Residential mortgage growth lifts MCAN earnings 19%

MCAN Financial’s mortgage book continued to grow in the second quarter, helping lift earnings even as the lender reported a higher share of impaired loans.

The mortgage investment corporation earned $24 million, up 19% from $20.2 million a year earlier. Earnings per share rose to 59 cents from 51 cents.

Net interest income increased 4% to $24.6 million, supported by a larger mortgage portfolio and higher income from renewals.

Originations picked up on both sides of MCAN’s residential business during the first half of the year. Uninsured volumes rose 22% from the same period in 2025, while insured originations increased 18%.

MCAN held $4.7 billion in residential mortgage assets as of Q2, up 3% from the start of the year. That included $1.4 billion in uninsured mortgages, up 6%, and $3.4 billion in insured mortgages, up 2%.

“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,” CEO Derek Sutherland said.

Total assets under management reached $8.5 billion, up 28% from a year earlier and 10% since the end of 2025.

Mortgage growth was not the only factor behind the stronger quarter. MCAN recorded $3 million in net gains on securities, up from $406,000 a year earlier, along with a $1.8-million gain related to the dilution of its investment in MCAP Commercial LP.

Equity income from MCAP edged up 3% to $10.1 million in the quarter. For the first half of the year, it rose 18% to $18 million, mainly because of higher securitization income from larger average portfolio balances.

Impaired mortgage ratio rises

MCAN set aside $1.8 million for credit losses during the quarter, down from $2.2 million a year earlier. Provisions for the first half fell to $3.3 million from $5.3 million.

The company said the provisions reflected growth in its mortgage portfolio and an uncertain economic outlook, partly offset by progress resolving impaired construction loans.

Still, its impaired non-securitized mortgage ratio rose to 2.40% at the end of June from 1.69% at the end of 2025.

Most of the impaired balance consisted of construction loans, along with uninsured residential mortgages that were either under recovery programs or expected to be brought current.

MCAN reported an average loan-to-value ratio of 68.6% across its uninsured residential portfolio and 61.6% for construction loans.

Construction and commercial mortgage balances stood at $1.2 billion, up 2% from year-end, with advances totalling $237.8 million during the first half. Some projects took longer than expected because of permitting, zoning and broader economic delays, which resulted in less portfolio runoff than MCAN had anticipated.

Expenses also moved higher. Non-interest expenses rose 22% to $17.7 million, reflecting higher salary, benefits and administrative costs.

MCAN declared a quarterly dividend of 43 cents per share, up from 41 cents a year earlier. Return on equity was 14.64%, while its common equity tier 1 capital ratio stood at 19.30%.

MCAN Q2 2026 highlights

Net income: $24.0 million, up 19% year over year
Earnings per share: $0.59, up from $0.51
Net interest income: $24.6 million, up 4%
Assets under management: $8.5 billion, up 28%
Residential originations: Uninsured volumes up 22% and insured volumes up 18% in the first half of 2026
Residential mortgage assets: $4.7 billion, up 3% from year-end
Provision for credit losses: $1.8 million, down from $2.2 million
Impaired mortgage ratio: 2.40%, up from 1.69% at the end of 2025
Return on equity: 14.64%
Quarterly dividend: $0.43 per share, up 5% year over year