- Diluted Earnings per Share of $0.92; adjusted diluted earnings per share of
$0.96
- Dividend of $0.24 per common
share.
TORONTO, May 4, 2016 /CNW/ - Home Capital today
reported financial results for the first quarter ended March 31, 2016.
This press release should be read in conjunction with the
Company's First Quarter Report, including Financial Statements and
Management's Discussion and Analysis, which are available on Home
Capital's website at www.homecapital.com and the Canadian
Securities Administrators' website at www.sedar.com.
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
For the three months
ended
|
(000s, except Per
Share and Percentage Amounts)
|
March
31
|
December
31
|
March 31
|
|
|
2016
|
|
2015
|
|
2015
|
OPERATING
RESULTS
|
|
|
|
|
|
|
Net Income
|
$
|
64,248
|
$
|
70,239
|
$
|
72,286
|
Adjusted Net
Income1
|
|
67,497
|
|
71,811
|
|
72,286
|
Net Interest
Income
|
|
122,517
|
|
126,658
|
|
115,524
|
Total Adjusted
Revenue1
|
|
241,197
|
|
246,406
|
|
249,232
|
Diluted Earnings per
Share
|
$
|
0.92
|
$
|
1.00
|
$
|
1.03
|
Adjusted Diluted
Earnings per Share1
|
$
|
0.96
|
$
|
1.02
|
$
|
1.03
|
Return on
Shareholders' Equity
|
|
15.7%
|
|
17.6%
|
|
19.7%
|
Adjusted Return on
Shareholders' Equity1
|
|
16.4%
|
|
18.0%
|
|
19.7%
|
Return on Average
Assets
|
|
1.2%
|
|
1.4%
|
|
1.4%
|
Net Interest Margin
(TEB)2
|
|
2.38%
|
|
2.46%
|
|
2.28%
|
Provision as a
Percentage of Gross Uninsured Loans (annualized)
|
|
0.04%
|
|
0.04%
|
|
0.07%
|
Provision as a
Percentage of Gross Loans (annualized)
|
|
0.03%
|
|
0.03%
|
|
0.05%
|
Efficiency Ratio
(TEB)2
|
|
39.6%
|
|
36.0%
|
|
30.4%
|
Adjusted Efficiency
Ratio (TEB)1,2
|
|
36.3%
|
|
33.7%
|
|
30.4%
|
|
|
|
|
|
|
As at
|
|
|
March
31
|
|
December
31
|
|
March 31
|
|
|
2016
|
|
2015
|
|
2015
|
BALANCE SHEET
HIGHLIGHTS
|
|
|
|
|
|
|
Total
Assets
|
$
|
20,672,422
|
$
|
20,512,019
|
$
|
20,514,613
|
Total Assets Under
Administration3
|
|
27,945,030
|
|
27,301,433
|
|
25,066,234
|
Total
Loans4
|
|
17,949,915
|
|
18,268,708
|
|
18,190,841
|
Total Loans Under
Administration3,4
|
|
25,222,523
|
|
25,058,122
|
|
22,742,462
|
Liquid
Assets
|
|
2,459,859
|
|
2,095,145
|
|
1,825,775
|
Deposits
|
|
15,824,899
|
|
15,665,958
|
|
14,741,902
|
Shareholders'
Equity
|
|
1,661,759
|
|
1,621,106
|
|
1,487,259
|
FINANCIAL
STRENGTH
|
|
|
|
|
|
|
Capital
Measures5
|
|
|
|
|
|
|
Risk-Weighted
Assets
|
$
|
8,169,818
|
$
|
7,985,498
|
$
|
7,454,175
|
Common Equity Tier 1
Capital Ratio
|
|
18.28%
|
|
18.31%
|
|
17.95%
|
Tier 1 Capital
Ratio
|
|
18.28%
|
|
18.30%
|
|
17.94%
|
Total Capital
Ratio
|
|
20.63%
|
|
20.70%
|
|
20.50%
|
Leverage
Ratio
|
|
7.46%
|
|
7.36%
|
|
6.75%
|
Credit
Quality
|
|
|
|
|
|
|
Net Non-Performing
Loans as a Percentage of Gross Loans
|
|
0.34%
|
|
0.28%
|
|
0.25%
|
Allowance as a
Percentage of Gross Non-Performing Loans
|
|
62.9%
|
|
74.0%
|
|
78.2%
|
Share
Information
|
|
|
|
|
|
|
Book Value per Common
Share
|
$
|
23.75
|
$
|
23.17
|
$
|
21.18
|
Common Share Price –
Close
|
$
|
35.06
|
$
|
26.92
|
$
|
42.56
|
Dividend paid during
the period ended
|
$
|
0.24
|
$
|
0.22
|
$
|
0.22
|
Market
Capitalization
|
$
|
2,453,008
|
$
|
1,883,808
|
$
|
2,988,819
|
Number of Common
Shares Outstanding
|
|
69,966
|
|
69,978
|
|
70,226
|
1
|
See definition of
Adjusted Net Income, Total Adjusted Revenue, Adjusted Diluted
Earnings per Share, Adjusted Return on Shareholders' Equity and
Adjusted Efficiency Ratio under Non-GAAP Measures in the Company's
unaudited interim consolidated financial report and the
Reconciliation of Net Income to Adjusted Net Income in the
following table.
|
2
|
See definition of
Taxable Equivalent Basis (TEB) under Non-GAAP Measures in the
Company's unaudited interim consolidated financial
report.
|
3
|
Total assets and
loans under administration include both on- and off-balance sheet
amounts.
|
4
|
Total loans include
loans held for sale.
|
5
|
These figures relate
to the Company's operating subsidiary, Home Trust
Company.
|
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
(000s, except %
and per share amounts)
|
Q1
|
Q4
|
|
Q1
|
|
|
|
2016
|
2015
|
Change
|
2015
|
Change
|
Net income under
GAAP
|
$
|
64,248
|
$
|
70,239
|
(8.5)%
|
$
|
72,286
|
(11.1)%
|
Adjustment for gain
recognized on acquisition of CFF Bank (net of tax)
|
|
(478)
|
|
1,572
|
(130.4)%
|
|
-
|
-
|
Adjustment for
severance and other related costs (net of tax)
|
|
3,727
|
|
-
|
-
|
|
-
|
-
|
Adjusted Net
Income1
|
$
|
67,497
|
$
|
71,811
|
(6.0)%
|
$
|
72,286
|
(6.6)%
|
Adjusted Basic
Earnings per Share1
|
$
|
0.96
|
$
|
1.02
|
(5.9)%
|
$
|
1.03
|
(6.8)%
|
Adjusted Diluted
Earnings per Share1
|
$
|
0.96
|
$
|
1.02
|
(5.9)%
|
$
|
1.03
|
(6.8)%
|
1 Adjusted
Net Income and Adjusted Earnings per share are defined in the
Non-GAAP section of the Company's unconsolidated interim financial
report.
|
The Company's results were affected by the following items of
note that aggregated to a negative impact on after-tax net income
of $3.2 million or $0.04 diluted earnings per share in Q1
2016. The items of note identified in the above table include
the following:
- Adjustment to gain recognized on the acquisition of CFF Bank in
the amount of $651 thousand
($478 thousand, after tax).
- Expenses including severance and other related costs in the
amount of $5.1 million ($3.7 million, after tax), that are not expected
to be indicative of future results.
The Company's results were affected by the following items of
note that aggregated to a negative impact on after-tax net income
of $1.6 million or $0.02 diluted earnings per share in Q4
2015:
- $0.7 million in acquisition costs
and $3.5 million in integration
costs, less $2.1 million in relation
to a bargain purchase gain, for a net of $2.1 million related to the acquisition of CFF
Bank in 2015 ($1.6 million after
tax).
FIRST QUARTER 2016 HIGHLIGHTS
Home Capital today reported financial results for the first
quarter ended March 31, 2016. The
Company delivered solid results across its business, including
strong net interest margins, a healthy loan portfolio evidenced by
low non-performing loans and credit losses, year-over-year
single-family mortgage originations growth, and a continued strong
capital position.
On February 29, 2016, Home Capital
announced the planned retirement of Chief Executive Officer (CEO)
Gerald (Jerry) M. Soloway.
Under Jerry's leadership for the past 30 years, the Company has
delivered truly outstanding performance and Home Capital will
continue to benefit from Jerry's wisdom and entrepreneurial
keenness as a member of the Company's Board. Following the
Company's Annual Meeting on May 11,
2016, the Company will welcome Martin Reid as its next CEO. Martin is an
outstanding executive with a strong track record, having spent the
past six years in his role as president of the Company.
Martin will continue to build on the Company's strong foundations
and existing strategic vision.
Home Capital continues to expect that it will meet its three- to
five- year mid-term targets, reflecting the continued strength of
the overall business and its diverse sources of growth.
Q1 Financial Highlights:
- Reported Q1 2016 net income was $64.2
million, compared to $70.2
million in Q4 2015 and $72.3
million in Q1 2015. Adjusted Q1 2016 net income was
$67.5 million, compared to adjusted
net income of $71.8 million in Q4
2015 and $72.3 million in the first
three months of 2015.
- Reported Q1 2016 diluted earnings per share were $0.92, compared to $1.00 in Q4 2015 and $1.03 in Q1 2015. Adjusted Q1 2016 diluted
earnings per share was $0.96,
compared to $1.02 earned in Q4 2015
and $1.03 in Q1 2015.
- Included in Q1 2016 reported net income of $64.2 million and reported diluted earnings per
share of $0.92 is $5.1 million ($3.7
million after tax and $0.05
diluted earnings per share) related to certain severance and other
related costs, $2.0 million of losses
($1.4 million, after tax and
$0.02 diluted earnings per share)
from continuing operations of CFF Bank and $3.8 million ($2.8
million, after tax and $0.04
diluted earnings per share) of derivative losses related to the
senior debt, which was retired early in Q2 2016. These amounts are
offset by an adjustment to the gain recognized on acquisition of
CFF Bank in the amount of $651
thousand ($478 thousand, after
tax and $0.01 diluted earnings per
share). The total impact to reported diluted earnings per share of
the above amounts is $0.10.
- Adjusted Return on common shareholders' equity was 16.4% for Q1
2016.
- Adjusted efficiency ratio of 36.3%, compared to 33.7% in Q4
2015 and 30.4% in Q1 2015. During Q1 2016, the Company incurred
additional expenses related to severance and other related costs
that are not reflective of ongoing operations.
- Net non-performing loans as a percentage of gross loans (NPL
ratio) were 0.34% at the end of Q1 2016, compared to 0.28% at the
end of Q4 2015, and 0.25% at the end of Q1 2015. Included in the Q1
2016 non-performing loans are $9.3
million of non-residential and residential commercial loans
that became non-performing in the quarter, with relatively high
collateral and accordingly no associated individual allowance. In
the absence of these loans, the NPL ratio would have been
0.29%.
- Q1 2016 Common Equity Tier 1 ratio was 18.28% and Tier 1 and
Total capital ratios were 18.28% and 20.63%, respectively.
Growing Our Core Business
Home Capital's first quarter results reflect its continued
profitability as measured by its strong net interest margin (TEB)
of 2.38%, a healthy loan portfolio as evidenced by continued low
non-performing loans and credit losses, and a strong capital
position.
Total originations in Q1 2016 were $1.78
billion, an increase of 28.8% from $1.38 billion in Q1 2015. The Company
reported traditional (uninsured single-family) residential mortgage
originations of $1.06 billion as
compared to $961.3 million in Q1
2015, an increase of 10.7%. Accelerator originations
increased 102.1% to $363.8 million in
Q1 2016 when compared to Q1 2015. Originations from all other
sources increased 45.9% to $354.0
million when compared to the same quarter in 2015. The
Company continues to take a prudent approach to growing its
traditional residential mortgage business.
On a quarter-over-quarter basis, total mortgage originations in
Q1 2016 were down 17.3% from Q4 2015, reflecting expected
seasonality trends.
The Company is approaching three-quarters of the way through its
review and re-validation of income documentation related to the
suspension of 45 individual mortgage brokers last year, which will
be completed at the end of 2016. The Company has not
experienced any unusual credit issues with respect to the
identified mortgages.
Home Capital will continue to focus on growing its origination
volumes, specifically to take advantage of the solid demand for its
traditional mortgages within its established regions. On
April 1, 2016, the Company launched
its new broker partnership program, Spire, with all broker partners
now participating in the program. Through the first half of
2016, the Company will continue with its roll out of its broker
portal technology, Loft, in an effort to enhance the broker
experience.
The Company's commercial lending products continue to
demonstrate strength in origination volumes through the first
quarter of the year.
Other lending, comprising credit cards, lines of credit and
other consumer retail loans, continues to be an important source of
loan assets with attractive returns. While representing 3.9%
of the total on-balance sheet loan portfolio, these assets
generated 7.2% of the interest income from loans for the
quarter.
The balance of Oaken deposits at the end of the quarter was
$1.23 billion, up 12.6% from the
balance at the end of 2015, demonstrating progress in the Company's
efforts towards deposit diversification.
Building on Operational Excellence
Home Capital continues to experience strong credit performance,
with an NPL ratio at 0.34% at the end of Q1 2016, compared to 0.28%
at the end of Q4 2015 and 0.25% at the end of Q1 2015. These
results reflect the high credit quality of the Company's loan
portfolio and were supported by the Company's continued investments
in its risk oversight and control functions.
In conjunction with the announcement of the succession plan for
the Company's CEO, the Company realigned certain resources and
incurred certain expenses in order to execute on its strategy and
achieve future growth. Specifically, these items included
certain severance and other related costs in the amount of
$5.1 million, reducing diluted
earnings per share by $0.05, which
have been excluded from the Company's adjusted metrics. The
Company does not expect these expenses to be indicative of the
Company's ongoing expense base.
Home Capital continued to make disciplined and measured
investments related to the long-term growth of the business,
including ongoing investments in information technology to move the
Company towards operating as a digital enterprise. In
addition, the Company incurred expenses of approximately
$0.5 million during the quarter
related to its efforts to realign some of its business
partnerships.
In 2015, the Company, through its subsidiary Home Trust Company,
acquired all of the outstanding common shares of CFF Bank for a
purchase price of $23.2
million. The integration of CFF Bank is proceeding to
plan, as the Company decommissions redundant systems and facilities
in order to realize cost savings and to facilitate growth.
The operating losses of CFF Bank reduced diluted earnings per share
by $0.02 in Q1 2016.
Solid Shareholder Returns, Strong and Conservative Financial
Position
Home Capital continued to focus on maintaining its strong and
conservative financial position while delivering value to
shareholders in Q1 2016. Home Capital delivered an adjusted
return on average shareholders' equity of 16.4% for the first
quarter.
On April 18, 2016, Home Capital
announced that it had taken up and paid for 3,989,361 common shares
at a price of $37.60 per share under
the Company's previously announced substantial issuer bid to
repurchase for cancellation up to $150
million of the Company's common shares. Subsequent to
the repurchase, the number of issued and outstanding shares was
reduced to 65,976,819 and there was a reduction in capital of
$150 million. In addition,
today, the Company repaid and retired its senior debt in the
principal amount of $150 million,
resulting in future savings of the related interest expense of
$1.8 million per
quarter.
Subsequent to the end of the quarter, and in light of the
Company's performance, profitability and strong financial position,
the Board of Directors approved a quarterly dividend of
$0.24 per common share, payable on
June 1, 2016 to shareholders of
record at the close of business on May 16,
2016.
In summary, the Company will continue to focus on delivering
success over the long-term, by providing the best service and
support to its customers and valued partners, generating future
growth that is sustainable and prudent, and making investments in
the business that help us to achieve those goals.
Looking ahead, the Board of Directors and management expect that
Home Capital will continue generating solid returns for
shareholders for the remainder of 2016 and beyond.
(signed)
|
(signed)
|
|
|
GERALD M.
SOLOWAY
|
KEVIN P.D.
SMITH
|
Chief Executive
Officer
|
Chair of the
Board
|
May 4,
2016
|
|
|
|
Additional information concerning the Company's targets and
related expectations for 2016, including the risks and assumptions
underlying these expectations, may be found in the MD&A of the
quarterly report.
First Quarter Results Conference Call
The conference
call will take place on Thursday, May 5,
2016 at 10:30 a.m.
Participants are asked to call 5 to 10 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 5, 2016 and midnight Thursday, May 12, 2016 by calling 416-849-0833 or
1-855-859-2056 (enter passcode 94488806). 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.
Supplemental Financial Information
Home Capital has
provided a Supplemental Financial Information package available at
the Company's website at www.homecapital.com to improve readers'
understanding of the financial position and performance of the
Company. This information should be used in conjunction with
the Company's first quarter unaudited interim consolidated
financial report, as well as the Company's 2015 Annual Report.
Consolidated
Statements of Income
|
|
For the three months
ended
|
thousands of
Canadian dollars, except per share amounts
|
March
31
|
December
31
|
March 31
|
(Unaudited)
|
|
2016
|
|
2015
|
|
2015
|
Net Interest
Income Non-Securitized Assets
|
|
|
|
|
|
|
Interest from
loans
|
$
|
193,546
|
$
|
197,052
|
$
|
186,900
|
Dividends from
securities
|
|
2,692
|
|
2,608
|
|
2,738
|
Other
interest
|
|
2,528
|
|
1,694
|
|
2,108
|
|
|
198,766
|
|
201,354
|
|
191,746
|
Interest on deposits
and other
|
|
77,685
|
|
77,762
|
|
79,395
|
Interest on senior
debt
|
|
1,778
|
|
1,824
|
|
1,544
|
Net interest income
non-securitized assets
|
|
119,303
|
|
121,768
|
|
110,807
|
|
|
|
|
|
|
|
Net Interest
Income Securitized Loans and Assets
|
|
|
|
|
|
|
Interest income from
securitized loans and assets
|
|
20,093
|
|
22,853
|
|
30,394
|
Interest expense on
securitization liabilities
|
|
16,879
|
|
17,963
|
|
25,677
|
Net interest income
securitized loans and assets
|
|
3,214
|
|
4,890
|
|
4,717
|
|
|
|
|
|
|
|
Total Net Interest
Income
|
|
122,517
|
|
126,658
|
|
115,524
|
Provision for credit
losses
|
|
1,394
|
|
1,415
|
|
2,403
|
|
|
121,123
|
|
125,243
|
|
113,121
|
Non-Interest
Income
|
|
|
|
|
|
|
Fees and other
income
|
|
19,165
|
|
19,927
|
|
21,219
|
Securitization
income
|
|
7,682
|
|
5,760
|
|
5,409
|
Gain on acquisition
of CFF Bank
|
|
651
|
|
2,056
|
|
-
|
Net realized and
unrealized (losses) gains on securities
|
|
(175)
|
|
(66)
|
|
1,444
|
Net realized and
unrealized losses on derivatives
|
|
(4,334)
|
|
(3,422)
|
|
(980)
|
|
|
22,989
|
|
24,255
|
|
27,092
|
|
|
144,112
|
|
149,498
|
|
140,213
|
Non-Interest
Expenses
|
|
|
|
|
|
|
Salaries and
benefits
|
|
28,711
|
|
25,874
|
|
22,014
|
Premises
|
|
3,851
|
|
2,731
|
|
3,134
|
Other operating
expenses
|
|
25,455
|
|
26,076
|
|
18,515
|
|
|
58,017
|
|
54,681
|
|
43,663
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
86,095
|
|
94,817
|
|
96,550
|
Income
taxes
|
|
|
|
|
|
|
|
Current
|
|
20,086
|
|
25,548
|
|
24,551
|
|
Deferred
|
|
1,761
|
|
(970)
|
|
(287)
|
|
|
21,847
|
|
24,578
|
|
24,264
|
NET
INCOME
|
$
|
64,248
|
$
|
70,239
|
$
|
72,286
|
|
|
|
|
|
|
|
NET INCOME PER
COMMON SHARE
|
|
|
|
|
|
|
Basic
|
$
|
0.92
|
$
|
1.00
|
$
|
1.03
|
Diluted
|
$
|
0.92
|
$
|
1.00
|
$
|
1.03
|
AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
Basic
|
|
69,972
|
|
70,157
|
|
70,137
|
Diluted
|
|
70,047
|
|
70,237
|
|
70,467
|
|
|
|
|
|
|
|
Total number of
outstanding common shares
|
|
69,966
|
|
69,978
|
|
70,226
|
Book value per common
share
|
$
|
23.75
|
$
|
23.17
|
$
|
21.18
|
Consolidated
Statements of Comprehensive Income
|
|
For the three months
ended
|
|
March
31
|
December
31
|
March 31
|
thousands of
Canadian dollars (Unaudited)
|
|
2016
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
NET
INCOME
|
$
|
64,248
|
$
|
70,239
|
$
|
72,286
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale
Securities and Retained Interests
|
|
|
|
|
|
|
Net unrealized
(losses) gains
|
|
(13,014)
|
|
6,171
|
|
(25,572)
|
Net losses (gains)
reclassified to net income
|
|
204
|
|
66
|
|
(1,443)
|
|
|
(12,810)
|
|
6,237
|
|
(27,015)
|
Income tax (recovery)
expense
|
|
(3,421)
|
|
1,654
|
|
(7,156)
|
|
|
(9,389)
|
|
4,583
|
|
(19,859)
|
|
|
|
|
|
|
|
Cash Flow
Hedges
|
|
|
|
|
|
|
Net unrealized gains
(losses)
|
|
3,221
|
|
(2,110)
|
|
(814)
|
Net losses
reclassified to net income
|
|
364
|
|
369
|
|
366
|
|
|
3,585
|
|
(1,741)
|
|
(448)
|
Income tax expense
(recovery)
|
|
951
|
|
(462)
|
|
(119)
|
|
|
2,634
|
|
(1,279)
|
|
(329)
|
|
|
|
|
|
|
|
Total other
comprehensive (loss) income
|
$
|
(6,755)
|
$
|
3,304
|
$
|
(20,188)
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
$
|
57,493
|
$
|
73,543
|
$
|
52,098
|
Consolidated
Balance Sheets
|
|
|
|
|
As at
|
|
March
31
|
December
31
|
thousands of
Canadian dollars (Unaudited)
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
Cash and Cash
Equivalents
|
$
|
1,454,752
|
$
|
1,149,849
|
Available for Sale
Securities
|
|
488,211
|
|
453,230
|
Loans Held for
Sale
|
|
70,187
|
|
135,043
|
Loans
|
|
|
|
|
Securitized
mortgages
|
|
2,516,944
|
|
2,674,475
|
Non-securitized
mortgages and loans
|
|
15,362,784
|
|
15,459,190
|
|
|
17,879,728
|
|
18,133,665
|
Collective allowance
for credit losses
|
|
(36,463)
|
|
(36,249)
|
|
|
17,843,265
|
|
18,097,416
|
Other
|
|
|
|
|
Restricted
assets
|
|
293,637
|
|
195,921
|
Derivative
assets
|
|
63,931
|
|
64,796
|
Other
assets
|
|
328,013
|
|
287,417
|
Goodwill and
intangible assets
|
|
130,426
|
|
128,347
|
|
|
816,007
|
|
676,481
|
|
$
|
20,672,422
|
$
|
20,512,019
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits
|
|
|
|
|
Deposits payable on
demand
|
$
|
2,321,093
|
$
|
1,986,136
|
Deposits payable on a
fixed date
|
|
13,503,806
|
|
13,679,822
|
|
|
15,824,899
|
|
15,665,958
|
Senior
Debt
|
|
153,283
|
|
151,480
|
Securitization
Liabilities
|
|
|
|
|
Mortgage-backed
security liabilities
|
|
863,284
|
|
531,326
|
Canada Mortgage Bond
liabilities
|
|
1,870,548
|
|
2,249,230
|
|
|
2,733,832
|
|
2,780,556
|
Other
|
|
|
|
|
Derivative
liabilities
|
|
1,040
|
|
5,447
|
Other
liabilities
|
|
273,317
|
|
264,941
|
Deferred tax
liabilities
|
|
24,292
|
|
22,531
|
|
|
298,649
|
|
292,919
|
|
|
19,010,663
|
|
18,890,913
|
Shareholders'
Equity
|
|
|
|
|
Capital
stock
|
|
90,283
|
|
90,247
|
Contributed
surplus
|
|
4,230
|
|
3,965
|
Retained
earnings
|
|
1,639,545
|
|
1,592,438
|
Accumulated other
comprehensive loss
|
|
(72,299)
|
|
(65,544)
|
|
|
1,661,759
|
|
1,621,106
|
|
$
|
20,672,422
|
$
|
20,512,019
|
Consolidated
Statements of Changes in Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Unrealized
|
|
|
|
|
|
|
|
Losses
|
Net
Unrealized
|
Total
|
|
|
|
|
|
on Securities
and
|
Losses on
|
Accumulated
|
|
|
|
|
|
|
|
|
Retained
Interests
|
Cash Flow
|
Other
|
Total
|
thousands of
Canadian dollars,
|
Capital
|
Contributed
|
Retained
|
Available
|
Hedges,
|
Comprehensive
|
Shareholders'
|
except per share
amounts (Unaudited)
|
Stock
|
Surplus
|
Earnings
|
for Sale, after
Tax
|
after Tax
|
Loss
|
Equity
|
Balance at
December 31, 2015
|
$
|
90,247
|
$
|
3,965
|
$
|
1,592,438
|
$
|
(62,466)
|
$
|
(3,078)
|
$
|
(65,544)
|
$
|
1,621,106
|
Comprehensive
income
|
|
-
|
|
-
|
|
64,248
|
|
(9,389)
|
|
2,634
|
|
(6,755)
|
|
57,493
|
Stock options
settled
|
|
53
|
|
(12)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
41
|
Amortization of
fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employee stock
options
|
|
-
|
|
277
|
|
-
|
|
-
|
|
-
|
|
-
|
|
277
|
Repurchase of
shares
|
|
(17)
|
|
-
|
|
(346)
|
|
-
|
|
-
|
|
-
|
|
(363)
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($0.24 per
share)
|
|
-
|
|
-
|
|
(16,795)
|
|
-
|
|
-
|
|
-
|
|
(16,795)
|
Balance at March
31, 2016
|
$
|
90,283
|
$
|
4,230
|
$
|
1,639,545
|
$
|
(71,855)
|
$
|
(444)
|
$
|
(72,299)
|
$
|
1,661,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December
31, 2014
|
$
|
84,687
|
$
|
3,989
|
$
|
1,378,562
|
$
|
(16,242)
|
$
|
(2,363)
|
$
|
(18,605)
|
$
|
1,448,633
|
Comprehensive
income
|
|
-
|
|
-
|
|
72,286
|
|
(19,859)
|
|
(329)
|
|
(20,188)
|
|
52,098
|
Stock options
settled
|
|
4,177
|
|
(1,123)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,054
|
Amortization of fair
value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employee stock
options
|
|
-
|
|
419
|
|
-
|
|
-
|
|
-
|
|
-
|
|
419
|
Repurchase of
shares
|
|
(2)
|
|
-
|
|
(83)
|
|
-
|
|
-
|
|
-
|
|
(85)
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($0.22 per
share)
|
|
-
|
|
-
|
|
(16,860)
|
|
-
|
|
-
|
|
-
|
|
(16,860)
|
Balance at March 31,
2015
|
$
|
88,862
|
$
|
3,285
|
$
|
1,433,905
|
$
|
(36,101)
|
$
|
(2,692)
|
$
|
(38,793)
|
$
|
1,487,259
|
Consolidated
Statements of Cash Flows
|
|
For the three months
ended
|
|
March
31
|
March 31
|
thousands of
Canadian dollars (Unaudited)
|
|
2016
|
|
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net income for the
period
|
$
|
64,248
|
$
|
72,286
|
Adjustments to
determine cash flows relating to operating activities:
|
|
|
|
|
|
Amortization of net
discount on securities
|
|
(135)
|
|
(6)
|
|
Provision for credit
losses
|
|
1,394
|
|
2,403
|
|
Gain on sale of
mortgages or residual interest
|
|
(5,935)
|
|
(4,427)
|
|
Net realized and
unrealized gains (losses) on securities
|
|
175
|
|
(1,444)
|
|
Amortization of
capital and intangible assets
|
|
3,646
|
|
2,924
|
|
Amortization of fair
value of employee stock options
|
|
277
|
|
419
|
|
Deferred income
taxes
|
|
1,761
|
|
(287)
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
Loans, net of
securitization and sales
|
|
323,494
|
|
176,776
|
|
Restricted
assets
|
|
(97,716)
|
|
(117,950)
|
|
Derivative assets and
liabilities
|
|
43
|
|
(43,054)
|
|
Accrued interest
receivable
|
|
1,493
|
|
46
|
|
Accrued interest
payable
|
|
17,779
|
|
36,206
|
|
Deposits
|
|
158,941
|
|
801,931
|
|
Securitization
liabilities
|
|
(46,724)
|
|
(479,273)
|
|
Taxes receivable or
payable and other
|
|
(47,225)
|
|
1,059
|
Cash flows provided
by operating activities
|
|
375,516
|
|
447,609
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
Repurchase of
shares
|
|
(363)
|
|
(85)
|
Exercise of employee
stock options
|
|
41
|
|
3,054
|
Dividends paid to
shareholders
|
|
(16,795)
|
|
(15,430)
|
Cash flows used in
financing activities
|
|
(17,117)
|
|
(12,461)
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
Activity in
securities
|
|
|
|
|
|
Purchases
|
|
(85,419)
|
|
(1,545)
|
|
Proceeds from
sales
|
|
-
|
|
76,929
|
|
Proceeds from
maturities
|
|
37,171
|
|
18,201
|
Purchases of capital
assets
|
|
(224)
|
|
(1,823)
|
Capitalized
intangible development costs
|
|
(5,024)
|
|
(5,404)
|
Cash flows (used
in) provided by investing activities
|
|
(53,496)
|
|
86,358
|
Net increase in cash
and cash equivalents during the period
|
|
304,903
|
|
521,506
|
Cash and cash
equivalents at beginning of the period
|
|
1,149,849
|
|
360,746
|
Cash and Cash
Equivalents at End of the Period
|
$
|
1,454,752
|
$
|
882,252
|
Supplementary
Disclosure of Cash Flow Information
|
|
|
|
|
Dividends received on
investments
|
$
|
2,779
|
$
|
2,485
|
Interest
received
|
|
217,384
|
|
219,790
|
Interest
paid
|
|
76,619
|
|
68,487
|
Income taxes
paid
|
|
27,479
|
|
48,155
|
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 in the Risk Management section of
this 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, compliance risk and capital adequacy 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
2016 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 2016, management's expectations continue to
assume:
- The Canadian economy is expected to be relatively stable in
2016, supported by expanded Federal Government spending; however,
it will continue to be impacted by adverse effects related to
fluctuations in oil prices and other commodities. The Company has
limited exposure in energy producing regions.
- Generally the Company expects stable employment conditions, in
its established regions; however, unemployment rates in energy
producing regions are expected to continue to increase in 2016.
Also, the Company expects inflation will generally be within the
Bank of Canada's target of 1% to
3%, leading to stable credit losses and consistent demand for the
Company's lending products in its established regions. Credit
losses and delinquencies in the energy producing regions may
increase, but given the Company's limited exposure, this is not
expected to be significant.
- The Canadian economy will continue to be influenced by the
economic conditions in the United
States and global markets and further adjustments in
commodity prices; as such, the Company is prepared for the
variability to plan that may result.
- The Company is assuming that overnight interest rates will
remain at the current very low rate for 2016. This is expected to
continue to support relatively low mortgage interest rates for the
foreseeable future.
- In the Company's established regions, the Company expects that
the housing market will remain stable with reduced, but balanced
supply supported by continued low interest rates, and relatively
stable employment, depending on location and level of immigration.
There will be moderately easing housing starts and resale activity
with relatively stable prices throughout most of Canada, with continued regional disparities.
This supports continued low credit losses and stable demand for the
Company's lending products in its established regions.
- The Company expects that consumer debt levels, while elevated,
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 2016 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.
In addition, Home Trust offers deposits via brokers and
financial planners, and through its direct to consumer brand, Oaken
Financial. Home Trust also conducts business through its
wholly owned subsidiary, CFF Bank. Licensed to conduct
business across Canada, Home Trust
has offices in Ontario,
Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.
SOURCE Home Capital Group Inc.
Copyright 2016 Canada NewsWire