2011 Third Quarter Results Compared to 2010:
Adjusted net income increased 36% to $0.15 per share from $0.11 per
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
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
"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
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
"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.