Equity Financial Holdings Reports Second Quarter 2017 Results and Announces Bank License Application

TORONTO, Aug. 10, 2017 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("EQI" or the "Corporation"), which offers residential first mortgage loans through its wholly-owned subsidiary, Equity Financial Trust Company ("Equity Trust"), today reported its interim consolidated financial results for the quarter ended June 30, 2017.

(dollar amounts, except per-share, are in $000s, except where otherwise noted)

Second Quarter 2017 Financial Highlights

  • Net income of $1,616 or $0.17 per share
  • Mortgage loan book of $888,092, up 9% from Q1 2017 and up 65% from the end of 2016
  • Mortgage originations of $149,836, up 32% from Q1 2017 and up 14% from Q2 2016
  • Net interest income of $6,642, up 8% compared to Q1 2017 and up 81% over Q2 2016
  • Net interest margin of 2.98%
  • Annualized return on equity of 6.6%

Year to date 2017 Financial Highlights

  • Net income of $2,872 or $0.30 per share
  • Mortgage originations of $263,740, up 21% year over year
  • Net interest income of $12,801, up 87% year over year
  • Net interest margin of 2.99%
  • Regulatory capital of $88,039 as at June 30, 2017
  • Book value per share of $10.35 as at June 30, 2017
  • Annualized return on equity of 6.0%

Equity Financial Holdings CEO Michael R. Jones said,

"During the second quarter of 2017, our loan portfolio grew to just under $900 million, total assets surpassed $1 billion and we experienced no loan losses in the first half of 2017. Our net interest margin increased and we also increased our liquidity reserve by 37% during the quarter while maintaining a reasonable cost of funds.  Our growth and enhanced level of liquidity has occurred during a period of ongoing change in the mortgage lending industry, including rapidly rising home prices, a shifting competitive landscape, and regulatory changes.

In our press release dated July 6, 2017, we discussed the potential impact of the revised Draft Guideline B‑20 and we continue to consult with advisors, other industry participants and OSFI prior to it being finalized later in the year.  Whereas these changes may have a negative effect on originations, there may be a mitigating positive impact caused by improved customer retention and an increase in applications from borrowers that no longer meet the qualification criteria for a large bank loan.

Equity Trust is strategically focused on lending conventional first mortgages to customers who do not meet the lending criteria of large banks and are seeking alternative solutions.  Key enablers of our strategy include hiring and training the right people, maintaining and expanding our access to liquidity and ensuring we have sufficient capital to support our loan book growth.  We expect our mortgage loan portfolio to reach the $1 billion level during fiscal 2017 and with the continued support of our stakeholder group we believe the company is well‑positioned to respond to ongoing market changes as we continue to pursue our growth objectives."

Bank License Application

The Company also announced that its wholly-owned subsidiary, Equity Trust, intends to apply to the Office of the Superintendent of Financial Institutions Canada ("OSFI") and to the Minister of Finance for consent to convert from a trust company operating under the Trust and Loans Companies Act (Canada) to a Schedule I bank operating under the Bank Act (Canada).  The Company believes that, in the longer term, operating as a bank will provide a national platform to expand its business beyond Ontario, promote efficiencies and assist in the creation of a brand identity that resonates with our customers, employees and financial backers.  Equity Trust's business model will not change as a result of this conversion and it will have no impact on its capital position.  The conversion application is subject to regulatory approval from OSFI and the Minister of Finance, Canada. There is no assurance as to when or if these approvals will be received.

Financial Highlights (unaudited)

For the three months ended

For the six months ended

($000s, except per share and percentage amounts)

June 30,

March 31,

June 30,

June 30,

June 30,


Net interest income











Provision for credit losses






Non‑interest income






Net interest income and other income,

including provision for credit losses






Net interest margin 1






Net income











Earnings per share ‑ basic/diluted

0.17 / 0.17

0.13 / 0.13

‑ / ‑

0.30 / 0.30

0.02 / 0.02

ROE (annualized) 2






As at

June 30,

March 31,

December 31,









Mortgages receivable, net








Shareholders' equity





Capital Measures 3

Regulatory capital (all‑in basis)







Leverage ratio




Common Equity Tier 1 ratio (all‑in basis)




Share Information

Book value per common share







Common share price ‑ close




Common shares outstanding




Market capitalization







1 See definition of Net interest margin under Non‑IFRS Financial Measures section of our MD&A for the quarter ended June 30, 2017.

2 See definition of ROE ("return on equity") under Non‑IFRS Financial Measures section of our MD&A for the quarter ended June 30, 2017.

3 Capital Measures figures relate to the Corporation's operating subsidiary, Equity Trust, and are calculated under Basel III.


Interim Consolidated Financial Statements and Management's Discussion and Analysis for the quarter ended June 30, 2017 can be found on SEDAR at www.sedar.com and on our website at www.equityfinancialtrust.com.

Analyst Conference Call

EQI will hold a conference call on August 11, 2017 at 9:30 a.m. Eastern Time to discuss its operating results and to answer questions. Participants can dial in locally at 647.427.7450 or toll free at 1.888.231.8191 and use Conference ID 10781420.

Conference Call Archive

A telephone replay of the call will be available between 1:00 p.m. Eastern Time August 11, 2017 and midnight September 8, 2017 by calling 416.849.0833 or toll free at 1.855.859.2056 (enter passcode 10781420).

Forward Looking Information

Certain portions of this press release as well as other public statements by the Corporation contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "targets," "continues", "estimates," "scheduled," "anticipates," "believes," "intends," "may," "could," "would" or might, and the negative of such expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. Such forward-looking statements include, without limitation, the Corporation's expectations in respect of earnings, fee income, expense levels, future loans and originations, repayment by borrowers, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets activities, the Corporation's expected need for equity or debt financing, business competition, technological change, changes in government regulations and regulatory guidelines, unexpected judicial or regulatory proceedings, catastrophic events, and the Corporation's ability to complete strategic transactions and integrate acquisitions and other factors. Forward looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all.

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 Corporation and the Canadian economy, retail mortgage markets, housing sales and capital markets. Certain material factors or assumptions are applied by the Corporation in making forward-looking statements, including without limitation, factors and assumptions regarding interest rates, availability of key personnel, the effect of competition, government regulation of its business, computer failure or security breaches, future capital requirements, its ability to fund its mortgage business, the value of mortgage originations, the competitive nature of the alternative mortgage market, the expected margin between the interest earned on its mortgage portfolio and the interest to be paid on its deposits, the relative continued health of real estate markets, acceptance of its products in the marketplace, as well as its operating cost structure and the current tax regime.

Forward-looking statements reflect the Corporation's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Readers should not place undue reliance on such forward-looking statements, as they reflect the Corporation's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others, a significant downturn in capital markets or the economy as a whole, errors or omissions by the Corporation in providing services to its customers, significant increases in the cost of complying with applicable regulatory requirements, civil unrest, economic recession, pandemics, war and acts of terrorism which may adversely impact the North American and global economic and financial markets, inability to raise funds through public or private financing significant changes in interest rates, failure by Equity Trust  to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to Equity Trust, failure by Equity Trust to adequately monitor and/or adjust its mortgage portfolio management practices for changing circumstances, failure by the Corporation to attract and to retain the necessary employees to meet its needs, failure by Equity Trust to adequately monitor the services provided by third party service providers or to establish alternative arrangements if required, failure by Equity Trust to secure sufficient deposits from investment dealers or deposit dealers or a sufficient level of mortgage origination from its mortgage broker network, a failure of the computer systems of the Corporation or one or more of its service providers or the risks detailed from time-to-time in the Corporation's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. The preceding list is not exhaustive of possible factors. The Corporation disclaims any intent or obligation to update or revise publicly any forward-looking statements whether as a result of new information, estimates, future events or results, or otherwise, unless required to do so by applicable laws. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

About Equity Financial Holdings Inc.

The Corporation is a financial services company operating through its wholly-owned subsidiary, Equity Trust, a federally regulated deposit-taking institution. Equity Trust serves the Canadian mortgage market by offering residential first mortgages to customers who are seeking an alternative solution because they do not meet the conventional underwriting standards of the major Canadian banks.  Learn more at www.equityfinancialtrust.com.

SOURCE Equity Financial Holdings Inc.

For further information: Equity Financial Holdings Inc., Michael R. Jones, President & CEO, 647.277.0106, www.equityfinancialtrust.com


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