Mr. David Taylor reports
PWC CAPITAL INC. ANNOUNCES RESULTS FOR ITS FIRST QUARTER ENDED JANUARY 31, 2015
PWC Capital Inc. has provided its financial results for the first quarter ended Jan. 31, 2015.
First quarter summary (1) (compared with the
same periods in the prior year unless otherwise noted)
PWC Capital Inc.
Net income (loss) of PWC Capital Inc. for the
three months ended Jan. 31, 2015, was ($1.6-million) or (five cents) per
share (basic and diluted) compared with ($2.2-million) or (seven cents) per
share (basic and diluted) for the same period last year. Net income
(loss) for the current period improved from a year ago as a result of
increased earnings of its principal subsidiary, Pacific & Western Bank
of Canada, as discussed below.
Pacific & Western Bank of Canada
Income before income taxes of the bank for the current quarter
increased over 30 per cent to $2.3-million from $1.8-million for the previous
quarter and from $1.4-million for the same period a year ago.
Net income for the current quarter was $1.7-million or seven cents per share
(basic and diluted) compared with $2.5-million or 13 cents per share (basic
and diluted) for the previous quarter, and $975,000 or five cents per share
(basic and diluted) for the same period a year ago. Net income for the
previous quarter included a positive income tax adjustment of $1.2-million.
Net interest margin or spread for the current quarter was 2.15 per cent
compared with 2.16 per cent for the previous quarter and 1.95 per cent for the same
period a year ago.
Total assets of the bank increased to $1.52-billion from $1.45-billion
at the end of previous quarter and $1.44-billion a year ago. This
increase was due to total loans which grew to $1.31-billion from $1.22-billion at the end of the previous quarter and $1.14-billion a year
ago.
Credit quality remains strong with no gross impaired loans at Jan. 31, 2015, and Oct. 31, 2014, compared with $6,000 a year ago.
At Jan. 31, 2015, the bank's common equity Tier 1 (CET1) ratio was
10.97 per cent compared with 11.25 per cent at the end of the previous quarter and
11.54 per cent a year ago. The bank's total capital ratio was 13.23 per cent compared
with 13.69 per cent at Oct. 31, 2014, and 12.64 per cent last year.
(1) Certain highlights include non-GAAP (generally accepted accounting principles) measures.
President's comments
"PWC Capital owns approximately 16.7 million of Pacific & Western Bank of
Canada common shares (86 per cent) and 100 per cent of Versabanq Innovations common
shares. The bank is by far our largest and most important investment and
the value of PWC is highly dependent on the bank's value.
"I am pleased to report that our bank is continuing to grow steadily in
all key areas. This is having a substantial positive effect on its
earnings. During the quarter, total assets increased by 5 per cent from $1.45-billion to $1.52-billion, and pretax income increased by more than 25 per cent
over the previous quarter's figure and more than 60 per cent over the same
quarter last year. Recently our bank completed another public offering
of 7 per cent preference shares, bringing the total new capital raised in the
last few months to $31-million. This new capital has provided our bank
with significant capacity for more profitable growth.
"Loans and leases sourced through the bank's bulk purchase program during
the quarter totalled $120-million, an almost 60-per-cent increase over the
previous quarter, increasing the balance of these assets by 20 per cent to $472-million. The bank purchases loans and leases from an increasing number
of financiers who operate throughout Canada in a variety of industries.
Our program provides much needed financing for small businesses and
consumers in niche markets. We have developed state-of-the-art systems
to allow us to process large numbers of these small ticket assets. This
business is rapidly becoming a significant portion of the bank's total
assets and revenue stream.
"Our bank's well-established commercial real estate financing business,
which primarily serves Southwestern Ontario, also grew modestly during
the quarter with total loans increasing by 4 per cent over the previous quarter,
bringing the total loans in this asset class to $644-million.
"The bank's net interest margin of 2.2 per cent remained virtually static over
the previous quarter, and with the 5-per-cent increase in total assets, gave
rise to a 5-per-cent increase in net interest income over the previous quarter;
however, total revenue for the quarter remained the same as the previous
quarter's at $8.4-million as the previous quarter's figure included a
$400,000 gain on the sale of a loan, about equivalent to this quarter's
increase in net interest income. Non-interest expenses of $5.5-million
were incurred during the quarter, about the same as that incurred in the
same quarter a year ago, and a 10-per-cent decline over the previous quarter.
Net income for the quarter was $1.7-million versus the previous
quarter's figure of $2.5-million; however, the previous quarter
benefited from a $1.2-million income tax adjustment.
"After working for several years to develop new markets and business
lines, our bank has now entered an asset expansion phase in which it
will realize significant economies of scale that will no doubt produce
considerable earnings growth."
FINANCIAL HIGHLIGHTS
For the three months ended
Jan. 31,
(in thousands of dollars except per share amounts) 2015 2014
Pacific & Western Bank of Canada
Results of operations
Net interest income $8,031 $6,935
Net interest margin* 2.15% 1.95%
Other income 338 337
Total revenue 8,369 7,272
Provision for (recovery of) credit losses 502 (51)
Non-interest expenses 5,537 5,534
Restructuring charges - 434
Income before income taxes 2,330 1,355
Net income 1,679 975
Return on average common equity 4.04% 2.89%
Gross impaired loans to total loans 0.00% 0.00%
Provision for credit losses as a % of average loans 0.04% 0.00%
PWC Capital Inc. (consolidated)
Results of operations
Net income of the bank $1,679 $975
Additional interest expense on notes of PWC (1,615) (1,592)
Interest expense relating to Class B
Preferred share dividends (1,145) (1,242)
Net non-interest and other expenses of PWC (51) 26
Provision for income taxes (437) (387)
Net (loss) $(1,569) $(2,220)
Net income attributable to non-controlling interests 219 86
Net (loss) attrubutable to shareholders (1,788) (2,306)
$(1,569) $(2,220)
(Loss) per common share
Basic $(0.05) $(0.07)
Diluted $(0.05) $(0.07)
We seek Safe Harbor.
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