Atrium Mortgage Investment Corporation
Adapting to Lower Rates Amid Market Softness
Published: Aug 11, 2025
Author: FRC Analysts
*Atrium Mortgage Investment Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Sector: Financial Services | Industry: Mortgage Finance
Ticker Symbols: AI.TO – TSX AMIVF – NASDAQ
Report Highlights
- In Q2 2025, gross mortgage receivables increased 5% QoQ to $921M, driven by a 9% YoY rise in loan advancements.
- As expected, lending rates continued to trend lower following BoC rate cuts. Q2 revenue declined 15% YoY (compared to a 13% drop in Q1), driven by lower lending rates, and came in 3% below our estimate. However, net income rose 14% YoY, in line with expectations, due to lower loan loss provisions.
- Due to sluggish sector activity, especially in development and construction, management remains focused on increasing exposure to lower-risk property types, such as single-family residential and income-producing commercial properties. During the earnings call, management stated that amid near-term softness in real estate markets, they will remain disciplined in underwriting standards, and warned that loan originations and repayments will likely soften in H2-2025.
- Key portfolio metrics remained stable, with a high proportion of first mortgages (97%), and a relatively low LTV of 61%.
- That said, stage three (impaired) mortgages surged 135% QoQ to $46M (5% of mortgages), after AI revised its policy to classify all defaulted loans as stage three, even those with no expected loss. Despite this, AI lowered loan loss allowances by 19 bp QoQ to 3.14% of receivables, reflecting no anticipated incremental losses.
- Sector outlook has improved since our May report, with multiples rising 3% since, and 6% YoY. Declining rate environments have historically boosted MIC/financial stocks.
- Since June 2024, the BoC has cut rates seven times (225 bps) to 2.75%, with two more cuts possible in the next six months amid slowing GDP growth, elevated trade tensions, high unemployment, and cooling inflation. While mortgage delinquencies remain a concern, we see easing risks due to falling rates. We expect a rebound in pre-sales, lower financing costs for developers, and higher transaction volumes for real estate lenders next year.
- With Q2 results largely meeting our forecasts, we are making no material changes to our outlook. We project a dividend of $0.98/share this year (unchanged), reflecting an 8.36% yield.
Price and Volume (1-year)
Fundamental Research Corp. Equity Rating Scale:
Fundamental Research Corp. Equity Rating Scale (ratings are not a recommendation to acquire, dispose of, or take no action regarding a security; the definition of our ratings are explained below):
- Buy – Fair value is 12% above the current market price; or risk and reward is favorable
- Hold – Fair value is between 5% to 12% above the current market price
- Sell – Fair value is 5% above, or less, than the current market value; or risk and reward is unfavorable
- Suspended or Rating N/A – Coverage and ratings suspended until more information can be obtained from the company regarding recent events.
Fundamental Research Corp. – Risk Rating Scale:
- (Low Risk) – The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is conservative with little or no debt.
- (Below Average Risk) – The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows (though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt.
- (Average Risk) – The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and coverage ratios are sufficient.
- (Speculative) – The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a turnaround situation. These companies should be considered speculative.
- (Highly Speculative) – The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues and may rely on external funding. These stocks are considered highly speculative.
Definition of FRC’s Fair Value Estimate – Our fair value estimate is the theoretical value of the company’s equity using widely accepted methods of valuation such as discount cash flow or comparables. IT IS NOT A TARGET PRICE or PREDICTION OF THE FUTURE STOCK PRICE.
Disclaimers and Disclosure
Analyst Certification: The views expressed in this report accurately reflect the personal views of the analyst, and no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed.
Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp.
Fundamental Research Corp. “FRC” owns shares of the subject company: No. The analyst owns shares of the subject company: No , does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company.
Annual fees ranging from $15,000 to $30,000 have been paid to FRC by Atrium Mortgage Investment Corporation to commission this report and research coverage including update reports. This fee creates a potential conflict of interest which readers should consider. FRC takes steps to mitigate conflicts including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. The issuer has agreed to a minimum coverage term and coverage cannot be unilaterally terminated. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time.
The distribution of FRC’s ratings are as follows: BUY (71%), HOLD (3%), SELL / SUSPEND (26%). Atrium Mortgage Investment Corporation
This report contains “forward looking” statements. Forward-looking statements regarding the Company and/or stock’s performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company’s products/services in the marketplace; acceptance in the marketplace of the Company’s new product lines/services; competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks and other risks discussed in the Company’s periodic report filings, including interim reports, annual reports, and annual information forms filed with the various securities regulators. By making these forward-looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update these statements for revisions or changes after the date of this report. A report initiating coverage will most often be updated quarterly while a report issuing a rating may have no further or less frequent updates because the subject company is likely to be in earlier stages where nothing material may occur quarter to quarter.
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