Equity Financial Holdings Reports First Quarter 2015 Results
TORONTO, May 12, 2015 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("EQI" or the "Corporation"), which offers residential mortgage loans through its wholly-owned subsidiary Equity Financial Trust Company ("Equity Trust"), today reported its interim consolidated financial results for the quarter ended March 31, 2015.
(dollar amounts, except per-share, are in $000s)
First Quarter 2015 Financial Highlights
- Mortgage originations of $28,676, up 50% over the prior quarter and up 13% year over year
- Mortgage loan book ending balance stabilized at $294,398, down 1% from year end 2014
- Net interest margin of 3.07%
- Net interest income of $2,496, down 28% year over year due to decline in size of loan book
- Net loss of $260, due primarily to decline in net interest income
- Basic loss per share of $0.03
- Regulatory capital of $85,351 as at March 31, 2015
- Book value per share of $9.95 as at March 31, 2015
Equity Financial Holdings CEO Michael R. Jones said,
"In the first quarter of 2015 our mortgage originations increased 50% compared to the previous quarter, demonstrating our improving capacity to originate new loans and our mortgage loan portfolio stabilized after a period of decline that began in early 2014. Over the past year, we have completed a rebuilding process that has included changes at the Board and CEO level, the establishment of a new senior management team, the creation of a sales and marketing team and significant improvements to our underwriting and risk management infrastructure. During the past twelve months, Equity Trust has maintained a strong base of regulatory capital and liquidity and we have continued to generate net interest and fee income from our mortgage loan portfolio.
After achieving the stabilization of our loan book in the first quarter, management remains focused on strengthening our mortgage processing capabilities, including expanding our new distribution arrangements with key mortgage broker relationships, evaluating technology solutions to further build scalability, enhancing our risk management infrastructure and refining our corporate governance practices. We continue to expect mortgage loan book growth to be modest in the first half of 2015 with momentum created as we move into the second half of the fiscal year. Correspondingly, income at or near the break-even level is expected while we focus on growing our mortgage loan book."
Stephen J. Griggs, Chair of the Board added,
"We have recently appointed Peter Friedmann to the Board of Equity Trust. Mr. Friedmann is an independent director with a wealth of mortgage industry experience that includes over thirty years as a senior executive at Canada Mortgage and Housing Corporation. Mr. Friedmann will also stand for election to the Board of Equity Financial Holdings at our Annual General Meeting on May 28, 2015."
Financial Highlights (unaudited)
| For the three months ended |
||||||||||||
| ($000s, except share, per share and percentage amounts) |
March 31, 2015 |
December 31, 2014 |
March 31, |
|||||||||
| OPERATIONS |
||||||||||||
| Net interest income |
$ |
2,496 |
$ |
2,805 |
$ |
3,448 |
||||||
| Reversal (increase) of provision for credit losses |
(32) |
88 |
(58) |
|||||||||
| Other income |
297 |
340 |
378 |
|||||||||
| Net interest income and other income, including reversal (increase) of credit losses |
2,761 |
3,233 |
3,768 |
|||||||||
| Net interest margin |
3.07% |
3.19% |
3.19% |
|||||||||
| Net loss |
$ |
(260) |
$ |
(229) |
$ |
(3,495) |
||||||
| Loss per share - basic/diluted |
$ |
(0.03)/(0.03) |
$ |
(0.02)/(0.02) |
$ |
(0.37)/(0.37) |
||||||
| ROE (annualized) 1 |
(1.1%) |
(1.0%) |
(15.0%) |
|||||||||
| ADJUSTED INCOME AND EPS |
||||||||||||
| Adjusted net (loss) income 2 |
$ |
(260) |
$ |
(229) |
$ |
599 |
||||||
| Adjusted (loss) earnings per share - basic/diluted 2 |
(0.03)/(0.03) |
(0.02)/(0.02) |
0.06/0.06 |
|||||||||
| As at |
March 31, 2015 |
December 31, 2014 |
March 31, |
|||||||||
| BALANCE SHEET |
||||||||||||
| Total assets |
$ |
334,876 |
$ |
334,953 |
$ |
463,137 |
||||||
| Mortgages, net |
294,398 |
297,375 |
397,036 |
|||||||||
| Deposits |
236,496 |
235,597 |
362,906 |
|||||||||
| Shareholders' Equity |
94,788 |
94,851 |
92,806 |
|||||||||
| FINANCIAL STRENGTH |
||||||||||||
| Capital Measures 3 |
||||||||||||
| Regulatory Capital (all-in basis) |
$ |
85,351 |
$ |
85,332 |
$ |
85,677 |
||||||
| Assets-to-Capital Multiple |
25.7% |
26.0% |
18.5% |
|||||||||
| Common Equity Tier 1 Ratio (all-in basis) |
64.9% |
65.5% |
53.0% |
|||||||||
| Share Information |
||||||||||||
| Book value per common share |
$ |
9.95 |
$ |
9.98 |
$ |
9.93 |
||||||
| Common share price - close |
$ |
9.69 |
$ |
10.35 |
$ |
11.38 |
||||||
| Common shares outstanding |
9,529,508 |
9,507,508 |
9,348,341 |
|||||||||
| Market Capitalization |
$ |
92,341 |
$ |
98,403 |
$ |
106,384 |
||||||
| 1See definition of ROE ("return on equity") under Non-IFRS financial measures section of our MD&A for the quarter ended March 31, 2015. |
||||||||||||
| 2Adjusted net (loss) income, adjusted basic (loss) earnings per share, adjusted diluted (loss) earnings per share are defined in the Non-IFRS financial measures section of our MD&A for the quarter ended March 31, 2015. |
||||||||||||
| 3These figures relate to the Corporation's operating subsidiary, Equity Trust, and are calculated under Basel III. |
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Interim Consolidated Financial Statements and Management's Discussion and Analysis for the quarter ended March 31, 2015 can be found on SEDAR at www.sedar.com and on our website at www.equityfinancialtrust.com.
Analyst Conference Call
EQI will hold a conference call on May 14, 2015 at 10 a.m. Eastern Time to discuss its operating results and to answer questions. Participants can dial in locally at 416-340-8018 or toll free at 1-866-223-7781.
Annual and Special Meeting
The annual and special meeting of the shareholders will be held at 1:30 pm on May 28, 2015 at the St. Andrew's Club and Conference Centre, 150 King Street West, 16th Floor, Toronto.
Information related to the Meeting can be found in the Corporation's Management Information Circular, available on SEDAR at www.sedar.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," "continues", "estimates," "scheduled," "anticipates," "believes," "intends," "may," "could," "would" or might, and the negative of such 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, future loans and originations, repayment by borrowers, 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. Forward looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all.
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 capital markets. 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, 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 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 capital markets or 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 significant changes in interest rates, failure by 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. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
About Equity Financial Holdings Inc.
The Corporation 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 & CEO, 647.277.0106, www.equityfinancialtrust.com
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