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1. Company Snapshot

1.a. Company Description

First National Financial Corporation, together with its subsidiaries, originates, underwrites, and services commercial and residential mortgages in Canada.The company operates in two segments, Residential and Commercial segments.It offers single-family residential, and multi-unit residential and commercial mortgages.


The company provides its services through mortgage broker distribution channel, as well as online.First National Financial Corporation was founded in 1988 and is headquartered in Toronto, Canada.

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1.b. Last Insights on FN

The recent performance of First National Financial Corporation has been driven by several positive factors. The company is expected to report Q2 2025 revenue of $233.43 million and earnings of $0.87 per share, according to consensus estimates. Additionally, First National Financial Corporation has announced its monthly dividend payment of $0.208334 per common share for the period July 1 to July 31, 2025, which will be payable on August 15, 2025, to shareholders of record at the close of business on July 31, 2025.

1.c. Company Highlights

2. First National Delivers Mixed Q1 Results Amid Mortgage Market Challenges

First National Financial Corporation reported a mixed bag in its first quarter earnings, with revenues increasing 2% year-over-year to $52.6 million, despite a 16% decline in pre-fair market value income. The net interest margin (NIM) compressed by 7 basis points, reflecting the impact of higher funding costs and the amortization of high-margin pandemic-era mortgages. Earnings per share (EPS) came in at $0.39, significantly below consensus estimates of $0.78, as profitability was weighed down by lower servicing income and tighter margins on mortgage placements. Despite these headwinds, the company maintained its focus on originations and renewals, which grew 34% and 18% year-over-year in the single-family and commercial segments, respectively.

Publication Date: May -01

📋 Highlights
  • Pre-fair market value income: was $52.6 million, down 16% year-over-year despite growth in originations and MUA.
  • Single-family funding: increased 34% year-over-year, reflecting strong commitment pipeline and market support.
  • Commercial mortgage originations: rose 18% in Q1, driven by insured multi-unit residential housing demand.
  • Mortgage Universe (MUA): grew 7% year-over-year, adding $10.3 billion, supported by higher production and retention.
  • Revenue growth: was modest at 2% year-over-year, impacted by NIM compression and deferred revenue from securitization.

Mortgage Market Trends and Operational Highlights

The company benefited from strong production volumes, driven by seven Bank of Canada rate cuts and government incentives such as the purchase price cap increase and the reintroduction of 30-year amortization for insured mortgages. Single-family commitments surged, positioning the company for continued growth in the second quarter. However, management noted that the housing market outlook has become more uncertain due to cross-border tariffs and recession risks, as highlighted by a downgrade in CREA’s forecast. Despite these macro challenges, First National’s originations pipeline remains robust, with no changes to its pricing or credit standards to artificially boost volumes. The company also emphasized the resilience of the multi-unit residential market, supported by demand for affordable rental housing, though originations may face headwinds from CMHC’s tighter underwriting standards.

Valuation Analysis

First National currently trades at a price-to-earnings (P/E) ratio of 10.96, slightly below its historical average, reflecting investor caution amid the uncertain macroeconomic backdrop. The price-to-book (P/B) ratio stands at 3.02, indicating a premium relative to its peers, though this is partly justified by its strong dividend yield of 8.0%, which remains attractive for income-focused investors. While the free cash flow yield is negative at -25.75%, the company’s ability to maintain its dividend payout alongside its growth initiatives suggests a balanced approach to capital allocation. With analysts estimating 10.3% revenue growth for the next year, the stock appears to price in a cautious recovery, though near-term risks tied to credit performance and NIM compression may linger.

3. NewsRoom

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First National Financial Corporation Reports Third Quarter 2025 Results

Oct -27

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First National Completes Plan of Arrangement

Oct -22

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S&P Dow Jones Indices Announces Changes to the S&P/TSX Canadian Dividend Aristocrats Index

Oct -17

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EARLY WARNING NEWS RELEASE FOR STEPHEN SMITH

Oct -17

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TSX Growth Companies With High Insider Ownership In October 2025

Oct -15

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FIRST NATIONAL FINANCIAL CORPORATION TO ISSUE $800 MILLION OF SENIOR NOTES

Oct -15

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First National Financial Says Received No Action Letter Under Competition Act For Plan of Arrangement

Oct -08

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FIRST NATIONAL RECEIVES NO-ACTION LETTER UNDER THE COMPETITION ACT FOR PLAN OF ARRANGEMENT

Oct -08

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.56%)

6. Segments

Residential

Expected Growth: 7%

Residential segment growth of 7% driven by low interest rates, increasing demand for housing, and government incentives for first-time homebuyers. Additionally, First National Financial Corporation's strong brand reputation, diversified mortgage offerings, and efficient operational processes contribute to its market share gain.

Commercial

Expected Growth: 9%

First National Financial Corporation's 9% commercial growth is driven by increasing demand for mortgage financing, strategic expansion into new markets, and a strong brand reputation. Additionally, the corporation's diversified product offerings, efficient operations, and effective risk management practices have contributed to its growth momentum.

7. Detailed Products

Mortgages

First National Financial Corporation offers a wide range of mortgage products to help individuals and families achieve their dream of homeownership.

Commercial Mortgages

The company provides commercial mortgage solutions to businesses and investors, helping them to acquire, refinance or renovate commercial properties.

Residential Mortgage Servicing

First National Financial Corporation offers residential mortgage servicing solutions, managing mortgage payments and providing customer support to borrowers.

Commercial Mortgage Servicing

The company provides commercial mortgage servicing solutions, managing loan payments and providing customer support to commercial borrowers.

Securitization

First National Financial Corporation offers securitization services, packaging mortgage loans into securities that can be sold to investors.

8. First National Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for First National Financial Corporation is medium due to the presence of alternative financial institutions and online lending platforms.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration of buyers in the mortgage lending market.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of mortgage lending services.

Threat Of New Entrants

The threat of new entrants is high due to the low barriers to entry in the mortgage lending market and the presence of fintech companies.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple players in the mortgage lending market, leading to intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 98.38%
Debt Cost 3.95%
Equity Weight 1.62%
Equity Cost 9.23%
WACC 4.03%
Leverage 6070.47%

11. Quality Control: First National Financial Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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MCAN Mortgage

A-Score: 7.7/10

Value: 6.2

Growth: 5.3

Quality: 7.4

Yield: 10.0

Momentum: 7.5

Volatility: 10.0

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First National

A-Score: 6.8/10

Value: 4.0

Growth: 5.0

Quality: 5.2

Yield: 9.0

Momentum: 8.0

Volatility: 9.7

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Firm Capital Mortgage

A-Score: 6.8/10

Value: 4.3

Growth: 4.0

Quality: 7.5

Yield: 9.0

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Volatility: 10.0

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Value: 5.8

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Quality: 5.8

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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Greystone Housing Impact Investors

A-Score: 6.3/10

Value: 7.0

Growth: 4.2

Quality: 6.4

Yield: 10.0

Momentum: 1.5

Volatility: 8.7

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UWM Holdings

A-Score: 4.5/10

Value: 2.2

Growth: 3.0

Quality: 4.2

Yield: 10.0

Momentum: 3.5

Volatility: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

47.98$

Current Price

47.98$

Potential

-0.00%

Expected Cash-Flows