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: From humble beginnings Red Deer-based wrestling promotion is growing

It wasn’t that long ago that Dylon Featherstone and the Canadian Wrestling… Continue reading

Popular Red Deer store to apply for cannabis dealer licence

At least one Red Deer store hopes to sell cannabis out of… Continue reading

Effect of electronics on students to be discussed at Central Alberta Teachers’ Convention

Thousands of area instructors will gather on Feb. 22 and 23 at RDC

Latest Red Deer Hospital Lottery launched

Ticket purchases opened on Friday

WATCH: Day-long hockey game at St. Francis of Assisi Middle School in Red Deer

An all-day hockey game was held at St. Francis of Assisi Middle School Friday

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

WATCH: Cat yoga — the purr-fect de-stresser, says Red Deer-area cafe owner

Felines and humans stretch together each month at Alley Cat Cafe

Effect of electronics on students to be discussed at Central Alberta Teachers’ Convention

Thousands of area instructors will gather on Feb. 22 and 23 at RDC

Judge critical of sentencing laws

Court of Queen’s Bench justice argues sentencing options for first-degree murder too limited

Liberals write off $200 million in student loans feds will never collect

The federal government is writing off more than $200 million in outstanding… Continue reading

Trudeau takes wing on trade mission to India, where Sikh politics loom

OTTAWA — Prime Minister Justin Trudeau is on his way to India,… Continue reading

Judge: Parole for triple-murderers based on many factors

Jason Klaus and Joshua Frank could have faced life in prison with no parole for 75 years for the Castor-area murders

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