Atrium Mortgage Investment Q3 Earnings Call Highlights

Key Points

• Third-quarter earnings declined: Net income fell to CAD 10.6 million (CAD 0.22 per share) from CAD 11.9 million a year earlier, with a CAD 1.5 million credit-loss provision weighing on results.
• Portfolio and lending outlook: The mortgage portfolio rose 1% from the prior quarter to CAD 869.1 million. Atrium expects strong fourth-quarter originations and continues to target a CAD 900 million portfolio by year-end.
• Credit indicators improved, while the dividend held steady: Stage 2 and Stage 3 loans declined to 15.3% of the portfolio from 18% in the prior quarter, and the board maintained its monthly dividend at CAD 0.0775 per share.

Atrium Mortgage Investment TSE: AI reported lower third-quarter earnings as interest income declined and credit-loss provisions rose, though executives said the mortgage portfolio grew from the prior quarter and showed signs of improving credit quality.

Net income fell to CAD 10.6 million, or CAD 0.22 per basic share, from CAD 11.9 million, or CAD 0.25 per share, a year earlier. CFO Chris Anastasopoulos said the year-over-year decline primarily reflected a lower average mortgage portfolio balance and lower weighted average mortgage rates, partly offset by lower borrowing costs.

The quarter included a CAD 1.5 million provision for credit losses, compared with CAD 137,000 in the second quarter. CEO and founder Robert Goodall cited the higher provision as the primary reason for reduced third-quarter earnings.

Portfolio growth and lending outlook

Atrium’s mortgage portfolio ended September at CAD 869.1 million, up 1% from CAD 860.1 million at the end of June but down 5.2% from CAD 917.1 million at year-end 2025. Advances exceeded repayments during the third quarter, producing CAD 7.2 million in net principal advances.

Goodall said he expects strong loan originations in the fourth quarter and continues to anticipate a CAD 900 million portfolio by year-end. He forecast up to CAD 40 million of funded loans in British Columbia in the fourth quarter and more than CAD 80 million in new funded loans there for calendar 2026.

Atrium’s Alberta office funded its first CAD 10 million of loans in the third quarter. Goodall said the company is also working on an approximately CAD 35 million apartment-backed transaction in Alberta that could close in the fourth quarter or early in the first quarter of 2027.

The weighted average mortgage rate was 8.64% at September 30, down from 8.69% at June 30 and 8.98% at the end of 2025. Goodall said he believes the rate has stabilized, although the potential Alberta transaction could lower it because of its lower rate; he said higher fees would compensate on an overall return basis.

Credit provisions and portfolio mix

Stage 2 and Stage 3 loans combined fell to approximately CAD 133 million, or 15.3% of the portfolio, from CAD 155 million, or 18%, in the prior quarter. Stage 2 loans declined to CAD 72.4 million from CAD 93.9 million, while Stage 3 loans edged down to CAD 60.9 million from CAD 61.5 million.

Asked about the higher quarterly credit-loss provision, Goodall said he believed single-family mortgages had required higher provisions. Those loans are revalued as their one-year terms turn over, he said, adding that revaluations had been a drag over the past two quarters but appeared to be improving.

Atrium’s total allowance for credit losses rose to CAD 31 million, or 3.57% of the mortgage portfolio, from CAD 30.1 million at the end of June. At September 30, first mortgages represented 96.8% of the portfolio, and the average loan-to-value ratio was 63.2%, up from 62.5% in the second quarter.

All loans funded in the third quarter were commercial, apartment or single-family loans, Goodall said. Commercial loans accounted for 30.6% of the portfolio, while apartment and single-family mortgages represented 25.2%. He said Atrium has deliberately shifted toward income-producing commercial and apartment properties over the past three years because their recurring income provides an added level of safety.

Dividend and market conditions

The board kept Atrium’s regular monthly dividend for 2027 unchanged at CAD 0.0775 per share, equivalent to CAD 0.93 annually, and declared dividends at that rate for January, February and March. Goodall said year-to-date earnings were CAD 0.71 per share, compared with dividends of CAD 0.6975 per share.

At quarter-end, Atrium had CAD 231 million drawn on its CAD 380 million credit facility, and total debt was 36% of assets. The facility’s weighted average borrowing cost was 4.68% for the quarter, down from 5.14% a year earlier.

Goodall described Canadian residential housing markets as weak in most regions during the quarter, while saying commercial real estate had held up well. He said Atrium would continue to focus new lending on commercial real estate, apartments, single-family mortgages and inventory loans for recently completed residential developments.

About Atrium Mortgage Investment (TSE:AI)

Atrium is a non-bank provider of residential and commercial mortgages that lends in major urban centres in Canada where the stability and liquidity of real estate are high. Atrium's objectives are to provide its shareholders with stable and secure dividends and preserve shareholders' equity by lending within conservative risk parameters. Atrium is a Mortgage Investment Corporation ('MIC') as defined in the Canada Income Tax Act, so is not taxed on income provided that its taxable income is paid to its shareholders in the form of dividends within 90 days after December 31 each year.

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