Equity Financial Holdings Inc. Announces Common Share Offering

TORONTO, ONTARIO--(Marketwire - Feb. 10, 2011) -

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Equity Financial Holdings Inc. (TSX:EQI) ("EQI" or "the Corporation"), a Canadian financial services company serving the corporate and institutional market, today filed a preliminary short form prospectus in each of the provinces of Canada other than Québec in connection with a proposed public offering of its common shares designed to raise gross proceeds of approximately $10 million (the "Offering"). The Offering will be conducted through an offering syndicate led by Cormark Securities Inc. and including Jennings Capital Inc. and National Bank Financial Inc. Final pricing and determination of the number of common shares to be sold pursuant to the Offering will occur immediately prior to the filing of the final short form prospectus in respect of the Offering.

The net proceeds from the Offering are expected to be used primarily by EQI to purchase additional shares of EQI's wholly-owned subsidiary, Equity Financial Trust Company ("EFT", formerly Equity Transfer & Trust Company), to enable EFT to attain a regulatory capital balance of not less than $20 million.

In January 2010, the Corporation announced that EFT had applied for regulatory approval to become a deposit-taking institution ("DTI") in order to enter the growing field of residential mortgage lending. If approved, EFT will focus on the 5-10% of this market represented by alternative residential mortgages. The approval process also requires EFT to become a member of the Canada Deposit Insurance Corporation ("CDIC"), as deposits must be CDIC-insured.

Since that announcement, EFT has taken steps to leverage its existing infrastructure, hired key personnel to support the mortgage and deposit operations, developed and tested new processes and systems and enhanced its risk management, compliance and control structures. 

The Offering is expected to close on or about February 25, 2011 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. Upon the completion of the Offering, the Corporation believes that it will have met all the regulatory requirements necessary to become a DTI. 

Subject to the receipt of all necessary approvals, EFT expects to commence mortgage and deposit operations shortly after the new capital investment has taken place and it is targeting originations of $100 million over the initial twelve month period. It is expected that the mortgage and deposit business will reach break-even EBITDA within twelve months and be accretive to earnings thereafter.

EQI President & CEO Paul G. Smith said, "Our strategic plan calls for growth through diversification into financial services that are adjacent and complementary to our existing operations. By leveraging EFT's regulatory status, trust charter, financial, and technology infrastructure, we believe that the achievement of DTI status has the potential to create significant shareholder value."

Nick Kyprianou, EFT's President, Mortgage Operations said, "In an industry facing ever-increasing regulatory expectations and oversight, the achievement of DTI status will be a significant milestone for the Corporation. With the relatively low level of competition in this segment and with EFT's robust foundation, the Corporation is confident in its ability to launch and operate a successful mortgage operation."

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Equity Financial Holdings Inc.

Through its wholly owned subsidiaries, EQI provides transfer agent, corporate trust, corporate secretarial and foreign exchange services to corporations in North American capital markets. The Corporation's Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2010 can be found in the Corporation's filings on SEDAR at www.sedar.com and on the Corporation's website at www.equityfinancialholdings.com.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "estimates," "anticipates," "believes," "intends," "may," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. This press release includes, without limitation, statements regarding the Corporation's intention to commence operations as a deposit-taking institution, the Corporation's belief that it will receive all necessary regulatory approvals in connection therewith, the Corporation's EBITDA and earnings expectations for the mortgage and deposit business, fee income, expense levels, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, catastrophic events, and the Corporation's ability to complete strategic transactions and integrate acquisitions and other factors. Such statements reflect the Corporation's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Prospective investors and others should not place undue reliance on such forward-looking statements, as they reflect the Corporation's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. 
Many factors could cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others a significant downturn in capital markets or the economy as a whole, errors or omissions by the Corporation in providing services to its customers, significant changes in interest rates, foreign currency exchange rates or the cost of complying with applicable regulatory requirements, inability to raise funds through public or private financing (including through the Offering), failure by EFT to obtain the approvals required to carry on its proposed deposit-taking and mortgage activities in a timely manner and/or on acceptable terms and conditions, the failure of borrowers or counterparties to honour their financial or contractual obligations to EFT, failure by EFT to adequately monitor and/or adjust its mortgage portfolio management practices for changing circumstances, failure by the Corporation to attract and to retain the necessary employees to meet its needs, failure by EFT to secure sufficient deposits from investment advisors or deposit brokers or a sufficient level of mortgage origination from its mortgage broker network, a failure of the computer systems of the Corporation or one or more of its service providers or the risks detailed from time-to-time in the Corporation's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. Forward-looking information will be updated as required pursuant to the requirements of applicable securities laws.