Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atrium Mortgage Investment Corp (AMIVF, Financial) reported a strong EPS of $0.26 for Q3, consistent with Q2 and above the prior year's $0.25.
- The company declared a 3.3% increase in its monthly dividend, raising the annualized rate to $0.93 per common share.
- Atrium's mortgage portfolio reached a record $926.3 million, indicating successful execution of its strategic plan.
- The company completed an oversubscribed bought deal share offering, raising $28.8 million to repay its credit facility, enhancing liquidity.
- Atrium's percentage of first mortgages increased to a record 97.3%, reflecting a focus on lower-risk sectors.
Negative Points
- Year-to-date earnings per share of $0.79 are down from the prior year, despite being the second best in the company's history.
- The mortgage portfolio rate decreased from 10.93% to 10.52% due to rate cuts by the Bank of Canada and a focus on lower-risk loans.
- Provision for credit risk increased by $3.5 million, reflecting ongoing challenges in the mortgage book.
- Real estate market activity remained slow, with principal advances and repayments below historical levels.
- The economic outlook in Canada is uninspiring, with GDP growth below expectations and a high unemployment rate.
Q & A Highlights
Q: The increase in focus on single-family and commercial mortgages. Is this a long-term trend or a temporary decision to align with market conditions?
A: Robert Goodall, CEO: It's a more long-term plan, but it also is a lower-risk type of sector, in fact, each are -- so we're particularly focused on it now. Single-family is a lower risk, lower return sector, single-family mortgages. So there's a limit to how large we'll get on it, but we have quite a bit of room where we are now.
Q: Which segment within single-family do you focus on? Is it the higher-end detached homes, condos, or?
A: Robert Goodall, CEO: It's a mix of all of them. We're more concerned with liquidity, so we tend to focus on the major geographic areas. So we focus on the GTA, London, Ottawa, Cambridge, Kitchener, Waterloo, Hamilton. We don't tend to go to the smaller towns or rural areas because there's less liquidity, but our average loan would be -- I think it's about $600,000 to $700,000 or $600,000 to $750,000. So we're not going for jumbo loans or anything like that.
Q: In terms of Stage 2 and 3 loans, they totaled $130 million at the end of Q3. Are you open to giving some guidance on what this figure will be by the end of 2024?
A: Robert Goodall, CEO: No. But what we can tell you is at least $62 million has come off already since -- and when I say come off and repaid since the end of Q3.
Q: Can you quantify the repayments you're expecting in Q4? Is that the $62 million you just referred to? Or do you have visibility on repayments beyond that?
A: Robert Goodall, CEO: We've tracked it to the extent we can for the entire portfolio. And it's as much as $150 million. So it's a big number. It was a small number in Q3, and it's a big number in Q4.
Q: With the regulatory changes around longer amortization periods for new purchases, what are you hearing from your developer clients? Is this material?
A: Robert Goodall, CEO: Yes, it's still the latter. It's still a weak market, particularly in the GTA. It was actually compressed with the number of launches in Vancouver, 46 launches and 38% or 39% resales by the end of the quarter on those launches. Those are pretty decent numbers. And the GTA, it's a lot slower, but what's interesting is construction costs are coming down in the GTA and not coming down in Vancouver, and that's a reflection of the weaker market in the GTA.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
