Builders Capital Mortgage Corp. Reports 2014 First Quarter Results
CALGARY, ALBERTA--(Marketwired - May 30, 2014) - Builders
Capital Mortgage Corp. (TSX-VENTURE:BCF) (Builders Capital or the
company) today released financial results for the three months
ended March 31, 2014, which represent the first quarter of its 2014
fiscal year and the company's first full quarter as a
publicly-traded mortgage investment corporation (MIC).
First Quarter Results
For the three months ended March 31, 2014, mortgage revenue was
$786,410, representing annualized gross revenue of 13.6% of gross
share capital. This revenue consisted of $760,085 in interest and
$26,325 in lender fees charged to borrowers.
First quarter operating expenses, excluding the provision for
mortgage losses, were $87,682, or 11.1% of revenues. The provision
for loan losses of $60,763 was estimated by management, based on an
analysis of historical bad debts of the predecessor companies and
current analysis of the construction finance marketplace. This is a
collective provision and does not relate to any individual
mortgage.
Total comprehensive income for the first quarter was $637,965,
or $0.27 per share, based on the weighted average number of shares
outstanding for the period. This translates into earnings of $0.46
per Class A Non-Voting Share. Given the dividend priority granted
to Class A Non-Voting Shares held by the public, the effective
Class A Non-Voting Share dividend cover ratio for the quarter was
2.3.
"We are pleased with our initial financial performance as a
public entity," said Sandy Loutitt, President of Builders Capital.
"Our tight focus on financing short-term, wood-frame residential
construction in strong urban markets like Calgary and Edmonton
positions us to generate above average risk weighted returns.
Builders Capital has an established, full-service asset management
platform and a strong team of experienced professionals who are
proven performers. We're ready to grow."
Mortgage Portfolio
At March 31, 204, Builders Capital's mortgage portfolio
consisted of 35 mortgage loans with an aggregate value of $24.6
million. Of the 30 mortgages the company acquired at its start-up,
five with values totaling $3.7 million at December 31, 2013 were
paid out during the first quarter. These were replaced by ten new
mortgages totaling $3.8 million. No loans were in default during
the quarter.
Distributions
On March 21, 2014, Builders Capital declared a first quarter
dividend of $0.1973 per Class A Non-Voting share to shareholders of
record on March 31, 2014, payable on April 30, 2014. The dividend
amount was calculated to provide an 8% return on the $10.00 initial
Class A Non-Voting share price, prorated for the 90 days in the
quarter. On an annual basis, this level of distribution is
equivalent to $0.80 per Class A Non-Voting share.
Subsequent to quarter-end, on April 30, 2014, the company
declared a dividend of $0.3456 per share to Class B Non-Voting
Shareholders of record on April 28, 2014, payable on April 30,
2014. This dividend applied to the 2013 stub period, for which
Class A Non-Voting Shareholders had already received a dividend,
and the first quarter of 2014.
Outlook
Builders Capital
expects that continued steady housing starts in southern Alberta,
its primary market, will drive strong demand for construction
financing for at least the next several years. In addition to
strengthening its position in Alberta, the company intends to
expand lending to other western Canadian markets in the future.
"In particular, like
Alberta, Saskatchewan is expected to continue to exceed average GDP
growth in Canada," said Loutitt. "We believe that employment
growth, a strengthening economy and high levels of net migration
make Saskatchewan a good market for Builders Capital."
Loutitt noted that, despite favourable conditions in both
provinces, prevailing low interest rates have increased borrower's
sensitivity to price. "In response, we will be reducing rates and
stepping up our marketing," he said. "We are confident that these
strategies will allow us to continue to grow, fully utilize our
capital, and remain both competitive and profitable."
A more detailed discussion of the company's financial results
can be found in its 2014 First Quarter Management's Discussion and
Analysis, which will be posted along with the unaudited interim
condensed financial statements for the period on Builders Capital's
website (www.builderscapital.ca) and SEDAR (www.sedar.com) on May
30, 2014.
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 was formed on
March 28, 2013 but did not commence active operations until
December 12, 2013, on the closing of its initial public offering,
following which 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 steady distributions to shareholders while
remaining focused on capital preservation and staying within the
criteria mandated for mortgage investment corporations, as defined
in the Income Tax Act.
As a 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 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.
Builders Capital Mortgage Corp.John StrangwayChief Financial
Officer(403) 685-9888www.builderscapital.ca
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