Connect with us

Equitable Delivers Record Earnings, ROE Surpasses Top End of Target Range, Dividend Increases Again

Equitable Delivers Record Earnings, ROE Surpasses Top End of Target Range, Dividend Increases Again
PR Newswire
TORONTO, May 10, 2022

AUM2 Exceeds $43 Billion on Diversified Lending, Confidence in 2022 Guidance Confirmed
TORONTO, May 10, 2022 /PRNe…

Published

on

Equitable Delivers Record Earnings, ROE Surpasses Top End of Target Range, Dividend Increases Again

PR Newswire

AUM2 Exceeds $43 Billion on Diversified Lending, Confidence in 2022 Guidance Confirmed

TORONTO, May 10, 2022 /PRNewswire/ - Equitable Group Inc. (TSX: EQB) (TSX: EQB.PR.C) (TSX: EQB.R) (Equitable or the Bank) today reported its best-ever quarter of earnings for the period ended March 31, 2022, as Equitable Bank (Canada's Challenger Bank™) delivered strong revenue growth across its personal and commercial business lines while boldly driving change in Canadian banking with expanded products, services and partnerships to enrich people's lives.

Strong 2022 start with best-ever quarterly earnings

•     Q1 reported earnings +27% y/y to $87.9 million, adjusted earnings3 +34% to $92.4 million

•     Q1 reported diluted EPS +27% to $2.51, adjusted diluted EPS3 +33% to $2.64

•     Reported efficiency ratio1 39.9%, adjusted efficiency
      ratio3 37.0% with 3.7% adjusted operating leverage1,,3


High-quality revenue and asset growth  

•     Assets under management2 +18% y/y to $43.4 billion

•     Loan originations +29% y/y to $3.5 billion

•     Reported revenue +25% y/y to $187.6 million, adjusted revenue3 +26% to $188.5 million


ROE and Book Value Per Share Growth ahead of target

•     Q1 reported ROE1 18.3%, adjusted ROE3 19.2%

•     Book value per share1 +18% to $57.64




Conventional loans2 +35% y/y to $22.5 billion

•     Single family alternative +37% y/y to $15.4 billion

•     Decumulation loans +216% y/y to $363 million

•     Commercial Finance Group +16% y/y to $4.1 billion,
      Specialized lending +178% y/y to $715 million and equipment
      leasing +31% y/y to $773 million


EQ Bank now exceeds 270,000 customers at May 1, 2022

•     Q1 customers +32% y/y to 266,188 at March 31, 2022

•     Deposits surpassed $7.3 billion, +25% y/y

•     Customer transactions +91% y/y, number of products held +15% y/y


Capital ratios provide strong support for future growth

•     CETI ratio1 13.5%, 0.5% above target floor representing $1.96 per
      share of excess capital


"Our Challenger Bank approach was validated again this quarter. Our lending activities produced double-digit growth and some of the best credit metrics I have seen since joining Equitable 15 years ago. The 216% year-over-year growth in our new decumulation lending services demonstrates the effectiveness of the Bank's strategic approach to building businesses organically, while ongoing strength in Bennington's performance proves our ability to grow through acquisition. EQ Bank's addition this week of a sleek new account opening process, using informed AI, will make our award-winning digital platform even more customer friendly as we go from strength to strength. Record earnings and an adjusted ROE1 of 19.2% (reported – 18.3%) point to really effective execution by a talented team that I am privileged to work with every day," said Andrew Moor, President and CEO. "I am also pleased to see the federal government's new appointment of an Open Banking lead as our country moves closer to giving Canadians access to valuable new choices and more control over their financial lives."   

___________________________

1. For information about these financial and banking measures and terms, see the "Other financial and banking measures and terms" section.

2. These are non-Generally Accepted Accounting Principles (GAAP) measures, see the "Non-GAAP financial measures" section. 

3. 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" section.


First Quarter Provides a Springboard to Achieve Ambitious 2022 Guidance

  • Based on first quarter growth in conventional assets, its current outlook, and the strength and advantage of its asset diversification and pricing strategies, the Bank today expressed confidence in prior annual guidance for the full-year 2022 of +12-15% in total lending growth (Q1 +19%), +8-10% EPS growth (Q1 adjusted1 +33%, Q1 reported +27%), ROE of 15%+ (Q1 adjusted1 19.2%, Q1 reported 18.3%), pre-provision, pre-tax income +12% (Q1 adjusted1 +28%, Q1 reported +21%), book value per share +12% (Q1 +18%) and CET1 13%+ (Q1 13.5%)
  • Net interest income and net interest margin (NIM)2 were both higher on a y/y and q/q basis with the full-year 2022 outlook for NIM remaining strong and stable as previously indicated, supported by systems and tools put in place over the years to manage margins, even in a changing rate environment

Personal Banking Asset Growth 20% to $23.2 Billion

  • Single family alternative portfolio +37% y/y and +7% q/q to $15.4 billion (2022 annual guidance +12-15%), with originations +63% y/y supported by deep broker partnerships and a decline in loan attrition
  • Reverse mortgage assets +262% y/y to $304 million (2022 annual guidance +150%) reflecting expanded distribution and growing brand awareness of Equitable as an attractive provider of reverse mortgages to Canadians nearing or in retirement
  • Insurance lending (CSV) +91% y/y to nearly $60 million (2022 annual guidance +100%) assisted by the introduction of Immediate Financing Arrangement, enabling customers who purchase whole life insurance policies with an Equitable insurance partner to immediately access 100% of their total annual premium as equity as well as by the addition of Equitable Life of Canada as one of nine leading insurers to partner with Equitable
  • During Q1, the Bank introduced Equitable Connect, a digital portal enabling mortgage brokers to more easily submit and manage client documentation as part of the origination process for alternative, prime and reverse mortgages, and the Bank to send real-time communication and status updates on the fulfillment process

_______________________________

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" section.
2. These are non-Generally Accepted Accounting Principles (GAAP) measures, see the "Non-GAAP financial measures" section.


Commercial Asset Growth 16% Y/Y to $10.9 Billion on Diversified Platform Expansion 

  • Conventional commercial loan asset expansion +26% y/y to $6.0 billion on +16% growth in Commercial Finance Group loan portfolio (2022 annual guidance +10-15%), +19% growth in Business Enterprise Solutions (2022 annual guidance +10-15%) and +178% growth in Specialized Finance (2022 annual guidance +20-30%)
  • Equipment leasing portfolio +31% y/y to $773 million (2022 annual guidance +10-15%) with 69% of new assets comprised of high credit-quality prime leases
  • Multi-unit insured portfolio +2% to $4.2 billion (2022 guidance 0-5%)

EQ Bank Again Named Top in Canada by Forbes

  • With EQ Bank customer growth of +32% y/y to 266,188 (including 15,000+ new account openings in the first quarter, further increasing to more than 270,000 as of May 1, 2022), EQ Bank continues to demonstrate why its digital platform is a better choice for Canadians who are looking to gain an edge through features that are built to help customers make more money, save time and benefit from transparency
  • EQ Bank deposits increased $1.5 billion or 25% y/y (2022 annual guidance +20-30%) to $7.3 billion
  • With the second quarter introduction of AI-enabled identity verification technology, opening an EQ Bank account using various forms of government-issued ID should become even easier for customers and is expected to support additional account and deposit growth
  • In recognition of its leadership, the EQ Bank platform was recently named top Schedule I Bank in Canada on the Forbes World's Best Banks list for 2022 – a title it also held in 2021

Solid Progress on Path to Closing the Acquisition of Concentra Bank in 2022

  • On February 7, 2022, Equitable Bank announced its intent to acquire Concentra Bank for an estimated $470 million, Canada's 13th largest Schedule I bank, which will add new customers, significant scale in core business lines and the opportunity to achieve mid-single digit EPS accretion in the first full year following closing including from $30 million+ in annual synergies within the first two years
  • The acquisition is subject to satisfaction of customary closing conditions and receipt of required regulatory approvals, including those required under the Bank Act (Canada), the Trust and Loan Companies Act (Canada), and the Competition Act (Canada)
  • A formal Application to acquire a significant and controlling interest in Concentra Bank was filed with OSFI on February 28, 2022 and is currently undergoing review for approval

Credit Quality Indicators Reflect Long-Term Success in Risk Management

  • PCL was a net benefit of $0.1 million in Q1 2022 (Q1 2021 net benefit $0.8 million, Q4 2021 benefit $1.4 million) as future expected losses recorded in 2020 continued to be released because of improving macroeconomic variables
  • Net impaired loans declined to 0.22% at March 31, 2022 compared to 0.36% a year ago reflecting net reductions of $26.8 million in single family mortgages and $6.9 million of equipment leases over the past 12 months, partially offset by $6.0 million in conventional commercial loans. Management does not expect to incur material loss on these loans
  • Equitable remains well reserved for credit losses with allowances as a percentage of total loan assets of 14 bps at March 31, 2022 compared to 22 bps at March 31, 2021
  • Realized losses were less than 1 basis point of total loan assets or $1.0 million in Q1 – better even than the Bank's industry-leading 10-year credit history– compared to $2.5 million or 3 basis points in Q1 2021
  • The Bank's risk management outlook for full-year 2022 is founded on a constructive view of Canadian residential and commercial real estate with expected credit loss provisions to return to pre-pandemic levels, assuming the Canadian economy continues on its path to recovery, while mortgage arrears rates in both the Personal and Commercial Bank segments are expected to remain low

Strong Capital and Liquidity Even with Record Capital Deployment

  • Liquid assets1 were $3.0 billion or 8.0% of total assets at March 31, 2022, a prudent level that reflects upcoming obligations, compared to the deliberately elevated level of $3.2 billion or 10.2% a year ago when pandemic-related uncertainties were much higher. Retail and securitization funding markets remain liquid and efficient
  • Equitable Bank's Common Equity Tier 1 ratio1 was 13.5% at March 31, 2022 compared to 13.3% at December 31, 2021, driven by quarterly earnings retention and a $50 million capital investment funded through Equitable Group Inc.'s new funding facility

New Milestone Reached with Bank's Institutional Deposit Note Program

  • During the first quarter, the Bank simultaneously closed two deposit note offerings, raising a combined total of $500 million – its largest total issuance to date – to bring its total Deposit Note program to $1.95 billion
  • Included in the successful offering was a $250 million, 1.8-year fixed rate note at 2.753% due December 4, 2023 and a $250 million, 4-year fixed rate note at 3.362% due March 2, 2026, priced respectively at 123 and 162 basis points over the interpolated Government of Canada bond curve
  • Despite market volatility, both offerings were well oversubscribed, reflecting investor confidence in the Bank
  • Retail funding markets also feature extraordinary liquidity compared to historical norms, supporting further deposit growth potential

NCIB and DRIP

  • In the first quarter, Equitable's common share Dividend Reinvestment Plan (DRIP) was reinstated to enable shareholders to reinvest their cash dividends to purchase additional common shares at a 2% discount to the volume weighted average trading price of the shares on the TSX for the five trading days immediately preceding the dividend payment date. Common shares issued through the DRIP are from the Bank's treasury
  • In the fourth quarter of 2021, Equitable Group renewed its normal course issuer bid (NCIB), allowing it to repurchase up to 2,325,951 of its common shares and 289,340 of its non-cumulative 5-year reset preferred shares Series 3, representing approximately 10% of its public float as at December 10, 2021. No shares were purchased under this renewed NCIB during the first quarter

 ______________________________________

1. For information about these financial and banking measures and terms, see the "Other financial and banking measures and terms" section. 


Equitable Announces 4% Q/Q Increase in Common Share Dividend or 57% Y/Y Growth

  • Equitable's Board of Directors declared a common share dividend of $0.29 per common share or $1.16 annualized, payable on June 30, 2022 to shareholders of record June 15, 2022
  • This represents an 57% increase over the $0.185 dividend declared a year ago or a 4% increase over the dividend declared in February 2022
  • The latest increase reflects Equitable's philosophy of growing the dividend while maintaining a payout ratio that is much lower than other Canadian banks and using incremental capital to fuel asset expansion with high future ROE as well as the recent lifting of a pandemic-related regulatory moratorium restricting Canadian banks from raising dividends
  • Equitable's Board also declared a quarterly dividend of $0.373063 per preferred share, payable on June 30, 2022 to preferred shareholders of record at the close of business June 15, 2022
  • Equitable's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada) and any similar provincial and territorial legislation

Equitable Produces First-Ever ESG Report  

  • In May 2022, the Bank issued its inaugural Environmental, Social and Governance (ESG) Report, providing detailed data on its dedicated environmental and social programs that are overseen by the Board of Directors through the recently expanded mandate of its Governance and Nominating Committee
  • The Report, available on the Bank's Investor Relations website, is modelled on industry best practices and recommendations made by the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures
  • As a result of the Bank's focus on ESG, Equitable's Sustainalytics risk rating improved to 21.1, its MSCI rating is AA and S&P's Global Corporate Sustainability Assessment of Equitable significantly improved year over year

Institutional Investor Day Set for June 13, 2022 in Person

  • Equitable's senior leadership team will showcase the next phase of the Bank's strategies, profile growth opportunities and elaborate on digital innovations at the Globe & Mail Centre in Toronto's King East Design District
  • A replay will be available at eqbank.investorroom.com following the event

"Every measure of Equitable's performance in Q1, whether reported or adjusted, demonstrated that challenging the status quo in Canadian banking with purpose is creating value for our stakeholders. In addition to expanding adjusted revenue1 by 26% (reported +25%) and earnings1 by 34% (reported +27%) year over year, we continued to invest in top talent, process and product innovation – while again delivering a Canadian banking best-in-class efficiency ratio. Our strategic focus on conventional asset growth, and diversification in sources and uses of funding is allowing us to maintain strong and stable margin performance while deploying resources to closing the Concentra Bank acquisition later in 2022. With these priorities and our resilient business model across economic cycles, we have conviction in the Bank's ability to achieve consistent north-star performance of greater than 15% ROE for the full year of 2022, building off the foundation of our record results in the first quarter," said Chadwick Westlake, Chief Financial Officer of Equitable.

Analyst Conference Call and Webcast: 8:30 a.m. ET Eastern May 11, 2022

Equitable will host its first quarter conference call and webcast on Wednesday May 11, 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 May 25, 2022 at midnight at (416) 764-8677 (passcode 369923 followed by the number sign). Alternatively, the webcast will be archived on the Bank's website.

________________________________

1. For information about these financial and banking measures and terms, see the "Other financial and banking measures and terms" section. 

 

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets (unaudited)

($000s) As at

March 31, 2022

December 31, 2021

March 31, 2021

Assets:




Cash and cash equivalents

725,281

773,251

596,267

Restricted cash

448,631

462,164

532,693

Securities purchased under reverse repurchase agreements

-

550,030

350,037

Investments

1,220,397

1,033,438

611,718

Loans – Personal

23,324,211

22,421,603

19,507,100

Loans – Commercial

10,893,131

10,479,159

9,384,917

Securitization retained interests

220,685

207,889

187,866

Other assets

317,632

231,536

183,939


37,149,968

36,159,070

31,354,537

Liabilities and Shareholders' Equity




Liabilities:




   Deposits

22,238,382

20,856,383

17,609,846

   Securitization liabilities

10,966,178

11,375,020

11,731,668

   Obligations under repurchase agreements

880,203

1,376,763

-

   Deferred tax liabilities

64,488

63,141

63,269

   Funding facilities

324,575

200,128

-

   Subscription receipts

230,386

-

-

   Other liabilities

407,920

335,001

217,975


35,112,132

34,206,436

29,622,758

Shareholders' equity:




   Preferred shares

70,607

70,607

72,194

   Common shares

232,854

230,160

224,397

   Contributed surplus

9,357

8,693

7,722

   Retained earnings

1,727,169

1,650,757

1,449,715

   Accumulated other comprehensive loss

(2,151)

(7,583)

(22,249)


2,037,836

1,952,634

1,731,779


37,149,968

36,159,070

31,354,537

 

Consolidated statements of income (unaudited)

($000s, except per share amounts) Three month period ended

March 31, 2022

March 31, 2021

Interest income:



     Loans – Personal

173,780

161,057

     Loans – Commercial

115,746

101,258

     Investments

3,855

2,899

     Other

2,859

2,620


296,240

267,834

Interest expense:



     Deposits

84,472

77,785

     Securitization liabilities

49,290

55,892

     Bank facilities

306

191


134,068

133,868

Net interest income

162,172

133,966

Non-interest income:



     Fees and other income

6,033

5,575

     Net loss on loans and investments

4,798

(1,461)

     Gains on securitization activities and income from securitization retained interests

14,615

12,090


25,446

16,204

Revenue

187,618

150,170

Provision for credit losses

(125)

(772)

Revenue after provision for credit losses

187,743

150,942

Non-interest expenses:



     Compensation and benefits

36,772

28,973

     Other

38,161

28,344


74,933

57,317

Income before income taxes

112,810

93,625

Income taxes:



     Current

23,516

22,042

     Deferred

1,347

2,389


24,863

24,431

Net income

87,947

69,194

Dividends on preferred shares

1,089

1,114

Net income available to common shareholders

86,858

68,080

Earnings per share:



     Basic

2.55

2.01

     Diluted

2.51

1.98

 

Consolidated statements of comprehensive income (unaudited)

($000s) Three month period ended

March 31, 2022

March 31, 2021

Net income

87,947

69,194

Other comprehensive income – items that will be reclassified subsequently to income:



Debt instruments at Fair Value through Other Comprehensive Income:



   Net unrealized losses from change in fair value

(21,369)

(1,658)

   Reclassification of net losses to income

2,277

1,139

Other comprehensive income – items that will not be reclassified subsequently

to income:



Equity instruments designated at Fair Value through Other Comprehensive Income:



   Net unrealized (losses) gains from change in fair value

(1,425)

9,728

   Reclassification of net losses to retained earnings

1,209

-


(19,308)

9,209

Income tax recovery (expense)

5,063

(2,418)


(14,245)

6,791

Cash flow hedges:



Net unrealized gains from change in fair value

26,241

13,910

Reclassification of net losses (gains) to income

429

(465)


26,670

13,445

Income tax expense

(6,993)

(3,533)


19,677

9,912

Total other comprehensive income

5,432

16,703

Total comprehensive income

93,379

85,897

 

Consolidated statements of changes in shareholders' equity (unaudited)

($000s)                                                                                                                                                                                                                                                            March 31, 2022


Preferred
Shares

Common
Shares

Contributed 
Surplus

Retained
Earnings

Accumulated other comprehensive
income (loss)

Total

Cash Flow
Hedges

Financial
Instruments at
FVOCI

Total

Balance, beginning
of period

70,607

230,160

8,693

1,650,757

680

(8,263)

(7,583)

1,952,634

Net Income

-

-

-

87,947

-

-

-

87,947

Realized loss on sale of shares

-

-

-

(896)

-

-

-

(896)

Other comprehensive income, net of tax

-

-

-

-

19,677

(14,245)

5,432

5,432

Exercise of stock options

-

2,405

-

-

-

-

-

2,405

Dividends:









   Preferred shares

-

-

-

(1,089)

-

-

-

(1,089)

   Common shares

-

-

-

(9,550)

-

-

-

(9,550)

Stock-based

compensation

-

-

953

-

-

-

-

953

Transfer relating to

the exercise of stock

options

-

289

(289)

-

-

-

-

-

Balance, end of period

70,607

232,854

9,357

1,727,169

20,357

(22,508)

(2,151)

2,037,836

($000s)                                                                                                                                                                           March 31, 2021

Balance, beginning of period

72,477

218,166

8,092

1,387,919

(19,943)

(19,009)

(38,952)

1,647,702

Net Income

-

-

-

69,194

-

-

-

69,194

Other comprehensive income, net of tax

-

-

-

-

9,912

6,791

16,703

16,703

Exercise of stock options

-

5,226

-

-

-

-

-

5,226

Purchase of treasury

preferred shares

(283)

-

-

-

-

-

-

(283)

Net loss on

cancellation of

treasury preferred

shares

-

-

-

(10)

-

-

-

(10)

Dividends:









   Preferred shares

-

-

-

(1,114)

-

-

-

(1,114)

   Common shares

-

-

-

(6,274)

-

-

-

(6,274)

Stock-based

compensation

-

-

635

-

-

-

-

635

Transfer relating to

the exercise of stock

options

-

1,005

(1,005)

-

-

-

-

-

Balance, end of period

72,194

224,397

7,722

1,449,715

(10,031)

(12,218)

(22,249)

1,731,779

 

Consolidated statements of cash flows (unaudited)

($000s) Three month period ended

March 31, 2022

March 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES



Net income

86,858

69,194

Adjustments for non-cash items in net income:



       Financial instruments at fair value through income

(1,727)

(7,390)

       Amortization of premiums/discount on investments

300

18

       Amortization of capital assets and intangible costs

8,833

7,337

       Provision for credit losses

(125)

(772)

       Securitization gains

(4,628)

(4,178)

       Stock-based compensation

953

635

       Income taxes

24,863

24,431

       Securitization retained interests

12,418

10,679

Changes in operating assets and liabilities:



       Restricted cash

13,533

(28,654)

       Securities purchased under reverse repurchase agreements

550,030

100,166

       Loans receivable, net of securitizations

(1,342,712)

(647,107)

       Other assets

(4,267)

5,907

       Deposits

1,409,648

1,028,166

              Securitization liabilities

(401,560)

(260,329)

Obligations under repurchase agreements

(496,560)

(251,877)

       Funding facilities

124,447

-

       Subscription receipts

230,386

-

       Other liabilities

46,697

35,578

Income taxes paid

(65,042)

(17,225)

Cash flows from operating activities

192,345

64,579

CASH FLOWS FROM FINANCING ACTIVITIES



       Proceeds from issuance of common shares

2,405

5,226

       Dividends paid on preferred shares

(1,089)

(1,114)

       Dividends paid on common shares

(9,550)

(6,274)

Cash flows used in financing activities

(8,234)

(2,162)

CASH FLOWS FROM INVESTING ACTIVITIES



       Purchase of investments

(57,900)

(31,307)

       Proceeds on sale or redemption of investments

111,468

16,355

       Net change in Canada Housing Trust re-investment accounts

(273,221)

(425)

       Purchase of capital assets and system development costs

(12,428)

(8,516)

Cash flows used in investing activities

(232,081)

(23,893)

Net (decrease) increase in cash and cash equivalents

(47,970)

38,524

Cash and cash equivalents, beginning of period

773,251

557,743

Cash and cash equivalents, end of period

725,281

596,267

Cash flows from operating activities include:



Interest received

271,048

338,505

Interest paid

(122,071)

(139,957)

Dividends received

1,271

1,482

 

About Equitable

Equitable Group Inc. trades on the Toronto Stock Exchange (TSX: EQB, EQB.PR.C and EQB.R) and serves more than 340,000 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) 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 the Bank 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 the Bank's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to the Bank'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", "guidance", "planned", "estimates", "forecasts", "outlook", "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", "should", "might" or "will be taken", "occur", "be achieved", "will likely" 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 the Bank 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 including, without limitation, impacts as a result of COVID-19, global geopolitical risk, 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 the Bank'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 Bank and the Canadian economy.  Although the Bank 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 Bank in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its loan business, a continuation of the current level of economic uncertainty that affects real estate market conditions including, without limitation, impacts as a result of COVID-19, 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 Bank 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

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 the Bank'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 in the second half of 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 the Bank's performance, adjusted results are being introduced starting Q1 2022.  Adjusted results are non-GAAP financial measures.

Adjustments impacting current and prior periods:

Concentra acquisition/integration costs, pre-tax:

  • Q1 2022 – $5.1 million of acquisition and integration related costs and $0.9 million of interest expenses paid to subscription receipt holders1, and
  • Q4 2021 – $0.7 million of acquisition costs.

_________________________________________

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 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. 

 

The following table presents a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results.

Reconciliation of reported and adjusted financial results



As at or for the three months ended




31-Mar-22

31-Dec-21

31-Mar-21

    Reported financial results ($ thousands)






     Net interest income



162,172

155,952

133,966

     Non-interest income



25,446

15,911

16,204

   Revenue



187,618

171,863

150,170

     Non-interest expense



74,933

70,427

57,317

     Pre-provision pre-tax income



112,685

101,436

92,853

     Provision for credit loss



(125)

(1,420)

(772)

     Income tax expense



24,862

22,795

24,431

   Net income



87,948

80,061

69,194

     Net income available to common shareholders



86,858

78,973

68,080

Adjustments ($ thousands)






     Interest expenses – paid to Subscription Receipt holders(1)



914

-

-

     Non-interest expenses – acquisition/integration related costs



5,133

725

-

     Pre-tax adjustments



6,047

725

-

     Income tax expense(2)



1,584

190

-

     Post-tax adjustments



4,463

535

-

Adjusted financial results ($ thousands)






     Net interest income



163,086

155,952

133,966

      Non-interest income



25,446

15,911

16,204

      Revenue



188,532

171,863

150,170

     Non-interest expense



69,800

69,702

57,317

     Pre-provision pre-tax income



118,732

102,161

92,853

     Provision for credit loss



(125)

(1,420)

(772)

     Income tax expense



26,447

22,985

24,431

     Net income



92,410

80,596

69,194

     Net income available to common shareholders



91,321

79,508

68,080

Diluted earnings per share ($, except number of shares)






     Weighted average number of diluted common shares outstanding



34,545,393

34,538,314

34,314,264

     Diluted earnings per share - reported



2.51

2.29

1.98

     Diluted earnings per share - adjusted



2.64

2.30

1.98

     Impact of adjustments on diluted earnings per share



0.13

0.01

-

(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 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.

 

• Reconciliation of adjusted efficiency ratio

($000s, except percentages)

31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Non-interest expenses - reported

74,933

70,427

6%

57,317

31%

Adjustments on a pre-tax basis:

     Non-interest expenses – integration related costs

(5,133)

(725)

608%

-

N/A

Non-interest expenses – adjusted

69,800

69,702

0%

57,317

22%







Revenue - reported

187,618

171,863

9%

150,170

25%

Adjustment on a pre-tax basis:






     Interest expenses – paid to Subscription Receipt holders

914

-

N/A

-

N/A

Revenue - adjusted

188,532

171,863

10%

150,170

26%

Efficiency ratio - adjusted

37.0%

40.6%

(3.6%)

38.2%

(1.2%)

 

• Reconciliation of adjusted return on equity (ROE)

($000s, except percentages)

31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Net income available to common shareholders – reported

86,858

78,973

10%

68,080

28%

Adjustments on an after-tax basis:

     Costs associated with Concentra acquisition

4,463

535

734%

-


N/A

Net income available to common shareholders – adjusted Weighted average common equity outstanding - adjusted

91,3211,926,646

79,508

1,841,008

15%

5%

68,080

1,617,447

34%

19%

Return on equity - adjusted

19.2%

17.1%

2.1%

17.1%

2.1%

 

Other non-GAAP measures and ratios 

• Assets under management (AUM): is the sum of total assets reported on the consolidated balance sheet  and loan principal derecognized but still managed by the Bank.

($000s)

31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Total assets on the consolidated balance sheet

37,149,968

36,159,070

3%

31,354,537

18%

Loan principal derecognized

6,272,342

5,860,830

7%

5,386,980

16%

Assets under management

43,422,310

42,019,900

3%

36,741,517

18%


• Conventional loans: are the total on-balance sheet loan principal excluding Prime single family and Insured multi-unit residential mortgages.

($000s)

31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Alternative single family mortgages

15,399,287

14,392,904

7%

11,257,582

37%

Reverse mortgages

304,285

247,363

23%

84,027

262%

Cash surrender value loans

59,196

49,142

20%

31,061

91%

Total Conventional loans – Personal

15,762,768

14,689,409

7%

11,372,670

39%







Business Enterprise Solutions

1,154,573

1,086,826

6%

966,317

19%

Commercial Finance Group

4,111,394

3,942,836

4%

3,532,112

16%

Specialized finance

714,856

645,588

11%

256,760

178%

Equipment leasing

772,868

732,682

5%

589,456

31%

Total Conventional loans – Commercial

6,753,691

6,407,932

5%

5,344,645

26%

Total Conventional loans

22,516,459

21,097,341

7%

16,717,315

35%


Net interest margin (NIM): this profitability measure is calculated on an annualized basis by dividing net interest income by the average total interest earning assets for the period.

Pre-provision pre-tax income: is the difference between revenue and non-interest expenses.

Other financial and banking measures and terms

• Book value per common share: is calculated by dividing common shareholders' equity by the number of      common shares outstanding.

($000s)

31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Shareholders' equity

2,037,836

1,952,634

4%

1,731,779

18%

Preferred shares

(70,607)

(70,607)

0%

(72,194)

(2%)

Common shareholders' equity

1,967,229

1,882,027

5%

1,659,585

19%

Common shares outstanding

34,130,326

34,070,810

0%

33,917,172

1%

Book value per common share - reported

57.64

55.24

4%

48.93

18%


CET1 ratio: this key measure of capital strength is defined as CET1 Capital as a percentage of total RWA.   This ratio is calculated for the Bank in accordance with the guidelines issued by OSFI. CET1 Capital is defined as shareholders' equity plus any qualifying other non-controlling interest in subsidiaries less preferred shares issued and outstanding, any goodwill, other intangible assets and cash flow hedge reserve components of accumulated other comprehensive income.

• Efficiency ratio: this measure is used to assess the efficiency of the Bank's cost structure in terms of revenue generation. This ratio is derived by dividing non-interest expenses by revenue. A lower efficiency ratio reflects a more efficient cost structure.

($000s, except percentages)

For the three months ended


31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Non-interest expenses

74,933

70,427

6%

57,317

31%

Revenue

187,618

171,863

9%

150,170

25%

Efficiency ratio - reported

39.9%

41.0%

(1.1%)

38.2%

1.7%


Liquid assets: is a measure of the Bank's cash or assets that can be readily converted into cash, which are held for the purposes of funding loans, deposit maturities, and the ability to collect other receivables and settle other obligations.

Operating leverage: is the growth rate in revenue less the growth rate in non-interest expenses.

• Return on equity (ROE): this profitability measure is calculated on an annualized basis and is defined as net income available to common shareholders as a percentage of the weighted average common equity outstanding during the period.

($000s, except percentages)

For the three months ended


31-Mar-22

31-Dec-21

Change

31-Mar-21

Change

Net income available to common shareholders

86,858

78,973

10%

68,080

28%

Weighted average common equity outstanding

1,923,879

1,841,008

5%

1,617,447

19%

Return on equity - reported

18.3%

17.0%

1.3%

17.1%

1.2%


Risk-weighted assets (RWA): represents the Bank's assets and off-balance sheet exposures, weighted according to risk as prescribed by OSFI under the CAR Guideline.

View original content to download multimedia:https://www.prnewswire.com/news-releases/equitable-delivers-record-earnings-roe-surpasses-top-end-of-target-range-dividend-increases-again-301544415.html

SOURCE Equitable Group Inc.

Read More

Continue Reading

International

Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

Published

on

It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

Read More

Continue Reading

Government

Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

Published

on

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

Read More

Continue Reading

Government

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

Published

on

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

Read More

Continue Reading

Trending