Mr. Andrew Moor reports

EQB DELIVERS RECORD QUARTERLY EARNINGS AND A 6% DIVIDEND INCREASE

EQB Inc. had record quarterly earnings for the three months ended March 31, 2023. This period reflected the first full quarter of results from Equitable Bank's recent acquisition of Concentra Bank, consistent risk-managed organic lending growth and credit performance, strong and diverse financing sources with resilient deposits, liquidity well above regulatory guidelines, and expanding margins and capital. With this performance, EQB has declared another common share dividend increase and reaffirmed its previous earnings guidance for 2023.

• Adjusted Q1 2023 return on equity (1) 16.9 per cent (reported 16.5 per cent) ahead of 15 per cent plus guidance;
• Adjusted Q1 2023 net income (1) $101.7-million (plus 10 per cent year over year and quarter over quarter), reported $99.5-million (plus 13 per cent year over year or plus 117 per cent quarter over quarter), supported by net interest margin expanding five basis points quarter over quarter to 1.92 per cent;
• Adjusted Q1 diluted earnings per share (1) of $2.62 (minus 1 per cent year over year or plus 7 per cent quarter over quarter), reported $2.56 (plus 2 per cent year over year or plus 115 per cent quarter over quarter), impacted year over year by the 3,266,000 additional common shares in Q4 2022 as part of the Concentra Bank acquisition;
• Common share dividends declared 37 cents per share for Q1 2023, plus 28 per cent year over year or plus 6 per cent quarter over quarter;
• EQ Bank recognized as the Best Bank in Canada for the 3rd consecutive year on the Forbes 2023 list of the World's Best Banks. Customer growth in Q1 plus 26 per cent year over year to 336,457 with $8.1 billion in deposits (plus 12 per cent year over year) and customer engagement up to 51 per cent
• Total assets under management plus AUA 2 $104.8 billion plus 2 per cent quarter over quarter. $52 billion of on-balance sheet assets plus 1 per cent quarter over quarter and plus 39 per cent year over year; 50 per cent of total loans under management are insured
• Liquid assets 2 7.5 per cent of total assets, with a Liquidity Coverage Ratio (LCR) well in excess of the regulatory minimum of 100 per cent which has remained consistent quarter over quarter. Nearly 95 per cent of the Bank's deposits are either term or insured
• Total capital ratio of 15.5 per cent with CET1 at 14.0 per cent;
• book value per share of $64.47, plus 12 per cent year over year and plus 3 per cent quarter over quarter, relative to guidance of plus 12 per cent to 15 per cent for 2023.

"We are proud to start 2023 with adjusted earnings exceeding $100-million for the first time. During a volatile economic period and credit performance that was superior to our bank peers, achieving adjusted ROE at nearly 17 per cent reminds us of the strength, agility and consistency of our franchise and excellent work by our Challenger team. What excites us is that while creating great value for our shareholders, we are driving change in Canadian banking that enriches people's lives. Our EQ Bank card is the latest example. Launched in January, it's already been used by customers travelling in 115 countries, helping them to save serious money on foreign exchange, earn cash back on all purchases and avoid [automated teller machine] fees in Canada. EQ Bank's all-digital accounts also received a resoundingly positive reception in Quebec since we introduced services late in 2022. It's no surprise that EQ Bank was just crowned Canada's best bank for the third year running, the verdict of tens of thousands of customers surveyed by Forbes. With a proven value-creation method underpinning our strategy, the future is very promising for Canada's Challenger Bank," said Andrew Moor, president and chief executive officer.

First quarter performance builds the foundation to achieve 2023 guidance:

• Adjusted Q1 revenue (1) plus 40 per cent year over year to $264.6-million on lending growth, net interest margin (NIM) expansion and higher non-interest revenue (reported revenue plus 43 per cent year over year to $267.8-million);
• Adjusted Q1 net interest income (1) plus 45 per cent year over year to $236.6-million with a NIM of 1.92 per cent, plus five bps year over year (Q1 reported plus 48 per cent year over year to $240.8-million with NIM of 1.95 per cent, plus nine bps year over year);
• Adjusted non-interest revenue (1) plus 10 per cent year over year to $28.0-million (reported plus 6 per cent year over year to $27.0-million) on higher fee income (including Concentra Bank) and continued strength in multifamily insured lending gains on sale and securitization income.

EQ Bank customers plus 26 per cent year over year and deposits plus 12 per cent year over year:

• EQ Bank customer base grew to 336,457 in Q1 supported by strong momentum early in 2023 with the highly successful Make Bank marketing campaign (average daily customer sign-ups increased 73 per cent versus Q1 2022), the launch of EQ Bank card and the introduction of services in Quebec. EQ Bank customer everyday engagement reached an all-time high of 51 per cent in Q1;
• EQ Bank is positioned for continued growth in 2023, offering customers more solutions to meet their everyday banking needs, including the advantages of fee-free cash withdrawals at any ATM nationally, cashback rewards on all purchases, and no foreign exchange fees on international purchases. EQ Bank Cards are now in the hands of nearly 40,000 customers, and have already been used hundreds of thousand times across 115 countries

Personal Banking assets plus 39 per cent year over year to $32.2 billion

• Single-family portfolio plus 33 per cent year over year to $30.3 billion reflecting EQB's consistent and prudent approach to credit risk management. Of the single-family residential portfolio, 37 per cent of single-family residential lending is insured and the average customer beacon for uninsured mortgage customers is 714 (new originations 732)
• Reverse mortgage assets plus 8 per cent quarter over quarter to $930-million and plus 206 per cent year over year. Growth reflected growing awareness of Equitable Bank's solution among Canadians nearing or in retirement and EQB's share of an expanding market. Insurance lending assets plus 12 per cent quarter over quarter to $99-million and plus 67 per cent year over year

Commercial Banking assets plus 32 per cent year over year to $14.4 billion

• EQB's focus remains on improving the supply of multi-family housing and apartments for Canadians, including affordable housing. Commercial office lending represents less than 1 per cent of EQB's total assets
• Insured multi-unit residential loans under management plus 6 per cent quarter over quarter and plus 60 per cent year over year to $16.7 billion
• Co-millionercial loans under management (LUM) plus 4 per cent quarter over quarter or plus 51 per cent year over year to $26.0 billion. Over 69 per cent of LUM is CMHC insured

Credit quality indicators reflect prudence in a higher-interest-rate environment:

• Provision for credit losses (PCL) (1) $6.2-million in Q1 accounting for continued organic portfolio growth, stability in macroeconomic forecasts and loss modelling, and net of a recovery related to an impaired loan in the quarter;
• Net impaired loans at 0.32 per cent of total assets at March 31, 2023, plus 10 bps from prior year and plus four bps sequentially. Annualized realized loss rate for Q1 2023 was two bps of total loan assets ($1.9-million), compared with less than 1 basis point year over year ($1.0-million);
• EQB remains well reserved for credit losses with allowances net of cash reserves as a percentage of total loan assets of 19 bps at March 31, 2023 versus 18 bps at Dec. 31, 2022.

Diversification and stability of funding sources generating consistent high liquidity

• Equitable Bank increased total deposits in Q1 to $31 billion, plus 1.4 per cent quarter over quarter and plus 42 per cent year over year, supported by diverse funding sources, solid growth in EQ Bank and credit union deposits
• To manage liquidity risk, Equitable Bank prioritizes funding through fixed term and insured deposits - as of March 31, 2023, 95 per cent of deposits are either term or insured. This is the result of conservative policy and practice; for example, EQ Bank generally limits new EQ Bank demand accounts to $200,000
• Equitable Bank holds $3.8 billion in liquid assets for regulatory purposes, and liquid assets cover 64 per cent of all demand deposits with contingency funding to cover the balance

First full quarter of Concentra Bank contributions demonstrate expected value

• The acquisition of Concentra Bank in Q4 2022 introduced complementary asset growth, diversification in funding and revenue sources plus enhanced distribution capabilities
• Concentra Bank's portfolio added $5.4 billion or 18 per cent to Q4 2022 conventional loans2, including its consumer lending portfolio
• Integration costs and synergy realization are tracking to plan

EQB announces an increase in common share dividend for Q2 2023:

• EQB's board of directors declared a common share dividend of 37 cents per common share or $1.48 annualized, payable on June 30, 2023, to shareholders of record as of June 15, 2023. This represents a 6-per-cent increase from the dividend declared in February, 2023, and a 28-per-cent increase from Q2 2022;
• EQB's board of directors also declared a quarterly dividend of 37.3063 cents per preferred share, payable on March 31, 2023, to shareholders of record at the close of business March 15, 2023;
• For the purposes of the Income Tax Act (Canada) and any similar provincial legislation, dividends declared will be eligible dividends, unless otherwise indicated

"This quarter set the tone for what we expect will be a great year for EQB. The benefit of our long-established Challenger Bank strategy with its distinct approach to ROE and value creation, and our diverse operating model founded in deep and effective credit, liquidity and capital management is translating clearly. The first few months of 2023 reflected strain on banks globally, but EQB results again point to the strength of our balance sheet, and our mature treasury and risk management capabilities that enable us to focus on enriching people's lives as we deliver consistently strong returns for our shareholders. We are the seventh-largest bank in Canada by assets with talent, technology and service capabilities that make it best in class in the country," said Chadwick Westlake, EQB's chief financial officer.

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.

Analyst conference call and webcast: 8:30 a.m. ET Eastern May 3, 2023

EQB will host its first quarter conference call and webcast on Wednesday May 3, 2023. To access the call with operator assistance, dial (416) 764-8609 five minutes prior to the start time. Or to join without operator assistance, you may register your phone number up to 15 minutes in advance of start time to receive an automatic call-back connection to the conference.

Call archive

A replay of the conference call with the accompanying slides will be archived on EQB's Investor Relations website.

About EQB Inc.

Equitable Bank - Canada's Challenger Bank -is a wholly owned subsidiary of EQB Inc., which trades on the Toronto Stock Exchange (TSX: EQB) (TSX: EQB.PR.C) and serves more than 515,000 customers. Equitable Bank's wholly owned subsidiary Concentra Bank supports Canadian credit unions and their more than 6-million members. With nearly $105 billion in combined assets under management and administration, Equitable Bank has a clear mandate to drive change in Canadian banking to enrich people's lives. Founded more than 50 years ago, Canada's Challenger Bank provides diversified personal and co-millionercial banking, and through its digital EQ Bank platform has been named the top Schedule I Bank in Canada on the Forbes World's Best Banks 2021, 2022 and 2023 lists.

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