First National Financial Corporation Reports First Quarter 2026 Financial Results

TORONTO, May 21, 2026 /CNW/ - First National Financial Corporation (the "Company" or "FNFC") today announced its financial results for the three months ended March 31, 2026.

First Quarter 2026 Financial results

In the first quarter of 2026, the Company earned net income of $2.8 million. The quarter's results were impacted by expenses related to the "go-private" transaction (the "transaction") which closed on October 22, 2025. These expenses included the amortization of fair value adjustments related to tangible assets, the amortization of intangible assets and advisory, legal and other costs associated with the transaction. A consequence of the transaction was to adjust some net tangible assets to fair value as well as to establish new intangible assets, both of which resulted because the purchase consideration of the transaction exceeded the net book value of common shareholders' equity at the time of the acquisition. The increased carrying value of tangible assets and the new intangible assets are being amortized over their expected useful lives. In the first quarter of 2026, the combined amortization for these assets was approximately $40.0 million which reduced the Company's earnings. Another impact of the acquisition was the incurrence of advisory, structuring and other expenses related to the acquisition. These expenses totaled about $2.2 million which were expensed in the first quarter of 2026.

The Company also presents Pre-FMV Income⁽¹⁾ as a key performance indicator. This non-IFRS measure adjusts the Company's earnings by excluding gains and losses related to the fair value of financial instruments and, commencing in 2025, adjusts for the amortization of tangible and intangible assets, as well as acquisition costs related to the transaction. For the first quarter of 2026, Pre-FMV Income⁽¹⁾ decreased by 16% to $44.2 million from $52.6 million in the comparative 2025 quarter. The change was mainly attributable to higher net interest expenses. Although interest expense was higher by about $5.6 million, this increase was moderated by a lower interest rate environment in 2026. Lower interest rates also affected mortgage investment income which revenue decreased by about $9.6 million, such that net interest expenses increased by approximately $15.2 million. This unfavorable variance was primarily the result of increased leverage added pursuant to the transaction which increased interest on debt capital by about $12.3 million.

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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 (except those on mortgage investments) and adjusting for the amortization of increased tangible assets and new intangible assets, and acquisition expenses pursuant to the go private transaction. See Key Performance Indicators section in this MD&A.

Detailed Operating Results

For more information on the Company's operating results, please refer to the Company's Management's Discussion & Analysis as posted on SEDAR+ and available at www.sedarplus.com. This Press Release, as well as the Company's first quarter unaudited condensed consolidated interim Financial Statements and Management's Discussion & Analysis are also posted on the Investor section of the Company's website, www.firstnational.ca. Investors are encouraged to review all of these materials.

About First National Financial Corporation

First National Financial Corporation is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With more than $168 billion in mortgages under administration, First National is one of Canada's largest non-bank mortgage originators and underwriters and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit www.firstnational.ca.

SOURCE First National Financial Corporation

For further information: Robert Inglis, Chief Financial Officer, First National Financial Corporation, Tel: [phone], Email: [email protected]