Laurentian Bank reports 2011 results under International Financial Reporting Standards

MONTREAL, March 7, 2012 /CNW Telbec/ - Laurentian Bank of Canada released today its unaudited quarterly and full year financial results for 2011 prepared in accordance with International Financial Reporting Standards (IFRS). The Bank adopted IFRS on November 1, 2011 and released, concurrently with this press release, its first interim financial statements under IFRS for the quarter ended January 31, 2012.

The release of the Bank's 2011 IFRS quarterly financial results, as well as the additional information in the Supplementary Information for the period ended January 31, 2012, provides a comprehensive view of the key impacts of the Bank's adoption of IFRS on its financial results for 2011, which will prove useful when analyzing the Bank's financial results for the upcoming quarters. The following information summarizes the impact of adopting IFRS on the results for 2011 and reflects the Bank's choice of elections on first-time adoption and choice of accounting policies available under IFRS, and should be read in conjunction with the Bank's 2011 Annual Report section Future Changes to Accounting Policies - IFRS on pages 60 to 66, as well as the supplementary information for the period ended January 31, 2012.

Note that the transition to IFRS is only an accounting change and does not reflect a change in the underlying business or strategies of the Bank.

The following table provides a summary of the differences between Canadian Generally Accepted Accounting Principles (Canadian GAAP)¹ and IFRS in measuring the Bank's financial performance for each quarter and year ended in 2011.

Key Performance Indicators for 2011 ^[1]

		FOR THE THREE MONTHS ENDED													FOR THE YEAR ENDED
In thousands of Canadian dollars (Unaudited)		OCTOBER 31 2011			JULY 31 2011			APRIL 30 2011			JANUARY 31 2011				OCTOBER 31 2011
Net income - Canadian GAAP		$	28,572		$	35,282		$	30,142		$	33,493			$	127,489
Adjustments - net of income taxes			(1,863)			(6,210)			874			3,427				(3,772)
Net income - IFRS		$	26,709		$	29,072		$	31,016		$	36,920			$	123,717
Diluted earnings per share
	Canadian GAAP	$	1.06		$	1.34		$	1.13		$	1.27			$	4.81
	IFRS	$	0.99		$	1.08		$	1.17		$	1.41			$	4.65
Return on common shareholders' equity
	Canadian GAAP		9.4	%		12.1	%		10.7	%		11.9	%			11.0	%
	IFRS		10.0	%		11.2	%		12.7	%		15.2	%			12.2	%
Adjusted metrics - Excluding Transaction and Integration Costs ^[2]
Adjusted net income - Canadian GAAP		$	34,412		$	35,282		$	30,142		$	33,493			$	133,329
Adjustments - net of income taxes			(1,037)			(6,210)			874			3,427				(2,946)
Adjusted net income - IFRS		$	33,375		$	29,072		$	31,016		$	36,920			$	130,383
Adjusted diluted earnings per share
	Canadian GAAP	$	1.31		$	1.34		$	1.13		$	1.27			$	5.05
	IFRS ^[3]	$	1.26		$	1.08		$	1.17		$	1.41			$	4.93
Adjusted return on common shareholders' equity
	Canadian GAAP		11.6	%		12.1	%		10.7	%		11.9	%			11.6	%
	IFRS		12.8	%		11.2	%		12.7	%		15.2	%			12.9	%

[1] See the non-GAAP financial measures below.
[2] Excluding the integration costs related to the recently acquired MRS Companies (which include M.R.S. Inc.; MRS Trust Company; M.R.S. Securities Services Inc.; and M.R.S. Correspondent Corporation) and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds.
[3] The impact of Transaction and Integration Costs on a per share basis does not add due to rounding.

As shown in the table above, for the year ended October 31, 2011, net income was $123.7 million or $4.65 diluted per share under IFRS, compared to $127.5 million or $4.81 diluted per share, under previous Canadian GAAP. Return on common shareholders' equity was 12.2% under IFRS in 2011, compared to 11.0% in 2011 under previous Canadian GAAP.

Excluding the integration costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds (Transaction and Integration Costs or T&I Costs), for the year ended October 31, 2011, net income was $130.4 million or $4.93 diluted per share under IFRS, compared to $133.3 million or $5.05 diluted per share, under previous Canadian GAAP. Excluding these one-time costs, return on common shareholders' equity was 12.9% under IFRS in 2011, compared to 11.6% in 2011 under previous Canadian GAAP.

As detailed below, the main adjustments relate to securitization activities and employee benefits with regards to pension plans.

IFRS Quarterly Earnings Impact

The following table presents the reconciliation between the net income reported under Canadian GAAP and net income reported in accordance with IFRS, for each 2011 quarter.

		FOR THE THREE MONTHS ENDED												FOR THE YEAR ENDED
In thousands of Canadian dollars (Unaudited)		OCTOBER 31 2011			JULY 31 2011			APRIL 30 2011			JANUARY 31 2011			OCTOBER 31 2011
Net income - Canadian GAAP		$	28,572		$	35,282		$	30,142		$	33,493		$	127,489
Adjustments
	Securitization		(3,343)			(4,066)			(2,588)			(3,003)			(13,000)
	Hedge accounting		(282)			83			69			280			150
	Employee benefits		2,110			1,898			1,897			1,898			7,803
	Loan loss provisioning		-			(4,147)			879			3,292			24
	Business combination		(826)			-			-			-			(826)
	Consolidation of B2B Trust		217			218			217			218			870
	Share-based payments		393			(390)			(286)			704			421
	Securities		(53)			51			246			75			319
	Tax accounting		(40)			232			604			-			796
	Other		(39)			(89)			(164)			(37)			(329)
			(1,863)			(6,210)			874			3,427			(3,772)
Net income - IFRS		$	26,709		$	29,072		$	31,016		$	36,920		$	123,717

 

Nature of Adjustments

The following paragraphs present both the quarterly impact on the income statement's line items as well as the impact on net income for the year ended October 31, 2011.

a) Securitization
The Bank securitizes residential mortgage loans primarily by participating to the Canada Mortgage Bonds Program (CMB Program) and through multi-seller conduits set up by large Canadian banks. According to Canadian GAAP, these securitization transactions met derecognition criteria and therefore were accounted for as transfers of receivables. Under IFRS, these transactions do not meet derecognition criteria and therefore were recorded as financing transactions.

The difference in accounting treatment between Canadian GAAP and IFRS for these securitization transactions has resulted in the following adjustments to the Bank's consolidated statement of income:

• Reversal of gains and losses on securitization, including gains and losses on seller swaps², on securities previously designated as at fair value through profit or loss³ and on retained interests, as well as amortization of servicing liability previously recognized in net income under Canadian GAAP;
• Recognition of interest income earned on the securitized mortgages and Replacement Assets⁴ not previously recognized under Canadian GAAP;
• Recognition of interest expense on the debt related to securitization activities not previously recognized under Canadian GAAP; and
• As of the first quarter of 2011, as a result of these changes, the Bank also modified certain hedging relationships in order to realign income recognition on derivatives used to hedge securitization activities.

The adjustments to the income statements are summarized as follows:

			FOR THE THREE MONTHS ENDED													FOR THE YEAR ENDED
In thousands of Canadian dollars (Unaudited)			OCTOBER 31 2011			JULY 31 2011			APRIL 30 2011			JANUARY 31 2011				OCTOBER 31 2011
Increase in interest income
	Increase in interest income due to the recording of the securitized residential mortgage loans and Replacement Assets		$	41,441		$	42,623		$	39,733		$	37,853			$	161,650
	Decrease in other interest income, including derivatives			(74)			(1,932)			(1,311)			(1,813)				(5,130)
				41,367			40,691			38,422			36,040				156,520
Increase in interest expense
	Increase in interest expense due to the recording of the debt related to securitization activities			38,552			36,333			33,983			31,875				140,743
Increase in net interest income				2,815			4,358			4,439			4,165				15,777
Decrease in other income
	Reversal of gains on sales and other income related to securitization activities			(8,831)			(10,201)			(7,564)			(8,890)				(35,486)
	Other			1,037			178			(448)			543				1,310
Decrease in other income				(7,794)			(10,023)			(8,012)			(8,347)				(34,176)
Increase in other expenses				93			37			55			27				212
Decrease in income taxes				(1,729)			(1,636)			(1,040)			(1,206)				(5,611)
Decrease in net income			$	(3,343)		$	(4,066)		$	(2,588)		$	(3,003)			$	(13,000)
Average assets related to securitization activities - adjustment			$	4,471,621		$	4,149,135		$	3,855,686		$	3,581,304			$	4,014,436
Net interest income as a percentage of average assets related to securitization activities				0.25	%		0.42	%		0.46	%		0.46	%			0.39	%

b) Hedge accounting
In accordance with Canadian GAAP, the Bank used the shortcut method and the variable cash flow method to measure the ineffectiveness of certain hedging relationships. As these methods cannot be used under IFRS, the Bank has developed admissible substitute quantitative methods. Other hedging relationships that were already using methods admissible under IFRS have not been modified and did not require any adjustments on the transition date.

In addition, the Bank reviewed and modified certain hedging relationships designated under Canadian GAAP due to changes in accounting for securitization transactions as explained above. The impact of these changes is included in the securitization adjustments above.

c) Employee benefits
Actuarial gains and losses
Under Canadian GAAP, actuarial gains and losses were amortized through income using a corridor approach over the estimated average remaining service life (EARSL) of employees. At the transition date, the Bank elected to use the exemption from retrospective application permitted by IFRS 1 and recorded the accumulated actuarial losses in retained earnings. Under IFRS, the Bank has elected that additional actuarial gains and losses recognized after the transition date will be amortized using a corridor approach.

Vested past service costs and transitional obligation
Under Canadian GAAP, vested past service costs of defined benefit plans and transitional obligation resulting from the initial application of the accounting standard with respect to employee future benefits were amortized over the EARSL of plan participants. Under IFRS, these deferred costs were recognized in retained earnings at the transition date.

As a result of the above, amortization of actuarial losses and other deferred amounts, previously recognized in salaries and employee benefits, was reversed under IFRS.

d) Loan loss provisioning
As part of the IFRS conversion, the Bank improved its methodology to assess provisions for groups of similar loans (collective allowances). Collective allowances are established based on the risk rating of credit facilities and on parameters such as the related probability of default (loss frequency) and the loss given default (extent of losses) associated with each type of facility. The improved methodology relies more heavily on the current status of the portfolios in accordance with IFRS requirements. The Bank had already estimated the collective allowance as of July 31, 2011 using the adjusted methodology in its Canadian GAAP financial statements. As a result, from July 31, 2011, the calculation of the provision for loan losses is harmonized under IFRS and Canadian GAAP, except for the presentation items noted below.

Under IFRS, as under Canadian GAAP, loan loss provisions must reflect the time value of money. Under Canadian GAAP, the accretion of the net present value of the written down amount of the loan due to the passage of time was recognized as a reduction of the provision for loan losses. Under IFRS, the accretion must be recognized as interest income based on the original effective interest rate of the loan.

In addition, the allowance for undrawn amounts under approved credit facilities was reclassified from the general allowance to the other liabilities and the related expense is now presented as part of other non-interest expenses.

The adjustments to the provision for loan losses presented in the table below reflect the variation of the allowance due to the improved methodology for the three-month periods ended January 31, 2011,  April 30, 2011 and July 31, 2011, as well as the effect of reclassifications to net interest income and other non-interest expenses for all periods presented.

	FOR THE THREE MONTHS ENDED												FOR THE YEAR ENDED
In thousands of Canadian dollars (Unaudited)	OCTOBER 31 2011			JULY 31 2011			APRIL 30 2011			JANUARY 31 2011			OCTOBER 31 2011
Increase in net interest income (accretion on impaired loans)	$	1,082		$	1,130		$	985		$	900		$	4,097
Decrease (increase) in provision for loan losses		(999)			(6,640)			16			3,543			(4,080)
Decrease (increase) in other non-interest expenses (allowance for undrawn amounts)		(83)			(174)			231			169			143
		-			(5,684)			1,232			4,612			160
Decrease (increase) in income taxes		-			1,537			(353)			(1,320)			(136)
Increase (decrease) in net income	$	-		$	(4,147)		$	879		$	3,292		$	24

e) Business combination
Under Canadian GAAP, acquisition-related costs, such as legal fees, were recognized as costs of the business combination. Under IFRS, these costs are expensed. As a result, the costs previously deferred under Canadian GAAP with regards to the acquisition of the MRS Companies were charged to non-interest expenses.

f) Consolidation of B2B Trust
Under Canadian GAAP, the acquisition of the minority shareholders of B2B Trust in June 2004 was accounted for as a step acquisition and resulted in the accounting of an intangible asset related to contractual relationships with financial intermediaries and customer relationships. Under IFRS, the repurchase of the minority shareholders is considered an equity transaction as the Bank already had control of its subsidiary prior to the repurchase. As a result, under IFRS the excess of the purchase price over the book value of the minority interest was recognized in retained earnings, rather than allocated to the contractual and customer relationships intangible asset as required under Canadian GAAP. Consequently, the related amortization expense of that intangible recorded under Canadian GAAP was eliminated under IFRS.The restatement of the repurchase of the minority shareholders of B2B Trust resulted in a decrease in non-interest expense.

g) Share-based payments
Under Canadian GAAP, for the stock appreciation rights (SARs) settled in cash, the excess of the share price over the exercise price, reviewed on an ongoing basis, was recognized in income during the SARs' vesting period. Under IFRS, the Bank is required to recognize as an expense the fair value of SARs during the vesting period. The Bank measures the fair value of the SARs using the Black and Scholes option pricing model, taking into account the terms and conditions upon which the SARs were granted. The impact of the revaluation was recorded in salaries and benefits.

h) Securities
Under Canadian GAAP, an impairment expense was recognized on available-for-sale securities when there was objective evidence of impairment and when that impairment was considered to be other than temporary. Under IFRS, an impairment of these securities should be recognized as soon as there is objective evidence of the impairment. As a result, unrealized gains and losses on identified securities recorded in accumulated other comprehensive income were adjusted to other income.

i) Tax accounting
Under Canadian GAAP, changes in income taxes in a subsequent period were generally charged to the income statement regardless of where the underlying transaction was initially recorded. Under IFRS, deferred taxes that are related to items that have been charged to equity in previous periods are charged directly to equity in a manner consistent with the underlying transaction. The impact was recorded in income tax expense.

Expected Regulatory Capital Implications as a Result of the Adoption of IFRS

The IFRS conversion has had a significant impact on capital. Had the adjustments resulting from the IFRS transition been applied to the Bank's financial statements as at October 31, 2011, they would have had negative impacts of 90 basis points on the Tier 1 capital ratio and 90 basis points on the total capital ratio. The Office of the Superintendent of Financial Institutions Canada issued in March 2010 an Advisory that permits a five-quarter phase-in of the adjustment to retained earnings arising from the first-time adoption of certain IFRS changes for purposes of calculating certain ratios. The Bank has elected to phase-in the adjustments. Therefore, the impact of the IFRS transition on the Bank's capital ratios will only be fully reflected as of January 31, 2013.

Caution Regarding Forward-Looking Statements

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

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

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

With respect to the MRS Companies transaction, such factors also include, but are not limited to: the anticipated benefits from the transaction such as it being accretive to earnings and synergies may not be realized in the time frame anticipated; the ability to promptly and effectively integrate the businesses; reputational risks and the reaction of B2B Trust's or MRS Companies' customers to the transaction; and diversion of management time on acquisition-related issues.

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

Non-GAAP Financial Measures

The Bank has adopted IFRS as its accounting framework. IFRS are the generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after January 1, 2011. The Bank uses both GAAP and certain non-GAAP measures to assess performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are unlikely to be comparable to any similar measures presented by other companies. These non-GAAP financial measures are considered useful to investors and analysts in obtaining a better understanding of the Bank's financial results and analyzing its growth and profit potential more effectively. The Bank's non-GAAP financial measures are defined as follows:

Book value per common share

The Bank's book value per common share is defined as common shareholders' equity, excluding accumulated other comprehensive income, divided by the number of common shares outstanding at the end of the period.

Return on common shareholders' equity

Return on common shareholders' equity is a profitability measure calculated as the net income available to common shareholders as a percentage of average common shareholders' equity, excluding accumulated other comprehensive income.

Net interest margin

Net interest margin is the ratio of net interest income to total average assets, expressed as a percentage or basis points.

Efficiency ratio and operating leverage

The Bank uses the efficiency ratio as a measure of its productivity and cost control. This ratio is defined as non-interest expenses as a percentage of total revenue. The Bank also uses operating leverage as a measure of efficiency. Operating leverage is the difference between total revenue and non-interest expenses growth rates.

Adjusted GAAP and non-GAAP measures

Certain analyses presented in this document are based on the Bank's core activities and therefore exclude the effect of the integration costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds related to the signing of a new distribution agreement of Mackenzie mutual funds.

About Laurentian Bank

Laurentian Bank of Canada is a banking institution operating across Canada and offering its clients diversified financial services. Distinguishing itself through excellence in service, as well as through its simplicity and proximity, the Bank serves individual consumers and small and medium-sized businesses. The Bank also offers its products to a wide network of independent financial intermediaries through B2B Trust, as well as full-service brokerage solutions through Laurentian Bank Securities.

Laurentian Bank is well established in the Province of Québec, operating the third-largest retail branch network. Elsewhere throughout Canada, it operates in specific market segments where it holds an enviable position. Laurentian Bank of Canada more than $29 billion in balance sheet assets and more than $32 billion in assets under administration. Founded in 1846, it has been selected as the Québec and Atlantic Canada regional winner of the Canada's 10 Most Admired Corporate Cultures^TM program presented by Waterstone Human Capital. The Bank employs close to 4,000 people.

Access to Quarterly Results Materials

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

Conference Call

Laurentian Bank invites media representatives and the public to listen to the conference call with financial analysts to be held at 2:00 p.m. Eastern Time on Wednesday, March 7, 2012. The live, listen-only, toll-free, call-in number is 514-861-2255 or 1-866-696-5910 Code 1035375#.

You can listen to the call on a delayed basis at any time from 6:00 p.m. on Wednesday, March 7, 2012 until 11:59 p.m. on April 6, 2012, by dialing the following playback number: 514-861-2272 or 1-800-408-3053 Code 1063231#. The conference call can also be heard through the Investor Relations section of the Bank's Web site at www.laurentianbank.ca. The Bank's Website also offers additional financial information.

_____________________________________________

¹ Reference to Canadian GAAP throughout this release relates to Canadian GAAP prior to the adoption of IFRS.
² As part of securitization transactions, the Bank enters into seller swaps which are designed to protect the conduits against interest rate and pre-payment risks. These seller swaps are derivatives and were therefore marked-to-market through the consolidated statement of income. Gains and losses on the seller swaps that were recognized in net income under Canadian GAAP were reversed under IFRS as the cash flows associated with these swaps are captured in the interest income recognized on the securitized mortgages and Replacement Assets and the interest expense recognized on the securitization liabilities under IFRS.
³ These securities were designated as at fair value through profit or loss under Canadian GAAP in order to offset changes in the fair value of seller swaps. As seller swaps are no longer recognized under IFRS, the designation of these securities was amended.
⁴ Replacement Assets consist of cash, deposits with other banks, securities purchased under reverse repurchase agreements and securities which were previously off balance sheet to manage the maturity mismatch between the amortizing securitized mortgages and the off-balance sheet securitization liabilities related to the CMB Program.

 

RECONCILIATION OF INCOME STATEMENT BETWEEN CANADIAN GAAP AND IFRS
In thousands of Canadian dollars, except per share amounts (Unaudited)		FOR THE THREE MONTHS ENDED OCTOBER 31, 2011										FOR THE THREE MONTHS ENDED JULY 31, 2011
		CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			IFRS				CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			IFRS
Interest income
	Loans	$	202,915		$	39,048		$	241,963			$	203,304		$	40,704		$	244,008
	Securities		15,340			3,457			18,797				15,737			3,040			18,777
	Deposits with other banks		1,066			18			1,084				1,584			10			1,594
	Other, including derivatives		15,826			(74)			15,752				18,221			(1,932)			16,289
			235,147			42,449			277,596				238,846			41,822			280,668
Interest expense
	Deposits		110,069			-			110,069				112,032			-			112,032
	Debt related to securitization activities		-			38,552			38,552				-			36,333			36,333
	Subordinated debt		2,432			-			2,432				2,411			-			2,411
	Other, including derivatives		152			-			152				466			-			466
			112,653			38,552			151,205				114,909			36,333			151,242
Net interest income			122,494			3,897			126,391				123,937			5,489			129,426
Other income
	Fees and commissions on loans and deposits		29,960			(627)			29,333				30,240			(792)			29,448
	Income from brokerage operations		8,332			-			8,332				10,221			-			10,221
	Securitization income		8,831			(8,831)			-				10,201			(10,201)			-
	Credit insurance income		4,994			-			4,994				4,104			-			4,104
	Income from treasury and financial market operations		5,328			569			5,897				4,555			364			4,919
	Income from sales of mutual funds		4,258			-			4,258				4,483			-			4,483
	Income from registered self-directed plans		1,505			-			1,505				1,674			-			1,674
	Other income		1,712			-			1,712				1,558			-			1,558
			64,920			(8,889)			56,031				67,036			(10,629)			56,407
Total revenue			187,414			(4,992)			182,422				190,973			(5,140)			185,833
Provision for loan losses			12,000			999			12,999				8,000			6,640			14,640
Non-interest expenses
	Salaries and employee benefits		73,716			(3,285)			70,431				72,466			(2,112)			70,354
	Premises and technology		35,332			43			35,375				36,198			84			36,282
	Other		23,077			(737)			22,340				28,108			(848)			27,260
	Costs related to an acquisition and other ^[3]		8,180			826			9,006				-			-			-
			140,305			(3,153)			137,152				136,772			(2,876)			133,896
Income before income taxes			35,109			(2,838)			32,271				46,201			(8,904)			37,297
Income taxes			6,537			(975)			5,562				10,919			(2,694)			8,225
Net income		$	28,572		$	(1,863)		$	26,709			$	35,282		$	(6,210)		$	29,072
Preferred share dividends, including applicable taxes			3,111			-			3,111				3,107			-			3,107
Net income available to common shareholders		$	25,461		$	(1,863)		$	23,598			$	32,175		$	(6,210)		$	25,965
Average number of common shares outstanding (in thousands)
	Basic		23,925			-			23,925				23,925			-			23,925
	Diluted		23,941			-			23,941				23,943			-			23,943
Earnings per share
	Basic	$	1.06		$	(0.07)		$	0.99			$	1.34		$	(0.25)		$	1.09
	Diluted	$	1.06		$	(0.07)		$	0.99			$	1.34		$	(0.26)		$	1.08
Net interest margin			2.00	%		(0.24)	%		1.76	%			2.03	%		(0.20)	%		1.83	%
Efficiency ratio			74.9	%		0.3	%		75.2	%			71.6	%		0.5	%		72.1	%
Return on common shareholders' equity			9.4	%		0.6	%		10.0	%			12.1	%		(0.9)	%		11.2	%
Excluding Transaction and Integration Costs ^[3]
	Adjusted diluted earnings per share	$	1.31		$	(0.05)		$	1.26			$	1.34		$	(0.26)		$	1.08
	Adjusted efficiency ratio		70.5	%		(0.3)	%		70.2	%			71.6	%		0.5	%		72.1	%
	Adjusted return on common shareholders' equity		11.6	%		1.2	%		12.8	%			12.1	%		(0.9)	%		11.2	%
In thousands of Canadian dollars, except per share amounts (Unaudited)		FOR THE THREE MONTHS ENDED APRIL 30, 2011										FOR THE THREE MONTHS ENDED JANUARY 31, 2011
		CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			IFRS				CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			IFRS
Interest income
	Loans	$	196,505		$	37,928		$	234,433			$	206,271		$	36,145		$	242,416
	Securities		15,418			2,781			18,199				15,686			2,600			18,286
	Deposits with other banks		1,581			8			1,589				1,002			8			1,010
	Other, including derivatives		15,507			(1,311)			14,196				16,921			(1,813)			15,108
			229,011			39,406			268,417				239,880			36,940			276,820
Interest expense
	Deposits		108,851			-			108,851				113,511			-			113,511
	Debt related to securitization activities		-			33,983			33,983				-			31,875			31,875
	Subordinated debt		2,352			-			2,352				4,379			-			4,379
	Other, including derivatives		1,166			-			1,166				452			-			452
			112,369			33,983			146,352				118,342			31,875			150,217
Net interest income			116,642			5,423			122,065				121,538			5,065			126,603
Other income
	Fees and commissions on loans and deposits		28,211			(329)			27,882				28,184			159			28,343
	Income from brokerage operations		16,592			-			16,592				13,284			-			13,284
	Securitization income		7,564			(7,564)			-				8,890			(8,890)			-
	Credit insurance income		4,290			-			4,290				5,203			-			5,203
	Income from treasury and financial market operations		4,003			(10)			3,993				5,087			1,042			6,129
	Income from sales of mutual funds		4,460			-			4,460				4,107			-			4,107
	Income from registered self-directed plans		1,990			-			1,990				2,084			-			2,084
	Other income		1,965			-			1,965				1,102			-			1,102
			69,075			(7,903)			61,172				67,941			(7,689)			60,252
Total revenue			185,717			(2,480)			183,237				189,479			(2,624)			186,855
Provision for loan losses			12,000			(16)			11,984				15,000			(3,543)			11,457
Non-interest expenses
	Salaries and employee benefits		75,416			(2,259)			73,157				72,332			(3,644)			68,688
	Premises and technology		34,845			109			34,954				34,464			137			34,601
	Other		24,563			(688)			23,875				24,162			(374)			23,788
	Costs related to an acquisition and other ^[3]		-			-			-				-			-			-
			134,824			(2,838)			131,986				130,958			(3,881)			127,077
Income before income taxes			38,893			374			39,267				43,521			4,800			48,321
Income taxes			8,751			(500)			8,251				10,028			1,373			11,401
Net income		$	30,142		$	874		$	31,016			$	33,493		$	3,427		$	36,920
Preferred share dividends, including applicable taxes			3,109			-			3,109				3,109			-			3,109
Net income available to common shareholders		$	27,033		$	874		$	27,907			$	30,384		$	3,427		$	33,811
Average number of common shares outstanding (in thousands)
	Basic		23,923			-			23,923				23,922			-			23,922
	Diluted		23,946			-			23,946				23,942			-			23,942
Earnings per share
	Basic	$	1.13		$	0.04		$	1.17			$	1.27		$	0.14		$	1.41
	Diluted	$	1.13		$	0.04		$	1.17			$	1.27		$	0.14		$	1.41
Net interest margin			2.01	%		(0.18)	%		1.83	%			2.03	%		(0.17)	%		1.86	%
Efficiency ratio			72.6	%		(0.6)	%		72.0	%			69.1	%		(1.1)	%		68.0	%
Return on common shareholders' equity			10.7	%		2.0	%		12.7	%			11.9	%		3.3	%		15.2	%
Excluding Transaction and Integration Costs ^[3]
	Adjusted diluted earnings per share	$	1.13		$	0.04		$	1.17			$	1.27		$	0.14		$	1.41
	Adjusted efficiency ratio		72.6	%		(0.6)	%		72.0	%			69.1	%		(1.1)	%		68.0	%
	Adjusted return on common shareholders' equity		10.7	%		2.0	%		12.7	%			11.9	%		3.3	%		15.2	%

In thousands of Canadian dollars, except per share amounts (Unaudited)		FOR THE YEAR ENDED OCTOBER 31, 2011
		CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			IFRS
Interest income
	Loans	$	808,995		$	153,825		$	962,820
	Securities		62,181			11,878			74,059
	Deposits with other banks		5,233			44			5,277
	Other, including derivatives		66,475			(5,130)			61,345
			942,884			160,617			1,103,501
Interest expense
	Deposits		444,463			-			444,463
	Debt related to securitization activities		-			140,743			140,743
	Subordinated debt		11,574			-			11,574
	Other, including derivatives		2,236			-			2,236
			458,273			140,743			599,016
Net interest income			484,611			19,874			504,485
Other income
	Fees and commissions on loans and deposits		116,595			(1,589)			115,006
	Income from brokerage operations		48,429			-			48,429
	Securitization income		35,486			(35,486)			-
	Credit insurance income		18,591			-			18,591
	Income from treasury and financial market operations		18,973			1,965			20,938
	Income from sales of mutual funds		17,308			-			17,308
	Income from registered self-directed plans		7,253			-			7,253
	Other income		6,337			-			6,337
			268,972			(35,110)			233,862
Total revenue			753,583			(15,236)			738,347
Provision for loan losses			47,000			4,080			51,080
Non-interest expenses
	Salaries and employee benefits		293,930			(11,300)			282,630
	Premises and technology		140,839			373			141,212
	Other		99,910			(2,647)			97,263
	Costs related to an acquisition and other ^[3]		8,180			826			9,006
			542,859			(12,748)			530,111
Income before income taxes			163,724			(6,568)			157,156
Income taxes			36,235			(2,796)			33,439
Net income		$	127,489		$	(3,772)			$ 123,717
Preferred share dividends, including applicable taxes			12,436			-			12,436
Net income available to common shareholders		$	115,053		$	(3,772)			$ 111,281
Average number of common shares outstanding (in thousands)
	Basic		23,924			-			23,924
	Diluted		23,943			-			23,943
Earnings per share
	Basic	$	4.81		$	(0.16)			$ 4.65
	Diluted	$	4.81		$	(0.16)			$ 4.65
Net interest margin			2.02	%		(0.20)	%		1.82	%
Efficiency ratio			72.0	%		(0.2)	%		71.8	%
Return on common shareholders' equity			11.0	%		1.2	%		12.2	%
Excluding Transaction and Integration Costs ^[3]
	Adjusted diluted earnings per share	$	5.05		$	(0.12)		$	4.93
	Adjusted efficiency ratio		71.0	%		(0.4)	%		70.6	%
	Adjusted return on common shareholders' equity		11.6	%		1.3	%		12.9	%

[1] See Reclassification of comparative figures in Note 2 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.
[2] See Note 5 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.
[3] Costs related to the recently acquired MRS Companies and the compensation for termination in 2012 of the distribution agreement of IA Clarington funds.

RECONCILIATION OF BALANCE SHEET BETWEEN CANADIAN GAAP AND IFRS
In thousands of Canadian dollars (Unaudited)		AS AT OCTOBER 31, 2011												AS AT JULY 31, 2011
		CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			RECLASSIFICATIONS ^[2]			IFRS			CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			RECLASSIFICATIONS ^[2]			IFRS
ASSETS
Cash and non-interest-bearing deposits with other banks		$	81,600		$	-		$	-		$	81,600		$	69,820		$	193		$	-		$	70,013
Interest-bearing deposits with other banks			276,429			9,030			-			285,459			596,979			2,773			-			599,752
Securities
	Available-for-sale		1,096,333			-			1,011,742			2,108,075			1,028,953			868			1,013,003			2,042,824
	Held-to-maturity		-			885,822			-			885,822			-			830,964			-			830,964
	Held-for-trading		2,181,969			-			-			2,181,969			2,044,465			-			-			2,044,465
	Designated as at fair value through profit or loss		1,011,742			-			(1,011,742)			-			1,013,003			-			(1,013,003)			-
			4,290,044			885,822			-			5,175,866			4,086,421			831,832			-			4,918,253
Securities purchased under reverse repurchase agreements			318,753			401,564			-			720,317			312,647			227,573			-			540,220
Loans
	Personal		5,768,787			-			5,420			5,774,207			5,728,317			-			4,553			5,732,870
	Residential mortgage		8,378,029			3,394,017			97,366			11,869,412			8,183,447			3,299,905			95,578			11,578,930
	Commercial mortgage		2,363,808			-			-			2,363,808			2,302,562			-			-			2,302,562
	Commercial and other		1,900,977			-			-			1,900,977			1,863,448			-			-			1,863,448
	Customers' liabilities under acceptances		179,140			-			-			179,140			198,429			-			-			198,429
			18,590,741			3,394,017			102,786			22,087,544			18,276,203			3,299,905			100,131			21,676,239
	Allowances for loan losses		(149,743)			1,000			5,593			(143,150)			(147,663)			1,000			5,510			(141,153)
			18,440,998			3,395,017			108,379			21,944,394			18,128,540			3,300,905			105,641			21,535,086
Other
	Premises and equipment		64,752			(3,044)			-			61,708			63,616			(3,036)			-			60,580
	Derivatives		228,704			(443)			-			228,261			147,009			(866)			-			146,143
	Goodwill		53,790			(24,566)			-			29,224			53,790			(24,566)			-			29,224
	Software and other intangible assets		123,357			(9,408)			-			113,949			114,812			(9,730)			-			105,082
	Deferred tax assets		-			19,876			(15,716)			4,160			-			19,570			(11,834)			7,736
	Other assets		612,024			(186,806)			(106,946)			318,272			509,054			(180,762)			(101,751)			226,541
			1,082,627			(204,391)			(122,662)			755,574			888,281			(199,390)			(113,585)			575,306
		$	24,490,451		$	4,487,042		$	(14,283)		$	28,963,210		$	24,082,688		$	4,163,886		$	(7,944)		$	28,238,630
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
	Personal	$	15,610,012		$	(159)		$	-		$	15,609,853		$	15,606,705		$	(72,176)		$	-		$	15,534,529
	Business, banks and other		4,457,406			(50,978)			-			4,406,428			3,891,333			-			-			3,891,333
			20,067,418			(51,137)			-			20,016,281			19,498,038			(72,176)			-			19,425,862
Other
	Obligations related to securities sold short		1,471,254			-			-			1,471,254			1,436,439			-			-			1,436,439
	Obligations related to securities sold under repurchase agreements		36,770			-			-			36,770			367,814			-			-			367,814
	Acceptances		179,140			-			-			179,140			198,429			-			-			198,429
	Derivatives		246,475			(116,506)			-			129,969			181,758			(77,731)			-			104,027
	Deferred tax liabilities		-			(17,244)			23,606			6,362			-			(17,241)			18,260			1,019
	Other liabilities		912,190			27,419			(37,889)			901,720			854,628			4,403			(26,204)			832,827
			2,845,829			(106,331)			(14,283)			2,725,215			3,039,068			(90,569)			(7,944)			2,940,555
Debt related to securitization activities			-			4,760,847			-			4,760,847			-			4,442,256			-			4,442,256
Subordinated debt			242,512			39			-			242,551			242,072			41			-			242,113
Shareholders' equity
	Preferred shares		210,000			-			-			210,000			210,000			-			-			210,000
	Common shares		259,492			-			-			259,492			259,492			-			-			259,492
	Share-based payment reserve		227			-			-			227			227			-			-			227
	Retained earnings		818,207			(135,200)			-			683,007			802,795			(133,337)			-			669,458
	Accumulated other comprehensive income		46,766			18,824			-			65,590			30,996			17,671			-			48,667
			1,334,692			(116,376)			-			1,218,316			1,303,510			(115,666)			-			1,187,844
		$	24,490,451		$	4,487,042		$	(14,283)		$	28,963,210		$	24,082,688		$	4,163,886		$	(7,944)		$	28,238,630
Average assets (For the three months period)		$	24,270,292		$	4,243,355		$	-		$	28,513,647		$	24,146,118		$	3,912,825		$	-		$	28,058,943
Book value per common share		$	45.05		$	(5.65)		$	-		$	39.40		$	$ 44.41		$	(5.57)		$	-		$	38.84
In thousands of Canadian dollars (Unaudited)		AS AT APRIL 30, 2011												AS AT JANUARY 31, 2011
		CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			RECLASSIFICATIONS ^[2]			IFRS			CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			RECLASSIFICATIONS ^[2]			IFRS
ASSETS
Cash and non-interest-bearing deposits with other banks		$	69,287		$	1,975		$	-		$	71,262		$	74,322		$	2,104		$	-		$	76,426
Interest-bearing deposits with other banks			641,777			4,756			-			646,533			454,600			2,607			-			457,207
Securities
	Available-for-sale		1,041,380			796			1,012,327			2,054,503			1,015,174			1,216			1,018,239			2,034,629
	Held-to-maturity		-			646,713			-			646,713			-			638,276			-			638,276
	Held-for-trading		2,248,007			-			-			2,248,007			1,889,086			-			-			1,889,086
	Designated as at fair value through profit or loss		1,012,327			-			(1,012,327)			-			1,023,680			-			(1,018,239)			5,441
			4,301,714			647,509			-			4,949,223			3,927,940			639,492			-			4,567,432
Securities purchased under reverse repurchase agreements			443,456			182,712			-			626,168			331,935			183,920			-			515,855
Loans
	Personal		5,677,165			-			4,362			5,681,527			5,622,733			-			4,886			5,627,619
	Residential mortgage		7,976,899			3,185,279			90,566			11,252,744			7,998,024			2,950,019			89,567			11,037,610
	Commercial mortgage		2,213,760			-			-			2,213,760			2,205,736			-			-			2,205,736
	Commercial and other		1,823,234			-			-			1,823,234			1,742,889			-			-			1,742,889
	Customers' liabilities under acceptances		187,400			-			-			187,400			170,098			-			-			170,098
			17,878,458			3,185,279			94,928			21,158,665			17,739,480			2,950,019			94,453			20,783,952
	Allowances for loan losses		(148,225)			6,684			5,336			(136,205)			(146,562)			5,452			5,567			(135,543)
			17,730,233			3,191,963			100,264			21,022,460			17,592,918			2,955,471			100,020			20,648,409
Other
	Premises and equipment		63,952			(2,986)			-			60,966			63,549			(2,911)			-			60,638
	Derivatives		120,201			(1,482)			-			118,719			132,776			(3,911)			-			128,865
	Goodwill		53,790			(24,566)			-			29,224			53,790			(24,566)			-			29,224
	Software and other intangible assets		110,467			(10,053)			-			100,414			110,349			(10,376)			-			99,973
	Deferred tax assets		-			23,010			(1,838)			21,172			-			22,342			1,330			23,672
	Other assets		524,547			(174,803)			(99,903)			249,841			587,543			(173,246)			(103,360)			310,937
			872,957			(190,880)			(101,741)			580,336			948,007			(192,668)			(102,030)			653,309
		$	24,059,424		$	3,838,035		$	(1,477)		$	27,895,982		$	23,329,722		$	3,590,926		$	(2,010)		$	26,918,638
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
	Personal	$	15,563,425		$	(52,733)		$	-		$	15,510,692		$	15,418,261		$	(36,895)		$	-		$	15,381,366
	Business, banks and other		4,063,085			-			-			4,063,085			3,545,739			-			-			3,545,739
			19,626,510			(52,733)			-			19,573,777			18,964,000			(36,895)			-			18,927,105
Other
	Obligations related to securities sold short		1,437,259			-			-			1,437,259			1,170,817			-			-			1,170,817
	Obligations related to securities sold under repurchase agreements		205,923			-			-			205,923			469,021			-			-			469,021
	Acceptances		187,400			-			-			187,400			170,098			-			-			170,098
	Derivatives		180,805			(51,217)			-			129,588			186,061			(54,082)			-			131,979
	Deferred tax liabilities		-			(12,909)			13,199			290			-			(12,727)			13,978			1,251
	Other liabilities		913,780			16,088			(14,676)			915,192			877,912			19,151			(15,988)			881,075
			2,925,167			(48,038)			(1,477)			2,875,652			2,873,909			(47,658)			(2,010)			2,824,241
Debt related to securitization activities			-			4,051,889			-			4,051,889			-			3,786,336			-			3,786,336
Subordinated debt			241,640			43			-			241,683			241,075			41			-			241,116
Shareholders' equity
	Preferred shares		210,000			-			-			210,000			210,000			-			-			210,000
	Common shares		259,484			-			-			259,484			259,388			-			-			259,388
	Share-based payment reserve		227			-			-			227			227			-			-			227
	Retained earnings		780,668			(127,127)			-			653,541			762,966			(128,001)			-			634,965
	Accumulated other comprehensive income		15,728			14,001			-			29,729			18,157			17,103			-			35,260
			1,266,107			(113,126)			-			1,152,981			1,250,738			(110,898)			-			1,139,840
		$	24,059,424		$	3,838,035		$	(1,477)		$	27,895,982		$	23,329,722		$	3,590,926		$	(2,010)		$	26,918,638
Average assets (For the three months period)		$	23,786,039		$	3,629,237		$	-		$	27,415,276		$	23,711,163		$	3,362,645		$	-		$	27,073,808
Book value per common share		$	43.49		$	(5.32)		$	-		$	38.17		$	42.75		$	(5.35)		$	-		$	37.40

 

In thousands of Canadian dollars (Unaudited)		AS AT NOVEMBER 1, 2010
			CANADIAN GAAP ^[1]			ADJUSTMENTS ^[2]			RECLASSIFICATIONS ^[2]			IFRS
ASSETS
Cash and non-interest-bearing deposits with other banks		$	70,537		$	1,907		$	-		$	72,444
Interest-bearing deposits with other banks			95,561			3,833			-			99,394
Securities
	Available-for-sale		1,103,744			1,281			1,033,836			2,138,861
	Held-to-maturity		-			559,457			-			559,457
	Held-for-trading		1,496,583			-			-			1,496,583
	Designated as at fair value through profit or loss		1,658,478			-			(1,033,836)			624,642
			4,258,805			560,738			-			4,819,543
Securities purchased under reverse repurchase agreements			803,874			190,800			-			994,674
Loans
	Personal		5,630,788			-			5,415			5,636,203
	Residential mortgage		8,055,034			2,715,535			89,078			10,859,647
	Commercial mortgage		2,166,375			-			-			2,166,375
	Commercial and other		1,691,190			-			-			1,691,190
	Customers' liabilities under acceptances		165,450			-			-			165,450
			17,708,837			2,715,535			94,493			20,518,865
	Allowances for loan losses		(138,143)			840			5,736			(131,567)
			17,570,694			2,716,375			100,229			20,387,298
Other
	Premises and equipment		58,536			(2,809)			-			55,727
	Derivatives		162,610			(4,544)			-			158,066
	Goodwill		53,790			(24,566)			-			29,224
	Software and other intangible assets		112,369			(10,698)			-			101,671
	Deferred tax assets		-			18,416			29,579			47,995
	Other assets		585,362			(172,001)			(124,072)			289,289
			972,667			(196,202)			(94,493)			681,972
		$	23,772,138		$	3,277,451		$	5,736		$	27,055,325
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
	Personal		15,396,911			(42,060)			-			15,354,851
	Business, banks and other		4,250,819			-			-			4,250,819
			19,647,730			(42,060)			-			19,605,670
Other
	Obligations related to securities sold short		1,362,336			-			-			1,362,336
	Obligations related to securities sold under repurchase agreements		60,050			-			-			60,050
	Acceptances		165,450			-			-			165,450
	Derivatives		199,278			(84,043)			-			115,235
	Deferred tax liabilities		-			(13,977)			41,520			27,543
	Other liabilities		947,879			33,844			(35,784)			945,939
			2,734,993			(64,176)			5,736			2,676,553
Debt related to securitization activities			-			3,486,634			-			3,486,634
Subordinated debt			150,000			-			-			150,000
Shareholders' equity
	Preferred shares		210,000			-			-			210,000
	Common shares		259,363			-			-			259,363
	Share-based payment reserve		243			-			-			243
	Retained earnings		741,911			(131,428)			-			610,483
	Accumulated other comprehensive income		27,898			28,481			-			56,379
			1,239,415			(102,947)			-			1,136,468
		$	23,772,138		$	3,277,451		$	5,736		$	27,055,325
Average assets (For the three months period)			n.a.			n.a.			n.a.			n.a.
Book value per common share		$	41.87		$	(5.50)		$	-		$	36.37

[1] See Reclassification of comparative figures in Note 2 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.
[2] See Note 5 to the unaudited condensed interim consolidated financial statements as at January 31, 2012 for further details.

 

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