Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — FY2024 Earnings Presentation
39 slides from Mcan Mortgage's earnings presentation, Feb 24, 2025
Slide 1: Investor Presentation
Investor Presentation February 24, 2025
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 ow
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: YTD 2024
MCAN at-a-glance: YTD 2024 $5.3B Total Assets (+13% from December 31, 2023) $2.4B Securitized Mortgages (+25% from December 31, 2023) $707M Market Capitalization (+26% from December 31, 2023) $77.6M Net Income (Flat to 2023) Net Corporate Mortgage $83.4M Spread Income1 (-5% from 2023) Return on Aver
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 • $5.3 billion of total assets, including $2.5 billion corporate mortgage portfolio, $2.4 billion securitized mortgage portfolio and $306 million real estate-related investment portfolio Unique Business • 100% owned origination platform (MCAN Home), deep third-party originator
Slide 10: MCAN Value Proposition
MCAN Value Proposition • ~14% ownership in MCAP, Canada’s largest independent mortgage finance company (majority owned by CDPQ), generates substantial income and represents a source of growth Investment Portfolio a Source of Nascent • Unique opportunity for investors to participate in top tier priva
Slide 11: Business Model That Produces Results
Business Model That Produces Results AVERAGE RETURN ON MORTGAGE ASSETS ($M) NET INCOME ($M) SHAREHOLDERS’ EQUITY1 42% 9% 18% 10% 12% 50% -14% 40% 0% $77.5 $77.6 16.9% 15.1% $64.4 $4,884 13.1% 13.4% $4,345 $55.4 12.5% $3,691 $3,390 $42.9 $2,389 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2
Slide 12: 32-Year History of Attractive Dividends
32-Year History of Attractive Dividends Paying dividends since 1992 The Board declared a Q1 2025 dividend of $0.41 per share $0.97 $0.85 $1.48 $1.56 $1.43 $1.36 $1.36 $1.44 $1.31 $1.28 $1.13 $1.17 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Regular Dividend per Share Special Stock Dividend per
Slide 13: Strong Total Shareholder Return
Strong Total Shareholder Return Total CAGR1 Shareholder Return1 3-Year 47.12% 13.73% 5-Year 88.32% 13.50% 10-Year 241.35% 13.06% Source: Bloomberg 1 Total shareholder return and CAGR are adjusted for reinvested dividends; trading data as at December 31, 2024 13
Slide 14: $5.3B Total Assets
Diversified Quality Mortgages and Other Investments Mortgage Portfolio and Other Investments $5.3B Total Assets Data presented as at December 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) 9.5 65% • Prudent risk management practices are the foundation of the quality and diversification of our lending activities • Co
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Slide 17: Our Business (MCAN Home)
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, switch transfers and renewals • Fixed and adjustable-rate mortgages • Geographical focus in maj
Slide 18: 2024 Highlights (MCAN Home)
MCAN HOME 2024 Highlights Residential Insured Mortgages ($127M) $1.2B $638M Residential Uninsured Mortgages ($1.2B) Total Insured Originations Originations (+28% from 2023) (+22% from 2023) $430M $449M Uninsured Uninsured Securitized Mortgages Originations Renewals ($2.4B) (+22% from 2023) (-9% from
Slide 19: 2025 Outlook and Strategy (MCAN Home)
MCAN HOME 2025 Outlook and Strategy Outlook • Solid housing starts expected despite near term economic and geopolitical uncertainty, though condominium starts expected to slow given current market • Improvements to the housing market expected, with sales activity and prices anticipated to rebound wi
Slide 20: Spotlight: Residential Mortgage Deal
Spotlight: Residential Mortgage Deal Financial Reboot: Support for Credit Optimization, Rehabilitation and Education Many Canadians find themselves carrying increased debt due to life events. It can be difficult to imagine a THE CHALLENGE path forward. Our client, a 35-year-old homeowner in Guelph,
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Slide 22: Our Business (MCAN Capital)
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: 2024 Highlights (MCAN Capital)
MCAN CAPITAL 2024 Highlights Non-Marketable Securities MCAP Marketable Securities ($117M) ($122M) ($66M) $1.1B $653M Commercial Loans Construction and Construction and ($17M) Commercial Commercial Portfolio Originations (-1% from 2023) (-2% from 2023) $16M $60M Construction Loans ($1.1B) 10-Year Mar
Slide 24: Unique Portfolio of Real Estate Based Investments
Unique Portfolio of Real Estate Based Investments We are committed to our investments in various funds that provide a current above-average yield or a projected longer term return over the life of the funds. All funds we invest in are secured by real estate in Canada and provide debt and equity capi
Slide 25: 2025 Outlook and Strategy (MCAN Capital)
MCAN CAPITAL 2025 Outlook and Strategy Construction and Commercial • Continued focus on major urban markets and affordable housing product • Maintain strong relationships with business partners e.g., originators and co-lenders • Maintain strong credit performance • Manage loan run-off following proj
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 November 30, 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
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Slide 29: Our Business (MCAN Wealth)
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: 2024 Highlights (MCAN Wealth)
MCAN WEALTH 2024 Highlights $1.2B 18.5Mths Term Deposits Average Term Raised in 2024 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: 2025 Outlook and Strategy (MCAN Wealth)
MCAN WEALTH 2025 Outlook and Strategy • Outlook • Declining interest rates can present some downside risk to market volumes • Depositors are expected to re-assess investment options as they search for yield • Strategy • Strengthen brand awareness of MCAN Wealth’s digital offering • Widen digital foo
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: 2024 ESG Highlights
HIGHLIGHTS 2024 ESG Highlights 8,960 >$55M $77,500 Trees planted in Committed for Amount of free partnership with investments in equity mortgage payments our partner funds focused on covered via MCAN program environmental ICON Partner sustainability and Program adapting to climate change >$25M $67,0
Slide 34: Our Amazing Team
MCAN FINANCIAL GROUP “A fair place and room Our Amazing Team to grow. People are supportive and collaborative. • Top Mortgage Employer for 2024 by Canadian Mortgage Professional The "Can Do" attitude.” • Canada’s Top Small and Medium Employers for 2024 by Mediacorp Canada Inc. • Canada’s Most Admire
Slide 35: Executive Leadership Team
Executive Leadership Team Derek Sutherland Santokh Birk Interim Chief Executive Officer SVP and Chief Financial Officer Derek has over 25 years of business experience, Santokh has over 30 years of progressive experience predominantly within the financial services sector. Derek covering key areas in
Slide 36: Contact: Derek Sutherland, Santokh Birk
Derek Sutherland Santokh Birk Interim Chief Executive Officer SVP and Chief Financial Officer (416) 203-5931 (289) 454-4196 MCAN Financial Group 700-200 King Street West, Toronto, ON M5H 3T4 (416) 572-4880 | mcanexecutive@mcanfinancial.com | mcanfinancial.com | TSX: MKP 36
Slide 37: Appendix
=> Appendix L.
Slide 38: Balance Sheet Highlights
Balance Sheet Highlights Trend YoY 2024 2023 Uninsured Originations +35% $562 million $417 million Insured Originations* +22% $638 million $523 million Residential Construction Originations -2% $647 million $659 million Return on Average Shareholders' Equity1 -1.65% 13.40% 15.05% Uninsured Asset Bal
Slide 39: Earnings Highlights
Earnings Highlights The Board declared a Q1 2025 cash dividend of $0.41 per share. Trend YoY 2024 2023 Spread of Corporate Mortgages over Term Deposit Interest 2.92% 3.57% and Expense1 -0.65% Net Corporate Mortgage Spread Income1 -5% $83.4 million $87.8 million Net Investment Income - Corporate Asse