CWB Reports Record Quarterly Earnings and Revenues



    8% quarterly loan growth
    17.1% return on equity

    EDMONTON, Sept. 6 /CNW/ - Canadian Western Bank (CWB on TSX) today
announced record quarterly earnings and revenues (teb) in its 77th consecutive
profitable quarter, a period spanning more than 19 years. Third quarter net
income of $24.0 million and diluted earnings per share of $0.37 were up 36%
and 32% respectively over last year. Strong quarterly earnings were driven by
excellent loan growth of 8% in the quarter and 30% over the past twelve
months. Year-to-date net income of $66.7 million and diluted earnings per
share of $1.04 were up 31% and 30% respectively over the same period in 2006.

    
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    Third Quarter Highlights:
    (three months ended July 31, 2007 compared with three months ended
    July 31, 2006 unless otherwise noted)
    -------------------------------------------------------------------------
    -  Record net income of $24.0 million, up 36%.
    -  Diluted earnings per share of $0.37, up 32%.
    -  Loan growth of 8% in the quarter and 30% over the past twelve months.
    -  Record total revenues (teb(1)) of $70.7 million, up 24%.
    -  Return on equity of 17.1%, up 290 basis points.
    -  Efficiency ratio (teb) of 43.6%, an improvement of 200 basis points.
    -  Total loans surpassed $7.0 billion.
    -  Trust assets under administration surpassed $4.0 billion.

    (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 October 4, 2007 to shareholders of record on
September 20, 2007. This quarterly dividend is unchanged from the previous
quarter and is 29% higher than the quarterly dividend declared one year ago.
    "The Bank's loan growth continued to surpass our expectations and we're
now in the final stretch to exceed all of our annual performance targets,"
said Larry Pollock, President and CEO. "Overall economic conditions in our
markets remain strong, with high levels of activity despite relative softness
in the forestry and natural gas markets. Our loan portfolio reflects an
ongoing focus on quality with very low non-performing assets or losses," added
Pollock.
    Both operating segments performed well in the quarter. Excellent loan
growth and strong other income drove quarterly banking and trust net income to
a record $21.8 million. The earnings contribution from insurance operations
increased 16% over the same quarter last year to $2.2 million.
    "Recent events in financial markets have had an insignificant impact on
our operations. At CWB, it's business as usual. Depending on how things
unfold, these events may actually provide some exciting new growth
opportunities for our Bank," said Pollock.

    
                                 For the three months ended           Change
    (unaudited)          ---------------------------------------        from
    ($ thousands, except      July 31     April 30      July 31      July 31
     per share amounts)          2007         2007         2006         2006
    -------------------------------------------------------------------------
    Results of Operations
      Net interest
       income (teb
       - see below)       $    54,888  $    50,567  $    42,942           28%
      Less teb adjustment       1,423        1,327        1,039           37
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      Net interest income
       per financial
       statements              53,465       49,240       41,903           28
      Other income             15,777       16,237       13,942           13
      Total revenues (teb)     70,665       66,804       56,884           24
      Total revenues           69,242       65,477       55,845           24
      Net income               24,033       22,219       17,693           36
      Earnings per
       common share
        Basic                    0.39         0.36         0.29           34
        Diluted                  0.37         0.35         0.28           32
      Return on
       shareholders'
       equity(1)                 17.1%        16.8%        14.2%    290 bp(2)
      Return on assets(3)        1.14         1.17         1.06            3
      Efficiency ratio(4)
       (teb)                     43.6         45.1         45.6         (200)
      Efficiency ratio           44.5         46.1         46.5         (200)
      Net interest margin
       (teb)                     2.59         2.65         2.58            1
      Net interest margin        2.53         2.58         2.52            1
      Provision for
       credit losses as
       a percentage of
       average loans             0.15         0.16         0.19           (4)
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    Per Common Share
      Cash dividends(5)   $      0.09  $      0.08  $      0.06           50%
      Book value                 9.05         8.82         8.12           11
      Closing market
       value                    27.87        23.89        22.74           23
      Common shares
       outstanding
       (thousands)             62,549       62,295       61,694            1
    -------------------------------------------------------------------------
    Balance Sheet and
     Off-Balance
     Sheet Summary
      Assets              $ 8,881,114  $ 8,021,542  $ 6,871,121           29%
      Loans                 7,090,632    6,567,598    5,466,969           30
      Deposits              7,656,542    6,798,483    5,944,676           29
      Subordinated
       debentures             390,000      393,126      198,126           97
      Shareholders'
       equity                 565,887      549,704      500,925           13
      Assets under
       administration       4,049,310    3,874,228    3,192,116           27
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    Capital Adequacy
      Tangible common
       equity to risk-
       weighted assets(6)         7.6%         8.0%         8.7%     (110)bp
      Tier 1 ratio(7)             9.0          9.4          8.7          (40)
      Total ratio(7)             13.6         14.2         12.3          130
    -------------------------------------------------------------------------


                          For the nine months ended      Change
    (unaudited)           -------------------------        from
    ($ thousands, except      July 31      July 31      July 31
     per share amounts)          2007         2006         2006
    ------------------------------------------------------------
    Results of Operations
      Net interest
       income (teb
       - see below)       $   154,664  $   122,714           26%
      Less teb adjustment       3,914        2,884           36
    ------------------------------------------------------------
      Net interest income
       per financial
       statements             150,750      119,830           26
      Other income             44,457       39,491           13
      Total revenues (teb)    199,121      162,205           23
      Total revenues          195,207      159,321           23
      Net income               66,710       50,798           31
      Earnings per common
       share
        Basic                    1.07         0.83           29
        Diluted                  1.04         0.80           30
      Return on
       shareholders'
       equity(1)                 16.5%        14.2%       230bp
      Return on assets(3)        1.13         1.09            4
      Efficiency ratio(4)
       (teb)                     44.8         46.4         (160)
      Efficiency ratio           45.7         47.2         (150)
      Net interest margin
       (teb)                     2.63         2.63            -
      Net interest margin        2.56         2.57           (1)
      Provision for
       credit losses as
       a percentage of
       average loans             0.16         0.20           (4)
    ------------------------------------------------------------
    Per Common Share
      Cash dividends(5)   $      0.25  $      0.18           39%
      Book value                 9.05         8.12           11
      Closing market
       value                    27.87        22.74           23
      Common shares
       outstanding
       (thousands)             62,549       61,694            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 Canada (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.


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    Message to Shareholders
    -------------------------------------------------------------------------

    Canadian Western Bank (CWB or the Bank) is pleased to report very strong
financial performance in its 77th consecutive profitable quarter. Excellent
loan growth of 8% in the quarter and 30% over the past twelve months led to
record quarterly results for both net income and total revenues (teb).
Consolidated third quarter net income and diluted earnings per share were up
36% and 32% respectively over last year on 24% growth in total revenues (teb)
and a lower effective tax rate. On a year-to-date basis, net income and
diluted earnings per share were up 31% and 30% respectively over the same
period in 2006.
    Consolidated net income was up 8% over last quarter due to a 12% higher
contribution from banking and trust operations including three more
revenue-earning days. Diluted earnings per share increased 6%.
    Third quarter return on equity was up 290 basis points over the same
period last year to 17.1%. On a year-to-date basis, return on equity improved
230 basis points to 16.5%.
    Given recent market events, it bears stating that the Bank continues to
maintain a strong discipline in managing both its lending and investment
portfolios. CWB has no direct exposure to the troubled non-bank asset backed
commercial paper market, collateralized debt obligations or United States
subprime mortgages. All assets are retained on the Bank's balance sheet with
no use of securitization. CWB's funding primarily comes from raising
traditional bank deposits through its branch operations and deposit broker
network.
    In August 2007, the Bank received affirmation from taxation authorities
of certain prior period transactions that will result in the fourth quarter
recognition of a $3.5 million reduction to income tax expense and, net of an
associated non-interest expense, a $2.9 million increase in net income.

    Share Price Performance

    CWB shares ended the third quarter at $27.87, up from $22.74 one year
ago. Including reinvested dividends, the total return to shareholders over the
twelve-month period ended July 31, 2007 was 24%.

    Dividends

    On September 6, 2007, CWB's Board of Directors declared a cash dividend
of $0.09 per common share, payable on October 4, 2007 to shareholders of
record on September 20, 2007. This quarterly dividend is unchanged from the
previous quarterly dividend and 29% higher than the quarterly dividend
declared one year ago.

    Loan Growth

    The Bank's organic loan growth of 8% in the quarter and 30% over the past
year reflects continued strong business activity throughout Western Canada. As
in previous quarters, Alberta and British Columbia (BC) were the primary areas
of growth. Each lending division made a significant contribution to growth in
the quarter with the largest increases coming from the real estate and general
commercial sectors. Year-to-date loan growth of 23% is well ahead of our 14%
annual target and reflects strong double-digit growth across all lending
areas. New deal flow remains healthy and barring unanticipated economic
impacts related to recent market events, we expect continued strong
performance.
    Our alternative mortgage business, Optimum Mortgage (Optimum), continued
to show excellent results. This portfolio, which now comprises approximately
5% of total loans, grew 14% in the quarter and 55% year-to-date. Optimum loans
are all conventional residential first mortgages having an underwritten
loan-to-value ratio of less than 75%. Mortgage principals are amortized over
25 years or less and the vast majority carry a fixed interest rate. Optimum
provides diversification as well as an excellent return on the Bank's capital
and we remain comfortable with its overall risk profile.

    Credit Quality

    Credit quality remained strong due to a combination of favourable
economic conditions and disciplined credit underwriting. Although we have
noted a slowdown in certain lending areas related to the forestry and natural
gas markets, we do not believe this will have any material impact on the
overall quality of our loan portfolio. The charge for credit losses was
consistent with prior periods and we remain well positioned to manage a future
turn in the credit cycle should one occur.

    Branch Deposit Growth

    Deposits raised through our branch network and Canadian Western Trust
Company (CWT) continued to show very strong growth increasing 11% in the
quarter and 29% over the past year. The demand and notice component within
branch-raised deposits was up 8% in the quarter and 33% over July 31, 2006.
Our success in growing additional sources of lower cost branch-raised deposits
will continue to support net interest margin and mitigate the impact of the
flat yield curve and competitive pressures in our markets.

    Net Interest Margin

    Net interest margin (teb) in the quarter was 2.59%, six basis points
lower than the previous quarter and up one basis point from the same period
last year. The decline in margin from the previous quarter mainly resulted
from higher interest expense and liquidity levels related to the issue of
subordinated debentures in March 2007.

    Trust Services

    Trust services achieved a new milestone in the third quarter with trust
assets under administration surpassing $4.0 billion. These assets have more
than doubled in three years and reflect the ongoing success and support of our
growing customer base. Trust services are an integral part of our growth and
diversification strategy and we expect continued strong performance from both
Canadian Western Trust and Valiant Trust Company as we move forward.

    Insurance

    Our insurance subsidiary, Canadian Direct Insurance Incorporated
(Canadian Direct), reported third quarter net income of $2.2 million, a 16%
increase over the same quarter last year. Quarterly earnings reflect higher
investment income and solid growth in our home and Alberta auto products. Auto
policy sales in BC continued to be impacted by the pricing strategy of the
Insurance Corporation of British Columbia. Year-to-date net income was 4%
higher than last year, as higher investment income and favorable results from
the Alberta risk sharing pools offset the claims impact of unusually severe
weather in the first quarter. Canadian Direct continues to develop its
Internet and broker distribution platforms. Overall, we remain optimistic
about opportunities to grow this business.

    Outlook

    The Bank's excellent third quarter results continued to exceed our
expectations. We have significantly surpassed our annual loan growth target
through the first nine months and expect to exceed all of our other annual
growth targets by a substantial margin. Economic conditions across Western
Canada continue to be robust and new deal flow remains healthy. Our
conservative balance sheet and ongoing focus on high quality assets has the
Bank well positioned to manage future credit and market-related events.
Although sustained capital market uncertainty will present challenges for the
financial sector, it may also provide CWB with exciting new growth
opportunities. Continued execution of our strategic focus on people,
infrastructure, process and business enhancement will remain key to extending
CWB's long history of success.

    We look forward to reporting our fourth quarter and fiscal 2007 results
on December 6, 2007.

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    Q3 Results Conference Call

    CWB's third quarter results conference call is scheduled for Thursday,
    September 6, 2007 at 3:30 p.m. ET (1:30 p.m. MT). The Bank's executives
    will comment on the third 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 September 20,
    2007 by dialing 416-640-1917 (Toronto) or 1-877-289-8525 (toll-free) and
    entering passcode 21217980, followed by the pound sign.
    -------------------------------------------------------------------------

    About Canadian Western Bank

    Canadian Western Bank offers highly personalized service through 34
branch locations and is the largest publicly traded Schedule I chartered bank
headquartered in and regionally focused on Western Canada. The Bank, with
total balance sheet assets of $8.9 billion and assets under administration of
over $4.0 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.


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    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 July 31, 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 quarterly earnings
led by excellent loan growth and solid contributions from both operating
segments. Consolidated net income of $24.0 million, or $0.37 per diluted share
($0.39 basic), increased 36% and 32% respectively over the same quarter last
year. Net income from banking and trust operations of $21.8 million was up 38%
over the previous year while the contribution from Canadian Direct Insurance
Incorporated (Canadian Direct) increased 16% to $2.2 million. These results
also reflect a higher effective tax rate in the third quarter last year.
    Record total revenues, on a taxable equivalent basis (teb - see
definition following Financial Highlights table), of  $70.7 million were up
24% over the same quarter last year driven by very strong growth in net
interest income and a 13% ($1.8 million) increase in other income. Quarterly
net interest income (teb) was up 28% ($11.9 million) over the previous year
benefiting from 30% loan growth.
    Net income was up 8% over the previous quarter reflecting 8% loan growth
and three additional revenue-earning days this quarter, partially offset by
lower income from insurance operations. Year-to-date net income of
$66.7 million increased 31% over the previous year while diluted earnings per
share was up 30% to $1.04 ($1.07 basic).
    Third quarter return on equity of 17.1% was 290 basis points better than
last year. Year-to-date return on equity increased 230 basis points to 16.5%.
In addition to very strong earnings growth, continued improvements in return
on equity are attributed to the Bank's less-dilutive regulatory capital
structure and greater contributions from less capital-intensive businesses.
Increased efficiencies related to economies of scale also had a positive
impact. Return on assets in the third quarter was 1.14%, compared to 1.06%
last year. Year-to-date return on assets of 1.13% represented a four basis
point improvement over the same period in 2006.

    Total Revenues (teb)

    Total revenues (teb), which are comprised of net interest income and
other income, were $70.7 million in the quarter representing a 24% increase
over the same period last year. Total revenues were up 6% over the second
quarter reflecting robust asset growth and three additional revenue-earning
days, partially offset by higher claims experience. Year-to-date, total
revenues (teb) were $199.1 million, up 23% over the first nine months in 2006.

    Net Interest Income (teb)

    Net interest income (teb) was up 28% ($11.9 million) over the third
quarter last year to $54.9 million reflecting 27% growth in average
interest-earning assets. Year-to-date net interest income (teb) of $154.7
million was 26% ($32.0 million) higher than 2006. Third quarter net interest
margin (teb) increased one basis point over last year to 2.59%. Net interest
margin (teb) year-to-date was unchanged from 2006 at 2.63%.
    Net interest income (teb) increased 9% ($4.3 million) over the previous
quarter driven by a 7% increase in average interest-earning assets and three
additional revenue-earning days. Net interest margin (teb) was six basis
points lower than the previous quarter primarily reflecting increased interest
expense and liquidity levels related to the issue of subordinated debentures
in March 2007.
    Note 12 to the unaudited interim financial statements provides a summary
of the Bank's exposure to interest rate risk as at July 31, 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 1.44%. This compares to April 30, 2007, when a one-percentage
point increase in all interest rates would have increased net interest income
by approximately 1.35%. The Bank's overall strategy remains relatively neutral
with respect to taking specific positions on interest rate risk.

    Other Income

    Other income of $15.8 million was 13% ($1.8 million) higher than the same
quarter last year mainly due to a 24% ($1.2 million) increase in credit
related fee income. Income from trust and retail banking services also
continued to perform well with contributions up 12% ($0.3 million) and 11%
($0.2 million) respectively. Net insurance revenues were relatively unchanged
from the same quarter last year reflecting consistent claims loss and expense
ratios of 64% and 28% respectively.
    Other income was down 3% ($0.5 million) in comparison to the previous
quarter reflecting a 19% ($1.0 million) decline in net insurance revenues
impacted by higher claims experience and a $0.8 million lower before-tax
contribution from the Alberta auto risk sharing pools. Lower net insurance
revenues were largely offset by increases in credit related and trust services
fee income of 14% ($0.8 million) and 8% ($0.2 million) respectively.
    On a year-to-date basis, other income was up 13% ($5.0 million) to
$44.5 million resulting from strong increases in credit related, trust
services and retail fees, partially offset by a $0.7 million decline in net
insurance revenues. Lower year-to-date net insurance revenues reflect
unusually high frequency and severity of claims in the BC home product line
related to severe weather in the first quarter.

    Credit Quality

    Credit quality remained strong and the quarterly provision for credit
losses of $2.6 million was unchanged from both the previous quarter and one
year ago. The provision for credit losses measured as a percentage of average
loans was 15 basis points, compared to 16 basis points in the previous quarter
and 19 basis points last year. Lower quarterly provisions measured as a
percentage of average loans were entirely due to robust loan growth.
    Gross impaired loans at July 31, 2007 were $15.1 million, compared with
$10.7 million last quarter and $8.6 million one year ago. The amount of gross
impaired loans remains low and 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
402% of gross impaired loans at the end of the third quarter, compared to 545%
last quarter and 596% one year ago. The general allowance as a percentage of
risk-weighted loans was 81 basis points, compared to 85 basis points in the
previous quarter and 88 basis points a year earlier.

    Non-interest Expenses

    Non-interest expenses were $30.8 million, up 19% ($4.9 million) over the
same quarter last year and 2% ($0.7 million) over the previous quarter.
Year-to-date, non-interest expenses were up 19% ($14.0 million) over last
year. Higher third quarter non-interest expenses mainly reflect increased
staff complement and premises to manage business growth. Non-interest expenses
year-to-date 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 43.6%. In comparison to the previous quarter, the
efficiency ratio (teb) improved 150 basis points due to very strong operating
performance and three additional days. The year-to-date efficiency ratio (teb)
of 44.8% represents a 160 basis point improvement over last year and is
120 basis points better than the fiscal 2007 target of 46.0%.

    Income Taxes

    The income tax rate (teb) for the first nine months of 2007 was 34.8%,
down from 36.0% in the same period last year. The year-to-date tax rate before
the teb adjustment decreased to 32.2% compared to 33.6% 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. Net income in the third
quarter 2006 was negatively impacted by a $1.2 million tax expense related to
the write-down of future tax assets due to enacted reductions to federal and
provincial income tax rates.
    Subsequent to quarter-end, the Bank received affirmation from taxation
authorities of certain prior period transactions. This will result in the
fourth quarter recognition of a $3.5 million income tax reduction and an
associated non-interest expense of $0.6 million (net of income taxes of
$0.3 million). The $2.9 million increase in net income represents diluted
earnings per share of approximately $0.04.

    Balance Sheet

    Total assets at July 31, 2007 were $8,881 million reflecting growth of
11% ($860 million) in the quarter and 29% ($2,010 million) over the past year.

    Cash and Securities

    Cash, securities and securities purchased under resale agreements totaled
$1,633 million at July 31, 2007, compared to $1,301 million last quarter and
$1,256 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 July 31, 2007 was
$13.3 million, compared to $7.2 million last quarter. The value of unrealized
and unrecorded losses as at July 31, 2006 was $4.2 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. Recent market events have had an
insignificant impact on operations, as the Bank has no direct exposure to any
troubled non-bank sponsored asset backed commercial paper, collateralized debt
obligations or United States subprime lending.

    Loans

    Total loans increased 8% ($523 million) in the quarter, 23%
($1,309 million) year-to-date and 30% ($1,624 million) in the past year to
$7,091 million at July 31, 2007. Quarterly loan growth reflects very strong
deal flow across Alberta and BC. Each lending division continued to show
strong performance with the largest gains coming from the real estate and
general commercial sectors. Personal loans and mortgages increased 9% ($83
million) reflecting a second consecutive quarter of 14% loan growth in Optimum
Mortgage. On a year to date basis, percentage growth has been reasonably
balanced with all lending areas exceeding expectations. New deal flow remains
healthy, although recent events have instilled increased caution in financial
and credit markets. Strong loan growth is expected to continue, but likely at
more sustainable double-digit levels than have recently been achieved.

    Deposits

    Growth in total branch deposits remained strong, increasing 11% in the
quarter and 29% in the past year. Lower cost demand and notice deposits
increased 8% in the quarter and 33% over the past twelve months. A significant
portion of the year-over-year growth in total branch deposits reflects larger
commercial and wholesale balances that can be subject to greater fluctuation.
Achieving continued growth in core demand and notice deposits remains a
priority as success in this area supports net interest margin and reduces the
requirement for more costly funding sources.
    Total deposits at July 31, 2007 were $7,657 million, an increase of 13%
($858 million) in the quarter and 29% ($1,712 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 measured as a percentage of total deposits remained
consistent with the previous quarter at 27%, up from 26% in the same quarter
last year.

    Other Assets and Other Liabilities

    Other assets at July 31, 2007 totaled $157 million, compared to
$153 million last quarter and $148 million one year ago. Other liabilities at
quarter end were $269 million, compared to $280 million the previous quarter
and $227 million in the same quarter last year.

    Off-Balance Sheet

    Off-balance sheet items include trust assets under administration, which
totaled $4,049 million at the end of the third quarter, compared to
$3,874 million last quarter and $3,192 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 July 31, 2007
unaudited interim consolidated financial statements for further details.

    Capital Management

    CWB's total capital adequacy ratio, which measures regulatory capital as
a percentage of risk-weighted assets, was 13.6% at the end of the third
quarter compared to 14.2% last quarter and 12.3% one year ago. The Tier 1
ratio at July 31, 2007 was 9.0% compared to 9.4% in the previous quarter and
8.7% 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 Bank's capital management objectives are to maintain a strong and
efficient capital structure to support continued high quality asset growth and
improve return on equity.
    Book value per common share at July 31, 2007 was $9.05 compared to $8.82
last quarter and $8.12 one year ago.
    Common shareholders received a quarterly cash dividend of $0.09 per
common share on July 5, 2007. On September 6, 2007, the Board of Directors
declared a quarterly cash dividend of $0.09 per common share payable on
October 4, 2007 to shareholders of record on September 20, 2007. This
quarterly dividend is 29% 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 July 31, 2007 that have
materially affected, or are reasonably likely to materially affect, internal
control over financial reporting.

    Updated Share Information

    As at August 31, 2007, there were 62,560,272 common shares outstanding.
Also outstanding were employee stock options, which are or will be exercisable
for up to 5,281,150 common shares for maximum proceeds of $86.7 million.

    
    Summary of Quarterly Financial Information

                                         2007
                            -----------------------------
    ($ thousands)               Q3        Q2        Q1
    -----------------------------------------------------
    Total revenues (teb)     $70,665   $66,804   $61,652
    Total revenues            69,242    65,477    60,488
    Net income                24,033    22,219    20,458
    Earnings per common
     share
      Basic                     0.39      0.36      0.33
      Diluted                   0.37      0.35      0.32
    Total assets
     ($ millions)              8,881     8,022     7,565
    -----------------------------------------------------


                                              2006                     2005
                            --------------------------------------- ---------
    ($ thousands)               Q4        Q3        Q2        Q1        Q4
    -------------------------------------------------------------------------
    Total revenues (teb)     $59,565   $56,884   $53,011   $52,310   $48,954
    Total revenues            58,731    55,845    52,038    51,438    47,618
    Net income                21,209    17,693    16,667    16,438    14,814
    Earnings per common
     share
      Basic                     0.34      0.29      0.27      0.27      0.24
      Diluted                   0.33      0.28      0.26      0.26      0.23
    Total assets
     ($ millions)              7,268     6,871     6,476     6,021     5,705
    -------------------------------------------------------------------------
    

    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 (refer to
Results by Business Segment - Insurance), 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.
    Record banking and trust earnings of $21.8 million were up 38%
($6.0 million) over the same quarter last year driven by excellent 30% loan
growth, strong increases in credit related and trust services fees and a lower
effective tax rate. Third quarter total revenues (teb) were up 26% over the
previous year reflecting 27% ($11.5 million) growth in net interest income
(teb) and an 18% ($1.8 million) increase in other income. Growth in total
revenues (teb) continued to exceed the 21% year-over-year increase in
non-interest expenses leading to a further improvement in the Bank's
efficiency ratio (teb), which measures non-interest expense as a percentage of
total revenues. The quarterly efficiency ratio (teb) improved 170 basis points
over the same quarter last year to a benchmark 44.0%.
    In comparison to the previous quarter, banking and trust earnings
increased 12% ($2.3 million) reflecting 8% quarterly loan growth and three
additional revenue-earning days, partially offset by a 2% ($0.7 million)
increase in non-interest expenses and a slightly higher effective tax rate
(teb). The combination of very strong revenue growth and three additional days
led to a 220 basis point improvement in the quarterly efficiency ratio (teb).
Net interest margin (teb) was down 7 basis points from the previous quarter
primarily due to higher interest costs and liquidity related to the issue of
subordinated debentures in March 2007. Other income was up 5% ($0.5 million)
reflecting increased credit related and trust services fee income of 14%
($0.8 million) and 8% ($0.3 million) respectively, partially offset by lower
retail services fees and gains on the sale of securities.
    Year-to-date, banking and trust net income of $61.6 million was up 34%
($15.7 million) over the same period in 2006 reflecting 30% loan growth and a
20% increase in other income, partially offset by a one basis point decrease
in net interest margin (teb). Other income year-to-date benefited from strong
growth in credit related and trust services fee income of 23% ($3.3 million)
and 15% ($1.2 million) respectively, as well as a 16% ($0.8 million) increase
in retail fee income.

    
                                 For the three months ended           Change
                         ---------------------------------------        from
                              July 31     April 30      July 31      July 31
    ($ thousands)                2007         2007         2006         2006
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $    53,533  $    49,523  $    42,071           27%
    Other income               11,685       11,175        9,889           18
    -------------------------------------------------------------------------
    Total revenues (teb)       65,218       60,698       51,960           26
    Provision for credit
     losses                     2,550        2,550        2,550            -
    Non-interest expenses      28,688       28,020       23,746           21
    Provision for income
     taxes (teb)               12,164       10,571        9,888           23
    -------------------------------------------------------------------------
    Net income            $    21,816  $    19,557  $    15,776           38%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)       44.0%        46.2%        45.7%     (170)bp
    Efficiency ratio             44.9         47.1         46.6         (170)
    Net interest margin
     (teb)                       2.58         2.65         2.58            1
    Net interest margin          2.52         2.59         2.52            1
    Average loans
     (millions)           $     6,774  $     6,358  $     5,249           29%
    Average assets
     (millions)                 8,227        7,654        6,459           27
    -------------------------------------------------------------------------


                          For the nine months ended      Change
                          -------------------------        from
                              July 31      July 31      July 31
    ($ thousands)                2007         2006         2006
    ------------------------------------------------------------
    Net interest income
     (teb)                $   151,204  $   120,278           26%
    Other income               34,054       28,339           20
    ------------------------------------------------------------
    Total revenues (teb)      185,258      148,617           25
    Provision for credit
     losses                     7,650        7,650            -
    Non-interest expenses      82,995       69,100           20
    Provision for income
     taxes (teb)               33,053       23,036           27
    ------------------------------------------------------------
    Net income            $    61,560  $    45,831           34%
    ------------------------------------------------------------
    Efficiency ratio (teb)       44.8%        46.5%     (170)bp
    Efficiency ratio             45.7         47.4         (170)
    Net interest margin
     (teb)                       2.63         2.64           (1)
    Net interest margin          2.56         2.58           (2)
    Average loans
     (millions)           $     6,361  $     4,987           28%
    Average assets
     (millions)                 7,700        6,092           26
    ------------------------------------------------------------

    bp -  basis points.
    teb - taxable equivalent basis, see definition following Financial
          Highlights table.
    (1)   Assets are disclosed on an average daily balance basis.
    

    Insurance

    The insurance segment consists of the operations of CWB's wholly owned
subsidiary Canadian Direct Insurance Incorporated (Canadian Direct), which
provides auto and home insurance to individuals in BC and Alberta.
    Canadian Direct reported third quarter net income of $2.2 million, a 16%
increase over the same period last year. Net income reflects 13% growth in net
earned premiums from the elimination of quota share reinsurance in November
2006 as well as continued policy growth and good customer retention. Net
interest income increased $0.5 million largely reflecting an 18%
year-over-year increase in Canadian Direct's average interest-earning assets.
The quarterly claims loss and expense ratios remained unchanged from one year
ago at 64% and 28% respectively. Ongoing competitive pricing pressures from
the Insurance Corporation of British Columbia in the BC auto product line
continued to result in lower average premiums and slower policy sales in that
line of business. Growth and customer retention in other lines of business
remained solid, particularly in the Alberta auto product line.
    Net income was $0.4 million lower than the previous quarter reflecting
higher claims experience and a before-tax loss from the Alberta auto risk
sharing pools (the Pools). Weather-related events in the third quarter
resulted in higher frequency and severity of claims in the Alberta home
product line, while the BC home product line experienced higher severity. The
Pools' results were affected by changes in assumptions in claims reserving
resulting from an updated review by the Pools' consulting actuary.
Year-to-date net income of $5.2 million was up 4% over the same period last
year despite an increased claims loss ratio. Improved net interest income,
good cost control and pre-tax earnings from the Pools offset unusually high
frequency and severity of claims due to severe BC storm activity in the first
quarter.

    
                                 For the three months ended           Change
                          --------------------------------------        from
                              July 31     April 30      July 31      July 31
    ($ thousands)                2007         2007         2006         2006
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $     1,355  $     1,044  $       871           56%
    Other income (net)
      Net earned premiums      24,988       22,626       22,086           13
      Commissions and
       processing fees            733          669        1,261          (42)
      Net claims and
       adjustment expenses    (16,097)     (13,222)     (14,179)          14
      Policy acquisition
       costs                   (5,531)      (5,024)      (5,122)           8
    -------------------------------------------------------------------------
    Insurance revenue (net)     4,093        5,049        4,046            1
    Gains (losses) on sale
     of securities                 (1)          13            7           nm
    -------------------------------------------------------------------------
    Total revenues (net)
     (teb)                      5,447        6,106        4,924           11
    Non-interest expenses       2,139        2,132        2,192           (2)
    Provision for income
     taxes (teb)                1,091        1,312          815           34
    -------------------------------------------------------------------------
    Net income            $     2,217  $     2,662  $     1,917           16%
    -------------------------------------------------------------------------
    Policies outstanding
     (number)                 163,875      162,207      156,305            5
    Gross written
     premiums             $    29,992  $    26,506  $    29,301            3
    Claims loss ratio(1)           64%          58%          64%         -bp
    Expense ratio(2)               28           29           28            -
    Combined ratio(3)              92           87           92            -
    Alberta auto risk
     sharing pools impact
     on net income
     before tax           $      (101) $       672  $      (261)         (61)
    Average total assets
     (millions)                   166          160          149           11
    -------------------------------------------------------------------------


                          For the nine months ended      Change
                          -------------------------        from
                              July 31      July 31      July 31
    ($ thousands)                2007         2006         2006
    ------------------------------------------------------------
    Net interest income
     (teb)                $     3,460  $     2,436           42%
    Other income (net)
      Net earned premiums      70,742       60,965           16
      Commissions and
       processing fees          2,008        3,499          (43)
      Net claims and
       adjustment expenses    (47,495)     (39,732)          20
      Policy acquisition
       costs                  (14,911)     (13,681)           9
    ------------------------------------------------------------
    Insurance revenue (net)    10,344       11,051           (6)
    Gains (losses) on sale
     of securities                 59          101          (42)
    ------------------------------------------------------------
    Total revenues (net)
     (teb)                     13,863       13,588            2
    Non-interest expenses       6,177        6,119            1
    Provision for income
     taxes (teb)                2,536        2,502            1
    ------------------------------------------------------------
    Net income            $     5,150  $     4,967            4%
    ------------------------------------------------------------
    Policies outstanding
     (number)                 163,875      156,305            5
    Gross written
     premiums             $    77,743  $    74,066            5
    Claims loss ratio(1)           67%          65%       200bp
    Expense ratio(2)               27           27            -
    Combined ratio(3)              94           92          200
    Alberta auto risk
     sharing pools impact
     on net income
     before tax           $       721  $      (596)          nm
    Average total assets
     (millions)                   161          143           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%                31%
    -------------------------------------------------------------------------
    Total revenue (teb) growth                   15%                23%
    -------------------------------------------------------------------------
    Loan growth                                  14%                30%
    -------------------------------------------------------------------------
    Provision for credit losses as a
     percentage of average loans            0.20% or less          0.16%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)                       46%               44.8%
    -------------------------------------------------------------------------
    Return on equity                             15%               16.5%
    -------------------------------------------------------------------------
    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 continued to surpass all of its annual performance targets and
expects to close the year exceeding each of these measures by a considerable
margin. Year-to-date growth in loans, net income and total revenues (teb) is
well above the Bank's respective annual targets. Disciplined cost management
has contributed to an improved efficiency ratio. Increased economies of scale
should provide additional efficiencies and support further infrastructure
expansion. Excellent earnings growth coupled with a more efficient capital
structure have resulted in significant increases in return on equity and
reflect the success of ongoing strategies to enhance shareholder returns.
    Western Canada's strong economies are supporting an ongoing stream of
high quality lending opportunities. The outlook is for continued strong loan
growth, although it is expected to return to more sustainable double-digit
levels over the near future. The credit environment is being monitored closely
for signs of a shift in economic fundamentals and possible repercussions from
recent market volatility. CWB also remains opportunistic about the potential
for new accretive growth opportunities including those that may result from
these market events. The Bank's conservative credit practices have it well
positioned to manage a future turn in the credit cycle should one occur.
    Management continues to develop and refine strategies to enhance
operations within both business segments and the overall outlook remains
excellent. CWB's success will be driven by an ongoing strategic focus on
people, combined with continuing infrastructure and process improvements.
    This management's discussion and analysis is dated September 6, 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, average loans and 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      July 31     April 30      July 31      July 31
     per share amounts)          2007         2007         2006         2006
    -------------------------------------------------------------------------
    Interest Income
      Loans               $   113,748  $   102,932  $    85,956           32%
      Securities               11,712       10,128        8,448           39
      Deposits with
       regulated financial
       institutions             3,618        2,999        3,106           16
    -------------------------------------------------------------------------
                              129,078      116,059       97,510           32
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 70,124       62,842       52,718           33
      Subordinated
       debentures               5,489        3,977        2,889           90
    -------------------------------------------------------------------------
                               75,613       66,819       55,607           36
    -------------------------------------------------------------------------
    Net Interest Income        53,465       49,240       41,903           28
    Provision for Credit
     Losses                     2,550        2,550        2,550            -
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             50,915       46,690       39,353           29
    -------------------------------------------------------------------------
    Other Income
      Credit related            6,277        5,513        5,060           24
      Insurance, net
       (Note 3)                 4,093        5,049        4,046            1
      Trust services            3,132        2,896        2,803           12
      Retail services           1,826        1,871        1,639           11
      Gains (losses) on
       sale of securities          10          302           12          (17)
      Foreign exchange
       gains                      371          475          336           10
      Other                        68          131           46           48
    -------------------------------------------------------------------------
                               15,777       16,237       13,942           13
    -------------------------------------------------------------------------
    Net Interest and
     Other Income              66,692       62,927       53,295           25
    -------------------------------------------------------------------------
    Non-interest Expenses
      Salaries and
       employee benefits       19,466       19,054       16,586           17
      Premises and
       equipment                5,167        5,071        4,328           19
      Other expenses            5,628        5,276        4,539           24
      Provincial capital
       taxes                      566          751          485           17
    -------------------------------------------------------------------------
                               30,827       30,152       25,938           19
    -------------------------------------------------------------------------
    Net Income Before
     Provision for
     Income Taxes              35,865       32,775       27,357           31
    Provision for Income
     Taxes                     11,832       10,556        9,664           22
    -------------------------------------------------------------------------
    Net Income            $    24,033  $    22,219  $    17,693           36%
    -------------------------------------------------------------------------

    Weighted average
     common shares
     outstanding(1)        62,413,781   62,249,126   61,573,962            1%

    Earnings per Common
     Share
      Basic               $      0.39  $      0.36  $      0.29           34%
      Diluted                    0.37         0.35         0.28           32
    -------------------------------------------------------------------------


                          For the nine months ended      Change
    (unaudited)           -------------------------        from
    ($ thousands, except      July 31      July 31      July 31
     per share amounts)          2007         2006         2006
    ------------------------------------------------------------
    Interest Income
      Loans               $   315,823  $   234,511           35%
      Securities               31,894       21,705           47
      Deposits with
       regulated financial
       institutions             9,672        7,547           28
    ------------------------------------------------------------
                              357,389      263,763           35
    ------------------------------------------------------------
    Interest Expense
      Deposits                194,284      135,571           43
      Subordinated
       debentures              12,355        8,362           48
    ------------------------------------------------------------
                              206,639      143,933           44
    ------------------------------------------------------------
    Net Interest Income       150,750      119,830           26
    Provision for Credit
     Losses                     7,650        7,650            -
    ------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses            143,100      112,180           28
    ------------------------------------------------------------
    Other Income
      Credit related           17,477       14,219           23
      Insurance, net
       (Note 3)                10,344       11,051           (6)
      Trust services            9,210        8,022           15
      Retail services           5,453        4,700           16
      Gains (losses) on
       sale of securities         431          161          168
      Foreign exchange
       gains                    1,334        1,225            9
      Other                       208          113           84
    ------------------------------------------------------------
                               44,457       39,491           13
    ------------------------------------------------------------
    Net Interest and
     Other Income             187,557      151,671           24
    ------------------------------------------------------------
    Non-interest Expenses
      Salaries and
       employee benefits       56,511       47,922           18
      Premises and
       equipment               14,852       12,821           16
      Other expenses           16,013       13,064           23
      Provincial capital
       taxes                    1,796        1,412           27
    ------------------------------------------------------------
                               89,172       75,219           19
    ------------------------------------------------------------
    Net Income Before
     Provision for
     Income Taxes              98,385       76,452           29
    Provision for Income
     Taxes                     31,675       25,654           23
    ------------------------------------------------------------
    Net Income            $    66,710  $    50,798           31%
    ------------------------------------------------------------

    Weighted average
     common shares
     outstanding(1)        62,240,603   61,415,540            1%

    Earnings per Common
     Share
      Basic               $      1.07  $      0.83           29%
      Diluted                    1.04         0.80           30
    ------------------------------------------------------------

    (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.

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



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

                                                                       Change
                                                                         from
                            As at       As at       As at       As at    July
    (unaudited)           July 31    April 30  October 31     July 31      31
    ($ thousands)            2007        2007        2006        2006    2006
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and non-
       interest bearing
       deposits with
       financial
       institutions    $   10,760  $   68,447  $   86,904  $   37,018   (71)%
      Interest bearing
       deposits with
       regulated
       financial
       institutions       312,513     234,647     350,601     365,858    (15)
      Cheques and other
       items in transit       729       1,446         789       4,751    (85)
    -------------------------------------------------------------------------
                          324,002     304,540     438,294     407,627    (21)
    -------------------------------------------------------------------------
    Securities (Note 4)
      Issued or
       guaranteed by
       Canada             414,433     319,668     334,379     341,094     22
      Issued or
       guaranteed by a
       province or
       municipality       285,559     237,286     168,839     177,378     61
      Other securities    553,021     439,532     382,475     329,832     68
    -------------------------------------------------------------------------
                        1,253,013     996,486     885,693     848,304     48
    -------------------------------------------------------------------------
    Securities
     Purchased Under
     Resale Agreements     56,425           -       9,000           -     nm
    -------------------------------------------------------------------------
    Loans
      Residential
       mortgages        1,654,906   1,606,465   1,314,988   1,212,050     37
      Other loans       5,496,505   5,019,446   4,520,370   4,305,949     28
    -------------------------------------------------------------------------
                        7,151,411   6,625,911   5,835,358   5,517,999     30
      Allowance for
       credit losses
       (Note 5)           (60,779)    (58,313)    (53,521)    (51,030)    19
    -------------------------------------------------------------------------
                        7,090,632   6,567,598   5,781,837   5,466,969     30
    -------------------------------------------------------------------------
    Other
      Land, buildings
       and equipment       24,443      23,898      24,198      21,144     16
      Goodwill              6,933       6,933       6,933       6,933      -
      Intangible assets     2,817       2,952       3,224       3,359    (16)
      Insurance related    55,027      52,879      57,136      55,326     (1)
      Derivative
       related (Note 6)       843         331           -           -     nm
      Other assets         66,979      65,925      62,045      61,459      9
    -------------------------------------------------------------------------
                          157,042     152,918     153,536     148,221      6
    -------------------------------------------------------------------------
    Total Assets       $8,881,114  $8,021,542  $7,268,360  $6,871,121     29%
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders'
     Equity
    Deposits
      Payable on
       demand          $  398,885  $  389,179  $  391,252  $  352,014     13%
      Payable after
       notice           1,628,043   1,480,037   1,262,270   1,167,065     39
      Payable on a
       fixed date       5,524,614   4,824,267   4,538,485   4,425,597     25
      Deposit from
       Canadian Western
       Bank Capital
       Trust              105,000     105,000     105,000           -      -
    -------------------------------------------------------------------------
                        7,656,542   6,798,483   6,297,007   5,944,676     29
    -------------------------------------------------------------------------
    Other
      Cheques and other
       items in transit    33,379      32,832      27,474      26,082     28
      Insurance related   124,095     120,537     120,936     114,256      9
      Derivative
       related (Note 6)     2,109       1,532           -           -     nm
      Securities
       purchased under
       reverse resale
       agreements               -      19,643           -           -      -
      Other liabilities   109,102     105,685     105,287      87,056     25
    -------------------------------------------------------------------------
                          268,685     280,229     253,697     227,394     18
    -------------------------------------------------------------------------
    Subordinated
     Debentures
      Conventional
       (Note 7)           390,000     393,126     198,126     198,126     97
    -------------------------------------------------------------------------
    Shareholders'
     Equity
      Retained earnings   348,817     330,407     297,841     280,963     24
      Accumulated other
       comprehensive
       income (loss)
       (Note 9)            (9,608)     (5,482)          -           -     nm
      Capital stock       217,589     216,579     215,349     214,445      1
      Contributed
       surplus              9,089       8,200       6,340       5,517     65
    -------------------------------------------------------------------------
                          565,887     549,704     519,530     500,925     13
    -------------------------------------------------------------------------
     Total Liabilities
      and Shareholders'
      Equity           $8,881,114  $8,021,542  $7,268,360  $6,871,121     29%
    -------------------------------------------------------------------------

    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 nine months ended
                                                   --------------------------
    (unaudited)                                        July 31       July 31
    ($ 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                                        66,710        50,798
      Dividends                                        (15,568)      (11,056)
    -------------------------------------------------------------------------
    Balance at end of period                           348,817       280,963
    -------------------------------------------------------------------------
    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                                       (8,114)            -
    -------------------------------------------------------------------------
    Balance at end of period                            (9,608)            -
    -------------------------------------------------------------------------
    Total retained earnings and accumulated other
     comprehensive income                              339,209       280,963
    -------------------------------------------------------------------------
    Capital Stock
    Balance at beginning of period (Note 8)            215,349       213,098
      Issued on exercise of employee stock options       1,525         1,122
      Transferred from contributed surplus on
       exercise or exchange of options                     715           225
    -------------------------------------------------------------------------
    Balance at end of period                           217,589       214,445
    -------------------------------------------------------------------------
    Contributed Surplus (Note 8)
    Balance at beginning of period                       6,340         3,671
      Amortization of fair value of employee
       stock options                                     3,464         2,071
      Transferred to capital stock on exercise
       or exchange of options                             (715)         (225)
    -------------------------------------------------------------------------
    Balance at end of period                             9,089         5,517
    -------------------------------------------------------------------------
    Total Shareholders' Equity                     $   565,887   $   500,925
    -------------------------------------------------------------------------



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

                                                                     For the
                                          For the three months          nine
                                                 ended                months
                                       -------------------------       ended
    (unaudited)                            July 31     April 30      July 31
    ($ thousands)                             2007         2007         2007
    -------------------------------------------------------------------------
    Net Income                         $    24,033  $    22,219  $    66,710
    Other Comprehensive Income (Loss),
     net of tax
      Available-for-sale securities
        Losses from change in fair value    (4,085)      (3,648)      (8,837)
        Reclassification to earnings for
         gain on sale of securities              7          204          290
    -------------------------------------------------------------------------
                                            (4,078)      (3,444)      (8,547)
    -------------------------------------------------------------------------
      Derivatives designated as cash
       flow hedges
        Losses from change in fair value      (423)        (111)        (809)
        Reclassification to net interest
         income                                375          320        1,242
    -------------------------------------------------------------------------
                                               (48)         209          433
    -------------------------------------------------------------------------
                                            (4,126)      (3,235)      (8,114)
    -------------------------------------------------------------------------
    Comprehensive Income for
     the Period                        $    19,907  $    18,984  $    58,596
    -------------------------------------------------------------------------

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



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

                             For the three months       For the nine months
                                     ended                     ended
                          ------------------------- -------------------------
    (unaudited)               July 31      July 31      July 31      July 31
    ($ thousands)                2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash Flows from
     Operating Activities
      Net income          $    24,033  $    17,693  $    66,710  $    50,798
      Adjustments to
       determine net
       cash flows
        Provision for
         credit losses          2,550        2,550        7,650        7,650
        Depreciation and
         amortization           1,584        1,320        4,411        3,905
        Future income
         taxes, net             2,376         (352)       2,594       (1,170)
        Gain on sale of
         securities, net          (10)         (12)        (431)        (161)
        Accrued interest
         receivable and
         payable, net          (3,256)         244        1,604        7,612
        Current income
         taxes payable, net       396        3,494         (287)      (8,159)
        Other items, net        4,822        2,655       (2,810)      10,509
    -------------------------------------------------------------------------
                               32,495       27,592       79,441       70,984
    -------------------------------------------------------------------------
    Cash Flows from
     Financing Activities
      Deposits, net           858,059      382,070    1,365,575    1,031,369
      Debentures issued             -            -      195,000       70,000
      Debenture redeemed       (3,126)           -       (3,126)           -
      Common shares issued        721          354        1,525        1,122
      Dividends                (5,623)      (3,694)     (15,568)     (11,056)
    -------------------------------------------------------------------------
                              850,031      378,730    1,543,406    1,091,435
    -------------------------------------------------------------------------
    Cash Flows from
     Investing Activities
      Interest bearing
       deposits with
       regulated financial
       institutions, net      (78,867)     (66,583)      36,455     (153,284)
      Securities, purchased  (893,170)    (509,954)  (2,035,649)  (1,499,642)
      Securities, sale
       proceeds               151,868       89,448      581,935      561,404
      Securities, matured     482,338      386,609    1,080,422      793,682
      Securities purchased
       under resale
       agreements, net        (76,068)      42,908      (47,425)      36,940
      Loans, net             (525,584)    (325,464)  (1,316,445)    (884,356)
      Land, buildings
       and equipment           (1,994)      (1,157)      (4,249)      (5,066)
    -------------------------------------------------------------------------
                             (941,477)    (384,193)  (1,704,956)  (1,150,322)
    -------------------------------------------------------------------------
    Change in Cash and
     Cash Equivalents         (58,951)      22,129      (82,109)      12,097
    Cash and Cash
     Equivalents at
     Beginning of Period       37,061       (6,442)      60,219        3,590
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period(*)         $   (21,890) $    15,687  $   (21,890) $    15,687
    -------------------------------------------------------------------------
    (*) Represented by:
        Cash and
         non-interest
         bearing deposits
         with financial
         institutions     $    10,760  $    37,018  $    10,760  $    37,018
        Cheques and other
         items in transit
         (included in
         Cash Resources)          729        4,751          729        4,751
        Cheques and other
         items in transit
         (included in
         Other Liabilities)   (33,379)     (26,082)     (33,379)     (26,082)
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period            $   (21,890) $    15,687  $   (21,890) $    15,687
    -------------------------------------------------------------------------

    Supplemental
     Disclosure of Cash
     Flow Information
      Amount of interest
       paid in the period $    73,000  $    51,335  $   197,640  $   130,070
      Amount of income
       taxes paid in the
       period                  11,436        6,523       29,368       34,983
    -------------------------------------------------------------------------

    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 Revenues, Net

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

                                                         For the nine months
                           For the three months ended           ended
                       ------------------------------------------------------
                         July 31   April 30    July 31    July 31    July 31
                            2007       2007       2006       2007       2006
        ---------------------------------------------------------------------
        Net earned
         premiums      $  24,988  $  22,626  $  22,086  $  70,742  $  60,965
        Commissions
         and processing
         fees                733        669      1,261      2,008      3,499
        Net claims and
         adjustment
         expenses        (16,097)   (13,222)   (14,179)   (47,495)   (39,732)
        Policy
         acquisition
         costs            (5,531)    (5,024)    (5,122)   (14,911)   (13,681)
        ---------------------------------------------------------------------
        Total, net     $   4,093  $   5,049  $   4,046  $  10,344  $  11,051
        ---------------------------------------------------------------------


    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
                                             July 31    April 30  November 1
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Interest bearing deposits with
         regulated financial institutions $   (1,633) $     (632) $     (293)
        Securities
          Issued or guaranteed by Canada      (1,055)       (622)       (264)
          Issued or guaranteed by a
           province or municipality             (747)       (234)       (145)
          Other securities                    (9,873)     (5,754)        113
        ---------------------------------------------------------------------
        Unrealized losses, net            $  (13,308) $   (7,242) $     (589)
        ---------------------------------------------------------------------


    5.  Allowance for Credit Losses

                                                         For the nine months
                           For the three months ended           ended
        ---------------------------------------------------------------------
                         July 31   April 30    July 31    July 31    July 31
                            2007       2007       2006       2007       2006
        ---------------------------------------------------------------------
        Balance at
         beginning
         of period     $  58,313  $  56,034  $  46,581  $  53,521  $  42,520
        Provision for
         credit losses     2,550      2,550      2,550      7,650      7,650
        Write-offs           (98)      (298)      (102)      (470)    (1,199)
        Recoveries            14         27      2,001         78      2,059
        ---------------------------------------------------------------------
        Balance at end
         of period     $  60,779  $  58,313  $  51,030  $  60,779  $  51,030
        ---------------------------------------------------------------------


                                                 As at      As at      As at
                                               July 31   April 30    July 31
                                                  2007       2007       2006
        ---------------------------------------------------------------------
        Specific allowance                   $   5,697  $   4,878  $   5,290
        General allowance                       55,082     53,435     45,740
        ---------------------------------------------------------------------
        Total allowance                      $  60,779  $  58,313  $  51,030
        ---------------------------------------------------------------------


    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 July 31, 2007, a net unrealized after tax loss
        of $48 (after tax gain of $433 for the nine 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 nine 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 $557 before tax for the quarter ($1,848 before tax for
        the nine months) was reclassified to net income. A net loss of $799
        before tax recorded in accumulated other comprehensive income (loss)
        as at July 31, 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 July 31, 2007       As at April 30, 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)    $663,000 $    219 $  1,302 $427,500 $     21 $    943
    Equity
     contracts(2)         6,000      612        -    6,000      239       36
    Foreign exchange
     contracts(3)         5,344       12       65   30,296       71        -
    Embedded
     derivatives in
     equity-linked
     deposits(2)            n/a        -      742      n/a        -      553
    Other forecasted
     transactions             -      n/a      n/a        -      n/a      n/a
    -------------------------------------------------------------------------
    Derivative related
     amounts                    $    843 $  2,109          $    331 $  1,532
    -------------------------------------------------------------------------

        (1) Interest rate swaps mature between August 2007 and March 2012.
        (2) Equity contracts and equity-linked deposits mature between
            February 2008 and March 2011.
        (3) Foreign exchange contracts mature between August 2007 and January
            2008.

        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.

        On June 30, 2007, a conventional subordinated debenture in the amount
        of $3,126 was redeemed by the Bank at face value.

    8.  Capital Stock and Share Incentive Plan

        Capital Stock
                                         For the three months ended
                              -----------------------------------------------
                                   July 31, 2007           July 31, 2006
        ---------------------------------------------------------------------
                               Number of               Number of
                                  Shares      Amount      Shares      Amount
        ---------------------------------------------------------------------
        Common Shares
          Outstanding at
           beginning of
           period             62,295,058  $  216,579  61,527,996  $  213,982
          Issued on exercise
           or exchange of
           options               253,862         721     165,732         354
          Transferred from
           contributed surplus
           on exercise or
           exchange of options         -         289           -         109
        ---------------------------------------------------------------------
        Outstanding at end
         of period            62,548,920  $  217,589  61,693,728  $  214,445
        ---------------------------------------------------------------------


                                         For the nine months ended
                              -----------------------------------------------
                                   July 31, 2007           July 31, 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               612,660       1,525     466,460       1,122
          Transferred from
           contributed surplus
           on exercise or
           exchange of options         -         715           -         225
        ---------------------------------------------------------------------
        Outstanding at end
         of period            62,548,920  $  217,589  61,693,728  $  214,445
        ---------------------------------------------------------------------



        Employee Stock Options
                                         For the three months ended
                              -----------------------------------------------
                                   July 31, 2007           July 31, 2006
        ---------------------------------------------------------------------
                                            Weighted                Weighted
                                             Average                 Average
                               Number of    Exercise   Number of    Exercise
                                 Options       Price     Options       Price
        ---------------------------------------------------------------------
        Options
          Balance at
           beginning of
           period              5,277,000  $    15.20   4,447,140  $    10.21
          Granted                365,400       26.38   1,097,000       21.46
          Exercised or
           exchanged            (307,250)       7.15    (196,000)       5.22
          Forfeited              (30,000)      20.45           -           -
        ---------------------------------------------------------------------
        Balance at end
         of period             5,305,150  $    16.41   5,348,140  $    12.70
        ---------------------------------------------------------------------


                                          For the nine months ended
                              -----------------------------------------------
                                   July 31, 2007           July 31, 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              1,108,500       25.46   1,158,000       21.28
          Exercised or
           exchanged            (755,390)       7.09    (564,384)       5.62
          Forfeited              (78,000)      20.25     (25,800)      11.89
        ---------------------------------------------------------------------
        Balance at end
         of period             5,305,150  $    16.41   5,348,140  $    12.70
        ---------------------------------------------------------------------
        Exercisable at end
         of period             1,133,550  $     8.49     692,340  $     5.44
        ---------------------------------------------------------------------

        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 755,390
        options (2006 - 564,384) exercised or exchanged in the nine months
        ended July 31, 2007, option holders exchanged the rights to 532,940
        options (2006 - 380,984) and received 389,708 shares (2006 - 283,060)
        in return under the cashless settlement alternative.

        In the nine months ended July 31, 2007, salary expense of $3,464
        (2006 - $2,071) 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
        4.2% (2006 - 4.3%), (ii) expected option life of 4.0 years (2006 -
        4.5 years), (iii) expected volatility of 19% (2006 - 19%), and (iv)
        expected dividends of 1.3% (2006 - 1.1%). The weighted average fair
        value of options granted was estimated at $4.94 (2006 - $4.34) per
        share.

    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 nine
                                                                months ended
                                                                     July 31
                                                                        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 $4,313                              (8,837)
          Reclassification to earnings for gain on sale
           of securities, net of income taxes of $141                    290
        ---------------------------------------------------------------------
        Balance at end of period                                      (8,943)
        ---------------------------------------------------------------------
        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 $395                                  (809)
          Reclassification to net interest income,
           net of income taxes of $606                                 1,242
        ---------------------------------------------------------------------
        Balance at end of period                                        (665)
        ---------------------------------------------------------------------
        Total accumulated other comprehensive income (loss)       $   (9,608)
        ---------------------------------------------------------------------


    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
                                             July 31    April 30     July 31
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Guarantees and standby
         letters of credit
          Balance outstanding             $  190,550  $  158,317  $  138,626
        Business credit cards
          Total approved limit                 8,709       8,310       7,433
          Balance outstanding                  1,995       1,878       1,504
        ---------------------------------------------------------------------

        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
                                             July 31    April 30     July 31
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Trust assets under administration $4,049,310  $3,874,228  $3,192,116
        ---------------------------------------------------------------------


    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                            Total
                                     Within     1 to 3   3 Months     Within
    ($ millions)                    1 Month     Months  to 1 Year     1 Year
    -------------------------------------------------------------------------
    July 31, 2007
    Total assets                  $   3,913  $     694  $   1,679  $   6,286
    Total liabilities and equity      3,956        652      1,545      6,153
    -------------------------------------------------------------------------
    Interest rate sensitive gap   $     (43) $      42  $     134  $     133
    -------------------------------------------------------------------------
    Cumulative gap                $     (43)        (1) $     133  $     133
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets       (0.0%)     (0.0%)      1.4%       1.4%
    -------------------------------------------------------------------------

    April 30, 2007
    Cumulative gap                $     (56) $    (119) $     130  $     130
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets       (0.7%)     (1.4%)      1.5%       1.5%
    -------------------------------------------------------------------------

    July 31, 2006
    Cumulative gap                $    (220) $    (341) $    (216) $    (216)
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets       (2.9%)     (4.5%)     (2.9%)     (2.9%)
    -------------------------------------------------------------------------


                                                             Non-
                                  1 Year to       Over   interest
    ($ millions)                    5 Years    5 Years  Sensitive    Total(1)
    -------------------------------------------------------------------------
    July 31, 2007
    Total assets                  $   2,978  $     185  $     101  $   9,550
    Total liabilities and equity      2,449        193        755      9,550
    -------------------------------------------------------------------------
    Interest rate sensitive gap   $     529  $      (8) $    (654) $       -
    -------------------------------------------------------------------------
    Cumulative gap                $     662  $     654  $       -  $       -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets        6.9%       6.8%         -%         -%
    -------------------------------------------------------------------------

    April 30, 2007
    Cumulative gap                $     597  $     569  $       -  $       -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets        7.1%       6.7%         -%         -%
    -------------------------------------------------------------------------

    July 31, 2006
    Cumulative gap                $     359  $     519  $       -  $       -
    -------------------------------------------------------------------------
    Cumulative gap as a
     percentage of total assets        4.8%       6.9%         -%         -%
    -------------------------------------------------------------------------

    (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
                  -----------------------------------------------------------
                   July 31  April 30   July 31   July 31  April 30   July 31
                      2007      2007      2006      2007      2007      2006
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $ 53,533  $ 49,523  $ 42,071  $  1,355  $  1,044  $    871
    Less teb
     adjustment      1,324     1,231       969        99        96        70
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements     52,209    48,292    41,102     1,256       948       801
    Other income(2) 11,685    11,175     9,889     4,092     5,062     4,053
    -------------------------------------------------------------------------
    Total revenues  63,894    59,467    50,991     5,348     6,010     4,854
    Provision for
     credit losses   2,550     2,550     2,550         -         -         -
    Non-interest
     expenses       28,688    28,020    23,746     2,139     2,132     2,192
    Provision for
     income taxes   10,840     9,340     8,919       992     1,216       745
    -------------------------------------------------------------------------
    Net income    $ 21,816  $ 19,557  $ 15,776  $  2,217  $  2,662  $  1,917
    -------------------------------------------------------------------------
    Total average
     assets
     ($ mill-
     ions)(3)     $  8,227  $  7,654  $  6,459  $    166  $    160  $    149
    -------------------------------------------------------------------------


                                                            Total
                                                -----------------------------
                                                     Three months ended
        ---------------------------------------------------------------------
                                                 July 31  April 30   July 31
                                                    2007      2007      2006
        ---------------------------------------------------------------------
        Net interest income (teb)(1)            $ 54,888  $ 50,567  $ 42,942
        Less teb adjustment                        1,423     1,327     1,039
        ---------------------------------------------------------------------
        Net interest income per
         financial statements                     53,465    49,240    41,903
        Other income                              15,777    16,237    13,942
        ---------------------------------------------------------------------
        Total revenues                            69,242    65,477    55,845
        Provision for credit losses                2,550     2,550     2,550
        Non-interest expenses                     30,827    30,152    25,938
        Provision for income taxes                11,832    10,556     9,664
        ---------------------------------------------------------------------
        Net income                              $ 24,033  $ 22,219  $ 17,693
        ---------------------------------------------------------------------
        Total average assets ($ millions)(3)    $  8,393  $  7,814  $  6,608
        ---------------------------------------------------------------------



                   Banking and Trust       Insurance             Total
                  -----------------------------------------------------------
                   Nine months ended   Nine months ended   Nine months ended
                  -----------------------------------------------------------
                   July 31   July 31   July 31   July 31   July 31   July 31
                      2007      2006      2007      2006      2007      2006
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $151,204  $120,278  $  3,460  $  2,436  $154,664  $122,714
    Less teb
     adjustment      3,640     2,720       274       164     3,914     2,884
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements    147,564   117,558     3,186     2,272   150,750   119,830
    Other income(2) 34,054    28,339    10,403    11,152    44,457    39,491
    -------------------------------------------------------------------------
    Total revenues 181,618   145,897    13,589    13,424   195,207   159,321
    Provision for
     credit losses   7,650     7,650         -         -     7,650     7,650
    Non-interest
     expenses       82,995    69,100     6,177     6,119    89,172    75,219
    Provision for
     income taxes   29,413    23,316     2,262     2,338    31,675    25,654
    -------------------------------------------------------------------------
    Net income    $ 61,560  $ 45,831  $  5,150  $  4,967  $ 66,710  $ 50,798
    -------------------------------------------------------------------------
    Total average
     assets
     ($ mill-
     ions)(3)     $  7,700  $  6,092  $    161  $    143  $  7,861  $  6,235
    -------------------------------------------------------------------------

        (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. Subsequent Event

        In August 2007, the Bank received affirmation from taxation
        authorities of certain prior period transactions that will result in
        the fourth quarter recognition of a $3,495 reduction to income tax
        expense and, net of an associated non-interest expense, a $2,945
        increase in net income.

    15. 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.

    16. 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.



    Head Office                       Transfer Agent and Registrar

    Canadian Western Bank & Trust     Valiant Trust Company
    Suite 2300, Canadian Western      Suite 310, 606 - 4th Street S.W.
     Bank Place                       Calgary, AB  T2P 1T1
    10303 Jasper Avenue               Telephone: (403) 233-2801
    Edmonton, AB  T5J 3X6             Fax: (403) 233-2857
    Telephone: (780) 423-8888         Website:  www.valianttrust.com
    Fax: (780) 423-8897               E-mail: inquiries@valianttrust.com
    Website: www.cwbankgroup.com
                                      Dividends
    Subsidiary Offices
                                      Cash dividends paid to Canadian
    Canadian Western Trust Company    residents in the 2007 calendar year
    Suite 600, 750 Cambie Street      are "eligible dividends" as defined in
    Vancouver, BC  V6B 0A2            the Income Tax Act.
    Telephone: (800) 663-1124
    Fax: (604) 669-6069               Investor Relations
    Website: www.cwt.ca
                                      For further financial information
    Canadian Direct Insurance         contact:
     Incorporated                     Kirby Hill, CFA
    Suite 600, 750 Cambie Street      Senior Manager, Investor and Public
    Vancouver, BC  V6B 0A2             Relations
    Telephone: (604) 699-3678         Canadian Western Bank
    Fax: (604) 699-3851               Telephone: (780) 441-3770
    Website: www.canadiandirect.com   Toll-free: 1-800-836-1886
                                      Fax: (780) 423-8899
    Valiant Trust Company             E-mail:
    Suite 310, 606 - 4th Street S.W.  InvestorRelations@cwbankgroup.com
    Calgary, AB  T2P 1T1
    Telephone: (403) 233-2801         Online Investor Information
    Fax: (403) 233-2857
    Website: www.valianttrust.com     Additional investor information
                                      including supplemental financial
    Stock Exchange Listing            information and a corporate
                                      presentation is available on our
    The Toronto Stock Exchange        website at www.cwbankgroup.com.
    Share Symbol: CWB
                                      Quarterly Conference Call and Webcast

                                      Our quarterly conference call and live
                                      audio webcast will take place on
                                      Thursday, September 6, 2007 at
                                      3:30 p.m. ET. The webcast will be
                                      archived on our website at
                                      www.cwbankgroup.com for sixty days. A
                                      replay of the conference call will be
                                      available until September 20, 2007 by
                                      dialing (416) 640-1917 or toll free
                                      (877) 289-8525 and entering passcode
                                      21217980, 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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