Laurentian Bank reports solid first quarter results

Highlights of the first quarter 2013 


    --  Net income of $34.1 million, return on common shareholders'
        equity of 10.3%, and diluted earnings per share of $1.12
    --  Loan losses remain low at $8.0 million, reflecting excellent
        credit quality
    --  Good improvement in operating efficiency
    --  Successful launch of the Bank's Dividend Reinvestment Plan


--  Excluding adjusting items:
  o Adjusted net income of $40.4 million, up 23% year-over-year
  o Adjusted return on common shareholders' equity of 12.2%
  o Adjusted diluted earnings per share of $1.34, up $0.10 from $1.24 a 
year earlier 
MONTREAL, March 6, 2013 /CNW Telbec/ - Laurentian Bank of Canada reported net 
income of $34.1 million or $1.12 diluted per share for the first quarter ended 
January 31, 2013, compared with $31.0 million or $1.16 diluted per share for 
the first quarter of 2012. Return on common shareholders' equity was 10.3% for 
the first quarter of 2013, compared with 11.5% for the same period in 2012. 
Excluding adjusting items(1), net income was up 23% to $40.4 million or $1.34 
diluted per share for the first quarter of 2013, compared to $32.9 million or 
$1.24 diluted per share for the same period in 2012; and adjusted return on 
common shareholders' equity was12.2%. 
Commenting on the Bank's financial results for the first quarter of 2013, 
Réjean Robitaille, President and Chief Executive Officer, mentioned: "We 
continued to deliver strong earnings growth and generated positive operating 
leverage in the quarter. Last year's acquisitions of the MRS Companies and AGF 
Trust have helped maintain strong revenue growth over the last twelve months, 
while the excellent credit quality of the Bank's loan portfolio and recovering 
financial markets also contributed to our good performance. With persistently 
low interest rates and slowing loan demand, we continue to execute our 
strategies to enhance shareholder value by maximizing synergies, generating 
additional growth in other income, focusing on high-margin products and 
maintaining a disciplined control over expenses throughout the Bank." 
Mr. Robitaille added: "With the integration of the MRS Companies nearly 
completed, our efforts now focus on the integration of the AGF Trust business 
in order to optimize the benefits for our clients as well as to fully realize 
the expected synergies of these two transactions." 


           

(1) Certain analyses presented throughout this document are based on
    the Bank's core activities and therefore exclude the effect of
    certain amounts designated as adjusting items. Refer to Adjusting
    items and Non-GAAP financial measures sections for further details.
    Caution Regarding Forward-looking Statements

In this document and in other documents filed with Canadian regulatory 
authorities or in other communications, Laurentian Bank of Canada may from 
time to time make written or oral forward-looking statements within the 
meaning of applicable securities legislation. Forward-looking statements 
include, but are not limited to, statements regarding the Bank's business plan 
and financial objectives. The forward-looking statements contained in this 
document are used to assist the Bank's security holders and financial analysts 
in obtaining a better understanding of the Bank's financial position and the 
results of operations as at and for the periods ended on the dates presented 
and may not be appropriate for other purposes. Forward-looking statements 
typically use the conditional, as well as words such as prospects, believe, 
estimate, forecast, project, expect, anticipate, plan, may, should, could and 
would, or the negative of these terms, variations thereof or similar 
terminology.

By their very nature, forward-looking statements are based on assumptions and 
involve inherent risks and uncertainties, both general and specific in nature. 
It is therefore possible that the forecasts, projections and other 
forward-looking statements will not be achieved or will prove to be 
inaccurate. Although the Bank believes that the expectations reflected in 
these forward-looking statements are reasonable, it can give no assurance that 
these expectations will prove to have been correct.

The Bank cautions readers against placing undue reliance on forward-looking 
statements when making decisions, as the actual results could differ 
considerably from the opinions, plans, objectives, expectations, forecasts, 
estimates and intentions expressed in such forward-looking statements due to 
various material factors. Among other things, these factors include capital 
market activity, changes in government monetary, fiscal and economic policies, 
changes in interest rates, inflation levels and general economic conditions, 
legislative and regulatory developments, competition, credit ratings, scarcity 
of human resources and technological environment. The Bank further cautions 
that the foregoing list of factors is not exhaustive. For more information on 
the risks, uncertainties and assumptions that would cause the Bank's actual 
results to differ from current expectations, please also refer to the Bank's 
Annual Report under the title "Integrated Risk Management Framework" and other 
public filings available at www.sedar.com.

With respect to the anticipated benefits from the acquisitions of the MRS 
Companies(1) and AGF Trust Company (AGF Trust) and the Bank's statements with 
regards to these transactions being accretive to earnings, such factors also 
include, but are not limited to: the fact that synergies may not be realized 
in the time frame anticipated; the ability to promptly and effectively 
integrate the businesses; reputational risks and the reaction of B2B Bank's or 
MRS Companies' and AGF Trust's customers to the transactions; and diversion of 
management time on acquisition-related issues.

The Bank does not undertake to update any forward-looking statements, whether 
oral or written, made by itself or on its behalf, except to the extent 
required by securities regulations.
           

(1) The MRS Companies include the renamed B2B Bank Financial Services
    Inc., B2B Bank Securities Services Inc. and B2B Bank Intermediary
    Services Inc. (B2B Bank Dealer Services), as well as MRS Trust,
    which was amalgamated with B2B Trust (now B2B Bank) as of
    April 16, 2012
    Highlights
                                   FOR THE THREE MONTHS ENDED       

In thousands of Canadian
dollars, except per share          JANUARY 31     JANUARY 31        

and percentage amounts
(Unaudited)                              2013           2012   VARIANCE
                                                                    

Profitability                                                       

  Total revenue                  $    213,914   $    193,744    10 %

  Net income                     $     34,090   $     30,962    10 %

  Diluted earnings per share     $       1.12   $       1.16   (3) %

  Return on common shareholders'
  equity ([1])                           10.3 %         11.5 %      

  Net interest margin ([1])              1.63 %         1.75 %      

  Efficiency ratio ([1] )                75.4 %         73.8 %      
                                                                    

Adjusted measures                                                   

  Adjusted net income ([1])      $     40,418   $     32,919    23 %

  Adjusted diluted earnings per
  share( [1])                    $       1.34   $       1.24     8 %

  Adjusted return on common
  shareholders' equity ([1])             12.2 %         12.4 %      

  Adjusted efficiency ratio (
  [1])                                   71.9 %         72.4 %      
                                                                    

Per common share                                                    

  Share price                                                       
    High                         $      45.97   $      48.68        
    Low                          $      42.90   $      41.12        
    Close                        $      44.10   $      46.20   (5) %

  Price / earnings ratio
  (trailing four quarters)                9.0 x         10.5 x         

  Book value ([1])               $      43.43   $      40.30     8 %

  Market to book value                    102 %          115 %      

  Dividends declared             $       0.49   $       0.45     9 %

  Dividend yield ([1])                   4.44 %         3.90 %      

  Dividend payout ratio ([1])            43.7 %         38.7 %      
                                                                    

Financial position                                                  

  Balance sheet assets           $ 34,248,690   $ 29,921,236    14 %

  Loans and acceptances          $ 26,846,658   $ 22,823,985    18 %

  Deposits                       $ 23,767,493   $ 20,701,287    15 %
                                                                    

Basel III regulatory capital
ratio( [2])                                                         

  Common Equity Tier I - All-in
  basis                                   7.5 %         n.a.        
                                                                    

Other information                                                   

  Number of full-time equivalent
  employees                             4,259          3,976        

  Number of branches                      155            158        

  Number of automated banking
  machines                                424            429        

[1] Refer to the non-GAAP financial measures section.

[2] As defined in OSFI 2013 Capital Adequacy Requirements Guideline.



Review of Business Highlights

Beyond the strategic implications of the recent acquisitions of the MRS 
Companies and AGF Trust, each of the Bank's business lines are executing 
business plans aimed at generating organic growth.

Within the Retail segment the agreement with Mackenzie Financial Corporation, 
a leading Canadian fund manager, becoming exclusive as of January 2013 offers 
a lot of potential. Clients are well-served by being offered a selection of 
good performing mutual fund products managed by Mackenzie and marketed under 
the Laurentian Bank name. The Bank is well-served by increasing its reach in 
the area of investments and wealth management.

With regard to the SME segment, the SME-Québec Health team was initially 
concentrated solely in the Pharmacy sector. Recognizing that this was a strong 
platform for growth, the team, now known as the Health Group, recently began 
to provide financing to other health professionals, including dentists, 
doctors, optometrists, radiologists and veterinarians. The expertise and solid 
reputation of this lending team provides opportunity for high quality growth 
within the SME sector.

The Real Estate & Commercial segment is also generating organic growth through 
the increasing specialization of certain groups. The Infrastructure and Energy 
sector team is a case in point. While this group has a niche focus, its reach 
is pan-Canadian. Focusing on the depth of experience and superior client 
service, this group is contributing to winning mandates and expanding its 
scope.

The recent acquisitions of the MRS Companies and AGF Trust are contributing to 
the growth and development of B2B Bank. While the first priority is 
integration, rolling out an expanded product line to 27,000 financial advisors 
and brokers will drive sustainable growth going forward. The B2B Bank platform 
is capable of leveraging all products and services, including the investment 
accounts and the expanded mortgage offering.

The development within Laurentian Bank Securities also positions its wealth 
management activities for accelerated growth in assets under administration. 
The addition of the Financial Planning team and strategist results in this 
operation being even better positioned to serve its retail clientele. This was 
particularly advantageous during the recent RRSP season.

Clearly, the Bank's business model fosters growth and development across all 
business lines as it endeavours to generate improving profitability.

Management's Discussion and Analysis

This Management's Discussion and Analysis (MD&A) is a narrative explanation, 
through the eyes of management, of the Bank's financial condition as at 
January 31, 2013, and of how it performed during the three-month period then 
ended. This MD&A, dated March 6, 2013, should be read in conjunction with the 
unaudited condensed interim consolidated financial statements for the 
three-month period ended January 31, 2013, prepared in accordance with 
IAS34Interim financial reporting, as issued by the International 
Accounting Standards Board (IASB). Supplemental information on risk 
management, critical accounting policies and estimates, and off-balance sheet 
arrangements is also provided in the Bank's 2012 Annual Report.

Additional information about the Laurentian Bank of Canada, including the 
Annual Information Form, is available on the Bank's website 
www.laurentianbank.ca and on SEDAR at www.sedar.com.

Economic Outlook

The global economic environment, while still relatively weak, is less 
worrisome than three months ago because financial tail risks have diminished. 
Firstly, China has demonstrated its ability to navigate an economic "soft 
landing". Secondly, the European sovereign debt crisis appears to have been 
contained, although the economy remains in recession. Thirdly, and most 
importantly for Canada, the economic recovery in the United States is gaining 
strength helped mainly by a rebounding housing market and diminishing 
political uncertainty.

Unfortunately, having come through the global financial crisis in better shape 
than most other advanced economies, Canada is now facing some headwinds. 
Recently released economic indicators - housing starts, employment and 
international trade- confirm that the Canadian economy is indeed slowing. 
This is mostly a result of household spending (still roughly two-thirds of our 
economy) being constrained by high levels of indebtedness.

Looking forward, as foreign demand (mainly US) improves, exports and business 
investment are also expected to rebound and compensate for some of the 
weakness in household demand. Nevertheless, this should be a relatively slow 
process given that some policy uncertainty still lingers. Furthermore, the 
Canadian dollar remains elevated and this has negative implications for 
Canada's international competitiveness. The Bank now expects real GDP to grow 
by only 1.7% in 2013 and 2.3% in 2014.

In the current environment, interest rates should stay low until at least the 
beginning of 2014. This was made clear by the Bank of Canada in January, when 
it not only revised down its economic forecasts and kept the overnight policy 
rate at 1.00%, but also stated that an eventual rate hike was now "less 
imminent than previously anticipated".

2013 Financial Objectives

The following table presents management's financial objectives for 2013 and 
the Bank's performance to date. These financial objectives are based on the 
assumptions noted on page 37 of the Bank's 2012 Annual Report under the title 
"Key assumptions supporting the Bank's objectives" and exclude adjusting 
items(1).

2013 FINANCIAL OBJECTIVES
([1])                                                                  
                                                 FOR THE THREE MONTHS  
                             2013 OBJECTIVES   ENDED JANUARY 31, 2013  
                                                                       

Revenue growth                         > 5 %                       10 %

Adjusted efficiency ratio
( [1] )                     72.5 % to 69.5 %                     71.9 %

Adjusted net income (in
millions of Canadian
dollars)( [1] )           $ 145.0 to $ 165.0                   $ 40.4  

Adjusted return on common
shareholders' equity( [1]
)                           10.5 % to 12.5 %                     12.2 %

Common Equity Tier I
capital ratio - All-in
basis                                > 7.0 %                      7.5 %

[1] Refer to the non-GAAP financial measures section.



Based on the results for the three months ended January 31, 2013 and current 
forecasts, management believes that the Bank is in line to meet its objectives 
as set out at the beginning of the year. Revenue growth and diversification, 
ongoing initiatives to control expenses as well as continued strong credit 
quality have contributed to the overall good performance.
           

(1) Refer to Adjusting items and Non-GAAP financial measures sections
    for further details.
    Analysis of Consolidated Results

CONSOLIDATED RESULTS                                                  
                                        FOR THE THREE MONTHS ENDED
                              JANUARY 31     OCTOBER 31     JANUARY 31

In thousands of Canadian
dollars, except per share
amounts (Unaudited)                 2013           2012           2012
                                                                      

Net interest income         $    142,344   $    142,411   $    130,629

Other income                      71,570         67,985         63,115

Total revenue                    213,914        210,396        193,744

Gain on acquisition and
amortization of net premium
on purchased financial
instruments                      (1,056)         23,795              -

Provision for loan losses          8,000          8,000         10,000

Non-interest expenses            161,314        165,377        143,020

Income before income taxes        43,544         60,814         40,724

Income taxes                       9,454         15,129          9,762

Net income                  $     34,090   $     45,685   $     30,962

Preferred share dividends,
including applicable taxes         2,533          3,273          3,166

Net income available to
common shareholders         $     31,557   $     42,412   $     27,796

Earnings per share                                                    

  Basic                     $       1.12   $       1.51   $       1.16

  Diluted                   $       1.12   $       1.51   $       1.16

 

Adjusting items

The Bank has designated certain amounts as adjusting items and has adjusted 
GAAP results to facilitate understanding of its underlying business 
performance and related trends. Adjusting items are included in the B2B Bank 
business segment's results. The Bank assesses performance on a GAAP basis and 
on an adjusted basis and considers both to be useful to investors and analysts 
in obtaining a better understanding of the Bank's financial results and 
analyzing its growth and profit potential more effectively. Adjusted results 
and measures are non-GAAP measures. Comments on the uses and limitations of 
such measures are disclosed in the Non-GAAP Financial Measures section.

IMPACT OF ADJUSTING ITEMS,
NET OF INCOME TAXES                                                   
                                        FOR THE THREE MONTHS ENDED
                              JANUARY 31     OCTOBER 31     JANUARY 31

In thousands of Canadian
dollars, except per share
amounts (Unaudited)                 2013           2012           2012
                                                                      

Impact on net income                                                  

Reported net income         $     34,090   $     45,685   $     30,962

Adjusting items, net of
income taxes ([1])                                                    

Gain on acquisition and
amortization of net premium
on purchased financial
instruments                                                           

  Gain on acquisition                  -       (16,382)              -

  Amortization of net
  premium on purchased
  financial instruments              778            400              -

Costs related to business
combinations and other( [2]
)                                                                     

  MRS Companies transaction
  and integration related
  costs                            4,318          4,739          1,957

  AGF Trust transaction and
  integration related
  costs                            1,232          1,744              -
                                   6,328        (9,499)          1,957

Adjusted net income( [1])   $     40,418   $     36,186   $     32,919
                                                                      

Impact on diluted earnings
per share                                                             

Reported diluted earnings
per share                   $       1.12   $       1.51   $       1.16

Adjusting items ([1])               0.22         (0.34)           0.08

Adjusted diluted earnings
per share ([1])             $       1.34   $       1.17   $       1.24

[1] Refer to the Non-GAAP Financial Measures section.

[2] Also referred to as Transaction and Integration Costs (T&I Costs).


Three months ended January 31, 2013 compared to three months ended January 31, 
2012 
Net income was $34.1 million, or $1.12 diluted per share, for the first 
quarter of 2013, compared with $31.0million, or $1.16diluted per share, 
for the first quarter of 2012. Adjusted net income was up 23% year-over-year 
to $40.4 million for the first quarter ended January 31, 2013, compared with 
$32.9 million in 2012, while adjusted diluted net income per share was up 8% 
to $1.34, compared to $1.24 diluted per share, in 2012. The calculation of 
diluted net income per share in the first quarter of 2013 includes a one-time 
$1.1 million favourable adjustment to preferred share dividends to reflect 
changes in taxation, partly offset by $0.6 million for the partial first 
quarter dividend on the newly issued Series 11 preferred shares. 
Total revenue 
Total revenue increased by $20.2 million or 10% to $213.9million in the 
first quarter of 2013, compared with $193.7million in the first quarter of 
2012. The contribution from AGF Trust to total revenue amounted to $19.8 
million for the first quarter of 2013, with the Bank's comparable revenue base 
essentially unchanged year-over-year, as growth in other income compensated 
for lower net interest income. 
Net interest income was up 9% to $142.3 million for the first quarter of 2013, 
from $130.6million in the first quarter of 2012, essentially reflecting loan 
and deposit growth year-over-year from the purchased portfolios of AGF Trust, 
which more than compensated for lower margins and lower loan prepayment 
penalties. When compared to the first quarter of 2012, margins decreased by 12 
basis points to 1.63% in the first quarter of 2013. Although the net interest 
margin continued to be adversely impacted by the very low interest rate 
environment and high liquidity levels, the compression was partly offset by 
the higher-yielding loans in the AGF Trust portfolios. 
Other income totalled $71.6 million in the first quarter of 2013, compared to 
$63.1 million in the first quarter of 2012, an$8.5million or 13% increase 
reflecting improvements across most revenue streams. Notably, income from 
brokerage operations increased by $3.0 million as the Bank capitalized on 
growth opportunities in the fixed income market and benefited from stronger 
equity markets, compared to a year ago. Higher fees and commissions on loans 
and deposits, income from mutual funds and card service revenues also 
contributed to the increase year-over-year, reflecting increased business 
activity. Income from investment accounts also increased by $1.1 million over 
the same period, mainly as a result of a full quarter of contribution from B2B 
Bank Dealer Services in the first quarter of 2013. In addition, income from 
treasury and financial market operations also improved, as a result of overall 
good performance. 
Gain on acquisition and amortization of net premium on purchased financial 
instruments 
For the first quarter of 2013, the charge related to the amortization of net 
premium on purchased financial instruments, presented on the line-item "Gain 
on acquisition and amortization of net premium on purchased financial 
instruments", amounted to $1.1million. Refer to Note 13 to the unaudited 
condensed interim financial statements for additional information on this item. 
Provision for loan losses 
The provision for loan losses decreased by $2.0 million or 20% to $8.0 million 
in the first quarter of 2013 from $10.0million in the first quarter of 2012, 
despite an 18% increase in the loan portfolio over the same period. Provisions 
in the first quarter of 2013 also included a $3.2million provision related 
to the AGF Trust loan portfolios. This very low level of losses reflects 
continued excellent credit conditions in the Canadian market and the quality 
of the Bank's loan portfolios. In addition, favourable settlements and overall 
improvements led to a net credit of $2.6million in loan losses in the 
commercial loan portfolio in the first quarter of 2013 while improving equity 
markets had a favourable impact on loan losses in B2B Bank's collateralized 
investment loan portfolio over the same period. 
Non-interest expenses 
Non-interest expenses increased to $161.3 million for the first quarter of 
2013, compared to $143.0million for the first quarter of 2012, mainly as a 
result of the addition of current operating expenses of $9.0 million related 
to AGF Trust and higher T&ICosts, as detailed below. 
Salaries and employee benefits increased by $12.3 million or 16% to $89.4 
million compared to the first quarter of 2012, mainly due to increased 
headcount from the acquisition of AGF Trust and regular salary increases, 
partly offset by savings from restructurings in 2012. Higher performance-based 
compensation and pension costs further contributed to the increase 
year-over-year. 
Premises and technology costs increased by $1.7 million or 5% to $38.9 million 
compared to the first quarter of 2012, mostly stemming from rental and IT 
costs as a result of the acquisition of AGF Trust. 
Other non-interest expenses decreased by $0.7 million to $25.5 million for the 
first quarter of 2013, from $26.2 million for the first quarter of 2012. The 
decrease is mainly attributable to expenses incurred in the early stage of the 
acquisition of the MRS Companies prior to their integration within B2B Bank in 
2012, as well as to lower advertising expenses and lower taxes in the first 
quarter of 2013, compared to a year ago. These were partly offset by other 
non-interest expenses of AGF Trust in the first quarter of 2013. In light of a 
slower revenue growth environment, the Bank continues to exercise disciplined 
control over expenses. 
T&I Costs for the first quarter of 2013 totalled $7.6 million and mainly 
related to IT systems conversions, severance costs and other expenses for the 
integration of the MRS Companies. T&I Costs also included salary, professional 
fees and other expenses for the integration of AGF Trust of $1.7 million. With 
regards to the MRS Companies, the integration process is progressing according 
to plan and overall budget. With only a few pieces of the MRS Companies 
integration yet to be completed, B2BBank is now gradually turning to the 
execution of its integration plans for AGF Trust. 
The adjusted efficiency ratio was 71.9% in the first quarter of 2013, compared 
to 72.4% in the first quarter of 2012. On the same adjusted basis, at 3.5% 
quarter-over-quarter, operating leverage was positive, mainly due to the 
addition of AGF Trust and the Bank's continued cost control initiatives. The 
Bank remains committed to leverage the two recent acquisitions to increase 
overall productivity as well as generating additional revenue growth from 
other income and higher margin products once the integration work is completed. 
Income taxes 
For the quarter ended January 31, 2013, the income tax expense was $9.5 
million and the effective tax rate was 21.7%. The lower tax rate, compared to 
the statutory rate, mainly resulted from the favourable effect of holding 
investments in Canadian securities that generate non-taxable dividend income 
and the lower taxation level on revenues from insurance operations. For the 
quarter ended January 31,2012, the income tax expense was $9.8million and 
the effective tax rate was24.0%. Year-over-year, the lower income tax rate 
for the first quarter ended January 31, 2013 results from the higher level of 
revenues from insurance operations and dividend income, as well as to 
miscellaneous tax recoveries. 
Three months ended January 31, 2013 compared to three months ended October 31, 
2012 
Net income was $34.1 million or $1.12 diluted per share for the first quarter 
of 2013 compared with $45.7 million or $1.51diluted per share for the fourth 
quarter of 2012. Adjusted net income was $40.4million, or $1.34diluted per 
share, compared to $36.2 million or $1.17 diluted per share for the fourth 
quarter ended October 31,2012. As explained above, the calculation of 
diluted net income per share in the first quarter of 2013 includes a net 
favourable effect of $0.4 million related to preferred share dividends, once 
dividends on the newly-issued Series 11 preferred shares are factored-in. 
Total revenue increased to $213.9 million in the first quarter of 2013, from 
$210.4 million in the previous quarter due to higher other income. Net 
interest income remained relatively unchanged sequentially at $142.3 million 
compared to $142.4million in the fourth quarter of 2012. Net interest 
margins stabilized at 1.63% versus 1.62% in the fourth quarter of 2012, as the 
positive impact of maturing high-coupon securitization liabilities totalling 
$0.8 billion more than offset slightly lower sequential margins on loans and 
deposits. 
Other income increased by $3.6 million sequentially, largely due to higher 
income from brokerage operations and lending fees, which were favourably 
impacted by improved financial market conditions. In addition, income from 
treasury and financial market operations also improved, as mentioned above. 
The charge related to amortization of net premium on purchased financial 
instruments, presented on the "Gain on acquisition and amortization of net 
premium on purchased financial instruments" line-item, amounted to 
$1.1million in the first quarter of 2013, compared to a $0.5 million charge 
for the last quarter. Results for the fourth quarter of 2012 also included a 
gain of $24.3 million in the fourth quarter of 2012. Refer to Note 13 to the 
unaudited condensed interim financial statements for additional information on 
this item. 
The provision for loan losses was unchanged at a very low level of $8.0 
million in the first quarter of 2013. During the first quarter of 2013, higher 
provisions totalling $3.2 million on the AGFTrust loan portfolios were 
partly offset by favourable settlements and net adjustments to allowances in 
the commercial and investment loan portfolios. 
Non-interest expenses amounted to $161.3 million in the first quarter of 2013, 
compared to $165.4 million in the fourth quarter of 2012. Excluding T&I Costs 
of $7.6 million in the first quarter of 2013 and of $8.8 million in the fourth 
quarter of2012, non-interest expenses decreased by $2.8million 
sequentially, a decline largely due to non-recurring expense items in the 
fourth quarter of 2012. 
Financial condition 
CONDENSED BALANCE
SHEET                                                                   
                AS AT JANUARY 
                           31   AS AT OCTOBER 31   AS AT JANUARY 31 
In thousands of
Canadian dollars
(Unaudited)                  2013               2012               2012 


                                                                       

ASSETS                                                                 

  Cash and
  deposits with
  other banks     $       370,789 $          571,043 $          622,707

  Securities            5,274,099          6,142,961          5,192,491

  Securities
  purchased under
  reverse
  repurchase
  agreements              917,007            631,202            639,604

  Loans and
  acceptances,
  net                  26,727,737         26,663,337         22,681,682

  Other assets            959,058            928,283            784,752
                  $    34,248,690 $       34,936,826 $       29,921,236
                                                                       

LIABILITIES AND
SHAREHOLDERS'
EQUITY                                                                 

  Deposits        $    23,767,493 $       24,041,443 $       20,701,287

  Other
  liabilities           3,238,870          2,873,563          2,952,430

  Debt related to
  securitization
  activities            5,244,311          6,037,097          4,798,554

  Subordinated
  debt                    443,978            443,594            242,987

  Shareholders'
  equity                1,554,038          1,541,129          1,225,978
                  $    34,248,690 $       34,936,826 $       29,921,236

 

Balance sheet assets stood at $34.2 billion at January 31, 2013, down $0.7 
billion from year-end2012. Over the last twelve months, balance sheet assets 
increased by $4.3 billion or 14%.

Liquid assets

Liquid assets, including cash, deposits with other banks, securities and 
securities purchased under reverse repurchase agreements, totalled 
$6.6billion at January 31, 2013, a $0.8 billion decrease compared to October 
31, 2012. This decrease is mainly due to the replacement assets used to 
reimburse $0.8 billion of matured debt related to securitization activities 
during the quarter. Liquid assets as a percentage of total assets decreased 
marginally to 19% from 21% as at October31,2012.

Loans

Net loans and bankers' acceptances stood at $26.7 billion as at January 31, 
2013, unchanged compared to October31,2012 and reflecting the recent 
cooling of consumer loan demand. Personal loans decreased by $0.2 billion or 
2% since October31,2012, mainly due to attrition in the acquired 
portfolios. Residential mortgage loans increased by $0.2billion or 1% over 
the same period, as demand for mortgage lending slowed seasonally as well as a 
result of the tightening of mortgage lending rules introduced in the second 
half of 2012. In addition, commercial loans, including bankers' acceptances, 
increased by $32.0million or 1% from October 31, 2012 while commercial 
mortgage loans decreased by $19.9 million or 1% over the same period due to a 
higher level of loan reimbursements.

Deposits

Personal deposits stood at $19.5 billion as at January 31, 2013, relatively 
unchanged from October 31, 2012. Business and other deposits, which include 
institutional deposits, were down $0.4 billion since October 31,2012 to $4.3 
billion as at January 31, 2013, as the Bank reduced the level of high-priced 
wholesale deposits as part of its liquidity management.

The Bank continues to actively manage its liquidity levels and to maintain 
diversified funding sources. It focuses its efforts on retail deposit 
gathering through its Retail & SME-Québec and B2BBank business segments, 
which represented 82% of total deposits as at January 31, 2013.

Other Liabilities

Debt related to securitization activities stood at $5.2 billion as at January 
31, 2013, a net $0.8 billion decrease since the beginning of the year 
considering the maturity of two issuances. During the quarter, the Bank also 
securitized $151.1 million of residential mortgage loans, of which 
$51.4million was sold as part of a new Canada Mortgage Bond issuance and 
$99.7million was sold as Replacement Assets. Subordinated debt stood at 
$444.0 million as at January 31, 2013, relatively unchanged from 
October31,2012.

Shareholders' equity

Shareholders' equity stood at $1,554.0 million as at January31, 2013, 
compared with $1,541.1 million as at October31,2012. This increase mainly 
resulted from internal capital generation as well as from the issuance of 
117,178 new shares issued under the Shareholder Dividend Reinvestment and 
Share Purchase Plan, and was slightly offset by a decrease in accumulated 
other comprehensive income (AOCI). The Bank's book value per common share, 
excluding AOCI, appreciated to $43.43 as at January 31, 2013 from $42.81 as at 
October 31, 2012. There were 28,254,714 common shares and 30,000 share 
purchase options outstanding as at February 28, 2013.

Capital Management

New regulatory capital requirements

In December 2012, the Office of the Superintendent of Financial Institutions 
Canada (OSFI) issued the final revised version of the Capital Adequacy 
Requirements Guideline (the Guideline) drawn on the Basel Committee on Banking 
Supervision (BCBS) capital guidelines, commonly referred to as Basel III. 
These new requirements took effect in January 2013 and generally provide more 
stringent capital adequacy standards. Institutions are expected to meet 
minimum risk-based capital requirements for exposure to credit risk, 
operational risk and, where they have significant trading activity, market 
risk.

Under the Guideline, minimum Common Equity Tier 1, Total Tier 1 and Total 
capital ratios were set at 3.5%, 4.5% and 8.0% respectively for 2013. These 
ratios include phase-in of certain regulatory adjustments between 2013 and 
2019 and phase-out of non-qualifying capital instruments between 2013 and 2022 
(the "transitional" basis). Starting in 2014, the Guideline also provides for 
annual increases in minimum capital ratio requirements, which will reach 7.0%, 
8.5% and 10.5% in 2019, including the effect of capital conservation buffers.

In its Guideline, OSFI indicated that it expects deposit-taking institutions 
to attain target capital ratios without transition arrangements equal to or 
greater than the 2019 minimum capital ratios plus conservation buffer levels 
(the "all-in" basis) early in the transition period, including a minimum 7.0% 
Common Equity Tier 1 ratio target by the first quarter of 2013. The "all-in" 
basis includes all of the regulatory adjustments that will be required by 2019 
but retains the phase-out rules for non-qualifying capital instruments. OSFI 
also requires that Canadian deposit-taking financial institutions maintain an 
Asset to Capital Multiple.

The Guideline provides additional guidance regarding the treatment of 
non-qualifying capital instruments and specifies that certain capital 
instruments no longer qualify fully as capital as of January 1, 2013. The 
Bank's non-common capital instruments are considered non-qualifying capital 
instruments under Basel III and are therefore subject to a 10% phase-out per 
year beginning in 2013. These non-common capital instruments include Series 9, 
10 and 11 preferred shares, as well as Series 2010-1 and 2012-1 subordinated 
Medium Term Notes. The Bank obtained regulatory approval to redeem at par on 
March 15, 2013 the Series 9 preferred shares which are non-qualifying 
instruments under Basel III.

As detailed in the table below, on a "transitional" basis, the Common Equity 
Tier 1, Total Tier 1 and Total capital ratios stood at 9.2%, 10.8% and 14.3%, 
respectively, as at January31, 2013. On an "all-in" basis, the Common Equity 
Tier 1, Total Tier 1 and Total capital ratios stood at 7.5%, 9.6% and 13.2% 
respectively as at January31, 2013. These ratios meet all present minimum 
requirements.

REGULATORY
CAPITAL                                                                     
                              Basel lll                      Basel II       
                     ALL-IN     TRANSITIONAL
                      BASIS            BASIS                                
                      AS AT            AS AT     AS AT               AS AT
                 JANUARY 31       JANUARY 31     OCTOBER 31     JANUARY 31  

In thousands
of Canadian
dollars,
except
percentage
amounts
(Unaudited)            2013             2013     2012( [1])     2012( [1])  

Common shares  $    434,312   $      434,312   $    428,526   $    259,492  

Share-based
payment
reserve                 136              136            227            227  

Retained
earnings            792,669          792,669        774,899        700,037  

Accumulated
other
comprehensive
income,
excluding cash
flow hedge
reserve              11,859           11,859           n.a.           n.a.  

Deductions
from Common
Equity Tier 1
capital           (236,198)                -           n.a.           n.a.  

Common Equity
Tier 1 capital
(A)               1,002,778        1,238,976           n.a.           n.a.  

Non-cumulative
preferred
shares              272,896          272,896        303,249        210,000  

Deductions
from Tier 1
capital                n.a.         (64,077)       (73,841)       (82,067)  

Adjustment for
transition to
IFRS                   n.a.             n.a.         27,193        108,773  

Additional
Tier 1 capital
(B)                 272,896          208,819           n.a.           n.a.  

Total Tier 1
capital (C)=
(A)+(B)           1,275,674        1,447,795      1,460,253      1,196,462  

Subordinated
debt                399,429          399,429        443,594        242,987  

Collective
allowances           79,403           79,403         75,752         79,918  

Deductions
from Tier 2
capital               (857)                -        (5,539)       (15,029)  

Tier 2 capital      477,975          478,832        513,807        307,876  

Total capital
(D)            $  1,753,649   $    1,926,627   $  1,974,060   $  1,504,338  

Total
risk-weighted
assets (E)     $ 13,286,829   $   13,459,653   $ 13,436,433   $ 11,645,279  

Common Equity
Tier 1 capital
ratio (A/E)             7.5 %            9.2 %         n.a.           n.a.  

Total Tier 1
capital ratio
(C/E)                   9.6 %           10.8 %         10.9 %         10.3 %

Total capital
ratio (D/E)            13.2 %           14.3 %         14.7 %         12.9 %

Asset to
capital
multiple               n.a.             16.8 x         16.3 x         18.0 x

[1] The amounts are presented in accordance with Basel II as filed with OSFI

 

Proposal for new liquidity regulatory measures

In December 2009, the BCBS published proposals on new liquidity requirements, 
which introduced new global liquidity standards. Updates were also published 
in December 2010 and January 2013, providing additional information. At this 
stage, it is still too early to determine their definitive impact on liquidity 
requirements, considering the proposals are yet to be finalized at both the 
international (BCBS) and national (OSFI) levels and may further change between 
now and when the final rules take effect. Nevertheless, the Bank initiated in 
2012 a gap analysis to highlight anticipated differences between the current 
liquidity requirements and its liquidity data and reporting systems.

Dividends

On February 20, 2013, the Board of Directors declared regular dividends on the 
various series of preferred shares to shareholders of record on March 8, 2013. 
At its meeting on March 6, 2013, the Board of Directors declared a dividend of 
$0.49 per common share, payable on May 1, 2013, to shareholders of record on 
April 1, 2013.

COMMON
SHARE
DIVIDENDS
AND PAYOUT
RATIO                                                                  
                 FOR THE
                   THREE                                               
                  MONTHS
                   ENDED                    FOR THE YEARS ENDED  
              JANUARY 31     OCTOBER 31     OCTOBER 31     OCTOBER 31  

In Canadian
dollars,
except
payout
ratios
(Unaudited)         2013           2012           2011           2010  
                                                                       

Dividends
declared
per common
share       $       0.49   $       1.84   $       1.62   $       1.44  

Dividend
payout
ratio ([1]
[2])                43.7 %         37.0 %         34.8 %         31.1 %

[1] Refer to the Non-GAAP Financial Measures section. 

[2] The ratio for 2010 is presented in accordance with previous
Canadian GAAP.

 

Risk Management

The Bank is exposed to various types of risks owing to the nature of its 
activities. These risks are mainly related to the use of financial 
instruments. In order to manage these risks, controls such as risk management 
policies and various risk limits have been implemented. These measures aim to 
optimize the risk/return ratio in all operating segments. For additional 
information regarding the Bank's Integrated Risk Management Framework, please 
refer to the 2012 Annual Report.

Credit risk

The following sections provide further details on the credit quality of the 
Bank's loan portfolios.

PROVISION FOR LOAN LOSSES                                              
                                        FOR THE THREE MONTHS ENDED

In thousands of Canadian
dollars, except percentage
amounts                      JANUARY 31     OCTOBER 31     JANUARY 31  

(Unaudited)                        2013           2012           2012  
                                                                       

Provision for loan losses                                              

  Personal loans           $      8,058   $      7,568   $      6,189  

  Residential mortgage
  loans                           1,407          1,416            284  

  Commercial mortgage
  loans                           1,101        (1,929)            888  

  Commercial and other
  loans (including
  acceptances)                  (2,566)            945          2,639  
                           $      8,000   $      8,000   $     10,000  

As a % of average loans
and acceptances                    0.12 %         0.12 %         0.18 %

 

The provision for loan losses amounted to $8.0 million in the first quarter of 
2013, unchanged from the fourth quarter of 2012 but down $2.0 million or 20% 
compared to a year ago, despite a strong increase in loan volumes. This low 
level of loan losses reflects the excellent credit quality of the Bank's loan 
portfolios and prolonged favourable credit conditions in the Canadian market.

The year-over-year increase of $1.9million in loan losses on personal loans 
includes losses on the AGF Trust loan portfolios, partly offset by 
improvements related to other B2B Bank personal loan portfolios. The provision 
on residential mortgage loans also increased by $1.1million compared to the 
first quarter of 2012, consistent with the higher loan volume.

Loan losses on commercial mortgages and commercial loans remained at a low 
level during the first quarter and further decreased by a combined $0.5 
million sequentially, benefitting from a $2.0 million favourable settlement on 
a single commercial loan exposure in the first quarter of 2013. The prolonged 
very low level of loan losses continues to reflect the very strong credit 
quality of this portfolio.

IMPAIRED LOANS
                  AS AT JANUARY
                             31   AS AT OCTOBER 31   AS AT JANUARY 31  

In thousands of
Canadian dollars,
except percentage
amounts
(Unaudited)                2013               2012               2012  
                                                                       

Gross impaired
loans                                                                  

  Personal             $ 21,185           $ 16,863           $ 15,642  

  Residential
  mortgages              23,142             21,971             16,127  

  Commercial
  mortgages              36,826             36,672             61,580  

  Commercial and
  other
  (including
  acceptances)           49,505             52,517             59,414  
                        130,658            128,023            152,763  

Individual
allowances             (45,717)           (47,849)           (62,385)  

Collective
allowances             (73,204)           (69,693)           (79,918)  

Net impaired
loans                  $ 11,737           $ 10,481           $ 10,460  

Impaired loans as
a % of loans and
acceptances                                                            

  Gross                    0.49 %             0.48 %             0.67 %

  Net                      0.04 %             0.04 %             0.05 %



Gross impaired loans amounted to $130.7 million as at January 31, 2013, 
relatively unchanged from $128.0 million as at October 31, 2012 as credit 
quality remained strong during the quarter. The slight increase since 
October31,2012 essentially resulted from the purchased AGF Trust personal 
and residential mortgage loan portfolios, offset by improvements in the 
commercial loan portfolios.

Since the beginning of the year, individual allowances decreased by 
$2.1million to $45.7million. Over the same period, collective allowances 
increased by $3.5million to $73.2 million, mainly as a result of new 
provisions related to the AGF Trust portfolio. Net impaired loans amounted to 
$11.7million as at January 31, 2013, compared to $10.5million as at 
October31,2012, and totalled 0.04% of loans and acceptances, unchanged 
from October31,2012 and reflecting the prudent level of provisioning of 
impaired loans.

Market risk

Market risk represents the financial losses that the Bank could incur 
following unfavourable fluctuations in the value of financial instruments 
subsequent to changes in the underlying factors used to measure them, such as 
interest rates, exchange rates or equity prices. This risk is inherent to the 
Bank's financing, investment, trading and asset and liability management (ALM) 
activities.

The purpose of ALM activities is to control structural interest rate risk, 
which corresponds to the potential negative impact of interest rate movements 
on the Bank's revenues and economic value. Dynamic management of structural 
risk is intended to maximize the Bank's profitability while protecting the 
economic value of common shareholders' equity from sharp interest rate 
movements. As at January31,2013, the effect on the economic value of 
common shareholders' equity and on net interest income before taxes of a 
sudden and sustained 1% increase in interest rates across the yield curve was 
as follows.

STRUCTURAL INTEREST RATE
SENSITIVITY ANALYSIS                                                   
                                  AS AT JANUARY 31     AS AT OCTOBER 31

In thousands of Canadian
dollars (Unaudited)                           2013                 2012

Increase in net interest
income before taxes over the
next 12 months                  $           16,754   $           16,701

Decrease in the economic
value of common shareholders'
equity (Net of income taxes)    $         (15,530)   $         (19,710)

 

As shown in the table above, the Bank maintained its short-term ALM 
sensitivity compared to October31,2012. These results reflect management's 
efforts to take advantage in the movement of short-term and long-term interest 
rates, while maintaining the sensitivity to these fluctuations within approved 
risk limits.

Segmented Information

This section outlines the Bank's operations according to its organizational 
structure. Services to individuals, businesses, financial intermediaries and 
institutional clients are offered through the following business segments:
                                     --  Laurentian Bank Securities &
    --  Retail & SME-Québec              Capital Markets
    --  Real Estate & Commercial     --  Other
    --  B2B Bank

Retail & SME-Québec
                                        FOR THE THREE MONTHS ENDED
                             JANUARY 31     OCTOBER 31     JANUARY 31  

In thousands of Canadian
dollars, except percentage
amounts (Unaudited)                2013           2012           2012  
                                                                       

Net interest income        $     76,855   $     75,792   $     78,725  

Other income                     35,436         35,234         31,803  

Total revenue                   112,291        111,026        110,528  

Provision for loan losses         6,066          6,433          6,216  

Non-interest expenses            92,981         93,359         91,260  

Income before income taxes       13,244         11,234         13,052  

Income taxes                      2,034          1,941          2,631  

Net income                 $     11,210   $      9,293   $     10,421  

Efficiency ratio( [1])             82.8 %         84.1 %         82.6 %

[1] Refer to the non-GAAP financial measures section.

 

The Retail & SME-Québec business segment's contribution to net income was 
$11.2 million in the first quarter of 2013, an 8% increase compared with $10.4 
million in the first quarter of 2012.

Total revenue increased from $110.5 million in the first quarter of 2012 to 
$112.3 million in the first quarter of 2013, as growth in other income 
compensated for lower net interest income. Net interest income decreased by 
$1.9million, as significant growth in loan and deposit volumes 
year-over-year, notably in the residential mortgage, home-equity lines of 
credit and SME loan portfolios, did not fully compensate for the decline in 
net interest margin stemming from the persistently low interest rate 
environment. Other income increased by 11% from $31.8million in the first 
quarter of 2012 to $35.4million for the same period in 2013 mainly due to 
higher fees on deposits as well as to higher income from sales of mutual funds 
stemming from increased net sales and stronger equity markets compared to a 
year ago. Higher revenues from card services resulting from increased business 
activity also contributed to the increase year-over-year.

Loan losses slightly decreased from $6.2 million in the first quarter of 2012 
to $6.1million in the first quarter of 2013. This decrease reflects lower 
provisions on the SME portfolio stemming from overall improvements, partly 
offset by higher provisions required for the personal and residential mortgage 
loan portfolios. Non-interest expenses increased by $1.7million or 2%, from 
$91.3million in the first quarter of 2012 to $93.0million in the first 
quarter of 2013. Higher salaries due to regular salary increases and 
additional headcount to enhance the SME-Québec sales force, as well as higher 
pension costs mainly accounted for the increase, partly attenuated by 
restructurings in 2012, which helped reduce headcount in retail banking. The 
efficiency ratio, at 82.8% in the first quarter of 2013, was relatively 
unchanged year-over-year, but improved sequentially.

Real Estate & Commercial
                                    FOR THE THREE MONTHS ENDED
                           JANUARY 31   OCTOBER 31   JANUARY 31  

In thousands of Canadian
dollars, except percentage
amounts (Unaudited)              2013         2012         2012  
                                                                 

Net interest income          $ 21,555     $ 21,833     $ 22,212  

Other income                    8,086        7,646        8,006  

Total revenue                  29,641       29,479       30,218  

Provision for loan losses     (1,464)      (2,040)        2,851  

Non-interest expenses           8,414        8,586        7,756  

Income before income taxes     22,691       22,933       19,611  

Income taxes                    6,059        6,204        5,305  

Net income                   $ 16,632     $ 16,729     $ 14,306  

Efficiency ratio( [1])           28.4 %       29.1 %       25.7 %

[1] Refer to the non-GAAP financial measures section.

 

The Real Estate & Commercial business segment's contribution to net income 
increased by $2.3 million or 16% to $16.6million in the first quarter of 
2013, compared with $14.3 million in the first quarter of 2012.

Total revenue decreased by $0.6 million, from $30.2 million in the first 
quarter of 2012 to $29.6 million in the first quarter of 2013. This decrease 
is mainly explained by a reduction in net interest income, which was impacted 
by compressed margins and a higher level of commercial loan reimbursements in 
the first quarter of 2013. Other income was relatively unchanged compared to 
last year, as higher commissions were partly offset by lower revenue from 
foreign exchange operations resulting from a continued stable currency 
environment. Loan losses improved and generated a net credit of $1.5million 
in the first quarter of 2013, compared with losses of $2.9million in the 
first quarter of 2012, a $4.3 million year-over-year decrease. During the 
quarter, the business segment benefitted from a $2.0 million favourable 
settlement on a single commercial loan exposure as well as from prolonged good 
credit conditions in Canada. Non-interest expenses increased by $0.7 million 
to $8.4 million in the first quarter of 2013 compared with $7.8 million in the 
first quarter of 2012 essentially due to regular salary increases and higher 
allocated costs year-over-year.

B2B Bank
                                         FOR THE THREE MONTHS ENDED
                                JANUARY 31   OCTOBER 31   JANUARY 31  

In thousands of Canadian
dollars, except percentage
amounts (Unaudited)                   2013         2012         2012  
                                                                      

Net interest income               $ 48,397     $ 49,821     $ 30,964  

Other income                         9,056        8,923        8,143  

Total revenue                       57,453       58,744       39,107  

Gain on acquisition and
amortization of net premium on
purchased financial instruments    (1,056)       23,795            -  

Provision for loan losses            3,398        3,607          933  

Non-interest expenses               32,960       35,259       23,422  

Costs related to business
combinations and other ([1])         7,557        8,830        2,660  

Income before income taxes          12,482       34,843       12,092  

Income taxes                         3,315        9,650        3,221  

Net income                         $ 9,167     $ 25,193      $ 8,871  

Adjusted net income ([2])         $ 15,495     $ 15,694     $ 10,828  

Efficiency ratio ([2])                70.5 %       75.1 %       66.7  

Adjusted efficiency ratio ([2])       57.4 %       60.0 %       59.9 %

[1] Integration costs related to the acquisition of the MRS Companies
and AGF Trust.

[2] Refer to the non-GAAP financial measures section. 

 

B2BBank business segment's contribution to adjusted net income was $15.5 
million in the first quarter of 2013, up $4.7million or 43% from $10.8 
million in the first quarter of 2012. Reported net income for the first 
quarter of 2013 was $9.2million compared to $8.9 million a year ago. The 
improvement stems from the addition of AGF Trust's net income which totalled 
$5.6 million in the first quarter of 2013, down from an elevated $7.3 million 
in the fourth quarter of 2012. Revenues at $19.8 million and loan losses at 
$3.2 million were relatively unchanged quarter-over-quarter while expenses and 
taxes, at $9.0 million and $2.0 million respectively in the first quarter of 
2013, were up a combined $1.3 million because of one-time favourable items in 
the fourth quarter of 2012.

Total revenue increased to $57.5 million in the first quarter of 2013 compared 
with $39.1 million in the first quarter of 2012. Net interest income increased 
by $17.4 million compared to last year, to $48.4 million in the first quarter 
of 2013, mainly due to higher loan and deposit volumes related to the 
acquisition of AGF Trust. Over the same period, other income also increased by 
$0.9 million to $9.1 million in the first quarter of 2013, mainly as a 
combined result of the contribution of AGF Trust and, to a lesser extent, 15 
additional days of B2B Bank Dealer Services-sourced fees on investment 
accounts in 2013.

As mentioned above, the charge related to amortization of net premium on 
purchased financial instruments, presented on the line-item "Gain on 
acquisition and amortization of net premium on purchased financial 
instruments", amounted to $1.1million in the first quarter of 2013, compared 
to a $0.5 million charge for the fourth quarter of 2012. Results for the 
fourth quarter of 2012 also included a gain of $24.3 million in the fourth 
quarter of 2012. Refer to Note 13 to the unaudited condensed interim financial 
statements for additional information on this item.

Loan losses increased from $0.9 million in the first quarter of 2012 to $3.4 
million in the first quarter of 2013, mainly as a result of a $3.2million 
provision related to the AGF Trust portfolios, partly offset by a $1.2 million 
favourable impact on loan losses in B2B Bank's collateralized investment loan 
portfolio due to improving equity markets.

Non-interest expenses, as shown in the table above, increased by $9.5 million 
to $33.0million in the first quarter of 2013, compared with $23.4million 
in the first quarter of 2012. This increase includes current operating costs 
of $9.0 million related to AGF Trust. Otherwise, expenses increased by $0.6 
million or 2% year-over-year, mainly due to higher allocated costs, as well as 
increased salary and pension costs, which were partly offset by realized cost 
synergies related to the MRSCompanies. T&I Costs amounted to $7.6million 
for the first quarter of 2013, $5.9 million from salaries, IT and professional 
fees to pursue the integration of the MRS Companies and $1.7 million of 
expenses incurred to initiate the integration of AGFTrust.

Laurentian Bank Securities & Capital Markets
                                        FOR THE THREE MONTHS ENDED
                             JANUARY 31     OCTOBER 31     JANUARY 31  

In thousands of Canadian
dollars, except percentage
amounts (Unaudited)                2013           2012           2012  
                                                                       

Total revenue              $     17,083   $     15,726   $     14,655  

Non-interest expenses            13,474         12,081         12,160  

Income before income taxes        3,609          3,645          2,495  

Income taxes                        928            953            620  

Net income                 $      2,681   $      2,692   $      1,875  

Efficiency ratio ([1])             78.9 %         76.8 %         83.0 %

[1] Refer to the non-GAAP
financial measures
section.                                                               

 

Laurentian Bank Securities & Capital Markets business segment's contribution 
to net income increased to $2.7 million in the first quarter of 2013, compared 
to $1.9million in the first quarter of 2012.

Total revenue was up 17% to $17.1 million in the first quarter of 2013 
compared with $14.7million for the same quarter of 2012. During the first 
quarter of 2013, the business segment capitalized on growth opportunities in 
the fixed income and equity underwriting markets and benefited from improved 
market conditions for trading and retail brokerage activities compared to a 
year ago. Non-interest expenses increased by $1.3 million to $13.5 million in 
the first quarter of 2013, mainly due to higher performance-based 
compensation, commissions and transaction fees, in-line with increased 
market-driven income.

Other Sector
                                         FOR THE THREE MONTHS ENDED
                                  JANUARY 31   OCTOBER 31   JANUARY 31

In thousands of Canadian dollars
(Unaudited)                             2013         2012         2012
                                                                      

Net interest income                $ (5,144)    $ (6,255)    $ (1,781)

Other income                           2,590        1,676        1,017

Total revenue                        (2,554)      (4,579)        (764)

Non-interest expenses                  5,928        7,262        5,762

Loss before income taxes             (8,482)     (11,841)      (6,526)

Income taxes recovery                (2,882)      (3,619)      (2,015)

Net loss                           $ (5,600)    $ (8,222)    $ (4,511)

 

The Other sector posted a negative contribution to net income of $5.6 million 
in the first quarter of 2013 compared to a negative contribution of $4.5 
million in the first quarter of 2012.

Net interest income decreased to negative $5.1 million in the first quarter of 
2013, compared to negative $1.8 million in the first quarter of 2012, mainly 
as a result of a continued high level of lower-yielding liquid assets and less 
favourable market positioning compared to a year ago. Other income for the 
first quarter of 2013 increased to $2.6million, compared to $1.0million 
for the first quarter of 2012, essentially as a result of higher realized 
security gains on treasury activities.

Non-interest expenses were up marginally to $5.9 million in the first quarter 
of 2013 compared to $5.8 million in 2012. The increase was largely due to 
higher stock-based compensation expense, partly offset by favourable 
adjustments related to the resolution of contractual IT exposures in the first 
quarter of 2013.

Additional Financial Information - Quarterly Results

In thousands of
Canadian
dollars, except
per share and     JANUARY
percentage             31     OCTOBER                   APRIL     JANUARY     OCTOBER                   APRIL
amounts                            31     JULY 31          30          31          31     JULY 31          30
(Unaudited)          2013        2012        2012        2012        2012        2011        2011        2011  
                                                                                                               

Total revenue   $ 213,914   $ 210,396   $ 193,833   $ 198,670   $ 193,744   $ 182,422   $ 185,833   $ 183,237  

Net income      $  34,090   $  45,685   $  29,998   $  33,863   $  30,962   $  26,709   $  29,072   $  31,016  

Earnings per
share                                                                                                          

  Basic         $    1.12   $    1.51   $    1.06   $    1.22   $    1.16   $    0.99   $    1.09   $    1.17  

  Diluted       $    1.12   $    1.51   $    1.06   $    1.22   $    1.16   $    0.99   $    1.08   $    1.17  

Return on
common
shareholders'
equity ([1])         10.3 %      14.2 %      10.1 %      12.0 %      11.5 %       9.9 %      11.2 %      12.7 %

Balance sheet
assets (in
millions of
dollars)        $  34,249   $  34,937   $  31,416   $  30,708   $  29,921   $  28,963   $  28,239   $  27,896  
                                                                                                               

Adjusted
measures                                                                                                       

Adjusted net
income( [1])    $  40,418   $  36,186   $  35,253   $  36,302   $  32,919   $  33,375   $  29,072   $  31,016  

Adjusted
diluted
earnings per
share( [1])     $    1.34   $    1.17   $    1.27   $    1.31   $    1.24   $    1.26   $    1.08   $    1.17  

Adjusted return
on common
shareholders
equity( [1])         12.2 %      10.9 %      12.1 %      13.0 %      12.4 %      12.7 %      11.2 %      12.7 %

[1] Refer to the non-GAAP financial measures section.



Accounting Policies

A summary of the Bank's significant accounting policies is presented in Notes 
2 and 3 of the 2012 audited annual consolidated financial statements. Pages 71 
to 73 of the 2012 Annual Report also contain a discussion of critical 
accounting policies and estimates which refer to material amounts reported in 
the consolidated financial statements or require management's judgement. The 
unaudited condensed interim consolidated financial statements for the first 
quarter of 2013 have been prepared in accordance with these accounting 
policies.

Future accounting changes

The IASB has issued new standards and amendments to existing standards on 
financial instruments, consolidation, fair value measurement, employee 
benefits, offsetting and presentation of other comprehensive income. These 
future accounting changes will be applicable for the Bank in various annual 
periods beginning on November1,2013 at the earliest. The Bank is currently 
assessing the impact of the adoption of these standards on its financial 
statements. Additional information on the new standards and amendments to 
existing standards can be found in Note 3 to the unaudited condensed interim 
consolidated financial statements.

Corporate Governance and Changes in Internal Control over Financial Reporting

In accordance with Canadian securities law, management has limited the scope 
of internal control over financial reporting and disclosure controls and 
procedures evaluation and excluded the controls, policies and procedures of 
AGF Trust, acquired by the Bank on August 1, 2012. AGF Trust's results are 
included in the unaudited condensed interim consolidated financial statements 
of the Bank for the period ended January31,2013. AGF Trust constituted 
approximately 10% of total assets, 9% of total liabilities, 9% of total 
revenue and 16% of total net income as at and for the three-month period ended 
January 31, 2013.

During the last quarter ended January 31, 2013, there have been no changes in 
the Bank's policies or procedures and other processes that comprise its 
internal control over financial reporting which have materially affected, or 
are reasonably likely to materially affect, the Bank's internal control over 
financial reporting.

The Board of Directors and the Audit Committee of Laurentian Bank reviewed 
this press release prior to its release today.

Non-GAAP Financial Measures

The Bank uses both generally accepted accounting principles (GAAP) and certain 
non-GAAP measures to assess performance. Non-GAAP measures do not have any 
standardized meaning prescribed by GAAP and are unlikely to be comparable to 
any similar measures presented by other companies. These non-GAAP financial 
measures are considered useful to investors and analysts in obtaining a better 
understanding of the Bank's financial results and analyzing its growth and 
profit potential more effectively. The Bank's non-GAAP financial measures are 
defined as follows:

 _____________________________________________________________________
|Return on common shareholders' equity                                |
|                                                                     |
|Return on common shareholders' equity is a profitability measure     |
|calculated as the net income available to common shareholders as a   |
|percentage of average common shareholders' equity, excluding         |
|accumulated other comprehensive income.                              |
|                                                                     |
|Book value per common share                                          |
|                                                                     |
|The Bank's book value per common share is defined as common          |
|shareholders' equity, excluding accumulated other comprehensive      |
|income, divided by the number of common shares outstanding at the end|
|of the period.                                                       |
|                                                                     |
|Net interest margin                                                  |
|                                                                     |
|Net interest margin is the ratio of net interest income to total     |
|average assets, expressed as a percentage or basis points.           |
|                                                                     |
|Efficiency ratio and operating leverage                              |
|                                                                     |
|The Bank uses the efficiency ratio as a measure of its productivity  |
|and cost control. This ratio is defined as non-interest expenses as a|
|percentage of total revenue. The Bank also uses operating leverage as|
|a measure of efficiency. Operating leverage is the difference between|
|total revenue and non-interest expenses growth rates.                |
|                                                                     |
|Dividend payout ratio                                                |
|                                                                     |
|The dividend payout ratio is defined as dividends declared on common |
|shares as a percentage of net income available to common             |
|shareholders.                                                        |
|                                                                     |
|Dividend yield                                                       |
|                                                                     |
|The dividend yield is defined as dividends declared per common share |
|divided by the closing common share price.                           |
|                                                                     |
|Adjusted GAAP and non-GAAP measures                                  |
|                                                                     |
|Certain analyses presented throughout this document are based on the |
|Bank's core activities and therefore exclude the effect of certain   |
|amounts designated as adjusting items, as presented in the table in  |
|the Adjusting Items section.                                         |
|                                                                     |
|Most of the adjusting items relate to gains and expenses that arise  |
|as a result of acquisitions. The gain on acquisition and ensuing     |
|amortization of net premium on purchased financial instruments are   |
|considered adjusting items since they represent, according to        |
|management, significant non-cash adjustments and due to their        |
|non-recurrence. Transaction and integration-related costs in respect |
|of the MRS Companies and AGF Trust have been designated as adjusting |
|items due to the significance of the amounts and the fact that some  |
|of these costs have been incurred with the intent to generate        |
|benefits in future periods.                                          |
|_____________________________________________________________________|

About Laurentian Bank

Laurentian Bank of Canada is a pan-Canadian banking institution that has $34 
billion in balance sheet assets and $36 billion in assets under 
administration. Founded in 1846, Laurentian Bank was selected in 2012 as one 
of the 10 winners of the Canada's Passion Capitalists program in recognition 
of its sustained success through the promotion of passion within its ranks. 
The Bank employs more than 4,200 people.

Recognized for its excellent service, proximity and simplicity, Laurentian 
Bank serves more than one million clients in market segments in which it holds 
an enviable position. In addition to occupying a choice position among 
consumers in Québec, where it operates the third largest branch network, the 
Bank has built a solid reputation across Canada in the area of real estate and 
commercial financing thanks to its teams working out of more than 35 offices 
in Ontario, Québec, Alberta and British Columbia. Its subsidiary, B2B Bank, 
is a Canadian leader in providing banking products as well as investment 
accounts and services to financial advisors and brokers, while Laurentian Bank 
Securities is an integrated broker, widely recognized for its expertise and 
effectiveness nationwide.

Access to Quarterly Results Materials

Interested investors, the media and others may review this press release, 
unaudited condensed interim consolidated financial statements, supplementary 
financial information and our report to shareholders which are posted on our 
web site at www.laurentianbank.ca.

Conference Call

Laurentian Bank invites media representatives and the public to listen to the 
conference call with financial analysts to be held at 2:00p.m. Eastern Time 
on Wednesday, March 6, 2013. The live, listen-only, toll-free, call-in number 
is 416 695-7806 or 1888 789-9572 Code5680517#.

You can listen to the call on a delayed basis at any time from 6:00 p.m. on 
Wednesday, March 6, 2013 until 11:59 p.m. on April 6, 2013, by dialing the 
following playback number: 905 694-9451 or 1800 408-3053 Code 3255829#. The 
conference call can also be heard through the Investor Relations section of 
the Bank's Web site at www.laurentianbank.ca. The Bank's Web site also offers 
additional financial information.

Unaudited Condensed Interim Consolidated Financial Statements

The unaudited condensed interim consolidated financial statements for the 
quarter ended January 31, 2013, including the notes to consolidated financial 
statements, are also available on the Bank's Web site at www.laurentianbank.ca.

Consolidated Balance Sheet
                            AS AT     AS AT OCTOBER     AS AT JANUARY
                       JANUARY 31                31                31

In thousands of
Canadian dollars
(Unaudited)                  2013              2012              2012
                                                                     

ASSETS                                                               

Cash and
non-interest-bearing
deposits with other
banks                $     87,821   $        90,860   $        85,426

Interest-bearing
deposits with other
banks                     282,968           480,183           537,281

Securities                                                           

  Available-for-sale    2,280,867         2,822,588         1,998,154

  Held-to-maturity        862,588         1,446,751         1,058,491

  Held-for-trading      2,130,644         1,873,622         2,135,846
                        5,274,099         6,142,961         5,192,491

Securities purchased
under reverse
repurchase
agreements                917,007           631,202           639,604

Loans                                                                

  Personal              7,654,648         7,806,067         6,064,020

  Residential
  mortgage             14,374,220        14,169,095        12,124,453

  Commercial
  mortgage              2,423,742         2,443,634         2,435,219

  Commercial and
  other                 2,183,805         2,150,953         1,994,040

  Customers'
  liabilities under
  acceptances             210,243           211,130           206,253
                       26,846,658        26,780,879        22,823,985

  Allowances for
  loan losses           (118,921)         (117,542)         (142,303)
                       26,727,737        26,663,337        22,681,682

Other                                                                

  Derivatives             131,470           167,643           229,247

  Premises and
  equipment                72,556            71,871            63,957

  Software and other
  intangible assets       159,307           159,973           136,534

  Goodwill                 64,077            64,077            64,077

  Deferred tax
  assets                   15,353             4,751             2,724

  Other assets            516,295           459,968           288,213
                          959,058           928,283           784,752
                     $ 34,248,690   $    34,936,826   $    29,921,236

LIABILITIES AND
SHAREHOLDERS' EQUITY                                                 

Deposits                                                             

  Personal           $ 19,474,971   $    19,369,310   $    16,254,742

  Business, banks
  and other             4,292,522         4,672,133         4,446,545
                       23,767,493        24,041,443        20,701,287

Other                                                                

  Obligations
  related to
  securities sold
  short                 1,714,803         1,349,932         1,349,022

  Obligations
  related to
  securities sold
  under repurchase
  agreements              291,775           244,039           360,622

  Acceptances             210,243           211,130           206,253

  Derivatives              92,926           100,867           141,754

  Deferred tax
  liabilities              24,922            16,128             1,984

  Other liabilities       904,201           951,467           892,795
                        3,238,870         2,873,563         2,952,430

Debt related to
securitization
activities              5,244,311         6,037,097         4,798,554

Subordinated debt         443,978           443,594           242,987

Shareholders' equity                                                 

  Preferred shares        303,078           303,249           205,527

  Common shares           434,312           428,526           252,601

  Share-based
  payment reserve             136               227               227

  Retained earnings       792,669           774,899           711,401

  Accumulated other
  comprehensive
  income                   23,843            34,228            56,222
                        1,554,038         1,541,129         1,225,978
                     $ 34,248,690   $    34,936,826   $    29,921,236

Consolidated Statement of Income
                                         FOR THE THREE MONTHS ENDED
                               JANUARY 31     OCTOBER 31     JANUARY 31

In thousands of Canadian
dollars, except per share
amounts (Unaudited)                  2013           2012           2012
                                                                       

Interest income                                                        

  Loans                      $    276,870   $    280,762   $    245,083

  Securities                       17,128         17,250         18,891

  Deposits with other banks           914          1,544          1,024

  Other, including
  derivatives                      13,453         14,529         15,697
                                  308,365        314,085        280,695

Interest expense                                                       

  Deposits                        121,423        124,926        107,673

  Debt related to
  securitization activities        40,225         43,809         39,672

  Subordinated debt                 4,024          2,654          2,403

  Other, including
  derivatives                         349            285            318
                                  166,021        171,674        150,066

Net interest income               142,344        142,411        130,629

Other income                                                           

  Fees and commissions on
  loans and deposits               31,330         30,263         28,511

  Income from brokerage
  operations                       16,522         14,386         13,549

  Income from investment
  accounts                          7,858          7,440          6,801

  Income from sales of
  mutual funds                      5,140          4,731          4,329

  Income from treasury and
  financial market
  operations                        5,341          4,563          4,714

  Credit insurance income           3,395          4,415          3,770

  Other income                      1,984          2,187          1,441
                                   71,570         67,985         63,115

Total revenue                     213,914        210,396        193,744

Gain on acquisition and
amortization of net premium
on purchased financial
instruments                       (1,056)         23,795              -

Provision for loan losses           8,000          8,000         10,000

Non-interest expenses                                                  

  Salaries and employee
  benefits                         89,380         87,112         77,032

  Premises and technology          38,881         39,111         37,166

  Other                            25,496         30,324         26,162

  Costs related to business
  combinations and other            7,557          8,830          2,660
                                  161,314        165,377        143,020

Income before income taxes         43,544         60,814         40,724

Income taxes                        9,454         15,129          9,762

Net income                   $     34,090   $     45,685   $     30,962

Preferred share dividends,
including applicable taxes          2,533          3,273          3,166

Net income available to
common shareholders          $     31,557   $     42,412   $     27,796

Average number of common
shares outstanding (in
thousands)                                                             

  Basic                            28,169         28,118         23,925

  Diluted                          28,182         28,135         23,943

Earnings per share                                                     

  Basic                      $       1.12   $       1.51   $       1.16

  Diluted                    $       1.12   $       1.51   $       1.16

Dividends declared per share                                           

  Common share               $       0.49   $       0.47   $       0.45

  Preferred share - Series 9 $       0.38   $       0.38   $       0.38

  Preferred share - Series
  10                         $       0.33   $       0.33   $       0.33

  Preferred share - Series
  11                         $       0.16   $         -            n.a.
    Consolidated Statement of Comprehensive Income
                                          FOR THE THREE MONTHS ENDED
                                   JANUARY 31   OCTOBER 31   JANUARY 31

In thousands of Canadian dollars
(Unaudited)                              2013         2012         2012
                                                                       

Net income                           $ 34,090     $ 45,685     $ 30,962
                                                                       

Other comprehensive income, net of
income taxes                                                           

Items that may subsequently be
reclassified to the statement of
income                                                                 

  Unrealized net gains (losses) on
  available-for-sale securities         1,116          307      (1,483)

  Reclassification of net (gains)
  losses on available-for-sale
  securities to net income            (1,458)        (831)        (321)

  Net change in value of
  derivatives designated as cash
  flow hedges                        (10,043)      (3,577)      (7,564)
                                     (10,385)      (4,101)      (9,368)

Comprehensive income                 $ 23,705     $ 41,584     $ 21,594
    Consolidated Statement of Changes in Shareholders' Equity


                                                                                FOR THE THREE MONTHS ENDED JANUARY 
31, 2013 


                                                                            AOCI RESERVES                         

In thousands of                                                                  CASH              SHARE-BASED          
  TOTAL
Canadian dollars       PREFERRED    COMMON   RETAINED   AVAILABLE-FOR-SALE       FLOW                  PAYMENT   SHARE-
HOLDERS'
(Unaudited)               SHARES    SHARES   EARNINGS           SECURITIES     HEDGES      TOTAL       RESERVE          
EQUITY 
                                                                                                                        
       

Balance as at
October 31, 2012     $   303,249 $ 428,526 $  774,899 $             12,201 $   22,027 $   34,228 $         227 $      
1,541,129

Net income                                     34,090                                                                   
 34,090

Other comprehensive
income (net of
income taxes)                                                                                                           
       

  Unrealized net
  gains (losses) on
  available-for-sale
  securities                                                         1,116                 1,116                        
  1,116

  Reclassification
  of net (gains)
  losses on
  available-for-sale
  securities to net
  income                                                           (1,458)               (1,458)                        
(1,458)

  Net change in
  value of
  derivatives
  designated as cash
  flow hedges                                                                (10,043)   (10,043)                       
(10,043)

Comprehensive income                           34,090                (342)   (10,043)   (10,385)                        
 23,705

Issuance of share
capital                    (171)     5,786                                                                (91)          
  5,524

Dividends                                                                                                               
       

  Preferred shares,
  including
  applicable taxes                            (2,533)                                                                   
(2,533)

  Common shares                              (13,787)                                                                  
(13,787)

Balance as at
January 31, 2013     $   303,078 $ 434,312 $  792,669 $             11,859 $   11,984 $   23,843 $         136 $      
1,554,038
                                                                                                                        
       


                                                                                FOR THE THREE MONTHS ENDED JANUARY 
31, 2012 


                                                                            AOCI RESERVES                         

In thousands of                                                                  CASH              SHARE-BASED     
TOTAL SHARE-
Canadian dollars       PREFERRED    COMMON   RETAINED   AVAILABLE-FOR-SALE       FLOW                  PAYMENT         
HOLDERS'
(Unaudited)               SHARES    SHARES   EARNINGS           SECURITIES     HEDGES    TOTAL         RESERVE          
 EQUITY
                                                                                                                        
       

Balance as at
October 31, 2011     $   205,527 $ 252,601 $  694,371 $             22,216 $   43,374 $   65,590 $         227 $      
1,218,316

Net income                                     30,962                                                                   
 30,962

Other comprehensive
income (net of
income taxes)                                                                                                           
       

  Unrealized net
  gains (losses) on
  available-for-sale
  securities                                                       (1,483)               (1,483)                        
(1,483)

  Reclassification
  of net (gains)
  losses on
  available-for-sale
  securities to net
  income                                                             (321)                 (321)                        
  (321)

  Net change in
  value of
  derivatives
  designated as cash
  flow hedges                                                                 (7,564)    (7,564)                        
(7,564)

Comprehensive income                           30,962              (1,804)    (7,564)    (9,368)                        
 21,594

Dividends                                                                                                               
       

  Preferred shares,
  including
  applicable taxes                            (3,166)                                                                   
(3,166)

  Common shares                              (10,766)                                                                  
(10,766)

Balance as at
January 31, 2012     $   205,527 $ 252,601 $  711,401 $             20,412 $   35,810 $   56,222 $         227 $      
1,225,978







Chief Financial Officer: Michel C. Lauzon, 514 284-4500 #7997 Media and 
Investor Relations contact: Gladys Caron, 514 284-4500 #7511;  cell 514 
893-3963

SOURCE: Laurentian Bank of Canada

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2013/06/c9397.html

CO: Laurentian Bank of Canada
ST: Quebec
NI: FIN ERN DIV CONF 

-0- Mar/06/2013 13:52 GMT


 
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