The Successful Investor Hotline – Friday, August 28, 2009

Article Excerpt

CANADIAN IMPERIAL BANK OF COMMERCE, $64.11, Toronto symbol CM, set aside roughly $3 billion in August 2005 to settle a class-action lawsuit related to its involvement with failed energy company Enron Corp. In its 2008 fourth quarter, which ended October 31, 2008, the bank recorded a $486-million tax benefit related to this settlement. The Canadian Revenue Agency is now challenging this deduction, and may take CIBC to court. If CIBC wins, it will recognize a further tax gain of $214 million. If it loses, it will have to pay $826 million. To put these figures in context, CIBC earned $434 million, of $1.02 a share, in the three months ended July 31, 2009. That’s a big improvement over the $71 million, or $0.11 a share, it earned a year earlier. However, if you exclude several unusual items, such as writedowns of securities, earnings per share fell 21.9%, to $1.29 from $1.65. On that basis, analysts were expecting $1.41 a share…