Laurentian Bank reports net income of $94.5 million for 2007, compared with $70.3 million for 2006



    MONTREAL, Dec. 4 /CNW Telbec/ - For the year ended October 31, 2007,
Laurentian Bank reported a net income of $94.5 million or diluted earnings of
$3.48 per common share, compared with $70.3 million or diluted earnings of
$2.48 per common share in 2006. Return on common shareholders' equity was
10.9% in 2007, compared with 8.2% in 2006. Income from continuing operations
increased by 37% to $90.1 million or diluted earnings of $3.29 per common
share for 2007, excluding income from discontinued operations of $4.4 million
related to the recognition of a portion of the deferred gain from the sale of
BLC-Edmond de Rothschild Asset Management Inc., as detailed below. For 2006,
income from continuing operations was $65.6 million or diluted earnings of
$2.28 per common share, excluding income from discontinued operations of
$4.7 million.
    For the fourth quarter ended October 31, 2007, the Bank reported a net
income of $30.2 million or diluted earnings of $1.14 per common share,
compared with $22.6 million or diluted earnings of $0.84 per common share for
the fourth quarter of 2006. Return on common shareholders' equity was 13.8%
for the fourth quarter of 2007 versus 10.8% for the same quarter of 2006. The
results from continuing operations reached $25.7 million or diluted earnings
of $0.95 per common share for the fourth quarter of 2007, compared with
$18.1 million or diluted earnings of $0.65 per common share for 2006.
    As detailed in the following sections, the results for the fourth quarter
ended October 31, 2007 benefited from certain significant items: a
$4.0 million ($3.3 million net of income taxes or $0.14 diluted per common
share) gain resulting from the worldwide restructuring of Visa and a
favourable tax adjustment of $2.2 million ($0.09 diluted per common share)
resulting from the resolution of certain tax exposures. During the fourth
quarter, the Bank also recorded a $2.9 million ($2.0 million net of income
taxes or $0.09 diluted per common share) charge related to its $20 million
portfolio of securities issued by conduits covered by the "Montreal
Agreement". The Bank was also affected by certain other items related to the
liquidity and credit crisis, as detailed below. The results for the fourth
quarter of 2006 included a favourable tax adjustment of $2.1 million ($0.09
diluted per common share) resulting from corporate reorganizations and other
tax planning strategies.
    Commenting on the results for the year, Mr. Robitaille, President and
Chief Executive Officer, stated: "2007 was a very good year for us. The strong
loan and deposit growth and our efficient cost control contributed positively
to our profitability and to the attainment of all the objectives that we had
set a year ago. The increase to the quarterly dividend of $0.03 per common
share, to $0.32 per common share, announced today is a testimonial to these
accomplishments and reflects our confidence in improving our performance. We
must however remain dedicated to ensure our long-term growth. As regards to
the ABCP issue, we reviewed rigorously the situation and decided to reduce the
value of our investments totalling $20 million by 15%." Mr. Robitaille further
added, "I am also very happy that we came to an agreement in principle with
our employee's union on the terms of the upcoming collective agreement for the
next four years. This further demonstrates the valued cooperation between the
Bank and its employees, and is perfectly in line with the Bank's human capital
priority."

    FINANCIAL REVIEW

    The following sections present a summary analysis of the Bank's financial
condition and operating results for the year ended October 31, 2007, as well
as for the fourth quarter of 2007. The analysis should be read in conjunction
with the unaudited financial information for the fourth quarter of 2007. The
Bank's audited annual consolidated financial statements and accompanying
Management Discussion and Analysis are also available on the Bank's website at
www.laurentianbank.ca.

    How Management measures its performance - a look-back to 2007 objectives
    and Objectives for 2008

    The following summarizes the Bank's performance with regard to its 2007
objectives and presents management's objectives for 2008.
    The objectives below are solely intended to provide the reader with
information about how management measures its performance. It is not intended
to disclose the Bank's expectations for future financial results.


    
    -------------------------------------------------------------------------
    Performance
     Indicators     2007 Objectives   2007 Performance   2008 Objectives(1)
    ------------ ------------------- ------------------ ---------------------
    Return on
     common
     shareholders'
     equity            8% to 9%             10.9%           9.5% to 10.5%
    Diluted net
     income per
     share          $2.55 to $2.85          $3.48          $3.30 to $3.60
    Total
     revenue    $550 to $560 million     $584 million    + 5% ($615 million)
    Efficiency
     ratio           75% to 73.5%            73.2%            74% to 72%
    Tier 1
     capital
     ratios         Minimum of 9.5%           9.8%          Minimum of 9.5%
    Credit quality
     (loan losses
     as a % of
     average
     assets)        0.24% to 0.21%           0.24%               n.a.(2)

    (1) these objectives for 2008 should be read concurrently with the
        following paragraphs.
    (2) no specific objective was set for credit quality for 2008 as it is
        closely related to the Return on common shareholders' equity and
        Diluted net income per share indicators. Management will nonetheless
        continue to closely monitor the quality of its loan portfolio.
    -------------------------------------------------------------------------

    As shown in the table above, the Bank met or exceeded all of its
objectives for 2007. Revenue grew significantly as a result of higher loan and
deposit volumes and overall improvements in all business segments, while cost
control measures limited increases in expenses.

    The results for the year also benefited from certain items as detailed
below:

    - A $4.0 million gain ($3.3 million net of income taxes or $0.14 diluted
      per common share) resulting from the Visa worldwide restructuring; and
    - Various favourable tax adjustments for $6.0 million ($0.25 diluted per
      common share); partially offset by
    - A $2.9 million ($2.0 million net of income taxes or $0.09 diluted per
      common share) charge related to its asset-backed securities portfolio.

    Excluding these items, return on common shareholders' equity would have
been 10.0% and diluted net income per share $3.18, still exceeding objectives
for 2007.
    The objectives set for 2008, described in the table above, take into
account that the Bank will not necessarily benefit from similar items next
year. These objectives take into account certain planned costs associated with
initiatives aimed at accelerating the Bank's growth, as well as the
uncertainties related to the prevailing liquidity and credit crisis in Canada
and the United States as described further.


    Highlights

    For the year

    - Net income improved by 34% to $94.5 million in 2007, from $70.3 million
      in 2006.
    - Total revenue increased by 8% and stood at $583.9 million in 2007,
      compared with $539.8 million in 2006. The continuous improvement in net
      interest income and other income reflect the growth in loan and
      deposits portfolios resulting from recent development initiatives and
      relatively stable market conditions.
    - "Non-interest expenses rose by 4% to $427.4 million in 2007 from
      $410.8 million in 2006. The increase essentially results from higher
      salaries and employee benefits, since cost control measures contributed
      to limiting increases in other expenses.
    - The provision for credit losses remained unchanged at $40.0 million for
      2007.
    - Income tax expense related to continuing operations was $26.4 million
      in 2007, for an effective tax rate of 22.7%, compared with
      $23.4 million in 2006, for an effective tax rate of 26.3%. The income
      tax expense for 2007 and 2006 includes the effect of certain tax items,
      as detailed below in the analysis of consolidated results section.
    - Results for the year included the significant items detailed above.

    - Results for 2006 included the effect of certain tax adjustments
      amounting to $2.1 million ($0.09 diluted per common share) resulting
      from corporate reorganizations and other tax planning strategies. Other
      tax adjustments which were recorded during the year generally offset
      each other.

    For the fourth quarter

    - Net income improved by 34% to $30.2 million for the fourth quarter of
      2007, compared with $22.6 million in 2006.
    - Total revenue increased by 6% and stood at $145.6 million in 2007,
      compared with $137.1 million in 2006, mainly as a result of higher net
      interest income and despite the effect of the liquidity and credit
      crisis.
    - Non-interest expenses rose to $105.8 million in 2007 from
      $104.8 million in 2006.
    - The provision for credit losses remained unchanged at $10.0 million for
      2007.
    - Income tax expense related to continuing operations was $4.1 million in
      2007, for an effective tax rate of 13.8%, compared with $4.1 million in
      2006, for an effective tax rate of 18.5%.
    - Results for the fourth quarter of 2007 included the following
      significant items:

        - $4.0 million ($3.3 million net of income taxes or $0.14 diluted per
          common share) gain resulting from the Visa worldwide restructuring;
        - the recognition of a $2.2 million ($0.09 diluted per common share)
          tax benefit following the resolution of certain tax exposures; and
        - the impact of the credit and liquidity crisis, including a
          $2.9 million ($2.0 million net of income taxes or $0.09 diluted per
          common share) charge related to the asset-backed securities
          portfolio.

    - Results for the fourth quarter of 2006 included a favourable tax
      adjustment of $2.1 million ($0.09 diluted per common share) resulting
      from corporate reorganizations and other tax planning strategies.

    Total revenue was $583.9 million in 2007, compared with $539.8 million in
2006. Net interest income improved by 9% to $390.2 million in 2007, from
$357.2 million in 2006. The increase resulted mainly from growth in loans and
deposits portfolios and, to a lesser extent, to higher net interest margin,
which was 2.31% in 2007.
    Other income was $193.7 million in 2007, compared with $182.6 million in
2006. The $11.1 million increase in 2007 is mainly attributable to growth in
core activities, including higher fees on deposits and card services, on
mutual funds sales, from brokerage activities and from treasury and financial
market activities. Other income also includes the $4.0 million gain on Visa
worldwide restructuring.
    Total revenue for the fourth quarter of 2007 amounted to $145.6 million,
compared with $137.1 million for the fourth quarter in 2006. Net interest
income improved by 6%, or $5.6 million, despite the negative effect of higher
funding costs, as discussed below. Other income stood at $47.9 million for the
fourth quarter of 2007, compared with $45.0 million for the fourth quarter of
2006. The increase is mainly attributable to the Visa gain as other revenues
remained relatively stable. Also noteworthy are the $3.0 million gain
resulting from the securitization of residential mortgages and the
$2.8 million loss on the revaluation of seller-swaps, as discussed below.
    The provision for credit losses amounted to $40.0 million for 2007, the
same level as for 2006. Considering the increase in loan volumes, this level
of loan losses actually reflects an improvement year over year. The surge in
the Canadian dollar and energy prices remain sources of concern for their
possible impact on the economy. However, so far the Canadian economy has shown
resilience and has been able to adapt. For the fourth quarter, the provision
for credit losses stood at $10.0 million, the same level as a year ago.
    Gross impaired loans improved to $103.9 million as at October 31, 2007,
from $130.6 million as at October 31, 2006. Net impaired loans stood at
-$11.4 million (-0.1% of total loans, bankers' acceptances and assets
purchased under reverse repurchase agreements) in 2007, while they stood at
$5.4 million (0.0%) a year ago.
    Non-interest expenses were $427.4 million in 2007, while they stood at
$410.8 million in 2006. The $16.6 million increase is mainly related to higher
salaries and employee benefits, as a combined effect of salary increases, new
hirings and performance-based compensation. The total number of employees on a
full-time equivalent basis increased from 3,238 at October 31, 2006, to 3,289
at October 31, 2007, essentially to support growth initiatives in the Retail
Financial Service segment. Increases of over $3.0 million in variable
compensation, reflecting the achievement of objectives for 2007 and over
$3.0 million in stock-based compensation also contributed to the higher level
of salaries and employee benefits during the year. Premises and technology
expenses increased slightly to $111.5 million in 2007, compared with
$108.1 million in 2006, mainly as a result of higher depreciation on
capitalized technology developments and higher rent and property taxes. Other
expenses decreased slightly to $86.6 million in 2007, compared with
$89.1 million in 2006, mainly as a result of lower taxes and insurance costs.
Overall, the increase in revenues of 8% more than offset the increase in
expenses of 4%, which led to the improvement of the efficiency ratio to 73.2%
in 2007, from 76.1% in 2006.
    For the fourth quarter of 2007, non-interest expenses amounted to
$105.8 million, compared with $104.8 million for the fourth quarter of 2006.
The year over year increase is largely attributable to the higher salaries and
premises and technology expenses, as noted above, as well as to the higher
advertising and business development expenses. These were slightly offset by
the effect of corporate reorganization on the capital tax charge.
    Income tax expense for fiscal 2007 was $26.4 million (22.7% effective tax
rate) compared with $23.4 million (26.3% effective tax rate) for 2006.

    Reconciliation of the income tax expense from continuing operations to
    the dollar amount of income tax using the statutory rate

                                         For the three-month periods ended
                         ----------------------------------------------------
    (in millions
     of dollars)        October 31, 2007   July 31, 2007  October 31, 2006
    -------------------------------------------------------------------------
    Income taxes at
     statutory rate         $9.8    32.8%   $10.8   33.1%     $7.3    32.9%
    Changes resulting
     from :
    Lower tax rate on
     foreign credit
     insurance operations   (1.0)   (3.3)    (0.6)  (1.9)     (0.8)   (3.8)
    Tax-exempt revenues     (1.2)   (4.0)    (0.3)  (0.9)     (0.3)   (1.1)
    -------------------------------------------------------------------------
                            $7.6    25.5%    $9.9   30.3%     $6.2    28.0%

    Resolution of
     income tax
     exposures              (2.2)   (7.4)    (1.1)  (3.4)        -       -
    Tax rate changes        (0.2)   (0.6)     0.4    1.1         -       -
    Gain on repatriation
     of foreign
     retained earnings         -       -        -      -         -       -
    Recognition of
     previously
     unrecognized
     temporary
     differences               -       -        -      -      (2.8)  (10.8)
    Non taxable
     portion of
     capital gains          (0.7)   (2.3)       -      -         -       -
    Corporate
     reorganization
     and other              (0.4)   (1.4)     0.3    1.1       0.7     1.3
    -------------------------------------------------------------------------
                            $4.1    13.8%    $9.5   29.1%     $4.1    18.5%
    -------------------------------------------------------------------------

                                                       For the years ended
                                         ------------------------------------
    (in millions
     of dollars)                        October 31, 2007  October 31, 2006
    -------------------------------------------------------------------------
    Income taxes at
     statutory rate                         $38.4   33.0%    $29.3    32.9%
    Changes resulting
     from :
    Lower tax rate on
     foreign credit
     insurance operations                    (3.6)  (3.0)     (2.4)   (2.7)
    Tax-exempt revenues                      (2.4)  (2.1)     (1.1)   (1.2)
    -------------------------------------------------------------------------
                                            $32.4   27.9%    $25.8    29.0%

    Resolution of
     income tax
     exposures                               (3.3)  (2.9)    (11.3)  (12.7)
    Tax rate changes                         (0.7)  (0.7)      8.6     9.7
    Gain on repatriation
     of foreign
     retained earnings                          -      -       4.5     5.1
    Recognition of
     previously
     unrecognized
     temporary
     differences                                -      -      (2.8)   (3.2)
    Non taxable
     portion of
     capital gains                           (1.5)  (1.3)        -       -
    Corporate
     reorganization
     and other                               (0.5)  (0.3)     (1.4)   (1.6)
    -------------------------------------------------------------------------
                                            $26.4   22.7%    $23.4    26.3%
    -------------------------------------------------------------------------


    As detailed in the table above, certain transactions and tax rate changes,
as well as the resolution of various tax exposures contributed to reducing the
effective tax rate in 2007 and 2006. Excluding the impact of these items, the
effective tax rate for 2007 would have been 27.9%, compared with 29.0% in
2006. The lower tax rate for 2007 results mainly from higher revenues from
tax-exempt revenues (dividends from Canadian entities).
    Note 18 to the annual consolidated financial statements provides further
information on the income tax expense.
    On October 30, 2007, the Conservative government delivered a Budget
Speech, including further reductions to the income tax rates. As the
Conservative Party forms a minority government, proposed amendments to the
Income Tax Act will not be considered to be substantively enacted for
accounting purposes until the proposals have passed third reading in the House
of Commons. As a result, the Bank has not reflected the effect of the proposed
changes in its consolidated financial statements. Based on the Bank's
analysis, the proposed changes would imply a revaluation of the future tax
assets, which would lead to an income tax charge between $4.0 and $5.0 million
in the period in which the changes would be substantively enacted. However,
going forward, the applicable statutory income tax rate would be reduced.

    Liquidity and Credit Crisis

    The Bank only held very limited holdings (approximately $20 million) in
securities issued by conduits covered by the "Montreal Agreement" and is not a
direct participant in the sub-prime mortgage loan market. However, the Bank
was also indirectly affected, as detailed below.

    Asset-backed commercial paper and other asset-backed investments

    At October 31, 2007, the Bank held investments in non-bank conduits
asset-backed commercial paper (ABCP) covered by the "Montreal Agreement" and
other investments issued by these conduits for an amount of approximately
$20 million. As a result of the liquidity issue in the ABS market, the Bank
has adjusted the estimated fair value of these investments and taken a charge
in the fourth quarter of $2.9 million ($2.0 million net of income taxes or
$0.09 diluted per common share).
    These investments have not traded in an active market since mid-August
2007, and there are currently no market quotations available. As a result, the
Bank has relied on valuation techniques considering the best available public
information regarding market conditions and other factors that a market
participant would consider for such investments to estimate the fair values.
    Continuing uncertainties regarding the value of the assets, which underlie
the investments, the amount and timing of cash flows and the outcome of the
restructuring process planned under the "Montreal Agreement" could give rise
to further changes in the value of the Bank's investments.

    Effect of the change in the prime-BA spread

    As part of their operations, banks continuously borrow funds from various
sources to finance their lending activities and other liquidity requirements.
A significant portion of these borrowings is based on the bankers' acceptances
(BA) rate. Banks will then lend to their clients based on the prime rate. As a
result of the credit crisis, the BA rate increased during the fourth quarter,
while the prime rate remained unchanged. This prime-BA spread, which, over the
last years, had been relatively stable at around 165 basis points, has
averaged 142 basis points during the fourth quarter. The higher funding costs
associated with the compressed prime-BA spread led to a reduction in net
interest income of approximately $2.7 million for the fourth quarter.

    General funding status

    The Bank mainly relies on its stable $11.6 billion retail deposit
portfolio to fund its operations. This preferred source of funding has been
little affected by the recent market conditions and continues to be
particularly advantageous. Over the last five years, the Bank has also relied
on securitization activities to meet specific funding needs. In this respect,
the Bank used the Canada Mortgage Bonds (CMB) program and bank-sponsored
securitization conduits. As a result of the prevailing liquidity and credit
crisis, bank-sponsored conduits have had serious difficulties to fund
additional assets and have significantly increased their funding costs.
However, the CMB program has remained fully effective. During the fourth
quarter, the Bank has securitized $405 million of residential mortgages
through this program, which generated a $3.0 million gain.

    Seller-swaps

    As part of its funding strategies, the Bank has relied on residential
mortgages securitization through bank-sponsored conduits. As part of these
transactions, the Bank has entered into interest-rate swaps (seller-swaps)
where it pays to the securitization conduits the variable funding cost. As a
result of the liquidity and credit crisis, these funding costs have increased,
which resulted in a $2.8 million decrease in the fair value of the
seller-swaps. This decrease in value was recorded in other income from
securitization activities.

    Discontinued Operations

    In fiscal 2005, the Bank sold its asset management activities to
Industrial Alliance Insurance and Financial Services Inc. As part of this
transaction, a portion of the proceeds was subject to recovery clauses, based
on net annual sales of mutual funds. Consequently, a $26.2 million portion of
the gain on sale was initially deferred. As net sales at the end of November
2007 significantly exceeded minimum requirements, a $5.2 million gain
($4.4 million, net of income taxes) was recognized during the fourth quarter
of 2007. For the same reason, a similar $5.2 million gain was also recognized
in the fourth quarter of 2006 and 2005. Discontinued operations for 2006 also
included revenues related to a separate recovery clause on institutional
assets under management and other adjustments for $0.5 million ($0.4 million,
net of income taxes). As at October 31, 2007, the remaining portion of the
deferred gain amounted to $10.4 million. Note 5 to the annual consolidated
financial statements provides additional information regarding this
transaction.

    Analysis of Financial Condition

    Balance sheet assets stood at $17.8 billion at October 31, 2007, compared
with $17.3 billion at October 31, 2006.
    As at October 31, 2007, liquidities, including cash resources, securities
and assets purchased under reverse repurchase agreements, decreased by
$651 million, compared with levels as at October 31, 2006. This decrease
results from the Bank's tighter liquidity management and the strong loan
growth during the year. 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
$1.1 billion or 9% since the beginning of the year to $13.5 billion as at
October 31, 2007, compared with $12.4 billion at October 31, 2006. Personal
loans increased by $790 million in 2007, mainly as a result of the strong
growth in B2B Trust's investment loan portfolio. The home equity lines of
credit also increased significantly since the beginning of the year. The
residential mortgage portfolio increased by $247 million in 2007. Considering
the increase of $523 million in securitized loans, as shown in the table
below, total residential mortgage loan growth was $770 million over the same
period.

    Residential Mortgages Portfolio

                                                          As at October 31
                                    -----------------------------------------
    (in millions of dollars)            2007           2006     Net growth
    -------------------------------------------------------------------------
    Residential mortgage loans,
     as reported on the
     balance sheet                    $6,233         $5,986            247
    Securitized loans                  1,562          1,039            523
    -------------------------------------------------------------------------
    Total residential mortgage
     loans, including securitized
     loans                            $7,795         $7,025            770
    -------------------------------------------------------------------------


    Commercial mortgages increased by $25.6 million in 2007, while commercial
loans, including bankers' acceptances, increased by $41.9 million, essentially
in Quebec in small- and medium-sized businesses.
    Personal deposits increased by $615.1 million in 2007 to reach
$11.6 billion at October 31, 2007 mainly through the B2B Trust channel and the
Bank's branch network. Business and other deposits increased by $169.2 million
during the same period as a result of new deposits raised from small
businesses and municipalities. As at October 31, 2007, personal deposits
accounted for 83% of total deposits of $13.9 billion.
    Shareholders' equity stood at $1,004.7 million as at October 31, 2007,
compared with $946.4 million at October 31, 2006. The increase mainly results
from net income generated since the beginning of the year, net of declared
dividends, as well as by the favourable adjustment to Accumulated other
comprehensive income (AOCI) resulting from the revaluation by the Bank of its
shares of the Montréal Exchange following its initial listing on the Toronto
Stock Exchange. The Bank's book value per common share, excluding AOCI, was
$33.34 at October 31, 2007, compared with $31.18 as at October 31, 2006. There
were 23,815,813 common shares and 165,027 share purchase options outstanding
as at November 28, 2007.
    The total capital of the Bank, comprised of shareholders' equity and
debentures, was $1,154.7 million as at October 31, 2007, compared with
$1,096.4 million as at October 31, 2006. The increase of $58 million results
from the same items as noted above. The BIS Tier 1 and Total capital ratios
stood at 9.8% and 11.6%, respectively, as at October 31, 2007, compared with
10.3% and 12.4% as at October 31, 2006. The variance is mainly related to the
strong loan growth in 2007.
    At its meeting on December 4, 2007, the Board of Directors approved a
$0.03, or 10%, raise in the quarterly dividend to $0.32 per common share. This
increase reflects the continued improvement in profitability, as well as the
Management's and the Board's confidence in the Bank's future performance. The
dividend will be payable on February 1, 2008 to shareholders of record on
January 2, 2008. On November 7, 2007, the Board of Directors also declared
regular dividends on the various series of preferred shares to shareholders of
record on December 10, 2007.
    Assets under administration stood at $15.6 billion at October 31, 2007,
compared with $14.7 billion at October 31, 2006. Most classes of assets under
administration have increased during the year as a result of organic growth,
market performance and securitization activities.

    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 Canadian Institute of Chartered
Accountants (CICA). The effect of the adoption of these standards on
shareholders' equity as at November 1, 2006, was relatively limited and is
detailed in notes 3 and 4 to the annual consolidated financial statements of
the Bank.
    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

    All business segments improved their performance in 2007 as a result of
increases in revenues and effective cost control.
    Higher loan and deposits volumes, combined with relatively stable loan
losses, contributed to improving the B2B Trust, Retail Financial Services and
Commercial Financial Services results. Laurentian Bank Securities growth
strategies also started to show tangible results with core revenues improving
by more than 15%. The continued improvement in net interest income in the
Other segment also contributed significantly to 2007 results.

    Net Income Contributions
    -------------------------------------------------------------------------
    (in          Retail  Commercial         Laurentian
     millions  Financial  Financial   B2B      Bank
     of $)      Services  Services   Trust  Securities  Other        Total
    -------------------------------------------------------------------------
    2007          44.9      24.0      30.5      7.1     (12.0)        94.5
              (40.5 from                                          (90.1 from
                 cont.                                               cont.
              operations)                                         operations)

    -------------------------------------------------------------------------
    2006          34.6      22.7      24.3      3.8     (15.1)        70.3
              (30.2 from                            ((15.4) from  (65.6 from
                 cont.                                   cont.        cont.
              operations)                            operations)  operations)

    -------------------------------------------------------------------------
    Q4-2007       19.1       5.4       7.9      0.2      (2.5)        30.2
              (14.7 from                                          (25.7 from
                 cont.                                                cont.
              operations)                                         operations)

    -------------------------------------------------------------------------
    Q3-2007        9.7       6.1       8.1      0.6      (1.4)        23.2

    -------------------------------------------------------------------------
    Q4-2006       14.3       5.5       6.3      1.5      (5.1)        22.6
               (9.8 from                                          (18.1 from
                 cont.                                                cont.
               operations)                                        operations)

    -------------------------------------------------------------------------


    Retail Financial Services

    Net income for the Retail Financial Services business segment improved by
$10.3 million, or 30%, compared with 2006, reflecting revenue growth derived
from higher loan and deposit portfolios, as well as the recognition of a
$4.0 million ($3.3 million net of income taxes) gain resulting from the Visa
worldwide restructuring. Mutual fund sales, deposit service charges and card
service revenues have also improved compared with a year ago.
    At $25.6 million for 2007, loan losses were $2.6 million higher than in
2006, mainly as a result of higher volumes, since the overall credit quality
remained good.
    Non-interest expenses for 2007 increased by $9.8 million, or 3%, compared
with 2006, reflecting higher salary charges resulting from the expansion in
the retail banking operations and higher advertising and business development
expenses.
    The income tax expense was $14.0 million (25.7% effective tax rate) for
2007, compared with $13.8 million (31.5% effective tax rate) for 2006. This
improvement in the effective tax rate resulted essentially from the lower
taxes on revenues from credit insurance operations and on the Visa gain.
    Discontinued operations contributed $5.2 million ($4.4 million net of
income taxes) in 2007 and 2006, since net sales threshold significantly
exceeded minimum requirements as at October 31 of both years.
    Net income for the fourth quarter of 2007 improved by $4.8 million, or
34%, compared with the fourth quarter of 2006, essentially for the same
reasons as noted above.
    During the fourth quarter of 2007, Retail Financial Services added to its
range of products with the introduction of three new guaranteed investment
certificates (GIC): Income ActionGIC, Blue Chip ActionGIC and Global Growth
ActionGIC. These latest products offer both investment protection and high
return potential, while they also represent a new step forward in the Bank's
strategy designed to consolidate its wealth management products and services.

    Commercial Financial Services

    Net income for the Commercial Financial Services business segment improved
by $1.3 million, or 6%, compared with 2006. Improvements in the real estate
financing operations and in the small- and medium-sized business operations in
Quebec more than offset lower profitability in commercial lending in Ontario.
    At $10.4 million for 2007, loan losses were $0.7 million lower than in
2006, benefiting from the good economic conditions prevailing in Canada.
Non-interest expenses for 2007 decreased by $0.3 million, compared with 2006,
reflecting the strict cost control during the year. The income tax expense was
$12.0 million (33.5% effective tax rate) for 2007, compared with $11.4 million
(33.5% effective tax rate) for 2006.
    Net income for the fourth quarter of 2007 stood at $5.4 million, compared
with $5.5 million in 2006, as revenues, loan losses and expenses remained very
stable.
    To further enhance proximity with its clients, Commercial Financial
Services has relocated a business centre in Ontario at the beginning of
November 2007. This initiative will enable the business segment to develop
closer relations with its clients and offer them more efficient services. With
seven commercial and real estate financing centres in Ontario and Western
Canada, Commercial Financial Services is resolutely pursuing a niche market
strategy which is proving to be both efficient and noticeably profitable.

    B2B Trust

    Net income for the B2B Trust business segment improved by $6.2 million, or
25%, compared with 2006, reflecting higher net interest income derived from
increase in loan and deposit portfolios. Loan losses related to the investment
loan portfolio remained low during the year, while initiatives to further
reduce the exposure to the line of credit portfolio permitted to reduce losses
by more than $2.2 million. Non-interest expenses for 2007 remained well under
control, despite the increase in activities.
    Net income for the fourth quarter of 2007 improved by $1.6 million, or
25%, compared with the fourth quarter of 2006, essentially for the same
reasons as noted above.
    The significant increase in loans and deposits is attributable to B2B
Trust's initiatives in designing products and simplifying key processes. As at
October 31, 2007, investment loans volumes had increased by 55%, compared to
2006, while maintaining rigorous underwriting practices. B2B Trust upholds its
leading position in the Canadian investment loans market, foremost through its
distribution agreements with some of the largest mutual funds companies.

    Laurentian Bank Securities

    Net income for the Laurentian Bank Securities business segment improved by
$3.3 million, or 84%, compared with 2006. These results were significantly
impacted by the $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 and a
$2.1 million ($1.4 million net of income taxes) charge to reflect the
adjustment to the estimated fair value of the asset-backed securities.
Excluding these items, the contribution rose by $1.0 million, or 25%,
essentially as a result of the performance of the institutional brokerage
division.
    Non-interest expenses for 2007 slightly increased by $3.2 million, or 12%,
compared with 2006, reflecting the costs associated with the expansion in the
retail brokerage operations and the introduction of the Institutional Equity
division.
    Net income for the fourth quarter of 2007 decreased by $1.3 million
essentially as a result of the charge related to the asset-backed securities
portfolio, as noted above. Excluding the effect of this charge, net income
would have increased by $0.1 million compared to the fourth quarter of 2006,
reflecting the growth in operations.
    During the fourth quarter of 2007, Laurentian Bank Securities has focused
on a rigorous performance of its activities and operations, with regard to
both its growth strategies and day-to-day management. It also went ahead with
new hirings in some strategic positions within its Retail Brokerage,
Institutional Equity and Institutional Fixed Income divisions in order to
reinforce its foundations et accelerate its development.

    Other sector

    Net income for the Other segment improved by $3.1 million, or 21%,
compared with 2006, reflecting the significant improvement in net interest
margin and income from treasury and financial market operations during the
year, as well as the resolution of various tax exposures during the year.
These improvement were partially offset by lower securitization revenues and
increases in performance-based compensation.
    Results for the fourth quarter of 2007 improved by $2.6 million, or 51%,
compared with the fourth quarter of 2006. The income tax recovery of
$2.2 million resulting from the resolution of various tax exposures more than
offset the lower margins on liquidities and the effect of a $0.8 million
($0.5 million net of income taxes) charge related to the ABS portfolio, as
noted above. Also noteworthy during the quarter, is the $3.0 million gain
resulting from the securitization of residential mortgages, which was offset
by the reduction in value of seller-swaps for $2.8 million, as detailed on
above.

    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 banking institution operating across Canada
and offering diversified financial services to its clients. Distinguishing
itself through excellence in service, as well as through its simplicity and
proximity, the Bank serves individual consumers and small and medium-sized
businesses. The Bank also offers its products to a wide network of independant
financial intermediaries through B2B Trust, as well as full-service brokerage
solutions through Laurentian Bank Securities.
    Laurentian Bank is well established in the Province of Quebec, operating
the third-largest retail branch network. Elsewhere throughout Canada, it
operates in specific market segments where it holds an enviable position.
Laurentian Bank of Canada has close to $18 billion in balance sheet assets and
more than $15 billion in assets under administration. Founded in 1846, the
Bank employs close to 3,300 people.

    Non-GAAP financial measures

    The Bank uses both generally accepted accounting principles ("GAAP") and
certain non-GAAP measures to assess performance such as return on common
shareholders' equity and efficiency ratios. Non-GAAP measures do not have any
standardized meaning prescribed by GAAP and are unlikely to be comparable to
any similar measures presented by other companies. The Bank believes that
these non-GAAP financial measures provide investors and analysts with useful
information so that they can better understand the financial results and
perform a better analysis of the Bank growth and profitability potential.

    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, expect, anticipate, plan, may, should, could,
would or the negative of these terms or variations of them or similar
terminology.
    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.
Although the Bank believes that the expectations reflected in these
forward-looking statements are reasonable, it can give no assurance that these
expectations will prove to have been correct.
    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. For more
information on the risk, uncertainties and assumptions that would cause the
Bank's actual results to differ from current expectations, please also refer
to the Bank's public filings available at www.sedar.com.
    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 on Tuesday, December 4,
2007, at 2 p.m. Eastern Standard 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.
Tuesday, December 4, 2007, until midnight Monday, December 24, 2007, by
dialling the following number: 1-800-408-3053 Code 3230440 #.
    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 YEARS ENDED
     OTHERWISE                                 OCTOBER   OCTOBER
     INDICATED                         VARIA-       31        31     VARIA-
    (UNAUDITED)    Q4-07     Q4-06      TION      2007      2006      TION
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings
    Net income   $  30.2   $  22.6        34 % $  94.5   $  70.3        34 %
    Income from
     continuing
     operations  $  25.7   $  18.1        42 % $  90.1   $  65.6        37 %
    Net income
     available
     to common
     share-
     holders     $  27.2   $  19.7        38 % $  82.6   $  58.6        41 %
    Return on
     common
     share-
     holders'
     equity         13.8 %    10.8 %              10.9 %     8.2 %
    Per common
     share
    Diluted net
     income      $  1.14   $  0.84        36 % $  3.48   $  2.48        40 %
    Diluted
     income from
     continuing
     operations  $  0.95   $  0.65        46 % $  3.29   $  2.28        44 %
    Dividends    $  0.29   $  0.29         - % $  1.16   $  1.16         - %
    Book value                                 $ 33.34   $ 31.18         7 %
    Share price -
     close                                     $ 43.70   $ 29.05        50 %
    Financial
     position
    Balance sheet
     assets                                    $17,787   $17,296         3 %
    Assets under
     administra-
     tion                                      $15,636   $14,725         6 %
    Loans,
     bankers'
     acceptances
     and assets
     purchased
     under
     reverse
     repurchase
     agreements,
     net                                       $13,969   $13,117         6 %
    Personal
     deposits                                  $11,565   $10,949         6 %
    Shareholders'
     equity and
     debentures                                $ 1,155   $ 1,096         5 %
    Number of
     common
     shares (in
     thousands)                                 23,811    23,620         1 %
    Net impaired
     loans as a %
     of loans,
     bankers'
     acceptances
     and assets
     purchased
     under
     reverse
     repurchase
     agreements                                   (0.1)%       - %
    Risk-weighted
     assets                                    $ 9,724   $ 8,702        12 %
    Capital
     ratios
    Tier I BIS
     capital
     ratio                                         9.8 %    10.3 %
    Total BIS
     capital
     ratio                                        11.6 %    12.4 %
    Assets to
     capital
     multiple                                     15.8 x    16.1 x
    Tangible
     common
     equity as a
     percentage
     of risk-
     weighted
     assets                                        7.5 %     7.7 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCIAL
     RATIOS
    Per common
     share
    Price /
     earnings
     ratio                                        12.5 x    11.7 x
    Market to
     book value                                    131 %      93 %
    Dividend
     yield          2.65 %    3.99 %              2.65 %    3.99 %
    Dividend
     payout ratio   25.4 %    34.7 %              33.3 %    46.7 %
    As a
     percentage
     of average
     assets
    Net interest
     income         2.26 %    2.19 %              2.31 %    2.14 %
    Provision
     for credit
     losses         0.23 %    0.24 %              0.24 %    0.24 %
    Net income      0.70 %    0.54 %              0.56 %    0.42 %
    Net income
     available
     to common
     share-
     holders        0.63 %    0.47 %              0.49 %    0.35 %
    Profitability
    Other income
     (as a % of
     total
     revenue)       32.9 %    32.8 %              33.2 %    33.8 %
    Efficiency
     ratio (non-
     interest
     expenses as
     a % of total
     revenue)       72.6 %    76.5 %              73.2 %    76.1 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    OTHER
     INFORMATION
    Number of
     full-time
     equivalent
     employees                                   3,289     3,238
    Number of
     branches                                      157       158
    Number of
     automated
     banking
     machines                                      338       325
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    The unaudited financial information provided therein do not reflect all
    of the information and disclosures required by Canadian generally
    accepted accounting principles for complete financial statements.
    Accordingly, the financial information should be read in conjunction with
    the annual consolidated audited financial statements as at October 31,
    2007 available on the Bank's web site at www.laurentianbank.ca.
    -------------------------------------------------------------------------


    CONSOLIDATED
    BALANCE SHEET

                                                 OCTOBER 31     OCTOBER 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)                2007(1)        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ASSETS
    Cash resources
      Cash and non-interest-bearing deposits
       with other banks                        $     65,245   $     70,907
      Interest-bearing deposits with other
       banks                                        283,255         98,722
                                               ------------------------------
                                                    348,500        169,629
                                               ------------------------------
    Securities
      Available-for-sale                            917,676              -
      Held-for-trading                            1,086,958      1,675,058
      Designated as held-for-trading                669,745              -
      Investment                                          -      1,567,222
                                               ------------------------------
                                                  2,674,379      3,242,280
                                               ------------------------------
    Assets purchased under reverse repurchase
     agreements                                     540,304        802,546
                                               ------------------------------
    Loans
      Personal                                    4,958,176      4,168,026
      Residential mortgages                       6,232,778      5,985,656
      Commercial mortgages                          684,625        659,014
      Commercial and other                        1,556,831      1,476,977
                                               ------------------------------
                                                 13,432,410     12,289,673
    Allowance for loan losses                      (115,322)      (125,153)
                                               ------------------------------
                                                 13,317,088     12,164,520
                                               ------------------------------
    Other
      Customers' liabilities under acceptances      111,891        149,818
      Property, plant and equipment                 137,691        111,291
      Derivative financial instruments               62,745         96,980
      Future tax assets                              86,534        101,048
      Goodwill                                       53,790         53,790
      Other intangible assets                        14,114         15,333
      Other assets                                  439,810        388,724
                                               ------------------------------
                                                    906,575        916,984
                                               ------------------------------
                                               $ 17,786,846   $ 17,295,959
                                               ------------------------------
                                               ------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Deposits
      Personal                                 $ 11,564,530   $ 10,949,473
      Business, banks and other                   2,314,178      2,145,028
                                               ------------------------------
                                                 13,878,708     13,094,501
                                               ------------------------------
    Other
      Obligations related to assets sold short      868,675      1,077,009
      Obligations related to assets sold under
       repurchase agreements                        928,987      1,100,385
      Acceptances                                   111,891        149,818
      Derivative financial instruments               70,851         81,807
      Other liabilities                             773,053        696,019
                                               ------------------------------
                                                  2,753,457      3,105,038
                                               ------------------------------
    Subordinated debentures                         150,000        150,000
                                               ------------------------------
    Shareholders' equity
      Preferred shares                              210,000        210,000
      Common shares                                 256,445        251,158
      Contributed surplus                               105            518
      Retained earnings                             537,254        485,334
      Treasury shares                                     -           (590)
      Accumulated other comprehensive income            877              -
                                               ------------------------------
                                                  1,004,681        946,420
                                               ------------------------------
                                               $ 17,786,846   $ 17,295,959
                                               ------------------------------
                                               ------------------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Information for 2007 takes into account the changes to accounting
        policies related to financial instruments - refer to notes 3 and 4 of
        the Annual consolidated financial statements of 2007.


    CONSOLIDATED STATEMENT
    OF INCOME

    IN THOUSANDS       FOR THE THREE-MONTH PERIODS           FOR THE YEARS
     OF DOLLARS,                             ENDED                   ENDED
     EXCEPT PER    OCTOBER        JULY     OCTOBER     OCTOBER     OCTOBER
     SHARE AMOUNTS      31          31          31          31          31
     (UNAUDITED)      2007        2007        2006(1)     2007        2006(1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest
     income
      Loans      $ 222,042   $ 214,778   $ 199,015   $ 837,092   $ 755,009
      Securities    13,004      13,386      17,317      58,000      70,446
      Deposits
       with other
       banks         5,117       3,453       2,419      13,802      11,721
                 ------------------------------------------------------------
                   240,163     231,617     218,751     908,894     837,176
                 ------------------------------------------------------------
    Interest
     expense
      Deposits     125,297     118,675     114,293     466,867     438,335
      Other
       liabili-
       ties         15,186       9,225      10,411      44,089      28,920
      Subordi-
       nated
       debentures    1,950       1,950       1,965       7,738      12,714
                 ------------------------------------------------------------
                   142,433     129,850     126,669     518,694     479,969
                 ------------------------------------------------------------
    Net interest
     income         97,730     101,767      92,082     390,200     357,207
                 ------------------------------------------------------------
    Other income
      Fees and
       commis-
       sions on
       loans and
       deposits     22,320      23,206      21,262      88,703      84,615
      Income from
       brokerage
       operations    6,454       7,664       8,896      32,359      31,418
      Income from
       treasury
       and
       financial
       market
       operations    3,912       6,516       4,168      19,286      15,206
      Income from
       sales of
       mutual
       funds         3,493       3,521       2,911      13,406      10,637
      Credit
       insurance
       income        3,492       2,453       3,222      12,557      12,578
      Income from
       registered
       self-
       directed
       plans         2,231       2,490       2,325       9,652      10,515
      Securiti-
       zation
       income        1,407       1,236       1,035       6,418       9,972
      Gains on
       disposal
       and on
       modifica-
       tion in
       ownership
       interest      4,000           -           -       4,000         931
      Other            583       2,189       1,158       7,345       6,728
                 ------------------------------------------------------------
                    47,892      49,275      44,977     193,726     182,600
                 ------------------------------------------------------------
    Total revenue  145,622     151,042     137,059     583,926     539,807
                 ------------------------------------------------------------
    Provision
     for credit
     losses         10,000      10,000      10,000      40,000      40,000
                 ------------------------------------------------------------
    Non-interest
     expenses
      Salaries
       and
       employee
       benefits     56,302      58,602      55,529     229,290     213,583
      Premises
       and
       technology   28,477      27,758      27,322     111,559     108,151
      Other         20,978      22,013      21,967      86,561      89,081
                 ------------------------------------------------------------
                   105,757     108,373     104,818     427,410     410,815
                 ------------------------------------------------------------
    Income from
     continuing
     operations
     before
     income taxes   29,865      32,669      22,241     116,516      88,992
    Income taxes     4,130       9,491       4,105      26,394      23,436
                 ------------------------------------------------------------
    Income from
     continuing
     operations     25,735      23,178      18,136      90,122      65,556
    Income from
     discontinued
     operations,
     net of
     income taxes    4,423           -       4,422       4,423       4,776
                 ------------------------------------------------------------
    Net income   $  30,158   $  23,178   $  22,558   $  94,545   $  70,332
                 ------------------------------------------------------------
                 ------------------------------------------------------------
    Preferred
     share
     dividends,
     including
     applicable
     taxes           2,996       2,990       2,811      11,966      11,766
                 ------------------------------------------------------------
    Net income
     available
     to common
     share-
     holders     $  27,162   $  20,188   $  19,747   $  82,579   $  58,566
                 ------------------------------------------------------------
                 ------------------------------------------------------------
    Average
     number of
     common
     shares
     outstanding
     (in
     thousands)
        Basic       23,783      23,662      23,616      23,678      23,605
        Diluted     23,843      23,728      23,639      23,728      23,649
                 ------------------------------------------------------------
    Income per
     common share
     from
     continuing
     operations
        Basic    $    0.96   $    0.85   $    0.65   $    3.30   $    2.28
        Diluted  $    0.95   $    0.85   $    0.65   $    3.29   $    2.28
                 ------------------------------------------------------------
    Net income
     per common
     share
        Basic    $    1.14   $    0.85   $    0.84   $    3.49   $    2.48
        Diluted  $    1.14   $    0.85   $    0.84   $    3.48   $    2.48
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Comparatives were reclassified as a result of the recognition on a
        gross basis of income related to brokerage activities - refer to
        note 2.3 of the Annual consolidated financial statements of 2007.


    CONSOLIDATED STATEMENT
    OF COMPREHENSIVE INCOME

                                                                   FOR THE
                          FOR THE THREE-MONTH PERIODS ENDED     YEAR ENDED
    IN THOUSANDS OF               OCTOBER 31        JULY 31     OCTOBER 31
    DOLLARS (UNAUDITED)                 2007           2007           2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income                     $  30,158      $  23,178      $  94,545

    Other comprehensive
     income (loss), net of
     income taxes
      Change in unrealized
       gains (losses) on
       available-for-sale
       securities                     (1,143)        (2,816)        15,333
      Reclassification to
       income of realized
       gains and losses on
       available-for-sale
       securities                        209           (336)        (1,581)
    Change in gains (losses)
     on derivatives designated
     as cash flow hedges              11,760         (4,686)         5,677
                                 --------------------------------------------
                                      10,826         (7,838)        19,429
                                 --------------------------------------------
    Comprehensive income           $  40,984      $  15,340     $  113,974
                                 --------------------------------------------
                                 --------------------------------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENT OF CHANGES
    IN SHAREHOLDERS' EQUITY

                                                       FOR THE YEARS ENDED
                                                 OCTOBER 31     OCTOBER 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)                2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Preferred shares
      Balance at beginning and end of year       $  210,000     $  210,000
                                                 ----------------------------
    Common shares
      Balance at beginning of year                  251,158        249,633
      Issued during the year                          5,287          1,525
                                                 ----------------------------
      Balance at end of year                        256,445        251,158
                                                 ----------------------------
    Contributed surplus
      Balance at beginning of year                      518             73
      Attribution of shares under
       the performance-based share agreement           (590)             -
      Stock-based compensation                          177            445
                                                 ----------------------------
      Balance at end of year                            105            518
                                                 ----------------------------
    Retained earnings
      Previous balance at
       beginning of year                            485,334        454,124
      Impact of adopting the
       new accounting policy
       regarding financial instruments,
        net of income taxes                          (3,185)             -
                                                 ----------------------------
      Restated balance at beginning of year         482,149        454,124
      Net income                                     94,545         70,332
      Dividends
        Preferred shares, including applicable
         taxes                                      (11,966)       (11,766)
        Common shares                               (27,474)       (27,356)
                                                 ----------------------------
      Balance at end of year                        537,254        485,334
                                                 ----------------------------
    Treasury shares
      Balance at beginning of year                     (590)          (590)
      Attribution of shares                             590              -
                                                 ----------------------------
      Balance at end of year                              -           (590)
                                                 ----------------------------
    Accumulated other comprehensive income
      Balance at beginning of year                        -              -
      Impact of adopting the new
       accounting policy regarding financial
       instruments, net of income taxes             (18,552)             -
      Other comprehensive income,
       net of income taxes                           19,429              -
                                                 ----------------------------
      Balance at end of year                            877              -
                                                 ----------------------------
    Shareholders' equity                         $1,004,681     $  946,420
                                                 ----------------------------
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CONSOLIDATED STATEMENT
    OF CASH FLOWS

                                         FOR THE THREE-MONTH PERIODS ENDED
    IN THOUSANDS OF DOLLARS       OCTOBER 31        JULY 31     OCTOBER 31
     (UNAUDITED)                        2007           2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows relating to
     operating activities
    Net income                  $     30,158   $     23,178   $     22,558
    Adjustments to determine
     net cash flows relating
     to operating activities:
      Provision for credit
       losses                         10,000         10,000         10,000
      Gains on securitization
       operations                     (3,003)        (1,055)             -
      Net loss (gain) on
       disposal of property,
       plant and equipment               317              -              3
      Net gain from discon-
       tinued operations              (5,185)             -         (5,182)
      Gains on disposal and
       on modification in
       ownership interest             (4,000)             -              -
      Net loss (gain) on
       sale of investment
       securities                          -              -            (98)
      Net loss (gain) on sale
       of other than
       held-for-trading
       securities                       (559)          (711)             -
      Future income taxes              4,976          8,943          3,101
      Depreciation and
       amortization                    7,432          7,187          7,180
      Net change in held-for-
       trading securities            138,614       (100,836)      (153,982)
      Change in accrued
       interest receivable            (4,319)        11,914         (3,424)
      Change in assets relating
       to derivative financial
       instruments                     9,960        (18,981)        21,595
      Change in accrued
       interest payable               32,919        (21,213)        29,412
      Change in liabilities
       relating to derivative
       financial instruments         (35,879)        39,159        (24,132)
      Other, net                      51,627         40,750         54,527
                                ---------------------------------------------
                                     233,058         (1,665)       (38,442)
                                ---------------------------------------------
    Cash flows relating to
     financing activities
      Net change in deposits          11,342        371,471       (421,681)
      Change in obligations
       related to assets
       sold short                    (65,414)        26,091        122,124
      Change in obligations
       related to assets sold
       under repurchase
       agreements                   (212,433)      (165,752)       476,905
      Issuance of subordinated
       debentures                          -              -              -
      Redemption of subor-
       dinated debentures                  -              -              -
      Issuance of common
       shares                          3,205          1,573            210
      Dividends, including
       applicable taxes               (9,900)        (9,856)        (9,654)
                                ---------------------------------------------
                                    (273,200)       223,527        167,904
                                ---------------------------------------------
    Cash flows relating to
     investing activities
      Change in available-for-
       sale and designated
       as held-for-trading
       securities
        Acquisitions                (434,686)    (2,015,904)             -
        Proceeds from sales
         and maturity                426,213      2,221,718              -
      Change in investment
       securities
        Acquisitions                       -              -     (2,905,462)
        Proceeds from sales
         and maturity                      -              -      2,977,052
      Change in loans               (504,632)      (963,207)      (171,958)
      Change in assets
       purchased under reverse
       repurchase agreements         215,542        255,362       (264,378)
      Proceeds from mortgage
       loan securitizations          403,274        310,904              -
      Additions to property,
       plant and equipment           (18,289)       (14,257)       (15,442)
      Proceeds from disposal
       of property, plant and
       equipment                          45              1             18
      Net change in interest-
       bearing deposits with
       other banks                   (51,474)       (13,596)       264,664
      Net cash flows from the
       sale of a subsidiary                -             -               -
                                ---------------------------------------------
                                      35,993       (218,979)      (115,506)
                                ---------------------------------------------
    Net change in cash and non-
     interest-bearing deposits
     with other banks during
     the period                       (4,149)         2,883         13,956
    Cash and non-interest-
     bearing deposits with
     other banks at beginning
     of period                        69,394         66,511         56,951
                                ---------------------------------------------
    Cash and non-interest-
     bearing deposits with
     other banks at end of
     period                     $     65,245   $     69,394   $     70,907
                                ---------------------------------------------
                                ---------------------------------------------
    Supplemental disclosure
     relating to cash flows:
      Interest paid during
       the period               $    109,069   $    150,074   $     93,979
      Income taxes paid
       during the period        $     (8,214)  $      5,895   $      1,558
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                       FOR THE YEARS ENDED
    IN THOUSANDS OF DOLLARS                      OCTOBER 31     OCTOBER 31
     (UNAUDITED)                                       2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows relating to
     operating activities
    Net income                                 $     94,545   $     70,332
    Adjustments to determine
     net cash flows relating
     to operating activities:
      Provision for credit
       losses                                        40,000         40,000
      Gains on securitization
       operations                                    (6,683)        (6,161)
      Net loss (gain) on
       disposal of property,
       plant and equipment                              (63)            29
      Net gain from discon-
       tinued operations                             (5,185)        (5,714)
      Gains on disposal and
       on modification in
       ownership interest                            (4,000)          (931)
      Net loss (gain) on
       sale of investment
       securities                                         -          1,421
      Net loss (gain) on sale
       of other than
       held-for-trading
       securities                                     1,812              -
      Future income taxes                            23,959          8,036
      Depreciation and
       amortization                                  28,612         27,193
      Net change in held-for-
       trading securities                           238,213       (590,977)
      Change in accrued
       interest receivable                           10,813          1,605
      Change in assets relating
       to derivative financial
       instruments                                   34,235         46,473
      Change in accrued
       interest payable                               6,748         40,224
      Change in liabilities
       relating to derivative
       financial instruments                        (10,956)       (23,519)
      Other, net                                     15,293         61,309
                                ---------------------------------------------
                                                    467,343       (330,680)
                                ---------------------------------------------
    Cash flows relating to
     financing activities
      Net change in deposits                        784,207       (602,437)
      Change in obligations
       related to assets
       sold short                                  (208,334)       350,946
      Change in obligations
       related to assets sold
       under repurchase
       agreements                                  (171,398)     1,040,320
      Issuance of subordinated
       debentures                                         -        150,000
      Redemption of subor-
       dinated debentures                                 -       (150,000)
      Issuance of common
       shares                                         5,287          1,525
      Dividends, including
       applicable taxes                             (39,440)       (39,122)
                                ---------------------------------------------
                                                    370,322        751,232
                                ---------------------------------------------
    Cash flows relating to
     investing activities
      Change in available-for-
       sale and designated
       as held-for-trading
       securities
        Acquisitions                             (6,888,907)             -
        Proceeds from sales
         and maturity                             7,224,590              -
      Change in investment
       securities
        Acquisitions                                      -    (12,881,435)
        Proceeds from sales
         and maturity                                     -     13,168,669
      Change in loans                            (2,095,543)    (1,150,389)
      Change in assets
       purchased under reverse
       repurchase agreements                        262,242       (294,473)
      Proceeds from mortgage
       loan securitizations                         892,035        631,896
      Additions to property,
       plant and equipment                          (54,481)       (43,002)
      Proceeds from disposal
       of property, plant and
       equipment                                      1,270            423
      Net change in interest-
       bearing deposits with
       other banks                                 (184,533)       161,069
      Net cash flows from the
       sale of a subsidiary                               -           (140)
                                ---------------------------------------------
                                                   (843,327)      (407,382)
                                ---------------------------------------------
    Net change in cash and non-
     interest-bearing deposits
     with other banks during
     the period                                      (5,662)        13,170
    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                                    $     65,245   $     70,907
                                ---------------------------------------------
                                ---------------------------------------------
    Supplemental disclosure
     relating to cash flows:
      Interest paid during
       the period                              $    518,456   $    440,922
      Income taxes paid
       during the period                       $      6,871   $     18,832
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    OTHER INCOME

    IN THOUSANDS
     OF DOLLARS                                                       2007
     (UNAUDITED)        Q4          Q3          Q2          Q1       TOTAL
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Fees and
     commissions
     on loans and
     deposits
      Deposit
       service
       charges   $  12,675   $  13,083   $  12,599   $  12,291   $  50,648
      Lending
       fees          5,904       5,963       5,663       5,882      23,412
      Card
       service
       revenues      3,741       4,160       3,345       3,397      14,643
                 ------------------------------------------------------------
    Sub-total -
     fees and
     commissions
     on loans and
     deposits       22,320      23,206      21,607      21,570      88,703
                 ------------------------------------------------------------
    Other
      Income from
       brokerage
       operations    6,454       7,664       9,693       8,548      32,359
      Income from
       treasury and
       financial
       market
       operations    3,912       6,516       4,274       4,584      19,286
      Income from
       sales
       of mutual
       funds         3,493       3,521       3,318       3,074      13,406
      Credit
       insurance
       income        3,492       2,453       3,030       3,582      12,557
      Income from
       registered
       self-directed
       plans         2,231       2,490       2,572       2,359       9,652
      Securitization
       income        1,407       1,236       3,215         560       6,418
      Gain on modi-
       fication in
       ownership
       interest      4,000           -           -           -       4,000
      Other            583       2,189       2,456       2,117       7,345
                  -----------------------------------------------------------
    Sub-total -
     other          25,572      26,069      28,558      24,824     105,023
                  -----------------------------------------------------------
    Total - other
     income      $  47,892   $  49,275   $  50,165   $  46,394  $  193,726
                  -----------------------------------------------------------

    As a % of
     average
     assets           1.11 %      1.16 %      1.23 %      1.11 %      1.15 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    IN THOUSANDS OF
    DOLLARS                                                           2006
    (UNAUDITED)         Q4          Q3          Q2          Q1       TOTAL
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Fees and
     commissions on
     loans and
     deposits
      Deposit
       service
       charges   $  12,055   $  12,096   $  11,926   $  11,836   $  47,913
      Lending
       fees          5,865       6,414       5,303       6,096      23,678
      Card service
       revenues      3,342       3,587       2,983       3,112      13,024
                  -----------------------------------------------------------
    Sub-total -
     fees and
     commissions
     on loans and
     deposits       21,262      22,097      20,212      21,044      84,615
                  -----------------------------------------------------------
    Other
      Income from
       brokerage
       operations    8,896       7,020       8,280       7,222      31,418
      Income from
       treasury and
       financial
       market
       operations    4,168       5,102       2,889       3,047      15,206
      Income from
       sales
       of mutual
       funds         2,911       2,717       2,636       2,373      10,637
      Credit
       insurance
       income        3,222       3,131       3,249       2,976      12,578
      Income from
       registered
       self-directed
       plans         2,325       2,540       2,893       2,757      10,515
      Securitization
       income        1,035       2,245       3,554       3,138       9,972
      Gain on
       disposal          -           -           -         931         931
      Other          1,158       1,681       1,587       2,302       6,728
                  -----------------------------------------------------------
    Sub-total -
     other          23,715      24,436      25,088      24,746      97,985
                  -----------------------------------------------------------
    Total - other
     income      $  44,977   $  46,533   $  45,300   $  45,790  $  182,600
                  -----------------------------------------------------------

    As a % of
     average
     assets           1.07 %      1.10 %      1.11 %      1.10 %      1.09 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NON - INTEREST EXPENSES

    IN THOUSANDS
    OF DOLLARS                                                        2007
    (UNAUDITED)         Q4          Q3          Q2          Q1       TOTAL
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Salaries and
     employee
     benefits
      Salaries   $  36,882   $  37,606   $  36,266   $  36,160  $  146,914
      Employee
       benefits     12,617      13,655      13,809      12,965      53,046
      Perfor-
       mance
       based
       compen-
       sation        6,803       7,341       8,045       7,141      29,330
                  -----------------------------------------------------------
    Sub-total -
     salaries
     and emp-
     loyee
     benefits       56,302      58,602      58,120      56,266     229,290
                  -----------------------------------------------------------
    Premises and
     technology
      Equipment
       and
       computer
       services     10,655      10,402      11,291      10,103      42,451
      Rent and
       property
       taxes         8,715       8,617       8,750       8,461      34,543
      Depreciation   7,127       6,883       6,814       6,569      27,393
      Maintenance
       and repairs   1,595       1,424       1,208       1,200       5,427
      Public
       utilities       262         296         417         309       1,284
      Other            123         136          88         114         461
                  -----------------------------------------------------------
    Sub-total -
     premises and
     technology     28,477      27,758      28,568      26,756     111,559
                  -----------------------------------------------------------
    Other
      Fees and
       commissions   5,251       5,208       4,845       3,649      18,953
      Taxes
       and
       insurance     4,094       4,431       4,590       5,641      18,756
      Communications
       and
       travelling
       expenses      4,634       4,631       4,677       4,373      18,315
      Advertising
       and business
       development   4,143       4,534       4,433       3,660      16,770
      Stationery
       and
       publications  1,420       1,418       1,691       1,705       6,234
      Recruitment
       and training    419         684         708         982       2,793
      Other          1,017       1,107       1,319       1,297       4,740
                  -----------------------------------------------------------
    Sub-total -
     other          20,978      22,013      22,263      21,307      86,561
                  -----------------------------------------------------------

    Total - non
     -interest
     expenses   $  105,757  $  108,373  $  108,951  $  104,329  $  427,410
                  -----------------------------------------------------------

    As a % of
     average
     assets           2.44 %      2.54 %      2.67 %      2.49 %      2.54 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    IN THOUSANDS
    OF DOLLARS                                                        2006
    (UNAUDITED)         Q4          Q3          Q2          Q1       TOTAL
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Salaries and
     employee
     benefits
      Salaries   $  35,225   $  36,647   $  34,102   $  34,814  $  140,788
      Employee
       benefits     12,727      12,426      12,903      11,923      49,979
      Performance-
       based
       compensation  7,577       4,328       3,369       7,542      22,816
                  -----------------------------------------------------------
    Sub-total -
     salaries and
     employee
     benefits       55,529      53,401      50,374      54,279     213,583
                  -----------------------------------------------------------
    Premises and
     technology
      Equipment and
       computer
       services     10,485      10,526      10,769      10,244      42,024
      Rent and
       property
       taxes         8,399       8,345       8,372       8,451      33,567
      Depreciation   6,874       6,249       6,348       6,502      25,973
      Maintenance
       and repairs   1,327       1,211       1,209       1,177       4,924
      Public
       utilities       265         276         364         316       1,221
      Other            (28)        162         188         120         442
                  -----------------------------------------------------------
    Sub-total -
     premises and
     technology     27,322      26,769      27,250      26,810     108,151
                  -----------------------------------------------------------
    Other
      Fees and
       commissions   5,357       5,210       4,903       3,688      19,158
      Taxes and
       insurance     5,983       5,732       6,110       6,090      23,915
      Communications
       and travelling
       expenses      4,436       4,666       4,371       4,061      17,534
      Advertising
       and business
       development   3,124       3,837       3,728       4,611      15,300
      Stationery and
       publications  1,412       1,443       1,490       1,622       5,967
      Recruitment
       and training    383         612         490         611       2,096
      Other          1,272       1,575       1,273         991       5,111
                  -----------------------------------------------------------
    Sub-total -
     other          21,967      23,075      22,365      21,674      89,081
                  -----------------------------------------------------------

    Total - non-
     interest
     expenses   $  104,818  $  103,245  $   99,989  $  102,763  $  410,815
                  -----------------------------------------------------------

    As a % of
     average assets   2.49 %      2.43 %      2.46 %      2.46 %      2.46 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    REGULATORY CAPITAL - BIS

                                                      AS AT          AS AT
                                                 OCTOBER 31     OCTOBER 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)                2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Tier I capital
      Common shares                              $  256,445     $  250,568
      Contributed surplus                               105            518
      Retained earnings                             537,254        485,334
      Non-cumulative preferred shares               210,000        210,000
      Less: goodwill                                (53,790)       (53,790)
                                               ------------------------------
    Total - Tier I capital (A)                      950,014        892,630
                                               ------------------------------
    Tier II capital
      Subordinated debentures                       150,000        150,000
      General allowances                             65,250         65,250
      Unrealized gains on available for sale
       equity securities                             11,698              -
                                               ------------------------------
    Total - Tier II capital                         226,948        215,250
                                               ------------------------------
    Securitization and other                        (45,525)       (28,469)
                                               ------------------------------
    Regulatory capital - BIS (B)               $  1,131,437   $  1,079,411
                                               ------------------------------
    Total risk-weighted assets (C)             $  9,723,950   $  8,702,241

    Tier I BIS capital ratio (A/C)                      9.8 %         10.3 %
    Total BIS capital ratio (B/C)                      11.6 %         12.4 %
    Assets to capital multiple                         15.8 x         16.1 x
    Tangible common equity as a percentage
     of risk-weighted assets                            7.5 %          7.7 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    RISK-WEIGHTED ASSETS
                                                      AS AT          AS AT
                                                 OCTOBER 31     OCTOBER 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)                2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance sheet items
      Cash resources                           $     85,613   $     41,931
      Securities                                    328,325        481,035
      Mortgage loans                              2,636,531      2,400,540
      Other loans and customers' liability under
       acceptances                                5,906,449      5,146,909
      Other assets                                  476,308        462,541
      General allowances                             65,250         65,250
                                               ------------------------------
    Total - balance sheet items                   9,498,476      8,598,206
    Off-balance sheet items
      Derivative financial instruments               28,647         26,620
      Credit-related commitments                    196,827         77,415
                                               ------------------------------
    Total - risk-weighted assets               $  9,723,950   $  8,702,241
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ASSETS UNDER ADMINISTRATION

                                                 OCTOBER 31     OCTOBER 31
    IN THOUSANDS OF DOLLARS (UNAUDITED)                2007           2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Self-directed RRSPs and RRIFs              $  8,429,223   $  8,415,222
    Clients' brokerage assets                     1,994,766      1,923,658
    Institutional                                 1,823,965      1,724,998
    Mortgage loans under management               1,742,466      1,223,020
    Mutual funds                                  1,615,886      1,405,164
    Other - Personal                                 29,988         33,246
                                               ------------------------------
    Total - assets under administration        $ 15,636,294   $ 14,725,308
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




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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