CIBC stays patient in deal for U.S. lender
TORONTO CIBC will remain disciplined and patient on its efforts to buy Chicago-based lender Private Bancorp as it looks to expand its business in the U.S. amid slowing loan growth at home, CIBC’s CEO said Thursday.
Victor Dodig made his comments after CIBC, Canada’s fifth largest bank by market capitalization, reported firstquarter results that surpassed expectations, with net income of $1.41 billion, up from $982 million a year ago. The earnings amounted to $3.50 per diluted share, up from $2.43 per diluted share during the same period last year.
Analysts had expected earnings of $2.96 per diluted share, according to an estimate compiled by Thomson Reuters.
“Our U.S. strategy continues to remain intact and that is to grow our footprint in the U.S. to be able to better serve our clients, as well as to have exposure into a market that we see growth in over the long term,” Dodig told analysts during a conference call to discuss the bank’s results.
A shareholder vote scheduled for December was postponed after shares of Private-Bancorp rose above the value implied in the proposed deal, which was announced in June. Private-Bancorp said its shareholders needed more time to consider the transaction.
The deadline for both to walk away from the deal is June 29.
Edward Jones analyst Jim Shanahan said the bank’s results for the quarter ended Jan. 31 show that loan growth was weak.
“Our thesis has been that there is limited growth opportunity in Canada, that the consumer is pretty highly leveraged and has limited incremental ability to borrow,” Shanahan said.
“That’s why a company like CIBC would be looking to the States for a Private Bancorp-type acquisition to drive loan growth.”