Equitable Group Inc. reported its financial results for the three and 12 months ended December 31, 2007 and introduced its financial objectives and capital plan for 2008.
2007 Financial Highlights
- Net income increased 14% to a record $31.2 million ($2.44 per share diluted) compared to $27.3 million ($2.26 per share diluted) in 2006.
- Adjusted net income (excluding the previously-announced $3.4 million after-tax write-down of a preferred share holding) increased 26% to $34.5 million ($2.71 per share diluted).
- Return on equity was 17.2% (18.9% adjusted) compared to 19.9% in 2006.
- Mortgage assets increased to a record $2.87 billion at year end - 35% higher than the previous year.
- Mortgage originations climbed to a record $2.73 billion from $2.16 billion in 2006.
- Realized loan losses, net of recoveries were $21 thousand - the same as in 2006.
- Total capital ratio was 11.4% compared to 10.6% at year end 2006.
- Book value per common share was $15.69, up 25% from 2006.
Fourth Quarter Highlights
- Net income was $6.9 million ($10.3 million on an adjusted basis to remove the $3.4 million after-tax write-down of the preferred share holding) compared to $7.8 million in the fourth quarter of 2006.
- Diluted earnings per share were $0.53 per share ($0.79 on an adjusted basis) compared to $0.64 a year ago.
- Return on equity was 13.7% (20.3% on an adjusted basis) compared to 21.0% in the same period of 2006.
- Conventional mortgage production, excluding warehoused mortgages, was $347.7 million, compared to $334.5 million in 2006.
Dividend
The Company's Board of Directors has declared a dividend in the amount of $0.10 per share payable on April 4, 2008 to shareholders of record at the close of business on March 14, 2008. The Company intends to maintain its current dividend throughout 2008.
2007 Commentary
"Equitable performed at a high level in 2007, achieving record earnings and an attractive return on equity," said Andrew Moor, President and Chief Executive Officer. "We are pleased with this performance, which was delivered during a period of substantial volatility in global financial markets."
Beyond record financial results, Equitable generated substantial asset expansion during 2007. A major highlight was the 35% year-over-year growth achieved in single-family mortgages receivable and 49% growth in mixed-use mortgages receivable. Growth in other conventional mortgages, other than warehoused, was 28%.
Despite record asset expansion, the Company maintained its outstanding credit track record. Over the past five years, total realized loan losses amounted to just $42 thousand.
Fourth Quarter Commentary
During the fourth quarter, the Company deliberately slowed the pace of conventional mortgage production in response to uncertain market conditions. Said Mr. Moor: "We felt this was most appropriate for our balance sheet and return on equity objectives. By reducing warehoused mortgage production to $63.4 million (from $276.9 million in the fourth quarter of 2006) we improved our capital ratio and generated a strong ROE in spite of market conditions." -- www.cnxmarketlink.com
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