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Laurentian Bank resolves issue on B2B Bank-underwritten mortgages

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Laurentian Bank resolves issue on B2B Bank-underwritten mortgages

Laurentian Bank of Canada has resolved the situation with mortgages underwritten by unit B2B Bank that were sold to a third party.

The Montreal-based company, in the fiscal first quarter, repurchased C$89 million in ineligible mortgages with documentation problems that were underwritten by B2B Bank. With the third party purchaser completing the confirmatory audit of Laurentian Bank's review of these mortgages, no further repurchases are required. The company also repurchased C$91 million in low loan-to-value mortgages that were sold to the same third party purchaser.

B2B Bank will get back about C$17 million out of the C$40 million additional indemnity cash reserve that it had given to the third-party purchaser. The rest of the amount will be retained as credit enhancement by the third-party purchaser and will be released after the amortization of B2B Bank's underwritten mortgages.

The branch-underwritten mortgages sold to the third-party purchaser are still under review by Laurentian Bank, with completion expected in the fiscal second quarter.

Regarding the mortgages it sold to the Canadian Mortgage and Housing Corp., Laurentian Bank repurchased C$88 million of inadvertently insured mortgage loans in the fiscal second quarter.

The company has repurchased C$268 million ineligible mortgage loans out of the C$392 million problematic loans it has identified.

Laurentian Bank reported net income of C$59.7 million, or C$1.41 per share, in the fiscal first quarter, compared to net income of C$48.5 million, or C$ 1.30 per share, a year ago.