Canada's
Challenger Bank™ Provides First Outlook for 2022 – Continued
Momentum
TORONTO, Nov. 2, 2021 /CNW/ - Equitable Group Inc. (TSX:
EQB and EQB.PR.C) (Equitable or the Bank) today reported
substantial growth in conventional loans and deposits for the three
and nine months ended September 30,
2021 as Equitable Bank (Canada's Challenger Bank™) delivered to
plan, served its purpose of driving change that enriches the lives
of Canadians and laid the groundwork for a very positive 2022
performance outlook.
Assets under management (AUM) +13% y/y
Conventional loans +22% y/y to $19.4
billion
- Alternative single-family originations 3x higher y/y
Reverse mortgage assets +259% y/y
- Market share gains from channel strategy
EQ Bank deposits +60% y/y to $6.9
billion
- Customers increased 60% y/y to 237,000
- Q3 digital transactions +74% and YTD +99% y/y
CETI ratio of 13.7%, 0.7% above 13.0% target floor
- Excess capital $88 million or
$5.17/share
Q3 earnings -2% y/y to $72.5
million
- Diluted EPS -4% y/y to $4.141, with half of the decline due
to an increase of 2% in shares outstanding
- Q3 2020 was elevated with higher gains on sale and reduced
expenses at that point of the pandemic
- YTD earnings +39% y/y to $212.5
million, diluted EPS +38% to $12.151
Q3 ROE 16%, within 15-17% target
- YTD Q3 16.6% despite the impact of excess capital
Book Value per share +19% y/y to $105.801
- Exceeding target of 12-15% growth
Q3 Efficiency ratio 41.6%
- YTD 40.3%, compared to 39-41% 2021 target
1
|
On a post stock split
basis, diluted EPS for Q3 and YTD were $2.07 and $6.08,
respectively, Book value per share was $52.90.
|
"Three quarters of consistent performance put us within striking
distance of achieving our elevated growth targets for 2021 and
provide clear evidence that Canadians prefer a digital-first
Challenger Bank experience. Through our expanding fintech services,
EQ Bank is establishing itself as the everyday hub where Canadians
can conveniently perform their most important transactions quickly
while saving more money for the future. We are particularly pleased
that deposits in our new EQ Bank US Dollar Account surpassed
our full-year growth ambitions in just over one quarter. In
lending, the story is the same. We are challenging and driving
positive change such that conventional loan principal increased
$1.7 billion or 9% from Q2, and
$3.5 billion or 22% year over year. A
clear highlight within our conventional business is single-family
originations which were three-fold higher than last year due to our
leadership of the alternative lending market. For our shareholders,
the future is bright. By allocating more capital to higher-return
but risk-managed conventional loan assets, which accounted for 73%
of originations to date this year and adding a covered bond program
in Q3 to reduce future funding costs, we are on pace for record
earnings and our outlook for 2022 is positive," said Andrew
Moor, President and Chief Executive Officer.
Equitable on Pace to Achieve 2021 Growth Targets
- Given the trajectory for assets and deposits through the first
nine months of year, the Bank is on track and in some cases ahead
of its high-growth ambition for 2021.
- EQ Bank deposits +$2.6 billion y/y or +60%, compared to a
30-50% target.
- Total loan growth +14% y/y, ahead of the Bank's 2021 y/y target
of 8-12%.
- Conventional loan growth +22% y/y, combined with favourable
spreads in Q3 that contributed to record results on a year-to-date
basis.
EQ Bank Today Serves 240,000 Customers and Deposits Surpass
$7 Billion
- At the end of Q3, EQ Bank customers increased over 88,000 y/y
to approximately 237,000. This momentum continued following
quarter-end to now more than 240,000 customers.
- A new e-transfer service was introduced in Q3, significantly
enriching the customer experience, modernizing the underlying
technology infrastructure and helping set the groundwork for EQ
Bank to be an early participant in the Real-Time Rail.
- Service innovations and enhancements resulted in a 28% increase
in average products per customer y/y and enabled digital
transactions to increase 99% in the first nine months of 2021 y/y,
reflecting growing customer engagement.
- With superior foreign exchange rates and ability to
cost-effectively transfer USDs worldwide, the new EQ Bank US
Dollar Account attracted nearly $150
million in deposits since its June
2021 launch, surpassing its first-year target in just over
one quarter.
Total Deposits Top $19.8
Billion on Diversified Customer and Channel
Growth
- Equitable Bank's total deposits +21% y/y to $19.8 billion, and +7% or + $1.3 billion sequentially.
- Sources of funding are becoming increasingly diversified,
comprised of EQ Bank ($6.9 billion),
Equitable Bank brokered deposits ($10.8
billion), deposit notes ($1.1
billion), strategic partnerships ($429 million) and covered bonds ($518 million).
Equitable Bank Launches First Covered Bonds in Europe as part of $2
Billion Program
- On September 16, 2021, the Bank
successfully issued €350 million of legislative covered bonds due
September 16, 2024 that are now
listed on the Euronext Dublin Exchange.
- The bonds were floated at a spread of 15 basis points over EUR
mid swaps and represent the lowest cost of wholesale funding
available to the Bank. More than 40 institutional investors
participated across 15 countries and the issuance was almost three
times oversubscribed.
Loans Under Management Reach $37.1
Billion with Above-Target Growth in Personal and Commercial
Loan Categories
- Loans Under Management +14% or +$4.6 billion y/y – driven by
growth in all Personal and Commercial segment business lines – and
+5%, or +$1.7 billion in Q3 2021.
- Loan principal for the Personal Bank +13% y/y to $21.3 billion on origination growth of +111% or
+$1.3 billion, while Commercial Bank loans were +17% to
$10.1 billion with originations +14%
or +$155 million.
- Growth in the Personal Bank portfolio was headlined by a 20%
y/y increase in alternative single family mortgage principal
(full-year target 12-15%) – a key driver of Bank earnings – where
Q3 originations amounted to $2.0
billion, three times the originations a year ago, with
assets now totalling $13.3
billion.
- Growth in the Commercial Bank portfolio was led by a 21% y/y
increase in Commercial Finance Group loans (full-year target
20-25%) on record quarterly originations of $741.5 million and included a 14% increase in
Business Enterprise Solutions (full-year target 7-10%), a 7%
increase in Multi-unit Insured (full-year target a slight decline),
an 86% increase in Specialized Finance (full-year target 20-25%)
and a 25% increase in Equipment Leasing primarily to logistics and
transportation sectors (full-year target 5-8%).
Wealth Decumulation Book Surpasses $200 Million, Reverse Mortgages +259%
- Equitable Bank's Wealth Decumulation business increased assets
by 223% y/y to $216.5 million.
- Reverse mortgage loans +259% y/y (full-year growth target
200%+) to $175 million and 38% in Q3
2021 sequentially due to expanded market share driven by an
evolving channel strategy.
- Cash Surrender Value loans +127% y/y (full-year target 150%+)
to $41.6 million while distribution
continued to increase to include another new lending arrangement.
The agreement finalized with Foresters Financial during the quarter
provides qualifying policyholders with ready access to Equitable
Bank's market-leading product. CSV products are now available
through eight leading life insurance companies.
Credit Metrics Reflect Long-Term Prudence, Q3 Reserve Release
$4.8 Million
- PCL was a net benefit of $3.5
million in Q3 2021 (Q2 2021 – net benefit $2.0 million), as future expected losses recorded
in Q1 and Q2 2020 continued to be released.
- Net impaired loans declined to 0.23% of total loan assets at
September 30, 2021 compared to 0.33%
a year ago reflecting a reduction of $19.0
million year over year. Net impaired loans were also lower
than at the end of Q2 2021 by $50.2
million due to the resolution of two commercial loans of
$40.1 million and net reductions in
impaired single family mortgages and equipment leases.
- Equitable remains well reserved for credit losses with
allowances as a percentage of total loan assets equaling 17 bps at
September 30, 2021 reflecting a
decrease in allowances in stage 1 and 2 over last year.
- Stage 3 allowances increased by $0.1
million since Q2 2021 but decreased $1.3 million y/y.
- Realized losses remained low at 1 bps of total loan assets or
$1.2 million at September 30, 2021 compared to $2.0 million (3 bps of total loan assets) a year
ago.
- The Bank's outlook for all of 2021 is for credit loss
provisions on the loan book to remain low or reverse further in Q4
assuming the Canadian economy continues on its path to
recovery.
Strong Capital and Liquidity even with Profitable Capital
Deployment
- Liquid assets were $3.2 billion
or 9.3% of total assets at September 30,
2021, compared to $2.8 billion
or 9.1% a year ago, a level that reflects measures taken to
strengthen the Bank's liquidity position in light of ongoing
pandemic-related uncertainties, growth in demand deposits and
upcoming obligations. Retail and securitization funding markets
remain liquid and efficient.
- Common Equity Tier 1 ratio was 13.7% at September 30, 2021, well above the Bank's 13.0%
target floor, although lower than 14.4% at June 30, 2021 due to additional deployment of
capital to expand conventional lending.
Two-for-One Stock Split Reflects Growing Market Recognition
of Value
- With shareholder approval at a special meeting called for the
purpose, Equitable implemented a two-for-one split of issued and
outstanding common stock for shareholders of record on October 15, 2021 using a push-out method whereby
each holder received one additional security certificate for each
share held on October 25, 2021.
- The split makes ownership more accessible for investors and is
part of a broader program designed to close what management
believes is the material discount that exists between a fair
valuation of the Bank and where the shares trade today.
- Trading on a post-split basis took effect in October and will
be reflected in Q4 2021 reporting.
Mastercard and Equitable Bank Sign Strategic Agreement to
Bring Forward New Digital Payment Options
- Subsequent to quarter end, Equitable expanded its relationship
with Mastercard to deliver additional digital-first products,
solutions and experience to its EQ Bank customers. EQ Bank intends
to develop a payments card for launch in the second half of 2022 as
part of the Bank's broader, multi-year plan to aggressively
position for the payments' modernization effort led by Payments
Canada and add convenience for customers.
- The payments infrastructure developed as part of this payments
card will also help grow the Bank's fee income in part by enabling
entry into the BIN sponsorship business.
Equitable Bank Becomes Carbon Neutral, Progressing Along ESG
Journey
- Equitable has become carbon neutral in its Scope 1 and 2
greenhouse gas (GHG) emissions, reflecting its commitment to
sustainability.
- The Bank generates Scope 1 and 2 emissions per dollar of
revenue that are far below branch-based banks in Canada.
- Equitable intends to publish a 2022 ESG report and further
advance its climate risk-management activities.
Continued Momentum Expected with Early Outlook for
2022
- Equitable expects next year's performance will be positively
influenced by the carry-forward effect of growth in loans this
year, an asset mix favouring the Bank's high-value conventional
loan book, ongoing success in growing EQ Bank customer
relationships and the reduction in funding costs to be achieved
through expansion of its covered bond program.
- Formal 2022 growth targets will be published in the fourth
quarter 2021 MD&A but management's early expectations for 2022
include ROE of 15% or greater, BVPS greater than 12%, and CET1
greater than 13%.
- For portfolio specific guidance, please refer to the 2022
outlook comments in the Q3 2021 MD&A.
Directors Declare Dividends for Fourth Quarter 2021
- The Board of Directors today declared a dividend of
$0.185 per common share to be
paid on December 31, 2021 to common
shareholders of record at the close of business December 15, 2021.
- A dividend of $0.373063 per
preferred share will also be paid on December 31, 2021 to preferred shareholders of
record at the close of business on December
15, 2021.
- The dividend rate was unchanged from 2020 reflecting regulatory
guidance from OSFI to all federally regulated banks.
"As strong as 2021 performance has been, we expect 2022 to be
that much better as we benefit from the extra costs incurred and
investments made this year to expand our Challenger Bank deposit
and lending platforms in keeping with our broader societal
purpose," said Mr. Moor. "Working from the premise that Canadians
deserve a better banking experience is serving us well as we ramp
up our services, work on thoughtful technology and product
innovations and drive change that enriches the lives of our
customers, employees, shareholders and business partners."
Analyst Conference Call and Webcast: 8:30 a.m. Eastern Wednesday, November 3, 2021
Equitable's Andrew Moor,
President and Chief Executive Officer, Chadwick Westlake, Chief Financial Officer, and
Ron Tratch, Chief Risk Officer will
host the third quarter conference call and webcast.
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 November 10, 2021 at midnight at (416)
764-8677 (passcode 204381 followed by the number sign).
Alternatively, the webcast will be archived on the Bank's
website.
INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
|
|
Consolidated balance sheets (unaudited)
|
|
|
|
|
($000s) As
at
|
September 30,
2021
|
December 31,
2020
|
September 30,
2020
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
646,501
|
557,743
|
1,148,004
|
Restricted
cash
|
466,641
|
504,039
|
567,994
|
Securities purchased
under reverse repurchase agreements
|
600,007
|
450,203
|
200,008
|
Investments
|
829,561
|
589,876
|
554,975
|
Loans –
Personal
|
21,413,300
|
19,445,386
|
18,963,470
|
Loans –
Commercial
|
10,061,492
|
8,826,182
|
8,628,451
|
Securitization
retained interests
|
204,820
|
184,844
|
171,736
|
Other
assets
|
202,745
|
188,045
|
212,448
|
|
34,425,067
|
30,746,318
|
30,447,086
|
Liabilities and
Shareholders' Equity
|
|
|
|
Liabilities:
|
|
|
|
Deposits
|
19,932,120
|
16,585,043
|
16,603,178
|
Securitization liabilities
|
11,195,418
|
11,991,964
|
11,691,653
|
Obligations under repurchase agreements
|
804,300
|
251,877
|
154,364
|
Deferred
tax liabilities
|
70,118
|
60,880
|
55,691
|
Other
liabilities
|
221,354
|
208,852
|
218,038
|
Funding
facilities
|
330,479
|
-
|
150,261
|
|
32,553,789
|
29,098,616
|
28,873,185
|
Shareholders'
equity:
|
|
|
|
Preferred
shares
|
71,195
|
72,477
|
72,557
|
Common
shares
|
228,645
|
218,166
|
214,657
|
Contributed surplus
|
8,272
|
8,092
|
8,245
|
Retained
earnings
|
1,578,128
|
1,387,919
|
1,323,855
|
Accumulated other comprehensive loss
|
(14,962)
|
(38,952)
|
(45,413)
|
|
1,871,278
|
1,647,702
|
1,573,901
|
|
34,425,067
|
30,746,318
|
30,447,086
|
Consolidated statements of income (unaudited)
|
|
|
|
($000s, except per
share amounts)
|
Three months
ended
|
Nine months
ended
|
|
September 30,
2021
|
September 30,
2020
|
September 30,
2021
|
September 30,
2020
|
Interest
income:
|
|
|
|
|
Loans –
Personal
|
165,171
|
169,447
|
490,591
|
523,023
|
Loans –
Commercial
|
107,203
|
101,859
|
311,630
|
301,039
|
Investments
|
4,223
|
3,569
|
10,946
|
9,372
|
Other
|
2,209
|
3,872
|
7,435
|
13,039
|
|
278,806
|
278,747
|
820,602
|
846,473
|
Interest
expense:
|
|
|
|
|
Deposits
|
75,358
|
89,658
|
229,836
|
285,500
|
Securitization
liabilities
|
52,269
|
59,932
|
163,439
|
190,255
|
Funding
facilities
|
327
|
1,726
|
670
|
4,429
|
|
127,954
|
151,316
|
393,945
|
480,184
|
Net interest
income
|
150,852
|
127,431
|
426,657
|
366,289
|
Non-interest
income:
|
|
|
|
|
Fees and other
income
|
5,629
|
5,025
|
16,802
|
16,878
|
Net gain on loans and
investments
|
4,569
|
4,367
|
8,015
|
4,489
|
Gains on
securitization activities and income from securitization retained
interests
|
1,050
|
11,885
|
19,570
|
17,227
|
|
11,248
|
21,277
|
44,387
|
38,594
|
Revenue
|
162,100
|
148,708
|
471,044
|
404,883
|
Provision for credit
losses
|
(3,500)
|
(2,357)
|
(6,254)
|
42,177
|
Revenue after provision
for credit losses
|
165,600
|
151,065
|
477,298
|
362,706
|
Non-interest
expenses:
|
|
|
|
|
Compensation and
benefits
|
33,430
|
26,589
|
94,799
|
79,737
|
Other
|
34,012
|
26,476
|
94,950
|
78,975
|
|
67,442
|
53,065
|
189,749
|
158,712
|
Income before income
taxes
|
98,158
|
98,000
|
287,549
|
203,994
|
Income
taxes:
|
|
|
|
|
Current
|
23,102
|
18,927
|
65,842
|
50,613
|
Deferred
|
2,583
|
5,145
|
9,239
|
1,001
|
|
25,685
|
24,072
|
75,081
|
51,614
|
Net income
|
72,473
|
73,928
|
212,468
|
152,380
|
Dividends on preferred
shares
|
1,099
|
1,119
|
3,324
|
3,357
|
Net income available to
common shareholders
|
71,374
|
72,809
|
209,144
|
149,023
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
4.20
|
4.33
|
12.33
|
8.87
|
Diluted
|
4.14
|
4.30
|
12.15
|
8.81
|
|
|
|
|
|
|
Consolidated statements of comprehensive income (unaudited)
|
|
|
|
($000s)
|
Three months
ended
|
Nine months
ended
|
|
September 30,
2021
|
September 30,
2020
|
September 30,
2021
|
September 30,
2020
|
Net income
|
72,473
|
73,928
|
212,468
|
152,380
|
Other comprehensive
income – items that will be reclassified subsequently to
income:
|
|
|
|
|
Debt instruments at
Fair Value through Other Comprehensive Income:
|
|
|
|
|
Net unrealized
(losses) gains from change in fair value
|
(502)
|
1,091
|
(3,730)
|
4,165
|
Reclassification of
net (gains) losses to income
|
(1,264)
|
(281)
|
54
|
(1,300)
|
Other comprehensive
income – items that will not be reclassified subsequently to
income:
|
|
|
|
|
Equity instruments
designated at Fair Value through Other Comprehensive
Income:
|
|
|
|
|
Net unrealized gains
(losses) from change in fair value
|
1,151
|
5,901
|
17,253
|
(10,768)
|
|
(615)
|
6,711
|
13,577
|
(7,903)
|
Income tax recovery
(expense)
|
163
|
(1,773)
|
(3,566)
|
2,088
|
|
(452)
|
4,938
|
10,011
|
(5,815)
|
Cash flow
hedges:
|
|
|
|
|
Net unrealized gains
(losses) from change in fair value
|
3,189
|
1,770
|
19,254
|
(31,584)
|
Reclassification of net
(gains) losses to income
|
(61)
|
418
|
(295)
|
3,028
|
|
3,128
|
2,188
|
18,959
|
(28,556)
|
Income tax (expense)
recovery
|
(822)
|
(578)
|
(4,980)
|
7,544
|
|
2,306
|
1,610
|
13,979
|
(21,012)
|
Total other
comprehensive income (loss)
|
1,854
|
6,548
|
23,990
|
(26,827)
|
Total comprehensive
income
|
74,327
|
80,476
|
236,458
|
125,553
|
Consolidated statements of changes in shareholders' equity (unaudited)
|
|
($000s) Three month
period ended
|
September 30,
2021
|
|
|
|
|
|
Accumulated
other
comprehensive income
(loss)
|
|
|
Preferred
Shares
|
Common
Shares
|
Contributed
Surplus
|
Retained
Earnings
|
Cash Flow
Hedges
|
Financial
Instruments at
FVOCI
|
Total
|
Total
|
Balance, beginning of
period
|
72,001
|
224,997
|
8,237
|
1,513,118
|
(8,273)
|
(8,543)
|
(16,816)
|
1,801,537
|
Net Income
|
-
|
-
|
-
|
72,473
|
-
|
-
|
-
|
72,473
|
Other comprehensive
income, net of tax
|
-
|
-
|
-
|
-
|
2,306
|
(452)
|
1,854
|
1,854
|
Exercise of stock
options
|
-
|
3,060
|
-
|
-
|
-
|
-
|
-
|
3,060
|
Purchase of
treasury preferred
shares
|
(806)
|
-
|
-
|
-
|
-
|
-
|
-
|
(806)
|
Net loss on
cancellation of treasury preferred
shares
|
-
|
-
|
-
|
(71)
|
-
|
-
|
-
|
(71)
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(1,099)
|
-
|
-
|
-
|
(1,099)
|
Common
shares
|
-
|
-
|
-
|
(6,293)
|
-
|
-
|
-
|
(6,293)
|
Stock-based
compensation
|
-
|
-
|
623
|
-
|
-
|
-
|
-
|
623
|
Transfer relating to
the exercise of stock options
|
-
|
588
|
(588)
|
-
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
71,195
|
228,645
|
8,272
|
1,578,128
|
(5,967)
|
(8,995)
|
(14,962)
|
1,871,278
|
($000s) Three month
period ended
|
September 30,
2020
|
Balance, beginning of
period
|
72,557
|
213,701
|
7,818
|
1,257,268
|
(22,381)
|
(29,580)
|
(51,961)
|
1,499,383
|
Net Income
|
-
|
-
|
-
|
73,928
|
-
|
-
|
-
|
73,928
|
Other comprehensive
income, net of tax
|
-
|
-
|
-
|
-
|
1,610
|
4,938
|
6,548
|
6,548
|
Exercise of stock
options
|
-
|
812
|
-
|
-
|
-
|
-
|
-
|
812
|
Dividends:
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(1,119)
|
-
|
-
|
-
|
(1,119)
|
Common
shares
|
-
|
-
|
-
|
(6,222)
|
-
|
-
|
-
|
(6,222)
|
Stock-based
compensation
|
-
|
-
|
571
|
-
|
-
|
-
|
-
|
571
|
Transfer relating to
the exercise of stock options
|
-
|
144
|
(144)
|
-
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
72,557
|
214,657
|
8,245
|
1,323,855
|
(20,771)
|
(24,642)
|
(45,413)
|
1,573,901
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of changes in shareholders' equity
(unaudited)
|
|
|
|
|
($000s) Nine month
period
ended
|
September 30,
2021
|
|
|
Preferred
Shares
|
Common
Shares
|
Contributed
Surplus
|
Retained
Earnings
|
Accumulated
other comprehensive
income (loss)
|
|
|
|
Cash Flow
Hedges
|
Financial
Instruments at
FVOCI
|
Total
|
Total
|
|
Balance, beginning
of period
|
72,477
|
218,166
|
8,092
|
1,387,919
|
(19,943)
|
(19,009)
|
(38,952)
|
1,647,702
|
|
Net Income
|
-
|
-
|
-
|
212,468
|
-
|
-
|
-
|
212,468
|
|
Other comprehensive
income, net of tax
|
-
|
-
|
-
|
-
|
13,979
|
10,011
|
23,990
|
23,990
|
|
Exercise of stock
options
|
-
|
8,775
|
-
|
-
|
-
|
-
|
-
|
8,775
|
|
Purchase of
treasury preferred
shares
|
(1,282)
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,282)
|
|
Net loss on
cancellation of treasury preferred
shares
|
-
|
-
|
-
|
(91)
|
-
|
-
|
-
|
(91)
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(3,324)
|
-
|
-
|
-
|
(3,324)
|
|
Common
shares
|
-
|
-
|
-
|
(18,844)
|
-
|
-
|
-
|
(18,844)
|
|
Stock-based
compensation
|
-
|
-
|
1,884
|
-
|
-
|
-
|
-
|
1,884
|
|
Transfer relating to
the exercise of stock options
|
-
|
1,704
|
(1,704)
|
-
|
-
|
-
|
-
|
-
|
|
Balance, end of
period
|
71,195
|
228,645
|
8,272
|
1,578,128
|
(5,964)
|
(8,998)
|
(14,962)
|
1,871,278
|
|
($000s) Nine month
period ended
|
September 30,
2020
|
|
Balance, beginning of
period
|
72,557
|
213,277
|
6,973
|
1,193,493
|
241
|
(18,827)
|
(18,586)
|
1,467,714
|
|
Net Income
|
-
|
-
|
-
|
152,380
|
-
|
-
|
-
|
152,380
|
|
Other comprehensive
loss, net of tax
|
-
|
-
|
-
|
-
|
(21,012)
|
(5,815)
|
(26,827)
|
(26,827)
|
|
Exercise of stock
options
|
-
|
1,169
|
-
|
-
|
-
|
-
|
-
|
1,169
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
Preferred
shares
|
-
|
-
|
-
|
(3,357)
|
-
|
-
|
-
|
(3,357)
|
|
Common
shares
|
-
|
-
|
-
|
(18,661)
|
-
|
-
|
-
|
(18,661)
|
|
Stock-based
compensation
|
-
|
-
|
1,483
|
-
|
-
|
-
|
-
|
1,483
|
|
Transfer relating to
the exercise of stock options
|
-
|
211
|
(211)
|
-
|
-
|
-
|
-
|
-
|
|
Balance, end of
period
|
72,557
|
214,657
|
8,245
|
1,323,855
|
(20,771)
|
(24,642)
|
(45,413)
|
1,573,901
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of cash flows (unaudited)
|
|
|
|
|
|
($000s)
|
Three months
ended
|
Nine months
ended
|
Three and nine month
periods ended
|
September 30,
2021
|
September 30,
2020
|
September 30,
2021
|
September 30,
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
72,473
|
73,928
|
212,468
|
152,380
|
Adjustments for non-cash items in net income:
|
|
|
|
|
Financial instruments at fair value through income
|
(5,240)
|
(6,191)
|
(10,852)
|
8,153
|
Amortization of premiums/discount on investments
|
22
|
301
|
68
|
1,758
|
Amortization of capital assets and intangible costs
|
8,555
|
5,806
|
23,789
|
16,541
|
Provision for credit losses
|
(3,500)
|
(2,357)
|
(6,254)
|
42,177
|
Securitization gains
|
(3,084)
|
(11,693)
|
(15,439)
|
(16,976)
|
Stock-based compensation
|
623
|
571
|
1,884
|
1,483
|
Income taxes
|
25,685
|
24,072
|
75,081
|
51,614
|
Securitization retained interests
|
11,395
|
18,011
|
33,295
|
27,009
|
Changes in operating assets and liabilities:
|
|
|
|
|
Restricted cash
|
40,654
|
21,052
|
37,398
|
(105,002)
|
Securities purchased under reverse repurchase
agreements
|
(499,992)
|
364
|
(149,804)
|
(49,939)
|
Loans receivable, net of securitizations
|
(1,588,722)
|
91,169
|
(3,260,888)
|
(1,054,112)
|
Other assets
|
(8,276)
|
(22,910)
|
(3,078)
|
(26,900)
|
Deposits
|
1,350,465
|
744,324
|
3,359,352
|
1,148,638
|
Securitization liabilities
|
(284,294)
|
500,952
|
(792,361)
|
979,191
|
Obligations under repurchase agreements
|
603,029
|
(444,592)
|
552,423
|
(352,680)
|
Funding facilities
|
330,479
|
(350,113)
|
330,479
|
150,261
|
Other liabilities
|
3,544
|
(31,400)
|
15,191
|
(17,597)
|
Income taxes paid
|
(10,485)
|
(38,991)
|
(43,016)
|
(76,910)
|
Cash flows from operating activities
|
43,331
|
572,303
|
359,736
|
879,089
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from issuance of common shares
|
3,060
|
812
|
8,775
|
1,169
|
Dividends paid on preferred shares
|
(1,099)
|
(1,119)
|
(3,324)
|
(3,357)
|
Dividends paid on common shares
|
(6,293)
|
(6,222)
|
(18,844)
|
(18,661)
|
Cash flows used in financing activities
|
(4,332)
|
(6,529)
|
(13,393)
|
(20,849)
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase of investments
|
(189,056)
|
(27,563)
|
(673,906)
|
(297,340)
|
Proceeds on sale or redemption of investments
|
244,963
|
36,372
|
474,429
|
148,598
|
Net change in Canada Housing Trust re-investment accounts
|
(29,530)
|
10,796
|
(29,619)
|
(49,871)
|
Purchase of capital assets and system development costs
|
(10,627)
|
(7,063)
|
(28,489)
|
(20,476)
|
Cash flows
from (used in) investing activities
|
15,750
|
12,542
|
(257,585)
|
(219,089)
|
Net increase in cash and cash equivalents
|
54,749
|
578,316
|
88,758
|
639,151
|
Cash and cash equivalents, beginning of period
|
591,752
|
569,688
|
557,743
|
508,853
|
Cash and cash equivalents, end of period
|
646,501
|
1,148,004
|
646,501
|
1,148,004
|
Cash flows from operating activities include:
|
|
|
|
|
Interest received
|
256,184
|
278,199
|
764,336
|
833,558
|
Interest paid
|
(112,378)
|
(125,440)
|
(386,564)
|
(419,163)
|
Dividends received
|
1,198
|
4,867
|
4,114
|
7,943
|
About Equitable
Equitable Group Inc. ("Equitable")
trades on the Toronto Stock Exchange (TSX: EQB and EQB.PR.C) and
serves nearly three hundred thousand Canadians through its
wholly-owned subsidiary Equitable Bank, Canada's Challenger Bank™. Equitable Bank (the
"Bank") has grown to become the country's eighth largest
independent Schedule I bank with a clear mandate to drive real
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 #1 Bank in Canada on
the Forbes World's Best Banks 2021 list. 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",
"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 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, 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 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. 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
This news release references certain
non-GAAP measures such as Return on equity, Book value per common
share, Assets under management, Conventional loans, CET1 ratio,
Efficiency ratio, Loans under management, Liquid assets, that
management believes provide useful information to investors
regarding the Bank's financial condition and results of operations.
The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")
FINANCIAL MEASURES" section of the Bank's Q3 2021 MD&A provides
a detailed description of each non-GAAP measure and should be read
in conjunction with this release. The MD&A also provides a
reconciliation between all non-GAAP measures and the most directly
comparable GAAP measure, where applicable. Readers are
cautioned that non-GAAP measures often do not have any standardized
meaning, and therefore, may not be comparable to similar measures
presented by other companies.
SOURCE Equitable Group Inc.