Niche mortgage lender Equitable Group Inc. reported an increase in its quarterly earnings for the three months ended June 30, remaining on par with the record earnings reported in the first quarter ended March 31.

Second quarter net income increased 15.5% to $11.9 million compared with $10.3 million in the same period a year ago; net interest income earned increased by $2.5 million from the prior quarter and by $2 million from the corresponding quarter of the prior year.

Equitable’s return on equity was 16.5% compared with 17.8% in Q1 2009 and 19.1% in Q2 of 2008; the tangible common equity ratio (TCE) ratio, a key measure of capital strength, was 11.8%, an improvement over the ratios of 10.8% and 8.6% for Q1 2009 and Q2 2008, respectively;

Its productivity ratio on a taxable equivalent basis — a measure of efficiency — improved to 24.4% from 26.8% in Q2 2008; net impaired mortgages improved to 0.79% of total mortgage principal outstanding from 0.94% at the end of Q1 2009.

Equitable’s board of directors declared a quarterly dividend in the amount of $0.10 per share, payable on Oct. 5 to shareholders of record at the close of business on Sept. 15.

“Equitable made strong progress in creating shareholder value over the first half of 2009 through a combination of margin improvement measures, excellent productivity, diligent risk management and the achievement of attractive securitization volumes and spreads,” said Andrew Moor, president and CEO.

“Given turbulent economic conditions, we are very pleased with Equitable’s performance to date, including growth in our $3.5 billion securitized mortgage portfolio and our robust capital position. Period end total capital ratio of 15.3% (inclusive of general allowance) is well ahead of our target for the year and supports meaningful growth in new mortgage business.”

Moor added that “economic conditions appear to be improving relative to the past few quarters and, based on our increasing comfort with credit and real estate market dynamics, we have increased our sales efforts within the context of ongoing lending and risk management discipline. Our robust balance sheet certainly supports incremental asset accumulation, and we’re confident that our low-cost business approach will allow us to add to our portfolio on a very profitable basis. For several reasons, we also expect continued improvement in our interest rate spreads. Notably, recent market conditions have eased overall deposit costs while the Bank of Canada has indicated that its benchmark interest rate should remain at its current level through the first half of 2010, assuming inflation remains in check. With greater market stability, combined with the progress we continue to make in implementing significantly enhanced pricing, we have a solid opportunity for additional shareholder value creation in the second half of 2009 and well into 2010.”