Mr. Yousry Bissada reports

HOME CAPITAL REPORTS SECOND QUARTER 2023 RESULTS

Home Capital Group Inc. has released its results for the three and six months ended June 30, 2023. This press release should be read in conjunction with the company's 2023 second quarter report including financial statements and management's discussion and analysis which are available on Home Capital's website and on SEDAR.

"This quarter's results showcased the growth in our net income and strong operational performance. While the growth in our loan portfolio slowed in line with market conditions, we were pleased with the strength of our retention this quarter," said Yousry Bissada, president and chief executive officer. "Our prudent underwriting and resourceful mortgage customers have kept net arrears at a low level. A significant majority of our Alt A mortgages have now been originated or renewed at rates reflecting the rapid interest rate increases over the last 18 months. This quarter we also completed the final component of our multiyear ignite program. We are pleased to report that the team has now successfully transformed our core technology platforms and digital capabilities to enable future growth and operating efficiencies."

Net income: diluted earnings per share of $1.49 in Q2 2023 compared with 97 cents in Q2 2022

• Net income of $58.1-million or $1.49 diluted earnings per share in Q2 2023, an increase of 11.2 per cent from $1.34 per share in Q1 2023 and an increase of 53.6 per cent from 97 cents per share in Q2 2022.
• Adjusted net income of $61.1-million or $1.57 diluted earnings per share in Q2 2023, an increase of 14.6 per cent from $1.37 per share in Q1 2023 and an increase of 60.2 per cent from 98 cents per share in Q2 2022. Results are adjusted for items of note related to implementing the company's ignite program and the SFC transaction (see arrangement with Smith Financial Corp. section). Adjusted results, measures and ratios are non-GAAP (generally accepted accounting principles) financial measures.
• Net interest margin of 2.35 per cent in Q2 2023, compared with 2.15 per cent in Q1 2023 and 1.97 per cent in Q2 2022.
• Non-interest expenses of $68.0-million in Q2 2023, compared with $65.3-million in Q1 2023 and $60.9-million in Q2 2022.

Asset growth: mortgage originations decreased 49.8 per cent over Q2 2022

• Mortgage originations of $1.53-billion in Q2 2023, compared with $1.45-billion in Q1 2023 and $3.04-billion in Q2 2022.
• Single-family mortgage originations of $1.14-billion in Q2 2023, compared with $921.2-million in Q1 2023 and $2.27-billion in Q2 2022.
• Total loan portfolio of $21.02-billion at the end of Q2 2023, an increase of 0.6 per cent from the end of Q1 2023 and an increase of 2.0 per cent from the end of Q2 2022.
• Loans under administration of $27.67-billion at the end of Q2 2023, up 0.4 per cent from the end of Q1 2023 and 3.7 per cent from the end of Q2 2022.

Funding: deposits through the company's Oaken channel of $5.10-billion make up 31.6 per cent of total deposits

• Total deposits of $16.12-billion at the end of Q2 2023, compared with $16.22-billion at the end of Q1 2023 and $15.02-billion at the end of Q2 2022.
• Total Oaken deposits of $5.10-billion at the end of Q2 2023, an increase of 0.9 per cent from the end of Q1 2023 and 10.0 per cent from the end of Q2 2022.
• Oaken's share of total deposits was 31.6 per cent at the end of Q2 2023, compared with 31.2 per cent at the end of Q1 2023 and 30.9 per cent at the end of Q2 2022.

Credit quality: provisions of $2.1-million compared with $4.7-million in Q2 2022

• Provision for credit losses (PCL) of $2.1-million in Q2 2023, compared with a provision expense of $700,000 in Q1 2023 and $4.7-million in Q2 2022.
• Allowance for credit losses of 0.27 per cent of gross loans at the end of Q2 2023, compared with 0.26 per cent at the end of Q1 2023 and 0.19 per cent at the end of Q2 2022.
• Net writeoffs as a percentage of gross loans were 0.01 per cent in Q2 2023, compared with less than one basis point in Q1 2023 and 0.01 per cent in Q2 2022.
• Net non-performing loans (represented by stage 3 loans under IFRS 9) as a percentage of gross loans were 0.41 per cent at the end of Q2 2023, compared with 0.24 per cent at the end of Q1 2023 and 0.14 per cent at the end of Q2 2022.

Dividend declaration

The board has declared a dividend of 15 cents per common share, payable on Sept. 15, 2023, to shareholders of record at the close of business on Aug. 31, 2023. The dividend is designated as an eligible dividend for the purposes of the Income Tax Act (Canada) and any similar provincial legislation and will be paid only if the SFC transaction has not closed on or before Aug. 31, 2023.

Arrangement with Smith Financial Corp.

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 (SFC), 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 approval and the Competition Bureau has also indicated that it will take no action in respect of it. Please see the business profile section in the company's 2023 second quarter report for more information.

Outlook

"We expect to receive approvals under the Bank Act and the Trust and Loan Companies Act for the acquisition of Home by Smith Financial Corp. and to close the transaction this summer. We believe this change will help Home further enhance our leadership in the markets in which we operate," stated Mr. Bissada.

The company's continuous disclosure materials, including interim filings, annual management's discussion and analysis and audited consolidated financial statements, and annual information form, are available on the company's website and on the Canadian Securities Administrators' website SEDAR+.

About Home Capital Group Inc.

Home Capital Group is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust 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 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, the company has offices in Ontario, Alberta, British Columbia, Nova Scotia and Quebec.

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