Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q1 2021 Earnings Presentation
29 slides from Mcan Mortgage's earnings presentation, May 11, 2021
Slide 1: Investor Presentation 2021 First Quarter
INVESTOR PRESENTATION 2021 FIRST QUARTER May 11, 2021
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION This presentation may contain forward-looking information within the meaning of applicable Canadian securities laws, including statements regarding the business and anticipated financial performance of MCAN Mortgage Corporation and its subsidiaries. These statements are b
Slide 3: Index
INDEX 1. Business Overview 2. Investment Strategy 3. Q1 2021 Highlights 4. Mission and Objectives 3
Slide 4: Business Overview
BUSINESS OVERVIEW 4
Slide 5: MCAN Business
MCAN BUSINESS Our focus since founding in 1991 5
Slide 6: MCAN Business: COVID-19 Operating Impact
MCAN BUSINESS COVID-19 Operating Impact • Continue to seamlessly maintain operations with remote workforce • Credit quality continues to remain strong; no significant distresses from borrowers within our residential mortgage portfolio since deferral periods ended • Continued to grow along all lines
Slide 7: Diversified Quality Real Estate Investments
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS MCAN's Real Estate Investments $1.6 Single Family Residential Billion Total Mortgages Corporate Assets Equity investment in MCAP Non-marketable securities Marketable securities $3.0 Commercial Loans Billion Total Assets Construction Loans • 13.7 months ave
Slide 8: Deposit Funding
DEPOSIT FUNDING MCAN's Term Deposits: • Since 1993 • Non-redeemable prior to maturity1 • Eligible for CDIC insurance coverage • $1.25 billion at March 31, 2021 • 17.7 months average term to maturity 1 Term deposits are non-redeemable prior to maturity except in the event of the death of a depositor
Slide 9: Most Recent Year History - Net Income and Earnings/Share
MOST RECENT 10 YEAR HISTORY - NET INCOME AND EARNINGS/SHARE $15.9M net 48.3 income and $0.64 EPS 42.9 40.2 39.9 in Q1 2021 36.3 32.9 30.2 25.4 2.01 21.5 1.75 1.72 1.75 1.54 1.51 1.54 1.22 1.23 15.9 0.64 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Net Income ($ Millions) Earnings per Share (
Slide 10: MCAN's Capital History
MCAN'S CAPITAL HISTORY Q1 2021 book value Most Recent 10 Year History - Capital Growth and Book Value/Share $13.65 per share* 400 $14.01 $15 $13.64 $13.65 $12.70 $12.89 350 $12.21 $11.36 $12 $10.83 300 $10.50 $9.49 250 ($ millions) $9 200 $6 150 100 $3 50 0 $0 2012 2013 2014 2015 2016 2017 2018 2019
Slide 11: Most Recent Year History - Dividend Growth & Yield
MOST RECENT 10 YEAR HISTORY - 8.41% DIVIDEND GROWTH & YIELD 10 year average yield** 10% 8% 6% 4% $1.43 $1.36 $1.31 $1.28 $1.09 $1.12 $1.12 $1.13 $1.17 2% $0.34 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Regular Dividend Dividend Yield ** 10 Year Average Yield ** MKP CN Equity - Dividend
Slide 12: Investment Strategy
INVESTMENT STRATEGY 12
Slide 13: Investment Strategy
INVESTMENT STRATEGY MCAN is a strategic investor in the Canadian real estate market with a diversified portfolio of mortgages, real estate secured lending products and equity investments • MIC focus is investments in residential mortgages and residential construction loans • Focus on first time / fi
Slide 14: Investment Strategy: Diversification
INVESTMENT STRATEGY Diversification is a key component of MCAN's overall risk profile and strategy • MCAN's portfolio is diversified by: ◦ asset category ◦ product type ◦ origination source ◦ geographic and market segments ◦ borrowers • Portfolio composition is actively monitored and adjusted for: ◦
Slide 15: Residential Construction Approach
INVESTMENT STRATEGY Residential Construction Approach MCAN uses lending discipline to effectively mitigate and manage risks inherent in residential construction lending • Invest in markets where deep experience, knowledge and "boots on the ground" exist • Leverage strategic relationships to provide
Slide 16: Strategic Partner Model
INVESTMENT STRATEGY Strategic Partner Model • MCAN selects strategic partner relationships with a clear alignment of interests, market approach and risk perspective • MCAN leverages its in house expertise in loan origination and underwriting • Strategic partners provide servicing and work-out expert
Slide 17: Q1 2021 Highlights
Q1 2021 HIGHLIGHTS 17
Slide 18: Q1 2021 Performance: Highlights
Q1 2021 PERFORMANCE: HIGHLIGHTS Q1 2021 Q1 2020 Mortgage Interest - Corporate Assets $15.8 million $15.4 million Net Investment Income (Loss) - Corporate $20.2 million $(5.0) million Net Investment Income - Securitization $1.5 million $0.8 million Net Gain (Loss) on Marketable Securities $3.9 millio
Slide 19: Q1 2021 Performance: Quarterly Highlights
Q1 2021 PERFORMANCE: QUARTERLY HIGHLIGHTS QoQ Q1 2021 Q4 2020 Q3 2020 Q2 2020 USF Balance** $575 million $532 million $491 million $444 million USF Originations** $105 million $122 million $94 million $52 million ISF Originations** $210 million $218 million $196 million $102 million Corporate Assets
Slide 20: Total Mortgage Portfolio
TOTAL MORTGAGE PORTFOLIO Mortgages - Corporate and Securitization ($ millions) 1,327 1,136 1,017 887 784 1,253 1,287 1,089 863 922 2017 2018 2019 2020 Q1 2021 Corporate Securitization ($ millions) Q1 2021 Q4 2020 Change Q1 2020 Change Single Family $ 728 $ 706 3%$ 598 22 % Construction & $ 559 $ 547
Slide 21: Strong Capital Position
STRONG CAPITAL POSITION 23.40% 22.17% 22.02% 22.02% 20.80% 11.70% 11.46% 10.26% 10.17% 9.69% 5.4 5.0 5.1 5.1 5.0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Total Capital Ratio (%)*, *** Leverage Ratio (%)* Income Tax Assets to Capital Ratio* * Non IFRS measure as defined in MCAN’s Q1 2021 MD&A *** Effective Marc
Slide 22: Key Metrics: Quarterly Trend Charts
KEY METRICS: QUARTERLY TREND CHARTS Net income Basic and diluted EPS $22.7 $22.1 $0.92 $0.89 $15.9 $0.64 $0.32 $7.8 $(0.40) $(9.7) Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Return on average shareholders' Book value per common share* equity* 28.04% 25.92% $14.01 $13.46 $13.65 18.15
Slide 23: Portfolio Credit Quality
PORTFOLIO CREDIT QUALITY 1.25% 1.10% 1.00% 0.75% 0.50% 0.25% Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sept 2020 Dec 2020 March 2021 Impaired Mortgages as % of Total Corporate Mortgages* • The increase in the impaired corporate mortgage ratio at June 30, 2020 mainly relates to one construction mo
Slide 24: MCAN's Mission and Objectives
MCAN'S MISSION AND OBJECTIVES 24
Slide 25: MCAN's Vision, Mission, Culture
MCAN'S VISION, MISSION, CULTURE • Our vision is to be the preferred mortgage lender and investor within our chosen real estate markets in Canada. • Our mission at work every day is to provide sustainable growth and returns for all of our stakeholders: ◦ through relationship-driven mortgage lending a
Slide 26: Long Term Objectives
LONG TERM OBJECTIVES • Sustained annual growth of assets 10% • Sustained ROE 13-15% • Sustained and prudent dividend growth 26
Slide 27: Environmental Social Governance
ENVIRONMENTAL SOCIAL GOVERNANCE Our values and culture are rooted in our people – customers, colleagues and communities ‑ and we are committed to good environmental, social and governance practices. Our objective over time is to advance these initiatives throughout our business operations with a foc
Slide 28: Footnotes and References
Footnotes and References • [*] Non IFRS measure as defined in MCAN’s Q1 2021 MD&A • [**] MKP CN Equity - Dividend Indicated Yield – Gross; monthly data 2012 to 2021 • [***] Effective March 31, 2020, the total capital ratio includes Tier 2 capital comprising Stage 1 and Stage 2 allowances on our mort
Slide 29: Contact Information
Contact Information MCAN MORTGAGE CORPORATION 200 King Street West, Suite 600 Toronto, ON M5H 3T4 Tel. (416) 572-4880 mcanexecutive@mcanmortgage.com www.mcanmortgage.com 29