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Xceed Company Profile

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30 years of experience in the Canadian mortgage finance industry. ... through established $100 billion dollar asset-backed commercial paper market ... – PowerPoint PPT presentation

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Title: Xceed Company Profile


1
Xceed Company Profile
Helping Canadians Make It Home
2
Forward-Looking And Other Statements
  • This presentation contains forward-looking
    statements which reflect managements
    expectations regarding Xceed Mortgage
    Corporations future growth, performance (both
    operational and financial), and business
    prospects and opportunities. Past results do not
    constitute a guarantee of future performance. A
    number of factors could cause actual results,
    performance, or achievements to differ materially
    from the results expressed or implied in these
    materials. Business prospects and opportunities
    considered are based on approximation
    extrapolation of potential market indicators.
    These factors should be considered carefully and
    prospective investors should not place undue
    reliance on any forward-looking statements.

- 2 -
3
Corporate Overview
  • Established in Canada in 1997 as a subsidiary of
    IMC Mortgage Corporation.
  • Current investor group purchased 90 of common
    stock from BMO in April 2002 and recapitalized
    firm with 22.2MM.
  • IPO of June 2004 raised additional 24.34MM.

- 3 -
4
Value Proposition
  • Focused Origination
  • Established mortgage broker relationships
  • Financial Institution channel
  • Direct business
  • Risk-Reward Management
  • Credit risk
  • Market risk
  • Business Model
  • Securitization program
  • Entrepreneurial culture
  • Structured management processes
  • Technology

- 4 -
5
Executive Team
  • Ivan Wahl Chairman, CEO Director
  • 30 years of experience in the Canadian mortgage
    finance industry.
  • Played a leading role in the development of the
    mortgage-backed securitization industry in
    Canada.
  • Founded FirstLine Trust Company in 1985, grew and
    sold the business to CIBC in 1995.
  • Vice-Chairman and Director of CIBC Mortgages Inc.
    from 1995 to 2001.
  • Recipient of the Ernst Young Financial Services
    Entrepreneur of the Year award for 2005.
  • Michael Jones President COO
  • Previously Vice President, Commercial Mortgages
    for CIBC Mortgages Inc. where he also oversaw the
    CIBC Access Program.
  • Joined FirstLine Trust in 1992.
  • John Ayanoglou CFO Corporate Secretary
  • Previously the Chief Financial Officer of
    publicly-listed Cartier Partners Financial Group.
  • Practiced within Financial Services Group of
    PricewaterhouseCoopers LLP from 1996 to 2000.
  • Karen Martin VP, Securitization and Capital
    Markets
  • Previously the Treasurer of Amicus Holdings
    (division of CIBC), Director of Balance Sheet
    Management, and General Manager of Securitization
    for CIBC.
  • Manager, Financial Analysis and Manager,
    Financial Reporting for FirstLine Trust Co. from
    1988 to 1996.

- 5 -
6
Financial Performance
2006(1)
2001
CAGR
Revenue
1,824M
58,015M
116
AUM
132MM
1,976MM
83
Net Income(2)
(1,127)M
21,993M
91
ROAE (3)
(34.8)
24.6
21.9
  1. Trailing twelve months ended April 30, 2006,
    except for Mortgages.
  2. The CAGR figure for Net Income is calculated from
    fiscal year 2002 as net income was negative in
    2001.
  3. The percentage presented is the average ROAE
    calculated from fiscal year 2002 as net income
    was negative in 2001.

- 6 -
7
Revenue Growth
CAGR 116
Under Previous Management
Under Current Management
Xceeds fiscal year end is October 31. The 2006
balance represents the trailing twelve months
ended April 30, 2006.
- 7 -
8
Total Assets Under Administration Growth
CAGR 83
Under Previous Management after 5 years
Under Current Management
Xceeds fiscal year end is October 31. The 2006
balance represents the trailing twelve months
ended April 30, 2006.
- 8 -
9
Increasing Profitability
Net Income Growth
CAGR 91
Under Previous Management
Under Current Management
Xceeds fiscal year end is October 31. The 2006
balance represents the trailing twelve months
ended April 30, 2006.
- 9 -
10
Effective Use of Capital
Return on Equity
Average 21.9
Under Previous Management
Under Current Management
Xceeds fiscal year end is October 31. The 2006
ratio represents the trailing twelve months
ended April 30, 2006.
- 10 -
11
Growth Potential
  • Potential size of Canadian non-traditional market
    is estimated at 10 of the total residential
    mortgage financing market (approximately 650
    billion)
  • Total outstandings of the non-conforming market
    in Canada are approximately 10 billion
  • About 55 billion in untapped potential!!
  • This represents 300,000 families living in
    apartments who may meet our underwriting
    requirements and would love to own their own
    homes.

- 11 -
12
Market Niche
  • Focus on non traditional market
  • Non Conforming Credit
  • High Loan to Value Uninsured

- 12 -
13
Market Position
Traditional Lenders (Big 6 Banks)
Wells Fargo / GMAC / First National
XCEED
A B C
Borrower Credit Rating
Home Capital / Equitable Trust
25 50 75 100
Mortgage Loan to Value (LTV) Ratio
- 13 -
14
Fundamentals
  • Opportunity for product innovation beyond vanilla
    3 year 5 year offerings.
  • Low variable cost business model provides
    significant operating leverage electronic
    approval / funding system, with single location
    (in Toronto).
  • Efficient method of raising capital provides
    opportunity for high ROE
  • Effective improvements in funding ratios to
    leverage increased volumes.

- 14 -
15
Funding Methodology
  • 62 Million combined warehouse and revolving
    facility
  • Securitization of mortgages thru regular
    (non-recourse) sale to Trusts.
  • Trust senior notes funded through established
    100 billion dollar asset-backed commercial paper
    market
  • Trust credit enhancement provided by third party
    investors and Xceed

- 15 -
16
Solid Risk Control
  • Interest Risk immunization thru swaps and other
    hedging mechanisms.
  • Credit Risk control thru frequent asset quality
    and compliance reviews by DBRS and Trusts
    securitization agent
  • First charge, residential mortgages only,
    regionally diversified, in pre-approved locales
  • Average mortgage size is 160,000
  • For mortgages with LTV gt 90, retain only the
    risk associated with 80 piece and sell the
    subordinated piece gt 80 to third party financial
    institution

- 16 -
17
Credit Risk
  • Typical Xceed Mortgage

100
Homeowner Equity
Interest Sold To 3rd Party F.I.
Credit Risk Managed by Xceed

92
81
Securitized Portfolio
- 17 -
18
Diversification
- 18 -
19
Financial Model Pro-Forma Economics
  • Approximate mortgage coupon rate and cost of
    funds are based on historical average in the
    securitized portfolio.
  • Trusts costs consist of allowance for losses,
    historical cost of credit enhancement in the
    existing securitized portfolio, program fees, and
    MCAP servicing costs.
  • Net Origination Costs are comprised of
    application fee revenue based on Xceeds
    historical product mix, less other costs incurred
    up to mortgage funding. These other costs
    include commissions and volume bonuses, cost of
    yield buy up on subordinate co-owned interest,
    and other origination costs.
  • This estimate is calculated by spreading the
    costs incurred in a trailing twelve month look
    back ending April 30, 2006 over the expected life
    of the mortgages originated.
  • Recurring income is before applicable taxes and
    does not consider prepayment fee income and
    certain pipeline hedging costs.
  • .

Recurring Yield Spreads Recurring Yield Spreads
Mortgage Coupon (1) 7.18
Swap Cost of Funds (1) (4.06)
Gross Spread 3.12
Trust Costs (2) (1.15)
Net Spread 1.97
Net Origination Costs (3)(4) (0.19)
Net Operating Expenses (4) (0.71)
Recurring Income (5) 1.07
- 19 -
20
Disciplined Underwriting
Reduction in Loss Default Percentages(1)
Mortgage Default CAGR (5)
(2)
Under Previous Management
Under Current Management
  1. Ratios are a percentage of average securitized
    portfolio under administration.
  2. Xceeds fiscal year end is October 31. The 2006
    percentages represent the trailing twelve months
    ended April 30, 2006.

- 20 -
21
Summary
  • Limited competition.
  • Nascent, rapidly growing niche.
  • Strong experienced management.
  • Capital markets proprietary funding models.
  • Performance based culture.
  • Focused multi-channel origination.
  • Disciplined underwriting.
  • Disciplined default management.
  • Risk adjusted pricing model.
  • Flexible, scalable technology with comprehensive
    relevant reporting capability.

- 21 -
22
Questions
- 22 -
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