Equity Financial Holdings Inc. (TSX:EQI) ("Equity" or "the Corporation"), a
Canadian financial services company serving the alternative retail mortgage
market, today reported its interim financial results for the three months ended
June 30, 2013.
Financial Highlights (all dollar amounts, except per-share, are in $000s, unless
otherwise stated)
(Unaudited) For the three months ended
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June 30, March 31, June 30,
2013 2013 2012
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OPERATIONS
Net interest income $ 2,306 $ 1,808 $ 1,061
Provision for credit losses (176) (101) (117)
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Net interest income, net of
provision 2,130 1,707 944
Other income 212 147 67
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Net interest income and other
income, net of provision 2,342 1,854 1,011
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Net earnings (loss)
Continuing $ 1 $ (388) $ (515)
Discontinued 42,747 (638) 789
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42,748 (1,026) 274
Net interest income and other
income, net of provision 2,342 1,854 1,011
Earnings per share -
basic/diluted
Continuing $ -/- $(0.04)/(0.04) $(0.06)/(0.06)
Discontinued 4.66/4.60 (0.07)/(0.07) 0.09/0.09
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4.66/4.60 (0.11)/(0.11) 0.03/0.03
Net interest margin 3.16% 3.21% 3.09%
ROE from continuing
operations (annualized) (1) 0.0% (3.0%) (4.0%)
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(Unaudited) For the six months ended
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June 30, June 30,
2013 2012
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OPERATIONS
Net interest income $ 4,114 $ 1,918
Provision for credit losses (277) (189)
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Net interest income, net of
provision 3,837 1,729
Other income 359 110
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Net interest income and other
income, net of provision 4,196 1,839
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Net earnings (loss)
Continuing $ (387) $ (1,179)
Discontinued 42,109 1,499
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41,722 320
Net interest income and other
income, net of provision 4,196 1,839
Earnings per share -
basic/diluted
Continuing $(0.04)/(0.04) $ (0.13)/(0.13)
Discontinued 4.59/4.53 0.17/0.17
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4.55/4.49 0.04/0.04
Net interest margin 3.20% 3.14%
ROE from continuing
operations (annualized) (1) (1.1%) (4.7%)
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December
June 30, March 31, 31, June 30,
As at 2013 2013 2012 2012
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BALANCE SHEET
Total assets $ 337,923 $ 282,179 $ 251,442 $ 212,543
Mortgages 276,550 226,876 198,147 138,679
Deposits 230,840 224,913 192,757 152,218
Shareholders' Equity 95,193 51,339 52,267 51,830
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FINANCIAL STRENGTH
Capital Measures (2)
Regulatory Capital
(transitional basis) $ 86,132 $ 34,467 $ 35,001 $ 23,952
Assets-to-Capital
Multiple 3.81 7.68 6.64 7.54
Common Equity Tier 1
Ratio 57.0% 23.8% 28.7% 24.2%
Share Information
Book value per common
share $ 10.28 $ 5.61 $ 5.71 $ 5.66
Common share price -
close $ 10.45 $ 9.89 $ 8.00 $ 8.99
Common shares
outstanding 9,264,340 9,155,840 9,155,007 9,153,007
Market Capitalization $ 96,812 $ 90,551 $ 73,240 $ 82,286
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(1) See definition of return on equity under Non-IFRS financial measures section
on page 21 of our MD&A for the Second Quarter ended June 30, 2013.
(2) These figures relate to the Corporation's operating subsidiary, Equity
Financial Trust and are calculated under Basel III for 2013 and Basel II for
2012 (see Capital Management on page 15 & 16 of our MD&A for the Second Quarter
ended June 30, 2013).
Second Quarter 2013 Highlights
-- Net earnings of $42,748 and earnings per share of $4.66, driven
primarily by the gain on sale of discontinued operations of $43,850,
which occurred April 5, 2013.
-- Regulatory capital of $86,132 as at June 30, 2013 compared with $35,001
as at December 31, 2012, comprised entirely of Common Equity Tier
1capital. The increase reflects the gain on sale from the disposition of
our transfer agent and corporate trust service business.
-- Break-even net earnings from our continuing mortgage operations for the
second quarter, compared to a net loss of $515 for the same period in
2012 and also an improvement compared to the net loss of $388
experienced in the first quarter of 2013.
-- Mortgage portfolio balance as at June 30, 2013 of $276,550, an increase
of 40% compared to December 31, 2012 and an increase of 99% compared to
June 30, 2012.
-- Mortgage originations of $72,662, an increase of $33,131 or 84% compared
to the first quarter of 2013 and $31,964 or 79% compared to originations
for the second quarter last year. Mortgage originations for the year to
date of $112,193, an increase of $57,666 or 106% compared to the prior
year.
-- Net interest income for the second quarter increased by 117% compared to
the second quarter of 2012 and increased by 114% for the six months year
to date.
-- Other income for the second quarter increased by 216% compared to the
second quarter of 2012 and increased by 226% for the six months year to
date.
Equity Financial Holdings President & CEO Paul G. Smith said,
"The Corporation is in the midst of a transitional period as we work to execute
our new strategy that is now focused solely on our mortgage lending and deposit
taking business and efficiently transfer the business unit sold to TMX in April.
Management continues to believe the most attractive opportunities are available
to us under our mortgage and deposit-taking business and realizing on the
inherent value of our transfer agent and corporate trust business allowed us to
allocate our resources accordingly."
Equity Financial Trust CEO Nick Kyprianou said,
"Our second quarter mortgage originations of nearly $73 million was a new record
for us. We are pleased with the pace of our mortgage originations for the year
to date and our expectation is that by the end of 2013 our mortgage loan
portfolio will have expanded 80% to 90% compared to the balance at the end of
2012."
Interim Consolidated Financial Statements and Management's Discussion and
Analysis for the second quarter and fiscal period ended June 30, 2013 can be
found on SEDAR at www.sedar.com and on Equity's website at
www.equityfinancialholdings.com.
Analyst Conference Call
EQI will hold a conference call on August 14, 2013 at 9:00 AM Eastern Time to
discuss its operating results and to answer questions. Participants can dial
416-340-2216 or toll free 866-226-1792.
About Equity Financial Holdings Inc.
Equity is a Canadian financial services company serving the alternative retail
mortgage market through its federally regulated and wholly-owned subsidiary,
Equity Financial Trust Company. Learn more at www.equityfinancialholdings.com.
Advisory notes:
Certain portions of this press release as well as other public statements by
Equity Financial Holdings Inc. (the "Corporation") contain "forward-looking
information" within the meaning of applicable Canadian securities legislation,
which is also referred to as "forward-looking statements", which may not be
based on historical fact. Wherever possible, words such as "will", "plans",
"expects", "targets", continue", "estimates", "scheduled", "anticipates",
"believes", "intends", "may", "could", "would", "might" or "will" have been used
to identify forward-looking information. Such forward-looking statements
include, without limitation, the Corporation's expectations in respect of
earnings, fee income, expense levels, general economic, political and market
factors in North America and internationally, interest and foreign exchange
rates, global equity and capital markets activities, the Corporation's expected
need for equity or debt financing, business competition, technological change,
changes in government regulations and regulatory guidelines, unexpected judicial
or regulatory proceedings, catastrophic events, and the Corporation's ability to
complete strategic transactions and integrate acquisitions and other factors.
All material assumptions used in making forward-looking statements are based on
management's knowledge of current business conditions and expectations of future
business conditions and trends, including their knowledge of the current credit,
interest rate and liquidity conditions affecting the Corporation and the
Canadian economy, retail mortgage markets, housing sales, and equity and capital
markets, operations and financial results and assumptions relating to the
Corporation's capital and financing requirements. Certain material factors or
assumptions are applied by the Corporation in making forward-looking statements,
including without limitation, factors and assumptions regarding interest rates,
housing sales and retail mortgage borrowing activities, availability of key
personnel, the effect of competition, government regulation of its business,
computer failure or security breaches, future capital and funding requirements,
its ability to fund its mortgage business, the value of mortgage originations,
the competitive nature of the alternative mortgage market, the expected margin
between the interest earned on its mortgage portfolio and the interest to be
paid on its deposits, the relative continued health of real estate markets,
acceptance of its products in the marketplace, as well as the Corporation's
operating cost structure and the current tax regime.
Forward-looking statements reflect the Corporation's current views with respect
to future events and are subject to a number of risks and uncertainties. Actual
results may differ materially from results contemplated by the forward- looking
statements. Readers should not place undue reliance on such forward-looking
statements as they reflect the Corporation's current views with respect to
future events and are subject to risks and uncertainties and are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by the Corporation, are inherently subject to significant business,
economic, regulatory, competitive, political and social uncertainties and
contingencies. Many factors could cause the Corporation's actual results,
performance or achievements to be materially different from any future results,
performance, or achievements that may be expressed or implied by such
forward-looking statements, including, among others a significant downturn in
the economy as a whole, errors or omissions by the Corporation in providing
services to its customers, significant increases in the cost of complying with
applicable regulatory requirements, civil unrest, economic recession, pandemics,
war and acts of terrorism which may adversely impact the North American and
global economic and financial markets, inability to raise funds through public
or private financing in the event that the Corporation incurs operating losses
or requires substantial capital investment in order to respond to unexpected
competitive pressures, significant changes in interest rates, failure by Equity
Financial Trust Company ("EFT") to meet ongoing regulatory obligations, failure
by the Corporation to generate or obtain sufficient cash or cash equivalents in
a timely manner and at a reasonable price or to meet its mortgage portfolio
management practices for changing circumstances, failure by the Corporation to
attract and to retain the necessary employees to meet its needs, failure by EFT
to adequately monitor the services provided by third party service providers or
to establish alternative arrangements if required, failure by EFT to secure
sufficient deposits from securities dealers or a sufficient level of mortgage
origination from its mortgage broker network, a failure of the computer systems
of the Corporation or one or more of its service providers or the risks detailed
from time-to-time in the Corporation's quarterly filings, annual information
forms, annual reports and annual filings with securities regulators. The
Corporation disclaims any intent or obligation to update or revise publicly any
forward-looking statements whether as a result of new information, estimates,
future events or results, or otherwise, unless required to do so by applicable
laws.
The Toronto Stock Exchange has neither approved nor disapproved the contents of
this press release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Equity Financial Holdings Inc.
Paul G. Smith
President & CEO
(416) 361-0152 Ext 270
www.equityfinancialholdings.com
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