Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q2 2019 Earnings Presentation
25 slides from Mcan Mortgage's earnings presentation, August 2019
Slide 1: Investor Presentation Second Quarter 2019
INVESTOR PRESENTATION SECOND QUARTER 2019 August 2019 Karen Weaver Dipti Patel President & Chief Vice President & Executive Officer Chief Financial Officer
Slide 2: Forward Looking Information
FORWARD LOOKING INFORMATION This presentation may contain forward-looking statements and statements regarding the business and anticipated financial performance of MCAN Mortgage Corporation and its subsidiaries. These statements are based on current expectations, and are subject to a number of risks
Slide 3: Index
INDEX 1. Business Overview 2. Q2 2019 Highlights 3. Mission and Objectives MCAN Mortgage Corporation 3
Slide 4: Business Overview
BUSINESS OVERVIEW MCAN Mortgage Corporation 4
Slide 5: MCAN Business
MCAN BUSINESS MIC CDIC Sustainable Shareholder Structure Insurable Growth Value Diversified, • Earnings Conservative Growth in quality, real • Book leverage dividends estate value with deposit Shareholder mortgages, • Capital funding returns investments Our focus since founding in 1991 MCAN Mort
Slide 6: Diversified Quality Real Estate Investments
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS $1.26 Billion Total Single Family Corporate Residential Residential & Assets Mortgages Non-Residential Construction $2.13 Equity Billion investment Total Assets Commercial in MCAP Non-marketable Marketable securities securities Data presented as at June 30
Slide 7: Deposit Funding
DEPOSIT FUNDING MCAN’s Term Deposits: • Since 1993 • Non-redeemable prior to maturity • Eligible for CDIC insurance coverage • $953 million at June 30, 2019 • 20.1 months average term to maturity MCAN Mortgage Corporation 7
Slide 8: 10 Year History of Net Income and Earnings Per Share
10 YEAR HISTORY OF NET INCOME AND $5.00 EARNINGS PER SHARE 45.0 $4.50 40.0 $4.00 40.2 39.9 35.0 36.3 $3.50 32.9 30.0 $3.00 30.2 26.7 27.1 25.0 $2.50 24.7 25.4 21.5 20.0 $2.00 15.0 $1.73 $1.85 $1.68 $1.75 $1.72 $1.50 $1.54 $1.51 $1.54 10.0 $1.00 $1.22 $1.23 $0.50 5.0 $- - 2009 2010 2011 2012 2013 201
Slide 9: MCAN's Capital History
DEC 2018 MCAN’S CAPITAL HISTORY book value 10 Year History - Capital Growth and Book Value per share $12.89 per share 350 $12.70 $14 $12.21 300 $11.36 $12 $10.50 $10.83 $9.40 $9.49 250 $10 $8.58 $8.66 $8 ($ millions) 200 150 $6 100 $4 50 $2 0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Base
Slide 10: 10 Year History Dividend Growth & Yield
Avg yield 10 YEAR HISTORY DIVIDEND GROWTH & YIELD 8.34% 10yr 2 1.8 10% 1.6 1.4 8% 1.43 1.2 1.31 1.17 6% 1 1.08 1.09 1.12 1.12 1.13 1.01 1.04 0.8 4% 0.6 0.4 2% 0.2 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Regular Dividend Dividend Yield 10 Yr Avg. Yield MCAN Mortgage Corporation 10
Slide 11: Second Quarter 2019 Highlights
SECOND QUARTER 2019 HIGHLIGHTS MCAN Mortgage Corporation 11
Slide 12: Q2 2019 Performance: Highlights
Q2 2019 PERFORMANCE: HIGHLIGHTS Q2 2019 Q2 2018 • Q2 2019 $1.0 Million net unrealized loss Net Income $8.9 Million $11.1 Million (REIT MTM) vs. Q2 2018 $3.3 Million net Net Investment unrealized gain ($2.0 Income Million related to our Corporate $13.1 Million $15.1 Million investment in Crown LP and
Slide 13: Q2 2019 Performance: Highlights
Q2 2019 PERFORMANCE: HIGHLIGHTS QoQ Q2 2019 Q1 2019 Q4 2018 USF Balance $345 Million $308 Million $256 Million USF Originations $56 Million $63 Million $51 Million ISF Originations $57 Million $38 Million $28 Million Corporate Assets $1.26 Billion $1.26 Billion $1.22 Billion Book Value per $13.23 $1
Slide 14: Q2 2019 Performance: Capital, Leverage & Dividends
Q2 2019 PERFORMANCE: CAPITAL, LEVERAGE & DIVIDENDS Q2 2019 Q1 2019 Q4 2018 CET 1 22.40% 22.09% 21.66% Leverage ratio 12.16% 12.05% 11.79% Income tax assets 4.71x 4.69x 4.64x to capital Dividends per share $0.32 $0.32 $0.32 Well positioned to adapt to business opportunities and challenges in 2019, ha
Slide 15: Corporate Mortgage Portfolio
CORPORATE MORTGAGE PORTFOLIO Total Corporate Mortgages - Single Family and Construction & Commercial ($ millions) 544 524 470 Construction & 452 529 547 Commercial 533 474 452 478 Single Family 443 375 375 330 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 MCAN Mortgage Corporation 15
Slide 16: Total Mortgage Portfolio
TOTAL MORTGAGE PORTFOLIO Mortgages - Corporate and Securitization ($ millions) 944 904 863 922 Corporate 895 1,002 Securitization 741 1,076 1,072 1,017 887 816 2014 2015 2016 2017 2018 Q2-2019 ($ millions) Q2 2019 Q4 2018 Change Q2 2018 Change Single Family $478 $375 27% $338 41% Construction & Comm
Slide 17: Strong Capital Position
STRONG CAPITAL POSITION 22.09% 22.40% 21.47% 21.66% 20.58% 11.79% 12.05% 12.16% 11.55% 11.35% 4.6 4.9 4.6 4.7 4.7 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 CET 1, Tier 1 and Total Capital Ratio (%, all-in) Leverage Ratio (%) (effective 2015) Income Tax Assets to Capital Ratio MCAN Mortgage Corporation 17
Slide 18: Key Metrics: Quarterly Trend Charts
KEY METRICS: QUARTERLY TREND CHARTS Net Income Basic and diluted earnings per share ($ millions) ($ per share) 14.3 0.60 11.1 11.0 0.47 0.47 8.9 0.37 3.5 0.15 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Return on average shareholders' equity1 Book value per common share1 (%) ($ per s
Slide 19: Credit Quality & Risk Management
CREDIT QUALITY & RISK MANAGEMENT 0.60% 0.40% 0.27% 0.20% 0.00% Sep Dec Mar Jun Sep Dec Mar Jun 2017 2017 2018 2018 2018 2018 2019 2019 Impaired Mortgages as % of Total Corporate Mortgages MCAN Mortgage Corporation 19
Slide 20: MCAN's Mission and Objectives
MCAN’S MISSION AND OBJECTIVES MCAN Mortgage Corporation 20
Slide 21: MCAN's Mission
MCAN’S MISSION • Achieve superior, sustainable and stable growth performance • Employ expert balance sheet management • Leverage our investment expertise and relationships MCAN Mortgage Corporation 21
Slide 22: Long Term Objectives
LONG TERM OBJECTIVES • Sustained annual growth of assets 8-10% • Sustained ROE 13-15% • Sustained and prudent dividend growth MCAN Mortgage Corporation 22
Slide 23: Executive Management
EXECUTIVE MANAGEMENT Karen Weaver Mike Jensen President and CEO Vice President and Chief Compliance Officer (Chief Anti Money Laundering & Privacy Officer) Dipti Patel Sylvia Pinto Vice President and Chief Financial Officer Vice President, Corporate Secretary & Governance Officer Martin Beaudry Vice
Slide 24: Footnotes and References
Footnotes and References: • [1] Non IFRS measure as defined in MCAN’s Q2 2019 MD&A • [2] MKP CN Equity - Dividend Indicated Yield – Gross; monthly data April 2009 up to Apr 26, 2019 • CET 1 = Common Equity Tier 1 • Data source of charts: MCAN’s Q2 2019 MD&A and historical quarterly and annual report
Slide 25: 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 MCAN Mortgage Corporation 25