Home Capital Group Inc. chief executive officer Gerald Soloway acknowledged rumours that he is set to retire from the mortgage lender he co-founded 30 years ago, saying an announcement about succession plans is “forthcoming.”
“I’ve been always very open and the fact that everyone knows how old I am,” Mr. Soloway, 77, told an analysts conference call on Thursday.
He added that his potential retirement has nothing to do with “nasty e-mails” he said were circulating insinuating that he was ill. “I’m in good health. But I think it’s something that’s a matter the board has talked about and they’re thinking about it.”
Last month, Bloomberg reported that there was speculation that Mr. Soloway was getting ready to retire and that the company was also searching for a replacement for its long-serving chief operating officer, Brian Mosko.
While he did not directly address management shakeup rumours, Mr. Soloway said the company has discussed succession plans and was planning an announcement “some time in the future couple of periods.”
A lawyer by trade, Mr. Soloway has been at the helm of Home Capital since 1986, expanding the company into one of Canada’s largest alternative mortgage lenders. Its core business is catering to borrowers who do not qualify for government-insured mortgages through the major banks, primarily in Ontario. It had more than $25-billion in loans under administration at the end of last year.
The company has faced scrutiny during the past year after revealing that it had cut off 45 mortgage brokers over concerns they had submitted mortgage applications that included falsified documents, such as altered income statements.
On Thursday, the company said it was about 40 per cent of the way through an investigation into nearly $2-billion worth of mortgages submitted by its suspended brokers. It expects to finish the investigation, which involves asking borrowers or brokers to provide additional documents to verify borrowers’ incomes, by the end of the year.
Roughly 90 per cent of the mortgages that have been reviewed would be eligible for renewal, although some suspended brokers have refused to give the company updated documentation on their clients and have said they intend to move the mortgages elsewhere.
“We’re not concerned because there are other sources that will take less documentation,” Mr. Soloway said. “They may be privates [lenders], they may be some of the credit unions, they may be other financial institutions.”
The outstanding balance of the suspect mortgages shrunk to $1.55-billion in the fourth quarter from $1.72-billion in the previous quarter.
Over all, Home Capital’s new mortgage volume dropped 8.9 per cent in 2015 to $8.06-billion. Its volume of new uninsured mortgages fell 13.5 per cent for the year to $5.07-billion, while insured mortgage volume dropped 22 per cent to $1.39-billion. The lender has been working to increase its commercial mortgage loans, which it said had help offset some of the drop in its residential mortgage business.
Expenses rose 22 per cent from the previous quarter, driven in part by $2.9-million the company spent to “realign business partnerships” after firing dozens of brokers. It said it was working to roll out a new platform for mortgage brokers in time for the start of the spring housing market that would see the company offer a response to a mortgage application within four hours.
Home Capital reported that profit was flat in the fourth quarter, declining to $71.8-million from $71.9-million a year earlier. Adjusted earnings per share were $1.02, below analysts’ expectations.
The company also said it was hiking its dividend by 9.1 per cent to 24 cents a share and announced it was planning to spend $150-million to buy back shares in the hope of shoring up its stock price, which has fallen close to 50 per cent since the summer.Report Typo/Error