Laurentian Bank unveiled quarterly performance that exceeded expectations on Thursday and indicated that the review of its strategic alternatives is continuing.
The bank’s management simply says it plans to make “no further announcements until the review is complete.”
Executives revealed on July 11 that a review of strategic options was being conducted with a view to maximizing shareholder value.
A restructuring charge of 8.2 million is recorded in the financial results for the months of May, June and July. This item includes an amount of 5.5 million resulting from the rationalization of capital markets activities and costs of 2.7 million attributable to the review of strategic options in the form mainly of professional fees.
“The lack of news (rightly or wrongly) is taken as a sign that the odds of a sell-off are weaker than expected,” Scotia analyst Meny Grauman said in a memo sent Thursday to his colleagues. clients.
“While it’s hard to predict what happens next, in the event of a trade I don’t expect a high chance of a buy occurring at a level above the current stock price,” he adds.
The bank’s stock jumped nearly 30% in July after the strategic options review was announced. The stock climbed as high as $43 before falling back below the $40 mark.
Although CEO Rania Llewellyn said in a conference call Thursday that “business is business as usual until the strategic review process is complete, the longer the consideration of alternatives drags on, the more observers are likely to fear the loss of customers and an impact on income and expenses.
Like others, Barclays analyst Joe Ng wondered this summer whether efforts to explore different strategic alternatives might mean that Laurentian’s management doubts its current business plan can produce the results that could bring the value of the bank to a level above its book value of approximately $59 per share.
The number of potential suitors dwindled over the summer. Joe Ng had indicated in late July in a memo sent to clients that the odds of seeing a Laurentian sale had dropped by possibly 50% after The Globe and Mail reported that Scotia and TD would not submit bids. ‘offer.
Called to comment Wednesday on an interest in Laurentian, National Bank CEO Laurent Ferreira declined to comment.
At Desjardins Group, management indicates for its part that for “strategic and competitive reasons”, it does not comment on the discussions that the organization may or may not have with different groups and companies.
In addition to the major Canadian banks and Desjardins Group, the names of iA Financial Group and Power Corporation (Weathsimple) were also mentioned during the summer as potential suitors.
If profits fell by 12% to 49.3 million at Laurentian during the most recent quarter, they amount to $1.22 per share excluding certain elements and thus prove to be better than anticipated.
Analysts had expected adjusted earnings per share of $1.16.
Revenue for the quarter was flat at 260 million, relatively in line with analyst consensus of around 263 million.
Provisions for credit losses reached 13.3 million for the quarter, down from 16.6 million a year earlier.
