FIRM CAPITAL

MORTGAGE INVESTMENT CORPORATION

CAPITAL PRESERVATION • DISCIPLINED INVESTING

REPORT TO

SHAREHOLDERS

FIRST QUARTER

MARCH 31, 2024

FIRM CAPITAL

MORTGAGE INVESTMENT CORPORATION

CAPITAL PRESERVATION • DISCIPLINED INVESTING

MD&A

MANAGEMENT

DISCUSSION

AND ANALYSIS

FIRST QUARTER

MARCH 31, 2024

MANAGEMENT'S DISCUSSION AND ANALYSIS

OUR BUSINESS

Firm Capital Mortgage Investment Corporation (the "Corporation") is a non-bank lender, investing predominantly in short- term residential and commercial real estate mortgage loans and real estate related debt investments. The Corporation operates as a mortgage investment corporation under the Income Tax Act (Canada). Mortgage investment corporations are able to have no income tax payable provided that they satisfy the requirements in subsection 130.1(6) of the Income Tax Act (Canada). The Corporation's primary investment objective is the preservation of shareholders' equity, while providing shareholders with a stable stream of dividends from the Corporation's investments. The Corporation achieves its investment objectives by pursuing a strategy of investing in loans in select niche real estate markets that are under- serviced by larger financial institutions.

The Corporation's more specific objective is to hold an investment portfolio that:

  1. is widely diversified across many investments;
  2. is concentrated in first mortgages;
  3. reduces exposure as a result of participation in various loan syndicates; and
  4. is primarily short-term in nature.

Firm Capital Corporation (the "Mortgage Banker") is the Corporation's mortgage banker and acts as the Corporation's loan originator, underwriter, servicer, and syndicator. The Corporation's affairs are administered by FC Treasury Management Inc. (the "Corporation Manager").

The Corporation has in place a Dividend Reinvestment Plan ("DRIP") and a Share Purchase Plan (collectively, with the DRIP, the "Plans") that are available to its shareholders. The Plans allow participants to have their monthly cash dividends reinvested in additional common shares of the Corporation ("Shares") and grant participants the right to purchase additional Shares. Shareholders who wish to enroll or who would like further information about the Plans should contact Investor Relations at (416) 635-0221.

Additional information on the Corporation, its Plans, and its investment portfolio is available on the Corporation's web site at www.firmcapital.com. Additional information about the Corporation, including its Annual Information Form ("AIF"), can be found on the SEDAR+ website at www.sedarplus.ca.

RECENT DEVELOPMENTS AND OUTLOOK

The Corporation's investment portfolio (the "Investment Portfolio") for three months ended March 31, 2024, continued to revolve during the three months ended March 31, 2024, in which new fundings and discharges of investments were $47.7 million and $32.6 million respectively (three months ended March 31, 2023 - $41.6 million and $50.7 million). The Corporation increased its allowance for impairment and fair value loss in the first quarter of 2024 by $2.5 million to a total of $25.2 million as at March 31, 2024, while generating earnings per share of $0.248 during the quarter. For the three months ended March 31, 2024, the Investment Portfolio consisted of 87% of conventional first mortgages of which 65% will mature in 2024. The Corporation continues to participate in new investments on a disciplined basis with conservative underwriting on real estate in large urban centers.

During the balance of 2024, the Corporation expects to continue to revolve the Investment Portfolio selectively, with an investment policy of holding a hard line on acceptable exposure levels, borrower quality and warranted interest rate pricing. There are no assurances on achievable portfolio size as the primary focus is on security. The Mortgage Banker continues to reject a significant number of potential investments that do not meet our investment criteria and risk tolerance.

BASIS OF PRESENTATION

The Corporation has adopted International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, as its basis of financial reporting. The Corporation's functional and reporting currency is the Canadian dollar.

The following Management's Discussion and Analysis ("MD&A") is dated as of May 7, 2024 and should be read in conjunction with the unaudited interim consolidated financial statements of the Corporation and the notes thereto as at, and for the three months ended March 31, 2024, and 2023, as well as the Corporation's Management's Discussion and Analysis, including the section on "Risks and Uncertainties", and each of our quarterly reports for 2023.

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 1

MANAGEMENT'S DISCUSSION AND ANALYSIS

HIGHLIGHTS

NET INCOME

For the three months ended March 31, 2024, net income decreased by 1.6% to $8,569,784 as compared to $8,711,896 for the same period in 2023.

EARNINGS PER SHARE

Basic weighted average earnings per share for the three months ended March 31, 2024 was $0.248 (2023 - $0.253).

Diluted weighted average earnings per share for the three months ended March 31, 2024 was $0.247 (2023 - $0.242)

REVENUES

Revenues for the three months ended March 31, 2024 decreased by 14.4% to $16,286,016 as compared to $19,015,889 reported for the same period in 2023. The decrease is primarily a result of lower interest income due to a smaller average portfolio size (on average, $38 million lower in the first quarter of 2024 than in the first quarter of 2023) and a lower weighted average portfolio interest rate, over the comparable period in 2023 (for the three months ended March 31, 2024 the weighted average interest rate was 10.89% as compared to a weighted average interest rate of 11.15% during the three months ended March 31, 2023).

INVESTMENT PORTFOLIO

The Corporation's Investment Portfolio increased by $15.1 million to $613,187,958 as at March 31, 2024, in comparison to $598,110,536 as at December 31, 2023 (in each case, gross of impairment allowance, fair value adjustment, and unamortized fees). The allowance for impairment and fair value adjustment as of March 31, 2024 was $25,200,000 (December 31, 2023 allowance for impairment and fair value adjustment - $22,700,000), comprising (i) $11,433,500 (December 31, 2023 - $10,653,000) representing the total amount of management's estimate of the shortfall between the investment balances and the estimated recoverable amount from the security under the specific loans, (ii) $11,749,100 (December 31, 2023 - $10,380,300) representing the total amount of management's estimate of fair value adjustment on an investment stated at fair value through profit or loss ("FVTPL"), and (iii) a collective allowance balance of $2,017,400 (December 31, 2023 - $1,666,700). The unamortized fees as of March 31, 2024 were $914,649 (December 31, 2023 - $943,901).

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 2

MANAGEMENT'S DISCUSSION AND ANALYSIS

INVESTMENT PORTFOLIO

The Corporation's Investment Portfolio was $587,064,481 as at March 31, 2024 (net of the allowance for impairment of $13,450,900, fair value loss adjustment of $11,749,100, unamortized fees of $914,649 and marketable securities of $42,139) and was $574,454,741 (net of the allowance for impairment of $12,319,700, fair value loss adjustment of $10,380,300, unamortized fees of $943,901 and marketable securities of $39,072 as at December 31, 2023). On March 31, 2024, the total Investment Portfolio comprised of 246 investments (243 as at December 31, 2023). The average gross investment size was approximately $2.5 million, with 15 investments individually exceeding $7.5 million.

March 31, 2024

December 31, 2023

Total Amount

% of

(before

% of

%

Mortgage Amount

Number

(before provision)

Portfolio

Number

provision)

Portfolio

Change

$0 - $2,500,000

174

$

174,549,159

28.4%

174

$

175,897,085

27.7%

(0.8%)

$2,500,001

- $5,000,000

41

140,213,290

22.9%

39

135,258,957

23.7%

3.7%

$5,000,001

- $7,500,000

16

96,868,917

15.8%

16

97,433,745

21.5%

(0.6%)

$7,500,001

+

15

201,505,626

32.9%

14

189,469,782

27.1%

6.4%

Total Investments

246

$

613,136,991

100%

243

$

598,059,570

100%

2.5%

Add: Marketable securities

42,139

39,072

Less: Impairment allowance

(13,450,900)

(12,319,700)

Less: Fair value adjustment

(11,749,100)

(10,380,300)

Less: Unamortized fees

(914,649)

(943,901)

Investment Portfolio

$

587,064,481

$

574,454,741

2.2%

Unadvanced committed funds under the existing Investment Portfolio amounted to $148 million as at March 31, 2024 (December 31, 2023 - $155 million).

The allocation of the Investment Portfolio between the five main investment categories (as well as the weighted average interest rate) is as follows:

March 31, 2024

December 31, 2023

W.A Interest

Outstanding

% of

W.A Interest

Outstanding

% of

%

Investment Categories

Rate

amount

Portfolio

Rate

amount

Portfolio

Change

Conventional First Mortgages

10.77%

$

532,019,877

86.7%

10.88%

$

523,562,080

87.5%

1.6%

Conventional Non-First Mortgages

11.62%

44,478,602

7.3%

11.84%

39,550,432

6.6%

12.5%

Related Debt Investments

10.55%

20,355,598

3.3%

10.12%

18,851,599

3.2%

8.0%

Non-Conventional Mortgages

14.37%

9,613,707

1.6%

14.37%

9,614,348

1.6%

(0.0%)

Debtor In Possession Loans

12.00%

6,669,208

1.1%

12.00%

6,481,110

1.1%

2.9%

Total Investments

10.89%

$

613,136,991

100%

10.99%

$

598,059,570

100%

2.5%

Add: Marketable securities

42,139

39,072

Less: Impairment allowance

(13,450,900)

(12,319,700)

Less: Fair value adjustment

(11,749,100)

(10,380,300)

Less: Unamortized fees

(914,649)

(943,901)

Investment Portfolio

$

587,064,481

$

574,454,741

2.2%

The related debt investments category is a basket of investments that are all participating in debt investments to a variety of third-party borrowers. Such debt investments are not secured by mortgage charges, and instead have other forms of security or recourse.

A debtor in possession loan ("DIP Loan") - is a loan obtained by an insolvent debtor while that debtor is restructuring its business under the Companies' Creditors Arrangement Act (Canada). A DIP Loan has "super-priority" security on the assets of the debtor company awarded by the court.

The $15.1 million increase in the Investment Portfolio (before the allowance for impairment, fair value adjustments and unamortized fees) was mainly due to an increase in the amount of the conventional first mortgages and conventional non- first mortgages. During the first quarter of 2024, new investment funding was $47.7 million (2023 - $41.6 million), while repayments during the period were $32.6 million (2023 - 50.7 million), resulting in an increase in the Investment Portfolio size.

Conventional first mortgages increased by 1.6% and represented 86.7% of the Investment Portfolio as at March 31, 2024 (87.5% as at December 31, 2023). Conventional non-first mortgages increased by 12.5% and represented 7.3% of the Investment Portfolio at March 31, 2024 (6.6% as at December 31, 2023). Related debt investments increased by 8.0% and represented 3.3% of the Investment Portfolio as at March 31, 2024 (3.2% as at December 31, 2023). DIP Loan increased by 2.9% and represented 1.1% of the Investment Portfolio as at March 31, 2024 (1.1% as at December 31,

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 3

MANAGEMENT'S DISCUSSION AND ANALYSIS

2023). Non-conventional mortgages represented 1.6% of the Investment Portfolio as at March 31, 2024 (1.6% as at December 31, 2023).

The weighted average face interest rate on the Corporation's Investment Portfolio was 10.89% per annum as at March 31, 2024, compared to 10.99% per annum as at December 31, 2023.

The allowance for impairment and fair value loss adjustment was $25,200,000 as at March 31, 2024 (December 31, 2023, allowance for impairment and fair value loss adjustment - $22,700,000), comprised of (i) $11,433,500 (December 31, 2023 - $10,653,000) representing the total amount of management's estimate of the shortfall between the investment balances and the estimated recoverable amount from the security under the specific loans, (ii) $11,749,100 (December 31, 2023 - $10,830,300) representing the total amount of management's estimate of fair value adjustment on an investment and (iii) a collective allowance balance of $2,017,400 (December 31, 2023 - $1,666,700).

The allocation of the Investment Portfolio between its 10 different loan categories is as follows:

March 31, 2024

December 31, 2023

Total Amount

Total Amount

% of

%

Property Type

(before provision)

% of Portfolio

(before provision)

Portfolio

Change

Construction Mortgages

78

$

162,425,408

26.5%

72

$

142,640,836

17.7%

13.9%

Land & Housing Sites

36

151,784,265

24.8%

36

151,442,649

31.0%

0.2%

Single Family Dwelling and Condo unit(s)

77

141,655,287

23.1%

82

151,209,871

20.8%

(6.3%)

Retail

10

51,995,412

8.5%

10

51,382,177

7.6%

1.2%

Multi Family Residential Mortgages

9

39,831,024

6.5%

9

38,034,552

3.6%

4.7%

Related Debt Investments

9

20,355,598

3.3%

8

18,851,599

9.1%

8.0%

Land Servicing & Serviced Lots

7

14,195,990

2.3%

8

15,695,990

2.6%

(9.6%)

Industrial

5

11,693,431

1.9%

5

11,656,431

2.8%

0.3%

Mixed Use & Other

7

12,447,500

2.0%

6

12,347,500

3.5%

0.8%

Office & Office Condos (owner occupied)

8

6,753,076

1.1%

7

4,797,964

1.3%

40.7%

246

$

613,136,991

100%

243

$

598,059,570

100%

2.5%

The Corporation continues to focus its lending into core markets that can be monitored closely during evolving economic conditions, with a strong focus in Ontario. The Mortgage Banker does not service or underwrite mortgages on hotels, hospitality properties or long-term care facilities and, as such, the Corporation does not have any investment exposure to these asset types.

As at March 31, 2024, the value of the Investment Portfolio that is secured by properties outside of Ontario was 12.1%, compared to 13.2% as at December 31, 2023.

March 31, 2024

December 31, 2023

Geographic Segment

Number

Total Amount

% of Portfolio

Number

Total Amount

% of

%

Greater Toronto Area

152

$

336,135,424

56.7%

155

$

327,580,879

56.6%

2.6%

Non-GTA Ontario

62

185,237,880

31.2%

57

175,206,939

30.2%

5.7%

Quebec

11

33,008,118

5.6%

13

41,309,698

7.1%

(20.1%)

Western Canada

8

19,165,629

3.2%

7

17,253,389

3.0%

11.1%

United States

3

18,206,324

3.1%

3

17,857,066

3.1%

2.0%

Nova Scotia

1

1,028,018

0.2%

0

-

0.0%

-

Mortgage Investment Portfolio

237

$

592,781,393

100%

235

$

579,207,971

100%

2.3%

Related Debt Investments

9

20,355,598

8

18,851,599

8.0%

246

$

613,136,991

243

$

598,059,570

2.5%

*The Related Debt Investments at March 31, 2024 includes $2,045,000 investments at amortized cost and $18,310,598 investments at FVTPL and then adjusted for a fair value decrease of $11,749,100.

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 4

MANAGEMENT'S DISCUSSION AND ANALYSIS

The allocation of the Investment Portfolio between the underlying security types is as follows:

March 31, 2024

December 31, 2023

Underlying Security Type

Number

Total Amount

% of

Total Amount

% of

%

(before provision)

Portfolio

Number

(before provision)

Portfolio

Change

Residential

205

$

484,766,902

79.0%

204

$

472,680,304

78.9%

2.6%

Commercial

35

108,014,491

17.6%

31

106,527,667

17.8%

1.4%

Related Debt Investments

9

20,355,598

3.3%

6

18,851,599

3.3%

8.0%

246

$

613,136,991

100%

243

$

598,059,570

100%

2.5%

The residential category includes mortgages on single family dwellings, residential condominiums, residential land, residential construction, and multifamily residential.

The commercial category includes mortgages on retail, industrial, retail or commercial land, offices, and DIP loans.

The Corporation's strategy is to mitigate loan loss risk by focusing on those areas of mortgage lending that have historically withstood market corrections and retained their underlying real estate asset value while limiting its exposure to those real estate asset classes that do not.

The weighted average loan to value ratio on conventional mortgages (being the combined conventional first and conventional non-first mortgages) is under 60% based on the appraisals obtained at the time of funding each mortgage loan.

Included in conventional first mortgages are two United States ("US") dollar denominated investments (at amortized cost) of $14,606,324 (US$10,779,575) (December 31, 2023 - two US dollar denominated investments of $14,257,066 (US$10,779,575)).

Included in related debt investments, classified at FVTPL, are two US dollar denominated investments totaling $11,749,234 (US $8,671,021), (December 31, 2023 - two US dollar denominated investments totaling $10,421,233 (US$7,879,354)). These investments are a participation by the Corporation in limited partnerships that have provided equity to real estate entities in the US.

For the three months ended March 31, 2024, income recorded on the US investments (at amortized cost and FVTPL) was $410,857 (US $302,514), (2023 - $458,642 (US $341,123)).

Related debt investments (classified as FVTPL) as at March 31, 2024 also included five Canadian investments (December 31, 2023 - five Canadian investments) totaling $6,561,366 (December 31, 2023 - $6,540,366).

As at March 31, 2024, the Investment Portfolio included six investments totaling $53,709,591 (December 31, 2023 - six investments totaling $53,709,591) for which a specific allowance of $11,433,500 (December 31, 2023 - $10,653,000) was recorded by the Corporation.

As at March 31, 2024, the Investment Portfolio included two investments totaling $11,749,233 (December 31, 2023 - two investments $10,421,234) for which a fair value adjustment of $11,749,100 (December 31, 2023 - $10,380,300) was recorded by the Corporation.

As at March 31, 2024, excluding investments for which there are allowances or fair value adjustments recorded against them by the Corporation, the Investment Portfolio had four investments totaling $9,509,432 (December 31, 2023 - one investment with a balance totaling $5,203,609) with contractual interest arrears greater than 60 days past due amounting to $656,401 (December 31, 2023 - $617,675).

The Investment Portfolio as at March 31, 2024 - included nineteen investments totaling $66,479,809 (December 31, 2023 - fifteen investments totaling $56,461,478) with maturity dates that are past due and for which no extensions or renewals were in place. Three of these investments was paid out after March 31, 2024 for an amount of $6,733,692 (December 31, 2023 - one investment was paid out in the amount of $1,863,750). Two of these investments totaling $11,810,023 (December 31, 2023 - two investments totaling $10,572,193) have allowances recorded against them included in the Corporation's allowance for impairment. The remaining fourteen investments with maturity dates that are past due and for which no extensions or renewals were in place amount to $54,669,786 (December 31, 2023 - twelve investments totaling $44,025,536) and do not require a specific allowance.

As at March 31, 2024, the Investment Portfolio continued to be heavily concentrated in short-term investments, with approximately 65% maturing on or before December 31, 2024. The short-term nature of the portfolio provides the

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 5

MANAGEMENT'S DISCUSSION AND ANALYSIS

Corporation with the ability to continually revolve the portfolio and adapt to changes in the real estate market. Renewals are offered to borrowers when deemed appropriate. Of the 246 investments, 72% were underwritten (as part of a renewal process or for new fundings) between 2024 and 2023, while only 28% were underwritten in or prior to 2022.

The contractual maturity dates of the Investment Portfolio are as follows:

March 31, 2024

Total Amount

No.

(before allowance and Fair

% of Portfolio

market adjustment)

2024

162

$

399,742,328

65.2%

2025

79

203,575,025

33.2%

2026

5

9,819,638

1.6%

Total gross investments

246

$

613,136,991

100%

A significant number of the Corporation's investments are shared with other syndicate partners, including several members of the Board of Directors and senior management of the Mortgage Banker and/or officers and directors of the Corporation. The Corporation ranks equally with other members of the syndicate as to receipt of principal, interest, and fees. As at March 31, 2024, 220 of the Corporation's 246 investments (investment amount of $498,586,959) are shared with other participants, and 26 of which (with a total investment amount of $114,550,033) the Corporation is a participant for less than 50% of the loan amount.

Certain members of our Board of Directors and senior management and their related entities co-invested approximately $35 million with the Corporation alongside its Investment Portfolio as at March 31, 2024.

The Mortgage Banker services the entire investment in which the Corporation is a participant, on behalf of all participants and except for the case of an investment with a first priority syndicate participant (i.e., loans payable), the Corporation ranks pari-passu with other members of the syndicate as to the receipt of principal, interest, and fees. As at March 31, 2024 and 2023, there were no mortgages with first priority participants.

As at March 31, 2024, the Corporation had unamortized commitment fees of $914,649 (December 31, 2023 - $943,901) which are netted against the Investment Portfolio. The Corporation's policy is to recognize commitment fees using the effective interest method over the contractual terms of the mortgages.

RESULTS OF OPERATIONS

REVENUES

For the three months ended March 31, 2024, revenues decreased by 14.4% to $16,286,016 compared to $19,015,888 for the three months ended March 31, 2023.

Revenues for the three months ended March 31, 2024 and 2023 are broken down as follows:

Three Months Ended

March 31, 2024

March 31, 2023

% Change

Interest

$

15,689,426

96.3%

$

18,262,159

96.0%

(14.1%)

Commitment & Renewal Fees

529,802

3.3%

701,838

3.7%

(24.5%)

Other Income

66,788

0.4%

51,892

0.3%

28.7%

$

16,286,016

100%

$

19,015,889

100.0%

(14.4%)

For the three months ended March 31, 2024, interest income was $15,689,426, a decrease of 14.1% over the $18,262,159 reported for the comparable period in 2023. The decrease is mainly a result of a decrease in the average Investment Portfolio size and the weighted average interest rate of the Investment Portfolio over the comparable period in 2023.

For the three months ended March 31, 2024, commitment and renewal fees were $529,802, a decrease of 24.5% from $701,838 reported for the comparable period in 2023. For the three months March 31, 2024, other income was $66,788 (2023 - $51,892 respectively).

CORPORATION MANAGER INTEREST ALLOCATION

During the three months ending March 31, 2024, the Corporation Manager received $1,120,372 (2023 - $1,496,289), through a joint venture interest arrangement with the Corporation. The decrease resulted mainly from the smaller average portfolio size in the first quarter of 2024 as compared to 2023.

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 6

MANAGEMENT'S DISCUSSION AND ANALYSIS

INTEREST EXPENSE

For the three months ended March 31, 2024, interest expense decreased by 14.1% to $3,435,047 as compared to $4,000,343 for the three months ended March 31, 2023. The decrease in interest expense is mainly due to the lower utilization of the Corporation's credit facility and having fewer debentures outstanding during the first quarter of 2024 relative to 2023.

Interest expense is broken down as follows:

Three Months Ended

March 31, 2024

March 31, 2023

% Change

Bank Interest Expense

$

779,520

22.7%

$

1,014,957

25.4%

(23.2%)

Debenture Interest Expense

2,655,527

77.3%

2,985,386

74.6%

(11.0%)

$

3,435,047

100%

$

4,000,343

100.0%

(14.1%)

GENERAL AND ADMINISTRATIVE (G&A) EXPENSES

For the three months ended March 31, 2024, G&A expenses were $361,759 (2023 - $321,426). The increase in G&A expenses is mainly the result of additional accounting and legal fees along with higher listing fees.

INCENTIVE OPTION PLAN

The following is the status of the stock options issued under the Corporation's stock option plan:

March 31, 2024

December 31, 2023

Weighted

Weighted

average

average

Number of

exercise

Amount3

Number of

exercise

Amount3

options

price

options

price

Outstanding, beginning of period

3,245,000

$

11.69

$

2,535,489

3,427,500

$

11.69

$

2,453,505

Options granted/amortization amount

-

-

20,552

-

-

82,439

Cancelled

-

-

-

(182,500)

12.13

-

Outstanding, end of period

3,245,000

11.69

$

2,556,041

3,245,000

$

11.67

$

2,535,944

Number of options exercisable

2,725,000

$

11.75

-

2,725,000

$

11.75

1The amount outstanding corresponds to the stock-based compensation associated with the issued stock options.

The following options were issued and outstanding as at March 31, 2024:

Number of options

Expiry date

outstanding

Exercise price

Number of options exercisable

August 14, 2030

1,515,000

11.70

1,345,000

December 6, 2031

100,000

13.97

100,000

July 6, 2032

1,630,000

11.62

1,280,000

Total

3,245,000

$11.75

2,725,000

The total number of stock options outstanding as at March 31, 2024 is 3,245,000 (December 31, 2023 - 3,245,00), of which 2,725,000 stock options are vested and exercisable (December 31, 2023 - 2,725,000).

FAIR VALUE ADJUSTMENT ON INVESTMENT PORTFOLIO AND ALLOWANCE FOR IMPAIRMENT ON INVESTMENT PORTFOLIO AND INTEREST RECEIVABLE

The Fair Value Adjustment on the Corporation's Investment Portfolio as at March 31, 2024 was $11,749,100 (2023 - $10,380,300). The provision for impairment on Investment Portfolio and interest receivable for the three months ended March 31, 2024 was $1,409,701 (2023 - provision $4,464,504). The sum of the fair value adjustment and provision for impairment for the three months ended March 31, 2024, was an expense of $2,778,501 (2023 - $4,464,504). As disclosed in our unaudited interim condensed consolidated financial statements for the three months ended March 31, 2024, income is gross of the interest receivable impairment allowance for the first quarter of 2024 of $695,501. The remaining fair value and loan impairment expense is related to an increase in the impairment allowance and fair value adjustment of $2,083,000.

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 7

MANAGEMENT'S DISCUSSION AND ANALYSIS

NET INCOME AND COMPREHENSIVE INCOME

Net income and comprehensive income for the three months ended March 31, 2024, was $8,569,784 (2023 - $8,711,896), which represents a decrease of 1.6% over the comparable prior year quarter. Income for the three months ended March 31, 2024 represented return on total shareholders' equity (based on the month end average total shareholders' equity in the quarter) of 8.55%. This return on total shareholders' equity represents 380 basis points per annum over the average one-year Government of Canada Treasury bill yield of 4.75%. The above return on total shareholders' equity is a non-IFRS financial measure and does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. This non-IFRS measure provides useful information to the Corporation's shareholders as it provides a measure of return generated on the Corporation's equity base.

EARNINGS PER SHARE

Basic weighted average earnings per share for the three months ended March 31, 2024 was $0.248 (2023 - $0.253). Diluted weighted average earnings per share for the three months ended March 31, 2024 was $0.247 (2023 - $0.242).

QUARTERLY FINANCIAL INFORMATION

Mar. 31

Dec. 31

Sep. 30

Jun. 30

Mar. 31

Dec. 31

Sep. 30

Jun. 30

Mar. 31

Dec. 31

($ in millions except per unit amounts)

2024

2023

2023

2023

2023

2022

2022

2022

2022

2021

Operating revenue

$

16.29

$

18.11

$

17.24

$

17.52

$

19.02

$

17.53

$

16.37

$

13.90

$

12.59

$

13.05

Interest expense

3.44

3.88

3.57

4.10

4.00

4.10

3.75

3.64

3.68

3.24

Corporation manager spread interest allocation

1.12

1.16

1.07

1.12

1.50

1.12

1.21

1.17

1.16

1.21

General & administrative expenses

0.36

0.66

0.43

0.46

0.32

0.46

0.53

0.33

0.27

0.38

Share based compensation

0.02

0.02

0.02

0.02

0.02

0.02

1.11

0.01

0.01

0.07

Fair value adjustment on investment portfolio

1.37

(0.08)

3.76

2.00

-

2.10

2.39

-

-

0.80

Impairment loss/(recovery) on investment portfolio

1.41

4.14

(0.20)

1.30

4.47

1.30

(0.80)

0.51

(0.39)

(0.39)

Income

$

8.57

$

8.33

$

8.59

$

8.52

$

8.71

$

8.43

$

8.18

$

8.24

$

7.86

$

7.74

Earnings per share

Basic

$0.248

$0.242

$0.249

$0.245

$0.253

$0.245

$0.237

$0.239

$0.232

$0.234

Diluted

$0.247

$0.241

$0.247

$0.243

$0.242

$0.243

$0.234

$0.237

$0.230

$0.223

Dividends per share

$0.234

$0.288

$0.234

$0.234

$0.234

$0.248

$0.234

$0.234

$0.234

$0.246

DIVIDENDS

For the three months ended March 31, 2024, the Corporation declared dividends on the Shares totaling $8,070,602 or $0.234 per Share, versus $8,069,798 or $0.234 per Share for the three months ended March 31, 2023. The number of Shares outstanding at March 31, 2024 was 34,489,955, compared to 34,486,550 at March 31, 2023.

March 31, 2024

March 31, 2023

Change

Cash Flow from Operating Activities

$

10,403,901

$

11,993,724

(13%)

(net of cash interest paid)

Profit

8,569,784

8,711,896

(2%)

Declared Dividends

8,070,602

8,069,798

0%

Excess Cash Flow from Operating Activities Over Declared Dividends

2,333,299

3,923,926

Declared Dividends in Excess of Profit

499,182

642,098

Firm Capital Mortgage Investment Corporation • 2024 • First Quarter

Page 8

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Firm Capital Mortgage Investment Corporation published this content on 10 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 May 2024 17:10:06 UTC.