Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript - Thomson StreetEvents

Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript

Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript - Thomson StreetEvents
Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript
Published Aug 04, 2011
17 pages (10114 words) — Published Aug 04, 2011
Price US$ 54.00  |  Buy this Report Now

About This Report

  
Abstract:

Final Transcript of HCG.TO earnings conference call or presentation 4-Aug-11 2:30pm GMT

  
Brief Excerpt:

...Gerald Soloway Home Capital Group Inc. - CEO Pino Decina Home Capital Group Inc. - SVP Mortgage Lending Martin Reid Home Capital Group Inc. - President Bob Blowes Home Capital Group Inc. - CFO...

  
Report Type:

Transcript

Source:
Company:
Ticker
HCG.TO
Time
2:30pm GMT
Format:
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Shubha Khan - National Bank Financial - Analyst: So, I'm looking at the growth or lack thereof in your securitized portfolio, and I should hasten to add that on last quarter's conference call you did say, I think, growth would be virtually zero in that portfolio, given the whole ACM limit issue. But you issued that during the quarter and your earnings growth is really strong, so you got some breathing room this quarter on the ACM. I'm wondering whether you should -- we should perhaps expect some growth, however modest, in that portfolio, or are you seeing a strong enough pipeline for your traditional mortgages to justify keeping -- managing the securitized portfolio flat?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Shubha Khan - National Bank Financial - Analyst: Okay, thanks. That's helpful. I'll just move on to the net interest margin a little bit. Specifically, the net interest margin on your non-securitized loans. It's been remarkably resilient, which is more than can be said of prime mortgages, I suppose. And you alluded to that as much in your opening remarks. Clearly, the stable NIM is a function of the level of competition in the market. I'm wondering with the housing market cooling off a little bit, have you seen any pressure on loan pricing for your traditional product or is the competitive environment largely stable, and how do you see that shaping up?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Geoff Kwan - RBC Capital Markets - Analyst: Just had a couple of questions. The first one was just, in terms of trying to expand the business with brokers that may have not really done deals on the nonprime space, is -- can you kind of talk about, I guess, qualitatively how that progress is going? And then, are you able to quantify some of the success that you're maybe having in terms of converting those brokers? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by Client Id: 43

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Answer By: Pino Decina - Home Capital Group Inc. - SVP Mortgage Lending


Question: Geoff Kwan - RBC Capital Markets - Analyst: The second question I had is when I take a look at the credit trends in the business, overall they're still getting better. The arrears rates, overall, did pick up just a slight bit quarter over quarter, and I'm just wondering if there was any incremental color you might be able to provide on that.

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Michael Goldberg - Desjardins Securities - Analyst: Has there been any progress with CMHC in developing a pool that would qualify for securitization where the originator retains no residual risk? In other words, so that loans sold wouldn't be included in your asset-to-capital ratio?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Michael Goldberg - Desjardins Securities - Analyst: So as long as that's the case, I guess you are on a strict diet with respect to insured mortgages.

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Michael Goldberg - Desjardins Securities - Analyst: Just following on this, how have mortgage brokers responded to your move toward withdrawal from the Excelerator-type product? Does it impact the traditional business that they give you? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by Client Id: 43

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Atul Shah - BMO Capital Markets - Analyst: I have two questions. The first relates to the traditional single-family originations. You originated about CAD870 million in the quarter. Could you give us any idea what would be a good run rate going forward?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Atul Shah - BMO Capital Markets - Analyst: Thank you. The next question relates to the SAP project that you just are, I guess, in the process of completing. Could you give us any idea what is the total spend on this? You indicated you want to amortize this over the next 10 years. Would this be on a straight-line basis? What sort of numbers are you talking about? And also, what sort of efficiencies are you -- do you expect to offset this?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Answer By: Martin Reid - Home Capital Group Inc. - President

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Bryan Brown - Macquarie Research - Analyst: The net gain on realized securities, that was CAD3.2 million this quarter, and with the TSX down in the quarter, what kind of factors go into deciding to realize those gains? And also, given the balance of AFS securities, should we expect more gains in the near future?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Answer By: Martin Reid - Home Capital Group Inc. - President


Question: Bryan Brown - Macquarie Research - Analyst: I guess a couple of quick ones. The SAP system, I'm not sure if we got the capitalized balance amount, and just your outlook for the tax rate.

Answer By: Bob Blowes - Home Capital Group Inc. - CFO

Answer By: Bob Blowes - Home Capital Group Inc. - CFO


Question: Jeff Fenwick - Cormark Securities - Analyst: So I actually just wanted to ask about the dividend, Gerry. I mean, good to see it getting increased again, and Home has been quite consistent with that. But when I look at the payout ratio, it still remains relatively low. It hasn't changed all that much over the last few years here. Is there any thought or do you guys ever debate around lifting that payout ratio? Home is very well capitalized on good solid footing here and what's the view on that going forward?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Jeff Fenwick - Cormark Securities - Analyst: Great, and then, maybe, just talking back on the growth topic there. How are things going in terms of penetrating into new markets? That's been a feature of your direction over the last year in markets like Quebec, and maybe you could just speak to your penetration there and what the opportunity looks like going forward.

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Answer By: Pino Decina - Home Capital Group Inc. - SVP Mortgage Lending


Question: Lawrence Rosenberg - Madison Square Investments - Analyst: I was hoping you could please talk about the difference in your underwriting process and/or standards between the uninsured mortgage side and the insured, please.

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Lawrence Rosenberg - Madison Square Investments - Analyst: At origination?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Lawrence Rosenberg - Madison Square Investments - Analyst: And I guess with the big banks perhaps as being such dominant players across Canada, where do you see like the principal competitive advantage that you bring to bear in the underwriting process that enables you to get comfortable with credits that they are not able to get comfortable with? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by Client Id: 43

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO


Question: Lawrence Rosenberg - Madison Square Investments - Analyst: That's absolutely fine. If you wouldn't mind just finishing up, when you decline a customer for a residential mortgage loan that's uninsured, what are typically the principal reasons why? Is it that they don't have a sufficient down payment or is it something else?

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Answer By: Pino Decina - Home Capital Group Inc. - SVP Mortgage Lending

Answer By: Gerald Soloway - Home Capital Group Inc. - CEO

Table Of Contents

Home Capital Group Inc Q2 2012 Earnings Conference Call Transcript – 2012-08-02 – US$ 54.00 – Edited Transcript of HCG.TO earnings conference call or presentation 2-Aug-12 2:30pm GMT

Home Capital Group Inc Q1 2012 Earnings Conference Call Transcript – 2012-05-03 – US$ 54.00 – Preliminary Transcript of HCG.TO earnings conference call or presentation 3-May-12 2:30pm GMT

Home Capital Group Inc at National Bank Financial Services Conference Transcript – 2012-03-28 – US$ 54.00 – Edited Transcript of HCG.TO presentation 28-Mar-12 1:55pm GMT

Home Capital Group Inc Q4 2011 Earnings Conference Call Transcript – 2012-02-15 – US$ 54.00 – Edited Transcript of HCG.TO earnings conference call or presentation 15-Feb-12 3:30pm GMT

Home Capital Group Inc Q3 2011 Earnings Conference Call Transcript – 2011-11-03 – US$ 54.00 – Edited Transcript of HCG.TO earnings conference call or presentation 3-Nov-11 2:30pm GMT

Home Capital Group Inc Q1 2011 Earnings Conference Call Transcript – 2011-05-05 – US$ 54.00 – Final Transcript of HCG.TO earnings conference call or presentation, 5-May-11 10:30am ET

HOME CAP GROUP INC Q4 2010 Earnings Conference Call Transcript – 2011-02-10 – US$ 54.00 – Final Transcript of HCG.TO earnings conference call or presentation, 10-Feb-11 10:30am ET

HOME CAP GROUP INC INFORMATION ON IFRS TRANSITION ACCOUNTING Conference Call Transcript – 2011-02-10 – US$ 54.00 – Final Transcript of HCG.TO conference call or presentation, 10-Feb-11 2:00pm ET

HOME CAP GROUP INC Q3 2010 Earnings Conference Call Transcript – 2010-11-03 – US$ 54.00 – Edited Transcript of HCG.TO earnings conference call or presentation 3-Nov-10 2:30pm GMT

HOME CAP GROUP INC Q2 2010 Earnings Conference Call Transcript – 2010-08-05 – US$ 54.00 – Edited Transcript of HCG.TO earnings conference call or presentation 5-Aug-10 2:30pm GMT

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Thomson StreetEvents. "Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript" Aug 04, 2011. Alacra Store. Mar 22, 2019. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q2-2011-Home-Capital-Group-Inc-Earnings-Conference-Call-T3953103>
  
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Thomson StreetEvents. (2011). Home Capital Group Inc Q2 2011 Earnings Conference Call Transcript Aug 04, 2011. New York, NY: Alacra Store. Retrieved Mar 22, 2019 from <http://www.alacrastore.com/thomson-streetevents-transcripts/Q2-2011-Home-Capital-Group-Inc-Earnings-Conference-Call-T3953103>
  
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