Atrium Mortgage Investment Corporation Announces Solid Third Quarter Results with Record Mortgage Portfolio Balance

Rhea-AI Summary

Atrium Mortgage Investment Corporation (TSX: AI) released its financial results for the three and nine months ended September 30, 2023. The company reported a record year to date basic earnings per share of $0.91, up from $0.77 in the prior year. The mortgage portfolio reached a record high of $875.6 million at quarter end, with 95.5% in first mortgages and an average loan-to-value of 61.0%. Atrium increased its loan loss provisions to 203 basis points to recognize the continuing weakness in real estate markets. Despite challenging market conditions, the company remains focused on maintaining a resilient portfolio and expects the market to remain challenging over the coming quarters.

Positive

• Record year to date basic earnings per share of $0.91, up from $0.77 in the prior year
• High quality mortgage portfolio of $875.6 million, with 95.5% in first mortgages and an average loan-to-value of 61.0%
• Proactively increased allowance for mortgage losses to 203 basis points to recognize the continuing weakness in real estate markets
• Management team experienced at navigating through market cycles
• Extended credit facility to July 2025 and currently have over $100 million available on the line of credit
• Increased loan loss provisions to protect future earnings
• Expect the market to remain challenging over the coming quarters

Negative

• Quarterly basic earnings per share of $0.25, down from $0.27 in the prior year
• Net income for the third quarter of 2023 decreased by 7.1% from the comparative period
• Assets decreased from the end of 2022
• Recovery of (provision for) mortgage losses was lower in the third quarter of 2023 compared to the comparative period

Toronto, Ontario--(Newsfile Corp. - November 14, 2023) - Atrium Mortgage Investment Corporation (TSX: AI) (TSX: AI.DB.C) (TSX: AI.DB.D) (TSX: AI.DB.E) (TSX: AI.DB.F) (TSX: AI.DB.G) today released its financial results for the three and nine months ended September 30, 2023.

Highlights

• Record year to date basic earnings per share of $0.91, up from $0.77 in the prior year

• Quarterly basic earnings per share of $0.25, down from $0.27 in the prior year

• High quality mortgage portfolio of $875.6 million

  • 95.5% of portfolio in first mortgages

  • 96.0% of portfolio is less than 75% loan to value

  • average loan-to-value is 61.0%

  • proactively increased allowance for mortgage losses

"Atrium produced another solid quarter for shareholders despite very challenging market conditions. Our nine month earnings of $0.91 per share is 18.2% ahead of last year's record result. In fact, our nine month EPS is close to what we would normally earn in a full year. In Q3, our mortgage portfolio reached a record high $875.6 million at quarter end. We also successfully completed the sale of our 90-unit investment property in Regina for a slight profit.

While elevated interest rates, persistent inflation, and a slowing economy are definitely adding pressure on real estate markets, our management team is experienced at navigating through market cycles. Our first priority remains maintaining a resilient portfolio that can withstand the most adverse scenarios. Our portfolio loan to value of 61.0% is conservative, 95.5% of our mortgages are in first position, and our mortgages remain concentrated in large urban markets. We are also focused on having ample liquidity at all times. We extended our credit facility to July 2025 during the quarter and currently have over $100 million available on our line of credit. Lastly, we increased our loan loss provisions to 203 basis points to recognize the continuing weakness in real estate markets and this will protect future earnings. Looking ahead, we expect the market to remain challenging over the coming quarters but we also believe that we are well positioned to continue to deliver solid returns for shareholders," said Rob Goodall, CEO of Atrium.

Conference call

Interested parties are invited to participate in a conference call with management on Wednesday, November 15, 2023 at 4:00 p.m. ET to discuss the results. To participate or listen to the conference call live, please call 1 (888) 886-7786 or (416) 764-8658, conference ID 97012059. For a replay of the conference call (available until November 28, 2023) please call 1 (877) 674-6060, conference ID 012059 #.

Results of operations

For the three months ended September 30, 2023, Atrium reported assets of $864.9 million at quarter end, down from $874.8 million at the end of 2022. Revenues were $25.4 million, an increase of 23.2% from the third quarter of the prior year. Net income for the third quarter of 2023 was $11.0 million, a decrease of 7.1% from the comparative period. Atrium's allowance for mortgage losses at September 30, 2023 totaled $17.8 million, or 2.03% of the gross mortgage portfolio, up from $10.7 million or 1.24% as at December 31, 2022, to reflect increased credit risk in the real estate markets.

For the nine months ended September 30, 2023, revenues were $72.7 million, an increase of 31.6% from the nine months ended September 30, 2022. Net income for the nine months ended September 30, 2023 was $39.6 million, an increase of 19.7% from the prior year period.

Basic and diluted earnings per common share were $0.25 for the three months ended September 30, 2023, compared with $0.27 basic and diluted earnings per common share in the comparable period. Basic and diluted earnings per common share were $0.91 and $0.88 respectively for the nine months ended September 30, 2023, compared with $0.77 and $0.76 basic and diluted earnings per common share, respectively, for the nine months ended September 30, 2022.

Mortgages receivable as at September 30, 2023 was $863.8 million, up from $860.4 million as at December 31, 2022. During the nine months ended September 30, 2023, $243.1 million of mortgage principal was advanced and $238.2 million was repaid. The weighted average interest rate on the mortgage portfolio at September 30, 2023 was 11.49%, compared to 10.77% at December 31, 2022.

Financial summary

Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, 000s, except per share amounts)

		Three months ended						Nine months ended
		September 30						September 30
		2023			2022			2023			2022
Revenue	$	25,412		$	20,634		$	72,667		$	55,212
Mortgage servicing and management fees		(2,153	)		(2,056	)		(6,259	)		(6,395	)
Other expenses		(241	)		(292	)		(1,017	)		(828	)
Impairment of investment property held for sale		−			−			−			(1,832	)
Recovery of (provision for) mortgage losses		(5,222	)		(1,114	)		(6,707	)		316
Income before financing costs		17,796			17,172			58,684			46,473
Financing costs		(6,804	)		(5,346	)		(19,051	)		(13,374	)
Net income and comprehensive income	$	10,992		$	11,826		$	39,633		$	33,099
Basic earnings per share	$	0.25		$	0.27		$	0.91		$	0.77
Diluted earnings per share	$	0.25		$	0.27		$	0.88		$	0.76
Dividends declared	$	9,854		$	9,706		$	29,461		$	29,029
Mortgages receivable, end of period	$	863,760		$	850,920		$	863,760		$	850,920
Total assets, end of period	$	864,894		$	871,302		$	864,894		$	871,302
Shareholders' equity, end of period	$	491,776		$	480,462		$	491,776		$	480,462
Book value per share, end of period	$	11.21		$	11.12		$	11.21		$	11.12

 

Analysis of mortgage portfolio

	As at September 30, 2023								As at December 31, 2022
				Outstanding			% of					Outstanding			% of
Property Type	Number			amount			Portfolio		Number			amount			Portfolio
(outstanding amounts in 000s)
High-rise residential	21		$	316,689			36.1%		20		$	300,989			34.7%
Mid-rise residential	25			199,477			22.8%		30			225,281			26.0%
Low-rise residential	14			148,475			17.0%		14			128,244			14.8%
House and apartment	144			112,973			12.9%		158			108,124			12.5%
Condominium corporation	11			1,883			0.2%		12			2,189			0.3%
Residential portfolio	215			779,497			89.0%		234			764,827			88.3%
Commercial	21			96,057			11.0%		26			101,435			11.7%
Mortgage portfolio	236		$	875,554			100.0%		260		$	866,262			100.0%

 

	As at September 30, 2023
Location of underlying property	Number of mortgages			Outstanding amount			Percentage outstanding			Weighted average loan to value			Weighted average interest rate
(outstanding amounts in 000s)
Greater Toronto Area	153		$	632,981			72.3%			62.5%			11.74%
Non-GTA Ontario	54			39,811			4.5%			64.3%			9.69%
British Columbia	28			195,312			22.3%			55.2%			10.95%
Alberta	1			7,450			0.9%			71.0%			14.00%
	236		$	875,554			100.0%			61.0%			11.49%

 

	As at December 31, 2022
	Number of mortgages			Outstanding amount			Percentage outstanding			Weighted average loan to value			Weighted average interest rate
Location of underlying property
(outstanding amounts in 000s)
Greater Toronto Area	169		$	598,207			69.0%			59.7%			11.04%
Non-GTA Ontario	61			38,950			4.5%			68.7%			8.25%
British Columbia	28			220,727			25.5%			56.4%			10.41%
Alberta	2			8,378			1.0%			71.2%			12.55%
	260		$	866,262			100.0%			59.4%			10.77%

 

For further information on the financial results, and further analysis of the company's mortgage portfolio, please refer to Atrium's interim consolidated financial statements and its management's discussion and analysis for the three and nine month period ended September 30, 2023, available on SEDAR+ at www.sedarplus.ca, and on the company's website at www.atriummic.com.

About Atrium

Canada's Premier Non-Bank Lender™
Atrium is a non-bank provider of residential and commercial mortgages that lends in major urban centres in Canada where the stability and liquidity of real estate are high. Atrium's objectives are to provide its shareholders with stable and secure dividends and preserve shareholders' equity by lending within conservative risk parameters. Atrium is a Mortgage Investment Corporation (MIC) as defined in the Canada Income Tax Act, so is not taxed on income provided that its taxable income is paid to its shareholders in the form of dividends within 90 days after December 31 each year. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same position as if the mortgage investments made by the company had been made directly by the shareholder. For further information about Atrium, please refer to regulatory filings available at www.sedarplus.ca or investor information on Atrium's website at www.atriummic.com.

For additional information, please contact
Robert G. Goodall John Ahmad
President and Chief Executive Officer Chief Financial Officer

(416) 867-1053
info@atriummic.com
www.atriummic.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/187385

FAQ

What are Atrium Mortgage Investment Corporation's financial results for the three and nine months ended September 30, 2023?

Atrium reported a record year to date basic earnings per share of $0.91, up from $0.77 in the prior year. The mortgage portfolio reached a record high of $875.6 million at quarter end, with 95.5% in first mortgages and an average loan-to-value of 61.0%.

What is the percentage of Atrium's portfolio in first mortgages?

95.5% of Atrium's portfolio is in first mortgages.

What is the company's approach to navigating through market cycles?

Atrium's management team is experienced at navigating through market cycles and is focused on maintaining a resilient portfolio.

What is the expected market outlook for Atrium?

Atrium expects the market to remain challenging over the coming quarters but believes it is well positioned to continue to deliver solid returns for shareholders.