First National Financial LP

First National Financial Corporation Reports First Quarter 2021 Results, Increases Common Share Dividend

Apr 27, 2021

Toronto, Ontario, April 27, 2021 – First National Financial Corporation (TSX: FN, TSX: FN.PR.A, TSX: FN.PR.B) today announced its financial results for the three months ended March 31, 2021. The Company derives virtually all of its earnings from its wholly owned subsidiary, First National Financial LP (“FNFLP” or “First National”), Canada’s largest non-bank mortgage originator and underwriter.

First Quarter Summary

  • Mortgages under administration (“MUA”) increased 5% to a record $119.6 billion compared to $113.5 billion at March 31, 2020
  • Revenue increased 23% to $336.5 million from $274.6 million a year ago
  • Net income increased to $52.6 million ($0.87 per share) from a loss of $2.3 million (loss of $0.05 per common share) a year ago
  • Pre-FMV Income(1) increased 21%  to $64.1 million from 

Common Share Dividend Increase 

Today, the Board of Directors also announced an increase in the Company’s regular monthly dividend. Effective with the payment on June 15, 2021, to shareholders of record on May 31, 2021, the common share dividend will increase to $2.35 per share on an annualized basis from its current annualized rate of $2.10 per share. 

Management Commentary

“First National’s first quarter results were ahead of our expectations reflecting market demand, our market share in the mortgage broker channel and excellent follow-through by our team in delivering responsive, technology-enabled service,” said Stephen Smith, Chairman and Chief Executive Officer. “Earnings improved as a result of growth in originations and higher mortgage spreads and, coupled with our positive outlook, provided support for the Board’s decision to increase the dividend for the 15th straight year since our 2006 IPO. We are very pleased with First National’s performance and proud of the hard work and commitment of our employees who continue to do great work for borrowers and mortgage brokers while working from home.” Total new mortgage origination increased 16% to $6.2 billion due to growth in new single family mortgage origination. “The first quarter typically features seasonally lower housing market activity but not this year as Canadians continued to arrange mortgage financings at a record pace,” said Moray Tawse, Executive Vice President. “First National was the beneficiary as our single-family mortgage originations reached $4.4 billion, 58% above last year. After coming off a record year last year, commercial originations and renewals were lower – at $1.8 billion and $283 million – but still represented a solid performance in a more competitive environment.”


Quarter ended


31, 2021

31, 2020

For the Period





  Income (loss) before income taxes



  Pre-FMV Income (1)



At Period end

  Total assets



  Mortgages under administration



 (1)  This non-IFRS measure adjusts income before income taxes by eliminating the impact of changes in fair value by adding back losses on the valuation of financial instruments (except those on mortgage investments) and deducting gains on the valuation of financial instruments (except those on mortgage investments). 

First Quarter Review

First quarter results generally reflected growth in mortgage originations which drove higher MUA – the source of most of the Company’s earnings – and increases in mortgage placement fees and mortgage servicing. 
First National’s MUA increased 5% to $119.6 billion from $113.5 billion at March 31, 2020 on new mortgage originations and renewal retention. MUA increased at an annualized rate of 3% during the first quarter. At March 31, 2021, single-family MUA was $83.6 billion, up 3% from $81.2 billion at March 31, 2020, while commercial MUA was $36.0 billion, up 11% from $32.3 billion a year ago. 

New single-family mortgage originations increased 58% to $4.4 billion from $2.8 billion a year ago. Management believes the increase was due to the Company’s strong mortgage broker and investor relationships and its MERLIN technology which supports efficient origination and underwriting – without the need for physical contact. Additionally, low mortgage rates have encouraged home purchasing across the country. Single-family mortgage renewals were $1.2 billion compared to $1.1 billion last year.

New commercial segment originations were $1.8 billion compared to $2.6 billion a year ago, 31% lower, reflecting more competitive market conditions. Commercial mortgage renewals totalled $283 million compared to $488 million a year ago. The Company believes many commercial borrowers have opted to refinance their mortgages mid-term to take advantage of low mortgage rates and increased property valuations. This reduced the amount of maturing loans and therefore renewal opportunities.

Of the $7.7 billion of new originations and renewals, $4.9 billion was placed with institutional investors and $2.5 billion was originated for First National’s own securitization programs.

2021 first quarter revenue increased 23% to $336.5 million from $274.6 million a year ago. Revenue performance included:

  • $61.5 million of placement fees, 33% or $15.3 million higher than a year ago reflecting a 26% increase in residential mortgage volume originated for institutional investors augmented by the impact on per-unit placement fees of a more favourable mix between residential and commercial volume

  • $50.0 million of mortgage servicing income, 37% or $13.4 million higher than a year ago primarily because of growth in the Company’s third-party underwriting business  

  • $39.9 million of net interest revenue earned on securitized mortgages, 13% or $4.6 million higher than a year ago due to 6% growth in the portfolio of mortgages pledged under securitization, growth in wider spread prime mortgages and an increase in the Excalibur program which continues to have lower credit loss ratios than expected

  • $13.8 million of mortgage investment income, 34% or $7.0 million lower than a year ago due primarily to the lower interest rate environment which reduced the company’s offered mortgage rates and resulted in lower interest earned while mortgages were accumulated for securitization and sale on the balance sheet

  • $4.4 million of gains on deferred placement fees, 5% or $0.2 million higher than a year ago reflecting wider mortgage spreads on multi-unit residential mortgages originated and sold to institutional investors and despite lower transaction volumes

The 23% year-over-year increase in total revenue was affected by changes in the fair market value of financial instruments related to interest rate movements in both comparative quarters.  Excluding these changes, revenue was 1% lower year over year at $329.0 million compared to $330.8 million in 2020.  

Income before income taxes increased to $71.5 million from a loss of $3.3 million a year ago, reflecting changing capital market conditions. Excluding gains and losses related to financial instruments, earnings before income taxes and gains and losses on financial instruments (“Pre-FMV Income”) for the first quarter of 2021 increased 21% to $64.1 million from $52.9 million in 2020. The increase was largely the result of steady growth in the securitization portfolio and higher origination in third-party underwriting which had a favourable impact on mortgage servicing fee revenue.

Net income increased to $52.6 million ($0.87 per share) from a loss of $2.3 million (loss of $0.05 per common share) a year ago. 


Total common share dividends paid or declared in the first quarter amounted to $31.5 million compared to $29.2 million a year ago reflecting an increase in the regular monthly dividend to an annualized rate of $2.10 per common share from $1.95 per common effective with the dividend paid in December 2020. 

The common share payout ratio in the first quarter was 61%. If gains and losses on financial instruments are excluded, the dividend payout ratio would have been 68% compared to 76% in the first quarter a year ago.

The Company also paid $0.7 million of dividends on its preferred shares in the first quarter compared to $0.8 million a year ago.

Subsequent to quarter end, (effective April 1, 2021) and in accordance with the terms of the original prospectus, the Company reset the annual dividend rate on its outstanding Class A Series 1 preference shares to 2.895% for a five-year term to March 31, 2026. 

Outstanding Securities

At March 31, 2021, and April 27, 2021, the Corporation had 59,967,429 common shares; 2,984,835 Class A preference shares, Series 1; 1,015,165 Class A preference shares, Series 2; 200,000 November 2024 senior unsecured notes; and 200,000 November 2025 senior unsecured notes outstanding.


With the results of the first quarter of 2021, management remains positive about the remainder of 2021. In the short term, the expectation for the next quarter includes: continued strong residential origination comparable to 2020, commercial segment success in growing origination, and employee productivity from the Company’s work-from-home strategy. During 2020, the value of First National’s business model was demonstrated. By designing systems that do not rely on face-to-face interactions, the Company’s business practices resonated with mortgage brokers and borrowers alike during the pandemic period. In 2021, the Company will adhere to this model and benefit from the record MUA generated in 2020. With the steady distribution of vaccines across the nation, the economic effects of COVID-19 should slowly diminish. Despite the length of this transition, First National is set up to execute its business plan. In 2021, the Company expects to enjoy the value of the goodwill with its broker partners that it has built over the last 30+ years and reinforced over the last 12 months. On the funding side, there continues to be strong demand from institutional investors as a result of the substantial amount of liquidity in the financial system. Securitization markets are robust and continue to provide consistent and reliable funding for the Company. 

While it is not early in the crisis, there is still significant uncertainty about its duration and the extent of repercussions. The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruption to businesses globally, resulting in an economic recession. Global equity markets have experienced significant volatility. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the long-term efficacy of the government and central bank interventions. It is still not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operating subsidiaries in future periods.
The Company is confident that its strong relationships with mortgage brokers and diverse funding sources will continue to set First National apart from its competition. The Company will continue to generate income and cash flow from its $34 billion portfolio of mortgages pledged under securitization and $83 billion servicing portfolio and focus on the value inherent in its significant single-family renewal book.

Conference Call and Webcast

April 28, 2021 10:00 am ET  

(647) 427-7450 or (888) 231-8191

A taped rebroadcast of the conference call will be available until May 5, 2021 at midnight ET. To access the rebroadcast, please dial (416) 849-0833 or (855) 859-2056 and enter passcode 4498034 followed by the number sign. The webcast is also archived at for three months.

Complete consolidated financial statements for the Company as well as management’s discussion and analysis are available at and at

About First National Financial Corporation

First National Financial Corporation (TSX: FN, TSX: FN.PR.A, TSX: FN.PR.B) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $119 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit 

1 Non-GAAP Measures

The Company uses IFRS as its accounting framework. IFRS are generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after January 1, 2011. The Company also refers to certain measures to assist in assessing financial performance. These “non-GAAP measures” such as “Pre-FMV EBITDA” and “After tax Pre-FMV Dividend Payout Ratio” should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of performance or as a measure of liquidity and cash flow. Non-GAAP measures do not have standard meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers.

Forward-Looking Information

Certain information included in this news release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will, "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, product development activities, projected costs and capital expenditures, financial results, risk management strategies, hedging activities, geographic expansion, licensing plans, taxes and other plans and objectives of or involving the Company. Particularly, information regarding growth objectives, any future increase in mortgages under administration, future use of securitization vehicles, industry trends and future revenues is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, interest rate changes and responses to such changes, the demand for institutionally placed and securitized mortgages, the status of the applicable regulatory regime and the use of mortgage brokers for single family residential mortgages. This forward-looking information should not be read as providing guarantees of future performance or results, and will not necessarily be an accurate indication of whether or not, or the times by which, those results will be achieved. While management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties listed under ‘‘Risks and Uncertainties Affecting the Business’’ in the MD&A, that could cause actual results to differ materially from what management currently expects. These factors include reliance on sources of funding, concentration of institutional investors, reliance on relationships with independent mortgage brokers and changes in the interest rate environment. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

For further information:

Robert Inglis
Chief Financial Officer
First National Financial Corporation
Tel: 416-593-1100

Ernie Stapleton
Fundamental Creative Inc.
Tel: 905-483-5331