First National reports sustained growth for Q1 2009

    THE U.S./

    Sustained growth in mortgages under administration, net income and
    Adjusted EBITDA(*)

    TORONTO, April 29, 2009 /CNW/ - First National Financial Income Fund
(TSX: FN.UN) (the "Fund") today announced its financial results for the
quarter ended March 31, 2009. The Fund derives all of its earnings from its
21% investment in First National Financial LP ("FNFLP") or ("First National")
which reports near-record profitability, with sustained growth in mortgages
under administration, net income and Adjusted EBITDA(*).

    First National Financial LP's Q1 2009 Summary:

    -   Mortgages under Administration up 20% year-over-year to $41.6 billion
    -   Mortgage originations decreased 13% year-over-year to $2.0 billion
    -   Revenue was $65.7 million, off 1% year-over-year
    -   Net income up 22% year-over-year to $32.5 million
    -   Adjusted EBITDA(*) up 22% year-over-year to $32.9 million
    -   Distributions declared to public unitholders totalled $4.3 million

    "The continued implementation of our business strategy and commitment to
excellence in service, technological innovation and prudent risk management
during the past year powered profitability to near-record highs in the first
quarter of 2009," said Stephen Smith, Chairman and President. "Despite the
challenging economic environment, growth in mortgages under administration
continues to be driven by our various origination channels with high levels of
continuing income and cash flow from mortgage servicing."
    "The widespread credit tightening conditions have created new
opportunities for First National as several of our competitors exit the
market," added Moray Tawse, Vice President, Mortgage Investments. "These
departures have improved our ability to gain origination volume and assisted
in achieving attractive pricing for our CMHC-insured multi-family mortgage
product. While we acknowledge that the recession may continue to cause
mortgage originations to decline in 2009, we are optimistic that the strength
of our business model and consistent track record of execution has
well-positioned us within the commercial mortgage market."

    Selected Financial Highlights for First National Financial LP

                                                            Quarter ended
                                                        March 31,   March 31,
                                                          2009        2008
    For the Period                                            ($ 000's)
    Revenue                                               65,705      66,312
    Net income                                            32,466      26,531
    Adjusted EBITDA(1)                                    32,890      26,930
    At Period end
    Total assets                                         905,774     663,594
    Mortgages under administration                    41,597,931  34,575,883
    (1) This non-GAAP measure adjusts income before income taxes by adding
        back expenses for amortization of capital assets.

    Q1 2009 Results

    First National's mortgages under administration were $41.6 billion at
March 31, 2009, up 20% from $34.6 billion at March 31, 2008 and up 10%, on an
annualized basis, from $40.6 billion at December 31, 2008. The growth was
driven primarily by mortgage originations, which totalled $2.0 billion for the
quarter, down 13% from $2.3 billion in the first quarter of 2008. The decrease
was mainly attributable to the slow down in the Canadian single-family real
estate market which led to lower mortgage origination volumes for the Company.
    Revenue for the quarter was $65.7 million, off by 1% from $66.3 million
in the same period in 2008. The revenue decline was primarily due to the
impact of lower placement fees from single-family origination. The decrease
would have been larger however it was offset by the significantly higher
revenue on placement fees related to increased volumes of multi-unit
residential mortgages.
    Net income for the quarter was $32.5 million, an increase of 22% from
$26.5 million in the same period in 2008. Adjusted earnings before income
taxes, depreciation and amortization ("Adjusted EBITDA"(*)) for the quarter was
$32.9 million, an increase of 22% from $26.9 million in the same period in
2008. The increases correspond to higher volumes and margins experienced in
the multi-unit residential origination department, particularly gains on
deferred placement fees related to the Company's NHA-MBS program.

    Distributable Cash

    The Fund's distributable cash(*) for the quarter was $2.2 million or $0.18
per unit and distributions declared totalled $4.3 million or $0.34 per unit.
The payout ratio of 189% was primarily a result of once-a-year cash payments
for accrued expenses during the quarter together with significant cash losses
on hedging activities associated with securitization. Distributable cash in
the first quarter is affected by seasonality, which normally requires the
Company to pay out a higher proportion of its cash than during the rest of the
year. These payments, which are typically made once a year, include the
special distribution declared last quarter, annual single-family residential
volume bonus amounts, and annual employee bonuses and salesmen commissions
accrued in 2008. Excluding seasonal fluctuations, the payout ratio would have
been 112% compared to 105% in the first quarter of 2008.

    Statement of Distributable Cash

    (in $000s, except where noted)

                                           For the     For the
                                           quarter     quarter     For the
                                            ended       ended     year ended
                                          March 31,   March 31,  December 31,
                                             2009        2008        2008
    First National Financial LP
    Distributable Cash of First National
     Financial LP(1)                          10,594      12,253      81,818

    First National Financial Income Fund
    Weighted Average Share of
     Distributable Cash from First
     National Financial LP(1)                  2,240       2,447      16,991
    Distributable Cash per Unit
     ($/Unit)(1)                                0.18        0.21        1.37
    Distributions Declared                     4,280       3,688      16,844
    Distributions Declared per Unit
     ($/Unit)                                   0.34        0.31        1.36
    Payout ratio                                189%        148%         99%

    (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. For
        FNFLP this measure adjusts cash provided by (used in) operating
        activities by accounting for changes between periods of mortgages
        accumulated for sale and deducting capital expenditures.

    Annual General Meeting

    The Fund will hold its Annual General Meeting of unitholders on Tuesday,
May 5, 2009 at 10 a.m. (ET) at The Gallery at the TSX Broadcast & Conference
Centre in Toronto, Ontario.

    Conference Call and Webcast

    Conference Call and Webcast             April 29, 2009, 10 a.m. ET
    Participant Numbers                     416-644-3423 or 1-800-732-6179

    The audio of the conference call will be webcast live and archived on
First National's website 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 6, 2009. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and input passcode 21302535 followed by the
number sign.
    Complete consolidated financial statements for the Fund and FNFLP as well
as management's discussion and analysis are available at and at

    About First National Financial Income Fund

    First National Financial Income Fund (TSX: FN.UN) owns a 21% 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 $40 billion in mortgages under
administration, First National is Canada's largest non-bank originator and
underwriter of mortgages and is among the top three in market share in the
growing mortgage broker distribution channel. For more information, please

    (*)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 Information

    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. This forward-looking information should
not be read as providing guarantees of future performance or results, and will
not necessarily be an accurate indication 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 listed under "Risk and
Uncertainties Affecting the Business" in the MD&A, 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. This forward-looking information is as of the date of
this release, and is subject to change after such date. However, management
and the Fund disclaim any intention or obligation to update or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required under applicable securities

For further information:

For further information: Rob Inglis, Chief Financial Officer, First
National Financial LP, Tel: (416) 593-1100, Email:; Camilla Bartosiewicz, Consultant, BarnesMcInerney
Inc., Tel: (416) 367-5000, Email:

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