Foolish readers should be very familiar with the Big Six Canadian bank stocks. They are also likely acquainted with the heavy hitters in the United States like Bank of America, JPMorgan Chase, and Goldman Sachs. Today, I want to look at the smaller fish in the financial pond. There are two undervalued Canadian regional bank stocks that are worth your attention before the release of their second-quarter (Q2) fiscal 2023 earnings. Let’s dive in!
Why United States regional banks are in a tailspin right now…
Short-sellers have set their sights on regional bank stocks in the United States over the past year. That should come as little surprise considering the catastrophic impact interest rate hikes have had on these smaller financial institutions.
Unfortunately, U.S. regional banks have demonstrated questionable lending practices that has left them exceedingly vulnerable in this changed environment. On this side of the border, Canadian regional bank stocks offer more stability. However, that is not to say that they are without risk in this turbulent economic climate.
This Canadian regional bank stock offers nice value and income
Canadian Western Bank (TSX: CWB) is an Edmonton-based company that provides personal and business banking products and services in Western Canada. This bank stock has climbed 2.5% month over month as of close on Monday, May 8. Its shares are up marginally so far in 2023. Investors can see more of its recent performance with the interactive price chart below.
This regional bank is set to release its Q2 fiscal 2023 earnings as markets open on May 26. In Q1 fiscal 2023, Canadian Western posted total revenue of $272 million — up from $266 million in the previous year. Meanwhile, the bank reported adjusted earnings per share of $1.02 compared to $0.99 in Q1 fiscal 2022. That managed to beat analyst expectations.
Shares of this regional bank stock currently possess a very favourable price-to-earnings (P/E) ratio of 7.2. Moreover, Canadian Western offers a quarterly dividend of $0.32 per share. That represents a strong 5.1% yield.
Here’s another cheap bank stock I’d consider before Q2 earnings
Laurentian Bank (TSX: LB) is a Montreal-based regional bank that provides various financial services to the personal, business, and institutional customers in Canada and the United States. Its shares have moved up marginally month over month. Meanwhile, the stock is down 1.5% so far in 2023.
Investors can expect to see Laurentian Bank’s Q2 fiscal 2023 earnings before markets open on May 31. In Q1 2023, Laurentian Bank reported adjusted net income of $54.3 million, or $1.15 per diluted share — down from $57.8 million, or $1.31 per diluted share, in Q1 fiscal 2022. Meanwhile, total revenue climbed 1% to $260 million. Laurentian Bank posted net interest income growth of 3% due to higher interest income from commercial loans. Like its Big Six peers, Laurentian has enjoyed improved profit margins in the face of interest rate increases.
This regional bank stock currently possesses an attractive P/E ratio of 6.5. Moreover, it offers a quarterly dividend of $0.46 per share, which represents a very strong 5.7% yield.
