HOMEQ Corporation Announces the Release of its 2009 Annual Financial Results
2009 Annual Results Compared to 2008:
- The mortgage portfolio grew by 6% to $866 million;
- Originations fell by 15% to $110 million;
- Net loss of $0.13 per share fell from net income of $2.10 per share;
- Adjusted net income increased 30% to $0.52 per share.
2009 Fourth Quarter Results Compared to 2008:
- Originations grew by 77% to $43 million;
- Net income of $0.02 per share fell from net income of $1.12 per share;
- Adjusted net income increased 23% to $0.13 per share.
Toronto, March 4, 2010 - HOMEQ Corporation [TSX: HEQ ("HOMEQ")], today announced its financial results for the year ended December 31, 2009. HOMEQ also announced the declaration of a quarterly dividend of $0.07 per share.
Fiscal 2009 marks a significant turning point for HOMEQ in which major changes were successfully implemented to its structure and operations in order to better position it for the future. On October 13, 2009, following approximately 12 months of focused effort, HOMEQ announced that its operating subsidiary, Canadian Home Income Plan Corporation, had received its Letters Patent and Order to Commence as a federally regulated Schedule I bank to be known as HomEquity Bank. As a result, HOMEQ has gained access to funding from retail deposits which will be used to supplement the existing wholesale funding strategy. This will directly enhance HOMEQ's ability to offer competitively positioned products and services to meet client needs and grow the business.
November 2009 is a milestone for the widespread acceptance of the reverse mortgage option. Although reverse mortgage rates were at an historic low, to attract new customers to our product, we lowered the rates to as low as 3.75%. The positive impact on origination volume was immediate and significant. The record $43 million origination volume in the fourth quarter of 2009 was an increase of 11% over the previous record in the second quarter of 2008. This growth attests to the transition of a formerly niche product to one with more widespread acceptance.
"We are extremely gratified with our achievements during the year, and Canadian seniors will benefit from lower interest rates on reverse mortgages as a result of HomEquity Bank's diversified sources of funding and lower cost of borrowing. We believe that the new pricing structure will benefit HOMEQ in the long term by making the reverse mortgage a mainstream product, growing the size of the mortgage portfolio and pre-empting competition." said President and Chief Executive Officer, Mr. Steven Ranson.
Net loss for the year was $1.8 million ($0.13 per share) compared to net income of $29.5 million ($2.10 per share) in 2008. Adjusted net income before tax was $10.4 million compared to $8.4 million, and after tax was $7.4 million ($0.52 per share) compared to $5.6 million ($0.40 per share) in 2008. Adjusted return on equity was 8.4% in comparison to 6.2% in 2008. In calculating adjusted net income and adjusted return on equity HOMEQ removes certain items from reported results as described in the 2009 Management Discussion and Analysis.
"Over the last two years we have proven the soundness of our business model and have been able to withstand the effects of extremely uncertain economic conditions well beyond our control" continued Mr. Ranson. "The future looks bright. It's based on an exciting intersection of demographics, product and expertise. Canada's seniors' market is the fastest growing segment of the population and is estimated to grow by 20% in the next six years. Increasingly, seniors will rely on HomEquity Bank for flexible and innovative solutions to meet their retirement needs. Our achievements and milestones over the last two years attest to our business model and its development and implementation by our highly trained professionals."
HOMEQ's goal is to continue to be Canada's leading provider of reverse mortgages. Market awareness of both HOMEQ and its product has increased, and sources of referral cover a widening array of financial institutions. With the bank deposit funding structure now in place, and the recent introduction of lower interest rates on reverse mortgages, HOMEQ's goal is to return new mortgage origination growth and portfolio growth to the growth rates experienced prior to 2009.
The Board of Directors has declared a quarterly dividend in the amount of $0.07 per share on the outstanding common shares of the company. The dividend is payable on April 13, 2010 to shareholders of record at the close of business on March 29, 2010.
HOMEQ for the purposes of the Income Tax Act (Canada) and any similar provincial legislation advises that the quarterly dividend declared today on the common shares and all future dividends is designated as an "eligible" dividend unless indicated otherwise.
Annual Financial Statements and Conference Call
The 2009 annual financial statements are available on HOMEQ's website at www.homeq.ca and www.sedar.com.
HOMEQ will hold a conference call to discuss these financial results on March 5, 2009, at 9:00 am (Eastern).
Available on the call to answer questions will be Steven Ranson, President and Chief Executive Officer, and Gary Krikler, Senior Vice President and Chief Financial Officer.
To participate in the conference call, please dial 1-888-892-3255.
A live audio webcast (listen-only mode) of the conference call will be available at www.homeq.ca.
An archived recording of the call will be available at 1-800-937-6305 (conference ID 225510).
Forward Looking Statements
HOMEQ Corporation from time to time makes written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including the likelihood of HOMEQ's success in developing and expanding its business. These may be included in HOMEQ's and its predecessor's annual reports, regulatory filings, reports to shareholders, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of HOMEQ. Actual results may differ materially from those expressed or implied by such forward-looking statements. HOMEQ does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.
About HOMEQ Corporation
HOMEQ's wholly owned subsidiary HomEquity Bank is Canada's newest Schedule 1 bank. HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 60 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand. As of December 31, 2009, the mortgage portfolio comprised approximately 7,100 reverse mortgages with an accrued value of $866 million, secured by residential properties across Canada worth approximately $2.4 billion. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.
HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ. Additional information on HOMEQ, including annual and quarterly reports can be viewed at www.homeq.ca.
For further information, please contact: Steven K. Ranson, President and Chief Executive Officer, (416) 413-4663 or Gary Krikler, Senior Vice President and Chief Financial Officer, (416) 413-4679.