Laurentian Bank reports second quarter results

Highlights of the second quarter of 2014 


        --  Financial highlights on a reported and adjusted basis for the
            second quarter of 2014:
      o Net income of $31.0 million
      o Return on common shareholders' equity of 9.2%
      o Diluted earnings per share of $0.99
      o Adjusted net income of $39.4 million
      o Adjusted return on common shareholders' equity of 11.9%
      o Adjusted diluted earnings per share of $1.29
        --  Commercial loan portfolio up 18% year-over-year
        --  Strong credit performance, with loan losses at $10.5 million
        --  Positive adjusted operating leverage
        --  Non tax-deductible charge of $4.1 million, impacting reported
            net income, as a result of the final settlement with
            AGF Management Limited of the contingent consideration related
            to the AGF Trust acquisition
        --  Successful issuance of $125.0 million Basel III-compliant
            Preferred Shares Series 13
        --  Quarterly common share dividend raised by $0.01 to $0.52 per
            share

MONTREAL, June 4, 2014 /CNW Telbec/ - Laurentian Bank of Canada reported 
adjusted net income of $39.4 million or $1.29 diluted per share for the second 
quarter of 2014, compared with $39.2 million or $1.24 diluted per share for 
the same period in 2013. Adjusted return on common shareholders' equity was 
11.9% for the second quarter of 2014, compared with 12.2% for the same period 
in 2013. When including adjusting items(1), net income totalled $31.0 million 
or $0.99 diluted per share for the second quarter of 2014, compared with $33.8 
million or $1.05 diluted per share for the second quarter of 2013. Return on 
common shareholders' equity was 9.2% for the second quarter of 2014, compared 
with 10.4% for the same period in 2013.

For the six months ended April 30, 2014, adjusted net income totalled $78.6 
million or $2.57 diluted per share, compared with $78.4 million or $2.54 
diluted per share in 2013. Adjusted return on common shareholders' equity was 
11.8% for the six months ended April 30, 2014, compared with 12.4% for the 
same period in 2013. When including adjusting items, net income was $66.5 
million or $2.15 diluted per share for the six months ended April 30, 2014, 
compared with $66.6 million or $2.13 diluted per share for the same period in 
2013. Return on common shareholders' equity was 9.8% for the six months ended 
April 30, 2014, compared with 10.4% for the same period in 2013.

Commenting on the Bank's financial results for the second quarter of 2014, 
Réjean Robitaille, President and Chief Executive Officer, mentioned: "We 
delivered solid core earnings in the quarter, as we continued our targeted 
efforts to improve efficiency, maximize operating leverage, and deliver the 
synergies related to our acquired businesses. The sustained credit quality of 
the loan portfolio and rigorous control over expenses contributed to the good 
performance for the quarter. In an environment of consumer deleveraging and 
compressed margins, we maintain our focus on further developing our 
higher-margin commercial activities and growing income from non-interest 
sensitive sources in order to foster profitable revenue growth."

Mr. Robitaille added: "I am pleased with the issuance of $125.0 million of 
Basel III compliant preferred shares which, combined with the expected 
redemption of $110.0 million of Series 10 preferred shares, strengthens our 
capital structure and helps to sustain our growth strategies."

Mr. Robitaille concluded: "As we move forward, we remain committed to 
enhancing value for our shareholders and we are working diligently to generate 
sustained earnings growth in each of our business segments. I am therefore 
pleased to announce that the Board of Directors has approved an increase in 
our quarterly common share dividend of $0.01 to $0.52 per share"
    ________________________________
    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 "Risk Appetite and Risk Management Framework" 
and other public filings available at www.sedar.com.

With respect to the anticipated benefits from the acquisition AGF Trust 
Company(1) (AGF Trust) and the Bank's statements with regards to this 
transaction 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 AGF Trust's customers to 
the transaction; 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 AGF Trust was amalgamated with B2B Bank as of September 1, 2013.
    Highlights ([1] )
                                               FOR THE THREE MONTHS ENDED                      FOR THE SIX MONTHS ENDED
    In thousands of
    Canadian
    dollars, except
    per
    share and
    percentage
    amounts            APRIL 30    JANUARY 31                  APRIL 30                  APRIL 30      APRIL 30


(Unaudited)            2014          2014    VARIANCE          2013    VARIANCE          2014          2013    
VARIANCE 


                                                                                                                        
    
    Profitability                                                                                                       
    
      Total revenue $ 216,890     $ 216,109     — %   $ 214,850           1 %   $ 432,999     $ 428,764           1 %
      Net income    $  30,989     $  35,525        (13) %   $  33,839         (8) %   $  66,514     $  66,627     — %
      Diluted
      earnings per


  share         $    0.99     $    1.16        (15) %   $    1.05         (6) %   $    2.15     $    2.13           
1 % 


      Return on
      common
      shareholders'
      equity [2]          9.2 %        10.5 %                    10.4 %                     9.8 %        10.4 %         
    
      Net interest
      margin [2]         1.68 %        1.66 %                    1.68 %                    1.67 %        1.66 %         
    
      Efficiency
      ratio [2]          73.7 %        73.6 %                    75.2 %                    73.7 %        75.7 %         
    
      Operating
      leverage[2]
      [3]               (0.1) %         8.1 %                     1.3 %                     2.8 %         n. m.         
    
                                                                                                                        
    
    Per common
    share                                                                                                               
    
      Share price                                                                                                       
    
        High        $   47.54     $   47.96                 $   45.41                 $   47.96     $   45.97           
    
        Low         $   45.00     $   44.34                 $   42.57                 $   44.34     $   42.57           
    


    Close       $   47.08     $   45.73           3 %   $   44.21           6 %   $   47.08     $   44.21           
6 % 


      Price /
      earnings
      ratio
      (trailing
      four
      quarters) [4]      12.3 x        11.8 x                     n. m.                    12.3 x         n. m.         
    
      Book value


  [2]           $   44.61     $   44.03           1 %   $   41.75           7 %   $   44.61     $   41.75           
7 % 


      Market to
      book value          106 %         104 %                     106 %                     106 %         106 %         
    
      Dividends
      declared      $    0.51     $    0.51     — %   $    0.49           4 %   $    1.02     $    0.98           4 %
      Dividend
      yield [2]           4.3 %         4.5 %                     4.4 %                     4.3 %         4.4 %         
    
      Dividend
      payout ratio
      [2]                51.3 %        44.1 %                    46.5 %                    47.4 %        46.0 %         
    
                                                                                                                        
    
    Adjusted
    financial
    measures                                                                                                            
    
      Adjusted net
      income [2]    $  39,375     $  39,261     — %   $  39,247     — %   $  78,636     $  78,363     — %
      Adjusted
      diluted
      earnings per
      share [2]     $    1.29     $    1.29     — %   $    1.24           4 %   $    2.57     $    2.54           1 %
      Adjusted
      return on
      common
      shareholders'
      equity [2]         11.9 %        11.7 %                    12.2 %                    11.8 %        12.4 %         
    
      Adjusted
      efficiency
      ratio [2]          71.7 %        71.8 %                    72.4 %                    71.7 %        72.5 %         
    
      Adjusted
      operating
      leverage [2]
      [3]                 0.2 %         4.9 %                     0.5 %                     1.1 %         n. m.         
    
      Adjusted
      dividend
      payout ratio
      [2]                39.6 %        39.6 %                    39.3 %                    39.6 %        38.5 %         
    
                                                                                                                        
    
    Financial
    position (in
    millions of
    Canadian
    dollars)                                                                                                            
    
      Balance sheet
      assets        $  34,261     $  33,631           2 %   $  34,480         (1) %                                     
    
      Loans and
      acceptances   $  27,233     $  27,092           1 %   $  27,035           1 %                                     
    
      Deposits      $  23,759     $  23,804     — %   $  23,809     — %                                        
                                                                                                                        
    
    Basel III
    regulatory
    capital ratios
    — All-in
    basis [5]                                                                                                           
    
      Common Equity
      Tier I              7.6 %         7.6 %                     7.6 %                                                 
    
      Tier 1             10.0 %         9.1 %                     9.1 %                                                 
    
      Total              13.3 %        12.4 %                    12.6 %                                                 
    
                                                                                                                        
    
    Other
    information                                                                                                         
    
      Number of
      full-time
      equivalent
      employees         3,764         3,850                     4,254                                                   
    
      Number of
      branches            153           153                       154                                                   
    
      Number of
      automated
      banking
      machines            423           422                       423                                                   
    
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] Refer to the non-GAAP financial measures section. Effective
        November 1, 2013, the Bank has modified its definition of common
        shareholders' equity, which is now better aligned with regulatory
        requirements. Book value per common share and return on common
        shareholders' equity measures for the quarters ended in 2013 have
        been amended accordingly.
    [3] Quarterly growth rates are calculated sequentially. Operating
        leverage for the six months ended April 30, 2013 is not meaningful
        as 2012 results were not restated to reflect the adoption of
        amendments to IAS 19, Employee Benefits.
    [4] Price / earnings ratios for the three months and six months ended
        April 30, 2013 are not meaningful as 2012 results were not restated
        to reflect the adoption of amendments to IAS 19, Employee Benefits.
    [5] Regulatory capital ratios for 2013 are presented as filed with OSFI
        and have not been adjusted to include the impact of the adoption of
        amendments to IAS 19, Employee Benefits.
    Review of Business Highlights

Personal & Commercial — Business services generated strong growth during the 
quarter. In particular, the commercial loan portfolio grew 18% year-over-year, 
approaching the $3.0 billion mark. The strategy of specialization is 
contributing to these excellent results. Recently hired account managers are 
becoming increasingly productive and delivering added value to clients. With 
respect to leasing and equipment financing, solid teams, systems and processes 
are now in place. The offer is being well received in the market and a strong 
pipeline is being built. The Business Services segment continues to be well 
positioned as one of the Bank's engines of growth. — Retail activities are 
benefitting from ongoing investments to improve the Bank's website. Thanks to 
significant enhancements made to the platform, the number of LBCDirect users 
has increased by 30% over the past six months. The Bank is committed to 
enhancing its internet offering to ensure that client needs, expectations and 
preferences are met.

B2B Bank added two new mortgage programs to its offering for mortgage brokers 
and their clients towards the end of the quarter, presenting one of the most 
comprehensive product lines in the industry. Along with insured and 
conventional mortgages, B2B Bank offers alternative and expanded mortgage 
solutions designed for borrowers who, due to their employment status or credit 
history, may not qualify for insured or conventional mortgage loans. This is 
yet another step to strengthen B2B Bank's position as a leader in serving 
financial advisors and brokers in Canada. Furthermore, the Bank reached a 
final settlement with AGF Management of the contingent consideration related 
to the AGF Trust acquisition for $10.0 million.

Laurentian Bank Securities hosted its first Annual Equity Small Cap Conference 
in April. The event was very well received, with 35 corporate issuers 
presenting and almost 200 institutional investors from across Canada in 
attendance. This success underscores the expertise and reputation of the LBS 
Institutional Equity team and validates their strategic focus on the small cap 
market niche. This group is well positioned to further leverage their small 
cap capability.

Supporting all of the Bank's activities is a solid capital base. During the 
quarter, $125.0 million of preferred shares, Series 13, yielding 4.3% 
annually, was issued. Subsequent to quarter-end, it was announced that the 
$110.0 million preferred share issue, Series 10, yielding 5.3% annually, will 
be redeemed on June 15, 2014. The Bank's proactive approach to capital 
management ensures the optimization of capital and will contribute to lower 
overall funding costs.

The Bank released its Social Responsibility Report for fiscal 2013 in March 
2014. As a responsible corporate citizen, the Bank carefully considers all of 
its stakeholders in the development of strategies and implementation of 
business decisions. Paying  particular attention to its governance, whether it 
be the composition and diversity of the Board of Directors, managing 
relationships with its shareholders and financial markets, its human resource 
programs for officers and employees or its community involvement, the Bank 
ensures that its practices are effective and equitable for shareholders, 
customers, employees and partners alike.

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 April 
30, 2014, and of how it performed during the three-month and six-month periods 
then ended. This MD&A, dated June 4, 2014, should be read in conjunction with 
the unaudited condensed interim consolidated financial statements for the 
period ended April 30, 2014, 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 2013 Annual Report.

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

Adoption of the amended IFRS accounting standard on employee benefits

Effective November 1, 2013, the Bank adopted the amendments to the employee 
benefits standard under International Financial Reporting Standards (IFRS), 
which required restatement of the Bank's 2013 comparative information and 
financial measures. Additional information on the impact of the adoption is 
available in the notes to the unaudited condensed interim consolidated 
financial statements and in the Supplementary Information reported for the 
second quarter of 2014.

Economic Outlook

North American economic growth resumed this spring. Prospects, particularly in 
the United States, are bright as US companies, consumers, workers and 
governments are all showing more confidence. Accordingly, the Federal Reserve 
has continued to reduce its stimulus asset purchase program and has begun to 
shift its focus on the near zero policy rate. However, as inflation remains 
low, interest rates are expected to increase only in the second half of 2015.

In Canada, the goods sector is better positioned to benefit from improving US 
demand and a lower currency. The services sector growth, driven to a larger 
extent by domestic demand, should however remain more modest. All-in, economic 
activity should continue to advance at a modest pace, around 2 %, for the 
remainder of 2014. Furthermore, inflation is expected to rise only moderately 
from its early 2014 trough. This should provide the Bank of Canada with the 
needed flexibility to postpone any increase to its rate policy until the end 
of 2015 at the earliest  and, in any case, not before a Federal Reserve 
increase. The ensuing moderate increase in interest rates should not exert 
undue pressure on households and housing affordability and favour a soft 
landing in the Canadian housing sector.

2014 Financial Performance

The following table presents management's financial objectives for 2014 and 
the Bank's performance to date. These financial objectives are based on the 
assumptions noted on page 21 of the Bank's 2013 Annual Report under the title 
"Key assumptions supporting the Bank's objectives" and exclude adjusting 
items(1).
    2014 FINANCIAL OBJECTIVES                                              
    [1]
                                                 FOR THE SIX MONTHS ENDED
                               2014 OBJECTIVES             APRIL 30, 2014  
                                                                           
    Adjusted return on common
    shareholders' equity        10.5% to 12.5%                       11.8 %
    Adjusted net income (in
    millions of dollars)      $145.0 to $165.0                      $78.6  
    Adjusted efficiency ratio   72.5% to 69.5%                       71.7 %
    Adjusted operating
    leverage[2]                       Positive                        1.1 %
    Common Equity Tier I
    capital ratio —
    All-in basis                        > 7.0%                        7.6 %
    [1] Refer to the non-GAAP financial measures section.
    [2] For the purpose of calculating 2014 financial objectives,
        year-to-date growth rates are calculated year-over-year
        (i.e. current period versus the corresponding prior year period).


Based on the results for the six months ended April 30, 2014 and current 
forecasts, management believes that the Bank is in line to meet its objectives 
as set out at the beginning of the year. Good organic growth in the 
higher-margin commercial businesses, strategies to diversify other income, a 
disciplined management of expenses and strong credit quality are expected to 
remain the key drivers of the Bank's overall financial performance for the 
year. 


    _______________________________
    1 Refer to Adjusting items and Non-GAAP financial measures sections for
      further details.
    Analysis of Consolidated Results
    CONDENSED
    CONSOLIDATED
    RESULTS [1]                                                                      
                           FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
    In thousands
    of Canadian
    dollars,
    except per
    share amounts    APRIL 30    JANUARY 31      APRIL 30      APRIL 30      APRIL 30
    (Unaudited)          2014          2014          2013          2014          2013
                                                                                     
    Net interest                                                                     
    income        $ 138,726     $ 140,856     $ 140,430     $ 279,582     $ 282,774
    Other income     78,164        75,253        74,420       153,417       145,990  
    Total revenue   216,890       216,109       214,850       432,999       428,764  
    Amortization
    of net
    premium on
    purchased
    financial
    instruments
    and
    revaluation
    of contingent
    consideration     5,498         1,136         1,224         6,634         2,280  
    Provision for
    loan losses      10,500        10,500         9,000        21,000        17,000  
    Non-interest
    expenses        159,904       159,133       161,630       319,037       324,723  
    Income before
    income taxes     40,988        45,340        42,996        86,328        84,761  
    Income taxes      9,999         9,815         9,157        19,814        18,134  
    Net income    $  30,989     $  35,525     $  33,839     $  66,514     $  66,627  
    Preferred
    share
    dividends,
    including
    applicable
    taxes             2,501         2,501         4,059     $   5,002     $   6,592  
    Net income                                                                       
    available to
    common
    shareholders  $  28,488     $  33,024     $  29,780     $  61,512     $  60,035
                                                                                     
    Diluted                                                                          
    earnings per
    share         $    0.99     $    1.16     $    1.05     $    2.15     $    2.13
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    Adjusting items

The Bank has designated certain amounts as adjusting items and presents 
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 
hereafter.
    IMPACT OF
    ADJUSTING ITEMS
    [1] [2]                                                                       
                                                              FOR THE SIX MONTHS
                           FOR THE THREE MONTHS ENDED                ENDED
    In thousands of
    Canadian
    dollars, except
    per share
    amounts           APRIL 30   JANUARY 31     APRIL 30     APRIL 30     APRIL 30
    (Unaudited)           2014         2014         2013         2014         2013
                                                                                  
    Impact on net
    income                                                                        
    Reported net                                                                  
    income          $ 30,989     $ 35,525     $ 33,839     $ 66,514     $ 66,627
    Adjusting
    items, net of
    income taxes                                                                  
    Amortization of
    net premium on
    purchased
    financial
    instruments and
    revaluation of
    contingent
    consideration                                                                 
      Amortization
      of net
      premium on
      purchased
      financial
      instruments      1,026          836          902        1,862        1,680  
      Revaluation
      of contingent
      consideration    4,100      —      —        4,100      —  
    Costs related
    to business
    combinations
    [3]                                                                           
      MRS Companies
      integration
      related costs  —          474        1,332          474        5,650  
      AGF Trust
      integration
      related costs    3,260        2,426        3,174        5,686        4,406  
                       8,386        3,736        5,408       12,122       11,736  
    Adjusted net                                                                  
    income          $ 39,375     $ 39,261     $ 39,247     $ 78,636     $ 78,363
                                                                                  
    Impact on
    diluted
    earnings per
    share                                                                         
    Reported                                                                      
    diluted
    earnings per
    share           $   0.99     $   1.16     $   1.05     $   2.15     $   2.13
    Adjusting items     0.29         0.13         0.19         0.42         0.42  
    Adjusted                                                                      
    diluted
    earnings per
    share [4]       $   1.29     $   1.29     $   1.24     $   2.57     $   2.54
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] Refer to the Non-GAAP Financial Measures section.
    [3] Also referred to as Transaction and Integration Costs (T&I Costs).
    [4] The impact of adjusting items on a per share basis does not add due
        to rounding for the three months ended April 30, 2014 and six
        months ended April 30, 2013.


Three months ended April 30, 2014 compared with the three months ended April 
30, 2013 
Net income was $31.0 million or $0.99 diluted per share for the second quarter 
of 2014, compared with $33.8 million or $1.05 diluted per share for the second 
quarter of 2013. 
Adjusted net income was $39.4 million for the second quarter ended April 30, 
2014, up marginally from $39.2 million for the same quarter of 2013, while 
adjusted diluted earnings per share was $1.29, compared with $1.24 diluted per 
share in 2013. The calculation of diluted earnings per share in the second 
quarter of 2013 included a final $1.5 million dividend on the Series 9 
preferred shares redeemed in March 2013. 
Total revenue 
Total revenue increased by $2.0 million or 1% to $216.9 million in the second 
quarter of 2014, compared with $214.9 million in the second quarter of 2013, 
as 5% year-over-year growth in other income was partly offset by slightly 
lower net interest income. 
Net interest income decreased by $1.7 million to $138.7 million for the second 
quarter of 2014, from $140.4 million in the second quarter of 2013. In the 
second quarter of 2014, the revenue impact of a lower level of personal loans 
was partially offset by interest recoveries resulting from favourable 
settlements in the commercial loan portfolio. Overall, margins were unchanged 
at 1.68% in the quarter, as the unfavourable repricing of maturing loans and 
deposits in the very low interest rate environment over the last twelve months 
was offset by the higher interest recoveries mentioned above and a better 
asset mix. 
Other income increased by $3.7 million or 5% and amounted to $78.2 million in 
the second quarter of 2014, compared with $74.4 million in the second quarter 
of 2013. Higher income from brokerage operations, particularly in the 
small-cap equity markets, as well as continued solid mutual fund commissions 
mainly contributed to the year-over-year increase. These strong results were 
partly offset by lower income from treasury and financial market operations, 
mainly due to lower income from trading activities. Furthermore, consistent 
with its syndication strategy, the Bank completed the sale of $102.4 million 
of commercial mortgage loans during the second quarter of 2014. This led to 
the recognition of a $3.7 million gain in other income, including $1.2 million 
reported in the Personal & Commercial business segment results and $2.5 
million in the Other sector. In a similar transaction, a $3.7 million gain on 
sale of a $94.7 million commercial mortgage loan portfolio had been recorded 
during the second quarter of 2013. 
Amortization of net premium on purchased financial instruments and revaluation 
of contingent consideration 
For the second quarter of 2014, the line-item "Amortization of net premium on 
purchased financial instruments and revaluation of contingent consideration" 
amounted to $5.5 million, compared with $1.2 million in the second quarter of 
2013. Results for the second quarter of 2014 include an additional $4.1 
million non tax-deductible charge to reflect the impact of an agreement 
reached on May 30, 2014 with AGF Management Limited to settle the $20.0 
million maximum contingent consideration, which was based on the credit 
performance of the acquired AGF Trust loan portfolio, for a lower total amount 
of $10.0 million. This amount will represent the final payment for the 
purchase of AGF Trust. The amortization of net premium on purchased financial 
instruments amounted to $1.4 million in the second quarter of 2014, 
essentially unchanged from the second quarter of 2013. Refer to Note 13 to the 
unaudited condensed interim consolidated financial statements. 
Provision for loan losses 
The provision for loan losses increased by $1.5 million to $10.5 million in 
the second quarter of 2014 from $9.0 million in the second quarter of 2013 as 
the Bank maintained its prudent approach to loan loss provisioning. 
Nonetheless, loan losses remained at a low level reflecting the overall 
underlying quality of the loan portfolios. Refer to the Risk Management 
section for additional information. 
Non-interest expenses 
Non-interest expenses decreased by $1.7 million to $159.9 million for the 
second quarter of 2014, compared with $161.6 million for the second quarter of 
2013, mainly reflecting lower T&I Costs. The Bank's other non-interest 
expenses were held unchanged through tight cost control, acquisition synergies 
and process reviews. 
Salaries and employee benefits decreased by $2.6 million or 3% to $84.4 
million for the second quarter of 2014, compared with the second quarter of 
2013, mainly due to lower headcount from acquisition synergies over the last 
twelve months and the optimization of certain activities in the fourth quarter 
of 2013. Regular salary increases, higher performance-based compensation and 
slightly higher expenses related to group insurance programs partly offset 
this decrease year-over-year. 
Premises and technology costs increased by $3.0 million to $45.6 million 
compared with the second quarter of 2013. The increase mostly stems from 
higher IT costs related to ongoing business growth, regulatory requirements 
and enhanced on-line services. Higher amortization expenses related to 
completed regulatory IT projects and rental costs for IT development teams 
also contributed to the increase. 
Other non-interest expenses decreased by $0.5 million to $25.4 million for the 
second quarter of 2014, compared with the second quarter of 2013. The decrease 
mainly reflects cost synergies in B2B Bank as well as the continued 
disciplined control over discretionary expenses throughout the Bank in light 
of a slower growth environment. 
T&I Costs for the second quarter of 2014 totalled $4.4 million compared with 
$6.1 million a year ago, and mainly related to IT systems conversion costs, 
salaries, professional fees and other expenses as integration activities of 
AGF Trust operations are winding down. 
The adjusted efficiency ratio was 71.7% in the second quarter of 2014, 
compared with 72.4% in the second quarter of 2013, mainly due to higher other 
income, integration synergies, continued rigorous cost control and efforts to 
streamline operations. The Bank continues to invest in strategic initiatives 
to ensure growth and efficiency in each of its business segments. 
Income taxes 
For the quarter ended April 30, 2014, the income tax expense was $10.0 million 
and the effective tax rate was 24.4%. 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 April 30, 2013, the income tax expense was $9.2 million 
and the effective tax rate was 21.3%. Year-over-year, the higher effective tax 
rate for the quarter ended April 30, 2014 resulted from a $4.1 million non 
tax-deductible charge recorded as a result of the final settlement of the 
contingent consideration related to the AGF Trust acquisition. On an adjusted 
basis, the effective tax rate was 22.7% for the second quarter of 2014 
compared with 22.1% for the second quarter of 2013. 
Six months ended April 30, 2014 compared with the six months ended April 30, 
2013 
Net income was $66.5 million or $2.15 diluted per share for the six months 
ended April 30, 2014, compared with $66.6 million or $2.13 diluted per share 
for the six months ended April 30, 2013. Adjusted net income was $78.6 million 
for the six months ended April 30, 2014, essentially unchanged compared with 
$78.4 million in 2013, while adjusted diluted earnings per share was $2.57, 
compared with $2.54 diluted per share in 2013. 
Total revenue 
Total revenue increased by $4.2 million or 1% to $433.0 million in the six 
months ended April 30, 2014, compared with $428.8 million in the six months 
ended April 30, 2013. The year-over-year growth of 5% in other income was 
partly offset by lower net interest income. 
Net interest income decreased by $3.2 million to $279.6 million for the six 
months ended April 30, 2014, from $282.8 million in the six months ended April 
30, 2013, mainly reflecting a reduced level of personal loans and lower 
prepayment penalties on residential mortgage loans, partly offset by improved 
margins. When compared with the six months ended April 30, 2013, margins 
increased by 1 basis point to 1.67% for the six months ended April 30, 2014. 
Other income increased by $7.4 million or 5% and amounted to $153.4 million in 
the six months ended April 30, 2014, compared with $146.0 million in the six 
months ended April 30, 2013. Higher lending fees stemming from increased 
business activity and loan prepayment penalties in the commercial portfolios 
amounting to $1.8 million in the first quarter of 2014 contributed to the 
year-over-year increase. Solid mutual funds commissions as well as higher 
insurance income and income from brokerage operations also contributed to the 
year-over-year increase. These strong improvements were partly offset by lower 
income from treasury and financial market operations mainly due to trading 
activities in the six months ended April 30, 2014. In addition, as noted 
above, the Bank recognized a $3.7 million gain on sale of a commercial 
mortgage portfolio during the second quarter of 2014, compared to a similar 
$3.7 million gain in the second quarter of 2013. 
Amortization of net premium on purchased financial instruments and revaluation 
of contingent consideration 
For the six months ended April 30, 2014, the line item "Amortization of net 
premium on purchased financial instruments and revaluation of contingent 
consideration" amounted to $6.6 million, compared with $2.3 million in the six 
months ended April 30, 2013. As noted above, an additional $4.1 million non 
tax-deductible charge was recorded in the second quarter of 2014 as a result 
of the final settlement of the contingent consideration for an amount of $10.0 
million related to the AGF Trust acquisition. The amortization of net premium 
on purchased financial instruments amounted to $2.5 million in the six months 
ended April 30, 2014, essentially unchanged compared with the six months ended 
April 30, 2013. Refer to Note 13 to the unaudited condensed interim 
consolidated financial statements. 
Provision for loan losses 
The provision for loan losses increased by $4.0 million to $21.0 million in 
the six months ended April 30, 2014 from $17.0 million in the six months ended 
April 30, 2013. While still comparatively low, this reflects a return to more 
normalized overall loan losses from the 2013 levels. Refer to the Risk 
Management section for additional information. 
Non-interest expenses 
Non-interest expenses decreased by $5.7 million to $319.0 million for the six 
months ended April 30, 2014, compared with $324.7 million for the six months 
ended April 30, 2013. This mainly reflects lower T&I Costs while the Bank's 
other non-interest expenses were held unchanged through tight cost control and 
process reviews. 
Salaries and employee benefits decreased by $8.2 million or 5% to $169.9 
million for the six months ended April 30, 2014, compared with the six months 
ended April 30, 2013, mainly due to lower headcount from acquisition synergies 
over the last twelve months and the optimization of certain activities in the 
fourth quarter of 2013, partly offset by regular salary increases. Lower 
pension costs and lower performance-based compensation expense also 
contributed to the decrease year-over-year. 
Premises and technology costs increased by $10.1 million to $91.6 million 
compared with the six months ended April 30, 2013. As noted above, the 
increase mostly stems from higher IT costs related to ongoing business growth, 
regulatory requirements and enhanced on-line services. Higher amortization 
expenses related to completed regulatory IT projects and rental costs also 
contributed to the increase. 
Other non-interest expenses decreased by $2.3 million to $49.1 million for the 
six months ended April 30, 2014, from $51.4 million for the six months ended 
April 30, 2013. As cost synergies are being realized, the Bank continued to 
exercise disciplined control over discretionary expenses in light of a slower 
growth environment. 
T&I Costs for the six months ended April 30, 2014 totalled $8.4 million 
compared with $13.7 million a year ago. They mainly related to IT systems 
conversion costs, salaries, professional fees, employee relocation costs and 
other expenses mostly for the integration of AGF Trust operations. 
The adjusted efficiency ratio was 71.7% in the six months ended April 30, 
2014, compared with 72.5% in the six months ended April 30, 2013. On the same 
basis, the Bank generated positive operating leverage of 1.1% year-over-year, 
mainly due to higher other income, integration synergies, continued rigorous 
cost control and efforts to streamline its operations. 
Income taxes 
For the six months ended April 30, 2014, the reported income tax expense was 
$19.8 million and the effective reported tax rate was 23.0%. 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 six months ended April 30, 2013, the income tax 
expense was $18.1 million and the effective tax rate was 21.4%. 
Year-over-year, the higher income tax rate for the six months ended April 30, 
2014 resulted from a $4.1 million non tax-deductible charge recorded in the 
second quarter of 2014 as a result of the final settlement of the contingent 
consideration related to the AGF Trust acquisition. On an adjusted basis, the 
effective tax rate was 22.4% for the six months ended April 30, 2014 compared 
with 22.2% for the same period in 2013. 
Three months ended April 30, 2014 compared with the three months ended January 
31, 2014 
Net income was $31.0 million or $0.99 diluted per share for the second quarter 
of 2014 compared with $35.5 million or $1.16 diluted per share for the first 
quarter of 2014. Adjusted net income was $39.4 million or $1.29 diluted per 
share, compared with $39.3 million or $1.29 diluted per share for the first 
quarter of 2014. 
Total revenue increased to $216.9 million in the second quarter of 2014, 
compared with $216.1 million in the previous quarter. Net interest income 
decreased by $2.1 million sequentially to $138.7 million in the second quarter 
of 2014, mainly due to three less days in the second quarter. Net interest 
income for the second quarter also included interest recoveries resulting from 
favourable settlements in the commercial loan portfolio. Net interest margin 
increased sequentially by 2 basis points to 1.68% in the second quarter of 
2014, compared with 1.66% in the first quarter of 2014. This increase mainly 
resulted from interest recoveries, which more than compensated for modest loan 
and deposit margin tightening. 
Other income increased by $2.9 million sequentially, largely due to a $3.7 
million gain on sale of a $102.4 million commercial mortgage loan portfolio 
during the second quarter, as well as higher income from brokerage operations, 
partly offset by lower income from treasury and financial market operations. 
Other income for the first quarter of 2014 also included loan prepayment 
penalties in the commercial portfolios amounting to $1.8 million. 
The line-item "Amortization of net premium on purchased financial instruments 
and revaluation of contingent consideration" amounted to $5.5 million in the 
second quarter of 2014, compared with $1.1 million for the last quarter mainly 
due to the final $4.1 million contingent consideration charge noted above. 
Refer to Note 13 to the unaudited condensed interim consolidated financial 
statements for additional information. 
The provision for loan losses remained low at $10.5 million for the second 
quarter of 2014, unchanged from the first quarter of 2014, reflecting the 
continued high quality of the portfolio. Refer to the Risk Management section 
for additional information. 
Non-interest expenses amounted to $159.9 million for the second quarter of 
2014, compared with $159.1 million for the first quarter of 2014. T&I Costs 
increased to $4.4 million in the second quarter of 2014, compared with $3.9 
million in the first quarter of 2014. Excluding T&I Costs, non-interest 
expenses were unchanged sequentially, mainly due to three less days in the 
second quarter which was partly offset by a full quarter of regular salary 
increases, as the Bank continued to carefully control costs. 
Financial condition 


    CONDENSED BALANCE
    SHEET [1]                                                              
    In thousands of
    Canadian dollars     AS AT APRIL 30   AS AT OCTOBER 31   AS AT APRIL 30
    (Unaudited)                    2014               2013             2013
                                                                           
    ASSETS                                                                 
      Cash and deposits
      with other banks   $    215,508     $    208,838       $    317,013  
      Securities            4,532,598        4,480,525          5,756,762  
      Securities
      purchased under
      reverse repurchase
      agreements            1,582,181        1,218,255            545,974  
      Loans and
      acceptances, net     27,110,647       27,113,107         26,920,674  
      Other assets            820,062          890,301            939,178  
                         $ 34,260,996     $ 33,911,026       $ 34,479,601  
                                                                           
    LIABILITIES AND
    SHAREHOLDERS' EQUITY                                                   
      Deposits           $ 23,758,753     $ 23,927,350       $ 23,808,825  
      Other liabilities     3,557,742        3,129,918          3,347,240  
      Debt related to
      securitization
      activities            4,896,007        4,974,714          5,473,470  
      Subordinated debt       446,485          445,473            444,469  
      Liability related
      to preferred
      shares                  120,946          —            —  
      Shareholders'
      equity                1,481,063        1,433,571          1,405,597  
                         $ 34,260,996     $ 33,911,026       $ 34,479,601  
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.


Balance sheet assets amounted to $34.3 billion at April 30, 2014, up $0.3 
billion or 1% from year-end 2013. Over the last twelve months, balance sheet 
assets decreased by $0.2 billion. 
Liquid assets 
Liquid assets, including cash, deposits with other banks, securities and 
securities purchased under reverse repurchase agreements, totalled $6.3 
billion as at April 30, 2014, an increase of $422.7 million or 7% compared 
with October 31, 2013. This higher level supports loan growth, particularly in 
the commercial loan portfolios, while maintaining diverse funding sources. 
Liquid assets as a percentage of total assets remained relatively unchanged at 
18% compared with October 31, 2013. The Bank continues to prudently manage the 
level of liquid assets and to hold 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 allowances, stood at $27.1 billion as 
at April 30, 2014, unchanged compared with October 31, 2013. On a gross basis, 
continued organic growth in the higher-margin commercial loan portfolios more 
than offset the decrease in the personal loan and residential mortgage loan 
portfolios. Commercial loans, including bankers' acceptances, increased by 
$192.9 million or 7% since October 31, 2013, and commercial mortgage loans 
increased by $47.1 million or 2% over the same period as the Bank maintained 
its efforts to develop these growth engines. The sale of $102.4 million 
commercial mortgage loans during the second quarter of 2014 partially muted 
the growth in the underlying portfolio. Personal loans decreased by $166.1 
million or 2% since October 31, 2013, mainly reflecting attrition in the 
investment loan portfolio. Residential mortgage loans decreased marginally by 
$69.8 million from October 31, 2013, mainly due to the combined effect of a 
slower growth environment in 2014 and the B2B Bank business segment's current 
focus on integration to build the foundation for future growth. 
Deposits 
Personal deposits stood at $19.2 billion as at April 30, 2014, relatively 
unchanged from October 31, 2013. Business and other deposits, which include 
institutional deposits decreased slightly by $0.1 billion or 1% since October 
31, 2013 to $4.6 billion as at April 30, 2014. This is in line with the modest 
growth in the Bank's loan portfolio during the six-month period. Moreover, the 
Bank continues to focus on personal deposit gathering and maintaining this 
solid retail funding base. Personal deposits represented 81% of total deposits 
as at April 30, 2014, unchanged from year-end 2013. 
Other Liabilities 
Debt related to securitization activities and subordinated debt remained 
essentially unchanged compared with October 31, 2013 and stood at $4.9 billion 
and $0.4 billion respectively as at April 30, 2014. 
On April 3, 2014, the Bank issued 5,000,000 Basel III-compliant Non-Cumulative 
Class A Preferred Shares, Series 13 (the "Preferred Shares Series 13"), at a 
price of $25.00 per share for gross proceeds of $125.0 million, $120.9 million 
net of issuance costs of $4.1 million, and yielding 4.3% annually. The 
Preferred Shares Series 13 are recorded as liabilities as the Bank may be 
required to convert any or all of the preferred shares into a variable number 
of common shares upon the occurrence of a non-viability trigger event. When 
declared, dividends on these preferred shares will be recorded in equity 
directly through retained earnings. Refer to Note 7 to the unaudited condensed 
interim consolidated financial statements for additional information. 
Shareholders' equity 
Shareholders' equity stood at $1,481.1 million as at April 30, 2014, compared 
with $1,433.6 million as at October 31, 2013. This increase resulted mainly 
from the net income contribution for the first six months, net of declared 
dividends. In addition, the issuance of 210,733 new common shares under the 
Shareholder Dividend Reinvestment and Share Purchase Plan further contributed 
to the increase in shareholders' equity. The Bank's book value per common 
share(1 )appreciated to $44.61 as at April 30, 2014 from $43.19 as at October 
31, 2013. There were 28,743,230 common shares and 20,000 share purchase 
options outstanding as at May 29, 2014. 
Capital Management 
Regulatory capital 
The regulatory capital calculation is determined based on the guidelines 
issued by the Office of the Superintendent of Financial Institutions Canada 
(OSFI) originating from the Basel Committee on Banking Supervision (BCBS) 
regulatory risk based capital framework, "Basel III: A global regulatory 
framework for more resilient banks and banking systems". Under OSFI's Capital 
Adequacy Requirements Guideline (the CAR Guideline), transitional requirements 
for minimum Common Equity Tier 1, Tier 1 and Total capital ratios were set at 
4.0%, 5.5% and 8.0% respectively for 2014, which, for the Bank, will be fully 
phased-in to 7.0%, 8.5% and 10.5% by 2019, including the effect of capital 
conservation buffers. 
In its CAR 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). The "all-in" basis includes all of the 
regulatory adjustments that will be required by 2019, while retaining the 
phase-out rules of non-qualifying capital instruments. Refer to page 39 of the 
Bank's 2013 Annual Report under the title "Capital Management" for additional 
information on the Bank's implementation of Basel III. 
In August 2013, OSFI issued a guideline clarifying the application of the 
Credit Valuation Adjustment (CVA). The CVA capital charge took effect as of 
January 1, 2014 and will be phased-in over a five-year period beginning in 
2014. This had no significant impact on the regulatory capital ratios for the 
Bank. 
As detailed in the table below, on an "all-in" basis, the Common Equity Tier 
1, Tier 1 and Total capital ratios stood at 7.6%, 10.0% and 13.3%, 
respectively, as at April 30, 2014. These ratios meet all current requirements. 


    ________________________________
    1   Effective November 1, 2013, the Bank has modified its definition of
        common shareholders' equity, which is now better aligned with
        regulatory requirements. Book value per common share and return on
        common shareholders' equity measures for the quarters ended in 2013
        have been amended accordingly. Refer to the Non-GAAP financial
        measures section for further information.
       REGULATORY CAPITAL
    [1]                                                                    
    In thousands of
    Canadian dollars,
    except percentage    AS AT APRIL 30   AS AT OCTOBER 31   AS AT APRIL 30
    amounts (Unaudited)            2014               2013             2013
                                                                           
    Regulatory capital                                                     
      Common Equity Tier
      1 capital (A)      $  1,030,263     $  1,017,659       $  1,018,515  
      Tier 1 capital (B) $  1,356,413     $  1,222,863       $  1,223,661  
      Total capital (C)  $  1,811,191     $  1,694,167       $  1,698,448  
                                                                           
    Total risk-weighted
    assets (D) [2]       $ 13,576,578     $ 13,379,834       $ 13,428,594  
                                                                           
    Regulatory capital
    ratios                                                                 
      Common Equity Tier
      1 capital ratio
      (A/D)                       7.6 %            7.6   %            7.6 %
      Tier 1 capital
      ratio (B/D)                10.0 %            9.1   %            9.1 %
      Total capital
      ratio (C/D)                13.3 %           12.7   %           12.6 %
    [1] The amounts are presented on an "all-in" basis. Regulatory capital
        for 2013 is presented as filed with OSFI and has not been adjusted
        to include the impact of the adoption of amendments to IAS 19,
        Employee Benefits.
    [2] Using the Standardized Approach in determining credit risk capital
        and to account for operational risk.


The Common Equity Tier 1 capital ratio held stable at 7.6% as at April 30, 
2014, unchanged compared with October 31, 2013. As mentioned previously, 
effective November 1, 2013, the Bank adopted an amended version of IAS 19, 
Employee Benefits which reduced the Common Equity Tier 1 capital ratio by 
approximately 0.2%. This impact was essentially offset by internal capital 
generation during the six months ended April 30, 2014, including actuarial net 
losses on employee benefit plans, and re-invested dividends, which overall 
increased total equity, while risk-weighted assets only increased marginally. 
On April 3, 2014, the Bank issued 5,000,000 Preferred Shares, Series 13 for 
net proceeds of $120.9 million. These preferred shares fully qualify as 
Additional Tier 1 capital under the Basel III capital adequacy framework and 
the CAR Guideline as they include mandatory non-viability contingency capital 
provisions. These preferred shares are classified as liabilities on the 
balance sheet. 
On May 5, 2014, the Bank announced that it will redeem, on June 15, 2014, all 
of its 4,400,000 outstanding Non-Cumulative Class A Preferred Shares Series 
10. Such preferred shares will be redeemed at a redemption price of $25.00 per 
share, together with the final declared dividends. 
Basel leverage ratio requirement 
The Basel III capital reforms introduced a non-risk based leverage ratio 
requirement to act as a supplementary measure to the risk-based capital 
requirements. The leverage ratio is currently defined as the Tier 1 capital 
divided by on-balance sheet assets and off-balance sheet commitments, 
derivatives and securities financing transactions, as defined within the 
requirements. It differs from OSFI's current Asset to Capital Multiple (ACM) 
requirement in that it includes more off-balance-sheet exposures and a 
narrower definition of capital (Tier 1 Capital instead of Total Capital). 
In January 2014, the BCBS issued the full text of Basel III leverage ratio 
framework and disclosure requirements following endorsement by its governing 
body. OSFI indicated that it will replace the ACM with the new Basel III 
leverage test as of January 1, 2015 and is expected to issue a new leverage 
guideline later this year. Federally regulated deposit-taking institutions 
will be expected to have Basel III leverage ratios that exceed 3%. 
Dividends 
On May 21, 2014, the Board of Directors declared the regular dividend on the 
Preferred Shares  Series 11, the final dividend on the Preferred Shares Series 
10, as well as the initial dividend on the Preferred Shares Series 13, to 
shareholders of record on June 6, 2014. Concurrent impact of these dividends 
will be recorded in the third quarter of 2014. At its meeting on June 4, 2014, 
given the Bank's solid results, solid balance sheet and capital position, the 
Board of Directors approved an increase of $0.01 per share, or 2%, to the 
quarterly dividend and declared a dividend of $0.52 per common share, payable 
on August 1, 2014, to shareholders of record on July 2, 2014. 


    COMMON SHARE DIVIDENDS AND
    PAYOUT RATIO [1]                                                                      
                                                 FOR THE                                  
                                                   SIX
                                                  MONTHS
                   FOR THE THREE MONTHS ENDED     ENDE     FOR THE YEARS ENDED
    In Canadian
    dollars,
    except
    payout                  JANUARY                          OCTOBER    OCTOBER    OCTOBER
    ratios      APRIL 30         31   APRIL 30   APRIL 30         31         31         31
    (Unaudited)     2014       2014       2013       2014       2013       2012       2011
                                                                                          
    Dividends
    declared
    per common
    share       $ 0.51     $ 0.51     $ 0.49     $ 1.02     $ 1.98     $ 1.84     $ 1.62  
    Dividend
    payout
    ratio [2]     51.3 %     44.1 %     46.5 %     47.4 %     52.0 %     37.0 %     34.8 %
    Adjusted
    dividend
    payout
    ratio [2]     39.6 %     39.6 %     39.3 %     39.6 %     40.3 %     36.9 %     32.9 %
    [1] Comparative figures for 2013 reflect the adoption of amendments to
        IAS 19, Employee benefits. Comparative figures for 2012 and 2011
        have not been restated. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] Refer to the Non-GAAP Financial Measures section.
    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. Refer to the section 
"Risk Appetite and Risk Management Framework" on page 42 of the Bank's 2013 
Annual Report for additional information.

Credit risk

The following sections provide further details on the credit quality of the 
Bank's loan portfolios.
    PROVISION FOR LOAN LOSSES                                                   
                                                            FOR THE SIX MONTHS
                         FOR THE THREE MONTHS ENDED                ENDED
    In thousands
    of Canadian
    dollars,
    except
    percentage
    amounts          APRIL 30   JANUARY 31    APRIL 30     APRIL 30     APRIL 30
    (Unaudited)          2014         2014        2013         2014         2013
                                                                                
    Provision for
    loan losses                                                                 
      Personal
      loans        $  8,003     $  4,473     $ 7,455     $ 12,476     $ 15,513  
      Residential
      mortgage
      loans             922          648         872        1,570        2,279  
      Commercial
      mortgage
      loans         (2,508)        2,892          48          384        1,149  
      Commercial
      and other
      loans
      (including
      acceptances)    4,083        2,487         625        6,570      (1,941)  
                   $ 10,500     $ 10,500     $ 9,000     $ 21,000     $ 17,000  
    As a % of
    average loans
    and
    acceptances        0.16 %       0.15 %      0.14 %       0.16 %       0.13 %


The provision for loan losses amounted to $10.5 million in the second quarter 
of 2014, unchanged from the first quarter of 2014 and up $1.5 million compared 
to the same quarter a year ago. For the six months ended April 30, 2014, 
provisions for loan losses increased by $4.0 million and amounted to $21.0 
million compared with $17.0 million for the same period in 2013. Despite the 
gradual increase from the 2013 very low levels, the provision for loan losses 
remains low and reflects the strong credit quality of the Bank's loan 
portfolios and prolonged favourable credit conditions in the Canadian market. 
Loan losses on personal loans slightly increased by $0.5 million compared with 
the second quarter of 2013. For the six months ended April 30, 2014, loan 
losses on personal loans decreased by $3.0 million, reflecting lower 
provisions in the investment loan and point-of-sale financing portfolios 
compared to last year due to the reduced exposure. On a sequential basis, loan 
losses on personal loans increased by $3.5 million, mostly explained by higher 
losses at B2B Bank in the second quarter of 2014 from the unsustainable low 
losses level in the first quarter. 
Loan losses on residential mortgage loans were up marginally from the second 
quarter of 2013 and sequentially. For the six months ended April 30, 2014, 
loan losses on residential mortgage loans decreased slightly by $0.7 million 
year-over-year. 
Loan losses on commercial mortgages and commercial loans remained very low and 
cumulatively amounted to $1.6 million in the second quarter of 2014, a 
year-over-year increase of $0.9 million. Favourable settlements and 
improvements in the commercial mortgage loan portfolio were offset by losses 
on commercial loans. On a sequential basis, loan losses in these portfolios 
decreased by a combined $3.8 million, mainly explained by favourable 
settlements and improvements on a limited number of impaired loans. For the 
six months ended April 30, 2014, loan losses on commercial mortgages and 
commercial loans totalled $7.0 million compared with a negative amount of $0.8 
million for the same period in 2013. The year-over-year increase in loan 
losses mainly results from growth in the underlying portfolios, a higher 
amount of favourable settlements and improvements of commercial loans in 2013, 
which led to a net credit of $1.9 million in loan losses in the commercial 
loan portfolio last year. 


    IMPAIRED LOANS                                                         
    In thousands of      AS AT APRIL 30   AS AT OCTOBER 31   AS AT APRIL 30
    Canadian dollars,              2014               2013             2013
    except percentage
    amounts (Unaudited)
                                                                           
    Gross impaired loans                                                   
      Personal           $   28,476       $   13,971         $   21,243    
      Residential            31,794           32,651             21,972    
      mortgages
      Commercial             13,360           14,082             32,251    
      mortgages
      Commercial and         33,653           38,687             42,200    
      other (including
      acceptances)
                            107,283           99,391            117,666    
                                                                           
    Allowances for loan                                                    
    losses against
    impaired loans
      Individual           (27,440)         (34,266)           (39,487)    
      allowances
      Collective           (16,896)         (12,049)           (12,802)    
      allowances
                           (44,336)         (46,315)           (52,289)    
                                                                           
    Net impaired loans   $   62,947       $   53,076         $   65,377    
                                                                           
    Collective           $ (77,767)       $ (69,275)         $ (62,079)    
    allowances against
    other loans
                                                                           
    Impaired loans as a                                                    
    % of loans and
    acceptances
      Gross                    0.39   %         0.37     %         0.44   %
      Net                      0.23   %         0.19     %         0.24   %


Gross impaired loans amounted to $107.3 million as at April 30, 2014, down 
sequentially from $113.9 million as at January 31, 2014, while up from $99.4 
million as at October 31, 2013, as continued improvement in the commercial 
loan portfolio was more than offset by increases in impaired loans in the 
personal loan portfolio. Despite the increase, gross impaired loans remain 
historically low and borrowers continue to benefit from the favourable low 
interest rate environment and good business conditions in Canada. 
Since the beginning of the year, individual allowances decreased by $6.8 
million to $27.4 million mainly explained by favourable settlements on a 
limited number of impaired commercial loans. Collective allowances against 
impaired loans increased by $4.8 million over the same period, in-line with 
the higher impaired loans level. Net impaired loans, calculated as gross 
impaired loans less individual allowances and collective allowances against 
impaired loans, amounted to $62.9 million as at April 30, 2014, compared with 
$53.1 million as at October 31, 2013. At 0.23% of loans and acceptances as at 
April 30, 2014 and 0.19% as at October 31, 2013, net impaired loans continue 
to be at a low level and reflect management's continued prudent approach to 
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 2013. 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 approved limits. 
Regulatory developments concerning liquidity 
In December 2010, the BCBS issued the regulatory liquidity framework, "Basel 
III: International framework for liquidity risk measurement, standards and 
monitoring", which mainly outlines two new liquidity requirements. This 
document prescribes the Liquidity Coverage Ratio (LCR) and Net Stable Funding 
Ratio (NSFR) as minimum regulatory standards effective January 2015 and 
January 2018, respectively. Further updates regarding these new requirements 
were also published in 2013 and 2014. 
In addition, in January 2014, the BCBS issued its final paper on "Liquidity 
coverage ratio disclosure standards". Banks are expected to comply with the 
BCBS LCR disclosure standards beginning in the first full fiscal quarter of 
calendar 2015 (expected to be the second quarter of 2015 for Canadian banks). 
In May 2014, OSFI issued a comprehensive domestic Liquidity Adequacy 
Requirements Guideline that reflects the aforementioned BCBS liquidity 
standards and monitoring tools and formalized the use of the Net Cumulative 
Cash Flow (NCCF) supervisory tool. At this stage, it is still too early to 
determine their definitive impact on liquidity management. The Bank is 
presently developing its liquidity data and reporting systems to meet the 
upcoming liquidity requirements. Based on its preliminary review of the 
recently published regulatory requirements and prior analyses, management 
expects that the Bank will meet the upcoming standards. 
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 April 30, 2014, 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                                                               
    In thousands of Canadian dollars      AS AT APRIL 30   AS AT OCTOBER 31
    (Unaudited)                                     2014               2013
                                                                           
    Effect of a 1% increase in interest
    rates                                                                  
      Increase in net interest income
      before taxes over the next 12
      months                              $    4,455       $    9,984      
      Decrease in the economic value of
      common shareholders' equity (Net of
      income taxes)                       $ (30,004)       $ (22,746)      


As shown in the table above, the sensitivity to changes in interest rates 
remained low as at April 30, 2014. Management continues to expect that long 
term rates will remain within a narrow range for now. These results reflect 
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 three following business 
segments: Personal & Commercial, B2B Bank, and Laurentian Bank Securities & 
Capital Markets. The Bank's other activities are grouped into the Other sector. 
Realignment of reportable segments 
Commencing November 1, 2013, the Bank reports its retail and commercial 
activities, which were previously reported in the Retail & SME-Québec and 
Real Estate & Commercial business segments, in the newly formed Personal & 
Commercial segment. The new business segment better reflects the 
interdependencies associated with these activities. In addition, the new 
segments more closely align the Bank's reporting to the industry practice. The 
B2B Bank and Laurentian Bank Securities & Capital Markets segments are not 
affected by this realignment. Furthermore, certain restructurings implemented 
in the fourth quarter of 2013 resulted in small adjustments to segment 
allocations. Comparative figures were reclassified to conform to the current 
presentation. 
Personal & Commercial ([1] ) 


                        FOR THE THREE MONTHS ENDED      FOR THE SIX MONTHS ENDED
    In thousands
    of Canadian
    dollars,
    except
    percentage
    amounts        APRIL 30   JANUARY 31     APRIL 30      APRIL 30      APRIL 30
    (Unaudited)        2014         2014         2013          2014          2013
                                                                                 
    Net interest
    income       $ 97,592     $ 98,054     $ 92,572     $ 195,646     $ 190,673  
    Other income   49,110       48,630       48,768        97,740        92,297  
    Total
    revenue       146,702      146,684      141,340       293,386       282,970  
    Provision
    for loan
    losses          7,436       10,254        5,850        17,690        10,452  
    Non-interest
    expenses       99,947       99,809      103,156       199,756       206,036  
    Income
    before
    income taxes   39,319       36,621       32,334        75,940        66,482  
    Income taxes    9,037        8,343        7,500        17,380        15,112  
    Net income   $ 30,282     $ 28,278     $ 24,834     $  58,560     $  51,370  
                                                                                 
    Efficiency
    ratio [2]        68.1 %       68.0 %       73.0 %        68.1 %        72.8 %
    [1] Comparative figures reflect the realignment of reportable segments
        and the adoption of amendments to IAS 19, Employee Benefits. Refer
        to Notes 2 and 12 in the unaudited condensed interim consolidated
        financial statements.
    [2] Refer to the non-GAAP financial measures section.


The Personal & Commercial business segment's contribution to net income was 
$30.3 million in the second quarter of 2014 compared with $24.8 million in the 
second quarter of 2013. 
Total revenue increased by $5.4 million from $141.3 million in the second 
quarter of 2013 to $146.7 million in the second quarter of 2014, mainly driven 
by higher net interest income, which increased by $5.0 million to $97.6 
million. This increase reflects interest recoveries resulting from favourable 
settlements in the commercial loan portfolio, good volume growth in the 
commercial portfolios and improved margins. Other income increased by $0.3 
million to $49.1 million in the second quarter of 2014, mainly due to higher 
mutual fund commissions and lending fees, offset by lower gains on loan sales. 
Consistent with the Bank's syndication strategy, the sale of a $102.4 million 
commercial mortgage loan portfolio was completed during the second quarter of 
2014, which led to the recognition of a $3.7 million gain of which $1.2 
million was recorded in the Personal & Commercial business segment. In a 
similar transaction, a $3.7 million gain on the sale of a $94.7 million 
commercial mortgage loan portfolio had been recorded during the second quarter 
of 2013 of which $3.1 million was recorded in Personal & Commercial. 
Loan losses increased by $1.6 million from $5.9 million in the second quarter 
of 2013 to $7.4 million in the second quarter of 2014. Higher losses on 
personal and commercial loans compared to the 2013 low levels were partly 
offset by favourable settlements in the commercial mortgage loan portfolio. 
Non-interest expenses decreased by $3.2 million, from $103.2 million in the 
second quarter of 2013 to $99.9 million in the second quarter of 2014, mainly 
due to lower headcount from the optimization of certain activities in the 
fourth quarter of 2013 and disciplined control over discretionary expenses. 
Compared with the first quarter of 2014, net income increased by $2.0 million, 
mainly as a result of interest recoveries, favourable settlements and 
improvement on a limited number of impaired loans, which more than offset the 
revenue impact of the three less days in the second quarter. 
For the six months ended April 30, 2014, net income increased from $51.4 
million to $58.6 million. Growth in commercial loan volumes of 18% 
year-over-year, a strong increase in other income and lower non-interest 
expenses contributed to this performance and compensated for higher loan 
losses. The efficiency ratio was 68.1% for the six months ended April 30, 
2014, compared with 72.8% for the six months ended April 30, 2013. The segment 
generated positive operating leverage of 6.7% year-over-year, reflecting the 
Bank's priorities to diversify other income, grow commercial businesses and 
control costs rigorously. 
B2B Bank ([1] ) 


                                                            FOR THE SIX MONTHS
                         FOR THE THREE MONTHS ENDED                ENDED
    In thousands
    of Canadian
    dollars,
    except
    percentage
    amounts         APRIL 30   JANUARY 31     APRIL 30     APRIL 30     APRIL 30
    (Unaudited)         2014         2014         2013         2014         2013
                                                                                
    Net interest
    income        $ 43,377     $ 46,197     $ 47,195     $ 89,574     $ 96,607  
    Other income     9,107        9,102        8,884       18,209       17,940  
    Total revenue   52,484       55,299       56,079      107,783      114,547  
    Amortization
    of net
    premium on
    purchased
    financial
    instruments
    and
    revaluation
    of contingent
    consideration    5,498        1,136        1,224        6,634        2,280  
    Provision for
    loan losses      3,064          246        3,150        3,310        6,548  
    Non-interest
    expenses [2]    30,971       31,576       33,196       62,547       67,181  
    Costs related
    to business
    combinations
    [3]              4,437        3,949        6,136        8,386       13,693  
    Income before
    income taxes     8,514       18,392       12,373       26,906       24,845  
    Income taxes     3,432        4,959        3,283        8,391        6,564  
    Net income    $  5,082     $ 13,433     $  9,090     $ 18,515     $ 18,281  
                                                                                
    Efficiency
    ratio [4]         67.5 %       64.2 %       70.1 %       65.8 %       70.6 %
                                                                                
    Adjusted net
    income [4]    $ 13,468     $ 17,169     $ 14,498     $ 30,637     $ 30,017  
    Adjusted
    efficiency
    ratio [4]         59.0 %       57.1 %       59.2 %       58.0 %       58.6 %
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] During the first quarter of 2014, the Bank retroactively adjusted
        its corporate expenses allocation methodology. As a result,
        non-interest expenses amounting to $1.0 million ($0.7 million net
        of income taxes) per quarter in 2013, which were previously
        reported in the Other sector, were reclassified to the B2B Bank
        business segment.
    [3] Integration costs related to the integration of the MRS Companies
        and AGF Trust (T&I Costs).
    [4] Refer to the non-GAAP financial measures section.


The B2B Bank business segment's contribution to adjusted net income was $13.5 
million for the second quarter of 2014, down $1.0 million from $14.5 million 
for the second quarter of 2013. Reported net income for the second quarter of 
2014 was $5.1 million compared with $9.1 million a year ago. 
Total revenue decreased to $52.5 million in the second quarter of 2014 from 
$56.1 million in the second quarter of 2013. Net interest income decreased by 
$3.8 million to $43.4 million in the second quarter of 2014 compared with the 
corresponding period in 2013. This decrease resulted from the reduced level of 
investment loans as investors continue to deleverage, as well as margin 
compression on mortgage loans. Other income amounted to $9.1 million in the 
second quarter of 2014, up $0.2 million from the second quarter of 2013. 
As shown above, the line item "Amortization of net premium on purchased 
financial instruments and revaluation of contingent consideration" increased 
by $4.3 million and amounted to $5.5 million in the second quarter of 2014 
compared with $1.2 million for the second quarter of 2013. This increase 
mainly resulted from the additional $4.1 million non tax-deductible charge to 
reflect the impact of an agreement reached on May 30, 2014 with AGF Management 
Limited to settle the $20.0 million maximum contingent consideration related 
to the AGF Trust acquisition for a lower total amount of $10.0 million. Refer 
to Note 13 to the unaudited condensed interim consolidated financial 
statements. 
Loan losses decreased by $0.1 million compared with the second quarter of 2013 
and amounted to $3.1 million in the second quarter of 2014. Lower provisions 
in the investment loan portfolios due to the reduced exposure compared to last 
year were mostly offset by higher provisions on other personal loans. 
Excluding T&I Costs, non-interest expenses decreased by $2.2 million or 7% to 
$31.0 million in the second quarter of 2014, compared with $33.2 million in 
the second quarter of 2013. As integration activities are winding down, T&I 
Costs for the second quarter of 2014 decreased to $4.4 million and mainly 
related to IT systems conversion costs, salaries, professional fees and other 
expenses for the integration of former AGF Trust operations. 
Compared with the first quarter of 2014, adjusted net income decreased by $3.7 
million, mainly resulting from lower net interest income, which was impacted 
by the fewer number of days in the quarter and higher loan losses. These 
items, combined with the final contingent consideration charge mentioned above 
and slightly higher T&I Costs contributed to the $8.4 million decrease in 
reported net income over the same period. 
For the six months ended April 30, 2014, adjusted net income was $30.6 
million, $0.6 million higher than the same period of 2013, as the items 
impacting revenues, as detailed above, were compensated by higher spread 
earned on deposits year-over-year and lower loan losses. Reported net income 
for the six months ended April 30, 2014 remained relatively stable over the 
same period in 2013, mainly due to the same factors mentioned above and as a 
result of lower T&I Costs year-over-year. 
Laurentian Bank Securities & Capital Markets ([1] ) 


                                                           FOR THE SIX MONTHS
                        FOR THE THREE MONTHS ENDED                ENDED
    In thousands
    of Canadian
    dollars,
    except
    percentage
    amounts        APRIL 30   JANUARY 31     APRIL 30     APRIL 30     APRIL 30
    (Unaudited)        2014         2014         2013         2014         2013
                                                                               
    Total
    revenue      $ 17,590     $ 16,165     $ 16,967     $ 33,755     $ 34,050  
    Non-interest
    expenses       14,059       13,087       12,959       27,146       26,433  
    Income
    before
    income taxes    3,531        3,078        4,008        6,609        7,617  
    Income taxes      947          826        1,033        1,773        1,961  
    Net income   $  2,584     $  2,252     $  2,975     $  4,836     $  5,656  
                                                                               
    Efficiency
    ratio [2]        79.9 %       81.0 %       76.4 %       80.4 %       77.6 %
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] Refer to the non-GAAP financial measures section.


Laurentian Bank Securities & Capital Markets business segment's contribution 
to net income decreased to $2.6 million in the second quarter of 2014, 
compared with $3.0 million in the second quarter of 2013. Total revenue 
increased by $0.6 million to $17.6 million in the second quarter of 2014 
compared with $17.0 million in the second quarter of 2013, mainly as a result 
of higher underwriting fees in the small-cap equity markets. Non-interest 
expenses increased by $1.1 million to $14.1 million in the second quarter of 
2014, mainly due to higher performance-based compensation, commissions and 
transaction fees, in-line with higher market-driven income. 
For the six months ended April 30, 2014, net income decreased by $0.8 million 
compared with the same period last year. Total revenue decreased by $0.3 
million to $33.8 million in the six months ended April 30, 2014, mainly as a 
result of lower underwriting fees in the fixed income market compared to 
strong results for the six months ended April 30, 2013, mainly during the 
first quarter of 2013. Non-interest expenses increased by $0.7 million to 
$27.1 million for the six months ended April 30, 2014, mainly due to higher 
performance-based compensation, commissions and transaction fees. 
Other sector ([1] ) 


                              FOR THE THREE MONTHS ENDED     FOR THE SIX MONTHS ENDED
    In thousands
    of Canadian
    dollars         APRIL 30    JANUARY 31      APRIL 30       APRIL 30      APRIL 30
    (Unaudited)         2014          2014          2013           2014          2013
                                                                                     
    Net interest
    income       $ (2,749)     $ (4,078)     $   (407)     $  (6,827)     $ (6,257)  
    Other income     2,863         2,039           871          4,902         3,454  
    Total
    revenue            114       (2,039)           464        (1,925)       (2,803)  
    Non-interest
    expenses [2]    10,490        10,712         6,183         21,202        11,380  
    Loss before
    income taxes  (10,376)      (12,751)       (5,719)       (23,127)      (14,183)  
    Income taxes
    recovery       (3,417)       (4,313)       (2,659)        (7,730)       (5,503)  
    Net loss     $ (6,959)     $ (8,438)     $ (3,060)     $ (15,397)     $ (8,680)  
    [1] Comparative figures reflect the realignment of reportable segments
        and the adoption of amendments to IAS 19, Employee Benefits. Refer
        to Notes 2 and 12 in the unaudited condensed interim consolidated
        financial statements.
    [2] During the first quarter of 2014, the Bank retroactively adjusted
        its corporate expenses allocation methodology. As a result,
        non-interest expenses amounting to $1.0 million ($0.7 million net
        of income taxes) per quarter in 2013, which were previously
        reported in the Other sector, were reclassified to the B2B Bank
        business segment.


The Other sector posted a negative contribution to net income of $7.0 million 
in the second quarter of 2014 compared with a negative contribution of $3.1 
million in the second quarter of 2013. 
Net interest income decreased to negative $2.7 million in the second quarter 
of 2014, compared with negative $0.4 million in the second quarter of 2013, 
mainly as a result of less favourable market conditions compared to a year ago 
impacting balance sheet management. Other income increased to $2.9 million in 
the second quarter of 2014, compared with $0.9 million in the second quarter 
of 2013, mainly as a result of the $2.5 million of the total $3.7 million gain 
related to the sale of $102.4 million of commercial mortgage loans during the 
second quarter of 2014, compared with a similar gain of $0.6 million in the 
second quarter of 2013. Non-interest expenses increased to $10.5 million in 
the second quarter of 2014 compared with $6.2 million in the second quarter of 
2013, mainly due to higher unallocated technology expenses related to new 
initiatives aimed at improving IT infrastructure and on-line services. 
On a sequential basis, net income improved by $1.5 million from the previous 
quarter due to higher total revenue, which includes the positive impact of the 
gain on the sale of commercial mortgage loans as discussed above. 
For the six months ended April 30, 2014, the negative contribution to net 
income was $15.4 million, compared to negative $8.7 million for the six months 
ended April 30, 2013, mainly explained by non-interest expenses which 
increased by $9.8 million compared to 2013. The increase in non-interest 
expenses essentially results from unallocated costs related to systems for 
regulatory requirements as well as the new IT initiatives mentioned above. 
Additional Financial Information - Quarterly Results ([1]) 


    In thousands of
    Canadian
    dollars, except
    per share and
    percentage


amounts            APRIL 30    JANUARY 31    OCTOBER 31       JULY 31      APRIL 30    JANUARY 31    OCTOBER 31     
  JULY 31 


    (Unaudited)            2014          2014          2013          2013          2013          2013          2012     
     2012
                                                                                                                        
         
    Net interest


income          $ 138,726     $ 140,856     $ 141,437     $ 144,549     $ 140,430     $ 142,344     $ 142,411     $ 
129,664   
Other income       78,164        75,253        74,094        76,493        74,420        71,570        67,985       
 64,169   
Total revenue     216,890       216,109       215,531       221,042       214,850       213,914       210,396       
193,833   


    Gain on
    acquisition,
    amortization of
    net premium on
    purchased
    financial
    instruments and
    revaluation of
    contingent


consideration       5,498         1,136         1,006         1,140         1,224         1,056      (23,795)       
—   
Provision for 
loan losses        10,500        10,500        10,000         9,000         9,000         8,000         8,000       
  7,500   
Non-interest 
expenses          159,904       159,133       172,651       176,705       161,630       163,093       165,377       
148,955   
Income before 
income taxes       40,988        45,340        31,874        34,197        42,996        41,765        60,814       
 37,378   
Income taxes        9,999         9,815         6,008         7,213         9,157         8,977        15,129       
  7,380   
Net income      $  30,989     $  35,525     $  25,866     $  26,984     $  33,839     $  32,788     $  45,685     $ 
 29,998   


                                                                                                                        
         
    Earnings per
    share                                                                                                               
         


  Basic         $    0.99     $    1.16     $    0.82     $    0.86     $    1.05     $    1.07     $    1.51     $  
1.06   
  Diluted       $    0.99     $    1.16     $    0.82     $    0.86     $    1.05     $    1.07     $    1.51     $  
1.06   


    Return on
    common
    shareholders'


equity [2]            9.2 %        10.5 %         7.6 %         8.1 %        10.4 %        10.3 %        14.2 %      
10.1 % 


    Balance sheet
    assets (in
    millions of
    Canadian


dollars)        $  34,261     $  33,631     $  33,911     $  33,758     $  34,480     $  34,252     $  34,937     $ 
 31,416   


                                                                                                                        
         
    Adjusted
    measures                                                                                                            
         
      Adjusted net


  income [2]    $  39,375     $  39,261     $  33,919     $  38,547     $  39,247     $  39,116     $  36,186     $ 
 35,253   


      Adjusted
      diluted
      earnings per


  share [2]     $    1.29     $    1.29     $    1.10     $    1.27     $    1.24     $    1.30     $    1.17     $  
1.27   


      Adjusted
      return on
      common
      shareholders'


  equity [2]         11.9 %        11.7 %        10.2 %        12.0 %        12.2 %        12.5 %        10.9 %      
12.1 % 


    [1] Comparative figures for 2013 reflect the adoption of amendments to
        IAS 19, Employee Benefits. 2012 results have not been restated.
        Refer to Note 2 in the unaudited condensed interim consolidated
        financial statements.
    [2] 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 2013 audited annual consolidated financial statements. Pages 58 
to 61 of the 2013 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 second 
quarter of 2014 have been prepared in accordance with these accounting 
policies, except for accounting changes detailed below.

Accounting changes

Effective November 1, 2013, the Bank adopted new standards and amendments to 
existing standards on employee benefits, consolidation, fair value 
measurement, and disclosure of offsetting arrangements. Additional information 
on the new standards, amendments to existing standards and new accounting 
policy can be found in Note 2 to the unaudited condensed interim consolidated 
financial statements.

Future accounting changes

The IASB has issued new standards and amendments to existing standards on 
financial instruments and offsetting. These future accounting changes will be 
applicable for the Bank in various annual periods beginning on November 1, 
2014 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

During the second quarter ended April 30, 2014, 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 document prior to its release.

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:

Common shareholders' equity

Effective November 1, 2013, the Bank has modified its definition of common 
shareholders' equity, as detailed below. All financial measures for the 
quarters and for the year ended in 2013 have been amended accordingly.

The Bank's common shareholders' equity is defined as the sum of the value of 
common shares, retained earnings and accumulated other comprehensive income, 
excluding cash flow hedge reserves. This definition is now better aligned with 
regulatory requirements.

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.

Book value per common share

The Bank's book value per common share is defined as common shareholders' 
equity 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. Quarterly growth rates are calculated 
sequentially (i.e. current period versus the immediately preceding period). 
Year-to-date growth rates are calculated year-over-year (i.e. current period 
versus the corresponding prior year period).

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 financial 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. The revaluation of the contingent 
consideration related to the AGF Trust acquisition, 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 
their non-recurrence.

About Laurentian Bank

Laurentian Bank of Canada is a banking institution whose activities extend 
across Canada. Recognized for its excellent service, proximity and simplicity, 
the Bank serves one and a half million clients throughout the country. Founded 
in 1846, the Bank is among the 2014 edition of the Montréal's Top Employers 
competition, which showcases the city's top 25 companies offering enviable 
places to work. It currently employs some 3,800 people whose talent and 
dedication has made it a major player in numerous market segments.

Laurentian Bank distinguishes itself through the excellence of its execution 
and its agility. Catering to the needs of retail clients via its extensive 
branch network and constantly evolving virtual offerings, the Bank has also 
earned a solid reputation among SMEs, larger businesses and real estate 
developers thanks to its growing presence across Canada and its specialized 
teams in Ontario, Québec, Alberta and British Columbia. For its part, the 
organization's B2B Bank subsidiary is a Canadian leader in providing banking 
and investment products and services to financial advisors and brokers, while 
Laurentian Bank Securities is an integrated broker that is also widely known 
for its expert and effective services nationwide. The institution has more 
than $34 billion in balance sheet assets and more than $41 billion in assets 
under administration.

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 Wednesday, June 4, 2014. The live, listen-only, toll-free, call-in number 
is 416 642-5212 or 1 866 321-6651.

You can listen to the call on a delayed basis at any time from 5:00 p.m. on 
Wednesday, June 4, 2014 until 5:00 p.m. on July 3, 2014, by dialing the 
following playback number: 647 436-0148 or 1 888 203-1112 Code 5653302#. 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 April 30, 2014, including the notes to consolidated financial 
statements, are also available on the Bank's Web site at www.laurentianbank.ca.

Consolidated Balance Sheet ([1] )
    In thousands of
    Canadian dollars     AS AT APRIL 30   AS AT OCTOBER 31   AS AT APRIL 30
    (Unaudited)                    2014               2013             2013
                                                                           
    ASSETS                                                                 
    Cash and                                                               
    non-interest-bearing
    deposits with other
    banks                $     92,282     $     82,836       $     83,512
    Interest-bearing
    deposits with other
    banks                     123,226          126,002            233,501  
    Securities                                                             
      Available-for-sale    2,027,794        1,679,067          2,151,551  
      Held-to-maturity        390,045          648,874          1,030,366  
      Held-for-trading      2,114,759        2,152,584          2,574,845  
                            4,532,598        4,480,525          5,756,762  
    Securities purchased
    under reverse
    repurchase
    agreements              1,582,181        1,218,255            545,974  
    Loans                                                                  
      Personal              7,079,386        7,245,474          7,605,244  
      Residential
      mortgage             14,665,381       14,735,211         14,499,292  
      Commercial
      mortgage              2,535,881        2,488,826          2,434,514  
      Commercial and
      other                 2,651,025        2,488,137          2,239,842  
      Customers'
      liabilities under
      acceptances             301,077          271,049            256,150  
                           27,232,750       27,228,697         27,035,042  
      Allowances for
      loan losses           (122,103)        (115,590)          (114,368)  
                           27,110,647       27,113,107         26,920,674  
    Other                                                                  
      Premises and
      equipment                74,535           73,261             72,108  
      Derivatives             126,777          126,617            156,308  
      Goodwill                 64,077           64,077             64,077  
      Software and other
      intangible assets       208,779          197,594            165,225  
      Deferred tax
      assets                   12,882           21,588             32,470  
      Other assets            333,012          407,164            448,990  
                              820,062          890,301            939,178  
                         $ 34,260,996     $ 33,911,026       $ 34,479,601  
                                                                           
    LIABILITIES AND
    SHAREHOLDERS' EQUITY                                                   
    Deposits                                                               
      Personal           $ 19,168,273     $ 19,282,042       $ 19,535,193  
      Business, banks
      and other             4,590,480        4,645,308          4,273,632  
                           23,758,753       23,927,350         23,808,825  
    Other                                                                  
      Obligations
      related to
      securities sold
      short                 1,436,150        1,464,269          1,679,095  
      Obligations
      related to
      securities sold
      under repurchase
      agreements              887,384          339,602            394,725  
      Acceptances             301,077          271,049            256,150  
      Derivatives             101,494          102,041             96,626  
      Deferred tax
      liabilities               1,884            9,845             19,264  
      Other liabilities       829,753          943,112            901,380  
                            3,557,742        3,129,918          3,347,240  
    Debt related to
    securitization
    activities              4,896,007        4,974,714          5,473,470  
    Subordinated debt         446,485          445,473            444,469  
    Liability related to
    preferred shares          120,946          —            —  
    Shareholders' equity                                                   
      Preferred shares        205,204          205,204            205,146  
      Common shares           456,032          446,496            438,454  
      Share-based
      payment reserve              91               91                136  
      Retained earnings       812,229          776,256            732,032  
      Accumulated other
      comprehensive
      income                    7,507            5,524             29,829  
                            1,481,063        1,433,571          1,405,597  
                         $ 34,260,996     $ 33,911,026       $ 34,479,601  
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    Consolidated Statement of Income ([1] )
                              FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
    In thousands of
    Canadian
    dollars, except
    per share
    amounts             APRIL 30    JANUARY 31      APRIL 30      APRIL 30      APRIL 30
    (Unaudited)             2014          2014          2013          2014          2013
                                                                                        
    Interest income                                                                     
      Loans          $ 260,326     $ 269,084     $ 264,704     $ 529,410     $ 541,574  
      Securities        10,136        10,321        16,178        20,457        33,306  
      Deposits with
      other banks          194           181           499           375         1,413  
      Other,
      including
      derivatives       10,167        10,188        11,193        20,355        24,646  
                       280,823       289,774       292,574       570,597       600,939  
    Interest expense                                                                    
      Deposits         108,811       114,020       112,525       222,831       233,948  
      Debt related
      to
      securitization
      activities        29,140        30,529        35,163        59,669        75,388  
      Subordinated
      debt               3,933         4,031         3,927         7,964         7,951  
      Other                213           338           529           551           878  
                       142,097       148,918       152,144       291,015       318,165  
    Net interest
    income             138,726       140,856       140,430       279,582       282,774  
    Other income                                                                        
      Fees and
      commissions on
      loans and
      deposits          32,964        34,755        31,724        67,719        63,054  
      Income from
      brokerage
      operations        16,992        15,207        14,523        32,199        31,045  
      Income from
      investment
      accounts           8,343         8,027         7,894        16,370        15,752  
      Income from
      sales of
      mutual funds       7,151         6,580         5,415        13,731        10,555  
      Income from
      treasury and
      financial
      market
      operations         2,766         4,339         4,601         7,105         9,942  
      Insurance
      income, net        4,744         4,633         4,415         9,377         7,810  
      Other income       5,204         1,712         5,848         6,916         7,832  
                        78,164        75,253        74,420       153,417       145,990  
    Total revenue      216,890       216,109       214,850       432,999       428,764  
    Amortization of
    net premium on
    purchased
    financial
    instruments and
    revaluation of
    contingent
    consideration        5,498         1,136         1,224         6,634         2,280  
    Provision for
    loan losses         10,500        10,500         9,000        21,000        17,000  
    Non-interest
    expenses                                                                            
      Salaries and
      employee
      benefits          84,407        85,540        86,977       169,947       178,136  
      Premises and
      technology        45,642        45,940        42,626        91,582        81,507  
      Other             25,418        23,704        25,891        49,122        51,387  
      Costs related
      to business
      combinations       4,437         3,949         6,136         8,386        13,693  
                       159,904       159,133       161,630       319,037       324,723  
    Income before
    income taxes        40,988        45,340        42,996        86,328        84,761  
    Income taxes         9,999         9,815         9,157        19,814        18,134  
    Net income       $  30,989     $  35,525     $  33,839     $  66,514     $  66,627  
    Preferred share
    dividends,
    including
    applicable taxes     2,501         2,501         4,059         5,002         6,592  
    Net income
    available to
    common
    shareholders     $  28,488     $  33,024     $  29,780     $  61,512     $  60,035  
    Average number
    of common shares
    outstanding (in
    thousands)                                                                          
      Basic             28,677        28,570        28,287        28,622        28,227  
      Diluted           28,684        28,577        28,297        28,630        28,239  
    Earnings per
    share                                                                               
      Basic          $    0.99     $    1.16     $    1.05     $    2.15     $    2.13  
      Diluted        $    0.99     $    1.16     $    1.05     $    2.15     $    2.13  
    Dividends
    declared per
    share                                                                               
      Common share   $    0.51     $    0.51     $    0.49     $    1.02     $    0.98  
      Preferred
      share - Series
      9                     n.a.          n.a.   $    0.38            n.a.   $    0.75  
      Preferred
      share - Series
      10             $    0.33     $    0.33     $    0.33     $    0.66     $    0.66  
      Preferred
      share - Series
      11             $    0.25     $    0.25     $    0.25     $    0.50     $    0.41  
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    Consolidated Statement of Comprehensive Income ([1] )
                                                                   FOR THE SIX MONTHS
                                FOR THE THREE MONTHS ENDED                ENDED
    In thousands of
    Canadian dollars       APRIL 30   JANUARY 31     APRIL 30     APRIL 30     APRIL 30
    (Unaudited)                2014         2014         2013         2014         2013
                                                                                       
    Net income           $ 30,989     $ 35,525     $ 33,839     $ 66,514     $ 66,627  
    Other comprehensive
    income, net of
    income taxes                                                                       
    Items that may
    subsequently be
    reclassified to the
    statement of income                                                                
      Unrealized net
      gains (losses) on
      available-for-sale
      securities            5,941          758        1,484        6,699        2,600  
      Reclassification
      of net (gains)
      losses on
      available-for-sale
      securities to net
      income              (1,236)      (1,061)        (427)      (2,297)      (1,885)  
      Net change in
      value of
      derivatives
      designated as cash
      flow hedges         (4,965)        2,546        4,929      (2,419)      (5,114)  
                            (260)        2,243        5,986        1,983      (4,399)  
    Items that may not
    be subsequently
    reclassified to the
    statement of income                                                                
      Actuarial gains
      (losses) on
      employee benefit
      plans               (2,012)        5,634      (6,638)        3,622      (4,290)  
    Comprehensive income $ 28,717     $ 43,402     $ 33,187     $ 72,119     $ 57,938  
    Income Taxes — Other Comprehensive Income

The following table presents the income taxes for each component of other 
comprehensive income:
                                                                FOR THE SIX MONTHS
                              FOR THE THREE MONTHS ENDED               ENDED
    In thousands of                    JANUARY                          
    Canadian dollars      APRIL 30          31    APRIL 30    APRIL 30      APRIL 30
    (Unaudited)               2014        2014        2013        2014          2013
                                                                                    
    Income tax expense                                    
    (recovery) on:                                                                  
      Unrealized net                            
      gains (losses) on
      available-for-sale
      securities         $ 2,103     $   243     $   508     $ 2,346     $     941  
      Reclassification                                    
      of net (gains)
      losses on
      available-for-sale
      securities to net
      income               (449)       (390)       (157)       (839)         (693)  
      Net change in                                       
      value of
      derivatives
      designated as cash
      flow hedges        (1,808)         925       1,799       (883)       (1,871)  
      Actuarial gains                                     
      (losses) on
      employee benefit
      plans                (738)       2,066     (2,434)       1,328       (1,573)  
                         $ (892)     $ 2,844     $ (284)     $ 1,952     $ (3,196)
    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    Consolidated Statement of Changes in Shareholders' Equity ([1] )


                                                                                           FOR THE SIX MONTHS ENDED 
APRIL 30, 2014 


                                                                                     AOCI RESERVES                      
              
                                                                                                              SHARE-    
       TOTAL
    In thousands of                                                AVAILABLE-          CASH                    BASED    
      SHARE-
    Canadian dollars       PREFERRED        COMMON      RETAINED     FOR-SALE          FLOW                  PAYMENT    
    HOLDERS'
    (Unaudited)            SHARES[2]        SHARES      EARNINGS   SECURITIES        HEDGES        TOTAL     RESERVE    
      EQUITY  
                                                                                                                        
              
    Balance as at


October 31, 2013     $ 205,204     $ 446,496     $ 776,256     $  9,536     $ (4,012)     $  5,524     $      91    
 $ 1,433,571   


    Net income                                          66,514                                                          
      66,514  
    Other comprehensive
    income (net of
    income taxes)                                                                                                       
              
      Unrealized net
      gains (losses) on
      available-for-sale
      securities                                                      6,699                      6,699                  
       6,699  
      Reclassification
      of net (gains)
      losses on
      available-for-sale
      securities to net
      income                                                        (2,297)                    (2,297)                  
     (2,297)  
      Net change in
      value of
      derivatives
      designated as cash
      flow hedges                                                                 (2,419)      (2,419)                  
     (2,419)  
      Actuarial gains
      (losses) on
      employee benefit
      plans                                              3,622                                                          
       3,622  
    Comprehensive income                                70,136        4,402       (2,419)        1,983                  
      72,119  
    Issuance of share
    capital                                9,536                                                                        
       9,536  
    Dividends                                                                                                           
              
      Preferred shares,
      including
      applicable taxes                                 (5,002)                                                          
     (5,002)  
      Common shares                                   (29,161)                                                          
    (29,161)  
    Balance as at April


30, 2014             $ 205,204     $ 456,032     $ 812,229     $ 13,938     $ (6,431)     $  7,507     $      91    
 $ 1,481,063   


                                                                                                                        
              


                                                                                           FOR THE SIX MONTHS ENDED 
APRIL 30, 2013 


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


November 1, 2012     $ 303,249     $ 428,526     $ 706,035     $ 12,201     $  22,027     $ 34,228     $     227    
 $ 1,472,265   


    Net income                                          66,627                                                          
      66,627  
    Other comprehensive
    income (net of
    income taxes)                                                                                                       
              
      Unrealized net
      gains (losses) on
      available-for-sale
      securities                                                      2,600                      2,600                  
       2,600  
      Reclassification
      of net (gains)
      losses on
      available-for-sale
      securities to net
      income                                                        (1,885)                    (1,885)                  
     (1,885)  
      Net change in
      value of
      derivatives
      designated as cash
      flow hedges                                                                 (5,114)      (5,114)                  
     (5,114)  
    Actuarial gains
    (losses) on employee
    benefit plans                                      (4,290)                                                          
     (4,290)  
    Comprehensive income                                62,337          715       (5,114)      (4,399)                  
      57,938  
    Issuance of share
    capital                  (218)         9,928                                                                (91)    
       9,619  
    Repurchase of share


capital               (97,885)                     (2,115)                                                           
(100,000)   


    Dividends                                                                                                           
              
      Preferred shares,
      including
      applicable taxes                                 (6,592)                                                          
     (6,592)  
      Common shares                                   (27,633)                                                          
    (27,633)  
    Balance as at April


30, 2013             $ 205,146     $ 438,454     $ 732,032     $ 12,916     $  16,913     $ 29,829     $     136    
 $ 1,405,597   


    [1] Comparative figures reflect the adoption of amendments to IAS 19,
        Employee Benefits. Refer to Note 2 in the unaudited condensed
        interim consolidated financial statements.
    [2] Excluding preferred shares presented as liabilities. Refer to Note
        7 in the unaudited condensed interim consolidated financial
        statements.



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/June2014/04/c7586.html 
CO: Laurentian Bank of Canada
ST: Quebec
NI: FIN ERN CONF DIV  
-0- Jun/04/2014 12:33 GMT
 
 
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