Strong Mortgage Portfolio Drives Increased Profits
Calgary, Alberta–(Newsfile Corp. – August 24, 2022) – Builders Capital Mortgage Corp. (TSXV: BCF) (“Builders Capital” or “the Company”) announced today the release of its second quarter financial results for the period ending June 30, 2022.
- Consistent with our targeted distribution, dividends of $0.1995 per share were paid to Class A public shareholders representing an 8% annualized return on the original $10.00 issue price for the thirty-fourth consecutive quarter since inception.
- Total comprehensive income grew to $695,000, up 18% year-over-year.
- Earnings per share increased to $0.24, up 26% year-over-year.
- Assets held for sale were successfully reduced by 51.9% and now represent only 4.6% of shareholders’ equity.
- Geographic diversity of our portfolio was further enhanced with continued growth in the BC market and our recent expansion into Nova Scotia.
- We achieved an approximate weighted average loan-to-value ratio of 73% on our mortgage portfolio, in line with our 75% target level.
In commenting on these results, Sandy Loutitt, President of Builders Capital, stated:
“We are happy to be reporting net earnings which are in line with the strong results we were achieving shortly after our initial public offering. Increases in gross revenues and a multi-year downward trend in provisions for mortgage losses have resulted in net earnings increasing to their highest level since early 2016. While we’ve had good success in weathering the storms of an oil price collapse in our primary market, an extended period of historically low interest rates placing downward pressure on our pricing, and a world-wide pandemic, we’re hopeful that this period of instability is now well behind us. Despite these travails, we have been consistently able to deliver our full planned distribution to public shareholders since inception, and are confident that this performance is relatively unique in this industry.”
“Lately, we have also had good success in improving the quality of our mortgage portfolio, having achieved lower average loans-to-value, much improved geographic diversification of assets and a more current and rapid turnover of investments. Aided by robust real estate markets, we have also had good success in reducing the amount of money tied up in non-productive assets held for sale. We fully expect these improvements to continue to benefit the bottom line going forward.”
“Despite a recent cooling in the real estate market in general, new home construction levels remain elevated, particularly in our core markets, and we have been experiencing a high demand for our construction financing. We plan to continue to work on growing the mortgage portfolio while prudently building in an adequate margin for error in our loan-to-value calculations in order to be well prepared for any potential deterioration in future prices.”
|Three months ended June 30,
|Six months ended June 30,
|Three months ended June 30,
ended June 30,2021
|Total comprehensive earnings||694,575||1,359,437||548,076||1,112,157|
|Net mortgages receivable, end of period||30,803,944||30,803,944||26,118,180||26,118,180|
|Earnings per share||0.24||0.47||0.19||0.38|
|Cash dividends declared||647,134||1,271,584||578,472||1,064,351|
|Cash dividends declared per Class A share||0.1995||0.3967||0.1995||0.3967|
|Cash dividends declared per Class B share||0.2712||0.5233||0.1972||0.2980|
A more detailed discussion of the Company’s financial results can be found in Builders Capital’s Second Quarter 2022 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.
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 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.
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