First National reports continued growth in mortgages under administration and originations for fiscal 2007

    THE U.S./

    Approval as issuer of NHA-MBS and seller into Canada Mortgage Bond
    programs will further diversify funding sources and reduce funding costs

    TORONTO, March 5 /CNW/ - First National Financial Income Fund
(TSX: FN.UN) (the "Fund") today announced its financial results for the period
ended December 31, 2007, with continued growth in key metrics for First
National Financial LP (the "LP") or ("First National").

    First National's 2007 Highlights:

    -   Mortgages under Administration grew to $33.1 billion, up 36%
    -   Mortgage originations up 49% year-over-year to $10.9 billion, with
        record months in June and August, 2007
    -   Revenue, excluding effect of non-cash, fair value adjustments, up 36%
        year-over-year to $263.3 million
    -   Adjusted EBITDA(*), excluding effect of non-cash, fair value
        adjustments, up 44% year-over-year to $98.4 million
    -   Monthly distributions for the Fund increased 31.5% in June, 2007
    -   Special year-end distribution of $0.06 per unit declared by the Fund

    "First National's leading position in the single-family mortgage broker
channel led to record origination volume in 2007 and a high water mark of
$33 billion for mortgages under administration," said Stephen Smith, Chairman
and President, First National Financial LP.
    "Excluding the fair value adjustments, we also achieved strong top and
bottom line growth. First National's commendable performance in the face of
challenging market conditions is a clear indication of our inherent strengths
and ability to effectively execute the growth strategy. As we progress through
2008 - the 20th anniversary of First National's founding - we look forward to
delivering continued unitholder value."
    "Our revenue growth also benefited from increased income from mortgage
servicing, a direct result of our growth in mortgages under administration,"
added Moray Tawse, Vice President, Mortgage Investments, First National
Financial LP. "Another highlight in 2007 was being granted approval to be an
issuer of NHA mortgage-backed securities and a seller to the Canada Mortgage
Bond program. These developments provide further funding diversification and
help reduce our overall funding costs."

    Selected Financial Highlights for First National

                                 Three months ended          Year ended
                              December    December    December    December
                              31, 2007    31, 2006    31, 2007    31, 2006
    For the Period                              (Cdn $000's)
    Revenue                       68,272      49,551     238,971     193,930
    Net income                    24,050      18,038      72,844      57,898
    Adjusted EBITDA(1)            24,389      18,328      74,086      68,158
    At Period end
    Total assets                 460,336     393,016     460,336     393,016
    Mortgages under
     administration           33,114,415  18,607,866  33,114,415  18,607,866

    (1) This Non-GAAP measure adjusts income before income taxes by adding
        back expenses for management compensation and interest expense on
        shareholder loans which consist primarily of distributions to
        shareholders while First National operated as a private company. This
        measure also includes a deduction in the year ended December 31, 2006
        of $750 ($Nil for the quarter ended December 31, 2006) for
        normalized compensation for each of the two senior management
        executives based on compensation policies that took effect on closing
        of the initial public offering.

    2007 Annual and Fourth Quarter Results
    Mortgages under administration for First National were $33.1 billion as
at December 31, 2007, up 6% from $31.2 billion as at September 30, 2007 and up
36% from $24.4 billion as at December 31, 2006. The growth was mainly due to
an increase in mortgage originations, which totalled $10.9 billion for the
year, up 49% from $7.3 billion in 2006. The increase was largely attributable
to First National's growing market share in the single-family residential
mortgage broker channel and higher volumes of commercial mortgage
    First National's revenue and Adjusted earnings before income taxes,
depreciation and amortization ("Adjusted EBITDA"(*)) for the year were decreased
by $24.3 million of non-cash fair value adjustments (the "Adjustments"). The
Adjustments consisted mainly of the previously announced non-cash fair value
adjustment that was recorded in the third quarter of 2007 and was related to
First National's securitization-related assets. This was due to unfavourable
capital market conditions associated with the asset-backed commercial paper
("ABCP") market. Total revenue for the year for First National was $239.0
million, up 23% from $193.9 million in the previous year. Excluding the effect
of the Adjustment, total revenue grew 36% year-over-year to $263.3 million.
This revenue growth was primarily due to increased placement fees on higher
origination volumes and increased mortgage servicing fees on higher mortgages
under administration. For the fourth quarter, revenue was $68.3 million, up
38% from $49.6 million for the same period last year.
    First National's Adjusted EBITDA for the year was $74.1 million, up 9%
from $68.2 million in the previous year. Excluding the effect of the
Adjustments, Adjusted EBITDA grew 44% year-over-year to $98.4 million. For the
fourth quarter, Adjusted EBITDA was $24.4 million, up 33% from $18.3 million
for the same period last year.

    Distributable Cash
    The Fund's distributable cash(*) for the year ended December 31, 2007 was
$14.8 million or $1.26 per unit and distributions declared totalled
$14.3 million or $1.21 per unit. This represents an annualized distribution
rate of $1.25 per unit when taking into account the distribution increase of
31.5%, which was effective with the May, 2007 distribution paid in June. The
Fund also declared a special year-end distribution of $0.06 per unit.

    Statement of Distributable Cash
    (in thousands $s, except where noted)

                                                         For the
                                                         quarter     For the
                                                           ended  year ended
                                                        December    December
                                                        31, 2007    31, 2007
    First National Financial LP
    Distributable Cash from First National
     Financial LP                                         14,873      74,373

    First National Financial Income Fund

    Weighted Average Share of Distributable
     Cash from First National Financial LP                 2,970      14,853

    Trust Administration Expenses                              6          24
    Distributable Cash from First National
     Financial Income Fund(1)                              2,964      14,829
    Distributable Cash per Unit ($/Unit)(1)                 0.25        1.26
    Distributions Declared                                 4,396      14,278
    Distributions Declared per Unit ($/Unit)                0.37        1.21
    Payout ratio                                            148%         96%

    (1) Distributable cash and distributable cash per unit are non-GAAP
        measures generally used by Canadian open-ended trusts as an indicator
        of financial performance. They are considered key measures as they
        demonstrate the cash available for distributions to unit holders.

    Initiation of Distribution Reinvestment Program (DRIP)
    On March 4, 2008, the Fund's Board approved a distribution reinvestment
program ("DRIP") targeted to be effective with the March, 2008 distribution to
be paid in April. Through the DRIP, unitholders can increase their monthly
holdings by reinvesting their monthly distributions in additional units of the
Fund without incurring brokerage or administrative fees. The reinvestment
price will be based on the volume-weighted average price of all Fund units
traded on the TSX for the 10 business days prior to the distribution date. In
addition, DRIP participants will receive bonus units amounting to 5% of their
monthly reinvested distributions. More information about the DRIP program will
be available on the 'Investor FAQ' section of the Fund's website, over the next few weeks.

    Conference Call and Webcast

    Conference Call and Webcast             March 5, 2008, 10 a.m. ET
    Participant Numbers                     416-644-3415 or 1-800-733-7571

    The call will be webcast live and archived on First National's web site
at Following management's presentation, there will be a
question and answer session for analysts and institutional investors.
    A taped rebroadcast will be available to listeners following the call
until 12 a.m. (ET) on March 12, 2008. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and input passcode 21259864 followed by the
number sign.
    Complete consolidated financial statements for the Fund and the LP as
well as management's discussion and analysis are available at
and at

    Annual General Meeting
    The Fund will hold its Annual General Meeting of unitholders on Tuesday,
May 6, 2008 at 10 a.m. (ET) at The Gallery at the TSX Broadcast & Conference
Centre in Toronto, Ontario.

    About First National Financial Income Fund

    First National Financial Income Fund (TSX: FN.UN) owns a 19.97% interest
in First National Financial LP, a Canadian-based originator, underwriter and
servicer of predominantly prime residential (single family and multi-unit) and
commercial mortgages. With more than $33 billion in mortgages under
administration, First National is Canada's largest non-bank originator and
underwriter of residential mortgages and is among the top three in market
share in the growing mortgage broker distribution channel. For more
information, please visit

    (*)Non-GAAP Measures
    The selected financial information and discussion below also refers to
certain measures to assist in assessing financial performance. These "non-GAAP
measures" such as "EBITDA", "Adjusted EBITDA", "Adjusted Net Income",
"Distributable Cash", and "Distributable Cash per Unit" should not be
construed as alternatives to net income or loss or other comparable measures
determined in accordance with GAAP as an indicator of performance or as a
measure of liquidity and cash flow. Non-GAAP measures do not have standard
meanings prescribed by GAAP and therefore may not be comparable to similar
measures presented by other issuers.

    Forward-Looking Statements
    Certain information included in this news release may constitute
forward-looking information within the meaning of securities laws. In some
cases, forward-looking information can be identified by the use of terms such
as "may", "will", "should", "expect", "plan", "anticipate", "believe",
"intend", "estimate", "predict", "potential", "continue" or other similar
expressions concerning matters that are not historical facts. Forward-looking
information may relate to management's future outlook and anticipated events
or results, and may include statements or information regarding the future
financial position, business strategy and strategic goals, product development
activities, projected costs and capital expenditures, financial results, risk
management strategies, hedging activities, geographic expansion, licensing
plans, taxes and other plans and objectives of or involving the Company.
Particularly, information regarding growth objectives, any future increase in
mortgages under administration, future use of securitization vehicles,
industry trends and future revenues is forward-looking information.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, interest rate changes and responses to such
changes, the demand for institutionally placed and securitized mortgages, the
status of the applicable regulatory regime and the use of mortgage brokers for
single family residential mortgages. These forward-looking statements should
not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not, or the times by which,
those results will be achieved. While management considers these assumptions
to be reasonable based on information currently available, they may prove to
be incorrect. Forward looking-information is subject to certain factors,
including risks and uncertainties that could cause actual results to differ
materially from what management currently expects. These factors include
reliance on sources of funding, concentration of institutional investors,
reliance on relationships with independent mortgage brokers and changes in
interest rates under "Risk and Uncertainties Affecting the Business" in the
MD&A. In evaluating these statements, investors should specifically consider
various factors, including the risks outlined under "Risk and Uncertainties
Affecting the Business" in the MD&A, which may cause actual events or results
to differ materially from any forward looking statement. These forward-looking
statements are made as of the date of this release, and are subject to change
after such date. However, management and the Fund disclaim any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required
under applicable securities regulations.

For further information:

For further information: Rob Inglis, Vice President, Finance, First
National Financial LP, Tel: (416) 593-1100, Email:; Danna Broadworth, Consultant, BarnesMcInerney
Inc., Tel: (416) 367-5000, Email:

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