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Laurentian Bank's main branch in downtown Montreal. (John Morstad/John Morstad/The Globe and Mail)
Laurentian Bank's main branch in downtown Montreal. (John Morstad/John Morstad/The Globe and Mail)

Laurentian profit hit by one-time charge Add to ...

Laurentian Bank is increasing its dividend for the third time in the past year amid continuing confidence that its growth strategies will survive the economic slowdown.

The lender said Wednesday that it will increase its quarterly dividend by three cents to 45 cents per share. It increased the dividend by three cents in June and by a similar amount last December.

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The Quebec-based bank said its earnings fell to $28.6-million in the fourth quarter as it booked an $8.2-million pre-tax charge acquisition charge.

Laurentian acquired the MRS companies in September. It also paid compensation for terminating in 2012 the existing distribution agreement of IA Clarington funds and signing a new deal with Mackenzie mutual funds.

The results were equal to $1.06 per share, down from a year-earlier profit of $32.5-million or $1.24 per share. Excluding one-time costs, adjusted earnings per share increased six per cent to $1.31.

Revenue was down to $187.4-million compared with $190-million in the same period in 2010.

Analysts had expected $1.20 per share in adjusted EPS in the quarter and $4.98 per share for the full year.

Laurentian set a new record profit for the year by earning $127.5-million, or $4.81 per share. That compared to $122.9-million or $4.61 per share in 2010.

Revenues increased to $753.6-million from $737.4-million last year, but were short of the $793-million forecast by analysts.

“For the seventh consecutive year, we successfully improved our earnings year-over-year and reached new record profitability, despite the challenging retail banking environment,” CEO Rejean Robitaille said in a statement.

He also noted that the results improved even when including one-time costs related to the MRS Companies acquisition and mutual fund distribution agreement.

Adjusting for the one-time costs, profits were $133.3-million, or $5.05 per share, up 9.1 per cent from last year.

Mr. Robitaille said the bank benefited from significant improvements in its credit quality, which offset continued pressure on interest margins.

“Our business lines generated strong organic growth, as evidenced by sustained increases in loan and deposit volumes.”

He said the bank will continue to “prudently manage” its capital ratios, especially in light of tighter regulatory capital requirements, and continue to invest.

Sumit Malhotra of Macquarie Capital Markets said the bank did a good job in managing expenses, an important issue as low interest rates continue to pressure revenue.

“We view this as a solid result from Laurentian, particularly given the tougher operating backdrop” the financial services analyst said in an email.

Return on common shareholders' equity was 9.4 per cent during the quarter and 11 per cent for the fully year.

Annualized loans, including securitized loans, grew by nine per cent in the quarter and by eight per cent for the year.

The credit quality of loans improved with loan losses decreasing 31 per cent for the year.

Shares in Laurentian Bank were up 47 cents to $44.04 in midday trading on the Toronto Stock Exchange.

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