Home Capital Group

Home Capital Group Inc.

Type	Public
Traded as	TSX: HCG
Industry	Credit Mortgage lending
Founded	1977
Headquarters	Toronto, Canada
Key people	Gerald M.Soloway CEO Martin Reid President Brian Mosko COO,Exec VP John Harry VP Mortg.Lend Robert Blowes CFO.
Products	Credit cards Securities Retirement Savings Plan
Revenue	$533.937 mil yd 20109.1%[1]
Net income	$180.9 mil 201025.2%[2]
Total assets	$7.71 bil Dec'10 4.8%[2]
Total equity	$695.848 mil sep10[3]
Number of employees	644 (3Q'11)
Divisions	Home Trust Company Psigate
Website	www.homecapital.com/index.asp

Home Capital Group is a Canadian holding company. Through its subsidiary Home Trust Company, it provides Canadians a range of credit products including mortgages, credit cards and deposit services. It is regulated under federal legislation. Home Trust operates mainly in regions considered low risk where above average returns may be achieved; it also tends to focus on areas largely ignored by other mortgage lenders. During the 2008 economic crisis, it faced less competition (the number of competitors was halved over the last couple years) and its customer base is unique (overrepresented by people who have had credit problems).^[4] Mortgaged properties are residential and non-residential and include apartment and office buildings, hotels, construction and industrial complexes (retail mortgage lending which is also one of the main sources of organic growth, is at the core of the company's business). Much of the consumer lending business is done under the PSiGate banner (including credit cards).^[5]

In 2009, its stock outperformed that of eight major competitors in the uninsured mortgage market.^[4]

In 2010, it improved the technology used in data/information transfers, which increased the speed and overall efficiency of transactions. When the government of Canada added restrictions to mortgage lending, concerns were raised about new disruptions to Canada's housing market. Home Capital considered it beneficial to the market's overall stability.^[6]

On November 25, 2013, Home Trust launched Oaken Financial to provide financial services directly to consumers through the Internet.^[7]

On November 10, 2014, Home Trust announced that it intends to apply to the Minister of Finance to charter a Schedule I bank subsidiary to be called Home Trust Bank in English ("Banque Home Trust" in French).^[8]

In July 2015, Home Capital Group suspended 45 brokers for creating mortgages with fraudulent income information, the estimated value of mortgages from the suspended brokers on Home Capital's books is $1.5-2 billion.^{[9] [10]}

History

Home Capital Group was established in 1977 as Sonor Resources Corp. It became Home Capital Group Inc. in 1986. During the 2009 fiscal year its workforce grew 24.3% (from 395 to 491).

Business

Products include short term deposits, investment certificates, retirement savings plans/income funds, Tax-Free Savings Accounts, and government-insured mortgage securities. Consumer lending provides businesses and individuals services for credit cards (including those paid in full) and other loans. Because it targets the uninsured and those with financing problems (rejected by the large retail banks), people without much credit or past credit problems make up a large part of the client base.

Home Capital operates only in Canada where it holds the largest market share in the uninsured mortgage market. The company grew rapidly during the decade leading up to 2011. Asset, annual earnings and revenue growth was consistent (did not decrease over any fiscal period).^[11] Although traditionally serving the uninsured mortgage market, insured mortgages represent the fastest growing business segment.^[11] Assets under administration represent 36.9% of total assets when combined with aum: total assets increased 36.6% in 2009 and 8.4% between December 2009 and September 2010. During the first three quarters of 2010 residential mortgages totalled $4.74 billion with traditional single family mortgages making up 64.5% of total interest income ($170.156 of $263.775 million). Net interest income ($150.15 million) represents 38.6% of total revenue ($389.1 million, 9M10).^[3] Arrears total $71.3 million (2Q09). In terms of assets, securities represent 10.49% of them about twice as much as personal and credit card loans. Residential mortgages make up 49.4% of all loans ($4.7 billion in September 2010).^[3]

Divisions and subsidiaries

For the first nine months of 2010 new insured mortgages amounted to $2.08 billion (twice that of the corresponding 2009 period) while those uninsured grew from $728.6 mill to $2.17 billion.^[3]

• Psigate - Gives businesses/merchants the ability to do business online by providing them with electronic payments support. Canadians are offered electronic payment services (credit cards Visa, MasterCard, American Express and Interac).^[12] It was started in 1988 and is 100% owned by Home Capital Group.
• Accelerator program - underwrites insured mortgages which it sells through the Canada Mortgage Bond program and mortgage-backed securities.
• Oaken Financial - Online financial services for individuals.

References