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Laurentian Bank reports third quarter results


Highlights of the third quarter 2013


    --  Net income of $28.3 million, return on common shareholders'
        equity of 8.1%, and diluted earnings per share of $0.91
    --  Total revenue up 14% year-over-year
    --  Net interest margin stable at 1.68%
    --  Loan losses remain low at $9.0 million and impaired loans
        continue to improve
    --  Solid growth in the commercial loan portfolios
    --  Transaction and Integration Costs of $14.6 million in the
        quarter

-- Excluding adjusting items: o Adjusted net income of $39.8 million, up 13% year-over-year o Adjusted return on common shareholders' equity of 11.8% o Adjusted diluted earnings per share of $1.31

MONTREAL, Aug. 30, 2013 /CNW Telbec/ - Laurentian Bank of Canada reported net income of $28.3 million or $0.91 diluted per share for the third quarter ended July 31, 2013, compared with $30.0 million or $1.06 diluted per share for the third quarter of 2012. Return on common shareholders' equity was 8.1% for the third quarter of 2013, compared with 10.1% for the same period in 2012. Excluding adjusting items(1), net income was up 13% to $39.8 million or $1.31 diluted per share for the third quarter of 2013, compared to $35.3 million or $1.27 diluted per share for the same period in 2012. Adjusted return on common shareholders' equity was 11.8% for the third quarter of 2013, compared with 12.1% for the same period in 2012.

For the nine months ended July 31, 2013, net income totalled $97.5 million or $3.12 diluted per share, compared with $94.8 million or $3.44 diluted per share in 2012. Return on common shareholders' equity was 9.6% for the nine months ended July 31, 2013, compared with 11.2% for the same period in 2012. Excluding adjusting items, net income was up 16% to $120.8 million or $3.95 diluted per share for the nine months ended July 31, 2013, compared with $104.5 million or $3.83 diluted per share for the same period in 2012. Adjusted return on common shareholders' equity was 12.1% for the nine months ended July 31, 2013, compared with 12.5% for the same period in 2012.

Commenting on the Bank's financial results for the third quarter of 2013, Réjean Robitaille, President and Chief Executive Officer, mentioned: "We continued to deliver solid revenues and earnings in the third quarter and leveraged our acquisitions to expand the Bank's revenue base. The continued excellent credit quality of the loan portfolio and disciplined control over expenses also contributed to our good performance."

Mr. Robitaille added: "In an environment of slower consumer loan demand and continued margin pressure, we are working diligently to increase the value in each of our business segments, with a constant focus on profitable growth, on optimizing certain operations, and on the integration of our recently acquired businesses in order to maximize operating leverage going forward."

________________________________

(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 the
     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              FOR THE NINE MONTHS ENDED

In thousands of
Canadian
dollars, except
per share and
percentage        JULY 31       JULY 31                  JULY 31       JULY 31
amounts
(Unaudited)          2013          2012     VARIANCE        2013          2012     VARIANCE
                                                                                           

Profitability                                                                              

  Total revenue $ 221,042     $ 193,833       14 %     $ 649,806     $ 586,247      11 %

  Net income    $  28,284     $  29,998      (6) %     $  97,513     $  94,823       3 %

  Diluted
  earnings per
  share         $    0.91     $    1.06     (14) %     $    3.12     $    3.44     (9) %

  Return on
  common
  shareholders'
  equity ([1])        8.1 %        10.1 %                    9.6 %        11.2 %           

  Net interest
  margin ([1])       1.68 %        1.66 %                   1.66 %        1.71 %           

  Efficiency
  ratio ([1])        79.1 %        76.8 %                   76.3 %        74.9 %           
                                                                                           

Adjusted
measures                                                                                   

  Adjusted net
  income ([1])  $  39,847     $  35,253       13 %     $ 120,812     $ 104,474      16 %

  Adjusted
  diluted
  earnings per
  share ([1])   $    1.31     $    1.27        3 %     $    3.95     $    3.83       3 %

  Adjusted
  return on
  common
  shareholders'
  equity ([1])       11.8 %        12.1 %                   12.1 %        12.5 %           

  Adjusted
  efficiency
  ratio ([1])        72.5 %        73.2 %                   72.0 %        72.7 %           
                                                                                           

Per common
share                                                                                      

  Share price                                                                              
    High        $   45.75     $   47.64                $   45.97     $   48.68             
    Low         $   42.41     $   40.66                $   42.41     $   40.66             
    Close       $   45.05     $   47.55      (5) %     $   45.05     $   47.55     (5) %

  Price /
  earnings
  ratio
  (trailing
  four
  quarters)                                                   9.7x         10.7x           

  Book value (
  [1])                                                 $   44.36     $   41.96       6 %

  Market to
  book value                                                 102 %         113 %           

  Dividends
  declared      $    0.50     $    0.47        6 %     $    1.48     $    1.37       8 %

  Dividend
  yield ([1])        4.44 %        3.95 %                   4.38 %        3.84 %           

  Dividend
  payout ratio
  ([1])              55.0 %        44.2 %                   47.3 %        39.8 %           
                                                                                           

Financial
position (in
millions of
Canadian
dollars)                                                                                   

  Balance sheet
  assets                                               $  33,759     $  31,416       7 %

  Loans and
  acceptances                                          $  27,189     $  23,436      16 %

  Deposits                                             $  23,866     $  21,622      10 %
                                                                                           

Basel III
regulatory
capital ratios
— All-in
basis ([2])                                                                                

  Common Equity
  Tier I                                                     7.5 %        n.a.             

  Tier 1                                                     9.0 %        n.a.             

  Total                                                     12.6 %        n.a.             
                                                                                           

Other
information                                                                                

  Number of
  full-time
  equivalent
  employees                                                4,289         4,044             

  Number of
  branches                                                   153           158             

  Number of
  automated
  banking
  machines                                                   422           426             

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

  [2] As defined in OSFI 2013 Capital Adequacy Requirements Guideline.
    Review of Business Highlights

Over the past few months, Laurentian Bank's Retail segment has been forming 
partnerships that are beneficial to the Bank's growth and development. For 
instance, the Bank launched a VISA product offering for FADOQ, the largest 
association of people aged 50 and over in Québec, with members totalling 
275,000. It also introduced an offering for the 60,000 members of the Réseau 
des Ingénieurs du Québec, an association of Québec engineers. While it is 
still early days, this credit card initiative targeted at these high potential 
customer groups is off to a promising start.

Activitiy involving commercial clients have been reaping the rewards of their 
approach to lending which is based on areas of specialization. The focus and 
expertise that the bankers bring to their clients are resulting in several 
attractive lending opportunities. This is reflected in the strong growth in 
commercial loans, increasing by 6% in the third quarter of 2013 compared to 
the second quarter of 2013 and by 13% compared to a year earlier. Examples of 
high quality and specialized lending opportunities include participation in 
two Ontario consortiums; one with the proceeds used to build a wind farm in 
Kingsville and another to build an environmentally sustainable facility to 
treat wastewater in Sudbury.

B2B Bank is continuing to make good progress in integrating its two 
acquisitions. In particular, there has been a pronounced ramp up in the effort 
to integrate AGF Trust into B2B Bank, in preparation for the legal merger of 
these two entities on September 1(st). When this occurs, all products and 
services will be branded under B2B Bank. Furthermore, as the integration 
proceeds, products begin to be offered to B2B Bank's clientele. For example, 
loans for Registered Educational Savings Plans are now offered to complement 
investment loans for Registered Retirement Savings Plans.

Laurentian Bank Securities is continuing to selectively build new 
capabilities. The syndication group, during the quarter, broadened its product 
offering by adding a team with structured note expertise. In addition to 
helping its partners bring product to market in a timely manner, this team is 
working with Investment Advisors to customize products to fit the needs of 
their high net worth clients. This enhancement to the Wealth Management 
platform is another effective way of helping clients to build wealth.

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 
July 31, 2013, and of how it performed during the three-month and nine-month 
periods then ended. This MD&A, dated August 30, 2013, should be read in 
conjunction with the unaudited condensed interim consolidated financial 
statements for the period ended July 31, 2013, prepared in accordance with 
IAS 34 Interim 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

As a result of recent Federal Reserve announcements, long-term interest rates 
in the U.S. and Canada have trended upward, triggering increases in fixed-term 
mortgage rates. While the Bank does not expect this situation to put 
significant pressure on housing affordability, activity in the housing market 
should continue to slow throughout 2013 and 2014 as imbalances between supply 
and demand persist. As for the broader real economy, some unusual temporary 
factors (floods and strike) will cause GDP growth to remain wavy in the near 
term. In the end, the outcome will remain the same: the Canadian economy 
should grow modestly in 2013 and accelerate somewhat in 2014, fuelled by 
stronger exports owing to a healthier economy south of the border.

Regarding monetary policy, the Bank of Canada will stay on the sidelines until 
inflation steadily increases and household sector balance sheets have 
improved. It will take time for these conditions to come together, consistent 
with an increase of the overnight target rate, only by the end of 2014 at the 
earliest.

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 NINE MONTHS ENDED
                                                                      
                         2013 OBJECTIVES               JULY 31, 2013
                                                                      

Revenue growth                      > 5%                          11 %

Adjusted efficiency                       
ratio ([1])               72.5% to 69.5%                        72.0 %

Adjusted net income (in                   
millions of dollars) (
[1])                    $145.0 to $165.0                      $120.8  

Adjusted return on                        
common shareholders'
equity( [1])              10.5% to 12.5%                        12.1 %

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 nine months ended July 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. Strong revenue growth stemming from the AGF Trust acquisition and the Bank's strategies to diversify its revenue base, combined with a disciplined management of expenses and continued excellent 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 NINE MONTHS
                  FOR THE THREE MONTHS ENDED             ENDED

In thousands
of Canadian
dollars,
except per
share          JULY 31    APRIL 30     JULY 31     JULY 31     JULY 31
amounts
(Unaudited)       2013        2013        2012        2013        2012
                                                                       

Net interest                                                   388,617
income       $ 144,549   $ 140,430   $ 129,664   $ 427,323   $

Other income    76,493      74,420      64,169     222,483     197,630

Total
revenue        221,042     214,850     193,833     649,806     586,247

Gain on
acquisition
and
amortization
of net
premium on
purchased
financial
instruments    (1,140)     (1,224)     —     (3,420)     —

Provision
for loan
losses           9,000       9,000       7,500      26,000      25,000

Non-interest
expenses       174,928     159,853     148,955     496,095     439,086

Income
before
income taxes    35,974      44,773      37,378     124,291     122,161

Income taxes     7,690       9,634       7,380      26,778      27,338

Net income   $  28,284   $  35,139   $  29,998   $  97,513   $  94,823

Preferred
share
dividends,
including
applicable
taxes            2,520       4,059       3,164       9,112       9,495

Net income                                                      85,328
available to
common
shareholders $  25,764   $  31,080   $  26,834   $  88,401   $

Earnings per
share                                                                 

  Basic      $    0.91   $    1.10   $    1.06   $    3.13   $    3.44

  Diluted    $    0.91   $    1.10   $    1.06   $    3.12   $    3.44
    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 NINE MONTHS
                   FOR THE THREE MONTHS ENDED                   ENDED

In thousands                                   
of Canadian
dollars,
except per      JULY 31   APRIL 30    JULY 31     JULY 31     JULY 31
share amounts
(Unaudited)        2013       2013       2012        2013        2012
                                                                     

Impact on net                                  
income                                                               

Reported net                                               
income         $ 28,284   $ 35,139   $ 29,998   $  97,513   $  94,823

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

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

  Amortization                                 
  of net
  premium on
  purchased
  financial
  instruments       840        902    —       2,520     —

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

  MRS                                          
  Companies
  transaction
  and
  integration
  related
  costs           3,977      1,332      4,801       9,627       9,197

  AGF Trust                                    
  transaction
  and
  integration
  related
  costs           6,746      3,174        454      11,152         454
                 11,563      5,408      5,255      23,299       9,651

Adjusted net                                               
income ([1])   $ 39,847   $ 40,547   $ 35,253   $ 120,812   $ 104,474
                                                                     

Impact on                                      
diluted
earnings per
share                                                                

Reported                                                   
diluted
earnings per
share          $   0.91   $   1.10   $   1.06   $    3.12   $    3.44

Adjusting                                      
items ([1])        0.41       0.19       0.21        0.82        0.39

Adjusted                                                   
diluted
earnings per
share ([1]
[3])           $   1.31   $   1.29   $   1.27   $    3.95   $    3.83

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

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

[3] The impact of adjusting items on a per share basis does not add due
    to rounding for the quarter ended July 31, 2013 and for the nine
    months ended July 31, 2013.
    Three months ended July 31, 2013 compared to three months ended July 31, 2012

Net income was $28.3 million, or $0.91 diluted per share, for the third 
quarter of 2013, compared with $30.0 million, or $1.06 diluted per share, for 
the third quarter of 2012. Adjusted net income was up 13% year-over-year to 
$39.8 million for the third quarter ended July 31, 2013, compared with $35.3 
million in 2012, while adjusted diluted net income per share was $1.31, 
compared to $1.27 diluted per share, in 2012.

Total revenue

Total revenue increased by $27.2 million or 14% to $221.0 million in the third 
quarter of 2013, compared with $193.8 million in the third quarter of 2012. 
The contribution from AGF Trust to total revenue amounted to $19.0 million for 
the third quarter of 2013, including $18.5 million reported in the B2B Bank 
business segment results and $0.5 million related to treasury activities 
presented in the Other business segment's results.

Net interest income was up 11% to $144.5 million for the third quarter of 
2013, from $129.7 million in the third quarter of 2012, essentially reflecting 
loan and deposit growth year-over-year from the purchased portfolios of AGF 
Trust, and slightly improved margins. When compared to the third quarter of 
2012, margins increased by 2 basis points to 1.68% for the third quarter of 
2013. The higher-yielding loans in the AGF Trust portfolios and relatively 
lower liquidity levels compared to a year ago, mainly contributed to the 
increase. These factors temporarily muted ongoing pressure on loan and deposit 
margins stemming from the repricing of maturing loans and deposits in the very 
low interest rate environment.

Other income totalled $76.5 million in the third quarter of 2013, compared to 
$64.2 million in the third quarter of 2012, a $12.3 million or 19% increase 
reflecting better performance in most revenue streams. During the quarter, 
fees and commissions on loans and deposits continued to benefit from increased 
activity. Income from treasury and financial market operations also increased 
due to a particularly strong quarter in treasury activities and slightly 
higher net security gains year-over-year. Higher income from brokerage 
operations, as well as continued solid income from sales of mutual funds and 
credit insurance also contributed to the increase year-over-year.

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

For the third 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 $1.1 million. Refer to Note 12 to the unaudited 
condensed interim financial statements for additional information on this item.

Provision for loan losses

The provision for loan losses increased by $1.5 million to $9.0 million in the 
third quarter of 2013 from $7.5 million in the third quarter of 2012, albeit a 
very low level, reflecting the overall underlying quality of the Bank's loan 
portfolios. The provision in the third quarter of 2013 includes a $3.5 million 
favourable settlement on a single commercial loan exposure. During the 
quarter, the Bank maintained its prudent approach to loan loss provisioning 
and adjusted collective provisions by $2.5 million for medium-sized 
residential real estate properties and projects as well as for certain 
residential mortgage loan portfolios in light of recent events in Alberta. 
Loan losses related to the AGF Trust loan portfolios amounted to $0.9 million 
for the quarter.

Non-interest expenses

Non-interest expenses increased by $26.0 million to $174.9 million for the 
third quarter of 2013, compared to $149.0 million for the third quarter of 
2012. This mainly resulted from the addition of current operating expenses of 
$7.2 million related to AGF Trust, higher T&I Costs and certain one-off 
charges incurred in the third quarter of 2013, as detailed below.

Salaries and employee benefits increased by $10.5 million or 14% to $87.7 
million for the third quarter of 2013, compared to the third quarter of 2012. 
Regular salary increases, higher performance-based compensation, as well as 
higher pension costs impacted costs for the quarter and more than offset 
savings related to group insurance programs. A $4.0 million portion of the 
increase was also due to the additional headcount resulting from the 
acquisition of AGF Trust.

Premises and technology costs increased by $5.8 million or 15% to $44.5 
million compared to the third quarter of 2012, mostly stemming from higher 
amortization expense related to completed IT development projects, including a 
$1.6 million impairment charge related to discontinued IT projects. Higher 
rental costs related to additional square footage of leased premises for IT 
development teams and a $0.7 million charge related to the branch network 
optimization also contributed to the increase. As well, additional rental and 
IT costs totalling $1.7 million resulted from the acquisition of AGF Trust.

Other non-interest expenses increased by $2.2 million to $28.2 million for the 
third quarter of 2013, from $26.0 million for the third quarter of 2012. The 
increase is mainly attributable to a $1.0 million adjustment to provincial 
sales taxes and to $1.5 million$1.4 million of other non-interest expenses 
related to AGF Trust in the third quarter of 2013.

T&I Costs for the third quarter of 2013 totalled $14.6 million and mainly 
related to IT systems conversions costs, employee relocation costs, salaries, 
professional fees and other expenses for the integration of AGF Trust and the 
MRS Companies. The integration process is progressing according to plan and 
should be ongoing over the next few quarters.

The adjusted efficiency ratio was 72.5% in the third quarter of 2013, compared 
to 73.2% in the third quarter of 2012. On the same adjusted basis, at 1.0% 
year-over-year, the Bank continued to generate positive operating leverage, 
mainly due to the addition of AGF Trust, integration synergies, higher other 
income and the Bank's continued cost control initiatives.

Income taxes

For the quarter ended July 31, 2013, the income tax expense was $7.7 million 
and the effective tax rate was 21.4%. 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 foreign insurance operations. 
For the quarter ended July 31, 2012, the income tax expense was $7.4 million 
and the effective tax rate was 19.7%. Year-over-year, the higher income tax 
rate for the third quarter ended July 31, 2013 results from a lower level of 
non-taxable dividend income.

Nine months ended July 31, 2013 compared to nine months ended July 31, 2012

Net income was $97.5 million, or $3.12 diluted per share, for the nine months 
ended July 31, 2013, compared with $94.8 million, or $3.44 diluted per share, 
in 2012. Adjusted net income was up 16% year-over-year to $120.8 million for 
the nine months ended July 31, 2013, compared with $104.5 million in 2012, 
while adjusted diluted net income per share was up 3% to $3.95, compared to 
$3.83 diluted per share, in 2012.

Total revenue

Total revenue increased $63.6 million or 11% to $649.8 million for the nine 
months ended July 31, 2013, compared with $586.2 million for the nine months 
ended July 31, 2012. The contribution from AGF Trust to total revenue amounted 
to $57.6 million for the nine months ended July 31, 2013, including 
$55.9 million reported in the B2B Bank business segment results and 
$1.7 million related to treasury activities included in the Other business 
segment's results.

Net interest income increased 10% to $427.3 million for the nine months ended 
July 31, 2013, compared with $388.6 million for the same period in 2012, and 
is mainly explained by strong loan and deposit volume growth year-over-year 
from the purchased AGF Trust portfolios, which essentially offset the effect 
of continuing pressure in net interest margin of 5 basis points over the same 
period.

Other income was $222.5 million for the nine months ended July 31, 2013, 
compared to $197.6 million for the same period in 2012, a 13% year-over-year 
increase reflecting improvements across all revenue streams, notably in fees 
and commissions on loans and deposits originating from increased business 
volume and pricing initiatives as noted above. In addition, income from 
brokerage operations increased by $5.1 million as the Bank's brokerage 
subsidiary capitalized on growth opportunities in the fixed income market and 
benefited from stronger equity markets compared to a year ago. Other income 
sources also contributed to the overall better performance.

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

For the nine months ended July 31, 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 $3.4 million. Refer to Note 12 
to the unaudited condensed interim financial statements for additional 
information on this item.

Provision for loan losses

The provision for loan losses amounted to $26.0 million for the nine months 
ended July 31, 2013, an increase of $1.0 million or 4% from $25.0 million for 
the nine months ended July 31, 2012, despite a 16% increase in the loan 
portfolio stemming mainly from the AGF Trust acquisition. This reflects the 
quality of the Bank's loan portfolios and the prolonged favourable credit 
conditions in the Canadian market. Provisions for the nine months ended July 
31, 2013 included a $6.7 million charge related to the AGF Trust loan 
portfolios. In addition, favourable settlements and overall improvements led 
to a net credit of $2.6 million in loan loss provisioning in the commercial 
portfolios for the nine months ended July 31, 2013.

Non-interest expenses

Non-interest expenses totalled $496.1 million for the nine months ended July 
31, 2013, compared to $439.1 million for the nine months ended July 31, 2012. 
Excluding current operating expenses related to AGF Trust of $24.0 million and 
T&I Costs of $28.3 million, non-interest expenses increased by $17.9 million 
or 4%.

Salaries and employee benefits increased by $28.8 million or 12% to $262.3 
million compared to the nine months ended July 31, 2012, mainly due to 
increased headcount from the acquisition of AGF Trust, as well as to regular 
salary increases, higher performance-based compensation and pension costs. 
These were partly offset by synergies from integration of the MRS Companies, 
lower other employee benefit costs and savings from restructurings in the 
retail banking operations in 2012.

Premises and technology costs increased by $12.2 million compared to the nine 
months ended July 31, 2012, mainly stemming from rental and IT costs resulting 
from the acquisition of AGF Trust, as well as higher rental costs related to 
additional square footage of leased premises for IT project teams. Higher IT 
costs related to ongoing business growth and amortization expense related to 
completed IT development projects, including a $1.6 million impairment charge 
for discontinued IT projects, also contributed to the increase.

Other non-interest expenses increased marginally by $0.9 million to $79.5 
million for the nine months ended July 31, 2013, from $78.6 million for the 
same period of 2012. The increase is mainly due to other non-interest expenses 
of AGF Trust for the nine months ended July 31, 2013, partly offset by net 
favourable adjustments to sales taxes. Expenses for the nine months ended July 
31, 2012 also included MRS Companies' outsourcing expenses prior to its 
integration within B2B Bank in 2012.

T&I Costs for the nine months ended July 31, 2013 totalled $28.3 million and 
mainly related to IT systems conversions costs, employee relocation costs, 
salaries, professional fees and other expenses, as noted above.

The adjusted efficiency ratio was 72.0% for the nine months ended July 31, 
2013, compared to 72.7% for the nine months ended July 31, 2012. On the same 
adjusted basis, operating leverage was slightly positive over period, as the 
addition of AGF Trust and higher other income combined with continued cost 
control measures aimed at slowing expense growth more than compensated for the 
impact of compressing margins.

Income taxes

For the nine months ended July 31, 2013, the income tax expense was $26.8 
million and the effective tax rate was 21.5%. 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 foreign insurance operations. 
For the nine months ended July 31, 2012, the income tax expense was $27.3 
million and the effective tax rate was 22.4%. Year-over-year, the lower income 
tax rate for the nine months ended July 31, 2013 reflects the higher level of 
revenues from foreign insurance operations, as well as miscellaneous tax 
recoveries.

Three months ended July 31, 2013 compared to three months ended April 30, 2013

Net income was $28.3 million or $0.91 diluted per share for the third quarter 
of 2013 compared with $35.1 million or $1.10 diluted per share for the second 
quarter of 2013.

Adjusted net income was $39.8 million, or $1.31 diluted per share, compared to 
$40.5 million or $1.29 diluted per share for the second quarter of 2013. The 
calculation of diluted net income per share in the second quarter of 2013 
included a $1.5 million final dividend on the Series 9 preferred shares 
redeemed in March.

Total revenue increased to $221.0 million in the third quarter of 2013, 
compared to $214.9 million in the previous quarter. Net interest income 
increased by $4.1 million sequentially to $144.5 million in the third 
quarter, mainly as a result of the three additional days. Net interest margins 
held stable at 1.68% in the third quarter of 2013, unchanged compared to the 
second quarter of 2013. Loan prepayment penalties, seasonally higher in the 
third quarter, and a reduction in lower-yielding liquid assets temporarily 
compensated for the margin compression related to the ongoing very low 
interest rate environment and reduced level of higher-margin personal loans.

Other income increased by $2.1 million sequentially despite a $3.7 million 
gain on sale of a commercial mortgage loan portfolio recorded during the 
second quarter. The increase is largely due to higher fees and commissions on 
loan and deposits stemming from increased business activity, as well as the 
particularly strong performance of treasury activities which contributed to 
higher income from treasury and financial market operations.

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 $1.1 
million in the third quarter of 2013, compared to a $1.2 million charge for 
the last quarter. Refer to Note 12 to the unaudited condensed interim 
financial statements for additional information on this item.

The provision for loan losses remained low at $9.0 million for the third 
quarter of 2013, unchanged from the second quarter of 2013, reflecting the 
continued excellent quality of the portfolio. In the third quarter of 2013, 
the Bank prudently adjusted by $2.5 million collective provisions for 
medium-sized residential real estate properties and projects as well as for 
certain residential mortgage loan portfolios in light of recent events in 
Alberta. These additional provisions were offset by a $3.5 million favourable 
settlement on a single commercial loan exposure, while there was no comparable 
significant settlement during the second quarter.

Non-interest expenses amounted to $174.9 million for the third quarter of 
2013, compared to $159.9 million for the second quarter of 2013. Excluding T&I 
Costs of $14.6 million in the third quarter of 2013 and of $6.1 million in the 
second quarter of 2013, non-interest expenses increased sequentially by 4%. 
This increase mainly results from adjustments to performance-based 
compensation, an impairment charge related to IT projects as well as an 
unfavourable adjustment to provincial sales taxes recorded in the third 
quarter, as the Bank continued to apply tight cost control measures in the 
midst of a more muted growth environment for net interest income.

Financial condition

CONDENSED BALANCE
SHEET                                                                  
                                                             

In thousands of        AS AT JULY 31   AS AT OCTOBER 31   AS AT JULY 31
Canadian dollars
(Unaudited)                     2013               2012            2012
                                                                       

ASSETS                                                                 

  Cash and deposits                                             917,923
  with other banks     $     219,480   $        571,043   $

  Securities               4,905,084          6,142,961       5,178,810

  Securities purchased
  under reverse
  repurchase
  agreements                 741,561            631,202       1,173,704

  Loans and
  acceptances, net        27,074,649         26,663,337      23,303,028

  Other assets               817,733            928,283         842,047
                       $  33,758,507   $     34,936,826   $  31,415,512
                                                                       

LIABILITIES AND
SHAREHOLDERS' EQUITY                                                   

  Deposits             $  23,866,365   $     24,041,443   $  21,622,059

  Other liabilities        3,025,682          2,873,563       3,137,239

  Debt related to
  securitization
  activities               4,952,060          6,037,097       5,109,015

  Subordinated debt          444,962            443,594         243,869

  Shareholders' equity     1,469,438          1,541,129       1,303,330
                       $  33,758,507   $     34,936,826   $  31,415,512

Balance sheet assets stood at $33.8 billion at July 31, 2013, down $1.2 billion from year-end 2012. Over the last twelve months, balance sheet assets increased by $2.3 billion or 7%, mainly due to the acquisition of AGF Trust.

Liquid assets

Liquid assets, including cash, deposits with other banks, securities and securities purchased under reverse repurchase agreements, totalled $5.9 billion at July 31, 2013, a $1.5 billion decrease compared to October 31, 2012. This decrease is mainly due to the replacement assets used to reimburse $1.5 billion of matured debt related to securitization activities during the nine months ended July 31, 2013. Liquid assets were relatively lower and decreased to 17%, as a percentage of total assets, from 21% as at October 31, 2012. The Bank continues to prudently manage the level and mix of liquid assets and maintains sufficient cash resources in order to meet its current and future financial obligations, under both normal and stressed conditions.

Loans

Loans and bankers' acceptances, net of loan loss allowances stood at $27.1 billion as at July 31, 2013, up $0.4 billion or 2% from October 31, 2012 and 16% year-over-year, mainly due to the purchased loans of AGF Trust. During the nine months ended July 31, 2013, the growth in the Bank's loan portfolios was fuelled by the strong organic growth in the higher-margin commercial loan portfolios, partly tempered by slowing loan demand in the retail portfolios. Commercial loans, including bankers' acceptances, increased by $273.6 million or 12% since October 31, 2012, as the Bank capitalized on increased demand from its business clients, while commercial mortgage loans were relatively unchanged, as growth of $96.1 million or 4% was offset by a loan sale of $94.7 million during the second quarter. Personal loans decreased by $394.4 million since October 31, 2012, mainly reflecting attrition in the acquired AGF Trust portfolios and lower demand for other personal loans as consumers begin to deleverage. Residential mortgage loans increased by $527.3 million or 4% from October 31, 2012.

Deposits

Personal deposits stood at $19.2 billion as at July 31, 2013, down $0.1 billion or 1% from October 31, 2012, in-line with more modest growth in the loan portfolios. Business and other deposits, which include institutional deposits, were down $0.1 billion since October 31, 2012 to $4.6 billion as at July 31, 2013, as the Bank reduced the level of high-priced wholesale deposits as part of its funding management. Nevertheless, the Bank continues to maintain diversified funding sources and to actively manage its liquidity levels. It focuses its efforts on retail deposit gathering through its Retail & SME-Québec and B2B Bank business segments, a solid funding base and a valuable asset in light of future regulatory liquidity adequacy requirements. These deposits represented 81% of total deposits as at July 31, 2013.

Other Liabilities

Debt related to securitization activities decreased by a net $1.1 billion since the beginning of the year considering the maturity of four issuances and stood at $5.0 billion as at July 31, 2013. Since October 31, 2012, the Bank also funded itself through the securitization of $816.5 million new residential mortgage loans. The Bank sold $512.6 million as part of new Canada Mortgage Bond issuances and $303.9 million as replacement assets in existing securitization structures. Subordinated debt stood at $445.0 million as at July 31, 2013, relatively unchanged from October 31, 2012.

Shareholders' equity

Shareholders' equity stood at $1,469.4 million as at July 31, 2013, compared with $1,541.1 million as at October 31, 2012. This decrease mainly resulted from the repurchase on March 15, 2013 of the Class A Preferred Shares, Series 9, at par for $100 million, partly offset by internal capital generation, as well as from the issuance of 296,195 new common shares under the Shareholder Dividend Reinvestment and Share Purchase Plan and 30 000 new common shares under the Share purchase option plan. The Bank's book value per common share, excluding accumulated other comprehensive income, appreciated to $44.36 as at July 31, 2013 from $42.81 as at October 31, 2012. There were 28,443,795 common shares and 20,000 share purchase options outstanding as at August 23, 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, 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 expected 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. Furthermore, certain banks in Canada have been designated by OSFI as Domestic Systemically Important Banks (or D-SIBs). Under this designation, these banks will be asked to hold a further 1% of Tier 1 Common Equity by January 1, 2016. Laurentian Bank, however, has not been so designated. 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 redeemed at par on March 15, 2013 the Series 9 preferred shares which were non-qualifying instruments under Basel III.

As detailed in the table below, on an "all-in" basis, the Common Equity Tier 1, Tier 1 and Total capital ratios stood at 7.5%, 9.0% and 12.6%, respectively, as at July 31, 2013. These ratios meet all present minimum requirements.

REGULATORY CAPITAL

Basel III ([1]) Basel II ([2])

In thousands AS AT JULY 31 AS AT APRIL 30 AS AT AS AT JULY 31 of Canadian OCTOBER 31 dollars, 2013 2013 2012 except 2012 percentage amounts (Unaudited)

Regulatory capital

Common $ 1,013,588 $ 1,018,515 n.a. n.a. Equity Tier 1 capital (A)

Tier 1 $ 1,218,734 $ 1,223,661 $ 1,460,253 $ 1,233,467 capital (B)

Total $ 1,701,438 $ 1,698,448 $ 1,974,060 $ 1,535,081 capital (C)

Total $ 13,471,849 $ 13,428,594 $ 13,436,433 $ 12,187,979 risk-weighted assets (D)


                                                                               

Regulatory                                                                     
capital
ratios

  Common               7.5 %            7.6 %           n.a.             n.a.  
  Equity Tier
  1 capital
  ratio (A/D)

  Tier 1               9.0 %            9.1 %           10.9 %           10.1 %
  capital
  ratio (B/D)

  Total               12.6 %           12.6 %           14.7 %           12.6 %
  capital
  ratio (C/D)

[1] The amounts are presented on an "all-in" basis.

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

The Common Equity Tier 1 capital ratio decreased by 0.1%, from 7.6% as at April 30, 2013 to 7.5% as at July 31, 2013. The decrease in unrealized gains on available-for-sale fixed income securities, reflecting the negative impact on fixed income security valuation due to the recent rise in long term bond yields, higher integration costs in the third quarter as well as higher deductions related to software resulted in a net decrease in regulatory capital, which combined with the slight increase in total risk-weighted assets hampered the ratio during the third quarter.

The Bank uses the Standardized Approach in determining credit risk capital and to account for operational risk. In 2012, the Bank initiated the process to adopt the advanced internal ratings-based (AIRB) approach to determine credit risk capital under Basel II. Currently, the Bank's capital requirements for credit risk under the Standardized Approach are not calculated on the same basis as its industry peers, as larger Canadian financial institutions predominantly use the more favourable AIRB approach. The Bank's eventual adoption of the AIRB approach should strengthen its credit risk management, improve comparability, optimize regulatory capital and provide a level-playing field for credit underwriting activities.

Proposal for new liquidity regulatory measures

In December 2009, the BCBS published proposals on new liquidity requirements, which introduced new global liquidity standards. The BCBS liquidity guidelines include minimum requirements for two regulatory measures, the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), which are scheduled for implementation in January 2015 and January 2018, respectively. The LCR establishes a common measure of liquidity risk and requires institutions to maintain sufficient liquid assets to cover a minimum of 30 days of cash flow requirements in a stressed situation. The NSFR describes a second common measure of liquidity establishing a minimum acceptable amount of stable funding based on the liquidity characteristics of a financial institution's assets and activities over a one-year horizon. 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 some aspects of 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 is in the process of assessing differences between the current liquidity requirements and its liquidity data and reporting systems.

Dividends

On August 21, 2013, the Board of Directors declared regular dividends on the various series of preferred shares to shareholders of record on September 9, 2013. At its meeting on August 30, 2013, the Board of Directors declared a dividend of $0.50 per common share, payable on November 1, 2013, to shareholders of record on October 1, 2013.

COMMON SHARE DIVIDENDS AND PAYOUT RATIO


                                                                                                       
                                                  FOR THE
                                                   NINE
                                                    MONTHS
                  FOR THE THREE MONTHS ENDED       ENDED                      FOR THE YEARS ENDED

In Canadian             APRIL 30                             OCTOBER 31                   
dollars,
except                      2013                                   2012
payout      JULY 31                  JULY 31     JULY 31                    OCTOBER 31     OCTOBER 31
ratios
(Unaudited)    2013                     2012        2013                          2011           2010  
                                                                                                       

Dividends                   0.49     $                             1.84     $     1.62           1.44  
declared
per common
share       $  0.50     $               0.47     $  1.48     $                             $

Dividend                                                                                  
payout
ratio ([1]
[2])           55.0 %       44.5 %      44.2 %      47.3 %         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 NINE MONTHS
                     FOR THE THREE MONTHS ENDED               ENDED

In thousands               APRIL 30                
of Canadian
dollars,                       2013
except
percentage     JULY 31                  JULY 31      JULY 31      JULY 31
amounts
(Unaudited)       2013                     2012         2013         2012  
                                                                           

Provision for                                      
loan losses                                                                

  Personal                    7,455     $                        $ 17,760  
  loans        $ 6,135     $              5,715     $ 21,648

  Residential                                                   
  mortgage
  loans          4,645          872       1,256        6,924        2,038  

  Commercial                                                    
  mortgage
  loans        (3,141)           48          13      (1,992)        3,456  

  Commercial                                                    
  and other
  loans
  (including
  acceptances)   1,361          625         516        (580)        1,746  
               $ 9,000     $  9,000     $ 7,500     $ 26,000     $ 25,000  

As a % of                                                       
average loans
and
acceptances       0.13 %       0.14 %      0.13 %       0.13 %       0.15 %

The provision for loan losses amounted to $9.0 million in the third quarter of 2013, unchanged from the second quarter of 2013 and up $1.5 million compared to a year ago. This very low level of loan losses reflects the strong overall credit quality of the Bank's loan portfolios and prolonged favourable credit conditions in the Canadian market.

The year-over-year increase of $0.4 million in loan losses on personal loans is mainly due to losses on the AGF Trust loan portfolios. The provision on residential mortgage loans also increased by $3.4 million compared to the third quarter of 2012, driven by additional collective provisions on medium-sized residential real estate properties and projects to better reflect the risk profile of these loans and on certain residential mortgage loan portfolios in light of recent events in Alberta.

Loan losses on commercial mortgages and commercial loans remained at a very low level during the third quarter of 2013 and further decreased by a combined $2.3 million year-over-year and $2.5 million sequentially, benefitting from a $3.5 million favourable settlement on a single commercial mortgage loan exposure in the third quarter of 2013. The prolonged low level of loan losses continues to reflect the excellent credit quality of these portfolios.

IMPAIRED LOANS

In thousands of AS AT OCTOBER 31 Canadian dollars, except 2012 percentage AS AT JULY 31 AS AT JULY 31 amounts (Unaudited) 2013 2012


                                                                       

Gross impaired                                         
loans                                                                  

  Personal       $      15,008     $         16,863     $      17,774  

  Residential                                21,971
  mortgages             25,784                                 18,853  

  Commercial                                 36,672
  mortgages             20,774                                 61,418  

  Commercial and                             52,517
  other
  (including
  acceptances)          36,631                                 58,348  
                 $      98,197     $        128,023     $     156,393  
                                                                       

Allowances for                                         
loan losses
against impaired
loans                                                                  

  Individual                                                           
  allowances     $    (35,941)     $       (47,849)     $    (62,052)

  Collective                               (12,492)
  allowances          (11,541)                               (17,643)  
                 $    (47,482)     $       (60,341)     $    (79,695)  
                                                                       

Net impaired                                                           
loans ([1])      $      50,715     $         67,682     $      76,698
                                                                       

Collective                                                             
allowances
against other
loans            $    (66,608)     $       (57,201)     $    (52,944)
                                                                       

Impaired loans                                         
as a % of loans
and acceptances                                                        

  Gross                   0.36 %               0.48 %            0.67 %

  Net                     0.19 %               0.25 %            0.33 %

[1] Net impaired loans are now calculated as gross impaired loans less
    individual allowances and collective allowances against impaired
    loans.

Gross impaired loans amounted to $98.2 million as at July 31, 2013, down 23% from $128.0 million as at October 31, 2012 as credit quality remained very good during the quarter. The decrease since October 31, 2012 resulted from improvement in the commercial mortgage loan and commercial loan portfolios, as borrowers continued to benefit from the favourable low interest rate environment, as well as the prevailing business conditions in Canada, partly offset by the accounting impact of the purchased AGF Trust personal and residential mortgage loan portfolios.

Since the beginning of the year, individual allowances decreased by $11.9 million to $35.9 million, as a result of favourable settlements and overall improvement in the commercial mortgage loan and commercial loan portfolios. Net impaired loans, now calculated as gross impaired loans less individual allowances and collective allowances against impaired loans, amounted to $50.7 million as at July 31, 2013, compared to $67.7 million as at October 31, 2012, and totalled 0.19% of loans and acceptances,a decrease from October 31, 2012, reflecting the excellent credit quality of the loan portfolio. Despite this decrease, management continues to prudently manage the level of provisioning of impaired loans.

Liquidity and funding risk

Liquidity and funding risk represents the possibility that the Bank may not be able to gather sufficient cash resources, when required and on reasonable conditions, to meet its financial obligations. There have been no material changes to the Bank's liquidity and funding risk management framework from year-end 2012. The Bank continues to maintain liquidity and funding that is appropriate for the execution of its strategy, with liquidity and funding risk remaining well within its risk appetite.

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 manage 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 July 31, 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 JULY 31 AS AT OCTOBER 31 In thousands of Canadian dollars (Unaudited) 2013 2012

Effect of a 1% increase in interest rates

Increase in net interest income $ 6,553 $ 16,701 before taxes over the next 12 months

Decrease in the economic value of $ (28,147) $ (19,710) common shareholders' equity (Net of income taxes)

As shown in the table above, the Bank reduced its short-term ALM sensitivity compared to October 31, 2012 while increasing its long term sensitivity in the context of a steepening of the longer end of the yield curve. 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:


    --  Retail & SME-Québec          --  Laurentian Bank Securities &
    --  Real Estate & Commercial         Capital Markets
    --  B2B Bank                     --  Other

Retail & SME-Québec
                      FOR THE THREE MONTHS ENDED       FOR THE NINE MONTHS ENDED

In thousands                APRIL 30                  
of Canadian
dollars,                        2013
except
percentage     JULY 31                     JULY 31       JULY 31       JULY 31
amounts
(Unaudited)       2013                        2012          2013          2012  
                                                                                

Net interest                  72,690     $                           $ 234,984  
income       $  77,799     $                80,163     $ 227,344

Other income    40,897        38,260        34,662       114,593        99,887  

Total                                                               
revenue        118,696       110,950       114,825       341,937       334,871  

Provision                                                           
for loan
losses           8,349         5,924         6,474        20,339        17,545  

Non-interest                                                        
expenses        96,984        93,386        91,107       283,351       273,635  

Income                                                              
before
income taxes    13,363        11,640        17,244        38,247        43,691  

Income taxes     2,339         1,978         3,709         6,351         9,077  

Net income   $  11,024     $   9,662     $  13,535     $  31,896     $  34,614  
                                                                                

Efficiency                                                          
ratio ([1])       81.7 %        84.2 %        79.3 %        82.9 %        81.7 %

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

The Retail & SME-Québec business segment's contribution to net income was $11.0 million in the third quarter of 2013 compared with $13.5 million in the third quarter of 2012.

Total revenue increased by $3.9 million from $114.8 million in the third quarter of 2012 to $118.7 million in the third quarter of 2013, as growth in other income compensated for lower net interest income. Net interest income decreased by $2.4 million, as growth in loan and deposit volumes year-over-year did not fully compensate for the ongoing decline in margins stemming from the repricing of loans and deposits in the very low interest rate environment. Other income increased by 18% from $34.7 million in the third quarter of 2012 to $40.9 million for the same period in 2013 reflecting improved performance across all revenue streams. Higher fees on deposits, higher income from sales of mutual funds reflecting new sales and better market performance compared to a year ago and higher credit insurance income mainly contributed to the increase year-over-year.

Loan losses increased from $6.5 million in the third quarter of 2012 to $8.3 million in the third quarter of 2013. This increase mainly results from adjustments to collective provisions on medium-sized residential real estate properties and projects to better reflect the risk profile of these loans. Non-interest expenses increased by $5.9 million or 6%, from $91.1 million in the third quarter of 2012 to $97.0 million in the third quarter of 2013. Regular salary increases and higher pension costs as well as higher premises and technology costs due to the recently harmonized Québec sales taxes and a $0.7 million charge related to the branch network optimization, mainly accounted for the increase.

The efficiency ratio was 81.7% in the third quarter of 2013, compared with 79.3% in the third quarter of 2012. Despite strong growth in other income and an increased focus on controlling costs, the impact of the prolonged very low interest rate environment continues to weigh on the segment's efficiency ratio.

Compared to the second quarter of 2013, net income increased by $1.4 million from $9.7 million to $11.0 million in the third quarter of 2013, mainly due to the increase in total revenue due to the three additional days, growth in loan and deposit volumes in the third quarter, seasonally higher loan prepayment penalties and better other income. This increase was partly offset by the additional provision for loan losses and higher non-interest expenses in part due to the three additional days in the third quarter and the charge related to the branch network optimization explained above.

For the nine months ended July 31, 2013, net income decreased by 8%, from $34.6 million to $31.9 million. Growth in loan and deposit volumes and increased other income, as explained above was more than offset by the effect of lower interest margins and increase in non-interest expenses partly attributable to higher salaries and sales taxes costs incurred since January 2013.

Real Estate & Commercial

FOR THE NINE MONTHS

FOR THE THREE MONTHS ENDED ENDED

In thousands APRIL 30 of Canadian dollars, 2013 except percentage JULY 31 JULY 31 JULY 31 JULY 31 amounts (Unaudited) 2013 2012 2013 2012

Net interest 20,179 $ $ 65,992 income $ 21,310 $ 21,731 $ 63,044

Other income 8,931 10,503 8,327 27,520 26,784

Total revenue 30,241 30,682 30,058 90,564 92,776

Provision for loan losses (1,880) (74) 436 (3,418) 5,042

Non-interest expenses 8,946 8,383 7,756 25,743 22,996

Income before income taxes 23,175 22,373 21,866 68,239 64,738

Income taxes 6,188 5,974 5,915 18,221 17,512

Net income $ 16,987 $ 16,399 $ 15,951 $ 50,018 $ 47,226

Efficiency ratio ([1]) 29.6 % 27.3 % 25.8 % 28.4 % 24.8 %

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

The Real Estate & Commercial business segment's contribution to net income increased by $1.0 million or 6% to $17.0 million in the third quarter of 2013, compared with $16.0 million in the third quarter of 2012.

Total revenue slightly increased by $0.2 million to $30.2 million in the third quarter of 2013, as growth in other income compensated for lower net interest income. Net interest income decreased by 2% compared to the third quarter of 2012 as the strong volume growth in the commercial loan portfolios was more than offset by compressed margins in the third quarter of 2013. Other income increased by 7% compared to the third quarter of 2012, mainly due to increased underwriting activity compared to a year ago. Loan losses decreased by $2.3 million compared to a year ago and generated a net credit of $1.9 million in the third quarter of 2013, as a result of a $3.5 million favourable settlement on a single commercial mortgage loan exposure, reflecting the excellent quality of the commercial loan portfolio. Non-interest expenses increased by $1.2 million to $8.9 million in the third quarter of 2013 compared with $7.8 million in the third quarter of 2012 essentially due to regular salary increases, higher performance-based compensation and higher allocated costs year-over-year.

Compared to the second quarter of 2013, net income increased sequentially. This increase mainly results from the three additional days in the third quarter which impacted net interest income and the $3.5 million favourable settlement on a single exposure, partly offset by a $3.1 million gain on the sale of a commercial mortgage loan portfolio recorded during the second quarter.

For the nine months ended July 31, 2013, net income increased by $2.8 million or 6% to $50.0 million, mostly driven by improvements in loan losses, partly offset by lower net interest income due to lower margins. Non-interest expenses increased by $2.7 million compared to the nine months ended July 31, 2012, mainly due to increased salaries and benefits, performance-based compensation and allocated costs as explained above.

B2B Bank

FOR THE NINE MONTHS

FOR THE THREE MONTHS ENDED ENDED

In thousands APRIL 30 of Canadian dollars, 2013 except percentage JULY 31 JULY 31 JULY 31 JULY 31 amounts (Unaudited) 2013 2012 2013 2012

Net interest income $ 48,249 $ 47,195 $ 32,119 $ 144,856 $ 93,772

Other income 9,359 8,884 8,408 27,299 25,667

Total revenue 57,608 56,079 40,527 172,155 119,439

Gain on acquisition and amortization of net premium on purchased financial instruments (1,140) (1,224) — (3,420) —

Provision for loan losses 2,531 3,150 590 9,079 2,413

Non-interest expenses 31,114 32,175 22,913 96,249 70,818

Costs related to business combinations and other ( [1]) 14,600 6,136 7,157 28,293 13,167

Income before income taxes 8,223 13,394 9,867 35,114 33,041

Income taxes 2,240 3,557 2,612 9,380 8,786

Net income $ 5,983 $ 9,837 $ 7,255 $ 25,734 $ 24,255

Adjusted net income ([2]) $ 17,546 $ 15,245 $ 12,510 $ 49,033 $ 33,906

Efficiency ratio ([2]) 79.4 % 68.3 % 74.2 % 72.3 % 70.3 %

Adjusted efficiency ratio ([2]) 54.0 % 57.4 % 56.5 % 55.9 % 59.3 %

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

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

B2B Bank business segment's contribution to adjusted net income was $17.5 million in the third quarter of 2013, up $5.0 million or 40% from $12.5 million in the third quarter of 2012. The improvement essentially stems from the addition of the portion of AGF Trust's net income reported in B2B Bank's business segment, which totalled $7.6 million in the third quarter of 2013, which more than offset the effect of overall tighter net interest margins. Reported net income for the third quarter of 2013 was $6.0 million compared to $7.3 million a year ago.

Total revenue increased to $57.6 million in the third quarter of 2013 compared with $40.5 million in the third quarter of 2012. Net interest income increased by $16.1 million compared to last year, to $48.2 million in the third quarter of 2013, as higher loan and deposit volumes related to the acquisition of AGF Trust added $18.1 million to net interest income in the quarter and compensated for the margin compression mainly stemming from the reduced level of higher-margin investment loans. Other income increased by $1.0 million to $9.4 million in the third quarter of 2013, mostly as a result of higher B2B Bank Dealer Services-sourced income from investment accounts, combined with the addition of a $0.3 million contribution from AGF Trust.

As shown 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 $1.1 million in the third quarter of 2013, compared to a $1.2 million charge for the second quarter of 2013. Refer to Note 12 to the unaudited condensed interim financial statements for additional information on this item.

Loan losses increased from $0.6 million in the third quarter of 2012 to $2.5 million in the third quarter of 2013, mainly as a result of loan losses related to the AGF Trust loan portfolios which amounted to $0.9 million for the quarter. In addition, during the third quarter of 2013, the collective provisions on certain residential mortgage loan portfolios were adjusted in light of recent events in Alberta.

Non-interest expenses, as shown in the table above, increased by $8.2 million to $31.1 million in the third quarter of 2013, compared with $22.9 million in the third quarter of 2012. This increase includes current operating costs of $7.1 million related to AGF Trust. Otherwise, expenses increased by $1.1 million year-over-year, as increased salaries and performance-based compensation, as well as higher allocated costs, were partly offset by integration synergies. T&I Costs for the third quarter of 2013 totalled $14.6 million and related to IT systems conversions costs, employee relocation costs, salaries, professional fees and other expenses for the integration of AGF Trust and the MRS Companies.

Compared to the second quarter of 2013, adjusted net income increased by $2.3 million, mainly as a result of the three additional days in the quarter that impacted net interest income and more favourable loan losses.

For the nine months ended July 31, 2013, adjusted net income was $49.0 million, $15.1 million higher than the same period of 2012, essentially as a result of the $18.6 million operating contribution of AGF Trust which compensated for tighter margins and higher loan losses compared to last year. Reported net income for the nine months ended July 31, 2013 was $25.7 million, a 6% increase.

Laurentian Bank Securities & Capital Markets

FOR THE NINE MONTHS

FOR THE THREE MONTHS ENDED ENDED

In thousands APRIL 30 of Canadian dollars, 2013 except percentage JULY 31 JULY 31 JULY 31 JULY 31 amounts (Unaudited) 2013 2012 2013 2012

Total 16,967 $ $ 44,176 revenue $ 16,040 $ 13,256 $ 50,090

Non-interest expenses 13,055 12,959 11,668 39,488 36,358

Income before income taxes 2,985 4,008 1,588 10,602 7,818

Income taxes 698 1,033 412 2,659 1,988

Net income $ 2,287 $ 2,975 $ 1,176 $ 7,943 $ 5,830

Efficiency ratio ([1]) 81.4 % 76.4 % 88.0 % 78.8 % 82.3 %

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

Laurentian Bank Securities & Capital Markets business segment's contribution to net income increased to $2.3 million in the third quarter of 2013, compared to $1.2 million in the third quarter of 2012.

Total revenue was up 21% to $16.0 million in the third quarter of 2013 compared with $13.3 million for the same quarter of 2012. During the third quarter of 2013, the business segment benefited from improved market conditions for trading and retail brokerage activities compared to a year ago and capitalized on growth opportunities in the fixed income market. Non-interest expenses increased by $1.4 million to $13.1 million in the third quarter of 2013, mainly due to higher performance-based compensation, commissions and transaction fees, in-line with increased market-driven income.

For the nine months ended July 31, 2013, net income increased by $2.1 million or 36% compared to the same period last year. The business segment generated positive operating leverage during the period, mainly as a result of higher revenues from business initiatives and better financial markets compared to a year ago.

Other Sector

FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS

ENDED

In thousands JULY 31 APRIL 30 JULY 31 JULY 31 JULY 31 of Canadian dollars 2013 2013 2012 2013 2012 (Unaudited)

Net interest $ (3,523) $ (704) $ (5,134) $ (10,386) $ (8,121) income

Other income 1,980 876 301 5,446 3,106

Total (1,543) 172 (4,833) (4,940) (5,015) revenue

Non-interest 10,229 6,814 8,354 22,971 22,112 expenses

Loss before (11,772) (6,642) (13,187) (27,911) (27,127) income taxes

Income taxes (3,775) (2,908) (5,268) (9,833) (10,025) recovery

Net loss $ (7,997) $ (3,734) $ (7,919) $ (18,078) $ (17,102)

The Other sector posted a negative contribution to net income of $8.0 million in the third quarter of 2013 compared to a negative contribution of $7.9 million in the third quarter of 2012.

Net interest income improved to negative $3.5 million in the third quarter of 2013, compared to negative $5.1 million in the third quarter of 2012, mainly as a result of a lower level of liquid assets compared to a year ago. Other income for the third quarter of 2013 increased to $2.0 million, compared to $0.3 million for the third quarter of 2012, resulting from a particularly strong quarter in treasury activities and higher net security gains year-over-year.

Non-interest expenses were up to $10.2 million in the third quarter of 2013 compared to $8.4 million in 2012. The increase was largely due to higher amortization expense related to completed IT development projects, including a $1.6 million impairment charge related to discontinued IT projects, as well as higher rental costs stemming from additional square footage of leased premises for IT project teams. Regular salary increases as well as higher performance-based compensation also contributed to the increase.

On a sequential basis, net interest income declined by $2.8 million to negative $3.5 million from negative $0.7 million for the second quarter ended April 30, 2013, partly due to maturing higher yielding securities.

For the nine months ended July 31, 2013, the negative contribution to net income was $18.1 million, compared to negative $17.1 million for the nine months ended July 31, 2012, due to the decrease in net interest income mainly resulting from a high level of lower-yielding liquid assets early in the period, as well as a slight increase in non-interest expenses as explained above, partly offset by net favourable adjustments to sales taxes.

Additional Financial Information - Quarterly Results

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

2011

Net interest

income $ 144,549 $ 140,430 $ 142,344 $ 142,411 $ 129,664 $ 128,324 $ 130,629 $ 126,391

Other income 76,493 74,420 71,570 67,985 64,169 70,346 63,115 56,031

Total revenue 221,042 214,850 213,914 210,396 193,833 198,670 193,744 182,422

Gain on acquisition and amortization of net premium on purchased financial instruments (1,140) (1,224) (1,056) 23,795 — — — —

Provision for loan losses 9,000 9,000 8,000 8,000 7,500 7,500 10,000 12,999

Non-interest expenses 174,928 159,853 161,314 165,377 148,955 147,111 143,020 137,152

Income before income taxes 35,974 44,773 43,544 60,814 37,378 44,059 40,724 32,271

Income taxes 7,690 9,634 9,454 15,129 7,380 10,196 9,762 5,562

Net income $ 28,284 $ 35,139 $ 34,090 $ 45,685 $ 29,998 $ 33,863 $ 30,962 $ 26,709

Earnings per share

Basic $ 0.91 $ 1.10 $ 1.12 $ 1.51 $ 1.06 $ 1.22 $ 1.16 $

0.99

Diluted $ 0.91 $ 1.10 $ 1.12 $ 1.51 $ 1.06 $ 1.22 $ 1.16 $

0.99

Return on common shareholders' equity ([1]) 8.1 % 10.3 % 10.3 % 14.2 % 10.1 % 12.0 % 11.5 %

9.9 %

Balance sheet

assets(in millions of Canadian dollars) $ 33,759 $ 34,474 $ 34,249 $ 34,937 $ 31,416 $ 30,708 $ 29,921 $ 28,963

Adjusted measures

Adjusted net

income ([1]) $ 39,847 $ 40,547 $ 40,418 $ 36,186 $ 35,253 $ 36,302 $ 32,919 $ 33,375

Adjusted

diluted earnings per share ([1]) $ 1.31 $ 1.29 $ 1.34 $ 1.17 $ 1.27 $ 1.31 $ 1.24 $

1.26

Adjusted return on common shareholders' equity ([1]) 11.8 % 12.1 % 12.2 % 10.9 % 12.1 % 13.0 % 12.4 %

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 third 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 November 1, 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 July 31, 2013. AGF Trust constituted approximately 10% of total assets, 9% of total liabilities, 9% of total revenue and 20% of total net income as at and for the nine months ended July 31, 2013.

During the last quarter ended July 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 $37 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 in creating "Passion Capital" among its people. 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 2:00 p.m. Eastern Time on Friday, August 30, 2013. The live, listen-only, toll-free, call-in number is 416 340-2217 or 1 866 689-5910 Code 3739731#.

You can listen to the call on a delayed basis at any time from 6:00 p.m. on Friday, August 30, 2013 until 11:59 p.m. on September 30, 2013, by dialing the following playback number: 905 694-9451 or 1 800 408-3053 Code 9518824#. 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 July 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

In thousands of AS AT JULY 31 AS AT OCTOBER 31 AS AT JULY 31 Canadian dollars (Unaudited) 2013 2012 2012

ASSETS

Cash and $ 91,090 $ 90,860 $ 89,287 non-interest-bearing deposits with other banks

Interest-bearing 128,390 480,183 828,636 deposits with other banks

Securities

Available-for-sale 2,077,626 2,822,588 1,956,279

Held-to-maturity 609,236 1,446,751 979,170

Held-for-trading 2,218,222 1,873,622 2,243,361

4,905,084 6,142,961 5,178,810

Securities purchased 741,561 631,202 1,173,704 under reverse repurchase agreements

Loans

Personal 7,411,683 7,806,067 6,081,592

Residential mortgage 14,696,426 14,169,095 12,554,098

Commercial mortgage 2,444,977 2,443,634 2,473,833

Commercial and other 2,371,945 2,150,953 2,094,100

Customers' 263,708 211,130 232,044 liabilities under acceptances

27,188,739 26,780,879 23,435,667

Allowances for loan (114,090) (117,542) (132,639) losses


                          27,074,649         26,663,337      23,303,028

Other                                                                  

  Derivatives                102,556            167,643         179,275

  Premises and                71,054             71,871          68,890
  equipment

  Software and other         178,585            159,973         147,886
  intangible assets

  Goodwill                    64,077             64,077          64,077

  Deferred tax assets          7,238              4,751          12,938

  Other assets               394,223            459,968         368,981
                             817,733            928,283         842,047
                       $  33,758,507   $     34,936,826   $  31,415,512
                                                                       

LIABILITIES AND                                                        
SHAREHOLDERS' EQUITY

Deposits                                                               

  Personal             $  19,249,777   $     19,369,310   $  16,837,043

  Business, banks and      4,616,588          4,672,133       4,785,016
  other
                          23,866,365         24,041,443      21,622,059

Other                                                                  

  Obligations related      1,433,525          1,349,932       1,519,105
  to securities sold
  short

  Obligations related        383,886            244,039         417,962
  to securities sold
  under repurchase
  agreements

  Acceptances                263,708            211,130         232,044

  Derivatives                 87,040            100,867         114,924

  Deferred tax                 7,770             16,128           1,411
  liabilities

  Other liabilities          849,753            951,467         851,793
                           3,025,682          2,873,563       3,137,239

Debt related to            4,952,060          6,037,097       5,109,015
securitization
activities

Subordinated debt            444,962            443,594         243,869

Shareholders' equity                                                   

  Preferred shares           205,146            303,249         205,527

  Common shares              442,447            428,526         313,544

  Share-based payment             91                227             227
  reserve

  Retained earnings          819,371            774,899         745,703

  Accumulated other            2,383             34,228          38,329
  comprehensive income
                           1,469,438          1,541,129       1,303,330
                       $  33,758,507   $     34,936,826   $  31,415,512
    Consolidated Statement of Income
                                                       FOR THE NINE MONTHS
                      FOR THE THREE MONTHS ENDED                     ENDED

In thousands of                                        JULY 31  
Canadian
dollars, except                                           2013
per share          JULY 31    APRIL 30     JULY 31                 JULY 31
amounts
(Unaudited)           2013        2013        2012                    2012
                                                                          

Interest income                                                           

  Loans          $ 274,778   $ 264,704   $ 248,073   $ 816,352   $ 734,099

  Securities        13,053      16,178      16,802      46,359      54,070

  Deposits with                    499       2,304              
  other banks          314                               1,727       4,604

  Other,                        11,193      14,457              
  including
  derivatives       10,217                              34,863      44,711
                   298,362     292,574     281,636     899,301     837,484

Interest expense                                                          

  Deposits         115,561     112,525     108,394     349,509     320,720

  Debt related                  35,163      40,891              
  to
  securitization
  activities        33,950                             109,338     120,071

  Subordinated                   3,927       2,408              
  debt               4,033                              11,984       7,185

  Other,                           529         279              
  including
  derivatives          269                               1,147         891
                   153,813     152,144     151,972     471,978     448,867

Net interest                                                    
income             144,549     140,430     129,664     427,323     388,617

Other income                                                              

  Fees and                      31,724      31,522              
  commissions on
  loans and
  deposits          35,033                              98,087      89,690

  Income from                   14,523      12,517              
  brokerage
  operations        14,449                              45,494      40,420

  Income from                    7,894       7,190              
  investment
  accounts           8,249                              24,001      21,639

  Income from                    5,415       4,478              
  sales of
  mutual funds       5,848                              16,403      13,295

  Income from                    4,601       2,398              
  treasury and
  financial
  market
  operations         5,840                              15,782      12,968

  Credit                         4,415       3,682              
  insurance
  income             4,793                              12,603      11,114

  Other income       2,281       5,848       2,382      10,113       8,504
                    76,493      74,420      64,169     222,483     197,630

Total revenue      221,042     214,850     193,833     649,806     586,247

Gain on                                                         
acquisition and
amortization of
net premium on
purchased
financial
instruments        (1,140)     (1,224)     —     (3,420)     —

Provision for                                                   
loan losses          9,000       9,000       7,500      26,000      25,000

Non-interest                                                    
expenses                                                                  

  Salaries and                  85,200      77,177              
  employee
  benefits          87,680                             262,260     233,491

  Premises and                  42,626      38,644              
  technology        44,491                             125,998     113,808

  Other             28,157      25,891      25,977      79,544      78,620

  Costs related                  6,136       7,157              
  to business
  combinations
  and other         14,600                              28,293      13,167
                   174,928     159,853     148,955     496,095     439,086

Income before                                                   
income taxes        35,974      44,773      37,378     124,291     122,161

Income taxes         7,690       9,634       7,380      26,778      27,338

Net income       $  28,284   $  35,139   $  29,998   $  97,513   $  94,823

Preferred share                                                 
dividends,
including
applicable taxes     2,520       4,059       3,164       9,112       9,495

Net income                                                      
available to
common
shareholders     $  25,764   $  31,080   $  26,834   $  88,401   $  85,328

Average number                                                  
of common shares
outstanding (in
thousands)                                                                

  Basic             28,385      28,287      25,250      28,280      24,800

  Diluted           28,393      28,297      25,267      28,291      24,818

Earnings per                                                    
share                                                                     

  Basic          $    0.91   $    1.10   $    1.06   $    3.13   $    3.44

  Diluted        $    0.91   $    1.10   $    1.06   $    3.12   $    3.44

Dividends                                                       
declared per
share                                                                     

  Common share   $    0.50   $    0.49   $    0.47   $    1.48   $    1.37

  Preferred                  $           $    0.38   $    0.75   $    1.13
  share - Series
  9                   n.a.        0.38                          

  Preferred                                                     
  share - Series
  10             $    0.33   $    0.33   $    0.33   $    0.98   $    0.98

  Preferred                                          $    0.66
  share - Series
  11             $    0.25   $    0.25        n.a.                    n.a.
    Consolidated Statement of Comprehensive Income
                        FOR THE THREE MONTHS ENDED    FOR THE NINE MONTHS
                                                             ENDED

In thousands of       JULY 31   APRIL 30    JULY 31    JULY 31    JULY 31
Canadian dollars
(Unaudited)              2013       2013       2012       2013       2012

Net income           $ 28,284   $ 35,139   $ 29,998   $ 97,513   $ 94,823

Other comprehensive                                                      
income, net of
income taxes

Items that may                                                           
subsequently be
reclassified to the
statement of income

  Unrealized net      (5,277)      1,484    (2,714)    (2,677)    (7,948)
  gains (losses) on
  available-for-sale
  securities

  Reclassification      (685)      (427)      (334)    (2,570)    (1,543)
  of net (gains)
  losses on
  available-for-sale
  securities to net
  income

  Net change in      (21,484)      4,929     13,774   (26,598)   (17,770)
  value of
  derivatives
  designated as cash
  flow hedges
                     (27,446)      5,986     10,726   (31,845)   (27,261)

Comprehensive income $    838   $ 41,125   $ 40,724   $ 65,668   $ 67,562
    Consolidated Statement of Changes in Shareholders' Equity
                                                                            FOR THE NINE MONTHS ENDED JULY 31, 2013
                                                                        AOCI RESERVES                              
                                                                                               SHARE-         TOTAL

AVAILABLE- CASH BASED SHARE-In thousands of Canadian dollars PREFERRED COMMON RETAINED FOR-SALE FLOW PAYMENT 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 97,513 97,513

Other comprehensive income (net of income taxes)

Unrealized net gains (losses) on available-for-sale securities (2,677) (2,677) (2,677)

Reclassification of net (gains) losses on available-for-sale

securities to net income (2,570) (2,570) (2,570)

Net change in value of derivatives designated as cash flow hedges (26,598) (26,598) (26,598)

Comprehensive income 97,513 (5,247) (26,598) (31,845) 65,668

Issuance of share capital (218) 13,921 (136) 13,567

Repurchase of share capital (97,885) (2,115) (100,000)

Dividends

Preferred shares, including applicable taxes (9,112) (9,112)

Common shares (41,814) (41,814)

Balance as at $ $ $ $ $ July 31, 2013 $ 205,146 442,447 $ 819,371 6,954 $ (4,571) 2,383 91 1,469,438


                                                                                                                   
                                                                            FOR THE NINE MONTHS ENDED JULY 31, 2012
                                                                        AOCI RESERVES                              
                                                                                               SHARE-         TOTAL

AVAILABLE- CASH BASED SHARE-In thousands of Canadian dollars PREFERRED COMMON RETAINED 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 94,823 94,823

Other comprehensive income (net of income taxes)

Unrealized net gains (losses) on available-for-sale securities (7,948) (7,948) (7,948)

Reclassification of net (gains) losses on available-for-sale securities to net income (1,543) (1,543) (1,543)

Net change in value of derivatives designated as cash flow hedges (17,770) (17,770) (17,770)

Comprehensive income 94,823 (9,491) (17,770) (27,261) 67,562

Issuance of share capital 60,943 60,943

Dividends

Preferred shares, including applicable taxes (9,495) (9,495)

Common shares (33,996) (33,996)

Balance as at $ $ $ $ $ July 31, 2012 $ 205,527 313,544 $ 745,703 12,725 $ 25,604 38,329 227 1,303,330

SOURCE Laurentian Bank of Canada

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

To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2013/30/c7978.html

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

-0- Aug/30/2013 12:40 GMT

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