Successful Two-Year Trend of Increasing Earnings Continues
Calgary, Alberta--(Newsfile Corp. - November 15, 2022) - Builders Capital Mortgage Corp. (TSXV: BCF) ("Builders Capital" or "the Company") announced today the release of its third quarter financial results for the period ending September 30, 2022.
Consistent with our targeted distribution, dividends of $0.2016 per share were paid to Class A public shareholders representing an 8% annualized return on the original $10.00 issue price for the thirty-fifth consecutive quarter since inception.
Year-to-date total comprehensive income of $2.1 million up 22% year-over-year.
Assets held for sale were successfully reduced by 52% and now represent only 4.3% 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.
The net mortgage portfolio grew to represent 114% of Shareholders' equity.
In commenting on these results, Sandy Loutitt, President of Builders Capital, stated:
"Despite signs that the greater economy appears to be slowing, and that a recession is possible in the new year, we continue to regularly receive many inquiries about access to our construction mortgage services and our lending book is currently fully utilized. We expect strong demand for housing and elevated levels of household creation to keep the local and regional construction industry very active for the foreseeable future, even if home prices and sales volumes cool. Fortunately, thanks to Builders Capital's flexible and carefully constructed business model, the success of our builder clients is not necessarily dependent solely upon high real-estate values, but rather the continuation of markets in which margins are sufficient to support the industry.
"Thanks to the ongoing and strong demand that we forecast for our brand of construction finance, we have taken steps to complete a capital raise by way of a rights offering. Through this mechanism, existing shareholders are being given the opportunity to increase their investment in our company on a discounted basis. We anticipate the full sale of these securities will raise a gross amount of about $6.0 million, thereby increasing Builders Capital's capital base by 22%. The net proceeds will be used to grow our mortgage portfolio in the coming months.
"When interest rates started to rise across the market, we responded accordingly and began quoting higher rates for new mortgages. We are happy to report that we are now advancing on some of these new higher rate loans and that we expect to see these higher rates contribute to our bottom line in the next few months.
"In concert with the achievement of higher rates on our mortgages, we're also staying tightly focused on the task of minimizing potential loan losses. We remain conservative in the valuations that we place on our mortgage security, and are paying close attention to the macro and micro-economic conditions exhibited in the various markets we serve in order to ensure that loans are placed where they have the best opportunity for success."
Three months ended September 30, 2022
Three months ended September 30, 2021
Nine months ended September 30, 2022
Nine months ended September 30, 2021
Total comprehensive earnings
Net mortgages receivable, end of period
Earnings per share
Cash dividends declared
Cash dividends declared per Class A share
Cash dividends declared per Class B share
A more detailed discussion of the Company's financial results can be found in Builders Capital's Third 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.
For more information, please contact:
John Strangway CPA, CA, Chief Financial Officer
Telephone: (403) 685-9888 Email: firstname.lastname@example.org
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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