Canadian Western Bank : Shareholders Report (PDF, 0.7MB)

CWB reports fourth quarter and full year 2021 financial and strategic performance

Fourth Quarter and Full Year 2021 Highlights (compared to the same period in the prior year, unless otherwise noted)

Diluted earnings

Pre-tax, pre-

Loans(2)

Branch-raised

per common

Total revenue

provision income(1)

deposits(1)

share (EPS)

$1.01

$261 million

$123 million

$32.9 billion

$19.3 billion

Q4 2021

Up 38%

Up 10%

Up 6%

Up 2% from Q3 Up 3% from Q3 2021

2021

Full year

$3.73

$1.0 billion

$517 million

Up 9% in total;

Up 16%

2021

Up 30%

Up 13%

Up 10%

10% in Ontario

Edmonton, December 3, 2021 - CWB Financial Group (TSX: CWB) (CWB) today announced financial performance for the year ended October 31, 2021, with annual revenue surpassing $1.0 billion for the first time in our history. Annual pre-tax,pre-provision income of $517 million was up 10% from last year. Annual net income available to common shareholders of $327 million and adjusted earnings per common share(1) of $3.81 were up 32% and 30%, respectively, from the prior year. Fourth quarter net income available to common shareholders of $90 million and adjusted earnings per common share of $1.03, were up 4% and 2%, respectively, from the third quarter. Our Board of Directors declared a cash dividend of $0.30 per common share, which is up one cent, or 3%, from the dividend declared last quarter and one year ago.

"In 2021, we again demonstrated the quality of our differentiated business model. Our annual revenue surpassed $1 billion for the first time, which supported a 10% annual increase in pre-tax,pre-provision income," said Chris Fowler, President and CEO. "Our momentum continued to build through the year. Strong strategic execution has delivered enhanced products and capabilities to our teams, and we are using these to win more full-service client relationships and drive profitable growth for our shareholders."

"Our brand of proactive, personalized, and specialized service clearly resonates with clients, and our team's relentless client-centric focus resulted in franchise building growth of loans and branch-raised deposits. Our core operating performance and a significant reduction in the performing loan provision for credit losses were the primary drivers of the 32% increase in full-year net income available to common shareholders. While we benefited from a macroeconomic outlook that improved compared to the prior year, we also delivered strong credit performance driven by prudent credit risk management, with a decline in gross impaired loans and realized losses that remained below our five-year average."

"Our momentum will continue for the year ahead, and we expect to deliver double-digit growth of loans and branch-raised deposits. It's an exciting time at CWB as we continue to invest in our capabilities and improve our full-service client experience through enhancements to our in-person and digital channels. We expect to deliver pre-tax,pre-provision income growth in the mid to high-single digits next year based on strong revenue growth balanced with the significant investments we'll continue to make in our capabilities to support higher levels of full- service client growth for the years to come."

1. Non-GAAPmeasure - refer to definitions and detail provided on page 7.
2. Excludes the allowance for credit losses.

CWB 2021 Fourth Quarter Report

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Financial Performance

On June 1, 2020, we acquired the businesses of T.E. Wealth and Leon Frazer & Associates (the wealth acquisition). The wealth acquisition has significantly contributed to non-interest income growth and added $0.04 to adjusted earnings per common share in fiscal 2021, but negatively affected our efficiency ratio by 140 basis points on a full year basis.

				Common shareholders' net income of $90 million	Up 42%
		Q4 2021,
			Diluted EPS of $1.01	Up 38%
		compared to		Adjusted EPS of $1.03	Up 37%
		Q4 2020(1)		Adjusted ROE of 12.5%	Up 300 bp
				Efficiency ratio of 52.9%	Up 200 bp(2)

Compared to the same quarter last year, common shareholders' net income increased as 10% revenue growth and a decline in the provision for credit losses more than offset non-interest expense growth. In line with our strategy, accelerated growth of full-service client relationships was the primary driver of very strong branch-raised deposit(1) growth of 16%, which included a 26% increase in demand and notice deposits. Net interest income increased 11% as the benefit of 9% loan growth was supported by a two basis point expansion of net interest margin(1). To support strong loan growth while prudently managing our regulatory capital ratios, we issued common shares for net proceeds of $41 million under our at-the-market (ATM) common equity distribution program during the quarter. Non-interest expenses were up 14% primarily from investments in our teams and technology infrastructure to support growth and strategic execution, and costs associated with operating and enhancing our Advanced Internal Ratings Based (AIRB) tools and processes. The provision for credit losses on total loans as a percentage of average loans(1) was 38 basis points lower than the same quarter last year, primarily due to improved macroeconomic forecasts and a recovery of impaired loan provisions, which reflected the partial reversal of provisions previously recognized combined with lower new impaired loan formations.

				Common shareholders' net income of $90 million	Up 4%
		Q4 2021,
			Diluted EPS of $1.01	Up 3%
		compared to		Adjusted EPS of $1.03	Up 2%
		Q3 2021(1)		Adjusted ROE of 12.5%	Up 20 bp
				Efficiency ratio of 52.9%	Up 520 bp

Common shareholders' net income increased compared to last quarter as a lower provision for credit losses was largely offset by a 10% increase in non-interest expenses, including the impact of continued investment in our teams and technology, the customary seasonal increase in certain expenses, and additional costs to implement enhancements to our AIRB tools and processes. Net interest income was consistent with last quarter, as the benefit of 2% loan growth was offset by a four basis point decline in net interest margin. The decline in net interest margin primarily reflects lower yields on our fixed rate loan portfolio, driven by very strong residential mortgage growth, and lower fee income recognized in loan yields compared to the prior quarter. The provision for credit losses on total loans as a percentage of average loans declined 23 basis points, primarily driven by lower impaired loan provisions due to the factors noted in the comparison to the same quarter last year.

				Common shareholders' net income of $327 million	Up 32%
		Fiscal 2021,		Diluted EPS of $3.73	Up 30%
			Adjusted EPS of $3.81	Up 30%
		compared to
			Adjusted ROE of 11.8%	Up 230 bp
		fiscal 2020(1)
			Efficiency ratio of 49.1%	Up 140 bp
				(47.7% excluding the impact of the wealth acquisition)	(Up 80 bp)

Compared to last year, the increase in common shareholders' net income was primarily driven by 13% growth in revenue and a decline in the provision for credit losses, partially offset by an increase in non-interest expenses. Revenue growth included a 12% increase in net interest income and a 26% increase in non-interest income driven by the wealth acquisition. The increase in net interest income was attributable to 9% annual loan growth and a four basis point increase in net interest margin. Non-interest expenses were up 17%, or approximately 10% excluding the wealth acquisition and costs associated with operating and enhancing our AIRB tools and processes. A nine basis point provision for credit losses on total loans as a percentage of average loans was 23 basis points lower than the prior year, primarily driven by a decline in the performing loan provision due to an improved macroeconomic outlook. Common shareholders' net income also reflected the first year of semi-annual coupon payments on our Series 1 and Series 2 Non-Viability Contingent Capital (NVCC) Limited Recourse Capital Notes (LRCN), which totaled $10 million, after-tax.

1. Adjusted EPS, adjusted ROE, efficiency ratio, branch-raised deposits, net interest margin and the provision for credit losses on total loans as a percentage of average loans are non-GAAP measures. Refer to definitions and detail provided on page 7.
2. A decrease in the efficiency ratio reflects improved efficiency. bp - basis point

CWB 2021 Fourth Quarter Report

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Fiscal 2022 Outlook

Leveraging our enhanced capabilities through ongoing strategic execution and a continued recovery of the Canadian economy, we expect our teams will deliver strong full-service client growth in strategically targeted market segments and within our risk appetite. For fiscal 2022, we are targeting double-digit annual percentage growth of both branch-raised deposits and loans, where prudent.

The timing and magnitude of potential Bank of Canada policy interest rate increases will impact revenue growth in fiscal 2022, with percentage growth expectations ranging within the low double-digits. We expect non-interest expense percentage growth in the low-teens, driven by continued strategic execution, including enhancements to our AIRB tools and processes, and an increase in costs associated with an expected return to a more normal operating environment. Through the ongoing economic recovery and as government support programs conclude, we expect our provision for credit losses on total loans as a percentage of average loans to increase to the mid- teens in basis points.

We expect to deliver annual pre-tax,pre-provision income growth in the mid- to high- single-digit range, and annual percentage growth of diluted earnings per common share in the low- to mid- single-digit range due to an expected increase in the provision for credit losses.

For further details on our expectations for fiscal 2022, refer to the Outlook section of our annual Management's Discussion and Analysis within the 2021 Annual Report.

Strategic Performance

We continue to transform our capabilities to offer a superior full-service client experience through a complete range of in-person and digital channels. These improving capabilities, delivered by our highly engaged and client- centric teams, have accelerated growth of full-service client relationships in specifically targeted segments that fit within our strategic growth objectives and prudent risk appetite. Our strategic execution, with current period highlights noted below, will enable us to continue to deliver strong growth of full-service clients and capitalize on the opportunities available to us as we continue to expand our presence in the Ontario market. This quarter, we:

• Were recognized by Great Places to Work® as one of the Best WorkplacesTM for Financial Services & Insurance for 2021, which reflects our unwavering commitment to advance a culture that puts people first.
• Continued to elevate our private wealth offering with the implementation of a leading-edge financial planning software from Conquest Planning, which supports our personalized, relationship-based wealth advisory experience. The platform was launched in fall 2021 and is currently in use by our wealth advisory teams across Canada.
• Opened our new Edmonton Gateway banking centre as part of our redesign initiatives to consolidate our teams in one location that features our refreshed client-inspired design and to provide an enhanced full- service client experience.

About CWB Financial Group

CWB Financial Group (CWB) is a diversified financial services organization known for a highly proactive client experience serving businesses and individuals across Canada. Our key business lines include full-service business and personal banking offered through banking centre locations of Canadian Western Bank, and personal banking through our digital channels, including Motive Financial. Highly responsive nation-wide specialized financing is delivered under the banners of CWB Optimum Mortgage, CWB Equipment Financing, CWB National Leasing, CWB Maxium Financial and CWB Franchise Finance. Trust services are offered through CWB Trust Services. Comprehensive wealth management services are provided through CWB Wealth Management and its affiliate brands, including T.E. Wealth, Leon Frazer & Associates, CWB McLean & Partners, and Canadian Western Financial. As a public company on the Toronto Stock Exchange (TSX), CWB trades under the symbols "CWB" (common shares), "CWB.PR.B" (Series 5 Preferred Shares) and "CWB.PR.D" (Series 9 Preferred Shares). Learn more at www.cwb.com.

CWB 2021 Fourth Quarter Report

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Fiscal 2021 Fourth Quarter and Fiscal 2021 Financial Results Conference Call

CWB's fourth quarter results conference call is scheduled for Friday, December 3, 2021, at 10:00 a.m. ET (8:00 a.m. MT). CWB's executives will comment on financial results and respond to questions from analysts.

The conference call may be accessed on a listen-only basis by dialing [phone] (Toronto) or 1 (888) 390-

0546 (toll free) and entering passcode: 76916053. The call will also be webcast live on CWB's website:

www.cwb.com/investor-relations/quarterly-reports.

A replay of the conference call will be available until December 10, 2021, by dialing [phone] (Toronto) or 1 [phone](toll-free) and entering passcode 916053#.

FOR FURTHER INFORMATION CONTACT:

Chris Williams, MBA

AVP, Investor Relations

Phone: [phone]

Email: [e-mail]

CWB 2021 Fourth Quarter Report

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Selected Financial Highlights

		For the three months ended		Change from				For the year ended	Change from
(unaudited)		October 31			July 31		October 31		October 31				October 31			October 31	October 31
(thousands, except per share amounts)		2021			2021		2020(2)		2020				2021			2020	2020
Results from Operations
Net interest income	$	229,925		$	230,021	$	206,640		11	%	$	892,363		$	799,411	12	%
Non-interest income		30,699			33,194		29,935		3				123,670			97,984	26
Total revenue		260,624			263,215		236,575		10				1,016,033			897,395	13
Pre-tax,pre-provision income(1)		122,747			137,586		116,267		6				517,149			469,318	10
Common shareholders' net income		89,998			86,280		63,380		42				327,471			248,956	32
Common Share Information
Earnings per common share
Basic	$	1.01		$	0.99	$	0.73		38	%	$	3.74		$	2.86	31	%
Diluted		1.01			0.98		0.73		38				3.73			2.86	30
Adjusted(1)		1.03			1.01		0.75		37				3.81			2.93	30
Cash dividends		0.29			0.29		0.29		-				1.16			1.15	1
Book value(1)		33.10			32.88		31.76		4				33.10			31.76	4
Closing market value		39.59			34.01		24.50		62				39.59			24.50	62
Common shares outstanding (thousands)		89,390			88,122		87,100		3				89,390			87,100	3
Performance Measures(1)
Return on common shareholders' equity		12.2	%		12.1	%	9.2	%	300		bp		11.6	%		9.3 %	230	bp
Adjusted return on common shareholders'
equity		12.5			12.3		9.5		300				11.8			9.5	230
Return on assets		0.97			0.94		0.75		22				0.92			0.76	16
Net interest margin		2.47			2.51		2.45		2				2.49			2.45	4
Efficiency ratio		52.9			47.7		50.9		200				49.1			47.7	140
Operating leverage(2)		(4.4)			(1.7)		(5.9)		150				(3.3)			(2.7)	(60)
Credit Quality(1)
Provision for credit losses on total loans as
a percentage of average loans(3)		(0.12)			0.11		0.26		(38)				0.09			0.32	(23)
Provision for credit losses on impaired
loans as a percentage of average loans(3)		(0.04)			0.20		0.10		(14)				0.17			0.18	(1)
Balance Sheet
Assets	$	37,323,176		$	36,649,461	$	33,937,865		10	%
Loans(4)		32,900,951			32,256,833		30,167,719		9
Deposits		29,975,739			29,605,018		27,310,354		10
Debt		3,015,065			2,849,182		2,424,323		24
Shareholders' equity		3,533,885			3,472,517		3,331,538		6
Off-Balance Sheet
Wealth management
Assets under management		7,818,170			7,626,309		6,229,674		25
Assets under advisement and
administration		2,936,035			2,852,186		2,224,839		32
Assets under administration - other(5)		14,031,042			13,274,099		11,081,581		27
Capital Adequacy(6)
Common equity Tier 1 ratio		8.8	%		8.8	%	8.8	%	-	bp
Tier 1 ratio		10.8			10.8		10.9		(10)
Total ratio		12.4			12.4		12.6		(20)
Other
Number of full-time equivalent staff		2,617			2,593		2,505		4	%

1. Non-GAAPmeasure - refer to definitions and detail provided on page 7.
2. Excluding the impact of the wealth acquisition, our operating leverage ratio would have been negative 6.2% and negative 1.6% for the fourth and third quarter of fiscal 2021 (Q4 2020 - negative 2.2%), respectively, and negative 1.7% for full year fiscal 2021 (2020 - negative 1.0%).
3. Includes provisions for credit losses on loans, committed but undrawn credit exposures and letters of credit.
4. Excludes the allowance for credit losses.
5. Comprised of trust assets under administration, third-party leases under administration and loans under service agreements.
6. Calculated using the Standardized approach in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions Canada (OSFI). bp - basis point

CWB 2021 Fourth Quarter Report

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