Home Capital stock plummets after CEO fired

TORONTO — Shares of Home Capital Group closed at their lowest level in months, plunging nearly 10 per cent Tuesday, a day after the mortgage lender fired its president and CEO.

The Toronto-based company (TSX:HCG), which has seen its stock value and earnings decline recently, announced after markets closed Monday that it was terminating Martin K. Reid effective immediately. Reid had been appointed CEO just over a year ago.

Home Capital’s stock closed down 9.60 per cent, or $2.66, to $25.06 on the Toronto Stock Exchange on Tuesday.

Cormark Securities analyst Jeff Fenwick said the leadership change likely relates to issues that started back in 2014 when the company discovered that some loan applications have been falsified. The following year, Home Capital announced it was severing ties with 45 brokers for allegedly committing fraud.

More recently, the lender has also come under scrutiny from the Ontario Securities Commission.

Last month, Home Capital said it received an enforcement order from the regulator, which concluded that the company had failed to meet its continuous disclosure obligations in 2014 and 2015 regarding the impact of the income falsification and the remedial actions taken.

“Part of the issue is just that it’s taken a lot longer to resolve those issues and to begin to move the business forward than anyone would have liked or expected,” Fenwick said.

“We’re now over two years later and Home (Capital) is still working to push through all those operational improvements and roll out new technology to the broker platform.”

The company’s loan originations have also dipped, stalling earnings growth, said Fenwick.

“They finally reached a point where they decided they needed to change leadership right at the top — to find somebody that could put a new direction behind the business and begin to move it forward again,” said Fenwick.

Bonita J. Then, a member of the company’s board of directors, will serve as interim leader while until a permanent replacement is found.

Just Posted

WATCH: Christmas Wish Breakfast toy donations almost double

All toys donated Sunday will be given to the Red Deer Christmas Bureau and Red Deer Salvation Army

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Mothers Against Drunk Driving hold candlelight vigil

Four-and-a-half years ago Marilyn Rinas’ husband was killed in a collision with… Continue reading

Thousands expected at memorial for fallen police officer in Abbotsford, B.C.

ABBOTSFORD, B.C. — The streets of Abbotsford, B.C., will be lined with… Continue reading

One person dead, five others injured in early-morning crash in Kingston, Ont.

KINGSTON, Ont. — A man who was checking the damage on his… Continue reading

VIDEO: Replay Red Deer: Nov. 19

Watch news highlights from the week of Nov. 13

CP Holiday train to stop in Ponoka for another year

The popular train will feature entertainment from Colin James and Emma-Lee

Kittens rescued after allegedly being tossed from vehicle

Couple finds abandoned kittens new home through Facebook

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Chicken crosses B.C. road, stops traffic

Rooster makes early morning commuters wait in Maple Ridge

Red Deerian honours her brother who died in a motorcycle collision

Houaida Haddad is encouraging Red Deer residents to donate blood

Red Deer County firefighters to be recognized for Waterton help

RCMP brass will give formal recognition Monday

Ron James tries to lighten humanity’s load through humour

The comedian returns to Red Deer for shows Dec. 1 and 2

100+ Women Red Deer donate to Christmas Bureau

About $14,000 will help with Christmas hampers and toys

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month