Atrium Mortgage Invest ((TSE:AI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Atrium Mortgage Investment Corporation’s recent earnings call painted a picture of a company navigating both successes and challenges. The sentiment was largely positive, driven by strong financial performance and strategic advancements, notably in earnings per share and maintaining a robust balance sheet. However, the company faces hurdles such as declining average mortgage rates, increased Stage 2 and 3 loans, and a sluggish real estate market. Additionally, capital markets activities were hindered by issues with a previous auditor.
Increased Earnings Per Share
Atrium reported a notable increase in earnings per share (EPS), reaching $0.28 for the second quarter. This marks an improvement from $0.26 in the same quarter last year and $0.25 in the first quarter of this year, indicating a positive trajectory in profitability.
Strong Loan Advances
The company achieved significant loan advances, totaling $105 million in the second quarter and $224 million for the first half of 2025. This represents an increase of nearly $50 million compared to the same period last year, showcasing Atrium’s growth in lending activities.
Well-Capitalized Balance Sheet
Atrium maintained a well-capitalized balance sheet, with debt constituting 41.6% of total assets. The company has drawn $265 million on a $340 million credit facility, leaving ample capacity for future financial maneuvers.
Portfolio Quality and Strategy
The composition of Atrium’s portfolio has shifted, with commercial loans rising to 27% and single-family mortgages and apartments growing to 18%. These categories now represent over 45% of the total portfolio, up from 41% last year, reflecting a strategic focus on diversification.
Decrease in Average Mortgage Rate
The average mortgage rate declined to 9.3% from 9.56% last quarter. This decrease is attributed to high repayments of higher-yielding loans and the issuance of new loans at lower interest rates.
Increase in Stage 2 and Stage 3 Loans
There was an increase in Stage 2 and Stage 3 loans, rising from 10.6% to 14.8% of the portfolio. This shift is due to a change in policy and market conditions, indicating a more conservative approach to loan categorization.
Real Estate Market Downturn
The real estate market remains weak, with the Greater Toronto Area (GTA) experiencing a significant decline in new home sales, down 60% year-over-year in June and 82% below the 10-year average.
Auditor Issue Affecting Capital Markets Activity
A $30 million convertible debenture was terminated due to an ongoing audit by the regulator of Atrium’s previous auditor, impacting the company’s capital markets activities.
Forward-Looking Guidance
Atrium’s forward-looking guidance remains cautiously optimistic. The company reported a year-to-date EPS of $0.53, surpassing its fixed dividend, and a growing mortgage balance of $921 million. Despite a decrease in average mortgage rates and an increase in Stage 2 and 3 loans, Atrium maintains a strong balance sheet and plans to address the auditor issue by the end of Q3. The company is considering revisiting a convertible debenture offering, contingent on portfolio size and market conditions.
In summary, Atrium Mortgage Investment Corporation’s earnings call highlighted a company with strong financial performance and strategic progress, despite facing challenges in the real estate market and capital markets. The increase in earnings per share and robust loan advances underscore Atrium’s resilience and adaptability in a fluctuating market environment.