Cervus Financial Group Inc.

Cervus Financial Group Inc.

October 04, 2005 08:30 ET

Cervus Completes its First Sale of Mortgages into the Conduit Securitization Channel

TORONTO, ONTARIO--(CCNMatthews - Oct. 4, 2005) -

Diversification of funding sources a major step in the development of Cervus

Cervus Financial Group Inc. ("Cervus"), (TSX:CFG), is a financial services company dedicated to providing mortgages through selected mortgage brokers. The Company announced today that it has executed its first sale of mortgages through a conduit securitization channel for residential mortgages.

The introduction of an additional funding channel through securitization is a significant step in fulfilling the Cervus growth strategy to become one of the largest mortgage broker lenders in Canada. The whole loan and securitization sales distribution model provides opportunities for Cervus to enhance liquidity and increase investor access to Cervus mortgages.

"Opening up additional sources of funding will give the company greater diversity in its funding options which potentially leads to a lower cost of funds and increased spreads," states Gary Bartholomew, CEO, Cervus Financial. "The company continues to pursue various sales distribution channels to provide a solid funding base to support our current asset growth."

The company originated $181 million in new mortgage applications in the third quarter of fiscal 2005 and it is expected that the company will originate over $345 million in the fourth quarter generating total assets under administration greater than $600 million.

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 profitable 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.

Cervus works on the basis of a "Customer for Life" model, where the borrower is the client of the mortgage broker and Cervus is effectively the "Back Office - Servicer" between borrowers and investors. Cervus has assembled an experienced management team and board of directors who are knowledgeable in banking, financial services and related businesses. Cervus is focused on funding and servicing insurable conventional and high ratio insured residential mortgages originated through mortgage brokers. Cervus is currently licensed under Ontario, Quebec, British Columbia and Alberta mortgage broker/lender legislation and is seeking similar regulatory approvals in other Canadian Provinces as required. Cervus's head office and Ontario operations centre is located in Toronto, with additional sales offices in Vancouver, Calgary and in Montreal. Cervus Financial Group Inc. conducts all lending operations through its wholly-owned subsidiary, Cervus Financial Corp.

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.

Contact Information

  • Cervus Financial Group Inc.
    Tracey McLaughlin
    Investor Relations
    416-861-1315 ext 262
    Cervus Financial Group Inc.
    Gary Bartholomew
    416-861-1315 ext 226