SEPTEMBER 8, 2016
Canadian Western Bank
CWB-T: $26.49 | Rating: Hold | Target price: $28.00
Continued Loan Book Growth Should Translate to EPS in Time
Mining
Marc Charbin, CPA, CA, CFA Financial Services Analyst Tel: 416 865-5941 [email protected]
Canadian Western Bank Continued Loan Book Growth Should Translate to EPS in Time
Company Profile ...... 2 Higher Commercial Concentration than Most Banks ...... 2 Western Exposure Not Just Alberta, B.C. Too… ...... 3 Geographic Concentration Slowly Shifting East ...... 4 Does Commercial + Alberta = Too Much Energy Exposure? No...... 5 (Higher) Accruals More Comparable to U.S. Peers ...... 5 Arrears Accelerated in Q1/16 for Most Lenders ...... 7 Have Energy Prices Impacted the Non-Energy Book? A Little...... 7 Canadian Commercial Lending Market ...... 8 Market Share Steadily Increasing...... 9 Canadian Residential Mortgage Market ...... 10 Financial Results ...... 10 Q3/16 Results ...... 10 Guidance ...... 11 Forecasting Loan Book Growth to Continue ...... 12 Capital Position Likely to Remain at Current Levels ...... 13 Valuation ...... 13 Risks ...... 16 Financial Statements ...... 17 Appendix I – Management and Board of Directors ...... 20 Appendix II – Important Disclosures ...... 21
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | i Canadian Western Bank CWB-T – $26.49 Hold – $28.00
Company Profile Initiating Coverage: Continued Loan Book Growth Should Translate to EPS in Time Canadian Western Bank, based in Edmonton, Alberta, is principally a commercial lender, specializing in asset-based lending. Alberta We are initiating coverage of Canadian Western Bank with a Hold and British Columbia are the Company’s two core markets. In addition to commercial lending, CWB also offers a full suite of recommendation and a $28.00 price target. We value CWB applying a consumer loans, mortgages and deposits, trust services and P/E multiple of 11.0x on 2017E EPS of $2.56. This valuation is consistent wealth management products. with those of the “Big Six” Canadian Banks. While CWB is a smaller and more concentrated lender, it continues to have a relatively higher growth profile. While Alberta is certainly CWB’s largest market (comprising 37.5% of the loan book), British Columbia is also a significant market representing 35.7% of the loan book. Since January 2014, the unemployment rate in Alberta has increased from 4.7% to 7.8%, while the unemployment rate in B.C. has declined from 6.9% to 5.4%. CWB’s exposure to energy extraction (including production and exploration) is 1.2% of the loan book, comparable with the “Big Six” exposure which ranges between 1.2% and 3.3%. CWB has accrued allowances equal to 82.0% of its energy portfolio Source: BigCharts.com that is currently in arrears and it has an allowance for credit losses against 5.5% of its total energy exposure. With the average bank only accruing an Market and Company Data allowance against 26.1% of its impaired energy loans and CWB’s accruals either comparable to or even higher than U.S. peers, we believe CWB has likely taken TickerCWB-T Year End Oct. 31 the brunt of its potential energy sector losses. RatingHOLD Next Reporting Dec-16 RiskMedium Shares-basic O/S (M) 88.1 Arrears in the energy portfolio have increased materially: from 0.4% to 6.7%. Price$26.49 Shares-FD O/S (M) 93.3 However, for CWB, the arrears in its commercial book ex-energy have 1-Yr Target$28.00 Market Cap (M) $2,333 only increased to 0.4% from 0.3% since Q4/14. This balance is much Yield3.6% Float O/S (M) 85.9 lower than its Canadian peers and indicates that CWB is likely more 1-Yr ROR9.3% Avg Daily Volume (K) 337.2 52 Wk High$29.30 Ownership diversified than most would believe. While these arrears could increase, 52 Wk Low$19.26 Manag. & Dir. 2.5% we’d expect that they would remain in line with peers and historical experience. Valuation 11.0x 2017E EPS Institutional 45.3% Over the course of the last ten years, CWB has grown its loan book an average of 15.0% per year. Only in 2009 did the Company record single- EPS (FD) Q1 Q2 Q3 Q4 Annual P/E digit loan book growth, which was still a respectable 7.0%. We forecast the F2015A $0.65 A $0.64 A $0.64 A $0.66 A $2.59 A 10.2x F2016E $0.65 A $0.40 A $0.55 A $0.57 $2.17 12.2x loan book to increase to $27.9 billion in 2018, representing y-y growth of 15.6% F2017E $0.61 $0.62 $0.65 $0.68 $2.56 10.4x in 2016, 11.7% in 2017 and 10.4% in 2018.
BVPS Q1 Q2 Q3 Q4 Annual We calculate that the PCL will average 37bps in 2016, up from an average F2015A $21.55 A $21.76 A $23.55 A $23.73 A $23.73 A 1.1x of 19bps in the last ten years. As CWB will continue to retain material F2016E $23.69 A $25.86 A $26.20 A $26.54 $26.54 1.0x exposure to Alberta in particular, we expect PCLs to remain at 22bps F2017E $28.18 0.9x through to the end of 2017. Source: Company reports; CapitalIQ; LBS estimates. We forecast that CWB will earn $2.17 in 2016 and $2.56 in 2017. We Prices as of September 6, 2016. believe CWB could have difficulty reaching its medium term guidance
of 7% to 12% EPS growth in the three-year period, but that this rate of growth is attainable over five years, provided that loan book growth maintains its prior pace, that margins do not decline further and that provisioning returns to prior experience. Banks in Canada are expected to grow EPS 4% this year and next, while CWB should return to double-digit growth in 2017.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 1 Laurentian Bank Securities | Equity Research Canadian Western Bank
Company Profile
Higher Commercial Concentration than Most Banks
Loan Book 83% Headquartered in Edmonton, Alberta, Canadian Western Bank is unique from many of its competitors, Commercial particularly because of its focus on commercial lending. As illustrated in Exhibit 1, 82.7% of the Company’s loan book is comprised of commercial loans, while personal loans make up the balance of 17.3%. In Exhibit 2, we compare the loan book concentration of CWB versus its peers. On average, Canada’s “Big Six” banks have 35.3% commercial exposure, but that ranges between 23.1% and 45.6%. CWB earns 88.4% of its total revenue from net interest income, with other credit related fees comprising 4.4% of revenue, retail fees and wealth management products adding 4.9% and trust services rounding out CWB’s service offering adding 1.9% to total revenue. Canadian Western Bank is regulated by the Bank Act, and its two trust subsidiaries (Canadian Western Trust and Valiant Trust) are regulated by the Trust and Loan Companies Act, which require the same degree of regulation for all intents and purposes. CWB’s capital structure is consistent with that of its peers. Its $25.2 billion balance sheet is funded principally from $21.2 billion in deposits (61% personal, 39% business and government), $1.3 billion in subordinated debentures and debt securities, $265 million in preferred shares and the balance, $2.1 billion, in shareholder’s equity.
Exhibit 1. Loan Book Exposure by Type of Loan
Source: Company reports, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 2 Laurentian Bank Securities | Equity Research Canadian Western Bank
Arrears Lower than Furthermore, in Exhibit 2, we highlight that CWB’s arrears are lower than the average for Canadian banks. Comps The Company’s arrears as a percentage of its commercial loan book are 0.5%, versus the “Big Six” average of 1.0% (with a range of 0.5% to 1.4%). This is indicative to us of CWB’s underwriting discipline and also likely the diversity of its exposure across various industries.
Exhibit 2. Commercial Loan Book Commercial % Arrears % LTM PCL
"Big Six" Average 35.3% 1.0% 0.3%
High 45.6% 1.5% 0.6%
Low 23.1% 0.5% 0.1%
Canadian Western Bank 82.7% 0.5% 0.3% Source: Company reports, LBS
Western Exposure Not Just Alberta, B.C. Too…
B.C. Exposure 36% As CWB is based in Alberta, the Company’s exposure is often perceived to be highly concentrated to that market which is especially important today given the volatility in energy prices. While Alberta is certainly CWB’s largest market (comprising 37.5% of the loan book), British Columbia is also a significant market representing 35.7% of the loan book. In Exhibit 3, we illustrate CWB’s loan book exposure by province.
Exhibit 3. Loan Book Exposure by Geography
Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 3 Laurentian Bank Securities | Equity Research Canadian Western Bank
B.C. Creating Jobs The Company’s exposure to British Columbia has proven to be a boon in the current economic environment given the diverging nature of employment between provinces. As depicted in Exhibit 4, since January 2014, the unemployment rate in Alberta has increased from 4.7% to 7.8%, while the unemployment rate in B.C. has declined from 6.9% to 5.4%.
Exhibit 4. Unemployment in Canada
Canada Alberta BC 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0%
Source: Statscan, LBS
Geographic Concentration Slowly Shifting East
Ontario now 12.4%, CWB has also been making an effort to diversify geographically. Through acquisitions (primarily National up from 8.0% in 2010 Leasing and Maxium Financial going forward) and continued growth in its Optimum mortgage portfolio, the Company has decreased its exposure to Alberta while slightly increasing its exposure to B.C and materially increasing its presence in Ontario. Between 2010 and 2016, Alberta loans have decreased to 37.5% of the portfolio, from 48.0%. The balance has been invested in British Columbia which has increased to 35.7% from 33.0%, and Ontario which was increased from 8.0% to 13.6%. The shift in CWB’s geographic concentration is illustrated in Exhibit 5.
Exhibit 5. Geographic Concentration
50.0% Alberta B.C. Ontario Other 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2010 2011 2012 2013 2014 2015 Q3/16
Source: Company reports, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 4 Laurentian Bank Securities | Equity Research Canadian Western Bank
Does Commercial + Alberta = Too Much Energy Exposure? No.
Energy Exposure CWB has minimal direct exposure to the energy industry. CWB’s exposure to energy extraction (including Comparable, Arrears production and exploration) is 1.2% of the loan book, comparable with the “Big Six” exposure which ranges Higher between 1.2% and 3.3%. Relative exposure to energy producing companies and the relating accruals is highlighted in Exhibit 6. We also note that arrears in CWB’s energy portfolio are higher than the average reported by its peers (especially when they peaked at 16.4% in Q2/16). Our understanding is that the Company’s energy producing borrowers have more concentrated and smaller operations than those funded by the “Big Six.” Consequently, these companies have fewer financial resources to service liabilities and fewer non-production assets as collateral. That being said, the arrears are fully accounted for as CWB has accrued reserves for up to 82.0% of its impairments in the energy sector, while the average “Big Six” bank has accrued 26.1% (refer to the column under the heading “ACL/Impaired” in Exhibit 6).
Exhibit 6. Energy Loan Book Energy % Arrears % ACL % ACL/Impaired LTM PCL "Big Six" Average 2.1% 6.5% 1.4% 26.1% 3.7%
High 3.3% 16.1% 2.6% 43.6% 11.8%
Low 1.2% 2.3% 0.6% 10.4% 1.2%
Canadian Western Bank 1.2% 6.7% 5.5% 82.0% N/A Source: Company reports, LBS
(Higher) Accruals More Comparable to U.S. Peers
CWB Appears Fully As illustrated in Exhibit 6, CWB has accrued an allowance against 82.0% of its energy portfolio that is Accrued currently in arrears and it has an allowance for credit losses against 5.5% of its total energy exposure. Looking to the U.S., we have found three banks with comparable exposure to commercial lending and energy lending: Cullen/Frost Bankers, Inc. (CFR-US, not rated), BOK Financial Corporation (BOK-US, not rated) and Hancock Holding Company (HBHC-US, not rated). Cullen/Frost operates primarily in Texas, BOK’s operations are about half in Texas and Oklahoma with the remainder diversified through the southern and mid-western U.S., and Hancock Holding Company operates in the Gulf South Corridor (Mississippi, Alabama, Florida, Louisiana and Texas).
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 5 Laurentian Bank Securities | Equity Research Canadian Western Bank
In Exhibit 7, we illustrate the commercial and energy lending exposure of these lenders, and the related non- performing loans and accruals. We see that Cullen/Frost has made an accrual of 4.4% of its total energy exposure as of Q2/16, which is down from 5.1% in Q1/16 consistent with its trend in non-performing loans. By contrast, CWB has accrued for 5.5% of its portfolio, but is arrears are also higher (6.7% versus 3.4% for Cullen/Frost). Hancock Holding Company has accrued an allowance of 7.5% against its energy portfolio (higher than CWB) with a rate of non- performing loans which is much higher than CWB, 13.3%. CWB’s allowance for credit losses against non-performing energy loans is 82.0% (Exhibit 6). We calculate for Hancock Holding Company, that this ratio is 56.4% in Q2/16, which adds additional credibility to CWB’s accruals.
Exhibit 7. U.S. Energy Lender Credit Quality ($U.S. millions) Q2/16 Q1/16 2015
Non- Non- Non- Loan Book Allowance Loan Book Allowance Loan Book Allowance performing performing performing
Cullen/Frost Bank 11,584 0.7% 1.3% 11,542 1.5% 1.4% 11,487 0.7% 1.2%
Energy 1,503 3.4% 4.4% 1,656 6.9% 5.1% 1,758 1.2% 3.1%
BOK Financial 16,407 2.1% 1.4% 16,022 2.2% 1.5% 15,941 0.9% 1.4%
Commercial 10,356 1.8% 1.3% 10,288 1.7% 1.4% 10,253 0.7% 1.3%
Energy 2,819 6.0% N/A 3,029 5.3% N/A 3,097 2.0% N/A
Hancock Holding 16,036 1.9% 1.4% 15,978 1.8% 1.4% 15,703 1.0% 1.2%
Energy 1,481 13.3% 7.5% 1,634 9.7% 6.8% 1,580 4.4% 4.9%
Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 6 Laurentian Bank Securities | Equity Research Canadian Western Bank
Arrears Accelerated in Q1/16 for Most Lenders
US$40 WTI is the Observing the trend in non-performing loans in Exhibit 7 and the comparable metrics for the Canadian Magic Number lenders, non-performing loans sharply increased in Q1/16. This coincided with a period when WTI Crude Oil decreased to a trough of US$27.24. Since then, the trend in non-performing loans has been variable depending on the lender. Accruals against these energy portfolios also increased sharply in Q1/16. This suggests to us that energy producers as a whole begin experiencing difficulty servicing debt with WTI under US$40.00. Since the trough in February 2016, WTI has traded between US$40.00 and US$50.00 for the most part and the loan quality of energy portfolios has remained stable or improved. We would expect that provisioning would have to be re-evaluated again by lenders should the price of oil decrease again under US$40.00, especially if lower price levels were sustained.
Have Energy Prices Impacted the Non-Energy Book? A Little.
Rest of Commercial Given the scale of energy operations in Alberta, it’s reasonable to believe that related companies would also Book Performing Well experience issues with debt servicing, as energy producers are serviced by a variety of companies in the transportation, construction, real estate, hospitality and other sectors. For this reason, we compare the commercial portfolio ex-energy of CWB versus its Canadian peers. In Exhibit 2, we illustrate that CWB’s arrears rate in its commercial portfolio is 0.5%, versus the average “Big Six” bank of 1.0%. The results improve when the energy portfolio is removed. In Exhibit 8, we illustrate the trend in commercial arrears ex-energy between Q4/14 (when oil prices began declining in earnest) and Q3/16 (the most recent reporting period for banks). As we can see on the right side of the table, arrears in the energy portfolios have increased materially: from 0.4% to 6.5% (in Q4/14, CWB did not disclose its exposure to energy companies). However, for CWB, the arrears in its commercial book ex- energy have only increased to 0.4% from 0.3%. This balance is much lower than arrears for its Canadian peers. We believe an arrears rate of 0.4% is likely well within investors’ risk tolerance, even if it were to increase closer to industry averages. As a point of reference, consolidated impairments at CWB increased to 1.72% in 2010, during a period spanning between 2008 and 2010 when impairments were above 1.00% most of the time. Impairments have reached as low as 0.35% since then and have inched up to 0.68% most recently.
Exhibit 8. Commercial Loan Book Arrears, Ex-Energy Commercial Energy Q3/16 Q4/14 Q3/16 Q4/14
"Big Six" Average 0.7% 1.0% 6.5% 0.4%
High 1.2% 1.7% 16.1% 1.8%
Low 0.3% 0.6% 2.3% 0.0%
Canadian Western Bank 0.4% 0.3% 6.7% N/A Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 7 Laurentian Bank Securities | Equity Research Canadian Western Bank
Canadian Commercial Lending Market
5.4% Long-Term Growth According to the Bank of Canada, the market for business loans in Canada is $646 billion as of December 31, 2015. This market is further broken down between non-mortgage loans ($439 billion or 68%) and mortgage loans ($135 billion or 21%). Since 1990, the market for business credit has grown at an average of 5.4% per year, as illustrated in Exhibit 9. Business Credit has not contracted in a single year, however very low growth (under 2.0%) was experienced in 1991, 1992, 2003 and 2010. CWB’s principal competitors in the market for Business Credit are the “Big Six” Canadian banks which collectively have $380 billion (or 57%) market share in Canada. In this market, CWB also competes with international lenders, a provincial crown corporation, credit unions, insurance companies, pension funds and private lenders, among others.
Exhibit 9. Y-Y Growth in Business Credit
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bank of Canada, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 8 Laurentian Bank Securities | Equity Research Canadian Western Bank
Market Share Steadily Increasing
Share Increasing from In Exhibit 9, we further illustrate trends in market share in Business Credit by all banks in Canada and CWB’s Real Estate Deals share of the banks’ market share. On a gross basis, CWB has consistently increased its share of Business Loans from 2.3% in December 2012, to 2.7% today. One reason for this increased market share is that Canadian banks as a whole have increased their share of lending in Canada as demonstrated by the increased market share in non-mortgage loans and commercial mortgages loans in Exhibit 10. Additionally, CWB has made a material increase in its share of the mortgage loan market, increasing from 11.9% in 2012 to 14.7% today.
Exhibit 10. Commercial Loan Market in Canada ($B) Non- Business Bank Share CWB Share Mortgage Bank Share CWB Share CWB Share mortgage loans % of Banks % loans % of Banks % loans
Dec-12 $501 2.3% $328 69.0% 3.0% $116 36.3% 11.9%
Dec-13 $542 2.4% $356 70.0% 2.9% $128 37.6% 12.1%
Dec-14 $589 2.5% $393 71.1% 2.8% $130 38.7% 13.6%
Dec-15 $646 2.5% $439 72.1% 2.7% $135 41.4% 13.3%
May-16 $665 2.7% $447 72.4% 2.8% $137 42.2% 14.7%
Source: Bank of Canada, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 9 Laurentian Bank Securities | Equity Research Canadian Western Bank
Canadian Residential Mortgage Market
Much Smaller Player As previously noted, personal loans comprise 17.3% of CWB’s loan book. This $3.8 billion portfolio is mostly in Personal comprised of the Company’s Optimum mortgage product which is sold through mortgage brokers. Optimum mortgages reached $2.2 billion in Q3/16 (58% of personal loans), and has increased over 100% since 2012. In 2015, residential mortgage credit in Canada increased to close to $1.4 trillion, which is 74% of the $1.9 trillion market for personal credit. As the personal credit is a smaller operation for CWB in a much larger market, its market share has risen from 0.14% in 2012 to 0.18% today. In addition to the competitors noted previously, CWB must compete in the residential mortgage and personal loan sectors against trust and loan companies, non-bank mortgage finance companies, credit unions, a provincial crown corporation and a number of new online personal loan finance companies.
Financial Results
Q3/16 Results
Q3/16 results reflected continued levels Exhibit 11. Results versus Prior Year of above-average provisioning for CWB. Q2/16 results for CWB were Q3/15A Q3/16A Var. % Var.
highlighted by a pre-earnings press Net interest income $139 $149 $10 7% release disclosing that the Company would be increasing its PCL to $40 Net interest margin 2.54% 2.41% million for the quarter, from $7 million Provision for credit losses $8 $17 $9 117% in the year prior, and Q3/16 results registered $17 million, up from $8 Non-interest income $13 $20 $6 47% million in Q3/15 (Exhibit11). The Non-interest expense $74 $82 $8 11% provision reflected ongoing weakness in energy markets. As highlighted Efficiency ratio 51.5% 54.6% earlier in this report, the increase to the Net income $51 $46 $(6) (11)% PCL was applied almost fully against EPS $0.64 $0.55 $(0.09) (14)% the Company’s energy portfolio and represents an accrual of 5.5% against Loan book $19,040 $21,745 $2,704 14% its entire energy book and 82.0% Source: Company reports, LBS. against the arrears in that portfolio. These accruals are higher than Canadian peers and relatively in line with accruals made by U.S. counterparts. The increase to the PCL in the last two quarters has certainly overshadowed a period in which CWB increased net interest income 7% y-y and the loan book by 14% y-y. In spite of lower energy prices impacting the economic outlook in certain Western provinces, CWB has delivered growth through increasing its loan book in British Columbia in particular (geographically) and through 17.9% growth in commercial real estate lending and 18.6% growth in commercial lending. The equipment finance segment of the loan book has declined 8.2% y-y. Personal lending has also increased 19.3% y-y, principally through 23.3% growth in the Optimum mortgage portfolio. Growth in the loan book has not translated into growth in net interest income given the declining rate environment (interest received from borrowers resets quicker than interest paid to depositor), increased cost related to raising deposit funding through brokers and heightened competition in core business lending segments. Growth in non-interest expense has followed the trajectory of loan book growth, and that trend is expected to continue. September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 10 Laurentian Bank Securities | Equity Research Canadian Western Bank
Guidance
3-year May Miss, Consistent with prior years, management has provided financial performance targets. However, last year 5-year More Realistic marked the first year in which the Company has elected to provide medium-term (3- to 5-year) targets, as opposed to annual targets. This decision is consistent with those made by comparable companies and likely reflects heightened uncertainly about the economic outlook in Canada. As illustrated in Exhibit 12, the Company has a history of meeting and exceeding its performance targets. We have presented our three-year forecast for the metrics management has identified in its current and past performance targets. In our estimation, given the impact of the loan loss provisioning in H1/16, CWB will fall short of its performance targets for the period between 2016 and 2018. We do believe operating leverage will be positive, but the impact to net income of the recent provisioning is that EPS growth and ROE will fall short of forecast. However, for the five-year period, it is likely that the performance targets can be met, especially if the current pace of loan growth is maintained. Our payout ratios for 2016, 2017 and 2018 are calculated to be 42.4%, 36.0% and 30.8%, respectively. Therefore, it is unlikely that CWB will increase its dividend in 2016, and perhaps for most of 2017 as well.
Exhibit 12. History of Performance Targets
Operating Result EPS Growth Loan Growth PCL ROE ROA Payout Ratio Leverage
CWB 7%-12% N/A N/A Positive 12%-15% N/A 30.0% 3- to 5-Year ? LBS 4.8% 12.5% 0.26% Positive 10.4% 0.8% No Forecast 3-Year
2015 5%-8% 10%-12% 0.17%-0.22% < 47% 14%-15% 1.07%-1.12% N/A
2014 12%-16% 10%-12% 0.18%-0.23% < 46% 14%-15% 1.05%-1.10% N/A
2013 > 8% > 10% 0.18%-0.23% < 46% > 14% > 1.05% N/A
2012 > 10% > 10% 0.20%-0.25% < 46% > 15% > 1.05% N/A
2011 > 6% > 10% 0.20%-0.25% < 46% > 15% > 1.20% N/A
Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 11 Laurentian Bank Securities | Equity Research Canadian Western Bank
Forecasting Loan Book Growth to Continue
Loan Book Growth Over the course of the last ten years, CWB has grown its loan book an average of 15.0% per year. Only in Should Translate to 2009 did the Company record single-digit loan book growth, which was still a respectable 7.0%. We believe EPS in Time CWB’s increasing presence across Canada from recent acquisitions and the Company’s still very low market share should allow the pace of growth to continue. Regarding recent acquisitions, it is expected that Maxium Financial will add $300 million per year to the loan book (or 2% growth). The purchase of GE Capital’s Franchise Finance operation is not expected to be a material contributor to growth after the initial addition of its $350 million loan book. As illustrated in Exhibit 13, we forecast the loan book to increase to $22.5 billion in 2016, $25.1 billion in 2017 and $27.8 billion in 2018, representing growth of 15.6%, 11.7% and 10.4%, respectively. Translating loan book growth to EPS has been more of a challenge for CWB. The declining interest rate environment has put pressure on spreads, declining 10bps from two years ago. Our forecast period sets net interest margins slightly below current levels (236bps). If interest rates were to decline further, we are doubtful that the impact to spreads would be as pronounced as it has been recently. Furthermore, an interest rate increase seems unlikely for quite some time, therefore we are comfortable with spreads at current levels. Credit conditions in energy producing regions of Canada have required the Company to take provisioning much higher than long-term averages. We calculate that the PCL will average 37bps in 2016, up from an average 19bps in the last ten years. As CWB will continue to retain material exposure to Alberta, we expect the PCL to remain at 22bps through until the end of 2017. As a point of reference, the PCL has ranged between 0.15% and 0.25% in the last ten years. Throughout the financial services sector, regulated institutions have had to incur material increases in costs and CWB is no exception. Non-interest expenses grew 8.9% in 2015 and are on pace to grow 8.6% in 2016. We forecast 8.0% growth in each of the next two years. If costs remain around these levels, management can indeed provide operating leverage in the coming years.
Exhibit 13. Annual Estimates 2014 2015 2016E 2017E 2018E
Net interest income $475 $512 $508 $595 $668
Net interest margin 2.55% 2.50% 2.40% 2.36% 2.37%
Provision for credit losses $25 $31 $78 $53 $53
Non-interest income $83 $67 $72 $78 $85
Non-interest expense $270 $293 $319 $343 $370
Efficiency ratio 48.3% 50.6% 54.9% 50.9% 49.2%
Net income $205 $208 $180 $225 $263
EPS $2.54 $2.59 $2.17 $2.56 $2.98
Loan book $17,536 $19,475 $22,507 $25,136 $27,759
Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 12 Laurentian Bank Securities | Equity Research Canadian Western Bank
Capital Position Likely to Remain at Current Levels
Safely Above Minimums, CWB is well above all regulatory capital minimums, but this holds true for all its peers as well. CWB’s current but Capital Not capital position is illustrated in Exhibit 14. Abundant Going forward, we expect a small gradual consumption of capital as the Company grows its loan book at a quicker rate than it is generating and retaining capital. In 2017 and 2018, loan book growth is expected to be 11.7% and 10.4%, respectively. While ROE for the same two periods is expected to be 10.5% and 11.4%, respectively, a payout ratio of 36.0% in 2017 and 30.8% in 2018 means that capital will be accumulated slightly slower than the loan book is growing. We forecast that the personal loan book will grow at a faster rate than the commercial loan book, but this is not expected to have a material impact to risk-weighted assets.
Exhibit 14. Forecast Capital Ratio
Minimums Q3/16 Q4/16E 2017E 2018E
CET 1 4.5% 9.0% 8.5% 8.3% 8.3%
Tier 1 6.0% 10.8% 10.3% 9.9% 9.7%
Total 8.0% 12.9% 12.8% 11.9% 11.4%
Leverage 4.0% 8.0% 8.0% 7.7% 7.5%
Source: Company reports, LBS
Valuation
Valued at 11.0x 2017E In the last ten years, CWB has traded in an average band between 10.2x and 15.5x current year P/E. The “Big EPS Six” Canadian Banks have traded between the same lower band, but have typically traded up to 13.7x current year P//E. Refer to Exhibit 15. The premium garnered by CWB has been between 0.4x and 1.8x as its growth profile has been more attractive, particularly when energy prices were rising. This premium was warranted as CWB has delivered a compounded annual growth rate of EPS of 6.6%, versus 3.9% for its peers. If results from the past year are ignored, the relative growth in EPS for CWB is approximately 14.5%. CWB’s historical premium/(discount) relative to the “Big Six” is illustrated in Exhibit 16. Valuation completely changed in 2015 when CWB’s premium valuation disappeared and shares began to trade at a discount of between 3.0x and 4.4x. While the Company’s loan book has continued to grow, earnings have been hampered by a sharp increase in provisioning. Today, CWB trades on par with its peers and we believe it is likely to remain that way until economic indicators begin improving in Alberta. As a result, we value CWB applying an 11.0x multiple to 2017E EPS of $2.50 to arrive at a target price of $27.50 per share. Refer to Exhibit 17 for CWB’s current comparable valuation table.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 13 Laurentian Bank Securities | Equity Research Canadian Western Bank
Exhibit 15. Historical P/E CWB Banks 18.0x
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Company reports, LBS
Exhibit 16. Premium/(Discount) to “Big 6”
8.0x High Low 6.0x 4.0x 2.0x 0.0x (2.0)x (4.0)x (6.0)x 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Company reports, LBS
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 14 Laurentian Bank Securities | Equity Research Canadian Western Bank
Exhibit 17. Canadian Lenders Comparable Analysis
EPS Growth P/E P/BV ROE ROE/PBV Dividend
Company Mcap (M) 2016E 2017E 2016E 2017E 2016E 2016E 2016E Yield
Bank of Montreal $55,889 6% 3% 11.9x 11.6x 1.5x 12% 8.3% 4.0%
Bank of Nova Scotia $85,085 4% 6% 11.9x 11.2x 1.7x 14% 8.3% 4.2%
Canadian Imperial Bank of Commerce $40,968 6% 0% 10.4x 10.4x 1.9x 18% 9.7% 4.7%
National Bank of Canada $16,002 (7)% 10% 10.9x 10.0x 1.7x 15% 8.7% 4.6%
Royal Bank of Canada $121,067 3% 4% 11.9x 11.4x 1.9x 17% 8.7% 4.1%
The Toronto-Dominion Bank $108,877 6% 4% 12.1x 11.6x 1.6x 14% 8.5% 3.7%
Banks 5% 4% 11.7x 11.2x 1.7x 15% 8.6% 4.2%
Canadian Western Bank $2,333 (14)% 11% 11.8x 10.6x 1.1x 10% 8.5% 3.5%
Laurentian Bank $1,507 0% 4% 8.8x 8.4x 1.0x 11% 10.9% 4.8%
All Banks 2% 5% 11.5x 10.9x 1.6x 14% 8.7% 4.2%
Street Capital $201 (29)% 33% 11.2x 8.4x 1.5x 13% 8.9% 0.0%
Equitable Group $950 5% 11% 7.6x 6.9x 1.1x 16% 14.0% 1.4%
Equity Financial $95 N/A N/A 76.9x 20.6x 1.0x 1% 1.3% 0.0%
First National Financial $1,816 26% 4% 10.5x 10.1x 4.3x 44% 10.2% 5.6%
Home Capital Group $1,942 (2)% 7% 7.3x 6.8x 1.2x 16% 13.8% 3.2%
MCAN Mortgage $341 26% 4% 8.8x 8.5x 1.2x 15% 12.1% 7.8%
Mortgage Lenders 10% 7% 9.5x 8.5x 1.3x 15% 11.2% 2.6%
Source: CapitalIQ, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 15 Laurentian Bank Securities | Equity Research Canadian Western Bank
Risks
Credit risk Credit risk is the risk of losing principal and/or interest as a result of a borrower’s failure to meet its financial obligations. Credit risk is most acute during economic recessions when wages stagnate or decline and joblessness increases. CWB has a long-standing history of credit quality. However, its portfolio is geographically concentrated and could be materially impacted by unemployment in its core markets relative to its competitors. Liquidity and funding The majority of the Company’s funding is through consumer deposits. Deposits are usually fixed in term and risk matched to the term of funded loans. In the event that deposit markets are unavailable to the Company or deposit providers choose to re-allocate their capital, future growth could be at risk. This risk is not unique to CWB as most financial institutions are capitalized in a similar manner. CWB is also funded through senior debentures, senior deposit notes, preferred shares and common equity. While these sources of funding in aggregate are much lower than the total amount of deposit funding, CWB has been relatively active in securing funding from these sources in recent years. These sources of funding are more volatile in cost and availability than consumer and corporate deposits. Regulatory risk In recent years, financial institution regulators have increased their oversight, and by doing so have increased capital requirements and have curtailed activities of its constituents. This trend will likely endure for a number of years. Most recently, the Company’s primary regulator, OSFI, has increased documentation requirements (including income and appraisals) for residential mortgage underwriting. It could be too that future shocks to the financial system, in any part of the world, could tighten regulatory requirements further. In such an environment, it could be increasingly difficult for financial institutions to grow at historical levels and maintain existing levels of profitability. We do not believe that CWB is of greater risk to regulatory factors than its peers. Competition CWB competes against at least six much larger direct Canadian competitors, as well as smaller and international competitors. Other Other business risks include, but are not limited to, failed business processes or systems, general economic risks, failed corporate governance, reputational risk, unfavourable monetary or fiscal policy and the retention of key personnel.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 16 Laurentian Bank Securities | Equity Research Canadian Western Bank
Financial Statements
Exhibit 18. Income statement ($M) 2014 2015 Q1/16 Q2/16 Q3/16 Q4/16E 2016E 2017E 2018E
Interest income 843 898 233 235 246 252 966 1,088 1,207
Interest expense 344 355 90 91 97 102 380 440 486
Net interest income 500 543 143 144 149 151 587 648 721
Provision for credit losses 25319401712785353
475 512 134 105 131 138 508 595 668
Credit related 25287778303437
Wealth management 14144334141515
Retail services 11143434141720
Trust services 11113333121212
Gains on sale of securities 14 (4) (3) - 0 - (3) - -
Other 85123- 5 - -
Other income 83 67 15 19 20 18 72 78 85
Net interest and other income 558 580 149 124 151 157 580 673 752
Salaries and employee benefits 176 191 50 52 51 53 206 223 243
Premises and equipment 44 47 12 12 14 14 52 58 61
Other expenses 505513141816616266
Non-interest expense 270 293 76 78 82 82 319 343 370
Income pre-tax 288 286 73 46 69 74 262 330 382
Provision for income taxes 7071191218207091105
Net income pre-pref dividends 218 215 54 34 50 54 192 239 277
Non-controlling interest in subsidiary 110000111
Preferred share dividends 1261143101313
Loss from discontinued operations ------
Net income 205 208 52 32 46 50 180 225 263
EPS - Basic $2.57 $2.59 $0.65 $0.40 $0.55 $0.57 $2.17 $2.56 $2.98
EPS - Diluted $2.54 $2.59 $0.65 $0.40 $0.55 $0.57 $2.17 $2.56 $2.98
Source: Company reports, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 17 Laurentian Bank Securities | Equity Research Canadian Western Bank
Financial Statements (cont’d)
Exhibit 19. Balance Sheet ($M) 2014 2015 Q1/16 Q2/16 Q3/16 Q4/16E 2016E 2017E 2018E
Cash resources 508 443 435 196 593 360 360 321 364
Securities 2,089 2,551 2,335 2,187 2,190 2,490 2,490 2,840 2,940
Securities purchased under resale agreements 100 - - 143 195 195 195 195 195
Personal 2,841 3,318 3,562 3,700 3,776 3,889 3,889 4,377 5,034
Business 14,765 16,252 16,890 17,676 18,078 18,731 18,731 20,884 22,864
17,606 19,570 20,452 21,376 21,854 22,620 22,620 25,262 27,898
Allowance for credit losses (69) (94) (102) (128) (110) (113) (113) (126) (139)
Loans 17,536 19,475 20,351 21,248 21,745 22,507 22,507 25,136 27,759
Other assets 401 369 352 462 462 467 467 477 477
Total Assets 20,635 22,839 23,473 24,237 25,185 26,020 26,020 28,969 31,735
Deposits 17,373 19,365 19,860 20,341 21,157 21,961 21,961 24,767 27,351
Other liabilities 530 374 483 568 442 442 442 442 442
Debt 1,037 1,188 1,190 1,210 1,279 1,279 1,279 1,279 1,279
Preferred shares 125 125 125 265 265 265 265 265 265
Common shares 533 538 538 566 717 717 717 717 717
Retained earnings 1,011 1,262 1,295 1,306 1,328 1,358 1,358 1,502 1,683
Accumulated other comprehensive income (loss) ------
Share-based payment reserve 252930303131313131
Other reserves (1) (42) (48) (49) (33) (33) (33) (33) (33)
Shareholder's equity 1,694 1,911 1,940 2,117 2,307 2,337 2,337 2,481 2,663
Non-controlling interest 1.1 1.0 0.3 0.4 0.4 0.4 0.4 0.4 0.4
Total liabilities and shareholder's equity 20,635 22,839 23,473 24,237 25,185 26,020 26,020 28,969 31,735
Source: Company reports, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 18 Laurentian Bank Securities | Equity Research Canadian Western Bank
Financial Statements (cont’d)
Exhibit 20. Statement of cash flows ($M) 2014 2015 Q1/16 Q2/16 Q3/16 Q4/16E 2016E 2017E 2018E Net income 205 208 52 32 50 54 192 239 277
Provision for credit losses 25 31 9 40 26 3 78 13 13
Depreciation and amortization 22 21 5 6 12 5 28 20 20
Current income taxes 10 1 (16) (8) (9) - (32) - -
Amortization of fair value of employee stock options65111- 3 - -
Accrued interest receivable and payable, 7 3 (6) 8 (23) - (21) - -
Deferred income taxes (5) (5) 0 (1) (2) - (3) - -
Gain on sale of securities, net (14) 5 3 - 3 - 6 - -
Deposits, net 1,742 1,992 494 481 1,310 805 3,090 2,805 2,585
Loans, net (1,968) (1,970) (884) (937) (1,054) (766) (3,641) (2,642) (2,636)
Securities sold under repurchase agreements (100) 100 134 (35) (160) - (61) - -
Securities purchased under resale agreements, net - - - (143) - - (143) - -
Other items, net 22 (5) 2 31 10 - 42 - -
Cash flow from operating activities (48) 386 (206) (525) 165 101 (463) 436 259
Common shares issued 18411147- 149 - -
Preferred shares issued (87) - 354 (217) 354 - 491 - -
Debt issued 332 371 (52) 517 (1,151) - (687) - -
Debt repaid (116) (221) (300) - (543) - (843) - -
Dividends (75) (76) (21) (20) (43) (24) (107) (94) (94)
Other - - - - (1) - (1) - -
Cash flows from financing activities 72 78 (18) 280 (1,237) (24) (998) (94) (94)
Interest bearing deposits (233) 44 9 234 (366) - (123) - -
Securities, purchased (6,779) (6,663) (1,618) (2,099) (5,133) (300) (9,150) (350) (100)
Securities, sale proceeds 4,330 4,980 1,304 2,016 3,691 - 7,011 - -
Securities, matured 2,605 1,002 536 204 1,689 - 2,429 - -
Land, buildings and equipment (31) (41) (15) (11) (26) (10) (62) (30) (20)
Business acquisitions - 215 (0) (20) (345) (0) (365) (1) (1)
Cash flows from investing activities (109) (463) 217 324 (490) (310) (260) (381) (121)
Change in cash (85) 1 (7) 79 (1,562) (233) (1,723) (39) 43
Source: Company reports, LBS.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 19 Laurentian Bank Securities | Equity Research Canadian Western Bank
Appendix I – Management and Board of Directors
Chris Fowler – CEO and Director Mr. Fowler has served with CWB for 25 years, beginning in commercial account management in 1991, then moving to credit risk before joining the executive committee in 2008. Carolyn Graham – EVP and CFO Ms. Graham joined the Company in 2000 and was appointed Chief Accountant in 2005. She has been in her current role since 2014. Robert Phillips – Chair Mr. Phillips also the lead Director of MacDonald, Dettwiler & Associates Ltd. (MDA-T, not rated), Precision Drilling (PD-T, not rated) and West Fraser Timber (WFT-T, not rated). Albrecht Bellstedt – Director Mr. Bellstedt was previously an EVP with TransCanada Corporation and a partner of the law firm Milner Fenerty prior thereto. Andrew Bibby – Director Mr. Bibby is currently the CEO of Grosvenor Americas Partners, a property investment and development firm. Linda Hohol – Director Ms. Hohol is the former President of the TSX Venture Exchange and was previously an EVP with CIBC. She is also currently a Director of EllisDon Construction, Export Development Canada and NAV Canada. Robert A. Manning – Director Mr. Manning was previously an EVP with North West Trust Company and a corporate banking account management at the Bank of Monreal. Mr. Manning was appointed to the Board of CWB in 1986. Sarah Morgan-Silvester – Director Ms. Morgan-Silvester was formerly the chancellor of the University of British Columbia and is currently a Director of ENMAX Corporation and a member of the Board of Grant Thornton LLP. Raymond Protti – Director Mr. Protti was formerly the CEO of the Canadian Bankers Association. Ian Reid – Director Mr. Reid spent 30 years with Finning International, of which 11 years were as president of Finning Canada. Mr. Reid is also a Director of Stuart Olson (SOX-T, not rated) and Delta Gold Corporation. H.S. Sandy Riley – Director Mr. Riley is the CEO of Richardson Financial Group and he was previously CEO of Investors Group. Mr. Riley is also a Director of GMP Capital (GMP-T, not rated) and Manitoba Telecom (MBT-T, not rated), among others. Alan Rowe – Director Mr. Rowe is a partner of Crown Realty Partners and prior thereto he was SVP and CFO of Crown Life Insurance.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 20 Laurentian Bank Securities | Equity Research Canadian Western Bank
Appendix II – Important Disclosures
Company Ticker Disclosures* Canadian Western Bank CWB-T N/A
The analyst(s) certify that (1) the views expressed in this report in connection with securities or issuers they analyze accurately reflect their personal views and (2) no part of their compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by them in this report. The Research Analyst’s compensation is based on various performance and market criteria and is charged as an expense to certain departments of Laurentian Bank Securities (LBS), including investment banking. * Legend A The Analyst, in his/her own account or in a related account, owns securities of this issuer. D A member of the Board of directors of LBS sits on the Board of directors of this issuer. L LBS collectively beneficially owns in excess of 1% of one or more classes of the issued and outstanding equity securities of this issuer. O The Director of Equity Research, in his/her own account or in a related account, owns securities of this issuer. U Within the last 24 months, LBS has undertaken an underwriting liability with respect to equity securities of, or has provided advice for a fee with respect to, this issuer. V The Analyst has visited material operations of this issuer. P This issuer paid a portion of the travel-related expenses incurred by the Analyst to visit material operations of this issuer. Laurentian Bank Securities Equity Research Ratings Distribution
60% Percentage of companies covered by
50% Laurentian Bank Securities Equity Research within each rating category. 40%
30% 55% 20% 33% 10%
5% 0% 1% 4% 2% Top Pick Buy Spec Buy Hold Reduce Tender
Source: Laurentian Bank Securities
Terminology LBS (Laurentian Bank Securities) recommendation/risk terminology is as follows:
Recommendation Top Pick Our best investment idea, the greatest potential value appreciation. Buy The stock is expected to generate significant risk-adjusted returns over the next 12 months. Hold The stock is expected to generate modest risk-adjusted returns over the next 12 months. Reduce The stock is expected to generate negative risk-adjusted returns over the next 12 months. Tender Analyst is recommending that investors tender to a specific offering for the stock.
Our ratings may be followed by “(S)” which denotes that the investment is speculative and has a higher degree of risk associated with it. Additionally, our target prices are based on a 12-month investment horizon.
Risk Ratings Low Low financial/operational risk, high predictability of financial performance, low stock volatility. Medium Moderate financial/operational risk, moderate predictability of financial performance, moderate stock volatility. High High financial/operational risk, low predictability of financial performance, high stock volatility.
The information contained in this document is based on what we deem to be reliable sources, but no guarantee or promise, explicit or implicit, is given as to the accuracy and exhaustiveness of these sources. This report shall under no circumstances be considered an offer to buy or sell, or a request to buy and/or sell the stocks mentioned. Laurentian Bank Securities Inc. and its employees may not be held liable for any monetary losses stemming from the implementation of the recommendations contained in this document. Laurentian Bank Securities Inc. and/or its officers, directors, representatives, traders, analysts and members of their families may hold positions in the stocks mentioned in this document and may buy and/or sell these stocks on the market or otherwise. Stocks in foreign currency may be adversely affected by exchange rate fluctuations. Laurentian Bank Securities Inc. is a wholly-owned subsidiary of Laurentian Bank of Canada. The opinions, projections and estimates are those of the Economic and Financial Research department of Laurentian Bank Securities Inc. as at the date appearing on the cover page, and are subject to change without prior notice. Laurentian Bank Securities Inc. may, in exchange for remuneration, act as a financial advisor or tax consultant for, or participate in the financing of companies mentioned in this document. This study may not be reproduced, in whole or in part, without the consent of Laurentian Bank Securities Inc. Member of the Investment Industry Regulatory Organization of Canada and of the Canadian Investor Protection Fund. The regulation of the securities market establishes requirements that analysts must follow when issuing research reports or making recommendations. These guidelines are included in the research dissemination policy of Laurentian Bank Securities, available at http://www.vmbl.ca/portal/research-dissemination-policy.
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 21 Laurentian Bank Securities | Equity Research Canadian Western Bank
Laurentian Bank Securities (LBS) President & Trading Fixed Income Sales Division Cameron Baker 514 350-3055 Chief Executive Officer Managing Director, Head Equity Trading Patrick F.J. Sheils, M.Sc. 416 865-5811 Institutional Equity Trader Senior Vice President, Fixed Income Michel C. Trudeau, MBA [email protected] Head of Sales, Fixed Income [email protected] Anthony Cox 416 865-5694 Director, Trading Institutional Equity Institutional Equity Trader Syndication [email protected] Ben Vendittelli, MBA, CFA 514 350-2803 Pierre Godbout 514 350-3050 Senior Vice President, Head of Equities Robert Giancola 514 350-3055 Senior Vice President, Institutional Services [email protected] Vice President, Institutional Equity [email protected] Institutional Equity Trader Matthieu Fournier-Viens 514 350-2979 Tina Champniss 514 350-2891 [email protected] Publisher and Research Assistant Syndication Analyst [email protected] Yvonne Nevala 416 865-5781 [email protected] Institutional EquityTrader Research [email protected] Retail Division Nick Agostino, MBA, CFA, P.Eng. 416 865-5967 Demitri Prassinos 514 350-3055 Head of Equity Research Middle Office/Institutional Equity Trader Riccardo Magini 514 350-2960 Managing Director, Equity Research [email protected] Senior Vice President, Retail Division Diversified Technology Analyst [email protected] Akshay D’Souza 416 865-5781 [email protected] Managing Director, Institutional Equity Marc Charbin, CPA, CA, CFA 416 865-5941 Institutional EquityTrader Compliance Financial Services Analyst [email protected] [email protected] Yves Ruest, CPA, CMA 514 350-3070 Sales Senior Vice President, Finance & Administration John Chu, CFA 416 941-7701 Chief Financial Officer R. Jeffrey White, LL.B., MBA 416 865-5982 Vice-President, Equity Research Chief Compliance Officer Head of Equity Sales Diversified Agriculture Analyst [email protected] [email protected] Managing Director, Institutional Equity Sales [email protected] Elizabeth Johnston 514 350-2949 Economics & Strategy Analyst Bruce Krugel 416 865-5889 [email protected] Director, Institutional Equity Sales Luc Vallée, Ph.D. 514 350-3000 Sales Representative, Institutional Equity Chief Strategist Mona Nazir, MBA 514 350-2964 [email protected] [email protected] Senior Analyst [email protected] Laila Danechi, MBA 514 350-3038 Sébastien Lavoie 514 350-2931 Sales Representative, Institutional Equity Chief Economist Pierre Vaillancourt 416 865-5798 [email protected] (Assuming the direction of LBS’ Economic Research Dept). Director, Research [email protected] Mining Analyst Nicholas Kaulbach 514 350-2834 [email protected] Sales Representative, Institutional Equity Éric Corbeil, CFA, M.Sc, FRM 514 350-2925 [email protected] Senior Economist Joseph Walewicz, MBA, CFA 514 350-2914 [email protected] Vice President, Research Stefanie Lau, M.Sc., CFA 416 865-5876 Healthcare Analyst Sales Representative, Institutional Equity [email protected] [email protected] Arslan Benbakouche 514 350-2808 Corporate Finance Equity Research Associate Kevin Hooke 204 291-5735 [email protected] Managing Director, Investment Banking Chris Martino 647 252-5605 Interim Head of Investment Banking Equity Research Associate [email protected] [email protected] Ryan Thomas, MBA 416 865-5840 Director, Investment Banking [email protected] Tyler Wirvin 204 291-5716 Vice President, Investment Banking [email protected] Maxime Bourgoing, Jr. Eng. 514 350-2817 Analyst, Investment Banking [email protected] Bob Wang, MBA 647 252-5602 Associate, Investment Banking [email protected]
September 8, 2016 Marc Charbin, CPA, CA, CFA, Financial Services Analyst | 22