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Builders Capital Mortgage Corp. Reports Second Quarter Results

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Quarterly Earnings at Highest Level Since 2016
Strength of Builders Capital’s Core Business Continues to Drive Resilience

Calgary, Alberta–(Newsfile Corp. – August 24, 2020) – Builders Capital Mortgage Corp. (TSXV: BCF) (“Builders Capital” or “the Company”) today released its second quarter financial results for the period ending June 30, 2020.

Highlights include:

  • Quarterly comprehensive income of $629,545 reaches highest level since Q4 2016
  • Earnings exceed the amount required to pay planned Class A Non-Voting Share dividends by 1.6 times
  • Consistent with our targeted distribution, dividends paid to Class A public shareholders in the second quarter were $0.1995 per share, representing an 8% annual return on the original $10.00 issue price for the 26th consecutive quarter since inception
  • Our mortgage portfolio grows 7.8% in the quarter and 22.1% year-over-year to represent 102% of our shareholders’ equity figure
  • Weighted average loan to value ratio of mortgage portfolio reduced to approximately 72%
  • Assets held for sale were reduced by 21.3% in the quarter and 32.6% year-over-year

Sandy Loutitt, President of Builders Capital, commented as follows:

“While real estate values in our primary markets have been softening recently, we at Builders Capital have worked hard to realize on a number of loans for which the equity had been eroded by these declines. The fact that our aggressive efforts to counter this impact have been successful in transitioning the portfolio began to appear last quarter, and have come to fruition this quarter with our highest net income in more than three years. In concert with these efforts aimed at portfolio repositioning, we have also worked the average loan-to-value ratio of our mortgages down to what for us are historically low figures and have thereby further enhanced the resilience of the portfolio.

“While we are concerned that the measures put in place to fight the COVID-19 pandemic and the low oil prices may continue to cause headwinds for real estate markets, we are confident that Builders Capital is now, and will remain, well positioned to cope with the challenges that may arise and we look forward to continued improvement in the Company’s results.”

Financial Overview

Three months ended June 30,
2020
$
Three months ended June 30,
2019
$
Three months ended June 30,
2018
$
Revenues 860,036 698,111 845,660
Total comprehensive income 629,545 472,190 492,823
Total assets 30,813,268 27,789,720 32,234,463
Shareholders’ equity 27,225,059 27,258,301 26,522,452
Basic and diluted earnings per share 0.21 0.16 0.18
Cash dividends declared 401,912 588,715 542,343
Cash dividends declared per Class A share 0.1995 0.1995 0.1995
Cash dividends declared per Class B share 0.2096 0.1763

 

A more detailed discussion of the Company’s financial results can be found in Builders Capital’s Second Quarter 2020 Management’s Discussion and Analysis, which has been posted along with condensed consolidated interim financial statements for the quarter on the Company’s website (www.builderscapital.ca) and filed on SEDAR (www.sedar.com).

About Builders Capital

Builders Capital is a mortgage lender providing short-term course-of-construction financing to builders of residential, wood-frame properties in Western Canada. The Company commenced active operations on December 12, 2013 on the closing of its initial public offering, whereupon it acquired a portfolio of mortgages from two predecessor companies.

Builders Capital’s investment objective is to generate attractive returns, relative to risk, in order to provide stable and consistent distributions to shareholders while remaining focused on capital preservation and satisfying the criteria mandated for mortgage investment corporations (“MIC”) as defined in the Income Tax Act.

As an MIC, Builders Capital is not subject to income tax provided that it distributes all of its taxable income as dividends to shareholders within 90 days of its December 31st year-end. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same tax position as if their proportionate share of mortgage investments made by the company had been made directly by the shareholder.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities legislation, including statements with respect to management’s beliefs, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements contained in this news release. These include, among other things, risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters, government and private industry response to the current COVID-19 epidemic, and the general economic environment. The company cautions that the foregoing list is not exhaustive, as other factors could adversely affect its results, performance or achievements. Readers are cautioned against undue reliance on any forward-looking statements. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

For more information, please contact:

John Strangway CPA, CA, Chief Financial Officer
Telephone: (403) 685-9888 Email: [email protected]
Website: www.builderscapital.ca

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Expressions of Interest for Director of the European Bank for Reconstruction and Development

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The Minister for Finance, Michael McGrath, is inviting Expressions of Interest from suitably qualified candidates to be considered as Ireland’s Director of the London-based European Bank for Reconstruction and Development (EBRD). The remunerated position of Director is an important post with a demanding workload. A full-time residential position, it is based at Bank headquarters in London.

The Minister’s nominee is expected to be appointed by the EBRD, with the agreement of Ireland’s Constituency partner countries, for a three-year term from 1 August 2024.

Minister McGrath commented:

“This is an exciting opportunity to represent Ireland (and our Constituency partners Denmark, Lithuania and Kosovo) as a Director on the Board of the European Bank for Reconstruction and Development overseeing the policy-making and governance of the Bank. The EBRD is a unique International Financial Institution supporting projects across three continents. By investing in projects which otherwise would not be fully met by the market, the EBRD promotes entrepreneurship and fosters transition towards open and sustainable market economies. I am keen to ensure our Irish representative has the ability, education, vision, and experience to make a significant contribution to the Board and brings a range of skills and diverse perspective to the deliberations of the Board.

My nominee will need high competence in economic and financial matters. Expertise can come from notable or significant achievements in the corporate or financial sector, academia, policy-focused institutions, or public service. Importantly, they will have the highest ethical standards, a strong sense of professionalism and commitment, and dedication to serving the interests of all the shareholders and be able to make themself readily available to the Board in the fulfilment of their duties.”

Expressions of interest will be accepted up to 3pm on 27th March 2024

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Council adopts regulation on instant payments

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The Council adopted today a regulation that will make instant payments fully available in euro to consumers and businesses in the EU and in EEA countries.

The new rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures. Improving the possibilities to mobilize cash-flows will bring benefits for citizens and companies and allow for innovative added value services.

The instant payments regulation will allow people to transfer money within ten seconds at any time of the day, including outside business hours, not only within the same country but also to another EU member state. The regulation takes into consideration particularities of non-euro area entities.

Payment service providers such as banks, which provide standard credit transfers in euro, will be required to offer the service of sending and receiving instant payments in euro. The charges that apply (if any) must not be higher than the charges that apply for standard credit transfers.

The new rules will come into force after a transition period that will be faster in the euro area and longer in the non-euro area, that needs more time to adjust.

The regulation grants access for payment and e-money institutions (PIEMIs) to payment systems, by changing the settlement finality Directive (SFD). As a result, these entities will be covered by the obligation to offer the service of sending and receiving instant credit transfers, after a transitional period. The regulation includes appropriate safeguards to ensure that the access of PIEMIs to payment systems doesn’t carry additional risk to the system.

Under the new rules, instant payment providers will need to verify that the beneficiary’s IBAN and name match in order to alert the payer to possible mistakes or fraud before a transaction is made. This requirement will apply to regular transfers too.

The regulation includes a review clause with a requirement for the Commission to present a report containing an evaluation of the development of credit charges.

Background

This initiative comes in the context of the completion of the capital markets union. The capital markets union is the EU’s initiative to create a truly single market for capital across the EU. It aims to get investment and savings flowing across all member states for the benefit of citizens, businesses, and investors.

On 26 October 2022 the Commission put forward a proposal on instant payments that amends and modernises the single euro payments area (SEPA) regulation of 2012 on standard credit transfers in euro by adding to it specific provisions for instant credit transfers in euro.

Source: European Council

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FCA highlights need for enhanced competition in wholesale data markets

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The FCA has unveiled the outcomes of its in-depth study into the wholesale data market, focusing on the sectors of credit ratings data, benchmarks, and market data vendor services.

Despite deciding against major regulatory actions due to the risk of unintended consequences that could affect the data’s availability and quality—a crucial resource for global investors—the FCA has pinpointed several areas where competition could be significantly improved.

The study’s revelations indicate that the current state of competition in these markets may lead to users incurring higher costs for data than would be the case in a more competitive environment. This concern is particularly pressing given the critical role that such data plays in supporting effective investment decisions across the financial sector.

In a move to address these findings, the FCA has proposed initiatives aimed at ensuring wholesale data is distributed under fair, reasonable, and transparent conditions. This approach forms a part of the regulator’s broader strategy to ‘repeal and replace’ assimilated EU law, reinforcing the UK’s status as a premier global financial hub fostering investment, innovation, and sustainable growth.

Sheldon Mills, the FCA’s Executive Director of Consumers and Competition, emphasised the importance of quality and accessible wholesale data for the efficiency of financial markets. “The quality and availability of wholesale data is integral to well-functioning wholesale financial markets,” Mills stated. He further clarified, “Our market study found that firms can access the data they need to make effective investment decisions. We do not believe the case has been made for significant interventions. However, we will examine ways to help support wholesale data being provided on fair, reasonable and transparent terms.”

In its commitment to fostering a competitive and fair marketplace, the FCA will continue to scrutinize allegations of anti-competitive behavior across all markets, including wholesale data markets, leveraging its powers under the Competition Act to address any such issues.

Source: Fintech Global

 

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