A customer walks out of a Canadian Western Bank branch in Calgary, June 9, 2009.Todd Korol/Reuters
Canadian Western Bank’s CWB-T shares tumbled Friday after the lender suddenly postponed the release of its fourth-quarter earnings, sparking speculation across Bay Street at a time when National Bank of Canada NA-T is waiting for approval to buy the Edmonton-based bank.
CWB’s stock price dropped 5.4 per cent in Toronto as investors try to make sense of the abrupt change in plans. The bank – which was set to release its fiscal year-end results early Friday morning – released a statement at 2:40 a.m. ET, saying that it will reschedule its earnings publication to an unspecified date in mid-December, but providing no explanation for the delay.
Separately, CWB announced a 3-per-cent increase to its quarterly dividend.
CWB’s change in plans has left investors speculating on whether the delay was caused by a shift in the fate of National Bank’s pending acquisition of CWB.
During a conference call Wednesday discussing fourth-quarter earnings, National Bank chief executive officer Laurent Ferreira said that the deal is in the final stages of approvals.
“Our proposed acquisition of Canadian Western Bank will be a key pillar in our domestic growth in 2025 and for the years to come,” Mr. Ferreira said during the call. “We look forward to bringing together two strong teams and highly complementary platforms to accelerate our growth. The approval process is progressing well.”
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, is currently reviewing the proposal, he said. The final step will be for Finance Minister Chrystia Freeland to green-light the deal. He added that he expects the deal to close in early 2025.
Previously, the bank anticipated the deal would close in late 2025.
In a note to clients in late November before banks reported fourth-quarter earnings, Bank of Nova Scotia analyst Meny Grauman said National Bank could close the CWB deal before Christmas.
In recent quarters, CWB has grappled with higher-than-expected provisions for loans that could default. In third-quarter earnings released at the end of August, the bank said that the increase in provisions was driven by two specific client accounts, and that it did not expect further issues.
Mr. Grauman said that those issues should not affect the odds of the deal closing.
“Given its pending acquisition by NA, CWB is also in a unique position where results are unlikely to drive material moves in the stock,” Mr. Grauman said in the note. “That said, credit was worse than expected in Q3, and although we expect it to normalize in Q4, it will be under the spotlight when the bank reports year-end results.”
In June, National Bank of Canada announced its intention to buy Canadian Western Bank in a deal that extends the reach of the country’s sixth-largest lender into Alberta and British Columbia.
National Bank struck a stock-swap deal that values Canadian Western Bank at $5-billion.
At the time, National Bank said it would gain $37-billion in loans across 65,000 customers and 39 branches in Western Canada and Ontario. The deal would increase the bank’s Canadian lending portfolio outside of Quebec by 37 per cent.
Shares of National Bank closed down 1.8 per cent Friday on the Toronto Stock Exchange.
National Bank and CWB did not immediately respond to requests for comment.