# Laurentian Bank (LB)



## My Own Advisor (Sep 24, 2012)

Nice 
http://www.thestar.com/business/201...tructuring_costs_take_bite_out_of_profit.html

Prices falling and dividend hike. Win-win.


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## Rusty O'Toole (Feb 1, 2012)

*Laurentian Bank in trouble*

Today on Bloomberg this appeared, Laurentian Bank revealed some iffy transactions.

https://www.bloomberg.com/news/arti...k-audit-finds-misrepresentations-in-mortgages


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## 1980z28 (Mar 4, 2010)

I sold 1000 shares of sunlife yesterday,to have some cash,maybe will buy some in a couple of days


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## My Own Advisor (Sep 24, 2012)

Great time to buy....


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## kcowan (Jul 1, 2010)

I would wait until they determine the source of those NINJA loans and take corrective action. I doubt that Warren will step in for them.


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## Mortgage u/w (Feb 6, 2014)

I am not surprised. 
BLC shut their mortgage division on the brokerage side earlier this year. Most likely a consequence of what is being reported now.
They have been known in the brokerage industry of having very lax lending criterias....and are now paying the price for it.


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## gardner (Feb 13, 2014)

kcowan said:


> I doubt that Warren will step in for them.


More likely the Caisse.


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## humble_pie (Jun 7, 2009)

could this be the canary in the coal mine though


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## Mortgage u/w (Feb 6, 2014)

gardner said:


> More likely the Caisse.


Caisse Desjardins or Caisse Depot?

Either or, I don't see anyone bailing them. They will simply fold the division over to B2B and wait until it all disappears - just like all of HCG loans.....


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## Eder (Feb 16, 2011)

Even after the pull back, in my opinion, all 5 big banks off better total return over the next couple years. I will pass.


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## 1980z28 (Mar 4, 2010)

I will wait until ?,unless i see some other opportunity


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## newfoundlander61 (Feb 6, 2011)

My Own Advisor said:


> Great time to buy....


I agree.


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## james4beach (Nov 15, 2012)

I wouldn't be too quick to dismiss these things as unimportant. We now have two incidents, Home Capital Group and then Laurentian, showing hints of problematic loans/fraud in the secondary mortgage market.

This probably shows that there is some widespread problem with mortgage origination in Canada. It may turn out to be 'not a big deal', or it could turn out to be the start of a more serious national problem. Strong market conditions (in this case a strong real estate market) can mask problems of this nature, so in any case nothing too much will probably come of it, until the real estate market cools off.


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## kcowan (Jul 1, 2010)

Yes Tip of the Iceberg indeed. Laurentian cannot be isolated among the banks. The fact that they are approving the NINJA loans and then reselling them almost suggests that they observed the US problem and said: "Hey we can make some dough doing the same thing!"

Are they going to claw back all the bonuses paid? No that never happens.


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## jargey3000 (Jan 25, 2011)

great! first, I buy a GIC at Home for the first time, to get a few pennies more interest, & they run into truoble. So then i buy one at Laurentian.... can Canadian Western be far behind? sheesh! I give up! i'm going back to RBC!!!


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## ian (Jun 18, 2016)

One of the big problems in the recent past is that lenders, especially the big banks, in a quest to reduce costs, have reduced the amount of money spent on veryifying/proving mortgage applications. In some cases they simply farm it out to third parties. Their costs are reduced but often so is the level of scrutiny. 

So it is of no surprise to me that they have been victims of outright mortgage fraud (try as they might to keep this from public scrutiny) or realized a higher ratio than normal of delinquent mortgages.


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## fatcat (Nov 11, 2009)

i see ads for "buy a new car, no sin required"
that should tell us how profitable the business of debt enslavement is 
competition is fierce for these poor people with marginal credit since they are very profitable


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## ian (Jun 18, 2016)

A few of the big banks lost a fair amount of money in Calgary through mortgage fraud. And at least one lawyer was convicted. I was told that much of the fraud would have been avoided if the banks had simply done the proper verification work. My understand is that in some cases mortgages were approved on the basis of a $150. report from a third party verification company. Some banks have laid off local staff in favour of outsourcing some or all of these tasks.

So, would you provide a $500K 30 or 40 year mortage to a client on the basis of a $150. third party verification check/review? This part of the story was kept well away from the public eye.


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## spdr1812 (Apr 8, 2016)

Now that 4 months have past and $10-12 washed out of the share price .. lets not say safe , but maybe a good time to start building a position ?

With only one insurer and no CAD banks was looking at getting in US market with BAC , but might have more upside if LB has cleaned up their mess ? Where are they in that process ? 

Thanks


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## spdr1812 (Apr 8, 2016)

Now that 4 months have past and $10-12 washed out of the share price .. lets not say safe , but maybe a good time to start building a position ?

With only one insurer and no CAD banks was looking at getting in US market with BAC , but might have more upside if LB has cleaned up their mess ? Where are they in that process ? 

Thanks


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## james4beach (Nov 15, 2012)

I moved this under Individual Stocks.

I see from the 2018 Q1 financial data that their impaired loans are creeping up over the last year (as a % of their total loan portfolio), but this doesn't look like too large an increase. Could still be within noise, insignificant. It's something I'd want to keep an eye on, though.

My view on stocks in this sector is that you're primarily making a bet on whether the good credit & housing party continues. If the party continues, it's a great time to buy and enjoy the strong returns of these leveraged banks who've been enjoying credit & housing growth. However, if the party is over, you don't want to be in this space.


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## spdr1812 (Apr 8, 2016)

If they had exposure to both Van and Toronto/Montreal i would be worried and might not touch it . But with mainly east properties more likely i might dive in . If you take out the highs of over $60 and even get back to mid $50's its looking decent . Have never even thought of the smaller banks in Canada but going to keep an eye on it .


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## blin10 (Jun 27, 2011)

thanks for reminding me, definitely a good pick up at these levels.... bought small position (can't go wrong with 5%+ dividend on a quality bank)


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## jargey3000 (Jan 25, 2011)

any other comments on this one? merci buckets.


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## RBull (Jan 20, 2013)

http://business.financialpost.com/i...-progress-being-made-on-problematic-mortgages


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## AltaRed (Jun 8, 2009)

In withdrawal stage, I have learned to stay away from potential trouble. I might be a contrarian on occasion but I don't gamble with my retirement.


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## blin10 (Jun 27, 2011)

AltaRed said:


> In withdrawal stage, I have learned to stay away from potential trouble. I might be a contrarian on occasion but I don't gamble with my retirement.


I would agree with you if it was gold/oil/air line/pharmaceutical stock, but not 8th largest Canadian bank. However, we'll see what happens.


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## Koogie (Dec 15, 2014)

blin10 said:


> I would agree with you if it was gold/oil/air line/pharmaceutical stock, but not 8th largest Canadian bank. However, we'll see what happens.


I agree. If I had some spare cash at the moment, I would be tempted to pick up a little.


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## jargey3000 (Jan 25, 2011)

...hmmmmmm......


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## james4beach (Nov 15, 2012)

jargey3000 said:


> ...hmmmmmm......


jargey, I thought you were a relatively conservative investor who doesn't seek high risks and high thrills? LB may be a fine company, but it's been an underperforming stock and has been exposed as having _at least_ a "little problem" with bad loan origination practices.

It just doesn't seem like the best choice for a conservative investor. The high quality stocks of the type Argonaut has posted about in The 6-Pack Portfolio, or regular index ETFs, or maybe something like ZLB (low volatility and even sector composition) all seem like they may be more suitable for the conservative types.

Apologies if I'm misread your investment style.


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## jargey3000 (Jan 25, 2011)

thank you james. you're prb. right &#55357;&#56436;


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## Koogie (Dec 15, 2014)

james4beach said:


> jargey, I thought you were a relatively conservative investor who doesn't seek high risks and high thrills? LB may be a fine company, but it's been an underperforming stock and has been exposed as having _at least_ a "little problem" with bad loan origination practices.
> It just doesn't seem like the best choice for a conservative investor. The high quality stocks of the type Argonaut has posted about in The 6-Pack Portfolio, or regular index ETFs, or maybe something like ZLB (low volatility and even sector composition) all seem like they may be more suitable for the conservative types. Apologies if I'm misread your investment style.


I think this is the exact type of stock that would constitute a "fun" play for a conservative investor.

Despite it's recent hiccups, it is still a billion dollar member of our banking oligarchy, so is relatively safe in a stable sector. It has been in business since 1846, is a reliable and growing dividend payer and has strong earnings. It is beaten down and that makes its basic metrics look pretty good.

Conservative investors should always have one or two fun little stocks they take a "risk" on. It stops them being stupid with the other 95% of their money.

Should you buy a few grand worth ? Absolutely. Today ? Don't know. Maybe tomorrow. I'm not a good timer.

You want "risky" "thrills" ?? That's Bitcoin. This is a bank. Let's not confuse the two.


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## jargey3000 (Jan 25, 2011)

.....hmmmmmmm.......


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## spdr1812 (Apr 8, 2016)

jargey3000 said:


> .....hmmmmmmm.......


Going to watch for a bit more , but might pull the trigger soon .. dont have any banks just an insurer , obviously safer names out there , but at a price point i can at least get a decent position with .


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## jargey3000 (Jan 25, 2011)

wait for me to buy....
price will drop - guauranteed!


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## Henry Good (May 28, 2017)

james4beach said:


> jargey, I thought you were a relatively conservative investor who doesn't seek high risks and high thrills? LB may be a fine company, but it's been an underperforming stock and has been exposed as having _at least_ a "little problem" with bad loan origination practices.
> 
> It just doesn't seem like the best choice for a conservative investor. The high quality stocks of the type Argonaut has posted about in The 6-Pack Portfolio, or regular index ETFs, or maybe something like ZLB (low volatility and even sector composition) all seem like they may be more suitable for the conservative types.
> 
> Apologies if I'm misread your investment style.


Getting into an underperforming stock just means you're getting a discount on the shares. This is only true of course, if the company's underlying performance is good. LB has a P/E under 8.7, is growing earnings and has a 5.3% and growing dividend with a payout ratio under 50%. I would say it's a good buy at these levels even for a conservative investor, because he's very likely to get his money back over time just from dividends alone. 

LB isn't perfect, but look hard enough and you can find problems with any stock.


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## jargey3000 (Jan 25, 2011)

anybody buying today...$48.12(+.42) as i type....?


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## Gordo99 (Dec 13, 2011)

Henry Good said:


> Getting into an underperforming stock just means you're getting a discount on the shares. This is only true of course, if the company's underlying performance is good. LB has a P/E under 8.7, is growing earnings and has a 5.3% and growing dividend with a payout ratio under 50%. I would say it's a good buy at these levels even for a conservative investor, because he's very likely to get his money back over time just from dividends alone.
> 
> LB isn't perfect, but look hard enough and you can find problems with any stock.


Agree. 

Also LB has increased it's dividend regularly (pretty much annually) since 1988, and never cut it even post 2008. I consider myself relatively conservative and LB is on my short list.

But for someone not owning the other 6 banks would consider them first.


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## james4beach (Nov 15, 2012)

Henry Good said:


> I would say it's a good buy at these levels even for a conservative investor, because he's very likely to get his money back over time just from dividends alone.


You make this sound like a bond. Getting your "principal" back, for break-even, is not really what an equity investor should look for. If you're taking a huge amount of risk (as you do with any stock) and just hope to get back to where you started, that's a bad deal. Just keep it in cash or GICs then.


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## doctrine (Sep 30, 2011)

LB is not a compelling enough buy to replace one of the big 6, in my opinion. They have very, very little growth and in fact had some big one time losses in recent years. I would rather upgrade to a big 6 bank and take their 5-10% growth. If you want a discounted financial, I would pick an EQB, which has a non-adjusted trailing P/E of 5.8 (adjusted is 5.2), and will probably still show 5-6% EPS growth this year if the market remains where it is (house sales down 20-25%). It's half the size of LB and thus riskier, but I think the upside is larger.


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## james4beach (Nov 15, 2012)

And who would say that big 6 bank stocks are not performing well enough? The sector (looking at XFN) has a 15 year annual return of 9.8% even after the recent correction. Over the last 5 years it's 11.8% per year!

This is already a ridiculously high return, so I'm not sure I see the argument for going into riskier stocks in the sector when you're getting such strong performance from the TBTF giants.


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## My Own Advisor (Sep 24, 2012)

doctrine said:


> LB is not a compelling enough buy to replace one of the big 6, in my opinion. They have very, very little growth and in fact had some big one time losses in recent years. I would rather upgrade to a big 6 bank and take their 5-10% growth. If you want a discounted financial, I would pick an EQB, which has a non-adjusted trailing P/E of 5.8 (adjusted is 5.2), and will probably still show 5-6% EPS growth this year if the market remains where it is (house sales down 20-25%). It's half the size of LB and thus riskier, but I think the upside is larger.


Agreed. So I made it one of my big 7  a long time ago.


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## Henry Good (May 28, 2017)

james4beach said:


> You make this sound like a bond. Getting your "principal" back, for break-even, is not really what an equity investor should look for. If you're taking a huge amount of risk (as you do with any stock) and just hope to get back to where you started, that's a bad deal. Just keep it in cash or GICs then.


It's not a huge amount of risk, as far as I'm concerned. I was making a point that it fits under the profile of a conservative investment. A lot has to happen for this stock to stop paying dividends and go to zero. The risk to reward profile here is quite attractive.


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## spdr1812 (Apr 8, 2016)

Should have picked up at $47 when i was digging in , only stock up a decent pecentage lately ..


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## spdr1812 (Apr 8, 2016)

Well good thing didn't pick it up @ $47 , limit order grabbed it .5c above the 52 week low , any other takers today ?


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## Calmoney (Dec 19, 2013)

I am looking for under $45, getting close to pulling the trigger.


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## Dividending (Mar 24, 2018)

*Waiting.....*

for LB to get close to $40 which may or may not happen. Yield will be over 6% but dividend growth is not inspiring.


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## james4beach (Nov 15, 2012)

Dividending said:


> for LB to get close to $40 which may or may not happen. Yield will be over 6% but dividend growth is not inspiring.


Now it's under $39 and yields 6.7%

I still don't see the appeal of buying this. It's one of the shakier looking banks and we could be entering an economic/housing slowdown. If that slowdown plays out, then I'd expect LB to get hit worse than the sector average.


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## AltaRed (Jun 8, 2009)

+1 I put them in the same bin as Home Capital and Equitable Group, rightly or wrongly.


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## james4beach (Nov 15, 2012)

The fact it yields almost 7% is surely a warning sign. Are you investors in this actually reading their financial statements? I suggest taking a look at their non performing loans ratios and the trend in bad loans.

Banks are very highly leveraged businesses, and the last thing you want to do is hold equity in a deteriorating bank.


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## doctrine (Sep 30, 2011)

Relatively speaking, it is pretty simply to go with a big bank instead of LB. *All* of the big 6 posted good results with good growth. Why buy shares in a bank having problems when good banks are also very good value? And they aren't that much more expensive than LB either.


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## spdr1812 (Apr 8, 2016)

Why the bid up in LB while others are sideways / lower these days , they suffered with the rest and for probably good reason . Just curious if I missed some news ?


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## james4beach (Nov 15, 2012)

All the banks rallied since the Dec 24 low. Relative to the others, LB just rallied much more (probably because it had been beaten up more).

For the trailing 1 year, XFN (bank index) is down 7.8% and LB is down 15%


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## doctrine (Sep 30, 2011)

LB has a P/E of about 9 in a year when its EPS fell 6%. 

TD has a P/E of about 10 in a year when its EPS grew by 18%.

This is a pretty easy decision. All 6 of the big banks look pretty good. And it's rare to see TD and RY at such good value. It won't last.


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## james4beach (Nov 15, 2012)

doctrine said:


> TD has a P/E of about 10 in a year when its EPS grew by 18%.
> 
> This is a pretty easy decision. All 6 of the big banks look pretty good. And it's rare to see TD and RY at such good value. It won't last.


Is it possible that Mr. Market is forecasting a contraction in bank earnings? If the end of the credit cycle is here, the expectation would be to see higher default rates, falling home prices, and bank earnings (and stocks) would suffer.


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## doctrine (Sep 30, 2011)

They could be, but it is forecasting something that hasn't happened yet. Which means that if TD's earnings continue to grow positively, the stock could easily return to the 12-13 P/E multiple that is more typical.

I would think if the market had truly figured out a recession was coming, which it often does 6-9 months in advance, then stocks wouldn't have bounced so hard a few weeks ago. Or it has correctly already priced in slowing growth, but is already suspecting that may pick up with resolution of a few files such as Brexit and China trade wars in the next 3-6 months.


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## spdr1812 (Apr 8, 2016)

I got out @ $44 for what it's worth , but I'll keep watching it .


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## like_to_retire (Oct 9, 2016)

I see that Laurentian Bank Financial Group launches new offering to help Canadians.

I wonder how long their 3.3% HISA will last?

_"Launch of a fully-digital offering for Canadians looking for a unique and user-friendly experience
November 19, 2019 10:45 ET | Source: Laurentian Bank of Canada

MONTREAL, Nov. 19, 2019 (GLOBE NEWSWIRE) -- Laurentian Bank Financial Group (TSX: LB) has launched a digital offering for personal customers under the LBC Digital brand. The launch marks a milestone for the organization whose mission is to help its customers improve their financial health.

Customers looking for a new banking experience can now open, with straight through on-the-spot processing, chequing accounts, high-interest savings accounts and guaranteed investment certificates from their mobile devices or online. All this, without paperwork or signatures. By opening an account at LBCDigital.ca, they can:

.. Enjoy a great interest rate of 3.30% with our high interest savings account (HISA);
.. Perform their daily banking transactions without monthly fees2 through our new digital chequing account;
.. Invest in guaranteed investment certificates in just a few clicks.

"Nowadays, customers prefer to do their banking digitally – which means primarily on their mobile device or online when and where they want, 24 hours a day, 7 days a week. This is what we are offering today,” said François Desjardins, President and Chief Executive Officer, Laurentian Bank Financial Group.

"Even though we have not been present outside Quebec in retail distribution since 2003, we are pleased to be able to serve customers from coast to coast once again under the Laurentian Bank banner."_

ltr


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## gardner (Feb 13, 2014)

I am tempted. I have some money to park for 6 months and 3.3% suits me.


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## Ponderling (Mar 1, 2013)

It pays a reasonable dividend. 
We are not currently over weight in financial service sector holdings. 
Don't need a capital loss now to track and carry forward.

But would I be buying this today? Likely not.


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## gardner (Feb 13, 2014)

I got the proxy vote email and this prompted me to look at the performance. Share price, obviously, took a dive in 2018, but since June 2020 when they cut their dividend by 40% it's been extremely rough sledding. It could well be time to find someone else to feed and house this pig because I am tired of waiting for it to get back on its feet. At this point I am about even on a total return basis and could just take the capital loss and move on.

I'm curious if others have insights as to their longer term viability. I don't feel like they're about to go out of business, but there is definitely something wrong with their ability to execute alongside their peers.


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## AltaRed (Jun 8, 2009)

I think LB is viable long term (more likley an acquisition takeout eventually) but whether they can execute or not remains a serious question. They seem to flounder from one strategy to the next and have been in the penalty box like HCG to some degree the past several years as per stock price history. 

If you still want to be in this space, I'd look at HCG or EQ as alternatives. EQ is off from a peak earlier this year but its Concentra acquisition which closes later this year may provide a surge in 2023 and beyond. I think that acquisition will put it ahead of LB in terms of size and well ahead of HCG.


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## KaeJS (Sep 28, 2010)

Sold them a couple years ago.
Never looked back.

Aren't they a unionized bank? I don't like that.
Lackluster performance and their future doesn't seem as good as CWB, imo.

I sold all my LB for CWB.


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## Ponderling (Mar 1, 2013)

I sat in LB in an RRSP for the longest time, looking for them to execute on the announced turn around, only to see them keep sailing closer to an ice berg, til I could not take it, esp. when the big banks were doin just fine.

Held my nose and sold LB at a loss a few years ago just prior to COVID coming to town..

Poured the cash from this sale into REIT's in the early summer of 2019, when COVID had their stock values in freefall. Most into HR.UN. I had held first batch of HR in 2018 at $15 per share. Bought in at covid fire sale price of $10. Recently back to 15, now down a bit, but that was after PMZ was spun out and gave me a piece of that as well.

So it has taught me sometimes it is better to take the loss and move on, rather than holding on on the fine hope the thing will at least recover to what you paid for it.
But the better course is to recognize you are riding a nag, shoot the nag and find a better horse to hitch your saddle to.


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## james4beach (Nov 15, 2012)

LB cratered yesterday, down 10%

Over a 5 year period they have underperformed every Big Six bank.


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## londoncalling (Sep 17, 2011)

I am not interested in owning Laurentian but here is a 10 year chart with comparison to other Canadian banks. Unfortunately TMX only lets you compare to 5 others at once. I tried to show some regionals, an internationally exposed and a couple top performers. My guess is BMO and CM fall somehwere below TD but well above BNS. Surprised to see NA ranked #1.

Advanced Charts | Perform Technical Analysis | TMX Money


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## gardner (Feb 13, 2014)

I bought both NA and LB at the same time, and NA has, as shown, outperformed. At first they seemed to both be good buys but since 2016 or so, LB has been lagging. I thought they mostly served the same geography with the same economic base, but I think NA has been stronger at diversifying into other regions. I suspect it is time to cut my losses. I am overweight in banks anyhow.


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## AltaRed (Jun 8, 2009)

A key major difference is size and thus range of businesses. A reason why CWB and LB lag the big 6.


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## londoncalling (Sep 17, 2011)

I have owned CWB since 2016. My thesis was that I could capitalize on energy exposure without directly owning energy stocks do to regional economics. I added earlier this year. As the chart shows it has lagged the big 5. Diworsification in action with this one. I will continue to hold but do not expect it to outperform the big 5.


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