Mr. Chris Fowler reports

CWB REPORTS FIRST QUARTER 2024 PERFORMANCE

Canadian Western Bank has released its financial performance for the three months ended Jan. 31, 2024, with quarterly common shareholders' net income of $88-million, down 7 per cent from the prior year, primarily due to an increase in the provision for credit losses as a percentage of average loans to within the bank's historical normal range. Net income was elevated in the prior year due to a large recovery recognized in the provision for credit losses. Pretax, preprovision income increased by 14 per cent compared with the prior year as net interest margin growth and prudent expense management drove positive operating leverage of 7.1 per cent.

Quarterly common shareholders' net income increased 14 per cent sequentially, primarily driven by lower non-interest expenses due to costs incurred in the prior quarter related to the reorganization of the bank's operations. Adjusted earnings per share common share (EPS) of 93 cents was down one cent from last quarter, as lower adjusted non-interest expenses was more than offset by the expected increase in the provision for credit losses to within Canadian Western's normal historical range.

Canadian Western's board of directors declared a cash dividend of 34 cents per common share, consistent with the dividend declared last quarter and up two cents, or 6 per cent, from last year.

"CWB's focused performance continued in the first quarter, with positive operating leverage driven by disciplined expense management while targeting new lending opportunities that met our risk-adjusted return expectations in the current environment," said Chris Fowler, president and chief executive officer. "Our strong balance sheet, prudent risk management and the differentiated experience we provide to our clients supports the continued delivery of solid results.

"Our financial outlook for 2024 is unchanged and we are well positioned to create value for our investors in the year ahead."

Financial performance

Common shareholders' net income decreased 7 per cent compared with the same quarter last year, as a 6-per-cent increase in revenue and a 1-per-cent decline in non-interest expenses were more than offset by an increase in the total provision for credit losses as a percentage of average loans. An expanding net interest margin and prudent expense management drove 7.1-per-cent operating leverage and a 14-per-cent increase in the bank's pretax, preprovision income compared with the prior year.

Higher revenue was primarily driven by a 7-per-cent increase in net interest income, which reflected the benefit of an eight-basis-point increase in net interest margin and 1-per-cent annual loan growth. The increase in net interest margin primarily reflected the benefit of increased yields on fixed-term assets from higher market interest rates, which had a larger impact than the increase in deposit costs.

Non-interest expenses were down 1 per cent from the prior year, primarily driven by lower people costs associated with a reduction in the bank's overall staffing levels following its reorganization activities last quarter. This impact was partially offset by higher depreciation expense associated with the opening of the bank's new Toronto financial district banking centre, and the phased rollout of the bank's new commercial digital and cash management platform initiated in the quarter.

The provision for credit losses on total loans as a percentage of average loans was 28 basis points higher than the same quarter last year, reflecting a 31-basis-point increase in the impaired loan provision, offset by a three-basis-point decrease in the performing loan provision. The prior-year impaired loan provision represented a 12-basis-point recovery, primarily due to the reversal of a previously recognized impaired loan write-off.

Compared with the prior quarter, common shareholders' net income increased 14 per cent as lower non-interest expenses were partially offset by an increase in the total provision for credit losses and a 1-per-cent decline in revenue. Adjusted common shareholders' net income decreased 1 per cent, while pretax, preprovision income increased 3 per cent.

Lower revenue reflected a 13-per-cent decline in non-interest income, as the bank recognized elevated foreign exchange gains in the prior quarter, partially offset by a 1-per-cent increase in net interest income. Net interest margin was consistent with the prior quarter, as the negative impact of higher average liquidity was offset by increased yields on fixed-term assets that exceeded the increase in deposit costs in the quarter.

Non-interest expenses were down 13 per cent, primarily driven by costs incurred in the previous quarter related to the reorganization of the bank's operations, with the remaining reorganization activities fully completed within the current quarter. Adjusted non-interest expenses were down 4 per cent, primarily due to lower people costs following the bank's reorganization activities, and lower spend due to the timing of continuing strategic execution activities.

The provision for credit losses on total loans as a percentage of average loans represented 19 basis points this quarter and was eight basis points higher than last quarter. A 19-basis-point impaired loan provision, compared with an eight-basis-point provision last quarter, and reflects the expected return to a level within the bank's historical normal range of 18 to 23 basis points.

About Canadian Western Bank

CWB Financial Group is the only full-service bank in Canada, with a strategic focus to meet the unique financial needs of businesses and their owners. The bank provides its nationwide clients with full-service business and personal banking, specialized financing, comprehensive wealth management offerings, and trust services. Clients choose Canadian Western for a differentiated level of service through specialized expertise, customized solutions, and faster response times relative to the competition. Canadian Western's people take the time to understand the bank's clients and their business, and work as a united team to provide holistic solutions and advice.

Canadian Western is firmly committed to the responsible creation of value for all its stakeholders and its approach to sustainability will support the bank's continued success.

Fiscal 2024 first quarter results conference call

Canadian Western's first quarter results conference call is scheduled for Friday, March 1, 2024, at 10 a.m. Eastern Time (8 a.m. Mountain Time). The bank's executives will comment on financial results and respond to questions from analysts.

The conference call may be accessed on a listen-only basis by dialling 416-764-8688 (Toronto) or 1-888-390-0546 (toll-free) and entering passcode: 79296021. The call will also be webcast live on the bank's website.

A replay of the conference call will be available until March 8, 2024, by dialling 416-764-8677 (Toronto) or 1-888-390-0541 (toll-free) and entering passcode 296021 followed by the pound key.

We seek Safe Harbor.