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
- Adjusted net income increased 23% to $0.13 per share.
TORONTO, - 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
November 2009 is a milestone for the widespread acceptance of the reverse
mortgage option. Although reverse mortgage rates were at a 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
"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
"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.