Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q1 2020 Earnings Presentation
29 slides from Mcan Mortgage's earnings presentation, May 12, 2020
Slide 1: Investor Presentation 2020 First Quarter
INVESTOR PRESENTATION 2020 FIRST QUARTER May 12, 2020
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. Q1 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 • Successfully moved to remote workforce and operations within one week • Little to no disruption in operations • Mortgage payment deferral option of up to six months for those who are eligible • Strong operating platform, solid liquidity position • Continued
Slide 7: Diversified Quality Real Estate Investments
DIVERSIFIED QUALITY REAL ESTATE INVESTMENTS MCAN'S Real Estate Investments Single Family Residential $1.43 Billion Total Corporate Assets Equity investment in MCAP Non-marketable securities Marketable securities $2.21 Commercial Billion Total Assets Construction • 12.2 months average term to maturit
Slide 8: Deposit Funding
DEPOSIT FUNDING MCAN's Term Deposits: • Since 1993 • Non-redeemable prior to maturity1 • Eligible for CDIC insurance coverage • $1.11 billion at March 31, 2020 • 17 months average term to maturity 1 Term deposits are non-redeemable prior to maturity except in the event of the death of a depositor or
Slide 9: 10 Year History of Net Income and Earnings per Share
10 YEAR HISTORY OF NET INCOME AND EARNINGS PER SHARE 48.3 40.2 39.9 36.3 32.9 30.2 27.1 25.4 21.5 2.01 1.68 1.75 1.72 1.54 1.51 1.54 1.22 1.23 (0.40) (9.7) 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Earnings per Share ($) Net Income ($ Millions) 9
Slide 10: MCAN's Capital History
MCAN'S CAPITAL HISTORY Q1 2020 10 Year History - Capital Growth and Book Value per Share book value $12.90 per share* 350 $13.64 $14 $12.70 $12.89 $12.90 $12.21 300 $11.36 $12 $10.83 $10.50 250 $9.40 $9.49 $10 ($ millions) 200 $8 150 $6 100 $4 50 $2 0 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 11: 10 Year History Dividend Growth & Yield
10 YEAR HISTORY 8.7% DIVIDEND GROWTH & YIELD 10 year average yield** 12% 10% 8% $1.43 $1.31 $1.28 $1.12 $1.12 $1.13 $1.17 6% $1.08 $1.09 4% $0.34 2% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Dividend Yield ** 10 Year Average Yield Regular Dividend ** MKP CN Equity - Dividend Indicated
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: Q1 2020 Highlights
Q1 2020 HIGHLIGHTS 17
Slide 18: Q1 2020 Performance: Quarterly Highlights
Q1 2020 PERFORMANCE: QUARTERLY HIGHLIGHTS QoQ Q1 2020 Q4 2019 Q3 2019 Q2 2019 USF Balance $437 million $428 million $413 million $357 million USF Originations $71 million $58 million $78 million $56 million ISF Originations $100 million $60 million $77 million $57 million Corporate Assets $1.43 bill
Slide 19: Q1 2020 Performance: Highlights
Q1 2020 PERFORMANCE: HIGHLIGHTS Q1 2020 Q1 2019 Mortgage Interest - Corporate Assets $15.4 million $13.2 million Net Investment Income (Loss) - Corporate $(5.0) million $18.8 million Net Investment Income - Securitization $0.8 million $1.1 million Net Gain (Loss) on Securities $(15.7) million $8.0 m
Slide 20: Q1 2020 Performance: Capital, Leverage & Dividends
Q1 2020 PERFORMANCE: CAPITAL, LEVERAGE & DIVIDENDS Q1 2020 Q4 2019 CET 1 Ratio*, *** 21.80% 22.52% Total Capital Ratio*, *** 22.17% 22.52% Leverage Ratio* 11.70% 12.58% Income Tax Assets to Capital Ratio* 5.03 4.93 Dividends per Share $0.34 $0.32 * Non IFRS measure as defined in MCAN’s Q1 2020 MD&A
Slide 21: Total Mortgage Portfolio
TOTAL MORTGAGE PORTFOLIO Mortgages - Corporate and Securitization ($ millions) 1,072 752 1,017 784 887 1,188 1,089 904 863 922 2016 2017 2018 2019 Q1 2020 Corporate Securitization ($ millions) Q1 2020 Q4 2019 Change Q1 2019 Change Single Family $ 598 $ 538 11 % $ 452 32 % Construction & $ 590 $ 551
Slide 22: Strong Capital Position
STRONG CAPITAL POSITION 22.09% 22.40% 22.52% 22.17% 21.77% 12.16% 12.28% 12.58% 12.05% 11.70% 4.7 4.7 5.1 4.9 5.0 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Total Capital Ratio (%)*, *** Leverage Ratio (%)* Income Tax Assets to Capital Ratio* * Non IFRS measure as defined in MCAN’s Q1 2020 MD&A *** Effective Mar
Slide 23: Key Metrics: Quarterly Trend Charts
KEY METRICS: QUARTERLY TREND CHARTS Net income Basic and diluted EPS $14.3 $14.6 $10.6 $0.60 $0.60 $8.9 $0.44 $0.37 $(0.40) $(9.7) Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Return on average shareholders' equity* Book value per common share* 18.36% 18.05% 11.27% 12.84% $13.53 $13.6
Slide 24: Portfolio Credit Quality
PORTFOLIO CREDIT QUALITY 0.50% 0.39% 0.40% 0.30% 0.20% 0.10% 0.00% Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Impaired Mortgages as % of Total Corporate Mortgages* * Non IFRS measure as defined in MCAN’s Q1 2020 MD&A 24
Slide 25: MCAN's Mission and Objectives
MCAN'S MISSION AND OBJECTIVES 25
Slide 26: MCAN's Mission
MCAN'S MISSION • Provide sustainable growth and returns for our shareholders: ◦ through relationship-driven mortgage lending and investing ◦ anchored by quality work delivered by an expert, engaged and committed team ◦ focused on our customers (internal and external) and partners 26
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: Footnotes and References
Footnotes and References • [*] Non IFRS measure as defined in MCAN’s Q1 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 mort
Slide 29: 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 29