HomeEquity Bank Posts Record Origination Volume During Q2 2010

HOMEQ Corporation announced its subsidiary HomEquity Bank reverse mortgage origination volume set a new record during Q2 2010. Driven by encouraging deman across Canada, the company originated $59 million of reverse mortgages during the quarter, exceeding its Q2 2009 volume by 160%.

According to the company, the growth affirms the ongoing transition of reverse mortgages from a niche product to a mainstream solution in Canada. “The volume of inquiries and applications continues to grow and the sales cycle is shortening, indicating the strong motivation of new customers to acquire a reverse mortgage,” said the company in a statement.

“We are in the midst of a significant business transformation and are adapting well to the new environment”, said President and Chief Executive Officer, Mr. Steven Ranson. “We are experiencing strong growth coupled with encouraging improvements in efficiency throughout the business. It is estimated that the number of Canadian seniors will grow by 20% in the next six years and increasingly they will rely on HomEquity Bank for flexible and innovative solutions to meet their retirement needs.”

Despite an increase in volume, the company posted a net loss of $0.9 million ($0.06 per share) for the quarter, compared to net loss of $5.1 million ($0.36 per share) in Q2, 2009. Adjusted net income $0.13 per share was similar to the $0.14 per share earned in Q2, 2009. HOMEQ’s ability to maintain its adjusted net income at the current level was achieved despite a 10.5% increase in non-interest expenditure relating primarily to additional overhead incurred in operating a bank. Adjusted return on equity (annualized) was 8.7% in comparison to 9.1% in 2009.

Origination volume was more than two and a half times that of Q2 2009. A combination of the strong originations and the effect of compound interest is resulting in the portfolio growing at an accelerated rate. The portfolio grew by 13.6% on a year-on-year basis.