CWB Reports Strong First Quarter Earnings on Record Total Revenues



    4% quarterly loan growth
    $0.10 per common share dividend declared

    EDMONTON, March 6 /CNW/ - Canadian Western Bank (CWB on TSX) today
announced first quarter net income of $25.9 million, or $0.40 per diluted
share, on record total revenues. Earnings and revenues benefited from strong
loan growth of 4% in the quarter and 25% over the past twelve months. Net
income was up 27% over the first quarter last year while diluted earnings per
share increased 25%. Reported earnings included $1.0 million ($0.01 per
diluted common share) of tax expense related to the write-down of future tax
assets due to reductions in future federal corporate income tax rates.
Excluding the impact of this tax expense, net income increased 31% over one
year ago, while diluted earnings per share grew 28%.

    
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    First Quarter Highlights:
    (three months ended January 31, 2008 compared with three months ended
    January 31, 2007 unless otherwise noted)
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    -   79th consecutive profitable quarter.
    -   Net income of $25.9 million, up 27%.
    -   Diluted earnings per share of $0.40, up 25%.
    -   Loan growth of 4% in the quarter and 25% over the past twelve months.
    -   Record total revenues (teb(1)) of $74.7 million, up 21%.
    -   Return on equity (ROE) of 16.9%, up 150 basis points.
    -   Efficiency ratio (teb) of 42.6%, an improvement of
        310 basis points.
    -   Second consecutive year of recognition as one of the "50 Best
        Employers in Canada".

    (1) Taxable equivalent basis. See definition following Financial
        Highlights table.
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    On March 5, 2008, CWB's Board of Directors declared a cash dividend of
$0.10 per common share, payable on April 3, 2008 to shareholders of record on
March 20, 2008. This quarterly dividend is consistent with the previous
quarterly dividend and 25% higher than the quarterly dividend declared one
year ago.
    Both operating segments performed well in the first quarter. Banking and
trust earnings of $24.4 million increased 21% over the same period last year,
with continued strong loan growth and fee income more than offsetting the
combined impact of lower net interest margin and the tax expense noted above.
Net income from insurance operations was $1.5 million, up $1.2 million over a
difficult first quarter last year that was impacted by severe weather.
    "Strong first quarter results in volatile financial markets highlight the
effectiveness of the Bank's responsible growth strategies and underscore our
expectations for continued strong financial performance," said Larry Pollock,
President and CEO. "Another highlight in the quarter was CWB's second
consecutive year as one of Canada's 50 Best Employers. We responded to our
employees' feedback from last year's survey and will introduce additional
enhancements in 2008 as we further define our position as an employer of
choice," said Pollock.
    "While CWB has not been directly affected by write-downs or losses
related to non-conventional lending or investment practices, ongoing turmoil
in capital markets has had a substantial impact on the financial sector as a
whole," Pollock said. "Net interest margin has been constrained by both
increased deposit costs and higher liquidity levels. We will continue to
monitor market conditions closely and fine-tune our strategies in line with
the Bank's low risk tolerance. We will also remain flexible to capitalize on
any strategic opportunities that may arise," added Pollock.

    
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    Financial Highlights
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                               For the three months ended
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except   January 31   October 31   January 31   January 31
     per share amounts)          2008         2007         2007         2007
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    Results of Operations
      Net interest income
       (teb - see below)  $    57,046  $    55,995  $    49,209         16%
      Less teb adjustment       1,337        1,496        1,164         15
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      Net interest income
       per financial
       statements              55,709       54,499       48,045         16
      Other income             17,623       18,364       12,443         42
      Total revenues (teb)     74,669       74,359       61,652         21
      Total revenues           73,332       72,863       60,488         21
      Net income               25,905       29,572       20,458         27
      Earnings per
       common share
        Basic                    0.41         0.47         0.33         24
        Diluted                  0.40         0.46         0.32         25
      Return on shareholders'
       equity(1)                 16.9%        20.1%        15.4%    150 bp(2)
      Return on assets(3)        1.07         1.29         1.10         (3)
      Efficiency ratio(4)
       (teb)                     42.6         44.1         45.7       (310)
      Efficiency ratio           43.4         45.0         46.6       (320)
      Net interest margin
       (teb)(5)                  2.36         2.43         2.65        (29)
      Net interest margin        2.30         2.37         2.58        (28)
      Provision for credit
       losses as a percentage
       of average loans          0.15         0.14         0.17         (2)
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    Per Common Share
      Cash dividends      $      0.10  $      0.09  $      0.08         25%
      Book value                 9.88         9.48         8.59         15
      Closing market value      29.40        30.77        25.14         17
      Common shares
       outstanding
       (thousands)             63,146       62,836       62,168          2
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    Balance Sheet and
     Off-Balance Sheet
     Summary
      Assets              $ 9,864,640  $ 9,525,040  $ 7,565,363         30%
      Loans                 7,706,981    7,405,580    6,154,449         25
      Deposits              8,560,346    8,256,918    6,566,652         30
      Subordinated
       debentures             390,000      390,000      198,126         97
      Shareholders'
       equity                 623,969      595,493      534,228         17
      Assets under
       administration       4,174,481    4,283,900    3,553,590         17
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    Capital Adequacy(6)
      Tangible common
       equity to risk-
       weighted assets(7)         7.9%         7.7%         8.3%       (45)bp
      Tier 1 ratio(8)             9.2          9.1          9.8        (61)
      Total ratio(8)             13.9         13.7         13.2         72
    -------------------------------------------------------------------------
    (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.
    


    Canadian Western Bank (CWB or the Bank) is pleased to report strong
financial performance for its 79th consecutive profitable quarter, a period
spanning almost 20 years. Quarterly results were highlighted by record total
revenues (teb), 4% loan growth and an efficiency ratio (teb) of 42.6%. CWB was
also proud to be recognized for a second consecutive year as one of Canada's
"50 Best Employers" in a national survey sponsored by the Globe and Mail
Report on Business Magazine.
    First quarter earnings of $25.9 million, or $0.40 per diluted share,
increased 27% and 25% respectively over the same period last year on 21%
growth in total revenues (teb). Quarterly earnings were reduced $1.0 million
($0.01 per diluted common share) due to additional tax expense resulting from
the write-down of future tax assets to reflect lower future federal corporate
income tax rates. Excluding this impact, net income and diluted earnings per
share increased 31% and 28% respectively.
    In comparison to the previous quarter, net income and diluted earnings
per share were down 12% and 13% respectively, reflecting the combined impact
of the additional first quarter tax expense and the tax benefit that increased
net income in the previous quarter by $2.9 million ($0.04 per diluted share).
Before taxes, earnings were up 3% over the last quarter to a record
$38.7 million.
    First quarter return on equity (ROE) of 16.9% represented a 150 basis
improvement over the same quarter last year due to strong operating
performance from the banking and trust segment and much improved results in
the insurance segment that was impacted by severe weather in the first quarter
of 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 first quarter at $29.40, up from $25.14 a year
earlier. Including reinvested dividends, the total return to shareholders over
the one-year period ended January 31, 2008 was 18%.

    Dividends

    On March 5, 2008, CWB's Board of Directors declared a cash dividend of
$0.10 per common share, payable on April 3, 2008 to shareholders of record on
March 20, 2008. This quarterly dividend is unchanged from the previous
quarterly dividend and 25% higher than the quarterly dividend declared one
year ago.

    Loan Growth

    The Bank continued to expand its market presence in Western Canada
achieving strong organic loan growth of 4%. Growth was almost evenly split
between Alberta and British Columbia (BC) with smaller dollar contributions
from Saskatchewan and Manitoba. The real estate division recorded the best
quarterly performance, while the general commercial and personal lending
sectors also showed good results. We continue to see a solid flow of new high
quality lending opportunities and maintain our fiscal 2008 expectations for
double-digit growth.
    Our alternative mortgage business, Optimum Mortgage, showed minimal
growth this quarter reflecting moderated residential sales activity in some
key markets as well as seasonal factors. This business continues to provide
very strong returns on a good risk profile.

    Credit Quality

    Overall credit quality remained strong and was consistent with
expectations. Some of our borrowers have been impacted by ongoing weakness in
the forestry and natural gas sectors and we continue to monitor exposures to
these areas closely. Gross impaired loans measured against total loans remain
well below historical norms and we are confident in the strength and diversity
of the loan portfolio. The quarterly charge for credit losses reflects
continued portfolio growth and represented 15 basis points of average loans,
compared to 14 basis points last quarter and 17 basis points a year earlier.

    Branch Deposit Growth

    Deposits raised through our branch network and Canadian Western Trust
Company (CWT) kept pace with loan growth increasing 4% in the quarter and 25%
over the past year. The demand and notice component within branch-raised
deposits was up 6% in the quarter and 33% over the same period last year,
partially due to the ongoing success of the Bank's high-interest savings
account branded "Summit Savings". We are pleased customers have embraced this
product, as it supports our ongoing strategies to further diversify funding
sources and increase market awareness of the Bank's services. Total deposits
in Summit Savings reached $440 million at January 31, 2008.

    Net Interest Margin

    Net interest margin (teb) in the quarter was 2.36%, down 7 basis points
from the previous quarter and 29 basis points compared to one year ago.
Compared to a year earlier, lower net interest margin mainly reflects
increased deposit costs and higher liquidity levels raised in response to
ongoing uncertainties in financial markets. Higher debenture interest costs
and consecutive reductions in the prime lending rate were additional factors
that contributed to a compressed margin. Pressures on net interest margin are
expected to continue until interest spreads in financial markets return to
more normal levels.

    Trust Services

    Trust services maintained strong momentum with solid financial
performance. CWT wrapped up a successful pilot of its upgraded CWeb financial
services Internet platform, which will be launched in the second quarter.
Valiant Trust Company (Valiant) obtained its federal trust license and is now
registered to operate in Ontario. Valiant is currently finalizing plans to
expand its geographic footprint with the opening of an office in Toronto in
2008.

    Insurance

    Canadian Direct Insurance Incorporated (CDI) reported much improved
results over a difficult first quarter last year that was impacted by severe
weather in BC. First quarter net income of $1.5 million represented a
$1.2 million increase from one year ago. Good progress has been made in the
development of CDI's Internet based technology platform. An increasing
percentage of new auto policies are being sold via the Internet and we
continue to enhance our product distribution capabilities with a view towards
long-term growth and increased efficiency.
    On February 8, 2008, the Alberta Court of Queen's Bench struck down the
cap on pain and suffering awards for minor injuries due to auto accidents.
This cap was part of a package of reforms introduced by the Alberta Government
in 2004, with the aim to keep auto insurance premiums low for all Albertans.
While the Alberta Government has appealed the court's decision, uncertainty
remains over the ultimate outcome. We believe that if the appeal is
unsuccessful, insurance companies operating in Alberta will likely require
higher auto rates to cover increased costs.

    Outlook

    CWB is off to a very good start for the year and is in a good position to
meet all fiscal 2008 performance targets. Our strategies to grow other income
and diversify funding sources remain important components in achieving both
our short- and long-term objectives. Maintaining responsible cost control
while ensuring we have a sound platform for sustained, high quality growth
also remains a key strategy. Economic conditions in Western Canada remain
quite healthy and we continue to see a solid flow of new lending
opportunities. Overall credit quality remains strong despite ongoing softness
in certain industries. We continue to closely monitor the impacts of financial
market disruptions and the marked U.S. economic slowdown, and to this point do
not see any major repercussions in our portfolio, or in the Bank's growth
prospects.
    CWB is proud to be recognized for a second consecutive year as one of
Canada's "50 Best Employers". We have worked hard to enhance our position as
an employer of choice and this recognition is particularly gratifying because
it is based on direct feedback from our employees. People drive CWB's success
and offering a rewarding work environment that enables and challenges
employees to achieve their full potential remains a key pillar to add value
for our stakeholders.
    We look forward to reporting fiscal 2008 second quarter results on
June 5, 2008.

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    Q1 Results Conference Call

    CWB's first quarter results conference call is scheduled for Thursday,
    March 6, 2008 at 2:30 p.m. ET (12:30 p.m. MT). The Bank's executives will
    comment on first 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 Bank's website for 60 days.

    A replay of the conference call will be available until March 20, 2008 by
    dialing 416-640-1917 (Toronto) or 1-877-289-8525 (toll-free) and entering
    passcode 21260799, followed by the pound sign.
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    About Canadian Western Bank

    Canadian Western Bank offers highly personalized service through
35 branch locations and is the largest publicly traded Schedule I chartered
bank headquartered in and regionally focused on Western Canada. The Bank, with
total balance sheet assets of more than $9.8 billion and assets under
administration of over $4.1 billion, specializes in mid-market commercial
lending and offers a full range of retail services. Trust services to
independent financial advisors, corporations, income trusts and individuals
are provided through the Bank's wholly owned subsidiaries, Canadian Western
Trust Company and Valiant Trust Company. Canadian Direct Insurance
Incorporated is a wholly owned subsidiary providing personal auto and home
insurance to customers in BC and Alberta. The common shares of Canadian
Western Bank are listed on the Toronto Stock Exchange under the trading symbol
'CWB'. Refer to www.cwbankgroup.com for additional information.



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    Management's Discussion and Analysis
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    This management's discussion and analysis (MD&A) should be read in
conjunction with the unaudited interim consolidated financial statements for
the period ended January 31, 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 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

    Canadian Western Bank (CWB or the Bank) posted strong earnings on record
total revenues (teb) for its 79th consecutive profitable quarter, a period
spanning almost 20 years. First quarter earnings from banking and trust
operations increased 21% ($4.3 million) over last year to $24.4 million driven
by strong growth in both loans and other income. The insurance segment also
posted favourable results with net income of $1.5 million, a $1.2 million
increase compared to a difficult first quarter last year impacted by severe
storms in British Columbia (BC). Consolidated net income was up 27% over the
previous year to $25.9 million, or $0.40 ($0.41 basic) per diluted share.
First quarter earnings were reduced by $1.0 million ($0.01 per diluted common
share) of tax expense resulting from the write-down of future tax assets to
reflect lower future federal corporate income tax rates.
    In comparison to the previous quarter, net income was down 12%
($3.7 million) reflecting the combined impact of the above noted first quarter
tax expense and a tax benefit that increased net income in the previous
quarter by $2.9 million ($0.04 per diluted common share). On a before tax
basis, earnings were up 3% ($1.1 million) over last quarter reflecting 48%
growth ($2.4 million) in credit related fee income, 4% loan growth and lower
non-interest expenses, partially offset by decreased contributions from trust
and insurance operations and a compressed net interest margin.
    First quarter return on equity was 16.9%, up from 15.4% last year. Return
on equity benefited from strong operating performance in the banking and trust
segment and a much improved contribution from insurance operations, partially
offset by a lower net interest margin and increased tax expense. First quarter
return on assets was 1.07%, down from 1.10% a year earlier.

    Total Revenues (teb)

    Total revenues (teb), which are comprised of net interest income and
other income, were a record $74.7 million representing a 21% ($13.0 million)
increase over the same quarter last year. Revenues were driven by 25% loan
growth and 42% ($5.2 million) growth in other income. Total revenues were up
modestly over the previous quarter reflecting continued asset growth, largely
offset by lower net interest margin and a $0.8 million decrease in other
income.

    Net Interest Income (teb)

    Quarterly net interest income (teb) of $57.0 million increased 16%
($7.8 million) over the same period last year driven by strong loan growth,
partially offset by a 29 basis point decrease in net interest margin to 2.36%
(teb). Compared to the first quarter last year, net interest margin was
primarily affected by increased deposit costs and higher liquidity, both
largely related to uncertainties in financial markets. Additional factors that
contributed to a lower margin included higher debenture interest costs from
subordinated debentures issued in March 2007 and consecutive reductions in the
prime lending rate. Reductions in short-term interest rates negatively impact
net interest margin because short-term deposits do not reprice as quickly as
prime-related loans.
    Net interest income increased 2% ($1.1 million) over last quarter driven
by strong 4% loan growth, largely offset by a seven basis point decline in net
interest margin mainly due to lower loan prepayment fees and the prime rate
decreases noted above.
    Note 13 to the unaudited interim consolidated financial statements
provides a summary of the Bank's exposure to interest rate risk as at
January 31, 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 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 2.9%. This compares to
October 31, 2007, when a one-percentage point increase in all interest rates
would have increased net interest income by approximately 2.5%. 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 $17.6 million increased 42% ($5.2 million) over the same
quarter last year reflecting strong results in all areas. Net insurance
revenues were up $2.0 million showing a strong recovery over a difficult first
quarter last year that was affected by unusually high claims experience due to
severe weather in BC. Credit related fee income increased $1.6 million while
combined gains on securities sales, foreign exchange and other were up
$1.0 million. Trust services and retail services fee income increased
$0.4 million and $0.2 million respectively.
    Other income decreased 4% ($0.7 million) compared to the previous quarter
reflecting lower contributions from trust services and insurance operations,
partially offset by a 48% ($2.4 million) increase in credit related fee income
and $0.7 million greater gains on securities sales, foreign exchange and
other. The $2.2 million quarterly decrease in trust services fee income was
attributed to unusually large trust transactions in the previous quarter.
Reduced net insurance revenues reflect a $1.0 million lower pre-tax
contribution from the Alberta auto risk sharing pools and increased claims
experience mainly attributable to seasonal factors.

    Credit Quality

    Credit quality remained strong due to a combination of economic strength
in Western Canada and disciplined credit underwriting. The quarterly provision
for credit losses was $2.8 million, modestly up from $2.6 million recorded in
each of the past twelve quarters. The provision for credit losses measured as
a percentage of average loans was 15 basis points, compared to 14 basis points
in the previous quarter and 17 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 the above noted
$0.2 million increase in the quarterly provision for credit losses.
    Gross impaired loans at January 31, 2008 were $38.9 million, compared
with $21.1 million last quarter and $11.5 million a year earlier. As a
percentage of total loans, gross impaired loans remain low by historical
measures and largely reflect accounts affected by ongoing softness in the
forestry and natural gas industries. Gross impaired loans represented 50 basis
points of total loans at quarter end, compared to 28 basis points at October
31, 2007 and 19 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. Gross impaired loans are returning to more normal levels as
the credit cycle moves from the trough previously observed.
    The total allowance for credit losses (general and specific) represented
167% of gross impaired loans at January 31, 2008, compared to 299% last
quarter and 485% one year ago. The general allowance as a percentage of
risk-weighted loans was 79 basis points, compared to 78 basis points in the
previous quarter and 88 basis points a year earlier.

    Non-interest Expenses

    Non-interest expenses were $31.8 million, up 13% ($3.6 million) over the
same quarter last year due to higher salary and benefit costs, as well as
premises and other expenses to support business growth. Compared to the
previous quarter, non-interest expenses were down 3% due to a $0.9 million
expense in the fourth quarter related to the tax benefit recorded in the same
period.
    Growth in total revenues continued to outpace non-interest expenses. The
efficiency ratio (teb), which measures non-interest expenses as a percentage
of total revenues (teb), improved to 42.6% or 310 basis points better than the
same quarter last year. Compared to the previous quarter, the efficiency ratio
(teb) improved 150 basis points due to continued revenue growth and the
previously noted decrease in non-interest expenses.

    Income Taxes

    The first quarter income tax rate (teb) was 35.3%, up 150 basis points
from one year ago, while the tax rate before the teb adjustment was 33.1%, or
190 basis points higher than last year. Excluding the impact of the previously
noted $1.0 million tax expense related to the write-down of future tax assets,
the income tax rate (teb) was 32.9%, or 90 basis points lower than a year
earlier. Looking forward, the reductions in federal income tax rates announced
this year will have a positive impact on overall tax rates and cash tax paid
on future earnings.
    The Province of BC's fiscal 2008 budget released in February included a
phase-out of financial institution capital tax, as well a reduction in the
corporate income tax rate. CWB's current capital tax rate in BC of 1.0% will
decrease to 0.67% on April 1, 2008 and 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 will 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 $32.8 million for the first quarter, compared to
$19.7 million in the same period last year and $33.2 million in the previous
quarter. As previously noted, net income increased 27% ($5.4 million) over one
year ago and was down 12% ($3.7 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.
First quarter OCI was $6.9 million, compared to a loss of $0.8 million a year
earlier. OCI in the previous quarter was $3.7 million. The changes in OCI
compared to previous quarters for available-for-sale cash and securities as
well as derivative instruments designated as cash flow hedges primarily
reflect market value fluctuations related to changes in interest rates and
shifts in the interest rate curve.

    Balance Sheet

    Total assets increased 4% ($340 million) in the quarter and 30%
($2,299 million) in the past twelve months to reach $9,865 million at
January 31, 2008.

    Cash and Securities

    Cash, securities and securities purchased under resale agreements totaled
$1,993 million at January 31, 2008, compared to $1,961 million last quarter
and $1,264 million one year ago. As previously noted, higher liquidity levels
are being maintained in response to ongoing 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.
    The unrealized loss recorded on the balance sheet at January 31, 2008 was
$1.7 million, compared to $9.3 million last quarter and $2.1 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. 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 4% ($301 million) in the quarter and 25%
($1,553 million) in the past twelve months to $7,707 million at January 31,
2008. Loan growth reflects solid deal flow across Alberta and BC with smaller
dollar contributions from Saskatchewan and Manitoba. The majority of quarterly
growth was attributed to performance in the real estate division, while the
general commercial and personal lending sectors also showed good results. Deal
flow remains solid despite increased challenges in areas related to softness
in the forestry and natural gas sectors, as well as moderated residential
resale activity in some key markets. CWB will maintain its long history of
disciplined underwriting and double-digit organic loan growth is expected to
continue in line with the fiscal 2008 target of 15%.

    Deposits

    Growth in total branch deposits kept pace with loan growth increasing 4%
in the quarter and 25% in the past year. The demand and notice component
within branch deposits increased 6% in the quarter and 33% over the past
twelve months. CWB's high-interest savings 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 greater fluctuation. Disruptions in financial
markets and resulting competitive influences have led to significant premiums
on external funding sources. These circumstances emphasize the importance of
generating continued growth in core branch deposits and support management's
ongoing strategies to develop additional sources of internal funding.
    Total deposits at January 31, 2008 were $8,560 million, an increase of 4%
($303 million) in the quarter and 30% ($1,994 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% last year. The
decrease in branch-raised deposits as a percentage of total deposits reflects
increased liquidity raised through the Bank's deposit broker network in
response to financial market uncertainties. Demand and notice deposits
measured as a percentage of total deposits of 27% remained consistent with
both the previous quarter and one year ago.

    Other Assets and Other Liabilities

    Other assets at January 31, 2008 totaled $164 million, compared to
$158 million last quarter and $147 million one year ago. Other liabilities at
quarter end were $290 million, compared to $283 million the previous quarter
and $266 million last year.

    Off-Balance Sheet

    Off-balance sheet items include trust assets under administration, which
totaled $4,174 million at the end of the first quarter, compared to $4,284
million last quarter and $3,554 million one year ago. Compared to the previous
quarter, lower trust assets under administration partially reflect changes in
market value. 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) requires 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 shift 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 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 CWB's
internal capital adequacy assessment processes.
    CWB's total capital adequacy ratio, which measures regulatory capital as
a percentage of risk-weighted assets, at January 31, 2008 under Basel II was
13.9%. Total capital adequacy ratios at October 31, 2007 and January 31, 2007
under the previous OSFI framework were 13.7% and 13.2% respectively. The Tier
1 ratio at January 31, 2008 under Basel II was 9.2%. The Tier 1 ratio in the
previous quarter and the same time last year under the previous framework were
9.1% and 9.8% respectively. Improved capital ratios over the previous quarter
reflect strong earnings and a modest positive impact from Basel II, offset by
continued asset growth. Compared to the same quarter last year, CWB's
regulatory capital increased with $200 million of subordinated debentures
issued in March 2007, strong earnings retention 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
January 31, 2007 reflects robust asset growth.
    The Bank's capital management objectives are to maintain a strong and
efficient capital structure to support continued high quality asset growth. A
strong capital position also provides flexibility in considering accretive
growth opportunities and 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 January 31, 2008 was $9.88 compared to
$9.48 last quarter and $8.59 one year ago.
    Common shareholders received a quarterly cash dividend of $0.10 per
common share on January 3, 2008. On March 5, 2008, the Board of Directors
declared a quarterly cash dividend of $0.10 per common share payable on
April 3, 2008 to shareholders of record on March 20, 2008. This quarterly
dividend is unchanged from the previous quarterly dividend and 25% higher than
the quarterly dividend declared one year ago.

    Accounting Policy Changes

    Significant accounting policies are detailed in the notes to the Bank's
October 31, 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 January 31, 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 February 29, 2008, there were 63,166,302 common shares outstanding.
Also outstanding were employee stock options, which are or will be exercisable
for up to 5,796,244 common shares for maximum proceeds of $97.4 million.

    
    Summary of Quarterly Financial Information

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


                              2007                     2006
                          ------------ --------------------------------------
    ($ thousands)              Q1           Q4           Q3           Q2
    -------------------------------------------------------------------------
    Total revenues (teb)  $    61,652  $    59,565  $    56,884  $    53,011
    Total revenues             60,488       58,371       55,845       52,038
    Net income                 20,458       21,209       17,693       16,667
    Earnings per
     common share
      Basic                      0.33         0.34         0.29         0.27
      Diluted                    0.32         0.33         0.28         0.26
    Total assets ($ millions)   7,565        7,268        6,871        6,476
    -------------------------------------------------------------------------
    

    The financial results for each of the last eight quarters are summarized
above. In general, CWB's performance reflects a consistent growth trend
although the second quarter contains three fewer revenue-earning days.
    The Bank's quarterly financial results are subject to some fluctuation
due to its exposure to property and casualty insurance. 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).
    Banking and trust earnings of $24.4 million were up 21% ($4.3 million)
over the same quarter last year benefiting from 25% loan growth and a 29%
($3.2 million) increase in other income, partially offset by a 31 basis point
decline in net interest margin and the first quarter additional tax expense.
Credit related and retail service fee income showed strong results growing 29%
($1.6 million) and 12% ($0.2 million) respectively, while gains on securities
sales, foreign exchange and other were up $1.0 million. The compressed net
interest margin (teb) compared to a year earlier was primarily due to
increased deposit costs and liquidity levels related to events in financial
markets, as well as higher debenture interest costs and decreases in the prime
lending rate. Growth in total revenues (teb) of 18% significantly outpaced the
12% increase in non-interest expenses leading to a further improvement in the
efficiency ratio (teb), which measures non-interest expense as a percentage of
total revenues. The quarterly efficiency ratio (teb) improved 220 basis points
over the same quarter last year to 42.1%. Strong growth in total branch-raised
deposits over the past year kept pace with loan growth at 25%. The demand and
notice component of branch-raised deposits increased 33% with a considerable
portion of this growth attributed to the ongoing success of CWB's Summit
Savings account.
    In comparison to the previous quarter, banking and trust earnings were
down 9% ($2.5 million) reflecting the combined impact of the $1.0 million
first quarter tax expense resulting from lower future federal corporate income
tax rates and the tax benefit that increased net income in the previous
quarter by $2.9 million. Before taxes, earnings were up 7% ($2.6 million) due
to continued loan growth, lower non-interest expenses and higher other income,
partially offset by a compressed net interest margin and a modest increase in
the quarterly provision for credit losses. Very strong growth in credit
related fee income more than offset lower trust services revenues, which were
positively impacted in the previous quarter by unusually large trust
transactions. Continued revenue growth and lower non-interest expenses led to
a 260 basis points improvement in the efficiency ratio (teb).

    
                               For the three months ended
                          -------------------------------------- Change from
                           January 31   October 31   January 31   January 31
    ($ thousands)                2008         2007         2007         2007
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $    55,642  $    54,663  $    48,148         16%
    Other income               14,395       13,452       11,194         29
    -------------------------------------------------------------------------
    Total revenues (teb)       70,037       68,115       59,342         18
    Provision for
     credit losses              2,813        2,550        2,550         10
    Non-interest expenses      29,504       30,461       26,287         12
    Provision for income
     taxes (teb)               13,280        8,155       10,318         29
    -------------------------------------------------------------------------
    Net income            $    24,440  $    26,949  $    20,187         21%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)       42.1%        44.7%        44.3%      (220)bp
    Efficiency ratio             42.9         45.6         45.1       (220)
    Net interest margin
     (teb)                       2.34         2.42         2.65        (31)
    Net interest margin          2.29         2.36         2.59        (30)
    Average loans
     (millions)(1)        $     7,545     $  7,198  $     5,950         27%
    Average assets
     (millions)                 9,428        8,953        7,220         31
    -------------------------------------------------------------------------
    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 reflects 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 net income of $1.5 million, up $1.2 million from
the same quarter last year which included provisions for claims related to
severe wind and rainstorms in BC. The quarterly claims loss ratio was 70%,
compared to 79% a year earlier. Net earned premiums grew 5% due to growth in
policies outstanding and good customer retention, partially offset by lower
average premiums per policy. Internet sales of new auto policies continued to
grow, as more customers chose to use this enhanced online service. Canadian
Direct's share of the Alberta auto risk sharing pools (the Pools) contributed
$0.1 million in before tax income, down from $0.2 million in the same quarter
last year. Ongoing challenges brought about by the pricing strategies of the
Insurance Corporation of British Columbia in the BC auto product line
continued to result in lower average premiums and slower policy sales in that
line of business. Net interest income increased $0.3 million largely
reflecting an increase in invested assets.
    In comparison to the previous quarter, Canadian Direct's net income
decreased $1.2 million due to a $1.0 million lower pre-tax contribution from
the Pools and increased claims experience attributed to winter weather. The
seasonal aspect of this business is also reflected in the decrease in gross
written premiums, as new policy growth is traditionally slowest in the first
quarter.
    On February 8, 2008, the Court of Queen's Bench of Alberta rendered a
decision that resulted in the lifting of the cap on the amount a claimant may
receive in respect of minor injuries suffered in an automobile accident. While
the Alberta Government has launched an appeal on this ruling, the judgment has
resulted in considerable uncertainty for companies offering automobile
insurance in Alberta. Provision has been made for the costs of settling these
claims and management will continue to monitor this situation to assess the
potential impact on claims cost and premiums.

    
                               For the three months ended
                          -------------------------------------- Change from
                           January 31   October 31   January 31   January 31
    ($ thousands)                2008         2007         2007         2007
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $     1,404  $     1,332  $     1,061         32%
    -------------------------------------------------------------------------
    Other income (net)
      Net earned premiums      24,299       24,172       23,128          5
      Commissions and
       processing fees            662          743          606          9
      Net claims and
       adjustment expenses    (17,069)     (14,896)     (18,176)        (6)
      Policy acquisition
       costs                   (4,683)      (5,100)      (4,356)         8
    -------------------------------------------------------------------------
    Insurance revenue (net)     3,209        4,919        1,202        167
    Gains (losses) on
     sale of securities            19           (7)          47        (60)
    -------------------------------------------------------------------------
    Total revenues
     (net) (teb)                4,632        6,244        2,310        101
    Non-interest expenses       2,320        2,301        1,906         22
    Provision for income
     taxes (teb)                  847        1,320          133        537
    -------------------------------------------------------------------------
    Net income            $     1,465  $     2,623  $       271        441%
    -------------------------------------------------------------------------
    Policies outstanding
     (No.)                    165,314      164,263      160,435          3%
    Gross written
     premiums             $    21,616  $    27,086  $    21,245          2
    Claims loss ratio(1)           70%          62%          79%      (900)bp
    Expense ratio(2)               26           27           24        200
    Combined ratio(3)              96           89          103       (700)
    Alberta auto risk
     sharing pools impact
     on net income
     before tax           $       120  $     1,155  $       150        (20)%
    Average total assets
     (millions)                   180          174          155         16
    -------------------------------------------------------------------------
    bp -  basis point change.
    teb - taxable equivalent basis, see definition following Financial
          Highlights table.

    (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%            27%
    -------------------------------------------------------------------------
    Total revenue (teb) growth                       17%            21%
    -------------------------------------------------------------------------
    Loan growth                                      15%            25%
    -------------------------------------------------------------------------
    Provision for credit losses as a
     percentage of average loans                   0.15%          0.15%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)                           45%          42.6%
    -------------------------------------------------------------------------
    Return on equity                                 17%          16.9%
    -------------------------------------------------------------------------
    Return on assets                               1.10%          1.07%
    -------------------------------------------------------------------------
    (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.
    


    Strong first quarter results combined with an overall favourable economic
outlook in CWB's primary markets has the Bank in a good position to meet all
of its fiscal 2008 performance targets. Quarterly loan growth of 4% was in
line with expectations and will benefit revenues and earnings for the
remainder of the year. Overall credit quality remains strong despite ongoing
softness in the forestry and natural gas industries. The pipeline for new
loans remains solid and double-digit loan growth is expected to continue in
line with the fiscal 2008 target.
    While disruptions in financial markets have constrained net interest
margin due to a combination of increased deposit costs and the Bank's decision
to maintain higher liquidity levels, these conditions are being closely
monitored and overall profitability remains strong. CWB's strategies for
responsible growth, including greater contributions from non-interest sources,
have had a very positive impact on results, particularly in light of ongoing
volatility in capital markets. Strong revenue growth combined with increasing
economies of scale led to further improvements in the efficiency ratio.
Maintaining disciplined cost control will remain an important focus as the
Bank builds upon its platform for sustained, high quality growth. Despite
increased challenges in certain areas, the outlook for banking, trust and
insurance is positive, with 2008 expected to be another year of strong
financial performance.
    This management's discussion and analysis is dated March 5, 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

    (unaudited)           --------------------------------------
    ($ thousands,                    For the three months ended  Change from
     except per share      January 31   October 31   January 31   January 31
     amounts)                    2008         2007         2007         2007
    -------------------------------------------------------------------------
    Interest Income
      Loans               $   126,751  $   123,845  $    99,143           28%
      Securities               15,191       13,696       10,054           51
      Deposits with
       regulated financial
       institutions             4,957        4,005        3,055           62
    -------------------------------------------------------------------------
                              146,899      141,546      112,252           31
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 85,707       81,556       61,318           40
      Subordinated
       debentures               5,483        5,491        2,889           90
    -------------------------------------------------------------------------
                               91,190       87,047       64,207           42
    -------------------------------------------------------------------------
    Net Interest Income        55,709       54,499       48,045           16
    Provision for Credit
     Losses                     2,813        2,550        2,550           10
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             52,896       51,949       45,495           16
    -------------------------------------------------------------------------
    Other Income
      Credit related            7,309        4,949        5,687           29
      Insurance, net
       (Note 3)                 3,209        4,919        1,202          167
      Trust services            3,564        5,733        3,182           12
      Retail services           1,959        1,837        1,756           12
      Gains on sale of
       securities               1,014            7          119          752
      Foreign exchange
       gains (losses)            (152)         825          488         (131)
      Other                       720           94            9           nm
    -------------------------------------------------------------------------
                               17,623       18,364       12,443           42
    -------------------------------------------------------------------------
    Net Interest and
     Other Income              70,519       70,313       57,938           22
    -------------------------------------------------------------------------
    Non-interest Expenses
      Salaries and employee
       benefits                20,617       19,995       17,991           15
      Premises and
       equipment                5,382        5,387        4,614           17
      Other expenses            5,256        6,767        5,109            3
      Provincial capital
       taxes                      569          613          479           19
    -------------------------------------------------------------------------
                               31,824       32,762       28,193           13
    -------------------------------------------------------------------------
    Net Income Before
     Provision
     for Income Taxes          38,695       37,551       29,745           30
    Provision for Income
     Taxes                     12,790        7,979        9,287           38
    -------------------------------------------------------------------------
    Net Income            $    25,905  $    29,572  $    20,458           27%
    -------------------------------------------------------------------------

    Weighted average
     common shares
     outstanding           62,975,022   62,690,892   62,059,180            1%

    Earnings per Common Share
      Basic               $      0.41  $      0.47  $      0.33           24%
      Diluted                    0.40         0.46         0.32           25
    -------------------------------------------------------------------------

    nm - not meaningful

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



    Consolidated Balance Sheet

                                As at        As at        As at  Change from
    (unaudited)            January 31   October 31   January 31   January 31
    ($ thousands)                2008         2007         2007         2007
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and non-interest
       bearing deposits
       with financial
       institutions       $     9,161  $     6,446  $     3,667          150%
      Interest bearing
       deposits with
       regulated financial
       institutions           475,902      405,122      288,428           65
      Cheques and other
       items in transit         5,262        1,122       27,262          (81)
    -------------------------------------------------------------------------
                              490,325      412,690      319,357           54
    -------------------------------------------------------------------------
    Securities (Note 4)
      Issued or guaranteed
       by Canada              417,735      630,396      315,110           33
      Issued or guaranteed
       by a province or
       municipality           396,492      251,418      197,122          101
      Other securities        479,806      459,812      432,592           11
    -------------------------------------------------------------------------
                            1,294,033    1,341,626      944,824           37
    -------------------------------------------------------------------------
    Securities Purchased
      Under Resale
      Agreements              209,000      206,925            -          100
    -------------------------------------------------------------------------
    Loans  (Notes 5 and 7)
      Residential
       mortgages            1,865,102    1,780,442    1,485,744           26
      Other loans           5,907,067    5,688,160    4,724,739           25
    -------------------------------------------------------------------------
                            7,772,169    7,468,602    6,210,483           25
      Allowance for credit
       losses (Note 6)        (65,188)     (63,022)     (56,034)          16
    -------------------------------------------------------------------------
                            7,706,981    7,405,580    6,154,449           25
    -------------------------------------------------------------------------
    Other
      Land, buildings and
       equipment               25,793       25,736       23,182           11
      Goodwill                  6,933        6,933        6,933            -
      Other intangible
       assets                   2,545        2,681        3,088          (18)
      Insurance related        53,891       51,744       52,651            2
      Derivative related
       (Note 8)                 3,701        1,496        1,263          193
      Other assets             71,438       69,629       59,616           20
    -------------------------------------------------------------------------
                              164,301      158,219      146,733           12
    -------------------------------------------------------------------------
    Total Assets          $ 9,864,640  $ 9,525,040  $ 7,565,363           30%
    -------------------------------------------------------------------------

    Liabilities and
     Shareholders' Equity
    Deposits
      Payable on demand   $   391,776  $   376,488  $   351,579           11
      Payable after notice  1,960,857    1,843,799    1,420,850           38
      Payable on a fixed
       date                 6,102,713    5,931,631    4,689,223           30
      Deposit from Canadian
       Western Bank Capital
       Trust                  105,000      105,000      105,000            -
    -------------------------------------------------------------------------
                            8,560,346    8,256,918    6,566,652           30
    -------------------------------------------------------------------------
    Other
      Cheques and other
       items in transit        25,525       22,177       40,077          (36)
      Insurance related       126,022      124,480      118,012            7
      Derivative related
       (Note 8)                   329        1,307        2,898          (89)
      Other liabilities       138,449      134,665      105,370           31
    -------------------------------------------------------------------------
                              290,325      282,629      266,357            9
    -------------------------------------------------------------------------
    Subordinated Debentures
      Conventional            390,000      390,000      198,126           97
    -------------------------------------------------------------------------
    Shareholders' Equity
      Retained earnings       392,345      372,739      313,169           25
      Accumulated other
       comprehensive
       income (loss)              961       (5,931)      (2,247)         143
      Capital stock           220,217      219,004      216,158            2
      Contributed surplus      10,446        9,681        7,148           46
    -------------------------------------------------------------------------
                              623,969      595,493      534,228           17
    -------------------------------------------------------------------------
    Total Liabilities and
     Shareholders'
     Equity               $ 9,864,640  $ 9,525,040  $ 7,565,363           30%
    -------------------------------------------------------------------------
    Contingent Liabilities
     and Commitments
     (Note 10)

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



    Consolidated Statement of Changes in Shareholders' Equity

                                                  For the three months ended
                                                 ----------------------------
    (unaudited)                                      January 31   January 31
    ($ thousands)                                          2008         2007
    -------------------------------------------------------------------------
    Retained Earnings
    Balance at beginning of period                  $   372,739  $   297,675
      Net income                                         25,905       20,458
      Dividends                                          (6,299)      (4,964)
    -------------------------------------------------------------------------
    Balance at end of period                            392,345      313,169
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income (Loss)
    Balance at beginning of period                       (5,931)      (1,494)
      Other comprehensive income (loss)                   6,892         (753)
    -------------------------------------------------------------------------
    Balance at end of period                                961       (2,247)
    -------------------------------------------------------------------------
    Total retained earnings and accumulated other
     comprehensive income (loss)                        393,306      310,922
    -------------------------------------------------------------------------
    Capital Stock (Note 9)
    Balance at beginning of period                      219,004      215,349
      Issued on exercise of employee stock options          650          537
      Transferred from contributed surplus on
       exercise or exchange of options                      563          272
    -------------------------------------------------------------------------
    Balance at end of period                            220,217      216,158
    -------------------------------------------------------------------------
    Contributed Surplus
    Balance at beginning of period                        9,681        6,340
      Amortization of fair value of employee
       stock options                                      1,328        1,080
      Transferred to capital stock on exercise or
       exchange of options                                 (563)        (272)
    -------------------------------------------------------------------------
    Balance at end of period                             10,446        7,148
    -------------------------------------------------------------------------
    Total Shareholders' Equity                      $   623,969  $   534,228
    -------------------------------------------------------------------------



    Consolidated Statement of Comprehensive Income
                                                        For the      For the
                                                          three        three
                                                         months       months
                                                          ended        ended
    (unaudited)                                      January 31   January 31
    ($ thousands)                                          2008         2007
    -------------------------------------------------------------------------
    Net Income                                      $    25,905  $    20,458
                                                    -------------------------
    Other Comprehensive Income (Loss), net of tax
      Available-for-sale securities
        Gains (losses) from change in fair value,
         net of income taxes of $2,108 (2007 - $540)      4,486       (1,104)
        Reclassification to other income,
         net of income taxes of $329 (2007 - $40)           685           79
    -------------------------------------------------------------------------
                                                          5,171       (1,025)
    -------------------------------------------------------------------------
      Derivatives designated as cash flow hedges
        Gains (losses) from change in fair value,
         net of income taxes of $833 (2007 - $137)        1,809         (275)
        Reclassification to net interest income,
         net of income taxes of $41 (2007 - $272)           (88)         547
    -------------------------------------------------------------------------
                                                          1,721          272
    -------------------------------------------------------------------------
                                                          6,892         (753)
    -------------------------------------------------------------------------
    Comprehensive Income for the Period             $    32,797  $    19,705
    -------------------------------------------------------------------------

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



    Consolidated Statement of Cash Flow

                                                  For the three months ended
                                                 ----------------------------
    (unaudited)                                      January 31   January 31
    ($ thousands)                                          2008         2007
    -------------------------------------------------------------------------
    Cash Flows from Operating Activities
      Net income                                    $    25,905  $    20,458
      Adjustments to determine net cash flows
        Provision for credit losses                       2,813        2,550
        Depreciation and amortization                     1,669        1,424
        Amortization of fair value of employee stock
         options                                          1,328        1,080
        Future income taxes, net                            726         (391)
        Gain on sale of securities, net                  (1,014)        (119)
        Accrued interest receivable and payable, net     11,815        2,323
        Current income taxes payable, net                (1,801)      (2,635)
        Other items, net                                (18,681)      (2,020)
    -------------------------------------------------------------------------
                                                         22,760       22,670
    -------------------------------------------------------------------------
    Cash Flows from Financing Activities
      Deposits, net                                     303,428      276,331
      Common shares issued                                  650          537
      Dividends                                          (6,299)      (4,964)
    -------------------------------------------------------------------------
                                                        297,779      271,904
    -------------------------------------------------------------------------
    Cash Flows from Investing Activities
      Interest bearing deposits with regulated
       financial institutions, net                      (68,719)      61,698
      Securities, purchased                            (553,008)    (546,151)
      Securities, sale proceeds                         298,287      136,923
      Securities, matured                               314,287      350,023
      Securities purchased under resale
       agreements, net                                   (2,075)       9,000
      Loans, net                                       (304,214)    (375,162)
      Land, buildings and equipment                      (1,590)        (272)
    -------------------------------------------------------------------------
                                                       (317,032)    (363,941)
    -------------------------------------------------------------------------
    Change in Cash and Cash Equivalents                   3,507      (69,367)
    Cash and Cash Equivalents at Beginning of Period    (14,609)      60,219
    -------------------------------------------------------------------------
    Cash and Cash Equivalents at End of Period(*)   $   (11,102) $    (9,148)
    -------------------------------------------------------------------------
    (*) Represented by:
      Cash and non-interest bearing deposits with
       financial institutions                       $     9,161  $     3,667
      Cheques and other items in transit
       (included in Cash Resources)                       5,262       27,262
      Cheques and other items in transit
       (included in Other Liabilities)                  (25,525)     (40,077)
    -------------------------------------------------------------------------
    Cash and Cash Equivalents at End of Period      $   (11,102) $    (9,148)
    -------------------------------------------------------------------------


    Supplemental Disclosure of Cash Flow Information
      Amount of interest paid in the period         $    80,664  $    59,175
      Amount of income taxes paid in the period          13,865       12,272
    -------------------------------------------------------------------------

    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 three months ended
                                       --------------------------------------
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Net earned premiums            $    24,299  $    24,172  $    23,128
        Commissions and processing fees        662          743          606
        Net claims and adjustment
         expenses                          (17,069)     (14,896)     (18,176)
        Policy acquisition costs            (4,683)      (5,100)      (4,356)
        ---------------------------------------------------------------------
        Total, net                     $     3,209  $     4,919  $     1,202
        ---------------------------------------------------------------------

    4.  Securities

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

                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Interest bearing deposits
         with regulated financial
         institutions                  $       992  $    (1,070) $      (500)
        Securities
          Issued or guaranteed by Canada     1,471          127         (471)
          Issued or guaranteed by a
           province or municipality          1,967          (14)        (232)
          Other securities                  (6,102)      (8,323)        (913)
        ---------------------------------------------------------------------
        Unrealized losses, net         $    (1,672) $    (9,280) $    (2,116)
        ---------------------------------------------------------------------

        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
        ($ millions)         Columbia      Alberta   Saskatchewan   Manitoba
        ---------------------------------------------------------------------
        Loans to Individuals
          Residential
           mortgages(2)     $     926    $     765    $      69    $      55
          Other loans              84          162           20            3
        ---------------------------------------------------------------------
                                1,010          927           89           58
        ---------------------------------------------------------------------
        Loans to Businesses
          Commercial              589        1,013           73           76
          Construction and
           real estate(3)         803        1,101           74           56
          Equipment financing     350          908           43           15
          Energy                   21          290            -            -
        ---------------------------------------------------------------------
                                1,763        3,312          190          147
        ---------------------------------------------------------------------
        Total Loans         $   2,773    $   4,239    $     279    $     205
        ---------------------------------------------------------------------
        Composition Percentage
          January 31, 2008        36%          54%           4%           2%
          October 31, 2007        35%          55%           4%           3%
        ---------------------------------------------------------------------


                                                     January 31   October 31
                                                           2008         2007
                                                    Composition  Composition
        ($ millions)            Other        Total   Percentage   Percentage
        ---------------------------------------------------------------------
        Loans to Individuals
          Residential
           mortgages(2)     $      50     $  1,865          24%          24%
          Other loans               1          270            3            3
        ---------------------------------------------------------------------
                                   51        2,135           27           27
        ---------------------------------------------------------------------
        Loans to Businesses
          Commercial              154        1,905           25           25
          Construction and
           real estate(3)          53        2,087           27           25
          Equipment financing      18        1,334           17           18
          Energy                    -          311            4            5
        ---------------------------------------------------------------------
                                  225        5,637           73           73
        ---------------------------------------------------------------------
        Total Loans         $     276    $   7,772         100%         100%
        ---------------------------------------------------------------------
        Composition Percentage
          January 31, 2008         4%         100%
          October 31, 2007         3%         100%
        ---------------------------------------------------------------------
        (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
                                                  January 31, 2008
                                        -------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
        ---------------------------------------------------------------------
        Balance at beginning of period  $    7,414   $   55,608   $   63,022
        Provision for credit losses          2,481          332        2,813
        Write-offs                            (674)           -         (674)
        Recoveries                              27            -           27
        ---------------------------------------------------------------------
        Balance at end of period        $    9,248   $   55,940   $   65,188
        ---------------------------------------------------------------------


                                             For the three months ended
                                                  October 31, 2007
                                        -------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
        ---------------------------------------------------------------------
        Balance at beginning of period  $    5,697   $   55,082   $   60,779
        Provision for credit losses          2,024          526        2,550
        Write-offs                            (316)           -         (316)
        Recoveries                               9            -            9
        ---------------------------------------------------------------------
        Balance at end of period        $    7,414   $   55,608   $   63,022
        ---------------------------------------------------------------------

                                             For the three months ended
                                                  January 31, 2007
                                        -------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
        ---------------------------------------------------------------------

        Balance at beginning of period  $    5,484   $   48,037   $   53,521
        Provision for credit losses           (362)       2,912        2,550
        Write-offs                             (74)           -          (74)
        Recoveries                              37            -           37
        ---------------------------------------------------------------------
        Balance at end of period        $    5,085   $   50,949   $   56,034
        ---------------------------------------------------------------------


    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 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 October 31, 2007
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,062,898  $     2,878  $       351  $     2,527
        Real estate(1)      2,887,822        1,098          896          202
        Industrial          1,325,431       11,261        2,550        8,711
        Commercial          2,192,451        5,867        3,617        2,250
        ---------------------------------------------------------------------
        Total             $ 7,468,602  $    21,104  $     7,414       13,690
        --------------------------------------------------------
        General allowance(2)                                         (55,608)
        ---------------------------------------------------------------------
        Net impaired loans
         after general
         allowance                                               $   (41,918)
        ---------------------------------------------------------------------


                                         As at January 31, 2007
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $   845,087  $     3,669  $       329  $     3,340
        Real estate(1)      2,383,342          579          579            -
        Industrial          1,166,233        2,334          458        1,876
        Commercial          1,815,821        4,965        3,719        1,246
        ---------------------------------------------------------------------
        Total             $ 6,210,483  $    11,547  $     5,085        6,462
        --------------------------------------------------------
        General allowance(2)                                         (50,949)
        ---------------------------------------------------------------------
        Net impaired loans after general allowance               $   (44,487)
        ---------------------------------------------------------------------
        (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 January 31, 2008
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $    20,108  $     6,090  $    14,018
        British Columbia                    15,648        1,622       14,026
        Saskatchewan                         3,095        1,480        1,615
        Manitoba                                96           56           40
        ---------------------------------------------------------------------
        Total                          $    38,947  $     9,248       29,699
        --------------------------------------------------------
        General allowance(1)                                         (55,940)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $   (26,241)
        ---------------------------------------------------------------------


                                               As at October 31, 2007
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $     9,163  $     3,927  $     5,236
        British Columbia                     8,864        2,013        6,851
        Saskatchewan                         3,061        1,458        1,603
        Manitoba                                16           16            -
        ---------------------------------------------------------------------
        Total                          $    21,104  $     7,414       13,690
        --------------------------------------------------------
        General allowance(1)                                         (55,608)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $   (41,918)
        ---------------------------------------------------------------------


                                               As at January 31, 2007
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $     5,115  $     2,138  $     2,977
        British Columbia                     4,566        1,348        3,218
        Saskatchewan                         1,744        1,599          145
        Manitoba                               122            -          122
        ---------------------------------------------------------------------
        Total                          $    11,547  $     5,085        6,462
        --------------------------------------------------------
        General allowance(1)                                         (50,949)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $   (44,487)
        ---------------------------------------------------------------------
        (1) The general allowance for credit risk is not allocated by
            province.

        During the quarter, interest recognized as income on impaired loans
        totaled $63 (2007 - $53).

        The gross amount of loans include other past due loans which are
        loans where payment of interest or principal is contractually
        90 - 180 days in arrears or government insured loans where payment of
        interest or principal is contractually not more than 365 days in
        arrears but are not classified as impaired because they are well
        secured and considered fully collectible. At January 31,
        2008 there were $1,338 (October 2007 - $1,100) outstanding other past
        due loans.

    8.  Derivative Financial Instruments

        For the quarter ended January 31, 2008, a net unrealized after tax
        gain of $1,824 (2007 - $275 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. A net loss of $129
        before tax for the quarter (2007 - $819) was reclassified to net
        income. A net gain of $1,054 (2007 - $927 net loss) before tax
        recorded in accumulated other comprehensive income (loss) as at
        January 31, 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 January 31, 2008
        ---------------------------------------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges(1)        $   560,000  $     3,010  $        53
        Equity contracts(2)                  6,000          178            -
        Foreign exchange contracts(3)       89,752          513            6
        Embedded derivatives in
         equity-linked deposits(2)             n/a            -          270
        Other forecasted transactions            -            -            -
        ---------------------------------------------------------------------
        Derivative related amounts                  $     3,701  $       329
        ---------------------------------------------------------------------

                                                      As at October 31, 2007
        ---------------------------------------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges(1)        $   482,000  $       946  $       498
        Equity contracts(2)                  6,000          515            -
        Foreign exchange contracts(3)        3,405           35           63
        Embedded derivatives in
         equity-linked deposits(2)             n/a            -          746
        Other forecasted transactions            -          n/a          n/a
        ---------------------------------------------------------------------
        Derivative related amounts                  $     1,496  $     1,307
        ---------------------------------------------------------------------


                                                      As at January 31, 2007
        ---------------------------------------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges           $   446,500  $       955  $     2,182
        Equity contracts                     9,570          308           28
        Foreign exchange contracts          20,885            -           78
        Embedded derivatives in
         equity-linked deposits                n/a            -          610
        Other forecasted transactions            -          n/a            -
        ---------------------------------------------------------------------
        Derivative related amounts                  $     1,263  $     2,898
        ---------------------------------------------------------------------
        (1)   Interest rate swaps outstanding at January 31, 2008 mature
              between February 2008 and January 2013.
        (2)   Equity contracts and equity-linked deposits outstanding at
              January 31, 2008 mature between February 2008 and March 2011.
        (3)   Foreign exchange contracts outstanding at January 31, 2008
              mature between February 2008 and April 2008.  n/a - not
              applicable.  There were no forecasted transactions that failed
              to occur during the quarter.

         n/a - not applicable.

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

    9.  Capital Stock and Share Incentive Plan

        Capital Stock                     For the three months ended
                           --------------------------------------------------
                                  January 31, 2008          January 31, 2007
        ---------------------------------------------------------------------
                            Number of                 Number of
                               Shares       Amount       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            309,888          650      231,986          537
          Transferred from
           contributed
           surplus on
           exercise or
           exchange of
            options                 -          563            -          272
        ---------------------------------------------------------------------
        Outstanding at
         end of period     63,146,077  $   220,217   62,168,246  $   216,158
        ---------------------------------------------------------------------


        Employee Stock
        Options                         For the three months ended
                           --------------------------------------------------
                                  January 31, 2008          January 31, 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             595,842        31.18      733,600        25.02
          Exercised or
           exchanged         (409,050)        8.88     (285,140)        6.97
          Forfeited           (10,800)       24.99      (19,500)       18.85
        ---------------------------------------------------------------------
        Balance at end
         of period          5,087,269  $     19.26    5,459,000  $     14.97
        ---------------------------------------------------------------------
        Exercisable at
         end of period      1,287,527  $      9.58    1,075,800  $      7.13
        ---------------------------------------------------------------------

        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 409,050
        options (2007 - 285,140) exercised or exchanged in the quarter,
        option holders exchanged the rights to 324,600 options (2007 -
        197,040) and received 225,438 shares (2007 - 143,384) in return under
        the cashless settlement alternative.

        In the three months ended January 31, 2008, salary expense of $1,328
        (2007 - $1,080) 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 $6.69 (2007 - $4.34) per
        share.

        During the first quarter of 2008, 595,842 options were granted. Of
        this amount, 540,030 options are subject to 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
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Guarantees and standby
         letters of credit
          Balance outstanding          $   196,670  $   202,194  $   147,698
        Business credit cards
          Total approved limit              10,040        9,728        7,646
          Balance outstanding                2,308        2,238        1,701
        ---------------------------------------------------------------------

        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
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
         Trust assets under
          administration               $ 4,174,481  $ 4,283,900  $ 3,553,590
        ---------------------------------------------------------------------

    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 January 31, 2008 at fair value (cash, securities, securities
        purchased under resale agreements and derivatives) was determined
        using published market prices quoted in active markets for 87% of the
        portfolio and estimated using a valuation technique based on
        observable market data for 13% 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                                  Total
                           and Within       1 to 3     3 Months       Within
        ($ millions)          1 Month       Months    to 1 Year       1 Year
        ---------------------------------------------------------------------
        January 31, 2008
        Assets
        Cash resources and
         securities       $       347  $       222  $       600  $     1,169
        Loans                   4,358          467          690        5,515
        Other assets                -            -            -            -
        Derivative
         financial
         instruments(1)            46           58          305          409
        ---------------------------------------------------------------------
        Total                   4,751          747        1,595        7,093
        ---------------------------------------------------------------------
        Liabilities and
         Equity
        Deposits                3,686          869        1,507        6,062
        Other liabilities           3            6           25           34
        Debentures                  -            -           65           65
        Shareholders'
         equity                     -            -            -            -
        Derivative
         financial
         instruments(1)           566            -            -          566
        ---------------------------------------------------------------------
        Total             $     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%
        ---------------------------------------------------------------------

        October 31, 2007
        Cumulative gap    $       364  $       224  $       426  $       426
        ---------------------------------------------------------------------
        Cumulative gap
         as a
         percentage of
         total assets            3.6%         2.2%         4.3%         4.3%
        ---------------------------------------------------------------------

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


                                                           Non-
                            1 Year to    More than     interest
        ($ millions)          5 Years      5 Years    Sensitive        Total
        ---------------------------------------------------------------------
        January 31, 2008
        Assets
        Cash resources and
         securities       $       478  $       111  $        26  $     1,784
        Loans                   2,414           54          (67)       7,916
        Other assets                -            -          164          164
        Derivative
         financial
         instruments(1)           157            -            -          566
        ---------------------------------------------------------------------
        Total                   3,049          165          123       10,430
        ---------------------------------------------------------------------
        Liabilities and
         Equity
        Deposits                2,404          105          (11)       8,560
        Other liabilities          32            9          215          290
        Debentures                250           75            -          390
        Shareholders'
         equity                     -            -          624          624
        Derivative
         financial
         instruments(1)             -            -            -          566
        ---------------------------------------------------------------------
        Total             $     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%           -%           -%
        ---------------------------------------------------------------------

        October 31, 2007
        Cumulative gap    $       709  $       710  $         -  $         -
        ---------------------------------------------------------------------
        Cumulative gap
         as a
         percentage of
         total assets             7.1%         7.1%           -%           -%
        ---------------------------------------------------------------------

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

        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 2.9% (October 31, 2007 - 2.5%,
        January 31, 2007 - 0.4%). 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
                                       --------------------------------------
                                                 Three months ended
                                       --------------------------------------
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $    55,642  $    54,663  $    48,148
        Less teb adjustment                  1,238        1,383        1,085
        ---------------------------------------------------------------------
        Net interest income per
         financial statements               54,404       53,280       47,063
        Other income(2)                     14,395       13,452       11,194
        ---------------------------------------------------------------------
        Total revenues                      68,799       66,732       58,257
        Provision for credit losses          2,813        2,550        2,550
        Non-interest expenses               29,504       30,461       26,287
        Provision for income taxes          12,042        6,772        9,233
        ---------------------------------------------------------------------
        Net income                     $    24,440  $    26,949  $    20,187
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $     9,428  $     8,953  $     7,220
        ---------------------------------------------------------------------

                                                     Insurance
                                       --------------------------------------
                                                 Three months ended
                                       --------------------------------------
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $     1,404  $     1,332  $     1,061
        Less teb adjustment                     99          113           79
        ---------------------------------------------------------------------
        Net interest income per
         financial statements                1,305        1,219          982
        Other income(2)                      3,228        4,912        1,249
        ---------------------------------------------------------------------
        Total revenues                       4,533        6,131        2,231
        Provision for credit losses              -            -            -
        Non-interest expenses                2,320        2,301        1,906
        Provision for income taxes             748        1,207           54
        ---------------------------------------------------------------------
        Net income                     $     1,465  $     2,623  $       271
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $       180  $       174  $       155
        ---------------------------------------------------------------------

                                                       Total
                                       --------------------------------------
                                                 Three months ended
        ---------------------------------------------------------------------
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $    57,046  $    55,995  $    49,209
        Less teb adjustment                  1,337        1,496        1,164
        ---------------------------------------------------------------------
        Net interest income per
         financial statements               55,709       54,499       48,045
        Other income                        17,623       18,364       12,443
        ---------------------------------------------------------------------
        Total revenues                      73,332       72,863       60,488
        Provision for credit losses          2,813        2,550        2,550
        Non-interest expenses               31,824       32,762       28,193
        Provision for income taxes          12,790        7,979        9,287
        ---------------------------------------------------------------------
        Net income                     $    25,905  $    29,572  $    20,458
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $     9,608  $     9,127  $     7,375
        ---------------------------------------------------------------------

        (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 asset for both credit and operational risk. Changes for the
        Bank under Basel II include a shift 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
                                        January 31   October 31   January 31
                                              2008         2007         2007
        ---------------------------------------------------------------------
        Capital
          Tier 1                       $   718,600  $   701,004  $   626,295
          Total                          1,087,805    1,059,269      845,943
        ---------------------------------------------------------------------
        Capital ratios
          Tier 1                              9.2%         9.1%         9.8%
          Total                               13.9         13.7         13.2
        Assets to capital multiple           9.1 x        9.1 x        8.9 X
        ---------------------------------------------------------------------

        (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.

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

                                      CWB's quarterly conference call and
                                      live audio webcast will be held on
                                      Thursday, March 6, 2008 at
                                      2:30 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 March 20, 2008 by
                                      dialing (416) 640-1917 or toll free
                                      (877) 289-8525 and entering passcode
                                      21260799, followed by the pound sign.
    





For further information:

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

Organization Profile

Canadian Western Trust

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CANADIAN DIRECT INSURANCE INCORPORATED

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