Stock Name: ETC
Amount: CAD 0.12
Announcement Date: 02/11/2011
Record Date: 13/12/2011
Dividend Detail:
TORONTO, Nov. 2, 2011 /CNW/ - Equitable Group Inc. (TSX: ETC) and (ETC.PR.A) ("Equitable" or the "Company") today reported its financial results
for the three and nine months ended September 30, 2011 and announced an
increase in its common share dividend.
THIRD QUARTER PERFORMANCE
The Company's mortgage portfolio produced strong earnings and credit
performance in the third quarter in spite of an operational provision
related to an alleged mortgage fraud in the amount of $5 million
pre-tax ($0.24 per share) ("the provision") related to these loans (see
"Operational Provision" below).
In the third quarter:
Diluted earnings per share ("EPS") increased 60.8% to $0.82 from $0.51 a
year ago;
Adjusted EPS on a diluted basis (see "Adjusting for Accounting Changes"
below) was $0.84, or $1.08 excluding the provision, compared to $0.84 a
year ago;
Adjusted net income was $13.6 million, or $17.2 million excluding the
provision, compared to $13.5 million a year ago;
Adjusted net income available to common shareholders increased to $12.7
million, or $16.3 million excluding the provision, from $12.6 million a
year ago;
Net interest income was $34.8 million, up 14.0% from $30.5 million a
year ago;
Total assets reached a record $10.3 billion at period end, up 18.9% from
a year earlier as total mortgage production increased 41.2%, led by
single family conventional mortgage production growth of 55.2%;
Return on equity ("ROE") was 13.7% compared to 9.9% a year ago;
Adjusted ROE for the third quarter was 14.0%, or 17.9% excluding the
provision, compared to 16.2% a year ago;
Productivity ratio on a taxable equivalent basis ("TEB") was 42.8%, or
29.2% excluding the provision;
Equitable Trust's total capital ratio was 16.3% (including collective
allowance) compared to 16.5% at September 30, 2010;
Book value per share at period end increased 15.3% to $24.02 compared to
$20.83 a year ago.
DIVIDEND INCREASE AND DECLARATIONS
The Company's Board of Directors announced a 9.1% annualized increase in
the Company's common share dividends and declared the third quarter
common share dividend of $0.12 per share, an increase of $0.01 per
share, payable on January 3, 2012, to common shareholders of record at
the close of business on December 15, 2011. This is the second common
share dividend increase in 2011. The Board also declared a quarterly
dividend in the amount of $0.453125 per preferred share, payable on
December 31, 2011, to preferred shareholders of record at the close of
business on December 15, 2011.
MANAGEMENT COMMENTARY
"The third quarter featured several meaningful accomplishments,
including a 41% increase in mortgage production, record quarterly net
interest income and outstanding credit performance," said Andrew Moor,
President and CEO. "By capitalizing on our strategies for service
excellence and our expanding national presence, we funded almost $380
million in conventional single family residential mortgages, surpassing
second quarter production by almost 31% and production in this business
line a year ago by over 55%. As a result of this growth, ongoing
success in our other business lines and long-term adherence to strict
underwriting and risk management practices, Equitable's mortgage
portfolio is increasingly well positioned to deliver high quality
earnings growth in the quarters ahead. While the alleged fraud is
unwelcome, it is isolated to a small group of condominium corporation
loans in the portfolio and will not distract us from our longer-term
plan to build value for our shareholders. Overall, the fundamentals of
our business are strong."
MORTGAGE PORTFOLIO AND CREDIT HIGHLIGHTS
Single Family Lending Services originated $379.9 million of conventional
mortgages or 40.0% of total third quarter production to bring
conventional production for this business line to $886.2 million for
the first nine months of 2011 from $732.9 million in the corresponding
period of 2010;
Commercial Mortgage - Broker Services originated $84.5 million of
mortgages or 8.9% of total third quarter production to bring nine-month
production to $234.7 million compared to $216.5 million a year ago;
Commercial Lending Services originated $187.9 million of conventional
mortgages or 19.8% of total production to bring total conventional
production for this business line over the first nine months of 2011 to
$375.0 million from $196.7 million in the same period a year ago.
At quarter end:
Conventional mortgage principal increased 20.1% or $690.9 million during
the 12 months ended September 30, 2011 to $4.1 billion;
Securitized assets increased 17.1% or $769.1 million year over year to
$5.3 billion at September 30, 2011 and included $207.7 million in
single family residential mortgage assets previously originated as
conventional loans that the Company insured and securitized as part of
its ongoing strategy to manage funding costs;
Net impaired mortgages improved to 0.23% of total mortgage principal,
compared to 0.38% a year ago and 0.29% at June 30, 2011;
Mortgage principal in arrears 90 days or more was 0.24% compared to
0.40% a year ago and 0.27% at June 30, 2011.
NINE MONTH PERFORMANCE
Diluted EPS increased 44.8% to $2.81 from $1.94 a year ago;
Adjusted EPS on a diluted basis was $2.81, or $3.05 excluding the
provision, compared to $2.56 a year ago;
Adjusted net income was $45.2 million, or $48.8 million excluding the
provision, compared to $41.0 million in the same period of 2010;
Adjusted net income available to common shareholders increased to $42.4
million, or $46.0 million excluding the provision, from $38.3 million a
year ago;
Net interest income increased 13.0% to $98.4 million from $87.1 million
a year ago;
ROE was 16.4% compared to 13.1% a year ago;
Adjusted ROE was 16.4%, or 17.7% excluding the provision, compared to
17.0% a year ago;
Productivity ratio on a TEB was 33.3%, or 28.5% excluding the provision,
compared to 26.5% a year ago.
OPERATIONAL PROVISION
In a press release dated August 23, 2011 the Company reported an alleged
fraud relating to four condominium corporation loans with a total
outstanding balance of approximately $14.0 million. This amount has
been reduced to $13.9 million as a result of a partial recovery.
Management has engaged external counsel to assist in this matter. The
Company has commenced an action against several parties to the subject
loan transactions and has been named, along with other defendants, in
two separate statements of claim made by parties seeking relief from
mortgage amounts owing. Management will defend these claims and will
cross claim against a number of the defendants and will continue to
review all legal options available to it in pursuing its recourse. In
addition to any potential recoveries under its claims, the Company will
also claim under its Financial Institution Bond, which is intended to
protect against fraud losses, however, there is no assurance that
proceeds or recoveries, if any, will be received in a timely manner or
that such proceeds will be sufficient to recover the full amount of the
loans. Accordingly, the Company recorded a pre-tax operational
provision of $5.0 million ($0.24 per share) in the third quarter and
reclassified the mortgages in question from mortgages receivable to
other assets. While the total loss, if any, arising from this alleged
fraud cannot be definitively determined at this time, management has
established the allowance based on the information available at the
reporting date and will continue to assess the progress of recovery
efforts and the resulting estimate of recoverable amounts.
ADJUSTING FOR ACCOUNTING CHANGES
Results for both reporting periods were prepared using International
Financial Reporting Standards ("IFRS"), with a transition date of
January 1, 2010. As a result, prior period comparative information in
this news release reflects conversion from previous Canadian Generally
Accepted Accounting Principles ("GAAP") to IFRS. In addition to being
affected by differences in the method of accounting for securitized
assets, the restatement of the Company's financial results from
previous Canadian GAAP to IFRS is affected by differences in the method
of accounting for the related derivatives that are within its
securitization activities, including the activities it undertakes to
hedge interest rate risk associated with mortgage commitments and
mortgages issued but awaiting securitization, as well as the interest
rate risk associated with the respective securitization liabilities. In
order to help readers, the Company analyzes its 2011 performance by
comparing it to 2010 on an adjusted basis, which removes gains and
losses associated with unmatched derivative measurement accounting.
Adjusted figures are non-GAAP financial measures and do not remove the
operational provision taken in the third quarter.
LOOKING AHEAD
"While market perceptions of risk have been heightened, and are factored
into our business strategies, we remain confident in Equitable's
ability to create value through profitable growth at this stage of the
economic cycle," said Mr. Moor. "With respect to production, we expect
to continue to expand our conventional mortgage assets in chosen
markets and over the coming year, to reduce securitization activity
related to multi-family insured mortgages as part of our strategy to
grow earnings and maintain our strong capital position. Included in our
fourth quarter outlook is an expectation that conventional single
family mortgage originations will remain strong and at levels similar
to the fourth quarter of 2010. Net interest margin should also remain
stable for the remainder of the year, even with the potential for a
minor contraction should the Bank of Canada reduce its
benchmark-setting rate. In total, we believe earnings should reflect
the momentum associated with recent expansion in our conventional
mortgage assets."
In respect of Canadian real estate, management has long focused on urban
centres where it believes long-term fundamentals (such as diversified
local economies and population growth) support demand. Management will
continue to apply this approach, along with its traditional discipline
in setting loan-to-value ratios and other prudent lending criteria
going forward within its active sales strategies.
Q3 CONFERENCE CALL
The Company will hold its third quarter conference call and webcast at
9:00 a.m. ET Thursday November 3, 2011. To access the call live, please
dial in five minutes prior to 416-644-3417. 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 November 11, 2011 and it
can be accessed by dialing 416-640-1917 and entering passcode 4481312
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 SEPTEMBER 30, 2011 | | | | | | | | | |
With comparative figures as at December 31, 2010, September 30, 2010 and January 1, 2010 | |||||||||
($ THOUSANDS) | | | | | | | | | |
| | | | | | | | | |
| September 30, 2011 | December 31, 2010 | September 30, 2010 | January 1, 2010 | |||||
| | | | | | | | | |
Assets | | | | | | | | | |
Cash and cash equivalents | $ | 173,122 | $ | 155,242 | $ | 242,663 | $ | 389,170 | |
Restricted cash | | 80,050 | | 86,570 | | 32,811 | | 25,372 | |
Investments | | 550,004 | | 413,330 | | 377,124 | | 302,292 | |
Mortgages receivable | | 4,121,858 | | 3,468,507 | | 3,434,379 | | 2,763,020 | |
Mortgages receivable - securitized | | 5,301,081 | | 4,748,794 | | 4,529,066 | | 4,137,247 | |
Other assets | | 28,276 | | 11,686 | | 7,989 | | 15,191 | |
| $ | 10,254,391 | $ | 8,884,129 | $ | 8,624,032 | $ | 7,632,292 | |
| | | | | | | | | |
Liabilities and Shareholders' Equity | | | | | | | | | |
Liabilities: | | | | | | | | | |
| Deposits | $ | 4,671,138 | $ | 3,878,853 | $ | 3,838,997 | $ | 3,332,319 |
| Securitization liabilities | | 5,077,052 | | 4,531,680 | | 4,335,118 | | 3,885,187 |
| Deferred tax liabilities | | 7,930 | | 7,086 | | 7,664 | | 5,191 |
| Other liabilities | | 24,666 | | 19,884 | | 17,726 | | 14,959 |
| Bank term loans | | 12,500 | | 12,500 | | 27,500 | | 27,500 |
| Subordinated debentures | | 52,671 | | 52,671 | | 37,671 | | 37,671 |
| | 9,845,957 | | 8,502,674 | | 8,264,676 | | 7,302,827 | |
| | | | | | | | | |
Shareholders' equity: | | | | | | | | | |
| Preferred shares | | 48,494 | | 48,494 | | 48,494 | | 48,494 |
| Common shares | | 129,193 | | 128,068 | | 127,692 | | 127,336 |
| Contributed surplus | | 4,538 | | 3,935 | | 3,784 | | 3,267 |
| Retained earnings | | 239,689 | | 202,187 | | 180,503 | | 155,890 |
| Accumulated other comprehensive loss | | (13,480) | | (1,229) | | (1,117) | | (5,522) |
| | 408,434 | | 381,455 | | 359,356 | | 329,465 | |
| | | | | | | | | |
| $ | 10,254,391 | $ | 8,884,129 | $ | 8,624,032 | $ | 7,632,292 | |
| | | | | | | | | |
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | | | | | |||||
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2011 | | | | | |||||
With comparative figures for the three and nine month periods ended September 30, 2010 | | | | | |||||
($ THOUSANDS, EXCEPT PER SHARE AMOUNTS) | | | | | | | | | |
| | | | | | | | | |
| Three months ended | Nine months ended | |||||||
| September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||
| | | | | | | | | |
Interest income: | | | | | | | | | |
| Mortgages | $ | 53,627 | $ | 46,531 | $ | 151,950 | $ | 130,134 |
| Mortgages - securitized | | 54,470 | | 50,343 | | 159,232 | | 145,936 |
| Investments | | 2,624 | | 2,136 | | 7,551 | | 5,791 |
| Other | | 977 | | 915 | | 3,244 | | 2,220 |
| | 111,698 | | 99,925 | | 321,977 | | 284,081 | |
Interest expense: | | | | | | | | | |
| Deposits | | 29,992 | | 25,307 | | 84,984 | | 70,037 |
| Securitization liabilities | | 45,757 | | 42,951 | | 135,136 | | 123,509 |
| Bank term loans | | 205 | | 467 | | 608 | | 1,361 |
| Subordinated debentures | | 880 | | 653 | | 2,612 | | 1,929 |
| Other | | 105 | | 54 | | 212 | | 107 |
| | 76,939 | | 69,432 | | 223,552 | | 196,943 | |
Net interest income | | 34,759 | | 30,493 | | 98,425 | | 87,138 | |
Provision for credit losses | | 1,991 | | 2,776 | | 6,146 | | 7,204 | |
Net interest income after provision for credit losses | | 32,768 | | 27,717 | | 92,279 | | 79,934 | |
Other income: | | | | | | | | | |
| Fees and other income | | 925 | | 606 | | 2,569 | | 2,247 |
| Net gain on investments | | 121 | | 144 | | 108 | | 20 |
| | 1,046 | | 750 | | 2,677 | | 2,267 | |
Net interest and other income | | 33,814 | | 28,467 | | 94,956 | | 82,201 | |
Non-interest expenses: | | | | | | | | | |
| Compensation and benefits | | 5,849 | | 4,752 | | 16,862 | | 14,073 |
| Other | | 9,895 | | 3,653 | | 17,746 | | 10,364 |
| | 15,744 | | 8,405 | | 34,608 | | 24,437 | |
Income before income taxes and fair value loss | | 18,070 | | 20,062 | | 60,348 | | 57,764 | |
Fair value loss on derivative financial instruments - securitization activities | | (368) | | (7,118) | | (1) | | (13,300) | |
Income before income taxes | | 17,702 | | 12,944 | | 60,347 | | 44,464 | |
Income taxes: | | | | | | | | | |
| Current | | 3,866 | | 2,706 | | 14,342 | | 11,634 |
| Deferred | | 473 | | 1,652 | | 844 | | 1,021 |
| | 4,339 | | 4,358 | | 15,186 | | 12,655 | |
Net income | | 13,363 | | 8,586 | | 45,161 | | 31,809 | |
Dividends on preferred shares | | 907 | | 907 | | 2,719 | | 2,719 | |
Net income available to common shareholders | $ | 12,456 | $ | 7,679 | $ | 42,442 | $ | 29,090 | |
| | | | | | | | | |
Earnings per share: | | | | | | | | | |
| Basic | $ | 0.83 | $ | 0.51 | $ | 2.84 | $ | 1.95 |
| Diluted | $ | 0.82 | $ | 0.51 | $ | 2.81 | $ | 1.94 |
| | | | | | | | | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | | | | | ||||||
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2011 | | | | | | | ||||
With comparative figures for the three and nine month periods ended September 30, 2010 | ||||||||||
($ THOUSANDS) | | | | | | | | | ||
| | | | | | | | | | |
| | | Three months ended | Nine months ended | ||||||
| | | September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | ||||
| | | | | | | | | | |
Net income | $ | 13,363 | $ | 8,586 | $ | 45,161 | $ | 31,809 | ||
Other comprehensive income (loss), net of tax: | | | | | | | | | ||
| Available for sale investments: | | | | | | | | | |
| | Net unrealized gains (losses) from change in fair value | | (1,781) | | 2,411 | | (55) | | 3,418 |
| | Reclassification of net (gains) losses to income | | (184) | | 77 | | (177) | | 987 |
| Cash flow hedges: | | | | | | | | | |
| | Net unrealized losses from change in fair value | | (9,340) | | - | | (11,841) | | - |
| | Reclassification of net gains to income | | (169) | | - | | (178) | | - |
Other comprehensive (loss) income | | (11,474) | | 2,488 | | (12,251) | | 4,405 | ||
Comprehensive income | $ | 1,889 | $ | 11,074 | $ | 32,910 | $ | 36,214 | ||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | | | | | |||||||||
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2011 | | | | | | | |||||||
With comparative figures for the three month period ended September 30, 2010 | | | | | | | |||||||
($ THOUSANDS) | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
September 30, 2011 | Preferred shares | Common shares | Contributed surplus | Retained earnings | Accumulated other comprehensive income (loss) | | Total | ||||||
| | | | | | | | | | | | | |
Balance, beginning of period | $ | 48,494 | $ | 129,054 | $ | 4,292 | $ | 228,881 | $ | (2,006) | $ | 408,715 | |
Net income | | - | | - | | - | | 13,363 | | - | | 13,363 | |
Other comprehensive income, net of tax | | - | | - | | - | | - | | (11,474) | | (11,474) | |
Contributions from reinvestment of dividends | | - | | 139 | | - | | - | | - | | 139 | |
Contributions from exercise of stock options | | - | | - | | - | | - | | - | | - | |
Dividends: | | | | | | | | | | | | | |
| Preferred shares | | - | | - | | - | | (907) | | - | | (907) |
| Common shares | | - | | - | | - | | (1,648) | | - | | (1,648) |
Stock-based compensation | | - | | - | | 246 | | - | | - | | 246 | |
Transfer relating to the exercise of stock options | | - | | - | | - | | - | | - | | - | |
Balance, end of period | $ | 48,494 | $ | 129,193 | $ | 4,538 | $ | 239,689 | $ | (13,480) | $ | 408,434 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
September 30, 2010 | Preferred shares | Common shares | Contributed surplus | Retained earnings | Accumulated other comprehensive income (loss) | | Total | ||||||
| | | | | | | | | | | | | |
Balance, beginning of period | $ | 48,494 | $ | 127,631 | $ | 3,613 | $ | 174,316 | $ | (3,605) | $ | 350,449 | |
Net income | | - | | - | | - | | 8,586 | | - | | 8,586 | |
Other comprehensive income, net of tax | | - | | - | | - | | - | | 2,488 | | 2,488 | |
Contributions from reinvestment of dividends | | - | | 61 | | - | | - | | - | | 61 | |
Contributions from exercise of stock options | | - | | - | | - | | - | | - | | - | |
Dividends: | | | | | | | | | | | | | |
| Preferred shares | | - | | - | | - | | (907) | | - | | (907) |
| Common shares | | - | | - | | - | | (1,492) | | - | | (1,492) |
Stock-based compensation | | - | | - | | 171 | | - | | - | | 171 | |
Transfer relating to the exercise of stock options | | - | | - | | - | | - | | - | | - | |
Balance, end of period | $ | 48,494 | $ | 127,692 | $ | 3,784 | $ | 180,503 | $ | (1,117) | $ | 359,356 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | | | | | |||||||||
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2011 | | | | | | | |||||||
With comparative figures for the nine month period ended September 30, 2010 | | | | | | | |||||||
($ THOUSANDS) | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
September 30, 2011 | Preferred shares | Common shares | Contributed surplus | Retained earnings | Accumulated other comprehensive income (loss) | | Total | ||||||
| | | | | | | | | | | | | |
Balance, beginning of period | $ | 48,494 | $ | 128,068 | $ | 3,935 | $ | 202,187 | $ | (1,229) | $ | 381,455 | |
Net income | | - | | - | | - | | 45,161 | | - | | 45,161 | |
Other comprehensive income, net of tax | | - | | - | | - | | - | | (12,251) | | (12,251) | |
Contributions from reinvestment of dividends | | - | | 415 | | - | | - | | - | | 415 | |
Contributions from exercise of stock options | | - | | 599 | | - | | - | | - | | 599 | |
Dividends: | | | | | | | | | | | | | |
| Preferred shares | | - | | - | | - | | (2,719) | | - | | (2,719) |
| Common shares | | - | | - | | - | | (4,940) | | - | | (4,940) |
Stock-based compensation | | - | | - | | 714 | | - | | - | | 714 | |
Transfer relating to the exercise of stock options | | - | | 111 | | (111) | | - | | - | | - | |
Balance, end of period | $ | 48,494 | $ | 129,193 | $ | 4,538 | $ | 239,689 | $ | (13,480) | $ | 408,434 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
September 30, 2010 | Preferred shares | Common shares | Contributed surplus | Retained earnings | Accumulated other comprehensive income (loss) | | Total | ||||||
| | | | | | | | | | | | | |
Balance, beginning of period | $ | 48,494 | $ | 127,336 | $ | 3,267 | $ | 155,890 | $ | (5,522) | $ | 329,465 | |
Net income | | - | | - | | - | | 31,809 | | - | | 31,809 | |
Other comprehensive income, net of tax | | - | | - | | - | | - | | 4,405 | | 4,405 | |
Contributions from reinvestment of dividends | | - | | 232 | | - | | - | | - | | 232 | |
Contributions from exercise of stock options | | - | | 106 | | - | | - | | - | | 106 | |
Dividends: | | | | | | | | | | | | | |
| Preferred shares | | - | | - | | - | | (2,719) | | - | | (2,719) |
| Common shares | | - | | - | | - | | (4,477) | | - | | (4,477) |
Stock-based compensation | | - | | - | | 535 | | - | | - | | 535 | |
Transfer relating to the exercise of stock options | | - | | 18 | | (18) | | - | | - | | - | |
Balance, end of period | $ | 48,494 | $ | 127,692 | $ | 3,784 | $ | 180,503 | $ | (1,117) | $ | 359,356 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||||
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2011 | |||||||||
With comparative figures for the three and nine month periods ended September 30, 2010 | |||||||||
($ THOUSANDS) | | | | | | | | | |
| | | | | | | | | |
| | Three months ended | Nine months ended | ||||||
| | September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
Net income for the period | $ | 13,363 | $ | 8,586 | $ | 45,161 | $ | 31,809 | |
Adjustments to determine cash flows relating to operating activities: | | | | | | | | | |
| Financial instruments at fair value through income | | 3,537 | | 948 | | 4,636 | | 5,223 |
| Amortization of capital assets | | 256 | | 154 | | 493 | | 449 |
| Provision for credit losses | | 1,991 | | 2,776 | | 6,146 | | 7,204 |
| Net gain on sale or redemption of investments | | (105) | | (41) | | (92) | | 15 |
| Income taxes | | 4,339 | | 4,358 | | 15,186 | | 12,655 |
| Taxes paid | | (4,861) | | (2,558) | | (14,402) | | (10,923) |
| Stock-based compensation | | 246 | | 171 | | 714 | | 535 |
| Amortization of premiums/discount on investments | | 834 | | 553 | | 2,506 | | 1,421 |
| Net increase in mortgages receivable | | (558,341) | | (353,520) | | (1,208,823) | | (1,068,460) |
| Net increase in deposits | | 416,867 | | 378,249 | | 792,285 | | 506,678 |
| Change in obligations related to investments sold under repurchase agreements | | (34,298) | | (37,558) | | - | | - |
| Net change in securitization liability | | 300,811 | | 164,120 | | 545,372 | | 449,931 |
| Other assets | | (22,374) | | 1,976 | | (27,467) | | 2,350 |
| Other liabilities | | (2,200) | | (2,687) | | (2,235) | | (1,290) |
Cash flows used in operating activities | | 120,065 | | 165,527 | | 159,480 | | (62,403) | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | |
| Dividends paid on preferred shares | | (907) | | (907) | | (2,719) | | (2,719) |
| Dividends paid on common shares | | (1,509) | | (1,430) | | (4,527) | | (4,242) |
| Proceeds from issuance of common shares | | - | | - | | 599 | | 106 |
Cash flows used in financing activities | | (2,416) | | (2,337) | | (6,647) | | (6,855) | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | |
| Purchase of investments | | (66,260) | | (77,547) | | (125,982) | | (274,662) |
| Proceeds on sale or redemption of investments | | 49,538 | | 11,639 | | 83,887 | | 153,057 |
| Net change in Canada Housing Trust re-investment accounts | | (13,430) | | (4,377) | | (20,961) | | (7,617) |
| Purchase of investments under reverse repurchase agreements | | (151,268) | | (69,862) | | (181,376) | | (289,281) |
| Proceeds on sale or redemption of investments under reverse repurchase agreements | | 5,115 | | 69,543 | | 105,016 | | 349,140 |
| Changes in restricted cash | | (31,704) | | (3,396) | | 6,520 | | (16,172) |
| Purchase of capital assets | | (1,242) | | (72) | | (2,057) | | (447) |
Cash flows used in investing activities | | (209,251) | | (74,072) | | (134,953) | | (85,982) | |
Net (decrease) increase in cash and cash equivalents | | (91,602) | | 89,118 | | 17,880 | | (155,240) | |
Cash and cash equivalents, beginning of period | | 264,724 | | 153,545 | | 155,242 | | 397,903 | |
Cash and cash equivalents, end of period | $ | 173,122 | $ | 242,663 | $ | 173,122 | $ | 242,663 | |
| | | | | | | | | |
Supplementary cash flow information | | | | | | | | | |
Net cash provided by (used in) operating activities include: | | | | | | | | | |
| Interest paid | $ | 66,088 | $ | 63,329 | $ | 184,246 | $ | 167,729 |
| Interest received | | 108,356 | | 94,788 | | 312,609 | | 274,856 |
| Dividends received | | 2,594 | | 2,512 | | 7,477 | | 6,638 |
| | | | | | | | | |
ABOUT EQUITABLE GROUP INC.
Equitable Group Inc. is a niche mortgage lender. Our core 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 entitled
"Management Commentary", "Operational Provision" 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.
For further information:
Andrew Moor
President and CEO
416-515-7000
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