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Home Capital shares jump 15% as chairman says company will ‘vigorously defend’ itself

By: financialpost.com 1 year ago
Home Capital shares jump 15% as chairman says company will ‘vigorously defend’ itself

The chairman's statement comes a day after Home Capital's shares fell 20% after the OSC accused the mortgage lender of misleading disclosure

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How Home Capital shares jump 15% as chairman says company will ‘vigorously defend’ itself

Home Capital Group Inc. moved to reassure shareholders Friday by releasing preliminary first quarter earnings-per-share figures and issuing a statement by its board chair saying the mortgage lender is “confident” about its future and that it will “vigorously defend” itself to the Ontario Securities Commission.

This comes a day after shares of Home Capital fell 20.65 per cent on Thursday after the OSC accused the mortgage lender of misleading disclosure after the company uncovered falsified income information on some loan applications and cut ties with dozens of brokers in 2014.

Home Capital said Friday that it expects to report earnings of $1.02 on an adjusted diluted earnings per share basis, compared to $0.96 a year ago. That’s above analysts’ estimates of $0.961 adjusted earnings per share for Home Capital’s first quarter, according to data compiled by Bloomberg.

Kevin Smith, chair of Home Capital’s board of directors, said in a message to shareholders on Friday that these preliminary, unaudited first-quarter numbers show that the “business is robust.”

He added that Home Capital continues to see “strong volumes and excellent credit quality.”

Smith also addressed the OSC’s statement of allegations and notice of hearing issued Wednesday against Home Capital, former president and chief executive Martin K. Reid, former president and chief executive and current director Gerald M. Soloway, and chief financial officer Robert Morton.

“We will continue to vigorously defend our approach to disclosure in the Ontario Securities Commission (OSC) proceeding,” Smith said in the statement. “While the OSC process may take some time, management and the Board are focused on continued profitable growth and industry leading customer service.”

The OSC will hold a hearing on May 4.

Shares of Home Capital were up more than 15 per cent in early trading in Toronto on Friday.

HomeCapitalsharesjumpchairmansayscompanywill‘vigorouslydefend’itself