ROE higher with growth in lending business
TORONTO, July 30, 2026 /CNW/ -- MCAN Mortgage Corporation d/b/a MCAN Financial Group ("MCAN", the "Company" or "we") (TSX: MKP), a leading Canadian mortgage investment corporation, today announced its financial results for the three and six months ended June 30, 2026. The results reflected higher net interest income from growth in our mortgage portfolio, higher income from MCAP and higher net realized gains on our securities.
Q2 2026 highlights compared to Q2 2025
-- Net interest income: $24.6 million, +4% -- Net income: $24.0 million, +19% -- Total assets under management1: $8.5 billion, +28% -- ROE1: 14.64% -- EPS: $0.59 -- Book value per share: $16.31 -- Cash dividends declared: $0.43, +5% -- CET 1 ratio2: 19.30%
YTD 2026 highlights compared to YTD 2025
-- Net interest income: $50.2 million, +6% -- Net income: $47.0 million, +28% -- ROE1: 14.40% -- EPS: $1.16 -- CET 1 ratio2: 19.30% -- Income tax assets to capital ratio3: 4.92
"We continued to grow our business to deliver improving returns to our shareholders while navigating uncertainty in the current geopolitical and economic environment. Our net interest income has increased as we grew our assets under management while managing our spreads with pricing and hedging strategies. We benefited from residential mortgage renewals which enhance our returns and continued to grow our securitization programs to diversify our funding and optimize our capital," said Derek Sutherland, CEO of MCAN. "We believe we are well-reserved in our allowance for credit losses in the current environment and our credit quality remains resilient from our sound underwriting practices and default management to remediate previously impaired files. MCAP remains a key strategic partner and we continue to work together to pursue opportunities that are mutually beneficial. Looking ahead, we will continue to focus on profitable growth, while diversifying our portfolios and investing in infrastructure to increase our operating leverage."
Total assets under management(1) grew to $8.5 billion, up 10% from the beginning of the year
-- Mortgage originations bringing total residential mortgage assets to $4.7
billion, +3% YTD, including uninsured residential mortgage assets of $1.4
billion, +6% YTD, and insured residential mortgage assets of $3.4 billion,
+2% YTD
-- Compared to YTD 2025, uninsured residential mortgage originations
increased 22% and insured residential mortgage originations
increased 18%, along with strong renewal volumes.
-- This performance reflects our outstanding service to our brokers
and customers despite a challenging and competitive market.
-- This growth was supported by our residential
mortgage securitization programs, as part of our funding
diversification and capital optimization strategy.
-- Construction and commercial mortgages balances grew to $1.2 billion, +2%
YTD
-- Loan advances of $237.8 million so far this year, including adding
more commercial term mortgages to diversify our portfolio.
-- Originations and future commitments have been steady this quarter
with some extensions of projects due to normal construction delays
relating to the permitting and zoning process as well as the
current economic environment. This led to lower run-off in the
portfolio than expected. To date, projects continue to progress
toward completion.
-- MCAP continues to perform ahead of expectations
-- MCAP income YTD of $18.0 million, +18% compared to YTD 2025,
primarily due to higher securitization income from higher average
portfolio balances.
-- Our investment in and strategic partnership with MCAP continues to
remain a key driver of returns for our shareholders.
Provisions for credit losses reflect current uncertain market outlook; however, credit quality continues to remain resilient
-- Provision for credit losses were $3.3 million for the year so far mainly
due to growth in our mortgage portfolio balance and uncertain economic
forecasts partially offset by progress on workouts for our impaired
construction loans.
-- Impaired non-securitized mortgage ratio1 was 2.40% at June 30, 2026
compared to 1.69% at December 31, 2025. At June 30, 2026, impaired
mortgages mainly represent impaired construction loans as well as
uninsured residential mortgages where asset recovery programs have been
initiated or we expect the loans to be brought current.
-- We believe overall that we have a quality mortgage loan portfolio with an
average LTV of 68.6% for our uninsured residential mortgages and 61.6%
for our construction loans at June 30, 2026.
MCAN quarterly dividend declared
-- The Board of Directors declared a third quarter regular cash dividend of
$0.43 per share to be paid September 29, 2026 to shareholders of record
on September 15, 2026.
-- Under our Dividend Reinvestment Plan ("DRIP"), dividends paid to
shareholders are automatically reinvested in common shares issued
out of treasury at the weighted average trading price for the five
days preceding such issue less a discount of 2% until further
notice from MCAN. Our DRIP may provide enhanced returns for
shareholders who participate. For how to enroll in the DRIP,
please refer to our Management Information Circular dated
February 27, 2026 or visit our website at www.mcanfinancial.com.
Management has been advised that a substantial shareholder has offered those of its unitholders who have elected to redeem their investment in such shareholder the option to take MCAN common shares in kind, instead of a cash payment. The number of unitholders who may elect this option, the number of shares that may be transferred and whether those unitholders choose to retain or dispose of those shares is uncertain.
(1) Considered to be a non-GAAP and other financial measure. For further details, refer to the "Non-GAAP and Other Financial Measures" section of this new release. Non-GAAP and other financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers. (2) These measures have been calculated in accordance with OSFI's Capital Adequacy Requirements guidelines. (3) Tax balances are calculated in accordance with the Tax Act.
Consolidated Financial Statements
Consolidated balance sheets
(Unaudited) (in thousands of Canadian dollars)
June 30 December 31
2026 2025
Assets
Cash and cash equivalents $ 66,873 $ 79,828
Cash held in trust 85,492 71,856
Marketable securities 40,395 54,146
Mortgages 6,073,183 5,938,259
Non-marketable securities 129,155 126,592
Equity investment in MCAP Commercial LP 141,249 133,995
Derivative financial instruments 488 1,907
Deferred tax assets 2,063 1,650
Other assets 100,164 69,237
6,639,062 6,477,470
Liabilities and Shareholders' Equity
Liabilities
Financial liabilities from securitization 3,665,766 3,433,883
Term deposits 2,249,097 2,340,483
Demand loans payable 36,182 19,438
Derivative financial instruments 594 46
Other liabilities 20,525 38,772
5,972,164 5,832,622
Shareholders' Equity
Share capital 500,464 491,015
Contributed surplus 510 510
Retained earnings 165,501 153,442
Accumulated other comprehensive income (loss) 423 (119)
666,898 644,848
$ 6,639,062 $ 6,477,470
Consolidated statements of income
(Unaudited) (in thousands of Canadian dollars except for per share amounts)
Q2 Q2 YTD YTD
For the Periods Ended June 30 2026 2025 2026 2025
Net Interest Income
Mortgage interest $ 76,080 $ 65,842 $ 150,774 $ 129,732
Interest on cash and other 1,305 1,691 2,573 2,866
77,385 67,533 153,347 132,598
Term deposit interest and expenses 23,073 25,502 45,956 50,384
Interest on financial liabilities
from securitization 29,202 16,276 56,211 32,312
Interest on loans payable 506 2,093 1,007 2,487
52,781 43,871 103,174 85,183
Total Net Interest Income 24,604 23,662 50,173 47,415
Non-interest Income
Equity income from MCAP Commercial
LP 10,060 9,732 17,999 15,303
Distribution income from securities 2,445 2,251 5,244 4,992
Fees 882 761 1,858 1,841
Net gain on securities 3,032 406 6,321 1,505
Net gain on sales of
securitizations, commitments
and whole loans 477 745 1,507 757
Gain on dilution of investment in
MCAP Commercial
LP 1,837 -- 1,837 --
18,733 13,895 34,766 24,398
Total Income 43,337 37,557 84,939 71,813
Provision for credit losses 1,793 2,227 3,254 5,316
Non-interest Expenses
Salaries and benefits 7,870 6,873 15,605 13,992
General and administrative 9,852 7,707 19,450 15,469
17,722 14,580 35,055 29,461
Net Income Before Income Taxes 23,822 20,750 46,630 37,036
Provision for (recovery of) income
taxes
Current 5 2 5 2
Deferred (189) 561 (413) 257
(184) 563 (408) 259
Net Income $ 24,006 $ 20,187 $ 47,038 $ 36,777
Basic and diluted earnings per share $ 0.59 $ 0.51 $ 1.16 $ 0.94
Cash dividends per share $ 0.43 $ 0.41 $ 0.86 $ 0.82
Weighted average number of basic and
diluted shares
(000's) 40,749 39,264 40,686 39,103
Consolidated statements of comprehensive income (unaudited)
(Unaudited) (in thousands of Canadian dollars)
Q2 Q2 YTD YTD
For the Periods Ended June 30 2026 2025 2026 2025
Net Income $ 24,006 $ 20,187 $ 47,038 $ 36,777
Other comprehensive income items that
may be subsequently
reclassifiedto income (loss):
Cash Flow Hedges
Net gains (losses) from changes in
fair value of cash
flow hedges (58) 557 428 557
Reclassification of net losses (gains)
to net income 42 107 114 221
Total Other Comprehensive Income (16) 664 542 778
Comprehensive Income $ 23,990 $ 20,851 $ 47,580 $ 37,555
Consolidated statements of changes in shareholders' equity (unaudited)
(Unaudited) (in thousands of Canadian dollars)
Q2 Q2 YTD YTD
For the Periods Ended June 30 2026 2025 2026 2025
Share Capital
Balance, beginning of period $ 496,057 $ 464,106 $ 491,015 $ 456,683
Share capital issued, net of share
issuance costs 4,407 8,821 9,449 16,244
Balance, end of period 500,464 472,927 500,464 472,927
Contributed Surplus 510 510 510 510
Retained Earnings
Balance, beginning of period 159,023 144,259 153,442 143,620
Net income 24,006 20,187 47,038 36,777
Dividends declared (17,528) (16,150) (34,979) (32,101)
Balance, end of period 165,501 148,296 165,501 148,296
Accumulated Other Comprehensive
Income
Balance, beginning of period 439 (1,510) (119) (1,624)
Other comprehensive income (16) 664 542 778
Balance, end of period 423 (846) 423 (846)
Total Shareholders' Equity $ 666,898 $ 620,887 $ 666,898 $ 620,887
Consolidated statements of cash flows (unaudited)
(Unaudited) (in thousands of Canadian dollars)
Q2 Q2 YTD YTD
For the Periods Ended June 30 2026 2025 2026 2025
Cash flows from (for):
Operating Activities
Net income $ 24,006 $ 20,187 $ 47,038 $ 36,777
Adjustments to determine cash
flows relating to operating
activities:
Deferred taxes (189) 561 (413) 257
Equity income from MCAP Commercial
LP (10,060) (9,732) (17,999) (15,303)
Gain on dilution of investment in
MCAP Commercial
LP (1,837) -- (1,837) --
Provision for credit losses 1,793 2,227 3,254 5,316
Net (gain) loss on securities (2,804) 526 (2,146) 887
Amortization of cash flow hedges
net losses (gains) 42 107 115 221
Amortization of securitized
mortgage and liability
transaction costs 3,055 2,627 5,816 5,181
Amortization of other assets 604 478 1,089 1,111
Changes in operating assets and
liabilities:
Marketable securities 17,172 5,169 17,271 9,003
Mortgages (23,678) (276,307) (142,342) (295,261)
Non-marketable securities (2,369) (751) (3,938) (5,778)
Derivative Financial Instruments (292) 3,714 2,394 229
Other assets (12,733) (4,710) (30,401) (9,612)
Cash held in trust (16,850) 632 (13,636) (14,907)
Term deposits (100,848) 49,660 (91,386) 100,635
Financial liabilities from
securitization 102,534 81,664 230,233 25,667
Other liabilities 1,763 3,213 (2,007) (3,585)
Cash flows from (for) operating
activities (20,691) (120,735) 1,105 (159,162)
Investing Activities
Distributions from MCAP Commercial
LP 6,136 3,622 12,582 8,653
Acquisition of capital and
intangible assets (707) (700) (811) (3,782)
Cash flows from investing
activities 5,429 2,922 11,771 4,871
Financing Activities
Proceeds from issuance of common
shares, net of share
issuance costs 993 5,616 993 6,714
Net change in demand loans (33,402) 144,431 16,744 258,258
Increase (decrease) in premises
lease liability (27) 2,387 328 2,305
Dividends paid (14,917) (13,659) (43,896) (40,172)
Cash flows from (for) financing
activities (47,353) 138,775 (25,831) 227,105
Increase (decrease) in cash and
cash equivalents (62,615) 20,962 (12,955) 72,814
Cash and cash equivalents,
beginning of period 129,488 113,555 79,828 61,703
Cash and cash equivalents, end of
period $ 66,873 $ 134,517 $ 66,873 $ 134,517
Supplementary Information
Interest received $ 78,091 $ 68,236 $ 155,492 $ 133,873
Interest paid 39,863 28,419 93,243 72,670
Distributions received from
securities 2,363 2,152 5,080 4,772
Further Information
See our complete 2026 Second Quarter Report filed on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca and on the Company's website at www.mcanfinancial.com.
For our Outlook, refer to the "Outlook" section of the 2026 Second Quarter Report.
MCAN is a public company listed on the Toronto Stock Exchange 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). MCAN is the largest MIC in Canada and the only federally regulated MIC that issues term deposits eligible for Canada Deposit Insurance Corporation deposit insurance.
MCAN's primary objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages, including residential mortgages, residential construction, non-residential construction, and commercial loans, as well as other types of securities, loans, and real estate investments.
MCAN is Reimagining Opportunity to Drive Growth for Canadian Communities.
A Caution About Forward-Looking Information and Statements
This news release contains forward-looking information within the meaning of applicable Canadian securities laws. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. All of the forward-looking information in this news release is qualified by this cautionary note. Often, but not always, forward-looking information can be identified by the use of words such as "may," "believe," "will," "anticipate," "expect," "planned," "estimate," "project," "future," and variations of these or similar words or other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters. Forward-looking information in this news release includes, among others, statements and assumptions with respect to:
-- the current business environment, economic environment and outlook;
-- possible or assumed future results;
-- our ability to create shareholder value;
-- our business goals and strategy;
-- the potential impact of new regulations and changes to existing
regulations as well as any changes in tax legislation;
-- the stability of home prices;
-- the effect of challenging conditions on us;
-- the performance of our investments;
-- factors affecting our competitive position within the housing lending
market;
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