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Preferred Share Description
Laurentian Bank of Canada (LB.PR.J)
5.85%% Non-Cumulative, Redeemable, Rate-Reset, NVCC*, Class A, Series 15 preferred shares
Prospectus - March 10, 2016
DBRS Credit Update: December 11, 2017 - DBRS confirmed the ratings of Laurentian Bank of Canada. The trends on all long-term ratings have been revised to Negative from Stable, while the trends on all short-term ratings remain Stable. The Bank’s Intrinsic Assessment (IA) of A (low) and Support Assessment of SA3 are unchanged. The SA3 designation, which reflects no expectation of timely external support, results in the final rating being equivalent to the IA.
In revising the trends to Negative, DBRS reflects its concern with the quality of LBC’s control functions and underwriting procedures at a sensitive time in the housing cycle and the potential impact of recent events on the Bank’s reputation and funding. These rating actions follow the Bank’s disclosure that residential prime mortgages the Bank had sold to third parties had documentation and client misrepresentation issues. LBC also disclosed that it identified some mortgage loans in these portfolios that were insured, but were not eligible for insurance as a result of their low loan-to-value ratio. These issues will result in LBC repurchasing $180 million of mortgage loans in Q1 2018, with the potential for more repurchases once the rest of the loans in the portfolio are audited.
* Important Note: NVCC preferred shares have a lower credit rating than other LB preferred share issues. DBRS assigned the NVCC Preferred Shares Series 15 a rating equal to the Bank’s intrinsic assessment because the Series 15 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.
*NVCC is short for Non-Viability Contingent Capital and it refers to the issuer's ability to convert the preferred shares into common shares if a "Trigger Event" occurs. See "Convertible by Company" section of the prospectus for the definition of a trigger event.
- DBRS Rating
- Pfd-3 Negative Trend
- DBRS Rating Date
- Shares Issued
- Issued Date
- Shares O/S
- O/S Date
- $1.4625 Per share per year
- Dividend Dates
- Dividends are payable on the 15th in each of March, June, September and December
- Dividend Details
- The Series 15 dividend is fixed at $1.4625 until June 15, 2021. On June 15, 2021, and on June 15th every 5 years thereafter, the annual dividend rate will be reset to a rate that equals the sum of the 5-year Government of Canada Bond Yield (GCAN5YR) plus 5.13%.
- The shares are redeemable by the company on June 15, 2021 and on June 15th every five years thereafter, at $25.00 per share.
- On June 15, 2021 and on June 15th every five years thereafter holders of the Series 15 preferred shares will have the right to convert their shares into an equal number of Series 16 Floating-Rate preferred shares. The Series 16 Floating-Rate will calculated and pay, quarterly, a dividend equal the sum of the Government of Canada 3-month Treasury Bill Rate plus 5.13%. In addition, holders of the Series 16 Floating-Rate preferred shares will have the right to convert their shares into an equal number of Series 15 Rate Reset preferred shares on June 15, 2026 and on June 15th every five years thereafter.
- Lead Underwriter(s)
- BMO Nesbitt Burns, RBC Dominion Securities, CIBC World Markets
- Transfer Agent
- Computershare Investor Services Inc.
- Computershare Investor Services Inc.
- Dividend Reinvestment Plan
- Holders of either Common Shares or Class A Preferred Shares the option to have their regular quarterly cash dividends automatically reinvested in additional Common Shares. For details visit this link: https://www.laurentianbank.ca/en/about_lbc/my_investment/dividend_reinvestment.html
- Convertible by Company
- Upon the occurrence of a "Trigger Event", each outstanding Preferred Share Series 15 and, if issued, each outstanding Preferred Share Series 16 will automatically and immediately be converted, without the consent of the holders thereof, into that number of fully-paid common shares of the Bank determined by dividing $25.00 plus any declared but unpaid dividends in respect of such Preferred Shares Series 15 or Preferred Shares Series 16 by the Conversion Price. The “Trigger Event” has the meaning as set out in the Office of the Superintendent of Financial Institutions Canada, Guideline for Capital Adequacy Requirements, Chapter 2 - Definition of Capital, effective January 1, 2013, as such term may be amended or superseded by OSFI from time to time.
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