Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Shareholder Meeting (May 2022)
59 slides from Mcan Mortgage's shareholder meeting presentation, May 10, 2022
Slide 1: Annual and Special Meeting of Shareholders
Annual and Special Meeting of Shareholders May 10, 2022
Slide 2: Opening Remarks
: Mcan...... Opening Remarks
Slide 3: 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 4: Notice of Meeting and Establishment of Quorum
Notice of Meeting and Establishment of Quorum
Slide 5: 2021 Financial Statements
: Mcan...... 2021 Financial Statements
Slide 6: Amendment to Section 3.01 of By-law No. Ten
Amendment to Section 3.01 of By-law No. Ten
Slide 7: Election of Directors
: Mcan...... Election of Directors
Slide 8: Appointment of Auditors
: Mcan...... Appointment of Auditors
Slide 9: Certain Amendments to Article 8 of By-law No. Ten
Certain Amendments to Article 8 of By-law No. Ten
Slide 10: Board's Approach to Executive Compensation
Board’s Approach to Executive Compensation
Slide 11: Scrutineer's Preliminary Report
Scrutineer’s Preliminary Report
Slide 12: Results of Amendment to Section 3.01 of By-law No. Ten
Results of Amendment to Section 3.01 of By-law No. Ten
Slide 13: Results of Director Election
Results of Director Election
Slide 14: Results of Auditor Vote
: Mcan...... Results of Auditor Vote
Slide 15: Results of Certain Amendments to Article 8 of By-law No. Ten
Results of Certain Amendments to Article 8 of By-law No. Ten
Slide 16: Results of Advisory Resolution on the Board's Approach to Executive Compensation
Results of Advisory Resolution on the Board’s Approach to Executive Compensation
Slide 17: Adoption of Preliminary Report
Adoption of Preliminary Report
Slide 18: Introduction of Elected Directors
Introduction of Elected Directors Bonnie Agostinho Brian W. Chu John E. Coke Glenn Doré Philip Gillin Gordon Herridge Gaelen J. Morphet Derek Sutherland Karen Weaver 18
Slide 19: Termination of Meeting
: Mcan...... Termination of Meeting
Slide 20: Karen Weaver, President and Chief Executive Officer
Karen Weaver Floriana Cipollone President and SVP and Chief Executive Officer Chief Financial Officer Carl Brown Avish Buck SVP Investments and Corporate SVP and Development Chief Operating Officer
Slide 21: Management Presentation
: Mcan...... Management Presentation
Slide 22: MCAN Financial Group – New Brand and Trade Name
MCAN Financial Group – New Brand and Trade Name 22
Slide 23: Invested in Canadian Communities
Invested in Canadian Communities Our shareholders benefit from MCAN’s investment in Canadian communities. MCAN offers exclusive access to a range of unique financing and investment opportunities for institutional and retail investors, originators and individuals across Canada that enables them to pa
Slide 24: MCAN Value Proposition
MCAN Value Proposition Lower risk profile than peer MICs with equal or higher returns driven by lower funding costs. Differentiated from OSFI-regulated peer lenders due to construction and other investment portfolio focus. Seasoned Unique Business Investment Portfolio a Consistent and Attractive Fin
Slide 25: $3.8B Total Assets
Diversified Quality Mortgages and Other Investments Balance sheet optimization achieved through risk and reward strategy MCAP Residential Insured Other Mortgages Non-Marketable Securities Marketable Securities $3.8B Commercial Loans Residential Uninsured Total Construction Loans 18% 22% Mortgages As
Slide 26: 2021 Year in Review
: Mcan...... 2021 Year in Review
Slide 27: 2021 Earnings Highlights
2021 Earnings Highlights FY 2021 Trend YoY Spread of Corporate Mortgages over Term Deposit Interest and 2.80% +0.18% Expense1 Mortgage Interest – Corporate Assets $71.8 million +12% Net Gain on Marketable Securities $14.8 million +262% Provision for Credit Losses $0.5 million -77% Net Income $64.4 m
Slide 28: 2021 Balance Sheet Highlights
2021 Balance Sheet Highlights FY 2021 Trend YoY Total Assets $3.8 billion +40% Corporate Assets $2.2 billion +39% Uninsured Balance* $783 million +62% Uninsured Originations* $575 million +103% Construction & Commercial Balance $777 million +42% Construction & Commercial Originations $728 million +4
Slide 29: First Quarter 2022 Highlights
First Quarter 2022 Highlights
Slide 30: Q1 2022 Earnings Highlights
Q1 2022 Earnings Highlights Q1 2022 Trend YoY Mortgage Interest – Corporate Assets $20.5 million +30% Recovery of Credit Losses $1.3 million n/a Spread of Corporate Mortgages over Term Deposit Interest and 2.59% -0.17% Expense1 Net Income $15.5 million -3% Return on Average Shareholders’ Equity1 14.
Slide 31: Q1 2022 Balance Sheet Highlights
Q1 2022 Balance Sheet Highlights FY 2021 Trend YoY Total Assets $4.0 billion +5% Corporate Assets $2.3 billion +5% Uninsured Balance* $834 million +6% Uninsured Originations* $120 million -24% Construction & Commercial Balance $820 million +5% Construction & Commercial Originations $102 million -16%
Slide 32: 2021 Liquidity and Funding Highlights and 2022 Strategy
2021 Liquidity and Funding Highlights and 2022 Strategy
Slide 33: 2021 Liquidity and Funding Highlights
2021 Liquidity and Funding Highlights • Active liquidity and funding management • $53 million in capital raised via two Rights Offerings • $400 million Base Shelf prospectus filed • Supplemental $30 million At-the-Market program • $50 million secured warehouse facility for insured residential mortg
Slide 34: 2022 Liquidity and Funding Strategy
2022 Liquidity and Funding Strategy • Continued expansion of funding sources to support growth • Share sales under At-the-Market program • Expand the shareholder base through further equity raises • Loan sales at commitment stage with additional partners • Secured warehouse facility increased by $5
Slide 35: Business Update and Strategy
Business Update and Strategy
Slide 36: 2021 Highlights and 2022 Strategy
2021 Highlights and 2022 Strategy • CDIC-insurable term deposits • Low-cost liability funding • Significant source of funding • Record $974 million raised in term deposits in 2021 • 2022 and beyond strategy • Expand term deposit channels • Efficiencies in operations • Implement digital solutions 36
Slide 37: Business Update and Market Outlook
Business Update and Market Outlook
Slide 38: a.
a.
Slide 39: Our Business
Our Business • Focus on first time/move-up homebuyers, self-employed professionals, property investors, individual with credit challenges • Purchases, refinances and renewals • Fixed and variable rate mortgages • Geographical focus in major urban areas of Ontario, Alberta, and BC • In-house originat
Slide 40: 2021 Highlights
2021 Highlights Residential Insured Mortgages 51% ($197M) • Record volumes and originations Residential Uninsured • Continued focus on operating Mortgages ($832M) capabilities and customer support • Industry recognition in 4 Canadian Mortgage Professionals Brokers on Lenders survey categories Securi
Slide 41: 2022 Outlook and Strategy
2022 Outlook and Strategy • Outlook • Moderating housing market demand • Competitive market given rising interest rates • Strategy • New products to meet market demand • Continued focus on service to borrowers and brokers • Efficiencies through technology, business infrastructure and process improve
Slide 42: Business Update and Market Outlook
Business Update and Market Outlook
Slide 43: Slide 43
Slide 44: Our Business
Our Business • Construction and Commercial Lending • Primarily residential construction loans • Focus on urban/suburban growth markets in ON, AB, BC • Marketable Securities • Expertly managed REIT portfolio • Larger market capitalizations and diversification • Non-Marketable Securities • Private rea
Slide 45: 2021 Highlights and 2022 Outlook & Strategy
2021 Highlights and 2022 Outlook & Strategy Construction and Commercial Lending Commercial Loans • 2021 Highlights ($93M) • Strong growth in originations (+46% YoY) Construction and total portfolio (+42% YoY) in 2021 Loans ($684M) • Solid relationships with co-investors and partners • Strong portfol
Slide 46: 2021 Highlights and 2022 Outlook & Strategy
2021 Highlights and 2022 Outlook & Strategy Marketable Securities Marketable Securities • 2021 Highlights ($63M) • 2021 distribution yield of 5.5% • Sold $17 million, $4 million realized capital gain • Opportunistic reinvestment of $15 million • 2022 Outlook and Strategy • Target 9-11% total return
Slide 47: 2021 Highlights and 2022 Outlook & Strategy
2021 Highlights and 2022 Outlook & Strategy Non-Marketable Securities Non-Marketable Securities ($65M) • 2021 Highlights • Over $33 million in new commitments over 4 funds • 2022 Outlook and Strategy • Long term holdings • 15% target return for real estate equity funds • 6-12% target return for real
Slide 48: Investment in MCAP
Investment in MCAP • Strategic relationship with Canada’s largest independent mortgage finance company ($147 billion in AUM at February 28, 2022), BBB DBRS Rating • MCAN owns ~14% equity interest in MCAP (majority owned by CDPQ) • MCAP serves many institutional investors and over 400,000 homeowners
Slide 49: Strategy and Outlook
: Mcan...... Strategy and Outlook
Slide 50: Attractive Financial Profile
Attractive Financial Profile AVERAGE RETURN ON MORTGAGE ASSETS ($MM) NET INCOME ($MM) SHAREHOLDERS’ EQUITY1 +90% $64.4 16.9% $3,561 $3,390 15.1% 14.2% 13.8% 13.1% $48.3 11.9% $2,389 $42.9 $39.9 $36.3 $1,880 $1,810 $1,874 $15.5 2017 2018 2019 2020 2021 Q1 2022 2017 2018 2019 2020 2021 Q1 2022 2017 20
Slide 51: 30-Year History of Attractive Dividends
30-Year History of Attractive Dividends Paying dividends since 1992 Declared Q1 2022 $0.36/share cash dividend and $0.97/share special stock dividend 0.85 $0.85 0.33 0.97 0.03 1.43 1.36 1.36 1.31 1.28 1.09 1.12 1.12 1.13 1.17 0.72 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD Regular Di
Slide 52: Strong Total Shareholder Return
Strong Total Shareholder Return Declared Q1 2022 $0.36/share cash dividend and $0.97/share special stock 3 dividend $0.85 CAGR1 Volatility2 LTM 25.09% 2.98 3-Year 17.27% 1.56 5-Year 15.23% 1.79 Source: Bloomberg 1 Total shareholder return is adjusted for reinvested dividends; trading data as at Marc
Slide 53: Market Outlook
Market Outlook • Adapting to dynamic market conditions with risks and opportunities • Long term business • Focused on the long run 53
Slide 54: Business Outlook
Business Outlook • Align for mutual success with broker partners • Increase complement of product offerings • Expand markets and geographies • Realize efficiencies in operations through investments in systems and infrastructure • Quality partnerships and relationship driven investing • Optimized mix
Slide 55: ESG Highlights
ESG Highlights Our values and culture are rooted in our people, and we are committed to responsible environmental, social and governance practices, with focus on: Providing capital and loans to real estate developers and investment funds who are committed to community and climate-based E responsible
Slide 56: MCAN Value Proposition
MCAN Value Proposition Lower risk profile than peer MICs with equal or higher returns driven by lower funding costs. Differentiated from OSFI-regulated peer lenders due to construction and other investment portfolio focus. Seasoned Unique Business Investment Portfolio a Consistent and Attractive Fin
Slide 57: A Thank You to Our Team
A Thank You to Our Team • Effective remote/hybrid work style • Rewarding team member benefits • Professional development and career advancement opportunities • #13 overall on 2022 list of Best WorkplacesTM • Great Place to Work® certified 57
Slide 58: Q&A
: Mcan...... Q&A
Slide 59: Thank You
: Mcan...... Thank You