Company Website:
http://www.pwccapital.com/
LONDON, Ontario -- (Business Wire)
PWC Capital Inc. (TSX:PWC):
FIRST QUARTER SUMMARY (1)
(compared to the
same periods in the prior year unless otherwise noted)
PWC Capital Inc.
-
Net income (loss) of PWC Capital Inc. (the “Corporation”) for the
three months ended January 31, 2015, was ($1.6 million) or ($0.05) per
share (basic and diluted) compared to ($2.2 million) or ($0.07) 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 (“the Bank”) as discussed below.
Pacific & Western Bank of Canada
-
Income before income taxes of the Bank for the current quarter
increased over 30% 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 $0.07 per share
(basic and diluted) compared to $2.5 million or $0.13 per share (basic
and diluted) for the previous quarter and $975,000 or $0.05 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%
compared to 2.16% for the previous quarter and 1.95% 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 January
31, 2015 and October 31, 2014 compared to $6,000 a year ago.
-
At January 31, 2015, the Bank’s Common Equity Tier 1 (CET1) ratio was
10.97% compared to 11.25% at the end of the previous quarter and
11.54% a year ago. The Bank’s total capital ratio was 13.23% compared
to 13.69% at October 31, 2014 and 12.64% last year.
(1) Certain highlights include non-GAAP measures. See
definition under ‘Basis of Presentation’ in the attached Management’s
Discussion and Analysis.
PRESIDENT’S COMMENTS
PWC Capital owns approximately 16.7 million of Pacific & Western Bank of
Canada common shares (86%) and 100% 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% from $1.45
billion to $1.52 billion, and pre-tax income increased by more than 25%
over the previous quarter’s figure and more than 60% over the same
quarter last year. Recently our Bank completed another public offering
of 7% 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 totaled $120 million, an almost 60% increase over the
previous quarter, increasing the balance of these assets by 20% 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% over the previous quarter,
bringing the total loans in this asset class to $644 million.
The Bank’s net interest margin of 2.2% remained virtually static over
the previous quarter, and with the 5% increase in total assets, gave
rise to a 5% 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% 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 $1.2 million income tax adjustment.
After working for several years to develop new markets and business
lines, our Bank has now entered an asset expansion phase in which it
will realize significant economies of scale that will no doubt produce
considerable earnings growth.
FINANCIAL HIGHLIGHTS
(unaudited)
|
|
|
| for the three months ended | |
|
| | | |
| January 31 |
| October 31 |
| January 31 | |
($CDN thousands except per share amounts )
|
| 2015 |
| 2014 |
| 2014 | |
Pacific & Western Bank of Canada | | | | | | | |
Results of operations | | | | | | | | |
|
Net interest income
| | |
$
|
8,031
| |
$
|
7,609
| |
$
|
6,935
| |
|
Net interest margin*
| | | |
2.15%
| | |
2.16%
| | |
1.95%
| |
|
Other income
| | | | |
338
| | |
791
| | |
337
| |
|
Total revenue
| | | | |
8,369
| | |
8,400
| | |
7,272
| |
|
Provision for (recovery of) credit losses
| | |
502
| | |
400
| | |
(51)
| |
|
Non-interest expenses
| | | |
5,537
| | |
6,243
| | |
5,534
| |
|
Restructuring charges
| | | |
-
| | |
-
| | |
434
| |
|
Income before income taxes
| | |
2,330
| | |
1,757
| | |
1,355
| |
| Net income | | | | | 1,679 | | | 2,476 | | | 975 | |
|
Return on average common equity
| | |
4.04%
| | |
7.14%
| | |
2.89%
| |
|
Gross impaired loans to total loans
| | |
0.00%
| | |
0.00%
| | |
0.00%
| |
|
Provision for credit losses as a % of average loans
|
|
|
0.04%
|
|
|
0.03%
|
|
|
0.00%
| |
| | | | | | | | | | |
|
PWC Capital Inc. (consolidated) | | | | | | | |
Results of operations | | | | | | | | |
|
Net income of the Bank
| | |
$
|
1,679
| |
$
|
2,476
| |
$
|
975
| |
|
Additional interest expense on notes of PWC
| | |
(1,615)
| | |
(1,655)
| | |
(1,592)
| |
|
Interest expense relating to Class B
| | | | | | | |
|
Preferred Share dividends
| | |
(1,145)
| | |
(1,254)
| | |
(1,242)
| |
|
Net non-interest and other expenses of PWC
| | |
(51)
| | |
(160)
| | |
26
| |
|
Provision for income taxes
|
|
|
(437)
|
|
|
(436)
|
|
|
(387)
| |
| Net loss | | | | $ | (1,569) | | $ | (1,029) | | $ | (2,220) | |
| | | | | | | | | | |
|
|
Net income attributable to non-controlling interests
| | |
219
| | |
284
| | |
86
| |
|
Net loss attrubutable to shareholders
|
|
|
(1,788)
|
|
|
(1,313)
|
|
|
(2,306)
| |
| | | | | | $ | (1,569) | | $ | (1,029) | | $ | (2,220) | |
|
Loss per common share:
| | | | | | | |
| |
Basic
| | | |
$
|
(0.05)
| |
$
|
(0.04)
| |
$
|
(0.07)
| |
|
|
Diluted
|
|
|
|
$
|
(0.05)
|
|
$
|
(0.04)
|
|
$
|
(0.07)
| |
| | | | | | as at | |
| | | | | | January 31 | | October 31 | | January 31 | |
PWC Capital Inc. (consolidated) | |
| 2015 |
|
| 2014 |
|
| 2014 | |
Balance Sheet Summary | | | | | | | | |
|
Cash and securities
| | |
$
|
184,013
| |
$
|
196,101
| |
$
|
274,011
| |
|
Total loans
| | | | |
1,305,142
| | |
1,224,247
| | |
1,136,132
| |
|
Total assets
| | | | |
1,514,685
| | |
1,443,445
| | |
1,434,072
| |
|
Deposits
| | | | |
1,246,943
| | |
1,193,797
| | |
1,221,247
| |
|
Notes payable and preferred share liabilities
| | |
118,243
| | |
118,969
| | |
117,824
| |
|
Shareholders' equity
|
|
|
|
8,215
|
|
|
10,195
|
|
|
12,516
| |
* This is a non-GAAP measure. See definition under 'Basis of
Presentation' in the attached
| |
Management's Discussion and Analysis.
| | | | | | | |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL
CONDITION
This management’s discussion and analysis (MD&A) of operations and
financial condition for the first quarter of fiscal 2015, dated March 3,
2015, should be read in conjunction with the unaudited interim
consolidated financial statements for the period ended January 31, 2015,
included herein which have been prepared in accordance with
International Financial Reporting Standards (IFRS). This MD&A should
also be read in conjunction with the Corporation’s MD&A and the audited
consolidated financial statements for the year ended October 31, 2014,
all of which are available on SEDAR at www.sedar.com.
Except as discussed below, all other factors discussed and referred to
in the MD&A for the year ended October 31, 2014, remain substantially
unchanged.
Basis of Presentation
Non-GAAP and Additional GAAP Measure
Net Interest Income and Net Interest Margin or Spread
Most banks analyze profitability by net interest income (as presented in
the Consolidated Statements of Income (Loss)) and net interest margin or
spread. Net interest margin or spread is defined as net interest income
as a percentage of average total assets. Net interest margin or spread
does not have a standardized meaning prescribed by IFRS and, therefore,
may not be comparable to similar measures presented by other financial
institutions.
Basel III Common Equity Tier 1, Tier 1 and Total Capital Adequacy
Ratios
Basel III Common Equity Tier 1, Tier 1 and Total Capital Adequacy Ratios
are determined in accordance with guidelines issued by the Office of the
Superintendent of Financial Institutions Canada (OSFI) (see Note 14 to
the interim financial statements for additional information).
Overview
PWC Capital Inc. (the `Corporation`) is a holding company whose shares
trade on the Toronto Stock Exchange. Its principal subsidiary, Pacific
and Western Bank of Canada (the “Bank”), of which it owns approximately
86% of its issued common shares, provides commercial banking services to
selected niche markets and operates as a Schedule I bank under the Bank
Act (Canada). Its common shares and preferred shares trade on the
Toronto Stock Exchange.
PWC Capital Inc.
Net income (loss) of PWC Capital Inc. (the “Corporation”) for the three
months ended January 31, 2015, was ($1.6 million) or ($0.05) per share
(basic and diluted) compared to ($2.2 million) or ($0.07) per share
(basic and diluted) for the same period last year. Net loss for the
current quarter includes interest expense totalling $1.1 million
relating to dividends on the Corporation’s Class B Preferred Shares.
This amount is recorded as interest expense in the consolidated
financial statements as the preferred shares carry certain redemption
features and are classified as preferred share liabilities on the
Consolidated Balance Sheet. Net income (loss) for the current period
improved from a year ago as a result of increased earnings of the Bank
as discussed below.
Interest income of the Corporation on a non-consolidated basis includes
interest income earned on its cash balances which is nominal. For the
three months ending January 31, 2015, interest expense of the
Corporation on a non-consolidated basis consists of $1.6 million
relating to its notes payable and dividends totalling $1.1 million on
its Class B Preferred Shares compared to $1.6 million and $1.2 million
respectively for the same period a year ago.
Pacific & Western Bank of Canada
Income before income taxes of the Bank for the current quarter increased
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 compared to $2.5 million for the previous
quarter and $975,000 for the same period a year ago. Net income for the
previous quarter included a positive income tax adjustment of $1.2
million.
Income before income taxes increased from the previous quarter and from
a year ago as a result of an increase in net interest income due to
growth in total assets. In addition, income before income taxes for the
same quarter a year ago included restructuring charges of $434,000
related to the early repayment of subordinated debt.
Total revenue of the Bank consists of net interest income and other
income. For the three months ended January 31, 2015, total revenue of
the Bank was $8.4 million compared to $8.4 million for the previous
quarter and $7.3 million for the same period last year. Total revenue in
the previous quarter included a gain of $400,000 from the sale of a
loan. There were no loan sales in the current quarter. Total revenue
increased from a year ago as a result of an increase in net interest
income in the current period.
Net interest income and net interest margin for the three months ended
January 31, 2015 were $8.0 million and 2.15% respectively compared to
$7.6 million and 2.16% for the previous quarter and $6.9 million and
1.95% for the same period a year ago. The increases in net interest
income from previous periods were due to increased interest income in
the current period as a result of asset growth and lower interest
expense as a result of a lower cost of deposits. Net interest margin
increased from a year ago as a result of growth in lending assets and a
more optimal asset mix.
At January 31, 2015, total assets of the Bank were $1.52 billion
compared to $1.45 billion at the end of the previous quarter and $1.44
billion a year ago. Total loans at the end of the current quarter
increased to $1.31 billion from $1.22 billion at the end of the previous
quarter and $1.14 billion a year ago with the increase due primarily to
growth in commercial and consumer loan and lease receivables sourced
through the Bank’s bulk purchase program. Cash and securities, which are
held primarily for liquidity purposes, totalled $184 million at January
31, 2015 compared to $194 million at the end of the previous quarter and
$272 million a year ago. Cash and securities decreased from the previous
quarter and from a year ago as a result of lower funding requirements
for deposits maturing in the coming months.
Despite the growth in loans, the Bank has maintained its high credit
quality and strong underwriting standards with $nil gross impaired loans
at the end of the current quarter and at the end of the previous quarter
and $6,000 a year ago.
At January 31, 2015, the Bank continued to exceed the Common Equity Tier
1 (CET1) capital requirement of 7.0% with a CET1 ratio of 10.97%
compared to 11.25% at the end of the previous quarter and 11.54% a year
ago. The decrease in the CET1 ratio from previous periods was due to the
growth in lending assets. At January 31, 2015, the Bank’s Tier 1 capital
ratio was 12.10% compared to 12.43% at the end of the previous quarter
and 11.54% a year ago. At January 31, 2015, its total capital ratio was
13.23% compared to 13.69% at the end of the previous quarter and 12.64%
a year ago. Required minimum regulatory capital ratios are a CET1
capital ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a total
capital ratio of 10.5%, all of which include a 2.50% capital
conservation buffer.
Non-Interest Expenses
Non-interest expenses, excluding restructuring charges of the Bank,
totalled $5.6 million for the current quarter compared to $6.4 million
for the previous quarter and $5.5 million for the same period a year
ago. Non-interest expenses in the previous quarter were higher due
primarily to timing of expenses. Non-interest expenses of the
Corporation on a non-consolidated basis are not significant and relate
primarily to the costs of being a publicly traded company such as
listing and annual filing fees and professional fees. As noted
previously, restructuring charges of the Bank in the same quarter a year
ago relate to the repayment in December 2013 of subordinated debt of the
Bank.
Income Taxes
The statutory federal and provincial income tax rate is approximately
27%, similar to that of the previous periods. The effective rate is
impacted by the tax benefit on operating losses in the Corporation on a
non-consolidated basis not being recorded for accounting purposes and
certain items not being taxable or deductible for income tax purposes.
The provision for income taxes consists of the following items:
|
|
|
|
|
|
|
| |
(thousands of Canadian dollars)
|
|
|
for the three months ended
| |
|
| |
|
|
January 31
|
|
January 31
| |
|
|
|
|
|
|
2015
|
|
|
2014
| |
| | | | | | | |
|
Income tax on earnings of the Bank
| | |
$
|
651
| |
$
|
380
| |
Income tax on dividends paid by the Corporation
| | | |
437
| | |
387
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
$
|
1,088
|
|
$
|
767
| |
For the three months ended January 31, 2015, the provision for income
taxes was $1.1 million compared to $767,000 for the same period a year
ago with the change due to increased taxable income in the Bank in the
current period.
At January 31, 2015, the Bank has a deferred income tax asset of $7.9
million compared to $8.5 million at the end of the previous quarter and
$8.3 million a year ago with the decrease a result of the drawdown of
loss carryforwards due to the positive operating results over the past
year, offset by the recognition of previously unrecognized loss
carryforwards discussed previously. The deferred income tax asset is
primarily a result of income tax losses totalling approximately $34.0
million from previous periods. The income tax loss carry-forwards in the
Bank are not scheduled to begin expiring until 2027 if unutilized.
In addition, the Corporation has income tax loss carry-forwards which
total approximately $60.0 million, the benefit of which has not been
recorded. These loss carry-forwards are not scheduled to begin expiring
until 2026 if unutilized.
Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income (loss) for the
period and other comprehensive income (loss) which consists of
unrealized gains and losses on available-for-sale securities.
Comprehensive income (loss) for the three months ended January 31, 2015
was ($1.5 million) compared to ($1.0 million) for the previous quarter
and ($2.2 million) a year ago. Due to the current composition of the
treasury portfolio, which consists primarily of liquid securities,
unrealized gains or losses in the portfolio are not significant and as a
result, comprehensive income (loss) does not differ materially from net
income (loss).
Consolidated Balance Sheet
Substantially all of the Corporation’s consolidated assets are held in
the Bank. Total consolidated assets at January 31, 2015, were $1.51
billion compared to $1.44 billion at the end of the previous quarter and
$1.43 billion a year ago with the increase from the previous periods due
primarily to an increase in total loans. Loans increased during the
period to $1.31 billion from $1.22 billion at the end of the previous
quarter and from $1.14 billion a year ago.
Cash and Securities
Cash and cash equivalents consist of deposits with Canadian financial
institutions and government treasury bills with less than ninety days to
maturity from the date of acquisition. Securities in the treasury
portfolio typically consist of Government of Canada and Canadian
provincial and municipal bonds, term deposits and debt of other
financial institutions. Cash and securities, which are held primarily
for liquidity purposes, totalled $184 million or 12% of total assets
compared to $196 million or 14% of total assets at the end of the
previous quarter and $274 million or 19% of total assets a year ago. The
level of cash and securities decreased from the previous quarter and a
year ago as a result of lower funding requirements for deposits maturing
in the coming months. The current level of cash and securities as a
percentage of total assets is expected to be maintained in the coming
months.
At January 31, 2015, unrealized gains in the available-for-sale
securities portfolio were $65,000 compared to unrealized gains of
$26,000 at the end of the previous quarter and $92,000 a year ago. In
addition, there was an unrealized loss of $115,000 at January 31, 2015
relating to a security that is classified as held-to-maturity, compared
to an unrealized loss of $129,000 at the end of the previous quarter.
This unrealized loss is due to factors other than changes in credit risk
and management is of the opinion that no impairment charge is required.
The Basel III Committee on Banking Supervision (the Basel Committee) has
issued a framework outlining new liquidity standards. The framework
prescribes two new standards being the Liquidity Coverage Ratio (LCR)
and the Net Stable Funding Ratio (NSFR) as minimum regulatory standards
beginning in 2015 and 2018 respectively. The LCR establishes a common
measure of liquidity risk and requires financial institutions to
maintain sufficient liquid assets to cover a minimum of 30 days of cash
flow in a stressed scenario. The NSFR describes a second common measure
of liquidity establishing a minimum acceptable amount of stable funding
based on the liquidity characteristics of an institution’s assets and
activities over a one year time horizon. Although the Basel Committee
has introduced a phase-in period for compliance with the LCR guidelines,
banks in Canada are required to fully comply with the LCR in January
2015 with no phase-in.
Loans
At January 31, 2015 loans increased to $1.31 billion from $1.22 billion
at the end of the previous quarter and from $1.14 billion a year ago.
The increase from the previous quarter and from the previous year was
due primarily to growth in commercial and consumer loan and lease
receivables sourced through the bulk purchase program.
At January 31, 2015, the balances of individual loan categories compared
to the end of the previous quarter and a year ago reflects a change in
lending strategy where focus on government financings has been reduced
due to market conditions, with an increased emphasis on commercial and
consumer lending opportunities, particularly those sourced through its
bulk purchase program. At January 31, 2015, there was a decrease in
commercial mortgages from a year ago which was due primarily to the
timing of loan transactions.
Commercial and consumer loan and lease receivables sourced through the
bulk purchase program showed significant growth during the quarter and
from a year ago, totalling $472 million at January 31, 2015 compared to
$394 million at the end of the previous quarter, an increase of $78
million or 20%, and almost doubling from $237 million a year ago. The
bulk purchase program, which consists of individual loan and lease
receivables continues to be a key initiative and the primary driver for
growth of the lending portfolio in the coming years. These loan and
lease receivables normally attract a lower collective allowance due to
the higher quality of the receivables comprising the portfolio and the
level of cash holdbacks that are retained.
Overall, new lending for the quarter totalled $218 million compared to
$189 million for the previous quarter and $139 million a year ago. Loan
repayments for the quarter totalled $139 million compared to $144
million for the previous quarter and $162 million a year ago. At January
31, 2015, loan commitments, excluding those related to credit cards,
totalled $224 million compared to $195 million at the end of the
previous quarter and $127 million a year ago.
Residential mortgage exposures
In accordance with OSFI Guideline B-20 – Residential Mortgage
Underwriting Practices and Procedures, additional information is
provided regarding the Bank’s residential mortgage exposure. For the
purposes of the Guideline, a residential mortgage is defined as a loan
to an individual that is secured by residential property (one to four
unit dwellings) and includes home equity lines of credit (HELOC’s). This
differs from the classification of residential mortgages by the Bank
which also includes multi-family mortgages.
Under OSFI’s definition, the Bank’s exposure to residential mortgages is
not significant and at January 31, 2015 totalled $887,000 compared to
$1.1 million at the end of the previous quarter and $1.2 million a year
ago. The Bank did not have any HELOC’s outstanding at January 31, 2015
or a year ago.
Credit Quality
Despite the strong loan growth during the quarter, the Bank has
maintained its high credit quality and strong underwriting standards and
traditionally requires minimal provisions for credit losses. Gross
impaired loans at January 31, 2015, were $nil, unchanged from the end of
the previous quarter and compared to $6,000 a year ago. The provision
(recovery) for credit losses in the current quarter was $502,000
compared to $400,000 for the previous quarter and ($51,000) a year ago.
The provision for credit losses increased from previous periods due to
an increase in the collective allowance as a result of the increase in
loans, and a higher level of write-offs relating to the credit card
program as the portfolio matures.
At January 31, 2015, the collective allowance totalled $3.1 million
compared to $2.9 million at the end of previous quarter and $2.9 million
a year ago with the increase due primarily to growth in loans. Included
in the collective allowance at January 31, 2015 was $1.0 million
relating to credit card receivables, compared to $962,000 at the end of
the previous quarter and $858,000 a year ago. The increase from a year
ago was due to the maturation of credit card balances.
Based on results from ongoing stress testing of the loan portfolio under
various scenarios and the secured nature of the existing loan portfolio,
the Bank is of the view that any credit losses which exist but cannot be
specifically identified at this time are adequately provided for. The
Bank’s loan exposure to the province of Alberta and to the oil and gas
industry is not significant and the Bank is not directly impacted by the
recent decline in world oil prices.
Other Assets
Other assets totalled $25.5 million at January 31, 2015, compared to
$23.1 million at the end of the previous quarter and $23.9 million a
year ago. Included in other assets is the deferred income tax asset of
the Bank of $7.9 million compared to $8.5 million at the end of the
previous quarter and $8.3 million a year ago. Also included in other
assets are capital assets and prepaid expenses of $13.1 million compared
to $10.8 million at the end of the previous quarter and $12.1 million a
year ago.
Deposits and Other Liabilities
Deposits are used as a primary source of financing growth in assets and
are raised primarily through a well established and well diversified
deposit broker network across Canada. Deposits at January 31, 2015,
totalled $1.25 billion compared to $1.19 billion at the end of the
previous quarter and $1.22 billion a year ago, and consist primarily of
guaranteed investment certificates. Of the total amount of deposits
outstanding, $18.5 million or approximately 1.5% of total deposits at
the end of the current quarter were in the form of demand savings
accounts compared to $19.3 million or 1.6% of total deposits at the end
of the previous quarter and $21.6 million or approximately 1.8% of total
deposits a year ago. In addition, the Bank has chequing accounts related
to trustees in the bankruptcy industry as discussed below.
In order to diversify its sources of deposits and reduce its cost of new
deposits, the Bank identified another source, that being chequing
accounts of trustees in the Canadian bankruptcy industry. The Bank
developed banking software to enable this market to efficiently
administer its chequing accounts. These services are being offered to
trustees in the bankruptcy industry across Canada and at January 31,
2015, outstanding balances from this source totalled $83.8 million
unchanged from the end of the previous quarter and compared to $51.6
million a year ago.
Other liabilities consist of accounts payable, accruals, holdbacks
payable related to the bulk purchase program and securities sold under
repurchase agreements. At January 31, 2015, other liabilities totalled
$63.7 million compared to $46.6 million at the end of the previous
quarter and $27.1 million a year ago with the increase from the previous
periods due to the amount outstanding at the end of quarter relating to
securities sold under repurchase agreements as noted below, and
increased holdbacks associated with loan and lease receivables sourced
through the bulk purchase program which have shown significant growth
over the past year.
An additional source of financing growth in assets and a source of
liquidity is the use of margin lines and securities sold under
repurchase agreements. At January 31, 2015, there was $15.0 million
outstanding relating to securities sold under repurchase agreements
compared to $nil at the end of the previous quarter and a year ago.
Securitization Liabilities
Securitization liabilities relate to amounts payable to counterparties
for cash received upon initiation of securitization transactions. At
January 31, 2015, securitization liabilities totalled $43.6 million
compared to $43.5 million at the end of the previous quarter and $43.5
million a year ago. There have been no securitization transactions in
the past year. The amounts payable to counterparties bear interest at
rates ranging from 1.97% - 3.95% and mature between 2016 and 2020.
Securitized insured mortgages with a carrying value of $39.8 million and
restricted cash totalling $3.6 million are pledged as collateral for
these liabilities.
Notes Payable
Notes payable, net of issue costs, totalled $75.2 million at January 31,
2015 compared to $75.8 million at the end of the previous quarter and
$75.2 million a year ago. During the three months ended January 31,
2015, the Corporation repaid notes totaling $988,000 and issued an
unsecured note totalling $100,000 bearing interest at 6.0% per annum.
Notes payable are comprised of Series C Notes with a par value of $61.7
million maturing in 2018 and other notes totalling $2.8 million maturing
between 2015 and 2017. The Series C Notes bear interest at 9.00% per
annum. The Series C Notes were modified effective August 27, 2013, to
allow the Corporation at its option, to pay interest on the Series C
Notes either in cash or in-kind in the form of common shares of the Bank
held by the Corporation. The modification also allows, at the option of
the holder, the Series C Notes to be convertible into common shares of
the Bank held by the Corporation. With this modification of the Series C
Notes, $386,000, representing the equity element of the Series C Notes,
net of applicable income taxes, was recorded in shareholders’ equity on
the Consolidated Balance Sheets.
During the period ended January 31, 2015, as payment of the interest due
on the Series C Notes, the Corporation distributed 471,266 common shares
it owned of the Bank. This resulted in the Corporation’s ownership
interest in the Bank decreasing to 86% from 89% at the end of the
previous quarter.
Notes payable also include subordinated notes totalling $14.5 million
issued by the Bank to an unrelated party. These subordinated notes, of
which $4.5 million are currently callable and $10 million are callable
beginning in 2016, bear interest at rates ranging from 8.00% to 11.00%
and mature between 2019 and 2021.
Preferred Share Liabilities
At January 31, 2015, the Corporation had 1,899,058 Class B Preferred
Shares outstanding with a total value of $47.5 million before deducting
issue and conversion costs. As these Class B Preferred Shares carry
certain redemption features and are convertible into common shares of
the Corporation, an amount of $43.1 million, net of issue and conversion
costs, has been classified on the Corporation’s Consolidated Balance
Sheet as Preferred Share Liabilities. In addition, an amount of $3.2
million, net of income taxes and issue costs, has been included in
shareholders’ equity on the Corporation’s Consolidated Balance Sheet. As
the Class B Preferred Shares must be redeemed by the Corporation in 2019
for $47.5 million, the preferred share liability amount of $43.1 million
will be adjusted over the remaining term to redemption until the amount
is equal to the estimated redemption amount. The adjustment is included
in interest expense in the Consolidated Statement of Income (Loss),
calculated using an effective interest rate of 11.8%.
Shareholders’ Equity
At January 31, 2015, shareholders’ equity was $8.2 million compared to
$10.2 million at the end of the previous quarter and $12.5 million a
year ago with the change due to common shares issued by the Corporation
on a private placement basis in the previous quarter and operating
losses incurred by the Corporation during the periods. During the three
months ended October 31, 2014, the Corporation issued through a private
placement, 4,700,000 common shares at $0.60 per share for cash proceeds
of $2,820,000.
Common shares outstanding at January 31, 2015 totalled 41,852,084
compared to 40,145,504 at the end of the previous quarter with the
increase due to 1,706,580 shares issued as payment of the dividends on
the Class B Preferred Shares.
At January 31, 2015, there were 314,572 Class A Preferred Shares
outstanding, unchanged from the previous quarter and a year ago and
1,899,058 Class B Preferred Shares outstanding compared 1,909,458 at the
end of the previous quarter and a year ago. The decrease from the
previous quarter was due to shares repurchased under the Normal Course
Issuer Bids as noted below.
Common share options totalled 468,023 at January 31, 2015, compared to
471,773 at the end of the previous quarter with the decrease due to the
expiry of 3,750 options. At January 31, 2015, there were 40,000 common
share options of the Bank outstanding which is unchanged from the end of
the previous quarter.
Normal Course Issuer Bids
On November 5th, 2014, the Corporation amended the Normal
Course Issuer Bids (NCIBs) that were approved on March 11th,
2015, for its common shares, Class B Preferred Shares and Series C Notes.
During the three months ended January 31, 2015, the Corporation
repurchased 10,400 Class B Preferred Shares for $129,000 under the
Normal Course Issuer Bids.
Reduction of Stated Capital
On May 30, 2012, at a special meeting of the shareholders of the
Corporation, approval was given authorizing the reduction of the stated
capital of the common shares of the Corporation by $50,472,000 and
correspondingly reducing retained earnings (deficit) by the same amount.
There was no impact on total shareholders’ equity.
Updated Share Information
As at March 3, 2015, there were no changes since January 31, 2015 in the
number of outstanding common shares, common share options or Class A
Preferred Shares. As at March 3, 2015 there were 1,894,158 Class B
Preferred Shares outstanding as a result of 4,900 Class B Preferred
Shares being purchased and cancelled under the Normal Course Issuer Bid.
Off-Balance Sheet Arrangements
As at January 31, 2015, the Corporation does not have any significant
off-balance sheet arrangements other than loan commitments and letters
of credit resulting from normal course business activities. See Note 12
to the unaudited interim consolidated financial statements for more
information.
Related Party Transactions
The Corporation’s and the Bank’s Board of Directors and Senior Executive
Officers represent key management personnel. Other than key management
personnel, the Corporation has no other related parties for which there
were transactions or outstanding balances during the period. See Note 13
to the unaudited interim consolidated financial statements for details
on related party transactions and balances.
Risk Management
The risk management policies and procedures of the Corporation are
provided in its annual MD&A for the year ended October 31, 2014, and are
found on pages 39 to 45 of the Corporation’s 2014 Annual Report.
Capital Management and Capital Resources
The Basel Committee on Banking Supervision has published rules
supporting more stringent global standards on capital adequacy and
liquidity (Basel III). Significant changes under Basel III that are most
relevant to the Bank include:
-
Increased focus on tangible common equity.
-
All forms of non-common equity such as the Bank’s conventional
subordinated notes must be NVCC compliant. NVCC compliant means the
subordinated notes must include a clause that would require conversion
to common equity in the event that OSFI deems the institution to be
insolvent or a government is ready to inject a “bail out” payment.
-
Changes in the risk-weighting of certain assets.
-
Additional capital buffers.
-
New requirements for levels of liquidity and new liquidity
measurements.
OSFI requires that all Canadian banks must comply with the Basel III
standards on an “all-in” basis for purposes of determining its
risk-based capital ratios. Required minimum regulatory capital ratios
are a 7.0% Common Equity Tier 1 (CET1) capital ratio and effective
January 1, 2014, an 8.5% Tier 1 capital ratio and 10.5% total capital
ratio, all of which include a 2.5% capital conservation buffer. The
Basel III rules provide for “transitional” adjustments whereby certain
aspects of the new rules will be phased in between 2013 and 2019. The
only available transition allowed by OSFI for capital ratios is related
to the 10 year phase out of non-qualifying capital instruments.
Under the Basel III standards, total capital of the Bank was $159.5
million at January 31, 2015 compared to $158.3 million at the end of the
previous quarter and $137.6 million a year ago. The increase in total
capital from the previous periods was due primarily to earnings in the
Bank during the periods and the issue of Series 1 Preferred Shares
during the previous quarter. At January 31, 2015, the Bank exceeded the
current regulatory capital requirements with a CET1 ratio of 10.97%
compared to 11.25% at the end of the previous quarter and 11.54% a year
ago. In addition, the Bank’s total capital ratio was 13.23% at January
31, 2015, compared to 13.69% at the end of the previous quarter and
12.64% a year ago.
At January 31, 2015, the Bank’s leverage ratio was 8.97%. Effective
January 1, 2015 the previous Assets–to-Capital ratio was replaced by the
Leverage Ratio which is prescribed under the Basel III Accord.
On February 26, 2015, the Bank issued 1,681,320 Non-Cumulative 6-Year
Rate Reset Series 3 Non-Viability Contingent Capital (NVCC) Preferred
Shares for net proceeds of $15.7 million. For the initial 6-year period
ending April 30, 2021, these Series 3 Preferred Shares yield 7%
annually, payable quarterly as and when declared by the Board of
Directors of the Bank. These preferred shares qualify as Additional Tier
1 Capital and will fund continued growth for the Bank.
See Note 14 to the interim consolidated financial statements for more
information regarding capital management.
Interest Rate Risk Management
The Bank is subject to interest rate risk which is the risk that a
movement in interest rates could negatively impact net interest margin,
net interest income and the economic value of assets, liabilities and
shareholders’ equity. The following table provides the duration
difference between the Bank’s assets and liabilities and the potential
after-tax impact of a 100 basis point shift in interest rates on the
Bank’s earnings during a 12 month period and the potential after-tax
impact of a 100 basis point shift in interest rates on the Bank’s
shareholders’ equity over a 60 month period if no remedial actions are
taken.
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
January 31, 2015
|
|
|
|
October 31, 2014
| |
|
|
|
|
Increase 100 bps
|
|
Decrease 100 bps
|
|
Increase 100 bps
|
|
Decrease 100 bps
| |
| | |
| |
| |
| |
| |
| | |
Impact on projected net interest
| | | | | | | | | | | |
income during a 12 month period
| |
$
|
3,209
| |
$
|
(3,173)
| | | |
$
|
3,543
| |
$
|
(3,493)
| |
Impact on reported equity
| | | | | | | | | | | | |
during a 60 month period
| | |
$
|
(764)
| |
$
|
1,162
| | | |
$
|
(319)
| |
$
|
484
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Duration difference between assets and
| | | | | | | | | | | |
liabilities (months)
|
|
|
|
0.1
|
|
|
|
|
|
|
0.2
|
|
| |
The Bank’s sensitivity to changes in interest rates and its duration
difference between assets and liabilities at January 31, 2015 has not
changed significantly since October 31, 2014. As indicated by the above,
at January 31, 2015, the impact on net interest income during a 12 month
period of a 100 basis point increase would be approximately $3.2 million
and the impact on net interest income of a 100 basis point decrease
would be approximately ($3.2 million). Similarly at January 31, 2015,
the impact on equity during a 60 month period of a 100 basis point
increase would be approximately ($764,000) and the impact on equity of a
100 basis point decrease would be approximately $1.2 million. As
indicated by the above, the duration difference between assets and
liabilities shows that the Bank’s assets and liabilities would reprice
at approximately the same time in the event of a change in interest
rates.
Liquidity
PWC Capital Inc., on a non-consolidated basis, has cash obligations
relating primarily to payments of interest on notes payable, the
expected cash portion of dividends on Class B Preferred Shares and
operational requirements. The Corporation on a non-consolidated basis
does not depend on funding to come from its subsidiary, the Bank, other
than normal dividends that may be declared from time to time by the
Bank. As a result, the funding for the obligations is expected to come
primarily from cash and proceeds from the sales of securities and
borrowings.
The unaudited Consolidated Statement of Cash Flows for the three months
ended January 31, 2015 shows cash provided by (used in) operations of
($25.3 million) compared to $59.5 million for the same period last year.
Operating cash flow is primarily affected by the change in the balance
of its deposits (a positive change in deposits has a positive impact on
cash flow and a negative change in deposits has a negative impact on
cash flow) as compared to the change in the balance of its loans (a
positive change in loans has a negative impact on cash flow and a
negative change in loans has a positive impact on cash flow). Based on
factors such as liquidity requirements and opportunities for investment
in loans and securities, the amount of deposits received and loans
funded are managed in ways that result in the balances of these items
giving rise to either negative or positive cash flow from operations.
The Corporation will continue to fund operations and meet contractual
obligations as they become due.
Liquidity Management in the Bank
The Bank has established policies to ensure that its cash outflows and
inflows are closely matched and that its sources of deposits are
diversified between funding sources and over a wide geographic area. The
Bank maintains a conservative investment profile by ensuring:
-
all Bank investments are high quality and include government debt
securities, bankers acceptances and Canadian bank debt;
-
specific investment criteria and procedures are in place to manage the
Bank's securities portfolio;
-
regular review, monitoring and approval of the Bank's investment
policies by the Risk Oversight Committee of the Board of Directors; and
-
quarterly reporting to the Risk Oversight Committee on the composition
of the Bank's securities portfolio.
Liquidity management is further supported by processes, which include
but are not limited to:
-
monitoring of liquidity levels;
-
monitoring of liquidity trends and key risk indicators;
-
scenario stress testing;
-
monitoring the credit profile of the liquidity portfolio; and
-
monitoring deposit concentration.
In order to manage its liquidity needs, the Bank has a liquidity risk
management program that is comprised specifically of the following
policies and procedures:
-
Holding sufficient liquid assets which results in positive cumulative
cash flow for a period of 31 to 60 days.
-
Holding of high quality liquid securities at levels that represent no
less than 8% of total assets. High quality liquid securities include
federal, provincial and municipal debt as well as widely distributed
debt of financial institutions.
-
Maintaining liquid assets at no less than 75% of obligations payable
within 90 days.
-
On a weekly basis, monitoring its cash flow requirements using a
liquidity forecasting template under a highly stressed scenario.
-
On a monthly basis, testing liquidity using three specific disruption
scenarios; specifically, industry specific disruption scenario,
company specific liquidity disruption scenario and a systematic
disruption scenario.
-
Managing liquidity in accordance with guidelines specified by OSFI.
Contractual Obligations
Contractual obligations as disclosed in the MD&A and audited
consolidated financial statements for the year ended October 31, 2014,
have not changed significantly as at January 31, 2015.
Capital Assets
Operations are not dependent upon significant amounts of capital assets
to generate revenue. Currently, the Corporation does not have any
significant commitments for capital expenditures or for significant
additions to its level of capital assets.
Summary of Quarterly Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
($CDN thousands except per share amounts)
|
|
| 2015 |
|
|
|
|
|
| 2014 |
|
|
|
|
|
|
|
| 2013 |
|
|
|
| |
| |
| Q1 |
|
|
| Q4 |
| Q3 |
| Q2 |
| Q1 |
|
|
| Q4 |
| Q3 |
| Q2 | |
| | | | | | | | | | | | | | | | | | | | | |
|
Results of operations: | | | | | | | | | | | | | | | | | | | | | | |
Total interest income
| | |
$
|
15,630
| | | |
$
|
15,080
| |
$
|
14,158
| |
$
|
13,980
| |
$
|
14,953
| | | |
$
|
15,212
| |
$
|
15,246
| |
$
|
14,779
| |
Interest expense
| | | |
10,359
| | | | |
10,382
| | |
10,381
| | |
10,177
| | |
10,852
| | | | |
11,063
| | |
11,356
| | |
11,145
| |
Net interest income
| | | |
5,271
| | | | |
4,698
| | |
3,777
| | |
3,803
| | |
4,101
| | | | |
4,149
| | |
3,890
| | |
3,634
| |
Other income
| | | |
338
| | | | |
791
| | |
619
| | |
886
| | |
337
| | | | |
325
| | |
315
| | |
400
| |
Total revenue
| | | |
5,609
| | | | |
5,489
| | |
4,396
| | |
4,689
| | |
4,438
| | | | |
4,474
| | |
4,205
| | |
4,034
| |
Provision for (recovery of) credit losses
| | | |
502
| | | | |
400
| | |
303
| | |
267
| | |
(51)
| | | | |
125
| | |
154
| | |
266
| |
Non-interest expenses
| | | |
5,588
| | | | |
6,401
| | |
5,436
| | |
5,369
| | |
5,508
| | | | |
5,932
| | |
5,222
| | |
5,828
| |
Restructuring charges
| | | |
-
| | | | |
-
| | |
-
| | |
-
| | |
434
| | | | |
1,275
| | |
287
| | |
118
| |
Income (loss) before income taxes
| | | |
(481)
| | | | |
(1,312)
| | |
(1,343)
| | |
(947)
| | |
(1,453)
| | | | |
(2,858)
| | |
(1,458)
| | |
(2,178)
| |
Income tax provision (recovery)
| | | |
1,088
| | | | |
(283)
| | |
1,135
| | |
858
| | |
767
| | | | |
177
| | |
735
| | |
393
| |
Net income (loss)
| | |
$
|
(1,569)
| | | |
$
|
(1,029)
| |
$
|
(2,478)
| |
$
|
(1,805)
| |
$
|
(2,220)
| | | |
$
|
(3,035)
| |
$
|
(2,193)
| |
$
|
(2,571)
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Net income attributable to non-controlling interests:
| | |
219
| | | | |
284
| | |
103
| | |
107
| | |
86
| | | | |
29
| | |
-
| | |
-
| |
Net income (loss) attributable to shareholders:
| | |
(1,788)
| | | | |
(1,313)
| | |
(2,581)
| | |
(1,912)
| | |
(2,306)
| | | | |
(3,064)
| | |
(2,193)
| | |
(2,571)
| |
Income (loss) per share
| | | | | | | | | | | | | | | | | | | | | | |
Basic
| | |
$
|
(0.05)
| | | |
$
|
(0.04)
| |
$
|
(0.08)
| |
$
|
(0.06)
| |
$
|
(0.07)
| | | |
$
|
(0.10)
| |
$
|
(0.07)
| |
$
|
(0.09)
| |
Diluted
|
|
|
$
|
(0.05)
|
|
|
|
$
|
(0.04)
|
|
$
|
(0.08)
|
|
$
|
(0.06)
|
|
$
|
(0.07)
|
|
|
|
$
|
(0.10)
|
|
$
|
(0.07)
|
|
$
|
(0.09)
| |
The financial results for each of the last eight quarters are summarized
above. The results, particularly total interest income and net interest
income, are comparable between quarters and over the past eight quarters
reflect seasonality occurring primarily in residential construction
lending. Total interest income increased in the first quarter of 2015 as
a result of growth in total assets of the Bank, specifically loan and
lease receivables sourced through the bulk purchase program.
Other income during the quarters shows variability due to the level of
gains realized on the sale of loans. The other component of other income
consists primarily of credit card fees which have been comparable over
the quarters.
Non-interest expenses reflect a strategy to control overhead expenses,
primarily with respect to the credit card program and the timing of
expenses. Restructuring charges in the first quarter of 2014 resulted
from the write-off of unamortized issue costs related to the repayment
of subordinated notes and in the fourth quarter of 2013, relate to
expenses incurred from the IPO.
The provision for income taxes in each of the quarters reflects the
effective statutory income tax rate applied to earnings (losses). The
provision for income taxes in the fourth quarter of 2014 includes a
positive income tax adjustment of $1.2 million relating to a change in
the estimate of previously recognized deferred income tax asset of the
Bank.
Significant Accounting Policies and Use of Estimates and Judgments
Significant accounting policies are detailed in Note 3 of the
Corporation’s 2014 Audited Consolidated Financial Statements. There have
been no material changes in accounting policies since October 31, 2014.
In preparing the consolidated financial statements, management has
exercised judgment and developed estimates in applying accounting
policies and generating reported amounts of assets and liabilities at
the date of the financial statements and income and expenses during the
reporting periods. Areas where significant judgment was applied or
estimates were developed include assessments of impairments of financial
instruments, the calculation of the allowance for credit losses, and the
measurement of deferred income taxes.
It is reasonably possible, on the basis of existing knowledge, that
actual results may vary from that expected in the generation of these
estimates. This could result in material adjustments to the carrying
amounts of assets and/or liabilities in the future.
Estimates and their underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are applied prospectively once
they are recognized.
The policies discussed below are considered particularly significant as
they require management to make estimates or judgements, some of which
may relate to matters that are inherently uncertain.
Financial Instruments
All financial assets are classified as one of the following:
held-to-maturity, loans and receivables, or available-for-sale. All
financial liabilities are classified as other liabilities. Financial
assets held-to-maturity, loans and receivables and financial liabilities
are measured at amortized cost based on the effective interest method.
Available-for-sale instruments are measured at fair value with gains and
losses, net of tax, recognized in other comprehensive income.
Securities
Securities are held primarily for liquidity purposes with the intention
of holding the securities to maturity or until market conditions render
alternative investments more attractive. Settlement date accounting is
used for all securities transactions.
At the end of each reporting period, an assessment is made of whether or
not there is any objective evidence to suggest that a security may be
impaired. Objective evidence of impairment results from one or more
events that occur after the initial recognition of the security which
has an impact that can be reliably estimated on the estimated future
cash flows of the security such as financial difficulty of the issuer.
An impairment loss is recognized for an equity instrument if the decline
in fair value is significant or prolonged, as such circumstances provide
objective evidence of impairment.
Impairment losses on a held-to-maturity security are recognized in
income and loss in the period they are identified. When there is
objective evidence of impairment of an available-for-sale security, the
cumulative loss that has been recorded in accumulated other
comprehensive income is reclassified to income or loss. For
available-for-sale debt securities, if in a subsequent period the
impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was first recognized, then the
previously recognized impairment loss is adjusted through income or loss
to reflect the net recoverable amount of the impaired security. No
adjustments of impairment losses are recognized for available-for-sale
equity securities.
Loans
Loans are initially measured at fair value plus incremental direct
transaction costs. Loans are subsequently measured at amortized cost,
net of allowance for credit losses, using the effective interest method.
On a monthly basis, the Bank assesses whether or not there is any
objective evidence to suggest that the carrying value of the loans may
be impaired. Impairment assessments are facilitated through the
identification of loss events and assessments of their impact on the
estimated future cash flows of the loans.
A loan is classified as impaired when, in management's opinion, there
has been deterioration in credit quality to the extent that there is no
longer reasonable assurance as to the timely collection of the full
amount of principal and interest. Loans, except credit cards, where
interest or principal is contractually past due 90 days are
automatically recognized as impaired, unless management determines that
the loan is fully secured, in the process of collection and the
collection efforts are reasonably expected to result in either repayment
of the loan or restoring it to current status. All loans, except credit
cards, are classified as impaired when interest or principal is past due
180 days, except for loans guaranteed or insured by the Canadian
government, provinces, territories, or a Canadian government agency,
which are classified as impaired when interest or principal is
contractually 365 days in arrears. Credit card receivables are written
off when payments are 180 days past due, or upon receipt of a bankruptcy
notification.
As loans are classified as loans and receivables and measured at
amortized cost, an impairment loss is measured as the difference between
the carrying amount and the present value of future cash flows
discounted using the effective interest rate computed at initial
recognition, if future cash flows can be reasonably estimated. When the
amounts and timing of cash flows cannot be reasonably estimated, the
carrying amount of the loan is reduced to its estimated net realizable
value based on either:
(i) the fair value of any security underlying the loan, net of expected
costs of realization, or,
(ii) observable market prices for the loan.
Impairment losses are recognized in income or loss. If, in a subsequent
period, the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was first
recognized, then a recovery of a portion or all of the previously
recognized impairment loss is adjusted through income or loss to reflect
the net recoverable amount of the impaired loan.
Real estate held for resale is recorded at the lower of cost and fair
value, less costs to sell.
Allowance for Credit Losses
An allowance for credit losses is maintained which, in management’s
opinion, is adequate to absorb all credit related losses in its loan
portfolio. The allowance for credit losses consists of both individual
and collective allowances and is reviewed on a monthly basis. The
allowance is included in loans on the Consolidated Balance Sheets.
Evidence of impairment of loans is assessed at both an individual asset
and collective level. All individually significant loans are assessed
for impairment first. All individually significant loans found not to be
specifically impaired and all loans which are not individually
significant are then collectively assessed for impairment.
The collective allowance is determined by separating loans into
categories that are considered to have common risk elements and
reviewing factors such as current portfolio credit quality trends,
exposure at default, probability of default and loss given default rates
and business and economic conditions. The collective allowance may also
be adjusted by management using its judgment taking into account other
observable and unobservable factors.
Corporate Income Taxes
Current income taxes are calculated based on taxable income at the
reporting period end. Taxable income differs from accounting income
because of differences in the inclusion and deductibility of certain
components of income which are established by Canadian taxation
authorities. Current income taxes are measured at the amount expected to
be recovered or paid using statutory tax rates at the reporting period
end.
The Corporation follows the asset and liability method of accounting for
deferred income taxes. Deferred income tax assets and liabilities arise
from temporary differences between financial statement carrying values
and the respective tax base of those assets and liabilities. Deferred
income tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply to taxable income in
the years when temporary differences are expected to be recovered or
settled.
Deferred income tax assets are recognized in the Corporation’s
consolidated financial statements to the extent that it is probable that
the Corporation will have sufficient taxable income to enable the
benefit of the deferred income tax asset to be realized. Unrecognized
deferred income tax assets are reassessed for recoverability at each
reporting period end.
Future Change in Accounting Policies
IFRS 9: Financial instruments (IFRS 9)
In July, 2014, the IASB issued the final revised IFRS 9 standard which
addresses classification, measurement and impairment of financial
instruments and hedge accounting. IFRS 9 will be effective for the
Corporation’s fiscal year beginning on November 1, 2018, although early
adoption is permitted. IFRS 9 specifies that financial assets be
classified into one of three categories: financial assets measured at
amortized cost, financial assets measured at fair value through profit
or loss or financial assets measured at fair value through other
comprehensive loss. The standard also includes an expected credit loss
model and a general hedging model. The Corporation has performed
preliminary evaluations of the impact of IFRS 9, however the impact on
the Corporation’s consolidated financial statements cannot be quantified
at this time as it is dependent upon the nature of financial instruments
held by the Corporation when IFRS 9 becomes effective.
Controls and Procedures
During the most recent interim period, there have been no changes in the
Corporation’s policies and procedures and other processes that comprise
its internal control over financial reporting, that have materially
affected, or are reasonably likely to materially affect, the
Corporation’s internal control over financial reporting.
At January 31, 2015, an evaluation was carried out by management of the
effectiveness of internal controls over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting
and financial statement compliance with International Financial
Reporting Standards. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer will file a certificate that the
design and operating effectiveness of internal control over financial
reporting were effective. These evaluations were conducted in accordance
with the standards of the 2013 Internal Control - Integrated Framework
of the Committee of Sponsoring Organizations of the Treadway Commission
(COSO), and the requirements of National Instrument 52-109 Certification
of Disclosure in Issuers’ Annual and Interim Filings of the Canadian
Securities Administrators.
Forward-Looking Statements
The statements in this management’s discussion and analysis that relate
to the future are forward-looking statements. By their very nature,
forward-looking statements involve inherent risks and uncertainties,
both general and specific, many of which are out of our control. Risks
exist that predictions, forecasts, projections and other forward-looking
statements will not be achieved. Readers are cautioned not to place
undue reliance on these forward-looking statements as a number of
important factors could cause actual results to differ materially from
the plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements. These factors include, but are not
limited to, the strength of the Canadian economy in general and the
strength of the local economies within Canada in which we conduct
operations; the effects of changes in monetary and fiscal policy,
including changes in interest rate policies of the Bank of Canada;
commodity prices, the effects of competition in the markets in which we
operate; inflation; capital market fluctuations; the timely development
and introduction of new products in receptive markets; the impact of
changes in the laws and regulations regulating financial services;
changes in tax laws; technological changes; unexpected judicial or
regulatory proceedings; unexpected changes in consumer spending and
savings habits; and our anticipation of and success in managing the
risks implicated by the foregoing. For a detailed discussion of certain
key factors that may affect our future results, please see page 46 of
our 2014 Annual Report.
The foregoing list of important factors is not exhaustive. When relying
on forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties
and potential events. The forward-looking information contained in the
management’s discussion and analysis is presented to assist our
shareholders in understanding our financial position and may not be
appropriate for any other purposes. Except as required by securities
law, we do not undertake to update any forward-looking statement that is
contained in this management’s discussion and analysis or made from time
to time by the Corporation or on its behalf.
PWC CAPITAL INC.
Consolidated Balance Sheets
(Unaudited)
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
| |
| | | |
| |
|
January 31
|
|
October 31
|
|
January 31
| |
As at
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
| |
| | | | | | | | | | | |
|
Assets | | | | | | | | | | | |
| | | | | | | | | | | |
|
Cash and cash equivalents
| | | | |
$ 161,239
| |
$ 147,301
| |
$ 211,508
| |
Securities (note 4)
| | | | |
22,774
| |
48,800
| |
62,503
| |
Loans, net of allowance for credit losses (note 5)
| |
1,305,142
| |
1,224,247
| |
1,136,132
| |
Other assets
| | | | | |
25,530
| |
23,097
| |
23,929
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
$1,514,685
|
|
$1,443,445
|
|
$1,434,072
| |
| | | | | | | | | | | |
|
Liabilities and Equity | | | | | | | | | | |
| | | | | | | | | | | |
|
Deposits
| | | | | |
$1,246,943
| |
$1,193,797
| |
$1,221,247
| |
Notes payable (note 6)
| | | | |
75,158
| |
75,832
| |
75,209
| |
Securitization liabilities (note 7)
| | | |
43,596
| |
43,466
| |
43,539
| |
Other liabilities
| | | | | |
63,651
| |
46,558
| |
27,045
| |
Preferred share liabilities (note 8)
|
|
|
|
43,085
|
|
43,137
|
|
42,615
| |
| | | | | | |
1,472,433
| |
1,402,790
| |
1,409,655
| |
| | | | | | | | | | | |
|
Equity attributable to shareholders:
| | | | | | | | | |
|
Share capital (note 9)
| | | | |
32,715
| |
32,644
| |
28,259
| |
|
Retained earnings (deficit)
| | | |
(24,541)
| |
(22,466)
| |
(15,804)
| |
|
Accumulated other comprehensive income
|
|
41
|
|
17
|
|
61
| |
| | | | | | |
8,215
| |
10,195
| |
12,516
| |
Non-controlling interests
|
|
|
|
|
34,037
|
|
30,460
|
|
11,901
| |
| | | | | | |
42,252
| |
40,655
| |
24,417
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
$1,514,685
|
|
$1,443,445
|
|
$1,434,072
| |
The accompanying notes are an integral part of these interim
Consolidated Financial Statements.
PWC CAPITAL INC.
Consolidated Statements of Loss
(Unaudited)
(thousands of Canadian dollars, except per share amounts)
|
|
|
|
| |
|
|
|
|
|
|
|
for the three months ended
| |
| | | | | |
|
January 31
|
|
January 31
| |
|
|
|
|
|
|
|
2015
|
|
2014
| |
| | | | | | | | | |
|
Interest income:
| | | | | | | | | |
|
Loans
| | | | | |
$
|
14,256
| |
$
|
13,049
| |
|
Securities
| | | | | | |
538
| | |
773
| |
|
Loan fees
|
|
|
|
|
|
|
836
|
|
|
1,131
| |
| | | | | | | |
15,630
| | |
14,953
| |
Interest expense:
| | | | | | | | |
|
Deposits and other
| | | | | |
7,249
| | |
7,529
| |
|
Notes payable
| | | | | |
1,965
| | |
2,081
| |
|
Preferred share liabilities
|
|
|
|
|
1,145
|
|
|
1,242
| |
| | | | | | | |
10,359
| | |
10,852
| |
|
|
|
|
|
|
|
|
|
| |
Net interest income
| | | | | |
5,271
| | |
4,101
| |
| | | | | | | | | |
|
Other income (note 10)
|
|
|
|
|
|
338
|
|
|
337
| |
Total revenue
| | | | | | |
5,609
| | |
4,438
| |
| | | | | | | | | |
|
Provision for (recovery of) credit losses (note 5)
|
|
|
|
502
|
|
|
(51)
| |
| | | | | | | |
5,107
| | |
4,489
| |
Non-interest expenses:
| | | | | | | | |
|
Salaries and benefits
| | | | | |
2,693
| | |
2,692
| |
|
General and administrative
| | | | |
2,533
| | |
2,414
| |
|
Premises and equipment
|
|
|
|
|
362
|
|
|
402
| |
| | | | | | | |
5,588
| | |
5,508
| |
|
Restructuring charges (note 6)
|
|
|
|
|
-
|
|
|
434
| |
| | | | | | | |
5,588
| | |
5,942
| |
|
|
|
|
|
|
|
|
|
| |
Loss before income taxes
| | | | | |
(481)
| | |
(1,453)
| |
| | | | | | | | | |
|
Income tax provision (note 11)
| | | | |
1,088
| | |
767
| |
|
|
|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
|
|
$
|
(1,569)
|
|
$
|
(2,220)
| |
| | | | | | | | | |
|
Net income attributable to non-controlling interests
| |
$
|
219
| |
$
|
86
| |
| | | | | | | | | |
|
Net income (loss) attributable to shareholders of PWC:
| |
$
|
(1,788)
| |
$
|
(2,306)
| |
|
|
|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
|
|
$
|
(1,569)
|
|
$
|
(2,220)
| |
| | | | | | | | | |
|
Basic loss per share
| | | | |
$
|
(0.05)
| |
$
|
(0.07)
| |
| | | | | | | | | |
|
Diluted loss per share
| | | | |
$
|
(0.05)
| |
$
|
(0.07)
| |
| | | | | | | | | |
|
Weighted average number of common shares outstanding
|
|
|
40,721,000
|
|
|
32,087,000
| |
The accompanying notes are an integral part of these interim
Consolidated Financial Statements.
PWC CAPITAL INC.
Consolidated Statements of Comprehensive
Loss
(Unaudited)
(thousands of Canadian dollars)
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
for the three months ended
| |
| | | | | |
|
January 31
|
|
January 31
| |
|
|
|
|
|
|
|
2015
|
|
2014
| |
| | | | | | | | | |
|
Net loss
| | | | | |
$
|
(1,569)
| |
$
|
(2,220)
| |
| | | | | | | | | |
|
Other comprehensive loss, net of tax
| | | | | | |
|
Net unrealized gains on assets held as available-for-sale (1) | | |
27
| | |
43
| |
|
|
|
|
|
|
|
|
|
| |
Comprehensive loss
|
|
|
|
|
$
|
(1,542)
|
|
$
|
(2,177)
| |
| | | | | | | | | |
|
Total comprehensive income (loss) attributable to:
| | | | | |
|
Shareholders
| | | | |
$
|
(1,764)
| |
$
|
(2,267)
| |
|
Non-controlling interests
|
|
|
|
|
222
|
|
|
90
| |
|
|
|
|
|
|
|
$
|
(1,542)
|
|
$
|
(2,177)
| |
(1) Net of income tax expense for three months of $10 (2014 – $16)
The accompanying notes are an integral part of these interim
Consolidated Financial Statements.
PWC CAPITAL INC.
Consolidated Statements of Changes in Equity
(Unaudited)
(thousands of Canadian dollars)
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
for the three months ended
| |
|
| | | | |
|
January 31
|
|
January 31
| |
|
|
|
|
|
|
|
|
2015
|
|
|
2014
| |
| | | | | | | | | |
|
Common shares (note 9(a)):
| | | | | | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
25,637
| |
$
|
19,294
| |
Issued on payment of Class B preferred share dividends
| | |
671
| | |
674
| |
Issued during the period, net of issue costs
| | | |
-
| | |
843
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
26,308
|
|
$
|
20,811
| |
| | | | | | | | | |
|
Preferred shares (note 9(a)):
| | | | | | | |
| | | | | | | | | |
|
Class A preferred shares |
|
|
|
|
|
| |
Balance, beginning and end of the period
|
|
|
$
|
1,061
|
|
$
|
1,061
| |
| | | | | | | | | |
|
Class B preferred shares | | | | | | | |
Balance, beginning of the period
| | | |
$
|
3,187
| |
$
|
3,187
| |
Purchased for cancellation
| | | | |
(25)
| | |
-
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
3,162
|
|
$
|
3,187
| |
| | | | | | | | | |
|
Contributed surplus (note 9(b)):
| | | | | | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
2,817
| |
$
|
2,743
| |
Fair value of stock options
| | | | |
7
| | |
22
| |
Purchase of preferred shares for cancellation
| | | |
25
| | |
-
| |
Other
| | | | | | | |
-
| | |
49
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
2,849
|
|
$
|
2,814
| |
| | | | | | | | | |
|
Other equity (note 6):
| | | | | | | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
(58)
| |
$
|
386
| |
Loss on distribution of subsidiary shares
| | | |
(607)
| | |
-
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
(665)
|
|
$
|
386
| |
| | | | | | | | | |
|
| | | | | | | | | |
|
Total share capital
|
|
|
|
|
$
|
32,715
|
|
$
|
28,259
| |
PWC CAPITAL INC.
Consolidated Statements of Changes in
Equity - continued
(Unaudited)
(thousands of Canadian dollars)
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
for the three months ended
| |
| |
| | | |
|
January 31
|
|
January 31
| |
|
|
|
|
|
|
|
|
2015
|
|
|
2014
| |
| | | | | | | | | |
|
Retained earnings (deficit):
| | | | | | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
(22,466)
| |
$
|
(13,432)
| |
Net loss attributable to shareholders
| | | |
(1,788)
| | |
(2,306)
| |
Dividends paid
| | | | | | |
(66)
| | |
(66)
| |
Dividends paid by subsidiary
| | | | |
(221)
| | |
-
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
(24,541)
|
|
$
|
(15,804)
| |
| | | | | | | | | |
|
Accumulated other comprehensive income net of taxes:
| | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
17
| |
$
|
22
| |
Other comprehensive income
| | | | |
27
| | |
43
| |
Change in non-controlling interests
| | | |
(3)
| | |
(4)
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
41
|
|
$
|
61
| |
| | | | | | | | | |
|
Total shareholders' equity
|
|
|
|
$
|
8,215
|
|
$
|
12,516
| |
| | | | | | | | | |
|
Non-controlling interests:
| | | | | | | |
| | | | | | | | | |
|
Balance, beginning of the period
| | | |
$
|
30,460
| |
$
|
11,809
| |
Net income attributable to non-controlling interests
| | |
219
| | |
86
| |
Impact of subsidiary shares distributed (note 6)
| | |
3,384
| | |
-
| |
Other comprehensive income (loss) attributable to non-controlling
interests
| | |
3
| | |
4
| |
Dividends paid by subsidiary
| | | | |
(36)
| | |
-
| |
Other
| | | | | | | |
7
| | |
2
| |
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
|
$
|
34,037
|
|
$
|
11,901
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
$
|
42,252
|
|
$
|
24,417
| |
The accompanying notes are an integral part of these interim
Consolidated Financial Statements.
PWC CAPITAL INC.
Consolidated Statements of Cash Flows
(Unaudited)
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
| |
| | | | | | |
|
January 31
|
|
|
|
January 31
| |
for the three months ended
|
|
|
|
|
2015
|
|
|
|
2014
| |
| | | | | | | | | | | | |
|
Cash provided (used in):
| | | | | | | | | | |
| | | | | | | | | | | | |
|
Operations:
| | | | | | | | | | | |
|
Net loss
| | | | | |
$ (1,569)
| | | |
$ (2,220)
| |
|
Adjustments to determine net cash flows:
| | | | | | | | |
| |
Items not involving cash:
| | | | | | | | | |
| | |
Provision for (recovery of) credit losses
| | |
502
| | | |
(51)
| |
| | |
Income tax provision
| | | |
1,088
| | | |
767
| |
| | |
Stock-based compensation
| | |
7
| | | |
22
| |
| | |
Interest income
| | | |
(15,630)
| | | |
(14,953)
| |
| | |
Interest expense
| | | |
10,359
| | | |
10,852
| |
| | |
Restructuring charges
| | | |
-
| | | |
434
| |
| |
Interest received
| | | |
15,827
| | | |
14,866
| |
| |
Interest paid
| | | | |
(8,079)
| | | |
(10,881)
| |
| |
Income taxes paid
| | | |
-
| | | |
-
| |
|
Change in operating assets and liabilities:
| | | | | | | | |
| |
Mortgages and loans
| | | |
(81,151)
| | | |
23,114
| |
| |
Deposits
| | | | |
53,388
| | | |
33,785
| |
|
|
Change in other assets and liabilities
|
|
|
(67)
|
|
|
|
3,726
| |
| | | | | | | |
(25,325)
| | | |
59,461
| |
Investing:
| | | | | | | | | | | | |
|
Purchase of securities
| | | |
-
| | | |
(34,877)
| |
|
Proceeds from sale and maturity of securities
|
|
|
25,603
|
|
|
|
12,365
| |
| | | | | | | |
25,603
| | | |
(22,512)
| |
Financing:
| | | | | | | | | | | | |
|
Other financings
| | | | |
15,000
| | | |
-
| |
|
Notes payable
| | | | |
(888)
| | | |
3,488
| |
|
Purchase of preferred shares for cancellation (note 9(a))
| |
(129)
| | | |
-
| |
|
Repayment of notes by subsidiary
| | |
-
| | | |
(7,000)
| |
|
Proceeds of shares issued, net of costs
| | |
-
| | | |
843
| |
|
Dividends paid
| | | | |
(66)
| | | |
(66)
| |
|
Dividends paid by subsidiary
|
|
|
|
(257)
|
|
|
|
-
| |
| | | | | | | |
13,660
| | | |
(2,735)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
(Decrease) increase in cash and cash equivalents
| | |
13,938
| | | |
34,214
| |
| | | | | | | | | | | | |
|
Cash and cash equivalents, beginning of the period
| | |
147,301
| | | |
177,294
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents, end of the period
|
|
|
$ 161,239
|
|
|
|
$ 211,508
| |
| | | | | | | | | | | | |
|
Cash and cash equivalents is represented by:
| | | | | | | | |
|
Cash
| | | | | | |
$ 41,348
| | | |
$ 211,508
| |
|
Cash equivalents
| | | | |
119,891
| | | |
-
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents, end of the period
|
|
|
$ 161,239
|
|
|
|
$ 211,508
| |
The accompanying notes are an integral part of these interim
Consolidated Financial Statements.
PWC CAPITAL INC.
Notes to Interim Consolidated Financial
Statements
(Unaudited)
Three month periods ended January 31, 2015 and 2014
1.Reporting entity:
PWC Capital Inc. (the “Corporation” or “PWC”), is a holding company
whose shares trade on the Toronto Stock Exchange. It is incorporated and
domiciled in Canada, and maintains its registered office at Suite 2002,
140 Fullarton Street, London, Ontario, Canada, N6A 5P2.
The Corporation’s principal subsidiary is Pacific & Western Bank of
Canada (“PWB” or the “Bank”) which operates as a Schedule I bank under
the Bank Act (Canada) and is regulated by the Office of the
Superintendent of Financial Institutions (OSFI). The Bank, whose common
shares and preferred shares trade on the Toronto Stock Exchange, is
involved in the business of providing commercial lending services to
selected niche markets.
2.Basis of preparation:
a) Statement of compliance:
These interim Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB) and have
been prepared in accordance with International Accounting Standard (IAS)
34 – Interim Financial Reporting and do not include all of the
information required for full annual financial statements. These
interim Consolidated Financial Statements should be read in conjunction
with the Corporation’s audited Consolidated Financial Statements for the
year ended October 31, 2014.
The interim Consolidated Financial Statements for the three months ended
January 31, 2015 and 2014 were approved by the Audit Committee of the
Board of Directors on March 3, 2015.
b) Basis of measurement:
These interim Consolidated Financial Statements have been prepared on
the historical cost basis except for securities designated as
available-for-sale that are measured at fair value in the Consolidated
Balance Sheets.
c) Functional and presentation currency:
These interimConsolidated Financial Statements are presented in
Canadian dollars which is the Corporation’s functional currency. Except
as indicated, the financial information presented has been rounded to
the nearest thousand.
d) Use of estimates and judgments:
In preparing these interimConsolidated Financial Statements,
management has exercised judgment and developed estimates in applying
accounting policies and generating reported amounts of assets and
liabilities at the date of the financial statements and income and
expenses during the reporting periods. Areas where significant judgment
was applied or estimates were developed include the calculation of the
allowance for credit losses, assessments of impairments of financial
instruments, and the measurement of deferred income taxes.
It is reasonably possible, on the basis of existing knowledge, that
actual results may vary from that expected in the generation of these
estimates. This could result in material adjustments to the carrying
amounts of assets and/or liabilities in the future.
Estimates and their underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are applied prospectively once
they are recognized.
3.Significant accounting policies:
The accounting policies applied by the Corporation in these interim
Consolidated Financial Statements are the same as those applied by the
Corporation as at and for the year ended October 31, 2014 and are
detailed in Note 3 of the Corporation’s 2014 Audited Consolidated
Financial Statements. There have been no material changes in accounting
policies.
4.Securities:
Portfolio analysis:
|
|
|
|
|
|
|
|
|
| |
|
| | |
|
January 31
|
|
October 31
|
|
January 31
| |
|
|
|
|
|
2015
|
|
2014
|
|
2014
| |
| | | | | | | | | |
|
Available-for-sale securities | | | | | | | |
Securities issued or guaranteed by:
| | | | | | | |
|
Canadian federal government
| |
$
|
-
| |
$
|
-
| |
$
|
5,050
| |
|
Canadian provincial governments
| | |
9,625
| | |
9,581
| | |
15,670
| |
|
Canadian municipal governments
| | |
553
| | |
554
| | |
877
| |
Term deposits
|
|
|
|
-
|
|
|
26,055
|
|
|
25,723
| |
Total available-for-sale securities
|
|
$
|
10,178
|
|
$
|
36,190
|
|
$
|
47,320
| |
| | | | | | | | | |
|
Held-to-maturity security | | | | | | | | |
Debt of other financial insitutions
|
|
$
|
12,596
|
|
$
|
12,610
|
|
$
|
15,183
| |
Total securities
|
|
|
$
|
22,774
|
|
$
|
48,800
|
|
$
|
62,503
| |
All available-for-sale securities are carried at fair value based on
quoted market prices (Level 1) except for term deposits and Canadian
municipal debt which fall into Level 2 of the fair value hierarchy. See
Note 3 (c) of the October 31, 2014 consolidated financial statements for
more information.
5.Loans:
a) Portfolio analysis:
|
|
|
|
|
|
|
| |
|
|
|
January 31
|
|
October 31
|
|
January 31
| |
|
|
|
|
2015
|
|
|
2014
|
|
|
2014
| |
| | | | | | | |
|
| | | | | | | |
|
Government financing
| | |
$
|
84,429
| |
$
|
87,332
| |
$
|
114,877
| |
Residential multi-family mortgages
| | | |
116,682
| | |
122,686
| | |
132,951
| |
Commercial and consumer loans and leases
| | | |
630,968
| | |
548,240
| | |
348,570
| |
Commercial mortgages
| | | |
440,628
| | |
432,567
| | |
506,401
| |
Credit card receivables
| | | |
26,960
| | |
27,972
| | |
28,344
| |
Other loans
|
|
|
|
3,980
|
|
|
3,967
|
|
|
3,884
| |
| | | |
1,303,647
| | |
1,222,764
| | |
1,135,027
| |
| | | | | | | |
|
Collective allowance
| | | |
(3,050)
| | |
(2,905)
| | |
(2,923)
| |
Accrued interest
| | | |
4,545
| | |
4,388
| | |
4,028
| |
|
|
|
|
|
|
|
| |
Total loans, net of allowance for credit losses
|
|
|
$
|
1,305,142
|
|
$
|
1,224,247
|
|
$
|
1,136,132
| |
The collective allowance for credit losses relates to the following loan
portfolios:
|
|
|
|
|
|
|
| |
|
|
|
January 31
|
|
October 31
|
|
January 31
| |
|
|
|
2015
|
|
2014
|
|
2014
| |
| | | | | | | |
|
Government financing
| | |
$ 15
| |
$ 13
| |
$ 15
| |
Residential multi-family mortgages
| | |
61
| |
66
| |
40
| |
Commercial and consumer loans and leases
| | |
508
| |
507
| |
391
| |
Commercial mortgages
| | |
1,398
| |
1,332
| |
1,596
| |
Credit card receivables
| | |
1,044
| |
962
| |
858
| |
Other loans
|
|
|
24
|
|
25
|
|
23
| |
|
|
|
$ 3,050
|
|
$ 2,905
|
|
$ 2,923
| |
The Corporation holds security against the majority of its loans in the
form of mortgage interests over property, other registered securities
over assets, guarantees and cash held for holdbacks on commercial and
consumer loans and lease receivables.
b) Allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
| |
| | |
| |
| |
|
January 31
|
|
January 31
| |
| | | | | | | | |
2015
| | |
2014
| |
For the three months ended
|
|
|
Collective
|
|
Individual
|
|
Total Allowance
|
|
Total Allowance
| |
| | | | | | | | | | |
|
Balance, beginning of the period
| |
$
|
2,905
| |
$
|
-
| |
$
|
2,905
| |
$
|
3,275
| |
Provision for credit losses
| | | |
502
| | |
-
| | |
502
| | |
(51)
| |
Write-offs
| | | | |
(357)
| | |
-
| | |
(357)
| | |
(301)
| |
|
|
|
|
|
|
|
|
|
|
| |
Balance, end of the period
|
|
|
$
|
3,050
|
|
$
|
-
|
|
$
|
3,050
|
|
$
|
2,923
| |
The allowance for credit losses results from the following:
c) Impaired loans:
At January 31, 2015, there were no impaired loans (October 31, 2014 -
$nil). At January 31, 2015, loans, other than credit card receivables,
past due but not impaired, totalled $nil (October 31, 2014 - $nil). At
January 31, 2015, credit card receivables overdue by one day or more but
not impaired totalled $2,839,000 (October 31, 2014 - $2,999,000).
6.Notes payable:
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
January 31
|
|
October 31
|
|
January 31
| |
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2014
| |
| | | | | | | | | | | |
|
Ten year term Series C Notes unsecured, maturing 2018, net of
issue costs of $nil (October 31, 2014 - $nil), effective
interest of 10.85%
| | | | | | | |
| | | | | | |
$
|
58,473
| |
$
|
58,285
| |
$
|
57,762
| |
| |
Ten year term, unsecured, callable, subordinated notes payable
by the Bank to an unrelated party, maturing between 2019 and
2021, net of issue costs of $615 (October 31, 2014 - $637),
effective interest of 10.06%
| | | | | | | |
| | | | | | | |
13,885
| | |
13,863
| | |
13,796
| |
| | | | | | | | | | | |
|
Notes payable, unsecured, maturing between 2015 and 2017, net
of issue costs of $nil (October 31, 2014 - $4) effective interest
of 6.07%
| | | | | | | |
| | | | | | | |
2,800
| | |
3,684
| | |
3,651
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
$
|
75,158
|
|
$
|
75,832
|
|
$
|
75,209
| |
The Series C Notes were modified effective August 27, 2013, to allow the
Corporation at its option, to pay interest on the Series C Notes either
in cash or in-kind in the form of common shares of the Bank held by the
Corporation. The modification also allows, at the option of the holder,
the Series C Notes to be convertible into common shares of the Bank held
by the Corporation.
At December 31, 2014, as payment of the interest due on the Series C
Notes, the Corporation distributed 471,266 common shares it held of the
Bank. This resulted in the Corporation’s ownership interest in the
common shares of the Bank reducing to 86% from 89%.
During the three months ended January 31, 2014, the Bank repaid
$7,000,000 in subordinated notes which had a carrying value of
$6,566,000. The difference of $434,000 relating to unamortized note
issue costs was included in restructuring charges in the Consolidated
Statements of Loss. There were no charges during the three months ended
January 31, 2015.
7.Securitization liabilities:
Securitization liabilities include amounts payable to counterparties for
cash received upon initiation of securitization transactions, accrued
interest on amounts payable to counterparties, and the unamortized
balance of deferred costs and discounts which arose upon initiation of
the securitization transactions.
The amounts payable to counterparties bear interest at rates ranging
from 1.97% - 3.95% and mature between 2016 and 2020. Securitized insured
mortgages with a carrying value of $39,766,000 (October 31, 2014 -
$39,982,000) and restricted cash of $3,591,000 (October 31, 2014 -
$3,367,000) are pledged as collateral for these liabilities.
8.Preferred share liabilities:
At January 31, 2015, the Corporation has outstanding 1,899,058 (October
31, 2014 - 1,909,458) Class B Preferred Shares with a face value of
$47.5 million (October 31, 2014 – $47.7 million) less unamortized issue
costs of $1.7 million (October 31, 2014 – $1.8 million). As these Class
B Preferred Shares carry certain redemption features and are convertible
into common shares of the Corporation, an amount of $43.1 million
(October 31, 2014 – $43.1 million), net of issue costs, has been
classified on the Corporation’s Consolidated Balance Sheets as a
preferred share liability. In addition, an amount of $3.2 million
(October 31, 2014 – $3.2 million) representing the equity element of the
Class B Preferred Shares, net of issue costs, has been classified in
share capital on the Consolidated Balance Sheets.
As the preferred shares must be redeemed by the Corporation in 2019 for
approximately $47.5 million, the preferred share liability amount of
$43.1 million (October 31, 2013 – $43.1 million) is being adjusted over
the remaining term to redemption, until the amount is equal to the
estimated redemption amount. The adjustment is included in interest
expense in the Consolidated Statement of Loss calculated using an
effective interest rate of 11.8%.
9.Share capital:
a) Share capital:
|
|
|
|
|
|
|
|
|
|
| |
|
| | |
|
| |
|
Stock Options
| |
|
|
|
|
|
|
Common shares outstanding
|
|
Number
|
|
Weighted- average exercise price
| |
| | | | | | | | |
| | |
Outstanding, October 31, 2014
| | | |
40,145,504
| |
471,773
| |
$
|
6.25
| |
Issued pursuant to Class B Preferred Share dividend
| | |
1,706,580
| |
-
| | |
-
| |
Expired
|
|
|
|
|
|
-
|
|
(3,750)
|
|
|
8.00
| |
Outstanding, January 31, 2015
|
|
|
|
41,852,084
|
|
468,023
|
|
$
|
6.24
| |
During the three months ended January 31, 2015 the Corporation purchased
and cancelled a total of 10,400 (January 31, 2014 – nil) Class B
Preferred Shares through a Normal Course Issuer Bid. At January 31,
2015, there were 314,572 (October 31, 2014 - 314,572) Class A Preferred
Shares outstanding and 1,899,058 (October 31, 2014 - 1,909,458) Class B
Preferred Shares outstanding.
b) Stock-based compensation:
During the three months ended January 31, 2015, the Corporation
recognized compensation expense of $7,000 (January 31, 2014 - $6,000)
relating to the estimated fair value of stock options granted in prior
periods by the Corporation and the Bank. No stock options were granted
by the Corporation or the Bank during the current period.
The Corporation recorded amounts in the Consolidated Statement of Loss
relating to DSU’s for the three months ended January 31, 2015 of $14,000
recovery (January 31, 2014 - $22,000 recovery). At January 31, 2015
there were 160,660 (October 31, 2014 – 160,660) DSU’s of the Corporation
outstanding.
10.Other income:
|
|
|
|
|
| |
|
|
|
for the three months ended
| |
| |
|
January 31
|
|
January 31
| |
|
|
|
|
2015
|
|
|
2014
| |
| | | | | |
|
Credit card non-interest revenue
| |
$
|
326
| |
$
|
327
| |
Other income
| | | |
12
| | |
10
| |
|
|
|
|
|
| |
|
|
|
$
|
338
|
|
$
|
337
| |
11. Income taxes:
The Corporation’s statutory federal and provincial income tax rate is
approximately 27%, similar to that of the previous periods. The
effective rate is impacted by the tax benefit on operating losses in the
Corporation on a non-consolidated basis not being recorded for
accounting purposes, and certain items not being taxable or deductible
for income tax purposes. The provision for income taxes consists of the
following items:
|
|
|
|
|
|
|
| |
(thousands of Canadian dollars)
|
|
|
|
for the three months ended
| |
| |
| |
|
January 31
|
|
January 31
| |
|
|
|
|
|
2015
|
|
2014
| |
| | | | | | | |
|
Income tax on earnings of the Bank
| | | |
$ 651
| |
$ 380
| |
Income tax on dividends paid by the Corporation
| |
437
| |
387
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
$ 1,088
|
|
$ 767
| |
12. Commitments and contingencies:
The amount of credit related commitments represents the maximum amount
of additional credit that the Corporation could be obligated to extend.
Under certain circumstances, the Corporation may cancel loan commitments
at its option. The amounts with respect to the letters of credit are not
necessarily indicative of credit risk as many of these arrangements are
contracted for a limited period of usually less than one year and will
expire or terminate without being drawn upon.
|
|
|
|
|
|
|
| |
|
|
|
January 31
|
|
October 31
|
|
January 31
| |
|
|
|
2015
|
|
2014
|
|
2014
| |
| | | | | | | |
|
Loan commitments
| | |
$
|
224,028
| |
$
|
195,148
| |
$
|
126,694
| |
Undrawn credit card lines
| | | |
155,019
| | |
159,306
| | |
155,221
| |
Letters of credit
| | | |
38,896
| | |
43,926
| | |
38,434
| |
|
|
|
|
|
|
|
| |
|
|
|
$
|
417,943
|
|
$
|
398,380
|
|
$
|
320,349
| |
13.Related party transactions:
The Corporation’s and the Bank’s Board of Directors and the
Corporation’s Senior Executive Officers represent key management
personnel. Other than key management personnel, the Corporation has no
other related parties for which there were transactions or balances
outstanding during the periods.
The Corporation issues both mortgages and personal loans to employees
and key management personnel. At January 31, 2015 amounts due from key
management personnel totalled $2,013,000 (October 31, 2014 - $2,013,000)
and are unsecured. The interest rates charged on these loans are similar
to those charged in an arms-length transaction. Interest income earned
on the above loans for the three months ended January 31, 2015 was
$17,000 (January 31, 2014 - $22,000). There were no provisions for
credit losses related to loans issued to key management personnel for
the three months ended January 31, 2015 and 2014.
14.Capital management:
a) Overview:
The Corporation’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain future
development of the business. The impact of the level of capital on
shareholders’ return is also important and the Corporation recognizes
the need to maintain a balance between the higher returns that might be
possible with greater leverage and the advantages and security afforded
by a sound capital position.
The Corporation’s principal subsidiary is Pacific & Western Bank of
Canada, (the “Bank”) and as a result, the following discussion on
capital management is with respect to the capital management of the
Bank. The Bank operates as a bank under the Bank Act (Canada) and
is regulated by the Office of the Superintendent of Financial
Institutions Canada (OSFI). OSFI sets and monitors capital requirements
for the Bank.
Capital is managed in accordance with policies and plans that are
regularly reviewed and approved by the Board of Directors and take into
account forecasted capital needs and conditions in financial markets.
The goal is to maintain adequate regulatory capital to be considered
well capitalized, protect consumer deposits and provide capacity for
internally generated growth and strategic opportunities that do not
otherwise require accessing the public capital markets, all the while
providing a satisfactory return to shareholders. The Bank’s regulatory
capital is comprised of share capital, retained earnings (deficit) and
unrealized gains and losses on available-for-sale securities (Common
Equity Tier 1 capital), preferred shares (Additional Tier 1 capital) and
the qualifying amount of subordinated notes (Tier 2 capital).
The Bank monitors its capital adequacy and related capital ratios on a
daily basis and has policies setting internal maximum and minimum
amounts for its capital ratios. These capital ratios consist of the
leverage ratio and the risk-based capital ratios.
During the three months ended January 31, 2015 there were no material
changes in the Bank’s management of capital.
b) Risk-Based Capital Ratio:
The Basel Committee on Banking Supervision has published the Basel III
rules supporting more stringent global standards on capital adequacy and
liquidity (Basel III).
OSFI requires that all Canadian banks must comply with the Basel III
standards on an “all-in” basis for purposes of determining its
risk-based capital ratios. The required minimum regulatory capital
ratios are a 7.0% Common Equity Tier 1 (CET1) capital ratio and
effective January 1, 2014, an 8.5% Tier 1 capital ratio and 10.5% total
capital ratio, all of which include a 2.5% capital conservation buffer.
The Basel III rules provide for “transitional” adjustments whereby
certain aspects of the new rules will be phased in between 2013 and
2019. The only available transition allowed by OSFI for capital ratios
is related to the 10 year phase out of non-qualifying capital
instruments.
OSFI also requires banks to measure capital adequacy in accordance with
guidelines for determining risk adjusted capital and risk-weighted
assets including off-balance sheet credit instruments as specified in
the Basel III regulations. Based on the deemed credit risk for each type
of asset, assets held by the Bank are assigned a weighting of 0% to 150%
to determine the risk-based capital ratios.
The Bank’s risk-based capital ratios are calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
January 31, 2015
|
|
|
|
January 31, 2014
| |
|
|
|
|
|
|
"All-in"
|
|
"Transitional"
|
|
|
|
"All-in"
|
|
"Transitional"
| |
| | | | |
| |
| |
|
|
| |
| | |
Common Equity Tier 1 (CET1) capital
| | | | | | | | | | | | |
|
Directly issued qualifying common share capital
| |
$
|
142,352
| |
$
|
142,352
| | | |
$
|
142,296
| |
$
|
142,296
| |
|
Retained earnings (deficit)
| | | |
(2,071)
| | |
(2,071)
| | | | |
(8,194)
| | |
(8,194)
| |
|
Accumulated other comprehensive income
|
|
|
46
|
|
|
46
|
|
|
|
|
67
|
|
|
67
| |
CET1 capital before regulatory adjustments
| | |
140,327
| | |
140,327
| | | | |
134,169
| | |
134,169
| |
|
Total regulatory adjustments to CET1
|
|
|
(8,096)
|
|
|
(3,239)
|
|
|
|
|
(8,447)
|
|
|
(1,689)
| |
Common Equity Tier 1 capital
|
|
|
$
|
132,231
|
|
$
|
137,088
|
|
|
|
$
|
125,722
|
|
$
|
132,480
| |
| | | | | | | | | | | | | | |
|
Additional Tier 1 (AT1) capital
| | | | | | | | | | | | |
|
Directly issued qualifying AT1 instruments
|
|
$
|
13,647
|
|
$
|
13,647
|
|
|
|
$
|
-
|
|
$
|
-
| |
Tier 1 capital
|
|
|
|
$
|
145,878
|
|
$
|
150,735
|
|
|
|
$
|
125,722
|
|
$
|
132,480
| |
| | | | | | | | | | | | | | |
|
Tier 2 capital
| | | | | | | | | | | | | | |
|
Directly issued capital instruments subject to
| | | | | | | | | | | |
|
phase out from Tier 2
|
|
|
|
$
|
13,600
|
|
$
|
13,600
|
|
|
|
$
|
14,500
|
|
$
|
14,500
| |
Tier 2 capital before regulatory adjustments
| | |
13,600
| | |
13,600
| | | | |
14,500
| | |
14,500
| |
|
Total regulatory adjustments to Tier 2 capital
|
|
|
-
|
|
|
-
|
|
|
|
|
(2,588)
|
|
|
(518)
| |
Tier 2 capital
|
|
|
|
|
$
|
13,600
|
|
$
|
13,600
|
|
|
|
$
|
11,912
|
|
$
|
13,982
| |
Total capital
|
|
|
|
|
$
|
159,478
|
|
$
|
164,335
|
|
|
|
$
|
137,634
|
|
$
|
146,462
| |
Total risk-weighted assets
|
|
|
$
|
1,205,585
|
|
$
|
1,210,443
|
|
|
|
$
|
1,089,269
|
|
$
|
1,098,096
| |
Capital ratios
| | | | | | | | | | | | | |
|
CET1 Ratio
| | | | |
10.97%
| | |
11.33%
| | | | |
11.54%
| | |
12.06%
| |
|
Tier 1 Capital Ratio
| | | | |
12.10%
| | |
12.45%
| | | | |
11.54%
| | |
12.06%
| |
|
Total Capital Ratio
|
|
|
|
|
13.23%
|
|
|
13.58%
|
|
|
|
|
12.64%
|
|
|
13.34%
| |
c) Leverage Ratio:
On January 1, 2015, the assets-to-capital multiple was replaced by a
leverage ratio that is prescribed under the Basel III Accord. The
leverage ratio is a supplementary measure to the risk-based capital
requirements and is defined as the ratio of Tier 1 capital to its
exposure measure. The Bank’s leverage ratio is calculated as follows:
|
|
|
| |
| |
|
January 31
| |
|
|
|
|
2015
| |
| | | |
|
On-balance sheet assets
| | |
$
|
1,518,795
| |
Asset amounts deducted in determining Basel III "all in" Tier 1
Capital
|
|
|
(8,096)
| |
Total on-balance sheet exposures
| | | |
1,510,699
| |
| | | |
|
Off-balance sheet exposure at gross notional amount
| | |
$
|
417,943
| |
Adjustments for conversion to credit equivalent amount
|
|
|
|
(302,012)
| |
Off-balance sheet items
| | | |
115,931
| |
| | | |
|
Tier 1 Capital
| | | |
145,878
| |
Total Exposures
| | | |
1,626,630
| |
| | | |
|
Basel III Leverage Ratio
|
|
|
|
8.97%
| |
The Bank was in compliance with the leverage ratio prescribed by OSFI
throughout the period presented.
15.Interest rate position:
The Bank is subject to interest rate risk which is the risk that a
movement in interest rates could negatively impact net interest margin,
net interest income and the economic value of assets, liabilities and
shareholders’ equity. The following table provides the duration
difference between the Bank’s assets and liabilities and the potential
after-tax impact of a 100 basis point shift in interest rates on the
Bank’s earnings during a 12 month period and the potential after-tax
impact of a 100 basis point shift in interest rates on the Bank’s
shareholders’ equity over a 60 month period if no remedial actions are
taken.
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
January 31, 2015
|
|
|
|
October 31, 2014
| |
|
|
|
|
Increase 100 bps
|
|
Decrease 100 bps
|
|
Increase 100 bps
|
|
Decrease 100 bps
| |
| | |
| |
| |
| |
| |
| | |
Impact on projected net interest
| | | | | | | | | | | |
income during a 12 month period
| |
$
|
3,209
| |
$
|
(3,173)
| | | |
$
|
3,543
| |
$
|
(3,493)
| |
Impact on reported equity
| | | | | | | | | | | |
during a 60 month period
| |
$
|
(764)
| |
$
|
1,162
| | | |
$
|
(319)
| |
$
|
484
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Duration difference between assets and
| | | | | | | | | | | |
liabilities (months)
|
|
|
|
0.1
|
|
|
|
|
|
|
0.2
|
|
| |
16.Fair Value of Financial Instruments:
Fair values are based on management’s best estimates of market
conditions and valuation policies at a certain point in time. The
estimates are subjective and involve particular assumptions and matters
of judgment and as such, may not be reflective of future fair values.
The Corporation’s loans and deposits lack an available market as they
are not typically exchanged. Therefore, they are not necessarily
representative of amounts realizable upon immediate settlement.
Changes in interest rates are the main cause of changes in the fair
value of the Corporation’s financial instruments. The carrying value of
loans, deposits and notes payable are not adjusted to reflect increases
or decreases in fair value due to interest rate changes as the
Corporation’s intention is to realize their value over time by holding
them to maturity. See Note 23 to the October 31, 2014 consolidated
financial statements for more information on fair values.
|
|
|
|
|
|
|
|
|
|
| |
|
|
January 31, 2015
|
|
|
|
October 31, 2014
| |
|
| |
|
Fair value
|
|
|
| |
|
Fair value
| |
| |
Carrying
| |
of assets
| | | |
Carrying
| |
of assets
| |
|
|
Value
|
|
and liabilities
|
|
|
|
Value
|
|
and liabilities
| |
| | | | | | | | | | |
|
Assets
| | | | | | | | | | | |
| | | | | | | | | | |
|
Cash and cash equivalents
| |
$
|
161,239
| |
$
|
161,239
| | | |
$
|
147,301
| |
$
|
147,301
| |
Securities
| | |
22,774
| | |
22,659
| | | | |
48,800
| | |
48,671
| |
Loans
| | |
1,305,142
| | |
1,313,797
| | | | |
1,224,247
| | |
1,224,730
| |
Other financial assets
| | |
4,115
| | |
4,115
| | | | |
3,793
| | |
3,793
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
$
|
1,493,270
|
|
$
|
1,501,810
|
|
|
|
$
|
1,424,141
|
|
$
|
1,424,495
| |
| | | | | | | | | | |
|
Liabilities
| | | | | | | | | | | |
| | | | | | | | | | |
|
Deposits
| |
$
|
1,246,943
| |
$
|
1,261,576
| | | |
$
|
1,193,797
| |
$
|
1,198,530
| |
Notes payable
| | |
75,158
| | |
62,345
| | | | |
75,832
| | |
63,850
| |
Securitization liabilities
| | |
43,596
| | |
48,495
| | | | |
43,466
| | |
46,732
| |
Other financial liabilities
| | |
63,651
| | |
63,651
| | | | |
46,558
| | |
46,558
| |
Preferred share liabilities
| | |
43,085
| | |
26,205
| | | | |
43,137
| | |
21,943
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
$
|
1,472,433
|
|
$
|
1,462,272
|
|
|
|
$
|
1,402,790
|
|
$
|
1,377,613
| |
17.Subsequent Event:
On February 26, 2015, the Bank issued 1,681,320 Non-Cumulative 6-Year
Rate Reset Series 3 Non-Viability Contingent Capital (NVCC) Preferred
Shares for net proceeds of $15.7 million. For the initial 6-year period
ending April 30, 2021, these Series 3 Preferred Shares yield 7%
annually, payable quarterly as and when declared by the Board of
Directors of the Bank. These preferred shares qualify as Additional Tier
1 Capital and will fund continued growth for the Bank.
Pacific & Western Bank of Canada (PWBank), a Schedule I chartered bank,
is a branchless financial institution with over $1.5 billion in assets.
PWBank specializes in providing commercial lending services to selected
niche markets and receives its deposits through a diversified deposit
broker network across Canada.
PWC Capital Inc. shares trade on the TSX under the symbol PWC.
On behalf of the Board of Directors: David R. Taylor, President & C.E.O.
To receive company news releases, please contact:
Wade MacBain at wadem@pwccapital.com
(519) 488-1280
Contacts:
PWC Capital Inc.
Investor Relations:
519-488-1280
wadem@pwccapital.com
or
Public
Relations & Media:
Tel Matrundola, 519-488-1280
Vice-President
telm@pwccapital.com
Visit our website at: http://pwccapital.com
Source: PWC Capital Inc.
© 2024 Canjex Publishing Ltd. All rights reserved.