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 CAMPBELL, Calif., Nov. 16 /PRNewswire/ -- Network Financial Services, Inc. (NASDAQ: NETW) today announced results for the first fiscal quarter ended Sept. 30, 1993. As expected, the company reported a consolidated net loss of $679,646 or $0.06 per share on 11.3 million weighted average shares outstanding for the quarter ended Sept. 30, 1993 compared to a net loss of $428,935 or $0.09 per share on 5 million shares for the prior year period. Revenues increased 6 percent to $4.0 million for the first quarter compared to $3.8 million for the prior year period.
 Network also announced that as of Oct. 31, 1993 there was a record $65 million of mortgages in process in its mortgage banking operation, more than 300 percent more than the prior year period, positioning the company for improved results from operations in the second fiscal quarter ended Dec. 31, 1993.
 Results for the first quarter included one month of operations from Westmark Mortgage Corporation, which was acquired Aug. 27, 1993. Shares outstanding increased from the prior year period due to the company raising $7 million, which was used for the Westmark acquisition and working capital, through the sale of a total of 7.5 million shares during fiscal 1993 and the first quarter of fiscal 1994. Results also included extraordinary expenses totalling approximately $230,000, equal to about $0.02 per share, in additional auditing fees and expenses.
 Loan origination fees increased 47 percent in the first quarter to $2.2 million compared to $1.5 million in the prior year period due to the addition of Westmark and an increase in Network's existing mortgage operation. Gross margins on the company's mortgage banking operation increased to 23.5 percent for the first quarter from 20.0 percent for the prior year period due primarily to the effects of Westmark's more favorable mortgage warehouse credit facility and the benefits of its more than $400 million mortgage loan servicing portfolio. Real estate commissions declined 22 percent in the first quarter to $1.7 million compared to $2.3 million in the prior year period due to a reduction in the number of real estate offices to 30 from 38 in the prior year period.
 Shareholders' equity at the end of the first quarter increased 49 percent to $6.4 million compared to $4.3 million at year end fiscal 1993. Book value per share increased 51 percent during the first quarter to $0.53 per share compared to $0.35 at year end. Total assets for the first quarter increased 109 percent to $28.0 million compared to $13.4 million at year end.
 Lee J. Danna, chairman and chief executive officer, commented, "The first quarter was a transition quarter with Network able to benefit from the Westmark acquisition for only one month. We are excited about the efficiencies, which have begun in the second quarter, from consolidating the Company's existing mortgage banking operation into Westmark. ProSolutions -- the first computer software system that will enable Realtors anywhere to access Network's 'one-stop shopping' on-line -- should begin to play an important role in subsequent quarters. Network is now in the process of negotiating marketing agreements with a number of mortgage banking and brokerage companies, each representing hundreds of sources of loan originations, in order to increase the use of ProSolutions as rapidly as possible."
 Network Financial Services, Inc. is building the nation's first integrated "one-stop shopping" service for home real estate sales, financing, insurance and home improvements. The company is the largest franchisee in the ERA real estate organization. Network has 30 offices in Northern California and more than 340 real estate agents and employees.
 Consolidated Statements of Operations
 Three months ended September 30, 1993 1992
 Commissions $1,775,989 $2,271,517
 Loan origination, document fees and
 gain from sales of servicing 2,244,762 1,526,313
 Other 17,018 3,597
 4,037,769 3,801,427
 Commissions 1,690,442 2,153,293
 Loan origination and document fees 1,717,632 1,220,660
 General and administrative 1,183,576 773,230
 Marketing and advertising 19,713 44,015
 Other 100,466 39,164
 4,711,829 4,230,362
 Net loss before income taxes (674,060) (428,935)
 Provision for state income taxes 5,586 --
 Net loss ($679,646) ($428,935)
 Net loss per share ($0.06) ($0.09)
 Weighted average shares outstanding 11,349,648 4,800,693
 -0- 11/16/93
 /CONTACT: Lee J. Danna, chairman of Network Financial Services, Inc., 408-475-1000, or Gary M. Fishman of The Hudson Stone Group, 212-983-8550/

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

LD -- NY009 -- 4871 11/16/93 08:09 EST
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Publication:PR Newswire
Date:Nov 16, 1993

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