Laurentian Bank of Canada Q2 2026 Earnings Report

Laurentian Bank of Canada EPS Results

• Actual EPS: C$0.46
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Laurentian Bank of Canada Revenue Results

• Actual Revenue: $236.16 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Laurentian Bank of Canada Announcement Details

• Quarter: Q2 2026
• Date: 5/29/2026
• Time: Before Market Opens
• Conference Call Date: Friday, May 29, 2026
• Conference Call Time: 9:00AM ET

Founded in Montreal in 1846, Laurentian Bank is committed to serving its customers and fostering deep relationships with specialized groups. Laurentian Bank runs operations across Canada - primarily in Québec and Ontario - as well as in the United States and competes where it sees market opportunity and has an edge, while harnessing the power of partnerships and collaboration.

Laurentian Bank of Canada Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Laurentian Bank said it made meaningful progress on the planned transactions with National Bank and Fairstone, with Competition Act approval now satisfied and both deals still expected to close by the end of 2026.
• Positive Sentiment: The bank reported strong commercial loan growth in its specialization teams, including 5% quarter-over-quarter growth in inventory financing and a 9% increase in the commercial real estate pipeline.
• Neutral Sentiment: Adjusted second-quarter results were softer, with net income of CAD 22.6 million, EPS of CAD 0.46, and an ROE of 3.4%, while revenue declined year-over-year and sequentially.
• Negative Sentiment: Provision for credit losses rose to 31 basis points, mainly because of one large commercial file in a sector the bank no longer serves, which management described as an isolated issue.
• Neutral Sentiment: Management guided to additional Q3 transaction-related charges of about CAD 40 million pre-tax, with loans expected to decline 2% to 3% and PCLs likely in the high teens.

Presentation

[Operator]

Welcome to Laurentian Bank Financial Results Call. Please note that this call is being recorded. I would now like to turn the meeting over to Raphaël Ambeault, Vice President, Finance and Investor Relations. Please go ahead, Raphaël.

[Raphaël Ambeault, VP of Finance and Investor Relations at Laurentian Bank]

[Non-English content] Good morning and thank you for joining us. Today's opening remark will be delivered by Éric Provost, President and CEO, the review of the second quarter financial result will be presented by Yvan Deschamps, Executive Vice President and CFO. After which, we'll invite questions from the phone. Also joining us for the question period is Christian De Broux, Executive Vice President and CRO. All documents pertaining to the quarter can be found on our website in the investor relations section.

[Raphaël Ambeault, VP of Finance and Investor Relations at Laurentian Bank]

I'd like to remind you that during this conference call, forward-looking statement may be made, it is possible that actual results may differ materially from those projected in such statements. For the complete cautionary note regarding forward-looking statement, please refer to our press release or to slide two of the presentation.

[Raphaël Ambeault, VP of Finance and Investor Relations at Laurentian Bank]

I would also like to remind listeners that the bank assesses its performance on a reported and adjusted basis and consider both to be useful in assessing underlying business performance. Éric and Yvan will be referring to adjusted results in their remarks, unless otherwise noted as reported. I will now turn the call over to Éric.

[Éric Provost, President and CEO at Laurentian Bank]

[Non-English content] Raphaël [Non-English content] Good morning and thank you for being with us today. Our focus continue to be firmly anchored in serving our customers and managing our operations with discipline. I would like to begin by thanking our employees for their focus and commitment during this challenging period as we navigate an uncertain macroeconomic environment while supporting the migration and sale process, and while continuing to effectively manage the Bank's day-to-day operations.

[Éric Provost, President and CEO at Laurentian Bank]

Moving on to our loan performance, our commercial specialization teams delivered another strong quarter in driving solid performance with combined commercial loan growth of 2.4%, excluding the syndication portfolio sale. Inventory financing performed well with loan growth of 5% quarter-over-quarter, while our dealer base grew by 4%, highlighting the continued expansion of our network.

[Éric Provost, President and CEO at Laurentian Bank]

In commercial real estate, the portfolio grew by 1% quarter-over-quarter, while the pipeline increased by 9%, positioning us well for future growth. Overall, our commercial specialization continued to deliver high-quality growth fully aligned with our transformation plan. In terms of Provision for Credit Losses, the ratio increased to 31 basis point, primarily driven by a single large commercial file in an industry where we no longer operate.

[Éric Provost, President and CEO at Laurentian Bank]

Importantly, this remains an isolated situation, and we are confident that our portfolio is appropriately reserved, reflecting its overall quality and performance. This quarter marked meaningful progress in advancing the announced transactions with National Bank and Fairstone, with several key milestones achieved. As a reminder, closing remains subject to regulatory approvals and other closing conditions.

[Éric Provost, President and CEO at Laurentian Bank]

We have made solid progress on both fronts, and as things stands, the Competition Act approval condition for both transactions has been satisfied, provided that there is no change in circumstances relating to the Competition Bureau. Operationally, the portfolio migration is progressing well and remains on track. Based on our current trajectory, we continue to expect both transactions to close by the end of 2026. I will now turn the call over to Yvan to review our financial performance.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

[Non-English content] I would like to begin by turning to slide six, which has been added to provide details on the adjusting items for the second quarter of 2026, which totaled CAD 43.2 million after tax, or CAD 0.96 per share. We recorded the following charges stemming from the transactions announced in December on an after-tax basis. Severance and employee benefits for CAD 12.9 million. Accelerated amortization of software and other intangible assets for CAD 7.8 million.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Charges related to onerous contracts, leases, and other for CAD 1.4 million. Impairment of premises and equipment for CAD 900,000. Transaction and conversion costs for CAD 3.7 million. During the quarter, we also announced the closing of the syndicated loan transaction, which resulted in a net loss of CAD 16.6 million after tax. Quarterly comparison is available on slide 21 and in the second quarter report to shareholders. Turning to slide seven, it highlights the bank's financial performance for the second quarter of 2026.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

On a reported basis, total revenue for the quarter was CAD 213.7 million, down 12% compared to last year and 15% quarter-over-quarter. Net loss and diluted loss per share were CAD 20.6 million and CAD 0.50 respectively. The remainder of my comments will be on an adjusted basis and also be on a total loans and total deposits basis as the balance sheet outlines separately for Q2, the assets held for sale and the liability directly associated with them.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Total revenue for the quarter was CAD 236.2 million, down 3% compared to last year and 6% quarter-over-quarter. The diluted EPS of CAD 0.46 decreased by 37% year-over-year and by 29% quarter-over-quarter. Net income of CAD 22.6 million was down by 33% compared to last year and was down by 34% sequentially. The bank's efficiency ratio increased by 240 basis points compared to last year due to our investments and by 90 basis points sequentially.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Our ROE for the quarter stood at 3.4%, down 180 basis points year-over-year and 110 basis points quarter-over-quarter. Slide eight shows net interest income up by CAD 2.8 million, or 2% year-over-year from the growth of average earning assets and higher commercial loan concentration. On a sequential basis, net interest income was down by CAD 9.8 million, or 5% from the shorter quarter and the impact of the syndicated loan transaction.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Our net interest margin at 1.84% was down one basis point year-over-year and down five basis points quarter-over-quarter. Sequential reduction was driven by the non-recurrence of loan repricing lags and favorable repayments recorded in the first quarter of 2026. Slide nine highlights the bank's funding position. On a sequential basis, total funding was up by CAD 300 million from an increase of the debt-related securitization activities and wholesale deposits.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

The bank maintained a healthy liquidity coverage ratio through the quarter, which remained at the higher end of the industry. Slide 10 presents other income of CAD 51.1 million, which was lower by 15% compared to last year and by 10% compared to last quarter. The decrease mostly related to income from financial instruments. Slide 11 shows non-interest expenses of CAD 183.2 million, up 1% year-over-year and down 5% sequentially, mainly from seasonally lower salaries and employee benefits and a streamlined workforce.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Slide 12 presents the CET1 ratio, which increased by 10 basis points to 11% due to the net impact of the syndicated loan transaction. Slide 13 highlights our total commercial loan portfolio, which increased by about CAD 800 million year-over-year and decreased by about CAD 300 million sequentially as the growth in commercial real estate and inventory financing was more than offset by the reduction due to the sale of the syndication loan portfolio in the second quarter of 2026. Slide 14 provides details of our inventory financing portfolio.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

This quarter, utilization rates were 46%, an increase of 1% quarter-over-quarter. Slide 15 illustrates that 2/3 of our commercial real estate portfolio is residential, with most of it in multi-residential housing. The LTV on the uninsured multi-residential portfolio stood prudently at 60%. Slide 16 presents the bank's total residential mortgage portfolio. Total residential mortgage loans were down 3% year-over-year and 2% on a sequential basis. We adhere to cautious underwriting standards and are confident in the quality of our portfolio.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

This is reflected in our 63% proportion of insured mortgages and a low loan-to-value ratio of 52% on the uninsured portion. Total allowances for credit losses on slide 17 totaled CAD 181.4 million, down CAD 11.2 million compared to last quarter, mostly from lower allowances on impaired commercial loans. Turning to slide 18, the Provision for Credit Losses was CAD 26.9 million, an increase of CAD 10.2 million from a year ago from higher provision on impaired commercial loans.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Sequentially, PCLs were up CAD 10.4 million for the same reasons. As a percentage of average loans, PCLs increased by 12 basis points year-over-year and by 13 basis points quarter-over-quarter to 31 basis points. Slide 19 provides an overview of impaired loans. Gross impaired loans decreased by CAD 50.6 million year-over-year and increased by CAD 6.7 million sequentially, driven by commercial loans. As we look ahead to the third quarter of 2026, I would like to provide some remarks. We will incur additional transaction-related charges in Q3 in the CAD 40 million range pre-tax.

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

This is essentially the continuance of the charges incurred or gradually amortized over the current fiscal year. We expect loans to decline by roughly 2%-3%, mainly due to the seasonal reduction in inventory financing and a reduction in residential mortgages. The reduction in inventory financing will also drive the NIM down. Regarding the adjusted efficiency ratio, Q3 should be relatively aligned with Q2. We expect PCLs to be in the high teens. Our tax rate is also expected to be in the high teens. Capital and liquidity levels are solid and expected to remain strong for Q3. Reminder that there is an LRCN interest payment next quarter. I will now turn the call back to the operator.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please. Again, to ask a question, please press star one. Your first question comes from Paul Holden with CIBC. Your line is now open.

[Paul Holden, Analyst at CIBC]

Oh, thank you. Good morning.

[Éric Provost, President and CEO at Laurentian Bank]

Good morning, Paul.

[Paul Holden, Analyst at CIBC]

Yeah. Good to see the news on the Competition Bureau approval. Can you give us a sense of, does that come a little bit earlier than original plan? I guess the reason I ask is there's some commentary recently from regulators in terms of suggesting sort of these transactions move faster in pace versus how they have historically. Just wondering if this transaction is indeed sort of moving along a little bit quicker than originally expected.

[Éric Provost, President and CEO at Laurentian Bank]

Well, I would comment, Paul, this is Éric, that we're pretty much on track. We've been collaborating with all instances of regulatory, and we believe things are moving along with what we expected. Not really earlier, just I think the timing is according to plan so far.

[Paul Holden, Analyst at CIBC]

Okay. Remind me, that is end of calendar 2026?

[Éric Provost, President and CEO at Laurentian Bank]

Yes. As I said in my comments-

[Paul Holden, Analyst at CIBC]

Yeah. Okay.

[Éric Provost, President and CEO at Laurentian Bank]

...we expect this to close in 2026.

[Paul Holden, Analyst at CIBC]

Okay. That is calendar, not fiscal.

[Éric Provost, President and CEO at Laurentian Bank]

It is calendar, yep.

[Paul Holden, Analyst at CIBC]

Yeah. Okay. Thank you for that. Just curious what you're seeing in terms of credit performance in the CRE book. I don't believe the higher losses this quarter are related to that. We've certainly seen some other banks put up higher losses in CRE. Just, you commented on the LTV etc. Just wondering if you're seeing any higher delinquency rates or any kind of negative movement on that portfolio.

[Éric Provost, President and CEO at Laurentian Bank]

Yeah. Thank you, Paul. Yeah. For the transaction we highlighted, this is not CRE related, but I would leave Christian for a few comments on that topic.

[Christian De Broux, EVP and Chief Risk Officer at Laurentian Bank]

Okay. Thank you for the question. I would just say that our CRE book is performing as expected according to historical normal variations. No concern there. The big file that we've incurred a loss on obviously is in a sector like we said, that we've exited, so obviously not CRE.

[Paul Holden, Analyst at CIBC]

Yeah. Okay. No concerns on CRE. Book's kind of performing in line with expectations?

[Christian De Broux, EVP and Chief Risk Officer at Laurentian Bank]

It's performing in line. You're asking a CRO if there's no worry. No, I always worry, but by and large, we're quite comfortable with the book at this point.

[Paul Holden, Analyst at CIBC]

Okay. That's good. One final question from me would just be, how do you think about the, I'll call it the capital stack or the different funding layers you have in place for the business today, obviously particular to commercial versus what might make sense as a private company. That question particularly comes into mind when you just mentioned the reminder on the LRCN next quarter. Is that the type of thing that still makes sense as a private company?

[Yvan Deschamps, EVP and CFO at Laurentian Bank]

Yeah. Thank you for the question. This is Yvan, Paul. I'll take this one. We are still a standalone company, so we still have the requirements in terms of capital stacks that we need to be in good standings with regulation and with, obviously, the regulator. There's no change from a standalone perspective. Obviously, once the company gets into Fairstone will have to make his own calls on a consolidated basis, but until the closing of the transaction, we need to manage as a standalone business.

[Paul Holden, Analyst at CIBC]

Okay. Got it. That's it for me. Thank you.

[Éric Provost, President and CEO at Laurentian Bank]

Thank you, Paul.

[Operator]

A final reminder, ladies and gentlemen, if you have a question or comment, please press star one. This concludes the Q&A session. I will now hand the meeting over to Éric Provost for closing remarks.

[Éric Provost, President and CEO at Laurentian Bank]

Thank you. We continue to make steady progress towards the completion of our agreements with Fairstone and National Bank on maintaining a clear focus on supporting our customers and employees. Although important steps remain, we are well-positioned and confident in our ability to execute on our priorities. I would also like to recognize and thank our employees for their dedication and continued commitment as Laurentian Bank navigates this important transition. Thank you, and I wish you all a great rest of the day.

[Operator]

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.

Participants

Analysts

• Christian De Broux, EVP and Chief Risk Officer at Laurentian Bank
• Paul Holden, Analyst at CIBC
• Raphaël Ambeault, VP of Finance and Investor Relations at Laurentian Bank
• Yvan Deschamps, EVP and CFO at Laurentian Bank
• Éric Provost, President and CEO at Laurentian Bank