CWB Reports Record Results for the Fourth Quarter and Fiscal 2007



    28% annual loan growth
    11% increase in quarterly cash dividend declared

    EDMONTON, Dec. 6 /CNW/ - Canadian Western Bank (CWB on TSX) today
announced record quarterly earnings and total revenues (teb) on strong loan
growth of 4% in the quarter and 28% over the past year. Net income of $29.6
million and diluted earnings per share of $0.46 were both up 39% over the same
period last year reflecting very strong operating performance and a lower
effective tax rate. Annual net income of $96.3 million or $1.50 per diluted
share represented increases of 34% and 33% respectively over fiscal 2006.

    
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    Fourth Quarter Highlights:
    (three months ended October 31, 2007 compared with three months ended
    October 31, 2006 unless otherwise noted)
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    -   Net income of $29.6 million, up 39%. Fiscal 2007 net income of
        $96.3 million, up 34%.
    -   Diluted earnings per share of $0.46, up 39%. Fiscal 2007 diluted
        earnings per share of $1.50, up 33%.
    -   Loan growth of 4% in the quarter and 28% over the past twelve months.
    -   Total revenues (teb(1)) of $74.4 million, up 25%. Annual total
        revenues of $273.5 million, up 23%.
    -   Return on equity (ROE) of 20.1%, up 360 basis points. Annual ROE of
        17.4%, up 260 basis points.
    -   Efficiency ratio (teb) of 44.1%, an improvement of 90 basis points.
        Annual efficiency ratio of 44.6%, an improvement of 140 basis points
    -   Total assets surpassed $9.5 billion.
    -   New branch opened in Medicine Hat, Alberta.

    (1) Taxable equivalent basis. See definition following Financial
        Highlights table.
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    On December 5, 2007, CWB's Board of Directors declared a cash dividend of
$0.10 per common share, payable on January 3, 2008 to shareholders of record
on December 20, 2007. This quarterly dividend represents an 11% increase over
the previous quarterly dividend and is 25% higher than the quarterly dividend
declared one year ago.
    "Exceptional loan growth in the year drove our record earnings, but
consolidated results reflect the ongoing success of every business within the
CWB Group," said Larry Pollock, President and CEO. "We continue to benefit
from Western Canada's economies and expect to achieve sustained, high quality
organic growth. Our new performance targets for fiscal 2008 reflect confidence
that the Bank's strategic direction will continue to deliver strong financial
performance for our shareholders," added Pollock.
    Both operating segments performed very well in the quarter. The benefit
of continued strong loan growth, an outstanding quarterly income contribution
from trust services and a lower effective tax rate drove banking and trust
earnings, which were up 40% (29% before tax) to a record $26.9 million.
Earnings include the impact of a previously disclosed tax benefit that
increased fourth quarter net income by $2.9 million ($0.04 per diluted share).
This compares to a tax benefit recognized in the same quarter last year that
increased net income by $2.0 million ($0.03 per diluted share). Net income
from insurance operations increased 33% over the same quarter last year to
$2.6 million.
    "It bears repeating that CWB has no direct exposure to any troubled
non-bank sponsored asset backed commercial paper, collateralized debt
obligations or U.S. subprime mortgages," said Pollock. "We are maintaining
higher liquidity levels in response to recent market events because of
increased uncertainties in financial markets. Although our margins are lower,
this strategy reinforces our conservative risk tolerance and puts us in an
excellent position to manage further unexpected events and capitalize on
strategic opportunities that may become available," added Pollock.

    
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    Financial Highlights
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                                  For the three months ended          Change
    (unaudited)               -----------------------------------       from
    ($ thousands, except      October 31     July 31  October 31  October 31
     per share amounts)             2007        2007        2006        2006
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    Results of Operations
      Net interest income
       (teb - see below)      $   55,995  $   54,888  $   45,970          22%
      Less teb adjustment          1,496       1,423       1,194          25
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      Net interest income per
       financial statements       54,499      53,465      44,776          22
      Other income                18,364      15,777      13,595          35
      Total revenues (teb)        74,359      70,665      59,565          25
      Total revenues              72,863      69,242      58,371          25
      Net income                  29,572      24,033      21,209          39
      Earnings per common share
        Basic                       0.47        0.39        0.34          38
        Diluted                     0.46        0.37        0.33          39
      Return on shareholders'
       equity(1)                    20.1%       17.1%       16.5%   360 bp(2)
      Return on assets(3)           1.29        1.14        1.20           9
      Efficiency ratio(4) (teb)     44.1        43.6        45.0         (90)
      Efficiency ratio              45.0        44.5        46.0        (100)
      Net interest margin
       (teb)(5)                     2.43        2.59        2.59         (16)
      Net interest margin           2.37        2.53        2.53         (16)
      Provision for credit
       losses as a percentage
       of average loans             0.14        0.15        0.18          (4)
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    Per Common Share
      Cash dividends(6)       $     0.09  $     0.09  $     0.07          29%
      Book value                    9.48        9.05        8.39          13
      Closing market value         30.77       27.87       21.15          45
      Common shares
       outstanding (thousands)    62,836      62,549      61,936           1
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    Balance Sheet and
     Off-Balance Sheet Summary
      Assets                  $9,525,040  $8,881,114  $7,268,360          31%
      Loans                    7,405,580   7,090,632   5,781,837          28
      Deposits                 8,256,918   7,656,542   6,297,007          31
      Subordinated debentures    390,000     390,000     198,126          97
      Shareholders' equity       595,493     565,887     519,530          15
      Assets under
       administration          4,283,900   4,049,310   3,344,414          28
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    Capital Adequacy
      Tangible common equity
       to risk-weighted
       assets(7)                     7.7%       7.6%         8.6%    (90) bp
      Tier 1 ratio(8)                9.1        9.0         10.1        (100)
      Total ratio(8)                13.7       13.6         13.7           -
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                                 For the year ended       Change
    (unaudited)               -----------------------       from
    ($ thousands, except      October 31  October 31  October 31
     per share amounts)             2007  	 2006        2006
    -------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)      $  210,659  $  168,684          25%
      Less teb adjustment          5,410       4,078          33
    -------------------------------------------------------------
      Net interest income per
       financial statements      205,249     164,606          25
      Other income                62,821      53,086          18
      Total revenues (teb)       273,480     221,770          23
      Total revenues             268,070     217,692          23
      Net income                  96,282      72,007          34
      Earnings per common share
        Basic                       1.54        1.17          32
        Diluted                     1.50        1.13          33
      Return on shareholders'
       equity(1)                    17.4%       14.8%     260 bp
      Return on assets(3)           1.18        1.12           6
      Efficiency ratio(4) (teb)     44.6        46.0        (140)
      Efficiency ratio              45.5        46.9        (140)
      Net interest margin
       (teb)(5)                     2.58        2.62          (4)
      Net interest margin           2.51        2.56          (5)
      Provision for credit
       losses as a percentage
       of average loans             0.16        0.20          (4)
    -------------------------------------------------------------
    Per Common Share
      Cash dividends(6)       $     0.34  $     0.25          36%
      Book value                    9.48        8.39          13
      Closing market value         30.77       21.15          45
      Common shares
       outstanding (thousands)    62,836      61,936           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) Net interest margin is calculated as annualized net interest income
        divided by average total assets.
    (6) 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.
    (7) 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 Office of the Superintendent of Financial Institutions Canada
        (OSFI).
    (8) 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
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    Canadian Western Bank (CWB or the Bank) is pleased to report record
financial performance for both the fourth quarter and the year ended October
31, 2007. Results were well ahead of all 2007 performance targets and marked
the Bank's 18th consecutive year of double-digit loan growth.
    Fourth quarter net earnings of $29.6 million and $0.46 per diluted share
were both up 39% over the same period last year on 25% growth in total
revenues (teb). For the year, net income and diluted earnings per share
increased 34% and 33% to $96.3 million and $1.50 respectively, while total
revenues (teb) were up 23%. Record earnings benefited from strong loan growth
of 4% in the quarter and 28% over the past year. Quarterly net income also
reflects an outstanding contribution from trust services, a lower effective
tax rate and a reduced net interest margin.
    Strong operating performance combined with the Bank's more efficient
capital structure resulted in a 360 basis point year-over-year increase in
quarterly return on equity to 20.1%. Return on equity for the year improved
260 basis points to 17.4%.
    As previously disclosed, CWB has no direct exposure to any troubled
non-bank sponsored asset backed commercial paper, collateralized debt
obligations or U.S. subprime mortgages.

    Share Price Performance

    CWB shares ended the year at $30.77, up from $21.15 twelve months
earlier. Including reinvested dividends, the total return to shareholders over
the year ended October 31, 2007 was 47%.

    Dividends

    On December 5, 2007, CWB's Board of Directors declared a cash dividend of
$0.10 per common share, payable on January 3, 2008 to shareholders of record
on December 20, 2007. This quarterly dividend represents an 11% increase over
the previous quarterly dividend and is 25% higher than the quarterly dividend
declared one year ago.

    Loan Growth

    The Bank's organic loan growth was 4% in the quarter and growth for the
year was well beyond our expectations. As in previous quarters, Alberta and
British Columbia (BC) were the primary areas of growth, led by strong
performance in the real estate, energy and personal lending sectors. Loan
growth in 2007 was double our 14% annual target due to excellent growth
contributions from all lending areas and robust economic conditions. The
Bank's 15% loan growth target for fiscal 2008 reflects expectations for
continued double-digit growth supported by CWB's expanding market presence and
continued economic strength in our chosen markets.
    Our alternative mortgage business, Optimum Mortgage, showed strong
results growing 5% in the quarter and 64% over the past year to comprise
approximately 5% of total loans. Slower growth in the quarter primarily
reflects market uncertainty and moderating residential sales activity in some
markets. This business continues to provide very strong returns and we remain
comfortable with its overall risk profile. Selective expansion of this
business remains an important part of our long-term growth strategy.

    Credit Quality

    Credit quality remained strong due to a combination of favourable overall
economic conditions and disciplined credit underwriting. However, some of our
borrowers have been impacted by ongoing weakness in the forestry and natural
gas markets. We are monitoring exposures to these markets closely and remain
confident in the strength and diversity of the loan portfolio. The charge for
credit losses was consistent with prior periods and we are well positioned to
manage turns in the credit cycle.

    Branch Deposit Growth

    Growing additional sources of core branch-raised deposits remains a
priority, as our success in this area provides important funding
diversification. CWB launched a high-interest savings account in July 2007
branded "Summit Savings", which has been very well received. Total deposits
from this initiative reached $321 million at year-end and this product is
proving to be an excellent tool to expand our customer base and increase brand
awareness. Total deposits raised through our branch network and Canadian
Western Trust Company (CWT) continued to show very strong growth increasing 5%
in the quarter and 27% in the past twelve months. The demand and notice
component within branch-raised deposits was up 11% in the quarter and 34% over
past year, partially due to the success of Summit Savings.

    Net Interest Margin

    Net interest margin (teb) in the quarter was 2.43%, down 16 basis points
from both the previous quarter and the same period last year. Reduced
quarterly net interest margin reflects increased uncertainties in financial
markets that have driven up deposit costs and prompted the Bank to raise its
liquidity levels. Also contributing to the decrease was a change in accounting
estimate related to the amortization of premiums on certain securities.
Compared to a year earlier, higher debenture interest costs further impacted
net interest margin. Although higher credit yields on new loans should help
offset increased deposit costs, pressures on net interest margin are expected
to continue until spreads in financial markets return to more normal levels.

    Trust Services

    Trust services showed excellent performance in the quarter confirming the
success of the Bank's ongoing strategy to achieve further income
diversification. Valiant Trust showed particularly strong results because of
unusually large trust transactions. CWT and Valiant Trust provide solid
platforms for continued growth and we expect strong performance from both
these businesses as we move forward.

    Insurance

    Our insurance subsidiary, Canadian Direct Insurance, reported fourth
quarter net income of $2.6 million. We are pleased with the progress of this
business segment despite ongoing regulatory and competitive challenges, as it
provides a solid income contribution and supports the Bank's strategies to
diversify revenues and enhance return on equity. Future initiatives for this
segment include further development of the Internet-based technology platform,
which will help facilitate new growth opportunities, including the ability to
sell the home product online.

    Outlook

    From the beginning of the year the Bank's results surpassed our
expectations and led to excellent performance compared to all of our 2007
targets. CWB's targets for fiscal 2008 reflect our outlook for continued
strong performance, but at more sustainable levels than achieved last year.
Our Think Western(R) approach to customer service coupled with ongoing
economic strength in our markets is expected to drive continued double-digit
growth. The Bank's conservative risk profile and proven business strategies
should allow us to build continued momentum, while effectively managing any
future credit and market-related events. We also remain ready to capitalize on
new strategic opportunities that may become available, including accretive
acquisitions. Achieving further income diversification remains a top priority
and will be accomplished through ongoing expansion of our trust and insurance
businesses. We plan to strengthen our position as an employer of choice, as
our talented and dedicated employees are the Bank's most important assets and
add value for customers and shareholders. Our continuing focus on people,
infrastructure, process and business enhancement will guide our strategic
direction in 2008 as we take CWB to the next level of its development.
    We look forward to reporting our fiscal 2008 first quarter results on
March 6, 2008.

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    Q4 Results Conference Call

    CWB's fourth quarter results conference call is scheduled for Thursday,
    December 6, 2007 at 12:00 p.m. ET (10:00 a.m. MT). The Bank's executives
    will comment on fourth 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 at www.cwbankgroup.com. The webcast will be
    archived on the Bank's website for 60 days.

    A replay of the conference call will be available until December 20, 2007
    by dialing 416-640-1917 (Toronto) or 1-877-289-8525 (toll-free) and
    entering passcode 21249441, followed by the pound sign.
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    About Canadian Western Bank

    Canadian Western Bank offers highly personalized service through 35
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 more than $9.5 billion and assets under
administration of over $4.2 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
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    This management's discussion and analysis (MD&A) should be read in
conjunction with the unaudited interim consolidated financial statements for
the period ended October 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.
The 2007 Annual Report and audited consolidated financial statements for the
year ended October 31, 2007 will be available on both SEDAR and the Bank's
website at www.cwbankgroup.com in mid-December 2007. The 2007 Annual Report
will be distributed to shareholders in January 2008.

    Overview

    Canadian Western Bank (CWB or the Bank) posted record quarterly net
income and total revenues (teb) for its 78th consecutive profitable quarter.
Fourth quarter earnings were up 39% over the previous year to $29.6 million,
or $0.46 ($0.47 basic) per diluted share.
    Both operating segments performed very well in the quarter. Banking and
trust earnings were a record $26.9 million, up 40% over the same quarter last
year. This segment benefited from continued strong loan growth of 4% for the
quarter and 28% for the year, an outstanding earnings contribution from trust
services and a lower effective tax rate. Earnings include the impact of a
previously disclosed tax benefit that increased fourth quarter net income by
$2.9 million ($0.04 per diluted share). This compares to a tax benefit
recognized in the same quarter last year that increased net income by $2.0
million ($0.03 per diluted share). The contribution from Canadian Direct
Insurance Incorporated (Canadian Direct) increased 33% to $2.6 million.
    Compared to last year, fiscal 2007 net income of $96.3 million increased
34% ($24.3 million) on 23% growth in total revenues, on a taxable equivalent
basis (teb - see definition following Financial Highlights table). Diluted
earnings per share were $1.50 ($1.54 basic), up 33% from $1.13 ($1.17 basic) a
year earlier.
    Net income increased 23% ($5.5 million) over the previous quarter
reflecting strong operating performance and a much lower effective tax rate.
On a before tax basis, earnings were up 5% ($1.7 million) over last quarter
reflecting 16% growth ($2.6 million) in other income and 4% loan growth,
partially offset by a lower net interest margin and a 6% ($1.9 million)
increase in non-interest expenses.
    Fourth quarter return on equity was 20.1%, up from 16.5% last year.
Return on equity for the year increased 260 basis points to 17.4%. Return on
equity benefited from very strong operating performance across all business
lines as well as CWB's more efficient regulatory capital structure. Fourth
quarter return on assets was 1.29%, up from 1.20% a year earlier. Return on
assets for the year of 1.18% represented a six basis point improvement over
2006.

    Total Revenues (teb)

    Total revenues, which are comprised of net interest income and other
income, were a record $74.4 million representing a 25% ($14.8 million)
increase over the same quarter last year. Revenues were driven by 28% loan
growth and 35% ($4.8 million) growth in other income. Fiscal 2007 total
revenues increased 23% ($51.7 million) to $273.5 million due to robust asset
growth and 18% ($9.7 million) higher other income. Total revenues were up 5%
($3.7 million) over the third quarter reflecting exceptional trust services
fee income, continued asset growth and a solid contribution from insurance
operations, partially offset by higher interest expense and lower credit
related fee income.

    Net Interest Income (teb)

    Quarterly net interest income of $56.0 million increased 22% ($10.0
million) over the same time last year driven by excellent loan growth,
partially offset by a 16 basis point decrease in net interest margin. Compared
to the fourth quarter last year, lower net interest margin was primarily
affected by higher debenture interest costs from subordinated debentures
issued in March 2007, as well as increased funding costs and higher liquidity,
both largely related to financial market events. Net interest margin was
further reduced by a change in accounting estimate related to the amortization
of premiums on certain securities.
    Net interest income (teb) for the year of $210.7 million was 25% ($42.0
million) higher than 2006 due to increased interest earning assets, partially
offset by a four basis point decline in net interest margin. Lower net
interest margin for the year mainly reflects higher debenture interest costs
and changes in the deposit mix.
    Net interest income (teb) increased 2% ($1.1 million) over the previous
quarter driven by 4% loan growth and offset by a 16 basis point decline in net
interest margin. Compared to the third quarter, reduced net interest margin
reflects increased deposit costs, higher liquidity and the previously noted
change in accounting estimate.
    Note 13 to the unaudited interim consolidated financial statements
provides a summary of the Bank's exposure to interest rate risk as at October
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 2.54%. This compares to July 31,
2007, when a one-percentage point increase in all interest rates would have
increased net interest income by approximately 1.44%. The Bank's overall
strategy remains relatively neutral with respect to taking specific positions
on interest rate risk.

    Other Income

    Other income of $18.4 million was 35% ($4.8 million) higher than the same
quarter last year mainly due to a 106% ($2.9 million) increase in trust
services fee income. Quarterly growth in trust services fee income reflects
unusually large trust transactions. Net insurance revenues were up 18% ($0.8
million) over the same quarter last year while foreign exchange gains were
$0.5 million higher. Quarterly contributions from credit related and retail
services fee income increased 7% ($0.3 million) and 12% ($0.2 million)
respectively.
    For the year, other income of $62.8 million was up 18% ($9.7 million)
mainly driven by strong increases in credit related, trust services and retail
fees. Net insurance revenues were up modestly from 2006, as higher claims
experience due primarily to severe BC storm activity in the first quarter
largely offset the benefit from 17% net earned premiums growth, a $1.6 million
improvement in the before tax contribution from the Alberta auto risk sharing
pools and a $1.4 million increase in net interest income.
    Other income was up 16% ($2.6 million) in comparison to the previous
quarter reflecting increases in trust services fees, net insurance revenues
and foreign exchange gains, offset by lower credit related fee income.

    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 14 basis points, compared to 15 basis points in the previous quarter
and 18 basis points in the same period last year. The provision for credit
losses in fiscal 2007 was unchanged at $10.2 million and represented 16 basis
points of average loans, compared to 20 basis points in 2006. Lower provisions
measured as a percentage of average loans reflect consistent dollar provisions
against robust loan growth.
    Gross impaired loans at October 31, 2007 were $21.1 million, compared
with $15.1 million last quarter and $10.4 million a year earlier. The total
amount of gross impaired loans remains low by historical measures with the
quarterly increase largely due to forestry related accounts. Overall exposure
to this sector remains low representing approximately 3% of the total
portfolio. The dollar level of gross impaired loans 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
299% of gross impaired loans at October 31, 2007, compared to 402% last
quarter and 514% one year ago. The general allowance as a percentage of
risk-weighted loans was 78 basis points, compared to 81 basis points in the
previous quarter and 88 basis points a year earlier.

    Non-interest Expenses

    Non-interest expenses were $32.8 million, up 22% ($5.9 million) over the
same quarter last year and 6% ($1.9 million) over the previous quarter.
Non-interest expenses for the year increased 19% ($19.9 million) over 2006.
Higher non-interest expenses mainly reflect increased staff complement,
stock-based compensation charges, annual salary increments, a mark-to-market
adjustment for staff loans and benefits due to new accounting requirements,
and premises and other expenses to manage business growth. Additional expense
of $0.9 million was recorded in the fourth quarter related to the tax recovery
explained under income taxes.
    Growth in revenues continued to outpace non-interest expenses and the
efficiency ratio (teb), which measures non-interest expenses as a percentage
of total revenues (teb), improved 90 basis points from the same quarter last
year to 44.1%. The efficiency ratio (teb) for the year of 44.6% represents a
140 basis point improvement over last year and was considerably better than
the fiscal 2007 target of 46.0%. In comparison to the previous quarter, the
efficiency ratio (teb) decreased 50 basis points due to expenses related to
the tax recovery.

    Income Taxes

    The fourth quarter income tax rate (teb) was 24.3%, down 540 basis points
from one year ago, while the tax rate before the teb adjustment was 21.2%, or
560 basis points lower. The quarterly provision includes a reduction to income
taxes of $3.5 million and the effective tax rate of 260 basis points related
to the previously disclosed affirmation from taxation authorities of certain
prior period transactions. The fourth quarter provision also reflects a $0.7
million tax-advantage from a deemed dividend received on a preferred share
redemption, largely offset by the impact of higher non-deductible compensation
expense related to employee stock options. For comparison purposes, the
provision in the fourth quarter of 2006 included a tax benefit of $2.0 million
that reduced the effective tax rate by 190 basis points.
    The income tax rate (teb) for the year was 31.9%, down from 34.3%. The
tax rate before the teb adjustment was 29.2% compared to 31.7% in the prior
year. Compared to 2006, lower effective income tax rates resulted in a 60
basis point reduction in the provision for income taxes.

    Balance Sheet

    Total assets increased 7% ($644 million) in the quarter and 31% ($2,257
million) in the past year to reach $9,525 million at October 31, 2007.

    Cash and Securities

    Cash, securities and securities purchased under resale agreements totaled
$1,961 million at October 31, 2007, compared to $1,633 million last quarter
and $1,333 million one year ago. The Bank is maintaining higher liquidity
levels in response to increased uncertainties in financial markets. Although
this strategy has a negative effect on net interest margin, it is consistent
with the Bank's conservative risk tolerance and augments its strong position
to manage future unexpected events.
    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 October 31, 2007 was $9.3
million, compared to $13.3 million last quarter. The value of unrealized and
unrecorded losses as at October 31, 2006 was $0.6 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. The Bank has no direct exposure
to any troubled non-bank sponsored asset backed commercial paper,
collateralized debt obligations or U.S. subprime lending.

    Loans

    Total loans increased 4% ($315 million) in the quarter and 28% ($1,624
million) in the past year to total $7,406 million at October 31, 2007. Loan
growth reflects strong deal flow across Alberta and BC with the real estate,
energy and personal lending sectors showing the best quarterly performance.
Each lending area achieved very strong double-digit growth for the year and
made a significant contribution towards combined results. Deal flow remains
healthy despite increased challenges in lending areas related to forestry and
natural gas markets, as well as moderating residential resale activity in some
markets. Overall, strong double-digit loan growth is expected to continue, but
at more sustainable levels than achieved in fiscal 2007.

    Deposits

    Growth in total branch deposits kept pace with excellent loan growth
increasing 5% in the quarter and 27% in the past year. Demand and notice
deposits increased 11% in the quarter and 34% over the past twelve months.
Growth in demand and notice deposits in the quarter was largely spurred by the
success of CWB's high-interest savings account launched in July 2007.
Reflecting the Bank's commercial focus, 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 provides further diversification of funding sources.
    Total deposits at October 31, 2007 were $8,257 million, an increase of 8%
($600 million) in the quarter and 31% ($1,960 million) over the past year.
Total branch deposits measured as a percentage of total deposits were 64%,
compared to 67% the previous quarter and 66% last year. Lower branch-raised
deposits as a percentage of total deposits reflect increased liquidity raised
through a deposit broker network in response to financial market
uncertainties. Demand and notice deposits measured as a percentage of total
deposits remained consistent with the previous quarter at 27%, up from 26%
last year.

    Other Assets and Other Liabilities

    Other assets at October 31, 2007 totaled $158 million, compared to $157
million last quarter and $154 million one year ago. Other liabilities at
quarter end were $283 million, compared to $269 million the previous quarter
and $254 million last year.

    Off-Balance Sheet

    Off-balance sheet items include trust assets under administration, which
totaled $4,284 million at the end of the fourth quarter, compared to $4,049
million last quarter and $3,344 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 7 to the October 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 13.7% at October 31, 2007, up from
13.6% last quarter and unchanged from one year ago. The Tier 1 ratio was 9.1%,
compared to 9.0% in the previous quarter and 10.1% the same time last year.
Improved capital ratios over the previous quarter reflect record earnings.
CWB's regulatory capital in the year increased with $200 million of
subordinated debentures issued in March 2007, earnings retention and a higher
general allowance for credit losses, partially offset by unrealized losses
recorded in other comprehensive income and the redemption of $3.1 million of
subordinated debentures. The lower Tier 1 capital ratio compared to October
31, 2006 reflects 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. A strong
capital position also provides flexibility in considering opportunities for
accretive acquisitions and future dividend increases.
    Effective November 1, 2007, Canadian financial institutions are required
to manage and report regulatory capital in compliance with the Basel II
Capital Adequacy Accord (Basel II). CWB expects a modest positive impact for
both the total and Tier 1 capital ratios under applicable Basel II guidelines.
    Book value per common share at October 31, 2007 was $9.48 compared to
$9.05 last quarter and $8.39 one year ago.
    Common shareholders received a quarterly cash dividend of $0.09 per
common share on October 4, 2007. On December 5, 2007, the Board of Directors
declared a quarterly cash dividend of $0.10 per common share payable on
January 3, 2008 to shareholders of record on December 20, 2007. This quarterly
dividend represents an 11% increase over the previous quarterly dividend and
is 25% 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 October 31, 2007 that have
materially affected, or are reasonably likely to materially affect, internal
control over financial reporting.

    Updated Share Information

    As at November 30, 2007, there were 62,901,187 common shares outstanding.
Also outstanding were employee stock options, which are or will be exercisable
for up to 4,835,277 common shares for maximum proceeds of $82.8 million.

    Summary of Quarterly Financial Information

    
                                                    2007
    -------------------------------------------------------------------------
    ($ thousands)                  Q4          Q3          Q2          Q1
    -------------------------------------------------------------------------
    Total revenues (teb)      $   74,359  $   70,665  $   66,804  $   61,652
    Total revenues                72,863      69,242      65,477      60,488
    Net income                    29,572      24,033      22,219      20,458
    Earnings per common share
      Basic                         0.47        0.39        0.36        0.33
      Diluted                       0.46        0.37        0.35        0.32
    Total assets ($ millions)      9,525       8,881       8,022       7,565
    -------------------------------------------------------------------------

                                                    2006
    -------------------------------------------------------------------------
    ($ thousands)                  Q4          Q3          Q2          Q1
    -------------------------------------------------------------------------
    Total revenues (teb)      $   59,565  $   56,884  $   53,011  $   52,310
    Total revenues                58,371      55,845      52,038      51,438
    Net income                    21,209      17,693      16,667      16,438
    Earnings per common share
      Basic                         0.34        0.29        0.27        0.27
      Diluted                       0.33        0.28        0.26        0.26
    Total assets ($ millions)      7,268       6,871       6,476       6,021
    -------------------------------------------------------------------------
    

    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 and on CWB's website at www.cwbankgroup.com. The
2007 Annual Report and audited consolidated financial statements for the year
ended October 31, 2007 will be available on both SEDAR and the Bank's website
in mid-December, 2007. The 2007 Annual Report will be distributed to
shareholders in January 2008.

    Results by Business Segment

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

    Banking and Trust

    Operations of the banking and trust segment include commercial and retail
banking services, as well as personal and corporate trust services provided
through CWB's wholly owned subsidiaries, Canadian Western Trust Company (CWT)
and Valiant Trust Company (Valiant).
    Record banking and trust earnings of $26.9 million were up 40% ($7.7
million) over the same quarter last year driven by excellent 28% loan growth,
a 106% ($2.9 million) increase in trust services fees and a tax benefit that
increased net income by $2.9 million. The significant increase in trust
revenues reflects unusually large trust transactions. Credit related and
retail service fee income showed good results growing 7% ($0.3 million) and
12% ($0.2 million) respectively. On a before tax basis, fourth quarter
earnings were up 29% ($7.8 million) reflecting very strong growth in both net
interest income (teb) and other income. Revenue growth continued to outpace
non-interest expenses, as evidenced by a 50 basis point improvement in the
quarterly efficiency ratio (teb). Fourth quarter net interest margin (teb) was
down 18 basis points from last year primarily due to higher debenture interest
costs, increased deposit costs and liquidity levels related to financial
market events, and a change in accounting estimate related to the amortization
of premiums on certain securities.
    For the year, banking and trust earnings were $88.5 million representing
36% ($23.4 million) growth over fiscal 2006. Annual net income benefited from
a 25% ($40.6 million) increase in net interest income (teb) and 26% ($9.7
million) growth in other income. The efficiency ratio (teb) improved 140 basis
points to set a new benchmark of 44.8%, reflecting 25% growth in total
revenues (teb) and a 21% increase in non-interest expenses. Net interest
margin (teb) in the year was 2.57%, down six basis points mainly due to higher
debenture interest costs and changes in the deposit mix. Total branch-raised
deposits increased 27% in the year. The demand and notice component of
branch-raised deposits was up 34% with growth in the most recent quarter
largely reflecting the success of CWB's newly launched high-interest savings
account.
    In comparison to the previous quarter, banking and trust earnings
increased 24% ($5.1 million) reflecting a much lower effective tax rate. On a
before tax basis, earnings were up 3% ($1.1 million) due to very strong other
income and 4% quarterly loan growth, largely offset by a lower net interest
margin and higher non-interest expenses. The quarterly efficiency ratio (teb)
decreased 70 basis points due to an expense related to the fourth quarter
income tax benefit. The 16 basis point quarterly decline in net interest
margin mainly reflects increased deposit costs, higher liquidity and the
previously noted change in accounting estimate.

    
                                   For the three months ended         Change
                              -----------------------------------       from
                              October 31     July 31  October 31  October 31
    ($ thousands)                   2007        2007        2006        2006
    -------------------------------------------------------------------------
    Net interest income (teb) $   54,663  $   53,533  $   44,971          22%
    Other income                  13,452      11,685       9,452          42
    -------------------------------------------------------------------------
    Total revenues (teb)          68,115      65,218      54,423          25
    Provision for credit losses    2,550       2,550       2,550           -
    Non-interest expenses         30,461      28,688      24,611          24
    Provision for income
     taxes (teb)                   8,155      12,164       8,026           2
    -------------------------------------------------------------------------
    Net income                $   26,949  $   21,816  $   19,236          40%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)          44.7%       44.0%       45.2%    (50) bp
    Efficiency ratio                45.6        44.9        46.2         (60)
    Net interest margin (teb)       2.42        2.58        2.60         (18)
    Net interest margin             2.36        2.52        2.53         (17)
    Average loans (millions)  $    7,198  $    6,774  $    5,606          28%
    Average assets (millions)      8,953       8,227       6,872          30
    -------------------------------------------------------------------------


                                 For the year ended       Change
                              -----------------------       from
                              October 31  October 31  October 31
    ($ thousands)                   2007        2006        2006
    -------------------------------------------------------------
    Net interest income (teb) $  205,867  $  165,249          25%
    Other income                  47,506      37,791          26
    -------------------------------------------------------------
    Total revenues (teb)         253,373     203,040          25
    Provision for credit losse    10,200      10,200           -
    Non-interest expenses        113,456      93,711          21
    Provision for income
     taxes (teb)                  41,208      34,062          21
    -------------------------------------------------------------
    Net income                $   88,509  $   65,067          36%
    -------------------------------------------------------------
    Efficiency ratio (teb)          44.8%       46.2%   (140) bp
    Efficiency ratio                45.7        47.0        (130)
    Net interest margin (teb)       2.57        2.63          (6)
    Net interest margin             2.51        2.57          (6)
    Average loans (millions)  $    6,570  $    5,142          28%
    Average assets (millions)      8,014       6,287          27
    -------------------------------------------------------------

    bp -  basis point change.
    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, which provides auto and home insurance to
individuals in BC and Alberta.
    Canadian Direct reported fourth quarter net income of $2.6 million, a 33%
increase over the same period last year. Growth in policies outstanding and
good customer retention combined with the elimination of quota share
reinsurance led to 17% growth in net earned premiums. Canadian Direct's share
of the Alberta auto risk sharing pools (the Pools) contributed $1.2 million in
before tax income, compared to $0.9 million in the same quarter last year. The
Pools' results for both years reflect a favorable adjustment to unpaid claims
reserves based on revised loss assumptions derived by the Pools' consulting
actuary. Excluding the Pools' impact, the quarterly claims loss ratio was 65%,
compared to 67% a year earlier due to lower frequency and severity of claims
in the BC auto product. The favorable claims experience in BC auto helped
mitigate ongoing challenges brought about by the pricing strategies of the
Insurance Corporation of British Columbia. Net interest income increased $0.3
million largely reflecting an increase in invested assets.
    For the year, Canadian Direct's net income of $7.8 million was up 12%
($0.8 million) over 2006 despite a 100 basis point increase in the claims loss
ratio. Growth in net earned premiums, a $1.6 million before tax positive
difference in Canadian Direct's share of the Pools and a $1.4 million increase
in net interest income more than offset the unusually high frequency and
severity of home claims due to severe BC storm activity in the first quarter.
Compared to the third quarter, earnings were up $0.4 million reflecting a $1.2
million before tax income contribution from the Pools.

    
                                   For the three months ended         Change
                              -----------------------------------       from
                              October 31     July 31  October 31  October 31
    ($ thousands)                   2007        2007        2006        2006
    -------------------------------------------------------------------------
    Net interest income (teb) $    1,332  $    1,355  $      999          33%
    -------------------------------------------------------------------------
    Other income (net)
      Net earned premiums         24,172      24,988      20,709          17
      Commissions and
       processing fees               743         733       1,327         (44)
      Net claims and
       adjustment expenses       (14,896)    (16,097)    (13,230)         13
      Policy acquisition costs    (5,100)     (5,531)     (4,653)         10
    -------------------------------------------------------------------------
    Insurance revenue (net)        4,919       4,093       4,153          18
    Gains (losses) on sale
     of securities                    (7)         (1)        (10)         nm
    -------------------------------------------------------------------------
    Total revenues (net) (teb)     6,244       5,447       5,142          21
    Non-interest expenses          2,301       2,139       2,219           4
    Provision for income
     taxes (teb)                   1,320       1,091         950          39
    -------------------------------------------------------------------------
    Net income                $    2,623  $    2,217  $    1,973          33%
    -------------------------------------------------------------------------
    Policies outstanding (No.)   164,263     163,875     158,965           3
    Gross written premiums    $   27,086  $   29,992  $   26,161           4
    Claims loss ratio(1)              62%         64%         64%   (200) bp
    Expense ratio(2)                  27          28          27           -
    Combined ratio(3)                 89          92          91        (200)
    Alberta auto risk sharing
     pools impact on net
     income before tax        $    1,155  $     (101) $      906          27
    Average total assets
     (millions)                      174         166         161           8
    -------------------------------------------------------------------------


                                 For the year ended       Change
                              -----------------------       from
                              October 31  October 31  October 31
    ($ thousands)                   2007        2006        2006
    -------------------------------------------------------------
    Net interest income (teb) $    4,792  $    3,435          40%
    -------------------------------------------------------------
    Other income (net)
      Net earned premiums         94,914      81,674          16
      Commissions and
       processing fees             2,751       4,826         (43)
      Net claims and
       adjustment expenses       (62,391)    (52,962)         18
      Policy acquisition costs   (20,011)    (18,334)          9
    -------------------------------------------------------------
    Insurance revenue (net)       15,263      15,204           -
    Gains (losses) on sale
     of securities                    52          91         (43)
    -------------------------------------------------------------
    Total revenues (net) (teb)    20,107      18,730           7
    Non-interest expenses          8,478       8,338           2
    Provision for income
     taxes (teb)                   3,856       3,452          12
    -------------------------------------------------------------
    Net income                $    7,773  $    6,940          12%
    -------------------------------------------------------------
    Policies outstanding (No.)   164,263     158,965           3
    Gross written premiums    $  104,829  $  100,227           5
    Claims loss ratio(1)              66%         65%     100 bp
    Expense ratio(2)                  27          27           -
    Combined ratio(3)                 93          92         100
    Alberta auto risk sharing
     pools impact on net
     income before tax        $    1,876  $      310          nm
    Average total assets
     (millions)                      164         147          12
    -------------------------------------------------------------

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

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


    Fiscal 2007 and 2008 Targets

    The performance targets established for the 2007 fiscal year are presented
in the table below, together with actual performance and targets for fiscal
2008.

                               ----------------------------------------------
                                    2007            2007            2008
                                   Target       Performance        Target
    -------------------------------------------------------------------------
    Net income growth                20%             34%             15%
    -------------------------------------------------------------------------
    Total revenue (teb) growth       15%             23%             17%
    -------------------------------------------------------------------------
    Loan growth                      14%             28%             15%
    -------------------------------------------------------------------------
    Provision for credit
     losses as a percentage
     of average loans          0.20% or less        0.16%           0.15%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)           46%            44.6%            45%
    -------------------------------------------------------------------------
    Return on equity                 15%            17.4%            17%
    -------------------------------------------------------------------------
    Return on assets                1.10%           1.18%           1.10%
    -------------------------------------------------------------------------
    

    CWB surpassed all 2007 performance targets by considerable margins led by
excellent 28% loan growth. Return on equity (ROE) continued to progress very
well reflecting both record earnings and a more efficient capital base. Growth
in total revenues (teb) continued to exceed expense growth establishing a new
benchmark efficiency ratio (teb) of 44.6%. Credit quality remained strong and
the Bank maintained level dollar provisions for credit losses on robust asset
growth.
    The fiscal 2008 loan growth target of 15% is based on expectations for
continued strong performance and includes consideration of recent industry and
financial market conditions. Other targets reflect management's outlook for
continued strong results in both business segments. Strong revenue growth
supported by disciplined cost control and increasing economies of scale should
help offset ongoing cost pressures in Western Canada. Further improvement in
the Bank's ROE remains a priority and asset growth will be supported by
efficient, non-dilutive sources of capital wherever possible.
    Economic strength in Western Canada continues to provide a solid flow of
new high quality lending opportunities. As always, the credit environment is
being monitored closely for any material shift in economic fundamentals and
the Bank remains well positioned to manage turns in the credit cycle. The Bank
also stands ready to capitalize on accretive growth opportunities, as well as
manage additional repercussions related to financial market events. A
strategic focus on people, infrastructure, process and business enhancement
will support further expansion within chosen markets. The overall outlook is
positive with 2008 expected to be another year of strong financial
performance.
    This management's discussion and analysis is dated December 5, 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      October 31     July 31  October 31  October 31
     per share amounts)             2007        2007        2006        2006
    -------------------------------------------------------------------------
    Interest Income
      Loans                   $  123,845  $  113,748  $   93,077          33%
      Securities                  13,696      11,712       8,996          52
      Deposits with regulated
       financial institutions      4,005       3,618       3,667           9
    -------------------------------------------------------------------------
                                 141,546     129,078     105,740          34
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                    81,556      70,124      58,076          40
      Subordinated debentures      5,491       5,489       2,888          90
    -------------------------------------------------------------------------
                                  87,047      75,613      60,964          43
    -------------------------------------------------------------------------
    Net Interest Income           54,499      53,465      44,776          22
    Provision for Credit Losses    2,550       2,550       2,550           -
    -------------------------------------------------------------------------
    Net Interest Income after
     Provision for Credit
     Losses                       51,949      50,915      42,226          23
    -------------------------------------------------------------------------
    Other Income
      Credit related               4,949       6,277       4,627           7
      Insurance, net (Note 3)      4,919       4,093       4,153          18
      Trust services               5,733       3,132       2,787         106
      Retail services              1,837       1,826       1,637          12
      Gains (losses) on sale
       of securities                   7          10         (19)        137
      Foreign exchange gains         825         371         295         180
      Other                           94          68         115         (18)
    -------------------------------------------------------------------------
                                  18,364      15,777      13,595          35
    -------------------------------------------------------------------------
    Net Interest and Other
     Income                       70,313      66,692      55,821          26
    -------------------------------------------------------------------------
    Non-interest Expenses
      Salaries and employee
       benefits                   19,995      19,466      16,837          19
      Premises and equipment       5,387       5,167       4,427          22
      Other expenses               6,767       5,628       5,099          33
      Provincial capital taxes       613         566         467          31
    -------------------------------------------------------------------------
                                  32,762      30,827      26,830          22
    -------------------------------------------------------------------------
    Net Income Before Provision
     for Income Taxes             37,551      35,865      28,991          30
    Provision for
     Income Taxes (Note 4)         7,979      11,832       7,782           3
    -------------------------------------------------------------------------
    Net Income                $   29,572  $   24,033  $   21,209          39%
    -------------------------------------------------------------------------

    Weighted average common
     shares outstanding(1)    62,690,892  62,413,781  61,808,846           1%

    Earnings per Common Share
      Basic                   $     0.47  $     0.39  $     0.34          38%
      Diluted                       0.46        0.37        0.33          39
    -------------------------------------------------------------------------


                                 For the year ended       Change
    (unaudited)               -----------------------       from
    ($ thousands, except      October 31  October 31  October 31
     per share amounts)             2007        2006        2006
    -------------------------------------------------------------
    Interest Income
      Loans                   $  439,668  $  327,588          34%
      Securities                  45,590      30,701          48
      Deposits with regulated
       financial institutions     13,677      11,214          22
    -------------------------------------------------------------
                                 498,935     369,503          35
    -------------------------------------------------------------
    Interest Expense
      Deposits                   275,840     193,647          42
      Subordinated debentures     17,846      11,250          59
    -------------------------------------------------------------
                                 293,686     204,897          43
    -------------------------------------------------------------
    Net Interest Income          205,249     164,606          25
    Provision for Credit Losses   10,200      10,200           -
    -------------------------------------------------------------
    Net Interest Income after
     Provision for Credit
     Losses                      195,049     154,406          26
    -------------------------------------------------------------
    Other Income
      Credit related              22,426      18,846          19
      Insurance, net (Note 3)     15,263      15,204           -
      Trust services              14,943      10,809          38
      Retail services              7,290       6,337          15
      Gains (losses) on sale
       of securities                 438         142         208
      Foreign exchange gains       2,159       1,520          42
      Other                          302         228          32
    -------------------------------------------------------------
                                  62,821      53,086          18
    -------------------------------------------------------------
    Net Interest and Other
     Income                      257,870     207,492          24
    -------------------------------------------------------------
    Non-interest Expenses
      Salaries and employee
       benefits                   76,506      64,759          18
      Premises and equipment      20,239      17,248          17
      Other expenses              22,780      18,163          25
      Provincial capital taxes     2,409       1,879          28
    -------------------------------------------------------------
                                 121,934     102,049          19
    -------------------------------------------------------------
    Net Income Before Provision
     for Income Taxes            135,936     105,443          29
    Provision for
     Income Taxes (Note 4)        39,654      33,436          19
    -------------------------------------------------------------
    Net Income                $   96,282  $   72,007          34%
    -------------------------------------------------------------

    Weighted average common
     shares outstanding(1)    62,354,101  61,514,674           1%

    Earnings per Common Share
      Basic                   $     1.54  $     1.17          32%
      Diluted                       1.50        1.13          33
    -------------------------------------------------------------

    (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
                                   As at       As at       As at        from
    (unaudited)               October 31     July 31  October 31  October 31
    ($ thousands)                   2007        2007        2006        2006
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and non-interest
       bearing deposits with
       financial institutions $    6,446  $   10,760  $   86,904        (93)%
      Interest bearing
       deposits with regulated
       financial institutions    405,122     312,513     350,601          16
      Cheques and other items
       in transit                  1,122         729         789          42
    -------------------------------------------------------------------------
                                 412,690     324,002     438,294          (6)
    -------------------------------------------------------------------------
    Securities (Note 5)
      Issued or guaranteed
       by Canada                 630,396     414,433     334,379          89
      Issued or guaranteed
       by a province or
       municipality              251,418     285,559     168,839          49
      Other securities           459,812     553,021     382,475          20
    -------------------------------------------------------------------------
                               1,341,626   1,253,013     885,693          51
    -------------------------------------------------------------------------
    Securities Purchased Under
     Resale Agreements           206,925      56,425       9,000          nm
    -------------------------------------------------------------------------
    Loans
      Residential mortgages    1,780,442   1,654,906   1,314,988          35
      Other loans              5,688,160   5,496,505   4,520,370          26
    -------------------------------------------------------------------------
                               7,468,602   7,151,411   5,835,358          28
      Allowance for credit
       losses (Note 6)           (63,022)    (60,779)    (53,521)         18
    -------------------------------------------------------------------------
                               7,405,580   7,090,632   5,781,837          28
    -------------------------------------------------------------------------
    Other
      Land, buildings and
       equipment                  25,736      24,443      24,198           6
      Goodwill                     6,933       6,933       6,933           -
      Intangible assets            2,681       2,817       3,224         (17)
      Insurance related           51,744      55,027      57,136          (9)
      Derivative related
       (Note 7)                    1,496         843           -          nm
      Other assets                69,629      66,979      62,045          12
    -------------------------------------------------------------------------
                                 158,219     157,042     153,536           3
    -------------------------------------------------------------------------
    Total Assets              $9,525,040  $8,881,114  $7,268,360          31
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders' Equity
    Deposits
      Payable on demand       $  376,488  $  398,885  $  391,252          (4)
      Payable after notice     1,843,799   1,628,043   1,262,270          46
      Payable on a fixed date  5,931,631   5,524,614   4,538,485          31
      Deposit from Canadian
       Western Bank Capital
       Trust                     105,000     105,000     105,000           -
    -------------------------------------------------------------------------
                               8,256,918   7,656,542   6,297,007          31
    -------------------------------------------------------------------------
    Other
      Cheques and other items
       in transit                 22,177      33,379      27,474         (19)
      Insurance related          124,480     124,095     120,936           3
      Derivative related
       (Note 7)                    1,307       2,109           -          nm
      Other liabilities          134,665     109,102     105,287          28
    -------------------------------------------------------------------------
                                 282,629     268,685     253,697          11
    -------------------------------------------------------------------------
    Subordinated Debentures
      Conventional (Note 8)      390,000     390,000     198,126          97
    -------------------------------------------------------------------------
    Shareholders' Equity
      Retained earnings          372,739     348,817     297,841          25
      Accumulated other
       comprehensive income
       (loss) (Note 10)           (5,931)     (9,608)          -          nm
      Capital stock              219,004     217,589     215,349           2
      Contributed surplus          9,681       9,089       6,340          53
    -------------------------------------------------------------------------
                                 595,493     565,887     519,530          15
    -------------------------------------------------------------------------
    Total Liabilities and
     Shareholders' Equity     $9,525,040  $8,881,114  $7,268,360          31
    -------------------------------------------------------------------------

    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 year ended
                                                      -----------------------
    (unaudited)                                       October 31  October 31
    ($ thousands)                                           2007        2006
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period                    $  297,841  $  241,221
      Cumulative effect of adopting of new
       accounting standards (Note 2)                        (166)          -
      Net income                                          96,282      72,007
      Dividends                                          (21,218)    (15,387)
    -------------------------------------------------------------------------
    Balance at end of period                             372,739     297,841
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income (Loss)
     (Note 10)
    Balance at beginning of period                             -           -
      Cumulative effect of adopting of new
       accounting standards (Note 2)                      (1,494)          -
      Other comprehensive income (loss)                   (4,437)          -
    -------------------------------------------------------------------------
    Balance at end of period                              (5,931)          -
    -------------------------------------------------------------------------
    Total retained earnings and accumulated other
     comprehensive income                                366,808     297,841
    -------------------------------------------------------------------------
    Capital Stock
    Balance at beginning of period (Note 9)              215,349     213,098
      Issued on exercise of employee stock options         2,464       1,669
      Transferred from contributed surplus on
       exercise or exchange of options                     1,191         582
    -------------------------------------------------------------------------
    Balance at end of period                             219,004     215,349
    -------------------------------------------------------------------------
    Contributed Surplus (Note 9)
    Balance at beginning of period                         6,340       3,671
      Amortization of fair value of employee stock
       options                                             4,532       3,251
      Transferred to capital stock on exercise or
       exchange of options                                (1,191)       (582)
    -------------------------------------------------------------------------
    Balance at end of period                               9,681       6,340
    -------------------------------------------------------------------------
    Total Shareholders' Equity                        $  595,493  $  519,530
    -------------------------------------------------------------------------



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

                                            For the three months     For the
                                                   ended                year
                                          -----------------------      ended
    (unaudited)                           October 31     July 31  October 31
    ($ thousands)                               2007        2007        2007
    -------------------------------------------------------------------------
    Net Income                            $   29,572  $   24,033  $   96,282
    Other Comprehensive Income (Loss),
     net of tax
      Available-for-sale securities
        Gains (losses) from change in
         fair value                            2,713      (4,071)    (5,544)
        Reclassification to other income          (5)         (7)      (295)
    -------------------------------------------------------------------------
                                               2,708      (4,078)    (5,839)
    -------------------------------------------------------------------------
      Derivatives designated as cash
       flow hedges
        Losses from change in fair value         406        (423)       (403)
        Reclassification to net
         interest income                         563         375       1,805
    -------------------------------------------------------------------------
                                                 969         (48)      1,402
    -------------------------------------------------------------------------
                                               3,677      (4,126)     (4,437)
    -------------------------------------------------------------------------
    Comprehensive Income for the Period   $   33,249  $   19,907  $   91,845
    -------------------------------------------------------------------------

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



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

                                For the three months        For the year
                                       ended                   ended
                              ----------------------- -----------------------
    (unaudited)               October 31  October 31  October 31  October 31
    ($ thousands)                   2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash Flows from Operating
     Activities
      Net income              $   29,572  $   21,209  $   96,282  $   72,007
      Adjustments to determine
       net cash flows
        Provision for credit
         losses                    2,550       2,550      10,200      10,200
        Depreciation and
         amortization              1,606       1,343       6,017       5,248
        Future income taxes,
         net                      (1,207)     (1,924)      1,387      (3,094)
        Gain on sale of
         securities, net              (7)         19        (438)       (142)
        Accrued interest
         receivable and
         payable, net             11,683       7,257      13,287      14,869
        Current income taxes
         payable, net             (1,490)      2,535      (1,777)     (5,624)
        Other items, net          20,525      15,199      17,715      25,708
    -------------------------------------------------------------------------
                                  63,232      48,188     142,673     119,172
    -------------------------------------------------------------------------
    Cash Flows from Financing
     Activities
      Deposits, net              600,378     202,331   1,965,953   1,278,700
      Deposit from Canadian
       Western Bank Capital
       Trust                           -     105,000           -     105,000
      Debenture issued                 -           -     195,000      70,000
      Debenture redeemed               -           -      (3,126)          -
      Common shares issued           939         547       2,464       1,669
      Dividends                   (5,650)     (4,331)    (21,218)    (15,387)
    -------------------------------------------------------------------------
                                 595,667     348,547   2,139,073   1,439,982
    -------------------------------------------------------------------------
    Cash Flows from Investing
     Activities
      Interest bearing deposits
       with regulated financial
       institutions, net         (92,005)     15,257     (55,550)   (138,027)
      Securities, purchased     (823,465)   (607,910) (2,859,114) (2,107,552)
      Securities, sale proceeds  377,325     214,840     959,260     776,244
      Securities, matured        357,288     356,290   1,437,710   1,149,972
      Securities purchased under
       resale agreements, net   (150,500)     (9,000)   (197,925)     27,940
      Loans, net                (317,498)   (317,418) (1,633,943) (1,201,774)
      Land, buildings and
       equipment                  (2,763)     (4,262)     (7,012)     (9,328)
    -------------------------------------------------------------------------
                                (651,618)   (352,203) (2,356,574) (1,502,525)
    -------------------------------------------------------------------------
    Change in Cash and Cash
     Equivalents                   7,281      44,532     (74,828)     56,629
    Cash and Cash Equivalents
     at Beginning of Period      (21,890)     15,687      60,219       3,590
    -------------------------------------------------------------------------
    Cash and Cash Equivalents
     at End of Period(*)      $  (14,610) $   60,219  $  (14,609) $   60,219
    -------------------------------------------------------------------------
    (*) Represented by:
        Cash and non-interest
         bearing deposits
         with financial
         institutions         $    6,409  $   86,904  $    6,446  $   86,904
        Cheques and other items
         in transit (included
         in Cash Resources)        1,122         789       1,122         789
        Cheques and other items
         in transit (included
         in Other Liabilities)   (22,177)    (27,474)    (22,177)    (27,474)
    -------------------------------------------------------------------------
    Cash and Cash Equivalents
     at End of Period         $  (14,609) $   60,219  $  (14,609) $   60,219
    -------------------------------------------------------------------------

    Supplemental Disclosure
     of Cash Flow Information
      Amount of interest paid
       in the period          $   70,323  $   52,901  $  267,963  $  182,971
      Amount of income taxes
       paid in the period         10,676       7,171      40,044      42,154
    -------------------------------------------------------------------------

    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
        Office of the Superintendent of Financial Institutions Canada (OSFI),
        using the same accounting policies as the audited consolidated
        financial statements for the year ended October 31, 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 7.

        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:

                                               Gross      Income   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 three months ended      For the year ended
                     --------------------------------------------------------
                      October 31    July 31 October 31 October 31 October 31
                            2007       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Net earned premiums $ 24,172   $ 24,988   $ 20,709   $ 94,914   $ 81,674
    Commissions and
     processing fees         743        733      1,327      2,751      4,826
    Net claims and
     adjustment
     expenses            (14,896)   (16,097)   (13,230)   (62,391)   (52,962)
    Policy acquisition
     costs                (5,100)    (5,531)    (4,653)   (20,011)   (18,334)
    -------------------------------------------------------------------------
    Total, net          $  4,919   $  4,093   $  4,153   $ 15,263   $ 15,204
    -------------------------------------------------------------------------

    4.  Provision for Income Taxes

        In the fourth quarter of 2007, the Bank received affirmation from
        taxation authorities of certain prior period transactions that
        resulted in the 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. The fourth quarter of 2006 included a tax
        benefit of $2,000.

    5.  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
                                          October 31     July 31  November 1
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Interest bearing deposits with
         regulated financial institutions $   (1,070) $   (1,633) $     (293)
        Securities
          Issued or guaranteed by Canada         127      (1,055)       (264)
          Issued or guaranteed by a
           province or municipality              (14)       (747)       (145)
          Other securities                    (8,323)     (9,873)        113
        ---------------------------------------------------------------------
        Unrealized losses, net            $   (9,280) $  (13,308) $     (589)
        ---------------------------------------------------------------------

    6.  Allowance for Credit Losses

                         For the three months ended      For the year ended
                     --------------------------------------------------------
                      October 31    July 31 October 31 October 31 October 31
                            2007       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Balance at beginning
     of period          $ 60,779   $ 58,313   $ 51,030   $ 53,521   $ 42,520
    Provision for
     credit losses         2,550      2,550      2,550     10,200     10,200
    Write-offs              (316)       (98)       (75)      (786)    (1,274)
    Recoveries                 9         14         16         87      2,075
    -------------------------------------------------------------------------
    Balance at end of
     period             $ 63,022   $ 60,779   $ 53,521   $ 63,022   $ 53,521
    -------------------------------------------------------------------------

                                               As at       As at       As at
                                          October 31     July 31  October 31
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Specific allowance                $    7,414  $    5,697  $    5,484
        General allowance                     55,608      55,082      48,037
        ---------------------------------------------------------------------
        Total allowance                   $   63,022  $   60,779  $   53,521
        ---------------------------------------------------------------------

    7.  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 October 31, 2007, a net unrealized after tax
        gain of $969 ($1,402 for the year) 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 year) 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 $839 before tax for the quarter ($2,687 before tax for
        the year) was reclassified to net income. A net loss of $68 before
        tax recorded in accumulated other comprehensive income (loss) as at
        October 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 October 31, 2007          As at July 31, 2007
                 ------------------------------------------------------------
                            Positive  Negative            Positive  Negative
                  Notional      Fair      Fair  Notional      Fair      Fair
                    Amount     Value     Value    Amount     Value     Value
    -------------------------------------------------------------------------
    Interest rate
     swaps desig-
     nated as
     cash flow
     hedges(1)   $ 482,000 $     946 $     498 $ 663,000 $     219 $   1,302
    Equity
     contracts(2)    6,000       515         -     6,000       612         -
    Foreign
     exchange
     contracts(3)    3,405        35        63     5,344        12        65
    Embedded
     derivatives
     in equity-
     linked
     deposits(2)       n/a         -       746       n/a         -       742
    Other
     forecasted
     transactions        -       n/a       n/a         -       n/a       n/a
    -------------------------------------------------------------------------
    Derivative
     related
     amounts               $   1,496 $   1,307           $     843 $   2,109
    -------------------------------------------------------------------------

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

    n/a - not applicable.

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

    8.  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.

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

    9.  Capital Stock and Share Incentive Plan

        Capital Stock                    For the three months ended
                               ----------------------------------------------
                                  October 31, 2007        October 31, 2006
        ---------------------------------------------------------------------
                               Number of               Number of
                                  Shares      Amount      Shares      Amount
        ---------------------------------------------------------------------
        Common Shares
          Outstanding at
           beginning of
           period             62,548,920  $  217,589  61,693,728  $  214,445
          Issued on exercise
           or exchange of
           options               287,269         939     242,532         547
          Transferred from
           contributed surplus
           on exercise or
           exchange of options         -         476           -         357
        ---------------------------------------------------------------------
          Outstanding at end
           of period          62,836,189  $  219,004  61,936,260  $  215,349
        ---------------------------------------------------------------------

                                             For the year ended
                               ----------------------------------------------
                                  October 31, 2007        October 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               899,929       2,464     708,992       1,669
          Transferred from
           contributed surplus
           on exercise or
           exchange of options         -       1,191           -         582
        ---------------------------------------------------------------------
        Outstanding at end of
         period               62,836,189  $  219,004  61,936,260  $  215,349
        ---------------------------------------------------------------------

        Employee Stock Options           For the three months ended
                               ----------------------------------------------
                                  October 31, 2007        October 31, 2006
        ---------------------------------------------------------------------
                                            Weighted                Weighted
                                             Average                 Average
                               Number of    Exercise   Number of    Exercise
                                 Options       Price     Options       Price
        ---------------------------------------------------------------------
        Options
          Balance at beginning
           of period           5,305,150  $    16.41   5,348,140  $    12.70
          Granted                  9,500       28.11      23,000       22.09
          Exercised or
           exchanged            (367,473)       8.69    (329,600)       7.49
          Forfeited              (35,900)      22.60     (11,500)      16.83
        ---------------------------------------------------------------------
        Balance at end of
         period                4,911,277  $    16.96   5,030,040  $    13.07
        ---------------------------------------------------------------------

                                             For the year ended
                               ----------------------------------------------
                                  October 31, 2007        October 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              1,118,000       25.49   1,181,000       21.29
          Exercised or
           exchanged          (1,122,863)       7.61    (893,984)       6.31
          Forfeited             (113,900)      20.98     (37,000)      13.43
        ---------------------------------------------------------------------
        Balance at end of
         period                4,911,277  $    16.96   5,030,040  $    13.07
        ---------------------------------------------------------------------
        Exercisable at end
         of period             1,656,077  $     9.30   1,336,940  $     7.04
        ---------------------------------------------------------------------

        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 1,122,863
        options (2006 - 893,984) exercised or exchanged in the year, option
        holders exchanged the rights to 796,213 options (2006 - 630,784) and
        received 572,777 shares (2006 - 445,792) in return under the cashless
        settlement alternative.

        In the year ended October 31, 2007, salary expense of $4,532 (2006 -
        $3,251) 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 - $4.33) per
        share.

    10. 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 year
                                                                       ended
                                                                  October 31
                                                                        2007
        ---------------------------------------------------------------------
        Available-for-sale securities
          Cumulative effect of adopting new accounting
           standards, net                              (Note 2) $       (396)
          Losses from change in fair value, net of
           income taxes of $2,720                                     (5,544)
          Reclassification to earnings for gain on
           sale of securities, net of income taxes
           of $144                                                      (295)
        ---------------------------------------------------------------------
        Balance at end of period                                      (6,235)
        ---------------------------------------------------------------------
        Derivatives designated as cash flow hedges
          Cumulative effect of adopting new accounting
           standards, net                              (Note 2)       (1,098)
          Losses from change in fair value, net of
           income taxes of $197                                         (403)
          Reclassification to net interest income,
           net of income taxes of $882                                 1,805
        ---------------------------------------------------------------------
        Balance at end of period                                         304
        ---------------------------------------------------------------------
        Total accumulated other comprehensive
         income (loss)                                              $ (5,931)
        ---------------------------------------------------------------------

    11. 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
                                          October 31     July 31  October 31
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Guarantees and standby letters
         of credit
          Balance outstanding             $  202,194  $  190,550  $  147,339
        Business credit cards
          Total approved limit                 9,728       8,709       8,291
          Balance outstanding                  2,238       1,995       1,883
        ---------------------------------------------------------------------

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

    12. 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
                                          October 31     July 31  October 31
                                                2007        2007        2006
        ---------------------------------------------------------------------
        Trust assets under
         administration                  $ 4,283,900 $ 4,049,310 $ 3,344,414
        ---------------------------------------------------------------------

    13. Interest Rate Sensitivity

        The Bank's exposure to interest rate risk as a result of a difference
        or gap between the maturity or repricing behavior of interest
        sensitive assets and liabilities, including derivative financial
        instruments, is discussed in Note 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
        ---------------------------------------------------------------------
        October 31, 2007
        Total assets               $  4,377   $    552   $  1,868   $  6,797
        Total liabilities and
         equity                       4,014        692      1,666      6,372
        ---------------------------------------------------------------------
        Interest rate sensitive
         gap                       $    363   $   (140)  $    202   $    425
        ---------------------------------------------------------------------
        Cumulative gap             $    363   $    223   $    425   $    425
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                        3.6%       2.2%       4.2%       4.2%
        ---------------------------------------------------------------------

        July 31, 2007
        Cumulative gap             $    (43)  $     (1)  $    133   $    133
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                       (0.0%)     (0.0%)      1.4%       1.4%
        ---------------------------------------------------------------------

        October 31, 2006
        Cumulative gap             $    (79)  $   (297)  $   (178)  $   (178)
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                       (1.0%)     (3.8%)     (2.3%)     (2.3%)
        ---------------------------------------------------------------------

                                                             Non-
                                  1 Year to     Over 5   interest
        ($ millions)                5 Years      Years  Sensitive    Total(1)
        ---------------------------------------------------------------------
        October 31, 2007
        Total assets               $  2,922   $    195   $    100   $ 10,014
        Total liabilities and
         equity                       2,638        194        810     10,014
        ---------------------------------------------------------------------
        Interest rate sensitive
         gap                       $    284   $      1   $   (710)  $      -
        ---------------------------------------------------------------------
        Cumulative gap             $    709   $    710   $      -   $      -
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                        7.1%       7.1%         -%         -%
        ---------------------------------------------------------------------

        July 31, 2007
        Cumulative gap             $    662   $    654   $      -   $      -
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                        6.9%       6.8%         -%         -%
        ---------------------------------------------------------------------
        October 31, 2006
        Cumulative gap             $    428   $    494   $      -   $      -
        ---------------------------------------------------------------------
        Cumulative gap as a
         percentage of total
         assets                        5.4%       6.3%         -%         -%
        ---------------------------------------------------------------------

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

    14. Segmented Information

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

                            Banking and Trust              Insurance
                       ------------------------------------------------------
                            Three months ended         Three months ended
                       ------------------------------------------------------
                        October     July  October  October     July  October
                        31 2007  31 2007  31 2006  31 2007  31 2007  31 2006
    -------------------------------------------------------------------------
    Net interest
     income (teb)(1)   $ 54,663 $ 53,533 $ 44,971 $  1,332 $  1,355 $    999
    Less teb adjustment   1,383    1,324    1,125      113       99       69
    -------------------------------------------------------------------------
    Net interest income
     per financial
     statements          53,280   52,209   43,846    1,219    1,256      930
    Other income(2)      13,452   11,685    9,452    4,912    4,092    4,143
    -------------------------------------------------------------------------
    Total revenues       66,732   63,894   53,298    6,131    5,348    5,073
    Provision for
     credit losses        2,550    2,550    2,550        -        -        -
    Non-interest
     expenses            30,461   28,688   24,611    2,301    2,139    2,219
    Provision for
     income taxes         6,772   10,840    6,901    1,207      992      881
    -------------------------------------------------------------------------
    Net income         $ 26,949 $ 21,816 $ 19,236 $  2,623 $  2,217 $  1,973
    -------------------------------------------------------------------------
    Total average
     assets
     ($ millions)(3)   $  8,953 $  8,227 $  6,872 $    174 $    166 $    161
    -------------------------------------------------------------------------

                                                             Total
                                                  ---------------------------
                                                      Three months ended
                                                  ---------------------------
                                                   October     July  October
                                                   31 2007  31 2007  31 2006
    -------------------------------------------------------------------------
    Net interest income (teb)(1)                  $ 55,995 $ 54,888 $ 45,970
    Less teb adjustment                              1,496    1,423    1,194
    -------------------------------------------------------------------------
    Net interest income per financial statements    54,499   53,465   44,776
    Other income                                    18,364   15,777   13,595
    -------------------------------------------------------------------------
    Total revenues                                  72,863   69,242   58,371
    Provision for credit losses                      2,550    2,550    2,550
    Non-interest expenses                           32,762   30,827   26,830
    Provision for income taxes                       7,979   11,832    7,782
    -------------------------------------------------------------------------
    Net income                                    $ 29,572 $ 24,033 $ 21,209
    -------------------------------------------------------------------------
    Total average assets ($ millions)(3)          $  9,127 $  8,393 $  7,033
    -------------------------------------------------------------------------

                        Banking and Trust    Insurance           Total
                       ------------------------------------------------------
                           Year ended        Year ended        Year ended
                       ------------------------------------------------------
                        October  October  October  October  October  October
                        31 2007  31 2006  31 2007  31 2006  31 2007  31 2006
    -------------------------------------------------------------------------
    Net interest
     income (teb)(1)   $205,867 $165,249 $  4,792 $  3,435 $210,659 $168,684
    Less teb adjustment   5,023    3,845      387      233    5,410    4,078
    -------------------------------------------------------------------------
    Net interest income
     per financial
     statements         200,844  161,404    4,405    3,202  205,249  164,606
    Other income(2)      47,506   37,791   15,315   15,295   62,821   53,086
    -------------------------------------------------------------------------
    Total revenues      248,350  199,195   19,720   18,497  268,070  217,692
    Provision for
     credit losses       10,200   10,200        -        -   10,200   10,200
    Non-interest
     expenses           113,456   93,711    8,478    8,338  121,934  102,049
    Provision for
     income taxes        36,185   30,217    3,469    3,219   39,654   33,436
    -------------------------------------------------------------------------
    Net income         $ 88,509 $ 65,067 $  7,773 $  6,940 $ 96,282 $ 72,007
    -------------------------------------------------------------------------
    Total average
     assets
     ($ millions)(3)   $  8,014 $  6,287 $    164 $    147 $  8,178 $  6,434
    -------------------------------------------------------------------------

    (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.

    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 transition Canadian GAAP for public companies to
        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 and Financial Instruments Disclosures

        The CICA issued new accounting standards which require the disclosure
        of both qualitative and quantitative information that enables
        financial statement users to evaluate the objectives, policies and
        processes for managing capital as well as enhanced financial
        instrument disclosure. These new standards are 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

                                      CWB's quarterly conference call and
                                      live audio webcast will take place on
                                      Thursday, December 6, 2007 at
                                      12:00 p.m. ET. The webcast will be
                                      archived on the Bank's website at
                                      www.cwbankgroup.com for sixty days. A
                                      replay of the conference call will be
                                      available until December 20, 2007 by
                                      dialing (416) 640-1917 or toll free
                                      (877) 289-8525 and entering passcode
                                      21249441, 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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