Firm Capital Mortgage Investment Corporation (the Corporation”)
(TSX FC, FC.DB.G, FC.DB.H, FC.DB.I, FC.DB.J ,FC.DB. K and FC.DB.L)
released its financial statements for the three and nine months
ended September 30, 2023.
NET ASSET VALUEThe Corporation has an adjusted
NAV1 of $11.37/share. This represents 13% discount to the closing
price as of November 6, 2023 of $9.89/share.
NET INCOMEFor the three months
ended September 30, 2023 net income increased by 5.1% to $8,594,640
as compared to $8,179,541 for the same period in 2022. Net income
for the nine months ended September 30, 2023 increased by 6.4% to
$25,828,891, as compared to $24,278,981 reported for the same
period in 2022. The increase is primarily a result of a higher
interest income.
EARNINGS PER SHAREBasic
weighted average earnings per share for the three months ended
September 30, 2023 was $0.249 (September 30, 2022 – $0.237). Basic
weighted average earnings per share for the nine months ended
September 30, 2023 was $0.749 (September 30, 2022 – $0.708).
PORTFOLIOThe Corporation’s
Investment Portfolio decreased by $82 million to $578,929,118 as at
September 30, 2023, in comparison to $661,003,596 as at December
31, 2022 (in each case, gross of impairment allowance, fair value
adjustment, and unamortized fees). During the nine months ended
September 30, 2023, new investment funding was $162.9 million (nine
months ended September 30, 2022 – $326.8 million), and repayments
were $244.8 million (nine months ended September 30, 2022 – $332.9
million). On September 30, 2023, the Investment Portfolio consisted
of 241 investments (December 31, 2022 – 252). The average gross
investment size was approximately $2.4 million, with 13 investments
individually exceeding $7.5 million.
The Corporation specializes in providing bridge
mortgage financing that entails seeing the portfolio revolve and
re-deployed into new investments based on current market rates. Of
the $578 million Investment portfolio as at September 30, 2023,
approximately 88% was either underwritten or newly funded during
2023 and 2022. Only approximately 12% of the Investment Portfolio
is associated with investments that were underwritten, or newly
funded prior to 2022. The Investment Portfolio's revolving nature
demonstrates the successful implementation of the Corporation’s
bridge financing strategy.
PRUDENT IMPAIRMENT ALLOWANCEManagement has
always taken a proactive approach to the Corporation’s loan
impairment allowance. This is a prudent approach that provides
stability of dividends to our shareholders in the event there are
any future issues with any of the loans within the Corporation’s
Investment Portfolio. The allowance for impairment and fair value
adjustment as of September 30, 2023 was $19.16 million (December
31, 2022 – 10.16 million), comprising (i) $6.20 million (December
31, 2022 – $3.70 million) representing the total amount of
management’s estimate of the shortfall between the investment
balances and the estimated recoverable amount from the security
under the specific loans, (ii) $10.46 million (2022 – $4.70
million) representing the total amount of management’s estimate of
fair value adjustment on two investments stated at fair value
through profit or loss; and (iii) a collective allowance balance of
$2.50 million (2022 – $1.76 million).
INVESTMENT PORTFOLIO
DETAILSDetails on the Corporation’s investment portfolio
as at September 30, 2023, are as follows:
- Total gross investment portfolio of
$578,929,118 a 12.4% decrease from the $661,003,596 reported at
December 31, 2022.
- Conventional first mortgages, being
those first mortgages with loan-to-values less than 75%, comprise
86.0% of the total portfolio (83.5% as at December 2022), and total
conventional mortgages with loan-to-values less than 75%, comprise
92.5% of the total portfolio (88.6% as at December 2022).
- Approximately 85% of the portfolio
matures by December 31, 2024, of which 29% matures by December 31,
2023.
- The average face interest rate on
the portfolio is 11.10% per annum, as compared to 10.99% on
December 30, 2022.
- Regionally, the mortgage investment
portfolio is primarily diversified as follows: Ontario (87.5%),
Quebec (6.1%), and Western Canada (3.1%).
- 95% of the Portfolio have variable
interest rates and are priced to be the greater of: (i) Bank Prime
plus spread (“Base Rate”), and (ii) a fixed floor rate.
DIVIDEND AND SHARE PURCHASE
PLANThe Corporation has in place a Dividend Reinvestment
Plan (DRIP) and Share Purchase Plan that is available to its
shareholders. The DRIP allows participants to have their monthly
cash dividends reinvested in additional shares. The price paid per
share is 97% (if the share price is higher than $14.85) of the
weighted average trading price calculated five trading days
immediately preceding each dividend date with no commission cost.
Once registered with the Share Purchase Plan, participants have the
right to purchase additional shares, totaling no greater than
$12,000 per year and no less than $250 per month. Shareholders
participating pay no commission.
For the nine months ended September 30, 2023,
the Corporation declared dividends on its common shares totaling
$24,210,051, or $0.702 per share, versus $24,079,389, or $0.702 per
share for the nine months ended September 30, 2022. The number of
common shares outstanding on September 30, 2023 was 34,488,577,
compared to 34,485,001 at September 30, 2022.
About the
CorporationWhere Mortgage Deals Get
Done®
The Corporation, through its mortgage banker,
Firm Capital Corporation, is a non-bank lender providing
residential and commercial short-term bridge and conventional real
estate financing, including construction, mezzanine, and equity
investments. The Corporation’s investment objective is the
preservation of shareholders’ equity, while providing shareholders
with a stable stream of monthly dividends from investments. The
Corporation achieves its investment objectives through investments
in selected niche markets that are under-serviced by large lending
institutions. Lending activities to date continue to develop a
diversified mortgage portfolio, producing a stable return to
shareholders. Full reports of the financial results of the
Corporation for the year are outlined in the audited consolidated
financial statements and the related management discussion and
analysis of the Corporation, available on the SEDAR website at
www.sedar.com. In addition, supplemental information is available
on the Corporation’s website at www.firmcapital.com.
Forward-Looking StatementsThis
news release contains forward-looking statements within the meaning
of applicable securities laws including, among others, statements
concerning our objectives, our strategies to achieve those
objectives, our performance, our investment portfolio and our
dividends, as well as statements with respect to management’s
beliefs, estimates, and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance, or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as “outlook”, “objective”,
“may”, “will”, “expect”, “intent”, “estimate”, “anticipate”,
“believe”, “should”, “plans”, or “continue”, or similar expressions
suggesting future outcomes or events. Such forward-looking
statements reflect management’s current beliefs and are based on
information currently available to management.
These statements are not guarantees of future
performance and are based on our estimates and assumptions that are
subject to risks and uncertainties, including those described in
our current Annual Information Form under “Risk Factors” (a copy of
which can be obtained at www.sedar.com), which could cause our
actual results and performance to differ materially from the
forward-looking statements contained in this news release.
Those risks and uncertainties include, among
others, risks associated with mortgage lending, dependence on the
Corporation’s manager and mortgage banker, competition for mortgage
lending, real estate values, interest rate fluctuations,
environmental matters, and shareholder liability. Material factors
or assumptions that were applied in drawing a conclusion or making
an estimate set out in the forward-looking information include,
among others, that the Corporation is able to invest in mortgages
at rates consistent with rates historically achieved; adequate
mortgage investment opportunities are presented to the Corporation;
and adequate bank indebtedness and bank loans are available to the
Corporation. Although the forward-looking information contained in
this news release is based upon what management believes are
reasonable assumptions, there can be no assurance that actual
results and performance will be consistent with these
forward-looking statements.
All forward-looking statements in this news
release are qualified by these cautionary statements. Except as
required by applicable law, the Corporation undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
For further information, please contact:
Firm Capital Mortgage Investment CorporationEli
DadouchPresident & Chief Executive Officer(416) 635-0221
Boutique Mortgage Lenders®
1 Includes the face value of the maturing debentures.
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