Equity Financial Holdings Reports First Quarter 2016 Results

TORONTO, May 10, 2016 /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, 2016.

(dollar amounts, except per-share, are in $000s)

First Quarter 2016 Financial Highlights

• Net income of $149 or $0.02 per share
• Mortgage loan book of $441,330, an increase of 15% from the end of 2015
• Mortgage originations of $85,842, our second highest quarterly volume ever
• Net interest income of $3,158 in Q1 2016, up 11% compared to Q4 2015
• Net interest margin of 2.86%
• Regulatory capital of $84,427
• Book value of $9.82

Equity Financial Holdings CEO Michael R. Jones said,

"Our mortgage loan portfolio increased to the highest level in our history during the first quarter of 2016, ending at a balance of $441,330. We also returned to profitability for the first time in over a year, following a period of significant organizational changes and rebuilding that began in 2014. Continued growth in our quarterly mortgage originations and a higher average loan book balance combined with the stabilization of our net interest margin and non‑interest expenses to produce net earnings for the quarter.

We anticipate continued growth in our quarterly origination volumes and loan book as we move into the traditionally busy season of spring mortgage lending. We remain focused on balancing trade‑offs between portfolio growth, net interest margins, duration and credit quality in order to build on our return to positive earnings. We expect to further leverage the operational and risk management infrastructure we established last year and we also plan to implement new mortgage underwriting and servicing systems in 2016 to enhance efficiency and scalability."

Financial Highlights (unaudited)

		For the three months ended
($000s, except per share and percentage amounts)		March 31, 2016		December 31, 2015		March 31, 2015
OPERATIONS
Net interest income		$	3,158	$	2,857	$	2,496
Provision for credit losses		(167)		101		(32)
Non‑interest income		495		475		297
Net interest income and other income, including provision for credit losses		3,486		3,433		2,761
Net interest margin		2.86%		2.88%		3.07%
Net income (loss)		$	149	$	(304)	$	(260)
Earnings (loss) per share ‑ basic/diluted		0.02 / 0.02		(0.03) / (0.03)		(0.03) / (0.03)
ROE (annualized) ^1		0.6%		(1.3)%		(1.1)%
As at		March 31, 2016		December 31, 2015		March 31, 2015
BALANCE SHEET
Assets		$	487,184	$	431,429	$	334,876
Mortgages receivable, net		441,330		383,282		294,398
Deposits		388,934		332,197		236,496
Shareholders' equity		93,664		93,455		94,788
FINANCIAL STRENGTH
Capital Measures ^2
	Regulatory capital (all‑in basis)	$	84,427	$	84,200	$	85,351
	Leverage ratio	16.9%		19.1%		25.6%
	Common Equity Tier 1 ratio (all‑in basis)	44.6%		49.8%		64.9%
Share Information
	Book value per common share	$	9.82	$	9.80	$	9.95
	Common share price ‑ close	9.00		8.06		9.69
	Common shares outstanding	9,539,508		9,539,508		9,529,508
	Market capitalization	$	85,856	$	76,888	$	92,341

¹ See definition of ROE ("return on equity") under Non‑IFRS Financial Measures section of our MD&A for the quarter ended March 31, 2016.
² These figures relate to the Corporation's operating subsidiary, Equity Trust, and are calculated under Basel III.

Interim Consolidated Financial Statements and Management's Discussion and Analysis for the quarter ended March 31, 2016 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 12, 2016 at 10 a.m. Eastern Time to discuss its operating results and to answer questions. Participants can dial in locally at 647.427.7450 or toll free at 1.888.231.8191 and use Conference ID 3776524.

Conference Call Archive

A telephone replay of the call will be available between 1:00 p.m. Eastern Time May 12, 2016 and midnight June 9, 2016 by calling 416.849.0833 or toll free at 1.855.859.2056 (enter passcode 3776524).

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 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