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Consolidated Financial Position
The Company’s on-balance sheet assets
totalled $5.99 billion at December 31, 2002, compared to $6.12
billion at December 31, 2001.
Securities
The Company’s holdings of securities
were $156.2 million at December 31, 2002 – a decrease
of $92.0 million or 37.1%. Securities currently represent
2.6% of total assets as compared with 4.1% at December 31,
2001. The market value of the Company’s portfolio at
December 31, 2002 exceeded cost by $125.1 million compared
with $163.6 million at year end 2001. The proceeds realized
from securities sold during the year were used in part to
repay the bridge financing related to the acquisition of Mackenzie.
The Company continually strives to ensure
that its portfolio holdings are of the highest quality. To
manage the market and credit risk associated with a securities
portfolio, a Senior Management Investment Committee monitors
the Company’s portfolio and approves all purchases. This
Committee regularly reviews the portfolio to identify holdings
where there has been an other than temporary decline in value.
In these circumstances, the carrying amount of the security
is written down to recognize the loss. Management also reviews
the portfolio to establish appropriate and prudent allowances
where other than temporary impairment is not yet evident.
Loans
Loans, including mortgages and personal
loans, decreased by 16.2%, or $106.1 million, to $549.0 million
at December 31, 2002 and represent 9.2% of total assets, compared
to 10.7% at year end 2001. This decrease is comprised of $44.7
million in mortgages and personal loans related to the Company’s
intermediary activities and a decrease of $61.4 million in
residential loans related to the Company’s mortgage banking
operations.
Residential mortgage loans, sourced with
the assistance of Investors Group Consultants, are primarily
designated for sale to third parties on a fully serviced basis
through Investors Group’s mortgage banking operations.
Mortgage loans sourced through mortgage brokers and personal
loans sourced through MRS Group relate to M.R.S. Trust’s
intermediary activities. M.R.S. Trust also sells mortgages
and personal loans to third parties on a fully serviced basis
through its securitization activities.
Credit risk
At December 31, 2002, impaired loans totalled
$2.2 million and represented .38% of the total loan portfolio,
compared with $3.4 million, or .49%, at December 31, 2001.
The Company monitors its credit risk management policies continuously
to evaluate their effectiveness. These policies and practices
have resulted in the effective control of impaired loans.
Management continued its conservative policy of maintaining
adequate allowances to absorb all known and foreseeable credit-related
losses in the mortgage, loan, and real estate portfolios.
The allowance for credit losses exceeded impaired mortgages
and loans by $19.4 million as at December 31, 2002, compared
to $17.9 million at December 31, 2001.
During 2003, the Company does not expect
any significant losses in its mortgage portfolios because:
- The portfolios are 94% residential
and 66% insured.
- 83% of the portfolios are owner occupied.
- The mortgages in the portfolios are
geographically diverse.
- The Company continues to apply strict
credit risk management policies.
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