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Canadian Western Bank | Investor Presentation 1 Fourth Quarter 2024 Financial Results Conference Call December 18, 2024
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Canadian Western Bank | Investor Presentation 2 From time to time, we make written and verbal forward-looking statements. Statements of this type are included in our Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as media releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about our objectives and strategies, targeted and expected financial results and the outlook for CWB’s businesses or for the Canadian economy. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “may increase”, “may impact”, “goal”, “focus”, “potential”, “proposed” and other similar expressions, or future or conditional verbs such as “will”, “should”, “would” and “could”. By their very nature, forward-looking statements involve numerous assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations, and conclusions will not prove to be accurate, that our assumptions may not be correct, and that our strategic goals will not be achieved. A variety of factors, many of which are beyond our control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in Canada including housing and commercial real estate market conditions and household and business indebtedness, the volatility and level of liquidity in financial markets, fluctuations in interest rates and currency values, the volatility and level of various commodity prices, changes in monetary policy, changes in economic and political conditions, material changes to trade agreements, legislative and regulatory developments, changes in supervisory expectations or requirements for capital, interest rate and liquidity management, legal developments, the level of competition, the occurrence of natural catastrophes, outbreaks of disease or illness that affect local, national or international economies, changes in accounting standards and policies, information technology and cyber risk, the accuracy and completeness of information we receive about customers and counterparties, the ability to attract and retain key personnel, the ability to complete and integrate acquisitions, reliance on third parties to provide components of business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, the impact of bank failures or other adverse developments at other banks that drive negative investor and depositor sentiment regarding the stability and liquidity of banks, the expected timing of completion of the transaction pursuant to which National Bank of Canada (NBC) proposes to acquire all of the issued and outstanding CWB common shares by way of a share exchange (the NBC transaction), and the conditions precedent to the closing of the NBC transaction, including the required approvals; that the transaction will be completed on the terms currently contemplated; assumptions about future events, including economic conditions and proposed courses of action, based on management’s assessment of the relevant information available as of the date hereof; and our ability to anticipate and manage the risks associated with these factors. It is important to note that the preceding list is not exhaustive of possible factors. Additional information about these factors can be found in the Risk Management section of our 2024 Annual MD&A. These and other factors should be considered carefully, and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward- looking statements. Any forward-looking statements contained in this document represent our views as of the date hereof. Unless required by securities law, we do not undertake to update any forward- looking statement, whether written or verbal, that may be made from time to time by us or on our behalf. The forward-looking statements contained in this document are presented for the purpose of assisting readers in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes. Assumptions about the performance of the Canadian economy over the forecast horizon and how it will affect our business are material factors considered when setting organizational objectives and targets. In determining expectations for economic growth, we consider our own forecasts, economic data and forecasts provided by the Canadian government and its agencies, as well as certain private sector forecasts. These forecasts are subject to inherent risks and uncertainties that may be general or specific. Where relevant, material economic assumptions underlying forward-looking statements are disclosed within the Fiscal 2025 Outlook and Allowance for Credit Losses section of our 2024 Annual MD&A., which are available on SEDAR at www.sedarplus.ca. Forward-looking statements Advisory
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Canadian Western Bank | Investor Presentation 3 Well positioned to deliver improved performance Chris Fowler President and Chief Executive Officer
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Canadian Western Bank | Investor Presentation 4 Fiscal 2024 operating performance 1. Non-GAAP measure – refer to definitions and detail provided beginning on page 2 our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca Full year performance • Delivered 6% revenue growth • 11 bp increase in our net interest margin through targeted loan growth and optimized funding • Franchise deposits increased 5% • Prudently managed adjusted expenses to deliver positive operating leverage • Strong, resilient balance sheet and are well positioned to support prudent growth • Our teams remain focused on delivering a differentiated experience for business owners and their families, while supporting the NBC integration planning process • We continue to retain the deep relationships we have with our clients and the engagement of our team remains strong324 268 2023 2024 -17% 8% 528 570 2023 2024 Pre-tax, pre-provision income1 ($ millions) Common shareholders’ net income ($ millions)
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Canadian Western Bank | Investor Presentation 5 On track to complete the acquisition with National Bank • The acquisition of CWB is aligned with National Bank’s (NBC) strategic plan to accelerate growth across all of its business lines in Canada and recognizes the embedded value of the bank we have built • We are confident that the combination of our two banks will create incredible value for our clients, teams, communities, and shareholders +
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Canadian Western Bank | Investor Presentation 6 Strong operating performance Matt Rudd Chief Financial Officer Q4 Financial performance
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Canadian Western Bank | Investor Presentation 7 Target loan growth 1. Excludes the allowance for credit losses Total loans1, by portfolio (% of total) Our resilient balance sheet remains well positioned to support prudent growth, targeted to optimize risk adjusted returns Total loans1, by portfolio ($ billions) Q4 2024 Y/Y Change General commercial loans $14.2 4% Personal loans & mortgages $7.0 1% Commercial mortgages $6.6 7% Equipment financing & leasing $6.0 4% Real estate project loans $3.3 7% Oil & gas production loans $0.5 5% 38% 19% 17% 16% 9% 1% General commercial loans Personal loans & mortgages Commercial mortgages Equipment financing & leasing Real estate project loans Oil & gas production loans
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Canadian Western Bank | Investor Presentation 8 Funding optimization supports NIM improvement Sequential highlights • Franchise deposits increased 3% sequentially, reflecting strong growth across our diverse franchise deposit channels • Capital market deposits decreased 7%, as a senior deposit note maturity in the current quarter was replaced by a prior quarter issuance • Broker term deposits declined 5% 37% 21% 23% 9% 10% Franchise demand & notice Franchise term Broker term deposits Capital markets deposits Securitization Q4 2024 (% of total funding) Total funding, by type ($ billions) Q4 24 Y/Y change Franchise deposits $21.7 5% Demand & notice $13.8 - -% Term deposits $7.9 14% Broker term deposits $8.4 9% Capital markets deposits $3.3 3% Securitization $3.5 6%
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NBC transaction costs, amortization of acquisition-related intangible assets and non-recurring reorganization costs Diluted earnings per share Canadian Western Bank | Investor Presentation 9 $0.80 Provision for credit losses Net interest income Adjusted earnings per share1 Adjusted items after tax ($ per share) Q4 2023 Q4 2024 $0.67 Q4 2024 results compared to Q4 2023 $0.94 $0.04 $0.14 -$0.13 1. Non-GAAP measure – refer to definitions and detail provided beginning on page 2 our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca Adjusted NIEs -$0.23Non-interest income $0.10 Q4 2023 $0.63 Q4 2024 $0.04 -$0.02-$0.02-$0.01 OtherEffective tax rate Diluted common shares
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-$0.01-$0.01-$0.02 Canadian Western Bank | Investor Presentation 10 Non-recurring reorganization costs, amortization of acquisition-related intangible assets, and NBC transaction costs $0.43 $0.63 Provision for credit losses Net interest income $0.67 Q4 2024 results compared to Q3 2024 $0.60 $0.04 -$0.08 LRCN distributions Adjusted NIEs $0.11 Non-interest income $0.04 Adjusted earnings per share Adjusted items after tax ($ per share) Diluted earnings per share Q3 2024 Q4 2024 Q3 2024 Q4 2024 $0.04$0.17 Effective tax rate Diluted common shares
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Canadian Western Bank | Investor Presentation 11 Sequential change in NIMRevenue performance ($ millions) Revenue performance and net interest margin1 (NIM) 1. Non-GAAP measure – refer to definitions and detail provided beginning on page 2 our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca 36 34 40 250 264 269286 298 309 Q2 2024 Q3 2024 Q4 2024 Non-interest income Net interest income Total revenue Q3 2024 Q4 2024 2.49% Asset vs. liability repricing Asset mix 2.49% 0.02% 0.01% -0.03% Funding mix
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Canadian Western Bank | Investor Presentation 12 1. Recognized in accumulated other comprehensive income 2. Limited recourse capital notes Sequential increase in CET1 ratio Common equity Tier 1 capital (CET1) 10.19% Q3 2024 Regulatory minimum 7.0% Q4 2024 10.28%0.09% Unrealized gains in debt securities measured at fair value through other comprehensive income1 0.01% -0.01% Earnings less dividends & LRCN2 distributions RWA growth
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Canadian Western Bank | Investor Presentation 13 Credit performance Secured and prudent lending model Carolina Parra Chief Risk Officer
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0.00% 0.15% 0.30% 0.45% 0.60% 0.75% 0.90% 1.05% 1.20% 1.35% Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 gross impaired loans as a % of gross loans write-offs as a % of average loans Canadian Western Bank | Investor Presentation 14 1. We use annualized write-offs divided by average total loans to calculate this non-GAAP measure – refer to definitions and detail provided beginning on page 2 of our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca 2. 5-year average from October 31, 2019, through October 31, 2024 3. Write offs in Q4 2021 included recognition of a write-off that was subsequently reversed due to a full recovery in Q1 2023 1 Our history of low write-offs demonstrates the strength of our credit risk management framework Gross impaired loans 3 5-year average2 0.15% 3
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Canadian Western Bank | Investor Presentation 15 1. Non-GAAP measure – refer to definitions and detail provided beginning on page 2 our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca 0.09% 0.14% 0.07% 0.37% 0.59% 0.43% 0.17% 0.10% 0.04% 0.34% 0.57% 0.38% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 2021 2022 2023 2024 Q3 2024 Q4 2024 Provision for credit losses on total loans Provision for credit losses on impaired loans 1 • Performing loan allowance increased $4 million sequentially • The prior quarter impaired loan provision included the impact of two impaired loans, where the circumstances which gave rise to the impaired loan provisions were unique to those exposures. Provision for credit losses (PCL) (as a % of average loans) Performing loan allowance (Stage 1 & 2, in $ millions) 132 137 141 Q4 2023 Q3 2024 Q4 2024 Provision for credit losses 1
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Canadian Western Bank | Investor Presentation 16 1. Non-GAAP measure – refer to definitions and detail provided beginning on page 2 our 2024 annual MD&A which is available on SEDAR at www.sedarplus.ca Outlook • Strong annual growth of pre-tax, pre-provision income1 and adjusted earnings per common share1 • Focused on supporting our teams and continuing to provide a differentiated experience to our clients to maintain low levels of attrition • Our resilient balance sheet remains well positioned to support prudent growth – Continued strategic focus on portfolios that provide full-service client opportunities • Solid revenue growth supported by continued net interest margin expansion • Disciplined management of our non-interest expenses to deliver positive operating leverage1 on an annual basis • As the year progresses, our gross impaired loan formations and provision for credit losses to gradually decline, reflecting our strong credit risk management tools and process, and a lower interest rate environment In 2025 we expect:
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Speakers Chris Fowler Matt Rudd Carolina Parra Stephen Murphy Jeff Wright President & Chief Executive Officer Chief Financial Officer Chief Risk Officer Group Head, Commercial, Personal & Wealth Group Head, Client Solutions & Specialty Businesses Q&A