CWB Financial Group

CWB reports very strong third quarter financial performance

Edmonton, August 31, 2017 – CWB Financial Group (TSX: CWB) (CWB) today announced very strong third quarter financial performance as we continue to execute our balanced growth strategy. Compared to the third quarter last year, results included positive loan growth with significantly higher net interest margin, a lower provision for credit losses, ongoing growth of relationship-based branch-raised deposits, record total revenue (teb) and substantial earnings growth, all supported with very strong regulatory capital ratios. Common shareholders’ net income of $56.3 million and pre-tax, pre-provision income (teb) of $100.9 million were up 24% and 9%, respectively. Very strong earnings growth was driven by a 9% increase in total revenue, a lower provision for credit losses, and decreased preferred share dividends. Record third quarter total revenue (teb) primarily reflects 10% higher net interest income (teb) resulting from the combined positive impact of a 20 basis point increase in net interest margin (teb) to 2.60% and 4% loan growth. Non-interest income was also higher. The provision for credit losses as a percentage of average loans was 20 basis points, down from 32 basis points last year. These factors were partially offset within common shareholders’ net income by increased non-interest expenses and acquisition-related fair value changes. Operating leverage was positive 0.3%. Changes in deposit mix were favourable with a lower balance of term deposits raised through the broker network and ongoing growth of relationship-based branch-raised deposits. Diluted earnings per common share of $0.64 and adjusted cash earnings per common share of $0.69 were up 16% and 15%, respectively, reflecting the factors noted above and the 2016 issuance of common shares.

Compared to the prior quarter, common shareholders’ net income and pre-tax, pre-provision income (teb) were up 18% and 11%, respectively. Total revenue (teb) increased by 7% from the second quarter. Net interest income (teb) was up 8%, reflecting the combined positive impacts of three additional interest-earning days, 2% loan growth and a five basis point increase in net interest margin (teb). Non-interest income was relatively consistent with the prior quarter. The provision for credit losses declined five basis points to 20 basis points as a percentage of average loans. Non-interest expenses and acquisition-related fair value changes were relatively unchanged. Diluted earnings per common share and adjusted cash earnings per common share were up 19% and 17%, respectively.

Year-to-date common shareholders’ net income of $153.4 million and pre-tax, pre-provision income (teb) of $286.6 million were up 18% and 8%, respectively. Strong earnings growth reflected an 8% increase in net interest income (teb) and 11% growth of non-interest income. Higher net interest income was driven by the combined impact of 4% loan growth and a nine basis point increase in net interest margin to 2.54%. The provision for credit losses of 24 basis points as a percentage of average loans was down from 43 basis points last year, primarily reflecting the impact of specific allowances recorded against energy loans in 2016. These factors were partly offset within common shareholders’ net income by increases in non-interest expenses, acquisition-related fair value changes and preferred share dividends. Diluted earnings per common share of $1.74 and adjusted cash earnings per common share of $1.89 were up 9% and 14%, respectively.

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FOR FURTHER INFORMATION CONTACT:

Matt Evans
Senior AVP, Strategy and Investor Relations
CWB Financial Group
(780) 969-8337
matt.evans@cwbank.com