'The sick puppy': Why Laurentian has struggled in a golden age for Canadian banks

financialpost.com:

Times are relatively tough for Canadian financial institutions, but even in an inflationary period marked by sharp interest rate increases, there can be little argument that running a bank in Canada is pretty much a licence to print money. The country’s handful of large, dominant banks have weathered low oil prices, real estate dips, the Great Financial Crisis and even the pandemic, not only remaining profitable but also steadily expanding their reach.

But there is one bank in Canada that for years has struggled to grow substantially beyond its small corner in Canada’s second-most populous province: Laurentian Bank of Canada, a regional Quebec financial institution that is now on the block as part of a strategic process aimed at maximizing shareholder value.

Laurentian’s underperformance is hard to ignore. The bank’s share price has risen around 165 per cent since January of 1995, an order of magnitude below the 1,800 per cent rise enjoyed by Royal Bank of Canada, the country’s largest bank, in the same period. National Bank of Canada, which is also based in Montreal, has seen similar gains, with its shares up more than 2,000 per cent since 1995. Its market capitalization of $34.4 billion in July dwarfed Laurentian’s of just $1.72 billion.

The results are not for lack of trying to grow. In one of the latest efforts, in 2015, Laurentian announced a bold “transformation” plan to double in size and match the country’s biggest financial institutions on key metrics such as return on equity (ROE), a key measure of profitability using net income available to common shareholders. But after some early gains, the ROE gap remained in 2020 when a dividend cut was announced, a rare move for a Canadian bank. With the share price down