Mr. Yousry Bissada reports

HOME CAPITAL REPORTS FIRST QUARTER 2023 RESULTS

Home Capital Group Inc. has released financial results for the three months ended March 31, 2023. This press release should be read in conjunction with the company's 2023 first-quarter report, including financial statements and management's discussion and analysis, which is available on Home Capital's website and on SEDAR.

"I am pleased with our progress so far this year," said Yousry Bissada, president and chief executive officer. "We were able to deliver 31-per-cent growth in diluted earnings per share, through growth in assets under administration, improved margins, a reduction in the number of shares outstanding and disciplined expense management. I am also happy to note that total deposits through our Oaken channel surpassed $5-billion during the quarter."

Net income -- diluted earnings per share of $1.34 in Q1 2023, compared with $1.02 in Q1 2022:

• Net income of $51.8-million, or $1.34 diluted earnings per share, in Q1 2023, an increase of 55.8 per cent from 86 cents per share in Q4 2022 and an increase of 31.4 per cent from $1.02 per share in Q1 2022;
• Adjusted net income of $53.0-million, or $1.37 diluted earnings per share, in Q1 2023, an increase of 44.2 per cent from 95 cents per share in Q4 2022 and an increase of 33.0 per cent from $1.03 per share in Q1 2022. Results are adjusted for items of note related to implementing the company's Ignite program and the Smith Financial Corp. transaction;
• Net interest margin of 2.15 per cent in Q1 2023, compared with 1.99 per cent in Q4 2022 and 2.18 per cent in Q1 2022;
• Non-interest expenses of $65.3-million in Q1 2023, compared with $67.0-million in Q4 2022 and $65.0-million in Q1 2022.

Asset growth -- mortgage originations decreased 47.6 per cent over Q1 2022:

• Mortgage originations of $1.45-billion in Q1 2023, compared with $1.81-billion in Q4 2022 and $2.76-billion in Q1 2022;
• Single-family mortgage originations of $921.2-million in Q1 2023, compared with $1.34-billion in Q4 2022 and $2.30-billion in Q1 2022;
• Total loan portfolio of $20.90-billion at the end of Q1 2023, a decrease of 0.5 per cent from the end of Q4 2022 and an increase of 7.4 per cent from the end of Q1 2022;
• Loans under administration of $27.57-billion at the end of Q1 2023, up 1.2 per cent from the end of Q4 2022 and 8.7 per cent from the end of Q1 2022.

Financing -- deposits through the company's Oaken channel of $5.06-billion make up 31.2 per cent of total deposits:

• Total deposits of $16.22-billion at the end of Q1 2023, compared with $15.92-billion at the end of Q4 2022 and $14.39-billion at the end of Q1 2022;
• Total Oaken deposits of $5.06-billion at the end of Q1 2023, an increase of 2.9 per cent from the end of Q4 2022 and 11.6 per cent from the end of Q1 2022;
• Oaken's share of total deposits was 31.2 per cent at the end of Q1 2023, compared with 30.9 per cent at the end of Q4 2022 and 31.5 per cent at the end of Q1 2022.

Credit quality -- provisions of $700,000, compared with a reversal of provision of $100,000 in Q1 2022:

• Provision for credit losses of $700,000 in Q1 2023, compared with a provision expense of $10.4-million in Q4 2022 and a reversal of provision for credit losses of $100,000 in Q1 2022;
• Allowance for credit losses of 0.26 per cent of gross loans at the end of Q1 2023, compared with 0.26 per cent at the end of Q4 2022 and 0.18 per cent at the end of Q1 2022;
• Net write-offs as a percentage of gross loans were fewer than one basis point in Q1 2023, compared with 0.01 per cent in Q4 2022 and Q1 2022;
• Net non-performing loans (represented by stage 3 loans under international financial reporting standards 9) as a percentage of gross loans at 0.24 per cent at the end of Q1 2023, compared with 0.22 per cent at the end of Q4 2022 and 0.11 per cent at the end of Q1 2022.

Dividend declaration

The board has declared a dividend of 15 cents per common share, payable on June 15, 2023, to shareholders of record at the close of business on May 31, 2023. The dividend is designated as an eligible dividend for the purposes of the Income Tax Act (Canada) and any similar provincial legislation.

Arrangement with Smith Financial

As previously announced, the company entered into a definitive agreement on Nov. 20, 2022, for its outstanding shares to be acquired by a wholly owned subsidiary of Smith Financial, a company controlled by Stephen Smith, by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The SFC transaction has received shareholder and court approvals, and the Competition Bureau has recently indicated that it will take no action in respect of it.

Outlook

"We're looking forward to completing Smith Financial Corp.'s acquisition of Home and continue to expect that we will close by mid-2023. The recent Competition Bureau decision to take no action in respect of the proposed acquisition marks an important step towards completing the transaction," stated Mr. Bissada. "We continue to work together with the team at Smith Financial to obtain the remaining regulatory approvals."

About Home Capital Group Inc.

Home Capital is a public company operating through its principal subsidiary, Home Trust Company. Home Trust Company is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending and credit card services. In addition, Home Trust Company and its wholly owned subsidiary, Home Bank, offer deposits via brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial. Licensed to conduct business across Canada, Home Capital has offices in Ontario, Alberta, British Columbia, Nova Scotia and Quebec.

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