Home Capital Reports Annual and Q4 Earnings, Share Buyback and Dividend Increase

• Diluted Q4 2015 earnings per share of $1.00; adjusted diluted earnings per share of $1.02
• Planned share buyback of up to $150 million
• Quarterly dividend increased 9.1% or $0.02 per share, to $0.24 per common share, which would be $0.96 on an annualized basis

TORONTO, Feb. 10, 2016 /CNW/ - Home Capital Group Inc. (TSX: HCG) today reported financial results for the fourth quarter and for 2015, a year in which the company made significant progress strengthening its business in a prudent, profitable and sustainable manner, and announced a dividend increase of 9.1% and a planned $150 million share buyback.

In Q4 2015, Home Capital delivered an increased net interest margin of 2.46%, from a healthy loan portfolio with low non-performing loans and credit losses, continued progress on improving the pace of loan originations, and a strong capital position. In addition, the Company continued to execute on growth initiatives, including closing the acquisition of CFF Bank, a Schedule I bank under the Bank Act (Canada), fulfilling a strategic priority, and the expansion of its credit card business with the launch of another co-branded Visa product.

For 2015, Home Capital reported adjusted diluted earnings per share in line with 2014's record level and near-record annual adjusted net income and adjusted revenue. Total loans under administration rose to $25.06 billion, the highest in the Company's history, driven by its solid core residential business, increases in its Accelerator portfolio, the acquisition of the CFF loans portfolio and increases in commercial mortgages and other lending. In addition, the Company continued to strengthen its balance sheet, invest in technology and diversify deposit funding, important steps in creating a stronger business.

Home Capital continues to expect that it will meet its three- to five-year mid-term targets, reflecting the strength of the overall business and its diverse sources of growth.

Q4 Financial Highlights:

• Adjusted Q4 2015 net income of $71.8 million and $288.9 million for 2015, down 0.1% compared to $71.9 million in Q4 2014 and down 0.1% compared to $289.2 million for 2015, respectively.  Adjusted Q4 2015 net income was 0.9% lower than Q3 2015.
• Adjusted Q4 2015 diluted earnings per share (EPS) of $1.02 and $4.11 for 2015, compared to $1.02 and $4.11 earned in Q4 2014 and full year 2014, respectively.  Adjusted Q4 2015 diluted EPS was down 1.0% compared to Q3 2015.
• Adjusted Return on common shareholders' equity was 18.0% for Q4 2015 and 18.8% for 2015.
• Net non-performing loans as a percentage of gross loans (NPL ratio) was 0.28% at the end of Q4 2015, compared to 0.30% at the end of Q4 2014 and 0.30% at the end of Q3 2015. 
• Net write-offs as a percentage of gross loans were 0.05% for Q4 2015, compared to 0.07% for Q4 2014 and 0.04% for Q3 2015.  Net write-offs for 2015 were 0.04% compared to 0.06% for 2014.   
• Q4 2015 Common Equity Tier 1 ratio of 18.31% and Tier 1 and Total capital ratios of 18.30% and 20.70%, respectively.

Growing Our Core Business

Home Capital, through its principal subsidiary Home Trust Company, continued throughout 2015 to build on its presence as Canada's leading alternative financial institution serving an established, but underserved and growing, market niche. The Company continued to make progress on its efforts to increase originations of single-family residential mortgages, and throughout the year has experienced strong growth in its other lines of business.

Total mortgage advances in Q4 2015 were $2.15 billion, a decrease of 6.0% from $2.29 billion in Q4 2014. Home Capital reported traditional (uninsured single-family) residential mortgage originations of $1.30 billion, as compared to $1.48 billion in Q4 2014, a decrease of 12.1%.  Accelerator originations increased 46.1% in Q4 2015 to $515.9 million from $353.0 million in Q4 2014.  Originations from all other sources decreased 26.3% to $334.0 million.

Total mortgage advances were down 13.8% over Q3 2015, reflecting expected seasonality trends.

On a full-year basis, total mortgage originations from all sources in 2015 were $8.06 billion, down 8.9% from 2014, as increased commercial mortgage originations helped to offset declines in traditional and Accelerator residential mortgages.

For 2015, traditional residential originations decreased 13.5% to $5.07 billion from $5.86 billion in 2014, while Accelerator originations declined 22.0% to $1.39 billion in 2015 from $1.79 billion in 2014.

In Q2 2015, the Company disclosed that its mortgage origination volumes were impacted directly by, among other things, the Company suspending, during the period of September 2014 to March 2015, its relationship with 18 independent mortgage brokers and 2 brokerages, for a total of approximately 45 individual mortgage brokers. 

The total value of outstanding loans at December 31, 2015 that were referred by the suspended brokers was $1.55 billion.  This compares to $1.72 billion as at September 30, 2015.  The Company expects this balance to decline further as customers pay down loans.  The Company continues to actively monitor the subject mortgages and notes that there have been no unusual credit issues. 

The Company is reviewing and re-validating, where appropriate, the income documentation related to the identified group of mortgages and taking corrective action accordingly.  As of the date of this report, the Company is over 40% of the way through its review process, with plans to complete these efforts by the end of 2016.  Of the accounts reviewed, the Company has determined that approximately 90% of the mortgages reviewed to date could be eligible for renewal.

Home Capital has taken several steps to improve origination volumes in 2015 and in the initial part of 2016, including sales measures to strengthen the Company's pipeline for residential mortgage originations and to take advantage of the solid demand for its traditional mortgages within its established regions.  The Company has taken additional steps to improve origination volumes in the beginning of 2016 by enhancing the broker experience through its broker portal technology, and launching a new broker partnership program.  In addition, the Company has renewed focus on expanding its commercial lending products, seeking to expand its footprint, as appropriate opportunities arise.  The Company expects to see further progress from these efforts to improve origination volumes through 2016.

Other lending, comprising credit cards and other consumer retail loans, continues to be an important source of loan assets with attractive returns.  These assets now represent 3.7% of the total on-balance sheet loan portfolio, and generated 7.0% of the interest income from loans for the quarter.  The other lending business demonstrated strong growth in 2015, despite the payout of the waterheater loan portfolio of $234.9 million in 2014, which resulted in the absence of net interest income of approximately $12.6 million ($9.3 million, after tax or $0.13 earnings per share) that would have been otherwise generated through this portfolio in 2014.

The Company continued its expansion of its credit card co-branding initiatives in Q4 2015, with the launch of a new Visa credit card program co-branded with Giant Tiger. That is in addition to two new programs announced in the third quarter of 2015 with Union Plus Canada and Optimax.  The Visa cards are issued and managed by Home Trust.  These credit card programs leverage the brand, customer affinity and distribution channels of these corporate partners.

The balance of Oaken deposits at the end of the year exceeded $1 billion at $1.09 billion, reflecting an increase in the balance over last year of 42.2%. 

On October 1, 2015, the Company, through its subsidiary Home Trust Company, finalized the acquisition of all outstanding common shares of CFF Bank for a purchase price of $19.6 million, subject to final adjustments.  The acquisition of CFF Bank, a Schedule 1 bank under the Bank Act (Canada), supports the Company's long-term strategy to continue to develop its deposit diversification initiatives and potentially its product suite.  In addition, the Company has a mortgage and lending distribution agreement in place with certain owner-managed Canadian First Financial Centres that had a prior relationship with CFF Bank. These centres are located across Canada, helping the Company to expand its distribution networks.

Building on Operational Excellence

Home Capital continues to experience strong credit performance, with net non-performing loans as a percentage of gross loans (NPL ratio) at 0.28% at the end of Q4 2015, down from 0.30% at the end of both Q3 2015 and Q4 2014. These results reflect the high credit quality of the Company's loan portfolio and are supported by the Company's continued investments in its risk oversight functions.

Home Capital also continued through the end of 2015 to make disciplined and measured investments in other areas related to the longer-term growth of the business. These investments include, among other things, ongoing investments in IT related to moving toward operating as a digital enterprise, as well as continuing to update the Company's loans-origination platform, which is designed for more efficient processing of loan applications. 

The integration of CFF Bank with the Company's own operations is proceeding as expected. All retained former employees of CFF Bank have been transitioned to Home Trust. The Company is beginning the initial stages of decommissioning redundant systems to realize planned cost savings and to facilitate the efficient growth of the CFF business. The Company incurred acquisition and integration expenses in the quarter related to CFF Bank in the amount of $4.2 million.  These amounts have been excluded in the calculation of adjusted metrics.

While most of the increase in expenses incurred by the Company in 2015 were associated with ongoing efforts to build on Home Capital's operational excellence and dedication to providing service to clients and business partners, the Company has incurred additional expenses of approximately $2.9 million in 2015 related to its efforts to realign some of its business partnerships following the suspension of the small number of brokers.

Strong and Conservative Financial Position

Home Capital continued to focus on maintaining its strong and conservative financial position while delivering value to shareholders in Q4 2015 and the full year 2015. Home Capital delivered an adjusted return on average shareholders' equity of 18.0% and 18.8%, respectively.

Subsequent to the end of the quarter, and in light of the Company's performance, profitability and strong financial position, the Board of Directors approved a quarterly dividend of $0.24 per common share, payable on March 1, 2016 to shareholders of record at the close of business on February 23, 2016.  The dividend increase marks Home Capital's 18th increase to its common share dividend in the last 10 years. 

In addition, Home Capital Group's Board of Directors has authorized a share repurchase of up to $150 million, which is anticipated to take place through a Substantial Issuer Bid by way of an issuer bid circular that would be provided to the shareholders of Home Capital.  Home Capital has engaged RBC Capital Markets as its financial advisor in connection with the proposed Substantial Issuer Bid.  The terms and conditions of the bid remain to be determined, and are subject to approval by the Board of Directors.  The Company will provide additional details regarding the share repurchase in due course.

In summary, the Company has maintained its solid fundamentals, and has seen improvements in originations through the end of 2015. Home Capital's focus remains on providing the best service and support to our customers and valued business partners, generating future growth that is sustainable and prudent, and making the investments in our business that help us to achieve those goals.

Looking ahead, the Board of Directors and management expect that Home Capital will continue generating solid shareholder returns for 2016 and beyond.

(signed)						(signed)
GERALD M. SOLOWAY						KEVIN P.D. SMITH
Chief Executive Officer						Chair of the Board
February 10, 2016

The Company's 2015 Annual and Fourth Quarter Consolidated Financial Report, including Management's Discussion and Analysis, for each of the three- and twelve-month periods ended December 31, 2015 is available at www.homecapital.com and on the Canadian Securities Administrators' website at www.sedar.com.

Conference Call and Webcast

Fourth Quarter Results Conference Call

The conference call will take place on Thursday, February 11, 2016, at 10:30 a.m. Participants are asked to call 5 to 15 minutes in advance, 647-427-7450 in Toronto or toll-free 1-888-231-8191 throughout North America. The call will also be accessible in listen-only mode via the Internet at www.homecapital.com.

Conference Call Archive

A telephone replay of the call will be available between 1:30 p.m. Thursday, February 11, 2016 and midnight Thursday, February 18, 2016 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 30647595). The archived audio web cast will be available for 90 days on CNW Group's website at www.newswire.ca and Home Capital's website at www.homecapital.com.

Annual Meeting Notice

The Annual Meeting of Shareholders of Home Capital Group Inc. will be held at One King West, Grand Banking Hall, Toronto, Ontario, M5H 1A1, on Wednesday, May 11, 2016 at 11:00 a.m. local time. Shareholders and guests are invited to join Directors and Management for lunch and refreshments following the Annual Meeting. All shareholders are encouraged to attend.

Financial Highlights
	For the three months ended						For the year ended
	December 31		September 30		December 31		December 31		December 31
(000s, except Percentage, Multiples, and Per Share Amounts)		2015		2015		2014		2015		2014
OPERATING RESULTS
Net Income	$	70,239	$	72,443	$	95,936	$	287,285	$	313,172
Adjusted Net Income^1		71,811		72,443		71,917		288,857		289,153
Net Interest Income		126,658		121,698		116,416		481,090		459,529
Total Adjusted Revenue^1		246,406		247,194		251,917		993,711		1,010,311
Diluted Earnings per Share	$	1.00	$	1.03	$	1.36	$	4.09	$	4.45
Adjusted Diluted Earnings per Share^1	$	1.02	$	1.03	$	1.02	$	4.11	$	4.11
Return on Shareholders' Equity		17.6%		18.7%		27.2%		18.7%		23.8%
Adjusted Return on Shareholders' Equity^1		18.0%		18.7%		20.4%		18.8%		22.0%
Return on Average Assets		1.4%		1.4%		1.9%		1.4%		1.6%
Net Interest Margin (TEB)^2		2.46%		2.38%		2.27%		2.36%		2.25%
Provision as a Percentage of Gross Uninsured Loans (annualized)		0.04%		0.08%		0.09%		0.06%		0.10%
Provision as a Percentage of Gross Loans (annualized)		0.03%		0.06%		0.07%		0.05%		0.07%
Efficiency Ratio (TEB)^2		36.0%		30.8%		22.9%		32.4%		27.2%
Adjusted Efficiency Ratio (TEB)^1,2		33.7%		30.8%		28.2%		31.8%		28.8%
						As at
	December 31		September 30		December 31
		2015		2015		2014
BALANCE SHEET HIGHLIGHTS
Total Assets	$	20,512,019	$	20,314,220	$	20,082,744
Total Assets Under Administration^3		27,301,433		25,404,219		24,281,366
Total Loans^4		18,268,708		18,336,736		18,364,910
Total Loans Under Administration^3,4		25,058,122		23,426,735		22,563,532
Liquid Assets		2,095,145		1,477,493		1,058,297
Deposits		15,665,958		14,949,842		13,939,971
Shareholders' Equity		1,621,106		1,569,230		1,448,633
FINANCIAL STRENGTH
Capital Measures^5
Risk-Weighted Assets	$	7,985,498	$	7,797,987	$	7,186,132
Common Equity Tier 1 Capital Ratio		18.31%		18.06%		18.30%
Tier 1 Capital Ratio		18.30%		18.06%		18.30%
Total Capital Ratio		20.70%		20.51%		20.94%
Leverage Ratio^6		7.36%		7.17%		N/A
Credit Quality
Net Non-Performing Loans as a Percentage of Gross Loans		0.28%		0.30%		0.30%
Allowance as a Percentage of Gross Non-Performing Loans		74.0%		69.4%		64.4%
Share Information
Book Value per Common Share	$	23.17	$	22.37	$	20.67
Common Share Price – Close	$	26.92	$	32.03	$	47.99
Dividend paid during the period ended	$	0.22	$	0.22	$	0.20
Market Capitalization	$	1,883,808	$	2,247,225	$	3,363,907
Number of Common Shares Outstanding		69,978		70,160		70,096

¹ See definition of Adjusted Net Income, Total Adjusted Revenue, Adjusted Diluted Earnings per Share, Adjusted Return on Shareholders' Equity and Adjusted Efficiency Ratio under Non-GAAP Measures in the Company's 2015 Annual and Fourth Quarter consolidated financial report and the Reconciliation of Net Income to Adjusted Net Income in the following table.

² See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures in the Company's 2015 Annual and Fourth Quarter consolidated financial report.

³ Total assets and loans under administration include both on- and off-balance sheet amounts.

⁴ Total loans include loans held for sale.

⁵ These figures relate to the Company's operating subsidiary, Home Trust Company.

⁶ Effective Q1 2015, the Assets to Regulatory Capital Multiple has been replaced with the Basel III Leverage ratio.  See definition of the leverage ratio under Non-GAAP Measures in the Company's 2015 Annual and Fourth Quarter consolidated financial report.

Reconciliation of Net Income to Adjusted Net Income
				Quarter						Year
(000s, except % and per share amounts)		Q4		Q3		%	Q4		%					%
		2015		2015		Change	2014		Change	2015		2014		Change
Net income under GAAP		$	70,239	$	72,443	(3.0)%	$	95,936	(26.8)%	$	287,285	$	313,172	(8.3)%
Adjustment for acquisition  and integration costs, net of gain recognized on acquisition of CFF Bank (net of tax)			1,572		-	-		-	-		1,572		-	-
Adjustment for prepayment income on portfolio sale (net of tax)			-		-	-		(24,019)	(100.0)%		-		(24,019)	(100.0)%
Adjusted Net Income^1		$	71,811	$	72,443	(0.9)%	$	71,917	(0.1)%	$	288,857	$	289,153	(0.1)%
Adjusted Basic Earnings per Share^1		$	1.02	$	1.03	(1.0)%	$	1.03	(1.0)%	$	4.12	$	4.14	(0.5)%
Adjusted Diluted Earnings per Share^1		$	1.02	$	1.03	(1.0)%	$	1.02	-	$	4.11	$	4.11	-

¹ Adjusted Net Income and Adjusted Earnings per share are defined in the Non-GAAP section of the Company's 2015 Annual and Fourth Quarter Consolidated Financial Report.

The Company's results were affected by the following items of note that aggregated to a negative impact of $1.6 million and $0.02 diluted earnings per share in both Q4 2015 and 2015:

• $0.7 million in acquisition costs, $3.5 million in integration costs, and $2.1 million in relation to a bargain purchase gain for a total of $2.1 million related to the acquisition of CFF Bank in 2015 ($1.6 million, after tax and $0.02 diluted earnings per share).

The Company's results were affected by the following items of note in Q4 2014 and the year ended 2014:

• $32.7 million prepayment income in Q4 2014 ($24.0 million, after tax and $0.34 diluted earnings per share) related to the prepayment of $234.9 million of water heater loans.

2015 Performance Summary

Below is a summary of the Company's performance for 2015 against the mid-term targets.  The Company will continue to focus on its medium-term objectives to guide the Company's decision-making and describe its accomplishments.

• Diluted earnings per share (adjusted) were $4.11 for 2015.  The Company's goal is to achieve, average annualized growth in diluted earnings (adjusted) per share of 8% to 13% in the three- to five-year medium term.
• Return on shareholders' equity (adjusted) was 18.8% for 2015, with the goal to achieve on average annualized return on equity of greater than 16% in the three- to five-year medium term.  This objective was revised during the fourth quarter of 2015.
• Common Equity Tier 1 and Tier 1 capital ratios of 18.31% and 18.30%, respectively, and Total capital ratio of 20.70% continue to be well in excess of regulatory minimums.
• Dividend payout ratio of 22.0%, with a targeted payout on average of 19% to 26% of earnings to shareholders in the three- to five-year medium term.

On annual basis, the Company will update its three year financial plan and evaluate targets as part of its year-end process or as required.

Consolidated Balance Sheets
							As at
			December 31		September 30		December 31
thousands of Canadian dollars			2015		2015		2014
ASSETS
Cash and Cash Equivalents		$	1,149,849	$	612,218	$	360,746
Available for Sale Securities			453,230		413,381		582,819
Loans Held for Sale			135,043		162,432		102,094
Loans
Securitized mortgages			2,674,475		2,900,586		3,945,654
Non-securitized mortgages and loans			15,459,190		15,273,718		14,317,162
			18,133,665		18,174,304		18,262,816
Collective allowance for credit losses			(36,249)		(35,900)		(34,100)
			18,097,416		18,138,404		18,228,716
Other
Restricted assets			195,921		494,133		421,083
Derivative assets			64,796		77,875		38,534
Other assets			287,417		292,331		235,616
Goodwill and intangible assets			128,347		123,446		113,136
			676,481		987,785		808,369
		$	20,512,019	$	20,314,220	$	20,082,744
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Deposits payable on demand		$	1,986,136	$	1,562,081	$	1,064,152
Deposits payable on a fixed date			13,679,822		13,387,761		12,875,819
			15,665,958		14,949,842		13,939,971
Senior Debt			151,480		153,652		152,026
Securitization Liabilities
Mortgage-backed security liabilities			531,326		327,837		471,551
Canada Mortgage Bond liabilities			2,249,230		2,990,281		3,831,912
			2,780,556		3,318,118		4,303,463
Other
Derivative liabilities			5,447		2,992		2,266
Other liabilities			264,941		283,421		199,831
Deferred tax liabilities			22,531		37,035		36,554
			292,919		323,378		238,651
			18,890,913		18,744,990		18,634,111
Shareholders' Equity
Capital stock			90,247		89,683		84,687
Contributed surplus			3,965		3,775		3,989
Retained earnings			1,592,438		1,544,620		1,378,562
Accumulated other comprehensive loss			(65,544)		(68,848)		(18,605)
			1,621,106		1,569,230		1,448,633
		$	20,512,019	$	20,314,220	$	20,082,744

Consolidated Statements of Income
					For the three months ended				For the year ended
			December 31		September 30		December 31		December 31		December 31
thousands of Canadian dollars, except per share amounts			2015		2015		2014		2015		2014
Net Interest Income Non-Securitized Assets
Interest from loans		$	197,052	$	195,051	$	187,272	$	769,562	$	717,798
Dividends from securities			2,608		2,597		2,842		10,620		11,426
Other interest			1,694		1,846		2,482		7,951		13,912
			201,354		199,494		192,596		788,133		743,136
Interest on deposits and other			77,762		80,771		81,326		318,597		311,494
Interest on senior debt			1,824		1,512		1,660		6,396		6,392
Net interest income non-securitized assets			121,768		117,211		109,610		463,140		425,250
Net Interest Income Securitized Loans and Assets
Interest income from securitized loans and assets			22,853		24,315		35,559		103,841		166,491
Interest expense on securitization liabilities			17,963		19,828		28,753		85,891		132,212
Net interest income securitized loans and assets			4,890		4,487		6,806		17,950		34,279
Total Net Interest Income			126,658		121,698		116,416		481,090		459,529
Provision for credit losses			1,415		2,849		3,186		8,933		13,134
			125,243		118,849		113,230		472,157		446,395
Non-Interest Income
Fees and other income			19,927		20,096		18,272		82,632		71,241
Securitization income			5,760		5,788		4,956		26,208		26,845
Prepayment income on portfolio sale			-		-		32,675		-		32,675
Gain on acquisition of CFF Bank			2,056		-		-		2,056		-
Net realized and unrealized (losses) gains on securities			(66)		(542)		965		836		3,425
Net realized and unrealized loss on derivatives			(3,422)		(1,957)		(431)		(7,939)		(827)
			24,255		23,385		56,437		103,793		133,359
			149,498		142,234		169,667		575,950		579,754
Non-Interest Expenses
Salaries and benefits			25,874		19,382		20,156		88,873		80,769
Premises			2,731		3,149		3,213		12,274		11,866
Other operating expenses			26,076		22,424		16,520		89,526		69,617
			54,681		44,955		39,889		190,673		162,252
Income Before Income Taxes			94,817		97,279		129,778		385,277		417,502
Income taxes
	Current		25,548		23,189		32,539		98,481		102,201
	Deferred		(970)		1,647		1,303		(489)		2,129
			24,578		24,836		33,842		97,992		104,330
NET INCOME		$	70,239	$	72,443	$	95,936	$	287,285	$	313,172
NET INCOME PER COMMON SHARE
Basic		$	1.00	$	1.03	$	1.37	$	4.09	$	4.48
Diluted		$	1.00	$	1.03	$	1.36	$	4.09	$	4.45
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			70,157		70,218		70,101		70,170		69,857
Diluted			70,237		70,380		70,462		70,323		70,432
Total number of outstanding common shares			69,978		70,160		70,096		69,978		70,096
Book value per common share		$	23.17	$	22.37	$	20.67	$	23.17	$	20.67

Consolidated Statements of Comprehensive Income
				For the three months ended				For the year ended
	December 31		September 30		December 31		December 31		December 31
thousands of Canadian dollars	2015		2015		2014		2015		2014
NET INCOME	$	70,239	$	72,443	$	95,936	$	287,285	$	313,172
OTHER COMPREHENSIVE INCOME (LOSS)
Available for Sale Securities and Retained Interests
Net unrealized gains (losses)		6,171		(29,730)		(3,862)		(61,991)		2,854
Net losses (gains) reclassified to net income		66		460		(965)		(917)		(3,425)
		6,237		(29,270)		(4,827)		(62,908)		(571)
Income tax expense (recovery)		1,654		(7,760)		(1,279)		(16,684)		(152)
		4,583		(21,510)		(3,548)		(46,224)		(419)
Cash Flow Hedges
Net unrealized (losses) gains		(2,110)		130		(608)		(2,449)		(1,061)
Net losses reclassified to net income		369		369		365		1,474		1,461
		(1,741)		499		(243)		(975)		400
Income tax (recovery) expense		(462)		133		(64)		(260)		107
		(1,279)		366		(179)		(715)		293
Total other comprehensive income (loss)		3,304		(21,144)		(3,727)		(46,939)		(126)
COMPREHENSIVE INCOME	$	73,543	$	51,299	$	92,209	$	240,346	$	313,046

Consolidated Statements of Changes in Shareholders' Equity
							Net Unrealized
							Losses		Net Unrealized		Total
							on Securities and		Losses on		Accumulated
							Retained		Cash Flow		Other		Total
thousands of Canadian dollars,	Capital		Contributed		Retained		Interests Available		Hedges,		Comprehensive		Shareholders'
except per share amounts	Stock		Surplus		Earnings		for Sale, After Tax		After Tax		Loss		Equity
Balance at December 31, 2014	$	84,687	$	3,989	$	1,378,562	$	(16,242)	$	(2,363)	$	(18,605)	$	1,448,633
Comprehensive income		-		-		287,285		(46,224)		(715)		(46,939)		240,346
Stock options settled		6,002		(1,605)		-		-		-		-		4,397
Amortization of fair value of
employee stock options		-		1,581		-		-		-		-		1,581
Repurchase of shares		(442)		-		(10,270)		-		-		-		(10,712)
Dividends
($0.88 per share)		-		-		(63,139)		-		-		-		(63,139)
Balance at December 31, 2015	$	90,247	$	3,965	$	1,592,438	$	(62,466)	$	(3,078)	$	(65,544)	$	1,621,106
Balance at December 31, 2013	$	70,233	$	5,984	$	1,119,959	$	(15,823)	$	(2,656)	$	(18,479)	$	1,177,697
Comprehensive income		-		-		313,172		(419)		293		(126)		313,046
Stock options settled		14,488		(3,895)		-		-		-		-		10,593
Amortization of fair value of
employee stock options		-		1,900		-		-		-		-		1,900
Repurchase of shares		(34)		-		(1,356)		-		-		-		(1,390)
Dividends
($0.70 per share)		-		-		(53,213)		-		-		-		(53,213)
Balance at December 31, 2014	$	84,687	$	3,989	$	1,378,562	$	(16,242)	$	(2,363)	$	(18,605)	$	1,448,633

Consolidated Statements of Cash Flows
			For the three months ended				For the year ended
				December 31		December 31		December 31		December 31
thousands of Canadian dollars				2015		2014		2015		2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the year			$	70,239	$	95,936	$	287,285	$	313,172
Adjustments to determine cash flows relating to operating activities:
		Amortization of net (discount) premium on securities		(221)		(514)		(169)		1,001
		Provision for credit losses		1,415		3,186		8,933		13,134
		Prepayment income on portfolio sale		-		(32,675)		-		(32,675)
		Gain on acquisition of CFF Bank		(2,056)		-		(2,056)		-
		Gain on sale of mortgages or residual interest		(4,728)		(4,362)		(21,412)		(23,712)
		Net realized and unrealized gains on securities		66		(965)		(836)		(3,425)
		Amortization of capital and intangible assets		2,918		868		12,922		10,387
		Amortization of fair value of employee stock options		418		376		1,581		1,900
		Deferred income taxes		(970)		1,303		(489)		2,129
Changes in operating assets and liabilities
		Loans, net of securitization and sales		165,761		158,268		205,412		(299,376)
		Restricted assets		302,883		245,557		229,833		227,200
		Derivative assets and liabilities		13,844		(5,275)		(24,075)		(9,791)
		Accrued interest receivable		495		(505)		1,319		(1,951)
		Accrued interest payable		(10,146)		(23,535)		4,399		60
		Deposits		514,361		(82,161)		1,524,232		1,174,017
		Securitization liabilities		(557,308)		(422,698)		(1,542,653)		(1,469,601)
		Taxes receivable or payable and other		(11,072)		(43,069)		20,358		(41,867)
Cash flows provided by (used in) operating activities				485,899		(110,265)		704,584		(139,398)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares				(7,334)		(618)		(10,712)		(1,390)
Exercise of employee stock options				638		101		4,397		10,593
Dividends paid to shareholders				(15,429)		(14,020)		(61,763)		(48,922)
Cash flows used in financing activities				(22,125)		(14,537)		(68,078)		(39,719)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in securities
		Purchases		(35,020)		(42,482)		(35,020)		(542,558)
		Proceeds from sales		-		32,617		76,924		206,020
		Proceeds from maturities		1,618		20,135		25,350		178,772
Acquisition of CFF Bank, net of cash acquired				115,892		-		115,892		-
Purchases of capital assets				(1,628)		(1,063)		(5,302)		(3,080)
Capitalized intangible development costs				(7,006)		(11,760)		(25,247)		(32,463)
Cash flows provided by (used in) investing activities				73,856		(2,553)		152,597		(193,309)
Net increase (decrease) in cash and cash equivalents during the year				537,630		(127,355)		789,103		(372,426)
Cash and cash equivalents at beginning of the period				612,219		488,101		360,746		733,172
Cash and Cash Equivalents at End of the Period			$	1,149,849	$	360,746	$	1,149,849	$	360,746
Supplementary Disclosure of Cash Flow Information
Dividends received on investments			$	4,342	$	2,607	$	11,656	$	9,750
Interest received				220,787		224,528		881,749		895,851
Interest paid				109,628		137,208		406,485		450,038
Income taxes paid				26,374		20,821		128,763		81,320

Net Interest Margin
	For the three months ended			For the year ended
	December 31	September 30	December 31	December 31	December 31
	2015	2015	2014	2015	2014
Net interest margin non-securitized interest earning assets (non-TEB)	2.87%	2.80%	2.77%	2.80%	2.80%
Net interest margin non-securitized interest earning assets (TEB)	2.89%	2.83%	2.79%	2.83%	2.83%
Net interest margin securitized assets	0.60%	0.52%	0.60%	0.49%	0.67%
Total net interest margin (non-TEB)	2.45%	2.36%	2.25%	2.34%	2.23%
Total net interest margin (TEB)	2.46%	2.38%	2.27%	2.36%	2.25%
Spread of non-securitized loans over deposits and other	2.97%	2.93%	2.83%	2.91%	2.93%

Net Interest Income by Product and Average Rate
							For the three months ended
	December 31, 2015			September 30, 2015			December 31, 2014
(000s, except %)		Income/	Average		Income/	Average		Income/	Average
		Expense	Rate^1		Expense	Rate^1		Expense	Rate^1
Interest-bearing assets
Cash resources and securities	$	4,302	1.39%	$	4,443	1.33%	$	5,324	1.80%
Traditional single-family residential mortgages		145,867	4.95%		148,945	5.02%		144,496	4.98%
Accelerator single-family residential mortgages		8,651	2.63%		6,879	2.47%		7,518	2.90%
Residential commercial mortgages^2		5,036	3.97%		4,121	3.85%		3,959	4.79%
Non-residential commercial mortgages		22,205	5.95%		21,067	6.09%		16,566	6.16%
Credit card loans and lines of credit		8,388	9.05%		7,823	9.14%		7,552	9.21%
Other consumer retail loans		6,905	9.81%		6,216	9.96%		7,181	10.07%
Total non-securitized loans		197,052	5.00%		195,051	5.07%		187,272	5.11%
Taxable equivalent adjustment		941	-		937	-		1,024	-
Total on non-securitized interest earning assets		202,295	4.76%		200,431	4.79%		193,620	4.89%
Securitized single-family residential mortgages		13,549	2.74%		14,524	2.85%		22,875	3.12%
Securitized multi-unit residential mortgages		8,580	4.28%		8,879	4.29%		10,969	4.09%
Assets pledged as collateral for securitization		724	0.63%		912	0.62%		1,715	1.22%
Total securitized residential mortgages		22,853	2.82%		24,315	2.81%		35,559	3.11%
Total interest-bearing assets	$	225,148	4.35%	$	224,746	4.36%	$	229,179	4.42%
Interest-bearing liabilities
Deposits and other	$	77,762	2.03%	$	80,771	2.14%	$	81,326	2.28%
Senior debt		1,824	4.78%		1,512	3.96%		1,660	4.55%
Securitization liabilities		17,963	2.20%		19,828	2.26%		28,753	2.48%
Total interest-bearing liabilities	$	97,549	1.89%	$	102,111	1.98%	$	111,739	2.15%
Net Interest Income (TEB)	$	127,599		$	122,635		$	117,440
Tax Equivalent Adjustment		(941)			(937)			(1,024)
Net Interest Income per Financial Statements	$	126,658		$	121,698		$	116,416
						2015			2014
(000s, except %)					Income/	Average		Income/	Average
					Expense	Rate^1		Expense	Rate^1
Interest-bearing assets
Cash resources and securities				$	18,571	1.44%	$	25,338	1.81%
Traditional single-family residential mortgages					588,854	4.99%		552,112	5.10%
Accelerator single-family residential mortgages					28,777	2.58%		26,746	2.80%
Residential commercial mortgages^2					17,053	4.16%		14,355	4.68%
Non-residential commercial mortgages					80,032	6.06%		64,852	6.27%
Credit card loans and lines of credit					31,427	9.06%		28,529	9.18%
Other consumer retail loans					23,419	9.88%		31,204	9.21%
Total non-securitized loans					769,562	5.05%		717,798	5.21%
Taxable equivalent adjustment					3,830	-		4,117	-
Total on non-securitized interest earning assets					791,963	4.79%		747,253	4.93%
Securitized single-family residential mortgages					62,891	2.79%		105,393	3.21%
Securitized multi-unit residential mortgages					36,625	4.23%		54,634	4.23%
Assets pledged as collateral for securitization					4,325	0.84%		6,464	1.18%
Total securitized residential mortgages					103,841	2.86%		166,491	3.25%
Total interest-bearing assets				$	895,804	4.35%	$	913,744	4.43%
Interest-bearing liabilities
Deposits and other				$	318,597	2.14%	$	311,494	2.28%
Senior debt					6,396	4.18%		6,392	4.35%
Securitization liabilities					85,891	2.32%		132,212	2.55%
Total interest-bearing liabilities				$	410,884	1.99%	$	450,098	2.18%
Net Interest Income (TEB)				$	484,920		$	463,646
Tax Equivalent Adjustment					(3,830)			(4,117)
Net Interest Income per Financial Statements				$	481,090		$	459,529

¹ The average is calculated with reference to opening and closing monthly asset and liability balances.

² Residential commercial mortgages include non-securitized multi-unit residential mortgages and commercial mortgages secured by residential property types.

Mortgage Advances
					For the three months ended				For the year ended
			December 31		September 30		December 31		December 31		December 31
(000s)			2015		2015		2014		2015		2014
Single-family residential mortgages
	Traditional	$	1,304,268	$	1,514,429	$	1,484,475	$	5,074,723	$	5,864,562
	Accelerator		515,891		416,273		353,002		1,391,740		1,785,032
Residential commercial mortgages
	Multi-unit uninsured residential mortgages		23,503		31,031		38,519		105,098		93,476
	Multi-unit insured residential mortgages		101,683		298,438		261,016		688,743		624,879
	Other^1		8,535		18,460		14,296		43,957		45,615
Non-residential commercial mortgages
	Stores and apartments		26,462		32,728		24,144		109,115		118,272
	Commercial		173,825		186,598		114,999		646,033		319,459
Total mortgage advances		$	2,154,167	$	2,497,957	$	2,290,451	$	8,059,409	$	8,851,295

¹ Other residential commercial mortgages include mortgages such as builders' inventory.

Provision for Credit Losses  and Net Write-offs as a Percentage of Gross Loans on an Annualized Basis
				For the three months ended
(000s, except %)	December 31, 2015			September 30, 2015			December 31, 2014
			% of Gross			% of Gross			% of Gross
	Amount		Loans^1	Amount		Loans^1	Amount		Loans^1
Provision^2
Single-family residential mortgages	$	986	0.03%	$	1,805	0.06%	$	2,203	0.07%
Residential commercial mortgages		-	-		-	-		24	0.04%
Non-residential commercial mortgages		(40)	(0.01)%		237	0.06%		81	0.03%
Credit card loans and lines of credit		343	0.37%		163	0.19%		128	0.15%
Other consumer retail loans		101	0.14%		44	0.07%		90	0.19%
Securitized single-family residential mortgages		-	-		-	-		-	-
Securitized multi-unit residential mortgages		-	-		-	-		-	-
Total individual provision		1,390	0.03%		2,249	0.05%		2,586	0.06%
Total collective provision		25	0.00%		600	0.01%		600	0.01%
Total provision	$	1,415	0.03%	$	2,849	0.06%	$	3,186	0.07%
Net Write-Offs^2
Single-family residential mortgages	$	1,415	0.04%	$	1,128	0.03%	$	3,054	0.10%
Residential commercial mortgages		-	-		-	-		24	0.04%
Non-residential commercial mortgages		127	0.03%		303	0.08%		56	0.02%
Credit card loans and lines of credit		502	0.54%		163	0.19%		114	0.14%
Other consumer retail loans		94	0.13%		29	0.04%		48	0.10%
Securitized single-family residential mortgages		-	-		-	-		-	-
Securitized multi-unit residential mortgages		-	-		-	-		-	-
Net write-offs	$	2,138	0.05%	$	1,623	0.04%	$	3,296	0.07%
(000s, except %)				2015			2014
						% of Gross			% of Gross
				Amount		Loans^1	Amount		Loans^1
Provision^2
Single-family residential mortgages				$	5,415	0.04%	$	9,507	0.08%
Residential commercial mortgages					4	0.00%		(1)	(0.00)%
Non-residential commercial mortgages					720	0.05%		270	0.02%
Credit card loans and lines of credit					798	0.22%		571	0.17%
Other consumer retail loans					171	0.06%		187	0.10%
Securitized single-family residential mortgages					-	-		-	-
Securitized multi-unit residential mortgages					-	-		-	-
Total individual provision					7,108	0.04%		10,534	0.06%
Total collective provision					1,825	0.01%		2,600	0.01%
Total provision				$	8,933	0.05%	$	13,134	0.07%
Net Write-Offs^2
Single-family residential mortgages				$	5,292	0.04%	$	9,099	0.07%
Residential commercial mortgages					4	0.00%		24	0.01%
Non-residential commercial mortgages					435	0.03%		202	0.02%
Credit card loans and lines of credit					969	0.26%		692	0.21%
Other consumer retail loans					168	0.06%		272	0.15%
Securitized single-family residential mortgages					-	-		-	-
Securitized multi-unit residential mortgages					-	-		-	-
Net write-offs				$	6,868	0.04%	$	10,289	0.06%

¹ Gross loans used in the calculation of total Company ratio includes securitized on-balance sheet loans.

² There were no specific provisions, allowances or net write-offs on securitized mortgages.

Loans by Geographic Region and Type (net of individual allowances for credit losses)
(000s, except %)								As at December 31, 2015
	British
	Columbia		Alberta		Ontario		Quebec			Other		Total
Securitized single-family residential mortgages	$	125,239	$	114,807	$	1,559,536	$	81,262	$	67,266	$	1,948,110
Securitized multi-unit residential mortgages		94,676		46,848		372,141		51,309		161,391		726,365
Total securitized mortgages		219,915		161,655		1,931,677		132,571		228,657		2,674,475
Single-family residential mortgages		706,555		525,984		11,060,894		419,075		266,910		12,979,418
Residential commercial mortgages^1		21,128		14,215		216,407		27,265		42,427		321,442
Non-residential commercial mortgages		25,157		59,861		1,358,295		14,505		32,830		1,490,648
Credit card loans and lines of credit		9,598		22,709		330,188		1,489		6,841		370,825
Other consumer retail loans		783		11,090		284,231		-		753		296,857
Total non-securitized mortgages and loans^2		763,221		633,859		13,250,015		462,334		349,761		15,459,190
	$	983,136	$	795,514	$	15,181,692	$	594,905	$	578,418	$	18,133,665
As a % of portfolio		5.4%		4.4%		83.7%		3.3%		3.2%		100.0%
(000s, except %)										As at September 30, 2015
		British
		Columbia		Alberta		Ontario		Quebec		Other		Total
Securitized single-family residential mortgages	$	136,396	$	108,656	$	1,676,375	$	90,839	$	60,867	$	2,073,133
Securitized multi-unit residential mortgages		103,608		61,846		396,139		71,204		194,656		827,453
Total securitized mortgages		240,004		170,502		2,072,514		162,043		255,523		2,900,586
Single-family residential mortgages		694,241		485,077		11,052,127		415,887		254,769		12,902,101
Residential commercial mortgages^1		24,530		24,242		198,956		23,989		24,174		295,891
Non-residential commercial mortgages		26,060		62,397		1,327,687		12,860		36,194		1,465,198
Credit card loans and lines of credit		5,280		15,020		316,965		1,532		3,988		342,785
Other consumer retail loans		754		6,716		259,570		-		703		267,743
Total non-securitized mortgages and loans^2		750,865		593,452		13,155,305		454,268		319,828		15,273,718
	$	990,869	$	763,954	$	15,227,819	$	616,311	$	575,351	$	18,174,304
As a % of portfolio		5.4%		4.2%		83.8%		3.4%		3.2%		100.0%
(000s, except %)										As at December 31, 2014
		British
		Columbia		Alberta		Ontario		Quebec		Other		Total
Securitized single-family residential mortgages	$	218,927	$	182,797	$	2,376,966	$	127,999	$	83,430	$	2,990,119
Securitized multi-unit residential mortgages		133,838		72,615		480,693		79,128		189,261		955,535
Total securitized mortgages		352,765		255,412		2,857,659		207,127		272,691		3,945,654
Single-family residential mortgages		661,661		445,390		10,737,812		392,998		212,667		12,450,528
Residential commercial mortgages^1		7,972		36,869		147,697		22,645		28,135		243,318
Non-residential commercial mortgages		9,956		45,263		1,001,141		10,422		40,096		1,106,878
Credit card loans and lines of credit		5,829		16,505		302,699		1,477		3,817		330,327
Other consumer retail loans		826		2,204		182,576		-		505		186,111
Total non-securitized mortgages and loans^2		686,244		546,231		12,371,925		427,542		285,220		14,317,162
	$	1,039,009	$	801,643	$	15,229,584	$	634,669	$	557,911	$	18,262,816
As a % of portfolio		5.7%		4.4%		83.4%		3.5%		3.0%		100.0%

¹ Residential commercial mortgages include non-securitized multi-unit residential mortgages and commercial mortgages secured by residential property types.

² Loans exclude mortgages held for sale.

Impaired Loans and Individual Allowances for Credit Losses
(000s)										As at December 31, 2015
			Single-Family		Residential		Non-Residential		Credit Card		Other
			Residential		Commercial		Commercial		Loans and		Consumer
			Mortgages		Mortgages		Mortgages		Lines of Credit		Retail Loans			Total
Gross amount of impaired loans	$	49,285		$	-	$	2,558	$	1,518	$	161		$	53,522
Individual allowances on principal		(1,652)			-		(340)		(329)		(161)			(2,482)
Net amount of impaired loans	$	47,633		$	-	$	2,218	$	1,189	$	-		$	51,040
Net impaired loans as a % of gross loans		0.37%			-		0.15%		0.32%		-			0.28%
(000s)										As at September 30, 2015
		Single-Family			Residential		Non-Residential		Credit Card		Other
		Residential			Commercial		Commercial		Loans and		Consumer
		Mortgages			Mortgages		Mortgages		Lines of Credit		Retail Loans			Total
Gross amount of impaired loans	$	50,873		$	-	$	4,594	$	1,450	$	155	$		57,072
Individual allowances on principal		(1,952)			-		(405)		(68)		(155)			(2,580)
Net amount of impaired loans	$	48,921		$	-	$	4,189	$	1,382	$	-	$		54,492
Net impaired loans as a % of gross loans		0.38%			-		0.29%		0.40%		-			0.30%
(000s)										As at December 31, 2014
		Single-Family			Residential		Non-Residential		Credit Card		Other
		Residential			Commercial		Commercial		Loans and		Consumer
		Mortgages			Mortgages		Mortgages		Lines of Credit		Retail Loans			Total
Gross amount of impaired loans	$	52,551		$	54	$	2,516	$	1,938	$	160		$	57,219
Individual allowances on principal		(1,808)			-		(55)		(80)		(160)			(2,103)
Net amount of impaired loans	$	50,743		$	54	$	2,461	$	1,858	$	-		$	55,116
Net impaired loans as a % of gross loans		0.41%			0.02%		0.22%		0.56%		-			0.30%

Allowance for Credit Losses
(000s)			For the three months ended December 31, 2015
					Single-family				Residential			Non-residential				Credit Card				Other
					Residential				Commercial			Commercial				Loans and				Consumer
					Mortgages				Mortgages			Mortgages				Lines of Credit				Retail Loans				Total
Individual allowances
Allowance on loan principal
Balance at the beginning of the period			$		1,952		$		-	$		405		$		68		$		155		$		2,580
Allowance assumed on purchase of CFF Bank					-				-			-				420				-				420
Provision for credit losses					1,115				-			62				343				100				1,620
Write-offs					(1,531)				-			(167)				(519)				(123)				(2,340)
Recoveries					116				-			40				17				29				202
					1,652				-			340				329				161				2,482
Allowance on accrued interest receivable
Balance at the beginning of the period					968				-			159				-				4				1,131
Provision for credit losses					(129)				-			(102)				-				1				(230)
					839				-			57				-				5				901
Total individual allowance					2,491				-			397				329				166				3,383
Collective allowance
Balance at the beginning of the period					22,232				327			9,500				3,541				300				35,900
Allowance assumed on purchase of CFF Bank					-				-			-				324				-				324
Provision for credit losses					-				-			-				25				-				25
					22,232				327			9,500				3,890				300				36,249
Total allowance			$		24,723		$		327	$		9,897		$		4,219		$		466		$		39,632
Total provision			$		986		$		-	$		(40)		$		368		$		101		$		1,415
(000s)			For the three months ended September 30, 2015
					Single-family				Residential			Non-residential				Credit Card				Other
					Residential				Commercial			Commercial				Loans and				Consumer
					Mortgages				Mortgages			Mortgages				Lines of Credit				Retail Loans				Total
Individual allowances
Allowance on loan principal
Balance at the beginning of the period			$		1,463		$		-	$		480		$		68		$		142		$		2,153
Provision for credit losses					1,617				-			228				163				42				2,050
Write-offs					(1,417)				-			(309)				(166)				(78)				(1,970)
Recoveries					289				-			6				3				49				347
					1,952				-			405				68				155				2,580
Allowance on accrued interest receivable
Balance at the beginning of the period					780				-			150				-				2				932
Provision for credit losses					188				-			9				-				2				199
					968				-			159				-				4				1,131
Total individual allowance					2,920				-			564				68				159				3,711
Collective allowance
Balance at the beginning of the period					21,632				327			9,500				3,541				300				35,300
Provision for credit losses					600				-			-				-				-				600
					22,232				327			9,500				3,541				300				35,900
Total allowance			$		25,152		$		327	$		10,064		$		3,609		$		459		$		39,611
Total provision			$		2,405		$		-	$		237		$		163		$		44		$		2,849

(000s)							For the three months ended December 31, 2014
		Single-family		Residential		Non-residential		Credit Card		Other
		Residential		Commercial		Commercial		Loans and		Consumer
		Mortgages		Mortgages		Mortgages		Lines of Credit		Retail Loans		Total
Individual allowances
Allowance on loan principal
Balance at the beginning of the period	$	2,399	$	-	$	55	$	66	$	118	$	2,638
Provision for credit losses		2,463		24		56		128		90		2,761
Write-offs		(3,125)		(24)		(56)		(134)		(123)		(3,462)
Recoveries		71		-		-		20		75		166
		1,808		-		55		80		160		2,103
Allowance on accrued interest receivable
Balance at the beginning of the period		760		-		32		-		3		795
Provision for credit losses		(200)		-		25		-		-		(175)
		560		-		57		-		3		620
Total individual allowance		2,368		-		112		80		163		2,723
Collective allowance
Balance at the beginning of the period		20,032		327		9,300		3,541		300		33,500
Provision for credit losses		600		-		-		-		-		600
		20,632		327		9,300		3,541		300		34,100
Total allowance	$	23,000	$	327	$	9,412	$	3,621	$	463	$	36,823
Total provision	$	2,863	$	24	$	81	$	128	$	90	$	3,186

(000s)												For the year ended December 31, 2015
			Single-family				Residential			Non-residential				Credit Card			Other
			Residential				Commercial			Commercial				Loans and			Consumer
			Mortgages				Mortgages			Mortgages				Lines of Credit			Retail Loans			Total
Individual allowances
Allowance on loan principal
Balance at the beginning of the year		$	1,808			$	-		$	55		$		80	$		160		$	2,103
Allowance assumed on purchase of CFF Bank			-				-			-				420			-			420
Provision for credit losses			5,136				4			720				798			169			6,827
Write-offs			(6,357)				(9)			(486)				(1,005)			(442)			(8,299)
Recoveries			1,065				5			51				36			274			1,431
			1,652				-			340				329			161			2,482
Allowance on accrued interest receivable
Balance at the beginning of the year			560				-			57				-			3			620
Provision for credit losses			279				-			-				-			2			281
			839				-			57				-			5			901
Total individual allowance			2,491				-			397				329			166			3,383
Collective allowance
Balance at the beginning of the year			20,632				327			9,300				3,541			300			34,100
Allowance assumed on purchase of CFF Bank			-				-			-				324			-			324
Provision for credit losses			1,600				-			200				25			-			1,825
			22,232				327			9,500				3,890			300			36,249
Total allowance		$	24,723			$	327		$	9,897		$		4,219	$		466		$	39,632
Total provision		$	7,015			$	4		$	920		$		823	$		171		$	8,933
(000s)									For the year ended December 31, 2014
			Single-family				Residential			Non-residential				Credit Card			Other
			Residential				Commercial			Commercial				Loans and			Consumer
			Mortgages				Mortgages			Mortgages				Lines of Credit			Retail Loans			Total
Individual allowances
Allowance on loan principal
Balance at the beginning of the year		$	1,201			$	-		$	-		$		201	$		236		$	1,638
Provision for credit losses			9,706				24			257				571			196			10,754
Write-offs			(9,645)				(24)			(294)				(752)			(488)			(11,203)
Recoveries			546				-			92				60			216			914
			1,808				-			55				80			160			2,103
Allowance on accrued interest receivable
Balance at the beginning of the year			759				25			44				-			12			840
Provision for credit losses			(199)				(25)			13				-			(9)			(220)
			560				-			57				-			3			620
Total individual allowance			2,368				-			112				80			163			2,723
Collective allowance
Balance at the beginning of the year			18,032				327			9,300				3,541			300			31,500
Provision for credit losses			2,600				-			-				-			-			2,600
			20,632				327			9,300				3,541			300			34,100
Total allowance		$	23,000			$	327		$	9,412		$		3,621	$		463		$	36,823
Total provision		$	12,107			$	(1)		$	270		$		571	$		187		$	13,134

There were no specific provisions, allowances, or net write-offs on securitized residential mortgages.

Securitization Activity
(000s)										For the three months ended
				December 31					September 30
						2015						2015
	Single-Family		Multi-Unit				Single-Family		Multi-Unit
	Residential MBS		Residential MBS		Total MBS		Residential MBS		Residential MBS		Total MBS
Carrying value of underlying mortgages derecognized	$	371,473	$	161,757	$	533,230	$	210,881	$	154,986	$	365,867
Net gains on sale of mortgages or residual interest^1		3,362		1,366		4,728		3,183		1,270		4,453
Retained interests recorded		-		5,933		5,933		-		8,910		8,910
Servicing liability recorded		-		1,278		1,278		-		1,686		1,686
(000s)								For the three months ended
									December 31
												2014
							Single-Family		Multi-Unit
							Residential MBS		Residential MBS		Total MBS
Carrying value of underlying mortgages derecognized							$	371,782	$	241,023	$	612,805
Net gains on sale of mortgages or residual interest^1								2,549		1,813		4,362
Retained interests recorded								-		9,289		9,289
Servicing liability recorded								-		2,257		2,257
(000s)		2015						2014
	Single-Family		Multi-Unit				Single Family		Multi-Unit
	Residential MBS		Residential MBS		Total MBS		Residential MBS		Residential MBS		Total MBS
Carrying value of underlying mortgages derecognized	$	1,184,253	$	713,635	$	1,897,888	$	1,745,454	$	783,972	$	2,529,426
Net gains on sale of mortgages or residual interest^1		15,499		5,913		21,412		18,685		5,027		23,712
Retained interests recorded		-		33,228		33,228		-		32,090		32,090
Servicing liability recorded		-		6,229		6,229		-		6,781		6,781

¹  Gains on sale of mortgages or residual interest are net of hedging impact.

Securitization Income
(000s)				For the three months ended
			December 31, 2015		September 30, 2015		December 31, 2014
Net gain on sale of mortgages or residual interest^1		$	4,728	$	4,453	$	4,362
Net change in unrealized gain or loss on hedging activities			(232)		(39)		(591)
Servicing income			1,264		1,374		1,185
Total securitization income		$	5,760	$	5,788	$	4,956

(000s)						2015			2014
Net gain on sale of mortgages and residual interest^1					$	21,412		$	23,712
Net change in unrealized gain or loss on hedging activities						(313)			(177)
Servicing income						5,109			3,310
Total securitization income					$	26,208		$	26,845

¹ Gains on sale of mortgages or residual interest are net of hedging impact.

Management's Responsibility for Financial Information

The Company's Audit Committee reviewed this document along with the Company's 2015 Annual and Fourth Quarter Consolidated Financial Report.  The Company's Board of Directors approved both documents prior to their release.   A full description of management's responsibility for financial information is included in the Company's 2015 Annual and Fourth Quarter Consolidated Financial Report.

Caution Regarding Forward-looking Statements

From time to time Home Capital makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are "financial outlooks" within the meaning of National Instrument 51-102.  Please see the risk factors, which are set forth in detail in the Risk Management section of the Company's 2015 Annual and Fourth Quarter Consolidated Financial Report, as well as its other publicly filed information, which are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, for the material factors that could cause the Company's actual results to differ materially from these statements.  These risk factors are material risk factors a reader should consider, and include credit risk, funding and liquidity risk, structural interest rate risk, operational risk, investment risk, strategic and business risk, reputational risk, compliance risk, and capital adequacy risk along with additional risk factors that may affect future results. Forward-looking statements can be found in the Report to the Shareholders and the Outlook sections in the Annual Report.   Forward-looking statements are typically identified by words such as "will,"  "believe," "expect," "anticipate," "estimate," "plan," "forecast," "may," and "could" or other similar expressions. 

By their very nature, these statements require the Company to make assumptions and are subject to inherent risks and uncertainties, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements.  These risks and uncertainties include, but are not limited to, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition and technological change. The preceding list is not exhaustive of possible factors.

These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update any forward-looking statements, whether written or verbal, that may be made from time to time by it or on its behalf, except as required by securities laws.

Assumptions about the performance of the Canadian economy in 2016 and its effect on Home Capital's business are material factors the Company considers when setting its objectives, targets and outlook.  In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical and forecasted economic data provided by the Canadian government and its agencies.  In setting and reviewing its targets, objectives and outlook for 2016, management's expectations assume:

• The Canadian economy is expected to be relatively stable in 2016; however, it will continue to be impacted by adverse effects related to the drop and fluctuations in oil prices and other commodities.  The Company has limited exposure in energy producing regions. 
• Generally the Company expects stable employment conditions in its established regions; however, unemployment rates in energy producing regions are expected to continue to increase in 2016.  Also, the Company expects inflation will generally be within the Bank of Canada's target of 1% to 3%, leading to stable credit losses and consistent demand for the Company's lending products in its established regions. Credit losses and delinquencies in the energy producing regions may increase, but given the Company's limited exposure, this is not expected to be significant.
• The Canadian economy will continue to be influenced by the economic conditions in the United States and global markets and further adjustments in commodity prices; as such, the Company is prepared for the variability to plan that may result.
• The Company is assuming that overnight interest rates will remain at the current very low rate for 2016. This is expected to continue to support relatively low mortgage interest rates for the foreseeable future.
• In the Company's established regions, the Company expects that the housing market will remain stable with reduced, but balanced supply supported by continued low interest rates, and relatively stable employment, depending on location and immigration.  There will be moderately easing housing starts and resale activity with relatively stable prices throughout most of Canada, with continued regional disparities. This supports continued stable credit losses and stable demand for the Company's lending products in its established regions.
• The Company expects that consumer debt levels, while elevated, will remain serviceable by Canadian households.
• The Company will have access to the mortgage and deposit markets through broker networks.

Non-GAAP Measures

The Company has adopted IFRS as its accounting framework. IFRS are the generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after January 1, 2011. The Company uses a number of financial measures to assess its performance.  Some of these measures are not calculated in accordance with GAAP, are not defined by GAAP, and do not have standardized meanings that would ensure consistency and comparability between companies using these measures.  Definitions of non-GAAP measures used in this report can be found under Non-GAAP Measures in the Management's Discussion and Analysis included in the Company's 2015 Annual and Fourth Quarter Consolidated Financial Report.

Regulatory Filings

The Company's continuous disclosure materials, including interim filings, annual Management's Discussion and Analysis and audited consolidated financial statements, Annual Information Form, Notice of Annual Meeting of Shareholders, and Proxy Circular are available on the Company's website at www.homecapital.com and on the Canadian Securities Administrators' website at www.sedar.com.

Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposits, residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card services.  Home Trust also conducts business through its wholly owned subsidiary, CFF Bank.  In addition, Home Trust offers deposits via brokers and financial planners, and through its direct to consumer brand, Oaken Financial.  Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.

SOURCE Home Capital Group Inc.

Gerald M. Soloway, CEO, or Martin Reid, President, 416-360-4663, www.homecapital.com