TORONTO, May 9, 2012 /CNW/ - Equitable Group Inc. ("Equitable" or
the "Company") today reported its financial results for the three
months ended March 31, 2012 - a period of significant growth and
momentum that supports a confident outlook for the year. FIRST
QUARTER RESULTS -- Diluted earnings per share ("EPS") increased 13%
to $1.13 compared to $1.00 in the first quarter of 2011; -- Net
income increased 12% to $17.9 million from $16.1 million in 2011;
-- Net interest income increased 17% to $36.5 million from $31.2
million in 2011; -- Net interest margin ("NIM") was 1.45%, up
marginally from 1.44% a year ago on growth in NIM on
non-securitized assets (2.57% versus 2.52% a year ago); -- Return
on equity ("ROE") was 17.7%, up from 17.3% in Q4 2011 and compared
to 18.0% a year ago; -- Book value per share increased 13% to
$26.26 from $23.32 a year ago; -- Total assets were $10.5 billion
at period end, up 14% or $1.3 billion from March 31, 2011; --
Mortgage principal outstanding in the Company's Core Lending
business (Single Family and Commercial) grew 23% to $4.4 billion
from $3.6 billion a year ago; -- Single Family principal
outstanding grew by 35% year-over-year, and now represents 51% of
Core Lending balances; -- Equitable Trust's period-end total
capital ratio was a solid 15.8% (including collective allowance).
"This was a strong opening to 2012 for Equitable as we surpassed
our previous first quarter earnings record and added to the very
positive momentum we've created in our Core Lending businesses
where principal outstanding increased 23% year over year," said
Andrew Moor, President and Chief Executive Officer. "We're
delighted with these results as they were achieved during the
traditionally slow season in Canadian real estate activity. Despite
our substantial growth, we continued to build our portfolio with an
absolute focus on credit quality." Reflecting the Company's
strategies, the growth leader in the quarter was the Single Family
segment in which "we exceeded our own expectations on the strength
of a 35% year-over-year increase in mortgage principal balances on
51% growth in originations," added Mr. Moor. DIVIDEND DECLARATIONS
The Company's Board of Directors today declared a quarterly
dividend in the amount of $0.12 per common share, payable on July
5, 2012, to common shareholders of record at the close of business
on June, 15, 2012. The Board also declared a quarterly
dividend in the amount of $0.453125 per preferred share, payable on
June 30, 2012, to preferred shareholders of record at the close of
business on June 15, 2012. CORE LENDING BUSINESSES Equitable's
Single Family and Commercial Lending businesses are collectively
referred to as Equitable's "Core Lending" business. Within
the Core Lending business in Q1 2012: -- Single Family Lending
Services mortgage principal amounted to a record $2.3 billion at
March 31, 2012, $589 million higher than at March 31, 2011. During
the most recent quarter, production amounted to $327 million, up
$111 million from the same period in 2011; -- Commercial Lending
Services mortgage principal at March 31, 2012 was $2.2 billion,
$245 million higher than at the end of the first quarter of 2011.
First quarter production was $120 million compared to $183 million
a year ago. These Core Lending businesses represented 46% of the
Company's mortgage portfolio compared to 42% a year ago, reflecting
Equitable's emphasis on optimizing returns adjusted for risk and
its capital plan of maintaining strong capital ratios as its grows.
SECURITIZATION FINANCING BUSINESS Equitable's Securitization
Financing business originates insured mortgages with the intention
of subsequently securitizing those assets. Approximately 92% of
securitized mortgages at period end were secured by multi-unit
residential properties and were underwritten by the Company's
commercial credit team. The remaining 8% were represented by
insured, single family residential mortgages, some of which were
securitized after residing in the Company's Core Lending portfolio.
During the first quarter: -- Securitization Financing mortgage
principal outstanding at March 31, 2012 was $5.2 billion, 6% or
$297 million higher than a year ago; -- Securitization Financing
production was $115 million, $139 million lower than a year ago,
reflecting a planned shift in emphasis toward Core Lending
activities. CREDIT QUALITY Equitable maintained its exemplary track
record of low realized loan losses during the first quarter ($0.5
million, net of recoveries). Solid key credit metrics were also
posted: -- Mortgage principal in arrears 90 days or more was 0.25%
of total mortgage principal outstanding, an improvement from 0.33%
a year ago; -- Net impaired mortgages were 0.28% of total mortgage
assets compared to 0.35% a year ago as workout activities continue
to yield positive results. Management remains comfortable that
allowances for credit losses (0.22% of total mortgage assets versus
0.24% a year ago) adequately provide for the risk of loss. LOOKING
AHEAD "Equitable built on and in some cases accelerated its
momentum during the first quarter and this supports our plan and
expectations of ongoing earnings growth and a solid ROE,
backstopped by the maintenance of very healthy capital levels,"
said Mr. Moor. "The markets we choose to serve continue to benefit
from a combination of population trends and economic stability,
giving us an attractive foundation for growth. Our 2012 agenda is
custom made for today's market realities and includes growth in
mortgage assets that best suit our hurdle rates and credit risk
tolerances, expansion of our national presence with emphasis on
niches that are positioned to benefit from secular trends and, most
importantly, an ongoing focus on broker and customer service
excellence, which is generating tremendous results for us. By
single-mindedly pursuing our service agenda while maintaining
highly cost-effective operations, we will drive ever-improving
results for our shareholders." The Company is also monitoring
recently announced changes in the regulatory environment, including
CMHC's decision to curtail its portfolio insurance activities. This
change is expected to have little direct impact on Equitable and
could indirectly benefit the Company should competitors change
their lending or pricing practices. Equitable is also
currently reviewing OSFI's "Draft Guideline B-20 - Residential
Mortgage Underwriting Practices and Procedures" and, while
management expects some revisions to the proposal, recognizes that
the outcome of the process continues to be uncertain. Q1 CONFERENCE
CALL The Company will hold its first quarter conference call and
webcast at 10:00 a.m. ET Thursday May 10, 2012. To access the call
live, please dial in five minutes prior to 416-644-3414. To access
a listen-only version of the webcast, please log on to
www.equitabletrust.com under Investor Relations. A replay of the
call will be available until May 17, 2012 and it can be accessed by
dialing 416-640-1917 and entering passcode 4530347 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 MARCH 31,
2012 With comparative figures as at December 31, 2011 and March 31,
2011 ($ THOUSANDS) March 31, 2012 December 31, 2011 March 31, 2011
Assets Cash and cash $ 239,517 $ 170,845 $ 177,251 equivalents
Restricted cash 90,246 83,156 36,404 Securities purchased 39,922
9,967 24,993 under reverse repurchase agreements Investments
389,497 390,340 360,137 Mortgages receivable 4,476,637 4,262,147
3,683,777 Mortgages receivable - 5,211,241 5,314,940 4,876,631
securitized Other assets 23,178 25,618 13,788 $ 10,470,238 $
10,257,013 $ 9,172,981 Liabilities and Shareholders' Equity
Liabilities: Deposits $ 4,860,547 $ 4,627,904 $ 4,032,391
Securitization 5,069,853 5,100,921 4,653,482 liabilities Deferred
tax 6,608 7,790 7,318 liabilities Other liabilities 24,602 28,587
17,298 Bank term loans 12,500 12,500 12,500 Subordinated 52,671
52,671 52,671 debentures 10,026,781 9,830,373 8,775,660
Shareholders' equity: Preferred shares 48,494 48,494 48,494 Common
shares 130,251 129,771 128,369 Contributed surplus 4,813 4,718
4,169 Retained earnings 269,235 254,006 215,700 Accumulated other
(9,336) (10,349) 589 comprehensive (loss) income 443,457 426,640
397,321 $ 10,470,238 $ 10,257,013 $ 9,172,981 CONSOLIDATED
STATEMENTS OF INCOME (unaudited) FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2012 With comparative figures for the three month
period ended March 31, 2011 ($ THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended March 31, 2012 March 31, 2011 Interest income:
Mortgages $ 57,187 $ 47,849 Mortgages - securitized 54,459 52,152
Investments 2,248 2,279 Other 1,226 1,025 115,120 103,305 Interest
expense: Deposits 30,350 26,741 Securitization liabilities 47,174
44,268 Bank term loans 202 200 Subordinated debentures 869 862
Other 1 29 78,596 72,100 Net interest income 36,524 31,205
Provision for credit losses 2,227 1,938 Net interest income after
provision for credit losses 34,297 29,267 Other income: Fees and
other income 1,005 854 Net gain on investments 249 298 1,254 1,152
Net interest and other income 35,551 30,419 Non-interest expenses:
Compensation and benefits 6,570 5,473 Other 5,339 3,643 11,909
9,116 Income before income taxes and fair value gain 23,642 21,303
Fair value gain on derivative financial instruments -
securitization activities 51 319 Income before income taxes 23,693
21,622 Income taxes: Current 6,935 5,327 Deferred (1,182) 232 5,753
5,559 Net income $ 17,940 $ 16,063 Earnings per share: Basic $ 1.13
$ 1.01 Diluted $ 1.13 $ 1.00 CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (unaudited) FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2012 With comparative figures for the three month period
ended March 31, 2011 ($ THOUSANDS) Three months ended March31, 2012
March 31, 2011 Net income $ 17,940 $ 16,063 Other comprehensive
income: Available for sale investments: Net unrealized gains from
change in fair 833 1,143 value Reclassification of net gains to
income (1,082) (265) (249) 878 Income tax 65 (246) (184) 632 Cash
flow hedges Net unrealized gains from change in fair 1,028 1,665
value Reclassification of net losses (gains) to 592 (18) income
1,620 1,647 Income tax (423) (461) 1,197 1,186 Total other
comprehensive income 1,013 1,818 Total comprehensive income $
18,953 $ 17,881 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (unaudited) FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2012
With comparative figures for the three month period ended March 31,
2011 ($ THOUSANDS) Accumulated other March 31, Preferred Common
Contributed Retained comprehensive 2012 shares shares surplus
earnings income (loss) Total Balance, $ 48,494 $ 129,771 $ 4,718 $
254,006 $ (10,349) $ 426,640 beginning of period Net income - - -
17,940 - 17,940 Other - - - - 1,013 1,013 comprehensive income, net
of tax Contributions - 188 - - - 188 from reinvestment of dividends
Contributions - 237 - - - 237 from exercise of stock options
Dividends: Preferred - - - (906) - (906) shares Common - - -
(1,805) - (1,805) shares Stock-based - - 150 - - 150 compensation
Transfer - 55 (55) - - - relating to the exercise of stock options
Balance, end $ 48,494 $ 130,251 $ 4,813 $ 269,235 $ (9,336) $
443,457 of period Accumulated other March 31, Preferred Common
Contributed Retained comprehensive 2011 shares shares surplus
earnings income (loss) Total Balance, $ 48,494 $ 128,068 $ 3,935 $
202,187 $ (1,229) $ 381,455 beginning of period Net income - - -
16,063 - 16,063 Other - - - - 1,818 1,818 comprehensive income, net
of tax Contributions - 127 - - 127 from reinvestment of dividends
Contributions - 144 - - - 144 from exercise of stock options
Dividends: Preferred - - - (906) - (906) shares Common - - -
(1,644) - (1,644) shares Stock-based - - 264 - - 264 compensation
Transfer - 30 (30) - - - relating to the exercise of stock options
Balance, end $ 48,494 $ 128,369 $ 4,169 $ 215,700 $ 589 $ 397,321
of period CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FOR THE
THREE MONTH PERIOD ENDED MARCH 31, 2012 With comparative figures
for the three month period ended March 31, 2011 ($ THOUSANDS) Three
months ended March 31,2012 March 31, 2011 CASH FLOWS FROM OPERATING
ACTIVITIES Net income for the period $ 17,940 $ 16,063 Adjustments
to determine cash flows relating to operating activities: Financial
instruments at fair value 1,836 99 through income Depreciation of
capital assets 231 63 Provision for credit losses 2,227 1,938 Net
gain on sale or redemption of (249) (298) investments Income taxes
5,825 5,559 Income taxes paid (4,801) (4,771) Stock-based
compensation 150 264 Amortization of premiums/discount on 784 785
investments Net increase in mortgages receivable (113,976)
(345,787) Net increase in deposits 232,643 153,538 Net change in
securitization (31,068) 121,802 liabilities Net interest income,
excluding (54,751) (47,713) non-cash items Interest paid (63,692)
(58,179) Other assets (191) (1,430) Other liabilities (3,260)
(2,342) Interest received 115,934 103,542 Dividends received 2,509
2,350 Cash flows from (used in) operating 108,091 (54,517)
activities CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid on
preferred shares (906) (906) Dividends paid on common shares
(1,614) (1,367) Proceeds from issuance of common 237 144 shares
Cash flows used in financing activities (2,283) (2,129) CASH FLOWS
FROM INVESTING ACTIVITIES Purchase of investments (20,000) (39,651)
Proceeds on sale or redemption of 46,730 20,943 investments Net
change in Canada Housing Trust (26,671) (2,638) re-investment
accounts Purchase of securities under reverse (39,922) (24,993)
repurchase agreements Proceeds on sale or redemption of 9,967
74,908 securities under reverse repurchase agreements Change in
restricted cash (7,090) 50,166 Purchase of capital assets (150)
(80) Cash flows (used in) from investing (37,136) 78,655 activities
Net increase in cash and cash 68,672 22,009 equivalents Cash and
cash equivalents, beginning of 170,845 155,242 period Cash and cash
equivalents, end of period $ 239,517 $ 177,251 ABOUT EQUITABLE
GROUP INC. Equitable Group Inc. is a niche mortgage lender. Our
primary business is first charge mortgage financing, which we offer
through our wholly owned subsidiary, The Equitable Trust Company.
Founded in 1970, Equitable Trust is a federally incorporated trust
company. It serves single family, small and large commercial
borrowers and their mortgage advisors. It also serves the investing
public as a provider of Guaranteed Investment Certificates.
Equitable is active in providing GICs across all Canadian provinces
and territories. We actively originate mortgages across Canada,
with offices in Ontario, Alberta and Quebec. Equitable Group's
shares are traded on the Toronto Stock Exchange under the symbols
ETC and ETC.PR.A, respectively. Visit the Company on line at
www.equitabletrust.com and click on Investor Relations. CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements made by the
Company in the sections of this report including those entitled
"Credit Quality" and "Looking Ahead", 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.
Equitable Group Inc. CONTACT: Andrew MoorPresident and
CEO416-515-7000Tim WilsonChief Financial Officer416-515-7000
Copyright
Evolve Crypotocurrencies... (TSX:ETC)
Historical Stock Chart
From May 2024 to Jun 2024
Evolve Crypotocurrencies... (TSX:ETC)
Historical Stock Chart
From Jun 2023 to Jun 2024