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NETWORK FINANCIAL SERVICES REPORTS RESULTS FOR FIRST QUARTER ENDED SEPT. 30, 1992; MORTGAGE VOLUME INCREASED 56 PERCENT

 SOQUEL, Calif., Nov. 17 ~PRNewswire~ -- Network Financial Servi ces Inc. (NASDAQ: NETW) today reported revenues of $3.8 million for the first fiscal quarter ended Sept. 30, 1992, up approximately 7 percent from $3.6 million for the same quarter a year ago. Lee Danna, chairman and chief executive officer, said, "Mortgage banking operations continued to show strong growth. Loan origination and document fees increased 55 percent from the quarter a year ago to $956,000. However, this increase was partially offset by a drop in gains from the sale of servicing, $560,000 this quarter versus $661,000 in the same quarter last year.
 "The drop in servicing sales revenues resulted from the planned increase in our servicing portfolio as part of an effort to switch to a new major secondary market investor for both the sale of bulk servicing and flow servicing. We have completed negotiations with the investor and the bulk sale of approximately $23 million in mortgages will be completed by the end of the week, resulting in a gain on sale of servicing of approximately $235,000 which will be recognized in the second fiscal quarter ended Dec. 31, 1992," Danna explained.
 "Despite the continued downturn in the California economy, real estate operations generated $2.3 million in commissions, equal to a year ago. The continued stability of these operations reflects the company's concentration in Northern California which has been less severely affected than the southern part of the state. And, recent indications suggest that the Northern California real estate market has begun to improve slowly," Danna continued.
 Higher expenses and the delay in servicing sales explained above led to a loss for the quarter of $429,000 or 9 cents per share, compared with net income of $8,000, or less than one cent per share, in the first quarter a year ago. Danna said, "These results and the recent sale of servicing should enable Network to meet or exceed our operating plan for the first six months of fiscal 1993."
 Loan origination and document expenses increased 67 percent to $1.2 million, up from $691,000 in the quarter a year ago, due to higher fees charged on the company's mortgage warehouse credit line. General and administrative expenses increased 26 percent to $801,000, versus $636,000, as a result of reorganization of the mortgage banking operation and systems improvements. As a part of general expenses, the company recognized a $90,000 charge to expense certain prior year transactions with its secondary investors.
 "We continue to focus our energies on expanding our mortgage banking operation," Danna said. "During the quarter we originated or purchased $38 million in loans, up 56 percent from $24.4 million in the first quarter last year. The value of total mortgages held for sale, reflecting the net effect of mortgages purchased and sold, increased to $4.7 million, up from $3.0 million at June 30, 1992.
 "We believe our performance clearly illustrates Network's ability to capitalize on mortgage demand. However, a lack of financing continues to hamper our growth and has contributed to higher expenses as we must pay more for our warehouse credit lines which fund mortgage origination and purchase," Danna explained. "Therefore, we continue to pursue negotiations with several investor groups to obtain additional financing. We believe these arrangements can be finalized before the end of the calendar year and that Network will achieve ongoing profitability shortly thereafter."
 Network Financial Services is a uniquely integrated provider of "one-stop shopping" for real estate, mortgage, insurance and other related services to home buyers and sellers throughout Northern California. The company operates three divisions: Network Real Estate, one of the largest and fastest growing real estate brokerage firms in Northern California; Network Capital Group, a 25-year old mortgage banking operation; and Network Home Services, a provider of insurance brokerage and property care services. The company has grown rapidly over the last several years, and currently operates more than 41 offices with more than 415 agents. Network's 4.8 million common shares are traded on the NASDAQ under the symbol NETW.
 NOTE: For additional information on Network Financial Services Inc. via fax, no cost, dial 800-PRO-INFO, CODE 008.
 -0- 11~17~92
 ~CONTACT: Lee J. Danna, chairman of Network Financial Services, 408-462-6200, or Lise Needham of the Financial Relations Board, 415-986-1591, for Network Financial Services~
 (NETW)


CO: Network Financial Services Inc. ST: California IN: FIN SU: ERN

TM-TB -- SF004 -- 1814 11~17~92 11:55 EST
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Date:Nov 17, 1992
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