NEWS
05/11/2017 16:48 EDT | Updated 05/11/2017 17:00 EDT

Home Capital reports slight dip in first quarter profits from a year ago

TORONTO — Home Capital Group is reporting a slight dip in first-quarter profits compared to a year ago.

The Toronto-based mortgage lender says it earned $58 million or 90 cents a share in the first three months, slightly less than the $64.2 million in earnings or 92 cents a share reported in the first quarter of 2016.

Home Capital has faced liquidity troubles in recent weeks as customers have been withdrawing their deposits, which the company uses to fund its mortgage lending.

The company's earnings report released late Thursday noted "liquidity and "reputational" events, an apparent reference to allegations from Ontario's securities watchdog that have put pressure on the subprime mortgage lender's stock.

The Ontario Securities Commission alleged that the company and three of its executives misled investors in their handling of a scandal involving falsified loan applications. The company has vowed to defend itself against the allegations, which it says are without merit. Lawyers for the three men haven't responded to requests for comment.

Brenda Eprile, the head of the board of directors, noted the company is taking steps to address its image, pointing to this week's appointment of four new directors to its board, including Claude Lamoureux, the former chief executive officer of the Ontario Teachers' Pension Plan.

The company also replaced company founder Gerald Soloway with former Royal Bank executive Alan Hibben last week.

"We are taking the steps required to regain the full confidence of Home's stakeholders," Eprile said in the statement.

She added the company is continuing its search for a new CEO and chief financial officer.

Home Capital said in a news release Thursday that it has roughly $128 million in its high interest savings accounts — down from $134 million on Wednesday and a sharp decline from $1.4 billion just over two weeks ago.

Meanwhile, its total GIC deposits stood at $12.54 billion — down from $12.58 billion on Monday and $13.01 billion on April 24.

However, shares of Home Capital gained 23.4 per cent, or $2.05, to $10.81 on the Toronto Stock Exchange on Thursday in advance of the report on its earnings.