New Purchase: I Bought A New Bank

Hey everyone, today I am going to share with you a recent purchase I made. As the title of the post says I bought a new bank. The bank is Canadian but not one of the big six that we have in the country. I decided to purchase a regional bank that I thought was a good buying opportunity. The bank I purchased is Laurentian Bank.

What Does This Company Do?

 
Laurentian Bank of Canada provides personal banking, business solutions as well as real estate and commercial financing to individuals and small- to medium-sized businesses. Laurentian Bank’s business-to-business, or B2B, subsidiary provides banking products to brokers and financial services across Canada. The bank also provides investors with brokerage services through its Laurentian Bank Securities subsidiary. The business operates through five lines: retail services, business services, B2B bank, Laurentian Bank securities and capital markets, and LBC financial services.

Source: Morningstar

Laurentian Bank is mostly based and focused on the Quebec market. The majority of its branches are in Quebec, but does have some spread out throughout Canada. In 2017 the bank established a small presence in the United States when they purchased Northpoint Commercial Finance which is among the leading US and Canadian inventory finance lenders.

Over the past few years Laurentian Bank has been growing steadily, there were a couple of hiccups profit wise in 2013 and 2015 but other than that the numbers continue to rise. I will now share with you some charts I created to show you some of the areas I researched before making this purchase.

Revenue

Like any business it is important to grow your revenue and build up your business. In nine years Laurentian has gone from having revenues of $666 million to $996 million in my opinion that is impressive for a regional bank. So far through three quarters of their current financial year revenue has increased another 8%.

Net Income

Along with its growing revenue the bank’s net income is also increasing. Last year it earned over $200 million for the first time. Through three quarters this year net income has increased 18%.

Deposits

The bank continues to attract new money from their current client base and new clients. As of July 31st deposits stood at just over $29 billion so they are continuing to grow in 2018.

Dividends

As a dividend investor I tend to look at a company’s dividends first to see if their dividends are growing every year, and if the can afford to pay a dividend. With Laurentian Bank they have been growing their dividend for quite awhile now, and I don’t see this stopping anytime soon.

Dividend Payout Percentage

The bank’s payout percentage is under 50% as of July 31st it stood at 47.6%. This tells us that the dividend is sustainable and they should be able to continue to raise the dividend in the years to come.

The Purchase

So let’s get to the purchase shall we! On September 7th I purchased 94 shares of Laurentian Bank. The purchased was in my Tax Free Savings Account (TFSA), when I made the purchase the shares were trading 7 cents of their 52 week low. The shares were priced $42.27 when the buy was made.

Income

Laurentian Bank currently pays a quarterly dividend of $0.64, so my income will increase $60.16 quarterly and $240.64 annually.

So what do you think of my purchase? Do you own Laurentian Bank? Please feel free to leave a comment I always enjoy reading what you have to say.

Thanks

Matthew

 

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