CWB reports very strong second quarter financial performance

6% quarterly loan growth, including the acquisition of National Leasing Group Inc.

Dividends declared on common and preferred shares

EDMONTON, June 3 /CNW/ - Canadian Western Bank (TSX: CWB) today announced very strong financial performance marking the Bank's 88th consecutive profitable quarter, a period spanning 22 years. Second quarter net income of $37.9 million increased 76% compared to the same quarter last year while diluted earnings per common share increased 57% to $0.47. Significantly higher second quarter earnings mainly reflect an 83 basis point improvement in net interest margin, on a taxable equivalent basis (teb - see definition following Financial Highlights table), compared to the same period in 2009 when this measure dropped to an unprecedented low due to impacts from the global financial crisis. On a year-to-date basis, the combined positive impact of a 70 basis point improvement in net interest margin (teb), a 27% increase in other income and 9% loan growth led to increases in net income and diluted earnings per common share of 65% and 41%, respectively.

    
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    Second Quarter Highlights:
    (three months ended April 30, 2010 compared with three months ended
    April 30, 2009 unless otherwise noted)
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    -   Net income of $37.9 million, up 76%.
    -   Diluted earnings per common share of $0.47, up 57%.
    -   Record quarterly total revenues (teb) of $111.0 million, up 47%.
    -   Net interest margin (teb) of 2.76%, up 83 basis points.
    -   Tier 1 capital ratio of 11.4% and total capital ratio of 14.5%,
        compared to 11.0% and 15.2% respectively a year earlier.
    -   Return on common shareholders' equity of 16.3%, up 530 basis points.
    -   Surpassed $12 billion in total assets.
    -   Record net income for Canadian Direct Insurance.
    -   Completed the acquisition of National Leasing Group Inc. (National
        Leasing).
    

On June 2, 2010, CWB's Board of Directors declared a cash dividend of $0.11 per common share, payable on July 2, 2010 to shareholders of record on June 17, 2010. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on July 31, 2010 to shareholders of record on July 22, 2010.

The banking and trust segment, which includes a full three months of performance from newly acquired National Leasing, reported net income of $34.5 million, up 78% compared to the same quarter last year. A significant improvement in net interest margin, including the favourable margin impact from National Leasing, a 38% increase in other income and 9% loan growth helped push this segment's total revenues (teb) up 49% to reach a record $103.4 million. Quarterly net income from insurance operations was a record $3.4 million, up from $2.2 million compared to a year earlier reflecting lower claims experience and continued business growth.

"These very strong results represent a continuation of our exceptional performance last quarter," said Larry Pollock, President and CEO of CWB. Our businesses are performing better than we expected at the onset of fiscal 2010. Although we expect earnings growth to moderate for the remaining two quarters, it's shaping up to be a great year for CWB. We are confident our commitment to building strong customer relationships and focus on sustainable, profitable growth will continue to payoff for both our clients and shareholders."

"National Leasing's opening quarter as part of CWB Group exceeded our expectations and included a bottom line contribution of $3.9 million, or about $0.05 per diluted common share," continued Pollock. "The acquisition has us on track to meet the Bank's fiscal 2010 target for double-digit loan growth and also materially benefited our second quarter net interest margin, which we believe will stabilize from this point. Our overall pipeline for new loans picked up compared to what we've seen over the past couple of quarters and we are optimistic about recent economic indicators in our markets."

    
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    Financial Highlights
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                              For the three months ended
    (unaudited)           -------------------------------------- Change from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2010         2010         2009         2009
    -------------------------------------------------------------------------
    Results of Operations
      Net interest income
      (teb - see below)   $    80,132  $    74,306  $    52,812           52%
      Less teb adjustment       2,662        2,563        1,675           59
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      Net interest income
       per financial
       statements              77,470       71,743       51,137           51
      Other income             30,840       26,366       22,570           37
      Total revenues (teb)    110,972      100,672       75,382           47
      Total revenues          108,310       98,109       73,707           47
      Net income               37,884       40,035       21,580           76
      Earnings per common
       share
        Basic(1)                 0.52         0.57         0.30           73
        Diluted(2)               0.47         0.52         0.30           57
        Diluted cash(3)          0.48         0.52         0.30           60
      Return on common
       shareholders'
       equity(4)                 16.3%        18.0%        11.0%         530
      Return on assets(6)        1.17         1.25         0.70           47
      Efficiency ratio(7)
       (teb)                     45.0         40.0         53.1         (810)
      Efficiency ratio           46.1         41.0         54.3         (820)
      Net interest margin
       (teb)(8)                  2.76         2.56         1.93           83
      Net interest margin        2.67         2.47         1.87           80
      Provision for credit
       losses as a
       percentage of
       average loans             0.23         0.16         0.15            8
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    Per Common Share
      Cash dividends      $      0.11  $      0.11  $      0.11            -%
      Book value                13.08        12.67        11.42           15
      Closing market value      23.99        20.56        13.35           80
      Common shares
       outstanding
       (thousands)             66,309       63,977       63,589            4
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    Balance Sheet and
     Off-Balance
     Sheet Summary
      Assets              $12,004,281  $11,641,634  $11,450,625            5%
      Loans                 9,866,669    9,282,180    9,041,518            9
      Deposits             10,185,043   10,003,921    9,713,334            5
      Subordinated
       debentures             315,000      315,000      375,000          (16)
      Shareholders'
       equity               1,077,111    1,020,642      935,753           15
      Assets under
       administration       8,223,274    5,461,921    4,472,060           84
      Assets under
       management             779,721      880,786      816,600           (5)
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    Capital Adequacy(9)
      Tangible common
      equity to
      risk-weighted
      assets(10)                  8.4%         8.4%         7.6%          80
      Tier 1 ratio               11.4         11.6         11.0           40
      Total ratio                14.5         15.1         15.2          (70)
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    ------------------------------------------------------------
                          For the six months ended
    (unaudited)           ------------------------- Change from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2010         2009         2009
    ------------------------------------------------------------
    Results of Operations
      Net interest income
       (teb - see below)  $   154,438  $  107,408            44%
      Less teb adjustment       5,225       3,261            60
    ------------------------------------------------------------
      Net interest income
       per financial
       statements             149,213     104,147            43
      Other income             57,206      44,921            27
      Total revenues (teb)    211,644     152,329            39
      Total revenues          206,419     149,068            38
      Net income               77,919      47,199            65
      Earnings per common
       share
        Basic(1)                 1.08        0.70            54
        Diluted(2)               0.99        0.70            41
        Diluted cash(3)          1.00        0.71            41
      Return on common
       shareholders'
       equity(4)                 17.1%       12.9%          420 bp(5)
      Return on assets(6)        1.21        0.82            39
      Efficiency ratio(7)
       (teb)                     42.6        50.2          (760)
      Efficiency ratio           43.7        51.3          (760)
      Net interest margin
       (teb)(8)                  2.66        1.96            70
      Net interest margin        2.57        1.90            67
      Provision for credit
       losses as a
       percentage of
       average loans             0.19        0.15             5
    ------------------------------------------------------------
    Per Common Share
      Cash dividends      $      0.22  $     0.22             -%
      Book value                13.08       11.42            15
      Closing market value      23.99       13.35            80
      Common shares
       outstanding
       (thousands)             66,309      63,589             4
    ------------------------------------------------------------
    Balance Sheet and
     Off-Balance
     Sheet Summary
      Assets
      Loans
      Deposits
      Subordinated
       debentures
      Shareholders'
       equity
      Assets under
       administration
      Assets under
       management
    ------------------------------------------------------------
    Capital Adequacy(9)
      Tangible common
      equity to
      risk-weighted
      assets(10)
      Tier 1 ratio
      Total ratio
    ------------------------------------------------------------

    (1)  Basic earnings per share is calculated as net income less preferred
         share dividends divided by the average number of common shares
         outstanding.
    (2)  Diluted earnings per share is calculated as net income less
         preferred share dividends divided by the average number of common
         shares outstanding adjusted for the dilutive effects of stock
         options and warrants.
    (3)  Diluted cash earnings per share is diluted earnings per common share
         excluding the after-tax amortization of acquisition-related
         intangible assets.
    (4)  Return on common shareholders' equity is calculated as annualized
         net income after preferred share dividends divided by average common
         shareholders' equity.
    (5)  bp - basis point change.
    (6)  Return on assets is calculated as annualized net income after
         preferred share dividends divided by average total assets.
    (7)  Efficiency ratio is calculated as non-interest expenses divided by
         total revenues.
    (8)  Net interest margin is calculated as annualized net interest income
         divided by average total assets.
    (9)  Capital adequacy is calculated in accordance with guidelines issued
         by the Office of the Superintendent of Financial Institutions Canada
         (OSFI).
    (10) 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.
    

Taxable Equivalent Basis (teb)

Most banks analyze revenues 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 GAAP and, therefore, may not be comparable to similar measures presented by other banks. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.

Non-GAAP Measures

Taxable equivalent basis, diluted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, provision for credit losses as a percentage of average loans and tangible common equity to risk-weighted assets do not have standardized meanings prescribed by generally accepted accounting principles (GAAP) and therefore may not be comparable to similar measures presented by other financial institutions.

    
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    Message to Shareholders
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Canadian Western Bank (CWB or the Bank) is pleased to report very strong financial performance for its 88th consecutive profitable quarter, a period spanning 22 years. Highlights for the second quarter included CWB's acquisition of National Leasing Group Inc. (National Leasing) effective February 1, 2010, which helped total assets surpass the $12 billion milestone.

Second quarter net income of $37.9 million was up 76% ($16.3 million) compared to a year earlier, while diluted earnings per common share increased 57% ($0.17) to $0.47. Lower percentage growth for diluted earnings per common share compared to net income mainly reflects the dilution from CWB's warrants and 2.1 million of additional CWB common shares issued as partial consideration for the acquisition of National Leasing. The quarterly net interest margin was up significantly over the unprecedented low reported in the second quarter last year and was the primary factor influencing earnings growth. Including the positive impact of the considerably higher yield earned on National Leasing's loan portfolio, the net interest margin was also above CWB's historical average levels. Record total revenues (teb) of $111.0 million represent a 47% ($35.6 million) increase reflecting the significant improvement in margin, 37% higher other income and the positive impact of loan growth.

Compared to the prior quarter, net income and diluted earnings per common share decreased 5% and 10%, respectively, as the combined positive impact of strong asset growth, an improved net interest margin and increased other income were more than offset by higher non-interest expenses, three fewer revenue earning days and the provision for credit losses. On a year-to-date basis, net income of $77.9 million was up 65% compared to the same period last year while diluted earnings per common share increased 41% to $0.99. Exceptional year-to-date earnings growth was mainly driven by the significant year-over-year improvement in net interest margin.

The Bank's Tier 1 and total capital ratios at April 30, 2010 remained very strong at 11.4% and 14.5%, respectively. The impact on capital adequacy ratios from the acquisition of National Leasing was largely offset by additional CWB common shares issued and the ongoing retention of earnings.

Return on common shareholders' equity of 16.3% was up 530 basis points compared to the same quarter last year, but down 170 basis points from the prior quarter. Quarterly return on assets of 1.17% represented a 47 basis point improvement from a year earlier and an eight basis point decline compared to last quarter. Compared to the second quarter last year, profitability ratios benefited from the recovery of net interest margin, increased other income and loan growth, partially offset by higher non-interest expenses and the provision for credit losses related to National Leasing's business. The decline in profitability ratios compared to the prior quarter reflects the factors already noted.

Acquisition of National Leasing

On February 1, 2010, CWB completed its previously announced strategic acquisition of 100% of the common shares of National Leasing for a total cost of $126.5 million. In business for over thirty years, National Leasing is a recognized leader in small and mid-size commercial equipment leases for a broad range of industries. With representation across Canada, there are currently over 58,000 active leases that immediately enhance the Bank's product and geographic diversification. We believe funding synergies and new growth opportunities related to the acquisition have potential to significantly increase both net interest income and non-interest income over time. National Leasing is expected to be accretive to the Bank's diluted earnings per common share in the current fiscal year, as demonstrated by the second quarter results.

Dividends

On June 2, 2010, CWB's Board of Directors declared a cash dividend of $0.11 per common share, payable on July 2, 2010 to shareholders of record on June 17, 2010. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on July 31, 2010 to shareholders of record on July 22, 2010.

Loan Growth

Total loans grew 6% ($584 million) in the quarter, 7% ($630 million) year-to-date and 9% ($825 million) over the last twelve months including $376 million of on-balance sheet loans at April 30, 2010 from the acquisition of National Leasing. Organic loan growth continued to reflect the realities of moderated economic activity and was further constrained by expected and unexpected repayments on existing accounts, particularly in the equipment financing and real estate construction portfolios. While there are still recession-related challenges across almost all lending areas, the pipeline for new loans has picked up considerably since last quarter. Based on what we see today, and including the growth contribution from National Leasing, we expect to achieve our 2010 target for double-digit loan growth.

Credit Quality

The level of gross impaired loans continues to fluctuate as we progress along the bottom of the current credit cycle. Overall credit quality remains satisfactory considering ongoing economic factors and the impact of a few large accounts. The dollar level of gross impaired loans was $167.2 million, compared to $146.4 million last quarter. Impaired loan formations of $55.6 million were partially offset by $26.2 million of impaired accounts that were paid down or resolved during the quarter. The net difference in the dollar amount of impaired loans compared to the prior quarter was magnified by the impact of a single account connection. A specific provision for credit losses for this account connection of $7.3 million was made in the quarter and led to a decrease in the general allowance. Based on our present view of credit quality, we believe gross impaired loans will peak within the current fiscal year and actual loan losses are expected to remain within acceptable levels. The quarterly provision for credit losses of $5.5 million represented 23 basis points of average loans and includes a $1.8 million provision for National Leasing. Excluding the impact of National Leasing, the provision for credit losses was 16 basis points of average loans, within our target range of 15 to 20 basis points. On a consolidated basis, we now expect the provision for credit losses for fiscal 2010 will represent 20 to 25 basis points of average loans.

Branch Deposit Growth

Deposits raised through our branch network and trust companies were up 2% in the quarter, 2% year-to-date and 14% compared to a year earlier. The demand and notice component within branch-raised deposits, which include lower cost deposits, grew 9% in the quarter, 11% year-to-date and 40% over the past year. The significant growth in demand and notice deposits is consistent with our strategies to further enhance and diversify the Bank's funding sources. Growth also reflects the ongoing success of Canadian Western Trust Company in generating new deposits through its fiduciary business. In addition to the benefits of diversification, our success in shifting the deposit mix toward demand and notice deposits provides an improved funding base to enhance our competitive position and further support net interest margin.

Net Interest Margin

Net interest margin recovered significantly from the trough level experienced in the same quarter last year. Lower deposit costs, more favourable yields on fixed rate loans, the mix of interest-earning assets including lower liquidity, and loan prepayment fees all contributed to an 83 basis point increase in the second quarter net interest margin (teb) to 2.76%. Net interest margin (teb) was up 20 basis points over the prior quarter mainly reflecting the considerably higher yields earned on National Leasing's fixed rate loans. The year-to-date net interest margin (teb) of 2.66% is more typical of spreads achieved prior to the global financial crisis. Increased competition and other factors suggest that further material improvements in margin over that achieved in the second quarter are unlikely.

Trust and Wealth Management

Our trust and wealth management businesses continue to provide opportunities for earnings growth, geographic expansion, income diversification and brand awareness. Canadian Western Trust Company, which includes our Optimum Mortgage business, continued to post very strong financial performance with results tracking ahead of our expectations. Valiant Trust Company is realizing the benefits of increased capital markets activity and continues to grow its client base. We anticipate good opportunities to enhance our presence in wealth management services through both organic growth and acquisitions.

Insurance

Canadian Direct Insurance Incorporated (Canadian Direct) reported a second consecutive record quarter with net income of $3.4 million. Strong results reflect lower claims experience and good growth in policies outstanding of 6% from a year ago. Profitability in the current period was most significant in the auto lines of business.

Outlook

CWB reported excellent second quarter and year-to-date results, and we expect to deliver continued strong performance for the balance of fiscal 2010. Results in the current quarter include the initial contribution from National Leasing and the addition of this business puts us on track to meet our 2010 loan growth target of 10%. While the achievement of double-digit organic loan growth will remain challenging until we enter a period of sustained economic growth, our dedicated team is taking a proactive approach to generating new business. We remain very confident about the benefits of our proven business plan and core geographic position in Western Canada, particularly once the economic recovery takes further hold. We expect gross impaired loans will continue to fluctuate, but our underwriting practices, solid balance sheet and strong capital base ensure we are very well positioned to manage through any ongoing challenges. One of our key objectives is to create ongoing value and growth for CWB shareholders and we continue to evaluate opportunities in this regard, including further acquisitions.

We look forward to reporting our fiscal 2010 third quarter results on September 2, 2010.

    
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    Q2 Results Conference Call

    CWB's second quarter results conference call is scheduled for Thursday,
    June 3, 2010 at 3:00 p.m. ET (1:00 p.m. MT). The Bank's executives will
    comment on financial results and respond to questions from analysts and
    institutional investors.

    The conference call may be accessed on a listen-only basis by dialing
    647-427-7450 or toll-free 1-888-231-8191. The call will also be webcast
    live on the Bank's website, www.cwbankgroup.com. The webcast will be
    archived on the Bank's website for 60 days.

    A replay of the conference call will be available until June 17, 2010 by
    dialing 416-849-0833 (Toronto) or 1-800-642-1687 (toll-free) and entering
    passcode 71761482.
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About Canadian Western Bank Group

Canadian Western Bank offers a full range of business and personal banking services across the four western provinces and is the largest Canadian owned bank headquartered in Western Canada. The Bank, along with its operating subsidiaries, Canadian Western Trust Company, Valiant Trust Company, Canadian Direct Insurance Incorporated, National Leasing Group Inc., Adroit Investment Management Ltd. and Canadian Western Financial Ltd., collectively offer a diversified range of financial services across Canada and are together known as the Canadian Western Bank Group. The common shares of Canadian Western Bank are listed on the Toronto Stock Exchange under the trading symbol 'CWB'. The Bank's Series 3 preferred shares and common share purchase warrants trade on the Toronto Stock Exchange under the trading symbols 'CWB.PR.A' and 'CWB.WT' respectively. 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 Canadian Western Bank's (CWB or the Bank) unaudited interim consolidated financial statements for the period ended April 30, 2010, as well as the audited consolidated financial statements and MD&A for the year ended October 31, 2009, 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 2009 remain substantially unchanged.

Overview

CWB recorded very strong second quarter results reflecting excellent financial performance from both business segments. Consolidated net income increased 76% ($16.3 million) over the same quarter last year to $37.9 million. Second quarter diluted earnings per common share was $0.47 ($0.52 basic), up 57% over the prior year. Lower percentage growth for diluted earnings per common share compared to net income mainly reflects the dilution from CWB's warrants and 2.1 million additional CWB common shares issued as partial consideration for the acquisition of National Leasing.

Net income from the banking and trust segment of $34.5 million was up 78% ($15.1 million) compared to the second quarter last year, a period that marked an unprecedented low for CWB's net interest margin. Positive revenue contributions from a significant improvement in net interest margin, 38% ($6.8 million) higher other income and 9% ($825 million) loan growth more than offset the impact of 26% ($9.7 million) higher non-interest expenses and a $2.1 million increase in the quarterly provision for credit losses. Second quarter banking and trust segment performance includes results from the acquisition of National Leasing Group Inc. (National Leasing), completed on February 1, 2010. Comparatively higher yields earned on National Leasing's portfolio positively impacted the Bank's net interest margin, but the earnings benefit of this higher spread is partially offset by an increased provision for credit losses. Total loan growth in the past twelve months was $825 million including National Leasing's on-balance sheet loans at April 30, 2010 of $376 million. The insurance segment posted record quarterly net income of $3.4 million, up $1.2 million from a year earlier. Strong insurance results mainly reflect favourable claims experience and continued business growth.

Compared to the previous quarter, consolidated net income was down 5% ($2.2 million) as the revenue contribution from National Leasing was offset by higher non-interest expenses, three fewer revenue earning days, $2.4 million lower gains on sale of securities and an increased provision for credit losses. Quarterly diluted earnings per common share decreased 10% ($0.05) reflecting the factors already noted. Consolidated year-to-date net income of $77.9 million was up 65% ($30.7 million) compared to the same period in 2009, while diluted earnings per common share increased 41% to $0.99 ($1.08 basic). The significant year-to-date improvement reflects comparatively strong results across almost all metrics, most notably net interest margin.

Second quarter return on common shareholders' equity was 16.3%, a significant increase from 11.0% a year earlier. Quarterly return on assets was 1.17%, up from 0.70% last year. On a year-to-date basis, return on common shareholders' equity was 17.1%, up from 12.9% in 2009. Return on assets through the first six months was 1.21%, compared to 0.82% last year. Compared to the same period in 2009, higher profitability ratios were mainly driven by very strong growth in net interest income due to the improvement in net interest margin and strong other income, partially offset by increased non-interest expenses and the impact of CWB's preferred unit offerings completed in March 2009.

Total Revenues (teb)

Total revenues, on a taxable equivalent basis (teb - see definition following Financial Highlights table), comprising both net interest income and other income, reached a record $111.0 million for the quarter, up 47% ($35.6 million) compared to a year earlier. Quarterly total revenues reflect the positive impact of a significant improvement in net interest margin and a 37% ($8.3 million) increase in other income. Compared to last quarter, net interest income increased $5.8 million despite three fewer revenue earning days while other income was up $4.5 million. On a year-to-date basis, total revenues of $211.6 million increased 39% ($59.3 million) over the same period last year. Margin improvement and loan growth led to a $47.0 million increase in year-to-date net interest income while other income was up 27% ($12.3 million).

Net Interest Income (teb)

Quarterly net interest income of $80.1 million was up 52% ($27.3 million) compared to the same period last year driven by an 83 basis point improvement in net interest margin to 2.76% and 9% loan growth. The improvement in net interest margin compared to the same quarter in 2009 reflects lower deposit costs, more favourable yields on fixed rate loans, the mix of interest-earning assets including lower liquidity, and increased loan prepayment fees. More favourable yields on fixed rate loans largely reflect the positive impact from National Leasing. In view of the current asset composition, interest rate environment, continued competitive influences and the positive impact from National Leasing, management believes the net interest margin should stabilize around the current level.

Net interest income was up 8% ($5.8 million) compared to the previous quarter reflecting a 20 basis point increase in net interest margin and 6% loan growth, including the loans of National Leasing. The improvement in net interest margin compared to the prior quarter was almost entirely attributed to comparatively higher yields earned on National Leasing's portfolio. On a year-to-date basis, net interest income increased 44% ($47.0 million) due to a 70 basis point improvement in net interest margin that was mainly due to the factors already noted.

Note 13 to the unaudited interim consolidated financial statements summarizes the Bank's exposure to interest rate risk as at April 30, 2010. The estimated sensitivity of net interest income to a change in interest rates is presented in the table below. The amounts represent the estimated change in net interest income over the time periods shown resulting from a one-percentage point change in interest rates. The estimates are based on a number of assumptions and factors, which include:

    
    -   a constant structure in the interest sensitive asset and liability
        portfolios;
    -   floor levels for various deposit liabilities;
    -   prime rate decreases limited to 0.25% due to the historical low
        levels of interest rates;
    -   interest rate changes affecting interest sensitive assets and
        liabilities by proportionally the same amount and applied at the
        appropriate re-pricing dates; and
    -   no early redemptions.


                                            April 30  January 31    April 30
    ($ thousands)                               2010        2010      2009(1)
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    Impact of 1% increase in interest rates
      1 year                              $   1,132   $  (2,066)   $  12,409
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      1 year percentage change                  0.4%       (0.8)%        5.6%
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    Impact of 1% decrease in interest rates
      1 year                              $   5,364   $   8,532    $  10,473
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      1 year percentage change                  1.9%        3.2%         4.8%
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    (1) Methodology for the calculation of interest sensitivity at April 30,
        2009 does not include a minimum interest rate level for certain
        deposit accounts that were included in the calculation.
    

As at April 30, 2010, a one-percentage point increase in interest rates would increase net interest income by 0.4% over the following twelve months; this compares to April 30, 2009 when a one-percentage point increase in interest rates would have increased net interest income by 5.6% over the following twelve months. During 2009, in order to more effectively manage interest rate sensitivity against falling interest rates, many prime-based loans were negotiated with a floor rate and a corresponding minimum interest rate level. Should the prime rate decrease further, the rate on these loans would remain fixed. However, when the prime rate increases, the rate on these loans only begins to go up once the floor rate is passed. In modeling the effects of a one-percentage point increase in interest rates, not all loans would increase by the full one-percentage point, whereas it is assumed that all liabilities increase by the full amount.

As at April 30, 2010, a one-percentage point decrease in interest rates would increase net interest income by 1.9% over the following twelve months; this compares to April 30, 2009 when a one-percentage point decrease in interest rates would have increased net interest income by 4.8% over the following twelve months. When modeling a one-percentage point decrease, the rates on prime-based loans with a negotiated floor rate do not decrease, whereas the remainder of prime-based loans decrease by only 0.25%. Due to the fact that many liabilities are subject to the full one-percentage point decrease, net interest income rises on a decrease in rates as at April 30, 2010.

Based on the interest rate gap position at April 30, 2010, it is estimated that a one-percentage point increase in all interest rates would decrease other comprehensive income by $12.1 million, net of tax (January 31, 2010 - $16.1 million); it is estimated that a one-percentage point decrease in all interest rates at April 30, 2010 would increase other comprehensive income by a similar amount.

It is management's intention to continue to manage the asset liability structure and interest rate sensitivity through pricing and product policies, as well as through the use of interest rate swaps or other appropriate hedging techniques.

Other Income

Second quarter other income of $30.8 million increased 37% ($8.3 million) from a year earlier reflecting growth across nearly all areas. The 'other' category within other income was up $3.3 million and included a $2.4 million change in fair value on National Leasing's interest rate swaps and $0.8 million of lease administration revenues. Credit related fee income was up 60% ($3.2 million). Quarterly net insurance revenues increased 32% ($1.3 million) reflecting favourable claims experience and 7% growth in net earned premiums. Trust and wealth management services revenues and retail services fee income increased 16% ($0.6 million) and 22% ($0.4 million), respectively. Gains on sale of securities of $4.1 million continued to provide a material source of other income, but were down from $6.6 million realized in the same quarter last year. Management expects gains on sale of securities to be considerably lower in future quarters. The $2.4 million positive change in fair value on National Leasing's interest rate swaps is not a sustainable source of revenue going forward as a large portion of this amount relates to the termination of existing swaps no longer required because of the availability of fixed-term funding generated through CWB.

Compared to the previous quarter, other income was up 17% ($4.5 million) as $3.3 million of 'other' other income, $1.9 million of securitization income from National Leasing (refer to Note 5 of the unaudited interim consolidated financial statements for further details on securitization) and a 17% ($1.2 million) increase in credit related fee income more than offset $2.4 million lower gains on sale of securities and the impact of three fewer revenue earning days. Other income year-to-date of $57.2 million increased 27% ($12.3 million) as strong results across CWB's core operations more than offset a $4.2 million decline in gains on sale of securities. National Leasing's revenue contributions, commencing in the second quarter, had a further positive impact on year-to-date other income.

Credit Quality

Overall credit quality remained satisfactory and within current expectations. The Bank's primary markets continue to be impacted by global economic factors, particularly as they relate to demand for commodities. Despite these challenges, management believes that Western Canada is positioned to benefit significantly once there is a sustained period of global economic growth.

    
                                 For the three months ended
                          -------------------------------------- Change from
    (unaudited)              April 30   January 31     April 30     April 30
    ($ thousands                 2010         2010         2009         2009
    -------------------------------------------------------------------------

    Gross impaired loans,
     beginning of period  $   146,402  $   137,944  $   107,785           36%
      New formations           55,586       45,745       29,478           89
      Reductions, impaired
       accounts paid down
       or returned to
       performing status      (26,229)     (30,682)     (27,487)          (5)
      Write-offs               (8,530)      (6,605)      (2,759)         209
    -------------------------------------------------------------------------
    Total(3)              $   167,229  $   146,402  $   107,017          56%
    -------------------------------------------------------------------------

    Balance of the ten
     largest impaired
     accounts             $    97,037  $    79,513  $    56,478          72%
    Total number of
     accounts classified
     as impaired(4)               211          234          204           3
    Total number of
     accounts classified
     as impaired under
     $1 million(4)                182          209          188          (3)
    Gross impaired loans
     as a percentage of
     total loans(1)              1.68%        1.57%        1.17%    51 bp(2)

    (1) Total loans do not include an allocation for credit losses or
        deferred revenue and premiums.
    (2) bp - basis point change.
    (3) Gross impaired loans includes foreclosed assets held for sale with a
        carrying value of $695 (January 31, 2010 - $nil and April 30, 2009 -
        $3,505).
    (4) Total number of accounts excludes National Leasing accounts.
    

Gross impaired loans at April 30, 2010 were $167.2 million, compared to $146.4 million last quarter and $107.0 million a year earlier. One large account connection with a balance of $30.7 million became impaired in the second quarter and represents the majority of the net increase in gross impaired loans from the prior period. The specific provision for credit losses related to this account connection was $7.3 million and led to a decrease in the general allowance for credit losses in the quarter. The foregoing account connection, plus two additional large accounts with a combined balance of $32.4 million that became impaired in the fourth quarter of fiscal 2009 together represent the majority of the net increase in gross impaired loans compared to a year earlier. The ten largest accounts classified as impaired, measured by dollars outstanding, represented approximately 58% of the total gross impaired loans at quarter end, and compared to 54% in the prior quarter and 53% a year earlier.

Gross impaired loans represented 1.68% of total loans at quarter end, compared to 1.57% last quarter and 1.17% one year ago. It is expected that the level of impaired loans will remain subject to considerable fluctuation until impacts from the current credit cycle subside. The dollar level of gross impaired loans goes up and down as loans become impaired and are subsequently resolved and does not directly reflect the dollar value of expected write-offs given the tangible security held against the Bank's lending positions. The Bank establishes its current estimates of expected write-offs through detailed analyses of both the overall quality and ultimate marketability of the security held against impaired accounts. Based on management's current view of credit quality, the dollar level of gross impaired loans should crest within the current fiscal year. Actual credit losses are expected to remain within acceptable levels through the latter stages of the credit cycle.

The fiscal 2010 target range for the provision for credit losses of 15 to 20 basis points of average loans does not consider the impact of National Leasing. Compared to the Bank's lending portfolio, the nature of National Leasing's business leads to a higher provision for credit losses measured as a percentage of loans. This circumstance is reflected by an increased provision in both the current quarter and looking forward. The second quarter provision for credit losses was 23 basis points of average loans, compared to 16 basis points excluding National Leasing. With the addition of National Leasing, the actual provision for credit losses for the year is likely to be in the range of 20 to 25 basis points of average loans.

The Bank's long-standing strategy with respect to managing the allowance for credit losses has been to maintain a consistent provision to cover both identified and unidentified losses. The purpose of the general allowance for credit losses is to mitigate the timing impact of unidentified losses in the portfolio. Results in the second quarter are consistent with management's expectations that the level of the general allowance will fluctuate as specific losses are recognized and subsequently written-off. Based on results from ongoing stress-testing of the portfolio under various credit scenarios, the adequacy of the general allowance for credit losses is deemed sufficient in consideration of management's current expectations for credit quality and the secured nature of the existing loan portfolio.

The total allowance for credit losses (general and specific) represented 46% of gross impaired loans at quarter end, compared to 50% last quarter and 70% one year ago. The total allowance for credit losses (general and specific) was $76.4 million at April 30, 2010 (including the $6.8 million allowance of National Leasing), compared to $72.6 million last quarter and $75.1 million a year earlier. The general allowance as a percentage of risk-weighted loans was 66 basis points, down from 70 basis points last quarter and 74 basis points one year ago.

Non-interest Expenses

Effective execution of CWB's strategic plan focused on profitable growth over the long-term will continue to require increased spending in certain areas. Significant expenditures relate to additional staff complement as well as expanded premises and technology upgrades. Spending in these areas is an integral part of the Bank's commitment to maximize shareholder value over the long-term and is expected to provide material benefits in future periods. In support of management's objective to enhance the Bank's market presence, two additional full-service banking branches are expected to open late in 2010.

Second quarter non-interest expenses of $50.0 million were up 25% ($10.0 million) compared to last year. Total salary and benefit costs increased $6.1 million, other expenses were $2.6 million higher and premises and equipment expenses were up $1.5 million. National Leasing comprised $6.7 million of the total increase in consolidated non-interest expenses, including $1.0 million of additional amortization of intangibles. Within non-interest expenses and excluding the impact of National Leasing, salary and benefit costs were up 8% ($2.2 million) with the increase attributed to increased staff complement and annual salary increments. Stock-based compensation charges were down slightly compared to a year earlier reflecting additional expense recognized in the second quarter last year for stock options forfeited by certain CWB management. Premises and equipment expenses excluding National Leasing were up $0.8 million in the aggregate over the same quarter last year while other expenses increased $0.4 million.

Compared to the prior quarter, non-interest expenses increased 24% ($9.7 million). Apart from the $6.7 million attributed to National Leasing, the increase was mainly due to higher salary and benefit costs, including $0.9 million of additional expense for restricted share units reflecting CWB's higher average share price in the quarter. Year-to-date non-interest expenses were 18% ($13.8 million) higher than the same period in 2009. Excluding National Leasing, year-to-date non-interest expenses increased 9% ($7.2 million) as higher salary and benefit costs reflecting increased staff complement and annual salary increments more than offset lower stock compensation expense this year. Other changes are consistent with the factors already discussed.

The second quarter efficiency ratio (teb), which measures non-interest expenses as a percentage of total revenues (teb), was 45.0%, compared to 53.1% last year and 40.0% in the previous quarter. The significant improvement compared to 2009 reflects the combined positive impact on total revenues from a strong recovery in net interest margin, increased other income including gains on sale of securities, and loan growth. Considering planned expenditures in conjunction with expectations for relatively stable margins, management expects CWB will be well within its 2010 target for the efficiency ratio of 48% or better. That being said, the year-to-date efficiency ratio (teb) of 42.6% is not expected to be a sustainable benchmark.

Income Taxes

The income tax rate (teb) for the first six months of 2010 was 30.5%, down 110 basis points from the same period one year ago, while the tax rate before the teb adjustment was 27.1%, also 110 basis points lower. The decrease from last year reflects a 100 basis point decrease in the basic federal income tax rate effective July 31, 2009, and a 50 basis point decrease in BC's provincial tax rate effective January 1, 2010.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income (OCI), all net of income taxes, and totaled $21.6 million for the second quarter, compared to $32.1 million in the same period last year. The decrease in comprehensive income reflects a decline in OCI resulting from lower unrealized gains on available-for-sale securities. The change in unrealized gains reflects market value fluctuations related to movements in market credit spreads and interest rates, as well as shifts in the interest rate curve. The impact of lower unrealized gains was partially offset by higher second quarter net income, which was up 76% ($16.3 million) compared to the same period last year. Year-to-date comprehensive income totaled $64.3 million, compared to $62.9 million last year. The increase reflects a 65% ($30.7 million) improvement in net income, mostly offset by lower unrealized gains on available-for-sale securities.

Balance Sheet

Total assets increased 3% ($363 million) in the quarter and 5% ($554 million) in the past year to reach $12,004 million at April 30, 2010.

Cash and Securities

Cash, securities and securities purchased under resale agreements totaled $1,827 million at April 30, 2010, compared to $2,170 million last quarter and $2,222 million one year ago (refer to the Treasury Management section of this MD&A for additional details). The unrealized gain recorded on the balance sheet at April 30, 2010 was $7.6 million, compared to $29.7 million last quarter and $10.8 million a year earlier. The considerable change in unrealized gains compared to the prior quarter is largely attributed to a fluctuation in market value of the Bank's preferred share portfolio; unrealized losses in this portfolio totaled $0.8 million as at April 30, 2010, compared to unrealized gains of $13.0 million last quarter. The cash and securities portfolio is mainly comprised of high quality debt instruments that are not held for trading purposes. Fluctuations in fair value are generally attributed to changes in interest rates, market credit spreads and shifts in the interest rate curve. CWB has no credit exposure to sovereign debt outside of Canada.

Realized gains on sale of securities in the second quarter were $4.1 million, compared to $6.5 million in the previous quarter and $6.6 million a year earlier. On a year-to-date basis, gains on sale of securities of $10.6 million were down 28% ($4.2 million) compared to the same period last year. Gains on sale of securities in both the current and prior periods mainly resulted from investment strategies and unusual market conditions that allowed the Bank to capitalize on opportunities to realize gains while maintaining relatively comparable yields on reinvestment in other high quality investment grade securities. Looking forward, the quarterly dollar amount of gains on sale of securities is expected to be considerably lower.

Treasury Management

High liquidity levels were maintained since August 2007 in response to disruptions and related uncertainties in financial markets. Many of these uncertainties have subsided and the Bank has now reduced liquidity to more normal levels. Compared to prior periods where liquidity levels were exceptionally high, this reduction has a positive impact on net interest margin. Barring significant adverse changes in the economic and market environments, liquidity is expected to be managed closer to current levels going forward.

Loans

Total loans of $9,867 million grew 6% ($585 million) in the quarter, 7% ($630 million) year-to-date and 9% ($825 million) in the past twelve months and included $376 million of on-balance sheet loans from the acquisition of National Leasing. Measured by geographic area and excluding National Leasing, all provinces showed loan growth in the quarter with the exception of Alberta. While organic loan growth continued to be constrained by ongoing economic impacts, including both expected and unexpected repayments (payouts and pay downs) on existing loans, the pipeline for new lending activity picked up compared to recent prior quarters. National Leasing adds further geographic and industry diversification to the Bank's loan portfolio. It operates across Canada with the largest concentration of leases sourced in Ontario and also lends to a number of industries not historically targeted by CWB.

Without the impact of National Leasing, all lending sectors showed relatively good quarterly growth with the exception of the equipment financing portfolio. Excluding all equipment financing loans, year-to-date organic loan growth for CWB was 5% with the real estate portfolio (excluding construction loans), personal loans and mortgages, and general commercial loans showing the best percentage growth. The equipment financing portfolio, excluding National Leasing, was down 12% ($151 million) year-to-date. Negative growth in this portfolio reflects both economic factors and its relatively short duration with loans fully repaid over a period of three to five years. Management believes the eventual return to growth of the equipment financing portfolio will be a good leading indicator of a more robust economic recovery in the Bank's markets. Management also continues to believe that Western Canada's resource-based economies are poised for a comparatively stronger recovery than the rest of Canada once overall global activity expands. Looking forward, loan growth is expected to remain constrained until economic factors improve further. With the acquisition of National Leasing, CWB is on track to achieve its 2010 loan growth target of 10%.

Loans in the Bank's alternative mortgage business, Optimum Mortgage (Optimum), increased 9% in the quarter, 20% year-to-date and 40% over the past twelve months to reach $672 million. Optimum's recently established offering of higher ratio insured mortgages has shown positive results and management expects insured mortgages could become a larger component of this portfolio over time. For uninsured mortgages, which currently represent approximately 65% of Optimum's total portfolio, the Bank remains well secured via conventional residential first mortgages carrying a weighted average underwritten loan-to-value ratio at initiation of approximately 70%. The large majority of all Optimum mortgages carry a fixed interest rate with the principal amortized over 25 years or less. Management remains committed to further developing this business as it continues to produce strong returns while maintaining an acceptable risk profile.

Deposits

Total branch deposits, including those raised by trust services, were up 14% ($769 million) compared to a year earlier and 2% ($126 million) from the previous quarter. The demand and notice component within branch deposits was up 40% ($995 million) compared to the same time last year and 9% ($275 million) from last quarter. Growth in demand and notice deposits compared to a year earlier largely reflects Canadian Western Trust Company's ongoing success in generating new trust deposits through growth of its fiduciary business. The significant growth in demand and notice deposits, which include the Bank's lowest cost funding, supports management's objective to further enhance and diversify the Bank's funding sources and can also benefit net interest margin. Valiant Trust Company was approved as a federal deposit-taking institution this year and management is evaluating strategies to utilize this additional channel to raise deposits and increase net interest income.

Total deposits at quarter end were $10,185 million, up 2% ($181 million) from the previous quarter and 5% ($472 million) over the past year. Total branch deposits measured as a percentage of total deposits were 61% at April 30, 2010, unchanged from the previous quarter and up from 56% a year earlier. Compared to April 30, 2009, the increase in branch deposits as a percentage of total deposits reflects the combined impact of very strong growth in the demand and notice component and a 4% ($149 million) decline in fixed rate term deposits raised through the deposit broker network. Demand and notice deposits represented 34% of total deposits at quarter end, compared to 32% in the previous quarter and 26% a year earlier.

Other Assets and Other Liabilities

Other assets at April 30, 2010 totaled $311 million, compared to $190 million last quarter and $187 million one year ago. The change in other assets compared to the previous quarter mainly reflects the acquisition of National Leasing (refer to Note 16 of the unaudited interim consolidated financial statements for further details on the acquisition), including increases in goodwill and other intangible assets of $27.8 million and $39.5 million, respectively. Other liabilities at quarter end were $427 million, compared to $302 million the previous quarter and $427 million last year. The increase in other liabilities compared to the prior quarter mainly reflects the acquisition of National Leasing. Other liabilities in the same period last year included $84 million of securities sold under repurchase agreements, compared to nil in the current quarter.

Off-Balance Sheet

Off-balance sheet items include assets under administration and assets under management. Total assets under administration, including both trust assets and leases under administration, totaled $8,223 million at April 30, 2010, compared to $5,462 million last quarter and $4,472 million one year ago. Assets under management were $780 million at quarter end, compared to $881 million last quarter and $817 million one year ago. The gross amount of securitized loans at quarter end was $276.2 million and reflects the acquisition of National Leasing (refer to Note 5 of the unaudited interim consolidated financial statements for further details on securitization). Other off-balance sheet items are comprised of standard industry credit instruments (guarantees, standby letters of credit and commitments to extend credit), and the non-consolidated variable interest entity. CWB does not utilize, nor does it have exposure to, collateralized debt obligations or credit default swaps. For additional information regarding other off-balance sheet items refer to Notes 14 and 20 to the audited consolidated financial statements on pages 82 and 88 respectively in the Bank's 2009 Annual Report.

Capital Management

At April 30, 2010, CWB's Total capital adequacy ratio, which measures regulatory capital as a percentage of risk-weighted assets, was 14.5%, down from 15.1% last quarter and 15.2% one year ago. The Tier 1 ratio was 11.4%, compared to 11.6% last quarter and 11.0% at the same time last year. Current minimums for the Total and Tier 1 capital adequacy ratios of Canadian Banks as set by the Office of the Superintendent of Financial Institutions Canada (OSFI) are 10% and 7%, respectively.

Compared to one year ago, the Bank's Tier 1 regulatory capital increased with the issuance of additional CWB common shares (including 2.1 million shares issued as partial consideration for National Leasing) and the retention of earnings, net of dividends, partially offset by goodwill attached to the acquisition of National Leasing and a capital deduction relating to its securitized assets. Total regulatory capital was impacted by the foregoing factors, as well as the redemption of $60.0 million of subordinated debentures on November 20, 2009 and an increased deduction for the investment in CWB's insurance subsidiary. Further details regarding changes in CWB's regulatory capital and capital adequacy ratios compared to prior periods are included in the following table:

    
                                As at        As at        As at  Change from
    (unaudited)              April 30   January 31     April 30     April 30
    ($ thousands)                2010         2010         2009         2009
    -------------------------------------------------------------------------
    Regulatory Capital
      Tier 1 Capital
       before
       deductions         $ 1,176,975  $ 1,104,200  $ 1,022,563  $   154,412
        Less: Goodwill        (37,191)      (9,359)      (9,359)     (27,832)
          Securitization
           (National
            Leasing)          (11,176)           0            0      (11,176)
    -------------------------------------------------------------------------
      Tier 1 Capital        1,128,608    1,094,841    1,013,204      115,404
    -------------------------------------------------------------------------
      Tier 2 Capital
       before
       deductions             380,080      386,074      441,015      (60,935)
        Less: Investment
         in insurance
         subsidiary           (63,431)     (60,073)     (50,732)     (12,699)
          Securitization
           (National
           Leasing)           (11,176)           -            -      (11,176)
    -------------------------------------------------------------------------
      Total Tier 2 Capital    305,473      326,001      390,283      (84,810)
    -------------------------------------------------------------------------
    Total Regulatory
    Capital               $ 1,434,081  $ 1,420,842  $ 1,403,487 $     30,594
    -------------------------------------------------------------------------
    Risk Weighted Assets  $ 9,882,832  $ 9,422,366  $ 9,195,541 $    687,291
    -------------------------------------------------------------------------
    Tier 1 capital
     adequacy ratio              11.4%        11.6%        11.0%     40 bp(1)
    Total capital adequacy
     ratio                       14.5         15.1         15.2          (70)

    (1) bp - basis point change.
    

CWB expects to remain very well capitalized. The ongoing retention of earnings should more than support capital requirements associated with the anticipated achievement of the fiscal 2010 target for double-digit loan growth. The Bank's very strong capital ratios provide considerable flexibility and management continues to evaluate alternatives to deploy capital for the long-term benefit of CWB shareholders.

In the fall of 2009, OSFI indicated that amendments would be forthcoming to the capital adequacy guidelines as a result of a global review of the adequacy of capital levels during the global financial crisis. In December 2009, the Basel Committee on Banking Supervision (the Committee) issued a Consultative Document entitled Strengthening the Resilience of the Banking Sector. The document as written represents a substantial change to the current guideline and has a strong emphasis on the quality and characteristics of Tier 1 capital. The Committee did not provide any indication as to minimum regulatory capital levels as they need to consider extensive feedback received from financial institutions and intend to study the quantitative impact of the draft framework before calibrating the standards. The Committee's initial time line would result in new standards being issued by the end of 2010 to be phased in by the end of 2012. CWB has a very strong capital position and expects implementation of the final set of standards should be relatively straightforward to manage given the lack of complexity in the Bank's current composition of regulatory capital, including an already strong component of tangible common equity.

Further information relating to the Bank's capital position is provided in Note 15 of the unaudited interim consolidated financial statements as well as the audited consolidated financial statements and MD&A for the year ended October 31, 2009.

Book value per common share at April 30, 2010 was $13.08 compared to $12.67 last quarter and $11.42 one year ago.

Common shareholders received a quarterly cash dividend of $0.11 per common share on April 1, 2010. On June 2, 2010, CWB's Board of Directors declared a cash dividend of $0.11 per common share, payable on July 2, 2010 to shareholders of record on June 17, 2010. This quarterly dividend is unchanged from both the previous quarter and one year ago. The Board of Directors also declared a cash dividend of $0.453125 per Series 3 Preferred Share payable on July 31, 2010 to shareholders of record on July 22, 2010.

Acquisitions

On February 1, 2010, the Bank acquired 100% of the common shares of National Leasing for a total cost of $126.5 million. Consideration for the acquisition included $52.8 million cash, 2,065,088 common shares of CWB ($42.6 million) and contingent consideration. Both the Bank and the vendors have the option to trigger payment of the contingent consideration no earlier than November 1, 2012. The future value of the contingent consideration is not yet determinable and the difference will be recognized as an adjustment to goodwill in the period in which the contingency is resolved. Refer to Note 16 of the unaudited interim consolidated financial statements for further details on the acquisition.

Changes in Accounting Policies

There were no new significant accounting policies adopted during the quarter for purposes of presenting the Bank's financial statements under Canadian generally accepted accounting principles.

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 and will include comparative information for the prior year.

During 2008, the Bank commenced a four stage project to identify and evaluate the impact of the transition to IFRS on the consolidated financial statements and develop a plan to complete the transition. The project plan includes the following phases - diagnostic, design and planning, solution development, and implementation. The diagnostic and the design and planning phases are complete, and the solution development phase is expected to be completed by the end of fiscal 2010. Further information on the Bank's transition plan is provided on pages 56 to 58 of the 2009 Annual Report.

The exact impact of the initial transition to IFRS on the Bank's November 1, 2010 consolidated financial statements for current standards is not yet determinable. The following areas have been identified as having the most significant potential for change on transition:

    
    -   Loan loss accounting - Although both existing Canadian GAAP and IFRS
        calculate loan losses using the incurred loss model, IFRS is more
        specific as to what qualifies as an "incurred event". Under IFRS,
        incurred losses require objective evidence of impairment, must have a
        reliably measurable effect on the present value of estimated cash
        flows and be supported by currently observable data. This difference
        is not expected to impact the calculation of the specific allowance
        for credit losses but may impact the calculation of the general (or
        collective) allowance. The Bank is developing an appropriate IFRS
        methodology but it is not yet determinable whether any adjustments
        will be required on transition.
    -   Derecognition - Under IFRS, National Leasing's securitized leases
        (totaling $276.2 million at April 30, 2010) would be reported on the
        balance sheet.
    -   Consolidation - Canadian Western Bank Capital Trust will be
        consolidated under IFRS. For more information about this entity see
        note 14 on page 82 of the October 31, 2009 audited consolidated
        financial statements.
    

CWB continues to monitor the International Accounting Standards Board's proposed changes to standards during Canada's transition to IFRS. These proposed changes may have a significant impact on the Bank's implementation plan and future financial statements.

Controls and Procedures

There were no changes in the Bank's internal controls over financial reporting that occurred during the quarter ended April 30, 2010 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

The Bank's certifying officers have limited the scope of design of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR) to exclude the controls, policies and procedures of National Leasing, acquired this quarter. The limitation will be removed no later than January 31, 2011.

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.

Updated Share Information

As at May 28, 2010, there were 66,324,147 common shares outstanding. Also outstanding were employee stock options, which are or will be exercisable for up to 4,221,465 common shares for maximum proceeds of $81.6 million and 14,838,784 warrants that are each exercisable until March 3, 2014 to purchase one common share in the Bank at a price of $14.00.

Dividend Reinvestment Plan

The Bank's common shares (TSX: CWB) and preferred shares (TSX: CWB.PR.A) are deemed eligible to participate in CWB's dividend reinvestment plan (the "Plan"). The Plan provides holders of the Bank's eligible shares the opportunity to direct cash dividends toward the purchase of common shares. Further details for the Plan are available on the Bank's website at http://www.cwbankgroup.com /investor_relations/drip.htm. At the current time, for the purposes of the Plan, the Bank has elected to issue common shares from treasury at a 2% discount from the average market price (as defined in the Plan).

Normal Course Issuer Bid

On January 18, 2010, CWB received approval from the Toronto Stock Exchange to initiate a Normal Course Issuer Bid (NCIB) and purchase, for cancellation, up to 748,058 of its warrants. The NCIB commenced January 20, 2010 and will expire January 19, 2011. From January 20 to April 30, 2010, the Bank purchased and cancelled 72,928 warrants at an average purchase price per warrant of $9.56; the aggregate amount of the warrant purchases was charged to retained earnings. A copy of the NCIB news release is available on the Bank's website and on SEDAR at www.sedar.com.

    
    Summary of Quarterly Financial Information

                         2010                          2009
                  ------------------- ---------------------------------------
    ($ thousands)    Q2        Q1        Q4        Q3        Q2        Q1
    -------------------------------------------------------------------------
    Total
     revenues
     (teb)        $110,972  $100,672  $ 90,099  $ 85,538  $ 75,382  $ 76,947
    Total
     revenues      108,310    98,109    87,702    83,349    73,707    75,361
    Net income      37,884    40,035    30,357    28,729    21,580    25,619
    Earnings per
     common share
      Basic           0.52      0.57      0.42      0.39      0.30      0.40
      Diluted         0.47      0.52      0.39      0.38      0.30      0.40
      Diluted cash    0.48      0.52      0.39      0.38      0.30      0.41
    Total assets
     ($ millions)   12,004    11,642    11,636    11,331    11,450    10,907
    -------------------------------------------------------------------------

                         2008
                  -------------------
    ($ thousands)    Q4        Q3
    ---------------------------------
    Total
     revenues
     (teb)        $ 74,059  $ 76,375
    Total
     revenues       72,519    74,933
    Net income      24,485    26,327
    Earnings per
     common share
      Basic           0.39      0.42
      Diluted         0.38      0.41
      Diluted cash    0.38      0.41
    Total assets
     ($ millions)   10,601    10,057
    ---------------------------------
    

The financial results for each of the last eight quarters are summarized above. In general, CWB's performance reflects a relatively consistent 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.

During the fourth quarter of 2008 and throughout fiscal 2009 the Bank's quarterly net interest income was negatively impacted by compression of the net interest margin that mainly resulted from consecutive reductions in the prime lending interest rate, coupled with significantly higher deposit costs and other spin-off effects of the global financial crisis. Gains on sale of securities, reflected in other income, were unusually high during the same period also mainly due to factors associated with the financial crisis, including a steep interest rate curve and wide credit spreads that allowed the Bank to capitalize on investment strategies. In the first quarter of fiscal 2010, net interest margin recovered to more typical levels achieved before the onset of the global financial crisis. Quarterly results can also fluctuate due to the recognition of periodic income tax items.

The acquisition of National Leasing was effective February 1, 2010 and the results of its operations and financial position are consolidated as part of the Bank's overall financial performance beginning with the second quarter of 2010 (refer to Results by Business Segment - Banking & trust). The acquisition had a positive impact on all categories in the table above.

For details on variations between the prior quarters, refer to the summary of quarterly results section of the Bank's MD&A for the year ended October 31, 2009 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 2009 Annual Report and audited consolidated financial statements for the year ended October 31, 2009 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 comprise all commercial and retail banking services including equipment leasing offered by National Leasing, acquired on February 1, 2010. The banking and trust segment also includes trust, wealth management and other financial services provided through Canadian Western Trust Company, Valiant Trust Company and Adroit Investment Management Ltd.

Net income of $34.5 million increased 78% ($15.1 million) compared to the same quarter last year driven by an 84 basis point improvement in net interest margin (teb). The significantly higher margin compared to the unprecedented low established a year earlier led to a 53% ($27.0 million) increase in quarterly net interest income (teb). The change in net interest margin (teb) mainly resulted from lower deposit costs, more favourable yields on fixed rate loans, the mix of interest-earning assets including lower liquidity, and loan prepayment fees. National Leasing's portfolio earns considerably higher yields compared to CWB's core business lending and was a key factor contributing to the improvement. The quarterly provision for credit losses increased by $2.1 million and included $1.8 million for National Leasing credit losses which are higher than the Bank's other loan portfolios when measured as a percentage of loans.

Second quarter other income grew 38% ($6.8 million) over a year earlier as very strong fee-based income, including a 60% ($3.2 million) increase in credit related fee income, offset a $2.5 million reduction in gains on sale of securities. Gains on sale of securities are expected to be considerably lower in future periods. Other income also included a $2.4 million positive change in fair value for National Leasing's interest rate swaps and $1.9 million of securitization income. The foregoing sources of other income are likely to reduce in future periods as new lease assets are retained on-balance sheet and funded with fixed rate deposits. The quarterly efficiency ratio (teb), which measures non-interest expense as a percentage of total revenues (teb), was 45.6%, compared to 53.8% last year. Non-interest expenses increased $9.7 million over the same quarter last year (including $6.7 million attributed to National Leasing) and the significant improvement in the efficiency ratio was entirely due to the achievement of record total revenues.

Compared to the prior quarter, earnings were down 6% ($2.2 million) as the combined positive impact of strong asset growth, an improved net interest margin and increased other income was more than offset by higher non-interest expenses, three fewer days and the provision for credit losses. On a year-to-date basis, net income was up 61% mainly driven by a 71 basis point improvement in net interest margin (teb). Net interest income (teb) was up 45% ($46.6 million) over the same period in 2009 while other income increased 19% ($7.2 million). Increased non-interest expenses and the provision for credit losses partially offset the positive earnings impact of record total revenues. The year-to-date efficiency ratio (teb) was 43.1%, an improvement of 680 basis points.

    
                              For the three months ended
                          -------------------------------------- Change from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2010         2010         2009         2009
    -------------------------------------------------------------------------
    Net interest income
     (teb)                $    78,436  $    72,619  $    51,399           53%
    Other income               24,951       20,616       18,125           38
    -------------------------------------------------------------------------
    Total revenues (teb)      103,387       93,235       69,524           49
    Provision for credit
     losses                     5,487        3,713        3,369           63
    Non-interest expenses      47,129       37,627       37,381           26
    Provision for income
     taxes (teb)               16,245       15,129        9,313           74
    Non-controlling
     interest in
     subsidiary                    41           76           56          (27)
    -------------------------------------------------------------------------
    Net income            $    34,485  $    36,690  $    19,405          78%
    -------------------------------------------------------------------------
    Efficiency ratio
     (teb)                       45.6%        40.4%        53.8%      (820)bp
    Efficiency ratio             46.7         41.4         55.0         (830)
    Net interest margin
     (teb)                       2.75         2.54         1.91           84
    Net interest margin          2.67         2.46         1.86           81
    Average loans
     (millions)(1)        $     9,714  $     9,253  $     8,982            8%
    Average assets
     (millions)(1)             11,688       11,317       11,024            6
    -------------------------------------------------------------------------


    ------------------------------------------------------------
                          For the six months ended
                          ------------------------- Change from
                             April 30     April 30     April 30
    ($ thousands)                2010         2009         2009
    ------------------------------------------------------------
    Net interest income
     (teb)                $   151,055  $   104,500           45%
    Other income               45,567       38,343           19
    ------------------------------------------------------------
    Total revenues (teb)      196,622      142,843           38
    Provision for credit
     losses                     9,200        6,738           37
    Non-interest expenses      84,756       71,291           19
    Provision for income
     taxes (teb)               31,374       20,464           53
    Non-controlling
     interest in
     subsidiary                   117          123           (5)
    ------------------------------------------------------------
    Net income            $    71,175   $   44,227           61%
    ------------------------------------------------------------
    Efficiency ratio
     (teb)                       43.1%        49.9%       (680)bp
    Efficiency ratio             44.2         51.0        (680)
    Net interest margin
     (teb)                       2.65         1.94          71
    Net interest margin          2.56         1.88          68
    Average loans
     (millions)(1)        $     9,484   $    8,918           6%
    Average assets
     (millions)(1)             11,502       10,867           6
    ------------------------------------------------------------

    bp - basis point change.
    teb - taxable equivalent basis, see definition following Financial
    Highlights table.

    (1) Assets are disclosed on an average daily balance basis.
    

Insurance

The insurance segment is comprised of the operations of Canadian Direct Insurance Incorporated (Canadian Direct or CDI), which provides auto and home insurance to individuals in BC and Alberta.

Canadian Direct reported record quarterly net income of $3.4 million representing a $1.2 million increase from a year ago. Strong results were driven by improved claims experience and a 7% increase in net earned premiums. Improved claims experience compared to the second quarter of 2009 includes a significant drop in the loss ratio for both the BC home and the Alberta auto product lines due to lower severity. Growth in net earned premiums reflects a 6% increase in policies outstanding and higher average premiums per policy in the home product lines of business.

In comparison to the previous quarter, which included a positive $1.9 million before tax ($1.3 million after tax) contribution from Canadian Direct's share of the Alberta auto risk sharing pools (the Pools), net income increased $0.1 million. Excluding the impact of the Pools from both quarters, net income was up by $1.2 million despite three fewer revenue earning days. The improvement can be attributed to lower net claims expense and an additional $0.3 million of gains on sale of securities. Improved claims experience was most notable in the Alberta auto line where net claims expense decreased by $2.7 million due to lower frequency and severity.

Year-to-date net income of $6.7 million represented a 127% ($3.8 million) increase from the same period last year. Absent the impact of the Pools, the year-over-year increase in net income was 54% ($2.2 million) reflecting 8% growth in net earned premiums and an improvement in net claims expense. Barring any severe weather or other catastrophe type events, Canadian Direct should continue to produce strong results through the remainder of fiscal 2010.

    
                                For the three months ended
                         --------------------------------------- Change from
                             April 30   January 31     April 30     April 30
    ($ thousands)                2010         2010         2009         2009
    -------------------------------------------------------------------------
    Net interest
     income (teb)            $  1,696     $  1,687     $  1,413          20%
    -------------------------------------------------------------------------
    Other income (net)
      Net earned premiums      26,627       27,331       24,880            7
      Commissions and
       processing fees            546          618          760          (28)
      Net claims and
       adjustment expenses    (15,784)     (16,990)     (16,126)          (2)
      Policy acquisition
       costs                   (5,868)      (5,289)      (5,316)          10
    -------------------------------------------------------------------------
    Insurance revenue (net)     5,521        5,670        4,198           32
    Gains on sale of
     securities                   368           80          247           49
    -------------------------------------------------------------------------
    Total revenues (net)
     (teb)                      7,585        7,437        5,858           29
    Non-interest expenses       2,831        2,621        2,613            8
    Provision for income
     taxes (teb)                1,355        1,471        1,070           27
    -------------------------------------------------------------------------
    Net income               $  3,399     $  3,345     $  2,175          56%
    -------------------------------------------------------------------------
    Policies outstanding
     (No.)                    180,289      177,272      170,433            6
    Gross written premiums   $ 30,531     $ 24,332     $ 29,120            5
    Claims loss ratio(1)          59%          62%          65%     (600) bp
    Expense ratio(2)               31           27           29          200
    Combined ratio(3)              90           89           94         (400)
    Alberta auto risk sharing
     pools impact on net
     income before tax       $    221     $  1,913     $     31         613%
    Average total assets
     (millions)                   210          214          192            9
    -------------------------------------------------------------------------


                          For the six months ended
                         -------------------------- Change from
                             April 30     April 30     April 30
    ($ thousands)                2010         2009         2009
    ------------------------------------------------------------
    Net interest
     income (teb)            $  3,383     $  2,908          16%
    ------------------------------------------------------------
    Other income (net)
      Net earned premiums      53,958       50,095            8
      Commissions and
       processing fees          1,164        1,414          (18)
      Net claims and
       adjustment expenses    (32,774)     (34,777)          (6)
      Policy acquisition
       costs                  (11,157)     (10,422)           7
    ------------------------------------------------------------
    Insurance revenue (net)    11,191        6,310           77
    Gains on sale of
     securities                   448          268           67
    ------------------------------------------------------------
    Total revenues (net)
     (teb)                     15,022        9,486           58
    Non-interest expenses       5,452        5,108            7
    Provision for income
     taxes (teb)                2,826        1,406          101
    ------------------------------------------------------------
    Net income               $  6,744     $  2,972         127%
    ------------------------------------------------------------
    Policies outstanding
     (No.)                    180,289      170,433            6
    Gross written premiums   $ 54,863     $ 52,223            5
    Claims loss ratio(1)          60%          69%     (900) bp
    Expense ratio(2)               29           29            -
    Combined ratio(3)              89           98         (900)
    Alberta auto risk sharing
     pools impact on net
     income before tax       $  2,134     $   (127)        nm %
    Average total assets
     (millions)                   212          190           12
    ------------------------------------------------------------
    bp -  basis point change.
    teb - taxable equivalent basis, see definition following Financial
          Highlights table.
    nm -  not meaningful.

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


    Fiscal 2010 Minimum Targets and Outlook

    The minimum performance targets established for the 2010 fiscal year
together with CWB's actual performance are presented in the table below:

                                               ------------------------------
                                                       2010         2010
                                                     Minimum    Year-to-date
                                                     Targets   Performance(1)
    -------------------------------------------------------------------------
    Net income growth(2)                                12%          65%
    -------------------------------------------------------------------------
    Total revenue (teb) growth                          12%          39%
    -------------------------------------------------------------------------
    Loan growth                                         10%           9%
    -------------------------------------------------------------------------
    Provision for credit losses as a percentage
     of average loans                             0.15% - 0.20%     0.19%
    -------------------------------------------------------------------------
    Efficiency ratio (teb)                              48%         42.6%
    -------------------------------------------------------------------------
    Return on common equity(3)                          13%         17.1%
    -------------------------------------------------------------------------
    Return on assets(4)                                0.90%        1.21%
    -------------------------------------------------------------------------
    (1) 2010 year-to-date 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.
    (2) Net income, before preferred share dividends.
    (3) Return on common equity calculated as annualized net income after
        preferred share dividends divided by average common shareholders'
        equity.
    (4) Return on assets calculated as annualized net income after preferred
        share dividends divided by average total assets.
    

The faster than expected recovery in net interest margin in the first quarter to more normal historical levels continued to have a very positive influence on overall financial performance. The acquisition of National Leasing further increased net interest margin and also impacts other key performance metrics, most notably loan growth and the provision for credit losses. In view of the foregoing, the majority of 2010 minimum targets do not accurately reflect management's current expectations. The contribution from National Leasing has the Bank on track to meet its 10% loan growth target. National Leasing's portfolio earns a relatively high yield that is accompanied by increased loan losses compared to the Bank's core lending business. The target range for the provision for credit losses as shown above does not reflect expected losses attributed to this portfolio and the actual consolidated provision for the year is now anticipated to be 20 to 25 basis points.

While the Bank should significantly surpass the minimum growth targets for net income and total revenues, year-to-date performance does not directly indicate expected annual growth given that fiscal 2009 comparative results were much better in the latter half of the year. Return on equity and return on assets for the year will also benefit from the robust recovery of net interest margin, although this positive impact will be partially offset by expectations for considerably lower gains on sale of securities going forward. Further growth in revenues, including the net impact from National Leasing, should lead to a better efficiency ratio compared to the fiscal 2010 target. That being said, management will maintain expenditures necessary for effective execution of CWB's strategic plan and the year-to-date efficiency ratio is not expected to be a sustainable benchmark.

Overall credit quality is sound despite an increase in gross impaired loans and actual losses should remain within acceptable levels given the current economic environment. Based on the present view, management believes gross impaired loans will peak within the current fiscal year. The Bank intends to continue to build market share while maintaining its focus on high quality loans that offer a fair and profitable return on investment. While there are still many challenges and global uncertainties, economic fundamentals in Canada appear to be improving and all companies in the Canadian Western Bank Group are well positioned to capitalize on opportunities in this regard. The overall outlook for 2010 and beyond is positive.

This management's discussion and analysis is dated June 3, 2010.

Taxable Equivalent Basis (teb)

Most banks analyze 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 GAAP and, therefore, may not be comparable to similar measures presented by other banks. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.

Non-GAAP Measures

Taxable equivalent basis, diluted cash earnings per common share, return on common 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;
    -   diluted cash earnings per common share - diluted earnings per common
        share excluding the amortization of acquisition-related intangible
        assets;
    -   return on common shareholders' equity - net income less preferred
        share dividends divided by average shareholder's equity;
    -   return on assets - net income less preferred share dividends 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);
    -   Tier 1 and total capital adequacy ratios - in accordance with
        guidelines issued by OSFI;
    -   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, general business and economic conditions in Canada including the volatility and lack of liquidity in financial markets, fluctuations in interest rates and currency values, changes in monetary policy, changes in economic and political conditions, regulatory and legal developments, the level of competition in the Bank's markets, the occurrence of weather-related and other natural catastrophes, changes in accounting standards and policies, 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. It is important to note that 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 as a number of important factors could cause the Bank's actual results to differ materially from the expectations expressed in such forward looking statements. Unless required by securities law, the Bank does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by it or on its behalf.

Assumptions about the performance of the Canadian economy in 2010 and how it will affect CWB's businesses are material factors the Bank considers when setting its objectives. In setting minimum performance targets for fiscal 2010, management's expectations assumed: moderate economic growth in Canada aided by positive relative performance in the four western provinces; stable or slightly higher energy and commodity prices; sound credit quality with actual losses remaining within the Bank's range of acceptable levels; modest inflationary pressures; and, an improved net interest margin resulting from lower deposit costs, a stable prime lending interest rate, favourable yields on both new lending facilities and renewed accounts, and relatively stable investment returns reflecting high quality assets held in the securities portfolio, partially offset by a reduction in the level of gains on the sale of securities compared to fiscal 2009. Through the first six months of fiscal 2010, very strong results reflect a significant recovery in net interest margin that materialized more quickly than management anticipated and a further positive impact from the February 1st acquisition of National Leasing Group Inc. Gains on sale of securities through the first two quarters were also much higher than management expected at the onset of fiscal 2010. The provision for credit losses measured as a percentage of average loans reflects higher inherent losses in the portfolio of National Leasing Group Inc. due to the nature of its business.

    
    -------------------------------------------------------------------------
    Consolidated Statements of Income
    -------------------------------------------------------------------------

                                  For the three months ended
    (unaudited)            ------------------------------------- Change from
    ($ thousands, except     April 30   January 31     April 30     April 30
     per share amounts)          2010         2010         2009         2009
    -------------------------------------------------------------------------
    Interest Income
      Loans                 $ 123,830    $ 116,841    $ 107,828          15%
      Securities                9,426       10,938       10,462          (10)
      Deposits with
       regulated financial
       institutions             1,443        2,104        3,770          (62)
    -------------------------------------------------------------------------
                              134,699      129,883      122,060           10
    -------------------------------------------------------------------------
    Interest Expense
      Deposits                 52,858       53,570       65,824          (20)
      Subordinated
       debentures               4,371        4,570        5,099          (14)
    -------------------------------------------------------------------------
                               57,229       58,140       70,923          (19)
    -------------------------------------------------------------------------
    Net Interest Income        77,470       71,743       51,137           51
    Provision for Credit
     Losses (Note 6)            5,487        3,713        3,369           63
    -------------------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses             71,983       68,030       47,768           51
    -------------------------------------------------------------------------
    Other Income
      Credit related            8,496        7,278        5,321           60
      Insurance, net (Note 2)   5,521        5,670        4,198           32
      Trust and wealth
       management services      4,499        4,470        3,869           16
      Retail services           2,332        2,016        1,913           22
      Gains on sale of
       securities               4,072        6,497        6,580          (38)
      Securitization
       revenue                  1,911            -            -           nm
      Foreign exchange
       gains                      676          435          667            1
      Other                     3,333            -           22           nm
    -------------------------------------------------------------------------
                               30,840       26,366       22,570           37
    -------------------------------------------------------------------------
    Net Interest and Other
     Income                   102,823       94,396       70,338           46
    -------------------------------------------------------------------------
    Non-Interest Expenses
      Salaries and employee
       benefits                32,681       26,390       26,587           23
      Premises and equipment    7,983        7,028        6,528           22
      Other expenses            8,901        6,520        6,330           41
      Provincial capital
       taxes                      395          310          549          (28)
    -------------------------------------------------------------------------
                               49,960       40,248       39,994           25
    -------------------------------------------------------------------------
    Net Income before
     Income Taxes and
     Non-Controlling
     Interest in
     Subsidiary                52,863       54,148       30,344           74
    Income Taxes               14,938       14,037        8,708           72
    -------------------------------------------------------------------------
                               37,925       40,111       21,636           75
    Non-Controlling Interest
     in Subsidiary                 41           76           56          (27)
    -------------------------------------------------------------------------
    Net Income               $ 37,884     $ 40,035     $ 21,580          76%
    -------------------------------------------------------------------------
    Preferred share
     dividends (Note 9)      $  3,802     $  3,802     $  2,458          55%
    Net income available
     to common shareholders  $ 34,082     $ 36,233     $ 19,122           78
    -------------------------------------------------------------------------
    Average number of
     common shares (in
     thousands)                66,144       63,925       63,503            4
    Average number of
     diluted common shares
     (in thousands)            72,670       70,090       63,559           14
    -------------------------------------------------------------------------
    Earnings Per Common
     Share
      Basic                  $   0.52     $   0.57     $   0.30           73
      Diluted                $   0.47     $   0.52     $   0.30           57
    -------------------------------------------------------------------------


                           For the six months ended
    (unaudited)            ------------------------ Change from
    ($ thousands, except     April 30     April 30     April 30
     per share amounts)          2010         2009         2009
    ------------------------------------------------------------
    Interest Income
      Loans                 $ 240,671    $ 227,096           6%
      Securities               20,364       21,674           (6)
      Deposits with
       regulated financial
       institutions             3,547        7,307          (51)
    ------------------------------------------------------------
                              264,582      256,077            3
    ------------------------------------------------------------
    Interest Expense
      Deposits                106,428      141,564          (25)
      Subordinated
       debentures               8,941       10,366          (14)
    ------------------------------------------------------------
                              115,369      151,930          (24)
    ------------------------------------------------------------
    Net Interest Income       149,213      104,147           43
    Provision for Credit
     Losses (Note 6)            9,200        6,738           37
    ------------------------------------------------------------
    Net Interest Income
     after Provision for
     Credit Losses            140,013       97,409           44
    ------------------------------------------------------------
    Other Income
      Credit related           15,774       11,064           43
      Insurance, net (Note 2)  11,191        6,310           77
      Trust and wealth
       management services      8,969        7,782           15
      Retail services           4,348        3,757           16
      Gains on sale of
       securities              10,569       14,723          (28)
      Securitization
       revenue                  1,911            -           nm
      Foreign exchange
       gains                    1,111        1,222           (9)
      Other                     3,333           63           nm
    ------------------------------------------------------------
                               57,206       44,921           27
    ------------------------------------------------------------
    Net Interest and Other
     Income                   197,219      142,330           39
    ------------------------------------------------------------
    Non-Interest Expenses
      Salaries and employee
       benefits                59,071       50,424           17
      Premises and equipment   15,011       12,556           20
      Other expenses           15,421       12,479           24
      Provincial capital
       taxes                      705          940          (25)
    ------------------------------------------------------------
                               90,208       76,399           18
    ------------------------------------------------------------
    Net Income before
     Income Taxes and
     Non-Controlling
     Interest in
     Subsidiary               107,011       65,931           62
    Income Taxes               28,975       18,609           56
    ------------------------------------------------------------
                               78,036       47,322           65
    Non-Controlling Interest
     in Subsidiary                117          123           (5)
    ------------------------------------------------------------
    Net Income               $ 77,919     $ 47,199          65%
    ------------------------------------------------------------
    Preferred share
     dividends (Note 9)      $  7,604     $  2,458         209%
    Net income available
     to common shareholders  $ 70,315     $ 44,741           57
    ------------------------------------------------------------
    Average number of
     common shares (in
     thousands)                65,016       63,484            2
    Average number of
     diluted common shares
     (in thousands)            71,362       63,609           12
    ------------------------------------------------------------
    Earnings Per Common
     Share
      Basic                  $   1.08     $   0.70           54
      Diluted                $   0.99     $   0.70           41
    ------------------------------------------------------------
    nm - not meaningful.
    The accompanying notes are an integral part of the interim consolidated
    financial statements.


    -------------------------------------------------------------------------
    Consolidated Balance Sheets
    -------------------------------------------------------------------------
                                                                      Change
                       As at        As at        As at        As at     from
    (unaudited)     April 30   January 31   October 31     April 30 April 30
    ($ thousands)       2010         2010         2009         2009     2009
    -------------------------------------------------------------------------
    Assets
    Cash Resources
      Cash and non-
       interest
       bearing
       deposits
       with
       financial
       institu-
       tions    $     15,343  $    18,728  $    17,447  $    14,739       4%
      Interest
       bearing
       deposits
       with
       regulated
       financial
       institutions
       (Note 3)      188,705      266,158      266,980      557,313      (66)
      Cheques and
       other items
       in transit        633        9,280       12,677            -       nm
    -------------------------------------------------------------------------
                     204,681      294,166      297,104      572,052      (64)
    -------------------------------------------------------------------------
    Securities
     (Note 3)
      Issued or
       guaranteed
       by Canada     508,267      930,048      854,457      585,320      (13)
      Issued or
       guaranteed
       by a province
       or munici-
       pality        103,318       96,999      253,143      545,032      (81)
      Other
       securities    762,760      828,737      783,809      519,283       47
    -------------------------------------------------------------------------
                   1,374,345    1,855,784    1,891,409    1,649,635      (17)
    -------------------------------------------------------------------------
    Securities
     Purchased
     Under
     Resale
     Agreements      247,682       20,000            -            -       nm
    -------------------------------------------------------------------------
    Loans (Notes
     4 and 7)
      Residential
       mortgages   2,292,578    2,308,916    2,282,475    2,239,023        2
      Other loans  7,650,477    7,045,834    7,029,177    6,877,594       11
    -------------------------------------------------------------------------
                   9,943,055    9,354,750    9,311,652    9,116,617        9
    -------------------------------------------------------------------------
      Allowance
       for credit
       losses
       (Note 6)      (76,386)     (72,570)     (75,459)     (75,099)       2
    -------------------------------------------------------------------------
                   9,866,669    9,282,180    9,236,193    9,041,518        9
    -------------------------------------------------------------------------
    Other
      Land,
       buildings
       and
       equipment      57,859       41,248       39,252       30,369       91
      Goodwill        37,191        9,360        9,360        9,360      297
      Other
       intangible
       assets         45,618        6,152        6,465        7,089      544
      Insurance
       related        55,254       56,583       55,932       52,283        6
      Derivative
       related
       (Note 8)          231          802        2,334        4,524      (95)
      Other assets   114,751       75,359       97,823       83,795       37
    -------------------------------------------------------------------------
                     310,904      189,504      211,166      187,420       66
    -------------------------------------------------------------------------
    Total Assets $12,004,281  $11,641,634  $11,635,872  $11,450,625       5%
    -------------------------------------------------------------------------

    Liabilities
     and Share-
     holders'
     Equity
    Deposits
      Payable
       on demand $   530,995  $   399,888  $   359,176  $   360,989      47%
      Payable
       after
       notice      2,963,594    2,820,033    2,778,601    2,139,361       39
      Payable on
       a fixed
       date        6,585,454    6,679,000    6,374,461    7,107,984       (7)
      Deposit
       from
       Canadian
       Western
       Bank
       Capital
       Trust         105,000      105,000      105,000      105,000        -
    -------------------------------------------------------------------------
                  10,185,043   10,003,921    9,617,238    9,713,334        5
    -------------------------------------------------------------------------
    Other
      Cheques and
       other items
       in transit     34,565       33,498       41,964       44,039      (22)
      Insurance
       related       135,482      137,424      145,509      135,563        -
      Derivative
       related
       (Note 8)          745           64           74          852      (13)
      Securities
       sold under
       repurchase
       agreements          -            -      300,242       83,468       nm
      Other
       liabilities   256,335      131,085      169,346      162,616       58
    -------------------------------------------------------------------------
                     427,127      302,071      657,135      426,538        -
    -------------------------------------------------------------------------
    Subordinated
     Debentures
      Conventional   315,000      315,000      375,000      375,000      (16)
    -------------------------------------------------------------------------
    Shareholders'
     Equity
      Preferred
       shares
       (Note 9)      209,750      209,750      209,750      209,750        -
      Common
       shares
       (Note 9)      274,223      227,716      226,480      223,062       23
      Contributed
       surplus        20,630       20,442       19,366       18,060       14
      Retained
       earnings      566,989      540,951      511,784      474,353       20
     Accumulated
      other
      comprehensive
      income           5,519       21,783       19,119       10,528      (48)
    -------------------------------------------------------------------------
                   1,077,111    1,020,642      986,499      935,753       15
    -------------------------------------------------------------------------
    Total
     Liabilities
     and
     Shareholders'
     Equity
                 $12,004,281  $11,641,634  $11,635,872  $11,450,625       5%
    -------------------------------------------------------------------------
    Contingent Liabilities and Commitments (Note 11)

    nm - not meaningful.

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


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

                                                    For the six months ended
                                                    -------------------------
    (unaudited)                                        April 30     April 30
    ($ thousands)                                          2010         2009
    -------------------------------------------------------------------------
    Retained Earnings
      Balance at beginning of period                 $  511,784   $  448,203
      Net income                                         77,919       47,199
      Dividends - Preferred shares                       (7,604)      (2,458)
                - Common shares                         (14,307)     (13,965)
      Warrants purchased under normal course
       issuer bid                            (Note 9)      (698)           -
      Issuance costs on common shares                      (105)           -
      Issuance costs on preferred units                       -       (4,626)
    -------------------------------------------------------------------------
    Balance at end of period                            566,989      474,353
    Accumulated Other Comprehensive Income
     (Loss)
    Balance at beginning of period                       19,119       (5,203)
      Other comprehensive income                        (13,600)      15,731
    -------------------------------------------------------------------------
    Balance at end of period                              5,519       10,528
    Total retained earnings and accumulated
     other comprehensive income                         572,508      484,881
    Preferred Shares                         (Note 9)
    Balance at beginning of period                      209,750            -
      Issued during the period                                -      209,750
    -------------------------------------------------------------------------
    Balance at end of period                            209,750      209,750
    Common Shares                            (Note 9)
    Balance at beginning of period                      226,480      221,914
      Issued on acquisition                 (Note 16)    42,582            -
      Issued on exercise of options                       2,289          393
      Issued under dividend reinvestment plan             1,563            -
      Transferred from contributed surplus
       on exercise or exchange of options                 1,199          755
      Issued on exercise of warrants                        110            -
    -------------------------------------------------------------------------
    Balance at end of period                            274,223      223,062
    -------------------------------------------------------------------------
    Contributed Surplus
    Balance at beginning of period                       19,366       14,234
      Amortization of fair value of options               2,463        4,581
      Transferred to common shares on exercise
       or exchange of options                            (1,199)        (755)
    -------------------------------------------------------------------------
    Balance at end of period                             20,630       18,060
    -------------------------------------------------------------------------
    Total Shareholders' Equity                      $ 1,077,111  $   935,753
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Consolidated Statements of Comprehensive Income
    -------------------------------------------------------------------------

                        For the three months ended  For the six months ended
                        --------------------------- -------------------------
    (unaudited)              April 30     April 30     April 30     April 30
    ($ thousands)                2010         2009         2010         2009
    -------------------------------------------------------------------------
    Net Income               $ 37,884     $ 21,580     $ 77,919     $ 47,199
    Other Comprehensive
     Income (Loss), net
     of tax
      Available-for-sale
       securities:
        Gains (losses)
         from change in
         fair value(1)        (13,251)      21,528       (4,617)      30,549
        Reclassification
         to other income(2)    (2,505)      (4,630)      (7,414)     (10,380)
    -------------------------------------------------------------------------
                              (15,756)      16,898      (12,031)      20,169
    -------------------------------------------------------------------------
      Derivatives
       designated as cash
       flow hedges:
        Gains (losses) from
         change in fair
         value(3)                  10        2,532           17        5,968
        Reclassification
         to net interest
         income(4)               (518)      (3,485)      (1,586)      (4,996)
        Reclassification
         to other liabilities
         for derivatives
         terminated prior
         to maturity(5)             -       (5,410)           -       (5,410)
    -------------------------------------------------------------------------
                                 (508)      (6,363)      (1,569)      (4,438)
    -------------------------------------------------------------------------
                              (16,264)      10,535      (13,600)      15,731
    -------------------------------------------------------------------------
    Comprehensive Income
     for the Period          $ 21,620     $ 32,115     $ 64,319     $ 62,930
    -------------------------------------------------------------------------
    (1) Net of income tax benefit of $5,679 and $1,965 for the three and six
        months ended April 30, 2010, respectively (2009 - tax expense of
        $9,027 and $12,780).
    (2) Net of income tax benefit of $1,074 and $3,155 for the three and six
        months ended April 30, 2010, respectively (2009 - $1,950 and $4,343).
    (3) Net of income tax expense of $4 and $7 for the three and six months
        ended April 30, 2010, respectively (2009 - $948 and $2,497).
    (4) Net of income tax benefit of $207 and $664 for the three and six
        months ended April 30, 2010, respectively (2009 - $1,409 and $2,090).
    (5) Net of income tax benefit of nil for the three and six months ended
        April 30, 2010 (2009 - $2,264 and $2,264).

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


    -------------------------------------------------------------------------
    Consolidated Statements of Cash Flow
    -------------------------------------------------------------------------

                        For the three months ended  For the six months ended
                        --------------------------- -------------------------
    (unaudited)              April 30     April 30     April 30     April 30
    ($ thousands)                2010         2009         2010         2009
    -------------------------------------------------------------------------
    Cash Flows from
     Operating Activities
      Net income             $ 37,884     $ 21,580     $ 77,919     $ 47,199
      Adjustments to
       determine net
       cash flows:
        Provision for
         credit losses          5,487        3,369        9,200        6,738
        Depreciation and
         amortization           3,823        2,159        6,202        4,285
        Amortization of
         fair value of
         employee stock
         options                1,257        3,020        2,463        4,581
        Future income
         taxes, net             1,992       (2,687)       2,032       (4,312)
        Gain on sale of
         securities, net       (4,072)      (6,580)     (10,569)     (14,723)
        Accrued interest
         receivable and
         payable, net             420        3,261      (12,305)      15,061
        Current income
         taxes payable, net        70        1,931      (14,004)      (2,047)
        Other items, net       47,413       15,090       54,637        7,528
    -------------------------------------------------------------------------
                               94,274       41,143      115,575       64,310
    -------------------------------------------------------------------------
    Cash Flows from
     Financing Activities
      Deposits, net           181,123      190,237      567,806      467,615
      Common shares
       issued       (Note 9)    2,855          333        3,962          393
      Issuance costs
       on share capital          (105)      (4,626)        (105)      (4,626)
      Warrants purchased
       under normal
       course issuer
       bid          (Note 9)     (665)           -         (698)           -
      Dividends               (11,076)      (9,442)     (21,911)     (16,423)
      Long-term debt
       repaid      (Note 16) (270,630)           -     (270,630)           -
      Securities
       sold under
       repurchase
       agreements, net              -            -     (300,242)           -
      Debentures
       redeemed                     -            -      (60,000)           -
      Preferred units
       issued                       -      209,750            -      209,750
    -------------------------------------------------------------------------
                              (98,498)     386,252      (81,818)     656,709
    -------------------------------------------------------------------------
    Cash Flows from
     Investing Activities
      Interest bearing
       deposits with
       regulated financial
       institutions, net       76,253     (121,028)      76,375      (81,828)
      Securities, purchased  (648,359)    (776,638)  (2,029,349)  (1,516,274)
      Securities, sale
       proceeds               964,332      361,682    2,274,063      989,576
      Securities, matured     149,923       24,252      263,191      131,578
      Securities purchased
       under resale
       agreements, net       (227,682)      98,468     (247,682)     160,468
      Loans, net             (266,770)     (51,434)    (316,470)    (424,187)
      Land, buildings
       and equipment           (3,512)      (1,010)      (7,574)      (2,115)
      Business
       acquisition (Note 16)  (53,060)           -      (53,060)      (6,481)
    -------------------------------------------------------------------------
                               (8,875)    (465,708)     (40,506)    (749,263)
    -------------------------------------------------------------------------
    Change in Cash and
     Cash Equivalents         (13,099)     (38,313)      (6,749)     (28,244)
    Cash and Cash
     Equivalents at
     Beginning of Period       (5,490)       9,013      (11,840)      (1,056)
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End of
     Period*              $ (18,589)   $ (29,300)   $ (18,589)   $ (29,300)
    -------------------------------------------------------------------------
    * Represented by:
      Cash and non-interest
       bearing deposits
       with financial
       institutions         $  15,343    $  14,739    $  15,343    $  14,739
      Cheques and other
       items in transit
       (included in Cash
       Resources)                 633            -          633            -
      Cheques and other
       items in transit
       (included in Other
       Liabilities)           (34,565)     (44,039)     (34,565)     (44,039)
    -------------------------------------------------------------------------
    Cash and Cash
     Equivalents at End
     of Period              $ (18,589)   $ (29,300)   $ (18,589)   $ (29,300)
    -------------------------------------------------------------------------

    Supplemental Disclosure
     of Cash Flow Information
      Amount of interest
       paid in the period   $  60,027    $  62,745    $ 138,394    $ 132,961
      Amount of income
       taxes paid in the
       period                  12,877        9,464       40,948       24,968
    -------------------------------------------------------------------------

    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.  Summary of Significant Accounting Policies

        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, 2009. 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, 2009 as set out on pages 66 to 100 of the Bank's 2009
        Annual Report.

    2.  Insurance Revenues, Net

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

                                                                 For the
                          For the three months ended        six months ended
                       ------------------------------------------------------
                        April 30 January 31   April 30   April 30   April 30
                            2010       2010       2009       2010       2009
    -------------------------------------------------------------------------
    Net earned premiums $ 26,627   $ 27,331   $ 24,880   $ 53,958   $ 50,095
    Commissions and
     processing fees         546        618        760      1,164      1,414
    Net claims and
     adjustment expenses (15,784)   (16,990)   (16,126)   (32,774)   (34,777)
    Policy acquisition
     costs                (5,868)    (5,289)    (5,316)   (11,157)   (10,422)
    -------------------------------------------------------------------------
    Total, net          $  5,521   $  5,670   $  4,198   $ 11,191   $  6,310
    -------------------------------------------------------------------------

    3.  Securities

    Net unrealized gains (losses) reflected on the balance sheet follow:

                                                 As at      As at      As at
                                              April 30 January 31 October 31
                                                  2010       2010       2009
    -------------------------------------------------------------------------
    Interest bearing deposits with regulated
     financial institutions                   $  3,018   $  6,689   $  7,390
    Securities issued or guaranteed by
      Canada                                    (2,662)       901      1,594
      A province or municipality                   506      1,250      2,547
    Other debt securities                        2,913      7,231      6,898
    Equity securities
      Preferred shares                            (835)    13,009      5,810
      Common shares                              4,706        647        558
    -------------------------------------------------------------------------
    Unrealized gain, net                      $  7,646   $ 29,727   $ 24,797
    -------------------------------------------------------------------------

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

    4.  Loans

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


                   British             Saskat-
    ($ millions)  Columbia   Alberta    chewan  Manitoba     Other     Total
    -------------------------------------------------------------------------
    Loans to
     Individuals
      Residential
       mortgages(2) $  985   $   987   $   121   $    84   $   116   $ 2,293
      Other loans       68       102        14         4         1       189
    -------------------------------------------------------------------------
                     1,053     1,089       135        88       117     2,482
    -------------------------------------------------------------------------
    Loans to
     Businesses
      Commercial       808     1,321        95        86       303     2,613
      Construction
       and real
       estate(3)     1,229     1,488       221        72       180     3,190
      Equipment
       financing       332       696        98        52       317     1,495
      Energy             -       163         -         -         -       163
    -------------------------------------------------------------------------
                     2,369     3,668       414       210       800     7,461
    -------------------------------------------------------------------------
    Total Loans(1) $ 3,422   $ 4,757   $   549   $   298   $   917   $ 9,943
    -------------------------------------------------------------------------
    Composition
     Percentage
      April 30, 2010   34%       48%        6%        3%        9%      100%
      January 31,
       2010            35%       50%        5%        3%        7%      100%
      October 31,
       2009            35%       50%        5%        3%        7%      100%
    -------------------------------------------------------------------------

                  April 30  January 31  October 31
                      2010        2010        2009
               Composition Composition Composition
                Percentage  Percentage  Percentage
    -----------------------------------------------
    Loans to
     Individuals
      Residential
       mortgages(2)    23%       25%       25%
      Other loans        2         2         2
    -----------------------------------------------
                        25        27        27
    -----------------------------------------------
    Loans to
     Businesses
      Commercial        26        28        27
      Construction
       and real
       estate(3)        32        32        31
      Equipment
       financing        15        12        13
      Energy             2         1         2
    -----------------------------------------------
                        75        73        73
    -----------------------------------------------
    Total Loans(1)    100%      100%      100%
    -----------------------------------------------
    Composition
     Percentage
      April 30, 2010
      January 31,
       2010
      October 31,
       2009
    -----------------------------------------------
    (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.

    5.  Securitization

        As a result of the acquisition of National Leasing Group Inc.
        (National Leasing) on February 1, 2010 (see Note 16), the Bank
        participates in securitization activities. Securitization consists of
        the transfer of equipment financing loans to an independent trust,
        which buys the loans and issues securities to investors. The Bank's
        securitizations are accounted for as a sale as the Bank surrenders
        control of the transferred assets and receives consideration other
        than a beneficial interest in the transferred assets.

        When the Bank has an entitlement to participate in future cash flows,
        the retained interests, net of estimated servicing costs, are
        classified by the Bank as available-for-sale and are included in
        other assets. When the Bank has received the full proceeds in cash, a
        reserve for estimated credit and prepayment losses and a reserve for
        future servicing costs, are included in other liabilities. The
        retained interests represent the maximum exposure to losses on the
        securitized assets. On a quarterly basis, the carrying value of the
        retained interests in securitized assets is reviewed for impairment
        on their fair value. Fair value is subject to credit, prepayment and
        interest rate risks.

        Gains on the sale of loans and servicing revenues are reported in
        other income - securitization revenue. In determining the gain, the
        carrying amount of the loans sold is allocated between the assets
        sold and the retained interests based on their relative fair value at
        the date of transfer. The Bank estimates fair value based on the
        present value of future expected cash flows using management's best
        estimates of the key assumptions - credit losses, prepayment speeds
        and discount rates commensurate with the risks involved. There was no
        sales activity related to securitization during the period.

        The loans are sold on a fully serviced basis. Accordingly, upon each
        securitization a servicing liability is recorded to recognize the
        potential reduction in cash flows receivable as if an amount was paid
        by the securitizor to a replacement servicer. The estimated fees that
        would otherwise be payable to a replacement servicer form the basis
        of determination of the fair value of the servicing liability that is
        charged against the gain at the time of recognition of the sale of
        securitized assets.

        Cash flows received from securitization activities were as follows:

                                                                     For the
                                                               three and six
                                                                months ended
                                                               April 30 2010
        ---------------------------------------------------------------------
        Proceeds from new securitizations                            $     -
        Cash flow received from retained interests                     4,418
        Losses reimbursed to securitizor                              (1,129)
        ---------------------------------------------------------------------
                                                                     $ 3,289
        ---------------------------------------------------------------------

        The following table presents information about off-balance sheet
        gross impaired loans and net write-offs for securitized assets as at
        April 30, 2010 and are not included in Note 6 - Allowance for Credit
        Losses and Note 7 - Impaired and Past Due Loans:

                                                         Gross    Write-offs,
                                           Gross      Impaired        Net of
                                           Loans         Loans  Recoveries(1)
        ---------------------------------------------------------------------
        Type of Loan
        Equipment financing
         securitization                $ 276,244     $   1,597     $     848
        ---------------------------------------------------------------------
        (1) For the three and six months ended April 30, 2010.

        As at April 30, 2010, key economic assumptions and the sensitivity of
        the current fair value (FV) of residual cash flows to immediate 10
        percent and 20 percent adverse changes in those assumptions are as
        follows:

                                                        Impact on  Impact on
                                                        FV of 10%  FV of 20%
                                          Key Economic    Adverse    Adverse
                                           Assumptions     Change     Change
        ---------------------------------------------------------------------
        Fair value of retained interests      $ 10,138
        Cash flow received from retained
         interests                               4,418    $   442    $   884
        Annual prepayment rate                    7.5%        393        785
        Expected credit losses                   3.27%        698      1,396
        Residual cash flows discount rate        4.00%         54        107
        ---------------------------------------------------------------------

        These sensitivities are hypothetical and should be used with caution.
        Changes in fair value based on a 10 or 20 percent variation in
        assumptions generally cannot be extrapolated because the relationship
        of the change in assumption to the change in fair value may not be
        linear. Also, in the above table, the effect of a variation in a
        particular assumption on the fair value of the retained interests is
        calculated without changing any other assumption. In reality, changes
        in one factor may result in changes in another, which might magnify
        or counteract the sensitivities.

    6.  Allowance for Credit Losses


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

                                             For the three months ended
                                                   April 30, 2010
                                       --------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
    -------------------------------------------------------------------------
    Balance at beginning of period        $ 13,531     $ 59,039     $ 72,570
    Allowance acquired          (Note 16)    2,596        4,172        6,768
    Provision for credit losses             10,693       (5,206)       5,487
    Write-offs                              (8,530)           -       (8,530)
    Recoveries                                  91            -           91
    -------------------------------------------------------------------------
    Balance at end of period              $ 18,381     $ 58,005     $ 76,386
    -------------------------------------------------------------------------


                                             For the three months ended
                                                 January 31, 2010
                                       --------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
    -------------------------------------------------------------------------
    Balance at beginning of period        $ 14,306     $ 61,153     $ 75,459
    Allowance acquired          (Note 16)        -            -            -
    Provision for credit losses              5,827       (2,114)       3,713
    Write-offs                              (6,605)           -       (6,605)
    Recoveries                                   3            -            3
    -------------------------------------------------------------------------
    Balance at end of period              $ 13,531     $ 59,039     $ 72,570
    -------------------------------------------------------------------------


                                              For the three months ended
                                                     April 30, 2009
                                       --------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
    -------------------------------------------------------------------------
    Balance at beginning of period        $ 13,554     $ 60,922     $ 74,476
    Provision for credit losses              3,276           93        3,369
    Write-offs                              (2,759)           -       (2,759)
    Recoveries                                  13            -           13
    Balance at end of period              $ 14,084     $ 61,015     $ 75,099
    -------------------------------------------------------------------------


                                             For the six months ended
                                                   April 30, 2010
                                       --------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
    -------------------------------------------------------------------------
    Balance at beginning of period        $ 14,306     $ 61,153     $ 75,459
    Allowance acquired          (Note 16)    2,596        4,172        6,768
    Provision for credit losses             16,520       (7,320)       9,200
    Write-offs                             (15,135)           -      (15,135)
    Recoveries                                  94            -           94
    Balance at end of period              $ 18,381     $ 58,005     $ 76,386


                                             For the six months ended
                                                   April 30, 2009
                                       --------------------------------------
                                                        General
                                                      Allowance
                                          Specific   for Credit
                                         Allowance       Losses        Total
    -------------------------------------------------------------------------
    Balance at beginning of period        $ 15,011     $ 60,527     $ 75,538
    Allowance acquired          (Note 16)        -            -            -
    Provision for credit losses              6,250          488        6,738
    Write-offs                              (7,223)           -       (7,223)
    Recoveries                                  46            -           46
    Balance at end of period              $ 14,084     $ 61,015     $ 75,099
    -------------------------------------------------------------------------

    7.  Impaired and Past Due Loans

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

                                        As at April 30, 2010
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,618,061  $    19,746  $     1,722  $    18,024
        Real estate(1)      4,077,489      101,228        5,884       95,344
        Equipment
         financing          1,629,344       21,322        4,897       16,425
        Commercial          2,618,161       24,933        5,878       19,055
        ---------------------------------------------------------------------
        Total(2)          $ 9,943,055  $   167,229  $    18,381      148,848
        --------------------------------------------------------
        General
         allowance(3)                                                (58,005)
        ---------------------------------------------------------------------
        Net impaired loans
         after general
         allowance                                               $    90,843
        ---------------------------------------------------------------------


                                        As at January 31, 2010
                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,533,375  $    19,128  $     1,115  $    18,013
        Real estate(1)      3,944,058       79,143        3,220       75,923
        Equipment
         financing          1,284,931       18,233        2,954       15,279
        Commercial          2,592,386       29,898        6,242       23,656
        ---------------------------------------------------------------------
        Total(2)          $ 9,354,750  $   146,402  $    13,531      132,871
        --------------------------------------------------------
        General
         allowance(3)                                                (59,039)
        ---------------------------------------------------------------------
        Net impaired loans
         after general
         allowance                                               $    73,832
        ---------------------------------------------------------------------


                          ---------------------------------------------------
                                             Gross                       Net
                                Gross     Impaired     Specific     Impaired
                               Amount       Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Consumer and
         personal         $ 1,452,682  $    14,805  $     1,207  $    13,598
        Real estate(1)      3,909,991       76,643        5,611       71,032
        Equipment
         financing          1,412,344       26,408        6,196       20,212
        Commercial          2,536,635       20,088        1,292       18,796
        ---------------------------------------------------------------------
        Total(2)          $ 9,311,652  $   137,944  $    14,306      123,638
        --------------------------------------------------------
        General
         allowance(3)                                                (61,153)
        ---------------------------------------------------------------------
        Net impaired loans
         after general
         allowance                                               $    62,485
        ---------------------------------------------------------------------

    (1) Multi-family residential mortgages are included in real estate loans.
    (2) Gross impaired loans includes foreclosed assets with a carrying value
        of $695 (January 31, 2010 - $nil and October 31, 2009 - $nil) which
        are held for sale.
    (3) The general allowance for credit risk is not allocated by loan type.

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

                                                  As at April 30, 2010
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $   111,487  $    12,943  $    98,544
        British Columbia                    32,260        2,379       29,881
        Saskatchewan                         2,002          933        1,069
        Manitoba                               749          210          539
        Other(1)                            20,731        1,916       18,815
        ---------------------------------------------------------------------
        Total                          $   167,229  $    18,381      148,848
        --------------------------------------------------------
        General allowance(2)                                         (58,005)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $    90,843
        ---------------------------------------------------------------------


                                                As at January 31, 2010
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $    80,478  $     4,854  $    75,624
        British Columbia                    33,623        2,058       31,565
        Saskatchewan                         1,570          645          925
        Manitoba                               684           29          655
        Other(1)                            30,047        5,945       24,102
        ---------------------------------------------------------------------
        Total                          $   146,402  $    13,531      132,871
        --------------------------------------------------------
        General allowance(2)                                         (59,039)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $    73,832
        ---------------------------------------------------------------------

                                                As at October 31, 2009
                                       --------------------------------------
                                             Gross                       Net
                                          Impaired     Specific     Impaired
                                            Amount    Allowance        Loans
        ---------------------------------------------------------------------
        Alberta                        $    74,847  $     7,651  $    67,196
        British Columbia                    37,655        5,000       32,655
        Saskatchewan                         1,632          609        1,023
        Manitoba                               337           23          314
        Other(1)                            23,473        1,023       22,450
        ---------------------------------------------------------------------
        Total                          $   137,944  $    14,306      123,638
        --------------------------------------------------------
        General allowance(2)                                         (61,153)
        ---------------------------------------------------------------------
        Net impaired loans after
         general allowance                                       $    62,485
        ---------------------------------------------------------------------

        (1) Included in Other is a corporate loan with security that is not
            identifiable to a specific province.
        (2) The general allowance for credit risk is not allocated by
            province.

        During the three and six months ended April 30, 2010, interest
        recognized as income on impaired loans totaled $950 and $1,604,
        respectively (2009 - $726 and $932).

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

                                          As at April 30, 2010
                        -----------------------------------------------------
                          1 - 30    31 - 60    61 - 90  More than
                            days       days       days    90 days      Total
        ---------------------------------------------------------------------
        Residential
         mortgages      $  8,173   $  3,003   $    346   $    456   $ 11,978
        Other loans       35,379      2,087        138          -     37,604
        ---------------------------------------------------------------------
                        $ 43,552   $  5,090   $    484   $    456   $ 49,582
        ---------------------------------------------------------------------

        Total as at
         January 31,
         2010           $ 30,128   $ 20,367   $  3,313   $  1,165   $ 54,973
        ---------------------------------------------------------------------
        Total as at
         October 31,
         2009           $ 27,533   $ 29,272   $  4,694   $      -   $ 61,499
        ---------------------------------------------------------------------

    8.  Derivative Financial Instruments For the three and six months ended
        April 30, 2010, a net unrealized after tax gain of $10 and $17
        respectively (2009 - $2,532 and $5,968) was recorded in other
        comprehensive income for changes in fair value of the effective
        portion of derivatives designated as cash flow hedges, and $nil (2009
        - $nil) was recorded in other income for changes in fair value of the
        ineffective portion of derivatives classified as cash flow hedges.
        Amounts accumulated in other comprehensive income are reclassified to
        net income in the same period that interest on certain floating rate
        loans (i.e. the hedged items) affect income. For the three and six
        months ended April 30, 2010, a net gain after tax of $518 and $1,586
        respectively (2009 - $3,485 and $4,996) was reclassified to net
        income. A net gain of $31 (2009 - $4,155) after tax recorded in
        accumulated other comprehensive income as at April 30, 2010 is
        expected to be reclassified to net income in the next twelve months
        and will offset variable cash flows from floating rate loans.

        The Bank designates certain derivative financial instruments as
        either a hedge of the fair value of recognized assets or liabilities
        or firm commitments (fair value hedges), or a hedge of highly
        probable future cash flows attributable to a recognized asset or
        liability or a forecasted transaction (cash flow hedges). On an
        ongoing basis, the Bank assesses whether the derivatives that are
        used in hedging transactions are effective in offsetting changes in
        fair values or cash flows of the hedged items. If a hedging
        transaction becomes ineffective or if the derivative is not
        designated as a cash flow hedge, any subsequent change in the fair
        value of the hedging instrument is recognized in earnings. Prior to
        February 1, 2010, all interest rate swaps were designated as cash
        flow hedges. Subsequent to February 1, 2010 with the acquisition of
        National Leasing (see Note 16), the Bank also has interest rate swaps
        not designated as hedges.

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

                                                  As at April 30, 2010
                                       --------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges(1)        $    25,000  $        39  $         -
        Interest rate swaps not
         designated as hedges(2)            60,910            -          687
        Equity contracts(3)                    500            3            -
        Foreign exchange contracts(4)       49,004          189           54
        Embedded derivatives in
         equity-linked deposits(3)             n/a                         4
        Other forecasted transactions            -            -            -
        ---------------------------------------------------------------------
        Derivative related amounts                  $       231  $       745
        ---------------------------------------------------------------------


                                                 As at January 31, 2010
                                       --------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges(1)        $   145,000  $       748  $         -
        Interest rate swaps not
         designated as hedges(2)                 -            -            -
        Equity contracts(3)                  2,000            -           12
        Foreign exchange contracts(4)        5,463           52           52
        Embedded derivatives in
         equity-linked deposits(3)             n/a            2            -
        Other forecasted transactions            -            -            -
        ---------------------------------------------------------------------
        Derivative related amounts                  $       802  $        64
        ---------------------------------------------------------------------

                                                 As at October 31, 2009
                                       --------------------------------------
                                          Notional     Positive     Negative
                                            Amount   Fair Value   Fair Value
        ---------------------------------------------------------------------
        Interest rate swaps designated
         as cash flow hedges           $   235,000  $     2,265  $         -
        Interest rate swaps not
         designated as hedges                    -            -            -
        Equity contracts                     2,000            -           33
        Foreign exchange contracts           2,496           44           41
        Embedded derivatives in
         equity-linked deposits                n/a           25            -
        Other forecasted transactions            -            -            -
        ---------------------------------------------------------------------
        Derivative related amounts                  $     2,334  $        74
        ---------------------------------------------------------------------

        (1) Interest rate swaps designated as cash flow hedges outstanding at
            April 30, 2010 mature between May and June 2010.
        (2) Interest rate swaps not designated as hedges outstanding at April
            30, 2010 mature between August 2010 and April 2014.
        (3) Equity contract and equity-linked deposits outstanding at April
            30, 2010 mature March 2011.
        (4) Foreign exchange contracts outstanding at April 30, 2010 mature
            between May 2010 and January 2011.

        n/a - not applicable.

        There were no forecasted transactions that failed to occur during the
        three and six months ended April 30, 2010.

    9.  Capital Stock

        Share Capital
                                       For the six months ended
                          ---------------------------------------------------
                                 April 30, 2010            April 30, 2009
        ---------------------------------------------------------------------
                            Number of                 Number of
                               Shares       Amount       Shares       Amount
        ---------------------------------------------------------------------
        Preferred Shares
         - Series 3
          Outstanding at
           beginning of
           period           8,390,000  $   209,750            -  $         -
          Issued during
           the period               -            -    8,390,000      209,750
        ---------------------------------------------------------------------
          Outstanding at
           end of period(1) 8,390,000      209,750    8,390,000      209,750
        ---------------------------------------------------------------------
        Common Shares
          Outstanding at
           beginning of
           period          63,903,460      226,480   63,457,142      221,914
          Issued on
           acquisition
           (Note 16)        2,065,088       42,582            -            -
          Issued under
           dividend
           reinvestment
           plan(2)             69,922        1,563            -            -
          Issued on
           exercise or
           exchange of
           options            262,801        2,289      131,378          393
          Issued on
           exercise of
           warrants             7,868          110            -            -
          Transferred from
           contributed
           surplus on
           exercise or
           exchange of
           options                  -        1,199            -          755
        ---------------------------------------------------------------------
          Outstanding at
           end of period   66,309,139      274,223   63,588,520      223,062
        ---------------------------------------------------------------------
        Share Capital                  $   483,973               $   432,812
        ---------------------------------------------------------------------

        (1) Holders of the Preferred Shares - Series 3 are entitled to
            receive non-cumulative quarterly fixed dividends for the initial
            five-year period ending April 30, 2014 of 7.25% per annum,
            payable quarterly, as and when declared. For further information
            on dividend rates after April 30, 2014, refer to Note 18 of the
            audited consolidated financial statements for the year ended
            October 31, 2009 (see page 85 of the 2009 Annual Report).
        (2) During the quarter, shares were issued at a 2% discount from the
            average closing price of the five trading days preceding the
            dividend payment date.


        Warrants to Purchase Common Shares
                                                    For the six months ended
                                                    -------------------------
                                                       April 30     April 30
        Number of Warrants                                 2010         2009
        ---------------------------------------------------------------------
          Outstanding at beginning of period         14,964,356            -
          Issued                                              -   14,964,980
          Purchased and cancelled                       (72,928)           -
          Exercised                                      (7,868)           -
        ---------------------------------------------------------------------
          Outstanding at end of period               14,883,560   14,964,980
        ---------------------------------------------------------------------

        On January 18, 2010, the Bank received approval from the Toronto
        Stock Exchange to institute a Normal Course Issuer Bid (NCIB) to
        purchase and cancel up to 748,058 of its warrants. The NCIB commenced
        January 20, 2010 and will expire January 19, 2011. For the three and
        six months ended April 30, 2010 the Bank purchased and cancelled
        68,428 and 72,928 warrants at an aggregate cost of $665 and $698,
        respectively, which was charged to retained earnings.

    10. Stock-Based Compensation

        Stock Options

                                       For the three months ended
                          ---------------------------------------------------
                                April 30, 2010            April 30, 2009
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
          Balance at
           beginning of
           period           4,667,731  $     18.98    6,173,917  $     19.41
          Granted                   -            -       16,500         8.58
          Exercised or
           exchanged         (397,800)       15.38     (445,000)       10.06
          Forfeited           (26,310)       20.21   (1,301,162)       27.12
        ---------------------------------------------------------------------
        Balance at end
         of period          4,243,621  $     19.31    4,444,255  $     18.05
        ---------------------------------------------------------------------


                                         For the six months ended
                          ---------------------------------------------------
                                April 30, 2010            April 30, 2009
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options        Price      Options        Price
        ---------------------------------------------------------------------
        Options
          Balance at
           beginning of
           period           4,394,605  $     18.65    5,204,882  $     20.83
          Granted             358,291        22.09    1,006,535        11.71
          Exercised or
           exchanged         (453,300)       15.19     (466,000)       10.06
          Forfeited           (55,975)       18.98   (1,301,162)       27.12
        ---------------------------------------------------------------------
        Balance at end
         of period          4,243,621  $     19.31    4,444,255  $     18.05
        ---------------------------------------------------------------------

        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 453,300
        options (2009 - 466,000) exercised or exchanged in the six months
        ended April 30, 2010, option holders exchanged the rights to 304,300
        options (2009 - 432,000) and received 113,801 shares (2009 - 97,378)
        in return under the cashless settlement alternative.

        For the six months ended April 30, 2010, salary expense of $2,463
        (2009 - $4,581) was recognized relating to the estimated fair value
        of options. 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 2.6% (2009 - 2.1%), (ii)
        expected option life of 4.0 years (2009 - 4.0 years), (iii) expected
        volatility of 44% (2009 - 35%), and (iv) expected dividends of 2.0%
        (2009 - 4.0%). The weighted average fair value of options granted was
        estimated at $7.16 (2009 - $1.91) per share.

        Further details relating to stock options outstanding and exercisable
        at April 30, 2010 follow:

                            Options Outstanding          Options Exercisable
                       ------------------------------------------------------
                                   Weighted
                                    Average
                                  Remaining
                                   Contrac-   Weighted              Weighted
                                       tual    Average               Average
    Range of Exercise  Number of       Life   Exercise  Number of   Exercise
     Prices              Options     (years)     Price    Options      Price
    -------------------------------------------------------------------------
    $ 8.58 to $13.78   1,002,135        3.5  $   11.79     40,400  $   13.78
    $16.38 to $17.58     950,900        2.1      16.67    510,700      16.48
    $19.16 to $21.46   1,045,490        1.7      21.45    735,700      21.45
    $22.09 to $26.38   1,026,316        3.1      24.40    294,200      24.95
    $28.11 to $31.18     218,780        2.6      31.13          -          -
    -------------------------------------------------------------------------
    Total              4,243,621        2.6  $   19.31  1,581,000  $   20.30
    -------------------------------------------------------------------------

        Restricted Share Units

        Under the Restricted Share Unit (RSU) plan, certain employees are
        eligible to receive an award in the form of RSUs. Each RSU entitles
        the holder to receive the cash equivalent of the market value of the
        Bank's common shares at the vesting date and an amount equivalent to
        the dividends paid on the common shares during the vesting period.
        RSUs vest on each anniversary of the grant in equal one-third
        installments over a vesting period of three years. Salary expense is
        recognized evenly over the vesting period, except where the employee
        is eligible to retire prior to the vesting date, in which case the
        expense is recognized between the grant date and the date the
        employee is eligible to retire.

        For the six months ended April 30, 2010, salary expense of $1,670 was
        recognized related to RSUs (2009 - nil). As at April 30, 2010, the
        liability for the RSUs held under this plan was $5,655 (2009 - nil).
        At the end of each period, the liability and salary expense are
        adjusted to reflect changes in the market value of the Bank's common
        shares. As at April 30, 2010, 292,448 RSUs were outstanding (2009 -
        nil).

        Deferred Share Units

        During the quarter, the Bank adopted a plan to grant Deferred Share
        Units (DSUs) by linking a portion of annual director compensation to
        the future value of the Bank's common shares. Under this plan,
        directors will receive at least 50% of their annual retainer in DSUs.
        The DSUs are not redeemable by the director until termination or
        retirement and must be redeemed for cash. Common share dividend
        equivalents accrue to the directors in the form of additional units.
        As at April 30, 2010, 23,838 DSUs were outstanding (2009 - nil)

        The expense related to the DSUs is recorded in the period the award
        is earned by the director. For the three and six months ended April
        30, 2010, non-interest expense "other expenses" included $40 related
        to DSUs (2009 - nil). As at April 30, 2010, the liability for DSUs
        was $572 (2009 - nil). At the end of each period, the liability and
        expense are adjusted to reflect changes in the market value of the
        Bank's common shares.

    11. Contingent Liabilities and Commitments

        Significant contingent liabilities and commitments, including
        guarantees provided to third parties, are discussed in Note 20 of the
        Bank's audited consolidated financial statements for the year ended
        October 31, 2009 (see page 88 of the 2009 Annual Report) and include:

                                             As at        As at        As at
                                          April 30   January 31   October 31
                                              2010         2010         2009
        ---------------------------------------------------------------------
        Guarantees and standby
         letters of credit
          Balance outstanding          $   214,144  $   187,786  $   196,380
        Business credit cards
          Total approved limit              12,660       11,025       10,496
          Balance outstanding                2,772        2,794        2,566
        ---------------------------------------------------------------------

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

    12. 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 sold under repurchase 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 2009 consolidated annual financial
        statements.

        The value of financial assets recorded on the consolidated balance
        sheets at April 30, 2010 at fair value (cash, securities, securities
        purchased under resale agreements and derivatives) was determined
        using published market prices quoted in active markets for 81% (2009
        - 95%) of the portfolio and estimated using a valuation technique
        based on observable market data for 19% (2009 - 5%) of the portfolio.
        The value of liabilities recorded on the consolidated balance sheet
        at fair value (derivatives and securities sold under repurchase
        agreements) was determined using a valuation technique based on
        observable market data. There were no financial instruments that were
        measured using unobservable market data.

        The table below sets out the fair values of financial instruments
        (including certain derivatives) using the valuation methods and
        assumptions outlined in the 2009 consolidated annual financial
        statements. The table does not include assets and liabilities that
        are not considered financial instruments.

                                                    April 30, 2010
                                      ---------------------------------------
                                                                  Fair Value
                                                                 Over (Under)
                                        Book Value   Fair Value   Book Value
        ---------------------------------------------------------------------
        Assets
          Cash resources               $   204,681  $   204,681  $         -
          Securities                     1,374,345    1,374,345            -
          Securities purchased under
           resale agreements               247,682      247,682            -
          Loans(1)                       9,912,915    9,899,359      (13,556)
          Other assets(2)                  116,859      116,859            -
          Derivative related                   231          231            -
        Liabilities
          Deposits(1)                   10,197,758   10,222,742       24,984
          Other liabilities(3)             292,948      292,948            -
          Securities sold under
           repurchase agreements                 -            -            -
          Subordinated debentures          315,000      314,197         (803)
          Derivative related                   745          745            -
        ---------------------------------------------------------------------


                                               October 31, 2009
                                      ---------------------------------------
                                                                  Fair Value
                                                                 Over (Under)
                                        Book Value   Fair Value   Book Value
        ---------------------------------------------------------------------
        Assets
          Cash resources               $   297,104  $   297,104  $         -
          Securities                     1,891,409    1,891,409            -
          Securities purchased under
           resale agreements                     -            -            -
          Loans(1)                       9,320,749    9,368,074       47,325
          Other assets(2)                   97,179       97,179            -
          Derivative related                 2,334        2,334            -
        Liabilities
          Deposits(1)                    9,628,949    9,739,360      110,411
          Other liabilities(3)             265,295      265,295            -
          Securities sold under
           repurchase agreements           300,242      300,242            -
          Subordinated debentures          375,000      377,363        2,363
          Derivative related                    74           74            -
        ---------------------------------------------------------------------

        (1) Loans and deposits exclude deferred premiums and deferred
            revenue, which are not financial instruments.
        (2) Other assets exclude land, buildings and equipment, goodwill and
            other intangible assets, reinsurers' share of unpaid claims and
            adjustment expenses, future income tax asset, prepaid and
            deferred expenses, financing costs and other items that are not
            financial instruments.
        (3) Other liabilities exclude future income tax liability, deferred
            revenue, unearned insurance premiums and other items that are not
            financial instruments.
        (4) For further information on interest rates associated with
            financial assets and liabilities, including derivative
            instruments, refer to Note 13.

    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 28 of the audited consolidated
        financial statements for the year ended October 31, 2009 (see page 93
        of the 2009 Annual Report). The following table shows the gap
        position for selected time intervals.

        Asset Liability Gap Positions

                             Floating
                             Rate and                                  Total
                             Within 1       1 to 3     3 Months     Within 1
        ($ millions)            Month       Months    to 1 Year         Year
        ---------------------------------------------------------------------
        April 30, 2010
        Assets
        Cash resources
         and securities   $       111  $        69  $       366  $       546
        Loans                   4,944          584        1,043        6,571
        Other assets                -            -            -            -
        Derivative financial
         instruments(1)             -           80            -           80
        ---------------------------------------------------------------------
        Total                   5,055          733        1,409        7,197
        ---------------------------------------------------------------------
        Liabilities
         and Equity
        Deposits                4,090          631        2,267        6,988
        Other liabilities           3            6           25           34
        Debentures                  -            -           70           70
        Shareholders'
         equity                     -            -            -            -
        Derivative financial
         instruments(1)             -           80            -           80
        ---------------------------------------------------------------------
        Total             $     4,093  $       717  $     2,362  $     7,172
        ---------------------------------------------------------------------
        Interest Rate
         Sensitive Gap    $       962  $        16  $      (953) $        25
        ---------------------------------------------------------------------
        Cumulative Gap    $       962  $       978  $        25  $        25
        ---------------------------------------------------------------------
        Cumulative Gap as
         a percentage of
         total assets            7.9%         8.0%         0.2%         0.2%
        ---------------------------------------------------------------------

        January 31, 2010
        Cumulative gap    $       693  $       591  $       265  $       265
        ---------------------------------------------------------------------
        Cumulative gap as
         a Percentage of
         total assets            5.9%         5.0%         2.2%         2.2%
        ---------------------------------------------------------------------

        October 31, 2009
        Cumulative gap    $       486  $       275  $       208  $       208
        ---------------------------------------------------------------------
        Cumulative gap as
         a percentage of
         total assets            4.1%         2.3%         1.8%         1.8%
        ---------------------------------------------------------------------


                                                           Non-
                            1 year to    More than     interest
        ($ millions)          5 years      5 years    Sensitive        Total
        ---------------------------------------------------------------------
        April 30, 2010
        Assets
        Cash resources
         and securities   $       921  $       107  $         5  $     1,579
        Loans                   3,486           96          (39)      10,114
        Other assets                -            -          311          311
        Derivative financial
         instruments(1)            55            -            -          135
        ---------------------------------------------------------------------
        Total                   4,462          203          277       12,139
        ---------------------------------------------------------------------
        Liabilities
         and Equity
        Deposits                3,124          105          (32)      10,185
        Other liabilities          34            8          351          427
        Debentures                170           75            -          315
        Shareholders'
         equity                     -            -        1,077        1,077
        Derivative financial
         instruments(1)            55            -            -          135
        ---------------------------------------------------------------------
        Total             $     3,383  $       188  $     1,396  $    12,139
        ---------------------------------------------------------------------
        Interest Rate
         Sensitive Gap    $     1,079  $        15  $    (1,119) $         -
        ---------------------------------------------------------------------
        Cumulative Gap    $     1,104  $     1,119  $         -  $         -
        ---------------------------------------------------------------------
        Cumulative Gap as
         a percentage of
         total assets            9.0%         9.1%           -%           -%
        ---------------------------------------------------------------------

        January 31, 2010
        Cumulative gap    $     1,048  $     1,052  $         -  $         -
        ---------------------------------------------------------------------
        Cumulative gap as
         a Percentage of
         total assets            8.9%         8.9%           -%           -%
        ---------------------------------------------------------------------

        October 31, 2009
        Cumulative gap    $     1,052  $     1,073  $         -  $         -
        ---------------------------------------------------------------------
        Cumulative gap as
         a percentage of
         total assets            8.9%         9.0%           -%           -%
        ---------------------------------------------------------------------

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

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

                             Floating
                             Rate and                                  Total
                             Within 1       1 to 3     3 Months     Within 1
        April 30, 2010          Month       Months    to 1 Year         Year
        ---------------------------------------------------------------------
        Total assets             3.5%         2.8%         4.6%         3.6%
        Total liabilities         0.6          1.7          2.9          1.4
        ---------------------------------------------------------------------
        Interest rate
         sensitive gap           2.9%         1.1%         1.7%         2.2%
        ---------------------------------------------------------------------

        January 31, 2010
        ---------------------------------------------------------------------
        Total assets             3.8%         2.8%         3.9%         3.7%
        Total liabilities         0.7          1.9          2.9          1.4
        ---------------------------------------------------------------------
        Interest rate
         sensitive gap           3.1%         0.9%         1.0%         2.3%
        ---------------------------------------------------------------------

        October 31, 2009
        ---------------------------------------------------------------------
        Total assets             3.8%         2.6%         4.5%         3.8%
        Total liabilities         0.7          2.4          3.1          1.4
        ---------------------------------------------------------------------
        Interest rate
         sensitive gap           3.1%         0.2%         1.4%         2.4%
        ---------------------------------------------------------------------


                            1 Year to    More than
        April 30, 2010        5 Years      5 Years        Total
        --------------------------------------------------------
        Total assets             5.5%         4.3%         4.3%
        Total liabilities         3.2          5.8          2.0
        --------------------------------------------------------
        Interest rate
         sensitive gap           2.3%       (1.5)%         2.3%
        --------------------------------------------------------

        January 31, 2010
        --------------------------------------------------------
        Total assets             5.0%         5.0%         4.2%
        Total liabilities         3.4          5.7          2.2
        --------------------------------------------------------
        Interest rate
         sensitive gap           1.6%       (0.7)%         2.0%
        --------------------------------------------------------

        October 31, 2009
        --------------------------------------------------------
        Total assets             4.9%         5.8%         4.3%
        Total liabilities         3.6          5.8          2.3
        --------------------------------------------------------
        Interest rate
         sensitive gap           1.3%           -%         2.0%
        --------------------------------------------------------

        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 0.4% or $1,132 (October 31, 2009
        - 2.5 % or $6,574 decrease to net interest income) and decrease other
        comprehensive income $12,066 (October 31, 2009 - $21,355) net of tax,
        respectively over the following twelve months. A one-percentage point
        decrease in all interest rates would increase net interest income by
        approximately 1.9% or $5,364 (October 31, 2009 - 3.8% or $10,241) and
        increase other comprehensive income $12,066 (October 31, 2009 -
        $21,355) net of tax.

    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 based within Western Canada. The banking and
        trust segment provides comprehensive banking services, including
        equipment loans and leases from National Leasing, as well as trust
        and wealth management services for individuals, businesses and
        institutional clients. The insurance segment provides home and auto
        insurance to individuals in British Columbia and Alberta.


                                                 Banking and Trust
                                       --------------------------------------
                                                 Three months ended
                                       --------------------------------------
                                          April 30   January 31     April 30
                                              2010         2010         2009
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $    78,436  $    72,619  $    51,399
        Less teb adjustment                  2,448        2,379        1,528
        ---------------------------------------------------------------------
        Net interest income per
         financial statements               75,988       70,240       49,871
        Other income(2)                     24,951       20,616       18,125
        ---------------------------------------------------------------------
        Total revenues                     100,939       90,856       67,996
        Provision for credit losses          5,487        3,713        3,369
        Non-interest expenses               47,129       37,627       37,381
        Provision for income taxes          13,797       12,750        7,785
        Non-controlling interest
         in subsidiary                          41           76           56
        ---------------------------------------------------------------------
        Net income                     $    34,485  $    36,690  $    19,405
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $    11,688  $    11,317  $    11,024
        ---------------------------------------------------------------------


                                                      Insurance
                                       --------------------------------------
                                                 Three months ended
                                       --------------------------------------
                                          April 30   January 31     April 30
                                              2010         2010         2009
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $     1,696  $     1,687  $     1,413
        Less teb adjustment                    214          184          147
        ---------------------------------------------------------------------
        Net interest income per
         financial statements                1,482        1,503        1,266
        Other income(2)                      5,889        5,750        4,445
        ---------------------------------------------------------------------
        Total revenues                       7,371        7,253        5,711
        Provision for credit losses              -            -            -
        Non-interest expenses                2,831        2,621        2,613
        Provision for income taxes           1,141        1,287          923
        Non-controlling interest
         in subsidiary                           -            -            -
        ---------------------------------------------------------------------
        Net income                     $     3,399  $     3,345  $     2,175
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $       210  $       214  $       192
        ---------------------------------------------------------------------


                                                        Total
                                       --------------------------------------
                                                 Three months ended
                                       --------------------------------------
                                          April 30   January 31     April 30
                                              2010         2010         2009
        ---------------------------------------------------------------------
        Net interest income (teb)(1)   $    80,132  $    74,306  $    52,812
        Less teb adjustment                  2,662        2,563        1,675
        ---------------------------------------------------------------------
        Net interest income per
         financial statements               77,470       71,743       51,137
        Other income                        30,840       26,366       22,570
        ---------------------------------------------------------------------
        Total revenues                     108,310       98,109       73,707
        Provision for credit losses          5,487        3,713        3,369
        Non-interest expenses               49,960       40,248       39,994
        Provision for income taxes          14,938       14,037        8,708
        Non-controlling interest
         in subsidiary                          41           76           56
        ---------------------------------------------------------------------
        Net income                     $    37,884  $    40,035  $    21,580
        ---------------------------------------------------------------------
        Total average assets
         ($ millions)(3)               $    11,898  $    11,531  $    11,216
        ---------------------------------------------------------------------


                                    Banking and Trust          Insurance
                                 --------------------------------------------
                                     Six months ended      Six months ended
    -------------------------------------------------------------------------
                                   April 30   April 30   April 30   April 30
                                       2010       2009       2010       2009
    -------------------------------------------------------------------------
    Net interest income (teb)(1)  $ 151,055  $ 104,500  $   3,383  $   2,908
    Less teb adjustment               4,827      2,966        398        295
    -------------------------------------------------------------------------
    Net interest income per
     financial statements           146,228    101,534      2,985      2,613
    Other income                     45,567     38,343     11,639      6,578
    -------------------------------------------------------------------------
    Total revenues                  191,795    139,877     14,624      9,191
    Provision for credit losses       9,200      6,738          -          -
    Non-interest expenses            84,756     71,291      5,452      5,108
    Provision for income taxes       26,547     17,498      2,428      1,111
    Non-controlling interest
     in subsidiary                      117        123          -          -
    -------------------------------------------------------------------------
    Net income                    $  71,175  $  44,227  $   6,744  $   2,972
    -------------------------------------------------------------------------
    Total average assets
     ($ millions)(3)              $  11,502  $  10,867  $     212  $     190
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                         Total
                                 ----------------------
                                    Six months ended
    ---------------------------------------------------
                                   April 30   April 30
                                       2010       2009
    ---------------------------------------------------
    Net interest income (teb)(1)  $ 154,438  $ 107,408
    Less teb adjustment               5,225      3,261
    ---------------------------------------------------
    Net interest income per
     financial statements           149,213    104,147
    Other income                     57,206     44,921
    ---------------------------------------------------
    Total revenues                  206,419    149,068
    Provision for credit losses       9,200      6,738
    Non-interest expenses            90,208     76,399
    Provision for income taxes       28,975     18,609
    Non-controlling interest
     in subsidiary                      117        123
    ---------------------------------------------------
    Net income                    $  77,919     47,199
    ---------------------------------------------------
    Total average assets
     ($ millions)(3)              $  11,714  $  11,057
    ---------------------------------------------------
    ---------------------------------------------------

    (1) Taxable Equivalent Basis (teb) - Most financial institutions analyze
        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

        Capital for Canadian financial institutions is managed and reported
        in accordance with a capital management framework specified by OSFI
        commonly called Basel II.

        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 Note 31 to the 2009 audited financial statements beginning on page
        97 of the 2009 Annual Report.

        Capital Structure and Regulatory Ratios

                                             As at        As at        As at
                                          April 30   January 31   October 31
                                              2010         2010         2009
        ---------------------------------------------------------------------
        Capital
          Tier 1                       $ 1,128,608  $ 1,094,841  $ 1,063,287
          Total                          1,434,081    1,420,842    1,449,790
        ---------------------------------------------------------------------
        Capital ratios
          Tier 1                             11.4%        11.6%        11.3%
          Total                               14.5         15.1         15.4
        Assets to capital multiple           8.4 x        8.2 x        8.1 x
        ---------------------------------------------------------------------

        During the three and six months ended April 30, 2010, the Bank
        complied with all internal and external capital requirements.

    16. Business Acquisition

        On February 1, 2010, the Bank acquired 100% of the outstanding common
        shares of National Leasing in exchange for $52,826 in cash, 2,065,088
        common shares of the Bank ($42,582) and contingent consideration for
        a total acquisition cost of $126,512. Both the Bank and the vendors
        have the option to trigger the payment of the contingent
        consideration no earlier than November 1, 2012. A portion of the
        contingent consideration is not yet determinable and will be
        recognized as an adjustment to goodwill in the period in which the
        contingency is resolved.

        National Leasing is a commercial equipment leasing company for small
        to mid-size transactions. National Leasing is headquartered in
        Winnipeg, Manitoba, and has over 58,000 lease agreements with a
        collective book value of approximately $658,000, including
        securitized leases which comprise approximately one half of the
        portfolio.

        Details of the fair values of assets and liabilities acquired are as
        follows:

        Assets and Liabilities Acquired at Fair Values
        ------------------------------------------------------
        Loans                                     $   341,621
        Intangible assets                              40,708
        Goodwill                                       27,831
        Long-term debt                               (270,630)
        Future income tax liabilities                 (10,611)
        Other items, net                               (2,407)
        ------------------------------------------------------
        Net assets acquired                       $   126,512
        ------------------------------------------------------

        Intangible assets include customer relationships, computer software,
        non-competition agreements, lease administration contracts and
        trademarks. The trademark, which has an estimated value of $1,610, is
        not subject to amortization. National Leasing's financial results,
        the goodwill and other intangible assets related to the acquisition
        are included in the banking and trust segment. The total amount of
        goodwill and intangible assets are not deductible for income tax
        purposes. The long-term debt was repaid immediately after the
        acquisition.

    17. Assets Under Administration and Management

        Assets under administration of $8,223,274 (October 31, 2009 -
        $5,467,447) and assets under management of $779,721 (October 31, 2009
        - $878,095) represent the fair value of trust assets held for
        personal, corporate and institutional clients and leases under
        administration. The assets are kept separate from the Bank's own
        assets. Assets under administration and management are not reflected
        in the consolidated balance sheets and relate to the banking and
        trust segment.

    18. 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
        and will include comparative information for the prior year.

        During 2008, the Bank commenced a four stage project to identify and
        evaluate the impact of the transition to IFRS on the consolidated
        financial statements and develop a plan to complete the transition.
        The project plan includes the following phases - diagnostic, design
        and planning, solution development, and implementation. The
        diagnostic and the design and planning phases are complete, and the
        solution development phase is expected to be completed by the end of
        fiscal 2010.

        The impact of the transition to IFRS on the Bank's consolidated
        financial statements for current standards is not yet determinable.
        CWB continues to monitor the International Accounting Standards
        Board's proposed changes to standards during Canada's transition to
        IFRS. These proposed changes may have a significant impact on the
        Bank's implementation plan and future financial statements.

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

    Head Office                       Transfer Agent and Registrar

    Canadian Western Bank & Trust     Valiant Trust Company
    Suite 3000, 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

    Subsidiary Offices                Eligible Dividends Designation

    Canadian Western Trust Company    CWB designates all dividends for both
    Suite 600, 750 Cambie Street      common and preferred shares paid to
    Vancouver, BC V6B 0A2             Canadian residents as "eligible
    Toll-free: 1-800-663-1124         dividends", as defined in the Income
    Fax: (604) 669-6069               Tax Act (Canada), unless otherwise
    Website: www.cwt.ca               noted.

    Canadian Direct Insurance         Dividend Reinvestment Plan
     Incorporated
    Suite 600, 750 Cambie Street      CWB's dividend reinvestment plan allows
    Vancouver, BC V6B 0A2             common and preferred shareholders to
    Telephone: (604) 699-3678         purchase additional common shares by
    Fax: (604) 699-3851               reinvesting their cash dividend without
    Website: www.canadiandirect.com   incurring brokerage and commission
                                      fees. For information about
    Valiant Trust Company             participation in the plan, please
    Suite 310, 606 - 4th Street S.W.  contact the Transfer Agent and
    Calgary, AB T2P 1T1               Registrar or visit www.cwbankgroup.com.
    Toll-free: 1-866-313-1872
    Fax: (403) 233-2857               Investor Relations
    Website: www.valianttrust.com
                                      For further financial information
    Adroit Investment Management Ltd.  contact:
    Suite 1250, Canadian Western      Kirby Hill, CFA
     Bank Place                       Director, Investor & Public Relations
    10303 Jasper Avenue               Canadian Western Bank
    Edmonton, AB T5J 3N6              Telephone: (780) 441-3770
    Telephone: (780) 429-3500         Toll-free: 1-800-836-1886
    Fax: (780) 429-9680               Fax: (780) 969-8326
    Website:                          E-mail: InvestorRelations@cwbank.com
     www.adroitinvestments.ca
                                      Online Investor Information
    National Leasing Group Inc.
    1525 Buffalo Place                Additional investor information
    Winnipeg, MB R3T 1L9              including supplemental financial
    Toll-free: 1-800-665-1326         information and corporate presentations
    Toll-free fax: 1-866-408-0729     are available on CWB's website at
    Website:                          www.cwbankgroup.com.
     www.nationalleasing.com
                                      Quarterly Conference Call and Webcast
    Stock Exchange Listings
                                      CWB's quarterly conference call and
    The Toronto Stock Exchange        live audio webcast will take place on
     Common Shares: CWB               June 3, 2010 at 3:00 p.m. ET.
     Series 3 Preferred               The webcast will be archived on the
      Shares: CWB.PR.A                Bank's website at www.cwbankgroup.com
     Common Share Purchase            for sixty days. A replay of the
      Warrants: CWB.WT                conference call will be available until
                                      June 17, 2010 by dialing (416) 849-0833
                                      or toll-free (800) 642-1687 and
                                      entering passcode 71761482.
    

SOURCE Canadian Western Bank

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

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Canadian Western Bank

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