TORONTO, Feb. 16, 2017 /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 consolidated financial results for the year-ended December 31, 2016.
(dollar amounts, except per-share, are in $000s)
2016 Financial Highlights
Equity Financial Holdings CEO Michael R. Jones said,
"We earned net income of $1,690 for the year ended December 31, 2016. This net income equated to $0.18 per share and an annualized return on equity of 1.8%. The primary driver of our increased profitability was the near doubling of our mortgage loan portfolio over the last twelve months, leading to net interest income growth at a higher rate than growth in expenses. We achieved record annual mortgage originations of $544 million, including significant year over year growth each quarter while maintaining a net interest margin of 2.85% with low over thirty day arrears and nominal loan losses.
In addition to significant business growth in 2016, we completed two key initiatives to support our strategic goals; we launched new mortgage systems and moved into new office space. Our newly implemented mortgage systems will provide greater operational efficiency and scalability as our originations volume and asset base grow. Our newly designed and centrally located office space is expected to help us attract key talent and provides room to expand our mortgage operations and support teams as required over the next several years. For 2017 our management team remains focused on growing our mortgage loan book through the expansion and deepening of key broker relationships, with the expectation that top line earnings growth will continue to outpace expense increases and deliver positive returns to our shareholders. While we are mindful of changing economic environments that could impact our business, we believe we are well positioned to take advantage of the profitable opportunities in our industry."
| Financial Highlights |
||||||
| For the years ended |
||||||
| ($000s, except per share and percentage amounts) |
December 31, |
December 31, |
December 31, |
|||
| OPERATIONS |
||||||
| Net interest income |
$ |
16,875 |
$ |
10,340 |
$ |
12,855 |
| Provision for credit losses |
(753) |
(165) |
281 |
|||
| Non‑interest income |
2,273 |
1,694 |
1,534 |
|||
| Net interest income and other income, including provision for credit losses |
18,395 |
11,869 |
14,670 |
|||
| Net interest margin 1 |
2.85% |
2.91% |
3.24% |
|||
| Net income (loss) |
$ |
1,690 |
$ |
(2,157) |
$ |
(2,919) |
| Earnings (loss) per share ‑ basic/diluted |
0.18 / 0.18 |
(0.23) / (0.23) |
(0.30) / (0.30) |
|||
| ROE (annualized) 2 |
1.8% |
(2.5)% |
(3.1)% |
|||
| ADJUSTED (LOSS) INCOME AND EPS FROM CONTINUING OPERATIONS |
||||||
| Adjusted income (loss) 3 |
$ |
1,690 |
$ |
(1,290) |
$ |
1,175 |
| Adjusted earnings (loss) per share ‑ basic/diluted 3 |
0.18 / 0.18 |
(0.14) / (0.14) |
0.12 / 0.12 |
|||
| As at |
December 31, |
December 31, |
December 31 |
|
| BALANCE SHEET |
||||
| Assets |
$ 833,744 |
$ 431,429 |
$ 334,953 |
|
| Mortgages receivable, net |
760,201 |
383,282 |
297,375 |
|
| Deposits |
726,762 |
332,197 |
235,597 |
|
| Shareholders' equity |
95,727 |
93,455 |
94,851 |
|
| FINANCIAL STRENGTH |
||||
| Capital Measures 4 |
||||
| Regulatory capital (all‑in basis) |
$ 85,045 |
$ 84,200 |
$ 85,332 |
|
| Leverage ratio |
10.0% |
19.1% |
25.9% |
|
| Assets‑to‑Capital Multiple |
N/A |
N/A |
3.8x |
|
| Common equity tier 1 ratio (all‑in basis) |
27.3% |
49.8% |
65.5% |
|
| Share Information |
||||
| Book value per common share |
$ 10.03 |
$ 9.80 |
$ 9.98 |
|
| Common share price ‑ close |
9.90 |
8.06 |
10.35 |
|
| Common shares outstanding |
9,543,508 |
9,539,508 |
9,507,508 |
|
| Market capitalization |
$ 94,481 |
$ 76,888 |
$ 98,403 |
|
| 1 |
See definition of Net interest margin under Non‑IFRS Financial Measures section of our MD&A for the year ended December 31, 2016. |
| 2 |
See definition of ROE ("return on equity") under Non‑IFRS Financial Measures section of our MD&A for the year ended December 31, 2016. |
| 3 |
Adjusted net income (loss) from continuing operations, adjusted basic earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share from continuing operations are defined in the Non‑IFRS Financial Measures section of our MD&A for the year ended December 31, 2016. |
| 4 |
These figures relate to the Corporation's operating subsidiary, Equity Trust, and are calculated under Basel III. |
Audited Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 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 February 21, 2017 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 73988238.
Conference Call Archive
A telephone replay of the call will be available between 1:00 p.m. Eastern Time February 21, 2017 and midnight March 23, 2017 by calling 416.849.0833 or toll free at 1.855.859.2056 (enter passcode 73988238).
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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