Firm Capital Mortgage Investment Corporation Announces Q3/2023 Results
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) has released its financial statements for the three and nine months ended September 30, 2023.
Net Asset Value
The Corporation reported an adjusted Net Asset Value (NAV) of $11.37 per share, representing a 13% discount to the closing price as of November 6, 2023.
Net Income
For the three months ended September 30, 2023, the Corporation's net income increased by 5.1% to $8,594,640 compared to the same period in 2022. For the nine months ended September 30, 2023, net income increased by 6.4% to $25,828,891 compared to the same period in 2022. The increase is primarily attributed to higher interest income.
Earnings per Share
Basic weighted average earnings per share for the three months ended September 30, 2023, was $0.249, while for the nine months ended September 30, 2023, it was $0.749.
Portfolio
The Corporation's Investment Portfolio decreased to $578,929,118 as of September 30, 2023, compared to $661,003,596 as of December 31, 2022. During the nine months ended September 30, 2023, new investment funding amounted to $162.9 million, while repayments were $244.8 million. The Investment Portfolio consists of 241 investments, with an average gross investment size of approximately $2.4 million.
The Corporation specializes in providing bridge mortgage financing and focuses on revolving and re-deploying the portfolio based on current market rates. Approximately 88% of the Investment Portfolio as of September 30, 2023, was underwritten or newly funded during 2023 and 2022, demonstrating the successful implementation of the Corporation's bridge financing strategy.
Impairment Allowance and Investment Portfolio Details
The Corporation maintains a prudent impairment allowance to ensure stability of dividends for shareholders. As of September 30, 2023, the allowance for impairment and fair value adjustment was $19.16 million. The Investment Portfolio primarily consists of conventional first mortgages, with 86.0% having loan-to-values less than 75%. Regionally, the mortgage investment portfolio is primarily diversified in Ontario (87.5%), Quebec (6.1%), and Western Canada (3.1%).
Dividend and Share Purchase Plan
The Corporation offers a Dividend Reinvestment Plan (DRIP) and Share Purchase Plan to its shareholders. The DRIP allows participants to reinvest their monthly cash dividends in additional shares, while the Share Purchase Plan enables shareholders to purchase additional shares with no commission cost.
For the nine months ended September 30, 2023, the Corporation declared dividends totaling $24,210,051, or $0.702 per share.
For more detailed financial information, please refer to the Corporation's audited consolidated financial statements and management discussion and analysis, available on the SEDAR website.
About the Corporation:
Firm Capital Mortgage Investment Corporation, through its mortgage banker, Firm Capital Corporation, provides residential and commercial short-term bridge and conventional real estate financing. The Corporation focuses on niche markets that are underserved by large lending institutions, aiming to preserve shareholders' equity and provide stable monthly dividends.
Please note that the information provided is based on the Corporation's financial statements and is subject to risks and uncertainties.
The Q3/2023 results from Firm Capital Mortgage Investment Corporation reveal a compelling insight into the current state of the mortgage investment market. The Corporation's strategy of focusing on under-served niche markets and providing bridge mortgage financing is paying off, with a 6.4% increase in net income compared to the same period in 2022. This is a positive signal for new businesses looking to enter the mortgage investment space, demonstrating that there are profitable opportunities outside of the mainstream markets dominated by larger lending institutions. However, the decrease in the Corporation's Investment Portfolio points to a potential challenge for new entrants. The ability to continually source new investment opportunities while managing repayments is a delicate balancing act, requiring a deep understanding of the market and robust risk management strategies. The Corporation's prudent impairment allowance is a testament to this, ensuring stability of dividends for shareholders. For new businesses, this underlines the importance of having a solid financial buffer to withstand potential loan impairments. Overall, while the Corporation's results highlight the potential for profitability in niche mortgage investment markets, they also underscore the need for careful portfolio management and risk mitigation strategies.
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