Strong mortgage renewal rates and increased originations drive positive performance
MCAN Mortgage (d/b/a MCAN Financial Group) reported a net income of $23.2 million ($0.65 per share) for the first quarter of 2024.
While earnings remain slightly below the same period in 2023, CEO Don Coulter said the company's core residential lending operations remained strong.
"Our first quarter results were solid with continued growth in our net mortgage interest and originations volumes in our residential lending portfolio," Coulter said in the company’s Q1 earnings report. "We grew our uninsured residential mortgage portfolio to over $1 billion in the quarter – a record high – with strong renewal volumes."
MCAN's uninsured residential mortgages reached $1.01 billion at the end of Q1, up $41 million or 4% from the prior quarter. Uninsured originations totalled $84 million, rising 34% year over year, as an improving economic outlook boosted housing market activity.
The company also saw higher residential mortgage renewal rates, with $127 million in Q1 renewals compared to $112 million a year earlier, as borrowers opted to stay with their existing lender.
On the insured side, originations surged 151% annually to $171 million, while securitizations hit $214 million versus just $11 million in Q1 2023 amid favourable market spreads.
"With our successful overnight marketed offering raising $28.8 million, we look to continue growing our business as we have consistently done over many years," Coulter added. The equity raise exceeded its original $20 million target due to strong investor demand.
MCAN's net corporate mortgage spread income rose 4% year-over-year to $23.6 million, reflecting its larger average corporate mortgage balance, though partially offset by higher funding costs.
The company reported a $0.6 million recovery of credit losses compared to a $1.2 million provision a year ago, citing improved economic forecasts, particularly around home prices and GDP.
Read next: MCAN Mortgage hunts for new finance chief after CFO exit
"We believe that we have a quality uninsured residential mortgage loan portfolio with an average loan to value of 65.5% on March 31, 2024, based on an industry index of current real estate values," MCAN stated.
Overall earnings equated to $0.65 per share, with return on equity of 17.09% versus 18.60% a year earlier. MCAN declared a Q2 dividend of $0.39 per share.
"As we celebrate our achievements this quarter, we remain committed to driving sustainable growth and maximizing shareholder value in the long term," Coulter said.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
