2010 Second Quarter Results Compared to 2009:
- Originations grew by 160% to $59 million;
- Mortgage portfolio balance grew by 14% to $946 million;
- Net loss of $0.06 per share fell from net loss of $0.36 per share;
- Adjusted net income was $0.13 per share compared to $0.14.
TORONTO, Aug. 5 /CNW/ - HOMEQ Corporation (TSX: HEQ ("HOMEQ")), today announced its financial results for the quarter ended June 30, 2010.
Since receiving its bank charter late last year, our subsidiary HomEquity Bank has experienced solid growth. During the current quarter, origination volume of $59 million exceeded Q2 2009 by 160%, again setting a new all time record. Resulting from the growth in originations, the mortgage balance has grown by 14%. This success continues to affirm the ongoing transition of a formerly niche product into a mainstream solution.
During the quarter encouraging demand was experienced throughout the country, all sales regions performing at levels significantly higher than in prior years. The volume of inquiries and applications continues to grow and the sales cycle is shortening, indicating the strong motivation of new customers to acquire a reverse mortgage. The increase in volume is stemming from growing demand and need amongst Canadian seniors, improved awareness of HomEquity Bank, and competitive pricing of the product.
Net loss for the quarter was $0.9 million ($0.06 per share) compared to net loss of $5.1 million ($0.36 per share) in Q2, 2009. Adjusted net income $0.13 per share was similar to the $0.14 per share earned in Q2, 2009. HOMEQ's ability to maintain its adjusted net income at the current level was achieved despite a 10.5% increase in non-interest expenditure relating primarily to additional overhead incurred in operating a bank. Adjusted return on equity (annualized) was 8.7% in comparison to 9.1% in 2009.
"We are in the midst of a significant business transformation and are adapting well to the new environment", said President and Chief Executive Officer, Mr. Steven Ranson. "We are experiencing strong growth coupled with encouraging improvements in efficiency throughout the business. It is estimated that the number of Canadian seniors will grow by 20% in the next six years and increasingly they will rely on HomEquity Bank for flexible and innovative solutions to meet their retirement needs."
Financial Statements and Conference Call
The Q2 2010 financial statements including an updated outlook are available on HOMEQ's website at www.homeq.ca and www.sedar.com.
HOMEQ will hold a conference call to discuss these financial results on August 6, 2010, at 9:00 am (Eastern).
Available on the call to answer questions will be Steven Ranson, President and Chief Executive Officer, and Gary Krikler, Senior Vice President and Chief Financial Officer.
To participate in the conference call, please dial 1-888-892-3255.
A live audio webcast (listen-only mode) of the conference call will be available at www.homeq.ca.
An archived recording of the call will be available at 1-800-937-6305 (conference ID 270938).
Forward Looking Statements
HOMEQ Corporation from time to time makes written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including the likelihood of HOMEQ's success in developing and expanding its business. These may be included in HOMEQ's and its predecessor's annual reports, regulatory filings, reports to shareholders, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of HOMEQ. Actual results may differ materially from those expressed or implied by such forward-looking statements. HOMEQ does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.
About HOMEQ Corporation
HOMEQ's wholly owned subsidiary HomEquity Bank is Canada's only national provider of reverse mortgages to homeowners aged 60 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand. As of June 30, 2010, the mortgage portfolio comprised approximately 7,600 reverse mortgages with an accrued value of $946 million, secured by residential properties across Canada worth approximately $2.6 billion. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.
HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ. Additional information on HOMEQ, including annual and quarterly reports can be viewed at www.homeq.ca.
SOURCE HOMEQ Corporation
For further information: For further information: Steven K. Ranson, President and Chief Executive Officer, (416) 413-4663; Gary Krikler, Senior Vice President and Chief Financial Officer, (416) 413-4679.