CIBC (Stock symbol CM … I can never quite decide how to present it!) has released its Second Quarter 2008 Report and Supplementary Package, so it’s time to recalculate how much room they have to issue new preferred shares – assuming they want to!
Step One is to analyze their Tier 1 Capital, reproducing the prior format:
| CM Capital Structure October, 2007 & April, 2008 |
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| 4Q07 | 2Q08 | |
| Total Tier 1 Capital | 12,379 | 12,009 |
| Common Shareholders’ Equity | 90.1% | 90.3% |
| Preferred Shares | 23.7% | 24.4% |
| Innovative Tier 1 Capital Instruments | 0% | 0% |
| Non-Controlling Interests in Subsidiaries | 1.1% | 1.2% |
| Goodwill | -14.9% | -16.0% |
Next, the issuance capacity (from Part 3 of the introductory series):
| CM Tier 1 Issuance Capacity October 2007 & April 2008 |
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| 4Q07 | 2Q08 | ||
| Equity Capital | (A) | 9,448 | 9,078 |
| Non-Equity Tier 1 Limit | (B=A/3), 4Q07 (B=0.428*A), 2Q08 |
3,149 | 3,885 |
| Innovative Tier 1 Capital | (C) | 0 | 0 |
| Preferred Limit | (D=B-C) | 3,149 | 3,885 |
| Preferred Actual | (E) | 2,931 | 2,931 |
| New Issuance Capacity | (F=D-E) | 218 | 954 |
| Items A, C & E are taken from the table “Regulatory Capital” of the supplementary information; Note that Item A includes Goodwill, FX losses, non-controlling interest, Gains on sale of securitizations and 50/50 deductions Item B is as per OSFI Guidelines; the limit was recently increased. Items D & F are my calculations |
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and the all important Risk-Weighted Asset Ratios!
| CM Risk-Weighted Asset Ratios October 2007 & April 2008 |
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| Note | 2007 | 2Q08 | |
| Equity Capital | A | 9,448 | 9,078 |
| Risk-Weighted Assets | B | 127,424 | 114,767 |
| Equity/RWA | C=A/B | 7.41% | 7.91% |
| Tier 1 Ratio | D | 9.7% | 10.5% |
| Capital Ratio | E | 13.9% | 14.4% |
| Assets to Capital Multiple | F | 19.0x | 19.3x |
| A is taken from the table “Issuance Capacity”, above B, D & E are taken from CM’s Supplementary Report C is my calculation. F is from Page 26 of the quarterly report |
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