Tuesday June 24, 3:38 pm ET...TFN turns the corner
http://biz.yahoo.com/bw/030624/245746_1.html
Transnational Financial Network Reports Record Earnings in Its Fourth Fiscal Quarter
Tuesday June 24, 3:38 pm ET
SAN FRANCISCO--(BUSINESS WIRE)--June 24, 2003--Transnational Financial Network (AMEX:TFN - News) announced Net Income of $1,134,730, or $0.17 per share for its fourth quarter ended April 30, 2003, a continuation of the dramatic turnaround from the fourth quarter of the previous year when it lost $311,122. The company earned $1,442,476 or $0.26 per share for the year ended April 30, 2003.
Joseph Kristul, Chairman and CEO, commented: "With these results, showing an annualized earning power in excess of $4.5 million and aggregate mortgage originations in excess of $1.6 billion, I believe we have thoroughly completed the turnaround and restructuring we embarked upon two years ago.
"This restructuring has occurred at all levels of the company, but is particularly noteworthy on three fronts:
"First, the restructuring of our product line to emphasize higher margin products with our correspondent mortgage brokers has continued to be remarkably fruitful. Our gain on sale continued its upward path, increasing to 128 basis points in our fourth quarter from 71 basis points in the comparable period a year earlier.
"Second, our mortgage originations were at a record high level. While we have benefited from strong industry conditions, we have also expanded our operations by adding new representative offices and account executives on our wholesale side, while increasing the base of mortgage origination officers on our retail side. This gives us an increasingly broad mortgage origination base for the future.
"Third, we continue to bear down hard on all aspects of our operational effectiveness. This can be clearly seen in several areas:
Our total cash balances grew to $4.5 million at the end of the quarter, or $0.66 per common share, reflecting both our improved profitability and the heightened productivity in all areas of our business.
Our indirect operating expenses as a percentage of revenues continue to decline, reaching 33.6% in the recently ended fourth quarter, down from over 50% a year earlier, and nearly 60% two years ago. In short, we have increased our efficiency dramatically, and will continue to pursue further efficiencies.
The average number of days our mortgages remain financed prior to purchase by secondary market buyers was down to 11 days by the end of the quarter, a figure that is very low by current industry standards. This results from our secondary market investors recognizing the extremely high quality of our submission packages and giving our loans expedited treatment as a result. Accordingly, we have been able to use our capital base more efficiently, resulting in a higher level of mortgage originations than would be the case if our mortgages remained financed for a longer period of time.
We are reporting our year-end audited financial results within 60 days following fiscal year end, a major accomplishment for a company of any size. Subject to receiving in a timely manner the consent to use previously audited statements from our prior outside auditing firm, we will file our Form 10KSB well before the statutory deadline of July 29th.
"There continue to be areas where we expect to achieve further material improvements in the year ahead. With these currently reported results, I expect that we will receive additional warehouse lines of credit that will permit us to increase our wholesale originations, while also being at a lower cost than our existing lines. To the extent we are able to accomplish this and current market conditions continue to prevail, I would expect an increase in our revenues as well as a reduction in our Net Interest Expense in the periods ahead. Furthermore, I expect our expenditures on professional fees to drop by about 50%, or about $500,000, in the coming year as a result of settling material litigation last December, and the retention of a new outside auditing firm last Fall."
Transnational Financial Network, Inc.
Condensed Statements of Operations
(Results for Year Ended April 30, 2003 Audited)
For the 3 Months Ended
April 30, April 30, Pct.
2003 2002 Chg.
REVENUE
Net gain on sale
of mortgages $2,486,646 $787,832 215.6%
Production revenue 3,618,487 2,806,825 28.9%
Other Revenue 23,419 15,426 51.8%
TOTAL REVENUE $6,128,552 $3,610,083 69.8%
DIRECT EXPENSE
Commission and production
incentives $2,262,404 $1,708,554 +32.4%
Production Expense 427,892 338,283 +26.4%
Pair-off Fees 15,924 16,633 -4.3%
Early payoff
penalties 30,000 20,000 +50.0%
TOTAL DIRECT EXPENSE $2,736,220 $2,083,470 +31.3%
NET INTEREST INCOME (EXPENSE)
Interest income on loans
in warehouse $392,107 $378,467 +3.6%
Interest expense on loans
in warehouse (489,081) (357,436) +36.8%
NET INTEREST EXPENSE $(96,974) $21,031 nm
GROSS PROFIT ON MORTGAGE
ACTIVITIES $3,295,358 $1,547,644 +112.9%
INDIRECT EXPENSE
Salaries and benefits $1,164,200 $1,094,315 +6.4%
General and admin. 717,287 488,669 +46.8%
Occupancy 175,931 177,220 -0.7%
Depreciation and amort. 22,111 25,143 -12.1%
TOTAL INDIRECT
EXPENSE $2,079,529 $1,785,347 +16.5%
OPERATING INCOME $1,215,829 $(237,703) nm
NON-OPERATING INCOME (EXPENSE)
Other interest expense $(124,467) $(82,656) +50.5%
Other income (expense) plus
SFAS 133 Adjustment 127,900 9,237 nm
TOTAL NON-OPERATING
INCOME (EXPENSE) $3,433 $(73,419) nm
PRETAX INCOME $1,219,262 $(311,122) nm
PROVISION FOR
INCOME TAXES 84,352 0 nm
NET INCOME $1,134,730 $(311,122) nm
EARNINGS PER SHARE $0.17 $(0.05) nm
AVERAGE SHARES 6,760,181 5,948,887
PRODUCTION ($ millions)
Wholesale $193.0 $108.9 +77.2%
Retail $246.8 $182.2 +35.5%
Total $439.8 $291.1 +51.0%
For the 12 Months Ended
April 30, April 30, Pct.
2003 2002 Chg.
REVENUE
Net gain on sale
of mortgages $6,758,421 $4,230,247 59.8%
Production revenue 14,288,361 10,697,847 33.6%
Other Revenue 134,811 156,849 -14.1%
TOTAL REVENUE $21,181,593 $15,084,943 40.4%
DIRECT EXPENSE
Commission and production
incentives $9,026,805 $6,515,933 +38.5%
Production Expense 1,640,461 1,539,326 +6.5%
Pair-off Fees 36,310 45,721 -20.6%
Early payoff
penalties 300,000 199,610 +50.3%
TOTAL DIRECT EXPENSE $11,003,576 $8,300,590 +32.3%
NET INTEREST INCOME (EXPENSE)
Interest income on loans
in warehouse $1,928,353 $2,157,458 -10.6%
Interest expense on loans
in warehouse (2,220,674) (2,583,444) -14.0%
NET INTEREST EXPENSE $(292,321) $(425,986) -31.4%
GROSS PROFIT ON MORTGAGE
ACTIVITIES $9,885,696 $6,358,367 +55.5%
INDIRECT EXPENSE
Salaries and benefits $4,523,376 $4,509,863 +0.3%
General and admin. 2,855,780 2,165,836 +31.9%
Occupancy 756,724 727,175 +4.1%
Depreciation and amort. 92,611 418,404 -77.9%
TOTAL INDIRECT
EXPENSE $8,228,491 $7,821,278 +5.2%
OPERATING INCOME $1,657,205 $(1,462,911) nm
NON-OPERATING INCOME (EXPENSE)
Other interest expense $(392,900) $(328,383) +19.6%
Other income (expense) plus
SFAS 133 Adjustment 262,703 (287,420) nm
TOTAL NON-OPERATING
INCOME (EXPENSE) $(130,197) $(615,803) nm
PRETAX INCOME $1,527,008 $(2,078,714) nm
PROVISION FOR
INCOME TAXES 84,352 0 nm
NET INCOME $1,442,476 $(2,078,714) nm
EARNINGS PER SHARE $0.26 $(0.38) nm
AVERAGE SHARES 5,624,626 5,519,746
PRODUCTION ($ millions)
Wholesale $664.5 $619.9 +7.2%
Retail $947.0 $666.8 +42.0%
Total $1,611.5 $1,286.7 +25.2%
This News Release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove correct.
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Contact:
Transnational Financial Network
Joseph Kristul, 415/242-8840
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Source: Transnational Financial Network
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