Mr. Andrew Moor reports

EQB DELIVERS 12% Y/Y EARNINGS GROWTH, INCREASES DIVIDEND 5% Q/Q AND 20% Y/Y, WITH ASSETS UNDER MANAGEMENT AND ADMINISTRATION CLIMBING 16% TO $119 BILLION

EQB Inc. today released its earnings for the three months ended Jan. 31, 2024, that reflected strong and resilient first quarter performance driven by growth in loans under management, margin expansion, higher non-interest revenue, EQ Bank customer growth and continued effective risk management. EQB also announced a 20-per-cent Y/Y (year-over-year) common share dividend increase and reaffirmed its previous earnings guidance for 2024 anchored in the continuing achievement of greater than 15-per-cent ROE (return on equity).

EQB changed its fiscal year in 2023 to end Oct. 31, resulting in a one-time 10-month transition year and a four-month final quarter of 2023. As a result, the comparisons herein are shown year over year from Dec. 31, 2022, as the most similar and comparable three-month period (Y/Y). Note the current period includes the acquisition of a majority interest of ACM Advisors that closed on Dec. 14, 2023, and the comparative period includes the acquisition of Concentra Bank that closed on Nov. 1, 2022 -- both within quarters for partial results.

• Adjusted ROE (return on equity) Q1 15.6 per cent (reported Q1 15.0 per cent);
• Total AUM (assets under management) plus AUA (assets under administration) $119-billion, plus 7 per cent Q/Q (quarter over quarter), plus 16 per cent Y/Y;
• Revenue $299-million, plus 27 per cent Y/Y;
• Adjusted net income $108-million, plus 17 per cent Y/Y (reported $104-million, plus 128 per cent Y/Y);
• Adjusted diluted EPS (earnings per share) Q1 $2.76, plus 12 per cent Y/Y (reported Q1 $2.66, plus 124 per cent Y/Y);
• Book value per share $71.33, plus 1 per cent Q/Q, plus 14 per cent Y/Y;
• Common share dividends 42 cents per share, plus 5 per cent Q/Q, plus 20 per cent Y/Y;
• Net interest margin (NIM) 2.01 per cent, plus one bps (basis points) Q/Q, plus 16 bps Y/Y;
• EQ Bank customer growth plus 6 per cent Q/Q and 38 per cent Y/Y to over 426,000 customers;
• Total capital ratio 15.4 per cent with CET of 14.2 per cent; Equitable Bank's liquidity coverage ratio well in excess of the regulatory minimum of 100 per cent.

"EQB delivered first quarter results consistent with our long-term value creation approach with ROE above 15 per cent. This performance is particularly encouraging in the context of the slow housing market in the face of Bank of Canada monetary tightening," said Andrew Moor, president and chief executive officer, EQB. "Moreover, Canadians are increasingly embracing our Challenger Bank approach to business. EQ Bank, our award-winning digital bank, is attracting new customers at an accelerated daily pace aided by the launch of our national 'second chance' campaign. The campaign is getting people to ask why so many of us still bank with our first-ever financial institution when we celebrate choice and have changed providers to get a better deal in so many other categories. Brought to life by Eugene and Dan Levy in English Canada and Diane Lavallee and Laurence Leboeuf in Quebec, 'second chance' is a key element of building our brand value, and I am thrilled by its success so far."

EQ Bank customers plus 38 per cent Y/Y with deposits of $8.3-billion

• EQ Bank customer base grew plus 6 per cent Q/Q and plus 38 per cent Y/Y to 426,000. EQ Bank launched its second chance campaign across English Canada on Jan. 4, and "deuxieme chance" across Quebec on Feb. 6, encouraging Canadians to move on from their first-ever bank accounts to EQ Bank/Banque EQ's personal account that combines the best features of chequing with no fees and high interest.
• EQ Bank will continue to challenge the status quo by launching Canada's first all-digital small business banking services to help business owners save and earn more through an easy, secure and differentiated experience.

Personal banking loans under management plus 1 per cent Q/Q to $32.7-billion with strong retention

• Single family portfolio increased to $30.2-billion as at Jan. 31, 2024, as customer retention increased while new originations moderated as a result of a slower housing market caused by Bank of Canada interest rate increases since 2022. Single family uninsured plus 2 per cent Q/Q and plus 4 per cent Y/Y.
• Decumulation lending assets (including reverse mortgages and insurance lending) plus 9 per cent Q/Q and plus 55 per cent Y/Y to $1.6-billion, with growth accelerating as a result of successful consumer advertising that bolstered public awareness, strong broker service and value to the borrower.

Commercial banking loans under management plus $1.3-billion Q/Q to $31.2-billion

• The bank continues to prioritize multiunit residential lending in major cities across the country with more than 70 per cent of its total commercial loans under management (LUM) insured through various CMHC programs. Insured multiunit residential LUM plus 6 per cent Q/Q and plus 34 per cent Y/Y to $21.1-billion.
• The Canadian commercial office real estate market continues to experience significant economic challenges; however, as part of the bank's risk appetite, only about 1 per cent of the bank's loan assets are associated with offices, and those balances declined in the first quarter. Equitable Bank's office lending is mostly restricted to properties located in major urban centres and to smaller buildings, for example those with professional service providers.

Provisions in first quarter reflect credit risk at this point in the cycle

• The bank is appropriately reserved for credit losses with net allowances as a percentage of total loan assets of 22 bps at Jan. 31, 2024, compared with 22 bps at Oct. 31, 2023, and 18 bps at Dec. 31, 2022.
• Provision for credit losses (PCL) of $15.5-million in Q1 reflecting the impacts of both future expected losses driven by macroeconomic forecasts and loss modelling, and increased provisions of $17.3-million associated with stage 3, two-thirds of which was driven by the equipment financing business. Net impaired loans increased to 94 bps of total loan assets at Jan. 31, 2024, plus 18 bps from Oct. 31, 2023, and plus 66 bps from Dec. 31, 2022.

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

• Equitable Bank increased total deposits in Q1 to $31.8-billion, plus 1 per cent Q/Q and plus 3 per cent Y/Y.
• Equitable Bank holds $3.7-billion in liquid assets for regulatory purposes. Liquid assets cover 63 per cent of all demand deposits with sufficient contingency funding available to cover the balance.
• Equitable Bank's new bearer deposit note (BDN) program continues to add funding diversification. Since being launched in Q4, it has now grown to nearly $500-million in funding.

EQB increases common share dividend

• EQB's board of directors declared a dividend of 42 cents per common share payable on March 28, 2024, to shareholders of record as of March 15, 2024, representing a 5-per-cent increase from the dividend paid in December, 2023, and 20 per cent above the payment made in February, 2023. EQB's board of directors amended the dividend reinvestment program (DRIP) to remove the 2-per-cent discount.
• The board also declared a quarterly dividend of 37.3063 cents per preferred share, payable on March 28, 2024, to shareholders of record at the close of business March 15, 2024.
• For the purposes of the Income Tax Act (Canada) and any similar provincial legislation, dividends declared are eligible dividends, unless otherwise indicated.

"This is an important time for EQB as we consistently build our business, which expanded to include ACM Advisors in the first quarter, providing access to an attractive wealth management market niche," said Chadwick Westlake, chief financial officer, EQB. "We delivered on our commitment to allocate capital and manage risk in order to consistently generate greater than 15-per-cent ROE. Notwithstanding the challenging economic backdrop, our strategy and growing diversification resulted in solid execution. We continue to believe the second half of 2024 will be even stronger, and based on this and Q1 results, we are reaffirming our 2024 guidance. It's a standout time for EQB, and our distinct approach to creating value and enriching lives."

Analyst conference call and webcast: 10 a.m. Eastern Time, Feb. 29, 2024

EQB's Andrew Moor, president and chief executive officer, Chadwick Westlake, chief financial officer, and Marlene Lenarduzzi, chief research officer, will host the company's first quarter conference call and webcast. The listen-only webcast with accompanying slides will be available on the bank's website. To access the conference call with operator assistance, dial 416-764-8609 five minutes prior to the start time.

About EQB Inc.

EQB is a leading digital financial services company with $119-billion in combined assets under management and administration (as at Jan. 31, 2024). It offers banking services through Equitable Bank, a wholly owned subsidiary and Canada's seventh-largest bank by assets, and wealth management through ACM Advisors, a majority owned subsidiary specializing in alternative assets. As Canada's Challenger Bank, Equitable Bank has a clear mission to drive change in Canadian banking to enrich people's lives. It leverages technology to deliver exceptional personal and commercial banking experiences and services to over 607,000 customers and more than six million credit union members through its businesses. Through its digital EQ Bank platform, its customers have named it the best bank in Canada on the Forbes World's Best Banks list since 2021.

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