Transnational Financial Network, Inc., a wholesale and retail mortgage banker, originates, funds and sells mortgage loans secured by one to four family residential properties, principally in the San Francisco Bay Area, Southern California, and Arizona. The company maintains wholly-owned retail offices in San Francisco and Campbell, CA. In addition, Transnational maintains net branches in association with local mortgage brokerage companies. As of April 30, 2006, the company maintained one net branch in Scottsdale, AZ. Transnational's wholesale lending division operates from its executive offices in San Francisco with offices in Costa Mesa and San Ramon, CA and Scottsdale, AZ. During the quarter ended April 30, 2006, the company originated mortgage loan volume through a network of apx. 650 independent mortgage brokers and other financial intermediaries who are all screened and approved by the company. No single source of independent brokers accounted for more than 3% of total wholesale mortgage originations. Mortgage brokers are qualified to participate in Transnational's wholesale program after the completion of an application process that includes its checking and verifying references, resumes, licenses and financial statements. New broker relationships are established through business development staff. Approved mortgage brokers are monitored by the company's wholesale account representatives; the broker's financial statements are updated and re-verified on an annual basis. Transnational's retail division was established in 1985 and as of April 30, 2006 contracted with 20 commissioned loan officers, who are based in the company's Campbell and San Francisco, CA offices. While the retail division advertises frequently in Bay Area newspapers, most of the company's retail division's business is generated through customer referrals. Approximately 16% and 18% of the aggregate dollar value of mortgage loans originated by the retail division were funded by its wholesale division during the quarters ended April 30, 2006 and 2005, respectively. The retail division completes and processes the mortgage loan applications and prepares and organizes necessary mortgage loan documents. The retail division preliminarily underwrites these mortgage loans to conform to either agency guidelines or private investor guidelines. Mortgage loans that are funded by Transnational's wholesale division are re-underwritten by the wholesale division. The retail division generates revenues from the origination and closing fees that it collects from the mortgage borrower.
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