First National reports first quarter 2007 results

    THE U.S./


    -   Mortgages under Administration up 30 per cent year over year
    -   Revenue up 43 per cent year over year
    -   Adjusted EBITDA(*) up 21 per cent year over year
    -   Distributions declared to public unitholders totalled $2.8 million
        for the quarter

    TORONTO, April 25 /CNW/ - First National Financial Income Fund (TSX:
FN.UN) (the "Fund") today announced its financial results for the quarter
ended March 31, 2007.
    "We've started 2007 with continued revenue growth, driven by increased
mortgages under administration, higher origination volume, and increased
securitization activities," said Stephen Smith, Chairman and President, First
National Financial LP. "First National's performance reflects our team's
success in consistently executing our growth strategy, particularly our
ability to increase market share in the growing single family residential
mortgage broker channel."
    "Once again, the Fund has succeeded in delivering strong results," said
Moray Tawse, Vice President, Mortgage Investments, First National Financial
LP. "Going forward, we will continue to leverage our strengths to achieve
profitable growth for the benefit of our unitholders."

    Selected Financial Highlights
                                                       Quarter ended
                                              March 31, 2007  March 31, 2006
    For the Period                                          ($ 000's)
    Revenue                                           53,550          37,503
    Net income                                        20,160          10,484
    Adjusted EBITDA(1)                                20,454          16,837
      Public company expenses                              -             250
      Maintenance capital expenditures                   243              72
    Distributable cash(2)                             20,211          16,515
    At Period end
    Total assets                                     576,082         279,751
    Mortgages under administration                25,405,909      19,622,960

    (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 March 31, 2006 period of
        $375,000 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.
    (2) This Non-GAAP measure adjusts Adjusted EBITDA by deducting public
        company expenses and maintenance capital expenditures. The
        comparative figures assume the Company incurred public company
        expenses in the prior period as described in the initial public
        offering prospectus.

    First Quarter Results
    The Fund commenced operations upon completion of its initial public
offering on June 15, 2006 and has a 19.97 per cent indirect interest in First
National Financial LP ("FNLP"). The results for the quarter ended March 31,
2007 are compared to results of operations for FNLP's predecessor, First
National Financial Corporation, for the quarter ended March 31, 2006.
    Mortgages under administration were $25.4 billion as at March 31, 2007,
up 4 per cent from $24.4 billion as at December 31, 2006 and up 30 per cent
from $19.6 billion as at March 31, 2006. The growth was mainly due to an
increase in mortgage originations, which totalled $1.8 billion for the first
quarter, up 38 per cent from the comparable quarter of 2006. The increase was
attributed to First National's growing market share in the single family
residential mortgage broker channel and higher volume for commercial real
estate transactions.
    Total revenue for the quarter was $53.6 million, up 43 per cent from the
comparable quarter of 2006. The revenue growth was primarily due to increased
placement fees on higher origination volumes, increased securitization
activities, and higher servicing income derived from the larger portfolio of
mortgages under administration. Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA(*)) for the quarter were
$20.5 million, up 21 per cent from the same quarter of 2006.

    Distributable Cash
    The Fund's distributable cash(*) for the quarter ended March 31, 2007 was
$4.0 million or $0.34 per unit and distributions declared totalled
$2.8 million or $0.24 per unit. Consistent with management's expectation at
the time of the IPO, this represents an annualized distribution of $0.95 per

    Statement of Distributable Cash

    (in thousands $s, except where noted)
                                                              For the Period
                                             For the quarter      June 15 to
                                              ended March 31,    December 31,
                                                        2007            2006
    First National Financial LP

    Net Income                                        20,160          40,148

    Amortization                                         294             589

    EBITDA(1)                                         20,454          40,737

    Maintenance Capital Expenditures                     243             341

    Distributable Cash from First National
     Financial LP                                     20,211          40,396

    First National Financial Income Fund

    Weighted Average Share of Distributable
     Cash from First National Financial LP             4,036           7,957

    Trust Administration Expenses                          6              13

    Distributable Cash from First National
     Financial Income Fund(2)                          4,030           7,944

    Distributable Cash per Unit ($/Unit)(2)             0.34            0.68

    Distributions Declared                             2,803           2,024

    Distributions Declared per Unit ($/Unit)            0.24            0.52

    (1) EBITDA is a non-GAAP measure that represents earnings generated to
        fund capital investment, meet financial obligations and fund
        distributions. It is considered a key measure as it demonstrates the
        ability of the business to meet its capital and financing
    (2) 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.

    Conference Call and Webcast
    Management will host a conference call at 10 a.m. (ET) on Wednesday,
April 25, 2007 to discuss the results. To participate in the teleconference,
the numbers are 416-644-3417 or 1-800-731-6941. The call will also 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 May 2, 2007. To access the rebroadcast, please dial 
416-640-1917 or 1-877-289-8525 and quote the passcode 21227136 followed by the
number sign.

    Annual General Meeting
    The Fund will hold its first Annual General Meeting of unitholders at
2 p.m. (ET) on Wednesday, April 25, 2007 at The Gallery at the TSX Broadcast &
Conference Centre in Toronto, Ontario. Following the formal meeting, there
will be a presentation by management and a question and answer session. The
simultaneous live webcast can be accessed at First National's web site at The webcast will also be archived on the web site.
    Full annual consolidated financial statements for the Fund and FNLP and
management's discussion and analysis are available at and at

    About First National Financial Income Fund

    First National Financial Income Fund (TSX: FN.UN) is a Canadian-based
originator, underwriter and servicer of predominantly prime residential
(single family and multi-unit) and commercial mortgages. With more than
$25 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 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 to it, they may
prove to be incorrect. Forward looking-information is subject to certain
factors, including risks and uncertainties, which 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 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, Account Executive,
BarnesMcInerney Inc., Tel: (416) 367-5000, Email:

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