Disclosure: Atrium Mortgage Investment Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
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Price and Volume (1-year)
* Atrium Mortgage Investment Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise stated.
Loan advances declined 62% YoY, marking the softest Q1 in more than a decade, while repayments fell 47% YoY, driving a 2% QoQ decline in net mortgages outstanding to $871M
Portfolio Update
First mortgages and LTVs remained relatively stable QoQ
AI’s lending rates continued to ease following BoC rate cuts; since peaking in 2023, rates have declined 2.50 pp vs a 2.75 pp decline in the benchmark rate, suggesting AI’s rates are less elastic
Credit facility borrowing costs also declined QoQ, from 5.08% to 4.57%, partially offsetting spread compression
Mortgages by Property Type
Source: Company Data / FRC
Exposure to property types remained unchanged, with continued focus on revenue-generating commercial properties, and built single-family units, relatively low risk segments vs development projects
Mortgages by Region
Continued to increase exposure to Ontario, weighing on geographic diversification
However, AI plans to expand further into Alberta and BC in coming quarters, including opening a new Alberta office to support grow
Stage three (impaired) mortgages rose 10% QoQ to $95M on one additional default
Source: FRC / Company
AI expects two loans ($41M) to be repaid or refinanced by May-end, which should reduce stage three exposure from 11% to 6% of total mortgages vs 9% at year-end 2025, and a historic average of 3%
*Red (green) indicates an increase (decrease) in risk level.
Source: FRC
Overall, we believe the portfolio’s risk profile has edged higher, primarily driven by higher impaired mortgages
Financials
Revenue declined 10% YoY on lower rates, partially offset by higher mortgage receivables, and came in 6% below our estimate
*The calculations in the above table are approximate as we used the average of beginning and end of period mortgages outstanding.
Net income increased 1% YoY due to lower loan loss provisions, but was 4% below our estimate
Annual regular dividend held steady at $0.93/share
* Our calculations are slightly different from the company’s calculations.
Source: Company / FRC
Debt-to-capital decreased slightly, driven by softer lending activity
FRC Forecasts & Valuation
As Q1 revenue and EPS came in below expectations, we are lowering our full-year estimates
Our estimate for the 2026 dividend varies between $0.91 and $1.04/share, as loan loss provisions and lending rates vary
Source: FRC
Source: S&P Capital IQ / FRC
Sector multiples are up 6% YoY, and 2% since our March 2026 report
On average, MICs and banks are expected to report 6% revenue growth this year vs 4% in 2025, primarily driven by lower rates
Our fair value estimate decreased from $13.12 to $13.01/share, driven by a lower EPS forecast, partially offset by higher sector multiples
We reiterate our BUY rating, and adjust our fair value estimate from $13.12 to $13.01/share, implying a potential return of 19% (including dividends) in the next 12 months. Soft Q1 lending activity led to lower revenue and declining mortgages, though lower loan loss provisions helped support earnings. Looking ahead, a stable interest rate environment, and easing credit conditions, should support improved mortgage origination, and lower default risk. We believe a gradual housing recovery should support MIC stocks this year.
Risks
We believe the company is exposed to the following risks:
Maintaining our risk rating of 3 (Average)
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