EDMONTON, ALBERTA--(Marketwired - Dec 3, 2014) - Canadian Western Bank (TSX:CWB) -

Fourth Quarter 2014 Highlights(1) (compared to the same period in the prior year)

  • Record net income available to common shareholders of $58.2 million, up 14%.
  • Record diluted earnings per common share of $0.72, up 13%, and adjusted cash earnings per common share of $0.73, up 12%.
  • Stable Basel III regulatory capital ratios using the Standardized approach for calculating risk-weighted assets of 8.0% common equity Tier 1 (CET1), 9.3% Tier 1 and 12.8% total ratio.
  • On December 3, 2014, declared a quarterly dividend of $0.21 per CWB common share, an increase of 5% over the prior quarter and 11% over the dividend declared a year earlier.
(1) Highlights include certain non-IFRS measures - refer to definitions following the table of Selected Financial Highlights on page 2.

Fiscal 2014 Highlights (compared to the prior year)

  • Record net income available to common shareholders of $218.5 million, up 17%.
  • Record diluted earnings per common share of $2.70 and adjusted cash earnings per common share of $2.76, both up 15%.
  • Strong loan growth of 12% with stable credit quality.
  • Net interest margin (teb) of 2.59%, down 7 basis points.
  • Issued $125 million of 4.40% preferred shares and redeemed $209 million of 7.25% preferred shares.
  • Recognized for a ninth consecutive year as one of the Best Employers in Canada by Aon Hewitt.

Fiscal 2014 Performance versus Target Ranges

2014 Performance Target Ranges2014 Performance
Adjusted cash earnings per share growth of 12 - 16% 15%
Total revenues (teb) growth of 10 - 12% 11%
Loan growth of 10 - 12% 12%
Provision for credit losses between 0.18 - 0.23% of average loans 0.15%
Efficiency ratio (teb) of 46% or less 46.0%
Return on common shareholders' equity of 14 - 15% 14.8%
Return on assets of 1.05 - 1.15% 1.10%

"Strong fourth quarter financial performance closed out a record year for CWB Group," said Chris Fowler, President and Chief Executive Officer. "We delivered double-digit loan growth for the 24th time in 25 years and achieved all of our fiscal 2014 performance targets. Our expectations for 2015 reflect ongoing confidence in our client-focused strategy while acknowledging the realities of persistent low interest rates and competitive influences."

"Our vision is to be seen as crucial to our clients' futures, and we know that our ability to achieve this starts with our people. We're determined to build on the strong foundation of CWB Group's unique, results-oriented culture as we continue to expand and enhance our product and service offerings. CWB's placement as one of the Best Employers in Canada for a ninth consecutive year confirms our ongoing commitment to employees."

"Looking ahead, our current pipeline for new loans is strong and we remain confident about the opportunities within our chosen core western Canadian geographic footprint, despite recent commodity price declines. Our ongoing belief that we will successfully execute our growth strategies is underpinned by the combination of our experience and past performance through economic cycles."

"Notwithstanding the current challenges, CWB Group's prospects for profitable growth remain promising over both the short and long term. We will diligently manage expenses as we continue to invest in our capacity to efficiently and profitably deliver the financial services our clients want. We're confident that the significant strategic investments we're making in people, technology and infrastructure will yield positive long-term benefits for all of our stakeholders," added Mr. Fowler."

Selected Financial Highlights

For the three months ended Change from October 31
2013		 For the year ended Change from October 31
2013
(unaudited)October 31
2014		 July 31
2014		 October 31 2013October 31 2014 October 31
2013
($ thousands, except per share amounts)
Results of Operations
Net interest income (teb - see below)$132,479 $131,751 $124,775 6%$513,196 $470,757 9%
Less teb adjustment1,709 1,888 2,062 (17)7,676 8,138 (6)
Net interest income per financial statements130,770 129,863 122,713 7505,520 462,619 9
Non-interest income27,057 28,027 26,181 3113,409 94,982 19
Total revenues (teb)159,536 159,778 150,956 6626,605 565,739 11
Total revenues157,827 157,890 148,894 6618,929 557,601 11
Net income available to common shareholders58,150 56,580 51,210 14218,549 187,163 17
Earnings per common share
Basic(1)0.72 0.71 0.64 132.73 2.36 16
Diluted(2)0.72 0.70 0.64 132.70 2.35 15
Adjusted cash(3)0.73 0.71 0.65 122.76 2.39 15
Return on common shareholders' equity(4)15.0% 14.9% 14.9% 10bp14.8% 14.2% 60bp(5)
Return on assets(6)1.12 1.11 1.11 11.10 1.06 4
Efficiency ratio (teb)(7)47.2 45.9 45.5 17046.0 46.4 (40)
Efficiency ratio47.7 46.4 46.1 16046.6 47.1 (50)
Net interest margin (teb)(8)2.56 2.58 2.72 (16)2.59 2.66 (7)
Net interest margin2.53 2.54 2.67 (14)2.55 2.62 (7)
Provision for credit losses as a percentage of average loans0.09 0.16 0.19 (10)0.15 0.19 (4)
Per Common Share
Cash dividends$0.20 $0.20 $0.18 11%$0.78 $0.70 11%
Book value19.52 19.03 17.45 1219.52 17.45 12
Closing market value37.75 41.62 33.44 1337.75 33.44 13
Common shares outstanding (thousands)80,369 80,270 79,620 180,369 79,620 1
Balance Sheet and Off-Balance Sheet Summary
Assets$20,608,656 $20,522,735 $18,513,340 11%
Loans17,510,099 17,141,881 15,567,440 12
Deposits17,373,014 17,457,554 15,631,040 11
Debt1,036,990 939,204 820,650 26
Shareholders' equity1,693,527 1,652,708 1,598,507 6
Assets under administration10,101,698 10,278,307 8,423,972 20
Assets under management1,795,975 1,788,500 1,901,146 (6)
Capital Adequacy(9)
Common equity Tier 1 ratio8.0% 8.0% 8.0% -bp
Tier 1 ratio9.3 9.3 9.7 40
Total ratio12.8 12.9 13.9 110
(1) Basic earnings per common share (EPS) is calculated as net income available to common shareholders divided by the average number of common shares outstanding.
(2) Diluted EPS is calculated as net income available to common shareholders divided by the average number of common shares outstanding adjusted for the dilutive effects of stock options.
(3) Adjusted cash EPS is diluted EPS excluding the after-tax amortization of acquisition-related intangible assets and the non-tax deductible change in fair value of contingent consideration. These exclusions represent non-cash charges and are not considered indicative of ongoing business performance. Management believes the adjusted results provide the reader with a better understanding about how they view CWB's performance.
(4) Return on common shareholders' equity is calculated as net income available to common shareholders divided by average common shareholders' equity.
(5) bp - basis point change.
(6) Return on assets is calculated as net income available to common shareholders divided by average total assets.
(7) Efficiency ratio is calculated as non-interest expenses divided by total revenues excluding the non-tax deductible charge for the fair value of contingent consideration.
(8) Net interest margin is calculated as net interest income divided by average total assets.
(9) Capital adequacy is calculated in accordance with Basel III guidelines issued by the Office of the Superintendent of Financial Institutions Canada (OSFI).

Taxable Equivalent Basis (teb)

Most banks analyze revenue on a taxable equivalent basis to permit uniform measurement and comparison of net interest income. Net interest income (as presented in the consolidated statement of income) includes tax-exempt income on certain securities. Since this income is not taxable, the rate of interest or dividends received is significantly lower than would apply to a loan or security of the same amount. The adjustment to taxable equivalent basis increases interest income and the provision for income taxes to what they would have been had the tax-exempt securities been taxed at the statutory rate. The taxable equivalent basis does not have a standardized meaning prescribed by International Financial Reporting Standards (IFRS) and, therefore, may not be comparable to similar measures presented by other financial institutions. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.

Non-IFRS Measures

CWB uses a number of financial measures to assess its performance. These measures provide readers with an enhanced understanding of how management views the results. Non-IFRS measures may also provide readers the ability to analyze trends and provide comparisons with our competitors. Taxable equivalent basis, adjusted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, common equity Tier 1, Tier 1 and total capital adequacy ratios, and average balances do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other financial institutions.

Forward-looking Statements

From time to time, CWB makes written and verbal forward-looking statements. Statements of this type are included in the Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as press releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about CWB's objectives and strategies, targeted and expected financial results and the outlook for CWB's businesses or for the Canadian or U.S. economy. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "may increase", "may impact" and other similar expressions, or future or conditional verbs such as "will", "should", "would" and "could."

By their very nature, forward-looking statements involve numerous assumptions. A variety of factors, many of which are beyond CWB's control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in Canada including the volatility and lack of liquidity in financial markets, fluctuations in interest rates and currency values, changes in monetary policy, changes in economic and political conditions, regulatory and legal developments, the level of competition in CWB's markets, the occurrence of weather-related and other natural catastrophes, changes in accounting standards and policies, the accuracy of and completeness of information CWB receives about customers and counterparties, the ability to attract and retain key personnel, the ability to complete and integrate acquisitions, reliance on third parties to provide components of CWB's business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and management's ability to anticipate and manage the risks associated with these factors. It is important to note that the preceding list is not exhaustive of possible factors.

These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause CWB's actual results to differ materially from the expectations expressed in such forward looking statements. Unless required by securities law, CWB does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by it or on its behalf.

Assumptions about the performance of the Canadian economy in 2015 and how it will affect CWB's businesses are material factors considered when setting organizational objectives and targets. Performance target ranges for fiscal 2015 consider the following management assumptions:

  • Moderate economic growth in Canada and relatively stronger performance in the four western provinces;
  • A relatively stable net interest margin (teb) compared to the level achieved in the fourth quarter of 2014, primarily attributed to treasury management strategies and shifts in asset mix that help to offset impacts from the very low interest rate environment, a flat interest rate curve and competitive factors;
  • Sound credit quality with actual losses remaining within CWB's historical range of acceptable levels.

Potential risks that may have a material adverse impact on current economic expectations and forecasts include a sustained period of materially lower energy and other commodity prices compared to average levels observed in fiscal 2014, a slowing rate of economic growth in the U.S., a significant and sustained deterioration in Canadian residential real estate prices, or a significant disruption in major global economies. Greater than expected pricing competition and/or disruptions in domestic or global financial markets that meaningfully impact loan yields and/or funding costs may also contribute to adverse financial results compared to expectations.

Financial Summary

This financial summary should be read in conjunction with Canadian Western Bank's (CWB) unaudited interim consolidated financial statements for the period ended October 31, 2014 and the audited consolidated financial statements and Management's Discussion and Analysis (MD&A) for the year ended October 31, 2013, available on SEDAR at www.sedar.com and the Bank's website at www.cwb.com. An electronic copy of the 2014 Annual Report, including MD&A and audited consolidated financial statements, for the year ended October 31, 2014 is expected to be available on both SEDAR and CWB's website during the week of December 8, 2014. Hardcopies of the 2014 Annual Report will be distributed to shareholders in January 2015.

Overview

Q4 2014 vs. Q4 2013

Strong fourth quarter financial performance was marked by record earnings and double-digit loan growth. Record net income available to common shareholders of $58.2 million was up 14% from a year ago, while diluted earnings per common share increased 13% to $0.72. Adjusted cash earnings per common share, which excludes the after-tax amortization of acquisition-related intangible assets and the non-tax deductible change in fair value of contingent consideration, was a record $0.73, up 12%. Earnings growth was based on a 6% increase in total revenues (teb - see definition following the Financial Highlights table) to $159.5 million, a decrease in preferred share dividends and a lower provision for credit losses, partially offset by higher non-interest expenses. Higher total revenues primarily resulted from the benefit of strong 12% loan growth and 3% higher non-interest income, partially offset by a 16 basis point decrease in net interest margin (teb) to 2.56%. Growth in almost all categories of non-interest income more than offset notable declines in both net insurance revenues and net gains on securities. 'Other' non-interest income was $4.5 million higher, primarily due to a gain on the sale of CWB's former Edmonton Main Branch location. Credit related fee income and trust and wealth management fees increased $1.0 million and $0.9 million respectively, while net insurance revenues were $3.6 million lower due to the impact of claims expense related to severe hailstorms in Alberta. Net gains on securities were $1.8 million lower. Higher non-interest expenses primarily relate to increases in salaries and benefits, as well as premises and equipment expense to facilitate business growth.

Q4 2014 vs. Q3 2014

Net income available to common shareholders increased 3% from last quarter mainly due to a lower provision for credit losses and higher 'other' non-interest income, partially offset by a $3.6 million decline in net gains on securities, a $2.0 million reduction in net insurance revenues and higher non-interest expenses. Changes in 'other' non-interest income and net insurance revenues primarily resulted from the same factors discussed above. Diluted and adjusted cash earnings per common share both increased 3%.

2014 vs. 2013

Record net income available to common shareholders for the full year of $218.5 million increased 17%, while diluted and adjusted cash earnings per common share were both up 15% to $2.70 and $2.76, respectively. Earnings growth primarily resulted from the achievement of record total revenues (teb) of $626.6 million, up 11%, lower preferred share dividends and a decrease in the provision for credit losses, partially offset by a 10% increase in non-interest expenses. Higher total revenues reflect 9% growth in net interest income (teb) and 19% higher non-interest income. Growth in net interest income was driven by strong loan growth, partially offset by the impact of a seven basis point reduction in net interest margin (teb) to 2.59%.

ROE and ROA

The quarterly return on common shareholders' equity (ROE) of 15.0% increased 10 basis points from both a year earlier and the prior quarter. ROE for the year of 14.8% was up from 14.2% in 2013. Fourth quarter return on assets (ROA) was 1.12%, compared to 1.11% both last year and in the previous quarter. ROA for the year was 1.10%, up four basis points from 2013.

Net Interest Margin

Net interest margin (teb) of 2.56% declined 16 basis points compared to the fourth quarter last year primarily due to lower loan yields and higher balances of cash and securities. Net interest margin (teb) was down two basis points from the prior quarter as the positive influence of lower balances of cash and securities only partially offset lower loan yields. Annual net interest margin (teb) of 2.59% was down seven basis points as the benefit of lower deposit costs was more than offset by lower asset yields.

Looking forward, meaningful improvement in this key metric from the level achieved in the fourth quarter is not expected in the absence of increases in the prime lending interest rate and/or a sustained steepening of the interest rate curve.

Efficiency ratio

The quarterly efficiency ratio (teb), which measures non-interest expenses as a percentage of total revenues (teb), excluding the non-tax deductible charge for the fair value of contingent consideration, was 47.2%, up from 45.5% a year earlier, primarily reflecting the revenue impact of lower net interest margin. The annual efficiency ratio (teb) of 46.0% improved from 46.4% in 2013.

Core banking system implementation

Work toward implementation of a new core banking system proceeded through the fourth quarter. Following completion of the analysis and design phases, management established a capital budget of $62 million, revised from an initial estimate of $50 million, and scheduled implementation for early fiscal 2016.

Loan Growth

Total loans of $17,606 million grew 2% in the quarter and 12% over the past twelve months. Very strong performance in real estate project loans, equipment financing and leasing, and personal loans and mortgages made the greatest contribution to annual loan growth measured in dollars. Fourth quarter growth was led by equipment financing and leasing, real estate project loans, and personal loans and mortgages. Growth was achieved across all lending sectors on both a year-over-year and quarterly basis, with the exception of declines in oil and gas production loans in both periods and lower general commercial loans compared to the prior quarter. With respect to real estate project loans, CWB has continued to finance well-capitalized developers on the basis of sound loan structures and acceptable pre-sale/lease levels. Although recent growth in this area has been very strong, total exposure to real estate remains within CWB's established risk appetite. CWB's promising pipeline of new commercial loans and a strategic focus on a customized training program for commercial relationship managers support management's expectations for higher growth in this portfolio over time. As the overall outlook for loan growth remains positive, management has established a 10 - 12% performance target range for fiscal 2015.

(unaudited)
($ millions)		October 31 2014 July 31 2014 October 31 2013 % change from October 31 2013
Commercial mortgages$3,574 $3,548 $3,311 8%
General commercial loans3,525 3,538 3,428 3
Equipment financing and leasing3,394 3,281 2,932 16
Real estate project loans2,871 2,768 2,304 25
Personal loans and mortgages2,841 2,768 2,502 14
Corporate lending (1)1,147 1,069 902 27
Oil and gas production loans254 263 274 (7)
Total loans outstanding (2)$17,606 $17,235 $15,653 12%
(1) Corporate lending represents a diversified portfolio that is centrally sourced and administered through a designated lending group located in Edmonton. These loans include participation in select syndications that are structured and led primarily by the major Canadian banks, but exclude participation in various other syndicated facilities sourced through relationships developed at CWB branches.
(2) Loans by lending sector exclude the allowance for credit losses.

Credit Quality

Overall credit quality continued to reflect sound underwriting, secured lending practices and strong economic activity in CWB's key geographic markets. Gross impaired loans totaled $62.1 million at quarter end, compared to $58.1 million last quarter and $64.2 million a year earlier. The quarterly provision for credit losses represented nine basis points of average loans, compared to 16 basis points in the prior quarter and 19 basis points last year. Despite the sequential decline, the dollar provision for credit losses exceeded net new specific provisions and led to a slight increase in the level of the collective allowance for credit losses compared to last quarter. Better than expected credit quality as evidenced by very low write-offs, coupled with an annual provision for credit losses of $25.1 million, or 15 basis points of average loans, contributed to a $13.9 million (18%) year-over-year increase in the collective allowance for credit losses to reach $90.1 million. The total provision for credit losses at October 31, 2014 of $95.6 million represented 154% of total gross impaired loans.

Fiscal 2015 Performance Target Ranges and Outlook

CWB's performance target ranges established for fiscal 2015 are presented in the following table:

2015
Target Ranges
Adjusted cash earnings per common share growth(1) 5 - 8%
Loan growth 10 - 12%
Provision for credit losses as a percentage of average loans 0.17 - 0.22%
Efficiency ratio (teb)(2) 47% or less
Return on common shareholders' equity(3) 14.0 - 15.0%
Return on assets(4) 1.07 - 1.12%
(1) Adjusted cash earnings per common share calculated as net income available to common shareholders, excluding the after-tax amortization of acquisition-related intangible assets and the non-tax deductible charge for the fair value of contingent consideration, divided by the average number of common shares outstanding adjusted for the dilutive effects of stock options.
(2) Efficiency ratio (teb) calculated as non-interest expenses divided by total revenues (teb).
(3) Return on common shareholders' equity calculated as net income available to common shareholders divided by average common shareholders' equity.
(4) Return on assets calculated as net income available to common shareholders divided by average total assets.

Fiscal 2015 performance target ranges, as shown in the table above, are based on expectations for moderate economic growth in Canada and comparatively stronger performance within key western Canadian markets. Achievement of 2015 targets for the important shareholder value metrics of adjusted cash earnings per share growth and profitability ratios will be largely driven by management's commitment to deliver ongoing strong loan growth, stable credit quality and effective expense management. Lower preferred share dividends compared to 2014 will also benefit earnings and profitability. CWB will maintain its focus on further enhancing its funding base and growing secured loans that offer a fair and profitable return in an environment where net interest margin pressure is expected to persist as a result of very low interest rates, a flat interest rate curve and competitive influences. The provision for credit losses is targeted between 17 and 22 basis points of average loans and reflects expectations that overall credit quality will remain sound. In consideration of constrained revenues owing to net interest margin pressure and strategic investment necessary to support CWB's long-term growth, the 2015 efficiency ratio (teb) target is 47% or less. While this represents an increase from 2014, management remains committed to disciplined control of all discretionary expenses, and expects the efficiency ratio will show improvement over the medium term. The most notable incremental expense contributing to the higher efficiency ratio target relates to changes in non-executive compensation to align the level and structure of CWB's employee offering with industry benchmarks. Profitability targets measured by the return on common shareholders' equity and return on assets are relatively consistent with 2014.

Ongoing assessment and development of each of CWB Group's core businesses will remain a key priority, while potential strategic acquisitions continue to be evaluated. With its solid capital position under the more conservative Standardized approach for calculating risk-weighted assets, CWB remains well positioned to support continued growth and manage unforeseen challenges. Management will maintain its focus on creating value for shareholders over the long term. Although the overall outlook for 2015 is positive, a sustained period of materially lower energy and other commodity prices compared to average levels observed in fiscal 2014 could have an adverse impact on economic expectations.

Dividends

On December 3, 2014, CWB's Board of Directors declared a cash dividend of $0.21 per common share, payable on January 8, 2015 to shareholders of record on December 16, 2014. This quarterly dividend represents a 5% increase over the previous quarter and is 11% higher than the quarterly dividend declared one year ago. The Board of Directors also declared a cash dividend of $0.275 per Series 5 Preferred Share payable on January 31, 2015 to shareholders of record on January 23, 2015.

Dividend Reinvestment Plan

CWB common shares (TSX:CWB) and preferred shares (TSX:CWB.PR.B) are deemed eligible to participate in CWB's dividend reinvestment plan (the Plan). The Plan provides holders of eligible shares of CWB the opportunity to direct cash dividends toward the purchase of CWB common shares. Further details for the Plan are available on CWB's website. For dividends declared commencing in December 2014, CWB has elected to issue common shares for the Plan from treasury with no discount from the average market price (as defined in the Plan), compared to a 2% discount in prior periods.

Fiscal 2014 Fourth Quarter and Annual Results Conference Call

CWB's fourth quarter and annual results conference call is scheduled for Thursday, December 4, 2014 at 1:30 p.m. ET (11:30 a.m. MT). The Bank's executives will comment on financial results and respond to questions from analysts and institutional investors.

The conference call may be accessed on a listen-only basis by dialing 647-788-4922 or toll-free 1-877-223-4471. The call will also be webcast live on the Bank's website, www.cwb.com.

A replay of the conference call will be available until December 18, 2014 by dialing 416-621-4642 (Toronto) or
1-800-585-8367 (toll-free) and entering passcode 34177374.

About Canadian Western Bank Group

Canadian Western Bank offers a full range of business and personal banking services across the four western provinces and is the largest publicly traded Canadian bank headquartered in Western Canada. The Bank, along with its operating affiliates, National Leasing Group, Canadian Western Trust, Valiant Trust, Canadian Direct Insurance, Canadian Western Financial, Adroit Investment Management, and McLean & Partners Wealth Management, collectively offer a diversified range of financial services across Canada and are together known as the CWB Group. The common shares of Canadian Western Bank are listed on the Toronto Stock Exchange under the trading symbol "CWB". The Bank's Series 5 Preferred Shares trade on the Toronto Stock Exchange under the trading symbol "CWB.PR.B". Refer to www.cwb.com for additional information.

Consolidated Balance Sheets

As at As at As at Change from
(unaudited)October 31 July 31 October 31 October 31
($ thousands)2014 2014 2013 2013
Assets
Cash Resources
Cash and non-interest bearing deposits with financial institutions$13,320 $45,626 $83,856 (84)%
Interest bearing deposits with regulated financial institutions491,255 418,220 258,466 90
Cheques and other items in transit3,839 2,697 5,673 (32)
508,414 466,543 347,995 46
Securities
Issued or guaranteed by Canada764,213 1,074,895 927,077 (18)
Issued or guaranteed by a province or municipality560,482 676,319 410,984 36
Other securities764,510 774,703 894,271 (15)
2,089,205 2,525,917 2,232,332 (6)
Securities Purchased Under Resale Agreements99,566 - - nm
Loans
Personal2,841,154 2,768,458 2,502,295 14
Business14,764,543 14,466,926 13,150,931 12
17,605,697 17,235,384 15,653,226 12
Allowance for credit losses(95,598) (93,503) (85,786) 11
17,510,099 17,141,881 15,567,440 12
Other
Property and equipment66,257 67,111 66,647 (1)
Goodwill50,408 50,408 49,424 2
Intangible assets85,137 80,698 70,197 21
Insurance related65,764 63,557 64,365 2
Derivative related5,420 6,616 4,509 20
Other assets128,386 120,004 110,431 16
401,372 388,394 365,573 10
Total Assets$20,608,656 $20,522,735 $18,513,340 11%
Liabilities and Equity
Deposits
Personal$9,832,669 $10,293,130 $9,420,754 4%
Business and government7,540,345 7,164,424 6,210,286 21
17,373,014 17,457,554 15,631,040 11
Other
Cheques and other items in transit54,826 52,922 55,290 (1)
Insurance related165,903 159,291 167,816 (1)
Derivative related386 178 36 nm
Other liabilities282,944 260,119 238,939 18
504,059 472,510 462,081 9
Debt
Subordinated debentures625,000 625,000 625,000 -
Debt securities411,990 314,204 195,650 111
1,036,990 939,204 820,650 26
Equity
Preferred shares125,000 125,000 208,815 (40)
Common shares533,038 529,283 510,282 4
Retained earnings1,011,147 969,066 858,167 18
Share-based payment reserve25,339 24,048 24,632 3
Other reserves(997) 5,311 (3,389) (71)
Total Shareholders' Equity1,693,527 1,652,708 1,598,507 6
Non-controlling interests1,066 759 1,062 -
Total Equity1,694,593 1,653,467 1,599,569 6
Total Liabilities and Equity$20,608,656 $20,522,735 $18,513,340 11%

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Consolidated Statements of Income

For the three months ended Change from October 31
2013		 For the year ended Change from October 31
2013
(unaudited)October 31 2014 July 31 2014 October 31 2013October 31 2014 October 31 2013
($ thousands, except per share amounts)
Interest Income
Loans$207,148 $206,251 $191,784 8%$799,909 $735,404 9%
Securities11,508 11,454 10,934 544,096 44,952 (2)
Deposits with regulated financial institutions1,544 1,516 492 2145,142 1,609 220
220,200 219,221 203,210 8849,147 781,965 9
Interest Expense
Deposits80,649 81,086 72,499 11311,075 286,913 8
Debt8,781 8,272 7,998 1032,552 32,433 -
89,430 89,358 80,497 11343,627 319,346 8
Net Interest Income130,770 129,863 122,713 7505,520 462,619 9
Provision for Credit Losses4,017 6,958 7,344 (45)25,057 27,846 (10)
Net Interest Income after Provision for Credit Losses126,753 122,905 115,369 10480,463 434,773 11
Non-Interest Income
Trust and wealth management services8,140 8,611 7,272 1233,866 24,511 38
Credit related6,702 6,359 5,723 1725,014 21,685 15
Insurance, net3,530 5,505 7,101 (50)20,914 16,279 28
Gains on securities, net563 4,211 2,338 (76)13,999 15,094 (7)
Retail services2,865 2,830 2,657 811,399 10,272 11
Other5,257 511 1,090 nm8,217 7,141 15
27,057 28,027 26,181 3113,409 94,982 19
Net Interest and Non-Interest Income153,810 150,932 141,550 9593,872 529,755 12
Non-Interest Expenses
Salaries and employee benefits47,867 47,477 44,557 7187,871 172,237 9
Premises and equipment12,909 12,955 10,941 1849,065 42,825 15
Other expenses14,646 13,065 13,146 1152,036 47,435 10
75,422 73,497 68,644 10288,972 262,497 10
Net Income before Income Taxes78,388 77,435 72,906 8304,900 267,258 14
Income Taxes18,510 19,147 17,574 573,601 64,052 15
Net Income$59,878 $58,288 $55,332 8%$231,299 $203,206 14%
Net Income Attributable to Non-Controlling Interests353 333 331 71,240 824 50
Net Income Attributable to Shareholders of CWB$59,525 $57,955 $55,001 8%$230,059 $202,382 14%
Preferred share dividends1,375 1,375 3,785 (64)11,510 15,183 (24)
Premium paid on purchase of preferred shares for cancellation- - 6 nm- 36 nm
Net Income Available to Common Shareholders$58,150 $56,580 $51,210 14%$218,549 $187,163 17%
Average number of common shares (in thousands)80,312 80,141 79,463 180,034 79,147 1
Average number of diluted common shares (in thousands)81,301 81,121 79,879 280,955 79,544 2
Earnings Per Common Share
Basic$0.72 $0.71 $0.64 13%$2.73 $2.36 16%
Diluted0.72 0.70 0.64 132.70 2.35 15

nm - not meaningful.

Consolidated Statements of Comprehensive Income

For the three months ended For the year ended
(unaudited)
($ thousands)		October 31 2014 October 31
2013		October 31
2014		 October 31
2013
Net Income$59,878 $55,332$231,299 $203,206
Other Comprehensive Income (Loss), net of tax
Available-for-sale securities:
Gains (losses) from change in fair value(1)(5,740) (22)12,882 (2,553)
Reclassification to net income(2)(348) (1,721)(10,287) (11,160)
(6,088) (1,743)2,595 (13,713)
Derivatives designated as cash flow hedges:
Gains from change in fair value(3)(787) 2,5363,372 2,332
Reclassification to net income(4)567 (1,154)(3,575) (1,255)
(220) 1,382(203) 1,077
(6,308) (361)2,392 (12,636)
Comprehensive Income for the Period$53,570 $54,971$233,691 $190,570
Comprehensive income for the period attributable to:
Shareholders of CWB$53,217 $54,640$232,451 $189,746
Non-controlling interests353 3311,240 824
Comprehensive Income for the Period$53,570 $54,971$233,691 $190,570
(1) Net of income tax of $1,868 and $4,697 for the quarter and year ended October 31, 2014, respectively (2013 - $8 and $866).
(2) Net of income tax of $214 and $3,712 for the quarter and year ended October 31, 2014, respectively (2013 - $617 and $3,934).
(3) Net of income tax of $266 and $1,139 for the quarter and year ended October 31, 2014, respectively (2013 - $857 and $788).
(4) Net of income tax of $191 and $1,208 for the quarter and year ended October 31, 2014, respectively (2013 - $390 and $424).

Consolidated Statements of Changes in Equity

For the year ended
(unaudited)October 31 2014 October 31 2013
($ thousands)
Retained Earnings
Balance at beginning of year$858,167 $726,378
Net income attributable to shareholders of CWB230,059 202,382
Dividends:
- Preferred shares(11,510) (15,183)
- Common shares(62,408) (55,374)
Issuance costs on preferred shares(3,161) -
Premium paid on purchase of preferred shares for cancellation- (36)
Balance at end of year1,011,147 858,167
Other Reserves
Balance at beginning of year(3,389) 9,247
Changes in available-for-sale securities2,595 (13,713)
Changes in derivatives designated as cash flow hedges(203) 1,077
Balance at end of year(997) (3,389)
Preferred Shares
Balance at beginning of year208,815 209,750
Issued125,000 -
Redeemed(208,815) -
Purchased for cancellation- (935)
Balance at end of year125,000 208,815
Common Shares
Balance at beginning of year510,282 490,218
Issued under dividend reinvestment plan16,467 14,404
Transferred from share-based payment reserve on the exercise or exchange of options5,223 3,986
Issued on exercise of options1,066 1,674
Balance at end of year533,038 510,282
Share-based Payment Reserve
Balance at beginning of year24,632 22,468
Amortization of fair value of options5,930 6,150
Transferred to common shares on the exercise or exchange of options(5,223) (3,986)
Balance at end of year25,339 24,632
Total Shareholders' Equity1,693,527 1,598,507
Non-Controlling Interests
Balance at beginning of year1,062 244
Net income attributable to non-controlling interests1,240 824
Dividends to non-controlling interests(1,139) (322)
Partial ownership increase(97) -
Business acquisition- 316
Balance at end of year1,066 1,062
Total Equity$1,694,593 $1,599,569

Consolidated Statements of Cash Flow

For the year ended
(unaudited)October 31 October 31
($ thousands)2014 2013
Cash Flows from Operating Activities
Net income$231,299 $203,206
Adjustments to determine net cash flows:
Provision for credit losses25,057 27,846
Depreciation and amortization21,685 21,572
Current income taxes receivable and payable10,254 (7,444)
Amortization of fair value of employee stock options5,930 6,150
Accrued interest receivable and payable, net6,604 2,816
Deferred income taxes, net(5,014) 5,507
Gain on securities, net(13,999) (15,094)
Gain on disposal of property, plant and equipment(4,698) -
Change in operating assets and liabilities:
Deposits, net1,741,974 1,381,203
Loans, net(1,967,717) (1,651,053)
Securities purchased under resale agreements, net(99,566) -
Securities sold under repurchase agreements, net- (70,089)
Other items, net13,327 934
(34,864) (94,446)
Cash Flows from Financing Activities
Common shares issued17,533 16,078
Preferred shares issued, net of issuance costs121,839 -
Preferred shares redeemed(208,815) -
Debt securities issued363,187 90,596
Debt securities repaid(146,848) (104,219)
Dividends(73,918) (70,557)
Distributions to non-controlling interests(1,139) (322)
Debentures issued- 250,000
Debentures redeemed- (50,000)
Preferred shares purchased and cancelled- (971)
71,839 130,605
Cash Flows from Investing Activities
Interest bearing deposits with regulated financial institutions, net(232,766) (81,284)
Securities, purchased(6,779,305) (6,004,062)
Securities, sale proceeds4,329,567 3,839,290
Securities, matured2,604,572 2,275,813
Proceeds on disposal of property and equipment7,263
Property, equipment and intangibles(38,212) (27,504)
Business acquisition- (10,098)
(108,881) (7,845)
Change in Cash and Cash Equivalents(71,906) 28,314
Cash and Cash Equivalents at Beginning of Year34,239 5,925
Cash and Cash Equivalents at End of Year *$(37,667) $34,239
* Represented by:
Cash and non-interest bearing deposits with financial institutions$13,320 $83,856
Cheques and other items in transit (included in Cash Resources)3,839 5,673
Cheques and other items in transit (included in Other Liabilities)(54,826) (55,290)
Cash and Cash Equivalents at End of Year$(37,667) $34,239
Supplemental Disclosure of Cash Flow Information
Interest and dividends received$845,603 $785,643
Interest paid333,479 313,463
Income taxes paid68,362 65,989