Total assets grows to record $5 billion TORONTO, Aug. 12, 2024 /CNW/ - MCAN Mortgage Corporation d/b/a MCAN Financial Group ("MCAN", the "Company" or "we") (TSX: MKP) reported net income of $19.7 million ($0.52 earnings per share) for the second quarter of 2024, an increase from net income of $15.9 million ($0.46 earnings per share) in the second quarter of 2023. Second quarter 2024 return on average shareholders' equity1 was 13.63% compared to 12.47% for the same period in the prior year. Net corporate mortgage spread income was solid for the current quarter and slightly ahead of the same period in the prior year. A number of other factors impacted our Q2 results including higher income from our investment in MCAP, a higher quarterly provision for credit losses in the current quarter and lower unrealized fair value losses on our REIT portfolio compared to the same prior year period. For year to date 2024, we reported net income of $43.0 million ($1.17 earnings per share), an increase from net income of $39.2 million ($1.13 earnings per share) for the same prior year period. Return on average shareholders' equity1 was 15.31% for year to date 2024 compared to 15.51% for the same prior year period. We reported higher total net income for the year to date mainly as a result of higher income from MCAP, higher net corporate mortgage spread income and lower unrealized fair value losses on our REIT portfolio compared to the same prior year period. We continued to adjust our portfolio to take advantage of the changing interest rate environment. Our net corporate mortgage spread income1 increased by $1.2 million for the current fiscal year compared to the prior fiscal year. We are committed to a strategy of managing controllable factors to protect our bottom line and taking advantage of opportunities that arise in the current market environment. The Board of Directors declared a third quarter regular cash dividend of $0.39 per share to be paid on September 27, 2024 to shareholders of record as of September 13, 2024. As a mortgage investment corporation, we pay out all of our taxable income to shareholders through dividends. "We had a solid second quarter with our total assets reaching over $5 billion and our net income ahead of last year as we continue to deploy our new capital from our successful overnight marketed offering. The floating rates on our construction and commercial loans continue to yield us higher returns and our origination and renewal volumes across our entire loan book continues to be solid allowing us to profitably grow," said CEO Don Coulter. "As rates begin to decline, our embedded culture of being vigilant and proactively managing our business through market cycles forms the roots of our exceptional performance. Our driven and committed team members are focused on MCAN's strategic growth and positioning in the Canadian mortgage market." HIGHLIGHTS Total assets reached $5.10 billion at June 30, 2024, a net increase of $358 million (7.5%) from December 31, 2023. Corporate assets totalled $2.86 billion at June 30, 2024, a net increase of $108 million (3.9%) from December 31, 2023. Construction and commercial mortgages totalled $1.08 billion at June 30, 2024, a net decrease of $34 million (3%) from December 31, 2023. Year to date 2024, the movement in the construction and commercial portfolios is attributed to net originations of $283 million in new construction and commercial mortgages, offset by repayments from completing projects. Originations in the second quarter were 3% higher compared to the same period in 2023 and we have seen some extensions of projects due to normal construction delays or normal delays relating to the permitting and zoning process. To date, projects continue to progress toward completion. Uninsured residential mortgages totalled $1.05 billion at June 30, 2024, a net increase of $86 million (9%) from December 31, 2023. Uninsured residential mortgage originations totalled $197 million year to date 2024, an increase of $20 million (11%) from the same period in 2023. The economic and interest rate environment and its impact on the housing market and borrowers has improved somewhat due to expectations about further interest rate cuts. We have also seen solid uninsured residential mortgage renewal rates with renewals of $259 million year to date 2024 compared to $258 million for the same period in 2023 as borrowers find it more convenient to stay with their existing lender in the current market environment. Non-marketable securities totalled $116 million at June 30, 2024, an increase of $7 million (6%) from December 31, 2023 with $71 million of remaining commitments expected to fund over the next five years. Marketable securities totalled $50 million at June 30, 2024, relatively consistent with December 31, 2023. Securitized mortgages totalled $2.17 billion at June 30, 2024, a net increase of $240 million (12%) from December 31, 2023, due to higher securitization volumes. Overall, total insured residential mortgage origination volumes are higher due to declining mortgage rates compared to the higher interest rate environment in the prior year. Insured residential mortgage originations totalled $356 million year to date 2024, an increase of $145 million (69%) from the same period in 2023. Insured residential mortgage securitizations totalled $371 million year to date 2024, an increase of $284 million (326%) from the same period in 2023. Insured residential mortgages being held for upcoming securitizations totalled $280 million at June 30, 2024, a net increase of $4 million (1%) from December 31, 2023. 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. 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. FINANCIAL UPDATE Net corporate mortgage spread income1 is derived from both our residential lending portfolio and our construction and commercial portfolio. It increased by $0.2 million for Q2 2024 from Q2 2023 and increased $1.2 million for year to date 2024 from year to date 2023 mainly due to a higher average corporate mortgage portfolio balance, partially offset by a reduction in the spread of corporate mortgages over term deposit interest and expenses. The decrease in the spread is mainly due to higher effective interest rates on our term deposits and fair value hedge costs. This was partially offset by higher average mortgage rates primarily due to the impact of the higher rate environment on our floating rate residential construction loans. Net securitized mortgage spread income1 increased by $0.4 million for Q2 2024 from Q2 2023 and increased $1.0 million year to date 2024 from year to date 2023 due to a higher average securitized mortgage portfolio balance and an increase in the spread of securitized mortgages over liabilities. We have seen better economics on securitizations as the ...