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Home Capital Rings Up Great Earnings

Home-Trust Home Capital, parent of lender Home Trust, surprised the market with a solid earnings showing yesterday.

  • It beat analyst estimates by 12%
  • It earned 36.9% more income than last year’s 3rd qtr.
  • It originated 26% more mortgages (thanks largely to its “Accelerator” mortgage line)
  • Its capital ratios (a “safety net” for Trust companies) strengthened notably YOY

Other tidbits of note:

  • Home believes its arrears will be stable or “decrease modestly over the next 1-2 quarters
  • The company said it plans to shift back to “traditional deposit on-balance sheet” lending and rely less on securitization in the future
  • Home says it’s resumed marketing its 2nd mortgage program, which it shelved during the economic downturn

People who took a risk and bought Home Capital stock earlier this year have hit the jackpot.  In February-March it was basing out in the $16 range.  Today it hit a 52-week high of $41 (a ~150% gain in eight months).