BW2255 OCT 11,2000 5:10 PACIFIC 08:10 EASTERN ( BW)(UT-THEORETICS) Theoretics Strikes Number of Strategic Licensing Agreements for Risk Management System -- GMAC Mortgage, SunTrust, Zurich Capital Markets, FHLB Boston Business & Technology Editors PARK CITY, Utah--(BUSINESS WIRE)--Oct. 11, 2000-- First to Offer Complete Risk Management System Online; Theoretics Forms Partnership with Applied Financial Technology (AFT) to Develop and Market AFT's Mortgage Analytics as Part of Risk Management System Theoretics, Inc., a specialty developer of fixed income/derivatives risk management systems, today announced a number of strategic licensing agreements for its Telemark Risk Management System. New customers include GMAC Mortgage, SunTrust, Zurich Capital Markets and Federal Home Loan Bank of Boston. Separately, Theoretics is the first to offer a complete risk management system online. Users will no longer need special hardware, installation or security blocks - they only need Internet access, user identification and a password to use the fully secure system. "We are tremendously encouraged by the high quality response to our Telemark Risk Management System," said Blaise F. Labriola, CEO of Theoretics. "Clearly, there's strong demand for sophisticated yet affordable fixed income/derivatives risk management software." "By offering our system online, managers can now track their portfolios from any location with Internet access - they no longer need to be tied to their in-house system," said Labriola. "Further, we have migrated our current system to an Internet platform, but also offer the identical system for use at the clients site. This allows the user to upload their trades from one portfolio to the other." The ASP Model (online version) is currently being offered for free trial use. About the Telemark System The Telemark System, which can be leased for $3,500 per month, offers extensive fixed income product coverage including bonds, mortgages, structured swaps, cap/floors, swaptions, currencies, and synthetic option replication. All positions are captured in the portfolio database and users can stress test, calculate VaR, hedge and create equivalent positions on any portfolio. All portfolios can then be viewed in the report module creating front, middle and back office reports. According to Theoretics, this is a state of the art product using a Windows Explorer tree-view interface for the portfolio. The user can drag and drop trades from different portfolios or copy and paste trades. All portfolios and trades can be set up with just a mouse click. The system covers the front, middle and back-office functions of most fixed income users, and the user can select from one of four databases, including Oracle, Sybase, SQL Server, or Access. Theoretics' New Customers GMAC Mortgage chose Theoretics' Telemark Risk Management System to conduct risk and sensitivity analysis on its $10 billion plus derivative portfolio, which includes CMT and CMS Floors, Swaps, and Swaptions. "We've used Theoretics' system for five years now and have been pleased with the company's commitment to continually enhance the software, increasing both its speed and ease of use dramatically over the years," said Ron Reardon, vice president of capital markets. "Theoretics has been very receptive to our ideas for modifications, whether they entail small changes or major overhauls - in this way, they are a true partner." The company will adopt Theoretics' online offering as well. SunTrust, the ninth largest bank in the nation, will use the Telemark system for its capital markets trading activity and risk management. The system will be used to calculate VaR, using Monte Carlo simulation, for the SunTrust derivative portfolio. Theoretics' import/export tool will allow SunTrust to link directly to the Theoretics system from its existing Infinity system. Zurich Capital Markets has installed the Telemark system in its New York, London and Dublin operations, making it the first international installation for Theoretics. "We use the Theoretics system as a front office system to price and value interest rate derivatives that we use to value and hedge secondary market securitizations," said Mickey Wohl, managing director of Zurich Capital Markets. "We chose Theoretics over other vendors, because Theoretics offers cleaner, more efficient algorithms and a very responsive customer service staff. This is just as good as having your own analytics department and more cost effective -- we are freed to stay on top of the economic and risk developments that pop up in the OTC derivatives market, relying on Theoretics to meet our technical requirements." FHLB of Boston has adopted the complete Telemark system including the new Mortgage Module that Theoretics developed jointly with Applied Financial Technology (AFT), a leading prepayment model developer. FHLB has been using the Principia system and now will be adding the extra capabilities of the Theoretics system. Specifically, the company will being using the system at its front-end to model and analyze the purchase of long term investments on a singular and portfolio basis. "We selected Theoretics system for its ease of use and its flexibility to handle complex derivative analysis," said Frank Y. Ye, CFA and senior financial analyst at FHLB. "The system training was fantastic and Theoretics' customer support staff has been very responsive on enhancing the system to meet our needs." Theoretics and Applied Financial Technology Form Partnership Theoretics and AFT have entered into a partnership to develop and market AFT's mortgage analytics within the Theoretics Telemark Risk Management System. This will give users the ability to price and perform risk management functions on all fixed income instruments, including mortgages, in one system. The current Theoretics release offers the new mortgage model and both companies will continue to work together on developing further mortgage trading capabilities within the Theoretics system. About Theoretics Theoretics, a privately held company based in Park City, Utah, was incorporated in 1994 as a derivatives consulting firm and quickly migrated toward custom software development as the need for affordable but powerful and flexible derivatives software increased. The high quality of Theoretics' customers ensures its position on the cutting-edge of finance technology. In addition to the AFT relationship, Theoretics also partners with Intex Solutions, Inc., a leading supplier of structured securities data, cashflow generators, and analytical solutions. Theoretics has developed derivatives and risk management products for almost all fixed income products including, bonds and notes, caps and floors, mortgages, swaps and swaptions. It has adapted its software to encompass several models including the Black-Derman-Toy (BDT) binomial, Black-Karasinski (BK) trinomial, Heath-Jarrow-Morton (HJM) 2 factor, Monte-Carlo simulation, and AFT's pre-payment. For more information about the company, please visit the website at www.theoretics.com. About Applied Financial Technology Applied Financial Technology (formerly Espiel) provides state of the art prepayment models and other analytics to the financial services community. The powerful and open architecture of the AFT system offers trading-quality models that integrate directly with proprietary trading, portfolio management, or servicing valuation systems. A privately held company based in San Francisco, AFT counts a number of leading financial institutions, regional investment banks and institutional investors among its clients. For more information about the company, please visit the website at www.aftgo.com. --30--ac/ny* CONTACT: Donel Young, 732/295-2406 donelyoung@sprintmail.com KEYWORD: UTAH CALIFORNIA INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS SOFTWARE BANKING