CWB Financial Group

CWB reports very strong second quarter financial performance

Edmonton, June 3, 2010 – Canadian Western Bank (TSX: CWB) today announced very strong financial performance marking the Bank’s 88 th consecutive profitable quarter, a period spanning 22 years. Second quarter net income of $37.9 million increased 76% compared to the same quarter last year while diluted earnings per common share increased 57% to $0.47. Significantly higher second quarter earnings mainly reflect an 83 basis point improvement in net interest margin, on a taxable equivalent basis (teb – see definition following Financial Highlights table), compared to the same period in 2009 when this measure dropped to an unprecedented low due to impacts from the global financial crisis. On a year-to-date basis, the combined positive impact of a 70 basis point improvement in net interest margin (teb), a 27% increase in other income and 9% loan growth led to increases in net income and diluted earnings per common share of 65% and 41%, respectively.  

Second Quarter Highlights:
(three months ended April 30, 2010 compared with three months ended April 30, 2009 unless otherwise noted)

  • Net income of $37.9 million, up 76%.
  • Diluted earnings per common share of $0.47, up 57%.
  • Record quarterly total revenues (teb) of $111.0 million, up 47%.
  • Net interest margin (teb) of 2.76%, up 83 basis points.
  • Tier 1 capital ratio of 11.4% and total capital ratio of 14.5%, compared to 11.0% and 15.2% respectively a year earlier.
  • Return on common shareholders’ equity of 16.3%, up 530 basis points.
  • Surpassed $12 billion in total assets.
  • Record net income for Canadian Direct Insurance.
  • Completed the acquisition of National Leasing Group Inc. (National Leasing).

On June 2, 2010, CWB’s Board of Directors declared a cash dividend of $0.11 per common share, payable on July 2, 2010 to shareholders of record on June 17, 2010. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on July 31, 2010 to shareholders of record on July 22, 2010.

The banking and trust segment, which includes a full three months of performance from newly acquired National Leasing, reported net income of $34.5 million, up 78% compared to the same quarter last year. A significant improvement in net interest margin, including the favourable margin impact from National Leasing, a 38% increase in other income and 9% loan growth helped push this segment’s total revenues (teb) up 49% to reach a record $103.4 million. Quarterly net income from insurance operations was a record $3.4 million, up from $2.2 million compared to a year earlier reflecting lower claims experience and continued business growth.

“These very strong results represent a continuation of our exceptional performance last quarter,” said Larry Pollock, President and CEO of CWB. Our businesses are performing better than we expected at the onset of fiscal 2010. Although we expect earnings growth to moderate for the remaining two quarters, it’s shaping up to be a great year for CWB. We are confident our commitment to building strong customer relationships and focus on sustainable, profitable growth will continue to payoff for both our clients and shareholders.”

“National Leasing’s opening quarter as part of CWB Group exceeded our expectations and included a bottom line contribution of $3.9 million, or about $0.05 per diluted common share,” continued Pollock. “The acquisition has us on track to meet the Bank’s fiscal 2010 target for double-digit loan growth and also materially benefited our second quarter net interest margin, which we believe will stabilize from this point. Our overall pipeline for new loans picked up compared to what we’ve seen over the past couple of quarters and we are optimistic about recent economic indicators in our markets.”  

Read the release in full.