Ms. Irene Eddy reports

ACCORD ANNOUNCES THIRD QUARTER FINANCIAL RESULTS

Accord Financial Corp. today released its financial results for the third quarter ended Sept. 30, 2023. The financial figures presented in this release are reported in Canadian dollars and have been prepared in accordance with international financial reporting standards.

Driven by portfolio growth and higher average yields, revenue rose 18.1 per cent year over year to $19.4-million in the third quarter. While key growth metrics, and the balance sheet, remain strong, a significant provision for credit and loan losses, rising interest costs, and one-time debenture restructuring expenses contributed to a net loss attributable to shareholders of $8.8-million, bringing the year-to-date loss to $7.1-million ($1.03 per common share), down from net earnings of $5.3-million (62 cents per common share) in the first nine months of 2022.

The company's president and chief executive officer, Simon Hitzig, highlighted a recent post-Q3 event included in the financial statements, "Accord's third quarter results have been impacted by an additional provision for loan losses related to a single borrower," he noted.

Over the last two weeks the company uncovered irregularities in collateral reporting by a borrower related to its $14.4-million revolving loan. Accord immediately commenced a comprehensive investigation and implemented strict on-premises oversight of the borrower's operations, including financial controls. This work is continuing. Based on the information available at this time, Accord recorded a third quarter provision for credit and loan losses of $11.4-million related to this account. This provision is also reflected in the allowance for credit losses on the balance sheet. The allowance for losses will be adjusted as more information becomes available and to reflect repayment from realized collateral and other potential sources of funds.

"We continue to focus on our comprehensive review of this case involving a single borrower and are pursuing all avenues for repayment," Mr. Hitzig said, adding: "Over all, Accord's portfolio continued to grow through the third quarter, as business conditions have shifted in favor of non-bank lenders, and Accord's collateral-based product mix specifically." The company's finance receivables and loans grew to $493.6-million at Sept. 30, 2023, up 9.0 per cent since the start of the year.

The reduction in the company's shareholders' equity resulting from the third quarter net loss may impact the company's current pace of portfolio growth. Accordingly, to strengthen the company's capital base in this environment, the company's board of directors has suspended its quarterly dividend, which will be reassessed in the normal course going forward.

The third quarter provision for credit and loan losses was $14.4-million, or $3.0-million excluding the account under review, compared with $1.1-million during the same quarter last year. Within the provision, $13.2-million boosts the company's allowance for future losses to $20.1-million at Sept. 30, 2023, compared with $8.2-million at the start of the year. With this provision and allowance, and related impact on earnings, book value per common share slipped to $10.76, compared with $11.80 at the start of the year.

During the third quarter the company also took an important step to ensure effective funding as the current growth phase unfolds. At a special meeting held on Aug. 10, more than 80 per cent of Accord's debenture holders voted in support of extending $20.7-million of convertible debentures, set to mature at the end of 2023, to Jan. 31, 2026. Carrying a 10-per-cent interest rate, the debentures were amended to remove the conversion feature, providing significant non-dilutive capital into early 2026.

Looking ahead, Mr. Hitzig added, "While the account under review is a significant event today, we look forward to continuing the company's long history of delivering much-needed capital to small and medium-sized companies, while maintaining the company's financial strength."

About Accord Financial Corp.

Accord is North America's most dynamic commercial finance company providing fast, versatile financing solutions for companies in transition including asset-based lending, factoring, equipment leasing, inventory finance, trade finance and film/media finance. By leveraging the company's unique combination of financial strength, deep experience and independent thinking, the company crafts winning financial solutions for small and medium-sized businesses, simply delivered, so the company's clients can thrive. For 45 years, Accord has helped businesses manage their cash flows and maximize opportunities.

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