Cervus Financial Group Inc.

Cervus Financial Group Inc.

May 17, 2006 09:04 ET

Cervus Financial Group Inc.: Letter of Intent Update

TORONTO, ONTARIO--(CCNMatthews - May 17, 2006) - Cervus Financial Group Inc. ("Cervus"), (TSX:CFG), today announced that the major international financial institution ("Financial Institution") with whom the Company had entered into a letter of intent has terminated the letter of intent. Accordingly, the international Financial Institution will return the arrangement fee previously paid by Cervus to the Financial Institution which will improve the Company's cash position. The Financial Institution had expressed the intention of opening a $5 million letter of credit in favor of Cervus's bank. However, the letter of credit was in fact never opened. Cervus continues its discussions with other major financial institutions in regards to a potential strategic partnership or acquisition as well as in regards to the replacement banking facilities.

About "Customer for Life"

The Cervus "Customer for Life" model enables the mortgage professional to retain the relationship with the borrower as a customer throughout the life of the mortgage. The compensation model also creates a continued revenue stream in the form of trailer fees, a one time origination fee and a renewal fee every time the customer renews with Cervus. This creates income security for the mortgage professional allowing a long-term relationship to be developed with the borrower. This long-term relationship subsequently gets passed along to the institutional investor of the mortgage security, creating a higher yield long-term investment cash flow stream. The Cervus "Customer for Life" model creates added value relationships for the borrowers, mortgage professionals, institutional investors and for Cervus.

About Cervus

Cervus Financial Group Inc. is a Canadian financial services company created as an industry initiative with leading mortgage broker companies and fixed income investment banks to become a high-yield residential mortgage producer and the largest mortgage broker lender of conventional insured and insurable mortgages in Canada. Our new and innovative business model demonstrates contracted asset accumulation of $22.5 billion in mortgages over five to seven years by fusing industry ownership, technology, service delivery and long term recurring revenue for the mortgage brokers.

Forward-looking (safe harbour) statement

Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes," plans," "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.

Additional information about Cervus is available on SEDAR (www.sedar.com).

The TSX does not accept responsibility for the adequacy or accuracy of this release.

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