With people-first financing and investing solutions that help Canadians
achieve homeownership and build wealth through real estate, we are
reframing our investment in community and home.
Our foundational experience and knowledge of Canadian real estate
means we build mortgage solutions that reflect the needs of real
Canadians, solutions inspired by real life, and we deliver access to
unique financing and investment opportunities through exclusive
partnerships and initiatives built for impact. Our offerings include:
homeownership through mortgages.
residential construction and commercial lending.
a portfolio of REIT investments expertly managed for long-term
investment income and capital appreciation.
private investment funds that are focused on lending and
developing in our communities.
our ownership interest in MCAP, privately owned and Canada’s
largest mortgage financing company.
INVESTING IN COMMUNITIES
AND HOMES FOR CANADIANS
To be the preferred mortgage lender and investor within our chosen real
estate markets in Canada.
To deliver sustainable growth and value for our stakeholders through:
relationship-driven mortgage lending and investing.
quality work from an expert engaged, and committed team.
dedication to excellence in service of our clients, our colleagues, and
our community.
D iversity and inclusion powering our ONE team mindset.
O U R E M B E D D E D C U L T U R E
R isk managers are in all of us.
I
nnovate, lean in to optimize and grow our business together.
V aluing a respectful, collaborative and relationship-focused team.
E mpowered to act like an owner, think like a customer.
2024 HIGHLIGHTS
$5.3B
TOTAL ASSETS AT
DECEMBER 31, 2024
$707M
MARKET CAPITALIZATION AT
DECEMBER 31, 2024
$78M
NET INCOME
$2.06
EARNINGS PER SHARE
13.40%
RETURN ON AVERAGE
SHAREHOLDERS' EQUITY 1
$1.56
DIVIDENDS PER SHARE
32 year track record of dividend distribution
MCAN HOME RESIDENTIAL
MORTGAGE LENDING
$2.4 billion total insured securitized portfolio
$638 million total insured originations
$1.1 billion total uninsured portfolio
$430 million total uninsured originations
MCAN CAPITAL CONSTRUCTION
AND COMMERCIAL LENDING
$1.1 billion total portfolio
$653 million total originations
CORPORATE ASSET GROWTH
FROM DECEMBER 31, 2023
4%
Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial
Measures" of our 2024 Management’s Discussion and Analysis of Operations (“MD&A”) available below or on SEDAR+ at
www.sedarplus.ca. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS
and, therefore, may not be comparable to similar terms used by other issuers.
1
MCAN WEALTH GICS
$2.3 billion total
$1.1 billion new deposits
SECURITIZED ASSET GROWTH
FROM DECEMBER 31, 2023
25%
TABLE OF CONTENTS
MESSAGE TO SHAREHOLDERS ...............................................................................................................
6
OUR BUSINESS AND STRATEGY ..............................................................................................................
8
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS ...........................................................
17
CONSOLIDATED FINANCIAL STATEMENTS .............................................................................................
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................
76
DIRECTORS AND EXECUTIVE OFFICERS ..................................................................................................
111
CORPORATE INFORMATION ..................................................................................................................
112
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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MESSAGE TO SHAREHOLDERS
Our strategy continues to be providing attractive returns for our shareholders generated through long-term
sustainable growth. We have delivered solid results this year with our diversified portfolio, while navigating a
declining interest rate environment, with a 13.40% return on average shareholders’ equity1 and a 5% increase
to our cash dividend. In the current market, we will continue to work with our brokers and partners to serve
our clients while managing our risk profile - like we have done in the past.
We provide our shareholders with a unique opportunity to invest in various channels of the Canadian real
estate landscape. We hold an approximately 14% interest in MCAP Commercial LP, a strategic partner to us,
as well as finance residential construction projects in urban markets and originate residential mortgages.
Collectively, this diversified pool of quality investments is not available to typical investors and provides a
curated portfolio for participation in the residential real estate market in Canada. We believe in the resiliency
of these portfolios through various economic cycles and, therefore, our financial performance and
shareholder returns over the long term. This is evidenced by our strong total shareholder returns1 of 47%,
88% and 241%, over 3 years, 5 years, and 10 years, respectively.
We conduct our business based on our prudent lending and investing principles with low-cost funding. In a
declining interest rate environment, our business has various levers and qualities that are positive for
managing net mortgage interest, including interest rate floors on our floating rate construction portfolio, and
the duration of our term deposit funding and related hedging strategies. While further geopolitical and
economic uncertainty in the financial services market will persist in 2025, our entire MCAN team is focused
on our returns to shareholders, managing our portfolio, and improving all aspects of our operations.
2024 Review
Our annual results benefited from higher income from MCAP and our securitization portfolio partially offset
by lower corporate mortgage spread income in the declining interest rate environment and non-recurring
operating expenses. Results for the fourth quarter of this year were mainly impacted by higher unrealized
losses on our REIT and non-marketable securities portfolios in the current economic environment and non-
recurring operating expenses. While we have seen some compression in our spreads, this trend stabilized in
the fourth quarter, assisted by our hedging strategies. We also saw strong performance from our MCAP
investment. We maintained a solid return on average shareholders’ equity compared to our sustained target
range of 13% to 15%, and we delivered over $58 million in dividends to our shareholders this year. Our
overnight marketed offering, at-the-market program, dividend reinvestment program and our core business
income have contributed to an almost 13% increase in our capital base and allowed us to successfully
manage our business. Strong participation in our at-the-market program this last quarter also shows the
continued support shareholders have for our business and strategy.
Our assets grew 13% this year to over $5.3 billion fuelled by residential mortgage originations and renewals.
We have built a resilient portfolio despite market conditions and other economic factors that could impact
our business. Our corporate and securitized mortgage portfolios have grown 12% since the beginning of the
year. We have achieved growth in our residential mortgage portfolio, without sacrificing our bottom line or
credit profile, as our uninsured residential mortgage balances are up 15% to a record $1.1 billion and our
average mortgage rate ended higher than the beginning of the year. We have seen some decline in our net
corporate mortgage spread income in the current quarter compared to the same period in the prior year
mainly due to the floating rates on our construction and commercial loans in a declining interest rate
environment. We continued our strategy of diversifying our residential mortgages with increased lending in
the Alberta and British Columbia urban markets. Our solid results highlight our abilities and team strength,
supported by outstanding service to our brokers, originators and customers. We are seeing stabilization in
our arrears and impaired mortgages and we believe that we have a quality loan portfolio with conservative
loan to value ratios supporting these loans. We increased our securitization volumes in the year rather than
selling our insured residential mortgage commitments due to better economics. We continue to manage our
interest rate risk through the duration of our term deposit funding and related hedging strategies.
We are focused on maintaining the pipeline of our residential construction lending portfolio in selected
markets, with our preferred borrowers and risk profile, as they provide comparatively higher yields than our
residential mortgages. We had significant repayments in our construction and commercial portfolio ($681
million in the year) but we maintained our outstanding balance over $1.1 billion at year end. This portfolio
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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was quicker to benefit in the previously increasing interest rate environment as it is almost entirely at floating
rates. In the current declining interest rate environment, we have seen some normalization of spreads as
term deposit and related hedges have caught up. We proactively manage investments in our construction
and commercial portfolio in terms of product composition, geographic mix, and exposure. We also have
strong strategic partnerships with originators. The borrowers that we like to target are experienced
developers with a successful track record of project completion and loan repayment, and often repeat
customers to us. We continue to increase our lending in and around the urban markets of the Greater
Vancouver area, the Greater Toronto area and, to a lesser degree, Calgary and Edmonton. There continues to
be strong demand for builders to build more affordable housing and entry level homes in these markets due
to household formation driven by population dynamics, and a lack of affordable housing.
MCAP reported higher income this year than prior year mainly driven by higher securitized mortgage net
interest income. MCAP is privately owned and is Canada’s largest independent mortgage finance company.
Our investment in and partnership with MCAP continues to remain a key driver of our success. With the
growth in its assets under management and its market leadership position, we expect that MCAP will
continue to provide solid returns for MCAN.
We also hold a portfolio of marketable and non-marketable securities. We realize the benefits of solid cash
flows and distributions from our marketable securities with a distribution yield1 of 6.05% on this portfolio this
year. With respect to our non-marketable securities, we had unrealized losses this year as underlying
property valuations are based on the current economic environment. These investments also tend to have
less predictable cash flows that are predicated on the completion of the development projects within these
funds. We will hold these investments to their maturity and expect to have positive returns over the next
number of years.
We continue to support and invest in our most important asset – our team! As measures of the success of
our journey, we were proud to be included this year as one of Canada’s Most AdmiredTM Corporate Cultures,
Best WorkplacesTM, and a Top Mortgage Employer of the Year. We believe in an inclusive, diverse, and equal
environment for our team and we believe in the strong support of our community.
I want to thank all our shareholders, partners, team members and the Board for their ongoing support.
Without their support, we would not be able to continue to execute on our mission of delivering sustainable
growth and value. While we are seeing geopolitical and economic uncertainty, there are positive signs that
Canada will start to engage in activities to bolster our internal economy so that we are not so reliant on
external forces. At MCAN, we are entering 2025 in a strong position in terms of our capital and liquidity and
expect to take advantage of our nimbleness, dedicated team members and partnerships to continue our
successes. We remain focused on MCAN’s strategic positioning in the Canadian residential mortgage market
and preserving long-term value for our shareholders.
Derek Sutherland
Interim Chief Executive Officer
1 Considered to be a non-generally accepted accounting principle (“non-GAAP”) and other financial measure and incorporated by reference and defined in the "Non-GAAP and Other Financial
Measures" section of our 2024 MD&A available below or on SEDAR+ at www.sedarplus.ca. Non-GAAP and other financial measures and ratios used in this document are not defined terms under
IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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OUR BUSINESS AND STRATEGY
MCAN is the largest Mortgage Investment Corporation (“MIC”) in Canada and the only federally regulated MIC.
MCAN (TSX: MKP) provides sustainable growth and returns for our shareholders by leveraging our real estate
expertise and providing our shareholders with unique access to investments in the Canadian real estate market
and the returns that they generate. Our business includes real estate lending and investing, including residential
mortgage lending, residential construction lending, non-residential construction and commercial lending, investing
in a portfolio of REITs, and investing in and being invested in strategic private investments like (i) MCAP
Commercial LP (“MCAP”) (privately-owned and Canada’s largest independent mortgage financing company) in
which we own an almost 14% interest and (ii) non-marketable equity-based real estate development funds and
mortgage funds. We provide a breadth of expertise in all facets of the real estate cycle that our shareholders
benefit from. Our unique tax structure as a flow-through MIC allows us to not be taxed at the corporate level by
distributing all of our taxable earnings annually to shareholders. It also means that 67% of our non-consolidated
tax assets are to be held in residential mortgages and cash.
MCAN’s lines of business include three divisions - MCAN Home, MCAN Capital and MCAN Wealth.
MCAN Home is our residential mortgage lender that partners
exclusively with accredited mortgage professionals to offer both
insured and uninsured mortgage solutions across Canada. MCAN
Home operates through MCAN’s wholly owned subsidiary, MCAN
Home Mortgage Corporation.
MCAN Capital focuses on unique financing and investment
opportunities in construction and commercial loans, REITs, and
private investment funds focused on lending to and developing
Canadian communities. We also have an almost 14% equity interest
in MCAP, Canada’s largest privately-owned mortgage financing
company.
MCAN Wealth offers investors CDIC insured investment solutions at
competitive rates, differing term options, and with no fees.
Business Model
MCAN’s business model provides focused investing in products and markets where we have extensive expertise
and that are not generally accessible to our shareholders, to generate attractive financial returns. We use our
expertise to source our term deposits through a network of independent financial agents, as well as through a
direct-to-consumer channel.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Our business model helps us to achieve our long-term objectives:
•
Sustained 13% to 15% average return on average shareholders’ equity (“ROE”);
•
Sustained 10% average annual growth of assets; and
•
Sustained and prudent dividend growth.
We have made significant strides over the last several years to grow our business and achieve our long-term
objectives. Comparing December 31, 2024 to December 31, 2020, we have:
•
Increased our corporate mortgage portfolio by 97% to $2.5 billion from $1.3 billion;
•
Increased our corporate assets by 84% to $2.9 billion from $1.6 billion;
•
Increased our annual net income by 81% to $77.6 million from $42.9 million;
◦
Increased our net corporate mortgage spread income1 by 160% to $83.4 million from $32.1
million.
◦
Increased our net securitized mortgage spread income1 by 76% to $9.9 million from $5.6 million.
•
Increased our regular cash dividends by 15% to $1.56 per share from $1.36 per share as well as distributed
two special stock dividends of $0.97 per share in 2022 and $0.85 per share in 2021; and
•
Delivered average ROE1 of 14.45% over the 4 year period compared to 13.47% over the previous 4 year
period.
Our 2024 Strategic Priorities
We believe we have been successful in executing on our strategic priorities in 2024. Those priorities included:
Strategic Priorities
Results
Grow revenue generating
business lines
•
Total assets increased by 13% to $5.3 billion:
◦
Securitized residential mortgages increased by 25% to $2.4 billion.
◦
Uninsured residential mortgages increased by 15% to $1.1 billion,
our highest outstanding balance.
◦
Maintained our higher-yielding construction and commercial loan
balance at $1.1 billion.
•
Increased originations in our residential mortgages by 28% to $1.2 billion.
•
Increased our residential mortgage lending in the Alberta and British
Columbia urban markets.
Optimize financial,
liquidity and funding
management
•
Successfully raised $28.8 million through an overnight marketed offering an
and $7 million of capital through our ATM Program to fund growth of our
business.
•
Expanded our fair value hedging program to manage our interest rate risk.
•
Launched our first digital GIC platform, allowing us to raise term deposits
directly from customers.
Enhance and mature
operating capabilities and
effectiveness
•
Enhanced existing technology applications for continued business
efficiencies, including a new enterprise resource planning system.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Strategic Priorities
Results
Enhance business partner
relations and customer
experience
•
Launched a new marketing cloud platform to enable data-driven marketing
efforts through customized communications, campaigns and partner
programs.
Leadership, people
management and culture
•
Recognized in 2024 Great Places to WorkTM:
◦
Best Workplaces™ in Canada – 100-999 Employees
•
Recognized as a Top Mortgage Employer for 2024 by Canadian Mortgage
Professional.
•
Canadian Mortgage Award Excellence Awardee for 2024
◦
Business Development Manager of the Year
◦
Underwriter of the Year
•
Recognized by Mediacorp Canada Inc. as one of Canada’s Top Small and
Medium Employers for 2024.
•
Recognized by Waterstone Human Capital as one of Canada’s Most
Admired™ Corporate Cultures for 2024 – Mid-Market.
•
Recognized as one of Canada’s Innovative HR Teams for 2024 by the
Canadian HR Reporter.
Our Investment Portfolio
With extensive in-house expertise, MCAN is a strategic investor in the Canadian real estate market. Our portfolio is
focused on residential mortgages and residential construction loans. We are also a strategic investor in MCAP,
REITs, and other non-marketable real estate based funds that are generally not accessible to shareholders.
Total Assets at December 31, 2024 of $5.3 billion
Securitized Insured
Residential Mortgages
(46%)
Residential Mortgages (26%)
Construction Loans (20%)
Commercial Loans (0%)
Equity Investment in MCAP (2%)
Non-Marketable Securities (2%)
Marketable Securities (1%)
Other Corporate Assets (2%)
Other Securitized Assets (1%)
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Residential Mortgage Lending (December 31, 2024 - $3.8 billion; December 31, 2023 - $3.2 billion)
We originate insured and uninsured residential mortgages across Canada primarily focused on first time and move
up homebuyers. Although we lend across Canada, our geographical focus is in the major urban regions in Ontario
and to a lesser extent in Alberta and Vancouver. We have in-house origination, underwriting and boots on the
ground in our core markets. These residential mortgages are originated through our strategic relationships with
mortgage brokers. We focus our uninsured residential mortgage lending to those customers with credit challenges
and to those who are self-employed. Our products include purchases, refinances and renewals. We also have
strategies to either originate and securitize our on-balance sheet insured residential mortgages, which are included
in securitized insured residential mortgages above, or sell our insured and uninsured residential mortgage
commitments, depending on market conditions.
Construction Lending (December 31, 2024 - $1.1 billion; December 31, 2023 - $1.0 billion)
Residential construction loans are made to developers to finance residential construction projects. We focus our
lending on the construction of more affordable housing in urban/suburban growth markets with a preference for
proximity to transit. This approach aims to mitigate the impact of price volatility and tightened sales activity in the
event of market corrections. As well, these markets are where we, or our originating partners, have experience
and local expertise. We have long established strategic relationships with originators, partners and borrowers. In
house, we apply our own seasoned experience, underwriting and monitoring. The borrowers that we like to target
are experienced developers with a successful track record of project completion and loan repayment, and often
repeat customers to us. These loans generally have a floating interest rate, with a floor rate set at origination and
loan terms typically ranging between 24 and 36 months. We also strategically lend at the land development stage
to enhance longer term relationships with borrowers. Non-residential construction loans provide similar
construction financing, but for retail shopping developments, office buildings and industrial developments.
Commercial Lending (December 31, 2024 - $17 million; December 31, 2023 - $71 million)
Commercial loans include multi-family residential loans (e.g. loans secured by apartment buildings), and other
commercial loans, which consist of term mortgages (e.g. loans secured by retail or industrial buildings) and higher
yielding mortgage loans (e.g. loans that do not meet conventional residential construction loan parameters).
Investment in MCAP (December 31, 2024 - $122 million; December 31, 2023 - $111 million)
We have an almost 14% equity interest in MCAP. MCAP is Canada’s largest independent mortgage finance
company with assets under management of $155 billion, serving many institutional investors and over 400,000
homeowners. This investment allows us to participate in the growth of MCAP that typically provides quarterly
distributions on our investment.
Non-Marketable Securities (December 31, 2024 - $117 million; December 31, 2023 - $110 million)
We have equity investments in various strategic private real estate development and mortgage funds or
instruments. All of the funds we invest in are backed by real estate in Canada and provide debt and equity capital
to experienced and successful originators and developers. These investments are either held for long-term capital
appreciation or distribution income. Our real estate development fund investments tend to have less predictable
cash flows that are predicated on the completion of the development projects within these funds.
Marketable Securities (December 31, 2024 - $66 million; December 31, 2023 - $50 million)
We have a diversified and managed REIT portfolio held for investment income and capital appreciation, as well as
Government of Canada bonds. We leverage our real estate investment expertise to actively manage this portfolio,
with periodic recycling of capital. Our REIT investment objectives are to earn long term total returns in the range of
9% to 11%. Our marketable securities provide additional liquidity and diversification to our overall investment
portfolio.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Our Loan Portfolio Quality
The majority of residential mortgage arrears activity occurs in the 1-30 day category, in which the bulk of arrears
are resolved and do not migrate to arrears categories over 30 days. We closely monitor and actively manage these
arrears. We believe that we have a quality uninsured residential mortgage loan portfolio with an average loan to
value of 63.7% at December 31, 2024 based on an industry index of current real estate values.
We have historically had low arrears related to our construction and commercial loan portfolios due to our
prudent and selective lending methodology and our account management processes in these product types. We
believe that we have a quality construction and commercial loan portfolio with an average loan to value of 61.9%
at December 31, 2024 based on an industry index of current real estate values. We have a strong track record with
our asset recovery programs as the need arises. Our realized loan losses on our construction portfolio have been
negligible in the last 10 years.
Our Shareholder Returns
ROE is a key performance metric for MCAN. With our diversified investment base, we believe that we are able to
generate strong returns for shareholders through various cycles of the real estate market. Despite market volatility
in 2024 broadly affecting public company share prices, we recorded a positive total shareholder return1 (dividends
plus share price appreciation) in 2024 of 26% and a compound annual growth rate of our total shareholder return1
for the last 5 years of almost 14%.
Historical ROE1
13.45%
14.74%
13.75%
11.90%
15.11%
13.13%
16.86%
12.47%
15.05%
13.40%
13.99%
ROE
Average 10-year ROE (13.99%)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Our long-term objective is sustained 13% to 15% average ROE. The nature of our investing activities may result in
fluctuations in our ROE year to year. ROE for this year was positively impacted by higher equity income from MCAP
and higher spreads on securitized mortgages compared to 2023. This was offset by a reduction in the spread of
corporate mortgages over term deposit interest and expenses and higher unrealized losses on our non-marketable
securities. In the last 10 years, we have delivered an average ROE1 of 14%.
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" of our 2024 MD&A available below or on SEDAR+ at
www.sedarplus.ca. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by
other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Our Capital Strength
We manage our capital and asset balances based on the regulations and limits of the Trust and Loan Companies
Act (the “Trust Act”), Income Tax Act (Canada) (the “Tax Act”) and the Office of the Superintendent of Financial
Institutions Canada (“OSFI”). Our strong capital base over the years has allowed us to pursue our growth strategy
while achieving our long-term objectives. We have made a conscious effort over the last few years to try to
optimize our balance sheet in order to position ourselves well for future growth and returns.
Historical Capital Ratios
5.09
5.29
4.93
5.52
5.24
22.02%
20.54%
19.83%
17.91%
19.28%
10.17%
9.41%
9.83%
9.48%
9.72%
Income Tax Assets to Capital Ratio
Total Capital Ratio (%)
Leverage Ratio (%)
2020
2021
2022
2023
2024
Our capital ratios have adjusted over the years as we have optimized our balance sheet, growing our assets
utilizing excess capital room. We had capital growth due to our $28.8 million overnight marketed offering in Q1
2024 and $7.0 million through our at-the-market equity program. Capital maintenance this year has come from our
dividend reinvestment program. Further growth in our capital will be dependent on equity market conditions and
shareholder appetite. All of our capital and leverage ratios are within our regulatory and internal risk appetite
guidelines.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Our Dividends
Uniquely structured as a MIC, our dividend policy is to pay out substantially all of our taxable income to our
shareholders. These dividends are taxable to our shareholders as interest income. Should taxable income per share
exceed our regular cash dividends per share, we would distribute special cash or stock dividends per our dividend
policy. We have been paying regular dividends since 1992.
Dividend History
$1.13
$1.17
$1.31
$1.43
$1.28
$1.36
$2.21
$2.41
$1.48
$1.56
$1.13
$1.17
$1.31
$1.43
$1.28
$1.36
$1.36
$1.44
$1.48
$1.56
$0.85
$0.97
Regular Dividend per Share
Special Stock Dividend per Share
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
The Board of Directors (“Board”) declared a first quarter regular cash dividend of $0.41 per share (an increase of
5% from our fourth quarter 2024 dividend) to be paid March 31, 2025 to shareholders of record on March 14,
2025.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Our Environment, Social and Governance (“ESG”) Program
People First. Purpose Driven. Performance Focused.
E
•
Supporting sustainable residential communities by providing residential mortgages using
responsible underwriting and risk management practices that are environmentally
compliant
•
Providing capital and loans to real estate developers and investment funds who are
committed to community and environmentally responsible development, primarily for
residential density development in urban communities close to mass transit
•
Operational efficiency to reduce our carbon footprint
S
•
Lending to, and investing in, the development of more affordable housing
•
Investing in the communities where our shareholders, customers, business partners and
team members call home
•
Creating a positive experience by tailoring products and offerings for our stakeholders and
customers to achieve their objectives
G
•
Ensuring strong governance and risk management practices aligned with our role as a
publicly traded regulated financial institution focused on all our stakeholders and their
communities
At the core of our ESG program is our management team and the Board, who navigate the risks and opportunities
in our business within our established sustainability framework. Our management team, along with our Board,
have built a strong risk and governance framework by which we do business. We believe these practices are
essential for the Company’s success. Information about our risk governance structure is included in the “Risk
Management” section of our 2024 MD&A available below or on the System for Electronic Document Analysis and
Retrieval at www.sedarplus.ca.
We remain committed to supporting sustainable residential development projects, investing in our team culture
and professional growth, and supporting local charities. The capital we provide for construction lending
opportunities primarily focuses on affordable residential development projects in urban markets that are
committed to net zero emissions frameworks by 2050, including Toronto, Vancouver and Calgary. We also work
with partners who are committed to responsible corporate citizenship. Many of these partners consider ESG at
every phase of the real estate lifecycle and recognize that this creates the greatest value for stakeholders. We
continue to invest in learning and development opportunities for our team members and support various local
charitable organizations. We also support our team members by providing a work environment that allows for a
flexible working structure, and enhancing our wellness, benefit and compensation plans.
Our MCAN DRIVE values support lending a hand…
•
To Canadians dreaming of home ownership and wealth creation through investment in Canadian real
estate;
•
To communities through support and investment in programs that connect, empower and revitalize;
•
To developers committed to social responsibility and building a low carbon world by reducing waste,
emissions, and energy consumption;
•
To shareholders by providing transparency on ESG risks and opportunities, and actively managing and
improving on reporting on ESG performance to ensure alignment with their vision; and
•
To team members through the cultivation of a diverse, inclusive, and collaborative culture.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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We are proud of our ESG journey to date with over 90% of team members feeling good about the ways MCAN
contributes to their community. As we continue to evolve our ESG efforts, we plan to incorporate more education,
measurements and further continued investments in environmental programs and our social impact. Some of our
key achievements in 2024 are highlighted below:
2024 ESG Achievements
E
•
>90%: percentage of total capital committed in our construction and commercial businesses
that is focused on density development
•
>$55 million: amount committed for investments in equity funds focused on environmental
sustainability and adapting to climate change
•
Low environmental footprint of our operations, including a hybrid working model and
mostly digital and paperless processes, allowing us to naturally have low Scope 1 and 2
emissions
•
8,960: number of trees planted under our partner program whereby we plant 4 trees for
every deal funded under the program. Our tree plantings were done in British Columbia and
Ontario regions impacted by fire and deforestation.
S
•
Top Mortgage Employer for 2024 by Canadian Mortgage Professional
•
Canada’s Top Small and Medium Employers for 2024 by Mediacorp Canada Inc.
•
Canada’s Most Admired™ Corporate Cultures for 2024 – Mid-Market by Waterstone
Human Capital
•
Canadian Mortgage Award Excellence Awardee for 2024
◦
Business Development Manager of the Year
◦
Underwriter of the Year
•
Recognized in 2024 Great Places to WorkTM:
◦
Best Workplaces™ in Canada – 100-999 Employees
•
Recognized as one of Canada’s Innovative HR Teams for 2024 by the Canadian HR Reporter
•
>$25 million: amount funded in our residential construction portfolio in affordable housing
projects
•
$77,500: amount of free mortgage payments awarded to our customers as part of our
partner program
•
$67,000: amount of cash donations made during the year
◦
$60,000 donated on behalf of our team members to our local communities
◦
$7,000 donated on behalf of our brokers and as part of our ICON Partner Program
•
>60%: percentage of team members who self-identify as a visible minority
•
Team member volunteer days, including participation in a Habitat for Humanity Build Day,
Terry Fox run and three kit packing events to provide needs to charitable organizations
within the communities we serve
G
•
100%: percentage of independent Board members serving on the Audit Committee, Conduct
Review, Corporate Governance and Human Resources Committee and Enterprise Risk
Management and Compliance Committee
•
67%: percentage of independent Board members serving on the Information Technology
Governance Committee
•
100%: percentage of active team members who have attested to the Code of Conduct
•
100%: percentage of Board members’ attendance at Board meetings
•
7 out of 8: number of Board members who are independent
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 16 -
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS
MCAN Mortgage Corporation is doing business as (“d/b/a”) MCAN Financial Group (“MCAN”, the “Company” or
“we”). This Management’s Discussion and Analysis of Operations (“MD&A”) should be read in conjunction with the
consolidated balance sheets and accompanying notes at December 31, 2024 and December 31, 2023 and the
consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the
years then ended, which have been prepared in accordance with International Financial Reporting Standards
(“IFRS”), which are the Generally Accepted Accounting Principles (“GAAP”) in Canada, and presented in Canadian
currency. This MD&A has been presented as of February 24, 2025.
Additional information regarding MCAN, including copies of our continuous disclosure materials such as the Annual
Information Form, are available on the System for Electronic Document Analysis and Retrieval (“SEDAR+”) at
www.sedarplus.ca and our website at www.mcanfinancial.com.
TABLE OF CONTENTS - MD&A
A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND STATEMENTS ....................................................
18
SELECTED FINANCIAL INFORMATION ..................................................................................................................
19
BUSINESS OVERVIEW AND OUTLOOK .................................................................................................................
23
HIGHLIGHTS ..........................................................................................................................................................
26
RESULTS OF OPERATIONS ....................................................................................................................................
31
FINANCIAL POSITION ...........................................................................................................................................
40
CAPITAL MANAGEMENT ......................................................................................................................................
52
RISK FACTORS .......................................................................................................................................................
56
DESCRIPTION OF CAPITAL STRUCTURE ................................................................................................................
61
OFF-BALANCE SHEET ARRANGEMENTS ...............................................................................................................
61
DIVIDEND POLICY AND RECORD ..........................................................................................................................
62
TRANSACTIONS WITH RELATED PARTIES .............................................................................................................
62
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS ......................................................................................
62
PEOPLE .................................................................................................................................................................
62
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS .......................................................................................
63
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING ...........
64
NON-GAAP AND OTHER FINANCIAL MEASURES ..................................................................................................
65
GLOSSARY .............................................................................................................................................................
66
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 17 -
A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND STATEMENTS
This MD&A contains forward-looking information within the meaning of applicable Canadian securities laws. All information contained in this
MD&A, other than statements of current and historical fact, is forward-looking information. All of the forward-looking information in this MD&A is
qualified by this cautionary note. Often, but not always, forward-looking information can be identified by the use of words such as “may,” “believe,”
“will,” “anticipate,” “expect,” “planned,” “estimate,” “project,” “future,” and variations of these or similar words or other expressions that are
predictions of, or indicate, future events and trends and that do not relate to historical matters. Forward-looking information in this MD&A includes,
among others, statements and assumptions with respect to:
•
the current business environment, economic environment and outlook;
•
possible or assumed future results;
•
our ability to create shareholder value;
•
our business goals and strategy;
•
the potential impact of new regulations and changes to existing regulations;
•
the stability of home prices;
•
the effect of challenging conditions on us;
•
the performance of our investments;
•
factors affecting our competitive position within the housing lending market;
•
international trade, international economic uncertainties, failures of international financial institutions and geopolitical uncertainties and their
impact on the Canadian economy;
•
sufficiency of our access to liquidity and capital resources;
•
the timing and effect of interest rate changes on our cash flows; and
•
the declaration and payment of dividends.
Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information reflects management’s
current beliefs and is based on information currently available to management. Forward-looking information is based on, among other things,
opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided,
inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially
different from those expressed or implied by the forward-looking information.
The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in
the forward-looking information, include, but are not limited to:
•
our ability to successfully implement and realize on our business goals and strategy;
•
government regulation of our business and the cost to us of such regulation;
•
factors and assumptions regarding interest rates, including the effect of Bank of Canada actions already taken;
•
the effect of supply chain issues;
•
the effect of inflation;
•
housing sales and residential mortgage borrowing activities;
•
the effect of household debt service levels;
•
the effect of competition;
•
systems failure or cyber and security breaches;
•
the availability of funding and capital to meet our requirements;
•
investor appetite for securitization products;
•
the value of mortgage originations;
•
the expected spread between interest earned on mortgage portfolios and interest paid on deposits;
•
the relative uncertainty and volatility of real estate markets;
•
acceptance of our products in the marketplace;
•
the stage of the real estate cycle and the maturity phase of the mortgage market;
•
impact on housing demand from changing population demographics and immigration patterns;
•
our ability to forecast future changes to borrower credit and credit scores, loan to value ratios and other forward-looking factors used in
assessing expected credit losses and rates of default;
•
availability of key personnel;
•
our operating cost structure;
•
the current tax regime; and
•
operations within, and market conditions relating to, our equity and other investments.
External geopolitical conflicts and government and Bank of Canada economic policy have resulted in uncertainty relating to the Company’s internal
expectations, estimates, projections, assumptions and beliefs, including with respect to the Canadian economy, employment conditions, interest
rates, supply chain issues, international trade, inflation, levels of housing activity and household debt service levels. There can be no assurance that
such expectations, estimates, projections, assumptions and beliefs will continue to be valid. The impacts that any further or escalating geopolitical
conflicts will have on our business is uncertain and difficult to predict.
Reliance should not be placed on forward-looking information because it involves known and unknown risks, uncertainties and other factors, which
may cause actual results to differ materially from anticipated future results expressed or implied by such forward-looking information. Factors that
could cause actual results to differ materially from those set forth in the forward-looking information include, but are not limited to, the risk that
any of the above opinions, estimates or assumptions are inaccurate and the other risks and uncertainties referred to in our Annual Information Form
for the year ended December 31, 2024, this MD&A and our other public filings with the applicable Canadian regulatory authorities.
Subject to applicable securities law requirements, we undertake no obligation to publicly update or revise any forward-looking information after the
date of this MD&A whether as a result of new information, future events or otherwise or to explain any material difference between subsequent
actual events and any forward-looking information. However, any further disclosures made on related subjects in subsequent reports should be
consulted.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 18 -
SELECTED FINANCIAL INFORMATION
Table 1: Financial Statement Highlights - Annual
(in thousands except per share amounts, % and where indicated)
Change
Change
At December 31
2024
2023
(%)
2022
(%)
Income Statement Highlights
Mortgage interest - corporate assets [A]
$
191,706
$
165,997
15% $
101,286
89%
Term deposit interest and expenses [B]
$
108,259
$
78,219
38% $
44,222
145%
Net corporate mortgage spread income1 [A-B]
$
83,447
$
87,778
(5%) $
57,064
46%
Equity income from MCAP Commercial LP
$
28,803
$
22,010
31% $
26,603
8%
Net loss on securities
$
(6,343)
$
(3,622)
75% $
(12,074)
(47%)
Net investment income - corporate assets
$
110,135
$
107,547
2% $
79,805
38%
Net investment income - securitization assets
$
6,156
$
4,252
45% $
3,898
58%
Net income
$
77,586
$
77,498
—% $
55,354
40%
Basic and diluted earnings per share
$
2.06
$
2.22
(7%) $
1.77
16%
Dividends per share - cash
$
1.56
$
1.48
5% $
1.44
8%
Dividends per share - stock
$
—
$
—
n/a $
0.97
(100%)
Next quarter’s dividend per share - cash
$
0.41
Return on average shareholders’ equity 1
13.40 %
15.05 %
(1.65%)
12.47 %
0.93%
Taxable income per share2
$
1.86
$
1.31
42% $
1.29
44%
Yields
Spread of corporate mortgages over term deposit interest and
expenses 1
2.92 %
3.57 %
(0.65%)
2.82 %
0.10%
Spread of securitized mortgages over liabilities 1
0.49 %
0.39 %
0.10%
0.47 %
0.02%
Average term to maturity (in months)
Mortgages - corporate
9.5
12.7
(25%)
11.4
(17%)
Term deposits
18.5
18.5
—%
16.0
16%
Balance Sheet Highlights
Total assets
$
5,347,565
$
4,739,087
13% $
4,078,676
31%
Mortgages - corporate
$
2,464,091
$
2,414,855
2% $
1,939,494
27%
Mortgages - securitized
$
2,419,871
$
1,929,948
25% $
1,751,303
38%
Total liabilities
$
4,748,376
$
4,207,243
13% $
3,589,366
32%
Shareholders’ equity
$
599,189
$
531,844
13% $
489,310
22%
Capital Ratios
Income tax assets to capital ratio2
5.24
5.52
(5%)
4.93
6%
CET 1 & Tier 1 capital ratio 4
19.02 %
17.61 %
1.41%
19.60 %
(0.58%)
Total capital ratio 4
19.28 %
17.91 %
1.37%
19.83 %
(0.55%)
Leverage ratio 3
9.72 %
9.49 %
0.23%
9.83 %
(0.11%)
Credit Quality
Impaired mortgage ratio (corporate) 1
2.46 %
3.26 %
(0.80%)
1.66 %
0.80%
Impaired mortgage ratio (total) 1
1.25 %
1.82 %
(0.57%)
0.89 %
0.36%
Mortgage Arrears
Corporate
$
96,368
$
112,789
(15%) $
54,430
77%
Securitized
4,103
4,661
(12%)
3,439
19%
Total
$
100,471
$
117,450
(14%) $
57,869
74%
Common Share Information (end of period)
Number of common shares outstanding
38,717
35,432
9%
34,306
13%
Book value per common share 1
$
15.48
$
15.01
3% $
14.26
9%
Common share price - close
$
18.25
$
15.89
15% $
15.00
22%
Market capitalization ($ million)
$
707
$
563
26% $
515
37%
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
2 For further information refer to the “Taxable Income” and “Income Tax Capital” sections of this MD&A. Tax balances are calculated in accordance with the Tax Act.
3 This measure has been calculated in accordance with OSFI’s Leverage Requirements guidelines. Mortgages securitized through the market MBS program and CMB program for which derecognition has not been achieved are included in regulatory assets in the leverage ratio. For further
information, refer to the “Capital Management” section of this MD&A.
4 These measures have been calculated in accordance with OSFI’s Capital Adequacy Requirements guidelines. Effective March 31, 2020, the total capital ratios in 2022 reflected the inclusion of stage 1 and stage 2 allowances on the Company’s mortgage portfolio in Tier 2 capital. In
accordance with OSFI’s transitional arrangements for capital treatment of ECL issued March 27, 2020, a portion of stage 1 and stage 2 allowances that would otherwise be included in Tier 2 capital were included in CET 1 capital. The adjustment to CET 1 capital was measured each quarter
as the increase, if any, in stage 1 and stage 2 allowances compared to the corresponding allowances at December 31, 2019. The increase, if any, was subject to a scaling factor that decreased over time and was 25% in fiscal 2022.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 19 -
Table 2: Financial Statement Highlights - Quarterly
(in thousands except per share amounts, %
and where indicated)
Q4 2024
Q3 2024
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Income Statement Highlights
Mortgage interest - corporate assets [A]
$ 47,209
$ 48,067
$ 48,422
$ 48,008
$ 47,406
$ 44,144
$ 38,691
$ 35,756
Term deposit interest and expenses [B]
$ 26,642
$ 28,021
$ 27,526
$ 26,070
$ 24,361
$ 21,083
$ 18,034
$ 14,741
Net corporate mortgage spread income1 [A-B]
$ 20,567
$ 20,046
$ 20,896
$ 21,938
$ 23,045
$ 23,061
$ 20,657
$ 21,015
Equity income from MCAP Commercial LP
$ 7,227
$ 6,667
$ 7,726
$ 7,183
$ 4,429
$ 4,310
$ 5,268
$ 8,003
Net gain (loss) on securities
$ (11,326) $ 5,671
$ (715)
$
27
$ 1,977
$ (1,581)
$ (5,017)
$
999
Net investment income - corporate assets
$ 17,180
$ 33,598
$ 28,760
$ 30,597
$ 28,130
$ 25,656
$ 23,139
$ 30,622
Net investment income - securitization assets
$ 2,019
$ 1,620
$ 1,203
$ 1,314
$ 1,451
$
770
$ 1,159
$
872
Net income
$ 7,725
$ 26,892
$ 19,749
$ 23,220
$ 19,855
$ 18,479
$ 15,887
$ 23,277
Basic and diluted earnings per share
$ 0.20
$ 0.70
$ 0.52
$ 0.65
$ 0.56
$ 0.53
$ 0.46
$ 0.67
Dividends per share - cash
$ 0.39
$ 0.39
$ 0.39
$ 0.39
$ 0.38
$ 0.38
$ 0.36
$ 0.36
Return on average shareholders’ equity 1
5.14 %
18.16 %
13.63 %
17.09 %
15.01 %
14.20 %
12.47 %
18.60 %
Taxable income (loss) per share 2
$ 0.51
$ 0.25
$ 0.44
$ 0.67
$ (0.13)
$ 0.45
$ 0.66
$ 0.33
Spreads
Spread of corporate mortgages over term deposit
interest and expenses 1
2.83 %
2.78 %
2.93 %
3.14 %
3.34 %
3.49 %
3.63 %
3.78 %
Spread of securitized mortgages over liabilities 1
0.54 %
0.49 %
0.46 %
0.46 %
0.39 %
0.42 %
0.39 %
0.39 %
Average term to maturity (in months)
Mortgages - corporate
9.5
12.9
12.1
11.5
12.7
13.1
12.7
11.5
Term deposits
18.5
19.1
19.2
18.2
18.5
19.2
16.1
14.9
Balance Sheet Highlights ($ million)
Total assets
$ 5,348
$ 5,213
$ 5,097
$ 4,894
$ 4,739
$ 4,540
$ 4,427
$ 4,152
Mortgages - corporate
$ 2,464
$ 2,472
$ 2,500
$ 2,385
$ 2,415
$ 2,338
$ 2,224
$ 2,037
Mortgages - securitized
$ 2,420
$ 2,290
$ 2,170
$ 2,095
$ 1,930
$ 1,835
$ 1,755
$ 1,724
Total liabilities
$ 4,748
$ 4,611
$ 4,512
$ 4,318
$ 4,207
$ 4,013
$ 3,910
$ 3,645
Shareholders’ equity
$
599
$
602
$
585
$
576
$
532
$
528
$
517
$
507
Capital Ratios
Income tax assets to capital ratio 2
5.24
5.38
5.34
5.14
5.52
5.14
5.22
5.02
CET 1 & Tier 1 capital ratios 4
19.02 %
19.94 %
19.10 %
19.00 %
17.61 %
17.72 %
17.90 %
19.59 %
Total capital ratio 4
19.28 %
20.19 %
19.35 %
19.23 %
17.91 %
17.98 %
18.14 %
19.81 %
Leverage ratio 3
9.72 %
9.99 %
9.85 %
10.11 %
9.49 %
9.76 %
9.71 %
9.94 %
Credit Quality
Impaired mortgage ratio (corporate) 1
2.46 %
2.26 %
3.50 %
3.42 %
3.26 %
1.76 %
1.70 %
1.92 %
Impaired mortgage ratio (total) 1
1.25 %
1.19 %
1.90 %
1.83 %
1.82 %
0.99 %
0.96 %
1.05 %
Mortgage Arrears
Corporate
$ 96,368
$ 139,427 $ 136,499 $ 136,175 $ 112,789 $ 85,513
$ 63,651
$ 54,873
Securitized
4,103
6,333
5,278
6,085
4,661
4,438
5,130
4,096
Total
$ 100,471 $ 145,760 $ 141,777 $ 142,260 $ 117,450 $ 89,951
$ 68,781
$ 58,969
Common Share Information (end of period)
Number of common shares outstanding
38,717
38,463
38,153
37,831
35,432
35,432
35,068
34,788
Book value of common share 1
$ 15.48
$ 15.65
$ 15.34
$ 15.24
$ 15.01
$ 14.89
$ 14.73
$ 14.58
Common share price - close
$ 18.25
$ 17.98
$ 16.10
$ 15.73
$ 15.89
$ 15.13
$ 15.36
$ 15.00
Market capitalization ($ million)
$
707
$
692
$
614
$
595
$
563
$
536
$
539
$
522
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
2 For further information refer to the “Taxable Income” and “Income Tax Capital” sections of this MD&A. Tax balances are calculated in accordance with the Tax Act.
3 This measure has been calculated in accordance with OSFI’s Leverage Requirements guidelines. Mortgages securitized through the market MBS program and CMB program for which derecognition has not been achieved are included in regulatory assets in the leverage ratio. For further
information, refer to the “Capital Management” section of this MD&A.
4 These measures have been calculated in accordance with OSFI’s Capital Adequacy Requirements guidelines.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 20 -
Annual Trends
•
Net income increased over the three year period mainly due to growth in our corporate mortgage and
securitized portfolios and higher equity income from our investment in MCAP.
•
For 2024 compared to 2023, our net income increased slightly due to growth in our mortgage portfolios,
higher equity income from our investment in MCAP, and higher spread on our securitized mortgages. This
was partially offset by a lower spread on our corporate mortgages in a declining interest rate environment
and unrealized losses on our non-marketable securities. Our corporate and securitized assets continued to
grow into 2024 compared to 2023 due to higher net origination volumes and solid renewals, and increases
in our capital base from our overnight marketed offering and our at-the-market equity program (“ATM
Program”).
•
For 2023 compared to 2022, our net income was positively impacted by growth in our mortgage portfolios
as well as higher spread of corporate mortgages over term deposit interest and expenses. This was
partially offset by unrealized fair value losses on our REIT portfolio. Our corporate and securitized assets
continued to grow in 2023 compared to 2022 due to high net origination volumes, including strong
renewals in our residential mortgages.
•
Taxable income fluctuations in the three year period are mainly due to taxable income recorded from our
investment in MCAP Commercial LP (“MCAP”). As a result of an increase in taxable income in 2021, the
Board of Directors (“Board”) declared a special stock dividend in 2022 in order to distribute all of MCAN’s
taxable income, net of loss carryforwards used.
Quarterly Trends
•
In 2023, we saw some stabilization in interest rates compared to prior periods, but still with a total of 75
basis points increase in interest rates during the year, as well as uncertainty on future increases by the
Bank of Canada and on the Canadian economy’s risk of recession. There continued to be volatility in REIT
stock prices and therefore mostly unrealized losses were recorded. In 2024, we saw the beginning of
interest rate cuts which helped initially with a recovery on REIT stock prices; however, Q4 2024 saw
unrealized losses on our REITS and our non-marketable securities mainly related to the current economic
environment and their impact on valuations. In 2024, we also recorded higher equity income from MCAP.
•
In 2023, the rising interest rate environment had increased rates in our floating rate residential
construction portfolio above their floor rates and our focus on changing the laddering of the duration of
our term deposits had kept average term deposit rates from rising faster than our mortgage rates, which
increased our spread of corporate mortgages over term deposit interest and expenses. Beginning in Q2
2024, we saw a larger decline in our spread of corporate mortgages over term deposit interest and
expenses as rates on our corporate mortgages fell faster than our term deposits in the declining interest
rate environment. In Q4 2024, we saw a slight increase in our spread of corporate mortgages over term
deposit interest and expenses due to our hedging strategy lowering our term deposit costs.
•
We saw spreads decline on securitizations in the first half of 2023 as a result of a decline in the spread of
Government of Canada bond yields versus our mortgage rates. Government of Canada bond yields
remained elevated in 2023. As a result, we had reduced our securitization volumes in 2023. 2023 volumes
were also impacted by lower insured residential mortgage originations due to the higher interest rate
environment. Since Q4 2023, we have seen better economics on securitizations as the spread of
Government of Canada bond yields versus our mortgage rates widened. We participate in this market
opportunistically.
•
In 2023, we had higher taxable income from our core business as well as from our investment in MCAP. In
Q4 2023, we had lower taxable income as a result of tax timing differences on various investing strategies
that we engaged in. In 2024, we had higher taxable income mainly as a result of higher taxable income
from MCAP.
•
Common Equity Tier 1 (“CET 1”), Tier 1 Capital and Total Capital to risk-weighted assets ratio reductions
are generally due to our growing risk-weighted assets compared to our capital base. The Company
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 21 -
successfully initiated a $28.8 million capital raise by way of an overnight marketed offering in March 2024.
In 2023 and 2024, we also raised $2 million and $7 million, respectively, of capital through our at-the-
market equity program (“ATM Program”). In Q2 2023, our total capital and leverage ratios decreased due
to Office of the Superintendent of Financial Institutions Canada’s (“OSFI”) revised rules that incorporate
Basel III reforms that came into effect. Improvement to our ratios in Q1 and Q2 2024 was due to our
overnight marketed offering mentioned above. Our Dividend Reinvestment Program (“DRIP”) provided us
with a reliable source of capital maintenance each quarter. All of our capital and leverage ratios are within
our regulatory and internal risk appetite guidelines.
•
Mortgage arrears have varied on a quarterly basis given the nature of the 1-30 day arrears. The majority
of residential mortgage arrears activity occurs in the 1-30 day category, in which the bulk of arrears are
resolved and do not migrate to arrears categories over 30 days. Our greater than 30 days arrears
increased compared to Q3 2024 in our uninsured residential mortgages; however, we believe overall that
we have a quality uninsured residential mortgage loan portfolio with an average loan to value (“LTV”) of
63.7% at December 31, 2024 based on an industry index of current real estate values. For the construction
and commercial mortgage arrears, these loans have either been brought current or we expect them to be
brought current, or we have initiated asset recovery programs. We have a strong track record with our
default management processes and asset recovery programs as the need arises. Our realized loan losses
on our construction portfolio have been negligible in the last 10 years.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 22 -
BUSINESS OVERVIEW AND OUTLOOK
We focus over the long term on growing our business and shareholder returns. We believe that our long-term
strategy will continue to serve us well, though we also consider the current market conditions in the execution of
that strategy. Over the short to mid-term, our focus is on continuing to grow our business and our returns within
our capital requirements and risk appetite, working with our strategic partners, and investing in infrastructure and
process improvements to drive efficiencies. We believe that we are a prudent and disciplined lender to the
Canadian real estate markets with a strong credit profile with conservative LTV ratios. We have strong
relationships with our brokers and strategic partners that are foundational to our strategy. This strategy and long-
term outlook are based on assumptions from our experience, our market knowledge, and sources we consider
reliable.
Economic Outlook
The Canadian economy is in a period of heightened political and economic uncertainty. Canada is still recovering
from high interest rates with higher unemployment, declining gross domestic product (“GDP”) per capita and a soft
labour market. The magnitude and duration of changes in tariffs on international trade presents a risk of recession
to the Canadian economy with the potential for weaker GDP, higher unemployment, and further inflationary
pressures. Most economists believe that to support economic growth the direction of rate cuts is downwards
through 2025 and there is a reasonable expectation inflation will remain close to their target. Higher leveraged
households and a weakening job market have shifted consumer spending toward debt servicing and more
conservative spending habits. High immigration has helped gross domestic product but it has not led to better
economic growth per capita. Although much of the Canadian consumer market continues to demonstrate credit
strength, there is increasing delinquency rates on non-housing-related consumer debt and some pullback on
consumer spending that indicates that the tighter monetary policy and high interest rates have worked their way
through the economy. We expect geopolitical uncertainty and its impact on the economy to be the dominant
concern for 2025.
Housing Market Outlook
Housing affordability continues to be a concern. Recent forecasts of further interest rate cuts will provide some
relief to homebuyers in the short-term; however, we do not expect a sustained recovery until interest rates come
down more meaningfully and geopolitical tensions de-escalate. In the long term, we believe that further interest
rate cuts and the continued supply-demand imbalance will provide upward pressure on sale and home price
growth, particularly in and around our core markets of (i) the Greater Toronto area; (ii) the Capital region; and (iii)
the Greater Vancouver area. However, housing affordability and reduced immigration will likely keep this growth
from being even stronger. Housing affordability (including housing supply) continues to be a critical issue for all
levels of government and in all provinces where we do business. Federal government policy changes, including
expanding the maximum mortgage amortization and raising the cap on insured mortgages, will likely lift home
sales but further erode affordability. The lack of supply of affordable housing is not easily resolved in the short
term, as there are multiple factors to building new supply (i.e. local/municipal government processes, skilled
labour shortages, increased construction costs including higher construction financing rates, lack of new
construction technologies, etc.) that limit how many homes can be built in the short term.
Business Outlook
We believe that our business is well structured with its focus on multiple facets of the Canadian residential real
estate market, giving us some flexibility in terms of income generation and allowing us to balance out volatility that
we may experience at certain points and in certain areas of our business. We believe that there is opportunity to
focus on and expand our core business without taking on significantly more risk. We will also continue to place an
emphasis on investing in our infrastructure and process improvements to drive operating leverage. We will remain
nimble, however, in dealing with any market changes or opportunities that may arise in any of our businesses in
the short term. With a strong liquidity and capital position, high level of credit quality, and our strategy of
continued diversification of our lending portfolio and funding base, we believe we are well positioned for an
uncertain economic and geopolitical environment.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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MCAN Capital Division
Our MCAN Capital division manages our construction and commercial lending business, as well as our
investments in REITs and private real estate-based development and loan funds. We expect continued high
demand for more affordable housing, which is our main strategy. We have seen growth in our average
residential construction and commercial portfolio balance, which is over $1.1 billion, but we do expect runoff
from completed projects and, therefore, we are building our pipeline to manage this and try to maintain our
current balances. Specifically with respect to construction zoning site delays as well as the aforementioned
housing market headwinds on our construction lending portfolio, the vast majority of our loans are
progressing towards completion and the few that have stalled are being actively managed to either be brought
current or asset recovery programs have been initiated. We continue to monitor that entire portfolio and the
market very closely, and we will continue to exercise our strong credit management practices in the context of
the market. As well, the cost of construction has increased due to inflationary pressures in the cost of building
materials and labour, and there continues to be a shortage of skilled labour within the construction industry.
Any changes in tariffs on international trade may further increase construction costs. All these factors have,
and may continue to have, an impact on the timing of repayments as loans remain outstanding longer;
however, they have not changed the overall expected success of these construction projects or the
performance of the loans within this portfolio. Our philosophy within our MCAN Capital division is to apply a
prudent approach to our underwriting criteria in line with our risk appetite, with a focus on well-located and
more affordable residential products, near transit corridors, with experienced borrowers and developers
where we have existing relationships. We will continue to remain vigilant in our underwriting and loan
management practices and look to onboard new borrowers and developers that fit within our lending
philosophy. With respect to our private real estate-based development funds, many of the fund sponsors have
been sitting on the sidelines, not committing amounts to new projects given current market conditions. We
believe this to be a prudent approach. MCAN has invested in these current funds for long-term returns and we
have no plans for new investments at this time. For projects currently being undertaken, we actively monitor
their progress and the fair values of those projects may experience volatility from quarter to quarter. With
respect to our REIT portfolio, the expected interest rate cuts should improve market valuations.
MCAN Home Division
Our MCAN Home division manages our residential lending business. Given the current interest rate
environment, our risk management, credit monitoring and assessment activities continue to have a
heightened focus in operating our business. We continue to focus on proactively protecting our net interest
margins on our residential mortgages with strong credit underwriting to ensure that we adequately
compensated for the level of risk we may take. We expect a moderate increase in home purchase activity, and
more competition in order to attract what demand is coming in for both originations and renewals, when
more meaningful interest rate cuts occur and federal government policy actions mentioned above come into
effect; however, the economic impact of the current geopolitical environment remains uncertain. We are
looking to add new products to further broaden our offering to our customers. We remain dedicated to
continuously improving our service for our borrowers and the broker community, and as such, we will
continue to invest in our current and new systems and business infrastructure to further enhance our service
experience. We will also look to expand to other urban markets within Canada. We will continue to keep
abreast of the many changes in the market, the regulatory environment and in our portfolios that could
impact our business or that could create opportunities in line with our risk appetite.
MCAN Wealth Division
Our MCAN Wealth division manages our term deposit business. We issue both retail and wholesale term
deposits that are eligible for CDIC deposit insurance that are sourced through a network of independent
brokers and financial agents, as well as through our digital direct-to-consumer platform. We expect solid
originations of term deposits to maintain the level of corporate growth we have achieved. We expect there
will continue to be volatility in the Government of Canada bond yield curve and, therefore, volatility in pricing
in the term deposit market due to changes in deposit customer demand from further interest rate cuts and
related higher demand by financial institutions for term deposits. Given forecasted interest rates, we continue
to look for opportunities to adjust the maturity terms of our term deposits relative to our corporate mortgage
portfolio. We will continue to utilize our hedging strategies to minimize interest rate risk in a declining rate
environment, particularly as our floating rate construction lending portfolio floats down to floor rates. We will
continue to expand our broker networks, grow our direct-to-consumer platform and look for other channels to
source term deposits. We have invested in, and expect to continue to invest in, our current and new systems
and business infrastructure and processes to drive efficiencies.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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We are expanding and maturing our capital markets, investor relations and funding diversification strategies over
the long term to continue our growth. That growth will be dependent on capital availability and, therefore, the
strength of capital markets and existing shareholder demand for our shares. We will continue to leverage our ATM
program and other share offerings when it makes sense. MCAN’s management and Board are committed to
proactively and effectively managing and evolving all our strategies, business activities and team to achieve our
targeted average annual growth in corporate assets over the long term of 10%.
This Outlook contains forward-looking statements. For further information, refer to the “A Caution About Forward-
Looking Information and Statements” section of this MD&A.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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HIGHLIGHTS
Q4 2024
•
Net income totalled $7.7 million in Q4 2024, a decrease of $12.2 million (61%) from $19.9 million in Q4
2023. Results for the fourth quarter of 2024 were mainly impacted by higher unrealized losses on our REIT
and non-marketable securities portfolios in the current economic environment and higher operating
expenses.
•
Earnings per share totalled $0.20 in Q4 2024, a decrease of $0.36 (64%) from earnings per share of $0.56
in Q4 2023.
•
Return on average shareholders’ equity1 was 5.14% for Q4 2024 compared to 15.01% in Q4 2023.
•
Net corporate mortgage spread income1 is derived from both our residential lending portfolio and our
construction and commercial portfolio. It decreased by $2.5 million from Q4 2023. The net corporate
mortgage spread income decreased due to a reduction in the spread of corporate mortgages over term
deposit interest and expenses partially offset by a higher average corporate mortgage portfolio balance
from continued mortgage originations and renewals. The decrease in the spread of corporate mortgages
over term deposit interest and expenses is due to higher effective interest rates on our term deposits and
related hedges, and lower mortgage rates, mainly in our floating rate residential construction portfolio, in
a declining interest rate environment. In Q4 2024, we saw the spread of corporate mortgages over term
deposit interest and expenses improve compared to Q3 2024 due to a faster reduction in term deposit
and related hedges compared to our mortgage rates. Term deposit costs are also higher as we utilized
them for funding instead of our short-term loan facilities. We had $1.3 million lower financing costs on
our short-term facilities in Q4 2024 compared to Q4 2023.
•
Net securitized mortgage spread income1 increased by $1.3 million from Q4 2023. The net securitized
mortgage spread income increased due to a higher spread of securitized mortgages over liabilities and a
higher average securitized mortgage portfolio balance from higher securitization volumes of insured
residential mortgages exceeding maturities. We have seen better economics on securitizations as the
spread of Government of Canada bond yields versus our mortgage rates widened in a declining interest
rate environment.
•
Provision for credit losses on our corporate mortgage portfolio of $1.2 million in Q4 2024 was mainly due
to growth in our mortgage portfolio and provisioning on impaired residential construction loans partially
offset by improvements to economic forecasts, particularly falling interest rates and a recovery in the
housing price index. We have a strong track record with our asset recovery programs on our construction
loans as the need arises. Our realized loan losses on our construction portfolio have been negligible in the
last 10 years. In Q4 2023, we had a provision for credit losses of $2.1 million mainly due to growth in our
portfolio, less favourable underlying economic forecasts relating to unemployment rates and housing
prices, and model enhancements.
•
Equity income from MCAP totalled $7.2 million in Q4 2024, an increase of $2.8 million (63%) from $4.4
million in Q4 2023, which was primarily due to (i) higher securitized mortgage net interest income from
more favourable spreads and a higher average securitized portfolio; and (ii) higher mortgage origination
fees as a result of wider mortgage spreads partially offset by hedge losses. These were partially offset by
(i) higher interest expense on credit facilities; and (ii) higher securitization expenses.
•
Net change in unrealized fair value loss on our marketable securities of $7.8 million in Q4 2024 compared
to a $4.4 million net unrealized fair value gain in Q4 2023. We expect some recovery in the REIT market
given a declining interest rate environment. We are long term investors and continue to realize the
benefits of solid cash flows and distributions from these investments. In Q4 2024, we received
distributions of $0.8 million (distribution yield1 of 6.13%) from our REITs compared to $0.8 million
(distribution yield1 of 7.23%) in Q4 2023.
•
Net realized and change in unrealized fair value loss on our non-marketable securities of $3.6 million in Q4
2024 compared to a $2.5 million net change in unrealized fair value loss in Q4 2023 both consisting of
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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gains and losses from certain underlying property investments as a result of (i) updated appraisals/
property valuations, net of related property debt and debt service costs; and (ii) actual executions on
construction and leasing stabilization and value-add activities. In Q4 2024, we had a $1.0 million realized
gain related to the sale of an underlying property. Our non-marketable securities are either held for long-
term capital appreciation or distribution income. Our real estate development fund investments tend to
have less predictable cash flows that are predicated on the completion of the development projects
within these funds.
Year to Date 2024
•
Net income totalled $77.6 million for 2024, an increase of $0.1 million (—%) from $77.5 million net
income in 2023. Our 2024 results were mainly impacted by higher income from MCAP and our
securitization portfolio partially offset by lower corporate mortgage spread income in a declining interest
rate environment and higher operating expenses.
•
Earnings per share totalled $2.06 for 2024, a decrease of $0.16 (7%) from earnings per share of $2.22 in
2023.
•
Return on average shareholders’ equity1 was 13.40% for 2024 compared to 15.05% in 2023.
•
Net corporate mortgage spread income1 decreased by $4.3 million from 2023. The net corporate
mortgage spread income decreased due to a reduction in the spread of corporate mortgages over term
deposit interest and expenses partially offset by a higher average corporate mortgage portfolio balance
from continued originations and renewals. For 2024, the decrease in the spread of corporate mortgages
over term deposit interest and expenses is mainly due to a larger increase in term deposit rates and
related hedges compared to our mortgage rates, particularly our floating rate residential construction
loans in a declining interest rate environment. Term deposit costs are also higher as we utilized them for
funding instead of our short-term loan facilities. We had $3.6 million lower financing costs on our short-
term facilities for 2024 compared to 2023.
•
Net securitized mortgage spread income1 increased by $3.3 million from 2023. The net securitized
mortgage spread income increased due to an increase in the spread of securitized mortgages over
liabilities and a higher average securitized mortgage portfolio balance from higher securitization volumes
of insured residential mortgages exceeding maturities. The increase in the net securitized mortgage
spread income is due to the same factors as for Q4 2024 mentioned above.
•
Provision for credit losses on our corporate mortgage portfolio of $3.3 million for 2024 mainly due to the
same factors as Q4 2024. For 2023, there was a provision for credit losses of $4.5 million mainly due to
the same factors as described for Q4 2023 mentioned above.
•
Equity income from MCAP totalled $28.8 million for 2024, an increase of $6.8 million (31%) from $22.0
million for 2023. For 2024, the increase is mainly due to the same factors as for Q4 2024 mentioned
above.
•
Net change in unrealized fair value gain on our marketable securities of $0.8 million for 2024 compared to
a $3.2 million net unrealized fair value loss for 2023. We expect some recovery in the REIT market given a
declining interest rate environment. We are long term investors and continue to realize the benefits of
solid cash flows and distributions from these investments. In 2024, we received distributions of $3.1
million (distribution yield1 of 6.05%) from our REITs compared to $3.6 million (distribution yield1 of 6.44%)
in 2023.
•
Net realized and change in unrealized fair value loss on our non-marketable securities of $7.1 million for
2024 mainly related to the same factors as for Q4 2024 mentioned above. For 2023, we had a $0.4 million
net change in unrealized fair value loss on our non-marketable securities investments due to the same
factors as described for Q4 2023 mentioned above. Our non-marketable securities are either held for
long-term capital appreciation or distribution income. Our real estate development fund investments tend
to have less predictable cash flows that are predicated on the completion of the development projects
within these funds.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Business Activity and Balance Sheet
•
Our balance sheet management reflects our focus in the short to mid term on maintaining solid net
interest margin within our capital requirements and risk appetite.
•
Corporate assets totalled $2.86 billion at December 31, 2024, a net decrease of $20 million (1%) from
September 30, 2024 and a net increase of $104 million (4%) from December 31, 2023.
•
Corporate mortgage portfolio totalled $2.5 billion at December 31, 2024, a net decrease of $8 million
(—%) from September 30, 2024 and a net increase of $49 million (2%) from December 31, 2023.
•
Construction and commercial portfolios totalled $1.10 billion at December 31, 2024, a net increase of $81
million (8%) from September 30, 2024 and a net decrease of $12 million (1%) from December 31, 2023.
The movement in the portfolio is attributed to originations and repayments on completing projects.
Construction and commercial loan originations were $233 million in Q4 2024, an increase of $97 million
(71%) from Q3 2024 and an increase of $47 million (25%) from Q4 2023 and $653 million (2% decrease) in
fiscal 2024 compared to $666 million in 2023. Originations have been solid this year and some extensions
of projects due to normal construction delays or normal delays relating to the permitting and zoning
process meant that we have not experienced as much run-off in the portfolio as expected. To date,
projects continue to progress toward completion.
•
Uninsured residential mortgage portfolio totalled $1.11 billion at December 31, 2024, a net increase of $7
million (1%) from September 30, 2024 and a net increase of $147 million (15%) from December 31, 2023.
Uninsured residential mortgage originations were $118 million in Q4 2024, an increase of $4 million (3%)
from Q3 2024 and an increase of $51 million (75%) from Q4 2023 and $430 million (22% increase) in fiscal
2024 compared to $352 million in 2023. We continue to see solid uninsured residential mortgage
renewals with $449 million in fiscal 2024 compared to $495 million in 2023, as borrowers find it more
convenient to stay with their existing lender in the current market environment. We actively manage
origination and renewal volumes in order to protect our net interest margins and our bottom line.
•
Securitized insured residential mortgages totalled $2.42 billion at December 31, 2024, a net increase of
$130 million (6%) from September 30, 2024 and a net increase of $490 million (25%) from December 31,
2023. As we have seen more favourable securitization spreads, we opted to securitize our insured
residential mortgages as opposed to selling them at the commitment stage. Insured residential mortgage
securitization volumes were $211 million in Q4 2024, a decrease of $9 million (4%) from Q3 2024 and an
increase of $83 million (65%) from Q4 2023, and $803 million (123%) in fiscal 2024 compared to $359
million in 2023. Insured residential mortgage originations were $110 million in Q4 2024, a decrease of $61
million (36%) from Q3 2024 and a decrease of $38 million (25%) from Q4 2023, and $638 million (22%
increase) in fiscal 2024 compared to $523 million in 2023. This includes $14 million insured residential
mortgage commitments originated and sold in Q4 2024 compared to $0.4 million in Q3 2024 and $nil in
Q4 2023, and $15 million in fiscal 2024 compared to $25 million in 2023. Overall, total insured residential
mortgage origination volumes are higher due to prior year’s economic uncertainty and the higher interest
rate environment impacting prior year origination volumes. Further interest rate decreases would help
first time home buyers, who would be a significant portion of the borrowers of our insured residential
mortgages. We use various channels in funding the insured residential mortgage portfolio, in the context
of market conditions and net contributions over the life of the mortgages, in order to support our overall
business.
Dividend
•
The Board declared a first quarter regular cash dividend of $0.41 per share (an increase of 5% from our
fourth quarter 2024 dividend) to be paid March 31, 2025 to shareholders of record as of March 14, 2025.
As a Mortgage Investment Corporation (“MIC”), we are entitled to deduct the dividends that we pay to
shareholders from our taxable income.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Credit Quality
•
Arrears total mortgage ratio1 was 2.06% at December 31, 2024 compared to 3.06% at September 30, 2024
and 2.70% at December 31, 2023. The majority of our residential mortgage arrears activity occurs in the
1-30 day category, in which the bulk of arrears are resolved and do not migrate to arrears categories over
30 days. While greater than 30 days arrears has increased in our uninsured residential mortgages, we
believe overall that we have a quality uninsured residential mortgage loan portfolio with an average LTV
of 63.7% at December 31, 2024 compared to 63.5% at September 30, 2024 and 63.4% at December 31,
2023 based on an industry index of current real estate values. We have also seen our arrears total
mortgage ratio decline since Q1 2024. With respect to our construction and commercial loan portfolio, we
have a strong track record with our default management processes and asset recovery programs as the
need arises.
•
Impaired corporate mortgage ratio1 was 2.46% at December 31, 2024 compared to 2.26% at September
30, 2024 and 3.26% at December 31, 2023. At December 31, 2024, impaired mortgages mainly represent
five impaired construction mortgages where asset recovery programs have been initiated.
•
Impaired total mortgage ratio1 was 1.25% at December 31, 2024 compared to 1.19% at September 30,
2024 and 1.82% at December 31, 2023. The decrease to our impaired total mortgage ratio is mainly due to
fewer impaired construction mortgages as they were either brought current or we recovered all past due
interest and principal.
•
Net write-offs were $0.2 million (3.7 basis points of the average corporate portfolio) in Q4 2024 compared
to $0.3 million (5.7 basis points) in Q4 2023; annual write-offs were $0.3 million (1.0 basis points) in 2024
compared to $0.3 million (1.5 basis points) in 2023. Write-offs in 2024 related to one loan in our
uninsured residential mortgage portfolio. Write-offs in 2023 related to one loan in our uninsured
residential mortgage portfolio and interest on one paid out construction loan.
Capital
•
We manage our capital and asset balances based on the regulations and limits of both the Tax Act and
OSFI.
•
We have a Base Shelf prospectus allowing us to make certain public offerings of debt or equity securities
during the period that it is effective, through Prospectus Supplements.
◦
On March 28, 2024, we closed an overnight marketed offering, established pursuant to a
Prospectus Supplement to our Base Shelf prospectus, at a price of $15.40 per common share for
gross proceeds of $28.8 million and net proceeds of $27.2 million including share issuance costs.
◦
We have an ATM Program, established pursuant to a Prospectus Supplement to our Base Shelf
prospectus, allowing us to issue up to $30 million common shares to the public from time to time
at the market prices prevailing at the time of sale. In Q4 2024, we sold 221,500 common shares
at a weighted average price of $18.73 for gross proceeds of $4.1 million and net proceeds of $4.0
million including $83 thousand of agent commission paid and $100 thousand of other share
issuance costs under the ATM Program. In fiscal 2024, we sold 404,100 common shares at a
weighted average price of $18.29 for gross proceeds of $7.4 million and net proceeds of $7.0
million including $0.1 million of agent commission paid and $0.3 million of other share issuance
costs under the ATM Program. At December 31, 2024, we have $21.0 million remaining available
to be issued through our ATM Program. The volume and timing of distributions under the ATM
Program are determined at MCAN’s sole discretion.
•
We issued $14.8 million in new common shares through the Dividend Reinvestment Plan (“DRIP”) in 2024
compared to $14.5 million in 2023. The DRIP participation rate was 14% for the 2024 fourth quarter
dividend (2023 fourth quarter dividend - 30%). The DRIP participation rate for 2024 dividends was 22%
(2023 - 29%).
•
Income tax assets to capital ratio3 was 5.24 at December 31, 2024 compared to 5.38 at September 30,
2024 and 5.52 at December 31, 2023.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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•
CET 1 and Tier 1 Capital to risk-weighted assets ratios2 were 19.02% at December 31, 2024 compared to
19.94% at September 30, 2024 and 17.61% at December 31, 2023. Total Capital to risk-weighted assets
ratio2 was 19.28% at December 31, 2024 compared to 20.19% at September 30, 2024 and 17.91% at
December 31, 2023. Leverage ratio2 was 9.72% at December 31, 2024 compared to 9.99% at September
30, 2024 and 9.49% at December 31, 2023. Improvement to our capital and leverage ratios was due to our
capital raises in 2024. All of our capital and leverage ratios are within our regulatory and internal risk
appetite guidelines.
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other
financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2 These measures have been calculated in accordance with OSFI’s Leverage Requirements and Capital Adequacy Requirements guidelines.
3 For further information refer to the “Income Tax Capital” section of this MD&A. Tax balances are calculated in accordance with the Tax Act.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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RESULTS OF OPERATIONS
Table 3: Net Income
(in thousands except for per share amounts and %)
Q4
Q3
Change
Q4
Change
Annual
Annual
Change
For the Periods Ended
2024
2024
(%)
2023
(%)
2024
2023
(%)
Net Investment Income - Corporate Assets
Mortgage interest
$ 47,209 $ 48,067
(2%) $ 47,406
—% $ 191,706 $ 165,997
15%
Equity income from MCAP Commercial LP
7,227
6,667
8%
4,429
63% 28,803 22,010
31%
Non-marketable securities
1,927
1,966
(2%)
2,066
(7%)
7,723
8,772
(12%)
Marketable securities
775
765
1%
828
(6%)
3,057
3,625
(16%)
Fees
873
1,024
(15%)
728
20%
3,526
2,417
46%
Interest on cash and other income
842
920
(8%)
914
(8%)
3,927
4,061
(3%)
Net gain (loss) on securities
(11,326)
5,671
(300%)
1,977
(673%) (6,343) (3,622)
(75%)
Gain on dilution of investment in MCAP Commercial LP
—
—
n/a
—
n/a
680
1,048
(35%)
47,527 65,080
(27%) 58,348
(19%) 233,079 204,308
14%
Term deposit interest and expenses
26,642 28,021
(5%) 24,361
9% 108,259 78,219
38%
Mortgage expenses
2,227
2,006
11%
2,098
6%
8,381
7,490
12%
Interest on loans payable
318
153
108%
1,645
(81%)
2,896
6,458
(55%)
Other financial expenses
—
—
n/a
—
n/a
150
100
50%
Provision for (recovery of) credit losses
1,160
1,302
(11%)
2,114
(45%)
3,258
4,494
(28%)
30,347 31,482
(4%) 30,218
—% 122,944 96,761
27%
17,180 33,598
(49%) 28,130
(39%) 110,135 107,547
2%
Net Investment Income - Securitization Assets
Mortgage interest
18,535 16,593
12% 11,309
64% 63,163 39,335
61%
Other securitization income
546
593
(8%)
958
(43%)
2,017
2,234
(10%)
19,081 17,186
11% 12,267
56% 65,180 41,569
57%
Interest on financial liabilities from securitization
15,511 14,064
10%
9,597
62% 53,255 32,769
63%
Mortgage expenses
1,551
1,502
3%
1,219
27%
5,769
4,548
27%
17,062 15,566
10% 10,816
58% 59,024 37,317
58%
2,019
1,620
25%
1,451
39%
6,156
4,252
45%
Operating Expenses
Salaries and benefits
8,791
6,627
33%
5,316
65% 27,762 22,815
22%
General and administrative
4,004
1,699
136%
2,873
39% 11,975 10,757
11%
12,795
8,326
54%
8,189
56% 39,737 33,572
18%
Net income before income taxes
6,404 26,892
(76%) 21,392
(70%) 76,554 78,227
(2%)
Recovery of income taxes
(1,321)
—
n/a
1,537
(186%) (1,032)
729
(242%)
Net Income
$ 7,725 $ 26,892
(71%) $ 19,855
(61%) $ 77,586 $ 77,498
—%
Basic and diluted earnings per share
$
0.20 $
0.70
(71%) $
0.56
(64%) $
2.06 $
2.22
(7%)
Dividends per share - cash
$
0.39 $
0.39
—% $
0.38
3% $
1.56 $
1.48
5%
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Net Investment Income - Corporate Assets
Mortgage Interest Income
Table 4: Net Mortgage Interest Income and Average Rate by Mortgage Portfolio - Quarterly
For the Quarters Ended
December 31, 2024
September 30, 2024
December 31, 2023
Average
Interest Average
Average
Interest Average
Average
Interest Average
(in thousands except %)
Balance 1
Income
Rate 1
Balance 1
Income
Rate 1
Balance 1
Income
Rate 1
Residential mortgages
Insured
$ 213,129 $ 1,998
3.86 % $ 298,136 $ 3,148
4.21 % $ 310,538 $ 3,428
4.40 %
Uninsured
1,109,751 18,969
6.82 % 1,078,502 18,692
6.92 %
955,780 15,593
6.50 %
Uninsured - completed inventory
98,697
2,221
8.95 %
89,001
2,085
9.31 %
39,041
1,001
10.17 %
Construction loans
Residential
1,030,488 23,064
8.90 %
983,427 23,057
9.32 % 1,011,924 25,665
9.86 %
Non residential
6,054
123
8.09 %
5,202
116
8.87 %
2,546
65
10.15 %
Commercial loans
Multi-family residential
33,139
834
7.60 %
55,472
969
8.40 %
78,146
1,576
9.00 %
Other
—
—
—
—
—
— %
4,515
78
9.40 %
Mortgages - corporate portfolio
$ 2,491,258 $ 47,209
7.53 % $ 2,509,740 $ 48,067
7.66 % $ 2,402,490 $ 47,406
7.80 %
Term deposit interest and expenses
2,213,808 26,642
4.70 % 2,252,227 28,021
4.88 % 2,118,745 24,361
4.46 %
Net corporate mortgage spread
income1
$ 20,567
$ 20,046
$ 23,045
Spread of corporate mortgages over
term deposit interest and expenses 1
2.83 %
2.78 %
3.34 %
Average term to maturity (months)
Mortgages - corporate
9.5
12.9
12.7
Term deposits
18.5
19.1
18.5
Table 5: Net Mortgage Interest Income and Average Rate by Mortgage Portfolio - Annual
For the Years Ended December 31
2024
2023
Average
Interest
Average
Average
Interest
Average
(in thousands except %)
Balance 1
Income
Rate 1
Balance 1
Income
Rate 1
Residential mortgages
Insured
$
277,766 $
11,613
4.20 % $
249,985 $
9,964
3.98 %
Uninsured
1,050,156
71,806
6.83 %
897,265
53,987
6.01 %
Uninsured - completed inventory
72,775
6,822
9.37 %
28,588
2,783
9.73 %
Construction loans
Residential
1,021,830
96,588
9.45 %
929,416
90,687
9.65 %
Non residential
3,978
349
8.76 %
1,454
120
8.23 %
Commercial loans
Multi-family residential
49,978
4,477
8.95 %
94,674
8,133
8.59 %
Other commercial
555
51
9.25 %
5,851
323
5.51 %
Mortgages - corporate portfolio
$ 2,477,038 $
191,706
7.74 % $ 2,207,233 $
165,997
7.47 %
Term deposit interest and expenses
2,204,590
108,259
4.82 % 1,956,612
78,219
3.90 %
Net corporate mortgage spread income1
$
83,447
$
87,778
Spread of corporate mortgages over term
deposit interest and expenses 1
2.92 %
3.57 %
1 Considered to be a Non-GAAP and other financial measure. The net corporate mortgage spread income and the spread of corporate mortgages over term deposit interest and expenses are indicators of the profitability of income
earning assets less the cost of funding. Net corporate mortgage spread income is calculated as the difference between corporate mortgage interest and term deposit interest and expenses, both of which are IFRS measures. Average
rate is equal to income/expense divided by the average balance over the period on an annualized basis. Income/expense incorporates items such as penalty income, commitment fee income, origination expense, commission expense
and term deposit hedging gains or losses. The average rate as presented may not necessarily be equal to “Income/Expense” divided by “Average Balance”, as non-recurring items such as prior period adjustments are excluded from
the calculation of the average rate as applicable. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial measures and ratios used in this document are not
defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 6: Mortgage Originations
(in thousands except %)
Q4
Q3
Change
Q4
Change
Annual
Annual
Change
For the Periods Ended
2024
2024
(%)
2023
(%)
2024
2023
(%)
Originations
Residential mortgages - insured fixed 2
$ 103,129 $ 169,507
(39%) $ 122,397
(16%) $ 581,796 $ 481,409
21%
Residential mortgages - insured adjustable
rate 2
7,257
1,830
297%
25,763
(72%)
56,384
41,605
36%
Residential mortgages - uninsured
118,474 114,624
3%
67,751
75% 429,723 352,238
22%
Residential mortgages - uninsured
completed inventory 1
46,966
23,065
104%
46,227
2% 132,718
65,168
104%
Residential construction 1
233,207 135,077
73% 185,939
25% 647,116 658,735
(2%)
Non-residential construction 1
119
1,437
(92%)
72
65%
6,154
3,383
82%
Commercial 1
—
50
(100%)
—
n/a
50
3,675
(99%)
$ 509,152 $ 445,590
14% $ 448,149
14% $ 1,853,941 $ 1,606,213
15%
1 Construction, commercial and completed inventory originations represent all advances on loans.
2 Includes insured residential mortgage commitments sold that the Company originated.
Overview
For fiscal 2024, the decrease in the spread of corporate mortgages over term deposit interest and expenses compared to 2023
is mainly due to (i) an increase in average term deposit rates including related hedges generally exceeding the pace of increase
in our mortgage portfolio, given the amount of term deposits we originated coupled with the impact of maturing lower-rate
term deposits; and (ii) higher competition for residential mortgage originations, particularly insured mortgages, and forecasted
interest rate cuts put pressure on new mortgage origination rates. For Q4 2024 compared to Q4 2023, the decrease is similar to
fiscal 2024 except the declining rate environment’s impact on our floating rate residential construction portfolio lowered our
overall average mortgage rate. For Q4 2024 compared to Q3 2024, the increase is mainly due to a larger decrease in our term
deposit rates including related hedges due to interest rate cuts. We actively manage our interest rate risk by continually
reviewing, and if necessary, changing the laddering of the duration of our term deposits relative to our corporate mortgage
portfolio as well as utilizing our hedging strategies to lock-in spreads. For information on our term deposit fair value hedging,
see “Derivatives and Hedging” sub-section below. Term deposit costs are also higher as we utilized them for funding instead of
our short-term loan facilities. We had $1.3 million lower financing costs on our short-term facilities in Q4 2024 compared to Q4
2023 and $3.6 million lower financing costs in fiscal 2024 compared to 2023.
Residential Mortgage Lending
Residential mortgages provide comparatively lower yields given their risk profile, with uninsured residential mortgages
providing higher yields than insured residential mortgages. We opportunistically invest in our residential uninsured completed
inventory portfolio which often migrate from our own construction book.
Excluding uninsured completed inventory, which is invested in opportunistically as deals arise, total origination volumes in Q4
2024, Q3 2024 and fiscal 2024 on our residential mortgages were higher compared to Q4 2023 and fiscal 2023. The economic
and interest rate environment and its impact on the housing market and borrowers has slightly improved due to expectations
about further interest rate cuts. Origination volumes this year compared to 2023 also improved as we continued to increase our
mortgage lending in the Alberta and British Columbia urban markets. We also saw solid uninsured residential mortgage
renewals with $449 million in 2024 compared to $495 million in 2023, as borrowers continue to find it more convenient to stay
with their existing lender in the current market environment.
Our insured adjustable rate residential mortgage product also saw an increase in the current year, as many borrowers believed
that interest rates have peaked and that there could be further interest rate cuts in 2025. Of note, unlike traditional insured
variable rate mortgages, payments on our insured adjustable rate residential mortgages adjust as interest rates change with no
changes to loan amortization. We also underwrite our insured adjustable rate mortgages for credit quality accordingly and our
borrowers expect their payments under this product to change as interest rates change.
We continue to enhance our internal sales and marketing capabilities, and strengthen relationships and customer service with
the broker community. We will continue to invest in new technology and add new products that fit within our risk appetite to
further enhance our service experience and broaden our offering to our customers.
We have agreements whereby we can sell our (i) insured and uninsured residential mortgage commitments; and (ii) uninsured
residential mortgage whole loans. We originated and sold $15 million in commitments in Q4 2024 (Q3 2024 - $2 million; Q4
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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2023 - $nil) and $16 million in fiscal 2024 (2023 - $25 million) under these agreements. In Q4 2024, we also sold $45 million of
uninsured residential mortgage whole loans.
We securitize our insured residential mortgages opportunistically through the CMHC National Housing Act (“NHA”) Mortgage-
Backed Securities (“MBS”) program. Our Q4 2024 residential mortgage securitization volumes were $211 million (Q3 2024 -
$220 million; Q4 2023 - $128 million) and $803 million in fiscal 2024 (2023 - $359 million). As we have seen more favourable
securitization spreads, we opted to securitize our insured residential mortgages as opposed to selling them at the commitment
stage. Overall, total insured residential mortgage origination volumes are higher due to prior year’s economic uncertainty and
the higher interest rate environment impacting prior year origination volumes. Further interest rate decreases would help first
time home buyers, who would be a significant portion of the borrowers of our insured residential mortgages. Renewals of
securitized mortgages fluctuate each period depending on the maturities in the securitization portfolio.
Mortgage Renewal Rights
Through our origination platform, we retain the renewal rights to internally originated residential mortgages that are held as
corporate or securitized mortgages or have been sold to third parties and derecognized from the consolidated balance sheet.
At maturity, we have the right to renew these mortgages, which we believe will contribute to future income including renewal
income. At December 31, 2024, we had the renewal rights to $3.6 billion of residential mortgages (September 30, 2024 - $3.6
billion; December 31, 2023 - $3.1 billion).
Construction and Commercial
We continue to focus on growing our balances in our residential construction portfolio in selected markets, with our preferred
borrowers and risk profile as they tend to provide comparatively higher yields given their risk profile. For Q4 2024 compared to
Q3 2024 and Q4 2023, the decrease in average rates is mainly due to Bank of Canada interest rate cuts reducing our mostly
floating rate construction and commercial loans. Higher average balances partially offset by lower average residential
construction rates from the declining interest rate environment for fiscal 2024 contributed to a slightly higher corporate
mortgage interest compared to 2023. Since this portfolio is entirely at prime-based floating rates, we are utilizing our hedging
strategies on term deposits to manage spreads on our construction and commercial loans in a decreasing interest rate
environment. For information on our term deposit fair value hedging, see “Derivatives and Hedging” sub-section below.
Some projects have experienced construction delays due to labour shortages and cost overruns from higher interest costs and
the inflationary impact on building supplies, which has led to some loan extension and amendment requests. To date, projects
continue to progress toward completion. Current impaired construction mortgages include five mortgages where asset
recovery programs have already been initiated. We have a strong track record with our default management processes and
asset recovery programs as the need arises. Our realized loan losses on our construction portfolio have been negligible in the
last 10 years. Our prudent underwriting approach requires satisfactory borrower liquidity, guarantor net worth and presale
requirements as applicable to the respective markets.
Equity Income from MCAP
In Q4 2024, MCAP’s origination volumes were $6.3 billion, an increase from $5.3 billion in Q4 2023. For 2024, MCAP’s
origination volumes were $22.7 billion, an increase from $20.5 billion in 2023. At November 30, 2024 (we account for MCAP on
a one-month lag basis), MCAP had $154.6 billion of assets under management compared to $154.1 billion at August 31, 2024
and $154.3 billion at November 30, 2023. Equity income from MCAP totalled $7.2 million in Q4 2024, an increase of $2.8 million
from $4.4 million in Q4 2023. For Q4 2024, the increase in equity income from MCAP was primarily due to (i) higher securitized
mortgage net interest income from more favourable spreads and a higher average securitized portfolio; and (ii) higher
mortgage origination fees as a result of wider mortgage spreads partially offset by hedge losses. These were partially offset by
(i) higher interest expense on credit facilities; and (ii) higher securitization expenses. For fiscal 2024, equity income from MCAP
totalled $28.8 million, an increase of $6.8 million from $22.0 million 2023. For fiscal 2024, the increase in equity income from
MCAP was due to the same factors as for Q4 2024 mentioned above.
We recognize equity income from MCAP on a one-month lag such that our 2024 equity income from MCAP is based on MCAP’s
net income for the year ended November 30, 2024. For further information on our equity investment in MCAP, refer to the
“Equity investment in MCAP” sub-section of the “Financial Position” section of this MD&A.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 34 -
Non-Marketable Securities
KingSett High Yield Fund (“KSHYF”): We received distribution income of $1.6 million in Q4 2024 (Q4 2023 - $1.7 million) and
$6.3 million for fiscal 2024 (2023 - $7.5 million). The distribution yield1 on this portfolio was 11.35% in Q4 2024 (Q4 2023 -
12.62%) and 11.53% for fiscal 2024 (2023 - 13.90%).
KingSett Senior Mortgage Fund LP (“KSSMF”): We received distribution income of $0.4 million in Q4 2024 (Q4 2023 - $0.3
million) and $1.5 million for fiscal 2024 (2023 - $1.3 million). The distribution yield1 on this portfolio was 8.85% in Q4 2024 (Q4
2023 - 8.67%) and 8.97% for fiscal 2024 (2023 - 9.37%).
The distribution yield has been calculated based on the average portfolio carrying value. For further information, refer to the
“Other Corporate Assets” section of this MD&A.
Marketable Securities
Marketable securities income consists primarily of distributions from the REIT portfolio. In Q4 2024, we received distributions of
$0.8 million (distribution yield1 of 6.13%) from our REITs compared to $0.8 million (distribution yield1 of 7.23%) in Q4 2023. In
fiscal 2024, we received distributions of $3.1 million (distribution yield1 of 6.05%) from our REITs compared to $3.6 million
(distribution yield1 of 6.44%) in 2023. Lower distribution income on the REIT portfolio and fair value volatility throughout the
year contributed mainly to the lower 2024 distribution yield.
Fees
Fee income can vary between quarters given the fact that certain fees such as loan amendment and extension fees do not occur
on a routine basis.
Net Gain (Loss) on Securities
In Q4 2024, we recorded a net change in unrealized fair value loss on our marketable securities of $7.8 million in Q4 2024
compared to a $4.4 million net unrealized fair value gain in Q4 2023. In fiscal 2024, we recorded a net change in unrealized fair
value gain on our marketable securities of $0.8 million compared to a $3.2 million net unrealized fair value loss for 2023. In
2024, we saw REIT prices increase marginally due to continued economic uncertainty despite a declining interest rate
environment. We expect some recovery in the REIT market given a declining interest rate environment. We are long term
investors and continue to realize the benefits of solid cash flows and distributions from these investments.
In Q4 2024, we recorded a net realized and change in unrealized fair value loss on our non-marketable securities of $3.6 million
in Q4 2024 compared to a $2.5 million net change in unrealized fair value loss in Q4 2023 both consisting of gains and losses
from certain underlying property investments as a result of (i) updated appraisals/property valuations, net of related property
debt and debt service costs; and (ii) actual executions on construction and leasing stabilization and value-add activities. In Q4
2024, we had a $1.0 million realized gain related to the sale of an underlying property. For fiscal 2024, we recorded a net
realized and change in unrealized fair value loss on our non-marketable securities of $7.1 million mainly related to the same
factors as for Q4 2024 mentioned above. For fiscal 2023, we had a $0.4 million net change in unrealized fair value loss on our
non-marketable securities investments due to the same factors as described for Q4 2023 mentioned above. Our non-
marketable securities are either held for long-term capital appreciation or distribution income. Our real estate development
fund investments tend to have less predictable cash flows that are predicated on the completion of the development projects
within these funds.
Gain on Dilution of Investment in MCAP
In 2024, MCAP issued additional class B units which decreased our equity interest. As a result of the issuance of new units at
prices in excess of the per-unit carrying value of the investment, we recorded a dilution gain of $0.7 million (2023 - $1.0 million).
Term Deposit Interest and Expenses
The increase in term deposit interest and expenses for the current quarter and fiscal 2024 compared to prior year periods was
mostly due to a larger average term deposits balance, higher average term deposit rates and related hedges from the higher
interest rate environment due to the delayed timing of interest rate cuts. For Q4 2024 compared to Q3 2024, the decrease is
mainly due to a larger decrease in our term deposit rates and related hedges due to the further interest rate cuts. We have
been actively managing our interest rate risk during this period of changing interest rates by changing the laddering of the
duration of our term deposits relative to our corporate mortgage portfolio and utilizing hedging strategies. Term deposit
expenses include costs related to insurance, operating infrastructure and administration. For information on our term deposit
fair value hedging, see “Derivatives and Hedging” sub-section below.
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial
measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 35 -
Net Investment Income - Securitization Assets
Net investment income from securitization assets relates to our participation in the market MBS program and the Canada
Housing Trust (“CHT”) Canada Mortgage Bonds (“CMB”) program. Our total new securitization volumes were $211 million in Q4
2024 (Q4 2023 - $128 million) and $803 million for fiscal 2024 (2023 - $359 million). The increase compared to the prior year
was due to higher securitization volumes of insured residential mortgages as well as better economics on securitization spreads.
As securitization spreads continue to be favourable, we expect to continue to be aggressive in originating insured residential
mortgages for securitization.
For further information on the market MBS and CMB programs, refer to the “Financial Position” section of this MD&A.
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial
measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
Table 7: Net Mortgage Interest Income and Average Rate for Securitized Mortgage Portfolio - Quarterly
For the Quarters Ended
December 31, 2024
September 30, 2024
December 31, 2023
Average
Interest Average
Average
Interest Average
Average
Interest Average
(in thousands except %)
Balance1
Income
Rate 1
Balance 1
Income
Rate 1
Balance 1
Income
Rate 1
Mortgages - securitized portfolio
$ 2,332,862 $ 18,535
3.18 % $ 2,185,630 $ 16,593
3.04 % $ 1,825,364 $ 11,309
2.48 %
Financial liabilities from securitization
2,352,941 15,511
2.64 % 2,207,995 14,064
2.55 % 1,836,593
9,597
2.09 %
Net securitized mortgage spread
income 1
$ 3,024
$ 2,529
$ 1,712
Spread of securitized mortgages over
liabilities 1
0.54 %
0.49 %
0.39 %
Table 8: Net Mortgage Interest Income and Average Rate for Securitized Mortgage Portfolio - Annual
For the Years Ended December 31
2024
2023
Average
Interest
Average
Average
Interest
Average
(in thousands except %)
Balance 1
Income
Rate 1
Balance 1
Income
Rate 1
Mortgages - securitized portfolio
$ 2,134,694 $
63,163
2.97 % $ 1,743,170 $
39,335
2.25 %
Financial liabilities from securitization
2,152,141
53,255
2.48 % 1,754,287
32,769
1.86 %
Net securitized mortgage spread income 1
$
9,908
$
6,566
Spread of securitized mortgages over
liabilities 1
0.49 %
0.39 %
1 Considered to be a non-GAAP and other financial measure. The net securitized mortgage spread income and spread of securitized mortgages over liabilities are indicators of the profitability of
securitized assets less securitized liabilities. Net securitized mortgage spread income is calculated as the difference between securitized mortgage interest and interest on financial liabilities from
securitization, both of which are IFRS measures. Average rate is equal to income/expense divided by the average balance over the period on an annualized basis. Income/expense incorporates
items such as penalty income, indemnity expense and cash flow hedging gain/loss. The average rate as presented may not necessarily be equal to “Income/Expense” divided by “Average
Balance”, as non-recurring items such as prior period adjustments are excluded from the calculation of the average interest rate, as applicable. For further details, refer to the "Non-GAAP and
Other Financial Measures" section of this MD&A. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be
comparable to similar terms used by other issuers.
In 2024, we have seen average spreads improve on securitizations compared to prior periods as a result of an increase in the
spread of Government of Canada bond yields versus our mortgage rates. Government of Canada bond yields have been
declining on the expectation of a further declining interest rate environment.
Derivatives and Hedging
Cash Flow Hedging
We may enter into Government of Canada bond forward contracts to hedge interest rate risk arising from the impact of (i)
movements in interest rates between the time insured residential mortgages are funded and the time that these mortgages are
securitized; and (ii) movements in interest rates between the time term deposit funding is forecasted to be required and the
time that the actual funding occurs. Hedges are structured such that the fair value movements of the hedge instruments offset,
within a reasonable range, the changes in fair value of either the pool of fixed-rate mortgages or term deposits due to interest
rate fluctuations. The term of our cash flow hedges is generally less than 60 days. The derivative instruments are settled at
either the time of securitization or funding of the term deposits, as applicable. We apply cash flow hedge accounting to these
derivative transactions with the intention to recognize the effective matching of the gain or loss on the derivative transactions
with the recognition of the related interest expense for either the securitization or term deposit funding.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 36 -
At December 31, 2024, we had $nil of derivatives outstanding relating to cash flow hedges (September 30, 2024 - $nil;
December 31, 2023 - $nil) on our consolidated balance sheets. In Q4 2024, we had net fair value gains of $nil (Q3 2024 - $0.7
million fair value losses; Q4 2023 - $2.1 million fair value losses), and for fiscal 2024, we had net fair value losses of $1.9 million
(2023 - $0.4 million fair value gains) on our derivative transactions recognized in accumulated other comprehensive income.
Fair Value Hedging
We may enter into interest rate swaps to hedge interest rate risk arising from fair value changes in our fixed-rate term deposits
due to movements in interest rates. Hedges are structured such that the fair value movements of the hedge instruments offset,
within a reasonable range, the changes in fair value of the pool of term deposits due to interest rate fluctuations. The terms of
our fair value hedges are generally less than 2 years but may go up to 5 years. The derivative instruments are settled at the time
of maturity of the pool of term deposits. We apply fair value hedge accounting to these derivative transactions with the
intention to recognize the effective matching of the fair value gain or loss on the derivative transactions with the fair value gain
or loss on the pool of term deposits, within a reasonable range. Any unmatched fair value is recorded in term deposit interest
and expenses as hedge ineffectiveness.
At December 31, 2024, the Company had $2.5 million of derivative financial assets outstanding relating to fair value hedges
(September 30, 2024 - $2.5 million assets; December 31, 2023 - $0.2 million assets).
Achieving hedge accounting for both our cash flow and fair values hedges allows us to reduce our net income volatility related
to changes in interest rates. All of our derivative transactions are with highly rated Canadian financial institutions.
For further information, refer to Note 13 to the consolidated financial statements.
Provision for (Recovery of) Credit Losses
Table 9: Provision for (Recovery of) Credit Losses and Write-offs
(in thousands except basis points and %)
Q4
Q3
Change
Q4
Change
Annual
Annual
Change
For the Periods Ended
2024
2024
(%)
2023
(%)
2024
2023
(%)
Provision for (recovery of) impaired corporate mortgages
Residential mortgages
Uninsured
$
(76)
337
(123%)
244
(131%) $
863 $
479
80%
Construction loans
930
861
8%
883
5%
3,098
1,594
94%
Commercial loans
Other commercial
—
—
n/a
(225)
100%
—
—
n/a
854
1,198
(29%)
902
(5%)
3,961
2,073
91%
Provision for (recovery of) performing corporate mortgages
Residential mortgages
Uninsured
(90)
371
(124%)
527
(117%)
311
996
(69%)
Uninsured - completed inventory
231
365
(37%)
261
(11%)
635
147
332%
Construction loans
312
(696)
145%
431
(28%) (1,440)
1,527
(194%)
Commercial loans
Multi-family residential
(123)
44
(380%)
(17)
(624%)
(207)
(235)
12%
Other commercial
—
—
n/a
(1)
100%
(2)
(31)
94%
330
84
293%
1,201
(73%)
(703)
2,404
(129%)
Other provisions (recoveries)
(24)
20
(220%)
11
(318%)
—
17
(100%)
Total corporate provision for (recovery of) credit losses
1,160
1,302
(11%)
2,114
(45%)
3,258
4,494
(28%)
Provision for (recovery of) performing securitized mortgages
—
—
n/a
—
n/a
—
—
n/a
Total provision for (recovery of) credit losses
$ 1,160 $ 1,302
(11%) $ 2,114
(45%) $ 3,258 $ 4,494
(28%)
Corporate mortgage portfolio data:
Provision for (recovery of) credit losses, net
$ 1,184 $ 1,282
(8%) $ 2,103
(44%) $ 3,258 $ 4,477
(27%)
Net write offs
$
232 $
—
n/a $
341
(32%) $
251 $
341
(26%)
Net write offs (basis points)
3.7
—
n/a
5.7
(35%)
1.0
1.5
(33%)
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Provisions are based on a statistical modelling methodology incorporating both internal portfolio characteristics and forward-
looking macroeconomic information. Loans are segmented into homogenous risk bands based on internal risk characteristics
including (but not limited to) credit scores, delinquency history, loan type and location. Historical regression methodology is
used to relate expected credit loss (“ECL”) to key macroeconomic indicators including house price indices, unemployment rates,
interest rates and gross domestic product. Economic forecasts of these variables are then used to produce forward-looking
estimates of ECL under multiple scenarios. Scenarios are probability weighted by management to obtain an aggregated forward
looking view. Additionally, we may incorporate management judgment, where appropriate, in the calculation of provisions.
Accordingly, provisions are expected to vary between periods.
We had a provision for credit losses on our corporate mortgage portfolio of $1.2 million in Q4 2024, which was mainly due to
growth in our mortgage portfolio and provisioning on impaired residential construction loans partially offset by improvements
to economic forecasts, particularly falling interest rates and a recovery in the housing price index. In Q4 2023, we had a
provision for credit losses of $2.1 million mainly due to growth in our portfolio, less favourable underlying economic forecasts
relating to unemployment rates and housing prices, and model enhancements. We had a provision for credit losses on our
corporate mortgage portfolio of $3.3 million for fiscal 2024 and $4.5 million for fiscal 2023 mainly due to the same factors as
described for Q4 2024 and Q4 2023, respectively. The current changing interest rate environment has increased the level of
uncertainty with respect to management’s judgments and estimates including the probability weights assigned to each
scenario, the impacts of monetary policy on macroeconomic indicators and the mortgage portfolio. These judgments and
uncertainties have been made or assessed with reference to the facts, projections and other circumstances at December 31,
2024. IFRS 9, Financial Instruments (“IFRS 9”) does not permit the use of hindsight in measuring provisions for credit losses.
Since December 31, 2024, forecasts around these uncertainties have continued to evolve. Any new forward-looking information
subsequent to December 31, 2024, will be reflected in the measurement of provisions for credit losses in future periods, as
appropriate. This may add significant variability to provisions for credit losses in future periods.
We continue to monitor our portfolio in arrears on a regular basis to detect specific significant stress or deterioration.
Operating Expenses
Table 10: Operating Expenses
(in thousands except %)
Q4
Q3
Change
Q4
Change
Annual
Annual Change
For the Periods Ended
2024
2024
(%)
2023
(%)
2024
2023
(%)
Salaries and benefits
$
8,791 $
6,627
33% $
5,316
65% $ 27,762 $ 22,815
22%
General and administrative
4,004
1,699
136%
2,873
39%
11,975
10,757
11%
$
12,795 $
8,326
54% $
8,189
56% $ 39,737 $ 33,572
18%
The increase in salaries and benefits in 2024 is mainly due to additional resources, regular pay increases, higher share-based
payment accruals and termination benefits.
The increase in general and administrative expenses in 2024 is primarily due to higher (i) marketing and business development
costs to grow our business; and (ii) professional fees and technology costs relating to new system enhancements for our
business operations and customer experience.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Taxable Income
The table below provides a reconciliation between consolidated net income (loss) for accounting purposes and non-
consolidated taxable income (loss). Taxable income is calculated in accordance with the Tax Act. In order to take advantage of
the tax benefits of our MIC status, we pay out all of MCAN’s non-consolidated taxable income to shareholders through
dividends. As a MIC, we are entitled to deduct dividends paid up to 90 days after year end from taxable income. Dividends that
are deducted in the calculation of taxable income are not included in the table below.
Table 11: Taxable Income Reconciliation
(in thousands)
Q4
Q4
Annual
Annual
For the Periods Ended
2024
2023
2024
2023
Consolidated net income for accounting purposes
$
7,725 $ 19,855 $ 77,586 $ 77,498
Adjustments to calculate taxable income (loss):
Reverse: Equity income from MCAP - accounting purposes
(7,227)
(4,429) (28,803) (22,010)
Add: MCAP taxable income (loss)
7,872
(5,574)
8,425
(5,264)
Reverse: Provision for (recovery of) credit losses 2
392
1,428
(324)
2,747
Add: Amortization of upfront securitization program costs 3
2,711
2,957
13,437
11,114
Deduct: Securitization program mortgage origination costs 3
(5,928) (15,210) (14,368) (17,249)
Add: Securitization program premium (discount)
(192)
(522)
2,598
(3,333)
Reverse: Net realized and unrealized gain (loss) on securities 4
11,326
(4,449)
6,343
3,212
Add: Capital gains (losses)
915
—
915
—
Reverse: Loss (income) earned in subsidiaries 5
2,582
2,012
4,943
509
Deduct: Gain on dilution of MCAP 6
—
—
(680)
(1,048)
Other items
(545)
(512)
(134)
(456)
Taxable Income (Loss)1
$ 19,631 $ (4,444) $ 69,938 $ 45,720
1 Taxable income is presented above on a non-consolidated basis for the MIC entity. The current year amounts presented above represent estimates as they are not finalized until the completion
of our corporate tax filings.
2 Provisions on performing mortgages are excluded from the calculation of taxable income; provisions on impaired mortgages are 90% deductible for tax purposes.
3 Securitization program mortgage origination costs are deductible in full for tax purposes as mortgages are securitized but are capitalized and amortized for accounting purposes. Therefore,
amortization is added back in the calculation of taxable income.
4 Excluded from the calculation of taxable income; only includes net realized gains and losses recognized in the MIC entity.
5 Represents the component of consolidated income that is earned outside of the MIC entity, therefore excluded in the calculation of taxable income.
6 Not recognizable in the calculation of taxable income.
The increase in taxable income in 2024 from 2023 is primarily due to higher taxable income from MCAP and premiums on
securitization transactions. As a MIC, we pay out all of our taxable income to shareholders through dividends.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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FINANCIAL POSITION
Assets
Table 12: Assets
(in thousands except %)
December 31
September 30
Change
December 31
Change
2024
2024
(%)
2023
(%)
Corporate Assets
Cash and cash equivalents
$
61,703 $
86,706
(29%) $
60,345
2%
Marketable securities
66,345
59,081
12%
50,320
32%
Mortgages
2,464,091
2,472,019
—%
2,414,855
2%
Non-marketable securities
117,428
113,848
3%
109,943
7%
Equity investment in MCAP Commercial LP
122,265
119,705
2%
111,367
10%
Deferred tax asset
1,430
478
199%
336
326%
Derivative financial instruments
2,508
2,500
—%
198
1,167%
Other assets
24,547
25,657
(4%)
8,965
174%
2,860,317
2,879,994
(1%)
2,756,329
4%
Securitization Assets
Cash held in trust
47,249
24,868
90%
30,909
53%
Mortgages
2,419,871
2,289,587
6%
1,929,948
25%
Other assets
20,128
18,835
7%
21,901
(8%)
2,487,248
2,333,290
7%
1,982,758
25%
$
5,347,565 $
5,213,284
3% $
4,739,087
13%
Our total corporate and securitized assets increased compared to December 31, 2023 primarily due to origination volumes,
including strong renewal activity in our residential mortgage portfolio, outpacing maturities.
In selecting residential construction projects to finance, we focus more on the affordable segments of the housing market, such
as first time and move up homebuyers. These segments are characterized by affordable price points, lower price volatility and
steady sales volumes based on continued family formation and migration primarily in major urban markets and their
surrounding areas in proximity to transit. We focus on a diverse portfolio of predominantly first mortgage positions with
65-75% LTVs in our normal segment of lending. At December 31, 2024, the average outstanding construction loan balance was
$11 million (September 30, 2024 - $10 million; December 31, 2023 - $11 million) with a maximum individual loan commitment
of $38 million (September 30, 2024 - $38 million; December 31, 2023 - $40 million).
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Securitized Mortgages
We are an NHA MBS issuer, which involves the securitization of insured mortgages to create MBS. Securitization assets consist
of insured residential mortgages that have been securitized through our internal market MBS program and the CHT CMB
program. For further information, refer to Note 11 to the consolidated financial statements.
Any mortgages securitized through the market MBS program or CMB program for which derecognition is not achieved remain
on the consolidated balance sheet as securitized assets and are also included in total exposures in the calculation of our
leverage ratio. However, for income tax purposes, all mortgages securitized by MCAN are excluded from income tax assets. For
further details on total exposures, regulatory capital and income tax assets and capital, refer to the “Capital Management”
section of this MD&A.
We securitized $211 million in Q4 2024 (Q3 2024 - $220 million; Q4 2023 - $128 million) and $803 million in fiscal 2024 (2023 -
$359 million) of insured residential mortgages through the market MBS program and CMB program. Overall, total insured
residential mortgage origination volumes are higher due to prior year’s economic uncertainty and the higher interest rate
environment impacting prior year origination volumes. Further interest rate decreases would help first time home buyers, who
would be a significant portion of the borrowers of our insured residential mortgages.
We securitized $94 million in Q4 2024 (Q4 2023 - $150 million) and $94 million for fiscal 2024 (2023 - $150 million) of insured
multi-family mortgages through the CMB program. At the time of the insured multi-family securitization, the Company
derecognized the mortgages from its balance sheet and recorded a gain on the sale of the mortgages of $0.1 million in Q4 2024
(Q4 2023 - $0.5 million) and $0.1 million for fiscal 2024 (2023 - $0.5 million).
We may issue market MBS through the NHA MBS program and retain the underlying MBS security for liquidity purposes rather
than selling the MBS to a third party. At December 31, 2024, we held $46 million of retained MBS on our balance sheet
(September 30, 2024 - $126 million; December 31, 2023 - $125 million), which is included in the insured residential mortgage
portfolio in corporate mortgages.
Table 13: Mortgage Summary
(in thousands except %)
December 31
September 30
Change
December 31
Change
2024
2024
(%)
2023
(%)
Corporate portfolio
Residential mortgages
Insured
$
126,528 $
250,660
(50%) $
276,685
(54%)
Uninsured
1,113,372
1,106,088
1%
966,726
15%
Uninsured - completed inventory
119,428
91,203
31%
54,367
120%
Construction loans
1,087,561
968,433
12%
1,045,768
4%
Commercial loans
Multi-family residential
17,202
55,635
(69%)
70,103
(75%)
Other commercial
—
—
n/a
1,206
(100%)
2,464,091
2,472,019
—%
2,414,855
2%
Securitized portfolio
2,419,871
2,289,587
6%
1,929,948
25%
$
4,883,962 $
4,761,606
3% $
4,344,803
12%
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 14: Corporate Mortgage Portfolio Continuity for Year to Date 2024
(in thousands)
Residential Mortgages
Construction
loans
Commercial
loans
Total
Insured
Uninsured
Uninsured -
completed
inventory
Balance, beginning of the period
$
276,685 $
966,726 $
54,367 $ 1,045,768 $
71,309 $ 2,414,855
Originations1
898,356
888,805
132,718
665,954
94,457 2,680,290
Payments and prepayments
(12,127)
(14,667)
(67,074)
(626,740)
(53,998)
(774,606)
Maturities
(194,345)
(682,867)
—
—
—
(877,212)
Securitizations
(825,298)
—
—
—
(94,457)
(919,755)
Sale of commitments and whole loans
(14,586)
(46,076)
—
—
—
(60,662)
Capitalization and amortization of fees
(2,157)
1,451
(583)
2,579
(109)
1,181
Balance, end of the period
$
126,528 $ 1,113,372 $
119,428 $ 1,087,561 $
17,202 $ 2,464,091
1 includes originations, including (i) insured and uninsured residential mortgage commitments originated and sold; (ii) acquisitions; (iii) renewals; and (iv) transfers in from
our securitization portfolio.
Table 15: Corporate Mortgage Portfolio Continuity for Year to Date 2023
(in thousands)
Residential Mortgages
Construction
loans
Commercial
loans
Total
Insured
Uninsured
Uninsured -
completed
inventory
Balance, beginning of the period
$
144,569 $
828,540 $
36,680 $
825,126 $
104,579 $ 1,939,494
Originations1
622,369
768,195
65,167
660,384
3,675 2,119,790
Payments and prepayments
(10,960)
(18,236)
(47,301)
(444,544)
(37,231)
(558,272)
Maturities
(79,251)
(612,970)
—
—
—
(692,221)
Securitizations
(376,902)
—
—
—
—
(376,902)
Sale of commitments
(24,876)
—
—
—
—
(24,876)
Capitalization and amortization of fees
1,736
1,197
(179)
4,802
286
7,842
Balance, end of the period
$
276,685 $
966,726 $
54,367 $ 1,045,768 $
71,309 $ 2,414,855
1 includes originations, including insured residential mortgage commitments originated and sold, renewals and transfers in from our securitization portfolio.
We continue to be selective and will reposition our loan portfolio in terms of product composition, geographic mix and
exposure as required to meet changing market conditions and align to our risk appetite. We have strong strategic partnerships
and relationships and we maintain a high quality of underwriting. We have also enhanced our internal sales and marketing
capabilities, strengthened relationships and customer service with the broker community and increased underwriting capacity.
We continue to focus on our construction and commercial portfolio growing it in selected markets, with our preferred
borrowers and risk profile given they tend to provide higher yields compared to our residential mortgages.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Figure 1: Total Corporate and Securitized Mortgage Portfolio (in thousands)
Net Principal
Securitized
Corporate
Dec 2022
Mar 2023
Jun 2023
Sep 2023
Dec 2023
Mar 2024
Jun 2024
Sep 2024
Dec 2024
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
Figure 2: Corporate Mortgage Portfolio Composition by Product Type (in thousands)
Net Principal
Construction loans
Residential
mortgages
uninsured
Residential
mortgages
insured
Commercial loans
multi family
residential
Commercial loans
other
Residential
mortgages
uninsured -
completed
inventory
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Construction loans
Residential mortgages
uninsured
Residential mortgages
insured
Commercial loans
multi-family
residential
Commercial loans
other
Residential mortgages
uninsured -
completed
inventory
Dec 31, 2023
$1,045,768 (44%)
$966,726 (40%)
$276,685 (11%)
$70,103 (3%)
$1,206 (0%)
$54,367 (2%)
Mar 31, 2024
$1,034,004 (44%)
$1,007,946 (42%)
$239,680 (10%)
$55,734 (2%)
$1,196 (0%)
$46,707 (2%)
Jun 30, 2024
$1,027,226 (42%)
$1,053,032 (42%)
$280,452 (11%)
$55,696 (2%)
$0 (0%)
$83,481 (3%)
Sep 30, 2024
$968,433 (39%)
$1,106,088 (45%)
$250,660 (10%)
$55,635 (2%)
$0 (0%)
$91,203 (4%)
Dec 31, 2024
$1,087,561 (44%)
$1,113,372 (45%)
$126,528 (5%)
$17,202 (1%)
$0 (0%)
$119,428 (5%)
Note: Amounts in parentheses represent the percentage of the corporate portfolio represented by the individual product type.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 16: Mortgage Portfolio Geographic Distribution
December 31, 2024
September 30, 2024
December 31, 2023
Corporate
Securitized
Corporate
Securitized
Corporate
Securitized
Ontario
62.5 %
82.5 %
64.2 %
83.5 %
60.4 %
85.7 %
British Columbia
28.2 %
3.0 %
27.2 %
3.1 %
30.3 %
3.3 %
Alberta
8.1 %
10.8 %
7.2 %
10.1 %
8.2 %
8.5 %
Atlantic Provinces
0.4 %
2.1 %
0.4 %
2.0 %
0.4 %
1.4 %
Quebec
0.2 %
0.2 %
0.2 %
0.2 %
0.1 %
0.4 %
Other
0.6 %
1.4 %
0.8 %
1.1 %
0.6 %
0.7 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Credit Quality
Table 17: Arrears and Impaired Mortgages
(in thousands except %)
December 31
September 30 Change December 31 Change
2024
2024
(%)
2023
(%)
Impaired mortgages
Corporate
Residential mortgages - insured
$
806
$
884
(9%) $
599
35%
Residential mortgages - uninsured
14,420
12,710
13%
5,971
142%
Construction loans
45,319
42,295
7%
72,206
(37%)
60,545
55,889
8%
78,776
(23%)
Securitized
264
738
(64%)
343
(23%)
Total impaired mortgages
$
60,809
$
56,627
7% $
79,119
(23%)
Impaired corporate mortgage ratio 1
2.46 %
2.26 %
0.20%
3.26 % (0.80%)
Impaired total mortgage ratio 1
1.25 %
1.19 %
0.06%
1.82 % (0.57%)
Mortgage arrears
Corporate
Residential mortgages - insured
$
2,161
$
2,350
(8%) $
813
166%
Residential mortgages - uninsured
48,888
52,534
(7%)
39,770
23%
Residential mortgages - uninsured - completed inventory
—
2,234
(100%)
—
n/a
Construction loans
45,319
54,859
(17%)
72,206
(37%)
Commercial loans
—
27,450
(100%)
—
n/a
Total corporate mortgage arrears
96,368
139,427
(31%)
112,789
(15%)
Total securitized mortgage arrears
4,103
6,333
(35%)
4,661
(12%)
Total mortgage arrears
$
100,471
$
145,760
(31%) $
117,450
(14%)
Staging analysis - corporate portfolio
Stage 2
Residential mortgages - insured
$
7,511
$
10,797
(30%) $
11,572
(35%)
Residential mortgages - uninsured
207,105
200,467
3%
184,514
12%
Residential mortgages - uninsured - completed inventory
—
2,234
(100%)
2,221
(100%)
Construction loans
—
19,614
(100%)
5,967
(100%)
Commercial loans - multi-family residential
12,194
39,728
(69%)
39,798
(69%)
226,810
272,840
(17%)
244,072
(7%)
Stage 3
Residential mortgages - insured
806
884
(9%)
599
35%
Residential mortgages - uninsured
14,420
12,710
13%
5,971
142%
Construction loans
45,319
42,295
7%
72,206
(37%)
60,545
55,889
8%
78,776
(23%)
Total stage 2 and 3 corporate mortgages
$
287,355
$
328,729
(13%) $
322,848
(11%)
Allowance for credit losses
Corporate
Allowance on performing mortgages
$
7,250
$
6,920
5% $
7,953
(9%)
Allowance on impaired mortgages
5,952
5,098
17%
1,972
202%
13,202
12,018
10%
9,925
33%
Securitized - allowance on performing mortgages
—
—
n/a
—
n/a
Total allowance for credit losses
$
13,202
$
12,018
10% $
9,925
33%
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial
measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Figure 3: Arrears and Impaired Mortgage Ratios1
Impaired Corporate Mortgage Ratio
Impaired Total Mortgage Ratio
Arrears Total Mortgage Ratio
Dec 2022
Mar 2023
Jun 2023
Sep 2023
Dec 2023
Mar 2024
Jun 2024
Sep 2024
Dec 2024
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
The majority of our residential mortgage arrears activity occurs in the 1-30 day category, in which the bulk of arrears are
resolved and do not migrate to arrears categories over 30 days. While greater than 30 days arrears has increased in our
uninsured residential mortgages, we believe overall that we have a quality uninsured residential mortgage loan portfolio with
an average LTV of 63.7% at December 31, 2024 based on an industry index of current real estate values. We have also seen our
arrears total mortgage ratio decline since Q1 2024. With respect to our construction and commercial loan portfolio, we have a
strong track record with our default management processes and asset recovery programs as the need arises. The impaired
ratios, as presented above, reflect impaired (stage 3) mortgages under IFRS 9 as a percentage of the corporate or total
mortgage portfolios, as applicable. At December 31, 2024, impaired mortgages are mainly five construction mortgages where
we have initiated asset recovery programs. Our realized loan losses on our construction portfolio have been negligible in the
last 10 years.
In the event of a protracted economic downturn due to the current interest rate environment or geopolitical conflicts, or for
any other reason, we would expect to observe an increase in overall mortgage default and arrears rates as realization periods
on collateral become longer and borrowers adjust to the new economic conditions and potentially changing real estate values
in such an event. An economic downturn could also result in an increase in our allowance for credit losses. MCAN utilizes a
number of risk assessment and mitigation strategies to lessen the potential impact for loss on residential mortgages; however,
traditional actions may not be available or effective.
For further information regarding corporate mortgages by risk rating, refer to Note 7 to the consolidated financial statements.
1 Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this MD&A. Non-GAAP and other financial
measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Additional Information on Residential Mortgages and Home Equity Lines of Credit (“HELOCs”)
In accordance with OSFI Guideline B-20 - Residential Mortgage Underwriting Practices and Procedures, additional information is
provided on the composition of MCAN’s residential mortgage portfolio by insurance status and province, as well as
amortization periods and LTV by province. LTV is calculated as the ratio of the outstanding loan balance on an amortized cost
basis to the value of the underlying collateral at the time of origination.
Insured mortgages include individual mortgages that are insured by CMHC or other approved mortgage insurers at origination
and mortgages that are portfolio-insured after origination. Uninsured mortgages include both residential uninsured and
residential uninsured - completed inventory loans.
The HELOC balances displayed below relate to insured residential mortgages that were acquired by MCAN previously. We do
not originate HELOCs at this time.
Table 18: Residential Mortgages by Province at December 31, 2024
(in thousands
except %)
Corporate
Securitized
Insured
% Uninsured
%
HELOCs
%
Insured
%
Total
%
Ontario
$ 84,903
67.0 % $ 1,049,153 85.1 % $
78
86.7 %
$ 1,995,326 82.5 %
$ 3,129,460
82.7 %
Alberta
27,631
21.9 %
65,353
5.3 %
12
13.3 %
260,743
10.8 %
353,739
9.4 %
British Columbia
4,135
3.3 % 103,255
8.4 %
—
— %
73,408
3.0 %
180,798
4.8 %
Quebec
2,736
2.2 %
1,170
0.1 %
—
— %
5,631
0.2 %
9,537
0.3 %
Atlantic Provinces
5,027
4.0 %
4,873
0.4 %
—
— %
51,295
2.1 %
61,195
1.6 %
Other
2,006
1.6 %
8,996
0.7 %
—
— %
33,468
1.4 %
44,470
1.2 %
Total
$ 126,438 100.0 % $ 1,232,800 100.0 % $
90 100.0 %
$ 2,419,871 100.0 %
$ 3,779,199 100.0 %
Table 19: Residential Mortgages by Province at December 31, 2023
(in thousands
except %)
Corporate
Securitized
Insured
% Uninsured
%
HELOCs
%
Insured
%
Total
%
Ontario
$ 202,183
73.0 % $ 888,284
87.1 % $
59
79.7 %
$ 1,655,249 85.7 %
$ 2,745,775
85.1 %
Alberta
52,071
18.9 %
27,844
2.7 %
15
20.3 %
164,398
8.5 %
244,328
7.6 %
British Columbia
8,516
3.1 %
96,305
9.4 %
—
— %
62,971
3.3 %
167,792
5.2 %
Quebec
2,090
0.8 %
1,221
0.1 %
—
— %
7,298
0.4 %
10,609
0.3 %
Atlantic Provinces
6,405
2.3 %
2,307
0.2 %
—
— %
26,521
1.4 %
35,233
1.1 %
Other
5,346
1.9 %
5,132
0.5 %
—
— %
13,511
0.7 %
23,989
0.7 %
Total
$ 276,611 100.0 % $ 1,021,093 100.0 % $
74 100.0 %
$ 1,929,948 100.0 %
$ 3,227,726 100.0 %
Table 20: Residential Mortgages by Amortization Period at December 31, 2024
Up to 20
>20 to 25
>25 to 30
>30 to 35
(in thousands except %)
Years
Years
Years
Years
Total
Corporate
$
224,627
$
158,920
$
491,353
$
484,428
$ 1,359,328
16.6 %
11.7 %
36.1 %
35.6 %
100.0 %
Securitized
$
807,727
$ 1,605,346
$
6,798
$
—
$ 2,419,871
33.4 %
66.3 %
0.3 %
— %
100.0 %
Total
$ 1,032,354
$ 1,764,266
$
498,151
$
484,428
$ 3,779,199
27.3 %
46.7 %
13.2 %
12.8 %
100.0 %
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 21: Residential Mortgages by Amortization Period at December 31, 2023
Up to 20
>20 to 25
>25 to 30
>30 to 35
(in thousands except %)
Years
Years
Years
Years
Total
Corporate
$
182,403
$
292,137
$
450,377
$
372,861
$ 1,297,778
14.1 %
22.4 %
34.7 %
28.8 %
100.0 %
Securitized
$
585,539
$ 1,343,070
$
1,339
$
—
$ 1,929,948
30.3 %
69.6 %
0.1 %
— %
100.0 %
Total
$
767,942
$ 1,635,207
$
451,716
$
372,861
$ 3,227,726
23.8 %
50.6 %
14.0 %
11.6 %
100.0 %
Table 22: Average LTV Ratio for Uninsured Residential Mortgage Originations
(in thousands except %)
Q4
Average
Q4
Average
Annual
Average
Annual
Average
For the Periods Ended
2024
LTV
2023
LTV
2024
LTV
2023
LTV
Ontario
$ 124,656
68.7 % $ 63,778
67.4 % $ 424,300
68.9 % $ 335,693
68.4 %
Alberta
22,856
69.2 %
601
61.2 % 50,188
68.1 %
7,651
70.1 %
British Columbia
15,536
67.9 % 49,599
68.5 % 79,593
66.1 % 73,912
68.4 %
Other
2,392
72.8 %
—
— %
8,360
73.5 %
150
22.2 %
$ 165,440
68.8 % $ 113,978
67.8 % $ 562,441
68.5 % $ 417,406
68.4 %
Table 23: Average LTV Ratios at Origination by Mortgage Portfolio
December 31
December 31
2024
2023
Corporate portfolio
Residential mortgages
Insured
67.8 %
69.6 %
Uninsured1
67.7 %
66.0 %
Uninsured - completed inventory
65.1 %
63.4 %
Construction loans
Residential
61.9 %
63.7 %
Non-residential
60.2 %
72.0 %
Commercial loans
Multi-family residential
82.4 %
75.9 %
Other commercial
— %
63.0 %
65.1 %
65.7 %
Securitized portfolio
79.9 %
79.9 %
72.4 %
72.0 %
1 MCAN’s corporate uninsured residential mortgage portfolio (including completed inventory loans) is secured with a weighted average LTV at origination of 68.7% at December 31, 2024
(December 31, 2023 - 65.9%). Based on an industry index that incorporates current real estate values, the ratios would be 63.7% at December 31, 2024 (December 31, 2023 - 63.4%).
Other Corporate Assets
Cash and Cash Equivalents
At December 31, 2024, our cash balance was $62 million (September 30, 2024 - $87 million; December 31, 2023 - $60 million).
As part of liquidity management, we align our liquidity position to our liquidity and funding requirements. Cash and cash
equivalents, which include cash balances with banks and overnight term deposits, provide liquidity to meet maturing term
deposits and new mortgage funding commitments. We actively manage our cash and cash equivalents in the context of our
prudent liquidity and cash management practices. See “Liquidity and Funding Risk” sub-section of this MD&A.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Marketable Securities
Marketable securities, consisting of REITs and Government of Canada bonds, provide additional liquidity at yields in excess of
cash and cash equivalents. We actively manage our portfolio, as appropriate. At December 31, 2024, the portfolio balance was
$66 million (September 30, 2024 - $59 million; December 31, 2023 - $50 million). We purchased $15 million of Government of
Canada bonds in Q4 2024. In fiscal 2024, we had a net change in unrealized fair value gains due to a declining interest rate
environment partially offset by uncertainty in the economic environment. We expect some recovery in the REIT market given a
declining interest rate environment. We are long term investors and continue to realize the benefits of solid cash flows and
distributions from these investments.
Non-Marketable Securities
At December 31, 2024, our non-marketable securities balance was $117 million (September 30, 2024 - $114 million; December
31, 2023 - $110 million). The movement to our security balance from prior periods mainly relates to funding of capital advances
and a $7 million net realized and change in unrealized loss consisting of gains and losses from certain underlying property
investments as a result of (i) updated appraisals/property valuations, net of related property debt and debt service costs; and
(ii) actual executions on construction and leasing stabilization and value-add activities. In Q4 2024, we had a $1.0 million
realized gain related to the sale of an underlying property. Our non-marketable securities are either held for long-term capital
appreciation or distribution income. Our real estate development funds tend to have less predictable cash flows that are
predicated on the completion of the development projects within these funds. We have $62 million in remaining capital
advances for non-marketable securities expected to fund mainly over the next five years. Some of the real estate funds that we
are invested in, have been slower to deploy committed capital then initially expected as finding the right opportunities in the
current market environment takes more time. Our non-marketable securities consist of the following:
KSHYF: We invest in the KSHYF representing a 5.9% equity interest at December 31, 2024 (September 30, 2024 - 5.9%;
December 31, 2023 - 5.9%). At December 31, 2024, the carrying value of our investment was $57 million (September 30, 2024 -
$56 million; December 31, 2023 - $55 million). The KSHYF invests in mortgages secured by real estate including mezzanine,
subordinate and bridge mortgages. At December 31, 2024, our total remaining commitment to the KSHYF was $30 million,
consisting of $1 million of capital advances for the KSHYF and $29 million to support credit facilities throughout the life of the
KSHYF.
KSSMF: We invest in KSSMF representing a 2.2% partnership interest at December 31, 2024 (September 30, 2024 - 2.1%;
December 31, 2023 - 2.1%). At December 31, 2024, the carrying value of our investment was $17 million (September 30, 2024 -
$17 million; December 31, 2023 - $16 million) with an additional $8 million remaining commitment. KSSMF invests in a
diversified portfolio of mortgage loans secured by Canadian residential and commercial real estate.
TAS LP 3 (“TAS 3”): We invest in TAS 3 representing a 9.7% partnership interest at December 31, 2024 (September 30, 2024 -
9.7%; December 31, 2023 - 9.7%). At December 31, 2024, the carrying value of our investment was $4 million (September 30,
2024 - $5 million; December 31, 2023 - $8 million) with no remaining commitment. At December 31, 2024, the Company has a
$3 million revolving promissory note commitment that matures on June 30, 2025 with $nil remaining available to be drawn. TAS
3 invests in, and develops, residential and mixed use properties with a focus on assets that drive environmental and social
impacts.
TAS LP 3 Co-Invest LP (“TAS Co”): We invest in TAS Co representing a 34.8% partnership interest at December 31, 2024
(September 30, 2024 - 34.8%; December 31, 2023 - 34.8%). At December 31, 2024, the carrying value of our investment was $3
million (September 30, 2024 - $3 million; December 31, 2023 - $4 million) with an additional $2 million remaining commitment.
TAS Co has an approximately 17.5% to 24% interest in some of the same properties invested in by TAS 3 as noted above.
Pearl Group Growth Fund LP (“Pearl”): We invest in Pearl representing a 6.9% partnership interest at December 31, 2024
(September 30, 2024 - 6.9%; December 31, 2023 - 6.9%). At December 31, 2024, the carrying value of our investment was $3
million (September 30, 2024 - $2 million; December 31, 2023 - $2 million) with an additional $1 million remaining commitment.
Pearl executes a value-add strategy by acquiring, redeveloping, entitling, leasing and project managing commercial and multi-
unit residential properties in the Greater Toronto area.
Crown Realty V Limited Partnership (“Crown”): We invest in Crown representing a 7.7% partnership interest at December 31,
2024 (September 30, 2024 - 7.7%; December 31, 2023 - 7.7%). At December 31, 2024, the carrying value of our investment was
$9 million (September 30, 2024 - $9 million; December 31, 2023 - $8 million) with an additional $9 million remaining
commitment. Crown integrates environmental and social focused initiatives to acquire, lease, manage and reposition
commercial real estate properties across Ontario.
Harbour Equity JV Development Fund VI (“Harbour”): We invest in Harbour representing a 12.1% partnership interest at
December 31, 2024 (September 30, 2024 - 12.1%; December 31, 2023 - 12.1%). At December 31, 2024, the carrying value of our
investment was $6 million (September 30, 2024 - $4 million; December 31, 2023 - $3 million) with an additional $5 million
remaining commitment. Harbour provides equity capital to real estate developers in joint ventures or co-ownership structures
for ground up development of residential and mixed-use properties across Canada.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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TAS Impact Development LP 4 (“TAS 4”): We invest in TAS 4 representing a 16.2% partnership interest at December 31, 2024
(September 30, 2024 - 16.2%; December 31, 2023 - 14.8%). At December 31, 2024, the carrying value of our investment was $6
million (September 30, 2024 - $2 million; December 31, 2023 - $2 million) with an additional $13 million remaining
commitment. TAS 4 acquires urban residential, mixed-use development and repositioning properties with a focus on developing
and repositioning assets that drive environmental and social impacts.
Broccolini Limited Partnership No. 8 (“Broccolini”): We invest in Broccolini representing a 5.7% partnership interest at
December 31, 2024 (September 30, 2024 - 5.7%; December 31, 2023 - 5.7%). At December 31, 2024, the carrying value of our
investment was $2 million (September 30, 2024 - $5 million; December 31, 2023 - $5 million) with an additional $19 million
remaining commitment. Broccolini manages real estate development funds primarily focused on ground up development of
industrial, residential and mixed-use properties across Canada, with a focus on Ontario and Quebec.
Fiera Real Estate Development Fund IV, LP (“Fiera”): We invest in Fiera representing a 6.5% partnership interest at December
31, 2024 (September 30, 2024 - 6.5%; December 31, 2023 - 6.5%). At December 31, 2024, the carrying value of our investment
was $10 million (September 30, 2024 - $10 million; December 31, 2023 - $6 million) with an additional $5 million remaining
commitment. Fiera focuses on development and re-development of multi-residential, industrial, office and retail properties,
located in growing major Canadian urban markets.
Equity Investment in MCAP
We have a strategic investment in MCAP, which is Canada’s largest independent mortgage finance company serving many
institutional investors and over 400,000 homeowners. We hold a 13.88% equity interest in MCAP (September 30, 2024 -
13.88%; December 31, 2023 - 13.73%), which represents 4.0 million units held by MCAN at December 31, 2024 (September 30,
2024 - 4.0 million; December 31, 2023 - 4.0 million) of the 28.8 million total outstanding MCAP partnership units (September
30, 2024 - 28.8 million; December 31, 2023 - 29.1 million). The investment had a net book value of $122 million at December
31, 2024 (September 30, 2024 - $120 million; December 31, 2023 - $111 million). The net book value is not indicative of the fair
market value of our equity interest in MCAP.
During Q4 2024, we received $4.7 million of unitholder distributions from MCAP (Q3 2024 - $5.4 million; Q4 2023 - $3.3 million).
For fiscal 2024, we have received $18.6 million of unitholder distributions from MCAP (2023 - $17.9 million). As we account for
this investment using the equity method, the receipt of distributions reduces the carrying value of the investment in MCAP.
Pursuant to the MCAP partnership agreement, the majority partner in MCAP has the right to acquire MCAN’s entire partnership
interest in MCAP at “fair market value”, which would be determined by an independent valuator agreed upon by both parties.
Any sale by MCAN of its units in MCAP pursuant to this majority partner right, could result in a taxable gain, which could be
material.
Other Securitization Assets
Other securitization assets include cash held in trust, which represents securitized mortgage principal and interest collections
from borrowers that are payable to MBS holders.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Liabilities and Shareholders’ Equity
Table 24: Liabilities and Shareholders' Equity
(in thousands except %)
December 31
September 30
Change
December 31
Change
2024
2024
(%)
2023
(%)
Corporate Liabilities
Term deposits
$
2,288,226 $
2,308,045
(1%) $
2,200,102
4%
Loans payable
107
69
55%
64,683
(100%)
Current taxes payable
—
370
(100%)
—
n/a
Other liabilities
36,807
18,939
94%
25,575
44%
2,325,140
2,327,423
—%
2,290,360
2%
Securitization Liabilities
Financial liabilities from securitization
2,423,236
2,284,021
6%
1,916,883
26%
2,423,236
2,284,021
6%
1,916,883
26%
4,748,376
4,611,444
3%
4,207,243
13%
Shareholders’ Equity
Share capital
456,683
452,099
1%
406,528
12%
Contributed surplus
510
510
—%
510
—%
Retained earnings
143,620
150,972
(5%)
124,708
15%
Accumulated other comprehensive income
(1,624)
(1,741)
(7%)
98
(1,757%)
599,189
601,840
—%
531,844
13%
$
5,347,565 $
5,213,284
3% $
4,739,087
13%
Term Deposits
Our primary source of funding for our corporate operations is the issuance of term deposits that are eligible for CDIC deposit
insurance. We source term deposits through a broker distribution network across Canada consisting of third party deposit
agents and financial advisors, as well as a direct-to-consumer channel through our MCAN Wealth GIC platform. Deposits cannot
be cashed prior to maturity or paid on demand except in the event of the death of a depositor or financial hardship. We believe
that our term deposits provide a reliable low-cost funding source that can be strategically matched against the corporate
mortgage portfolio. The role of term deposits in managing liquidity and funding risk is discussed in the “Liquidity and Funding
Risk” sub-section of the “Risk Factors” section of this MD&A.
Loans Payable
We have a secured demand revolver facility from a Canadian Schedule I Chartered bank with a facility limit of $220 million. The
facility is due and payable upon demand. Under the facility, there is a sublimit for issued letters of credit which are used for the
purpose of supporting developer obligations to municipalities in conjunction with residential construction loans.
We also have a $100 million senior secured mortgage warehouse facility with a Canadian Schedule I Chartered bank. The facility
is used to fund insured residential mortgages prior to securitization activities.
Loans payable balances are lower compared to December 31, 2023, as we utilized term deposit funding instead of our short-
term loan facilities. We had $1.3 million lower financing costs on our short-term facilities in Q4 2024 compared to Q4 2023 and
$3.6 million lower financing costs in fiscal 2024 compared to 2023.
Financial Liabilities from Securitization
Financial liabilities from securitization relate to our participation in the market MBS and CMB programs, where we have sold
MBS to third parties but have not derecognized the related mortgages from our balance sheet. For further information on the
market MBS and CMB programs, refer to the “Financial Position” section of this MD&A.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Share Capital
Share capital activity may reflect new common shares issued through the DRIP, Executive Share Purchase Plan, special stock
dividend and other share offerings and their related costs, as applicable. For further information, refer to the “Description of
Capital Structure” section of this MD&A and Note 18 to the consolidated financial statements.
Retained Earnings
Retained earnings activity for Q4 2024 consists of net income of $7.7 million (Q3 2024 - $26.9 million; Q4 2023 - $19.9 million)
less dividends of $15.1 million (Q3 2024 - $14.9 million; Q4 2023 - $13.5 million). Retained earnings activity for fiscal 2024
consists of a net income of $77.6 million (2023 - $77.5 million) less dividends of $58.7 million (2023 - $51.8 million).
Accumulated Other Comprehensive Income
We may enter into Government of Canada bond forward contracts to hedge interest rate risk arising from the impact of (i)
movements in interest rates between the time insured residential mortgages are funded and the time that these mortgages are
securitized; and (ii) movements in interest rates between the time term deposit funding is forecasted to be required and the
time that the actual funding occurs. Achieving hedge accounting allows us to reduce our net income volatility related to changes
in interest rates. In Q4 2024, we had net fair value gains of $nil (Q3 2024 - $0.7 million fair value losses; Q4 2023 - $2.1 million
fair value losses), and for fiscal 2024, we had net fair value losses of $1.9 million (2023 - $0.4 million fair value gains) on our
derivative transactions recognized in accumulated other comprehensive income. For further information, refer to the
“Derivatives and Hedging” sub-section of this MD&A and Note 13 to the consolidated financial statements.
CAPITAL MANAGEMENT
Our primary capital management objectives are to maintain sufficient capital for regulatory purposes and to earn acceptable
and sustainable risk-weighted returns for our shareholders. Through our risk management and corporate governance
framework, we assess current and projected asset growth, economic conditions, housing market activity, the interest rate
environment and changes to credit quality to determine appropriate levels of capital. We expect to pay out all of MCAN’s non-
consolidated taxable income over time through dividends subject to final review and declaration by the Board. Capital growth
is achieved through retained earnings, the DRIP, Executive Share Purchase Plan, rights offerings, public share offerings and stock
dividends. Our capital management is primarily driven by the guidelines set out by the Tax Act and OSFI.
Income Tax Capital
As a MIC under the Tax Act, we are limited to an income tax liabilities to capital ratio of 5:1 (or an income tax assets to capital
ratio of 6:1), based on our non-consolidated balance sheet in the MIC entity measured at its tax value. Securitization assets and
liabilities (less accrued interest) are both excluded from the calculation of the income tax assets to capital ratio. We calculate
our income tax capital in accordance with the Tax Act.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 25: Income Tax Capital
(in thousands except ratios)
December 31
December 31
2024
2023
Income tax assets
Consolidated assets
$
5,347,565 $
4,739,087
Adjustment for assets in subsidiaries
35,924
(27,520)
Non-consolidated assets in MIC entity
5,383,489
4,711,567
Add: corporate mortgage allowances
7,844
8,149
Less: securitization assets 1
(2,454,257)
(1,953,086)
Adjustments to equity investments in MCAP and subsidiaries
(69,378)
(59,274)
Other adjustments
313
5,501
$
2,868,011 $
2,712,857
Income tax liabilities
Consolidated liabilities
$
4,748,376 $
4,207,243
Adjustment for liabilities in subsidiaries
(10,040)
(71,761)
Non-consolidated liabilities in MIC entity
4,738,336
4,135,482
Less: securitization liabilities 1
(2,418,059)
(1,913,719)
$
2,320,277 $
2,221,763
Income tax capital
$
547,734 $
491,094
Income tax capital ratios
Income tax assets to capital ratio
5.24
5.52
Income tax liabilities to capital ratio
4.24
4.52
1 The majority of securitization assets and liabilities on the balance sheet are excluded from income tax assets, liabilities and capital as they are derecognized for income tax purposes in
accordance with the Tax Act.
Regulatory Capital
As a Loan Company under the Trust Act, OSFI oversees the adequacy of our capital. For this purpose, OSFI has imposed
minimum capital-to-regulatory (or risk-weighted) assets ratios and a minimum leverage ratio which is calculated on a different
basis from the income tax assets to capital ratio discussed in the “Income Tax Capital” sub-section above.
Both OSFI and the Basel Committee on Banking Supervision promote a resilient banking sector and strong global capital
standards. Key components of Basel III impact MCAN through the Capital Adequacy Requirements and Leverage Requirements
Guidelines.
Our CET 1 capital consists of share capital, contributed surplus and retained earnings. We do not hold any additional Tier 1
capital instruments; therefore, our CET 1 capital is equal to our Tier 1 capital. Our Tier 2 capital consists of Stage 1 and Stage 2
mortgage allowances calculated under IFRS. Total Capital equals CET 1 or Tier 1 capital plus Tier 2 capital. OSFI expects all
federally regulated financial institutions to meet the minimum capital to risk-weighted asset ratios of 7% CET 1 Capital, 8.5%
Tier 1 Capital and 10.5% Total Capital.
At December 31, 2024, we were in compliance with our internal target minimum CET 1, Tier 1 and Total Capital to risk weighted
asset and leverage ratios. Our total capital and leverage ratios have decreased due to OSFI’s new revised rules that incorporate
Basel III reforms. We maintain prudent capital planning practices to ensure that we are adequately capitalized and continue to
satisfy minimum standards and internal targets.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 26: Regulatory Capital 3
(in thousands except %)
December 31
December 31
2024
2023
OSFI Regulatory Ratios
Share capital
$
456,683
$
406,528
Contributed surplus
510
510
Retained earnings
143,620
124,708
Accumulated other comprehensive income
(1,624)
98
Deduction from equity investment in MCAP 1
(62,346)
(58,183)
Common Equity Tier 1 and Tier 1 Capital (A)
536,843
473,661
Tier 2 Capital
7,250
7,953
Total Capital (D)
$
544,093
$
481,614
Total Exposure/Regulatory Assets
Consolidated assets
$
5,347,565
$
4,739,087
Less: deduction for equity investment in MCAP 1
(62,346)
(58,183)
Other adjustments 2
8,472
1,900
Total On-Balance Sheet Exposures
5,293,691
4,682,804
Mortgages and non-marketable securities funding commitments
208,440
286,655
Letters of credit
22,147
24,318
Total Off-Balance Sheet Items
230,587
310,973
Total Exposure/Regulatory Assets (B)
$
5,524,278
$
4,993,777
Leverage ratio (A / B)
9.72 %
9.49 %
Risk-weighted assets (C)
$
2,822,418
$
2,689,764
Regulatory Capital Ratios
Common Equity Tier 1 capital to risk-weighted assets ratio (A / C)
19.02 %
17.61 %
Tier 1 capital to risk-weighted assets ratio (A / C)
19.02 %
17.61 %
Total capital to risk-weighted assets ratio (D / C)
19.28 %
17.91 %
1 The deduction for the equity investment in MCAP is equal to the equity investment balance less 10% of shareholders’ equity and eligible stage 1 and stage 2 mortgage allowances.
2 Certain items, such as negative cash balances and derivatives, are adjusted from total exposures but included in consolidated assets.
3 These measures have been calculated in accordance with OSFI’s Capital Adequacy Requirements and Leverage Requirements guidelines.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 27: Regulatory Risk-Weighted Assets 1
(in thousands except %)
December 31, 2024
December 31, 2023
Amounts
Average
Rate
Risk-
Weighted
Assets
Amounts
Average
Rate
Risk-
Weighted
Assets
On-Balance Sheet Assets
Cash and cash equivalents
$
61,703
21 % $
12,654 $
60,345
21 % $
12,449
Cash held in trust
47,249
20 %
9,450
30,909
20 %
6,182
Marketable securities
66,345
100 %
66,345
50,320
100 %
50,320
Mortgages - corporate
2,464,091
69 % 1,700,214 2,414,855
67 % 1,626,403
Mortgages - securitized
2,419,871
6 %
136,693 1,929,948
5 %
104,989
Non-marketable securities
117,428
162 %
190,120
109,943
172 %
188,885
Equity investment in MCAP Commercial LP
122,265
123 %
149,797
111,367
119 %
132,961
Deferred tax asset
1,430
100 %
1,430
336
100 %
336
Other assets
44,675
100 %
44,675
30,866
100 %
30,867
Derivative Financial Instruments
2,508
— %
—
198
— %
—
5,347,565
2,311,378 4,739,087
2,153,392
Off-Balance Sheet Items
Letters of credit
44,295
50 %
22,148
48,637
50 %
24,319
Commitments
521,100
45 %
234,666
716,638
43 %
306,764
Derivative Financial Instruments
793,439
3 %
24,288
314,197
— %
276
281,102
331,359
Charge for operational risk 2
229,938
205,013
Risk-Weighted Assets
$ 2,822,418
$ 2,689,764
1 This measure has been calculated in accordance with OSFI’s Capital Adequacy Requirements guidelines.
2 We use the basic indicator approach for operational risk, which is equal to 15% of the previous three-year average of net investment income from corporate and securitized assets excluding
provisions for credit losses multiplied by a factor of 12.5.
Other Capital Management Activity
In conjunction with the annual strategic planning and budgeting process, we complete an Internal Capital Adequacy Assessment
Process (“ICAAP”) in order to ensure that we have sufficient capital to support our business plan and risk appetite. The ICAAP
assesses the capital necessary to support the various inherent risks that we face, including liquidity and funding, credit, interest
rate, market, operational, regulatory compliance, strategic and reputational risks. Our business plan is also stress-tested under
various adverse scenarios to determine the impact on our results from operations and financial condition. The ICAAP is
reviewed by both management and the Board and is submitted to OSFI annually. In addition, the Company performs stress
testing on our internal forecasts for capital adequacy on a quarterly basis, and the results of such testing are reported to the
Board.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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RISK FACTORS
For a detailed description of all risk factors associated with the Company, refer to the “Risk Governance and Management”
section of our Annual Information Form, which is available on the Company’s profile on SEDAR+ at www.sedarplus.ca. Incidents
related to any of the Company’s risks could adversely affect our ability to achieve our business objectives or execute our
business strategies, and may result in a loss of earnings, capital and/or damage to our reputation. Our Enterprise Risk
Management Framework addresses these risks by establishing effective policies, limits, and internal controls to monitor and
mitigate these risks.
The shaded areas of this MD&A represent a discussion of risk factors and risk management policies and procedures relating to
liquidity, credit, interest rate and market risks as required under IFRS 7, Financial Instruments: Disclosures. The relevant MD&A
sections are identified by shading within boxes and the content forms an integral part of the consolidated financial statements.
Liquidity and Funding Risk
Liquidity risk is the risk that cash and liquid assets are insufficient to honour all cash outflow commitments (both on- and off-
balance sheet) as they come due. Funding risk is the risk that available sources of liquidity and long term funding are
insufficient to sustain business growth or mitigate funding gaps.
On a daily basis, we monitor our liquidity position to ensure that the level of liquid assets held, together with our ability to raise
new deposits and other funding sources, are sufficient to meet our commitments, deposit maturity obligations, and other
financial obligations.
On a monthly basis, we plan out our funding using a 12-month rolling forecast of expected business growth and balance sheet
obligations. This provides us with a forward-looking perspective on the adequacy of our funding and liquidity channels.
Stress testing is performed using multiple scenarios incorporating simultaneous impacts to the Company’s funding sources and
uses. MCAN’s stress testing is designed to assess the viability of liquidity and funding channels, as well as contingency funding
to remain within Board-approved liquidity risk limits. At December 31, 2024, the Company held sufficient funding and liquidity
to meet all requirements under the stress test scenarios.
The Board is accountable for the approval of the Liquidity Risk Management Framework (“LRMF”). The LRMF establishes a
framework to maintain sufficient funding and liquidity, including holding a portfolio of high-quality liquid assets to meet
commitments as they come due. The LRMF provides guidance for the daily, monthly and quarterly analyses that are performed
by management, and includes a framework for daily funding requirements, gap analysis between assets and liabilities, deposit
concentration levels, liquidity risk limits, and stress testing requirements, in alignment with both the standards set under the
Trust Act and regulations and guidelines issued by OSFI. Further to the LRMF, the Company maintains a Contingency Funding
Plan that details the strategies and action plans to respond to stress events that could materially impair its access to funding
and liquidity.
ALCO, which is comprised of management, is accountable for liquidity management oversight. On a monthly basis, or more
frequently as required, ALCO reviews the Company’s funding and liquidity risk profile, including funding strategies, performance
against established liquidity risk limits, stress testing and contingency funding plan status. Results of the monitoring of liquidity
risk are reported to the Board and any exceptions or breach of key limits are immediately reported by ALCO to the ERM&CC. At
December 31, 2024, the Company was in full compliance with the LRMF, key liquidity risk limits and regulatory requirements.
We have access to liquidity through our ability to issue term deposits eligible for CDIC deposit insurance. These term deposits
also provide us with the ability to fund asset growth as needed.
The Company maintains a secured demand revolver facility to meet its short-term obligations as required. Under the facility,
there is a sublimit for issued letters of credit, which may be used to support the obligations of borrowers to municipalities in
conjunction with construction loans. The facility limit is $220 million.
We also have an agreement with a Canadian Schedule I Chartered bank that enables the Company to execute repurchase
agreements for liquidity purposes. This facility provides liquidity and allows the Company to encumber certain eligible securities
for financing purposes. As part of the agreement, the Company may sell assets to the counterparty at a specified price with an
agreement to repurchase at a specified future date. The interest rate on the borrowings is driven by market spot rates at the
time of borrowing. The Company will execute these repurchase agreements to provide alternative sources of liquidity when it is
efficient and effective to do so.
We have a credit agreement with a Canadian Schedule I Chartered bank for a $100 million senior secured mortgage warehouse
facility. The facility is used to fund insured residential mortgages prior to securitization activities. This facility provides
improved funding in response to our continued growth.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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We have agreements whereby the Company can sell insured and uninsured residential mortgages and mortgage commitments.
These agreements provide liquidity and the opportunity to fund other core business activities in line with our strategy.
The Company continues to enhance monitoring of its liquidity risk profile, its funding markets such as the term deposit and
securitization markets and its liquidity risk position.
OSFI’s Liquidity Adequacy Requirements guideline currently establishes two minimum standards based on the Basel III
framework with national supervisory discretion applied to certain treatments: the Liquidity Coverage Ratio (“LCR”) and Net
Cumulative Cash Flow (“NCCF”) metrics. At December 31, 2024, we were in compliance with the LCR and NCCF metrics.
Our sources and uses of liquidity are outlined in the table below. For information on our off-balance sheet commitments refer
to the “Off-Balance Sheet Arrangements” section of this MD&A.
Table 28: Liquidity Analysis
At December 31, 2024
Within
> 3 Months
> 1 to 3
> 3 to 5
> 5
Total
(in thousands)
3 months
to 1 Year
Years
Years
Years
Sources of liquidity
Cash and cash equivalents
$
61,703 $
— $
— $
— $
— $
61,703
Marketable securities
66,345
—
—
—
—
66,345
Mortgages - corporate
570,820
1,062,932
795,830
29,384
5,125
2,464,091
Non-marketable securities
—
—
—
—
117,428
117,428
Other loans
5,742
—
—
—
—
5,742
704,610
1,062,932
795,830
29,384
122,553
2,715,309
Uses of liquidity
Term deposits
301,555
813,428
755,448
417,795
—
2,288,226
Loans payable
107
—
—
—
—
107
Other liabilities
30,828
(2,203)
641
989
6,552
36,807
332,490
811,225
756,089
418,784
6,552
2,325,140
Net liquidity surplus (deficit)
$
372,120 $
251,707 $
39,741 $
(389,400) $
116,001 $
390,169
Note: The above table excludes securitized assets and liabilities and pledged assets as their use is restricted to securitization program operations.
Credit Risk
Credit risk is the risk of financial loss resulting from the failure of a counterparty, for any reason, to fully honour its financial or
contractual obligations to the Company, primarily arising from our investments and lending activities. Fluctuations in interest
rates may impact real estate values and may also reduce the net realizable value of the collateral property to the Company.
These risks may result in defaults and credit losses, which may result in a loss of earnings.
Credit risk is managed through risk management policies and procedures that emphasize the quality and diversification of our
investments and lending activities. Credit policies include credit risk limits in alignment with the Risk Appetite Framework
(“RAF”). These credit risk limits include, but are not limited to, concentration by asset class, geographic region, dollar amount
and borrower. These policies are amended on an ongoing basis and approved by the Board to reflect changes in market
conditions and risk appetite.
Capital Commitments Committee, which is comprised of management, is accountable for decision-making on credit risk issues
and provides oversight of proposed investments for the construction, commercial and marketable and non-marketable
securities portfolios.
Credit and commitment exposure are closely monitored by the First and Second Lines of Defence. The Risk and Compliance
Committee, which is comprised of management, monitors and challenges credit risk exposures, monitors portfolio and
underwriting quality and performance against credit risk limits on a quarterly basis. The ERM&CC reviews all material risks
affecting the Company on a quarterly basis, which includes the identification, assessment, and monitoring of material credit
risks.
We identify potential risks in our mortgage portfolio by way of regular review of market and portfolio metrics, which are a key
component of quarterly market reports provided to the Board by management. Existing risks in our mortgage portfolio are
identified by arrears reporting, portfolio diversification analysis, post funding monitoring and risk rating trends of the entire
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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mortgage portfolio. The aforementioned reporting and analysis provide adequate monitoring of and control over our exposure
to credit risk.
We assign a credit score and risk rating for all mortgages at the time of underwriting based on the assessed credit quality of the
borrower and the value of the underlying real estate. Risk ratings are reviewed annually at a minimum, and more frequently
whenever there is an amendment, or a material change such as a default or impairment.
As part of our credit risk management process, we monitor our loan portfolio for early indicators of potential concern. The
“monitored/arrears” category includes construction and commercial loans that may experience events such as slow sales, cost
overruns or are located in geographic markets in which concerns have arisen. Loans in this category are included in stage 2.
Considering factors such as borrower equity, portfolio LTV ratios and project liquidity, at December 31, 2024 and 2023 there
have been no indications at the portfolio level of potential loss of principal in excess of the allowances for credit losses recorded
for mortgages in stage 1 and 2. These collective allowances are based on forward-looking economic assumptions and other
factors discussed in Note 4 to the consolidated financial statements.
As a response to economic uncertainty, the Company has increased the frequency of monitoring and reporting of our credit risk
profile, including enhanced arrears reporting and pipeline monitoring. Real estate prices may continue to be impacted by
macroeconomic headwinds, which may adversely impact asset values and the ability for borrowers to make timely payments on
mortgages.
The maximum credit exposure on our individual financial assets is equal to the carrying value of the respective assets, except
for our corporate mortgage portfolio, where maximum credit exposure also includes outstanding commitments for future
mortgage fundings and our investments in non-marketable securities, where maximum credit exposure includes our total
remaining commitments.
Credit Risk - Impairment Assessment Under IFRS 9
The analysis of MCAN’s IFRS 9 impairment assessment and measurement approach discussed below should be read in
conjunction with Note 4 to the consolidated financial statements.
Impairment calculations are based on a forward-looking ECL methodology. ECL is composed of 3 submodels; Probability of
Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”). Each of these submodels produce quarterly
projections of the respective metric under various macroeconomic scenarios.
Probability of default
PD is an estimate of the likelihood of default over a given time horizon. The PD model is comprised of (i) forward-looking
macroeconomic projections and (ii) internal risk rating-based segmentation. Forward-looking macroeconomic projections are
built utilizing statistical regression to determine relationships between default rates and macroeconomic variables. Internal risk
rating-based segmentation views the portfolio by internal risk rating and credit scores to provide PD differentiation at the
borrower level.
Loss given default
LGD is an estimate of the loss arising in the case where a default occurs. LGD is built utilizing statistical regression to determine
a relationship between LGD and macroeconomic variables, using external LGD data from comparable historical portfolios to
forecast LGD under macroeconomic scenarios. Like the PD model, the construction and commercial LGD model also segments
the portfolio by internal risk ratings to differentiate LGDs at the borrower level. The uninsured single family LGD model
segments the portfolio by loan to value ratios to differentiate LGDs at the borrower level as well.
Exposure at default
EAD is the estimate of exposure at a future default date at the borrower level, taking into account expected changes in the
exposure after the reporting date. EAD is the borrower level exposure in the event of default, determined by forecasting
advances and repayments on the portfolio. The forecast is determined utilizing historical advance and repayment trends and is
segmented by product type. EAD is forecasted up to the expected lifetime of each individual loan, capped at 12 months for IFRS
9 stage 1 loans.
Grouping financial assets measured on a collective basis
The Company calculates ECLs either on a collective or specific basis for the corporate mortgage portfolio based on the line of
business (per Note 7 to the consolidated financial statements). ECLs are calculated on a specific basis for all mortgages in stage
3 and are calculated on a collective basis for all mortgages in stage 1 and stage 2.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Analysis of inputs into the ECL model under multiple economic scenarios
An overview of the approach to estimating ECLs is set out in Notes 4 and 5 to the consolidated financial statements. As part of
the model input process, macroeconomic data are obtained from third party sources (e.g. rating agencies, bank economic
forecasts, etc.), and our Risk Management department assesses the quality of data and assumptions in the Company’s ECL
models including determining the weights attributable to the multiple scenarios.
Interest Rate Risk
Interest rate risk is the potential impact of changes in interest rates on our earnings and capital. Interest rate risk arises when
our assets and liabilities, both on- and off-balance sheet, have mismatched repricing and maturity dates. Changes in interest
rates where we have mismatched repricing and maturity dates may have an adverse effect on our financial condition and
results of operations.
The Interest Rate Risk Management Framework, which is reviewed and approved by the Board, provides guidance on MCAN’s
interest rate risk measurement tools, including stress testing, roles and accountabilities, and monitoring and reporting
requirements. Additionally, it establishes interest rate risk limits and articulates appetite for interest rate exposures.
We evaluate our exposure to a variety of changes in interest rates across the term spectrum of our assets and liabilities
including both parallel and non-parallel changes in interest rates. By managing and strategically matching the terms of
corporate assets and term deposits, we seek to reduce the risks associated with interest rate changes. In conjunction with
liquidity management policies and procedures, we also manage cash flow mismatches. ALCO reviews our interest rate exposure
on a monthly basis using a duration-based framework to measure structural risk and sensitivity analysis based on various
scenarios. This information is also formally reviewed by the Board each quarter.
We are exposed to interest rate risk on: (i) movements in interest rates between the time residential mortgages are committed
to borrowers and the time that the mortgage is funded; (ii) movements in interest rates between the time insured residential
mortgages are funded and the time that these mortgages are securitized; (iii) movements in interest rates between the time
term deposit funding is forecasted to be required and the time that the actual funding occurs; and (iv) movements in interest
rates during the term of the fixed-rate term deposits and floating rate construction and commercial portfolios. To manage these
risks, we may employ various hedging strategies. For further information, refer to “Derivatives and Hedging” sub-section of this
MD&A and Note 13 to the consolidated financial statements.
An immediate and sustained parallel 1% increase to market interest rates on interest-bearing financial instruments at
December 31, 2024 would have an estimated positive effect of $1.2 million (September 30, 2024 - positive effect of $2.4
million; December 31, 2023 - positive effect of $5.0 million) to net income over the following twelve month period. An
immediate and sustained parallel 1% decrease to market interest rates at December 31, 2024 would have an estimated adverse
effect of $0.3 million (September 30, 2024 - adverse effect of $1.4 million; December 31, 2023 - adverse effect of $3.8 million)
to net income over the following twelve month period.
The following tables present the assets and liabilities of the Company by interest rate sensitivity at December 31, 2024 and
December 31, 2023 and do not incorporate mortgage and loan prepayments. This analysis is subject to significant change in
subsequent periods based on changes in customer preferences and in the application of asset/liability management policies.
Floating rate assets and liabilities are immediately sensitive to changing interest rates while other assets are sensitive to
changing interest rates periodically, either as they mature or as contractual repricing events occur. Non-interest sensitive items
include marketable securities, equity investment in MCAP and other assets and liabilities. Yield spread represents the difference
between the weighted average interest rate of the assets and liabilities in a certain category.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Table 29: Interest Rate Sensitivity at December 31, 2024
At December 31, 2024
(in thousands except %)
Floating
Rate
Within
3 Months
> 3
Months to
1 Year
> 1 to 3
Years
> 3 to 5
Years
> 5 Years
Non
Interest
Sensitive
Total
Assets
Corporate
$ 1,285,164
$ 158,375
$ 584,118
$ 486,236
$ 28,055
$ 4,368
$ 314,001 $ 2,860,317
Securitization
196,777
61,325
404,678
1,076,875 680,216
—
67,377
2,487,248
1,481,941
219,700
988,796
1,563,111 708,271
4,368
381,378
5,347,565
Liabilities
Corporate
107
301,555
813,428
755,448
417,793
—
36,809
2,325,140
Securitization
196,084
33,028
378,459
1,250,067 565,598
—
—
2,423,236
196,191
334,583
1,191,887 2,005,515 983,391
—
36,809
4,748,376
Shareholders’ Equity
—
—
—
—
—
—
599,189
599,189
GAP
$ 1,285,750
$ (114,883) $ (203,091) $ (442,404) $ (275,120) $ 4,368
$ (254,620) $
—
YIELD SPREAD
4.76 %
1.43 %
1.21 %
0.72 %
0.44 %
4.35 %
Table 30: Interest Rate Sensitivity at December 31, 2023
At December 31, 2023
(in thousands except %)
Floating
Rate
Within
3 Months
> 3
Months to
1 Year
> 1 to 3
Years
> 3 to 5
Years
> 5 Years
Non
Interest
Sensitive
Total
Assets
Corporate
$ 1,265,585 $ 162,442
$ 433,336
$ 504,327
$ 101,094
$ 8,614
$ 280,931 $ 2,756,329
Securitization
126,874
16,427
145,074
1,262,090
379,482
—
52,811
1,982,758
1,392,459
178,869
578,410
1,766,417
480,576
8,614
333,742
4,739,087
Liabilities
Corporate
64,682
282,827
803,952
790,157
323,237
—
25,505
2,290,360
Securitization
126,103
7,420
137,127
1,199,547
446,686
—
—
1,916,883
190,785
290,247
941,079
1,989,704
769,923
—
25,505
4,207,243
Shareholders’ Equity
—
—
—
—
—
—
531,844
531,844
GAP
$ 1,201,674 $ (111,378) $ (362,669) $ (223,287) $ (289,347) $ 8,614
$ (223,607) $
—
YIELD SPREAD
4.36 %
2.07 %
1.56 %
0.74 %
(0.03) %
5.39 %
Market Risk
Market risk is the exposure to adverse changes in the value of financial assets. Market risk includes price risk on marketable
securities, execution risk and real estate values, among others. Any changes in these market risk factors may negatively affect
the value of our financial assets, which may have an adverse effect on our financial condition and results of operations. We do
not undertake trading activities as part of our regular operations, and therefore are not exposed to risks associated with
activities such as market making, arbitrage or proprietary trading.
Our marketable securities portfolios are susceptible to market price risk arising from uncertainties about future values of the
securities. We manage the equity price risk through diversification and limits on both individual and total securities. Portfolio
reporting is submitted to management on a regular basis and to the Board on a quarterly basis.
Our non-marketable securities portfolios are focused on equity and debt investments in Canadian real estate focused funds.
The portfolio is susceptible to the overall outlook of the real estate market, execution risk from respective fund managers, and
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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other market conditions, such as spreads, housing prices, land prices, construction costs and adverse changes in interest rates
or capitalization rates.
DESCRIPTION OF CAPITAL STRUCTURE
Our authorized share capital consists of an unlimited number of common shares with no par value. These common shares are
the only voting securities of MCAN. At December 31, 2024, there were 38,717,004 common shares outstanding (September 30,
2024 - 38,462,802; December 31, 2023 - 35,431,938). At February 24, 2025, there were 38,901,213 common shares
outstanding.
We issued $1.2 million in 2024 (2023 - $nil) in new common shares through standard issuances under our Executive Share
Purchase Plan.
We issued $14.8 million in 2024 (2023 - $14.5 million) in new common shares under the DRIP, which has historically provided
MCAN with a reliable source of new capital and existing shareholders an opportunity to acquire additional shares at a discount
to market value. Under the DRIP, dividends paid to shareholders are automatically reinvested in common shares issued out of
treasury at the weighted average trading price for the five days preceding such issue less a discount of 2% until further notice
from MCAN. The DRIP participation rate for the 2024 fourth quarter dividend was 14% (2024 third quarter - 15%; 2023 fourth
quarter - 30%). The DRIP participation rate for 2024 dividends was 22% (2023 - 29%).
We have a Base Shelf prospectus allowing us to make certain public offerings of debt or equity securities during the period that
it is effective, through Prospectus Supplements.
•
On March 28, 2024, we closed an overnight marketed offering, established pursuant to a Prospectus Supplement to
our Base Shelf prospectus, at a price of $15.40 per common share for gross proceeds of $28.8 million and net
proceeds of $27.2 million including share issuance costs.
•
We have an ATM Program, established pursuant to a Prospectus Supplement to our Base Shelf prospectus, allowing
us to issue up to $30 million common shares to the public from time to time at the market prices prevailing at the
time of sale. In Q4 2024, we sold 221,500 common shares at a weighted average price of $18.73 for gross proceeds of
$4.1 million and net proceeds of $4.0 million including $83 thousand of agent commission paid and $100 thousand of
other share issuance costs under the ATM Program. In fiscal 2024, we sold 404,100 common shares at a weighted
average price of $18.29 for gross proceeds of $7.4 million and net proceeds of $7.0 million including $0.1 million of
agent commission paid and $0.3 million of other share issuance costs under the ATM Program. At December 31, 2024,
we have $21.0 million remaining available to be issued through our ATM Program. The volume and timing of
distributions under the ATM Program are determined at MCAN’s sole discretion.
For additional information related to share capital, refer to Note 18 to the consolidated financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
We have contractual obligations relating to outstanding commitments for future fundings of corporate mortgages and our
investments in non-marketable securities. Only a portion of the mortgage commitments that we issue are expected to fund.
Accordingly, these amounts do not necessarily represent the future cash requirements of the Company.
Table 31: Contractual Commitments
At December 31, 2024
Within
> 3 Months
> 1 to 3
> 3 to 5
> 5
(in thousands)
3 months
to 1 Year
Years
Years
Years
Total
Mortgage funding commitments
$
272,856 $
133,937 $
23,072 $
— $
— $
429,865
Commitment - TAS Co
—
—
1,599
—
—
1,599
Commitment - TAS 4
—
7,609
2,536
2,533
—
12,678
Commitment - Harbour
950
2,500
1,000
1,000
—
5,450
Commitment - KSSMF
1,300
3,900
2,600
—
—
7,800
Commitment - Pearl
—
583
—
—
—
583
Commitment - Crown
—
6,385
2,406
—
—
8,791
Commitment - Fiera
649
2,000
390
390
1,500
4,929
Commitment - Broccolini
950
5,028
10,300
2,000
1,000
19,278
Commitment - KSHYF
1,283
—
—
—
28,844
30,127
$
277,988 $
161,942 $
43,903 $
5,923 $
31,344 $
521,100
We retain mortgage servicing obligations relating to securitized insured multi-family mortgages where balance sheet
derecognition has been achieved. At December 31, 2024, these derecognized securitized insured multi-family mortgages
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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totalled $308 million. For further information on our securitization activities, refer to Note 11 to the consolidated financial
statements.
We provide letters of credit, which are not reflected on the consolidated balance sheet, for the purpose of supporting
developer obligations to municipalities in conjunction with residential construction loans. If the developer defaults in its
obligation to the municipalities, the municipalities may draw on the letters of credit, in which case we are obligated to fund the
letters of credit. For further information, refer to Note 24 to the consolidated financial statements.
DIVIDEND POLICY AND RECORD
Our dividend policy is to pay out substantially all of our taxable income to our shareholders. These dividends are taxable to our
shareholders as interest income. In addition, as a MIC, we can pay certain capital gains dividends which are taxed as capital
gains to our shareholders. We intend to continue to declare and pay dividends on a quarterly basis. The Company has generally
paid out dividends in cash but has the option to pay out its dividends in the form of cash or shares. In the event of a significant
increase in taxable income relative to accounting income, the Company may look to pay out a combination of regular dividends
in the form of cash and special dividends in the form of cash or shares. This is consistent with our dividend policy and our
obligations as a MIC, while at the same time providing a cost effective source of capital for the Company to support future
growth and business operations.
Regular cash dividends and special stock dividends per share over the past three years are shown in the table below:
Table 32: Dividends Per Share
For the Years Ended December 31
2024
2023
2022
First quarter - regular cash
$
0.39 $
0.36 $
0.36
Second quarter - regular cash
0.39
0.36
0.36
Third quarter - regular cash
0.39
0.38
0.36
Fourth quarter - regular cash
0.39
0.38
0.36
Total regular cash dividends
1.56
1.48
1.44
First quarter - special stock
—
—
0.97
Total regular cash and special stock dividends
$
1.56 $
1.48 $
2.41
The Board declared a first quarter regular cash dividend of $0.41 per share (an increase of 5% from our fourth quarter 2024
dividend) to be paid March 31, 2025 to shareholders of record on March 14, 2025.
TRANSACTIONS WITH RELATED PARTIES
Related party transactions for the years ended December 31, 2024 and December 31, 2023 and related party balances at
December 31, 2024 and December 31, 2023 are discussed in Notes 9 and 23 to the consolidated financial statements.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The majority of our consolidated balance sheet consists of financial instruments, and the majority of net income (loss) is derived
from the related income, expenses, gains and losses. Financial instruments include cash and cash equivalents, cash held in
trust, marketable securities, mortgages, non-marketable securities, other loans, financial liabilities from securitization, term
deposits and loans payable, which are discussed throughout this MD&A.
The use of financial instruments exposes us to liquidity and funding, credit, interest rate and market risk. A discussion of these
risks and how they are managed is found in the “Risk Factors” section of this MD&A.
Information on the financial statement classification and amounts of income, expenses, gains and losses associated with
financial instruments are located in the “Results of Operations” and “Financial Position” sections of this MD&A. Information on
the determination of the fair value of financial instruments is located in the “Critical Accounting Estimates and Judgments”
section of this MD&A.
PEOPLE
At December 31, 2024, we had 160 team members (September 30, 2024 - 155; December 31, 2023 - 142). Team members
include full-time, part-time, contract and students, as applicable.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the Company’s consolidated financial statements requires management to make judgments, estimations
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities, at the end of the reporting period. Estimates are considered carefully and reviewed at an appropriate level within
MCAN. We believe that our estimates of the value of our assets and liabilities are appropriate. However, changes in these
assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or
liability affected in future periods.
Critical Accounting Estimates
Fair value of financial instruments
For non-marketable securities, fair value is determined using a variety of approaches including independent appraisals, recent
transactions and incremental investments in the funds. We consider various factors in the determination of fair value including,
but not limited to, recent appraisals, the status of underlying construction project and recent capital calls. Judgment is applied
in the determination of the appropriate valuation approach, depending on the nature of the investment. On a quarterly basis,
we review the fair value of the investments in conjunction with reports produced by the fund administrators, recent
development activity and any other market-driven triggers.
For all other financial instruments where the fair values of financial assets and financial liabilities recorded in the consolidated
financial statements cannot be derived from active markets, they are determined using a variety of appropriate valuation
techniques that may include discounted cash flow method, comparison to similar instruments for which market observable
prices may exist and other relevant valuation models. The inputs are derived from observable market data where possible, but
where observable market data is not available, estimates are required to establish fair values. These estimates include
considerations of liquidity and model inputs such as discount rates, prepayment rates and default rate assumptions for certain
investments.
Allowances for credit losses
The allowance for credit losses reduces the carrying value of mortgage assets by an estimate of the principal amounts that
borrowers may not repay in the future. In assessing the estimated realizable value of assets, we must rely on estimates and
exercise judgment regarding matters for which the ultimate outcome is unknown. A number of factors can affect the amount
that we ultimately collect, including the quality of our own underwriting process and credit criteria, the diversification of the
portfolio, the underlying security relating to the loans and the overall economic environment. Allowances on impaired
mortgages include all of the accumulated provisions for losses to reduce the assets to their estimated realizable value.
Allowances depend on asset class, as different classes have varying underlying risks. Future changes in circumstances could
materially affect net realizable values and lead to an increase or decrease in the allowance for credit losses.
The measurement of impairment losses under IFRS 9 across all categories of financial assets requires judgment, in particular,
the estimation of the amount and timing of future cash flows and collateral values and the assessment of a significant increase
in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.
The Company’s ECL calculations are model outputs with a number of underlying assumptions regarding the choice of variable
inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates
include:
•
The Company’s criteria for assessing if there has been a significant increase in credit risk which results in allowances
being measured on a lifetime versus 12 month ECL basis;
•
The segmentation of financial assets for the purposes of assessing ECL on a collective basis;
•
Development of ECL models, including the various formulas and the choice of inputs;
•
Determination of associations between macroeconomic scenarios and economic inputs such as unemployment levels
and collateral values, and the effect on PDs, EADs and LGDs; and
•
Forward-looking information used as economic inputs.
We review our ECL models on a quarterly basis. We continue to monitor asset performance and economic conditions, including
considering regionally specific issues to assess the adequacy of the current provisioning policies.
The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the
consolidated financial statements. To reflect this, we may make temporary qualitative adjustments or overlays using credit
judgment when such differences are material.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Mortgage prepayment rates
In calculating the rate at which borrowers prepay their mortgages, the Company makes estimates based on its historical
experience. These assumptions impact the timing of revenue recognition and the amortization of mortgage premiums, as
applicable, using the effective interest rate method.
Impairment of financial assets
As applicable, the Company reviews financial assets at each consolidated financial statement date to assess whether an
impairment loss should be recorded. In particular, estimates by management are required in the calculation of the amount and
timing of future cash flows associated with these assets when determining the impairment loss. These estimates are based on
assumptions about a number of factors and actual results may differ, resulting in future changes to the fair value of the asset.
Critical Accounting Judgments
Significant influence
In determining whether it has significant influence over an entity, the Company makes certain judgments based on the
applicable accounting standards. These judgments form the basis for the Company’s policies in accounting for its equity
method investments.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure Controls and Procedures (“DC&P”)
A disclosure committee (the “Disclosure Committee”), comprised of members of our senior management is responsible for
establishing and maintaining adequate DC&P. As of December 31, 2024, we have evaluated the effectiveness of the design and
operation of our DC&P in accordance with requirements of National Instrument 52-109 of the Canadian Securities
Administrators – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”). Our Chief Executive Officer and
CFO supervised and participated in this evaluation. Based on the evaluation, our Chief Executive Officer and CFO concluded that
our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we
file or submit is recorded, processed, summarized and reported within the time periods specified in securities legislation and is
accumulated and communicated to our management, including our Chief Executive Officer and CFO, to allow timely decisions
regarding required disclosure.
Internal Controls over Financial Reporting (“ICFR”)
The Disclosure Committee is responsible for establishing and maintaining adequate ICFR. Under the supervision and with the
participation of the Disclosure Committee, including our Chief Executive Officer and CFO, we evaluated the effectiveness of our
ICFR in accordance with the Integrated (2013) Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission, a recognized control model, and the requirements of NI 52-109. Based on the evaluation, our Chief
Executive Officer and CFO concluded that our ICFR were effective as of December 31, 2024.
Ernst & Young LLP, our Independent Registered Chartered Professional Accountants, have audited our consolidated financial
statements for the year ended December 31, 2024.
Changes in ICFR
There were no changes in our ICFR that occurred during the period beginning on January 1, 2024 and ending on December 31,
2024 that have materially affected, or are reasonably likely to materially affect, our control framework.
On January 1, 2024, we implemented a new enterprise resource planning (“ERP”) system. This ERP implementation did not
result in any significant changes in internal controls. We had appropriate testing on the new ERP system to ensure a proper
transition as well as appropriate procedures to ensure internal controls over financial reporting were in place during and after
the implementation.
Inherent Limitations of Controls and Procedures
All internal control systems, no matter how well designed, have inherent limitations. As a result, even systems determined to be
effective may not prevent or detect misstatements on a timely basis, as systems can provide only reasonable assurance that the
objectives of the control system are met. In addition, projections of any evaluation of the effectiveness of ICFR to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may change.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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NON-GAAP AND OTHER FINANCIAL MEASURES
We prepare our consolidated financial statements in accordance with IFRS, which is current GAAP. We use a number of
financial measures and ratios to assess our performance. Some of these measures are not calculated in accordance with IFRS,
are not defined by IFRS and do not have standardized meanings that would ensure consistency and comparability between
other issuers using these measures. The non-GAAP and other financial measures used in this MD&A are defined as follows:
Non-GAAP Financial Measures
Net Corporate Mortgage Spread Income
Non-GAAP financial measure that is an indicator of net interest profitability of income-earning corporate assets less cost of
funding for our corporate mortgage portfolio. It is calculated as the difference between corporate mortgage interest and
term deposit interest and expenses as reported on the consolidated statements of income. Calculations can also be found in
Tables 1, 2, 4 and 5 of this MD&A.
Table 33: Net Corporate Mortgage Spread Income
(in thousands)
Q4
Q4
Change
Annual
Annual
Change
At December 31
2024
2023
($)
2024
2023
($)
Mortgage interest - corporate assets
$
47,209 $
47,406
$ 191,706 $ 165,997
Term deposit interest and expenses
26,642
24,361
108,259
78,219
Net Corporate Mortgage Spread Income
$
20,567 $
23,045 $
(2,478) $
83,447 $
87,778 $
(4,331)
Securitized Mortgage Spread Income
Non-GAAP financial measure that is an indicator of net interest profitability of income-earning securitized assets less cost of
securitized liabilities for our securitized mortgage portfolio. It is calculated as the difference between securitized mortgage
interest and interest on financial liabilities from securitization as reported on the consolidated statements of income.
Calculations can also be found in Tables 7 and 8 of this MD&A.
Table 34: Net Securitized Mortgage Spread Income
(in thousands)
Q4
Q4
Change
Annual
Annual
Change
At December 31
2024
2023
($)
2024
2023
($)
Mortgage interest - securitized assets
$ 18,535 $ 11,309
$ 63,163 $ 39,335
Interest on financial liabilities from securitization
15,511
9,597
53,255
32,769
Net Securitized Mortgage Spread Income
$
3,024 $
1,712 $
1,312 $
9,908 $
6,566 $
3,342
Supplementary Financial Measures
Average Rates
Supplementary financial measures that are an indicator of interest profitability of income-earning assets or the cost of
liabilities. It is calculated as income or expense as a percentage of average interest-earning assets or liabilities balance. This
financial measure includes average interest rates for (i) mortgages - corporate portfolios; (ii) term deposit interest and
expenses; (iii) mortgages - securitized portfolio; and (iv) financial liabilities from securitization. The average income-earning
asset or liability balance that is incorporated into the average interest rate calculations is calculated on either a daily or
monthly basis depending on the nature of the asset or liability.
Spread of Corporate Mortgages over Term Deposit Interest and Expenses
Supplementary financial measure that is an indicator of net interest profitability of income-earning corporate assets less cost
of funding. The spread of corporate mortgages over term deposit interest and expenses is calculated by taking the total
corporate mortgage interest as a percentage of the average corporate mortgage average portfolio balance less the average
term deposit interest and expenses rate.
Spread of Securitized Mortgages over Liabilities
Supplementary financial measure that is an indicator of net interest profitability of income-earning securitized assets less cost
of securitized liabilities. The spread of securitized mortgages over liabilities is calculated by taking the securitized mortgage
portfolio average interest rate less the financial liabilities average interest rate.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Return on Average Shareholders’ Equity
Supplementary financial measure that measures profitability by presenting the annualized net income available (loss
attributable) to shareholders as a percentage of the average capital deployed to earn the income (loss). It is calculated as net
income (loss) divided by average shareholders’ equity. Average shareholders’ equity is calculated as a monthly average using
all components of shareholders’ equity.
Arrears and Impaired Mortgage Ratios
Supplementary financial measures that represent the ratio of arrears and impaired mortgages to mortgage principal for both
the corporate and total (corporate and securitized) portfolios.
Distribution Yield
Supplementary financial measure that is an indicator of profitability on marketable and non-marketable securities. It is
calculated by dividing the distribution income as a percentage of the average balance.
Book Value per Common Share
Supplementary financial measure that is calculated as total shareholders’ equity divided by the number of common shares
outstanding as of that date.
Total Shareholder Return
Supplementary financial measure that is defined as the total return of one share to a shareholder including stock appreciation
and dividends.
GLOSSARY
CET 1, Tier 1, Tier 2 and Total Capital, Total Exposures, Regulatory Assets, Leverage Ratio and Risk-Weighted Asset Ratios
These measures are calculated in accordance with OSFI’s Capital Adequacy Requirements and Leverage Requirements
guidelines.
Income Tax Capital Measures
Income tax assets, income tax liabilities and income tax capital represent assets, liabilities and capital as calculated on a non-
consolidated basis using the provisions of the Tax Act applicable to a MIC. The calculation of the income tax assets to capital
ratio and income tax liabilities to capital ratio are based on these amounts.
Market Capitalization
Market capitalization is calculated as the number of common shares outstanding multiplied by the closing common share
price as of that date.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION
The accompanying consolidated financial statements of MCAN Mortgage Corporation (“MCAN” or the “Company”) are the
responsibility of management and have been approved by the Board of Directors. Management is responsible for the
information and representations contained in these consolidated financial statements, the Management’s Discussion and
Analysis of Operations and all other sections of the annual report. The consolidated financial statements have been prepared by
management in accordance with International Financial Reporting Standards (“IFRS”), including the accounting requirements of
our regulator, the Office of the Superintendent of Financial Institutions Canada.
The Company’s accounting system and related internal controls are designed, and supporting procedures are maintained to
provide reasonable assurance that the Company’s financial records are complete and accurate and that assets are safeguarded
against loss from unauthorized use or disposition.
The Office of the Superintendent of Financial Institutions Canada makes such examination and enquiry into the affairs of MCAN
as deemed necessary to be satisfied that the provisions of the Trust and Loan Companies Act (Canada) are being duly observed
for the benefit of depositors and that the Company is in sound financial condition.
The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is
ultimately responsible for reviewing and approving the consolidated financial statements. These responsibilities are carried out
primarily through an Audit Committee of unrelated directors appointed by the Board of Directors. The Chief Financial Officer
reviews internal controls, control systems and compliance matters and reports thereon to the Audit Committee.
The Audit Committee meets periodically with management and the external auditors to discuss internal controls over the
financial reporting process, auditing matters and financial reporting issues. The Audit Committee reviews the consolidated
financial statements and recommends them to the Board of Directors for approval. The Audit Committee also recommends to
the Board of Directors and Shareholders the appointment of external auditors and approval of their fees.
The consolidated financial statements have been audited by the Company’s external auditors, Ernst & Young LLP, in accordance
with Canadian generally accepted auditing standards. Ernst & Young LLP has full and free access to the Audit Committee.
Derek Sutherland
Santokh Birk
Interim Chief Executive Officer
Senior Vice President and Chief Financial Officer
Toronto, Canada
February 24, 2025
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders and Directors of MCAN Mortgage Corporation
Opinion
We have audited the consolidated financial statements of MCAN Mortgage Corporation and its subsidiaries
(the “Company”), which comprise the consolidated balance sheets as at December 31, 2024 and 2023, and
the consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash
flows for the years then ended, and notes to the consolidated financial statements, including a summary of
material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Company as at December 31, 2024 and 2023, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with
International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of the audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion
thereon, and we do not provide a separate opinion on these matters. For each matter below, our description
of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying consolidated financial statements.
Allowance for expected credit loss
Key audit matter
MCAN describes its significant accounting judgments and estimates in relation to the allowance for expected
credit loss (“ECL”) in Note 5 of the 2024 consolidated financial statements. As disclosed in Note 7 and Note
12 to the 2024 consolidated financial statements, MCAN recognized $13,202 thousand in ECL on its
consolidated balance sheet using an ECL model. ECLs represent an unbiased and probability-weighted
amount, which is determined by evaluating a range of possible outcomes and reasonable and supportable
information about past events, current conditions and forecasts of future economic conditions. Forward-
looking information (“FLI”), which involves significant judgment, is explicitly incorporated into the estimation
of ECLs. ECLs are measured at amounts equal to either (i) 12 month ECL; or (ii) lifetime ECL for those
financial instruments that have experienced a significant increase in credit risk (“SICR”) since initial
recognition or when there is objective evidence of impairment.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Auditing the ECLs was complex and required the application of significant judgment because of the forward-
looking nature of the key assumptions, and the inherent interrelationship of the critical variables used in
measuring the ECLs. Key areas of judgment included evaluating: (i) the models and methodologies used for
measuring both the 12 month and lifetime expected credit losses; (ii) the assumptions used in the ECL
scenarios including FLI and assigning probability weights; (iii) assessing SICR; and (iv) the qualitative
adjustments applied to the modelled ECL based on management's expert credit judgment.
How our audit addressed the key audit matter
We obtained an understanding and evaluated the design of management's controls over the ECLs. We tested
the controls over data completeness and accuracy of information used in determining the ECLs. To test the
ECLs, our audit procedures included, among others, involving our credit risk modelling specialists to assist in
assessing the methodology and assumptions used in the models that estimate the ECLs across various
portfolios and to assess management’s SICR triggers. For a sample of key FLI variables, we compared the
base forecasts produced by management against publicly available information, and also assessed the
reasonability of the upside and downside scenarios within the current environment. We independently
recalculated the ECLs and reperformed the staging to validate that the model methodology and staging
triggers were correctly applied. With the assistance of our credit risk modelling specialists, we evaluated
management's methodology over the qualitative adjustments contributing to the ECLs based on the
application of expert credit judgment including management’s assessment of regional differences in defaults.
Furthermore, we assessed the adequacy of the presentation and disclosures of the ECLs in the notes to the
consolidated financial statements.
Non-Marketable Securities
Key audit matter
MCAN describes its significant accounting judgments and estimates in relation to non-marketable securities
in Note 5 of the 2024 consolidated financial statements. As disclosed in Note 8 to the 2024 consolidated
financial statements, MCAN recognized $117,428 thousand in fair value on its consolidated balance sheet for
its portfolio of limited partnership real estate funds within the overall non-marketable securities portfolio
(“the Funds”). The valuation process involves judgement in determining the appropriate valuation approach
to be used, and in estimating the fair value. The fair value is determined using independent appraisals,
recent transactions and considers incremental investments in the Funds. The Funds are considered level 3
investments and are not traded in active markets.
Auditing the fair value of the Funds was complex, required the application of auditor judgment and involved
the use of our Valuation Specialists, due to the judgement required to determine the fair value of the Funds.
How our audit addressed the key audit matter
We involved Valuations Specialists with specialized skills and knowledge to evaluate management’s estimate
of fair value for a sample of Funds. We assessed the reasonableness of inputs and assumptions used in the
appraisals of the underlying properties in the Funds. We also reviewed comparable transactions, where
applicable and market data from our research of independent third-party sources to assess the fair value.
We obtained confirmations from fund administrators for each of the Funds to confirm the proportionate
share of MCAN’s investment in each Fund. We reviewed quarterly updates provided by each of the Funds to
identify events or transactions that would impact fair value and assessed how management included in the
determination of fair value if relevant. We also considered changes in market conditions and events affecting
the Funds to assess the adjustments, or lack of adjustments, made by MCAN in arriving at the fair value of
each Fund.
Other Information
Other information consists of the information included in the Annual Report, other than the financial
statements and our auditor’s report thereon. Management is responsible for the other information. The other
information comprises:
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2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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Management’s Discussion and Analysis
The information, other than the consolidated financial statements and our auditor’s report thereon,
in the Annual Report
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
We obtained Management’s Discussion & Analysis and the Annual Report prior to the date of this auditor’s
report. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact in this auditor’s report. We have nothing to report in
this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with IFRSs, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Canadian generally accepted auditing standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the consolidated financial statements or, if such
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2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Andrea Feddema.
Toronto, Canada
February 24, 2025
71
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
At December 31
Note
2024
2023
Assets
Corporate Assets
Cash and cash equivalents
$
61,703 $
60,345
Marketable securities
6
66,345
50,320
Mortgages
7
2,464,091
2,414,855
Non-marketable securities
8
117,428
109,943
Equity investment in MCAP Commercial LP
9
122,265
111,367
Derivative financial instruments
13
2,508
198
Deferred tax assets
15
1,430
336
Other assets
10
24,547
8,965
2,860,317
2,756,329
Securitization Assets
Cash held in trust
47,249
30,909
Mortgages
12
2,419,871
1,929,948
Other assets
12
20,128
21,901
2,487,248
1,982,758
$
5,347,565 $
4,739,087
Liabilities and Shareholders’ Equity
Liabilities
Corporate Liabilities
Term deposits
14
$
2,288,226 $
2,200,102
Demand loans payable
24
107
64,683
Other liabilities
16
36,807
25,575
2,325,140
2,290,360
Securitization Liabilities
Financial liabilities from securitization
17
2,423,236
1,916,883
2,423,236
1,916,883
4,748,376
4,207,243
Shareholders’ Equity
Share capital
18
456,683
406,528
Contributed surplus
510
510
Retained earnings
143,620
124,708
Accumulated other comprehensive income (loss)
(1,624)
98
599,189
531,844
$
5,347,565 $
4,739,087
The accompanying notes and shaded areas of the “Risk Factors” section of Management’s Discussion and Analysis of Operations are an integral
part of these consolidated financial statements.
On behalf of the Board:
Derek Sutherland
John Coke
Interim Chief Executive Officer
Director, Chair of the Audit Committee
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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CONSOLIDATED STATEMENTS OF INCOME
(in thousands of Canadian dollars except for per share amounts)
Years Ended December 31
Note
2024
2023
Net Investment Income - Corporate Assets
Mortgage interest
$
191,706 $
165,997
Equity income from MCAP Commercial LP
9
28,803
22,010
Non-marketable securities
7,723
8,772
Marketable securities
3,057
3,625
Fees
3,526
2,417
Interest on cash and other income
3,927
4,061
Net loss on securities
20
(6,343)
(3,622)
Gain on dilution of investment in MCAP Commercial LP
9
680
1,048
233,079
204,308
Term deposit interest and expenses
13
108,259
78,219
Mortgage expenses
21
8,381
7,490
Interest on loans payable
2,896
6,458
Other financial expenses
23
150
100
Provision for credit losses
22
3,258
4,494
122,944
96,761
110,135
107,547
Net Investment Income - Securitization Assets
Mortgage interest
63,163
39,335
Other securitization income
2,017
2,234
65,180
41,569
Interest on financial liabilities from securitization
13
53,255
32,769
Mortgage expenses
21
5,769
4,548
59,024
37,317
6,156
4,252
Operating Expenses
Salaries and benefits
27,762
22,815
General and administrative
11,975
10,757
39,737
33,572
Net Income Before Income Taxes
76,554
78,227
Provision for (recovery of) income taxes
Current
15
62
(30)
Deferred
15
(1,094)
759
(1,032)
729
Net Income
$
77,586 $
77,498
Basic and diluted earnings per share
$
2.06 $
2.22
Cash dividends per share
$
1.56 $
1.48
Weighted average number of basic and diluted shares (000’s)
37,635
34,873
The accompanying notes and shaded areas of the “Risk Factors” section of Management’s Discussion and Analysis of Operations are an integral
part of these consolidated financial statements.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of Canadian dollars)
Years Ended December 31
Note
2024
2023
Net Income
$
77,586 $
77,498
Other comprehensive income (loss) items that may be subsequently reclassified to net
income:
Cash Flow Hedges
13
Net gains (losses) from changes in fair value of cash flow hedges
(1,949)
386
Reclassification of net losses (gains) to net income
227
(112)
Total Other Comprehensive Income (Loss)
(1,722)
274
Comprehensive Income
$
75,864 $
77,772
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands of Canadian dollars)
Years Ended December 31
Note
2024
2023
Share Capital
Balance, beginning of year
$
406,528 $
389,986
Share capital issued, net of share issuance costs
18
50,155
16,542
Balance, end of year
456,683
406,528
Contributed Surplus
510
510
Retained Earnings
Balance, beginning of year
124,708
98,990
Net income
77,586
77,498
Dividends declared
18
(58,674)
(51,780)
Balance, end of year
143,620
124,708
Accumulated Other Comprehensive Income (Loss)
13
Balance, beginning of year
98
(176)
Other comprehensive income (loss)
(1,722)
274
Balance, end of year
(1,624)
98
Total Shareholders’ Equity
$
599,189 $
531,844
The accompanying notes and shaded areas of the “Risk Factors” section of Management’s Discussion and Analysis of Operations are an integral
part of these consolidated financial statements.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Years Ended December 31
Note
2024
2023
Cash flows from (for):
Operating Activities
Net income
$
77,586 $
77,498
Adjustments to determine cash flows relating to operating activities:
Provision for (recovery of) income taxes
(1,094)
759
Equity income from MCAP Commercial LP
9
(28,803)
(22,010)
Gain on dilution of investment in MCAP Commercial LP
9
(680)
(1,048)
Provision for credit losses
22
3,258
4,494
Net loss on securities
7,384
3,622
Amortization of cash flow hedges net losses (gains)
226
(112)
Amortization of securitized mortgage and liability transaction costs
10,097
9,132
Amortization of other assets
1,034
640
Changes in operating assets and liabilities:
Marketable securities
(15,224)
210
Corporate and securitized mortgages
(549,009)
(663,654)
Non-marketable securities
(15,671)
(13,125)
Derivative financial instruments
(4,260)
198
Other assets
(8,776)
(13,900)
Cash held in trust
(16,340)
3,622
Term deposits
88,124
380,272
Financial liabilities from securitization
502,849
172,516
Current taxes payable
—
(30)
Other liabilities
3,072
1,321
Cash flows from (for) operating activities
53,773
(59,595)
Investing Activities
Distributions from MCAP Commercial LP
9
18,585
17,859
Acquisition of capital and intangible assets
(4,800)
(669)
Cash flows from investing activities
13,785
17,190
Financing Activities
Proceeds from issuance of common shares, net of share issuance costs
34,109
2,085
Net change in demand loans
(64,576)
58,151
Increase (decrease) in premises lease liability
6,548
(369)
Dividends paid
(42,281)
(35,327)
Cash flows from (for) financing activities
(66,200)
24,540
Increase (decrease) in cash and cash equivalents
1,358
(17,865)
Cash and cash equivalents, beginning of year
60,345
78,210
Cash and cash equivalents, end of year
$
61,703 $
60,345
Supplementary Information
Interest received
$
265,745 $
219,233
Interest paid
158,788
125,366
Distributions received from securities
10,823
12,397
The accompanying notes and shaded areas of the “Risk Factors” section of Management’s Discussion and Analysis of Operations are an integral
part of these consolidated financial statements.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note
1.
Corporate Information ...............................................................................................................................
77
2.
Basis of Preparation ...................................................................................................................................
77
3.
Basis of Consolidation ................................................................................................................................
77
4.
Material Accounting Policy Information ....................................................................................................
78
5.
Summary of Significant Accounting Judgments and Estimates .................................................................
84
6.
Marketable Securities ................................................................................................................................
85
7.
Mortgages - Corporate ..............................................................................................................................
86
8.
Non-Marketable Securities ........................................................................................................................
94
9.
Equity Investment in MCAP Commercial LP ..............................................................................................
95
10.
Other Assets ...............................................................................................................................................
96
11.
Securitization Activities .............................................................................................................................
96
12.
Mortgages - Securitized .............................................................................................................................
97
13.
Derivative Financial Instruments ...............................................................................................................
99
14.
Term Deposits ............................................................................................................................................
100
15.
Income Taxes .............................................................................................................................................
101
16.
Other Liabilities ..........................................................................................................................................
101
17.
Financial Liabilities from Securitization .....................................................................................................
102
18.
Share Capital ..............................................................................................................................................
102
19.
Dividends ...................................................................................................................................................
102
20.
Net loss on securities .................................................................................................................................
103
21.
Mortgage Expenses ...................................................................................................................................
103
22.
Provision for (Recovery of) Credit Losses ..................................................................................................
103
23.
Related Party Disclosures ..........................................................................................................................
103
24.
Credit Facilities ...........................................................................................................................................
105
25.
Capital Management .................................................................................................................................
106
26.
Financial Instruments ................................................................................................................................
108
27.
Commitments and Contingencies..............................................................................................................
110
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
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1. Corporate Information
MCAN Mortgage Corporation doing business as (“d/b/a”) MCAN Financial Group (the “Company” or “MCAN”) is a Loan
Company under the Trust and Loan Companies Act (Canada) (the “Trust Act”) and a Mortgage Investment Corporation
(“MIC”) under the Income Tax Act (Canada) (the “Tax Act”). As a Loan Company under the Trust Act, the Company is
subject to the guidelines and regulations set by the Office of the Superintendent of Financial Institutions Canada (“OSFI”).
MCAN is incorporated in Canada with its head office located at 200 King Street West, Suite 700, Toronto, Ontario, Canada.
MCAN is a public company listed on the Toronto Stock Exchange under the symbol MKP.
MCAN’s objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages,
including residential, residential construction, non-residential construction and commercial loans, as well as other types of
securities, loans and real estate investments, including our investment in MCAP Commercial LP (“MCAP”). MCAN issues
term deposits that are eligible for Canada Deposit Insurance Corporation deposit insurance and are sourced through a
network of independent financial agents. The Company manages its capital and asset balances based on the regulations
and limits of both the Tax Act and OSFI.
MCAN’s wholly owned subsidiary, MCAN Home Mortgage Corporation, is an originator of residential mortgage products
across Canada.
The consolidated financial statements were approved in accordance with a resolution of the Board of Directors (the
“Board”) on February 24, 2025.
2.
Basis of Preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The consolidated financial statements have been prepared on a historical cost basis, except for certain items carried at fair
value as discussed in Note 4. The consolidated financial statements are presented in Canadian dollars.
The disclosures that accompany the consolidated financial statements include the material accounting policy information
applied (Note 4) and the significant accounting judgments and estimates (Note 5) applicable to the preparation of the
consolidated financial statements. Certain disclosures are included in the shaded sections of the “Risk Factors” section of
Management’s Discussion and Analysis of Operations (the “MD&A”), as permitted by IFRS, and form an integral part of the
consolidated financial statements.
The Company separates its assets into its corporate and securitization portfolios for reporting purposes. Corporate assets
are funded by term deposits and share capital. Securitization assets consist primarily of mortgages that have been
securitized through the National Housing Act (“NHA”) Mortgage-Backed Securities (“MBS”) program and subsequently sold
to third parties in transactions that do not achieve derecognition of the mortgages. These assets are funded by the cash
received from the sale of the associated securities, from which the Company records a financial liability from securitization.
3.
Basis of Consolidation
The consolidated financial statements include the balances of MCAN and its wholly owned subsidiaries, after the
elimination of intercompany transactions and balances. The Company consolidates those entities that it controls. The
Company has control when it is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are
prepared for the same reporting period as the Company, using consistent accounting policies.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
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4.
Material Accounting Policy Information
The following are the material accounting policies applied by the Company in the preparation of its consolidated financial
statements.
(1) Accounting for financial instruments under IFRS 9, Financial Instruments (“IFRS 9”)
Classification and measurement
All financial instruments are measured initially at their fair value plus, in the case of financial instruments not subsequently
recorded at fair value through the consolidated statements of income, directly attributable transaction costs. To determine
their classification and measurement category, IFRS 9 requires all financial assets to be assessed based on a combination of
the entity’s business model for managing the assets and the instruments’ contractual cash flow characteristics.
All financial assets and liabilities are initially recognized on the trade date, which is the date that the Company becomes a
party to the contractual provisions of the instrument.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset
or financial liability. Transaction costs are capitalized and amortized over the expected life of the instrument using the
effective interest rate method (“EIM”), except for transaction costs that are related to financial assets or financial liabilities
at fair value through profit or loss (“FVPL”), which are expensed.
a.
Debt instruments at amortized cost
The Company only measures debt instruments at amortized cost if both of the following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows.
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest (“SPPI”) on the principal amount outstanding.
Business model assessment
The Company determines its business model at the level that best reflects how it manages groups of financial assets
to achieve its business objective. The business model is not assessed on an instrument-by-instrument basis, but at a
higher level of aggregated portfolios and is based on observable factors such as:
•
How the performance of the business model and the financial assets held within that business model are
evaluated and reported to the Company’s key management personnel;
•
The risks that affect the performance of the business model (and the financial assets held within that business
model) and, in particular, the way those risks are managed;
•
How managers of the business are compensated (for example, whether the compensation is based on the fair
value of the assets managed or on the contractual cash flows collected); and
•
The expected frequency, value and timing of sales.
The SPPI test
As a second step of its classification process, the Company assesses the contractual terms of financial instruments to
identify whether they meet the SPPI test.
“Principal” for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may
change over the life of the financial asset (for example, if there are repayments of principal or amortization of the
premium/discount).
In contrast, contractual terms that introduce more than a minimal exposure to risks or volatility in the contractual
cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are SPPI
on the principal amount outstanding. In such cases, the financial asset is required to be measured at FVPL.
Debt instruments at amortized cost include all corporate and securitized mortgages, and Government of Canada
bonds held by the Company.
b.
Financial assets at FVPL
Financial assets in this category are those that are not held for trading purposes and have been either designated by
management upon initial recognition or are mandatorily required to be measured at fair value under IFRS 9.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
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Financial assets at FVPL are recorded in the consolidated balance sheets at fair value. Changes in fair value are
recorded in profit and loss. Interest earned on instruments designated at FVPL is accrued in interest income. Interest
earned on assets mandatorily required to be measured at FVPL is recorded using contractual interest rates. Dividend
income from equity instruments measured at FVPL is recorded in profit and loss when the right to the payment has
been established.
Financial assets at FVPL include all marketable and non-marketable securities held by the Company.
c.
Financial liabilities
After initial recognition, interest-bearing financial liabilities other than those classified at FVPL are subsequently
measured at amortized cost using the EIM. Amortized cost is calculated by taking into account any discount or
premium, fees or other costs using the EIM. The amortization is included in the related line in the consolidated
statements of income. Unamortized premiums and discounts are recognized in the consolidated statements of
income upon extinguishment of the liability.
Financial liabilities include all term deposits and financial liabilities from securitization held by the Company.
Impairment
IFRS 9 requires the Company to record an allowance for expected credit loss (“ECL”) for all mortgages and other debt
financial assets not held at FVPL, together with mortgage commitments and financial guarantee contracts not measured at
FVPL.
Overview of ECL principles
The ECL allowance is based on the 12-month ECL of the asset, unless there has been a significant increase in credit risk
(“SICR”) since origination in which case the allowance is based on the lifetime ECL.
The Company groups its financial assets into stage 1, stage 2 and stage 3, as described below:
•
Stage 1: When mortgages are first recognized, the Company recognizes an allowance based on 12-month ECLs,
which represent the portion of ECLs that would occur over the life of the mortgage related to default events that
are possible to occur within 12 months after the reporting date. Stage 1 mortgages also include facilities
reclassified from stage 2 or stage 3 where the credit risk has subsequently improved such that the increase in
credit risk since initial recognition is no longer significant.
•
Stage 2: When a mortgage has shown a SICR since origination, the Company records an allowance for the ECLs
that result from all possible default events over the expected life of the asset. Stage 2 mortgages also include
facilities reclassified from stage 3 where the credit risk has improved or the facility is no longer credit-impaired.
•
Stage 3: The Company records an allowance for the lifetime ECLs for mortgages considered to be credit-impaired
(as outlined below in “Definition of default and cure”).
Both lifetime ECLs and 12-month ECLs are calculated on either an individual basis or a collective basis, depending on the
nature of the underlying portfolio of financial instruments.
Significant increase in credit risk (“SICR”)
The Company has established a policy to assess, at the end of each reporting period, whether a financial instrument’s
credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over
the remaining life of the financial instrument. The primary indicators of SICR are relative changes in credit scores for
residential mortgages and changes in internal risk ratings for construction and commercial mortgages. The Company may
also apply a secondary qualitative method for identifying a SICR, such as changes in macroeconomic circumstances or the
application of management’s judgment. In certain cases, the Company may also consider that certain events are a SICR as
opposed to a default. For a definition of default and cure, refer to the “Definition of default and cure” sub-section of this
note. IFRS 9 provides a rebuttable presumption that a SICR has occurred if contractual payments are more than 30 days
past due. The Company has not rebutted this presumption.
Calculation of ECLs
The Company calculates ECLs based on three probability-weighted scenarios to measure the expected cash shortfalls,
discounted at an approximation to the effective interest rate. The cash shortfall is the difference between the cash flows
that are due to the Company in accordance with the contract and the cash flows that the Company expects to receive if
the borrower defaults.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
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The mechanics of the ECL calculations are outlined below and the key elements are as follows:
•
PD: The Probability of Default (“PD”) is an estimate of the likelihood of default over a given time horizon. Default
is only assessed if the facility has not been previously derecognized and is still in the portfolio. The PD model
comprises forward-looking macroeconomic projections and internal risk rating-based segmentation.
•
LGD: The Loss Given Default (“LGD”) is an estimate of the loss arising in the case where a default occurs. It is
based on the difference between the contractual cash flows due and those that the lender would expect to
receive in the event of default, including from the realization of any collateral.
•
EAD: The Exposure at Default (“EAD”) is an estimate of the exposure at a future default date at the borrower
level, taking into account expected changes in the exposure after the reporting date, including advances and
repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on
committed facilities, and accrued interest from missed payments.
The ECLs are calculated through three probability-weighted forward-looking scenarios (base, favourable and
unfavourable). Each of these is associated with different PDs, EADs and LGDs. The assessment of multiple scenarios also
incorporates how defaulted mortgages are expected to be recovered, including the probability that the mortgages will
cure and the value of collateral or the amount that might be received from selling the asset. Outcomes under the
favourable and unfavourable scenarios are generated based on management judgment, looking at the likelihood of a range
of macroeconomic variables. A cross-functional internal management committee reviews the proposed probability
weights assigned to each of the three scenarios. The above committee applies judgment to adjust the weights when
changes are noted in relevant macroeconomic variables.
The maximum period for which the credit losses are determined is the contractual life of a financial instrument unless the
Company has the legal right to call the instrument earlier.
Mortgage commitments and letters of credit
Undrawn mortgage commitments and letters of credit are commitments under which, over the duration of the
commitment, the Company is required to advance funds to the borrower. These contracts are in the scope of the ECL
requirements. The contractual value of letters of credit and undrawn mortgage commitments, where the mortgage agreed
to be provided is on market terms, are not recorded in the consolidated balance sheets. When estimating lifetime ECLs for
undrawn mortgage commitments, the Company estimates the portion of the mortgage commitment that will be drawn
down over its expected life.
Definition of default and cure
The Company considers a financial instrument defaulted and therefore stage 3 (credit-impaired) for ECL calculations in all
cases when the borrower becomes 90 days past due on its contractual payments. In certain other cases, where qualitative
thresholds indicate unlikeliness to pay as a result of a credit event, the Company carefully considers whether the event
should result in an assessment at stage 2 or stage 3 for ECL calculations.
The combined impact of several events may cause financial assets to become defaulted as opposed to one discrete event.
It is the Company’s policy to consider a financial instrument as “cured” and, therefore, reclassified out of stage 3 when
none of the default criteria remain present at the end of each quarter. The decision whether to classify an asset as stage 1
or stage 2 once cured depends on the current assessment of SICR.
Forward-looking information
In its ECL models, the Company relies on a broad range of forward-looking information as macroeconomic variables, such
as but not limited to:
•
House price indices
•
Unemployment rates
•
Gross domestic product
•
Interest rates
The macroeconomic variables and models used for calculating ECLs may not always capture all characteristics of the
market at the dates of the consolidated financial statements. To reflect this, the Company may make temporary qualitative
adjustments or overlays using expert credit judgment.
Modified financial assets
In a case where the borrower experiences financial difficulties, the Company may grant certain concessionary
modifications to the terms and conditions of a mortgage. If the Company determines that a modification results in an
expiry of cash flows, the original financial asset is derecognized while a new asset is recognized based on the new
contractual terms. SICR is assessed relative to the risk of default on the date of modification. If the Company determines
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
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that a modification does not result in derecognition, SICR is assessed based on the risk of default at initial recognition of
the original asset. Expected cash flows arising from the modified contractual terms are considered when calculating the
ECL for the modified asset. For mortgages that have been modified while having a lifetime ECL, the mortgages can revert to
having a 12-month ECL after a period of performance and improvement in the borrower’s financial condition.
Write-offs
Financial assets are written off either partially or in their entirety only when the Company believes that there are no
reasonably expected future recoveries. If the amount to be written off is greater than the accumulated loss allowance, the
difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any
subsequent recoveries are credited to provisions for losses.
Hedge accounting
The Company makes use of bond forwards and interest rate swaps to manage interest rate exposures. In order to manage
particular risks, the Company applies hedge accounting for transactions that meet specified criteria. If derivative
instruments do not meet all of the criteria for hedge accounting, the changes in fair value of such derivatives are
recognized in non-interest income.
In order to qualify for hedge accounting, a hedge relationship must be designated and formally documented in accordance
with IFRS 9. The Company’s documentation, in accordance with these requirements, includes a specific risk management
objective and strategy being applied, the specific cash flow or fair value being hedged and how hedge effectiveness is
assessed. To qualify for hedge accounting, there must be a correlation between the changes in the cash flows or fair value
between the hedged and hedging item.
Hedge effectiveness is assessed at the inception of the hedging relationship and on an ongoing basis. Hedge
ineffectiveness occurs when the changes in cash flows or fair value of the hedging item differ from the cash flows or fair
value changes in the hedged risk in the hedged item.
Cash flow hedges
The Company’s cash flow hedges use bond forwards to hedge changes in future cash flows attributable to interest rate
fluctuations arising in highly probable forecasted issuances of fixed-rate liabilities. The effective portion of the change in
fair value of the bond forward is recognized in other comprehensive income (loss) (“OCI”) until the forecasted cash flows
being hedged are recognized in income in future accounting periods. When the forecasted cash flows are recognized in
income, the cash flow hedge reserve related to those cash flows is reclassified from OCI to income. Hedge ineffectiveness
is recognized immediately in net gain (loss) on securities.
If the hedging instrument expires, or is settled or sold, or if the hedge no longer meets the criteria for hedge accounting
under IFRS 9, the hedge relationship is terminated. Any cumulative gain or loss recognized at the time remains in OCI until
the forecasted transaction impacts the consolidated statements of income. When the forecasted transaction is no longer
expected to occur, the cumulative gain or loss that was recognized in OCI is immediately recognized in non-interest
income.
Fair value hedges
The Company’s fair value hedges use interest rate swaps to hedge changes in fair value of fixed-rate term deposits, which
are impacted by changes in market interest rates. The fair value of the interest rate swap and the change in fair value of
the pool of term deposits are recorded as part of the change in their carrying value and in term deposit interest and
expenses.
If the hedging instrument expires, or is settled or sold, or if the hedge no longer meets the criteria for hedge accounting
under IFRS 9, the hedge relationship is terminated. Any fair value adjustment on the pool of term deposits is amortized
over their remaining term. If the term deposits are settled before their remaining term, the unamortized fair value
adjustment is recognized immediately in net gain (loss) on securities.
(2) Determination of fair value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Financial assets and liabilities are classified into three
levels, as follows: quoted prices in an active market (Level 1), fair value based on directly or indirectly observable inputs
other than quoted prices (Level 2) and fair value based on inputs that are not based on observable data (Level 3).
For non-marketable securities, fair value is determined using a variety of approaches including independent appraisals,
recent transactions and incremental investments in the funds. The Company considers various factors in the determination
of fair value including, but not limited to, recent appraisals, the status of underlying construction project and recent capital
calls. Judgment is applied in the determination of the appropriate valuation approach, depending on the nature of the
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
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investment. On a quarterly basis, the Company reviews the fair value of the investments in conjunction with reports
produced by the fund administrators, recent development activity and any other market-driven triggers.
For all other financial instruments where the fair values of financial assets and financial liabilities recorded in the
consolidated financial statements cannot be derived from active markets, they are determined using a variety of
appropriate valuation techniques that may include discounted cash flow method, comparison to similar instruments for
which market observable prices may exist and other relevant valuation models. The inputs are derived from observable
market data where possible, but where observable market data is not available, estimates are required to establish fair
values. These estimates include considerations of liquidity and model inputs such as discount rates, prepayment rates and
default rate assumptions for certain investments.
Changes in fair value are recognized in net gain (loss) on securities in the consolidated statements of income.
(3) Derecognition of financial assets and financial liabilities
(i)
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognized when:
•
The rights to receive cash flows from the asset have expired; or
•
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a qualifying “pass-through”
arrangement; and either:
•
The Company has transferred substantially all the risks and rewards of ownership of the financial
asset, or
•
The Company has neither transferred nor retained substantially all the risks and rewards of
ownership of the financial asset, but has transferred control of the financial asset.
When substantially all the risks and rewards of ownership of the financial asset have been transferred, the Company
will derecognize the financial asset and recognize separately as assets or liabilities any rights and obligations created
or retained in the transfer. When substantially all the risks and rewards of ownership of the financial asset have been
retained, the Company continues to recognize the financial asset and also recognizes a financial liability for the
consideration received. In these circumstances, certain transaction costs incurred are also capitalized and amortized
using the EIM. When the Company has neither transferred nor retained substantially all the risks and rewards of
ownership of the financial asset nor transferred control of the financial asset, the financial asset is recognized to the
extent of the Company’s continuing involvement in the financial asset. In that case, the Company also recognizes an
associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that
the Company has retained.
(ii) Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. Where
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in the consolidated statements of income.
Realized gains and losses from the derecognition of financial assets and financial liabilities are recognized in net gain (loss)
on securities in the consolidated statements of income.
(4) Taxes
As a MIC under the Tax Act, the Company is able to deduct from income for tax purposes dividends paid within 90 days of
year-end. The Company intends to maintain its status as a MIC and intends to pay sufficient dividends to ensure that it is
not subject to income taxes in the MIC entity on a non-consolidated basis. Accordingly, the Company does not record a
provision for current or deferred taxes within the MIC entity; however, provisions are recorded as applicable in all
subsidiaries of MCAN.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 82 -
(i)
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at
the consolidated financial statement dates.
(ii) Deferred tax
The Company follows the asset and liability method of accounting for income taxes, whereby deferred tax assets and
liabilities are recognized for the expected future tax impact of temporary differences between the carrying amounts of
certain assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
or substantively enacted tax rates applicable to taxable income in the period in which those temporary differences are
expected to be recovered or settled. Deferred tax assets are only recognized for deductible temporary differences and the
carry forward of unused tax losses to the extent that it is probable that taxable income will be available and the carry
forward of unused tax losses can be used.
(5)
Dividends on common shares
Dividends on common shares are deducted from shareholders’ equity at the time that they are declared. Dividends that
are approved after the consolidated financial statement date are not recognized as a liability in the consolidated financial
statements but are disclosed as a subsequent event.
(6)
Investment in associate
The Company’s investment in MCAP is accounted for using the equity method. An associate is an entity over which the
Company has significant influence.
Under the equity method, the investment in the associate is carried on the consolidated balance sheets at cost plus post-
acquisition changes in the Company’s share of net assets of the associate.
The consolidated statements of income reflect the Company’s proportionate share of the results of operations of the
associate. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated
to the extent of the interest in the associate.
The most recent available financial statements of the associate are used by the Company in applying the equity method.
When the financial statements of an associate used in applying the equity method are prepared as of a different date from
that of the Company, adjustments are made for the effects of significant transactions or events that occur between that
date and the date of the Company’s consolidated financial statements.
Where necessary, adjustments are made to harmonize the accounting policies of the associate with those of the Company.
The Company determines at each consolidated financial statement date whether there is any objective evidence that the
investment in the associate is impaired. The Company calculates the amount of impairment as the difference between the
recoverable amount of the investment in the associate and its carrying value, and recognizes the amount in the
consolidated statements of income, thus reducing the carrying value by the amount of impairment.
(7)
Revenue recognition
Interest income or expense
For all financial assets measured at amortized cost and interest-bearing financial assets measured at FVPL under IFRS 9,
interest income or expense is accrued in interest income or expense. The calculation takes into account the contractual
interest rate, along with any fees or incremental costs that are directly attributable to the instrument and all other
premiums or discounts. Interest income or expense is included in the appropriate component of the consolidated
statements of income.
Revenue from contracts with customers
Revenue from contracts with customers is recognized at an amount that reflects the consideration that the Company
expects to receive in exchange for transferring goods or services to a customer.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 83 -
(8)
Cash and cash equivalents
Cash and cash equivalents (including cash held in trust) on the consolidated balance sheets comprise cash held at banks
and short-term deposits with original maturity dates of less than 90 days.
(9)
Share-based compensation payment transactions
The cost of cash-settled transactions is measured initially at fair value at the grant date. The obligations are accrued over
the vesting period and adjusted for fluctuations in the market price of the Company’s common shares. Changes in the
obligations are recorded as salaries and benefits in the consolidated statements of income with a corresponding change to
other liabilities. The liability is remeasured at fair value at each consolidated financial statement date up to and including
the settlement date.
(10) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are
shown in equity as a deduction, net of tax, from the proceeds.
(11) Provisions
Provisions for legal claims are recognized when (a) the Company has a present legal or constructive obligation as a result of
past events; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) the amount has
been reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is included in interest expense.
(12) Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. Right-of-use assets and lease liabilities are recognized at the lease commencement
date, that is, on the date when the underlying asset is available for use by the Company. The Company’s right-of-use asset
relating to its premises lease does not meet the definition of investment property.
Right-of-use assets are initially and subsequently measured at cost and depreciated over the shorter of the asset’s useful
life and the lease term, on a straight-line basis. The right-of-use assets are remeasured in the event of impairment in
accordance with IAS 36, Impairment of Assets.
Lease liabilities are initially and subsequently measured at the present value of the lease payments, which are unpaid as of
the commencement date. The future lease payments are discounted using the interest rate implicit in the lease, if readily
determinable. If not readily determinable, the Company’s incremental borrowing rate is used, which is the rate to borrow
over a similar term and with similar security, the funds necessary to obtain an asset of similar value to the right-of-use
asset. After the commencement date, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an
index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the
underlying asset. Adjustments to the carrying amount of the lease obligation as a result of remeasurement are accounted
for as a corresponding adjustment to the right-of-use asset.
5.
Summary of Significant Accounting Judgments and Estimates
The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the carrying amount of the affected assets or liabilities in
future periods.
Significant influence
Significant influence represents the power to participate in the financial and operating policy decisions of an investee but
does not represent control or joint control over the entity. In determining whether it has significant influence over an
entity, the Company makes certain judgments to form the basis for the Company’s policies in accounting for its equity
investments. Although MCAN’s voting interest in MCAP was less than 20% at December 31, 2024, MCAN uses the equity
basis of accounting for the investment as it has significant influence in MCAP per IAS 28, Investments in Associates and
Joint Ventures, as a result of its entitlement to a position on MCAP’s Board of Directors.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 84 -
Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded in the consolidated financial statements cannot be
derived from active markets, they are determined using a variety of valuation techniques that may include the use of:
•
Mathematical models - the inputs to mathematical models are derived from observable market data where
possible, but where observable market data is not available, estimates are required to establish fair values.
These estimates include considerations of liquidity and model inputs such as discount rates, prepayment rates
and default rate assumptions for certain investments.
•
Market approach - the inputs include the use of recently observable market transactions and appraisals.
•
Cost approach - for new property developments, the inputs include the cost of the land and construction costs.
Impairment of financial assets
The measurement of impairment losses under IFRS 9 across all categories of financial assets requires judgment, in
particular, the estimation of the amount and timing of future cash flows and collateral values when determining
impairment losses. These estimates are driven by a number of factors, changes in which can result in different levels of
allowances.
The Company’s ECL calculations are model outputs with a number of underlying assumptions regarding the choice of
variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and
estimates include:
•
The Company’s criteria for assessing if there has been a SICR that results in allowances being measured on a
lifetime versus 12-month ECL basis;
•
The segmentation of financial assets for the purposes of assessing ECL on a collective basis;
•
Development of ECL models, including the various formulas and the choice of inputs;
•
Determination of associations between macroeconomic scenarios and economic inputs, such as unemployment
levels and collateral values, and the effect on PD, EAD and LGD; and
•
Forward-looking information used as economic inputs.
The Company may also make qualitative adjustments or overlays using expert credit judgment in the calculations of ECLs,
which represent accounting judgments and estimates which have been heightened due to the current inflationary and
rising interest rate environment. Key judgments and estimates, including around probability weights to assign to each
scenario and the impacts of government policy and stimulus measures, will be heavily influenced by the extent and
severity of these events. These judgments have been made with reference to the facts, projections and other
circumstances at the consolidated balance sheet dates. IFRS 9 does not permit the use of hindsight in measuring provisions
for credit losses. Any new forward-looking information subsequent to the consolidated balance sheet dates are reflected in
the measurement of provisions for credit losses in future periods, as appropriate.
Mortgage prepayment rates
In calculating the rate at which borrowers prepay their mortgages, the Company makes estimates based on its historical
experience. These assumptions impact the timing of revenue recognition and the amortization of mortgage premiums
using the EIM.
6. Marketable Securities
At December 31
2024
2023
Real estate investment trusts
$
51,331 $
50,320
Government of Canada bonds
15,014
—
$
66,345 $
50,320
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 85 -
7. Mortgages - Corporate
(a) Summary
Gross
Allowance
Net
At December 31, 2024
Principal
Stage 1
Stage 2
Stage 3
Total
Principal
Corporate Portfolio:
Residential mortgages
Insured
$
126,528 $
— $
— $
— $
— $
126,528
Uninsured
1,117,095
1,149
1,314
1,260
3,723 1,113,372
Uninsured - completed inventory
120,410
982
—
—
982
119,428
Construction loans
1,096,023
3,770
—
4,692
8,462 1,087,561
Commercial loans
Multi-family residential
17,237
10
25
—
35
17,202
$ 2,477,293 $
5,911 $
1,339 $
5,952 $
13,202 $ 2,464,091
Gross
Allowance
Net
At December 31, 2023
Principal
Stage 1
Stage 2
Stage 3
Total
Principal
Corporate Portfolio:
Residential mortgages
Insured
$
276,685 $
— $
— $
— $
— $
276,685
Uninsured
969,256
885
1,267
378
2,530
966,726
Uninsured - completed inventory
54,714
336
11
—
347
54,367
Construction loans
1,052,572
5,210
—
1,594
6,804 1,045,768
Commercial loans
Multi-family residential
70,345
201
41
—
242
70,103
Other commercial
1,208
2
—
—
2
1,206
$ 2,424,780 $
6,634 $
1,319 $
1,972 $
9,925 $ 2,414,855
Gross principal as presented in the tables above includes unamortized capitalized transaction costs and accrued interest.
Uninsured - completed inventory loans are extended to developers to provide interim mortgage financing on residential
units (condominium or freehold) that are completed or close to completion. Qualification criteria for the completed
inventory classification include no substantial remaining construction risk, commencement of occupancy permits, potential
sale and closing with a purchaser within three to four months or units near completion.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 86 -
(b) Mortgages by risk rating
The Company’s internal risk rating system involves judgment and combines multiple factors to arrive at a borrower-specific
score to assess the borrower’s probability of default and ultimately classify the mortgage into one of the categories listed
below. For residential mortgages, these factors include, but are not limited to, the loan to value ratio, the borrower’s
ability to service debt, property location and credit score. For construction, commercial and uninsured completed
inventory loans, these factors include, but are not limited to, borrower net worth, project presales, experience with the
borrower, project location, debt serviceability and loan to value ratio.
The internal risk ratings presented below are defined as follows:
•
Insured Performing: Mortgages that are insured by a federally regulated mortgage insurer that are not in arrears
or default.
•
Very Low/Low: Mortgages that have below average probability of default with credit risk that is lower than the
Company’s risk appetite and risk tolerance levels.
•
Normal/Moderate: Mortgages that have a standard probability of default with credit risk that is within the
Company’s risk appetite and risk tolerance levels.
•
High/Higher: Mortgages that may have a higher probability of default but are within the Company’s risk
appetite or have subsequently experienced an increase in credit risk. The proportion of mortgages originated in
this category is managed to the Company’s overall risk appetite and tolerance levels.
•
Monitored/Arrears: For residential mortgages, mortgages that are past due but less than 90 days in arrears or
mortgages for which an escalated concern has arisen. For construction, commercial and uninsured completed
inventory loans, mortgages where the performance trend is negative or where debt serviceability may be in
jeopardy.
•
Impaired/Default: Mortgages that are over 90 days past due or mortgages for which there is objective evidence
of impairment.
The table below shows the credit quality of the Company’s corporate mortgage portfolio based on the Company’s internal
risk rating system and stage classification. The Company’s policy that outlines whether ECLs are calculated on an impaired
or performing basis are set out in Note 4.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 87 -
At December 31
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Residential mortgages
Insured
Insured performing
$ 118,211 $
6,156 $
— $ 124,367 $ 264,514 $
11,358 $
— $ 275,872
Monitored/Arrears
—
1,355
—
1,355
—
214
—
214
Impaired/Default
—
—
806
806
—
—
599
599
118,211
7,511
806
126,528
264,514
11,572
599
276,685
Uninsured
Very low/Low
270,185
53,204
—
323,389
328,323
55,912
—
384,235
Normal/Moderate
516,730 108,522
—
625,252
399,425
83,046
—
482,471
High/Higher
94,739
21,104
—
115,843
48,493
11,757
—
60,250
Monitored/Arrears
10,193
24,275
—
34,468
—
33,799
—
33,799
Impaired/Default
—
—
14,420
14,420
—
—
5,971
5,971
891,847 207,105
14,420 1,113,372
776,241
184,514
5,971
966,726
Uninsured - completed inventory
Normal/Moderate
4,012
—
—
4,012
—
—
—
—
High/Higher
115,416
—
—
115,416
52,146
—
—
52,146
Monitored/Arrears
—
—
—
—
—
2,221
—
2,221
119,428
—
—
119,428
52,146
2,221
—
54,367
Construction loans
Normal/Moderate
12,889
—
—
12,889
—
—
—
—
High/Higher
1,029,353
—
— 1,029,353
967,595
—
—
967,595
Monitored/Arrears
—
—
—
—
—
5,967
—
5,967
Impaired/Default
—
—
45,319
45,319
—
—
72,206
72,206
1,042,242
—
45,319 1,087,561
967,595
5,967
72,206 1,045,768
Commercial loans
Multi-family residential
High/Higher
5,008
12,194
—
17,202
30,305
39,798
—
70,103
5,008
12,194
—
17,202
30,305
39,798
—
70,103
Other
Normal/Moderate
—
—
—
—
1,206
—
—
1,206
—
—
—
—
1,206
—
—
1,206
$ 2,176,736 $ 226,810 $ 60,545 $ 2,464,091 $ 2,092,007 $ 244,072 $ 78,776 $ 2,414,855
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 88 -
(c) Mortgage allowances
Years Ended December 31
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Residential mortgages
Insured
Allowance, beginning of year
$
— $
— $
— $
— $
— $
— $
— $
—
Total provision
—
—
—
—
—
—
—
—
Allowance, end of year
—
—
—
—
—
—
—
—
Uninsured
Allowance, beginning of year
885
1,267
378
2,530
514
642
49
1,205
Transfer to stage 1 3
(1,721)
1,721
—
—
(1,242)
1,242
—
—
Transfer to stage 2 3
693
(1,354)
661
—
341
(565)
224
—
Transfer to stage 3 3
1
160
(161)
—
—
2
(2)
—
Net remeasurement of allowance 1
141
(321)
1,148
968
657
56
350
1,063
Originations 4
1,256
—
—
1,256
676
—
—
676
Mortgages derecognized or repaid 2
(106)
(159)
(785)
(1,050)
(61)
(110)
(93)
(264)
Total provision
264
47
863
1,174
371
625
479
1,475
Write-off (recovery)
—
—
19
19
—
—
(150)
(150)
Allowance, end of year
1,149
1,314
1,260
3,723
885
1,267
378
2,530
Uninsured - completed inventory
Allowance, beginning of year
336
11
—
347
200
—
—
200
Transfer to stage 1 3
(11)
11
—
—
(63)
63
—
—
Transfer to stage 2 3
10
(23)
13
—
32
(45)
13
—
Transfer to stage 3 3
—
13
(13)
—
—
—
—
—
Net remeasurement of allowance 1
282
11
—
293
104
(7)
(13)
84
Originations 4
367
—
—
367
172
—
—
172
Mortgages derecognized or repaid 2
(2)
(23)
—
(25)
(109)
—
—
(109)
Total provision (recovery)
646
(11)
—
635
136
11
—
147
Allowance, end of year
982
—
—
982
336
11
—
347
Construction loans
Allowance, beginning of year
5,210
—
1,594
6,804
3,503
180
—
3,683
Transfer to stage 1 3
(902)
902
—
—
(1,902)
1,902
—
—
Transfer to stage 2 3
429
(451)
22
—
1,873
(1,995)
122
—
Net remeasurement of allowance 1
(1,016)
(8)
3,076
2,052
1,948
88
1,472
3,508
Originations 4
1,384
—
—
1,384
685
—
—
685
Mortgages derecognized or repaid 2
(1,335)
(443)
—
(1,778)
(897)
(175)
—
(1,072)
Total provision (recovery)
(1,440)
—
3,098
1,658
1,707
(180)
1,594
3,121
Allowance, end of year
$
3,770 $
— $
4,692 $
8,462 $
5,210 $
— $
1,594 $
6,804
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 89 -
Years Ended December 31
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Commercial loans
Multi-family residential
Allowance, beginning of year
$
201 $
41 $
— $
242 $
348 $
129 $
— $
477
Transfer to stage 1 3
—
—
—
—
(12)
12
—
—
Net remeasurement of allowance 1
(37)
66
—
29
(18)
(100)
—
(118)
Mortgages derecognized or repaid 2
(154)
(82)
—
(236)
(117)
—
—
(117)
Total provision (recovery)
(191)
(16)
—
(207)
(147)
(88)
—
(235)
Allowance, end of year
10
25
—
35
201
41
—
242
Other
Allowance, beginning of year
2
—
—
2
8
25
—
33
Transfer to stage 2 3
—
—
—
—
—
(25)
25
—
Transfer to stage 3 3
—
—
—
—
—
225
(225)
—
Net remeasurement of allowance 1
—
—
—
—
(6)
—
200
194
Mortgages derecognized or repaid 2
(2)
—
—
(2)
—
(225)
—
(225)
Total provision (recovery)
(2)
—
—
(2)
(6)
(25)
—
(31)
Allowance, end of year
—
—
—
—
2
—
—
2
Total
Allowance, beginning of year
6,634
1,319
1,972
9,925
4,573
976
49
5,598
Transfer to stage 1 3
(2,634)
2,634
—
—
(3,219)
3,219
—
—
Transfer to stage 2 3
1,132
(1,828)
696
—
2,246
(2,631)
385
—
Transfer to stage 3 3
1
173
(174)
—
—
227
(227)
—
Net remeasurement of allowance 1
(630)
(252)
4,224
3,342
2,685
38
2,009
4,732
Originations 4
3,007
—
—
3,007
1,533
—
—
1,533
Mortgages derecognized or repaid 2
(1,599)
(707)
(785)
(3,091)
(1,184)
(510)
(94)
(1,788)
Total provision (recovery)
(723)
20
3,961
3,258
2,061
343
2,073
4,477
Write-off (recovery)
—
—
19
19
—
—
(150)
(150)
Allowance, end of year
$
5,911 $
1,339 $
5,952 $ 13,202 $
6,634 $
1,319 $
1,972 $
9,925
1 Represents the change in the allowance related to changes in model parameters, inputs, and assumptions. This includes remeasurement between 12-month and lifetime ECLs following
stage transfers, changes to forward-looking macroeconomic conditions, changes in the level of risk, and changes to other parameters used in the ECL model.
2 Reflects the decrease in the allowance related to mortgages that were repaid or derecognized during the period.
3 Represents movements between ECL stages and excludes the impact to the allowance of remeasurement between 12-month and lifetime ECLs, and changes in risk.
4 Reflects the increase in allowance related to mortgages newly recognized during the period. This includes mortgages that were newly originated, purchased, or re-recognized following
a modification of terms.
ECLs are calculated through three probability-weighted forward-looking scenarios: base, favourable and unfavourable.
ECLs are sensitive to the macroeconomic variables used in the three forward-looking scenarios and the probability weights
assigned to those forecasts. The macroeconomic variables used in these scenarios are projected over the specified forecast
period and could have a material impact in determining ECLs.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 90 -
The following table represents the average values of the macroeconomic variables used in these forecasts:
At December 31, 2024
Base
Favourable
Unfavourable
Next 12
2 to 5
Next 12
2 to 5
Next 12
2 to 5
Macroeconomic Variables
Months 1
Years 1 Months 1
Years 1 Months 1
Years 1
Housing Price Index (annual change)
Canada
5.29%
3.12%
13.85%
4.14%
3.23 %
2.86%
Greater Toronto Area
4.10%
3.15%
12.59%
4.18%
3.36 %
2.98%
Greater Vancouver Area
2.86%
3.07%
11.28%
4.10%
2.81 %
2.92%
Gross domestic product (annual change)
1.80%
1.62%
2.80%
1.74%
0.80 %
1.49 %
Unemployment rate
6.73%
6.37%
6.23%
6.31%
7.23%
6.43%
Interest rates
Prime rate
4.78%
4.78%
5.28%
4.85%
4.53%
4.75%
At December 31, 2023
Base
Favourable
Unfavourable
Next 12
2 to 5
Next 12
2 to 5
Next 12
2 to 5
Macroeconomic Variables
Months 1
Years 1 Months 1
Years 1 Months 1
Years 1
Housing Price Index (annual change)
Canada
(1.90%)
4.14%
6.23%
5.18%
(3.85) %
3.89%
Greater Toronto Area
(3.10%)
3.94%
4.95%
4.82%
(4.12) %
3.89%
Greater Vancouver Area
(1.33%)
4.00%
6.83%
4.95%
(3.93) %
3.95%
Gross domestic product (annual change)
0.96%
2.26%
1.96%
2.39%
(0.04) %
2.14%
Unemployment rate
6.45%
6.46%
5.95%
6.36%
6.95%
6.55%
Interest rates
Prime rate
6.61%
5.29%
7.11%
5.79%
6.36%
5.04%
1 The numbers represent the average values over the quoted period.
Historical regression methodology is used to relate ECL to key macroeconomic indicators including housing price indices,
gross domestic product, unemployment rate and interest rates. Economic forecasts are determined based on a
combination of external information and internal management judgments and estimates at the reporting date. The current
changing interest rate environment has increased the level of uncertainty with respect to management’s judgments and
estimates including the probability weights assigned to each scenario, the impacts of monetary policy on macroeconomic
indicators and the mortgage portfolio. Since December 31, 2024, forecasts around these uncertainties have continued to
evolve. Any new forward-looking information subsequent to December 31, 2024, will be reflected in the measurement of
provisions for credit losses in future periods, as appropriate. This may add significant variability to provisions for credit
losses in future periods.
The base scenario represents management’s best estimate using all available economic forecasts in light of the changing
interest rate environment. It assumes the unemployment rate will increase before decreasing in the mid to long term.
Gross domestic product will increase in the short term with a lower increase in the mid to long term. Housing prices are
also expected to increase in key markets. The favourable scenario assumes a larger increase in housing prices, lower
unemployment in the short term, and a larger increase to gross domestic product compared to the base scenario. The
unfavourable scenario assumes a more pronounced increase to the unemployment rate, a lower increase in housing prices
and slower gross domestic product growth in the short term followed by a recovery in the mid to long term.
Assuming a 100% base case economic forecast with the incorporation of the impact of the migration of mortgages
between stages, with all other assumptions held constant, the ECL for corporate mortgages at December 31, 2024 would
be approximately $13,219 (December 31, 2023 - $9,243) compared to the reported ECL for corporate mortgages of
$13,202 (December 31, 2023 - $9,925).
Assuming a 100% unfavourable economic forecast with the incorporation of the impact of the migration of mortgages
between stages, with all other assumptions held constant, the ECL for corporate mortgages at December 31, 2024 would
be approximately $14,250 (December 31, 2023 - $10,947) compared to the reported ECL for corporate mortgages of
$13,202 (December 31, 2023 - $9,925).
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 91 -
(d) Mortgage arrears
Mortgages past due but not impaired are as follows:
At December 31, 2024
1 to 30 Days
31 to 60 Days
61 to 90 Days
Total
Residential mortgages
Insured
$
992 $
92 $
271 $
1,355
Uninsured
18,477
8,915
7,076
34,468
$
19,469 $
9,007 $
7,347 $
35,823
At December 31, 2023
1 to 30 Days
31 to 60 Days
61 to 90 Days
Total
Residential mortgages
Insured
$
214 $
— $
— $
214
Uninsured
17,203
10,190
6,406
33,799
$
17,417 $
10,190 $
6,406 $
34,013
Impaired mortgages (net of individual allowances) are as follows:
At December 31, 2024
Residential Mortgages
Construction
Loans
Total
Insured
Uninsured
Ontario
$
— $ 12,481 $
12,441 $
24,922
Alberta
452
—
—
452
British Columbia
—
1,604
32,878
34,482
Atlantic Provinces
59
—
—
59
Other
295
335
—
630
$
806 $ 14,420 $
45,319 $
60,545
At December 31, 2023
Residential Mortgages
Construction
Loans
Total
Insured
Uninsured
Ontario
$
— $
5,384 $
14,315 $
19,699
Alberta
311
138
—
449
British Columbia
—
449
57,891
58,340
Atlantic Provinces
137
—
—
137
Other
151
—
—
151
$
599 $
5,971 $
72,206 $
78,776
At December 31, 2024, the total appraised value of the collateral related to the impaired construction loans is $85,973.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 92 -
(e) Geographic analysis
At December 31, 2024
Residential
Mortgages
Construction
Loans
Commercial
Loans
Total
Ontario
$
1,134,134 $
395,454 $
12,194 $
1,541,782
62.5 %
Alberta
92,996
105,426
—
198,422
8.1 %
British Columbia
107,390
586,681
—
694,071
28.2 %
Quebec
3,906
—
—
3,906
0.2 %
Atlantic Provinces
9,900
—
—
9,900
0.4 %
Other
11,002
—
5,008
16,010
0.6 %
$
1,359,328 $
1,087,561 $
17,202 $
2,464,091
100.0 %
At December 31, 2023
Residential
Mortgages
Construction
Loans
Commercial
Loans
Total
Ontario
$
1,090,528 $
301,776 $
66,337 $
1,458,641
60.4 %
Alberta
79,928
116,888
—
196,816
8.2 %
British Columbia
104,821
627,104
—
731,925
30.3 %
Quebec
3,311
—
—
3,311
0.1 %
Atlantic Provinces
8,711
—
—
8,711
0.4 %
Other
10,479
—
4,972
15,451
0.6 %
$
1,297,778 $
1,045,768 $
71,309 $
2,414,855
100.0 %
(f) Other information
Outstanding commitments for future fundings of mortgages are as follows:
At December 31
2024
2023
Residential mortgages
Insured
$
63,674 $
76,904
Uninsured
31,201
25,332
Uninsured - completed inventory
6,994
2,432
Construction loans
327,996
507,159
Commercial loans
Other
—
203
$
429,865 $
612,030
Of the total outstanding commitments for future fundings, only a portion issued are expected to fund. Accordingly, these
amounts do not necessarily represent future cash requirements of the Company.
The fair value of the corporate mortgage portfolio at December 31, 2024 is $2,483,036 (December 31, 2023 - $2,416,197).
Fair values are calculated on a discounted cash flow basis using the prevailing market rates for similar mortgages.
At December 31, 2024, insured residential mortgages include $46,299 (December 31, 2023 - $125,350) of mortgages that
had been securitized through the market MBS program; however, the underlying MBS security has been retained by the
Company for liquidity purposes.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 93 -
8. Non-Marketable Securities
At December 31
2024
2023
KingSett High Yield Fund
$
56,970 $
54,548
KingSett Senior Mortgage Fund LP
17,326
16,307
Crown Realty V Limited Partnership
9,316
8,413
TAS LP 3
4,273
8,291
Fiera Real Estate Development Fund IV, LP
10,435
6,072
Broccolini Limited Partnership No. 8
1,824
4,534
TAS LP 3 Co-Invest LP
3,289
4,284
Harbour Equity JV Development Fund VI
5,500
3,000
Pearl Group Growth Fund LP
2,823
2,094
TAS Impact Development LP 4
5,672
2,400
$
117,428 $
109,943
KingSett High Yield Fund (“KSHYF”): The Company holds an investment in the KSHYF representing a 5.9% equity interest
(December 31, 2023 - 5.9%). The KSHYF invests in mortgages secured by real estate including mezzanine, subordinate and
bridge mortgages. As mortgage advances are made by the KSHYF, the Company advances its proportionate share. The
KSHYF pays a base distribution of 9% per annum, and distributes any additional income earned on a quarterly basis. At
December 31, 2024, the Company’s total remaining commitment to the KSHYF is $30,127 (December 31, 2023 - $32,694),
consisting of $1,283 available for capital advances for the KSHYF (December 31, 2023 - $3,850) and $28,844 that supports
credit facilities throughout the life of the KSHYF (December 31, 2023 - $28,844).
KingSett Senior Mortgage Fund LP (“KSSMF”): The Company holds an investment in KSSMF representing a 2.2% partnership
interest (December 31, 2023 - 2.1%). At December 31, 2024, the Company’s total remaining commitment is $7,800. The
Company advances its proportionate share as KSSMF invests in a diversified portfolio of mortgage loans secured by
Canadian residential and commercial real estate.
Crown Realty V Limited Partnership (“Crown”): The Company holds an investment in Crown representing a 7.7%
partnership interest (December 31, 2023 - 7.7%). At December 31, 2024, the Company’s total remaining commitment is
$8,791. The Company advances its proportionate share as Crown integrates environmental and social focused initiatives to
acquire, lease, manage and reposition commercial real estate properties across Ontario.
TAS LP 3 (“TAS 3”): The Company holds an investment in TAS 3 representing a 9.7% partnership interest (December 31,
2023 - 9.7%). At December 31, 2024, the Company has a $3,000 revolving promissory note commitment that matures on
June 30, 2025 with $nil remaining available to be drawn. TAS 3 invests in, and develops, residential and mixed use
properties with a focus on assets that drive environmental and social impacts.
Fiera Real Estate Development Fund IV, LP (“Fiera”): The Company holds an investment in Fiera representing an 6.5%
partnership interest (December 31, 2023 - 6.5%). At December 31, 2024, the Company’s total remaining commitment is
$4,929. The Company advances its proportionate share as Fiera develops and re-develops multi-residential, industrial,
office and retail properties, located in growing major Canadian urban markets.
Broccolini Limited Partnership No. 8 (“Broccolini”): The Company holds an investment in Broccolini representing a 5.7%
partnership interest (December 31, 2023 - 5.7%). At December 31, 2024, the Company’s total remaining commitment is
$19,278. The Company advances its proportionate share as Broccolini invests in ground up development of industrial,
residential and mixed-use properties across Canada, with a focus on Ontario and Quebec.
TAS LP 3 Co-Invest LP (“TAS Co”): The Company holds an investment in TAS Co, in which it has a 34.8% partnership interest
(December 31, 2023 - 34.8%). At December 31, 2024, the Company’s total remaining commitment is $1,599. The Company
advances its proportionate share as TAS Co invests and it invests in some of the same properties as TAS 3 noted above.
Harbour Equity JV Development Fund VI (“Harbour”): The Company holds an investment in Harbour representing a 12.1%
partnership interest (December 31, 2023 - 12.1%). At December 31, 2024, the Company’s total remaining commitment is
$5,450. The Company advances its proportionate share as Harbour provides equity capital to real estate developers in joint
ventures or co-ownership structures for ground up development of residential and mixed-use properties across Canada.
Pearl Group Growth Fund LP (“Pearl”): The Company holds an investment in Pearl, in which it has a 6.9% partnership
interest (December 31, 2023 - 6.9%). At December 31, 2024, the Company’s total remaining commitment is $583. The
Company advances its proportionate share as Pearl executes a value-add strategy by acquiring, redeveloping, entitling,
leasing and project managing commercial and multi-unit residential properties in the Greater Toronto area.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 94 -
TAS Impact Development LP 4 (“TAS 4”): The Company holds an investment in TAS 4 representing a 16.2% partnership
interest (December 31, 2023 - 14.8%). At December 31, 2024, the Company’s total remaining commitment is $12,678. The
Company advances its proportionate share as TAS 4 acquires urban residential, mixed-use development and repositioning
properties with a focus on developing and repositioning assets that drive environmental and social impacts.
For details of net gains and losses on non-marketable securities, refer to Note 20.
9. Equity Investment in MCAP Commercial LP
At December 31, 2024, the Company holds a 13.88% equity interest in MCAP (December 31, 2023 - 13.73%), representing
4,000,000 units held by MCAN (December 31, 2023 - 4,000,000) of the 28,813,772 total outstanding MCAP partnership
units (December 31, 2023 - 29,137,895).
The Company recognizes equity income from MCAP on a one-month lag such that equity income from MCAP is based on
MCAP’s net income for the years ended November 30 adjusted for the impacts of significant transactions or events up to
the date of our financial statements.
Amongst the interparty rights in the MCAP partnership agreement, the majority partner in MCAP has the right to acquire
MCAN’s entire partnership interest in MCAP at “fair market value”, which would be determined by an independent
valuator agreed upon by both parties.
At December 31
2024
2023
Balance, beginning of year
$
111,367 $
106,168
Equity income
28,803
22,010
Dilution gain
680
1,048
Distributions received
(18,585)
(17,859)
Balance, end of year
$
122,265 $
111,367
Selected MCAP financial information is as follows:
At November 30
2024
2023
MCAP’s balance sheet:
Assets
$ 66,971,617 $ 62,259,446
Liabilities
66,113,046
61,453,572
Equity
858,571
805,874
Years Ended November 30
2024
2023
MCAP’s revenue and net income:
Revenue
$
1,187,445 $
1,056,940
Net income
208,774
160,149
During 2024, MCAP issued new class B units at a price in excess of the carrying value per unit, resulting in a dilution gain of
$680 (2023 - $1,048).
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 95 -
10. Other Assets
At December 31
2024
2023
Corporate assets:
Intangible assets, net
$
1,610 $
837
Capital assets, net
3,835
472
Right-of-use asset
5,939
1,147
Prepaid expenses
1,587
1,093
Other loans
5,742
2,256
Related party receivable - MCAP
1,629
1,628
Receivables
3,884
1,211
Foreclosed real estate
321
321
$
24,547 $
8,965
The Company recorded a new right-of-use asset of $6,077, as well as additions to leasehold improvements and furniture
and fixtures, due to moving into a new office space on October 1, 2024. During the year ended December 31, 2024, the
Company recognized $370 (2023 - $306) of depreciation expense on the right-of-use asset.
The related party receivable from MCAP consists primarily of net principal and interest collected by MCAP in its role as a
mortgage servicer, which is remitted to MCAN on the next business day.
The capital assets and intangible assets continuity is as follows:
Furniture &
Fixtures
Computer
Hardware
Leasehold
Improvements
Capital Asset
Total
Intangible
Assets
Cost
At January 1, 2023
$
835 $
2,213 $
2,003 $
5,051 $
6,277
Additions
—
10
—
10
659
At December 31, 2023
835
2,223
2,003
5,061
6,936
Additions
1,362
595
1,710
3,667
1,133
At December 31, 2024
2,197
2,818
3,713
8,728
8,069
Amortization
At January 1, 2023
831
2,029
1,590
4,450
5,904
Amortization for the year
2
78
59
139
195
At December 31, 2023
833
2,107
1,649
4,589
6,099
Amortization for the year
67
94
143
304
360
At December 31, 2024
900
2,201
1,792
4,893
6,459
Net Book Value
At December 31, 2023
2
116
354
472
837
At December 31, 2024
$
1,297 $
617 $
1,921 $
3,835 $
1,610
11. Securitization Activities
The Company is an NHA MBS issuer, which involves the securitization of insured mortgages to create and sell MBS through
Canada Mortgage and Housing Corporation (“CMHC”) market MBS and Canada Mortgage Bonds (“CMB”) programs.
The Company may sell MBS to third parties and may also sell the net economics and cash flows from the underlying
mortgages (“interest-only strips”) to third parties. The MBS portion of the mortgage represents the core securitized
mortgage principal and the right to receive coupon interest at a specified rate. The interest-only strips represent the right
to receive excess cash flows after satisfying the MBS coupon interest payment and any other expenses such as mortgage
servicing.
Pursuant to the NHA MBS program, MBS investors receive monthly cash flows consisting of interest and scheduled and
unscheduled principal payments. CMHC makes principal and interest payments in the event of any MBS default by the
issuer, thus fulfilling the Timely Payment guarantee to investors. All MBS issuers (including the Company) are required to
remit scheduled mortgage principal and interest payments to Computershare, the designated Central Payor and Transfer
Agent (“CPTA”) for the program, even if these mortgage payments have not been collected from mortgagors. Similarly, at
the maturity of the MBS pools that have been issued by the Company, any outstanding principal must be paid to the CPTA.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 96 -
If the Company fails to make a scheduled principal and interest payment to CPTA, CMHC may enforce the assignment of
the mortgages included in all MBS pools in addition to other assets backing the MBS issued. In the case of mortgage
defaults, MCAN is required to make scheduled principal and interest payments to the CPTA until legal enforcement
proceedings are terminated at which time MCAN is required to transfer the full amount of any outstanding principal to the
CPTA as part of the Timely Payment obligation and then place the mortgage/property through the insurance claims
process to recover any losses. These defaults may result in cash flow timing mismatches that may marginally increase
funding and liquidity risks.
During 2024, MCAN securitized $802,713 insured residential mortgages through the market MBS and CMB programs (2023
- $359,419).
During 2024, MCAN bought, from a related party, and securitized $94,312 of insured multi-family mortgages (2023 -
$150,265). With respect to the insured multi-family securitization, at the time of securitization the Company derecognized
the mortgages from its consolidated balance sheet and recorded an upfront gain of $128 (2023 - $518).
Other accounting considerations
The primary risks associated with the market MBS program and CMB program are prepayment, liquidity and funding risks,
including the requirement to fund 100% of any cash shortfall related to the above-noted Timely Payment obligation. Please
refer to the shaded sections of the “Risk Factors” section of the MD&A where these risks are discussed further.
Transferred financial assets that are not derecognized in their entirety
Since MCAN neither transfers nor retains substantially all of the risks and rewards of ownership on sale and retains
significant continuing involvement through the provision of the Timely Payment obligation with respect to the majority of
the market MBS program and residential mortgage CMB program sale transactions, MCAN continues to recognize the
securitized mortgages (Note 12) and financial liabilities from securitization (Note 17) on its consolidated balance sheet.
Transferred financial assets that are derecognized in their entirety but where the Company has a continuing
involvement
MCAN securitizes insured multi-family mortgages through the market MBS program and CMB program, and in some cases,
sells MBS and the associated interest-only strips to third parties. In these instances, where MCAN transfers control of the
asset or substantially all risks and rewards on sale, MCAN derecognizes the mortgages from its consolidated balance
sheets. MCAN’s continuing involvement is the ongoing obligation in its role as MBS issuer to service the mortgages and
MBS until maturity.
In these circumstances, the derecognized MBS balance related to the market MBS program and CMB program are not
reflected as an asset or liability on MCAN’s consolidated balance sheets. The derecognized MBS mature as follows:
2025
2026
2028
2029
2030
2034
Total
At December 31, 2024
$
13,819 $
7,887 $
80,963 $
106,996 $
31,400 $
67,032 $
308,097
12. Mortgages - Securitized
(a) Summary
Gross
Allowance
Net
Principal
Total
Principal
At December 31, 2024
$ 2,419,871 $
— $ 2,419,871
At December 31, 2023
$ 1,929,948 $
— $ 1,929,948
(b) Mortgages by risk rating
The Company’s internal risk rating system involves judgment and combines multiple factors to arrive at a borrower-specific
score to assess the borrower’s probability of default and ultimately classify the mortgage into one of the categories listed
in the table below. For residential mortgages, these factors include, but are not limited to, the loan to value ratio, the
borrower’s ability to service debt, property location and credit score. For a definition of internal risk ratings, refer to Note
7.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 97 -
The table below shows the credit quality of the Company’s securitized mortgage portfolio based on the Company’s internal
risk rating system and stage classification. The Company’s policy that outlines whether ECLs are calculated on an impaired
or performing basis is discussed in Note 4.
At December 31
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Insured performing
$ 2,276,745 $ 139,023 $
— $ 2,415,768 $ 1,826,912 $ 98,375 $
— $ 1,925,287
Monitored/Arrears
—
3,839
—
3,839
—
4,318
—
4,318
Impaired/Default
—
—
264
264
—
—
343
343
$ 2,276,745 $ 142,862 $
264 $ 2,419,871 $ 1,826,912 $ 102,693 $
343 $ 1,929,948
(c) Mortgage allowances
The allowance for credit losses on the securitized portfolio at December 31, 2024 was $nil (December 31, 2023 - $nil). The
provision for credit losses recorded during 2024 was $nil (2023 - provision for credit losses of $nil).
(d) Mortgage arrears
Securitized mortgages past due but not impaired are as follows:
1 to 30 days
31 to 60 days
61 to 90 days
Total
At December 31, 2024
$
2,819 $
1,020 $
— $
3,839
At December 31, 2023
$
3,904 $
414 $
— $
4,318
Impaired securitized mortgages are as follows:
At December 31
2024
2023
Ontario
$
264 $
—
Alberta
—
343
$
264 $
343
(e) Geographic analysis
At December 31
2024
2023
Ontario
$
1,995,326
82.5 % $
1,655,249
85.7 %
Alberta
260,743
10.8 %
164,398
8.5 %
British Columbia
73,408
3.0 %
62,971
3.3 %
Quebec
5,631
0.2 %
7,298
0.4 %
Atlantic Provinces
51,295
2.1 %
26,521
1.4 %
Other
33,468
1.4 %
13,511
0.7 %
$
2,419,871
100.0 % $
1,929,948
100.0 %
(f) Other information
Capitalized transaction costs are included in mortgages and are amortized using the EIM. At December 31, 2024, the
unamortized capitalized transaction cost balance is $16,529 (December 31, 2023 - $11,563).
The fair value of the securitized mortgage portfolio at December 31, 2024 is $2,447,952 (December 31, 2023 - $1,891,654).
Other securitized assets of $20,128 at December 31, 2024 (December 31, 2023 - $21,901) includes interest-only strips of
$9,550 (December 31, 2023 - $12,500) from the Company’s CMB-insured multi-family securitizations.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 98 -
13. Derivative Financial Instruments
Cash Flow Hedging Relationships
The Company may enter into Government of Canada bond forward contracts to hedge interest rate risk arising from the
impact of (i) movements in interest rates between the time insured residential mortgages are funded and the time that
these mortgages are securitized; and (ii) movements in interest rates between the time term deposit funding is forecasted
to be required and the time that the actual funding occurs. Realized gains or losses on these derivatives are reclassified
from other comprehensive income (“OCI”) to interest on financial liabilities from securitization and term deposit interest
and expenses on the consolidated statements of income over the expected life of the underlying hedged item.
At December 31, 2024, the Company had $nil of derivative financial instruments outstanding relating to cash flow hedges
(December 31, 2023 - $nil).
The following table provides a reconciliation of OCI related to cash flow hedges:
Years Ended December 31
2024
2023
Liabilities - Interest Rate Risk
Accumulated OCI at the beginning of the year
$
98 $
(176)
OCI
(1,722)
274
Accumulated OCI at the End of the Period
$
(1,624) $
98
OCI on designated hedges
$
(1,722) $
274
The following table presents the total effects of cash flow hedges on the consolidated statements of income and the
consolidated statements of comprehensive income:
Years Ended December 31
2024
2023
Liabilities - Interest Rate Risk
Change in value of hedged item for ineffectiveness measurement
$
1,949 $
(386)
Change in value of hedging item for ineffectiveness measurement
(1,949)
386
Hedge Ineffectiveness
—
—
Hedging gains recognized in other comprehensive income
(1,949)
386
Amount reclassified from accumulated other comprehensive income to net income
227
(112)
Effect on OCI
$
(1,722) $
274
Fair Value Hedging Relationships
The Company may enter into interest rate swaps to hedge interest rate risk arising from fair value changes in our fixed-rate
term deposits due to movements in interest rates. Hedges are structured such that the fair value movements of the hedge
instruments offset, within a reasonable range, the changes in fair value of the pool of term deposits due to interest rate
fluctuations. The terms of our fair value hedges are generally less than 2 years but may go up to 5 years. The derivative
instruments are settled at the time of maturity of the pool of term deposits. The Company applies fair value hedge
accounting to these derivative transactions with the intention to recognize the effective matching of the fair value gain or
loss on the derivative transactions with the fair value gain or loss on the pool of term deposits, within a reasonable range.
Any unmatched fair value is recorded in term deposit interest and expenses as hedge ineffectiveness.
At December 31, 2024, the Company had $2,508 of unrealized gains on derivative financial assets outstanding relating to
fair value hedges (December 31, 2023 - $198 unrealized gains). In 2024, we had unrealized fair value hedge costs of $566
(2023 - $230) recorded in term deposit interest and expenses in the consolidated statements of income.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 99 -
The following table presents the effects of fair value hedges on the consolidated balance sheets and the consolidated
statements of income:
Years Ended December 31
2024
2023
Liabilities - Interest Rate Risk
Change in value of hedged item for ineffectiveness measurement
$
86 $
72
Change in value of hedging item for ineffectiveness measurement
9
(198)
Hedge Ineffectiveness
95
(126)
Carrying amounts for hedged items
$
788,157 $
317,000
Accumulated amounts of fair value hedge adjustments on hedged items
$
2,170 $
72
The following table presents outstanding derivative financial instruments designated in qualifying fair value hedging
relationships:
At December 31, 2024
Notional
Amount
Average
Rate on
Interest Rate
Swaps1
Derivative
Asset
Derivative
Liability
Net Fair
Market
Value
Interest Rate Risk - Fair Value Hedges
Within 1 year
$ 517,515
4.44 % $
1,971 $
— $
1,971
1 to 5 years
269,200
2.80 %
537 $
—
537
Total Derivatives in Qualifying Hedging Relationships
$ 786,715
3.88 % $
2,508 $
— $
2,508
1Average rate on interest rate swaps represents the weighted average received fixed rate
The notional amount is not recorded as an asset or liability as it represents the face amount of the contract to which the
rate or price is applied in order to calculate the amount of cash exchanged. Notional amounts do not represent the
potential gain or loss associated with market risk and are not indicative of the credit risk associated with the derivatives.
Derivative-Related Risks
The potential for derivatives to increase or decrease in value as a result of changes in relevant factors, such as interest rate
changes is referred to as market risk. Credit risk on derivatives, also known as counterparty credit risk, is the risk of a
financial loss occurring as a result of the failure of a counterparty to meet its obligation to the Company. The risks are
actively monitored and managed by the Company.
14. Term Deposits
At December 31
2024
2023
Maturity Date
Within 3 Months
$
301,555 $
282,817
> 3 Months to 1 Year
813,428
803,927
> 1 to 3 Years
755,448
790,132
> 3 to 5 Years
417,795
323,226
$
2,288,226 $
2,200,102
The estimated fair value of term deposits at December 31, 2024 was $2,356,668 (December 31, 2023 - $2,213,220) and is
determined by discounting the contractual cash flows using market interest rates currently offered for deposits of similar
remaining maturities.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 100 -
15. Income Taxes
The composition of the provision for (recovery of) income taxes is as follows:
Years Ended December 31
2024
2023
Income before income taxes
$
76,554
$
78,227
Statutory rate of tax 1
0 %
0 %
Tax provision (recovery) before the following:
$
—
$
—
Provision related to income subject to tax in subsidiaries
(1,032)
729
$
(1,032)
$
729
1 MCAN is subject to tax at a statutory tax rate of 38% to the extent that it does not pay sufficient dividends to eliminate its taxable income. As MCAN has historically paid sufficient
dividends such that it does not have taxable income, a 0% tax rate is used above.
Years Ended December 31
2024
2023
Current tax
Current tax provision
$
62 $
(30)
Deferred tax provision (recovery)
Relating to loss carry forward benefit
(539)
591
Other
(555)
168
(1,094)
759
$
(1,032) $
729
A summary of temporary differences by type is as follows:
At December 31
2024
2023
Deferred tax assets
Loss carry forward benefit
$
735 $
196
Other
695
140
$
1,430 $
336
At December 31, 2024, deferred tax assets and liabilities were assessed for each entity and are presented as deferred tax
assets of $1,430 (December 31, 2023 - $336) and deferred tax liabilities of $nil (December 31, 2023 - $nil) on the
consolidated balance sheets.
The loss carry forward benefit reflected in the deferred tax asset relates to losses in subsidiaries to which the Company has
attributed a future benefit.
At December 31, 2024, the Company has loss carry forward amounts in the non-consolidated MIC entity of $13,037
(December 31, 2023 - $4,574), the benefit of which has not been recorded in deferred tax assets. This balance only
includes assessed fiscal years. The tax loss carry forward amounts expire beginning in 2036.
16. Other Liabilities
At December 31
2024
2023
Accounts payable and accrued charges
$
15,668 $
10,411
Premises lease liability
6,061
1,700
Dividends payable
15,078
13,464
$
36,807 $
25,575
The Company moved into a new office space on October 1, 2024 and recorded a new premises lease liability of $6,077, net
of $2,356 in lease incentive receivable.
During 2024, the Company recognized $128 (2023 - $66) of interest expense and $484 (2023 - $436) of payments relating
to the premises lease liability.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 101 -
The maturity of the premises lease liability is as follows, excluding the lease incentive receivable:
At December 31
2024
Within 1 year
$
66
> 1 to 5 years
1,630
> 5 years
6,552
Total premises lease liability
$
8,248
17. Financial Liabilities from Securitization
Total financial liabilities from securitization mature as follows:
At December 31
2024
2023
2024
$
— $
144,546
2025
411,487
471,305
2026
709,301
728,243
2027
540,766
345,650
2028
262,822
227,139
2029
498,860
—
$
2,423,236 $
1,916,883
18. Share Capital
At December 31
2024
2023
Number
Share
Number
Share
of Shares
Capital
of Shares
Capital
Balance, January 1
35,431,938 $
406,528
34,305,704 $
389,986
Issued
Dividend reinvestment plan
938,713
14,779
972,834
14,458
At-the-market equity program
404,100
6,987
153,400
2,084
Overnight marketed offering
1,868,750
27,153
—
—
Executive Share Purchase Plan
73,503
1,236
—
—
Balance, December 31
38,717,004 $
456,683
35,431,938 $
406,528
The authorized share capital of the Company consists of unlimited common shares with no par value.
The Company issues shares under the dividend reinvestment plan (“DRIP”) out of treasury at the weighted average trading
price for the five days preceding such issue less a discount of 2%.
In 2023, the Company renewed its (i) Base Shelf prospectus; and (ii) at-the-market equity program (“ATM Program”)
established pursuant to a Prospectus Supplement to its Base Shelf prospectus allowing the Company to issue up to $30,000
common shares to the public from time to time over a 2 year period at the market prices prevailing at the time of sale. The
volume and timing of distributions under the ATM Program are determined at MCAN’s sole discretion. The Company
began issuing shares under the ATM Program in 2022. During 2024, the Company sold 404,100 common shares at a
weighted average price of $18.29 for gross proceeds of $7,390 and net proceeds of $6,987 including $148 of agent
commission paid and $255 of other share issuance costs under the ATM Program. During 2023, the Company sold 153,400
common shares at a weighted average price of $16.12 for gross proceeds of $2,474 and net proceeds of $2,084 including
$50 of agent commission paid and $340 of other share issuance costs under the ATM Program.
In Q1 2024, the Company closed an overnight marketed offering and issued 1,868,750 common shares at a price of $15.40
per common share for gross proceeds of $28,779 and $1,626 of share issuance costs.
For details on the Executive Share Purchase Plan, refer to Note 23.
The Company had no potentially dilutive instruments at December 31, 2024 or December 31, 2023.
19. Dividends
On February 24, 2025, the Board declared a quarterly regular cash dividend of $0.41 per share to be paid on March 31,
2025 to shareholders of record as of March 14, 2025.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 102 -
20. Net loss on securities
Years Ended December 31
2024
2023
Net change in unrealized gain (loss) on marketable securities
802
(3,212)
Net realized gain (loss) on non-marketable securities
1,041
—
Net change in unrealized gain (loss) on non-marketable securities
(8,186)
(410)
$
(6,343) $
(3,622)
For the year ended December 31, 2024, the Company recorded a (i) $1,041 realized gain related to the sale of one
underlying property investment with value-add activity; and a (ii) $8,186 net unrealized loss on non-marketable securities
mainly related to underlying properties from general commercial real estate headwinds increasing capitalization rates as
well as increased debt servicing costs that impact overall returns. Net unrealized gains or losses on marketable securities
fluctuate with share prices of the underlying securities.
21. Mortgage Expenses
Corporate assets
Years Ended December 31
2024
2023
Mortgage servicing expense
$
6,613 $
5,930
Letter of credit expense
801
752
Other mortgage expenses
967
808
$
8,381 $
7,490
Letter of credit expense relates to outstanding letters of credit under the Company’s credit facility, discussed in Note 24.
Securitization assets
At December 31, 2024, mortgage expenses associated with securitization assets of $5,769 (2023 - $4,548) consist primarily
of mortgage servicing expenses.
22. Provision for (Recovery of) Credit Losses
Years Ended December 31
Note
2024
2023
Corporate portfolio:
Stage 1 - provisions for (recoveries of) performing mortgages
7
$
(723) $
2,061
Stage 2 - provisions for (recoveries of) performing mortgages
7
20
343
Stage 3 - provisions for (recoveries of) impaired mortgages
7
3,961
2,073
3,258
4,477
Other provisions (recoveries), net
—
17
Provision for credit losses
3,258
4,494
Securitized portfolio:
Stage 1 - provisions for (recoveries of) performing mortgages
12
—
—
Provision for credit losses
$
— $
—
23. Related Party Disclosures
Transactions with MCAP
In 2024, the Company entered into related party transactions with MCAP as follows:
•
Purchase of mortgage origination and administration services of $8,269 (2023 - $7,054).
•
Purchase of uninsured residential mortgages of $8,138 (2023 - $16,750).
•
Purchase of construction loans of $nil (2023 - $nil) and sale of construction loans at par of $3,480 (2023 - $nil)
with no gain or loss on sale.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 103 -
•
The Company has an agreement with MCAP Securities Limited Partnership, a wholly owned subsidiary of MCAP,
whereby the Company can sell to MCAP Securities Limited Partnership insured residential mortgage
commitments. The Company sold commitments of $1,956 (2023 - $24,877) under this agreement and received
revenue of $56 (2023 - $193) recorded in interest on cash and other income on the consolidated statements of
income.
All related party transactions noted above were in the normal course of business.
Compensation
Key management personnel of the Company consist of individuals that have authority and accountability for planning,
directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the
members of the Board.
The compensation of key management personnel is as follows:
Years Ended December 31
2024
2023
Short term benefits (salaries, benefits and director fees)
$
6,085 $
6,822
Share-based payments (RSU, PSU)
2,109
464
Termination benefits
2,301
—
$
10,495 $
7,286
Executive Share Purchase Plan
The Company has an Executive Share Purchase Plan (the “Share Purchase Plan”) whereby the Board can approve loans to
senior management for the purpose of purchasing the Company’s common shares. The maximum amount of loans
approved under the Share Purchase Plan is limited to 10% of the issued and outstanding common shares.
Dividend distributions on the common shares are used to reduce the principal balance of the loans as follows: 50% of
regular distributions; 75% of capital gain distributions. Common shares are issued out of treasury for the Share Purchase
Plan. The granting of awards under the Share Purchase Plan may only be done before a black-out period begins or after
the sixth day following the end of a black-out period.
At December 31, 2024, $1,947 of loans were outstanding under the Share Purchase Plan (December 31, 2023 - $1,852).
During 2024, the Company advanced new loans under the Share Purchase Plan of $1,236 (2023 - $nil). The loans under the
Share Purchase Plan bore interest at 6.45% at December 31, 2024 (December 31, 2023 - 8.20%) which represents prime
plus 1% and have a five-year term. The shares are pledged as security for the loans and had a fair value of $2,448 at
December 31, 2024 (December 31, 2023 - $2,405). In 2024, MCAN recognized $133 of interest income (2023 - $161) on the
Share Purchase Plan loans.
Employee Share Ownership Plan
The Company has an Employee Share Ownership Plan whereby team members can elect to purchase common shares of
the Company up to 6% of their annual earnings. The Company matches 50% of each team member’s contribution amount.
During each pay period, all contributions are used by the plan’s trustee to purchase the common shares in the open
market. The common shares acquired with the Company’s contributions fully vest immediately. The Company’s
contributions are expensed as paid and totalled $234 for 2024 (2023 - $215).
Share Unit Plans
Deferred Share Units Plan
The Company has a Deferred Share Units Plan (the “DSU Plan”) whereby the Board grants units under the DSU Plan to
certain members of senior management of the Company (the “DSU Participants”). Each unit is equivalent in value to one
common share of the Company. The DSU Participants are entitled to receive cash for each unit following their individual
retirement or termination dates, whichever is earlier. The individual unit values are based on the average market value of
the Company’s common shares for the five days preceding the retirement/termination date. During 2024 and 2023, there
were no DSU Plan units outstanding.
Restricted Share Units Plan
The Company has a Restricted Share Units Plan (the “RSU Plan”) whereby the Board grants units under the RSU Plan to
certain members of senior management of the Company (the “RSU Participants”). Each unit is equivalent in value to one
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 104 -
common share of the Company. The RSU Participants are entitled to receive cash for each unit three years subsequent to
the awarding of the units subject to continued employment with the Company. The individual unit values are based on the
value of the Company’s common shares at the time of payment. In addition, the RSU Participants are entitled to receive
dividend distributions in the form of additional units. All RSU units vest after three years.
During 2024, the Company paid the RSU Participants $502 (2023 - $761) upon vesting of 31,971 RSU Plan units (2023 -
45,776 units).
Performance Share Units Plan
The Company has established a Performance Share Units Plan (the “PSU Plan”) whereby the Board grants units under the
PSU Plan to certain members of senior management of the Company (the “PSU Participants”). Each unit is equivalent in
value to one common share of the Company. Issuances prior to 2019 vest three years subsequent to the awarding of the
units subject to continued employment with the Company. Units issued in 2019 and thereafter vest annually over a three
year period, however these units are not payable until three years from the issuance date. The individual unit values are
based on the value of the Company’s common shares at the time of payment. In addition, the PSU Participants are
entitled to receive dividend distributions in the form of additional units. At the time of vesting, a “Performance Factor” of
0-200% is applied to the number of units awarded which is based on earnings per share and other performance metrics in
the years subsequent to the grant date.
The units granted under the PSU Plan may be either PSU units or Performance Deferred Share Units (“PDSU units”).
Holders of PSU units issued prior to 2019 are paid in cash at the time of vesting. Holders of PSU units issued in 2019 and
thereafter are paid in cash three years from the issuance date. Holders of PDSU units are paid in cash at their individual
retirement or termination, whichever is earlier, provided that the units have vested. Additionally, the PDSU units earn
dividends subsequent to vesting until the retirement or termination, whichever is earlier.
During 2024, the Company paid the PSU Participants $713 (2023 - $303) upon vesting of 32,458 PSU Plan units (2023 -
26,954). At December 31, 2024 and 2023, the Company recorded a liability on all outstanding units as it expected to
payout on these units.
Activity related to the RSU Plan and PSU Plan is as follows:
At December 31
2024
2023
RSU
PSU
RSU
PSU
Units outstanding, beginning of year
119,371 140,876 104,994
100,340
New units granted
49,125
97,411
49,858
55,693
Units issued as dividends
11,145
15,286
11,017
12,519
Units vested
(31,971)
(32,458)
(45,776)
(26,954)
Units forfeited
(33,956)
(45,802)
(722)
(722)
Units outstanding, end of year
113,714 175,313 119,371
140,876
Compensation expense for the year
$
648 $
2,071 $
767 $
954
Outstanding liability, end of year
$
1,106 $
2,903 $
957 $
1,542
24. Credit Facilities
The Company has a secured demand revolver facility from a Canadian Schedule I Chartered bank bearing interest at prime
plus 0.25% (December 31, 2023 - prime plus 0.25%), with a facility limit of $220,000 (December 31, 2023 - $220,000). The
facility is due and payable upon demand. At December 31, 2024, the outstanding loan principal payable was $nil
(December 31, 2023 - $nil).
Under the facility, there is a sublimit for issued letters of credit. Letters of credit have a term of up to one year from the
date of issuance, plus a renewal clause providing for an automatic one-year extension at the maturity date subject to the
bank’s option to cancel by written notice at least 30 days prior to the letters of credit expiry date. The letters of credit are
for the purpose of supporting developer obligations to municipalities in conjunction with residential construction loans. If
the developer defaults in its obligation to the municipalities, the municipalities may draw on the letters of credit, in which
case the Company is obligated to fund the letters of credit. At December 31, 2024, there were letters of credit in the
amount of $44,295 issued (December 31, 2023 - $48,637) and additional letters of credit in the amount of $24,429
committed but not issued (December 31, 2023 - $25,722).
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 105 -
The Company has an agreement with a Canadian Schedule I Chartered bank that enables the Company to execute
repurchase agreements for liquidity purposes. This facility allows the Company to encumber certain eligible securities for
financing purposes. As part of the agreement, the Company may sell assets to the counterparty at a specified price with an
agreement to repurchase at a specified future date. The interest rate on the borrowings is driven by market spot rates at
the time of borrowing. At December 31, 2024, the outstanding facility balance was $nil (December 31, 2023 - $nil).
The Company has a demand loan credit agreement with a Canadian Schedule I Chartered bank for a $100,000 senior
secured mortgage warehouse facility (December 31, 2023 - $100,000) at either prime plus 0.05% or bankers’ acceptance
rate plus 1.05%. The facility is used to fund insured residential mortgages prior to securitization activities. At December
31, 2024, the outstanding loan principal payable was $nil (December 31, 2023 - $64,280).
25. Capital Management
The Company’s primary capital management objectives are to maintain sufficient capital for regulatory purposes and to
earn acceptable and sustainable risk-weighted returns. Through the Company’s risk management and corporate
governance framework, assessments of current and projected asset growth, economic conditions, housing market activity,
the interest rate environment and changes to credit quality are made to determine appropriate levels of capital. The
Company expects to pay out all of MCAN’s non-consolidated taxable income over time through dividends subject to final
review and declaration by the Board. Capital growth is achieved through retained earnings, the DRIP, Executive Share
Purchase Plan, rights offerings, public share offerings and stock dividends. Our capital management is primarily driven by
the guidelines set out by the Tax Act and OSFI.
For further information, refer to the “Capital Management” section of the MD&A.
Regulatory capital
As a Loan Company under the Trust Act, OSFI oversees the adequacy of the Company’s capital. For this purpose, OSFI has
imposed minimum capital to risk-weighted asset ratios and a minimum leverage ratio. OSFI expects all federally regulated
financial institutions to meet the minimum capital to risk-weighted asset ratios of 7% common equity tier 1 capital, 8.5%
tier 1 capital and 10.5% total capital.
For further information on the Company’s regulatory capital management, refer to the “Regulatory Capital” sub-section of
the “Capital Management” section of the MD&A.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 106 -
At December 31
2024
2023
Regulatory ratios (OSFI)
Share capital
$
456,683
$
406,528
Contributed surplus
510
510
Retained earnings
143,620
124,708
Accumulated other comprehensive income
(1,624)
98
Deduction for equity investment in MCAP 1
(62,346)
(58,183)
Common Equity Tier 1 and Tier 1 Capital (A)
536,843
473,661
Tier 2 Capital
7,250
7,953
Total Capital
$
544,093
$
481,614
Total exposures/Regulatory assets
Consolidated assets
$
5,347,565
$
4,739,087
Less: deduction for equity investment in MCAP 1
(62,346)
(58,183)
Other adjustments 2
8,472
1,900
Total on-balance sheet exposures
5,293,691
4,682,804
Mortgage and investment funding commitments
521,100
716,638
Less: conversion to credit equivalent amount
(312,660)
(429,983)
Letters of credit
44,295
48,637
Less: conversion to credit equivalent amount
(22,148)
(24,319)
Off-balance sheet items
230,587
310,973
Total exposures/Regulatory assets (B)
$
5,524,278
$
4,993,777
Leverage ratio (A / B)
9.72 %
9.49 %
1 The deduction for the equity investment in MCAP is equal to the equity investment balance less 10% of shareholders’ equity and eligible stage 1 and stage 2 allowances.
2 Certain items, such as negative cash balances and derivatives, are adjusted from total exposures but included in consolidated assets.
Income tax capital
As a MIC under the Tax Act, the Company is limited to an income tax liabilities to capital ratio of 5:1 (or an income tax
assets to capital ratio of 6:1), based on the non-consolidated balance sheet in the MIC entity measured at its tax value. For
further information on the Company’s income tax capital management, refer to the “Income Tax Capital” sub-section of
the “Capital Management” section of the MD&A.
Other Capital Management Activity
In conjunction with the annual strategic planning and budgeting process, the Company completes an Internal Capital
Adequacy Assessment Process (“ICAAP”) in order to ensure that it has sufficient capital to support its business plan and risk
appetite. The ICAAP assesses the capital necessary to support the various inherent risks that the Company faces, including
liquidity and funding, credit, interest rate, market, operational, regulatory compliance, strategic and reputational risks.
The Company’s business plan is also stress-tested under various adverse scenarios to determine the impact on results from
operations and financial condition. The ICAAP is reviewed by both management and the Board and is submitted to OSFI
annually. In addition, the Company performs stress testing on its internal forecasts for capital adequacy on a quarterly
basis, and the results of such testing are reported to the Board.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 107 -
26. Financial Instruments
The majority of the Company’s consolidated balance sheet consists of financial instruments, and the majority of net
income is derived from the related income, expenses, gains and losses. Financial instruments include cash and cash
equivalents, cash held in trust, marketable securities, mortgages, non-marketable securities, other loans, financial liabilities
from securitization, term deposits and demand loans payable.
To measure financial instruments that are carried at fair value on the consolidated balance sheets, or for which fair value is
disclosed, the following fair value hierarchy is used based on the inputs to the valuation:
Level 1: Quoted market prices observed in active markets for identical assets and liabilities.
Level 2: Directly or indirectly observable inputs for the assets or liabilities not included in Level 1.
Level 3: Unobservable market inputs.
Financial instruments are classified at the lowest level of the hierarchy for which a significant input has been used. The fair
value hierarchy requires the use of observable market inputs whenever obtainable.
There were no transfers between levels during the years ended December 31, 2024 and 2023.
The following tables summarize the fair values of financial assets measured at FVPL and financial assets and liabilities
measured at amortized cost for which fair values are disclosed.
At December 31, 2024
Level 1
Level 2
Level 3
Total
Carrying
Value
Assets measured at FVPL
Marketable securities
$
66,345 $
— $
— $
66,345 $
66,345
Derivative financial instruments 10
—
2,508
—
2,508
2,508
Non-marketable securities - KSHYF 1
—
—
56,970
56,970
56,970
Non-marketable securities - TAS 3 9
—
—
4,273
4,273
4,273
Non-marketable securities - KSSMF 1
—
—
17,326
17,326
17,326
Non-marketable securities - TAS Co 9
—
—
3,289
3,289
3,289
Non-marketable securities - Crown 9
—
—
9,316
9,316
9,316
Non-marketable securities - Pearl 9
—
—
2,823
2,823
2,823
Non-marketable securities - TAS 4 8
—
—
5,672
5,672
5,672
Non-marketable securities - Broccolini 9
—
—
1,824
1,824
1,824
Non-marketable securities - Fiera 8
—
—
10,435
10,435
10,435
Non-marketable securities - Harbour 8
—
—
5,500
5,500
5,500
$
66,345 $
2,508 $
117,428 $
186,281 $
186,281
Assets measured at amortized cost
for which fair values are disclosed
Cash and cash equivalents
$
61,703 $
— $
— $
61,703 $
61,703
Mortgages - corporate 3
—
—
2,483,036
2,483,036
2,464,091
Other assets - other loans 4
—
—
5,742
5,742
5,742
Securitization program cash held in trust
47,249
—
—
47,249
47,249
Mortgages - securitized 3
—
—
2,447,952
2,447,952
2,419,871
$
108,952 $
— $ 4,936,730 $ 5,045,682 $ 4,998,656
Liabilities measured at amortized cost
for which fair values are disclosed
Term deposits 6
$
— $
— $ 2,356,668 $ 2,356,668 $ 2,288,226
Demand loans payable 5
—
—
107
107
107
Other liabilities - corporate 5
—
—
36,807
36,807
36,807
Financial liabilities from securitization 7
—
—
2,411,721
2,411,721
2,423,236
$
— $
— $ 4,805,303 $ 4,805,303 $ 4,748,376
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 108 -
At December 31, 2023
Level 1
Level 2
Level 3
Total
Carrying
Value
Assets measured at FVPL
Marketable securities
$
50,320 $
— $
— $
50,320 $
50,320
Derivative financial instruments 2
—
198
— $
198
198
Non-marketable securities - KSHYF 1
—
—
54,548
54,548
54,548
Non-marketable securities - TAS 3 9
—
—
8,291
8,291
8,291
Non-marketable securities - KSSMF 1
—
—
16,307
16,307
16,307
Non-marketable securities - TAS Co 9
—
—
4,284
4,284
4,284
Non-marketable securities - Crown 9
—
—
8,413
8,413
8,413
Non-marketable securities - Pearl 9
—
—
2,094
2,094
2,094
Non-marketable securities - TAS 4 8
—
—
2,400
2,400
2,400
Non-marketable securities - Broccolini 9
—
—
4,534
4,534
4,534
Non-marketable securities - Fiera 8
—
—
6,072
6,072
6,072
Non-marketable securities - Harbour 8
—
—
3,000
3,000
3,000
$
50,320 $
198 $
109,943 $
160,461 $
160,461
Assets measured at amortized cost
for which fair values are disclosed
Cash and cash equivalents
$
60,345 $
— $
— $
60,345 $
60,345
Mortgages - corporate 3
—
—
2,416,197
2,416,197
2,414,855
Other assets - other loans 4
—
—
2,256
2,256
2,256
Securitization program cash held in trust
30,909
—
—
30,909
30,909
Mortgages - securitized 3
—
—
1,891,654
1,891,654
1,929,948
$
91,254 $
— $ 4,310,107 $ 4,401,361 $ 4,438,313
Liabilities measured at amortized cost
for which fair values are disclosed
Term deposits 6
$
— $
— $ 2,213,220 $ 2,213,220 $ 2,200,102
Demand loan payable 6
—
—
64,683
64,683
64,683
Other liabilities - corporate 5
—
—
25,575
25,575
25,575
Financial liabilities from securitization 7
—
—
1,854,850
1,854,850
1,916,883
$
— $
— $ 4,158,328 $ 4,158,328 $ 4,207,243
1 Fair value is based on the redemption value.
2 Fair value based on swaps curves adjusted for credit risks.
3 Fair value of corporate and securitized fixed rate mortgages are calculated based on discounting the expected future cash flows of the mortgages, adjusting for credit risk and
prepayment assumptions at current market rates for offered mortgages based on term, contractual maturities and product type. For insured adjustable rate residential mortgages, fair
value is assumed to equal their carrying amount since there are no fixed spreads. The Company classifies its mortgages as Level 3 given the fact that although many of the inputs to the
valuation models used are observable, non-observable inputs include the discount rate and the assumed level of prepayments.
4 Fair value is assumed to be the carrying value as underlying loans are variable rate.
5 The carrying value of the asset/liability approximates fair value.
6 As term deposits are non-transferable by the deposit holders, there is no observable market. As such, the fair value of the term deposits is determined by discounting expected future
cash flows of the deposits at current offered rates for deposits with similar terms.
7 Fair value of financial liabilities from securitization is determined using current market rates for CMB and MBS.
8 Fair value based on recent transaction price.
9 Fair value based on the net asset value of the underlying partnerships.
The following table shows the continuity of Level 3 financial assets measured at FVPL:
At December 31
2024
2023
Balance, beginning of year
$
109,943 $
97,228
Advances / Purchases
17,349
14,670
Repayments / Dispositions
(1,678)
(1,545)
Changes in unrealized fair value, recognized in net income
(8,186)
(410)
Balance, end of year
$
117,428 $
109,943
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 109 -
Risk management
The types of risks to which the Company is exposed include but are not limited to liquidity and funding risk, credit risk,
interest rate risk and market risk. The Company’s enterprise risk management framework includes policies, guidelines and
procedures, with oversight by senior management and the Board. These policies are developed and implemented by
management and reviewed and approved periodically by the Board. For the nature of these risks and how they are
managed, please refer to the shaded sections of the “Risk Factors” section of the MD&A. The shaded sections of the
MD&A relating to liquidity and funding, credit, interest rate and market risks inherent in financial instruments form an
integral part of these consolidated financial statements.
27. Commitments and Contingencies
For the nature of the Company’s commitments and contingencies, please refer to the shaded sections of the “Off-Balance
Sheet Arrangements” section of the MD&A. The shaded section of the MD&A relating to off-balance sheet arrangements
forms an integral part of these consolidated financial statements.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
(Dollar amounts in thousands except for per share amounts)
- 110 -
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
EXECUTIVE OFFICERS
Bonnie Agostinho
Corporate Director, MCAN
Member of Audit Committee
Member of Enterprise Risk Management and Compliance Committee
Chair of Information Technology Governance Committee
Director since May 2022
Brian Chu
Corporate Director, MCAN
Chair of Conduct Review, Corporate Governance and Human
Resources Committee
Member of Enterprise Risk Management and Compliance Committee
Director since May 2021
John Coke
Corporate Director, MCAN
Chair of Audit Committee
Member of Conduct Review, Corporate Governance and Human
Resources Committee
Director since May 2021
Glenn Doré
President, Teff Administration Inc.
Member of Audit Committee
Member of Conduct Review, Corporate Governance and Human
Resources Committee
Director since May 2020
Philip Gillin
Corporate Director, MCAN
Member of Audit Committee
Chair of Enterprise Risk Management and Compliance Committee
Director since May 2020
Karen Martin
Corporate Director, MCAN
Member of Audit Committee
Member of Enterprise Risk Management and Compliance Committee
Member of Information Technology Governance Committee
Director since May 2024
Gaelen Morphet
Lead Director, MCAN
President, Morphet Family Wealth Advisors Inc.
Member of Conduct Review, Corporate Governance and Human
Resources Committee
Member of Enterprise Risk Management and Compliance Committee
Director since January 2018
Derek Sutherland
Chair of the Board, MCAN
Member of Information Technology Governance Committee
President, Canadazil Capital Inc.
Director since May 2017
Derek Sutherland
Interim Chief Executive Officer
Santokh Birk
Senior Vice President and Chief Financial Officer
Avish Buck
Senior Vice President and Chief Operating Officer
Carl Brown
Senior Vice President, Investments & Corporate Development
Aaron Corr
Vice President and Chief Risk Officer
Michelle Liotta
Vice President, Human Resources
Mike Jensen
Vice President and Chief Compliance Officer
(Chief Anti Money Laundering & Privacy Officer)
Sylvia Pinto
Vice President, Corporate Secretary & Governance Officer
Paul Gill
Vice President, Information Technology
Susan Han
Vice President and Chief Audit Executive
Alysha Rahim
Vice President, Finance
Justin Silva
Vice President, Treasurer
Peter Ryan
Vice President, Controller
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 111 -
CORPORATE INFORMATION
Head Office
Dividend Reinvestment Plan (“DRIP”)
200 King Street West, Suite 700
For further information regarding MCAN’s Dividend
Toronto, Ontario M5H 3T4
Reinvestment Plan, please visit:
Tel: 416-572-4880
www.mcanfinancial.com.
Tel: 1-855-213-6226 (toll free)
Fax: 416-598-4142
An Enrolment Form may be obtained at any time upon written
mcanexecutive@mcanfinancial.com
request addressed to the Plan Agent, Computershare.
Registered Participants may also obtain Enrolment Forms online
Term Deposits
at https://www-us.computershare.com/Investor/#DirectStock.
Tel: 1-800-387-9096 (toll free)
Fax: 1-877-821-0710
Shareholders
termdeposits@mcanfinancial.com
For dividend information, change in share registration or
address, lost certificates, estate transfers, or to advise of
Stock Listing
duplicate mailings, please call MCAN Mortgage Corporation’s
Toronto Stock Exchange
Transfer Agent and Registrar, Computershare
Symbol: MKP
(see left for contact).
Registrar and Transfer Agent
Report Copies
Computershare Investor Services Inc.
This MCAN Mortgage Corporation
100 University Avenue, 9th Floor
2024 Annual Report is available for viewing/printing on our
Toronto, Ontario M5J 2Y1
website at www.mcanfinancial.com, and also on SEDAR+ at
Tel: 1-800-564-6253
www.sedarplus.ca.
Website
To request a printed copy, please contact Ms. Sylvia Pinto,
www.mcanfinancial.com
Corporate Secretary & Governance Officer, or e-mail
mcanexecutive@mcanfinancial.com.
General Information
For general enquiries about MCAN Mortgage Corporation,
please write to Ms. Sylvia Pinto,
Corporate Secretary & Governance Officer (head office details
above) or e-mail mcanexecutive@mcanfinancial.com.
2024 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)
- 112 -
MCAN Financial Group
200 King Street West, Suite 700, Toronto, ON, M5H 3T4
mcanfinancial.com
TSX: MKP
INVESTING IN COMMUNITIES AND
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