First National Financial Corporation Reports First Quarter 2024 Results
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Mortgages Under Administration ("MUA") increased 9% to a record$145.1 billion compared to$133.0 billion atMarch 31, 2023 - Revenue increased 20% to
$518.0 from$432.1 million a year ago - Pre-FMV Income(1) increased 5% to
$62.7 from$59.7 million a year ago - Net income was
$49.9 million ($0.82 cents per share) compared to$35.7 million ($0.58 cents per share) a year ago
"First National translated its business model advantages into positive results for shareholders in the first quarter," said
First Quarter Review
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Quarter ended |
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2023 |
For the Period |
($000s) |
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Revenue |
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518,045 |
432,086 |
Income before income taxes |
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67,892 |
48,638 |
Pre-FMV Income (1) |
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62,745 |
59,748 |
At Period End |
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Total assets |
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45,765,958 |
44,268,705 |
Mortgages under administration |
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145,095,772 |
133,014,706 |
1 This non-IFRS measure adjusts income before income taxes by eliminating the impact of changes in fair value by adding back losses on the valuation of financial instruments (except those on mortgage investments) and deducting gains on the valuation of financial instruments. See Non-GAAP measures. |
First quarter 2024 performance met management's expectations. First National's MUA increased 9% to
Single-family mortgage origination (including renewals) was
Commercial segment origination (including renewals) was
Revenue increased 20% to
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$56.6 million of mortgage servicing income compared to$50.8 million a year ago, an 11% increase, due to growth in MUA, higher interest earned on escrow deposits and growth in its third-party underwriting business -
$54.1 million of net interest – securitized mortgages (NIM) compared to$49.4 million a year ago, a 10% increase due to an 8% increase in the portfolio of mortgages pledged under securitization combined with historically slow mortgage prepayment speeds, success with the company's Excalibur securitization program and the reduced impact of short-term interest rate volatility on floating rate securitization programs. Residential segment NIM was higher by$1.8 million year over year while Commercial NIM was$2.9 million higher -
$45.2 million of placement fees compared to$51.5 million a year ago, a 12% reduction due to a 12% decrease in placement activity and a shift in the mix favouring commercial segment volumes, which generally attract lower per-unit fees than residential placement. The decrease due to lower per-unit placement fees was offset by an increase in renewal fees in the residential segment -
$31.3 million of mortgage investment income compared to$28.9 million a year ago, an 8% increase due to the higher interest rate environment which resulted in more interest income earned on First National's mortgage and loan investment portfolio and mortgages accumulated for securitization -
$5.4 million of gains on deferred placement fees compared to$6.8 million a year ago, a 21% decrease reflecting a 26% decrease in multi-unit residential mortgages placed in these programs
Income before income taxes was
Earnings before income taxes and gains and losses on financial instruments ("Pre-FMV Income1"), which excludes the impact of these changes, increased 5% to
At
Total common share dividends paid or declared in the first quarter amounted to
First National paid
First National, for the purposes of the Income Tax Act (
2024 began as expected by the Company – significantly lower single-family origination and growing commercial segment origination. In general, management believes that the housing market overall is solid with stable valuations and continued demand. Lower single-family origination is the result of increased competition, particularly in the mortgage broker distribution channel. In the quarter, the Company continued to build its portfolio of mortgages pledged under securitization. It will benefit from both MUA and the securitized portfolio in the future: earning income from mortgage administration, net securitization margin and improving its position to capture increased renewal opportunities.
In the short term, the Company expects lower single-family origination to continue into the second quarter of 2024 as competitors continue to build market share with relatively low mortgage rates and elevated broker incentives. Although the Company does not see weakness in the housing market, the acceleration of activity from expected
First National is well prepared to execute its business plan. The Company expects to enjoy the value of its continued goodwill with broker partners earned over the last 35+ years and reinforced during the pandemic. With diverse relationships over an array of institutional investors and solid securitization markets, the Company has access to consistent and reliable sources of funding.
The Company is confident that its strong relationships with mortgage brokers and diverse funding sources will continue to set First National apart from its competition. The Company will continue to generate income and cash flow from its
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(888) 390-0605 or (416) 764-8609 |
A taped rebroadcast of the conference call will be available until
Complete consolidated financial statements for the Company as well as management's discussion and analysis are available at www.sedar.com and at www.firstnational.ca.
First National will host its 2024 annual meeting of shareholders on
The Company uses IFRS as its accounting framework. IFRS are generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after
($000s, except per share amounts)
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Income |
Add/ deduct |
Deduct (losses), add |
Pre-FMV |
2024 |
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First quarter |
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$— |
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2023 |
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Fourth quarter |
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Third quarter |
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( |
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Second quarter |
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( |
$— |
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First quarter |
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$— |
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Forward-Looking Information
Certain information included in this news release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will, "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, product development activities, projected costs and capital expenditures, financial results, risk management strategies, hedging activities, geographic expansion, licensing plans, taxes and other plans and objectives of or involving the Company. Particularly, information regarding growth objectives, any future increase in mortgages under administration, future use of securitization vehicles, industry trends and future revenues is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, interest rate changes and responses to such changes, the demand for institutionally placed and securitized mortgages, the status of the applicable regulatory regime and the use of mortgage brokers for single family residential mortgages. This forward-looking information should not be read as providing guarantees of future performance or results, and will not necessarily be an accurate indication of whether or not, or the times by which, those results will be achieved. While management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties listed under ''Risks and Uncertainties Affecting the Business'' in the MD&A, that could cause actual results to differ materially from what management currently expects. These factors include reliance on sources of funding, concentration of institutional investors, reliance on relationships with independent mortgage brokers and changes in the interest rate environment. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
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