Equitable Group reports record 2008 second quarter results



    
    -   EPS Growth of 33.9% to a Record $0.79 Per Share
    -   37.4% Net Income Growth
    -   Sharp Increase In Single-Family Mortgage Lending

    TSX Symbol: ETC

    TORONTO, July 31 /CNW/ - Equitable Group Inc. ("Equitable" or the
"Company") today reported record financial performance for the three and six
months ended June 30, 2008 as well as excellent progress in building both its
Single-Family Lending Services business and its total regulatory capital.

    Second Quarter Financial Highlights

    -   Net income increased 37.4% to a record $10.3 million from
        $7.5 million a year ago.
    -   Diluted earnings per share grew 33.9% to a record $0.79 per share
        compared to $0.59 per share diluted in the second quarter of 2007.
    -   Return on equity was 19.1%, compared to 17.0% a year ago.
    -   Productivity ratio on a Taxable Equivalent Basis improved to 26.8%
        from 29.6% in the second quarter a year ago.
    -   Net impaired mortgages improved to 0.16% of total mortgage assets at
        June 30, 2008 from 0.29% at the end of the prior quarter. Total
        realized loan losses were $36 thousand on total mortgages receivable
        of $2.9 billion at June 30, 2008.

    Six Month Financial Highlights

    -   Net income increased 29.0% to a record $20.0 million from
        $15.5 million a year ago - surpassing the Company's target growth
        rate of 16% to 20% for all of 2008.
    -   Diluted earnings per share grew 23.4% to a record $1.53 per share
        compared to $1.24 per share in the same period of 2007.
    -   Return on equity was 18.9%, compared to Equitable's 2008 objective of
        16% to 18%.
    -   Productivity ratio on a Taxable Equivalent Basis improved to 26.4%
        from 28.0% in the first half of 2007 - and remained ahead of the
        Company's target of 27% to 30% for all of 2008.
    -   Total capital ratio, including general allowance, improved to 12.0%
        at June 30, 2008 compared to 11.0% at January 1, 2008 and 11.4% at
        March 31, 2008.

    Operational Highlights

    -   Equitable funded $969.8 million of mortgages during the second
        quarter, an increase of 38.2% or $267.9 million over second quarter
        of fiscal 2007.
    -   Consistent with management's focus, the fastest rate of growth in
        fundings was achieved in Single-Family Lending Services where
        production increased 169.9% to $225.2 million (23.2% of total
        mortgage principal funded) compared to $83.5 million (11.9 % of total
        mortgage principal funded) at June 30, 2007.
    -   Equitable capitalized on credit market dynamics to securitize
        $410.0 million of CMHC-insured mortgages at profit margins that were
        in excess of historical levels.
    -   Total mortgage principal increased on a net basis by $48.1 million or
        1.7% since December 31, 2007, reflecting management's focus on
        slowing the pace of growth in Commercial Lending Services to improve
        overall investment returns.
    

    Dividend

    The Company's Board of Directors has declared a dividend of $0.10 per
share payable on October 3, 2008 to shareholders of record at the close of
business on September 12, 2008.

    Management Commentary

    "Equitable made significant headway in the first half of 2008 against our
annual financial and operating plan," said Andrew Moor, President and Chief
Executive Officer. "While delivering record earnings in both the first and
second quarters at a pace of growth that significantly exceeded our target for
the year, our team continued to improve the two fundamentals that are crucial
to ongoing performance: our total capital ratio and investment returns on a
risk-weighted basis. Consistent with our focus on risk-weighted returns, we
substantially increased our origination of single-family business in the
second quarter. Also as planned, we became more selective in Commercial
Lending Services and placed more emphasis on the origination of CMHC-insured
mortgages on multi-family apartment buildings. As a result, we reduced total
Commercial Lending Services production to 70.7% of total fundings from 78.9% a
year ago.
    In the context of this shift in our mortgage portfolio, the impact on our
net interest margin of three Prime Rate decreases earlier this year and
volatile markets, Equitable's progress is outstanding."

    Outlook

    "Equitable's performance to date and the current strength of demand for
financing in our niches gives us a good deal of momentum heading into the last
half of the year and confidence in our ability to achieve our objectives,"
said Mr. Moor. "Unquestionably, we are operating in an economic environment
that is very different than prior years, given heightened risk of credit
market volatility. This validates the plan we adopted at the beginning of
2008, with its focus on investment returns, risk management and balance sheet
improvement. As such, we will continue to pursue all elements of our plan
vigorously in the coming quarters. "
    John Ayanoglou, Chief Financial Officer said: "Through the successful
completion of a secondary offering of common shares that closed in July
(subsequent to quarter end), we are now ahead of our capital plan with a pro
forma total capital ratio of 13.4%, had the proceeds of the offering been
invested prior to June 30, 2008. This $37.9 million equity investment gives us
additional strength to support strategic growth in our single-family mortgage
portfolio and the means to further enhance our value creation potential for
the future."

    Second Quarter Webcast

    Management will discuss Equitable's results during a conference call
beginning at 10 a.m. ET today. To listen to the audio webcast, log on to
www.equitablegroupinc.com. To participate in the call, please dial
416-644-3415.

    MD&A

    The Company will post its MD&A for the three and six months ended June
30, 2008 on its website www.equitablegroupinc.com this morning. This document
will also be archived on the site.


    
    CONSOLIDATED BALANCE SHEET

    AS AT JUNE 30, 2008 - UNAUDITED
    With comparative figures as at December 31, 2007 and June 30, 2007
    (In thousands of dollars)

    -------------------------------------------------------------------------
                                             June 30,   December     June 30,
                                                2008    31, 2007        2007
    -------------------------------------------------------------------------

    Assets
    Cash and cash
     equivalents                         $   248,139 $    15,927 $   164,232
    Restricted cash                            5,000       5,000       5,000
    Investments purchased under reverse
     repurchase agreements                   412,004     232,120           -
    Investments                              149,214     220,697     357,888
    Loan securitizations - retained
     interests                                67,469      51,214      46,491
    Mortgages receivable                   2,915,912   2,874,241   2,313,024
    Other assets                              16,457      10,427      14,559
    -------------------------------------------------------------------------
                                         $ 3,814,195 $ 3,409,626 $ 2,901,194
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Liabilities:
      Customer deposits                  $ 3,483,607 $ 3,104,524 $ 2,613,504
      Future income taxes                     11,733       7,945       5,541
      Other liabilities                       21,193      17,423      19,173
      Bank term loans                         44,595      44,595      44,595
      Subordinated debentures                 31,969      31,969      31,969
    -------------------------------------------------------------------------
                                           3,593,097   3,206,456   2,714,782

    Shareholders' equity:
      Capital stock                           87,653      87,062      86,339
      Contributed surplus                      2,124       1,778       1,415
      Retained earnings                      133,695     116,325     103,215
      Accumulated other comprehensive loss    (2,374)     (1,995)     (4,557)
    -------------------------------------------------------------------------
                                             221,098     203,170     186,412

    -------------------------------------------------------------------------
                                         $ 3,814,195 $ 3,409,626 $ 2,901,194
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENT OF INCOME
    FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2008 - UNAUDITED
    With comparative figures for the three and six month periods ended
    June 30, 2007
    (In thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------
                                  Three Months ended        Six Months ended
                                 June 30,    June 30,    June 30,    June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    Interest income:
      Mortgages              $    45,151 $    38,086 $    90,843 $    74,481
      Investments                  2,146       3,478       4,322       6,632
      Other                        3,807       2,049       7,530       3,525
    -------------------------------------------------------------------------
                                  51,104      43,613     102,695      84,638
    Interest expense:
      Customer deposits           32,128      26,147      62,837      50,501
      Deposit agent commissions    2,148       1,542       4,090       2,940
      Bank term loans                771         831       1,517       1,446
      Subordinated debentures        584         626       1,168       1,183
    -------------------------------------------------------------------------
                                  35,631      29,146      69,612      56,070
    -------------------------------------------------------------------------
    Net interest income           15,473      14,467      33,083      28,568
    Provision for credit losses      300         225         600         450
    -------------------------------------------------------------------------
    Net interest income after
     provision for credit losses  15,173      14,242      32,483      28,118
    Other income:
      Fees and other income          421         345         781         633
      Net gain (loss) on
       investments                    49           -         230         (15)
      Loan securitizations -
       retained interests          4,278         770       4,959       2,140
    -------------------------------------------------------------------------
                                   4,748       1,115       5,970       2,758
    -------------------------------------------------------------------------
    Net interest income and
     other income                 19,921      15,357      38,453      30,876
    Non-interest expenses:
      Compensation and benefits    3,233       2,780       6,260       5,361
      Other                        2,448       2,257       4,569       4,169
    -------------------------------------------------------------------------
                                   5,681       5,037      10,829       9,530
    -------------------------------------------------------------------------
    Income before income taxes    14,240      10,320      27,624      21,346
    Income taxes (recovery):
      Current                      1,384       2,978       4,988       5,033
      Future                       2,576        (138)      2,671         841
    -------------------------------------------------------------------------
                                   3,960       2,840       7,659       5,874

    -------------------------------------------------------------------------
    Net income               $    10,280 $     7,480 $    19,965 $    15,472
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
    FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2008 - UNAUDITED
    With comparative figures for the three and six month periods ended
    June 30, 2007
    (In thousands of dollars)

    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                 June 30,    June 30,    June 30,    June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    Capital stock:
      Balance, beginning of
       period                $    87,257 $    60,050 $    87,062 $    57,849
      Common shares issued
        Gross proceeds of
         equity issue                  -      25,000           -      25,000
        Issue expense, net of
         tax recovery of - nil
         (2007 - $498)                 -        (962)          -        (962)
        Proceeds from exercise
         of stock options            350       1,966         525       3,965
        Transfer from contributed
         surplus relating to
         the exercise of stock
         options                      46         285          66         487
    -------------------------------------------------------------------------
      Balance, end of period      87,653      86,339      87,653      86,339

    Contributed surplus:
      Balance, beginning of
       period                      1,961       1,485       1,778       1,539
      Stock-based compensation       209         215         412         363
      Transfer to common shares
       relating to the
       exercise of stock options     (46)       (285)        (66)       (487)
    -------------------------------------------------------------------------
      Balance, end of period       2,124       1,415       2,124       1,415

    Retained earnings:
      Balance, beginning of
       period                    124,714      97,025     116,325      90,348
      Transition adjustment -
       Financial instruments           -           -           -        (113)
      Net income                  10,280       7,480      19,965      15,472
      Dividends                   (1,299)     (1,290)     (2,595)     (2,492)
    -------------------------------------------------------------------------
      Balance, end of period     133,695     103,215     133,695     103,215

    Accumulated other
     comprehensive loss:
      Balance, beginning of
       period                     (1,996)        (63)     (1,995)          -
      Transition adjustment -
       Financial instruments           -           -           -         302
      Other comprehensive loss      (378)     (4,494)       (379)     (4,859)
    -------------------------------------------------------------------------
      Balance, end of period      (2,374)     (4,557)     (2,374)     (4,557)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total retained earnings
     and accumulated other
     comprehensive loss          131,321      98,658     131,321      98,658

    -------------------------------------------------------------------------
    Total shareholders'
     equity                  $   221,098 $   186,412 $   221,098 $   186,412
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
    FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2008 - UNAUDITED
    With comparative figures for the three and six month periods ended
    June 30, 2007
    (In thousands of dollars)

    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                 June 30,    June 30,    June 30,    June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Net income               $    10,280 $     7,480 $    19,965 $    15,472
    Other comprehensive loss:
      Available-for-sale
       assets, change in
       unrealized gains
       (losses)                     (304)     (4,886)       (391)     (4,877)
      Reclassification to
       income for realization
       of available-for-sale
       assets fair value
       changes                       (74)        392          12          18
    -------------------------------------------------------------------------
    Other comprehensive loss        (378)     (4,494)       (379)     (4,859)
    -------------------------------------------------------------------------
    Comprehensive income     $     9,902 $     2,986 $    19,586 $    10,613
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About Equitable Group Inc.

    Equitable Group Inc. is a leading niche financial institution focused on
single-family dwelling mortgage lending, Commercial Mortgage - Broker
Services, a business line that funds loans on a variety of properties
including mixed-use, apartment, commercial and industrial buildings, and
commercial lending in partnership with mortgage banking organizations.
Equitable is a nationally-licensed deposit-taking institution. It conducts
business through its wholly-owned subsidiary, The Equitable Trust Company,
which was founded in 1970. Equitable's non-branch business model, valued
relationships with independent mortgage professionals and deposit-taking
agents, and disciplined lending practices have allowed the Company to grow
profitably and efficiently for many years.
    The common shares of Equitable Group Inc. are listed on the Toronto Stock
Exchange under the trading symbol of "ETC". For more information, visit
www.equitablegroupinc.com.

    Certain forward-looking statements are made in this news release,
including statements regarding possible future business. Investors are
cautioned that such forward-looking statements involve risks and uncertainties
detailed from time to time in the Company's periodic reports filed with
Canadian regulatory authorities. Many factors could cause 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. Equitable does not undertake to update any
forward-looking statements, oral or written, made by itself or on its behalf.
See the MD&A for further information on forward-looking statements.





For further information:

For further information: John Ayanoglou, Chief Financial Officer, (416)
513-3535


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