Canadian Western Bank T.CWB

This Quarters Results.

[DeanEdmonton]

Not much to say, the verbage from management does not match the numbers. Another quarter of really medicore results. ROE bites, expenses are growing faster than revenue and loan growth is pretty anemic. Net interest margins did not improve, which would be expected given their business mix and the fact half their loans are funded with hot money. In fact rising interest rates are likely to supress loan demand in their target market. Loan loss provisions seem to be on the light side. The only postive is the growth in branch deposits.

[bubba9]

Take Optimum Mortgage results out of the mix. I dare you....

[DeanEdmonton]

Yes, that would make them even uglier for sure.

[zforzebra]

DE, I'm not a shareholder yet but you paint a bad picture of the company. All the things you point out look factual.  Another fact however is that their divs are stable and growing though slowly for a long time, so it does speak to the strength of the business model.

[DeanEdmonton]

Somehow responded to the wrong post the first time. There is a long list of stocks that trade below their peers, Suncor, Manulife, Laurentian Bank, and on it goes. They have for years and there is a good reason they trade at a discount - performance and poor management. I always buy the best managed in any sector, in Banks that is RY, TD and for a smaller one National. CWB's results speak for

[zforzebra]

DE, Just looking at stock perfomance.  CWB is clearly worse than its peers.  For a turnaround play, I'm looking at the relative ability for the company to survive a downturn ahead.  I think it should be okay in that regard.  Do you think there is serious chance it can go under? The fact that is it trades only in the TSE, whereas the banks trade in the NYSE as well, is a

[DeanEdmonton]

Commercial lending will always be more risky than mortgage or retail lending. If 100% of the portfolio was mortgages, at least 60% would be insured, meaning the Bank suffers zero loss on delfault. On the remaining 40%, to be uninsured the borrower had to put down at least 25%. Until house prices drop more than 25% from what the mortgaged house was bought at, not necessarily the most recent highs

[zforzebra]

What the insurers of the mortgages go broke?  Would the banks face a real loss then?

[bubba9]

Most are CMHC insured and that's the gov't....So, no chance. The stress test by OSFI on all the banks gave them a bill of health. It's been far worse than this before folks but this is where we make money. Load up on cash cuz you'll want to hit the buy button soon till your trigger finger hurts. Personally waiting for CWB to hit $20 and I'll dabble. I expect that to be next

[bubba9]

And most insured mortgages are sold off through an MBS anyway. ...

[zforzebra]

Yeah, gotta have cash to pick the deals.  If these banks don't go under, every bank is cheap.  CWB is one of the cheapest (with good reasons)