Equity Financial Holdings Inc. Reports Solid Third Quarter 2014 Results

TORONTO, Nov. 12, 2014 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity" or the "Corporation"), which serves the Canadian alternative residential mortgage market through its wholly-owned subsidiary, Equity Financial Trust Company, today reported its interim financial results for the three and nine months ended September 30, 2014.
(dollar amounts, except per-share, are in $000s)

Third Quarter 2014 Financial Highlights

• Mortgage loan book ending balance of $326,393, down 10% from the previous quarter and 8% year over year
• Net interest margin of 3.34% vs. 3.24% in the previous quarter
• Net interest income of $3,213, up 14% year over year
• Net earnings from continuing operations of $535; basic earnings per share of $0.06
• Regulatory capital of $84,786

Year to Date 2014 Financial Highlights

• Net interest margin of 3.24%
• Net interest income of $10,050, up 45% year over year
• Fee income of $1,194, up 83% year over year
• Adjusted net earnings from continuing operations¹ of $1,404
• Adjusted basic earnings per share from continuing operations¹ of $0.15
• Net loss from continuing operations of $2,690, due to significant non-recurring one-time costs in the first quarter of 2014

Equity's CEO Michael R. Jones said, "We had positive net earnings for the third quarter.  We continued to experience an expected decline in our mortgage loan portfolio, reflecting the short term nature of our loan book and the continued focus on rebuilding our origination capacity.  With recent appointments in sales and marketing, mortgage operations, internal audit and treasury we have established an experienced management team with individual track records of success in our industry.  We continue to rebuild in accordance with our plan, which includes establishing new distribution arrangements with key mortgage broker relationships and building scalable mortgage processing capabilities."

Stephen J. Griggs, Chair of the Board stated, "During the quarter we enhanced the strength of our trust company board with the addition of Yousry Bissada and William Mulvihill, independent directors who bring a wealth of mortgage industry and related experience. The recent additions to our management team bring to Equity the skills, experience and industry relationships that are key to the future growth of our business. Our CEO, Michael Jones, has done an excellent job of building a new management team over the quarter.  We are confident that we now have in place the executive team we need to excel in the rapidly growing Canadian alternative residential mortgage industry."

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¹ Adjusted net earnings from continuing operations and adjusted basic and diluted earnings per share from continuing operations are Non-IFRS financial measures, as defined in our MD&A for the for the third quarter ended September 30, 2014

Mr. Jones continued, "Equity Financial Trust Company is a well-capitalized, federally regulated deposit-taking institution, with a management team and Board with many years of experience in the Canadian non-prime and near-prime residential mortgage business. We are well positioned to take advantage of our strong capital base and the profitable opportunities in our industry in 2015 and beyond."

Interim Consolidated Financial Statements and Management's Discussion and Analysis for the quarter ended September 30, 2014 can be found on SEDAR at www.sedar.com and on Equity's website at www.equityfinancialtrust.com

Financial Highlights (Unaudited)
							For the three months ended						For the nine months ended
($000s, except share, per share and percentage amounts)							September 30, 2014		June 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013
OPERATIONS
Net interest income						$	3,213	$	3,389	$	2,828	$	10,050	$	6,942
Provision for credit losses							146		105		(281)		193		(558)
Other income							407		409		292		1,194		651
Net interest income and other income, net of provision							3,766		3,903		2,839		11,437		7,035
Net interest margin							3.34%		3.24%		3.08%		3.24%		3.16%
Net earnings (loss)
Continuing						$	535	$	270	$	(175)	$	(2,690)	$	(562)
Discontinued							-		-		-		-		42,109
							535		270		(175)		(2,690)		41,547
Earnings (loss) per share - basic/diluted
Continuing						$	0.06/0.06	$	0.03/0.03	$	(0.02)/(0.02)	$	(0.28)/(0.28)	$	(0.06)/(0.06)
Discontinued							-/-		-/-		-/-		-/-		4.57/4.53
							0.06/0.06		0.03/0.03		(0.02)/(0.02)		(0.28)/(0.28)		4.51/4.47
ROE from continuing operations (annualized) ^1							2.3%		1.2%		(0.7%)		(3.8%)		(1.0%)
ADJUSTED EARNINGS AND ADJUSTED ROE
Adjusted net earnings (loss) from continuing operations ^2						$	535	$	270	$	(175)	$	1,404	$	(562)
Adjusted earnings (loss) per share from continuing operations - basic/diluted ^2							0.06/0.06		0.03/0.03		(0.02)/(0.02)		0.15/0.15		4.51/4.47
As at							September 30, 2014		June 30, 2014		December 31, 2013
BALANCE SHEET
Total assets						$	367,590	$	409,043	$	442,376
Mortgages, net							326,393		364,563		394,812
Deposits							269,176		310,712		332,437
Shareholders' Equity							94,750		93,865		96,110
FINANCIAL STRENGTH
Capital Measures ^4
Regulatory Capital (all-in basis)						$	84,786	$	84,346	$	84,755
Assets-to-Capital Multiple							4.2x		4.7x		5.0x
Common Equity Tier 1 Ratio (transitional basis)							60.7%		55.3%		54.1%
Share Information
Book value per common share						$	9.97	$	9.91	$	10.33
Common share price - close						$	9.13	$	10.35	$	12.35
Common shares outstanding							9,507,508		9,468,341		9,305,840
Market Capitalization						$	86,804	$	97,997	$	114,927
^1See definition of ROE ("return on equity") under Non-IFRS financial measures section of our MD&A for the quarter ended September 30, 2014.
^2Adjusted net earnings from continuing operations, adjusted basic earnings per share from continuing operations and adjusted diluted earnings per share from continuing operations are defined in the Non-IFRS financial measures section of our MD&A for the quarter ended September 30, 2014.
^3These figures relate to the Corporation's operating subsidiary, Equity Financial Trust, and are calculated under Basel III.

Analyst Conference Call

The Corporation will hold a conference call on November 13, 2014 at 10 a.m. Eastern Time to discuss its operating results and to answer questions. Participants can dial in locally at 416-340-8010 or toll free at 1-866-223-7781.

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 ("Equity Trust") to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to Equity Trust, failure by Equity Trust 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 Equity Trust to adequately monitor the services provided by third party service providers or to establish alternative arrangements if required, failure by Equity Trust 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.

About Equity Financial Holdings Inc.

Equity is a financial services company operating through its wholly-owned subsidiary, Equity Trust, a federally regulated deposit-taking institution. Equity Trust serves the Canadian alternative mortgage market by offering residential mortgage loans to non-prime and near-prime customers who do not meet the conventional underwriting standards of the major Canadian banks.  Learn more at www.equityfinancialtrust.com.

SOURCE: Equity Financial Holdings Inc.

Equity Financial Holdings Inc., Michael R. Jones, President and CEO, [phone]www.equityfinancialtrust.com