Firm Capital Mortgage Investment Corporation · TSX:FC
Firm Capital Mortgage Investment — Q3 2017 Earnings Presentation
18 slides from Firm Capital Mortgage Investment's earnings presentation, November 2017
Slide 1: Q3 2017 Investor Presentation
Firm Capital Mortgage Investment Corporation Firm Capital Mortgage Investment Corporation is a non-bank lender providing residential and commercial real estate financing. Q3 2017 Investor Presentation November, 2017 DISCIPLINED INVESTING ● CAPITAL PRESERVATION
Slide 2: Highlights
Highlights The Mortgage Banker, Firm Capital Corporation, since 1988 and since our IPO in 1999, Firm Capital Mortgage Investment Corporation has been a non-bank lender focused on short-term bridge real estate financing market. Investment Themes: • Preservation of Shareholders’ Capital • Strong Gover
Slide 3: Governance: Strong Board of Directors
Governance: Strong Board of Directors Independent Directors Management Directors • Geoffrey Bledin (1) • Eli Dadouch (1) • Morris Fischtein • Edward Gilbert (1) • Stanley Goldfarb (1) • Jonathan Mair (1) • Anthony Heller • Hon. Frank Newbould • Victoria Granovski • Hon. Joe Oliver, P.C. • Keith L. R
Slide 4: Aligned Management Interests
Aligned Management Interests • Performance based compensation - MIC Manager receives 75 bps on performing investments, not cash balances - Mortgage Banker receives 10 bps servicing fee on performing investments - No payment on work outs for any defaulted loans - Commitment fee income is shared - Cor
Slide 5: Conservative Lending Approach
Conservative Lending Approach • 72% conventional first mortgages • Experienced borrowers in proven markets • Conservative lending guidelines restricting investment exposure on loan size and related borrower groups Investment Portfolio Geographic Diversification Conventional Non- Alberta First Mortga
Slide 6: Rigid Operating Standards
Rigid Operating Standards • Maximum single first mortgage restricted to 5% and 10% of capital, depending on LTV (1) • Maximum single non first mortgage restricted to 2.5% of capital (1) • Restrictions on the amount of non-first mortgage investments • Independent director approval of every investment
Slide 7: Financial Highlights - 2017 Q2
Financial Highlights - 2017 Q2 Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Mortgage Portfolio $534 $484 $460 $444 $429 (millions)(1) Basic Profit Per Share $0.241 $0.238 $0.311(2) $0.239 $0.241 Dividends Per S
Slide 8: Annualized Return on Shareholders' Equity
Annualized Return on Shareholders’ Equity 12% FC 8.69% 10% 8% 6% Q3-2017 ROE Spread 729 bps 4% Gov’t of Canada 1-yr. T-bill 1.40% 2% % 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3- 2017 DISCIPLINED INVESTING • CAPITAL PRESERVATION 8
Slide 9: Results of Operations – 2017
Results of Operations – 2017 Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended ($ in millions) Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Interest and Fees $10.9 $9.9 $11.7 $9.3 $8.9 Earned Interest and Operating $5.0 $3.9 $4.7 $3.9 $3.5 Expenses Profit $5.9
Slide 10: Stable Cash Dividends
Stable Cash Dividends 2014 2015 2016 DECLARED $ per share TOTAL : $0.970 TOTAL : $0.991 TOTAL : $0.966 YTD 2017 0.16 $0.858 0.14 $0.133 0.12 $0.112 $0.108 0.10 0.08 0.06 0.04 0.02 0.00 Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul Sep Nov 10
Slide 11: Mortgage Portfolio Investments in Q3 2017
Mortgage Portfolio 265 Investments in Q3 2017 539 $500M 449 403 $400M 340 343 345 297 307 311 291 $300M 274 285 256 254 235 236 226 210 205 213 204 $200M 173 170 180 184 169 167 147 146 150 153 140 136 133 96 94 $100M $0M 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Mortgage Portf
Slide 12: Loan Loss Provision
Loan Loss Provision $5,312M $4,460M $4,230M $3,180 $3,360M $3,170M $2,980M $2,980M $2,700M $2,400M $1,725M $1,425M $1,095M $1,115M 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3, 2017 Prudent Loan Loss Provisions DISCIPLINED INVESTING • CAPITAL PRESERVATION 12
Slide 13: Deal Flow
Deal Flow • Significant Origination Capability - Mortgage Banker (FCC) 27 year track record - 2012 transaction volume - $515 million - 2013 transaction volume - $665 million - 2014 transaction volume - $755 million - 2015 transaction volume - $793 million - 2016 transaction volume - $735 million - 2
Slide 14: Capital Markets
Capital Markets • Accessed the capital market nine times since August 2011 • August 2011 • March 2017 • $25.7 MM Series B Convert 5.40% • $23.0 MM Common Share Equity • April 2012 • June 2017 • $20.7 MM Common Share Equity • $26.5 MM Series H Convert 5.30% • $20.5 MM Series C Convert 5.25% • March 2
Slide 15: Average Share Price & Trading Volume
Average Share Price & Trading Volume 1,400 Thousands Volume Traded Price $14 1,200 $12 1,000 $10 800 $8 600 $6 400 $4 200 $2 0 $0 DISCIPLINED INVESTING • CAPITAL PRESERVATION 15
Slide 16: 2017 Outlook
2017 Outlook • Anticipate to continue to meet and exceed stated objectives of generating a return on equity of 400 basis points over average 1 year Government of Canada treasury bill yields • Position mortgage investment portfolio towards higher concentration in conventional first mortgages and rela
Slide 17: Highlights
Highlights • Diversified investment portfolio that produces a stable stream of dividends • Preservation of shareholders’ equity • Focused on large liquid markets • Specialized in short term bridge financings with clear exit strategies • Focused on managing the investment portfolio as opposed to grow
Slide 18: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this presentation, and other statements concerning Firm Capital Mortgage Investment Corporation’s (“FCMIC” or the “C
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