Source: The Canadian Press

The Canadian Western Bank (TSX:CWB) increased its quarterly dividend for the first time in more than two years as it anticipates another strong performance next year.

The Edmonton-based bank said the Western Canadian economy should improve and support strengthening results.

The bank said it will increase its dividend by 18% to 13 cents per share as of Jan. 13. It marks the first increase since July 2008.

It capped the fiscal year with its 90th consecutive profitable quarter as fourth-quarter profit increased 29% to $39.1 million. Diluted earnings per share grew to 48 cents, from 39 cents a year earlier when net earnings were $30.35 million.

Revenues for the period ended Oct. 31 increased to $108.4 million from $87.7 million a year ago on higher net interest margin and a 4% loan growth.

For the full year, net income increased 54% to a record $163.6 million. Diluted earnings per share increased to $2.05 per diluted share from $1.47 a year earlier.

Canadian Western Bank said it achieved a record financial performance for the year and surpassed its 2010 minimum targets for revenue growth, profitability, loan growth and efficiency.

The fourth quarter net income for the banking and trust segment grew 35% to $37.0 million. The improvement was attributed to a significant improvement in net interest margin, in part from the acquisition of National Leasing Group Inc., and loan growth.

Total loans grew 4% or $392 million in the quarter and by 14% or $1.26 billion over the last twelve months, including the contribution from National Leasing.

It expects to maintain double-digit loan growth in fiscal 2011 despite a cautious economic outlook and maintained its 10% target.

“We achieved record results across almost all key metrics despite the post-recessionary economy, which makes this accomplishment particularly gratifying, as it further confirms our strategies and the dedication of our people,” president and CEO Larry Pollock.

Despite continuing uncertainties about the strength of the economic recovery, he said the bank is “definitely seeing more optimism in our markets compared to earlier in the year.”

“We are also seeing some further positive signs on the credit front, as evidenced by another decline this quarter in the dollar level of gross impaired loans.”

Gross impaired loans increased in the quarter to $143.2 million from $137.9 million a year earlier.

Net interest margin was 2.84%, compared to 2.34% in the fourth quarter last year mainly reflecting lower deposit costs, more favourable yields on fixed rate loans, a shift in the deposit mix and lower liquidity levels.

In 2011, it will continue to focus on high quality loans and expects to grow earnings and revenues while maintaining strong efficiency.

Pollock said the dividend increase brings it more in line with its targeted payout range of 25% to 30% of net income.

“While we plan to keep our payout range low relative to other Canadian banks to support CWB’s ongoing growth and development, we expect further dividend increases in the future as we achieve our performance objectives,” he added.

The Bank’s Tier 1 and total capital ratios were 11.3% and 14.3% respectively.

Canadian Western Bank is the largest publicly traded bank headquartered in Western Canada, servicing the four western provinces with about 1,450 employees.

On the Toronto Stock Exchange, its shares increased 63 cents, or 2.32%, at $27.75 in morning trading.