Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Shareholder Meeting (May 2019)
43 slides from Mcan Mortgage's shareholder meeting presentation, May 8, 2019
Slide 1: Annual & Special Meeting of Shareholders Presentation
ANNUAL & SPECIAL MEETING OF SHAREHOLDERS PRESENTATION May 8, 2019
Slide 2: Introductions
INTRODUCTIONS Ian Sutherland Chair of the Board Founding Partner MCAN Mortgage Corporation 2
Slide 3: Thank You to Our Retiring Director
THANK YOU TO OUR RETIRING DIRECTOR William Terrence Wright Director since September 2013 MCAN Mortgage Corporation 3
Slide 4: 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 5: Meeting Agenda
MEETING AGENDA 1. Call meeting to order and appoint Secretary and Scrutineer 2. 2018 Annual Report including Audited Financial Statements MCAN Mortgage Corporation 5
Slide 6: Meeting Agenda
MEETING AGENDA 3. Amendment to Section 3.01 of By-law No. Ten 4. Election of Directors MCAN Mortgage Corporation 6
Slide 7: Board of Directors Nominees
BOARD OF DIRECTORS NOMINEES Verna Cuthbert Susan Doré Gordon Herridge Loraine McIntosh Director since Director since Director since Director since September 2013 May 2010 May 2018 May 2017 Gaelen Morphet Derek Sutherland Ian Sutherland Karen Weaver Director since Director since Director since Direct
Slide 8: Meeting Agenda
MEETING AGENDA 5. Appointment of Auditors 6. Amendment to Section 3.17 of By-law No. Ten 7. Amendment to Section 3.04 of By-law No. Ten MCAN Mortgage Corporation 8
Slide 9: Meeting Agenda
MEETING AGENDA 8. Termination of formal business of meeting 9. Discussion of Company’s business performance 10. Question period MCAN Mortgage Corporation 9
Slide 10: Management Presentation
MANAGEMENT PRESENTATION May 8, 2019
Slide 11: Welcome
WELCOME Investors Depositors Borrowers MCAN Regulatory Team Bodies Members Valued Business Partners MCAN Mortgage Corporation 11
Slide 12: Today
TODAY 1. CEO’s Business Overview 2. 2018 Year in Review 3. First Quarter 2019 Highlights 4. Strategy and Outlook MCAN Mortgage Corporation 12
Slide 13: Executive Management
EXECUTIVE MANAGEMENT Karen Weaver Dipti Patel Emily Randle Carl Brown Sylvia Pinto President & CEO VP & CFO VP & CRO VP, Operations VP, Corporate Secretary & Treasurer & Governance Officer Martin Beaudry Joseph Shaw Paul Gill Mike Jensen Milica Pejic VP, Single Family VP & CIO VP, Information VP & C
Slide 14: 55+ Years Collective Experience
COLLECTIVE EXPERIENCE 188 163 years years Real Estate Lending Business 55+ years MCAN Mortgage Corporation 14
Slide 15: 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 16: Diversified Quality Real Estate Investments
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS Residential & $2.14 $1.2B Single TotalBillion Corporate Non- Total Assets Family Assets Residential Residential Construction Mortgages Equity Commercial investment in MCAP Non-marketable securities Marketable securities MCAN Mortgage Corporation 16
Slide 17: Conservative Leverage
CONSERVATIVE LEVERAGE 25.0% 22.62% 23.02% 22.55% 21.26% 21.66% 25 20.0% 20 15.0% 11.31% 11.79% 15 9.96% 10.46% 10.0% 10 5.1 5.1 4.9 4.6 4.6 5.0% 5 0.0% 0 2014 2015 2016 2017 2018 CET 1, Tier 1 and Total Capital Ratio (%, all-in) Leverage Ratio (%) (effective 2015 onwards) Income Tax Assets to Capita
Slide 18: Deposit Funding
DEPOSIT FUNDING MCAN’s Term Deposits: • Since 1993 • Non-redeemable prior to maturity • Eligible for CDIC insurance coverage • $920 million at December 31, 2018 • 18.7 months average term to maturity MCAN Mortgage Corporation 18
Slide 19: 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 36.3 35.0 32.9 $3.50 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 $1.50 $1.75 $1.72 $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 20: 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 21: 10 Year History Dividend Growth & Yield
10 YEAR HISTORY Avg yield 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 21
Slide 22: 2018 Year in Review
2018 YEAR IN REVIEW MCAN Mortgage Corporation 22
Slide 23: 2018 Performance: Assets & Income
2018 PERFORMANCE: ASSETS & INCOME 2018 Corporate Assets $1.2 Billion Net Investment Income Corporate $48.1 Million Securitization $5.0 Million Basic and diluted earnings per share $1.54 Unrealized gains on REITS ($0.15) Return on average 11.90% shareholders’ equity Book value per common share $12.89
Slide 24: 2018 Performance: Single Family Originations
2018 PERFORMANCE: SINGLE FAMILY ORIGINATIONS ($ Millions) 50.8 35.2 33.1 28.0 27.6 25.0 13.0 12.4 6.7 3.8 Q1-18 Q2-18 Q3-18 Q4-18 SF - uninsured SF - insured SF - uninsured completed inventory MCAN Mortgage Corporation 24
Slide 25: 2018 Performance: Construction & Commercial Originations
2018 PERFORMANCE: CONSTRUCTION & COMMERCIAL ORIGINATIONS ($ Millions) 52.6 44.8 40.6 15.2 3.7 Q1-18 Q2-18 Q3-18 Q4-18 Construction Commercial MCAN Mortgage Corporation 25
Slide 26: Corporate Impaired Ratio
CORPORATE IMPAIRED RATIO < 0.04% Avg. 5yr 0.94% loan losses 0.53% 0.43% 0.34% 0.29% Dec Dec Dec Dec Dec 2014 2015 2016 2017 2018 MCAN Mortgage Corporation 26
Slide 27: Corporate Net Spread Quarterly Trend
CORPORATE NET SPREAD QUARTERLY TREND 7.00% 6.50% 6.00% 5.50% 5.72% 5.65% 5.62% 5.56% 5.53% 5.00% 5.14% 5.28% 5.25% 4.50% 4.00% 3.27% 3.34% 3.50% 3.07% 3.17% 2.94% 3.00% 2.92% 2.93% 3.00% 2.50% 2.00% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Avg. corporate mortgage portfolio yield Spread of mor
Slide 28: 2018 Performance Overall
2018 PERFORMANCE OVERALL Stronger balance sheet Asset mix and risk profile Successful marketing and sales Focused improvements on infrastructure Committed, focused, management team MCAN Mortgage Corporation 28
Slide 29: First Quarter 2019 Highlights
FIRST QUARTER 2019 HIGHLIGHTS MCAN Mortgage Corporation 29
Slide 30: Q1 2019 Performance: Assets & Income
Q1 2019 PERFORMANCE: ASSETS & INCOME Q1 2019 Corporate Assets $1.26 Billion Net Investment Income Corporate $19.0 Million Securitization $1.1 Million Basic and diluted earnings per share $0.60 Return on average 18.36% shareholders’ equity Book value per common $13.18 share MCAN Mortgage Corporation
Slide 31: Q1 2019 Performance: Highlights
Q1 2019 PERFORMANCE: HIGHLIGHTS Q1 2019 USF Balance $308 Million USF Originations $63 Million ISF Originations $38 Million Net Spread 2.73% Mark to Market Unrealized Gain on $8 Million securities MCAN Mortgage Corporation 31
Slide 32: Q1 2019 Performance: Capital, Leverage & Dividends
Q1 2019 PERFORMANCE: CAPITAL, LEVERAGE & DIVIDENDS Q1 2019 CET 1 22.08% Leverage ratio 12.04% Income tax assets to 4.69x capital Dividends per share $0.32 MCAN Mortgage Corporation 32
Slide 33: MCAN 5 Year Total Return vs. Index
MCAN 5 YEAR TOTAL RETURN vs. INDEX $200 5 year MCAN (MKP) $175 9.3% 9.3% CAGR $150 S&P / TSX Fin. 6.9% $125 S&P / TSX 1 year $100 $100 4.1% -18.6% $75 2013 2014 2015 2016 2017 2018 MCAN Mortgage Corporation 33
Slide 34: Strategy and Outlook
STRATEGY AND OUTLOOK MCAN Mortgage Corporation 34
Slide 35: 2019 Business Focus: Single Family
2019 BUSINESS FOCUS Single Family: Uninsured single family Insured single family and securitization Sales and marketing Underwriting platform MCAN Mortgage Corporation 35
Slide 36: 2019 Business Focus: Construction & Commercial
2019 BUSINESS FOCUS Construction & Commercial: Commercial mortgages Increase/maintain Construction mortgages Underwriting and asset management platform MCAN Mortgage Corporation 36
Slide 37: 2019 Business Focus: Other
2019 BUSINESS FOCUS Other: Marketable securities Non-marketable securities MCAP Liquidity and balance sheet management MCAN Mortgage Corporation 37
Slide 38: 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 38
Slide 39: Long Term Objectives
LONG TERM OBJECTIVES Achieved through: • Engaged and committed team • Focused business activities within our risk appetite • Efficient internal operations • Strong and valued partner relationships • Strong governance • Agile response to markets MCAN Mortgage Corporation 39
Slide 40: 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 40
Slide 41: Footnotes & References
FOOTNOTES & REFERENCES • [1] Non IFRS measure as defined in MCAN’s Q1 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 Q1-2019 MD&A and historical quarterly and annual reports •
Slide 42: Thank You
THANK YOU MCAN Mortgage Corporation 42
Slide 43: 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 43