Edmonton, September 1, 2010 – Canadian Western Bank (TSX: CWB) today announced very strong financial performance marking the Bank’s 89 th consecutive profitable quarter. Third quarter net income increased 62% to $46.6 million compared to the same quarter last year while diluted earnings per common share increased 55% to $0.59. Record earnings included recognition of a $7.5 million reduction to income tax expense and a related $1.2 million before tax interest receipt from certain prior period transactions that together increased quarterly net income by approximately $8.3 million ($0.11 per diluted common share). Net income before income taxes increased 34% compared to the same quarter last year on record total revenues, on a taxable equivalent basis (teb – see definition following Financial Highlights table), driven by a 65 basis point improvement in net interest margin (teb) and 11% growth in total loans. On a year-to-date basis, net earnings of $124.5 million, or $1.57 per diluted common share, increased 64% and 45%, respectively, reflecting the combined positive impact of a 68 basis point improvement in net interest margin (teb), a 20% increase in other income, 9% loan growth and a lower effective tax rate.
Third Quarter Highlights:
(three months ended July 31, 2010 compared with three months ended July 31, 2009 unless otherwise noted)
- Record net income of $46.6 million, up 62%; net income before income taxes of $53.2 million, up34%.
- Diluted earnings per common share of $0.59, up 55%.
- Record quarterly total revenues (teb) of $111.0 million, up 30%.
- Net interest margin (teb) of 2.78%, up 65 basis points.
- Tier 1 capital ratio of 11.4% and total capital ratio of 14.4%, compared to 11.2% and 15.4% respectively a year earlier.
- Return on common shareholders’ equity of 19.1%, up 570 basis points.
- Total loans surpassed the $10 billion milestone to reach $10.1 billion.
- Third consecutive quarter of record net income for Canadian Direct Insurance.
On September 1, 2010, CWB’s Board of Directors declared a cash dividend of $0.11 per common share, payable on September 30, 2010 to shareholders of record on September 16, 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 October 31, 2010 to shareholders of record on October 21, 2010.
Record banking and trust segment net income of $43.0 million was a 69% increase compared to the same quarter last year and included the previously noted income tax recovery. Net income before income taxes in this segment was $48.4 million, up 37% over a year earlier. A significant improvement in net interest margin, including the favourable margin impact from the acquisition of National Leasing Group Inc., loan growth and a 7% increase in other income helped push banking and trust segment total revenues (teb) up 32% to $103.1 million. Quarterly net income from insurance operations was a record $3.6 million, up from $3.2 million compared to a year earlier reflecting continued business growth.
“Our exceptional financial performance through an uncertain operating environment confirms the ongoing success and resiliency of CWB’s business model,” said Larry Pollock, President and CEO. “We have already surpassed last year’s record annual earnings by a considerable margin. While we are optimistic about the economic outlook for our markets, particularly over the long-term, lingering recessionary impacts are still apparent, most notably in Alberta. Our pipeline for new loans remains in line with expectations and we plan to continue our long history of double-digit loan growth. We are also seeing some further positive signs on the credit front, as evidenced by the decline in the dollar level of our gross impaired loans this quarter.”