Atrium Mortgage Investment (TSE:AI) reported second-quarter net income of C$11.7 million, or C$0.24 per basic share, down from C$13.1 million, or C$0.28 per share, a year earlier, as its mortgage portfolio contracted amid elevated repayments and portfolio yields declined.
Despite the year-over-year decline, Chief Financial Officer Chris Anastasopoulos said quarterly earnings remained above Atrium’s regular quarterly dividend of C$0.2325 per share. Year-to-date earnings were C$0.49 per share, compared with dividends of C$0.465 per share, according to Chief Executive Officer Robert Goodall.
Portfolio Declines as Repayments Outpace Originations
Atrium’s mortgage portfolio stood at C$860.1 million at June 30, down 6.2% from C$917.1 million at the end of 2025 and down roughly 4% from the prior quarter. During the second quarter, the company advanced C$88.2 million in mortgage principal while C$121.9 million was repaid or transferred, net of C$1 million in write-offs.
The repayment activity produced an annualized portfolio turnover rate of 58%, compared with 38% for full-year 2025. Goodall said repayments can be “lumpy” and that the company expects activity to moderate during the remainder of the year.
“Despite the decline in our mortgage portfolio this quarter, we had our most active quarter for new business in 12 months,” Goodall said. He said Atrium expects the portfolio to rise to at least C$900 million by year-end, supported by anticipated lower repayments and contributions from its Ontario, British Columbia and Alberta offices.
Goodall said the British Columbia office made a significant contribution to second-quarter originations and has a full potential-loan pipeline for the third quarter. Atrium’s Alberta office, opened in mid-April, has closed one loan and negotiated binding commitments on two others.
The weighted average interest rate on the mortgage portfolio fell to 8.69% at June 30 from 8.86% at March 31. Anastasopoulos attributed the decline to repayments of higher-yielding loans and new originations at lower yields. Goodall added that the repayment of C$41 million of older Stage 3 loans, which had been originated when rates were higher, contributed to the lower portfolio yield.
At quarter-end, 80.9% of Atrium’s mortgage portfolio carried floating interest rates, with most loans subject to interest-rate floors.
Credit Metrics Improve, Though Stage 2 Balances Rise
Atrium’s Stage 3, or impaired, loans declined 28% to C$61.5 million at June 30 from C$86 million at the end of 2025. Goodall said two large Stage 3 loans totaling C$41 million were resolved during the quarter, more than offsetting a C$13.5 million commercial loan that entered Stage 3 because it was more than 90 days past maturity.
The C$13.5 million loan remains current on interest payments. During the question-and-answer session, Goodall said it relates to land intended for a purpose-built rental project and that the borrower is close to securing replacement financing.
Stage 2 mortgages increased to C$93.9 million from C$48.7 million at year-end. The increase included C$24.4 million of loans moved to Stage 2 because they were more than 30 days past maturity, although the borrowers continued to make interest payments.
Goodall said these loans may remain past contractual maturity when borrowers seek lower-cost financing or elect not to accept a renewal offer while continuing to pay interest. He said Atrium did not have fundamental credit concerns with those loans and hoped to renew them where appropriate.
The total allowance for credit losses was C$30.1 million at June 30, slightly lower than C$30.5 million at year-end. Because the overall portfolio was smaller, the allowance represented 3.5% of the mortgage portfolio, up from 3.32% at Dec. 31. Atrium recorded a C$137,000 loan-loss provision in the second quarter, compared with C$651,000 in the previous quarter.
Shift Toward Commercial and Apartment Lending
Atrium continued to increase its exposure to commercial and house-and-apartment mortgages, which Goodall described as preferred sectors. Commercial loans represented 30% of the portfolio at quarter-end, up from 29% in the first quarter, while house-and-apartment mortgages rose to 23.4% from 20.1%.
Combined, those two categories accounted for 53.4% of the portfolio, up from 49% in the prior quarter and 23% in 2023. Construction loan balances increased to C$52 million from C$43 million in the first quarter, as the company became more comfortable with construction lending amid more stable building costs.
First mortgages represented 96.9% of the portfolio, while the weighted average loan-to-value ratio was 62.5%, below Atrium’s targeted 65% level. High-ratio loans, defined as loans above 75% loan-to-value, totaled C$82 million, or about 9.5% of the portfolio.
In Alberta, Goodall said the company’s recent lending activity has focused on commercial properties, including a 41-unit purpose-built rental project near a university, a recently completed small-bay industrial property, and a commercial building being converted to medical-office use.
Management Cites Competitive Lending Environment
Atrium ended the quarter with C$224.1 million drawn on its C$280 million credit facility. Debt represented 36.5% of total assets, while the weighted average borrowing cost on the facility declined to 4.67% from 5.1% a year earlier.
Goodall said the lending market remains competitive because of limited property transaction activity, with banks, life insurers and smaller institutions competing for available business. He said the company expects its portfolio yield to be more stable going forward, though pricing pressure remains evident.
On the real-estate market, Goodall said commercial property conditions continued to stabilize during the quarter, while residential markets showed some improvement in single-family activity. However, he said the high-rise condominium market in Toronto and Vancouver remained weak as excess supply is absorbed.
“Atrium remains on solid footing with ample financial resources to take advantage of opportunities in the market,” Goodall said.
About Atrium Mortgage Investment (TSE:AI)
Atrium Mortgage Investment Corp is a non-banking finance company providing residential and commercial mortgages that lends funds in major urban centres in Canada where the stability and liquidity of real estate are high. Its objectives are to provide its shareholders with stable and secure dividends and preserve shareholders’ equity by lending within conservative risk parameters. The company generates its revenue from mortgage interest and fees.
