Toronto-based Home Capital Group reported that its personal and credit card loans doubled in the second quarter, from $17.9 million in 2Q/02 to $34.4 million in 2Q/03. The gross credit card receivable balance is comprised of $18.1 million in accounts secured by cash deposits or residential mortgage collateral, and $5.8 million is unsecured. The total credit approved is comprised of $27.3 million in secured and $7.3 million in unsecured accounts. Security deposits on VISA accounts amounted to $12.0 million. “Equity Plus VISA” credit cards are secured
by a collateral residential mortgage, and this product now amounts to $10.8 million of the credit card receivable balance.
Home Capital Group Inc. has
maintained its uninterrupted record of rising quarterly growth and financial
performance with significant increases in earnings, earnings per share, and
total assets in the second quarter of 2003. The Company has now achieved
consistent quarter-over-quarter increases in earnings for 32 consecutive
This performance reflects the underlying strength of Home’s business
strategy and adherence to a well-developed set of business principles, as well
as the strong demand for Home Trust Company’s products and services within our
large target market. It is also due to the efforts and dedication of our
mortgage broker network and our employees.
– Earnings rose 35.4% to $6.9 million for the three-month period ended
June 30, 2003, compared with earnings of $5.1 million during the
same quarter one year earlier. Earnings per share increased by
32.3% to $0.41, compared with $0.31 for the comparable quarter of
2002. Net income for the first six months of 2003 rose by 31.4% to
$12.9 million from the $9.8 million recorded in the first half of
2002. Net income per share for this six month period increased from
$0.60 to $0.77, and on a fully diluted basis from $0.56 to $0.75.
– Return on equity for the second quarter was 26.7%, compared to
24.6% for the comparable quarter of 2002 and up from 24.8% in the
first quarter, 2003. For the first six months of 2003, return on
equity was 25.7%.
– Total assets were $1.62 billion at June 30, 2003, a substantial
increase of 28.3% over assets of $1.26 billion one year earlier and
16.2% greater than $1.39 billion in assets recorded at the close of
– The Company issued a further $36.2 million in MBS poolings of
residential mortgages, generating $1.5 million in revenues. The
comparable figures for the second quarter of 2002 were $16.1 million
and $0.3 million respectively. The MBS portfolio administered by
Home Trust stood at $208.1 million at June 30, 2003.
– Home Capital’s consumer lending business, comprised of retail credit
services and VISA products, continues to grow profitably. Earnings
from this segment of $301,000 in the second quarter of 2003
represented a substantial increase over $52,000 in earnings in the
first quarter of the year.
– Net impaired loans at June 30, 2003 represented 0.33% of the total
portfolio down from 0.35% at March 31, 2003 and 0.46% in the second
During the quarter, the holders of the Company’s remaining Class A multi-
vote shares agreed to convert these shares into an equal number of single-vote
Class B subordinated voting shares without benefit or enhancement. The
completion of this milestone conversion program increased the float of
publicly traded Class B shares from 15,490,228 to 16,744,195 with no dilutive
effect on the Company’s earnings per share. The dual class structure benefited
the Company during its formative stages; however, the Company’s subsequent
growth and increasingly strong financial performance in recent years made this
a suitable time to adopt a single class share structure. In completing this
transition, the Board of Directors and the Class “A” shareholders fulfilled a
long-standing commitment to eliminate the dual class share.
At the company’s Annual Meeting of May 27, 2003, the company announced an
increase of 25% to the annual dividend from 12 to 15 cents per year,
annualized. As a result, there will be a dividend of $0.0375 per share payable
on September 1, 2003 to shareholders of record at the close of business on
August 15, 2003.
Home Capital Group continues to increase its market share of the large
and expanding Canadian residential mortgage sector and to deliver exceptional
results across all measures of business performance. At the beginning of 2003,
the Company identified four key performance targets for the year ahead. These
are to achieve 20% ROE for the sixth consecutive year; as well as 20% growth
in each of earnings, diluted earnings per share, and total assets, each for
the eighth consecutive year. As was stated at the 2003 Annual General Meeting
of Shareholders, “We are on track to meet or exceed all of these goals.”