Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q1 2024 Earnings Presentation
40 slides from Mcan Mortgage's earnings presentation, May 6, 2024
Slide 1: Investor Presentation
Investor Presentation 1 May 6, 2024
Slide 2: Forward Looking Information; Non-GAAP and Other Financial Measures
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 d/b/a MCAN Financial Group and its subsidiar
Slide 3: MCAN Financial Group
MCAN Financial Group Residential lending exclusively Real estate and residential CDIC-insured investment with mortgage professionals. construction-based financing and solutions. investments. 3
Slide 4: Investing in Communities and Homes for Canadians
INVESTING IN COMMUNITIES AND HOMES FOR CANADIANS How we invest • homeownership through mortgage lending. • residential construction lending for borrowers building homes. • a portfolio of managed long-term REIT investments. • private investment funds focused on lending and developing homes. • our own
Slide 5: Our Vision and Mission
Our Vision is to be the preferred mortgage lender and investor within our chosen real estate markets in Canada. Our Mission every day is to deliver sustainable growth and value for our stakeholders through: • relationship-driven mortgage lending and investing. • quality work from an expert, engaged
Slide 6: MCAN at-a-glance: March 31, 2024
MCAN at-a-glance: March 31, 2024 $4.9B Total Assets (+3% from December 31, 2023) $595M Market Capitalization (+6% from December 31, 2023) $23.2M Net Income (Flat from Q1 2023) Net Corporate Mortgage $21.9M Spread Income1 (+4% from Q1 2023) Return on Average 17.09% Shareholders’ Equity1 1 Considered
Slide 7: MCAN's Business Model
MCAN’s Business Model MCAN is Canada's largest Mortgage Investment Corporation ("MIC") and the only MIC that is federally regulated LONG TERM Uniquely structured as a flow-through MIC1 OBJECTIVES • not taxed at the corporate level • distributes all taxable earnings annually • Sustained 10% • 67% of
Slide 8: MCAN Value Proposition
MCAN Value Proposition We differentiate ourselves from MIC peers with: 1. A lower risk profile; and 2. Higher returns driven by lower funding costs. We differentiate ourselves from OSFI-regulated peers with: 1. A focus on real estate lending and investing, including our construction and other invest
Slide 9: MCAN Value Proposition
MCAN Value Proposition • $4.9 billion of total assets, including $2.4 billion corporate mortgage portfolio, $2.1 billion securitized mortgage portfolio and meaningful corporate investments Unique Business • 100% owned origination platform (MCAN Home), deep third-party originator and broker Model wit
Slide 10: MCAN Value Proposition
MCAN Value Proposition • ~14% ownership in MCAP, Canada’s largest independent mortgage finance company (majority owned by CDPQ), generates substantial income and represents a source of growth Investment Portfolio a Source of Nascent • Unique opportunity for investors to participate in top tier priva
Slide 11: Business Model That Produces Results
Business Model That Produces Results AVERAGE RETURN ON MORTGAGE ASSETS ($M) NET INCOME ($M) SHAREHOLDERS’ EQUITY1 42% -11% 50% -14% 40% 27% 9% 18% 3% $77.5 17.1% $4,480 16.9% $4,345 15.1% 15.1% $64.4 $3,691 13.1% $3,390 $55.4 12.5% $48.3 $42.9 $2,389 $1,874 $23.2 2019 2020 2021 2022 2023 Q1 2024 201
Slide 12: 32-Year History of Attractive Dividends
32-Year History of Attractive Dividends Paying dividends since 1992 Declared Q1 2022 $0.36/share cash dividend and $0.97/share special stock dividend The Board declared a Q2 2024 dividend of $0.39 per share $0.97 $0.85 $0.85 $1.43 $1.44 $1.48 $1.31 $1.28 $1.36 $1.36 $1.13 $1.17 0$.39 2015 2016 2017
Slide 13: Strong Total Shareholder Return
Strong Total Shareholder Return Total CAGR1 Shareholder Return1 3-Year 64.66% 18.09% 5-Year 50.54% 8.53% 10-Year 221.60% 12.39% Source: Bloomberg 1 Total shareholder return and CAGR are adjusted for reinvested dividends; trading data as at March 31, 2024 13
Slide 14: Diversified Quality Mortgages and Other Investments
Diversified Quality Mortgages and Other Investments Mortgage Portfolio and Other Investments $4.9B Total Assets Data presented at March 31, 2024 14
Slide 15: Portfolio Quality and Lending Criteria
Portfolio Quality and Lending Criteria Corporate Mortgage Portfolio Average corporate Average LTV at Geographic Distribution mortgage term to maturity Origination (months) 11.5 66% • Prudent risk management practices are the foundation of the quality and diversification of our lending activities • C
Slide 16: MCAN Home
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Slide 17: Our Business
MCAN HOME Our Business • Award winning business • Focus on first time/first move-up homebuyers, self-employed professionals, property investors, individuals with credit challenges • Purchases, refinances and renewals • Fixed and adjustable-rate mortgages • Geographical focus in major urban areas of
Slide 18: Q1 2024 Highlights
MCAN HOME Q1 2024 Highlights Residential Insured $257M $171M Mortgages ($240M) Residential Uninsured Total Insured Mortgages ($1.1B) Originations Originations $86M $127M Securitized Uninsured Uninsured Mortgages ($2.1B) Originations Renewals 18
Slide 19: 2024 Outlook and Strategy
MCAN HOME 2024 Outlook and Strategy Outlook • Improvements to housing market activity expected though delayed due to Bank of Canada interest rate policy • Increased competition given market conditions • Continued strong renewals given current high interest rate environment • Solid housing market fun
Slide 20: Spotlight: Residential Mortgage Deal
Spotlight: Residential Mortgage Deal We help entrepreneurial Canadians access mortgage solutions for growth Self-employed individuals often face challenges when applying for mortgages in Canada due to THE CHALLENGE income verification, documentation requirements and risk perception. MCAN recently ex
Slide 21: MCAN Capital
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Slide 22: Our Business
MCAN CAPITAL Our Business Construction and Commercial Lending • Primarily residential construction loans for more affordable housing • Focus on urban/suburban growth markets in ON, AB, BC with proximity to transit • Negligible loan exposure to commercial income properties Marketable Securities • Man
Slide 23: Q1 2024 Highlights
MCAN CAPITAL Q1 2024 Highlights Non-Marketable $1.1B $122M Securities ($113M) Marketable Securities MCAP ($115M) ($50M) Construction and Construction and Commercial Commercial Commercial Loans ($57M) Portfolio Originations Construction Loans ($1.0B) $14M $76M 5-Year Marketable Non-Marketable Securit
Slide 24: Unique Portfolio of Real Estate Based Investments
Unique Portfolio of Real Estate Based Investments We are committed to increasing our investments in various funds that provide a current above-average yield or a projected longer term double digit return over the life of the funds. All funds we invest in are secured by real estate in Canada and prov
Slide 25: 2024 Outlook and Strategy
MCAN CAPITAL 2024 Outlook and Strategy Construction and Commercial • Continued focus on urban/suburban markets supported by increased immigration levels • Solid relationships with co-investors/partners • Maintain strong credit performance • Manage loan run-off following project completions in 2024 w
Slide 26: Spotlight: Vancouver Real Estate Market
Spotlight: Vancouver Real Estate Market Leveraging our experience and strong strategic partnerships with originators MCAN’s investment in the Greater Vancouver Area is focused on more affordable housing with family-oriented amenities and good transit access to Metro Vancouver (e.g., Langley, Surrey,
Slide 27: Investment in MCAP
Investment in MCAP • Strategic relationship with Canada’s largest independent mortgage finance company ($155 billion in AUM at February 29, 2024), BBB DBRS Rating • Privately owned - MCAN owns ~14% equity interest in MCAP (majority owned by CDPQ) • MCAP serves many institutional investors and over 4
Slide 28: MCAN Wealth
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Slide 29: Our Business
MCAN WEALTH Our Business • CDIC-insurable term deposits • Low-cost liability funding • Significant source of funding • Short and long-term investment options • Non-redeemable • Direct to consumer channel launched in 2024 29
Slide 30: Q1 2024 Highlights
MCAN WEALTH Q1 2024 Highlights $277M 18.2Mths Term Deposits Average Term Raised to Maturity 3 >40 Total Number of Large Total Number of Bank Boards Used to Brokers and Agents Source Term Deposits Used to Source Term Deposits 30
Slide 31: 2024 Outlook and Strategy
MCAN WEALTH 2024 Outlook and Strategy • Outlook • Active market for deposits • Continued volatility in Government of Canada bond rates will impact deposit market • Strategy • Launched new digital deposit channel under MCAN Wealth brand in Jan 2024 • Expect to continue to increase brand awareness and
Slide 32: ESG Overview
MCAN FINANCIAL GROUP ESG Overview Our values and culture are rooted in our stakeholders, including our shareholders, customers, business partners and team members, and their communities. Our ESG practices focus on: • Supporting sustainable residential communities by providing residential mortgages u
Slide 33: 2023 ESG Highlights
HIGHLIGHTS 2023 ESG Highlights 7,940 >$55M $57,000 Trees planted in Committed for Amount of free partnership with investments in equity mortgage payments One Tree Planted funds focused on the covered via MCAN environment ICON Partner Program >120 $24M $81,000 Hours volunteered Funded in construction
Slide 34: Our Amazing Team
MCAN FINANCIAL GROUP “A fair place and room Our Amazing Team to grow. People are supportive and • Best WorkplacesTM in Canada in 2022 and 2023 collaborative. • Canada’s Top Small & Medium Employers 2024 The "Can Do" attitude.” • Report on Business Women Lead Here last 5 years • Great Place to Work®
Slide 35: Executive Leadership Team
Executive Leadership Team Don Coulter Peter Ryan President and Chief Executive Officer Interim Chief Financial Officer Don has over 25 years of executive banking experience. Peter has over 15 years of financial and industry Prior to joining MCAN, he was the President & Chief experience, including ov
Slide 36: MCAN Value Proposition
MCAN Value Proposition We differentiate ourselves from MIC peers with: 1. A lower risk profile; and 2. Higher returns driven by lower funding costs. We differentiate ourselves from OSFI-regulated peers with: 1. A focus on real estate lending and investing, including our construction and other invest
Slide 37: Contact Details
Don Coulter Peter Ryan President and Chief Executive Officer Interim Chief Financial Officer (416) 203-5931 (416) 847-2460 MCAN Financial Group 600-200 King Street West, Toronto, ON M5H 3T4 (416) 572-4880 | mcanexecutive@mcanfinancial.com | mcanfinancial.com | TSX: MKP 37
Slide 38: Appendix
L Appendix => 38
Slide 39: Balance Sheet Highlights
Balance Sheet Highlights Trend YoY Q1 2024 Q1 2023 Uninsured Originations $86 million $72 million Insured Originations* $171 million $68 million Residential Construction Originations $122 million $116 million Return on Average Shareholders' Equity1 17.09% 18.60% Uninsured Balance $1.05 billion $886
Slide 40: Earnings Highlights
Earnings Highlights The Board declared a Q2 2024 cash dividend of $0.39 per share. Trend YoY Q1 2024 Q1 2023 Spread of Corporate Mortgages over Term Deposit Interest 3.14% 3.78% and Expense1 Net Corporate Mortgage Spread Income1 $21.9 million $21.0 million Net Investment Income - Corporate Assets $3