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The bank confirmed that Eric Profost, previously the head of personal and commercial banking with 11 years at the institution, would replace Rania Llewellyn as CEO. Llewellyn, the first woman to run a major Canadian bank, had been in the position for three years and was midway through a three-year turnaround strategy endorsed by the board last September.
Michael Boychuk, head of the board’s audit committee, will take over as chair from Michael Muller. Boychuk played a significant role in the recent strategic review of Laurentian, which included exploring potential sale options for the bank.
“Eric is the right executive to lead the Bank at this critical point in its evolution,” said Boychuk in a press release. “We have experienced challenges recently and the Board is confident that Éric will successfully focus the organization on our customer experience and operational effectiveness.”
Boychuk also expressed gratitude towards both Mueller and Llewellyn for their contributions to the bank.
Profost’s initial priority as CEO will be to rebuild trust with the bank’s customers and address the impacts of last week’s mainframe outage that occurred during a planned technology maintenance update. As part of this effort, Laurentian announced on Monday that it will reverse all monthly services fees for September due to the outage.
The IT failure affected online banking services on both the website and mobile application of Laurentian Bank. Although ATM withdrawals were possible during this period, other transactions such as deposits were not.
This leadership change follows a recent announcement that Laurentian Bank reported a net income of $55.9 million for its third quarter, down from $62.1 million in the same quarter last year, as its provision for bad loans rose compared with a year ago. The bank is currently trading at a low earnings multiple of 6.77, according to InvestingPro data.
The bank, headquartered in Montreal, is currently the ninth largest lender in Canada. Despite its challenges, the bank has maintained dividend payments for 50 consecutive years, offering a significant dividend yield of 6.21% to shareholders, as per InvestingPro Tips. Its decision to remain a standalone bank necessitates finding a path to growth amidst these challenges.
InvestingPro Tips also suggest that the bank’s valuation implies a strong free cash flow yield, which could be an attractive feature for investors. These insights are part of a larger set of tips available to subscribers of the InvestingPro service, which provides comprehensive real-time metrics and tips for informed investment decisions.
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