The Canadian mortgage originator First National Financial Corp. (FNFC) released financial results for 1Q11 and said it increased its mortgage originations by 26% to $2.4 billion from 2010 first quarter results.
The firm also securitized a considerable portion of its multi-residential mortgage origination in two issuances under the Canada Mortgage Bonds program in the quarter: $135 million in the February 10-year issue and $140 million in the March five-year issue.
It's also the first time the FNFC reported under the International Financial Reporting Standards.
"We see 2011 as a year of opportunity," said Moray Tawse, vice president in mortgage investments. "With the impact of IFRS and more onerous capital rules for financial institutions, First National sees reduced competition from smaller industry participants. By increasing the use of securitization strategies to fund our mortgages, we believe First National can take advantage of market conditions and continue to grow and profit."
FNFC said that it believes that its decision to securitize directly will be more profitable than a comparable placement transaction. However, from an accounting perspective, these profits will be earned over a longer term.
The company said that mortgages under administration were up 11.7% year-over-year to $54.4 billion and that revenue was $108.8 million, up 32% year-over-year.
The 32% growth reflects the increased interest revenue on securitized mortgages, specifically floating-rate mortgages indexed to the prime rate, which increased from 2.25% in the 2010 quarter to 3.00% for the 2011 first quarter.