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TORONTO, Oct. 31, 2023 /PRNewswire/ — First National Financial Corporation (TSX: FN) (TSX: FN. PR. A) (TSX: FN. PR. B) (the “Company” or “FNFC”) announced its monetary effects for the three and nine months ended September 30, 2023. The Company derives substantially all of its profits from its wholly-owned subsidiary, First National Financial LP (“FNFLP” or “First National”), one of Canada’s largest non-financial companies. Money Corporations. Originators and underwriters of bank mortgages.
Third Quarter Summary
Mortgage management (“MUA”) increased 10% to a record $141. 9 billion, up from $129. 3 billion as of September 30, 2022.
Revenue rose 43% to $562. 9 million from $392. 4 million ago.
Pre-FMV(1) revenue increased 98% to $95. 5 million from $48. 2 million a year ago.
Net source of revenue of $83. 6 million, or 1. 38 cents per share, compared to $40. 1 million, or $0. 66 per share, a year ago.
1 This measure does not IFRS adjust earnings before taxes on the source of income by removing the effect of fair value adjustments, adding losses on the valuation of monetary instruments (other than those on credit investments), and deducting gains on the valuation. of monetary tools (except those for investment in loans). See Non-GAAP Measures.
Special Dividend The Board of Directors announced a special dividend in the amount of $0. 75, consistent with the non-unusual percentage to be paid on December 15, 2023 to holders of percentages of record on November 30, 2023. This payment reflects the Board’s determination that First National has generated excess capital in the following year and that the capital required for near-term expansion can be generated through continued and consistent negotiations.
Common Stock Dividend Increase The Board of Directors also announced an increase in the Company’s normal monthly dividend at an annualized rate of $2. 45 per percent (from $2. 40 annualized) payment effective December 15, 2023 to holders of percentages of record on November 30. , 2023.
“With today’s announcement, First National has increased its dividend 17-fold since our initial public offering in 2006, a transparent demonstration of its ability to create long-term pricing through diversified mortgage, control and securitization businesses,” said Jason Ellis, chairman and chief executive officer. “We are proud of this functionality and are committed to maintaining it by intentionally focusing on our fundamentals: delivering intelligent service, encouraging our partner expansion, making an investment in generation, and enhancing our team’s capabilities. As our markets continue to adjust to a more expansive interest rate environment, these principles will serve us well.
Third Trimester Review
Quarter ended
Nine months ended
September 30, 2023
September 30
2022
September 30, 2023
September 30
2022
For the period
(in U. S. dollars)
Income
562 861
392 413
1 520 844
1 159 508
Income Taxes
113 830
54 645
284 012
210 813
Pre-FMV Revenue (1)
95 456
48 219
245 058
149 270
At the end of the period
Total assets
45 176 543
42 392 225
45 176 543
42 392 225
Mortgage Administration
141 915 465
129 321 654
141 915 465
129 321 654
1This non-IFRS measure adjusts pre-tax earnings on the source of income by eliminating the effect of fair value adjustments, adding losses on the valuation of monetary instruments (other than those on credit investments), and deducting gains on the valuation of monetary instruments (other than those on credit investments). See Non-GAAP Measures.
First National’s MUA increased 10% to $141. 9 billion as of September 30, 2023, compared to $129. 3 billion as of September 30, 2022, or 12% annualized since June 30, 2023. At the end of the quarter, the MUA for single-family homes was $94. 5 billion, up 8% compared to $87. 6 billion as of September 30, 2022, while advertising MUA was $47. 4 billion, up 14% from $41. 7 billion a year ago.
Single-family loan origination (including renewals) was $8. 3 billion, up 26% from $6. 6 billion in the third quarter of 2022. This functionality exceeded management’s expectations, which were influenced by interest rate hikes through the Bank of Canada that led to a decline in year-over-year originations in early 2023. The sharp increase in real estate activity in the second quarter of 2023, coinciding with a transitory pause in the Bank of Canada’s rate hikes, resulted in an increase in loan funding in the third quarter. quarter. First National’s MERLIN generation and operating systems continued effective and effective loan underwriting across the country.
Commercial segment packages (including renewals) were $3. 3 billion, up from $2. 5 billion in the third quarter of last year. This 30% increase reflects demand for First National’s secured loan systems for multifamily properties, partially offset by a reduction in demand for traditional ones. loan products.
Third-quarter profit rose 34% to $526. 9 million from $392. 4 million a year ago, largely due to a higher interest rate environment. During the quarter, the company obtained:
$75. 8 million in investment expenses, up 30% from $58. 5 million a year ago due to a 23% increase in origination volumes of new homes sold to institutional investors, strong placement fees consistent with the quarter-to-quarter unit, and a 30% expansion in advertising origination volumes. (which doubled investment fees in this segment), offset by lower investment fees for renewed residential mortgages
$71. 1 million in loan control revenue, up 28% from $55. 4 million a year ago due to MUA growth, higher interest earned on escrow and higher third-party subscription revenue.
$57. 7 million of net interest earned as a source of income on securitized loans (NIM), compared to $43. 2 million a year ago, an increase of 34% due to portfolio growth, slower loan repayment rates and the continued good fortune of the company’s Excalibur securitization. systems (which continued to operate with almost no credit losses)
$42. 3 million in loan investment income, a 41% increase from $30. 0 million a year ago, reflecting a truly extensive increase in interest rates that resulted in higher interest earned on First National’s loan investment and loan portfolio and on accrued loans for securitization.
Gains on deferred investment charges from $6. 9 million to $4. 6 million a year ago, a 50% increase reflecting the expansion of multi-unit residential mortgages issued and sold to institutional investors.
Third quarter pre-tax profit of $113. 8 million, compared to $54. 6 million a year ago, due to core operating good luck as well as the conversion of money market situations that affected the price of monetary tools used to economically hedge residential loan liabilities. During the third quarter of 2023, the Company recorded monetary tool gains of $18. 4 million (excluding similar losses to loans and loan investments) compared to earnings of $6. 4 million a year ago on the same basis.
Pre-tax earnings on the source of gains and gains and losses on monetary instruments (“pre-FMV1 gains”), which excludes the effect of those changes, increased 98% to $95. 5 million, compared to $48. 2 million in the third quarter of 2022. This expansion reflects the Company’s success in expanding MUA over many years. A higher-servicing MUA generates higher gains on loan management, adding interest on escrows, and a larger securitized loan portfolio provides five- and ten-year profit streams that are reflected in securitization as a source of profit.
Outstanding Securities As of September 30, 2023 and October 31, 2023, the Company had outstanding: 59,967,429 non-unusual shares; 2,984,835 Class A Preferred Stock, Series 1; 1,015,165 Class A Preferred Stock, Series 2; 200,000 November 2024 unsecured senior notes; 200,000 senior unsecured notes due November 2025; and 200,000 September 2026 unsecured notes.
Dividends on customary percentages paid or reported in the third quarter were $36. 0 million, compared with $35. 2 million a year ago. The usual payout percentage for the third quarter was 44%. Excluding gains and losses on monetary instruments, the dividend payout ratio in usual percentages would have been 52%, up from 101% in the third quarter of last year.
First National paid $1. 0 million in dividends on its preferred stock in the third quarter, up from $0. 8 million a year ago.
First National, for the purposes of the Income Tax Act (Canada) and any similar provincial legislation, advises that its declared dividends will be eligible dividends unless otherwise specified. This includes the special dividend on non-unusual shares to be paid in December. 2023.
Perspectives
The third quarter of 2023 saw an increase in loan financing compared to the same quarter last year. The Company believes this is partly explained by real estate activity in the second quarter due to the Bank of Canada’s (“BoC”) financial policy pause aimed at reducing inflation. At the same time, news about the problems of regional banks in the United States caused a significant, although temporary, drop in benchmark interest rates. In this context, borrowers entered the market and the Company’s credit commitments particularly increased. However, at the end of the second quarter, the Bank of Canada began raising final overnight interest rates again. At its June and July meetings, the Bank of Canada raised rates through a total of 50 more key issues and reiterated its commitment to reducing inflation. This has led to higher lending rates and more questions about long-term interest rates. The Company believes that such accruals contributed to a particularly slower real estate market during the summer months and, consequently, a reduction in long-term loan financing commitments. Despite this doubtful business environment, the Company managed to increase its MUC up to 12% in the third quarter of 2023. The Company also continued to increase its portfolio of secured loans in securitization. You will gain benefits from both the MUA and the securitized portfolio in the long term: you will generate a source of income from loan servicing, a net securitization margin and you will be better positioned to capture asset renewal opportunities.
In the near term, the Company expects a significant slowdown in single-family housing starts in the fourth quarter of 2023 compared to the comparative quarter of 2022, as real estate market activity has slowed particularly across the country due to recent increases in loans. interest rates and a more doubtful economic environment. Although economic signs point to a decline in inflation rates, the Bank of Canada has not yet announced the end of its rate hike cycle. This doubt has affected potential buyers in such a way that the last quarter of the year and early 2024 will see less activity than initially expected through the Company. As a result, the Company expects a significant slowdown in credit investment in the fourth quarter. In the long term, immigration levels are expected to increase. demand in the real estate market. The Company anticipates that listing generation will also slow as the market digests adjustments in real estate valuations given the new underlying monetary environment. In any line of business, Control is confident that First National will continue to be a competitive leader in the market.
First National is well prepared to execute your business plan. The company expects to capitalize on its continued goodwill with broker partners acquired over the past 35 years and strengthened during the pandemic. Through diversified relationships with a wide diversity of institutional investors and strong securitization markets. , the Company has access to consistent and reliable financing resources.
The Company is confident that its strong relationships with loan officers and diverse financing resources will continue to differentiate First National from its competitors. The Company will continue to generate earnings and money through its portfolio of $39 billion in secured securitization loans and $100 billion. portfolio of services and will concentrate on the inherent price of its significant home renovation portfolio.
Conference Call & Webcast
November 1, 2023, 10 a. m. ET
(888) 390-0605 or (416) 764-8609
www. firstnational. ca
There will be a recorded replay of the convention until November 8, 2023 at ET. To access the replay, dial (416) 764-8677 or (888) 390-0541 and enter the access code 955275 followed by the number to sign. The webcast is archived in www. firstnational. ca for 3 months.
The Company’s full consolidated monetary statements and Management’s Discussion and Analysis are located at www. sedar. com and www. firstnational. ca.
About First National Financial CorporationFirst National Financial Corporation (TSX: FN, TSX: FN. PR. A, TSX: FN. PR. B) is the parent company of First National Financial LP, a Canadian-based loan originator, insurer and asset manager. First-lien residential loans (single-family and multi-family loans) and advertising loans. With more than $141 billion in loans under service, First National is one of the largest originators and underwriters of non-bank loans in Canada and is among the most sensible. 3 lenders in terms of market share in the distribution channel of loan brokers. For more information, visit www. firstnational. ca.
1 Non-GAAP Measures The Company uses IFRS as its accounting framework. IFRS is sometimes an accepted accounting principle (GAAP) for publicly liable Canadian corporations for fiscal years beginning on or after January 1, 2011. The Company also refers to safe measures to help. when comparing their monetary functionality. These “non-GAAP measures” such as “EBITDA before FMV” and “pre-tax dividend payout ratio before FMV” do not deserve to be construed as opportunities for the net source of income or loss or other comparable measures. We decide according to GAAP as an indicator of functionality or as a measure of liquidity and cash flow. Non-GAAP measures do not have a prescribed popular meaning through GAAP and therefore would not possibly be comparable to similar measures presented through other issuers.
Forward-Looking InformationCertain data contained in this press release may constitute forward-looking data within the meaning of securities laws. In some cases, forward-looking data may be known by the use of words such as “possibly,” “will,” “expect,” “plan,” “anticipate,” “believe,” “have. ” “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions related to topics that are not ancient facts. Forward-looking data would possibly relate to long-term control customers and expected events or effects, and would possibly include statements or data relating to long-term monetary condition, business strategy and strategic objectives, product progression activities, projected prices and capital expenditures, monetary effects, threat control strategies, coverage of marketing activities, geographic expansion, licensing plans, taxes. and other plans and objectives of or involving the Company. In particular, data relating to expansion objectives, any long-term accumulation of loans under management, long-term use of securitization vehicles, industry trends and long-term revenues are forward-looking data. Forward-looking data is based on safe assumptions and assumptions relating to, among other things, adjustments in interest rates. and the responses to those adjustments, the demand for institutionally placed and securitized loans, the prestige of the applicable regulatory regime, and the use of loan officers for single-family residential loans. Such forward-looking data should not be construed as promises of functionality or long-term effects, and will not necessarily constitute an accurate indication of whether or not such effects will be achieved, or the time frame within which such effects will be achieved. . Although the control considers these assumptions to be conservative based on the most recently available data, they may prove to be incorrect. Forward-looking data is subject to certain points, in addition to the threats and uncertainties indexed in “Risks and uncertainties affecting the business” in MD&A, which may also cause actual effects to differ materially from those expected through control. Lately expected. These points are accompanied by dependence on financing sources, concentration of institutional investors, dependence on relationships with independent loan brokers and adjustments in the interest rate environment. This forward-looking data speaks as of the date of this press release and is subject to update after this date. However, Control and First National disclaim any objective or legal responsibility to update or revise any forward-looking data, whether as a result of new data, long-term events or otherwise, as required by applicable securities regulations. required.
SOURCE First National Financial Corporation
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