Equity Financial Announces Board Changes and Appointment of Interim CEO

TORONTO, Feb. 26, 2014 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity" or the "Corporation") announced today that Equity and its largest shareholder, Smoothwater Capital Partners LP I ("Smoothwater"), have agreed to work together in the best interests of all stakeholders of Equity. Equity also announced the retirement of its CEO and the appointment of an interim CEO.

Board Changes

Several members of the Equity board have retired to facilitate the appointment of new directors. "On behalf of all shareholders of Equity, we thank Mike Gerrior, Elmer Kim, Bernard le Duc, Al Ringler, Natasha Sharpe and Paul Smith for their tireless work on behalf of the company," said Mr. Wright, Chairman.

Stephen J. Griggs, Wesley J. Hall and Glen Silvestri were nominated by Smoothwater and have been appointed to the board, as have Michele McCarthy and David Roundthwaite.  Michael Jones, Interim CEO has also joined the board.

The board of Equity is now comprised of the following individuals:

• Donald A. Wright, Chairman
• Stephen J. Griggs
• Wesley J. Hall
• Michael Jones
• Bradley R. Kipp
• Michele McCarthy
• F. David Rounthwaite
• Glen Silvestri
• Thomas R. Spencer

Details on each of the newly appointed directors are set out below.

Mr. Griggs is an industry recognized leader in corporate governance, investment management and law.  He is the CEO of Smoothwater Capital Corporation, the owner of Smoothwater Capital Partners Inc., the general partner of Smoothwater, and is a member of the Law Society of Upper Canada.  He has held a number of senior executive roles in the investment industry, including as CEO of Legg Mason Canada Inc., and was the Executive Director of the Canadian Coalition of Good Governance from the late 2007 to mid-2011.

Mr. Hall is the CEO of Kingsdale Shareholder Services Inc., which he founded in 2003, prior to which he was Vice-President, National Sales at Georgeson Shareholder Communications Canada.  He is an industry expert in proxy solicitation, depositary, corporate governance and other shareholder related initiatives.  He successfully completed the Directors Education Program (ICD) at the Rotman School of Management and received the Institute of Corporate Directors certified designation ICD.D.

Mr. Jones is Interim CEO of Equity and President and Interim CEO of Equity Financial Trust Company ("Equity Trust").  He is an accomplished financial services industry executive with more than 30 years of experience, including spending more than a decade in senior leadership positions with XCEED Mortgage Corporation where he oversaw much of the company's rapid growth. He joined XCEED in 2002 as President and Chief Operations Officer and ultimately was named President and Chief Executive Officer in 2009. He was named a Director at the company in 2011.  Before joining XCEED, he served as Vice-President, Commercial Mortgages at CIBC Mortgages Inc. and held senior positions with Firstline Trust and Bank of Montreal.

Ms. McCarthy is a practicing lawyer and is an innovative strategist with a track record for building high-performance teams and for leading organizational change. She regularly advises financial institutions, hedge funds and mutual funds on regulatory advice and compliance matters, corporate governance and strategic planning.  Her recent work included the launch of Ally, a new online bank, the creation of two bank branches, Deutsche Bank AG Canada Branch and UBS AG Canada Branch, advising ICICI Bank in obtaining its order to commence operations in Canada, leading the acquisition of ResMor and advising on the restructuring of GMAC LLC during the ABCP crisis.  Ms. McCarthy holds an LL.M. in Securities Law from Osgoode Hall Law School and she has successfully completed the Directors Education Program (ICD) at the Rotman School of Management and received the Institute of Corporate Directors certified designation ICD.D.

Mr. Rounthwaite is a former partner of McCarthy Tétrault LLP, a leading Canadian law firm, is a corporate lawyer with a strong background in the regulation of financial institutions and corporate governance and is an experienced corporate director. He is currently General Counsel & Corporate Secretary of eHealth Ontario.

Mr. Silvestri is a professional investor and has extensive experience in mergers, acquisitions and finance.  He was most recently a Vice-President of Teachers' Private Capital, the private equity arm of the Ontario Teachers' Pension Plan, where he led private equity transaction activities in the telecom, media, technology, energy and power sectors.

Management Changes

The board of Equity also announced today that Mr. Paul G. Smith has retired, as Chief Executive Officer of Equity and Equity Trust. Mr. Smith said "I am proud of my role in building Equity. We have created value for all shareholders".

"The board of Equity and our shareholders thank Paul Smith for his years of service as a co-founder and executive of the Equity Financial we know today", said Mr. Wright.  "Since co-founding Equity Financial in December 2004, Mr. Smith oversaw the creation of significant shareholder value.  He led the company from an IPO at 30 cents per share in 2004 to approximately $11 per share today thereby presiding over the creation of more than $100M in shareholder value.  He also led the successful transition of the company's subsidiary into a Deposit-taking Institution with a strong capital base.  The board wishes him the best in his next business endeavor."

The board of Equity has appointed Michael Jones as the Interim Chief Executive Officer of Equity, who will take on the same role with Equity Trust.  He will also continue as President of Equity Trust.

The board of Equity has established an Executive Search Committee to immediately undertake a process to appoint a permanent Chief Executive Officer.

Postponement of Annual Meeting of Shareholders

The annual meeting of shareholders has been postponed from the previously announced date of March 28, 2014.  The new meeting date and associated record date for determining shareholders entitled to receive notice of and vote at the meeting as well as additional details about the meeting will be provided to shareholders in due course.

About Equity

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.

Forward Looking Information 

Certain portions of this press release as well as other public statements by 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," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, 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 rates, global equity and capital markets, activities, the Corporation's expected need for equity on debt financing, business competition, technological change, changes in government regulations, 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. Certain material factors or assumptions are applied by the Corporation in making forward-looking statements, including without limitation, factors and assumptions regarding interest rates, availability of key personnel, the effect of competition on the Corporation's business, government regulation of its business, computer failure or security breaches, future capital 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 its 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 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 a significant downturn in capital markets or the economy as a whole, 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 significant changes in interest rates, failure by Equity Financial Trust Company ("EFT") to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to EFT, failure by EFT to adequately monitor and/or adjust 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 preceding list is not exhaustive of possible factors. 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.

SOURCE: Equity Financial Trust Company

Contact Information:

Equity Financial Holdings Inc.
Donald A. Wright
Chairman
[phone]

- and -

Michael Jones
Interim CEO
[phone] Ext 290
www.equityfinancialholdings.com

Media:

Riyaz Lalani
Bayfield Strategy, Inc.
[phone]