News Column

Firm Capital Mortgage Investment Corporation Announces Q2/2014 Results and Announces Appointment of New Independent Director

August 7, 2014

TSX Symbol FC

TORONTO, Aug. 7, 2014 /CNW/ - Firm Capital Mortgage Investment Corporation (the "Corporation") (TSX FC) today released its financial statements for the three months and six months ended June 30, 2014 and is pleased to announce the appointment of a new independent director.

PROFIT & RETURN ON EQUITY

Profit for the second quarter ended June 30, 2014 increased by 6% to $4,800,625 as compared to $4,527,827 for the same period last year. Profit for the six months ended June 30, 2014 increased by 12% to $9,770,228 as compared to $8,722,292 for the same period last year.  Basic weighted average profit per share for the second quarter ended June 30, 2014 was $0.239, which is lower than the $0.257 per share reported for the second quarter ended June 30, 2013.

Profit for the quarter ended June 30, 2014 represented an annualized return on shareholders' equity (based on the month end average shareholders' equity) of 9.21% versus a previously reported return on shareholders' equity of 9.97% for the quarter ended June 30, 2013. This return on shareholders' equity represents 820 basis points per annum over the average Government of Canada one year treasury bill yield for the period being 1.01%, 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 three and six months ended June 30, 2014, the Corporation declared dividends totaling $4,700,202 and $9,399,219 respectively or $0.234 and $0.468 per Share versus $4,160,723 and $8,258,271 or $0.234 and $0.468 per share for the three and six months ended June 30, 2013. While the per share amount of dividends did not change quarter over quarter, the quantum of dividends paid is higher in 2014 as a result of the increase in the number of shares outstanding. The number of shares outstanding as June 30, 2014 was 20,095,452 as compared to 18,083,368 as at June 30, 2013.

INVESTMENT PORTFOLIO HIGHLIGHTS

Details on the Corporation's investment portfolio as at June 30, 2014 are as follows:

•Total gross investment portfolio of $344,892,561, which is a 2% increase over December 31, 2013. •Conventional first mortgages, being those first mortgages with loan to values less than 75%, comprise approximately 68% of the Corporation's total portfolio, and total conventional mortgages with loan to values under 75% comprise 77% of the Corporation's total portfolio. •Related investments total 16% of the portfolio. •Non-conventional mortgages total 5% of the portfolio. •Discounted debt investments total 1% of the portfolio. •Conventional non first mortgages total 10% of the portfolio. •Approximately 70% of the portfolio matures by June 30, 2015. This results in a continuously revolving portfolio, allowing management to assess market conditions. •The average face interest rate on the portfolio is 8.37% per annum. •Regionally, the portfolio is diversified approximately as follows: Ontario (67%), Quebec (12%), Alberta (9%), British Columbia (6%) and Other (6%). •Gross investment portfolio breakdown by loan size is as follows:











Amount

Number of

Investments

%

Total Amount

%



$0 - $2,500,000

111

68%

$ 103,788,345

30%



$2,500,001 - $5,000,000

33

20%

$ 120,969,753

35%



$5,000,001 - $7,500,000

16

10%

$   82,014,464

24%



$7,500,001 +

3

2%

$   38,119,999

11%





163

100%

$ 344,892,561

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 of $3,330,000 as at June 30, 2014 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 June 30, 2014, the Corporation has recorded as unearned income, banked non-refundable fee income of $603,053, 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.

APPOINTMENT OF INDEPENDENT DIRECTOR

The Corporation is also pleased to announce the appointment of Keith L. Ray as a new independent director of the Corporation.

Since 2007, Keith has been the Chief Executive Officer of Realvest Management, a privately-owned company with investments that include real estate and mortgages. Keith also currently sits on the boards of two TSX publicly-listed companies and acts as chair of the audit committees for both companies.

For 27 years, until his retirement in 2007, Keith was a partner at KPMG LLP and its predecessor firm.  While at KPMG, Keith helped oversee the first initial public offering of a REIT in Canada and was an audit partner to many public and private real estate companies. In addition, Keith was the partner in charge of the Corporation's audit.

Eli Dadouch, President & CEO of the Corporation, stated, "We are pleased to announce the appointment of Keith Ray as a member of the Board. With experience as a chartered accountant and involvement with many publicly listed companies, we believe that he will bring added experience to the Board."

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


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