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1. Company Snapshot

1.a. Company Description

Laurentian Bank of Canada, together with its subsidiaries, provides various financial services to personal, business, and institutional customers in Canada and the United States.It operates through three segments: Personal Banking, Commercial Banking, and Capital Markets.The company offers notice, demand, and term deposits; commercial, residential mortgage, and personal loans; real estate, and equipment and inventory financing; and credit life and disability insurance products.


It also provides investment securities services; research, market analysis, and advisory services; corporate underwriting services for debt and equity; and administrative, foreign exchange, and trustee services.The company sells its products through the bank's financial clinics, advisors, broker channels, and digital platforms.Laurentian Bank of Canada was founded in 1846 and is headquartered in Montréal, Canada.

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1.b. Last Insights on LB

Laurentian Bank of Canada's recent performance was driven by a strong second quarter 2025 earnings release, which reported net income of $32.3 million and diluted earnings per share of $0.69. This represents a significant improvement from the second quarter of 2024, where the company reported a net loss of $117.5 million and a diluted loss per share of $2.71. Additionally, the company declared a regular quarterly dividend of 47 cents per share on its common shares, payable on August 1, 2025, to the holders of record at the close of business on July 1, 2025.

1.c. Company Highlights

2. Laurentian Bank's Strategic Transformation Yields Results

Laurentian Bank reported net income on an adjusted basis of $147.2 million or $3 per share, with diluted EPS of $2.85 on a reported basis. The bank's net interest income increased year-over-year, driven by a more favorable business mix and an improved net interest margin of 1.83%, up from 1.79% in the prior year. The actual EPS came in at $0.73 relative to estimates of $0.74, a minor miss. The bank's efficiency ratio was 75.2%, aligned with guidance, indicating effective cost management.

Publication Date: Dec -07

📋 Highlights
  • Cloud-based System Deployment:: Enhanced operational efficiency and customer experience, with a 40-basis point improvement in net interest margin to 1.83%.
  • Commercial Loan Growth:: Loan balances rose 8% YoY, while inventory financing surged 12% to $4.2 billion.
  • Efficiency Ratio Alignment:: Maintained efficiency ratio of 75.2%, consistent with guidance, alongside $147.2M adjusted net income and $2.85 reported EPS.
  • Capital Strength:: CET1 ratio at 11.3%, supporting a $0.47 dividend with no restrictions but no future increases permitted.
  • Strategic Partnerships:: Agreements with Fairstone and National Bank to divest retail/SME banking, focusing on specialized commercial growth, pending 2026 approvals.

Business Growth and Segment Performance

Commercial loan balances grew 8% year-over-year, with inventory financing closing at $4.2 billion, a 12% year-over-year increase. This growth underscores the bank's focus on its specialized commercial business. The bank's management expressed confidence in its future, citing a solid foundation to support growth while executing on strategic priorities, including the deployment of cloud-based systems that improved operational efficiency, resilience, and customer experience.

Capital Position and Dividend

The bank's capital and liquidity positions remained strong, with a CET1 ratio of 11.3%. The bank declared a $0.47 dividend on common shares, with no restrictions on paying dividends in the agreement, but is restricted from increasing it going forward. The dividend yield stands at 4.72%, an attractive return for income-focused investors.

Strategic Agreements and Future Outlook

The bank announced agreements with Fairstone Bank and National Bank, which include the sale of its retail and SME banking services business. The transaction is expected to allow Laurentian Bank to grow its specialized commercial business while maintaining its brand identity and head office in Montreal. Analysts estimate next year's revenue growth at 2.0%, indicating a moderate pace.

Valuation and Metrics

The bank trades at a Price-to-Tangible Book Value (P/TBV) that can be derived from the given 'P/B Ratio' of 0.62, suggesting the stock may be undervalued given its strong capital position and improving operational efficiency. The Net Interest Margin (NIM) of 1.83% is a positive indicator of the bank's ability to manage its interest-earning assets and liabilities effectively. With a Dividend Yield of 4.72%, the stock presents an attractive income opportunity. The ROE of 5.23% indicates a reasonable return on equity, though there is room for improvement as the bank continues its transformation.

3. NewsRoom

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Laurentian Bank (TSX:LB): Reassessing Valuation After a Sharp Share Price Rebound

Dec -07

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Laurentian Bank of Canada (LRCDF) Q4 2025 Earnings Call Highlights: Navigating Challenges and ...

Dec -05

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Laurentian Bank Q4 Profit Drops 16% on Weaker Revenue; Announces $0.47 Dividend

Dec -05

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Laurentian Bank of Canada declares dividend on its common shares

Dec -05

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Laurentian Bank of Canada reports 2025 results

Dec -05

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Correction To TSX Closer: Up For the First Time This Week, Back To Near Last Friday's Record Close

Dec -04

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Equitable Bank parent EQB to buy PC Financial from Loblaw

Dec -04

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TSX Closer: Up For the First Time This Week, Back To Near Last Friday's Record Close

Dec -03

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Banking and Related Activities

Expected Growth: 4.0%

Laurentian Bank of Canada's 4.0% growth in Banking and Related Activities is driven by increased lending activities, improved deposit growth, and enhanced digital banking capabilities. Additionally, strategic acquisitions, cost savings initiatives, and a favorable interest rate environment have contributed to this growth.

7. Detailed Products

Personal Banking

Laurentian Bank of Canada offers a range of personal banking services, including chequing and savings accounts, credit cards, loans, and investment products.

Business Banking

Laurentian Bank of Canada provides business banking services, including commercial loans, lines of credit, and cash management solutions.

Wealth Management

Laurentian Bank of Canada offers wealth management services, including investment advice, portfolio management, and estate planning.

Mortgage Solutions

Laurentian Bank of Canada provides mortgage solutions, including residential and commercial mortgages, and mortgage insurance.

Credit Cards

Laurentian Bank of Canada offers a range of credit cards, including cashback, rewards, and low-interest credit cards.

Investment Products

Laurentian Bank of Canada offers a range of investment products, including mutual funds, exchange-traded funds, and guaranteed investment certificates.

Insurance Services

Laurentian Bank of Canada offers insurance services, including life insurance, disability insurance, and home and auto insurance.

8. Laurentian Bank of Canada's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Laurentian Bank of Canada is medium, as there are alternative financial institutions and digital payment methods available to customers.

Bargaining Power Of Customers

The bargaining power of customers is low, as individual customers have limited negotiating power, and the bank has a large customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low, as the bank has a diverse range of suppliers and can negotiate favorable terms.

Threat Of New Entrants

The threat of new entrants is low, as there are significant barriers to entry in the banking industry, including regulatory hurdles and high capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high, as the Canadian banking industry is highly competitive, with several major players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 87.48%
Debt Cost 10.35%
Equity Weight 12.52%
Equity Cost 10.35%
WACC 10.35%
Leverage 698.71%

11. Quality Control: Laurentian Bank of Canada passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Laurentian Bank

A-Score: 6.9/10

Value: 7.1

Growth: 5.1

Quality: 3.5

Yield: 9.0

Momentum: 7.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Citizens & Northern

A-Score: 6.6/10

Value: 6.0

Growth: 4.9

Quality: 7.4

Yield: 8.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

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Hawthorn Bancshares

A-Score: 6.2/10

Value: 6.1

Growth: 5.2

Quality: 6.0

Yield: 5.0

Momentum: 8.5

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Flushing Financial

A-Score: 5.6/10

Value: 8.3

Growth: 2.7

Quality: 3.9

Yield: 10.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

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ACNB

A-Score: 5.6/10

Value: 4.5

Growth: 5.2

Quality: 5.8

Yield: 6.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
BayFirst

A-Score: 4.9/10

Value: 9.3

Growth: 7.3

Quality: 5.9

Yield: 4.0

Momentum: 1.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.81$

Current Price

39.81$

Potential

-0.00%

Expected Cash-Flows