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NETWORK FINANCIAL SERVICES REPORTS RESULTS FOR THREE AND NINE MONTHS ENDED MARCH 31

 SAN JOSE, Calif., May 14 /PRNewswire/ -- Network Financial Services Inc. (NASDAQ: NETW) reported a net loss for the quarter ended March 31, 1993, of $735,140, or 9 cents per share on 8.4 million weighted average shares outstanding, compared with net income in the prior year's quarter of $35,832, or 1 cent per share on 4.2 million shares. For the nine months, Network reported a net loss of $1.5 million, or 24 cents per share on 6.3 million weighted average shares outstanding, compared with net income of $13,731, or less than 1 cent per share on 3.9 million shares in the same period last year.
 According to Lee Danna, chairman and chief executive officer of Network, the loss was within management's expectations and attributed to two circumstances. "During the quarter, we invested heavily in our infrastructure. We undertook an overall restructuring of systems across the board at all of our facilities, moving from an antiquated system to a cutting-edge system," he said. The restructuring, which peaked in January and February, is about 95 percent completed. "While this has increased our general expense in the short term, it is a prudent and necessary investment in our future growth," Danna said.
 "Secondly, the California economy continues to operate in a recessionary environment due, in part, to job losses from the ongoing downsizing of defense-related industries," Danna said. "However, we remain optimistic about California's economic future, believing that interest rates, lower housing prices and a friendlier state-business climate, combined with the highest-projected population growth in the nation, bode well for the future of the state and Network." According to Danna, Network's strong cash position, currently in excess of $2.2 million, will help support the company's efforts to increase market share by capitalizing on the industry consolidation of smaller competitors.
 As previously reported, during the quarter, Network completed several private offerings of 3.1 million restricted shares at an average price of $1.07 per share. Total net proceeds to the company were $3.3 million, of which $2.2 million has been received, with the balance of $1.1 million to be received by June 30. "This capital infusion will continue to help position Network for the economy's eventual recovery," said Erwin Lenowitz, president. "Aside from greatly improving our internal systems, we have used these resources to build our human infrastructure, especially in our mortgage banking unit. We now have the management structure and back office support to handle a significantly larger volume of originations," he said.
 According to Lenowitz, loan originations increased considerably. "At the end of the quarter, our pipeline of loan applications stood at an all-time record of more than $17 million. This level of activity is continuing into the June quarter. In fact, loans closed in the month of April were in excess of $21 million, and loan originations are continuing at strong levels."
 Revenue for the nine months ended March 31, 1993, exceeded $10 million, compared to $11 million for the same period in 1992. For the three months, revenue was $2.3 million, down from $3.7 million for the comparison period. Network has total current assets of over $10 million and virtually no long-term debt.
 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, an Electronic Realty Associates (ERA) franchisee, one of the largest 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 38 offices with more than 375 agents and employees. Network's 9.2 million common shares are traded on the NASDAQ under the symbol NETW.
 NOTE: For additional information on Network Financial Services Inc. via FAX at no cost, dial 800-PRO-INFO, Code 008.
 -0- 5/14/93
 /CONTACT: Lee J Danna of Network Financial, 408-475-1000; or Lise Needham of the Financial Relations Board, 415-986-1591, for Network Financial/
 (NETW)


CO: Network Financial Services Inc.; Network Real Estate;
 Network Capital Group; Network Home Services ST: California IN: FIN SU: ERN


GT -- SF010 -- 8782 05/14/93 16:30 EDT
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Publication:PR Newswire
Date:May 14, 1993
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