Laurentian Bank Falls 3.5% on Quarterly Loss, Share Sale

  • Montreal-based bank sells shares to bolster capital position
  • Laurentian takes $58 million charge for reorganization

Laurentian Bank of Canada fell the most since August after posting a fiscal fourth-quarter loss that included C$78.4 million ($58 million) in costs tied to restructuring and impairments, and selling shares to bolster its balance sheet.

Laurentian slid 3.5 percent to C$52.01 at 9:32 a.m. in Toronto, the worst performance in the eight-company Standard & Poor’s/TSX Composite Banks Index. The shares have gained 3.8 percent this year.

The bank reported a loss of C$18.7 million, or 73 cents a share, for the period ended Oct. 31, compared with profit of C$33.8 million, or C$1.09, a year earlier. Profit excluding one-time items was C$1.44 a share, missing the C$1.46 average estimate of nine analysts surveyed by Bloomberg. The bank raised its quarterly dividend 3.6 percent to 58 cents a share.

Francois Desjardins, who took over Nov. 1 as chief executive officer, disclosed a seven-year plan to make the lender simpler and more efficient. The Montreal-based bank, Canada’s seventh-largest by assets, recorded a C$72.2 million impairment charge and C$6.2 million of costs tied to severances from reorganizing management.

“After a year of review, we concluded that in order to progress, a true transformation is required," Desjardins said. “We are convinced that this is the right time to progressively transform the bank."

Separately, Laurentian said it sold 1.25 million shares for C$52 each in a so-called bought deal led by BMO Capital Markets and RBC Capital Markets. The bank said its common equity Tier 1 ratio, which was the lowest among Canadian banks at 7.6 percent as of Oct. 31, would be about 8 percent after the offering.

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