MCAN Mortgage Corporation Reports 48% Increase in Third Quarter Net Income and Increase in Quarterly Dividend

Stock market symbol
TSX: MKP

TORONTO, Nov. 5, 2015 /CNW/ - MCAN Mortgage Corporation ("MCAN", the "Company" or "we") reported strong third quarter 2015 earnings today. 

Q3 2015 Operating Results

Net income for the third quarter of 2015 was $7.2 million, up 48% from $4.9 million in the prior year, while earnings per share increased from $0.23 to $0.32.  Return on average shareholders' equity was 11.36% for the quarter, up from 8.74% in the prior year.

The increase in net income from the third quarter of 2014 was primarily due to higher securitization income from a significant increase in our participation in the market MBS program, higher equity income from MCAP in the current quarter and an increased recovery of deferred taxes, partially offset by a higher loss on realized and unrealized financial instruments.

Year to date net income increased to $23.4 million from $18.3 million in the prior year, primarily due to the items noted above for the third quarter.  For the year to date, earnings per share totalled $1.09, up from $0.89 per share in the prior year, while year to date return on average shareholders' equity increased from 11.10% to 13.02%.

Corporate assets totalled $1.09 billion at September 30, 2015, up $13 million from June 30, 2015.  Activity for the quarter included increases of $24 million in mortgages and $8 million in marketable securities and a decrease of $19 million in cash and cash equivalents.  Our corporate mortgage portfolio increased from $857 million at June 30, 2015 to $881 million at September 30, 2015, which included increases of $34 million in uninsured single family and $15 million in commercial loans and a decrease of $27 million in insured single family.  The growth in uninsured single family is due to the continued increase in volumes from our internal Xceed origination platform throughout 2015, while insured single family decreased as a result of high securitization volumes during the quarter.

We sold $182 million of new MBS through the market MBS program.  Income from the market MBS program increased significantly due to growth of 151% in the average market MBS mortgage portfolio balance. 

Net Investment Income - Corporate Assets:  Net investment income from corporate assets was $9.0 million in the current quarter, up from $8.7 million in the prior year.

Mortgage interest income

Mortgage interest income decreased from $12.8 million in the prior year to $12.3 million in the current quarter.  The average mortgage portfolio balance decreased from $918 million to $902 million and the average mortgage portfolio yield decreased from 5.52% to 5.25%. The current quarter included discount income of $370,000 recognized on the payout of impaired uninsured single family mortgages that had been acquired as part of the acquisition of Xceed, which is excluded from the average mortgage portfolio yield as it is a non-recurring item.

The spread of our corporate mortgage yield over the term deposit average rate decreased from 3.07% in the prior year to 2.93% in the current quarter.  Lower market rates for the funding of new single family mortgages and a 0.30% decrease in the prime rate have both contributed to the decline in the average mortgage portfolio yield throughout 2015. 

The uninsured single family mortgage average portfolio increased significantly over the prior year as a result of the continued increase in volumes from our internal Xceed origination platform.  The decrease in the construction loan portfolio is a result of the measured approach that we took to new loan originations in early 2015 and the geographic rebalancing of the portfolio given the current economic uncertainty in Western Canada, in addition to us experiencing a steady volume of loan repayments.

Equity income from MCAP

Equity income from our investment in MCAP increased from $835,000 in the prior year to $2.0 million in the current quarter.  MCAP earned higher origination fees, gains on sales of mortgages and servicing fees in the current quarter.  MCAP's origination volumes were $4.5 billion in the third quarter of 2015.  MCAP had $51.5 billion of assets under administration as at August 31, 2015.  The current quarter may not be indicative of future results.  Our share of equity income from MCAP has historically varied from quarter to quarter as a result of seasonal variations in MCAP's mortgage fundings and short term changes in interest rate spreads that impact MCAP's gains on sales of mortgages and origination fees; however MCAP's annual earnings have been increasing with its growth in assets under administration and mortgage originations.

Realized and unrealized losses on financial instruments

We hedge mortgage funding commitments to mitigate interest rate risk by entering into forward starting interest rate swaps with a financial institution as part of this hedge.  If the hedged mortgage is securitized through the market MBS program, the offsetting economic gain (loss) is generally realized over the term of the mortgage through higher (lower) spread income.  MBS spreads were lower than usual in the current quarter issuances due to reduced demand for MBS in the market.  If the hedged mortgages are sold to third parties on a whole loan basis, offsetting gains or losses are recognized in the period that the mortgages are sold. 

The realized and unrealized loss on financial instruments was $1.4 million in the current quarter compared to a loss of $119,000 in the prior year. The current quarter loss was due to a 0.20% decrease in the interest rate on our forward starting swaps during the quarter.

Other net investment income

Fees consisting primarily of extension, renewal and letter of credit fees earned on our corporate mortgage portfolio, increased to $1.2 million in the current quarter from $713,000 in the prior year.  The increase is primarily due to a non-recurring deferred profit participation fee received on a commercial loan.

Term deposit interest and expenses decreased to $5.2 million in the current quarter from $5.3 million in the prior year.  The decrease was due to a drop in the average term deposit rate from 2.45% in the prior year to 2.32% in the current quarter, partially offset by the impact of a $28 million increase in the average term deposit balance from $822 million to $850 million.

Mortgage expenses, consisting primarily of mortgage servicing fees, decreased to $900,000 in the current quarter from $945,000 in the prior year as a result of a lower average mortgage portfolio. 

We recorded $149,000 of recoveries of credit losses during the quarter compared to $73,000 in the prior year.  In the current quarter, we had a $430,000 recovery of an individual allowance recorded against an impaired construction loan upon the sale of the underlying collateral.  This was partially offset by $313,000 of collective provisions recorded as a result of the significant increase in the corporate mortgage portfolio in the current quarter.  The prior year had a recovery of collective provisions due to a decrease in the corporate mortgage balance.  Net write-offs were $3,000 (0.1 basis points) in the current quarter, down from $4,000 (0.2 basis points) in the prior year.

Net Investment Income - Securitization Assets:  Net investment income from securitization assets was $1.2 million in the current quarter compared to a loss of $96,000 in the prior year.  Net investment income from securitization assets relates to MCAN's participation in the market MBS program and, in the prior year, the Canada Mortgage Bonds ("CMB") program. For further details on these programs, refer to the "Securitization Programs" section of the Management's Discussion and Analysis ("MD&A"). Net investment income from the market MBS program has increased in recent quarters as we have continued to securitize insured single family mortgages through this program. 

Market MBS Program

Net investment income from the market MBS program was $1,246,000 in the current quarter, up from $397,000 in the prior year.  Mortgage interest income was $6.9 million, up from $2.9 million in the prior year.  The average portfolio balance increased from $411 million to $1,030 million, while the average yield increased from 2.64% to 2.67%.  Interest on financial liabilities from securitization was $5.3 million in the current quarter, up from $2.3 million in the prior year.  The market MBS liability average balance increased from $417 million to $1,038 million while the average interest rate decreased from 2.24% to 2.02%.

We sold $182 million of MBS to third parties in the current quarter compared to $197 million in the prior year.  For the year to date, we have sold $500 million, up from $390 million in the prior year.

CMB Program

In the prior year, we incurred a net loss of $492,000 from the CMB program. 

Operating Expenses:  Operating expenses were $3.6 million in the current quarter, unchanged from the prior year.  Salaries and benefits increased by $188,000 due to an increase in the number of employees, while general and administrative expenses decreased by $207,000 as a result of lower professional fees.

Income Taxes:  In the current quarter we had a recovery of deferred taxes of $528,000 compared to a provision of $165,000 in the prior year.   

Taxable income was $6.9 million ($0.31 per share) in the current quarter compared to $584,000 ($0.03 per share) in the prior year.  The increase was due to higher taxable income from MCAP and lower MBS program upfront cash outflows in the current year.  In the current quarter, we incurred $3.1 million of up-front origination costs on mortgages securitized through the market MBS program, which are expensed for tax purposes and amortized for accounting purposes, compared to $3.4 million in the prior year. 

Credit Quality:  Impaired mortgages decreased from $5.7 million at June 30, 2015 to $3.7 million at September 30, 2015.  The total impaired mortgage ratio decreased from 0.27% to 0.15% during the quarter, while the corporate impaired mortgage ratio also decreased from 0.58% to 0.34%.

Impaired uninsured single family mortgages increased by $2.0 million during the quarter, relating primarily to mortgages in Ontario and one mortgage based in Alberta. Subsequent to quarter end, $586,000 of these mortgages were resolved by way of payout or return to non-arrears status.

Impaired construction loans decreased by $4.0 million during the quarter as a result of the resolution of a previously impaired residential construction loan upon the sale of the underlying collateral.  Arrears in this asset class can be volatile given the relatively low volume of loans and the significant individual loan sizes.

Corporate mortgage arrears were $27 million at September 30, 2015, down from $29 million at June 30, 2015.  Securitized mortgage arrears increased from $12 million to $13 million during the quarter.  Despite the economic volatility and continued weakness in oil prices and any potential impact across Canada, our total mortgage arrears have not increased significantly during 2015 and our impaired mortgage ratios have decreased.  We continue to diligently monitor mortgage arrears given current economic conditions.

Financial Position:  Total assets were $2.27 billion as at September 30, 2015, consisting of $1.09 billion of corporate assets and $1.18 billion of securitization assets.  Corporate assets increased by $13 million in the current quarter, which included increases of $24 million in mortgages and $8 million in marketable securities and a decrease of $19 million in cash and cash equivalents.  Our corporate mortgage portfolio increased from $857 million at June 30, 2015 to $881 million at September 30, 2015, which included increases of $34 million in uninsured single family and $15 million in commercial loans and a decrease of $27 million in insured single family. 

Securitization assets increased by $156 million during the quarter, primarily due to the securitization of $182 million of mortgages through the market MBS program less $26 million of net repayments. 

As we securitize mortgages into the market MBS program, assets are effectively transferred from corporate mortgages to securitized mortgages on the balance sheet.  The change contributes to changes in asset levels when corporate mortgages are securitized in the following quarter.

Term deposit liabilities were $857 million at September 30, 2015, up slightly from $854 million at June 30, 2015.

Financial liabilities from securitization were $1.16 billion at September 30, 2015, up from $1.0 billion at June 30, 2015.  The increase of $154 million in the current quarter consisted of $182 million of new liabilities issued through the market MBS program and a $28 million repayment of existing market MBS liabilities. 

During the quarter, we raised $15.1 million of new share capital through a rights offering in which 1,406,084 new common shares were issued.  The rights offering also created $87 million of additional income tax asset capacity.

Total shareholders' equity was $255 million at September 30, 2015, up from $238 million at June 30, 2015. Activity for the quarter included the above noted rights offering, net income of $7.2 million, the issuance of $1.5 million of new common shares through the dividend reinvestment plan, the payment of the third quarter dividend of $6.3 million and a decrease to accumulated other comprehensive income of $736,000.

Dividend:  The Board of Directors (the "Board") declared an increase to the quarterly dividend from $0.28 per share to $0.29 per share effective with the 2015 fourth quarter regular dividend to be paid January 4, 2016 to shareholders of record as of December 15, 2015. 

Asset Capacity:  As at September 30, 2015, our remaining income tax asset capacity, based on our target income tax assets to capital ratio of 5.75, was $191 million.

Outlook:  We expect Canadian real estate markets to remain balanced for the remainder of 2015. We continue to observe some weakness in Alberta housing markets as the province adjusts to the lower oil prices and the employment concerns for the province.  We expect the majority of Canadian housing markets to remain in a balanced state with inventory levels at historical lows and strong consumer demand due to historically low mortgage rates. Housing markets are expected to encounter moderation and potential instability over the next few quarters as Canada adjusts to lower sale volumes in some markets such as Alberta. Financial markets have adjusted to the volatility within bond markets as a result of the rate cuts by the Bank of Canada and indications that further monetary policy changes are possible should economic conditions warrant such measures. The results of the federal election and new government policies could create further volatility in Canadian financial markets.

The Bank of Canada recently downgraded its economic outlook again as the country reacts to lower prices of oil and other commodities.  In July the Bank lowered its forecast for 2015 GDP growth to 1.1 percent from 2 percent. The Canadian economy is now expected to grow just 2 percent in 2016 and 2.5 percent in 2017.  The more realistic outlook is expected to delay eventual interest rate hikes in Canada. This continues to soften the impact on the housing market as lower rates are integrated into markets, facilitate increased consumer spending and stabilize economic growth.

he key concerns are low economic growth and that any increase in unemployment rates will have a spillover effect to consumer confidence. Housing markets continue to benefit from the low interest rate environment, relatively stable unemployment rates and restricted supply in our core markets. Volatility in the stock market and continued weakness in the global price of oil could have a negative influence on the economy for the latter part of 2015 and early 2016.  Although mortgage rates remain low, volatility within the long term bond market is expected to impact mortgage spreads.

Our growth strategy remains focused on our insured and uninsured single family mortgage portfolio sourced through our direct Xceed origination platform. As a result of the repositioning of our construction pipeline that was carried out through the first part of 2015, we expect the construction book to see growth in the coming quarters. Although our actual corporate asset growth rate of 6% was below our annualized 10% target of $78 million for the year to date, we believe that we have repositioned our origination strategy to account for the impact of the oil markets on Alberta housing, and we continue to observe origination growth in these asset classes and expect originations to remain steady through the remainder of the year.  We expect the origination and portfolio growth over the remainder of 2015 will allow us to grow our corporate assets, further diversify and re-balance our mortgage portfolio while optimizing returns and lowering our risk profile.

We expect construction activity to moderate nationally, with British Columbia and Ontario benefiting from the continued decline in the Canadian dollar and increased export gains on provincial GDP growth.  Following this year's rate cuts by the Bank of Canada and the recent downgraded growth projections for the Canadian economy, management continues to closely monitor our construction portfolio.  We believe that our portfolio remains well balanced with seasoned projects with strong presales and seasoned builders and developers.  We expect interest rates to remain at historic lows for the remainder of 2015.

We participated in the MBS securitization market with regular issuances throughout the third quarter of 2015. We expect volumes to moderate in the fourth quarter of 2015 as the mortgage market adjusts to a seasonally slower housing market and MBS spreads remain compressed. In the third quarter, we issued $182 million of new MBS. To date, we have retained the residual economics of the MBS (the "interest-only strip"). We regularly review the economics of this retention strategy and will assess the impact of future sales of a portion of the MBS interest-only strips going forward to facilitate portfolio growth.

Non-IFRS Measures:  The following metrics are considered to be Non-IFRS measures and are defined in the "Non-IFRS Measures" section of the MD&A:  Return on Average Shareholders' Equity, Taxable Income, Taxable Income Per Share, Average Interest Rate, Net Interest Income, Impaired Mortgage Ratios, Mortgage Arrears, Common Equity Tier 1, Tier 1 and Total Capital Ratios, Total Exposures, Regulatory Assets, Leverage Ratio, Assets to Capital Multiple; Risk Weighted Assets Ratios, Tier 1, Tier 2, Tier 3 and Total Liquid Assets and Liquidity Ratios, Income Tax Assets, Income Tax Liabilities, Income Tax Capital, Income Tax Assets to Capital Ratio, Income Tax Asset Capacity, Market Capitalization, Book Value per Common Share and Limited Partner's At-Risk Amount.

Further Information:  Complete copies of the Company's 2015 Third Quarter Report will be filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and on the Company's website at www.mcanmortgage.com

CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of Canadian dollars)
			September 30			December 31
As at				2015			2014
Assets
Corporate Assets
	Cash and cash equivalents		$	91,693		$	51,090
	Marketable securities			35,473			24,900
	Mortgages			880,945			895,467
	Financial investments			36,341			28,469
	Other loans			1,776			2,108
	Equity investment in MCAP Commercial LP			43,612			38,792
	Foreclosed real estate			538			686
	Other assets			2,110			3,067
				1,092,488			1,044,579
Securitization Assets
	Short-term investments			10,643			16,763
	Mortgages			1,166,629			741,184
	Financial investments			-			907
	Derivative financial instruments			-			71
	Other assets			2,549			1,441
				1,179,821			760,366
			$	2,272,309		$	1,804,945
Liabilities and Shareholders' Equity
Liabilities
Corporate Liabilities
	Term deposits		$	856,537		$	821,742
	Current taxes payable			100			120
	Deferred tax liabilities			386			473
	Other liabilities			4,860			11,202
				861,883			833,537
Securitization Liabilities
	Financial liabilities from securitization			1,155,495			746,063
	Other liabilities			-			42
				1,155,495			746,105
				2,017,378			1,579,642
Shareholders' Equity
	Share capital			206,382			183,939
	Contributed surplus			510			510
	Retained earnings			39,774			34,481
	Accumulated other comprehensive income			8,265			6,373
				254,931			225,303
			$	2,272,309		$	1,804,945

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in thousands of Canadian dollars except for per share amounts)
For the Quarters Ended September 30				2015		2014
Net Investment Income - Corporate Assets
	Mortgage interest		$	12,290		$	12,799
	Equity income from MCAP Commercial LP			1,992			835
	Fees			1,231			713
	Marketable securities			463			558
	Whole loan gain on sale income			178			175
	Realized and unrealized loss on financial instruments			(1,414)			(119)
	Interest on financial investments and other loans			249			24
	Interest on cash and cash equivalents			237			205
				15,226			15,190
	Term deposit interest and expenses			5,231			5,283
	Mortgage expenses			900			945
	Interest on loans payable			248			327
	Provision for (recovery of) credit losses			(149)			(73)
				6,230			6,482
				8,996			8,708
Net Investment Income - Securitization Assets
	Mortgage interest			6,942			3,074
	Interest on financial investments			-			48
	Interest on short-term investments			9			239
	Other securitization income			-			414
				6,951			3,775
	Interest on financial liabilities from securitization			5,307			3,277
	Mortgage expenses			398			180
				5,705			3,457
	Net investment income before fair market value adjustment			1,246			318
	Fair market value adjustment - derivative financial instruments			-			(414)
				1,246			(96)
Operating Expenses
	Salaries and benefits			1,996			1,808
	General and administrative			1,581			1,788
				3,577			3,596
Net Income Before Income Taxes				6,665			5,016
Provision for (recovery of) income taxes
	Deferred			(528)			165
				(528)			165
Net Income			$	7,193		$	4,851
Basic and diluted earnings per share			$	0.32		$	0.23
Dividends per share			$	0.28		$	0.28
Weighted average number of basic and diluted shares (000's)				22,475			20,678

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of Canadian dollars)
			Q3		Q3			YTD		YTD
For the Periods Ended September 30			2015		2014			2015		2014
Net income		$	7,193	$	4,851		$	23,407	$	18,317
Other comprehensive income
	Change in unrealized gain on available for sale marketable securities		(1,018)		(761)			(713)		138
	Transfer of losses on sale of marketable securities to net income		-		(131)			-		(82)
	Change in unrealized gain on available for sale financial investment		326		-			3,004		-
	Less: deferred taxes		(44)		-			(399)		-
			(736)		(892)			1,892		56
Comprehensive income		$	6,457	$	3,959		$	25,299	$	18,373

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) (in thousands of Canadian dollars)
For the Nine Months Ended September 30				2015			2014
Share capital
Balance, beginning of period			$	183,939		$	179,215
Common shares issued				22,443			4,724
Balance, end of period				206,382			183,939
Contributed surplus
Balance, beginning of period				510			510
Changes to contributed surplus				-			-
Balance, end of period				510			510
Retained earnings
Balance, beginning of period				34,481			32,145
Net income				23,407			18,317
Dividends declared				(18,114)			(17,285)
Balance, end of period				39,774			33,177
Accumulated other comprehensive income
Balance, beginning of period				6,373			3,030
Other comprehensive income				1,892			56
Balance, end of period				8,265			3,086
Total shareholders' equity			$	254,931		$	220,712

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands of Canadian dollars)
For the Nine Months Ended September 30				2015			2014
Cash provided by (used for):
Operating Activities
	Net income		$	23,407		$	18,317
	Adjusted for non-cash items:
		Deferred taxes		(486)			537
		Equity income from MCAP Commercial LP		(8,026)			(4,415)
		Gain on dilution of MCAP Commercial LP		(68)			-
		Gain on sale of investment in MCAP Commercial LP		-			(711)
		Provision for (recovery of) credit losses		(250)			(679)
		Fair market value adjustment - derivative financial instruments		71			1,243
		Amortization of securitized mortgage and liability transaction costs		2,497			1,459
		Amortization of other assets		261			352
		Amortization of mortgage discounts (premiums)		(2,098)			(1,215)
		Amortization of premium on marketable securities		32			59
	Mortgage advances			(1,078,735)			(1,331,660)
	Mortgage reductions			608,576			921,564
	Proceeds on sale of mortgages			59,805			394,238
	Issuance of term deposits			457,059			371,810
	Repayment of term deposits			(422,264)			(334,748)
	Issuance of financial liabilities from securitization			500,075			377,085
	Repayment of financial liabilities from securitization			(91,387)			(787,866)
	Decrease (increase) in other assets			71			(952)
	Decrease in other liabilities			(1,035)			(2,919)
Cash flows from (for) operating activities				47,505			(378,501)
Investing Activities
	Increase in marketable securities			(11,319)			(1,140)
	Decrease in short-term investments			6,120			306,956
	Decrease (increase) in financial investments			(3,962)			102,717
	Decrease in other loans			333			675
	Distributions from MCAP Commercial LP			3,274			3,020
	Decrease in foreclosed real estate			149			305
	Proceeds on sale of investment in MCAP Commercial LP			-			2,930
Cash flows (for) from investing activities				(5,405)			415,463
Financing Activities
	Issue of common shares			22,443			4,724
	Increase in loans payable			-			2,944
	Dividends paid			(23,940)			(23,017)
Cash flows for financing activities				(1,497)			(15,349)
Increase in cash and cash equivalents				40,603			21,613
Cash and cash equivalents, beginning of period				51,090			64,945
Cash and cash equivalents, end of period			$	91,693		$	86,558
Supplementary Information
				2015			2014
Interest received			$	56,871		$	48,911
Interest paid				26,659			21,846

MCAN is a public company listed on the Toronto Stock Exchange ("TSX") under the symbol MKP and is a reporting issuer in all provinces and territories in Canada.  MCAN also qualifies as a mortgage investment corporation ("MIC") under the Income Tax Act (Canada) (the "Tax Act").

The Company's primary objective is to generate a reliable stream of income by investing its corporate funds in a portfolio of mortgages (including single family residential, residential construction, non-residential construction and commercial loans), as well as other types of financial investments, loans and real estate investments. MCAN employs leverage by issuing term deposits eligible for Canada Deposit Insurance Corporation ("CDIC") deposit insurance up to a maximum of five times capital (on a non-consolidated tax basis in the MIC entity) as permitted by the Tax Act.  The term deposits are sourced through a network of independent financial agents. As a MIC, MCAN is entitled to deduct from income for tax purposes 100% of dividends, except for capital gains dividends, which are deducted at 50%.  Such dividends are received by the shareholders as interest income and capital gains dividends, respectively.

MCAN's wholly-owned subsidiary, Xceed, focuses on the origination and sale to third party mortgage aggregators of residential first-charge mortgage products across Canada.  As such, Xceed operates primarily in one industry segment through its sales team and mortgage brokers.

MCAN also participates in the NHA MBS program.

A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND STATEMENTS

This press release contains "forward-looking statements" within the meaning of applicable Canadian securities laws.  The words "may," "believe," "will," "anticipate," "expect," "planned," "estimate," "project," "future," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Such statements reflect management's current beliefs and are based on information currently available to management. The forward-looking statements in this press release include, among others, statements and assumptions with respect to:      

• the current business environment and outlook;
• possible or assumed future results;
• ability to create shareholder value;
• business goals and strategy;
• the stability of home prices;
• effect of challenging conditions on us;
• factors affecting our competitive position within the housing markets;
• sufficiency of our access to capital resources; and
• the timing of the effect of interest rate changes on our cash flows.

The material factors or assumptions that were identified and applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking statements include, but are not limited to:

• the Company's ability to successfully implement and realize on its business goals and strategy;
• factors and assumptions regarding interest rates;
• housing sales and residential mortgage borrowing activities;
• the effect of competition;
• government regulation of the Company's business;
• computer failure or security breaches;
• future capital and funding requirements;
• the value of mortgage originations;
• the expected margin between interest earned on mortgage portfolios and interest paid on deposits;
• the relative continued health of real estate markets;
• acceptance of the Company's products in the marketplace;
• availability of key personnel;
• the Company's operating cost structure; and
• the current tax regime.

Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to:

• global market activity;
• worldwide demand for and related impact on commodity prices;
• changes in government and economic policy;
• changes in general economic, real estate and other conditions;
• changes in interest rates;
• changes in MBS spreads and swap rates;
• MBS and mortgage prepayment rates;
• mortgage rate and availability changes;
• adverse legislation or regulation;
• availability of MBS issuer allocation;
• technology changes;
• confidence levels of consumers;
• ability to raise capital and term deposits on favourable terms;
• our debt and leverage;
• competitive conditions in the homebuilding industry, including product and pricing pressures;
• ability to retain our executive officers and other employees;
• litigation risk;
• relationships with our mortgage originators;
• ability to realize anticipated benefits from the acquisition of Xceed; and
• additional risks and uncertainties, many of which are beyond our control, referred to in this press release and our other public filings with the applicable Canadian regulatory authorities.

Subject to applicable securities law requirements, we undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.  However, any further disclosures made on related subjects in subsequent reports should be consulted.

SOURCE MCAN Mortgage Corporation

MCAN Mortgage Corporation, Website: www.mcanmortgage.com, e-mail: [email protected], William Jandrisits, President and Chief Executive Officer, [phone]; Jeffrey Bouganim, Vice President and Chief Financial Officer, [phone]