(September 22 – 09:50 ET) – Laurentian Bank is revising its estimated earnings and taxable income for the years ending October 31, 2000, 2001 and 2002, to account for the growth in the bank’s business and improved profitability.
It attributes these increases in part due to acquisitions and alliances completed in the current fiscal year, including the planned purchase of 43 Quebec Scotiabank branches. That deal has now been finalized and is scheduled to close November 1.
The bank now says it will recognize an additional $25 million of future income tax benefits not previously recorded. Of this amount, approximately $10 million (or 50¢ a common share) will increase the net income for the fourth quarter of 2000, and approximately $15 million will be recorded in the purchase price allocation of the Scotiabank branch acquisition, thus reducing goodwill by the same amount.
The recognition of additional tax benefits was made possible due to the revised estimates of earnings and taxable income and to the existence of tax losses of prior acquisitions for which tax benefits had not been recognized by the bank’s latest audited financial statements. These additional tax benefits will also generate approximately $25 million of Tier I capital for the Scotiabank branch acquisition.
“With this acquisition, Laurentian strengthens its retail banking position throughout the province of Quebec, said Henri-Paul Rousseau, president and CEO. “Increasing the number of branches enables us to augment our client base, to benefit from their competent personnel and to become a leader in the Quebec market. Clients of our Commercial, Point of Sale retailers and B2B Trust will also have access to this more extensive network. Moreover, this transaction will spread our fixed costs over a broader business base, which will lower our average costs and increase our overall efficiency.”
Laurentian Bank will report of its fourth quarter and year 2000 results on December 4.
-IE Staff