TWST: What is FNC?

Mr. Rayburn: FNC is a collateral infrastructure & information company. Here is what we do and how we do it. Most folks have a mortgage on their house. To make your mortgage, the lender has got to get to two numbers. They get to a credit number on the applicant in the form of a credit report and a credit score, and they need a collateral number on the property in the form of an appraisal, flood, title, that sort of thing, but the valuation number is the key number for the lender. Before we came along, the credit area had been highly automated, but the collateral area involved a lot of people and paper. We invented a process that allows lenders to turn those collateral documents into data and images, and we have systems in big many of the country's biggest lending institutions that allow them to process mortgages a lot more efficiently. In our second line of business, we take the data and we warehouse it. So, just like the credit bureaus collect credit data, we have developed a National Collateral Database where lenders and other market participants share this collateral data--building this national collateral warehouse, if you will. Our third line of business is developing descriptive and predictive analytics that allow our customers to use the data to explain and forecast what's going on in the market place. So, we have three lines of business, pipes or our technologies, data, and analytics. How do we get started? Well, we were doing seminars for many of the nation's big banks telling them how to comply with an act called the Financial Institution Reform, Recovery, Enforcement Act (FIRREA) or the S&L bailout bill. And, one of our customers asked us if we could build the type of information system we discussed in our seminars. The answer was absolutely yes.

TWST: Who do you see as your customer or client today and what's the go-to- market strategy to reach them? How is who you see as your client changing or evolving?

Mr. Rayburn: Our customers, today, are really the biggest residential mortgage lenders in the country. Those are household names among banks and many of them are our customers. And as we evolve, our ultimate business model is to be to the residential real estate what Bloomberg is to finance. Bloomberg streams data and analytics to the street. They do it in bonds and in some case equities, but mainly fixed income. They have some great fixed income analytics. What we want to do is the same thing for residential real estate, which is rapidly becoming a more important asset class, as mortgages have become more important. We want to stream that collateral information that's collected at origination to Wall Street. We are headed there as hard and fast as we can go. In the meantime, we are making the process for originating lenders much more efficient.

TWST: What's the competitive landscape? Who do you see as direct competition, who are the peers around you? What's the differentiator as far as those customers deciding not to do it themselves, to go outside, but then obviously to make you the choice?

Mr. Rayburn: Certainly, you've hit the nail on the head in terms of the primary competitor and that's the lending institutions' internal IT group. Why do they want to outsource? Because it is much more efficient for them to remove headcount, to lay that headcount over on us and in that way, in good times and bad times, lenders don't have those bodies on their payroll. We have a few others that do pieces and parts of what we do. Some of those customers that are out there are -- there is a consortium called RealEC, which is made up of Fidelity, Stuart, and Land America. RealEC has a few pieces of what we do and position themselves as a perceived competitor. We had some other competitors that are not worth mentioning. We have perceived competitors from time to time, but those are the primary competitors.

TWST: What are the barriers to entry for competitors at this point?

Mr. Rayburn: The barriers to entry are what make us unique. We have invented a data standard. We worked with the Appraisal Institute, which was the largest appraisal organization back in '98, and we developed an XML standard for appraisal. It has made us very unique in the marketplace. When an appraisal is transmitted to the lender, we are able to pop it open and suck all the data out, and do it in a formatted way. This process allows a lender to do two critical things. The first critical thing it allows an automated review of that document. So, before we arrived, they had a human being that was sampling and reviewing a large percentage of their deeds and after we arrived, they can do it automated. The second thing it allows them to do, it allows lenders to decision the loan in an automated fashion with respect to collateral. They have already been doing that with respect to credit. If you had a certain credit score, you've got a certain interest rate and certain terms and conditions. They have not been able to do that previously in terms of collateral and we have come up with a way to score the appraisal. So, we know the score on the valuation and lenders eat that alive. So, those are some of the primary things that make us unique.

TWST: Introduce us to your top-level management team, two or three of the key individuals?

Mr. Rayburn: Bob Dorsey is our Chief Operating Officer. Bob had been a mining engineer, where he'd been in charge of process development. He has also been a professor. Some of us had an entrepreneurial background, some of us had a university background, and Bob Dorsey had been a professor. Our Chief Financial Officer, Wylie Richards was the Managing Partner for Deloitte and Touche in Mississippi for many years. Dennis Tosh is the Co-Founder. Dorsey, Tosh, and I are Co-Founders. Tosh is our Chief Administrative Officer. He had a consulting background and a professor background, and I was an entrepreneur and also a professor prior to this venture.

TWST: As you assess bench strengths and skill sets within the company today, are there particular areas or positions to add or augment?

Mr. Rayburn: In other words, are there gaps? Is that what you are asking or are there strengths, or both?

TWST: Always have look at both, don't we?

Mr. Rayburn: I think I'll do our gaps first. I think our gaps are we need to continue to build our analytics area. We are doing that today, and we are focused on it. We plan on opening a New York office. Our real estate analytics are sold in two places. They are sold in Orange County, California, and the reason being most of your non-prime lenders are headquartered for some reason in Orange County. I've got an office in Orange County and one in San Diego County. The other place it's sold, if you are focused on the street, they are sold in New York, and there is about 30 or 40 block area, as you know. We will open a New York office; we hope to have it done by the end of the year or early 2006. So, some of our weaknesses or gaps are analytics products, which we are building out now and adding locations, which we intend to add to by the end of this year. One of our core strengths is that we're very customer focused. I know people give that lip service, but we are very customer focused, we also have very much of an entrepreneurial attitude. We are focused on calculated risk taking and innovation, and we have got a group of people dedicated to innovation, in fact, Michael Graber, Director of Marketing, heads up what we call our Innovation Hive. We are dedicated to new product development. That's the first objective in our strategic plan.

TWST: What are the dynamics around you in the competitive landscape for consolidation at this point? What drives or what hinders consolidations, mergers and acquisitions activity? What role can it play in your own growth strategies?

Mr. Rayburn: I will talk about us as being the acquirer and then I will talk about us being the acquiree. Let us talk about us buying other companies. We are constantly on the lookout for companies that are very synergistic to us and yet at the same time, allow us to enter new markets. We have looked at several deals, we have done a couple. We have therefore been fairly small. They have been in the $3 million to $5 million range, but as we get bigger, we will do bigger deals. If I change hats and talk about us being acquired, we would fit nicely with someone who is in the credit space; we would fit nicely with a non- US company who wanted to enter the US in financial services, which is kind of how I see the landscape. What is driving consolidation? Some of the players have got high stock prices; they have got nice stock prices in financial services. Of course, it depends on the company and where they are, but I think those multiples are one of the catalysts for consolidation.

TWST: What's the agenda at this point? What are your priorities for the next 12 to 24 months? What would make that time frame a success?

Mr. Rayburn: We want to continue to acquire new customers. We want to upsell existing customers in terms of our pipes business. In terms of our analytics business, we want to sell all of our existing customers, especially our capital markets groups. We want to partner with them and deliver our analytics suite for capital markets. That's where we are clearly focused in the next 18 to 24 months.

TWST: What has been the funding, the investment history to date with the company? At this point, do you need outside investors to meet your goals and to help you meet the opportunities you have in front of you?

Mr. Rayburn: We don't need any additional outside funding. We are cash flow positive. I don't know if you would like specifics, I don't have any real problem disclosing specifics because I'm assuming public companies do these kinds of interviews and they disclose specifics, right?

TWST: Yes. Obviously, as you're private, there are some things you may not have already previously revealed, but that's up to you.

Mr. Rayburn: It didn't bother me. We are growing our topline about 40% a year. We are going to probably do, my guess is, we are going to be in the 27, 28 topline this year and 5 to 6 on the bottom, bottom being EBITDA. We are going to probably be somewhere in the high-30s, low-40s next year and 12 to 15 on the bottom. That's a guess, but it's an educated guess. And the company is growing. We are starting to really look at financial metrics very closely. Mississippi was very remote for most Wall Street folks before we went cash flow positive and made the Inc. 500, and once we did that, then everybody discovered us all of a sudden. It's been like almost like a cattle call.

TWST: Another overnight success that took about what 10 years, 12 years?

Mr. Rayburn: Something like that. We delivered our first product in '99 and so we are in '06. What is it? Seven years or eight years. It's amazing. Inc. Magazine did a survey. They looked at the average number of years to go public. Even in the dotcom go-go years, you would think it would be very short, right? It was about ten years to go public. Now in '03, when the market was bad, it was like 17, 18 years to go public.

TWST: What have I overlooked? Are there any thoughts or issues, items on your agenda to review or discuss, we haven't included?

Mr. Rayburn: No, I think you asked about capital structure, you asked about financing, you asked about what we do at a high level. You have covered the major points.

TWST: In looking ahead with your clients, with the products and services you provide, do you see any current disconnects or questions that your clients aren't yet asking that you are preparing or are ready to respond to?

Mr. Rayburn: Yes, the focus on collateral. As an industry, we have had a focus on credit for the last 10 or 15 years and as markets go up, there is a big focus on credit. I mean, candidly I don't even know why other than because of the secondary market requirements, these lenders do collateral right now. The market is going up, have been going up. Heavy focus on credit. As markets come down however, that all changes. We think that we are just entering the collateral era, the age of collateral, and really just starting to see these bubbles or as Mr. Greenspan says `Froth`. Lenders are going to start focusing more, more, and more on collateral and that's where we will be positioned. We do the tools and additional analytic techniques we hope to roll out between now and mid next year as the market begins to peak and in some cases, we think decline. We are ready for this emerging era.

TWST: Are there any regulatory issues, or obviously interest rates is always the backdrop, but the impending change in bankruptcies, will that have an impact do you feel on what you are doing with your customers?

Mr. Rayburn: Probably not the bankruptcy legislation. However, there is increased scrutiny of the collateral documentation of a loan based on my previous comments, as markets turn, the collateral gets more important. So, I it won't be so much driven by bankruptcy as it is by regulatory scrutiny on the assets underlying the loan.

TWST: Thank you.

WILLIAM B. RAYBURN Chief Executive Officer and Chairman of the Board FNC, Inc 1214 Office Park Drive Oxford, MS 38655 (662) 236-2020 (662) 236-2037 - fax www.fncinc.com