Firm Capital Mortgage Investment Corporation Firm Capital Mortgage Investment Corporation is a non-bank lender providing residential and commercial real estate financing. Investor Presentation November 2019 DISCIPLINED INVESTING ● CAPITAL PRESERVATION
Highlights Since 1988 and since our IPO in 1999, Firm Capital Mortgage Investment Corporation has been a non-bank lender focused on short-term bridge real estate financing market. Investment Themes: • Preservation of Shareholders ’ Capital No loan losses • Strong Governance Policies Conservative underwriting philosophy • Performance Driven Compensation Payment on performing balances, not cash or non-performing loans • Growth coupled with strong balance sheet while minimizing risk • Stable Dividend Stable dividend since IPO + year end “top up” special dividend • Short term lending with experienced partners comprised of management and investors ➢ All loans syndicated to various parties ➢ “Pari -passu ” basis ➢ Right of first refusal on all loans 2 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Governance: Strong Board of Directors & Senior Management Independent Directors Management Directors • • Eli Dadouch * Stanley Goldfarb * • • Jonathan Mair * Anthony Heller • • Edward Gilbert * Larry Shulman * • • Victoria Granovski * Geoffrey Bledin * • Morris Fischtein Senior Management • Keith L. Ray * • Sandy Poklar • Joe Oliver • Boris Baril • Frank Newbould Significant Real Estate Experience Note: (*) Actively co-invests with FC MIC on mortgage transactions 3 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Aligned Management Interests Performance Based Compensation Substantial Personal Investment • • MIC Manager receives 75 bps on performing 25% pari-passu investment in all non- investments, not cash balances conventional mortgages • • Mortgage Banker receives 10 bps servicing fee on Management and directors are co-investors in performing investments most investments • No payment on work outs for any defaulted loans • Commitment fee income is shared • Corporation receives 75% of profits from mezzanine and equity investments after first earning a 10% preferred return No acquisition or disposition fees charged! 4 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Conservative Lending Approach • 70.5% conventional first mortgages • Experienced borrowers in proven markets • Conservative lending guidelines restricting investment exposure on loan size and related borrower groups Investment Portfolio Geographic Diversification Conventional Non-First Mortgages Quebec 8.6% 2.1% Western Related Canada Investments 3.9% 19.0% Other 2.9% Other Ontario 1.9% 91.1% Conventional First Mortgages 70.5% *(excluding Related Investments) 5 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Capital Stack (in $MM) Current Capital Stack Convertible Debentures (1) Q3/2019 Q3/2019 $170.0 $501MM Millions $500 Series J 5.50% $15 $25.0 Bank Indebtedness Millions $153.0 Due Jan/2026 $450 $136.0 Series I 5.40% (1) $25.0 $167 $400 Due Jun/2025 Convertible Debentures $119.0 $350 Series H 5.30% $26.5 $102.0 Due Aug/2024 $300 $6 Other Liabilities $85.0 $250 Series G 5.20% $22.5 Due Dec/2023 $68.0 $200 Equity Series F 5.50% $23.0 $313 Due Dec/2022 $150 $51.0 $100 Series E 5.30% $34.0 $25.0 Due May/2022 $50 $17.0 Series D 4.75% $20.0 Due Mar/2020 $- $- 1 Total: $167M 6 (1) At par value DISCIPLINED INVESTING • CAPITAL PRESERVATION
Rigid Operating Standards Investment Restrictions Independent Approval Risk Diversification • • • Maximum single first mortgage Independent director approval Co-investment by management restricted to 5% and 10% of capital, of every investment • Syndicated portfolio to depending on LTV (1) • $1M – $2M: at least one diversify risk • Maximum single non first mortgage • >$2M: no less than three restricted to 2.5% of capital (1) • Restrictions on the amount of non- first mortgage investments Credit Management Default Recovery Program Independent Reports • • • Internalized credit Mandatory enforcement within Appraisals, environmental management 15 days audits, structural audits • Reports directly to independent directors 7 Note: (1) Capital is based on total paid up Shareholder ’ s Equity and Convertible Debentures DISCIPLINED INVESTING • CAPITAL PRESERVATION
Q3/2019 Financial Highlights Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended Sept 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Mortgage Portfolio $467 $539 $550 $521 $535 (millions) (1) Basic Profit Per Share $0.273 $0.251 $0.246 $0.233 $0.265 Dividends Per Share $0.234 $0.234 $0.234 $0.284 $0.234 Return on Equity 9.82% 9.06% 8.97% $9.01% 9.69% Loan Losses None None None None None (1) Gross of impairment provision 8 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Q3/2019 Results of Operations Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended ($ in millions) Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Interest and Fees $12.23 $12.21 $11.86 $11.53 $12.39 Earned Interest and Operating $4.54 $5.16 $5.27 $5.43 $5.46 Expenses Profit $7.69 $7.05 $6.60 $6.10 $6.93 Dividends to $7.43 (1) $6.59 $6.57 $6.26 $6.11 Shareholders Impairment allowance $5.48 (2) $5.48 (2) $4.95 $4.95 $5.0 (1) Fourth quarter dividends include one time payout of accumulated excess earnings throughout the year (2) Impairment allowance of $5.48 million does not include allowance for credit losses of $3.2 million 9 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Annualized Return on Shareholder s’ Equity FC 9.82% 12% 10% 8% *Q3/2019 ROE Spread 6% 808 bps 4% Gov’t of Canada 1-yr. T-bill 1.74% 2% % 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10 10 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Stable Cash Dividends • Steady 7.8¢ dividend • In addition, spend “top up” dividend at year end 2015 2016 2017 2018 TOTAL : $0.991 TOTAL : $0.966 TOTAL : $1.006 TOTAL : $0.986 0.16 0.148 0.14 0.133 0.128 0.12 0.108 2019 YTD 0.1 $0.702 0.08 0.06 0.04 0.02 0 Jan. May. Sep. Jan. May. Sep. Jan. May. Sep. Jan. May. Sep. Jan. May. Sep. 11 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Increasing Mortgage Portfolio (in $MM) 204 Investments in Q3/2019 $562 $521 $467 $449 $403 $375 $375 $345 $340 $343 $311 $307 $291 $287 $285 $297 $262 $256 $254 $274 $236 $221 $213 $235 $226 $204 $210 $180 $205 $173 $169 $167 $167 $170 $147 $146 $140 $136 $150 $133 $96 $94 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD Mortgage Portfolio Repayments New Investments 12 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Deal Flow • Significant Origination Capability • 30 year track record of mortgage origination • The mortgage bank experience and strong partners provide steady deal flow with excellent risk mitigation • Co-investing with knowledgeable real estate partners Transaction Volume (in $MM): 2012 – 2019 $1,000 $1,000 Millions $793 $755 $800 $735 $731 $665 $600 $515 $440 $400 $200 $- 13 13 2012 2013 2014 2015 2016 2017 2018 2019 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Accessing the Capital Markets Millions Accessed the capital market fifteen times since October 2010 Convertibles Equity $23.1MM $25.0MM Convertibles fully redeemed at par Equity $25.0MM Offering Series J $13.20/share $26.5MM Convert 5.50% Series I $23.0MM Convert 5.40% Series H $22.5MM Convert Equity 5.30% $25.3MM Offering $14.10/share Series G $23.0MM Convert Total: Equity 5.20% $25.0MM Offering $360MM Series F $12.90/share $23.6MM Convert 5.50% Series E $20.0MM Convert 5.30% $20.5MM Equity Offering Series D $20.7MM $12.10/share $31.4MM Convert $25.7MM Series C Series A 4.75% Convert Convert Equity 5.25% 5.75% Offering Series B $13.45/share Convert 5.40% Wide Investment Dealer Distribution Network 14 DISCIPLINED INVESTING • CAPITAL PRESERVATION
Average Share Price & Trading Volume $14.50 Thousands 1200 $14.00 1000 $13.50 800 $13.00 600 $12.50 400 $12.00 200 0 $11.50 2013 2014 2015 2016 2017 2018 2019 Volume Traded Trading Price 15 15 DISCIPLINED INVESTING • CAPITAL PRESERVATION
An Attractive Investment A $100 FC investment in 1999 would be worth $795 today! $795 $399 $100 Since Oct. 15 th , 1999 till Sept. 30 th , 2019 S&P/TSX Composite Index Firm Capital Mortgage Investment Corp. 16 DISCIPLINED INVESTING • CAPITAL PRESERVATION
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