Canadian Western Bank (TSX: CWB) provides personal and business banking products and services primarily in Western Canada. The company offers a variety of bank accounts, leading products, equipment financing products, mortgages, secured lines of credit, registered retirement savings plan, vehicle loans, personal lines of credit and credit cards. The bank was incorporated in 1984 and is headquartered in Edmonton, Canada.
The company is extremely cheap with a price to earnings ratio of 10.49, price to book ratio of 0.97, dividend yield of 3.84% and market capitalization of $ 2.61 billion. Debt is moderate at Canadian Western Bank in comparison to the other major banks. The company has excellent performance metrics with an operating margin of 46.08% and a return on equity of 8.65%.
Canadian Western Bank (CWB) operates only in Canada and is a full-service financial institution. The bank is the only Schedule 1 chartered bank in Canada with a focus to meet the unique financial needs of business owners. The company’s operating subsidiaries include CWB National Leasing, CWB Maxium Financial, Canadian Western Trust Company, CWB McLean & Partners Wealth Management, and Canadian Western Financial.
The bank has made some significant progress over the last few years by reducing risk, growing digital capabilities and extending capabilities to service clients across Canada through CWB’s branch network and other dedicated wealth and trust offices. Canadian Western Bank provide full-service business banking, personal banking, wealth management and trust services offerings specifically tailored for business owners and employees.
CWB’s key business lines include full service business and personal banking, expanding digital banking services, and nationwide specialized financing. Trust services are offered through CWB Trust Services and comprehensive wealth management offerings are provided through the CWB wealth division.
An investor in CWB faces the risk of increased competition from domestic banks, foreign banks, credit unions, trust companies, insurance companies, asset lenders, pension funds, investment management firms, government-owned entities operating in the financial services industry, commercial lessors, and other regionally based financial institutions.
The company’s businesses operate in very competitive markets, particularly with respect to the pricing, nature and extent of products and services offered. Despite the competition, CWB’s key competitive differences include a clear focus on business owners, commitment to proactive, personalized service and highly knowledgeable teams able to provide faster customer response times.
The bank achieved loan growth of 6% over 2020, and averaged 9% annual loan growth over the past three years. CWB’s net income was $249 million for 2020 compared to $214 million for 2019. From 2017 to 2020, total assets grew to $34 billion from $26 billion despite the oil price drop
Canadian Western Bank has been making several strategic acquisitions to grow the business. The company acquired the businesses of TE Wealth and Leon Frazer through the acquisition of CWB Private Investment Counsel. In 2018, CWB also acquired the commercial and vendor finance assets of ECN Financial.
At these prices, Canadian Western Bank looks like an excellent buy. As Alberta’s economy improves and oil prices recover, the company is expected to report higher profits and lower loan losses. CWB’s valuation is in deep value territory and is, by far, the cheapest Canadian bank.
