Online Resources to Restate Q3 Results; Reports Q4 Loss

Online Resources Corporation, a leading provider of web-based financial services, today reported financial and operating results for the three months and full year ended December 31, 2006.

The Company also announced that it will restate its third quarter 2006 financial statements to properly account for its convertible preferred stock.

The following results include the impact of the acquisition of Princeton eCom on July 3, 2006, and reflect the introduction in 2006 of accounting changes (for equity compensation and tax expense) and acquisition financing costs, not included in 2005.

"It was an upbeat close to a landmark year for Online Resources," stated Matthew P. Lawlor, chairman and chief executive officer of the Company. "Strong operating fundamentals drove higher than expected core earnings in the fourth quarter. Revenue growth was mitigated by the previously announced client loss on the Princeton platform, but we showed excellent cost discipline."

The Company reported that the cost-related portion of the Princeton eCom integration was substantially complete. Lawlor stated, "We are already seeing leverage from the acquisition. For the quarter prior to the acquisition, the combined pro forma Ebitda margin for the two companies was 19 percent. We closed the year at 25 percent Ebitda margin, and are on track to achieve our goal of at least 30 percent by year-end 2007."

Lawlor added, "Put into context, it was an exemplary year for the Company. In one stroke, we achieved almost three years of strategic and product plans with the acquisition of Princeton eCom. On the operating side, despite heavy integration demands, we grew core earnings by 50 percent after factoring out accounting changes and the acquisition financing. With our transformational moves behind us, we are primed to drive shareholder value in 2007 and the years beyond."

The Company has adopted the transitional provisions of SAB 108 to correct an error for prior period revenues that should have been deferred. The effect of adopting SAB 108 has adjusted the Company’s January 1, 2006 balance sheet by reducing retained earnings and increasing deferred revenues by $1.4 million. The effect of the adoption on the Company’s 2006 revenues and earnings is not material.

The Company also announced that as a part of its 2006 year end close process, it determined that it had improperly accounted for its convertible preferred stock and a related embedded derivative. As a result, the Company will restate its third quarter financial statements within its 2006 Annual Report on Form 10-K. The restatement will reduce third quarter net income available to common shareholders by $0.02 per share and core net income by $0.01 per share. It will have no impact on Ebitda or the Company’s cash position. The impact on the Company’s balance sheet as of September 30, 2006 will be a reclassification from preferred stock to other liabilities of approximately $2.2 million. Please refer to our Current Report on Form 8-K for additional information.