Laurentian Bank of Canada reports strong net income of $23.2 million for the third quarter of 2007



    MONTREAL, Sept. 6 /CNW Telbec/ - Laurentian Bank of Canada reported net
income of $23.2 million or $0.85 diluted per common share for the third
quarter ended July 31, 2007, compared to $6.2 million or $0.13 diluted per
common share for the same period in 2006. Return on common shareholders'
equity was 10.5% for the quarter, compared to 1.7% for the same period in
2006. For the nine-month period ended July 31, 2007, net income totalled
$64.4 million or $2.34 diluted per common share, compared to net income of
$47.8 million or $1.64 diluted per common share in 2006. Return on common
shareholders' equity was 9.9% for the nine-month period, compared to 7.3% for
the same period in 2006.
    Results for the third quarter of 2006 included an unfavorable tax
adjustment of $11.0 million ($0.47 diluted per common share). Excluding this
tax adjustment, net income for the third quarter of 2006 would have stood at
$17.2 million or $0.60 diluted per common share. Compared to the third quarter
of 2006 and considering this adjustment, net income for the third quarter of
2007 improved by $6.0 million or 35% and diluted net income per common share
rose by $0.25 or 42%. It should be noted that the unusual tax item mentioned
above has no significant effect on the results for the nine-month period ended
July 31, 2006, as it was offset by a favorable $10.7 million net tax
adjustment recorded during the second quarter of 2006.
    Réjean Robitaille, President and Chief Executive Officer, commented on
the results of operations: "The Bank's performance for the third quarter was
very solid. After nine months, all lines of business contributed to our growth
and results exceeded our objectives. The strong retail loan growth, especially
over the last quarter, and steady improvement in net income are good
indications of our ability to develop our business. Encouraged by these
successes, we remain dedicated to our three priorities: increasing our
profitability, improving our efficiency and developing our human capital."
    Mr. Robitaille added, "The recent turmoil related to the liquidity crisis
has certainly retained our attention over the last month. However, as
mentioned in the press release we issued on August 21, the Bank has a very
limited exposure to conduits issuing asset-backed commercial paper."

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    This Management's Discussion and Analysis (MD&A) is a narrative
explanation, through the eyes of management, of the Bank's financial condition
as at July 31, 2007, and of how it performed during the three-month and
nine-month periods then ended. This MD&A should be read in conjunction with
the unaudited interim consolidated financial statements for the third quarter
of 2007. This MD&A is dated September 6, 2007.
    Complementary information on subjects such as risk management, accounting
policies and off-balance sheet arrangements is also provided in the Bank's
2006 Annual Report.

    Performance and financial objectives

    Laurentian Bank publishes its financial objectives at the beginning of
each financial year and then reports actual results quarterly. The Bank's
practice is not to provide interim guidance. The following table presents,
strictly for information purposes, a comparison of the actual performance with
the objectives set by management for 2007.

    
    Performance for 2007
    -------------------------------------------------------------------------
                                                         Nine-month period
                                                        ended July 31, 2007
                                 2007 Objectives                Actual
    -------------------------------------------------------------------------
    Return on common
     shareholders' equity            8% to 9%                    9.9%
    Diluted net income
    per share                 $2.55 to $2.85 (annual)           $2.34
    Total revenue          $550 to $560 million (annual)   $438.3 million
    Efficiency ratio               75% to 73.5%                 73.4%
    Tier 1 Capital ratio         Minimum of 9.5%                 9.7%
    Credit quality
    (loan losses as a % of
     average assets)              0.24% to 0.21%                0.24%
    -------------------------------------------------------------------------


    Highlights

    This section presents the highlights of the third quarter ended July 31,
2007, and provides details on significant items affecting results, when
compared to the third quarter of 2006.

    - Total revenue stood at $151.0 million in the third quarter of 2007,
      compared to $138.0 million in the third quarter of 2006. The increase
      results mainly from growth in net interest income of $10.3 million
      stemming from increases of more than $1.2 billion in loans and
      $350 million in deposits.
    - Non-interest expenses increased to $108.4 million in the third quarter
      of 2007 from $103.2 million in the third quarter of 2006, essentially
      in salaries and employee benefits.
    - The provision for credit losses was $10.0 million in the third quarter
      of 2007, the same level as a year ago.
    - Income taxes stood at $9.5 million in the third quarter of 2007,
      compared to $18.6 million in the third quarter of 2006. Income taxes
      for 2006 included an $11.0 million ($0.47 diluted per common share)
      charge resulting from the federal budget adopted in June 2006.

    Analysis of consolidated results

    Summary results

    Net income was $23.2 million or $0.85 diluted per common share for the
third quarter ended July 31, 2007, compared to $6.2 million or $0.13 diluted
per common share for the same period in 2006. Results for the third quarter of
2006 included an unfavorable tax adjustment of $11.0 million ($0.47 diluted
per common share). Excluding this tax adjustment, net income for 2006 would
have stood at $17.2 million or $0.60 diluted per common share. On this basis,
net income improved by $6.0 million or 35% and diluted net income per common
share rose by $0.25 or 42%.
    For the nine-month period ended July 31, 2007, net income totalled
$64.4 million or $2.34 diluted per common share, compared to net income of
$47.8 million or $1.64 diluted per common share in 2006. It should be noted
that the unusual tax item mentioned above has no significant effect on the
results for the nine-month period ended July 31, 2006, as it was offset by the
favorable $10.7 million tax adjustment recorded during the second quarter of
2006.
    Total revenue increased by $13.0 million or 9% to $151.0 million in the
third quarter of 2007, compared to $138.0 million in the third quarter of
2006. The variation mainly results from the $10.3 million increase in net
interest income stemming from the strong loan and deposit growth, as well as
from the higher interest margin. Net interest margin increased from 2.16% in
the third quarter of 2006 to 2.39% in the third quarter of 2007.
    The $2.7 million increase in other income reflects continued improvement
in most activities, including treasury and financial markets, services related
to loans and deposits, mutual fund sales and brokerage operations. These were
partially offset by lower securitization revenues, which are largely dependent
on market conditions at the time loans are sold, and credit insurance income,
as reported life insurance claims were higher for the quarter.
    Compared to the second quarter of 2007, net interest income increased by
$6.3 million. This quarter-over-quarter improvement is mainly due to the three
additional days of the quarter and from growth in loan and deposit volumes.
For its part, other income decreased by $0.9 million over the same period,
mainly as a result of lower securitization revenues and credit insurance
income, and despite the $1.6 million improvement in fees and commission on
loans and deposits resulting from the higher transaction volumes. Also, the
strong contribution from treasury and financial markets operations, at
$6.5 million for the third quarter of 2007, compared to $4.3 million for the
second quarter of 2007, was offset by the lower revenues from brokerage
operations, which historically have been lower during the third quarter.
    For the nine-month period ended July 31, 2007, total revenue was
$438.3 million, a $35.6 million or 9% increase compared to the same period for
2006. Net interest income improved by $27.3 million as a result of increases
of $1.2 billion in loans and $350 million in deposits, and the improvement in
net interest margin. Other income also improved by $8.2 million, mainly as a
result of the increase in fees and commission on loans and deposits and of the
increase in income from sales of mutual funds derived from the expansion of
the Bank's retail activities. Revenues from brokerage operations and income
from treasury and financial markets operations also improved.
    The significant volatility associated with the recent liquidity and credit
crisis has only had a limited effect on the Bank's operations during the third
quarter of 2007. The Bank is not a direct participant in the sub-prime
mortgage loan market and only had very limited participations in such related
securities. The recent events demonstrate the soundness of the Bank's
long-term strategy to focus on the lower-risk retail and small- and
medium-business markets.
    The provision for credit losses was stable at $10.0 million or 0.23% of
average assets in the third quarter of 2007 when compared to the third quarter
of 2006, even though loan volumes have increased by more than 10% over the
last twelve months. Lower losses on point-of-sales financing and B2B Trust
loan portfolios have offset higher losses on the commercial loan portfolio.
Nonetheless, the commercial loan portfolio has performed satisfactorily during
the quarter. Net impaired loans improved to -$7.6 million (representing -0.05%
of total loans, bankers' acceptances and assets purchased under reverse
repurchase agreements), while they stood at $5.4 million (0.04%) as at
October 31, 2006. Gross impaired loans stood at $109.3 million as at July 31,
2007, while they stood at $130.6 million as at October 31, 2006. Overall
credit quality remained good and continued to benefit from the favorable
economic conditions during the third quarter.
    Non-interest expenses increased by 5% to $108.4 million in the third
quarter of 2007, up from $103.2 million in the third quarter of 2006. At
$58.6 million for the third quarter of 2007, salaries and employee benefits
increased by $5.2 million, compared to the same quarter a year ago. The
increase in salary charges is mainly due to higher bonus provisions and
stock-based compensation, as well as the increase in the number of employees
to support growth, particularly in the Retail Financial Services and
Laurentian Bank Securities business segments. During the quarter, the Bank has
hedged a significant portion of its stock-based compensation programs to limit
its exposure to variations in the Bank share price. Other expenses for the
third quarter of 2007 remained relatively unchanged compared to the same
quarter of 2006.
    The Bank continued to limit the increase of its expenses. Moreover,
specific efforts were made to devote additional resources to the lines of
business in order to increase revenues. This has contributed to the
improvement in efficiency, which has improved by 300 basis points from 74.8%
for the third quarter of 2006 to 71.8% for the third quarter of 2007.
    For the nine-month period ended July 31, 2007, non-interest expenses
increased by $15.7 million, mainly as a result of higher salaries and employee
benefits, including performance-based compensation, as other costs remained
relatively stable.
    The income tax expense was $9.5 million (29.1% effective tax rate) for the
third quarter of 2007. The lower tax rate, compared to the statutory rate of
approximately 33%, resulted from lower taxes on dividend income generated by
the Canadian equity portfolio and on revenues from credit insurance
operations.
    For the third quarter of 2006, the income tax expense was $18.6 million
(75.2% effective tax rate) and included an income tax charge of $11.0 million
resulting from the adoption of the 2006 federal budget during that quarter.
Excluding this unusual charge, the income tax expense would have stood at
$7.6 million (30.8% effective tax rate). This lower tax rate in 2006, compared
to the statutory rate, mainly resulted from lower taxes on dividend income and
certain capital gains realized during the quarter.
    For the nine-month period ended July 31, 2007, the income tax expense was
$22.3 million (25.7% effective tax rate). The lower tax rate, compared to the
statutory rate, results from the above items, as well as from other favorable
adjustments during the first and second quarters amounting to $2.5 million.
    For the nine-month period ended July 31, 2006, the income tax expense
stood at $19.3 million (29.0% effective tax rate). The lower tax expense in
2006 results mainly from the combined effect of legislative changes,
recoveries related to the resolution of various income tax exposures, as well
as the decision to repatriate capital from foreign credit insurance
operations, as further detailed in Note 8 to the Interim Consolidated
Financial Statements. It should be noted that the unusual tax charge of the
third quarter of 2006 mentioned above had no significant effect on the results
for the nine-month period ended July 31, 2006, as it was offset by other
adjustments recorded during the second quarter of 2006.

    Analysis of financial condition

    Balance sheet assets stood at $18.0 billion at July 31, 2007, compared to
$17.3 billion at October 31, 2006.
    As at July 31, 2007, liquidities, including cash resources, securities and
assets purchased under reverse repurchase agreements, decreased by more than
$360 million, compared to levels as at October 31, 2006. This decrease results
from the Bank's tighter liquidity management. Since the beginning of the year,
the Bank continued to rely on its deposit portfolios and on residential
mortgage securitization to fund its strong loan growth. As noted below, the
securities are now classified as Available-for-sale, Held-for-trading or
Designated as held-for-trading, as of November 1, 2006, to conform to the new
accounting standards.
    The loans and bankers' acceptances portfolio increased by more than
$1.0 billion or 8% since the beginning of the year to $13.5 billion at
July 31, 2007, compared to $12.4 billion at October 31, 2006. Personal loans
increased by $621.5 million for the nine-month period ended July 31, 2007. The
increase is mainly attributable to the B2B Trust's investment loan portfolio,
which increased by $435 million in the third quarter alone. The home equity
lines of credit also increased significantly since the beginning of the year.
The residential mortgage portfolio increased by $363 million for the
nine-month period ended July 31, 2007. Considering the increase of
$197 million in securitized loans, as shown in the table below, total mortgage
loan growth was excellent at $560 million over the same period.

    Residential mortgage portfolio
    (millions of $)                     July 31,   October 31,
                                           2007          2006    Net growth
    -------------------------------------------------------------------------
    On-balance sheet mortgage loans       6,349         5,986           363
    Securitized loans
     (Off-balance sheet)                  1,236         1,039           197
    -------------------------------------------------------------------------
                                          7,585         7,025           560


    Commercial mortgages increased by $11.9 million for the nine-month period
ended July 31, 2007, while commercial loans, including bankers' acceptances,
increased by $35.3 million, essentially in Quebec in the small- and
medium-sized businesses.
    Personal deposits increased by $530.6 million for the nine-month period
ended July 31, 2007 to $11.5 billion. The growth mainly came from
broker-deposits raised through B2B Trust for $403.2 million and from the
branch network for $135.2 million. Business and other deposits increased by
$242.2 million during the same period, essentially as a result of new deposits
raised from small businesses and municipalities through the branch network. At
July 31, 2007, personal deposits accounted for 83% of total deposits of
$13.9 billion. These deposits constitute the preferred funding source of the
Bank because of their relative stability and lower marginal cost compared to
wholesale deposits.
    Shareholders' equity, since the beginning of the year, includes
Accumulated other comprehensive income (AOCI), as a result of the adoption of
the new accounting standards on financial instruments on November 1, 2006. It
stood at $970.4 million as at July 31, 2007, compared to $946.4 million at
October 31, 2006. The adoption of the new accounting standards initially
reduced opening Retained earnings by $3.2 million and opening AOCI by
$18.6 million. These decreases were, however, more than offset by the net
income generated since the beginning of the year, net of declared dividends,
as well as by the favorable adjustment to AOCI resulting from the revaluation
by the Bank of its shares of the Montréal Exchange following its initial
listing on the TSE. The Bank's book value per common share, excluding AOCI,
was $32.50 as at July 31, 2007, compared to $31.18 as at October 31, 2006. The
consolidated statement of changes in shareholders' equity and note 1 to the
interim consolidated financial statements provide further details. There were
23,750,025 common shares and 230,815 share purchase options outstanding as at
August 29, 2007.
    The total capital of the Bank, comprised of shareholders' equity and
debentures, reached $1,120 million at July 31, 2007, compared to
$1,096 million at October 31, 2006. The increase of $24 million results from
the same items as noted above. The BIS Tier 1 and Total capital ratios stood
at 9.7% and 11.6%, respectively, at July 31, 2007, compared to 10.3% and 12.4%
at October 31, 2006. The variance is mainly related to the strong loan growth
during the nine-month period.
    At its meeting on August 29, 2007, the Board of Directors declared regular
dividends on the various series of preferred shares to shareholders of record
on September 10, 2007. As well, at its meeting on September 6, 2007, the Board
of Directors declared a dividend of $0.29 per common share, payable on
November 1, 2007, to shareholders of record on October 1, 2007.
    Assets under administration stood at $15.3 billion at July 31, 2007,
compared to $14.7 billion at October 31, 2006, and $14.6 billion at July 31,
2006. The increase is attributable to the growth in all types of assets,
mainly as a result of market values and business development.

    Adoption of CICA's accounting standards on Financial Instruments -
    Recognition and Measurement, Hedges and Comprehensive Income

    On November 1, 2006, the Bank adopted the new accounting standards on
financial instruments issued by the CICA. The effect of the adoption of these
standards on shareholders' equity as at November 1, 2006, was mainly
attributable to the reclassification of unrealized gains and losses, amounting
to $21.7 million, related to hedging relationships. The effect on net income
for the three-month and nine-month periods ended July 31, 2007, was not
significant. The comparative financial statements were not restated, in
accordance with the transitional provisions.
    Note 1 to the interim consolidated financial statements provides
additional information on the new standards and on the effect of their
adoption.
    With regard to the calculation of the Return on common shareholders'
equity ratio, the Bank has considered that Net income is the best measure of
profitability and that Common shareholders' equity, excluding the Accumulated
other comprehensive income, would be used as a measure of capital. The
calculation of the Bank's book value will also be based on Common
shareholders' equity, excluding Accumulated other comprehensive income.

    Segmented information

    For the third quarter of 2007, the contribution from the Retail Financial
Services and B2B Trust segments improved by 45% and 20% respectively, when
compared to the same quarter of 2006, benefiting from the increase in revenues
and lower loan losses. Total revenue also improved for the Laurentian Bank
Securities (LBS) and Commercial Financial Services segments, leading to an
overall increase in profitability. The significant increase in net interest
income has also contributed to the better results for the Other segment.
    Compared to the second quarter of 2007, the contribution of the Retail
Financial Services, Commercial Financial Services and B2B Trust segments
benefited from the three additional days. Also, it should be noted that the
LBS segment had benefited from a $4.4 million ($3.7 million net of income
taxes) gain on sale on a portion of the Montréal Exchange shares held by the
Bank during the second quarter, while the Other sector had incurred a
$4.3 million loss ($2.9 million net of income taxes) from the fixed income
securities portfolio.

    Net income contributions

                             Commer-             Lauren-
                   Retail      cial                tian
    (in             Finan-    Finan-               Bank
     millions        cial      cial       B2B      Secu-
     of $)       Services  Services     Trust    rities     Other     Total
    -------------------------------------------------------------------------
                                                                    (note 1)
    Q3-2007
    Net income        9.7       6.1       8.1       0.6      (1.4)     23.2
                       40%       25%       33%       2%       n/a       100%

    Q2-2007
    Net income        6.8       6.0       7.1       5.3      (4.6)     20.7
                       27%       24%       28%       21%      n/a       100%

    Q3-2006
    Net income        6.7       6.9       6.8       0.5     (14.7)      6.2
                       32%       33%       33%       2%       n/a       100%
    -------------------------------------------------------------------------
    Note 1: Percentage of net income contribution from the four business
            segments, excluding the Other segment.


    Retail Financial Services

    Net income for the Retail Financial Services business segment improved by
$3.0 million, to $9.7 million for the third quarter of 2007, from $6.7 million
for the third quarter of 2006. The 45% increase results mainly from higher
revenues stemming from the growth in loans and deposits. Mutual fund sales and
card service revenues have also contributed to the strong quarter. At
$6.4 million, loan losses were $0.9 million lower than for the third quarter
of 2006 as the overall credit quality remained good.
    Non-interest expenses slightly increased to $75.5 million for the third
quarter of 2007, compared to $73.3 million for the same quarter of 2006. The
increase is mainly due to the higher salary charge resulting from the
expansion in the retail banking operations combined with regular salary
increases. As at July 31, 2007, the RFS segment counted 2,068 employees,
compared to 1,998 a year ago. Higher advertising expenses also contributed by
$0.4 million to the increase in non-interest expenses.
    The income tax expense was $3.7 million (27.6% effective tax rate) for the
third quarter of 2007, compared to $3.4 million (33.5% effective tax rate) for
the third quarter of 2006. This improvement in the effective tax rate results
essentially from the lower taxes on revenues from credit insurance operations.
    The steady growth in loan and deposit volumes in the Retail Financial
Services business segment attests to the soundness of the internal growth
strategies adopted by Retail Financial Services over the last few years, as
well as to its capacity to ensure continued business development. The
formation of a team of approximately 60 "mobile bankers", expert in mortgage
solutions, has spurred growth in mortgage loans. Likewise, the Bank continued
to invest in the expansion and renovation of the branch network, which now
comprises 158 branches, including nine brand-new financial services boutiques
located in areas with strong demographic growth. To date, more than 25% of the
Bank's retail branches have already been either renovated or relocated.

    Commercial Financial Services

    Net income for the Commercial Financial Services segment declined by
$0.8 million to $6.1 million in the third quarter of 2007, compared to
$6.9 million for the third quarter of 2006. Total revenue was relatively
stable at $20.7 million, as the increase in net interest income resulting from
the higher loan and deposit volumes was offset by the lower loan fees, mainly
in Ontario. Loan losses in the third quarter of 2007 were $2.4 million,
compared to $1.2 million in the third quarter of 2006. The lower loan losses
in 2006 resulted from a $0.6 million recovery on a commercial mortgage.
    Non-interest expenses were stable at $9.0 million for the third quarter of
2007, compared to the same quarter of 2006, as higher salaries and employee
benefits were offset by a reduction of credit and administrative costs.
    Commercial Financial Services launched a new range of banking products -
the Performance series - tailored for small- and medium-sized businesses with
significant transaction volumes and specific needs with regard to commercial
deposits. The new Performance series thus complements the BUSINESS packages,
launched during spring 2006, which are tailored for the self-employed and for
small businesses with lower transaction volumes.
    Furthermore, two new credit cards have been launched, namely VISA Business
and Business Performance. These new credit cards offer distinctive features,
unique in the present market, that meet the specific needs of small- and
medium-sized businesses and self-employed workers, including a 28-day payment
period (one of the longest in the industry), as well as individual life,
disability, medical and dental insurance, that are offered to both card
holders and non-card holders employed by the company.

    B2B Trust

    Net income for the B2B Trust business segment improved by 20% to
$8.1 million in the third quarter of 2007, from $6.8 million in the third
quarter of 2006. Year-over-year growth of $443 million in average loan volumes
and of $269 million in average deposit volumes contributed to the $1.8 million
increase in net interest income, which more than offset the slight decrease in
revenues from registered self-directed plans.
    For the third quarter of 2007, loan losses totalled $1.2 million, compared
to $1.5 million for the same quarter of 2006. The improvement reflects the
initiatives to reduce B2B Trust credit exposure in the personal line of credit
portfolio over the last two years. Non-interest expenses remained relatively
stable at $10.5 million for the third quarter of 2007, reflecting the tight
control over expenses.
    The enhancements to the Investment Loan Program launched in May 2007 and
improvements in administrative processes, together with a promotional rate on
investment loans under $50,000, built significant market momentum through the
period and resulted in increased investment loan gross sales volumes. With 47
partnership agreements with financial intermediaries, B2B Trust is the leading
Canadian third-party supplier of investment and RRSP lending products.

    Laurentian Bank Securities

    The Laurentian Bank Securities business segment contribution to net income
was $0.6 million in the third quarter of 2007, compared to $0.5 million for
the third quarter of 2006. LBS has been expanding its activities over the last
years through the opening of new branches and the introduction of the
Institutional equity division. This has led to a 17% or $1.3 million increase
in revenues for the third quarter of 2007, compared to the same quarter of
2006.
    Every division of Laurentian Bank Securities has performed well during the
third quarter. Given that all the foundations of the Institutional Equity
division are now well in place and that its operations are being deployed in a
timely manner, Laurentian Bank Securities is focusing its energy and resources
on consolidating the infrastructure of its Retail Brokerage division.
Considering that this division has doubled in size over the last few years,
Laurentian Bank Securities is committed to developing new tools and processes
to fully support its team of over 60 private investment advisors and enhance
their efficiency through the improvement and optimization of business
processes.

    Other sector

    The Other sector reported a negative contribution of $1.4 million for the
third quarter of 2007, compared to a negative contribution of $14.7 million
for the third quarter of 2006. Results for 2006 included the $11.0 million
income tax charge, as noted above. Excluding the effect of this tax charge,
the negative contribution to net income for the third quarter of 2006 would
have been $3.7 million. The improvement in profitability is mainly
attributable to the higher net interest income and treasury and financial
market income, partially offset by lower securitization revenues.

    Additional financial information - Quarterly results

    in millions                2007                            2006    2005
     of dollars,
     except per
     share
     amounts
    (unaudited)  Q3      Q2      Q1      Q4      Q3      Q2      Q1      Q4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total
     revenue $151.0  $145.7  $141.6  $137.1  $138.0  $131.0  $133.7  $135.9
    Income
     from
     conti-
     nuing
     opera-
     tions     23.2    20.7    20.6    18.1     6.2    24.6    16.7    17.4
    Net
     income    23.2    20.7    20.6    22.6     6.2    24.6    17.0    21.6
    Income
     per
     common
     share
     from
     conti-
     nuing
     opera-
     tions
      Basic    0.85    0.75    0.74    0.65    0.13    0.92    0.58    0.61
      Diluted  0.85    0.75    0.74    0.65    0.13    0.91    0.58    0.61
    Net
     income
     per
     common
     share
      Basic    0.85    0.75    0.74    0.84    0.13    0.92    0.59    0.79
      Diluted  0.85    0.75    0.74    0.84    0.13    0.91    0.59    0.79
    Return on
     common
     share-
     holders'
     equity    10.5%    9.7%    9.4%   10.8%    1.7%   12.5%    7.9%   10.6%
    Balance
     sheet
     assets  18,011  17,809  17,177  17,296  17,062  17,307  16,742  16,507
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Changes in internal control over financial reporting

    There were no changes in the Bank's internal control over financial
reporting during the most recent interim period that has materially affected,
or is reasonably likely to materially affect, the Bank's internal control over
financial reporting.

    Dividends - new taxation regime

    Effective January 1, 2006, the Federal Government implemented a new
dividend tax regime for dividends paid by Canadian corporations to their
shareholders. Certain provinces have also replicated the federal regulations
governing such dividends. In accordance with this new regime, the Bank advises
that all dividends declared in 2006 and 2007 were eligible dividends and that
all future dividends will be eligible, unless indicated otherwise.

    About Laurentian Bank

    Laurentian Bank of Canada is a Quebec banking institution operating across
Canada and is dedicated to meeting its clients' financial needs through
excellence in service, as well as through its simplicity and proximity. The
Bank serves individual consumers and small and medium-sized businesses, as
well as financial advisors through B2B Trust. It also provides full-service
brokerage solutions through its Laurentian Bank Securities subsidiary.
    Laurentian Bank is well established in the Province of Quebec, operating
the third-largest retail branch network and is also a performing player in
specific market segments elsewhere in the country. Laurentian Bank of Canada
has over $18 billion in balance sheet assets and $15 billion in assets under
administration. Founded in 1846, the Bank employs 3,400 people. Its common
shares are listed on the Toronto Stock Exchange (TSX: LB). For more
information, please visit www.laurentianbank.ca.

    Corporate governance

    The Board of Directors and the Audit Committee of Laurentian Bank reviewed
this press release prior to its release today. The disclosure controls and
procedures support the ability of the President and Chief Executive Officer
and the Senior Executive Vice-President and Chief Financial Officer to ensure
that Laurentian Bank's interim consolidated financial statements are fairly
presented.

    Caution regarding forward-looking statements

    In this document and in other documents filed with Canadian regulatory
authorities or in other communications, Laurentian Bank of Canada (the "Bank")
may from time to time make written or oral forward-looking statements within
the meaning of applicable securities legislation, including statements
regarding the Bank's business plan and financial objectives. These statements
typically use the conditional, as well as words such as prospects, believe,
estimate, forecast, project, should, could or would.
    By their very nature, forward-looking statements are based on assumptions
and involve inherent risks and uncertainties, both general and specific in
nature. It is therefore possible that the forecasts, projections and other
forward-looking statements will not be achieved or will prove inaccurate.
    The Bank cautions readers against placing undue reliance on
forward-looking statements when making decisions, as the actual results could
differ appreciably from the opinions, plans, objectives, expectations,
forecasts, estimates and intentions expressed in such forward-looking
statements due to various material factors. Among other things, these factors
include capital market activity, changes in government monetary, fiscal and
economic policies, changes in interest rates, inflation levels and general
economic conditions, legislative and regulatory developments, competition,
credit ratings, scarcity of human resources and technological environment. The
Bank cautions that the foregoing list of factors is not exhaustive.
    The Bank does not undertake to update any forward-looking statements,
whether oral or written, made by itself or on its behalf, except to the extent
required by securities regulations.

    Conference call

    Laurentian Bank invites media representatives and the public to listen to
the financial analysts' conference call to be held Thursday, September 6,
2007, at 2 p.m. Eastern Time. The live, listen only, toll-free call-in number
is 1-866-540-8136.
    You may listen to a playback of the call at any time from 6:00 p.m.
Thursday, September 6, 2007, until midnight Thursday, September 27, 2007, by
dialling the following number: 1-800-408-3053 Code 3230255 #.
    The conference call can also be heard through the Investors' Relations
section of the Laurentian Bank website at www.laurentianbank.ca. The website
also offers additional financial information.


    FINANCIAL HIGHLIGHTS



    IN MILLIONS OF
     DOLLARS,
     UNLESS                                    FOR THE NINE-MONTH
     OTHERWISE                                      PERIODS ENDED
     INDICATED                          VARIA-  JULY 31   JULY 31     VARIA-
    (UNAUDITED)     Q3-07     Q3-06      TION      2007      2006      TION
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings
    Net income    $  23.2   $   6.2       274 % $  64.4   $  47.8        35 %
    Income from
     continuing
     operations   $  23.2   $   6.2       274 % $  64.4   $  47.4        36 %
    Net income
     available to
     common
     shareholders $  20.2   $   3.2       531 % $  55.4   $  38.8        43 %
    Return on
     common
     shareholders'
     equity          10.5 %     1.7 %               9.9 %     7.3 %
    Per common
     share
    Diluted net
     income       $  0.85   $  0.13       554 % $  2.34   $  1.64        43 %
    Dividends     $  0.29   $  0.29         - % $  0.87   $  0.87         - %
    Book value                                  $ 32.50   $ 30.63         6 %
    Share price -
     close                                      $ 38.00   $ 30.45        25 %
    Financial
     position
    Balance sheet
     assets                                     $18,011   $17,062         6 %
    Assets under
     administration                             $15,339   $14,585         5 %
    Loans, bankers'
     acceptances and
     assets purchased
     under reverse
     repurchase
     agreements, net                            $14,111   $12,636        12 %
    Personal deposits                           $11,480   $10,946         5 %
    Shareholders'
     equity and
     debentures                                 $ 1,120   $ 1,083         3 %
    Number of common
     shares (in
     thousands)                                  23,700    23,613         - %
    Net impaired
     loans as a
     % of loans,
     bankers'
     acceptances
     and assets
     purchased
     under reverse
     repurchase
     agreements                                    (0.1)%       - %
    Risk-weighted
     assets                                     $ 9,575   $ 8,533        12 %
    Capital ratios
    Tier I BIS                                      9.7 %    10.3 %
    Total BIS capital                              11.6 %    12.5 %
    Assets to capital
     multiple                                      16.3x     16.1x
    Tangible common
     equity as a
     percentage of
     risk-weighted
     assets                                          7.3 %     7.7 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCIAL RATIOS
    Per common share
    Price / earnings
     ratio (trailing
     four quarters)                                11.9x     12.5x
    Market to book
     value                                          117 %      99 %
    Dividend yield   3.05 %    3.81 %              3.05 %    3.81 %
    Dividend payout
     ratio           34.0 %   216.0 %              37.1 %    52.9 %
    As a percentage
     of average
     assets
    Net interest
     income          2.39 %    2.16 %              2.33 %    2.12 %
    Provision for
     credit losses   0.23 %    0.24 %              0.24 %    0.24 %
    Net income       0.54 %    0.15 %              0.51 %    0.38 %
    Net income
     available to
     common
     shareholders    0.47 %    0.07 %              0.44 %    0.31 %
    Profitability
    Other income
     (as a % of
     total revenue)  32.6 %    33.7 %              33.3 %    34.2 %
    Efficiency ratio
     (non-interest
     expenses as a
     % of total
     revenue)        71.8 %    74.8 %              73.4 %    76.0 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    OTHER INFORMATION
    Number of full-
     time equivalent
     employees                                    3,400     3,373
    Number of branches                              158       157
    Number of
     automated banking
     machines                                       340       323
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED BALANCE SHEET

    IN THOUSANDS OF DOLLARS             JULY 31    OCTOBER 31       JULY 31
     (UNAUDITED)            NOTES          2007(1)       2006          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    ASSETS
    Cash resources
      Cash and non-
       interest-bearing
       deposits with other
       banks                        $    69,394   $    70,907   $    56,951
      Interest-bearing
       deposits with
       other banks                      231,781        98,722       363,386
                                   ------------------------------------------
                                        301,175       169,629       420,337
                                   ------------------------------------------
    Securities
      Available-for-sale
       account                        1,067,569             -             -
      Account held-
       for-trading                    1,225,572     1,675,058     1,521,076
      Account designated as
       held-for-trading                 504,402             -             -
      Investment account                      -     1,567,222     1,639,162
                                   ------------------------------------------
                                      2,797,543     3,242,280     3,160,238
                                   ------------------------------------------
    Assets purchased under
     reverse repurchase
     agreements                         755,846       802,546       538,168
                                   ------------------------------------------
    Loans                 3 and 4
      Personal                        4,789,477     4,168,026     4,160,630
      Residential
       mortgages                      6,349,418     5,985,656     5,799,043
      Commercial
       mortgages                        670,918       659,014       638,765
      Commercial
       and other                      1,533,864     1,476,977     1,532,565
                                   ------------------------------------------
                                     13,343,677    12,289,673    12,131,003
    Allowance for
     loan losses                       (116,915)     (125,153)     (128,441)
                                   ------------------------------------------
                                     13,226,762    12,164,520    12,002,562
                                   ------------------------------------------
    Other
      Customers'
       liabilities under
       acceptances                      128,234       149,818        95,190
      Property, plant
       and equipment                    126,556       111,291       102,272
      Derivative financial
       instruments                       72,705        96,980       118,575
      Future tax assets         8        96,258       101,048       101,521
      Goodwill                           53,790        53,790        53,790
      Other intangible
       assets                            14,419        15,333        15,638
      Other assets                      437,895       388,724       453,857
                                   ------------------------------------------
                                        929,857       916,984       940,843
                                   ------------------------------------------
                                   $ 18,011,183  $ 17,295,959  $ 17,062,148
                                   ------------------------------------------
                                   ------------------------------------------
    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Deposits
      Personal                     $ 11,480,114  $ 10,949,473  $ 10,946,057
      Business, banks
       and other                      2,387,252     2,145,028     2,570,125
                                   ------------------------------------------
                                     13,867,366    13,094,501    13,516,182
                                   ------------------------------------------
    Other
      Obligations related
       to assets sold short             934,089     1,077,009       954,885
      Obligations related
       to assets sold under
       repurchase agreements          1,141,420     1,100,385       623,480
      Acceptances                       128,234       149,818        95,190
      Derivative financial
       instruments                      106,730        81,807       105,940
      Other liabilities                 712,982       696,019       683,278
                                   ------------------------------------------
                                      3,023,455     3,105,038     2,462,773
                                   ------------------------------------------
    Subordinated debentures             150,000       150,000       150,000
                                   ------------------------------------------
    Shareholders' equity
      Preferred shares          5       210,000       210,000       210,000
      Common shares             5       253,240       251,158       250,948
      Contributed surplus                    75           518           405
      Retained earnings                 516,996       485,334       472,430
      Treasury shares           5             -          (590)         (590)
      Accumulated other
       comprehensive
       income (loss)            1        (9,949)            -             -
                                   ------------------------------------------
                                        970,362       946,420       933,193
                                   ------------------------------------------
                                   $ 18,011,183  $ 17,295,959  $ 17,062,148
                                   ------------------------------------------
                                   ------------------------------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Changes to accounting policies related to financial instruments.
        Refer to note 1.

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


    CONSOLIDATED STATEMENT OF INCOME

    IN THOUSANDS
     OF DOLLARS,                 FOR THE THREE-MONTH     FOR THE NINE-MONTH
     EXCEPT PER                     PERIODS ENDED             PERIODS ENDED
     SHARE AMOUNTS          JULY 31  APRIL 30   JULY 31   JULY 31   JULY 31
     (UNAUDITED)    NOTES      2007      2007    2006(1)     2007    2006(1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Interest income
      Loans                $214,778  $198,582  $195,625  $615,050  $555,994
      Securities             13,386    15,468    19,609    44,996    53,129
      Deposits with
       other banks            3,453     3,347     3,709     8,685     9,302
                           --------------------------------------------------
                            231,617   217,397   218,943   668,731   618,425
                           --------------------------------------------------
    Interest expense
      Deposits and
       other
       liabilities          127,900   120,004   124,394   370,473   342,551
      Subordinated
       debentures             1,950     1,887     3,057     5,788    10,749
                           --------------------------------------------------
                            129,850   121,891   127,451   376,261   353,300
                           --------------------------------------------------
    Net interest
     income                 101,767    95,506    91,492   292,470   265,125
    Provision for
     credit losses      3    10,000    10,000    10,000    30,000    30,000
                           --------------------------------------------------
                             91,767    85,506    81,492   262,470   235,125
                           --------------------------------------------------
    Other income
      Fees and
       commissions
       on loans and
       deposits              23,206    21,607    22,097    66,383    63,353
      Revenues from
       brokerage
       operations             7,664     9,693     7,020    25,905    22,522
      Income from
       treasury and
       financial
       market
       operations             6,516     4,274     5,102    15,374    11,038
      Credit
       insurance
       income                 2,453     3,030     3,131     9,065     9,356
      Income from
       sales of
       mutual funds           3,521     3,318     2,717     9,913     7,726
      Income from
       registered
       self-directed
       plans                  2,490     2,572     2,540     7,421     8,190
      Securitization
       income                 1,236     3,215     2,245     5,011     8,937
      Gain on disposal            -         -         -         -       931
      Other                   2,189     2,456     1,681     6,762     5,570
                           --------------------------------------------------
                             49,275    50,165    46,533   145,834   137,623
                           --------------------------------------------------
                            141,042   135,671   128,025   408,304   372,748
                           --------------------------------------------------
    Non-interest
     expenses
      Salaries and
       employee
       benefits              58,602    58,120    53,401   172,988   158,054
      Premises and
       technology            27,758    28,568    26,769    83,082    80,829
      Other                  22,013    22,263    23,075    65,583    67,114
                           --------------------------------------------------
                            108,373   108,951   103,245   321,653   305,997
                           --------------------------------------------------
    Income from
     continuing
     operations
     before income
     taxes                   32,669   26,720     24,780    86,651    66,751
    Income taxes        8     9,491    6,067     18,624    22,264    19,331
                           --------------------------------------------------
    Income from
     continuing
     operations              23,178   20,653      6,156    64,387    47,420
    Income from
     discontinued
     operations,
     net of income
     taxes              2         -         -         -         -       354
                           --------------------------------------------------
    Net income             $ 23,178  $ 20,653  $  6,156  $ 64,387  $ 47,774
                           --------------------------------------------------
                           --------------------------------------------------
    Preferred share
     dividends,
     including
     applicable
     income taxes             2,990     2,990     2,986     8,970     8,955
                           --------------------------------------------------
    Net income
     available to
     common
     shareholders          $ 20,188  $ 17,663  $  3,170  $ 55,417  $ 38,819
                           --------------------------------------------------
                           --------------------------------------------------
    Average number
     of common
     shares
     outstanding
     (in thousands)
      Basic                  23,662    23,638    23,613    23,642    23,601
      Diluted                23,728    23,685    23,644    23,690    23,652
                           --------------------------------------------------
    Income per common
     share from
     continuing
     operations
      Basic                $   0.85  $   0.75  $   0.13  $   2.34   $  1.63
      Diluted              $   0.85  $   0.75  $   0.13  $   2.34   $  1.63
                           --------------------------------------------------
    Net income per
     common share
      Basic                $   0.85  $   0.75  $   0.13  $   2.34   $  1.64
      Diluted              $   0.85  $   0.75  $   0.13  $   2.34   $  1.64
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Comparatives were reclassified as a result of recognition on a gross
        basis of income related to brokerage activities. Refer to Note 1.

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



    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                      FOR THE       FOR THE
                                                  THREE-MONTH    NINE-MONTH
                                                PERIODS ENDED  PERIOD ENDED
    IN THOUSANDS OF DOLLARS             JULY 31      APRIL 30       JULY 31
     (UNAUDITED)            NOTES          2007          2007          2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income                     $     23,178  $     20,653  $    64,387

    Other comprehensive
     income (loss), net
     of income taxes            1
      Change in unrealized
       gains (losses) on
       available-for-sale
       securities                        (2,816)       19,719       16,476
      Reclassification to
       income of realized
       gains and losses on
       available-for-sale
       securities                          (336)       (1,701)      (1,790)
      Change in gains
       (losses) on
       derivatives
       designated as cash
       flow hedges                       (4,686)       (1,039)      (6,083)
                                   ------------------------------------------
                                         (7,838)       16,979        8,603
                                   ------------------------------------------
    Comprehensive income           $     15,340  $     37,632  $    72,990
                                   ------------------------------------------
                                   ------------------------------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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


    CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                           FOR THE NINE-MONTH PERIODS ENDED
                                                          JULY 31   JULY 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)           NOTES      2007      2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Preferred shares
      Balance at beginning and end of period             $210,000  $210,000
                                                         --------------------
    Common shares                                     5
      Balance at beginning of period                      251,158   249,633
      Issued during the period                              2,082     1,315
                                                         --------------------
    Balance at end of period                              253,240   250,948
                                                         --------------------
    Contributed surplus
      Balance at beginning of period                          518        73
      Attribution of shares under the
       performance-based share agreement              6      (590)        -
      Stock-based compensation                        6       147       332
                                                         --------------------
    Balance at end of period                                   75       405
                                                         --------------------
    Retained earnings
      Previous balance at beginning of period             485,334   454,124
      Impact of adopting the new accounting policy
       regarding financial instruments,
       net of income taxes                            1    (3,185)        -
                                                         --------------------
      Restated balance at beginning of period             482,149   454,124
      Net income                                           64,387    47,774
      Dividends
        Preferred shares, including applicable
         income taxes                                      (8,970)   (8,955)
        Common shares                                     (20,570)  (20,513)
                                                         --------------------
      Balance at end of period                            516,996   472,430
                                                         --------------------
    Treasury shares
      Balance at beginning of period                         (590)     (590)
      Attribution of shares                           6       590         -
                                                         --------------------
      Balance at end of period                                  -      (590)
                                                         --------------------
    Accumulated other comprehensive income (loss)     1
      Balance at beginning of period                            -         -
      Impact of adopting the new accounting policy
       regarding financial instruments,
       net of income taxes                                (18,552)        -
      Other comprehensive income (loss), net of
       income taxes                                         8,603         -
                                                         --------------------
      Balance at end of period                             (9,949)        -
                                                         --------------------
    Shareholders' equity                                 $970,362  $933,193
                                                         --------------------
                                                         --------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes are an integral part of the interim consolidated
    financial statements.


    CONSOLIDATED STATEMENT
    OF CASH FLOWS

                                          FOR THE THREE-MONTH PERIODS ENDED
    IN THOUSANDS OF DOLLARS             JULY 31      APRIL 30       JULY 31
     (UNAUDITED)            NOTES          2007          2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows relating to
     operating activities
    Net income                     $     23,178  $     20,653  $      6,156
    Adjustments to determine
     net cash flows relating
     to operating activities:
      Provision for credit
       losses                            10,000        10,000        10,000
      Gains on
       securitization
       operations               4        (1,055)       (2,625)       (1,251)
      Net loss (gain) on
       disposal of property,
       plant and equipment                    -          (277)            -
      Net loss (gain) from
       discontinued
       operations               2             -             -             1
      Gain on disposal                        -             -             -
      Net loss (gain) on
       sale of held-for-
       trading securities                  (711)        4,386          (127)
      Future income taxes                 8,943         4,353        12,549
      Depreciation and
       amortization                       7,187         7,119         6,552
      Net change in held-
       for-trading
       securities                      (100,836)      457,788       138,461
      Change in accrued
       interest receivable               11,914        (7,849)       (1,842)
      Change in assets
       relating to
       derivative financial
       instruments                      (18,981)       24,306        29,505
      Change in accrued
       interest payable                 (21,213)      (19,109)        3,830
      Change in
       liabilities relating
       to derivative
       financial instruments             39,159       (18,778)      (35,713)
      Other, net                         40,750       (46,991)      (76,649)
                           --------------------------------------------------
                                         (1,665)      432,976        91,472
                           --------------------------------------------------
    Cash flows relating to
     financing activities
      Net change in deposits            371,471       327,785       408,326
      Change in obligations
       related to assets
       sold short                        26,091      (450,416)     (312,238)
      Change in obligations
       related to assets
       sold under repurchase
       agreements                      (165,752)      717,605      (129,649)
      Issuance of
       subordinated
       debentures                             -             -             -
      Redemption of
       subordinated
       debentures                             -             -      (150,000)
      Issuance of
       common shares                      1,573           237             -
      Dividends, including
       applicable income
       taxes                             (9,856)       (9,846)       (9,829)
                           --------------------------------------------------
                                        223,527       585,365      (193,390)
                           --------------------------------------------------
    Cash flows relating to
     investing activities
      Change in available-
       for-sale and
       designated as
       held-for-trading
       securities
        Acquisitions                 (2,015,904)   (2,703,298)            -
        Proceeds from sales           2,221,718     2,317,896             -
      Change in investment
       securities
        Acquisitions                          -             -    (1,958,771)
        Proceeds from sales
         and maturity                         -             -     1,865,608
      Change in loans                  (963,207)     (424,793)     (394,531)
      Change in assets
       purchased under
       reverse repurchase
       agreements                       255,362      (424,241)      512,339
      Proceeds from mortgage
       loan securitizations             310,904       177,857       111,087
      Additions to property,
       plant and equipment              (14,257)       (9,059)       (9,998)
      Proceeds from disposal
       of property, plant
       and equipment                          1           401             -
      Net change in interest-
       bearing deposits with
       other banks                      (13,596)       34,067       (19,039)
      Net cash flows from
       the sale of a
       subsidiary                             -             -             -
                           --------------------------------------------------
                                       (218,979)   (1,031,170)      106,695
                           --------------------------------------------------
    Net change in cash and
     non-interest-bearing
     deposits with other
     banks during the period              2,883       (12,829)        4,777
    Cash and non-interest-
     bearing deposits with
     other banks at
     beginning of period                 66,511        79,340        52,174
                           --------------------------------------------------
    Cash and non-interest-
     bearing deposits with
     other banks at end of
     period                        $     69,394  $     66,511  $     56,951
                           --------------------------------------------------
    Supplemental disclosure
     relating to cash flows:
      Interest paid during
       the period                  $    150,074  $    152,193  $    125,266
      Income taxes paid
       during the period           $      5,895  $      1,094  $      3,943
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                         FOR THE NINE-MONTH
                                                              PERIODS ENDED
    IN THOUSANDS OF DOLLARS                              JULY 31    JULY 31
     (UNAUDITED)                                            2007       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows relating to operating activities
    Net income                                          $ 64,387   $ 47,774
    Adjustments to determine net cash flows
     relating to operating activities:
      Provision for credit losses         	           30,000     30,000
      Gains on securitization operations                  (3,680)    (6,161)
      Net loss (gain) on disposal of
       property, plant and equipment                        (380)        26
      Net loss (gain) from discontinued operations             -       (532)
      Gain on disposal                                         -       (931)
      Net loss (gain) on sale of held-for-trading
       securities                                          2,371      1,519
      Future income taxes                                 18,983      4,935
      Depreciation and amortization                       21,180     20,013
      Net change in held-for-trading securities           99,599   (436,995)
      Change in accrued interest receivable               15,132      5,029
      Change in assets relating to derivative
       financial instruments                              24,275     24,878
      Change in accrued interest payable                 (26,171)    10,812
      Change in liabilities relating to derivative
       financial instruments                              24,923        613
      Other, net                                         (36,334)     6,782
                                                         --------------------
                                                         234,285   (292,238)
                                                         --------------------
    Cash flows relating to financing activities
      Net change in deposits                             772,865   (180,756)
      Change in obligations related to assets
       sold short                                       (142,920)   228,822
      Change in obligations related to assets sold
       under repurchase agreements                        41,035    563,415
      Issuance of subordinated debentures                      -    150,000
      Redemption of subordinated debentures                    -   (150,000)
      Issuance of common shares                            2,082      1,315
      Dividends, including applicable income taxes       (29,540)   (29,468)
                                                         --------------------
                                                         643,522    583,328
                                                         --------------------
    Cash flows relating to investing activities
      Change in available-for-sale and designated as
       held-for-trading securities
        Acquisitions                                  (6,454,221)         -
        Proceeds from sales                            6,798,377          -
      Change in investment securities
        Acquisitions                                           - (9,975,973)
        Proceeds from sales and maturity                       - 10,191,617
      Change in loans                                 (1,590,911)  (978,431)
      Change in assets purchased under reverse
       repurchase agreements                              46,700    (30,095)
      Proceeds from mortgage loan securitizations        488,761    631,896
      Additions to property, plant and equipment         (36,192)   (27,560)
      Proceeds from disposal of property, plant
       and equipment                                       1,225        405
      Net change in interest-bearing deposits with
       other banks                                      (133,059)  (103,595)
      Net cash flows from the sale of a subsidiary             -       (140)
                                                         --------------------
                                                        (879,320)  (291,876)
                                                         --------------------
    Net change in cash and non-interest-bearing
     deposits with other banks during the period          (1,513)      (786)
    Cash and non-interest-bearing deposits with
     other banks at beginning of period                   70,907     57,737
                                                         --------------------
    Cash and non-interest-bearing deposits with
     other banks at end of period                       $ 69,394   $ 56,951
                                                         --------------------
    Supplemental disclosure relating to cash flows:
      Interest paid during the period                   $409,387   $346,943
      Income taxes paid during the period               $ 15,085   $ 17,274
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The accompanying notes are an integral part of the interim consolidated
    financial statements.


    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)

    1. ACCOUNTING POLICIES

    The unaudited interim consolidated financial statements of Laurentian Bank
have been prepared by management, who is responsible for the integrity and
fairness of the financial information presented. These interim consolidated
financial statements have been prepared in accordance with Canadian generally
accepted accounting principles (GAAP) for interim financial statements. The
significant accounting policies used in the preparation of these interim
consolidated financial statements, except for changes to accounting policies
stated below, are the same as those in the Bank's annual consolidated audited
financial statements as at October 31, 2006. These accounting policies conform
to GAAP. However, these interim consolidated financial statements do not
reflect all of the information and disclosures required by GAAP for complete
financial statements. Accordingly, these interim consolidated financial
statements should be read in conjunction with the annual consolidated audited
financial statements as at October 31, 2006. These interim consolidated
financial statements reflect amounts, which are based on the best estimates
and judgement of management. Actual results may differ from these estimates.
Certain comparative figures have been reclassified to conform to the current
period presentation.

    Changes to accounting policies

    Income related to brokerage activities

    Other income for 2006 was adjusted to reflect the presentation on a gross
basis of brokerage operations, which previously were presented net of
commissions and other expenses. The impact of the reclassification is as
follows:

                                                         FOR THE    FOR THE
                                                     THREE-MONTH NINE-MONTH
                                                          PERIOD     PERIOD
                                                           ENDED      ENDED
                                                         JULY 31    JULY 31
    IN THOUSANDS OF DOLLARS                                 2006       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjustments for 2006
      Other income - Brokerage operations               $  2,183   $  6,884

      Non-interest expenses - Salaries and employee
       benefits                                         $  1,871   $  5,922
      Non-interest expenses - Premises and technology   $    312   $    962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Financial instruments

    On April 1, 2005, the CICA issued the accounting standards: Financial
Instruments - Recognition and Measurement, Financial Instruments - Disclosure
and Presentation, Hedges and Comprehensive Income. The Bank prospectively
adopted these standards on November 1, 2006. As a result, the financial
statements presented for comparison purposes have not been restated, in
accordance with the applicable transitional provisions. The accounting
consequences of these new standards on the financial statements of the Bank
are presented below.

    Section 3855, Financial Instruments - Recognition and Measurement

    Under Section 3855, Financial Instruments - Recognition and Measurement,
all financial assets and liabilities are initially carried at fair value with
the Bank using the settlement date for recognizing transactions in the
consolidated balance sheet. Subsequently, they are re-evaluated at fair value,
except for loans and receivables, investments held-to-maturity and non-trading
liabilities, which are recognized at amortized cost using the effective
interest method of amortization. Realized and unrealized gains and losses on
trading assets and liabilities are recognized immediately in the consolidated
statement of income under income from treasury and financial market
operations. Unrealized gains and losses on financial assets that are
available-for-sale are recognized in other comprehensive income until their
realization, after which these amounts will be recognized in the consolidated
statement of income. Interest income earned, amortization of premiums and
discounts as well as dividends received are included in interest income.
Interest income related to loans is accounted for using the accrual basis of
accounting. Commissions received and origination fees in respect of loans,
including restructuring and renegotiation charges, are generally recorded in
interest income over the term of the loans. Loan origination and other fees
paid are charged to interest income over the terms of the loans. The fees
received for mortgage prepayments are included in interest income upon
prepayment. Transaction costs, origination cost and other fees are expensed as
incurred for financial instruments classified or designated as
held-for-trading. Transactions cost, origination cost and other fees related
to acquisition of available-for-sale financial instruments or other financial
liabilities are added to the acquisition costs of the instruments.
    All derivative financial instruments are carried at fair value in the
consolidated balance sheet, including those derivatives that are embedded in
other contracts but are not considered to be closely related to the host
contract.
    Derivative financial instruments used to manage the Bank's interest rate
risk are accounted for using the accrual method. Under this method, interest
income or expense on these derivative instruments is accrued and included in
interest expense in the consolidated statement of income. When these
derivative financial instruments do not meet the requirements for hedge
accounting, as discussed below, the resulting realized and unrealized gains
and losses are recognized immediately in income from treasury and financial
market operations.
    When the derivative financial instruments are used in connection with
trading activities or to serve the needs of customers, the resulting realized
and unrealized gains and losses are also recognized in income from treasury
and financial market operations.
    The fair value of a financial instrument on initial recognition is
normally the transaction price, i.e. the fair value of the consideration given
or received. In certain circumstances, the initial fair value may be based on
other observable current market transactions in the same instrument or on a
valuation technique whose variables include only data from observable markets.
    Subsequent to initial recognition, the fair values of financial
instruments that are quoted in active markets are generally based on bid
prices for financial assets held and offer prices for financial liabilities.
When independent prices are not available, fair values are determined by using
valuation techniques which incorporate current market price and, as
appropriate, contractual prices of the underlying instruments, yield curves
and volatility factors.
    Fair values of derivative financial instruments are generally determined
by using valuation techniques which incorporate certain observable and
non-observable data, such as, notably, current market prices and contractual
prices of the underlying instruments, yield curves and volatility factors.

    Section 3855 also permits an entity to voluntarily designate a financial
instrument as held-for-trading. The Bank elected this fair value measurement
option:
    - Where the voluntary designation allows the Bank to eliminate or
      significantly reduce a measurement or recognition inconsistency that
      would have otherwise resulted from the fact that the assets or
      liabilities are measured differently, or that gains and losses on these
      items are recognized differently; and
    - Where it is possible to reliably determine the fair value of the
      financial instruments designated as held-for-trading.
    Instruments that are classified as held-for-trading by way of this "fair
value option" are subject to certain conditions and additional requirements
set out by OSFI.

    Section 3865, Hedges

    When it uses derivative financial instruments to manage its own exposures,
the Bank determines for each derivative financial instrument whether hedge
accounting is appropriate. When appropriate, the Bank formally documents the
hedging relationship detailing, among other things, the type of hedge (either
fair value or cash flow), the item being hedged, the risk management
objective, the hedging strategy and the method to be used to measure its
effectiveness. The derivative financial instrument must be highly effective in
accomplishing the objective of offsetting the changes in the hedged item's
fair value attributable to the risk being hedged both at inception and over
the life of the hedge. Effectiveness is generally reviewed on a monthly basis
using statistical regression models.

    Fair value hedge

    Fair value hedge transactions predominantly use interest rate swaps to
hedge the changes in the fair value of an asset, liability or firm commitment.
    Effective derivative financial instruments, held for fair value hedging
purposes, are recognized at fair value and the changes in fair value are
recognized in the consolidated statement of income under income from treasury
and financial market operations. Changes in fair value of the hedged items
attributable to the hedged risk are also recognized in the consolidated
statement of income under income from treasury and financial market
operations, with a corresponding adjustment to the carrying amount of the
hedged items in the consolidated balance sheet. When the derivative instrument
no longer qualifies as an effective hedge or the hedging instrument is sold or
terminated prior to maturity, hedge accounting is discontinued prospectively.
The cumulative adjustment of the carrying amount of the hedged item related to
a hedging relationship that ceases to be effective is recognized in net
interest income in the periods during which the hedged item affects income.
Furthermore, if the hedged item is sold or terminated prior to maturity, hedge
accounting is discontinued, and the cumulative adjustment of the carrying
amount of the hedged item is then immediately recognized in other income.

    Cash flow hedge

    Cash flow hedge transactions predominantly use interest rate swaps to
hedge the variability in cash flows related to a variable rate asset or
liability.
    Effective derivative financial instruments, held for cash flow hedging
purposes, are recognized at fair value and the changes in fair value related
to the effective portion of the hedge are recognized in other comprehensive
income. Changes in fair value related to the ineffective portion of the hedge
are immediately recorded in the consolidated statement of income. Changes in
fair value recognized in other comprehensive income are reclassified in the
consolidated statement of income under net interest income in the periods
during which the cash flows constituting the hedged item affect income. When
the derivative instrument no longer qualifies as an effective hedge, or when
the hedging instrument is sold or terminated prior to maturity, hedge
accounting is discontinued prospectively. Changes in fair value recognized in
other comprehensive income related to a cash flow hedging relationship that
ceases to be effective are reclassified in the consolidated statement of
income under net interest income in the periods during which the cash flows
constituting the hedged item affect income. Furthermore, if the hedged item is
sold or terminated prior to maturity, hedge accounting is discontinued, and
the related changes in fair value recognized in other comprehensive income are
then immediately reclassified in the consolidated statement of income under
other income.

    Other considerations

    The derivative financial instruments for which the Bank has ceased
applying hedge accounting remain eligible for designation in future hedging
relationships. Upon redesignation, any previously recognized fair value in the
consolidated balance sheet is amortized to other income over the remaining
life of the derivative financial instrument.

    Section 1530, Comprehensive Income

    Section 1530, Comprehensive Income, requires the presentation of a new
consolidated statement of comprehensive income and the accumulated other
comprehensive income, separately under shareholders' equity in the
consolidated balance sheet. The consolidated statement of comprehensive income
presents net income, as well as other comprehensive income items: the
unrealized gains and losses on the financial instruments classified as
available-for-sale, the effective portion of the changes in value of the
derivative instruments designated as cash flow hedging instruments and the
balance to be reclassified in the consolidated statement of income from
terminated cash flow hedges.

    IMPACT OF ADOPTING SECTIONS 3855, 3865 AND 1530

    The adoption of Sections 3855, 3865 and 1530 had an impact on certain
items of the Bank's consolidated balance sheet:

    a) The reclassification of investment portfolio securities in new
       financial asset classes, i.e. securities available-for-sale,
       securities designated as held-for-trading and securities held-to-
       maturity, with adjustments to the opening balances of retained
       earnings and accumulated other comprehensive income;
    b) The reclassification of the balances in the consolidated balance sheet
       to reflect the new accounting standards regarding hedge accounting,
       with adjustments to the opening balances of retained earnings and
       accumulated other comprehensive income.

    These items are detailed below.


    Reconciliation of opening retained earnings balance
    IN THOUSANDS OF DOLLARS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Opening retained earnings balance as reported
     as at October 31, 2006, before adoption of
     Sections 3855, 3865 and 1530                                 $ 485,334

    Adjustments, net of income taxes:
      Securities designated as held-for-trading                       1,061
      Hedging relationships for which hedge accounting is
       no longer appropriate and other items                         (4,246)
                                                                  -----------
    Total adjustments                                                (3,185)
                                                                  -----------
    Balance of retained earnings as at November 1, 2006,
     after adoption of Sections 3855, 3865 and 1530               $ 482,149
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Reconciliation of opening accumulated other comprehensive income
    IN THOUSANDS OF DOLLARS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance of accumulated other comprehensive income
     as reported as at October 31, 2006, before adoption
     of Sections 3855, 3865 and 1530                              $       -

    Adjustments, net of income taxes:
      Securities available-for-sale                                  (2,620)
      Hedge accounting                                              (15,932)
                                                                  -----------
    Total adjustments                                               (18,552)
                                                                  -----------
    Balance of accumulated other comprehensive income
     as at November 1, 2006, after adoption of
     Sections 3855, 3865 and 1530                                 $ (18,552)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Securities

    The securities in the investment account have been reclassified in the
following new financial asset classes:

    - Securities available-for-sale - The remeasurement reflecting the
      unrealized gains and losses on these securities gave rise to a charge
      to accumulated other comprehensive income of $3,906,000 ($2,620,000,
      net of income taxes).
    - Securities designated as financial instruments held-for-trading - The
      remeasurement reflecting the unrealized gains and losses on these
      securities gave rise to an increase to the opening balance of retained
      earnings of $1,581,000 ($1,061,000, net of income taxes).

    No investment account security was reclassified among the securities
held-to-maturity, or transferred into the account of securities
held-for-trading.

    The following table summarizes the reclassifications in the investment
portfolio subsequent to the adoption of Section 3855.


       Consolidated balance sheet
       amounts before adoption of        Consolidated balance sheet amounts
        section 3855, as reported            after adoption of section 3855
           as at October 31, 2006                    as at November 1, 2006
    ----------------------------- -------------------------------------------
    ----------------------------- -------------------------------------------
                                                                      TOTAL
                                    INVESTMENTS   INVESTMENTS    SECURITIES
                                     DESIGNATED DESIGNATED AS         OTHER
                                        AS HELD-    AVAILABLE-    THAN HELD
    IN THOUSANDS       INVESTMENT   FOR TRADING      FOR-SALE FOR TRADING(1)
     OF DOLLARS           ACCOUNT            (A)           (B)         (A+B)
    -------------------------------------------------------------------------
    Securities issued
     or guaranteed by
     the Government
     of Canada        $ 1,277,679   $    13,796   $ 1,260,467   $ 1,274,263
     Provinces              2,674             -         2,672         2,672
    Other debt
     securities           196,312       165,720        30,818       196,538
    Preferred shares       56,556             -        56,678        56,678
    Common and other
     shares                34,001             -        35,049        35,049
                      -------------------------------------------------------
                      $ 1,567,222   $   179,516   $ 1,385,684   $ 1,565,200
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) These amounts now include unrealized gains and losses previously
        unrecognized as at October 31, 2006 in the investment account.

    Trading account securities have been reclassified into the
held-for-trading account, without any effect on opening amounts in the
consolidated balance sheet.

    (b) Hedge accounting

    Fair value hedging

    Unrealized gains and losses on fair value hedges are included in the
opening balance of retained earnings. Prior changes in the fair value of
hedged items attributable to the hedged risk have also been recognized in the
opening balance of retained earnings, with a corresponding adjustment to the
carrying amount of the hedged items in the consolidated balance sheet. These
adjustments did not have any effect on the opening balance of retained
earnings as they offset one another on November 1, 2006.

    Cash flow hedging

    The adoption of Section 3865 gave rise to an adjustment to accumulated
other comprehensive income in the amount of -$23,750,000 (-$15,932,000, net of
income taxes), representing the unrealized loss on interest rate swaps
designated as cash flow hedging instruments of $14,075,000 ($9,442,000, net of
income taxes) and to deferred losses of $9,675,000 ($6,490,000, net of income
taxes) related to previously terminated hedging relationships, which are
amortized.

    Termination of hedging relationships involving hedging instruments other
    than derivatives and accumulated ineffectiveness in hedging relationships

    In accordance with Section 3865, fair value hedges of securities financial
instruments other than derivative financial instruments no longer qualify.
Moreover, the accumulated ineffectiveness of hedging relationships must be
measured, and the ineffective portion of changes in fair value must be
recognized in the consolidated statement of income. The foregoing led to a
charge of $6,337,000 ($4,246,000, net of income taxes) to the opening balance
of retained earnings, as a result of the adoption of Section 3865.

    SUPPLEMENTAL INFORMATION

    Ineffectiveness related to hedging relationships

    During the quarter ended July 31, 2007, the ineffective portion of
accumulated changes in the fair value of hedging instruments recognized in the
income statement amounted to -$220,000 (-$280,000 for the nine-month period
ended July 31, 2007) as it relates to cash flow hedging relationships and
-$47,000 (-$76,000 for the nine-month period ended July 31, 2007) as it
relates to fair value hedging relationships.

    Breakdown of swap contracts designated as hedging instruments, by
    category

    The following table presents the Bank's swap contracts between those
designated as cash flow hedging instruments and those designated as fair value
hedging instruments.
    The swap contracts designated as hedging instruments are used by the Bank
primarily for balance sheet matching purposes and to mitigate net interest
revenue volatility. The fair value of such swap contracts may vary
considerably. Accordingly, changes in the fair value of the swap contracts
designated as cash flow hedging instruments could result in significant
changes in accumulated other comprehensive income, in shareholders' equity.


                                        JULY 31                  NOVEMBER 1
                                           2007                        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS          NOMINAL    FAIR VALUE       NOMINAL    FAIR VALUE
     OF DOLLARS            AMOUNT    NET AMOUNT        AMOUNT    NET AMOUNT
    -------------------------------------------------------------------------
    Contracts
     designated
     as hedging
     instruments
      Interest rate
       swap contracts
        Swaps used
         for cash
         flow
         hedging      $ 3,711,000   $   (21,407)  $ 3,822,000   $   (13,830)
        Swaps used
         for fair
         value
         hedging        2,310,000       (10,223)      130,000           220
                      -------------------------------------------------------
                      $ 6,021,000   $   (31,630)  $ 3,952,000   $   (13,610)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other information on hedging relationships

    Of the amount of net deferred losses included in accumulated other
comprehensive income as at July 31, 2007, the Bank expects to transfer
$5,142,000 into net income over the next twelve months.
    The maximum term of cash flow hedging relationships of anticipated
transactions was 5 years as at July 31, 2007.

    Financial instruments designated as held-for-trading

    For the three-month period ended July 31, 2007, a loss of $4,777,000 (a
loss of $5,850,000 for the nine-month period ended July 31, 2007) was
recognized in trading income for financial instruments designated as
held-for-trading under the fair value option.
    The Bank designated certain deposits for a nominal amount of $62,815,000
as held-for-trading. The difference between the amount the Bank would be
contractually required to pay at maturity to the holder of the deposits and
the carrying amount of $62,652,000, is $163,000.


    Other comprehensive income

                             FOR THE THREE-MONTH PERIOD ENDED JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                                     AMOUNT
                                        AMOUNTS                      NET OF
                                  BEFORE INCOME        INCOME        INCOME
    IN THOUSANDS OF DOLLARS               TAXES         TAXES         TAXES
    -------------------------------------------------------------------------
    Unrealized gains and losses
     on available-for-sale
     securities
      Unrealized gains and
       losses during the period    $     (4,134) $      1,318  $     (2,816)
    Less : reclassification
     to income of realized
     gains and losses during the
     period                                (498)          162          (336)
                                  -------------------------------------------
    Unrealized gains and losses
     on available-for-sale
     securities                          (4,632)        1,480        (3,152)

    Gains and losses on
     derivatives designated as
     cash flow hedges                    (7,094)        2,408        (4,686)
                                  -------------------------------------------
    Other comprehensive income     $    (11,726) $      3,888  $     (7,838)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                              FOR THE NINE-MONTH PERIOD ENDED JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                                     AMOUNT
                                        AMOUNTS                      NET OF
                                  BEFORE INCOME        INCOME        INCOME
    IN THOUSANDS OF DOLLARS               TAXES         TAXES         TAXES
    -------------------------------------------------------------------------
    Unrealized gains and losses
     on available-for-sale
     securities
      Unrealized gains and
       losses during the period    $     19,200  $     (2,724) $     16,476
      Less : reclassification to
       income of realized gains
       and losses during the
       period                            (1,561)         (229)       (1,790)
                                  -------------------------------------------
    Unrealized gains and losses
     on available-for-sale
     securities                          17,639        (2,953)       14,686

    Gains and losses on
     derivatives designated as
     cash flow hedges                    (9,232)        3,149        (6,083)
                                  -------------------------------------------
    Other comprehensive income     $      8,407  $        196  $      8,603
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Accumulated other comprehensive income

                                                        AS AT JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                                ACCUMULATED
                                           CASH     AVAILABLE-        OTHER
                                           FLOW      FOR-SALE COMPREHENSIVE
    IN THOUSANDS OF DOLLARS             HEDGING    SECURITIES        INCOME
    -------------------------------------------------------------------------
    Balance at beginning of
     period                        $          -  $          -  $          -
    Impact of adopting the new
     accounting policy, net of
     income taxes                       (15,932)       (2,620)      (18,552)
    Change during the three-
     month period ended
     January 31, 2007                      (358)         (180)         (538)
    Change during the three-
     month period ended
     April 30, 2007                      (1,039)       18,018        16,979
    Change during the three-
     month period ended
     July 31, 2007                       (4,686)       (3,152)       (7,838)
                                  -------------------------------------------
    Balance at end of period       $    (22,015) $     12,066  $     (9,949)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    2. DISPOSALS

    Sale of the joint-venture BLC-Edmond de Rothschild Asset Management Inc.

    On December 31, 2004, the Bank completed the sale of the BLC-Edmond de
Rothschild Asset Management Inc. joint-venture (BLCER) to Industrial Alliance
Insurance and Financial Services Inc. (Industrial Alliance).
    During the first quarter ended January 31, 2006, the Bank recognized a
gain of $187,000 ($124,000 net of income taxes) with regards to the recovery
clause related to institutional funds under management. As well, in relation
with the sale of BLCER, it was agreed that investments in seed capital owned
by the Bank at the time of the transaction would be disposed of. Also during
the first quarter ended January 31, 2006, the Bank completed the sale of these
investments and recorded revenues of $300,000 ($200,000 net of income taxes)
to reflect the realized net gains. These gains were entirely attributed to the
Other segment.

    Income per common share from discontinued operations

                                  FOR THE THREE-MONTH    FOR THE NINE-MONTH
                                        PERIODS ENDED         PERIODS ENDED
                        JULY 31   APRIL 30    JULY 31    JULY 31    JULY 31
    IN DOLLARS             2007       2007       2006       2007       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic             $       -  $       -  $       -  $       -  $    0.01
    Diluted           $       -  $       -  $       -  $       -  $    0.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    3. LOANS

    LOANS AND IMPAIRED LOANS

                                                        AS AT JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                     GROSS
                          GROSS  AMOUNT OF   SPECIFIC    GENERAL      TOTAL
    IN THOUSANDS         AMOUNT   IMPAIRED    ALLOWAN-   ALLOWAN-   ALLOWAN-
     OF DOLLARS        OF LOANS      LOANS        CES        CES        CES
    -------------------------------------------------------------------------

    Personal
     loans         $  4,789,477  $  18,627  $   7,167  $  26,663  $  33,830
    Residential
     mortgages        6,349,418     20,288      1,850      4,404      6,254
    Commercial
     mortgages          670,918      4,855      1,563      3,811      5,374
    Commercial and
     other loans      1,533,864     65,516     41,085     30,372     71,457
                  -----------------------------------------------------------
                   $ 13,343,677  $ 109,286  $  51,665  $  65,250  $ 116,915
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                     AS AT OCTOBER 31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                     GROSS
                          GROSS  AMOUNT OF   SPECIFIC    GENERAL      TOTAL
    IN THOUSANDS         AMOUNT   IMPAIRED    ALLOWAN-   ALLOWAN-   ALLOWAN-
     OF DOLLARS        OF LOANS      LOANS        CES        CES        CES
    -------------------------------------------------------------------------

    Personal
     loans         $  4,168,026  $  16,100  $   5,659  $  26,436  $  32,095
    Residential
     mortgages        5,985,656     16,501      3,479      4,771      8,250
    Commercial
     mortgages          659,014      8,393      3,472      2,471      5,943
    Commercial and
     other loans      1,476,977     89,603     47,293     26,900     74,193
    Unallocated
     general
     allowance                -          -          -      4,672      4,672
                  -----------------------------------------------------------
                   $ 12,289,673  $ 130,597  $  59,903  $  65,250  $ 125,153
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                        AS AT JULY 31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                     GROSS
                          GROSS  AMOUNT OF   SPECIFIC    GENERAL      TOTAL
    IN THOUSANDS         AMOUNT   IMPAIRED    ALLOWAN-   ALLOWAN-   ALLOWAN-
     OF DOLLARS        OF LOANS      LOANS        CES        CES        CES
    -------------------------------------------------------------------------

    Personal
     loans         $  4,160,630  $  14,841  $   5,276  $  23,855  $  29,131
    Residential
     mortgages        5,799,043     12,087      3,802      4,676      8,478
    Commercial
     mortgages          638,765     10,194      4,970      3,607      8,577
    Commercial and
     other loans      1,532,565     95,579     49,143     28,407     77,550
    Unallocated
     general
     allowance                -          -          -      4,705      4,705
                  -----------------------------------------------------------
                   $ 12,131,003  $ 132,701  $  63,191  $  65,250  $ 128,441
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SPECIFIC ALLOWANCES FOR LOAN LOSSES

                                   FOR THE NINE-MONTH PERIODS ENDED JULY 31
                                                              2007     2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 COMMER-
                            RESIDEN-   COMMER-     CIAL     TOTAL     TOTAL
                    PERSO-     TIAL      CIAL       AND  SPECIFIC  SPECIFIC
    IN THOUSANDS      NAL    MORTGA-   MORTGA-    OTHER   ALLOWAN-  ALLOWAN-
     OF DOLLARS     LOANS       GES       GES     LOANS       CES       CES
    -------------------------------------------------------------------------

    Balance at
     beginning
     of period   $  5,659  $  3,479  $  3,472  $ 47,293  $ 59,903  $ 64,556
    Provision
     for credit
     losses
     recorded
     in the
     consoli-
     dated
     statement
     of income     21,318       825       264     7,593    30,000    30,000
    Write-offs    (23,228)   (2,489)   (2,175)  (13,921)  (41,813)  (34,375)
    Recoveries      3,418        35         2       120     3,575     3,421
    Provision
     for credit
     losses
     resulting
     from the
     sale of a
     subsidiary         -         -         -         -         -      (411)
                 ------------------------------------------------------------
    Balance at
     end of
     period      $  7,167  $  1,850  $  1,563  $ 41,085  $ 51,665  $ 63,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    GENERAL ALLOWANCES FOR LOAN LOSSES

                                   FOR THE NINE-MONTH PERIODS ENDED JULY 31
                                                                       2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 COMMER-   UNALLO-
                            RESIDEN-   COMMER-     CIAL     CATED     TOTAL
                    PERSO-     TIAL      CIAL       AND   GENERAL   GENERAL
    IN THOUSANDS      NAL    MORTGA-   MORTGA-    OTHER   ALLOWAN-  ALLOWAN-
     OF DOLLARS     LOANS       GES       GES     LOANS        CE       CES
    -------------------------------------------------------------------------

    Balance at
     beginning
     of period   $ 26,436  $  4,771  $  2,471  $ 26,900  $  4,672  $ 65,250
    Change
     during the
     period           227      (367)    1,340     3,472    (4,672)        -
                 ------------------------------------------------------------
    Balance at
     end of
     period      $ 26,663  $  4,404  $  3,811  $ 30,372  $      -  $ 65,250
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                   FOR THE NINE-MONTH PERIODS ENDED JULY 31
                                                                       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                      TOTAL
                                                                    GENERAL
    IN THOUSANDS                                                    ALLOWAN-
     OF DOLLARS                                                         CES
    -------------------------------------------------------------------------

    Balance at
     beginning
     of period                                                     $ 65,250
      Change
       during the
       period                                                             -
                -------------------------------------------------------------
    Balance at
     end of
     period                                                        $ 65,250
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    4. LOAN SECURITIZATION

    The Bank securitizes residential mortgage loans insured by the Canadian
Mortgage and Housing Corporation, as well as conventional mortgages. The gains
before income taxes, net of transaction related costs, are recognized in other
income.
    The following table summarizes the residential loan securitization
transactions carried out by the Bank:


                          FOR THE THREE-MONTH PERIODS    FOR THE NINE-MONTH
                                                ENDED         PERIODS ENDED
    IN THOUSANDS        JULY 31   APRIL 30    JULY 31    JULY 31    JULY 31
     OF DOLLARS            2007       2007       2006       2007       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash proceeds,
     net of
     transaction
     related
     costs         $    310,904  $ 136,777  $ 111,087  $ 447,681  $ 631,896
    Rights to
     future excess
     interest             8,504      4,730      2,856     13,234     14,375
    Servicing
     liabilities         (2,123)    (1,091)      (733)    (3,214)    (4,401)
    Cash reserve
     accounts             7,419      1,076      4,629      8,495     15,582
    Other                (4,514)    (1,157)      (872)    (5,671)    (3,646)
                     --------------------------------------------------------
                        320,190    140,335    116,967    460,525    653,806
    Residential
     loans
     securitized
     and sold           319,135    138,134    115,716    457,269    647,645
                     --------------------------------------------------------
    Gains before
     income taxes,
     net of
     transaction
     related costs $      1,055  $   2,201  $   1,251  $   3,256  $   6,161
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    With regard to the transfer of residential mortgages, the key assumptions
used to determine the initial fair value of retained interests at the
securitization date for transactions carried out during the quarter are
summarized as follows:


                                                                    JULY 31
                                                                       2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Rate of prepayment                                                 25.9%
    Discount rate                                                      4.80%
    Rate of credit losses                                              0.05%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    No loss is expected on insured residential mortgages.


    During the second quarter of 2007, the Bank also securitized commercial
mortgages for $40,338,000, generating a $424,000 gain. The Bank has not
retained any right or obligation with respect to the commercial mortgages.
    The total principal amount of securitized loans outstanding amounted to
$1,262,348,000 as at July 31, 2007 ($1,079,026,000 as at October 31, 2006).


    5. CAPITAL STOCK

    Issuance of common shares

    During the quarter, 58,338 common shares (79,589 common shares during the
nine-month period ended July 31, 2007) were issued under the employee share
purchase option plan for the management of the Bank for a cash consideration
of $1,573,000 ($2,082,000 during the nine-month period ended July 31, 2007).




    ISSUED AND
     OUTSTANDING            AS AT JULY 31, 2007      AS AT OCTOBER 31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS OF
     DOLLARS, EXCEPT       NUMBER                      NUMBER
     NUMBER OF SHARES   OF SHARES        AMOUNT     OF SHARES        AMOUNT
    -------------------------------------------------------------------------

    Class A Preferred
     Shares(1)
      Series 9          4,000,000  $    100,000     4,000,000  $    100,000
      Series 10         4,400,000       110,000     4,400,000       110,000
                     --------------------------------------------------------
    Total preferred
     shares             8,400,000  $    210,000     8,400,000  $    210,000
                     --------------------------------------------------------
                     --------------------------------------------------------
    Common shares      23,700,025  $    253,240    23,620,436  $    251,158
                     --------------------------------------------------------
    Treasury shares             -  $          -       (20,000) $       (590)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The preferred shares are convertible into common shares at the Bank's
        option. However, the number of shares issuable on conversion is not
        determinable until the date of conversion.


    6. STOCK-BASED COMPENSATION

    Restricted Share Unit Program

    Under the Restricted Share Unit Program, annual bonuses for certain
employees amounting to $612,000 were converted into 19,978 entirely vested
restricted share units during the first quarter of 2007. The Bank also granted
11,987 additional restricted share units which will vest in December 2009.

    Stock option purchase plan

    During the first quarter of 2007, the Bank awarded 50,000 stock options
with an exercise price of $29.47, at a fair value of $4.55 per stock option. A
$29,000 charge to salaries and employee benefits was recorded for the third
quarter of 2007 ($75,000 for the nine-month period ended July 31, 2007) with
regards to this grant.
    The fair value of these options was estimated, on the award date, using
the Black-Scholes valuation model, with the following assumptions:


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Risk-free interest rate                                            4.10%
    Expected options life                                           7 years
    Expected volatility                                               19.60%
    Expected dividend yield                                            4.00%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on outstanding number of options is as follows:

                                                           AS AT      AS AT
                                                            JULY    OCTOBER
                                                        31, 2007   31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          NUMBER     NUMBER
    -------------------------------------------------------------------------
    Share purchase options
      Outstanding at end of period                       280,815    339,604
      Exercisable at end of period                       230,815    339,604
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Performance-based share agreement

    In accordance with the performance-based share agreement, all rights to
the 20,000 common shares granted in 2005 vested in January 2007, as objectives
were met. Consequently, the shares were issued to the employee. A $72,000
charge to salaries and employee benefits was recorded for the first quarter of
2007 with regards to this grant.

    Stock appreciation rights (SARs) plan

    During the third quarter of 2007, the Bank awarded 229,000 stock
appreciation rights (SARs) with an exercice price of $34.47.


    7. EMPLOYEE FUTURE BENEFITS

                          FOR THE THREE-MONTH PERIODS    FOR THE NINE-MONTH
                                                ENDED         PERIODS ENDED
    IN THOUSANDS        JULY 31   APRIL 30    JULY 31    JULY 31    JULY 31
     OF DOLLARS            2007       2007       2006       2007       2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Defined benefit
     pension plans
     expense       $      4,158  $   4,022  $   4,805  $  12,517  $  14,040
    Defined
     contribution
     pension plan
     expense                771        735        691      2,201      1,914
    Other plans
     expense                807        780        630      2,394      1,870
                     --------------------------------------------------------
    Total          $      5,736  $   5,537  $   6,126  $  17,112  $  17,824
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    8. INCOME TAXES

    For the quarter ended July 31, 2007, the income tax expense was $9,491,000
(29.1% effective tax rate). This lower tax rate, compared to the statutory tax
rate of approximately 33%, results from investments in Canadian securities
that generate tax-exempt dividend income, as well as the lower taxation level
on revenues from credit insurance operations.
    For the nine-month period ended July 31, 2007, the income tax expense was
$22,264,000 (25.7% effective tax rate). The lower tax rate for this nine-month
period results from the items discussed above, as well as to the following
items: during the second quarter - the lower income taxes on capital gains for
$710,000; and a $848,000 favorable adjustment relative to last year's
repatriation of accumulated foreign retained earnings from credit insurance
operations; also during the first quarter - a $900,000 favorable adjustment to
reflect the increase in value of the future tax assets following the adoption,
in December 2006, of Federal fiscal measures which provided for raising the
threshold of the federal minimum tax on financial institutions to $1 billion.
    For the quarter ended July 31, 2006, the income tax expense was
$18,624,000 (75.2% effective tax rate). This rate reflected the decrease of
future tax assets of $11,000,000 following the Federal Corporate Income Tax
Rate reductions for the years 2008 and thereafter. Excluding the effect of
this reduction, the income tax expense for the quarter would have been
$7,624,000, for a 30.8% effective tax rate.
    For the nine-month period ended July 31, 2006, the income tax expense was
$19,331,000 (29.0% effective tax rate). This tax rate reflects the combined
effect of the adjustment of the third quarter of $11,000,000, discussed above,
and of the following items: during the second quarter - an $11,327,000
recovery related to the resolution of various income tax exposures, the
recognition of $2,730,000 of previously unrecognized temporary differences
related to the minimum tax on financial institutions and a $3,385,000 charge
on the decision to repatriate capital from foreign credit insurance
operations; also during the first quarter - the favorable adjustment to future
tax assets of $2,398,000, resulting from the increase in Quebec income tax
rates and the lower taxes on the gain on sale of Brome Financial Corporation.


    9. WEIGHTED AVERAGE NUMBER OF OUTSTANDING COMMON SHARES

                                FOR THE THREE-MONTH      FOR THE NINE-MONTH
                                      PERIODS ENDED                   ENDED
                    JULY 31    APRIL 30     JULY 31     JULY 31     JULY 31
                       2007        2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average
     number of
     outstanding
     common
     shares      23,661,820  23,638,152  23,612,865  23,642,412  23,601,426
    Dilutive and
     other share
     purchase
     options         66,522      47,076      31,025      47,466      50,538
                -------------------------------------------------------------
    Weighted
     average
     number of
     outstanding
     common
     shares      23,728,342  23,685,228  23,643,890  23,689,878  23,651,964
                -------------------------------------------------------------
    Average
     number of
     share
     purchase
     options not
     taken into
     account
     in the
     calculation
     of diluted
     net income
     per common
     share(1)             -           -     124,200      30,150      41,855
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1)  The average number of share purchase options was not taken into
         account in the calculation of diluted net income per common share
         since the average exercise price of these options exceeded the
         average market price of the Bank's share during these periods.


    10. SEGMENTED INFORMATION

                                           FOR THE THREE-MONTH PERIOD ENDED
                                                              JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                             RFS           CFS           B2B
    -------------------------------------------------------------------------
    Net interest
     income                        $     68,847  $     15,513  $     20,863
    Other income                         26,483         5,144         3,014
                                   ------------------------------------------
    Total revenue                        95,330        20,657        23,877
    Provision for credit losses           6,414         2,430         1,156
    Non-interest expenses                75,453         9,019        10,497
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                 13,463         9,208        12,224
    Income taxes
     (recovered)                          3,717         3,085         4,136
                                   ------------------------------------------
    Income (loss) from
     continuing operations                9,746         6,123         8,088
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $      9,746  $      6,123  $      8,088
                                   ------------------------------------------
                                   ------------------------------------------
    Average assets(2)              $  8,797,006  $  2,481,731  $  3,213,020
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                          LBS (3)        OTHER         TOTAL
    -------------------------------------------------------------------------
    Net interest income            $        570  $     (4,026) $    101,767
    Other income                          8,005         6,629        49,275
                                   ------------------------------------------
    Total revenue                         8,575         2,603       151,042
    Provision for credit losses               -             -        10,000
    Non-interest expenses                 7,826         5,578       108,373
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                    749        (2,975)       32,669
    Income taxes
     (recovered)                            170        (1,617)        9,491
                                   ------------------------------------------
    Income (loss) from
     continuing operations                  579        (1,358)       23,178
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $        579  $     (1,358) $     23,178
                                   ------------------------------------------
                                   ------------------------------------------
    Average assets(2)              $  1,479,992  $    948,407  $ 16,920,156
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                           FOR THE THREE-MONTH PERIOD ENDED
                                                             APRIL 30, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    IN THOUSANDS
     OF DOLLARS                             RFS           CFS           B2B
    -------------------------------------------------------------------------
    Net interest income            $     64,633  $     15,003  $     19,551
    Other income (1)                     25,689         5,553         2,998
                                   ------------------------------------------
    Total revenue                        90,322        20,556        22,549
    Provision for credit losses           6,721         2,241         1,038
    Non-interest expenses                74,852         9,225        10,764
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                  8,749         9,090        10,747
    Income taxes
     (recovered)                          1,944         3,045         3,623
                                   ------------------------------------------
    Income (loss) from
     continuing operations                6,805         6,045         7,124
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $      6,805  $      6,045  $      7,124
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  8,575,446  $  2,413,619  $  2,934,231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                          LBS (3)        OTHER         TOTAL
    -------------------------------------------------------------------------
    Net interest income            $        376  $     (4,057) $     95,506
    Other income (1)                     14,214         1,711        50,165
                                   ------------------------------------------
    Total revenue                        14,590        (2,346)      145,671
    Provision for credit losses               -            -         10,000
    Non-interest expenses                 7,956         6,154       108,951
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                  6,634        (8,500)       26,720
    Income taxes
     (recovered)                          1,341        (3,886)        6,067
                                   ------------------------------------------
    Income (loss) from
     continuing operations                5,293        (4,614)       20,653
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $      5,293  $     (4,614) $     20,653
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  1,498,057  $  1,312,860  $ 16,734,213
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                           FOR THE THREE-MONTH PERIOD ENDED
                                                              JULY 31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                             RFS           CFS           B2B
    -------------------------------------------------------------------------
    Net interest income            $     66,198  $     14,648  $     19,051
    Other income                         24,515         5,873         3,145
                                   ------------------------------------------
    Total revenue                        90,713        20,521        22,196
    Provision for credit losses           7,289         1,215         1,496
    Non-interest expenses                73,307         8,939        10,469
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                 10,117        10,367        10,231
    Income taxes                          3,388         3,473         3,471
                                   ------------------------------------------
    Income (loss) from
     continuing operations                6,729         6,894         6,760
    Income from discontinued
     operations, net of income
     taxes                                    -             -             -
                                   ------------------------------------------
    Net income                     $      6,729  $      6,894  $      6,760
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  8,277,569  $  2,265,991  $  2,771,988
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                          LBS (3)     OTHER (4)        TOTAL
    -------------------------------------------------------------------------
    Net interest income            $        207  $     (8,612) $     91,492
    Other income                          7,096         5,904        46,533
                                   ------------------------------------------
    Total revenue                         7,303        (2,708)      138,025
    Provision for credit losses               -             -        10,000
    Non-interest expenses                 6,748         3,782       103,245
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                    555        (6,490)       24,780
    Income taxes                             43         8,249        18,624
                                   ------------------------------------------
    Income (loss) from
     continuing operations                  512       (14,739)        6,156
    Income from discontinued
     operations, net of income
     taxes                                    -             -             -
                                   ------------------------------------------
    Net income                     $        512  $    (14,739) $      6,156
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  1,464,569  $  2,052,333  $ 16,832,450
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                            FOR THE NINE-MONTH PERIOD ENDED
                                                              JULY 31, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                             RFS           CFS           B2B
    -------------------------------------------------------------------------
    Net interest income            $    199,206  $     45,942  $     60,170
    Other income (1)                     77,530        16,540         8,806
                                   ------------------------------------------
    Total revenue                       276,736        62,482        68,976
    Provision for credit losses          19,431         7,360         3,209
    Non-interest expenses               222,971        27,217        31,674
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                 34,334        27,905        34,093
    Income taxes
     (recovered)                          8,499         9,348        11,529
                                   ------------------------------------------
    Income (loss) from
     continuing operations               25,835        18,557        22,564
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $     25,835  $     18,557  $     22,564
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  8,627,827  $  2,412,767  $  2,994,672
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                          LBS (3)        OTHER         TOTAL
    -------------------------------------------------------------------------
    Net interest income            $      1,239  $    (14,087) $    292,470
    Other income (1)                     30,931        12,027       145,834
                                   ------------------------------------------
    Total revenue                        32,170        (2,060)      438,304
    Provision for credit losses               -             -        30,000
    Non-interest expenses                23,421        16,370       321,653
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                  8,749       (18,430)       86,651
    Income taxes
     (recovered)                          1,890        (9,002)       22,264
                                   ------------------------------------------
    Income (loss) from
     continuing operations                6,859        (9,428)       64,387
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $      6,859  $     (9,428) $     64,387
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  1,539,471  $  1,180,157  $ 16,754,894
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                            FOR THE NINE-MONTH PERIOD ENDED
                                                              JULY 31, 2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                             RFS        CFS (5)          B2B
    -------------------------------------------------------------------------
    Net interest income            $    192,988  $     43,993  $     54,622
    Other income                         70,656        17,609         9,764
                                   ------------------------------------------
    Total revenue                       263,644        61,602        64,386
    Provision for credit losses          17,592         7,890         4,518
    Non-interest expenses               215,556        27,954        32,657
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                 30,496        25,758        27,211
    Income taxes
     (recovered)                         10,187         8,627         9,233
                                   ------------------------------------------
    Income (loss) from continuing
     operations                          20,309        17,131        17,978
    Income from discontinued
     operations, net of
     income taxes                             -             -             -
                                   ------------------------------------------
    Net income                     $     20,309  $     17,131  $     17,978
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets(2)              $  8,137,184  $  2,248,267  $  2,685,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    IN THOUSANDS
     OF DOLLARS                          LBS (3)        OTHER         TOTAL
    -------------------------------------------------------------------------
    Net interest income            $        790  $    (27,268) $    265,125
    Other income                         22,749        16,845       137,623
                                   ------------------------------------------
    Total revenue                        23,539       (10,423)      402,748
    Provision for credit losses               -             -        30,000
    Non-interest expenses                20,332         9,498       305,997
                                   ------------------------------------------
    Income (loss) from
     continuing operations
     before income taxes                  3,207       (19,921)       66,751
    Income taxes
     (recovered)                            896        (9,612)       19,331
                                   ------------------------------------------
    Income (loss) from continuing
     operations                           2,311       (10,309)       47,420
    Income from discontinued
     operations, net of
     income taxes                             -           354           354
                                   ------------------------------------------
    Net income                     $      2,311  $     (9,955) $     47,774
                                   ------------------------------------------
                                   ------------------------------------------

    Average assets (2)             $  1,475,551  $  2,149,033  $ 16,695,537
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RFS -   The Retail Financial Services segment covers the full range of
            savings, investment, financing and transactional products and
            services offered through its direct distribution network, which
            includes branches, the electronic network and the call centre, as
            well as Point-of-Sale financing across Canada. This business
            segment also offers Visa credit card services and insurance
            products as well as trust services.
    CFS -   The Commercial Financial Services segment handles commercial
            loans and larger financings as part of banking syndicates, as
            well as commercial mortgage financing, leasing, factoring and
            other services.
    B2B -   The B2B Trust business segment supplies generic and complementary
            banking and financial products to financial advisors and non-bank
            financial institutions across Canada.This business segment also
            consists of deposit brokerage operations.
    LBS -   LBS segment consists of the activities of the subsidiary
            Laurentian Bank Securities Inc.
    Other - The category "Other" includes treasury and securitization
            activities and other activities of the Bank including revenues
            and expenses that are not attributable to the above-mentioned
            segments.
    (1)     During the second quarter of 2007, the initial public offering of
            the Montreal Stock Exchange triggered a $21.7 million
            ($18.2 million net of income taxes) revaluation of the shares
            held by the Bank through other comprehensive income. A portion of
            the holding was subsequently sold and a $4.4 million
            ($3.7 million net of income taxes) gain was reclassified to other
            income in the LBS segment. Also during the second quarter,a
            $4.3 million loss on sale of securities was incurred and reported
            in the Other segment.
    (2)     Assets are disclosed on an average basis as this measure is most
            relevant to a financial institution.
    (3)     Results for LBS were reclassified for 2006 to present revenues
            gross of certain commissions and other costs which were
            previously netted against revenues.
    (4)     Results of the Other segment for the third quarter of 2006
            included an $11,000,000 tax charge resulting from the Federal
            Corporate Income Tax Rate reductions for the years 2008 and
            thereafter (see Note 8 to the interim consolidated financial
            statements).
    (5)     Results for the first quarter of 2006 included a $0.05 million
            contribution to net income from Brome Financial Corporation Inc.
            for the two months prior to the sale of the subsidiary and the
            $0.93 million gain from this sale.


    OTHER INCOME

                                                                       2007
    IN THOUSANDS
    OF DOLLARS
    (UNAUDITED)                Q4            Q3            Q2            Q1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Fees and commissions
     on loans and deposits
      Deposit service
       charges        $         -   $    13,083   $    12,599   $    12,291
      Lending fees              -         5,963         5,663         5,882
      Card service
       revenues                 -         4,160         3,345         3,397
                     --------------------------------------------------------
    Sub-total - fees and
     commissions on loans
     and deposits               -        23,206        21,607        21,570
                     --------------------------------------------------------
    Other
      Revenues from
       brokerage operations     -         7,664         9,693         8,548
      Income from treasury
       and financial market
       operations               -         6,516         4,274         4,584
      Credit insurance income   -         2,453         3,030         3,582
      Income from sales of
       mutual funds             -         3,521         3,318         3,074
      Income from registered
       self-directed plans      -         2,490         2,572         2,359
      Securitization income     -         1,236         3,215           560
      Other                     -         2,189         2,456         2,117
                     --------------------------------------------------------
    Sub-total - other           -        26,069        28,558        24,824
                     --------------------------------------------------------

    Total - other
     income           $         -   $    49,275   $    50,165   $    46,394
                     --------------------------------------------------------
                     --------------------------------------------------------

    As a % of
     average assets             - %        1.16 %        1.23 %        1.11 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                       2006
    IN THOUSANDS
     OF DOLLARS
     (UNAUDITED)               Q4            Q3            Q2            Q1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Fees and commissions
     on loans and deposits
      Deposit service
       charges        $    12,055   $    12,096   $    11,926   $    11,836
      Lending fees          5,865         6,414         5,303         6,096
      Card service
       revenues             3,342         3,587         2,983         3,112
                     --------------------------------------------------------
    Sub-total - fees and
     commissions on loans
     and deposits          21,262        22,097        20,212        21,044
                      -------------------------------------------------------
    Other
      Revenues from
       brokerage
       operations           8,896         7,020         8,280         7,222
      Income from
       treasury and
       financial market
       operations           4,168         5,102         2,889         3,047
      Credit insurance
       income               3,222         3,131         3,249         2,976
      Income from sales
       of mutual funds      2,911         2,717         2,636         2,373
      Income from
       registered
       self-directed plans  2,325         2,540         2,893         2,757
      Securitization
       income               1,035         2,245         3,554         3,138
      Gain on disposal          -             -             -           931
      Other                 1,158         1,681         1,587         2,302
                      -------------------------------------------------------
    Sub-total - other      23,715        24,436        25,088        24,746
                      -------------------------------------------------------

    Total - other
     income            $   44,977   $    46,533   $    45,300   $    45,790
                      -------------------------------------------------------
                      -------------------------------------------------------

    As a % of average
     assets                  1.07 %        1.10 %        1.11 %        1.10 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NON - INTEREST EXPENSES

                                                                       2007
    IN THOUSANDS
     OF DOLLARS
    (UNAUDITED)                Q4            Q3            Q2            Q1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Salaries and
     employee
     benefits
      Salaries        $         -  $     37,606  $     36,266  $     36,160
      Employee
       benefits                 -        13,655        13,809        12,965
      Performance-
       based
       compensation             -         7,341         8,045         7,141
                      -------------------------------------------------------
    Sub-total -
     salaries and
     employee benefits          -        58,602        58,120        56,266
                      -------------------------------------------------------
    Premises and
     technology
      Equipment and
       computer
       services                 -        10,402        11,291        10,103
      Rent and
       property taxes           -         8,617         8,750         8,461
      Depreciation              -         6,883         6,814         6,569
      Maintenance and
       repairs                  -         1,424         1,208         1,200
      Public utilities          -           296           417           309
      Other                     -           136            88           114
                      -------------------------------------------------------
    Sub-total -
     premises
     and technology             -        27,758        28,568        26,756
                      -------------------------------------------------------
    Other expenses
      Taxes and
       insurance                -         4,431         4,590         5,641
      Fees and
       commissions              -         5,208         4,845         3,649
      Communications
       and travelling
       expenses                 -         4,631         4,677         4,373
      Advertising and
       business
       development              -         4,534         4,433         3,660
      Stationery and
       publications             -         1,418         1,691         1,705
      Recruitment and
       training                 -           684           708           982
      Other                     -         1,107         1,319         1,297
                      -------------------------------------------------------
    Sub-total -
     other expenses             -        22,013        22,263        21,307
                      -------------------------------------------------------
    Total -
     non-interest
     expenses         $         -   $   108,373   $   108,951   $   104,329
                      -------------------------------------------------------
                      -------------------------------------------------------
    As a % of average
     assets                     - %        2.54 %        2.67 %        2.49 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                       2006
    IN THOUSANDS
     OF DOLLARS
    (UNAUDITED)                Q4            Q3            Q2            Q1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Salaries and
     employee
     benefits
      Salaries        $    35,225   $    36,647   $    34,102   $    34,814
      Employee
       benefits            12,727        12,426        12,903        11,923
      Performance-
       based
       compensation         7,577         4,328         3,369         7,542
                      -------------------------------------------------------
    Sub-total -
     salaries and
     employee
     benefits              55,529        53,401        50,374        54,279
                      -------------------------------------------------------
    Premises and
     technology
      Equipment and
       computer
       services            10,485        10,526        10,769        10,244
      Rent and
       property taxes       8,399         8,345         8,372         8,451
      Depreciation          6,874         6,249         6,348         6,502
      Maintenance and
       repairs              1,327         1,211         1,209         1,177
      Public utilities        265           276           364           316
      Other                   (28)          162           188           120
                      -------------------------------------------------------
    Sub-total -
     premises and
     technology            27,322        26,769        27,250        26,810
                      -------------------------------------------------------
    Other expenses
      Taxes and
       insurance            5,983         5,732         6,110         6,090
      Fees and
       commissions          5,357         5,210         4,903         3,688
      Communications
       and travelling
       expenses             4,436         4,666         4,371         4,061
      Advertising and
       business
       development          3,124         3,837         3,728         4,611
      Stationery and
       publications         1,412         1,443         1,490         1,622
      Recruitment and
       training               383           612           490           611
      Other                 1,272         1,575         1,273           991
                      -------------------------------------------------------
    Sub-total -
     other expenses        21,967        23,075        22,365        21,674
                      -------------------------------------------------------
    Total -
     non-interest
     expenses         $   104,818   $   103,245   $    99,989   $   102,763
                      -------------------------------------------------------
                      -------------------------------------------------------
    As a % of average
     assets                  2.49 %        2.43 %        2.46 %        2.46 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    REGULATORY CAPITAL - BIS

                                          AS AT         AS AT         AS AT
    IN THOUSANDS OF DOLLARS             JULY 31    OCTOBER 31       JULY 31
    (UNAUDITED)                            2007          2006          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Tier I capital
      Common shares                $    253,240  $    250,568  $    250,358
      Contributed surplus                    75           518           405
      Retained earnings                 516,996       485,334       472,430
      Non-cumulative preferred
       shares                           210,000       210,000       210,000
      Less: goodwill                    (53,790)      (53,790)      (53,790)
                                   ------------------------------------------
    Total - Tier I capital (A)          926,521       892,630       879,403
                                   ------------------------------------------
    Tier II capital
      Subordinated debentures           150,000       150,000       150,000
      General allowances                 65,250        65,250        65,250
      Unrealized gains on
       available for sale equity
       securities                        12,220             -             -
                                   ------------------------------------------
    Total - Tier II capital             227,470       215,250       215,250
                                   ------------------------------------------
    Securitization, investment
     in non-consolidated
     corporations and other             (44,115)      (28,469)      (27,852)
                                   ------------------------------------------
    Regulatory capital - BIS (B)   $  1,109,876  $  1,079,411  $  1,066,801
                                   ------------------------------------------
    Total risk-weighted
     assets (C)                    $  9,574,613  $  8,702,241  $  8,532,889
    Tier I BIS capital
     ratio (A/C)                            9.7%         10.3%         10.3%
    Total BIS capital ratio (B/C)          11.6%         12.4%         12.5%
    Assets to capital multiple             16.3 x        16.1 x        16.1 x
    Tangible common equity as a
     percentage of risk-weighted
     assets                                 7.3%          7.7%          7.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RISK-WEIGHTED ASSETS

                                          AS AT         AS AT         AS AT
    IN THOUSANDS OF DOLLARS             JULY 31    OCTOBER 31       JULY 31
    (UNAUDITED)                            2007          2006          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance sheet items
      Cash resources               $     58,449  $     41,931  $    107,090
      Securities                        466,062       481,035       315,613
      Mortgage loans                  2,507,632     2,400,540     2,319,457
      Other loans and customers'
       liability under acceptances    5,778,736     5,146,909     5,163,378
      Other assets                      463,945       462,541       454,610
      General allowances                 65,250        65,250        65,250
                                   ------------------------------------------
    Total - balance sheet items       9,340,074     8,598,206     8,425,398

    Off-balance sheet items
      Derivative financial
       instruments                       25,998        26,620        18,687
      Credit-related commitments        208,541        77,415        88,804
                                   ------------------------------------------
    Total - risk-weighted assets   $  9,574,613  $  8,702,241  $  8,532,889
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ASSETS UNDER ADMINISTRATION

                                          AS AT         AS AT         AS AT
    IN THOUSANDS OF DOLLARS             JULY 31    OCTOBER 31       JULY 31
    (UNAUDITED)                            2007          2006          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Self-directed RRSPs and RRIFs  $  8,458,832  $  8,415,222  $  8,298,189
    Clients' brokerage assets         2,002,739     1,923,658     1,860,932
    Institutional                     1,814,975     1,724,998     1,733,100
    Mutual funds                      1,608,068     1,405,164     1,351,659
    Mortgage loans under
     management                       1,423,358     1,223,020     1,310,832
    Other - Personal                     30,823        33,246        30,706
                                   ------------------------------------------
    Total - assets under
     administration                $ 15,338,795  $ 14,725,308  $ 14,585,418
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Chief Financial Officer: Robert Cardinal, (514)
284-4500 #7535; Media and Investors Relations contact: Gladys Caron, (514)
284-4500 #7511, cell (514) 893-3963

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Laurentian Bank of Canada

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