Peakhill: How Much of Earnings Really Comes From the Loan Book, and How Much From the Internal Fee Layer
The main article argued that Peakhill's real test runs through the CMHC exit path. This follow-up shows that 2025 earnings did not come only from a larger loan book, but also from CAD 4.8 million of related-party commitment fees and a lower management-fee burden, which makes earnings quality less clean than the headline profit implies.
The Follow-up Question
The main article argued that Peakhill lives or dies on its ability to recycle bridge loans into CMHC takeouts. This follow-up stops one step earlier and asks a more forensic question: how much of 2025 profit really came from the economics of the loan book, and how much came from an internal fee layer inside the Peakhill group.
Three points matter immediately. First, CAD 4.8 million out of CAD 5.478 million of other income came from commitment fees charged to Peakhill Capital. Second, management-fee expense fell to CAD 1.488 million because no management fees were paid starting in October 2025, while servicing fees rose to CAD 547 thousand. Third, if one strips the related-party commitment fees out of profit and analytically restores the drop in management fees to the 2024 level, 2025 net income falls to CAD 21.238 million, essentially identical to CAD 21.241 million in 2024.
This is not a claim that the earnings are fictitious. It is a narrower claim: the CAD 26.4 million headline looks like a clean acceleration in loan-book earnings, but the structure underneath is more mixed. The spread engine did get bigger. A large part of the bottom-line improvement simply came from fee items moving in the right direction inside the group, not only from the gap between borrower interest and funding cost.
Almost All Of The Apparent Revenue Diversification Is Internal
At headline level, the revenue mix looks healthy. Interest income rose to CAD 36.034 million and other income jumped to CAD 5.478 million. But once the second line is opened up, most of that growth no longer looks like a new external revenue source. The related-party note says explicitly that CAD 4.8 million of commitment-fee revenue was earned from Peakhill Capital.
The arithmetic is sharp. Commitment fees were 87.6% of other income, 11.6% of total revenue, and 18.2% of net income. Other income that was not commitment fees amounted to only CAD 678 thousand. So anyone reading the move from CAD 24.355 million of interest income to CAD 41.512 million of total revenue could easily imagine a more diversified earnings base. In practice, most of that diversification comes from one related party.
That matters because for a non-bank lender, earnings quality is first about whether the loan book generates spread and whether that spread survives expected credit losses and funding cost. Commitment fees from a related party are perfectly legitimate revenue, but they do not say the same thing as interest earned from third-party borrowers. They reflect an internal pricing decision inside the group, not only the standalone earning power of the mortgage book.
| Item | 2025 | Share of the line |
|---|---|---|
| Interest income | CAD 36.034 million | 86.8% of total revenue |
| Other income | CAD 5.478 million | 13.2% of total revenue |
| Commitment fees from Peakhill Capital | CAD 4.8 million | 87.6% of other income |
| Other income excluding commitment fees | CAD 0.678 million | 1.6% of total revenue |
| Net income | CAD 26.403 million | Commitment fees equal 18.2% of it |
This also changes the right way to read growth. Interest income itself was up CAD 11.679 million versus 2024. But other income rose by CAD 3.331 million, and CAD 2.9 million of that increase came from higher commitment fees charged to the related party. So roughly 87% of the growth in the non-interest line did not come from a broader external client base or from a second real engine. It came from the same internal fee layer.
The Expense Side Also Moved In The Same Direction
The other half of the story sits in costs. The directors' report says management-fee expense fell from CAD 1.853 million to CAD 1.488 million because no management fees were paid starting in October 2025. That is not just a technical note. It means that in the exact quarter from which management chooses to annualize the presentation view, the management-fee layer had already dropped to zero.
At the same time, servicing fees rose to CAD 547 thousand from CAD 300 thousand in 2024 and were set at 0.10% of assets under administration. So the servicing layer did grow with scale. But the jump in commitment-fee revenue and the drop in management fees moved in the same accounting direction: both lifted net income.
Putting the three fee items that directly touch Peakhill Capital into one frame gives a clearer read. In 2024, the internal fee layer was slightly negative at CAD 253 thousand: CAD 1.9 million of commitment fees less CAD 1.853 million of management fees and less CAD 300 thousand of servicing fees. In 2025, the same layer contributed CAD 2.765 million net. That is a CAD 3.018 million swing in one year.
That number matters more than it first appears. Total net income rose by CAD 5.162 million between 2024 and 2025. Of that, CAD 3.018 million, or about 58.5%, came from the internal fee layer moving from a small drag to a positive contributor. So reading the profit increase as a clean improvement in loan-book quality captures only part of the picture.
What Remains After Stripping Out The Fee Layer
One warning first: normalization is an analytical tool, not a reported metric. In this case, though, it clarifies the earnings picture better than the headline does.
Under the first and relatively conservative lens, one simply removes the full CAD 4.8 million of related-party commitment fees. 2025 net income falls from CAD 26.403 million to CAD 21.603 million. Peakhill still remains profitable on that basis, but it already looks far less like a breakout year.
Under a stricter earnings-quality lens, one also restores the CAD 365 thousand year-over-year drop in management fees back to the 2024 level. Net income then falls to CAD 21.238 million. That is almost a copy of 2024 profit, which stood at CAD 21.241 million.
That chart does not mean the loan book failed to improve. It does mean that the acceleration in the bottom line is less clean than the presentation and the headline suggest. The credit engine did work: interest income rose 48% and the net mortgage book climbed to CAD 578.262 million. But a large part of that gross gain was absorbed by three other forces: expected credit losses that rose to CAD 3.998 million, net financing expense of CAD 6.804 million after the bond issue, and a profit mix that leaned more heavily than before on intra-group fees.
The same point shows up even without full normalization. If one looks only at a rougher spread measure, meaning interest income less expected credit losses and less net financing expense, the result is CAD 25.232 million in 2025. That is above the CAD 23.349 million that the same calculation yields for 2024 when credit losses are deducted from interest income. So the book did produce more earning power. The improvement was simply much more modest than the final CAD 26.4 million profit line makes it appear.
The Presentation Pushes The Reader Straight To The Headline
Pages 15 to 17 of the investor presentation do exactly what a management deck is meant to do: they pull attention toward a larger balance sheet, about CAD 42 million of revenue, and about CAD 26 million of net profit. The problem is not the numbers themselves. The problem is what gets left outside the frame.
The deck compresses the earnings story into two clean charts and even adds a footnote saying that total revenue and net income are annualized based on the three months ended December 31, 2025. That is a run-rate framing, not an earnings-quality framing. A reader who does not go back to the related-party note and the expense details will not see that almost all of the non-interest line came from a related party and that management fees disappeared in the last quarter.
That is the core point. Peakhill is not hiding the data. The numbers are there. But the management framing is cleaner than the fee anatomy. The reader sees CAD 42 million of revenue and CAD 26 million of profit and is naturally pushed toward reading 2025 as a full breakout in loan-book economics. The more cautious reading is that the business did grow, but the final profit line still passed through an internal filter of related-party fees and lower charges to the same party.
Conclusion
The main article argued that Peakhill's real test sits in the CMHC exit path. This follow-up shows that the profit line itself also needs filtering. In 2025, Peakhill benefited not only from a larger loan book, but also from CAD 4.8 million of related-party commitment fees and from lower management fees after October. That makes earnings quality less clean than the headline, even though the profit itself is properly reported.
So the right 2026 question is not whether the company can generate profit. It is what kind of profit remains once the internal fee layer cools down. If interest income keeps growing, credit cost and funding cost stabilize, and the other-income line does not need repeated help from a related party to hold the pace, earnings quality will look materially cleaner. If not, 2025 will look less like a pure spread breakout and more like a year in which the internal fee layer helped close the gap.
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