Transnational Financial Network, Inc. Earns $0.05 Per Share in the Second Fiscal Quarter

Transnational Financial Network, Inc. Earns $0.05 Per Share in the Second Fiscal Quarter

Transnational Financial Network, Inc. Earns $0.05 Per Share in the Second Fiscal Quarter

SAN FRANCISCO, Dec 18, 2002 /PRNewswire-FirstCall via COMTEX/ -- Transnational Financial Network (Amex: TFN) announced second fiscal quarter earnings of $365,154, or $0.05 per share, reversing a first quarter loss of $0.04 per share, and resulting in earnings for the first six months of $0.01 per share.

Joseph Kristul, Chairman and CEO, commented as follows: "We have finally demonstrated to our shareholders the effectiveness of the business and operational changes we began putting in place in the middle of calendar 2001. These changes have resulted in increased revenues, a substantially lower cost to produce these revenues, better margins, and resultant positive earnings for our shareholders.

"The first key metric we focus on is total loan production. Our total loan production was $430 million for the quarter ended October 31 2002, a 44% increase over the $298 million of loan production in the comparable period a year ago. This improvement from both a year ago and from the earlier periods in this calendar year resulted from two factors. First, with the industry generally, we continue to be in the strongest mortgage market in history. We have further benefited from our presence in the strong markets of Northern California, Southern California and Phoenix, Arizona.

"The second factor driving higher loan originations from the earlier periods this year was the maturation of the restructuring of our wholesale production management, which began in January of this year. Our recovery has been dramatic. Wholesale loan production increased 68% in the quarter just ended, when compared to the average quarterly production in the first half of this calendar year.

"The second key metric our management has focused on intensively during this past year and a half has been our wholesale product line and the mix of this product line. Our objective has been to make increasingly efficient use of our warehouse lending lines by offering higher margin products to our correspondent mortgage brokers. We have been relentless in pursuing this objective. As a result, our Gain on Sale increased from 53 basis points in the first quarter of 2001 to 89 basis points in the quarter just ended. As shown in the table below, this has been a steady and consistent quarter-by- quarter increase.

"The third key metric we have pursued has been the delivery of improved operational efficiencies at all levels of our company. One important measurement of the effectiveness of our efforts is how much it costs us in Indirect Expenses to deliver a dollar of revenue. Our efforts have resulted in Indirect Expenses, when calculated as a percent of Total Revenues, declining from 55.4% in the quarter ended June 30, 2001 to 38.9% in the recent quarter just ended.

"As we have continued to demonstrate better operational performance, we have been able both to increase the capacity of our aggregate warehouse lines as well as to get better terms on them. We currently have $80 million in warehouse lines available to us, a substantial increase from the $55 million available to us at this time last year.

"While it is too early to predict with certainty how the current quarter will finish out, I can say that our results to date are on par with the recently ended and reported quarter."

Transnational Financial Network Key Operational Metrics 3 Month Period Ending 10/31/2002 7/31/2002 3/31/2002 (Restated) Revenue $5,383,391 $4,211,290 $3,865,566 Gain on sale $1,574,170 $701,712 $827,772 Gain on sale - basis points 88.9 73.9 71.4 Gross profit $2,360,698 $1,525,745 $1,549,444 Percent of revenues 43.9% 36.2% 40.1% Indirect expense $2,091,610 $1,869,021 $1,767,649 Percent of revenues 38.9% 44.4% 45.7% Operating income (loss) $269,088 $(343,276) $(218,205) Net income (loss) $365,154 $(294,000) $(137,689) Fully diluted EPS $0.05 $(0.04) $(0.03) Loan production ($ millions) Wholesale $177 $95 $116 Retail $253 $205 $172 Total loan production $430 $300 $288 Transnational Financial Network Key Operational Metrics (Continued) 3 Month Period Ending 12/31/2001 9/30/2001 6/30/2001 3/31/2001 (Restated) (Restated) (Restated) (Restated) Revenue $5,615,440 $3,368,007 $4,231,894 $4,879,112 Gain on sale $1,315,567 $1,047,684 $1,063,449 $1,330,891 Gain on sale - basis points 67.5 68.5 56.6 53.4 Gross profit $2,455,806 $1,348,396 $1,160,574 $1,329,937 Percent of revenues 43.7% 40.0% 27.4% 27.3% Indirect expense $2,092,373 $1,969,250 $2,345,894 $2,215,094 Percent of revenues 37.3% 58.5% 55.4% 45.4% Operating income (loss) $363,433 $(620,854) $(1,185,320) $(885,157) Net income (loss) $326,265 $(798,368) $(1,449,392) $(475,930) Fully diluted EPS $0.07 $(0.17) $(0.34) $(0.11) Loan production ($ millions) Wholesale $195 $153 $188 $249 Retail $202 $145 $136 $108 Total loan production $397 $298 $324 $357 Contact: Joseph Kristul, CEO (415) 242-8840

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.

SOURCE Transnational Financial Network, Inc.

CONTACT: Joseph Kristul, CEO of Transnational Financial Network, Inc., +1-415-242-8840 URL: http://www.transnational.com http://www.prnewswire.com

CONTACT: Dawn Van Zant, ECON Investor Relations, Inc.,1-866-730-1152 dvanzant@investorideas.com