CWB Reports Record Quarterly Earnings and Revenues



    7% quarterly loan growth
    13% increase in quarterly cash dividend declared

    EDMONTON, June 7 /CNW/ - Canadian Western Bank (CWB on TSX) today
announced record quarterly earnings and revenues (teb) in its 76th consecutive
profitable quarter, a period spanning 19 years. Second quarter net income of
$22.2 million and diluted earnings per share of $0.35 were up 33% and 35%
respectively over last year. Earnings were driven by excellent loan growth of
7% in the quarter and 28% over the past twelve months. Year-to-date net income
of $42.7 million, or $0.67 per diluted share was up 29% over the same period
in 2006.

    
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    Second Quarter Highlights:
    (three months ended April 30, 2007 compared with three months ended
    April 30, 2006 unless otherwise noted)
    -------------------------------------------------------------------------
    -  Record net income of $22.2 million, up 33%.
    -  Diluted earnings per share of $0.35, up 35%.
    -  Loan growth of 7% in the quarter and 28% over the past twelve months.
    -  Total assets surpassed $8.0 billion.
    -  Record total revenues (teb(1)) of $66.8 million, up 26%.
    -  Return on equity of 16.8%, up 250 basis points.
    -  Efficiency ratio (teb) of 45.1%, an improvement of 200 basis points.
    -  Opened a new, full-service branch in Abbotsford, British Columbia.
    -  Issued $200 million of subordinated debentures in a private placement
       to institutional investors.

    (1) Taxable equivalent basis. See definition following Financial
        Highlights table.
    -------------------------------------------------------------------------
    

    The Board of Directors today declared a quarterly dividend of $0.09 per
common share, payable on July 5, 2007 to shareholders of record on June 21,
2007. This quarterly dividend represents a 13% increase over the previous
quarterly dividend and is 50% higher than the quarterly dividend declared one
year ago.
    "The Bank's loan growth continued to be the story in the second quarter,
pushing total assets to more than $8 billion. Our growing asset base not only
confirms the ongoing opportunities in our markets, it allows us to capitalize
on economies of scale," said Larry Pollock, President and CEO. "Strong banking
and trust earnings along with Canadian Direct's recovery in the quarter
provide an excellent picture of the combined strength of our businesses,"
added Pollock.
    Both operating segments performed very well in the quarter. Quarterly net
income from banking and trust operations was $19.6 million, up 29% over last
year on very strong growth in both total loans and other income. The earnings
contribution from insurance operations increased 71% over the same quarter
last year to $2.7 million. Insurance results showed a strong recovery over the
first quarter of 2007 which was impacted by severe weather in British
Columbia.

    
                                 For the three months ended
                                 --------------------------
                                                                      Change
    (unaudited)                                                         from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2007         2007         2006         2006
    -------------------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $    50,567  $    49,209  $    40,058           26%
      Less teb adjustment       1,327        1,164          973           36
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      Net interest income
       per financial
       statements              49,240       48,045       39,085           26
      Other income             16,237       12,443       12,953           25
      Total revenues (teb)     66,804       61,652       53,011           26
      Total revenues           65,477       60,488       52,038           26
      Net income               22,219       20,458       16,667           33
      Earnings per common
       share
        Basic                    0.36         0.33         0.27           33
        Diluted                  0.35         0.32         0.26           35
      Return on
       shareholders'
       equity(1)                 16.8%        15.4%        14.3%     250bp(2)
      Return on assets(3)        1.17         1.10         1.10            7
      Efficiency ratio(4)
       (teb)                     45.1         45.7         47.1         (200)
      Efficiency ratio           46.1         46.6         47.9         (180)
      Net interest margin
       (teb)                     2.65         2.65         2.64            1
      Net interest margin        2.58         2.58         2.57            1
      Provision for credit
       losses as a
       percentage of
       average loans             0.16         0.17         0.20           (4)
    -------------------------------------------------------------------------
    Per Common Share
      Cash dividends(5)   $      0.08  $      0.08  $      0.06           33%
      Book value                 8.82         8.59         7.90           12
      Closing market
       value                    23.89        25.14        21.25           12
      Common shares
       outstanding
       (thousands)             62,295       62,168       61,528            1
    -------------------------------------------------------------------------
    Balance Sheet and
     Off-Balance
     Sheet Summary
      Assets              $ 8,021,542  $ 7,565,363  $ 6,475,759           24%
      Loans                 6,567,598    6,154,449    5,144,055           28
      Deposits              6,798,483    6,566,652    5,562,606           22
      Subordinated
       debentures             393,126      198,126      198,126           98
      Shareholders'
       equity                 549,704      534,228      485,691           13
      Assets under
       administration       3,874,228    3,553,590    3,105,873           25
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    Capital Adequacy
      Tangible common
       equity to risk-
       weighted assets(6)         8.0%         8.3%         8.9%      (90)bp
      Tier 1 ratio(7)             9.4          9.8          8.9           50
      Total ratio(7)             14.2         13.2         12.7          150
    -------------------------------------------------------------------------


                                 For the six months ended
                                 ------------------------
                                                         Change
    (unaudited)                                            from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2007         2006         2006
    -------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $    99,776  $    79,772           25%
      Less teb adjustment       2,491        1,845           35
    -------------------------------------------------------------
      Net interest income
       per financial
       statements              97,285       77,927           25
      Other income             28,680       25,549           12
      Total revenues
       (teb)                  128,456      105,321           22
      Total revenues          125,965      103,476           22
      Net income               42,677       33,105           29
      Earnings per common
       share
        Basic                    0.69         0.54           28
        Diluted                  0.67         0.52           29
      Return on
       shareholders'
       equity(1)                 16.1%        14.2%       190bp
      Return on assets(3)        1.13         1.10            3
      Efficiency ratio(4)
       (teb)                     45.4         46.8         (140)
      Efficiency ratio           46.3         47.6         (130)
      Net interest margin
       (teb)                     2.65         2.66           (1)
      Net interest margin        2.58         2.60           (2)
      Provision for credit
       losses as a
       percentage of
       average loans             0.17         0.21           (4)
    -------------------------------------------------------------
    Per Common Share
      Cash dividends(5)   $      0.16  $      0.12           33%
      Book value                 8.82         7.90           12
      Closing market
       value                    23.89        21.25           12
      Common shares
       outstanding
       (thousands)             62,295       61,528            1
    -------------------------------------------------------------

    (1)  Return on shareholders' equity is calculated as annualized net
         income divided by average shareholders' equity.
    (2)  bp - basis point change.
    (3)  Return on assets is calculated as annualized net income divided by
         average total assets.
    (4)  Efficiency ratio is calculated as non-interest expenses divided by
         total revenues.
    (5)  A stock dividend effecting a two-for-one split of the Bank's common
         shares was declared and paid during the first quarter of 2007. All
         prior period common share and per common share information have been
         restated to reflect this effective split.
    (6)  Tangible common equity to risk-weighted assets is calculated as
         shareholders' equity less trust subsidiary goodwill divided by
         risk-weighted assets, calculated in accordance with guidelines
         issued by the Superintendent of Financial Institutions (OSFI).
    (7)  Tier 1 and Total capital adequacy ratios are calculated in
         accordance with guidelines issued by OSFI.
    

    Taxable Equivalent Basis (teb)

    Most financial institutions analyse 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.

    Non-GAAP Measures

    Taxable equivalent basis, return on shareholders' equity, return on
assets, efficiency ratio, net interest margin 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 very strong
financial performance in its 76th consecutive profitable quarter, a 19 year
period. Excellent loan growth of 7% in the quarter and 28% over the past
twelve months drove total assets to more than $8 billion, leading to record
quarterly results for both net income and total revenues (teb). Consolidated
second quarter net income and diluted earnings per share were up 33% and 35%
respectively over last year on 26% growth in total revenues (teb). On a
year-to-date basis, net income and diluted earnings per share both increased
29%.
    In comparison to the previous quarter, consolidated net income and
diluted earnings per share were both 9% higher primarily due to a strong
recovery from insurance operations which were impacted in the first quarter by
unusually severe weather in British Columbia (BC).
    CWB's previously announced $200 million issue of subordinated debentures
in the quarter provides very strong support for current and future asset
growth. Return on equity will also benefit from this non-dilutive source of
regulatory capital. Quarterly return on equity was up 250 basis points over
the same period last year to 16.8%. On a year-to-date basis, return on equity
improved 190 basis points over last year to 16.1%.

    Share Price Performance

    CWB shares ended the second quarter at $23.89, up from $21.25 one year
ago. Including reinvested dividends, the total return to shareholders over the
twelve-month period ended April 30, 2007 was 14%.

    Dividends

    On June 7, 2007, CWB's Board of Directors declared a cash dividend of
$0.09 per common share, payable on July 5, 2007 to shareholders of record on
June 21, 2007. This quarterly dividend represents a 13% increase over the
previous quarterly dividend and is 50% higher than the quarterly dividend
declared one year ago.

    Loan Growth

    The Bank achieved 7% organic loan growth in the quarter reflecting
continued strong business activity throughout Western Canada. As in previous
quarters, Alberta and BC were the primary sources of growth. Each lending
division showed excellent performance in the quarter and all have achieved
double-digit loan growth since our 2006 year-end. With these results we have
already met our 14% annual loan growth target, achieving our 18th consecutive
year of double-digit loan growth in only the first six months. A strong
pipeline for new loans reflects Western Canada's robust economies as well as
our growing market presence. Our ongoing commitment to build high quality
assets will remain front and centre as we continue to expand within our
markets.
    Our alternative mortgage business, Optimum Mortgage (Optimum), grew 14%
in the quarter to $312 million of total loans outstanding. Results in this
business continue to exceed our expectations and we remain comfortable with
its overall risk profile. Optimum produces an excellent return on the Bank's
capital and its lending focus is consistent with our objective to enhance
portfolio diversification.

    Credit Quality

    Credit quality remained excellent due to a combination of favourable
economic conditions and disciplined credit underwriting. We maintained our
consistent charge for credit losses and are well positioned to manage future
turns in the credit cycle.

    Branch Deposit Growth

    Deposits raised through our branch network and Canadian Western Trust
Company (CWT) continued to show strong growth increasing 3% in the quarter and
22% over the past year. The demand and notice component within branch-raised
deposits was up 5% in the quarter and 26% over April 30, 2006. Our success in
growing additional sources of lower cost branch-raised deposits will continue
to support the Bank's net interest margin and remains an important part of our
overall strategy.

    Net Interest Margin

    Net interest margin (teb) in the quarter was 2.65%, unchanged from the
previous quarter and one basis point higher than the same period last year. We
maintain our expectation that net interest margin will remain within a
relatively tight band through the foreseeable future, due primarily to the
flat interest rate curve and competitive market conditions.

    Trust Services

    Trust services are an important part of our overall business strategy,
providing excellent income diversification, strong growth opportunities and
increased brand awareness. Total trust assets under administration of
$3.9 billion were up 25% over the same time last year. CWT continues to
perform very well and celebrated its 20th anniversary in the second quarter.
Valiant Trust Company has a growing client base and ongoing investments in
this service platform support our commitment to provide superior customer
experiences.

    Insurance

    Our insurance subsidiary, Canadian Direct Insurance Incorporated
(Canadian Direct), realized record earnings of $2.7 million in the second
quarter, following a difficult first quarter impacted by high levels of claims
resulting from unusually severe weather in BC. In contrast to the prior
period, Canadian Direct's second quarter earnings benefited from low claims
experience. Results for the quarter also reflect a pre-tax contribution from
the Alberta auto risk sharing pools. Year-to-date, net income was comparable
to the same period in 2006. We continue to work on enhancing our insurance
distribution capabilities and remain optimistic about this segment.

    Outlook

    CWB has a long history of quality growth and our results in the second
quarter marked several new milestones along the same path. We achieved our
annual loan growth objective in just six months and are currently well on
track to meet or exceed all of our 2007 performance targets. New deal flow
remains healthy and loan growth achieved in the first half of the year will
benefit revenues and earnings throughout the remainder of 2007. We opened a
new full-service branch in Abbotsford, BC, our third new branch in the past
nine months, bringing our total number to 34. Western Canada's strong
economies are presenting more opportunities to add value for our shareholders
and we continue to capitalize on these. Our strategic focus on infrastructure,
people, process and business enhancement is critical in meeting our objective
for sustained, high quality asset growth and will remain a top management
priority.
    We look forward to reporting our third quarter results on September 6,
2007.

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    Q2 Results Conference Call

    CWB's second quarter results conference call is scheduled for
    Thursday, June 7, 2007 at 3:30 p.m. ET (1:30 p.m. MT). The Bank's
    executives will comment on the second quarter results and respond to
    questions from analysts and institutional investors.

    The conference may be accessed on a listen-only basis by dialing
    416-644-3431 or toll-free 1-800-732-6179. 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 June 21, 2007 by
    dialing 416-640-1917 (Toronto) or 1-877-289-8525 (toll-free) and entering
    passcode 21217979, followed by the pound sign.
    -------------------------------------------------------------------------

    About Canadian Western Bank

    Canadian Western Bank offers highly personalized service through
34 branch locations and is the only publicly traded Schedule I chartered bank
headquartered in and regionally focused on Western Canada. The Bank, with
total balance sheet assets of $8.0 billion and assets under administration of
$3.9 billion, specializes in mid-market commercial lending and offers a full
range of retail services. Trust services to independent financial advisors,
corporations, income trusts and individuals are provided through the Bank's
wholly owned subsidiaries, Canadian Western Trust Company and Valiant Trust
Company. Canadian Direct Insurance Incorporated is a wholly owned subsidiary
providing personal auto and home insurance to customers in BC and Alberta. The
common shares of Canadian Western Bank are listed on the Toronto Stock
Exchange under the trading symbol 'CWB'. 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 the unaudited interim consolidated financial statements for
the period ended April 30, 2007, as well as the audited consolidated financial
statements and MD&A for the year ended October 31, 2006, available on SEDAR at
www.sedar.com. Except as discussed below, the factors discussed and referred
to in the MD&A for fiscal 2006 remain substantially unchanged.

    Overview

    Canadian Western Bank (CWB or the Bank) posted record earnings in the
quarter led by very strong loan growth and excellent contributions from both
operating segments. Consolidated net income of $22.2 million, or $0.35 per
diluted share ($0.36 basic), increased 33% and 35% respectively over the same
quarter last year. These results marked the Bank's 76th consecutive profitable
quarter, a 19 year period. Second quarter net income from banking and trust
operations was up 29% over the previous year to $19.6 million while the
contribution from Canadian Direct Insurance Incorporated (Canadian Direct)
increased 71% to $2.7 million.
    Total revenues, on a taxable equivalent basis (teb - see definition
following Financial Highlights table), were up 26% over last year to a record
$66.8 million. Quarterly revenue growth was driven by very strong growth in
both total loans and other income.
    Net income was up 9% over the previous quarter reflecting record earnings
from Canadian Direct and 6% growth in average interest-earning assets,
partially offset by three fewer revenue-earning days this quarter.
Year-to-date net income and diluted earnings per share both increased 29% over
last year to $42.7 million and $0.67 ($0.69 basic) respectively.
    Second quarter return on equity of 16.8% was 250 basis points better than
last year. Year-to-date return on equity increased 190 basis points to 16.1%.
Continued improvements in return on equity are attributed to the Bank's
less-dilutive regulatory capital structure and greater income contributions
from less capital-intensive businesses. Increased efficiencies related to
economies of scale have also positively impacted return on equity. Return on
assets for the second quarter was 1.17%, compared to 1.10% one year ago.
Year-to-date return on assets of 1.13% represented a three basis point
improvement over last year.

    Total Revenues (teb)

    Total revenues (teb), which are comprised of net interest income and
other income, were $66.8 million for the quarter representing a 26% increase
over the same period last year and an 8% improvement over the first quarter,
despite three fewer days. Year-to-date, total revenues (teb) were
$128.5 million, up 22% over the first six months in 2006.

    Net Interest Income (teb)
    Net interest income (teb) was up 26% ($10.5 million) over the second
quarter last year to $50.6 million reflecting equivalent 26% growth in average
interest-earning assets. Year-to-date net interest income (teb) of
$99.8 million increased 25% ($20.0 million) over 2006. Second quarter net
interest margin (teb) of 2.65% was one basis point higher than last year.
    Net interest income (teb) increased 3% ($1.4 million) over the previous
quarter driven by a 6% increase in average interest-earning assets, partially
offset by the second quarter having three fewer days. Net interest income per
day, a calculation that excludes this impact, increased 6% over the first
quarter and 26% over the same quarter last year to $568,000. Net interest
margin remained unchanged quarter-over-quarter. These results support
management's expectation that net interest margin will remain within a
relatively tight band due to the flat interest rate curve and competitive
market conditions.
    Note 12 to the unaudited interim financial statements provides a summary
of the Bank's exposure to interest rate risk as at April 30, 2007. Interest
rate risk or sensitivity is defined as the impact on net interest income, both
current and future, resulting from a change in market interest rates. Based on
the current interest rate gap position, it is estimated that a one-percentage
point increase in all interest rates would increase net interest income by
approximately 1.35%. This compares to January 31, 2007, when a one-percentage
point increase in all interest rates would have increased net interest income
by approximately 0.4%. The Bank's overall strategy remains relatively neutral
with respect to taking specific positions on interest rate risk.

    Other Income
    Other income of $16.2 million was 25% ($3.3 million) higher than the same
quarter last year due to growth in net insurance revenues and solid increases
in credit related and trust services fees. Net insurance revenues in the
quarter of $5.0 million were up 40% ($1.4 million) over last year due to a
600 basis point improvement in the quarterly claims loss ratio and 18% growth
in net earned premiums. Canadian Direct's quarterly earnings also benefited
from a $0.7 million positive pre-tax contribution from the Alberta auto risk
sharing pools (the Pools). Approximately half of the growth in net earned
premiums resulted from the elimination of quota share reinsurance in November
2006. Credit related fees of $5.5 million were up 20% ($0.9 million) over the
same quarter last year while trust services fees increased 8% ($0.2 million)
to $2.9 million. Market uncertainty related to the future taxation of income
trusts has moderated revenue growth at Valiant Trust.
    In comparison to the previous quarter, other income was up 30%
($3.8 million) due almost entirely to an improvement in net insurance
revenues. Canadian Direct's first quarter revenues were low due to the impact
of severe weather in BC that resulted in an exceptionally high level of
property claims in that province's home product line.
    On a year-to-date basis, other income was up 12% ($3.1 million) to
$28.7 million reflecting strong increases in credit related, trust services
and retail fees, partially offset by $0.8 million decline in net insurance
revenues.

    Credit Quality

    Credit quality continued to be excellent and the quarterly provision for
credit losses of $2.6 million remained unchanged from both the previous
quarter and one year ago. The provision for credit losses measured as a
percentage of average loans was 16 basis points in the quarter, compared to
17 basis points in the previous quarter and 20 basis points last year. Lower
quarterly provisions measured as a percentage of average loans were entirely
due to continued loan growth.
    Gross impaired loans at April 30, 2007 were $11.1 million, compared with
$11.5 million in the previous quarter and $11.4 million in the second quarter
last year. Gross impaired loans remain at exceptionally low levels, although
the dollar level is expected to fluctuate over time within the Bank's
acceptable range as loans become impaired and are subsequently resolved.
    The total allowance for credit losses (general and specific) represented
545% of gross impaired loans at the end of the second quarter, compared to
485% last quarter and 409% one year ago. The general allowance as a percentage
of risk-weighted loans was 85 basis points, compared to 88 basis points in the
previous quarter and 82 basis points a year earlier.

    Non-interest Expenses

    Non-interest expenses were $30.2 million in the second quarter, up 21%
over the same quarter last year and 7% over the previous quarter.
Year-to-date, non-interest expenses were up 18% ($9.1 million) over last year.
Higher non-interest expenses over the previous quarter were mainly a result of
increased staff complement and premises to manage business growth. Compared to
last year, results reflect the increases noted above as well as annual salary
increments and higher stock-based compensation charges.
    Growth in revenues continued to outpace higher non-interest expenses and
the efficiency ratio (teb), which measures non-interest expenses as a
percentage of total revenues (teb), improved 200 basis points from the same
quarter last year to 45.1%. In comparison to the previous quarter, the
efficiency ratio (teb) improved 60 basis points despite three fewer days in
the second quarter. The year-to-date efficiency ratio (teb) of 45.4%
represents a 140 basis point improvement over last year and was 60 basis
points better than the fiscal 2007 target of 46.0%.

    Income Taxes

    The income tax rate (teb) for the first six months of 2007 was 34.4%,
down from 35.0% in the same period last year. The year-to-date tax rate before
the teb adjustment decreased to 31.7% compared to 32.6% in 2006. Lower tax
rates reflect reductions in corporate income tax rates in Alberta,
Saskatchewan and Manitoba, partially offset by the impact of increased
non-deductible charges for stock-based compensation.

    Balance Sheet

    Total assets at April 30, 2007 were $8,021 million reflecting growth of
6% ($456 million) in the quarter and 24% ($1,546 million) over the past year.

    Cash and Securities
    Cash, securities and securities purchased under resale agreements totaled
$1,301 million at April 30, 2007, compared to $1,264 million last quarter and
$1,193 million one year ago.
    As a result of new accounting standards for financial instruments (refer
to Note 2 to the unaudited interim consolidated financial statements),
commencing November 1, 2006 all of CWB's cash and securities have been
designated as available-for-sale and are recorded on the balance sheet at fair
value with changes in value recognized in other comprehensive income. The
unrealized loss recorded on the balance sheet at April 30, 2007 was
$7.2 million, compared to $2.1 million last quarter. More than half of the
increase in unrealized losses this quarter relates to the change in value of a
certain preferred share investment affected by a possible leveraged buyout of
the issuer, with the remainder attributed to changes in interest rates. The
value of unrealized and unrecorded losses as at April 30, 2006 was
$5.2 million. The cash and securities portfolio is comprised of high quality
debt instruments that are not held for trading purposes and are typically held
until maturity. Fluctuations in fair value are generally attributed to changes
in interest rates and shifts in the interest rate curve.

    Loans
    Total loans increased 7% ($413 million) in the quarter, 14%
($786 million) year-to-date and 28% ($1,424 million) in the past year to
$6,568 million at April 30, 2007. Loan growth reflects continued strong
results across Alberta and BC as well as increased lending opportunities in
Saskatchewan. Each lending division performed very well in the quarter with
the strongest contributions coming from real estate ($117 million) and general
commercial ($106 million) sectors. Personal loans and mortgages increased 9%
($76 million) reflecting 14% quarterly loan growth in Optimum Mortgage which
continues to produce excellent results. All of CWB's lending divisions have
realized double-digit loan growth through the first six months of fiscal 2007.
Overall, new deal flow remains healthy and continued strong loan growth is
expected through the remainder of the year.

    Deposits
    Growth in total branch deposits remained strong, increasing 3% in the
quarter and 22% in the past year. Lower cost demand and notice deposits
increased 5% in the quarter and 26% over the past twelve months. A significant
portion of the year-over-year growth in total branch deposits reflects larger
commercial and wholesale balances, which can be subject to greater
fluctuation. The Bank will maintain its focus on increasing branch-raised
deposits which provides support for net interest margin.
    Total deposits at April 30, 2007 were $6,798 million, an increase of 4%
($232 million) in the quarter and 22% ($1,236 million) over the past year.
Total branch deposits measured as a percentage of total deposits remained
unchanged from the previous quarter at 67%, compared to 66% one year ago.
Demand and notice deposits comprised 27% of total deposits at April 30, 2007,
consistent with both the previous quarter and the same quarter last year.

    Other Assets and Other Liabilities
    Other assets at April 30, 2007 totaled $153 million, compared to
$147 million last quarter and $138 million one year ago. Other liabilities at
quarter end were $280 million, compared to $266 million the previous quarter
and $229 million in the same quarter last year.

    Off-Balance Sheet

    Off-balance sheet items include trust assets under administration, which
totaled $3,874 million at the end of the second quarter, compared to
$3,554 million last quarter and $3,106 million one year ago. Other off-balance
sheet items are composed of standard industry credit instruments (guarantees,
standby letters of credit and commitments to extend credit), the
non-consolidated variable interest entity and, prior to the first quarter of
fiscal 2007, derivative financial instruments which are primarily interest
rate swaps used to manage sensitivity to interest rate changes. For additional
information regarding other off-balance sheet items refer to Notes 14, 21 and
26 to the audited consolidated financial statements on pages 57, 63 and 67
respectively in the Bank's 2006 Annual Report.
    With the November 1, 2006 adoption of new accounting policies for
financial instruments, all derivative financial instruments are recorded on
the balance sheet at fair value, with changes in fair value reported in other
comprehensive income for the effective portion of cash flow hedges and other
income for all other derivatives. Refer to Notes 2 and 6 to the April 30, 2007
unaudited interim consolidated financial statements for further details.

    Unaudited Capital Management

    CWB's total capital adequacy ratio, which measures regulatory capital as
a percentage of risk-weighted assets, was 14.2% at the end of the second
quarter compared to 13.2% last quarter and 12.7% one year ago. The Tier 1
ratio at April 30, 2007 was 9.4% compared to 9.8% in the previous quarter and
8.9% last year. Improved capital adequacy ratios in the last twelve months
reflect the placement of subordinated debentures in the second quarter of 2007
and innovative Tier 1 capital in the fourth quarter of 2006. The lower Tier 1
ratio compared to the previous quarter reflects the Bank's robust asset
growth.
    The $200 million subordinated debentures issued in the second quarter
were privately placed with institutional investors and consisted of both
five-year ($125 million) and ten-year ($75 million) debentures. The five-year,
Series A debentures have a fixed interest rate of 5.070% until March 21, 2012,
and a rate thereafter fixed quarterly at the 90-day Bankers' Acceptance rate
plus 155 basis points, until maturity on March 21, 2017. The ten-year, Series
B debentures have a fixed interest rate of 5.571% until March 21, 2017, and a
rate thereafter fixed quarterly at the 90-day Bankers' Acceptance rate plus
180 basis points, until maturity on March 21, 2022. This placement was
consistent with management's objective to further build a strong and efficient
capital structure to support continued high quality asset growth and improve
the Bank's return on equity.
    Book value per common share at April 30, 2007 was $8.82, compared to
$8.59 last quarter and $7.90 one year ago.
    Common shareholders received a quarterly cash dividend of $0.08 per
common share on April 5, 2007. On June 7, 2007, the Board of Directors
declared a quarterly cash dividend of $0.09 per common share payable on
July 5, 2007 to shareholders of record on June 21, 2007. This quarterly
dividend represents a 13% increase over the previous quarterly dividend and is
50% higher than the quarterly dividend declared one year ago.

    Accounting Policy Changes

    Significant accounting policies are detailed in the notes to the Bank's
October 31, 2006 audited consolidated financial statements. Effective
November 1, 2006, the Bank adopted new accounting standards issued by the
Canadian Institute of Chartered Accountants (CICA): Financial Instruments -
Recognition and Measurement, Hedges, Comprehensive Income and Financial
Instruments - Disclosure and Presentation. As a result of adopting these
standards, a new category, accumulated other comprehensive income (loss), has
been added to shareholders' equity where certain unrealized gains and losses
are reported until realization. Refer to Note 2 to the unaudited interim
consolidated financial statements for further details.

    Controls and Procedures

    There were no changes in the Bank's internal controls over financial
reporting that occurred during the quarter ended April 30, 2007 that have
materially affected, or are reasonably likely to materially affect, internal
control over financial reporting.

    Updated Share Information

    As at June 1, 2007, there were 62,324,000 common shares outstanding. Also
outstanding were employee stock options, which are or will be exercisable for
up to 5,253,550 common shares for maximum proceeds of $80.1 million.


    
    Summary of Quarterly Financial Information


                                    2007                      2006
                          ------------------------- -------------------------
    ($ thousands)                Q2           Q1           Q4           Q3
    -------------------------------------------------------------------------
    Total revenues (teb)  $    66,804  $    61,652  $    59,565  $    56,884
    Total revenues             65,477       60,488       58,731       55,845
    Net income                 22,219       20,458       21,209       17,693
    Earnings per common
     share
      Basic                      0.36         0.33         0.34         0.29
      Diluted                    0.35         0.32         0.33         0.28
    Total assets
     ($ millions)               8,022        7,565        7,268        6,871
    -------------------------------------------------------------------------


                                    2006                      2005
                          ------------------------- -------------------------
     ($ thousands)               Q2           Q1           Q4           Q3
    -------------------------------------------------------------------------
    Total revenues (teb)  $    53,011  $    52,310  $    48,954  $    49,549
    Total revenues             52,038       51,438       47,618       48,593
    Net income                 16,667       16,438       14,814       15,212
    Earnings per common
     share
      Basic                      0.27         0.27         0.24         0.25
      Diluted                    0.26         0.26         0.23         0.24
    Total assets
     ($ millions)               6,476        6,021        5,705        5,424
    -------------------------------------------------------------------------
    

    The financial results for each of the last eight quarters are summarized
above. In general, CWB's performance reflects a consistent growth trend
although the second quarter contains three fewer revenue-earning days.
    The Bank's quarterly financial results are subject to some fluctuation
due to its exposure to property and casualty insurance. Canadian Direct's
operating results, which are primarily reflected in other income (see
information for the insurance segment provided on page 11), are subject to
seasonal weather conditions, cyclical patterns of the industry and natural
catastrophes. Canadian Direct's mandatory participation in the Alberta auto
risk sharing pools (the Pools) can also result in unpredictable quarterly
fluctuations.
    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,
2006 and the individual quarterly reports to shareholders which are available
on SEDAR at www.sedar.com.

    Results by Business Segment

    CWB operates in two business segments: 1) banking and trust, and 2)
insurance. Segmented information is also provided in Note 13 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 wholly owned subsidiaries, Canadian Western Trust Company and
Valiant Trust Company.
    Banking and trust net income of $19.6 million was up 29% over the same
quarter last year reflecting excellent 28% loan growth, strong increases in
credit related and trust services fee income and a stable net interest margin.
Second quarter total revenues (teb) grew 25% over the previous year,
continuing to outpace growth in non-interest expenses of 22%. The Bank's
efficiency ratio (teb), which measures non-interest expense as a percentage of
total revenues, improved 100 basis points over the same quarter one year ago
to 46.2%.
    Banking and trust earnings were down 3% in comparison to the previous
quarter mainly due to three fewer interest-earning days and a 7%
($1.7 million) increase in non-interest expenses, partially offset by 7%
quarterly loan growth. The increase in non-interest expenses reflects
additional staff complement and premises to accommodate business growth. Net
interest income (teb) per day, a calculation that excludes the impact of three
fewer days, increased 6% over the first quarter to $556,000. The combination
of three fewer days and increased non-interest expenses led to a 190 basis
point deterioration in the efficiency ratio (teb). Second quarter net interest
margin was unchanged. Other income was also relatively unchanged from the
previous quarter due to slightly lower credit related and trust services fee
income, offset by higher retail services fee income and gains on the sale of
securities.
    Year-to-date, banking and trust net income of $39.7 million increased 32%
($9.7 million) over the same period in 2006 reflecting 27% growth in average
loans and 21% higher other income, partially offset by a two basis point
decrease in net interest margin. Other income benefited from strong increases
in both credit related and retail fee income of 22% ($2.0 million) and 18%
($0.6 million) respectively. Trust services fee income increased 16% ($0.9
million) to $6.1 million on a comparable year-to-date basis. The slightly
lower year-to-date net interest margin was primarily due to changes in the
deposit mix and a flat interest rate curve, which limits the Bank's ability to
take advantage of different term structures for interest rates.


    
                               For the three months ended             Change
                          --------------------------------------        from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2007         2007         2006         2006
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $    49,523  $    48,148  $    39,260           26%
    Other income               11,175       11,194        9,389           19
    -------------------------------------------------------------------------
    Total revenues (teb)       60,698       59,342       48,649           25
    Provision for credit
     losses                     2,550        2,550        2,550            -
    Non-interest expenses      28,020       26,287       22,982           22
    Provision for income
     taxes (teb)               10,571       10,318        8,008           32
    -------------------------------------------------------------------------
    Net income            $    19,557  $    20,187  $    15,109           29%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)       46.2%        44.3%        47.2%     (100)bp
    Efficiency ratio             47.1         45.1         48.1         (100)
    Net interest margin
     (teb)                       2.65         2.65         2.65            -
    Net interest margin          2.59         2.59         2.58            -
    Average loans
     (millions)           $     6,358  $     5,950  $     4,993           27%
    Average assets
     (millions)                 7,654        7,220        6,086           26
    -------------------------------------------------------------------------


                           For the six months ended      Change
                          --------------------------       from
                             April 30     April 30     April 30
    ($ thousands)                2007         2006         2006
    -------------------------------------------------------------
    Net interest income
     (teb)                $    97,671  $    78,207           25%
    Other income               22,369       18,450           21
    -------------------------------------------------------------
    Total revenues (teb)      120,040       96,657           24
    Provision for credit
     losses                     5,100        5,100            -
    Non-interest expenses      54,307       45,354           20
    Provision for income
     taxes (teb)               20,889       16,148           29
    -------------------------------------------------------------
    Net income            $    39,744  $    30,055           32%
    -------------------------------------------------------------
    Efficiency ratio
     (teb)                       45.2%        46.9%     (170)bp
    Efficiency ratio             46.1         47.8         (170)
    Net interest margin
     (teb)                       2.65         2.67           (2)
    Net interest margin          2.59         2.61           (2)
    Average loans
     (millions)           $     6,154  $     4,856           27%
    Average assets
     (millions)                 7,437        5,908           26
    -------------------------------------------------------------
    bp - basis points.
    teb - taxable equivalent basis, see definition following Financial
          Highlights table.
    

    Insurance
    The insurance segment consists of the operations of CWB's wholly owned
subsidiary Canadian Direct Insurance Incorporated (Canadian Direct), which
provides home and auto insurance to individuals in BC and Alberta.
    Canadian Direct reported record net income of $2.7 million in the second
quarter, a 71% ($1.1 million) increase over the same period last year. Higher
net income primarily reflects a 600 basis point year-over-year improvement in
the quarterly claims loss ratio and 18% growth in net earned premiums,
partially offset by a 200 basis point increase in the expense ratio. The
improvement in the quarterly claims loss ratio over last year primarily
resulted from lower frequency and severity of insurance claims due to improved
weather conditions. The Alberta auto risk sharing pools (the Pools) also
contributed to quarterly results with $0.7 million of before-tax income
reflecting a favourable adjustment to unpaid claims reserves based on revised
estimated loss assumptions derived by the Pools' consulting actuary. Increased
net earned premiums reflect the elimination of quota share reinsurance in
November 2006 as well as continued policy growth and strong customer
retention. Ongoing pricing pressures in BC auto continue to result in a lower
average premium per policy and generally slower growth in new policy sales in
that line of business. Policy growth and customer retention in Alberta auto
and home products have remained strong.
    Net income increased $2.4 million over the previous quarter reflecting a
significant improvement in the claims loss ratio from the first quarter which
was impacted by unprecedented severe weather in BC. Compared to the first
quarter, net income was also aided by an additional $0.5 million of before-tax
income from the Pools. Partially offsetting these gains were increased policy
acquisition costs and three fewer days in the second quarter. Year-to-date,
Canadian Direct's net income of $2.9 million was 4% ($0.1 million) lower than
the first six months of 2006 due to the severe weather-related events noted
above, partially offset by a positive contribution from the Pools.

    
                               For the three months ended             Change
                          --------------------------------------        from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2007         2007         2006         2006
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $     1,044  $     1,061  $       798           31%
    Other income (net)
      Net earned
       premiums                22,626       23,128       19,138           18
      Commissions and
       processing fees            669          606        1,159          (42)
      Net claims and
       adjustment expenses    (13,222)     (18,176)     (12,173)           9
      Policy acquisition
       costs                   (5,024)      (4,356)      (4,519)          11
    -------------------------------------------------------------------------
    Insurance revenue (net)     5,049        1,202        3,605           40
    Gains (losses) on sale
     of securities                 13           47          (41)          nm
    -------------------------------------------------------------------------
    Total revenues (net)
     (teb)                      6,106        2,310        4,362           40
    Non-interest expenses       2,132        1,906        1,960            9
    Provision for income
     taxes (teb)                1,312          133          844           55
    -------------------------------------------------------------------------
    Net income            $     2,662  $       271  $     1,558           71%
    -------------------------------------------------------------------------
    Policies outstanding      162,207      160,435      153,660            6
    Gross written
     premiums             $    26,506  $    21,245  $    25,023            6
    Claims loss ratio(1)           58%          79%          64%     (600)bp
    Expense ratio(2)               29           24           27          200
    Combined ratio(3)              87          103           91         (400)
    Alberta auto risk
     sharing pools
     impact on net
     income before tax    $       672  $       150  $       (86)          nm
    Average cash and
     securities (millions)        101           95           80           26%
    Average total assets
     (millions)                   160          155          140           14
    -------------------------------------------------------------------------


                           For the six months ended      Change
                          --------------------------       from
                             April 30     April 30     April 30
    ($ thousands)                2007         2006         2006
    -------------------------------------------------------------
    Net interest income
     (teb)                $     2,105  $     1,565           35%
    Other income (net)
      Net earned
       premiums                45,754       38,879           18
      Commissions and
       processing fees          1,275        2,238          (43)
      Net claims and
       adjustment expenses    (31,398)     (25,553)          23
      Policy acquisition
       costs                   (9,380)      (8,559)          10
    -------------------------------------------------------------
    Insurance revenue (net)     6,251        7,005          (11)
    Gains (losses) on sale
     of securities                 60           94          (36)
    -------------------------------------------------------------
    Total revenues (net)
     (teb)                      8,416        8,664           (3)
    Non-interest expenses       4,038        3,927            3
    Provision for income
     taxes (teb)                1,445        1,687          (14)
    -------------------------------------------------------------
    Net income            $     2,933  $     3,050          (4)%
    -------------------------------------------------------------
    Policies outstanding      162,207      153,660            6
    Gross written
     premiums             $    47,751  $    44,765            7
    Claims loss ratio(1)           69%          66%       300bp
    Expense ratio(2)               26           26            -
    Combined ratio(3)              95           92          300
    Alberta risk sharing
     pools impact on net
     income before tax    $       822  $      (335)          nm
    Average cash and
     securities (millions)         98           80           23%
    Average total assets
     (millions)                   158          140           13
    -------------------------------------------------------------
    bp - basis points.
    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 2007 Targets

    The performance targets established for the 2007 fiscal year are presented
in the table below together with CWB's actual performance to date.

                                                 2007            2007 YTD
                                                Target        Performance(1)
    -------------------------------------------------------------------------
    Net income growth                             20%              29%
    -------------------------------------------------------------------------
    Total revenue (teb) growth                    15%              22%
    -------------------------------------------------------------------------
    Loan growth                                   14%              28%
    -------------------------------------------------------------------------
    Provision for credit losses as a
     percentage of average loans            0.20% or less         0.17%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)                        46%             45.4%
    -------------------------------------------------------------------------
    Return on equity                              15%             16.1%
    -------------------------------------------------------------------------
    Return on assets                             1.10%            1.13%
    -------------------------------------------------------------------------

    (1) 2007 YTD Performance for earnings and revenue growth is the current
        year results over the same period in the prior year, loan growth is
        the increase over the past twelve months and performance for ratio
        targets is the current year-to-date results annualized.
    

    CWB is currently exceeding all of its annual performance targets and is
well on track to post another year of excellent financial results. Very strong
loan growth through the first six months has already met the Bank's annual
target and will provide a solid boost to earnings and revenues through the
remainder of the year. Western Canada's economic conditions remain strong and
are contributing to an ongoing stream of quality lending opportunities. A
continued focus on high quality asset growth and close monitoring of the
credit environment have the Bank well positioned to effectively manage future
turns in the credit cycle. CWB's more efficient capital structure has
contributed to further improvements in return on equity. These results reflect
the success of management's ongoing strategies to enhance shareholder returns.
    Management will maintain its emphasis on people, infrastructure, process
and business enhancement in shaping CWB's future growth. In support of these
initiatives, the Bank opened a new full service branch in Abbotsford, BC in
the second quarter and continued with improvements and expansions to other
existing infrastructure. Further enhancements were also made to the Bank's
initiative branded "cwbalance", which recognizes and supports employees in
achieving an appropriate work-life balance.
    The economic outlook for Western Canada is positive and should support
continued financial performance and growth within CWB's core lending business.
Strong results are also expected from trust operations and other banking
services. The insurance segment should continue to perform well and management
remains optimistic about future opportunities in this area as distribution
capabilities are further developed and enhanced.
    This management's discussion and analysis is dated June 7, 2007.

    Taxable Equivalent Basis (teb)

    Most financial institutions analyse 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.

    Non-GAAP Measures

    Taxable equivalent basis, return on shareholders' equity, return on
assets, efficiency ratio, net interest margin, tangible common equity to
risk-weighted assets, 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.

    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, fluctuations in interest rates and currency values, changes in
monetary policy, changes in economic and political conditions, legislative and
regulatory developments, the level of competition in the Bank's markets, the
occurrence of weather related and other natural catastrophes, 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. 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. The Bank does not undertake,
unless required by securities law, to update any forward-looking statement,
whether written or verbal, that may be made from time to time by it or on its
behalf.

    
    -------------------------------------------------------------------------
    Consolidated Statement of Income
    -------------------------------------------------------------------------

                                For the three months ended            Change
    (unaudited)           --------------------------------------        from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2007         2007         2006         2007
    -------------------------------------------------------------------------
    Interest Income
      Loans               $   102,932  $    99,143       76,436          35%
      Securities               10,128       10,054        6,920           46
      Deposits with
       regulated financial
       institutions             2,999        3,055        2,386           26
    -------------------------------------------------------------------------
                              116,059      112,252       85,742           35
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 62,842       61,318       43,859           43
      Subordinated
       debentures               3,977        2,889        2,798           42
    -------------------------------------------------------------------------
                               66,819       64,207       46,657           43
    -------------------------------------------------------------------------
    Net Interest Income        49,240       48,045       39,085           26
    Provision for Credit
     Losses                     2,550        2,550        2,550            -
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             46,690       45,495       36,535           28
    -------------------------------------------------------------------------
    Other Income
      Credit related            5,513        5,687        4,595           20
      Insurance, net
       (Note 3)                 5,049        1,202        3,605           40
      Trust services            2,896        3,182        2,685            8
      Retail services           1,871        1,756        1,517           23
      Gains (losses) on
       sale of securities         302          119           44          586
      Foreign exchange gains      475          488          472            1
      Other                       131            9           35          274
    -------------------------------------------------------------------------
                               16,237       12,443       12,953           25
    -------------------------------------------------------------------------
    Net Interest and
     Other Income              62,927       57,938       49,488           27
    -------------------------------------------------------------------------
    Non-interest Expenses
      Salaries and employee
       benefits                19,054       17,991       15,880           20
      Premises and equipment    5,071        4,614        4,326           17
      Other expenses            5,276        5,109        4,278           23
      Provincial capital
       taxes                      751          479          458           64
    -------------------------------------------------------------------------
                               30,152       28,193       24,942           21
    -------------------------------------------------------------------------
    Net Income Before
     Provision for
     Income Taxes              32,775       29,745       24,546           34
    Provision for Income
     Taxes                     10,556        9,287        7,879           34
    -------------------------------------------------------------------------
    Net Income            $    22,219  $    20,458  $    16,667          33%
    -------------------------------------------------------------------------

    Weighted average
     common shares
     outstanding(1)        62,249,126   62,059,180   61,420,778           1%

    Earnings per Common
     Share
      Basic               $      0.36  $      0.33  $      0.27          33%
      Diluted                    0.35         0.32         0.26           35
    -------------------------------------------------------------------------


                           For the six months ended      Change
    (unaudited)           -------------------------        from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2006         2006         2006
    ------------------------------------------------------------
    Interest Income Loans $   202,075  $   148,555          36%
      Securities               20,182       13,257           52
      Deposits with
       regulated financial
       institutions             6,054        4,441           36
    ------------------------------------------------------------
                              228,311      166,253           37
    ------------------------------------------------------------
    Interest Expense
     Deposits                 124,160       82,853           50
      Subordinated
       debentures               6,866        5,473           25
    ------------------------------------------------------------
                              131,026       88,326           48
    ------------------------------------------------------------
    Net Interest Income        97,285       77,927           25
    Provision for Credit
     Losses                     5,100        5,100            -
    ------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             92,185       72,827           27
    ------------------------------------------------------------
    Other Income
      Credit related           11,200        9,159           22
      Insurance, net (Note 3)   6,251        7,005          (11)
      Trust services            6,078        5,219           16
      Retail services           3,627        3,061           18
      Gains (losses) on sale
       of securities              421          149          183
      Foreign exchange gains      963          889            8
      Other                       140           67          109
    ------------------------------------------------------------
                               28,680       25,549           12
    ------------------------------------------------------------
    Net Interest and
     Other Income             120,865       98,376           23
    ------------------------------------------------------------
    Non-interest Expenses
      Salaries and employee
       benefits                37,045       31,336           18
      Premises and equipment    9,685        8,493           14
      Other expenses           10,385        8,525           22
      Provincial capital
       taxes                    1,230          927           33
    ------------------------------------------------------------
                               58,345       49,281           18
    ------------------------------------------------------------
    Net Income Before
     Provision for Income
      Taxes                    62,520       49,095           27
    Provision for Income
     Taxes                     19,843       15,990           24
    ------------------------------------------------------------
    Net Income            $    42,677  $    33,105          29%
    ------------------------------------------------------------

    Weighted average
     common shares
     outstanding(1)        62,152,579   61,335,016           1%

    Earnings per Common
     Share
      Basic               $      0.69  $      0.54          28%
      Diluted                    0.67         0.52           29
    ------------------------------------------------------------

    (1) A stock dividend effecting a two-for-one split of the
        Bank's common shares was declared and paid during the
        first quarter of 2007. All prior period common share and
        per common share information have been restated to
        reflect this effective split.

    nm - not meaningful.

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



    -------------------------------------------------------------------------
    Consolidated Balance Sheet
    -------------------------------------------------------------------------

                                                                      Change
                           As at      As at      As at      As at       from
    (unaudited)         April 30 January 31 October 31   April 30   April 30
    ($ thousands)           2007       2007       2006       2006       2006
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and
       non-interest
       bearing
       deposits with
       financial
       institutions   $   68,447 $    3,667 $   86,904 $   28,545       140%
      Interest
       bearing
       deposits with
       regulated
       financial
       institutions      234,647    288,428    350,601    299,275        (22)
      Cheques and other
       items in transit    1,446     27,262        789      9,623        (85)
    -------------------------------------------------------------------------
                         304,540    319,357    438,294    337,443        (10)
    -------------------------------------------------------------------------
    Securities (Note 4)
      Issued or
       guaranteed
       by Canada         319,668    315,110    334,379    382,542        (16)
      Issued or
       guaranteed by
       a province or
       municipality      237,286    197,122    168,839    112,277        111
      Other securities   439,532    432,592    382,475    318,166         38
    -------------------------------------------------------------------------
                         996,486    944,824    885,693    812,985         23
    -------------------------------------------------------------------------
    Securities
     Purchased Under
     Resale Agreements         -          -      9,000     42,908       (100)
    -------------------------------------------------------------------------
    Loans
      Residential
       mortgages       1,606,465  1,485,744  1,314,988  1,120,121         43
      Other loans      5,019,446  4,724,739  4,520,370  4,070,515         23
    -------------------------------------------------------------------------
                       6,625,911  6,210,483  5,835,358  5,190,636         28
      Allowance for
       credit losses
       (Note 5)          (58,313)   (56,034)   (53,521)   (46,581)        25
    -------------------------------------------------------------------------
                       6,567,598  6,154,449  5,781,837  5,144,055         28
    -------------------------------------------------------------------------
    Other
      Land, buildings
       and equipment      23,898     23,182     24,198     21,171         13
      Goodwill             6,933      6,933      6,933      6,933          -
      Intangible assets    2,952      3,088      3,224      3,495        (16)
      Insurance related   52,879     52,651     57,136     54,127         (2)
      Derivative related
       (Note 6)              331      1,263          -          -         nm
      Other assets        65,925     59,616     62,045     52,642         25
    -------------------------------------------------------------------------
                         152,918    146,733    153,536    138,368         11
    -------------------------------------------------------------------------
    Total Assets      $8,021,542 $7,565,363 $7,268,360 $6,475,759        24%
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders'
     Equity
    Deposits
      Payable on
       demand         $  389,179 $  351,579 $  391,252 $  334,765        16%
      Payable after
       notice          1,480,037  1,420,850  1,262,270  1,150,485         29
      Payable on a
       fixed date      4,824,267  4,689,223  4,538,485  4,077,356         18
      Deposit from
       Canadian
       Western Bank
       Capital Trust     105,000    105,000    105,000          -         nm
    -------------------------------------------------------------------------
                       6,798,483  6,566,652  6,297,007  5,562,606         22
    -------------------------------------------------------------------------
    Other
      Cheques and
       other items
       in transit         32,832     40,077     27,474     44,610        (26)
      Insurance related  120,537    118,012    120,936    106,046         14
      Derivative
       related (Note 6)    1,532      2,898          -          -         nm
      Securities
       purchased under
       reverse resale
       agreements         19,643          -          -          -         nm
      Other liabilities  105,685    105,370    105,287     78,680         34
    -------------------------------------------------------------------------
                         280,229    266,357    253,697    229,336         22
    -------------------------------------------------------------------------
    Subordinated
     Debentures
      Conventional
       (Note 7)          393,126    198,126    198,126    198,126         98
    -------------------------------------------------------------------------
    Shareholders'
     Equity
      Retained earnings  330,407    313,169    297,841    266,964         24
      Accumulated other
       comprehensive
       income (loss)
       (Note 9)           (5,482)    (2,247)         -          -         nm
      Capital stock      216,579    216,158    215,349    213,982          1
      Contributed
       surplus             8,200      7,148      6,340      4,745         73
    -------------------------------------------------------------------------
                         549,704    534,228    519,530    485,691         13
    -------------------------------------------------------------------------
    Total Liabilities
     and Shareholders'
     Equity           $8,021,542 $7,565,363 $7,268,360 $6,475,759        24%
    -------------------------------------------------------------------------

    nm - not meaningful.

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



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

                                                    For the six months ended
                                                    -------------------------
    (unaudited)                                        April 30     April 30
    ($ thousands)                                          2007         2006
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period                  $   297,841  $   241,221
      Transition adjustment on adoption of new
       accounting standards (Note 2)                       (166)           -
      Net income                                         42,677       33,105
      Dividends                                          (9,945)      (7,362)
    -------------------------------------------------------------------------
    Balance at end of period                            330,407      266,964
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income (Loss)
     (Note 9)
    Balance at beginning of period                            -            -
      Transition adjustment of adoption of new
       accounting standards (Note 2)                     (1,494)           -
      Other comprehensive income (loss) for
       the period                                        (3,988)           -
    -------------------------------------------------------------------------
    Balance at end of period                             (5,482)           -
    -------------------------------------------------------------------------
    Total retained earnings and accumulated
     other comprehensive income                         324,925      266,964
    -------------------------------------------------------------------------
    Capital Stock
    Balance at beginning of period (Note 8)             215,349      213,098
      Issued on exercise of employee stock options          804          768
      Transferred from contributed surplus on
       exercise or exchange of options                      426          116
    -------------------------------------------------------------------------
    Balance at end of period                            216,579      213,982
    -------------------------------------------------------------------------
    Contributed Surplus (Note 8)
    Balance at beginning of period                        6,340        3,671
      Amortization of fair value of employee
       stock options                                      2,286        1,190
      Transferred to capital stock on exercise or
       exchange of options                                 (426)        (116)
    -------------------------------------------------------------------------
    Balance at end of period                              8,200        4,745
    -------------------------------------------------------------------------
    Total Shareholders' Equity                      $   549,704  $   485,691
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Consolidated Statement of Comprehensive Income
    -------------------------------------------------------------------------

                                          For the three months   For the six
                                                 ended                months
                                       -------------------------       ended
    (unaudited)                           April 30   January 31     April 30
    ($thousands)                              2007         2007         2007
    -------------------------------------------------------------------------
    Net Income                         $    22,219  $    20,458  $    42,677
    Other Comprehensive Income (Loss),
     net of tax
      Available-for-sale securities
        Losses from change in fair value    (3,648)      (1,104)      (4,752)
        Reclassification to earnings for
         gain on sale of securities            204           79          283
    -------------------------------------------------------------------------
                                            (3,444)      (1,025)      (4,469)
    -------------------------------------------------------------------------
      Derivatives designated as cash
       flow hedges
        Losses from change in fair value      (111)        (275)        (386)
        Reclassification to net interest
         income                                320          547          867
    -------------------------------------------------------------------------
                                               209          272          481
    -------------------------------------------------------------------------
                                            (3,235)        (753)      (3,988)
    -------------------------------------------------------------------------
    Comprehensive Income for
     the Period                        $    18,984  $    19,705  $    38,689
    -------------------------------------------------------------------------

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



    -------------------------------------------------------------------------
    Consolidated Statement of Cash Flow
    -------------------------------------------------------------------------

                             For the three months        For the six months
                                     ended                     ended
                          ------------------------- -------------------------
    (unaudited)              April 30     April 30     April 30     April 30
    ($ thousands)                2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash Flows from
     Operating Activities
      Net income          $    22,219  $    16,667  $    42,677  $    33,105
      Adjustments to
       determine net cash
       flows
        Provision for
         credit losses          2,550        2,550        5,100        5,100
        Depreciation and
         amortization           1,403        1,303        2,827        2,585
        Future income
         taxes, net               609         (754)         218         (818)
        Gain on sale of
         securities, net         (302)         (44)        (421)        (149)
        Accrued interest
         receivable and
         payable, net           2,537        2,222        4,860        7,368
        Current income
         taxes payable, net     1,952          451         (683)     (11,653)
        Other items, net       (6,692)       8,501       (7,632)       7,854
    -------------------------------------------------------------------------
                               24,276       30,896       46,946       43,392
    -------------------------------------------------------------------------
    Cash Flows from
     Financing Activities
      Deposits, net           231,185      406,889      507,516      649,299
      Debentures issued       195,000            -      195,000       70,000
      Common shares issued        267          325          804          768
      Dividends                (4,981)      (3,688)      (9,945)      (7,362)
    -------------------------------------------------------------------------
                              421,471      403,526      693,375      712,705
    -------------------------------------------------------------------------
    Cash Flows from
     Investing Activities
      Interest bearing
       deposits with
       regulated financial
       institutions, net       53,624      (58,259)     115,322      (86,701)
      Securities, purchased  (596,328)    (457,360)  (1,142,479)    (989,688)
      Securities, sale
       proceeds               293,144      116,707      430,067      471,956
      Securities, matured     248,061      242,219      598,084      407,073
      Securities purchased
       under resale
       agreements, net         19,643      (42,908)      28,643       (5,968)
      Loans, net             (415,699)    (233,605)    (790,861)    (558,892)
      Land, buildings
       and equipment           (1,983)      (1,493)      (2,255)      (3,909)
    -------------------------------------------------------------------------
                             (399,538)    (434,699)    (763,479)    (766,129)
    -------------------------------------------------------------------------
    Change in Cash and
     Cash Equivalents          46,209         (277)     (23,158)     (10,032)
    Cash and Cash
     Equivalents at
     Beginning of Period       (9,148)      (6,165)      60,219        3,590
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period(*)         $    37,061  $    (6,442) $    37,061  $    (6,442)
    -------------------------------------------------------------------------
    (*) Represented by:
        Cash and
         non-interest
         bearing deposits
         with financial
         institutions     $    68,447  $    28,545  $    68,447  $    28,545
        Cheques and other
         items in transit
         (included in
         Cash Resources)        1,446        9,623        1,446        9,623
        Cheques and other
         items in transit
         (included in
         Other Liabilities)   (32,832)     (44,610)     (32,832)     (44,610)
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period            $    37,061  $    (6,442) $    37,061  $    (6,442)
    -------------------------------------------------------------------------

    Supplemental
     Disclosure of Cash
     Flow Information
      Amount of interest
       paid in the period $    65,465  $    43,361  $   124,640  $    78,785
      Amount of income
       taxes paid in the
       period                   7,995        8,181       20,308       28,460
    -------------------------------------------------------------------------

    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.  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
        Superintendent of Financial Institutions Canada (OSFI), using the
        same accounting policies as the audited consolidated financial
        statements for the year ended October 31, 2006, except as described
        in Note 2. 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, 2006 as set out on pages 46 to 70 of the
        Bank's 2006 Annual Report.

    2.  Change in Accounting Policies - Financial Instruments

        Effective November 1, 2006, the Bank adopted new accounting standards
        issued by the Canadian Institute of Chartered Accountants (CICA):
        Financial Instruments - Recognition and Measurement, Hedges,
        Comprehensive Income and Financial Instruments - Disclosure and
        Presentation. As a result of adopting these standards, a new
        category, accumulated other comprehensive income (loss), has been
        added to shareholders' equity and certain unrealized gains and losses
        are reported in accumulated other comprehensive income (loss) until
        realization.

        As a result of adopting these new accounting standards, certain
        financial assets and liabilities are measured at fair value with the
        remainder recorded at amortized cost. The adjustment of the previous
        carrying amounts to comply with the new standards has been recognized
        as an adjustment to either accumulated other comprehensive income
        (loss) or retained earnings at November 1, 2006 and prior period
        consolidated financial statements have not been restated. The
        significant components of the Bank's implementation of the standards
        include:

        a) Cash resources, securities, securities purchased under resale
           agreements and securities purchased under reverse resale
           agreements have been designated as available-for-sale and are
           reported on the balance sheet at fair value with changes in fair
           value reported in other comprehensive income, net of income taxes.
        b) Derivative financial instruments are recorded on the balance sheet
           at fair value as either other assets or other liabilities with
           changes in fair value related to the effective portion of cash
           flow interest rate hedges recorded in other comprehensive income,
           net of income taxes. Changes in fair value related to the
           ineffective portion of cash flow hedges or other derivative
           financial instruments are reported in other income on the
           consolidated statement of income. Specific accounting policies
           under the new standards relating to equity contracts that no
           longer qualify for hedge accounting and embedded derivatives are
           further described in Note 6.
        c) Loans, deposits and subordinated debentures continue to be
           recorded at amortized cost using the effective interest method.

        The fair value of a financial instrument on initial recognition is
        normally the transaction price i.e. the value of the consideration
        given or received. Subsequent to initial recognition, financial
        instruments measured at fair value that are quoted in active markets
        are based on bid prices for financial assets and offer prices for
        financial liabilities. For derivative financial instruments where an
        active market does not exist, fair values are determined using
        valuation techniques that refer to observable market data including
        discounted cash flow analysis, option pricing models and other
        valuation techniques commonly used by market participants.

        Transition adjustments recorded at November 1, 2006 include:
                                                         Income
                                             Gross        Taxes          Net
        ---------------------------------------------------------------------
        Retained Earnings
          Fair value of equity
           derivative contracts no
           longer designated as hedges $       593  $      (195) $       398
          Cumulative amortization of
           loan portfolio premium
           using the effective
           interest method                    (271)          89         (182)
          Fair value of other
           derivatives not designated
           as hedges                          (563)         185         (378)
          Ineffective portion of fair
           value of cash flow hedges            (6)           2           (4)
        ---------------------------------------------------------------------
                                       $      (247) $        81  $      (166)
        ---------------------------------------------------------------------
        Accumulated Other Comprehensive
         Income (Loss)
          Available-for-sale securities,
           unrealized gains (losses)   $      (589) $       193  $      (396)
          Effective portion of fair
           value of cash flow hedges,
           unrealized gains (losses)        (1,632)         534       (1,098)
        ---------------------------------------------------------------------
                                       $    (2,221) $       727  $    (1,494)
        ---------------------------------------------------------------------


    3.  Insurance Income

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

                                                         For the six months
                         For the three months ended             ended
                      -------------------------------------------------------
                        April 30 January 31   April 30   April 30   April 30
                            2007       2007       2006       2007       2006
        ---------------------------------------------------------------------
        Net earned
         premiums     $   22,626 $   23,128 $   19,138 $   45,754 $   38,879
        Commissions
         and processing
         fees                669        606      1,159      1,275      2,238
        Net claims and
         adjustment
         expenses        (13,222)   (18,176)   (12,173)   (31,398)   (25,553)
        Policy
         acquisition
         costs            (5,024)    (4,356)    (4,519)    (9,380)    (8,559)
        ---------------------------------------------------------------------
        Total, net    $    5,049 $    1,202 $    3,605 $    6,251 $    7,005
        ---------------------------------------------------------------------


    4.  Securities

        Securities are accounted for at settlement date. Net unrealized gains
        (losses) reflected on the balance sheet, as required by the change in
        accounting policies described in Note 2, follow:

                                                                  Transition
                                                                  Adjustment
                                               As at       As at          at
                                            April 30  January 31  November 1
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Interest bearing deposits with
         regulated financial institutions $     (632) $     (500) $     (293)
        Securities
          Issued or guaranteed by Canada        (622)       (471)       (264)
          Issued or guaranteed by a
           province or municipality             (234)       (232)       (145)
        Other securities                      (5,754)       (913)        113
        ---------------------------------------------------------------------
        Unrealized losses, net            $   (7,242) $   (2,116) $     (589)
        ---------------------------------------------------------------------


    5.  Allowance for Credit Losses

                      For the three months ended    For the six months ended
    -------------------------------------------------------------------------
                    April 30  January 31    April 30    April 30    April 30
                        2007        2007        2006       2007        2006
    -------------------------------------------------------------------------
    Balance at
     beginning
     of period    $   56,034  $   53,521  $   44,670  $   53,521  $   42,520
    Provision for
     credit losses     2,550       2,550       2,550       5,100       5,100
    Write-offs          (298)        (74)       (673)       (372)     (1,097)
    Recoveries            27          37          34          64          58
    -------------------------------------------------------------------------
    Balance at end
     of period    $   58,313  $   56,034  $   46,581  $   58,313  $   46,581
    -------------------------------------------------------------------------



                                               As at       As at       As at
                                            April 30  January 31    April 30
                                                2007        2007        2006
    -------------------------------------------------------------------------
    Specific
     allowance                            $    4,878  $    5,085  $    5,728
    General
     allowance                                53,435      50,949      40,853
    -------------------------------------------------------------------------
    Total allowance                       $   58,313  $   56,034  $   46,581
    -------------------------------------------------------------------------


    6.  Derivative Financial Instruments

        The Bank designates certain derivative financial instruments as
        either a hedge of the fair value of recognized assets or liabilities
        or firm commitments (fair value hedges), or a hedge of highly
        probable future cash flows attributable to a recognized asset or
        liability or a forecasted transaction (cash flow hedges). The Bank
        has designated all interest rate swaps as cash flow hedges. Under the
        new accounting requirements for hedges (refer Note 2), the Bank's
        equity contracts no longer qualify for hedge accounting.

        Certain derivatives embedded in other financial instruments, such as
        the return on fixed term deposits that are linked to a stock index,
        are treated as separate derivatives when their economic
        characteristics and risks are not closely related to those of the
        host contract and the combined contract is not carried at fair value.
        Embedded derivatives entered into after November 1, 2002 have been
        separated from the host contract and are recorded at fair value.

        Hedge accounting is used for designated derivatives provided certain
        criteria are met. Derivatives that qualify for hedge accounting are
        accounted for at fair value with changes in fair value for the
        effective portion of the hedge reported in other comprehensive
        income. Changes in fair value for the ineffective portion of the
        hedges are reported in other income on the consolidated statement
        of income.

        The change in fair value related to derivatives that are not
        designated as hedges is reported in other income on the consolidated
        statement of income.

        For the quarter ended April 30, 2007, a net unrealized gain of $209
        ($481 for the six months) was recorded in other comprehensive income
        for changes in fair value of the effective portion of derivatives
        designated as cash flow hedges and $nil ($nil for the six months) 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. A net loss of $472
        before tax for the quarter ($1,291 for the six months) was
        reclassified to net income. A net loss of $743 before tax recorded in
        accumulated other comprehensive income (loss) as at April 30, 2007 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 April 30, 2007      As at January 31, 2007
                       ------------------------------------------------------
                                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)    $427,500 $     21 $    943 $446,500 $    955 $  2,182
    Equity
     contracts(2)         6,000      239       36    9,570      308       28
    Foreign exchange
     contracts(3)        30,296       71        -   20,885        -       70
    Embedded
     derivatives in
     equity-linked
     deposits(2)            n/a        -      553      n/a        -      618
    Other forecasted
     transactions             -      n/a      n/a        -      n/a      n/a
    -------------------------------------------------------------------------
    Derivative related
     amounts                    $    331 $  1,532          $  1,263 $  2,898
    -------------------------------------------------------------------------

        (1) Interest rate swaps mature between May 2007 and October 2011.
        (2) Equity contracts and equity-linked deposits mature between
            February 2008 and March 2011.
        (3) Foreign exchange contracts mature between May and August 2007.

        n/a - not applicable.

        There were no forecasted transactions that failed to occur during the
        quarter.


    7.  Subordinated Debentures

        On March 22, 2007, the Bank issued $200,000 of conventional
        subordinated debentures consisting of $125,000 of Series A Debentures
        and $75,000 of Series B Debentures. The Series A Debentures have a
        fixed interest rate of 5.070% until March 21, 2012. Thereafter, the
        rate will be fixed quarterly at the Canadian dollar CDOR 90-day
        Bankers' Acceptance rate plus 155 basis points until maturity on
        March 21, 2017. Of the Series A Debentures issued, $5,000 were
        acquired by Canadian Direct Insurance Incorporated, a wholly owned
        subsidiary, and have been eliminated on consolidation. The Series B
        Debentures have a fixed interest rate of 5.571% until March 21, 2017.
        Thereafter, the rate will be fixed quarterly at the Canadian dollar
        CDOR 90-day Bankers Acceptance rate plus 180 basis points until
        maturity on March 21, 2022. The Bank may redeem the Series A
        Debentures on or after March 22, 2012 and the Series B Debentures on
        or after March 22, 2017 with the approval of OSFI.

    8.  Capital Stock and Share Incentive Plan

        Capital Stock
                                        For the three months ended
                              -----------------------------------------------
                                  April 30, 2007          April 30, 2006
    -------------------------------------------------------------------------
                               Number of               Number of
                                  Shares      Amount      Shares    Amount
    -------------------------------------------------------------------------
    Common Shares
      Outstanding at beginning
       of period              62,168,246  $  216,158  61,323,106  $  213,606
      Issued on exercise or
       exchange of options       126,812         267     204,890         325
      Transferred from
       contributed surplus
       on exercise or
       exchange of options             -         154           -          51
    -------------------------------------------------------------------------
    Outstanding at
     end of period            62,295,058  $  216,579  61,527,996  $  213,982
    -------------------------------------------------------------------------



                                         For the six months ended
                              -----------------------------------------------
                                  April 30, 2007          April 30, 2006
    -------------------------------------------------------------------------
                               Number of               Number of
                                  Shares      Amount      Shares    Amount
    -------------------------------------------------------------------------
    Common Shares
      Outstanding at beginning
       of period              61,936,260  $  215,349  61,227,268  $  213,098
      Issued on exercise or
       exchange of options       358,798         804     300,728         768
      Transferred from
       contributed surplus
       on exercise or
       exchange of options             -         426           -         116
    -------------------------------------------------------------------------
    Outstanding at
     end of period            62,295,058  $  216,579  61,527,996  $  213,982
    -------------------------------------------------------------------------



    Employee Stock Options
                                       For the three months ended
                              -----------------------------------------------
                                   April 30, 2007          April 30, 2006
    -------------------------------------------------------------------------
                                            Weighted                Weighted
                                             Average                 Average
                               Number of    Exercise   Number of    Exercise
                                 Options       Price     Options       Price
    -------------------------------------------------------------------------
    Options
      Balance at beginning
       of period               5,459,000  $    14.97   4,707,744  $     9.93
      Granted                      9,500       24.72      13,000       19.67
      Exercised or exchanged    (163,000)       7.18    (262,104)       5.75
      Forfeited                  (28,500)      20.98     (11,500)      11.43
    -------------------------------------------------------------------------
    Balance at end of period   5,277,000  $    15.20   4,447,140  $    10.21
    -------------------------------------------------------------------------



                                         For the six months ended
                              -----------------------------------------------
                                   April 30, 2007          April 30, 2006
    -------------------------------------------------------------------------
                                            Weighted                Weighted
                                             Average                 Average
                               Number of    Exercise   Number of    Exercise
                                 Options       Price     Options       Price
    -------------------------------------------------------------------------
    Options
      Balance at beginning
       of period               5,030,040  $    13.07   4,780,024  $     9.78
      Granted                    743,100       25.01      61,000       17.96
      Exercised or exchanged    (448,140)       7.04    (368,384)       5.83
      Forfeited                  (48,000)      20.11     (25,500)      11.89
    -------------------------------------------------------------------------
    Balance at end of period   5,277,000  $    15.20   4,447,140  $    10.21
    -------------------------------------------------------------------------
    Exercisable at
     end of period               932,800  $     7.19     888,340  $     5.39
    -------------------------------------------------------------------------


        A stock dividend effecting a two-for-one split of the Bank's common
        shares was declared and paid during the first quarter of 2007. All
        prior period common share and per common share information have been
        restated to reflect this effective split.

        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 448,140
        options (2006 - 368,384) exercised or exchanged in the six months
        ended April 30, 2007, option holders exchanged the rights to 328,040
        options (2006 - 244,984) and received 238,196 shares (2006 - 177,328)
        in return under the cashless settlement alternative.

        In the six months ended April 30, 2007, salary expense of $2,286
        (2006 - $1,190) was recognized relating to the estimated fair value
        of options granted since November 1, 2002. 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
        3.9% (2006 - 4.0%), (ii) expected option life of 4.0 years (2006 -
        4.0 years), (iii) expected volatility of 19% (2006 - 19%), and (iv)
        expected dividends of 1.3% (2006 - 1.3%). The weighted average fair
        value of options granted was estimated at $4.34 (2006 - $3.35) per
        share.

        During the second quarter, 1,000,000 additional options (including
        664,400 granted in the first quarter of 2007 and 320,000 granted in
        2006) received shareholder and TSX approval.

    9.  Accumulated Other Comprehensive Income (Loss)

        Accumulated other comprehensive income (loss) includes the after tax
        change in unrealized gains and losses on available-for-sale
        securities and cash flow hedging activities.

                                                                 For the six
                                                                months ended
                                                                    April 30
                                                                        2007
    -------------------------------------------------------------------------
    Available-for-sale securities
      Transition adjustment on adoption of new
       accounting standards, net                         (Note 2) $     (396)
      Losses from change in fair value,
       net of income taxes of $2,322                                  (4,752)
      Reclassification to earnings for gain on
       sale of securities, net of income taxes of $138                   283
    -------------------------------------------------------------------------
    Balance at end of period                                          (4,865)
    -------------------------------------------------------------------------
    Derivatives designated as cash flow hedges
      Transition adjustment on adoption of
       new accounting standards, net                     (Note 2)     (1,098)
      Losses from change in fair value,
       net of income taxes of $188                                      (386)
      Reclassification to net interest income,
       net of income taxes of $424                                       867
    -------------------------------------------------------------------------
    Balance at end of period                                            (617)
    -------------------------------------------------------------------------
    Total accumulated other comprehensive income (loss)           $   (5,482)
    -------------------------------------------------------------------------


    10. Contingent Liabilities and Commitments

        Significant contingent liabilities and commitments, including
        guarantees provided to third parties, are discussed in Note 21 of the
        Bank's audited consolidated financial statements for the year ended
        October 31, 2006 (see pages 63 to 64 of the 2006 Annual Report) and
        include:

                                               As at       As at       As at
                                            April 30  January 31    April 30
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Guarantees and standby
         letters of credit
          Balance outstanding             $  158,317  $  147,698  $  136,550
        Business credit cards
          Total approved limit                 8,310       7,646       5,855
          Balance outstanding                  1,878       1,701       1,208
        ---------------------------------------------------------------------

        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.

    11. Trust Assets Under Administration

        Trust assets under administration represent assets held for personal
        and corporate trust clients, administered by subsidiaries, and are
        kept separate from the subsidiaries' own assets. Trust assets under
        administration are not reflected in the consolidated balance sheet
        and relate to the banking and trust segment.


                                               As at       As at       As at
                                            April 30  January 31    April 30
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Trust assets under administration $3,874,228  $3,553,590  $3,105,873
        ---------------------------------------------------------------------

    12. 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 24 of the audited consolidated
        financial statements for the year ended October 31, 2006 (see page 65
        of the 2006 Annual Report). The following table shows the gap
        position for selected time intervals.

                                         Floating
                                          Rate or          3 Months    Total
                                           Within   1 to 3     to 1   Within
    ($ millions)                          1 Month   Months     Year   1 Year
    -------------------------------------------------------------------------
    April 30, 2007
    Total assets                          $ 3,400  $   475  $ 1,655  $ 5,530
    Total liabilities and equity            3,456      538    1,406    5,400
    -------------------------------------------------------------------------
    Interest rate sensitive gap           $   (56) $   (63) $   249  $   130
    -------------------------------------------------------------------------
    Cumulative gap                        $   (56)    (119) $   130  $   130
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets             (0.7%)   (1.4%)    1.5%     1.5%
    -------------------------------------------------------------------------

    January 31, 2007
    Cumulative gap                        $  (100) $  (244) $ (100)  $  (100)
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets             (1.2%)   (3.0%)  (1.2%)    (1.2%)
    -------------------------------------------------------------------------

    April 30, 2006
    Cumulative gap                        $  (119) $   (60) $  (64)  $   (64)
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets             (1.7%)   (0.8%)  (0.9%)    (0.9%)
    -------------------------------------------------------------------------


                                           1 Year              Non-
                                             to 5   Over 5 interest
    ($ millions)                            Years    Years Sensitive Total(1)
    -------------------------------------------------------------------------
    April 30, 2007
    Total assets                          $ 2,596  $   165  $   164  $ 8,455
    Total liabilities and equity            2,129      193      733    8,455
    -------------------------------------------------------------------------
    Interest rate sensitive gap           $   467  $   (28) $  (569) $     -
    -------------------------------------------------------------------------
    Cumulative gap                        $   597  $   569  $     -  $     -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets              7.1%     6.7%       -%       -%
    -------------------------------------------------------------------------

    January 31, 2007
    Cumulative gap                        $   542  $   596  $     -  $     -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets              6.8%     7.4%       -%       -%
    -------------------------------------------------------------------------

    April 30, 2006
    Cumulative gap                        $   351  $   520  $     -  $     -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets              4.9%     7.2%       -%       -%
    -------------------------------------------------------------------------

        (1) Totals include interest sensitive derivative financial
            instruments at the notional amount.

    13. 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 services primarily to personal clients and
        small to medium-sized commercial business clients 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
                  -----------------------------------------------------------
                  April 30 January 31 April 30  April 30 January 31 April 30
                      2007      2007     2006       2007      2007      2006
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $ 49,523  $ 48,148  $ 39,260  $  1,044  $  1,061  $    798
    Less teb
     adjustment      1,231     1,085       914        96        79        59
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements     48,292    47,063    38,346       948       982       739
    Other income(2) 11,175    11,194     9,389     5,062     1,249     3,564
    -------------------------------------------------------------------------
    Total
     revenues       59,467    58,257    47,735     6,010     2,231     4,303
    Provision for
     credit losses   2,550     2,550     2,550         -         -         -
    Non-interest
     expenses       28,020    26,287    22,982     2,132     1,906     1,960
    Provision for
     income taxes    9,340     9,233     7,094     1,216        54       785
    -------------------------------------------------------------------------
    Net income    $ 19,557  $ 20,187  $ 15,109  $  2,662  $    271  $  1,558
    -------------------------------------------------------------------------
    Total average
     assets
     ($ mill-
     ions)(3)     $  7,654  $  7,220  $  6,086  $    160  $    155  $    140
    -------------------------------------------------------------------------



                                                            Total
                                                -----------------------------
                                                     Three months ended
                                                -----------------------------
                                                April 30 January 31 April 30
                                                    2007      2007      2006
    -------------------------------------------------------------------------
    Net interest income (teb)(1)                $ 50,567  $ 49,209  $ 40,058
    Less teb adjustment                            1,327     1,164       973
    -------------------------------------------------------------------------
    Net interest income per
     financial statements                         49,240    48,045    39,085
    Other income                                  16,237    12,443    12,953
    -------------------------------------------------------------------------
    Total revenues                                65,477    60,488    52,038
    Provision for credit losses                    2,550     2,550     2,550
    Non-interest expenses                         30,152    28,193    24,942
    Provision for income taxes                    10,556     9,287     7,879
    -------------------------------------------------------------------------
    Net income                                  $ 22,219  $ 20,458  $ 16,667
    -------------------------------------------------------------------------
    Total average assets ($ millions)(3)        $  7,814  $  7,375  $  6,226
    -------------------------------------------------------------------------



                   Banking and Trust       Insurance             Total
                  -----------------------------------------------------------
                   Six months ended    Six months ended    Six months ended
                  -----------------------------------------------------------
                  April 30  April 30  April 30  April 30  April 30  April 30
                      2007      2006      2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $ 97,671  $ 78,207  $  2,105  $  1,565  $ 99,776  $ 79,772
    Less teb
     adjustment      2,316     1,751       175        94     2,491     1,845
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements     95,355    76,456     1,930     1,471    97,285    77,927
    Other income(2) 22,369    18,450     6,311     7,099    28,680    25,549
    -------------------------------------------------------------------------
    Total
     revenues      117,724    94,906     8,241     8,570   125,965   103,476
    Provision for
     credit losses   5,100     5,100         -         -     5,100     5,100
    Non-interest
     expenses       54,307    45,354     4,038     3,927    58,345    49,281
    Provision for
     income taxes   18,573    14,397     1,270    1,593     19,843    15,990
    -------------------------------------------------------------------------
    Net income    $ 39,744  $ 30,005  $  2,933  $ 3,050  $  42,677  $ 33,105
    -------------------------------------------------------------------------
    Total average
     assets
     ($ mill-
     ions)(3)     $  7,437  $  5,908  $    158  $   140  $   7,595  $  6,048
    -------------------------------------------------------------------------

        (1) Taxable Equivalent Basis (teb) - Most financial institutions
            analyse 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.

    14. Comparative Figures

        The October 31, 2006 balance sheet was adjusted in the first quarter
        of 2007 to correct the classification of certain amounts within
        deposit liabilities. As a result of this correction, deposits payable
        after notice increased $45,582 and deposits payable on demand
        decreased $45,582.

        Certain other comparative figures have been reclassified to conform
        to the current period's presentation.

    15. Future Accounting Changes

        International Financial Reporting Standards

        The CICA plans to converge Canadian GAAP for public companies with
        International Financial Reporting Standards (IFRS) over a transition
        period expected to end in 2011. The impact of the transition to IFRS
        on the Bank's consolidated financial statements is not yet
        determinable.

        Capital Disclosures

        The CICA issued a new accounting standard which requires the
        disclosure of both qualitative and quantitative information that
        enables financial statement users to evaluate the objectives,
        policies and processes for managing capital. This new standard is
        effective for the Bank beginning November 1, 2007.

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

    Head Office                       Investor Relations
    Canadian Western Bank & Trust     For further financial information
    Suite 2300, Canadian Western       contact:
     Bank Place                       Kirby Hill, CFA
    10303 Jasper Avenue               Senior Manager, Investor and
    Edmonton, AB  T5J 3X6              Public Relations
    Telephone: (780) 423-8888         Canadian Western Bank
    Fax: (780) 423-8897               Telephone: (780) 441-3770
    Website: www.cwbankgroup.com      Toll-free: 1-800-836-1886
                                      Fax: (780) 423-8899
    Subsidiary Offices                E-mail:
    Canadian Western Trust Company     InvestorRelations@cwbankgroup.com
    Suite 600, 750 Cambie Street
    Vancouver, BC  V6B 0A2            Online Investor Information
    Telephone: (800) 663-1124         Additional investor information
    Fax: (604) 669-6069                including supplemental financial
    Website: www.cwt.ca                information and a corporate
                                       presentation is available on our
    Canadian Direct Insurance          website at www.cwbankgroup.com.
     Incorporated
    Suite 600, 750 Cambie Street      Complaints or Concerns Regarding
    Vancouver, BC  V6B 0A2             Accounting, Internal Accounting
    Telephone: (604) 699-3678          Controls or Auditing Matters
    Fax: (604) 699-3851               Please contact either:
    Website: www.canadiandirect.com
                                      Tracey C. Ball, FCA
    Valiant Trust Company             Executive Vice President and Chief
    Suite 310, 606 - 4th Street S.W.   Financial Officer
    Calgary, AB  T2P 1T1              Canadian Western Bank
    Telephone: (403) 233-2801         Telephone: (780) 423-8855
    Fax: (403) 233-2857               Fax: (780) 423-8899
    Website: www.valianttrust.com     E-mail: tracey.ball@cwbank.com

    Stock Exchange Listing            or
    The Toronto Stock Exchange
    Share Symbol: CWB                 Robert A. Manning
                                      Chairman of the Audit Committee
    Transfer Agent and Registrar      c/o 210 - 5324 Calgary Trail
    Valiant Trust Company             Edmonton, AB  T6H 4J8
    Suite 310, 606 - 4th Street S.W.  Telephone: (780) 438-2626
    Calgary, AB  T2P 1T1              Fax: (780) 438-2632
    Telephone: (403) 233-2801         E-mail: rmanning@shawbiz.ca
    Fax: (403) 233-2857
    Website: www.valianttrust.com     Quarterly Conference Call and Webcast
    E-mail:                           Our quarterly conference call and live
    inquiries@valianttrust.com        audio webcast will take place on
                                      Thursday, June 7, 2007 at 3:30 p.m.
    Dividends                         ET. The webcast will be archived on
    Cash dividends paid in the 2007   our website at www.cwbankgroup.com
    calendar year to Canadian         for sixty days. A replay of the
    residents are "eligible           conference call will be available
    dividends" as defined in the      until June 21, 2007 by dialing
    Income Tax Act.                   (416) 640-1917 or toll free
                                      (877) 289-8525 and entering passcode
                                      21217979, followed by the pound sign.
    





For further information:

For further information: Larry M. Pollock, President and Chief Executive
Officer, Canadian Western Bank, Phone: (780) 423-8888; Kirby Hill, CFA, Senior
Manager, 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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