Positive Earnings Trend Continues: Strength of Builders Capital's Core Business Drives Company Resilience
Calgary, Alberta--(Newsfile Corp. - November 23, 2020) - Builders Capital Mortgage Corp. (TSXV: BCF) ("Builders Capital" or "the Company") today released its third quarter financial results for the period ending September 30, 2020.
Earnings exceeded the amount required to pay planned Class A Non-Voting Share dividends by 1.3 times.
Consistent with distribution targets, dividends paid to Class A public shareholders in the third quarter were $0.2016 per share, representing an 8% annual return on the original $10.00 issue price for the 27th consecutive quarter since inception.
Mortgage portfolio grew 13.7% year-over-year to represent 95% of shareholders' equity
Assets held for sale were reduced by 17.9% year-over-year representing 11% of shareholders' equity by quarter-end.
In line with targeted levels, a weighted average loan-to-value ratio of 75% was achieved in the mortgage portfolio.
Sandy Loutitt, President of Builders Capital, commented as follows:
"Recently, softening real estate values in some of our primary markets have caused difficulties, but at Builders Capital we have worked diligently and successfully to realize on problem assets and to transition the portfolio to more secure and thus more profitable loans. The success of this transition is becoming apparent as our year-over-year earnings trend continues to improve, our weighted average loan to value ratio remains approximately at its targeted level and our regional diversification is broadened. Of course, we are particularly pleased that, despite some difficult times, the specialized share structure of Builders Capital, which was established with an aim of ensuring the ability of the Company to regularly pay planned dividends to our Class A shareholders, has functioned as intended.
"While we - and all Canadian businesses - remain concerned about the possible economic impacts of the COVID-19 pandemic, we are confident that Builders Capital is now, and will remain, well positioned to cope with any further challenges that may arise. We look forward to continued improvement in the Company's results."
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Total comprehensive income
Basic and diluted 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 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.
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.
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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