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The Latest on Street’s Bank Application

Street Capital FCStreet Capital, the broker channel’s #3 lender in market share, updated the industry on its bank licence application Wednesday, essentially saying there’s not much to report.

Its comments came as part of the 2014 year-end financial release from its parent company, Counsel Corp. (TSX:CXS)

“We do not want our stakeholders to draw any conclusions regarding the application process from the fact that no announcement has been made regarding receipt of Letters Patent to date,” Allan Silber, Chairman and CEO of Counsel Corporation, said in the company’s release.

Street Capital, which commands about 10% of the broker market (according to D+H’s latest figures), first applied to operate as a federally regulated Schedule I Bank back in 2012. But the company acknowledged at the time that obtaining a bank licence approval would take “at least two years.”

“Street Capital continues to work with representatives at OSFI in order to satisfy the necessary requirements. To date, our efforts have been focused on providing all necessary business information and financial plans as well as policies and procedures, which are currently under review by OSFI,” said Ed Gettings, CEO of Street Capital.

“Our next major milestone is the OSFI onsite visit,” he added. “During their visit, OSFI staff will review our control environment and look at how we operate day to day in order to satisfy themselves that the requirements necessary to obtain an Order to Commence Operations are in place. Should we be successful, we would expect the necessary approvals to be forthcoming.”

Counsel’s 2014 financials showed that 2014 was an otherwise decent year for the company, which earns revenues almost entirely from mortgage sales through Street Capital:

  • Diluted earnings per share from continuing operations increased by 56% to $0.25
  • Mortgage renewal rates at Street Capital were in the high 70% range

In terms of originations:

  • Mortgages sold in 2014 were roughly in line with the previous year, at $7.8 billion, compared to $7.7 billion in 2013
  • In the last quarter, however, mortgages sold were $2.2 billion, compared to $1.4 billion in Q4-2013

“Our priority this year is to continue to grow Street Capital through originations and complimentary offerings, while driving incremental bottom-line contribution from mortgage renewals,” Silber noted.

Steve Huebl, CMT