First National (TSX:FN) is a Toronto-based company that originates, underwrites, and services residential and commercial mortgages in Canada through its subsidiaries. Shares of First National were pushed into the red for 2021 this week. The company released its third quarter 2021 results on October 26.
Mortgages under administration (MUA) rose 4% year-over-year to $122 billion. Meanwhile, revenue fell 5% to $353 million. It suffered from mortgage spread compression in the year-over-year period. First National reported net income of $47.6 million or $0.78 per common share – down from $72.5 million or $1.20 per common share in the third quarter of 2020.
This company has been bolstered by a very strong Canadian housing market. However, sales started to weaken by the spring of 2021. Regardless, MUA still posted a 10% increase in new originations. In September, Canadian home sales posted a sales increase for the first time since the early spring. This is a good sign going forward for housing-linked stocks like First National.
Total mortgage renewals came in at $2.3 billion, which was flat in the year-over-year period. Total assets in the first nine months of 2021 came in at $40.7 billion – up from $38.3 billion year-to-date in 2020. Meanwhile, revenue came in at $1.05 billion in the year-to-date period – up from $992 million for the first nine months of the previous year.
Shares of First National possess a favourable price-to-earnings ratio of 10. It offers a quarterly dividend of $0.196 per share, which represents a strong 5.7% yield.
