HOMEQ Corporation Q3 Results Continue Strong Momentum

2011 Third Quarter Results Compared to 2010:

  • Adjusted net income increased 36% to $0.15 per share from $0.11 per share;
  • Mortgage portfolio of $1.1 billion increased 16% from June 30, 2010;
  • Originations grew by 5% to $54.5 million in the quarter;
  • Net income of $0.15 per share increased from $0.05 per share.

TORONTO, Nov. 4, 2011 /CNW/ - HOMEQ Corporation [TSX: HEQ ("HOMEQ")], today announced its financial results for the period ended September 30, 2011.

During the quarter, HOMEQ's business continued to favourably evolve and is proving its future potential.  Adjusted net income per share increased by 36% over the same period in 2010, the portfolio grew by 16%, spreads remained firm, origination and administrative expenditure remained well controlled and the volume of inquiries and applications continued at a heightened pace.

HOMEQ is meeting growing demand for its reverse mortgages from across the country driven by several factors including the increasing number of seniors, Canada's fastest growing demographic.  In addition, competitive pricing, effective publicity and engaging marketing campaigns are making the CHIP Home Income Plan more accessible and attractive to seniors.  During the quarter, originations grew by 5% over 2010 and HOMEQ expects that demand for reverse mortgages will remain firm.

"HOMEQ strives to achieve a high level of quality, consistency and predictability in its mortgage portfolio by adhering strictly to its underwriting philosophy and methodology. As a result, the average loan-to-value of its portfolio has remained consistently at 36% over the years while the compound annual growth rate of the portfolio has been 14% over the past five years", said Steven Ranson, President and CEO. "Notwithstanding this, we constantly monitor real estate trends throughout the country to determine whether adjustments to our underwriting policies and methodologies are required".

HOMEQ has restated its first and second quarter results due to a correction to unrealized gains or losses on derivative instruments. The restatement has no impact on adjusted net income or adjusted return on equity The adjustments to unrealized gains or losses on derivative instruments and the related tax impact resulted in the net income for the three month period ended March 31, 2011 to be revised from $1.5 million ($0.04 per share) to a net loss of $0.8 million ($0.06 per share) and net income for the three month period June 30, 2011 to be revised from $2.2 million ($0.17 per share) to $1.4 million ($0.09 per share). Further details are provided in the MD&A and Interim financial statements.

Subsequent to the end of the quarter, HOMEQ concluded the sale of $11.0 million unsecured subordinated debt (the "Notes") due October 31, 2021 with a coupon of 8.55%.  The Notes constitute subordinated indebtedness within the meaning of the Bank Act (Canada) and qualify as Tier 2 B Capital of HomEquity Bank.  This new issue adds to the already strong capital base of HomEquity Bank and will enable it to continue its strong growth.

"In the near term, shareholders should be rewarded with steady increases in net income performance as a result of a combination of portfolio growth, efficient originations, managed spread and controlled overhead expenses. Central to our success is the burgeoning demographic of seniors, seeking to enjoy their retirement years.  HOMEQ is uniquely positioned to satisfy seniors' financial needs and enable them to stay in their home.

Third Quarter Financial Statements and Conference Call

The 2011 Interim financial statements 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 November 7, 2011, 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.vcall.com and will be subsequently posted at www.homeq.ca.

An archived recording of the call will be available at 1-800-937-6305 (conference ID 399474).

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 the only national provider of reverse mortgages to homeowners aged 55 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 September 30, 2011, the mortgage portfolio comprised approximately 8,700 reverse mortgages with an accrued value of $1.1 billion, secured by residential properties across Canada worth approximately $3.1 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.

The Company'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:

Steven Ranson, President and Chief Executive Officer, (416) 413-4663, or Gary Krikler, Senior Vice President and Chief Financial Officer, (416) 413-4679.

Profil de l'entreprise

HOMEQ Corporation

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