CM Capitalization : 2Q08

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
  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):

Tier 1 Issuance Capacity
October 2007
& April 2008
  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

and the all important Risk-Weighted Asset Ratios!

Risk-Weighted Asset Ratios
October 2007
& April 2008
  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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