Home Capital Reports Strong Earnings with Net Income up 16.8% Year over Year

 Home Capital Reports Strong Earnings with Net Income up 16.8% Year over Year  --  Diluted Earnings per Share up 16.3% Year over Year to $1.00        --  Return on Equity Solid at 23.1% for the Quarter  TORONTO, May 7, 2014 /CNW/ - Home Capital today reported another quarter of  growth and increased earnings.  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.  FINANCIAL HIGHLIGHTS        Error occurred while generating ASCII Content for table     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()  FIRST QUARTER 2014 HIGHLIGHTS  Key results for the first quarter of 2014 included:     --  Net income increased to $69.7 million for the first quarter, up         1.3% from Q4 2013 and 16.8% over Q1 2013.     --  Diluted earnings per share(1) were $1.00 for the quarter,         representing increases of 2.0% and 16.3% over the $0.98 and         $0.86 earned in Q4 2013 and Q1 2013, respectively.     --  Total net interest income, before provisions, of $110.4 million         was down slightly from the $111.0 million in Q4 2013 and up         8.3% from the $101.9 million in Q1 2013. The slight decrease         from last quarter reflects $3.7 million in lower net interest         income on securitized loans which, consistent with the         Company's business strategy, has been replaced with gains on         sale of $8.1 million in the quarter compared to $4.6 million in         Q4 2013 and $1.4 million in Q1 2013 (please see below). Net         interest income on the non-securitized portfolio exceeded $100         million for the first time, reaching $102.8 million in the         quarter, up 3.1% from last quarter and 16.7% from one year ago,         reflecting strong and consistent growth in the traditional         portfolio.     --  Net interest margin (TEB) was 2.19% in the quarter, down from         2.22% last quarter and up from 2.17% one year ago. Higher         liquidity balances and lower net interest margins on         securitized mortgages contributed to the decline from last         quarter while spreads on traditional mortgages remained         consistent     --  Securitization income, including gains on sale mentioned above,         was $8.7 million compared to $5.8 million in Q4 2013 and $1.5         million in Q1 2013. The gains consisted of $6.7 million on the         sale of residual interests related to $486.2 million of         underlying single-family mortgages and gains of $1.4 million on         the sale of $211.5 million of multi-unit residential mortgages.     --  Return on equity was strong at 23.1% for the quarter and         continues to be in excess of the Company's minimum performance         objective of 20%.     --  The credit quality of the loan portfolio remains strong with         continued low non-performing loans and credit losses. Net         non-performing loans as a percentage of gross loans (NPL ratio)         ended the quarter at 0.33% compared to 0.35% at the end of last         quarter and 0.32% one year ago. Included in the non-performing         loans is an insured multi-unit residential property with an         outstanding amount of $9.7 million, where the Company expects         no losses. In the absence of this fully insured CMHC loan the         NPL ratio would have been 0.27%. The annualized credit         provision as a percentage of gross uninsured loans of 0.11% has         decreased from the 0.14% in Q4 2013 and the 0.18% in Q1 2014,         reflecting lower individual provisions.     --  Capital ratios remain high with Home Trust's Common Equity Tier         1 ratio (CET 1 ratio) ending the quarter at 17.22%, while Tier         1 and Total Capital ratios were 17.22% and 20.06%,         respectively. Home Trust's Assets to Capital multiple (ACM) was         13.02 at the end of the quarter compared to 13.19 at December         31, 2013 and 13.45 one year ago. The sale of residual interests         and resulting off-balance sheet treatment of mortgages lowered         the ACM in the quarter.     --  Total loans under administration, which includes securitized         mortgages that qualify for off-balance sheet accounting,         reached $20.48 billion, reflecting increases of $2.03 billion         or 11.0% from $18.45 billion one year ago, and $0.53 billion or         2.7% from $19.94 billion at the end of 2013 (10.7% on an         annualized basis).     --  Total mortgage originations in the quarter decreased seasonally         to $1.68 billion from $1.91 billion last quarter and increased         from $1.38 billion from the same quarter last year. First         quarter originations, while seasonally lower as expected,         remained strong despite the slow start to real estate markets         which was reflective of the harsh winter conditions that kept         many Canadians out of the market for much of the first quarter.     --  Traditional residential mortgage originations of $1.07 billion         in the quarter also decreased seasonally from $1.23 billion in         Q4 2013 and increased from $0.99 billion in Q1 2013. The         Company continues to experience strong demand for its         traditional product offerings, which continue to be of high         credit quality. This continues to enhance profitability and         asset quality.     --  Accelerator (insured) residential mortgage originations of         $289.5 million in the quarter decreased seasonally from $357.1         million in Q4 2013 and increased 138.1% from $121.6 million in         Q1 2013. The favourable regulatory ruling regarding the sale of         residual interests in Q3 2013 led the Company to increase its         activity in insured lending during the second half of 2013 and         into 2014.     --  Multi-unit residential mortgage originations were $213.6         million in the quarter compared to $239.9 million last quarter         and $202.6 million in the same period last year. Multi-unit         residential mortgage originations are mostly insured and         subsequently securitized through programs that qualify for         off-balance sheet accounting resulting in the securitization         gains discussed above.     --  Commercial mortgage and other loan advances were $72.0 million         for the quarter compared to $60.5 million in Q4 2013 and $38.6         million in Q1 2013. Store and apartment mortgage advances were         $27.6 million in the quarter compared to $24.5 million in Q4         2013 and $23.6 million in Q1 2013.     --  The consumer retail credit portfolio, which includes durable         household goods, such as water heaters and larger-ticket home         improvement items, reached $346.9 million at the end of Q1         2014, up 2.0% from $340.0 million at the end of last quarter         and up 21.7% from $285.1 million at the end of Q1 2013. The         Company continues to be successful at expanding relationships         with its business partners to increase this portfolio which         offers attractive returns for the risk profile.     --  Total deposits reached $13.08 billion, up 2.5% from last         quarter and 23.0% from one year ago.     --  The Company initiated two new programs over the last year in to         further diversify its deposits from a predominately large         broker funded model, a high-interest savings account and Oaken         Financial, a direct-to-consumer deposit brand. Oaken deposits         at the end of the quarter increased by 25.9% over the balance         at Q4 2013 and to over three times the balance one year ago.         The high-interest saving accounts also grew significantly         reaching a balance at the end of the quarter of $450.9 million,         representing an increase of 33.7% over the $337.2 million at         the end of 2013 and over ten times the balance of $42.3 million         one year ago.  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 approved a quarterly dividend of $0.16 per common share, payable on  June 1, 2014 to shareholders of record at the close of business on May 16,  2014.  While winter and early spring real estate activity was reduced by poor weather  and a limited supply of homes for sale, recent transaction levels suggest a  recovery in the late spring and summer.  The slow market conditions in the  early part of 2014 will have an impact on the timing and level of  securitization and gains on sale of mortgages during the balance of the year.   On an overall basis, the Company anticipates growing demand for all its  lending products as the year progresses and expects that it will also be able  to further increase its market share through its network of brokers and its  business development programs, leading to achievement of the annual goals set  out in Table 1 of this press release.  The Company continues to deliver solid results in terms of growth, high  returns and increased dividends. Despite the modest economic improvement in  Canada, the Company's performance continues to reflect the strength and the  successful execution of its core strategy.     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()  (1) For comparative presentation purposes, the prior period diluted earnings  per share amounts were restated to half of the previously reported amounts to  reflect the stock dividend of one common share per outstanding share declared  during the first quarter of 2014.  Additional information concerning the Company's targets and related  expectations for 2014, including the risks and assumptions underlying these  expectations, may be found in the Management's Discussion and Analysis (MD&A)  of the quarterly report.  First Quarter Results Conference Call The conference call will take place on  Thursday, May 8, 2014 at 10:30 a.m. 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. Thursday, May 8, 2014 and midnight Thursday, May 15, 2014 by  calling 416-849-0833 or 1-855-859-2056 (enter passcode 26905840). 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 One King West, Grand Banking Hall, Toronto, Ontario, M5H  1A1, on Wednesday, May 14, 2014 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.     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()  Home Capital published its annual financial objectives for 2014 on page 17 of  the Company's 2013 Annual Report. The following table compares actual  performance to date against each of these objectives.  Table 1: 2014 Targets and Performance     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()  Table 2: Reconciliation of Net Income to Adjusted Net Income     Index was outside the bounds of the array.        at PrimaryContent.GenerateASCIIContent()  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  54 through 67 of the Company's 2013 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 and its effect on  Home Capital's business are material factors the Company considers when  setting its objectives, targets 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 its  targets, objectives and outlook for the remainder of 2014, management's  expectations continue to assume:     --  The Canadian economy will continue to produce modest growth in         2014 with stable to modestly improving employment conditions in         most regions, and inflation will generally be within the Bank         of Canada's target of 1% to 3% leading to stable credit losses         and strong demand for the Company's lending products.     --  The Canadian economy will continue to be influenced by the         economic conditions in the United States and global markets; as         such, the Company is prepared for the variability to plan that         may result.     --  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         rate, with the potential for modest increases later in the         year. This is expected to continue to support relatively low         mortgage interest rates for the foreseeable future.     --  The housing market will likely remain stable with balanced         supply and demand conditions in most regions supported by         continued low interest rates, relatively stable to improving         employment, and immigration. There will be modest declines in         housing starts and resale activity with stable prices         throughout most of Canada. This supports continued stable         credit losses and strong demand for the Company's lending         products.     --  Consumer debt levels will remain serviceable by Canadian         households.     --  The Company will have access to the mortgage and deposit         markets through broker networks.  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  2014 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 branch  offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and  Manitoba.    SOURCE  Home Capital Group Inc.  Gerald M. Soloway, CEO, or Martin Reid, President, 416-360-4663,  www.homecapital.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/May2014/07/c3296.html  CO: Home Capital Group Inc. ST: Ontario NI: FIN ERN CONF  
Press spacebar to pause and continue. Press esc to stop.