Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q1 2019 Earnings Presentation
25 slides from Mcan Mortgage's earnings presentation, May 2019
Slide 1: Investor Presentation First Quarter 2019
INVESTOR PRESENTATION FIRST QUARTER 2019 May 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. Q1 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 $1.3B
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS $1.3B Single Family Residential & Total Non- Corporate Residential Residential Assets Mortgages Construction Equity Commercial $2.17 investment Billion in MCAP Total Assets Non-marketable securities Marketable securities Data presented as at March 31, 2019
Slide 7: Deposit Funding
DEPOSIT FUNDING MCAN’s Term Deposits: • Since 1993 • Non-redeemable prior to maturity • Eligible for CDIC insurance coverage • $946 million at March 31, 2019 • 17.2 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: First Quarter 2019 Highlights
FIRST QUARTER 2019 HIGHLIGHTS MCAN Mortgage Corporation 11
Slide 12: Q1 2019 Performance: Highlights
Q1 2019 PERFORMANCE: HIGHLIGHTS Q1 2019 Q4 2018 USF Balance $308 Million $256 Million USF Originations $63 Million $51 Million ISF Originations $38 Million $28 Million Corporate Assets $1.26 Billion $1.22 Billion Net Spread 2.73% 2.93% Mark to Market Unrealized Gain (Loss) $8.0 Million ($4.2 Million
Slide 13: Q1 2019 Performance: Highlights
Q1 2019 PERFORMANCE: HIGHLIGHTS Q1 2019 Q1 2018 Net Investment Income Corporate $18.7 Million $13.8 Million Securitization $1.1 Million $1.3 Million Basic and diluted $0.60 $0.45 earnings per share Return on average 18.36% 14.10% shareholders’ equity MCAN Mortgage Corporation 13
Slide 14: Q1 2019 Performance: Capital, Leverage & Dividends
Q1 2019 PERFORMANCE: CAPITAL, LEVERAGE & DIVIDENDS Q1 2019 Q4 2018 CET 1 22.09% 21.66% Leverage ratio 12.05% 11.79% Income tax assets 4.69x 4.64x to capital Dividends per $0.32 $0.32 share MCAN Mortgage Corporation 14
Slide 15: Corporate Mortgage Portfolio
CORPORATE MORTGAGE PORTFOLIO Total Corporate Mortgages - Single Family and Construction & Commercial ($ millions) Construction & 470 544 Commercial 452 547 529 533 Single Family 443 474 452 375 330 375 2014 2015 2016 2017 2018 Q1-2019 MCAN Mortgage Corporation 15
Slide 16: Total Mortgage Portfolio
TOTAL MORTGAGE PORTFOLIO Mortgages - Corporate and Securitization ($ millions) 944 904 863 996 922 895 Corporate 1,076 1,072 1,017 741 887 871 Securitization 2014 2015 2016 2017 2018 Q1-2019 ($ millions) Q1 2019 Q4 2018 Change Q1 2018 Change Single Family $452 $375 21% $280 62% Construction & Commer
Slide 17: Strong Capital Position
STRONG CAPITAL POSITION 25.00% 21.66% 22.08% 21.29% 21.47% 25 20.58% 20.00% 20 15.00% 11.74% 11.55% 11.79% 12.05% 15 11.35% 10.00% 10 5.00% 4.3 4.6 4.9 4.6 4.7 5 0.00% 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 CET 1, Tier 1 and Total Capital Ratio (%, all-in) Leverage Ratio (%) (effective 2015) Income Tax Ass
Slide 18: Key Metrics: Quarterly Trend Charts
KEY METRICS: QUARTERLY TREND CHARTS (as at March 31, 2019) Return on average shareholders' equity1 Net Income (%) ($ millions) 18.36% 14.3 14.10% 14.54% 14.29% 11.1 11.0 10.6 4.66% 3.5 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Basic and diluted earnings per share Book value per com
Slide 19: Credit Quality & Risk Management
CREDIT QUALITY & RISK MANAGEMENT 0.60% 0.40% 0.30% 0.20% 0.00% Jun Sep Dec Mar Jun Sep Dec Mar 2017 2017 2017 2018 2018 2018 2018 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 Emily Randle President and CEO Vice President and Chief Risk Officer Dipti Patel Mike Jensen Vice President and Chief Compliance Officer Vice President and Chief Financial Officer (Chief Anti Money Laundering & Privacy Officer) Joseph Shaw Sylvia Pinto Vice Presiden
Slide 24: Footnotes and References
Footnotes and 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 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