Canadian banks are often looked to as a source of stability for investors looking for steady growth and yield over time. While the country’s six largest banks are typically the focus for most investors, Canada’s smaller regional banks provide access to different niche aspects of the Canadian lending space, and are thus more intriguing opportunities for investors for a number of reasons.
The lending practices of smaller regional banks in Canada is often different than those prescribed by the country’s largest lenders. Regional lenders are (as would be expected) more concentrated on specific geographical areas of the country and have less international exposure, meaning Provincial employment and economic data become more important for such lenders.
Loan losses and loan quality are often assessed more closely as well, given the fact that many Canadians who cannot receive a loan from one of the Big 6 will often turn to an alternative lender or regional lender as a secondary option.
Laurentian Bank of Canada (TSX:LB) has had some issues of late with mortgage disclosures, resulting in a significant dip in the company’s stock price. With the lender now trading near its 52-week low, insiders have begun to buy shares of the firm on this large dip, hoping for outsized returns moving forward. Two of the company’s corporate directors recently purchased a significant number of shares, begging the question to investors: is now the time to buy?
Fundamentally, Laurentian looks like a very inexpensive option at the moment. That being said, I will remain on the sidelines with this play, due to structural risks I view as being pervasive in this sector.
As always, a reminder that insider selling is in no way an indication of the direction a stock is expected to move in the near-term, and long-term investors should assess the fundamentals of said company and consult an investment advisor before making any purchases.
Invest wisely, my friends.
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