Home Capital Group Inc. today reported record second quarter and half-yearly earnings for the period ended June 30, 2000. These results were achieved through the Company’s wholly owned subsidiary, Home Trust Company.
Three Months Ended % Six Months Ended %
June 30 change June 30 change
2000 1999 2000 1999
Net
Income $2,485,178 $1,958,393 26.9% $4,806,990 $3,844,523 25.0%
Earnings
per
share
(basic) $0.17 $0.13 30.8% $0.33 $0.26 26.9%
Return on
equity 22.9% 21.7% 22.6% 21.8%
Revenue $16,824,847 $12,509,508 34.5% $32,529,047 $24,452,824 33.0%
Assets $791,613,273 $604,213,038 31.0% $791,613,273 $604,213,038 31.0%
Total No.
shares
outstan-
ding 14,749,695 14,811,195 14,749,695 14,811,195
– This represents the 20th consecutive quarter in which earnings
before unusual items exceeded those of the previous quarter.
– The Company recently announced a 33% increase in the dividend,
to $0.08 per share.
– The Hon. William G. Davis, P.C., C.C., Q.C., has been elected
Chairman of the wholly-owned subsidiary, Home Trust Company.
– Home Trust Company has joined the VISA Canada Association,
becoming only the 11th General Member financial institution
authorized to offer VISA cards in Canada.
– Home Trust Company will launch a secured VISA credit card
starting September, 2000 to assist consumers in establishing
or re-establishing their credit worthiness.
– The Company is on track to meet or exceed its stated goals
for the current year.
Home Capital Group Inc.
To Our Shareholders
Home Capital Group Inc. is pleased to announce record 2nd quarter earnings of $0.17 per share, or $2,485,178, versus earnings of $0.13 per share, or $1,958,393, for the comparable period in the previous year, an increase of 26.9%. Total assets grew from $604,213,038 to $791,613,273, or 31.0% and our annualized return on equity was 22.9%, compared to 21.7% on a year over year basis. Our results reflect the power of our strategy to pursue market leadership with customers who are underserved by traditional lenders.
This represents the 20th consecutive quarter, a full five years, in which earnings before unusual items exceeded those of the previous quarter.
For the first six months of the year the Company reported net income of $4,806,990, an increase of 25.0% over the $3,844,523 recorded through the first half of 1999. Earnings per share rose from $0.26 to $0.33 and annualized return on shareholders equity stood at 22.6% compared to 21.8% for the same period in 1999.
In addition, our credit quality remains excellent. Mortgage charge-offs continue to decline and our non-performing loans represented 0.36% at June 30, compared to 0.30% one year ago. In keeping with the safety and soundness with which the Company has operated, we have moved our general reserve to 0.78% of assets on a risk-weighted basis as of June 30, 2000, which is slightly higher than the average of the general reserves for the five leading banks in Canada. All other performance indicators also reflected positive results during the period under review. In short, we are on track to report a record year.
These and other achievements are the signs of a stable and profitable core business and a Company that is “coming of age.” Your Board of Directors further validated this fact by announcing a 33% increase in the dividend paid on the outstanding convertible Class A shares and Class B subordinated voting shares. This step, equating to an effective increase from $0.06 to $0.08 per share on an annualized basis, reflects our strong cash flow from operations, our financial strength, and the quality of our balance sheet. It also represents further tangible indication of our commitment to the creation of value for all our shareholders. The first quarterly dividend at the increased amount will be payable on August 10, 2000 to shareholders of record at the close of business on July 13, 2000.
I am pleased to report that the transition of Home Savings & Loan Corporation into Home Trust Company proceeded smoothly during the second quarter. Other significant steps will ensure that we are well positioned to grow and to profit from this change in the years ahead.
The Honourable William Davis, P.C., C.C., Q.C., who is already a Director of Home Capital Group, has kindly agreed to serve as Chairman of Home Trust Company. His experience, particularly with broadly based and accomplished financial institutions, and wise counsel will be of great assistance to your Company.
During the second quarter we also announced that Home Trust Company had been approved for membership in the VISA Canada Association. We are only the eleventh General Member financial institution authorized to offer VISA payment cards in Canada.
We also announced that Home Trust Company will launch a secured VISA credit card starting in September of this year. This card is designed to assist consumers to establish or re-establish their credit worthiness. These customer segments have been served effectively and profitably in the United States by several issuers. We believe that we can serve this niche in a manner that is socially responsible for consumers, and low risk yet profitable for your Company.
The economic outlook for Canada and your Company remains positive. Our core business continues to grow in an innovative and dynamic way and we are confident about the market acceptance of our new secured VISA credit card. This combination of factors makes your Company very optimistic about its future prospects.
