2011 First Quarter Results Compared to 2010:
- Mortgage portfolio of $1.1 billion increased 16%;
- Originations grew by 1% to $47 million;
- Net income of $0.10 per share increased from net loss of $0.01 per
- Adjusted net income decreased to $0.04 per share from $0.09 per
TORONTO, May 31 /CNW/ - HOMEQ Corporation (TSX: HEQ ("HOMEQ")), today announced its financial results for the period ended March 31, 2011. HOMEQ implemented International Financial Reporting Standards (IFRS) as of January 1, 2011 and prior period results have been restated to an IFRS basis.
In the quarter, adjusted net income fell due to actions taken in addressing impending medium-term note (MTN) maturities, including exercising call features on MTNs prior to their maturity. In redeeming the MTNs prior to maturity , a premium of $1.7 million was incurred which reduced adjusted net income in the period, however, the benefits of lower cost of funds on new debt will be realized throughout the rest of the year.
Following a remarkable 2010 in which the business was completely transformed and the platform set to benefit 2011 and future years, the first quarter of 2011 has evolved as anticipated. The mortgage portfolio grew by 16% in comparison to March 31, 2010, funds were raised at attractive rates, origination and administrative expenditure remained well controlled and the volume of inquiries and applications continued at the heightened pace experienced in 2010.
"We are happy with the level of originations in the quarter which compare favourably to the first quarter of 2010. This is a significant achievement in light of the fact that originations in Q1 2010 were especially high, having responded strongly to pent-up demand following a period during which HOMEQ had taken active steps to reduce its level of business expansion," said Steven Ranson, President and CEO.
HOMEQ continues to operate at improving levels of sales, marketing and administrative efficiency. During the quarter, the trailing four-quarter total origination percentage was 6.0% in comparison to 7.7% the prior year. The trailing four-quarter administration cost percentage was 0.73% in comparison to 0.72% the prior year indicating that additional expenditures incurred as a result of being a bank are substantially fixed in nature and have now been fully integrated into the cost structure.
"HomEquity Bank is meeting growing demand for its reverse mortgages from across the country driven by a number of factors including the increasing number of seniors, Canada's fastest growing demographic," continued Mr. Ranson "In addition, competitive pricing, effective publicity and engaging marketing campaigns are making the CHIP Home Income Plan more accessible and attractive to seniors."
First 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 June 1, 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 309894).
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 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 March 31, 2011, the mortgage portfolio comprised approximately 8,000 reverse mortgages with an accrued value of $1.1 billion, secured by residential properties across Canada worth approximately $2.8 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.