Canadian Western Bank (CWB) Q3 2024 earnings summary

Executive summary

• Pre-tax, pre-provision income grew 4% year-over-year in Q3, driven by targeted loan growth and improved net interest margin, despite a significant increase in provision for credit losses mainly due to two large impaired loans.

• Net income for common shareholders was $41 million in Q3 2024, down 50% year-over-year and 46% sequentially, with diluted EPS at $0.43, down 50% year-over-year.

• NBC transaction costs of $19.7–$20 million were incurred, excluded from adjusted metrics.

• Announced a definitive agreement to be acquired by National Bank, with shareholder vote and regulatory reviews underway; closing expected in 2025.

• The bank remains confident in its secured lending model and expects credit losses to return to historical ranges in Q4.

Financial highlights

• Adjusted earnings per share (EPS) was $0.43 in Q3 2024, down from $0.86 in Q3 2023, with a decrease of CAD 0.28 year-over-year due to higher provision for credit losses.

• Net interest income increased 5% year-over-year and 6% sequentially; net interest margin rose by 12 basis points year-over-year and 9 basis points sequentially.

• Non-interest income decreased 4% sequentially but was up 10% year-over-year.

• Non-interest expenses rose 20% year-over-year, including NBC transaction-related costs.

• Common share dividend declared at $0.35 per share, up 6% year-over-year.

Outlook and guidance

• Sequential loan growth expected in Q4 within disciplined risk appetite and pricing framework, with approximately 1% loan growth in Q4 and 2% for fiscal 2024.

• Net interest margin anticipated to continue expanding in Q4.

• Adjusted EPS guidance for Q4 set at $0.86–$0.91; for fiscal 2024, $3.20–$3.25.

• Provisions for credit losses expected to trend back toward historical range in Q4, with significant improvement in financial performance anticipated.

• Continued focus on profitable growth within a disciplined and secured lending model.