New trust company focused on the retail market
Home Capital announces new federal charter
TORONTO, March 28 /CNW/ - Gerald M. Soloway, President and Chief
Executive Officer of Home Capital Group Inc., today announced the launch of
Home Trust Company, Canada's newest federal trust geared specifically for the
retail market across Canada.
"Effective today, our wholly owned subsidiary, Home Savings & Loan
Corporation, becomes Home Trust Company," Soloway told a gathering of
journalists and members of the financial community at an 11:00 a.m. press
briefing at the King Edward Hotel. "As of this announcement, Home is the first
provincial loan corporation in ten years to become converted to a federal
trust company servicing the retail market across Canada."
In the financial services industry, consolidations and mergers over the
last decade have resulted in the virtual elimination of independent trust
companies in Canada, which have decreased from 50 in 1990 to just 15 today.
"The creation of Home Trust will come as welcome news to the retail market,
where the loss of independent trust companies has been most sorely felt," he
said.
As a federal trust, Home will continue to be Canada's first choice
alternative provider of residential mortgages. However, the company is now
empowered to provide a number of innovative trust services.
"We are expanding into the area of self-directed RRSPs for mortgages and
other investment vehicles. Until now, self-directed RRSPs through brokerages
have basically been confined to trading in stocks and bonds," he said.
In a second new area of expansion, Home will provide trust services to
the many smaller RRSP plans. With its fine-tuned infrastructure, Home can
administer these at less cost than is now being offered in the marketplace. At
the same time, the company is offering less expensive conversions from RRSPs
to RRIFs, both administered and self-directed.
"The evolution of Home into a federal trust does not in any way affect
our core mortgage business," Soloway said. "We will continue to be Canada's
leading alternative lender. We have no intention of deviating from that plan.
Home Trust will simply allow us to provide new product portfolios and open up
new business opportunities for us."
Home is firmly established in the marketplace as Canada's leading
provider of first residential mortgages, serving customers who may not meet
the particular criteria of conventional providers. Home has been very
successful in this niche, which consists in large measure of self-employed
people and those with limited or irregular credit histories. And it is a
market that has grown significantly in recent years. In December of 1999, for
example, Statistics Canada reported that self-employed people now represent 18
percent of the total workforce, having risen from 1.2 million Canadians in
1975 to 2.5 million.
"There is no evidence that this trend has abated, and we are extremely
well positioned to serve this growing segment of the population," Soloway
said.
Home currently has five branches: one each in Vancouver and Calgary, and
three in Ontario. As a federal trust, the company plans to open a branch
within the year in Nova Scotia to provide a presence in the Maritimes. It has
also positioned itself for further expansion across Canada, obtaining
regulatory approval to conduct business in Manitoba, New Brunswick, Prince
Edward Island, Saskatchewan, and Newfoundland.
"Today's announcement is a significant milestone," Soloway said. "This
said, I think it ranks equally with the fact that we have been able to
maintain a return-on-equity in excess of 20 percent over each of the last two
years." That figure is among the best in Canada for deposit-taking
institutions.
With asset growth in 1999 of 37.0 percent, mortgage growth of 35.6
percent, net earnings growth of 33.2 percent and a 21.8 percent return on
equity, the company exceeded all previously stated performance objectives.
"At year end, despite the fact that some of our mortgages may be
considered sub-prime in the marketplace, we only had a 0.21 percent impaired
rate. This means that only one out of every 500 of our mortgages is more than
90 days in arrears. That is as good as or better than the major banks."
Home Capital Group Inc. is a holding company, publicly traded on the
Toronto Stock Exchange (HCG.B), operating through its principal subsidiary,
Home Trust Company. Home Trust is a federally regulated trust company that
offers deposit, mortgage lending and other services. The Company operates in
Ontario, Alberta and British Columbia, and is commencing operations in Nova
Scotia.
For further information: Gerald M. Soloway, President & Chief Executive
Officer, Home Capital Group, (416) 360-4663, fax (416) 363-7611,
www.homecapital.com; Mala Nag, Senior Analyst, Office of the Superintendent of
Financial Institutions Canada, (613) 990-6516 |
