Home Capital Reports Net Income up 16.0% year over year:

• Diluted Earnings per Share are $1.90, up 15.2%;
• Return on Equity was 24.3% for the quarter.

TORONTO, Nov. 6, 2013 /CNW/ - Home Capital today reported another quarter of solid results and strong origination volumes.

The Company's Third Quarter Report, including Management's Discussion and Analysis, is available on Home Capital's website at www.homecapital.com and the Canadian Securities Administrators' website at www.sedar.com.

FINANCIAL HIGHLIGHTS

(Unaudited)	For the three months ended						For the nine months ended
(000s, except Per Share and Percentage Amounts)	September 30		June 30		September 30		September 30		September 30
		2013		2013		2012		2013		2012
OPERATING RESULTS
Net Income	$	66,417	$	61,573	$	57,254	$	187,715	$	163,018
Total Revenue		239,433		232,555		226,603		703,182		660,036
Diluted Earnings per Share	$	1.90	$	1.77	$	1.65	$	5.37	$	4.68
Return on Shareholders' Equity		24.3%		23.6%		25.6%		24.0%		25.7%
Return on Average Assets		1.3%		1.3%		1.2%		1.3%		1.2%
Net Interest Margin (TEB)^1		2.16%		2.14%		2.14%		2.16%		2.08%
Provision as a Percentage of Gross Loans (annualized)		0.06%		0.10%		0.10%		0.09%		0.08%
Efficiency Ratio (TEB)^1		29.6%		28.6%		28.1%		28.8%		27.9%
								As at
		September 30		June 30		December 31		September 30
		2013		2013		2012		2012
BALANCE SHEET HIGHLIGHTS
Total Assets	$	19,840,797	$	19,532,958	$	18,800,079	$	19,241,999
Total Assets Under Administration ^2		21,287,095		20,577,505		19,681,750		19,410,132
Total Loans ^3,4		18,084,382		17,794,420		17,159,913		17,468,655
Securitized Loans On-Balance Sheet ^3		6,164,544		6,570,837		6,706,160		7,415,206
Total Loans Under Administration ^3,4,5		19,530,680		18,838,967		18,041,584		17,636,788
Liquid Assets		1,097,429		884,908		771,772		998,219
Deposits		11,936,647		11,168,639		10,136,599		9,870,691
Shareholders' Equity		1,121,362		1,068,017		968,213		919,618
FINANCIAL STRENGTH
Capital Measures ^6
Risk-Weighted Assets	$	6,240,690	$	5,984,644	$	5,491,513	$	5,271,674
Common Equity Tier 1 Capital Ratio		16.72%		16.63%		N/A		N/A
Tier 1 Capital Ratio		16.72%		16.63%		17.01%		16.97%
Total Capital Ratio		19.72%		19.74%		20.68%		20.78%
Assets to Regulatory Capital Multiple^7		13.34		13.36		13.39		14.07
Credit Quality
Net Non-Performing Loans as a Percentage of Gross Loans		0.32%		0.31%		0.33%		0.28%
Allowance as a Percentage of Gross Non-Performing Loans		57.0%		58.3%		57.0%		64.7%
Share Information
Book Value per Common Share	$	32.27	$	30.83	$	27.96	$	26.53
Common Share Price - Close	$	72.03	$	55.53	$	59.07	$	51.44
Market Capitalization	$	2,502,754	$	1,923,948	$	2,045,594	$	1,783,322
Number of Common Shares Outstanding		34,746		34,647		34,630		34,668

¹See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures of the unaudited interim consolidated financial report.
²Total assets under administration include total on-balance sheet assets and off-balance sheet loans.
³In 2013 the Company classified Home Trust mortgages used as CMB replacement assets as securitized mortgages.  In 2012 these were classified as pledged securities.  Prior periods in 2012 have been restated to reflect the current classification.
⁴Total loans include loans held for sale.
⁵Loans under administration includes total loans and off-balance sheet loans.
⁶These figures relate to the Company's operating subsidiary, Home Trust Company and are calculated under Basel III for 2013 and Basel II for 2012.
⁷During Q3 2013, the Company excluded from its assets, for purposes of calculating the Assets to Regulatory Capital Multiple, mortgages that are off-balance sheet as a result of sales of interest only strips in light of regulatory communications confirming this treatment.  The comparative multiples have been restated to reflect this treatment.

THIRD QUARTER 2013 HIGHLIGHTS

Key results for the third quarter and the first nine months of 2013 included:

• Net income increased to $66.4 million for the third quarter and $187.7 million for the first nine months of 2013, up 16.0% and 15.1% over the comparable periods in 2012. Adjusted net income, as defined in Table 2, was $64.6 million for Q3 2013 and $189.5 million for the first nine months of 2013, representing increases of 12.9% and 16.3% over the comparable periods of 2012. Adjusted net income was also up 4.4% from $61.9 million in Q2 2013.
  
  
• Diluted earnings per share were $1.90 for the quarter and $5.37 year to date representing increases of 15.2% and 14.7% over the $1.65 and $4.68 earned in the comparable periods of 2012 and an increase of 7.3% over the $1.77 last quarter.
  
  
• During the quarter, the Company recognized $1.9 million in a gain on sale from the sale of interest only strips of underlying mortgages with a principal value of $191.8 million. In the quarter, Home Capital received a favorable regulatory ruling confirming that the underlying mortgages in these transactions can be excluded from the calculation of the assets to capital multiple.  Please see the discussion below.
  
  
• Net interest income, before provisions, continued in an upward trend, reaching $106.6 million in the third quarter and $311.0 million year to date, increasing from $99.5 million and $281.6 million recorded in the same periods of 2012 and from $102.5 million earned in Q2 2013. The growth in net interest income reflects strong net on-balance sheet loan growth in the traditional loan portfolio.
  
  
• Net interest margin (TEB) was 2.16% in both the quarter and on a year-to-date basis. This is up from 2.14% and 2.08% in the same periods of 2012 and the 2.14% recorded last quarter. The increase year over year reflects the combination of the shift to higher yielding traditional mortgages relative to securitized mortgages and improved spreads earned on non-securitized lending year to date.
  
  
• Return on equity was strong at 24.3% for the quarter and continues to be in excess of the Company's minimum performance objective of 20%.
  
  
• The credit quality of the loan portfolio remains strong with continued low non-performing loans and credit losses that are well within expected levels. Net non-performing loans as a percentage of gross loans (NPL ratio) ended the quarter at 0.32% compared to 0.31% at the end of last quarter, 0.33% at the end of last year and 0.28% one year ago. The annualized credit provision as a percentage of gross loans (PCL ratio) of 0.06% has decreased from the 0.10% in both last quarter and one year ago.
  
  
• Capital ratios remain high with Home Trust's Common Equity Tier 1 ratio (CET 1 ratio) ending the quarter at 16.80%, while Tier 1 and Total Capital Ratios were 16.80% and 19.81%, respectively.  Home Trust's Assets to Capital (ACM) multiple was 13.33 at the end of the quarter compared to 13.36 at June 30, 2013 and 14.07 one year ago.
  
  
• Total loans under administration, which includes securitized mortgages that qualify for off-balance sheet accounting, increased to $19.53 billion, reflecting increases of $1.89 billion or 10.7% from $17.64 billion one year ago, and $1.49 billion or 8.3% from $18.04 billion at the end of 2012 (11.0% on an annualized basis).
  
  
• Strong demand for the Company's products continues to support residential loan growth. Total mortgage originations in the quarter increased to $1.99 billion from $1.63 billion last quarter and $1.68 billion in the same quarter last year.  Year-to-date loan originations were $5.01 billion, up from $4.53 billion in 2012.
  
  
• Traditional residential mortgage originations increased to $1.31 billion in the quarter, up from $1.23 billion in Q3 2012 and $1.24 billion in Q2 2013. Year-to-date traditional mortgage originations were $3.54 billion, up from $3.33 billion last year. The Company continues to experience strong demand for its traditional product offerings, which continue to be of high credit quality. This continues to enhance profitability and asset quality.
  
  
• Accelerator (insured) residential mortgage originations increased to $272.6 million in the quarter, up from $236.7 million in Q3 2012 and $260.3 million in last quarter. Year-to-date originations of $654.5 million are up from the $630.5 million originated in the same period last year. Accelerator originations are expected to increase compared to current levels as the Company increases its focus on origination of new Accelerator mortgages and the renewal of its existing portfolios.
  
  
• Multi-unit residential mortgage originations were $326.3 million in the quarter and $583.3 million year to date compared to $114.3 million and $229.6 million in the same periods last year and $54.3 million last quarter. The Company securitized and sold $235.5 million in Q3 2013 resulting in $2.9 million in securitization gains. The insured multi-unit residential market is relatively limited and the Company participates as appropriate opportunities are available through various origination channels. Consequently, origination volumes can vary significantly from quarter to quarter.
  
  
• Commercial mortgage advances were $49.3 million for the quarter and $124.0 million year to date compared to $52.6 million and $186.3 million in the comparable periods of 2012 and $44.0 million last quarter. Store and apartment mortgage advances were $24.3 million in the quarter and $75.4 million year to date compared to $18.2 million and $93.9 million in the comparable periods of 2012 and $27.5 million last quarter.
  
  
• The consumer retail credit portfolio, which includes durable household goods, such as water heaters and larger-ticket home improvement items, reached $328.0 million in Q3 2013, up 47.9% from $221.8 million one year ago. The Company has been successful at expanding relationships with its business partners to increase this portfolio which offers attractive returns for the risk profile.

During the quarter, OSFI confirmed the Company's proposed treatment of mortgages underlying sales of interest only strips as it affects the measurement of the regulatory asset to capital multiple. This favourable ruling confirms that off-balance sheet capital treatment can be achieved for securitized mortgages in certain situations and has resulted in an immediate increase of the Company's unutilized lending capacity. The ruling also provides significant flexibility with respect to growth of the portfolio of insured prime residential mortgages originated or renewed by the Company. The significance of this development is discussed under Capital and Lending Capacity in the Capital Management section of the Management's Discussion and Analysis in the Company's Third Quarter 2013 Report, which is available on Home Capital's website. As discussed above, in September the Company sold interest only strips of underlying mortgages with a principal value of $191.8 million. This resulted in a gain of $1.9 million in the quarter.

The Company continues to experience strong demand for its mortgage lending products.  Recent information indicates that modest increases in sales volumes and prices occurred in the quarter, which is reflective of relatively balanced markets. This is consistent with the Company's experience and observations of a healthy market with listings and sales in balance. The Company has not observed evidence of a "housing bubble" and expects that it will be able to continue to expand its share of the market through its network of brokers and its business development programs.

In the previous quarter, the Company reported that, based on its review of properties, it did not expect to incur significant losses as a result of the dramatic flooding in Alberta that occurred late in the second quarter.  We are pleased to report that, although a number of borrowers were affected by the flooding and a small number have asked for revisions to payments, no significant losses have been reported as of this date and the Company does not expect significant losses.

Senior Management and the Board of Directors are pleased to announce that the Company further strengthened its senior executive team during the quarter with the appointment of Fariba Rawhani to the position of Senior Vice President and Chief Information Officer, along with Carol Ferguson to the position of Vice President, Human Resources. Ms. Rawhani is a seasoned information technology executive with 28 years of experience in IT leadership and transformation spanning public sector agencies, and numerous private sector industries including 16 years in the financial services industry.  She has managed highly complex IT programs involving large teams of professionals, delivering senior IT leadership for national and international Fortune 100 companies. Ms. Ferguson brings to the organization over 25 years of financial services industry experience and a proven track record of building strong Human Resources teams. She specializes in delivering customized, practical human capital solutions, most notably in succession planning and leadership development.

On September 25, 2013, Home Trust was pleased to host and sponsor the first annual Home Trust Tom Trenouth Charity Golf Tournament.  Over 144 brokers and industry partners were in attendance and overwhelming support was received from everyone involved.  The proceeds of $67 thousand from the tournament were donated to the Breast Cancer Society of Canada.  The Company is looking forward to the second annual tournament which promises to be even more successful. 

Subsequent to the end of the quarter, and in light of the Company's solid performance, profitability and strong financial position, the Board of Directors approved a quarterly dividend of $0.28 per common share, payable on December 1, 2013 to shareholders of record at the close of business on November 15, 2013.

The Company continues to deliver solid results in terms of growth, high returns and increased dividends. Despite the persistent international economic instability and modest economic improvement in Canada, the Company's performance continues to reflect the strength and the successful execution of its core strategy.

With solid performance in all aspects of Home Capital's business, management continues to expect the positive performance the Company experienced during the first nine months 2013 to continue for the remainder of year and into 2014.

(signed) GERALD M. SOLOWAY      Chief Executive Officer      November 6, 2013

(signed) KEVIN P.D. SMITH Chair of the Board

Additional information concerning the Company's targets and related expectations for 2013, including the risks and assumptions underlying these expectations, may be found in Management's Discussion and Analysis (MD&A) of the quarterly report.

Third Quarter Results Conference Call
The conference call will take place on Thursday, November 7, 2013 at 10:30 a.m. Participants are asked to call 5 to 15 minutes in advance, 647-427-7450 in Toronto or toll-free 1-888-231-8191 throughout North America. The call will also be accessible in listen-only mode via the Internet at www.homecapital.com.

Conference Call Archive
A telephone replay of the call will be available between 2:30 p.m. Thursday, November 7, 2013 and midnight Thursday, November 14, 2013 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 80101898). The archived audio web cast will be available for 90 days on CNW Group's website at www.newswire.ca and Home Capital's website at www.homecapital.com.

Consolidated Statements of Income
		For the three months ended									For the nine months ended
thousands of Canadian dollars, except per share amounts		September 30			June 30			September 30			September 30			September 30
(Unaudited)			2013			2013			2012			2013			2012
Net Interest Income Non-Securitized Assets
Interest from loans		$	159,573		$	153,598		$	138,271		$	461,202		$	381,412
Dividends from securities			2,621			2,795			3,172			8,609			10,669
Other interest			2,386			1,778			1,093			5,620			3,070
			164,580			158,171			142,536			475,431			395,151
Interest on deposits			67,911			65,640			58,962			196,489			168,133
Interest on senior debt			1,635			1,601			1,648			4,819			5,006
Net interest income non-securitized assets			95,034			90,930			81,926			274,123			222,012
Net Interest Income Securitized Loans and Assets
Interest income from securitized loans and assets			55,229			57,953			70,618			174,519			223,520
Interest expense on securitization liabilities			43,669			46,351			53,053			137,630			163,968
Net interest income securitized loans and assets			11,560			11,602			17,565			36,889			59,552
Total Net Interest Income			106,594			102,532			99,491			311,012			281,564
Provision for credit losses			2,768			4,429			4,239			11,864			11,035
			103,826			98,103			95,252			299,148			270,529
Non-Interest Income
Fees and other income			15,472			15,406			11,281			45,850			32,935
Securitization income			4,864			508			1,507			6,878			2,545
Net realized and unrealized (losses) gains on securities			(668)			1,163			(1,141)			2,441			402
Net realized and unrealized (loss) gain on derivatives			(44)			(646)			1,802			(1,937)			5,483
			19,624			16,431			13,449			53,232			41,365
			123,450			114,534			108,701			352,380			311,894
Non-Interest Expenses
Salaries and benefits			17,768			16,673			15,465			51,391			43,965
Premises			2,407			2,439			2,296			7,291			6,271
Other operating expenses			17,460			15,160			14,304			47,194			40,879
			37,635			34,272			32,065			105,876			91,115
Income Before Income Taxes			85,815			80,262			76,636			246,504			220,779
Income taxes
Current			20,258			16,077			19,904			59,791			59,527
Deferred			(860)			2,612			(522)			(1,002)			(1,766)
			19,398			18,689			19,382			58,789			57,761
NET INCOME		$	66,417		$	61,573		$	57,254		$	187,715		$	163,018
NET INCOME PER COMMON SHARE
Basic		$	1.91		$	1.78		$	1.65		$	5.42		$	4.70
Diluted		$	1.90		$	1.77		$	1.65		$	5.37		$	4.68
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			34,703			34,612			34,697			34,645			34,705
Diluted			34,953			34,850			34,803			34,962			34,826
Total number of outstanding common shares			34,746			34,647			34,668			34,746			34,668
Book value per common share		$	32.27		$	30.83		$	26.53		$	32.27		$	26.53

Consolidated Statements of Comprehensive Income
		For the three months ended									For the nine months ended
		September 30			June 30			September 30			September 30			September 30
thousands of Canadian dollars (Unaudited)			2013			2013			2012			2013			2012
NET INCOME		$	66,417		$	61,573		$	57,254		$	187,715		$	163,018
OTHER COMPREHENSIVE (LOSS) INCOME
Available for Sale Securities
Net unrealized (losses) gains on securities available for sale			(10,638)			(10,737)			1,667			(14,210)			4,991
Net losses (gains) reclassified to net income			671			(1,162)			1,141			(2,437)			(571)
			(9,967)			(11,899)			2,808			(16,647)			4,420
Income tax (recovery) expense			(2,640)			(3,151)			742			(4,410)			1,266
			(7,327)			(8,748)			2,066			(12,237)			3,154
Cash Flow Hedges
Net unrealized losses on cash flow hedges			(195)			-			-			(195)			(370)
Net losses reclassified to net income			376			372			376			1,115			1,086
			181			372			376			920			716
Income tax expense			48			97			99			240			120
			133			275			277			680			596
Total other comprehensive (loss) income			(7,194)			(8,473)			2,343			(11,557)			3,750
COMPREHENSIVE INCOME		$	59,223		$	53,100		$	59,597		$	176,158		$	166,768

Consolidated Balance Sheets
		September 30			June 30			December 31
thousands of Canadian dollars (Unaudited)			2013			2013			2012
ASSETS
Cash and Cash Equivalents		$	774,591		$	707,240		$	301,863
Available for Sale Securities			441,689			396,557			414,344
Loans Held for Sale			77,655			25,508			21,921
Loans
Securitized mortgages			6,164,544			6,570,837			6,706,160
Non-securitized mortgages and loans			11,842,183			11,198,075			10,431,832
			18,006,727			17,768,912			17,137,992
Collective allowance for credit losses			(30,900)			(30,500)			(30,000)
			17,975,827			17,738,412			17,107,992
Other
Restricted cash			108,223			136,165			137,424
Pledged securities			195,187			304,269			588,069
Derivative assets			32,731			28,739			45,388
Other assets			148,548			110,958			100,983
Goodwill and intangible assets			86,346			85,110			82,095
			571,035			665,241			953,959
		$	19,840,797		$	19,532,958		$	18,800,079
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Deposits payable on demand		$	281,348		$	172,370		$	105,923
Deposits payable on a fixed date			11,655,299			10,996,269			10,030,676
			11,936,647			11,168,639			10,136,599
Senior Debt			149,822			148,300			150,684
Securitization Liabilities
Mortgage-backed security liabilities			913,103			1,103,266			1,301,693
Canada Mortgage Bond liabilities			5,495,144			5,820,394			6,034,202
			6,408,247			6,923,660			7,335,895
Other
Derivative liabilities			2,378			1,704			2,386
Other liabilities			187,301			186,744			170,502
Deferred tax liabilities			35,040			35,894			35,800
			224,719			224,342			208,688
			18,719,435			18,464,941			17,831,866
Shareholders' Equity
Capital stock			70,237			64,662			61,903
Contributed surplus			5,412			6,419			6,224
Retained earnings			1,061,015			1,005,044			903,831
Accumulated other comprehensive loss			(15,302)			(8,108)			(3,745)
			1,121,362			1,068,017			968,213
		$	19,840,797		$	19,532,958		$	18,800,079

Consolidated Statements of Changes in Shareholders' Equity
							Net Unrealized		Net Unrealized		Total
							Gains (Losses)		Losses on		Accumulated
							on Securities		Cash Flow		Other		Total
thousands of Canadian dollars,	Capital		Contributed		Retained		Available for		Hedges,		Comprehensive		Shareholders'
except per share amounts (Unaudited)	Stock		Surplus		Earnings		Sale, after Tax		after Tax		Loss		Equity
Balance at December 31, 2012	$	61,903	$	6,224	$	903,831	$	432	$	(4,177)	$	(3,745)	$	968,213
Comprehensive income		-		-		187,715		(12,237)		680		(11,557)		176,158
Stock options settled		8,400		(2,202)		-		-		-		-		6,198
Amortization of fair value of
employee stock options		-		1,390		-		-		-		-		1,390
Repurchase of shares		(66)		-		(2,077)		-		-		-		(2,143)
Dividends
($0.80 per share)		-		-		(28,454)		-		-		-		(28,454)
Balance at September 30, 2013	$	70,237	$	5,412	$	1,061,015	$	(11,805)	$	(3,497)	$	(15,302)	$	1,121,362
Balance at December 31, 2011	$	55,104	$	5,873	$	722,999	$	(4,141)	$	(5,050)	$	(9,191)	$	774,785
Comprehensive income		-		-		163,018		3,154		596		3,750		166,768
Stock options settled		6,988		(1,379)		-		-		-		-		5,609
Amortization of fair value of
employee stock options		-		1,353		-		-		-		-		1,353
Repurchase of shares		(219)		-		(5,743)		-		-		-		(5,962)
Dividends
($0.64 per share)		-		-		(22,935)		-		-		-		(22,935)
Balance at September 30, 2012	$	61,873	$	5,847	$	857,339	$	(987)	$	(4,454)	$	(5,441)	$	919,618

Consolidated Statements of Cash Flows
			For the nine months ended
			September 30		September 30
thousands of Canadian dollars (Unaudited)				2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period			$	187,715	$	163,018
Adjustments to determine cash flows relating to operating activities:
	Deferred income taxes			(1,002)		(1,766)
	Amortization of capital assets			2,455		2,477
	Amortization of intangible assets			5,907		4,854
	Amortization of net premium on securities			1,877		2,046
	Amortization of securitization and senior debt transaction costs			11,144		10,141
	Provision for credit losses			11,864		11,035
	Change in accrued interest payable			25,996		31,090
	Change in accrued interest receivable			(962)		(6,733)
	Net realized and unrealized gains on securities			(2,441)		(402)
	Realized gain on securitization			(6,878)		(2,545)
	Settlement of derivatives			3,115		(370)
	Loss (gain) on derivatives			2,151		(5,483)
	Net increase in mortgages			(1,540,523)		(1,551,261)
	Net decrease (increase) in pledged assets			392,882		(266,250)
	Net increase in credit card loans and other consumer retail loans			(27,706)		(7,112)
	Net increase in deposits			1,800,048		1,948,567
	Activity in securitization liabilities
		Proceeds from sale of mortgage-backed securities derecognized		427,232		173,178
		Proceeds from sale of mortgage-backed securities		479,247		152,303
		Settlement and repayment of securitization liabilities		(1,217,173)		(710,644)
	Amortization of fair value of employee stock options			1,390		1,353
	Changes in taxes payable and other			656		(20,241)
Cash flows provided by (used in) operating activities				556,994		(72,745)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares				(2,143)		(5,962)
Exercise of employee stock options				6,198		5,609
Dividends paid to shareholders				(27,729)		(22,233)
Cash flows used in financing activities				(23,674)		(22,586)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in securities
	Purchases			(182,382)		(276,922)
	Proceeds from sales			138,216		270,826
Purchases of capital assets				(6,268)		(4,270)
Purchases of intangible assets				(10,158)		(7,279)
Cash flows used in investing activities				(60,592)		(17,645)
Net increase (decrease) in cash and cash equivalents during the period				472,728		(112,976)
Cash and cash equivalents at beginning of the period				301,863		534,394
Cash and Cash Equivalents at End of the Period			$	774,591	$	421,418
Supplementary Disclosure of Cash Flow Information
Dividends received on investments			$	7,175	$	8,898
Interest received				459,720		372,892
Interest paid				175,312		142,049
Income taxes paid				77,534		72,262

Home Capital published its financial objectives for 2013 on page 18 of the Company's 2012 Annual Report. The following table compares actual performance to date against each of these objectives.

Table 1: 2013 Targets and Performance
			For the nine months ended September 30, 2013
		2013 Targets	Actual Results		Amount	Increase over 2012
Growth in net income		13%-18%	15.1%	$	187,715	$	24,697
Growth in diluted earnings per share		13%-18%	14.7%		5.37		0.69
Growth in total loans under administration^1		10%-15%	11.0%		19,530,680		1,489,096
Return on shareholders' equity		20.0%	24.0%
Efficiency ratio (TEB)^2		28.0% - 34.0%	28.8%
Provision as a percentage of gross loans (annualized)		0.10% - 0.18%	0.09%

^1	Change represents growth over December 31, 2012 on an annualized basis and includes loans held for sale.
^2	See definition of TEB under Non-GAAP Measures in the unaudited interim consolidated financial report.

Table 2: Reconciliation of Net Income to Adjusted Net Income

		Quarter								Year to date
(000s, except % and per share amounts)		Q3		Q2		%	Q3		%					%
			2013		2013	Change		2012	Change		2013		2012	Change
Reconciliation of Net Income to Adjusted Net Income
Net income		$	66,417	$	61,573	7.9%	$	57,254	16.0%	$	187,715	$	163,018	15.1%
Adjustment for derivative restructuring - IFRS conversion (net of tax)			931		2,309	(59.7)%		-	-		5,023	$	-	-
Adjustment for disputed loans to condominium corporations (net of tax)			-		-	-		-	-		1,508		-	-
Adjustment for investment tax credit benefits (net of tax)			(2,735)		(1,985)	37.8%		-	-		(4,720)		-	-
Adjusted Net Income^1		$	64,613	$	61,897	4.4%	$	57,254	12.9%	$	189,526	$	163,018	16.3%
Adjusted Basic Earnings per Share^1		$	1.86	$	1.79	3.9%	$	1.65	12.7%	$	5.47	$	4.70	16.4%
Adjusted Diluted Earnings per Share^1		$	1.85	$	1.78	3.9%	$	1.65	12.1%	$	5.42	$	4.68	15.8%
^1 Adjusted net income and Adjusted earnings per share are defined in the Non-GAAP section of the MD&A.

Caution Regarding Forward-Looking Statements

From time to time Home Capital Group Inc. makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are "financial outlooks" within the meaning of National Instrument 51-102.  Please see the risk factors, which are set forth in detail on pages 55 through 68 of the Company's 2012 Annual Report, as well as its other publicly filed information, which are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, for the material factors that could cause the Company's actual results to differ materially from these statements.  These risk factors are material risk factors a reader should consider, and include credit risk, funding and liquidity risk, structural interest rate risk, operational risk, investment risk, strategic and business risk, reputational risk and regulatory and legal risk along with additional risk factors that may affect future results.  Forward-looking statements can be found in the Report to the Shareholders and the Outlook Section in the quarterly report.   Forward-looking statements are typically identified by words such as "will,"  "believe," "expect," "anticipate," "estimate," "plan," "forecast," "may," and "could" or other similar expressions.

By their very nature, these statements require the Company to make assumptions and are subject to inherent risks and uncertainties, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements.  These risks and uncertainties include, but are not limited to, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition and technological change. The preceding list is not exhaustive of possible factors.

These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update any forward-looking statements, whether written or verbal, that may be made from time to time by it or on its behalf, except as required by securities laws.

Assumptions about the performance of the Canadian economy and its effect on Home Capital's business are material factors the Company considers when setting its objectives, targets and outlook.  In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical and forecasted economic data provided by the Canadian government and its agencies.  In setting and reviewing its targets, objectives and outlook for the remainder of 2013, management's expectations continue to assume:

• The Canadian economy will produce modest growth in 2013 with relatively stable to modestly improving employment conditions in most regions and inflation will generally be within the Bank of Canada's target of 1% to 3%, leading to stable credit losses and continued strong demand for the Company's lending products.
  
  
• The Canadian economy will continue to be heavily influenced by the economic conditions in the United States and global markets and, as such, the Company is prepared for the variability to plan that this may lead to.
  
  
• The Bank of Canada continues to indicate that increases to its target overnight interest rate are not imminent and, as such, the Company is assuming the rate will remain at its current level for the balance of 2013 and for the foreseeable future. This is expected to continue to support relatively low mortgage interest rates for the foreseeable future.
  
  
• The housing market will remain relatively stable with balanced supply and demand conditions in most regions supported by continued low interest rates, relatively stable to modestly improving employment, and immigration.  There will be declines in housing starts and resale activity compared to prior years with relatively stable prices throughout most of Canada. This supports continued stable credit quality and strong demand for the Company's products.
  
  
• Consumer debt levels will remain serviceable by Canadian households.
  
  
• The Company will have uninterrupted access to the mortgage and deposit markets through broker networks.

Non-GAAP Measures

The Company uses a number of financial measures to assess its performance.  Some of these measures are not calculated in accordance with GAAP, are not defined by GAAP, and do not have standardized meanings that would ensure consistency and comparability between companies using these measures.  Definitions of non-GAAP measures can be found under Non-GAAP Measures in the Management's Discussion and Analysis included in the Company's Third Quarter 2013 Report.

Regulatory Filings

The Company's continuous disclosure materials, including interim filings, annual Management's Discussion and Analysis and audited consolidated financial statements, Annual Information Form, Notice of Annual Meeting of Shareholders and Proxy Circular are available on the Company's website at www.homecapital.com, and on the Canadian Securities Administrators' website at www.sedar.com.

About Home Capital

Home Capital Group Inc. 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 deposits, residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card services. Licensed to conduct business across Canada, Home Trust has branch offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.

 

 

 

 

SOURCE: Home Capital Group Inc.

Gerald M. Soloway, CEO, or
Martin Reid, President
416-360-4663
www.homecapital.com