E LOAN INC
424B4, 1999-06-29
MORTGAGE BANKERS & LOAN CORRESPONDENTS
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<PAGE>   1
                                               Filed pursuant to Rule 424(b)(4)
                                               Registration No. 333-74945

                                3,500,000 Shares

                                  E-LOAN, INC.

                                  Common Stock
E-Loan Logo
                             ----------------------

     This is a firm commitment underwritten initial public offering of shares of
common stock of E-LOAN, Inc. Of the 3,500,000 shares of common stock being
offered, 3,495,000 shares are being sold by E-LOAN and 5,000 shares are being
sold by a selling stockholder, the Community Foundation Silicon Valley, a
charitable organization administering the E-LOAN Foundation fund. See "Principal
and Selling Stockholders". E-LOAN will not receive any of the proceeds from the
sale of the shares being sold by the selling stockholder.

     Immediately following and conditioned upon the closing of the initial
public offering, E-LOAN will sell to Forum Holdings, Inc. in a private placement
an additional 960,061 shares of common stock at the initial public offering
price less the underwriting discount.

     At the request of E-LOAN, the underwriters have reserved, at the initial
public offering price, up to 300,000 shares of common stock for sale to
individuals designated by E-LOAN who have expressed an interest in purchasing
shares in the offering.

     Prior to the offering, there has been no market for the common stock. The
shares of common stock have been approved for quotation on the Nasdaq National
Market under the symbol "EELN".

     SEE "RISK FACTORS" BEGINNING ON PAGE 4 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
                             ----------------------

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
                             ----------------------

<TABLE>
<CAPTION>
                                                               Per
                                                              Share       Total
                                                              ------   -----------
<S>                                                           <C>      <C>
Initial public offering price...............................  $14.00   $49,000,000
Underwriting discount.......................................  $ 0.98   $ 3,430,000
Proceeds, before expenses, to E-LOAN........................  $13.02   $45,504,900
Proceeds to selling stockholder.............................  $13.02   $    65,100
</TABLE>

     The underwriters may, under the terms of the underwriting agreement,
purchase up to an additional 525,000 shares from E-LOAN at the initial public
offering price less the underwriting discount.

     The underwriters expect to deliver the shares against payment in New York,
New York on July 2, 1999.
                             ----------------------

GOLDMAN, SACHS & CO.                                DONALDSON, LUFKIN & JENRETTE

HAMBRECHT & QUIST
                            DLJDIRECT INC.

                                                        E*TRADE SECURITIES, INC.
                             ----------------------
                        Prospectus dated June 28, 1999.
<PAGE>   2

                             DESCRIPTION OF ARTWORK

     [Picture of three screen shots of E-LOAN's Internet home page and interior
pages with the heading, "Changing the Mortgage Process."]

     Text at the bottom of the page:

     Traditionally, getting a mortgage has been a frustrating experience for
many consumers. Now, E-LOAN envisions a better way. Founded by two mortgage
brokers, E-LOAN uses the Internet to provide access to thousands of loan
products and detailed comparisons, and to allow customers the convenience of
applying for and tracking their loans online. And, E-LOAN eliminates the loan
agent's commission to save customers money. E-LOAN believes that its technology
and customer service add up to a better way to get a loan. [E-LOAN LOGO]

     E-LOAN is a registered trademark of E-LOAN. All other brand names or
trademarks appearing in this prospectus are the property of their respective
holders.

     The gatefold includes a graphic illustrating the typical customer's path
through the E-LOAN loan process, from the initial search for interest rates
through analyzing and comparing loans, applying for a loan online, tracking the
loan online, closing the loan, and monitoring the loan to determine the optimum
time for refinancing. The graphic is overlaid on a screenshot of E-LOAN's home
page.

     Heading for the graphic: [E-LOAN logo] Changing the mortgage process.

     Text: E-LOAN's vision is to offer customers the best loans at the lowest
cost -- and to help them manage their mortgage as they do their investments. As
the largest part of most consumers' balance sheets, the home mortgage can be
leveraged to lower the overall cost of capital in an individual's portfolio.
E-LOAN's online tools allow customers to compare different types of loans,
forecast their performance in various interest rate scenarios, and create
personalized financial profiles that all combine to help them choose the right
loan. After the loan is closed, they can continue to track the market and
receive automatic notification of savings opportunities through refinancing.

     [The graphical representation begins with a screenshot of E-LOAN's home
page pointing to a screenshot of the Rate Watch function. Each specific function
in the loan process is represented by a screen shot, with captions describing
the functions, which flow around a counterclockwise circle representing the
entire consumer loan process through E-LOAN. The functions and associated
descriptions, aligned next to the screen shots around the circle, are as
follows]:

     Rate Watch: Customers can set up a customized account and be automatically
notified when the product they want is available. [Rate Watch then points to the
next screenshot representing Search for Rates, which marks the customer's entry
point into the circular loan process]:

     Search for Rates: Our rate search delivers the most competitive products
from over 50,000 in our database, in seconds. Or, we can recommend a loan based
on a customer's financial profile. [Search for rates then points to a set of
screen shots moving counterclockwise around the loan process circle]:

     Search Results- Review Costs-Compare Loans: Our web site offers access to
over 70 lenders through brokerage sourcing and direct loan sourcing from capital
markets. Detailed
<PAGE>   3

analyses show which loan is right for an individual's situation [round the
circle to Apply for Loan screenshot]:

     Apply for Loan: Customers complete our easy application entirely online
[around the circle to Lock Through E-Track screenshot]:

     Lock Through E-Track: Through an E-Track account, customers can review all
of their costs prior to closing [around the circle to Close Loan. In the
interior of the circle, connecting the Apply for Loan and Closed Loan screen
shots, is a curved line representing E-LOAN's internal processes. These are
bulleted and labeled in order: Automated Underwriting, Decision Within 24 Hours,
Document Collection/Verification, Appraisal, Funding.]

     [Also in the interior of the circle is a screen shot representing the
E-Track function and a photograph captioned, Julie O., Loan Consultant. The
caption text for this combined graphic reads as follows]: With a personal loan
consultant and a password protected E-Track account, customers can get
up-to-date status on their loan applications anytime.

     [The Close Loan screenshot leads around the circle to a Monitor Mortgage
screenshot, which leads to the final screenshot in the circle, Refinance. The
caption for Refinance is as follows]:

     To help manage a customer's mortgage, E-LOAN automatically notifies them of
opportunities to save money on refinancing. [The circle forms into an arrow
leading from the Refinance screenshot into the Search for Rates screenshot,
indicating that when it is time to refinance, the customer begins a new rate
search and starts around the circle again].
<PAGE>   4

                               PROSPECTUS SUMMARY

     This summary may not contain all of the information that you should
consider before investing in our common stock. You should read the following
summary together with the more detailed information regarding E-LOAN and the
common stock being sold in this offering and our financial statements and notes
to those statements appearing elsewhere in this prospectus. Except as described
in the financial statements or as otherwise specified in this prospectus, all
information in this prospectus: (1) assumes no exercise of the underwriters'
over-allotment option; (2) reflects a three-for-one split of the outstanding
shares of common stock completed in May 1999; (3) reflects the conversion of all
of our outstanding preferred stock into common stock upon the effectiveness of
the registration statement related to this offering; and (4) reflects the
issuance of 960,061 shares of common stock in a private placement to close
immediately following this offering at the initial public offering price of
$14.00 less the underwriting discount. See "Description of Capital Stock" and
"Underwriting".

                                  E-LOAN, INC.

     E-LOAN is a leading online provider of mortgages, offering consumers the
ability to obtain the most suitable mortgages from a wide array of lenders at
substantial savings. E-LOAN's easy-to-use website enables borrowers to search
through over 50,000 products provided by over 70 lending sources to find the
most competitively priced loans that match the borrowers' criteria. Borrowers
can analyze and compare loans online as well as receive unbiased loan
recommendations based on their personal criteria and financial characteristics.

     E-LOAN offers origination cost savings of over 50% compared to obtaining a
mortgage through traditional mortgage brokers or single source lenders. E-LOAN
achieves these savings primarily by eliminating the commissioned loan agent, who
typically charges an origination fee of 1.25% to 1.5% of the loan amount. By
contrast, E-LOAN's origination fee is 0.625% of the loan amount. E-LOAN provides
complete transaction fulfillment and a high level of service through customer
service representatives assigned to each borrower and the proprietary E-Track
loan monitoring service. E-LOAN is the exclusive mortgage provider for loan
centers that E-LOAN has established with leading websites including Yahoo!,
E*Trade, DLJdirect,Telebank and CBS MarketWatch.

     In 1998 and the first quarter of 1999, E-LOAN was the leader in the online
mortgage market with approximately $1 billion and $490 million in closed loans
originated, respectively, including E-LOAN's estimate of closed loan volume from
referrals. During these periods, E-LOAN incurred losses of $11.2 million and
$11.4 million, respectively.

                         THE E-LOAN MARKET OPPORTUNITY

     E-LOAN believes that the traditional mortgage origination process is highly
inefficient, which is the result of a fragmented, broker-dominated industry,
paper-intensive processes and a baffling array of mortgage products. This
inefficient process has made obtaining a mortgage a time-consuming, expensive,
inconvenient and unpleasant experience for many consumers. E-LOAN believes an
Internet-based distribution model reduces or eliminates many of these
shortcomings and provides a significant opportunity for an open, centralized and
easy-to-use service with a compelling consumer value proposition. Forrester
Research projects the market for online mortgage originations will grow from
$18.7 billion in 1999 to over $91.2 billion in 2003, representing an increase in
online penetration of the existing market from 1.5% in 1999 to 9.6% in 2003.

     E-LOAN's website enables customers to efficiently search, analyze and
compare mortgage products offered by multiple lenders and apply for, qualify for
and obtain the mortgage that is most compatible with their individual financial
characteristics and borrowing requirements. By offering a large selection of
products from leading lenders, eliminating agent commissions and passing those
savings on to customers, and providing personalized customer service, E-LOAN
provides customers a more streamlined and efficient way to get a home loan.
E-LOAN plans to execute on its strategy of

                                        1
<PAGE>   5

becoming the leading Internet-based provider of mortgages and debt management
services for customers by continuing to build brand awareness, using technology
to bring borrowers and capital markets closer together and helping customers
monitor and manage their debt.

                               E-LOAN FOUNDATION

     In May 1999, E-LOAN established the E-LOAN Foundation, a charitable fund
which is administered by the Community Foundation Silicon Valley. The Community
Foundation Silicon Valley is a third party organization that has been
administering charitable donations on behalf of many corporations and other
organizations since 1954. The Community Foundation Silicon Valley is not
affiliated with E-LOAN and no officers or directors of E-LOAN will be involved
in the administration of the E-LOAN Foundation. To capitalize the E-LOAN
Foundation, E-LOAN donated 75,000 post-split shares of common stock to the
Community Foundation Silicon Valley on behalf of the E-LOAN Foundation. All
decisions with respect to the voting of these shares shall be made by the
Community Foundation Silicon Valley. The estimated value of the shares at the
time they were donated to the E-LOAN Foundation was $900,000. E-LOAN has made no
other charitable donations. The Community Foundation Silicon Valley is selling
5,000 shares of common stock in this offering. Through the Community Foundation
Silicon Valley, the E-LOAN Foundation will make grants to charitable
organizations.

                             CORPORATE INFORMATION

     We were incorporated in California in August 1996 and we reincorporated in
Delaware in March 1999. Our principal executive offices are located at 5875
Arnold Road, Suite 100, Dublin, California 94568 and our phone number is (925)
241-2400. Our Internet address is www.eloan.com. The information on our website
is not part of this prospectus.

                                  THE OFFERING

<TABLE>
<S>                                       <C>
Common stock offered by E-LOAN..........  3,495,000 shares
Common stock offered by the selling
  stockholder on behalf of the E-LOAN
  Foundation............................  5,000 shares
Common stock offered in a private
  placement to be closed at the same
  time as this offering.................  960,061 shares
Common stock to be outstanding after
  this offering.........................  38,297,744 shares
Use of proceeds.........................  Working capital and general corporate purposes,
                                          including capital expenditures. See "Use of
                                          Proceeds".
Nasdaq National Market symbol...........  "EELN"
</TABLE>

     In addition to the 38,297,744 shares of common stock to be outstanding
after the offering, as of the date of this prospectus, E-LOAN has authorized the
issuance of 11,279,714 additional shares of common stock under its 1997 Stock
Option Plan and 1999 Employee Stock Purchase Plan.

RECENT SALES OF SECURITIES

     Pursuant to a private transaction with 25 of our stockholders on March 23,
1999, Softbank America Inc. purchased an aggregate of 972,732 shares of common
and preferred stock at a per share price of $16.00.

                                        2
<PAGE>   6

                             SUMMARY FINANCIAL DATA
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                         YEAR ENDED
                                        DECEMBER 31,                            THREE MONTHS ENDED (UNAUDITED)
                                  -------------------------   -------------------------------------------------------------------
                                                               MAR. 31,      JUNE 30,      SEPT. 30,     DEC. 31,      MAR. 31,
                                     1997          1998          1998          1998          1998          1998          1999
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>           <C>           <C>           <C>
Revenues........................  $     1,043   $     6,832   $       527   $     1,233   $     2,051   $     3,021   $     4,802
Operating expenses(1):
  Operations....................        1,319         7,626           779         1,077         2,127         3,643         4,104
  Sales and marketing...........          470         5,642           513           874         2,174         2,081         3,657
  Technology....................          102         1,248           163           371           284           430           481
  General and
    administrative..............          524         2,410           379           436           711           884         1,423
  Amortization of unearned
    compensation................           --         1,251            44           211           296           700         6,554
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
    Total operating expenses....        2,415        18,177         1,878         2,969         5,592         7,738        16,219
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Loss from operations............       (1,372)      (11,345)       (1,351)       (1,736)       (3,541)       (4,717)      (11,417)
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Other income, net...............           (2)          173            20            29            26            98            36
Net loss........................  $    (1,374)  $   (11,172)  $    (1,331)  $    (1,707)  $    (3,515)  $    (4,619)  $   (11,381)
                                  ===========   ===========   ===========   ===========   ===========   ===========   ===========
Net loss per share(2):
  Basic and diluted.............  $     (0.12)  $     (0.98)  $     (0.12)  $     (0.15)  $     (0.30)  $     (0.41)  $     (0.94)
                                  ===========   ===========   ===========   ===========   ===========   ===========   ===========
Weighted average number of
  shares outstanding -- basic
  and diluted...................   12,262,032    12,400,284    12,323,258    12,367,871    12,421,801    12,485,599    12,598,378
                                  ===========   ===========   ===========   ===========   ===========   ===========   ===========
Pro forma net loss per
  share(3)......................                $     (0.41)  $     (0.06)  $     (0.07)  $     (0.12)  $     (0.14)  $     (0.36)
Pro forma weighted average
  number of shares
  outstanding(3)................                 27,153,122    22,743,817    23,314,274    29,035,490    33,021,508    33,100,579
</TABLE>

<TABLE>
<CAPTION>
        OPERATING DATA:
<S>                               <C>           <C>           <C>           <C>           <C>           <C>           <C>
Closed loan volume (dollars)
  E-LOAN closed..............................   $   835,318   $   104,943   $   172,108   $   219,232   $   339,035   $   469,817
  Referral closed(4).........................       146,880           135        37,530        56,565        52,650        19,710
                                                -----------   -----------   -----------   -----------   -----------   -----------
  Total......................................   $   982,198   $   105,078   $   209,638   $   275,797   $   391,685   $   489,527
                                                ===========   ===========   ===========   ===========   ===========   ===========
Closed loan volume (loans)
  E-LOAN closed..............................         3,865           447           779         1,004         1,635         2,371
  Referral closed(4).........................         1,086             1           278           418           389           146
                                                -----------   -----------   -----------   -----------   -----------   -----------
  Total......................................         4,951           448         1,057         1,422         2,024         2,517
                                                ===========   ===========   ===========   ===========   ===========   ===========
</TABLE>

     The following table provides a summary of our balance sheet as of March 31,
1999. The pro forma column gives effect to the conversion of all outstanding
shares of preferred stock into 20,493,921 shares of common stock and the
exercise and conversion of a warrant for 53,996 shares of Series D preferred
stock into 161,988 shares of common stock. The as-adjusted column reflects the
issuance of 75,000 shares of common stock to the selling stockholder, the
issuance of 960,061 shares of common stock in a private placement to be closed
immediately following this offering, and the sale of 3,495,000 shares of common
stock in this offering by E-LOAN at the initial public offering price of $14.00
per share, after deducting the estimated underwriting discount and offering
expenses payable by E-LOAN. See "Use of Proceeds" and "Capitalization".

<TABLE>
<CAPTION>
                                                                        MARCH 31, 1999 (UNAUDITED)
                                                                ------------------------------------------
                                                                                              PRO FORMA
                                                                 ACTUAL      PRO FORMA       AS ADJUSTED
                                                                --------    ------------    --------------
<S>                                                             <C>         <C>             <C>
BALANCE SHEET DATA:
Mortgage loans held-for-sale (pledged)......................    $ 63,729      $63,729          $ 63,729
Cash and cash equivalents...................................       3,565        4,065            60,070
Total assets................................................      72,962       73,462           129,467
Warehouse lines payable.....................................      60,256       60,256            60,256
Long term obligations.......................................       1,301        1,301             1,301
Mandatorily redeemable preferred stock......................      22,760           --                --
Total stockholders' equity (deficit)........................     (16,505)       6,755            62,760
</TABLE>

- ---------------
(1) For an alternative presentation of operating expenses, see Note 14 of Notes
    to Financial Statements.

(2) Net loss per share includes the accretion for the Series C and Series D
    mandatorily redeemable convertible preferred stock.

(3) Pro forma net loss per share has been computed by dividing net loss by the
    pro forma weighted average number of shares outstanding. The pro forma
    weighted average number of shares outstanding includes the pro forma effects
    of the automatic conversion on a weighted average basis of E-LOAN's
    preferred stock, and the exercise and conversion of a warrant for 53,996
    shares of Series D preferred stock into 161,988 shares of common stock as if
    the conversion occurred on January 1, 1998 or at the date of issuance, if
    later.

(4) Computed based on E-LOAN's estimate of the percentage of referred loans
    closed.

                                        3
<PAGE>   7

                                  RISK FACTORS

     You should carefully consider the risks described below before making a
decision to buy our common stock. The risks and uncertainties described below
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.

     If any of the following risks actually occur, our business, financial
condition or results of operations could be adversely affected, the trading
price of our common stock could decline, and you could lose all or part of your
investment. You should also refer to the other information set forth in this
prospectus, including our financial statements and the related notes.

WE HAVE A HISTORY OF LOSSES, WE EXPECT LOSSES TO CONTINUE AND WE MAY NOT ACHIEVE
OR MAINTAIN PROFITABILITY

     We have not achieved profitability and expect to continue to incur
operating losses for the foreseeable future. We incurred net losses of $11.2
million for the year ended December 31, 1998. As of March 31, 1999, our
accumulated deficit was $24.0 million. Given that we expect to continue to incur
significant sales and marketing expenses, we will need to generate significant
revenues to achieve and maintain profitability. Although our revenues have grown
in recent quarters, we may not achieve sufficient revenues for profitability.
Even if we achieve profitability, we may not sustain or increase profitability
on a quarterly or annual basis in the future. If revenues grow slower 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. See "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

WE HAVE A LIMITED OPERATING HISTORY AND CONSEQUENTLY FACE SIGNIFICANT RISKS AND
UNCERTAINTIES

     We were incorporated in August 1996 and initiated our online mortgage
operations in June 1997. As a result of our limited operating history and our
recent growth, it will be necessary to implement new and expanded operational,
financial and administrative systems and control procedures to enable us to
expand, train and manage our employees and coordinate the efforts of our
underwriting, accounting, finance, marketing, and operations departments. In the
past, we have experienced difficulties summarizing and preparing accurate
financial information on a timely basis. If we experience these difficulties in
the future, we may be unable to produce accurate and timely financial
statements, which could limit our ability to conduct loan origination and sale
operations and adversely affect the liquidity and price of our common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview".

OUR QUARTERLY FINANCIAL RESULTS ARE VULNERABLE TO SIGNIFICANT FLUCTUATIONS AND
SEASONALITY BECAUSE OF MANY FACTORS, ANY OF WHICH COULD ADVERSELY AFFECT OUR
STOCK PRICE

     Due to rising interest rates and other factors, we expect our revenues in
the quarter ended June 30, 1999 to be flat or below the prior quarter's revenue.
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. Our revenues and operating results may vary
significantly from quarter to quarter due to a number of factors. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for detailed information on our quarterly operating results. As a
result, we believe that quarter-to-quarter comparisons of our operating results
are not a good indication of our future performance.

                                        4
<PAGE>   8

INTEREST RATE FLUCTUATIONS COULD ADVERSELY AFFECT OUR BUSINESS

     A high percentage of our customers use our services to refinance existing
mortgages and 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. For example, we
believe our loan volume will decline in the quarter ending June 30, 1999 below
the prior quarter's volume, partly based on a recent increase in interest rates.
Our failure to successfully reduce this dependence on refinancings and increase
the volume of our business derived from home purchases could have an adverse
effect on our business.

     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, 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 which we depend on to fund the loans we
originate. We currently do not use derivative financial instruments to hedge
these risks and are therefore exposed to losses caused by fluctuations in
interest rates.

     A sharp decrease in interest rates over a short period may cause customers
who have interest rates on mortgages committed through E-LOAN 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.

UNCERTAINTY WITH RESPECT TO THE TIME IT TAKES TO CLOSE LOANS CAN LEAD TO
UNPREDICTABLE REVENUE AND PROFITABILITY

     The time between the date an application is received from a customer on our
website and the date the loan closes has typically been lengthy and
unpredictable. For instance, in April 1999 approximately 9.5% of our loans were
funded after the loan commitment period had expired. 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. 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 loans applied for during that period do
not close in a timely manner or at all. For example, we have experienced a
significant increase in purchase loan applications during the quarter ending
June 30, 1999. Purchase loan applications generally take longer to close than
refinancing applications as they are tied to the close of escrow date. We expect
our loan volumes will decline in the quarter ending June 30, 1999 below the
prior quarter's volume, partly based on the extended time it takes to close a
purchase loan.

WE HAVE ONLY OPERATED DURING PERIODS OF GROWTH IN THE HOME MORTGAGE MARKET AND
CONSEQUENTLY FACE SIGNIFICANT RISKS AND UNCERTAINTIES

     All of our operations have occurred during a period in which the home
mortgage market has experienced rapid growth. Since we began our online mortgage
operations, we have never operated during a downturn in the mortgage business
and we cannot assure you that we will be able to operate successfully if a
downturn occurs. We have generated limited revenues and have never operated
profitably.

                                        5
<PAGE>   9

WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS, AND IF
WE ARE UNABLE TO MANAGE THIS GROWTH, OUR BUSINESS WILL BE ADVERSELY AFFECTED

     We have experienced periods of significant growth, which have placed a
strain on our resources and will continue to do so in the future. If we do not
manage this growth effectively, it 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 December 31, 1997, we had a total of 40 full-time
employees and at March 31, 1999, we had a total of 237 full-time employees.

     Several members of our senior management joined us within the last eight
months, including Frank Siskowski, Chief Financial Officer; Harold "Pete"
Bonnikson, Senior Vice President of Operations; and Joseph Kennedy, Senior Vice
President of Marketing and Business Development. These individuals have not
previously worked together and they may not work together effectively.

IF ONLINE MORTGAGES AND OUR SERVICE OFFERINGS DO NOT ACHIEVE WIDESPREAD CONSUMER
ACCEPTANCE, OUR BUSINESS WILL BE ADVERSELY AFFECTED

     Our success will depend in large part on widespread consumer acceptance of
purchasing mortgages online. The development of an online market for mortgage
loans has only recently begun, is rapidly evolving and likely will be
characterized by an increasing number of market entrants. Our future growth, if
any, will depend on the following critical factors:

     - the growth of the Internet as a commerce medium generally, and as a
       market for consumer financial products and services specifically;

     - our ability to successfully and cost-effectively market our services to a
       sufficiently large number of customers; and

     - our ability to overcome a perception among many real estate market
       participants that obtaining mortgages online is risky for consumers.

     There can be no assurance that the market for our services will develop,
that our services will be adopted or that consumers will significantly increase
their use of the Internet for obtaining mortgage loans. If the online market for
mortgage loans fails to develop, or develops more slowly than expected, or if
our services do not achieve widespread market acceptance, our business, results
of operations and financial condition would be adversely affected.

BECAUSE A HIGH CONCENTRATION OF OUR BUSINESS IS IN CALIFORNIA, WE ARE
PARTICULARLY VULNERABLE TO ECONOMIC AND OTHER FACTORS AFFECTING CALIFORNIA

     Approximately 84% and 69% of the loans we closed in the year ended December
31, 1998 and the quarter ended March 31, 1999, respectively, were from borrowers
located in California. No other state generated more than 10% of our closed
loans during these periods. We are more likely to originate a significant amount
of our loans in California for the foreseeable future because we are located
there, we have advertised more heavily in California than in other states to
date, and we believe that California consumers are more likely to be comfortable
with using the Internet to purchase mortgages. There have been times in the
past, most recently in 1991 - 1992, when the California economy has suffered a
recession disproportionate with the rest of the country. Should a similar
recession happen again in California, our business would be adversely affected.

     In addition, California historically has been vulnerable to natural
disasters, including earthquakes and mudslides, which are not typically covered
by standard hazard insurance policies maintained by borrowers. Uninsured
disasters may adversely impact borrowers' ability to repay mortgage loans we
originate and any sustained period of increased delinquencies or defaults could
adversely affect the pricing of our future secondary loan sales and our overall

                                        6
<PAGE>   10

ability to sell loans. The occurrence of natural disasters in California could
have an adverse effect on our business, results of operations and financial
condition.

THE LOSS OF ONE OR MORE OF OUR SIGNIFICANT DISTRIBUTION PARTNERS WOULD ADVERSELY
AFFECT OUR BUSINESS

     We rely on Internet distribution partners to direct a significant number of
our prospective customers to our website. If we lose any of our significant
distribution partners, we will likely fail to meet our growth objectives, both
in terms of additional borrowers and increased brand awareness. We consider our
distribution partnerships with Yahoo!, E*Trade and DLJdirect to be the most
critical to our success. During the year ended December 1998, approximately 13%
of our closed loans were derived from a website that we operate with Yahoo!, and
during the first quarter of 1999, approximately 14%, 2% and 1% of our closed
loans were derived from the websites we operate with Yahoo!, E*Trade and
DLJdirect, respectively. In the aggregate, approximately 18% and 22% of our
closed loans were derived from the websites of our distribution partners in 1998
and the first quarter of 1999. Our agreements with our distribution partners are
typically short-term, from one to three years in length, and 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 any of these agreements were to
be terminated or were to lapse without extension, we could lose a considerable
number of loan applications and our business would be adversely affected.

THE TERMINATION OF ONE OR MORE OF OUR FUNDING PARTNERSHIPS WOULD ADVERSELY
AFFECT OUR BUSINESS

     We depend on GE Capital Mortgage Services, Inc. and Bank United to finance
our internal loan funding activities through the warehouse credit facilities
provided by each of these lenders. We also depend on Greenwich Capital Financial
Products, Inc. to finance portions of our mortgage loan inventory pending
ultimate sale to mortgage loan purchasers. If either of our warehouse credit
facilities becomes unavailable or our relationship with Greenwich Capital is
terminated, our business would be adversely affected. Under our agreements with
each of these partners, 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 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 Greenwich Capital
and GE Capital 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 April 2000, our agreement
with GE Capital expires in April 2000 and our agreement with Bank United expires
in February 2000. Our agreement with GE Capital can be terminated at any time on
120 days prior written notice. We are continually seeking to obtain additional
warehouse lending resources, but we may not be successful in this regard.

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 could be adversely affected.

                                        7
<PAGE>   11

WE DEPEND ON OUR AGREEMENTS WITH THIRD PARTIES TO FUND MORTGAGE LOANS OR FULFILL
LOAN TRANSACTION PROCESSING IN 16 STATES; IF THESE AGREEMENTS ARE TERMINATED,
OUR BUSINESS COULD BE ADVERSELY AFFECTED

     E-LOAN licenses its mortgage loan origination systems and proprietary marks
to NetB@nk to enable NetB@nk to fund mortgage loans under the E-LOAN brand in
eleven states, and has agreements with PHH Mortgage Services Corporation and
Prism Mortgage Company relating to the fulfillment of all aspects of loan
transaction processing following origination in five states. Each of these
agreements may be terminated by either party upon 30 days prior written notice.
The termination of any or all of these agreements could have a material adverse
effect on our business.

THE LOSS OF OUR RELATIONSHIP WITH FANNIE MAE OR ANY OTHER SIGNIFICANT PROVIDER
OF AUTOMATED UNDERWRITING WOULD HAVE AN ADVERSE AFFECT ON OUR BUSINESS

     We expect to depend on automated underwriting and other services offered by
government sponsored and other mortgage investors, including Fannie Mae and
Freddie Mac, to help ensure that our mortgage services can be offered
efficiently and on a timely basis. We currently have an agreement with Fannie
Mae that authorizes our use of their automated underwriting services and enables
us to sell qualified first mortgages to Fannie Mae. We cannot assure you that we
will remain in good standing with Fannie Mae or that Fannie Mae will not
terminate our relationship. We expect to process a significant portion of our
conforming loans using the Fannie Mae system until we are able to obtain
automated underwriting services from other providers. Our agreement with Fannie
Mae can be terminated by either party. The termination of our agreement with
Fannie Mae would adversely impact our business by reducing our ability to
streamline the mortgage origination process. Additionally, we may not be able to
successfully implement the automated underwriting services of Fannie Mae or
other automated underwriting providers in a manner that will lead to substantial
processing efficiencies.

WE MAY INCUR LOSSES ON LOANS IF WE BREACH REPRESENTATIONS OR WARRANTIES TO
MORTGAGE LOAN PURCHASERS

     In connection with the sale and exchange of loans, we make customary
representations and warranties to mortgage loan purchasers relating to, among
other things, compliance with laws and origination practices. In the event we
breach any of these representations and warranties, we may be required to
repurchase or substitute these mortgage loans and bear any subsequent losses on
the repurchased loans. We may also be required to indemnify mortgage loan
purchasers for these losses and claims with respect to mortgage loans for which
there was a breach of representations and warranties. In addition, many of our
agreements with mortgage loan purchasers prohibit our solicitation of borrowers
with respect to the refinancing of loans we originate and sell. The mortgage
loan purchasers under these agreements may construe our Mortgage Monitor service
as violating these non-solicitation provisions, in which case they may elect to
terminate their agreements with us or may seek recovery from us for damages
sustained by them. Many of our agreements with mortgage loan purchasers prohibit
us from refinancing mortgage loans for specified time periods, unless we pay
penalties to the mortgage loan purchasers or obtain their consent. These
agreements also require us to return any premiums paid by a mortgage loan
purchaser if the mortgage loans purchased are prepaid in full during periods of
up to 12 months following the date the mortgage loan is purchased.

THE MORTGAGE LENDING INDUSTRY IS INTENSELY COMPETITIVE, AND IF WE FAIL TO
SUCCESSFULLY COMPETE IN THIS INDUSTRY, OUR MARKET SHARE AND BUSINESS WILL BE
ADVERSELY AFFECTED

     To compete successfully, we must respond promptly and effectively to the
challenges of technological change, evolving standards and our competitors'
innovations by continuing to enhance and expand our services, as well as our
sales and marketing channels. Increased

                                        8
<PAGE>   12

competition, particularly online competition, could result in price reductions,
reduced margins or loss of market share, any of which could adversely affect our
business. We may not be able to compete successfully in our market environment
and our failure to do so could have an adverse effect on our business, results
of operations and financial condition. See "Business -- Competition".

IF WE FAIL TO COMPLY WITH THE NUMEROUS LAWS AND REGULATIONS THAT GOVERN OUR
INDUSTRY, OUR BUSINESS COULD BE ADVERSELY AFFECTED

     Our business must comply with extensive and complex rules and regulations
of, and licensing and examination by, various federal, state and local
government authorities. These rules impose obligations and restrictions on our
residential loan brokering and lending activities. In particular, these rules
limit the broker fees, interest rates, finance charges and other fees we may
assess, require extensive disclosure to our customers, prohibit discrimination
and impose on us multiple qualification and licensing obligations. We may not
always have been and may not always be in compliance with these requirements.
Failure to comply with these requirements may result in, among other things,
revocation of required licenses or registrations, loss of approved status,
voiding of loan contracts or security interests, indemnification liability or
the obligation to repurchase mortgage loans sold to mortgage loan purchasers,
rescission of mortgage loans, class action lawsuits, administrative enforcement
actions and civil and criminal liability. See "Business -- Regulation of
Mortgage Brokers and Lenders".

ANY ACQUISITIONS THAT WE UNDERTAKE COULD BE DIFFICULT TO INTEGRATE, DISRUPT OUR
BUSINESS, DILUTE STOCKHOLDER VALUE AND ADVERSELY AFFECT OUR OPERATING RESULTS

     We may acquire or make investments in complementary businesses,
technologies, services or products. These acquisitions and investments could
disrupt our ongoing business, distract our management and employees and increase
our expenses. We have had discussions with companies regarding our acquiring, or
investing in, their businesses, products, services or technologies. If we
acquire a company, we could have difficulty in assimilating that company's
personnel, operations, technology and software. In addition, the key personnel
of the acquired company may decide not to work for us. We could also have
difficulty in integrating the acquired products, services or technologies into
our operations and we may incur indebtedness or issue equity securities to pay
for any future acquisitions. The issuance of equity securities could be dilutive
to our existing stockholders.

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS OR KEY PERSONNEL WOULD LIKELY HAVE AN
ADVERSE EFFECT ON OUR BUSINESS

     Our future success depends to a significant extent on the continued
services of our senior management and other key personnel, particularly
co-founders Chris Larsen, Chief Executive Officer, and Janina Pawlowski,
President. Ms. Pawlowski, a licensed real estate broker, is responsible for all
of our activities in California and several other states. If Ms. Pawlowski were
to terminate her relationship with us for any reason we would not be able to
conduct business in these states until a replacement is found. The loss of the
services of Mr. Larsen, Ms. Pawlowski or other key employees, would also likely
have an adverse effect on our business, results of operations and financial
condition. We have not entered into employment agreements with any of our
executives, except Joseph Kennedy, Senior Vice President, Marketing and Business
Development, and do not maintain "key person" life insurance for any of our
personnel. See "Management" for detailed information on our key personnel.

WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE PERSONNEL WE NEED TO SUCCEED

     Competition for personnel throughout our industry is intense. We may be
unable to retain our key employees or attract, assimilate or retain other highly
qualified employees in the future. Our

                                        9
<PAGE>   13

future success depends on our continuing to attract, retain and motivate highly
skilled employees, particularly with respect to our loan processing functions.
We have in the past experienced, and we expect to continue to experience in the
future, difficulty in hiring and retaining employees with appropriate
qualifications. If we do not succeed in attracting new personnel or retaining
and motivating our current personnel, our business will be adversely affected.

OUR BUSINESS WILL BE IMPAIRED IF CONSUMERS DO NOT CONTINUE TO USE THE INTERNET

     Our business will be adversely affected if Internet usage does not continue
to grow, particularly by homebuyers. A number of factors may inhibit Internet
usage by consumers, including inadequate network infrastructure, security
concerns, inconsistent quality of service, and lack of availability of
cost-effective, high-speed service. If Internet usage grows, the Internet
infrastructure may not be able to support the demands placed on it by this
growth and its performance and reliability may decline. In addition, many
websites have experienced service interruptions as a result of outages and other
delays occurring throughout the Internet infrastructure. If these outages or
delays frequently occur in the future, Internet usage, as well as the usage of
our website, could grow more slowly or decline.

OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO EXPAND AND PROMOTE OUR BRAND
RECOGNITION

     Establishing and maintaining our brand is critical to attracting and
expanding our customer base, solidifying our business relationships and
successfully implementing our business strategy. We cannot assure you that our
brand will be positively accepted by the market or that our reputation will be
strong.

     Promotion and enhancement of our brand will also depend, in part, on our
success in providing a high-quality customer experience. We cannot assure you
that we will be successful in achieving this goal. To date we are aware of
numerous customer complaints regarding the quality of our service. If these
complaints persist they may significantly damage our reputation and offset the
efforts we make in promoting and enhancing our brand and could have an adverse
effect on our business, results of operations and financial condition. If
visitors to our website do not perceive our existing services to be of high
quality or if we alter or modify our brand image, introduce new services or
enter into new business ventures that are not favorably received, the value of
our brand could be diluted, thereby decreasing the attractiveness of our service
to potential customers.

OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO ADAPT TO THE RAPID TECHNOLOGICAL
CHANGE THAT CHARACTERIZES OUR INDUSTRY

     Our future success will depend on our ability to adapt to rapidly changing
technologies by continually improving the performance features and reliability
of our services. We rely on third party software products and services,
including software related to automated underwriting functions which will enable
us to realize processing efficiencies that are central to our operations. If we
are unable to integrate this software in a fully functional manner, we may
experience difficulties that could delay or prevent the successful development,
introduction or marketing of new products and services. In addition,
enhancements of our products and services must meet the requirements of our
current and prospective customers and must achieve significant market
acceptance. We could also incur substantial costs if we need to modify our
services or infrastructure to adapt to these changes.

ANY FAILURES OF, OR CAPACITY CONSTRAINTS IN, OUR SYSTEMS OR THE SYSTEMS OF THIRD
PARTIES ON WHICH WE RELY COULD ADVERSELY AFFECT OUR BUSINESS

     Our communications hardware and certain of our other computer hardware
operations are located at the facilities of Exodus Communications, Inc. in Santa
Clara, California and Jersey City, New Jersey. The hardware for our internal
loan and product database, as well as our loan

                                       10
<PAGE>   14

processing operations is maintained in our Dublin, California facility. Fires,
floods, earthquakes, power losses, telecommunications failures, break-ins and
similar events could damage these systems. Computer viruses, electronic
break-ins or other similar disruptive problems could also adversely affect our
website. Our business could be adversely affected if our systems were affected
by any of these occurrences. Our insurance policies may not adequately
compensate us for any losses that may occur due to any failures or interruptions
in our systems.

ANY OUTGAGES, 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 OR 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 of them 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 any federal or state laws governing
privacy which may be adopted in the future.

OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS FROM THIRD PARTY CHALLENGES OR IF WE ARE INVOLVED
IN LITIGATION

     Trademarks and other proprietary rights are important to our success and
our competitive position. Although we seek to protect our trademarks and other
proprietary rights through a variety of means, we cannot assure you that the
actions we have taken are adequate to protect these rights. We may also license
content from third parties in the future and it is possible that we could face
infringement actions based upon the content licensed from these third parties.
We have received notice from EduCap, Inc., a provider of educational loans, that
it believes that our use of the name "E-LOAN" infringes EduCap's trademark "THE
E-LOAN." EduCap has demanded that we cease and desist our use of the name E-LOAN
and has threatened legal action if we are unable to reach an amicable solution.
Any claims brought against us, regardless of their merit, could result in costly
litigation and the diversion of our financial resources and technical and
management personnel. Further, if any of these claims are proved valid, through
litigation or otherwise, we may be required to change our trademarks and pay
financial damages, which could adversely affect our business. In particular, if
the claim by EduCap is upheld, we would no longer be permitted to use the name
E-LOAN. See "Business -- Intellectual Property".

IF OUR INTERNAL SYSTEMS, OR THE INTERNAL SYSTEMS OF OUR SUPPLIERS, ARE NOT YEAR
2000 COMPLIANT, OUR BUSINESS COULD BE SERIOUSLY DISRUPTED

     Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Thus, the year 2000 will appear as
"00", which the system might consider to be the year 1900 rather than the year
2000. This could result in system failures,

                                       11
<PAGE>   15

delays or miscalculations. Computer systems and software that have not been
developed or enhanced recently may need to be upgraded or replaced to comply
with Year 2000 requirements.

     We believe that each of our software systems on a stand-alone basis is
currently Year 2000 compliant. However, we rely on software components acquired
from third parties which may not be Year 2000 compliant. The Internet operations
of many of our customers and suppliers may also be affected by Year 2000
complications. The failure of our customers or suppliers to ensure that their
systems are Year 2000 compliant could have an adverse effect on our customers
and suppliers, resulting in decreased Internet usage or our inability to obtain
necessary data communication and telecommunication capacity, which in turn could
have an adverse effect on our business, results of operations and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000".

THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK AND AN ACTIVE TRADING MARKET
MAY NOT DEVELOP FOLLOWING THIS OFFERING

     Before this offering, there has not been a public market for our common
stock and the trading market price for our common stock may decline below the
initial public offering price. We cannot predict the extent to which a market
will develop or how liquid that market might become. The initial public offering
price for the shares of our common stock was determined by negotiations between
us and the representatives of the underwriters and may not be indicative of
prices that will prevail in the trading market. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price.

OUR STOCK PRICE COULD BE VOLATILE AND COULD DECLINE FOLLOWING THIS OFFERING

     The stock market has experienced significant price and volume fluctuations,
and the market prices of technology companies, particularly Internet-related
companies, have been highly volatile. Investors may not be able to resell their
shares at or above the initial public offering price. See "Underwriting". In the
past, securities class action litigation has often been instituted against
companies following periods of volatility in the market price of their
securities. This type of litigation could result in substantial costs and a
diversion of management's attention and resources.

MANAGEMENT WILL HAVE DISCRETION OVER THE PROCEEDS OF THIS OFFERING AND MAY NOT
USE THE FUNDS FOR PURPOSES YOU APPROVE

     We intend to use the majority of the net proceeds from this offering for
working capital and general corporate purposes, including capital expenditures.
Our management will have broad discretion with respect to the use of these funds
and the determination of the timing of expenditures. We cannot assure you that
management will use these funds for purposes that you approve or that the
allocations will be in the best interests of our stockholders. See "Use of
Proceeds".

PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS WILL RETAIN SUBSTANTIAL
CONTROL OVER OUR BUSINESS AFTER THE OFFERING AND MAY MAKE DECISIONS THAT ARE NOT
IN THE BEST INTEREST OF ALL STOCKHOLDERS

     Upon completion of this offering, our executive officers, directors and
greater than 5% stockholders, and related entities controlled by them, will, in
the aggregate, own approximately 75.1% of our outstanding common stock. As a
result, these persons, acting together, will have the ability to substantially
influence all matters submitted to the stockholders for approval, including the
election and removal of directors and any merger, consolidation or sale of all
or substantially all of our assets, and to control our management and affairs.
Accordingly, this

                                       12
<PAGE>   16

concentration of ownership may have the effect of delaying, deferring or
preventing a change in control, impeding a merger, consolidation, takeover or
other business combination involving us or discouraging a potential acquirer
from making a tender offer or otherwise attempting to obtain control of our
business, even if the transaction would be beneficial to other stockholders. See
"Principal and Selling Stockholders".

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE

     If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could decline. Upon completion of this offering we will have outstanding
38,297,744 shares of common stock, assuming no exercise of the underwriters'
over-allotment option. Of these shares, the 3,500,000 shares of common stock
sold in this offering will be freely tradeable, without restriction, in the
public market. After the agreements not to sell shares after this offering
expire, 180 days from the date of this prospectus, an additional 32,340,964
shares will be eligible for sale in the public market.

     In addition, 6,131,573 shares under outstanding options and warrants and
5,268,141 shares reserved for future issuance under our stock option and
purchase plans will be eligible for sale in the public market subject to vesting
and the expiration of agreements not to sell shares after the offering.

                           FORWARD LOOKING STATEMENTS

     This prospectus contains forward-looking statements that involve risks and
uncertainties. We use the words "anticipates," "believes," "plans," "expects,"
"future," "intends" and similar expressions to identify forward-looking
statements. This prospectus also contains forward-looking statements attributed
to certain third parties relating to their estimates regarding the growth of
e-commerce and mortgage loan markets. Our actual results could differ materially
from those anticipated in these forward-looking statements for many reasons,
including the risks faced by us described in "Risk Factors" and elsewhere in
this prospectus.

                                       13
<PAGE>   17

                                USE OF PROCEEDS

     The net proceeds to us from the sale of the 3,495,000 shares of common
stock offered by us and from a private placement of 960,061 shares of common
stock that will close at the same time as this offering are estimated to be
approximately $56.0 million, at the initial public offering price of $14.00 per
share, after deducting the underwriting discount, estimated offering expenses
and assuming no exercise of the underwriters' over-allotment option to purchase
525,000 additional shares of common stock from us. We are conducting this
offering at this time to take advantage of favorable market conditions in the
public equity markets. Our primary objective of this offering is to increase our
equity capital, create a public market for our common stock and to facilitate
future access to public equity markets. We expect to use the majority of these
proceeds for working capital and general corporate purposes. E-LOAN will not
receive any proceeds from the sale of common stock by the selling stockholder.
It is our intent to focus our operating efforts on increasing client
satisfaction with the E-LOAN experience by further streamlining the mortgage
process. This focused effort will include expenditures on technology and system
upgrades, corporate training, and recruitment of key management and personnel to
improve our operating and customer service practices. In addition, we may use a
portion of the net proceeds to acquire complementary products, technologies or
businesses; however, we currently have no commitments or agreements and are not
involved in any negotiations to do so. We intend to invest the net proceeds of
this offering in interest-bearing, investment-grade securities pending their
use.

                                DIVIDEND POLICY

     We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. The covenants made by us under our existing line of credit
prohibit the payment of dividends.

                                       14
<PAGE>   18

                                 CAPITALIZATION

     The following table sets forth the following information:

     - the actual capitalization of E-LOAN as of March 31, 1999;

     - the pro forma capitalization of E-LOAN after giving effect to the
       conversion of all outstanding shares of convertible preferred stock upon
       the effectiveness of the registration statement relating to this offering
       and a warrant to purchase Series D preferred stock into an aggregate of
       20,655,909 shares of common stock upon the closing of this offering; and

     - the pro forma as-adjusted capitalization after giving effect to the
       issuance of 75,000 shares of common stock to the selling stockholder, the
       issuance of 960,061 shares of common stock in a private placement that
       will close immediately following this offering and the sale of 3,495,000
       shares of common stock in this offering by E-LOAN at the initial public
       offering price of $14.00 per share, less underwriting discounts and
       commissions and estimated offering expenses payable by E-LOAN.

<TABLE>
<CAPTION>
                                                                AS OF MARCH 31, 1999 (UNAUDITED)
                                                              ------------------------------------
                                                                                        PRO FORMA
                                                               ACTUAL     PRO FORMA    AS ADJUSTED
                                                              --------   -----------   -----------
                                                                  (IN THOUSANDS, EXCEPT SHARE
                                                                      AND PER SHARE DATA)
<S>                                                           <C>        <C>           <C>
Lease obligations, long-term portion........................  $    686    $    686      $    686
Notes payable, long-term....................................       614         614           614
Mandatorily redeemable convertible preferred stock:
  Series C, 4,467,912 shares authorized; 4,269,936 shares
    issued and outstanding, actual (aggregate liquidation
    preference $5,245,702); no shares issued and
    outstanding, pro forma as adjusted......................     6,135          --            --
  Series C-1, 4,467,912 shares authorized; no shares issued
    and outstanding, actual (liquidation preference $1.22852
    per share); no shares issued and outstanding, pro forma
    as adjusted.............................................        --          --            --
  Series D, 1,950,000 shares authorized; 1,702,529 shares
    issued and outstanding, actual (aggregate liquidation
    preference $15,770,526); no shares issued and
    outstanding, pro forma as adjusted......................    16,625          --            --
                                                              --------    --------      --------
Stockholders' deficit:
  Convertible preferred stock:
    Series A, 428,635 shares authorized; 428,635 shares
      issued and outstanding, actual (aggregate liquidation
      preference $94,300) no shares issued and outstanding,
      pro forma and as adjusted.............................        91          --            --
    Series B, 450,708 shares authorized; 430,207 shares
      issued and outstanding, actual (aggregate liquidation
      preference $412,999); no shares issued and
      outstanding, pro forma as adjusted....................       411          --            --
  Preferred stock; no shares authorized, actual; 5,000,000
    shares authorized, pro forma as adjusted, no shares
    issued and outstanding, actual, pro forma as adjusted...        --          --            --
  Common stock; 50,000,000 shares authorized and 12,742,974
    shares issued and outstanding, actual; 70,000,000
    authorized, 33,398,883 shares issued and outstanding,
    pro forma, 37,928,944 shares issued and outstanding, pro
    forma as adjusted.......................................        50      23,812        79,818
  Less: subscription receivable.............................        (4)         (4)           (4)
  Unearned compensation.....................................   (34,488)    (34,488)      (34,488)
  Additional paid-in capital................................    41,414      41,414        42,314
  Accumulated deficit.......................................   (23,979)    (23,979)      (24,880)
                                                              --------    --------      --------
         Total stockholders' equity (deficit)...............  $(16,505)   $  6,755      $ 62,760
                                                              --------    --------      --------
         Total mandatorily redeemable convertible stock and
           stockholders' equity.............................  $  6,255    $  6,755      $ 62,760
                                                              --------    --------      --------
Total capitalization........................................  $  7,555    $  8,055      $ 64,060
                                                              ========    ========      ========
</TABLE>

                                       15
<PAGE>   19

     This table excludes the following shares:

     - 10,148,514 shares issuable upon the exercise of options under E-LOAN's
       1997 Stock Option Plan consisting of:

       - 5,739,432 shares underlying options outstanding at a weighted average
         exercise price of $1.17 per share, of which 237,195 are exercisable as
         of March 31, 1999;

       - 4,409,082 shares underlying options available for future grants;

     - 1,500,000 shares issuable under E-LOAN's 1999 Employee Stock Purchase
       Plan;

     - 45,000 shares underlying a warrant that may be exercised and converted
       into these shares at a price of $0.67 per share; and

     - 75,000 shares underlying a warrant that may be exercised at a price of
       $13.33 per share.

     See "Management -- Stock Plans", "Description of Capital Stock" and Notes
11, 12 and 16 of Notes to Financial Statements.

                                       16
<PAGE>   20

                                    DILUTION

     The pro forma net tangible book value of our common stock on March 31, 1999
was $6.8 million, or approximately $0.20 per share. Pro forma net tangible book
value per share represents the amount of our total tangible assets less total
liabilities, divided by the 33,398,883 pro forma number of shares of common
stock outstanding (assuming the conversion of all outstanding shares of
convertible preferred stock upon the effectiveness of the registration statement
relating to this offering and the exercise and conversion of a warrant to
purchase Series D preferred stock into an aggregate of 20,655,909 shares of
common stock upon the closing of this offering). Dilution in net tangible book
value per share represents the difference between the amount per share paid by
purchasers of shares of our common stock in this offering and the net tangible
book value per share of our common stock immediately after the offering. After
giving effect to the issuance of 960,061 shares of common stock in a private
placement that will close immediately following this offering and our sale of
3,495,000 shares of common stock and after deducting the underwriting discounts
and commissions and estimated offering expenses payable by E-LOAN, E-LOAN's net
tangible book value would have been $62.8 million or approximately $1.66 per
share. This represents an immediate increase in net tangible book value of $1.46
per share to existing stockholders and an immediate dilution in net tangible
book value of $12.34 per share to new investors. The following table illustrates
this per share dilution.

<TABLE>
<S>                                                           <C>      <C>
Initial public offering price per share.....................           $14.00
  Pro forma net tangible book value per share as of March
     31, 1999...............................................  $0.20
  Increase per share attributable to new investors..........  $1.46
                                                              -----
Pro forma net tangible book value per share after the
  offering..................................................           $ 1.66
                                                                       ------
Dilution in pro forma net tangible book value per share to
  new investors.............................................           $12.34
                                                                       ======
</TABLE>

     The following table shows, as of March 31, 1999, the number of shares of
common stock purchased from E-LOAN by existing stockholders and by the new
investors together with the total price and average price per share paid by each
of these groups. The information presented is based upon the initial public
offering price of $14.00 per share, before deducting underwriting discounts and
commissions and estimated offering expenses payable by E-LOAN.

<TABLE>
<CAPTION>
                                SHARES PURCHASED      TOTAL CONSIDERATION
                              --------------------   ---------------------   AVERAGE PRICE
                                NUMBER     PERCENT     AMOUNT      PERCENT     PER SHARE
                              ----------   -------   -----------   -------   -------------
<S>                           <C>          <C>       <C>           <C>       <C>
Existing stockholders.......  33,398,883      88%    $22,240,403      26%       $ 0.67
New investors...............   4,455,061      12%     61,430,000      74%       $13.79
                              ----------     ---     -----------     ---
  Total.....................  37,853,944     100%    $83,670,403     100%
                              ==========     ===     ===========     ===
</TABLE>

     The information set forth above is based upon the number of shares of
common stock outstanding on March 31, 1999 and gives effect to the conversion of
all outstanding shares of E-LOAN's convertible preferred stock, the exercise and
conversion of a warrant to purchase Series D preferred stock into shares of
common stock and the issuance of 960,061 shares of common stock in the private
placement that will occur immediately following the closing of this offering.
This information excludes:

     - 10,148,514 shares issuable upon the exercise of options under E-LOAN's
       1997 Stock Option Plan consisting of:

       - 5,739,432 shares underlying options outstanding at a weighted average
         exercise price of $1.17 per share, of which 237,195 are exercisable as
         of March 31, 1999;

       - 4,409,082 shares underlying options available for future grants;

     - 1,500,000 shares issuable under E-LOAN's 1999 Employee Stock Purchase
       Plan;

     - 45,000 shares underlying a warrant that may be exercised and converted
       into these shares at a price of $0.67 per share; and

     - 75,000 shares underlying a warrant that may be exercised at a price of
       $13.33 per share.

     See "Management -- Stock Plans", "Description of Capital Stock" and Notes
11, 12 and 16 of Notes to Financial Statements.

                                       17
<PAGE>   21

                            SELECTED FINANCIAL DATA
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

     The selected financial data below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and is qualified by reference to the Financial Statements and Notes
thereto appearing elsewhere in this prospectus. The balance sheet data as of
December 31, 1997 and 1998 and the income statement data for each of the three
years in the period ended December 31, 1998 are derived from, and are qualified
by reference to, the audited financial statements of E-LOAN included elsewhere
in this prospectus. The balance sheet data as of March 31, 1999 and the income
statement data for the three months ended March 31, 1999 are derived from the
unaudited financial results included elsewhere in this prospectus. The balance
sheet data as of December 31, 1995 and 1996 and the income statement data for
the year ended December 31, 1995 are derived from the unaudited financial
statements of E-LOAN not included herein. The balance sheet amounts for December
31, 1994 related to Palo Alto Funding Group, the predecessor company, are de
minimis and the income statement amounts for the year ended December 31, 1994
are not available. The historical results are not necessarily indicative of
results to be expected for any future period.

<TABLE>
<CAPTION>
                                                                                                     THREE MONTHS
                                                             YEAR ENDED DECEMBER 31,                    ENDED
                                                -------------------------------------------------     MARCH 31,
                                                   1995           1996         1997        1998          1999
                                                -----------    -----------    -------    --------    ------------
                                                (UNAUDITED)                                          (UNAUDITED)
<S>                                             <C>            <C>            <C>        <C>         <C>
INCOME STATEMENT DATA:
Revenues......................................   $  1,603       $    893      $ 1,043    $  6,832      $  4,802
Operating expenses:
  Operations..................................      1,368            903        1,319       7,626         4,104
  Sales and marketing.........................         --             --          470       5,642         3,657
  Technology..................................         --             --          102       1,248           481
  General and administrative..................        152             97          524       2,410         1,423
  Amortization of unearned compensation.......         --             --           --       1,251         6,554
                                                 --------       --------      -------    --------      --------
    Total operating expenses..................      1,520          1,000        2,415      18,177        16,219
                                                 --------       --------      -------    --------      --------
      Loss from operations....................         83           (107)      (1,372)    (11,345)      (11,417)
Other income, net.............................         --             (3)          (2)        173            36
                                                 --------       --------      -------    --------      --------
Net income (loss).............................   $     83       $   (110)     $(1,374)   $(11,172)     $(11,381)
                                                 ========       ========      =======    ========      ========
  Net loss per share:
    Basic and diluted.........................   $    .01       $  (0.01)     $ (0.12)   $  (0.98)     $  (0.94)
                                                 ========       ========      =======    ========      ========
BALANCE SHEET DATA (AT END OF PERIOD):          (UNAUDITED)    (UNAUDITED)                           (UNAUDITED)
  Mortgage loans held-for-sale (pledged)......   $     --       $     --      $    --    $ 42,154      $ 63,729
  Cash and cash equivalents...................         47              2        4,218       9,141         3,565
  Total assets................................         81             40        4,680      55,523        72,962
  Warehouse lines payable.....................         --             --           --      41,046        60,256
  Long term obligations.......................         --             --           --       1,290         1,301
  Mandatorily redeemable preferred stock......         --             --        5,049      21,393        22,760
  Total stockholders' equity (deficit)........         58            (52)        (966)    (11,184)      (16,505)
</TABLE>

                                       18
<PAGE>   22

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with E-LOAN's
Financial Statements and Notes thereto and the other financial information
appearing elsewhere in this prospectus. In addition to historical information,
the following discussion and other parts of this prospectus contain
forward-looking information that involves risks and uncertainties. E-LOAN's
actual results could differ materially from those anticipated by the
forward-looking information due to competitive factors, risks associated with
E-LOAN's expansion plans and other factors discussed under "Risk Factors" and
elsewhere in this prospectus.

OVERVIEW

     E-LOAN is a leading online provider of mortgages and is engaged in the
brokerage, origination and sale of mortgage loans secured by residential real
estate.

     E-LOAN was incorporated in August 1996 and began marketing its services and
initiated online mortgage brokerage operations in June 1997. E-LOAN first
derived revenues from the origination and sale of mortgage loans in June 1998.

     In December 1997, E-LOAN merged with Palo Alto Funding Group (PAFG), a
traditional mortgage brokerage firm established in 1992, and suspended PAFG's
operations. In compliance with applicable reporting requirements, the results of
PAFG have been included in E-LOAN's financial statements as a predecessor
company beginning in 1995. However, E-LOAN believes that reported results prior
to 1998, which are primarily composed of PAFG results, are not indicative of
E-LOAN's current business operations.

     E-LOAN's revenues are derived from the brokering of loans and the
origination and sale of loans. Brokered loans are funded through lending
partners and E-LOAN never takes title to the mortgage. Brokerage revenues are
comprised of the mark-up to the lending partner's loan price, and processing and
credit reporting fees. These revenues are recognized at the time a loan is
closed. Originated and sold loans are loans that are funded through E-LOAN's own
warehouse lines of credit and sold to mortgage loan purchasers. Loan origination
and sale revenues consist of proceeds in excess of the carrying value of the
loan, origination fees less certain direct origination costs, other processing
fees and interest paid by borrowers on loans that E-LOAN holds for sale. These
revenues are recognized at the time the loan is sold or, for interest income, as
earned during the period from funding to sale. E-LOAN earns additional revenue
from its loan origination and sale operations as compared to brokered loan
operations because the sale of loans includes a service release premium.

     E-LOAN's loan origination and sale operations were initiated in June 1998
and represented 35% and 64% of total revenues for the year ended December 31,
1998 and for the three months ended March 31, 1999, respectively. E-LOAN expects
revenues derived from its loan origination and sale operations to continue to
increase as a percentage of total revenues.

     In generating revenues, E-LOAN relies on a number of strategic Internet
distribution partners to direct a significant number of prospective customers to
its website. E-LOAN considers its distribution partnerships with Yahoo!, E*Trade
and DLJdirect to be the most critical to its ability to generate revenues. Both
Yahoo! and E*Trade have made equity investments in E-LOAN. See "Certain
Transactions" and "Risk Factors -- The loss of one or more of our significant
distribution partners would adversely affect our business".

     As a result of our limited operating history and our recent growth, it will
be necessary to implement new and expanded operational, financial and
administrative systems and control procedures to enable us to expand, train and
manage our employees and coordinate the efforts of our underwriting, accounting,
finance, marketing, and operations departments. For example,

                                       19
<PAGE>   23

we intend to implement both a new financial reporting system and a loan
production system by the end of 1999.

     Historically, our efforts were focused primarily on developing and growing
our online mortgage operations and less on implementing internal accounting
controls, financial and operational reporting systems and expanding the size and
capabilities of our financial staff.

     In the fourth quarter of 1998, we hired a Chief Financial Officer and in
1999, we hired a Director of Finance and two other accounting managers as well
as additional full time and temporary financial personnel. We have also
documented and are in the process of enhancing our procedures and controls to
address the deficiencies in our financial reporting and loan production system.
See "Risk Factors -- We have a limited operating history and consequently face
significant risks and uncertainties".

E-LOAN FOUNDATION STOCK ISSUANCE

     In May 1999, E-LOAN donated 75,000 shares of common stock in connection
with its establishment of a charitable foundation. The shares donated had an
estimated fair value of $900,000, and E-LOAN expects to record this as a general
and administrative expense in the three month period ending June 30, 1999.

AMORTIZATION OF UNEARNED COMPENSATION

     Certain stock options granted in the years ended December 31, 1997 and
1998, and in the three months ended March 31, 1999 have been considered to be
compensatory. Additionally, an issuance of Series D preferred stock to an
officer in the three months ended March 31, 1999 has been considered to be
compensatory. Unearned compensation associated with stock options for the years
ended December 31, 1997 and 1998 amounted to $0 and $5.7 million, respectively.
Of these amounts $0 and $1.25 million have amortized for the years ended
December 31, 1997 and 1998, respectively. The remainder will be amortized over
the respective stock option vesting periods.

     Stock options granted in the three months ended March 31, 1999 resulted in
unearned compensation of $35.0 million. Additionally, in February 1999 E-LOAN
issued shares of Series D preferred stock to an officer which resulted in a one
time compensation charge of $1.6 million. The total unearned compensation charge
resulting from these transactions was $36.6 million. Of this amount $6.6 million
was amortized during the three months ended March 31, 1999. The remainder will
be amortized over the respective stock option vesting periods.

                                       20
<PAGE>   24

QUARTERLY RESULTS

     The following table sets forth the results of operations for E-LOAN on a
quarterly basis and expressed as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED
                                       -----------------------------------------------------
                                       MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,
                                         1998       1998       1998        1998       1999
                                       --------   --------   ---------   --------   --------
                                                            (UNAUDITED)
<S>                                    <C>        <C>        <C>         <C>        <C>
Revenues.............................  $   527    $ 1,233     $ 2,051    $ 3,021    $  4,802
Operating expenses:
  Operations.........................      779      1,077       2,127      3,643       4,104
  Sales and marketing................      513        874       2,174      2,081       3,657
  Technology.........................      163        371         284        430         481
  General and administrative.........      379        436         711        884       1,423
  Amortization of unearned
     compensation....................       44        211         296        700       6,554
                                       -------    -------     -------    -------    --------
     Total operating expenses........    1,878      2,969       5,592      7,738      16,219
                                       -------    -------     -------    -------    --------
Loss from operations.................   (1,351)    (1,736)     (3,541)    (4,717)    (11,417)
Other income, net....................       20         29          26         98          36
                                       -------    -------     -------    -------    --------
Net loss.............................  $(1,331)   $(1,707)    $(3,515)   $(4,619)   $(11,381)
                                       =======    =======     =======    =======    ========
AS A PERCENTAGE OF REVENUES:
Revenues.............................      100%       100%        100%       100%        100%
Operating expenses:
  Operations.........................      148         87         104        121          85
  Sales and marketing................       97         71         106         69          76
  Technology.........................       31         30          14         14          10
  General and administrative.........       72         35          35         29          30
  Amortization of unearned
     compensation....................        8         17          14         23         136
     Total operating expenses........      356        241         273        256         338
Loss from operations.................     (256)      (141)       (173)      (156)       (238)
Other income, net....................        4          2           1          3           1
Net loss.............................     (253)%     (138)%      (171)%     (153)%      (237)%
                                       =======    =======     =======    =======    ========
</TABLE>

REVENUES

     Revenues increased sequentially each quarter throughout 1998 from $0.5
million to $3.0 million and increased $1.8 million from the fourth quarter to
$4.8 million for the three months ended March 31, 1999. Substantially all of
these increases resulted from growth in the number of loans closed and the
initiation of E-LOAN's loan origination and sale operations in June 1998. E-LOAN
did not significantly change its pricing during 1998 or the first quarter of
1999. E-LOAN expects that the rate of its revenue growth in future periods will
decline from the rates of revenue growth experienced in recent quarters. In
particular, E-LOAN expects that its revenues for the quarter ending June 30,
1999 will be lower than or flat relative to the first quarter of 1999. Recent
increases in interest rates have reduced the number of refinancing applications
received by E-LOAN, which has reduced the number of loans E-LOAN expects to
originate. In addition, a significant increase in the number of purchase loan
applications, which take substantially longer to close relative to refinancing
loan applications, also will contribute to lower loan volumes and, therefore,
lower revenues in the quarter ending June 30, 1999, as compared to the first
quarter of 1999. E-LOAN expects revenues derived from its loan origination and
sale operations to continue to increase as a percentage of its total revenues.

                                       21
<PAGE>   25

OPERATING EXPENSES

     TOTAL OPERATING EXPENSES. Total operating expenses increased sequentially
each quarter throughout 1998 from $1.9 million to $7.7 million and increased
$8.5 million from the fourth quarter of 1998 to $16.2 million for the first
quarter of 1999. The quarterly increases are due to significant increases in
compensation and benefits as a result of increasing headcount, and sales and
marketing increases due to the initiation of a major advertising campaign and
third party distribution agreements.

     OPERATIONS. Operations expense is comprised of both fixed and variable
expenses, including salaries, benefits and expenses associated with the
brokering, and the origination and sale of mortgage loans, and interest expense
paid by E-LOAN under the warehouse facilities it uses to fund loans held for
sale. Operations expense increased sequentially from the first quarter to the
fourth quarter of 1998 from $0.8 million to $3.6 million and increased $0.5
million from the fourth quarter of 1998 to $4.1 million for the three months
ended March 31, 1999. Operations expense decreased as a percentage of revenues
from 148% for the first quarter to 121% for the fourth quarter of 1998 and
decreased from 121% for the fourth quarter of 1998 to 85% for the three months
ended March 31, 1999. The increase in absolute dollars was primarily
attributable to an operations headcount increase necessary to support the growth
in E-LOAN's total closed loan volume. In addition, E-LOAN established its loan
origination and sale business in the last two quarters, which resulted in
additional headcount and an increase in interest expense due to an increase in
the number of loans held for sale. The decrease in operations expense as a
percentage of total revenue between the first and second quarter is due to
revenue growth exceeding growth in operations expense with an increase in the
third and fourth quarter from the establishment of the loan origination and sale
business. E-LOAN expects operations expense to increase in absolute dollars over
the next two years and intends to increase operations capacity in anticipation
of an increase in the number of loans funded, particularly purchase loans.
Purchase loan applications take longer to close and require greater interaction
between the borrower, the Realtor and other parties performing services related
to the transaction.

     SALES AND MARKETING. Sales and marketing expense is primarily comprised of
salaries, benefits and other expenses related to advertising, promotion and
distribution partnerships. Sales and marketing expense increased from the first
quarter to the fourth quarter of 1998 from $0.5 million to $2.1 million and
increased $1.6 million from the fourth quarter of 1998 to $3.7 million for the
three months ended March 31, 1999. Sales and marketing expense decreased as a
percentage of revenues from 97% for the first quarter to 69% for the fourth
quarter of 1998 and increased from 69% for the fourth quarter of 1998 to 76% for
the three months ended March 31, 1999. Sales and marketing expense increased in
absolute dollars due to increases in compensation associated with additional
headcount and a substantial increase in expenses for advertising, promotion and
distribution partnerships beginning in the third quarter of 1998 and continuing
through the first quarter of 1999. Sales and marketing expense decreased between
the first and second quarters of 1998 as a percentage of revenues due to revenue
growth exceeding growth in sales and marketing expense, with an increase in the
third quarter of 1998 due to the initiation of a major advertising campaign.
E-LOAN intends to significantly increase absolute dollar spending in sales and
marketing activities over the next two years in an effort to drive origination
volume and increase overall brand awareness.

     TECHNOLOGY. Technology expense includes salary, benefits and consulting
fees related to website development, the introduction of new technologies and
the support of E-LOAN's existing technological infrastructure. Technology
expense increased from the first quarter of 1998 to the fourth quarter of 1998,
from $0.2 million to $0.4 million and increased $0.1 million from the fourth
quarter of 1998 to $0.5 million for the three months ended March 31, 1999.
Technology expense decreased as a percentage of revenues from 31% to 14% from
the first quarter of 1998 to the fourth quarter of 1998 and decreased from 14%
in the fourth quarter of 1998 to 10% for the three months ended March 31, 1999.
Aside from a decrease from the second to third quarters of 1998

                                       22
<PAGE>   26

as a result of higher recruitment costs in the second quarter of 1998,
technology expense increased in absolute dollars sequentially in each quarter
throughout 1998 into 1999. The absolute dollar increases were primarily the
result of the growth in engineering and management information systems personnel
to support the expansion of online operations. Technology expense decreased
sequentially as a percentage of revenues due to revenue growth exceeding growth
in technology expense. E-LOAN intends to significantly increase absolute dollar
spending on technology over the next two years in an effort to further improve
the online mortgage origination process.

     GENERAL AND ADMINISTRATIVE. General and administrative expense is primarily
comprised of salary, benefits, rent and depreciation and amortization. General
and administrative expense increased sequentially from the first quarter to the
fourth quarter of 1998 from $0.4 million to $0.9 million and increased $0.5
million from the fourth quarter of 1998 to $1.4 million for the three months
ended March 31, 1999. General and administrative expense decreased as a
percentage of revenues from 72% in the first quarter of 1998 to 29% in the
fourth quarter of 1998 and increased from 29% in the fourth quarter of 1998 to
30% for the three months ended March 31, 1999. On an absolute dollar basis,
general and administrative expense increased sequentially throughout 1998 and
the three months ended March 31, 1999 primarily as a result of:

     - the addition of general and administrative headcount;

     - increase in professional services fees;

     - increase in rent and building expense resulting from the fourth quarter
       move into a new facility; and

     - growth in depreciation and amortization expense on computer equipment and
       leasehold improvements.

     General and administrative expense increased significantly in the first
quarter of 1999 due to the addition of accounting and finance personnel. General
and administrative expenses are expected to increase in absolute dollars over
the next two years. In particular, E-LOAN expects to record an expense of
approximately $900,000 in the three months ending June 30, 1999 in connection
with its donation of 75,000 shares of common stock to a charitable foundation in
May 1999.

     AMORTIZATION OF UNEARNED COMPENSATION. Amortization of unearned
compensation increased sequentially from $44,000 to $0.7 million from the first
to the fourth quarter of 1998 and increased to $6.6 million for the three months
ended March 31, 1999.

OTHER INCOME, NET

     Other income, net, is comprised of interest income on non-warehouse
facility borrowings. Other income, net, increased sequentially from $20,000 to
$0.1 million from the first to the fourth quarter of 1998 primarily due to an
increase of cash from the sale of equity securities. Other income, net,
decreased to $36,000 in the first quarter of 1999 due to a decrease in the
amount of cash.

                                       23
<PAGE>   27

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1998 AND THREE MONTHS ENDED
MARCH 31, 1998 AND 1999

     The following table sets forth the results of operations for E-LOAN and
these results expressed as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                                           THREE MONTHS
                                                     YEARS ENDED               ENDED
                                                     DECEMBER 31,            MARCH 31,
                                                 --------------------   -------------------
                                                  1997         1998      1998        1999
                                                 -------     --------   -------    --------
                                                                            (UNAUDITED)
<S>                                              <C>         <C>        <C>        <C>
Revenues.......................................  $ 1,043     $  6,832   $   527    $  4,802
Operating expenses:
  Operations...................................    1,319        7,626       779       4,104
  Sales and marketing..........................      470        5,642       513       3,657
  Technology...................................      102        1,248       163         481
  General and administrative...................      524        2,410       379       1,423
  Amortization of unearned compensation........       --        1,251        44       6,554
                                                 -------     --------   -------    --------
     Total operating expenses..................    2,415       18,177     1,878      16,219

Loss from operations...........................   (1,372)     (11,345)   (1,351)    (11,417)
  Other income, net............................       (2)         173        20          36
                                                 -------     --------   -------    --------
Net loss.......................................  $(1,374)    $(11,172)  $(1,331)   $(11,381)
                                                 =======     ========   =======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                            THREE MONTHS
                                                          YEAR ENDED           ENDED
                                                         DECEMBER 31,        MARCH 31,
                                                         -------------     --------------
                                                         1997     1998     1998     1999
                                                         ----     ----     -----    -----
                                                                            (UNAUDITED)
<S>                                                      <C>      <C>      <C>      <C>
AS A PERCENTAGE OF TOTAL REVENUES:

Revenues...............................................   100%     100%     100%     100%
Operating expenses:
  Operations...........................................   126      112      148       85
  Sales and marketing..................................    45       83       97       76
  Technology...........................................    10       18       31       10
  General and administrative...........................    50       35       72       30
  Amortization of unearned compensation................     0       18        8      136
     Total operating expenses..........................   232      266      356      338

Loss from operations...................................  (132)    (166)    (256)    (238)
  Other income, net....................................     0        3        4        1
Net loss...............................................  (132)%   (164)%   (253)%   (237)%
                                                         ====     ====     ====     ====
</TABLE>

REVENUES

     Revenues for the year ended December 31, 1998 increased $5.8 million to
$6.8 million as compared to $1.0 million for the same period in 1997 and from
$0.5 million in the first three months of 1998 to $4.8 million in the first
three months of 1999. This increase resulted primarily from growth in the number
of loans closed and the initiation of E-LOAN's loan origination and sale
operations in June 1998. E-LOAN expects that the rate of its revenue growth in
future periods will decline from the rates of revenue growth experienced in
recent quarters.

                                       24
<PAGE>   28

OPERATING EXPENSES

     TOTAL OPERATING EXPENSES. Total operating expenses increased $15.8 million
to $18.2 million for the year ended December 31, 1998 as compared to $2.4
million in 1997. The increase is primarily due to a $6.5 million increase in
compensation and benefits and a $4.8 million increase in sales and marketing
expenses. Total headcount increased from 40 at December 31, 1997 to 224 at
December 31, 1998. The sales and marketing increase is primarily related to the
initiation of a major advertising campaign and increased costs related to third
party distribution agreements. See Note 14 of Notes to Financial Statements.

     Total operating expenses increased $14.3 million to $16.2 million in the
first quarter of 1999 as compared to $1.9 million in the first quarter of 1998.
The increase is primarily due to a $2.9 million increase in compensation and
benefits, a $2.8 million increase in advertising and marketing and a $6.5
million increase in amortization of unearned compensation. See Note 14 of Notes
to Financial Statements.

     OPERATIONS. Operations expense increased $6.3 million to $7.6 million for
the year ended December 31, 1998 as compared to $1.3 million in 1997 and
decreased as a percentage of revenues from 126% to 112% for the same period. The
absolute dollar increase was attributable to an operations headcount increase to
187 as of December 31, 1998 from 27 as of December 31, 1997. This increase was
primarily necessary to support the growth in E-LOAN's origination volume and to
establish its loan origination and sale operations. The decrease as a percentage
of revenues was primarily due to revenues growing much faster than operations
expense.

     Operations expense increased $3.3 million to $4.1 million in the first
three months of 1999 as compared to $0.8 million in the first three months of
1998 and decreased as a percentage of revenues from 148% to 85% for the same
period. The absolute dollar increase is primarily due to the increase in
operations headcount, including the addition of a Senior Vice President of
Operations. Operations expense as a percentage of revenues decreased from the
first quarter of 1998 to the first quarter of 1999 due to increased revenues
compared to the growth of expenses as well as efficiencies obtained from the
implementation of new policies and procedures.

     SALES AND MARKETING. Sales and marketing expense increased $5.1 million to
$5.6 million for 1998, as compared to $0.5 million for 1997 and increased as a
percentage of revenues from 45% to 83% for the same period. These increases were
primarily attributable to:

     - the initiation of a major advertising campaign in 1998;

     - increased costs related to third party distribution partnership
       agreements; and

     - the addition of sales and marketing personnel.

     Sales and marketing headcount increased to six as of December 31, 1998 from
three as of December 31, 1997.

     Sales and marketing expense increased $3.2 million to $3.7 million in the
first three months of 1999 as compared to $0.5 million in the first three months
of 1998 and decreased as a percentage of revenues from 97% to 76% for the same
period. The absolute dollar increase is primarily due to the increased costs
related to third party distribution partnership agreements as well as the
continued increase in advertising expenditures. Sales and marketing expense
decreased as a percentage of revenues, from the first quarter of 1998 to the
first quarter of 1999 due to a more rapid increase in revenue growth compared to
the increase in expenses.

     TECHNOLOGY. Technology expense increased $1.1 million to $1.2 million for
1998, as compared to $0.1 million for 1997 and increased as a percentage of
revenues from 10% to 18% for the same period. These increases were primarily the
result of the growth in engineering and management information systems personnel
to 14 as of December 31, 1998 from two as of December 31, 1997 to support the
initiation of online operations in June 1997.

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<PAGE>   29

     Technology expense increased to $0.5 million in the first three months of
1999 as compared to $0.2 million in the first three months of 1998 and decreased
as a percentage of revenues from 31% to 10% for the same period. Technology
expenses increased in absolute dollars due to the addition of engineering
headcount. Technology expenses decreased as a percentage of revenue from the
first quarter of 1998 to the first quarter of 1999 due to a more rapid increase
in revenues compared to the increase in expenses.

     GENERAL AND ADMINISTRATIVE. General and administrative expense increased
$1.9 million to $2.4 million for 1998, as compared to $0.5 million for 1997 and
decreased as a percentage of revenues from 50% to 35% for the same period. The
absolute dollar increase is primarily attributable to:

     - the addition of general and administrative headcount;

     - increase in rent and building expense resulting from the move into a new
       facility; and

     - growth in depreciation and amortization expense on computer equipment and
       leasehold improvements.

     General and administrative headcount increased to 15 as of December 31,
1998 from eight as of December 31, 1997. The decrease as a percentage of
revenues was primarily due to revenues growing much faster than general and
administrative expense.

     General and administrative expense increased $1.0 million to $1.4 million
in the first three months of 1999 as compared to $0.4 million in the first three
months of 1998 and decreased as a percentage of revenues from 72% to 30% for the
same period. The absolute dollar increase is primarily due to an increase in
payroll and related expenses, increased facility costs and increased
depreciation associated with the purchase of capital assets. General and
administrative expense decreased as a percentage of revenues from the first
quarter of 1999 to the first quarter of 1999 due to a more rapid increase in
revenues compared to expenses.

     AMORTIZATION OF UNEARNED COMPENSATION. Amortization of unearned
compensation increased from zero to $1.3 million for the year ended December 31,
1998. Amortization of unearned compensation increased from $44,000 to $6.6
million for the three months ended March 31, 1998 compared to the same period in
1999.

OTHER INCOME, NET

     Other income, net, increased from an expense of $2,000 in 1997 to income of
$0.2 million for the year ended December 31, 1998. The increase is attributable
to interest income on cash proceeds from sale of equity partially offset by
interest expense on non-warehouse facility borrowings.

     Other income, net, increased from $20,000 in the first quarter of 1998 to
$36,000 in the first quarter of 1999 due to interest income on cash and cash
equivalents, partially offset by interest expense on non-warehouse facility
borrowings.

INCOME TAXES

     As of December 31, 1998 and March 31, 1999, E-LOAN had approximately $10.5
million and $14.0 million, respectively, of federal and state net operating loss
carryforwards for tax reporting purposes available to offset future taxable
income. E-LOAN's federal net operating loss carryforwards begin to expire in
2011. Certain future changes in share ownership of E-LOAN, as defined in the Tax
Reform Act of 1986, may restrict the utilization of carryforwards. A valuation
allowance has been recorded for the entire deferred tax asset at December 31,
1999 and March 31, 1999 as a result of uncertainties regarding the realization
of the asset due to the lack of E-LOAN's earnings history.

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<PAGE>   30

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, E-LOAN has financed its operations primarily through
private placements of convertible preferred stock and borrowings under warehouse
lines of credit and other credit facilities. As of December 31, 1998 and March
31, 1999, E-LOAN had approximately $9.1 million and $3.6 million in cash and
cash equivalents, respectively.

     E-LOAN's sources of cash flow include cash from the sale of mortgage loans,
borrowings under warehouse lines of credit and other credit facilities,
brokerage fees, interest income, and the sale of equity securities. E-LOAN's
uses of cash include the funding of mortgage 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 used in
operating activities was ($1.2), ($50.4) and ($25.4) million in 1997, 1998 and
the first three months of 1999, respectively. Net cash used in operating
activities was primarily due to an increase in net losses and an increase in
mortgage loans held for sale.

     Net cash used in investing activities was $0.2, $1.6 and $.4 million in
1997, 1998, and the first three months of 1999, respectively. Net cash used in
investing activities during these periods was primarily for the purchase of
furniture and equipment.

     Net cash provided by financing activities was $5.5, $56.9 and $20.2 million
in 1997, 1998 and the first three months of 1999, respectively. Net cash
provided in these periods was primarily from the sale of preferred stock and
borrowings under E-LOAN's warehouse lines of credit and other credit facilities,
partially offset by repayments of warehouse lines of credit.

     At December 31, 1998, E-LOAN had a warehouse line of credit for borrowings
up to approximately $18.8 million, including a temporary overdraft limit of
approximately $3.8 million for interim financing of mortgage loans. The interest
rate charged on borrowings against the warehouse line of credit was 2.0% over
the 30 day commercial paper rate of the lender. Borrowings are collateralized by
the mortgage loans held for sale. On April 23, 1999, the amount of the warehouse
line of credit was increased to $25.0 million and the expiration date was
extended from June 30, 1999 to April 20, 2000.

     At December 31, 1998, E-LOAN had a commitment from a third party to finance
up to $35 million of E-LOAN's mortgage loan inventory. The funds borrowed
pursuant to this commitment are secured by the related mortgage loans and accrue
interest at LIBOR plus 1.25%. This agreement includes various non-financial
negative and affirmative covenants. Either E-LOAN or the lender can terminate
the agreement at any time. At December 31, 1998 and March 31, 1999,
approximately $26.1 million and $17.1 million was outstanding under this
financing commitment, respectively. In May 1999, the amount of the warehouse
line of credit was increased to $100 million committed funds and an additional
$100 million uncommitted funds after the closing of the initial public offering.
The line expires May 20, 2000.

     As of December 31, 1998 and March 31, 1999 the principal source of
liquidity for E-LOAN was $9.1 million and $3.6 million in cash and cash
equivalents and $4.4 million and $9.2 million in unused credit facilities. In
December 1998, E-LOAN entered into two credit facilities for working capital and
equipment financing in the aggregate amount of $5.0 million. The first credit
facility in the amount of $1.5 million has an interest rate of prime plus 0.5%.
This facility expires in one year. The second credit facility is a $3.5 million
term loan with an interest rate of prime plus 0.5%. As of December 31, 1998,
$642,000 was outstanding under these two credit facilities. In January 1999,
E-LOAN entered into a warehouse line of credit agreement for borrowings of up to
$40 million for interim financing of mortgage loans. The interest rate charged
on borrowings

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<PAGE>   31

under the line of credit is equal to 1.85% per annum over the monthly average
LIBOR rate. The line of credit expires in January 2000. At March 31, 1999,
approximately $15 million was outstanding under this line. In March 1999, E-LOAN
entered into an agreement for a revolving line of credit in the amount of $5.0
million with an interest rate based on the prime rate. The line expires at the
earlier of March 2000 or the closing of E-LOAN's initial public offering and is
guaranteed by two of our founding stockholders. There were no amounts
outstanding on this line at March 31, 1999.

     E-LOAN has entered into several marketing service agreements with third
parties. Under these agreements, the third parties display E-LOAN's logo and
loan information on their websites and provide related marketing services.
E-LOAN pays for these services in minimum monthly and quarterly installments
plus, in some cases, a per view charge for each time the information is
displayed. Future minimum payments under these agreements are $5.5 million in
1999, $2.3 million in 2000 and $212,000 in 2001.

     E-LOAN believes that its existing cash and cash equivalents, the net
proceeds from this offering and existing and available credit facilities will be
sufficient to fund its operating activities, capital expenditures and other
obligations for the foreseeable future. However, if during that period or
thereafter E-LOAN is not successful in generating sufficient cash flow from
operations, or in raising additional capital when required in sufficient amounts
and on terms acceptable to E-LOAN, these failures could have a material adverse
affect on E-LOAN'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.

DISCLOSURE ABOUT MARKET RISK

     Interest rate movements significantly impact E-LOAN's volume of closed
loans and represent the primary component of market risk to E-LOAN. 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. In addition, in an increasing interest rate
environment, E-LOAN's mortgage loan brokerage volume is adversely affected.

     E-LOAN originates mortgage loans and manages the market risk related to
these loans by pre-selling them on a best efforts basis to the anticipated
purchaser at the same time that E-LOAN establishes the borrowers' interest
rates. If E-LOAN can process loans within the applicable purchasers' commitment
timeframes E-LOAN has no interest rate risk exposure on the loans. However, if
E-LOAN cannot process the loan within this timeframe and interest rates
increase, E-LOAN may experience a reduced gain or may even incur a loss on the
sale of the loan. See "Risk Factors -- Uncertainty with respect to the time it
takes to close loans can lead to unpredictable revenue and profitability".

     With the exception of pre-selling loans through best-efforts commitments,
E-LOAN currently does not engage in any hedging activities.

     E-LOAN currently does not maintain a trading portfolio. As a result, E-LOAN
is not exposed to market risk as it relates to trading activities. The majority
of E-LOAN's portfolio is held for sale which requires E-LOAN to perform market
valuations of its pipeline, its mortgage portfolio held for sale and related
forward sale commitments in order to properly record the portfolio and the
pipeline at the lower of cost or market. Therefore, E-LOAN monitors the interest
rates of its loan portfolio as compared to prevailing interest rates in the
market.

     Because E-LOAN pre-sells its mortgage loan commitments forward, E-LOAN
believes that a 100 basis point increase or decrease in long-term rates would
not have a significant adverse effect on E-LOAN's earnings from its interest
rate sensitive assets. E-LOAN pays off the

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<PAGE>   32

warehouse lines payable when the loan is sold and consequently would not be
expected to incur significant losses from an increase in interest rates on the
line due to the short timeframe that the line is drawn down. However, since a
high percentage of E-LOAN's closed loan volume is from refinancings, E-LOAN's
future operating results are more sensitive to interest rate movements than a
mortgage lender who has a lower proportion of refinancings.

     In the future, if E-LOAN does not pre-sell the mortgage commitments, its
market risk could change significantly.

RECENT ACCOUNTING PRONOUNCEMENTS

     On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS No. 133). SFAS No. 133 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999 (January
1, 2000 for E-LOAN). SFAS No. 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. E-LOAN is in the
process of evaluating the impact of SFAS No. 133 on its financial statements.

     In October 1998, the Financial Accounting Standards Board issued SFAS No.
134, Accounting for Mortgage-Backed Securities Retained after the Securitization
of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise. SFAS No. 134
amends SFAS No. 65, Accounting for Certain Mortgage Backed Securities, to
require that after an entity that is engaged in mortgage banking activities has
securitized mortgage loans that are held for sale, it must classify the
resulting retained mortgage-backed securities or other retained interests based
on its ability and intent to sell or hold those investments. This statement is
effective for the first fiscal quarter beginning after December 15, 1998, with
earlier application encouraged. At this time, E-LOAN does not anticipate any
impact from the adoption of this standard.

     The American Institute of Certified Public Accountants issued Statement of
Position ("SOP") No. 98-1, "Software for Internal Use," which provides guidance
on accounting for the cost of computer software developed or obtained for
internal use. SOP No. 98-1 is effective for financial statements for fiscal
years beginning after December 15, 1998. SOP No. 98-1 did not have a material
impact on E-LOAN's March 31, 1999 financial statements.

YEAR 2000

     Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Thus, the year 2000 will appear as
"00", which the system might consider to be the year 1900 rather than the year
2000. This could result in system failures, delays or miscalculations. Computer
systems and software that have not been developed or enhanced recently may need
to be upgraded or replaced to comply with Year 2000 requirements.

     We use multiple software systems and products developed by third party
vendors, including systems and products used in operations and finance, and
systems that operate our facilities. We are currently in the process of
requesting compliance certificates from these vendors to certify their Year 2000
readiness. We have received compliance certificates from substantially all of
these vendors.

     Our Year 2000 testing is complete and found to be compliant by an outside
testing agency, Valencia Software Systems. We tested our computer systems,
website and loan processing systems during March and April 1999. Our tests
focused on date boundary crossing problems, in particular from December 31, 1999
through January 2, 2000. All systems operated as expected

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<PAGE>   33

and without incident. Procedures are in place to review all future changes to
ensure that Year 2000 problems are not introduced with system upgrades.

     The Internet operations of many of our customers and suppliers may be
affected by Year 2000 complications. The failure of our customers or suppliers
to ensure that their systems are Year 2000 compliant could have an adverse
effect on our customers and suppliers, resulting in decreased Internet usage or
our inability to obtain necessary data communication and telecommunication
capacity, which in turn could have an adverse effect on our business, results of
operations and financial condition.

     The potential worst case scenario includes:

     - slowdown in online applications due to a general failure of the Internet;

     - corruption of data in our internal information systems;

     - delays in our processing capabilities that depend on third-party systems;

     - financial losses associated with delays in closing loans; and

     - failure of infrastructure services provided by third parties, including
       public utilities and Internet service providers.

     We have not incurred significant costs to date complying with Year 2000
requirements, and we do not believe that we will incur significant costs for
this purpose in the foreseeable future. If we discover any Year 2000 errors or
defects in our internal systems, we could incur substantial costs in making
repairs. The resulting disruption of our operations could seriously damage our
business.

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<PAGE>   34

                                    BUSINESS

     E-LOAN is a leading online provider of mortgages, offering consumers the
ability to obtain the most suitable mortgages from a wide array of lenders at
substantial savings. E-LOAN's easy-to-use website enables borrowers to search
through over 50,000 products provided by over 70 lending sources to find the
most competitively priced loans that match the borrowers' criteria. Borrowers
can analyze and compare loans online as well as receive unbiased loan
recommendations based on their personal criteria and financial characteristics.
E-LOAN offers origination cost savings of over 50% compared to obtaining a
mortgage through traditional mortgage brokers or single source lenders. E-LOAN
provides complete transaction fulfillment and a high level of service through
customer service representatives assigned to each borrower and the proprietary
E-Track loan monitoring service. E-LOAN is the exclusive mortgage provider for
co-branded loan centers that E-LOAN has established with leading websites,
including Yahoo!, E*Trade, DLJdirect, Telebank and CBS MarketWatch. In 1998 and
the first quarter of 1999, E-LOAN was the leader in the online mortgage market
with approximately $1 billion and $490 million in closed loans originated,
respectively, including E-LOAN's estimate of closed loan volume from referrals.

INDUSTRY BACKGROUND

     ELECTRONIC COMMERCE

     The Internet has emerged as a global medium for communication, information
and commerce. International Data Corporation estimates that there were 97
million Internet users worldwide at the end of 1998 and anticipates this number
will grow to approximately 320 million users by the end of 2002. The Internet
possesses a number of unique characteristics that differentiate it from
traditional media and methods of commerce, including:

     - users communicate or access information without geographic or temporal
       limitations;

     - companies can reach and serve a large and global group of customers
       electronically from a central location;

     - companies can provide personalized, low-cost and real-time customer
       interaction;

     - users enjoy greater privacy and face less sales pressure; and

     - users have an enormous diversity of easily accessible content and
       commerce offerings.

     As a result of these unique characteristics and the Internet's growing
adoption rate, businesses have an enormous opportunity to conduct commerce over
the Internet. International Data Corporation estimates that commerce over the
Internet will increase from approximately $32 billion worldwide in 1998 to
approximately $130 billion worldwide in 2000. While many companies initially
focused on facilitating and conducting transactions between businesses over the
Internet, more recently there has been a proliferation of companies focused on a
wide variety of consumer transactions. These companies have typically offered
products and services that do not necessarily require the customer's physical
presence to purchase, including books, CDs, videocassettes, automobiles,
mortgages, airline tickets and online banking and stock trading. The Internet
gives these companies the opportunity to develop one-to-one relationships with
customers worldwide without having to make the significant investments to build
and manage a local market presence or develop the printing and mailing
capabilities associated with traditional direct marketing activities.

     TRADITIONAL UNITED STATES MORTGAGE MARKET

     The Mortgage Bankers Association estimates the United States mortgage
market to total over $4.3 trillion in terms of loans outstanding and projects
mortgage originations of new mortgage loans to be $1.2 trillion in 1999.

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<PAGE>   35

     The mortgage industry is divided broadly into four major segments today:

     - mortgage origination -- sourcing, verification and documentation of
       mortgage loans, typically done by mortgage brokers and single-source
       lenders;

     - mortgage funding -- underwriting, funding and selling closed loans to
       mortgage loan purchasers;

     - securitization -- aggregating loans for sale into the secondary market;
       and

     - servicing -- ongoing billing, collection and foreclosure/collateral
       management.

     Over the past two decades, the mortgage industry has evolved dramatically.
Until the late 1970s, retail banks and savings and loan institutions originated
loans through their branches, underwrote and closed loans internally, funded
loans from their own customer deposits and then serviced the loans themselves.
This internal chain of production was broken by the emergence of the pure
mortgage bank that could buy mortgages from mortgage brokers and sell to
government sponsored mortgage investors, most significantly Fannie Mae and
Freddie Mac, and the development of a large, liquid secondary funding and
trading market for mortgage debt. This efficient new market for mortgage funding
made it viable for the first time to uncouple from the large retail banks both
the front-end functions of mortgage origination and mortgage funding and the
back-end function of servicing.

     A significant transformation of the mortgage origination, banking and
servicing businesses into specialized functions conducted primarily by
independent companies has also occurred during the last two decades. This
transformation has created both a large, concentrated and efficient secondary
mortgage market and a large, fragmented and inefficient mortgage origination and
banking market. There are approximately 20,000 mortgage brokerage operations in
the United States, according to the National Association of Mortgage Brokers.
However, there is no multi-lender originator that operates nationally and enjoys
a widely recognized consumer brand. In 1997, no mortgage originator had over 7%
market share. While increased competition at all levels of the industry has
resulted in tremendous innovation in the mortgage choices available to
consumers, the level of complexity associated with these loans has also
increased. In addition, the underwriting and lending processes remain paper and
time-intensive, with little visibility into the process for consumers. As a
result, we believe that the traditional mortgage lending process causes many
consumers to feel:

     - uncertain that their single source lenders and brokers are providing
       unbiased advice and recommending the most suitable mortgage products;

     - skeptical that rates initially quoted will ultimately be available;

     - intimidated by the number and variety of mortgage products available;

     - pressured to commit to a particular product before they have researched
       and compared products to their satisfaction;

     - frustrated with the amount and types of fees they are required to pay;
       and

     - overwhelmed by the substantial time and effort that it takes to get a
       mortgage loan.

     Many borrowers receive little ongoing assistance in managing their debt
after the loan is closed. Many direct lenders who also engage in mortgage
servicing are not committed to proactive monitoring of their customers' loans
because they risk losing servicing fees if customers refinance with other
lenders. Multi-lender brokers have the incentive to pursue refinancing
opportunities, but typically lack the technological capability to proactively
monitor for large customer bases the market changes of thousands of loan
products in real time.

     MARKET OPPORTUNITY FOR ONLINE MORTGAGE ORIGINATION

     According to Forrester Research, the market for online mortgage
originations is expected to grow from an estimated $18.7 billion in 1999 to over
$91.2 billion in 2003, representing an

                                       32
<PAGE>   36

increase in online penetration of the existing market from 1.5% in 1999 to 9.6%
in 2003. Mortgage origination is well suited to an Internet-based distribution
model for a number of reasons, including:

     - mortgages are information products that need no physical delivery or
       warehousing;

     - complex mortgage products can be made more understandable through the use
       of graphical and dynamic real-time presentations, including explanation
       of terminology and ready access to detailed supporting information;

     - borrower data can be efficiently captured through a website, allowing
       real time automated underwriting and streamlined overall processing; and

     - costly local offices or brokers and the expensive fee structure
       associated with the traditional distribution model are not required.

     Many companies have attempted to address this significant market
opportunity. Existing mortgage banks have created websites to sell their loans
directly online as an alternative front end to the traditional process. These
sources, however, do not offer the consumer a multi-lender selection or
comparison of products and may be reluctant to reduce fees due to the risk of
cannibalizing their traditional distribution channels.

     A number of websites have been created that act as multi-lender
distribution channels for mortgage banks. While many of these referral sites
offer a selection of lenders, they do not offer complete transaction fulfillment
for the consumer and, therefore, do not control the entire mortgage process.
Because these websites do not eliminate the services of commissioned loan
agents, they are unable to substantially reduce the cost to the consumer of
securing a mortgage.

     As a result of the shortcomings inherent in these and other online
approaches to mortgage origination, we believe there exists a significant market
opportunity for a centralized, globally accessible and easy-to-use online
service with a broad selection of lenders, a compelling value proposition based
upon saving borrowers money, time and effort, and an open, integrated service
that provides complete transaction fulfillment.

THE E-LOAN SOLUTION

     E-LOAN is a leading online provider of mortgages offering consumers the
ability to obtain the most suitable mortgage from a wide array of lenders at
substantial savings. Utilizing E-LOAN's website, borrowers can efficiently
search, analyze and compare mortgage products offered by multiple lenders and
apply for, qualify for and obtain the mortgage product that is most compatible
with their individual financial characteristics and borrowing requirements.
E-LOAN also enables borrowers to track online the status of their mortgage
applications from submission through closing and to monitor their mortgages on
an ongoing basis after closing. E-LOAN recognizes the importance to borrowers of
selecting the right mortgage product and performing ongoing debt management
given that mortgages typically represent the single largest debt component of an
individual's financial portfolio. To assist borrowers in this regard, E-LOAN
provides unbiased recommendations as well as an array of online analytical and
product comparison tools. E-LOAN also provides a high level of customer service
designed to make the mortgage process significantly more streamlined,
transparent to the borrower and efficient. In 1998 and the first quarter of
1999, E-LOAN was the leader in the online mortgage market with approximately $1
billion and $490 million in closed loans originated, respectively, including
E-LOAN's estimate of closed loan volume from referrals.

     The E-LOAN solution provides the following key advantages to its customers:

     LARGE SELECTION OF MORTGAGE PRODUCTS. E-LOAN offers mortgages from over 70
lending sources, including nationally-recognized institutions. Each customer
inquiry triggers a proprietary rate search algorithm that sorts through over
50,000 products updated in real time. The result,

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<PAGE>   37

delivered in seconds, is a set of the most competitively priced loans that best
match the customer's criteria. E-LOAN believes this large selection of lenders
and loans available in a single destination saves borrowers time and effort in
searching for and obtaining the most suitable mortgage.

     SIGNIFICANT CUSTOMER SAVINGS. E-LOAN offers savings of over 50% on the
origination costs of obtaining mortgages from traditional mortgage brokers or
single source lenders. These savings are possible because of the elimination of
the commissioned loan agent, who typically charges an origination fee of 1.25%
to 1.5% of the loan. E-LOAN's origination fee, by contrast, is 0.625% of the
loan, or just half of the lower end of the typical commission range. Because the
origination fee is the single largest nonrecurring fee, accounting for
approximately 40% of the total nonrecurring loan fees, a reduction of 50% or
more in that fee provides substantial customer savings in the overall
transaction. Other nonrecurring loan expenses include underwriting, appraisal,
insurance and closing fees.

     UNBIASED LOAN RECOMMENDATIONS. E-LOAN provides the borrower with unbiased
recommendations regarding available loan products. E-LOAN formulates its
recommendations by using powerful, comparative and analytical tools designed to
assist the borrower in determining the most suitable mortgage. These
recommendations are based solely upon borrower-provided information and
criteria. This approach differs substantially from that of traditional brokers,
who often recommend and promote mortgage products based on associated
commissions, which can vary by lender. By contrast, E-LOAN charges the same
brokerage fee regardless of whether the loans are funded internally or through
other lenders.

     EASY-TO-USE SERVICE WITH VALUE-ADDED FEATURES. E-LOAN's website enables
borrowers to easily and efficiently search, analyze and compare mortgage
products offered by multiple lenders in complete privacy, on their own time and
free from the sales pressures typically experienced offline. Prospective
borrowers can also determine online which mortgage products they qualify for
based on their individual financial characteristics and borrowing requirements
and ultimately apply for and obtain the selected mortgage product. E-LOAN offers
a number of value-added features designed to further promote a more open and
borrower-oriented loan process. For example, E-LOAN's unique E-Track service
enables borrowers to monitor the status of their loans at every stage of the
lending process in real time, removing much of the uncertainty and inconvenience
that has tended to reduce borrowers' comfort in obtaining a loan.

     HIGH LEVEL OF CUSTOMER SERVICE. E-LOAN is committed to providing a high
level of customer service, as evidenced by referrals received from satisfied
customers. Because customer service is a strategic priority, E-LOAN bases the
compensation of its loan production personnel in part on their contribution to
improving customer satisfaction. E-LOAN implements its customer service
objectives by:

     - providing consumer resources through its information rich website, which
       includes a comprehensive guide to every aspect of the mortgage process;

     - working with the customer throughout the entire transaction process, in
       contrast to many online websites which refer customers to third party
       lenders;

     - assigning a personal customer service representative to each borrower to
       serve as a single point of contact and support throughout the entire loan
       process;

     - providing borrowers with a real time window into every stage of the
       lending process through its proprietary E-Track service; and

     - maintaining a call center to respond promptly to phone and e-mail
       inquiries.

     ONGOING MORTGAGE MONITORING. E-LOAN enables customers to optimize refinance
decisions by continuously comparing their existing loan to new products
available in the market and alerting them to opportunities to save money over
the life of their loan. E-LOAN's monitoring algorithm takes into account the
borrower's investment objectives, prospective hold period, risk

                                       34
<PAGE>   38

profile and marginal tax rate. E-LOAN's monitoring capability promotes long-term
relationships with its customers.

THE E-LOAN STRATEGY

     The E-LOAN strategy is to be the leading Internet-based provider of
mortgages and debt management services for consumers worldwide. Key elements of
the E-LOAN strategy include:

     GROW CORE CONSUMER MORTGAGE BUSINESS. E-LOAN intends to become a leading
originator of single family mortgage loans, capturing market share from
traditional funding sources by delivering to its customers significant cost
savings, unparalleled product choice and unbiased advice and assistance. E-LOAN
believes that its Internet-based business model will continue to reduce the
costs and inefficiencies in mortgage origination and increase the productivity
of its mortgage operation through reduced brokerage commissions and ongoing
process improvements. In addition, E-LOAN's ability to control the entire loan
fulfillment process will provide a more efficient and consistent customer
experience. Over time, E-LOAN expects to enhance its product offerings,
capitalizing on its customer base, brand name and fulfillment capabilities by
expanding into additional activities customers may need as part of their ongoing
debt management efforts. As part of an alliance with Stater BV, E-LOAN has
established an online mortgage origination subsidiary to serve the European
market. Additionally, under a joint venture agreement with Softbank Corp.,
E-LOAN holds a minority interest in E-LOAN Japan, a Japanese corporation that
will develop, market and provide an online mortgage marketplace to serve
consumers in Japan and the Republic of Korea. E-LOAN intends to continue to
expand into other key international markets in the future.

     EXPAND MULTI-SOURCE LENDING CAPABILITIES. E-LOAN believes that its ability
to satisfy customers' specific borrowing requirements by offering the most
comprehensive selection of mortgages available nationwide is one of its greatest
competitive advantages. Accordingly, E-LOAN intends to continue to broaden the
number and variety of its mortgage products and lending sources.

     USE TECHNOLOGY TO BRING BORROWERS AND CAPITAL MARKETS CLOSER
TOGETHER. E-LOAN intends to continue to streamline and automate mortgage
origination and underwriting processes in order to enable borrowers to more
directly benefit from the cost, speed and convenience of highly efficient
secondary mortgage markets. By continually incorporating and upgrading automated
underwriting techniques and technologies into our service, E-LOAN will increase
its ability to match borrowers with lenders earlier in the process, resulting in
reduced documentation requirements, faster approval and lower pricing. E-LOAN
believes these techniques and technologies will enable it to provide the most
cost-effective and tailored mortgage solutions for its customers.

     ENHANCE BRAND AWARENESS AND CUSTOMER LOYALTY. E-LOAN intends to become the
first national multi-source lender with a widely recognized consumer brand name.
E-LOAN uses both traditional and online marketing strategies to maximize
customer awareness and enhance brand recognition. Through its advertising and
promotional activities, E-LOAN targets prospective homebuyers, homeowners and
Realtors interested in efficient, easy and economical mortgage origination.
Traditional advertising efforts include a mix of radio, television, outdoor and
print campaigns aimed at building brand awareness nationwide. E-LOAN also
partners with many leading financial services-related online companies,
including Yahoo!, E*Trade, DLJdirect, Telebank and CBS MarketWatch. Online
partnering arrangements include placing a mortgage center on partners' websites,
placing links and banner advertisements on those sites and establishing mortgage
monitoring services for those partners' customers. In addition, E-LOAN will
continue to focus on promoting customer loyalty and maximizing the lifetime
value of its customer relationships through the implementation of superior
personalization features and the continuous enhancement of its customer service
offerings. E-LOAN also intends to extend its

                                       35
<PAGE>   39

traditional and online marketing strategies to international markets to develop
brand recognition abroad as it expands into foreign markets.

     HELP CONSUMERS MONITOR AND MANAGE THEIR DEBT. By assisting consumers in
monitoring and managing their mortgages, E-LOAN intends to transform what have
traditionally been single origination transactions into long-term, mutually
beneficial relationships. Since mortgages typically comprise the single largest
consumer liability, E-LOAN has a unique opportunity to build valuable ongoing
relationships with its customers. E-LOAN's services include continuous loan
monitoring that provide customers with unbiased assistance in refinancing
decisions and promotes long-term customer relationships. Recognizing that
mortgage and mortgage-related financing represent the lowest cost, most tax
efficient capital for consumers, E-LOAN intends to further develop its services
and product offerings to assist customers in managing their overall debt
portfolio, with the objective of maintaining the lowest overall cost of debt.

PRODUCTS AND SERVICES

     E-LOAN is an online service that offers first mortgages to homebuyers and
homeowners seeking to refinance, along with second mortgages and home equity
lines of credit. E-LOAN handles all aspects of loan origination, including
quoting rates, collecting and verifying borrower data, locking the rate,
pre-underwriting the loan package, communicating with the lender and arranging
for appraisal and settlement services for the borrower. In addition, E-LOAN can
provide complete transaction fulfillment, including underwriting, funding and
packaging loans for sale to the secondary markets. Through its easy to use
website, E-LOAN offers:

     LOAN PRODUCTS. E-LOAN has relationships with over 70 lending sources who
are eligible to quote product rates on E-LOAN's website. E-LOAN's website
currently offers a wide array of loan products, including 30-year and 15-year
fixed rate loans, a variety of adjustable rate mortgages (ARMs),
fixed/adjustable products, products with balloon payments, second mortgages and
home equity lines of credit.

     RATE SEARCH. E-LOAN's database contains rates for over 50,000 loan products
at any given time and is updated multiple times daily. Prospective borrowers can
quickly obtain customized rate quotes for multiple loan types and amounts in a
single search by completing a brief questionnaire. E-LOAN's search function
features an algorithm that identifies the most competitive products available
based on individual borrower information and the total costs of the various
products, including applicable interest rates, points and fees. Borrowers can
click on a link to see even more loans of those types if they so choose.

     LOAN COMPARISON. Borrowers can compare loans returned from a rate search. A
basic comparison shows how any two loans differ on rate, points, prepayment
penalties, interest rate costs over time, and, for ARMs, life cap, index type,
margin and periodic adjustments. An advanced comparison allows borrowers to
forecast how the loans would perform based on various interest rate scenarios
and taking into account debt objectives, hold periods, return on other
investments and marginal tax rates.

     LOAN RECOMMENDATIONS. To help borrowers find the most suitable loan among
the broad array of available products, E-LOAN provides a recommendation feature.
This feature consists of a brief questionnaire that enables borrowers to
describe their investment objectives and prospective hold period, select an
interest rate scenario and indicate the loan amount sought. E-LOAN's proprietary
algorithm uses this information to deliver a set of suitable loan products.
Borrowers can then adjust various parameters, such as the hold period or
interest-rate scenario, to see how that recommendation might change.

     E-TRACK. E-LOAN has developed a proprietary online tracking system,
E-Track, in order to make the mortgage process more open and convenient for
consumers. E-Track allows borrowers to track the progress of their loan
application as well as the amount of anticipated closing costs

                                       36
<PAGE>   40

from preliminary estimate to final settlement. E-LOAN establishes an E-Track
account for each borrower at the time an application is completed online. Each
E-Track account is personalized and password-protected, and contains:

     - a timeline of the loan application and approval process;

     - an updated list of estimated closing costs, including explanations of all
       disclosure terms;

     - a product details page explaining all of the terms of the loan;

     - a list of the documents required by the lender in order to approve the
       application;

     - an area where a borrower can request an interest rate commitment online;

     - contact information, status and results of appraisal; and

     - contact information for designated customer service representatives.

     All of these items are updated in real time as the loan application is
processed, thereby enabling borrowers to keep close track of their progress
anytime.

     RATE WATCH. The Rate Watch service allows prospective borrowers to input a
target interest rate for the desired loan type. E-LOAN searches its database of
over 50,000 loan products on a daily basis to determine if a product has become
available that meets the borrower's criteria. If a suitable product is found,
the borrower receives an e-mail alert inviting them to visit E-LOAN's website
and apply for the loan.

     MORTGAGE MONITOR. The Mortgage Monitor service allows the prospective
borrower to input the terms for an existing mortgage and immediately compare
that loan to all other suitable products available through E-LOAN. In addition,
the prospective borrower can choose to receive an e-mail alert whenever a
product becomes available that can beat that rate. All E-LOAN customers are
automatically enrolled in the Mortgage Monitor service once their loan closes.

     PRE-QUALIFICATION/PRE-APPROVAL SERVICES. E-LOAN assists prospective
borrowers in making their home buying decisions by enabling them to determine
the exact amount of the loan they are qualified to obtain through its online
pre-qualification and pre-approval services.

     INFORMATION FOR BORROWERS. E-LOAN's website hosts a rich array of
information on the home buying and refinancing processes, including articles
about how to evaluate loan products, maximizing your home buying power, timing a
refinance and a glossary of mortgage terms. Detailed explanations of the overall
process of obtaining a loan is also available.

     REALTOR INFORMATION AND SERVICES. Realtors can use the E-LOAN website to
help their clients calculate the loan amount they can afford, generate a
pre-qualification letter or obtain a pre-approval before selecting a property,
search for rates and educate them on the mortgage process and terms. In
addition, E-LOAN's website offers Realtors a free service allowing them to
generate custom flyers to advertise their listings.

     INTERNATIONAL MORTGAGES. Under E-LOAN's alliance with Stater BV, E-LOAN and
Stater BV will cooperate to support E-LOAN's online mortgage origination
subsidiary in establishing and operating a service that offers residential
mortgage loans through the Internet directly to consumers in the European Union,
other than the United Kingdom. The initial term of the alliance is five years.
E-LOAN expects to begin launching European services in the third quarter of
1999.

     In addition, under a joint venture agreement with Softbank Corp., E-LOAN
holds a minority interest in E-LOAN Japan, a Japanese corporation that will
develop, market and provide an online mortgage marketplace to serve consumers in
Japan and the Republic of Korea. E-LOAN intends to continue to expand into other
key international markets in the future.

MORTGAGE OPERATIONS

     E-LOAN is engaged in the mortgage loan origination business as a
multi-source lender. E-LOAN originates, underwrites, funds and sells mortgage
loans. Originations are funded either through lending partners or through
E-LOAN's own warehouse lines of credit. E-LOAN's loan

                                       37
<PAGE>   41

originations are principally prime credit quality first-lien mortgage loans
secured by single family residences. E-LOAN also offers second mortgages and
home equity lines of credit in many states. All loans are underwritten pursuant
to standards established by E-LOAN and conform to the underwriting standards of
the ultimate purchasers of the loans.

     Principal sources of income are loan origination fees, gains from the sale
of loans, if any, and interest earned on mortgage loans during the period that
they are held pending sale, net of interest paid on borrowed funds. Since
E-LOAN's policy is to sell all loans that it originates, E-LOAN does not perform
loan servicing functions and therefore does not generate ongoing servicing
revenues that are customarily earned by traditional mortgage lenders.

     In 34 states and the District of Columbia, E-LOAN is licensed as a mortgage
broker and/or mortgage banker, or is exempt from licensing requirements, and can
fund all of the loans that it originates. E-LOAN licenses its mortgage loan
origination systems and proprietary marks to NetB@nk to enable NetB@nk to fund
mortgage loans under the E-LOAN brand in eleven of the remaining 16 states, and
has agreements with PHH Mortgage Services Corporation and Prism Mortgage Company
relating to the fulfillment of all aspects of loan transaction processing
following origination in the other five remaining states.

     OBTAINING AN E-LOAN LOAN. The loan origination process begins when the
customer completes a loan application online through the E-LOAN website. Once
the application is submitted, E-LOAN initiates a series of steps to efficiently
underwrite and process the loan while providing a consistent level of customer
service. Within two days of submitting an application, customers receive a
welcome package from E-LOAN in the mail which is designed to further brand the
E-LOAN experience and contains the necessary disclosure documents mandated by
governmental authorities.

     An E-Track account is created at the time a loan application is received
and serves as the customer's primary communication system with E-LOAN throughout
the loan process. Customers are invited to visit their E-Track account
frequently to review key steps in the loan process, receive updated information
regarding their loan product, closing costs, and interest rate lock, and view
the progress of their loan approval.

     Although the E-Track account is available 24 hours a day, seven days a
week, E-LOAN believes that a more personalized touch from a customer service
perspective is necessary to truly brand the E-LOAN experience and build customer
loyalty. Therefore, assigned customer service representatives maintain telephone
contact with borrowers throughout the loan process to communicate major events
and answer questions. Customer service contact begins once the online
application has been received, continues through approval and funding, and is
available until loan monitoring account preferences have been established.

     Loan packages are pre-underwritten upon E-LOAN's receipt of completed
paperwork along with a nominal check to cover the cost of obtaining credit
reports and utilizing automated underwriting systems, if applicable. All
conforming loans are underwritten utilizing an automated system such as Fannie
Mae's Desktop Underwriter (DU). Loans that do not immediately qualify for
automated underwriting are underwritten using standard manual processes.

     As additional loan documentation is received, data provided by the customer
at the time of initial origination is validated. Appraisals, credit reports, and
title and survey documents are ordered and reviewed by the designated
underwriting teams.

     Once the underwriting process is completed, customers are invited to
request interest rate commitments for their selected loan through their E-Track
accounts. E-LOAN then confirms that this request can be obtained from mortgage
loan purchasers or lending sources. Once the requested rate has been confirmed,
customers are notified and provided with all relevant product and execution
conditions.

     Final loan approval is secured once all critical data elements have been
validated and have been confirmed to satisfy the guidelines of the lending
program sought by the borrower. If a

                                       38
<PAGE>   42

borrower's loan does not satisfy lender guidelines, the designated service team
will research additional lenders for the customer. For more complex situations,
customers will be referred to an E-LOAN loan specialist for special assistance.
If a product cannot be secured for the customer, the customer will receive a
denial letter stating the reasons that a loan could not be obtained.

     After loans have been approved and all relevant conditions have been met,
E-LOAN will either prepare or request preparation of loan documents to be signed
by the borrower. The assigned customer service representative will work with the
borrower to obtain the necessary signatures for funding and schedule the closing
of the loan. Once the borrower has signed all documentation, the loan file is
reviewed to identify any missing requirements. The loan is then funded and
recorded as closed.

     A quality control review of E-LOAN sourced and funded loans is performed
prior to forwarding the loan documentation to the final mortgage loan purchaser
or its designated custodian. An accounting audit is also performed to reconcile
settlement information provided by escrow/attorney settlement agents with
E-LOAN's internal information. Loan documentation relating to closed loans is
then shipped to the mortgage loan purchaser or its designated custodian, and
documentation is maintained to satisfy regulatory and company record retention
requirements.

     E-LOAN then establishes ongoing loan monitoring accounts for all closed
loans to ensure that its customers remain in the most suitable loan products
based on their specified personal financial requirements. E-LOAN also solicits
customer feedback regarding the loan process to measure overall E-LOAN customer
loyalty and to utilize in developing future product and service enhancements
that are responsive to customer concerns.

     LOAN PRODUCTION. E-LOAN originates conventional mortgage loans (conforming
and jumbo loans) and home equity lines of credit, a high percentage of which
were refinancings of existing mortgages in 1998. A majority of the conventional
loans originated are conforming loans, which are eligible for sale in programs
sponsored by Fannie Mae or Freddie Mac. While E-LOAN does not currently sell
directly to Fannie Mae or Freddie Mac, the conforming loans E-LOAN originates
are ultimately eligible for sale in the secondary markets supported by these
organizations.

     The remainder of the conventional loans are non-conforming loans. These
include loans with an original balance in excess of $240,000 that otherwise meet
all other Fannie Mae or Freddie Mac guidelines (jumbo loans), and other loans
that do not meet those guidelines. As part of E-LOAN's multi-source lending
activities, E-LOAN originates loans with original balances of up to $2 million.

     E-LOAN offers the following categories of loan products:

     - long term adjustable rate mortgages;

     - intermediate term adjustable rate mortgages;

     - fixed rate mortgages;

     - balloons;

     - home equity lines of credit; and

     - no cost loans.

                                       39
<PAGE>   43

     Based on the best information available to E-LOAN, the following table sets
forth the number and dollar amount of the various types of loan products sold to
customers for the periods indicated.

                    TOTAL NUMBER OF CLOSED LOANS BY PRODUCT
<TABLE>
<CAPTION>
                                                                       1998
                       -----------------------------------------------------------------------------------------------------
                                    Q1                             Q2                             Q3                   Q4
                       ----------------------------   ----------------------------   ----------------------------   --------
                                    LOAN      % OF                 LOAN      % OF                 LOAN      % OF
                                   DOLLAR    TOTAL                DOLLAR    TOTAL                DOLLAR    TOTAL
                        NUMBER     VOLUME    DOLLAR    NUMBER     VOLUME    DOLLAR    NUMBER     VOLUME    DOLLAR    NUMBER
    TYPE OF LOAN       OF LOANS   ($ MILL)   VOLUME   OF LOANS   ($ MILL)   VOLUME   OF LOANS   ($ MILL)   VOLUME   OF LOANS
    ------------       --------   --------   ------   --------   --------   ------   --------   --------   ------   --------
<S>                    <C>        <C>        <C>      <C>        <C>        <C>      <C>        <C>        <C>      <C>
30 Year Fixed........     233      $ 53.4      51%       447      $ 93.7      54%       704      $153.0      70%     1,033
15 Year Fixed........     143      $ 29.1      28%       201      $ 41.8      24%       238      $ 47.1      21%       391
30 Year ARM..........      71      $ 22.4      21%       126      $ 36.2      21%        56      $ 17.1       8%       199
Other Products.......       0      $  0.0       0%         5      $  0.4       0%         6      $  1.9       1%        12
                        -----      ------     ---      -----      ------     ---      -----      ------     ---      -----
   Total.............     447      $104.9     100%       779      $172.1     100%     1,004      $219.1     100%     1,635

<CAPTION>
                             1998                      1999
                       -----------------   ----------------------------
                              Q4                        Q1
                       -----------------   ----------------------------
                         LOAN      % OF                 LOAN      % OF
                        DOLLAR    TOTAL                DOLLAR    TOTAL
                        VOLUME    DOLLAR    NUMBER     VOLUME    DOLLAR
    TYPE OF LOAN       ($ MILL)   VOLUME   OF LOANS   ($ MILL)   VOLUME
    ------------       --------   ------   --------   --------   ------
<S>                    <C>        <C>      <C>        <C>        <C>
30 Year Fixed........   $188.3      56%     1,280      $254.5      54%
15 Year Fixed........   $ 77.9      23%       806      $130.7      28%
30 Year ARM..........   $ 69.9      21%       254      $ 78.3      17%
Other Products.......   $  2.9       1%        31      $  6.3       1%
                        ------     ---      -----      ------     ---
   Total.............   $339.0     100%     2,371      $469.8     100%
</TABLE>

     AUTOMATED UNDERWRITING. Automated underwriting (AU) is expected to
contribute significantly to E-LOAN's goal of increasing the efficiency of
multi-source lending by providing customers faster, more cost-efficient credit
reviews and decisions. AU may further offer efficiency enhancements through
reduced costs in property appraisals. In addition, E-LOAN believes customers
will also value the less onerous and time-consuming nature of AU relative to
more traditional underwriting processes. E-LOAN will continue to seek to enhance
its AU capabilities and incorporate as many techniques and technologies as are
warranted by its business needs and the needs of its major business partners.

     E-LOAN has recently been approved by Fannie Mae to be an originator under
Fannie Mae's Desktop Originator and Desktop Underwriter system (DU). DU is
expected to help automate the lending process for all conforming loans and loans
aimed at low-and moderate-income borrowers. The goal of DU is to reduce the time
and expense of property appraisals. The DU system is expected to enable E-LOAN
to implement a comprehensive, integrated point-of-sale solution providing
expedited loan decisions. E-LOAN is the largest exclusive online originator
approved to use the DU system. E-LOAN also expects to implement additional AU
systems, including Freddie Mac's Loan Prospector and GECMC's Good Decisions.

     LOAN UNDERWRITING. E-LOAN's guidelines for underwriting conventional
conforming loans comply with the underwriting criteria employed by Fannie Mae
and/or Freddie Mac. E-LOAN's underwriting guidelines and property standards for
all other conventional non-conforming loans are based on the underwriting
standards employed by the secondary mortgage loan purchasers.

     E-LOAN considers the following general underwriting criteria in determining
whether to approve a loan application:

     - employment and income;

     - credit history;

     - property value and characteristics;

     - borrower characteristics; and

     - available assets.

                                       40
<PAGE>   44

     GEOGRAPHIC DISTRIBUTION. Based on the best information available to E-LOAN,
the following table sets forth the geographic distribution by state of E-LOAN's
loan originations for the periods indicated.

              DISTRIBUTION BY STATE OF E-LOAN'S LOAN ORIGINATIONS

<TABLE>
<CAPTION>
                                    1998                       FIRST QUARTER 1999
                       -------------------------------   -------------------------------
                        NUMBER OF     PERCENT OF TOTAL    NUMBER OF     PERCENT OF TOTAL
        STATE          CLOSED LOANS     CLOSED LOANS     CLOSED LOANS     CLOSED LOANS
        -----          ------------   ----------------   ------------   ----------------
<S>                    <C>            <C>                <C>            <C>
California...........     3,223              83%            1,636              69%
Washington...........       218               6%              140               6%
Texas................        86               3%               94               4%
Colorado.............        64               2%               61               3%
All Others...........       274               6%              440              18%
                          -----             ---             -----             ---
          Total......     3,865             100%            2,371             100%
</TABLE>

     We are more likely to originate a significant amount of our loans in
California for the foreseeable future because we are located there, we have
advertised more heavily in California than in other states to date, and we
believe that California consumers are more likely to be comfortable with using
the Internet to purchase mortgages. E-LOAN has initiated advertising campaigns
in other major markets outside California in an effort to generate more loan
applications from other states. Based on the best information available to
E-LOAN, the following table sets forth the distribution by county of E-LOAN's
California loan originations for the periods indicated.

        DISTRIBUTION BY COUNTY OF E-LOAN'S CALIFORNIA LOAN ORIGINATIONS

<TABLE>
<CAPTION>
                                    1998                       FIRST QUARTER 1999
                       -------------------------------   -------------------------------
                        NUMBER OF     PERCENT OF TOTAL    NUMBER OF     PERCENT OF TOTAL
       COUNTY          CLOSED LOANS     CLOSED LOANS     CLOSED LOANS     CLOSED LOANS
       ------          ------------   ----------------   ------------   ----------------
<S>                    <C>            <C>                <C>            <C>
Santa Clara..........       783              24%              311              19%
Alameda..............       481              15%              183              11%
San Mateo............       301               9%              122               7%
Contra Costa.........       313              10%              178              11%
Los Angeles..........       270               9%              216              13%
Orange...............       208               6%              130               8%
San Francisco........       122               4%               58               4%
Other................       745              23%              438              27%
                          -----             ---             -----             ---
          Total......     3,223             100%            1,636             100%
</TABLE>

     SALE OF LOANS. E-LOAN sells all loans that it originates, on a loan by loan
basis, along with the loan servicing rights. Substantially all prime credit
quality first mortgage loans sold by E-LOAN are sold without recourse.
Generally, E-LOAN sells its non-conforming conventional loan production to large
buyers in the secondary market.

     E-LOAN minimizes its credit exposure on loans funded through its warehouse
credit facilities by currently selling a majority of these loans within 14 days
of funding. To facilitate the rapid sale of each loan, E-LOAN enters into a
best-efforts commitment with the mortgage loan purchaser at the same time the
customer's interest rate commitment is obtained. E-LOAN sells its loans on a
best efforts basis, as opposed to a mandatory basis, in order to avoid the
potential financial penalties associated with failing to deliver a loan to the
mortgage loan purchaser under a mandatory commitment. With the interest rate
risk limited by the commitments to sell originated loans, E-LOAN does not enter
into any hedging transactions in order to offset the risk that a change in
interest rates will result in a decrease in the value of E-LOAN's current
mortgage loan inventory or its commitments to purchase or originate mortgage
loans.

                                       41
<PAGE>   45

     FINANCING OF INTERNAL MORTGAGE FUNDING OPERATIONS. E-LOAN's principal
financing requirements are associated with its internal loan funding activities.
To satisfy these requirements, E-LOAN currently draws on warehouse credit
facilities it has established with Bank United and GE Capital. E-LOAN has also
secured an additional credit facility with Greenwich Capital. E-LOAN had
committed and uncommitted funds available through its warehouse credit
facilities and its agreement with Greenwich Capital aggregating approximately
$165 million as of May 31, 1999. E-LOAN also has an agreement with Greenwich
Capital to add an additional $100 million in uncommitted funds to finance
E-LOAN's mortgage loan inventory effective upon the closing of this offering. As
of May 31, 1999, the funding sources available to E-LOAN under each of its
current warehouse credit facilities and its agreement with Greenwich Capital are
as follows:

<TABLE>
<S>                                      <C>
Greenwich Capital......................  $100 million
Bank United............................  $ 40 million
GE Capital.............................  $ 25 million
</TABLE>

     If E-LOAN continues to sell a majority of its internally funded mortgage
loans within 14 days, the existing warehouse credit facilities together with an
increase in the Greenwich Capital commitment would enable E-LOAN to internally
fund approximately $330 million in mortgage loans during each 30-day period,
increasing to approximately $530 million upon the closing of this offering.

     Our agreements with GE Capital and Bank United require us to comply with
various operating and financial covenants. These covenants restrict our ability
to:

     - sell any of our material assets or merge or consolidate with another
       company;

     - issue additional shares of common stock without their consent;

     - pay dividends on our outstanding shares of common stock; and

     - amend our Certificate of Incorporation or Bylaws.

     These covenants also require us to:

     - maintain a minimum tangible net worth;

     - limit the amount of debt we incur relative to our net worth; and

     - ensure that our current assets are equal to or greater than our current
       liabilities.

     E-LOAN intends to increase and diversify further its short-term funding
capabilities and continue to identify and pursue alternative and supplementary
methods to finance its operations through the public and private capital
markets.

CUSTOMER SERVICE

     E-LOAN devotes significant resources to providing personalized, timely
customer service and support to minimize the potential uncertainty, anxiety and
inconvenience of the loan process. By combining high-tech communications with
highly personalized attention, E-LOAN believes it provides a level of customer
service superior to that experienced in the traditional loan application
process.

     To help prospective customers understand the mortgage process, E-LOAN's
website provides a rich assortment of information on how to choose the most
suitable mortgage, descriptions of the various types of loan products, articles
about buying and refinancing a home, a glossary of mortgage terms, and answers
to frequently asked questions. Prospective customers may call E-LOAN toll-free
with general questions or click on one of the many "contact us" links throughout
its website to send questions via e-mail. Call center staff respond to both
phone calls and e-mail requests within 24 hours, and are available from 5 AM to
8 PM California

                                       42
<PAGE>   46

time Monday through Saturday. To respond promptly to questions from Realtors,
E-LOAN also maintains a toll-free Realtor hotline staffed during the same hours.

     Once a loan application is submitted online, E-LOAN assigns the customer a
personal customer service representative (CSR). The CSR becomes the customer's
primary point of contact with E-LOAN, ensuring prompt and personalized
attention. The CSR maintains regular e-mail and phone communication with the
borrower to answer questions, address any problems and generally facilitate
closing the loan by coordinating with E-LOAN's underwriting and processing
staff. After closing, E-LOAN asks each borrower to rate the level of customer
service received from the CSR, as well as from appraisal and settlement
personnel. The survey results are factored into the CSR's compensation, ensuring
a strong commitment to continually improving the quality of customer service.

     Every online application also triggers the opening of a password-protected
E-Track account. Using E-Track, customers can track the process of their loan
applications online at any time. Each event that occurs throughout the various
stages of the loan process, for instance the receipt of appraisal details or a
lender's request for documentation from the borrower, generates an automated
e-mail alert to the borrower. The information is also logged in E-Track so the
borrower has a continuously updated record of all loan application developments.
With a customer's permission, Realtors may also access the E-Track account to
keep abreast of the progress of a loan.

TECHNOLOGY

     E-LOAN's technology systems use a combination of its own proprietary
technologies and commercially available, licensed technologies from industry
leading providers, including Sun Microsystems, Cisco Systems and Oracle.
E-LOAN's systems were designed around industry standard architecture to reduce
downtime in the event of outages or catastrophic occurrences. Our systems
provide availability 24 hours a day, seven days a week, and have capacity for a
tenfold increase in activity before requiring additional hardware or support.
The system architecture and user interface were designed by E-LOAN's co-founders
and engineering staff.

     USER INTERFACE. The E-LOAN website is designed for fast downloads and
compatibility with the most basic browsers. Pages are built with minimal
graphics and do not require client-side plug-ins or Java to view.

     RATE SEARCHES AND COMPARISONS. Many of the mortgage services that E-LOAN
offers its customers are facilitated through its proprietary database. The
database features a rate-loading mechanism that enables electronic data feeds
from E-LOAN's lenders to be received and added to the database multiple times
per day. This mechanism provides prospective borrowers searching E-LOAN's
database with timely access to rates as the market changes. The database
currently contains rates and other details for about 50,000 products on an
average day and is designed to support a virtually limitless number of products
or search parameters. The database supports the dynamic comparison of loans
according to rate, term and points, and in the case of adjustable-rate
mortgages, margin, index and life cap. The rate-loading and search capabilities
of our database are the focus of significant development resources and we plan
to continuously improve and enhance these features.

     LOAN APPLICATION AND TRACKING. When a customer applies for a loan online,
the application data is stored in a file server. As additional information,
including credit reports, appraisal details and financial documentation, is
obtained throughout the loan process and added to the borrower's file, e-mails
are automatically sent to the borrower and Realtor to inform them of the current
status of the loan application. At the same time, the borrower's E-Track account
is updated. Each day, E-LOAN sends thousands of automated e-mails and updates
hundreds of E-Track accounts.

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<PAGE>   47

     SECURITY. In order to safeguard borrowers' sensitive financial data,
E-LOAN's systems provide the most secure online transaction capability
available. Customer information sent via the website is encrypted using a Secure
Socket Layer. The server is protected with industry-leading firewall software.
The website itself is locked down, with only two people authorized to change the
content on the production server. E-Track is password-protected so that only the
borrower may access the account. For an extra measure of protection, none of the
borrower's credit or financial information is contained in the E-Track account.
The file server containing borrower data is accessible only to authorized users
within E-LOAN. There is no external access to this internal server via modem,
even by E-LOAN employees.

     PARTNER TEMPLATES. E-LOAN's ability to develop and support mortgage loan
centers in partnership with websites, including Yahoo!, E*Trade and DLJdirect is
critical to driving applications and expanding the E-LOAN brand. E-LOAN has
developed a unique template system that allows for the rapid development and
deployment of mortgage loan centers within several hours of signing a
distribution agreement. In addition, our partners' websites contain customized
data and retain unique appearances. E-LOAN currently maintains over 40 mortgage
loan centers on distribution partners' websites.

     SERVER HOSTING AND BACK-UP. E-LOAN's website system hardware is hosted at
the Exodus facilities in Santa Clara, California and Jersey City, New Jersey,
providing redundant communication lines and emergency power back-up. We have
implemented load balancing systems and our own redundant servers to provide for
fault tolerance. Scheduled maintenance takes place without taking the website
offline.

MARKETING

     E-LOAN's marketing strategy is to attract loan applicants to its website by
promoting the E-LOAN brand as a byword for choice, selection, competitive
pricing and service in the mortgage industry. E-LOAN relies on a variety of
methods to promote its brand. By providing superior customer service, E-LOAN
promotes online referrals from satisfied borrowers. Strategic partnerships with
online financial websites, including Yahoo!, E*Trade, DLJdirect, Telebank and
CBS MarketWatch drive applications through mortgage loan centers on those
websites. Offline marketing campaigns featuring radio, TV, print and outdoor
advertising in key markets and nationwide target the demographic segments with
the highest propensity to utilize an online mortgage provider. E-LOAN also
engages in a number of marketing activities at trade shows and other events in
the real estate industry in order to encourage Realtors to refer homebuyers
directly to our website.

     E-LOAN entered into an agreement with Yahoo!, Inc. in September 1998, which
was extended in March 1999 to run through February 2001. Pursuant to this
agreement, E-LOAN is the exclusive provider of mortgage related information on
the "Yahoo! Loan Center" website.

REGULATION OF MORTGAGE BROKERS AND LENDERS

     The residential mortgage financing industry is highly regulated. E-LOAN's
business must comply with extensive and complex rules and regulations of, and
licensing and examination by, various federal, state and local government
authorities. These rules impose obligations and restrictions on E-LOAN's
residential loan brokering and lending activities. In particular, these rules
limit the broker fees, interest rates, finance charges and other fees E-LOAN may
assess, require extensive disclosure to E-LOAN's customers, prohibit
discrimination and impose multiple qualification and licensing obligations on
E-LOAN. Failure to comply with these requirements may result in, among other
things, revocation of required licenses or registrations, loss of approved
status, voiding of the loan contracts or security interests, indemnification
liability or the obligation to repurchase mortgage loans sold to mortgage loan
purchasers, rescission of mortgage loans,

                                       44
<PAGE>   48

class action lawsuits, administrative enforcement actions and civil and criminal
liability. E-LOAN believes it is in substantial compliance with these rules and
regulations.

     As a mortgage company doing business exclusively through the Internet,
E-LOAN faces an additional level of regulatory risk given the fact that the
statutes and regulations governing mortgage transactions have not been
substantially revised or updated to fully accommodate electronic commerce. Most
of the federal and state laws, rules and regulations governing mortgage loans
contemplate or assume paper-based transactions and do not currently address the
delivery of required disclosures and other documents through electronic
communications. Until the applicable laws, rules and regulations are revised to
clarify their applicability to transactions through e-commerce, any company
offering mortgage loans through the Internet or other means of e-commerce will
face uncertainty as to compliance. In addition, there is no assurance that
revisions to the laws, rules and regulations will be adopted and, if adopted,
will be timely or adequate to eliminate this uncertainty. Nonetheless, E-LOAN
believes that it has taken prudent steps to mitigate these risks in offering its
mortgage loan services through the Internet.

     At the state level, E-LOAN must comply with licensing and regulation in
most of the states where it acts as a mortgage broker or lender. In addition,
any person who acquires 10% or more of E-LOAN's stock may be required to comply
with state licensing regulations requiring the person to periodically file
certain financial information and other personal and business information. If
any person holding 10% or more of E-LOAN's stock refuses or fails to comply with
these filing requirements, E-LOAN's existing licensing arrangements could be
jeopardized. The loss of required licenses could have a material adverse effect
on E-LOAN's results of operations and financial condition.

     State laws limit the broker fees, interest rates, finance charges and other
fees E-LOAN may assess, including late charges, insufficient funds charges for
returned checks and prepayment penalties, and may require payment of interest on
escrow balances. State laws also require extensive disclosure to E-LOAN's
customers concerning fees and charges, brokerage agreements, lock-in agreements
and commitments, alternative mortgage transactions, escrows for taxes and
insurance, choosing settlement attorneys and insurance agents and private
mortgage insurance, among others. These laws regulate both the content and
timing of disclosures. In addition, many state laws regulate advertising claims
in connection with the solicitation of mortgage loan applications. State and
federal laws also prohibit unfair and deceptive trade practices in the mortgage
finance business. E-LOAN believes that it has obtained all licenses material to
our business in the jurisdictions where it conducts business, and is operating
substantially in compliance with the laws of these jurisdictions.

     At the federal level, E-LOAN's mortgage brokering and lending activities
are regulated under a variety of laws, including, but not limited to, the Truth
in Lending Act and Regulation Z (TILA), the Equal Credit Opportunity Act and
Regulation B (ECOA), the Fair Housing Act, the Fair Credit Reporting Act (FCRA),
the Real Estate Settlement Procedures Act and Regulation X (RESPA) and the Home
Mortgage Disclosure Act of 1975 and Regulation C (HMDA). These statutes
generally require detailed disclosure of information concerning mortgage loans,
and they regulate the manner in which loans are made, including advertising,
disclosure of consumer information, servicing (and transfer of servicing) of
mortgage loans, payments for settlement services and reporting of consumer data.
These laws regulate both the content and timing of disclosures. E-LOAN believes
that it is operating substantially in compliance with the laws applicable to
E-LOAN's business.

     Under TILA, lenders are required to provide consumers with uniform,
understandable information concerning certain terms and conditions of their loan
and credit transactions. Disclosures include providing the annual percentage
rate, monthly payment amount and total amount financed, plus certain disclosures
concerning alternative mortgage transactions. In

                                       45
<PAGE>   49

addition, TILA gives borrowers, among other things, the right to rescind loan
transactions if the lender fails to provide the requisite disclosure.

     Under ECOA, creditors are prohibited from discriminating against applicants
on the basis of race, color, sex, age, religion, national origin or marital
status. The regulations under ECOA also restrict creditors from requesting
certain types of information from loan applicants. FCRA requires lenders to
supply applicants with certain information (called an "adverse action notice")
when the lender denies its applicants credit. The Fair Housing Act prohibits
discrimination in mortgage lending on the basis of race, color, religion, sex,
handicap, familial status or national origin. Finally, E-LOAN, when acting as a
mortgage lender, must also file annual reports with HUD pursuant to HMDA, which
requires the collection and reporting of statistical data concerning loan
transactions.

     RESPA requires certain disclosures, including a good faith estimate of
closing costs and fees, as well as mortgage servicing transfer practices. RESPA
also prohibits the payment or receipt of kickbacks or referral fees, fee shares
or splits, or unearned fees in connection with the provision of real estate
settlement services. It is a common practice for online mortgage companies to
enter into advertising, marketing and distribution arrangements with other
Internet companies and websites whereby the mortgage companies pay the Internet
companies fees for advertising, marketing and distribution services and other
goods and facilities based on the number of click-throughs, completed loan
applications or closed loans derived from these arrangements. The applicability
of RESPA's referral fee prohibitions to the compensation provisions of these
arrangements is unclear and the Department of Housing and Urban Development has
provided no guidance to date on the subject. Although E-LOAN believes that it
has structured its relationships with Internet advertisers to ensure compliance
with RESPA, some level of risk is inherent absent amendments to the law or
regulations, or clarification from regulators.

     The laws, rules and regulations applicable to E-LOAN may undergo periodic
modification and change. There are currently proposed various laws, rules and
regulations which, if adopted, could impact E-LOAN. There can be no assurance
that these proposed laws, rules and regulations, or other applicable laws, rules
or regulations, will not be adopted in the future which could make compliance
much more difficult or expensive, restrict E-LOAN's ability to originate,
broker, purchase or sell loans, further limit or restrict the amount of
commissions, interest and other charges earned on loans originated, brokered,
purchased or sold by E-LOAN, or otherwise adversely affect the business or
prospects of E-LOAN.

COMPETITION

     The market for the origination of mortgage loans is rapidly evolving, both
online and through traditional channels, and competition for borrowers is
intense and is expected to increase significantly in the future. E-LOAN faces
competition from companies directly competing by offering mortgage loans or
other home buying services over the Internet. Principal among these competitors
are Microsoft HomeAdvisor, Intuit QuickenMortgage, iOwn.com, Keystroke and
Mortgage.com. Traditional lenders, including Countrywide, Norwest, Wells Fargo
and Bank America, also provide access to their mortgage loan offerings over the
Internet. Increased competition, particularly online competition, could result
in price reductions, reduced margins or loss of market share, any of which could
adversely affect our business. Further, there can be no assurance that E-LOAN's
competitors and potential competitors will not develop services and products
that are equal or superior to those of E-LOAN or that achieve greater market
acceptance than its products and services.

     E-LOAN believes that the primary competitive factors in creating a
financial services resource on the Internet are functionality, brand
recognition, customer loyalty, ease-of-use, quality of service, reliability and
critical mass. Competition is likely to increase significantly as

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<PAGE>   50

new companies enter the market and current competitors expand their services.
Many of these potential competitors are likely to enjoy substantial competitive
advantages, including:

     - longer operating histories;

     - greater name recognition;

     - larger, established customer bases; and

     - substantially greater financial, marketing, technical and other
       resources.

LEGAL PROCEEDINGS

     E-LOAN is not currently a party to any material legal proceedings. E-LOAN
may become a party to various legal proceedings arising in the ordinary course
of its business.

INTELLECTUAL PROPERTY

     Trademarks and other proprietary rights are important to our success and
our competitive position. E-LOAN currently has a number of trademarks and
copyrights; however, it does not hold any patents. Although E-LOAN seeks to
protect its trademarks and other proprietary rights through a variety of means,
E-LOAN may not have taken adequate steps to protect these rights. E-LOAN may
also license content from third parties in the future and it is possible that it
could be subjected to infringement actions based upon the content licensed from
these third parties. Any claims brought against E-LOAN, regardless of their
merit, could result in costly litigation and the diversion of its financial
resources and technical and management personnel. Further, if any claims are
proved valid, through litigation or otherwise, E-LOAN may be required to change
its trademarks and pay financial damages, which could adversely affect its
business.

     E-LOAN typically enters into confidentiality or license agreements with its
employees, consultants and corporate partners, and generally controls access to
and distribution of its technologies, documentation and other proprietary
information. Despite its efforts to protect its proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
E-LOAN's rights. The steps E-LOAN has taken may not prevent misappropriation of
its proprietary rights, particularly in foreign countries where laws or law
enforcement practices may not protect E-LOAN's proprietary rights as fully as in
the United States.

     E-LOAN expects it may be involved in legal proceedings and claims in the
ordinary course of its business, including claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by E-LOAN and
its licensees. Any of these claims, even if without merit, could result in the
expenditure of significant financial and managerial resources. If any of these
claims are successful, E-LOAN may be required to change its trademarks, alter
its content and pay financial damages, which could adversely affect its
business.

     In particular, E-LOAN has received several communications over the last
year from EduCap, Inc, a provider of educational loan services and financing for
computer equipment for use in education. In the latest of these communications,
a letter received in June 1999, EduCap contends that E-LOAN's use of the name
and trademark "E-LOAN" is wrongful, likely to cause consumer confusion and
infringes EduCap's trademark "THE E-LOAN." EduCap has demanded that E-LOAN cease
and desist all use of the trademark and has indicated that it will seek damages
if the parties are unable to reach an amicable solution. E-LOAN denies EduCap's
allegations and if a lawsuit is initiated, intends to defend itself vigorously.
However, litigation involves inherent uncertainties and if a lawsuit is filed
there can be no assurance that E-LOAN will prevail or that an adverse judgment
will not materially affect E-LOAN's business.

EMPLOYEES

     As of March 31, 1999, E-LOAN employed 237 full-time employees, of whom 185
were in operations, 26 were in administration, 12 were in marketing and business
development and 14

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<PAGE>   51

were in engineering. As E-LOAN continues to grow and introduce more products, it
expects to hire more personnel, particularly in the areas of mortgage operations
and marketing. None of E-LOAN's current employees is represented by a labor
union or is the subject of a collective bargaining agreement. E-LOAN believes
that relations with its employees are good.

FACILITIES

     E-LOAN is headquartered in Dublin, California, where it leases
approximately 68,000 square feet of space primarily in a single building. E-LOAN
also occupies approximately 2,000 square feet of space in Palo Alto, California.
The lease for E-LOAN's office space in Dublin expires in October 2003, and the
lease for E-LOAN's office space in Palo Alto is month to month. E-LOAN currently
anticipates that it will require additional space as more personnel are hired.

THE E-LOAN FOUNDATION

     E-LOAN has donated 75,000 shares of its common stock to the Community
Foundation Silicon Valley to fund the E-LOAN Foundation. The Community
Foundation Silicon Valley was founded in 1954, has over $250 million in assets
and makes charitable contributions in excess of $14 million annually. The
Community Foundation Silicon Valley provides charitable giving expertise to
individuals and corporations and has established many funds on behalf of
corporations and other organizations located in Silicon Valley.

     The E-LOAN Foundation was established by E-LOAN to support charitable
causes in the San Francisco Bay Area. E-LOAN's reasons for establishing the
foundation were to improve conditions in the local community and build goodwill
for E-LOAN.

     The E-LOAN Foundation will primarily focus on alleviating homelessness and
improving the quality of life and education for disadvantaged members of the
community. Supported programs will be selected by a grant committee comprised of
E-LOAN employees, with final authorization to be given by our executive officers
Chris Larsen, Janina Pawlowski and Frank Siskowski. The Community Foundation
Silicon Valley will conduct all administration and management of the grants.
Other than some involvement in the nature of the charitable contributions, no
officers or directors of E-LOAN are affiliated with the Community Foundation
Silicon Valley or the E-LOAN Foundation. There are no agreements in place
between E-LOAN and the Community Foundation Silicon Valley with respect to
voting of the shares being donated to the E-LOAN Foundation. The donation of
shares to the Community Foundation Silicon Valley will not have a material
impact on per share value.

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<PAGE>   52

                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth certain information regarding the directors
and executive officers of E-LOAN as of March 31, 1999:

<TABLE>
<CAPTION>
                  NAME                      AGE                    POSITION
                  ----                      ---                    --------
<S>                                         <C>    <C>
Chris Larsen............................    38     Chief Executive Officer and Director
Janina Pawlowski........................    38     President and Director
Frank Siskowski.........................    51     Chief Financial Officer
Harold "Pete" Bonnikson.................    44     Senior Vice President, Operations
William Crane...........................    37     Vice President, Engineering
Doug Galen..............................    37     Vice President, Business Development &
                                                   Sales
Janet Hammond...........................    41     Vice President, Underwriting
Joseph Kennedy..........................    39     Senior Vice President, Marketing and
                                                   Business Development
Steve Majerus...........................    35     Vice President, Secondary Markets
Sara Myers Bisler.......................    39     Vice President, Operations
Sharon Ruwart...........................    36     Vice President, Marketing
Ira M. Ehrenpreis(1)(2).................    30     Director
Robert C. Kagle(1)(2)...................    43     Director
Tim Koogle(1)(2)........................    47     Director
Wade Randlett...........................    34     Director
</TABLE>

- ---------------
(1) Member of Audit Committee

(2) Member of Compensation Committee

     CHRIS LARSEN co-founded E-LOAN in August 1996 and has served as its Chief
Executive Officer since June 1998. From August 1996 to June 1998, Mr. Larsen
served as the President of E-LOAN. Mr. Larsen has been a Director of E-LOAN
since its incorporation in August 1996. From October 1992 to August 1996, Mr.
Larsen was the President of the Palo Alto Funding Group, the mortgage brokerage
he co-founded in 1992 and E-LOAN's predecessor company. Mr. Larsen holds an
M.B.A. degree from Stanford University and a B.S. degree from San Francisco
State University.

     JANINA PAWLOWSKI co-founded E-LOAN in August 1996 and has served as its
President since June 1998. From August 1996 to June 1998, Ms. Pawlowski served
as the Chief Executive Officer of E-LOAN. Ms. Pawlowski has been a Director of
E-LOAN since its incorporation in August 1996. From October 1992 to August 1996,
Ms. Pawlowski was the Chief Executive Officer of the Palo Alto Funding Group,
the mortgage brokerage she co-founded in 1992 and E-LOAN's predecessor company.
Ms. Pawlowski holds an M.B.A. degree from the University of Rochester and a B.S.
degree from Cornell University.

     FRANK SISKOWSKI has served as the Chief Financial Officer of E-LOAN since
October 1998. Prior to joining E-LOAN, Mr. Siskowski was the Senior Vice
President and Chief Financial Officer of The Indus Group, Inc. from September
1996 to August 1998. From July 1991 to September 1996, Mr. Siskowski served as
Senior Vice President and Controller of VISA International. From January 1985 to
July 1991, Mr. Siskowski served as the Vice President and Chief Financial
Officer of the MCI Pacific Division of MCI Communications Corporation. Mr.
Siskowski holds an M.B.A. degree from Fordham University and a B.A. degree from
Manhattan College.

     HAROLD "PETE" BONNIKSON has served as the Senior Vice President of
Operations of E-LOAN since January 1999. Prior to joining E-LOAN, Mr. Bonnikson
was with North American Mortgage

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<PAGE>   53

and its predecessor companies since 1981. Mr. Bonnikson was the Executive Vice
President of North American Mortgage from 1993 to 1999. Mr. Bonnikson holds a
B.S. degree from California State University at Sacramento.

     WILLIAM CRANE has served as the Vice President of Engineering of E-LOAN
since April 1998. Prior to joining E-LOAN, Mr. Crane was the Vice President of
Engineering of FrontOffice Technologies from January 1996 to April 1998. From
November 1992 to January 1996, Mr. Crane was the Vice President of Engineering
of Network Computing Devices. Mr. Crane holds a B.S. degree from Texas A&M
University.

     DOUG GALEN has served as the Vice President of Business Development and
Sales of E-LOAN since September 1997. Prior to joining E-LOAN, Mr. Galen was the
Vice President of Business Development of Owners.com from August 1996 to August
1997. From January 1996 to August 1996, Mr. Galen was the Vice President of
Limar Realty. From June 1988 to January 1996, Mr. Galen was the Vice President
of The Shilder Group. Mr. Galen holds an M.B.A. degree and a B.A. degree from
the University of California, Berkeley.

     JANET HAMMOND has served as the Vice President of Underwriting of E-LOAN
since March 1999. From June 1998 to March 1999, Ms. Hammond served as the
Director of Operations of E-LOAN. From December 1997 to June 1998, Ms. Hammond
served as a manager of Customer Service and then as the Director of Customer
Service of E-LOAN. Prior to joining E-LOAN, from May 1997 to December 1997, Ms.
Hammond was a project manager with PMI Mortgage Insurance, Inc. From September
1990 to May 1997, Ms. Hammond was a Loan Manager for Rockwell Federal Credit
Union. Ms. Hammond attended California State University, Fresno.

     JOSEPH KENNEDY has served as the Senior Vice President of Marketing and
Business Development of E-LOAN since February 1999. Mr. Kennedy was the Vice
President of Sales, Service and Marketing of Saturn Corporation from October
1995 to February 1999. From December 1993 to September 1995, Mr. Kennedy was the
General Director of Marketing and Product Planning for the Cadillac Motor Car
Division of General Motors Corporation. From September 1992 to December 1993,
Mr. Kennedy was the Director of Product Portfolio Planning for the North
American Operations of General Motors Corporation. Mr. Kennedy holds an M.B.A.
degree from Harvard Business School and a B.S. degree from Princeton University.

     STEVE MAJERUS has served as the Vice President of Secondary Markets of
E-LOAN since January 1999. From April 1998 to January 1999, Mr. Majerus served
as the Director of Mortgage Banking of E-LOAN. Prior to joining E-LOAN, Mr.
Majerus was the Director of Mortgage Lending for CMG Mortgage from January 1996
to March 1998. From February 1993 to November 1995, Mr. Majerus was the
President of Trans Capital Mortgage, a company which he co-founded.

     SARA MYERS BISLER has served as the Vice President of Operations of E-LOAN
since May 1999. From November 1993 to May 1999, Ms. Bisler held various
positions with North American Mortgage Company, most recently as Senior Vice
President of Inventory Management. Ms. Bisler holds a B.A. degree from
California State University, Sacramento.

     SHARON RUWART has served as the Vice President of Marketing of E-LOAN since
December 1998. From April 1998 to December 1998, Ms. Ruwart served as Director
of Marketing of E-LOAN. Prior to joining E-LOAN, Ms. Ruwart held a variety of
positions at the San Jose Mercury News, a division of Knight-Ridder, Inc.,
including Brand Group Manager and Recruitment Advertising Manager from January
1995 to April 1998. Ms. Ruwart holds an M.B.A. degree from Stanford University
and a B.A. degree from Yale University.

     IRA M. EHRENPREIS has served as a Director of E-LOAN since January 1998.
Since 1996 Mr. Ehrenpreis has been a General Partner of TPW Management V, L.P.
the General Partner of Technology Partners Fund V, L.P. and Managing Director of
TP Management VI, L.L.C., the General Partner of Technology Partners Fund VI,
L.P. Mr. Ehrenpreis holds J.D. and M.B.A.

                                       50
<PAGE>   54

degrees from Stanford University and a B.A. degree from the University of
California, Los Angeles.

     ROBERT C. KAGLE has served as a Director of E-LOAN since January 1998. Mr.
Kagle has been a member of Benchmark Capital Management Co., L.L.C., since its
founding in May 1995. Mr. Kagle also has been a General Partner of Technology
Venture Investors since January 1984. Mr. Kagle is also a director of eBay Inc.,
a leading online trading community. Mr. Kagle holds a B.S. degree from the
General Motors Institute (renamed Kettering University in January 1998) and an
M.B.A. degree from Stanford University.

     TIM KOOGLE has served as a Director of E-LOAN since September 1998. Mr.
Koogle has been the Chief Executive Officer of Yahoo!, Inc. and a member of
Yahoo!'s Board of Directors since August 1995. He has also been Yahoo!'s
Chairman since January 1999 and was its President from August 1995 until January
1999. Prior to joining Yahoo!, Mr. Koogle was President of Intermec Corporation,
a manufacturer of data collection and data communication products, from 1992 to
1995. During that time, he also served as a corporate Vice President of
Intermec's parent company, Western Atlas. Mr. Koogle holds a B.S. degree from
the University of Virginia and an M.S. degree from Stanford University.

     WADE RANDLETT has served as a Director of E-LOAN since June 1997. Mr.
Randlett has been the Political Director of TechNet since February 1997. From
November 1992 until February 1997, Mr. Randlett was self-employed as a Policy
Consultant. Mr. Randlett holds a B.S. degree from Princeton University.

BOARD COMPOSITION

     E-LOAN currently has authorized six directors. E-LOAN's Restated
Certificate of Incorporation will provide that, effective upon the closing of
this offering, the terms of office of the members of the Board of Directors will
be divided into three classes: Class I, whose term will expire at the annual
meeting of stockholders to be held in 2000, Class II, whose term will expire at
the annual meeting of stockholders to be held in 2001, and Class III, whose term
will expire at the annual meeting of stockholders to be held in 2002. The Class
I directors are Messrs. Ehrenpreis and Randlett, the Class II directors are
Messrs. Kagle and Koogle and the Class III directors are Mr. Larsen and Ms.
Pawlowski. At each annual meeting of stockholders after the initial
classification, the successors to directors whose term will then expire will be
elected to serve from the time of election and qualification until the third
annual meeting following election. Any additional directorships resulting from
an increase in the number of directors will be distributed among the three
classes so that, as nearly as possible, each class will consist of one-third of
the total number of directors. This classification of the Board of Directors may
have the effect of delaying or preventing changes in control or management of
E-LOAN.

     Each officer is elected by, and serves at the discretion of, the Board of
Directors. Each of E-LOAN's officers and directors, other than nonemployee
directors, devotes full time to the affairs of E-LOAN. E-LOAN's nonemployee
directors devote time to the affairs of E-LOAN as is necessary to discharge
their duties. There are no family relationships among any of the directors,
officers or key employees of E-LOAN.

BOARD COMMITTEES

     The Audit Committee of the Board of Directors reviews the internal
accounting procedures of E-LOAN and consults with and reviews the services
provided by E-LOAN's independent accountants. The Audit Committee currently
consists of Messrs. Ehrenpreis, Kagle and Koogle.

     The Compensation Committee of the Board of Directors reviews and recommends
to the Board the compensation and benefits of all executive officers of E-LOAN,
administers E-LOAN's stock option plan and establishes and reviews general
policies relating to compensation and

                                       51
<PAGE>   55

benefits of employees of E-LOAN. The Compensation Committee currently consists
of Messrs. Ehrenpreis, Kagle and Koogle. No interlocking relationships exist
between E-LOAN's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has any
interlocking relationship existed in the past.

DIRECTOR COMPENSATION

     Our directors do not currently receive cash compensation from E-LOAN for
their service as members of the Board of Directors, although they are reimbursed
for certain expenses in connection with attendance at Board and Committee
meetings. E-LOAN does not provide additional compensation for committee
participation or special assignments of the Board of Directors. From time to
time, certain directors of E-LOAN have received grants of options to purchase
shares of E-LOAN's common stock pursuant to the 1997 Stock Option Plan. See
"-- Stock Plans" and "Certain Transactions".

EXECUTIVE COMPENSATION

     The following table sets forth the total compensation received for services
rendered to E-LOAN during the fiscal year ended December 31, 1998 by our Chief
Executive Officer and other executive officers who received salary and bonus in
that fiscal year in excess of $100,000. The executive officers listed in the
table below are sometimes referred to as Named Executive Officers.

<TABLE>
<CAPTION>
                                                                              LONG-TERM
                                                                            COMPENSATION
                                                                        ---------------------
                                                ANNUAL COMPENSATION           NUMBER OF
                                               ----------------------   SECURITIES UNDERLYING
         NAME AND PRINCIPAL POSITION             SALARY       BONUS            OPTIONS
         ---------------------------           ----------   ---------   ---------------------
<S>                                            <C>          <C>         <C>
Chris Larsen
  Chief Executive Officer....................   $129,807     $    --               --
Janina Pawlowski
  President..................................    129,808          --               --
Doug Galen
  Vice President, Business Development &
     Sales...................................    114,496          --          150,000
Steve Majerus
  Vice President, Secondary Marketing........    115,773      47,336          225,000
</TABLE>

     Mr. Bonnikson joined E-LOAN in January 1999 as its Senior Vice President of
Operations and will be compensated at an annual base salary of $150,000 during
the fiscal year ended December 31, 1999. Mr. Crane joined E-LOAN in April 1998
as its Vice President of Engineering and will be compensated at an annual base
salary of $130,000 during the fiscal year ended December 31, 1999. Mr. Kennedy
joined E-LOAN in February 1999 as its Senior Vice President of Marketing and
Business Development will be compensated at an annual base salary of $200,000
during the fiscal year ended December 31, 1999. Mr. Siskowski joined E-LOAN in
October 1998 as its Chief Financial Officer and will be compensated at an annual
base salary of $170,000 during the fiscal year ended December 31, 1999.

                                       52
<PAGE>   56

OPTION GRANTS IN LAST FISCAL YEAR

     The following table sets forth certain summary information concerning
grants of stock options to each of the Named Executive Officers for the year
ended December 31, 1998. E-LOAN has never granted any stock appreciation rights.

<TABLE>
<CAPTION>
                                            INDIVIDUAL GRANTS
                        ---------------------------------------------------------        POTENTIAL REALIZABLE VALUE
                        NUMBER OF      PERCENT OF                                         AT ASSUMED ANNUAL RATES
                        SECURITIES   TOTAL OPTIONS                                      OF STOCK PRICE APPRECIATION
                        UNDERLYING     GRANTED TO                                            FOR OPTION TERM(3)
                         OPTIONS      EMPLOYEES IN    EXERCISE PRICE   EXPIRATION   ------------------------------------
       NAME(1)           GRANTED     FISCAL YEAR(2)       ($/SH)          DATE          0%           5%          10%
       -------          ----------   --------------   --------------   ----------   ----------   ----------   ----------
<S>                     <C>          <C>              <C>              <C>          <C>          <C>          <C>
Chris Larsen..........        --            --               --               --                         --           --
Janina Pawlowski......        --            --               --               --                         --           --
Doug Galen............   120,000           3.9%           $0.22         03/12/08    $1,653,600   $2,709,600   $4,330,800
                          30,000           1.0%           $1.00         08/11/08    $  390,000   $  654,000   $1,059,300
Steve Majerus.........   225,000           7.3%           $0.22         05/07/08    $3,100,500   $5,080,500   $8,120,250
</TABLE>

- ---------------
(1) In January 1999, E-LOAN granted to Mr. Bonnikson an option to purchase
    654,261 shares of common stock at an exercise price of $2.00 per share,
    which expires on January 13, 2009. In May 1998, E-LOAN granted to Mr. Crane
    an option to purchase 495,000 shares of common stock at an exercise price of
    $0.22 per share, which expires on May 7, 2008. In February 1999, E-LOAN
    granted to Mr. Kennedy an option to purchase 747,519 shares of common stock
    at an exercise price of $2.00 per share, which expires on February 22, 2009.
    In November 1998, E-LOAN granted to Mr. Siskowski an option to purchase
    385,377 shares of common stock at an exercise price of $1.33 per share,
    which expires November 25, 2008.

(2) In 1998, E-LOAN granted options to purchase an aggregate of 3,084,627 shares
    of common stock, of which 3,011,877 were granted to employees and 72,750
    were granted to consultants.

(3) The 0%, 5% and 10% assumed annual rates of stock price appreciation are
    mandated by the rules of the Securities and Exchange Commission and do not
    represent E-LOAN's estimate or projection of future common stock prices. The
    potential realizable value is calculated by assuming that the initial public
    offering price of $14.00 per share appreciates at the indicated rate for the
    entire term of the option and that the option is exercised at the exercise
    price and sold on the last day at the appreciated price. The potential
    realizable value is net of the applicable exercise price, but does not take
    into account applicable federal or state income tax consequences and other
    expenses of option exercises or sales of appreciated stock.

FISCAL YEAR END OPTION VALUES

     The following table provides certain summary information concerning stock
options held as of December 31, 1998 by each of the Named Executive Officers.
None of the Named Executive Officers exercised options in fiscal 1998.

<TABLE>
<CAPTION>
                                                       NUMBER OF SECURITIES
                                                      UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                              OPTIONS               IN-THE-MONEY OPTIONS AT
                                                       AT DECEMBER 31, 1998            DECEMBER 31, 1998
                                                    ---------------------------   ---------------------------
                       NAME                         EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
                       ----                         -----------   -------------   -----------   -------------
<S>                                                 <C>           <C>             <C>           <C>
Chris Larsen......................................        --              --              --             --
Janina Pawlowski..................................        --              --              --             --
Doug Galen........................................    90,000         330,000      $1,255,500     $4,554,600
Steve Majerus.....................................        --         225,000      $       --     $3,100,500
</TABLE>

                                       53
<PAGE>   57

     There was no public trading market for E-LOAN's common stock as of December
31, 1998. Accordingly, the value of unexercised in-the-money options as of that
date was calculated on the basis of the initial public offering price of $14.00
per share.

STOCK PLANS

1997 Stock Plan

     E-LOAN's 1997 Stock Plan (1997 Plan) provides for the granting to employees
of incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (Code), and for the granting to employees,
directors and consultants of nonstatutory stock options and stock purchase
rights (SPRs). The 1997 Plan was approved by the Board of Directors in August
1997 and by the stockholders in November 1997. The Board approved amendments to
the 1997 Plan to increase the number of shares reserved under the 1997 Plan in
May 1998 and January 1999, and the stockholders also approved these amendments
to the 1997 Plan in May 1998 and January 1999. Unless terminated sooner, the
1997 Plan will terminate automatically in 2007. A total of 10,500,000 shares of
common stock is currently reserved for issuance pursuant to the 1997 Plan, plus
annual increases equal to the lesser of 4,500,000 shares, 4% of the then
outstanding shares, or a lesser amount determined by the Board.

     The 1997 Plan may be administered by the board of directors or a committee
of the board (as applicable, the "Administrator"), which committee shall, in the
case of options intended to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Code, consist of two or more "outside
directors" within the meaning of Section 162(m) of the Code. The Administrator
has the power to determine the terms of the options or SPRs granted, including
the exercise price, the number of shares, the exercisability thereof, and the
form of consideration payable upon exercise. The board has the authority to
amend, suspend or terminate the 1997 Plan, provided that the action may not
adversely affect any share of common stock previously issued and sold or any
option previously granted under the 1997 Plan.

     Options and SPRs granted under the 1997 Plan are not generally transferable
by the optionee, and each option and SPR is exercisable during the lifetime of
the optionee only by the optionee. Options granted under the 1997 Plan must
generally be exercised within three months of the Optionee's separation of
service from E-LOAN, or within 12 months after the optionee's termination by
death or disability, but in no event later than the expiration of the option's
ten year term. In the case of SPRs, unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant E-LOAN a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service for E-LOAN for any reason, including death or
disability. The purchase price for Shares repurchased pursuant to the Restricted
Stock Purchase Agreement shall be the original price paid by the purchaser and
may be paid by cancellation of any indebtedness of the purchaser to E-LOAN. The
repurchase option shall lapse at a rate determined by the Administrator. The
exercise price of all incentive stock options granted under the 1997 Plan must
be at least equal to the fair market value of the common stock on the date of
grant. The exercise price of nonstatutory stock options and SPRs granted under
the 1997 Plan is determined by the Administrator, but with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must at least be equal to the fair market value of the common stock on the
date of grant. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of E-LOAN's outstanding capital
stock, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the term of any
incentive stock option must not exceed five years. The term of all other options
granted under the 1997 Plan may not exceed ten years.

     The 1997 Plan provides that in the event of a merger of E-LOAN with or into
another corporation or a sale of substantially all of E-LOAN's assets, each
option or SPR shall be

                                       54
<PAGE>   58

assumed or an equivalent option or SPR substituted by the successor corporation.
If each outstanding option or SPR is not assumed or substituted as described in
the preceding sentence, the Administrator shall notify the Optionees that each
option or SPR shall be fully vested and exercisable, including shares as to
which it would not otherwise be exercisable, for a period of 15 days from the
date of notice, and the option or SPR will terminate upon the expiration of the
period.

1999 Employee Stock Purchase Plan

     E-LOAN's 1999 Employee Stock Purchase Plan (1999 Purchase Plan) was adopted
by the Board of Directors in March 1999 and approved by the stockholders in
April 1999. A total of 1,500,000 shares of common stock has been reserved for
issuance under the 1999 Purchase Plan, plus annual increases on the first day of
E-LOAN's fiscal year beginning in or after 2000 equal to the lesser of 1,500,000
shares, 2% of the then outstanding shares or a lesser amount determined by the
Board. As of the date of this Prospectus, no shares have been issued under the
1999 Purchase Plan.

     The 1999 Purchase Plan, which is intended to qualify under Section 423 of
the Internal Revenue Code of 1986, as amended, contains consecutive overlapping
24-month offering periods. Each offering period includes four six-month purchase
periods. The offering periods generally start on the first trading day on or
after May 1 and November 1 of each year, except for the first offering period
which commences on the first trading day on or after the effective date of this
Offering and ends on the last trading day on or before April 30, 2001.

     Employees are eligible to participate if they are customarily employed by
E-LOAN or any participating subsidiary for at least 20 hours per week and more
than five months in any calendar year. However, to the extent any employee (a)
immediately after a grant would own stock or hold options to purchase stock
possessing 5% or more of the total combined voting power or value of all classes
of the capital stock of E-LOAN or (b) would have rights to purchase stock under
all employee stock purchase plans of E-LOAN which exceed $25,000 worth of stock
for each calendar year in which the options are outstanding, the employee may be
not be granted an option to purchase stock under the 1999 Purchase Plan. The
1999 Purchase Plan permits participants to purchase common stock through payroll
deductions of up to 15% of the participant's "compensation". Compensation is
defined as the participant's base straight time gross earnings, commissions,
cash incentive payments and bonuses, but exclusive of payments for overtime,
profit sharing payments, shift premium payments, non-cash compensation and other
compensation. The maximum number of shares a participant may purchase during a
single purchase period is 3,750 shares.

     Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each purchase period. The price of stock
purchased under the 1999 Purchase Plan is generally 85% of the lower of the fair
market value of the common stock (i) at the beginning of the offering period or
(ii) at the end of the purchase period. In the event the fair market value at
the end of a purchase period is less than the fair market value at the beginning
of the offering period, the participants will be withdrawn from the current
offering period following exercise and automatically re-enrolled in a new
offering period. The new offering period will use the lower fair market value as
of the first date of the new offering period to determine the purchase price for
future purchase periods. Participants may end their participation at any time
during an offering period, and they will be paid their payroll deductions to
date. Participation ends automatically upon termination of employment with
E-LOAN.

     Rights granted under the 1999 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the 1999 Purchase Plan. The 1999 Purchase Plan provides
that, in the event of a merger of E-LOAN with or into another corporation or a
sale of substantially all of E-LOAN's assets, each outstanding option

                                       55
<PAGE>   59

may be assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set. After shares have been purchased on the New Exercise Date, the 1999
Purchase Plan will terminate. Unless terminated earlier, the 1999 Purchase Plan
will terminate in 2009. The Board of Directors has the authority to amend or
terminate the 1999 Purchase Plan, except that no action may adversely affect any
outstanding rights to purchase stock under the 1999 Purchase Plan.

401(K) PLAN

     E-LOAN maintains an employee savings and retirement plan (401(k) Plan)
which covers all eligible employees of E-LOAN (Participants). Pursuant to the
401(k) Plan, Participants may elect to reduce their current compensation, on a
pre-tax basis, up to 15%, or the statutorily prescribed annual limit, whichever
is lower, and have the amount of the reduction contributed to the 401(k) Plan.
Participants' salary reduction contributions are fully vested at all times.
E-LOAN, in its sole discretion, may make discretionary employer contributions,
qualified discretionary employer contributions and matching contributions to the
401(k) Plan. Each Participants' interest in their employer discretionary
contributions and matching contributions generally vest in accordance with a
four-year graduated vesting schedule. Participants may receive loans and
hardship distributions while in service and are eligible for a distribution from
the 401(k) Plan upon separation from service with E-LOAN. The 401(k) Plan is
intended to qualify under Section 401(a) of the Code, and its accompanying trust
is intended to be a tax-exempt trust under Section 501(a) of the Code.
Contributions made on behalf of Participants, on a pre-tax basis, to the 401(k)
Plan, and income earned on the contributions, are not currently taxable to
Participants until distributed to them. All contributions are tax deductible by
E-LOAN. The trustee under the 401(k) Plan, at the direction of Participants,
invests the assets of the 401(k) Plan in any of seven designated investment
options.

EMPLOYMENT AGREEMENT AND CHANGE OF CONTROL ARRANGEMENTS

     Under the terms of E-LOAN's offer of employment to Mr. Kennedy, if Mr.
Kennedy's employment is terminated by E-LOAN or a successor company to E-LOAN
within six months prior to or 12 months following a change of control, E-LOAN
has agreed to pay Mr. Kennedy three years of salary, accelerate vesting of all
shares under Mr. Kennedy's option and pay a gross-up for any taxation Mr.
Kennedy incurs in connection with the payment and acceleration above standard
individual taxes for ordinary income. Alternatively, if Mr. Kennedy's employment
is terminated by E-LOAN at any time, E-LOAN has agreed to give Mr. Kennedy three
months notice of termination, pay Mr. Kennedy 12 months of salary and accelerate
vesting of that number of shares under Mr. Kennedy's option that would have been
exercisable on the date 12 months following the date of termination. E-LOAN is
not required to perform any of these obligations if Mr. Kennedy's termination
from E-LOAN is due to a criminal act or gross violation of E-LOAN policy. E-LOAN
has also agreed to reimburse Mr. Kennedy for relocation expenses he incurred in
relocating to the Bay Area.

     In accordance with the terms of their option agreements under E-LOAN's 1997
Stock Plan, whether or not the options are assumed or substituted in a merger,
acquisition or asset sale, each Named Executive Officer's outstanding options
vest and become exercisable as to an additional 50% of the unvested shares at
the time of the merger, acquisition or sale of assets.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

     E-LOAN's Restated Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not

                                       56
<PAGE>   60

be personally liable for monetary damages for breach of their fiduciary duties
as directors, except liability for:

     - breach of their duty of loyalty to the corporation or its stockholders;

     - acts or omissions not in good faith or which involve intentional
       misconduct or a knowing violation of law;

     - unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

     - any transaction from which the director derived an improper personal
benefit.

     The limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies, including injunctive relief or rescission.

     E-LOAN's Bylaws provide that E-LOAN shall indemnify its directors,
officers, employees and other agents to the fullest extent permitted by law.
E-LOAN believes that indemnification under its Bylaws covers at least negligence
and gross negligence on the part of indemnified parties. E-LOAN's Bylaws also
permit it to secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws permit indemnification.

     E-LOAN has entered into agreements to indemnify its directors and executive
officers, in addition to the indemnification provided for in its Bylaws. These
agreements, among other things, indemnify E-LOAN's directors and executive
officers for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any person in any action or proceeding, including
any action by or in the right of E-LOAN arising out of that person's services as
a director, officer, employee, agent or fiduciary of E-LOAN, any subsidiary of
E-LOAN or any other company or enterprise to which the person provides services
at the request of E-LOAN. E-LOAN believes that these provisions and agreements
are necessary to attract and retain qualified persons as directors and executive
officers.

     At present, there is no pending litigation or proceeding involving a
director or officer of E-LOAN in which indemnification is required or permitted,
and E-LOAN is not aware of any threatened litigation or proceeding that may
result in a claim for indemnification.

                                       57
<PAGE>   61

                              CERTAIN TRANSACTIONS

     In December 1997, E-LOAN issued shares of Series B preferred stock to
certain investors at a purchase price of $0.96 per share, which shares will
automatically convert into 1,290,621 shares of common stock upon the
effectiveness of the registration statement related to this offering. Also in
December 1997, E-LOAN issued shares of Series C preferred stock to certain
investors at a purchase price of $1.23 per share, which shares will
automatically convert into 12,809,808 shares of common stock upon the
effectiveness of the registration statement related to this offering. In
September 1998 and February 1999, E-LOAN issued shares of Series D preferred
stock to certain investors at a purchase price of $9.26 per share, which shares
will automatically convert into 5,107,587 shares of common stock upon the
effectiveness of the registration statement related to this offering. The
investors in the Series B preferred stock, Series C preferred stock and Series D
preferred stock include the following affiliates of E-LOAN:

<TABLE>
<CAPTION>
                                                          SHARES OF   SHARES OF    SHARES OF
                                                          SERIES B    SERIES C     SERIES D
                                                          PREFERRED   PREFERRED    PREFERRED
                        INVESTOR                            STOCK       STOCK        STOCK
                        --------                          ---------   ---------    ---------
<S>                                                       <C>         <C>          <C>
Doug Galen..............................................   15,625           --           --
Benchmark Capital Partners II L.P.(1)...................       --     2,589,959      97,161
Entities Affiliated with Technology Partners(2).........       --     1,479,977      75,570
Entities Affiliated With STV IV, LLC(3).................       --           --      777,286
Yahoo!, Inc.(4).........................................       --           --      323,869
Harold "Pete" Bonnikson.................................       --           --       40,000
</TABLE>

- -------------------------
(1) Mr. Kagle, a director of E-LOAN, is a member of Benchmark Capital Management
    Co., L.L.C., the general partner of Benchmark Capital Partners II L.P.

(2) Technology Partners Fund V, L.P. purchased 739,989 shares of Series C
    preferred stock and 16,361 shares of Series D preferred stock. Technology
    Partners Fund VI, L.P. purchased 739,988 shares of Series C preferred stock
    and 59,209 shares of Series D preferred stock. Mr. Ehrenpreis, a director of
    E-LOAN, is a general partner of TPW Management V, L.P., the general partner
    of Technology Partners Fund V, L.P. and is a managing member of TP
    Management VI, L.L.C., the general partner of Technology Partners Fund VI,
    L.P.

(3) Softbank Holdings, Inc., L.P. purchased 388,643 shares of Series D preferred
    stock, Softbank Technology Advisors Fund, L.P. purchased 7,306 shares of
    Series D preferred stock, and Softbank Technology Ventures IV, L.P.
    purchased 381,337 shares of Series D preferred stock.

(4) Mr. Koogle, a director of E-LOAN, is the Chief Executive Officer of Yahoo!

     In December 1997, E-LOAN entered into an agreement with Yahoo!, Inc., under
which E-LOAN became the exclusive provider of mortgage related information on
the "Yahoo! Loan Center" website and E-LOAN and Yahoo! will conduct joint
marketing activities. In September 1998, E-LOAN entered into a subsequent
agreement with Yahoo!, which became effective in March 1999 upon the expiration
of the December 1997 agreement, under which E-LOAN would continue to be the
exclusive provider of mortgage related information on the "Yahoo! Loan Center"
website and E-LOAN and Yahoo! would continue to conduct joint marketing
activities through February 2000. In March 1999, the parties extended this
agreement through February 2001. Pursuant to the agreement, E-LOAN is required
to pay a slotting fee plus click-through fees to Yahoo! Tim Koogle, a director
of E-LOAN, is the Chief Executive Officer of Yahoo!

     In October 1997, March 1998 and August 1998, E-LOAN granted to Doug Galen,
its Vice President of Business Development and Sales, options to purchase
270,000, 120,000 and 30,000 shares of common stock, respectively, at $0.05,
$0.22 and $1.00 per share, respectively. These
                                       58
<PAGE>   62

options vest according to the following schedules:  1/4(th) of the total number
of shares under each option vests on August 26, 1998, March 12, 1999 and August
11, 1999, respectively, and 1/48(th) of the total number of shares under each
option vests at the end of each full month thereafter.

     In December 1997 and August 1998, E-LOAN granted to Janet Hammond, its Vice
President of Underwriting, an option to purchase 45,000 shares and two separate
options to purchase 30,000 shares of common stock each, respectively, at $0.22
and $1.00 per share, respectively. These options vest according to the following
schedules:  1/4(th) of the total number of shares subject to each option vests
on December 10, 1998, May 1, 1999 and August 11, 1999, respectively, and
1/48(th) of the total number of shares subject to each option vests at the end
of each full month thereafter.

     In May 1998, E-LOAN granted to Bill Crane, its Vice President of
Engineering, an option to purchase 495,000 shares of common stock at $0.22 per
share. This option vests according to the following schedule:  1/4(th) of the
total number of shares vests on April 20, 1999 and 1/48(th) of the total number
of shares vests at the end of each full month thereafter.

     In May 1998, January 1999 and February 1999, E-LOAN granted to Sharon
Ruwart, its Vice President of Marketing, options to purchase 180,000, 30,000 and
15,000 shares of common stock, respectively, at $0.22, $2.00 and $2.00 per
share, respectively. These options vest according to the following schedules:
 1/4(th) of the total number of shares under each option vests on May 1, 1999,
January 1, 2000 and February 22, 2000, respectively, and 1/48(th) of the total
number of shares under each option vests at the end of each full month
thereafter.

     In May 1998 and February 1999, E-LOAN granted to Steve Majerus, its Vice
President of Secondary Markets, options to purchase 225,000 and 75,000 shares of
common stock, respectively, at $0.22 and $2.00 per share, respectively. These
options vest according to the following schedules:  1/4(th) of the total number
of shares under each option vests on April 27, 1999 and February 22, 2000,
respectively, and 1/48(th) of the total number of shares under each option vests
at the end of each full month thereafter.

     In November 1998, E-LOAN granted to Frank Siskowski, its Chief Financial
Officer, an option to purchase 385,377 shares of common stock at $1.33 per
share. This option vests according to the following schedule:  1/4(th) of the
total number of shares vests on October 26, 1999 and 1/48(th) of the total
number of shares vests at the end of each full month thereafter.

     In January 1999, E-LOAN granted to Harold "Pete" Bonnikson, its Senior Vice
President of Operations, an option to purchase 654,261 shares of common stock at
$2.00 per share. This option vests according to the following schedule:  1/4(th)
of the total number of shares vests on January 13, 2000 and 1/48(th) of the
total number of shares vests at the end of each full month thereafter.

     In February, 1999, E-LOAN granted to Joseph Kennedy, its Senior Vice
President of Marketing and Business Development, an option to purchase 747,519
shares of common stock at $2.00 per share. This option vests according to the
following schedule:  1/4(th) of the total number of shares vests on February 22,
2000 and 1/48(th) of the total number of shares vests at the end of each full
month thereafter. For a description of the terms of the employment arrangement
between E-LOAN and Mr. Kennedy, see "Management -- Employment Agreement and
Change of Control Arrangements".

     In March 1999, E-LOAN entered into a joint venture agreement with Softbank
Corp., under which E-LOAN will hold a minority interest in E-LOAN Japan, a
Japanese corporation. E-LOAN Japan will develop, market and provide an online
mortgage marketplace to serve consumers in Japan and the Republic of Korea.

     E-LOAN has entered into indemnification agreements with its officers and
directors containing provisions that require E-LOAN, among other things, to
indemnify its officers and

                                       59
<PAGE>   63

directors against certain liabilities that may arise by reason of their status
or service as officers or directors, other than liabilities arising from willful
misconduct of a culpable nature, and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.

     In May 1999, E-LOAN established the E-LOAN Foundation, a charitable fund
which is administered by the Community Foundation Silicon Valley. To capitalize
the E-LOAN Foundation, E-LOAN donated 75,000 shares of common stock to the
Community Foundation Silicon Valley on behalf of the E-LOAN Foundation. The
Community Foundation Silicon Valley is selling 5,000 shares of common stock in
this offering to generate liquidity for the E-LOAN Foundation fund.

                                       60
<PAGE>   64

                       PRINCIPAL AND SELLING STOCKHOLDERS

     The following table sets forth information with respect to beneficial
ownership of E-LOAN's common stock as of May 18, 1999 and as adjusted to reflect
the sale of common stock offered by this prospectus and in the private placement
to be closed immediately following this offering, in each case reflecting the
common stock beneficially held by the following individuals or groups:

     - each person known by E-LOAN to beneficially own more than 5% of its
       outstanding common stock;

     - each director of E-LOAN;

     - each Named Executive Officer listed in the Summary Compensation Table;

     - all directors and executive officers of E-LOAN as a group; and

     - the Community Foundation Silicon Valley, the selling stockholder.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The address for each listed director and officer is
c/o E-LOAN, Inc., 5875 Arnold Road, Suite 100, Dublin, California 94568. Except
as indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them. The number of
shares of common stock outstanding used in calculating the percentage for each
listed person includes the shares of common stock underlying options or warrants
held by that person that are exercisable within 60 days of May 18, 1999, but
excludes shares of common stock underlying options or warrants held by any other
person. Percentage of beneficial ownership prior to this offering is based on
33,737,403 shares of common stock outstanding as of May 18, 1999, after giving
effect to the conversion of the outstanding preferred stock and the exercise and
conversion of a warrant to purchase Series D preferred stock. Percentage of
beneficial ownership after this offering is based on 38,192,464 shares of common
stock to be outstanding after completion of this offering and the private
placement that will close immediately following this offering.

                                       61
<PAGE>   65

<TABLE>
<CAPTION>
                                                                               PERCENTAGE OF
                                                                                  SHARES
                                                                               BENEFICIALLY
                                                                                   OWNED
                                                SHARES         NUMBER       -------------------
                                             BENEFICIALLY     OF SHARES     PRIOR TO    AFTER
         NAME OF BENEFICIAL OWNER               OWNED       BEING OFFERED   OFFERING   OFFERING
         ------------------------            ------------   -------------   --------   --------
<S>                                          <C>            <C>             <C>        <C>
Benchmark Capital Partners II L.P.(1)......    8,061,360           --         23.9%      21.1%
  Robert C. Kagle
Entities affiliated with Technology
  Partners(2)..............................    4,666,641           --         13.8%      12.2%
  Ira M. Ehrenpreis
Entities affiliated with STV IV, LLC(3)....    3,304,590           --          9.8%       8.7%
Chris Larsen(4)............................    5,555,121           --         16.5%      14.5%
Janina Pawlowski(5)........................    5,511,927           --         16.3%      14.4%
Doug Galen(6)..............................      185,625           --            *          *
Steve Majerus(7)...........................       65,625           --            *          *
Tim Koogle(8)..............................      971,607           --          2.9%       2.5%
Wade Randlett..............................        1,500           --            *          *
The Community Foundation Silicon
  Valley(9)................................       75,000        5,000            *          *
All directors and executive officers as a
  group (15 persons)(10)...................   25,345,531           --         75.1%      66.4%
</TABLE>

- -------------------------
  *  Represents beneficial ownership of less than one percent of E-LOAN's common
     stock.

 (1) Excludes 483,132 shares beneficially owned by Chris Larsen and pledged to
     Benchmark Capital Partners II L.P. pursuant to Loan and Pledge Agreements
     between Benchmark Capital Partners II L.P. and Mr. Larsen. Also excludes
     483,132 shares beneficially owned by Janina Pawlowski and pledged to
     Benchmark Capital Partners II L.P. pursuant to Loan and Pledge Agreements
     between Benchmark Capital Partners II L.P. and Ms. Pawlowski. Mr. Kagle, a
     director of E-LOAN, is a member of Benchmark Capital Management Co.,
     L.L.C., the general partner of Benchmark Capital Partners II, L.P. and
     disclaims beneficial ownership of the shares held by Benchmark Capital
     Partners II, L.P. except to the extent of his proportionate partnership
     interest therein.

 (2) Consists of 2,397,591 shares held of record by Technology Partners Fund VI,
     L.P. and 2,269,050 shares held of record by Technology Partners Fund V,
     L.P. Excludes 237,933 and 57,672 shares beneficially owned by Chris Larsen
     and pledged to Technology Partners Fund V, L.P. and Technology Partners
     Fund VI, L.P., respectively, pursuant to Loan and Pledge Agreements between
     these entities and Mr. Larsen. Also excludes 237,933 and 57,672 shares
     beneficially owned by Janina Pawlowski and pledged to Technology Partners
     Fund V, L.P. and Technology Partners Fund VI, L.P., respectively, pursuant
     to Loan and Pledge Agreements between these entities and Ms. Pawlowski. Mr.
     Ehrenpreis, a director of E-LOAN, is a general partner of TPW Management V,
     L.P., the general partner of Technology Partners Fund V, L.P. and is a
     managing member of TP Management VI, L.L.C., the general partner of
     Technology Partners Fund VI, L.P. and disclaims beneficial ownership of the
     shares held by Technology Partners Fund VI, L.P. and Technology Partners
     Fund V, L.P. except to the extent of his proportionate partnership interest
     therein.

 (3) Consists of 1,165,929 shares held of record by Softbank Holdings, Inc.
     L.P., 1,144,011 shares held of record by Softbank Technology Ventures IV,
     L.P., 21,918 shares held of record by Softbank Technology Advisors Fund,
     L.P., and 972,732 shares held of record by Softbank America Inc. Excludes
     378,549, 370,527, 8,025 and 346,731 shares beneficially owned by Chris
     Larsen and pledged to Softbank Holdings, Inc., Softbank Technology Ventures
     IV, L.P., Softbank Technology Advisors Fund, L.P., and Softbank
                                       62
<PAGE>   66

     America Inc., respectively, pursuant to Loan and Pledge Agreements between
     these entities and Mr. Larsen. Also excludes 378,549, 370,527, 8,025 and
     303,387 shares beneficially owned by Janina Pawlowski and pledged to
     Softbank Holdings, Inc., Softbank Technology Ventures IV, L.P., Softbank
     Technology Advisors Fund, L.P., and Softbank America Inc., respectively,
     pursuant to Loan and Pledge Agreements between these entities and Ms.
     Pawlowski.

 (4) Includes 150,000 shares held of record by the Larsen Trust. Also includes
     2,576,577 shares that are pledged to certain investors to secure $10.8
     million in full recourse loans made to Mr. Larsen by these investors. All
     of Mr. Larsen's pledged shares are also subject to put and call options
     pursuant to agreements between Mr. Larsen and these investors. See
     "Description of Capital Stock -- Put/Call Options on Common Stock".

 (5) Includes 150,000 shares held of record by the Pawlowski Trust. Also
     includes 2,533,233 shares that are pledged to certain investors to secure
     $10.1 million in full recourse loans made to Ms. Pawlowski by these
     investors. All of Ms. Pawlowski's pledged shares are also subject to put
     and call options pursuant to agreements between Ms. Pawlowski and these
     investors. See "Description of Capital Stock -- Put/Call Options on Common
     Stock".

 (6) Includes 21,876 stock options that are exercisable within 60 days of May
     18, 1999.

 (7) Includes 9,375 stock options that are exercisable within 60 days of May 18,
     1999.

 (8) Consists of 971,607 shares held of record by Yahoo!, Inc. Excludes 315,459
     shares beneficially owned by Chris Larsen and pledged to Yahoo!, Inc.
     pursuant to a Loan and Pledge Agreement between Yahoo!, Inc. and Mr.
     Larsen. Also excludes 315,459 shares beneficially owned by Janina Pawlowski
     and pledged to Yahoo!, Inc. pursuant to a Loan and Pledge Agreement between
     Yahoo!, Inc. and Ms. Pawlowski. Mr. Koogle, a director of E-LOAN, is Chief
     Executive Officer of Yahoo! and disclaims beneficial ownership of the
     shares held by Yahoo!

 (9) In May 1999, E-LOAN established a fund known as the E-LOAN Foundation,
     which is administered by the Community Foundation Silicon Valley, and to
     capitalize this foundation, donated 75,000 shares of common stock to the
     Community Foundation Silicon Valley to fund the E-LOAN Foundation.

(10) Includes 237,376 stock options that are exercisable within 60 days of May
     18, 1999.

                                       63
<PAGE>   67

                      THE FORUM HOLDINGS PRIVATE PLACEMENT

     In May 1999, E-LOAN entered into a stock purchase agreement with Forum
Holdings, Inc. (Forum) in which E-LOAN agreed to sell shares of common stock to
Forum equal to $12,500,000 divided by the initial public offering price less the
underwriting discount, for a per share price equal to the initial public
offering price less the underwriting discount. Based on the initial public
offering price of $14.00 per share, E-LOAN will sell 960,061 shares of common
stock to Forum. E-LOAN entered into this transaction with Forum in order to
support E-LOAN's branding efforts in Europe. Forum, through its affiliation with
the European consumer goods conglomerate LVMH, has offered to assist E-LOAN with
its anticipated European expansion. There is no affiliation between E-LOAN and
Forum. The stock purchase agreement further provides that Forum will not sell,
transfer, encumber or otherwise dispose of any of the common stock acquired in
the private placement in a public or private sale for a period of one year
following the closing of the private placement.

     In addition, Forum has agreed that it will notify E-LOAN of any sale by it
of E-LOAN common stock. Finally, at any time after it owns in excess of 9.5% of
E-LOAN's outstanding common stock and E-LOAN's Board of Directors approves a
sale of substantially all of E-LOAN's assets or a merger in which E-LOAN is not
the surviving entity, Forum has agreed to vote its shares of E-LOAN common stock
in the same proportion as the other stockholders of E-LOAN.

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     E-LOAN's Restated Certificate of Incorporation, which will become effective
upon the closing of this offering, authorizes the issuance of up to 70 million
shares of common stock, par value $0.001 per share, and five million shares of
preferred stock, par value $0.001 per share, the rights and preferences of which
may be established by E-LOAN's Board of Directors. As of March 31, 1999,
12,742,974 shares of common stock were issued and outstanding and 6,831,307
shares of preferred stock convertible into 20,493,921 shares of common stock
upon the effectiveness of the registration statement related to this offering
were issued and outstanding. As of March 31, 1999, E-LOAN had 72 stockholders.

COMMON STOCK

     Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. After taking into account preferences to which holders of preferred
stock issued after the sale of the common stock in this offering may be
entitled, holders of common stock are entitled to receive dividends, if any, as
may be declared by the Board of Directors out of funds legally available
therefor. See "Dividend Policy". In the event of a liquidation, dissolution or
winding up of E-LOAN, holders of common stock would be entitled to share in
E-LOAN's assets remaining after the payment of liabilities and the satisfaction
of any liquidation preference granted the holders of any outstanding shares of
preferred stock. Holders of common stock have no preemptive or conversion rights
or other subscription rights and there are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are, and the shares of common stock offered by E-LOAN in this offering,
when issued and paid for, will be, fully paid and nonassessable. The rights,
preferences and privileges of the holders of common stock are subject to, and
may be adversely affected by, the rights of the holders of shares of any series
of preferred stock which E-LOAN may designate in the future.

                                       64
<PAGE>   68

PREFERRED STOCK

     Upon the closing of this offering, the Board of Directors will be
authorized, absent any limitations prescribed by law, without stockholder
approval, to issue up to an aggregate of five million shares of preferred stock,
in one or more series, each of the series to have rights and preferences,
including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences, as shall be determined by the Board of
Directors. The rights of the holders of common stock will be subject to, and may
be adversely affected by, the rights of holders of any preferred stock that may
be issued in the future. Issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, a majority
of the outstanding voting stock of E-LOAN. E-LOAN has no present plans to issue
any shares of preferred stock.

WARRANTS

     As of March 31, 1999, E-LOAN had outstanding a warrant to purchase 15,000
shares of Series C preferred stock at an exercise price of $2.00 per share,
convertible into 45,000 shares of common stock upon the effectiveness of the
registration statement relating to this offering, and a warrant to purchase
53,996 shares of Series D preferred stock at an exercise price of $9.26 per
share, convertible into 161,988 shares of common stock upon the effectiveness of
the registration statement relating to this offering. Each warrant has a net
exercise provision under which the holder may, in lieu of payment of the
exercise price in cash, surrender the warrant and receive a net amount of
shares, based on the fair market value of E-LOAN's stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price. The
warrant for 53,996 shares of Series D preferred stock will expire upon the
closing of this offering. The warrant for 15,000 shares of Series C preferred
stock shall expire three years from the effective date of this offering.

     In May 1999, E-LOAN issued a warrant to purchase 75,000 shares of common
stock at an exercise price equal to $13.33 per share. The warrant has a net
exercise provision under which the holder may, in lieu of payment of the
exercise price in cash, surrender the warrant and receive a net amount of
shares, based on the fair market value of E-LOAN's stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price. The
warrant expires May 21, 2000.

REGISTRATION RIGHTS

     Pursuant to the terms of an Investor Rights Agreement among E-LOAN and
certain holders of E-LOAN's securities, after the closing of this offering, the
holders of 17,842,395 shares of the outstanding common stock or their permitted
transferees, including shares issuable upon the exercise of warrants to purchase
common stock, are entitled to certain rights with respect to the registration of
the shares under the Securities Act. The holders of at least 66 2/3% of the
shares entitled to registration rights may require E-LOAN to file a registration
statement covering shares entitled to registration rights with an aggregate
gross offering price of at least $1.5 million. E-LOAN is not required to effect
(i) more than two registrations pursuant to demand registration rights; (ii) a
registration within 60 days following the determination by the Board of
Directors of E-LOAN to file a registration statement; (iii) a registration
during the period in which any other registration statement has been filed or
has been declared effective within the prior 120 days; or (iv) a registration
for a period not to exceed 120 days, if the Board of Directors of E-LOAN has
made a good faith determination that a registration would be seriously
detrimental to E-LOAN or to its stockholders. Pursuant to the terms of the
Investor Rights Agreement, the holders of the shares entitled to registration
rights are entitled to certain piggyback registration rights in connection with
any registration by E-LOAN of its securities for its own account or the account
of other security holders. In the event that E-LOAN proposes to register any
shares of common
                                       65
<PAGE>   69

stock under the Securities Act, the holders of piggyback registration rights are
entitled to receive notice of the registration and are entitled to include their
shares in the registration.

     At any time after E-LOAN becomes eligible to file a registration statement
on Form S-3, holders of 20% or more of the Registrable Securities may require
E-LOAN to file an unlimited number of registration statements on Form S-3 under
the Securities Act with respect to their shares of common stock.

     Each of the foregoing registration rights is qualified by certain
conditions and limitations, including the right of the underwriters in any
underwritten offering to limit the number of shares to be included in a
registration. The registration rights with respect to any holder thereof
terminate upon the earlier of (i) seven years from the effective date of this
offering or (ii) when the shares held by the holder may be sold under Rule 144
during any three-month period. E-LOAN is generally required to bear all of the
expenses of all registrations, except underwriting discounts and commissions.
Registration of any of the shares entitled to registration rights would result
in the shares becoming freely tradable without restriction under the Securities
Act immediately upon effectiveness of the registration. The Investor Rights
Agreement also contains a commitment of E-LOAN to indemnify the holders of
registration rights.

PUT/CALL OPTIONS ON COMMON STOCK

     In December 1997, Chris Larsen, E-LOAN's Chief Executive Officer, and
Janina Pawlowski, E-LOAN's President, each entered into a separate Loan and
Pledge Agreement with some of E-LOAN's investors under which each of these
officers were loaned $250,000 on a full recourse basis. Each officer secured his
or her loan with a pledge of 610,491 shares of common stock and a security
interest in the officer's rights under a Put Option Agreement and Call Option
Agreement among the investors and each officer. The loans are due December 19,
2002 and bear interest, compounded annually, at a rate of 7% per annum. Under
the Call Option Agreements, each officer granted the investors an option to call
the 610,491 shares covered by the option at any time from the date of the
agreement up to December 19, 2001 at an exercise price equal to an aggregate of
$500,000. Under the Put Option Agreements, the investors granted to each officer
an option to put the 610,491 shares covered by the option to the investors at an
exercise price equal to an aggregate of $500,000 together with interest at the
rate of 7% per annum, compounded annually, at any time during the eleven-month
period beginning January 20, 2002 and ending November 19, 2002.

     In August 1998, each of these officers entered into a separate Loan and
Pledge Agreement with the investors under which each officer was loaned $5.0
million on a full recourse basis. Each officer secured his or her loan with a
pledge of 1,619,355 shares of common stock and a security interest in the
officer's rights under a Put Option Agreement and Call Option Agreement among
the investors and each officer. The loans are due August 31, 2003 and bear
interest, compounded annually, at a rate of 6% per annum. Under the Call Option
Agreement, each officer granted the investors an option to call the 1,619,355
shares covered by the option at any time from the date of the agreement up to
August 31, 2002 at an exercise price equal to an aggregate of $10.0 million.
Under the Put Option Agreements, the investors granted to each officer an option
to put the 1,619,355 shares covered by the option to the investors at an
exercise price equal to an aggregate $10.0 million together with interest of the
rate of 6% per annum, compounded annually, at any time during the eleven-month
period beginning January 1, 2003 and ending November 30, 2003.

     In March 1999, Softbank America Inc. purchased an aggregate of 972,732
shares of common stock and preferred stock from 25 stockholders of E-LOAN,
including 253,269 and 221,613 shares of common stock from Mr. Larsen and Ms.
Pawlowski, respectively, at a purchase price of $16.00 per share. The
stockholders agreement with Softbank America provides that Softbank America will
not dispose of the acquired shares prior to March 23, 2000.

                                       66
<PAGE>   70

     At the time of these purchases, Mr. Larsen and Ms. Pawlowski each entered
into a separate Loan and Pledge Agreement with Softbank America under which Mr.
Larsen was loaned $5.5 million on a full recourse basis and Ms. Pawlowski was
loaned $4.8 million on a full recourse basis. Mr. Larsen secured his loan with a
pledge of 346,731 shares of common stock and Ms. Pawlowski secured her loan with
a pledge of 303,387 shares of common stock and both granted Softbank America a
security interest in the officer's rights under a Put Option Agreement and a
Call Option Agreement. The loans are due March 23, 2004 and bear interest,
compounded annually, at a rate of 7% per annum. Under the Call Option
Agreements, both Mr. Larsen and Ms. Pawlowski granted Softbank America an option
to call all of the shares covered by the option at any time from the date of the
agreement up to March 23, 2003 at an exercise price equal to $5.5 million and
$4.8 million, respectively. Under the Put Option Agreements, Softbank America
granted to both Mr. Larsen and Ms. Pawlowski an option to put all of the shares
covered by the option at an exercise price equal to an aggregate of $5.5 million
and $4.8 million, respectively, together with interest at the rate of 7% per
annum, compounded annually, at any time during the eleven-month period beginning
in March 2003 and ending February 2004.

EFFECT OF CERTAIN PROVISIONS OF E-LOAN'S RESTATED CERTIFICATE OF INCORPORATION
AND BYLAWS, AND THE DELAWARE ANTITAKEOVER STATUE

     Certain provisions of E-LOAN's Restated Certificate of Incorporation and
Bylaws, which will become effective upon the closing of this offering, may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of E-LOAN. These
provisions could limit the price that certain investors might be willing to pay
in the future for shares of E-LOAN's common stock. Certain of these provisions
allow E-LOAN to issue preferred stock without any vote or further action by the
stockholders, eliminate the right of stockholders to act by written consent
without a meeting and eliminate cumulative voting in the election of directors.
These provisions may make it more difficult for stockholders to take certain
corporate actions and could have the effect of delaying or preventing a change
in control of E-LOAN. In addition, E-LOAN is bound by Section 203 of the
Delaware General Corporation Law which, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any business combination with any
interested stockholder, unless:

     - the Board of Directors of the corporation previously approved either the
       business combination or the transaction which resulted in the stockholder
       becoming an interested stockholder;

     - upon consummation of the transaction which resulted in the stockholder
       becoming an interested stockholder, the interested stockholder owned at
       least 85% of the voting stock of the corporation outstanding at the time
       the transaction commenced, excluding for purposes of determining the
       number of shares outstanding (a) shares owned by persons who are
       directors and also officers, and (b) shares owned by employee stock plans
       in which employee participants do not have the right to determine
       confidentially whether shares under the plan will be tendered in a tender
       or exchange offer; or

     - on that date or subsequently, the business combination is approved by the
       Board of Directors and authorized at an annual or special meeting of
       stockholders, and not by written consent, by the affirmative vote of at
       least 66 2/3% of the outstanding voting stock which is not owned by the
       interested stockholder.

     E-LOAN's Restated Certificate of Incorporation provides that, upon the
closing of this offering, the Board of Directors will be divided into three
classes of directors with each class serving a staggered three-year term. The
classification system of electing directors may tend to discourage a third party
from making a tender offer or otherwise attempting to obtain control of E-LOAN
and may maintain the incumbency of the Board of Directors, as the classification
of the Board of Directors generally increases the difficulty of replacing a
majority of the directors.

                                       67
<PAGE>   71

E-LOAN's Bylaws eliminate the right of stockholders to call special meetings of
stockholders. The authorization of undesignated preferred stock makes it
possible for the Board of Directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of E-LOAN. These and other provisions may have the effect of
deferring hostile takeovers or delaying changes in control or management of
E-LOAN. The amendment of any of these provisions would require approval by
holders of at least 66 2/3% of the outstanding common stock.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the common stock is Chase Mellon
Shareholder Services.

                                       68
<PAGE>   72

                        SHARES AVAILABLE FOR FUTURE SALE

     Prior to this offering there has been no public market for E-LOAN's common
stock. Future sales of substantial amounts of E-LOAN's common stock in the
public market or the availability of such shares for sale, could adversely
affect the prevailing market price and the ability of E-LOAN to raise equity
capital in the future.

     Upon the closing of this offering, E-LOAN will have an aggregate of
38,297,744 shares of common stock outstanding, assuming no exercise of the
underwriters' over-allotment option and no exercise of outstanding options to
purchase common stock.

     Of the 38,297,744 shares of common stock to be outstanding upon the closing
of this offering, the 3,500,000 shares offered hereby will be eligible for
immediate sale in the public market without restriction, unless the shares are
purchased by "affiliates" of E-LOAN within the meaning of Rule 144 promulgated
under the Securities Act of 1933. The remaining 34,797,744 shares of common
stock held by existing stockholders upon the closing of this offering will be
"restricted securities", as that term is defined in Rule 144. Restricted
securities may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144, 144(k) or 701 under
the Securities Act. All of the holders of these "restricted securities,"
including officers and directors of E-LOAN, have entered into "lock-up
agreements" providing that they will not sell, directly or indirectly, any
common stock without the prior consent of the representatives of Goldman, Sachs
& Co. for a period of 180 days from the date of this prospectus. Subject to the
provisions of Rules 144, 144(k) and 701, 32,340,964 shares will be available for
sale in the public market, subject in the case of shares held by affiliates to
compliance with certain volume restrictions, upon expiration of this 180-day
period.

     In general, under Rule 144, a person or persons whose shares are
aggregated, including an affiliate who has beneficially owned shares for at
least one year, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the outstanding shares of
common stock, or the average weekly trading volume of the common stock during
the four calendar weeks preceding the date on which notice of such sale is
filed, subject to certain restrictions. In addition, a person who is not deemed
to have been an affiliate of E-LOAN at any time during the three months
preceding a sale, and who has beneficially owned the shares proposed to be sold
for at least two years would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above. To the extent that shares
were purchased from an affiliate of E-LOAN, the purchasers' holding period for
the purpose of effecting a sale under Rule 144 commences on the date of purchase
from the affiliate. As of March 31, 1999, there were outstanding options to
purchase 5,739,432 shares of common stock which will be eligible for sale in the
public market from time to time subject to vesting and the expiration of lock-up
agreements. As of March 31, 1999, there was outstanding a warrant to purchase
15,000 shares of Series C preferred stock convertible into 45,000 shares of
common stock upon the effectiveness of this offering and a warrant to purchase
53,996 shares of Series D preferred stock convertible into 161,988 shares of
common stock upon the effectiveness of this offering. The 206,988 shares of
common stock that will be issuable upon exercise of these warrants will be
eligible for sale in the public market from time to time subject to the
expiration of lock-up agreements and Rule 144. The possible sale of a
significant number of shares by the holders thereof may have an adverse effect
on the price of the common stock.

     E-LOAN is unable to estimate the number of shares that will be sold under
Rule 144, as this will depend on the market price for the common stock of
E-LOAN, the personal circumstances of the sellers and other factors. Prior to
this offering, there has been no public market for the common stock, and there
can be no assurance that a significant public market for the common stock will
develop or be sustained after this offering. Any future sale of substantial
amounts of common stock in the open market may adversely affect the market price
of the common stock offered hereby.

     E-LOAN will file a registration statement on Form S-8 under the Securities
Act to register the shares of common stock reserved for issuance under its 1997
Stock Option Plan and 1999

                                       69
<PAGE>   73

Employee Stock Purchase Plan. As a result, shares issued upon exercise of stock
options granted under the Stock Option Plan will be available, subject to
special rules for affiliates, for resale in the public market after the
effective date of such registration statement. See "Management -- Stock Plans".

     Pursuant to an Investor Rights Agreement among E-LOAN and certain holders
of E-LOAN's securities, after the closing of this offering, subject to certain
conditions, the holders of 17,842,395 shares of outstanding common stock,
including shares issuable upon the exercise of certain warrants to purchase
common stock, will be entitled to certain demand and piggyback registration
rights. Registration of such shares under the Securities Act would result in
such shares becoming freely tradable without restriction under the Securities
Act, except for shares purchased by Affiliates. Please see "Description of
Capital Stock -- Registration Rights".

                                 LEGAL MATTERS

     The validity of the common stock to be issued in this offering will be
passed upon for E-LOAN by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto,
California. Certain legal matters will be passed upon for the Underwriters by
Venture Law Group, A Professional Corporation, Menlo Park, California. As of the
date of this prospectus, WS Investment Company 96B and WS Investment Company
97B, investment partnerships composed of certain current and former members of
and persons associated with Wilson Sonsini Goodrich & Rosati, P.C., and Mario M.
Rosati, a member of Wilson Sonsini Goodrich & Rosati, P.C., beneficially own an
aggregate of 166,878 shares of E-LOAN's common stock.

                                    EXPERTS

     The financial statements of E-LOAN as of December 31, 1997 and 1998 and for
each of the three years in the period ended December 31, 1998 included in this
Prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.

                             AVAILABLE INFORMATION

     E-LOAN has filed with the Securities and Exchange Commission, a
Registration Statement on Form S-1, including the exhibits and schedules
thereto, under the Securities Act with respect to the shares to be sold in this
offering. This prospectus does not contain all the information set forth in the
Registration Statement. For further information with respect to E-LOAN and the
shares to be sold in this offering, reference is made to the Registration
Statement. Statements contained in this prospectus as to the contents of any
contract, agreement or other document referred to, are not necessarily complete,
and in each instance reference is made to the copy of the contract, agreement or
other document filed as an exhibit to the Registration Statement, each statement
being qualified in all respects by such reference.

     You may read and copy all or any portion of the Registration Statement or
any reports, statements or other information E-LOAN files with the Commission at
the Commission's public reference room at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.C., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can request copies of these documents upon payment
of a duplicating fee, by writing to the Commission. Please call the Commission
at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. E-LOAN's Commission filings, including the Registration
Statement will also be available to you on the Commission's Internet site. The
address of this site is http://www.sec.gov.

     E-LOAN intends to send to its stockholders annual reports containing
audited financial statements for each fiscal year and quarterly reports
containing unaudited financial statements for the first three quarters of each
fiscal year.

                                       70
<PAGE>   74

                         INDEX TO FINANCIAL STATEMENTS

                                    CONTENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
  Report of Independent Accountants.........................  F-2
  Balance Sheets at December 31, 1997, 1998 and March 31,
     1999 (unaudited).......................................  F-3
  Statements of Operations for the years ended December 31,
     1996, 1997 and 1998 and the three months ended March
     31, 1998 and 1999 (unaudited)..........................  F-4
  Statements of Stockholders' Deficit for the years ended
     December 31, 1996, 1997 and 1998 and the three months
     ended March 31, 1999 (unaudited).......................  F-5
  Statements of Cash Flows for the years ended December 31,
     1996, 1997 and 1998 and the three months ended March
     31, 1998 and 1999 (unaudited)..........................  F-6
  Notes to Financial Statements.............................  F-7
</TABLE>

                                       F-1
<PAGE>   75

                       REPORT OF INDEPENDENT ACCOUNTANTS

March 24, 1999

To the Stockholders and Board of Directors of E-Loan, Inc.

     In our opinion, the accompanying balance sheets and the related statements
of operations, stockholders' deficit and cash flows present fairly, in all
material respects, the financial position of E-Loan, Inc. (the Company) at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP
San Francisco, California

                                       F-2
<PAGE>   76

                                  E-LOAN, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                          PRO FORMA
                                                                                                        STOCKHOLDERS'
                                                                   DECEMBER 31,                           EQUITY AT
                                                            --------------------------    MARCH 31,       MARCH 31,
                                                               1997           1998           1999           1999
ASSETS                                                      -----------   ------------   ------------   -------------
                                                                                         (UNAUDITED)     (UNAUDITED)
<S>                                                         <C>           <C>            <C>            <C>
CURRENT ASSETS:
Cash and cash equivalents.................................  $ 4,217,687   $  9,141,367   $  3,565,219   $  4,065,219
Mortgage loans held-for-sale..............................           --     42,153,648     63,729,190
Accounts receivable, net..................................       33,924        411,058        241,186
Prepaids and other current assets.........................      168,577        720,681      2,247,370
                                                            -----------   ------------   ------------   ------------
      Total current assets................................    4,420,188     52,426,754     69,782,965     70,282,965
Furniture and equipment, net..............................      146,207      2,365,564      2,543,980
Deposits and other assets.................................      113,480        730,938        635,264
                                                            -----------   ------------   ------------   ------------
      Total assets........................................  $ 4,679,875   $ 55,523,256   $ 72,962,209   $ 73,462,209
                                                            ===========   ============   ============   ============
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
  STOCK AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Warehouse lines payable...................................  $        --   $ 41,046,122   $ 60,255,860
Accounts payable, accrued expenses and other..............      518,186      2,654,623      4,755,336
Capital lease obligation..................................           --        252,475        252,475
Notes payable.............................................       78,868         71,299        142,889
                                                            -----------   ------------   ------------   ------------
      Total current liabilities...........................      597,054     44,024,519     65,406,560
Capital lease obligations.................................           --        719,294        686,215
Notes payable.............................................           --        570,393        614,295
                                                            -----------   ------------   ------------   ------------
                                                                597,054     45,314,206     66,707,070
                                                            -----------   ------------   ------------   ------------
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
  Series C, 4,467,912 shares authorized; 4,069,936,
    4,069,936 and 4,269,936 (unaudited) shares issued and
    outstanding at December 31, 1997, 1998 and March 31,
    1999 (unaudited) (aggregate liquidation preference
    $4,997,998 and $5,245,702 at December 31, 1997 and
    1998 and March 31, 1999 (unaudited))..................    5,048,716      5,525,904      6,134,996
  Series C-1, 4,467,912 shares authorized; 0 shares issued
    and outstanding (liquidation preference $1.22852 per
    share)................................................           --             --
  Series D, 1,950,000 shares authorized; 1,662,529 and
    1,702,529 (unaudited) shares issued and outstanding at
    December 31, 1998 and March 31, 1999 (unaudited)
    (aggregate liquidation preference $15,400,006 and
    $15,770,526 at December 31, 1998 and March 31, 1999
    (unaudited))..........................................           --     15,867,098     16,625,127             --
                                                            -----------   ------------   ------------   ------------
COMMITMENTS AND CONTINGENCIES (NOTE 10)
STOCKHOLDERS' DEFICIT:
Convertible preferred stock:
  Series A, 428,635 shares authorized; 428,635 shares
    issued and outstanding (aggregate liquidation
    preference $94,300)...................................       90,901         90,901         90,901             --
  Series B, 450,708 shares authorized; 430,207 shares
    issued and outstanding (aggregate liquidation
    preference $412,999)..................................      411,482        411,482        411,482             --
Common stock, 20,000,000 and 50,000,000 (unaudited) shares
  authorized at December 31, 1997 and 1998, and March 31,
  1999; 12,255,000, 12,524,010 and 12,742,974 (unaudited)
  shares issued and outstanding at December 31, 1997 and
  1998 and March 31, 1999; 70,000,000 shares authorized;
  33,398,883 shares issued and outstanding on a pro forma
  basis (unaudited).......................................        4,085         26,867         50,108     23,812,614
Less: subscription receivable.............................       (4,085)        (4,085)        (4,085)        (4,085)
Unearned compensation.....................................           --     (4,477,000)   (34,488,000)   (34,488,000)
Additional paid-in capital................................      (41,667)     5,366,548     41,414,356     41,414,356
Accumulated deficit.......................................   (1,426,611)   (12,598,665)   (23,979,746)   (23,979,746)
                                                            -----------   ------------   ------------   ------------
      Total stockholders' equity (deficit)................     (965,895)   (11,183,952)   (16,504,984)     6,755,139
                                                            -----------   ------------   ------------   ------------
      Total liabilities, mandatorily redeemable
        convertible preferred stock and stockholders'
        deficit...........................................  $ 4,679,875   $ 55,523,256   $ 72,962,209   $ 73,462,209
                                                            ===========   ============   ============   ============
</TABLE>

The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>   77

                                  E-LOAN, INC.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED
                                            YEARS ENDED DECEMBER 31,                   MARCH 31,
                                    ----------------------------------------   --------------------------
                                       1996          1997           1998          1998           1999
                                    -----------   -----------   ------------   -----------   ------------
                                                                                      (UNAUDITED)
<S>                                 <C>           <C>           <C>            <C>           <C>
Revenues (Note 13)................  $   892,995   $ 1,042,729   $  6,831,546   $   526,597   $  4,801,641
Operating expenses:
  Operations......................      902,736     1,318,342      7,626,413       779,167      4,103,795
  Sales and marketing.............           --       470,323      5,642,394       513,044      3,656,761
  Technology......................           --       102,074      1,247,528       163,080        481,363
  General and administrative......       96,865       524,076      2,409,591       378,795      1,422,916
  Amortization of unearned
    compensation..................           --            --      1,251,000        44,000      6,554,000
                                    -----------   -----------   ------------   -----------   ------------
         Total operating
           expenses...............      999,601     2,414,815     18,176,926     1,878,086     16,218,835
                                    -----------   -----------   ------------   -----------   ------------
    Loss from operations..........     (106,606)   (1,372,086)   (11,345,380)   (1,351,489)   (11,417,194)
Other income, net.................       (3,438)       (2,407)       173,326        20,536         36,113
                                    -----------   -----------   ------------   -----------   ------------
         Net loss.................  $  (110,044)  $(1,374,493)  $(11,172,054)  $(1,330,953)  $(11,381,081)
                                    ===========   ===========   ============   ===========   ============
Net loss per share:
  Basic and diluted...............  $     (0.01)  $     (0.12)  $      (0.98)  $     (0.12)  $      (0.94)
                                    ===========   ===========   ============   ===========   ============
  Weighted-average shares --
    basic.........................   12,255,000    12,262,032     12,400,284    12,323,258     12,598,378
                                    ===========   ===========   ============   ===========   ============
Pro forma net loss per share
  (unaudited):
  Basic and diluted...............                              $      (0.41)  $     (0.06)  $      (0.34)
                                                                ============   ===========   ============
  Weighted-average shares --
    basic.........................                                27,153,122    22,743,817     33,100,579
                                                                ============   ===========   ============
</TABLE>

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

                                       F-4
<PAGE>   78

                                  E-LOAN, INC.

                      STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
                                        SERIES A             SERIES B
                                     PREFERRED STOCK     PREFERRED STOCK        COMMON STOCK
                                    -----------------   ------------------   -------------------   SUBSCRIPTION     UNEARNED
                                    SHARES    AMOUNT    SHARES     AMOUNT     SHARES     AMOUNT     RECEIVABLE    COMPENSATION
                                    -------   -------   -------   --------   ---------   -------   ------------   ------------
<S>                                 <C>       <C>       <C>       <C>        <C>         <C>       <C>            <C>
Balance at December 31, 1995......       --   $    --        --   $     --   12,255,000  $ 4,085   $     (4,085)  $         --
Net loss..........................
                                    -------   -------   -------   --------   ---------   -------   ------------   ------------
Balance at December 31, 1996......       --   $    --        --   $     --   12,255,000  $ 4,085   $     (4,085)  $         --
Series A preferred stock issued
 for cash, net of issuance costs
 of $3,399 at $0.22 per share in
 June 1997........................  428,635   $90,901
Series B preferred stock issued
 for cash, net of issuance costs
 of $1,517 at $0.96 per share in
 December 1997....................                      430,207    411,482
Accretion for preferred stock
 Series C.........................
Net loss..........................
                                    -------   -------   -------   --------   ---------   -------   ------------   ------------
Balance at December 31, 1997......  428,635   $90,901   430,207   $411,482   12,255,000  $ 4,085   $     (4,085)  $
Common Stock issued for cash......                                             136,488    20,027
Common Stock issued for cash upon
 exercise of stock options........                                             132,522     2,755
Accretion for preferred stock
 Series C.........................
Accretion for preferred stock
 Series D.........................
Issuance of warrants for capital
 lease............................
Issuance of warrants in relation
 to marketing agreements..........
Issuance of stock options for
 services rendered................
Unearned Compensation.............                                                                                  (4,477,000)
Net Loss..........................
                                    -------   -------   -------   --------   ---------   -------   ------------   ------------
Balance at December 31, 1998......  428,635   $90,901   430,207   $411,482   12,524,010  $26,867   $     (4,085)  $ (4,477,000)
Common stock issued for cash upon
 exercise of stock options
 (unaudited)......................                                             218,964    23,241
Accretion for preferred stock
 Series C (unaudited).............
Accretion for preferred stock
 Series D (unaudited).............
Unearned Compensation
 (unaudited)......................                                                                                 (30,011,000)
Net Loss (unaudited)..............
                                    -------   -------   -------   --------   ---------   -------   ------------   ------------
Balance at March 31, 1999
 (unaudited)......................  428,635   $90,901   430,207   $411,482   12,742,974  $50,108   $     (4,085)  $(34,488,000)
The accompanying notes are an integral part of these financial statements.

<CAPTION>

                                    ADDITIONAL                       TOTAL
                                       PAID       ACCUMULATED    STOCKHOLDERS'
                                    IN CAPITAL      DEFICIT         DEFICIT
                                    -----------   ------------   -------------
<S>                                 <C>           <C>            <C>
Balance at December 31, 1995......  $        --   $     57,926   $     57,926
Net loss..........................                    (110,044)      (110,044)
                                    -----------   ------------   ------------
Balance at December 31, 1996......  $        --   $    (52,118)  $    (52,118)
Series A preferred stock issued
 for cash, net of issuance costs
 of $3,399 at $0.22 per share in
 June 1997........................                                     90,901
Series B preferred stock issued
 for cash, net of issuance costs
 of $1,517 at $0.96 per share in
 December 1997....................                                    411,482
Accretion for preferred stock
 Series C.........................      (41,667)                      (41,667)
Net loss..........................                  (1,374,493)    (1,374,493)
                                    -----------   ------------   ------------
Balance at December 31, 1997......  $   (41,667)  $ (1,426,611)  $   (965,895)
Common Stock issued for cash......                                     20,027
Common Stock issued for cash upon
 exercise of stock options........                                      2,755
Accretion for preferred stock
 Series C.........................     (500,000)                     (500,000)
Accretion for preferred stock
 Series D.........................     (513,352)                     (513,352)
Issuance of warrants for capital
 lease............................       29,575                        29,575
Issuance of warrants in relation
 to marketing agreements..........      640,150                       640,150
Issuance of stock options for
 services rendered................       23,842                        23,842
Unearned Compensation.............    5,728,000                     1,251,000
Net Loss..........................                 (11,172,054)   (11,172,054)
                                    -----------   ------------   ------------
Balance at December 31, 1998......  $ 5,366,548   $(12,598,665)  $(11,183,952)
Common stock issued for cash upon
 exercise of stock options
 (unaudited)......................                                     23,241
Accretion for preferred stock
 Series C (unaudited).............     (129,095)                     (129,095)
Accretion for preferred stock
 Series D (unaudited).............     (388,097)                     (388,097)
Unearned Compensation
 (unaudited)......................   36,565,000                     6,554,000
Net Loss (unaudited)..............                 (11,381,081)   (11,381,081)
                                    -----------   ------------   ------------
Balance at March 31, 1999
 (unaudited)......................  $41,414,356   $(23,979,746)  $(16,504,984)
The accompanying notes are an inte
</TABLE>

                                       F-5
<PAGE>   79

                                  E-LOAN, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                 THREE MONTHS ENDED
                                                         YEARS ENDED DECEMBER 31,                     MARCH 31,
                                                  ---------------------------------------    ---------------------------
                                                    1996         1997           1998            1998           1999
                                                  ---------   -----------   -------------    -----------   -------------
                                                                                                     (UNAUDITED)
<S>                                               <C>         <C>           <C>              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................  $(110,044)  $(1,374,493)  $ (11,172,054)   $(1,330,953)  $ (11,381,081)
Adjustments to reconcile net loss to cash used
  in operating activities:
  Amortization of unearned compensation.........         --            --       1,251,000         44,000       6,554,000
  Depreciation and amortization.................         --         6,860         512,998         29,417         210,900
  Loss on disposal of furniture and equipment...         --        37,361          41,092             --              --
  Changes in operating assets and liabilities:
    Accounts receivable.........................     (3,300)      (30,624)       (377,134)        (1,501)        169,872
    Net change in mortgage loans
      held-for-sale.............................         --            --     (42,153,648)            --     (21,575,542)
    Prepaids, deposits and other assets.........      2,862      (276,960)       (641,899)        46,572      (1,431,259)
    Accounts payable, accrued expenses and
      other.....................................     33,668       474,583       2,136,437       (265,626)      2,101,472
                                                  ---------   -----------   -------------    -----------   -------------
        Net cash used in operating activities...    (76,814)   (1,163,273)    (50,403,208)    (1,478,091)    (25,351,638)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of furniture and equipment..........     (4,557)     (160,775)     (1,608,899)      (156,334)       (389,316)
                                                  ---------   -----------   -------------    -----------   -------------
        Net cash used in investing activities...     (4,557)     (160,775)     (1,608,899)      (156,334)       (389,316)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock........         --            --          22,782         21,606          23,241
  Payments on obligations under capital
    leases......................................         --            --         (26,875)            --         (33,078)
  Proceeds from notes payable...................     33,565        32,303         641,692             --         115,493
  Repayments of notes payable...................                                  (78,868)       (78,868)             --
  Proceeds from warehouse lines payable.........         --            --     241,242,483             --     270,045,646
  Repayments of warehouse lines payable.........         --            --    (200,196,361)            --    (250,835,908)
  Proceeds from issuance of preferred stock,
    net.........................................         --     5,509,432      15,330,934             --         849,412
                                                  ---------   -----------   -------------    -----------   -------------
        Net cash provided by financing
          activities............................     33,565     5,541,735      56,935,787        (57,262)     20,164,806
                                                  ---------   -----------   -------------    -----------   -------------
  Net increase (decrease) in cash...............    (47,806)    4,217,687       4,923,680     (1,691,687)     (5,576,148)
  Cash and cash equivalents at beginning of
    period......................................     47,806            --       4,217,687      4,217,687       9,141,367
                                                  ---------   -----------   -------------    -----------   -------------
  Cash and cash equivalents at end of period....  $      --   $ 4,217,687   $   9,141,367    $ 2,526,000   $   3,565,219
                                                  =========   ===========   =============    ===========   =============
  SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest......................  $   1,124   $     7,036   $     588,987    $     5,356   $     814,413
                                                  =========   ===========   =============    ===========   =============
  NONCASH INVESTING AND FINANCING ACTIVITIES:
    Furniture and equipment under capital
      leases....................................  $      --   $        --   $     998,642    $   499,610   $          --
                                                  =========   ===========   =============    ===========   =============
</TABLE>

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

                                       F-6
<PAGE>   80

                                  E-LOAN, INC.

                         NOTES TO FINANCIAL STATEMENTS

 1. THE COMPANY

     E-Loan, Inc. (the Company) was incorporated on August 26, 1996 and began
marketing its services in June 1997. Prior to that date, the Company conducted
business through a predecessor company, Palo Alto Funding Group (PAFG) which was
established in 1992 as a mortgage broker. The stockholders of PAFG and the
Company were the same and on December 18, 1997 PAFG merged with the Company. The
transaction was accounted for in a manner similar to a pooling of interests and,
as a result, the accompanying financial statements represent the combined
balance sheets and results of operations of the Company and PAFG.

     The Company is a provider of mortgage offerings online and is engaged in
the brokerage, origination, and sale of mortgage loans collateralized by
residential real estate. The Company serves U.S. consumers in the first and
second home mortgage loan market over the internet.

 2. BASIS OF PRESENTATION

     The Company has sustained net losses and negative cash flows from
operations since its inception. The Company's ability to meet its obligations in
the ordinary course of business is dependent upon its ability to establish
profitable operations or raise additional financing through public or private
equity financings, collaborative or other arrangements with corporate sources,
or other sources of financing to fund operations. However, there can be no
assurance that the Company will be able to achieve profitable operations.
Management believes that its current funds and available lines of credit will be
sufficient to enable the Company to meet its planned expenditures through at
least December 31, 1999.

 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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.

     UNAUDITED INTERIM RESULTS

     The accompanying interim financial statements as of March 31, 1999, and for
the three months ended March 31, 1998 and 1999, 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, 1999 and for the three months ended March 31, 1998 and 1999. The financial
data and other information disclosed in these notes to financial statements
related to these periods are unaudited. The results for the three months ended
March 31, 1999 are not necessarily indicative of the results to be expected for
the year ending December 31, 1999.

     RISKS AND UNCERTAINTIES

     The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for internet products and services. These
risks include the failure to develop and extend the Company's online service
brands, the rejection of the Company's services by consumers,

                                       F-7
<PAGE>   81
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

vendors and/or advertisers, the inability of the Company to maintain and
increase the levels of traffic on its online services, as well as other risks
and uncertainties.

     Additionally, in the normal course of business, companies in the mortgage
banking industry encounter certain economic and regulatory risks. Economic risks
include interest rate risk, credit risk and market risk. The Company is subject
to interest rate risk to the extent that in a rising interest rate environment,
the Company will generally experience a decrease in loan production which may
negatively impact the Company's operations. Credit risk is the risk of default,
primarily in the Company's mortgage loan portfolio that result from the
mortgagors' inability or unwillingness to make contractually required payments.
Market risk reflects changes in the value of mortgage loans held-for-sale and in
commitments to originate loans.

     The Company sells loans to mortgage loan purchasers on a servicing released
basis without recourse. As such, the risk of loss or default by the borrower has
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 the loans and indemnify these purchasers
for any losses from borrower defaults. For the year ended December 31, 1998 and
the three months ended March 31, 1999 (unaudited), the Company had not
repurchased any loans.

     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.

     MORTGAGE LOANS HELD-FOR-SALE

     Mortgage loans held-for-sale consist of residential property mortgages
having maturities up to 30 years. Pursuant to the mortgage terms, the borrowers
have pledged the underlying real estate as collateral for the loans. It is the
Company's practice to sell these loans to mortgage loan purchasers shortly after
they are funded. Mortgage loans held-for-sale are recorded at the lower of cost
or aggregate market value. Cost generally consists of loan principal balance
adjusted for net deferred fees and costs. No valuation adjustment was required
at December 31, 1998 or March 31, 1999.

     FURNITURE AND EQUIPMENT

     Furniture and equipment, including furniture and equipment under capital
leases, are recorded at cost and depreciated using the straight-line method over
their useful lives, which is generally three years for computers and five years
for furniture and fixtures. Assets under capital leases are depreciated over the
shorter of the useful life of the asset or the term of the lease. Leasehold
improvements are amortized over the remaining life of the lease. Maintenance and
repairs are charged to expense as incurred, and improvements and betterments are
capitalized. When assets are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is reflected in operations in the period realized.

     BROKERAGE FEES

     Brokerage fees represent compensation earned for the processing of mortgage
loan applications for third party lenders. The Company does not take title to
the mortgages and the

                                       F-8
<PAGE>   82
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

funding for these customers is provided by third party lenders. The fees for
providing these services are recognized at such time as the loans are funded by
the lender.

     GAIN ON SALE OF LOANS

     Gain on sale of loans includes gains or losses determined by loan sales
proceeds less the carrying value of the loans sold. Origination fees, net of
certain direct origination costs, are deferred and recognized when the loan is
sold. The carrying value of the loan is adjusted for the deferred origination
fees and costs. Gain on sale of loans are recognized at the time of settlement
with the mortgage loan purchaser.

     INTEREST INCOME ON LOANS

     Interest income is accrued as earned. Loans are placed on non-accrual
status when any portion of principal or interest is ninety days past due or
earlier when concern exists as to the ultimate collectibility of principal or
interest. Loans return to accrual status when principal and interest become
current and are anticipated to be fully collectible.

     ADVERTISING COSTS

     Advertising costs related to various media content advertising such as
television, radio, and print are charged to other operating expenses as
incurred. These costs include the cost of production as well as the cost of any
airtime.

     INCOME TAXES

     The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards (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. The provision for income tax expense represents taxes
payable for the current period, plus the net change in deferred tax assets and
liabilities.

     STOCK-BASED COMPENSATION

     The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and complies with the disclosure
provision 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 the
grant.

     NET INCOME (LOSS) PER SHARE

     The Company computes net loss per share in accordance with SFAS No. 128,
Earnings per Share. Under the provisions of SFAS No. 128 basic net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of common shares outstanding during
the period. Diluted net loss per share is computed by dividing the net loss
available to common stockholders for the period by the weighted average number
of common and common equivalent shares outstanding during the period, to the
extent such

                                       F-9
<PAGE>   83
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

common equivalent shares are dilutive. Common equivalent shares are composed of
incremental common shares issuable upon the exercise of stock options and
warrants and upon conversion of Series A, B, C and Series D convertible
preferred stock.

     The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated:

<TABLE>
<CAPTION>
                                          YEARS ENDED                      THREE MONTHS ENDED
                                          DECEMBER 31,                         MARCH 31,
                            ----------------------------------------   --------------------------
                               1996          1997           1998          1998           1999
                            -----------   -----------   ------------   -----------   ------------
                                                                              (UNAUDITED)
<S>                         <C>           <C>           <C>            <C>           <C>
Numerator:
  Net loss................  $  (110,044)  $(1,374,493)  $(11,172,054)  $(1,330,953)  $(11,381,081)
  Accretion of Series C
    and D mandatorily
    redeemable convertible
    preferred stock to
    redemption value......           --       (41,667)    (1,013,352)     (125,000)      (517,192)
                            -----------   -----------   ------------   -----------   ------------
         Net loss
           available to
           common
           shareholders...  $  (110,044)  $(1,416,160)  $(12,185,406)  $(1,455,953)  $(11,898,273)
                            ===========   ===========   ============   ===========   ============
Denominator:
  Weighted average common
    shares -- basic and
    diluted...............   12,255,000    12,262,032     12,400,284    12,323,258     12,598,378
                            -----------   -----------   ------------   -----------   ------------
Net loss per share:
  Basic and diluted.......  $     (0.01)  $     (0.12)  $      (0.98)  $     (0.12)  $      (0.94)
                            ===========   ===========   ============   ===========   ============
</TABLE>

     PRO FORMA NET LOSS PER SHARE (UNAUDITED)

     Pro forma net loss per share for the year ended December 31, 1998 and the
three months ended March 31, 1998 and 1999 is computed using the weighted
average number of common shares outstanding, including the pro forma effects of
the automatic conversion of the Company's Series A and Series B convertible
preferred stock, Series C and Series D mandatorily redeemable preferred stock
and 53,996 warrants to purchase Series D preferred stock at $9.26 per share into
shares of the Company's Common Stock effective upon the closing of the Company's
initial public offering as if such conversion occurred on January 1, 1998, or at
date of original issuance, if later. Pro forma diluted net loss per share is
computed only using the pro forma weighted average number of common shares as
common stock equivalents are antidilutive.

     Effective upon the closing of the Company's proposed initial public
offering, the outstanding shares of Series A and Series B convertible preferred
stock, Series C and D mandatorily redeemable preferred stock and warrants to
purchase Series D preferred stock will automatically convert into 1,285,905,
1,290,621, 12,809,808, 5,107,587 and 161,988 shares, respectively, of Common
Stock (for a total of 20,655,909 shares). The pro forma effects of these
transactions are unaudited and have been reflected in the accompanying pro forma
balance sheet at March 31, 1999.

                                      F-10
<PAGE>   84
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     COMPREHENSIVE INCOME

     The Company adopted SFAS No. 130, Reporting Comprehensive Income, during
1998. The Company classifies items of "other comprehensive income" by their
nature in a financial statement and displays the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. To date the Company has not
had any transactions that are required to be reported in comprehensive income.

     SEGMENT REPORTING

     The FASB issued SFAS No. 131, Disclosure about Segments of an Enterprise
and Related Information. SFAS No. 131 establishes standards for the way public
business enterprises are to report information about operating segments in
annual financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports. The Company
has determined that it does not have any separately reportable business
segments.

 4. SIGNIFICANT CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

     All cash deposits are held by two financial institutions and exceed
existing federal deposit insurance coverage limits at each institution.
Additionally, approximately 67% and 78% (unaudited) of all loans sold during the
year ended December 31, 1998 and the three months ended March 31, 1999 were sold
to one mortgage loan purchaser.

 5. MORTGAGE LOANS HELD-FOR-SALE

     The inventory of mortgage loans consists primarily of first trust deed
mortgages on residential properties located throughout the United States,
primarily concentrated in California. As of December 31, 1998 and March 31,
1999, the Company has net mortgage loans held-for-sale of $42,153,648 and
$63,729,190 (unaudited), all of which are on accrual basis. All mortgage loans
held-for-sale are pledged as collateral for borrowings at December 31, 1998 and
March 31, 1999 (see Note 8). There were no mortgage loans held-for-sale at
December 31, 1997.

 6. FURNITURE AND EQUIPMENT

     Furniture and equipment are recorded at cost and consist of the following:

<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                              ----------------------     MARCH 31,
                                                1997         1998          1999
                                              --------    ----------    -----------
                                                                        (UNAUDITED)
<S>                                           <C>         <C>           <C>
Computer equipment..........................  $133,295    $  929,486    $1,225,776
Furniture and fixtures......................    19,772       646,847       677,054
Equipment under capital leases..............        --       998,642       998,642
Leasehold improvements......................        --       144,541       186,456
                                              --------    ----------    ----------
                                               153,067     2,719,516     3,087,928
Accumulated depreciation and amortization...    (6,860)     (353,952)     (543,948)
                                              --------    ----------    ----------
                                              $146,207    $2,365,564    $2,543,980
                                              ========    ==========    ==========
</TABLE>

                                      F-11
<PAGE>   85
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     Depreciation and amortization expense for the years ended December 31, 1997
and 1998 and three months ended March 31, 1999 was $6,860 and $347,092, $210,900
(unaudited), respectively.

     As of December 31, 1998 and March 31, 1999, accumulated amortization for
equipment under capital leases was $203,447 and $278,205 (unaudited). There was
no amortization for equipment under capital leases as of December 31, 1997. All
equipment under capital leases serves as collateral for the related lease
obligation (see Note 10).

 7. INCOME TAXES

     There was no benefit for income taxes for the years ended December 31,
1996, 1997 and 1998 and the three months ended March 31, 1999 due to the
Company's inability to recognize the benefit of net operating losses. At
December 31, 1998, the Company had net operating loss carryforwards of
approximately $10.0 million for both federal and state income tax purposes. At
March 31, 1999 the Company had net operating loss carryforwards of approximately
$14.0 million (unaudited) for both federal and state income tax purposes. The
federal carryforwards expire in the years 2011 through 2018. For federal and
state tax purposes, a portion of the Company's net operating loss may be subject
to certain limitations on annual utilization in case of changes in ownership, as
defined by federal and state tax laws.

     The primary components of temporary differences, which give rise to
deferred taxes are as follows:

<TABLE>
<CAPTION>
                                                           DECEMBER 31,          MARCH 31,
                                                     ------------------------   -----------
                                                       1997          1998          1999
                                                     ---------    -----------   -----------
                                                                                (UNAUDITED)
<S>                                                  <C>          <C>           <C>
Deferred tax assets:
  Net operating loss carryforwards.................  $ 441,756    $ 4,193,310   $ 5,647,521
  Other............................................     78,951        227,984       814,348
                                                     ---------    -----------   -----------
          Total deferred tax assets................    520,707      4,421,294     6,461,869
Valuation allowance................................   (520,707)    (4,245,551)   (6,461,869)
                                                     ---------    -----------   -----------
                                                     $      --    $        --   $        --
                                                     =========    ===========   ===========
</TABLE>

     Management evaluates the recoverability of the deferred tax asset and the
level of the valuation allowance. Due to the uncertainty surrounding the
realization of the favorable tax attributes in future tax returns, the Company
has recorded a valuation allowance against its net deferred tax asset at
December 31, 1997, 1998 and March 31, 1999 (unaudited). 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.

 8. WAREHOUSE LINES PAYABLE

     As of December 31, 1998 and March 31, 1999, the Company had a warehouse
line of credit for borrowings up to $18.8 million, which includes a temporary
overdraft limit of $3.75 million, for interim financing of mortgage loans. The
interest rate charged on borrowings against the warehouse line of credit is
variable based on the commercial paper rate of the lender plus various
percentage rates. Borrowings are collateralized by the mortgage loans
held-for-sale. The line of credit which is uncommitted expires on June 30, 1999.
Upon expiration, management believes it will either renew its existing line or
obtain sufficient additional lines. At December 31,

                                      F-12
<PAGE>   86
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1998 and March 31, 1999 approximately $15.0 million and $19.9 million
(unaudited) was outstanding under this line. Either the Company or the Lender
can terminate the agreement at any time. On April 23, 1999 the amount of the
warehouse line of credit was increased to $25 million and the expiration date
was extended to April 20, 2000 (unaudited).

     This line of credit agreement generally requires the Company to comply with
various financial and non-financial covenants. The Company was not in compliance
with certain covenants contained in the credit agreement and has obtained a
waiver from the lender.

     Two of the Company's founding stockholders have provided guarantees for the
Company's obligations under this line of credit.

     Additionally, the Company has a commitment to finance up to $35.0 million
of mortgage loan inventory pending sale of these loans to the ultimate mortgage
loan purchasers. This additional loan inventory financing is secured by the
related mortgage loans. The interest rate charged is LIBOR plus 1.25%. Either
the Company or the lender can terminate the agreement at any time. At December
31, 1998 and March 31, 1999 approximately $26.1 million and $17.1 million
(unaudited), respectively was outstanding under this financial commitment. This
agreement includes various non-financial negative and affirmative covenants. The
Company was not in compliance with a covenant contained in the agreement and has
obtained a waiver from the lender.

     On May 21, 1999 the Company entered into an agreement with this lender for
a $100 million committed line of credit. In addition, after the closing of the
Company's initial public offering, the agreement is expanded to include another
$100 million of uncommitted funds. Interest accrues on these funds at 95 basis
points (.95%) over the monthly average LIBOR rate. The line expires May 20, 2000
(unaudited).

     Subsequent to year end, on January 15, 1999, the Company entered into a
warehouse line of credit agreement for borrowings of up to $40 million for
interim financing of mortgage loans. The interest rate charged on borrowings
against the line is equal to 185 basis points (1.85%) per annum over the Monthly
Average LIBOR Rate. The line of credit expires on January 26, 2000. Upon
expiration, management believes it will either renew its existing line or obtain
sufficient additional lines. At March 31, 1999, approximately $15 million
(unaudited) was outstanding under this line. Either the Company or the lender
can terminate the agreement at anytime.

     This line of credit agreement generally requires the Company to comply with
various financial and non-financial covenants. The Company was not in compliance
as of May 31 and into June 1999 with certain covenants contained in the credit
agreement and has obtained a waiver from the lender (unaudited).

 9. NOTES PAYABLE

     In December 1998, the Company entered into two credit facilities in the
aggregate principal amount of $5,000,000 for working capital and equipment
financing. The first credit facility in the amount of $1,500,000 has an interest
rate of prime plus 0.50% and expires in December 1999. The second credit
facility is a $3,500,000 term loan with an interest rate of prime plus 0.50% and
expires in September 2002. At December 31, 1998 and March 31, 1999 $641,692 and
$757,185 (unaudited) was outstanding under these two credit facilities.

     These credit facilities require the Company to meet various financial
covenants. The Company was not in compliance with one of these covenants and has
obtained a waiver from the lender.

     During March 1999, the Company obtained a commitment of $5.0 million for a
revolving line of credit capital facility. The interest rate will be based on
the prime rate and the facility will

                                      F-13
<PAGE>   87
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

expire at the earlier of March 2000 or the closing of the Company's initial
public offering. Two of the Company's founding stockholders have provided
guarantees for the Company's obligation under this line of credit.

     This line of credit agreement generally requires the Company to comply with
various financial covenants. The Company was not in compliance as of May 31 and
into June 1999 with certain covenants and has obtained a waiver from the lender
(unaudited).

10. COMMITMENTS AND CONTINGENCIES

     LEASES

     The Company leases office space under an operating lease which provides for
renewal in October 2003. Rent expense under operating leases amounted to
$77,037, $107,652, $374,794 and $225,059 (unaudited) for the years ended
December 31, 1996, 1997 and 1998 and the three months ended March 31, 1999,
respectively.

     During April 1998, the Company entered into a 48-month capital lease for
equipment (see Note 6). The Company's lease obligations under capital and
operating leases are as follows:

<TABLE>
<CAPTION>
                 YEAR ENDING DECEMBER 31,                    CAPITAL      OPERATING
                 ------------------------                   ----------    ----------
<S>                                                         <C>           <C>
          1999............................................  $  300,408    $  532,580
          2000............................................     332,068       665,797
          2001............................................     332,068       686,336
          2002............................................     162,424       706,874
          2003............................................          --       603,325
                                                            ----------    ----------
          Total minimum lease payments....................   1,126,968    $3,194,912
                                                                          ==========
  Less amount representing interest.......................    (155,199)
                                                            ----------
  Present value of minimum lease payments.................     971,769
  Less current portion of capital lease obligations.......    (252,475)
                                                            ----------
  Long-term portion.......................................  $  719,294
                                                            ==========
</TABLE>

     Under the terms of the office lease, the Company maintains a $900,000
stand-by letter of credit in favor of the lessor. The Company has deposited
$255,000 as collateral for this letter of credit which is recorded as deposits
and other assets in the accompanying balance sheet.

     FACILITY LEASE (UNAUDITED)

     In March 1999, the Company entered into an amendment to the existing
facility lease for an additional 25,474 feet commencing June 1, 1999. The
amended lease expires November 30, 2004. In connection with the amendment, the
Company increased the letter of credit securing the facility to $1,250,000 and
released the $255,000 in collateral.

     FINANCIAL INSTRUMENT CONTINGENCIES

     At December 31, 1998 and March 31, 1999 (unaudited), the Company was party
to commitments to fund loans at interest rates previously agreed (locked) by
both the lender and the borrower for specified periods of time. Prior to
originating loans under these commitments, the Company evaluates each customer's
credit and collateral worthiness. The Company uses its best efforts to fund
these locked loans within the agreed-upon locked period. If the loan cannot be
funded within this period, or if the Company is unable to secure a rate lock
from the lender equal to or less than the rate lock extended to the borrower,
the Company will earn less revenue than it anticipated at the time it locked
with the borrower. At December 31, 1998 and March 31,

                                      F-14
<PAGE>   88
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1999, the Company has provided locks to originate loans amounting to
approximately $99.1 million and $52.2 Million (unaudited) (the "locked
pipeline"). In addition, the Company had commitments at December 31, 1998 and
March 31, 1999, in its capacity as a broker, amounting to approximately $45.0
million and $23.7 (unaudited).

     At December 31, 1998 and March 31, 1999, the Company has entered into
non-mandatory forward loan sale agreements, including commitments with lenders
for brokered loans, amounting to approximately $186.3 million and $139.6 million
(unaudited) (this includes the mortgage loans held-for-sale at December 31, 1998
and March 31, 1999, of approximately $42.2 million and $63.7 million
(unaudited)). The 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 these agreements to date.

     LEGAL

     In the normal course of business, the Company is at times subject to
pending and threatened legal actions and proceedings. After reviewing pending
and threatened actions and proceedings with counsel, management believes that
the outcome of such actions or proceedings is not expected to have a material
adverse effect on the financial position or results of operation of the Company.

     MORTGAGE BANKERS' BLANKET BOND

     At December 31, 1998 and March 31, 1999, the Company carried a mortgage
bankers' blanket bond for $300,000 and carried errors and omissions insurance
coverage for $2,000,000. The premiums for the bond and insurance coverage are
paid through May 27, 1999 and January 9, 2000 (unaudited), respectively.

     MARKETING SERVICE AGREEMENTS

     The Company has entered into several marketing service agreements with
third parties. Under these agreements the third parties will display the
Company's logo and loan information on their internet websites and provide
related marketing services. The Company pays for these services in minimum
monthly and quarterly installments plus, in some cases, a per view charge for
each time the information is displayed. Future minimum payments under these
agreements are as follows:

<TABLE>
<CAPTION>
                YEAR ENDING DECEMBER 31,
                ------------------------
<S>                                                       <C>
          1999..........................................  $5,463,300
          2000..........................................   2,309,800
          2001..........................................     212,000
          Thereafter....................................          --
                                                          ----------
                                                          $7,985,100
                                                          ==========
</TABLE>

     Two of these marketing agreements are with a stockholder of the Company.
The Company has incurred approximately $1.04 million and $0.6 million
(unaudited) in marketing service expenses under these agreements with this
stockholder during the year ended December 31, 1998 and the three months ended
March 31, 1999. There were no such agreements as of December 31, 1996 and 1997.

                                      F-15
<PAGE>   89
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. STOCKHOLDERS' (DEFICIT) AND MANDATORILY REDEEMABLE PREFERRED STOCK

     COMMON AND CONVERTIBLE PREFERRED STOCK

     At December 31, 1998 and March 31, 1999, the Company was authorized to
issue 20,000,000 shares and 50,000,000 (unaudited) shares of common stock and
11,765,167 shares of preferred stock. The Company has designated 428,635 shares
of the authorized preferred stock as Series A preferred stock, 450,708 shares as
Series B preferred stock, 4,467,912 shares as Series C preferred stock,
4,467,912 shares as Series C-1 preferred stock and 1,950,000 shares as Series D
preferred stock.

     REDEMPTION

     Series A and B preferred stock are not redeemable.

     The Series C and C-1 preferred stock are redeemable at any time after
December 17, 2001 at the request of no less than 66.67% of the then outstanding
Series C and C-1 stockholders. The redemption price is equal to $1.22852 per
share plus 10% per annum on the amount payable plus all declared but unpaid
dividends. The redemption amounts are payable in three annual installments.

     The Series D preferred stock is redeemable at any time after September 4,
2002 at the request of no less than 66.67% of the then outstanding Series D
stockholders and subject to the consent of a majority of the Series C and C-1
preferred stockholders. The redemption price is equal to $9.263 per share plus
10% per annum on the amount payable plus all declared but unpaid dividends. The
redemption amounts are payable in three annual installments.

     LIQUIDATION PREFERENCE

     In the event of any liquidation, dissolution or winding up of the Company,
either voluntary or involuntary, the holders of preferred stock retain
liquidation preference over common stockholders. The liquidation amounts are
$0.22 per share of Series A, $0.96 per share of Series B, $1.22852 per share of
Series C, $1.22852 per share of Series C-1, and $9.263 per share of Series D
preferred stock.

     The remaining assets and funds of the Company available for distribution
shall be distributed ratably among all holders of Series C, Series C-1, and
Series D preferred stock and common stock pro rata based on the number of shares
of common stock held by each holder (assuming conversion of all Series C, Series
C-1, and Series D preferred stock) until, with respect to holders of Series C
and Series C-1, such holders shall have received an aggregate of $3.6855 per
share and the holders of Series D preferred stock have received an aggregate of
$13.89 per share. Any remaining assets shall be distributed among the holders of
common stock on a pro rata basis.

     VOTING RIGHTS

     Holders of preferred stock are entitled to vote together with holders of
common stock. The number of votes granted to preferred shareholders is to equal
the number of full shares of common stock into which each share of preferred
stock could be converted as described in the Company's Articles of
Incorporation. Special voting rights are provided to Series C, C-1, and D
preferred stockholders for the election of Board of Director members.

                                      F-16
<PAGE>   90
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     CONVERSION

     At the option of the holder, each share of preferred stock is convertible
at any time into shares of common stock as determined by dividing the Issuance
Price by the Conversion Price. The Issuance Price and Conversion Price for the
preferred stock are as follows: $0.22 per share and $0.07333 per share for
Series A; $0.96 per share and $0.32 per share for Series B; $1.22852 per share
and $0.40951 per share for Series C; $1.22852 per share and $0.40951 per share
for Series C-1; and $9.26 per share and $3.0867 per share for Series D,
respectively. The Conversion Price for each series of preferred stock is subject
to adjustment as described in the Company's articles of incorporation.
Additionally, Series C preferred stock may be automatically converted to Series
C-1 preferred stock in the event such holders of Series C preferred stock do not
exercise their right of first refusal as set forth in the restated investors'
rights agreement.

     All preferred shares will automatically be converted into shares of common
stock upon the earlier of (i) a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of 1933
at an offering price of not less than $4.63 per share (as adjusted to reflect
any stock splits, stock dividends, or combinations), and an aggregate offering
price of $15.0 million; or (ii) the date specified by written consent or
agreement of (a) the holders of a majority of the then outstanding shares of
Series C and Series C-1 preferred stock, (b) the holders of a majority of the
then outstanding shares of Series D preferred stock and (c) the holders of a
majority of the then outstanding shares of preferred stock.

     DIVIDENDS

     Holders of preferred stock are entitled to receive, when and if declared by
the Board of Directors, dividends at the rate of $0.02 per share of Series A,
$0.096 per share of Series B, $0.122852 per share of Series C, $0.122852 per
share of Series C-1 and $0.926 per share of Series D, respectively, per year,
payable in preference to any payment of any dividend on common stock. After such
dividend payment, any additional dividends declared shall be payable entirely to
the holders of Series C and Series C-1 preferred stock and common stock on a pro
rata basis. The dividends are non-cumulative.

     WARRANTS

     In March 1998, the Company issued warrants to purchase up to 15,000 shares
of Series C preferred stock at an exercise price of $2.00 per share to a lender
in connection with a capital lease. In addition, in connection with two separate
strategic alliance agreements, the Company issued warrants to purchase 200,000
shares of Series C preferred stock at an exercise price of $2.40 per share in
March 1998 and 53,996 shares of Series D preferred stock at an exercise price of
$9.26 per share in September 1998.

     As of December 31, 1998, no warrants had been exercised. As of March 31,
1999, 200,000 warrants for Series C preferred stock had been exercised
(unaudited).

12. STOCK OPTION PLAN AND UNEARNED COMPENSATION

     As of March 31, 1999, the Company has reserved up to 7,500,000 (unaudited)
shares of common stock issuable upon exercise of options issued to certain
employees, directors, and consultants pursuant to the Company's 1997 Stock
Option Plan. Such options are exercisable at prices established at the date of
grant, and have a term of ten years. Each optionee has a vested interest in 25%
of the option shares upon the optionee's completion of one year of service
measured from the grant date. The balance will vest in equal successive monthly
installments of 1/48
                                      F-17
<PAGE>   91
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

upon the optionee's completion of each of the next 36 months of service. If an
option holder ceases to be employed by the Company, vested options held at the
date of termination may be exercised within three months. As of December 31,
1997, 1998 and March 31, 1999, 1,835,649, 3,084,627 and 2,498,280 (unaudited)
options have been granted and 864,351, 621,630 and 1,409,082 (unaudited) options
were still available for grant under the Company's stock option plan. There were
no options granted in 1996.

     Options granted during the years ended December 31, 1997 and 1998 and the
three months ended March 31, 1999 resulted in unearned compensation of $0, $5.7
million and $35.0 million (unaudited), respectively. The amounts recorded
represent the difference between the exercise price and the deemed fair value of
the Company's common stock for shares subject to the options granted. The
amortization of deferred compensation is being charged to operations over the
four-year vesting period of the options. For the year ended December 31, 1998
and the three months ended March 31, 1999, the amortization of unearned
compensation was $1,251,000 and $5,005,000 (unaudited).

     Options under the plan may be either Incentive Stock Options, as defined
under Section 422 of the Internal Revenue Code, or Nonstatutory Options.

     The following information concerning the Company's stock option plan is
provided in accordance with Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (SFAS 123). As permitted by SFAS 123,
the Company accounts for such plans in accordance with APB No. 25 and related
interpretations. The fair value of each stock option is estimated on the date of
grant using the minimum value option-pricing model with the following weighted
average assumptions.

<TABLE>
<S>                                                           <C>
Expected life...............................................  5 years
Risk-free interest rate.....................................    5.00%
Expected dividend rate......................................    0.00%
Estimated volatility........................................    0.00%
</TABLE>

     As a result of the above assumptions, the weighted average fair value of
options granted during the years ending December 31, 1997 and 1998 and the three
months ended March 31, 1998 and 1999 was $0.22, $2.02, $0.38 (unaudited) and
$14.40 (unaudited), respectively.

     The following pro forma net loss information has been prepared as if the
Company had followed the provisions of SFAS No. 123:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                   YEAR ENDED DECEMBER 31,               MARCH 31,
                                 ---------------------------    ---------------------------
                                    1997            1998           1998            1999
                                 -----------    ------------    -----------    ------------
                                                                        (UNAUDITED)
<S>                              <C>            <C>             <C>            <C>
Net loss:
  As reported..................  $(1,374,493)   $(11,172,054)   $(1,330,953)   $(11,381,081)
  Pro forma....................  $(1,401,894)   $(11,210,409)   $(1,336,786)   $(11,649,135)
Net loss per share:
  As reported..................  $     (0.12)   $      (0.98)   $     (0.12)   $      (0.94)
  Pro-forma....................  $     (0.12)   $      (0.99)   $     (0.12)   $      (0.97)
</TABLE>

                                      F-18
<PAGE>   92
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     A summary of the status of the Company's stock option plan and changes
during those periods is presented below:

<TABLE>
<CAPTION>
                                      YEARS ENDED DECEMBER 31,                     THREE MONTHS ENDED
                       ------------------------------------------------------        MARCH 31, 1999
                                 1997                         1998              -------------------------
                       -------------------------   --------------------------          (UNAUDITED)
                                     EXERCISE                     EXERCISE       NUMBER       EXERCISE
                       NUMBER OF     PRICE PER     NUMBER OF      PRICE PER        OF         PRICE PER
                        SHARES         SHARE         SHARES         SHARE        SHARES         SHARE
                       ---------   -------------   ----------   -------------   ---------   -------------
<S>                    <C>         <C>             <C>          <C>             <C>         <C>
Outstanding at
  beginning of year..        --               --    1,835,649   $0.05 - $0.32   3,746,118   $0.05 - $1.33
  Granted............  1,835,649   $0.05 - $0.32    3,084,627   $0.05 - $1.33   2,498,280           $2.00
  Exercised..........        --               --     (132,522)  $0.05 - $0.22    (218,964)  $0.05 - $1.00
  Terminated/
    forfeited........        --               --   (1,041,636)  $0.05 - $1.33    (286,002)  $0.05 - $2.00
                       ---------   -------------   ----------   -------------   ---------   -------------
Outstanding at end of
  year...............  1,835,649   $0.05 - $0.32    3,746,118   $0.15 - $1.33   5,739,432   $0.05 - $2.00
                       =========   =============   ==========   =============   =========   =============
Options exercisable
  at end of year.....   114,999    $        0.05      496,437   $0.05 - $1.00     237,195   $0.05 - $2.00
                       =========   =============   ==========   =============   =========   =============
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 1998:

<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                  -----------------------------------------------   ----------------------------
                                                     WEIGHTED
                                   WEIGHTED          AVERAGE                         WEIGHTED
   RANGE OF         NUMBER         AVERAGE          REMAINING         NUMBER         AVERAGE
EXERCISE PRICES   OUTSTANDING   EXERCISE PRICE   CONTRACTUAL LIFE   EXERCISABLE   EXERCISE PRICE
- ---------------   -----------   --------------   ----------------   -----------   --------------
<S>               <C>           <C>              <C>                <C>           <C>
     $0.05           786,996        $0.05              8.62           425,226         $0.05
     $0.22         1,580,310        $0.22              9.23            30,525         $0.22
     $0.32            10,935        $0.32              8.80             3,186         $0.32
     $0.33           222,000        $0,33              9.52                --            --
     $1.00           408,000        $1.00              9.64            37,500         $1.00
     $1.33           737,877        $1.33              9.90                --            --
                   ---------                                          -------
                   3,746,118                                          496,437
                   =========                                          =======
</TABLE>

                                      F-19
<PAGE>   93
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     The following table summarizes information about stock options outstanding
at March 31, 1999 (unaudited):

<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                  -----------------------------------------------   ----------------------------
                                                     WEIGHTED
                                   WEIGHTED          AVERAGE                         WEIGHTED
   RANGE OF         NUMBER         AVERAGE          REMAINING         NUMBER         AVERAGE
EXERCISE PRICES   OUTSTANDING   EXERCISE PRICE   CONTRACTUAL LIFE   EXERCISABLE   EXERCISE PRICE
- ---------------   -----------   --------------   ----------------   -----------   --------------
<S>               <C>           <C>              <C>                <C>           <C>
     $0.05           425,463        $0.05              8.18           103,869         $0.05
     $0.22         1,521,627        $0.22              9.05            72,711         $0.22
     $0.32            10,935        $0.32              8.56             3,870         $0.32
     $0.33           207,750        $0.33              9.27               750         $0.33
     $1.00           394,500        $1.00              9.39            36,000         $1.00
     $1.33           689,877        $1.33              9.65                --            --
     $2.00         2,489,280        $2.00              9.87            19,995         $2.00
                   ---------                                          -------
                   5,739,432                                          237,195
</TABLE>

13. REVENUES AND OTHER INCOME, NET

     The following table provides the components of revenues

<TABLE>
<CAPTION>
                                                                          THREE MONTHS
                                      YEARS ENDED DECEMBER 31,           ENDED MARCH 31,
                                 ----------------------------------   ---------------------
                                   1996        1997         1998        1998        1999
                                 --------   ----------   ----------   --------   ----------
                                                                           (UNAUDITED)
<S>                              <C>        <C>          <C>          <C>        <C>
  Brokerage fees...............  $892,995   $1,042,729   $4,456,070   $526,597   $1,732,464
  Gain on sale of loans........        --           --    1,709,195         --    2,242,116
  Interest income on loans.....        --           --      666,281         --      827,061
                                 --------   ----------   ----------   --------   ----------
          Total revenues.......  $892,995   $1,042,729   $6,831,546   $526,597   $4,801,641
                                 ========   ==========   ==========   ========   ==========
</TABLE>

     The following table provides the components of other income, net

<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                   YEARS ENDED DECEMBER 31,      ENDED MARCH 31,
                                 ----------------------------   ------------------
                                  1996      1997       1998      1998       1999
                                 -------   -------   --------   -------   --------
                                                                   (UNAUDITED)
<S>                              <C>       <C>       <C>        <C>       <C>
Interest on short-term
  investments..................  $    --   $ 4,629   $237,187   $29,591   $ 62,440
Interest expense on non-
  warehouse facility
  borrowings...................   (3,438)   (7,036)   (63,861)   (9,055)   (26,327)
                                 -------   -------   --------   -------   --------
                                 $(3,438)  $(2,407)  $173,326   $20,536   $ 36,113
                                 =======   =======   ========   =======   ========
</TABLE>

                                      F-20
<PAGE>   94
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

14. OPERATING EXPENSES

     The following table provides the detail of the Company's operating expenses
classified by the following categories:

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED
                                        YEARS ENDED DECEMBER 31,                MARCH 31,
                                   -----------------------------------   ------------------------
                                     1996        1997         1998          1998         1999
                                   --------   ----------   -----------   ----------   -----------
                                                                               (UNAUDITED)
<S>                                <C>        <C>          <C>           <C>          <C>
Compensation and benefits........  $378,149   $  923,766   $ 7,387,104   $  807,098   $ 3,693,125
Processing costs.................   394,977      624,210     1,219,869      245,278       185,859
Advertising and marketing........    11,430      360,524     5,118,727      424,202     3,256,821
Professional services............    11,201      125,010       307,854       50,673       401,696
Occupancy costs..................    77,037      107,652       374,794       55,509       247,792
Computer and internet............    23,775       42,693       248,929       68,158        42,834
General and administrative.......   103,032      230,960     1,510,618      183,168       805,446
Interest expense on warehouse
  borrowings.....................        --           --       758,031           --     1,031,262
Amortization of unearned
  compensation...................        --           --     1,251,000       44,000     6,554,000
                                   --------   ----------   -----------   ----------   -----------
         Total operating
           expenses..............  $999,601   $2,414,815   $18,176,926   $1,878,086   $16,218,835
                                   ========   ==========   ===========   ==========   ===========
</TABLE>

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of a financial instrument is the amount for which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced liquidation sale. Fair value estimates are subjective in
nature and involve uncertainties and therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.

     At December 31, 1998 and March 31, 1999, the fair value of mortgage loans
held-for-sale including the related commitments to sell those mortgage loans
exceeds the carrying value of the mortgage loans held-for-sale by approximately
$300,000 and $400,000 (unaudited), respectively. At December 31, 1998, and March
31, 1999, the fair value of commitments to originate mortgage loans and the
related commitments to sell those loans resulted in an unrecognized gain of
approximately $900,000 and $475,000 (unaudited), respectively. The fair value of
mortgage loans held-for-sale are estimated using quoted market prices for
similar loans or prices for mortgage backed securities backed by similar loans
and the fair value of the commitments to originate and commitments to sell
mortgage loans are estimated using quoted market prices.

     The carrying value of the Company's other financial instruments, including
cash and cash equivalents, accounts receivable and all other financial assets
and liabilities approximate their fair value because of the short-term maturity
of those instruments or because they carry interest rates which approximate
market.

16. SUBSEQUENT EVENTS (UNAUDITED)

     STOCK SPLIT

     In May 1999, the Company's Board of Directors effected a three-for-one
stock split of the outstanding shares of Common Stock. All share and per share
information included in these financial statements have been retroactively
adjusted to reflect this stock split.

                                      F-21
<PAGE>   95
                                  E-LOAN, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     INITIAL PUBLIC OFFERING AND CONCURRENT PRIVATE PLACEMENT

     In March 1999, the Company's Board of Directors authorized the Company to
file a registration statement with the Securities and Exchange Commission for
the purpose of the initial public offering of the Company's common stock. Upon
the completion of the offering, if requirements set forth in the Certificate of
Incorporation are met, all of the Company's outstanding preferred stock will be
converted into shares of common stock, and all such outstanding shares of
preferred stock will be cancelled and retired. Upon the conversion of the
preferred stock, all rights to accrued and unpaid dividends are waived.
Additionally, upon the completion of the offering, the Company will be
authorized to issue 5,000,000 shares of undesignated preferred stock. The board
of directors will have the authority to determine the price, rights,
preferences, privileges and restrictions of the preferred stock.

     In May 1999, the Company entered into a stock purchase agreement with Forum
Holdings, Inc. in which the Company agreed to sell shares of common Stock to
Forum Holdings, Inc. equal to $12,500,000 divided by the initial public offering
price less the underwriting discount. This sale of shares is conditioned on the
closing of the Company's initial public offering.

     EMPLOYEE STOCK PURCHASE PLAN

     In March 1999, the Company's Board of Directors approved the 1999 Employee
Stock Purchase Plan ("1999 Purchase Plan"). A total of 1,500,000 shares of
common stock have been received for issuance under the 1999 Purchase Plan.

     STOCK OPTION PLAN

     On April 20, 1999, the Board of Directors of the Company voted to increase
the authorized number of common stock options available for grant under the 1997
Stock Option Plan from 7,500,000 to 10,500,000. During April of 1999, the
Company issued 542,055 additional stock options to employees. These options were
issued at exercise prices less than the fair value of the common stock at the
date of the grant. As a result the Company expects to record unearned
compensation amount of approximately $3.3 million.

     SERIES D PREFERRED STOCK PURCHASE

     In February 1999, the Company sold 40,000 shares of Series D convertible
and manditorily redeemable preferred stock at a price of $9.26 per share for
aggregate proceeds of $370,520 to an officer of the Company in connection with
his employment by the Company. This price was below the fair value of the common
stock and resulted in a compensation charge in the amount of $1.55 million
(unaudited) which is equal to the difference between the fair value of the
Series D preferred stock and the price paid for these shares.

     COMMON STOCK ISSUED TO A FOUNDATION

     In May 1999, the Company donated 75,000 shares of common stock in
connection with its establishment of a charitable foundation.

     WARRANT ISSUED

     In May 1999, the Company issued a warrant to purchase 75,000 shares of
common stock at an exercise price equal to the lesser of $13.33 or the initial
public offering price to a lender in connection with a warehouse agreement. This
warrant expires May 21, 2000.

                                      F-22
<PAGE>   96

                                  UNDERWRITING

     E-LOAN, the selling stockholder and the Underwriters named below have
entered into an underwriting agreement with respect to the shares being offered.
Subject to certain conditions, each underwriter has severally agreed to purchase
the number of shares indicated in the following table. Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette Securities Corporation, Hambrecht & Quist LLC,
DLJdirect Inc., and E*TRADE Securities, Inc. are the representatives of the
underwriters.

<TABLE>
<CAPTION>
                                                              Number of
                        Underwriters                            Shares
                        ------------                          ----------
<S>                                                           <C>
Goldman, Sachs & Co.........................................   1,088,000
Donaldson, Lufkin & Jenrette Securities Corporation.........   1,048,000
Hambrecht & Quist LLC.......................................     544,000
DLJdirect Inc...............................................      40,000
E*TRADE Securities, Inc. ...................................      40,000
Deutsche Bank Securities Inc. ..............................      80,000
BancBoston Robertson Stephens Inc. .........................      80,000
A.G. Edwards & Sons, Inc. ..................................      80,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........      80,000
Wasserstein Perella Securities, Inc. .......................      80,000
Advest, Inc. ...............................................      60,000
Robert W. Baird & Co. Incorporated..........................      60,000
Dain Rauscher Wessels
  a division of Dain Rauscher Incorporated..................      60,000
Legg Mason Wood Walker, Incorporated........................      60,000
U.S. Bancorp Piper Jaffray Inc. ............................      60,000
Charles Schwab & Co., Inc. .................................      40,000
                                                              ----------
          Total.............................................   3,500,000
                                                              ==========
</TABLE>

                            ------------------------

     If the underwriters sell more than the total number set forth in the table
above, the underwriters have an option to buy up to an additional 525,000 shares
from E-LOAN to cover such sales. They may exercise that option for 30 days. If
any shares are purchased pursuant to this option, the underwriters will
severally purchase shares in approximately the same proportion as set forth in
the table above.

     The following table show the per share and total underwriting discounts and
commissions to be paid to the underwriters by E-LOAN. Such amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.

<TABLE>
<CAPTION>
                                               Paid by E-LOAN
                                        ----------------------------
                                        No Exercise    Full Exercise
                                        -----------    -------------
<S>                                     <C>            <C>
Per Share.............................  $     0.98      $     0.98
Total.................................  $3,425,100      $3,939,600
</TABLE>

     Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $0.55 per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the underwriters to
certain other brokers or dealers at a discount of up to $0.10 per share from the
initial public offering price. If all the shares are not sold at the initial
public offering price, the representatives may change the offering price and the
other selling terms.

                                       U-1
<PAGE>   97

     E-LOAN and the selling stockholder have agreed with the underwriters not to
dispose of or hedge any of its common stock or securities convertible into or
exchangeable for shares of common stock during the period from the date of this
prospectus continuing through the date 180 days after the date of this
prospectus, except with the prior written consent of the representatives. This
agreement does not apply to any grants under E-LOAN's existing employee benefit
plans. See "Shares Available for Future Sale" for a discussion of certain
transfer restrictions.

     Prior to this offering, there has been no public market for the shares. The
initial public offering price was negotiated among E-LOAN and the
representatives. Among the factors to be considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, were E-LOAN's historical performance, estimates of the business
potential and earnings prospects of E-LOAN, an assessment of E-LOAN's management
and the consideration of the above factors in relation to market valuation of
companies in related businesses.

     The shares of common stock have been approved for quotation on the Nasdaq
National Market under the symbol "EELN".

     In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while this offering is in progress.

     The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

     These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.

     The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.

     The underwriters have reserved for sale, at the initial public offering
price, up to 300,000 shares of the common stock offered by this prospectus for
certain individuals designated by E-LOAN who have expressed an interest in
purchasing such shares of common stock in the offering. The number of shares
available for sale to the general public will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased will
be offered by the underwriters to the general public on the same basis as other
shares offered hereby.

     E-LOAN estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $2.0 million.

     E-LOAN and the selling stockholder have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

     E*Trade Group, Inc., the parent company of E*TRADE Securities, Inc., an
underwriter of the common stock offered hereby, purchased 200,000 shares of
Series C preferred stock of E-LOAN for a total purchase price of $480,000 in
connection with its exercise of the warrant issued to E*Trade Group pursuant to
a marketing agreement with E-LOAN. The shares of Series C preferred stock held
by E*Trade Group are convertible into 600,000 shares of common stock
                                       U-2
<PAGE>   98

upon the completion of this offering on the same terms as the other investors in
the private placement of E-LOAN's Series C preferred stock. DLJdirect Inc., an
underwriter of the common stock offered hereby and a wholly owned subsidiary of
Donaldson, Lufkin & Jenrette Securities Corporation, holds a warrant to purchase
53,996 shares of Series D preferred stock of E-LOAN at an exercise price of
$9.26 per share that was issued pursuant to a marketing agreement with E-LOAN.
DLJdirect intends to exercise this warrant prior to the completion of this
offering. The shares of Series D preferred stock to be issued to DLJdirect upon
the exercise of this warrant are convertible into 161,988 shares of common stock
upon the completion of this offering on the same terms as the other investors in
the private placement of E-LOAN's Series D preferred stock. These entities have
agreed that they will not sell, transfer, assign or hypothecate such shares for
180 days after the date of this prospectus, except with the prior written
consent of the representatives.

                                       U-3
<PAGE>   99

                              [INSIDE BACK COVER]

                            DESCRIPTION OF ARTWORK:

[HEADER: E-LOAN LOGO. TEXT UNDER LOGO READS:

     E-LOAN is proud to partner with these financial and real estate industry
leaders by providing their customers with E-LOAN's mortgage products and
services through loan centers on these websites: [there follows a table showing
logos of 34 of E-LOAN's strategic partners, including]:

     E*Trade, DLJdirect, Yahoo!, CBS Marketwatch, SmartMoney.com, Insweb,
Realty.com, USA Today, CCCHome.com, Credit.com, Financenter.com, Homes.com,
HomeSmart USA, InvesTools, Moneyclub, Prism Mortgage Company, NetNoir, NeXTL,
Newconstruction.com, NewRealty.com, Your New House, NextCard, Real Times,
Thomson Investor Network, StockMaster, Talkway, Tegris, Telebank, West Bay
Properties, SiebertNet, Owners.com, Ebtel Federal Credit Union, NetBank,
Bankrate.com.]

     [Text underneath the table of logos reads:

     All of the companies listed here have consented to the use of their logos
in this prospectus.]
<PAGE>   100

- ----------------------------------------------------------
- ----------------------------------------------------------

     No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

                             ----------------------

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                          Page
                                          ----
<S>                                       <C>
Prospectus Summary......................    1
Risk Factors............................    4
Forward Looking Statements..............   13
Use of Proceeds.........................   14
Dividend Policy.........................   14
Capitalization..........................   15
Dilution................................   17
Selected Financial Data.................   18
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations............................   19
Business................................   31
Management..............................   49
Certain Transactions....................   58
Principal and Selling Stockholders......   61
The Forum Holdings Private Placement....   64
Description of Capital Stock............   64
Shares Available for Future Sale........   69
Legal Matters...........................   70
Experts.................................   70
Available Information...................   70
Index to Financial Statements...........  F-1
Underwriting............................  U-1
</TABLE>

     Through and including July 23, 1999 (25 days after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer's obligation to deliver a prospectus when acting
as underwriter and with respect to an unsold allotment or subscription.

- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
                                3,500,000 Shares
                                  E-LOAN, INC.
                                  Common Stock
                             ----------------------

                                  E-Loan Logo

                             ----------------------
                              GOLDMAN, SACHS & CO.
                          DONALDSON, LUFKIN & JENRETTE
                               HAMBRECHT & QUIST
                                 DLJDIRECT INC.
                            E*TRADE SECURITIES, INC.

                      Representatives of the Underwriters
- ----------------------------------------------------------
- ----------------------------------------------------------


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