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Equity Financial Holdings Reports 2012 Results

Equity Financial Holdings Reports 2012 Results 
Mortgage loans outstanding over $198 million; total assets over $251
million 
TORONTO, ONTARIO -- (Marketwire) -- 02/13/13 -- Equity Financial
Holdings Inc. (TSX:EQI) ("Equity" or "the Corporation"), a Canadian
financial services company serving the corporate and institutional
markets and the retail mortgage market, today reported its annual
financial results for the year ended December 31, 2012. 


 
Financial Highlights (all dollar amounts, except per-share, are in $000s,   
 unless otherwise stated)                                                   
                                                                            
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                                    Fiscal year ending          Change      
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                                    Dec. 31,     Dec. 31,                   
                                        2012         2011          $      % 
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Operating Results                                                           
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  Net interest income            $     4,791  $     1,332  $   3,459    260 
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  Other revenue                        2,083       13,571    (11,488)   (85)
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Net interest income and other                                               
 revenue                               6,874       14,903     (8,029)   (54)
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Net earnings and comprehensive                                              
 income(1)                               534        9,230     (8,696)   (94)
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Earnings per share, basic(1)     $      0.06  $      1.07  $   (1.01)   (94)
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Earnings per share, diluted(1)   $      0.06  $      1.05  $   (0.99)   (94)
----------------------
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Return on equity(2)                        1%          24%                  
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Balance Sheet Highlights                                                    
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Cash and cash equivalents        $    34,429  $    25,568  $   8,861     35 
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Assets                               251,442      129,736    121,706     94 
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Liabilities                          199,175       79,738    119,437    150 
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(1) As a result of the Transaction noted below we have also reported on the 
 operating results of continuing and discontinued operations. Please refer  
 to our 2012 Audited Financial Statements and MD&A for additional details.  
(2) Return on equity (net earnings divided by the simple average of         
 reported shareholders' equity at the beginning and end of the period) does 
 not have any standardized meaning prescribed by IFRS and may not be        
 comparable to similar measures presented by other issuers. However, we     
 believe financial analysts and investors view these as key measures of     
 certain aspects of our performance. They use return on equity as a key     
 indicator of whether we use our capital resources efficiently. This        
 measure should not be considered as an alternative to cash flows from      
 operating activities nor to any other measures of performance presented in 
 accordance with IFRS.                                                      

 
Our total net earnings were down $8,696 or 94%, to $534 for the year
ended December 31, 2012, primarily affected by the absence of
significant revenue from large-volume transactions which had
contributed to record results in 2011. Our total earnings per share
also decreased by $1.01 or 94%, to $0.06 (basic) for the year ended
December 31, 2012.   
Subsequent to December 31, 2012, we executed a definitive agreement
for the sale of the assets of our transfer agent and corporate trust
services business to an affiliate of TMX Group Inc. (we announced
this "Transaction" today in a separate press release). This
Transaction represents the culmination of a strategic review
undertaken in 2012 during which we considered options for obtaining
capital resources to support further growth in our mortgage business,
which we believe offers the best potential returns to our
shareholders. By realizing the inherent value of the assets being
sold we will immediately improve EFT's regulatory capital position
and expect to reduce our need to consider further equity or debt
financing over the coming years. 
Our mortgage lending and deposit-taking business unit provided a
source of growth for the Corporation in a year where our other
business units were negatively affected by difficult market
conditions. Revenue and net earnings contributed by the mortgage unit
increased each quarter in 2012 and mortgages receivable more than
doubled to a balance of $198,147 as at December 31, 2012 ($84,780 as
at December 31, 2011). Net interest income represents a reliable and
recurring revenue stream which increased $3,459 or 260%, to $4,791
year over year, driven by the growth in our mortgage loan portfolio.  
Our foreign exchange segment experienced an absence of large-volume
transactions in 2012 compared to those which occurred in 2011. These
large-volume foreign exchange revenues are associated with our
corporate trust services and are included in the Transaction. We also
saw a decline in revenue from retail foreign exchange operations,
leading to the decision to begin winding down our day-to-day foreign
exchange business. This wind-down is expected to be completed in the
first quarter of 2013, at which time our foreign exchange segment
will be reclassified as a discontinued operation. Other revenue from
our foreign exchange segment decreased 87% by $11,807 to $1,726 for
the year ended December 31, 2012. 
Our transfer agent and corporate trust segment also experienced a
decline in revenue for the financial year ended December 31, 2012
compared to 2011. Persistently difficult capital market conditions
that started in the second half of 2011 affected transaction volumes
for the transfer agent business and provided limited opportunities
for our corporate trust group to act in merger and acquisition
transactions. As a result of these factors, revenue from transfer
agent and corporate trust decreased by $4,993 or 23%, to $17,169 for
the year ended December 31, 2012. 
Equity Financial Holdings President & CEO, Paul G. Smith said, 
"The decision to sell our transfer agent and corporate trust services
business represents the culmination of our strategic review,
resulting in our decision to shift our strategy and focus on our
mortgage unit. We believe adopting this exclusive focus on our
growing business unit - in which we recorded growth in revenue and
net earnings each quarter in 2012 - offers greater potential for our
company. With the proceeds from the sale of our transfer agent and
trust business to TMX Group Inc., we have the opportunity to invest
in the future growth of our mortgage business in order to create
value for our shareholders." 
Audited annual consolidated financial statements and Management's
Discussion and Analysis for the fiscal year ended December 31, 2012
can be found on SEDAR at www.sedar.com and on Equity's website at
www.equityfinancialholdings.com. 
Analyst Conference Call 
Equity will hold a conference call on February 13, 2013 at 9:00 AM
Eastern Time to discuss its operating results and to answer
questions. Participants can dial 416-340-2218 or toll free
866-226-1793. 
About Equity Financial Holdings Inc. 
Through its wholly owned subsidiaries, EQI provides foreign exchange
and retail mortgage services to the corporate and institutional
markets and the retail mortgage market. Learn more at
www.equityfinancialholdings.com. 
Advisory notes:  
Certain portions of this press release as well as other public
statements by Equity Financial Holdings Inc. (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," "continue", "estimates," "scheduled," "anticipates,"
"believes," "intends," "may," and similar 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, those relating to the anticipated timing
and completion of the proposed sale transaction and the Corporation's
ability to receive all necessary approvals related thereto, the
expected effect of the completion of the proposed sale transaction on
the Corporation, its business, operations and financial results, the
Corporation's expected need for regulatory capital and equity or debt
financing, the expected timing of the Corporation's previously
announced wind-down of its day-to-day retail foreign exchange
operations and its expected impact on the Corporation's business,
operations and financial results, the Corporation's earnings
expectations, fee income, expense levels, general economic, political
and market factors in North America and internationally, interest and
foreign exchange rates, global equity and capital markets activities,
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. 
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 equity and capital market, as
well as those assumptions relating to the completion of the proposed
sale transaction and receipt of required approvals in connection
therewith and those assumptions relating to the Corporation's ability
to implement and realize on its new strategic focus, assumptions
relating to the Corporation's ability to wind-down its day-to-day
retail foreign exchange operations and the expected impact on the
Corporation's business, operations and financial results, and
assumptions relating to the Corporation's capital and debt or equity
financing requirements. Certain material factors or assumptions are
applied by the Corporation in making forward-looking statements,
including without limitation, the Corporation's ability to
successfully close the proposed sale transaction and successfully
implement and realize on its new strategic focus, factors and
assumptions regarding interest and foreign exchange 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
failure to successfully close the proposed sale transaction, failure
by the corporation to implement or realize on its new strategic
focus, a significant downturn in capital markets or the economy as a
whole, delays in completing the wind-down of the Corporation's
day-to-day retail foreign exchange operations or other unforeseen
circumstances arising from such wind-down, reduced large-volume
foreign exchange revenue which could lead to an impairment of
goodwill in our foreign exchange unit, errors or omissions by the
Corporation in providing services to its customers, significant
changes in foreign currency exchange rates, extreme price and volume
fluctuations in the stock markets, 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
in the event that the Corporation incurs operating losses or requires
substantial capital investment in order to respond to unexpected
competitive pressures, significant changes in interest rates, failure
by Equity Financial Trust Company ("EFT") to meet ongoing regulatory
requirements, the failure of borrowers or counterparties to honour
their financial or contractual obligations to EFT, failure by the
Corporation to generate or obtain sufficient cash or cash equivalents
in a timely manner and at a reasonable price or to meet its
commitments as they become due, failure by EFT 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 EFT to
adequately monitor the services provided by third party service
providers or to establish alternative arrangements if required,
failure by EFT to secure sufficient deposits from securities 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 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 Toronto Stock Exchange has neither approved nor disapproved the
contents of
 this press release. 
Contacts:
Equity Financial Holdings Inc.
Paul G. Smith
President & CEO
(416) 361-0930 Ext 270
www.equityfinancialholdings.com
 
 
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