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Press release from CNW Group

Laurentian Bank reports 2011 results under International Financial Reporting Standards

Wednesday, March 07, 2012

Laurentian Bank reports 2011 results under International Financial Reporting Standards08:41 EST Wednesday, March 07, 2012MONTREAL, March 7, 2012 /CNW Telbec/ - Laurentian Bank of Canada released today its unaudited quarterly and full year financial results for 2011 prepared in accordance with International Financial Reporting Standards (IFRS). The Bank adopted IFRS on November 1, 2011 and released, concurrently with this press release, its first interim financial statements under IFRS for the quarter ended January 31, 2012.The release of the Bank's 2011 IFRS quarterly financial results, as well as the additional information in the Supplementary Information for the period ended January 31, 2012, provides a comprehensive view of the key impacts of the Bank's adoption of IFRS on its financial results for 2011, which will prove useful when analyzing the Bank's financial results for the upcoming quarters. The following information summarizes the impact of adopting IFRS on the results for 2011 and reflects the Bank's choice of elections on first-time adoption and choice of accounting policies available under IFRS, and should be read in conjunction with the Bank's 2011 Annual Report section Future Changes to Accounting Policies - IFRS on pages 60 to 66, as well as the supplementary information for the period ended January 31, 2012.Note that the transition to IFRS is only an accounting change and does not reflect a change in the underlying business or strategies of the Bank.The following table provides a summary of the differences between Canadian Generally Accepted Accounting Principles (Canadian GAAP)1 and IFRS in measuring the Bank's financial performance for each quarter and year ended in 2011.Key Performance Indicators for 2011 [1] FOR THE THREE MONTHS ENDED  FOR THE YEARENDED In thousands of Canadian dollars (Unaudited)OCTOBER 312011 JULY 312011 APRIL 302011 JANUARY 312011  OCTOBER 312011 Net income - Canadian GAAP $28,572 $35,282 $30,142 $33,493  $127,489 Adjustments - net of income taxes (1,863)  (6,210)  874  3,427   (3,772) Net income - IFRS$ 26,709 $ 29,072 $31,016 $ 36,920  $123,717                  Diluted earnings per share                 Canadian GAAP$1.06 $1.34 $1.13 $1.27  $4.81  IFRS$0.99 $1.08 $1.17 $1.41  $4.65                  Return on common shareholders' equity  Canadian GAAP 9.4% 12.1% 10.7% 11.9%  11.0% IFRS 10.0% 11.2% 12.7% 15.2%  12.2%                 Adjusted metrics - Excluding Transaction and Integration Costs [2]Adjusted net income - Canadian GAAP$34,412 $35,282 $30,142 $33,493  $133,329 Adjustments - net of income taxes (1,037)  (6,210)  874  3,427   (2,946) Adjusted net income - IFRS$ 33,375 $ 29,072 $31,016 $ 36,920  $130,383                  Adjusted diluted earnings per share                 Canadian GAAP$1.31 $1.34 $1.13 $1.27  $5.05  IFRS [3]$1.26 $1.08 $1.17 $1.41  $4.93                  Adjusted return on common shareholders' equity  Canadian GAAP 11.6% 12.1% 10.7% 11.9%  11.6% IFRS 12.8% 11.2% 12.7% 15.2%  12.9%[1] See the non-GAAP financial measures below.[2] Excluding the integration costs related to the recently acquired MRS Companies (which include M.R.S. Inc.; MRS Trust Company; M.R.S. Securities Services Inc.; and M.R.S. Correspondent Corporation) and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds.[3] The impact of Transaction and Integration Costs on a per share basis does not add due to rounding.As shown in the table above, for the year ended October 31, 2011, net income was $123.7 million or $4.65 diluted per share under IFRS, compared to $127.5 million or $4.81 diluted per share, under previous Canadian GAAP. Return on common shareholders' equity was 12.2% under IFRS in 2011, compared to 11.0% in 2011 under previous Canadian GAAP.Excluding the integration costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds (Transaction and Integration Costs or T&I Costs), for the year ended October 31, 2011, net income was $130.4 million or $4.93 diluted per share under IFRS, compared to $133.3 million or $5.05 diluted per share, under previous Canadian GAAP. Excluding these one-time costs, return on common shareholders' equity was 12.9% under IFRS in 2011, compared to 11.6% in 2011 under previous Canadian GAAP.As detailed below, the main adjustments relate to securitization activities and employee benefits with regards to pension plans.IFRS Quarterly Earnings ImpactThe following table presents the reconciliation between the net income reported under Canadian GAAP and net income reported in accordance with IFRS, for each 2011 quarter. FOR THE THREE MONTHS ENDED FOR THE YEARENDEDIn thousands of Canadian dollars (Unaudited)OCTOBER 312011 JULY 312011 APRIL 302011 JANUARY 312011 OCTOBER 312011               Net income - Canadian GAAP$28,572 $35,282 $30,142 $33,493 $127,489Adjustments               Securitization (3,343)  (4,066)  (2,588)  (3,003)  (13,000) Hedge accounting (282)  83  69  280  150 Employee benefits 2,110  1,898  1,897  1,898  7,803 Loan loss provisioning -  (4,147)  879  3,292  24 Business combination (826)  -  -  -  (826) Consolidation of B2B Trust 217  218  217  218  870 Share-based payments 393  (390)  (286)  704  421 Securities (53)  51  246  75  319 Tax accounting (40)  232  604  -  796 Other (39)  (89)  (164)  (37)  (329)  (1,863)  (6,210)  874  3,427  (3,772)Net income - IFRS$26,709 $29,072 $31,016 $36,920 $123,717 Nature of AdjustmentsThe following paragraphs present both the quarterly impact on the income statement's line items as well as the impact on net income for the year ended October 31, 2011.a) SecuritizationThe Bank securitizes residential mortgage loans primarily by participating to the Canada Mortgage Bonds Program (CMB Program) and through multi-seller conduits set up by large Canadian banks. According to Canadian GAAP, these securitization transactions met derecognition criteria and therefore were accounted for as transfers of receivables. Under IFRS, these transactions do not meet derecognition criteria and therefore were recorded as financing transactions.The difference in accounting treatment between Canadian GAAP and IFRS for these securitization transactions has resulted in the following adjustments to the Bank's consolidated statement of income:Reversal of gains and losses on securitization, including gains and losses on seller swaps2, on securities previously designated as at fair value through profit or loss3 and on retained interests, as well as amortization of servicing liability previously recognized in net income under Canadian GAAP;Recognition of interest income earned on the securitized mortgages and Replacement Assets4 not previously recognized under Canadian GAAP;Recognition of interest expense on the debt related to securitization activities not previously recognized under Canadian GAAP; andAs of the first quarter of 2011, as a result of these changes, the Bank also modified certain hedging relationships in order to realign income recognition on derivatives used to hedge securitization activities.The adjustments to the income statements are summarized as follows:  FOR THE THREE MONTHS ENDED  FOR THE YEARENDED In thousands of Canadian dollars (Unaudited) OCTOBER 312011 JULY 312011 APRIL 302011 JANUARY 312011  OCTOBER 312011 Increase in interest income                  Increase in interest income due to the recording of the securitizedresidential mortgage loans and Replacement Assets $41,441 $42,623 $39,733 $37,853  $161,650  Decrease in other interest income, including derivatives  (74)  (1,932)  (1,311)  (1,813)   (5,130)    41,367  40,691  38,422  36,040   156,520 Increase in interest expense                  Increase in interest expense due to the recording of the debt relatedto securitization activities  38,552  36,333  33,983  31,875   140,743 Increase in net interest income  2,815  4,358  4,439  4,165   15,777 Decrease in other income                  Reversal of gains on sales and other income related tosecuritization activities  (8,831)  (10,201)  (7,564)  (8,890)   (35,486)  Other  1,037  178  (448)  543   1,310 Decrease in other income  (7,794)  (10,023)  (8,012)  (8,347)   (34,176) Increase in other expenses  93  37  55  27   212 Decrease in income taxes  (1,729)  (1,636)  (1,040)  (1,206)   (5,611) Decrease in net income $(3,343) $(4,066) $(2,588) $(3,003)  $(13,000) Average assets related to securitization activities - adjustment $4,471,621 $4,149,135 $3,855,686 $3,581,304  $4,014,436 Net interest income as a percentage of average assets related tosecuritization activities  0.25% 0.42% 0.46% 0.46%  0.39%b) Hedge accountingIn accordance with Canadian GAAP, the Bank used the shortcut method and the variable cash flow method to measure the ineffectiveness of certain hedging relationships. As these methods cannot be used under IFRS, the Bank has developed admissible substitute quantitative methods. Other hedging relationships that were already using methods admissible under IFRS have not been modified and did not require any adjustments on the transition date.In addition, the Bank reviewed and modified certain hedging relationships designated under Canadian GAAP due to changes in accounting for securitization transactions as explained above. The impact of these changes is included in the securitization adjustments above.c) Employee benefitsActuarial gains and lossesUnder Canadian GAAP, actuarial gains and losses were amortized through income using a corridor approach over the estimated average remaining service life (EARSL) of employees. At the transition date, the Bank elected to use the exemption from retrospective application permitted by IFRS 1 and recorded the accumulated actuarial losses in retained earnings. Under IFRS, the Bank has elected that additional actuarial gains and losses recognized after the transition date will be amortized using a corridor approach.Vested past service costs and transitional obligationUnder Canadian GAAP, vested past service costs of defined benefit plans and transitional obligation resulting from the initial application of the accounting standard with respect to employee future benefits were amortized over the EARSL of plan participants. Under IFRS, these deferred costs were recognized in retained earnings at the transition date.As a result of the above, amortization of actuarial losses and other deferred amounts, previously recognized in salaries and employee benefits, was reversed under IFRS.d) Loan loss provisioning As part of the IFRS conversion, the Bank improved its methodology to assess provisions for groups of similar loans (collective allowances). Collective allowances are established based on the risk rating of credit facilities and on parameters such as the related probability of default (loss frequency) and the loss given default (extent of losses) associated with each type of facility. The improved methodology relies more heavily on the current status of the portfolios in accordance with IFRS requirements. The Bank had already estimated the collective allowance as of July 31, 2011 using the adjusted methodology in its Canadian GAAP financial statements. As a result, from July 31, 2011, the calculation of the provision for loan losses is harmonized under IFRS and Canadian GAAP, except for the presentation items noted below.Under IFRS, as under Canadian GAAP, loan loss provisions must reflect the time value of money. Under Canadian GAAP, the accretion of the net present value of the written down amount of the loan due to the passage of time was recognized as a reduction of the provision for loan losses. Under IFRS, the accretion must be recognized as interest income based on the original effective interest rate of the loan.In addition, the allowance for undrawn amounts under approved credit facilities was reclassified from the general allowance to the other liabilities and the related expense is now presented as part of other non-interest expenses.The adjustments to the provision for loan losses presented in the table below reflect the variation of the allowance due to the improved methodology for the three-month periods ended January 31, 2011,  April 30, 2011 and July 31, 2011, as well as the effect of reclassifications to net interest income and other non-interest expenses for all periods presented. FOR THE THREE MONTHS ENDED FOR THE YEARENDEDIn thousands of Canadian dollars (Unaudited)OCTOBER 312011 JULY 312011 APRIL 302011 JANUARY 312011 OCTOBER 312011Increase in net interest income (accretion on impaired loans)$1,082 $1,130 $985 $900 $4,097Decrease (increase) in provision for loan losses (999)  (6,640)  16  3,543  (4,080)Decrease (increase) in other non-interest expenses (allowance for undrawn amounts) (83)  (174)  231  169  143  -  (5,684)  1,232  4,612  160Decrease (increase) in income taxes -  1,537  (353)  (1,320)  (136)Increase (decrease) in net income$- $(4,147) $879 $3,292 $24e) Business combinationUnder Canadian GAAP, acquisition-related costs, such as legal fees, were recognized as costs of the business combination. Under IFRS, these costs are expensed. As a result, the costs previously deferred under Canadian GAAP with regards to the acquisition of the MRS Companies were charged to non-interest expenses.f) Consolidation of B2B TrustUnder Canadian GAAP, the acquisition of the minority shareholders of B2B Trust in June 2004 was accounted for as a step acquisition and resulted in the accounting of an intangible asset related to contractual relationships with financial intermediaries and customer relationships. Under IFRS, the repurchase of the minority shareholders is considered an equity transaction as the Bank already had control of its subsidiary prior to the repurchase. As a result, under IFRS the excess of the purchase price over the book value of the minority interest was recognized in retained earnings, rather than allocated to the contractual and customer relationships intangible asset as required under Canadian GAAP. Consequently, the related amortization expense of that intangible recorded under Canadian GAAP was eliminated under IFRS.The restatement of the repurchase of the minority shareholders of B2B Trust resulted in a decrease in non-interest expense.g) Share-based paymentsUnder Canadian GAAP, for the stock appreciation rights (SARs) settled in cash, the excess of the share price over the exercise price, reviewed on an ongoing basis, was recognized in income during the SARs' vesting period. Under IFRS, the Bank is required to recognize as an expense the fair value of SARs during the vesting period. The Bank measures the fair value of the SARs using the Black and Scholes option pricing model, taking into account the terms and conditions upon which the SARs were granted. The impact of the revaluation was recorded in salaries and benefits.h) SecuritiesUnder Canadian GAAP, an impairment expense was recognized on available-for-sale securities when there was objective evidence of impairment and when that impairment was considered to be other than temporary. Under IFRS, an impairment of these securities should be recognized as soon as there is objective evidence of the impairment. As a result, unrealized gains and losses on identified securities recorded in accumulated other comprehensive income were adjusted to other income.i) Tax accountingUnder Canadian GAAP, changes in income taxes in a subsequent period were generally charged to the income statement regardless of where the underlying transaction was initially recorded. Under IFRS, deferred taxes that are related to items that have been charged to equity in previous periods are charged directly to equity in a manner consistent with the underlying transaction. The impact was recorded in income tax expense.Expected Regulatory Capital Implications as a Result of the Adoption of IFRS The IFRS conversion has had a significant impact on capital. Had the adjustments resulting from the IFRS transition been applied to the Bank's financial statements as at October 31, 2011, they would have had negative impacts of 90 basis points on the Tier 1 capital ratio and 90 basis points on the total capital ratio. The Office of the Superintendent of Financial Institutions Canada issued in March 2010 an Advisory that permits a five-quarter phase-in of the adjustment to retained earnings arising from the first-time adoption of certain IFRS changes for purposes of calculating certain ratios. The Bank has elected to phase-in the adjustments. Therefore, the impact of the IFRS transition on the Bank's capital ratios will only be fully reflected as of January 31, 2013.Caution Regarding Forward-Looking StatementsIn this document and in other documents filed with Canadian regulatory authorities or in other communications, Laurentian Bank of Canada may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements include, but are not limited to, statements regarding the Bank's business plan and financial objectives. The forward-looking statements contained in this document are used to assist the Bank's security holders and financial analysts in obtaining a better understanding of the Bank's financial position and the results of operations as at and for the periods ended on the dates presented and may not be appropriate for other purposes. Forward-looking statements typically use the conditional, as well as words such as prospects, believe, estimate, forecast, project, expect, anticipate, plan, may, should, could and would, or the negative of these terms, variations thereof or similar terminology.By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other forward-looking statements will not be achieved or will prove to be inaccurate. Although the Bank believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct.The Bank cautions readers against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various material factors. Among other things, these factors include capital market activity, changes in government monetary, fiscal and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition, credit ratings, scarcity of human resources and technological environment. The Bank further cautions that the foregoing list of factors is not exhaustive. For more information on the risks, uncertainties and assumptions that would cause the Bank's actual results to differ from current expectations, please also refer to the Bank's Annual Report under the title "Integrated Risk Management Framework" and other public filings available at www.sedar.com.With respect to the MRS Companies transaction, such factors also include, but are not limited to: the anticipated benefits from the transaction such as it being accretive to earnings and synergies may not be realized in the time frame anticipated; the ability to promptly and effectively integrate the businesses; reputational risks and the reaction of B2B Trust's or MRS Companies' customers to the transaction; and diversion of management time on acquisition-related issues.The Bank does not undertake to update any forward-looking statements, whether oral or written, made by itself or on its behalf, except to the extent required by securities regulations.Non-GAAP Financial Measures The Bank has adopted IFRS as its accounting framework. IFRS are the generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after January 1, 2011. The Bank uses both GAAP and certain non-GAAP measures to assess performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are unlikely to be comparable to any similar measures presented by other companies. These non-GAAP financial measures are considered useful to investors and analysts in obtaining a better understanding of the Bank's financial results and analyzing its growth and profit potential more effectively. The Bank's non-GAAP financial measures are defined as follows:Book value per common shareThe Bank's book value per common share is defined as common shareholders' equity, excluding accumulated other comprehensive income, divided by the number of common shares outstanding at the end of the period.Return on common shareholders' equityReturn on common shareholders' equity is a profitability measure calculated as the net income available to common shareholders as a percentage of average common shareholders' equity, excluding accumulated other comprehensive income.Net interest marginNet interest margin is the ratio of net interest income to total average assets, expressed as a percentage or basis points.Efficiency ratio and operating leverageThe Bank uses the efficiency ratio as a measure of its productivity and cost control. This ratio is defined as non-interest expenses as a percentage of total revenue. The Bank also uses operating leverage as a measure of efficiency. Operating leverage is the difference between total revenue and non-interest expenses growth rates.Adjusted GAAP and non-GAAP measuresCertain analyses presented in this document are based on the Bank's core activities and therefore exclude the effect of the integration costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds.About Laurentian BankLaurentian Bank of Canada is a banking institution operating across Canada and offering its clients diversified financial services. Distinguishing itself through excellence in service, as well as through its simplicity and proximity, the Bank serves individual consumers and small and medium-sized businesses. The Bank also offers its products to a wide network of independent financial intermediaries through B2B Trust, as well as full-service brokerage solutions through Laurentian Bank Securities.Laurentian Bank is well established in the Province of Québec, operating the third-largest retail branch network. Elsewhere throughout Canada, it operates in specific market segments where it holds an enviable position. Laurentian Bank of Canada more than $29 billion in balance sheet assets and more than $32 billion in assets under administration. Founded in 1846, it has been selected as the Québec and Atlantic Canada regional winner of the Canada's 10 Most Admired Corporate CulturesTM program presented by Waterstone Human Capital. The Bank employs close to 4,000 people.Access to Quarterly Results MaterialsInterested investors, the media and others may review this press release, interim consolidated financial statements, supplementary financial information and our report to shareholders which are posted on our web site at www.laurentianbank.ca.Conference CallLaurentian Bank invites media representatives and the public to listen to the conference call with financial analysts to be held at 2:00 p.m. Eastern Time on Wednesday, March 7, 2012. The live, listen-only, toll-free, call-in number is 514-861-2255 or 1-866-696-5910 Code 1035375#.You can listen to the call on a delayed basis at any time from 6:00 p.m. on Wednesday, March 7, 2012 until 11:59 p.m. on April 6, 2012, by dialing the following playback number: 514-861-2272 or 1-800-408-3053 Code 1063231#. The conference call can also be heard through the Investor Relations section of the Bank's Web site at www.laurentianbank.ca. The Bank's Website also offers additional financial information._____________________________________________1 Reference to Canadian GAAP throughout this release relates to Canadian GAAP prior to the adoption of IFRS.2 As part of securitization transactions, the Bank enters into seller swaps which are designed to protect the conduits against interest rate and pre-payment risks. These seller swaps are derivatives and were therefore marked-to-market through the consolidated statement of income. Gains and losses on the seller swaps that were recognized in net income under Canadian GAAP were reversed under IFRS as the cash flows associated with these swaps are captured in the interest income recognized on the securitized mortgages and Replacement Assets and the interest expense recognized on the securitization liabilities under IFRS.3 These securities were designated as at fair value through profit or loss under Canadian GAAP in order to offset changes in the fair value of seller swaps. As seller swaps are no longer recognized under IFRS, the designation of these securities was amended.4 Replacement Assets consist of cash, deposits with other banks, securities purchased under reverse repurchase agreements and securities which were previously off balance sheet to manage the maturity mismatch between the amortizing securitized mortgages and the off-balance sheet securitization liabilities related to the CMB Program. RECONCILIATION OF INCOME STATEMENT BETWEEN CANADIAN GAAP AND IFRS                    In thousands of Canadian dollars, except per share amounts (Unaudited)FOR THE THREE MONTHS ENDED OCTOBER 31, 2011  FOR THE THREE MONTHS ENDED JULY 31, 2011  CANADIANGAAP [1] ADJUSTMENTS [2] IFRS  CANADIANGAAP [1] ADJUSTMENTS [2] IFRS                     Interest income                    Loans$202,915 $39,048 $241,963  $203,304 $40,704 $244,008  Securities 15,340  3,457  18,797   15,737  3,040  18,777  Deposits with other banks 1,066  18  1,084   1,584  10  1,594  Other, including derivatives 15,826  (74)  15,752   18,221  (1,932)  16,289   235,147  42,449  277,596   238,846  41,822  280,668 Interest expense                    Deposits 110,069  -  110,069   112,032  -  112,032  Debt related to securitization activities -  38,552  38,552   -  36,333  36,333  Subordinated debt 2,432  -  2,432   2,411  -  2,411  Other, including derivatives 152  -  152   466  -  466   112,653  38,552  151,205   114,909  36,333  151,242 Net interest income 122,494  3,897  126,391   123,937  5,489  129,426 Other income                    Fees and commissions on loans and deposits 29,960  (627)  29,333   30,240  (792)  29,448  Income from brokerage operations 8,332  -  8,332   10,221  -  10,221  Securitization income 8,831  (8,831)  -   10,201  (10,201)  -  Credit insurance income 4,994  -  4,994   4,104  -  4,104  Income from treasury and financial market operations 5,328  569  5,897   4,555  364  4,919  Income from sales of mutual funds 4,258  -  4,258   4,483  -  4,483  Income from registered self-directed plans 1,505  -  1,505   1,674  -  1,674  Other income 1,712  -  1,712   1,558  -  1,558   64,920  (8,889)  56,031   67,036  (10,629)  56,407 Total revenue 187,414  (4,992)  182,422   190,973  (5,140)  185,833 Provision for loan losses 12,000  999  12,999   8,000  6,640  14,640 Non-interest expenses                    Salaries and employee benefits 73,716  (3,285)  70,431   72,466  (2,112)  70,354  Premises and technology 35,332  43  35,375   36,198  84  36,282  Other 23,077  (737)  22,340   28,108  (848)  27,260  Costs related to an acquisition and other [3] 8,180  826  9,006   -  -  -   140,305  (3,153)  137,152   136,772  (2,876)  133,896 Income before income taxes 35,109  (2,838)  32,271   46,201  (8,904)  37,297 Income taxes 6,537  (975)  5,562   10,919  (2,694)  8,225 Net income$28,572 $(1,863) $26,709  $35,282 $(6,210) $29,072 Preferred share dividends, including applicable taxes 3,111  -  3,111   3,107  -  3,107 Net income available to common shareholders$25,461 $(1,863) $23,598  $32,175 $(6,210) $25,965 Average number of common shares outstanding (in thousands)                    Basic 23,925  -  23,925   23,925  -  23,925  Diluted 23,941  -  23,941   23,943  -  23,943 Earnings per share                    Basic$1.06 $(0.07) $0.99  $1.34 $(0.25) $1.09  Diluted$1.06 $(0.07) $0.99  $1.34 $(0.26) $1.08                     Net interest margin 2.00% (0.24)% 1.76%  2.03% (0.20)% 1.83%Efficiency ratio 74.9% 0.3% 75.2%  71.6% 0.5% 72.1%Return on common shareholders' equity 9.4% 0.6% 10.0%  12.1% (0.9)% 11.2%Excluding Transaction and Integration Costs [3]                    Adjusted diluted earnings per share$1.31 $(0.05) $ 1.26  $1.34 $(0.26) $1.08  Adjusted efficiency ratio 70.5% (0.3)% 70.2%  71.6% 0.5% 72.1% Adjusted return on common shareholders' equity 11.6% 1.2% 12.8%  12.1% (0.9)% 11.2%                                        In thousands of Canadian dollars, except per share amounts (Unaudited)FOR THE THREE MONTHS ENDED APRIL 30, 2011  FOR THE THREE MONTHS ENDED JANUARY 31, 2011  CANADIANGAAP [1] ADJUSTMENTS [2] IFRS  CANADIANGAAP [1] ADJUSTMENTS [2] IFRS                       Interest income                    Loans$196,505 $37,928 $234,433  $206,271 $36,145 $242,416  Securities 15,418  2,781  18,199   15,686  2,600  18,286  Deposits with other banks 1,581  8  1,589   1,002  8  1,010  Other, including derivatives 15,507  (1,311)  14,196   16,921  (1,813)  15,108   229,011  39,406  268,417   239,880  36,940  276,820 Interest expense                    Deposits 108,851  -  108,851   113,511  -  113,511  Debt related to securitization activities -  33,983  33,983   -  31,875  31,875  Subordinated debt 2,352  -  2,352   4,379  -  4,379  Other, including derivatives 1,166  -  1,166   452  -  452   112,369  33,983  146,352   118,342  31,875  150,217 Net interest income 116,642  5,423  122,065   121,538  5,065  126,603 Other income                    Fees and commissions on loans and deposits 28,211  (329)  27,882   28,184  159  28,343  Income from brokerage operations 16,592  -  16,592   13,284  -  13,284  Securitization income 7,564  (7,564)  -   8,890  (8,890)  -  Credit insurance income 4,290  -  4,290   5,203  -  5,203  Income from treasury and financial market operations 4,003  (10)  3,993   5,087  1,042  6,129  Income from sales of mutual funds 4,460  -  4,460   4,107  -  4,107  Income from registered self-directed plans 1,990  -  1,990   2,084  -  2,084  Other income 1,965  -  1,965   1,102  -  1,102   69,075  (7,903)  61,172   67,941  (7,689)  60,252 Total revenue 185,717  (2,480)  183,237   189,479  (2,624)  186,855 Provision for loan losses 12,000  (16)  11,984   15,000  (3,543)  11,457 Non-interest expenses                    Salaries and employee benefits 75,416  (2,259)  73,157   72,332  (3,644)  68,688  Premises and technology 34,845  109  34,954   34,464  137  34,601  Other 24,563  (688)  23,875   24,162  (374)  23,788  Costs related to an acquisition and other [3] -  -  -   -  -  -   134,824  (2,838)  131,986   130,958  (3,881)  127,077 Income before income taxes 38,893  374  39,267   43,521  4,800  48,321 Income taxes 8,751  (500)  8,251   10,028  1,373  11,401 Net income$30,142 $874 $31,016  $33,493 $3,427 $36,920 Preferred share dividends, including applicable taxes 3,109  -  3,109   3,109  -  3,109 Net income available to common shareholders$27,033 $874 $27,907  $30,384 $3,427 $33,811 Average number of common shares outstanding (in thousands)                    Basic 23,923  -  23,923   23,922  -  23,922  Diluted 23,946  -  23,946   23,942  -  23,942 Earnings per share                    Basic$1.13 $0.04 $1.17  $1.27 $0.14 $1.41  Diluted$1.13 $0.04 $1.17  $1.27 $0.14 $1.41                     Net interest margin 2.01% (0.18)% 1.83%  2.03% (0.17)% 1.86%Efficiency ratio 72.6% (0.6)% 72.0%  69.1% (1.1)% 68.0%Return on common shareholders' equity 10.7% 2.0% 12.7%  11.9% 3.3% 15.2%Excluding Transaction and Integration Costs [3]                    Adjusted diluted earnings per share$1.13 $0.04 $1.17  $1.27 $0.14 $1.41  Adjusted efficiency ratio 72.6% (0.6)% 72.0%  69.1% (1.1)% 68.0% Adjusted return on common shareholders' equity 10.7% 2.0% 12.7%  11.9% 3.3% 15.2%In thousands of Canadian dollars, except per share amounts (Unaudited)FOR THE YEAR ENDED OCTOBER 31, 2011  CANADIANGAAP [1] ADJUSTMENTS [2] IFRS           Interest income          Loans$808,995 $153,825 $962,820  Securities 62,181  11,878  74,059  Deposits with other banks 5,233  44  5,277  Other, including derivatives 66,475  (5,130)  61,345   942,884  160,617  1,103,501 Interest expense          Deposits 444,463  -  444,463  Debt related to securitization activities -  140,743  140,743  Subordinated debt 11,574  -  11,574  Other, including derivatives 2,236  -  2,236   458,273  140,743  599,016 Net interest income 484,611  19,874  504,485 Other income          Fees and commissions on loans and deposits 116,595  (1,589)  115,006  Income from brokerage operations 48,429  -  48,429  Securitization income 35,486  (35,486)  -  Credit insurance income 18,591  -  18,591  Income from treasury and financial market operations 18,973  1,965  20,938  Income from sales of mutual funds 17,308  -  17,308  Income from registered self-directed plans 7,253  -  7,253  Other income 6,337  -  6,337   268,972  (35,110)  233,862 Total revenue 753,583  (15,236)  738,347 Provision for loan losses 47,000  4,080  51,080 Non-interest expenses          Salaries and employee benefits 293,930  (11,300)  282,630  Premises and technology 140,839  373  141,212  Other 99,910  (2,647)  97,263  Costs related to an acquisition and other [3] 8,180  826  9,006   542,859  (12,748)  530,111 Income before income taxes 163,724  (6,568)  157,156 Income taxes 36,235  (2,796)  33,439 Net income$127,489 $(3,772)  $ 123,717 Preferred share dividends, including applicable taxes 12,436  -  12,436 Net income available to common shareholders$115,053 $(3,772)  $ 111,281 Average number of common shares outstanding (in thousands)          Basic 23,924  -  23,924  Diluted 23,943  -  23,943 Earnings per share          Basic$4.81 $(0.16)  $ 4.65  Diluted$4.81 $(0.16)  $ 4.65           Net interest margin 2.02% (0.20)% 1.82%Efficiency ratio 72.0% (0.2)% 71.8%Return on common shareholders' equity 11.0% 1.2% 12.2%Excluding Transaction and Integration Costs [3]          Adjusted diluted earnings per share$5.05 $(0.12) $4.93  Adjusted efficiency ratio 71.0% (0.4)% 70.6% Adjusted return on common shareholders' equity 11.6% 1.3% 12.9%[1] See Reclassification of comparative figures in Note 2 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.[2] See Note 5 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.[3] Costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds.RECONCILIATION OF BALANCE SHEET BETWEEN CANADIAN GAAP AND IFRSIn thousands of Canadian dollars(Unaudited)AS AT OCTOBER 31, 2011 AS AT JULY 31, 2011 CANADIAN GAAP [1] ADJUSTMENTS [2] RECLASSIFICATIONS [2] IFRS CANADIAN GAAP [1]  ADJUSTMENTS [2] RECLASSIFICATIONS [2] IFRS                        ASSETS                       Cash and non-interest-bearing deposits with other banks$81,600 $- $- $81,600 $69,820 $193 $- $70,013Interest-bearing deposits with other banks 276,429  9,030  -  285,459  596,979  2,773  -  599,752Securities                         Available-for-sale 1,096,333  -  1,011,742  2,108,075  1,028,953  868  1,013,003  2,042,824 Held-to-maturity -  885,822  -  885,822  -  830,964  -  830,964 Held-for-trading 2,181,969  -  -  2,181,969  2,044,465  -  -  2,044,465 Designated as at fair value through profit or loss 1,011,742  -  (1,011,742)  -  1,013,003  -  (1,013,003)  -  4,290,044  885,822  -  5,175,866  4,086,421  831,832  -  4,918,253Securities purchased under reverse repurchase agreements 318,753  401,564  -  720,317  312,647  227,573  -  540,220Loans                        Personal 5,768,787  -  5,420  5,774,207  5,728,317  -  4,553  5,732,870 Residential mortgage 8,378,029  3,394,017  97,366  11,869,412  8,183,447  3,299,905  95,578  11,578,930 Commercial mortgage 2,363,808  -  -  2,363,808  2,302,562  -  -  2,302,562 Commercial and other 1,900,977  -  -  1,900,977  1,863,448  -  -  1,863,448 Customers' liabilities under acceptances 179,140  -  -  179,140  198,429  -  -  198,429  18,590,741  3,394,017  102,786  22,087,544  18,276,203  3,299,905  100,131  21,676,239 Allowances for loan losses (149,743)  1,000  5,593  (143,150)  (147,663)  1,000  5,510  (141,153)  18,440,998  3,395,017  108,379  21,944,394  18,128,540  3,300,905  105,641  21,535,086Other                        Premises and equipment 64,752  (3,044)  -  61,708  63,616  (3,036)  -  60,580 Derivatives 228,704  (443)  -  228,261  147,009  (866)  -  146,143 Goodwill 53,790  (24,566)  -  29,224  53,790  (24,566)  -  29,224 Software and other intangible assets 123,357  (9,408)  -  113,949  114,812  (9,730)  -  105,082 Deferred tax assets -  19,876  (15,716)  4,160  -  19,570  (11,834)  7,736 Other assets 612,024  (186,806)  (106,946)  318,272  509,054  (180,762)  (101,751)  226,541  1,082,627  (204,391)  (122,662)  755,574  888,281  (199,390)  (113,585)  575,306 $24,490,451 $4,487,042 $(14,283) $28,963,210 $24,082,688 $4,163,886 $(7,944) $28,238,630                        LIABILITIES AND SHAREHOLDERS' EQUITY                       Deposits                        Personal$15,610,012 $(159) $- $15,609,853 $15,606,705 $(72,176) $- $15,534,529 Business, banks and other 4,457,406  (50,978)  -  4,406,428  3,891,333  -  -  3,891,333  20,067,418  (51,137)  -  20,016,281  19,498,038  (72,176)  -  19,425,862Other                        Obligations related to securities sold short 1,471,254  -  -  1,471,254  1,436,439  -  -  1,436,439 Obligations related to securities sold under repurchase agreements 36,770  -  -  36,770  367,814  -  -  367,814 Acceptances 179,140  -  -  179,140  198,429  -  -  198,429 Derivatives 246,475  (116,506)  -  129,969  181,758  (77,731)  -  104,027 Deferred tax liabilities -  (17,244)  23,606  6,362  -  (17,241)  18,260  1,019 Other liabilities 912,190  27,419  (37,889)  901,720  854,628  4,403  (26,204)  832,827  2,845,829  (106,331)  (14,283)  2,725,215  3,039,068  (90,569)  (7,944)  2,940,555Debt related to securitization activities -  4,760,847  -  4,760,847  -  4,442,256  -  4,442,256Subordinated debt 242,512  39  -  242,551  242,072  41  -  242,113Shareholders' equity                        Preferred shares 210,000  -  -  210,000  210,000  -  -  210,000 Common shares 259,492  -  -  259,492  259,492  -  -  259,492 Share-based payment reserve 227  -  -  227  227  -  -  227 Retained earnings 818,207  (135,200)  -  683,007  802,795  (133,337)  -  669,458 Accumulated other comprehensive income 46,766  18,824  -  65,590  30,996  17,671  -  48,667  1,334,692  (116,376)  -  1,218,316  1,303,510  (115,666)  -  1,187,844 $24,490,451 $4,487,042 $(14,283) $28,963,210 $24,082,688 $4,163,886 $(7,944) $28,238,630                        Average assets (For the three months period)$24,270,292 $4,243,355 $- $28,513,647 $24,146,118 $3,912,825 $- $28,058,943Book value per common share$45.05 $(5.65) $- $39.40 $$ 44.41 $(5.57) $- $38.84                                                 In thousands of Canadian dollars (Unaudited)AS AT APRIL 30, 2011 AS AT JANUARY 31, 2011 CANADIAN GAAP [1]   ADJUSTMENTS [2]   RECLASSIFICATIONS [2]   IFRS   CANADIAN GAAP [1]   ADJUSTMENTS [2]   RECLASSIFICATIONS [2]   IFRS                        ASSETS                       Cash and non-interest-bearing deposits with other banks$69,287 $1,975 $- $71,262 $74,322 $2,104 $- $76,426Interest-bearing deposits with other banks  641,777  4,756  -  646,533  454,600  2,607  -  457,207Securities                         Available-for-sale 1,041,380  796  1,012,327  2,054,503  1,015,174  1,216  1,018,239  2,034,629 Held-to-maturity -  646,713  -  646,713  -  638,276  -  638,276 Held-for-trading 2,248,007  -  -  2,248,007  1,889,086  -  -  1,889,086 Designated as at fair value through profit or loss 1,012,327  -  (1,012,327)  -  1,023,680  -  (1,018,239)  5,441  4,301,714  647,509  -  4,949,223  3,927,940  639,492  -  4,567,432Securities purchased under reverse repurchase agreements 443,456  182,712  -  626,168  331,935  183,920  -  515,855Loans                        Personal 5,677,165  -  4,362  5,681,527  5,622,733  -  4,886  5,627,619 Residential mortgage 7,976,899  3,185,279  90,566  11,252,744  7,998,024  2,950,019  89,567  11,037,610 Commercial mortgage 2,213,760  -  -  2,213,760  2,205,736  -  -  2,205,736 Commercial and other 1,823,234  -  -  1,823,234  1,742,889  -  -  1,742,889 Customers' liabilities under acceptances 187,400  -  -  187,400  170,098  -  -  170,098  17,878,458  3,185,279  94,928  21,158,665  17,739,480  2,950,019  94,453  20,783,952 Allowances for loan losses (148,225)  6,684  5,336  (136,205)  (146,562)  5,452  5,567  (135,543)  17,730,233  3,191,963  100,264  21,022,460  17,592,918  2,955,471  100,020  20,648,409Other                        Premises and equipment 63,952  (2,986)  -  60,966  63,549  (2,911)  -  60,638 Derivatives 120,201  (1,482)  -  118,719  132,776  (3,911)  -  128,865 Goodwill 53,790  (24,566)  -  29,224  53,790  (24,566)  -  29,224 Software and other intangible assets 110,467  (10,053)  -  100,414  110,349  (10,376)  -  99,973 Deferred tax assets -  23,010  (1,838)  21,172  -  22,342  1,330  23,672 Other assets 524,547  (174,803)  (99,903)  249,841  587,543  (173,246)  (103,360)  310,937  872,957  (190,880)  (101,741)  580,336  948,007  (192,668)  (102,030)  653,309 $24,059,424 $3,838,035 $(1,477) $27,895,982 $23,329,722 $3,590,926 $(2,010) $26,918,638                        LIABILITIES AND SHAREHOLDERS' EQUITY                       Deposits                        Personal$15,563,425 $(52,733) $- $15,510,692 $15,418,261 $(36,895) $- $15,381,366 Business, banks and other 4,063,085  -  -  4,063,085  3,545,739  -  -  3,545,739  19,626,510  (52,733)  -  19,573,777  18,964,000  (36,895)  -  18,927,105Other                        Obligations related to securities sold short 1,437,259  -  -  1,437,259  1,170,817  -  -  1,170,817 Obligations related to securities sold under repurchase agreements 205,923  -  -  205,923  469,021  -  -  469,021 Acceptances 187,400  -  -  187,400  170,098  -  -  170,098 Derivatives 180,805  (51,217)  -  129,588  186,061  (54,082)  -  131,979 Deferred tax liabilities -  (12,909)  13,199  290  -  (12,727)  13,978  1,251 Other liabilities 913,780  16,088  (14,676)  915,192  877,912  19,151  (15,988)  881,075  2,925,167  (48,038)  (1,477)  2,875,652  2,873,909  (47,658)  (2,010)  2,824,241Debt related to securitization activities -  4,051,889  -  4,051,889  -  3,786,336  -  3,786,336Subordinated debt 241,640  43  -  241,683  241,075  41  -  241,116Shareholders' equity                        Preferred shares 210,000  -  -  210,000  210,000  -  -  210,000 Common shares 259,484  -  -  259,484  259,388  -  -  259,388 Share-based payment reserve 227  -  -  227  227  -  -  227 Retained earnings 780,668  (127,127)  -  653,541  762,966  (128,001)  -  634,965 Accumulated other comprehensive income 15,728  14,001  -  29,729  18,157  17,103  -  35,260  1,266,107  (113,126)  -  1,152,981  1,250,738  (110,898)  -  1,139,840 $24,059,424 $3,838,035 $(1,477) $27,895,982 $23,329,722 $3,590,926 $(2,010) $26,918,638                        Average assets (For the three months period)$23,786,039 $3,629,237 $- $27,415,276 $23,711,163 $3,362,645 $- $27,073,808Book value per common share$43.49 $(5.32) $-  $38.17 $42.75 $(5.35) $- $37.40 In thousands of Canadian dollars (Unaudited)AS AT NOVEMBER 1, 2010  CANADIANGAAP [1]  ADJUSTMENTS [2]  RECLASSIFICATIONS [2]  IFRS            ASSETS           Cash and non-interest-bearing deposits with other banks$70,537 $1,907 $- $72,444Interest-bearing deposits with other banks  95,561  3,833  -  99,394Securities             Available-for-sale 1,103,744  1,281  1,033,836  2,138,861 Held-to-maturity -  559,457  -  559,457 Held-for-trading 1,496,583  -  -  1,496,583 Designated as at fair value through profit or loss 1,658,478  -  (1,033,836)  624,642  4,258,805  560,738  -  4,819,543Securities purchased under reverse repurchase agreements 803,874  190,800  -  994,674Loans            Personal 5,630,788  -  5,415  5,636,203 Residential mortgage 8,055,034  2,715,535  89,078  10,859,647 Commercial mortgage 2,166,375  -  -  2,166,375 Commercial and other 1,691,190  -  -  1,691,190 Customers' liabilities under acceptances 165,450  -  -  165,450  17,708,837  2,715,535  94,493  20,518,865 Allowances for loan losses (138,143)  840  5,736  (131,567)  17,570,694  2,716,375  100,229  20,387,298Other            Premises and equipment 58,536  (2,809)  -  55,727 Derivatives 162,610  (4,544)  -  158,066 Goodwill 53,790  (24,566)  -  29,224 Software and other intangible assets 112,369  (10,698)  -  101,671 Deferred tax assets -  18,416  29,579  47,995 Other assets 585,362  (172,001)  (124,072)  289,289  972,667  (196,202)  (94,493)  681,972 $23,772,138 $3,277,451 $5,736 $27,055,325            LIABILITIES AND SHAREHOLDERS' EQUITY           Deposits            Personal 15,396,911  (42,060)  -  15,354,851 Business, banks and other 4,250,819  -  -  4,250,819  19,647,730  (42,060)  -  19,605,670Other            Obligations related to securities sold short 1,362,336  -  -  1,362,336 Obligations related to securities sold under repurchase agreements 60,050  -  -  60,050 Acceptances 165,450  -  -  165,450 Derivatives 199,278  (84,043)  -  115,235 Deferred tax liabilities -  (13,977)  41,520  27,543 Other liabilities 947,879  33,844  (35,784)  945,939  2,734,993  (64,176)  5,736  2,676,553Debt related to securitization activities -  3,486,634  -  3,486,634Subordinated debt 150,000  -  -  150,000Shareholders' equity            Preferred shares 210,000  -  -  210,000 Common shares 259,363  -  -  259,363 Share-based payment reserve 243  -  -  243 Retained earnings 741,911  (131,428)  -  610,483 Accumulated other comprehensive income 27,898  28,481  -  56,379  1,239,415  (102,947)  -  1,136,468 $23,772,138 $3,277,451 $5,736 $27,055,325            Average assets (For the three months period) n.a.  n.a.  n.a.  n.a.Book value per common share$ 41.87 $(5.50) $-  $36.37[1] See Reclassification of comparative figures in Note 2 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.[2] See Note 5 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details. For further information: Chief Financial Officer: Michel C. Lauzon, 514-284-4500 #7997 Media and Investor Relations contact: Gladys Caron, 514-284-4500 #7511; cell 514-893-3963