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Press release from CNW Group

CWB reports solid fourth quarter performance and record results for fiscal 2012

Tuesday, December 04, 2012

CWB reports solid fourth quarter performance and record results for fiscal 201208:30 EST Tuesday, December 04, 2012Loan growth of 2% in the quarter and 14% for the yearQuarterly dividend declared of $0.17 per CWB common share, an increase of 6%Fourth Quarter 2012 Highlights(1) (compared to the same period in the prior year)Net income available to common shareholders of $43.0 million, up 20% ($7.1 million).Diluted earnings per common share of $0.55, up 17%; adjusted cash earnings per common share(2) of $0.56, up 6%.Total revenues, on a taxable equivalent basis (teb)(2), of $133.2 million, up 11% ($13.5 million).Solid Basel II regulatory capital position using the standardized approach for calculating risk-weighted assets: tangible common equity to risk-weighted assets ratio(2) of 8.8%, Tier 1 capital ratio of 10.6% and total capital ratio of 13.8%. Well positioned for transition to Basel III regulatory capital framework effective January 1, 2013.Opened a new full-service business and personal banking centre in Winnipeg, Manitoba, bringing the total number of CWB branches to 41.Recognized for a seventh consecutive year as one of the 50 Best Employers in Canada in a list compiled by Aon Hewitt, a global human resources consultant.On December 3, 2012, declared a quarterly dividend of $0.17 per CWB common share, an increase of 6% over the prior quarter and 13% over the dividend declared a year earlier.(1)     Effective in the first quarter of 2012, CWB's unaudited interim consolidated financial statements and the accompanying notes, along with all comparative information, are prepared in accordance with International Financial Reporting Standards (IFRS).(2)     Non-GAAP measure - refer to definitions following the table of Selected Financial Highlights.Fiscal 2012 Highlights (compared to the prior year)Record net income available to common shareholders of $172.2 million, up 15% ($22.7 million).Record diluted earnings per common share of $2.22, up 14%; adjusted cash earnings per share of $2.30, up 6%.Very strong loan growth of 14% ($1,660 million).Record total revenues (teb) of $525.5 million, up 9% ($41.9 million).Return on common shareholders' equity of 15.0%, up 30 basis points.Net interest margin (teb) of 2.79%, down 20 basis points.Efficiency ratio (teb) of 44.8%, an improvement of 10 basis points.Dollar level of gross impaired loans decreased 31% ($30.4 million) to $66.8 million, or 0.48% of total loans (compared to 0.79% of total loans at October 31, 2011).Total assets and total loans surpassed $16 billion and $13 billion, respectively.Fiscal 2012 Performance versus Minimum Targets2012 Minimum Targets2012 PerformanceNet income available to common shareholders growth of 10%15%Total revenues (teb) growth of 7%9%Loan growth of 10%14%Provision for credit losses between 0.20% - 0.25% of average loans0.19%Efficiency ratio (teb)(1) of 46% or less44.8%Return on common shareholders' equity(1) of 15%15.0%Return on assets(1) of 1.05%1.08%(1) Defined on page 2.Selected Financial Highlights For the three months ended Change fromOctober 312011 For the year endedChange fromOctober 312011 (unaudited) October 312012  July 312012  October 312011    October 312012  October 312011  ($ thousands, except per share amounts)          Results of Operations                    Net interest income (teb - see below)$113,246 $115,217 $106,184  7%$443,572 $411,452 8%Less teb adjustment 1,979  2,086  3,133  (37)  9,143  11,059 (17) Net interest income perfinancial statements 111,267  113,131  103,051  8  434,429  400,393 9 Other income 19,932  22,933  13,489  48  81,910  72,103 14 Total revenues (teb) 133,178  138,150  119,673  11  525,482  483,555 9 Total revenues 131,199  136,064  116,540  13  516,339  472,496 9 Net income available tocommon shareholders 43,046  48,004  35,921  20  172,197  149,538 15 Earnings per common share                      Basic(1) 0.55  0.62  0.48  15  2.24  2.07 8   Diluted(2) 0.55  0.61  0.47  17  2.22  1.95 14   Adjusted cash(3) 0.56  0.63  0.53  6  2.30  2.17 6 Return on common shareholders' equity(4) 13.8% 16.1% 13.6% 20bp 15.0% 14.7%30bp(5)Return on assets(6) 1.03  1.19  0.97  6  1.08  1.09 (1) Efficiency ratio (teb)(7) 46.7  42.8  45.5  120  44.8  44.9 (10) Efficiency ratio 47.4  43.4  46.7  70  45.6  45.9 (30) Net interest margin (teb)(8) 2.71  2.85  2.87  (16)  2.79  2.99 (20) Net interest margin 2.67  2.80  2.79  (12)  2.73  2.91 (18) Provision for credit losses as apercentage of average loans 0.17  0.19  0.17  -  0.19  0.19 - Per Common Share                    Cash dividends$0.16 $0.16 $0.14  14%$0.62 $0.54 15%Book value 15.94  15.56  13.87  15  15.94  13.87 15 Closing market value 29.56  26.27  28.50  4  29.56  28.50 4 Common shares outstanding (thousands) 78,743  78,319  75,462  4  78,743  75,462 4 Balance Sheet and Off-Balance Sheet Summary                    Assets$16,873,269 $16,033,025 $14,849,141  14%        Loans 13,953,686  13,642,414  12,293,282  14         Deposits 14,144,837  13,455,398  12,394,689  14         Debt 634,273  603,931  634,877  -         Shareholders' equity 1,464,981  1,428,090  1,256,613  17         Assets under administration 7,171,826  6,830,282  9,369,589  (23)         Assets under management 855,333  814,498  816,219  5         Capital Adequacy(9)                    Tangible common equityto risk-weighted assets(10) 8.8% 8.7% 8.6% 20bp        Tier 1 ratio 10.6  10.5  11.1  (50)         Total ratio 13.8  13.7  15.4  (160)         (1)     Basic earnings per common share (EPS) is calculated as net income available to common shareholders divided by the average number of common shares outstanding.(2)     Diluted EPS is calculated as net income available to common shareholders divided by the average number of common shares outstanding adjusted for the dilutive effects of stock options and warrants.(3)     Adjusted cash EPS is diluted EPS excluding the after-tax amortization of acquisition-related intangible assets and the non-tax deductible change in fair value of contingent consideration. These exclusions represent non-cash charges mainly related to the acquisition of National Leasing Group Inc. and are not considered indicative of ongoing business performance. The effect of the non-tax deductible change in the fair value of contingent consideration was eliminated in the third quarter of 2012 on the settlement of such consideration.  The Bank believes the adjusted results provide the reader with a better understanding about how management views CWB's performance.(4)     Return on common shareholders' equity is calculated as net income available to common shareholders divided by average common shareholders' equity.(5)     bp - basis point change.(6)     Return on assets is calculated as net income available to common shareholders divided by average total assets.(7)     Efficiency ratio is calculated as non-interest expenses divided by total revenues excluding the non-tax deductible change in fair value of contingent consideration.(8)     Net interest margin is calculated as annualized net interest income divided by average total assets.(9)     Capital adequacy is calculated in accordance with Basel II guidelines issued by the Office of the Superintendent of Financial Institutions Canada (OSFI). The 2011 ratio reflects the returns filed and has not been restated to International Financial Reporting Standards (IFRS).(10)     Tangible common equity to risk-weighted assets is calculated as shareholders' equity less subsidiary goodwill divided by risk-weighted assets, calculated in accordance with guidelines issued by OSFI. The 2011 ratio has not been restated to IFRS.Taxable Equivalent Basis (teb)Most banks analyze revenue on a taxable equivalent basis to permit uniform measurement and comparison of net interest income. Net interest income (as presented in the consolidated statement of income) includes tax-exempt income on certain securities. Since this income is not taxable, the rate of interest or dividends received is significantly lower than would apply to a loan or security of the same amount. The adjustment to taxable equivalent basis increases interest income and the provision for income taxes to what they would have been had the tax-exempt securities been taxed at the statutory rate. The taxable equivalent basis does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other banks. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.Non-GAAP MeasuresTaxable equivalent basis, adjusted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, tangible common equity to risk-weighted assets, Tier 1 and total capital adequacy ratios, and average balances do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other financial institutions.Management's Discussion and AnalysisThis financial summary should be read in conjunction with Canadian Western Bank's (CWB or the Bank) unaudited interim consolidated financial statements for the period ended October 31, 2012 and the audited consolidated financial statements and Management's Discussion and Analysis (MD&A) for the year ended October 31, 2011, available on SEDAR at www.sedar.com and the Bank's website at www.cwbankgroup.com. Commencing in 2012, CWB's financial results and quarterly financial statements, including comparative information, are prepared under International Financial Reporting Standards (IFRS). Except where indicated below, the factors discussed and referred to in the MD&A for fiscal 2011 remain substantially unchanged. Commencing in the first quarter of 2012, operating results are presented as one segment - Banking and Financial Services. The 2012 Annual Report and audited consolidated financial statements for the year ended October 31, 2012 will be available on both SEDAR and the Bank's website on December 6, 2012. The 2012 Annual Report will be distributed to shareholders in January 2013. EDMONTON, Dec. 4, 2012 /CNW/ - Canadian Western Bank (TSX: CWB) today announced solid financial performance marking the Bank's 98th consecutive profitable quarter. Fourth quarter net income available to common shareholders of $43.0 million was up 20% ($7.1 million) compared to the same quarter last year while diluted earnings per common share increased 17% to $0.55. Adjusted cash earnings per share, which excludes the after-tax amortization of acquisition-related intangible assets and the non-tax deductible change in fair value of contingent consideration, was $0.56, up 6%.Fourth quarter total revenues, measured on a taxable equivalent basis (teb - see definition following the Financial Highlights table), grew 11% ($13.5 million) to reach a record $133.2 million as the benefit of very strong 14% year-over-year loan growth and 48% ($6.4 million) higher other income more than offset the impact of a 16 basis point decline in net interest margin (teb) to 2.71%. Growth in other income mainly resulted from an $8.5 million positive change in net gains on securities and the elimination of charges related to changes in fair value of contingent consideration ($3.6 million in the fourth quarter of 2011), partially offset by $4.0 million lower net insurance revenues and a $2.6 million decline in the "other" component of other income. Net gains on securities of $5.4 million in the fourth quarter compared to net losses of $3.1 million in the same period of 2011. Charges for contingent consideration were eliminated in the third quarter of this year upon the settlement of the Bank's ownership of National Leasing Group Inc. Net insurance revenues were impacted by increased claims expense related to severe hailstorms in Alberta in August 2012. The 'other' component of other income in the fourth quarter of 2011 included a $2.0 million gain attributed to the sale of a residential mortgage portfolio.Compared to last quarter, net income available to common shareholders declined 10% ($5.0 million) as the positive revenue contribution from 2% quarterly loan growth and $3.5 million higher gains on securities was more than offset by the combined impact of a 14 basis point reduction in net interest margin (teb), a $5.3 million decline in net insurance revenues and a $1.8 million reduction in the 'other' component of other income. The material reduction in net interest margin largely resulted from unusually high interest recoveries in the previous quarter, as well as lower yields on both loans and securities, partially offset by more favourable fixed term deposit costs. Diluted earnings per common share decreased 10% ($0.06) from the prior quarter while adjusted cash earnings per share was down 11% ($0.07).Record annual net income available to common shareholders of $172.2 million increased 15% ($22.7 million) compared to last year while diluted earnings per common share was up 14% to $2.22. Adjusted cash earnings per share of $2.30 improved from $2.17 in the prior year. Record total revenues (teb) of $525.5 million increased 9%, reflecting 8% ($32.1 million) growth in net interest income (teb) and 14% ($9.8 million) higher other income. Growth in net interest income was driven by the benefit of very strong loan growth, partially offset by the significant impact of a 20 basis point reduction in net interest margin (teb) to 2.79%.The quarterly return on common shareholders' equity of 13.8% increased 20 basis points compared to a year earlier, but was down 230 basis points from the prior quarter for the reasons already mentioned. Return on common shareholders' equity for the year of 15.0% was up from 14.7% in 2011. Fourth quarter return on assets of 1.03% compared to 0.97% last year and 1.19% in the previous quarter. Return on assets for the year was 1.08%, down one basis point from 2011.The quarterly efficiency ratio (teb), which measures non-interest expenses as a percentage of total revenues (teb), excluding the non-tax deductible change in fair value of contingent consideration, was 46.7%, up 120 basis points. The annual efficiency ratio (teb) of 44.8% was a slight improvement from 44.9% in 2011."Solid fourth quarter performance marked the Bank's 98th consecutive profitable quarter and capped off a record year for CWB Group," said Larry Pollock, Chief Executive Officer of CWB. "We met or exceeded all of our fiscal 2012 targets, led by very strong loan growth. The volume in our pipeline for new loans remains solid and continues to be supported by favourable economic conditions in our key western Canadian markets. Although we will likely see an increase from the current very low dollar level of impaired loans, this period marked the 10th consecutive quarter of declines in this measure. Overall credit quality remains sound and we expect this will continue going forward.""Our minimum performance targets for 2013 reflect ongoing confidence across all of our businesses," added Chris Fowler, President and Chief Operating Officer of CWB. "However, near-term growth in both revenues and earnings will likely be range-bound in the high single-digits owing to the significant headwinds on net interest margin from a very low interest rate environment and flat yield curve. Until we enter a rising rate environment, which could still be quite some time away, our focus will remain centred on diligently serving our clients and underwriting quality, secured loans that offer a fair return in the context of today's markets. We will also keep a close eye on managing expenses to maintain our industry-leading efficiency ratio.""As always, maintaining our track record of strong growth requires that we adapt and constantly evolve our businesses to ensure we maintain our competitive advantages and continue to meet the needs of our clients and other stakeholders. CWB Group's vision is to be seen as crucial to our clients' futures and we are communicating and acting to achieve this vision across every corner of our business. Our tremendous team of people and their contributions to CWB Group's unique organizational culture are the basis of our past and future success, and we will continue to foster this core advantage going forward. CWB was recognized in November for a seventh straight year as one of the 50 Best Employers in Canada, which is something we're very proud of," added Mr. Fowler.Regulatory Capital The Bank's Basel II Tier 1 and total capital ratios at October 31, 2012 remained solid at 10.6% and 13.8%, respectively, compared to 11.1% and 15.4% a year earlier. Reported capital ratios for 2011 are based on the returns filed and have not been restated for the full transition impact of IFRS or a required change in the capital deduction related to CWB's insurance subsidiary, both of which were effective in the first quarter of 2012. The lower total capital adequacy ratio additionally reflects the March 2012 redemption of $125 million of subordinated debentures. The tangible common equity ratio, which represents the highest quality form of capital, was 8.8%, up from 8.6% a year earlier.Going forward, all Canadian banks must comply with the Basel III capital standards. Pro forma application of the all-in Basel III standards to the Bank's financial position at October 31, 2012 results in an estimated 8.1% common equity Tier 1 (CET1) ratio, 9.9% Tier 1 ratio and 13.1% total capital ratio. This compares to required minimum Basel III regulatory capital ratios, which include a 250 basis point capital conservation buffer, of 7.0% CET1 effective January 1, 2013, and 8.5% Tier 1 and 10.5% total capital effective January 1, 2014. The maintenance of solid capital levels over-and-above regulatory minimums supports management's objectives to effectively manage risks and maintain strong growth.DividendsOn December 3, 2012, CWB's Board of Directors declared a cash dividend of $0.17 per common share, payable on January 4, 2013 to shareholders of record on December 17, 2012. This quarterly dividend represents a 6% increase over the previous quarter and is 13% higher than the quarterly dividend declared one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on January 31, 2013 to shareholders of record on January 24, 2013.Dividend Reinvestment PlanCWB common shares (TSX: CWB) and preferred shares (TSX: CWB.PR.A) are deemed eligible to participate in the Bank's dividend reinvestment plan (the Plan). The Plan provides holders of eligible shares of CWB the opportunity to direct cash dividends toward the purchase of CWB common shares. Further details for the Plan are available on the Bank's website. At the current time, for the purposes of the Plan, the Bank has elected to issue common shares from treasury at a 2% discount from the average market price (as defined in the Plan).Loan Growth Total loans of $13,954 million grew 2% ($311 million) in the quarter and 14% ($1,660 million) over the past twelve months. Very strong performance in general commercial loans, equipment financing and leasing, and personal loans and mortgages contributed the greatest amount to loan growth in both the current quarter and for the year. Growth was achieved across all lending sectors, with the exception of oil and gas production loans, and the overall outlook for generating new loans remains solid. Management expects the Bank to maintain double-digit loan growth and has set the fiscal 2013 minimum loan growth target at 10%.Credit QualityOverall credit quality continued to show improvement reflecting sound underwriting, secured lending practices and a relatively strong level of economic activity in the Bank's key geographic markets. Gross impaired loans totaled $66.8 million at quarter end, compared to $70.2 million last quarter and $97.3 million a year earlier. This represented the tenth consecutive quarterly decrease in the dollar level of impaired loans. The quarterly provision for credit losses exceeded net new specific provisions and led to a slight increase in the dollar level of the collective allowance for credit losses compared to last quarter. Compared to October 31, 2011, the dollar level of the total allowance for credit losses increased $9.7 million to reach $81.7 million, exceeding the total balance of gross impaired loans. Based on management's current view of credit quality, a 2013 provision for credit losses  between 18 and 23 basis points of average loans is expected.Net Interest Margin Net interest margin (teb) of 2.71% was down from 2.87% in the fourth quarter last year with the difference resulting from lower yields on both loans and securities, partially offset by more favourable costs on fixed term deposits and reduced debenture expense. Compared to the prior quarter, net interest margin (teb) decreased 14 basis points reflecting unusually high interest recoveries in the previous quarter, as well as lower yields on both loans and securities, partially offset by more favourable fixed term deposit costs. Annual net interest margin (teb) of 2.79% was down 20 basis points from the prior year reflecting the factors already noted. In view of expectations for a prolonged period of very low interest rates, a flat interest rate curve and ongoing competitive influences, fiscal 2013 net interest margin is expected to be lower compared to 2012.Fiscal 2013 Minimum Performance Targets and OutlookThe Bank's minimum performance targets established for fiscal 2013 are presented in the following table: 2013Minimum TargetsNet income available to common shareholders growth8%Total revenue (teb) growth8%Loan growth10%Provision for credit losses as a percentage of average loans0.18% - 0.23%Efficiency ratio (teb)(1)46%Return on common shareholders' equity(2)14%Return on assets(3)1.05%(1)Efficiency ratio (teb) calculated as non-interest expenses divided by total revenues (teb)(2)Return on common shareholders' equity calculated as net income available to common shareholders divided by average common shareholders' equity.(3)Return on assets calculated as net income available to common shareholders divided by average total assets.Fiscal 2013 minimum performance targets are based on expectations for modest economic growth in Canada and comparatively stronger performance within the Bank's key western Canadian markets. Lending activity remains solid and double-digit loan growth is expected to be maintained despite the impacts of competitive factors and ongoing global economic uncertainties. Overall credit quality is expected to remain sound and the provision for credit losses is targeted between 18 and 23 basis points of average loans. The Bank will maintain its focus on secured loans that offer a fair and profitable return in an environment where net interest margin pressure is expected to persist as a result of a very low interest rate environment, a flat interest rate curve and increased competitive influences in certain sectors. The foregoing circumstances will continue to constrain growth in total revenues and earnings compared to what would be expected in a more normal historical interest rate environment.Targeted growth of 8% for both total revenues (teb) and net income available to common shareholders' reflects confidence in CWB's proven business model and overall strategic direction, but also considers expectations for a lower net interest margin compared to 2012. Minimum targets for return on common shareholders' equity and return on assets have been established at 14% and 1.05%, respectively. One of management's key priorities is to maintain effective control of costs while ensuring the Bank is positioned to deliver continued strong growth. In consideration of targeted revenue growth and planned expenditures, the 2013 efficiency ratio (teb) is expected to remain at 46% or less.The ongoing development of CWB Group's core businesses will remain a key priority to achieve continued strong growth. Potential acquisitions that are both strategic and accretive for CWB shareholders will also be evaluated very closely. With its strong capital position under the more conservative standardized approach for calculating risk-weighted assets, CWB is well positioned to support continued growth and manage unforeseen challenges. Management will maintain its focus on creating value and growth for shareholders over the long term. Despite challenges arising from the current interest rate environment and related pressures on net interest margin, the current overall outlook for 2013 and beyond is positive.Fiscal 2012 Fourth Quarter and Annual Results Conference Call CWB's fourth quarter and annual results conference call is scheduled for Tuesday, December 4, 2012 at 3:00 p.m. ET (1:00 p.m. MT). The Bank's executives will comment on financial results and respond to questions from analysts and institutional investors.The conference call may be accessed on a listen-only basis by dialing 647-427-7450 or toll-free 1-888-231-8191. The call will also be webcast live on the Bank's website, www.cwbankgroup.com.A replay of the conference call will be available until December 18, 2012 by dialing 416-849-0833 (Toronto) or 1-855-859-2056 (toll-free) and entering passcode 59924778.About Canadian Western Bank GroupCanadian Western Bank offers a full range of business and personal banking services across the four western provinces and is the largest publicly traded Canadian bank headquartered in Western Canada. The Bank, along with its operating affiliates, National Leasing Group Inc., Canadian Western Trust Company, Valiant Trust Company, Canadian Direct Insurance Incorporated, Adroit Investment Management Ltd. and Canadian Western Financial Ltd., collectively offer a diversified range of financial services across Canada and are together known as the Canadian Western Bank Group. The common shares of Canadian Western Bank are listed on the Toronto Stock Exchange under the trading symbol "CWB". The Bank's Series 3 Preferred Shares trade on the Toronto Stock Exchange under the trading symbol "CWB.PR.A". Refer to www.cwbankgroup.com for additional information.Taxable Equivalent Basis (teb)Most banks analyze revenue on a taxable equivalent basis to permit uniform measurement and comparison of net interest income. Net interest income (as presented in the consolidated statement of income) includes tax-exempt income on certain securities. Since this income is not taxable, the rate of interest or dividends received is significantly lower than would apply to a loan or security of the same amount. The adjustment to taxable equivalent basis increases interest income and the provision for income taxes to what they would have been had the tax-exempt securities been taxed at the statutory rate. The taxable equivalent basis does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other banks. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.Non-GAAP MeasuresTaxable equivalent basis, adjusted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, tangible common equity to risk-weighted assets, Tier 1 and total capital adequacy ratios, and average balances do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other financial institutions. The non-GAAP measures used in this MD&A are calculated as follows:taxable equivalent basis - described above;adjusted cash earnings per common share - diluted earnings per common share excluding the after-tax amortization of acquisition-related intangible assets and the non-tax deductible change in fair value of contingent consideration. These exclusions represent non-cash charges mainly related to the acquisition of National Leasing Group Inc. and are not considered to be indicative of ongoing business performance;return on common shareholders' equity - annualized net income available to common shareholders divided by average common shareholders' equity;return on assets - annualized net income available to common shareholders divided by average total assets;efficiency ratio - non-interest expenses divided by total revenues excluding the non-tax deductible change in fair value of contingent consideration;net interest margin - net interest income divided by average total assets;tangible common equity to risk-weighted assets - common shareholders' equity less subsidiary goodwill divided by risk-weighted assets, calculated in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions Canada (OSFI);Basel II Tier 1 and total capital adequacy ratios - in accordance with guidelines issued by OSFI;Basel III common equity Tier 1, Tier 1 and total capital ratios - in accordance with CWB's interpretation of the Basel III capital requirements and OSFI proposed guidance; andaverage balances - average daily balances.Forward-looking StatementsFrom time to time, Canadian Western Bank (the Bank) makes written and verbal forward-looking statements. Statements of this type are included in the Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as press releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about the Bank's objectives and strategies, targeted and expected financial results and the outlook for the Bank's businesses or for the Canadian economy. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "may increase", "may impact" and other similar expressions, or future or conditional verbs such as "will", "should", "would" and "could."By their very nature, forward-looking statements involve numerous assumptions. A variety of factors, many of which are beyond the Bank's control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in Canada including the volatility and lack of liquidity in financial markets, fluctuations in interest rates and currency values, changes in monetary policy, changes in economic and political conditions, regulatory and legal developments, the level of competition in the Bank's markets, the occurrence of weather-related and other natural catastrophes, changes in accounting standards and policies, the accuracy of and completeness of information the Bank receives about customers and counterparties, the ability to attract and retain key personnel, the ability to complete and integrate acquisitions, reliance on third parties to provide components of the Bank's business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and management's ability to anticipate and manage the risks associated with these factors. It is important to note that the preceding list is not exhaustive of possible factors.These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause the Bank's actual results to differ materially from the expectations expressed in such forward looking statements. Unless required by securities law, the Bank does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by it or on its behalf.Assumptions about the performance of the Canadian economy in 2013 and how it will affect CWB's businesses are material factors the Bank considers when setting its objectives. In setting minimum performance targets for fiscal 2013, management's assumptions included: modest economic growth in Canada and relatively stronger performance in the four western provinces; relatively stable prices for energy and other commodities compared to the levels observed at October 31, 2012; sound credit quality with actual losses remaining within the Bank's historical range of acceptable levels; and, a lower net interest margin attributed to expectations for the continuation of a very low interest rate environment, a flat interest rate curve, competitive factors and ongoing uncertainties about global economic conditions. Potential risks that would have a material adverse impact on the Bank's current economic expectations and forecasts include a global economic recession spurred by unfavourable developments in the euro zone, the strength of economic recovery in the United States, a meaningful slowdown in China's economic growth, or a significant and sustained deterioration in Canadian residential real estate prices.Consolidated Balance Sheets  As at  As at  As at  As at  Change from (unaudited) October 31   July 31  October 31  November 1  October 31 ($ thousands) 2012  2012  2011  2010  2011 Assets               Cash Resources               Cash and non-interest bearing deposits with financial institutions$33,690 $59,470 $73,318 $8,965  (54)%Interest bearing deposits with regulated financial institutions       177,028  217,290  233,964  168,998  (24) Cheques and other items in transit 26,265  112  5,053  9,981  420   236,983  276,872  312,335  187,944  (24) Securities                     Issued or guaranteed by Canada 980,200  688,164  644,356  564,694  52 Issued or guaranteed by a province or municipality 478,622  272,826  380,031  88,478  26 Other securities 877,278  839,519  901,317  857,015  (3)   2,336,100  1,800,509  1,925,704  1,510,187  21 Securities Purchased Under Resale Agreements -  -  -  177,954  - Loans                         Residential mortgages 3,352,735  3,311,330  3,008,545  2,479,957  11 Other loans 10,682,674  10,410,879  9,356,717  8,276,263  14   14,035,409  13,722,209  12,365,262  10,756,220  14 Allowance for credit losses      (81,723)  (79,795)  (71,980)  (81,523)  14   13,953,686  13,642,414  12,293,282  10,674,697  14 Other               Property and equipment 86,941  75,685  72,674  65,978  20 Goodwill 45,536  45,536  45,691  45,562  - Other intangible assets 31,956  33,245  37,420  43,420  (15) Insurance related 57,650  56,774  56,734  59,652  2 Derivative related                   1,951  130  -  134  nm Other assets 122,466  101,860  105,301  116,200  16   346,500  313,230  317,820  330,946  9 Total Assets$16,873,269 $16,033,025 $14,849,141 $12,881,728  14%                Liabilities and Shareholders' Equity               Deposits               Payable on demand$685,193 $590,923 $583,267 $530,608  17%Payable after notice 3,773,611  3,763,642  3,407,590  2,999,599  11 Payable on a fixed date 9,686,033  9,100,833  8,403,832  7,177,560  15   14,144,837  13,455,398  12,394,689  10,707,767  14 Other               Cheques and other items in transit 54,030  78,726  45,986  39,628  17 Insurance related 160,302  151,052  149,130  149,396  7 Derivative related                   10  238  436  992  (98) Securities sold under repurchase agreements 70,089  -  -  -  nm Other liabilities 239,503  210,353  262,185  239,474  (9)   523,934  440,369  457,737  429,490  14 Debt               Debt securities 209,273  178,931  89,877  202,006  133 Subordinated debentures 425,000  425,000  545,000  315,000  (22)   634,273  603,931  634,877  517,006  - Equity                  Preferred shares      209,750  209,750  209,750  209,750  - Common shares       490,218  483,266  408,282  279,620  20 Retained earnings 733,298  702,799  608,848  586,933  20 Share-based payment reserve 22,468  23,339  21,884  21,291  3 Other reserves 9,247  8,936  7,849  24,692  18 Total Shareholders' Equity 1,464,981  1,428,090  1,256,613  1,122,286  17 Non-controlling interests 105,244  105,237  105,225  105,179  - Total Equity 1,570,225  1,533,327  1,361,838  1,227,465  15 Total Liabilities and Shareholders' Equity$16,873,269 $16,033,025 $14,849,141 $12,881,728  14%nm - not meaningful.Consolidated Statements of Income For the three months endedChange fromOctober 312011 For the year endedChange fromOctober 312011 (unaudited) October 31 2012  July 312012  October 312011   October 31 2012  October 312011  ($ thousands, except per share amounts)            Interest Income                    Loans$177,191 $176,977 $162,945  9%$686,534 $625,048 10%Securities 10,135  10,578  12,011  (16)  43,548  44,177 (1) Deposits with regulated financial institutions 567  500  808  (30)  2,389  4,062 (41)   187,893  188,055  175,764  7  732,471  673,287 9 Interest Expense                    Deposits 70,022  68,387  64,265  9  269,772  238,701 13 Debt 6,604  6,537  8,448  (22)  28,270  34,193 (17)   76,626  74,924  72,713  5  298,042  272,894 9 Net Interest Income 111,267  113,131  103,051  8  434,429  400,393 9 Provision for Credit Losses         5,962  6,453  5,183  15  25,107  21,783 15 Net Interest Income after                    Provision for Credit Losses 105,305  106,678  97,868  8  409,322  378,610 8 Other Income                    Credit related 5,284  5,026  4,638  14  19,705  18,307 8 Trust and wealth management services 4,725  4,587  4,336  9  19,065  19,050 - Insurance, net        946  6,251  4,943  (81)  17,353  20,250 (14) Gains on securities, net 5,433  1,896  (3,103)  nm  12,449  7,283 71 Retail services 2,310  2,249  2,289  1  9,227  9,486 (3) Foreign exchange gains 965  812  930  4  3,255  3,488 (7) Contingent consideration fair value change  -  -  (3,539)  nm  (2,489)  (12,305) (80) Other 269  2,112  2,995  (91)  3,345  6,544 (49)   19,932  22,933  13,489  48  81,910  72,103 14 Net Interest and Other Income 125,237  129,611  111,357  12  491,232  450,713 9 Non-Interest Expenses                    Salaries and employee benefits 39,826  39,350  35,183  13  153,844  141,865 8 Premises and equipment 10,404  9,839  9,383  11  39,502  36,738 8 Other expenses 11,790  9,779  11,419  3  42,720  42,449 1 Provincial capital taxes 156  150  125  25  500  1,399 (64)   62,176  59,118  56,110  11  236,566  222,451 6 Net Income before Income Taxes 63,061  70,493  55,247  14  254,666  228,262 12 Income Taxes 14,445  16,915  13,773  5  60,209  56,541 6 Net Income$48,616 $53,578 $41,474  17%$194,457 $171,721 13%Net Income Attributable to                     Non-Controlling Interests 1,768  1,772  1,751  1  7,052  6,975 1 Net Income Attributable to                    Shareholders of the Bank$46,848 $51,806 $39,723  18%$187,405 $164,746 14%Preferred share dividends   3,802  3,802  3,802  -  15,208  15,208 - Net Income Available to                    Common Shareholders$43,046 $48,004 $35,921  20%$172,197 $149,538 15%Average number of common                    shares (in thousands) 78,506  77,527  75,376  4  76,841  72,205 6 Average number of diluted common                    shares (in thousands) 78,911  78,107  76,959  3  77,460  76,705 1 Earnings Per Common Share                    Basic$0.55 $0.62 $0.48  15%$2.24 $2.07 8%Diluted 0.55  0.61  0.47  17  2.22  1.95 14 nm - not meaningful.Consolidated Statements of Comprehensive Income For the three months ended For the year ended(unaudited)($ thousands) October 312012       October 312011        October 31 2012 October 312011Net Income $48,616$41,474 $194,457$171,721Other Comprehensive Income (Loss), net of tax         Available-for-sale securities:           Gains (losses) from change in fair value(1) 3,426 (8,693)  9,580 (11,710)  Reclassification to net income(2) (3,984) 2,337  (9,129) (5,133)  (558) (6,356)  451 (16,843)Derivatives designated as cash flow hedges:           Losses from change in fair value(3) 1,514 -  1,430 -  Reclassification to net income(4) (645) -  (483) -  869 -  947 -  311 (6,356)  1,398 (16,843)Comprehensive Income for the Period$48,927$35,118 $195,855$154,878          Comprehensive income for the period attributable to:           Shareholders of the Bank$47,159$33,367 $188,803$147,903  Non-controlling interests 1,768 1,751  7,052 6,975Comprehensive Income for the Period$48,927$35,118 $195,855$154,878(1)Net of income tax of $1,247 and $3,441 for the quarter and year ended October 31, 2012, respectively (2011 - $3,553 and $4,731).(2)Net of income tax of $1,450 and $3,320 for the quarter and year ended October 31, 2012, respectively (2011 - $824 and $2,093).(3)Net of income tax of $530 and $500 for the quarter and year ended October 31, 2012, respectively (2011 - nil).(4)Net of income tax of $226 and $169 for the quarter and year ended October 31, 2012, respectively (2011 - nil). Consolidated Statements of Changes in Shareholders' Equity For the year ended(unaudited) October 312012 October 312011($ thousands)  Retained Earnings    Balance at beginning of period$608,848$586,933Net income attributable to shareholders of the Bank 187,405 164,746Dividends  - Preferred shares (15,208) (15,208) - Common shares (47,747) (39,177)Warrants purchased and cancelled  - (88,446)Balance at end of period 733,298 608,848Other Reserves    Balance at beginning of period 7,849 24,692Changes in available-for-sale securities 451 (16,843)Changes in derivatives designated as cash flow hedges 947 -Balance at end of period 9,247 7,849Preferred Shares      Balance at beginning and end of period  209,750 209,750Common Shares     Balance at beginning of period  408,282 279,620Issued on settlement of contingent consideration   63,399 -Issued under dividend reinvestment plan    12,252 5,941Transferred from share-based payment reserve on the exercise or exchange of options 4,432 4,009Issued on exercise of options    1,853 2,996Issued on exercise of warrants - 115,716Balance at end of period  490,218 408,282Share-based Payment Reserve    Balance at beginning of period 21,884 21,291Amortization of fair value of options 5,016 4,602Transferred to common shares on the exercise or exchange of options (4,432) (4,009)Balance at end of period 22,468 21,884Total Shareholders' Equity 1,464,981 1,256,613Non-Controlling Interests    Balance at beginning of period 105,225 105,179Net income attributable to non-controlling interests 7,052 6,975Dividends to non-controlling interests (7,033) (6,929)Balance at end of period 105,244 105,225Total Equity$1,570,225$1,361,838Consolidated Statements of Cash Flow   For the year ended(unaudited)      October 312012 October 312011($ thousands)     Cash Flows from Operating Activities               Net income     $194,457$171,721      Adjustments to determine net cash flows:           Provision for credit losses      25,107 21,783  Depreciation and amortization      17,261 19,748  Current income taxes receivable and payable      8,981 5,036  Amortization of fair value of employee stock options      5,016 4,602  Accrued interest receivable and payable, net      (3,541) 2,529  Deferred income taxes, net      (695) (11,146)  Gain on securities, net      (12,449) (7,283)  Other items, net      24,283 51,352       258,420 258,342Cash Flows from Financing Activities          Deposits, net      1,750,148 1,686,922      Securities sold under repurchase agreements, net      70,089 - Common shares issued, net of issuance costs       14,004 124,653 Debt securities issued, net of issuance costs      226,249 -      Debt securities repaid      (106,855) (112,129) Dividends      (62,955) (54,385) Distributions to non-controlling interests      (7,033) (6,930)      Debentures redeemed      (120,000) (70,000) Debentures issued        - 300,000      Warrants purchased and cancelled      - (88,446)       1,763,647 1,779,685Cash Flows from Investing Activities           Interest bearing deposits with regulated financial institutions, net      57,128 (65,414) Securities, purchased      (4,959,542) (4,725,843) Securities, sale proceeds      2,855,832 2,095,077 Securities, matured      1,711,152 2,192,675 Loans, net      (1,685,511) (1,640,368) Property and equipment      (27,586) (19,041) Securities purchased under resale agreements, net      - 177,954       (2,048,527) (1,984,960)Change in Cash and Cash Equivalents      (26,460) 53,067Cash and Cash Equivalents at Beginning of Period      32,385 (20,682)Cash and Cash Equivalents at End of Period *     $5,925$32,385* Represented by:            Cash and non-interest bearing deposits with financial institutions     $33,690$73,318   Cheques and other items in transit (included in Cash Resources)      26,265 5,053   Cheques and other items in transit (included in Other Liabilities)      (54,030) (45,986)Cash and Cash Equivalents at End of Period     $5,925$32,385                    Supplemental Disclosure of Cash Flow Information           Interest and dividends received     $724,759$672,271   Interest paid      293,871 268,272  Income taxes paid      51,923 63,034 SOURCE: Canadian Western BankFor further information: Larry M. Pollock  Chief Executive Officer Canadian Western Bank Phone: (780) 423-8888 Kirby Hill, CFA Director, Strategy and Communications Canadian Western Bank Phone: (780) 441-3770 E-mail: kirby.hill@cwbank.com