CWB Financial Group

CWB reports strong second quarter financial performance

Edmonton, June 1, 2017 – Canadian Western Bank (TSX: CWB) (CWB) today announced strong second quarter financial performance including very strong earnings growth from the same quarter last year, positive loan growth, strong growth of relationship-based branch-raised deposits, higher net interest margin, stable credit quality and very strong regulatory capital ratios. Pre-tax, pre-provision income (teb) of $90.8 million was up 4% and common shareholders’ net income of $47.6 million was 48% higher. The significant increase in net income was driven by a 67% decline in the provision for credit losses, primarily reflecting the impact of specific allowances recorded against energy loans last year. Growth of total revenues also contributed to the bottom line, with net interest income and non-interest income both up 5%. These factors were partially offset by increased non-interest expenses, acquisition-related fair value changes and higher preferred share dividends. Average loan balances were up 5% from the second quarter last year, and net interest margin (teb) of 2.55% was up eight basis points. Higher net interest margin partly reflects CWB’s improved funding mix, including the benefit of very strong 15% growth of lower-cost demand and notice deposits within branch-raised funding. Diluted earnings per common share of $0.54 and adjusted cash earnings per common share of $0.59 were up 35% and 44%, respectively, with growth driven by the factors noted above, partially offset by the 2016 issuance of common shares.

Compared to the prior quarter, pre-tax, pre-provision income and common shareholders’ net income were both 4% lower. Net interest income (teb) was down 2% as the positive impacts of 1% growth of average loans and an eight basis point increase in net interest margin (teb) were more than offset by three fewer interest-earning days. Non-interest income was up 4% and the provision for credit losses was 12% lower. Non-interest expenses were up 2% during the quarter. Diluted earnings per common share and adjusted cash earnings per common share were down 4% and 3% on a sequential basis, respectively.

Year-to-date pre-tax, pre-provision income (teb) of $185.7 million was 8% higher and common shareholders’ net income of $97.1 million was up 15% from last year. Both metrics benefitted from the 7% increase in net interest income and 17% higher non-interest income. Higher net interest income reflects 7% growth of average loans and a four basis point increase in net interest margin (teb). The higher growth rate of common shareholders’ net income as compared to pre-tax, pre-provision income primarily reflects the 42% decrease in the provision for credit losses. These factors were partially offset within common shareholders’ net income by increased non-interest expenses, acquisition-related fair value changes, and higher preferred share dividends. Diluted earnings per common share and adjusted cash earnings per common share of $1.10 and $1.20, respectively, were up 6% and 12%, from last year.

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For further information, please contact:

Matt Evans, CFA
Senior AVP, Strategy & Investor Relations
Canadian Western Bank
Phone: (780) 969-8337
E-mail: matt.evans@cwbank.com