Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp.

December 12, 2008 21:27 ET

Abode Mortgage Holdings Corp. Reports 2008 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 12, 2008) - Abode Mortgage Holdings Corp. (TSX VENTURE:ABD) today announced its financial results for the year ending August 31, 2008. The company recorded a loss of $2,468,028 for fiscal 2008 compared to $4,711,176 for fiscal 2007. AMHC recorded a profit in the 4th quarter of $389,488 compared to a loss of 1,591,872 in Q4 of 2007.


- Funded $105.3 million of loans for 2008

- Recorded net profit in Q4 of 2008 of $389,488

- Securitized $104.8 million of Loans in 2008


- Launched Prime A Insured Residential Mortgage Program

- Completed our launched into the Province of Ontario

- Obtained Approved Lender Status with Private Mortgage Insurers

Results of Operations

Continued disruption in the Canadian capital markets provides challenges for the Company as both the credit markets and the market for securitized mortgages remains very tight. While the credit crisis was a global event well outside the direct control or influence of the Company, the strategic response was in the Company's control. AMC was able to post positive earnings for the fourth quarter of 2008 despite reporting negative earnings for the year overall. In addition to the 4th quarter P&L improvement, the Company was successful in altering its business strategy to focus on the large conforming real estate market in Canada.

The Company's origination volumes are meeting current re-building expectations. While there remain significant concerns around the capital markets, liquidity markets have begun to re-emerge with the Bank of Canada's aggressive rate cutting and the CMHC mortgage auctions and CMB programs.

Net Income

Net loss for the year ended August 31st, 2008 was $(2,468,028) as compared with a net loss of $(4,711,176) for the prior year.

Net income for the 4th quarter ended August 31st, 2008 was $389,488 compared with the net loss of $(1,591,872) on for the corresponding 4th quarter of the prior year.

Revenues have been bolstered by 4th quarter origination volumes and realized through year end whole loan sales. The Company's mortgage sales have lead to improved valuations on the held for trading portfolio, as well as the realization of gain on sale of securitized assets. The sources of revenue, spread income valuations and securitization gains based on volume all contribute to the Company's income statement.

Infrastructure costs have been maintained throughout the 2008 fiscal year. Origination expenses are directly correlated to funded volumes. Referral fees paid to individual brokers fluctuate with funded volumes as well as all the associated costs of funding mortgages. Internally, as would be expected, staffing remains the one of the largest overhead components of our day to day activities. It was through the excellent contribution of these employees that Abode was able to successfully retool our business model.

Loss per share for the year was $(0.0214) compared to the 2007 loss of $(0.0458).

Earnings / (Loss) per share for the 4th quarter was $0.0033 compared to the Q4 2007 loss of $(0.0148).


The credit market crisis in the Canadian, US and European capital markets continues to provide many challenges for the Company. The ability to securitize mortgages in the market place has been difficult as capital markets have become illiquid with uncertainty brought on by the global credit crisis and perceived irrational investment decisions worldwide. However, the decision to change the distribution strategy by the Company to originate and fund only insured mortgages appears sound given how credit markets have behaved. In today's capital market the overriding benefit of the current origination model is highlighted by the Company's ability to sell insured mortgages via whole loan sale transactions as evidenced below. It also gives potential for the Company to obtain access to a broader array of mortgage originations ultimately through brokers and their customers.

By re-tooling the product line offerings and funding only in the Prime "A" insured residential mortgage product space during 2008, AMC was rewarded with positive growth results in the latter half of the year. A comparison of Q3 2007 to Q3 2008 shows the Company reduced its losses from $1,1180,168 in Q3 2007 to $313,055 in Q3 2008. Moreover, in Q4 2008 the Company generated a $389,488 profit compared to the $1,591,872 loss it incurred in Q4 2007. With new product line offerings, an updated distribution strategy, and the recent Ontario expansion making further contributions to volume, origination volumes and profit are projected to continue their improvement into 2009.

Subsequent to year end, the Company obtained Approved Lender status with Canada Mortgage and Housing Corporation (CMHC) and has since insured its mortgages with CMHC. By obtaining CMHC Approved Lender status the Company significantly expanded the list of whole loan purchasers prepared to consider the Company's mortgages. Since year end, the Company has completed the following sales of insured mortgages:

Book Value Sale Proceeds Gain on Sale

October 10, 2008 $ 16,400,000 $ 16,700,000 $ 300,000
November 19, 2008 23,500,000 24,300,000 800,000
November 27, 2008 5,600,000 5,900,000 300,000
December 12, 2008 13,800,000 14,600,000 800,000

In order to stabilize cash flow, the Company has made a non-binding arrangement with a whole loan purchaser whereby the purchaser will buy the Company's CMHC mortgages on a regular basis at the Company's request.

"The well documented capital markets disruption provided many challenges for the industry and our Company. We have adapted to the market turbulence by altering our strategic business model to include mortgage insurance protection. While insurance costs impact fee income, the strategic change increases access to favorably priced capital market liquidity which remains an essential component to the success of our business," said Mike Linehan, CEO of Abode Mortgage Corporation. Mr. Linehan continued, "The housing industry remains on reasonable footing throughout Canada and our ability to trade in the large conforming mortgage marketplace has permitted the Company to generate satisfactory mortgage volumes. This trend is expected to continue for the Company into 2009."

Financial Information

Abode Mortgage Holdings Corp.
Consolidated Balance Sheets
As at August 31st 2008, 2007, and 2006

2008 2007 2006


Cash and cash equivalents 2,536,647 1,646,080 4,950,854
Advances for mortgage loans 50,684 1,066,475 -
Mortgage loans 63,607,409 79,393,174 -
Accrued interest receivable 345,907 241,305 -
Accounts receivable - - 64,575
Prepaid expenses and deposits 55,123 60,701 237,001
Equipment 89,643 120,378 151,113

66,685,413 82,528,113 5,403,543


Credit facilities 59,319,586 77,347,887 -
Accounts payable and accrued
liabilities 2,088,194 1,341,571 535,315
Debt 2,957,757 685,169 653,422
Interest rate swap 827,102 167,691 -

65,192,639 79,542,318 1,188,737

Shareholders' equity

Capital stock 14,306,040 13,636,439 10,491,022
Equity portion of convertible debt 301,230 65,757 65,757
Contributed surplus 705,359 635,426 298,678
Deficit (13,819,855) (11,351,827) (6,640,651)

1,492,774 2,985,795 4,214,806

66,685,413 82,528,113 5,403,543

Financial Highlights Annual 3 Years

Consolidated Statements of Operations and Deficit
For the years ended August 31 2008, 2007, and 2006

2008 2007 2006


Fee income 3,906,251 1,975,788 -
Interest on mortgages held 4,406,651 1,626,836 -
Unrealized gains on mortgage
loans held for trading 2,754,170 - -
Gain on sale of mortgage loans 2,844,130 91,128 -
13,911,202 3,693,752 -
Origination and financing expense (11,772,308) (3,334,364) -
2,138,894 359,388 -
Other income 48,651 305,789 -
2,187,545 665,177 -


General and administrative 4,457,492 5,055,321 1,856,072
Amortization of non-recurring
development expense - 230,564 -
Interest on debt 198,081 115,747 120,679
Loss from continuing operations (2,468,028) (4,736,455) (1,976,751)
Other Items
Foreign exchange gain - 25,279 131,339
Gain on sale of assets - - 2,190,708
Investment impairment - - (1,753,442)
Income from discontinued
operations - - 478,547
Net loss and comprehensive
loss for the period (2,468,028) (4,711,176) (929,599)

Deficit - Beginning of year (11,351,827) (6,640,651) (5,711,052)
Deficit - End of year (13,819,855) (11,351,827) (6,640,651)

Basic and diluted loss per share (0.0214) (0.0458) (0.0162)
Basic and diluted earnings per
share from discontinued operations - - 0.0084

Weighted average number of
shares outstanding 115,233,808 102,922,978 57,272,672

About Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. is a publicly traded company on the TSX Venture Exchange under the symbol ABD, and through its wholly owned subsidiary, Abode Mortgage Corporation, provides residential mortgage financing to Canadians in the markets we serve. Headquartered in Vancouver, Abode Mortgage Corporation is delivering a new standard of service excellence to the Canadian residential mortgage industry by providing simplified products, consistent underwriting decisions, competitive pricing and compensation programs. The company launched its lending operations in Western Canada and recently expanded into the Province of Ontario.

Information about Abode Mortgage Corporation is available on the Internet at: www.abodecorp.com

Forward-Looking Statements

Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to the use of proceeds. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements, and as such undue reliance should not be placed on forward-looking information. Such factors include, among others, the financial needs of Abode on an ongoing basis and the timing and amount of Abode's expenditures.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information