Equity Financial Holdings Reports Year-End 2014 Results

TORONTO, Feb. 12, 2015 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("EQI" or the "Corporation"),  which serves the Canadian alternative residential mortgage market through  its wholly-owned subsidiary Equity Financial Trust Company ("Equity Trust"), today reported its audited consolidated financial results for the year-ended December 31, 2014.
(dollar amounts, except per-share, are in $000s)

2014 Highlights

  • Mortgage loan book ending balance of $297,375, a 25% decrease during a year of rebuilding
  • Net interest margin of 3.24%
  • Net interest income of $12,855, up 24% year over year
  • Fee income of $1,534, up 54% year over year
  • Adjusted net earnings from continuing operations1 of $1,175
  • Adjusted basic earnings per share from continuing operations1 of $0.12
  • Net loss from continuing operations of $2,919, due to significant non-recurring one-time costs in the first quarter of 2014
  • Regulatory capital of $85,332 as at December 31, 2014
  • Book value per share of $9.98 as at December 31, 2014
  • Substantially restructured Board of Directors and management team
  • Reorganization of underwriting and risk management infrastructure

Equity Financial Holdings CEO Michael R. Jones said,

"Fiscal 2014 began with the resolution of the shareholder action initiated in 2013 and a review of our underwriting and risk management controls in the first quarter.  These two events together led to a rebuilding process that included changes at the Board and CEO level, the establishment of a new senior management team and the reorganization of our underwriting and risk management infrastructure.  Throughout this period of changes Equity has maintained a strong base of regulatory capital and liquidity and we have continued to generate income on our mortgage loan portfolio.

The Corporation's focus in 2015 will be on resuming growth in our mortgage loan portfolio.  In accordance with our plan, we continue to form new distribution arrangements with key mortgage broker relationships in parallel with building scalable mortgage processing capabilities.  We expect 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, profitability at or near the break-even level, similar to our experience in the second half of fiscal 2014, is expected to continue while we focus on re-establishing a larger mortgage loan book."

Financial Highlights (audited)
(dollar amounts, except per-share, are in $000s, unless otherwise stated)









For the years ended

($000s, except share, per share and percentage amounts)









December 31,

2014


December 31,

2013


December 31,

2012

OPERATIONS







Net interest income

$

12,855

$

10,328

$

4,697

Reversal (increase) of provision for credit losses


281


(692)


(396)

Other income


1,534


998


357

Net interest income and other income, including reversal (increase) of credit losses


14,670


10,634


4,658

Net interest margin


3.24%


3.18%


3.10%








Net (loss) income








Continuing

$

(2,919)

$

(327)

$

(1,958)


Discontinued


-


42,109


2,492



(2,919)


41,782


534

(Loss) earnings per share - basic/diluted








Continuing

$

(0.30)/(0.30)

$

(0.04)/(0.04)

$

(0.21)/(0.21)


Discontinued


-/-


4.56/4.51


0.27/0.27



(0.30)/(0.30)


4.52/4.47


0.06/0.06








ROE from continuing operations (annualized) 1


(3.1%)


(0.4%)


(3.8%)

ADJUSTED INCOME (LOSS) AND EPS







Adjusted net income (loss) from continuing operations 2

$

1,175

$

518

$

(1,958)

Adjusted earnings (loss) per share from continuing operations - basic/diluted 2


0.12/0.12


0.06/0.06


(0.21)/(0.21)








As at


December 31,
2014


December 31,
2013


December 31,
2012

BALANCE SHEET







Total assets

$

334,953

$

442,376

$

251,442

Mortgages, net


297,375


394,812


198,147

Deposits


235,597


332,437


192,757

Shareholders' Equity


94,851


96,110


52,267

FINANCIAL STRENGTH







Capital Measures 3








Regulatory Capital (all-in basis)

$

85,332

$

84,755

$

35,001


Assets-to-Capital Multiple


3.8x


5.0x


6.6x


Common Equity Tier 1 Ratio (transitional basis)


65.8%


54.1%


28.7%

Share Information








Book value per common share

$

9.98

$

10.28

$

5.71


Common share price - close

$

10.35

$

12.35

$

8.00


Common shares outstanding


9,507,508


9,345,840


9,155,007


Market Capitalization

$

98,403

$

115,421

$

73,240

1See definition of ROE ("return on equity") under Non-IFRS financial measures section of our MD&A for the year ended December 31, 2014.

2Adjusted net income (loss) from continuing operations, adjusted basic earnings (loss) per share from continuing operations and 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, 2014.

3These figures relate to the Corporation's operating subsidiary, Equity Financial Trust, and are calculated under Basel III for 2014 and 2013 and Basel II for 2012.

 

Audited Consolidated Financial Statements and Management's Discussion and Analysis for the fourth quarter and year-ended December 31, 2014 can be found on SEDAR at www.sedar.com and on Equity's website at www.equityfinancialtrust.com.

Analyst Conference Call

EQI will hold a conference call on February 17, 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.

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.

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.

For further information: Equity Financial Holdings Inc., Michael R. Jones, President & CEO, 647.277.0106, www.equityfinancialtrust.com


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