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Name | Symbol | Market | Type |
---|---|---|---|
EQB Inc | TSX:EQB.PR.C | Toronto | Preference Share |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.05 | 0.20% | 25.00 | 24.80 | 25.00 | 25.00 | 24.95 | 25.00 | 1,300 | 21:00:01 |
Full-Year 2022 Guidance for Key Metrics Confirmed
TORONTO, Aug. 9, 2022 /PRNewswire/ - EQB Inc. (TSX: EQB) (TSX: EQB.PR.C) (TSX: EQB.R) (EQB) today reported earnings for the three and six months ended June 30, 2022 that reflected strong Q2 performance in core operations including record quarterly net interest income but with revenue growth offset at the bottom line by mark-to-market and fair value adjustments to non-interest income due to the impact of significant declines in North American equity markets on its strategic investment and security portfolios.
Core Personal and Commercial business performance in Q2 featured conventional lending growth of 36% year over year, adjusted quarterly net interest income2 up 18%, margins in line with 2022 guidance and fee-based income up 41%. However, after reflecting the decline in non-interest income, Q2 adjusted earnings2 were held to $1.75 diluted and adjusted ROE2 was 12.1%. EQB deploys capital to strategic fintech investments to gain access to early-stage technologies and innovative business models. Changes in their fair value and other derivatives are not indicative of core business performance.
Q2 adjusted net interest income2 +$25.8 million or +18% to $167.6 million (reported +$24.8 million or +17%) • Adjusted earnings2 -13% to $61.5 million, reported earnings -17% y/y to $58.8 million • Adjusted diluted EPS2 -13% to $1.75, reported diluted EPS -17% to $1.67 • Adjusted NIM2 1.81% consistent to Q2 2021, reported NIM1 1.80%, -1 bps y/y • Adjusted ROE2 12.1%, reported ROE 11.6% | Conventional loan1 momentum continued through Q2 • Conventional loans1 +36% y/y to $24.1 billion • Single family alternative +35% y/y to $16.3 billion • Decumulation loans +200% y/y to $495 million • Commercial Finance Group +28% y/y to • Assets Under Management (AUM)1 +21% y/y to $45.8 million EQ Bank adds 58,000 customers y/y |
Year-to-date EQB set an all-time record for earnings, with 15.6% adjusted ROE2 (reported 14.9%) and on-target core business performance including | |
YTD earnings reflect margin, asset growth • Adjusted earnings2 +10% y/y to $153.9 million, reported earnings +5% y/y to $146.8 million • Adjusted diluted EPS2 +10% y/y to $4.40, reported diluted EPS +5% to $4.19 • Adjusted net interest income2 +20% y/y to $330.7 million • Adjusted NIM2 1.84%, +5 bps y/y, reported NIM1 1.83%, +4 bps y/y | Record BVPS, YTD Adjusted ROE2 ahead of guidance • Adjusted ROE2 15.6%, reported ROE 14.9% • Book value per share +16% to $59.25 Strong credit metrics from long-term prudence • Net impaired loans -23 bps y/y to 0.18% of total assets Capital ratios support strategy, growth in dividends • CETI ratio 13.5%, 0.5% above guidance |
1. These are Non-Generally Accepted Accounting Principles (GAAP) measures, see the "Non-GAAP financial measures and ratios" section. 2 Adjusted measures and ratios are Non-GAAP measures and ratios. Adjusted measures and ratios are calculated in the same manner as reported measures and ratios, except that financial information included in the calculation of adjusted measures and ratios is adjusted to exclude the impact of the Concentra Bank acquisition and integration related costs. For additional information and a reconciliation of reported results to adjusted results, see the "Non-GAAP financial measures and ratios" section. |
"EQB's core businesses delivered strong, on-plan performance despite market headwinds that impacted second quarter non-interest income in the form of mark-to-market adjustments. In alignment with our ROE targets, we generated risk-managed growth in our now $24 billion conventional loan1 portfolios of 36% year over year and 7% since March. Consistent with our established risk management practices, we also continued to proactively adjust our underwriting approach across the business to respond to elevated risks from inflation, the Bank of Canada's response to inflation and our expectations of changing collateral values. That said, as we exited the quarter, the fundamental forces that provide a solid foundation for our business – including strong demand for housing in Canada's major urban centers fueled by population growth, and our distinctive position as Canada's Challenger Bank – remain firmly in place," said Andrew Moor, President and CEO. "Priorities for the current quarter include the introduction of EQ Bank's payment card, the launch of EQ Bank in Québec and readying ourselves to acquire Concentra Bank which will add significant scale and opportunity to serve more Canadians."
Record YTD performance has EQB on track to meet 2022 guidance
Net interest income moves higher with stable margins
1. These are non-GAAP measures, see the "Non-GAAP financial measures and ratios" section. 2 Adjusted measures and ratios are Non-GAAP measures and ratios. Adjusted measures and ratios are calculated in the same manner as reported measures and ratios, except that financial information included in the calculation of adjusted measures and ratios is adjusted to exclude the impact of the Concentra Bank acquisition and integration related costs. For additional information and a reconciliation of reported results to adjusted results, see the "Non-GAAP financial measures and ratios" section. |
Non-interest income reflects mark-to-market, fair value adjustments
Continued investment in Challenger innovations across people, process, and platforms
Personal Banking asset growth +19% y/y to record $24.0 billion
1 Adjusted measures and ratios are Non-GAAP measures and ratios. Adjusted measures and ratios are calculated in the same manner as reported measures and ratios, except that financial information included in the calculation of adjusted measures and ratios is adjusted to exclude the impact of the Concentra Bank acquisition and integration related costs. For additional information and a reconciliation of reported results to adjusted results, see the "non-GAAP financial measures and ratios" section. |
Commercial Banking asset growth +25% y/y to $12.1 billion
Strong capital and liquidity positions
Credit quality indicators reflect long-term prudence, risk management responsiveness
1 These are non-GAAP measures, see the "Non-GAAP financial measures and ratios" section. |
Equitable Bank continued to diversify its sources of funding and optimize costs of funds
EQ Bank deposits +16% y/y to record $7.6 billion with attractive economics
EQ Bank poised to introduce payment card, serve customers in Québec
Equitable Bank continues to prepare for the closing of the Concentra Bank acquisition
EQB announces +7% q/q increase in Common Share Dividend or +68% y/y
Normal course issuer bid (NCIB)
"What is important to us is to drive results in our core personal and commercial business lines. In this regard, we have identified high-quality opportunities short and long term where our risk-managed capital allocation decisions will position EQB to continuously achieve our ROE target of 15% to 17%. From the perspective of our strategic investment portfolio, market-driven fluctuations reflected in the second quarter do not change the business value of these investments as they give us access to leading-edge knowledge, technologies and capabilities and, as recently as Q1, allowed us to capture significant gains. Putting all the component pieces of our outlook together, we look forward to proving the resiliency of our business model and consistency of our Challenger purpose through this next stage of the economic cycle while delivering on our full-year guidance," said Chadwick Westlake, EQB's Chief Financial Officer.
Analyst conference call and webcast: 8:30 a.m. ET Eastern August 10, 2022
EQB will host its second quarter conference call and webcast on Wednesday August 10, 2022. 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 24, 2022 at midnight at (416) 764-8677 (passcode 542700 followed by the number sign). Alternatively, the webcast will be archived on EQB's website.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets (unaudited)
($000s) As at | June 30, 2022 | December 31, 2021 | June 30, 2021 | |
Assets: | ||||
Cash and cash equivalents | 539,509 | 773,251 | 591,752 | |
Restricted cash | 557,283 | 462,164 | 507,295 | |
Securities purchased under reverse repurchase agreements | 420,009 | 550,030 | 100,015 | |
Investments | 1,097,004 | 1,033,438 | 859,925 | |
Loans – Personal | 24,122,303 | 22,421,603 | 20,225,222 | |
Loans – Commercial | 12,123,469 | 10,479,159 | 9,667,652 | |
Securitization retained interests | 227,013 | 207,889 | 203,491 | |
Other assets | 331,168 | 231,536 | 186,901 | |
39,417,758 | 36,159,070 | 32,342,253 | ||
Liabilities and Shareholders' Equity | ||||
Liabilities: | ||||
Deposits | 23,708,958 | 20,856,383 | 18,588,223 | |
Securitization liabilities | 11,366,847 | 11,375,020 | 11,483,635 | |
Obligations under repurchase agreements | 814,494 | 1,376,763 | 201,271 | |
Deferred tax liabilities | 64,180 | 63,141 | 67,520 | |
Funding facilities | 711,380 | 200,128 | - | |
Subscription receipts | 230,821 | - | - | |
Other liabilities | 426,527 | 335,001 | 200,067 | |
37,323,207 | 34,206,436 | 30,540,716 | ||
Shareholders' equity: | ||||
Preferred shares | 70,424 | 70,607 | 72,001 | |
Common shares | 234,372 | 230,160 | 224,997 | |
Contributed surplus | 10,106 | 8,693 | 8,237 | |
Retained earnings | 1,773,658 | 1,650,757 | 1,513,118 | |
Accumulated other comprehensive income (loss) | 5,991 | (7,583) | (16,816) | |
2,094,551 | 1,952,634 | 1,801,537 | ||
39,417,758 | 36,159,070 | 32,342,253 | ||
Consolidated statements of income (unaudited)
($000s, except per share amounts) | Three months ended | Six months ended | ||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |
Interest income: | ||||
Loans – Personal | 190,830 | 164,363 | 364,610 | 325,420 |
Loans – Commercial | 133,540 | 103,169 | 249,286 | 204,427 |
Investments | 3,351 | 3,824 | 7,206 | 6,723 |
Other | 5,558 | 2,606 | 8,417 | 5,226 |
333,279 | 273,962 | 629,519 | 541,796 | |
Interest expense: | ||||
Deposits | 110,413 | 76,693 | 194,885 | 154,478 |
Securitization liabilities | 53,741 | 55,278 | 103,031 | 111,170 |
Funding facilities | 2,468 | 152 | 2,774 | 343 |
166,622 | 132,123 | 300,690 | 265,991 | |
Net interest income | 166,657 | 141,839 | 328,829 | 275,805 |
Non-interest income: | ||||
Fees and other income | 7,866 | 5,598 | 13,899 | 11,173 |
Net (losses) gains on loans and investments | (16,839) | 4,907 | (12,041) | 3,446 |
Gains on securitization activities and income from | 6,445 | 6,430 | 21,060 | 18,520 |
(2,528) | 16,935 | 22,918 | 33,139 | |
Revenue | 164,129 | 158,774 | 351,747 | 308,944 |
Provision for credit losses | 5,233 | (1,982) | 5,108 | (2,754) |
Revenue after provision for credit losses | 158,896 | 160,756 | 346,639 | 311,698 |
Non-interest expenses: | ||||
Compensation and benefits | 40,067 | 32,396 | 76,839 | 61,369 |
Other | 38,209 | 32,594 | 76,370 | 60,938 |
78,276 | 64,990 | 153,209 | 122,307 | |
Income before income taxes | 80,620 | 95,766 | 193,430 | 189,391 |
Income taxes: | ||||
Current | 22,091 | 20,698 | 45,607 | 42,740 |
Deferred | (307) | 4,267 | 1,040 | 6,656 |
21,784 | 24,965 | 46,647 | 49,396 | |
Net income | 58,836 | 70,801 | 146,783 | 139,995 |
Dividends on preferred shares | 1,086 | 1,111 | 2,175 | 2,225 |
Net income available to common shareholders | 57,750 | 69,690 | 144,608 | 137,770 |
Earnings per share: | ||||
Basic | 1.69 | 2.05 | 4.24 | 4.07 |
Diluted | 1.67 | 2.02 | 4.19 | 4.01 |
Consolidated statements of comprehensive income (unaudited)
($000s) | Three months ended | Six months ended | ||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |
Net income | 58,836 | 70,801 | 146,783 | 139,995 |
Other comprehensive income – items that will be reclassified | ||||
Debt instruments at Fair Value through Other Comprehensive | ||||
Reclassification of losses from AOCI on sale of investment | (926) | - | (926) | - |
Net unrealized losses from change in fair value | (8,011) | (1,570) | (29,380) | (3,228) |
Reclassification of net losses to income | 2,729 | 178 | 5,006 | 1,317 |
Other comprehensive income – items that will not be | ||||
Equity instruments designated at Fair Value through Other | ||||
Net unrealized (losses) gains from change in fair value | (5,278) | 6,374 | (6,703) | 16,102 |
Reclassification of net losses to retained earnings | 1,836 | - | 3,045 | - |
(9,650) | 4,982 | (28,958) | 14,191 | |
Income tax recovery (expense) | 2,531 | (1,307) | 7,594 | (3,725) |
(7,119) | 3,675 | (21,364) | 10,466 | |
Cash flow hedges: | ||||
Net unrealized gains from change in fair value | 19,668 | 2,155 | 45,909 | 16,065 |
Reclassification of net losses (gains) to income | 1,944 | 231 | 2,373 | (234) |
21,612 | 2,386 | 48,282 | 15,831 | |
Income tax expense | (5,667) | (628) | (12,660) | (4,161) |
15,945 | 1,758 | 35,622 | 11,670 | |
Total other comprehensive income | 8,826 | 5,433 | 14,258 | 22,136 |
Total comprehensive income | 67,662 | 76,234 | 161,041 | 162,131 |
Consolidated statements of changes in shareholders' equity (unaudited)
($000s) Three month period ended | June 30, 2022 | ||||||||||
Preferred | Common | Contributed | Retained | Accumulated other comprehensive income (loss) | |||||||
Cash Flow | Financial | Total | Total | ||||||||
Balance, beginning | 70,607 | 232,854 | 9,357 | 1,727,169 | 20,357 | (22,508) | (2,151) | 2,037,836 | |||
Net Income | - | - | - | 58,836 | - | - | - | 58,836 | |||
Realized Loss on Sale of | - | - | - | (1,355) | - | (684) | (684) | (2,039) | |||
Other comprehensive | - | - | - | - | 15,945 | (7,119) | 8,826 | 8,826 | |||
Exercise of stock options | - | 1,463 | - | - | - | - | - | 1,463 | |||
Purchase of treasury | (183) | - | - | - | - | - | - | (183) | |||
Net loss on cancellation of | - | - | - | (6) | - | - | - | (6) | |||
Dividends: | |||||||||||
Preferred shares | - | - | - | (1,086) | - | - | - | (1,086) | |||
Common shares | - | - | - | (9,900) | - | - | - | (9,900) | |||
Stock-based Compensation | - | - | 804 | - | - | - | - | 804 | |||
Transfer relating to the exercise of stock options | - | 55 | (55) | - | - | - | - | - | |||
Balance, end of period | 70,424 | 234,372 | 10,106 | 1,773,658 | 36,302 | (30,311) | 5,991 | 2,094,551 | |||
($000s) Three month period ended June 30, 2021 | |||||||||||
Balance, beginning | 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 | - | - | - | - | 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 | |||
Consolidated statements of changes in shareholders' equity (unaudited)
($000s) Six month period ended | June 30, 2022 | |||||||||
Preferred | Common | Contributed | Retained | Accumulated other comprehensive income (loss) | ||||||
Cash Flow | Financial | Total | Total | |||||||
Balance, beginning | 70,607 | 230,160 | 8,693 | 1,650,757 | 680 | (8,263) | (7,583) | 1,952,634 | ||
Net Income | - | - | - | 146,783 | - | - | - | 146,783 | ||
Realized loss on sale of | - | - | - | (2,251) | - | (684) | (684) | (2,935) | ||
Other comprehensive | - | - | - | - | 35,622 | (21,364) | 14,258 | 14,258 | ||
Exercise of stock options | - | 3,867 | - | - | - | - | - | 3,867 | ||
Purchase of treasury | (183) | - | - | - | - | - | - | (183) | ||
Net loss on cancellation of | - | - | - | (6) | - | - | - | (6) | ||
Dividends: | ||||||||||
Preferred shares | - | - | - | (2,175) | - | - | - | (2,175) | ||
Common shares | - | - | - | (19,450) | - | - | - | (19,450) | ||
Stock-based compensation | - | - | 1,758 | - | - | - | - | 1,758 | ||
Transfer relating to the exercise of stock options | - | 345 | (345) | - | - | - | - | - | ||
Balance, end of period | 70,424 | 234,372 | 10,106 | 1,773,658 | 36,302 | (30,311) | 5,991 | 2,094,551 | ||
($000s) Six month period ended June 30, 2021 | ||||||||||
Balance, beginning | 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 | - | - | - | - | 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 | ||
Consolidated statements of cash flows (unaudited)
($000s) | Three months ended | Six months ended | ||
Three and six month periods ended | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | 58,836 | 70,801 | 146,783 | 139,995 |
Adjustments for non-cash items in net income: | ||||
Financial instruments at fair value through income | 3,103 | 1,778 | 1,376 | (5,612) |
Amortization of premiums/discount on investments | 330 | 28 | 630 | 46 |
Amortization of capital assets and intangible costs | 9,211 | 7,897 | 18,044 | 15,234 |
Provision for credit losses | 5,233 | (1,982) | 5,108 | (2,754) |
Securitization gains | (1,620) | (8,177) | (6,248) | (12,355) |
Stock-based compensation | 804 | 626 | 1,758 | 1,261 |
Income taxes | 21,784 | 24,965 | 46,647 | 49,396 |
Securitization retained interests | 12,742 | 11,221 | 25,160 | 21,900 |
Changes in operating assets and liabilities: | ||||
Restricted cash | (108,652) | 25,398 | (95,119) | (3,256) |
Securities purchased under reverse repurchase agreements | (420,009) | 250,022 | 130,021 | 350,188 |
Loans receivable, net of securitizations | (2,000,934) | (1,025,059) | (3,344,734) | (1,672,166) |
Other assets | 3,162 | (709) | (1,105) | 5,198 |
Deposits | 1,493,378 | 980,721 | 2,903,026 | 2,008,887 |
Securitization liabilities | 401,333 | (247,738) | (227) | (508,067) |
Obligations under repurchase agreements | (65,709) | 201,271 | (562,269) | (50,606) |
Funding facilities | 386,805 | - | 511,252 | - |
Subscription receipts | 435 | - | 230,821 | - |
Other liabilities | (33,605) | (23,931) | 13,092 | 11,647 |
Income taxes paid | (28,616) | (15,306) | (93,658) | (32,531) |
Cash flows (used in) from operating activities | (261,989) | 251,826 | (69,642) | 316,405 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from issuance of common shares | 1,463 | 489 | 3,867 | 5,715 |
Dividends paid on preferred shares | (1,086) | (1,111) | (2,176) | (2,225) |
Dividends paid on common shares | (9,900) | (6,277) | (19,450) | (12,551) |
Cash flows used in financing activities | (9,523) | (6,899) | (17,759) | (9,061) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of investments | (926) | (453,543) | (58,826) | (484,850) |
Proceeds on sale or redemption of investments | 122,300 | 213,111 | 233,768 | 229,466 |
Net change in Canada Housing Trust re-investment accounts | (21,882) | 336 | (295,103) | (89) |
Purchase of capital assets and system development costs | (13,752) | (9,346) | (26,180) | (17,862) |
Cash flows from (used in) investing activities | 85,740 | (249,442) | (146,341) | (273,335) |
Net (decrease) increase in cash and cash equivalents | (185,772) | (4,515) | (233,742) | 34,009 |
Cash and cash equivalents, beginning of period | 725,281 | 596,267 | 773,251 | 557,743 |
Cash and cash equivalents, end of period | 539,509 | 591,752 | 539,509 | 591,752 |
Cash flows from operating activities include: | ||||
Interest received | 289,106 | 250,337 | 560,154 | 508,152 |
Interest paid | (143,009) | (134,229) | (265,080) | (274,186) |
Dividends received | 899 | 1,434 | 2,170 | 2,916 |
About EQB Inc.
EQB Inc. trades on the Toronto Stock Exchange (TSX: EQB, EQB.PR.C and EQB.R) and serves more than 360,000 Canadians through its wholly owned subsidiary Equitable Bank, Canada's Challenger Bank™. Equitable Bank has a clear mandate to drive 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), it has been named the top Schedule I Bank in Canada on the Forbes World's Best Banks 2022 and 2021 lists. Please visit equitablebank.ca for details.
Cautionary Note Regarding Forward-Looking Statements
Statements made by EQB 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 EQB's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to EQB'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 EQB 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 EQB'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 EQB and the Canadian economy. Although EQB 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 EQB 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. EQB 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 and Ratios
In addition to GAAP prescribed measures, this news release references certain non-GAAP measures, including adjusted financial results, that we believe provide useful information to investors regarding EQB's financial condition and results of operations. Readers are cautioned that non-GAAP measures often do not have any standardized meaning, and therefore, are unlikely to be comparable to similar measures presented by other companies.
Adjusted financial results
On February 7, 2022, Equitable Bank announced that it entered into a definitive agreement to acquire a majority interest in Concentra Bank (Concentra), subject to customary closing conditions and regulatory approvals, and is expected to close later in 2022. As a result of the announced agreement, Equitable Bank has incurred certain acquisition costs beginning in Q4 2021. To enhance comparability between reporting periods, increase consistency with other financial institutions, and provide the reader with a better understanding of EQB's performance, adjusted results were introduced starting in Q1 2022. Adjusted results are non-GAAP financial measures.
Adjustments impacting current and prior periods:
Concentra acquisition/integration costs, pre-tax:
The following table presents a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results.
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1. The interest expense refers to the dividend equivalent amount paid to subscription receipt holders. The subscription receipt holders are entitled to receive a payment equal to the common share dividend declared multiplied by the number of subscription receipts held on the common share dividend payment date. These subscription receipts will be converted into common shares at a 1:1 ratio upon the closing of the Concentra acquisition. The net proceeds from the issuance are held in an escrow account and the interest income earned is not recognized until the closing date. In the event that the acquisition does not close, the interest that accrues to the investment will be paid to the subscription receipt holders, along with the return of their initial investment. |
Reconciliation of reported and adjusted | As at or for the three months ended | For the six months ended | ||||
30-Jun-22 | 31-Mar-22 | 30-Jun-21 | 30-Jun-22 | 30-Jun-21 | ||
Reported financial results ($thousands) | ||||||
Net interest income | 166,657 | 162,172 | 141,839 | 328,829 | 275,805 | |
Non-interest income | (2,528) | 25,446 | 16,935 | 22,918 | 33,139 | |
Revenue | 164,129 | 187,618 | 158,774 | 351,747 | 308,944 | |
Non-interest expense | 78,276 | 74,933 | 64,990 | 153,209 | 122,307 | |
Pre-provision pre-tax income | 85,853 | 112,685 | 93,784 | 198,538 | 186,637 | |
Provision for credit loss | 5,233 | (125) | (1,982) | 5,108 | (2,754) | |
Income tax expense | 21,784 | 24,863 | 24,965 | 46,647 | 49,396 | |
Net income | 58,836 | 87,947 | 70,801 | 146,783 | 139,995 | |
Net income available to common shareholders | 57,750 | 86,858 | 69,690 | 144,608 | 137,770 | |
Adjustments ($ thousands) | ||||||
Interest expenses – paid to subscription | - | 1,861 | - | |||
947 | 914 | |||||
Non-interest expenses – | - | 7,842 | - | |||
2,709 | 5,133 | |||||
Pre-tax adjustments | 3,656 | 6,047 | - | 9,703 | - | |
Income tax expense(2) | 958 | 1,584 | - | 2,542 | - | |
Post-tax adjustments | 2,698 | 4,463 | - | 7,161 | - | |
Adjusted financial results ($ thousands) | ||||||
Net interest income | 167,604 | 163,086 | 141,839 | 330,690 | 275,805 | |
Non-interest income | (2,528) | 25,446 | 16,935 | 22,918 | 33,139 | |
Revenue | 165,076 | 188,532 | 158,774 | 353,608 | 308,944 | |
Non-interest expense | 75,567 | 69,800 | 64,990 | 145,367 | 122,307 | |
Pre-provision pre-tax income | 89,509 | 118,732 | 93,784 | 208,241 | 186,637 | |
Provision for credit loss | 5,233 | (125) | (1,982) | 5,108 | (2,754) | |
Income tax expense | 22,742 | 26,447 | 24,965 | 49,189 | 49,396 | |
Net income | 61,534 | 92,410 | 70,801 | 153,944 | 139,995 | |
Net income available to common shareholders | 60,448 | 91,321 | 69,690 | 151,769 | 137,770 | |
Diluted earnings per share ($, except number | ||||||
Weighted average number of diluted common | 34,479,387 | 34,545,393 | 34,434,216 | 34,512,207 | 34,374,572 | |
Diluted earnings per share - reported | 1.67 | 2.51 | 2.02 | 4.19 | 4.01 | |
Diluted earnings per share - adjusted | 1.75 | 2.64 | 2.02 | 4.40 | 4.01 | |
Impact of adjustments on diluted earnings per share | 0.08 | 0.13 | - | 0.22 | - |
(1) The interest expense refers to the dividend equivalent amount paid to subscription receipt holders. The subscription receipt holders are entitled to receive a payment equal to the common share dividend declared multiplied by the number of subscription receipts held on the common share dividend payment date. These subscription receipts will be converted into common shares at a 1:1 ratio upon the closing of the Concentra acquisition. The net proceeds from the issuance are held in an escrow account and the interest income earned is not recognized until the closing date. In the event that the acquisition does not close, the interest that accrues to the investment will be paid to the subscription receipt holders, along with the return of their initial investment. (2) Income tax expense associated with non-GAAP adjustment was calculated based on the statutory tax rate applicable for that period. |
In addition to the adjusted results that are presented above, additional adjusted financial measures and ratios are disclosed as follows:
• Reconciliation of adjusted efficiency ratio
($000s, except percentages) | For the three months ended | For the six months ended | ||||||||||||||||
30-Jun-22 | 31-Mar-22 | Change | 30-Jun-21 | Change | 30-Jun-22 | 30-Jun-21 | Change | |||||||||||
Non-interest expenses – reported | 78,276 | 74,933 | 4 % | 64,990 | 20 % | 153,209 | 122,307 | 25 % | ||||||||||
Adjustments on a pre-tax basis: Non-interest expenses – acquisition/integration related costs | (2,709) | (5,133) | (47 %) | - | N/A | (7,842) | - | N/A | ||||||||||
Non-interest expenses – adjusted | 75,567 | 69,800 | 8 % | 64,990 | 16 % | 145,367 | 122,307 | 19 % | ||||||||||
Revenue – reported | ||||||||||||||||||
Adjustment on a pre-tax basis: | 164,129 | 187,618 | (13 %) | 158,774 | 3 % | 351,747 | 308,944 | 14 % | ||||||||||
Interest expenses – paid to subscription receipt holders | 947 | 914 | 4 % | - | N/A | 1,861 | - | N/A | ||||||||||
Revenue – adjusted | 165,076 | 188,532 | (12 %) | 158,774 | 4 % | 353,608 | 308,944 | 14 % | ||||||||||
Efficiency ratio – adjusted | 45.8 % | 37.0 % | 8.8 % | 40.9 % | 4.9 % | 41.1 % | 39.6 % | 1.5 % | ||||||||||
($000s, except percentages) | For the three months ended | For the six months ended | |||||||||
30-Jun-22 | 31-Mar-22 | Change | 30-Jun-21 | Change | 30-Jun-22 | 30-Jun-21 | Change | ||||
Net income available to common | 57,750 | 86,858 | (34 %) | 69,690 | (17 %) | 144,608 | 137,770 | 5 % | |||
Adjustments on an after-tax basis: Costs associated with Concentra acquisition | 2,698 | 4,463 | (40 %) | - | N/A | 7,161 | - | N/A | |||
Net income available to common | 60,448 | 91,321 | (34 %) | 69,690 | (13 %) | 151,769 | 137,770 | 10 % | |||
Weighted average common equity | 2,001,383 | 1,926,646 | 4 % | 1,694,570 | 18 % | 1,956,738 | 1,653,599 | 18 % | |||
Return on equity - adjusted | 12.1 % | 19.2 % | (7.1 %) | 16.5 % | (4.4 %) | 15.6 % | 16.8 % | (1.2 %) | |||
Other non-GAAP financial measures and ratios
($000s) | 30-Jun-22 | 31-Mar-22 | Change | 30-Jun-21 | Change |
Total assets on the consolidated balance sheet | 39,417,758 | 37,149,968 | 6 % | 32,342,253 | 22 % |
Loan principal derecognized | 6,349,413 | 6,272,342 | 1 % | 5,585,644 | 14 % |
Assets under management | 45,767,171 | 43,422,310 | 5 % | 37,927,897 | 21 % |
($000s) | 30-Jun-22 | 31-Mar-22 | Change | 30-Jun-21 | Change |
Alternative single family mortgages | 16,264,259 | 15,399,287 | 6 % | 12,058,136 | 35 % |
Reverse mortgages | 421,406 | 304,285 | 38 % | 127,138 | 231 % |
Cash surrender value loans | 73,219 | 59,196 | 24 % | 37,566 | 95 % |
Total Conventional loans – Personal | 16,758,884 | 15,762,768 | 6 % | 12,222,840 | 37 % |
Business Enterprise Solutions | 1,228,665 | 1,154,573 | 6 % | 1,011,089 | 22 % |
Commercial Finance Group | 4,516,012 | 4,111,394 | 10 % | 3,538,869 | 28 % |
Specialized finance | 738,675 | 714,856 | 3 % | 357,257 | 107 % |
Equipment leasing | 902,054 | 772,868 | 17 % | 643,095 | 40 % |
Total Conventional loans – Commercial | 7,385,406 | 6,753,691 | 9 % | 5,550,310 | 33 % |
Total Conventional loans | 24,144,290 | 22,516,459 | 7 % | 17,773,150 | 36 % |
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SOURCE EQB Inc.
Copyright 2022 PR Newswire
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