Adjusting to Adjusting to Succeed Succeed Raym ond Raym ond - - PowerPoint PPT Presentation

Adjusting to Adjusting to Succeed Succeed

Raym ond Raym ond McManus McManus President & CEO President & CEO

National Bank Financial Canadian Financial Services Conference

Montreal - April 7, 2004

2

How we compare How we compare

Total Assets ( $ B)

Q1 2004

Total operating revenue as a % of ave assets Q1 2004 P& C Total operating revenue as a % of ave assets Q1 2004 Ì LBC

ranks 7 th am ong Canadian chartered banks in term s of assets

Ì I n

term s

• f
• perating

revenues, LBC & CW B lag all

• ther banks as they lack

critical m ass in w ealth m anagem ent & brokerage activities w hich are

• ff

balance sheet activities

Ì P&C’s

• perating

revenues generate slightly better

• spreads. W e expect this

sector to im prove over the next quarters as w e are im plem enting

• ur

3-year plan

TD & CIBC P&C results are calculated over average loans which explains the higher spreads

2,91% 3,05% 3,51% 3,55% 3,65% 4,14% 4,19% 4,68% LBC CWB BMO Scotia TD RBC CIBC NBC

3,05% 3,54% 4,20% 4,44% 4,80% 4,81% 4,87% 5,67% CWB LBC BMO RBC CIBC Scotia NBC TD

4 14 81 265 281 285 316 416 17 CWB ATB LBC NBC BMO Scotia CIBC TD RBC

3

How we compare How we compare

I nterest Revenues as a % of ave assets Q1 2004 Personal Dem and & Notice Deposits as a % of P& C ave assets Q1 2004 Ì LBC ranks second best in

term s of ability to generate interest revenues

Ì How ever, due to its size

and its history of acquiring sm all trust com panies, LBC’s funding cost is the highest in the industry

Ì Part of LBC’s 3-year plan is

to m odify its portfolio m ix to decrease its over reliance

• n fixed term deposits and

increase dem and & notice deposits

I nterest Expenses as a % of ave assets Q1 2004

5% 14% 22% 26% 27% 31% 34% 52%

CWB LBC NBC RBC Scotia CIBC BMO TD

2,93% 3,23% 3,28% 3,73% 3,76% 4,34% 4,88% 5,52% NBC RBC BMO TD CIBC Scotia LBC CWB

1,42% 1,50% 1,65% 1,73% 1,79% 2,25% 3,06% 3,19% BMO NBC RBC CIBC TD Scotia CWB LBC

4

How we compare How we compare

PCL as a % of loans,Bas & reverse Repos Q1 2004 Non-I nterest Expenses as a % of ave assets Q1 2004

Ì PCLs are at an acceptable

level

Ì Our cost reduction program

has brought non interest expenses in line w ith the rest

• f the industry

Ì Specifically, P&C non interest

expenses are even low er at 18 p.b. under the industry average

Ì P&C’s efficiency ratio w hich

ranks 8 th at 6 9 .6 % is not necessarily the best m etric to evaluate the bank’s level of expenses

P&C Non-I nterest Expenses as a % of ave assets Q1 2004

• 0.27%

0.25% 0.31% 0.38% 0.38% 0.38%

• 0.05%

0.04% TD RBC BMO CWB LBC Scotia CIBC NBC

1.50% 2.46% 2.70% 2.74% 2.84% 2.94% 3.29% 2.64% CWB LBC BMO CIBC RBC Scotia NBC TD 1,50% 1,98% 2,30% 2,32% 2,66% 2,75% 2,98% 2,24% CWB Scotia LBC TD BMO RBC CIBC NBC

5

Smart Moves - Smart Moves - Strategic Refocusing Strategic Refocusing

Official start of R. McManus Reduction in Mgt Com m ittee Elim ination

• f Holding
• Co. concept

Expense Reduction Program Sale of branches

• utside

Quebec 3 -year repositioning plan B2 B Trust Privatization Aug 0 2 Dec 0 2 June 0 3 Aug 0 3 Dec 0 3 Mar 0 4 Feb 0 3 Union arbitration process Feb 0 4 Sale of VI SA cards

• utside

Quebec

6

Our 3-year plan Our 3-year plan

4% 5% 8% 10%

2 0 0 3 pro forma 2 0 0 4 2 0 0 5 2 0 0 6

ROE

1.07 1.44 2.37 3.13

2 0 0 3 pro forma 2 0 0 4 2 0 0 5 2 0 0 6

EPS

78% 77% 73% 69%

2 0 0 3 pro forma 2 0 0 4 2 0 0 5 2 0 0 6

Efficiency

0.24% 0.22% 0.25% 0.25%

2 0 0 3 pro forma 2 0 0 4 2 0 0 5 2 0 0 6

PCL ( as a % of ave assets)

10.2 9.5 9.5 9.5 15.2 13.0 13.0 13.0

2003 pro forma 2004 2 0 0 5 2006

BI S Capital ratios

W e w ill need the next three years to restore the Bank’s grow th and profitability, and enable it to build all of its operations on truly solid foundations

Ì Clear vision Ì Focussed

approach

Ì Transparen-

cy & open- m indedness

Ì Accounta-

bility

BACK

to

Basics

Minim um objectives

7

Performance to date on track Performance to date on track

Perform ance Measure Q1 2 0 0 4 2 0 0 4 Annual Target Return on Equity 6% 5% Earnings per share $0.43 $1.44 Total revenue $ 120.5 M $ 503 M Efficiency Ratio 77% 77% Capital Ratios

• Tier 1 capital ratio

10.7% Min of 9.5 %

• Total capital ratio

16.0% Min of 13.0 % Credit Quality ( PCL ratio) 0.24% 0.22%

8

Performance and Capital ratios Performance and Capital ratios support dividend support dividend

Total Capital Ratio

Superior total capital ratio Highest dividend yield in the industry at 4.06 % in Q1 04 W ill m aintain dividend at current level if financial targets are m et and capital ratios rem ain strong

Com m on Share dividends

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Target payout: 40-50%

0.76 0.76 0.76 0.76 0.90 0.92 0.92 0.94 1.06 1.16 1.16 1 2 .4 1 2 .3 1 3 .5 1 2 .4 1 5 .2 1 3 .3 1 6 .0 1 3 .4 2 0 0 1 2 0 0 2 2 0 0 3 Q1 2 0 0 4

LBC 6 Bank

9

2004 Achievements to Date 2004 Achievements to Date

Ì

Roll-out of the Entrepreneurship m odel throughout the branch netw ork

Ì

Developm ent of a new LBC branch layout and com pletion of an

• ptim ization plan for the branch

netw ork

Ì

Launch of our new advertising cam paign - DARE !

Ì

Sale of our $ 2 8 M VI SA credit card portfolio outside Quebec for $ 4 .6 M gain

Ì

Proposed privatization of B2 B Trust expected to close in June 2 0 0 4

I n 2003- 2 0 0 4 the priority w as given to the strategic repositio- ning of our retail

• perations

10

Retail Financial Services Retail Financial Services

New Laurentian Bank Signature Optim ization of the branch netw ork Entrepreneurship Business Model Retailer approach to client servicing

Total

• perating

revenue as a % of ave assets

2003 2002 2003 2002

PCL as a % of average loan

2003 2002

NI E as a % of ave assets

Operating revenues as a % of assets increased in Q1 2 0 0 4 NI E increased as w ell but at a slow er pace due to

• ur cost

reduction program

3 . 4 6 % 3 . 3 6 % 3 . 8 8 %

Q1 2004 Q1 2004 Q1 2004 0 . 2 3 % 0 . 2 7 % 0 . 2 5 %

2.61% 2 . 8 5 % 3 . 1 0 %

11

Retail Financial Services Retail Financial Services

Market position Market position LBC ranks 3 rd in term s

• f

num ber

• f

branches in Quebec

Q3 2003 Quebec Market Share LBC Desjardins Other Banks Retail loans 5.2% 44.0% 50.8% Commercial loans 3.8% 31.0% 65.2% Deposits 6.2% 45.6% 48.1%

Source: Bank of Canada, Statistics Canada and Banks’ internet site 6 7 1 3 6 8 1 5 1 1 4 8 1 3 7 1 3 4 4 5 8 2 Desjardins BNC BLC BMO CI BC RBC TD/ CT Scotia

Ranking by num ber of branches in Quebec

Q1 2 0 0 4

Survey done in Quebec in 2004 by Léger Marketing. For LBC it represents a 30% jum p

• ver last

year’s results Ranking of m ost adm ired financial institutions

6 1 59 5 4 4 3 4 1 4 9 33 35 60 60 5 7 5 6 5 5 55 42 4 1 10 20 30 40 50 60 70

2003 2004

Source: Bank’s internal reports Bad Good

12

Retail Financial Services Retail Financial Services

New Laurentian Bank Signature - the new branch concept New Laurentian Bank Signature - the new branch concept

New standards have been established w ith respect to the design

• f our

branches in

• rder to

im prove interaction w ith our clients

13

Retail Financial Services Retail Financial Services

Optimization - Working towards the Right Branch Network Optimization - Working towards the Right Branch Network

50% of our branch network will be impacted by the plan

• ver 3

years & we expect to

• pen 4

branches by 2004

Each branch w as classified according to 4 quadrants

High

Reconfigure I nvest I nvest Maintain

Low

Consolidate Maintain

Low High

Branch Profitability M a r k e t Pot e nt ia l

14

Retail Financial Services Retail Financial Services

Entrepreneurship Entrepreneurship Business Model Business Model

Source : Ad Hoc Research, telephone survey # 1 conducted from Novem ber 6 to 17, 2002, am ong 757 clients ; telephone survey # 2 conducted from Novem ber 3 to 16, 2003, am ong 503 clients.

The level of satisfaction

• f our

clients w ithin the pilot project has increased

• ver the

last 12 m onths

• Honoring a

commitment

• Waiting time at

the counter

• Staff politeness

and courtesy

• Staff ability to

answer questions

• Staff knowledge
• f the bank ’s

products and services

Five specific attributes score significantly higher:

100 100 150 47 20 40 60 80 100 120 140 160

Satisfaction has increased Satisfaction has de cr e a se d

Proportion of clients w ho claim s... N ov 0 2 = 1 0 0

• Nov. 02
• Nov. 03

15

Retail Financial Services Retail Financial Services

Retailer approach to client servicing - The New LBC Brand Retailer approach to client servicing - The New LBC Brand A new challenger w ith a new attitude Dare !

Dare !

Considered by the French Journal La Presse as a very good cam paign

16

Retail Financial Services Retail Financial Services

Retailer approach to client servicing - VISA passport Retailer approach to client servicing - VISA passport LBC takes a leading position am ong Canadian banks by providing a new w ay to use credit card rew ard points

This innovative program offers its cardholders an opportunity to get som e OOMPH! in their lives, to share extraordinary experiences tailored to them

“This program is in line w ith the latest m arket trends,” declared Frequency Marketing I nc., a US firm specializing in m arketing trends

17

Retail Financial Services Retail Financial Services

Retailer approach to client servicing - CRM initiatives Retailer approach to client servicing - CRM initiatives

Ì CRM direct m arketing initiatives produced a success rate of 22% generating 5 % grow th in lines of credit over the last 6 m onths

Analytical CRM activities already show great ROI

Ì Best 2004 RRSP cam paign ever generating a 18% increase in net grow th

I ncrease in net grow th

18% 8%

2004 2003

18

Commercial Financial Services Commercial Financial Services

Grow the com m ercial book Continue to build on reputation as a recognized prim e construction real estate lender Becom e a leader in the sm all business and m icro enterprise niche Becom e a recognized lender in farm lending

2003 2002

Total

• perating

revenue as a % ave of assets PCL as a % of average loan

2003 2002

Strong I m prove- m ent in provision for loan losses due to continued pruning of

• ur

com m er- cial portfolio

Loan portfolio distri- bution

( $ M)

Q1 2004 Q1 2004 3 . 7 6 % 3 . 4 4 % 3 . 6 3 % 3 . 3 2 % 1 . 2 8 % 0 . 8 9 % 916 905 1105 853 914 988 211 231 300

Q1 2004 2003 2002

Mid-Market Real Estate Corporate

19

Commercial Financial Services Commercial Financial Services

New Ad campaign New Ad campaign A new challenger w ith a new attitude Dare !

Dare !

Mid- Market- loan & Agri- loan Ads

20

B2B Trust B2B Trust

Becom e a m ajor supplier of private label lending products for non-bank financial institutions & m ajor retailers Maintain leadership position in investm ent loans

2003 2002

Total

• perating

revenue as a % ave of assets PCL as a % of average loan

2003 2002

NI E as a % of ave assets

2003 2002 Q1 2004 Q1 2004 Q1 2004 2 . 8 3 % 2 . 3 7 % 2 . 2 6 % 1.45% 1 . 4 3 % 1.41%

AEGON NEW NEW AI C Lim ited AXA Berkshire Canada Life NEW NEW Canadian Tire N EW N EW Capital Teraxis Cartier Partners CI Funds Clarington Dynam ic Franklin Tem pleton N EW N EW Northw est NEW NEW Peak Perform a Standard Life SSQ NEW NEW Transam erica

Alliances Alliances

0.13% 0 . 0 8 % 0.03%

21

B2B Trust - Privatization B2B Trust - Privatization

Beneficial to

• ur

shareholders & in line w ith

• ur decision

to abandon the “holding com pany” structure

Represents cost savings estim ated betw een $1 & $2 m illion per year

IPO at $9

Purchase price at $ 9 .5 0

22

Wealth Management & Brokerage Wealth Management & Brokerage

Organically grow assets under m anagem ent Continue to grow institutional m arket share

Total

• perating

revenue as a % of ave assets

2003 2002

NI E as a % of ave assets

2003 2002

Assets under Managem ent

( in $ M)

I n 2 0 0 3 , LBC posted net positive results w hile m ost com peti- tors reported net redem p- tions

1.77% 2.27% 2 . 0 9 % Q1 2004 Q1 2004

1683 1596 1236 1405 1345 1316 Q1 2004 2 0 0 3 2002 Wealth Mgt Brokerage

1.65% 1.42% 1.55%

23

Wealth Management & Brokerage Wealth Management & Brokerage

Q1 2004 2 0 0 3 2 0 0 2

Net incom e BLC Edm ond de Rothschild

( in $ M)

Q1 2004 2003* 2 0 0 2

I n 2 0 0 3 contribution from brokerage

• perations

increased w hile our w ealth m anagem ent arm alm ost broke even

(* ) I ncludes the sale of the TSX I nc. shares in Q1 2003 which resulted in an after-tax gain of $6.7 m illion 0.00 (0.2) (0.6)

Net incom e LBC Securities

( in $ M) 1.2 8.9 1.5

24

Treasury Operations Treasury Operations

Treasury & Financial Markets revenues

( in $ M)

Annualized Q1 0 4

2003 2002

Strong & sustainable perform ance from treasury

• perations

and positive gains from im proved capital m arkets

Treasury incom e as a %

• f total

revenues

Q1 2 0 0 4

62 51 51

Treasury is an im por- tant contribu- tor to the Bank’s bottom line

I nvestm ent account - unrealized gains & losses

( in $ M)

2% 6% 6% 10% 11% 12% 17% BMO Scotia CIBC RBC LBC TD NBC Q1 2004 2003 2002

9.8 4.6 4.1

• 10.4
• 17.5
• 15.8

Gains Losses

25

We are adjusting to succeed We are adjusting to succeed

K Highly focused

strategy

K Strong execution of

3-year plan

K Strong em ployee

com m itm ent

K Support from our

shareholders

“ “Let us learn from the past, m anage rigorously the present, and look very focussed tow ards the future”

Raymond McManus, CEO

26

Q & A

27

Forward Looking Statements Forward Looking Statements

This presentation and related communications may contain forward-looking statements, including statements regarding the business and anticipated financial performance of Laurentian Bank. These statements are subject to a number of risks and uncertainties. Actual results may differ from results contemplated by the forward-looking statements. Such differences may be caused by factors which include, among others, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition and technological change. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and

• ther uncertainties and should not place undue reliance on such forward-looking
• statements. The Laurentian Bank does not undertake to update any forward-

looking statements, oral or written, made by itself or on its behalf.

For questions on this presentation, please call: Alicia Zem anek, Vice President, I nvestors Relations and I ntegrated Risk Managem ent