Canadian Western Bank updated June 3, 2017

Canadian Western Bank is updated and rated Strong Buy at $25.37. In the December and March updates I was fairly lukewarm on it due to risks of loan losses. But now the stock has fallen down to only 105% of book value. The decline seems to be related to troubles at Home Capital and speculation that CWB will suffer mortgage loan losses or unacceptably high deposit costs.  But, it has now reported another quarter with no serious loan losses and is projecting growth and seems to refute that the it faces any serious problems on the small part of its business that is similar to that of Home Capital. Loan losses will remain somewhat higher than recent years and could spike unexpectedly. But the bank indicates that even under serious stress conditions it expects to still report profits. All in all, I believe this stock is now priced to provide quite strong returns in the next one to three years. Book value is likely to continue to increase with retained earnings. And the multiple to book value is likely to increase as current temporary concerns abate. I had earlier reduced my position at prices around $30 to $32. I have now added to my position on the way down at about $28, $26, $25 and $24. There are no guarantees but I feel good about holding 11% of my portfolio in CWB shares.