Canadian Western Bank : Shareholders Report (PDF, 2.4MB)

CWB reports third quarter 2021 financial and strategic performance

Third Quarter 2021 Highlights (compared to the same period in the prior year)

Diluted earnings

Total revenue

Loans(1)

Branch-raised

Common share

per common share

deposits(2)

dividend declared(3)

(EPS)

$0.98

$263.2 million

$32.3 billion

$18.7 billion

$0.29

Up 38%

Up 16%

Up 9% in total;

Up 17%

Consistent with the

Up 10% in Ontario

dividend declared last

year and last quarter

Edmonton, August 27, 2021 - CWB Financial Group (TSX: CWB) (CWB) today announced financial performance for the three and nine month periods ended July 31, 2021, with third quarter net income available to common shareholders of $86 million and adjusted earnings per common share(2) of $1.01, each up 20% from the previous quarter, and up 39% and 36%, respectively, from the same period in the prior year. Pre-tax, pre- provision income(2) of $138 million was up 9% from the prior quarter and 15% from the same period in the prior year.

"We delivered very strong results again this quarter, and expect to drive annual growth of adjusted earnings per common share in excess of 20% for fiscal 2021. Our brand of proactive, personalized service is a differentiatingfactor that clearly resonates with business clients. Our teams are leveraging our strong brand and continued enhancements to our products and capabilities to win more full-servicerelationships in an improving economicenvironment," said Chris Fowler, President and CEO. "We continued to drive strong growth of lower cost branch- raised deposits and our quarterly loan growth remains at one of the strongest levels in our history. Our loan growth continues to be achieved while reflecting our targeted approach of high-quality client selection through disciplined underwriting and prudent lending structures. We delivered another quarter of strong credit performance, with low write-offsand provisions for credit losses, and a decline in impaired loans, reflective of ourconservative credit risk management."

"It is an exciting time at CWB as we continue to transform our capabilities and improve our full-service client experience through a growing range of in-personand digital channels. The development of our digital clientoffering is advancing well, and we are on track to release our enhanced digital banking platform for personal and small business clients, including a limited initial roll-out of our Virtual COO solution, later this year."

"We continue to see the momentum of growth opportunities build in line with the economic recovery. We are making progress on our strategic priorities that are uniquely focused on business owners. Capitalizing on these opportunities will further enhance our client experience and deliver strong growth of full-serviceclientrelationships and returns for our investors."

1. Excludes the allowance for credit losses.
2. Non-GAAPmeasure - refer to definitions and detail provided on page 6.
3. Declared by our Board of Directors on August 26, 2021.

CWB 2021 Third Quarter Report

Financial Performance

On June 1, 2020, we acquired the businesses of T.E. Wealth and Leon Frazer & Associates (the wealth acquisition). The operations of the wealth acquisition contributed to non-interest income growth while negatively affecting our efficiency ratio compared to periods prior to the acquisition. The wealth acquisition has contributed approximately $0.02 to adjusted earnings per common share in fiscal 2021, with higher levels of accretion anticipated starting in fiscal 2022.

			Common shareholders' net income of $86 million	Up 39%
	Q3 2021,		Diluted EPS of $0.98	Up 38%
	compared to		Adjusted EPS of $1.01	Up 36%
	Q3 2020(1)		Adjusted return on common shareholders' equity (ROE) of 12.3%	Up 290 bp(2)
			Efficiency ratio of 47.7%	Worsened 70 bp

Compared to the same quarter last year, common shareholders' net income increased as 16% revenue growth and a decline in the provision for credit losses more than offset the impact of higher non-interest expenses. Accelerated growth of full-service client relationships was the primary driver of very strong branch-raised deposit growth of 17%, which included a 31% increase in lower-cost demand and notice deposits. Net interest income increased 15%, driven by 9% loan growth, including 10% growth in Ontario, and an 11 basis point increase in net interest margin(1). To support strong loan growth while prudently managing our regulatory capital ratios, we issued common shares for net proceeds of $30 million under our at-the-market (ATM) common equity distribution program during the quarter. Non-interest income growth of 29% was primarily related to the wealth acquisition, which we owned for only two months in the same quarter last year. Non-interest expenses were up 17%, reflective of investments in our people and technology infrastructure to support our strategic execution, costs associated with operating and enhancing our Advanced Internal Ratings Based (AIRB) tools and processes and the wealth acquisition. The provision for credit losses as a percentage of average loans(1) was 22 basis points lower than last year, primarily due to improved macroeconomic forecasts associated with the ongoing economic recovery, which drove a 20 basis point decrease in the performing loan provision for credit losses(1).

			Common shareholders' net income of $86 million	Up 20%
	Q3 2021,		Diluted EPS of $0.98	Up 20%
	compared to		Adjusted EPS of $1.01	Up 20%
	Q2 2021(1)		Adjusted ROE of 12.3%	Up 150 bp
			Efficiency ratio of 47.7%	Improved 120 bp

Compared to the prior quarter, common shareholders' net income increased as 7% revenue growth and a decline in the provision for credit losses more than offset a 4% increase in non-interest expenses. Revenue increased primarily due to three additional interest earnings days and 3% sequential loan growth, partially offset by the impact of a two basis point decline in net interest margin. In the prior quarter, net interest margin included a onetime two basis point benefit associated with adjusting certain balance sheet management activities in response to a shift in our funding mix. Sequential growth in branch-raised deposits of 4% included 5% growth in lower cost demand and notice deposits. The provision for credit losses as a percentage of average loans was nine basis points lower than last quarter, primarily due to a decrease in the impaired loan provision for credit losses(1).

			Common shareholders' net income of $237 million	Up 28%
	YTD 2021,		Diluted EPS of $2.72	Up 28%
		Adjusted EPS of $2.78	Up 28%
	compared to
		Adjusted ROE of 11.6%	Up 200 bp
	YTD 2020(1)
		Efficiency ratio of 47.8%	Worsened 120 bp
			(46.2% excluding the impact of the wealth acquisition)	(Worsened 10 bp)

1. Adjusted EPS, adjusted ROE, efficiency ratio, branch-raised deposits, net interest margin and provisions for credit losses on performing, impaired and total loans as a percentage of average loans are non-GAAP measures. Refer to definitions and detail provided on page 6.
2. bp - basis point

Year-to-date, the increase in common shareholders' net income was primarily driven by 14% 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 37% 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 five basis point increase in net interest margin. Non-interest expenses were up 17%, or approximately 9% excluding the wealth acquisition and costs associated with operating and enhancing our AIRB tools and processes. A 16 basis point provision for credit losses as a percentage of average loans was 18 basis points lower than the prior year, primarily due to a 22 basis point decline in the performing loan provision for credit losses due to an improved macroeconomic outlook in fiscal 2021. Common shareholders' net income also reflected the impact of the first semi-annual Series 1 and Series 2 Non-Viability Contingent Capital (NVCC) Limited Recourse Capital Notes (LRCN) coupon payments made during fiscal 2021, which totaled $6 million, after-tax.

CWB 2021 Third Quarter Report

2

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 commercial segments that fit within our prudent risk appetite. Our continued 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 growth opportunities available to us as we continue to expand our geographic footprint outside of Western Canada, including an increased presence in the Ontario market. This quarter, we:

• were recognized by Great Place to Work® as one of the Best WorkplacesTM in Alberta as well as one of the Best WorkplacesTM for Mental Wellness in 2021, which reflects our unwavering commitment to advance a culture that puts people first.
• continued development of our Virtual COO (VCOO) solution in partnership with Temenos, a global leader in banking software. The VCOO will have an initial limited roll-out later in 2021, and will integrate data and explainable-artificial intelligence powered tools to empower our small business owner clients to make informed decisions that accelerate their business growth. We believe the VCOO will be a differentiated solution for small business owner clients that once fully deployed, will assist in driving strong client growth in this segment. Broader roll-out of the VCOO solution is scheduled to occur in early 2022.
• progressed development of our enhanced digital banking platform, which is scheduled to launch later in 2021 for personal and small business clients. The new platform will provide enhanced functionality, including integration with the VCOO solution for small business owners once fully launched, and a single point of access that allows clients to seamlessly navigate between business and personal accounts.

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. CWB's key business lines include full-service business and personal banking offered through branch 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.

Fiscal 2021 Third Quarter Results Conference Call

CWB's third quarter results conference call is scheduled for Friday, August 27, 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: 46981552. 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 September 3, 2021 by dialing [phone] (Toronto) or 1 [phone](toll-free) and entering passcode: 981552.

FOR FURTHER INFORMATION CONTACT:

Chris Williams, MBA

AVP, Investor Relations

Phone: [phone]

Email:[e-mail]

			Selected Financial Highlights		4
	Contents		Management's Discussion and Analysis	5
		Interim Consolidated Financial Statements	21
			Shareholder Information		41
	CWB 2021 Third Quarter Report	3

Selected Financial Highlights

		For the three months ended		Change from			For the nine months ended	Change from
(unaudited)		July 31			April 30		July 31		July 31			July 31			July 31	July 31
($ thousands, except per share amounts)		2021			2021		2020		2020			2021			2020	2020
Results of Operations
Net interest income	$	230,021		$	216,964	$	200,773		15	%	$	662,438		$	592,771	12	%
Non-interest income		33,194			30,142		25,711		29			92,971			68,049	37
Total revenue		263,215			247,106		226,484		16			755,409			660,820	14
Pre-tax,pre-provision income(1)		137,586			126,342		119,949		15			394,402			353,051	12
Common shareholders' net income		86,280			71,956		62,252		39			237,473			185,576	28
Common Share Information
Earnings per common share
Basic		0.99			0.83		0.71		39			2.72			2.13	28
Diluted		0.98			0.82		0.71		38			2.72			2.13	28
Adjusted(1)		1.01			0.84		0.74		36			2.78			2.18	28
Cash dividends		0.29			0.29		0.29		-			0.87			0.86	1
Book value(1)		32.88			32.26		31.50		4			32.88			31.50	4
Closing market value		34.01			33.80		22.80		49			34.01			22.80	49
Common shares outstanding (thousands)		88,122			87,162		87,100		1			88,122			87,100	1
Performance Measures(1)
Return on common shareholders' equity		12.1	%		10.6	%	9.1	%	300	bp(7)		11.3	%		9.4 %	190	bp(7)
Adjusted return on common shareholders'
equity		12.3			10.8		9.4		290			11.6			9.6	200
Return on assets		0.94			0.84		0.75		19			0.90			0.77	13
Net interest margin		2.51			2.53		2.40		11			2.50			2.45	5
Efficiency ratio		47.7			48.9		47.0		70			47.8			46.6	120
Operating leverage(2)		(1.7)			(4.2)		(1.3)		(40)			(3.0)			(1.5)	(150)
Credit Quality(1)
Provision for credit losses on total loans as
a percentage of average loans(3)		0.11			0.20		0.33		(22)			0.16			0.34	(18)
Provision for credit losses on impaired
loans as a percentage of average loans(3)		0.20			0.27		0.22		(2)			0.24			0.20	4
Balance Sheet
Assets	$	36,649,461		$	35,917,565	$	33,222,764		10	%
Loans(4)		32,256,833			31,372,100		29,689,751		9
Deposits		29,605,018			29,067,025		26,495,412		12
Debt		2,849,182			2,587,326		2,791,088		2
Shareholders' equity		3,472,517			3,527,213		3,133,661		11
Off-Balance Sheet
Wealth Management
Assets under management		7,626,309			7,166,287		6,215,083		23
Assets under advisement and administration		2,852,186			2,479,606		2,285,878		25
Assets under administration - other(5)		13,274,099			12,525,645		10,577,914		25
Capital Adequacy(6)
Common equity Tier 1 ratio		8.8	%		8.7	%	8.8	%	-	bp(7)
Tier 1 ratio		10.8			11.2		10.2		60
Total ratio		12.4			12.9		12.0		40
Other
Number of full-time equivalent staff		2,593			2,516		2,502		4	%

1. Non-GAAPmeasure - refer to definitions and detail provided on page 6.
2. Excluding the impact of the wealth acquisition, our operating leverage ratio for the third quarter of fiscal 2021 would have been negative 1.6% (Q2 2021 - positive 0.2%; Q3 2020 - positive 1.7%) and negative 0.1% for the first nine months of fiscal 2021 (2020 - negative 0.5%).
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).
7. bp - basis point

CWB 2021 Third Quarter Report

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Management's Discussion and Analysis

This Management's Discussion and Analysis (MD&A), dated August 26, 2021, should be read in conjunction with the unaudited condensed interim consolidated financial statements of Canadian Western Bank (CWB) for the period ended July 31, 2021, available on SEDAR at www.sedar.comand on CWB's website at www.cwb.com.

The condensed interim consolidated financial statements have been prepared under International Accounting Standard 34 Interim Financial Reporting in accordance with International Financial Reporting Standards (IFRS) and are presented in Canadian dollars.

Forward-looking Statements

From time to time, we make written and verbal forward-looking statements. Statements of this type are included in our 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 our objectives and strategies, targeted and expected financial results and the outlook for CWB's businesses or for the Canadian economy. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "may increase", "may impact", "goal", "focus", "potential", "proposed" 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 and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations and conclusions will not prove to be accurate, that our assumptions may not be correct and that our strategic goals may not be achieved.

A variety of factors, many of which are beyond our 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 housing market conditions, the volatility and level of liquidity in financial markets, fluctuations in interest rates and currency values, the volatility and level of various commodity prices, changes in monetary policy, changes in economic and political conditions, material changes to trade agreements, transition to the Advanced Internal Ratings Based (AIRB) approach for calculating regulatory capital, legislative and regulatory developments, legal developments, the level of competition, the occurrence of natural catastrophes, outbreaks of disease or illness that affect local, national or international economies, changes in accounting standards and policies, information technology and cyber risk, the accuracy and completeness of information we receive 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 business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and our 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.

Additional information about these factors can be found in the Risk Management section of our annual MD&A. 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 our actual results to differ materially from the expectations expressed in such forward-looking statements. Any forward-looking statements contained in this document represent our views as of the date hereof. Unless required by securities law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by us or on our behalf. The forward-looking statements contained in this document are presented for the purpose of assisting readers in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the performance of the Canadian economy over the forecast horizon and how it will affect our business are material factors considered when setting organizational objectives and targets. In determining expectations for economic growth, we consider our own forecasts, economic data and forecasts provided by the Canadian government and its agencies, as well as certain private sector forecasts. These forecasts are subject to inherent risks and uncertainties that may be general or specific. The full extent of the impact that the COVID-19 pandemic, including government and regulatory responses to the outbreak, will have on the Canadian economy and our business is highly uncertain and difficult to predict. Where relevant, material economic assumptions underlying forward-looking statements are disclosed within the Outlook and Allowance for Credit Losses sections of this MD&A and our annual MD&A.

CWB 2021 Third Quarter Report

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