2026 Annual Financial Statements

M C A N F I N A N C I A L . C O M T S X : M K P

2025 ANNUAL REPORT | MCAN MORTGAGE CORPORATION (d/b/a MCAN FINANCIAL GROUP)

STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION

The accompanying consolidated financial statements of MCAN Mortgage Corporation ("MCAN" or the "Company") are the responsibility of management and have been approved by the Board of Directors. Management is responsible for the information and representations contained in these consolidated financial statements, the Management's Discussion and Analysis of Operations and all other sections of the annual report. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards ("IFRS"), including the accounting requirements of our regulator, the Office of the Superintendent of Financial Institutions Canada.

The Company's accounting system and related internal controls are designed, and supporting procedures are maintained to provide reasonable assurance that the Company's financial records are complete and accurate and that assets are safeguarded against loss from unauthorized use or disposition.

The Office of the Superintendent of Financial Institutions Canada makes such examination and enquiry into the affairs of MCAN as deemed necessary to be satisfied that the provisions of the Trust and Loan Companies Act (Canada) are being duly observed for the benefit of depositors and that the Company is in sound financial condition.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. These responsibilities are carried out primarily through an Audit Committee of unrelated directors appointed by the Board of Directors. The Chief Financial Officer reviews internal controls, control systems and compliance matters and reports thereon to the Audit Committee.

The Audit Committee meets periodically with management and the external auditors to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit Committee reviews the consolidated financial statements and recommends them to the Board of Directors for approval. The Audit Committee also recommends to the Board of Directors and Shareholders the appointment of external auditors and approval of their fees.

The consolidated financial statements have been audited by the Company's external auditors, Ernst & Young LLP, in accordance with Canadian generally accepted auditing standards. Ernst & Young LLP has full and free access to the Audit Committee.

Derek Sutherland Santokh Birk

Chief Executive Officer Senior Vice President and Chief Financial Officer

Toronto, Canada

February 23, 2026

- 60 -

INDEPENDENT AUDITOR'S REPORT

To the Shareholders and Directors of MCAN Mortgage Corporation Opinion

We have audited the consolidated financial statements of MCAN Mortgage Corporation and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as at December 31, 2025 and 2024, and the consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with

International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the

context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Allowance for expected credit loss

Key audit matter

MCAN describes its significant accounting judgments and estimates in relation to the allowance for expected credit loss ("ECL") in Note 5 of the 2025 consolidated financial statements. As disclosed in Note 7, 10, and Note 12 to the 2025 consolidated financial statements, MCAN recognized $25,826 thousand in ECL on its consolidated balance sheet using an ECL model. ECLs represent an unbiased and probability-weighted amount, which is determined by evaluating a range of possible outcomes and reasonable and supportable information about past events, current conditions and forecasts of future economic conditions. Forward-looking information ("FLI"), which involves significant judgment, is explicitly incorporated into the estimation of ECLs. ECLs are measured at amounts equal to either (i) 12 month ECL; or (ii) lifetime ECL for those financial instruments that have experienced a significant

increase in credit risk ("SICR") since initial recognition or when there is objective evidence of impairment.

Auditing the ECLs was complex and required the application of significant judgment because of the forward-looking nature of the key assumptions, and the inherent interrelationship of the critical variables used in measuring the ECLs. Key areas of judgment included evaluating: (i) the models and methodologies used for measuring both the 12 month and lifetime expected credit losses; (ii) the assumptions used in the ECL scenarios including FLI and assigning probability weights; (iii) assessing SICR; and (iv) the qualitative adjustments applied to the modelled ECL based on management's expert credit judgment.

How our audit addressed the key audit matter

We obtained an understanding and evaluated the design of management's controls over the ECLs. We tested the controls over data completeness and accuracy of information used in determining the ECLs. To test the ECLs, our audit procedures included, among others, involving our credit risk modelling specialists to assist in assessing the methodology and assumptions used in the models that estimate the ECLs across various

portfolios and to assess management's SICR triggers. For a sample of key FLI variables, we compared the base forecasts produced by management against publicly available information, and also assessed the reasonability of the upside and downside scenarios within the current environment. We independently recalculated the ECLs and reperformed the staging to validate that the model methodology and staging triggers were correctly applied. With the assistance of our credit risk modelling specialists, we evaluated management's methodology over the qualitative adjustments contributing to the ECLs based on the

application of expert credit judgment including management's assessment of regional differences in defaults. Furthermore, we assessed the adequacy of the presentation and disclosures of the ECLs in the notes to the consolidated financial statements.

Non-Marketable Securities

Key audit matter

MCAN describes its significant accounting judgments and estimates in relation to non-marketable securities in Note 5 of the 2025 consolidated financial statements. As disclosed in Note 8 to the 2025 consolidated financial statements, MCAN recognized $48,527 thousand in fair value on its consolidated balance sheet for its portfolio of limited partnership real estate funds within the overall non-marketable securities portfolio

("the Funds"). The valuation process involves judgement in determining the appropriate valuation approach to be used, and in estimating the fair value. The fair value is determined using independent appraisals, recent transactions and considers incremental investments in the Funds. The Funds are considered level 3 investments and are not traded in active markets.

Auditing the fair value of the Funds was complex, required the application of auditor judgment and involved the use of our Valuation Specialists, due to the judgement required to determine the fair value of the Funds.

How our audit addressed the key audit matter

We involved Valuations Specialists with specialized skills and knowledge to evaluate management's estimate of fair value for a sample of Funds. We assessed the reasonableness of inputs and assumptions used in the appraisals of the underlying properties in the Funds. We also reviewed comparable transactions, where applicable and market data from our research of independent third-party sources to assess the fair value.

We obtained confirmations from fund administrators for each of the Funds to confirm the proportionate

share of MCAN's investment in each Fund. We reviewed quarterly updates provided by each of the Funds to identify events or transactions that would impact fair value and assessed how management included in the determination of fair value if relevant. We also considered changes in market conditions and events affecting the Funds to assess the adjustments, or lack of adjustments, made by MCAN in arriving at the fair value of each Fund.

Other Information

Management is responsible for the other information. The other information comprises:

• Management's Discussion and Analysis

• The information, other than the consolidated financial statements and our auditor's report thereon,

  in the Annual Report

  Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

  In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

  We obtained Management's Discussion & Analysis and the Annual Report prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

  Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

  Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

  In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

  Those charged with governance are responsible for overseeing the Company's financial reporting process.

  Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

  Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

  As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such

  disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Andrea Feddema.

Toronto, Canada February 23, 2026

(in thousands of Canadian dollars)

The accompanying notes and shaded areas of the "Risk Factors" section of Management's Discussion and Analysis of Operations are an integral part of these consolidated financial statements.

On behalf of the Board:

Derek Sutherland John Coke

Chief Executive Officer Director, Chair of the Audit Committee

(in thousands of Canadian dollars except for per share amounts)

The accompanying notes and shaded areas of the "Risk Factors" section of Management's Discussion and Analysis of Operations are an integral part of these consolidated financial statements.

(in thousands of Canadian dollars)

(in thousands of Canadian dollars)

The accompanying notes and shaded areas of the "Risk Factors" section of Management's Discussion and Analysis of Operations are an integral part of these consolidated financial statements.

(in thousands of Canadian dollars)

The accompanying notes and shaded areas of the "Risk Factors" section of Management's Discussion and Analysis of Operations are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information 70

2. Basis of Preparation 70

3. Basis of Consolidation 70

4. Material Accounting Policy Information 71

5. Summary of Significant Accounting Judgments and Estimates 71

6. Marketable Securities 79

7. Mortgages - Non-securitized 79

8. Non-marketable Securities 86

9. Equity Investment in MCAP Commercial LP 87

10. Other Assets 88

11. Securitization Activities 88

12. Mortgages - Securitized 90

13. Derivative Financial Instruments 92

14. Term Deposits 93

15. Income Taxes 94

16. Other Liabilities 94

17. Financial Liabilities from Securitization 95

18. Share Capital 95

19. Dividends 95

20. Net gain (loss) on securities 96

21. Related Party Disclosures 96

22. Credit Facilities 98

23. Capital Management 98

24. Financial Instruments 100

25. Commitments and Contingencies 102

26. Comparative Amounts 102

1. ‌Corporate Information

   MCAN Mortgage Corporation doing business as ("d/b/a") MCAN Financial Group (the "Company" or "MCAN") is a Loan Company under the Trust and Loan Companies Act (Canada) (the "Trust Act") and a Mortgage Investment Corporation ("MIC") under the Income Tax Act (Canada) (the "Tax Act"). As a Loan Company under the Trust Act, the Company is subject to the guidelines and regulations set by the Office of the Superintendent of Financial Institutions Canada ("OSFI"). MCAN is incorporated in Canada with its head office located at 200 King Street West, Suite 700, Toronto, Ontario, Canada. MCAN is a public company listed on the Toronto Stock Exchange under the symbol MKP.

   MCAN's objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages, including residential, residential construction, non-residential construction and commercial loans, as well as other types of securities, loans and real estate investments, including our investment in MCAP Commercial LP ("MCAP"). MCAN issues term deposits that are eligible for Canada Deposit Insurance Corporation deposit insurance and are sourced through a network of independent financial agents. The Company manages its capital and asset balances based on the regulations and limits of both the Tax Act and OSFI.

   MCAN's wholly owned subsidiary, MCAN Home Mortgage Corporation, is an originator of residential mortgage products across Canada.

   The consolidated financial statements were approved in accordance with a resolution of the Board of Directors (the "Board") on February 23, 2026.

2. ‌Basis of Preparation

   The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

   The consolidated financial statements have been prepared on a historical cost basis, except for certain items carried at fair value as discussed in Note 4. The consolidated financial statements are presented in Canadian dollars.

   The disclosures that accompany the consolidated financial statements include the material accounting policy information applied (Note 4) and the significant accounting judgments and estimates (Note 5) applicable to the preparation of the consolidated financial statements. Certain disclosures are included in the shaded sections of the "Risk Factors" section of Management's Discussion and Analysis of Operations (the "MD&A"), as permitted by IFRS, and form an integral part of the consolidated financial statements.

   The Company separates its assets into its non-securitized and securitization portfolios for reporting purposes. Non-securitized assets are funded by term deposits and share capital. Securitization assets consist of (i) insured residential mortgages that have been securitized through the National Housing Act ("NHA") Mortgage-Backed Securities ("MBS") program and subsequently sold to third parties; and (ii) uninsured residential mortgages securitized through a bank-sponsored program. Both of these transactions do not achieve derecognition of the mortgages. These assets are funded by the cash received from the sale of the associated securities or notes, from which the Company records a financial liability from securitization.

3. ‌Basis of Consolidation

   The consolidated financial statements include the balances of MCAN and its wholly owned subsidiaries, after the elimination of intercompany transactions and balances. The Company consolidates those entities that it controls. The Company has control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.

4. ‌Material Accounting Policy Information

   The following are the material accounting policies applied by the Company in the preparation of its consolidated financial statements.

   1. Accounting for financial instruments under IFRS 9, Financial Instruments ("IFRS 9")

      Classification and measurement

      All financial instruments are measured initially at their fair value plus, in the case of financial instruments not subsequently recorded at fair value through the consolidated statements of income, directly attributable transaction costs. To determine their classification and measurement category, IFRS 9 requires all financial assets to be assessed based on a combination of the entity's business model for managing the assets and the instruments' contractual cash flow characteristics.

      All financial assets and liabilities are initially recognized on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.

      Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. Transaction costs are capitalized and amortized over the expected life of the instrument using the effective interest rate method ("EIM"), except for transaction costs that are related to financial assets or financial liabilities at fair value through profit or loss ("FVPL"), which are expensed.

      1. Debt instruments at amortized cost

         The Company only measures debt instruments at amortized cost if both of the following conditions are met:

         • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

         • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding.

           Business model assessment

           The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

         • How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Company's key management personnel;

         • The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed;

         • How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); and

         • The expected frequency, value and timing of sales.

           The SPPI test

           As a second step of its classification process, the Company assesses the contractual terms of financial instruments to identify whether they meet the SPPI test.

           "Principal" for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortization of the premium/discount).

           In contrast, contractual terms that introduce more than a minimal exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are SPPI on the principal amount outstanding. In such cases, the financial asset is required to be measured at FVPL.

           Debt instruments at amortized cost include all non-securitized and securitized mortgages, and Government of Canada bonds held by the Company.

      2. Financial assets at FVPL

         Financial assets in this category are those that are not held for trading purposes and have been either designated by management upon initial recognition or are mandatorily required to be measured at fair value under IFRS 9.

         Financial assets at FVPL are recorded in the consolidated balance sheets at fair value. Changes in fair value are recorded in profit and loss. Interest earned on instruments designated at FVPL is accrued in interest income. Interest earned on assets mandatorily required to be measured at FVPL is recorded using contractual interest rates. Dividend income from equity instruments measured at FVPL is recorded in profit and loss when the right to the payment has been established.

         Financial assets at FVPL include real estate investment trusts and non-marketable securities held by the Company.

      3. Financial liabilities

         After initial recognition, interest-bearing financial liabilities other than those classified at FVPL are subsequently measured at amortized cost using the EIM. Amortized cost is calculated by taking into account any discount or premium, fees or other costs using the EIM. The amortization is included in the related line in the consolidated statements of income. Unamortized premiums and discounts are recognized in the consolidated statements of income upon extinguishment of the liability.

         Financial liabilities include all term deposits and financial liabilities from securitization held by the Company.

         Impairment

         IFRS 9 requires the Company to record an allowance for expected credit loss ("ECL") for all mortgages and other debt financial assets not held at FVPL, together with mortgage commitments and financial guarantee contracts not measured at FVPL.

         Overview of ECL principles

         The ECL allowance is based on the 12-month ECL of the asset, unless there has been a significant increase in credit risk ("SICR") since origination in which case the allowance is based on the lifetime ECL.

         The Company groups its financial assets into stage 1, stage 2 and stage 3, as described below:

         • Stage 1: When mortgages are first recognized, the Company recognizes an allowance based on 12-month ECLs, which represent the portion of ECLs that would occur over the life of the mortgage related to default events that are possible to occur within 12 months after the reporting date. Stage 1 mortgages also include facilities reclassified from stage 2 or stage 3 where the credit risk has subsequently improved such that the increase in credit risk since initial recognition is no longer significant.

         • Stage 2: When a mortgage has shown a SICR since origination, the Company records an allowance for the ECLs that result from all possible default events over the expected life of the asset. Stage 2 mortgages also include facilities reclassified from stage 3 where the credit risk has improved or the facility is no longer credit-impaired.

         • Stage 3: The Company records an allowance for the lifetime ECLs for mortgages considered to be credit-impaired (as outlined below in "Definition of default and cure").

           Both lifetime ECLs and 12-month ECLs are calculated on either an individual basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments.

           SICR

           The Company has established a policy to assess, at the end of each reporting period, whether a financial instrument's credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The primary indicators of SICR are relative changes in credit scores for residential mortgages and changes in internal risk ratings for construction and commercial mortgages. The Company may also apply a secondary qualitative method for identifying a SICR, such as changes in macroeconomic circumstances or the application of management's judgment. In certain cases, the Company may also consider that certain events are a SICR as opposed to a default. For a definition of default and cure, refer to the "Definition of default and cure" subsection of this note. IFRS 9 provides a rebuttable presumption that a SICR has occurred if contractual payments are more than 30 days past due. The Company has not rebutted this presumption.

           Calculation of ECLs

           The Company calculates ECLs based on three probability-weighted scenarios to measure the expected cash shortfalls, discounted at an approximation to the effective interest rate. The cash shortfall is the difference between the cash flows that are due to the Company in accordance with the contract and the cash flows that the Company expects to receive if the borrower defaults.

           The mechanics of the ECL calculations are outlined below and the key elements are as follows:

         • PD: The Probability of Default ("PD") is an estimate of the likelihood of default over a given time horizon. Default is only assessed if the facility has not been previously derecognized and is still in the portfolio. The PD model comprises forward-looking macroeconomic projections and internal risk rating-based segmentation.

         • LGD: The Loss Given Default ("LGD") is an estimate of the loss arising in the case where a default occurs. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive in the event of default, including from the realization of any collateral.

         • EAD: The Exposure at Default ("EAD") is an estimate of the exposure at a future default date at the borrower level, taking into account expected changes in the exposure after the reporting date, including advances and repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest from missed payments.

           The ECLs are calculated through three probability-weighted forward-looking scenarios (base, favourable and unfavourable). Each of these is associated with different PDs, LGDs and EADs. The assessment of multiple scenarios also incorporates how defaulted mortgages are expected to be recovered, including the probability that the mortgages will cure and the value of collateral or the amount that might be received from selling the asset. Outcomes under the favourable and unfavourable scenarios are generated based on management judgment, looking at the likelihood of a range of macroeconomic variables. A cross-functional internal management committee reviews the proposed probability weights assigned to each of the three scenarios. The above committee applies judgment to adjust the weights when changes are noted in relevant macroeconomic variables.

           The maximum period for which the credit losses are determined is the contractual life of a financial instrument unless the Company has the legal right to call the instrument earlier.

           Mortgage commitments and letters of credit

           Undrawn mortgage commitments and letters of credit are commitments under which, over the duration of the commitment, the Company is required to advance funds to the borrower. These contracts are in the scope of the ECL requirements. The contractual value of letters of credit and undrawn mortgage commitments, where the mortgage agreed to be provided is on market terms, are not recorded in the consolidated balance sheets. When estimating lifetime ECLs for undrawn mortgage commitments, the Company estimates the portion of the mortgage commitment that will be drawn down over its expected life.

           Definition of default and cure

           The Company considers a financial instrument defaulted and therefore stage 3 (credit-impaired) for ECL calculations in all cases when the borrower becomes 90 days past due on their contractual payments. In certain other cases, where qualitative thresholds indicate unlikeliness to pay as a result of a credit event, the Company carefully considers whether the event should result in an assessment at stage 2 or stage 3 for ECL calculations.

           The combined impact of several events may cause financial assets to become defaulted as opposed to one discrete event. It is the Company's policy to consider a financial instrument as "cured" and, therefore, reclassified out of stage 3 when none of the default criteria remain present at the end of each quarter. The decision whether to classify an asset as stage 1 or stage 2 once cured depends on the current assessment of SICR.

           Forward-looking information

           In its ECL models, the Company relies on a broad range of forward-looking information as macroeconomic variables, such as but not limited to:

         • House price indices

         • Unemployment rates

         • Gross domestic product

         • Interest rates

         The macroeconomic variables and models used for calculating ECLs may not always capture all characteristics of the market at the dates of the consolidated financial statements. To reflect this, the Company may make temporary qualitative adjustments or overlays using expert credit judgment.

         Modified financial assets

         In a case where the borrower experiences financial difficulties, the Company may grant certain concessionary modifications to the terms and conditions of a mortgage. If the Company determines that a modification results in an expiry of cash flows, the original financial asset is derecognized while a new asset is recognized based on the new contractual terms. SICR is assessed relative to the risk of default on the date of modification. If the Company determines

         that a modification does not result in derecognition, SICR is assessed based on the risk of default at initial recognition of the original asset. Expected cash flows arising from the modified contractual terms are considered when calculating the ECL for the modified asset. For mortgages that have been modified while having a lifetime ECL, the mortgages can revert to having a 12-month ECL after a period of performance and improvement in the borrower's financial condition.

         Write-offs

         Financial assets are written off either partially or in their entirety only when the Company believes that there are no reasonably expected future recoveries. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to provisions for losses.

         Hedge accounting

         The Company makes use of bond forwards and interest rate swaps to manage interest rate exposures. In order to manage particular risks, the Company applies hedge accounting for transactions that meet specified criteria.

         In order to qualify for hedge accounting, a hedge relationship must be designated and formally documented in accordance with IFRS 9. The Company's documentation, in accordance with these requirements, includes a specific risk management objective and strategy being applied, the specific cash flow or fair value being hedged and how hedge effectiveness is assessed. To qualify for hedge accounting, there must be a correlation between the changes in the cash flows or fair value between the hedged and hedging item.

         Hedge effectiveness is assessed at the inception of the hedging relationship and on an ongoing basis. Hedge ineffectiveness occurs when the changes in cash flows or fair value of the hedging item differ from the cash flows or fair value changes in the hedged risk in the hedged item.

         The Company uses bond forwards and interest rate swaps to manage interest rate risk. Hedge accounting is applied only when the hedging relationship meets all IFRS 9 criteria. Otherwise, derivative instruments are measured at FVPL, and changes in fair value are included in non-interest income.

         Cash flow hedges

         The Company's cash flow hedges use bond forwards to hedge changes in future cash flows attributable to interest rate fluctuations arising in highly probable forecasted issuances of fixed-rate liabilities. The effective portion of the change in fair value of the bond forward is recognized in other comprehensive income (loss) ("OCI") until the forecasted cash flows being hedged are recognized in income in future accounting periods. When the forecasted cash flows are recognized in income, the cash flow hedge reserve related to those cash flows is reclassified from OCI to term deposit interest and expenses on the consolidated statements of income. Hedge ineffectiveness is recognized immediately in net gain (loss) on securities.

         If the hedging instrument expires, or is settled or sold, or if the hedge no longer meets the criteria for hedge accounting under IFRS 9, the hedge relationship is terminated. Any cumulative gain or loss recognized at the time remains in OCI until the forecasted transaction impacts the consolidated statements of income. When the forecasted transaction is no longer expected to occur, the cumulative gain or loss that was recognized in OCI is immediately recognized in non-interest income.

         Fair value hedges

         The Company's fair value hedges use interest rate swaps to hedge changes in fair value of fixed-rate term deposits, which are impacted by changes in market interest rates. The change in fair value of the interest rate swap and the change in fair value of the pool of term deposits are recorded as part of the change in their carrying value and in term deposit interest and expenses.

         If the hedging instrument expires, or is settled or sold, or if the hedge no longer meets the criteria for hedge accounting under IFRS 9, the hedge relationship is terminated. Any fair value adjustment on the pool of term deposits is amortized over their remaining term. If the term deposits are settled before their remaining term, the unamortized fair value adjustment is recognized immediately in net gain (loss) on securities.

   2. Determination of fair value

      Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities are classified into three levels, as follows: quoted prices in an active market (Level 1), fair value based on directly or indirectly observable inputs other than quoted prices (Level 2) and fair value based on inputs that are not based on observable data (Level 3).

      For non-marketable securities, fair value is determined using a variety of approaches including independent appraisals, recent transactions and incremental investments in the funds. The Company considers various factors in the determination

      of fair value including, but not limited to, recent appraisals, the status of underlying construction project and recent capital calls. Judgment is applied in the determination of the appropriate valuation approach, depending on the nature of the investment. On a quarterly basis, the Company reviews the fair value of the investments in conjunction with reports produced by the fund administrators, recent development activity and any other market-driven triggers.

      For all other financial instruments where the fair values of financial assets and financial liabilities recorded in the consolidated financial statements cannot be derived from active markets, they are determined using a variety of appropriate valuation techniques that may include discounted cash flow method, comparison to similar instruments for which market observable prices may exist and other relevant valuation models. The inputs are derived from observable market data where possible, but where observable market data is not available, estimates are required to establish fair values. These estimates include considerations of liquidity and model inputs such as discount rates, prepayment rates and default rate assumptions for certain investments.

      Changes in fair value are recognized in net gain (loss) on securities in the consolidated statements of income.

   3. Derecognition of financial assets and financial liabilities

      1. Financial assets

         A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

         • The rights to receive cash flows from the asset have expired; or

         • The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a qualifying "pass-through" arrangement; and either:

           • The Company has transferred substantially all the risks and rewards of ownership of the financial asset, or

           • The Company has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, but has transferred control of the financial asset.

             When substantially all the risks and rewards of ownership of the financial asset have been transferred, the Company will derecognize the financial asset and recognize separately as assets or liabilities any rights and obligations created or retained in the transfer. When substantially all the risks and rewards of ownership of the financial asset have been retained, the Company continues to recognize the financial asset and also recognizes a financial liability for the consideration received. In these circumstances, certain transaction costs incurred are also capitalized and amortized using the EIM. When the Company has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset nor transferred control of the financial asset, the financial asset is recognized to the extent of the Company's continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.

             The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

      2. Financial liabilities

      A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statements of income.

      Only the Company's insured multi-family mortgage securitizations achieve derecognition (Note 11). Realized gains and losses from the derecognition of these financial assets and financial liabilities are recognized in other non-interest income in the consolidated statements of income.

   4. Taxes

      As a MIC under the Tax Act, the Company is able to deduct from income for tax purposes dividends paid within 90 days of year-end. The Company intends to maintain its status as a MIC and intends to pay sufficient dividends to ensure that it is not subject to income taxes in the MIC entity on a non-consolidated basis. Accordingly, the Company does not record a provision for current or deferred taxes within the MIC entity; however, provisions are recorded as applicable in all subsidiaries of MCAN.

      1. Current tax

         Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the consolidated financial statement dates.

      2. Deferred tax

      The Company follows the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are recognized for the expected future tax impact of temporary differences between the carrying amounts of certain assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates applicable to taxable income in the period in which those temporary differences are expected to be recovered or settled. Deferred tax assets are only recognized for deductible temporary differences and the carry forward of unused tax losses to the extent that it is probable that taxable income will be available and the carry forward of unused tax losses can be used.

   5. Dividends on common shares

      Dividends on common shares are deducted from shareholders' equity at the time that they are declared. Dividends that are approved after the consolidated financial statement date are not recognized as a liability in the consolidated financial statements but are disclosed as a subsequent event.

   6. Investment in associate

      The Company's investment in MCAP is accounted for using the equity method. An associate is an entity over which the Company has significant influence.

      Under the equity method, the investment in the associate is carried on the consolidated balance sheets at cost plus post-acquisition changes in the Company's share of net assets of the associate.

      The consolidated statements of income reflect the Company's proportionate share of the results of operations of the associate. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the interest in the associate.

      The most recent available financial statements of the associate are used by the Company in applying the equity method. When the financial statements of an associate used in applying the equity method are prepared as of a different date from that of the Company, adjustments are made for the effects of significant transactions or events that occur between that date and the date of the Company's consolidated financial statements.

      Where necessary, adjustments are made to harmonize the accounting policies of the associate with those of the Company.

      The Company determines at each consolidated financial statement date whether there is any objective evidence that the investment in the associate is impaired. The Company calculates the amount of impairment as the difference between the recoverable amount of the investment in the associate and its carrying value, and recognizes the amount in the consolidated statements of income, thus reducing the carrying value by the amount of impairment.

   7. Revenue recognition

      Interest income or expense

      For all financial assets measured at amortized cost and interest-bearing financial assets measured at FVPL under IFRS 9, interest income or expense is accrued in interest income or expense. The calculation takes into account the contractual interest rate, along with any fees or incremental costs that are directly attributable to the instrument and all other premiums or discounts. Interest income or expense is included in the appropriate component of the consolidated statements of income.

      Revenue from contracts with customers

      Revenue from contracts with customers is recognized at an amount that reflects the consideration that the Company expects to receive in exchange for transferring goods or services to a customer.

   8. Cash and cash equivalents

      Cash and cash equivalents (including cash held in trust) on the consolidated balance sheets comprise cash held at banks and short-term deposits with original maturity dates of less than 90 days.

   9. Share-based compensation payment transactions

      The cost of cash-settled transactions is measured initially at fair value at the grant date. The obligations are accrued over the vesting period and adjusted for fluctuations in the market price of the Company's common shares. Changes in the obligations are recorded as salaries and benefits in the consolidated statements of income with a corresponding change to other liabilities. The liability is remeasured at fair value at each consolidated financial statement date up to and including the settlement date.

   10. Share capital

       Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.

   11. Provisions

       Provisions for legal claims are recognized when: (a) the Company has a present legal or constructive obligation as a result of past events; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) the amount has been reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is included in interest expense.

   12. Leases

       A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets and lease liabilities are recognized at the lease commencement date, that is, on the date when the underlying asset is available for use by the Company. The Company's right-of-use asset relating to its premises lease does not meet the definition of investment property.

       Right-of-use assets are initially and subsequently measured at cost and depreciated over the shorter of the asset's useful life and the lease term, on a straight-line basis. The right-of-use assets are remeasured in the event of impairment in accordance with IAS 36, Impairment of Assets.

       Lease liabilities are initially and subsequently measured at the present value of the lease payments, which are unpaid as of the commencement date. The future lease payments are discounted using the interest rate implicit in the lease, if readily determinable. If not readily determinable, the Company's incremental borrowing rate is used, which is the rate to borrow over a similar term and with similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset. After the commencement date, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Adjustments to the carrying amount of the lease obligation as a result of remeasurement are accounted for as a corresponding adjustment to the right-of-use asset.

   13. Future changes in accounting policies

   The following standard and amendments have been issued but are not yet effective on the date of issuance of the Company's consolidated financial statements.

   Presentation and Disclosure in Financial Statements

   In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements ("IFRS 18"), which replaces the guidance in IAS 1, Presentation of Financial Statements and sets out requirements for presentation and disclosure of information, focusing on providing relevant information to users of the financial statements. IFRS 18 introduces changes to the structure of the statements of income, aggregation and disaggregation of financial information, and management-defined performance measures to be disclosed in the notes to the consolidated financial statements. It will be effective for the Company's annual period beginning January 1, 2028. Early application is permitted. The standard will be applied

   retrospectively with restatement of comparatives. The Company is currently assessing the impact of adopting this standard.

5. Summary of Significant Accounting Judgments and Estimates

   The preparation of the Company's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the affected assets or liabilities in future periods.

   Significant influence

   Significant influence represents the power to participate in the financial and operating policy decisions of an investee but does not represent control or joint control over the entity. In determining whether it has significant influence over an entity, the Company makes certain judgments to form the basis for the Company's policies in accounting for its equity investments. Although MCAN's voting interest in MCAP was less than 20% at December 31, 2025, MCAN uses the equity basis of accounting for the investment as it has significant influence in MCAP per IAS 28, Investments in Associates and Joint Ventures, as a result of its entitlement to a position on MCAP's Board of Directors.

   Fair value of financial instruments

   Where the fair values of financial assets and financial liabilities recorded in the consolidated financial statements cannot be derived from active markets, they are determined using a variety of valuation techniques that may include the use of:

   • Mathematical models - the inputs to mathematical models are derived from observable market data where possible, but where observable market data is not available, estimates are required to establish fair values. These estimates include considerations of liquidity and model inputs such as discount rates, prepayment rates and default rate assumptions for certain investments.

   • Market approach - the inputs include the use of recently observable market transactions and appraisals.

   • Cost approach - for new property developments, the inputs include the cost of the land and construction costs.

     Impairment of financial assets

     The measurement of impairment losses under IFRS 9 across all categories of financial assets requires judgment, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

     The Company's ECL calculations are model outputs with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates include:

   • The Company's criteria for assessing if there has been a SICR that results in allowances being measured on a lifetime versus 12-month ECL basis;

   • The segmentation of financial assets for the purposes of assessing ECL on a collective basis;

   • Development of ECL models, including the various formulas and the choice of inputs;

   • Determination of associations between macroeconomic scenarios and economic inputs, such as unemployment levels and collateral values, and the effect on PD, EAD and LGD; and

   • Forward-looking information used as economic inputs.

     The Company may also make qualitative adjustments or overlays using expert credit judgment in the calculations of ECLs, which represent accounting judgments and estimates that have been heightened due to the current economic and geopolitical environment. Key judgments and estimates, including around probability weights to assign to each scenario and the impacts of government policy and stimulus measures, will be heavily influenced by the extent and severity of these events. These judgments have been made with reference to the facts, projections and other circumstances at the consolidated balance sheet dates. IFRS 9 does not permit the use of hindsight in measuring provisions for credit losses. Any new forward-looking information subsequent to the consolidated balance sheet dates are reflected in the measurement of provisions for credit losses in future periods, as appropriate.

     Mortgage prepayment rates

     In calculating the rate at which borrowers prepay their mortgages, the Company makes estimates based on its historical experience. These assumptions impact the timing of revenue recognition and the amortization of mortgage premiums using the EIM.

6. ‌Marketable Securities

   At December 31	2025	2024
   Real estate investment trusts	$ 39,025	$ 51,331
   Government of Canada bonds	15,121	15,014
   	$ 54,146	$ 66,345

   For details of net gains and losses on marketable securities, refer to Note 20.

7. ‌Mortgages - Non-securitized

   1. Summary

      At December 31, 2025	Gross Principal	Stage 1	Allowance Stage 2 Stage 3		Total	Net Principal
      Non-securitized Portfolio:
      Residential mortgages
      Insured	$ 171,895	$ -	$ -	$ -	$ -	$ 171,895
      Uninsured	985,065	1,795	2,350	2,861	7,006	978,059
      Uninsured - completed inventory	167,518	1,485	-	-	1,485	166,033
      Construction loans	1,149,649	3,441	210	10,368	14,019	1,135,630
      Commercial loans
      Multi-family residential	17,366	177	-	-	177	17,189
      Other commercial	10,997	215	-	-	215	10,782
      	$ 2,502,490	$ 7,113	$ 2,560	$ 13,229	$ 22,902	$ 2,479,588

      Gross Allowance Net At December 31, 2024 Principal Stage 1 Stage 2 Stage 3 Total Principal Non-securitized Portfolio:

      Residential mortgages

      Insured	$ 126,528	$ -	$ -	$ -	$ -	$ 126,528
      Uninsured	1,117,095	1,149	1,314	1,260	3,723	1,113,372
      Uninsured - completed inventory	120,410	982	-	-	982	119,428
      Construction loans	1,096,023	3,770	-	4,692	8,462	1,087,561
      Commercial loans
      Multi-family residential	17,237	10	25	-	35	17,202
      	$ 2,477,293	$ 5,911	$ 1,339	$ 5,952	$ 13,202	$ 2,464,091

      Gross principal as presented in the tables above includes unamortized capitalized transaction costs and accrued interest.

      Uninsured - completed inventory loans are extended to developers to provide interim mortgage financing on residential units (condominium or freehold) that are completed or close to completion. Qualification criteria for the completed inventory classification include no substantial remaining construction risk, commencement of occupancy permits, potential sale and closing with a purchaser within three to four months or units near completion.

   2. Mortgages by risk rating

      The Company's internal risk rating system involves judgment and combines multiple factors to arrive at a borrower-specific score to assess the borrower's probability of default and ultimately classify the mortgage into one of the categories listed below. For residential mortgages, these factors include, but are not limited to, the loan to value ratio, the borrower's ability to service debt, property location and credit score. For construction, commercial and uninsured completed inventory loans, these factors include, but are not limited to, borrower net worth, project presales, experience with the borrower, project location, debt serviceability and loan to value ratio.

      The internal risk ratings presented below are defined as follows:

      • Insured Performing: Mortgages that are insured by a federally regulated mortgage insurer that are not in arrears or default.

      • Very Low/Low: Mortgages that have below average probability of default with credit risk that is lower than the Company's risk appetite and risk tolerance levels.

      • Normal/Moderate: Mortgages that have a standard probability of default with credit risk that is within the Company's risk appetite and risk tolerance levels.

      • High/Higher: Mortgages that may have a higher probability of default but are within the Company's risk appetite or have subsequently experienced an increase in credit risk. The proportion of mortgages originated in this category is managed to the Company's overall risk appetite and tolerance levels.

      • Monitored/Arrears: For residential mortgages, mortgages that are past due but less than 90 days in arrears or mortgages for which an escalated concern has arisen. For construction, commercial and uninsured completed inventory loans, mortgages where the performance trend is negative or where debt serviceability may be in jeopardy.

      • Impaired/Default: Mortgages that are over 90 days past due or mortgages for which there is objective evidence of impairment.

        The table below shows the credit quality of the Company's non-securitized mortgage portfolio based on the Company's internal risk rating system and stage classification. The Company's policy that outlines whether ECLs are calculated on an impaired or performing basis are set out in Note 4.

        At December 31	2025				2024
        	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
        Residential mortgages
        Insured
        Performing	$ 163,341	$ 4,288	$ -	$ 167,629	$ 118,211	$ 6,156	$ -	$ 124,367
        High/Higher	2,660	130	-	2,790	-	-	-	-
        Monitored/Arrears	-	1,231	-	1,231	-	1,355	-	1,355
        Impaired/Default	-	-	245	245	-	-	806	806
        	166,001	5,649	245	171,895	118,211	7,511	806	126,528
        Uninsured
        Very low/Low	212,419	20,377	-	232,796	270,185	53,204	-	323,389
        Normal/Moderate	429,429	109,623	-	539,052	516,730	108,522	-	625,252
        High/Higher	88,159	55,062	-	143,221	94,739	21,104	-	115,843
        Monitored/Arrears	16,847	33,898	-	50,745	10,193	24,275	-	34,468
        Impaired/Default	-	-	12,245	12,245	-	-	14,420	14,420
        	746,854	218,960	12,245	978,059	891,847	207,105	14,420	1,113,372
        Uninsured - completed inventory
        Normal/Moderate	2,009	-	-	2,009	4,012	-	-	4,012
        High/Higher	164,024	-	-	164,024	115,416	-	-	115,416
        	166,033	-	-	166,033	119,428	-	-	119,428
        Construction loans
        Normal/Moderate	7,487	-	-	7,487	12,889	-	-	12,889
        High/Higher	1,074,872	-	-	1,074,872	1,029,353	-	-	1,029,353
        Monitored/Arrears	-	23,943	-	23,943	-	-	-	-
        Impaired/Default	-	-	29,328	29,328	-	-	45,319	45,319
        	1,082,359	23,943	29,328	1,135,630	1,042,242	-	45,319	1,087,561
        Commercial loans
        Multi-family residential
        High/Higher	17,189	-	-	17,189	5,008	12,194	-	17,202
        	17,189	-	-	17,189	5,008	12,194	-	17,202
        Other
        High/Higher	10,782	-	-	10,782	-	-	-	-
        	10,782	-	-	10,782	-	-	-	-
        	$2,189,218	$ 248,552	$ 41,818	$2,479,588	$2,176,736 $ 226,810 $ 60,545 $2,464,091

   3. Mortgage allowances

      Years Ended December 31	2025	2024
      	Stage 1 Stage 2 Stage 3 Total	Stage 1 Stage 2 Stage 3 Total
      Residential mortgages
      Insured
      Allowance, beginning of year	$ - $ - $ - $ -	$ - $ - $ - $ -
      Total provision	- - - -	- - - -
      Allowance, end of year	- - - -	- - - -
      Uninsured
      Allowance, beginning of year	1,149 1,314 1,260 3,723	885 1,267 378 2,530
      Transfer from stage 1 3	(3,261) 3,261 - -	(1,721) 1,721 - -
      Transfer from stage 2 3	1,089 (1,889) 800 -	693 (1,354) 661 -
      Transfer from stage 3 3	2 434 (436) -	1 160 (161) -
      Net remeasurement of allowance 1	662 (118) 3,907 4,451	141 (321) 1,148 968
      Originations 4	2,752 - - 2,752	1,256 - - 1,256
      Mortgages derecognized or repaid 2	(598) (652) (1,835) (3,085)	(106) (159) (785) (1,050)
      Total provision	646 1,036 2,436 4,118	264 47 863 1,174
      Write-off (recovery)	- - (835) (835)	- - 19 19
      Allowance, end of year	1,795 2,350 2,861 7,006	1,149 1,314 1,260 3,723
      Uninsured - completed inventory
      Allowance, beginning of year	982 - - 982	336 11 - 347
      Transfer from stage 1 3	- - - -	(11) 11 - -
      Transfer from stage 2 3	- - - -	10 (23) 13 -
      Transfer from stage 3 3	- - - -	- 13 (13) -
      Net remeasurement of allowance 1	(448) - - (448)	282 11 - 293
      Originations 4	988 - - 988	367 - - 367
      Mortgages derecognized or repaid 2	(37) - - (37)	(2) (23) - (25)
      Total provision (recovery)	503 - - 503	646 (11) - 635
      Allowance, end of year	1,485 - - 1,485	982 - - 982
      Construction loans
      Allowance, beginning of year	3,770 - 4,692 8,462	5,210 - 1,594 6,804
      Transfer from stage 1 3	(799) 799 - -	(902) 902 - -
      Transfer from stage 2 3	540 (561) 21 -	429 (451) 22 -
      Transfer from stage 3 3	14 - (14) -	- - - -
      Net remeasurement of allowance 1	(379) (28) 5,664 5,257	(1,016) (8) 3,076 2,052
      Originations 4	2,993 - 5 2,998	1,384 - - 1,384
      Mortgages derecognized or repaid 2	(2,698) - - (2,698)	(1,335) (443) - (1,778)
      Total provision (recovery)	(329) 210 5,676 5,557	(1,440) - 3,098 1,658
      Allowance, end of year	$ 3,441 $ 210 $ 10,368 $ 14,019	$ 3,770 $ - $ 4,692 $ 8,462

      Years Ended December 31	2025	2024
      	Stage 1 Stage 2 Stage 3 Total	Stage 1 Stage 2 Stage 3 Total
      Commercial loans
      Multi-family residential
      Allowance, beginning of year	$ 10 $ 25 $ - $ 35	$ 201 $ 41 $ - $ 242
      Net remeasurement of allowance 1	4 2 - 6	(37) 66 - 29
      Originations 4	174 - - 174	- - - -
      Mortgages derecognized or repaid 2	(11) (27) - (38)	(154) (82) - (236)
      Total provision (recovery)	167 (25) - 142	(191) (16) - (207)
      Allowance, end of year	177 - - 177	10 25 - 35
      Other
      Allowance, beginning of year	- - - -	2 - - 2
      Net remeasurement of allowance 1	105 - - 105	- - - -
      Originations 4	110 - - 110	- - - -
      Mortgages derecognized or repaid 2	- - - -	(2) - - (2)
      Total provision (recovery)	215 - - 215	(2) - - (2)
      Allowance, end of year	215 - - 215	- - - -
      Total
      Allowance, beginning of year	5,911 1,339 5,952 13,202	6,634 1,319 1,972 9,925
      Transfer from stage 1 3	(4,060) 4,060 - -	(2,634) 2,634 - -
      Transfer from stage 2 3	1,629 (2,450) 821 -	1,132 (1,828) 696 -
      Transfer from stage 3 3	16 434 (450) -	1 173 (174) -
      Net remeasurement of allowance 1	(56) (144) 9,571 9,371	(630) (252) 4,224 3,342
      Originations 4	7,017 - 5 7,022	3,007 - - 3,007
      Mortgages derecognized or repaid 2	(3,344) (679) (1,835) (5,858)	(1,599) (707) (785) (3,091)
      Total provision (recovery)	1,202 1,221 8,112 10,535	(723) 20 3,961 3,258
      Write-off (recovery)	- - (835) (835)	- - 19 19
      Allowance, end of year	$ 7,113 $ 2,560 $ 13,229 $ 22,902	$ 5,911 $ 1,339 $ 5,952 $ 13,202

      1 Represents the change in the allowance related to changes in model parameters, inputs and assumptions. This includes remeasurement between 12-month and lifetime ECLs following stage transfers, changes to forward-looking macroeconomic conditions, changes in the level of risk and changes to other parameters used in the ECL model.

      2 Reflects the decrease in the allowance related to mortgages that were repaid or derecognized during the period.

      3 Represents movements between ECL stages and excludes the impact to the allowance of remeasurement between 12-month and lifetime ECLs, and changes in risk.

      4 Reflects the increase in allowance related to mortgages newly recognized during the period. This includes mortgages that were newly originated, purchased or re-recognized following a modification of terms.

      ECLs are calculated through three probability-weighted forward-looking scenarios: base, favourable and unfavourable. ECLs are sensitive to the macroeconomic variables used in the three forward-looking scenarios and the probability weights assigned to those forecasts. The macroeconomic variables used in these scenarios are projected over the specified forecast period and could have a material impact in determining ECLs.

      All mortgages are secured by real estate property located in Canada. Insured residential mortgages also qualify for insurance that mitigates the risk of credit loss. For past due but not impaired, and impaired mortgages, there may be no ECL if there is sufficient collateral value and quality to cover the maximum credit exposure. Appraised values for collateral held against mortgages are obtained initially at the time of origination and updated when a mortgage is individually assessed as credit impaired.

      At December 31, 2025, the maximum credit exposure was $2,502,490 (December 31, 2024 - $2,477,293) for all mortgages.

      The following table represents the average values of the macroeconomic variables used in these forecasts:

      At December 31, 2025	Base		Favourable		Unfavourable
      Macroeconomic Variables	Next 12 Months 1	2 to 5 Years 1	Next 12 Months 1	2 to 5 Years 1	Next 12 Months 1	2 to 5 Years 1
      Housing Price Index (annual change)
      Canada	2.51%	3.03%	10.91%	4.05%	0.49 %	2.77%
      Greater Toronto Area	1.11%	2.99%	9.42%	4.01%	0.51 %	2.88%
      Greater Vancouver Area	2.47%	3.02%	10.86%	4.04%	0.50 %	2.83%
      Gross domestic product (annual change)	1.69%	1.57%	2.69%	1.69%	0.69 %	1.44 %
      Unemployment rate	6.58%	6.14%	6.08%	6.08%	7.08%	6.20%
      Interest rates
      Prime rate	4.50%	4.86%	5.00%	4.92%	4.25%	4.83%

      At December 31, 2024 Base Favourable Unfavourable

      Macroeconomic Variables	Next 12 Months 1	2 to 5 Years 1	Next 12 Months 1	2 to 5 Years 1	Next 12 Months 1	2 to 5 Years 1
      Housing Price Index (annual change) Canada	5.29%	3.12%	13.85%	4.14%	3.23 %	2.86%
      Greater Toronto Area	4.10%	3.15%	12.59%	4.18%	3.36 %	2.98%
      Greater Vancouver Area	2.86%	3.07%	11.28%	4.10%	2.81 %	2.92%
      Gross domestic product (annual change)	1.80%	1.62%	2.80%	1.74%	0.80 %	1.49%
      Unemployment rate	6.73%	6.37%	6.23%	6.31%	7.23%	6.43%
      Interest rates Prime rate	4.78%	4.78%	5.28%	4.85%	4.53%	4.75%
      1 The numbers represent the average values over the quoted period.

      Historical regression methodology is used to relate ECL to key macroeconomic indicators including housing price indices, gross domestic product, unemployment rate and interest rates. Economic forecasts are determined based on a combination of external information and internal management judgments and estimates at the reporting date. The current geopolitical environment has increased the level of uncertainty with respect to management's judgments and estimates including the probability weights assigned to each scenario, the impacts of monetary policy on macroeconomic indicators and the mortgage portfolio. Since December 31, 2025, forecasts around these uncertainties have continued to evolve. Any new forward-looking information subsequent to December 31, 2025, will be reflected in the measurement of provisions for credit losses in future periods, as appropriate. This may add significant variability to provisions for credit losses in future periods.

      The base scenario represents management's best estimate using all available economic forecasts in light of the current geopolitical environment. It assumes the unemployment rate will decrease while gross domestic product and housing prices are expected to increase. The favourable scenario assumes a larger increase in housing prices, lower unemployment and a larger increase to gross domestic product compared to the base scenario. The unfavourable scenario assumes a more pronounced increase to the unemployment rate, a slight increase in housing prices and modest increase in gross domestic product growth in the short term followed by a recovery in the mid to long term.

      Assuming a 100% base case economic forecast with the incorporation of the impact of the migration of mortgages between stages, with all other assumptions held constant, the ECL for non-securitized mortgages at December 31, 2025 would be approximately $23,382 (December 31, 2024 - $13,219) compared to the reported ECL for non-securitized mortgages of $22,902 (December 31, 2024 - $13,202).

      Assuming a 100% unfavourable economic forecast with the incorporation of the impact of the migration of mortgages between stages, with all other assumptions held constant, the ECL for non-securitized mortgages at December 31, 2025 would be approximately $24,976 (December 31, 2024 - $14,250) compared to the reported ECL for non-securitized mortgages of $22,902 (December 31, 2024 - $13,202).

   4. Mortgage arrears

      Mortgages past due but not impaired are as follows:

      At December 31, 2025	1 to 30 Days	31 to 60 Days	61 to 90 Days	Total
      Residential mortgages
      Insured	$ 949	$ 15	$ 267	$ 1,231
      Uninsured	29,720	16,622	4,403	50,745
      Construction loans	15,443	8,500	-	23,943
      	$ 46,112	$ 25,137	$ 4,670	$ 75,919

      At December 31, 2024	1 to 30 Days	31 to 60 Days	61 to 90 Days	Total
      Residential mortgages Insured	$ 992	$ 92	$ 271	$ 1,355
      Uninsured	18,477	8,915	7,076	34,468
      	$ 19,469	$ 9,007	$ 7,347	$ 35,823

      Impaired mortgages (net of individual allowances) are as follows:

      At December 31, 2025
      	Residential Mortgages Insured Uninsured		Construction Loans	Total
      Ontario	$ 245	$ 10,904	$ 11,039	$ 22,188
      British Columbia	-	785	18,289	19,074
      Atlantic Provinces	-	207	-	207
      Other	-	349	-	349
      	$ 245	$ 12,245	$ 29,328	$ 41,818

      	Insured	Uninsured	Loans	Total
      Ontario	$ -	$ 12,481	$ 12,441	$ 24,922
      Alberta	452	-	-	452
      British Columbia	-	1,604	32,878	34,482
      Atlantic Provinces	59	-	-	59
      Other	295	335	-	630
      	$ 806	$ 14,420	$ 45,319	$ 60,545

      At December 31, 2024 Residential Mortgages Construction

      At December 31, 2025, the carrying value was $55,052 (December 31, 2024 - $66,496) and the most recent appraised value of collateral was $88,027 (December 31, 2024 - $110,456) for all impaired mortgages. There were no significant changes in the quality of collateral since the beginning of the year.

   5. Geographic analysis

   At December 31, 2025	Residential Mortgages	Construction Loans	Commercial Loans	Total
   Ontario	$ 1,064,815	$ 403,583	$ 17,189	$ 1,485,587	59.9 %
   Alberta	99,979	92,972	10,782	203,733	8.2 %
   British Columbia	118,544	639,075	-	757,619	30.6 %
   Quebec	4,596	-	-	4,596	0.2 %
   Atlantic Provinces	12,412	-	-	12,412	0.5 %
   Other	15,641	-	-	15,641	0.6 %
   	$ 1,315,987	$ 1,135,630	$ 27,971	$ 2,479,588	100.0 %

   Residential Construction Commercial

   At December 31, 2024	Mortgages	Loans	Loans	Total
   Ontario	$ 1,134,134	$ 395,454	$ 12,194	$ 1,541,782	62.5 %
   Alberta	92,996	105,426	-	198,422	8.1 %
   British Columbia	107,390	586,681	-	694,071	28.2 %
   Quebec	3,906	-	-	3,906	0.2 %
   Atlantic Provinces	9,900	-	-	9,900	0.4 %
   Other	11,002	-	5,008	16,010	0.6 %
   	$ 1,359,328	$ 1,087,561	$ 17,202	$ 2,464,091	100.0 %
   (f) Other information

   Outstanding commitments for future fundings of mortgages are as follows:

   At December 31	2025	2024
   Residential mortgages
   Insured	$ 167,072	$ 63,674
   Uninsured	81,197	31,201
   Uninsured - completed inventory	5,752	6,994
   Construction loans	275,305	327,996
   Commercial loans
   Other	690	-
   	$ 530,016	$ 429,865

   Of the total outstanding commitments for future fundings, only a portion issued are expected to fund. Accordingly, these amounts do not necessarily represent future cash requirements of the Company.

   The fair value of the non-securitized mortgage portfolio at December 31, 2025 is $2,502,511 (December 31, 2024 -

   $2,483,036). Fair values are calculated on a discounted cash flow basis using the prevailing market rates for similar mortgages.

   At December 31, 2025, insured residential mortgages include $37,835 (December 31, 2024 - $46,299) of mortgages that had been securitized through the market MBS program; however, the underlying MBS security has been retained by the Company for liquidity purposes.

8. ‌Non-marketable Securities

   At December 31	2025	2024
   Real Estate Debt Funds	$ 78,065	$ 74,296
   Other Real Estate Limited Partnerships	48,527	43,132
   	$ 126,592	$ 117,428

   The Company holds investments in Real Estate Debt Funds with investment interests ranging from 2.4% to 6.2% (December 31, 2024 - 2.2% to 5.9%). At December 31, 2025, the Company's total remaining commitments relating to its Real Estate Debt Funds are $34,344, consisting of $5,500 available for capital advances and $28,844 that supports credit facilities throughout the life of one of the Real Estate Debt Funds. The Company advances its proportionate share as the Real Estate Debt Funds invest in a diversified portfolio of mortgage loans, including mezzanine, subordinate and bridge mortgages, secured by Canadian residential and commercial real estate.

   The Company holds investments in Other Real Estate Limited Partnerships with partnership interests ranging from 4.8% to 34.8% (December 31, 2024 - 5.7% to 34.8%). At December 31, 2025, the Company's total remaining commitments relating to its Other Real Estate Limited Partnerships are $34,000. The Company advances its proportionate share as the Other Real Estate Limited Partnerships acquire, develop, re-develop, lease, manage and reposition real estate properties across Canada.

   For details of net gains and losses on non-marketable securities, refer to Note 20.

9. ‌Equity Investment in MCAP Commercial LP

   At December 31, 2025, the Company holds a 13.89% equity interest in MCAP (December 31, 2024 - 13.88%), representing 4,000,000 units held by MCAN (December 31, 2024 - 4,000,000) of the 28,796,809 total outstanding MCAP partnership units (December 31, 2024 - 28,813,772).

   The Company recognizes equity income from MCAP on a one-month lag such that equity income from MCAP is based on MCAP's net income for the years ended November 30 adjusted for the impacts of significant transactions or events up to the date of our financial statements.

   Amongst the interparty rights in the MCAP partnership agreement, the majority partner in MCAP has the right to acquire MCAN's entire partnership interest in MCAP at fair market value, which would be determined by an independent valuator agreed upon by both parties.

   At December 31	2025	2024
   Balance, beginning of year	$ 122,265	$ 111,367
   Equity income	33,444	28,803
   Dilution gain	-	680
   Distributions received	(21,714)	(18,585)
   Balance, end of year	$ 133,995	$ 122,265

   Selected MCAP financial information is as follows:

   At November 30	2025	2024
   MCAP's balance sheet:
   Assets	$ 75,403,669	$ 66,971,617
   Liabilities	74,461,830	66,113,046
   Equity	941,839	858,571

   Years Ended November 30	2025	2024
   MCAP's revenue and net income:
   Revenue	$ 1,123,817	$ 1,187,445
   Net income	240,790	208,774

10. ‌Other Assets

    At December 31	2025	2024
    Intangible assets, net	$ 3,427	$ 1,610
    Capital assets, net	5,662	3,835
    Right-of-use asset, net	5,510	5,939
    Prepaid expenses	2,053	1,587
    Other loans	6,451	5,742
    Related party receivable - MCAP	682	1,629
    Receivables	3,139	3,884
    Foreclosed real estate	220	321
    	$ 27,144	$ 24,547

    Intangible and capital assets are initially recognized at cost and are amortized over their estimated useful lives (typically 5 years) on a straight-line basis.

    During the year ended December 31, 2025, the Company recognized $363 (2024 - $370) of depreciation expense on the right-of-use asset.

    The related party receivable from MCAP consists primarily of net principal and interest collected by MCAP in its role as a mortgage servicer, which is remitted to MCAN on the next business day.

    The capital assets and intangible assets continuity is as follows:

    	Furniture & Fixtures		Computer Hardware		Leasehold Improvements		Capital Asset Total		Intangible Assets
    Cost
    At January 1, 2024	$ 835	$	2,223	$	2,003	$	5,061	$	6,936
    Additions	1,362		595		1,710		3,667		1,133
    At December 31, 2024	2,197		2,818		3,713		8,728		8,069

    Additions	73	48	2,868	2,989	2,560
    At December 31, 2025
    	2,270	2,866	6,581	11,717	10,629

    Amortization
    At January 1, 2024	833	2,107	1,649	4,589	6,099
    Amortization for the year	67	94	143	304	360
    At December 31, 2024	900	2,201	1,792	4,893	6,459

    Amortization for the year	287	163	712	1,162	743
    At December 31, 2025
    	1,187	2,364	2,504	6,055	7,202

    Net Book Value
    At December 31, 2024	1,297	617	1,921	3,835	1,610
    At December 31, 2025	$ 1,083	$ 502	$ 4,077	$ 5,662	$ 3,427

    At December 31, 2025, the Company has a $3,946 revolving promissory note receivable including accrued interest (December 31, 2024 - $3,404) with an Other Real Estate Limited Partnership (refer to Note 8), The net carrying amount, inclusive of an allowance for ECL of $2,521 (December 31, 2024 - $nil), is $1,420 (December 31, 2024 - $3,404). The revolving promissory note receivable matures on June 30, 2026 with $nil remaining available to be drawn.

11. ‌Securitization Activities

The Company is an NHA MBS issuer, which involves the securitization of insured mortgages to create and sell MBS through Canada Mortgage and Housing Corporation ("CMHC") market MBS and Canada Mortgage Bonds ("CMB") programs.

The Company may sell MBS to third parties and may also sell the net economics and cash flows from the underlying mortgages ("interest-only strips") to third parties. The MBS portion of the mortgage represents the core securitized mortgage principal and the right to receive coupon interest at a specified rate. The interest-only strips represent the right to receive excess cash flows after satisfying the MBS coupon interest payment and any other expenses such as mortgage servicing.