The Globe and Mail reports in its Saturday, Dec. 20, edition that
Canadian Western Bank ($32.41) stands to suffer as a result of the rout in energy prices. The Globe's Norman Rothery writes in the Strategy Lab column that about
41 per cent of its loan portfolio
is in Alberta and 35 per cent is in
British Columbia. Mr. Rothery notes the bank's geographic concentration
is great when Alberta
booms but it smarts when it
busts.
If it were not for low oil prices,
the bank would
be a much more attractive
investment. It has $20.6-billion
in total assets, $1.6-billion in common equity and a
market capitalization of $2.6-billion. The bank's
stock has lagged both the market
and its peers in recent times.
After hitting a 52-week high of
$43.30 in August, its shares fell to
a low of $28.86 last week.
While the stock is less expensive
than it was, its valuation
is not dirt cheap on a historical
basis. It currently trades
at 1.8 times tangible book value.
The last time oil took a big dive,
during the crash of 2008-2009,
the stock changed hands at only
0.73 times tangible book value.
Mr. Rothery notes that the shares would have to fall
almost 60 per cent to reach similar
ratios.
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