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Attention Business/Financial Editors
First National reports record fourth quarter and year-end 2009 results
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE U.S./
Sustained growth in mortgages under administration, revenue, net income
and EBITDA
TORONTO, March 9, 2010 /CNW/ - First National Financial Income Fund (TSX:
FN.UN) (the "Fund") today announced its audited financial results for the
fourth quarter and year ended December 31, 2009. The Fund derives all of its
earnings from its 21% investment in First National Financial LP ("FNFLP") or
("First National"), which reports record profitability with continued growth
in mortgages under administration, revenue, net income and earnings before
income taxes, depreciation and amortization ("EBITDA").
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First National Financial LP's 2009 Summary:
- Annual distribution rate increased by 11% from $1.35 per unit to
$1.50 per unit
- Mortgages under administration up 18% year-over-year to $47.8 billion
- Mortgage originations declined by only 1% from 2008 to $11.8 billion
- Revenue was $341.7 million, up 16% year-over-year
- Net income up 51% year-over-year to $163.5 million
- EBITDA* up 51% year-over-year to $165.2 million
- Distributions declared to unitholders totalled $86.9 million
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"First National achieved record profitability in 2009, optimizing the use
of its diverse funding sources to drive sustained growth in mortgages under
administration, revenue and net income," said Stephen Smith, Chairman and
President. "During the year, demand for prime insured mortgages was strong and
wide spreads persisted, allowing the Fund to earn higher profits on its most
creditworthy products. These higher margins combined with stable operating
costs to produce record results in 2009."
"In a period of economic weakness, First National was able to increase
profitability and returns to unitholders, demonstrating the sustainability of
our business model and distribution policy," said Moray Tawse, Vice President,
Mortgage Investments. "Although we expect tighter mortgage spreads in both our
prime single-family and multi-unit residential business segments in 2010 as a
result of excess liquidity in capital markets, the Fund will profit from
higher income and cash flow derived from our growing portfolio of mortgages
under administration."
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Selected Financial Highlights for First National Financial LP
Three months ended Year ended
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
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($ 000's)
For the Period
Revenue 88,280 59,488 341,716 293,959
Net income 44,768 17,743 163,483 108,021
EBITDA(1) 45,247 18,201 165,232 109,675
At Period end
Total assets 1,067,690 460,336 1,067,232 737,065
Mortgages under
administration 47,793,045 40,596,013 47,793,045 40,596,013
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Note:
(1) This non-GAAP measure adjusts income before income taxes by adding
back expenses for amortization of capital assets.
2009 Annual and Fourth Quarter Results
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First National's mortgages under administration were $47.8 billion at
December 31, 2009, up 18% from $40.6 billion at December 31, 2008, and up 17%,
on an annualized basis, from $45.9 billion at September 30, 2009. The growth
was driven primarily by mortgage originations, which declined by only 1% to
$11.8 billion from $11.9 billion at year-end 2008.
Total revenue for the year ended December 31, 2009 increased 16% to
$341.7 million from $294.0 million at year-end 2008. The increase was
primarily due to higher amounts of mortgages originated for the Company's
securitization programs, which generated higher revenue on wider margins.
Net income for the year was $163.5 million, an increase of 51% from
$108.0 million in 2008. EBITDA for the year was $165.2 million, an increase of
51% from $109.7 million in 2008. The increases were due to the combination of
the higher margins associated with mortgage placement and securitization,
coupled with stable operating costs. In particular, profitability was
increased through higher margins on multi-unit residential mortgage
origination and single-family floating rate mortgages as demand for these high
credit quality assets increased in 2009 with an uncertain credit environment.
Mortgage originations for the year declined by only 1% from $11.9 billion
in 2008 to $11.8 billion for 2009. Excluding $225 million of Alt-A mortgage
originations in 2008, mortgage origination increased by 1% from 2008 to 2009.
The decrease reflects a 3% decline in single-family origination figures
between the periods and a 6% increase in the multi-unit residential and
commercial segment. Although single-family volumes are lower than the levels
experienced in 2008, these volumes are above those expected by management
going into the year.
For the fourth quarter, revenue was $88.3 million, up from $59.5 million
in the same quarter last year. Net income increased significantly in the
quarter to $44.8 million, up from $17.7 million in the fourth quarter of 2008.
The increase in net income was primarily the result of First National's
ability to earn higher margins on both single-family and multi-unit
residential origination due to the stabilization of capital markets. EBITDA
also saw substantial growth during the quarter, increasing to $45.2 million
from $18.2 million in the same period of 2008.
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Distributable Cash
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The Fund's distributable cash* for the year was $16.3 million or $1.28
per unit and distributions declared totalled $18.4 million or $1.45 per unit.
The Fund also declared a year-end special distribution of $0.05 per unit. The
payout ratio of 113% was up from 99% at year-end 2008. Despite strong
earnings, distributable cash was adversely affected as more working capital
was needed to support the Company's Alt-A program. In the fourth quarter of
2009, the payout ratio was 84%. The ratio of distributions to net income,
which the Company believes is as important as the payout ratio, was 53% for
the year.
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Statement of Distributable Cash
(in $000s, except For the quarter ended For the year ended
where noted)
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
First National Financial LP
Distributable Cash of First
National Financial LP(1) 30,252 18,795 76,907 81,818
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First National Financial
Income Fund
Weighted Average Share of
Distributable Cash from
First National Financial
LP(1) 6,339 3,975 16,266 16,991
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Distributable Cash per Unit
($/Unit)(1) 0.50 0.31 1.28 1.37
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Distributions Declared 5,390 5,168 18,388 16,844
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Distributions Declared per
Unit ($/Unit) 0.42 0.41 1.45 1.36
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Payout Ratio 84% 132% 113% 99%
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(1) Distributable cash and distributable cash per unit are non-GAAP
measures generally used by Canadian open-ended trusts as an indicator
of financial performance. They are considered key measures as they
demonstrate the cash available for distributions to unit holders. For
FNFLP this measure adjusts cash provided by (used in) operating
activities by accounting for changes between periods of mortgages
accumulated for sale and deducting capital expenditures.
Conference Call and Webcast
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Conference Call and Webcast March 10, 2010, 10 a.m. ET
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Participant Numbers 416-644-3414 or 1-800-814-4859
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The audio of the conference call will be webcast live and archived on
First National's website at www.firstnational.ca. Following management's
presentation, there will be a question and answer session for analysts and
institutional investors.
A taped rebroadcast will be available to listeners following the call
until 12 a.m. (ET) on March 17, 2010. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and input passcode 4216115 followed by the
number sign.
Complete consolidated financial statements for the Fund and FNFLP as well
as management's discussion and analysis are available at www.sedar.com and at
www.firstnational.ca.
About First National Financial Income Fund
First National Financial Income Fund (TSX: FN.UN) owns a 21% interest in
First National Financial LP, a Canadian-based originator, underwriter and
servicer of predominantly prime residential (single family and multi-unit) and
commercial mortgages. With nearly $48 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
growing mortgage broker distribution channel. For more information, please
visit www.firstnational.ca.
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* Non-GAAP Measures
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The selected financial information and discussion below also refers to
certain measures to assist in assessing financial performance. These "non-GAAP
measures" such as "EBITDA", "Distributable Cash", and "Distributable Cash per
Unit" 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.
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Forward-Looking Information
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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 "Risk 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 interest. This forward-looking information is as of the date of
this release, and is subject to change after such date. However, management
and the Fund 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.
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/For further information: Rob Inglis, Chief Financial Officer, First
National Financial LP, Tel: (416) 593-1100, Email:
rob.inglis@firstnational.ca; Steve Wallace, Vice President, BarnesMcInerney
Inc., Tel: (416) 367-5000, Email: swallace@barnesmcinerney.com/
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