Toronto-based Home Capital Group Inc.’s (HCG) chairman, Kevin Smith, says he remains confident about the mortgage company’s future despite recently announced allegations against the firm as well as two of its former CEOs and its current chief financial officer.
In an open letter, Smith says the company recognizes that the Ontario Security Commission’s allegations, released on Wednesday, have shaken shareholder confidence.
The OSC enforcement staff alleges, among other things, that the company and three men misled shareholders through financial statements and conference call comments in 2015.
Read: OSC accuses Home Capital, execs of misleading disclosure
Following the OSC’s allegations, HCG’s stock lost one-fifth of its value on Thursday, closing at $17.71 — the lowest since August 2009.
The stock regained some of its losses early Friday following Smith’s letter and the release of HCG’s estimated profit for the first quarter.
Under standard accounting rules, Home Capital estimates it had 90¢ per share of diluted earnings for the first quarter and $1.02 per share on an adjusted basis.
A year earlier, GAAP profit was 92¢ per share and adjusted earnings were 96¢ per share.
Aos of mid-morning, HCG’s stock was at $20.05 — up $2.34 from Thursday’s close but down $2.27, or 10% from Wednesday’s close, prior to the OSC’s announcement.
=Smith’s letter says the firm’s management team will remain focused on growing the company profitably while defending itself from the OSC’s allegations.