News

EQB delivers record annual earnings and increases dividend 5% sequentially as fiscal year changes to align with industry

TORONTO, Dec. 7, 2023 /CNW/ - EQB Inc. (TSX: EQB) (TSX: EQB.PR.C) today reported record annual earnings for its new fiscal year ended October 31, 2023, highlighted by growth in loans under management, margin expansion, higher non-interest revenues, accretion from the prior-year acquisition of Concentra Bank and effective risk management. On the strength of this performance, EQB raised its common share dividend and issued guidance for fiscal 2024 anchored in the expectation of another consecutive year of greater than 15% ROE.

EQB now reports its financial results on the same fiscal year basis as the Canadian banking industry, which will enable better performance comparison between EQB's wholly owned subsidiary Equitable Bank (the "Bank") and its peers. To effect this changeover, fiscal year 2023 ("FY23") is for the ten month-period from January 1, 2023 to October 31, 2023. The fourth quarter ("Q4") is for the four months ended October 31, 2023. For FY23 only, there was no Q3 and, as a result, quarter-over-quarter ("q/q") comparisons below are to the three months ended June 30, 2023. All references to year-over-year ("y/y") comparisons are to the twelve months ended December 31, 2022. There is no change to the dividend schedule.

  • Adjusted ROE1 Q4 16.5% and FY23 17.1% (reported Q4 15.8% and FY23 17.5%)
  • Adjusted diluted EPS1 Q4 $3.80 and FY23 $9.40 (reported Q4 $3.64 and FY23 $9.59)
  • Book value per share $70.33 (+4% q/q, +12% y/y)
  • Common share dividends declared $0.40 per share (+5% q/q, +21% y/y vs. December 2022)
  • Total AUM + AUA2 $111 billion (+3% q/q, +8% y/y) with $20 billion of loans under management reflecting the total multi-unit insured portfolio
  • Net interest margin (NIM) expanded 1 bps q/q to 2.00% in Q4 with FY23 adjusted NIM 1.97% (reported 1.98%)
  • EQ Bank customer growth +9% q/q and 30% y/y to over 400,000 customers at October 31, 2023
  • Total capital ratio 15.2% with CET1 of 14.0%; total liquid assets $3.8 billion or 7.2% of total assets and Equitable Bank's Liquidity Coverage Ratio well in excess of the regulatory minimum of 100%3

"Forward thinking customers look to Canada's Challenger Bank for innovation, while EQB shareholders look for consistently superior value creation. Our team delivered both in 2023," said Andrew Moor, President and Chief Executive Officer, EQB. "We introduced new services across EQ Bank, Equitable Bank and Concentra Trust where we support our credit union partners.  Customer enthusiasm for our new EQ Bank card offering and all-digital First Home Savings Account was nothing short of brilliant, and EQ Bank set the foundation for our brand journey with its remarkably successful "Make Bank" campaign. In lending, we increased customer retention and market share while adhering to our long-standing risk disciplines to keep our credit book strong against economic headwinds. With its overwhelming focus on lending to build and renovate housing for Canadians, our commercial banking business generated strong growth in insured multi-unit loans. We also prepared well for the future with robust capital ratios, excellent liquidity and a sound approach to managing interest rate in the banking book. We will have new opportunities for diversified growth when we close our announced agreement to acquire a majority interest in ACM Advisors Ltd., a leading Canadian alternative asset manager that will become part of EQB Inc. As we enter our 20th year as a public company, our purpose to change Canadian banking to enrich people's lives is making an important impact, and we're positioned to move from strength to strength."

EQB surpassed raised earnings guidance for ten-month FY23 with strong revenue

  • Adjusted and reported Q4 revenue1 $395 million and FY23 $944 million (reported $976 million) on lending growth, NIM expansion and higher non-interest revenue
  • Adjusted and reported Q4 net interest income1 $346 million and FY23 $834 million (reported $838 million), with Q4 NIM 2.00% and FY23 NIM 1.97% adjusted1 (1.98% reported)
  • Adjusted and reported Q4 non-interest revenue1 $49.5 million and FY23 $110.4 million adjusted (reported $137.4 million) on higher fee income and strength in multi-unit insured lending gains on sale and securitization income
  • Adjusted pre-provision pre-tax income1 $529.3 million (reported $540.9 million) exceeded guidance of $490 million to $520 million
  • Adjusted diluted EPS1 Q4 $3.80 (reported $3.64) and FY23 $9.40 (reported $9.59) compared to annual guidance of $9.00-9.20 per share

EQ Bank customers +30% in FY23 to over 400,000 with deposits of $8.2 billion

  • EQ Bank customer base +9% q/q and +30% y/y as daily account openings accelerated in 2023 due to the increasing popularity of the Savings Plus Account that operates like a high interest chequing account, as well as the addition of new digital offerings such as the EQ Bank First Home Savings Account (FHSA), the introduction of the EQ Bank Card and expanded offerings in Québec
  • In FY24, EQ Bank expects to launch a new brand campaign following tremendous success with FY23's "Make Bank" campaign, and introduce Canada's first all-digital small business banking services to help business owners save and earn more through an easy, secure and delightful experience

Personal Banking lending +1% y/y to $32.4 billion

  • Single family portfolio increased to $30.0 billion at October 31, 2023 as customer retention increased while new originations moderated as a result of recent Bank of Canada interest rate increases. As expected, Equitable Bank stayed the course with its proven credit risk management approach. Single family uninsured flat q/q and +3% y/y
  • 35% of single-family lending is insured against default and the average credit score for uninsured mortgage customers is 713 (new originations 742)
  • Decumulation lending assets (which include reverse mortgages and insurance lending) +18% q/q and +43% y/y to $1.5 billion. With its new multi-media advertising campaign to support brand awareness of its challenger product offering, the Bank expects strong continued growth in FY24

Commercial Banking loans under management +20% y/y to $30 billion

  • The Bank's commercial operations primarily finance development and renovation of rental housing and construction of condominium buildings in Canada's major cities. More than 70% of the Bank's commercial loans under management are insured, including construction loans
  • Exposures to higher risk asset classes are low, with office, hotel, shopping malls and big box retail sectors accounting for approximately 2% of the Bank's total loan assets. Over two-thirds of commercial banking loans under management (LUM) are insured multi-unit residential mortgages
  • Insured multi-unit residential LUM +11% q/q and +27% y/y to $20.0 billion

Consistent and active credit risk management approach

  • Provision for credit losses (PCL) $19.6 million in Q4 reflecting contributions of the four-month period and the impacts of both future expected losses driven by macroeconomic forecasts and loss modelling ($2.3 million of this PCL was for Stages 1 and 2), and increased provisions of $17.3 million associated with Stage 3. In Q4, 87% of Stage 3 provision was contributed by equipment financing and a single commercial loan
  • Net impaired loans 76 bps of total assets at October 31, 2023, +48 bps from December 31, 2022 and +29 bps from June 30, 2023. Annualized realized loss rate for Q4 was 7 bps of total loan assets ($10.6 million), compared to 3 basis points ($3.2 million) in 2022
  • The Bank is appropriately reserved for credit losses with net allowances as a percentage of total loan assets of 22 bps at October 31, 2023 compared to 20 bps at June 30, 2023 and 18 bps at December 31, 2022

Stable, diversified and growing funding with more than 95% term or insured

  • Total deposits flat q/q and +2% y/y to $32.0 billion
  • As part of the Bank's ongoing funding diversification, EQB successfully launched a Bearer Deposit Note (BDN) program in Sept 2023. This program facilitates issuance of short-term instruments to a new class of fixed income investors

EQB increases common share dividend

  • EQB's Board of Directors declared a dividend of $0.40 per common share payable on December 29, 2023 to shareholders of record as of December 20, 2023, representing a 5% increase from the dividend paid on September 29, 2023 and 21% above the payment made on December 30, 2022 consistent with guidance of 20 to 25% annual growth
  • The Board also declared a quarterly dividend of $0.373063 per preferred share, payable on December 29, 2023 to shareholders of record at the close of business December 20, 2023
  • For the purposes of the Income Tax Act (Canada) and any similar provincial legislation, dividends declared are eligible dividends, unless otherwise indicated

 FY24 guidance includes earnings growth, 15%+ Adjusted ROE

  • FY2024 guidance for adjusted pre-provision pre-tax earnings, adjusted diluted EPS, adjusted ROE, dividends, book value per share and CET1 ratio of 13%+, along with balance sheet growth are found in the Q4 2023 MD&A
  • Guidance incorporates fee-based revenue and earnings accretion from the acquisition of a majority interest in ACM Advisors expected to close before the end of the calendar year

"Fiscal 2023 again validated the strength of EQB across economic and credit cycles. Our focus on diversifying sources of funding, revenue and asset classes positioned the business to perform above the increased guidance we provided last quarter," said Chadwick Westlake, Chief Financial Officer, EQB. "Our 2024 outlook recognizes both near-term economic challenges and the strength of our distinct challenger business platforms. We benefited from the Concentra Bank acquisition over the past year and grew sources of non-interest revenue. With this momentum and our strategic roadmap, we believe EQB can deliver increasing long-term value to customers and shareholders."

1 Adjusted measures and ratios are Non-Generally Accepted Accounting Principles (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 and ratios" section.

2 These are non-GAAP measures, see the "Non-GAAP financial measures and ratios" section.

3 At October 31, 2023 Equitable Bank's liquid assets held for regulatory purposes was $3.7 billion, which represents 228% of the Bank's minimum required policy liquidity. For additional information, see EQB's Management Discussion & Analysis.

Analyst conference call and webcast: 8:00 a.m. Eastern December 8, 2023

EQB's Andrew Moor, President and Chief Executive Officer, and Chadwick Westlake, Chief Financial Officer, will host the company's fourth quarter conference call and webcast. The listen-only webcast with accompanying slides will be available at: eqbank.investorroom.com/events-webcasts. To access the conference call with operator assistance, dial 416-764-8609 five minutes prior to the start time.

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet

($000s) As at

October 31, 2023

December 31, 2022

Assets:



Cash and cash equivalents

549,474

495,106

Restricted cash

767,195

737,656

Securities purchased under reverse repurchase agreements

908,833

200,432

Investments

2,120,645

2,289,618

Loans – Personal

32,390,527

31,996,950

Loans – Commercial

14,970,604

14,513,265

Securitization retained interests

559,271

373,455

Deferred tax assets

14,230

-

Other assets

652,675

538,475


52,933,454

51,144,957

Liabilities and Shareholders' Equity



Liabilities:



   Deposits

31,996,450

31,051,813

   Securitization liabilities

14,501,161

15,023,627

   Obligations under repurchase agreements

1,128,238

665,307

   Deferred tax liabilities

128,436

72,675

   Funding facilities

1,731,587

1,239,704

   Other liabilities

602,039

556,876


50,087,911

48,610,002

Shareholders' Equity:



   Preferred shares

181,411

181,411

   Common shares

471,014

462,561

   Contributed surplus

12,795

11,445

   Retained earnings

2,185,480

1,870,100

   Accumulated other comprehensive (loss) income

(5,157)

9,438


2,845,543

2,534,955


52,933,454

51,144,957

Consolidated Statement of Income

($000s, except per share amounts) Period/Year ended

2023

2022

Interest income:



Loans – Personal

1,410,571

917,708

Loans – Commercial

860,363

640,293

Investments

65,362

21,337

Other

70,123

36,893


2,406,419

1,616,231

 Interest expense:



Deposits

1,077,520

578,998

Securitization liabilities

402,443

260,761

Funding facilities

44,527

19,979

Other

43,650

23,088


1,568,140

882,826

Net interest income

838,279

733,405

Non-interest revenue:



Fees and other income

46,895

31,081

Net gains (losses) on loans and investments

34,442

(8,054)

Gains on sale and income from retained interests

56,384

26,765

Net losses on securitization activities and derivatives

(336)

(1,011)


137,385

48,781

Revenue

Provision for credit losses

975,664

38,856

782,186

37,258

Revenue after provision for credit losses

936,808

744,928

Non-interest expenses:



Compensation and benefits

199,752

183,605

Other

234,991

192,866


434,743

376,471

Income before income taxes

502,065

368,457

Income taxes:



Current

84,066

84,903

Deferred

46,409

13,373


130,475

98,276

Net income

371,590

270,181

Dividends on preferred shares

6,998

5,566

Net income available to common shareholders

364,592

264,615

Earnings per share:

Basic

Diluted

9.67

9.59

7.63

7.55

Consolidated Statement of Comprehensive Income

($000s) Period/Year ended

2023

2022

Net income

371,590

270,181

Other comprehensive income – items that may be reclassified subsequently to income



Debt instruments at Fair Value through Other Comprehensive Income:



Reclassification of losses from AOCI on sale of investment

-

(1,010)

Net unrealized losses from change in fair value

(36,208)

(33,678)

Reclassification of net losses to income

37,432

10,315




Other comprehensive income – items that will not be reclassified subsequently to income



Equity instruments designated at Fair Value through Other Comprehensive Income:



Reclassification of (losses) gains from AOCI on sale of investment

(10,951)

604

Net unrealized losses from change in fair value

(34,767)

(13,156)

Reclassification of net losses to retained earnings

11,042

3,843

Income tax recovery 

(33,452)

9,210

(33,082)

9,033


(24,242)

(24,049)

Cash flow hedges



Net unrealized gains from change in fair value

40,951

53,926

Reclassification of net (gains) losses to income

(38,718)

2,103

Income tax expense

2,233

(631)

56,029

(14,693)


1,602

41,336

Total other comprehensive (loss) income

(22,640)

17,287

Total comprehensive income

348,950

287,468

Consolidated Statement of Changes in Shareholders' Equity

($000s)

2023


Preferred

shares

Common 
shares

Contributed

surplus

Retained 
earnings

Accumulated other comprehensive
 income (loss)

Total

Cashflow 
hedges

Financial 
instruments

at FVOCI

Total

Balance, beginning of year

181,411

462,561

11,445

1,870,100

42,016

(32,578)

9,438

2,534,955

Net income

-

-

-

371,590

-

-

-

371,590

Realized losses on sale of shares

-

-

-

(7,722)

-

-

-

(7,722)

Transfer of AOCI losses to retained earnings





-

8,045

8,045

8,045

Other comprehensive income, net of tax

-

-

-

-

1,602

(24,242)

(22,640)

(22,640)

Exercise of stock options

-

13,161

-

-

-

-

-

13,161

Share issuance costs, net of tax

-

(6,230)

-

-

-

-

-

(6,230)

Dividends:









   Preferred shares

-

-

-

(6,998)

-

-

-

(6,998)

   Common shares

-

-

-

(41,490)

-

-

-

(41,490)

Stock-based compensation

-

-

2,872

-

-

-

-

2,872

Transfer relating to the exercise of stock options

-

1,522

(1,522)

-

-

-

-

-

Balance, end of year

181,411

471,014

12,795

2,185,480

43,618

(48,775)

(5,157)

2,845,543

 

($000s)

2022


Preferred

shares

Common 
shares

Contributed

surplus

Retained
 earnings

Accumulated other comprehensive 
income (loss)

Total

Cashflow

hedges

Financial
 instruments

at FVOCI

Total

Balance, beginning of year

70,607

230,160

8,693

1,650,757

680

(8,263)

(7,583)

1,952,634

Net income

-

-

-

270,181

-

-

-

270,181

Realized losses on sale of shares

-

-

-

(2,839)

-

-

-

(2,839)

Transfer of AOCI losses to retained earnings

-

-

-

-

-

(299)

(299)

(299)

Investment elimination on acquisition

-

-

-

-

-

33

33

33

Other comprehensive income, net of tax

-

-

-

-

41,336

(24,049)

17,287

17,287

Common shares issued

-

223,112

-

-

-

-

-

223,112

Exercise of stock options

-

9,274

-

-

-

-

-

9,274

Purchase of treasury preferred shares

(183)

-

-

-

-

-

-

(183)

Net loss on cancellation of treasury preferred shares

-

-

-

(6)

-

-

-

(6)

Dividend payout from principal

-

(655)

-

-

-

-

-

(655)

Dividends:









   Preferred shares

-

-

-

(5,566)

-

-

-

(5,566)

   Common shares

-

-

-

(42,427)

-

-

-

(42,427)

Stock-based compensation

-

-

3,422

-

-

-

-

3,422

Transfer relating to the exercise of stock options

-

670

(670)

-

-

-

-

-

Shares on acquisition

110,987

-

-

-

-

-

-

110,987

Balance, end of year

181,411

462,561

11,445

1,870,100

42,016

(32,578)

9,438

2,534,955

Consolidated Statement of Cash Flows

($000s) Period/Year ended

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES



Net income

371,590

270,181

Adjustments for non-cash items in net income:



Financial instruments at fair value through profit or loss

45,533

(10,816)

Amortization of premiums/discount on investments

7,678

1,215

Amortization of capital assets and intangible costs

39,155

46,870

Provision for credit losses

38,856

37,258

Securitization gains

(46,948)

(22,418)

Stock-based compensation

2,871

3,422

Dividend income earned, not received

(28,380)

-

Income taxes

130,475

98,276

Securitization retained interests

75,304

53,834

Changes in operating assets and liabilities:



Restricted cash

(29,539)

(193,620)

Securities purchased under reverse repurchase agreements

(708,401)

349,598

Loans receivable, net of securitizations

(1,126,698)

(5,061,011)

Other assets

(57,566)

168,660

Deposits

865,734

3,702,998

Securitization liabilities

(519,066)

925,452

Obligations under repurchase agreements

462,931

(711,456)

Funding facilities

491,883

685,469

Other liabilities

108,201

(157,502)

Income taxes paid

(90,318)

(156,525)

Cash flows from operating activities

33,295

29,885

CASH FLOWS FROM FINANCING ACTIVITIES



Proceeds from issuance of common shares

6,931

231,731

Term loan facility

-

275,000

Dividends paid on preferred shares

(6,998)

(5,566)

Dividends paid on common shares

(41,490)

(42,427)

Cash flows (used in) from financing activities

(41,557)

458,738

CASH FLOWS FROM INVESTING ACTIVITIES



Purchase of investments

(989,055)

(585,721)

Investment in subsidiary

-

(495,369)

Proceeds from sale or redemption of investments

1,007,663

559,680

Net change in Canada Housing Trust re-investment accounts

78,988

(168,787)

Purchase of capital assets and system development costs

(34,966)

(76,571)

Cash flows from (used in) investing activities

62,630

(766,768)

Net increase (decrease) in cash and cash equivalents

54,368

(278,145)

Cash and cash equivalents, beginning of year

495,106

773,251

Cash and cash equivalents, end of year

549,474

495,106

Cash flows from operating activities include:



Interest received

2,137,216

1,437,499

Interest paid

(1,221,598)

(560,656)

Dividends received

31,243

4,074

About EQB Inc.

EQB Inc. trades on the Toronto Stock Exchange (TSX: EQB and EQB.PR.C) and has over $111 billion in combined assets under management and administration2. A wholly owned subsidiary of EQB, Equitable Bank, Canada's Challenger Bank™, is the seventh largest bank in Canada by assets and serves more than 578,000 customers. Equitable Bank's subsidiaries Concentra Bank and Concentra Trust support Canadian credit unions and their more than 6 million members. Equitable Bank has a clear mandate to drive change in Canadian banking to enrich people's lives. Founded more than 50 years ago, it provides diversified personal and commercial banking, and through its digital EQ Bank platform (eqbank.ca) has been named the top Schedule I Bank in Canada on the Forbes World's Best Banks 2021, 2022 and 2023 lists. Please visit eqbank.investorroom.com for more details.

Investor contact:
Sandie Douville
VP, Investor Relations & ESG Strategy
investor_enquiry@eqbank.ca

Media contact:
Maggie Hall
Director, PR & Media Relations
maggie.hall@eqbank.ca

Cautionary Note Regarding Forward-Looking Statements

Statements made by EQB 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 EQB's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to EQB'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 EQB 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 EQB'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 EQB and the Canadian economy.  Although EQB 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 EQB 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.  EQB 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 and Ratios

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 EQB'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.

Adjustments listed below are presented on a pre-tax basis:

2023

  • $28.0 million related to a strategic investment,
  • $15.1 million acquisition and integration-related costs associated with Concentra and ACM,
  • $3.5 million intangible asset amortization,
  • $3.3 million net fair value amortization adjustments, and
  • $0.9 million other expenses.

2022

  • $2.2 million interest earned on the escrow account where the proceeds of the subscription receipts are held(1),
  • $49.9 million acquisition and integration-related costs,
  • $19.0 million provision credit for credit losses recorded on purchased loan portfolios,
  • $3.3 million net fair value-related amortization recorded for November and December 2022,
  • $2.2 million interest expenses paid to subscription receipt holders(2) in connection with the Concentra acquisition, and
  • $3.8 million increase in future tax expense associated with additional 1.5% tax rate introduced for banks in 2022.

(1) The net proceeds from the issuance of subscription receipts were held in an escrow account and the interest income earned was recognized upon closing of the Concentra acquisition. (2) The interest expense refers to the dividend equivalent amount paid to subscription receipt holders. The subscription receipt holders were 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 were converted into common shares at a 1:1 ratio upon the closing of the Concentra acquisition.

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 quarter ended 


For the year ended 

($000, except share and per share amounts)

31-Oct-23

30-Jun-23

31-Dec-22


31-Oct-23

31-Dec-22

Reported results







Net interest income

345,783

251,699

218,325


838,279

733,405

Non-interest revenue

49,503

60,848

16,382


137,385

48,781

Revenue

395,286

312,547

234,707


975,664

782,186

Non-interest expense

181,165

127,030

139,180


434,743

376,471

Pre-provision pre-tax income(3)

214,121

185,517

95,527


540,921

405,715

Provision for credit loss

19,566

13,042

26,796


38,856

37,258

Income tax expense

53,409

41,550

22,912


130,475

98,276

Net income

141,146

130,925

45,819


371,590

270,181

Net income available to common shareholders

138,797

128,594

43,514


364,592

264,615

Adjustments







Net interest income – earned on the escrow account

-

-

(2,220)


-

(2,220)

Net interest income – fair value amortization/adjustments

-

-

3,324


(4,167)

3,324

Net interest income – paid to subscription receipt holders

-

-

(654)


-

2,220

Non-interest revenue – strategic investment

-

(27,965)

-


(27,965)

-

Non-interest revenue – fair value amortization/adjustments

-

-

(65)


941

(65)

Non-interest expenses – acquisition-related costs(1)

(6,972)

(3,377)

(36,921)


(15,093)

(49,942)

Non-interest expenses – other expenses

-

(858)

-


(858)

-

Non-interest expenses – intangible asset amortization

(1,181)

(885)

-


(3,542)

-

Non-interest expenses – fair value amortization/adjustments

-

-

-


(66)

-

Provision for credit loss – purchased loans

-

-

(19,020)


-

(19,020)

Pre-tax adjustments

8,153

(22,844)

56,326


(11,631)

72,221

Income tax expense – tax impact on above adjustments(2)

2,264

(7,425)

15,271


(4,311)

19,435

Income tax expense – 2022 tax rate adjustment

-

-

(5,621)


-

(3,769)

Post-tax adjustments

5,889

(15,419)

46,676


(7,320)

56,555

Adjusted results







Net interest income

345,783

251,699

218,775


834,112

736,729

Non-interest revenue

49,503

32,883

16,317


110,361

48,716

Revenue

395,286

284,582

235,092


944,473

785,445

Non-interest expense

173,012

121,910

102,259


415,184

326,529

Pre-provision pre-tax income(3)

222,274

162,672

132,833


529,289

458,916

Provision for credit loss

19,566

13,042

7,776


38,856

18,238

Income tax expenses

55,673

34,124

32,562


126,163

113,942

Net income

147,035

115,506

92,495


364,270

326,736

Net income available to common shareholders

144,686

113,175

90,190


357,272

321,170

Diluted earnings per share







Weighted average diluted common shares outstanding

38,117,929

37,975,115

36,632,711


38,013,724

35,031,166

Diluted earnings per share – reported

3.64

3.39

1.19


9.59

7.55

Diluted earnings per share adjusted

3.80

2.98

2.46


9.40

9.17

Diluted earnings per share – adjustment impact

0.16

(0.41)

1.27


(0.19)

1.62

(1) Includes costs associated with ACM acquisition.

(2) Income tax expense associated with non-GAAP adjustment was calculated based on the statutory tax rate applicable for that period, taking into account the federal tax rate increase.

(3) This is a non-GAAP measure, see Other Non-GAAP financial measures and ratios section.

Other non-GAAP financial measures and ratios

  • Adjusted return on equity (ROE): it is calculated on an annualized basis and is defined as adjusted net income available to common shareholders as a percentage of weighted average common shareholders' equity (reported) outstanding during the period.
  • Assets under administration (AUA): is sum of (1) assets over which EQB's subsidiaries have been named as trustee, custodian, executor, administrator or other similar role; (2) loans held by credit unions for which EQB's subsidiaries act as servicer.
  • Assets under management (AUM): is the sum of total assets reported on the consolidated balance sheet and loan principal derecognized but still managed by EQB.

($000s)

31-Oct-23

30-Jun-23

Change

31-Dec-22

Change

Total assets on the consolidated balance sheet

52,933,454

53,318,703

(1 %)

51,144,957

3 %

Loan principal derecognized

14,998,436

12,591,570

19 %

10,424,114

44 %

Assets under management

67,931,890

65,910,273

3 %

61,569,071

10 %

  • Liquid assets: is a measure of EQB'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.
  • Loans under management (LUM): is the sum of loan principal reported on the consolidated balance sheet and loan principal derecognized but still managed by EQB.
  • 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 (PPPT): this is the difference between revenue and non-interest expenses.
  • Total loan assets: this is calculated on a gross basis (prior to allowance for credit losses) as the sum of both Loans – Personal and Loans – Commercial on the balance sheet and adding their associated allowance for credit losses.

SOURCE EQ Bank

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