Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — FY2020 Earnings Presentation
30 slides from Mcan Mortgage's earnings presentation, Feb 23, 2021
Slide 1: Investor Presentation 2020 Annual & Fourth Quarter
INVESTOR PRESENTATION 2020 ANNUAL & FOURTH QUARTER February 23, 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. 2020 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 • Payment deferrals of up to six months were offered on existing mortgages for those eligible. No mortgages remaining in our payment deferral program
Slide 7: Diversified Quality Real Estate Investments
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS MCAN's Real Estate Investments $1.56 Single Family Residential Billion Total Mortgages Corporate Assets Equity investment in MCAP Non-marketable securities Marketable securities $2.73 Commercial Loans Billion Total Assets Construction Loans • 14.2 months a
Slide 8: Deposit Funding
DEPOSIT FUNDING MCAN's Term Deposits: • Since 1993 • Non-redeemable prior to maturity1 • Eligible for CDIC insurance coverage • $1.23 billion at December 31, 2020 • 18.3 months average term to maturity 1 Term deposits are non-redeemable prior to maturity except in the event of the death of a deposit
Slide 9: 10 Year History of Net Income and Earnings per Share
10 YEAR HISTORY OF NET INCOME AND EARNINGS PER SHARE 48.3 42.9 40.2 39.9 36.3 32.9 30.2 27.1 25.4 21.5 2.01 1.68 1.75 1.72 1.75 1.54 1.51 1.54 1.22 1.23 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net Income ($ Millions) Earnings per Share ($) 9
Slide 10: MCAN's Capital History
MCAN'S CAPITAL HISTORY Q4 2020 book value 10 Year History - Capital Growth and Book Value per Share $14.01 per share* 400 $14.01 $15 $13.64 350 $12.89 $12.70 $12.21 300 $11.36 $12 $10.83 $10.50 $9.40 $9.49 250 ($ millions) $9 200 150 $6 100 $3 50 0 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 11: 10 Year History Dividend Growth & Yield
Declared Q1 2021 cash 10 YEAR HISTORY 8.59% dividend of $0.34 per share DIVIDEND GROWTH & YIELD 10 year and special average stock dividend yield** of $0.85 per share 10% 8% $1.43 $1.36 $1.31 $1.28 6% $1.13 $1.17 $1.08 $1.09 $1.12 $1.12 4% 2% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Regul
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: Investment Strategy: 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 and knowledge exists • Leverage strategic relationships to provide added market and work-
Slide 16: Investment Strategy: 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: 2020 Annual & Q4 Highlights
2020 ANNUAL & Q4 HIGHLIGHTS 17
Slide 18: 2020 Performance: Highlights
2020 PERFORMANCE: HIGHLIGHTS 2020 2019 Mortgage Interest - Corporate Assets $64.1 million $56.4 million Net Investment Income - Corporate $60.3 million $64.9 million Net Investment Income - Securitization $4.0 million $4.0 million Net Gain (Loss) on Marketable Securities $(9.1) million $14.0 million
Slide 19: 2020 Performance: Capital, Leverage & Dividends
2020 PERFORMANCE: CAPITAL, LEVERAGE & DIVIDENDS 2020 2019 CET 1 Ratio*,*** 21.67% 22.52% Total Capital Ratio*,*** 22.02% 22.52% Leverage Ratio* 10.17% 12.58% Income Tax Assets to Capital Ratio* 5.09 4.93 Dividends per Share $1.36 $1.28 • The Board declared a first quarter cash dividend of $0.34 per
Slide 20: 2020 Performance: Quarterly Highlights
2020 PERFORMANCE: QUARTERLY HIGHLIGHTS QoQ Q4 2020 Q3 2020 Q2 2020 Q1 2020 USF Balance $532 million $491 million $444 million $437 million USF Originations $122 million $94 million $52 million $71 million ISF Originations $218 million $196 million $102 million $100 million Corporate Assets $1.56 bil
Slide 21: Total Mortgage Portfolio
TOTAL MORTGAGE PORTFOLIO Mortgages - Corporate and Securitization ($ millions) 1,136 1,072 1,017 887 784 1,253 1,089 904 863 922 2016 2017 2018 2019 2020 Corporate Securitization ($ millions) 2020 2019 Change 2018 Change Single Family $ 706 $ 538 31 % $ 375 88 % Construction & $ 547 $ 551 (1)% $ 548
Slide 22: Strong Capital Position
STRONG CAPITAL POSITION 23.40% 22.52% 22.17% 22.02% 20.80% 12.58% 11.70% 11.46% 10.26% 10.17% 5.4 5.0 5.1 4.9 5.0 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Total Capital Ratio (%)*, *** Leverage Ratio (%)* Income Tax Assets to Capital Ratio* * Non IFRS measure as defined in MCAN’s 2020 MD&A *** Effective March
Slide 23: Key Metrics: Quarterly Trend Charts
KEY METRICS: QUARTERLY TREND CHARTS Net income Basic and diluted EPS $22.7 $22.1 $0.92 $0.89 $10.6 $0.44 $0.32 $7.8 $(0.40) $(9.7) Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Return on average shareholders' Book value per common share* equity* 28.04% 25.92% $14.01 $13.64 $13.46 12.84
Slide 24: Portfolio Credit Quality
PORTFOLIO CREDIT QUALITY 1.25% 1.00% 0.75% 0.50% 0.30% 0.25% Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sept 2020 Dec 2020 Impaired Mortgages as % of Total Corporate Mortgages* The impaired corporate mortgage ratio* was 0.30% at December 31, 2020 compared to 0.27% at September 30, 2020 an
Slide 25: MCAN's Mission and Objectives
MCAN'S MISSION AND OBJECTIVES 25
Slide 26: MCAN's Mission
MCAN'S MISSION • Our mission at work every day is to provide sustainable growth and returns for all of our stakeholders: ◦ through relationship-driven mortgage lending and investing; ◦ anchored by delivering quality work through an expert, engaged and committed team; and ◦ focused on servicing our c
Slide 27: Long Term Objectives
LONG TERM OBJECTIVES • Sustained annual growth of assets 10% • Sustained ROE 13-15% • Sustained and prudent dividend growth 27
Slide 28: 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 29: Footnotes and References
Footnotes and References • [*] Non IFRS measure as defined in MCAN’s 2020 MD&A • [**] MKP CN Equity - Dividend Indicated Yield – Gross; monthly data 2011 to 2020 • [***] Effective March 31, 2020, the total capital ratio includes Tier 2 capital comprising Stage 1 and Stage 2 allowances on our mortgag
Slide 30: 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 30