EQI Reports Third Quarter 2012 Results

Equity Financial Holdings Inc. (TSX:EQI) ("EQI" or "the Corporation"), a
Canadian financial services company serving the corporate and institutional
markets and the retail mortgage market, reported today its financial results for
the three and nine months ended September 30, 2012.


Financial Highlights (all dollar amounts, except per-share, are in $000s unless
otherwise stated)(1)




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(Unaudited)                     Three months ended             $         %  
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                                Sep. 30,    Sep. 30,                        
                                    2012        2011      Change    Change  
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Operating Results                                                           
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Fees and margin revenue            4,411       5,250        (839)      (16%)
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Net interest income                1,244         416         828       199% 
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Fees, margin revenue and net                                                
 interest income                   5,655       5,666         (11)        0% 
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EBTDA                                398         299          99        33% 
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Net earnings and                                                            
 comprehensive income                 90          60          30        50% 
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Earnings per share, basic    $      0.01  $     0.01  $        -         0% 
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Earnings per share, diluted  $      0.01  $     0.01  $        -         0% 
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Return on equity                                                            
 (annualized)                          1%          0%          1%       NA  
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Balance Sheet Highlights                                                    
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Cash and cash equivalents         44,382      35,536       8,846        25% 
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Assets                           229,418     111,958     117,460       105% 
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Liabilities                      177,385      62,685     114,700       183% 
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(Unaudited)                     Nine months ended             $          %  
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                               Sep. 30,    Sep. 30,                         
                                   2012        2011      Change     Change  
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Operating Results                                                           
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Fees and margin revenue          14,786      29,860     (15,074)       (50%)
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Net interest income               3,240         648       2,592        400% 
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Fees, margin revenue and net                                                
 interest income                 18,026      30,508     (12,482)       (41%)
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EBTDA                             1,427      12,933     (11,506)       (89%)
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Net earnings and                                                            
 comprehensive income               410       8,640      (8,230)       (95%)
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Earnings per share, basic    $     0.04  $     1.01  $    (0.97)       (96%)
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Earnings per share, diluted  $     0.04  $     1.00  $    (0.96)       (96%)
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Return on equity                                                            
 (annualized)                         1%         30%        (29%)      (97%)
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Balance Sheet Highlights                                                    
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Cash and cash equivalents        44,382      35,536       8,846         25% 
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Assets                          229,418     111,958     117,460        105% 
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Liabilities                     177,385      62,685     114,700        183% 
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(1) EBTDA (Earnings Before Taxes, Depreciation and Amortization,) and       
annualized return on equity (net earnings divided by the simple average of  
reported shareholders' equity at the beginning and end of the period,       
multiplied by the appropriate factor to arrive at an annualized figure) do  
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 EBTDA as an indication of our  
ability to invest in property, plant and equipment, and to raise and service
debt; and they use return on equity as a key indicator of whether we use our
capital resources efficiently. These measures 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 mortgage unit continued to grow during the quarter and is the primary driver
of the increase of $828 or 199% in net interest income year-over-year. Net
interest income generated for the year-to-date has increased by $2,592 or 400%
as our mortgage loan portfolio is expanding and the revenue and net earnings
contributed by this business unit has increased each quarter in 2012. Overall
revenue for the third quarter, however, was flat year over year, with the
increased contribution from our mortgage unit offset by a decrease of $839 or
16% in fees and margin revenues from our other business units, reflecting the
persistently difficult capital market conditions that started in the second half
of last year. Revenue for the year-to-date has decreased $12,482 or 41%,
reflecting the absence of the large-volume foreign exchange transactions
comparable to those which occurred in 2011. Earnings per share was flat for the
third quarter at $0.01 but down by 96% to $0.04 for the year-to-date, again
reflecting the significant drop in revenues from our non-mortgage business
units. The infrastructure costs for our non-mortgage business units were
established during prior years when average revenues per client were
significantly higher. Management is currently reviewing this cost infrastructure
and made headcount reductions in the third quarter in response to the decline in
revenues.


The key elements by operating segment of our performance for the quarter were as
follows:


Mortgage

The rapid year-over-year growth in third quarter fees ($93 or 443%) and net
interest income ($779 or 187%) led to the most profitable quarter to date from
our mortgage business with segment earnings of $305 ($631 for the year-to-date).
Net interest margins remain in line with our expectation of 3% and our mortgage
loan portfolio has provided a growing source of recurring revenue since we
commenced mortgage lending in the second quarter of 2011.


We originated $42.0 million of new mortgage loans during the third quarter (an
increase of 21% from 2011), establishing a new high for quarterly originations.
We now have mortgage loans outstanding of $166.0 million as at September 30,
2012 (compared to $53.3 million at September 30, 2011), and we have estimated
commitments to make future advances on mortgage loans of $16.2 million. During
the quarter we increased EFT's regulatory capital through an injection of $5
million funded with existing cash. Based on our capacity and current pace of
originations we expect our loan book by year end 2012 will be approaching $200.0
million. We believe we have built a robust and scalable infrastructure which has
allowed us to proactively respond to the new lending guidelines issued by the
financial services supervisory authorities, and we are confident in our ability
to meet these regulatory requirements.


Transfer Agent & Trust

Our average revenue per transfer agent client has declined in 2012 as a result
of difficult market conditions. Our transfer agent and corporate trust revenue
streams have both been constrained by depressed market stock market activity:
trading volumes and financing volumes have both been significantly lower in 2012
than in 2011. The effect of these depressed volumes was particularly strong over
the summer months and in response to these unfavourable results management made
tactical headcount reductions during the third quarter and is evaluating options
for further cost reductions. Our transfer and trust segment incurred a loss for
the quarter of $168 (earnings of $422 for the year-to-date).


Foreign Exchange

Third quarter results for our foreign exchange segment were lower than those for
the same period in the previous year due to the decline in our core revenues,
whereas the decline in year-to-date results primarily reflects the absence of
the large-volume transactions which occurred in the second quarter of 2011. In
response, we have been refocusing our sales efforts and have also reduced
segment operating costs, primarily through headcount reductions. We will,
however, retain the capacity to earn significant additional profits from
large-volume transactions when market conditions allow. This segment incurred a
loss of $101 for the quarter ($612 for the year-to-date).


EQI President & CEO Paul G. Smith said,

"Our mortgage unit continued to grow during the quarter and we expect this
segment to continue to be our fastest growing income stream through the
remainder of 2012. The earnings from this segment, and the positive growth in
our balance sheet, contrast with otherwise subdued results, reflecting
persistent difficult market conditions and the absence of large-volume foreign
exchange transactions comparable to those which occurred in 2011. The
infrastructure costs for our non-mortgage business units were established during
prior years when average revenues per client were significantly higher but the
recent period of challenging market conditions has led to management's decision
to make headcount reductions. We will, however, retain the capacity to earn
significant additional profits when market conditions allow, as we demonstrated
in the second quarter last year. As our mortgage portfolio expands, we expect
the impact of large-volume transactions on our operating results to gradually
decline over time."


Our Interim Consolidated Financial Statements and Management's Discussion and
Analysis for the third quarter ended September 30, 2012 can be found in our
filings on SEDAR at www.sedar.com and on our website at
www.equityfinancialholdings.com


Quarterly Conference Call

EQI will hold a conference call on November 12, 2012 at 10:00 AM Eastern Time to
discuss its operating results and to answer questions. Participants can dial
416-340-2216 or toll free 866-226-1792.


About Equity Financial Holdings Inc.

Through its wholly owned subsidiaries, EQI provides transfer agent, corporate
trust, 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, 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 and equity and capital markets. Certain material factors or
assumptions are applied by the Corporation in making forward-looking statements,
including without limitation, 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 significant downturn in capital markets or
the economy as a whole, 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.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Equity Financial Holdings Inc.
Paul G. Smith
President & CEO
[phone] Ext 270
www.equityfinancialholdings.com