First National to Issue C$100 Million of Cumulative Rate Reset Preferred Shares

TORONTO, ONTARIO--(Marketwire - Jan. 5, 2011) -

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First National Financial Corporation ("First National" or the "Corporation") (TSX:FN) today announced a Canadian public offering of Cumulative 5-Year Rate Reset Class A Preference Shares, Series 1 ("Series 1 Preferred Shares"). First National will issue 4 million Series 1 Preferred Shares priced at $25 per share to raise gross proceeds of C$100 million. The offering will be underwritten by a syndicate of investment dealers led by RBC Capital Markets and Scotia Capital Inc.

The offering is being made in all the provinces of Canada by means of a prospectus and the expected closing date is on or about January 25, 2011. The net proceeds of the offering will be used to repay current indebtedness as well as for general corporate purposes.

Holders of the Series 1 Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.65% annually for the initial period ending March 31, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada yield plus 2.07%.

Holders of Series 1 Preferred Shares will have the right, at their option, to convert their shares into Cumulative, Floating Rate Class A Preference Shares, Series 2 ("Series 2 Preferred Shares"), subject to certain conditions, on March 31, 2016 and on March 31 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 2.07%.

The Series 1 Preferred Shares and Series 2 Preferred Shares have not been and will not be registered in the United States under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release does not constitute an offer to sell or a solicitation to buy securities in the United States and any public offering of the securities in the United States must be made by means of a prospectus.

About First National Financial Corporation

First National Financial Corporation (TSX:FN) is a Canadian-based originator, underwriter and servicer of predominantly prime residential (single family and multi-unit) and commercial mortgages. With over $52 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 visit www.firstnational.ca.

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. 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. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and the Corporation 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 regulations.