Canada's
Challenger Bank™ Matches Ambitious Growth Targets with Strong
Execution
TORONTO, July 28, 2021 /CNW/ - Equitable Group Inc. (TSX:
EQB) (TSX: EQB.PR.C) ("Equitable" or the "Bank") today reported
record earnings for the three and six months ended June 30, 2021, as Equitable Bank (Canada's Challenger Bank™) continued to
deliver on its ambitious annual growth targets while investing in
the expansion of its services and technology to drive change that
enriches the lives of Canadians.
Q2 Net Earnings $70.8 million,
+$18.3 million or +35% from 2020
- Q2 diluted EPS $4.05, +33% from
Q2 2020
ROE 16.5% with $100 million in
Excess Capital
- Q2 ROE towards high end of 15-17% target, and 1.8% better than
14.7% in Q2 2020
- CET1 14.4% vs. mid-point target of 13.5%, or excess capital of
nearly $6 per share
- Efficiency remaining in target range of 39-41% at 40.9% in Q2
and 39.6% YTD
Book Value Surpasses $100 per
share
- Book value +20% y/y to $101.94
per share and +$4.08 or +4% from Q1 2021
Customers and Digital – Growing & Deepening
- Now serving nearly 300,000 Canadians, with EQ Bank digital
customers +79% y/y to 222,000 and deposits +99% y/y to over
$6.5 billion
- Digital transactions +101% y/y, average products per customer
+44%, customer lifetime value more than 10 times higher than
account acquisition costs
Conventional Lending Driving Asset Growth
- Loans under management +9% y/y to $35.4
billion
- Single family alternative loan originations +200% y/y to
$1.8 billion, reverse mortgage
originations +318% y/y to $45
million, and Commercial loan originations +16% y/y to
$0.7 billion
"Earlier this year, we significantly upgraded our growth
forecast and in so doing, challenged ourselves to do more for
customers, partners, and shareholders. Through Q2, Equitable
delivered to this guidance. On the strength of great execution by
our team and meaningful innovations in our challenger bank
services, each area of the Bank registered growth. EQ Bank deposits
grew 99% over 2020 to a record $6.5
billion, an indication that digital services like our new US
Dollar Account are driving the kind of change that enriches the
lives of our customers. This past quarter was also an excellent
illustration of how we're positioning to drive future earnings,
with double-digit loan origination growth reflecting strong
contributions from alternative single family, reverse mortgages,
Cash Surrender Value lines of credit and conventional commercial
loans where Equitable stands out for responsive service, effective
underwriting, and risk management. For shareholders, Q2 featured
record earnings, high ROE, and an industry best efficiency ratio,
even as we purposely drive higher investment to seed future growth.
With the tailwinds of an improving economy and the positive impact
of service expansions, Equitable is in a great position to realize
its objectives this year and beyond, on behalf of almost 300,000
customers, our valued shareholders, and business partners,"
said Andrew Moor, President and Chief Executive Officer.
Record Results Put Equitable on Pace to Achieve Ambitious
2021 Outlook
- Equitable raised its outlook for 2021 in May and based on
growth trends in Q2 and through the first half of the year, the
Bank is running on or ahead of that guidance.
- EQ Bank deposit growth of 43% or $2.0
billion since December 31,
2020 compares to full year targeted growth of 30-50%.
- Total loan growth of 8% year over year and 6% or $1.6 billion since December 31, 2020 compares to full year targeted
growth of 8-12%.
- Conventional Commercial and Personal loan growth positively
impacted earnings in Q2 and is expected to create additional
momentum for earnings growth in 2022.
EQ Bank Now Serves approximately 222,000 Canadians, Deposits
Exceed $6.5 Billion
- EQ Bank deposits increased 99% year over year to over
$6.5 billion at June 30, 2021, reflecting customer growth and the
growing popularity of services including the recently launched EQ
Bank US Dollar Account and Mortgage Marketplace.
- EQ Bank term deposits increased 267% year over year and 191%
during the second quarter.
- Transactions on the platform increased 101% over Q2 last year,
while products per customer grew 44%, both indications of strong
and growing customer engagement.
New EQ Bank US Dollar Account Expands Challenger Bank
Services
- In June, EQ Bank added a US Dollar Account to its
ever-expanding suite of smarter digital banking products, making it
simpler, faster, and more economic to purchase, hold and transfer
US dollars internationally with complete digital account opening
and usage, that eliminates monthly fees and paperwork. This account
offers a very competitive U.S. and Canadian currency exchange rate
that also adds fee-based revenue for Equitable.
- The same interest rate is available on the recently introduced
Equitable Bank U.S. High Interest Savings Account. The introduction
of these new US dollar products is based on the Bank's recognition
that Canadians need smarter options to more easily grow their US
funds and the opportunity created by the recent extension of CDIC
coverage to foreign currency accounts.
- During the quarter, EQ Bank added more currencies to its
innovative and cost-effective international money transfer service,
bringing the total to 45 currencies at the end of Q2.
Equitable Bank Receives CMHC Approval to Launch $2 Billion Covered Bond Program
- Subsequent to quarter end, the Bank was very pleased to
announce that CMHC approved Equitable's $2
billion legislative covered bond program, which will
contribute to lower cost of funds and become an important part of
the Bank's funding diversification plan.
- The first issuance of approximately €250-€300 million is
expected early this fall. Equitable's covered bonds will be senior,
unsecured and unconditional obligations of Equitable Bank and will
rank pari passu in right of payment with all of the Bank's deposit
liabilities.
Total Deposits Top $18.4
Billion on Diversified Customer and Channel Growth
- Equitable Bank's total deposits were up 18% year over
year to $18.4 billion from
$15.6 billion a year ago, and up 6%
within the second quarter.
- Equitable Bank's Deposit Note Program reached $1.05 billion during the quarter – 197% higher
than a year ago – with the successful offering of an additional
$150 million principal amount of
1.774% fixed rate notes maturing September
21, 2023, priced at 90 basis points over the interpolated
Government of Canada curve
(representing the lowest ever spread with a re-opening yield of
1.384%). The offering was approximately four times oversubscribed,
reflecting the Bank's strong credit performance.
Loans Under Management Reach $35.4
Billion with Strong Growth in Alternative Single Family and
Conventional Commercial
- Loans Under Management increased 9% since Q2 2020 or
$3.0 billion – driven by growth in
all Personal and Commercial segment business lines – and grew 4%,
or $1.2 billion, in Q2 2021
alone.
- Loan principal for the Personal Bank grew 6% year over year to
$20.1 billion on origination growth
of 34% or $569 million, while
Commercial loan principal increased 12% to $9.7 billion with originations up 46% or
$431 million.
- Alternative single family mortgage principal, a key driver of
the Bank's Personal segment earnings, generated record originations
of $1.8 billion in Q2, three times
higher than the average a year ago, with assets now totaling
$12.1 billion (2021 growth target
12-15%).
- Growth in the Commercial Bank's portfolio included a 14% year
over year increase in Commercial Finance Group loans (full-year
target 20-25%), a 9% increase in Business Enterprise Solutions
(full-year target 7-10%), a 9% increase in Multi-unit Insured
(full-year target a slight decline), a 31% increase in Specialized
Finance (full-year target 20-25%) and a 24% increase in Equipment
Leasing (full-year target 5-8%).
- Assets under management reached a record $37.9 billion, up 9% over the past 12-months (and
3% from Q1 2021) reflecting broad-based growth.
Wealth Decumulation Book Reaches $165
Million, On Track to 2021 200%+ Target
- Equitable Bank's Wealth Decumulation business increased assets
by more than two-fold year over year to $165
million.
- Reverse mortgage loans increased 273% year over year (full-year
growth target 200%+) to $127 million
due to expanded market share and differentiated product terms and
features that appeal to a larger audience of Canadian mortgage
advisors and clients.
- CSV loans increased 180% year over year (full-year target
150%+) while distribution continues to increase to include new
lending arrangements finalized with Sun Life and Manulife and,
subsequent to quarter end, a partnership with Desjardins Insurance
whereby qualifying policyholders can access Equitable Bank's
market-leading product.
Credit Metrics Reflect Long-Term Prudence, Q2 Reserve Release
$5.3 Million
- Reserve releases amounted to $5.3
million in Q2 (or $0.23 per
share), reflecting an improvement in macroeconomic forecasts used
for loss modelling and the large provision for credit losses (PCL)
taken a year ago.
- PCL was a net benefit of $2.0
million in Q2 2021 (Q1 2021 – $0.8
million), as future expected losses accrued in 2020 were
recorded in Q1 and Q2 2020.
- Net impaired loans declined to 0.41% of total loan assets at
June 30, 2021 compared to 0.54% a
year ago reflecting a reduction of $29.0
million year over year. At June 30,
2021, net impaired loans were higher than 0.36% in Q1 2021
because of the addition of two commercial loans – $23.1 million in Alberta which was fully repaid in July 2021 and $8.9
million in Manitoba – and
despite net reductions in impaired single family mortgages and
equipment leases. The loan in Manitoba has an LTV of 59% and no loss is
expected.
- Equitable remains well reserved for credit losses with
allowances as a percentage of total loan assets equaling 19 bps at
June 30, 2021 reflecting a decrease
in allowances in stage 2 and 3 over last year.
- Stage 3 allowances dropped by $2.9
million year over year and $0.8
million since Q1 2021.
- Realized losses remained low at $4.1
million or 6 basis points relative to total loan
assets.
Strong Capital and Liquidity Combined with Positive Credit
Rating
- Liquid assets were $2.9 billion
or 9.1% of total assets at June 30,
2021, compared to $1.9 billion
or 6.4% a year ago, a level that is sufficient for the Bank to meet
its upcoming obligations even in the unlikely event of further
pandemic disruptions in financial markets. Retail and
securitization funding markets remain liquid and efficient.
- In a report published on May 26,
2021, Fitch Ratings assigned long-term and short-term
ratings of 'BBB-'/'F3' respectively to Equitable Bank, with a
stable outlook and noted the Bank's capital ratios are higher than
many larger bank peers.
ESG – Meaningful Progress in Scope 3 Measurement and
Diversity Goals
- Following completion of Scope 1 and 2 greenhouse gas ("GHG")
emissions inventory, the Bank quantified emissions from all Scope 3
categories in Q2, including financed emissions.
- The Scope 3 GHG emissions were quantified using calculation
approaches and methodologies from the GHG Protocol and the
Partnership for Carbon Accounting Financials (PCAF), and supported
by external partner WSP Canada.
- Equitable looks forward to disclosing targets and progress on
climate risk and diversity initiatives in our Environmental, Social
and Governance annual report next year.
Proposed Two-for-One Stock Split Reflects Growing Market
Recognition of Value
- Equitable plans to implement a two-for-one split of issued and
outstanding common stock to make ownership more accessible for
investors. It intends to use the push-out method whereby
shareholders receive additional or replacement security
certificates.
- This proposal has been approved by Equitable's Board of
Directors and is subject to shareholder and regulatory
approval.
- Further details on the proposal and key dates for shareholders
will be included in the special shareholder meeting announcement in
August 2021.
Board of Directors Declares Dividends for Third Quarter
2021
- A dividend of $0.37 per common
share will be paid on September 30,
2021 to common shareholders of record at the close of
business September 15, 2021.
- A dividend of $0.373063 per
preferred share will be paid on September
30, 2021 to preferred shareholders of record at the close of
business on September 15, 2021.
- The dividend rate was unchanged from 2020 reflecting regulatory
guidance from OSFI to all federally regulated banks. The Bank
intends to resume its previously announced dividend increases once
regulatory restrictions are lifted.
"As a leading digital bank, Equitable is challenging not just to
enrich lives today or next quarter but for the long term and we are
guided accordingly as we plan and invest in our people, technology,
customer service innovations and business partnerships," said Mr.
Moor. "In that context, the remaining months of 2021 will feature
growth that we expect will hit our targets for the year, but also
platform expansions that will set us up for another strong year in
2022."
Analyst Conference Call and Webcast: 8:30 a.m. Eastern Thursday, July 29, 2021
Equitable's Andrew Moor,
President and Chief Executive Officer, Chadwick Westlake, Chief Financial Officer, and
Ron Tratch, Chief Risk Officer will
host the second quarter conference call and webcast. To
access the call live, please dial (416) 764-8609 five minutes prior
to the start time. The listen-only webcast with accompanying
slides will be available at
eqbank.investorroom.com/events-webcasts.
Call Archive
A replay of the call will be available
until August 5, 2021 at midnight at
(416) 764-8677 (passcode 015442 followed by the number sign).
Alternatively, the webcast will be archived on the Bank's
website.
INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
Consolidated balance sheets (unaudited)
|
|
|
|
|
($000s) As
at
|
June 30,
2021
|
December 31,
2020
|
June 30,
2020
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
591,752
|
557,743
|
569,688
|
Restricted
cash
|
507,295
|
504,039
|
589,046
|
Securities purchased
under reverse repurchase agreements
|
100,015
|
450,203
|
200,370
|
Investments
|
859,925
|
589,876
|
566,859
|
Loans –
Personal
|
20,225,222
|
19,445,386
|
19,135,799
|
Loans –
Commercial
|
9,667,652
|
8,826,182
|
8,573,118
|
Securitization
retained interests
|
203,491
|
184,844
|
149,307
|
Other
assets
|
186,901
|
188,045
|
173,059
|
|
32,342,253
|
30,746,318
|
29,957,246
|
Liabilities and
Shareholders' Equity
|
|
|
|
Liabilities:
|
|
|
|
Deposits
|
18,588,223
|
16,585,043
|
15,861,725
|
Securitization liabilities
|
11,483,635
|
11,991,964
|
11,190,224
|
Obligations under repurchase agreements
|
201,271
|
251,877
|
598,956
|
Deferred
tax liabilities
|
67,520
|
60,880
|
50,546
|
Other
liabilities
|
200,067
|
208,852
|
256,038
|
Funding
facilities
|
-
|
-
|
500,374
|
|
30,540,716
|
29,098,616
|
28,457,863
|
Shareholders'
equity:
|
|
|
|
Preferred
shares
|
72,001
|
72,477
|
72,557
|
Common
shares
|
224,997
|
218,166
|
213,701
|
Contributed surplus
|
8,237
|
8,092
|
7,818
|
Retained
earnings
|
1,513,118
|
1,387,919
|
1,257,268
|
Accumulated other comprehensive loss
|
(16,816)
|
(38,952)
|
(51,961)
|
|
1,801,537
|
1,647,702
|
1,499,383
|
|
32,342,253
|
30,746,318
|
29,957,246
|
Consolidated statements of income
(unaudited)
|
|
|
|
($000s, except per
share amounts)
|
Three months
ended
|
Six months
ended
|
|
June 30,
2021
|
June 30,
2020
|
June 30,
2021
|
June 30,
2020
|
Interest
income:
|
|
|
|
|
Loans –
Personal
|
164,363
|
172,019
|
325,420
|
353,576
|
Loans –
Commercial
|
103,169
|
98,974
|
204,427
|
199,180
|
Investments
|
3,824
|
3,315
|
6,723
|
5,803
|
Other
|
2,606
|
3,220
|
5,226
|
9,167
|
|
273,962
|
277,528
|
541,796
|
567,726
|
Interest
expense:
|
|
|
|
|
Deposits
|
76,693
|
94,022
|
154,478
|
195,842
|
Securitization
liabilities
|
55,278
|
63,302
|
111,170
|
130,323
|
Funding
facilities
|
152
|
1,497
|
343
|
2,703
|
|
132,123
|
158,821
|
265,991
|
328,868
|
Net interest
income
|
141,839
|
118,707
|
275,805
|
238,858
|
Non-interest
income:
|
|
|
|
|
Fees and other
income
|
5,598
|
5,130
|
11,173
|
11,853
|
Net gain on loans
and investments
|
4,907
|
8,653
|
3,446
|
122
|
Gains (losses) on
securitization activities and income from
securitization retained interests
|
6,430
|
(1,160)
|
18,520
|
5,342
|
|
16,935
|
12,623
|
33,139
|
17,317
|
Revenue
|
158,774
|
131,330
|
308,944
|
256,175
|
Provision for credit
losses
|
(1,982)
|
8,847
|
(2,754)
|
44,534
|
Revenue after provision
for credit losses
|
160,756
|
122,483
|
311,698
|
211,641
|
Non-interest
expenses:
|
|
|
|
|
Compensation and
benefits
|
32,396
|
26,253
|
61,369
|
53,148
|
Other
|
32,594
|
25,214
|
60,938
|
52,499
|
|
64,990
|
51,467
|
122,307
|
105,647
|
Income before income
taxes
|
95,766
|
71,016
|
189,391
|
105,994
|
Income
taxes:
|
|
|
|
|
Current
|
20,698
|
16,106
|
42,740
|
31,686
|
Deferred
|
4,267
|
2,428
|
6,656
|
(4,144)
|
|
24,965
|
18,534
|
49,396
|
27,542
|
Net income
|
70,801
|
52,482
|
139,995
|
78,452
|
Dividends on preferred
shares
|
1,111
|
1,119
|
2,225
|
2,238
|
Net income available to
common shareholders
|
69,690
|
51,363
|
137,770
|
76,214
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
4.11
|
3.06
|
8.13
|
4.54
|
Diluted
|
4.05
|
3.05
|
8.02
|
4.50
|
Consolidated statements of comprehensive income
(unaudited)
|
|
|
|
($000s)
|
Three months
ended
|
Six months
ended
|
|
June 30,
2021
|
June 30,
2020
|
June 30,
2021
|
June 30,
2020
|
Net income
|
70,801
|
52,482
|
139,995
|
78,452
|
Other comprehensive
income – items that will be
reclassified subsequently to income:
|
|
|
|
|
Debt instruments at
Fair Value through Other
Comprehensive Income:
|
|
|
|
|
Net unrealized
(losses) gains from change in fair
value
|
(1,570)
|
3,899
|
(3,228)
|
3,074
|
Reclassification of
net losses (gains) to income
|
178
|
(351)
|
1,317
|
(1,019)
|
Other comprehensive
income – items that will not be
reclassified subsequently to income:
|
|
|
|
|
Equity instruments
designated at Fair Value through
Other Comprehensive Income:
|
|
|
|
|
Net unrealized gains
(losses) from change in fair
value
|
6,374
|
6,239
|
16,102
|
(16,669)
|
|
4,982
|
9,787
|
14,191
|
(14,614)
|
Income tax (expense)
recovery
|
(1,307)
|
(2,586)
|
(3,725)
|
3,861
|
|
3,675
|
7,201
|
10,466
|
(10,753)
|
Cash flow
hedges:
|
|
|
|
|
Net unrealized gains
(losses) from change in fair
value
|
2,155
|
(5,293)
|
16,065
|
(33,354)
|
Reclassification of net
losses (gains) to income
|
231
|
(245)
|
(234)
|
2,610
|
|
2,386
|
(5,538)
|
15,831
|
(30,744)
|
Income tax (expense)
recovery
|
(628)
|
1,463
|
(4,161)
|
8,122
|
|
1,758
|
(4,075)
|
11,670
|
(22,622)
|
Total other
comprehensive income (loss)
|
5,433
|
3,126
|
22,136
|
(33,375)
|
Total comprehensive
income
|
76,234
|
55,608
|
162,131
|
45,077
|
Consolidated statements of changes in shareholders'
equity (unaudited)
|
|
($000s) Three month
period ended
|
June 30,
2021
|
|
Preferred
Shares
|
Common
Shares
|
Contributed
Surplus
|
Retained
Earnings
|
Accumulated
other comprehensive
income (loss)
|
|
Cash Flow
Hedges
|
Financial
Instruments at
FVOCI
|
Total
|
Total
|
Balance, beginning of
period
|
72,194
|
224,397
|
7,722
|
1,449,715
|
(10,031)
|
(12,218)
|
(22,249)
|
1,731,779
|
Net Income
|
-
|
-
|
-
|
70,801
|
-
|
-
|
-
|
70,801
|
Other comprehensive
income, net of tax
|
-
|
-
|
-
|
-
|
1,758
|
3,675
|
5,433
|
5,433
|
Exercise of stock
options
|
-
|
489
|
-
|
-
|
-
|
-
|
-
|
489
|
Purchase of
treasury preferred
shares
|
(193)
|
-
|
-
|
-
|
-
|
-
|
-
|
(193)
|
Net loss on
cancellation of treasury
preferred shares
|
-
|
-
|
-
|
(10)
|
-
|
-
|
-
|
(10)
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(1,111)
|
-
|
-
|
-
|
(1,111)
|
Common
shares
|
-
|
-
|
-
|
(6,277)
|
-
|
-
|
-
|
(6,277)
|
Stock-based
compensation
|
-
|
-
|
626
|
-
|
-
|
-
|
-
|
626
|
Transfer relating
to the exercise of
stock options
|
-
|
111
|
(111)
|
-
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
72,001
|
224,997
|
8,237
|
1,513,118
|
(8,273)
|
(8,543)
|
(16,816)
|
1,801,537
|
($000s)
|
June 30,
2020
|
Balance, beginning of
period
|
72,557
|
213,701
|
7,405
|
1,212,125
|
(18,306)
|
(36,781)
|
(55,087)
|
1,450,701
|
Net Income
|
-
|
-
|
-
|
52,482
|
-
|
-
|
-
|
52,482
|
Other comprehensive
loss, net of tax
|
-
|
-
|
-
|
-
|
(4,075)
|
7,201
|
3,126
|
3,126
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(1,119)
|
-
|
-
|
-
|
(1,119)
|
Common
shares
|
-
|
-
|
-
|
(6,220)
|
-
|
-
|
-
|
(6,220)
|
Stock-based
compensation
|
-
|
-
|
413
|
-
|
-
|
-
|
-
|
413
|
Balance, end of
period
|
72,557
|
213,701
|
7,818
|
1,257,268
|
(22,381)
|
(29,580)
|
(51,961)
|
1,499,383
|
Consolidated statements of changes in shareholders' equity
(unaudited)
|
|
($000s) Six month
period ended
|
June 30,
2021
|
|
Preferred
Shares
|
Common
Shares
|
Contributed
Surplus
|
Retained
Earnings
|
Accumulated
other comprehensive income (loss)
|
|
Cash Flow
Hedges
|
Financial
Instruments at
FVOCI
|
Total
|
Total
|
Balance, beginning of
period
|
72,477
|
218,166
|
8,092
|
1,387,919
|
(19,943)
|
(19,009)
|
(38,952)
|
1,647,702
|
Net Income
|
-
|
-
|
-
|
139,995
|
-
|
-
|
-
|
139,995
|
Other comprehensive
income, net of tax
|
-
|
-
|
-
|
-
|
11,670
|
10,466
|
22,136
|
22,136
|
Exercise of stock
options
|
-
|
5,715
|
-
|
-
|
-
|
-
|
-
|
5,715
|
Purchase of
treasury preferred
shares
|
(476)
|
-
|
-
|
-
|
-
|
-
|
-
|
(476)
|
Net loss on
cancellation of treasury
preferred shares
|
-
|
-
|
-
|
(20)
|
-
|
-
|
-
|
(20)
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(2,225)
|
-
|
-
|
-
|
(2,225)
|
Common
shares
|
-
|
-
|
-
|
(12,551)
|
-
|
-
|
-
|
(12,551)
|
Stock-based
compensation
|
-
|
-
|
1,261
|
-
|
-
|
-
|
-
|
1,261
|
Transfer relating
to the exercise of
stock options
|
-
|
1,116
|
(1,116)
|
-
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
72,001
|
224,997
|
8,237
|
1,513,118
|
(8,273)
|
(8,543)
|
(16,816)
|
1,801,537
|
($000s)
|
June 30,
2020
|
Balance, beginning of
period
|
72,557
|
213,277
|
6,973
|
1,193,493
|
241
|
(18,827)
|
(18,586)
|
1,467,714
|
Net Income
|
-
|
-
|
-
|
78,452
|
-
|
-
|
-
|
78,452
|
Other comprehensive
loss, net of tax
|
-
|
-
|
-
|
-
|
(22,622)
|
(10,753)
|
(33,375)
|
(33,375)
|
Exercise of stock
options
|
-
|
357
|
-
|
-
|
-
|
-
|
-
|
357
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(2,238)
|
-
|
-
|
-
|
(2,238)
|
Common
shares
|
-
|
-
|
-
|
(12,439)
|
-
|
-
|
-
|
(12,439)
|
Stock-based
compensation
|
-
|
-
|
912
|
-
|
-
|
-
|
-
|
912
|
Transfer relating
to the exercise of
stock options
|
-
|
67
|
(67)
|
-
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
72,557
|
213,701
|
7,818
|
1,257,268
|
(22,381)
|
(29,580)
|
(51,961)
|
1,499,383
|
Consolidated statements of cash flows (unaudited)
|
|
|
|
($000s)
|
Three months
ended
|
Six months
ended
|
Three and six month
periods ended
|
June 30,
2021
|
June 30,
2020
|
June 30,
2021
|
June 30,
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
70,801
|
52,482
|
139,995
|
78,452
|
Adjustments for non-cash items in net income:
|
|
|
|
|
Financial instruments at fair value through income
|
1,778
|
982
|
(5,612)
|
14,344
|
Amortization of premiums/discount on investments
|
28
|
1,148
|
46
|
1,457
|
Amortization of capital assets and intangible costs
|
7,897
|
5,504
|
15,234
|
10,735
|
Provision for credit losses
|
(1,982)
|
8,847
|
(2,754)
|
44,534
|
Securitization gains
|
(8,177)
|
(2,516)
|
(12,355)
|
(5,283)
|
Stock-based compensation
|
626
|
413
|
1261
|
912
|
Income taxes
|
24,965
|
18,534
|
49,396
|
27,542
|
Securitization retained interests
|
11,221
|
518
|
21,900
|
8,998
|
Changes in operating assets and liabilities:
|
|
|
|
|
Restricted cash
|
25,398
|
(198,648)
|
(3,256)
|
(126,054)
|
Securities purchased under reverse repurchase
agreements
|
250,022
|
299,594
|
350,188
|
(50,303)
|
Loans receivable, net of securitizations
|
(1,025,059)
|
(939,714)
|
(1,672,166)
|
(1,145,281)
|
Other assets
|
(709)
|
(1,520)
|
5,198
|
(3,990)
|
Deposits
|
980,721
|
168,440
|
2,008,887
|
404,314
|
Securitization liabilities
|
(247,738)
|
412,120
|
(508,067)
|
478,239
|
Obligations under repurchase agreements
|
201,271
|
169,609
|
(50,606)
|
91,912
|
Funding facilities
|
-
|
386
|
-
|
500,374
|
Other liabilities
|
(23,931)
|
(8,057)
|
11,647
|
13,803
|
Income taxes paid
|
(15,306)
|
(420)
|
(32,531)
|
(37,919)
|
Cash flows from (used in)
operating activities
|
251,826
|
(12,298)
|
316,405
|
306,786
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from issuance of common shares
|
489
|
-
|
5,715
|
357
|
Dividends paid on preferred shares
|
(1,111)
|
(1,119)
|
(2,225)
|
(2,238)
|
Dividends paid on common shares
|
(6,277)
|
(6,220)
|
(12,551)
|
(12,439)
|
Cash flows used in financing activities
|
(6,899)
|
(7,339)
|
(9,061)
|
(14,320)
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase of investments
|
(453,543)
|
(153,815)
|
(484,850)
|
(269,777)
|
Proceeds on sale or redemption of investments
|
213,111
|
50,045
|
229,466
|
112,226
|
Net change in Canada Housing Trust re-investment accounts
|
336
|
(36,997)
|
(89)
|
(60,667)
|
Purchase of capital assets and system development costs
|
(9,346)
|
(7,243)
|
(17,862)
|
(13,413)
|
Cash flows used in investing activities
|
(249,442)
|
(148,010)
|
(273,335)
|
(231,631)
|
Net
(decrease) increase in cash and cash equivalents
|
(4,515)
|
(167,647)
|
34,009
|
60,835
|
Cash and cash equivalents, beginning of period
|
596,267
|
737,335
|
557,743
|
508,853
|
Cash and cash equivalents, end of period
|
591,752
|
569,688
|
591,752
|
569,688
|
Cash flows from operating activities include:
|
|
|
|
|
Interest received
|
250,337
|
275,050
|
508,152
|
555,359
|
Interest paid
|
(134,229)
|
(150,628)
|
(274,186)
|
(293,723)
|
Dividends received
|
1,434
|
1,522
|
2,916
|
3,076
|
About Equitable
Equitable Group Inc. trades on the Toronto Stock Exchange (TSX:
EQB and EQB.PR.C) and serves nearly three hundred thousand
Canadians through Equitable Bank, Canada's Challenger Bank™. Equitable Bank has
grown to become the country's eighth largest independent Schedule I
bank with a clear mandate to drive real change in Canadian banking
to enrich people's lives. Founded over 50 years ago,
Equitable Bank provides diversified personal and commercial banking
and through its EQ Bank platform (eqbank.ca) has been named #1 Bank
in Canada on the Forbes World's
Best Banks 2021 list. Please visit equitablebank.ca for
details.
Cautionary Note Regarding Forward-Looking Statements
Statements made by the Bank in the sections of this news
release, 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 Bank's objectives, strategies and
initiatives, financial performance expectations and other
statements made herein, whether with respect to the Bank'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", or
other similar expressions of future or conditional verbs.
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 Bank 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,
changes in accounting standards, the nature of our customers and
rates of default, and competition as well as those factors
discussed under the heading "Risk Management" in the MD&A and
in the Bank'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 Bank and the Canadian economy.
Although the Bank 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 Bank in
making forward-looking statements, including without limitation,
assumptions regarding its continued ability to fund its mortgage
business, 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 Bank 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 equity, Book value per common share, Loans under
management, Efficiency ratio, CET1 Capital Ratio, Assets under
management, Liquid assets, and Liquidity Coverage Ratio that
management believes provide useful information to investors
regarding the Bank's financial condition and results of
operations. The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
("GAAP") FINANCIAL MEASURES" section of the Bank's Q2 2021 MD&A
provides a detailed description of each non-GAAP measure and should
be read in conjunction with this release. The MD&A 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 often do not
have any standardized meaning, and therefore, may not be comparable
to similar measures presented by other companies.
SOURCE Equitable Group Inc.