Home Capital Reports Another Strong Quarter:
-- Diluted Earnings per Share up 13.2% year over year to $1.72; -- Adjusted Diluted Earnings per Share(*) up 19.1% year over year to $1.81; -- Assets Under Administration Surpass $20 billion and Shareholders' Equity Increases to over $1 billion TORONTO, May 8, 2013 /CNW/ - Home Capital Group (TSX: HCG) today reported another quarter of strong results for the three months ended March 31, 2013. The Company's First Quarter Report, including Management's Discussion and Analysis, is available on Home Capital's website at www.homecapital.com and the Canadian Securities Administrators website at www.sedar.com. (*) Table 2 provides a reconciliation of net income to adjusted net income and adjusted diluted earnings per share. FINANCIAL HIGHLIGHTS ( ) ( ) ( ) ( ) ( ) ( ) (Unaudited) For the three months ended (000s, except Per Share and March 31 December 31 March 31 Percentage Amounts) ( ) 2013 2012 2012 OPERATING ( ) ( ) ( ) ( ) ( ) ( ) RESULTS Net Income $ 59,725 $ 58,965 $ 52,534 Total Revenue ( ) 231,194 227,649 214,682 Diluted Earnings per $ 1.72 $ 1.70 $ 1.52 Share Return on Shareholders' ( ) 24.0% 25.0% 26.2% Equity Return on ( ) 1.3% 1.2% 1.2% Average Assets Net Interest ( ) 2.17% 2.13% 2.02% Margin (TEB)(1) Provision as a Percentage of ( ) 0.11% 0.09% 0.11% Gross Loans (annualized) Efficiency ( ) 28.3% 27.3% 27.7% Ratio (TEB)(1) ( ) ( ) ( ) ( ) ( ) As at ( ) March 31 December 31 March 31 2013 2012 2012 BALANCE SHEET ( ) ( ) ( ) ( ) HIGHLIGHTS Total Assets $ 19,358,563 $ 18,800,079 $ 17,995,256 Total Assets Under ( ) 20,377,074 19,681,750 17,995,256 Administration (2) Total Loans ( ) 17,429,982 17,159,913 16,451,745 (3,4) Securitized Loans ( ) 6,710,556 6,706,160 8,001,414 On-Balance Sheet(3) Total Loans Under ( ) 18,448,493 18,041,584 16,451,745 Administration (3,4,5) Liquid Assets ( ) 823,973 771,772 683,511 Deposits ( ) 10,642,280 10,136,599 8,297,126 Shareholders' ( ) 1,021,813 968,213 828,036 Equity FINANCIAL ( ) ( ) ( ) ( ) ( ) ( ) STRENGTH Capital ( ) ( ) ( ) ( ) ( ) ( ) Measures(6) Risk-Weighted ( ) 5,738,257 5,491,513 4,704,529 Assets Common Equity Tier 1 Capital ( ) 16.57% N/A N/A Ratio Tier 1 Capital ( ) 16.57% 17.01% 17.49% Ratio Total Capital ( ) 19.82% 20.68% 21.62% Ratio Assets to Regulatory ( ) 13.98 13.98 13.64 Capital Multiple Credit Quality ( ) ( ) ( ) ( ) ( ) ( ) Net Non-Performing Loans as a ( ) 0.32% 0.33% 0.28% Percentage of Gross Loans Allowance as a Percentage of Gross ( ) 59.9% 57.0% 67.6% Non-Performing Loans Share ( ) ( ) ( ) ( ) ( ) ( ) Information Book Value per $ 29.53 $ 27.96 $ 23.83 Common Share Common Share $ 58.74 $ 59.07 $ 50.34 Price - Close Market $ 2,032,404 $ 2,045,594 $ 1,749,365 Capitalization Number of Common Shares ( ) 34,600 34,630 34,751 Outstanding
(1 )See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures of the unaudited interim consolidated financial report. (2)Total assets under administration include total on-balance sheet assets and off-balance sheet loans. (3)In the quarter the Company classified Home Trust mortgages used as CMB replacement assets as securitized mortgages. In prior periods these were classified as pledged securities. Prior periods have been restated to reflect the current classification. (4 )Total loans include loans held for sale. (5)Loans under administration includes total loans and off-balance sheet loans. (6)These figures relate to the Company's operating subsidiary, Home Trust Company and are calculated under Basel III for 2013 and Basel II for 2012.
FIRST QUARTER 2013 HIGHLIGHTS Key results for Q1 2013 included: -- Net income increased to $59.7 million, up 13.7% over Q1 2012 and 1.3% over Q4 2012. Net income reflects $1.8 million in after tax charges related to IFRS implementation (see the Non-Interest Income section of the MD&A) and $1.5 million in after-tax charges related to the resolution of disputed loans to commercial condominium corporations (see the Provision and Allowance for Credit Losses section of the MD&A). Without these charges, adjusted net income, as defined in Table 2,( )was $63.0 million representing an increase of 20.0% over Q1 2012. -- Diluted earnings per share were $1.72 for the quarter representing increases of 13.2% over the $1.52 earned in Q1 2012 and increases of 1.2% over the $1.70 earned in Q4 2012. Adjusting for charges for IFRS implementation and the condominium loan resolution, adjusted diluted earnings per share(1) were $1.81, 19.1% higher than Q1 2012. -- Net interest income, before provisions, continued its upward trend, reaching $101.9 million in Q1 2013, increasing 15.5% over the $88.2 million recorded in Q1 2012 and 2.0% over the $99.9 million earned in Q4 2012. This reflects net on-balance sheet loan growth and improving total net interest margin. -- Net interest margin (TEB) increased to 2.17% in Q1 2013 from 2.02% in Q1 2012 and 2.13% in Q4 2012. The increase reflects the combination of the shift to higher yielding traditional mortgages relative to securitized mortgages and, when compared to Q1 2012, improved spreads earned on non-securitized lending. -- Return on equity at 24.0% for the quarter remains strong and continues well in excess of the Company's minimum performance objective of 20%. -- The loan portfolio credit quality remains solid with continued low non-performing loans and credit losses well within expected levels. Net non-performing loans as a percentage of gross loans (NPL ratio) ended the quarter at 0.32% compared to 0.33% at the end of 2012 and 0.28% at the end of Q1 2012. The annualized credit provision as a percentage of gross loans (PCL ratio) remains within expectations at 0.11%, compared to 0.09% in Q4 2012 and 0.11% in Q1 2012. Excluding the provisions related to the resolution of disputed loans to the two condominium corporations the PCL ratio would have been 0.06% in the quarter. -- Home Trust adopted the new Basel III capital requirements in Q1 2013 and continues to significantly exceed regulatory minimums. Under Basel III, Home Trust's Common Equity Tier 1 ratio (CET 1 ratio) was 16.57%, while Tier 1 and Total Capital Ratios were 16.57% and 19.82%, respectively. Home Trust's assets to capital multiple was 13.98 at the end of the quarter compared to 13.98 at December 31, 2012 and 13.64 at March 31, 2012. -- Total loans under administration, which includes securitized mortgages that qualify for off-balance sheet accounting, grew to $18.45 billion, reflecting increases of $2.00 billion or 12.1% from $16.45 billion one year ago, and $0.41 billion or 2.3% from $18.04 billion at the end of 2012 (9.0% on an annualized basis). At this point the Company still expects to meet its loans under administration growth target of 10-15% year over year. -- Product demand was strong in the quarter, with $1.38 billion in total mortgage originations up from $1.19 billion originated in Q1 2012. Even though Q1 2012 benefited from milder weather and increased activity ahead of mortgage insurance changes, the Company was able to increase year over year originations. Q1 2013 originations were behind Q4 2012 originations of $1.47 billion primarily due to seasonal factors. -- Traditional mortgage originations increased to $0.99 billion in Q1 2013 from $0.92 billion in Q1 2012 and declined seasonally from $1.16 billion in Q4 2012. The Company continues to experience strong demand for its traditional product offerings combined with high credit quality. This continues to enhance profitability and asset quality. -- Accelerator (insured) mortgage originations declined to $121.6 million in Q1 2013 from $172.7 million in Q1 2012 and from $174.2 million in Q4 2012 reflecting the Company's continued preference for high margin assets on balance sheet. -- The Company continues to pursue strategies for transactions that will qualify lower margin, insured single-family residential mortgages for off-balance sheet treatment and lead to increased growth in this loan portfolio. Ongoing dialogue with regulators and other interested parties regarding these strategies has continued and management remains cautiously optimistic that a solution can be attained. -- Multi-unit residential mortgage originations were $202.6 million in Q1 2013 compared to $27.5 million in Q1 2012 and $57.2 million in Q4 2012. In the quarter the Company securitized and sold $156.2 million of insured multi-unit residential mortgages that qualified for off-balance sheet accounting compared to $64.6 million last quarter. These transactions resulted in securitization gains of $1.4 million in the quarter compared to $0.7 million last quarter. This securitization program was initiated in the second quarter of 2012. The Company is pleased with the results and anticipates that this program will continue to enhance profitability and experience modest growth. -- Store and apartment mortgage advances were $23.6 million in Q1 2013 compared to $37.9 million in Q1 2012 and $24.8 million in Q4 2012. -- Commercial mortgage advances were $30.7 million in Q1 2013 compared to $27.7 million in Q1 2012 and $52.4 million in Q4 2012. The Company continues to be selective and focuses on opportunities that present strong credit and risk profiles. (1)Table 2 provides a reconciliation of net income to adjusted net income and adjusted diluted earnings per share.
Data from the Canadian Real Estate Association indicates that real estate markets have softened in the first quarter of 2013 with an overall decline in housing activity of approximately 15% when compared to the first quarter of 2012. Average prices across Canada rose marginally in the quarter and the rate of appreciation of home prices has moderated, with pockets of pricing declines in certain markets. The Company's view and observations are that housing markets remain in balanced territory and remain healthy overall. Declines in housing activity were not unexpected given the strong start to spring last year, ahead of changes to mortgage insurance rules. While the Company experienced overall originations below the last quarter of 2012, the activity was within management's expectations given seasonality and the slower start to the spring housing market this year. The Company continues to observe good demand for its traditional mortgage products from customers with strong credit profiles and originations in this product were up over the same period last year. The Company anticipates that demand for its traditional products to continue to be robust, but recognizes that overall markets have softened and demand could be reduced in future quarters. Management is prepared to adjust its strategy in such a situation.
During the quarter the Company continued its deposit diversification initiative by further building balances in its brokered high interest savings account and in GICs directly with customers. These efforts will be further bolstered by the launch of a direct to consumer savings account later this year combined with continued advertising and business development activities and investment in information technology infrastructure to build the direct deposit channel and enhance deposit diversification.
Beginning on January 1, 2013 the Company's subsidiary Home Trust was subject to, and fully compliant with, the new regulatory capital rules known as Basel III. Generally, the new rules introduced higher minimum capital targets along with requirements for higher quality capital. Home Trust was well positioned to adopt the new rules as it already well exceeded minimum regulatory capital ratios and maintained a simple structure of high quality capital.
To further strengthen the Company's Board of Directors, Ms. Diana Graham will stand as a nominee for election to the board at the upcoming Annual General Meeting. Ms. Graham brings extensive experience to the Board, including governance, credit, operational, market and enterprise risk management, in both the United States and Canada, most recently retiring from the position of Chief Risk Officer at a Canadian financial institution. We are confident that Ms. Graham's significant experience and depth of knowledge will be assets to the Board and the Company.
Subsequent to the end of the quarter, and in light of the Company's solid performance, profitability and strong financial position, the Board of Directors declared a quarterly dividend of $0.26 per Common share, payable on June 1, 2013 to shareholders of record at the close of business on May 17, 2013.
The Company continues to deliver solid results in terms of growth and increased returns. Despite the persistent international economic instability and modest economic improvement in Canada, the Company's performance continues to reflect the strength and the successful execution of the Company's core strategy.
With solid performance in all aspects of Home Capital's business, management continues to expect the positive performance the Company experienced during the first quarter of 2013 to continue for the remainder of year.
GERALD M. SOLOWAY Chief Executive Officer
KEVIN P.D. SMITH Chair of the Board May 8, 2013
Additional information concerning the Company's targets and related expectations for 2013, including the risks and assumptions underlying these expectations, may be found in Management's Discussion and Analysis (MD&A) of the quarterly report.
Conference Call and Webcast
First Quarter Results Conference Call The conference call will take place on Thursday, May 9, 2013 at 10:30 a.m. ET. Participants are asked to call 5 to 15 minutes in advance, 647-427-7450 in Toronto or toll-free 1-888-231-8191 throughout North America. The call will also be accessible in listen-only mode via the Internet at www.homecapital.com.
Conference Call Archive A telephone replay of the call will be available between 1:30 p.m. ETThursday, May 9, 2013 and midnight ETThursday, May 16, 2013 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 36458511). The archived audio web cast will be available for 90 days on CNW Group's website at www.newswire.ca and Home Capital's website at www.homecapital.com.
Annual Meeting Notice
The Annual Meeting of Shareholders of Home Capital Group Inc. will be held at the Design Exchange, Trading Floor, Second Floor, 234 Bay Street, Toronto, Ontario, on Wednesday, May 15, 2013 at 11:00 a.m. local time. Shareholders and guests are invited to join Directors and Management for lunch and refreshments following the Annual Meeting. All shareholders are encouraged to attend.
Consolidated Statements of Income
For the three months ended
thousands of Canadian dollars, except per share March 31 December 31 March 31 amounts
(Unaudited) 2013 2012 2012
Net Interest Income Non-Securitized Assets
Interest from loans $ 148,031 $ 144,310 $ 117,565
Dividends from securities 3,193 3,502 3,964
Other interest 1,456 949 1,047
152,680 148,761 122,576
Interest on deposits 62,938 61,873 53,128
Interest on senior debt 1,583 1,825 1,653
Net interest income 88,159 85,063 67,795 non-securitized assets
Net Interest Income Securitized Loans and Assets
Interest income from 61,337 64,351 76,616 securitized loans and assets
Interest expense on 47,610 49,506 56,192 securitization liabilities
Net interest income 13,727 14,845 20,424 securitized loans and assets
Total Net Interest Income 101,886 99,908 88,219
Provision for credit losses 4,667 3,685 4,498
97,219 96,223 83,721 Non-Interest Income Fees and other income 14,972 11,059 10,897 Securitization income 1,587 5,659 - Net realized and unrealized gains (losses) on securities 2,274 (883) 308 and mortgages Net realized and unrealized (1,656) (1,298) 4,285 (loss) gain on derivatives 17,177 14,537 15,490 114,396 110,760 99,211 Non-Interest Expenses Salaries and benefits 16,950 14,991 13,999 Premises 2,445 2,562 1,998 Other operating expenses 14,574 14,067 13,171 33,969 31,620 29,168 Income Before Income Taxes 80,427 79,140 70,043 Income taxes Current 23,456 22,649 19,055 Deferred (2,754) (2,474) (1,546) 20,702 20,175 17,509 NET INCOME $ 59,725 $ 58,965 $ 52,534 NET INCOME PER COMMON SHARE Basic $ 1.72 $ 1.70 $ 1.52 Diluted $ 1.72 $ 1.70 $ 1.52 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 34,630 34,655 34,550 Diluted 34,825 34,779 34,593 Total number of outstanding 34,600 34,630 34,751 common shares Book value per common share $ 29.53 $ 27.96 $ 23.83 Consolidated Statements of Comprehensive Income For the three months ended March 31 December 31 March 31 thousands of Canadian 2013 2012 2012 dollars (Unaudited) NET INCOME $ 59,725 $ 58,965 $ 52,534 OTHER COMPREHENSIVE INCOME Available for Sale Securities Net unrealized gains on securities available for 7,165 1,471 4,393 sale Net (gains) losses (1,946) 457 (364) reclassified to net income 5,219 1,928 4,029 Income tax expense 1,381 509 1,167 3,838 1,419 2,862 Cash Flow Hedges Net unrealized gains on - - 26 cash flow hedges Net losses reclassified to 367 376 353 net income 367 376 379 Income tax expense 95 99 110 272 277 269 Total other comprehensive 4,110 1,696 3,131 income COMPREHENSIVE INCOME $ 63,835 $ 60,661 $ 55,665 Consolidated Balance Sheets March 31 December 31 thousands of Canadian dollars 2013 2012 (Unaudited) ASSETS Cash and Cash Equivalents $ 631,080 $ 301,863 Available for Sale Securities 404,254 414,344 Loans held for sale 43,434 21,921 Loans Securitized mortgages 6,710,556 6,706,160 Non-securitized mortgages and loans 10,675,992 10,431,832 17,386,548 17,137,992 Collective allowance for credit losses (30,300) (30,000) 17,356,248 17,107,992 Other Restricted cash 130,083 137,424 Pledged securities 551,008 588,069 Derivative assets 44,643 45,388 Other assets 114,528 100,983 Goodwill and intangible assets 83,285 82,095 923,547 953,959 $ 19,358,563 $ 18,800,079 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits Deposits payable on demand $ 96,513 $ 105,923 Deposits payable on a fixed date 10,545,767 10,030,676 10,642,280 10,136,599 Senior Debt 152,092 150,684 Securitization Liabilities Mortgage-backed security liabilities 1,271,879 1,301,693 Canada Mortgage Bond liabilities 6,036,475 6,034,202 7,308,354 7,335,895 Other Derivative liabilities 2,941 2,386 Other liabilities 198,037 170,502 Deferred tax liabilities 33,046 35,800 234,024 208,688 18,336,750 17,831,866 Shareholders' Equity Capital stock 61,850 61,903 Contributed surplus 6,729 6,224 Retained earnings 952,869 903,831 Accumulated other comprehensive income 365 (3,745) (loss) 1,021,813 968,213 $ 19,358,563 $ 18,800,079 Consolidated Statements of Changes in Shareholders' Equity Net Net Total Unrealized Unrealized Gains Losses Accumulated (Losses) on on Cash Flow Other Total Securities thousands of Available Canadian Capital Contributed Retained for Hedges, Comprehensive Shareholders' dollars, except per Sale, share amounts Stock Surplus Earnings after Tax after Tax (Loss) Income Equity (Unaudited) Balance at December 31, $ 61,903 $ 6,224 $ 903,831 $ 432 $ (4,177) $ (3,745) $ 968,213 2012 Comprehensive - - 59,725 3,838 272 4,110 63,835 income Amortization of fair value of employee - 505 - - - - 505 stock options Repurchase of (53) - - (1,746) shares (1,693) - - Dividends paid ($0.26 per - - (8,994) - - - (8,994) share) Balance at $ 61,850 $ 6,729 $ 952,869 $ 4,270 $ $ 365 $ 1,021,813 March 31, 2013 (3,905) Balance at December 31, $ 55,104 $ 5,873 $ 722,999 $ (4,141) $ (5,050) $ (9,191) $ 774,785 2011 Comprehensive - - 52,534 2,862 269 3,131 55,665 income Stock options 6,431 (1,254) - - - - 5,177 settled Amortization of fair value of employee - 588 - - - - 588 stock options Repurchase of (41) - (1,159) - - - (1,200) shares Dividends paid ($0.20 per - - (6,979) - - - (6,979) share) Balance at $ 61,494 $ 5,207 $ 767,395 $ $ $ (6,060) $ 828,036 March 31, 2012 (1,279) (4,781) Consolidated Statements of Cash Flows For the three months ended March 31 March 31 thousands of Canadian dollars (Unaudited) 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the period $ 59,725 $ 52,534 Adjustments to determine cash flows relating to operating activities: Deferred income taxes (2,754) (1,546) Amortization of capital assets 686 705 Amortization of intangible assets 1,927 1,591 Amortization of net premium on securities 477 929 Amortization of securitization and senior debt transaction costs 3,114 3,460 Provision for credit losses 4,667 4,498 Change in accrued interest payable 40,909 39,292 Change in accrued interest receivable (2,105) (667) Net realized and unrealized gains on securities and mortgages (2,274) (308) Realized gain on securitization (1,587) - Settlement of derivatives 3,115 - Loss (gain) on derivatives 1,857 (4,285) Net increase in mortgages (679,017) (313,250) Net increase in credit card loans and other consumer retail loans (6,667) (4,810) Net increase in deposits 505,681 375,002 Proceeds from obligations under repurchase agreement - 49,720 Proceeds from sale of mortgage-backed securities 143,553 - Proceeds from securitization of mortgage-backed security liabilities 285,616 - Settlement and repayment of securitization liabilities (316,334) (181,242) Amortization of fair value of employee stock options 505 588 Changes in taxes payable and other (6,039) (19,777) Cash flows provided by operating activities 35,055 2,434 CASH FLOWS FROM FINANCING ACTIVITIES Repurchase of shares (1,746) (1,200) Exercise of employee stock options - 5,177 Dividends paid to shareholders (9,003) (6,954) Cash flows used in financing activities (10,749) (2,977) CASH FLOWS FROM INVESTING ACTIVITIES Activity in securities Purchases (895,985) (243,855) Proceeds from sales 321,975 7,145 Proceeds from maturities 883,337 7,058 Purchases of capital assets (1,299) (1,629) Purchases of intangible assets (3,117) (2,890) Cash flows provided by (used in) investing activities 304,911 (234,171) Net increase (decrease) in cash and cash equivalents during the period 329,217 (234,714) Cash and cash equivalents at beginning of the period 301,863 534,394 Cash and Cash Equivalents at End of the Period $ 631,080 $ 299,680 Supplementary Disclosure of Cash Flow Information Dividends received on investments $ 1,768 $ 4,671 Interest received 147,027 194,561 Interest paid 23,613 74,681 Income taxes paid 38,744 33,571
Home Capital published its financial objectives for 2013 on page 18 of the Company's 2012 Annual Report. The following table compares actual performance to date against each of these objectives.
Table 1: 2013 Targets and Performance
( ) ( ) ( ) ( ) ( ) ( )
( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
For the three months ended March 31, ( ) ( ) ( ) 2013
2013 Actual ( ) Amount Increase
Targets Results over 2012
Growth in net 13%-18% 13.7% $ 59,725 $ 7,191 income
Growth in diluted 13%-18% 13.2% ( ) 1.72 0.20 earnings per share
Growth in total loans under 10%-15% 9.0% ( ) 18,448,493 406,909 administration (1)
Return on shareholders' 20.0% 24.0% ( ) ( ) ( ) ( ) equity
Efficiency 28.0% - 28.3% ( ) ( ) ( ) ( ) ratio (TEB)(2) 34.0%
Provision as a percentage of 0.10% - 0.11% ( ) ( ) ( ) ( ) gross loans 0.18% (annualized)
(1) Change represents growth over December 31, 2012 on an annualized basis and includes loans held for sale. (2) See definition of TEB under Non-GAAP Measures in the unaudited interim consolidated financial report.
Table 2: Reconciliation of Net Income to Adjusted Net Income
Quarter (000s, except % and Q1 Q4 % Q1 % per share amounts) Reconciliation of Net Income to Adjusted ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Net Income Net income per Consolidated $ 59,725 $ 58,965 1.3% $ 52,534 13.7% Statements of Income Adjustment for derivative restructuring - IFRS ( ) 1,783 $ 2,602 (31.5)% - - conversion (net of tax) Adjustment for disputed loans to condominium ( ) 1,508 - - - - corporations (net of tax) Adjusted Net Income $ 63,016 $ 61,567 2.4% $ 52,534 20.0% (1) Adjusted Basic $ 1.82 $ 1.78 2.2% $ 1.52 19.7% Earnings per Share(1) Adjusted Diluted $ 1.81 $ 1.77 2.3% $ 1.52 19.1% Earnings per Share(1) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) (1) Adjusted net income and Adjusted earnings per share are defined in the Non-GAAP section of the MD&A. Caution Regarding Forward-Looking Statements From time to time Home Capital Group Inc. makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are "financial outlooks" within the meaning of National Instrument 51-102. Please see the risk factors, which are set forth in detail on pages 55 through 68 of the Company's 2012 Annual Report, as well as its other publicly filed information, which are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, for the material factors that could cause the Company's actual results to differ materially from these statements. These risk factors are material risk factors a reader should consider, and include credit risk, funding and liquidity risk, structural interest rate risk, operational risk, investment risk, strategic and business risk, reputational risk and regulatory and legal risk along with additional risk factors that may affect future results. Forward-looking statements can be found in the Report to the Shareholders and the Outlook Section in the quarterly report. Forward-looking statements are typically identified by words such as "will," "believe," "expect," "anticipate," "estimate," "plan," "forecast," "may," and "could" or other similar expressions. By their very nature, these statements require the Company to make assumptions and are subject to inherent risks and uncertainties, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition and technological change. The preceding list is not exhaustive of possible factors. These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update any forward-looking statements, whether written or verbal, that may be made from time to time by it or on its behalf, except as required by securities laws. Assumptions about the performance of the Canadian economy in 2013 and its effect on Home Capital's business are material factors the Company considers when setting its objectives and outlook. In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical and forecasted economic data provided by the Canadian government and its agencies. In setting and reviewing the outlook and objectives for the remainder of 2013, management's expectations continue to assume: -- The Canadian economy will produce modest growth in 2013 with relatively stable to modestly improving employment conditions in most regions. The economy will continue to be heavily influenced by the economic conditions in the United States and global markets. Inflation will generally be within the Bank of Canada's target of 1% to 3%. -- The Bank of Canada continues to indicate that increases to its target overnight interest rate are not imminent and, as such, the Company is assuming the rate will remain at its current level for most of 2013. This is expected to continue to support low mortgage interest rates. -- The housing market will remain relatively stable with balanced supply and demand conditions in most regions supported by continued low interest rates, relatively stable to modestly improving employment, and immigration. There will be declines in housing starts and resale activity compared to prior years with stable to modestly declining prices throughout most of Canada. -- Consumer debt levels will remain serviceable by Canadian households. Non-GAAP Measures The Company uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with GAAP, are not defined by GAAP, and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. Definitions of non-GAAP measures can be found under Non-GAAP Measures in the Management's Discussion and Analysis included in the Company's First Quarter 2013 Report. Regulatory Filings The Company's continuous disclosure materials, including interim filings, annual Management's Discussion and Analysis and audited consolidated financial statements, Annual Information Form, Notice of Annual Meeting of Shareholders and Proxy Circular are available on the Company's website at www.homecapital.com, and on the Canadian Securities Administrators' website at www.sedar.com. About Home Capital Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposits, residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba. Gerald M. Soloway, CEO, or Martin Reid, President 416-360-4663 www.homecapital.com SOURCE: Home Capital Group Inc. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2013/08/c4636.html CO: Home Capital Group Inc. ST: Ontario NI: FIN ERN CONF -0- May/08/2013 21:00 GMT