First National Financial Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 6, 2024

There are 7 speakers on the call.

Operator

Good morning, and welcome to First National's 4th Quarter Analyst Call. This call is being recorded on Wednesday, March 6, 2024. At this time, all callers are in listen only mode. Later, we will conduct a question and answer session. Now it's my pleasure to turn the call over to Rob Ingalls, CFO of First National.

Operator

Please go ahead, sir.

Speaker 1

Good morning. Welcome to our call and thank you for participating. Sadly, after a long illness, Jason's father passed away recently and Jason is unable to attend today. But joining me on this call today is Jeremy Wedgbery, our Executive Vice President, Commercial Mortgages, who will be available to answer any of your questions relating to our Commercial segment after the call. Before we begin, I will remind you that our remarks and answers may contain forward looking information about future events and the company's future performance.

Speaker 1

This information is subject to risks and uncertainties and should be considered in conjunction with the risk factors detailed in our management discussion and analysis. 2023 was a very successful year for First National, marking our 35th business anniversary, 17 years as a TASX listed company and the 17th year of increasing common share dividends. This year ended with strong 4th quarter revenue and earnings. Q4 pre fair market value income of $77,100,000 was 30% higher than the same quarter of 2022. For the year, this key profit metric increased 54% over 2022.

Speaker 1

This performance reflected success in growing mortgages under administration in a volatile environment and earning more income from securitization. The higher interest rate environment while perhaps slowing new origination had a favorable impact on parts of our business. These include slower mortgage prepayment speeds that benefited portfolio growth and higher interest rates that acted as a tailwind for mortgage servicing where we earned higher interest income on escrow deposits. We ended the year with MUA of 143,500,000,000 the result of 7% growth in residential MUA and a 16% growth in commercial MUA. Overall, MUA increased 10% for the year and 5% annualized during the Q4 to its highest level ever supported by renewal retention and historically low prepayment speeds, probably the lowest in my 27 years at First National.

Speaker 1

We are pleased with MUA performance given the significant impact of higher interest rates and affordability, which directly affects real estate market activity and our originations. Single family origination including renewals was down 20% in the 4th quarter 7% for the full year. This is in keeping with the expectations we described in our last call, although we saw a significant outperformance in Alberta and Quebec compared to that in BC and Ontario. This is perhaps a reflection of market conditions in those regions, but definitely underscores the value of our geographic diversification. Of note, the mix between new originations and renewals stayed relatively consistent on a trailing 12 month basis in 2023 compared to 2022.

Speaker 1

Commercial origination also including renewals was up 27% year over year in the 4th quarter and 11% for the year on strong demand for insured multiunit mortgages. A higher rate of growth in the 4th quarter partially reflected a catch up by CMHC and its underwriting centers. After announcing a premium rate increase for a multiunit insurance in mid-twenty 23, CMHC received a rush of applications before the cutoff date. Turnaround time pushed transactions into the last quarter of 2023. Looking a little deeper at our results, you will see net interest income on mortgages splits for securitization increased in 2023 and in the 4th quarter.

Speaker 1

Both periods have benefited from portfolio growth, slower than normal prepayment speeds and a relatively stable interest rate environment that feature just 2 Bank of Canada rate increases compared to the 7 we experienced in 2022. Low rates of prepayment also meant lower amortization of capitalized origination expenses and other securitization related fees. The slower amortization was one reason why NIM on our securitization portfolio widened significantly quarter over quarter from December 2022 to December 2023. On an annualized basis, NIM grew from 47 basis points to 56 basis points by year end. There were several drivers of this performance beyond portfolio growth and more favorable prepayment including the success of both our high margin insured construction and Excalibur securitization programs and the beneficial impact from the lower frequency of short term interest rate increases on our floating rate securitization program.

Speaker 1

We expect NIM to remain generally at this level in 2024. 2023 annual placement fee revenue declined 8% was up 4% in the 4th quarter over 2022. The 4th quarter change came from higher volumes placed with institutional investors in the commercial segment. As always, changes in placement activity between segments has an impact on the revenue line. As a rule, per unit fees are generally higher on residential placements compared to commercial.

Speaker 1

However, for the year, per unit pricing for new residential volume was lower by 1% than in 2022 as more borrowers chose shorter term mortgages. Shorter terms may still be popular, a popular board option in 2024 as many advisors expect mortgage rates will be lower in 3 years' time. Gains on deferred placement fees, which we earned in originating and selling multiunit residential mortgages to institutional investors increased 69% between 20222023 reflecting strong volumes of origination for this program. For the Q4, this revenue was flat to the same period of 2022 on similar volumes. Investment income was up 32% in 2023 12% year over year in the 4th quarter, another positive result of higher interest earned on our mortgage and loan investment portfolios and the mortgages held for securitization.

Speaker 1

On the growth in MUA, mortgage servicing income was higher by 70% in 2023 and 24% in the Q4 compared to 2022. This also reflected the continued benefit of higher interest on escrow deposits and the success of our 3rd party underwriting customers. Excluding the impact of higher interest costs incurred to fund the securitization portfolio, net revenue for 2023 was a record 905000000 dollars 8% higher than in 2022. On the expense side, broker fees decreased 20% year over year in 2023. This reflected lower origination volumes of single family mortgages for institutional investors and a return to more traditional per unit broker fees, which were historically high in 2022 as a result of competition.

Speaker 1

Dollars and benefits increased 4% in 2023 reflecting standard annual merit increases and incentive driven commercial underwriting compensation. FTE was slightly lower in 2023 compared to 2022 due to regular attrition that was not replaced. Other operating expenses increased 7% to $4,200,000 in 2023 due to spending on technology and our growing securitization business. The bottom line, pre form market value income increased 54% in 2023 and 30% year over year for the Q4. CapEx was $6,200,000 for the year, largely for computer equipment and the cost of technology.

Speaker 1

Overall, a very successful year for First National with record net income of $4.15 per share. For shareholders, corporate success translated in the 4th quarter to another common share dividend increase to 2.45 dollars per share annualized and the payment of a $0.75 special dividend. Excluding the special dividend in December, the dividend payout ratio was 58% compared to 73% in 2022. On the same basis, the 4th quarter payout was 84% compared to 86% a year earlier. As an illustration of our business model's efficiency, after tax prepare market value return on shareholders' equity was 38% for the year.

Speaker 1

Now let's talk about our 2024 outlook. We expect residential origination to open the year below Q1 2023 volumes of $4,400,000,000 based on our lower commitment levels in the 4th quarter and our assessment of the ongoing impact of Bank of Canada interest rate policy on housing activity. This outlook encompasses both our Prime and Excalibur product lines. Excalibur originations were more affected by market pressures in 2023 than were prime mortgages as it was more difficult for these borrowers to qualify for credit offered as the higher mortgage coupon rates. Mortgage brokers are also still coming around the idea of First National as a lender or choice for this product.

Speaker 1

That said, we continue to view Excalibur as an important part of our long term plan. And we've been successful in growing our available liquidity in asset backed commercial paper programs to support our ambition. Of note, Excalibur mortgages continued to perform as expected with virtually no loan losses and a relatively small number of mortgages in default. Since the vast majority of Excalibur borrowers take 1 year terms, they have been given very little time to adapt to the new rate environment as opposed to the majority of prime borrowers who are generally locked into 5 year terms. As house prices continue to hold up well in our urban area markets of focus, defaults can usually be resolved successfully through sale.

Speaker 1

Arrears for our prime fixed and adjustable rate single family portfolios are also trending as expected with just small upticks in arrear statistics. On prepayment speeds, we expect these to remain near current levels until such time as we see a significant reduction in interest rates. In this environment, borrowers who hold mortgage coupon rates well below prevailing market rates have very little incentive to refinance. Over time, repayments will likely see a reversion to the mean after the past couple of years of extremes. For our commercial business, we expect to see ongoing strength in the first half of twenty twenty four as borrowers have responded to government incentives to build and provide financing for multiunit properties.

Speaker 1

We have built a sizable commitment pipeline. In the second half, we expect competitive industry or competitive intensity to increase as more aggregators come to the market attracted by the recent $20,000,000,000 increase in the Canada mortgage bond program. So likely have an impact on our multiunit originations and available spreads later in the year. For these reasons, it will be difficult to replicate 2023's record financial performance in 2024. Affordability will remain a challenge, but the potential for somewhat less restrictive monetary policy later in 2024 may lead to a gradual market reset.

Speaker 1

Longer term population growth and ongoing lack of housing supply should provide ongoing support for prices and stimulate much needed new construction of affordable rental units that First National will finance. We will address these challenges and opportunities as we always have with a focus on striving for better using our proven strategies. Among our agenda items, we look to continue to leverage our underwriting capabilities to serve our 3rd party customers. On January 31, we introduced services to our newest bank client on a soft launch basis. Now looking forward to ramp up over the course of the year.

Speaker 1

Additionally, we tend to apply our usual disciplines to enhance efficiently using technology. Recently, we launched a pilot program using cognitive document readers to process residential borrower insurance updates. Auto adjudication of certain pre approval tasks is our next frontier. Developments in AI that may reduce repetitive tasks for our team and make our business more scalable are of interest to us. In closing, 2023 was a successful year that once again illustrated the recurring cash flow and income derived from First National securitization portfolio and MUA servicing business even as housing market activity moderated.

Speaker 1

Now Jeremy and I would be pleased to answer any of your questions. Operator, please open the lines. Thank you. Operator, I think I see some questions in the queue. Please acknowledge the analysts.

Speaker 1

I'm sorry, something seems to have gone wrong with our telecommunication here. We're waiting for the operator to attend to the questions. We see some questions that are lined up and we're just waiting until our operator gets back to us. Sure. Can we acknowledge the questions and now it has to be the operator?

Speaker 1

Well, this is unfortunate. I don't know what to do. I guess we'll give them a few more minutes to reconnect or whatever's happened.

Operator

Apologies for this. We've had some technical issues on my side. So, sir, apologies. We're ready for the Q and A?

Speaker 1

Yes, we are.

Operator

Apologies again for that. Our first question comes from the line of Nick Priebe of CIBC. Please go ahead. Your line is open.

Speaker 2

Okay, thanks. So headcount declined 4% last year, presumably the result of a bit of natural attrition in the business. When you look out into 2024, considering the outlook for softer single family volumes, do you foresee further room to allow headcount to gradually moderate with the natural churn in the employee base? Or how in your mind the current staffing levels align with the current level of mortgage activity?

Speaker 1

Yes, Nick, it's Rob. I think that's I think we're okay with our current headcount. I think in the pandemic, we really ramped up. We had a lot of business internally and for our 3rd party customers and we ramped up. We had too much staff when the excesses of the pandemic slowed down.

Speaker 1

Down. Now we have a new customer in our underwriting business for 3rd parties. We have about 15 to 18 people that are going to be full time there. So that's for the most part moved over from our existing underwriting operations. So I would say it's probably going to be maybe a little bit of increase in FTE just as the company grows, but nothing extravagant.

Speaker 2

Okay. No, that makes sense. And just on that partnership, I think you had indicated last quarter that, the reentry of BMO to the broker channel via First National was expected to begin sometime early this year. Are there any updates you can provide there on the rollout? Just how that's proceeding and tracking relative to what you would hope for in the early days?

Speaker 1

Yes, it's proceeding as planned. I mean, it's going to be a slow start. I mean, I think they did a soft launch end of January. In February, they're sort of they grew it out to sort of a number of brokers, I think, just in Ontario. As it's they learn how the flow information goes and how the reporting goes, they'll expand to more brokers in Ontario.

Speaker 1

And so there'll be a slow growth throughout the course of the year. I think it's going as planned. I mean their sales force is out there talking to brokers and telling them to send business to them.

Speaker 2

Okay, that's good. And just one last one for me, just point of clarification. So the comment that placement fees are a lot lower on commercial mortgages than single family residential, is that because the single family channel, the upfront placement fee needs to compensate you for the fee that you would pay to mortgage brokers to originate, whereas commercial originations are sourced mostly by proprietary channels? Or like what's the reason for that higher per unit placement fee? And are you able to roughly quantify the magnitude of the difference there?

Speaker 1

Yes, it's almost what the market is. I mean it's like people will pay that much for a single family mortgage, maybe there's more spread in it. And just the nature of it. I think in general, 1.4% has been sort of a run rate for single family placements. That's what the market pays for it.

Speaker 1

And if you compare it to like the banks, some things they'll tell us, oh, that's where our costs internally are anyways to originate a mortgage. So if we buy it from you or do internally, it's the same cost. So you see the economics there. For multi units, it's anywhere from like 50 basis points to 75 basis points, which has been historically the rate. Why that is?

Speaker 1

I don't know why it's not different. Maybe Jeremy could pick charge more on it, but the market will bear, what the market will bear. And in commercial as well, it's probably more 10 year business done. So that's going to be a bit higher than like 5 years, which I think is typically at 50 basis points. And so again, it's the market.

Speaker 2

Yes. Okay. Fair enough. All right. That's good for me.

Speaker 2

I'll pass the line. Thanks.

Operator

Thank you. The next question comes from the line of Etienne Ricard, BMO. Please go ahead. Your line is open.

Speaker 3

Okay. Thank you and good morning. With 2023 behind us, what is your assessment of First National's market share in the broker channel? And more broadly, do you think the broker channel took market share from the bank channel?

Speaker 1

Well, that's a difficult question. I think it's hard because we used to get a report from Finastra, which is pretty indicative of where the market share was. They stopped reporting, I think, mid of 2022 in terms of the full number of companies reporting in because they have a big share of the marketplace and then there was privacy issues, I think. We think our market share for the year has held up and it's maybe in the low teens kind of thing. As far as the channel versus the banks, I don't know.

Speaker 1

I really don't know.

Speaker 3

Okay. And to circle back on placement fees, to the extent borrowers favor once again longer term mortgages, the 5 years as opposed to 1 to 3 years, how much of a tailwinds will that be to per unit placement fees?

Speaker 1

Probably not a lot. I mean, I think definitely the longer the 5 year will get us more revenue. But the same side of things, we pay the broker a little bit less on a shorter term. And I would say origination for single family is kind of like a breakeven business, right? It's really to get the MUA going and the longer term value of MUA.

Speaker 1

So I think it's not a big deal in terms of that changes. And if we do a lot 3 years this year, it means we have renewal opportunities in 3 years' time. So there's a value there as well that we'll see earlier than the 5 year.

Speaker 3

Okay. And lastly, on the commercial segment, we've seen some construction delays and a rise in impaired loans across the industry. What credit metrics are you seeing on your commercial book?

Speaker 4

Good morning, Etienne. Yes, so our construction book just hit $5,000,000,000 of committed capital and we've been very, very careful with our program. 1st and foremost, it is insured by CMHC. That's the predominant asset on our book would be CMHC insured construction, but we've been very, very careful with our client selection. So we've been working a large portion of our portfolio would be with pension funds and very strong experienced developers.

Speaker 4

There's a segment of the market definitely that has gone downstream and we've avoided that very much. I would say that the challenges we're seeing right now and obviously higher interest rates are having a big impact on it's really impacting all aspects of construction. So yes, we're starting to see some defaults, we're seeing land defaults, but we're not seeing them on our book to be clear. We're monitoring our book of about 100 construction loans very, very carefully. But we're very confident that I think the program we set up 7 or 8 years ago has served us very well.

Speaker 4

So yes, there's some challenges in the industry. We've focused on multifamily rental, insured predominantly and we've been very, very selective with our developer clients. So I hope that answers your question.

Speaker 3

It does. Thank you very much.

Operator

Our next question comes from the line of Graham Rydon at TD. Please go ahead. Your line is open.

Speaker 5

Hi, good morning. Maybe I just start with, just to make sure I heard your message correctly. So on the commercial front, it sounds like you're expecting a strong first half of the year, but then competition to pick up in the second half. Maybe you can dig into that a little bit. Why are you expecting competition to pick up on that front?

Speaker 4

Yes. Good morning, Graham. So as Rob touched on, in June of last year, CMHC increased the premiums on their select product, which is the product that they developed about a year and a half ago to really push supply in Canada, it caused a surge by about 4 times of what they would normally face from a queue perspective. And so we were in a normal timeframe, you'd get an approval in 6 to 8 weeks with CMHC that was getting pushed out to 4 to 6 months. And so basically all of the business we put in June into the pipeline with CMHC was being pushed back into approvals really in Q4 of 2023 and even then we're still getting them right now, Graham.

Speaker 4

So Q1, Q2 will continue to be driven by a combination of 2023 volumes and then of course just the volumes that are going on in 2024. The other, I guess the tailwind for us which is creating more competition is the increase of $20,000,000,000 to the Canada mortgage bond is really empowering the aggregators in the business and it's allowing them to securitize more. And therefore, they tend to originate through smaller CMHC originators and they tend to compete on price. So the greater supply is being passed on to clients with tighter pricing. So we've got strong pipeline through to sort of Q2, Q3.

Speaker 4

And then at that point, we think we're going to be in a much more competitive environment. Also given the fact that with these higher interest rates, there just seems to be there is less activity in commercial in general, multifamily included, far fewer trades than we would normally see as buyers and sellers start to get comfortable with where cap rates should be. So that's kind of the outlook for commercial for 2024.

Speaker 5

Okay. That's helpful. And then on the single family side, you said significantly lower originations at the beginning of the year. Yet we're seeing some year over year increases in Canada and some more specific markets through sort of January February in terms of housing sales. So why is that not falling through into your origination expectations for the beginning of the year?

Speaker 5

Is that related to some of your commentary on Excalibur? Or maybe you could expand on that?

Speaker 1

Yes, a little bit. I think that there's a couple of things. So Q3 for us is very strong because every thought in Q2, Bank Canada was done and rates were sort of finished. But then in June July, Bank of Canada said, no, we're not finished. And we increased a couple of times more and people in Q3 said, I'm slowing down.

Speaker 1

So that affected what happened in Q4, right? And that's still the case. I mean, people are still on the sidelines. People are considering what's the value of my house. I bought this thing in 2021 in the pandemic and it's worth this much.

Speaker 1

Maybe it's not worth that much. So slowing down. But I think there's a swell of like people waiting to get into the housing market and they will. That's number 1. And so I think Q1, we've seen the commitments from Q4 were pretty slow.

Speaker 1

And as well, I think competition for us a little bit, the TD Bank, Scotiabank was out from a lot of 2023 for whatever reason. I think they're back with a vengeance now and competing. So that's going to take some market share probably from us. And of course, our new friends, the BMO will be out there too competing against those 2 banks, I think, with sharp pricing. The only way they can probably start to get goodwill and broker business is through sharp pricing.

Speaker 1

I think, so we have those 2 things to worry about as well or that the pricing as well to worry about. So it will be a slower start, but I think as the economy I think gets better, I think it's going to get better. I think we're in for a soft landing. And if Bank Canada cuts, I think we'll see some real activity.

Speaker 5

Okay, understood. And then any commentary on the Excalibur product? You're saying no loss experience. How about the how's the book trending with respect to arrears and workout situations?

Speaker 1

Yes. So our product that we securitize is B-twenty compliant, 80% loan to value or less. So there's a lot of equity from the borrowers in those properties. Arrears have kicked off a little bit on a smaller portfolio. We've had, I think, one loss in the last 4 years, a realized loss.

Speaker 1

I think we're well provisioned for in case something does happen, we've compared to our peers in the industry and we're at the right levels. I think we're over provisioned to be honest, but you never know. So we're not worried. Our worry is to be honest is to find more products. So I think last year it was down much like our overall single family origination book.

Speaker 1

We really want to get the products keep coming in to replace the stuff that's going to pay out and mature. It's typically for us 1 year and 2 year product. So it tends to turn over very quickly. We have conduits there that need the product to keep the ink employing.

Speaker 5

Okay. That's helpful. Thank you.

Operator

Thank you. Our next question comes from the line of Jamie Gloyn at National Bank. Please go ahead. Your line is open.

Speaker 6

Yes, thanks. Good morning. Just wanted to go back to the couple of questions ago in the comment around TB. I believe you said TB and Scotia, they had kind of paused a little bit during 2023 and are now out there competing more aggressively. And you would expect BMO to also ramp that up.

Speaker 6

Did I hear that correctly in terms of their position in the market? And then I guess the follow-up to that is a couple of these banks now in your mortgage servicing or fulfillment processing business, How do you balance that part of the channel with your own flows? And do you take what they're doing and make adjustments yourselves? Or maybe talk a little bit more about, I don't want to say there's channel conflict here, but balancing those outcomes.

Speaker 1

Okay. Well, the one thing is, I think the TD Bank has never slowed down. They've been very strong for the last, I don't know, 5 years in the channel, especially after we helped them with their underwriting and fulfillment. Only Scotia sort of feel bad for a while there for whatever reason, maybe it was economics, I'm not sure, but they are back now. But yes, there's always a conflict between us doing that business and doing our own business, right.

Speaker 1

But we all find that having a customer with deep logs like the banks is a great customer to have. And we're going to be there for the long term. Like the T agreements that we signed in 2014, it's been now 10 years on and we've made the money we thought we were going to make. It's been a great addition to our business. Our competency is underwriting and we are Merlin Technology also with leading edge technology.

Speaker 1

Let's use that technology to make money and this is how we do it. But you're right, there is a conflict to me. And if you ask Scott McKenzie, not a big fan of it because it's going to hurt his sales force competing with these 3 banks.

Speaker 6

Okay, understood. Excuse me. Second question is just on the brokerage fees. And the way I'm looking at this is looking at brokerage fees as a percentage of volume sold to institutional investors. And it's more than just normalized.

Speaker 6

It's quite a bit lower in this Q4 than we've seen it historically, going back several years even. So is there something a little bit more happening in this quarter that would drive those brokerage fee expenses lower? And then would I take that kind of rate and assume this is the normal rate for the next couple of years? Or should we kind of go back a few more quarters to look at a more smooth level of brokerage fees as a percentage of volume sold to institutional investors?

Speaker 1

Yes. Well, I guess the difficulty is this, is that on a commercial mortgage being sold to institution that probably has no brokerage fees. That's done internally, pay people salaries for that. So to the extent that the commercial volume has been up, I think it's up in just being Q4 because of the great origination, The fraction, the calculation you're doing will be unbalanced there, right, because you'll have a lot of commercial there at 0 and you have the regular single family there at the regular rates. I would say for overall rates for brokers in 2022 maybe lower by 10% than 2022.

Speaker 1

2022, we had to compete very strongly in the market by giving incentives or matching incentives to brokers that other people were posting. And I think next year, 2024, I think we're already maybe half half, a little bit like 2023, but maybe more incentives for brokers to compete without everybody in the channel looking for the same product. Will that

Speaker 4

help you?

Speaker 1

Yes, it does.

Speaker 6

Might be helpful. So I don't know if to be able to disclose like single family versus commercial going to institutional investors and kind of trying to narrow it that way from a forecast perspective, but a conversation for another day perhaps. But that's good for me.

Speaker 5

Yes.

Speaker 1

Thank you. That's your job. That's your job. Thanks.

Operator

Thank you. Our next question comes from the line of Graham Rodden at TD.

Speaker 5

Just a couple of follow ups. You did $11,800,000,000 in securitization funding this year, I think, in total, both through the CMB and also your, I guess, your bank sponsored conduits. Is that should we think of that as you're sort of close to your capacity there? Is that a reasonable sort of run rate or capacity for that funding channel?

Speaker 1

I would say it is, but subject to, I guess, the $20,000,000,000 of new CMB room that we announced, right? So I think the government or CMHC wants to allocate that $20,000,000,000 to multifamily mostly, because that's what they think is going to help Canada in terms of rental stock, etcetera, to give incentives to people to do those kind of mortgages. So that might sort of they might sort of carve that out in terms of allocations and we'd be able to do more ourselves in that regard. Okay. So there was none of that $9,800,000,000 stay the same or go up.

Speaker 5

Yes. Okay. So there was was there any of that increased CMB issuance limit in the Q4 numbers this year? Is that program enrolled out yet?

Speaker 1

Well, it was rolled out. I think it was rolled out and they increased some things, but it was almost like December 15 sort of thing and we couldn't really take advantage of it at that point. They always do that. They always increase things like in December, where the banks can sort of throw in a whole bunch of stuff, but we plan ahead and we don't have the product to necessarily sell in.

Speaker 5

Okay. And then just my last one, if I could, just on the net interest margin, you expect you said you expect it to be flat year over year. What's sort of implied there in terms of your outlook for either origination volumes or prepayment activity when you're expecting them to be flat?

Speaker 1

Yes. So I think for prepayment, similar to this year, still low because we have a whole bunch of mortgages in our programs at 2%, 3% from the pandemic years, which probably will not pay out or refinance because they can without paying or if they can, but they can get a much higher mortgage rate. Why do that? I think NIM was lower in 2022 for a whole bunch of reasons like the Bank of Canada changing rates seven times is not good for us because our prime rate kind of lags the cost of funds as they go up so that we lost money there. Prepaidments, lot of penalties, the 975 pools in 2022.

Speaker 1

So what I'm saying is that 2022 was abnormally low and now we're back to where it should be. So I think that's why I'm saying 2024 will be similar because we have a whole $40,000,000,000 of securitized mortgages that will keep producing at the same level they're producing in 2023.

Speaker 5

Okay. That's helpful. Thank you.

Operator

Thank you. And there are no further questions on the line. So I'll hand the floor back to Mr. Ingalls for the closing comments.

Speaker 1

Thank you, operator. First National report its Q1 results on April 30 and host its Annual General Meeting of Shareholders on May 2 at the TMX Market Centre in Toronto. We look forward to both events. In closing, my thanks to the First National team, our business partners and customers for making 2023 a successful year. And thank you all for participating in our call today.

Speaker 1

Have a great day.

Operator

This now concludes the conference. Thank you all very much for your attendance. You may now disconnect your lines.

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