CWB reports record net income and total revenues for the fourth quarter and
fiscal 2009

Dividends declared on both common and preferred shares

EDMONTON, Dec. 2 /CNW/ - Canadian Western Bank (CWB on TSX) today announced strong fourth quarter performance despite continuing challenges related to various economic factors, including slower growth and ongoing uncertainties in both domestic and global markets. Highlights included the achievement of record net income and total revenues and CWB's 86th consecutive profitable quarter. Fourth quarter net income of $30.4 million increased 24% compared to the same quarter last year reflecting 7% loan growth, very strong other income and a slight improvement in net interest margin. Diluted earnings per common share of $0.39 increased 3% and include the net impact of the preferred units issued in March 2009. Compared to the prior quarter, revenues and overall profitability were positively affected by a 21 basis point improvement in net interest margin to 2.34%, on a taxable equivalent basis (teb - see definition following Financial Highlights table). Record annual net income of $106.3 million was up 4% over the prior year, while diluted earnings per common share of $1.47 declined 7% reflecting the net impact of the preferred units issued.

    
    -------------------------------------------------------------------------
    Fourth Quarter Highlights:
    (three months ended October 31, 2009 compared with three months ended
    October 31, 2008 unless otherwise noted)
    -------------------------------------------------------------------------

    -   Record net income of $30.4 million, up 24%. Record annual net income
        of $106.3 million, up 4%.
    -   Diluted earnings per common share of $0.39, up 3%. Fiscal 2009
        diluted earnings per share of $1.47, down 7% reflecting the net
        impact of the preferred units issued.
    -   Record total revenues (teb) of $90.1 million, up 22%. Record annual
        total revenues (teb) surpassed the $300 million milestone to reach
        $328.0 million, up 10%.
    -   Net interest margin (teb) of 2.34%, up four basis points compared to
        the fourth quarter 2008, 21 basis points from the prior quarter and
        41 basis points from the second quarter 2009. Annual net interest
        margin (teb) of 2.10%, down 20 basis points.
    -   Tier 1 capital ratio of 11.3% and total capital ratio of 15.4%; up
        from 8.9% and 13.5% respectively a year earlier.
    -   Loan growth of 1% in the quarter and 7% over the past twelve months.
    -   Opened new full-service commercial and retail banking centres in
        Saskatoon, Saskatchewan and Kamloops, British Columbia (BC).
    -   Surpassed $5.0 billion of assets under administration in
        Canadian Western Trust Company.
    -   Introduced a dividend reinvestment plan.
    -------------------------------------------------------------------------
    

On December 2, 2009, CWB's Board of Directors declared a cash dividend of $0.11 per common share, payable on January 8, 2010 to shareholders of record on December 24, 2009. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on January 31, 2010 to shareholders of record on January 21, 2010. Regarding the dividend reinvestment plan introduced in August 2009, CWB has currently elected to issue common shares from treasury at a 2% discount from the average market price (further details on the dividend reinvestment plan are available at http://www.cwbankgroup.com/investor_relations/drip.htm).

Banking and trust earnings of $27.5 million were up 23% compared to the same quarter last year as the positive earnings impact from loan growth, a 47% increase in other income, including an additional $3.2 million of gains on sale of securities, and a slightly improved net interest margin offset an 18% increase in non-interest expenses. Quarterly net income from insurance operations was $2.9 million, up 33% compared to a year earlier. For the year, record banking and trust net income of $97.2 million was up 4% over fiscal 2008 while insurance operations contributed a record $9.1 million, a 9% increase.

"CWB's record financial performance amidst ongoing economic challenges and effects from the global financial crisis is a very notable accomplishment," said Larry Pollock, President and CEO. "The significant earnings impact from a compressed net interest margin was also a key challenge for us this year and the benefits from our efforts to help mitigate this became more apparent in the fourth quarter, largely helped by a more stable interest rate environment. Actually, our fourth quarter results represent the first time we've reported a year-over-year improvement in our net interest margin since the third quarter of fiscal 2007. Based on what we see today, we expect this positive trend will continue through next year."

"We are seeing opportunities to achieve continued high quality growth despite the adverse impacts on loan growth and overall credit quality due to the economic downturn," continued Mr. Pollock. "While both the timing and strength of an economic recovery are uncertain, we expect to grow earnings and revenues in fiscal 2010 partially driven by a return to double-digit loan growth. There will still be considerable challenges as we progress through the credit cycle, but we expect our actual write-offs will remain within an acceptable range. We also believe Western Canada is well positioned to benefit relative to the rest of Canada once there is a sustained period of growth in major global economies."

"As we've stated in prior periods, the Bank's strong capital base has us very well positioned to capitalize on opportunities in our markets and we continue to evaluate our alternatives in this regard. Patience continues to be important for both the Bank and our shareholders at this time."

    
    Financial Highlights

                                  For the three months ended
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except   October 31      July 31   October 31   October 31
     per share amounts)          2009         2009         2008         2008
    -------------------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $    68,012  $    60,934  $    58,622           16%
      Less teb adjustment       2,397        2,189        1,540           56
    -------------------------------------------------------------------------
      Net interest income
       per financial
       statements              65,615       58,745       57,082           15
      Other income             22,087       24,604       15,437           43
      Total revenues (teb)     90,099       85,538       74,059           22
      Total revenues           87,702       83,349       72,519           21
      Net income               30,357       28,729       24,485           24
      Earnings per common
       share
        Basic(1)                 0.42         0.39         0.39            8
        Diluted(2)               0.39         0.38         0.38            3
      Return on common
       shareholders'
       equity(3)                 13.7%        13.4%        14.4%    (70)bp(4)
      Return on assets(5)        0.91         0.87         0.96           (5)
      Efficiency ratio(6)
       (teb)                     46.1         47.0         47.7         (160)
      Efficiency ratio           47.4         48.2         48.8         (140)
      Net interest margin
       (teb)(7)                  2.34         2.13         2.30            4
      Net interest margin        2.25         2.05         2.24            1
      Provision for credit
       losses as a
       percentage of
       average loans             0.15         0.15         0.15            -
    -------------------------------------------------------------------------
    Per Common Share
      Cash dividends      $      0.11  $      0.11  $      0.11            -%
      Book value                12.16        11.87        10.70           14
      Closing market value      21.38        18.19        18.44           16
      Common shares
       outstanding
       (thousands)             63,903       63,738       63,457            1
    -------------------------------------------------------------------------
    Balance Sheet and
     Off-Balance Sheet
     Summary
      Assets              $11,635,872  $11,331,377  $10,600,732           10%
      Loans                 9,236,193    9,137,763    8,624,069            7
      Deposits              9,617,238    9,393,809    9,245,719            4
      Subordinated
       debentures             375,000      375,000      375,000            -
      Shareholders' equity    986,499      966,232      679,148           45
      Assets under
       administration       5,467,447    4,751,886    4,347,723           26
      Assets under
       management             878,095      835,613            -           nm
    -------------------------------------------------------------------------
    Capital Adequacy(8)
    Tangible common equity
     to risk-weighted
     assets(9)                    8.0%         7.9%         7.7%       30 bp
      Tier 1 ratio               11.3         11.2          8.9          240
      Total ratio                15.4         15.4         13.5          190
    -------------------------------------------------------------------------


                               For the year ended
    (unaudited)           ------------------------- Change from
    ($ thousands, except   October 31   October 31   October 31
     per share amounts)          2009         2008         2008
    ------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $   236,354  $   228,617            3%
      Less teb adjustment       7,847        5,671           38
    ------------------------------------------------------------
      Net interest income
       per financial
       statements             228,507      222,946            2
      Other income             91,612       70,240           30
      Total revenues (teb)    327,966      298,857           10
      Total revenues          320,119      293,186            9
      Net income              106,285      102,019            4
      Earnings per common
       share
        Basic(1)                 1.51         1.61           (6)
        Diluted(2)               1.47         1.58           (7)
      Return on common
       shareholders'
       equity(3)                 13.2%        15.9%   (270)bp(4)
      Return on assets(5)        0.86         1.03          (17)
      Efficiency ratio(6)
       (teb)                     48.2         45.2          300
      Efficiency ratio           49.4         46.1          330
      Net interest margin
       (teb)(7)                  2.10         2.30          (20)
      Net interest margin        2.03         2.25          (22)
      Provision for credit
       losses as a
       percentage of
       average loans             0.15         0.15            -
    ------------------------------------------------------------
    Per Common Share
      Cash dividends      $      0.44  $      0.42            5%
      Book value                12.16        10.70           14
      Closing market value      21.38        18.44           16
      Common shares
       outstanding
       (thousands)             63,903       63,457            1
    ------------------------------------------------------------
    Balance Sheet and
     Off-Balance Sheet
     Summary
      Assets
      Loans
      Deposits
      Subordinated
       debentures
      Shareholders' equity
      Assets under
       administration
      Assets under
       management
    -------------------------------------------------------------------------
    Capital Adequacy(8)
    Tangible common equity
     to risk-weighted
     assets(9)
      Tier 1 ratio
      Total ratio
    -------------------------------------------------------------------------

    nm - not meaningful.
    (1) Basic earnings per share is calculated as net income less preferred
        share dividends divided by the average number of common shares
        outstanding.
    (2) Diluted earnings per share is calculated as net income less preferred
        share dividends divided by the average number of common shares
        outstanding adjusted for the dilutive effects of stock options,
        warrants and other common stock equivalents.
    (3) Return on common shareholders' equity is calculated as annualized net
        income after preferred share dividends divided by average common
        shareholders' equity.
    (4) bp - basis point change.
    (5) Return on assets is calculated as annualized net income after
        preferred share dividends divided by average total assets.
    (6) Efficiency ratio is calculated as non-interest expenses divided by
        total revenues.
    (7) Net interest margin is calculated as annualized net interest income
        divided by average total assets.
    (8) Capital adequacy is calculated in accordance with guidelines issued
        by the Office of the Superintendent of Financial Institutions Canada
        (OSFI).
    (9) 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.
    

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 GAAP 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 Measures

Taxable equivalent basis, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, provisions for credit losses as a percentage of average loans and tangible common equity to risk-weighted assets do not have standardized meanings prescribed by generally accepted accounting principles (GAAP) and therefore may not be comparable to similar measures presented by other financial institutions.

Message to Shareholders

Canadian Western Bank (CWB or the Bank) is pleased to report strong fourth quarter and annual performance in a challenging economic environment in Canada and globally. Highlights for CWB included the achievement of record net income and total revenues and the Bank's 86th consecutive profitable quarter, a period spanning almost 22 years.

Fourth quarter net income of $30.4 million was up 24% ($5.9 million) compared to the prior year, while diluted earnings per common share increased 3% ($0.01) to $0.39. Lower percentage growth for diluted earnings per common share compared to net income was mainly due to the net impact of the preferred units issued in March 2009. Record total revenues, on a taxable equivalent basis (teb - see definition following Financial Highlights table), of $90.1 million increased 22% ($16.0 million) on continued loan growth, a 43% ($6.7 million) increase in other income and a slightly improved net interest margin.

Annual net income increased 4% over 2008 to a record $106.3 million while diluted earnings per common share of $1.47 were down 7% reflecting the preferred units issued. Total revenues (teb) for the year were up 10% to a record $328.0 million. Compared to last quarter, consolidated net income increased 6% as the positive impact from a 21 basis point improvement in net interest margin (teb) to 2.34% more than offset lower other income and higher non-interest expenses. Diluted earnings per common share were up 3% from last quarter reflecting the items already noted.

The Bank's very strong Tier 1 and total capital ratios at October 31, 2009 of 11.3% and 15.4%, respectively, remained well above regulatory minimums and continued to build from last quarter with the ongoing retention of earnings. These very strong ratios provide flexibility to pursue accretive growth opportunities and management continues to evaluate alternatives to deploy capital for the long-term benefit of CWB shareholders.

Fourth quarter return on equity of 13.7% was down 70 basis points compared to the same quarter last year, but up 30 basis points from the prior quarter. Return on equity for the year decreased 270 basis points to 13.2%. Quarterly return on assets of 0.91% declined five basis points from a year earlier, but was up four basis points compared to last quarter. Annual return on assets was down 17 basis points for 2009 to 0.86%. Lower profitability ratios compared to the same quarter last year reflect the net impact from the preferred units issued in March 2009. For the year, the lower profitability ratios compared to 2008 are mainly attributed to a significant 20 basis point decline in annual net interest margin (teb) and the preferred units issued.

Common Share Price Performance

CWB shares ended the fourth quarter at $21.38, compared to $18.44 a year earlier. Including reinvested dividends, the total return for shareholders over the one year holding period ended October 31, 2009 was 19%. This compares to the Total Return S&P/TSX Financials Index of 13% over the same one year period.

Dividends

On December 2, 2009, CWB's Board of Directors declared a cash dividend of $0.11 per common share, payable on January 8, 2010 to shareholders of record on December 24, 2009. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on January 31, 2010 to shareholders of record on January 21, 2010.

The Bank's common shares and Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 are currently deemed eligible to participate in CWB's dividend reinvestment plan (the "Plan"). The Plan provides holders of the Bank's eligible shares with the opportunity to direct cash dividends toward the purchase of common shares. Further details for the Plan are available on the Bank's website at http://www.cwbankgroup.com/investor_relations/drip.htm. 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

Loan growth of 1% in the quarter and 7% over the past year reflects the realities of moderated activity related to ongoing economic uncertainties and a cautious outlook regarding the timing and strength of an economic recovery. Recessionary effects had a material impact on new deal flow this year and slower loan growth additionally reflects repayments on existing loans. Some customers across all lending sectors prudently chose to scale back operations and direct cash flows towards the repayment of debt until there is a more certain economic outlook. Despite an encouraging pipeline for new loans, the achievement of CWB's twentieth consecutive year of double-digit loan growth did not materialize. Loan growth will likely remain constrained until economic fundamentals in our markets improve further. While challenging, based on our current view, we expect to return to double-digit loan growth in fiscal 2010 and have set our target at 10%, unchanged from the loan target for fiscal 2009.

Credit Quality

Overall credit quality remained satisfactory and within expectations considering ongoing economic challenges and a cautious outlook. The dollar level of gross impaired loans was $137.9 million compared to $105.2 million last quarter. While the dollar level of new formations exceeded the amount of impaired loans that were resolved in the quarter, the net increase was dominated by two accounts. Our disciplined underwriting and secured lending practices have assisted in the resolution of impaired loans and we will remain diligent in this regard. Estimated write-offs from all existing loans classified as impaired are reflected in the specific provisions for credit losses and have been established based on our current assessments of security held against these accounts. The quarterly provision for credit losses of $3.4 million was unchanged from last quarter and represented 15 basis points of average loans for the year, at the low end of our 2009 performance target range. Based on our present view of credit quality, while the level of gross impaired loans will fluctuate up or down as we progress through the current cycle, actual losses are expected to remain within the Bank's historic range of acceptable levels. Provisions for credit losses measured as a percentage of average loans for fiscal 2010 is targeted in a range of 15 to 20 basis points, up slightly from the target range for fiscal 2009, and above the average of our net new specific provisions for credit losses over the past ten years of 13 basis points.

Branch Deposit Growth

Deposits raised through our branch network and Canadian Western Trust Company (CWT) were up 12% over last quarter and 5% compared to a year earlier. The marked increase in branch-raised deposits was driven by growth in the demand and notice component of 19% in the quarter and 31% for the year. The significant growth in demand and notice deposits reflects CWT's recent appointment as trustee for a major Canadian investment dealer, as well as ongoing execution of our strategies to further enhance and diversify the Bank's core funding sources. Customer awareness continued to build for our Internet-based division of the Bank named Canadian Direct Financial(TM) (www.canadiandirectfinancial.com) and we remain optimistic about the potential for this channel to provide a valued source of deposits.

Net Interest Margin

Compared to the same quarter last year, lower deposit costs, increased loan prepayment fees and an improved deposit and securities mix more than offset the negative margin impact from consecutive reductions in the prime lending interest rate, and led to slight improvement in net interest margin (teb) to 2.34%. Our success in pricing new and renewal loan accounts to ensure a fair and profitable return in the context of current markets, coupled with initiatives to negotiate interest rate floors with our customers further benefited net interest margin. The combination of lower overall deposit costs and favourable changes in the deposit mix were primary factors that led to the considerable improvement in net interest margin compared to last quarter. The annual net interest margin (teb) of 2.10% declined 20 basis points compared to fiscal 2008 and continued to have a significant negative impact on growth in both total revenues and overall profitability. Based on the Bank's financial position at year end, it is estimated that every one basis point improvement in net interest margin (teb) would represent an increase of approximately $1.1 million in annual net interest income (teb), all else being equal. We currently maintain a positive outlook for net interest margin (teb) and expect it will move closer toward our historic ten year average of 2.54% as the 2010 fiscal year progresses.

Trust and Wealth Management Services

Ongoing development of trust and wealth management services is an important part of our overall strategy and continues to provide opportunities for earnings growth, diversification and brand awareness. CWT, which includes Optimum Mortgage, posted very strong financial performance for the year and this positive momentum should continue. Valiant Trust Company's revenues were down reflecting the considerable slowdown in capital markets activity, but we do foresee increasing opportunities for this business moving forward. Our fiscal 2009 acquisition of Adroit Investment Management Ltd. marked the Bank's initial move into wealth management services and we believe this business line has potential to become a more material source of revenue growth.

Insurance

Canadian Direct Insurance Incorporated (CDI) reported strong fourth quarter performance and achieved record earnings for the year. CDI's auto book continued to perform well and offset increased claims experience in the home insurance book which was impacted by severe weather and a number of fires in both BC and Alberta. Our strategies to enhance market share in BC auto also progressed well with further expansion of our broker distribution network in that market. The overall earnings and growth outlook for CDI remains positive.

Outlook

CWB finished the fourth quarter and fiscal 2009 with strong results in what was arguably one of the most challenging years in history for the financial sector, both in Canada and globally. We achieved record total revenues and net income despite the material impact from margin compression and a recessionary economic environment. We expect net interest margin will further improve in fiscal 2010, maintaining the positive trend that was apparent over the past two quarters. While we expect economic challenges in our markets will persist, particularly in areas related to natural gas in Alberta, we believe Western Canada will continue to show positive growth relative to the rest of Canada. As in prior quarters, our solid balance sheet and strong capital base have us very well positioned to capitalize on strategic growth initiatives, including acquisitions, and we continue to evaluate opportunities in this regard. CWB's overall performance underscores the value of our disciplined strategies and we will maintain our focus on creating value and growth for our shareholders over the long-term.

We look forward to reporting our fiscal 2010 first quarter results on March 4, 2010.

    
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    Q4 Results Conference Call

    CWB's fourth quarter and fiscal 2009 results conference call is scheduled
    for Thursday, December 3, 2009 at 4:30 p.m. ET (2:30 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. The webcast will be
    archived on the Bank's website for 60 days.

    A replay of the conference call will be available until December 17, 2009
    by dialing 416-849-0833 (Toronto) or 1-800-642-1687 (toll-free) and
    entering passcode 41377847.
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About Canadian Western Bank

Canadian Western Bank offers highly personalized service through 37 branch locations and is the largest Canadian bank headquartered in Western Canada. The Bank, with total balance sheet assets of approximately $12 billion, assets under administration of over $5 billion and assets under management approaching $1 billion, specializes in mid-market commercial lending and offers a full range of retail banking services. Trust services to independent financial advisors, corporations, income trusts and individuals are provided through the Bank's subsidiaries, Canadian Western Trust Company and Valiant Trust Company. Canadian Direct Insurance Incorporated is a subsidiary that offers personal auto and home insurance to customers in BC and Alberta. Subsidiary Adroit Investment Management Ltd. provides wealth management services to individuals, corporations and institutional clients. 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 and common share purchase warrants trade on the Toronto Stock Exchange under the trading symbols 'CWB.PR.A' and 'CWB.WT' respectively. Refer to www.cwbankgroup.com for additional information.

Management's Discussion and Analysis

This management's discussion and analysis (MD&A) 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, 2009, as well as the audited consolidated financial statements and MD&A for the year ended October 31, 2008, available on SEDAR at www.sedar.com and the Bank's website at www.cwbankgroup.com. Except as discussed below, the factors discussed and referred to in the MD&A for fiscal 2008 remain substantially unchanged. The 2009 annual report and audited consolidated financial statements for the year ended October 31, 2009 will be available on both SEDAR and the Bank's website in mid-December 2009. The 2009 Annual Report will be distributed to shareholders in January 2010.

Overview

CWB recorded strong fourth quarter results reflecting solid performance from both business segments despite ongoing challenges related to a downturn in economic activity and uncertainty regarding both the timing and strength of a recovery. Record quarterly net income from banking and trust operations of $27.5 million was up 23% ($5.2 million) compared to one year ago as positive earnings contributions from 7% loan growth, very strong other income - including $3.2 million higher gains on sale of securities - and a slightly improved net interest margin, measured on a taxable equivalent basis (teb - see definition following Financial Highlights table), offset an 18% ($6.1 million) increase in non-interest expenses. Canadian Direct Insurance Incorporated (Canadian Direct or CDI) posted quarterly net income of $2.9 million, up 33% ($0.7 million) compared to a year earlier. Consolidated net income increased 24% from one year ago to $30.4 million. Fourth quarter earnings per diluted common share of $0.39 ($0.42 basic) grew 3% over the prior year and includes the net impact from the preferred units issued in March 2009.

Annual consolidated net income reached a record $106.3 million, a 4% ($4.3 million) increase over last year. Reflecting the net impact from the preferred units issued in March 2009, diluted earnings per common share for the year were $1.47 ($1.51 basic), down 7% from $1.58 ($1.61 basic) a year earlier. Despite record net income for the year, overall profitability remained constrained due to the impact of a significantly lower net interest margin and a 17% ($23.0 million) increase in non-interest expenses, offset by the positive impact from loan growth and 30% ($21.4 million) growth in other income, including $20.5 million higher gains on sale of securities. Compared to the previous quarter, consolidated net income was up 6% ($1.6 million) reflecting a marked improvement in net interest margin that offset a $2.5 million decline in other income and $1.4 million higher non-interest expenses. Diluted earnings per common share increased 3% ($0.01) over the prior quarter.

Fourth quarter return on equity of 13.7% decreased from 14.4% a year earlier. Return on equity for the year was 13.2%, down from 15.9% in 2008. Fourth quarter return on assets was 0.91%, down from 0.96% last year. Fiscal 2009 return on assets of 0.86% represented a 17 basis point decline compared to the previous year. Although partially offset by strong growth in other income, profitability ratios were negatively impacted by constrained total revenues due to a significantly lower net interest margin and higher non-interest expenses. Compared to 2008, the net impact from CWB's preferred unit offerings completed in March 2009 further reduced profitability ratios. The preferred share capital will support considerable future growth and is expected to become accretive to earnings over time. Looking forward, the Bank expects year-over-year improvements for both return on equity and return on assets in fiscal 2010.

Total Revenues (teb)

Total revenues (teb), comprised of net interest income and other income, of $90.1 million were up 22% ($16.0 million) compared to the same quarter last year reflecting the positive impact from loan growth, a 43% ($6.7 million) increase in other income and a slightly improved net interest margin. Total revenues (teb) for the year increased 10% ($29.1 million) over 2008 reflecting the positive impact of continued loan growth and increased other income, offset by a significantly lower net interest margin. Compared to last quarter, total revenues (teb) were up 5% ($4.6 million) reflecting a $7.1 million increase in net interest income (teb) that offset a $2.5 million decline in other income.

Net Interest Income (teb)

Quarterly net interest income (teb) of $68.0 million was up 16% ($9.4 million) compared to the same period last year driven by the positive impact from continued loan growth and a four basis point improvement in net interest margin (teb) to 2.34%. The slight improvement in net interest margin (teb) compared to the same quarter last year reflects lower deposit costs, increased loan prepayment fees and an improved deposit and securities mix that offset the negative impact of consecutive reductions in the prime lending interest rate. Generally, reductions in the prime interest rate negatively impact net interest margin because deposits do not reprice as quickly as prime-based loans, which subsequently compresses the interest spread earned on the Bank's assets. Also, the marginal benefit attributed to the Bank's lower cost demand and notice deposits is significantly reduced as interest rates approach zero.

Net interest income (teb) for the year of $236.4 million increased 3% ($7.7 million) over 2008 as the positive impact from loan growth was largely offset by a significant 20 basis point decline in net interest margin (teb) to 2.10%. The significant decrease in annual net interest margin was mainly the result of consecutive reductions in the prime lending interest rate and lower yields on investments held in the securities portfolio, partially offset by lower deposit costs, more favourable spreads on both new and renewal loans and an improved mix in the securities portfolio. Margin pressures were most prevalent through the first half of the fiscal year but have maintained a positive upward trend since March when net interest margin (teb) reached a monthly low of 1.88%. Net interest income (teb) was up 12% ($7.1 million) compared to the previous quarter reflecting a 21 basis point increase in net interest margin (teb) and modest loan growth. The improved net interest margin compared to the prior quarter mainly reflects lower deposit costs, an improved deposit mix and the positive effects from loan pricing actions in prior quarters.

Note 13 to the unaudited interim consolidated financial statements summarizes the Bank's exposure to interest rate risk as at October 31, 2009. The estimated sensitivity of net interest income to a change in interest rates is presented in the table below. The amounts represent the estimated change in net interest income over the time period shown resulting from a one percentage point change in interest rates. The estimates are based on a number of assumptions and factors, which include:

    
    -   a constant structure in the interest sensitive asset liability
        portfolio;
    -   floor levels for various deposit liabilities;
    -   prime rate decreases limited to 0.25% due to the historic low levels
        of interest rates;
    -   interest rate changes affecting interest sensitive assets and
        liabilities by proportionally the same amount and applied at the
        appropriate repricing dates; and
    -   no early redemptions.


                                             For the three months ended
                                      ---------------------------------------
                                       October 31        July 31  October 31
    ($ thousands)                            2009         2009(1)       2008
    -------------------------------------------------------------------------

    Impact of 1% increase in interest rates
    -------------------------------------------------------------------------
    1 year                            $    (6,574)  $     9,493  $    10,324
    -------------------------------------------------------------------------
    1 year percentage change                 (2.5)%         3.8%         4.8%
    -------------------------------------------------------------------------

    Impact of 1% decrease in interest rates
    -------------------------------------------------------------------------
    1 year                            $    10,241   $    13,058  $    10,356
    -------------------------------------------------------------------------
    1 year percentage change                  3.8%          5.2%       (4.8)%
    -------------------------------------------------------------------------

    (1) Methodology for the calculation of interest sensitivity at July 31,
        2009 does not include a minimum interest rate level for certain
        deposit accounts that were included in the October 31, 2009
        methodology. Interest rate floors at October 31, 2008 were not
        applicable.
    

As at October 31, 2009, a 1% increase in interest rates would decrease net interest income by 2.5% over the following twelve months; this compares to October 31, 2008 when a 1% increase in interest rates would have increased net interest income by 4.8% over the following twelve months. During 2009, to better manage interest rate sensitivity against falling interest rates, many prime related loans were negotiated with a floor rate and a corresponding minimum interest rate level. Should prime rate decrease, the rate on these loans would remain fixed, however when prime rates increase, the rates on these loans only begin to increase once the floor rate is passed. In modelling the effects of a 1% increase in interest rates, not all loans would increase by the full 1% whereas it is assumed that all liabilities increase by the full amount. The result is a decrease in net income when interest rates rise by 1%, however this effect is diminished on further increases in interest rates. Notwithstanding the movement of interest rates, net interest margin is expected to improve in fiscal 2010 due to the re-pricing of high cost fixed term deposits raised in prior periods. When modeling a 1% decrease in rates, the rates on the above negotiated prime rate loans do not decrease whereas the balance of prime related loans decrease only by 0.25%. Many liabilities, though, decrease by the full 1% causing net interest income to rise on a decrease in rates. As at October 31, 2009, a 1% decrease in interest rates would increase net interest income by 3.8% over the following twelve months; this compares to October 31, 2008 when a 1% decrease in interest rates would increase net interest income by 4.8% over the following twelve months.

Based on the interest rate gap position at October 31, 2009, it is estimated that a 1% increase in all interest rates would decrease annual other comprehensive income by $21.4 million, net of tax (2008 - $20.0 million); it is estimated that a one-percentage point decrease in all interest rates at October 31, 2009 would increase other comprehensive income by a similar amount.

It is management's intention to continue to manage the asset liability structure and interest rate sensitivity through pricing and product policies, as well as through the use of interest rate swaps or other appropriate hedging techniques (see Note 8 to the unaudited interim consolidated financial statements for additional disclosure on derivative financial instruments).

Other Income

Fourth quarter other income of $22.1 million was up 43% ($6.7 million) from a year earlier reflecting growth across almost all areas, including $3.2 million higher gains on sale of securities. Quarterly net insurance revenues increased 30% ($1.2 million) over the same period last year, while credit related fee income and trust and wealth management services revenues were up 18% ($0.9 million) and 22% ($0.7 million) respectively. Foreign exchange gains and other categories increased $0.7 million in the aggregate.

Other income for the year was $91.6 million, up 30% ($21.4 million) over fiscal 2008 reflecting a $20.5 million increase in gains on sale of securities, 16% ($2.2 million) higher trust and wealth management fee income, an 8% ($1.3 million) increase in net insurance revenues and a combined $1.1 million improvement in foreign exchange gains and other categories, offset by 13% ($3.6 million) lower credit related fee income, consistent with decreased new loan volumes. Compared to the previous quarter, other income declined 10% ($2.5 million) reflecting $2.3 million lower gains on sale of securities and a $0.8 million decline in net insurance revenues, offset by a $0.6 million improvement in trust and wealth management fee income.

Credit Quality

Overall credit quality remained satisfactory and within current expectations. The Bank's primary markets continue to be materially impacted by global economic factors, particularly as they relate to demand for commodities. Despite these challenges, management believes that Western Canada is positioned to benefit significantly once major global economies commence a sustained period of economic growth.

    
                                 For the three months ended
                          -------------------------------------- Change from
    (unaudited)             October 31     July 31   October 31   October 31
    ($ thousands)                 2009        2009         2008         2008
    -------------------------------------------------------------------------

    Gross impaired loans,
     beginning of period   $   105,229  $  107,017  $    47,539          121%
      New formations            70,612      25,111       50,643           39
      Reductions, impaired
       accounts paid down
       or returned to
       performing status       (35,733)    (22,444)      (5,841)         512
      Write-offs                (2,164)     (4,455)        (705)         207
    -------------------------------------------------------------------------
    Total(3)               $   137,944  $  105,229  $    91,636           51%
    -------------------------------------------------------------------------

    Balance of the ten
     largest impaired
     accounts              $  76,101     $  54,990     $  56,797          34%
    Total number of
     accounts classified
     as impaired                 224           211           161          39
    Total number of
     accounts classified
     as impaired under
     $1 million                  199           195           142          40
    Gross impaired loans
     as a percentage of
     total loans(1)             1.49%         1.14%         1.06%    43 bp(2)

    (1) Total loans do not include an allocation for credit losses or
        deferred revenue and premiums.
    (2) bp - basis point change.
    (3) Gross impaired loans includes foreclosed assets with a carrying value
        of $nil (July 31, 2009 - $4,756 and October 31, 2008 - $901) which
        are held for sale.
    

Gross impaired loans at October 31, 2009 were $137.9 million, compared to $105.2 million last quarter and $91.6 million a year earlier. The increased dollar level of gross impaired loans can mainly be attributed to two large accounts that became impaired during the fourth quarter; the combined balance for these two accounts at quarter end was $32.4 million, almost the entire net increase in gross impaired loans compared to last quarter. The dollar level of gross impaired loans fluctuates as loans become impaired and are subsequently resolved and does not directly reflect the dollar value of expected write-offs given the tangible security held against the Bank's lending positions. Existing loans classified as impaired are well structured and current estimates of expected write-offs are reflected in the specific provisions for credit losses. The Bank establishes its current estimates of expected write-offs through carrying out detailed analyses of both the overall quality and ultimate marketability of the security held against impaired accounts. The ten largest accounts classified as impaired measured by dollars outstanding represented approximately 55% of the total gross impaired loans at quarter end, compared to 52% in the prior quarter and 62% a year earlier. As in prior quarters, the timeframe required to recover balances on loans classified as impaired has been lengthened in certain cases due to the presence of other lenders with charges subordinated to CWB. Slow foreclosure processes on residential real estate in the western provinces also lengthen the timeframe required to resolve certain impaired accounts.

Gross impaired loans represented 1.49% of total loans at quarter end, compared to 1.14% last quarter and 1.06% one year ago. The fiscal 2009 net new specific provisions for credit losses as a percentage of average loans were 14 basis points; this compares to the Bank's average over the past ten years of 13 basis points (including fiscal 2006 when recoveries exceeded losses). It is expected that the level of impaired loans will continue to experience wider fluctuations than normal until the current economic cycle runs its course. However, actual losses are expected to remain within acceptable levels. Based on current credit quality, management expects the fiscal 2010 provisions for credit losses will remain in a targeted range between 15 to 20 basis points of average loans, consistent with the target range established for fiscal 2009.

The total allowance for credit losses (general and specific) represented 55% of gross impaired loans at quarter end, compared to 71% last quarter and 82% one year ago. The total allowance for credit losses (general and specific) was $75.5 million at October 31, 2009, compared to $74.2 million last quarter and $75.5 million a year earlier. The general allowance as a percentage of risk-weighted loans was unchanged from last quarter at 73 basis points, down from 77 basis points one year ago. The Bank's long-standing strategy with respect to managing the allowance for credit losses has been to maintain consistent provisions to cover both identified and unidentified losses. The purpose of the general allowance for credit losses is to mitigate the timing impact of unidentified losses in the portfolio. It is expected that the level of the general allowance will fluctuate up and down as specific losses are recognized and subsequently written off.

Non-interest Expenses

Effective execution of CWB's strategic plan which is focused on long-term, sustainable growth has necessitated increased spending in certain areas. Significant expenditures relate to additional staff complement, as well as expanded premises and technology upgrades. Spending in these areas is an integral part of management's commitment to maximize shareholder value over the long-term and is expected to provide material benefits in future periods. CWB completed previously announced plans with the opening of new full service branches in Saskatoon and Kamloops in the fourth quarter. The Bank expects to open two additional branches late in 2010.

Fourth quarter non-interest expenses of $41.6 million increased 18% ($6.2 million) compared to last year. Within non-interest expenses, salary and benefit costs were up 17% ($3.8 million) with the increase mainly attributed to increased staff complement, additional stock-based compensation charges, including expense related to the third quarter grant of Restricted Share Units (RSUs) associated with a revised long-term incentive plan, and annual salary increments. Premises and equipment expenses were up $1.0 million in the aggregate over the same quarter last year. Other expenses increased $1.4 million and included $0.8 million of additional advertising and business development expense. Fourth quarter non-interest expenses related to newly acquired Adroit were $0.8 million, including the associated amortization of intangible assets.

Fiscal 2009 non-interest expenses of $158.2 million were up 17% ($23.0 million) over the same period last year reflecting 19% ($16.5 million) higher salary and benefit costs. Total stock-based compensation charges of $10.7 million represented a $4.9 million increase over fiscal 2008 and included $4.0 million of expense recognized for RSUs and $1.7 million of additional non-cash, stock-based compensation expense reflecting required accounting treatment for stock options voluntarily forfeited by certain CWB management in the second quarter. Premises and equipment expenses, including depreciation, increased 16% ($3.7 million) mainly resulting from ongoing business growth and capital investment, while advertising expense increased $1.1 million. Annual non-interest expenses related to Adroit were $2.7 million, including amortization of intangible assets. Non-interest expenses were up $1.4 million compared to the prior quarter mainly reflecting $0.8 million of additional advertising expense and expanded premises, including the two new full service branches opened in the fourth quarter.

The fourth quarter efficiency ratio (teb), which measures non-interest expenses as a percentage of total revenues (teb), was 46.1%, compared to 47.7% last year and 47.0% in the previous quarter. This measure improved despite higher non-interest expenses reflecting the combined positive impact on total revenues of loan growth, increased other income, including gains on sale of securities, and a higher net interest margin. The fiscal 2009 efficiency ratio (teb) of 48.2% represented a 300 basis point deterioration compared to last year, but was within the Bank's targeted range of 47 to 49%. Looking forward, an expected positive trend for net interest margin and ongoing discipline with regard to discretionary spending should support improvements to this measure. Management's target for the fiscal 2010 efficiency ratio (teb) is 48% or better.

On April 1, 2009, the capital tax rate in BC applicable to CWB decreased to 0.33%, down from 0.67%, and is expected to be eliminated completely by April 1, 2010.

Income Taxes

The income tax rate (teb) for the year was 31.8%, down from 32.7% in 2008. The tax rate before the teb adjustment was 28.2% compared to 30.1% in the prior year. The fiscal 2008 tax rate included $1.0 million of additional tax expense that resulted from the write-down of future tax assets to reflect lower future federal corporate income tax rates. Excluding this additional fiscal 2008 tax expense, the current year's income tax rate (teb) was 70 basis points lower than a year earlier.

Effective July 1, 2008, the corporate provincial income tax rates in BC, Saskatchewan and Manitoba each decreased 100 basis points to 11%, 12% and 13% respectively. The federal corporate income tax rate was reduced from 19.5% to 19.0%, effective January 1, 2009. The corporate income tax rate in Manitoba decreased from 13% to 12% effective July 1, 2009. Based on current expectations, CWB's budgeted income tax rate (teb) for fiscal 2010 is 28.8%, or 30.3% before the teb adjustment.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income (OCI), all net of income taxes, and totaled $28.4 million for the fourth quarter, compared to $20.6 million in the same period last year. As previously noted, fourth quarter net income was up 24% ($5.9 million) compared to one year ago. Higher OCI reflects $1.8 million of unrealized gains on available-for-sale securities compared to $8.2 million of unrealized losses during the same period last year. These increases were partially offset by lower unrealized gains on derivative instruments designated as cash flow hedges, which reflects market value fluctuations related to changes in both market credit spreads and interest rates, as well as shifts in the interest rate curve.

Balance Sheet

Total assets increased 3% ($304 million) in the quarter and 10% ($1,035 million) in the past year to reach $11,636 million at October 31, 2009.

Cash and Securities

Cash, securities and securities purchased under resale agreements totaled $2,189 million at October 31, 2009, compared to $1,997 million last quarter and $1,798 million one year ago. The unrealized gain recorded on the balance sheet at October 31, 2009 was $24.8 million, compared to $25.6 million last quarter and an unrealized loss of $17.8 million as at October 31, 2008. The change in unrealized gains and losses compared to October 31, 2008 is primarily attributed to a market value improvement in the Bank's preferred share portfolio; unrealized gains in this portfolio totaled $5.8 million as at October 31, 2009, compared to unrealized losses of $17.8 million as at October 31, 2008. The cash and securities portfolio is mainly comprised of high quality debt instruments that are not held for trading purposes and, where applicable, are typically held until maturity. Fluctuations in fair value are generally attributed to changes in interest rates, market credit spreads and shifts in the interest rate curve.

Realized gains on sale of securities in the fourth quarter were $4.1 million, compared to $6.4 million in the previous quarter and $0.9 million in the same quarter last year. The difference in realized gains on sale of securities compared to the prior year mainly resulted from investment strategies and unusual market conditions that allowed the Bank to capitalize on opportunities to realize gains while maintaining relatively comparable yields on reinvestment in other high quality investment grade securities. The Bank has no direct exposure to any troubled asset backed commercial paper, collateralized debt obligations, credit default swaps, U.S. subprime lending or monoline insurers.

Treasury Management

High liquidity levels have been maintained since August 2007 in response to disruptions and related uncertainties in financial markets. Although this strategy has a negative impact on net interest margin, it reflects the Bank's conservative risk tolerance and augments its strong position to manage future unexpected events. Average liquidity balances, net of securities purchased under reverse resale agreements, were higher compared to the same quarter last year reflecting proceeds from the Bank's preferred unit offerings completed in March 2009. Comparatively slower loan growth also contributed to increased liquidity compared a year earlier. Average liquidity, net of securities purchased under reverse resale agreements, declined slightly compared to the prior quarter. The Bank has implemented improved methodologies for measuring and monitoring liquidity and has also enhanced its deposit monitoring capabilities. This has enabled management to better assess risks under various scenarios and provides flexibility to decrease the level of liquid asset coverage on a general basis. Overall liquidity is expected to decrease in future periods, although elevated levels will be maintained compared to what would be held under more normal market conditions. Management intends to maintain this strategy until economic uncertainties subside further.

Loans

Total loans grew 1% ($98 million) in the quarter and 7% ($612 million) in the past twelve months to reach $9,236 million. All provinces showed positive quarterly growth except Alberta, where there were material repayments on existing loans. While the volume of new lending activity has slowed due to economic factors, loan growth further reflects the number of customers who prudently chose to scale back operations and direct cash flows towards the repayment of debt. Measured by lending sector, personal loans, general commercial and real estate loans each experienced quarterly growth while equipment financing and energy loans showed a decline. For the year, all lending sectors realized positive growth led by activity in British Columbia and Alberta, respectively. Saskatchewan provided the largest geographic growth contribution measured in percentage terms. Looking forward, loan growth is expected to remain constrained as moderated economic activity in Western Canada continues to have an adverse impact, particularly in the Bank's real estate construction and equipment financing portfolios. Construction loans are relatively short in duration and there are now fewer quality lending opportunities in this area. The equipment financing portfolio also has a short duration with loans fully repaid over a period of three to five years. The substantial reduction in natural gas prices has had a significant negative impact on conventional exploration activity and continues to adversely affect cash flows for companies involved in oil and gas services, particularly in Alberta. Crude oil prices have remained relatively stable of late and exploration and production companies appear to be increasing their capital budgets tied to conventional oil exploration. There is also clear evidence supporting increased capital investment in both the Alberta oil sands and the shale gas deposits in BC. These areas should have a favourable impact on the overall level of activity in fiscal 2010. Systemic softness in the forestry industry is expected to continue, but this currently represents less than 2% of the Bank's overall portfolio. Despite the foregoing challenges, management believes the Bank is well positioned to achieve continued loan growth while managing through ongoing uncertainties. Management also believes Western Canada's resource-based economies will be poised for a comparatively faster recovery than the rest of Canada once major global economies begin to expand. The overall outlook for new loans at the current time is encouraging despite slower growth in recent quarters and management has established its fiscal 2010 loan growth target at 10%.

Loans in the Bank's alternative mortgage business, Optimum Mortgage (Optimum), increased 14% in the quarter and 20% over the past twelve months to reach $561 million. Real estate values appear to have stabilized and residential sales activity in Western Canada continued to show surprising resilience. Improved residential sales activity also positively impacted marketing time for homes in foreclosure and had a favourable effect on the overall level of delinquent loans in the quarter. Optimum's newly established offering of higher ratio mortgages insured by either the Canada Mortgage and Housing Corporation or Genworth Financial Canada showed positive results and management expects insured mortgages will become a larger component of this portfolio over time. For uninsured mortgages, which currently represent approximately 81% of Optimum's total portfolio, the Bank remains well secured via conventional residential first mortgages carrying a weighted average underwritten loan-to-value ratio at initiation of approximately 70%. The vast majority of all Optimum mortgages carry a fixed interest rate with the principal amortized over 25 years or less. Management remains committed to grow this business over time as it continues to produce strong returns while maintaining an acceptable risk profile.

Deposits

Total branch deposits, including those raised by Canadian Western Trust Company (CWT), were up 12% ($647 million) from the previous quarter and 5% ($293 million) compared to a year earlier. The demand and notice component within branch deposits was up 19% ($503 million) from last quarter and 31% ($745 million) compared to the same time last year. The significant growth in demand and notice deposits compared to prior periods reflects CWT's recent appointment as trustee for a major Canadian investment dealer and ongoing execution of strategies to further enhance and diversify the Bank's core funding sources. The recently introduced Internet-based division of the Bank named Canadian Direct Financial(TM) has shown good success and based on experience to date, management is optimistic about its potential to provide a valued source of deposits. Consistent with recent prior quarters, more normalized financial markets and reduced competitive influences have continued to ease overall deposit costs for both branch-generated deposits and those raised through the deposit broker network. If interest rates remain at current levels, this will have a positive impact on net interest margin going forward. Also, a significant component of comparatively higher cost one-year deposits that were raised in prior periods, largely to increase liquidity, have begun maturing. These deposits are either being replaced at much more favourable current rates or paid out at maturity due to reduced liquidity requirements.

Total deposits at quarter end were $9,617 million, up 2% ($223 million) from the previous quarter and 4% ($372 million) over the past year. Total branch deposits measured as a percentage of total deposits were 64% at October 31, 2009 compared to 58% in the previous quarter and 63% a year earlier. Compared to October 31, 2008, the increase in branch-raised deposits as a percentage of total deposits reflects very strong growth in the demand and notice component that more than offset a 4% ($130 million) increase in fixed rate term deposits raised through the deposit broker network and a reduction in larger commercial term deposits, which are subject to greater fluctuation. Demand and notice deposits represented 33% of total deposits at year end, compared to 28% in the previous quarter and 26% at the end of fiscal 2008.

Other Assets and Other Liabilities

Other assets at October 31, 2009 totaled $211 million, compared to $196 million last quarter and $179 million one year ago. Other liabilities at quarter end were $657 million, compared to $596 million the previous quarter and $301 million last year. The increase in other liabilities compared to prior quarters mainly reflects the use of reverse resale agreements for short-term cash management purposes.

Off-Balance Sheet

Off-balance sheet items include trust assets under administration and assets under management. Trust assets under administration totaled $5,467 million at October 31, 2009, compared to $4,752 million last quarter and $4,348 million one year ago. Assets under management were $878 million at quarter end, compared to $836 million last quarter and nil one year ago reflecting the acquisition of Adroit, which was effective November 1, 2008. Other off-balance sheet items are composed of standard industry credit instruments (guarantees, standby letters of credit and commitments to extend credit), and the non-consolidated variable interest entity. CWB does not utilize, nor does it have exposure to, collateralized debt obligations or credit default swaps. For additional information regarding other off-balance sheet items refer to Notes 14 and 20 to the audited consolidated financial statements on pages 76 and 80 respectively in the Bank's 2008 Annual Report.

Capital Management

At October 31, 2009, CWB's total capital adequacy ratio, which measures regulatory capital as a percentage of risk-weighted assets was unchanged from last quarter at 15.4%, up from 13.5% a year earlier. The Tier 1 ratio at quarter end was 11.3%, compared to 11.2% last quarter and 8.9% at the same time last year. Compared to one year ago, CWB's total regulatory capital increased with the issuance of $209.8 million preferred units, the retention of earnings, net of dividends, and a modestly higher general allowance for credit losses, slightly offset by strong asset growth. The higher Tier 1 ratio compared to the prior quarter reflects the retention of earnings, net of dividends, slightly offset by ongoing growth in risk weighted assets. Subsequent to year end, on November 20, 2009, the Bank redeemed $60.0 million of subordinated debentures.

During the second quarter of fiscal 2009, the Bank issued 2,990,000 preferred units (the "Public Offering preferred units") for total proceeds of $74.8 million. The Public Offering preferred units each consisted of one Non-Cumulative 5-Year Rate Reset Preferred Share, Series 3 (the "Series 3 Preferred Shares") in the capital of the Bank with an issue price of $25.00 per share and 1.78 common share purchase warrants (each whole warrant a "Warrant"). Each Warrant is exercisable at a price of $14.00 to purchase one common share in the capital of the Bank until March 3, 2014. The Bank also issued 5,400,000 preferred units (the "Private Placement Preferred Units") by way of a private placement to institutional investors for total proceeds of $135.0 million. The Private Placement Preferred Units consisted of one Series 3 Preferred Share and 1.7857 Warrants. The Warrants have the same terms as those issued under the public offering.

Based on a $25.00 issue price, the Series 3 Preferred Shares yield a 7.25% dividend annually, payable quarterly, as and when declared by the Board of Directors of CWB for an initial period ending April 30, 2014. Thereafter, the dividend rate will reset every five years at a level of 500 basis points over the then current five-year Government of Canada bond yield. Holders of Series 3 Preferred Shares will, subject to certain conditions, have the option to convert their shares to Non-Cumulative Floating Rate Preferred Shares, Series 4 (the "Series 4 Preferred Shares") on April 30, 2014 and on April 30 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to a floating quarterly dividend at a rate equal to the then current 90-day Canadian Treasury Bill Rate plus 500 basis points, as and when declared by the Board of Directors of CWB. The Series 3 Preferred Shares and Series 4 Preferred Shares are redeemable at the option of CWB on April 30, 2014, and every fifth anniversary thereafter at a price of $25.00 per share. In addition, the Series 4 Preferred Shares are redeemable at the option of CWB at any other time, on or after April 30, 2014, at a price of $25.50 per share.

The Series 3 Preferred Shares and the Series 4 Preferred Shares qualify as Tier 1 capital for the Bank. Both the Series 3 Preferred Shares and the Warrants commenced trading on the Toronto Stock Exchange on March 2, 2009 under the trading symbols CWB.PR.A and CWB.WT, respectively.

Further information relating to the Bank's capital position is provided in Note 15 to the quarterly financial statements as well as the audited consolidated financial statements and MD&A for the year ended October 31, 2008.

Book value per common share at October 31, 2009 was $12.16 compared to $11.87 last quarter and $10.70 one year ago.

Common shareholders received a quarterly cash dividend of $0.11 per common share on October 1, 2009. On December 2, 2009, the Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on January 8, 2010 to shareholders of record on December 24, 2009. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on January 31, 2010 to shareholders of record on January 21, 2010.

Changes in Accounting Policies

Goodwill and Intangible Assets

Effective November 1, 2008, the Bank adopted the Canadian Institute of Chartered Accountants (CICA) new accounting standard, Section 3064, Goodwill and Intangible Assets. Section 3064, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs, provides clarifying guidance on the criteria that must be satisfied in order for an intangible asset to be recognized, including internally developed intangible assets. The new guidance did not have a material effect on the financial position or earnings of the Bank.

Credit Risk and Fair Value

Effective November 1, 2008, the Bank adopted EIC 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. The abstract clarifies how the Bank's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivatives. The new guidance did not have a material effect on the financial position or earnings of the Bank.

Financial Instruments - Disclosures

Effective October 31, 2009, the Bank adopted CICA amendments to Section 3862, Financial Instruments - Disclosures. These amendments require enhanced disclosures over fair value measurements of financial instruments and liquidity risks. The additional disclosures over fair value measurements include categorization of fair value measurements into one of three levels, ranging from those fair values measurements that are determined through quoted market prices in an active market to those fair value measurements that are based on inputs that are not based on observable market data. The additional disclosures over liquidity risks require greater clarification over the application of liquidity risk as well as maturity analysis for derivative financial liabilities.

Future Accounting Changes

International Financial Reporting Standards

The CICA will transition Canadian GAAP for publicly accountable entities to International Financial Reporting Standards (IFRS). The Bank's consolidated financial statements will be prepared in accordance with IFRS for the fiscal year commencing November 1, 2011 and will include comparative information for the prior year.

During 2008, the Bank commenced a four stage project to identify and evaluate the impact of the transition to IFRS on the consolidated financial statements and develop a plan to complete the transition. The project plan includes the following phases - diagnostic, design and planning, solution development, and implementation. The diagnostic and the design and planning phases are complete, and the solution development phase is expected to be completed by the end of fiscal 2010.

The impact of the transition to IFRS on the Bank's consolidated financial statements for current standards is not yet determinable. CWB continues to monitor the International Accounting Standards Board's proposed changes to standards during Canada's transition to IFRS. These proposed changes may have a significant impact on the Bank's implementation plan and future financial statements.

Controls and Procedures

There were no changes in the Bank's internal controls over financial reporting that occurred during the quarter ended October 31, 2009 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Prior to its release, this quarterly report to shareholders was reviewed by the Audit Committee and, on the Audit Committee's recommendation, approved by the Board of Directors of Canadian Western Bank, consistent with prior quarters.

Updated Common Share Information

As at November 30, 2009, there were 63,908,660 common shares outstanding and employee stock options, which are or will be exercisable for up to 4,386,555 common shares for maximum proceeds of $81.9 million. Also outstanding were 14,961,156 warrants that are each exercisable at a price of $14.00 to purchase one common share in the Bank until March 3, 2014.

Summary of Quarterly Financial Information

    


                                                 2009
                          ---------------------------------------------------
    ($ thousands)                  Q4          Q3           Q2           Q1
    -------------------------------------------------------------------------
    Total revenues (teb)  $    90,099  $    85,538  $    75,382  $    76,947
    Total revenues             87,702       83,349       73,707       75,361
    Net income                 30,357       28,729       21,580       25,619
    Earnings per
     common share
      Basic                      0.42         0.39         0.30         0.40
      Diluted                    0.39         0.38         0.30         0.40
    Total assets
     ($ millions)              11,636       11,331       11,450       10,907
    -------------------------------------------------------------------------

                                                  2008
                          ---------------------------------------------------
    ($ thousands)                  Q4           Q3           Q2           Q1
    -------------------------------------------------------------------------
    Total revenues (teb)  $    74,059  $    76,375  $    73,754  $    74,669
    Total revenues             72,519       74,933       72,402       73,332
    Net income                 24,485       26,327       25,302       25,905
    Earnings per
     common share
      Basic                      0.39         0.42         0.40         0.41
      Diluted                    0.38         0.41         0.39         0.40
    Total assets
     ($ millions)              10,601       10,057       10,038        9,865
    -------------------------------------------------------------------------
    

The financial results for each of the last eight quarters are summarized above. In general, CWB's performance reflects a relatively consistent trend although the second quarter contains three fewer revenue earning days, or two fewer days in a leap year such as 2008.

The Bank's quarterly financial results are subject to some fluctuation due to its exposure to property and casualty insurance. Insurance operations, which are primarily reflected in other income (refer to Results by Business Segment - Insurance), are subject to seasonal weather conditions, cyclical patterns of the industry and natural catastrophes. Mandatory participation in the Alberta auto risk sharing pools can also result in unpredictable quarterly fluctuations.

Quarterly results can also fluctuate due to the recognition of periodic income tax items. Net income in the first quarter of 2008 included $1.0 million ($0.01 per diluted share) of tax expense resulting from the write-down of future tax assets to reflect lower future federal corporate income tax rates.

During the fourth quarter of 2008 and throughout fiscal 2009 the Bank's quarterly net interest income was negatively impacted by compression of the net interest margin mainly resulting from consecutive reductions in the prime lending interest rate coupled with significantly higher deposit costs and other spin-off effects of the global financial crisis. Gains on sale of securities, which are reflected in other income, were unusually high in fiscal 2009 also mainly due to factors associated with the financial crisis, including a steep interest rate curve and wide credit spreads that allowed the Bank to capitalize on investment strategies.

For details on variations between the prior quarters see the summary of quarterly results section of the Bank's MD&A for the year ended October 31, 2008 and the individual quarterly reports to shareholders which are available on SEDAR at www.sedar.com and on CWB's website at www.cwbankgroup.com. The 2008 Annual Report and audited consolidated financial statements for the year ended October 31, 2008 are available on both SEDAR and the Bank's website. The 2009 annual report and audited consolidated financial statements for the year ended October 31, 2009 will be available on both SEDAR and the Bank's website in mid-December 2009. The 2009 Annual Report will be distributed to shareholders in January 2010.

Results by Business Segment

CWB operates in two business segments: 1) banking and trust and 2) insurance. Segmented information is also provided in Note 14 of the unaudited interim consolidated financial statements.

Banking and trust

Operations of the banking and trust segment include commercial and retail banking services, as well as personal and corporate trust services provided through CWB's subsidiaries, Canadian Western Trust Company (CWT) and Valiant Trust Company (Valiant). Effective November 1, 2008, the banking and trust segment also includes wealth management services provided through CWB's 72.5% ownership interest in subsidiary, Adroit Investment Management Ltd. (Adroit).

Record net income of $27.5 million increased 23% ($5.2 million) compared to the same quarter last year as positive revenue contributions from 7% loan growth, 47% ($5.4 million) higher other income - including an additional $3.2 million of gains on sale of securities - and a four basis point improvement in net interest margin (teb), to 2.32%, offset an 18% ($6.1 million) increase in non-interest expenses. Credit related fee income was up 18% ($0.9 million) while trust and wealth management services fee income increased 22% ($0.7 million). The improved net interest margin (teb) compared to a year earlier mainly resulted from lower deposit costs, increased loan prepayment fees and an improved deposit and securities mix, largely offset by the negative margin impact from consecutive reductions in the prime lending interest rate. Success in pricing new and renewal loan accounts to ensure a fair and profitable return in the context of current markets, coupled with initiatives to negotiate interest rate floors on floating rate loans further benefited net interest margin. The change in non-interest expenses reflects higher salary and benefit costs mainly related to increased staff complement and stock-based compensation expense, as well as continued business growth and investment in future development initiatives, including the addition of Adroit. The quarterly efficiency ratio (teb), which measures non-interest expense as a percentage of total revenues (teb), was 46.8%, compared to 48.0% one year ago.

Record annual net income of $97.2 million increased 4% ($3.5 million) over 2008 as a 3% ($7.4 million) increase in net interest income (teb) and a 36% ($19.7 million) increase in other income - attributed to $20.5 million of additional gains on sale of securities - was largely offset by a significant decline in net interest margin (teb) to 2.08% and a 17% ($21.8 million) increase in non-interest expenses. Credit related fee income declined 13% ($3.6 million) compared to 2008, consistent with decreased loan volumes. Trust and wealth management services fee income increased 16% ($2.2 million) while foreign exchange gains and other categories were up $1.1 million in the aggregate. The 2009 efficiency ratio (teb) of 48.5% deteriorated 310 basis points from the prior year.

Quarterly earnings were up 8% ($2.0 million) from the prior period as the positive impact of a 21 basis point improvement in net interest margin (teb) more than offset a 5% ($1.7 million) increase in non-interest expenses and a 9% ($1.6 million) decline in other income. The efficiency ratio (teb) improved 100 basis points compared to last quarter.

    
                                    For the three months ended
                         --------------------------------------- Change from
                           October 31      July 31   October 31   October 31
    ($ thousands)                2009         2009         2008         2008
    -------------------------------------------------------------------------
    Net interest income
      (teb)               $    66,387  $    59,340  $    56,993           16%
    Other income               17,019       18,651       11,580           47
    -------------------------------------------------------------------------
    Total revenues (teb)       83,406       77,991       68,573           22
    Provision for credit
     losses                     3,393        3,369        3,187            6
    Non-interest expenses      38,997       37,283       32,913           18
    Provision for income
     taxes (teb)               13,490       11,809       10,163           33
    Non-controlling
     interest in
     subsidiary                    59           50            -           nm
    -------------------------------------------------------------------------
    Net income            $    27,467  $    25,480  $    22,310           23%
    -------------------------------------------------------------------------
    Efficiency ratio
     (teb)                       46.8%        47.8%        48.0%    (120) bp
    Efficiency ratio             48.0         49.1         49.0         (100)
    Net interest margin
     (teb)                       2.32         2.11         2.28            4
    Net interest margin          2.24         2.04         2.23            1
    Average loans
     (millions)(1)        $     9,161  $     9,028  $     8,317           10%
    Average assets
     (millions)(1)             11,342       11,142        9,902           15
    -------------------------------------------------------------------------


                             For the year ended
                         -------------------------- Change from
                           October 31   October 31   October 31
    ($ thousands)                2009         2008         2008
    ------------------------------------------------------------
    Net interest income
      (teb)               $   230,227  $   222,837            3%
    Other income               74,013       54,338           36
    ------------------------------------------------------------
    Total revenues (teb)      304,240      277,175           10
    Provision for credit
     losses                    13,500       12,000           13
    Non-interest expenses     147,571      125,748           17
    Provision for income
     taxes (teb)               45,763       45,780            -
    Non-controlling
     interest in
     subsidiary                   232            -           nm
    ------------------------------------------------------------
    Net income            $    97,174  $    93,647            4%
    ------------------------------------------------------------
    Efficiency ratio
     (teb)                       48.5%        45.4%      310 bp
    Efficiency ratio             49.7         46.2          350
    Net interest margin
     (teb)                       2.08         2.29          (21)
    Net interest margin          2.02         2.23          (21)
    Average loans
     (millions)(1)        $     9,007  $     7,910           14%
    Average assets
     (millions)(1)             11,055        9,747           13
    ------------------------------------------------------------

    bp -  basis point change.
    teb - taxable equivalent basis, see definition following
          Financial Highlights table.
    nm - not meaningful.

    (1) Assets are disclosed on an average daily balance basis.
    

Insurance

The insurance segment is comprised of the operations of CWB's subsidiary, Canadian Direct Insurance Incorporated (Canadian Direct or CDI), which provides auto and home insurance to individuals in BC and Alberta.

Canadian Direct's fourth quarter net income of $2.9 million represented a $0.7 million increase compared to a year earlier mainly due to a 9% increase in net earned premiums. The Alberta auto product line performed well as a 17% increase in net earned premiums coupled with lower claims resulted in significantly improved profitability. Results included a before tax loss of $0.7 million from the Alberta auto risk sharing pools (the Pools) compared to a $1.1 million before tax loss in the fourth quarter last year. The Pools' results for both quarters reflected unfavourable adjustments to unpaid claims reserves by the Pools' consulting actuary. Absent the Pools' impact on quarterly results for both years, net income was up 16% ($0.5 million) based on a claims loss ratio of 61%.

Canadian Direct reported record annual net income of $9.1 million, up 9% ($0.7 million) over 2008 reflecting a 6% increase in net earned premiums due to continued business growth. Claims expense increased compared to 2008 mainly due to results in the home product line which was impacted by severe weather and a few large fire losses. Improved profitability in the auto lines of business due to strong underwriting results more than offset the impact of increased claims in the home product line. Fiscal 2009 results include a $0.3 million before tax loss from the Pools, compared to a $1.0 million before tax loss in the prior year. The Pools' results for 2008 included a large unfavourable adjustment to unpaid claims reserves specifically attributed to the impact of a ruling on the Minor Injury Regulation (MIR) by the Court of Queen's Bench of Alberta. That ruling struck down the cap on the amount a claimant may receive in respect of minor injuries suffered in an automobile accident. In 2009, the Alberta Court of Appeal overturned the lower court ruling on the MIR, thereby reinstating the cap. A leave to appeal this ruling has been filed with the Supreme Court of Canada. No specific adjustment to the unpaid claims reserves has been made based on the Alberta Court of Appeal's decision.

Net income declined $0.4 million compared to the previous quarter as a 3% increase in net earned premiums and a 2% improvement in the claims loss ratio for the core business was offset by results from the Pools'. Absent the Pools' impact for both quarters, net income was up $0.5 million.

Canadian Direct has implemented the Alberta Insurance Rate Board's mandated 5% rate decrease for basic auto coverage on private passenger vehicles, effective November 1, 2009. The rate decrease reflects the 2009 ruling on the MIR by the Alberta Court of Appeal.

    
                                 For the three months ended
                         --------------------------------------- Change from
                           October 31      July 31   October 31   October 31
    ($ thousands)                2009         2009         2008         2008
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $     1,625  $     1,594  $     1,629            -%
    -------------------------------------------------------------------------
    Other income (net)
      Net earned premiums      27,072       26,895       24,877            9
      Commissions and
       processing fees            697          741          742           (6)
      Net claims and
       adjustment expenses    (17,559)     (16,660)     (16,564)           6
      Policy acquisition
       costs                   (5,199)      (5,181)      (5,212)           -
    -------------------------------------------------------------------------
    Insurance revenue
     (net)                      5,011        5,795        3,843           30
    Gains on sale of
     securities                    57          158           14          307
    -------------------------------------------------------------------------
    Total revenues (net)
     (teb)                      6,693        7,547        5,486           22
    Non-interest expenses       2,576        2,927        2,446            5
    Provision for income
     taxes (teb)                1,227        1,371          865           42
    -------------------------------------------------------------------------
    Net income            $     2,890  $     3,249  $     2,175           33%
    -------------------------------------------------------------------------
    Policies outstanding
     (No.)                    175,662      172,979      168,071            5
    Gross written
     premiums             $    31,537  $    33,067  $    28,776           10
    Claims loss ratio(1)           65%          62%          67%    (200) bp
    Expense ratio(2)               26           27           27        (100)
    Combined ratio(3)              91           89           94        (300)
    Alberta auto risk
     sharing pools
     impact on net income
     before tax           $      (722) $       557  $    (1,060)          32%
    Average total assets
     (millions)                   212          200          191           11
    -------------------------------------------------------------------------


                              For the year ended
                          ------------------------- Change from
                           October 31   October 31   October 31
    ($ thousands)                2009         2008         2008
    ------------------------------------------------------------
    Net interest income
     (teb)                $     6,127  $     5,780            6%
    ------------------------------------------------------------
    Other income (net)
      Net earned premiums     104,062       97,943            6
      Commissions and
       processing fees          2,852        2,876           (1)
      Net claims and
       adjustment expenses    (68,996)     (64,380)           7
      Policy acquisition
       costs                  (20,802)     (20,573)           1
    ------------------------------------------------------------
    Insurance revenue
     (net)                     17,116       15,866            8
    Gains on sale of
     securities                   483           36        1,242
    ------------------------------------------------------------
    Total revenues (net)
     (teb)                     23,726       21,682            9
    Non-interest expenses      10,611        9,418           13
    Provision for income
     taxes (teb)                4,004        3,892            3
    ------------------------------------------------------------
    Net income            $     9,111  $     8,372            9%
    ------------------------------------------------------------
    Policies outstanding
     (No.)                    175,662      168,071            5
    Gross written
     premiums             $   116,828  $   107,054            9
    Claims loss ratio(1)           67%          66%      100 bp
    Expense ratio(2)               27           27            -
    Combined ratio(3)              94           93          100
    Alberta auto risk
     sharing pools
     impact on net income
     before tax           $      (292)     $  (973)          70%
    Average total assets
     (millions)                   198          184            8
    ------------------------------------------------------------

    bp - basis point change.
    teb - taxable equivalent basis, see definition following
          Financial Highlights table.
    nm - not meaningful.

    (1)  Net claims and adjustment expenses as a percentage of net earned
         premiums.
    (2)  Policy acquisition costs and non-interest expenses net of
         commissions and processing fees as a percentage of net earned
         premiums.
    (3)  Sum of the claims loss and expense ratios.
    

Fiscal 2009 Target Ranges and Performance & 2010 Minimum Targets

The performance target ranges established for the 2009 fiscal year together with CWB's actual performance, and minimum targets for fiscal 2010 are presented in the table below:

    
                                ---------------------------------------------
                                     2009           2009           2010
                                 Target Ranges  Performance  Minimum Targets
    -------------------------------------------------------------------------
    Net income growth (1)           2% to 5%         4%             12%
    -------------------------------------------------------------------------
    Total revenue (teb) growth      5% to 8%        10%             12%
    -------------------------------------------------------------------------
    Loan growth                        10%           7%             10%
    -------------------------------------------------------------------------
    Provision for credit losses
     as a percentage of average
     loans                       0.15% - 0.18%      0.15%     0.15% - 0.20%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)         46% - 49%        48.2%           48%
    -------------------------------------------------------------------------
    Return on common equity         14% -16%       13.2%(2)        13%(2)
    -------------------------------------------------------------------------
    Return on assets             0.90% - 1.05%     0.86%(3)      0.90% (3)
    -------------------------------------------------------------------------

    (1) Net income, before preferred share dividends.
    (2) Return on common equity calculated as net income after preferred
        share dividends divided by average common shareholders' equity.
    (3) Return on assets calculated as net income after preferred share
        dividends divided by average total assets.
    

CWB met or exceeded four of its seven fiscal 2009 performance target ranges despite very challenging market conditions and a recessionary environment that was much more pronounced than anticipated when the target ranges were established one year ago. Total revenue (teb) growth exceeded expectations while net income growth, the efficiency ratio (teb) and provision for credit losses as a percentage of average loans were all within the respective target ranges. Realized gains on the sale of securities during the year helped offset the significant financial impact of a reduced net interest margin. Management expects margin improvement in fiscal 2010 will offset reduced securities gains going forward, as such gains are not expected to be sustainable at the levels achieved in 2009. While the return on equity and return on assets ratios were both below the respective targets, the net impact on these ratios from the preferred unit offerings completed in March 2009 was not considered when the target ranges were established. Impacts from the recessionary environment, repayments of existing loans, particularly in the interim construction and equipment financing portfolios, and uncertainty regarding both the strength and timing of an economic recovery led to slower than anticipated loan growth for the year.

Minimum performance targets for fiscal 2010 reflect expectations for a return to double-digit loan growth and strong overall performance aided by improved market conditions and a more positive economic outlook compared to 2009. Economic fundamentals in Western Canada are expected to remain favourable relative to the rest of Canada, notwithstanding continued challenges in some sectors, particularly those related to natural gas. The Bank will maintain its focus on high quality, secured loans that offer a fair and profitable return on investment and management believes there will be good lending opportunities that fit these parameters. Credit quality is sound despite an increase in gross impaired loans and future write-offs are expected to remain within the Bank's historic acceptable range. Maintaining responsible cost control while ensuring the Bank continues to build its sound platform for sustained, high quality growth also remains a key strategy. The ongoing development of trust, insurance, wealth management and other complementary businesses supports objectives to increase the proportion of non-interest income to total revenues over time. Another key goal for 2010 is to leverage the Bank's strong capital position and management continues to evaluate potential strategic acquisitions of loan portfolios and/or other businesses that fit with CWB's growth and diversification objectives. Overall, CWB is well positioned to capitalize on market opportunities and management will maintain its focus on creating value and growth for shareholders over the long-term.

This management's discussion and analysis is dated December 2, 2009.

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 GAAP 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 Measures

Taxable equivalent basis, 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, average balances, claims loss ratio, expense ratio and combined ratio do not have standardized meanings prescribed by generally accepted accounting principles (GAAP) 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;
    -   return on common shareholders' equity - net income less preferred
        share dividends divided by average shareholder's equity;
    -   return on assets - net income less preferred share dividends divided
        by average total assets;
    -   efficiency ratio - non-interest expenses divided by total revenues
        (net interest income plus other income);
    -   net interest margin - net interest income divided by average total
        assets;
    -   tangible common equity to risk-weighted assets - 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);
    -   Tier 1 and total capital adequacy ratios - in accordance with
        guidelines issued by OSFI;
    -   average balances - average daily balances;
    -   claims loss ratio - net insurance claims and adjustment expenses as a
        percentage of net earned premiums;
    -   expense ratio - policy acquisition costs and non-interest expenses
        net of commissions and processing fees as a percentage of net earned
        premiums; and
    -   combined ratio - sum of the claims loss and expense ratios.
    

Forward-looking Statements

From 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 2010 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 2010, management's expectations assume: moderate economic growth in Canada aided by positive relative performance in the four western provinces; stable or slightly higher energy and commodity prices; sound credit quality with actual losses remaining within the Bank's range of acceptable levels; modest inflationary pressures; and, an improved net interest margin resulting from lower deposit costs, a stable prime lending interest rates, favourable yields on both new lending facilities and renewal accounts and relatively stable investment returns reflecting high quality assets held in the securities portfolio, partially offset by a reduction in the level of gains on the sale of securities compared to fiscal 2009.

    
    -------------------------------------------------------------------------
    Consolidated Statements of Income
    -------------------------------------------------------------------------


                                     For the three months ended
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except   October 31      July 31   October 31   October 31
     per share amounts)          2009         2009         2008         2008
    -------------------------------------------------------------------------
    Interest Income
      Loans               $   116,042  $   112,275  $   123,192         (6)%
      Securities               11,411       11,124       10,818          5
      Deposits with
       regulated
       financial
       institutions             2,393        3,103        3,857        (38)
    -------------------------------------------------------------------------
                              129,846      126,502      137,867         (6)
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 58,963       62,490       75,016        (21)
      Subordinated
       debentures               5,268        5,267        5,769         (9)
    -------------------------------------------------------------------------
                               64,231       67,757       80,785        (20)
    -------------------------------------------------------------------------
    Net Interest Income        65,615       58,745       57,082         15
    Provision for Credit
     Losses (Note 6)            3,393        3,369        3,187          6
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             62,222       55,376       53,895         15
    -------------------------------------------------------------------------
    Other Income
      Credit related            6,150        6,155        5,226         18
      Insurance, net
       (Note 3)                 5,011        5,795        3,843         30
      Trust and wealth
       management services      4,139        3,557        3,398         22
      Retail services           1,865        1,781        1,963         (5)
      Gains on sale of
       securities               4,103        6,399          948        333
      Foreign exchange
       gains                      647          876          (61)        nm
      Other                       172           41          120         43
    -------------------------------------------------------------------------
                               22,087       24,604       15,437         43
    -------------------------------------------------------------------------
    Net Interest and Other
     Income                    84,309       79,980       69,332         22
    -------------------------------------------------------------------------
    Non-Interest Expenses
      Salaries and
       employee benefits       26,704       26,977       22,861         17
      Premises and
       equipment                6,996        6,478        6,022         16
      Other expenses            7,373        6,263        6,020         22
      Provincial capital
       taxes                      500          492          456         10
    -------------------------------------------------------------------------
                               41,573       40,210       35,359         18
    -------------------------------------------------------------------------
    Net Income before
     Income Taxes and
     Non-Controlling
     Interest in
     Subsidiary                42,736       39,770       33,973         26
    Income Taxes               12,320       10,991        9,488         30
    -------------------------------------------------------------------------
                               30,416       28,779       24,485         24
    Non-Controlling
     Interest in
     Subsidiary                    59           50            -         nm
    -------------------------------------------------------------------------
    Net Income            $    30,357  $    28,729  $    24,485         24 %
    -------------------------------------------------------------------------

    Preferred share
     dividends (Note 9)   $     3,802  $     3,802  $         -         nm %
    Net income available
     to common
     shareholders         $    26,555  $    24,927  $    24,485          8
    -------------------------------------------------------------------------
    Average number of
     common shares (in
     thousands)                63,828       63,654       63,418          -
    Average number of
     diluted common shares
     (in thousands)            68,683       65,439       64,165          7
    -------------------------------------------------------------------------
    Earnings Per Common
     Share
      Basic               $      0.42  $      0.39  $      0.39          8
      Diluted             $      0.39  $      0.38  $      0.38          3
    -------------------------------------------------------------------------


                                For the year ended
    (unaudited)           ------------------------- Change from
    ($ thousands, except   October 31   October 31   October 31
     per share amounts)          2009         2008         2008
    ------------------------------------------------------------
    Interest Income
      Loans               $   455,413  $   491,991         (7)%
      Securities               44,209       52,929        (16)
      Deposits with
       regulated
       financial
       institutions            12,803       17,847        (28)
    ------------------------------------------------------------
                              512,425      562,767         (9)
    ------------------------------------------------------------
    Interest Expense
      Deposits                263,017      317,554        (17)
      Subordinated
       debentures              20,901       22,267         (6)
    ------------------------------------------------------------
                              283,918      339,821        (16)
    ------------------------------------------------------------
    Net Interest Income       228,507      222,946          2
    Provision for Credit
     Losses (Note 6)           13,500       12,000         13
    ------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses            215,007      210,946          2
    ------------------------------------------------------------
    Other Income
      Credit related           23,369       26,998        (13)
      Insurance, net
       (Note 3)                17,116       15,866          8
      Trust and wealth
       management services     15,478       13,299         16
      Retail services           7,403        7,689         (4)
      Gains on sale of
       securities              25,225        4,725        434
      Foreign exchange
       gains                    2,745        1,225        124
      Other                       276          438        (37)
    ------------------------------------------------------------
                               91,612       70,240         30
    ------------------------------------------------------------
    Net Interest and Other
     Income                   306,619      281,186          9
    ------------------------------------------------------------
    Non-Interest Expenses
      Salaries and
       employee benefits      104,105       87,660         19
      Premises and
       equipment               26,030       22,360         16
      Other expenses           26,115       23,145         13
      Provincial capital
       taxes                    1,932        2,001         (3)
    ------------------------------------------------------------
                              158,182      135,166         17
    ------------------------------------------------------------
    Net Income before
     Income Taxes and
     Non-Controlling
     Interest in
     Subsidiary               148,437      146,020          2
    Income Taxes               41,920       44,001         (5)
    ------------------------------------------------------------
                              106,517      102,019          4
    Non-Controlling
     Interest in
     Subsidiary                   232            -         nm
    ------------------------------------------------------------
    Net Income            $   106,285  $   102,019          4 %
    ------------------------------------------------------------

    Preferred share
     dividends (Note 9)   $    10,062  $         -         nm %
    Net income available
     to common
     shareholders         $    96,223  $   102,019         (6)
    ------------------------------------------------------------
    Average number of
     common shares (in
     thousands)                63,613       63,214          1
    Average number of
     diluted common shares
     (in thousands)            65,335       64,441          1
    ------------------------------------------------------------
    Earnings Per Common
     Share
      Basic               $      1.51  $      1.61         (6)
      Diluted             $      1.47  $      1.58         (7)
    ------------------------------------------------------------
    nm - not meaningful.

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    -------------------------------------------------------------------------
    Consolidated Balance Sheets
    -------------------------------------------------------------------------

                                As at        As at        As at  Change from
    (unaudited)            October 31      July 31   October 31   October 31
    ($ thousands)                2009         2009         2008         2008
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and
       non-interest
       bearing deposits
       with financial
       institutions       $    17,447  $    38,297  $     8,988         94 %
      Interest bearing
       deposits with
       regulated financial
       institutions
       (Note 4)               266,980      357,057      464,193        (42)
      Cheques and other
       items in transit        12,677            -       18,992        (33)
    -------------------------------------------------------------------------
                              297,104      395,354      492,173        (40)
    -------------------------------------------------------------------------
    Securities (Note 4)
      Issued or
       guaranteed by
       Canada                 854,457      611,644      347,777        146
      Issued or
       guaranteed by a
       province or
       municipality           253,143      334,370      452,045        (44)
      Other securities        783,809      656,029      429,142         83
    -------------------------------------------------------------------------
                            1,891,409    1,602,043    1,228,964         54
    -------------------------------------------------------------------------
    Securities Purchased
     Under Resale
     Agreements                     -            -       77,000       (100)
    -------------------------------------------------------------------------
    Loans (Notes 5 and 7)
      Residential
       mortgages            2,282,475    2,100,432    2,134,327          7
      Other loans           7,029,177    7,111,545    6,565,280          7
    -------------------------------------------------------------------------
                            9,311,652    9,211,977    8,699,607          7

      Allowance for credit
       losses (Note 6)        (75,459)     (74,214)     (75,538)         -
    -------------------------------------------------------------------------
                            9,236,193    9,137,763    8,624,069          7
    -------------------------------------------------------------------------
    Other
      Land, buildings and
       equipment               39,252       31,738       31,893         23
      Goodwill                  9,360        9,360        6,933         35
      Other intangible
       assets                   6,465        6,801        2,155        200
      Insurance related        55,932       55,500       52,943          6
      Derivative related
       (Note 8)                 2,334        4,081        9,980        (77)
      Other assets             97,823       88,737       74,622         31
    -------------------------------------------------------------------------
                              211,166      196,217      178,526         18
    -------------------------------------------------------------------------
    Total Assets          $11,635,872  $11,331,377  $10,600,732         10 %
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders' Equity
    Deposits
      Payable on demand   $   359,176  $   395,128  $   383,083         (6)%
      Payable after notice  2,778,601    2,239,682    2,010,039         38
      Payable on a fixed
       date                 6,374,461    6,653,999    6,747,597         (6)
      Deposit from
       Canadian Western
       Bank Capital Trust     105,000      105,000      105,000          -
    -------------------------------------------------------------------------
                            9,617,238    9,393,809    9,245,719          4
    -------------------------------------------------------------------------

    Other
      Cheques and other
       items in transit        41,964       27,472       29,036         45
      Insurance related       145,509      138,996      134,769          8
      Derivative related
       (Note 8)                    74          164          163        (55)
      Securities purchased
       under reverse
       resale agreements      300,242      246,794            -         nm
      Other liabilities       169,346      182,910      136,897         24
    -------------------------------------------------------------------------
                              657,135      596,336      300,865        118
    -------------------------------------------------------------------------
    Subordinated Debentures
      Conventional            375,000      375,000      375,000          -
    -------------------------------------------------------------------------
    Shareholders' Equity
      Preferred shares
       (Note 9)               209,750      209,750            -         nm
      Common shares
       (Note 9)               226,480      224,405      221,914          2
      Contributed surplus      19,366       18,708       14,234         36
      Retained earnings       511,784      492,274      448,203         14
      Accumulated other
       comprehensive
       income (loss)           19,119       21,095       (5,203)        nm
    -------------------------------------------------------------------------
                              986,499      966,232      679,148         45
    -------------------------------------------------------------------------
    Total Liabilities and
     Shareholders' Equity $11,635,872  $11,331,377  $10,600,732         10 %
    -------------------------------------------------------------------------
    Contingent Liabilities
     and Commitments
     (Note 11)

    nm - not meaningful.

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    -------------------------------------------------------------------------
    Consolidated Statements of Changes in Shareholders' Equity
    -------------------------------------------------------------------------

                                                          For the year ended
    (unaudited)                                      October 31   October 31
    ($ thousands)                                          2009         2008
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period                  $   448,203  $   372,739
      Net income                                        106,285      102,019
      Dividends  - Preferred shares                     (10,061)           -
                 - Common shares                        (27,992)     (26,555)
      Issuance costs on preferred units                  (4,651)           -
    -------------------------------------------------------------------------
    Balance at end of period                            511,784      448,203
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income (Loss)
    Balance at beginning of period                       (5,203)      (5,931)
      Other comprehensive income                         24,322          728
    -------------------------------------------------------------------------
    Balance at end of period                             19,119       (5,203)
    -------------------------------------------------------------------------
    Total retained earnings and accumulated other
     comprehensive income (loss)                        530,903      443,000
    -------------------------------------------------------------------------
    Preferred Shares (Note 9)
    Balance at beginning of period                            -            -
       Issued during the period                         209,750            -
    -------------------------------------------------------------------------
    Balance at end of period                            209,750            -
    -------------------------------------------------------------------------
    Common Shares (Note 9)
    Balance at beginning of period                      221,914      219,004
      Issued on exercise of options                       2,200        1,646
      Transferred from contributed surplus on
       exercise or exchange of options                    1,613        1,264
      Issued under dividend reinvestment plan               744            -
      Issued on exercise of warrants                          9
    -------------------------------------------------------------------------
    Balance at end of period                            226,480      221,914
    -------------------------------------------------------------------------
    Contributed Surplus
    Balance at beginning of period                       14,234        9,681
      Amortization of fair value of options               6,745        5,817
      Transferred to common shares on exercise or
       exchange of options                               (1,613)      (1,264)
    -------------------------------------------------------------------------
    Balance at end of period                             19,366       14,234
    -------------------------------------------------------------------------
    Total Shareholders' Equity                      $   986,499  $   679,148
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statements of Comprehensive Income
    -------------------------------------------------------------------------

                        For the three months ended        For the year ended
                        --------------------------- -------------------------
    (unaudited)            October 31   October 31   October 31   October 31
    ($ thousands)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Net Income            $    30,357  $    24,485  $   106,285  $   102,019
    -------------------------------------------------------------------------
    Other Comprehensive
     Income, net of tax
       Available-for-sale
        securities:
         Gains (losses)
          from change in
          fair value(1)         1,762       (8,154)      47,214       (2,631)
         Reclassification
          to other
          income(2)            (2,672)        (637)     (17,556)      (3,271)
    -------------------------------------------------------------------------
                                 (910)      (8,791)      29,658       (5,902)
    -------------------------------------------------------------------------
       Derivatives
        designated as
        cash flow hedges:
         Gains from change
          in fair value(3)        889        5,437        9,453        9,341
         Reclassification
          to net interest
          income(4)            (1,955)        (541)      (9,379)      (1,773)
         Reclassification
          to other
          liabilities for
          derivatives
          terminated prior
          to maturity(5)            -           -        (5,410)        (938)
    -------------------------------------------------------------------------
                               (1,066)       4,896       (5,336)       6,630
    -------------------------------------------------------------------------
                               (1,976)      (3,895)      24,322          728
    -------------------------------------------------------------------------
    Comprehensive Income
     for the Period       $    28,381  $    20,590  $   130,607  $   102,747
    -------------------------------------------------------------------------
    (1) Net of income tax expense of $755 and $20,094 for the quarter and
        year ended October 31, 2009, respectively (2008 - tax benefit of
        $3,626 and $1,170).
    (2) Net of income tax benefit of $1,431 and $7,669 for the quarter and
        year ended October 31, 2009, respectively (2008 - tax benefit of $283
        and $1,454).
    (3) Net of income tax expense of $483 and $4,066 for the quarter and year
        ended October 31, 2009, respectively (2008 - tax expense of $2,390
        and $4,104).
    (4) Net of income tax benefit of $1,075 and $4,035 for the quarter and
        year ended October 31, 2009, respectively (2008 - tax benefit of $242
        and $775).
    (5) Net of income tax benefit of nil and $2,264 for the quarter and year
        ended October 31, 2009, respectively (2008 - tax benefit nil and
        $429).

    The accompanying notes are an integral part of the interim consolidated
    financial statements.



    -------------------------------------------------------------------------
    Consolidated Statements of Cash Flow
    -------------------------------------------------------------------------

                        For the three months ended        For the year ended
                        --------------------------- -------------------------
    (unaudited)            October 31   October 31   October 31   October 31
    ($ thousands)                2009         2008         2009         2008
    -------------------------------------------------------------------------
    Cash Flows from
     Operating Activities
      Net income          $    30,357  $    24,485  $   106,285  $   102,019
      Adjustments to
       determine net cash
       flows
        Provision for
         credit losses          3,393        3,187       13,500       12,000
        Depreciation and
         amortization           2,332        1,780        8,773        6,896
        Amortization of
         fair value of
         employee stock
         options                1,086        1,576        6,745        5,817
        Future income
         taxes, net            (2,670)        (623)     (13,633)         276
        Gain on sale of
         securities, net       (4,103)        (948)     (25,225)      (4,725)
        Accrued interest
         receivable and
         payable, net         (28,999)      (3,607)       1,032        2,719
        Current income
         taxes payable,
         net                    4,748          614       11,694         (454)
        Other items, net       (4,609)        (201)       5,595       (5,164)
    -------------------------------------------------------------------------
                                1,535       26,263      114,766      119,384
    -------------------------------------------------------------------------
    Cash Flows from
     Financing Activities
      Deposits, net           223,429      559,383      371,519      988,801
      Securities purchased
       under reverse
       resale agreements,
       net                     53,448            -      300,242            -
      Debentures issued             -            -            -       50,000
      Debentures redeemed           -      (35,000)           -      (65,000)
      Common shares issued
       (Note 9)                 1,647          560        2,953        1,646
      Preferred units
       issued (Note 9)              -            -      209,750            -
      Issuance costs on
       preferred units            (23)           -       (4,651)           -
      Dividends               (10,824)      (6,979)     (38,053)     (26,555)
    -------------------------------------------------------------------------
                              267,677      517,964      841,760      948,892
    -------------------------------------------------------------------------
    Cash Flows from
     Investing Activities
      Interest bearing
       deposits with
       regulated financial
       institutions, net       87,461      (54,107)     203,663      (57,057)
      Securities, purchased  (933,266)    (552,162)  (3,253,024)  (2,609,432)
      Securities, sale
       proceeds               608,086      366,759    2,302,967    1,303,698
      Securities, matured      57,122      229,000      348,998    1,421,159
      Securities purchased
       under resale
       agreements, net              -      (67,999)      77,000      129,925
      Loans, net             (101,823)    (458,508)    (625,624)  (1,230,489)
      Land, buildings and
       equipment               (9,457)      (7,296)     (14,809)     (12,527)
      Business acquisitions
      (Note 2)                      -            -       (6,481)           -
    -------------------------------------------------------------------------
                             (291,877)    (544,313)    (967,310)  (1,054,723)
    -------------------------------------------------------------------------
    Change in Cash and Cash
     Equivalents              (22,665)         (86)     (10,784)      13,553
    Cash and Cash
     Equivalents at
     Beginning of Period       10,825         (970)      (1,056)     (14,609)
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period *        $   (11,840) $    (1,056) $   (11,840) $    (1,056)
    -------------------------------------------------------------------------
    * Represented by:
      Cash and
       non-interest
       bearing deposits
       with financial
       institutions       $    17,447  $     8,988  $    17,447  $     8,988
      Cheques and other
       items in transit
       (included in Cash
       Resources)              12,677       18,992       12,677       18,992
      Cheques and other
       items in transit
       (included in Other
       Liabilities)           (41,964)     (29,036)     (41,964)     (29,036)
    -------------------------------------------------------------------------
    Cash and Cash
      Equivalents at End
      of Period           $   (11,840) $    (1,056) $   (11,840) $    (1,056)
    -------------------------------------------------------------------------

    Supplemental
     Disclosure of Cash
     Flow Information
      Amount of interest
       paid in the period $    85,742  $    82,074  $   275,943  $   336,106
      Amount of income
       taxes paid in the
       period                  10,581        9,670       44,198       44,179
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements.

    

-------------------------------------------------------------------------

Notes to Interim Consolidated Financial Statements

-------------------------------------------------------------------------

    

    (unaudited)
    ($ thousands, except per share amounts)

    1.  Summary of Significant Accounting Policies

        Basis of Presentation

        These unaudited interim consolidated financial statements have been
        prepared in accordance with Canadian generally accepted accounting
        principles (GAAP), including the accounting requirements of the
        Office of the Superintendent of Financial Institutions Canada (OSFI),
        using the same accounting policies as the audited consolidated
        financial statements for the year ended October 31, 2008, except as
        disclosed below. Under Canadian GAAP, additional disclosures are
        required in annual financial statements and accordingly, these
        unaudited interim consolidated financial statements should be read in
        conjunction with the audited consolidated financial statements for
        the year ended October 31, 2008 as set out on pages 61 to 91 of the
        Bank's 2008 Annual Report.

        Changes in Accounting Policies

        Goodwill and Intangible Assets

        Effective November 1, 2008, the Bank adopted the Canadian Institute
        of Chartered Accountants (CICA) new accounting standard, Section
        3064, Goodwill and Intangible Assets. Section 3064, which replaces
        Section 3062, Goodwill and Other Intangible Assets, and Section 3450,
        Research and Development Costs, provides clarifying guidance on the
        criteria that must be satisfied in order for an intangible asset to
        be recognized, including internally developed intangible assets. The
        new guidance did not have a material effect on the financial position
        or earnings of the Bank.

        Credit Risk and Fair Value

        Effective November 1, 2008, the Bank adopted EIC 173, Credit Risk and
        the Fair Value of Financial Assets and Financial Liabilities. The
        abstract clarifies how the Bank's own credit risk and the credit risk
        of a counterparty should be taken into account in determining the
        fair value of financial assets and financial liabilities, including
        derivatives. The new guidance did not have a material effect on the
        financial position or earnings of the Bank.

        Financial Instruments - Disclosures

        Effective October 31, 2009, the Bank adopted CICA amendments to
        Section 3862, Financial Instruments - Disclosures. These amendments
        require enhanced disclosures over fair value measurements of
        financial instruments and liquidity risks. The additional disclosures
        over fair value measurements include categorization of fair value
        measurements into one of three levels, ranging from those fair value
        measurements that are determined through quoted market prices in an
        active market to those fair value measurements that are based on
        inputs that are not based on observable market data. The additional
        disclosures over liquidity risks require greater clarification over
        the application of liquidity risk as well as maturity analysis for
        derivative financial liabilities.

    2.  Business Acquisition

        Effective November 1, 2008 the Bank acquired 72.5% of the outstanding
        shares of Adroit Investment Management Ltd. (Adroit). Adroit is an
        Edmonton, Alberta based firm specializing in wealth management for
        individuals, corporations and institutional clients. The results of
        operations for Adroit have been included in the Bank's consolidated
        financial statements since the effective acquisition date. The
        initial $6,481 acquisition cost was paid in cash. Additional
        contingent consideration, to a maximum of $1,675, will be paid in
        cash if earnings targets are achieved over a two year period. Any
        future contingent payment will be recorded when the liability has
        been incurred and will increase goodwill.

        The following table summarizes the fair value of the assets acquired
        and liabilities assumed:

        Net assets acquired
          Other assets                                           $        90
          Other intangible assets                                      3,964
          Goodwill                                                     2,427
        ---------------------------------------------------------------------
                                                                 $     6,481
        ---------------------------------------------------------------------

        Other intangible assets include customer relationships,
        non-competition agreements and a trademark. The trademark, which has
        an estimated value of $280, is not subject to amortization. Adroit's
        financial results, the goodwill and other intangible assets related
        to the acquisition are included in the banking and trust segment. The
        total amount of goodwill and intangible assets are not deductible for
        income tax purposes.


    3.  Insurance Revenues, Net

        Insurance revenues, net, as reported in other income on the
        consolidated statement of income is presented net of net claims and
        adjustment expenses and policy acquisition costs.

                           For the three months ended     For the year ended
                     --------------------------------------------------------
                      October 31    July 31 October 31 October 31 October 31
                            2009       2009       2008       2009       2008
        ---------------------------------------------------------------------
        Net earned
         premiums      $  27,072  $  26,895  $  24,877  $ 104,062  $  97,943
        Commissions and
         processing
         fees                697        741        742      2,852      2,876
        Net claims and
         adjustment
         expenses        (17,559)   (16,660)   (16,564)   (68,996)   (64,380)
        Policy
         acquisition
         costs            (5,199)    (5,181)    (5,212)   (20,802)   (20,573)
        ---------------------------------------------------------------------
        Total, net     $   5,011  $   5,795  $   3,843  $  17,116  $  15,866
        ---------------------------------------------------------------------

    4.  Securities

        Net unrealized gains (losses) reflected on the balance sheet follow:

                                                 As at      As at      As at
                                            October 31    July 31 October 31
                                                  2009       2009       2008
        ---------------------------------------------------------------------
        Interest bearing deposits with
         regulated financial institutions    $   7,390  $  10,006  $     940
        Securities
          Issued or guaranteed by Canada         1,594        490      1,417
          Issued or guaranteed by a province
           or municipality                       2,547      3,900      1,214
          Other securities                      13,266     11,166    (21,386)
        ---------------------------------------------------------------------
        Unrealized gain (losses), net        $  24,797  $  25,562  $ (17,815)
        ---------------------------------------------------------------------

        The securities portfolio is primarily comprised of high quality debt
        instruments and preferred shares that are not held for trading
        purposes and, where applicable, are typically held until maturity.
        Fluctuations in value are generally attributed to changes in market
        credit spreads, interest rates and shifts in the interest rate curve.
        Unrealized losses are considered to be other than permanent in
        nature.

    5.  Loans

        The composition of the Bank's loan portfolio by geographic region and
        industry sector follow:

                   British          Saskatche-
    ($ millions)  Columbia   Alberta       wan  Manitoba     Other     Total
    -------------------------------------------------------------------------
    Loans to
     Individuals
      Residential
       mortga-
       ges(2)     $  1,005  $  1,006  $    120  $     89  $     62  $  2,282
      Other loans       62       102        15         3         1       183
    -------------------------------------------------------------------------
                     1,067     1,108       135        92        63     2,465
    -------------------------------------------------------------------------

    Loans to
     Businesses
      Commercial       752     1,258       120        85       321     2,536
      Construction
       and real
       estate(3)     1,126     1,361       154        61       194     2,896
      Equipment
       financing       324       744        50        14       125     1,257
      Energy             -       158         -         -         -       158
    -------------------------------------------------------------------------
                     2,202     3,521       324       160       640     6,847
    -------------------------------------------------------------------------
    Total
     Loans(1)     $  3,269  $  4,629  $    459  $    252  $    703  $  9,312
    -------------------------------------------------------------------------
    Composition
     Percentage
      October 31,
       2009            35%       50%        5%        3%        7%      100%
      July 31,
       2009            35%       52%        4%        3%        6%      100%
      October 31,
       2008            36%       53%        4%        2%        5%      100%
    -------------------------------------------------------------------------


                   October   July 31   October
                   31 2009      2009   31 2008
                  Composi-  Composi-  Composi-
                      tion      tion      tion
                   Percen-   Percen-   Percen-
    ($ millions)      tage      tage      tage
    -------------------------------------------
    Loans to
     Individuals
      Residential
       mortgages(2)    25%       23%       24%
      Other loans       2         4         4
    -------------------------------------------
                       27        27        28
    -------------------------------------------

    Loans to
     Businesses
      Commercial       27        27        27
      Construction
       and real
       estate(3)       31        30        29
      Equipment
       financing       13        14        14
      Energy            2         2         2
    -------------------------------------------
                       73        73        72
    -------------------------------------------
    Total Loans(1)    100%      100%      100%
    -------------------------------------------
    Composition
     Percentage
      October 31,
       2009
      July 31,
       2009
      October 31,
       2008
    -------------------------------------------
    (1) This table does not include an allocation for credit losses or
        deferred revenue and premiums.
    (2) Includes single- and multi-unit residental mortgages and project
        (interim) mortgages on residential property.
    (3) Includes commercial term mortgages and project (interim) mortgages
        for non-residential property.

    6.  Allowance for Credit Losses

        The following table shows the changes in the allowance for credit
        losses:

                  For the three months ended    For the three months ended
                       October 31, 2009                July 31, 2009
                 ------------------------------------------------------------
                             General                       General
                           Allowance                     Allowance
                                 for                           for
                  Specific    Credit            Specific    Credit
                 Allowance    Losses     Total Allowance    Losses     Total
    -------------------------------------------------------------------------
    Balance at
     beginning
     of period    $ 12,998  $ 61,216  $ 74,214  $ 14,084  $ 61,015  $ 75,099
    Provision for
     credit losses   3,456       (63)    3,393     3,168       201     3,369
    Write-offs      (2,164)        -    (2,164)   (4,455)        -    (4,455)
    Recoveries          16         -        16       201         -       201
    -------------------------------------------------------------------------
    Balance at
     end of
     period       $ 14,306  $ 61,153  $ 75,459  $ 12,998  $ 61,216  $ 74,214
    -------------------------------------------------------------------------


                                                For the three months ended
                                                     October 31, 2008
                                               ------------------------------
                                                           General
                                                         Allowance
                                                               for
                                                Specific    Credit
                                               Allowance    Losses     Total
    -------------------------------------------------------------------------
    Balance at
     beginning
     of period                                  $ 10,784  $ 59,225  $ 70,009
    Provision for
     credit losses                                 1,885     1,302     3,187
    Write-offs                                      (705)        -      (705)
    Recoveries                                     3,047         -     3,047
    -------------------------------------------------------------------------
    Balance at end
     of period                                  $ 15,011  $ 60,527  $ 75,538
    -------------------------------------------------------------------------


                      For the year ended            For the year ended
                       October 31, 2009              October 31, 2008
                 ------------------------------------------------------------
                             General                       General
                           Allowance                     Allowance
                                 for                           for
                  Specific    Credit            Specific    Credit
                 Allowance    Losses     Total Allowance    Losses     Total
    -------------------------------------------------------------------------
    Balance at
     beginning
     of period    $ 15,011  $ 60,527  $ 75,538  $  7,414  $ 55,608  $ 63,022
    Provision
     for credit
     losses         12,874       626    13,500     7,081     4,919    12,000
    Write-offs     (13,842)        -   (13,842)   (2,577)        -    (2,577)
    Recoveries         263         -       263     3,093         -     3,093
    -------------------------------------------------------------------------
    Balance at end
     of period    $ 14,306  $ 61,153  $ 75,459  $ 15,011  $ 60,527  $ 75,538
    -------------------------------------------------------------------------

    7.  Impaired and Past Due Loans

        Outstanding gross loans and impaired loans, net of allowances for
        credit losses, by loan type, are as follows:


                                           As at October 31, 2009
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,452,682  $    14,805  $     1,207  $    13,598
        Real estate(1)      3,909,991       76,643        5,611       71,032
        Equipment
         financing          1,412,344       26,408        6,196       20,212
        Commercial          2,536,635       20,088        1,292       18,796
        ---------------------------------------------------------------------
        Total(3)          $ 9,311,652  $   137,944  $    14,306      123,638
        --------------------------------------------------------
        General
         allowance(2)                                                (61,153)
        ---------------------------------------------------------------------
        Net impaired
         loans after
         general
         allowance                                               $    62,485
        ---------------------------------------------------------------------


                                            As at July 31, 2009
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,348,362  $    16,706  $     1,306  $    15,400
        Real estate(1)      3,892,443       63,999        5,513       58,486
        Equipment
         financing          1,449,319       23,223        5,494       17,729
        Commercial          2,521,853        1,301          685          616
        ---------------------------------------------------------------------
        Total(3)          $ 9,211,977  $   105,229  $    12,998       92,231
        --------------------------------------------------------
        General
         allowance(2)                                                (61,216)
        ---------------------------------------------------------------------
        Net impaired
         loans after
         general
         allowance                                               $    31,015
        ---------------------------------------------------------------------


                                         As at October 31, 2008
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,288,160  $    11,462  $       305  $    11,157
        Real estate(1)      3,673,158       51,909        2,948       48,961
        Equipment
         financing          1,391,287       20,456        5,647       14,809
        Commercial          2,347,002        7,809        6,111        1,698
        ---------------------------------------------------------------------
        Total             $ 8,699,607  $    91,636  $    15,011       76,625
        --------------------------------------------------------
        General
         allowance(2)                                                (60,527)
        ---------------------------------------------------------------------
        Net impaired loans
         after general
         allowance                                               $    16,098
        ---------------------------------------------------------------------

        (1) Multi-family residential mortgages are included in real estate
            loans.
        (2) The general allowance for credit risk is not allocated by loan
            type.
        (3) Gross impaired loans includes foreclosed assets with a carrying
            value of nil (July 31, 2009 - $4,756 and October 31, 2008 - $901)
            which are held for sale.


        Outstanding impaired loans, net of allowance for credit losses, by
        provincial location of security, are as follows:

                     As at October 31, 2009          As at July 31, 2009
                 ------------------------------------------------------------
                     Gross                 Net     Gross                 Net
                  Impaired  Specific  Impaired  Impaired  Specific  Impaired
                    Amount Allowance     Loans    Amount Allowance     Loans
        ---------------------------------------------------------------------
        Alberta   $ 74,847  $  7,651  $ 67,196  $ 50,553  $  5,178  $ 45,375
        British
         Columbia   37,655     5,000    32,655    52,477     6,737    45,740
        Saskatche-
         wan         1,632       609     1,023     1,424       618       806
        Manitoba       337        23       314       498       336       162
        Other(2)    23,473     1,023    22,450       277       129       148
        ---------------------------------------------------------------------
        Total     $137,944  $ 14,306   123,638  $105,229  $ 12,998    92,231
        -----------------------------          --------------------
        General
         allow-
         ance(1)                       (61,153)                      (61,216)
        ---------------------------------------------------------------------
        Net
         impaired
         loans
         after
         general
         allow-
         ance                         $ 62,485                      $ 31,015
        ---------------------------------------------------------------------


                                                   As at October 31, 2008
                                               ------------------------------
                                                   Gross                 Net
                                                Impaired  Specific  Impaired
                                                  Amount Allowance     Loans
        ---------------------------------------------------------------------
        Alberta
        British                                 $ 48,133  $  9,005  $ 39,128
         Columbia                                 40,656     4,626    36,030
        Saskatche-
         wan                                       2,155       792     1,363
        Manitoba                                     389       389         -
        Other                                        303       199       104
        ---------------------------------------------------------------------
        Total                                   $ 91,636  $ 15,011    76,625
        -----------------------------------------------------------
        General
         allow-
         ance(1)                                                     (60,527)
        ---------------------------------------------------------------------
        Net
         impaired
         loans
         after
         general
         allow-
         ance                                                       $ 16,098
        ---------------------------------------------------------------------

        (1) The general allowance for credit risk is not allocated by
            province.
        (2) Included in Other is a corporate loan with security that is not
           identifiable to a specific province.

        During the quarter and year ended October 31, 2009, interest
        recognized as income on impaired loans totaled $326 and $1,726
        respectively (2008 - $56 and $360).

        Gross impaired loans exclude certain past due loans where payment of
        interest or principal is contractually in arrears, which are not
        classified as impaired. Details of such past due loans that have not
        been included in the gross impaired amount are as follows:

                                           As at October 31, 2009
                            -------------------------------------------------
                              1 - 30   31 - 60   61 - 90 More than
                                days      days      days   90 days     Total
        ---------------------------------------------------------------------
        Residential
         mortgages          $  5,002  $ 11,102  $ 1,828   $      -  $ 17,932
        Other loans           22,531    18,170    2,866          -    43,567
        ---------------------------------------------------------------------
                            $ 27,533  $ 29,272  $ 4,694   $      -  $ 61,499
        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Total as at
         July 31, 2009      $ 15,942  $ 45,106  $ 5,847   $      -  $ 66,895
        ---------------------------------------------------------------------
        Total as at
         October 31, 2008   $ 18,949  $ 12,560  $   689   $      -  $ 32,198
        ---------------------------------------------------------------------

    8.  Derivative Financial Instruments

        For the quarter and year ended October 31, 2009, a net unrealized
        after tax gain of $889 and $9,453 respectively (2008 - $5,437 and
        $9,341) was recorded in other comprehensive income for changes in
        fair value of the effective portion of derivatives designated as cash
        flow hedges, and $nil (2008 - $nil) was recorded in other income for
        changes in fair value of the ineffective portion of derivatives
        classified as cash flow hedges. Amounts accumulated in other
        comprehensive income are reclassified to net income in the same
        period that interest on certain floating rate loans (i.e. the hedged
        items) affect income. For the quarter and year ended October 31,
        2009, a net gain after tax of $1,955 and $9,379 respectively (2008 -
        $541 and $1,773) was reclassified to net income. A net gain of $1,678
        (2008 - $2,432) after tax recorded in accumulated other comprehensive
        income (loss) as at October 31, 2009 is expected to be reclassified
        to net income in the next 12 months and will offset variable cash
        flows from floating rate loans.

        The following table shows the notional value outstanding for
        derivative financial instruments and the related fair value:


                     As at October 31, 2009          As at July 31, 2009
                 ------------------------------------------------------------
                            Positive  Negative            Positive  Negative
                  Notional      Fair      Fair  Notional      Fair      Fair
                    Amount     Value     Value    Amount     Value     Value
    -------------------------------------------------------------------------
    Interest rate
     swaps
     designated as
     cash flow
     hedges(1)    $235,000  $  2,265  $      -  $235,000  $  3,922  $      -
    Equity
     contracts(2)    2,000         -        33     2,000         -        40
    Foreign
     exchange
     contracts(3)    2,496        44        41     2,234       128       124
    Embedded
     derivatives
     in
     equity-linked
     deposits(2)       n/a        25         -       n/a        31         -
    Other
     forecasted
     transactions        -         -         -         -         -         -
    -------------------------------------------------------------------------
    Derivative
     related
     amounts                $  2,334  $     74            $  4,081  $    164
    -------------------------------------------------------------------------


                                                   As at October 31, 2008
                                                -----------------------------
                                                          Positive  Negative
                                                Notional      Fair      Fair
                                                  Amount     Value     Value
    -------------------------------------------------------------------------
    Interest rate
     swaps
     designated as
     cash flow
     hedges                                     $593,000  $ 9,827   $      -
    Equity
     contracts                                     4,400        -        139
    Foreign
     exchange
     contracts                                     2,600        2         24
    Embedded
     derivatives
     in
     equity-linked
     deposits                                        n/a      151          -
    Other
     forecasted
     transactions                                      -        -          -
    -------------------------------------------------------------------------
    Derivative
     related
     amounts                                              $ 9,980   $    163
    -------------------------------------------------------------------------

    (1) Interest rate swaps outstanding at October 31, 2009 mature between
        November 2009 and June 2010.
    (2) Equity contracts and equity-linked deposits outstanding at
        October 31, 2009 mature between March 2010 and March 2011.
    (3) Foreign exchange contracts outstanding at October 31, 2009 mature
        between November 2009 and April 2010.

    n/a - not applicable.

    There were no forecasted transactions that failed to occur during the
    year ended October 31, 2009.


    9.  Capital Stock


        Share Capital

                                      For the three months ended
                          ---------------------------------------------------
                                  October 31, 2009          October 31, 2008
                          ---------------------------------------------------
                            Number of                 Number of
                               Shares       Amount       Shares       Amount
        ---------------------------------------------------------------------
        Preferred Shares
         - Series 3
        Outstanding at
         beginning of
         period             8,390,000  $   209,750            -  $         -
        Issued during the
         period                     -            -            -            -
        ---------------------------------------------------------------------
        Outstanding at
         end of period      8,390,000      209,750            -            -
        ---------------------------------------------------------------------
        Common Shares
        Outstanding at
         beginning of
         period            63,738,113      224,405   63,341,949      221,103
        Issued on
         exercise of
         warrants                 624            9            -            -
        Issued under
         dividend
         reinvestment
         plan                  38,760          744            -            -
        Issued on
         exercise or
         exchange of
         options              125,963          894      115,193          560
        Transferred from
         contributed
         surplus on
         exercise or
         exchange of
         options                    -          428            -          251
        ---------------------------------------------------------------------
        Outstanding at end
         of period         63,903,460      226,480   63,457,142      221,914
        ---------------------------------------------------------------------
        Share Capital                  $   436,230               $   221,914
        ---------------------------------------------------------------------


                                          For the year ended
                          ---------------------------------------------------
                                  October 31, 2009          October 31, 2008
                          ---------------------------------------------------
                            Number of                 Number of
                               Shares       Amount       Shares       Amount
        ---------------------------------------------------------------------
        Preferred Shares
         - Series 3
        Outstanding at
         beginning of
         period                     -  $         -            -  $         -
        Issued during the
         period             8,390,000      209,750            -            -
        ---------------------------------------------------------------------
        Outstanding at end
         of period          8,390,000      209,750            -            -
        ---------------------------------------------------------------------
        Common Shares
        Outstanding at
         beginning of
         period            63,457,142      221,914   62,836,189      219,004
        Issued on exercise
         of warrants              624            9            -            -
        Issued under
         dividend
         reinvestment plan     38,760          744            -            -
        Issued on exercise
         or exchange of
         options              406,934        2,200      620,953        1,646
        Transferred from
         contributed
         surplus on
         exercise or
         exchange of
        options                     -        1,613            -        1,264
        ---------------------------------------------------------------------
        Outstanding at
         end of period     63,903,460      226,480   63,457,142      221,914
        ---------------------------------------------------------------------
        Share Capital                  $   436,230               $   221,914
        ---------------------------------------------------------------------

        In March 2009, the Bank issued 8.4 million preferred units at $25 per
        unit, for total proceeds of $209.8 million. Of the total, 5.4 million
        preferred units were issued by way of a private placement for total
        proceeds of $135.0 million, and 3.0 million were issued under a
        public offering for total proceeds of $74.8 million.

        The preferred units issued by way of the private placement and the
        public offering each consist of one Non-Cumulative 5-Year Rate Reset
        Preferred Share, Series 3 (Series 3 Preferred Shares) in the capital
        of the Bank with an issue price of $25.00 per share and 1.7857 and
        1.7800 common share purchase warrants, respectively. Each warrant is
        exercisable at a price of $14.00 to purchase one common share in the
        capital of the Bank until March 3, 2014.

        Holders of the Series 3 Preferred Shares are entitled to receive
        non-cumulative quarterly fixed dividends for the initial five-year
        period ending April 30, 2014 of 7.25% per annum, payable quarterly,
        as and when declared by the Board of Directors. The dividend rate on
        Series 3 Preferred Shares will reset May 1, 2014 and every five years
        thereafter at a level of 500 basis points over the then current
        five-year Government of Canada bond yield. On April 30, 2014, and
        every five years thereafter, holders of Series 3 Preferred Shares
        will, subject to certain conditions, have the option to convert their
        shares to Non-Cumulative Floating Rate Preferred Shares, Series 4
        (Series 4 Preferred Shares). Holders of the Series 4 Preferred Shares
        will be entitled to a floating quarterly dividend rate equal to the
        90-day Canadian treasury bill rate plus 500 basis points, as and when
        declared by the Board of Directors.

        The Series 3 Preferred Shares are not redeemable prior to April 30,
        2014. Subject to the provisions of the Bank Act, the prior consent of
        OSFI and the provisions described in the prospectus for the public
        offering, on April 30, 2014 and on April 30 every five years
        thereafter, the Bank may redeem all or any part of the then
        outstanding Series 3 Preferred Shares at the Bank's option without
        the consent of the holder, by the payment of an amount in cash for
        each such share so redeemed of $25.00 together with all declared and
        unpaid dividends to the date fixed for redemption.

        Subject to the provisions of the Bank Act, the prior consent of OSFI
        and the provisions described in the prospectus for the public
        offering, on not more than 60 nor less than 30 days' notice, the Bank
        may redeem all or any part of the then outstanding Series 4 Preferred
        Shares at the Bank's option without the consent of the holder by the
        payment of an amount in cash for each such share so redeemed of: (i)
        $25.00 together with all declared and unpaid dividends to the date
        fixed for redemption in the case of redemptions on April 30, 2019 and
        on April 30 every five years thereafter; or (ii) $25.50 together with
        all declared and unpaid dividends to the date fixed for redemption in
        the case of redemptions on any other date on or after April 30, 2014.

        Warrants to Purchase Common Shares

                         For the three months ended     For the year ended
                        -----------------------------------------------------
        Number of          October 31,  October 31,  October 31,  October 31,
         Warrants                2009         2008         2009         2008
        ---------------------------------------------------------------------
           Outstanding at
            beginning of
            period         14,964,980            -            -            -
           Issued                   -            -   14,964,980            -
           Exercised             (624)           -         (624)           -
        ---------------------------------------------------------------------
           Outstanding at
            end of period 14,964,356             -   14,964,356            -
        ---------------------------------------------------------------------

        The warrants issued in March 2009 were part of the Preferred Unit
        issuance discussed in the section above.

        Dividend Reinvestment Plan

        During the period, the Bank introduced a dividend reinvestment plan
        (plan) that provides holders of the Bank's common shares and holders
        of any other class of shares deemed eligible by the Bank's Board of
        Directors with the opportunity to direct cash dividends paid on any
        class of their eligible shares towards the purchase of additional
        common shares. Currently, the Board of Directors has deemed that
        holders of the Bank's Non-Cumulative 5-Year Rate Reset Preferred
        Shares, Series 3 are eligible to participate in the plan. The plan is
        only open to shareholders residing in Canada.

        At the option of the Bank, the common shares may be issued from the
        Bank's treasury at an average market price based on the closing
        prices of a board lot of common shares on the Toronto Stock Exchange
        for the five trading days immediately preceding the dividend payment
        date, with a discount of between 0% to 5% at the Bank's discretion.
        The Bank also has the option to fund the plan through the open market
        at market prices. During the three month period ended October 31,
        2009, 38,760 common shares were issued under the plan from the Bank's
        treasury with a 2% discount.

    10. Stock-Based Compensation

        Stock Options

                                        For the three months ended
                           --------------------------------------------------
                               October 31, 2009          October 31, 2008
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
           Balance at
            beginning of
            period          4,626,405  $     18.37    5,359,842  $     20.53
           Granted                  -            -       32,790        21.44
           Exercised or
            exchanged        (208,600)       12.02     (152,200)        9.33
           Forfeited          (23,200)       20.01      (35,550)       25.49
        ---------------------------------------------------------------------
        Balance at end of
         period             4,394,605  $     18.66    5,204,882  $     20.83
        ---------------------------------------------------------------------


                                          For the year ended
                           --------------------------------------------------
                               October 31, 2009          October 31, 2008
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
           Balance at
            beginning of
            period          5,204,882  $     20.83    4,911,277  $     16.96
           Granted          1,465,035        13.33    1,249,032        28.39
           Exercised or
            exchanged        (933,900)       10.56     (838,177)        8.98
           Forfeited       (1,341,412)       26.88     (117,250)       24.26
        --------------------------------------------------------------------
        Balance at end
         of period          4,394,605  $     18.66    5,204,882  $     20.83
        ---------------------------------------------------------------------
        Exercisable at
         end of period      1,742,100  $     18.22    1,870,500  $     13.10
        ---------------------------------------------------------------------

        The terms of the share incentive plan allow the holders of vested
        options a cashless settlement alternative whereby the option holder
        can either (a) elect to receive shares by delivering cash to the Bank
        in the amount of the option exercise price or (b) elect to receive
        the number of shares equivalent to the excess of the market value of
        the shares under option over the exercise price. Of the 933,900
        options (2008 - 838,177) exercised or exchanged in the year ended
        October 31, 2009, option holders exchanged the rights to 722,400
        options (2008 - 651,727) and received 195,434 shares (2008 - 434,503)
        in return under the cashless settlement alternative.

        For the year ended October 31, 2009, salary expense of $6,745 (2008 -
        $5,817) was recognized relating to the estimated fair value of
        options granted since November 1, 2002, which included the stock
        option forfeiture discussed below. The fair value of options granted
        was estimated using a binomial option pricing model with the
        following variables and assumptions: (i) risk-free interest rate of
        2.2% (2008 - 3.8%), (ii) expected option life of 4.0 years (2008 -
        4.0 years), (iii) expected volatility of 38% (2008 - 23%), and (iv)
        expected dividends of 3.6% (2008 - 1.5%). The weighted average fair
        value of options granted was estimated at $2.94 (2008 - $5.84) per
        share.

        In March 2009, certain employees voluntarily and irrevocably
        released, without consideration, all right, title and interest in
        1,283,062 stock options. The unamortized fair value of these
        forfeited options ($1,696) was recognized at that time as additional
        non-tax deductible salary expense with an offsetting increase to
        contributed surplus.

        Further details relating to stock options outstanding and exercisable
        at October 31, 2009 follow:

                                Options Outstanding      Options Exercisable
                          ---------------------------------------------------
                                      Weighted
                                       Average
                                     Remaining  Weighted            Weighted
                                     Contract-   Average             Average
        Range of Exercise  Number of  ual Life  Exercise Number of  Exercise
        Prices               Options    (years)    Price   Options     Price
        ---------------------------------------------------------------------
        $ 8.58 to $10.84      26,500       2.7  $   9.20     10,000 $  10.21
        $11.76 to $13.78   1,209,735       3.4     12.16    239,500    13.78
        $15.46 to $17.58   1,185,100       2.3     16.61    733,500    16.44
        $19.16 to $21.46   1,063,890       2.1     21.45    753,100    21.44
        $22.29 to $26.3    8 684,600       2.8     25.64      6,000    22.30
        $28.11 to $31.18     224,780       3.1     31.13          -        -
        ---------------------------------------------------------------------
        Total              4,394,605       2.7  $  18.66  1,742,100 $  18.22
        ---------------------------------------------------------------------

        Restricted Share Units

        During the year, the Bank adopted a plan to grant Restricted Share
        Units (RSUs) as part of its long-term incentive plan. Under this
        plan, certain employees are eligible to receive an award in the form
        of RSUs. Each RSU entitles the holder to receive the cash equivalent
        of the market value of the Bank's common shares at the vesting date
        and an amount equivalent to the dividends paid on the common shares
        during the vesting period. RSUs vest on each anniversary of the grant
        in equal one-third installments over a vesting period of three years.
        Salary expense is recognized evenly over the vesting period except
        where the employee is eligible to retire prior to the vesting date,
        in which case the expense is recognized between the grant date and
        the date the employee is eligible to retire.

        For the quarter and year ended October 31, 2009, salary expense of
        $1,826 and $3,985 respectively ($1,269 and $2,770, net of tax) was
        recognized related to RSUs. As at October 31, 2009, the liability for
        the RSUs held under this plan was $3,985. At the end of each period,
        the liability and salary expense are adjusted to reflect changes in
        the market value of the Bank's common shares.

        For the year ended October 31, 2009                   Number of RSUs
        ---------------------------------------------------------------------
        Restricted Share Units
          Balance at beginning of period                                   -
          Granted                                                    286,929
          Vested                                                           -
          Forfeited                                                   (1,732)
          Balance at end of period                                   285,197
        ---------------------------------------------------------------------

    11. Contingent Liabilities and Commitments

        Significant contingent liabilities and commitments, including
        guarantees provided to third parties, are discussed in Note 20 of the
        Bank's audited consolidated financial statements for the year ended
        October 31, 2008 (see pages 80 to 81 of the 2008 Annual Report) and
        include:

                                             As at        As at        As at
                                        October 31      July 31   October 31
                                              2009         2009         2008
        ---------------------------------------------------------------------
        Guarantees and standby letters
         of credit
          Balance outstanding          $   196,380  $   208,166  $   232,649
        Business credit cards
          Total approved limit              10,496       10,610       11,503
          Balance outstanding                2,566        2,357        2,778
        ---------------------------------------------------------------------

        In the ordinary course of business, the Bank and its subsidiaries are
        party to legal proceedings. Based on current knowledge, management
        does not expect the outcome of any of these proceedings to have a
        material effect on the consolidated financial position or results of
        operations.


    12. Financial Instruments

        As a financial institution, most of the Bank's balance sheet is
        comprised of financial instruments and the majority of net income
        results from gains, losses, income and expenses related to the same.

        Financial instrument assets include cash resources, securities,
        securities purchased under resale agreements, loans and derivative
        financial instruments. Financial instrument liabilities include
        deposits, securities purchased under reverse resale agreements,
        derivative financial instruments and subordinated debentures.

        The use of financial instruments exposes the Bank to credit,
        liquidity and market risk. A discussion of how these and other risks
        are managed can be found in the 2008 consolidated annual financial
        statements.

        The value of financial assets recorded on the consolidated balance
        sheet at October 31, 2009 at fair value (cash, securities, securities
        purchased under resale agreements and derivatives) was determined
        using published market prices quoted in active markets for 88%
        (2008 - 92%) of the portfolio and estimated using a valuation
        technique based on observable market data for 12% (2008 - 8%) of the
        portfolio. The value of liabilities recorded on the consolidated
        balance sheet at fair value (derivatives and securities purchased
        under reverse resale agreements) was determined for the entire
        portfolio using a valuation technique based on observable market
        data.

        The table below sets out the fair values of financial instruments
        (including certain derivatives) using the valuation methods and
        assumptions outlined in the 2008 consolidated annual financial
        statements. The table does not include assets and liabilities that
        are not considered financial instruments.


                        October 31, 2009              October 31, 2008
                  -----------------------------------------------------------
                                          Fair                          Fair
                                         Value                         Value
                                          Over                          Over
                                        (Under)                       (Under)
                      Book      Fair      Book      Book      Fair      Book
                     Value     Value     Value     Value     Value     Value
    -------------------------------------------------------------------------
    Assets
      Cash
       resources  $297,104  $297,104  $      -  $492,173  $492,173  $      -
      Securities 1,891,409 1,891,409         - 1,228,964 1,228,964         -
      Securities
       purchased
       under
       resale
       agreements        -         -         -    77,000    77,000         -
      Loans(1)   9,320,749 9,368,074    47,325 8,700,672 8,635,811   (64,861)
      Other
       assets(2)    97,179    97,179         -    82,782    82,782         -
      Derivative
       related       2,334     2,334         -     9,980     9,980         -
    Liabilities
      Depo-
       sits(1)   9,628,949 9,739,360   110,411 9,258,776 9,247,017   (11,759)
      Other
       liabili-
       ties(3)     265,295   265,295         -   232,678   232,678         -
      Securities
       purchased
       under
       reverse
       resale
       agreements  300,242   300,242         -         -         -         -
      Subordinated
       debentures  375,000   377,363     2,363   375,000   387,774    12,774
      Derivative
       related          74        74         -       163       163         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        (1) Loans and deposits exclude deferred premiums and deferred
            revenue, which are not financial instruments.
        (2) Other assets exclude land, buildings and equipment, goodwill and
            other intangible assets, reinsurers' share of unpaid claims and
            adjustment expenses, future income tax asset, prepaid and
            deferred expenses, financing costs and other items that are not
            financial instruments.
        (3) Other liabilities exclude future income tax liability, deferred
            revenue, unearned insurance premiums and other items that are not
            financial instruments.
        (4) For further information on interest rates associated with
            financial assets and liabilities, including derivative
            instruments, refer to Note 13.

    13. Interest Rate Sensitivity

        The Bank's exposure to interest rate risk as a result of a difference
        or gap between the maturity or repricing behavior of interest
        sensitive assets and liabilities, including derivative financial
        instruments, is discussed in Note 28 of the audited consolidated
        financial statements for the year ended October 31, 2008 (see page 86
        of the 2008 Annual Report). The following table shows the gap
        position for selected time intervals.

    Asset Liability Gap Positions

                                Floating
                                Rate and                               Total
                                  Within      1 to 3    3 Months      Within
    ($ millions)                 1 Month      Months   to 1 Year      1 Year
    -------------------------------------------------------------------------
    October 31, 2009
    Assets
    Cash resources and
     securities               $       92  $       36  $      352  $      480
    Loans                          4,792         585         929       6,306
    Other assets                       -           -           -           -
    Derivative financial
     instruments(1)                    -           -         239         239
    -------------------------------------------------------------------------
    Total                          4,884         621       1,520       7,025
    -------------------------------------------------------------------------
    Liabilities and Equity
    Deposits                       3,796         826       1,560       6,182
    Other liabilities                303           6          27         336
    Debentures                        60           -           -          60
    Shareholders' equity               -           -           -           -
    Derivative financial
     instruments(1)                  239           -           -         239
    -------------------------------------------------------------------------
    Total                     $    4,398  $      832  $    1,587  $    6,817
    -------------------------------------------------------------------------
    Interest Rate
     Sensitive Gap            $      486  $     (211) $      (67) $      208
    -------------------------------------------------------------------------
    Cumulative Gap            $      486  $      275  $      208  $      208
    -------------------------------------------------------------------------
    Cumulative Gap as a
     percentage of total
     assets                          4.1%        2.3%        1.8%        1.8%
    -------------------------------------------------------------------------

    July 31, 2009
    Assets                    $    5,040  $      686  $    1,375  $    7,101
    Liabilities and equity         3,813         954       1,845       6,612
    -------------------------------------------------------------------------
    Interest rate sensitive
     gap                      $    1,227  $     (268) $     (470) $      489
    -------------------------------------------------------------------------
    Cumulative gap            $    1,227  $      959  $      489  $      489
    -------------------------------------------------------------------------
    Cumulative gap as a
     Percentage of total
     assets                         10.6%        8.3%        4.2%        4.2%
    -------------------------------------------------------------------------

    October 31, 2008
    Cumulative gap            $    1,068  $      963  $      234  $      234
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total
     assets                          9.5%        8.6%        2.1%        2.1%
    -------------------------------------------------------------------------


                                                            Non-
                               1 Year to   More than    interest
    ($ millions)                 5 Years     5 Years   Sensitive       Total
    -------------------------------------------------------------------------
    October 31, 2009
    Assets
    Cash resources and
     securities               $    1,573  $       81  $       55  $    2,189
    Loans                          2,890         128         (88)      9,236
    Other assets                       -           -         211         211
    Derivative financial
     instruments(1)                    -           -           -         239
    -------------------------------------------------------------------------
    Total                          4,463         209         178      11,875
    -------------------------------------------------------------------------
    Liabilities and Equity
    Deposits                       3,343         105         (13)      9,617
    Other liabilities                 36           8         277         657
    Debentures                       240          75           -         375
    Shareholders' equity               -           -         987         987
    Derivative financial
     instruments(1)                    -           -           -         239
    -------------------------------------------------------------------------
    Total                     $    3,619  $      188  $    1,251  $   11,875
    -------------------------------------------------------------------------
    Interest Rate
     Sensitive Gap            $      844  $       21  $   (1,073) $        -
    -------------------------------------------------------------------------
    Cumulative Gap            $    1,052  $    1,073  $        -  $        -
    -------------------------------------------------------------------------
    Cumulative Gap as a
     percentage of total
     assets                          8.9%        9.0%          -%          -%
    -------------------------------------------------------------------------

    July 31, 2009
    Assets                    $    4,123  $      168  $      178  $   11,570
    Liabilities and equity         3,550         188       1,220      11,570
    -------------------------------------------------------------------------
    Interest rate sensitive
     gap                      $      573  $      (20) $   (1,042) $        -
    -------------------------------------------------------------------------
    Cumulative gap            $    1,062  $    1,042  $        -  $        -
    -------------------------------------------------------------------------
    Cumulative gap as a
     Percentage of total
     assets                          9.2%        9.0%          -%          -%
    -------------------------------------------------------------------------

    October 31, 2008
    Cumulative gap            $      818  $      770  $        -  $        -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total
     assets                          7.3%        6.9%          -%          -%
    -------------------------------------------------------------------------
    (1) Derivative financial instruments are included in this table at the
        notional amount.
    (2) Accrued interest is excluded in calculating interest sensitive assets
        and liabilities.
    (3) Potential prepayments of fixed rate loans and early redemption of
        redeemable fixed term deposits have not been estimated. Redemptions
        of fixed term deposits where depositors have this option are not
        expected to be material. The majority of fixed rate loans, mortgages
        and leases are either closed or carry prepayment penalties.

        The effective, weighted average interest rates for each class of
        financial assets and liabilities are shown below:

              Floating
    October   Rate and           3 Months   Total   1 Year     More
     31,        Within   1 to 3      to 1  Within       to     than
     2009      1 Month   Months      Year  1 Year  5 Years  5 Years    Total
    -------------------------------------------------------------------------
    Total
     assets       3.8%     2.6%      4.5%    3.8%     4.9%     5.8%     4.3%
    Total
     liabil-
     ities        0.7      2.4       3.1     1.4      3.6      5.8      2.3
    -------------------------------------------------------------------------
    Interest
     rate
     sensitive
     gap          3.1%     0.2%      1.4%    2.4%     1.3%      -%      2.0%
    -------------------------------------------------------------------------

    July 31,
     2009
    -------------------------------------------------------------------------
    Total
     assets        3.7%    2.5%      4.6%    3.8%     5.1%    6.1%      4.3%
    Total
     liabil-
     ities         0.6     3.1       3.3     1.7      3.9     5.8       2.5
    -------------------------------------------------------------------------
    Interest
     rate
     sensitive
     gap           3.1%   (0.6)%     1.3%    2.1%     1.2%    0.3%      1.8%
    -------------------------------------------------------------------------


    October
     31,
     2008
    -------------------------------------------------------------------------
    Total
     assets        4.7%     4.2%     5.1%    4.8%     5.4%    5.8%      5.0%
    Total liabil-
     ities         2.2      3.6      4.0     2.9      4.2     5.7       3.4
    -------------------------------------------------------------------------
    Interest
     rate
     sensitive
     gap           2.5%     0.6%     1.1%    1.9%     1.2%    0.1%      1.6%
    -------------------------------------------------------------------------

        Based on the current interest rate gap position, it is estimated that
        a one-percentage point increase in all interest rates would decrease
        net interest income by approximately 2.5% or $6,574 (July 31, 2009 -
        3.8% or $9,493 increase to net interest income) and decrease other
        comprehensive income $21,355 (July 31, 2009 - $20,689) net of tax,
        respectively over the following twelve months. A one-percentage point
        decrease in all interest rates would increase net interest income by
        approximately 3.8% or $10,241 million (July 31, 2009 - 5.2% or
        $13,058) and increase other comprehensive income $21,355 (July 31,
        2009 - $20,689) net of tax.

    14. Segmented Information

        The Bank operates principally in two industry segments - banking and
        trust, and insurance. These two segments differ in products and
        services but are both within the same geographic region. The banking
        and trust segment provides banking, trust and wealth management
        services to personal clients, small to medium-sized commercial
        business clients and institutional clients primarily in Western
        Canada. The insurance segment provides home and auto insurance to
        individuals in British Columbia and Alberta.

                        Banking and Trust                Insurance
                  -----------------------------------------------------------
                       Three months ended            Three months ended
                  -----------------------------------------------------------
                   October   July 31   October   October   July 31   October
                   31 2009      2009   31 2008   31 2009      2009   31 2008
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $ 66,387  $ 59,340  $ 56,993  $  1,625  $  1,594  $  1,629
    Less teb
     adjustment      2,219     2,018     1,375       178       171       165
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements     64,168    57,322    55,618     1,447     1,423     1,464
    Other
     income(2)      17,019    18,651    11,580     5,068     5,953     3,857
    -------------------------------------------------------------------------
    Total
     revenues       81,187    75,973    67,198     6,515     7,376     5,321
    Provision
     for credit
     losses          3,393     3,369     3,187         -         -         -
    Non-interest
     expenses       38,997    37,283    32,913     2,576     2,927     2,446
    Provision for
     income taxes   11,271     9,791     8,788     1,049     1,200       700
    Non-controlling
     interest in
     subsidiary         59        50         -         -         -         -
    -------------------------------------------------------------------------
    Net income    $ 27,467  $ 25,480  $ 22,310   $ 2,890   $ 3,249   $ 2,175
    -------------------------------------------------------------------------
    Total
     average
     assets
     ($ millions)
     (3)          $ 11,342  $ 11,142  $ 9,902    $   212   $   200   $   191
    -------------------------------------------------------------------------



                                                            Total
                                                -----------------------------
                                                      Three months ended
                                                -----------------------------
                                                 October   July 31   October
                                                 31 2009      2009   31 2008
    -------------------------------------------------------------------------
    Net interest income (teb)(1)                $ 68,012  $ 60,934  $ 58,622
    Less teb adjustment                            2,397     2,189     1,540
    -------------------------------------------------------------------------
    Net interest income per
     financial statements                         65,615    58,745    57,082
    Other income                                  22,087    24,604    15,437
    -------------------------------------------------------------------------
    Total revenues                                87,702    83,349    72,519
    Provision for credit losses                    3,393     3,369     3,187
    Non-interest expenses                         41,573    40,210    35,359
    Provision for income taxes                    12,320    10,991     9,488
    Non-controlling interest in subsidiary            59        50         -
    -------------------------------------------------------------------------
    Net income                                  $ 30,357  $ 28,729  $ 24,485
    -------------------------------------------------------------------------
    Total average assets ($ millions)(3)        $ 11,554  $ 11,342  $ 10,093
    -------------------------------------------------------------------------


                   Banking and Trust       Insurance             Total
                  -----------------------------------------------------------
                      Year ended          Year ended          Year ended
                  -----------------------------------------------------------
                   October   October   October   October   October   October
                   31 2009   31 2008   31 2009   31 2008   31 2009   31 2008
    -------------------------------------------------------------------------
    Net interest
     income
    (teb)(1)      $230,227  $222,837  $  6,127  $  5,780  $236,354  $228,617
    Less teb
     adjustment      7,203     5,191       644       480     7,847     5,671
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements    223,024   217,646     5,483     5,300   228,507   222,946
    Other
     income(2)      74,013    54,338    17,599    15,902    91,612    70,240
    -------------------------------------------------------------------------
    Total
     revenues      297,037   271,984    23,082    21,202   320,119   293,186
    Provision
     for credit
     losses         13,500    12,000         -         -    13,500    12,000
    Non-interest
     expenses      147,571   125,748    10,611     9,418   158,182   135,166
    Provision for
     income taxes   38,560    40,589     3,360     3,412    41,920    44,001
    Non-controlling
     interest in
     subsidiary        232         -         -         -       232         -
    -------------------------------------------------------------------------
    Net income    $ 97,174  $ 93,647  $  9,111  $  8,372  $106,285  $102,019
    -------------------------------------------------------------------------
    Total
     average
     assets
     ($ millions)
     (3)          $ 11,055  $  9,747  $    198  $    184  $ 11,253  $  9,931
    -------------------------------------------------------------------------

    (1) Taxable Equivalent Basis (teb) - Most financial institutions 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
        generally accepted accounting principles and therefore may not be
        comparable to similar measures presented by other financial
        institutions.
    (2) Other income for the insurance segment is presented net of net
        claims, adjustment expenses and policy acquisition expenses and
        includes gains on sale of securities.
    (3) Assets are disclosed on an average daily balance basis as this
        measure is most relevant to a financial institution and is the
        measure reviewed by management.

    15. Capital Management

        Capital for Canadian financial institutions is managed and reported
        in accordance with a capital management framework specified by OSFI
        commonly called Basel II.

        Capital funds are managed in accordance with policies and plans that
        are regularly reviewed and approved by the Board of Directors and
        take into account forecasted capital needs and markets. The goal is
        to maintain adequate regulatory capital to be considered well
        capitalized, protect customer deposits and provide capacity for
        internally generated growth and strategic opportunities that do not
        otherwise require accessing the public capital markets, all while
        providing a satisfactory return for shareholders.

        During March 2009, the Bank issued 8.4 million preferred units for
        total proceeds of $209.8 million, which qualify as Tier 1 capital
        (refer to Note 9). The preferred units, issued by way of the private
        placement and the public offering, each consist of one Non-Cumulative
        5-Year Rate Reset Preferred Share, Series 3 (Series 3 Preferred
        Shares) in the capital of the Bank with an issue price of $25.00 per
        share and 1.7857 and 1.7800 common share purchase warrants,
        respectively. Each warrant is exercisable at a price of $14.00 to
        purchase one common share in the capital of the Bank until March 3,
        2014 (refer to Note 9).

        Additional information about the Bank's capital management practices
        is provided in Note 31 to the 2008 audited financial statements
        beginning on page 89 of the 2008 Annual Report.

        Capital Structure and Regulatory Ratios

                                             As at        As at        As at
                                        October 31      July 31   October 31
                                              2009         2009         2008
    -------------------------------------------------------------------------
    Capital
    Tier 1                             $ 1,063,287  $ 1,040,753  $   775,445
    Total                                1,449,790    1,432,146    1,168,272
    -------------------------------------------------------------------------
    Capital ratio
    Tier 1                                   11.3%        11.2%         8.9%
    Total                                    15.4         15.4         13.5
    Assets to capital multiple               8.1 x        8.0 x        9.2 x
    -------------------------------------------------------------------------

        During the quarter and year ended October 31, 2009, the Bank complied
        with all internal and external capital requirements.

    16. Future Accounting Changes International Financial Reporting Standards

        The CICA will transition Canadian GAAP for publicly accountable
        entities to International Financial Reporting Standards (IFRS). The
        Bank's consolidated financial statements will be prepared in
        accordance with IFRS for the fiscal year commencing November 1, 2011
        and will include comparative information for the prior year.

        During 2008, the Bank commenced a four stage project to identify and
        evaluate the impact of the transition to IFRS on the consolidated
        financial statements and develop a plan to complete the transition.
        The project plan includes the following phases - diagnostic, design
        and planning, solution development, and implementation. The
        diagnostic and the design and planning phases are complete, and the
        solution development phase is expected to be completed by the end of
        fiscal 2010.

        The impact of the transition to IFRS on the Bank's consolidated
        financial statements for current standards is not yet determinable.
        CWB continues to monitor the International Accounting Standards
        Board's proposed changes to standards during Canada's transition to
        IFRS. These proposed changes may have a significant impact on our
        implementation plan and future financial statements.


    -------------------------------------------------------------------------
    Shareholder Information
    -------------------------------------------------------------------------

    Head Office                       Transfer Agent and Registrar

    Canadian Western Bank & Trust     Valiant Trust Company
    Suite 3000, Canadian Western      Suite 310, 606 - 4th Street S.W.
    Bank Place                        Calgary, AB  T2P 1T1
    10303 Jasper Avenue               Telephone: (403) 233-2801
    Edmonton, AB  T5J 3X6             Fax: (403) 233-2857
    Telephone: (780) 423-8888         Website: www.valianttrust.com
    Fax: (780) 423-8897               E-mail: inquiries@valianttrust.com
    Website: www.cwbankgroup.com
                                      Eligible Dividends Designation
    Subsidiary Offices
                                      CWB designates all dividends for both
    Canadian Western Trust Company    common and preferred shares paid to
    Suite 600, 750 Cambie Street      Canadian residents as "eligible
    Vancouver, BC  V6B 0A2            dividends", as defined in the Income
    Toll-free: 1-800-663-1124         Tax Act (Canada), unless otherwise
    Fax: (604) 669-6069               noted.
    Website: www.cwt.ca
                                      Dividend Reinvestment Plan
    Canadian Direct Insurance
     Incorporated                     CWB's dividend reinvestment plan allows
    Suite 600, 750 Cambie Street      common and preferred shareholders to
    Vancouver, BC  V6B 0A2            purchase additional common shares
    Telephone: (604) 699-3678         by reinvesting their cash dividend
    Fax: (604) 699-3851               without incurring brokerage and
    Website: www.canadiandirect.com   commission fees. For information about
                                      participation in the plan, please
    Valiant Trust Company             contact the Transfer Agent
    Suite 310, 606 - 4th Street S.W.  and Registrar or visit
    Calgary, AB  T2P 1T1              www.cwbankgroup.com.
    Toll-free: 1-866-313-1872
    Fax: (403) 233-2857               Investor Relations
    Website: www.valianttrust.com     For further financial information
                                       contact:
    Adroit Investment Management Ltd. Kirby Hill, CFA
    Suite 1250, Canadian Western      Assistant Vice President, Investor
    Bank Place                         and Public Relations
    10303 Jasper Avenue               Canadian Western Bank
    Edmonton, AB  T5J 3N6             Telephone: (780) 441-3770
    Telephone: (780) 429-3500         Toll-free: 1-800-836-1886
    Fax: (780) 429-9680               Fax: (780) 969-8326
    Website:                          E-mail:
    www.adroitinvestments.ca          InvestorRelations@cwbank.com

    Stock Exchange Listings           Online Investor Information

    The Toronto Stock Exchange        Additional investor information
     Common Shares: CWB               including supplemental financial
     Series 3 Preferred Shares:       information and corporate
      CWB.PR.A                        presentations are available on
     Common Share Purchase Warrants:  CWB's website at www.cwbankgroup.com.
      CWB.WT
                                      Quarterly Conference Call and Webcast

                                      CWB's quarterly conference call and
                                      live audio webcast will take place
                                      on December 3, 2009 at 4:30 p.m. ET.
                                      The webcast will be archived on the
                                      Bank's website at www.cwbankgroup.com
                                      for sixty days. A replay of the
                                      conference call will be available
                                      until December 17, 2009 by dialing
                                      (416) 849-0833 or toll free
                                      (800) 642-1687 and entering
                                      passcode 41377847.
    

SOURCE Canadian Western Bank

For further information: For further information: Larry M. Pollock, President and Chief Executive Officer, Canadian Western Bank, Phone: (780) 423-8888; Kirby Hill, CFA, Assistant Vice President, Investor and Public Relations, Canadian Western Bank, Phone: (780) 441-3770, E-mail: kirby.hill@cwbank.com

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Canadian Western Bank

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