Firm Capital Mortgage Investment Corporation announces Q1/2014 results

TSX Symbol FC

TORONTO, May 7, 2014 /CNW/ - Firm Capital Mortgage Investment Corporation (the "Corporation") (TSX FC) today released its financial statements for the three months ended March 31, 2014.

PROFIT & RETURN ON EQUITY
Profit for the first quarter ended March 31, 2014 increased by 18% to $4,969,604 as compared to $4,194,465 for the same period last year. Basic weighted average profit per share for the first quarter ended March 31, 2014 was $0.253, which is higher than the $0.240 per share reported for the first quarter ended March 31, 2013 and higher than the $0.243 per share reported for the fourth quarter ended December 31, 2013.

Profit for the quarter ended March 31, 2014 represented an annualized return on shareholders' equity (based on the month end average shareholders' equity) of 9.54% versus a previously reported return on shareholders' equity of 9.45% for the quarter ended March 31, 2013. This return on shareholders' equity represents 858 basis points per annum over the average Government of Canada one year treasury bill yield for the period of 0.96%, and is well in excess of the Corporation's stated target yield objective of 400 basis points per annum over the average one year treasury bill yield.

DIVIDEND OVERVIEW
For the first quarter ended March 31, 2014, the Corporation declared dividends totaling $4,699,017 or $0.234 per Share versus $4,097,458 or $0.234 per share for the first quarter ended March 31, 2013. While the per share amount of dividends did not change quarter over quarter, the quantum of dividends paid is higher in the comparable 2014 period as a result of the increase in  the number of shares outstanding. The number of shares outstanding as March 31, 2014 was 20,081,399 as compared to 17,549,223 as at March 31, 2013.

INVESTMENT PORTFOLIO HIGHLIGHTS
Details on the Corporation's investment portfolio as at March 31, 2014 are as follows:

  • Total gross investment portfolio of $328,120,345, which is a 3% decrease over December 31, 2013.
  • Conventional first mortgages, being those first mortgages with loan to values less than 75%, comprise 65% of our total portfolio, and total conventional mortgages with loan to values under 75% comprise 74% of our total portfolio.
  • Related investments total 15% of the portfolio.
  • Non-conventional mortgages total 10% of the portfolio.
  • Discounted debt investments total 1% of the portfolio.
  • Conventional non first mortgages total 9% of the portfolio.
  • Approximately 77% of the portfolio matures by March 31, 2015. This results in a continuously revolving portfolio, allowing management to assess market conditions.
  • The average face interest rate on the portfolio is 8.54% per annum.
  • Regionally, the portfolio is diversified approximately as follows: Ontario (72%), Quebec (10%), Alberta (8%), British Columbia (5%) and Other (5%).
  • Gross investment portfolio breakdown by loan size is as follows:

                 
  Amount   Number of
Investments
%   Total Amount   %
    $0 - $2,500,000   104 70%   $ 99,284,629   30%
    $2,500,001 - $5,000,000   29 20%   $ 115,904,850   36%
    $5,000,001 - $7,500,000   9 6%   $ 62,960,000   19%
    $7,500,001 +   6 4%   $ 49,970,866   15%
      148 100%   $ 328,120,345   100%

IMPAIRMENT PROVISION UPDATE
Management has always taken a proactive approach to allowance provision reserves. This is a prudent approach to protecting our Shareholders' equity. The impairment provision at $3,330,000 as at March 31, 2014 and represents the total amount of management's estimate of the shortfall between the investment portfolio principal balances and the estimated net realizable recovery from the collateral securing the loans. The impairment provision represents 1% of the investment portfolio balance.

UNRECOGNIZED INCOME COLLECTED
As at March 31, 2014, the Corporation has recorded as unearned income, banked non-refundable fee income of $581,262, which will be recognized as income over the term of the corresponding investments.

DIVIDEND AND SHARE PURCHASE PLAN
The Corporation has in place a Dividend Reinvestment Plan (DRIP) and a Share Purchase Plan that are available to its shareholders.  The Plans allow participants to have their monthly cash dividends reinvested in additional common shares of the Corporation and grant participants the right to purchase additional Shares.

ABOUT THE CORPORATION
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 by pursuing a strategy of growth 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 financial statements and the related management discussion and analysis of Firm Capital, available on the SEDAR website at www.sedar.com. In addition, supplemental information is available on Firm Capital's website at www.firmcapital.com.

Forward-Looking Statements
This 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 mortgage portfolio and our distributions, 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 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 circular.  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, shareholder liability and the introduction of new tax rules.  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 continued in this new 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.

SOURCE: Firm Capital Mortgage Investment Corporation

For further information:


Firm Capital Mortgage Investment Corporation
Eli Dadouch
President & Chief Executive Officer
(416) 635-0221


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