Disclosure: Builders Capital Mortgage Corp. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Price and Volume (1-year)
* Builders Capital has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures are in C$.
Mortgage advancements increased 52% YoY to $65M, an all-time high
Portfolio Update
Repayments were up 100% YoY, indicating higher turnover
Net receivables grew 13% YoY, to $48M
Exposure to first mortgages remained relatively flat at 98% vs a five-year average of 94%, indicating lower risk levels
Source: FRC / Company
Improved portfolio diversification by trimming exposure to Calgary and B.C., and broadening allocation across other regions in AB
Remains focused on single-family units (construction)
Average mortgage size remained flat at ~$900K vs. the five-year average of $1.0M
Source: FRC / Company
LTV rose 2.6 pp YoY to 79%, above the five-year average of 76%, indicating higher risk
Even with declining market rates, BCF’s lending rates increased as new mortgages were priced above existing ones
Stage three (impaired) mortgages increased 155% YoY, but declined 11% QoQ, representing 10% of total mortgages
Source: FRC / Company
However, allowances remained relatively flat at 3.14% of receivables, indicating management does not expect incremental losses
Following the rise in stage three loans in Q3, we had increased our loan loss provision forecasts; 2025 provisions rose 37% YoY to $1.03M, just 2% above our estimate
*Red (green) indicates an increase (decrease) in risk level.
Source: FRC
On a YoY basis, we believe the portfolio’s risk profile has increased, driven by higher LTVs, and a rise in stage three mortgages
Financials
2025 revenue rose 47% YoY, driven by higher receivables, and lending rates
EPS increased 15% YoY
Revenue and EPS were broadly in line, with small beats of 0.81% and 1.67%, respectively, driven by higher mortgage receivables and lending rates
Source: FRC / Company
Dividends remained unchanged at 11% of shareholders’ equity
* Yields were calculated based on the average share price for the given time period.
Note: Class A non-voting common shares are publicly listed, while Class B non-voting common shares are held by management and private investors. In terms of dividend distribution, Class A shares (public investors) rank first, followed by Class B shares. Class A shares will be paid $0.80 per share, before dividends are paid on Class B shares.
Dividends for Class A investors remained unchanged at $0.80/share, implying a yield of 8.26%
Source: FRC / Company
Debt-to-capital deceased 2 pp YoY to 12%, implying lower risk levels
FRC’s Projections and Valuation
As 2025 results were broadly in line with our estimates, we are not making any major changes to our 2026 forecasts
Source: FRC
We believe the MIC can comfortably distribute its stated $0.80/share annual dividend
Source: S&P Capital IQ / FRC
On average, MICs and banks are expected to report 4% revenue growth in 2026 vs 7% in 2025, primarily driven by lower rates
Since our last report in December 2025, MIC sector multiples are up 5%
As a result, our fair value estimate increased from $10.59 to $10.89/share
We are reiterating our BUY rating, and adjusting our fair value estimate from $10.59 to $10.89/share, implying an expected return of 21% (including dividends) in the next 12 months. Overall, BCF delivered a strong 2025, with record earnings and robust loan growth. While near-term macro headwinds remain for development lending, we believe stabilizing rates, improving mortgage activity, and a potential recovery in the housing market, support a more positive near-term outlook for the stock.
Risks
The following, we believe, are the key risks of the company:
Maintaining our risk rating of 3 (Average)
APPENDIX
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