Mr. Eric Provost reports

LAURENTIAN BANK OF CANADA REPORTS FIRST QUARTER 2024 RESULTS

Laurentian Bank of Canada had net income of $37.3-million and diluted earnings per share of 75 cents for the first quarter of 2024, compared with $51.9-million and $1.09 for the first quarter of 2023. Of note, reported and adjusted results for the first quarter of 2024 included a negative pretax impact of $2.3-million ($1.7-million after income taxes), or four cents per share, from the remediation activities following the mainframe outage that occurred in September, 2023. Reported results for the first quarter of 2024 also included restructuring charges of $6.1-million ($4.5-million after income taxes), or 10 cents per share. Return on common shareholders' equity was 5 per cent for the first quarter of 2024, compared with 7.5 per cent for the first quarter of 2023. Adjusted net income was $44.2-million and adjusted diluted earnings per share were 91 cents for the first quarter of 2024, compared with $54.3-million and $1.15 for the first quarter of 2023. Adjusted return on common shareholders' equity was 6 per cent for the first quarter of 2024, compared with 7.8 per cent for the same period a year ago.

"The bank has a strong level of liquidity and strengthened our capital position in a period of macroeconomic uncertainty," said Eric Provost, president and chief executive officer. "Throughout the quarter we remained focused on delivering against our three priorities -- customer focus, simplification and strategic investments to improve our technology infrastructure -- and we look forward to launching our revamped strategic plan later this year."

Financial reporting changes

Adoption of IFRS 17, Insurance Contracts

Effective Nov. 1, 2023, the bank retrospectively adopted international financial reporting standard 17, Insurance Contracts (IFRS 17), which replaces IFRS 4 addressing insurance contracts. The adoption of IFRS 17 required a restatement of the bank's 2023 comparative information and financial measures and resulted in an increase in other assets and a decrease in retained earnings of $700,000 as at Nov. 1, 2022, and Oct. 31, 2023, respectively. The adoption of IFRS 17 had no material impact on the consolidated statement of income, consolidated statement of comprehensive income and consolidated statement of cash flows for the fiscal year ended Oct. 31, 2023, as well as on financial measures previously disclosed.

Consolidated results

Three months ended Jan. 31, 2024, financial performance

Net income was $37.3-million and diluted earnings per share were 75 cents for the first quarter of 2024, compared with $51.9-million and $1.09 for the first quarter of 2023. Of note, reported and adjusted results for the first quarter of 2024 included a negative pretax impact of $2.3-million ($1.7-million after income taxes), or four cents per share, from the remediation activities following the mainframe outage that occurred in September, 2023. Reported results for the first quarter of 2024 also included restructuring charges of $6.1-million ($4.5-million after income taxes), or 10 cents per share. Adjusted net income was $44.2-million and adjusted diluted earnings per share were 91 cents for the first quarter of 2024, compared with $54.3-million and $1.15 for the first quarter of 2023.

Total revenue

Total revenue decreased by $1.7-million to $258.3-million for the first quarter of 2024, compared with $260.1-million for the first quarter of 2023.

Net interest income decreased by $1.9-million to $185.3-million for the first quarter of 2024, compared with $187.1-million for the first quarter of 2023. The decrease was mainly due to lower interest income from lower loan volumes. The net interest margin was 1.80 per cent for the first quarter of 2024, an increase of three basis points compared with the first quarter of 2023, mainly due to more interest rate stability contributing to improved product margins, partly offset by higher liquidity levels.

Other income was $73.1-million for the first quarter of 2024, mainly unchanged compared with first quarter of 2023. Higher income from financial instruments in the first quarter of 2024 was mostly offset by lower lending fees due to tempered commercial real estate activity and lower income from mutual funds.

Provision for credit losses

The provision for credit losses was $16.9-million for the first quarter of 2024, compared with $15.4-million for the first quarter of 2023, an increase of $1.5-million mainly as a result of higher provisions on performing loans due to credit migration. The provision for credit losses as a percentage of average loans and acceptances was 18 basis points for the quarter, compared with 16 basis points for the same quarter a year ago.

Non-interest expenses

Non-interest expenses amounted to $197.8-million for the first quarter of 2024, an increase of $14.2-million compared with the first quarter of 2023. In the first quarter of 2024, non-interest expenses included restructuring charges of $6.1-million. Adjusted non-interest expenses increased by $8.1-million or 4 per cent to $188.5-million for the first quarter of 2024, compared with $180.5-million for the first quarter of 2023.

Salaries and employee benefits amounted to $102.5-million for the first quarter of 2024, a decrease of $1.4-million compared with the first quarter of 2023, mostly due to efficiency gains resulting from the reduced head count and lower performance-based compensation, partly offset by higher employee benefits.

Premises and technology costs were $52.1-million for the first quarter of 2024, an increase of $5-million compared with the first quarter of 2023. The increase year-over-year is mainly due to higher technology costs as the bank is investing in its infrastructure, as well as increased amortization charges resulting from recently completed projects.

Other non-interest expenses were $37.2-million for the first quarter of 2024, an increase of $4.5-million compared with the first quarter of 2023 mainly resulting from higher professional and advisory services fees. Other non-interest expenses for the first quarter of 2024 also included $2.3-million of professional fees and other expenses related to the mainframe outage that occurred in September, 2023.

Impairment and restructuring charges were $6.1-million for the first quarter of 2024, compared with nil for the first quarter of 2023, and included restructuring charges of $6.1-million resulting from the simplification of the bank's organizational structure and head count reduction.

Efficiency ratio

The efficiency ratio on a reported basis increased to 76.6 per cent for the first quarter of 2024, compared with 70.6 per cent for the first quarter of 2023, as a result of higher non-interest expenses, including restructuring charges of $6.1-million. The adjusted efficiency ratio increased to 73 per cent for the first quarter of 2024, compared with 69.4 per cent for the first quarter of 2023 as a result of higher adjusted non-interest expenses.

Income taxes

For the first quarter of 2024, the income tax expense was $6.3-million, and the effective income tax rate was 14.5 per cent, compared with an income tax expense of $9.1-million, and an effective income tax rate of 14.8 per cent for the first quarter of 2023. For both quarters, the lower effective income tax rate compared with the statutory income tax rate was mainly attributed to the lower taxation level of income from foreign operations. The lower effective income tax rate for the first quarter of 2024 compared with the first quarter of 2023 mainly resulted from the lower proportion of income from domestic operations.

Financial condition

As at Jan. 31, 2024, total assets amounted to $48.1-billion, a 4-per-cent decrease compared with $49.9-billion as at Oct. 31, 2023, mainly due to the lower level of liquid assets.

Liquid assets

As at Jan. 31, 2024, liquid assets as presented on the balance sheet amounted to $10.1-billion, a decrease of $1.3-billion compared with $11.4-billion as at Oct. 31, 2023. The bank continues to prudently manage its level of liquid assets. The bank's financing sources remain well diversified and sufficient to meet all liquidity requirements. Liquid assets represented 21 per cent of total assets as at Jan. 31, 2024, compared with 23 per cent as at Oct. 31, 2023.

Loans

Loans and bankers' acceptances, net of allowances, stood at $36.5-billion as at Jan. 31, 2024, a decrease of $400-million since Oct. 31, 2023. During the first quarter of 2024, the decrease in commercial and personal loans was partly offset by an increase in residential mortgage loans. Commercial loans and acceptances amounted to $17.3-billion as at Jan. 31, 2024, a decrease of $500-million or 3 per cent since Oct. 31, 2023, mainly resulting from lower real estate commercial loans. Personal loans of $2.4-billion as at Jan. 31, 2024, decreased by $200-million from Oct. 31, 2023, mainly as a result of a decline in the investment loan portfolio driven by volatile market conditions and higher interest rates. Residential mortgage loans of $17-billion as at Jan. 31, 2024, increased by $300-million or 2 per cent from Oct. 31, 2023.

Deposits

Deposits decreased by $1-billion to $25.1-billion as at Jan. 31, 2024, compared with $26-billion as at Oct. 31, 2023, as the bank gradually reduced its deposit basis considering loan volume reductions and its liquidity position. Personal deposits stood at $21.5-billion as at Jan. 31, 2024, a decrease of $800-million compared with $22.3-billion as at Oct. 31, 2023. Of note, personal deposits sourced through the retail channel were stable compared with Oct. 31, 2023. Personal notice and demand deposits from partnerships decreased by $500-million since Oct. 31, 2023, and deposits from advisers and brokers decreased by $300-million. Personal deposits represented 86 per cent of total deposits as at Jan. 31, 2024, unchanged since Oct. 31, 2023, and contributed to the bank's sound liquidity position. Business and other deposits decreased by $200-million over the same period to $3.6-billion.

Debt related to securitization activities

Debt related to securitization activities stood at $12.8-billion, unchanged since Oct. 31, 2023.

Shareholders' equity and regulatory capital

Shareholders' equity stood at $2.9-billion as at Jan. 31, 2024, and increased by $28.4-million compared with Oct. 31, 2023. Retained earnings increased by $11.8-million compared with Oct. 31, 2023, mainly as a result of the net income contribution of $37.3-million, partly offset by dividends. Accumulated other comprehensive income increased by $13.9-million compared with Oct. 31, 2023. For additional information, please refer to the capital management section of the bank's management discussion and analysis and to the consolidated statement of changes in shareholders' equity for the period ended Jan. 31, 2024.

The bank's book value per common share was $59.80 as at Jan. 31, 2024, compared with $59.96 as at Oct. 31, 2023.

The Common Equity Tier 1 capital ratio was 10.2 per cent as at Jan. 31, 2024, in excess of the minimum regulatory requirement and the bank's target management levels. The CET1 capital ratio increased by 30 basis points compared with Oct. 31, 2023, mainly due to the risk-weighted assets reduction. The bank met OSFI's (Office of the Superintendent of Financial Institutions) capital and leverage requirements throughout the quarter.

On Feb. 28, 2024, the board of directors declared a quarterly dividend of 47 cents per common share, payable on May 1, 2024, to shareholders of record on April 1, 2024. This quarterly dividend is equal to the dividend declared in the previous quarter and is 2 per cent higher than the dividend declared in the previous year. The board also determined that shares attributed under the bank's shareholder dividend reinvestment and share purchase plan will be made in common shares issued from corporate treasury with a 2-per-cent discount.

Access to quarterly results materials

This press release can be found on the bank's website, under the press room tab, and the bank's report to shareholders, investor presentation and supplementary financial information under the investor centre tab, financial results.

Conference call

Laurentian Bank of Canada invites media representatives and the public to listen to the conference call to be held at 11 a.m. (ET) on Feb. 29, 2024. The live, listen-only, toll-free, call-in number is 1-888-664-6392, code 59050634. A live webcast will also be available on the bank's website under the investor centre tab, financial results.

The conference call playback will be available on a delayed basis from 2 p.m. (ET) on Feb. 29, 2024, until 12 p.m. (ET) on April 1, 2024, on the bank's website under the investor centre tab, financial results.

The presentation material referenced during the call will be available on the bank's website under the investor centre tab, financial results.

About Laurentian Bank of Canada

Founded in Montreal in 1846, Laurentian Bank helps families, businesses and communities thrive. Today, it has approximately 3,000 employees working together as one team, to provide a broad range of financial services and advice-based solutions for customers across Canada and the United States. The bank protects, manages and grows $48.1-billion in balance sheet assets and $26.5-billion in assets under administration.

We seek Safe Harbor.