Particularly affected by the computer crash that occurred at the end of September, the year-end financial performance revealed by Laurentian Bank on Thursday morning turned out to be lower than expected.
Adjusted earnings per share for August, September and October were $1, compared to analysts’ expectations of $1.16. Outage management-related costs had a negative impact of 9 cents on adjusted earnings per share.
A year ago, adjusted earnings per share were $1.31. Thus, the bank achieved adjusted net profits of 44.7 million during this quarter, compared to 57.8 million a year ago.
Revenues fell by 9.7 million to 247 million compared to the same period last year. Analysts expected 262 million.
“We are currently rationalizing the bank’s activities and undertaking a comprehensive review of our strategic plan in order to focus on serving our clients and remaining a strong institution in Quebec,” comments the new President and CEO, Eric Provost.
Laurentienne has been directed by Eric Provost since the beginning of October. He was called in to replace Rania Llewellyn. The management change came at a time when the central system outage affected operations and shortly after the bank announced the completion of a review of its strategic options, ruling out a sale.
The bank indicated that the outage occurred during a planned IT maintenance operation.
The bank’s management also claims that it began simplifying its organizational structure in December. Therefore, the bank plans to record a restructuring charge of $6.5 million for the current quarter, which will end at the end of January.
The Bank estimates that the measures taken will generate recurring savings of approximately $8 million on an annual basis.
“At first glance, it was a very difficult quarter-end for Laurentian, which did not meet expectations on several fronts,” comments analyst Mike Rezvanovich of Keefe, Bruyette & Woods.
Laurentian keeps its quarterly earnings unchanged while Mike Rezvanovich expects earnings to increase.
The fourth quarter results also include restructuring charges and strategic review charges totaling $15.9 million.
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