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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 Q1 Results: A Mixed Bag

Laurentian Bank reported total revenue of $251.6 million, up 1% year-over-year and 3% quarter-over-quarter. However, the diluted EPS decreased by 17% year-over-year to -$0.45905, missing estimates of $0.737. Net income was $24.2 million, down 13% compared to last year. The bank's efficiency ratio increased by 240 basis points compared to last year, mainly due to strategic investments. The ROE stood at 4.5%, down 80 basis points year-over-year and 50 basis points quarter-over-quarter.

Publication Date: Mar -07

📋 Highlights
  • Total Loan Growth:: 4% in Q1, aligned with the bank's transformation plan.
  • After-Tax Adjusting Items:: $54.7 million from December transactions, with 98.8% shareholder approval for the acquisition.
  • Inventory Finance Progress:: 7% QoQ growth in inventory financing, utilization improved 5 percentage points to 45%.
  • Commercial Real Estate:: Portfolio and pipeline increased by 5%, with a provision for credit losses ratio of 18 bps.
  • Efficiency Ratio:: Rose 240 basis points YoY due to strategic investments, while ROE declined to 4.5%.

Loan Growth and Credit Quality

The bank reported total loan growth of 4% in the first quarter, aligning with the transformation plan. Commercial loan growth continued, with inventory financing increasing 7% quarter-over-quarter and utilization improving by 5 percentage points to 45%. The provision for credit losses ratio decreased to 18 bps, reflecting the bank's specialized underwriting and education practices. As Eric Provost noted, "the team has made significant progress, with shareholders voting 98.8% in favor of the acquisition transaction."

Valuation and Outlook

Laurentian Bank's Price-to-Tangible Book Value (P/TBV) is around 0.67, indicating that the stock may be undervalued. The Dividend Yield is 4.68%, which is attractive for income investors. Analysts estimate next year's revenue growth at 3.3%. However, the EV/EBITDA ratio is high at 157.49, suggesting that the stock may be overvalued on this metric. The bank's Net Interest Margin (NIM) and loan growth will be crucial in determining its future performance.

Regulatory Approvals and Growth Prospects

Regarding regulatory approvals, Eric Provost mentioned that the main ones are OSFI and the Competition Bureau, with the timing expected to be late 2026. The bank is confident in achieving its objectives, driven by growth in inventory finance and commercial real estate. The feedback from customers has been positive, with them understanding the rationale of the transaction. The growth in inventory finance is attributed to a mix of dealer utilization and restocking.

3. NewsRoom

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Laurentian Bank of Canada (TSX:LB) Valuation Check After Strong 1 Year Total Shareholder Return

Mar -02

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Laurentian Bank of Canada Q1 Earnings Call Highlights

Mar -01

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Laurentian Bank of Canada (LRCDF) Q1 2026 Earnings Call Highlights: Navigating Challenges with ...

Feb -27

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Laurentian Bank of Canada declares dividend on its common shares

Feb -27

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Laurentian Bank of Canada reports first quarter 2026 results

Feb -27

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Laurentian Bank Completes Sale of Syndicated Loans Portfolio

Feb -17

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Assessing Laurentian Bank of Canada (TSX:LB) Valuation After Strong 1 Year Shareholder Return

Feb -08

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Laurentian Bank of Canada Shareholders OK $40.50/Share Fairstone Buyout at Special Meeting

Feb -07

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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
Citizens & Northern

A-Score: 6.5/10

Value: 6.1

Growth: 4.9

Quality: 7.2

Yield: 8.0

Momentum: 4.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Laurentian Bank

A-Score: 6.3/10

Value: 7.0

Growth: 3.0

Quality: 3.4

Yield: 9.0

Momentum: 7.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Hawthorn Bancshares

A-Score: 6.1/10

Value: 6.1

Growth: 5.2

Quality: 7.1

Yield: 4.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
ACNB

A-Score: 6.0/10

Value: 4.7

Growth: 5.2

Quality: 5.7

Yield: 6.0

Momentum: 6.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Flushing Financial

A-Score: 5.6/10

Value: 8.1

Growth: 2.6

Quality: 3.9

Yield: 9.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
BayFirst

A-Score: 4.6/10

Value: 9.8

Growth: 7.3

Quality: 5.0

Yield: 3.0

Momentum: 0.5

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

40.31$

Current Price

40.31$

Potential

-0.00%

Expected Cash-Flows