OVERLAND PARK, Kan., May 06, 2008 (BUSINESS WIRE) -- Brooke Credit Corporation d/b/a/ Aleritas Capital Corp. (OTCBB: BRCR; BRCRW; BRCRU) ("Aleritas") today announced certain changes in its operating and funding strategy in the face of the current difficult credit market environment in order to improve the Company's operating cash flow and capital efficiency. The Company has, as of March 31, 2008, decided to discontinue the use of third party funding sources that rely on the over-collateralization, or retention by the Company of significant portions of capital, in newly originated loans until the credit markets become more favorable. In the past few years, the Company has utilized a variety of funding sources including secured bank borrowings and loan securitization vehicles, as well as limited or non-recourse whole loan sales to support substantial loan portfolio growth. By relying on funding sources which require less capital the Company's monthly cash flow has improved significantly.
In addition, until credit conditions improve, the Company announced its intention to focus on its existing loan portfolio, both on balance sheet and off balance sheet, over new loan growth during this period. The existing net interest margin on its outstanding loan portfolio is a significant contributor to the Company's operating cash flow.
Aleritas' Chairman Robert D. Orr stated, "Like other participants in the specialty finance industry, the Company has witnessed reduced availability of new funding sources for loan originations and stricter lending terms. While this environment has constrained loan portfolio growth in the short term, our focus on our substantial existing loan portfolio together with a strong capital position will help the Company weather these difficult credit market conditions. As of year end, Aleritas had more than $100 million in equity capital and a capital to asset ratio of more than 40%. Furthermore, the Company has a loan portfolio which exceeds $700 million, in which the Company receives continued interest spreads with minimum operating expenses."
Mr. Orr also stated, "Like most lending organizations in today's market, we are slowing our loan origination activities as compared to prior periods and are making better use of our capital by maximizing the use of funding sources that do not require us to retain portions of the loans that we originate. Our current objective remains to build a strong financial foundation by drawing upon our experience in managing lending services in difficult credit environments. Slower loan origination activity by Aleritas is anticipated to result in fewer insurance agency and insurance franchise acquisitions so the impact of this credit crunch is expected to extend beyond Aleritas."
Aleritas Capital Corp. had previously reported new loan origination results on a monthly basis. However, as a result of the Company's decision to significantly reduce new loan originations, the Company will discontinue the monthly announcement of loan origination information. Loan origination information will continue to be provided in the Company's quarterly reporting under Form 10-Q.
About the Company... Aleritas Capital Corp. is a specialty finance company that originates loans to insurance agencies and related businesses.
This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will achieve its short-term and long-term profitability and growth goals, uncertainties associated with market acceptance of and demand for the Company's products and services, the impact of competitive products and pricing, the dependence on third-party suppliers and their pricing, its ability to meet product demand, the availability of funding sources, the exposure to market risks, uncertainties associated with the development of technology, changes in the law and in economic, political and regulatory environments, changes in management, the dependence on intellectual property rights, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company's business is provided in the Company's reports and registration statements, which are available from the Company without charge at www.aleritascapital.com
or at www.sec.gov.
Contact Info:
The Equity Group Inc.
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
or
Media Inquiries:
Aleritas Capital
Jeff Wallace, 913-323-9214
jeff.wallace@aleritascapital.com