CWB Reports Solid Results to Mark its 80th Consecutive Profitable Quarter



    10% Increase in Quarterly Cash Dividend Declared

    3% Quarterly Loan Growth

    EDMONTON, June 5 /CNW/ - Canadian Western Bank (CWB on TSX) today
announced solid quarterly earnings and revenues for its 80th consecutive
profitable quarter, a period spanning 20 years. Second quarter net income of
$25.3 million and diluted earnings per share of $0.39 increased 14% and 11%
respectively over the same quarter last year. Strong loan growth of 3% in the
quarter and 21% over the past twelve months pushed total assets to a new
benchmark of more than $10 billion. Growth in total revenues and earnings
continued to be constrained by a lower net interest margin resulting from
increased deposit costs related to ongoing market turmoil, reductions in the
prime-lending rate and higher liquidity levels maintained in response to
events in financial markets. Year-to-date net income was up 20% over the prior
year to $51.2 million while diluted earnings per share grew 18% to $0.79.

    
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    Second Quarter Highlights:
    (three months ended April 30, 2008 compared with three months ended
    April 30, 2007 unless otherwise noted)
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    -   80th consecutive profitable quarter.
    -   Net income of $25.3 million, up 14%.
    -   Diluted earnings per share of $0.39, up 11%.
    -   Total assets surpassed $10 billion.
    -   Loan growth of 3% in the quarter and 21% over the past twelve months.
    -   Quarterly dividend of $0.11 per share declared, up 22%.
    -   Total revenues (teb(1)) of $73.8 million, up 10%.
    -   Valiant Trust Company opened a share transfer services office in
        Toronto.
    -   Total deposits in Summit Savings(R) surpassed $500 million.

    (1) Taxable equivalent basis. See definition following Financial
        Highlights table.
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    On June 4, 2008, CWB's Board of Directors declared a cash dividend of
$0.11 per common share, payable on July 3, 2008 to shareholders of record on
June 19, 2008. This quarterly dividend represents a 10% increase over the
previous quarterly dividend and is 22% higher than the quarterly dividend
declared one year ago.
    Both operating segments performed well in the second quarter. Banking and
trust earnings of $23.1 million increased 18% over the same period last year,
with continued strong loan growth and fee income, including gains on
securities sales, more than offsetting the impact of a lower net interest
margin. Quarterly net income from insurance operations of $2.2 million was
down $0.4 million compared to one-year ago mainly due to a lower contribution
from the Alberta auto risk sharing pools. On a year-to-date basis, banking and
trust earnings increased 20% over the prior year to $47.5 million, while net
income from insurance operations was up 26% to $3.7 million.
    "CWB posted impressive quarterly results in a period that continued to be
impacted by turmoil in global financial markets and slower economic activity
in some areas" said Larry Pollock, President and CEO. "The fallout of these
events is mainly reflected in our compressed net interest margin, which is
apparent industry-wide. Our overall credit quality remains strong and we are
still seeing a healthy pipeline of new lending opportunities. Management's
ongoing commitment to maintain a sound balance sheet and strong capital
position will maximize the Bank's flexibility while market disruptions
continue to be worked out."
    "Events in financial markets have also led to some interesting
possibilities with regard to potential acquisitions, including a number of
quality asset portfolios. We are currently evaluating several prospects and
stand ready to move on them if it makes good business sense and fits our
parameters of being both strategic and accretive for CWB shareholders," added
Pollock.

    
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    Financial Highlights
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                                For the three months ended
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2008         2008         2007         2007
    -------------------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $    55,659  $    57,046  $    50,567           10%
      Less teb adjustment       1,352        1,337        1,327            2
    -------------------------------------------------------------------------
      Net interest income
       per financial
       statements              54,307       55,709       49,240           10
      Other income             18,095       17,623       16,237           11
      Total revenues (teb)     73,754       74,669       66,804           10
      Total revenues           72,402       73,332       65,477           11
      Net income               25,302       25,905       22,219           14
      Earnings per
       common share
        Basic                    0.40         0.41         0.36           11
        Diluted                  0.39         0.40         0.35           11
      Return on
       shareholders'
       equity(1)                 16.1%        16.9%        16.8%   (70) bp(2)
      Return on assets(3)        1.04         1.07         1.17          (13)
      Efficiency
       ratio(4) (teb)            45.4         42.6         45.1           30
      Efficiency ratio           46.2         43.4         46.1           10
      Net interest
       margin (teb)(5)           2.28         2.36         2.65          (37)
      Net interest margin        2.22         2.30         2.58          (36)
      Provision for credit
       losses as a
       percentage of
       average loans             0.15         0.15         0.16           (1)
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    Per Common Share
      Cash dividends      $      0.10  $      0.10  $      0.08           25%
      Book value                10.22         9.88         8.82           16
      Closing market
       value                    24.83        29.40        23.89            4
      Common shares
       outstanding
       (thousands)             63,234       63,146       62,295            2
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    Balance Sheet and
     Off-Balance Sheet
     Summary
      Assets              $10,038,214  $ 9,864,640  $ 8,021,542           25%
      Loans                 7,942,636    7,706,981    6,567,598           21
      Deposits              8,679,024    8,560,346    6,798,483           28
      Subordinated
       debentures             390,000      390,000      393,126           (1)
      Shareholders'
       equity                 646,215      623,969      549,704           18
      Assets under
       administration       4,498,560    4,174,481    3,874,228           16
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    Capital Adequacy(6)
      Tangible common
       equity to
       risk-weighted
       assets(7)                  7.9%         7.9%         8.0%     (10) bp
      Tier 1 ratio(8)             9.3          9.2          9.4          (10)
      Total ratio(8)             14.0         13.9         14.2          (20)
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                          For the six months ended
    (unaudited)           ------------------------- Change from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2008         2007         2007
    -------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $   112,705  $    99,776           13%
      Less teb adjustment       2,689        2,491            8
    -------------------------------------------------------------
      Net interest income
       per financial
       statements             110,016       97,285           13
      Other income             35,718       28,680           25
      Total revenues (teb)    148,423      128,456           16
      Total revenues          145,734      125,965           16
      Net income               51,207       42,677           20
      Earnings per
       common share
        Basic                    0.81         0.69           17
        Diluted                  0.79         0.67           18
      Return on
       shareholders'
       equity(1)                 16.5%        16.1%       40 bp
      Return on assets(3)        1.05         1.13           (8)
      Efficiency
       ratio(4) (teb)            44.0         45.4         (140)
      Efficiency ratio           44.8         46.3         (150)
      Net interest
       margin (teb)(5)           2.32         2.65          (33)
      Net interest margin        2.26         2.58          (32)
      Provision for credit
       losses as a
       percentage of
       average loans             0.15         0.17           (2)
    -------------------------------------------------------------
    Per Common Share
      Cash dividends      $      0.20  $      0.16           25%
      Book value                10.22         8.82           16
      Closing market
       value                    24.83        23.89            4
      Common shares
       outstanding
       (thousands)             63,234       62,295            2
    -------------------------------------------------------------
    Balance Sheet and
     Off-Balance Sheet
     Summary
      Assets
      Loans
      Deposits
      Subordinated
       debentures
      Shareholders'
       equity
      Assets under
       administration
    -------------------------------------------------------------
    Capital Adequacy(6)
      Tangible common
       equity to
       risk-weighted
       assets(7)
      Tier 1 ratio(8)
      Total ratio(8)
    -------------------------------------------------------------
    (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) Capital adequacy is calculated in accordance with guidelines issued
        by the Office of the Superintendent of Financial Institutions Canada
        (OSFI). As of November 1, 2007 (as described in Note 15 to the
        interim consolidated financial statements), OSFI adopted a new
        capital management framework called Basel II and capital is now
        managed and reported in accordance with those requirements. Prior
        year ratios have been calculated using the previous framework.
    (7) Tangible common equity to risk-weighted assets is calculated as
        shareholders' equity less subsidiary goodwill divided by risk-
        weighted assets, calculated in accordance with guidelines issued by
        OSFI.
    (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 solid
financial performance for its 80th consecutive profitable quarter, a period
spanning 20 years. Quarterly results were highlighted by 3% loan growth that
helped push total assets to a new benchmark of over $10 billion. An additional
highlight was the opening of a share transfer services office in Toronto.
    Second quarter earnings of $25.3 million, or $0.39 per diluted share,
increased 14% and 11% respectively over the same period last year on 10%
growth in total revenues (teb). In comparison to the previous quarter, net
income and diluted earnings per share were down 2% and 3% respectively
reflecting the impact of a compressed net interest margin, increased
non-interest expenses and two fewer revenue earning days in the second
quarter. On a year-to-date basis, net income increased 20% over the same
period last year to $51.2 million while diluted earnings per share grew 18% to
$0.79.
    Second quarter return on equity (ROE) of 16.1% was down 70 basis points
compared to the same quarter last year mainly reflecting a lower net interest
margin. Year-to-date ROE was 16.5% representing a 40 basis point improvement
over the same period in 2007.
    CWB has no direct exposure to any troubled asset backed commercial paper,
collateralized debt obligations, U.S. subprime mortgages or monoline insurers.

    Share Price Performance

    CWB shares ended the second quarter at $24.83, up from $23.89 a year
earlier. Including reinvested dividends, the total return to shareholders over
the one-year period ended April 30, 2008 was 6%.

    Dividends

    On June 4, 2008, CWB's Board of Directors declared a cash dividend of
$0.11 per common share, payable on July 3, 2008 to shareholders of record on
June 19, 2008. This quarterly dividend represents a 10% increase over the
previous quarterly dividend and is 22% higher than the quarterly dividend
declared one year ago.

    Loan Growth

    The Bank continued to expand its market presence achieving strong organic
loan growth of 3% in the quarter, 7% year-to-date and 21% over the past year.
Lending activity in British Columbia has shown the strongest growth this year
while activity in Alberta also remained healthy. Combined growth contributions
from Saskatchewan and Manitoba were relatively flat in the second quarter. The
best quarterly performance came from the general commercial sector with the
real estate and personal lending divisions also posting strong results.
Economic fundamentals in Western Canada remain good and results should
continue to reflect our focus on high quality underwriting. Double-digit loan
growth is expected to continue in line with our fiscal 2008 target of 15%.
    Our alternative mortgage business, Optimum Mortgage (Optimum), showed
good growth over the previous quarter largely reflecting the seasonal aspect
of this business, as well as the purchase of a small portfolio. Optimum
provides an excellent platform for future growth and diversification and we
continue to explore various avenues to expand this product line.

    Credit Quality

    Overall credit quality remained strong and within our expectations. Some
borrowers continue to be impacted by softness in certain areas, particularly
those related to the forestry and natural gas service industries. Ongoing
challenges in these areas have the most pronounced impact on the equipment
lending sector and we are monitoring these exposures very closely. The outlook
for the natural gas services industry has improved over the past several
months and this trend is expected to continue as resource prices remain
buoyant. The quarterly provision for credit losses of $3.0 million increased
in line with the fiscal 2008 performance target of 15 basis points of average
loans. Credit quality is expected to remain strong and the Bank is well
positioned to effectively manage future credit events.

    Branch Deposit Growth

    Deposits raised through our branch network and Canadian Western Trust
Company (CWT) increased 2% in the quarter and 23% over the past twelve months.
The demand and notice component within branch-raised deposits was up 6% in the
quarter and 34% in the past twelve months. As in the previous two quarters, a
considerable portion of growth in demand and notice deposits was due to the
ongoing success of the Bank's high-interest personal savings account branded
"Summit Savings(R)". Customers have embraced this product since its initial
launch last summer and this success directly supports our ongoing strategies
to further diversify funding sources and increase market awareness of the
Bank's services. Total deposits in Summit Savings(R) surpassed $500 million in
the second quarter.

    Net Interest Margin

    Net interest margin continued to be significantly impacted by increased
deposit costs related to ongoing disruptions in financial markets, while
consecutive reductions in the prime lending rate and higher liquidity levels
further exacerbated these pressures. Second quarter net interest margin (teb)
was 2.28%, down 8 basis points compared to the previous quarter and 37 basis
points from one year ago. Based on the Bank's financial position at quarter
end, it is estimated that every four basis point improvement in net interest
margin (teb) would increase quarterly net earnings by approximately $0.01 per
diluted share ($0.7 million), all else being equal. CWB's net interest margin
(teb) in the previous fiscal year ended October 31, 2007 was 2.58%. While we
plan to reduce the Bank's excess liquidity levels as elevated uncertainties
subside, pressures on net interest margin are expected to continue until
spreads return to more normal levels and market pricing on loans better
reflects risk differentials and higher funding costs. Reductions in the prime
lending rate will generally have a negative influence on net interest margin
because the Bank's loan portfolio reprices more quickly than deposit
liabilities.

    Trust Services

    Trust services continue to provide valued diversification and are viewed
as a source of considerable untapped growth. Valiant Trust Company (Valiant)
opened a share transfer services office in Toronto following its recent
continuance as a federal trust company. Valiant also announced a new strategic
partnership with Kingsdale Shareholder Services that will help facilitate
further expansion in key markets. Canadian Western Trust Company (CWT) added
approximately $60 million in assets under administration and enhanced its
future earnings potential with new business sourced from a Calgary-based
investment firm in the second quarter.

    Insurance

    Canadian Direct Insurance Incorporated (CDI) reported solid second
quarter results with net income of $2.2 million. Customer utilization of CDI's
Internet-based technology platform surpassed expectations in the quarter as an
increasing percentage of customers are choosing to purchase new auto policies
online. The focus on Internet-based delivery of products and services remains
a key part of our strategy and continued success in this area will enhance
long-term growth opportunities and improve operational efficiency.

    Outlook

    The benefits of CWB's strategies for sustained, responsible growth and
disciplined credit underwriting have been brought to the forefront this year,
particularly in view of the difficult operating environment for the financial
sector as a whole. We are in a good position to achieve all of our fiscal 2008
performance targets despite the significant financial impact of a constrained
net interest margin. We expect margins will return to more normal historic
levels over time and this should give us considerable momentum for earnings
growth in future periods. Economic fundamentals in Western Canada remain good
and we will maintain our focus on achieving high quality asset growth. Overall
credit quality is strong despite softness in certain industries and we are
well positioned to manage swings in the credit cycle. We are also closely
monitoring the impact of the marked U.S. economic slowdown and remain
optimistic this will not have a significant effect on the Bank's growth
prospects. Expanding sources of non-interest income remains a key strategic
priority and we are actively evaluating opportunities to support this
objective.
    We look forward to reporting fiscal 2008 third quarter results on
September 4, 2008.

    Q2 Results Conference Call

    CWB's second quarter results conference call is scheduled for Thursday,
June 5, 2008 at 3:30 p.m. ET (1:30 p.m. MT). The Bank's executives will
comment on Second quarter results and respond to questions from analysts and
institutional investors.
    The conference may be accessed on a listen-only basis by dialing
416-644-3418 or toll-free 1-800-732-9307. The call will also be webcast live
on the Bank's website, www.cwbankgroup.com. The webcast will be archived on
the website for 60 days.
    A replay of the conference call will be available until June 19, 2008 by
dialing 416-640-1917 (Toronto) or 1-877-289-8525 (toll-free) and entering
passcode 21260802, followed by the pound sign.

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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 April 30, 2008, as well as the audited consolidated financial
statements and MD&A for the year ended October 31, 2007, available on SEDAR at
www.sedar.com and on the Bank's website at www.cwbankgroup.com. Except as
discussed below, the factors discussed and referred to in the MD&A for fiscal
2007 remain substantially unchanged.

    Overview

    Solid second quarter results reflect good performance from both business
segments and marked Canadian Western Bank's (CWB or the Bank) 80th consecutive
profitable quarter. Second quarter earnings from banking and trust operations
of $23.1 million increased 18% ($3.5 million) over last year driven by 21%
loan growth and 25% growth in other income, partially offset by a lower net
interest margin. A $2.2 million earnings contribution from Canadian Direct
Insurance Incorporated was down $0.4 million compared to one year ago
reflecting a $0.7 million lower pre-tax contribution from the Alberta auto
risk sharing pools. Consolidated net income was up 14% ($3.1 million) over the
same quarter last year to $25.3 million, or $0.39 ($0.40 basic) per diluted
share.
    In comparison to the previous quarter, consolidated net income was down
2% ($0.6 million) reflecting a lower net interest margin, a $1.6 million
increase in non-interest expenses and two fewer revenue earning days in the
second quarter. Quarterly other income increased 3% ($0.5 million) over the
prior period as higher net insurance revenues and gains on securities sales
more than offset lower credit related and trust services fee income.
Year-to-date net income and diluted earnings per share increased 20% and 18%
to reach $51.2 million and $0.79 respectively.
    Second quarter return on equity was 16.1%, compared to 16.8% last year.
Year-to-date return on equity was 16.5%, compared to 16.1% in 2007. Second
quarter return on assets was 1.04%, down from 1.17% a year earlier.
Year-to-date return on assets of 1.05% represented an eight basis point
decline compared to one year ago. Both of the aforementioned profitability
ratios were negatively impacted by a lower net interest margin, although
partially offset by strong growth in other income.

    Total Revenues (teb)

    Total revenues (teb), comprised of net interest income and other income,
were $73.8 million representing a 10% ($7.0 million) increase over the same
quarter last year. Higher revenues were driven by 21% loan growth and 11%
($1.9 million) growth in other income. Total revenues (teb) were down 1%
($0.9 million) compared to the previous quarter reflecting a lower net
interest margin and two fewer days in the second quarter, largely offset by
continued asset growth and a $0.5 million increase in other income.
Year-to-date total revenues increased 16% ($20.0 million) over 2007 reflecting
strong loan growth and a 25% ($7.0 million) increase in other income,
partially offset by a lower net interest margin.

    Net Interest Income (teb)

    Quarterly net interest income (teb) of $55.7 million increased 10%
($5.1 million) over the same period last year driven by strong loan growth,
partially offset by a 37 basis point decline in net interest margin (teb) to
2.28%. Net interest margin was mainly affected by increased deposit costs
related to disruptions in financial markets, consecutive reductions in the
prime lending rate and higher liquidity. Reductions in the prime interest rate
negatively impacts net interest margin because short-term deposits do not
reprice as quickly as prime-based loans.
    Net interest income was down 2% ($1.4 million) compared to the previous
quarter reflecting an eight basis point decline in net interest margin and two
fewer days in the second quarter, partially offset by continued loan growth.
Net interest income per day, a calculation that excludes the impact of fewer
days, was $618,000 in the second quarter, compared to $620,000 in the previous
quarter and $568,000 in the same quarter one year ago. Year-to-date net
interest income increased 13% over 2007 driven by strong loan growth and one
additional day in the second quarter this year due to the leap year, offset by
a 33 basis point decrease in net interest margin (teb) to 2.32%.
    Note 13 to the unaudited interim consolidated financial statements
provides a summary of the Bank's exposure to interest rate risk as at
April 30, 2008. 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 interest rate gap position at April 30,
2008, it is estimated that a one-percentage point increase in all interest
rates would increase net interest income by approximately 2.3%. This compares
to January 31, 2008, when a one-percentage point increase in all interest
rates would have increased net interest income by approximately 2.9%. The
opposite effect occurs when all interest rates decrease. The Bank's overall
strategy remains relatively neutral with respect to taking specific positions
on interest rate risk.

    Other Income

    Other income of $18.1 million was up 11% ($1.9 million) over the same
quarter last year mainly due to $1.7 million higher gains on the sale of
securities and a 19% ($1.1 million) increase in credit related fee income,
partially offset by a $0.9 million decline in net insurance revenues. Gains on
the sale of securities were mainly realized due to favourable pricing observed
on certain government debt investments held in the securities portfolio, while
credit related fee income was up as a result of strong loan growth. Lower net
insurance revenues reflect a $0.7 million lower pre-tax contribution from the
Alberta auto risk sharing pools and higher claims experience in the core
business. Trust services fee income increased $0.1 million compared to the
same quarter last year while retail service fee income was relatively
unchanged.
    Other income increased 3% ($0.5 million) compared to the previous quarter
reflecting $1.0 million greater gains on securities sales and 29%
($0.9 million) higher net insurance revenues, largely offset by decreases in
credit related and trust services fee income of $0.7 million and $0.6 million
respectively. The improvement in net insurance revenues reflects a recovery
from higher claims experience in the first quarter due to winter weather.
    Year-to-date other income of $35.7 million was 25% ($7.0 million) higher
than the same period last year with the increase reflecting improvements
across all categories. Credit related fee income increased 24% ($2.7 million)
while gains on securities sales, foreign exchange and other were up
$2.6 million in aggregate. Year-to-date net insurance revenues increased 17%
($1.1 million) while trust services and retail services fee income were up 7%
($0.4 million) and 5% ($0.2 million) respectively.

    Credit Quality

    Strong credit quality was maintained due to a combination of Western
Canada's ongoing economic strength and CWB's disciplined credit underwriting.
The provision for credit losses measured as a percentage of average loans
remained unchanged from the previous quarter and was in line with the fiscal
2008 performance target of 15 basis points, compared to 16 basis points in the
same period last year. Compared to one year ago, lower provisions measured as
a percentage of average loans reflect robust loan growth, partially offset by
a $0.4 million increase in the provision to $3.0 million. The provision for
credit losses recorded in the previous quarter was $2.8 million. Modestly
higher dollar provisions reflect ongoing portfolio growth and are expected to
remain in line with the Bank's target for the remainder of the year.
    Gross impaired loans at April 30, 2008 were $43.0 million, compared with
$38.9 million last quarter and $10.7 million a year earlier. As a percentage
of total loans, gross impaired loans remain low by historical measures and
mainly reflect accounts impacted by softness in the forestry and natural gas
industries. Gross impaired loans represented 54 basis points of total loans at
quarter end, compared to 50 basis points last quarter and 16 basis points one
year ago. At the end of fiscal 2007, the ten year average for gross impaired
loans measured against total loans was 86 basis points, with a high of
169 basis points in 1999 and a low of 18 basis points in 2006. The average
actual losses over the same ten year period noted above were 15 basis points
of average loans (excluding fiscal 2006 where recoveries actually exceeded
losses). The dollar level of gross impaired loans is expected to fluctuate
within an acceptable range as loans become impaired and are subsequently
resolved. It is important to note that almost all CWB's loans are secured by
tangible assets. Overall credit quality is expected to remain strong.
    The total allowance for credit losses (general and specific) represented
156% of gross impaired loans at April 30, 2008, compared to 167% last quarter
and 545% one year ago. The general allowance as a percentage of risk-weighted
loans was 78 basis points, compared to 79 basis points in the previous quarter
and 85 basis points a year earlier.

    Non-interest Expenses

    Non-interest expenses were $33.5 million, up 11% ($3.3 million) over the
same quarter last year due to higher salary and benefit costs, as well as
premises and other expenses to manage business growth. Compared to the
previous quarter, non-interest expenses increased 5% ($1.6 million) reflecting
the same factors noted above in addition to increased marketing and business
development expense.
    The second quarter efficiency ratio (teb), which measures non-interest
expenses as a percentage of total revenues (teb), was 45.4%, compared to 45.1%
in the same quarter last year and 42.6% in the previous quarter. A constrained
net interest margin combined with higher non-interest expenses and two fewer
days were the main factors contributing to the deterioration in this measure
from the previous quarter. The year-to-date efficiency ratio (teb) of 44.0%
represented a 140 basis point improvement over the same period last year and
was 100 basis points better than the Bank's fiscal 2008 target of 45.0%.

    Income Taxes

    The income tax rate (teb) for the first six months of 2008 was 33.8%,
down 60 basis points from one year ago, while the tax rate before the teb
adjustment was 31.4%, or 30 basis points lower than last year. Lower tax rates
mainly reflect reductions in federal corporate income tax rates, partially
offset by $1.0 million of additional related tax expense taken in the first
quarter due to the write-down of future tax assets. CWB's capital tax rate in
BC decreased to 0.67% on April 1, 2008, down from 1.0%, and will be eliminated
completely by April 1, 2010. In fiscal 2007, CWB paid capital taxes to BC
totaling $1.7 million. The corporate income tax rate in British Columbia (BC)
will also decrease from 12% to 11%, effective July 1, 2008.

    Comprehensive Income

    Comprehensive income is composed of net income and other comprehensive
income (OCI), and totaled $26.9 million for the second quarter, compared to
$18.9 million in the same period last year and $32.8 million in the prior
quarter. As previously noted, net income increased 14% ($3.1 million) over one
year ago and was down 2% ($0.6 million) compared to last quarter. CWB's OCI
includes unrealized gains and losses on available-for-sale cash and securities
and derivative instruments designated as cash flow hedges, all net of tax.
Second quarter OCI was $1.6 million, compared to $6.8 million in the previous
quarter and a loss of $3.2 million a year earlier. The increase in OCI for
available-for-sale securities as well as derivative instruments designated as
cash flow hedges compared to the same quarter last year  primarily reflects
market value fluctuations related to changes in interest rates and shifts in
the interest rate curve, partially offset by higher realized gains on sale of
securities reclassified to other income and the financial impact of a
derivative instrument designated as a cash flow hedge that was terminated
prior to maturity and reclassified to deferred revenue in other liabilities.

    Balance Sheet

    Total assets increased 2% ($174 million) in the quarter and 25%
($2,017 million) in the past twelve months to reach $10,038 million at
April 30, 2008.

    Cash and Securities

    Cash, securities and securities purchased under resale agreements totaled
$1,935 million at April 30, 2008, compared to $1,993 million last quarter and
$1,301 million one year ago. As previously noted, higher liquidity levels have
been maintained over the past several quarters in response to uncertainties
and related volatility in financial markets. Although this strategy has a
negative impact on net interest margin, it is consistent with the Bank's
conservative risk tolerance and augments its strong position to manage future
unexpected events. Liquidity levels will be reduced as elevated uncertainties
in financial markets continue to be resolved.
    The unrealized gain recorded on the balance sheet at April 30, 2008 was
$0.2 million, compared to unrealized losses of $1.7 million last quarter and
$7.2 million one year ago. 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.
Realized gains on sale of securities in the second quarter were $2.0 million,
compared to $1.0 million in the previous quarter and $0.3 million a year
earlier. The Bank has no direct exposure to any troubled asset backed
commercial paper, collateralized debt obligations, U.S. subprime lending or
monoline insurers.

    Loans

    Total loans increased 3% ($236 million) in the quarter, 7% ($537 million)
year-to-date and 21% ($1,375 million) in the past twelve months to reach
$7,943 million at April 30, 2008. Ongoing lending activity in BC provided the
greatest dollar and percentage growth contributions in both the quarter and on
a year-to-date basis. Deal flow in Alberta remained healthy, although it has
slowed compared to twelve months ago. Combined loan growth in Saskatchewan and
Manitoba was relatively flat. Measured by lending sector, the majority of
quarterly growth was attributed to performance in general commercial lending,
while the real estate and personal lending sectors also showed strong results.
Performance in the industrial equipment sector and to a lesser extent, the
energy lending sector, continued to be impacted by challenges related to
softness in the forestry and natural gas industries. The outlook for natural
gas and related services has improved, which should result in better
performance in this area moving forward. More systemic problems remain
apparent in the forestry industry and the Bank will continue to closely manage
its exposure to this area. CWB's total exposure to the forestry industry at
April 30, 2008 represented approximately 3% of total loans with an average
loan balance per customer of approximately $0.5 million. Overall expectations
for fiscal 2008 loan growth remain in line with the Bank's target of 15%.
    The Bank's alternative mortgage business, Optimum Mortgage, showed good
performance with total loans growing 7% in the quarter, 9% year-to-date and
31% over the past twelve months to reach $409 million. Volume increased
compared to a slower first quarter that was mainly impacted by seasonal
factors. Compared to a year earlier, moderated residential sales activity in
some markets has also slowed growth in this business. While there are
significant underwriting opportunities in this market, partially due to
reduced competitive influences, Optimum has been very conscious not to adjust
its risk tolerance in order to increase volume. Optimum's loan book is
entirely comprised of conventional residential first mortgages carrying a
weighted average underwritten loan-to-value ratio at initiation of
approximately 70%. The vast majority of these mortgages carry a fixed interest
rate with the principal being amortized over 25 years or less. This business
continues to produce very strong returns on a solid risk profile and is
expected to be a profitable source of future growth. Optimum's underwriting
platform is also scalable and has excellent potential to expand from both a
product and geographic perspective.

    Deposits

    Total branch deposits increased 2% in the quarter and 23% in the past
year. The demand and notice component within branch deposits increased 6% in
the quarter and 34% over the past twelve months. CWB's high-interest Summit
Savings(R) account launched in July 2007 continued to promote increased brand
awareness and was the primary source of quarterly growth in demand and notice
deposits. Reflecting the Bank's commercial focus, a significant portion of the
year-over-year growth in total branch deposits reflects larger,
relationship-based commercial and wholesale balances that can be subject to
notable fluctuation. Disruptions in financial markets and associated
competitive influences have led to significant increases in funding costs,
both branch-generated and those raised through the deposit broker network.
    Total deposits at April 30, 2008 were $8,679 million, an increase of 1%
($119 million) in the quarter and 28% ($1,881 million) over the past year.
Total branch deposits measured as a percentage of total deposits were
unchanged from the previous quarter at 64%, compared to 67% one year ago. The
decrease in branch-raised deposits as a percentage of total deposits compared
to the previous year reflects increased liquidity raised through the deposit
broker network in response to financial market uncertainties. Demand and
notice deposits measured as a percentage of total deposits increased to 29%,
compared to 27% in both the previous quarter and the same time last year.

    Other Assets and Other Liabilities

    Other assets at April 30, 2008 totaled $161 million, compared to
$164 million last quarter and $153 million one year ago. Other liabilities at
quarter end were $323 million, compared to $290 million the previous quarter
and $280 million last year.

    Off-Balance Sheet

    Off-balance sheet items include trust assets under administration, which
totaled $4,499 million at the end of the second quarter, compared to
$4,174 million last quarter and $3,874 million one year ago. The majority of
quarterly growth in trust assets under administration resulted from strong
performance in Canadian Western Trust's corporate and group services division
and new business sourced from a Calgary-based investment consulting firm.
Other off-balance sheet items are composed of standard industry credit
instruments (guarantees, standby letters of credit and commitments to extend
credit), and the non-consolidated variable interest entity. For additional
information regarding other off-balance sheet items refer to Notes 13 and 19
to the audited consolidated financial statements on pages 71 and 74
respectively in the Bank's 2007 Annual Report.

    Capital Management

    Effective November 1, 2007, the Office of the Superintendent of Financial
Institutions (OSFI) required Canadian financial institutions to manage and
report regulatory capital in accordance with a new capital management
framework, commonly called Basel II. Basel II introduced several significant
changes to the risk-weighting of assets and the calculation of regulatory
capital. The Bank has implemented the standardized approach to calculating
risk-weighted assets for both credit and operational risk. Changes for CWB
under Basel II include a reclassification into lower risk-weight categories
for residential mortgages and loans to small-to-medium sized enterprises, as
well as a new capital requirement related to operational risk.
    Basel II had a modest positive impact on the overall required level of
regulatory capital for CWB. New procedures and system enhancements were
developed to conform to the new framework including the formalization of
internal capital adequacy assessment processes.
    CWB's total capital adequacy ratio, which measures regulatory capital as
a percentage of risk-weighted assets, at April 30, 2008 under Basel II was
14.0%, 10 basis points higher than the previous quarter. The total capital
adequacy ratio at April 30, 2007 under the previous OSFI framework was 14.2%.
The Tier 1 ratio at April 30, 2008 under Basel II was 9.3%, compared to 9.2%
last quarter. The Tier 1 ratio at the same time last year under the previous
framework was 9.4%. Improved capital ratios over the previous quarter reflect
the retention of earnings, partially offset by continued asset growth.
Compared to the same quarter last year, CWB's regulatory capital increased
with the retention of strong earnings and a higher general allowance for
credit losses, partially offset by the redemption of $3.1 million of
subordinated debentures. The lower Tier 1 capital ratio compared to April 30,
2007 reflects increased capital from earnings that did not keep pace with
robust growth in risk-weighted assets, partially offset by the modest positive
impact from the adoption of Basel II.
    The Bank's capital management objectives are to maintain a strong and
efficient capital structure to support continued high quality asset growth. A
strong capital position also provides flexibility in considering accretive
growth opportunities, including strategic acquisitions, as well as future
dividend increases.
    Further information relating to the Bank's capital position is provided
in Note 15 to the quarterly financial statements as well as the audited
consolidated financial statements and MD&A for the year ended October 31,
2007.
    Book value per common share at April 30, 2008 was $10.22 compared to
$9.88 last quarter and $8.82 one year ago.
    Common shareholders received a quarterly cash dividend of $0.10 per
common share on April 3, 2008. On June 4, 2008, the Board of Directors
declared a quarterly cash dividend of $0.11 per common share payable on
July 3, 2008 to shareholders of record on June 19, 2008. This quarterly
dividend represents a 10% increase over the previous quarterly dividend and is
22% 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, 2007 audited consolidated financial statements. Effective
November 1, 2007, the Bank adopted new accounting standards issued by the
Canadian Institute of Chartered Accountants (CICA): Financial Instruments -
Disclosure and Presentation and Capital Disclosures. As a result of adopting
these standards, new or enhanced disclosure has been provided. Refer to Note 2
to the unaudited interim consolidated financial statements for further
details.

    Controls and Procedures

    There were no changes in the Bank's internal controls over financial
reporting that occurred during the quarter ended April 30, 2008 that have
materially affected, or are reasonably likely to materially affect, internal
control over financial reporting.
    Prior to its release, this quarterly report to shareholders was reviewed
by the Audit Committee and, on the Audit Committee's recommendation, approved
by the Board of Directors of Canadian Western Bank, consistent with prior
quarters.

    Updated Share Information

    As at May 30, 2008, there were 63,261,809 common shares outstanding. Also
outstanding were employee stock options, which are or will be exercisable for
up to 5,700,737 common shares for maximum proceeds of $95.7 million.

    
    Summary of Quarterly Financial Information

                              2008                       2007
                        ----------------  -----------------------------------
    ($ thousands)          Q2       Q1       Q4       Q3       Q2       Q1
    -------------------------------------------------------------------------
    Total revenues
     (teb)              $73,754  $74,669  $74,359  $70,665  $66,804  $61,652
    Total revenues       72,402   73,332   72,863   69,242   65,477   60,488
    Net income           25,302   25,905   29,572   24,033   22,219   20,458
    Earnings per
     common share
      Basic                0.40     0.41     0.47     0.39     0.36     0.33
      Diluted              0.39     0.40     0.46     0.37     0.35     0.32
    Total assets
     ($ millions)        10,038    9,865    9,525    8,881    8,022    7,565
    -------------------------------------------------------------------------


                              2006
                        -----------------
    ($ thousands)          Q4       Q3
    -------------------------------------
    Total revenues
     (teb)              $59,565  $56,884
    Total revenues       58,371   55,845
    Net income           21,209   17,693
    Earnings per
     common share
      Basic                0.34     0.29
      Diluted              0.33     0.28
    Total assets
     ($ millions)         7,268    6,871
    -------------------------------------
    

    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, or two
fewer days in a leap year such as 2008.
    The Bank's quarterly financial results are subject to some fluctuation
due to its exposure to property and casualty insurance. Insurance operations,
which are primarily reflected in other income (refer to Results by Business
Segment - Insurance), are subject to seasonal weather conditions, cyclical
patterns of the industry and natural catastrophes. Mandatory participation in
the Alberta auto risk sharing pools can also result in unpredictable quarterly
fluctuations.
    Quarterly results can also fluctuate due to the recognition of periodic
income tax items. Net income in the first quarter of 2008 included
$1.0 million ($0.01 per diluted share) of tax expense resulting from the
write-down of future tax assets to reflect lower future federal corporate
income tax rates. Net income in the fourth quarters of 2007 and 2006 included
the recognition of previously unrecorded tax benefits related to certain prior
period transactions of $2.9 million ($0.04 per diluted share) and $2.0 million
($0.03 per diluted share) respectively.
    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,
2007 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 are available on both SEDAR and the Bank's website.

    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).
    Earnings of $23.1 million were up 18% ($3.5 million) over the same
quarter last year benefiting from 21% loan growth and a 25% ($2.8 million)
increase in other income, partially offset by a 39 basis point decline in net
interest margin (teb). Gains on securities sales, foreign exchange and other
were up $1.6 million while credit related fee income increased 19%
($1.1 million). Trust services revenues were 2% ($0.1 million) higher than the
same quarter last year while retail services fee income was relatively
unchanged. The significant reduction in net interest margin (teb) compared to
a year earlier resulted from increased deposit costs related to events in
financial markets, decreases in the prime lending rate and higher liquidity
levels. The efficiency ratio (teb), which measures non-interest expense as a
percentage of total revenues (teb), was 45.7% for the quarter, compared to
46.2% one year ago. The improved efficiency ratio (teb) reflects solid growth
in both net interest income (teb) and other income, combined with good cost
control. Total branch-raised deposits grew 23% over the past year while the
demand and notice component of branch-raised deposits was up 34%. A
considerable portion of growth in demand and notice deposits was due to the
ongoing success of CWB's Summit Savings(R) account.
    Earnings were down 6% ($1.4 million) compared to the previous quarter
reflecting a lower net interest margin (teb), a $1.7 million increase in
non-interest expenses and two fewer revenue earning days in the second
quarter, partially offset by higher gains on securities sales. The quarterly
increase in non-interest expenses was mainly attributed to higher salary and
benefit costs and expense related to marketing and business development. Gains
on securities sales were mainly realized due to favourable pricing observed on
certain government debt investments held in the securities portfolio.
    Year-to-date net income of $47.5 million increased 20% ($7.8 million)
over the same period in 2007 reflecting strong loan growth and a 27%
($6.0 million) increase in other income, partially offset by a 35 basis point
decline in net interest margin (teb). Other income benefited from improved
performance across all areas led by a $2.7 million increase in credit related
fee income and $2.6 million higher gains on securities sales, foreign exchange
and other. On a year-to-date basis, growth in total revenues continued to
exceed higher non-interest expenses leading to a 135 basis point improvement
in the efficiency ratio (teb) to 43.9%.

    
                                For the three months ended
                          -------------------------------------- Change from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2008         2008         2007         2007
    -------------------------------------------------------------------------
    Net interest
     income (teb)         $    54,325  $    55,642  $    49,523           10%
    Other income               13,948       14,395       11,175           25
    -------------------------------------------------------------------------
    Total revenues (teb)       68,273       70,037       60,698           12
    Provision for credit
     losses                     2,962        2,813        2,550           16
    Non-interest expenses      31,207       29,504       28,020           11
    Provision for income
     taxes (teb)               11,031       13,280       10,571            4
    -------------------------------------------------------------------------
    Net income            $    23,073  $    24,440  $    19,557           18%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)       45.7%        42.1%        46.2%     (49) bp
    Efficiency ratio             46.6         42.9         47.1          (54)
    Net interest
     margin (teb)                2.26         2.34         2.65          (39)
    Net interest margin          2.21         2.29         2.59          (38)
    Average loans
     (millions)(1)        $     7,798  $     7,545  $     6,358           23%
    Average assets
     (millions)                 9,730        9,428        7,654           27
    -------------------------------------------------------------------------


                          For the six months ended
                          ------------------------- Change from
                             April 30     April 30     April 30
     ($ thousands)               2008         2007         2007
    -------------------------------------------------------------
    Net interest
     income (teb)         $   109,967  $    97,671           13%
    Other income               28,343       22,369           27
    -------------------------------------------------------------
    Total revenues (teb)      138,310      120,040           15
    Provision for credit
     losses                     5,775        5,100           13
    Non-interest expenses      60,711       54,307           12
    Provision for income
     taxes (teb)               24,311       20,889           16
    -------------------------------------------------------------
    Net income            $    47,513  $    39,744           20%
    -------------------------------------------------------------
    Efficiency ratio (teb)       43.9%        45.2%    (135) bp
    Efficiency ratio             44.7         46.1         (145)
    Net interest
     margin (teb)                2.30         2.65          (35)
    Net interest margin          2.25         2.59          (34)
    Average loans
     (millions)(1)        $     7,672  $     6,154           25%
    Average assets
     (millions)                 9,579        7,437           29
    -------------------------------------------------------------
    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 is comprised of the operations of CWB's wholly
owned subsidiary, Canadian Direct Insurance Incorporated (Canadian Direct or
CDI), which provides auto and home insurance to individuals in BC and Alberta.
    Canadian Direct reported solid second quarter results with net income of
$2.2 million. This represented a $0.4 million decrease compared to the same
quarter last year which was positively impacted by a $0.7 million pre-tax
contribution from the Alberta auto risk sharing pools ("the Pools"). The
Pools' impact is also reflected in the second quarter claims ratio, which
increased to 64% from 58% a year earlier. Second quarter earnings before tax,
excluding the Pools' impact, was down $0.1 million compared to last year due
to higher claims experience. Net earned premiums grew 5% reflecting growth in
policies outstanding, partially offset by lower average premiums per policy in
the BC auto product line. Sales of new auto policies over the Internet
maintained strong momentum and should continue to provide both increased
efficiencies as well as improved service capacity. All product lines showed
solid growth with the exception of BC auto, which continued to be challenged
by the competitive pricing strategies of the Insurance Corporation of British
Columbia. Net interest income (teb) increased $0.3 million reflecting both an
increase in invested assets and improved yields on the investment portfolio.
    Canadian Direct's net income was up $0.7 million compared to the previous
quarter due to lower claims experience attributed to post-winter weather,
partially offset by a $0.1 million lower pre-tax contribution from the Pools
and a decrease in net interest income (teb) resulting from two fewer days in
the second quarter.
    Year-to-date net income of $3.7 million represented a 26% ($0.8 million)
increase over the same period last year reflecting continued business growth
and improved loss experience, partially offset by a $0.7 million lower pre-tax
contribution from the Pools.

    
                                For the three months ended
                          -------------------------------------- Change from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2008         2008         2007         2007
    -------------------------------------------------------------------------
    Net interest
     income (teb)         $     1,334  $     1,404  $     1,044           28%
    -------------------------------------------------------------------------
    Other income (net)
      Net earned premiums      23,737       24,299       22,626            5
      Commissions and
       processing fees            738          662          669           10
      Net claims and
       adjustment expenses    (15,135)     (17,069)     (13,222)          14
      Policy acquisition
       costs                   (5,212)      (4,683)      (5,024)           4
    -------------------------------------------------------------------------
    Insurance revenue (net)     4,128        3,209        5,049          (18)
    Gains (losses) on
     sale of securities            19           19           13           46
    -------------------------------------------------------------------------
    Total revenues
     (net) (teb)                5,481        4,632        6,106          (10)
    Non-interest expenses       2,246        2,320        2,132            5
    Provision for
     income taxes (teb)         1,006          847        1,312          (23)
    -------------------------------------------------------------------------
    Net income            $     2,229  $     1,465  $     2,662         (16)%
    -------------------------------------------------------------------------
    Policies
     outstanding (No.)        166,093      165,314      162,207            2
    Gross written
     premiums             $    26,642  $    21,616  $    26,506            1
    Claims loss ratio(1)           64%          70%          58%      600 bp
    Expense ratio(2)               28           26           29         (100)
    Combined ratio(3)              92           96           87          500
    Alberta auto risk
     sharing pools
     impact on net
     income before tax    $        (3) $       120  $       672           nm%
    Average total assets
     (millions)                   180          180          160           13
    -------------------------------------------------------------------------


                          For the six months ended
                          ------------------------- Change from
                             April 30     April 30     April 30
    ($ thousands)                2008         2007         2007
    -------------------------------------------------------------
    Net interest
     income (teb)         $     2,738  $     2,105           30%
    -------------------------------------------------------------
    Other income (net)
      Net earned premiums      48,036       45,754            5
      Commissions and
       processing fees          1,400        1,275           10
      Net claims and
       adjustment expenses    (32,204)     (31,398)           3
      Policy acquisition
       costs                   (9,895)      (9,380)           5
    -------------------------------------------------------------
    Insurance revenue (net)     7,337        6,251           17
    Gains (losses) on
     sale of securities            38           60          (37)
    -------------------------------------------------------------
    Total revenues
     (net) (teb)               10,113        8,416           20
    Non-interest expenses       4,566        4,038           13
    Provision for
     income taxes (teb)         1,853        1,445           28
    -------------------------------------------------------------
    Net income            $     3,694  $     2,933           26%
    -------------------------------------------------------------
    Policies
     outstanding (No.)        166,093      162,207            2
    Gross written
     premiums             $    48,258  $    47,751            1
    Claims loss ratio(1)           67%          69%    (200) bp
    Expense ratio(2)               27           26          100
    Combined ratio(3)              94           95         (100)
    Alberta auto risk
     sharing pools
     impact on net
     income before tax    $       117  $       822           nm%
    Average total assets
     (millions)                   180          158           14
    -------------------------------------------------------------

    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 2008 Targets

    The performance targets established for the 2008 fiscal year are presented
in the table below together with CWB's actual performance.

                                            ---------------------------------
                                                  2008             2008
                                                 Target        Performance(1)
    -------------------------------------------------------------------------
    Net income growth                                    15%              20%
    Total revenue (teb) growth                           17%              16%
    Loan growth                                          15%              21%
    Provision for credit losses as a
     percentage of average loans                       0.15%            0.15%
    Efficiency ratio (teb)                               45%            44.0%
    Return on equity                                     17%            16.5%
    Return on assets                                   1.10%            1.05%
    -------------------------------------------------------------------------
    (1) 2008 performance for earnings and revenue growth is the current year
        results over the same period in the prior year, loan growth is the
        increase over the past twelve months and performance for ratio
        targets is the current year-to-date results annualized.
    

    Solid second quarter and year-to-date results in a challenging
environment for the financial sector confirm the success of CWB's strategies
for sustained, responsible growth. The overall economic outlook in the Bank's
primary markets is favourable and the pipeline for new loans remains healthy.
Overall credit quality is strong despite the impact of softness in the
forestry and natural gas industries, as well as a slowdown in residential
sales activity in some key markets. Management is also closely monitoring the
impact of the marked economic slowdown in the U.S., which has been the main
factor prompting further interest rate cuts by the Bank of Canada in its
effort to boost economic growth in Ontario and Quebec. CWB will maintain its
focus on high quality assets and will not compromise a long history of
disciplined underwriting to increase volume. Double-digit loan growth is
expected to continue in line with the fiscal 2008 target of 15%. The Bank
remains in a good position to meet all of its fiscal 2008 performance targets.
    A constrained net interest margin, due to a combination of increased
deposit costs, falling prime-based lending rates and higher liquidity levels,
has been the main factor leading to slower earnings growth over the past three
quarters. Although net interest margins are expected to return to more normal
levels as uncertainties in financial markets subside, this could take
considerable time. Further development of trust, insurance and other
complementary businesses remains a key strategy. Enhanced initiatives in this
area correspond with management's objective to increase the proportion of
non-interest income to total revenues over time. Management also continues to
evaluate strategic acquisitions that may be available. Despite increased
challenges in certain areas, the outlook for banking, trust and insurance is
positive with 2008 expected to be another year of solid financial performance.
    This management's discussion and analysis is dated June 4, 2008.

    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, Tier 1 and total capital adequacy ratios, average
balances, claims loss ratio, expense ratio and combined ratio do not have
standardized meanings prescribed by generally accepted accounting principles
(GAAP) and therefore may not be comparable to similar measures presented by
other financial institutions. The non-GAAP measures used in this MD&A are
calculated as follows:

    
    -   taxable equivalent basis - described above;
    -   return on shareholders' equity - net income divided by average
        shareholder's equity;
    -   return on assets - net income divided by average total assets;
    -   efficiency ratio - non-interest expenses divided by total revenues
        (net interest income plus other income);
    -   net interest margin - net interest income divided by average total
        assets;
    -   tangible common equity to risk-weighted assets - shareholders' equity
        less subsidiary goodwill divided by risk-weighted assets, calculated
        in accordance with guidelines issued by the Office of the
        Superintendent of Financial Institutions Canada (OSFI). As of
        November 1, 2007 (as described in Note 15 to the interim consolidated
        financial statements), OSFI adopted a new capital management
        framework called Basel II and capital is now managed and reported in
        accordance with those requirements. Prior year ratios have been
        calculated using the previous framework;
    -   Tier 1 and total capital adequacy ratios - in accordance with
        guidelines issued by OSFI. As of November 1, 2007 (as described in
        Note 15 to the interim consolidated financial statements), OSFI
        changed their methodology and capital is now managed and reported in
        accordance with the requirements of Basel II. Prior year ratios have
        not been restated.
    -   average balances - average daily balances;
    -   claims loss ratio - net insurance claims and adjustment expenses as a
        percentage of net earned premiums;
    -   expense ratio - policy acquisition costs and non-interest expenses
        net of commissions and processing fees as a percentage of net earned
        premiums; and
    -   combined ratio - sum of the claims loss and expense ratios.
    

    Forward-looking Statements

    From time to time Canadian Western Bank (the "Bank") makes written and
verbal forward-looking statements. Statements of this type are included in the
Annual Report and reports to shareholders and may be included in filings with
Canadian securities regulators or in other communications such as press
releases and corporate presentations. Forward-looking statements include, but
are not limited to, statements about the Bank's objectives and strategies,
targeted and expected financial results and the outlook for the Bank's
businesses or for the Canadian economy. Forward-looking statements are
typically identified by the words "believe", "expect", "anticipate", "intend",
"estimate", "may increase", "may impact" and other similar expressions or
future or conditional verbs such as "will", "should", "would" and "could".
    By their very nature, forward-looking statements involve numerous
assumptions. A variety of factors, many of which are beyond the Bank's
control, may cause actual results to differ materially from the expectations
expressed in the forward-looking statements. These factors include, but are
not limited to, 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
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2008         2008         2007         2007
    -------------------------------------------------------------------------
    Interest Income
      Loans               $   121,593  $   126,751  $   102,932           18%
      Securities               13,862       15,191       10,128           37
      Deposits with
       regulated
       financial
       institutions             4,543        4,957        2,999           51
    -------------------------------------------------------------------------
                              139,998      146,899      116,059           21
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 80,325       85,707       62,842           28
      Subordinated
       debentures               5,366        5,483        3,977           35
    -------------------------------------------------------------------------
                               85,691       91,190       66,819           28
    -------------------------------------------------------------------------
    Net Interest Income        54,307       55,709       49,240           10
    Provision for Credit
     Losses                     2,962        2,813        2,550           16
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             51,345       52,896       46,690           10
    -------------------------------------------------------------------------
    Other Income
      Credit related            6,587        7,309        5,513           19
      Insurance, net
       (Note 3)                 4,128        3,209        5,049          (18)
      Trust services            2,952        3,564        2,896            2
      Retail services           1,861        1,959        1,871           (1)
      Gains on sale of
       securities               1,998        1,014          302          562
      Foreign exchange
       gains                      435          383          475           (8)
      Other                       134          185          131            2
    -------------------------------------------------------------------------
                               18,095       17,623       16,237           11
    -------------------------------------------------------------------------
    Net Interest and
     Other Income              69,440       70,519       62,927           10
    -------------------------------------------------------------------------
    Non-interest Expenses
      Salaries and
       employee benefits       21,674       20,617       19,054           14
      Premises and
       equipment                5,503        5,382        5,071            9
      Other expenses            5,847        5,256        5,276           11
      Provincial capital
       taxes                      429          569          751          (43)
    -------------------------------------------------------------------------
                               33,453       31,824       30,152           11
    -------------------------------------------------------------------------
    Net Income Before
     Provision for Income
     Taxes                     35,987       38,695       32,775           10
    Provision for Income
     Taxes                     10,685       12,790       10,556            1
    -------------------------------------------------------------------------
    Net Income            $    25,302  $    25,905  $    22,219           14%
    -------------------------------------------------------------------------

    Weighted average
     common shares
     outstanding           63,183,486   62,975,022   62,249,126            2%

    Earnings per Common
     Share
      Basic               $      0.40  $      0.41  $      0.36           11%
      Diluted                    0.39         0.40         0.35           11
    -------------------------------------------------------------------------


                           For the six months ended
    (unaudited)           ------------------------- Change from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2008         2007         2007
    ------------------------------------------------------------
    Interest Income
      Loans               $   248,344  $   202,075           23%
      Securities               29,053       20,182           44
      Deposits with
       regulated
       financial
       institutions             9,500        6,054           57
    ------------------------------------------------------------
                              286,897      228,311           26
    ------------------------------------------------------------
    Interest Expense
      Deposits                166,032      124,160           34
      Subordinated
       debentures              10,849        6,866           58
    ------------------------------------------------------------
                              176,881      131,026           35
    ------------------------------------------------------------
    Net Interest Income       110,016       97,285           13
    Provision for Credit
     Losses                     5,775        5,100           13
    ------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses            104,241       92,185           13
    ------------------------------------------------------------
    Other Income
      Credit related           13,896       11,200           24
      Insurance, net
       (Note 3)                 7,337        6,251           17
      Trust services            6,516        6,078            7
      Retail services           3,820        3,627            5
      Gains on sale of
       securities               3,012          421          615
      Foreign exchange
       gains                      818          963          (15)
      Other                       319          140          128
    ------------------------------------------------------------
                               35,718       28,680           25
    ------------------------------------------------------------
    Net Interest and
     Other Income             139,959      120,865           16
    ------------------------------------------------------------
    Non-interest Expenses
      Salaries and
       employee benefits       42,291       37,045           14
      Premises and
       equipment               10,885        9,685           12
      Other expenses           11,103       10,385            7
      Provincial capital
       taxes                      998        1,230          (19)
    ------------------------------------------------------------
                               65,277       58,345           12
    ------------------------------------------------------------
    Net Income Before
     Provision for Income
     Taxes                     74,682       62,520           19
    Provision for Income
     Taxes                     23,475       19,843           18
    ------------------------------------------------------------
    Net Income            $    51,207  $    42,677           20%
    ------------------------------------------------------------

    Weighted average
     common shares
     outstanding           63,078,109   62,152,579            1%

    Earnings per Common
     Share
      Basic               $      0.81  $      0.69           17%
      Diluted                    0.79         0.67           18
    ------------------------------------------------------------

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



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

                                                                      Change
                           As at      As at      As at      As at       from
    (unaudited)         April 30 January 31 October 31   April 30   April 30
    ($ thousands)           2008       2008       2007       2007       2007
    -------------------------------------------------------------------------
    Assets
    Cash
     Resources
      Cash and
       non-interest
       bearing
       deposits with
       financial
       institutions  $    31,039 $    9,161 $    6,446 $   68,447       (55)%
      Interest bearing
       deposits with
       regulated
       financial
       institutions
       (Note 4)          476,585    475,902    405,122    234,647        103
      Cheques and other
       items in transit    6,065      5,262      1,122      1,446        319
    -------------------------------------------------------------------------
                         513,689    490,325    412,690    304,540         69
    -------------------------------------------------------------------------
    Securities (Note 4)
      Issued or
       guaranteed
       by Canada         331,272    417,735    630,396    319,668          4
      Issued or
       guaranteed
       by a province
       or municipality   443,775    396,492    251,418    237,286         87
      Other securities   490,945    479,806    459,812    439,532         12
    -------------------------------------------------------------------------
                       1,265,992  1,294,033  1,341,626    996,486         27
    -------------------------------------------------------------------------
    Securities
     Purchased Under
     Resale Agreements   155,148    209,000    206,925          -         nm
    -------------------------------------------------------------------------
    Loans (Notes 5
     and 7)
      Residential
       mortgages       1,959,048  1,865,102  1,780,442  1,606,465         22
      Other loans      6,050,679  5,907,067  5,688,160  5,019,446         21
    -------------------------------------------------------------------------
                       8,009,727  7,772,169  7,468,602  6,625,911         21
    Allowance for
     credit losses
     (Note 6)            (67,091)   (65,188)   (63,022)   (58,313)        15
    -------------------------------------------------------------------------
                       7,942,636  7,706,981  7,405,580  6,567,598         21
    -------------------------------------------------------------------------
    Other
      Land, buildings
       and equipment      25,795     25,793     25,736     23,898          8
      Goodwill             6,933      6,933      6,933      6,933          -
      Other intangible
       assets              2,410      2,545      2,681      2,952        (18)
      Insurance related   52,656     53,891     51,744     52,879          -
      Derivative
       related (Note 8)    3,966      3,701      1,496        331      1,099
      Other assets        68,989     71,438     69,629     65,925          5
    -------------------------------------------------------------------------
                         160,749    164,301    158,219    152,918          5
    -------------------------------------------------------------------------
    Total Assets     $10,038,214 $9,864,640 $9,525,040 $8,021,542         25%
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders'
     Equity
     Deposits
      Payable on
       demand        $   373,692 $  391,776 $  376,488 $  389,179        (4)%
      Payable after
       notice          2,123,327  1,960,857  1,843,799  1,480,037         43
      Payable on a
       fixed date      6,077,005  6,102,713  5,931,631  4,824,267         26
      Deposit from
       Canadian
       Western Bank
       Capital Trust     105,000    105,000    105,000    105,000          -
    -------------------------------------------------------------------------
                       8,679,024  8,560,346  8,256,918  6,798,483         28
    -------------------------------------------------------------------------
    Other
      Cheques and other
       items in transit   34,550     25,525     22,177     32,832          5
      Insurance related  127,337    126,022    124,480    120,537          6
      Derivative
       related (Note 8)      846        329      1,307      1,532        (45)
      Securities
       purchased under
       reverse resale
       agreements         19,896          -          -     19,643          1
      Other liabilities  140,346    138,449    134,665    105,685         33
    -------------------------------------------------------------------------
                         322,975    290,325    282,629    280,229         15
    -------------------------------------------------------------------------
    Subordinated Debentures
      Conventional       390,000    390,000    390,000    393,126         (1)
    -------------------------------------------------------------------------
    Shareholders'
      Equity
       Retained
       earnings          411,329    392,345    372,739    330,407         24
      Accumulated other
       comprehensive
       income (loss)       2,597        961     (5,931)    (5,482)        nm
      Capital stock      220,634    220,217    219,004    216,579          2
      Contributed
       surplus            11,655     10,446      9,681      8,200         42
    -------------------------------------------------------------------------
                         646,215    623,969    595,493    549,704         18
    -------------------------------------------------------------------------
    Total Liabilities
     and
     Shareholders'
     Equity          $10,038,214 $9,864,640 $9,525,040 $8,021,542         25%
    -------------------------------------------------------------------------
    Contingent
     Liabilities
     and Commitments
     (Note 10)

    nm - not meaningful.

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



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

                                                    For the six months ended
                                                    -------------------------
    (unaudited)                                        April 30     April 30
    ($ thousands)                                          2008         2007
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period                  $   372,739  $   297,675
      Net income                                         51,207       42,677
      Dividends                                         (12,617)      (9,945)
    -------------------------------------------------------------------------
    Balance at end of period                            411,329      330,407
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income (Loss)
    Balance at beginning of period                       (5,931)      (1,494)
      Other comprehensive income (loss)                   8,528       (3,988)
    -------------------------------------------------------------------------
    Balance at end of period                              2,597       (5,482)
    -------------------------------------------------------------------------
    Total retained earnings and accumulated other
     comprehensive income (loss)                        413,926      324,925
    -------------------------------------------------------------------------
    Capital Stock (Note 9)
    Balance at beginning of period                      219,004      215,349
      Issued on exercise of employee stock options          900          804
      Transferred from contributed surplus on
       exercise or exchange of options                      730          426
    -------------------------------------------------------------------------
    Balance at end of period                            220,634      216,579
    -------------------------------------------------------------------------
    Contributed Surplus
    Balance at beginning of period                        9,681        6,340
      Amortization of fair value of employee stock
       options                                            2,704        2,286
      Transferred to capital stock on exercise or
       exchange of options                                 (730)        (426)
    -------------------------------------------------------------------------
    Balance at end of period                             11,655        8,200
    -------------------------------------------------------------------------
    Total Shareholders' Equity                      $   646,215  $   549,704
    -------------------------------------------------------------------------



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

                                  For the                     For the
                             three months ended          six months ended
                          ------------------------- -------------------------
    (unaudited)              April 30     April 30     April 30     April 30
    ($ thousands)                2008         2007         2008         2007
    -------------------------------------------------------------------------
    Net Income            $    25,302  $    22,219  $    51,207  $    42,677
    -------------------------------------------------------------------------
    Other Comprehensive
     Income (Loss), net
     of tax
      Available-for-sale
       securities:
        Gains (losses)
         from change in
         fair value, net
         of income taxes
         of $4,053 for the
         six months (2007
         - $2,322)              2,573       (3,648)       8,429       (4,752)
        Reclassification
         to other income,
         net of income
         taxes of $978
         for the six
         months (2007 -
         $138)                 (1,349)         204       (2,034)         283
    -------------------------------------------------------------------------
                                1,224       (3,444)       6,395       (4,469)
    -------------------------------------------------------------------------
      Derivatives
       designated as cash
       flow hedges:
        Gains (losses)
         from change in
         fair value, net
         of income taxes
         of $1,528 for the
         six months (2007
         - $197)                1,529         (111)       3,338         (386)
        Reclassification
         to net interest
         income, net of
         income taxes of
         $123 for the six
         months (2007 -
         $429)                   (179)         320         (267)         867
        Reclassification
         to other
         liabilities for
         derivatives
         terminated prior
         to maturity, net
         of taxes of $429
         for the six
         months (2007 -
         nil)                    (938)           -         (938)           -
    -------------------------------------------------------------------------
                                  412          209        2,133          481
    -------------------------------------------------------------------------
                                1,636       (3,235)       8,528       (3,988)
    -------------------------------------------------------------------------
    Comprehensive Income
     for the Period       $    26,938  $    18,984  $    59,735  $    38,689
    -------------------------------------------------------------------------

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



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

                                  For the                     For the
                             three months ended          six months ended
                          ------------------------- -------------------------
    (unaudited)              April 30     April 30     April 30     April 30
    ($ thousands)                2008         2007         2008         2007
    -------------------------------------------------------------------------
    Cash Flows from
     Operating Activities
      Net income          $    25,302  $    22,219  $    51,207  $    42,677
      Adjustments to
       determine net cash
       flows
        Provision for
         credit losses          2,962        2,550        5,775        5,100
        Depreciation and
         amortization           1,686        1,403        3,355        2,827
        Amortization of
         fair value of
         employee stock
         options                1,376        1,206        2,704        2,286
        Future income
         taxes, net              (199)         609          527          218
        Gain on sale of
         securities, net       (1,998)        (302)      (3,012)        (421)
        Accrued interest
         receivable and
         payable, net          (2,215)       2,537        9,600        4,860
        Current income
         taxes payable,
         net                      (83)       1,952       (1,884)        (683)
        Other items, net        9,631       (7,898)      (9,050)      (9,918)
    -------------------------------------------------------------------------
                               36,462       24,276       59,222       46,946
    -------------------------------------------------------------------------
    Cash Flows from
     Financing Activities
      Deposits, net           118,678      231,185      422,106      507,516
      Debentures issued             -      195,000            -      195,000
      Common shares issued        250          267          900          804
      Dividends                (6,318)      (4,981)     (12,617)      (9,945)
    -------------------------------------------------------------------------
                              112,610      421,471      410,389      693,375
    -------------------------------------------------------------------------
    Cash Flows from
     Investing Activities
      Interest bearing
       deposits with
       regulated financial
       institutions, net          174       53,624      (68,545)     115,322
      Securities,
       purchased             (845,860)    (596,328)  (1,398,868)  (1,142,479)
      Securities, sale
       proceeds               451,469      293,144      749,756      430,067
      Securities, matured     425,223      248,061      739,510      598,084
      Securities purchased
       under resale
       agreements, net         73,748       19,643       71,673       28,643
      Loans, net             (238,617)    (415,699)    (542,831)    (790,861)
      Land, buildings and
       equipment               (1,553)      (1,983)      (3,143)      (2,255)
    -------------------------------------------------------------------------
                             (135,416)    (399,538)    (452,448)    (763,479)
    -------------------------------------------------------------------------
    Change in Cash and
     Cash Equivalents          13,656       46,209       17,163      (23,158)
    Cash and Cash
     Equivalents at
     Beginning of Period      (11,102)      (9,148)     (14,609)      60,219
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period(*)         $     2,554  $    37,061  $     2,554  $    37,061
    -------------------------------------------------------------------------
    (*) Represented by:
      Cash and
       non-interest
       bearing deposits
       with financial
       institutions       $    31,039  $    68,447  $    31,039  $    68,447
      Cheques and other
       items in transit
       (included in Cash
       Resources)               6,065        1,446        6,065        1,446
      Cheques and other
       items in transit
       (included in Other
       Liabilities)           (34,550)     (32,832)     (34,550)     (32,832)
    -------------------------------------------------------------------------
      Cash and Cash
       Equivalents at End
       of Period          $     2,554  $    37,061  $     2,554  $    37,061
    -------------------------------------------------------------------------

    Supplemental
     Disclosure of Cash
     Flow Information
      Amount of interest
       paid in the period $    85,779  $    65,465  $   166,443  $   124,640
      Amount of income
       taxes paid in the
       period                  13,865        7,995       24,832       20,308
    -------------------------------------------------------------------------

    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, 2007, 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, 2007 as set out on pages 57 to 82 of the
        Bank's 2007 Annual Report.

    2.  Change in Accounting Policies

        Effective November 1, 2007, the Bank adopted new accounting standards
        issued by the Canadian Institute of Chartered Accountants (CICA):
        Financial Instruments - Disclosure and Presentation and Capital
        Disclosures. The new standards require additional disclosure
        regarding financial instruments and capital management practices. As
        a result of adopting these standards, new or enhanced disclosure is
        provided in Note 4 Securities, Note 5 Loans, Note 6 Allowance for
        Credit Losses, Note 7 Impaired and Past Due Loans, Note 12 Financial
        Instruments, Note 13 Interest Rate Sensitivity and Note 15 Capital
        Management.

    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                  For the
                                  three months ended        six months ended
                            -------------------------------------------------
                               April   January     April     April     April
                                  30        31        30        30        30
                                2008      2008      2007      2008      2007
        ---------------------------------------------------------------------
        Net earned premiums $ 23,737  $ 24,299  $ 22,626  $ 48,036  $ 45,754
        Commissions and
         processing fees         738       662       669     1,400     1,275
        Net claims and
         adjustment
         expenses            (15,135)  (17,069)  (13,222)  (32,204)  (31,398)
        Policy acquisition
         costs                (5,212)   (4,683)   (5,024)   (9,895)   (9,380)
        ---------------------------------------------------------------------
        Total, net          $  4,128  $  3,209  $  5,049  $  7,337  $  6,251
        ---------------------------------------------------------------------

    4.  Securities

        Securities are accounted for at settlement date.  Net unrealized
        gains (losses) reflected on the balance sheet follow.

                                               As at       As at       As at
                                            April 30  January 31    April 30
                                                2008        2008        2007
        ---------------------------------------------------------------------
        Interest bearing deposits with
         regulated financial institutions $    1,849  $      992  $     (632)
        Securities
          Issued or guaranteed by Canada       1,106       1,471        (622)
          Issued or guaranteed by a
           province or municipality            1,827       1,967        (234)
          Other securities                    (4,600)     (6,102)     (5,754)
        ---------------------------------------------------------------------
        Unrealized gains (losses), net    $      182  $   (1,672) $   (7,242)
        ---------------------------------------------------------------------

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

    5.  Loans

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


                   British                Sask-
    ($ millions)  Columbia   Alberta  atchewan  Manitoba     Other     Total
    -------------------------------------------------------------------------
    Loans to
     Individuals
      Residential
       mortgages(2) $  963    $  816    $   73    $   50    $   57    $1,959
      Other loans       96       181        25         3         1       306
    -------------------------------------------------------------------------
                     1,059       997        98        53        58     2,265
    -------------------------------------------------------------------------
    Loans to Businesses
      Commercial       635     1,091        77        75       131     2,009
      Construction
       and real
       estate(3)       819     1,158        67        54        57     2,155
      Equipment
       financing       348       871        43        14        25     1,301
      Energy            20       260         -         -         -       280
    -------------------------------------------------------------------------
                     1,822     3,380       187       143       213     5,745
    -------------------------------------------------------------------------
    Total Loans     $2,881    $4,377    $  285    $  196    $  271    $8,010
    -------------------------------------------------------------------------
    Composition
     Percentage
      April 30,
       2008             36%       55%        4%        2%        3%      100%
      January 31,
       2008             36%       54%        4%        2%        4%      100%
      October 31,
       2007             35%       55%        4%        3%        3%      100%
    -------------------------------------------------------------------------



                     April   January   October
                        30        31        31
                      2008      2008      2007
                   Composi-  Composi-  Composi-
                      tion      tion      tion
                   Percent-  Percent-  Percent-
    ($ millions)       age       age       age
    -------------------------------------------
    Loans to
     Individuals
      Residential
       mortgages(2)     24%       24%       24%
      Other loans        4         3         3
    -------------------------------------------
                        28        27        27
    -------------------------------------------
    Loans to
     Businesses
      Commercial        25        25        25
      Construction
       and real
       estate(3)        27        27        25
      Equipment
       financing        16        17        18
      Energy             4         4         5
    -------------------------------------------
                        72        73        73
    -------------------------------------------
    Total Loans        100%      100%      100%
    -------------------------------------------
    Composition
     Percentage
      April 30,
       2008
      January 31,
       2008
      October 31,
       2007
    -------------------------------------------

    (1) This table does not include an allocation for credit losses or
        deferred revenue and premiums.
    (2) Includes single- and multi-unit residential mortgages and project
        (interim) mortgages on residential property.
    (3) Includes commercial term mortgages and project (interim) mortgages
        for non-residential property.

    6.  Allowance for Credit Losses

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

               For the three months ended        For the three months ended
                    April 30, 2008                    January 31, 2008
           ------------------------------------------------------------------
                         General                          General
                       Allowance                        Allowance
             Specific for Credit              Specific for Credit
            Allowance     Losses      Total  Allowance     Losses      Total
    -------------------------------------------------------------------------
    Balance
     at
     begin-
     ning of
     period  $  9,248   $ 55,940   $ 65,188   $  7,414   $ 55,608   $ 63,022
    Provi-
     sion
     for
     credit
     losses     2,598        364      2,962      2,481        332      2,813
    Write-
     offs      (1,065)         -     (1,065)      (674)         -       (674)
    Recover-
     ies            6          -          6         27          -         27
    -------------------------------------------------------------------------
    Balance
     at end
     of
     period  $ 10,787   $ 56,304   $ 67,091   $  9,248   $ 55,940   $ 65,188
    -------------------------------------------------------------------------


                                                 For the three months ended
                                                        April 30, 2007
                                             --------------------------------
                                                          General
                                                        Allowance
                                              Specific for Credit
                                             Allowance     Losses      Total
    -------------------------------------------------------------------------
    Balance at beginning of period            $  5,085   $ 50,949   $ 56,034
    Provision for credit losses                     64      2,486      2,550
    Write-offs                                    (298)         -       (298)
    Recoveries                                      27          -         27
    -------------------------------------------------------------------------
    Balance at end of period                  $  4,878   $ 53,435   $ 58,313
    -------------------------------------------------------------------------


               For the six months ended          For the six months ended
                    April 30, 2008                    April 30, 2007
           ------------------------------------------------------------------
                         General                          General
                       Allowance                        Allowance
             Specific for Credit              Specific for Credit
            Allowance     Losses      Total  Allowance     Losses      Total
    -------------------------------------------------------------------------
    Balance
     at
     begin-
     ning
     of
     period  $  7,414   $ 55,608   $ 63,022   $  5,484   $ 48,037   $ 53,521
    Provi-
     sion
     for
     credit
     losses     5,079        696      5,775       (298)     5,398      5,100
    Write-
     offs      (1,739)         -     (1,739)      (372)         -       (372)
    Recover-
     ies           33          -         33         64          -         64
    -------------------------------------------------------------------------
    Balance
     at end
     of
     period  $ 10,787   $ 56,304   $ 67,091   $  4,878   $ 53,435   $ 58,313
    -------------------------------------------------------------------------


    7.  Impaired and Past Due Loans

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

                                              As at April 30, 2008
                              -----------------------------------------------
                                               Gross                     Net
                                   Gross    Impaired    Specific    Impaired
                                  Amount      Amount   Allowance       Loans
    -------------------------------------------------------------------------
    Consumer and personal     $1,159,586  $    6,417  $      283  $    6,134
    Real estate(1)             3,232,475      11,223         920      10,303
    Industrial                 1,580,911      14,972       3,948      11,024
    Commercial                 2,036,755      10,406       5,636       4,770
    -------------------------------------------------------------------------
    Total                     $8,009,727  $   43,018  $   10,787      32,231
    -------------------------------------------------------------
    General allowance(2)                                             (56,304)
    -------------------------------------------------------------------------
    Net impaired loans after
     general allowance                                            $  (24,073)
    -------------------------------------------------------------------------


                                            As at January 31, 2008
                              -----------------------------------------------
                                               Gross                     Net
                                   Gross    Impaired    Specific    Impaired
                                  Amount      Amount   Allowance       Loans
    -------------------------------------------------------------------------
    Consumer and personal     $1,093,034  $    5,197  $      528  $    4,669
    Real estate(1)             3,126,745       7,815         918       6,897
    Industrial                 1,643,847      12,260       3,377       8,883
    Commercial                 1,908,543      13,675       4,425       9,250
    -------------------------------------------------------------------------
    Total                     $7,772,169  $   38,947  $    9,248      29,699
    -------------------------------------------------------------
    General allowance(2)                                             (55,940)
    -------------------------------------------------------------------------
    Net impaired loans after
     general allowance                                            $  (26,241)
    -------------------------------------------------------------------------


                                            As at April 30, 2007
                              -----------------------------------------------
                                               Gross                     Net
                                   Gross    Impaired    Specific    Impaired
                                  Amount      Amount   Allowance       Loans
    -------------------------------------------------------------------------
    Consumer and personal     $  920,778  $    2,750  $      325  $    2,425
    Real estate(1)             2,499,960         351         350           1
    Industrial                 1,462,824       2,848         632       2,216
    Commercial                 1,742,349       4,746       3,571       1,175
    -------------------------------------------------------------------------
    Total                     $6,625,911  $   10,695  $    4,878       5,817
    -------------------------------------------------------------
    General allowance(2)                                             (53,435)
    -------------------------------------------------------------------------
    Net impaired loans after
     general allowance                                            $  (47,618)
    -------------------------------------------------------------------------

    (1) Multi-family residential mortgages are included in real estate loans.
    (2) The general allowance for credit risk is not allocated by loan type.
    (3) There are no foreclosed real estate assets held for sale.

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

                       As at April 30, 2008          As at January 31, 2008
             ----------------------------------------------------------------
                     Gross                 Net     Gross                 Net
                  Impaired  Specific  Impaired  Impaired  Specific  Impaired
                    Amount Allowance     Loans    Amount Allowance     Loans
    -------------------------------------------------------------------------
    Alberta       $ 18,586  $  8,071  $ 10,515  $ 20,108  $  6,090  $ 14,018
    British
     Columbia       21,757     1,778    19,979    15,648     1,622    14,026
    Saskatchewan     2,167       499     1,668     3,095     1,480     1,615
    Manitoba           508       439        69        96        56        40
    -------------------------------------------------------------------------
    Total         $ 43,018  $ 10,787    32,231  $ 38,947  $  9,248    29,699
    ---------------------------------           -------------------
    General
     allowance(1)                      (56,304)                      (55,940)
    -------------------------------------------------------------------------
    Net impaired
     loans after
     general
     allowance                        $(24,073)                     $(26,241)
    -------------------------------------------------------------------------


                                                      As at April 30, 2007
                                                -----------------------------
      	                                         Gross                 Net
                                                Impaired  Specific  Impaired
                                                  Amount Allowance     Loans
    -------------------------------------------------------------------------
    Alberta                                     $  5,430  $  2,433  $  2,997
    British Columbia                               3,637       887     2,750
    Saskatchewan                                   1,592     1,558        34
    Manitoba                                          36         -        36
    -------------------------------------------------------------------------
    Total                                       $ 10,695  $  4,878     5,817
    ---------------------------------------------------------------
    General allowance(1)                                             (53,435)
    -------------------------------------------------------------------------
    Net impaired loans after general allowance                      $(47,618)
    -------------------------------------------------------------------------

    (1) The general allowance for credit risk is not allocated by province.


        During the quarter, interest recognized as income on impaired loans
        totaled $115 (2007 - $39).

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

    As at
     April
     30,          1 - 30      31 - 60      61 - 90    More than
     2008           days         days         days      90 days        Total
    -------------------------------------------------------------------------
    Residen-
     tial
     mortgag-
     es      $    18,545  $     2,242  $     1,203  $         -  $    21,990
    Other
     loans        14,882        1,655        1,196          107       17,840
    -------------------------------------------------------------------------
             $    33,427  $     3,897  $     2,399  $       107  $    39,830
    -------------------------------------------------------------------------
         Certain process changes were required to compile the above
         information and comparitive figures are not available.

    8.  Derivative Financial Instruments

        For the quarter and six months ended April 30, 2008, a net unrealized
        after tax gain of $1,529 and $3,338 repectively (2007 - $111 and $386
        after tax loss) was recorded in other comprehensive income for
        changes in fair value of the effective portion of derivatives
        designated as cash flow hedges, and $nil (2007 - $nil) was recorded
        in other income for changes in fair value of the ineffective portion
        of derivatives classified as cash flow hedges. Amounts accumulated in
        other comprehensive income are reclassified to net income in the same
        period that interest on certain floating rate loans (i.e. the hedged
        items) affect income. For the quarter and six months ended April 30,
        2008, a net loss after tax of $179 and $267 respectively (2007 - $320
        and $867 net gain after tax) was reclassified to net income. During
        the quarter, $938 after tax (2007 - nil) was reclassified to other
        liabilities for derivatives terminated prior to maturity and the
        deferred balance will be amortized into net income over the original
        hedged period. A net gain of $3,152 (2007 - $743 net loss) before tax
        recorded in accumulated other comprehensive income (loss) as at
        April 30, 2008 is expected to be reclassified to net income in the
        next 12 months and will offset variable cash flows from floating rate
        loans.

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

                      As at April 30, 2008         As at January 31, 2008
    -------------------------------------------------------------------------
                            Positive  Negative            Positive  Negative
                  Notional      Fair      Fair  Notional      Fair      Fair
                    Amount     Value     Value    Amount     Value     Value
    -------------------------------------------------------------------------
    Interest rate
     swaps
     designated as
     cash flow
     hedges(1)    $693,000  $  3,632  $     74  $560,000  $  3,010  $     53
    Equity
     contracts(2)    4,400       320         -     6,000       178         -
    Foreign
     exchange
     contracts(3)   71,299        14       456    89,752       513         6
    Embedded
     derivatives
     in equity-
     linked
     deposits(2)       n/a         -       316       n/a         -       270
    Other
     forecasted
     transactions        -         -         -         -         -         -
    -------------------------------------------------------------------------
    Derivative
     related amounts        $  3,966  $    846            $  3,701  $    329
    -------------------------------------------------------------------------


                                                    As at April 30, 2007
                                               ------------------------------
                                                          Positive  Negative
                                                Notional      Fair      Fair
                                                  Amount     Value     Value
    -------------------------------------------------------------------------
    Interest rate swaps designated
     as cash flow hedges                        $427,500  $     21  $    943
    Equity contracts                               6,000       239        36
    Foreign exchange contracts                    30,296        71         -
    Embedded derivatives in equity-linked
     deposits                                        n/a         -       553
    Other forecasted transactions                      -         -         -
    -------------------------------------------------------------------------
    Derivative related amounts                            $    331  $  1,532
    -------------------------------------------------------------------------

    (1) Interest rate swaps outstanding at April 30, 2008 mature between
        May 2008 and January 2013.
    (2) Equity contracts and equity-linked deposits outstanding at April 30,
        2008 mature between February 2009 and March 2011.
    (3) Foreign exchange contracts outstanding at April 30, 2008 mature
        between May 2008 and October 2008.

    n/a - not applicable.


        There were no forecasted transactions that failed to occur during the
        quarter and six months ended April 30, 2008.

    9.  Capital Stock and Share Incentive Plan

        Capital Stock                 For the three months ended
                         ----------------------------------------------------
                               April 30, 2008            April 30, 2007
        ---------------------------------------------------------------------
                               Number                    Number
                            of Shares       Amount    of Shares       Amount
        ---------------------------------------------------------------------
        Common Shares
          Outstanding at
           beginning of
           period          63,146,077   $  220,217   62,168,246   $  216,158
          Issued on
           exercise or
           exchange of
           options             88,373          250      126,812          267
          Transferred from
           contributed
           surplus on
           exercise or
           exchange of
           options                  -          167            -          154
        ---------------------------------------------------------------------
        Outstanding at
         end of period     63,234,450   $  220,634   62,295,058   $  216,579
        ---------------------------------------------------------------------


                                       For the six months ended
                         ----------------------------------------------------
                               April 30, 2008            April 30, 2007
        ---------------------------------------------------------------------
                               Number                    Number
                            of Shares       Amount    of Shares       Amount
        ---------------------------------------------------------------------
        Common Shares
          Outstanding at
           beginning of
           period          62,836,189   $  219,004   61,936,260   $  215,349
          Issued on
           exercise or
           exchange of
           options            398,261          900      358,798          804
          Transferred from
           contributed
           surplus on
           exercise or
           exchange of
           options                  -          730            -          426
        ---------------------------------------------------------------------
        Outstanding at
         end of period     63,234,450   $  220,634   62,295,058   $  216,579
        ---------------------------------------------------------------------


        Employee Stock
         Options                      For the three months ended
                         ----------------------------------------------------
                               April 30, 2008            April 30, 2007
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
          Balance at
           beginning of
           period           5,087,269   $    19.26    5,459,000   $    14.97
          Granted               5,500        22.98        9,500        24.72
          Exercised or
           exchanged         (120,477)        8.97     (163,000)        7.18
          Forfeited           (31,050)       21.55      (28,500)       20.98
        ---------------------------------------------------------------------
        Balance at end
         of period          4,941,242   $    19.50    5,277,000   $    15.20
        ---------------------------------------------------------------------


                                       For the six months ended
                         ----------------------------------------------------
                               April 30, 2008            April 30, 2007
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
          Balance at
           beginning of
           period           4,911,277   $    16.96    5,030,040   $    13.07
          Granted             601,342        31.11      743,100        25.01
          Exercised or
           exchanged         (529,527)        8.90     (448,140)        7.04
          Forfeited           (41,850)       22.44      (48,000)       20.11
        ---------------------------------------------------------------------
        Balance at end
         of period          4,941,242   $    19.50    5,277,000   $    15.20
        ---------------------------------------------------------------------
        Exercisable at
         end of period      1,158,050   $     9.74      932,800   $     7.19
        ---------------------------------------------------------------------

        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 529,527
        options (2007 - 448,140) exercised or exchanged in the six months
        ended April 30, 2008, option holders exchanged the rights to 419,077
        options (2007 - 328,040) and received 287,811 shares (2007 - 238,196)
        in return under the cashless settlement alternative.

        In the six months ended April 30, 2008, salary expense of $2,704
        (2007 - $2,286) 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
        4.1% (2007 - 3.9%), (ii) expected option life of 4.0 years (2007 -
        4.0 years), (iii) expected volatility of 21% (2007 - 19%), and (iv)
        expected dividends of 1.3% (2007 - 1.3%). The weighted average fair
        value of options granted was estimated at $6.66 (2007 - $4.34) per
        share.

        During the second quarter of 2008, 950,000 additional options
        (including 540,030 granted in the first quarter of 2008) received
        shareholder and TSX approval.

    10. Contingent Liabilities and Commitments

        Significant contingent liabilities and commitments, including
        guarantees provided to third parties, are discussed in Note 19 of the
        Bank's audited consolidated financial statements for the year ended
        October 31, 2007 (see pages 74 to 75 of the 2007 Annual Report) and
        include:

                                             As at        As at        As at
                                          April 30   January 31     April 30
                                              2008         2008         2007
        ---------------------------------------------------------------------
        Guarantees and standby letters
         of credit
          Balance outstanding          $   231,837  $   196,670  $   158,317
        Business credit cards
          Total approved limit              11,169       10,040        8,310
          Balance outstanding                2,326        2,308        1,878
        ---------------------------------------------------------------------

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

    11. Trust Assets Under Administration

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


                                             As at        As at        As at
                                          April 30   January 31     April 30
                                              2008         2008         2007
        ---------------------------------------------------------------------
        Trust assets under
         administration                $ 4,498,560  $ 4,174,481  $ 3,874,228
        ---------------------------------------------------------------------

    12. Financial Instruments

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

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

        The use of financial instruments exposes the Bank to credit,
        liquidity and market risk. A discussion of how these and other risks
        are managed can be found in the Risk Management section of the 2007
        Annual Report beginning on page 51.

        The value of financial assets recorded on the consolidated balance
        sheet at April 30, 2008 at fair value (cash, securities, securities
        purchased under resale agreements and derivatives) was determined
        using published market prices quoted in active markets for 90% of the
        portfolio and estimated using a valuation technique based on
        observable market data for 10% of the portfolio. The value of
        liabilities recorded on the consolidated balance sheet at fair value
        (derivatives) was determined for the entire portfolio using a
        valuation technique based on observable market data. Further
        information on how the fair value of financial instruments is
        determined is included in the Financial Instruments Measured at Fair
        Value discussion in the Critical Accounting Estimates section of the
        2007 Annual Report beginning on page 49 as well as Note 27 of the
        October 31, 2007 audited financial statements beginning on page 80 in
        the 2007 Annual Report.

        Income and expenses are classified as to source, either securities or
        loans for income, and deposits or subordinated debentures for
        expense. Gains on the sale of securities, net, are shown separately
        in other income.

    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 26 of the audited consolidated
        financial statements for the year ended October 31, 2007 (see page 78
        of the 2007 Annual Report). The following table shows the gap
        position for selected time intervals.

    Asset Liability Gap Positions

                                      Floating
                                      Rate and            3 Months     Total
                                      Within 1    1 to 3        to    Within
    ($ millions)                         Month    Months    1 Year    1 Year
    -------------------------------------------------------------------------
    April 30, 2008
    Assets
    Cash resources and securities     $    261  $    222  $    367  $    850
    Loans                                4,566       431       706     5,703
    Other assets                             -         -         -         -
    Derivative financial instruments(1)     30       150       182       362
    -------------------------------------------------------------------------
    Total                                4,857       803     1,255     6,915
    -------------------------------------------------------------------------
    Liabilities and Equity
    Deposits                             3,761       709     1,530     6,000
    Other liabilities                       23         6        25        54
    Debentures                               -        30        35        65
    Shareholders' equity                     -         -         -         -
    Derivative financial
     instruments(1)                        697         -         -       697
    -------------------------------------------------------------------------
    Total                             $  4,481  $    745  $  1,590  $  6,816
    -------------------------------------------------------------------------
    Interest Rate Sensitive Gap       $    376  $     58  $   (335) $     99
    -------------------------------------------------------------------------
    Cumulative Gap                    $    376  $    434  $     99  $     99
    -------------------------------------------------------------------------
    Cumulative Gap as a percentage
     of total assets                       3.5%      4.0%      0.9%      0.9%
    -------------------------------------------------------------------------

    January 31, 2008
    Assets                            $  4,751  $    747  $  1,595  $  7,093
    Liabilities and equity               4,255       875     1,597     6,727
    -------------------------------------------------------------------------
    Interest rate sensitive gap       $    496  $   (128) $     (2) $    366
    -------------------------------------------------------------------------
    Cumulative gap                    $    496  $    368  $    366  $    366
    -------------------------------------------------------------------------
    Cumulative gap as a percentage
     of total assets                       4.8%      3.5%      3.5%      3.5%
    -------------------------------------------------------------------------

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


                                                    More       Non-
                                     1 Year to      than   interest
    ($ millions)                       5 Years   5 Years  Sensitive    Total
    -------------------------------------------------------------------------
    April 30, 2008
    Assets
    Cash resources and securities     $    828  $     53  $     49  $  1,780
    Loans                                2,423        49       (78)    8,097
    Other assets                             -         -       161       161
    Derivative financial instruments(1)    335         -         -       697
    -------------------------------------------------------------------------
    Total                                3,586       102       132    10,735
    -------------------------------------------------------------------------
    Liabilities and Equity
    Deposits                             2,589       105       (15)    8,679
    Other liabilities                       32         9       228       323
    Debentures                             250        75         -       390
    Shareholders' equity                     -         -       646       646
    Derivative financial
     instruments(1)                          -         -         -       697
    -------------------------------------------------------------------------
    Total                             $  2,871  $    189  $    859  $ 10,735
    -------------------------------------------------------------------------
    Interest Rate Sensitive Gap       $    715  $    (87) $   (727) $      -
    -------------------------------------------------------------------------
    Cumulative Gap                    $    814  $    727  $      -  $      -
    -------------------------------------------------------------------------
    Cumulative Gap as a percentage
     of total assets                       7.6%      6.8%        -%        -%
    -------------------------------------------------------------------------

    January 31, 2008
    Assets                            $  3,049  $    165  $    123  $ 10,430
    Liabilities and equity               2,686       189       828    10,430
    -------------------------------------------------------------------------
    Interest rate sensitive gap       $    363  $    (24) $   (705) $      -
    -------------------------------------------------------------------------
    Cumulative gap                    $    729  $    705  $      -  $      -
    -------------------------------------------------------------------------
    Cumulative gap as a percentage
     of total assets                       7.0%      6.8%        -%        -%
    -------------------------------------------------------------------------

    April 30, 2007
    Cumulative gap                    $    597  $    596  $      -  $      -
    -------------------------------------------------------------------------
    Cumulative gap as a percentage
     of total assets                       7.1%      6.7%        -%        -%
    -------------------------------------------------------------------------

    (1) Derivative financial instruments are included in this table at the
        notional amount.
    (2) Accrued interest is excluded in calculating interest sensitive assets
        and liabilities.
    (3) Potential prepayments of fixed rate loans and early redemption of
        redeemable fixed term deposits have not been estimated. Redemptions
        of fixed term deposits where depositors have this option are not
        expected to be material. The majority of fixed rate loans, mortgages
        and leases are either closed or carry prepayment penalties.


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

                    Floating
                        Rate               3
                         and          Months   Total  1 Year    More
                    Within 1  1 to 3      to  Within      to    than
    April 30, 2008   1 Month  Months  1 Year  1 Year 5 Years 5 Years   Total
    -------------------------------------------------------------------------
    Total assets         5.4%    4.6%    5.3%    5.3%    5.6%    5.3%    5.4%
    Total liabilities    2.8     3.9     4.1     3.2     4.3     5.8     3.6
    -------------------------------------------------------------------------
    Interest rate
     sensitive gap       2.6%    0.7%    1.2%    2.1%    1.3%  (0.5)%    1.8%
    -------------------------------------------------------------------------

    January 31, 2008
    -------------------------------------------------------------------------
    Total assets         6.1%    4.9%    5.2%    5.8%    5.9%    5.7%    5.8%
    Total liabilities    3.5     4.3     4.2     3.8     4.3     5.7     3.9
    -------------------------------------------------------------------------
    Interest rate
     sensitive gap       2.6%    0.6%    1.0%    2.0%    1.6%    0.0%    1.9%
    -------------------------------------------------------------------------

        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 2.3% (January 31, 2008 - 2.9%).
        A one-percentage point decrease in all interest rates would decrease
        net interest income by a similar 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
                     --------------------------------------------------------
                     April   January     April     April   January     April
                        30        31        30        30        31        30
                      2008      2008      2007      2008      2008      2007
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $ 54,325  $ 55,642  $ 49,523  $  1,334  $  1,404  $  1,044
    Less teb
     adjustment      1,252     1,238     1,231       100        99        96
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements     53,073    54,404    48,292     1,234     1,305       948
    Other
     income(2)      13,948    14,395    11,175     4,147     3,228     5,062
    -------------------------------------------------------------------------
    Total revenues  67,021    68,799    59,467     5,381     4,533     6,010
    Provision for
     credit losses   2,962     2,813     2,550         -         -         -
    Non-interest
     expenses       31,207    29,504    28,020     2,246     2,320     2,132
    Provision for
     income taxes    9,779    12,042     9,340       906       748     1,216
    -------------------------------------------------------------------------
    Net income    $ 23,073  $ 24,440  $ 19,557  $  2,229  $  1,465  $  2,662
    -------------------------------------------------------------------------
    Total average
     assets ($
     millions)(3) $  9,730  $  9,428  $  7,654  $    180  $    180  $    160
    -------------------------------------------------------------------------


                                                           Total
                                              -------------------------------
                                                     Three months ended
                                              -------------------------------
                                                   April   January     April
                                                      30        31        30
                                                    2008      2008      2007
    -------------------------------------------------------------------------
    Net interest income (teb)(1)                $ 55,659  $ 57,046  $ 50,567
    Less teb adjustment                            1,352     1,337     1,327
    -------------------------------------------------------------------------
    Net interest income per financial
     statements                                   54,307    55,709    49,240
    Other income                                  18,095    17,623    16,237
    -------------------------------------------------------------------------
    Total revenues                                72,402    73,332    65,477
    Provision for credit losses                    2,962     2,813     2,550
    Non-interest expenses                         33,453    31,824    30,152
    Provision for income taxes                    10,685    12,790    10,556
    -------------------------------------------------------------------------
    Net income                                  $ 25,302  $ 25,905  $ 22,219
    -------------------------------------------------------------------------
    Total average assets ($ millions)(3)        $  9,910  $  9,608  $  7,814
    -------------------------------------------------------------------------


                    Banking and Trust       Insurance             Total
                   ----------------------------------------------------------
                    Six months ended    Six months ended    Six months ended
                   ----------------------------------------------------------
                     April     April     April     April     April     April
                        30        30        30        30        30        30
                      2008      2007      2008      2007      2008      2007
    -------------------------------------------------------------------------
    Net interest
     income
     (teb)(1)     $109,967  $ 97,671  $  2,738  $  2,105  $112,705  $ 99,776
    Less teb
     adjustment      2,490     2,316       199       175     2,689     2,491
    -------------------------------------------------------------------------
    Net interest
     income per
     financial
     statements    107,477    95,355     2,539     1,930   110,016    97,285
    Other
     income(2)      28,343    22,369     7,375     6,311    35,718    28,680
    -------------------------------------------------------------------------
    Total
     revenues      135,820   117,724     9,914     8,241   145,734   125,965
    Provision for
     credit losses   5,775     5,100         -         -     5,775     5,100
    Non-interest
     expenses       60,711    54,307     4,566     4,038    65,277    58,345
    Provision for
     income taxes   21,821    18,573     1,654     1,270    23,475    19,843
    -------------------------------------------------------------------------
    Net income    $ 47,513  $ 39,744  $  3,694  $  2,933  $ 51,207  $ 42,677
    -------------------------------------------------------------------------
    Total average
     assets ($
     millions)(3) $  9,579  $  7,437  $    180  $    158  $  9,759  $  7,595
    -------------------------------------------------------------------------

    (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. Capital Management

        Effective November 1, 2007, OSFI adopted a new capital management
        framework called Basel II for Canadian financial institutions and
        capital is now managed and reported in accordance with those
        requirements. Basel II introduced some significant changes to the
        risk-weighting of assets and calculation of regulatory capital. The
        Bank has implemented the standardized approach to calculating risk-
        weighted assets for both credit and operational risk. Changes for the
        Bank under Basel II include a reclassification into lower risk-
        weight categories for residential mortgages and loans to small-
        to-medium sized enterprises and a new capital requirement related
        to operational risk.

        Basel II has not had a significant impact on the Bank's overall
        required level of regulatory capital as compared to OSFI's previous
        methodology. New procedures and system enhancements have been
        developed to conform to the new framework including the formalization
        of CWB's internal capital adequacy assessment process.

        Under the Basel II standardized approach to credit risk and OSFI's
        previous framework, banks are required to measure capital adequacy in
        accordance with instructions for determining risk-adjusted capital
        and risk-weighted assets, including off-balance sheet commitments.
        Based on the deemed credit risk of each type of asset, a weighting of
        0% to 150% under Basel II (0% to 100% under the previous framework)
        is assigned. The ratio of regulatory capital to risk-weighted assets
        is calculated and compared to OSFI's standards for Canadian financial
        institutions. Off-balance sheet assets, such as the notional amount
        of derivatives and some credit commitments, are included in the
        calculation of risk-weighted assets and both the credit risk
        equivalent and the risk-weight calculations are prescribed by OSFI.
        As Canadian Direct Insurance Incorporated (CDI) is subject to
        separate OSFI capital requirements specific to insurance companies,
        the Bank's investment in CDI is deducted from capital and CDI's
        assets are excluded from the calculation of risk-weighted assets.

        Regulatory guidelines require banks to maintain a minimum ratio of
        capital to risk-weighted assets and off-balance sheet items of 8%, of
        which 4% must be core capital (Tier 1) and the remainder
        supplementary capital (Tier 2). However, OSFI has established that
        Canadian banks need to maintain a minimum total capital adequacy
        ratio of 10% with a Tier 1 ratio of not less than 7%. CWB's Tier 1
        capital is primarily comprised of common shareholders' equity and
        innovative capital (to a maximum of 15% of net Tier 1 capital) while
        Tier 2 capital includes subordinated debentures (to a maximum amount
        of 50% of net Tier 1 capital) and the inclusion of the general
        allowance for credit losses to a maximum of 125 basis points of risk-
        weighted assets (87.5 basis points under the previous framework).

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

        Additional information about the Bank's capital management practices
        is provided in the 2007 Annual Report beginning on page 41.

        Capital Structure and Regulatory Ratios(1)

                                               As at       As at       As at
                                            April 30  January 31    April 30
                                                2008        2008        2007
        ---------------------------------------------------------------------
        Capital
          Tier 1                          $  739,724  $  718,600  $  644,957
          Total                            1,117,667   1,087,805     977,765
        ---------------------------------------------------------------------
        Capital ratios
          Tier 1                                 9.3%        9.2%        9.4%
          Total                                 14.0        13.9        14.2
        Assets to capital multiple               9.1x        9.1x        8.2x
        ---------------------------------------------------------------------

        (1) Regulatory capital and capital ratios are calculated in
            accordance with the requirements of OSFI. As described above, as
            of November 1, 2007, OSFI changed the framework and capital is
            now managed and reported in accordance with the requirements of
            Basel II. Prior year figures have been calculated using the
            previous framework.


        During the quarter, the Bank complied with all internal and external
        capital requirements.

    16. Comparative Figures

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

    17. Future Accounting Changes

        International Financial Reporting Standards The CICA will transition
        Canadian GAAP for publicly accountable entities to International
        Financial Reporting Standards (IFRS). The Bank's consolidated
        financial statements will be prepared in accordance with IFRS for the
        fiscal year commencing November 1, 2011. The impact of the transition
        to IFRS on the Bank's consolidated financial statements is not yet
        determinable.


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

    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 are "eligible dividends"
    Suite 600, 750 Cambie Street       as defined in the Income Tax Act.
    Vancouver, BC  V6B 0A2
    Toll-free: 1-800-663-1124          Investor Relations
    Fax: (604) 669-6069
    Website: www.cwt.ca                For further financial information
                                       contact:
    Canadian Direct Insurance          Kirby Hill, CFA
     Incorporated                      Senior Manager, Investor and Public
    Suite 600, 750 Cambie Street        Relations
    Vancouver, BC V6B 0A2              Canadian Western Bank
    Telephone: (604) 699-3678          Telephone: (780) 441-3770
    Fax: (604) 699-3851                Toll-free: 1-800-836-1886
    Website: www.canadiandirect.com    Fax: (780) 423-8899
                                       E-mail:
    Valiant Trust Company              InvestorRelations@cwbankgroup.com
    Suite 310, 606 - 4th Street S.W.
    Calgary, AB  T2P 1T1               Online Investor Information
    Toll-free: 1-866-313-1872
    Fax: (403) 233-2857                Additional investor information
    Website: www.valianttrust.com      including supplemental financial
                                       information and a corporate
    Stock Exchange Listing             presentation is available on our
                                       website at www.cwbankgroup.com.
    The Toronto Stock Exchange
    Share Symbol: CWB                  Quarterly Conference Call and Webcast

                                       CWB's quarterly conference call and
                                       live audio webcast will take place on
                                       June 5, 2008 at 3:30 p.m. ET. The
                                       webcast will be archived on the Bank's
                                       website at www.cwbankgroup.com for
                                       sixty days. A replay of the conference
                                       call will be available until June 19,
                                       2008 by dialing (416) 640-1917 or toll
                                       free (877) 289-8525 and entering
                                       passcode 21260802, followed by the
                                       pound sign.

    





For further information:

For further information: Head Office: Canadian Western Bank & Trust,
Suite 2300, Canadian Western Bank Place, 10303 Jasper Avenue, Edmonton, AB,
T5J 3X6, Telephone: (780) 423-8888, Fax: (780) 423-8897, Website:
www.cwbankgroup.com; Transfer Agent and Registrar: Valiant Trust Company,
Suite 310, 606 - 4th Street S.W., Calgary, AB, T2P 1T1, Telephone: (403)
233-2801, Fax: (403) 233-2857, Website: www.valianttrust.com, E-mail:
inquiries@valianttrust.com; Subsidiary Offices: Canadian Western Trust
Company, Suite 600, 750 Cambie Street, Vancouver, BC, V6B 0A2, Toll-free:
1-800-663-1124, Fax: (604) 669-6069, Website: www.cwt.ca; Canadian Direct
Insurance Incorporated, Suite 600, 750 Cambie Street, Vancouver, BC, V6B 0A2,
Telephone: (604) 699-3678, Fax: (604) 699-3851, Website:
www.canadiandirect.com; Valiant Trust Company, Suite 310, 606 - 4th Street
S.W., Calgary, AB, T2P 1T1, Toll-free: 1-866-313-1872, Fax: (403) 233-2857,
Website: www.valianttrust.com; Investor Relations: For further financial
information contact: Kirby Hill, CFA Senior Manager, Investor and Public
Relations, Canadian Western Bank, Telephone: (780) 441-3770, Toll-free:
1-800-836-1886, Fax: (780) 423-8899, E-mail:
InvestorRelations@cwbankgroup.com; Larry M. Pollock, President and Chief
Executive Officer, Canadian Western Bank, Phone: (780) 423-8888

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Canadian Western Bank

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