Cervus Financial Group Inc.

Cervus Financial Group Inc.

July 26, 2005 09:03 ET

Cervus Financial Group Inc. Raises Total Mortgage Origination Volume Agreements To $22.5 Billion

TORONTO, ONTARIO--(CCNMatthews - July 26, 2005) - Cervus Financial Group Inc. ("Cervus"), (CFG:TSX), is a financial services company dedicated to providing mortgages to selected mortgage brokers. The company is pleased to announce that it has signed an additional $1 billion in residential mortgage origination volume agreements with two Canadian mortgage broker firms in exchange for 70,000 common shares of Cervus. A total of $22.5 billion in mortgage origination volume agreements are signed with 17 mortgage broker firms. These prime mortgage assets are to be delivered over the next five to seven years in exchange for a total of 4,112,500 common shares of Cervus. This unique model creates the opportunity for mortgage brokers to own and participate in the building of Cervus into one of the largest mortgage broker lenders in Canada.

The mortgage origination volume agreements are agreements to deliver mortgage origination volume by mortgage broker firms who are limited partners in a Partnership. In return for the assignment of these agreements to Cervus, the Company has issued Cervus Shares to the Partnership that are non-forfeitable, but subject to distribution restrictions for a period estimated at approximately five and one-half years until completion of all mortgage origination volume agreements. The additional $1 billion in mortgage origination volume agreements has been assigned to Cervus by completing a private placement of 70,000 common shares issued to the Partnership at a share price of $0.92. After the issuance of the 70,000 common shares Cervus currently has 42,373,660 common shares outstanding.

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 $30B 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' 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