CWB Reports Solid Financial Performance and Strong Earnings Growth

 CWB Reports Solid Financial Performance and Strong Earnings Growth  NEWS RELEASE TRANSMITTED BY Marketwired  FOR: Canadian Western Bank  TSX SYMBOL:  CWB  JUNE 5, 2014  CWB Reports Solid Financial Performance and Strong Earnings Growth  Common Share Dividend of $0.20 Per Share Declared, Up 11% Over the Dividend Declared a Year Earlier; Quarterly Dividend Declared on Series 5 Preferred Shares  EDMONTON, ALBERTA--(Marketwired - June 5, 2014) - Canadian Western Bank (TSX:CWB) (CWB) -   Second Quarter 2014 Highlights(1) (compared to the same period in the prior year)  /T/  --  Net income available to common shareholders of $51.2 million, up 19%.   --  Diluted earnings per common share of $0.63, up 17%, and adjusted cash  earnings per common share of $0.65, up 18%.   --  Total revenues, on a taxable equivalent basis (teb)(1), of $153.5  million, up 13%.   --  Strong loan growth of 3% in the quarter, 7% year-to-date and 12% over  the past twelve months.   --  Net interest margin (teb) of 2.59%, compared to 2.64% in the previous  quarter and 2.61% last year.   --  Issued $125 million of 4.40% preferred shares and redeemed $209 million  of 7.25% preferred shares.   --  Solid Basel III regulatory capital ratios using the Standardized  approach for calculating risk-weighted assets of 8.1% common equity Tier  1 (CET1), 9.4% Tier 1 and 13.1% total ratio.   --  Relocated Edmonton flagship branch into new and expanded premises.   (1) Highlights include certain non-IFRS measures - refer to definitions      following the table of Selected Financial Highlights.                         /T/  Canadian Western Bank today announced solid second quarter financial performance led by strong earnings growth. Compared to the same quarter last year, net income available to common shareholders of $51.2 million was up 19%, while diluted earnings per common share increased 17% to $0.63. Adjusted cash earnings per common share, which excludes the after-tax amortization of acquisition-related intangible assets and non-tax deductible changes in fair value of contingent consideration, increased 18% to $0.65. Total revenues (teb) of $153.5 million increased 13%, reflecting the positive impact of strong 12% loan growth and a 27% increase in other income, partially offset by a two basis point decline in net interest margin (teb) to 2.59%.   Compared to last quarter, net income available to common shareholders decreased 3% as the benefits of 3% loan growth, 4% higher other income and a lower provision for credit losses were offset by three fewer revenue earning days, a decline of five basis points in net interest margin (teb), higher non-interest expenses and a one-time increase in preferred share dividends. Adjusted cash earnings per share was also down 3%.   Year-to-date net income available to common shareholders of $103.8 million increased 17% as the benefit of strong growth in loans and other income was partially offset by higher non-interest expenses and preferred share dividends, while net interest margin (teb) was unchanged. Diluted and adjusted cash earnings per share each increased 16%, to reach $1.29 and $1.31, respectively.   "Our targeted, client-focused strategy continues to deliver solid performance for CWB Group shareholders," said Chris Fowler, President and CEO. "Growth in second quarter net income available to common shareholders of 19% is a very positive result, and our strong year-to-date loan growth and promising pipeline for new loans are very encouraging. Overall, we continue to maintain an optimistic outlook for the remainder of the year, even though pressure on net interest margin remains."   "Our capital structure was enhanced with this quarter's issuance of $125 million of Basel III-compliant preferred shares to replace our $209 million of higher cost preferred shares issued in 2009," continued Mr. Fowler. "This more efficient capital structure and a lower overall cost of capital will have a significant positive impact on future earnings per share and reinforce our solid foundation for future growth."   On June 4, 2014, CWB's Board of Directors declared a cash dividend of $0.20 per common share, payable on June 26, 2014 to shareholders of record on June 16, 2014. This quarterly dividend was 11% ($0.02) higher than the quarterly dividend declared one year ago and 5% ($0.01) higher than the prior quarter. The Board of Directors also declared a cash dividend of $0.275 per Series 5 Preferred Share, payable on July 31, 2014 to shareholders of record on July 24, 2014.   Fiscal 2014 Performance Target Ranges and Outlook  CWB's actual year-to-date performance together with the 2014 performance target ranges are presented in the table below:  /T/  2014                       Year-to-date      2014        Performance   Target Ranges  ---------------------------------------------------------------------------- Adjusted cash earnings per common share                                       growth(1)(2)                                       16%          12 - 16%    Total revenue (teb) growth(1)                       13%          10 - 12%    Loan growth(3)                                      12%          10 - 12%    Provision for credit losses as a percentage of                                average loans(4)                                  0.18%       0.18 - 0.23%  Efficiency ratio (teb)(5)                          45.5%       46% or less   Return on common shareholders' equity(6)           14.5%       14.0 - 15.0%  Return on assets(7)                                1.09%       1.05 - 1.15%  ----------------------------------------------------------------------------  1.  Year-to-date performance for adjusted cash earnings per common share and  total revenue growth (teb) is the current year results over the same  period last year.  2.  Adjusted cash earnings per common share is calculated as diluted  earnings per common share excluding the after-tax amortization of  acquisition-related intangible assets and the non-tax deductible change  in fair value of contingent consideration (which represent non-cash  charges that are not considered indicative of ongoing business  performance).  3.  Loan growth is the increase over the past twelve months.  4.  Year-to-date provision for credit losses, annualized, divided by average  total loans.  5.  Efficiency ratio (teb) is calculated as non-interest expenses divided by  total revenues (teb) excluding the non-tax deductible change in fair  value of contingent consideration.  6.  Return on common shareholders' equity is calculated as annualized net  income available to common shareholders divided by average common  shareholders' equity.  7.  Return on assets is calculated as annualized net income available to  common shareholders divided by average total assets.   /T/  Performance through the first half of the year has CWB positioned to achieve full-year financial results within all of our target ranges. Performance for loan growth, adjusted cash earnings per share and total revenues was driven by ongoing activity across our key lending sectors in each geographic region. Year-to-date net interest margin (teb) was unchanged compared to last year, as the impact of lower loan yields was offset by more favourable fixed term deposit and debenture costs and lower average liquidity. Meaningful improvement in this key metric is not expected in the absence of increases in the prime lending interest rate and/or a sustained steepening of the yield curve. The 2014 target for the efficiency ratio remains challenging but attainable as revenue growth through the remainder of the year is expected to offset the impact of higher non-interest expenses from an increased staff complement and ongoing initiatives to support business growth. Overall credit quality remains stable and supports our view that the annual provision for credit losses will remain near the low end of the target range.   During the quarter, we issued $125 million of 4.40% non-cumulative five-year rate reset Series 5 preferred shares and, on April 30th, redeemed the outstanding $209 million of 7.25% non-cumulative five-year rate reset Series 3 preferred shares. These transactions will have a positive impact on future growth in net income available to common shareholders and adjusted cash earnings per share, although the timing of the new preferred share issuance led to the second quarter payment of dividends on both series. As a result, year-to-date preferred share dividend payments were $1.2 million, approximately $0.01 per share, higher than last year.   The outlook for the Canadian economy is positive and economic fundamentals within CWB's key western Canadian markets remain particularly strong. Steady job creation in the western provinces continues to support very strong in-migration and overall employment conditions have remained stable. Supply and demand in the Canadian housing sector appear to be roughly in balance, however, we continue to carefully monitor market dynamics within specific geographic regions. Economic growth in the United States (U.S.) is expected to accelerate on the basis of escalating demand for goods and services, although moderation in the housing recovery is apparent in certain regions. On the basis of expectations for ongoing stability in the U.S. and global markets, consensus forecasts call for improved expansion within the domestic economy in 2014 and 2015, supporting our optimistic outlook for continued profitable growth.   About CWB Group  Canadian Western Bank offers a full range of business and personal banking services across the four western provinces and is the largest publicly traded Canadian bank headquartered in Western Canada. CWB, along with its operating affiliates, National Leasing, Canadian Western Trust, Valiant Trust, Canadian Direct Insurance, Canadian Western Financial, Adroit Investment Management, and McLean & Partners Wealth Management, collectively offer a diversified range of financial services across Canada and are together known as the CWB Group. The common shares of Canadian Western Bank are listed on the Toronto Stock Exchange under the trading symbol "CWB". CWB's Series 5 preferred shares trade on the Toronto Stock Exchange under the trading symbol "CWB.PR.B". Refer to www.cwb.com for additional information.  Fiscal 2014 Second Quarter Results Conference Call   CWB's second quarter results conference call is scheduled for Thursday, June 5, 2014 at 3:00 p.m. ET (1:00 p.m. MT). CWB's executives will comment on financial results and respond to questions from analysts and institutional investors.   The conference call may be accessed on a listen-only basis by dialing 416-695-7848 or toll-free 1-800-396-7098. The call will also be webcast live on CWB's website: www.cwb.com/investor_relations/webcast_events.htm.   A replay of the conference call will be available until June 19, 2014 by dialing 905-694-9451 (Toronto) or 1-800-408-3053 (toll-free) and entering passcode 1696268.   /T/  Selected Financial Highlights                                                 (unaudited)                                                      Change      ($ thousands,               For the three months ended             from      except                   April 30    January 31      April 30  April 30      per share amounts)           2014          2014       2013(1)      2013      ---------------------------------------------------------------------------- Results of Operations                                                        Net interest income                                                           (teb - see below)   $    123,727  $    125,239  $    111,929        11      Less teb adjustment         1,989         2,090         2,000        (1)     ---------------------------------------------------------------------------- Net interest income                                                           per financial                                                                statements               121,738       123,149       109,929        11      Other income               29,794        28,531        23,390        27      Total revenues (teb)      153,521       153,770       135,319        13      Total revenues            151,532       151,680       133,319        14      Net income available                                                          to common                                                                    shareholders              51,191        52,628        42,988        19      Earnings per common                                                           share                                                                         Basic(2)                   0.64          0.66          0.54        19        Diluted(3)                 0.63          0.65          0.54        17        Adjusted cash(4)           0.65          0.67          0.55        18      Return on common                                                             shareholders'                                                                equity(5)                   14.3%         14.7%         13.4%       90   bp Return on assets(7)          1.07          1.11          1.00         7      Efficiency ratio                                                              (teb)(8)                    46.0          45.1          47.9      (190)     Efficiency ratio             46.6          45.7          48.6      (200)     Net interest margin                                                           (teb)(9)                    2.59          2.64          2.61        (2)     Net interest margin          2.55          2.60          2.56        (1)     Provision for credit                                                          losses as a                                                                  percentage of                                                                average loans               0.16          0.19          0.19        (3)     ---------------------------------------------------------------------------- Per Common Share                                                             Cash dividends       $       0.19  $       0.19  $       0.17        12      Book value                  18.65         18.03         16.82        11      Closing market value        37.14         36.43         28.46        30      Common shares                                                                 outstanding                                                                  (thousands)               80,045        79,897        79,171         1      ---------------------------------------------------------------------------- Balance Sheet and Off-Balance Sheet Summary                                  Assets               $ 19,626,666  $ 19,135,490  $ 17,779,280        10      Loans                  16,707,888    16,156,366    14,884,553        12      Deposits               16,668,534    16,243,496    14,885,315        12      Debt                      997,962       812,780       897,183        11      Shareholders' equity    1,492,553     1,648,971     1,540,971        (3)    Assets under                                                                  administration        11,538,750     8,463,935     7,821,089        48      Assets under                                                                  management             1,763,256     1,683,813       904,730        95      ---------------------------------------------------------------------------- Capital Adequacy(10)                                                         Common equity Tier 1                                                          ratio                        8.1%          8.0%          8.0%       10   bp Tier 1 ratio                  9.4           9.5           9.7       (30)     Total ratio                  13.1          13.2          14.1      (100)     ----------------------------------------------------------------------------  Selected Financial Highlights                                      (unaudited)                                         Change        ($ thousands,          For the six months ended       from        except                    April 30      April 30  April 30        per share amounts)            2014       2013(1)      2013        ----------------------------------------------------------------- Results of Operations                                             Net interest income                                                (teb - see below)  % $    248,966  $    224,981        11      % Less teb adjustment          4,079         3,915         4        ----------------------------------------------------------------- Net interest income                                                per financial                                                     statements                244,887       221,066        11        Other income                58,325        45,769        27        Total revenues (teb)       307,291       270,750        13        Total revenues             303,212       266,835        14        Net income available                                               to common                                                         shareholders              103,819        88,470        17        Earnings per common                                                share                                                              Basic(2)                    1.30          1.12        16          Diluted(3)                  1.29          1.11        16          Adjusted cash(4)            1.31          1.13        16        Return on common                                                   shareholders'                                                     equity(5)                    14.5%         13.8%       70  bp(6) Return on assets(7)           1.09          1.03         6        Efficiency ratio                                                   (teb)(8)                     45.5          46.9      (140)       Efficiency ratio              46.1          47.6      (150)       Net interest margin                                                (teb)(9)                     2.61          2.61         -        Net interest margin           2.57          2.57         -        Provision for credit                                               losses as a                                                       percentage of                                                     average loans                0.18          0.18         -        ----------------------------------------------------------------- Per Common Share                                                  Cash dividends      % $       0.38  $       0.34        12      % Book value                   18.65         16.82        11        Closing market value         37.14         28.46        30        Common shares                                                      outstanding                                                       (thousands)                80,045        79,171         1        ----------------------------------------------------------------- Balance Sheet and Off-Balance Sheet Summary                       Assets              %                                             Loans                                                             Deposits                                                          Debt                                                              Shareholders' equity                                              Assets under                                                       administration                                                   Assets under                                                       management                                                       ----------------------------------------------------------------- Capital Adequacy(10)                                              Common equity Tier 1                                               ratio                                                            Tier 1 ratio                                                      Total ratio                                                       -----------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1 of the  consolidated financial statements.  2.  Basic earnings per common share (EPS) is calculated as net income  available to common shareholders divided by the average number of common  shares outstanding.  3.  Diluted EPS is calculated as net income available to common shareholders  divided by the average number of common shares outstanding adjusted for  the dilutive effects of stock options.  4.  Adjusted cash EPS is diluted EPS excluding the after-tax amortization of  acquisition-related intangible assets and the non-tax deductible change  in fair value of contingent consideration. These exclusions represent  non-cash charges and are not considered indicative of ongoing business  performance.  5.  Return on common shareholders' equity is calculated as annualized net  income available to common shareholders divided by average common  shareholders' equity.  6.  bp - basis point change.  7.  Return on assets is calculated as annualized net income available to  common shareholders divided by average total assets.  8.  Efficiency ratio is calculated as non-interest expenses divided by total  revenues excluding the non-tax deductible change in fair value of  contingent consideration.  9.  Net interest margin is calculated as annualized net interest income  divided by average total assets.  10. Capital adequacy is calculated in accordance with Basel III guidelines  issued by the Office of the Superintendent of Financial Institutions  Canada (OSFI).   /T/  Taxable Equivalent Basis (teb)  Most banks analyze revenue on a taxable equivalent basis to permit uniform measurement and comparison of net interest income. Net interest income (as presented in the consolidated statement of income) includes tax-exempt income on certain securities. Since this income is not taxable, the rate of interest or dividends received is significantly lower than would apply to a loan or security of the same amount. The adjustment to taxable equivalent basis increases interest income and the provision for income taxes to what they would have been had the tax-exempt securities been taxed at the statutory rate. The taxable equivalent basis does not have a standardized meaning prescribed by International Financial Reporting Standards (IFRS) and, therefore, may not be comparable to similar measures presented by other financial institutions. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.  Non-IFRS Measures  CWB uses a number of financial measures to assess its performance. These measures provide readers with an enhanced understanding of how management views the results. Non-IFRS measures may also provide readers the ability to analyze trends and provide comparisons with our competitors. Taxable equivalent basis, adjusted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, common equity Tier 1, Tier 1 and total capital adequacy ratios, and average balances do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other financial institutions.  Management's Discussion and Analysis  This management's discussion and analysis (MD&A), dated June 4, 2014, should be read in conjunction with Canadian Western Bank's (CWB) unaudited condensed interim consolidated financial statements for the period ended April 30, 2014, and the audited consolidated financial statements and MD&A for the year ended October 31, 2013, available on SEDAR at www.sedar.com and CWB's website at www.cwb.com.   Forward-looking Statements  From time to time, CWB makes written and verbal forward-looking statements. Statements of this type are included in the Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as press releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about CWB's objectives and strategies, targeted and expected financial results and the outlook for CWB's businesses or for the Canadian or U.S. economy. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "may increase", "may impact" and other similar expressions, or future or conditional verbs such as "will", "should", "would" and "could."  By their very nature, forward-looking statements involve numerous assumptions. A variety of factors, many of which are beyond CWB's control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in Canada including the volatility and lack of liquidity in financial markets, fluctuations in interest rates and currency values, changes in monetary policy, changes in economic and political conditions, regulatory and legal developments, the level of competition in CWB's markets, the occurrence of weather-related and other natural catastrophes, changes in accounting standards and policies, the accuracy of and completeness of information CWB receives about customers and counterparties, the ability to attract and retain key personnel, the ability to complete and integrate acquisitions, reliance on third parties to provide components of CWB's business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and management's ability to anticipate and manage the risks associated with these factors. It is important to note that the preceding list is not exhaustive of possible factors.   These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause CWB's actual results to differ materially from the expectations expressed in such forward looking statements. Unless required by securities law, CWB does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by it or on its behalf.  Assumptions about the performance of the Canadian economy in 2014 and how it will affect CWB's businesses are material factors considered when setting organizational objectives and targets. Performance target ranges for fiscal 2014 consider the following management assumptions: a modest acceleration of economic growth in Canada and relatively stronger performance in the four western provinces; prices for energy and other commodities remaining at levels comparable with those observed at October 31, 2013; sound credit quality with actual losses remaining within CWB's historical range of acceptable levels; and, a relatively stable net interest margin (teb) compared to the prior year, attributed to favourable deposit costs and shifts in asset mix that help to offset impacts from the very low interest rate environment and competitive factors. Management's assumptions at the end of the second quarter remained relatively unchanged compared to those at the 2013 fiscal year end.   Potential risks that would have a material adverse impact on current economic expectations and forecasts include a slowing rate of economic growth in the U.S., a significant and sustained deterioration in Canadian residential real estate prices, or a significant disruption in other global economies. Unexpected pricing competition and/or disruptions in domestic or global financial markets that meaningfully impact the costs of overall deposit funding may also contribute to adverse financial results compared to expectations.  Overview  CWB reported solid financial performance including strong loan growth of 12% over the past twelve months, 3% in the quarter and 7% year-to-date.   Q2 2014 vs. Q2 2013  Net income available to common shareholders of $51.2 million was up 19% as the benefit of strong loan growth, higher other income and a lower provision for credit losses more than offset a two basis point decrease in net interest margin (teb) and higher non-interest expenses. Other income increased 27% primarily reflecting a significant increase in trust and wealth management revenues, as well as higher net gains on securities and credit related fee income. Diluted earnings per common share was up 17% to $0.63. Despite the payment of dividends on both Series 3 and Series 5 preferred shares this quarter, adjusted cash earnings per common share, which excludes the after-tax amortization of acquisition-related intangible assets and non-tax deductible changes in fair value of contingent consideration, increased 18% to $0.65.   Q2 2014 vs. Q1 2014  Net income available to common shareholders was 3% lower as the positive revenue impact of strong loan growth and higher other income, as well as a lower provision for credit losses, was offset by three fewer revenue-earning days, lower net interest margin (teb), higher non-interest expenses and a one-time increase in preferred share dividends.   YTD 2014 vs. YTD 2013  Net income available to common shareholders of $103.8 million was up 17% as growth in total revenues (teb) of 13% more than offset the one-time increase in preferred share dividends and higher non-interest expenses. Higher total revenues were driven by an 11% increase in net interest income (teb) and 27% higher other income. The year-to-date net interest margin (teb) of 2.61% was unchanged. Adjusted cash earnings per share increased 16% to $1.31.  ROE and ROA  Second quarter return on common shareholders' equity (ROE) was 14.3% compared to 14.7% last quarter and 13.4% last year. Year-to-date ROE of 14.5% was 70 basis points higher than last year. Return on assets (ROA) of 1.07% was down four basis points from last quarter and up seven basis points compared to a year earlier. Year-to-date ROA of 1.09% compares to 1.03% last year.   Issuance of First Preferred Shares Series 5 and Redemption of First Preferred Shares Series 3  As previously reported, CWB closed its domestic public offering of five million Basel III-compliant non-cumulative five-year rate reset Series 5 preferred shares for gross proceeds of $125 million during the second quarter. Holders of these shares are entitled to receive a non-cumulative fixed dividend in the amount of $1.10 annually, payable quarterly, for the initial period ending April 30, 2019. The quarterly dividend represented an annual yield of 4.40% at issuance, based on the $25.00 issue price per share. CWB also redeemed, on April 30, 2014, $209 million of outstanding 7.25% Series 3 preferred shares.   These transactions will benefit shareholders through a more efficient capital structure while ensuring CWB remains well capitalized within the Basel III regulatory capital framework.   Total Revenues (teb)  Total revenues, comprised of both net interest income (teb) and other income, of $153.5 million were 13% higher than the same quarter in 2013 and relatively unchanged from the previous quarter. Year-to-date total revenues of $307.3 million were up 13% compared to last year.   Net Interest Income (teb)  Q2 2014 vs. Q2 2013  Net interest income of $123.7 million was up 11% as the revenue contribution from strong 12% loan growth more than offset a two basis point decline in net interest margin (teb) to 2.59%. The change in net interest margin mainly resulted from lower loan yields, partially offset by more favourable fixed term deposit and debenture costs.   Q2 2014 vs. Q1 2014  Net interest income was down 1% as the benefit of strong 3% loan growth was offset by three fewer days and a five basis point decrease in net interest margin (teb). The decline in net interest margin primarily resulted from lower loan yields and higher average liquidity.  YTD 2014 vs. YTD 2013  Net interest income of $249.0 million was up 11%, mainly the result of strong loan growth. Net interest margin (teb) of 2.61% was unchanged as lower loan yields were offset by more favourable fixed term deposit and debenture costs and lower average liquidity.  Interest rate sensitivity  Note 14 to the unaudited interim consolidated financial statements summarizes CWB's exposure to interest rate risk as at April 30, 2014. The estimated sensitivity of net interest income to a change in interest rates is presented in the table below. The amounts represent the estimated change in net interest income that would result over the following twelve months from a one-percentage point change in interest rates. The estimates are based on a number of assumptions and factors, which include:  /T/  --  a constant structure in the interest sensitive asset and liability  portfolios;  --  interest rate changes affecting interest sensitive assets and  liabilities by proportionally the same amount, except floor levels for  various deposit liabilities, and applied at the appropriate repricing  dates; and,  --  no early redemptions.   April 30    January 31    April 30   ($ thousands)                               2014          2014        2013   ----------------------------------------------------------------------------  Estimated impact on net interest                                              income of a 1% increase in interest                                          rates                                                                         1 year                              $   16,270   $    13,980   $  20,425   ----------------------------------------------------------------------------   1 year percentage change                   3.8%          3.1%        4.9%  ----------------------------------------------------------------------------  Estimated impact on net interest                                              income of a 1% decrease in interest                                          rates                                                                         1 year                              $  (29,418)  $   (23,587)  $ (28,260)  ----------------------------------------------------------------------------   1 year percentage change                  (6.9)%        (5.2)%      (6.8)% ----------------------------------------------------------------------------  /T/  Higher sensitivity to a decrease in rates is due to asymmetry in the impact of falling rates on loans and deposits. A decrease of one-percentage point in rates is assumed to reduce loan yields by an equivalent amount. The assumed change in total deposit costs is lower because deposits yielding less than one percent cannot be reduced to a rate lower than zero.   In addition to the projected changes in net interest income noted above, it is estimated that a one-percentage point increase in all interest rates at April 30, 2014 would decrease unrealized gains related to available-for-sale securities and the fair value of interest rate swaps designated as hedges, and result in a reduction in other comprehensive income of approximately $14.6 million, net of tax (April 30, 2013 - $9.5 million). It is estimated that a one-percentage point decrease in all interest rates at April 30, 2014 would have the opposite effect, increasing other comprehensive income by approximately $14.6 million, net of tax (April 30, 2013 - $9.5 million).   Management maintains the asset liability structure and interest rate sensitivity within CWB's established policies through pricing and product initiatives, as well as the use of interest rate swaps and other appropriate strategies.  Outlook for net interest margin  Second quarter net interest margin (teb) was two basis points lower than the same quarter last year, down five basis points from the previous quarter, and unchanged on a year-to-date basis. Meaningful improvement in net interest margin (teb) from the current level is not expected in the absence of increases in the prime lending interest rate and/or a sustained steepening of the interest rate curve. CWB will maintain its long-term strategic focus on mitigating the earnings impact of ongoing margin pressure through efforts to achieve stronger relative growth in higher yielding loan portfolios with an acceptable risk profile, improving the funding mix to lower the overall cost of funds, prudently managing liquidity levels and increasing contributions from other income sources.   Other Income  Q2 2014 vs. Q2 2013  Other income of $29.8 million was up 27% ($6.4 million) mainly due to increases in trust and wealth management revenues, net gains on securities, credit related fee income and the "other" category of other income, partially offset by lower net insurance income. Higher wealth management revenue primarily reflects the third quarter 2013 acquisition of McLean & Partners. Higher net gains on securities reflect strategic management of the portfolio in view of favourable equity and bond market conditions. Based on the level of gains realized and the current composition of the securities portfolio, quarterly net gains on securities are expected to be lower through the remainder of the year although equity and bond market conditions are inherently unpredictable in the short-term. The 'other' category of other income was up $0.8 million, mainly due to a gain on the sale of $25 million of conventional residential mortgages.   Q2 2014 vs. Q1 2014  Other income was up 4% ($1.3 million) primarily reflecting a $0.9 million increase in the 'other' category of other income and higher trust revenues, offset by slightly lower net insurance revenues and net gains on securities. The increase in 'other' other income reflects the sale of residential mortgages discussed above.   YTD 2014 vs. YTD 2013  Other income was up 27% ($12.6 million), reflecting increases across all categories with the exception of 'other' other income. A significant $6.7 million increase in trust and wealth management revenues accounted for over half of the overall increase, with higher net gains on securities and credit related fee income also contributing. Increases in these categories mainly reflect the factors discussed above under the heading Q2 2014 vs. Q2 2013.   Credit Quality  Overall credit quality reflects continued strong underwriting practices and relatively stable levels of economic activity in Western Canada. The dollar level of gross impaired loans at April 30, 2014 represented 0.30% of total loans at quarter end, compared to 0.33% last quarter and 0.41% one year ago.  /T/  Change         For the three months ended            from        (unaudited)                 April 30   January 31   April 30 April 30        ($ thousands)                   2014         2014       2013     2013        ----------------------------------------------------------------------------  Gross impaired loans,                                                         beginning of period       $  53,937  $    64,211  $  55,734       (3)     %   New formations              23,129        5,634     19,923       16          Reductions, impaired                                                        accounts paid down or                                                      returned to performing                                                     status                    (17,189)     (13,455)   (10,158)      69          Write-offs                  (9,256)      (2,453)    (3,876)     139        ---------------------------------------------------------------------------- Total(1)                   $  50,621  $    53,937  $  61,623      (18)     % ----------------------------------------------------------------------------  Balance of the ten largest                                                    impaired accounts         $  22,009  $    27,929  $  33,189      (34)     % Total number of accounts                                                      classified as impaired(3)       133          132        131        2        Gross impaired loans as a                                                     percentage of total                                                          loans(4)                       0.30%        0.33%      0.41%     (11) bp(2)  1.  Gross impaired loans include foreclosed assets held for sale with a  carrying value of $4,157 (January 31, 2014 - $5,014 and April 30, 2013 -  $7,256).  2.  bp - basis point change.  3.  Total number of accounts excludes National Leasing.  4.  Total loans do not include an allocation for credit losses or deferred  revenue and premiums.   /T/  The level of gross impaired loans fluctuates as loans become impaired and are subsequently resolved, and does not directly reflect the dollar value of expected write-offs given tangible security held in support of lending exposures. The reduction in gross impaired loans compared to both the prior quarter and last year mainly resulted from write-offs in the current period, coupled with pay downs and loans returned to performing status. Management expects gross impaired loans to increase from the current very low level reflecting normal fluctuations of the credit cycle.  Specific allowances for expected write-offs are established through detailed analyses of both the overall quality and ultimate marketability of the security held against impaired accounts. Actual credit losses are expected to remain within CWB's historical range of acceptable levels. As at April 30, 2014, the collective allowance for credit losses exceeded the balance of impaired loans, net of specific allowances. The total allowance for credit losses (collective and specific) represented 176% of gross impaired loans at quarter end, compared to 169% last quarter and 129% one year ago. The total allowance for credit losses was $89.0 million at April 30, 2014, compared to $91.4 million last quarter and $79.5 million a year earlier.  The quarterly provision for credit losses measured against average loans was 16 basis points, three basis points lower than both the same quarter last year and the prior quarter. On a year-to-date basis, the provision for credit losses measured against average loans was unchanged from last year at 18 basis points. Based on the current environment and expectations for credit quality looking forward, management expects the annual provision for credit losses will remain at the low end of the 2014 target range of 18 to 23 basis points.  Non-interest Expenses  One of management's key priorities is to deliver strong long-term growth through strategic investment in people, technology, infrastructure and other areas while maintaining effective control of costs. This strategy is aligned with a commitment to maximize long-term shareholder value and expected to provide material benefits in future periods. Work toward implementation of a new core banking system has proceeded on time and on budget through the end of the second quarter. Current plans estimate completion of this very significant technology project in 2015 based on a capital budget of $50 million. Upgrades and expansion of branch infrastructure are also ongoing, as evidenced by this quarter's relocation of CWB's flagship Edmonton Main Branch to significantly expanded premises. Compliance with an increasing level of regulatory rules and oversight for all Canadian banks requires the investment of both time and resources, which further contributes to higher non-interest expenses.  Q2 2014 vs. Q2 2013  Quarterly non-interest expenses of $70.6 million were up 9% ($5.8 million) primarily due to higher salaries and benefits, and premises and equipment expense. Of the total increase in non-interest expenses, 33% reflects the addition of McLean & Partners. The change in salaries and benefits, excluding McLean & Partners, mainly resulted from higher full-time salary expense associated with annual salary increments and a larger staff complement to support ongoing growth across all businesses. Premises and equipment expense was 10% higher primarily reflecting increased rent expense and direct computer costs.   Q2 2014 vs. Q1 2014  Non-interest expenses were up 2%. Increases in benefit costs, direct computer costs and premises expense were partially offset by lower maintenance and salary expense. The sequential decrease in salaries reflects lower stock based compensation charges.   YTD 2014 vs. YTD 2013  Non-interest expenses of $140.1 million were 10% ($13.2 million) higher than the prior year, primarily as a result of increases in salaries and benefits, premises and equipment, and general expenses. Of the total increase in non-interest expenses, 27% reflects the addition of McLean & Partners. Higher salaries and benefits, and premises and equipment expense reflect the factors discussed above under the heading Q2 2014 vs. Q2 2013. The change in general expenses was driven by higher regulatory costs, the impact of a higher CWB common share price on Deferred Share Units (DSUs) for directors, and expenses related to this quarter's issuance of preferred shares.   Efficiency ratio  The second quarter efficiency ratio (teb), which measures non-interest expenses as a percentage of total revenues (teb), was 46.0%, compared to 47.9% last year and 45.1% in the previous quarter. Improved efficiency compared to last year reflects the revenue benefit of strong growth in loans and other income, partially offset by slightly lower net interest margin (teb). The change compared to the prior quarter mainly reflects three fewer revenue earning days combined with the impact on total revenues of lower net interest margin (teb). Improvement in the year-to-date efficiency ratio, from 46.9% last year to 45.5% this year, reflects the combined benefits of strong total revenue growth and effective cost control. Based on year-to-date performance and in consideration of expected revenues and planned expenditures through the rest of the year, management believes the 2014 efficiency ratio target of 46% or better is challenging but attainable.   Income Taxes  The second quarter effective income tax rate (teb) was 26.2%, compared to 26.5% last year. The effective income tax rate (teb) for the first six months of 2014 was 26.1%, compared to 26.4% last year.   Comprehensive Income  Comprehensive income is comprised of net income and other comprehensive income (OCI), all net of income taxes, and totaled $67.0 million for the second quarter, compared to $46.7 million last year.   The increase in second quarter comprehensive income was driven by a significant increase in OCI and higher net income. The increase in OCI mainly resulted from higher unrealized gains, net of tax, from changes in fair value of available-for-sale securities, which was driven by the net effect of increased market values of securities and the realization of gains and losses within CWB's portfolios of common and preferred equities. While the combined dollar investment in these portfolios is relatively small in relation to total liquid assets, it increases the potential for comparatively larger fluctuations in OCI. Year-to-date comprehensive income of $122.4 million compares to $99.6 million last year. The increase in year-to-date comprehensive income was mainly the result of higher net income and OCI, with the latter driven by the factors described above.   Balance Sheet  Total assets increased 3% in the quarter, 10% in the past year and 6% year-to-date to reach $19,627 million at April 30, 2014.  Cash and Securities  Cash and securities totaled $2,535 million at April 30, 2014, compared to $2,545 million a year earlier and $2,596 million at the end of last quarter. Net unrealized gains recorded on the balance sheet of $6.4 million compare to unrealized gains of $16.5 million a year earlier and unrealized losses of $8.8 million last quarter. The securities portfolio is primarily comprised of high quality debt instruments, preferred shares and common equities that are not held for trading purposes and, where applicable, are typically held until maturity. Volatility in equity markets can lead to fluctuations in value, particularly for common shares. Fluctuations in the value of interest rate sensitive securities, such as preferred shares and debt instruments, are generally attributed to changes in interest rates, movements in market credit spreads and shifts in the interest rate curve. Changes in unrealized gains or losses result from the combined impact of strategic repositioning of the securities portfolio and changes in market values.   Net realized gains on securities in the second quarter of $4.6 million compare to $3.1 million in the same period last year and $4.7 million in the previous quarter. Year-to-date net gains of $9.2 million were up from $5.7 million last year. Net gains reflect both favourable equity and bond market conditions and strategic management of the securities portfolio. Based on the level of gains realized and current composition of the portfolio, quarterly net gains on securities are expected to be lower through the remainder of the year although equity and bond market conditions are inherently unpredictable in the short-term.   Treasury Management  Average liquidity was up from the prior quarter and down from the same quarter last year. Assuming an ongoing supportive economic environment, management expects average liquidity ratios to remain relatively consistent with the current level through the remainder of the year.   DBRS Limited (DBRS) maintains published credit ratings on CWB's senior debt (deposits), short-term debt, subordinated debentures and Basel III-compliant First Preferred Shares Series 5 of "A (low)", "R1 (low)", "BBB (high)" and "Pfd-3", respectively, all with a stable outlook. Credit ratings do not consider market price or address the suitability of any financial instrument for a particular investor and are not recommendations to purchase, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the rating organization. Management believes the ratings widen the base of clients and investors who can participate in CWB's offerings, while also lowering overall funding costs and the cost of capital.   Loans   Total loans grew 3% ($552 million) in the quarter, 12% ($1,823 million) in the past twelve months and 7% ($1,131 million) year-to-date to reach $16,708 million.   Lending activity in British Columbia showed the highest growth in dollar terms for all comparison periods, led by particularly strong growth in real estate project loans. Year-to-date growth was also relatively strong in Ontario, primarily reflecting increased corporate lending and ongoing development of CWB's broker-sourced residential mortgage business, Optimum Mortgage (Optimum).  Loan growth by portfolio compared to the prior quarter, the same quarter last year and on a year-to-date basis is provided in the table below.   /T/  %   Change   from  (unaudited)                April 30 January 31 October 31 April 30 April 30  (millions)                     2014       2014       2013     2013     2013  ----------------------------------------------------------------------------  General commercial loans   $  3,525 $    3,505 $    3,428 $  3,312        6% Commercial mortgages          3,512      3,475      3,311    3,124       12  Equipment financing and                                                       leasing                      3,131      3,016      2,942    2,766       13  Personal loans and                                                            mortgages                    2,665      2,602      2,502    2,378       12  Real estate project loans     2,632      2,418      2,304    2,091       26  Corporate lending(1)          1,044        951        902    1,011        3  Oil and gas production                                                        loans                          288        281        274      282        2  ---------------------------------------------------------------------------- Total loans outstanding(2) $ 16,797 $   16,248 $   15,663 $ 14,964       12% ----------------------------------------------------------------------------  1.  Corporate lending represents a diversified portfolio that is centrally  sourced and administered through a designated lending group located in  Edmonton. These loans include participation in select syndications that  are structured and led primarily by the major Canadian banks, but  exclude participation in various other syndicated facilities sourced  through relationships developed at CWB branches.  2.  Loans by lending sector exclude the allowance for credit losses.   /T/  Growth was led by real estate project loans for all comparison periods as CWB continued to identify opportunities to finance well-capitalized developers on the basis of sound loan structures and acceptable pre-sale/lease levels. Although recent growth in this area has been very strong, CWB's total exposure to real estate remains within management's established risk appetite. Lower than anticipated growth in general commercial loans was partly the result of approved credit facilities remaining undrawn. The potential growth represented by undrawn credit facilities and CWB's promising pipeline of new commercial loans supports management's expectations for strong relative growth in this portfolio over time.   Optimum Mortgage  Total loans of $1,342 million within Optimum represented an increase of 3% ($36 million) compared to the prior quarter, 17% ($196 million) year-over-year, and 10% ($120 million) on a year-to-date basis. Adjusted for loan sales in the current period and third quarter of 2013 of $25 million and $66 million, respectively, loan growth was 5% ($61 million) for the quarter, 25% ($287 million) over the past twelve months and 12% ($145 million) year-to-date. Net growth was driven almost exclusively by alternative mortgages secured via conventional residential first mortgages carrying a weighted average loan-to-value ratio at initiation of approximately 71%. The book value of alternative mortgages represented 85% of Optimum's total portfolio at quarter end, compared to 80% in the prior quarter and 74% last year, with the increase partly resulting from loan sales. Overall, Optimum continues to deliver very strong performance and expand its geographic footprint beyond Western Canada. In addition to its growing presence in Ontario, Optimum added sales staff in Atlantic Canada this quarter.   Securitization  Securitized leases are reported on-balance sheet with total loans. The gross amount of securitized leases at April 30, 2014 was $282 million, compared to $223 million last quarter and $255 million one year ago. Leases securitized in the second quarter and year-to-date totaled $85 million and $102 million, respectively.   Outlook for loans  While strong competition from domestic banks and other financial services firms is expected to continue, management believes CWB will continue to gain market share through a combination of several positive influences. These include an expanded market presence, increased brand awareness in core geographic markets due in part to ongoing marketing initiatives, and the effective execution of CWB's strategic plan focused on targeted client solutions and superior customer service. CWB's strategy continues to focus on enhancing existing competitive advantages in business banking, while offering complementary products and personalized services in small-ticket equipment leasing, personal banking, trust, wealth management and insurance.   Consensus forecasts for Canada's domestic economy continue to anticipate more rapid expansion of economic growth in 2014 and 2015 compared to prior years, largely predicated on improving economic conditions in the U.S. Key markets in Western Canada are expected to perform well relative to the rest of Canada reflecting ongoing capital investment and increased personal spending as well as in-migration primarily related to a favourable long-term outlook for commodities. Canadian residential real estate markets have been resilient and affordability in most geographic areas remains within historical ranges, largely reflecting very low interest rates.   However, the combination of historically high prices, elevated levels of Canadian consumer debt and the potential for increasing interest rates could slow construction and other related lending activity, particularly in Vancouver and Toronto.   Relatively weak natural gas markets and ongoing uncertainty surrounding long-term transportation solutions for both natural gas and heavy oil could lead to moderated growth in capital investment related to natural gas production and oil sands development in the near term. However, the composition of economic growth in Western Canada has broadened in recent years, with accelerations in non-resource exports, personal consumption and housing-related activity. Opportunities related to the maintenance of existing facilities within the resource sector also remain abundant. The current overall economic outlook remains supportive of management's expectations for double-digit loan growth in fiscal 2014.  Deposits  Total deposits at April 30, 2014 were $16,669 million, up 3% over the previous quarter and 12% over the past year. Personal deposits represented 60% of total deposits at April 30, 2014, up from 59% the prior quarter and down from 62% one year ago. Total branch-raised deposits, including trust services deposits, represented 54% of total deposits at April 30, 2014, unchanged from the previous quarter and down from 56% one year ago. Demand and notice deposits were 31% of total deposits, down from 32% in the previous quarter and 33% in the same period last year.   Total branch deposits of $8,875 million were up 1% sequentially, 7% over the past twelve months and 3% year-to-date. The demand and notice component within branch-raised deposits, which includes lower cost balances, was up 2% compared to the prior quarter, 7% from the same time last year and 4% year-to-date to reach $5,216 million. One of management's long-term strategic objectives is to increase the level of personal and business deposits raised within the branch network, trust companies and Canadian Direct Financial, the Internet-based division of CWB. Specific emphasis is placed on growing deposits that are lower cost, provide associated transactional fee income and strengthen relationships by providing clients with relevant tools for managing their business and personal finances. Meaningful enhancements to CWB's cash management offerings for business clients, including the availability of desktop wires and foreign exchange services, now expected in the third quarter, continue to support this focus on growing branch-raised deposits over time, as do focused training programs that have reached a significant number of branch employees.   CWB's growing market presence, including ongoing expansion and upgrades to existing branches, also supports the generation of branch-raised deposits. On April 28, 2014, CWB opened its relocated flagship branch in central Edmonton, Alberta. The significantly expanded footprint will enhance the branch's overall capacity for future growth and accommodate CWB's primary team of real estate lending specialists for the capital region.  Management remains committed to further enhance and diversify all funding sources to support growth, manage the impact of competitive factors and mitigate pressure on net interest margin. The deposit broker network remains a valued source for raising insured fixed term retail deposits and has proven to be an effective and efficient way to access funding and liquidity over a wide geographic base. Selectively utilizing debt capital markets is also part of management's strategy to further diversify the funding base over time. At the end of the second quarter, a total of $1,719 million of term deposits raised through debt capital markets was outstanding, representing 10% of total deposits, consistent with the previous quarter and up from 7% from last year. The increase from last year mainly reflects a $300 million senior deposit note issuance in January 2014 and expansion of CWB's Bearer Deposit Note (BDN) program to $314 million. Management will continue to evaluate the funding potential available through securitization of portfolios that may include equipment loans and leases, residential mortgages and commercial mortgages.   Other Assets and Other Liabilities  Other assets at April 30, 2014 totaled $383 million, unchanged from the prior quarter and up from $350 million one year ago. Other liabilities at quarter end were $466 million, compared to $429 million the previous quarter and $456 million a year earlier.   Off-Balance Sheet  Off-balance sheet items include assets under administration and assets under management. Total assets under administration, which are comprised of trust assets and third-party leases under administration, as well as mortgages under service agreements, totaled $11,539 million at April 30, 2014, compared to $8,464 million last quarter and $7,821 million one year ago.   The significant increase in assets under administration during the quarter was mainly driven by funds temporarily on hand at Valiant Trust related to a large corporate action and the addition of a new trust services client.   Assets under management were $1,763 million at quarter end, compared to $1,684 million last quarter and $905 million a year earlier. Higher assets under management compared to last year reflect the addition of McLean & Partners.  Other off-balance sheet items are comprised of standard industry credit instruments (guarantees, standby letters of credit and commitments to extend credit). CWB does not utilize, nor does it have exposure to, collateralized debt obligations or credit default swaps. For additional information regarding other off-balance sheet items refer to Note 12 of the unaudited interim consolidated financial statements for the period ended April 30, 2014, as well as Notes 11 and 20 of the audited consolidated financial statements in CWB's 2013 Annual Report.  Capital Management  The Office of the Superintendent of Financial Institutions Canada (OSFI) requires Canadian financial institutions to manage and report regulatory capital in accordance with the Basel III capital management framework. The required minimum regulatory capital ratios, including a 250 basis point capital conservation buffer, are 7.0% common equity Tier 1 (CET1), 8.5% Tier 1 and 10.5% total capital.   During the quarter CWB closed its domestic public offering of five million Basel III-compliant Series 5 preferred shares for gross proceeds of $125 million. CWB also redeemed the outstanding non-cumulative five-year rate reset Series 3 preferred shares on April 30, 2014.   At April 30, 2014, CWB's capital ratios were 8.1% CET1, 9.4% Tier 1 and 13.1% total capital. The CET1 ratio increased 10 basis points from the previous quarter, while the Tier 1 and total capital ratios were each down 10 basis points. Lower Tier 1 and total capital ratios reflect the net impact of the preferred share transactions.   Further details regarding CWB's regulatory capital and capital adequacy ratios are included in the following table:  /T/  As at        As at        As at  (unaudited)                              April 30   January 31     April 30  ($ millions)                                 2014         2014         2013  ---------------------------------------------------------------------------- Regulatory capital                                                             CET1 capital before deductions      $     1,492  $     1,438  $     1,331    Net CET1 deductions                        (115)        (112)        (101) ----------------------------------------------------------------------------   CET1 capital                              1,377        1,326        1,230  ----------------------------------------------------------------------------   Tier 1 capital before deductions(1)         230          252          283    Net deductions                                -           (2)         (10) ----------------------------------------------------------------------------   Tier 1 capital                            1,607        1,576        1,503  ----------------------------------------------------------------------------   Tier 2 capital before deductions(1)         625          619          678    Net deductions                                -            -           (1) ----------------------------------------------------------------------------   Total capital                       $     2,232  $     2,195  $     2,180  ---------------------------------------------------------------------------- Risk-weighted assets                  $    17,089  $    16,671  $    15,446  ---------------------------------------------------------------------------- Capital adequacy ratios                                                       CET1                                      8.1%         8.0%         8.0%  Tier 1                                    9.4          9.5          9.7   Total                                    13.1         13.2         14.1   1.  The 2014 inclusion of non-common equity instruments that do not include  non-viability contingent capital clauses is capped at 80% of the January  1, 2013 outstanding balances (April 30, 2013 - 90%). At April 30, 2014,  there was no exclusion from regulatory capital related to the Innovative  Tier 1 capital (disclosed in deposits). At January 31, 2014 and April  30, 2013 a combined $62 million and $31 million, respectively, of  outstanding Innovative Tier 1 capital and preferred shares were excluded  from regulatory capital. At April 30, 2014, $85 million of outstanding  subordinated debentures (January 31, 2014 - $85 million and April 30,  2013 - $68 million) were excluded from regulatory capital.    /T/  Retention of earnings associated with anticipated performance within the 2014 target ranges is expected to support capital requirements, including targets established through CWB's Internal Capital Adequacy Assessment Process (ICAAP).   CWB currently reports its regulatory capital ratios using the Standardized approach for calculating risk-weighted assets. This approach requires CWB to carry significantly more capital for certain credit exposures compared to requirements under the Advanced Internal Ratings Based (AIRB) methodology used by larger Canadian financial institutions. For this reason, regulatory capital ratios of banks that utilize the Standardized approach versus the AIRB methodology are not directly comparable. Required resources, costs and potential timelines related to CWB's possible multi-year transition to an AIRB methodology for managing credit risk and calculating risk-weighted assets continue to be evaluated. CWB's new core banking system, expected to be implemented in 2015, is a critical component for a number of requirements necessary for AIRB compliance, including the collection and analysis of certain types of data.  Further information relating to CWB's capital position is provided in Note 15 of the unaudited interim consolidated financial statements as well as the audited consolidated financial statements and MD&A for the year ended October 31, 2013.   Book value per common share at April 30, 2014 was $18.65, compared to $18.03 last quarter and $16.82 one year ago.  Common shareholders received a quarterly cash dividend of $0.19 per common share on March 27, 2014. On April 30, 2014, holders of Series 3 preferred shares received the final quarterly cash dividend of $0.453125 per share and holders of Series 5 preferred shares received an initial pro-rated cash dividend of $0.2381 per share. On June 4, 2014, CWB's Board of Directors declared a cash dividend of $0.20 per common share, payable on June 26, 2014 to shareholders of record on June 16, 2014. This quarterly dividend was 11% higher than the quarterly dividend declared one year ago and 5% higher than the prior quarter. The Board of Directors also declared a quarterly cash dividend of $0.275 per Series 5 preferred share payable on July 31, 2014 to shareholders of record on July 24, 2014.   Significant Changes in Accounting Policies  Consolidated Financial Statements   Effective November 1, 2013, CWB adopted IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosures of Interests in Other Entities, which establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities, and new disclosure requirements for all forms of interests in other entities. As a result of the application of IFRS 10, CWB has changed its accounting policy for determining whether it has control over its investees and consequently, has de-consolidated Canadian Western Bank Capital Trust (the Trust) through which certain regulatory capital instruments are issued. In accordance with the transitional provisions, CWB has applied IFRS 10 retrospectively and comparative figures have been restated to reflect the de-consolidation of the Trust. The de-consolidation of the Trust resulted in a $105 million decrease in CWB Capital Trust Capital Securities Series 1 (WesTS) previously classified as non-controlling interest and an increase of $105 million in deposit liabilities, and reclassification of the associated distribution, which totaled $1.7 million and $3.3 million for the three and six months ended April 30, 2013, respectively, from non-controlling interest to interest expense.   Fair value measurement  Effective November 1, 2013, CWB adopted IFRS 13 Fair Value Measurement, which applies to other IFRS standards that require or permit fair value measurements or disclosures about fair value measurements and sets out a framework on how to measure fair value using the assumptions that market participants would use when pricing the asset or liability under current market conditions, including assumptions about risk. In accordance with the transitional provisions of IFRS 13, CWB has applied the new fair value measurement guidance prospectively. This new standard had no impact on the measurement of CWB's assets and liabilities. Additional disclosures required by IFRS 13 are included in Note 13 of the unaudited interim consolidated financial statements.  Future Accounting Changes  A number of standards and amendments have been issued by the International Accounting Standards Board (IASB) and are noted on page 45 of the 2013 Annual Report. These standards and amendments may impact the presentation of financial statements in the future and management is currently reviewing these changes to determine the impact, if any.  CWB continues to monitor activities of the IASB as well as proposed changes to IFRS. Several accounting standards in the process of being amended by the IASB (e.g. loan impairment, leases and insurance) may have a significant impact on the presentation of CWB's consolidated financial statements in the future.  Controls and Procedures  There were no changes in CWB's internal controls over financial reporting that occurred during the quarter ended April 30, 2014 that have materially affected, or are reasonably likely to materially affect, CWB's internal controls over financial reporting.   The Bank's certifying officers had previously limited the scope of the design of disclosure controls and procedures and internal control over financial reporting to exclude the controls, policies and procedures of McLean & Partners, acquired in the third quarter of 2013. This limitation has now been removed.  Prior to its release, this quarterly report to shareholders was reviewed by the Audit Committee and, on the Audit Committee's recommendation, approved by the Board of Directors of CWB.  Updated Share Information  As at May 30, 2014, there were 80,047,829 CWB common shares outstanding. Also outstanding were employee stock options, which are or will be exercisable for up to 4,413,632 common shares for maximum proceeds of $127 million.   Dividend Reinvestment Plan  CWB common shares (TSX:CWB), as well as Series 3 and Series 5 preferred shares (TSX: CWB.PR.A and CWB.PR.B, respectively) have been deemed eligible to participate in CWB's dividend reinvestment plan (the Plan). The Plan provides holders of eligible shares the opportunity to direct cash dividends toward the purchase of CWB common shares. Further details for the Plan are available on CWB's website at www.cwb.com/investor_relations/drip. At the current time, for the purposes of the Plan, CWB has elected to issue common shares from treasury at a 2% discount from the average market price (as defined in the Plan).   Preferred Share Normal Course Issuer Bid  Prior to its expiration on February 28, 2014, CWB had a Normal Course Issuer Bid (NCIB) outstanding to purchase, for cancellation, up to 826,120 Non-Cumulative five-Year Rate Reset Preferred Shares Series 3 ("preferred shares"). During fiscal 2014, CWB did not purchase any preferred shares under the NCIB.   /T/  Summary of Quarterly Financial Information                        2014              ---------------------------- ($ thousands)                                   Q2            Q1 ---------------------------------------------------------------- Total revenues (teb)                 $     153,521 $     153,770 Total revenues                             151,532       151,680 Net income                                  56,384        56,749 Net income available to common                                    shareholders                               51,191        52,628 Earnings per common share                                          Basic                                       0.64          0.66   Diluted                                     0.63          0.65   Adjusted cash                               0.65          0.67 Total assets ($ millions)                   19,627        19,135 ----------------------------------------------------------------  Summary of Quarterly Financial Information                                    2013(1)                  ---------------------------------------- ($ thousands)                               Q4        Q3        Q2        Q1 ---------------------------------------------------------------------------- Total revenues (teb)                 $ 150,956 $ 144,034 $ 135,319 $ 135,431 Total revenues                         148,894   141,873   133,319   133,516 Net income                              55,332    51,623    46,887    49,365 Net income available to common                                                shareholders                           51,210    47,484    42,988    45,482 Earnings per common share                                                      Basic                                   0.64      0.60      0.54      0.58   Diluted                                 0.64      0.60      0.54      0.57   Adjusted cash                           0.65      0.61      0.55      0.58 Total assets ($ millions)               18,520    17,927    17,779    17,161 ----------------------------------------------------------------------------  Summary of Quarterly Financial Information                        2012(1)            ---------------------------- ($ thousands)                                   Q4            Q3 ---------------------------------------------------------------- Total revenues (teb)                 $     131,482 $     136,454 Total revenues                             129,503       134,368 Net income                                  46,920        51,882 Net income available to common                                    shareholders                               43,046        48,004 Earnings per common share                                          Basic                                       0.55          0.62   Diluted                                     0.55          0.61   Adjusted cash                               0.56          0.63 Total assets ($ millions)                   16,873        16,033 ----------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1 of the  consolidated financial statements and within the Changes in Accounting Policies section of this MD&A. 2012 financial results have been restated  for the purposes of this chart.   /T/  The financial results for each of the last eight quarters are summarized above. In general, CWB's performance reflects a relatively consistent trend, although the second quarter contains three fewer revenue-earning days.   CWB's quarterly financial results are subject to some fluctuation due to its exposure to property and casualty insurance. Insurance operations, which are primarily reflected in other income, are subject to seasonal weather conditions, cyclical patterns of the industry and natural catastrophes.   Among other things, quarterly results can also fluctuate from the recognition of periodic income tax items.  For additional details on variations between the prior quarters, refer to the summary of quarterly results section of CWB's MD&A for the year ended October 31, 2013 and the individual quarterly reports to shareholders which are available on SEDAR at www.sedar.com and on CWB's website at www.cwb.com.  Taxable Equivalent Basis (teb)  Most banks analyze revenue on a taxable equivalent basis to permit uniform measurement and comparison of net interest income. Net interest income (as presented in the consolidated statement of income) includes tax-exempt income on certain securities. Since this income is not taxable, the rate of interest or dividends received is significantly lower than would apply to a loan or security of the same amount. The adjustment to taxable equivalent basis increases interest income and the provision for income taxes to what they would have been had the tax-exempt securities been taxed at the statutory rate. The taxable equivalent basis does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions. Total revenues, net interest income and income taxes are discussed on a taxable equivalent basis throughout this quarterly report to shareholders.  Non-IFRS Measures  CWB uses a number of financial measures to assess its performance. These measures provide readers with an enhanced understanding of how management views the results. Non-IFRS measures may also provide readers the ability to analyze trends and provide comparisons with our competitors. Taxable equivalent basis, adjusted cash earnings per common share, return on common shareholders' equity, return on assets, efficiency ratio, net interest margin, common equity Tier 1, Tier 1 and total capital adequacy ratios, and average balances do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other financial institutions. The non-IFRS measures used in this MD&A are calculated as follows:  /T/  --  taxable equivalent basis - described above;  --  adjusted cash earnings per common share - diluted earnings per common  share excluding the after-tax amortization of acquisition-related  intangible assets and the non-tax deductible change in fair value of  contingent consideration (see calculation below). These exclusions  represent non-cash charges and are not considered to be indicative of  ongoing business performance;  --  return on common shareholders' equity - annualized net income available to common shareholders divided by average common shareholders' equity;  --  return on assets - annualized net income available to common  shareholders divided by average total assets;  --  efficiency ratio - non-interest expenses divided by total revenues  excluding the non-tax deductible change in fair value of contingent  consideration;  --  net interest margin - net interest income divided by average total  assets;  --  Basel III common equity Tier 1, Tier 1 and total capital ratios - in  accordance with guidelines issued by OSFI; and  --  average balances - average daily balances.   Adjusted net income available to common shareholders                          For the six months    For the three months ended            ended          ------------------------------------------------------- (unaudited)             April 30 January 31   April 30   April 30   April 30 ($ thousands)               2014       2014       2013       2014       2013 ---------------------------------------------------------------------------- Net income available                                                          to common                                                                    shareholders         $   51,191 $   52,628 $   42,988 $  103,819 $   88,470 Adjustments:                                                                   Amortization of                                                             acquisition-                                                               related intangible                                                         assets (after tax)        903        891        731      1,794      1,461   Contingent                                                                  consideration fair                                                         value change              150        150          -        300          - ---------------------------------------------------------------------------- Adjusted net income                                                           available to common                                                          shareholders         $   52,244 $   53,669 $   43,719 $  105,913 $   89,931 ----------------------------------------------------------------------------  Consolidated Balance Sheets                                              As at          As at  (unaudited)                                    April 30     January 31  ($ thousands)                                      2014           2014  ----------------------------------------------------------------------- Assets                                                                  Cash Resources                                                            Cash and non-interest                                                  bearing deposits with                                                 financial institutions                 $      54,040  $         273    Interest bearing deposits                                              with regulated financial                                              institutions                  (Note 4)       342,179        375,717    Cheques and other items in                                             transit                                          280          7,288  -----------------------------------------------------------------------  396,499        383,278  ----------------------------------------------------------------------- Securities                       (Note 4)                                 Issued or guaranteed by                                                Canada                                       712,167        734,924    Issued or guaranteed by a                                              province or municipality                     630,849        619,242    Other securities                              795,779        858,776  -----------------------------------------------------------------------  2,138,795      2,212,942  -----------------------------------------------------------------------  Loans                           (Notes 5                                 and 7)                                 Personal                                    2,665,550      2,602,391    Business                                   14,131,314     13,645,329  -----------------------------------------------------------------------  16,796,864     16,247,720    Allowance for credit losses    (Note 6)       (88,976)       (91,354) -----------------------------------------------------------------------  16,707,888     16,156,366  ----------------------------------------------------------------------- Other                                                                     Property and equipment                         67,505         65,626    Goodwill                                       50,408         50,408    Intangible assets                              76,375         72,767    Insurance related                              63,541         63,637    Derivative related             (Note 8)         7,050          6,975    Other assets                                  118,605        123,491  -----------------------------------------------------------------------  383,484        382,904  ----------------------------------------------------------------------- Total Assets                              $  19,626,666  $  19,135,490  -----------------------------------------------------------------------  Liabilities and Equity                                                  Deposits                                                                  Personal                                $  10,040,387  $   9,632,095    Business and government                     6,628,147      6,611,401  -----------------------------------------------------------------------  16,668,534     16,243,496  ----------------------------------------------------------------------- Other                                                                     Cheques and other items in                                             transit                                       64,055         36,853    Insurance related                             155,961        159,372    Derivative related             (Note 8)            44             82    Other liabilities                             246,184        232,733  -----------------------------------------------------------------------  466,244        429,040  ----------------------------------------------------------------------- Debt                                                                      Subordinated debentures                       625,000        625,000    Debt securities                               247,962        187,780    Preferred share liabilities    (Note 9)       125,000              -  -----------------------------------------------------------------------  997,962        812,780  ----------------------------------------------------------------------- Equity                                                                    Preferred shares              (Note 10)             -        208,815    Common shares                 (Note 10)       522,790        518,010    Retained earnings                             938,568        902,568    Share-based payment reserve                    25,278         24,248    Other reserves                                  5,917         (4,670) ----------------------------------------------------------------------- Total Shareholders' Equity                    1,492,553      1,648,971    Non-controlling interests                       1,373          1,203  ----------------------------------------------------------------------- Total Equity                                  1,493,926      1,650,174  ----------------------------------------------------------------------- Total Liabilities and Equity              $  19,626,666  $  19,135,490  -----------------------------------------------------------------------  Consolidated Balance Sheets                                                   Change   As at        As at     from  (unaudited)                                October 31     April 30 April 30  ($ thousands)                                 2013(1)      2013(1)     2013  ---------------------------------------------------------------------------- Assets                                                                       Cash Resources                                                                 Cash and non-interest                                                       bearing deposits with                                                      financial institutions                 $    83,856  $    48,506       11%   Interest bearing deposits                                                   with regulated financial                                                   institutions                  (Note 4)     258,466      107,683      218    Cheques and other items in                                                  transit                                      5,673        5,251      (95) ----------------------------------------------------------------------------  347,995      161,440      146  ---------------------------------------------------------------------------- Securities                       (Note 4)                                      Issued or guaranteed by                                                     Canada                                     927,077      736,092       (3)   Issued or guaranteed by a                                                   province or municipality                   410,984      600,257        5    Other securities                            894,271    1,046,854      (24) ----------------------------------------------------------------------------  2,232,332    2,383,203      (10) ----------------------------------------------------------------------------  Loans                           (Notes 5                                      and 7)                                      Personal                                  2,502,295    2,378,451       12    Business                                 13,160,384   12,585,573       12  ----------------------------------------------------------------------------  15,662,679   14,964,024       12    Allowance for credit losses    (Note 6)     (85,786)     (79,471)      12  ----------------------------------------------------------------------------  15,576,893   14,884,553       12  ---------------------------------------------------------------------------- Other                                                                          Property and equipment                       66,647       64,860        4    Goodwill                                     49,424       45,536       11    Intangible assets                            70,197       53,141       44    Insurance related                            64,365       56,853       12    Derivative related             (Note 8)       4,509        1,468      380    Other assets                                107,898      128,226       (8) ----------------------------------------------------------------------------  363,040      350,084       10  ---------------------------------------------------------------------------- Total Assets                              $18,520,260  $17,779,280       10% ----------------------------------------------------------------------------  Liabilities and Equity                                                       Deposits                                                                       Personal                                $ 9,420,754  $ 9,293,391        8%   Business and government                   6,210,286    5,591,924       19  ----------------------------------------------------------------------------  15,631,040   14,885,315       12  ---------------------------------------------------------------------------- Other                                                                          Cheques and other items in                                                  transit                                     55,290       68,708       (7)   Insurance related                           167,816      153,837        1    Derivative related             (Note 8)          36           18      144    Other liabilities                           238,939      233,006        6  ----------------------------------------------------------------------------  462,081      455,569        2  ---------------------------------------------------------------------------- Debt                                                                           Subordinated debentures                     625,000      675,000       (7)   Debt securities                             195,650      222,183       12    Preferred share liabilities    (Note 9)           -            -      100  ----------------------------------------------------------------------------  820,650      897,183       11  ---------------------------------------------------------------------------- Equity                                                                         Preferred shares              (Note 10)     208,815      209,649     (100)   Common shares                 (Note 10)     510,282      499,730        5    Retained earnings                           865,087      794,944       18    Share-based payment reserve                  24,632       24,026        5    Other reserves                               (3,389)      12,622      (53) ---------------------------------------------------------------------------- Total Shareholders' Equity                  1,605,427    1,540,971       (3)   Non-controlling interests                     1,062          242      467  ---------------------------------------------------------------------------- Total Equity                                1,606,489    1,541,213       (3) ---------------------------------------------------------------------------- Total Liabilities and Equity              $18,520,260  $17,779,280       10% ----------------------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1.   The accompanying notes are an integral part of the interim consolidated       financial statements.                                                        Consolidated Statements of Income                                             Change  (unaudited)                         For the three months ended         from  ($ thousands, except               April 30  January 31   April 30 April 30  per share amounts)                     2014        2014    2013(1)     2013  ---------------------------------------------------------------------------- Interest Income                                                                Loans                          $  192,685 $   193,825 $  177,159        9%   Securities                         10,625      10,509     11,272       (6)   Deposits with                                                               regulated financial                                                        institutions                       1,165         917        419      178  ----------------------------------------------------------------------------  204,475     205,251    188,850        8  ---------------------------------------------------------------------------- Interest Expense                                                               Deposits                           75,061      74,279     70,500        6    Debt                                7,676       7,823      8,421       (9) ----------------------------------------------------------------------------  82,737      82,102     78,921        5  ---------------------------------------------------------------------------- Net Interest Income                 121,738     123,149    109,929       11  Provision for Credit                                                          Losses                 (Note 6)      6,463       7,619      6,684       (3) ---------------------------------------------------------------------------- Net Interest Income                                                           after                                                                       Provision for Credit                                                          Losses                             115,275     115,530    103,245       12  ---------------------------------------------------------------------------- Other Income                                                                   Trust and wealth                                                            management services                8,780       8,335      5,371       63    Credit related                      5,966       5,987      5,053       18    Insurance, net        (Note 3)      5,868       6,011      6,201       (5)   Gains on securities,                                                        net                                4,572       4,653      3,074       49    Retail services                     2,934       2,770      2,774        6    Other                               1,674         775        917       83  ----------------------------------------------------------------------------  29,794      28,531     23,390       27  ---------------------------------------------------------------------------- Net Interest and Other                                                        Income                             145,069     144,061    126,635       15  ---------------------------------------------------------------------------- Non-Interest Expenses                                                          Salaries and employee                                                       benefits                          46,636      45,891     42,287       10    Premises and                                                                equipment                         11,820      11,381     10,730       10    Other expenses                     12,162      12,163     11,810        3  ----------------------------------------------------------------------------  70,618      69,435     64,827        9  ---------------------------------------------------------------------------- Net Income before                                                             Income Taxes                        74,451      74,626     61,808       20  Income Taxes                         18,067      17,877     14,921       21  ---------------------------------------------------------------------------- Net Income                           56,384      56,749     46,887       20  ---------------------------------------------------------------------------- Net Income Attributable                                                       to                                                                          Non-Controlling                                                               Interests                              218         336         92      137  ---------------------------------------------------------------------------- Net Income Attributable                                                       to                                                                          Shareholders of CWB                  56,166      56,413     46,795       20  ----------------------------------------------------------------------------   Preferred share                                                             dividends                          4,975       3,785      3,800       31    Premium paid on                                                             purchase of                                                                preferred shares for                                                       cancellation                           -           -          7     (100) ---------------------------------------------------------------------------- Net Income Available to                                                       Common Shareholders             $   51,191 $    52,628 $   42,988       19% ----------------------------------------------------------------------------   Average number of                                                           common shares (in                                                          thousands)                        79,955      79,724     79,075        1    Average number of                                                           diluted common                                                             shares (in                                                                 thousands)                        80,826      80,514     79,471        2  ---------------------------------------------------------------------------- Earnings Per Common                                                           Share                                                                         Basic                          $     0.64 $      0.66 $     0.54       19%   Diluted                              0.63        0.65       0.54       17  ----------------------------------------------------------------------------  The accompanying notes are an integral part of the interim        consolidated financial statements.                               Consolidated Statements of Income                                 For the six months     Change  (unaudited)                              ended             from  ($ thousands, except               April 30   April 30 April 30  per share amounts)                     2014    2013(1)     2013  ---------------------------------------------------------------- Interest Income                                                    Loans                          $  386,510 $  356,200        9%   Securities                         21,134     22,496       (6)   Deposits with                                                   regulated financial                                            institutions                       2,082        856      143  ----------------------------------------------------------------  409,726    379,552        8  ---------------------------------------------------------------- Interest Expense                                                   Deposits                          149,340    142,412        5    Debt                               15,499     16,074       (4) ----------------------------------------------------------------  164,839    158,486        4  ---------------------------------------------------------------- Net Interest Income                 244,887    221,066       11  Provision for Credit                                              Losses                 (Note 6)     14,082     13,011        8  ---------------------------------------------------------------- Net Interest Income                                               after                                                           Provision for Credit                                              Losses                             230,805    208,055       11  ---------------------------------------------------------------- Other Income                                                       Trust and wealth                                                management services               17,115     10,414       64    Credit related                     11,953     10,487       14    Insurance, net        (Note 3)     11,879     11,403        4    Gains on securities,                                            net                                9,225      5,736       61    Retail services                     5,704      5,242        9    Other                               2,449      2,487       (2) ----------------------------------------------------------------  58,325     45,769       27  ---------------------------------------------------------------- Net Interest and Other                                            Income                             289,130    253,824       14  ---------------------------------------------------------------- Non-Interest Expenses                                              Salaries and employee                                           benefits                          92,527     83,642       11    Premises and                                                    equipment                         23,201     20,984       11    Other expenses                     24,325     22,268        9  ----------------------------------------------------------------  140,053    126,894       10  ---------------------------------------------------------------- Net Income before                                                 Income Taxes                       149,077    126,930       17  Income Taxes                         35,944     30,678       17  ---------------------------------------------------------------- Net Income                          113,133     96,252       18  ---------------------------------------------------------------- Net Income Attributable                                           to                                                              Non-Controlling                                                   Interests                              554        173      220  ---------------------------------------------------------------- Net Income Attributable                                           to                                                              Shareholders of CWB                 112,579     96,079       17  ----------------------------------------------------------------   Preferred share                                                 dividends                          8,760      7,602       15    Premium paid on                                                 purchase of                                                    preferred shares for                                           cancellation                           -          7     (100) ---------------------------------------------------------------- Net Income Available to                                           Common Shareholders             $  103,819 $   88,470       17% ----------------------------------------------------------------   Average number of                                               common shares (in                                              thousands)                        79,838     78,936        1    Average number of                                               diluted common                                                 shares (in                                                     thousands)                        80,702     79,362        2  ---------------------------------------------------------------- Earnings Per Common                                               Share                                                             Basic                          $     1.30 $     1.12       16%   Diluted                              1.29       1.11       16  ----------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1.   The accompanying notes are an integral part of the interim consolidated      financial statements.                                                         Consolidated Statements of Comprehensive Income                               For the three months ended   For the six months ended  (unaudited)               April 30      April 30      April 30     April 30  ($ thousands)                 2014       2013(1)          2014      2013(1)  ---------------------------------------------------------------------------- Net Income            $     56,384  $     46,887   $   113,133  $    96,252  ---------------------------------------------------------------------------- Other Comprehensive                                                           Income (Loss), net                                                           of tax                                                                        Available-for-sale                                                          securities:                                                                 Gains from change                                                           in fair value(2)         14,620         2,572        16,679        7,896    Reclassification to                                                         net income(3)            (3,237)       (2,241)       (6,762)      (4,183) ----------------------------------------------------------------------------  11,383           331         9,917        3,713  ----------------------------------------------------------------------------   Derivatives                                                                 designated as cash                                                         flow hedges:                                                                Gains (loss) from                                                           change in fair                                                             value(4)                     91          (983)        1,895         (365)   Reclassification to                                                         net income(5)              (887)          508        (2,506)          27  ----------------------------------------------------------------------------  (796)         (475)         (611)        (338) ----------------------------------------------------------------------------  10,587          (144)        9,306        3,375  ---------------------------------------------------------------------------- Comprehensive Income                                                          for the Period       $     66,971  $     46,743   $   122,439  $    99,627  ----------------------------------------------------------------------------  Comprehensive                                                               income for the                                                             period                                                                     attributable to:                                                            Shareholders of CWB $     66,753  $     46,651   $   121,885  $    99,454    Non-controlling                                                             interests                   218            92           554          173  ---------------------------------------------------------------------------- Comprehensive Income                                                          for the Period       $     66,971  $     46,743   $   122,439  $    99,627  ----------------------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1. Net of income  tax of $5,366 and $6,075 for the three and six months ended April 30,  2014, respectively (2013 - $960 and $2,949).  2.  Net of income tax of $1,335 and $2,463 for the three and six months  ended April 30, 2014, respectively (2013 - $833 and $1,553).  3.  Net of income tax of $31 and $640 for the three and six months ended  April 30, 2014, respectively (2013 - $330 and $123).  4.  Net of income tax of $300 and $847 for the three and six months ended  April 30, 2014, respectively (2013 - $170 and $9).   Items presented in other comprehensive income will be subsequently            reclassified to the Consolidated Statement of Income when specific           conditions are met.                                                          The accompanying notes are an integral part of the interim consolidated       financial statements.                                                        Consolidated Statements of Changes in Equity                                  For the six months     ended           ------------------------ (unaudited)                                            April 30    April 30  ($ thousands)                                              2014     2013(1)  ---------------------------------------------------------------------------- Retained Earnings                                                            Balance at beginning of period                      $   865,087 $   733,298  Net income attributable to shareholders of                                    CWB                                                    112,579      96,079  Dividends - Preferred shares/preferred                                        share liabilities                                       (8,760)     (7,602)  - Common shares                               (30,338)    (26,824) Premium paid on preferred shares purchased                                    for cancellation                                             -          (7) ---------------------------------------------------------------------------- Balance at end of period                                938,568     794,944  ---------------------------------------------------------------------------- Other Reserves                                                               Balance at beginning of period                           (3,389)      9,247  Changes in available-for-sale securities                  9,917       3,713  Changes in derivatives designated as cash                                     flow hedges                                               (611)       (338) ---------------------------------------------------------------------------- Balance at end of period                                  5,917      12,622  ---------------------------------------------------------------------------- Preferred Shares                           (Note 10)                         Balance at beginning of period                          208,815     209,750  Redeemed                                               (208,815)          -  Purchased for cancellation                                    -        (101) ---------------------------------------------------------------------------- Balance at end of period                                      -     209,649  ---------------------------------------------------------------------------- Common Shares                              (Note 10)                         Balance at beginning of period                          510,282     490,218  Issued under dividend reinvestment plan                   9,172       7,172  Transferred from share-based payment                                          reserve on the exercise or exchange of                                       options                                                  2,270       1,389  Issued on exercise of options                             1,066         951  ---------------------------------------------------------------------------- Balance at end of period                                522,790     499,730  ---------------------------------------------------------------------------- Share-based Payment Reserve                                                  Balance at beginning of period                           24,632      22,468  Amortization of fair value of options      (Note 11)      2,916       2,947  Transferred to common shares on the                                           exercise or exchange of options                         (2,270)     (1,389) ---------------------------------------------------------------------------- Balance at end of period                                 25,278      24,026  ---------------------------------------------------------------------------- Total Shareholders' Equity                            1,492,553   1,540,971  ---------------------------------------------------------------------------- Non-Controlling Interests                                                    Balance at beginning of period                            1,062         244  Net income attributable to non-controlling                                    interests                                                  554         173  Dividends to non-controlling interests                     (146)       (175) Partial ownership increase                                  (97)          -  ---------------------------------------------------------------------------- Balance at end of period                                  1,373         242  ---------------------------------------------------------------------------- Total Equity                                        $ 1,493,926 $ 1,541,213  ----------------------------------------------------------------------------  1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1.   The accompanying notes are an integral part of the interim consolidated       financial statements.                                                        Consolidated Statements of Cash Flow                                          For the six months ended    (unaudited)                                         April 30       April 30  ($ thousands)                                           2014        2013(1)  ---------------------------------------------------------------------------- Cash Flows from Operating Activities                                           Net income                                   $     113,133  $      96,252    Adjustments to determine net cash                                           flows:                                                                     Provision for credit losses                       14,082         13,011   Depreciation and amortization                     11,714         10,338   Current income taxes receivable                                           and payable                                      (3,987)       (12,420)  Amortization of fair value of                                             employee stock options          (Note 11)         2,916          2,947   Accrued interest receivable and                                           payable, net                                      3,949          8,517   Deferred income taxes, net                        (4,762)         2,196   Gain on securities, net                           (9,225)        (5,736)   Change in operating assets and                                              liabilities:                                                               Deposits, net                                  1,037,494        635,478   Loans, net                                    (1,145,078)      (943,878)  Securities sold under repurchase                                          agreements, net                                       -        (70,089)  Other items, net                                 (21,849)       (16,062) ----------------------------------------------------------------------------  (1,613)      (279,446) ---------------------------------------------------------------------------- Cash Flows from Financing Activities                                           Common shares issued               (Note 10)        10,238          8,123    Debt securities issued                             101,789         59,321    Debt securities repaid                             (49,477)       (46,410)   Dividends                                          (39,098)       (34,426)   Preferred shares redeemed          (Note 10)      (208,815)             -    Preferred shares purchased and                                              cancelled                                               -           (108)   Preferred share liabilities issued  (Note 9)       125,000              -    Distributions to non-controlling                                            interests                                            (146)          (175)   Debentures issued                                        -        250,000  ----------------------------------------------------------------------------  (60,509)       236,325  ---------------------------------------------------------------------------- Cash Flows from Investing Activities                                           Interest bearing deposits with                                              regulated financial institutions,                                          net                                               (83,499)        69,547    Securities, purchased                           (3,603,834)    (3,208,919)   Securities, sale proceeds                        2,223,556      2,003,746    Securities, matured                              1,500,403      1,167,732    Property, equipment and intangible                                          assets                                            (18,478)        (9,862) ----------------------------------------------------------------------------  18,148         22,244  ---------------------------------------------------------------------------- Change in Cash and Cash Equivalents                  (43,974)       (20,877) Cash and Cash Equivalents at                                                  Beginning of Period                                  34,239          5,926  ---------------------------------------------------------------------------- Cash and Cash Equivalents at End of                                           Period (i)                                    $      (9,735) $     (14,951) ---------------------------------------------------------------------------- (i) Represented by:                                                            Cash and non-interest bearing                                               deposits with financial                                                    institutions                                $      54,040  $      48,506    Cheques and other items in transit                                          (included in Cash Resources)                          280          5,251    Cheques and other items in transit                                          (included in Other Liabilities)                   (64,055)       (68,708) ---------------------------------------------------------------------------- Cash and Cash Equivalents at End of                                           Period                                        $      (9,735) $     (14,951) ----------------------------------------------------------------------------  Supplemental Disclosure of Cash Flow                                          Information                                                                   Interest and dividends received              $     415,537  $     395,296    Interest paid                                      160,072        154,353    Income taxes paid                                   44,693         40,671   1.  Effective November 1, 2013, CWB retrospectively adopted IFRS 10  Consolidated Financial Statements as described in Note 1.   The accompanying notes are an integral part of the interim consolidated      financial statements.                                                         Notes to Interim Consolidated Financial Statements                           (unaudited)                                                                  ($thousands, except per share amounts)                                        /T/  1. Basis of Presentation and Significant Accounting Policies   These unaudited condensed interim consolidated financial statements of Canadian Western Bank (CWB) have been prepared in accordance with International Accounting Standard (IAS) 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) using the same accounting policies as the audited consolidated financial statements for the year ended October 31, 2013, except as noted below. These interim consolidated financial statements of CWB, domiciled in Canada, have also been prepared in accordance with subsection 308 (4) of the Bank Act and the accounting requirements of the Office of the Superintendent of Financial Institutions Canada (OSFI). Under International Financial Reporting Standards (IFRS), additional disclosures are required in annual financial statements and accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended October 31, 2013 as set out on pages 62 to 102 of CWB's 2013 Annual Report.  The interim consolidated financial statements were authorized for issue by the Board of Directors on June 4, 2014.  Significant Changes in Accounting Policies  Consolidated Financial Statements   Effective November 1, 2013, CWB adopted IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosures of Interests in Other Entities, which establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities, and new disclosure requirements for all forms of interests in other entities. As a result of the application of IFRS 10, CWB has changed its accounting policy for determining whether it has control over its investees and consequently, has de-consolidated Canadian Western Bank Capital Trust (the Trust) through which certain regulatory capital instruments are issued. In accordance with the transitional provisions, CWB has applied IFRS 10 retrospectively and comparative figures have been restated to reflect the de-consolidation of the Trust. The de-consolidation of the Trust resulted in a $105,000 decrease in CWB Capital Trust Capital Securities Series 1 (WesTS) previously classified as non-controlling interest and an increase of $105,000 in deposit liabilities, and reclassification of the associated distribution, which totaled $1,647 and $3,344 for the three and six months ended April 30, 2013, from non-controlling interest to interest expense. Additional information on the Trust is discussed in Note 19 of CWB's audited consolidated financial statements for the year ended October 31, 2013.  Fair value measurement  Effective November 1, 2013, CWB adopted IFRS 13 Fair Value Measurement, which applies to other IFRS standards that require or permit fair value measurements or disclosures about fair value measurements and sets out a framework on how to measure fair value using the assumptions that market participants would use when pricing the asset or liability under current market conditions, including assumptions about risk. In accordance with the transitional provisions of IFRS 13, CWB has applied the new fair value measurement guidance prospectively. This new standard had no impact on the measurement of CWB's assets and liabilities. Additional disclosures required by IFRS 13 are included in Note 13.  2. Future Accounting Changes   CWB continues to monitor the IASB's proposed changes to accounting standards. Although not expected to materially impact CWB's 2014 consolidated financial statements, these proposed changes may have a significant impact on future financial statements. Additional discussion on certain accounting standards that may impact CWB is included in the audited consolidated financial statements within CWB's 2013 Annual Report.  3. Insurance Revenues, Net   Insurance revenues, net, as reported in other income on the consolidated statement of income are presented net of net claims and adjustment expenses, and policy acquisition costs.  /T/  For the six months   For the three months ended            ended         ----------------------------------------------------------------------------  April 30    January   April 30   April 30   April 30   2014    31 2014       2013       2014       2013  ---------------------------------------------------------------------------- Net earned premiums   $  31,646  $  32,619  $  30,701  $  64,265  $  62,196  Commissions and                                                               processing fees            317        425        404        742        841  Net claims and                                                                adjustment expenses    (19,741)   (21,252)   (18,312)   (40,993)   (38,997) Policy acquisition                                                            costs                   (6,354)    (5,781)    (6,592)   (12,135)   (12,637) ---------------------------------------------------------------------------- Total, net            $   5,868  $   6,011  $   6,201  $  11,879  $  11,403  ----------------------------------------------------------------------------  /T/  4. Securities   Net unrealized gains (losses) reflected on the consolidated balance sheet follow:  /T/  As at       As at         As at   April 30   January 31   October 31   2014         2014         2013  ---------------------------------------------------------------------------- Interest bearing deposits with                                                regulated financial institutions     $       435  $       822  $       569  Securities issued or guaranteed by                                             Canada                                      150          424          632    A province or municipality                  181          (70)         161  Other debt securities                       1,166        1,455        1,180  Equity securities                                                              Preferred shares                           (258)     (15,923)     (16,301)   Common shares                             4,730        4,459        6,657  ---------------------------------------------------------------------------- Unrealized gains (losses), net        $     6,404  $    (8,833) $    (7,102) ----------------------------------------------------------------------------  /T/  The securities portfolio is primarily comprised of high quality debt instruments, preferred shares and common shares that are not held for trading purposes and, where applicable, are typically held until maturity. Fluctuations in value are generally attributed to changes in interest rates, market credit spreads and shifts in the interest rate curve. Volatility in equity markets also leads to fluctuations in value, particularly for common shares. For the three and six months ended April 30, 2014, CWB assessed the securities with unrealized losses and, based on available objective evidence, no impairment charges (2013 - nil) were included in gains on securities, net.  5. Loans   The composition of CWB's loan portfolio by geographic region and industry sector follows:  /T/  ($ millions)                        BC          AB          ON         SK  --------------------------------------------------------------------------  Personal                     $     864   $   1,076   $     482  $     171  --------------------------------------------------------------------------  Business                                                                     Real estate                    2,878       2,523         430        438    Commercial                     1,541       1,737         427        207    Equipment financing and                                                   energy(1)                       589       1,468         608        285  -------------------------------------------------------------------------- Total Business                   5,008       5,728       1,465        930  -------------------------------------------------------------------------- Total Loans(2)               $   5,872   $   6,804   $   1,947  $   1,101  -------------------------------------------------------------------------- Composition Percentage                                                       April 30, 2014                    35%         41%         11  %       7%   January 31, 2014                  35%         42%         11  %       7%   October 31, 2013                  35%         42%         11  %       7%  ($ millions)                          MB         Other         Total  ---------------------------------------------------------------------  Personal                     $        72   $         1   $     2,666  ---------------------------------------------------------------------  Business                                                                Real estate                        119            13         6,401    Commercial                         287            79         4,278    Equipment financing and                                              energy(1)                         116           386         3,452  --------------------------------------------------------------------- Total Business                       522           478        14,131  --------------------------------------------------------------------- Total Loans(2)               $       594   $       479   $    16,797  --------------------------------------------------------------------- Composition Percentage                                                  April 30, 2014                       3%            3%          100%   January 31, 2014                     2%            3%          100%   October 31, 2013                     2%            3%          100%  Composition Percentage              ($ millions)               April 30 2014   January 31 2014  October 31 2013  ----------------------------------------------------------------------------  Personal                              16%               16%              16% ----------------------------------------------------------------------------  Business                                                                       Real estate                         38                38               37    Commercial                          25                26               26    Equipment financing and                                                     energy(1)                          21                20               21  ---------------------------------------------------------------------------- Total Business                        84                84               84  ---------------------------------------------------------------------------- Total Loans(2)                       100%              100%             100% ---------------------------------------------------------------------------- Composition Percentage                                                         April 30, 2014                                                               January 31, 2014                                                             October 31, 2013                                                            1.  Includes securitized leases reported on-balance sheet of $282 (January  31, 2014 - $223; October 31, 2013 - $230).  2.  This table does not include an allocation for credit losses.   /T/  6. Allowance for Credit Losses   The following table shows the changes in the allowance for credit losses:  /T/  For the three months ended            April 30, 2014                 --------------------------------------------  Collective                 Allowance                 Specific     for Credit                 Allowance         Losses         Total  ---------------------------------------------------------------------------- Balance at beginning of period   $      12,757  $      78,597 $      91,354  Provision for credit losses                338          6,125         6,463  Write-offs                              (9,256)             -        (9,256) Recoveries                                 415              -           415  ---------------------------------------------------------------------------- Balance at end of period         $       4,254  $      84,722 $      88,976  ----------------------------------------------------------------------------  For the three months ended            January 31, 2014                --------------------------------------------  Collective                 Allowance                 Specific     for Credit                 Allowance         Losses         Total  ---------------------------------------------------------------------------- Balance at beginning of period   $       9,569  $      76,217 $      85,786  Provision for credit losses              5,239          2,380         7,619  Write-offs                              (2,453)             -        (2,453) Recoveries                                 402              -           402  ---------------------------------------------------------------------------- Balance at end of period         $      12,757  $      78,597 $      91,354  ----------------------------------------------------------------------------  For the three months ended           April 30, 2013                -----------------------------------------   Collective                 Allowance                 Specific     for Credit                 Allowance         Losses         Total  ---------------------------------------------------------------------------- Balance at beginning of period   $       6,667  $      69,701 $      76,368  Provision for credit losses              5,885            799         6,684  Write-offs                              (3,876)             -        (3,876) Recoveries                                 295              -           295  ---------------------------------------------------------------------------- Balance at end of period         $       8,971  $      70,500 $      79,471  ----------------------------------------------------------------------------  For the six months ended           April 30, 2014                --------------------------------------------  Collective                 Allowance                 Specific     for Credit                 Allowance         Losses         Total  ---------------------------------------------------------------------------- Balance at beginning of period   $       9,569  $      76,217 $      85,786  Provision for credit losses              5,577          8,505        14,082  Write-offs                             (11,709)             -       (11,709) Recoveries                                 817              -           817  ---------------------------------------------------------------------------- Balance at end of period         $       4,254  $      84,722 $      88,976  ----------------------------------------------------------------------------  For the six months ended            April 30, 2013                --------------------------------------------  Collective                 Allowance                 Specific     for Credit                 Allowance         Losses         Total  ---------------------------------------------------------------------------- Balance at beginning of period   $      14,379  $      67,344 $      81,723  Provision for credit losses              9,855          3,156        13,011  Write-offs                             (17,048)             -       (17,048) Recoveries                               1,785              -         1,785  ---------------------------------------------------------------------------- Balance at end of period         $       8,971  $      70,500 $      79,471  ----------------------------------------------------------------------------  /T/  7. Impaired and Past Due Loans   Outstanding gross loans and impaired loans, net of allowance for credit losses, by loan type, are as follows:  /T/  As at April 30, 2014                 -------------------------------------------------  Gross                     Net   Gross    Impaired    Specific    Impaired   Amount      Amount   Allowance       Loans  ---------------------------------------------------------------------------- Personal                    $ 2,665,550 $    14,883 $       665 $    14,218  Business                                                                       Real estate(1)              6,401,392      20,101         300      19,801    Commercial                  4,277,615       4,526         196       4,330    Equipment financing and                                                     energy                     3,452,307      11,111       3,093       8,018  ---------------------------------------------------------------------------- Total(2)                    $16,796,864 $    50,621 $     4,254      46,367  ---------------------------------------------------------------              Collective allowance(3)                                             (84,722) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                           $   (38,355) ----------------------------------------------------------------------------  As at January 31, 2014                -------------------------------------------------  Gross                     Net   Gross    Impaired    Specific    Impaired   Amount      Amount   Allowance       Loans  ---------------------------------------------------------------------------- Personal                    $ 2,602,391 $    15,561 $       507 $    15,054  Business                                                                       Real estate(1)              6,132,790      23,226       7,476      15,750    Commercial                  4,198,341       3,801         221       3,580    Equipment financing and                                                     energy                     3,314,198      11,349       4,553       6,796  ---------------------------------------------------------------------------- Total(2)                    $16,247,720 $    53,937 $    12,757      41,180  ---------------------------------------------------------------              Collective allowance(3)                                             (78,597) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                           $   (37,417) ----------------------------------------------------------------------------  As at October 31, 2013               -----------------------------------------------  Gross                     Net   Gross    Impaired    Specific    Impaired   Amount      Amount   Allowance       Loans  ---------------------------------------------------------------------------- Personal                    $ 2,502,295 $    17,052 $       748 $    16,304  Business                                                                       Real estate(1)              5,829,225      31,937       6,349      25,588    Commercial                  4,091,371       4,612         293       4,319    Equipment financing and                                                     energy                     3,239,788      10,610       2,179       8,431  ---------------------------------------------------------------------------- Total(2)                    $15,662,679 $    64,211 $     9,569      54,642  ---------------------------------------------------------------              Collective allowance(3)                                             (76,217) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                           $   (21,575) ----------------------------------------------------------------------------  1.  Multi-family residential mortgages are included in real estate loans.  2.  Gross impaired loans include foreclosed assets with a carrying value of  $4,157 (January 31, 2014 - $5,014 and October 31, 2013 - $12,407) which  are held for sale. CWB pursues timely realization on foreclosed assets  and does not use the assets for its own operations.  3.  The collective allowance for credit risk is not allocated by loan type.   /T/  Outstanding impaired loans, net of allowance for credit losses, by provincial location of security, are as follows:  /T/  As at April 30, 2014              -------------------------------------------  Net   Gross Impaired      Specific      Impaired   Amount     Allowance         Loans  ---------------------------------------------------------------------------- Alberta                           $      11,343 $       1,465 $       9,878  British Columbia                         28,890           716        28,174  Ontario                                   6,524           904         5,620  Saskatchewan                              1,973           475         1,498  Manitoba                                    542           162           380  Other                                     1,349           532           817  ---------------------------------------------------------------------------- Total                             $      50,621 $       4,254        46,367  -------------------------------------------------------------                Collective allowance(1)                                             (84,722) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                         $     (38,355) ----------------------------------------------------------------------------  As at January 31, 2014             -------------------------------------------  Gross                               Impaired      Specific  Net Impaired   Amount     Allowance         Loans  ---------------------------------------------------------------------------- Alberta                           $      29,764 $      10,168 $      19,596  British Columbia                         14,920           406        14,514  Ontario                                   5,084           954         4,130  Saskatchewan                              2,329           505         1,824  Manitoba                                    715           196           519  Other                                     1,125           528           597  ---------------------------------------------------------------------------- Total                             $      53,937 $      12,757        41,180  -------------------------------------------------------------                Collective allowance(1)                                             (78,597) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                         $     (37,417) ----------------------------------------------------------------------------  As at October 31, 2013            -----------------------------------------  Gross                               Impaired      Specific  Net Impaired   Amount     Allowance         Loans  ---------------------------------------------------------------------------- Alberta                           $      38,886 $       7,475 $      31,411  British Columbia                         17,904           476        17,428  Ontario                                   2,886           728         2,158  Saskatchewan                              1,861           381         1,480  Manitoba                                  1,214           146         1,068  Other                                     1,460           363         1,097  ---------------------------------------------------------------------------- Total                             $      64,211 $       9,569        54,642  -------------------------------------------------------------                Collective allowance(1)                                             (76,217) ---------------------------------------------------------------------------- Net impaired loans after                                                      collective allowance                                         $     (21,575) ----------------------------------------------------------------------------  1.  The collective allowance for credit risk is not allocated by province.   /T/  Gross impaired loans exclude certain past due loans where payment of interest or principal is contractually in arrears. Details of such past due loans that have not been included in the gross impaired amount are as follows:  /T/  As at April 30, 2014               ----------------------------------------------  1 - 30  31 - 60  61 - 90 More than           days     days     days   90 days    Total ---------------------------------------------------------------------------- Personal                       $ 24,166 $  2,546 $  1,465 $   1,506 $ 29,683 Business                         45,734   17,336    4,871         -   67,941 ----------------------------------------------------------------------------  $ 69,900 $ 19,882 $  6,336 $   1,506 $ 97,624 ----------------------------------------------------------------------------  Total as at January 31, 2014   $ 37,076 $ 28,980 $ 17,491 $   1,897 $ 85,444 ---------------------------------------------------------------------------- Total as at October 31, 2013   $ 24,710 $ 48,102 $  2,075 $   2,400 $ 77,287 ----------------------------------------------------------------------------  /T/  8. Derivative Financial Instruments   CWB designates certain derivative financial instruments as either a hedge of the fair value of recognized assets or liabilities or firm commitments (fair value hedges), or a hedge of highly probable future cash flows attributable to a recognized asset or liability or a forecasted transaction (cash flow hedges). On an ongoing basis, the derivatives used in hedging transactions are assessed to determine whether they are effective in offsetting changes in fair values or cash flows of the hedged items. If a hedging transaction becomes ineffective or if the derivative is not designated as a cash flow hedge, any subsequent change in the fair value of the hedging instrument is recognized in net income.   For the three and six months ended April 30, 2014, $91 and $1,895 of net unrealized after tax gains (2013 - $983 and $365 unrealized after tax losses) were recorded in other comprehensive income for changes in fair value of the effective portion of equity and interest rate swap derivatives designated as cash flow hedges, and no amounts (2013 - $nil) were recorded in other income for changes in fair value of the ineffective portion of derivatives classified as cash flow hedges. Amounts accumulated in other comprehensive income are reclassified to net income in the same period that the hedged item affects income. For the three and six months ended April 30, 2014, $887 and $2,506 of net gains after tax (2013 - $508 and $27 of net losses after tax) were reclassified to net income.  The following table shows the notional value outstanding for derivative financial instruments and the related fair value:  /T/  As at April 30, 2014             ------------------------------------------  Notional     Positive       Negative  Amount    Fair Value    Fair Value ---------------------------------------------------------------------------- Interest rate swaps designated as                                             hedges(1)                         $     775,000 $         329 $          40 Equity swaps designated as                                                    hedges(2)                                17,470         6,712             - Foreign exchange contracts(3)                858             9             4 ---------------------------------------------------------------------------- Derivative related amounts         $     793,328 $       7,050 $          44 ----------------------------------------------------------------------------  As at January 31, 2014            ------------------------------------------  Notional      Positive     Negative   Amount    Fair Value    Fair Value ---------------------------------------------------------------------------- Interest rate swaps designated as                                             hedges(1)                         $     700,000 $         763 $          26 Equity swaps designated as                                                    hedges(2)                                17,470         6,142             - Foreign exchange contracts(3)              4,134            70            56 ---------------------------------------------------------------------------- Derivative related amounts         $     721,604 $       6,975 $          82 ----------------------------------------------------------------------------  As at October 31, 2013            ------------------------------------------  Notional     Positive      Negative   Amount    Fair Value    Fair Value ---------------------------------------------------------------------------- Interest rate swaps designated as                                             hedges                            $     800,000 $         367 $          32 Equity swaps designated as hedges         17,470         4,131             - Foreign exchange contracts                 1,235            11             4 ---------------------------------------------------------------------------- Derivative related amounts         $     818,705 $       4,509 $          36 ----------------------------------------------------------------------------  1.  Interest rate swaps designated as hedges outstanding at April 30, 2014  mature between May 2014 and April 2016.  2.  Equity swaps designated as hedges outstanding at April 30, 2014 mature  between June 2014 and June 2016.  3.  Foreign exchange contracts outstanding at April 30, 2014 mature between  May 2014 and March 2015.   /T/  There were no forecasted transactions that failed to occur during the three and six months ended April 30, 2014.  9. Preferred Share Liabilities   On February 10, 2014, CWB issued five million Basel III-compliant, non-cumulative, five year rate reset First Preferred Shares Series 5 (Series 5 Preferred Shares) at $25 per share, for gross proceeds of $125 million. The shares are recorded as liabilities on the consolidated balance sheets due to the inclusion of non-viability contingent capital provisions necessary for the shares to qualify as regulatory capital. The distributions are recorded in equity reflecting CWB's discretion over dividend payments.  Holders of Series 5 Preferred Shares are entitled to receive a non-cumulative fixed dividend in the amount of $1.10 annually, payable quarterly, as and when declared by the Board of Directors of CWB, for the initial period ending April 30, 2019. The quarterly dividend represents an annual yield of 4.40% based on the stated issue price per share. Thereafter, the dividend rate will reset every five years at a level of 276 basis points over the then five year Government of Canada bond yield.  CWB maintains the right to redeem, subject to the approval of OSFI, up to all of the then outstanding Series 5 Preferred Shares on April 30, 2019, and on April 30 every five years thereafter at a price of $25.00 per share. Should CWB choose not to exercise its right to redeem the Series 5 Preferred Shares, holders of these shares will have the right to convert their shares into an equal number of non-cumulative, floating rate First Preferred Shares Series 6 (Series 6 Preferred Shares), subject to certain conditions, on April 30, 2019, and on April 30 every five years thereafter. Holders of the Series 6 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of CWB, equal to the 90-day Government of Canada Treasury Bill rate plus 276 basis points.  Upon the occurrence of a trigger event (as defined by OSFI), each Series 5 or 6 Preferred Share will be automatically converted, without the consent of the holders, into CWB common shares. Conversion to common shares will be determined by dividing the preferred share conversion value ($25.00 per preferred share plus any declared but unpaid dividends) by the common share value (the greater of (i) the floor price of $5.00 and (ii) the current market price calculated as the volume-weighted average trading price for the ten consecutive trading days ending on the day immediately prior to the date of the conversion).   10. Capital Stock   Share Capital  /T/  For the six months ended              ------------------------------------------------  April 30, 2014          April 30, 2013       ------------------------------------------------  Number of               Number of                Shares       Amount     Shares       Amount  ---------------------------------------------------------------------------- Preferred Shares - Series 3                                                    Outstanding at beginning                                                    of period                 8,352,496  $   208,815  8,390,000  $   209,750    Redeemed                  (8,352,496)    (208,815)         -            -    Purchased for cancellation         -            -     (4,038)        (101) ----------------------------------------------------------------------------   Outstanding at end of                                                       period                            -            -  8,385,962      209,649  ---------------------------------------------------------------------------- Common Shares                                                                  Outstanding at beginning                                                    of period                79,619,595      510,282 78,742,812      490,218    Issued under dividend                                                       reinvestment plan(1)        248,620        9,172    257,795        7,172    Issued on exercise or                                                       exchange of options         177,052        1,066    169,910          951    Transferred from share-                                                     based payment reserve on                                                   exercise or exchange of                                                    options                           -        2,270          -        1,389  ----------------------------------------------------------------------------   Outstanding at end of                                                       period                   80,045,267      522,790 79,170,517      499,730  ---------------------------------------------------------------------------- Share Capital                           $   522,790             $   709,379  ----------------------------------------------------------------------------  1.  Shares are issued at a 2% discount from the average closing price of the  five trading days preceding the dividend payment date.   /T/  On April 30, 2014, CWB redeemed all outstanding Series 3 Preferred Shares at $25.00 per share.  11. Share-based Payments   Stock Options  /T/  For the three months ended             April 30, 2014          April 30, 2013       ------------------------------------------------  Weighted                 Weighted  Average                  Average  Number of     Exercise   Number of     Exercise  Options        Price     Options        Price ---------------------------------------------------------------------------- Options                                                                        Balance at beginning of                                                     period                    4,524,603  $     28.73   3,857,314  $     25.37   Exercised or exchanged       (61,203)       21.36    (107,196)       17.44   Forfeited                    (40,520)       29.55     (14,300)       27.05 ---------------------------------------------------------------------------- Balance at end of period     4,422,880  $     28.83   3,735,818  $     25.60 ----------------------------------------------------------------------------  For the six months ended              April 30, 2014          April 30, 2013       ------------------------------------------------  Weighted                 Weighted  Average                  Average  Number of     Exercise   Number of     Exercise  Options        Price     Options        Price ---------------------------------------------------------------------------- Options                                                                        Balance at beginning of                                                     period                    4,217,908  $     26.96   3,441,100  $     24.51   Granted                      623,320        37.50     824,667        28.09   Exercised or exchanged      (359,609)       21.89    (343,722)       17.96   Forfeited                    (58,739)       29.39     (24,152)       27.39   Expired                            -            -    (162,075)       31.18 ---------------------------------------------------------------------------- Balance at end of period     4,422,880  $     28.83   3,735,818  $     25.60 ----------------------------------------------------------------------------  /T/  Until March 1, 2014, the terms of the share incentive plan allowed the holders of vested options a cashless settlement alternative whereby the option holder could either (i) elect to receive shares by delivering cash to CWB in the amount of the option exercise price or (ii) elect to receive the number of shares equivalent to the excess of the market value of the shares under option, determined at the exercise date, over the exercise price (cashless settlement). Effective March 1, 2014, all options exercised are settled via cashless settlement. Of the 359,609 (2013 - 343,722) options exercised or exchanged in the six months ended April 30, 2014, option holders exchanged the rights to 313,117 (2013 - 291,140) options and received 130,560 (2013 - 117,328) shares in return under the cashless settlement alternative.  For the six months ended April 30, 2014, salary expense of $2,916 (2013 - $2,947) was recognized relating to the estimated fair value of options granted. The fair value of options granted was estimated using a binomial option pricing model with the following variables and assumptions: (i) risk-free interest rate of 1.5% (2013 - 1.4%), (ii) expected option life of 4.0 (2013 - 4.0) years, (iii) expected annual volatility of 19% (2013 - 25%), and (iv) expected annual dividends of 2.0% (2013 - 2.5%). The weighted average fair value of options granted was estimated at $5.19 (2013 - $4.61) per share.  Further details relating to stock options outstanding and exercisable at April 30, 2014 follow:  /T/  Options Outstanding         Options Exercisable   -------------------------------------------------------  Weighted                                    Average                                    Remaining    Weighted              Weighted  Contractual     Average               Average Range of Exercise     Number of       Life    Exercise Number of   Exercise   Prices                 Options    (years)       Price   Options       Price ---------------------------------------------------------------------------- $16.89 to $23.43        247,817        0.8 $     21.99   247,817 $     21.99 $25.46 to $29.42      3,219,579        3.3       27.49   271,775       29.42 $30.75 to $37.50        955,484        3.4       35.09         -           - ---------------------------------------------------------------------------- Total                 4,422,880        3.2 $     28.83   519,592 $     25.88 ----------------------------------------------------------------------------  /T/  12. Contingent Liabilities and Commitments   In the normal course of business, CWB enters into various commitments and has contingent liabilities, which are not reflected in the consolidated balance sheets. At April 30, 2014, these items include guarantees and standby letters of credit of $360,448 (October 31, 2013 - $354,083). Significant contingent liabilities and commitments, including guarantees provided to third parties, are discussed in Note 20 of CWB's audited consolidated financial statements for the year ended October 31, 2013 (see page 89 of the 2013 Annual Report).  In the ordinary course of business, CWB and its subsidiaries are party to legal proceedings. Based on current knowledge, CWB does not expect the outcome of any of these proceedings to have a material effect on the consolidated financial position or results of operations.  13. Fair Value of Financial Instruments   Financial Assets and Liabilities by Measurement Basis   The table below provides the carrying amount of financial instruments by category as defined in IAS 39 - Financial Instruments: Recognition and Measurement and by balance sheet heading. The table does not include assets and liabilities that are not considered financial instruments.   /T/  Loans and                Receivables                and Non-                trading    Available-As at April 30, 2014                 Derivatives   Liabilities      for-sale ---------------------------------------------------------------------------- Financial Assets                                                               Cash resources                   $           - $           - $     396,499   Securities                                   -             -     2,138,795   Loans (1)                                    -    16,766,355             -   Other assets (2)                             -       127,242             -   Derivative related                       7,050             -             - ---------------------------------------------------------------------------- Total Financial Assets             $       7,050 $  16,893,597 $   2,535,294 ----------------------------------------------------------------------------  Financial Liabilities                                                          Deposits (1)                     $           - $  16,684,195 $           -   Other liabilities(3)                         -       376,082             -   Debt                                         -       997,962             -   Derivative related                          44             -             - ---------------------------------------------------------------------------- Total Financial Liabilities        $          44 $  18,058,239 $           - ----------------------------------------------------------------------------  As at January 31, 2014                                                       ---------------------------------------------------------------------------- Total Financial Assets             $       6,975 $  16,362,530 $   2,596,220 ---------------------------------------------------------------------------- Total Financial Liabilities        $          82 $  17,419,162 $           - ---------------------------------------------------------------------------- As at October 31, 2013                                                       ---------------------------------------------------------------------------- Total Financial Assets             $       4,509 $  15,750,288 $   2,580,327 ---------------------------------------------------------------------------- Total Financial Liabilities        $          36 $  16,834,175 $           - ----------------------------------------------------------------------------  Fair Value  Total                Over (Under)  Carrying                    Carrying As at April 30, 2014                      Amount    Fair Value        Amount ---------------------------------------------------------------------------- Financial Assets                                                               Cash resources                   $     396,499 $     396,499 $           -   Securities                           2,138,795     2,138,795             -   Loans (1)                           16,766,355    16,771,004         4,649   Other assets (2)                       127,242       127,242             -   Derivative related                       7,050         7,050             - ---------------------------------------------------------------------------- Total Financial Assets             $  19,435,941 $  19,440,590 $       4,649 ----------------------------------------------------------------------------  Financial Liabilities                                                          Deposits (1)                     $  16,684,195 $  16,716,091 $      31,896   Other liabilities(3)                   376,082       376,082             -   Debt                                   997,962     1,022,630        24,668   Derivative related                          44            44             - ---------------------------------------------------------------------------- Total Financial Liabilities        $  18,058,283 $  18,114,847 $      56,564 ----------------------------------------------------------------------------  As at January 31, 2014                                                       ---------------------------------------------------------------------------- Total Financial Assets             $  18,965,725 $  18,985,528 $      19,803 ---------------------------------------------------------------------------- Total Financial Liabilities        $  17,419,244 $  17,481,512 $      62,268 ---------------------------------------------------------------------------- As at October 31, 2013                                                       ---------------------------------------------------------------------------- Total Financial Assets             $  18,335,124 $  18,320,618 $    (14,506) ---------------------------------------------------------------------------- Total Financial Liabilities        $  16,834,211 $  16,867,410 $      33,199 ----------------------------------------------------------------------------  1.  Loans and deposits exclude deferred premiums and deferred revenue, which  are not financial instruments.  2.  Other assets exclude property and equipment, goodwill and other  intangible assets, reinsurers' share of unpaid claims and adjustment  expenses, deferred tax asset, prepaid and deferred expenses, financing  costs and other items that are not financial instruments.  3.  Other liabilities exclude deferred tax liability, deferred revenue,  unearned insurance premiums and other items that are not financial  instruments.   /T/  Fair values are based on management's best estimates based on market conditions and pricing policies at a certain point in time. The estimates are subjective and involve particular assumptions and matters of judgment and, as such, may not be reflective of future fair values. Further information on how the fair value of financial instruments is determined is included in Note 29 of the October 31, 2013 consolidated audited financial statements (see page 97 of the 2013 Annual Report).  Fair Value Hierarchy  CWB categorizes its fair value measurements of financial instruments recorded on the consolidated balance sheets according to a three-level hierarchy. Level 1 fair value measurements reflect published market prices quoted in active markets. Level 2 fair value measurements were estimated using a valuation technique based on observable market data. Level 3 fair value measurements were determined using a valuation technique based on unobservable market data. There were no transfers between Level 1 and Level 2 during the three and six months ended April 30, 2014.  Further information on how the fair value of financial instruments is determined is included in Note 29 of the October 31, 2013 consolidated audited financial statements (see page 97 of the 2013 Annual Report).  The following table presents CWB's financial assets and liabilities that are carried at fair value, categorized by level under the fair value hierarchy:  /T/  Valuation Technique            As at April 30, 2014    Fair Value       Level 1       Level 2    Level 3 ---------------------------------------------------------------------------- Financial assets                                                               Cash resources        $     396,499 $     382,439 $      14,060 $        -  Securities               2,138,795     2,138,795             -          -   Derivative related            7,050             -         7,050          - ----------------------------------------------------------------------------  $   2,542,344 $   2,521,234 $      21,110 $        - ----------------------------------------------------------------------------  Financial liabilities                                                          Other liability       $       1,979 $           - $           - $    1,979   Derivative related               44             -            44          - ----------------------------------------------------------------------------  $       2,023 $           - $          44 $    1,979 ---------------------------------------------------------------------------- As at January 31, 2014                                                       ---------------------------------------------------------------------------- Financial assets        $   2,603,195 $   2,559,982 $      43,213 $        - ---------------------------------------------------------------------------- Financial liabilities   $       1,911 $           - $          82 $    1,829 ---------------------------------------------------------------------------- As at October 31, 2013                                                       ---------------------------------------------------------------------------- Financial assets        $   2,584,836 $   2,533,327 $      51,509 $        - ---------------------------------------------------------------------------- Financial liabilities   $       1,715 $           - $          36 $    1,679 ----------------------------------------------------------------------------  /T/  Financial instruments that are not carried on the balance sheet at fair value include loans, deposits and debt. Based on the inputs used to calculate fair values disclosed above, these financial instruments are classified as Level 2 in the fair value hierarchy.  Level 3 Financial Instruments  The Level 3 financial instrument are comprised of the contingent consideration related to a subsidiary acquisition. The following table shows a reconciliation of the fair value measurements related to the Level 3 valued instrument:  /T/  For the six months ended   April 30           2014         2013 ---------------------------------------------------------------------------- Balance at beginning of period                      $     1,679  $         -   Change in fair value charged to other income              300            - ---------------------------------------------------------------------------- Balance at end of period                            $     1,979  $         - ----------------------------------------------------------------------------  /T/  14. Interest Rate Sensitivity   CWB's exposure to interest rate risk as a result of a difference or gap between the maturity or repricing behavior of interest sensitive assets and liabilities, including derivative financial instruments, is discussed in Note 28 of the audited consolidated financial statements for the year ended October 31, 2013 (see page 96 of the 2013 Annual Report). The following table shows the gap position for selected time intervals.  Asset Liability Gap Positions  /T/  Floating                                       Rate and                               Total   Within 1      1 to 3    3 Months    Within 1  ($ millions)                      Month      Months   to 1 Year        Year  ---------------------------------------------------------------------------- April 30, 2014                                                               Assets                                                                       Cash resources and                                                            securities                  $      217  $      920  $      426  $    1,563  Loans                             7,906         737       2,278      10,921  Other assets                          -           -           -           -  Derivative financial                                                          instruments(1)                     150         208         275         633  ---------------------------------------------------------------------------- Total                             8,273       1,865       2,979      13,117  ---------------------------------------------------------------------------- Liabilities and Equity                                                       Deposits                          5,908       1,332       3,845      11,085  Other liabilities                     4           8          34          46  Debt                                  9          16          69          94  Equity                                -           -           -           -  Derivative financial                                                          instruments(1)                     792           -           -         792  ---------------------------------------------------------------------------- Total                             6,713       1,356       3,948      12,017  ---------------------------------------------------------------------------- Interest Rate Sensitive Gap  $    1,560  $      509  $     (969) $    1,100  ---------------------------------------------------------------------------- Cumulative Gap               $    1,560  $    2,069  $    1,100  $    1,100  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         7.6%       10.1%        5.4%        5.4% ----------------------------------------------------------------------------  January 31, 2014                                                             Cumulative Gap               $    1,292  $    1,456  $      596  $      596  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         6.5%        7.3%        3.0%        3.0% ----------------------------------------------------------------------------  October 31, 2013                                                             Cumulative Gap               $    1,289  $    1,785  $      240  $      240  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         6.7%        9.2%        1.2%        1.2% ----------------------------------------------------------------------------  Non-               1 Year to 5  More than     interest              ($ millions)                      Years     5 Years   Sensitive       Total  ---------------------------------------------------------------------------- April 30, 2014                                                               Assets                                                                       Cash resources and                                                            securities                  $      703  $      168  $      101  $    2,535  Loans                             5,739         107         (58)     16,709  Other assets                          -           -         383         383  Derivative financial                                                          instruments(1)                     159           -           1         793  ---------------------------------------------------------------------------- Total                             6,601         275         427      20,420  ---------------------------------------------------------------------------- Liabilities and Equity                                                       Deposits                          5,600           -         (16)     16,669  Other liabilities                    31           9         380         466  Debt                                529         250         125         998  Equity                                -           -       1,494       1,494  Derivative financial                                                          instruments(1)                       -           -           1         793  ---------------------------------------------------------------------------- Total                             6,160         259       1,984      20,420  ---------------------------------------------------------------------------- Interest Rate Sensitive Gap  $      441  $       16  $   (1,557) $        -  ---------------------------------------------------------------------------- Cumulative Gap               $    1,541  $    1,557  $        -  $        -  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         7.5%        7.6%          -%          -% ----------------------------------------------------------------------------  January 31, 2014                                                             Cumulative Gap               $    1,570  $    1,625  $        -  $        -  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         7.9%        8.2%          -%          -% ----------------------------------------------------------------------------  October 31, 2013                                                             Cumulative Gap               $    1,499  $    1,541  $        -  $        -  ---------------------------------------------------------------------------- Cumulative Gap as a                                                           Percentage of Total Assets         7.8%        8.0%          -%          -% ----------------------------------------------------------------------------  1.  Derivative financial instruments are included in this table at the  notional amount.  2.  Accrued interest is excluded in calculating interest sensitive assets  and liabilities.  3.  Potential prepayments of fixed rate loans and early redemption of  redeemable fixed term deposits have not been estimated. Redemptions of  fixed term deposits where depositors have this option are not expected  to be material. The majority of fixed rate loans, mortgages and leases  are either closed or carry prepayment penalties.   /T/  The effective, weighted average interest rates of financial assets and liabilities are shown below:  /T/  Floating               3                                  Rate and          Months   Total  1 Year    More          Within 1  1 to 3    to 1  Within     to   than 5         April 30, 2014         Month  Months    Year  1 Year 5 Years   Years  Total  ---------------------------------------------------------------------------- Total assets             3.3%    2.4%    4.2%    3.4%    4.5%    4.7%   3.8% Total liabilities        1.3     1.8     2.0     1.6     2.4     3.3    1.9  ---------------------------------------------------------------------------- Interest rate                                                                 sensitive gap           2.0%    0.6%    2.2%    1.8%    2.1%    1.4%   1.9% ----------------------------------------------------------------------------  January 31, 2014                                                             ---------------------------------------------------------------------------- Total assets             3.7%    2.5%    4.0%    3.6%    4.5%    4.7%   4.0% Total liabilities        1.3     1.8     2.0     1.6     2.5     3.3    1.9  ---------------------------------------------------------------------------- Interest rate                                                                 sensitive gap           2.4%    0.7%    2.0%    2.0%    2.0%    1.4%   2.1% ----------------------------------------------------------------------------  October 31, 2013                                                             ---------------------------------------------------------------------------- Total assets             3.8%    2.3%    4.0%    3.6%    4.6%    4.8%   4.0% Total liabilities        1.3     1.9     2.0     1.6     2.4     3.3    1.9  ---------------------------------------------------------------------------- Interest rate                                                                 sensitive gap           2.5%    0.4%    2.0%    2.0%    2.2%    1.5%   2.1% ----------------------------------------------------------------------------  /T/  15. Capital Management   Capital for Canadian financial institutions is managed and reported in accordance with a capital management framework specified by OSFI commonly called Basel III. Additional information about CWB's capital management practices is provided in Note 31 to the fiscal 2013 audited consolidated financial statements within 2013 Annual Report (see page 100 of the 2013 Annual Report) and in the Capital Management section in the Q2 2014 Management's Discussion and Analysis.  Capital funds are managed in accordance with policies and plans that are regularly reviewed and approved by the Board of Directors and take into account forecasted capital needs and markets. The goal is to maintain adequate regulatory capital to be considered well capitalized, protect customer deposits and provide capacity for internally generated growth and strategic opportunities that do not otherwise require accessing the public capital markets, all while providing a satisfactory return for shareholders.  On February 10, 2014, CWB issued five million Basel III-compliant, non-cumulative, five year rate reset Series 5 Preferred Shares at $25 per share, for gross proceeds of $125 million (see Note 9). On April 30, 2014, CWB redeemed all outstanding Series 3 Preferred Shares (see Note 10).  Capital Structure and Regulatory Ratios  /T/  As at          As at          As at    April 30      January 31       April 30   2014           2014           2013  ---------------------------------------------------------------------------- Regulatory capital, net of                                                    deductions                                                                    Common equity Tier 1          $   1,376,624  $   1,326,448  $   1,229,936    Tier 1                            1,606,780      1,576,411      1,503,325    Total                             2,231,539      2,194,824      2,180,295  ---------------------------------------------------------------------------- Capital ratios                                                                 Common equity Tier 1                    8.1%           8.0%           8.0%   Tier 1                                  9.4            9.5            9.7    Total                                  13.1           13.2           14.1  Asset to capital multiple                 8.7x           8.6x           8.0x ----------------------------------------------------------------------------  /T/  During the six months ended April 30, 2014, CWB complied with all internal and external capital requirements.  16. Comparative Figures   Certain comparative figures have been reclassified to conform to the current period's presentation.  /T/  Shareholder Information                                                       Head Office                                                                   Canadian Western Bank Group                                                  Suite 3000, Canadian Western Bank Place                                      10303 Jasper Avenue                                                          Edmonton, AB T5J 3X6                                                         Telephone: (780) 423-8888                                                    Fax: (780) 423-8897                                                          cwb.com                                                                       Subsidiary Offices                                                            National Leasing Group Inc.                                                  1525 Buffalo Place                                                           Winnipeg, MB R3T 1L9                                                         Toll-free: 1-800-665-1326                                                    Toll-free fax: 1-866-408-0729                                                nationalleasing.com                                                           Canadian Western Trust Company                                               Suite 600, 750 Cambie Street                                                 Vancouver, BC V6B 0A2                                                        Toll-free: 1-800-663-1124                                                    Fax: (604) 669-6069                                                          cwt.ca                                                                        Valiant Trust Company                                                        Suite 310, 606 4th Street S.W.                                               Calgary, AB T2P 1T1                                                          Toll-free: 1-866-313-1872                                                    Fax: (403) 233-2857                                                          valianttrust.com                                                              Canadian Direct Insurance Incorporated                                       Suite 600, 750 Cambie Street                                                 Vancouver, BC V6B 0A2                                                        Telephone: (604) 699-3678                                                    Fax: (604) 699-3851                                                          canadiandirect.com                                                            Adroit Investment Management Ltd.                                            Suite 1250, Canadian Western Bank Place                                      10303 Jasper Avenue                                                          Edmonton, AB T5J 3N6                                                         Telephone: (780) 429-3500                                                    Fax: (780) 429-9680                                                          adroitinvestments.ca                                                          McLean & Partners Wealth Management Ltd.                                     801 10th Avenue SW                                                           Calgary, AB T2R 0B4                                                          Telephone: (403) 234-0005                                                    Fax: (403) 234-0606                                                          mcleanpartners.com                                                            Stock Exchange Listings                                                       The Toronto Stock Exchange                                                   Common Shares: CWB                                                           Series 5 Preferred Shares: CWB.PR.B                                           Transfer Agent and Registrar                                                  Valiant Trust Company                                                        Suite 310, 606 4th Street S.W.                                               Calgary, AB T2P 1T1                                                          Telephone: (403) 233-2801                                                    Fax: (403) 233-2857                                                          Website: http://www.valianttrust.com/                                        Email: inquiries@valianttrust.com                                             /T/  Eligible Dividends Designation  CWB designates all dividends for both common and preferred shares paid to Canadian residents as "eligible dividends", as defined in the Income Tax Act (Canada), unless otherwise noted.  Dividend Reinvestment Plan  CWB's dividend reinvestment plan allows common and preferred shareholders to purchase additional common shares by reinvesting their cash dividend without incurring brokerage and commission fees. For information about participation in the plan, please contact the Transfer Agent and Registrar or visit cwb.com.   /T/  Investor Relations                                                            Investor & Public Relations                                                  Canadian Western Bank                                                        Telephone: (780) 969-8337                                                    Toll-free: 1-800-836-1886                                                    Fax: (780) 969-8326                                                          Email: InvestorRelations@cwbank.com                                           /T/  Online Investor Information  Additional investor information including supplemental financial information and corporate presentations are available on CWB's website at cwb.com.   Quarterly Conference Call and Webcast  CWB's quarterly conference call and live audio webcast will take place on June 5, 2014 at 3:00 p.m. ET (1:00 p.m. MT). The webcast will be archived on CWB's website at cwb.com for sixty days. A replay of the conference call will be available until June 19, 2014 by dialing 905-694-9451 (Toronto) or 1-800-408-3053 (toll-free) and entering passcode 1696268.  -30- FOR FURTHER INFORMATION PLEASE CONTACT:  Canadian Western Bank Matt Evans, CFA Senior Manager, Investor Relations (780) 969-8337 matt.evans@cwbank.com  INDUSTRY:  Financial Services - Commercial and Investment Banking, Financial Services - Retail Banking  SUBJECT:  ERN 
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