Home Capital Group Inc. records 101% rise in net income
Company exceeds all performance objectives for 1998
Leading alternative provider of residential first mortgages
expects solid growth in 1999
TORONTO, Feb. 10 /CNW/ - Home Capital Group Inc. (TSE : HCG.B) announced
today its unaudited results for the fourth quarter and year ending December
31, 1998. These results were achieved through the Company's wholly owned
subsidiary, Home Savings & Loan Corporation.
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Three months ended Twelve months ended
December 31 December 31
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1998 1997 1998 1997
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Revenue $11,982,641 $9,440,768 $42,069,017 $33,753,574
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Net Income $1,998,034 $1,017,600 $6,067,432 $3,018,482
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Net Income/Share $0.13 $0.09 $0.46 $0.27
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Return on Equity 24.4% 17.0% 20.7% 13.2%
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Assets $538,875,715 $434,120,336 $538,875,715 $434,120,336
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- For the year ending December 31, 1998, total assets increased by
24.1%, net income by 101.0% and earnings per share by 70.4%.
- The return on shareholders' equity reached 24.4% in the quarter and
20.7% for the year.
- The Company exceeded all objectives for 1998 as set out in the 1997
Annual Report and anticipates continuing solid growth in 1999.
Home Capital Group Inc. is a holding company, publicly traded on the
Toronto Stock Exchange (HCG.B), operating thorough its principal subsidiary,
Home Savings & Loan Corporation. Home Savings & Loan was incorporated in 1977
and is a regulated financial institution that offers deposit and mortgage
lending services. The Company's service area is primarily Ontario and has
recently expanded into Western Canada.
HOME CAPITAL GROUP INC.
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HIGHLIGHTS
For the period ended December 31
Three Twelve
Months Ended Months Ended
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(Unaudited) (Audited) (Unaudited) (Audited)
1998 1997 1998 1997
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SHAREHOLDER RETURNS
Net Income $ 1,998,034 $1,017,600 $6,067,432 $3,018,482
Earnings per Share 0.13 0.09 0.46 0.27
Return on
Shareholders' Equity 24.4% 17.0% 20.7% 13.2%
Book Value per
Common Share 2.27 2.06
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GROWTH IN BUSINESS
Total Assets $ 538,875,715 $434,120,336
Mortgage Loans 471,841,177 385,872,534
Deposits and Borrowings 493,385,830 399,497,379
Revenue 42,069,017 33,753,574
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FINANCIAL STRENGTH
Tier 1 (x) 10.23% 9.02%
Total Capital (x) 13.72% 12.22%
Common Shareholders' Equity $ 33,620,000 $ 25,004,443
(x) These figures relate to the Company's operating subsidiary, Home
Savings & Loan Corporation.
Come visit us on the web:
Home Savings & Loan Corporation (www.hslcorp.com)
Home Capital Group Inc. (www.homecapital.com)
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HOME CAPITAL GROUP INC.
TO OUR SHAREHOLDERS
I am delighted to report that your Company today announced significant
growth in net income, earnings per share, assets and return on equity for the
year ended December 31, 1998. These results were achieved through our wholly
owned subsidiary, Home Savings & Loan Corporation.
Results for the fourth quarter contributed to the positive momentum
achieved throughout the year as a whole. During this period, and compared to
the same quarter in 1997, net income rose from $1,017,600 to $1,998,034, an
increase of 96.3%, and earnings per share rose from $0.09 to $0.13 per share,
an increase of 44.4%. Positive year end adjustments representing approximately
one cent per share were taken in the quarter. The annualized return on equity
including year end adjustments increased in the fourth quarter of 1998 to
24.4% from 17.0% in the same quarter of 1997.
For the year ended December 31, 1998, and compared to the results for the
previous year, the Company recorded a 101.0% increase in net income, from
$3,018,482 to $6,067,432. Earnings per share rose by 70.4%, from $0.27 to
$0.46. Asset growth of 24.1%, from $434,120,336 to $538,875,715, was achieved
- making 1998 the first year in which our assets exceeded the one half billion
dollar mark. Return on equity stood at 20.7% compared to the 13.2% recorded in
1997. Our risk weighted Tier 1 and Total Capital ratios, at 10.23% and 13.72%
respectively, continued to exceed all standards.
This above average performance was achieved on the strength of the
Company's core business: a limited-risk mortgage portfolio consisting of 99.7%
first mortgages and 96.9% residential mortgages. Other than those mortgages
that are insured by CMHC, the maximum loan to value does not exceed 75%. The
success of this strategy is reflected in the increasingly positive performance
of recent years. Net impaired loans represented 0.26% of the mortgage
portfolio as at December 31, 1998, compared to 0.25% one year earlier.
The past year saw a number of initiatives that will strengthen our
ability to generate further growth and earnings. Strategic alliances were
concluded with leading financial institutions, complementing the relationships
we enjoy with our valued core broker network. Our credit facility with Penfund
Capital (No. 1) Limited was increased, enabling us to increase Home Savings &
Loan Corporation's regulatory capital base. The balance of outstanding
convertible subordinated debentures were converted into Class ''B''
subordinated voting shares of the Company. Our business expansion in western
Canada continued to proceed in a positive and prudent manner. The Company also
announced a Normal Course Issuer Bid as a means of ensuring that the market
price of the Class ''B'' shares accurately reflects the current value and
future prospects of our business. As at the year end of December 31, 1998, the
Company had repurchased 65,500 shares.
Our proven performance and positive outlook reflect a greatly increased
awareness and appreciation in the marketplace of the residential real estate
niche that we occupy. The results for 1998 confirmed the benefits to our
shareholders resulting from the dedication to our strategy and the efficient
execution of that strategy. By all standards, the Company enjoyed the best
combination of results: above average growth and returns and below average
risk. We are optimistic about our prospects for continued solid growth in
1999.
GERALD M. SOLOWAY
President and Chief Executive Officer
February 10, 1999 |
