Equitable Group Reports Second Quarter 2017 Results and Increases Dividend

TORONTO, Aug. 10, 2017 /CNW/ - Equitable Group Inc. (TSX: EQB and EQB.PR.C) ("Equitable" or the "Company") today reported financial results for the three and six months ended June 30, 2017 that reflected solid performance for Equitable Bank (the "Bank"), its wholly owned subsidiary, despite significant turbulence in the funding and mortgage markets.

SECOND QUARTER HIGHLIGHTS

  • Net income of $38.9 million, which included the costs associated with recent market events, was 16% higher compared with Q2 2016 and 10% lower than in Q1 2017
  • Diluted earnings per share were $2.28, 11% higher compared with Q2 2016, reflecting the issuance of 809,585 common shares in December 2016, and down 10% from Q1 2017
  • Return on Equity ("ROE") was 15.6% compared to 17.1% in the same period of 2016

FIRST SIX MONTHS HIGHLIGHTS

  • Net income was $82.3 million and diluted earnings per share were $4.82, 34% and 28% higher than in the same period of 2016
  • ROE was 17.0% compared to 15.9% for the same period of 2016
  • Book value per common share was $59.98 at June 30, 2017 up 21% from $49.55 a year ago
  • Mortgages Under Management were $22.0 billion, compared to $18.7 billion a year ago, an 18% increase
  • Deposit principal was $10.0 billion at June 30, 2017, up 11% from a year ago and 0.6% higher than at March 31, 2017

DIVIDEND DECLARATIONS

The Board of Directors today declared a dividend of $0.24 per common share, payable on October 5, 2017 to common shareholders of record at the close of business September 15, 2017.  This represents a 14% increase over the dividend declared in August 2016 and a one cent or 4.3% increase over the dividend declared in May 2017.  In addition, the Board declared a quarterly dividend of $0.396875 per preferred share, payable on September 30, 2017 to preferred shareholders of record at the close of business September 15, 2017.

CEO's COMMENTARY          

"Equitable displayed the value of its business model and its reputation for prudence by achieving solid second quarter profitability while taking various measures to increase the Bank's liquidity position in response to recent market disruptions," said Andrew Moor, President and Chief Executive Officer. "These measures came at a cost of $0.38 per share but accomplished the objective of solidifying our liquidity levels and provided additional stability to our business. Total deposits ended the quarter higher than they were at March 31st and have grown by another $130 million since then, leading us to believe that our funding markets have stabilized. On the lending side, we experienced higher demand, but as planned, tightened our lending criteria to manage that flow within the constraints of our risk appetite and funding capacity. Taken together, these actions, coupled with the generous support of customers and the confidence of our business partners, enabled Equitable Bank to successfully navigate a challenging period and proved that there is significant value in the way our institution is governed. This was a true team effort and I would like to extend my personal thanks to everyone who supported the Bank, especially our own exceptional employees."

OPERATING HIGHLIGHTS

  • Single Family Lending mortgage principal at June 30, 2017 was a record $8.5 billion, up 19% from $7.2 billion a year ago on second quarter originations of $939 million, down 2% from a year ago.
  • Commercial Lending mortgage principal at June 30, 2017 was $2.8 billion, up 16% from $2.4 billion a year ago. Originations were $202 million, down 38% from a year ago, reflecting management's decision to allocate funding more towards Single Family Lending opportunities in the period.
  • Securitization Financing Mortgages Under Management at June 30, 2017 was $10.6 billion, up 17% from $9.1 billion a year ago. Securitization Financing originations were $487 million in the second quarter of 2017, 35% lower than a year ago, reflecting primarily the impact that changes to mortgage insurance rules last fall had on our Prime Single Family originations.
  • Deposit principal outstanding amounted to $10.0 billion, up 11% from $9.0 billion a year ago and 0.6% from the preceding quarter as the Bank grew its GIC principal balances by $1.0 billion or 14% from a year ago and $317 million or 4% from the prior quarter to $7.7 billion and its EQ Bank Savings Plus Account balances by $310 million or 31% from a year ago and $86 million or 7% from last quarter to $1.3 billion.

Equitable's credit metrics reflect the high quality of the mortgage portfolio and remain well in line with the Bank's long-term levels. At June 30, 2017, net impaired mortgage assets were just 0.16% of total mortgage assets compared to 0.20% a year ago. The Bank's provision for credit losses of one basis point of mortgage principal increased in percentage terms and in absolute dollars year over year but were down one basis point and $0.4 million from March 31, 2017. This strong performance reflected Equitable's risk-aware culture, the strength of its internal control framework, its prudent underwriting approach that emphasizes income verification, and its three lines of defence operating model.

CAPITAL

Equitable Bank's Capital Ratios continue to exceed minimum regulatory standards and were above the levels of the other eight publicly listed Schedule I Canadian banks.  At June 30, 2017:

  • Common Equity Tier 1 Capital Ratio was 14.8%, surpassing the Basel III minimum of 7.0%, and up from last year's level of 13.5%.
  • Total Capital Ratio was 17.4%, well above the regulatory requirement of 10.5% on an all-in basis and above last year's level of 16.5%.
  • Leverage Ratio was 5.3% and as such the Bank was fully compliant with the target that OSFI sets on a confidential, institution-by-institution basis.

LIQUIDITY AND FUNDING UPDATE

Equitable closely manages its liquidity position at all times but in light of recent market events took several additional measures to fortify its liquidity position during the quarter.  These steps included:

  • Obtaining a two-year, $2.0 billion secured backstop funding facility from a syndicate comprised of all six of Canada's largest banks. This facility is cost competitive with the spreads on the Bank's most recent deposit note issuance. In the second quarter, the Bank expensed $1.4 million of upfront and standby costs associated with this facility.
  • Insuring and securitizing an $892 million portfolio of existing residential mortgages. This transaction augmented Equitable's base of liquid assets and the insurance premiums will be more than offset by lower funding costs over time. The impact on earnings per share will be negative over the next three quarters, however, as we will amortize the insurance premiums into Net Interest Income more quickly than we realize the funding cost benefit. In each of Q3 and Q4 2017 we expect the net cost to be approximately $2 million.
  • Pulling forward a planned two-month EQ Bank marketing campaign originally scheduled for the fall of 2017 and increasing the interest rate on the EQ Bank Savings Plus Account by 0.30% to 2.30% in order to drive deposit growth.
  • Raising the interest rate on the Bank's brokered HISA account by 0.45% to 1.50% (or 1.75% for the EQB 200 product)
  • Selling $22.5 million of preferred shares to increase our cash position.
  • Optimizing the use of various bank-sponsored funding facilities.
  • Placing more focus on extending the term of the Bank's GIC portfolio.

These measures were costly but achieved their desired result. At June 30, 2017, the Bank's total liquid assets amounted to $1.6 billion (7.9% of total assets), up from $1.2 billion and 6.0% at March 31, 2017.  Equitable intends to maintain higher than normal levels of liquidity for the foreseeable future, until market conditions have demonstrated stability for a longer period of time.

These events regrettably weighed on earnings performance in Q2.  The costs of insurance and the secured backstop funding facility caused Net Interest Income to be $5.9 million lower than it would have been otherwise.  Non-interest expenses were elevated by $2.6 million during the quarter due to investments in EQ Bank marketing. In aggregate, these factors reduced EPS by $0.38.  Management expects that the EPS impact will be in the range of $0.30-$0.35 in each of Q3 and Q4 due to backstop funding facility and mortgage insurance expenses, net of the associated funding cost benefits.

STRATEGIC UPDATE

Equitable continues to deliver on its key strategic priorities. Among its recent strategic highlights, Equitable:

  • Introduced new digital-only account sign-up within EQ Bank and further automated the digital platform's back office capabilities to improve the customer experience, improve onboarding efficiency and support an ambitious technology roadmap.
  • Outperformed Canada's big banks with an Efficiency Ratio of 39.2% in the second quarter even though the Bank chose to increase marketing expenses and technology investments.
  • Closed (on April 17, 2017) an institutional placement of a $150 million 2-year floating rate unsecured Deposit Note priced at 130 basis points over 3-month CDOR to further diversify its cost-effective funding sources and support asset growth.
  • Continued to advance efforts to migrate to the Advanced Internal Ratings Based ("AIRB") approach to capital and risk management.

"Our EQ Bank digital platform is an enabler of Equitable's asset growth and a critical tool in managing liquidity, but of equal significance, it represents an innovative and high-value way for Canadians to bank without the costs and artificial barriers associated with traditional savings and chequing accounts," said Mr. Moor. "Thousands of new customers have embraced these advantages since we launched in early 2016 and many thousands more have come on line in the past few months in response to our marketing campaign. Very recent technology advancements mean that account sign up is now fully digital and all future products will include this time and cost-saving feature. Overall, Equitable continues to demonstrate the advantages of its positioning as Canada's Challenger Bank by helping our customers to achieve their goals with unique and responsive solutions."

BUSINESS OUTLOOK

Equitable expects that its strategy, including its disciplined approach to capital allocation, will continue to deliver value for shareholders and protect depositors. Asset quality remains high and core lending markets continue to present meaningful growth opportunities. In the final six months of 2017, the Bank expects EPS will likely decline by approximately 10% year-over-year in the last half of 2017 and ROE will likely be in the range of 13% to 15%.

"We are confident in the strength of the Bank's franchise and the ability of our diversified business model to continue performing well over the long term," said Mr. Moor. "We expect to see continued growth in Mortgages Under Management in the final half of 2017 and we plan to work hard to continue delivering the service quality that has long distinguished Equitable as a residential and commercial lender and resulted in consistent, long-term asset expansion."

"Nonetheless, we need to carefully manage through an uncertain environment," Mr. Moor added. "With broader funding market difficulties now likely resolved, attention has turned to carefully monitoring housing market developments and assessing the impact of the proposed update to OSFI's Guideline B-20. On paper, several aspects of this proposal appear likely to shrink available lending opportunities, most notably the plan to require borrowers of uninsured mortgages to qualify using an interest rate stress test. However, it is difficult to assess the effect as much will depend on the competitive reaction of other lenders who are also subject to these B-20 updates." 

Other changes introduced last fall by the Department of Finance that included tightening the qualification criteria for insured loans appear to have already begun to exert downward pressure on activity in the insured prime mortgage market and increased competition among lenders. As a result, management believes insured Prime originations will continue to be lower in 2017 than in 2016, however, this business represents just over 2% of the Bank's after-tax earnings, and as such the decline will not have a significant impact on Equitable's 2017 prospects or strategy.

Management believes that in the remaining quarters of 2017 Net Interest Income should increase at year-over-year rates in the 2% to 5% range due to continued growth of the Bank's assets, even though net interest margins will likely decline from second quarter 2017 levels as a result of costs related to the recent liquidity events. The acquisition of the Maple NHA-MBS pools is expected to continue adding between $0.06 and $0.08 to earnings in each of the next two quarters.

"We plan to continue to invest in the Bank's franchise and service capabilities in the last half of 2017 such that non-interest expenses will likely increase at year-over-year rates that are in line with the growth of our business," said Tim Wilson, Vice President and Chief Financial Officer. "These investments reduce efficiency in the near term, but add to our foundation for growth and productivity. Quarterly expenses should be slightly lower in the back half of 2017 compared to the second quarter but our Efficiency Ratio in Q3 and Q4 2017 will be slightly higher than Q2 2017 as a result of slower growth in Net Interest Income."

Management's complete business outlook can be found in Management's Discussion and Analysis for the three and six months ended June 30, 2017 which is available on SEDAR and on Equitable's website.

CONFERENCE CALL AND WEBCAST

The Company will hold its second quarter conference call and webcast with accompanying slides at 10:00 a.m. ET August 11, 2017.  To access the call live, please dial 416-427-7450 five minutes prior.  The listen-only webcast with accompanying slides is available at www.equitablebank.ca under Investor Relations.

A replay of the call will be available until Friday, August 18, 2017 and it can be accessed by dialing (416) 849-0833 and entering passcode 40730924 followed by the number sign. Alternatively, the call will be archived on the Company's website for three months.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS
















CONSOLIDATED BALANCE SHEETS (unaudited)








AS AT JUNE 30, 2017








With comparative figures as at December 31, 2016 and June 30, 2016








($ THOUSANDS)



















June 30, 2017


December 31, 2016


June 30, 2016









Assets:








Cash and cash equivalents


$

811,465

$

444,179

$

336,237

Restricted cash



412,036


247,878


150,691

Securities purchased under reverse repurchase agreements



-


199,401


150,906

Investments



112,658


136,718


130,770

Mortgages receivable – Core Lending



11,393,045


10,678,452


9,591,449

Mortgages receivable – Securitization Financing



6,870,578


7,105,351


6,652,657

Securitization retained interests



98,513


88,782


74,563

Other assets



97,691


72,827


60,581



$

19,795,986

$

18,973,588

$

17,147,854









Liabilities and Shareholders' Equity








Liabilities:









Deposits


$

10,099,459

$

9,763,082

$

9,148,025


Securitization liabilities



7,750,405


7,762,632


6,807,964


Obligations under repurchase agreements



428,985


112,488


-


Deferred tax liabilities



43,988


38,771


33,663


Other liabilities



205,482


204,465


79,278


Bank facilities



141,815


50,000


170,000


Debentures



65,000


65,000


65,000




18,735,134


17,996,438


16,303,930









Shareholders' equity:









Preferred shares



72,557


72,557


72,557


Common shares



197,439


196,608


144,615


Contributed surplus



5,594


5,056


5,099


Retained earnings



798,253


725,912


658,098


Accumulated other comprehensive loss



(12,991)


(22,983)


(36,445)




1,060,852


977,150


843,924



$

19,795,986

$

18,973,588

$

17,147,854

 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)




FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2017




With comparative figures for the three and six month periods ended June 30, 2016




($THOUSANDS, EXCEPT PER SHARE AMOUNTS)






















Three months ended

Six months ended



June 30, 2017

June 30, 2016

June 30, 2017

June 30, 2016











Interest income:











Mortgages – Core Lending


$

125,670

$

107,544

$

247,562

$

208,963


Mortgages – Securitization Financing



44,957


45,296


90,112


88,903


Investments



1,370


2,372


3,498


4,248


Other



1,715


1,227


3,043


2,279




173,712


156,439


344,215


304,393

Interest expense:











Deposits



49,817


46,085


96,811


89,743


Securitization liabilities



42,379


41,354


86,312


80,539


Bank facilities



2,217


1,040


2,491


1,606


Debentures



950


950


1,900


1,900




95,363


89,429


187,514


173,789

Net interest income



78,349


67,010


156,701


130,604

Provision for credit losses



378


105


1,116


332

Net interest income after provision for credit losses



77,971


66,905


155,585


130,272

Other income:











Fees and other income



6,853


3,781


14,657


6,958


Net (loss) gain on investments



(788)


747


(788)


747


Gains on securitization activities and income from securitization retained interests



3,248


1,894


6,466


2,454




9,313


6,422


20,335


10,159

Net interest and other income



87,284


73,327


175,920


140,431

Non-interest expenses:











Compensation and benefits



16,467


15,193


32,890


29,843


Other



18,028


13,179


31,425


27,907




34,495


28,372


64,315


57,750

Income before income taxes



52,789


44,955


111,605


82,681

Income taxes:











Current



7,896


7,875


24,087


16,294


Deferred



5,984


3,670


5,216


4,965




13,880


11,545


29,303


21,259

Net income


$

38,909

$

33,410

$

82,302

$

61,422

Dividends on preferred shares



1,191


1,191


2,382


2,381

Net income available to common shareholders


$

37,718

$

32,219

$

79,920

$

59,041











Earnings per share:











Basic


$

2.29

$

2.07

$

4.85

$

3.80


Diluted


$

2.28

$

2.05

$

4.82

$

3.76

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)




FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2017

With comparative figures for the three and six month periods ended June 30, 2016




($ THOUSANDS)






















Three months ended

Six months ended



June 30, 2017

June 30, 2016

June 30, 2017

June 30, 2016











Net income


$

38,909

$

33,410

$

82,302

$

61,422











Other comprehensive income – items that may be reclassified subsequently to income:




















Available for sale investments:










Net unrealized gains (losses) from change in fair value



475


1,086


10,080


(4,455)

Reclassification of net losses (gains) to income



596


(795)


401


(901)




1,071


291


10,481


(5,356)

Income tax (expense) recovery



(284)


(77)


(2,752)


1,422




787


214


7,729


(3,934)











Cash flow hedges:










Net unrealized gains (losses)from change in fair value



1,932


(3,404)


1,832


(4,828)

Reclassification of net losses to income



877


802


1,328


1,780




2,809


(2,602)


3,160


(3,048)

Income tax (expense) recovery



(746)


692


(897)


810




2,063


(1,910)


2,263


(2,238)

Total other comprehensive income (loss)



2,850


(1,696)


9,992


(6,172)

Total comprehensive income


$

41,759

$

31,714

$

92,294

$

55,250

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2017

With comparative figures for the three month period ended June 30, 2016

($ THOUSANDS)















Accumulated other

comprehensive

income (loss)


June 30, 2017


Preferred shares

Common shares

Contributed surplus

Retained earnings

Cash flow hedges

Available

for sale investments

 

Total

 

Total



















Balance, beginning of period


$

72,557

$

197,339

$

5,322

$

764,325

$

(2,573)

$

(13,268)

$

(15,841)

$

1,023,702

Net income



-


-


-


38,909


-


-


-


38,909

Other comprehensive gain, net of tax



-


-


-


-


2,063


787


2,850


2,850

Exercise of stock options



-


84


-


-


-


-


-


84

Dividends:



















Preferred shares



-


-


-


(1,191)


-


-


-


(1,191)


Common shares



-


-


-


(3,790)


-


-


-


(3,790)

Stock-based compensation



-


-


288


-


-


-


-


288

Transfer relating to the exercise of stock options



-


16


(16)


-


-


-


-


-

Balance, end of period


$

72,557

$

197,439

$

5,594

$

798,253

$

(510)

$

(12,481)

$

(12,991)

$

1,060,852



























Accumulated other

comprehensive

income (loss)


June 30, 2016


Preferred shares

Common shares

Contributed surplus

Retained earnings

Cash flow

hedges

Available

for sale investments

 

Total

 

Total



















Balance, beginning of period


$

72,557

$

144,159

$

4,935

$

629,147

$

(8,143)

$

(26,606)

$

(34,749)

$

816,049

Net income



-


-


-


33,410


-


-


-


33,410

Other comprehensive (loss)/gain, net of tax



-


-


-


-


(1,910)


214


(1,696)


(1,696)

Issuance cost



-


364


-


-


-


-


-


364

Exercise of stock options



-


-


-


-


-


-


-


-

Dividends:



















Preferred shares



-


-


-


(1,191)


-


-


-


(1,191)


Common shares



-


-


-


(3,268)


-


-


-


(3,268)

Stock-based compensation



-


-


256


-


-


-


-


256

Transfer relating to the exercise of stock options



-


92


(92)


-


-


-


-


-

Balance, end of period


$

72,557

$

144,615

$

5,099

$

658,098

$

(10,053)

$

(26,392)

$

(36,445)

$

843,924

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2017











With comparative figures for the six month period ended June 30, 2016











($ THOUSANDS)














































Accumulated other

comprehensive

income (loss)



June 30, 2017


Preferred shares

Common shares

Contributed surplus

Retained earnings

Cash flow hedges

Available

for sale investments


Total


Total



















Balance, beginning of period


$

72,557

$

196,608

$

5,056

$

725,912

$

(2,773)

$

(20,210)

$

(22,983)

$

977,150

Net income



-


-


-


82,302


-


-


-


82,302

Other comprehensive gain, net of tax



-


-


-


-


2,263


7,729


9,992


9,992

Exercise of stock options



-


697


-


-


-


-


-


697

Dividends:



















Preferred shares



-


-


-


(2,382)


-


-


-


(2,382)


Common shares



-


-


-


(7,579)


-


-


-


(7,579)

Stock-based compensation



-


-


672


-


-


-


-


672

Transfer relating to the exercise of stock options



-


134


(134)


-


-


-


-


-

Balance, end of period


$

72,557

$

197,439

$

5,594

$

798,253

$

(510)

$

(12,481)

$

(12,991)

$

1,060,852















































Accumulated other

comprehensive

income (loss)



June 30, 2016


Preferred shares

Common shares

Contributed surplus

Retained earnings

Cash flow

hedges

Available

for sale investments


Total


Total



















Balance, beginning of period


$

72,557

$

143,690

$

4,706

$

605,436

$

(7,815)

$

(22,458)

$

(30,273)

$

796,116

Net income



-


-


-


61,422


-


-


-


61,422

Other comprehensive loss, net of tax



-


-


-


-


(2,238)


(3,934)


(6,172)


(6,172)

Issuance cost



-


743


-


-


-


-


-


743

Exercise of stock options



-


-


-


-


-


-


-


-

Dividends:



















Preferred shares



-


-


-


(2,382)


-


-


-


(2,382)


Common shares



-


-


-


(6,378)


-


-


-


(6,378)

Stock-based compensation



-


-


575


-


-


-


-


575

Transfer relating to the exercise of stock options



-


182


(182)


-


-


-


-


-

Balance, end of period


$

72,557

$

144,615

$

5,099

$

658,098

$

(10,053)

$

(26,392)

$

(36,445)

$

843,924

 


CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2017

With comparative figures for the three and six month periods ended June 30, 2016

($ THOUSANDS)






















Three months ended

Six months ended



June 30, 2017

June 30, 2016

June 30, 2017

June 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES










Net income for the period


$

38,909

$

33,410

$

82,302

$

61,422

Adjustments for non-cash items in net income:











Financial instruments at fair value through income



1,364


(91)


1,349


(1,009)


Amortization of premiums/discount on investments



1,349


137


4,784


279


Amortization of capital assets and intangible costs



2,083


1,918


4,173


3,795


Provision for credit losses



378


105


1,116


332


Securitization gains



(2,717)


(1,894)


(6,287)


(3,513)


Net loss (gain) on sale or redemption of investments



788


(747)


788


(747)


Stock-based compensation



288


256


672


575


Income taxes



13,880


11,545


29,303


21,259


Securitization retained interests



6,093


3,689


11,609


7,003

Changes in operating assets and liabilities:











Restricted cash



(153,437)


(21,238)


(164,158)


(42,703)


Securities purchased under reverse repurchase agreements



4,984


(120,561)


199,401


(130,989)


Mortgages receivable, net of securitizations



(107,701)


(713,509)


(496,612)


(1,559,754)


Other assets



(24,311)


51


(20,914)


367


Deposits



54,013


303,535


338,480


938,037


Securitization liabilities



(43,324)


231,787


(11,674)


698,528


Obligations under repurchase agreements



283,489


-


316,497


-


Bank facilities



141,815


170,000


91,815


(65,779)


Other liabilities



19,407


(1,947)


8,718


(4,211)

Income taxes paid



(11,147)


(4,634)


(37,621)


(11,454)

Cash flows from (used ) in operating activities



226,203


(108,188)


353,741


(88,562)

CASH FLOWS FROM FINANCING ACTIVITIES










Dividends paid on preferred shares



(1,191)


(1,191)


(2,382)


(2,382)

Dividends paid on common shares



(7,579)


(3,109)


(11,022)


(6,215)

Proceeds from issuance of common shares



84


364


697


743

Cash flows used in financing activities



(8,686)


(3,936)


(12,707)


(7,854)

CASH FLOWS FROM INVESTING ACTIVITIES










Purchase of investments



(2,553)


-


(40,538)


(6,783)

Proceeds on sale or redemption of investments



60,301


23,538


70,219


23,608

Net change in Canada Housing Trust re-investment accounts



17


29


227


49

Purchase of capital assets and system development costs



(1,462)


(3,006)


(3,656)


(7,587)

Cash flows from investing activities



56,303


20,561


26,252


9,287

Net increase (decrease) in cash and cash equivalents



273,820


(91,563)


367,286


(87,129)

Cash and cash equivalents, beginning of period



537,645


427,800


444,179


423,366

Cash and cash equivalents, end of period


$

811,465

$

336,237

$

811,465

$

336,237











Cash flows from operating activities include:










Interest received


$

173,850

$

154,482

$

344,788

$

300,447

Interest paid



(83,078)


(98,723)


(149,462)


(156,744)

Dividends received



1,104


2,347


2,460


4,101

 

ABOUT EQUITABLE GROUP INC.

Equitable Group Inc. is a growing Canadian financial services business that operates through its wholly-owned subsidiary, Equitable Bank. Equitable Bank is Canada's ninth largest independent Schedule I bank and offers a diverse suite of residential lending, commercial lending and savings solutions to Canadians. Through its proven branchless approach and customer service focus, Equitable Bank has grown to over $23 billion of Assets Under Management.  Most recently, Equitable Bank launched a digital banking operation, EQ Bank, along with its flagship product the EQ Bank Savings Plus Account.  Equitable Bank employs nearly 600 dedicated professionals across the country, and is a 2017 recipient of Canada's Best Employer Platinum Award, the highest bestowed by AON. For more information about Equitable Bank and its products, please visit equitablebank.ca.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made by the Company in the sections of this news release including those entitled "CEO's Commentary", "Operating Highlights", "Capital", "Liquidity and Funding Update," "Strategic Update", "Business Outlook", in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws ("forward-looking statements"). These statements include, but are not limited to, statements about the Company's objectives, strategies and initiatives, financial result expectations and other statements made herein, whether with respect to the Company's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved." Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in the Management's Discussion and Analysis and in the Company's documents filed on SEDAR at www.sedar.com. 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 Company and the Canadian economy. Although the Company believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Company in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business at current levels, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.

NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES

This news release references certain non-GAAP measures such as Return on Shareholders' Equity ("ROE"), book value per common share, Mortgages Under Management, Capital Ratios, Liquidity Coverage Ratio, Efficiency Ratio, Net Interest Margin ("NIM"), and Assets Under Management that management believes provide useful information to investors regarding the Company's financial condition and results of operations. The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES" section of the Company's second quarter 2017 Management's Discussion and Analysis provides a detailed description of each non-GAAP measure and should be read in conjunction with this report. The Management's Discussion and Analysis also provides a reconciliation between all non-GAAP measures and the most directly comparable GAAP measure, where applicable. Readers are cautioned that non-GAAP measures do not have any standardized meaning, and therefore, may not be comparable to similar measures presented by other companies.

SOURCE Equitable Group Inc.

For further information: Andrew Moor, President and Chief Executive Officer, 416-515-7000; Tim Wilson, Vice President and Chief Financial Officer, 416-515-7000

RELATED LINKS
www.equitablebank.ca

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