Canadian Western on the hunt for acquisitions

There are deals Larry Pollock wishes he could do, and those he is intent on doing.

If the chief executive officer of Canadian Western Bank in Edmonton had his druthers, he would buy up his cross-town rival, ATB Financial, and create a powerhouse bank in the West that would force the big Toronto financial institutions to sit up and take notice.

His dream deal would be nothing to scoff at, combining Canada's seventh-largest bank in Canadian Western with the Alberta government-owned ATB to create an organization with $50-billion of combined assets under management.

"It makes sense when you sit back and look at it," the brash Mr. Pollock says with a smirk. At 20 years and counting on the job, he is Canada's longest-serving bank CEO.

Then again, Mr. Pollock has enough grey hairs on his head to know that the ATB deal won't happen unless the province decides to sell its prized Crown corporation. So until that day comes, he has other plans to expand Canadian Western Bank.

Pondering the bank's future, Mr. Pollock shifts the conversation to the deals he fully expects to execute. On the verge of posting its 90th consecutive profitable quarter, Canadian Western is laying the groundwork for a string of acquisitions in the leasing business.

In an unheralded move earlier this year, the bank bought Winnipeg-based National Leasing Group Inc. in a cash and stock deal worth about $130-million. It was a quirky move: National holds about 58,000 leases, but they are small ones - golf carts for golf courses, riding mowers for landscapers, photocopiers for office buildings, and so on.

But in that small-ticket segment, Mr. Pollock sees a consolidation opportunity that the big banks won't bother with.

"If you talk to [Royal Bank of Canada CEO]Gord Nixon, he's not going to be talking about small-ticket leasing as his primary objective. It would be a rounding error on Royal's bottom line. So we're under the radar screen," Mr. Pollock said.

The National Leasing deal gives Canadian Western 20 per cent of the leasing market, and was a key driver in boosting Canadian Western's profit 62 per cent to $46.6-million in the third quarter. Now Mr. Pollock wants more of that pie.

"We're the largest [leasing]company in Canada but we've got 80 per cent market share left to go. So obviously there's lots of little ones still out there. I think we're talking to four of them now," Mr. Pollock said.

"So we'll consolidate other ones in. And when you do it that way, you're not in the eye of the Competition Bureau, so we'll just keep growing organically more or less with some odd acquisitions here and there."

In two years, he expects to double the size of Canadian Western's leasing business.

National Leasing was a turnaround job. The company ran into trouble securing financing to backstop its leasing. It's business came from companies like Yamaha and John Deer that would sell their products to customers then parcel off the financing to National, which then takes a spread, Mr. Pollock said.

But National struggled to get growing lines of credit amid the economic downturn, so Canadian Western moved in, seeing an opportunity to buy a business with steady growth, while simultaneously solving the financing problem with its own capital.

"We saw a business that was a very simple business made complicated," he said. "We could buy this company and just fix it."

Flying under the radar of the big banks is how Mr. Pollock has structured Canadian Western, which has its roots in the early 1980s when Alberta's oil economy fell on hard times and lending from the major banks dried up.

Mr. Pollock says he would also like to buy up credit unions around the West to grow his operations. However, much like the ATB deal, he concedes he must find a willing seller first. "You always stay tuned - and you always let the market know you are interested," he said.