C.A. Bancorp Inc.
TSX : BKP

C.A. Bancorp Inc.

November 10, 2010 09:12 ET

C.A. Bancorp Inc. Reports Third Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2010) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced its consolidated financial results for the third quarter ended September 30, 2010.  The Company reported a net loss of $3.8 million or $0.14 per share compared to a net loss of $1.9 million or $0.07 per share in the third quarter of 2009.  Included in the third quarter of 2010 financial results is an "other than temporary" impairment loss related to the Company's investment in C.A. Bancorp Canadian Realty Finance Corporation ("CRFC") and the intangible asset related to CRFC.

For the nine months ended September 30, 2010, the Company reported a net loss of $4.7 million or $0.17 per share compared to net earnings of $2.3 million or $0.09 per share in the same period of 2009.  Included in the financial results for the first nine months of 2010 are one-time expenses of $3.5 million or $0.13 per share related to employee severance costs and costs in connection with the Company's strategic review process.  Net losses for the first nine months ended September 30, 2010 adjusted for one-time expenses were $1.2 million or $0.04 per share.

At September 30, 2010, the Company maintained a strong and liquid balance sheet with approximately $37.8 million of cash and other liquid net assets.  The balance sheet also includes investments in private entities and CRFC in the aggregate amount of $24.7 million and debt of $1.6 million.  The Company's net book value as at September 30, 2010 was $62.0 million or $2.33 per share.

Realization Strategy

As previously disclosed, the Board of Directors of the Company determined that, following the expiry, in August 2010, of the offer by a wholly-owned subsidiary of Century Services LP to acquire all of the outstanding common shares of the Company, C.A. Bancorp's interests would be best served through the realization of the Company's assets and the distribution of the proceeds to the Company's shareholders (the "Realization Strategy"). 

In support of the Realization Strategy, the Company completed the dispositions of its interests in Bermingham Foundation Solutions ("Bermingham"), Kingswood Drive Kitchener Limited Partnership ("Kingswood") and Windward Telecom Inc. ("Windward") for aggregate proceeds of approximately $18.4 million in the third quarter of 2010.  The Company completed the sale of its interest in Bermingham for $11.5 million, its interest in Kingswood for $6.7 million and its interest in Windward for $0.16 million.

The Company continues to pursue opportunities to accelerate the realization dates for its assets, where possible, and to explore and develop further opportunities to do so.  The Company has engaged, and continues to engage, in discussions which are at various stages of advancement, with third parties concerning possible dispositions of assets. 

As part of the Realization Strategy, during the quarter, the Company announced its intention to make a normal course issuer bid through the facilities of the Toronto Stock Exchange.  As at the date hereof, the Company has repurchased for cancellation 309,900 shares at an average price of $1.79 per share (excluding commission) pursuant to the terms and conditions of the Company's normal course issuer bid.

Further to its announcement on September 23, 2010, that it may make a substantial issuer bid by way of modified "Dutch Auction" (the "Issuer Bid") as a form of distribution to shareholders prior to December 31, 2010, the Company has, on the date hereof, announced the terms of the Issuer Bid pursuant to which the Company is offering to repurchase for cancellation up to $31.0 million in value of its shares from shareholders.  The range of offer prices will be $1.80 to $2.10 per share.  The Issuer Bid will expire at 5:00 pm (Toronto time) on December 17, 2010, unless it is extended or withdrawn. 

Third Quarter 2010 Financial Results 

Statement of Operations Highlights  
In Canadian $ millions except per share amounts 3rd quarter ended Sept 30,     Nine months ended Sept 30,  
2010     2009     2010     2009  
Revenue $ 0.8     $ 1.3     $ 3.3     $ 4.0  
Net results of investments1   (4.3 )     0.1       (1.8 )     5.2  
Expenses, taxes and non-controlling interest   (0.3 )     (3.3 )     (6.2 )     (6.9 )
Net earnings (loss) from continuing operations $ (3.8 )   $ (1.9 )   $ (4.7 )   $ 2.22  
Net earnings from discontinued operations   -       -       -       0.0  
Net earnings (loss) $ (3.8 )   $ (1.9 )   $ (4.7 )   $ 2.3  
Add back: one-time expenses related to the strategic review process (2010), severance (2010) and the Internalization (2009)   0.0       1.5       3.5       2.1  
Net earnings (loss) excluding one-time expenses $ (3.8 )   $ (0.4 )   $ (1.2 )   $ 4.4  
                               
Net earnings (loss) per share $ (0.14 )   $ (0.07 )   $ (0.17 )   $ 0.09  
Add back: one-time expenses   0.00       0.05       0.13       0.082  
Net earnings (loss) per share excluding one-time expenses $ (0.14 )   $ (0.02 )   $ (0.04 )   $ 0.16  
1 Includes the gain on sale of AgriFinancial Canada Corp. (net of tax) which has been reclassified from discontinued operations (as reported under GAAP).
2 Rounding.
 

 

Balance Sheet Highlights             
In Canadian $ millions except per share amounts   September
30, 2010
    December
31, 2009
 
Cash and liquid assets   $ 39.9     $ 14.5  
Investments in private entities and CRFC     24.7       46.6  
Investment in Charter REIT     -       7.5  
Other assets     0.8       2.9  
Total Assets
  $
64.4
    $
71.5
 
Total Liabilities     2.5       3.9  
Total Shareholders' Equity   $ 62.01     $ 67.6  
                 
Number of shares outstanding (millions)     26.6       26.7  
Net book value per share   $ 2.33     $ 2.53  
Closing market price per share   $ 1.80     $ 1.33  
Market price discount to net book value     23 %     47 %
1 Rounding.                 

Financial Results Discussion

Consolidated revenues for the third quarter ended September 30, 2010 were significantly lower when compared to the same period in 2009.  Moreover, consolidated revenues were lower by $0.7 million for the nine months ended September 30, 2010 compared to the same period in 2009.  The Company recorded lower interest and investment income as the Company disposed of its interest in Bermingham during the quarter.  The Company also recognized lower asset management fees compared to 2009 as a result of (i) the termination of management agreement between the Company and Charter REIT which occurred in the second quarter 2010 in connection with the sale of the Company's interest in Charter REIT, and (ii) a reduction in assets under management at Barlow Capital Management Inc. ("Barlow").

Additionally, it should be noted that, the Company generated cash flow of $0.2 million in the third quarter of 2010 from distributions received from its investments in CRFC (year-to-date $1.0 million from CRFC and Charter REIT) that are not classified as interest and investment income but as a return of capital for accounting purposes and therefore are not recognized as revenue.

Consolidated net results of investments resulted in a loss of $4.3 million for the third quarter ended September 30, 2010 compared to a gain of $0.1 million for the same quarter ended 2009.  The loss in the third quarter 2010 was primarily as a result of the $4.0 million impairment loss on the Company's investment in CRFC and the intangible asset related to CRFC.  The Company also recorded a realized gain of $0.7 million offset by a change in unrealized loss of $1.2 million as a result of the Company's dispositions of its investments in private entities.      

For the nine month period ended September 30, 2010, the Company reported a $1.8 million loss on net results of investments compared to a gain of $5.2 million for the same nine month period ended 2009.  The Company reported a $4.0 million impairment loss on the Company's investment in CRFC and the intangible asset related to CRFC.  This was offset by $2.1 million gain on the sale of the Company's investment in Charter REIT that occurred in the second quarter 2010.   For the nine month period ended 2009, the Company reported a $6.9 million gain on the sale of AgriFinancial Canada Corp. offset by a $2.1 million impairment loss on goodwill and intangible assets related to Barlow. 

The Company's consolidated expenses, taxes and non-controlling interests decreased by $2.9 million for the third quarter ended September 30, 2010 compared to the same period in 2009. After deducting one-time expenses, the Company decreased its operating expenses year-over-year by $1.1 million. Similarly, for the nine month period ended September 30, 2010, the Company has reduced operating expenses as total headcount have declined year-over-year and other administration and corporate expenses have been reduced.  This was primarily driven by a restructuring of the Company's cost structure over the past nine months and a restructuring of the Barlow cost structure which took place in the second quarter 2009.

For the third quarter ended 2010, the Company incurred one-time expenses of less than $0.1 million related to the strategic review process as the process came to its completion in early August 2010.  Total one-time expenses related to the strategic review process and severance for the nine month period ended September 30, 2010 totaled $3.5 million.  Additional one-time expenses may also be incurred in the future as the Company continues to execute its Realization Strategy.

Financial Information

C.A. Bancorp's third quarter 2010 consolidated financial statements and Management's Discussion and Analysis of the results will be available on its website at www.cabancorp.com and on SEDAR at www.sedar.com.

C.A. Bancorp Inc.

C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. C.A. Bancorp is focused on investments in small- and middle-capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors.  The Company is currently implementing its Realization Strategy.

This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue" or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Without limiting the generality of the foregoing, there can be no assurance of any kind that the realization strategy will yield a value equal or close to the net book value per Company common share. These forward-looking statements are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company's Annual Information Form, elsewhere in the Management's Discussion and Analysis for the year ended December 31, 2009 and in the Directors' Circular dated June 4, 2010 and in our other filings with Canadian securities regulators. Additional important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel, ability of the Company to generate positive future returns for investors, Company's success in preserving capital, managing debt, maintaining liquidity and managing operating costs. This news release makes reference to net results of investments that are different than reported under Canadian GAAP.

C.A. Bancorp has reclassified its interest in AgriFinancial from Discontinued Operations to Net Results of Operations. C.A. Bancorp believes that it is more appropriate to classify AgriFinancial under Net Results of Operations because it is more akin to a private equity investment and the capital gains from the sale of AgriFinancial would normally fall in Net Results of Operations if it were a non-consolidated private equity investment. C.A. Bancorp's method of classifying AgriFinancial is a Non-GAAP financial measure that does not have any standardized meaning prescribed by Canadian GAAP and therefore it is unlikely to be comparable to similar measures presented by other issuers. This classification is not a Canadian GAAP measure and should not be considered either in isolation of, or as a substitute for, measures prepared in accordance with Canadian GAAP. For a reconciliation of this Non-GAAP financial measure to Canadian GAAP, please see the Company's MD&A. In addition, this news release makes reference to the net book value per share which is a non-GAAP financial measure. The Company calculates the net book value per share as it believes it to be an important metric that shareholders use and frequently request and refer to because shareholders often view the Company as an holding company of investments in private entities. Net book value is a non-GGAP financial measure that does not have any standardized meaning prescribed by Canadian GAAP and therefore it is unlikely to be comparable to similar measures presented by other issuers. This classification is not a Canadian GAAP measure and should not be considered either in isolation of, or as a substitute for, measures prepared in accordance with Canadian GAAP.

C.A. Bancorp Inc.
The Exchange Tower
130 King Street West, Suite 2810 Toronto, Ontario M5X 1A4
Telephone: (416) 214-5985
Fax: (416) 861-8166

Contact Information