Laurentian Bank of Canada (TSX:LB) stock is down 7.2% week over week as of early afternoon trading on May 31. Shares are down 19% in 2018 so far. The bank recently announced that it successfully resolved issues related to its mortgage loans sold to an unnamed lenders. CMHC was identified as the other third party purchaser in its first quarter results.
In its first quarter report Laurentian said the review of its ineligible B2B Bank residential mortgages sold to the third party purchaser had seen that the audit was confirmed complete. The CMHC ultimately communicated that Laurentian was not required to perform a full review or make material repurchases. The bank also said that the full review would be complete by the end of the second quarter.
Laurentian is set to release its second quarter earnings tomorrow morning. Apart from its mortgage controversy, Laurentian has posted solid results in successive quarters. In Q1 net income rose 20% year-over-year to $59.7 million and loans to business customers were up 22% from the prior year. Residential mortgages through brokers and independent advisors jumped 19% from Q1 2017. The bank also offers a quarterly dividend of $0.63 per share representing a 5.5% dividend yield.
In spite of its struggles with the mortgage book I still like Laurentian for its dividend and its strong footprint in Quebec. Investors should monitor the stock ahead of its Q2 results.
