MCAN Mortgage Corporation Reports First Quarter Earnings and Declares Dividend

Stock market symbol
TSX: MKP

TORONTO, May 6, 2015 /CNW/ - MCAN Mortgage Corporation's ("MCAN", the "Company" or "we") net income for the first quarter of 2015 was $4.3 million, compared to $7.4 million in 2014.  Earnings per share were $0.21, down from $0.36 in the prior year.  Return on average shareholders' equity was 7.49% for the quarter, down from 13.52% in the prior year.

The decrease in net income from the first quarter of 2014 was primarily due to certain items not related to net interest income.  We had a $1.5 million realized and unrealized loss on financial instruments and lower equity income from MCAP Commercial LP ("MCAP") in the current quarter, partially offset by higher securitization income in the current quarter from a significant increase in our participation in the market mortgage-backed securities ("MBS") program.  In the prior year, we had a gain from the partial sale of our equity investment in MCAP and a significant recovery of a provision. 

We incurred a $1.5 million loss in the current quarter on the hedge associated with mortgages securitized through the market MBS program as a result of the decline in 5-year Government of Canada bond rates during the quarter following the Bank of Canada overnight rate cut in January.  The offsetting economic gain will be recorded over the 5-year term of the related MBS through higher spread income, as this hedging activity did not qualify for hedge accounting which would have provided an accounting offset.  Income from the market MBS program increased in the current quarter as a result of the growth in our securitized portfolio from the prior year, including the issuance of $146 million of new MBS in the current quarter.

Corporate assets totalled $1.06 billion as at March 31, 2015, up from $1.04 billion as at December 31, 2014.  Activity for the quarter included increases of $27 million in cash and cash equivalents and $4 million in financial investments and a decrease of $13 million in mortgages.  Our corporate mortgage portfolio decreased from $895 million at December 31, 2014 to $882 million at March 31, 2015, which included a decrease of $26 million in construction loans and increases of $5 million in uninsured single family mortgages and $9 million in commercial loans.  Given the current economic uncertainty in Alberta, we have taken a measured approach to new loan originations and have experienced a steady volume of loan repayments. 

The Board of Directors (the "Board") declared a second quarter regular dividend of $0.28 per share to be paid June 30, 2015 to shareholders of record as of June 15, 2015.

Net Investment Income - Corporate Assets:  Net investment income from corporate assets was $7.4 million in the current quarter, down from $10.3 million in the prior year.

Mortgage interest income

Mortgage interest income increased to $12.5 million in the current quarter from $12.4 million in the prior year.  The average mortgage portfolio balance increased from $848 million in the prior year to $921 million in the current quarter, while the average mortgage portfolio yield decreased from 6.02% in the prior year to 5.48% in the current quarter. 

Excluding the mortgages acquired as part of the acquisition of Xceed, the average yield decreased from 5.79% to 5.48%.  The balance of the decrease in the corporate yield from the prior year was due to a shift in the average mortgage balance by line of business in the current quarter such that our residential construction portfolio has been relatively flat while our single family portfolio has increased significantly.  The proportionately higher balance of these lower-yielding mortgages caused the average corporate mortgage yield to decrease, however this was more than offset by an increase in market MBS program income in the current quarter. 

The growth in the average mortgage portfolio since the prior year has related primarily to our single family mortgage portfolio.  Due to significantly higher securitization activity through the market MBS program in the current quarter, our average corporate insured single family mortgage balance increased substantially over the prior year.  We generally hold these mortgages on our corporate balance sheet on a short-term basis prior to securitization.  The average corporate mortgage portfolio also increased as a result of an increase in our uninsured single family mortgage portfolio, partially offset by a decrease in the average commercial loan portfolio balance. 

Equity income from MCAP

Equity income from our ownership in MCAP decreased from $2.1 million in the prior year to $1.1 million in the current quarter.  During the quarter, MCAP incurred hedge losses on its mortgage commitments as a result of the decrease in 5-year Government of Canada bond rates further discussed below in "realized and unrealized losses on financial instruments".  MCAP expects to recover these losses through gains on sale or higher spread income once the committed mortgages fund.  In addition, mortgage origination expenses increased over the prior year.   These items were partially offset by increased servicing income from higher assets under administration and an increase in mortgage origination fees.  MCAP's origination volumes were $2.7 billion in the first quarter of 2015.  MCAP had $47.6 billion of assets under administration as at February 28, 2015.

Realized and unrealized losses on financial instruments

The realized and unrealized loss on financial instruments increased significantly to $1.5 million in the current quarter from $319,000 in the prior year. These losses relate to the hedging of mortgage funding commitments to mitigate interest rate risk.  We enter 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 realized over the term of the mortgage through higher (lower) spread income. 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. 

During the current quarter, 5-year Government of Canada bond rates decreased significantly from 1.34% to 0.79%, which was the primary reason for the $1.5 million loss that was incurred.  However, this decrease will be offset by a significant future economic benefit through substantially higher than usual spread income from the $146 million of mortgages securitized through the market MBS program in the current quarter.  The prior year loss was due to a decrease of 0.14% in the 5-year Government of Canada bond rate.

Other net investment income

Fees consisting primarily of extension, renewal and letter of credit fees earned on our corporate mortgage portfolio, decreased slightly to $530,000 in the current quarter from $615,000 in the prior year.

Marketable securities income increased to $387,000 in the current quarter from $310,000 in the prior year as a result of a higher average portfolio balance in the current quarter. 

Whole loan gains on sale were $205,000 in the current quarter, down from $331,000 in the prior year.  We regularly sell mortgages to third-party aggregators on a whole-loan basis with mortgage premiums received at the time of sale.  In the current quarter, we used the majority of our insured single family originations for the market MBS program and therefore whole loan sales volumes were relatively low.

Term deposit interest and expenses increased to $5.1 million in the quarter from $5.0 million in the prior year as a result of a $54 million increase in the average term deposit balance from $788 million in the prior year to $842 million in the current quarter.  The average term deposit rate decreased from 2.49% in the prior year to 2.40% in the current quarter.

Mortgage expenses, consisting primarily of mortgage servicing fees, decreased to $894,000 in the current quarter from $954,000 in the prior year. 

We recorded $63,000 of recoveries of credit losses during the quarter compared to $608,000 of recoveries in the prior year.  The change is primarily due to a recovery of a $550,000 individual mortgage allowance in the prior year.
Net write-offs increased to $223,000 (9.7 basis points) during the current quarter from $57,000 (2.7 basis points) in the prior year.

Other Income - Corporate Assets:  The prior year included a $711,000 gain from the partial sale of our investment in MCAP.

Net Investment Income - Securitization Assets:  Net investment income from securitization assets was $694,000 in the current quarter compared to a loss of $277,000 in the prior year.  Net investment income from securitization assets relates to MCAN's participation in the market MBS program and 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.  The CMB program will cease after the maturity of the last issuance in the second quarter of 2015. 

Market MBS Program

Net investment income from the market MBS program was $728,000 in the current quarter, up from $421,000 in the prior year.  Mortgage interest income was $4.9 million, up from $1.6 million in the prior year.  The average portfolio balance increased from $208 million to $709 million, while the average yield decreased from 3.00% to 2.84%.  Interest on financial liabilities from securitization was $3.9 million in the current quarter, up from $1.1 million in the prior year.  The market MBS liability average balance increased from $205 million to $710 million while the average interest rate decreased from 2.25% to 2.23%. 

CMB Program

We incurred a net loss of $33,000 from the CMB program in the current quarter compared to a loss of $699,000 in the prior year.  CMB mortgage interest was $57,000 in the current quarter, down from $939,000 in the prior year. Interest on financial liabilities from securitization was $122,000, down from $2.1 million in the prior year.  Both decreases were a result of a significant decline in the average principal balance from the maturity of issuances over 2014.  Interest on financial investments and interest on short-term investments both decreased from the prior year by $204,000 and $264,000, respectively, as a result of a significant decrease in the average portfolios due to the continued maturity of CMB-related assets during the current year.

Operating Expenses:  Operating expenses were $3.6 million in the current quarter, up from $3.4 million in the prior year.  Salaries and benefits increased by $323,000, while general and administrative expenses decreased by $117,000.  The increase in salaries and benefits was due to an increase in the number of employees in the current quarter.  As we have grown our internal origination platform through Xceed, we have continued to increase the size of our staff.

Income Taxes:  In the current quarter we incurred a deferred tax expense of $225,000 compared to a recovery of $13,000 in the prior year.  We incurred deferred taxes in the current year from the partial application of loss carry forwards as a result of taxable income earned in subsidiaries.

Taxable income was $924,000 ($0.04 per share) in the current quarter compared to $4.1 million ($0.20 per share) in the prior year.  In the current quarter, we incurred $5.8 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 $2.1 million in the prior year. 

Credit Quality:  Impaired mortgages were $8.0 million as at March 31, 2015, down from $8.4 million as at December 31, 2014.  The total impaired mortgage ratio was 0.45% at March 31, 2015, down from 0.50% at December 31, 2014 while the corporate impaired mortgage ratio also decreased to 0.90% at March 31, 2015 from 0.92% as at December 31, 2014. 

Corporate mortgage arrears and impaired mortgages were $32 million at March 31, 2015, up from $30 million at December 31, 2014.  Securitized mortgage arrears were $10 million at March 31, 2015, up from $9 million as at December 31, 2014.  Despite the economic volatility and uncertainty relating to oil prices and any potential impact across Canada, our mortgage arrears did not increase significantly during the first quarter of 2015.

Financial Position:  Total assets were $1.96 billion as at March 31, 2015, consisting of $1.06 billion of corporate assets and $901 million of securitization assets.  Corporate assets increased by $19 million in the current quarter, which included increases of $27 million in cash and cash equivalents and $4 million in financial investments and a decrease of $13 million in mortgages.  Our corporate mortgage portfolio decreased from $895 million at December 31, 2014 to $882 million at March 31, 2015, which included a decrease of $26 million in our residential construction loan portfolio.

Securitization assets increased by $140 million during the quarter, primarily due to the $146 million of new mortgages securitized through the market MBS program in the current quarter.  CMB-related asset activity was minimal as there were no CMB issuance maturities in the quarter.

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 mortgages purchased are securitized in the following quarter.

Term deposit liabilities were $847 million at March 31, 2015, up from $822 million at December 31, 2014.

Financial liabilities from securitization were $881 million at March 31, 2015, up from $746 million as at December 31, 2014.  The increase was due to $146 million of new liabilities from our current quarter issuance through the market MBS program and an $11 million repayment of existing market MBS liabilities. 

Total shareholders' equity was $231 million as at March 31, 2015, up from $225 million as at December 31, 2014. Activity for the quarter included net income of $4.3 million, the issuance of $3.9 million of new common shares through the dividend reinvestment plan, the payment of the first quarter dividend of $5.9 million and an increase to accumulated other comprehensive income of $3.7 million.

Asset Capacity:  As at March 31, 2015, our remaining income tax asset capacity, based on our target income tax assets to capital ratio of 5.75, was $105 million.

Outlook:  While the majority of Canadian real estate markets have remained balanced throughout the first quarter of 2015, we continued to observe weakness in the housing markets in Alberta as the province adjusts to instability in oil prices and weakness in employment. We expect housing markets to remain in a balanced state given inventory levels remain at record lows while consumers and developers adjust current sales activity due to regional economic conditions. The housing market in Alberta is expected to encounter some instability over the next few quarters as the market adjusts to lower employment, net provincial migration and home sales.

The overnight rate cut by the Bank of Canada in January appears to have softened the impact of the energy sector on the housing market.  The integration of lower rates into markets has facilitated increased consumer spending and stabilized economic growth. In 2015, the housing market should continue to benefit from the low interest rate environment and stable unemployment rates. We expect continued volatility in the stock market and the global price of oil could have a temporary negative influence on market sentiment in the first half of 2015. We expect mortgage rates to remain low as a result of increased competition between mortgage providers and compression in the long term bond market which has improved mortgage spreads. Balanced housing markets and low mortgage rates should support price appreciation to support demand for housing in Ontario and British Colombia. We expect interest rates to remain at historic lows throughout 2015.

We participated in the MBS securitization market with a $146 million issuance in the first quarter of 2015. We expect to continue these issuances in the near term. We experienced significant volatility in the Canadian MBS bond market in the first quarter following the Bank of Canada's unexpected overnight rate cut as MBS bond spreads widened due to market uncertainty and reduced appetite given significantly lower all-in rates. These market conditions impacted the timing of MCAN's securitization and hedging activities in the first quarter. We expect less volatile market conditions in the coming quarters.

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.

Our growth strategy remains focused on our single family mortgage portfolio both sourced by MCAP and through our direct origination platform of Xceed. We continue to experience growth in origination in this asset class and expect originations to strengthen over 2015 which will allow us to grow 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 experiencing increased activity while Alberta sees reduced activity as a result of the decline in oil prices and decreased exploration activity effecting employment. Our construction portfolio remains well balanced containing seasoned projects underwritten with strong pre-sales and experienced builders and developers.

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, Common Equity Tier 1, Tier 1 and Total Capital Ratios, Total Exposures, Regulatory Assets, Leverage Ratio, Assets to Capital Multiple; Risk Weighted Asset 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 First 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)
				March 31		December 31
As at				2015			2014
Assets
Corporate Assets
	Cash and cash equivalents		$	78,438		$	51,090
	Marketable securities			26,445			24,900
	Mortgages			882,181			895,467
	Foreclosed real estate			686			686
	Financial investments			32,859			28,469
	Other loans			1,517			2,108
	Equity investment in MCAP Commercial LP			39,888			38,792
	Other assets			1,798			3,067
				1,063,812			1,044,579
Securitization Assets
	Short-term investments			24,939			16,763
	Mortgages			874,075			741,184
	Financial investments			109			907
	Derivative financial instruments			47			71
	Other assets			1,678			1,441
				900,848			760,366
			$	1,964,660		$	1,804,945
Liabilities and Shareholders' Equity
Liabilities
Corporate Liabilities
	Term deposits		$	847,434		$	821,742
	Current taxes payable			120			120
	Deferred tax liabilities			1,053			473
	Other liabilities			3,957			11,202
				852,564			833,537
Securitization Liabilities
	Financial liabilities from securitization			880,574			746,063
	Other liabilities			180			42
				880,754			746,105
				1,733,318			1,579,642
Shareholders' Equity
	Share capital			187,799			183,939
	Contributed surplus			510			510
	Retained earnings			32,913			34,481
	Accumulated other comprehensive income			10,120			6,373
				231,342			225,303
			$	1,964,660		$	1,804,945

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in thousands of Canadian dollars except for per share amounts)
For the Quarters Ended March 31				2015			2014
Net Investment Income - Corporate Assets
	Mortgage interest		$	12,541		$	12,407
	Equity income from MCAP Commercial LP			1,096			2,095
	Fees			530			615
	Marketable securities			387			310
	Whole loan gain on sale income			205			331
	Realized and unrealized gain (loss) on financial instruments			(1,481)			(319)
	Interest on financial investments and other loans			144			44
	Interest on cash and cash equivalents			128			218
				13,550			15,701
	Term deposit interest and expenses			5,141			5,029
	Mortgage expenses			894			954
	Interest on loans payable			180			34
	Provision for (recovery of) credit losses			(63)			(608)
				6,152			5,409
				7,398			10,292
Other Income - Corporate Assets
	Gain on sale of investment in MCAP Commercial LP			-			711
				-			711
Net Investment Income - Securitization Assets
	Mortgage interest			4,951			2,573
	Interest on financial investments			1			205
	Interest on short-term investments			25			289
	Other securitization income			33			447
				5,010			3,514
	Interest on financial liabilities from securitization			4,022			3,226
	Mortgage expenses			270			101
				4,292			3,327
	Net investment income before fair market value adjustment			718			187
	Fair market value adjustment - derivative financial instruments			(24)			(464)
				694			(277)
Operating Expenses
	Salaries and benefits			2,060			1,737
	General and administrative			1,511			1,628
				3,571			3,365
Net Income Before Income Taxes				4,521			7,361
Provision for (recovery of) income taxes
	Deferred			225			(13)
				225			(13)
Net Income			$	4,296		$	7,374
Basic and diluted earnings per share			$	0.21		$	0.36
Dividends per share			$	0.28		$	0.28
Weighted average number of basic and diluted shares (000's)				20,941			20,507

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (in thousands of Canadian dollars)
For the Quarters Ended March 31			2015			2014
Net income		$	4,296		$	7,374
Other comprehensive income
	Change in unrealized gain on available for sale marketable securities		1,424			590
	Transfer of losses (gains) on sale of marketable securities to net income		-			41
	Change in unrealized gain on available for sale financial investments		2,678			-
	Less: deferred taxes		(355)			-
			3,747			631
Comprehensive income		$	8,043		$	8,005

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) (in thousands of Canadian dollars)
For the Quarters Ended March 31				2015			2014
Share capital
Balance, beginning of period			$	183,939		$	179,215
Common shares issued				3,860			1,246
Balance, end of period				187,799			180,461
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				4,296			7,374
Dividends declared				(5,864)			(5,742)
Balance, end of period				32,913			33,777
Accumulated other comprehensive income
Balance, beginning of period				6,373			3,030
Other comprehensive income				3,747			631
Balance, end of period				10,120			3,661
Total shareholders' equity			$	231,342		$	218,409

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands of Canadian dollars)
For the Quarters Ended March 31				2015			2014
Cash provided by (used for):
Operating Activities
	Net income		$	4,296		$	7,374
	Adjusted for non-cash items:
		Deferred taxes		225			(13)
		Equity income		(1,096)			(2,095)
		Gain on sale of investment in MCAP Commercial LP		-			(711)
		Provision for (recovery of) credit losses		(63)			(608)
		Fair market value adjustment - derivative financial instruments		24			464
		Amortization of securitized mortgage and liability transaction costs		644			227
		Amortization of other assets		98			17
		Amortization of mortgage discounts (premiums)		11			(610)
		Amortization of premium on marketable securities		(11)			-
	Mortgage advances			(333,442)			(284,248)
	Mortgage reductions			187,252			104,991
	Proceeds on sale of mortgages			26,112			322,419
	Issuance of term deposits			111,187			77,080
	Repayment of term deposits			(85,495)			(69,279)
	Issuance of financial liabilities from securitization			146,060			45,998
	Repayment of financial liabilities from securitization			(11,549)			(372,472)
	Decrease in other assets			710			866
	Decrease in other liabilities			(1,176)			(5,203)
Cash flows from (for) operating activities				43,787			(175,803)
Investing Activities
	Increase in marketable securities			(111)			(2,983)
	(Increase) Decrease in short-term investments			(8,177)			207,229
	(Increase) Decrease in financial investments			(914)			1,964
	Increase in foreclosed real estate			-			(40)
	Proceeds on sale of investment in MCAP Commercial LP			-			2,930
	Decrease in other loans			593			346
Cash flows (for) from investing activities				(8,609)			209,446
Financing Activities
	Issue of common shares			3,860			1,246
	Decrease in loans payable			-			(17,991)
	Dividends paid			(11,690)			(11,471)
Cash flows for financing activities				(7,830)			(28,216)
Increase in cash and cash equivalents				27,348			5,427
Cash and cash equivalents, beginning of period				51,090			64,945
Cash and cash equivalents, end of period			$	78,438		$	70,372
Supplementary Information
				2015			2014
Interest received			$	18,805		$	15,687
Interest paid				7,254			4,302

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 market MBS program and the CMB 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 CMB and 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]