TFN earns loans delivery bonus, obtains new warehouse and reports September loans production.
News Release
October 7, 2003
Transnational Financial Network, Inc. (TFN – AMEX), a wholesale and retail mortgage banking company announced two positive developments today along with the release of its September loans production figures.
Joseph Kristul, Chairman and CEO, commented: “I am delighted to report that we earned a $528,000 loans delivery bonus for completion of a $150 million forward delivery commitment during September 2003.
“We are also pleased to announce that we obtained a new $20 million warehouse facility that carries a borrowing rate of 30-day LIBOR plus 2.25%, for a current effective borrowing rate under 3.5%. Not only will this facility provide additional funding capacity, but also this new facility carries a borrowing cost that is the lowest of all of our borrowing facilities. Full utilization of this credit line in place of credit lines we previously have used would result in annual interest expense savings of $400-600,000 when compared to what our financing costs were in the first half of this calendar year. Completing the negotiations for this facility is part of our continuing efforts to reduce our warehouse interest expenses.
“With the culmination in this new financing line, in the last two months we have taken actions that will reduce our annual operating expenses within a range of $700,000 to $1,000,000 as compared to what we saw in our first fiscal quarter this year, assuming interest rates and loans production remain at or near current levels.
Loans production a function of total mortgage industry trends
“As I have previously noted, our near-term loans production is largely a function of the total mortgage industry trends, and September was no different. Mortgage rates in September were extremely volatile, as indicated by rate changes in the FHLMC 30 year fixed rate mortgage pricing. At the beginning of September, rates peaked at approximately 160 basis points above the historic low reached last June, and then declined nearly 80 basis points during September. Since the decline in rates largely occurred toward the end of the month, loans application rates began to increase late in the month, too late to have a material effect on our September funding volumes. If rates maintain at current levels, or the downward pattern during September continues, the industry could move back into a high volume of fundings in the last three months of this calendar year. While I do not expect overall loans volumes to reach the peak levels we saw early last summer, if the current interest rate environment holds or improves further, I expect that future months will see loans production levels growing from the levels achieved in August and September.
Typically when loans origination activity begins to shrink, lenders become more price competitive to attract more loans from a shrinking population of loan applications available. This aggressive pricing strategy in turn puts downward pressure on the gain on sale margin. Despite this increased price competition in the face of contracting loans funding levels, it is important to note that TFN successfully maintained its targeted gain on sale margin above 90 basis points in September 2003.
Transnational Financial Network, Inc.
Transnational Financial Network, Inc. is a wholesale and retail mortgage banker that originates, funds and sells mortgage loans secured by one to four family residential properties. The Company is positioned with a strong sales and service department, and has built a foundation for growth and expansion based on the loans results in the markets of Northern California, Southern California and Phoenix, Arizona.
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.
URL: http://www.transnational.com
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