Friday, August 31, 2012

LB - Laurentian Bank reports a 21% increase in operating net income for the third quarter of 2012 (CAD 0.47)

Company: Laurentian Bank
Stock Name: LB
Amount: CAD 0.47
Announcement Date: 31/08/2012
Record Date: 05/09/2012

Dividend Detail:




Highlights of the third quarter 2012









  • Net income of $30.0 million, return on common shareholders' equity of
    10.2%, and diluted earnings per share of $1.06




  • Good loan growth, up 8% year-over-year




  • Excellent credit quality as evidenced by loan losses of $7.5 million




  • Announcement of the acquisition of AGF Trust, which closed August 1st




  • B2B Trust becomes B2B Bank


  • Excluding Transaction and Integration Costs related to the acquisitions
    of the MRS Companies and AGF Trust:





    • Net income of $35.3 million, up 21% year-over-year




    • Return on common shareholders' equity of 12.2%




    • Diluted earnings per share of $1.27, up $0.19 from $1.08 a year earlier








MONTREAL, Aug. 31, 2012 /CNW Telbec/ - Laurentian Bank of Canada
reported net income of $30.0 million, or $1.06 diluted per share, for
the third quarter ended July 31, 2012, compared with $29.1��million, or
$1.08 diluted per share, for the third quarter of 2011. Return on
common shareholders' equity was 10.2% compared with 11.2% for the third
quarter of 2011. Excluding Transaction and Integration��Costs1 (T&I Costs), net income was up 21% to $35.3 million or $1.27 diluted per
share for the third quarter of 2012 and return on common shareholders'
equity was 12.2%.



For the nine-month period ended July 31, 2012, net income totaled $94.8
million or $3.44 diluted per share, compared with $97.0 million or
$3.66 diluted per share in 2011. Return on common shareholders' equity
was 11.3% for the nine-month period ended July 31, 2012, compared with
13.0% for the same period in 2011. Excluding T&I��Costs, net income was
up 8% to $104.5��million or $3.83 diluted per share for the nine-month
period ended July 31, 2012 and return on common shareholders' equity
was��12.5%.



Commenting on the Bank's financial results for the third quarter of
2012, R��jean Robitaille, President and Chief Executive Officer,
mentioned: "Once again, we continued to increase the Bank's core
profitability amid a challenging environment. We generated good organic
loan and deposit growth in all our business lines and continued to
benefit from excellent credit quality. Furthermore, the conversion and
integration process of the MRS Companies is progressing according to
plan with some synergies already being achieved. In the midst of
persistent economic uncertainty and a historically low interest rate
environment, we are leveraging strategic opportunities such as the MRS
acquisition to foster continued revenue growth while we remain focused
on closely managing expenses."



On the acquisition of AGF Trust Company (AGF Trust) and recent share
issuance, Mr. Robitaille added: "I am pleased with the conclusion of
these transactions, which closed a few weeks ago. The acquisition of
AGF Trust further entrenches the B2B Bank business segment's leadership
position as provider of banking products and services to the Canadian
financial advisor community and will contribute to its future growth.
In addition, the $120��million common share issuance maintains our
financial strength and ability to deploy our strategies and to support
future growth."














________________________________

1

Transaction and Integration Costs (T&I Costs) specifically refer to
costs incurred by the Bank to finalize the acquisition of the MRS
Companies (which included M.R.S. Inc.; MRS Trust Company; M.R.S.
Securities Services Inc.; and M.R.S. Correspondent Corporation) and
integrate their operations within the B2B Bank business segment, as
well as costs related to the recently acquired AGF Trust Company. Refer
to the non-GAAP financial measures section.







IFRS Conversion










The Bank implemented International Financial Reporting Standards (IFRS)
as its financial reporting framework on November 1, 2011. Transition to
IFRS occurred as at November��1,��2010 and required restatement of the
Bank's 2011 comparative information from Canadian GAAP basis to IFRS
basis. Additional information on the impact from the transition is also
available in the Bank's 2011 Annual Report, in the notes to the
unaudited condensed interim consolidated financial statements and in
the Supplementary Information reported for the third quarter of 2012.







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.



Financial objectives for 2012 are based on expected results presented on
an IFRS basis, the conversion towards which should be completed in
October 2012.



The pro forma impact of Basel III on regulatory capital ratios is based on the Bank's
interpretation of the proposed rules announced by the Basel Committee
on Banking Supervision (BCBS) and related requirements of the Office of
the Superintendent of Financial Institutions Canada (OSFI). The Basel
rules and impact of IFRS conversion could be subject to further change,
which may impact the results of the Bank's analysis.



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 and AGF Trust transactions, 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 Bank's or MRS Companies' and
AGF Trust's customers to the transaction; and diversion of management
time on acquisition-related issues. In addition, the pro forma impact of the acquisition of AGF Trust on regulatory capital ratios
includes the preliminary assessments of the impact of the acquisition.



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.





Highlights






































































































































































































































































































































































































































































































































































































































































































































































































































































































��

��

FOR THE THREE MONTHS ENDED

��

��

FOR THE NINE MONTHS ENDED

��

��

In thousands of Canadian dollars, except per share

��

JULY 31

��

JULY 31

��

��

��

JULY 31

��

JULY 31

��

��

��

and percentage amounts (Unaudited)

��

2012

��

2011

��

VARIANCE

2012

��

2011

��

VARIANCE

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Profitability

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Total revenue

��

$

193,833

��

$

185,833

��

4

%

$

586,247

��

$

555,925

��

5

%

��

Net income

��

$

29,998

��

$

29,072

��

3

%

$

94,823

��

$

97,008

��

(2)

%

��

Diluted earnings per share

��

$

1.06

��

$

1.08

��

(2)

%

$

3.44

��

$

3.66

��

(6)

%

��

Return on common shareholders' equity [1]

��

��

10.2

%

��

11.2

%

��

��

��

11.3

%

��

13.0

%

��

��

��

Net interest margin [1]

��

��

1.66

%

��

1.83

%

��

��

��

1.71

%

��

1.84

%

��

��

��

Efficiency ratio [1]

��

��

76.8

%

��

72.1

%

��

��

��

74.9

%

��

70.7

%

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Profitability - Excluding Transaction and Integration Costs [2]

��

Transaction and Integration Costs

��

$

7,157

��

$

-

��

��

��

$

13,167

��

$

-

��

��

��

��

Adjusted net income [1]

��

$

35,253

��

$

29,072

��

21

%

$

104,474

��

$

97,008

��

8

%

��

Adjusted diluted earnings per share [1]

��

$

1.27

��

$

1.08

��

18

%

$

3.83

��

$

3.66

��

5

%

��

Adjusted return on common shareholders' equity [1]

��

��

12.2

%

��

11.2

%

��

��

��

12.5

%

��

13.0

%

��

��

��

Adjusted efficiency ratio [1]

��

��

73.2

%

��

72.1

%

��

��

��

72.7

%

��

70.7

%

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Per common share

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Share price

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

High

��

$

47.64

��

$

52.49

��

��

��

$

48.68

��

$

55.87

��

��

��

��

��

Low

��

$

40.66

��

$

42.44

��

��

��

$

40.66

��

$

42.44

��

��

��

��

��

Close

��

$

47.55

��

$

42.86

��

11

%

$

47.55

��

$

42.86

��

11

%

��

Price / earnings ratio (trailing four quarters)

��

��

��

��

��

��

��

��

��

��

10.7

x

��

��n.a.

��

��

��

��

Book value [1]

��

��

��

��

��

��

��

��

��

$

41.78

��

$

38.84

��

8

%

��

Market to book value

��

��

��

��

��

��

��

��

��

��

114

%

��

110

%

��

��

��

Dividends declared

��

$

0.47

��

$

0.42

��

12

%

$

1.37

��

$

1.20

��

14

%

��

Dividend yield [1]

��

��

3.95

%

��

3.92

%

��

��

��

3.84

%

��

3.73

%

��

��

��

Dividend payout ratio [1]

��

��

44.2

%

��

38.7

%

��

��

��

39.8

%

��

32.7

%

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Financial position

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Balance sheet assets

��

��

��

��

��

��

��

��

��

$

31,415,512

��

$

28,238,630

��

11

%

��

Loans and acceptances

��

��

��

��

��

��

��

��

��

$

23,435,667

��

$

21,676,239

��

8

%

��

Deposits

��

��

��

��

��

��

��

��

��

$

21,622,059

��

$

19,425,862

��

11

%

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Basel II regulatory capital ratio [3]

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Tier I

��

��

��

��

��

��

��

��

��

��

10.1

%

��

11.0

%

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Other information

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Number of full-time equivalent employees

��

��

��

��

��

��

��

��

��

��

4,044

��

��

3,807

��

��

��

��

Number of branches

��

��

��

��

��

��

��

��

��

��

158

��

��

157

��

��

��

��

Number of automated banking machines

��

��

��

��

��

��

��

��

��

��

426

��

��

424

��

��

��

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

[2] Costs related to the acquisition of the MRS Companies and AGF Trust.

[3] The ratio for 2011 is presented in accordance with previous Canadian
GAAP as filed with OSFI.







Review of Business Highlights



During the third quarter, B2B Trust converted into a Schedule I
federally chartered bank under the banner of B2B Bank. This re-branding
reflects the evolution of this business segment in the distribution of
banking products and services through financial advisors to their
clients across Canada. This structure also facilitates serving clients,
advisors and dealers, building on B2B Bank's reputation of providing
unparalleled service to this community.



On August 1, Laurentian Bank, through its subsidiary B2B Bank, completed
the acquisition of AGF Trust. The recent acquisition of the MRS
Companies, coupled with the acquisition of AGF Trust, solidify B2B
Bank's position as the leader in its market. From a year ago, B2B
Bank's loans and deposits increased by 63% and 42% respectively and, by
adding over $20 billion of assets under administration, became a
significant player in the self-directed market. The number of financial
advisors who distribute B2B Bank's products also increased
significantly to 27,000 from 15,000 a year ago and the number of
clients served grew to about 750,000 from 320,000. B2B Bank's increased
size, scale and diversification will serve it and its customers well.



Laurentian Bank Securities took a further step in expanding its presence
with the opening of an office in Winnipeg. Hiring an experienced
investment banking team in a region with favourable growth prospects
should provide additional opportunities for future growth. Laurentian
Bank Securities remains focused on providing financial services to the
small cap market in Canada and participating in fixed income markets.



The Retail and SME-Qu��bec and the Real Estate and Commercial sectors
continued their expansion. Residential mortgages grew by 9% over the
year, evidence that our channels of distribution as well as our
partnerships are resulting in solid mortgage generation. SME-Qu��bec
loans grew by 8% during the last 12 months, reflecting the
effectiveness of our targeted approach and the value proposition that
the Bank offers. Similarly, Real Estate and Commercial loans and BA's
increased by 8% from a year earlier or 10% excluding the second quarter
sale of commercial mortgages. This sector will continue to deliver and
grow as it expands its partnerships, increases its participation in
syndications and further enhances the productivity of its account
managers.



Laurentian Bank's assets, including those of AGF Trust on a pro-forma
basis, now exceed $35 billion. This is 22% higher than at year-end 2011
and almost double the level 5 years ago. On a similar basis, loans and
BAs grew by 20% from year-end 2011 and almost doubled over the past 5
years, with deposits increasing by 22% and 76% respectively.
Furthermore, the Laurentian Bank is the only Canadian bank to have
increased its earnings per share for the past 7 consecutive years. This
exemplifies the effectiveness of Laurentian Bank's business model which
supports growth and development and generates sustainable
profitability.



Management's Discussion and Analysis



This Management's Discussion and Analysis (MD&A) is a narrative
explanation, through the eyes of management, of the Bank's financial
condition as at July 31, 2012, and of how it performed during the
three-month and nine-month periods then ended. This MD&A, dated August
31, 2012, should be read in conjunction with the unaudited condensed
interim consolidated financial statements for the third quarter of
2012, prepared in accordance with IAS��34 Interim financial reporting, and IFRS��1 First-time adoption of IFRS, as issued by the International Accounting Standards Board (IASB). The
comparative figures as at July 31, 2011 and October 31, 2011 and for
the three-month and nine-month periods ended July��31, 2011 have been
restated to comply with IFRS. For details on the significant
adjustments to the interim financial statements, refer to Note 5,
"Adoption of IFRS", to the unaudited condensed interim consolidated
financial statements. Supplemental information on risk management,
critical accounting policies and estimates, and off-balance sheet
arrangements is also provided in the Bank's 2011 Annual Report.



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



Economic Outlook



As we approach the fourth anniversary of the spectacular bankruptcy of
Lehman Brothers and the ensuing massive financial crisis and global
recession, many questions remain unanswered. Nevertheless, one constant
has been the incredibly low interest rate environment. While very low
interest rates were expected and understandable from 2008 to mid-2010,
they are less so since 2011, particularly in Canada where the economy
has been and remains in expansion mode. In fact, 10-year Government of
Canada bond yields have declined steadily since February 2011, dropping
from 3.42% to an astonishing 1.66% in July, below the core rate of
inflation; this movement was particularly intense in June and July. All
the while, the Bank of Canada has kept the overnight rate fixed at
1.00%.



Typically, long term interest rates are the product of central bank
policy and economic conditions, namely growth and inflation. This time,
however, another key factor is also at play: massive international
capital flows in search of a safe haven. Canada, for a variety of
reasons, has that "safe-haven" status. This gives us a stronger
currency and lower bond yields than would otherwise be the case as
foreign investors buy Canadian bonds. How long this will last depends
primarily on international developments, particularly financial
conditions in the eurozone.



Although this very low interest rate environment has eased credit
conditions and favored economic development and loan growth, it also
poses operational challenges for the banking industry. Management is
closely monitoring the impact on competitive pricing and declining
margins but nevertheless remains confident that the Bank is well
positioned to navigate through this environment.



Acquisition of AGF Trust



On August 1, 2012, the Bank and AGF Management Limited concluded an
agreement pursuant to which B2B Bank, a subsidiary of the Bank,
acquired 100% of AGF Trust in a share purchase transaction. As of the
closing date, assets of AGF Trust were approximately $4.0 billion,
essentially cash and marketable securities of $0.8 billion and retail
loan portfolios of approximately $3.1 billion. The final purchase price
will be based on AGF Trust's net book value as at the closing date,
estimated at approximately $247.1��million. The agreement also includes
a contingent consideration of a maximum of $20.0��million over five
years if credit quality reaches certain thresholds.



To support the Bank's balance sheet, considering this transaction, the
Bank entered into subscription agreements with the Caisse de d��p��t et
placement du Qu��bec and the Fonds de solidarit�� FTQ, relating to a
private placement of 2,867,383 subscription receipts, which were issued
on June 12, 2012, at a price of $41.85 per receipt and were
exchangeable, on a one-for-one basis, for common shares of the Bank. On
August 1, 2012, the subscription receipts were automatically exchanged
for 2,867,383 common shares of the Bank for total net proceeds of
$115.0 million.



2012 Financial Objectives



The following table presents management's financial objectives for 2012
and the Bank's performance to date. Revenue growth was determined with
reference to the restated 2011 IFRS comparative figures. These
financial objectives are based on the same assumptions as noted on page
29 of the Bank's 2011 Annual Report under the title "Key assumptions
supporting the Bank's objectives" and exclude Transaction and
Integration Costs.





































































2012 FINANCIAL OBJECTIVES [1]

(Excluding Transaction and Integration Costs)

��

��

��

FOR THE NINE MONTHS

��

��

��

2012 OBJECTIVES

��

��

��ENDED JULY 31, 2012

��

��

Revenue growth

��

> 5

%

��

5

%

Adjusted efficiency ratio

��

73 % to 70

%

��

72.7

%

Adjusted return on common shareholders' equity

��

11.0% to 13.5

%

��

12.5

%

Adjusted diluted earnings per share

��

$ 4.80 to $ 5.40

��

��

$ 3.83

��

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







Based on the results for the nine months ended July 31, 2012 and current
forecasts, which include the effect of the recent share issuance and
the expected contribution from AGF Trust in the fourth quarter,
management believes the Bank should meet its objectives as set out at
the beginning of the year. Strong loan growth, the acquisition of the
MRS��Companies, sustained improvements in credit quality and good cost
control have contributed to the overall good performance.



Analysis of Consolidated Results






































































































































































































































































































��

��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

In thousands of Canadian dollars,



��

JULY 31

��

APRIL 30

��

JULY 31

��

JULY 31

��

JULY 31

except per share amounts (Unaudited)

��

2012

��

2012

��

2011

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Net interest income

��

$

129,664

��

$

128,324

��

$

129,426

��

$

388,617

��

$

378,094

Other income

��

��

64,169

��

��

70,346

��

��

56,407

��

��

197,630

��

��

177,831

Total revenue

��

��

193,833

��

��

198,670

��

��

185,833

��

��

586,247

��

��

555,925

Provision for loan losses

��

��

7,500

��

��

7,500

��

��

14,640

��

��

25,000

��

��

38,081

Non-interest expenses

��

��

148,955

��

��

147,111

��

��

133,896

��

��

439,086

��

��

392,959

Income before income taxes��

��

��

37,378

��

��

44,059

��

��

37,297

��

��

122,161

��

��

124,885

Income taxes

��

��

7,380

��

��

10,196

��

��

8,225

��

��

27,338

��

��

27,877

Net income

��

$

29,998

��

$

33,863

��

$

29,072

��

$

94,823

��

$

97,008

Preferred share dividends, including applicable taxes

��

��

3,164

��

��

3,165

��

��

3,107

��

��

9,495

��

��

9,325

Net income available to common shareholders

��

$

26,834

��

$

30,698

��

$

25,965

��

$

85,328

��

$

87,683

Earnings per share

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Basic

��

$

1.06

��

$

1.22

��

$

1.09

��

$

3.44

��

$

3.67

��

Diluted

��

$

1.06

��

$

1.22

��

$

1.08

��

$

3.44

��

$

3.66







Impact of Transaction and Integration Costs [1]










































































































































































































































































































































































































































































































��

��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

In thousands of Canadian dollars,



��

JULY 31

��

APRIL 30

��

JULY 31

��

JULY 31

��

JULY 31

except per share amounts (Unaudited)

��

2012

��

2012 [2]

��

2011

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Items before income taxes

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Income before income taxes as reported

��

$

37,378

��

$

44,059

��

$

37,297

��

$

122,161

��

$

124,885

Transaction and Integration Costs :



��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

MRS Companies Integration-related costs

��

��

6,538

��

��

3,350

��

��

-

��

��

12,548

��

��

-

��

AGF Trust Transaction-related costs

��

��

619

��

��

-

��

��

-

��

��

619

��

��

-

��

��

$

7,157

��

$

3,350

��

$

-

��

$

13,167

��

$

-

Adjusted income before income taxes

��

$

44,535

��

$

47,409

��

$

37,297

��

$

135,328

��

$

124,885

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Items net of income taxes

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Net income as reported

��

$

29,998

��

$

33,863

��

$

29,072

��

$

94,823

��

$

97,008

Transaction and Integration Costs :



��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

MRS Companies Integration-related costs

��

��

4,801

��

��

2,439

��

��

-

��

��

9,197

��

��

-

��

AGF Trust Transaction-related costs

��

��

454

��

��

-

��

��

-

��

��

454

��

��

-

��

��

$

5,255

��

$

2,439

��

$

-

��

$

9,651

��

$

-

Adjusted net income

��

$

35,253

��

$

36,302

��

$

29,072

��

$

104,474

��

$

97,008

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Diluted, per common share

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Diluted earnings per share as reported

��

$

1.06

��

$

1.22

��

$

1.08

��

$

3.44

��

$

3.66

Transaction and Integration Costs :



��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

MRS Companies Integration-related costs

��

��

0.19

��

��

0.10

��

��

-

��

��

0.37

��

��

-

��

AGF Trust Transaction-related costs

��

��

0.02

��

��

-

��

��

-

��

��

0.02

��

��

-

��

��

��$

0.21

��

��$

0.10

��

��$

-

��

��$

0.39

��

��$

-

Adjusted diluted earnings per share��

��

$

1.27

��

$

1.31

��

$

1.08

��

$

3.83

��

$

3.66

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

[2] The impact of Transaction and Integration Costs on a per share basis
does not add due to rounding.







Three months ended July 31, 2012 compared to three months ended July 31,
2011



Net income was $30.0 million, or $1.06 diluted per share, for the third
quarter ended July 31, 2012, compared with $29.1��million, or $1.08
diluted per share, for the third quarter of 2011. Excluding T&I Costs,
for the third quarter ended July��31, 2012, net income was up 21% to
$35.3 million, or $1.27 diluted per share as presented above.



Total revenue



Total revenue increased $8.0 million or 4% to $193.8��million in the
third quarter of 2012, compared with $185.8��million in the third
quarter of 2011. The contribution from the MRS Companies to total
revenue amounted to $10.7 million for the third quarter of 2012.



Net interest income increased marginally to $129.7 million for the third
quarter of 2012, from $129.4��million in the third quarter of 2011, as
good loan and deposit growth year-over-year compensated for lower
margins. When compared to the third quarter of 2011, margins decreased
by 17 basis points to 1.66% in the third quarter of 2012, as the net
interest margin continued to be adversely impacted by the continued
very low interest rate environment, the flatter yield curve, an
increase in lower yielding assets related to securitization activities
and high liquidity levels.



Other income was $64.2 million in the third quarter of 2012, compared to
$56.4 million in the third quarter of 2011, a $7.8��million or 14%
year-over-year increase. This includes a $6.7 million contribution to
other income from the recently acquired MRS Companies, largely from
revenues related to registered self-directed plans. Higher income from
brokerage operations, higher fees and commissions on loan and deposits,
and higher card service revenues, have also contributed to the increase
year-over-year. These increases were partly offset by lower income from
treasury and financial market operations.



Provision for loan losses



The provision for loan losses amounted to $7.5 million in the third
quarter of 2012, down $7.1 million or 49% from $14.6��million in the
third quarter of 2011. This very low level of losses reflects the
continued excellent credit conditions in Canada, the quality of the
Bank's loan portfolios and marked improvements in the commercial
portfolios year-over-year. Losses in the quarter represented 0.13% of
average loans and acceptances, down from 0.27% in the third quarter of
2011.



Non-interest expenses



Non-interest expenses totaled $149.0 million for the third quarter of
2012, compared to $133.9��million for the third quarter of 2011.
Excluding T&I Costs of $7.2 million and the addition of operating
expenses related to the MRS Companies of $6.6��million, non-interest
expenses were up only 1% to $135.2��million compared to a year ago.



Salaries and employee benefits increased by $6.8 million or 10% to $77.2
million compared to the third quarter of 2011, mainly due to increased
headcount from the acquisition of the MRS Companies, regular salary
increases, higher performance-based compensation and increased pension
costs.



Premises and technology costs increased by $2.4 million to $38.6 million
compared to the third quarter of 2011. This increase is mainly due to
higher software and amortization expense related to completed IT
development projects, increased rental costs due to the acquisition of
the MRS Companies, and additional square footage of leased premises.



Other non-interest expenses decreased by $1.3 million to $26.0 million
for the third quarter of 2012 from $27.3 million for the third quarter
of 2011. This decrease is attributable to lower advertising expenses
compared to last year and overall decreases in other non-interest
expenses as the Bank continued to exercise disciplined control over
expenses in light of a slower revenue growth environment.



T&I Costs for the third quarter of 2012 totaled $7.2��million and mainly
related to IT, legal and communication expenses for the integration of
the MRS Companies. In addition, T&I Costs now include transaction costs
related to the acquisition of AGF Trust of $0.6 million. With regards
to the MRS Companies, the integration process is progressing according
to plan.



Excluding the T&I��Costs, the efficiency ratio was 73.2% in the third
quarter of 2012, compared to 72.1% in the third quarter of 2011. With
pressure on net interest income likely to persist in the near future,
as interest rates continue to be at record lows, the Bank remains
committed to control costs and leverage the two recent acquisitions to
generate additional revenue growth.



Income taxes



For the quarter ended July 31, 2012, the income tax expense was $7.4
million and the effective tax rate was 19.7%. The lower tax rate,
compared to the statutory rate, mainly resulted from the favourable
effect of holding investments in Canadian securities that generate
non-taxable dividend income and the lower taxation level on revenues
from insurance operations. For the quarter ended July 31,��2011, the
income tax expense was $8.2��million and the effective tax rate was
22.1%. Year-over-year, the lower income tax rate for the third quarter
ended July 31, 2012 reflects a higher level of revenues from insurance
operations and non-taxable dividends, combined with the 1.5% reduction
in Federal income tax rates, effective this year.



Nine months ended July 31, 2012 compared to nine months ended July 31,
2011



Net income was $94.8��million, or $3.44 diluted per share, for the nine
months ended July 31, 2012, compared with $97.0��million, or $3.66
diluted per share, in 2011. Excluding T&I Costs, net income was
$104.5��million, or $3.83 diluted per share.



Total revenue



Total revenue increased $30.3 million or 5% to $586.2��million for the
nine months ended July 31, 2012, compared with $555.9��million for the
nine months ended July 31, 2011. The contribution from the MRS
Companies to total revenue amounted to $29.8 million for the nine
months ended July 31, 2012.



Net interest income increased to $388.6 million for the nine months
ended July 31, 2012, compared with $378.1��million for the same period
in 2011. This increase is mainly explained by the sustained loan and
deposit volume growth year-over-year of $1.8��billion and $2.2 billion
respectively, both organic and from the acquisition of MRS. This was
partly offset by a decrease in net interest margin of 13 basis points
over the same period. As noted above, the compression in net interest
margin resulted from the persistently low interest rate environment,
the increase in lower-yielding Replacement Assets related to
securitization activities compared to last year as well as high
liquidity levels.



Other income was $197.6 million for the nine months ended July 31, 2012,
compared to $177.8 million for the same period in 2011, an 11%
year-over-year increase. This includes a $19.4 million contribution to
other income from the acquisition of the MRS Companies, largely from
revenues related to registered self-directed plans. The increase in
other income is also explained by higher fees and commissions on loans
and deposits, as well as higher card service revenues year-over-year.
These increases were partly offset by lower credit insurance income
resulting from a higher level of claims in the first half of the year.



Provision for loan losses



The provision for loan losses amounted to $25.0 million for the nine
months ended July 31, 2012, a significant decrease of $13.1 million or
34% from $38.1 million for the nine months ended July 31, 2011. This
reflects excellent credit conditions in the Canadian market, proactive
credit management decisions and the quality of the Bank's loan
portfolios, with marked improvements in the commercial loan portfolios.



Non-interest expenses



Non-interest expenses totaled $439.1 million for the nine months ended
July 31, 2012, compared to $393.0��million for the nine months ended
July 31, 2011. Excluding T&I Costs of $13.2 million and current
operating costs related to MRS Companies of $21.3 million, non-interest
expenses increased by $11.6��million or 3% to $404.6��million.



Salaries and employee benefits increased by $21.3 million or 10% to
$233.5 million compared to the nine months ended July��31, 2011, mainly
due to increased headcount from the acquisition of the MRS Companies.
Regular salary increases and variable compensation, as well as higher
employee benefits costs related to certain group insurance programs and
higher pension costs also contributed to the increase year-over-year.



Premises and technology costs increased by $8.0 million to $113.8
million compared to $105.8 million for the nine months ended July��31,
2011. Higher IT costs related to ongoing business growth and
amortization expense related to completed IT development projects, as
well as higher rental costs due to the acquisition of the MRS Companies
and increased square footage of leased premises accounted for the
increase.



Other non-interest expenses increased by $3.7 million to $78.6 million
for the nine months ended July��31, 2012, from $74.9��million for the
same period of 2011, mainly as a result of the acquisition of the MRS
Companies.



T&I Costs for the nine months ended July��31, 2012 totaled $13.2��million
and were related to IT, legal and communication expenses for the
integration of the MRS Companies. As of the third quarter of 2012, T&I
Costs also include transaction costs of $0.6 million related to the
acquisition of AGF Trust.



For the nine months ended July��31, 2012, excluding the T&I��Costs, the
efficiency ratio was 72.7%, compared with 70.7% for the nine months
ended July��31, 2011 as the moderate increase in total revenue did not
fully compensate for increases in expenses. The integration of the MRS
Companies and AGF Trust should contribute to improving the overall
efficiency ratio over the next 12 to 18 months.



Income taxes



For the nine months ended July��31, 2012, the income tax expense was
$27.3 million and the effective tax rate was 22.4%. The lower tax rate,
compared to the statutory rate, mainly resulted from the favourable
effect of holding investments in Canadian securities that generate
non-taxable dividend income and the lower taxation level on revenues
from insurance operations. For the nine months ended July��31,��2011, the
income tax expense was $27.9��million and the effective tax rate was
22.3%.



Three months ended July��31, 2012 compared to three months ended
April��30, 2012



Net income was $30.0 million or $1.06 diluted per share for the third
quarter of 2012 compared with $33.9 million or $1.22 diluted per share
for the second quarter of 2012. Excluding T&I Costs, net income was
$35.3��million, or $1.27��diluted per share, compared to $36.3 million or
$1.31 diluted per share for the second quarter ended April��30,��2012.



Total revenue decreased to $193.8 million in the third quarter of 2012,
from $198.7 million in the previous quarter. Net interest income
increased by $1.3 million sequentially to $129.7 million as loan and
deposit growth and the two additional days in the third quarter more
than offset the sequential margin decrease of 7 basis points. Higher
levels of lower-yielding liquid securities and mortgages renewing at
lower interest rates explains the sequential drop in the net interest
margin.



Other income decreased by $6.2 million sequentially, largely due to a
$3.1 million gain on sale of a $77.0 million commercial mortgage loan
portfolio during the second quarter, lower income from treasury and
financial markets and income from brokerage operations as the
resurgence of global economic concerns in the latter part of the second
quarter continued throughout the third quarter.



The provision for loan losses remained unchanged for the third quarter
of 2012, compared to the second quarter of 2012, reflecting the ongoing
excellent quality of the portfolio and continued favourable credit
conditions in Canada.



Non-interest expenses amounted to $149.0 million in the third quarter of
2012, compared to $147.1 million in the second quarter of 2012.
Excluding T&I Costs of $7.2 million in the third quarter and of $3.4
million in the second quarter of 2012, non-interest expenses decreased
by $2.0��million sequentially as the Bank continued to apply tight cost
control measures and began to benefit from expense synergies related to
the MRS acquisition.



Financial Condition






































































































































































































































CONDENSED BALANCE SHEET ��

��

��

AS AT JULY 31

��

AS AT OCTOBER 31

��

AS AT JULY 31

In thousands of Canadian dollars (Unaudited)

��

2012

��

2011

��

2011

��

��

��

��

��

��

��

��

��

��

ASSETS

��

��

��

��

��

��

��

��

��

��

Cash and deposits with other banks

��

$

917,923

��

$

367,059

��

$

669,765

��

Securities

��

��

5,178,810

��

��

5,175,866

��

��

4,918,253

��

Securities purchased under reverse repurchase agreements

��

��

1,173,704

��

��

720,317

��

��

540,220

��

Loans and acceptances, net

��

��

23,303,028

��

��

21,944,394

��

��

21,535,086

��

Other assets

��

��

842,047

��

��

755,574

��

��

575,306

��

��

$

31,415,512

��

$

28,963,210

��

$

28,238,630

��

��

��

��

��

��

��

��

��

��

LIABILITIES AND SHAREHOLDERS' EQUITY

��

��

��

��

��

��

��

��

��

��

Deposits

��

$

21,622,059

��

$

20,016,281

��

$

19,425,862

��

Other liabilities

��

��

3,137,239

��

��

2,725,215

��

��

2,940,555

��

Debt related to securitization activities

��

��

5,109,015

��

��

4,760,847

��

��

4,442,256

��

Subordinated debt

��

��

243,869

��

��

242,551

��

��

242,113

��

Shareholders' equity

��

��

1,303,330

��

��

1,218,316

��

��

1,187,844

��

��

$

31,415,512

��

$

28,963,210

��

$

28,238,630







Balance sheet assets stood at $31.4 billion as at July��31, 2012, up $2.5
billion from year-end 2011. Over the last twelve months, balance sheet
assets increased by $3.2 billion or 11%.



Liquid assets



Liquid assets, including cash, deposits with other banks, securities and
securities purchased under reverse repurchase agreements, increased by
$1.0 billion from year-end 2011, as the Bank maintained diverse funding
sources and continued to prudently manage its liquidity levels to
support the growth in business activity. Liquid assets as a percentage
of total assets increased marginally to 23% from 22% as at October 31,
2011.



Loans



Total loans and bankers' acceptances stood at $23.4 billion as at
July��31, 2012, up $1.3 billion or 6% from October��31,��2011 and 8%
year-over-year. Despite intense competition and recent tightening of
mortgage lending rules in Canada, the Bank had another solid quarter of
organic growth, with loans up $314.2 million sequentially. Since the
beginning of the year, the Bank generated $1.0 billion in organic
growth while the acquisition of the MRS Companies added $0.3 billion to
the loan portfolio. Personal loans increased by $307.4 million or 5%
since October 31, 2011, as investment loans acquired through the MRS
Companies transaction, as well as higher home equity lines of credit
and personal loans granted under the Immigrant Investor Program more
than offset slowing run-offs in point-of-sale financing. Residential
mortgage loans also increased by $684.7 million over the same period,
including $67.4��million related to the acquisition of the MRS
Companies, reflecting the Bank's strength in the retail market. In
addition, commercial loans, including bankers' acceptances, increased
by $246.0��million or 12% from October 31, 2011 while commercial
mortgage loans grew by $110.0 million or 5% over the same period,
despite a loan sale of $77.0 million during the second quarter of 2012.



Deposits



Personal deposits increased by $1.2 billion or 8% from October 31, 2011
and stood at $16.8 billion as at July��31,��2012 including $0.7 billion
resulting from the acquisition of the MRS Companies and $0.5 billion
generated from organic growth. Business and other deposits, which
include institutional deposits, were up $378.6 million since the
beginning of the year to $4.8 billion as at July��31, 2012, including a
$200.0��million of three-year senior deposit notes raised during the
second quarter.



While the Bank continues to actively manage its liquidity levels and to
maintain diversified funding sources, it focuses its efforts on retail
deposit gathering through its Retail & SME-Qu��bec and B2B��Bank business
segments, which represented 78% of total deposits as at July��31, 2012.



Other Liabilities



Debt related to securitization activities increased by $348.2 million
since the beginning of the year and stood at $5.1 billion as at
July��31, 2012. Since October 31, 2011, the Bank securitized and legally
sold $518.3 million of residential mortgage loans, including $163.7
million in the third quarter, which led to an increase in debt related
to securitization activities of $516.0 million. In addition, loans
totalling $621.0��million were sold as Replacement Assets during the
same period, of which $161.8 million were sold in the third quarter.
For additional information on the Bank's debt related to securitization
activities, please refer to Note 8 to the unaudited condensed interim
financial statements.



Subordinated debt stood at $243.9 million as at July��31, 2012,
relatively unchanged from October 31, 2011.



Shareholders' equity



Shareholders' equity stood at $1,305.4 million as at July��31, 2012,
compared with $1,218.3 million as at October��31,��2011. This increase
mainly resulted from the issuance of 1,325,100 common shares for net
proceeds of $60.9 million during the second quarter of 2012 and from
internal capital generation, which more than offset the decrease in
accumulated other comprehensive income (AOCI). The Bank's book value
per common share, excluding AOCI, appreciated to $41.78 as at July��31,
2012 from $39.40 as at October 31, 2011. There were 28,117,520 common
shares (including 2,867,383 shares issued as a result of a private
placement which closed August 1st, 2012) and 50,000 share purchase options outstanding as at August 20,
2012.



Assets under administration



Assets under administration stood at $32.3 billion as at July��31, 2012,
$20.3 billion higher than as at October 31, 2011. The increase is
mainly attributable to the growth in assets related to self-directed
RRSPs due to the acquisition of the MRS��Companies and, to a lesser
extent, to mutual funds, which continued to benefit from the
distribution agreement related to Mackenzie funds.



Capital Management



The regulatory Tier I capital of the Bank, calculated using the
Standardized Approach, reached $1,233.5 million as at July��31, 2012,
compared with $1,217.2 million as at October 31, 2011, measured under
previous Canadian GAAP. Taking into account that the Bank has elected
to phase-in the IFRS adjustments, the Tier 1 BIS capital and total BIS
capital ratios stood at 10.1% and 12.6%, respectively, as at July��31,
2012, compared to 11.0% and 13.7%, respectively, as at October��31,��2011
under previous Canadian GAAP. These ratios remain well above present
minimum requirements. The decrease in these ratios mainly results from
the IFRS transition, while higher risk-weighted assets related to the
acquisition of the MRS Companies was partially offset by the common
share issue of the second quarter of 2012. The tangible common equity
ratio of 8.0% continues to reflect the high quality of the Bank's
capital.



On August 1, 2012, to support the Bank's balance sheet considering the
acquisition of AGF Trust, the Bank successfully completed the issuance
of a private placement of 2,867,383 common shares for net proceeds of
$115.0 million. This is consistent with its prudent approach to
managing capital and objective to maintain capital ratios above new
regulatory requirements as detailed below.




















































































































































REGULATORY CAPITAL

In thousands of Canadian dollars,

��

AS AT JULY 31

��

��

AS AT OCTOBER 31

[2]

��

AS AT JULY 31

[2]

except percentage amounts (Unaudited)

��

2012

��

��

2011

��

��

2011

��

��

Tier 1 capital (A)

��

$

1,233,467

��

��

$

1,217,225

��

��

$

1,198,722

��

Tier I BIS capital ratio (A/C)

��

��

10.1

%

��

��

11.0

%

��

��

11.0

%

Total regulatory capital - BIS (B)

��

$

1,535,081

��

��

$

1,516,840

��

��

$

1,494,221

��

Total BIS capital ratio (B/C)

��

��

12.6

%

��

��

13.7

%

��

��

13.7

%

Total risk-weighted assets (C)

��

$

12,187,979

��

��

$

11,071,971

��

��

��$

10,879,847

��

Assets to capital multiple

��

��

18.7

x

��

��

16.2

x

��

��

16.2

x

Tangible common equity as a % of risk-weighted assets [1]

��

��

8.0

%

��

��

9.2

%

��

��

9.2

%

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

[2] The amounts are presented in accordance with previous Canadian GAAP
as filed with OSFI.







Impact of the adoption of IFRS on regulatory capital



Effective November 1, 2011, the Bank adopted IFRS, which impacted its
shareholders' equity. The Bank has irrevocably elected to phase-in,
over five quarters, the impact of the adjustment to retained earnings
arising from the first-time adoption of certain IFRS changes, as
allowed by OSFI's transition guidance. As such, for the purposes of
calculating capital ratios, the Bank has amortized, since November��1,
2011, the eligible portion of the impact of IFRS on capital initially
totaling $136.0��million on a straight-line basis over the next five
quarters until January 31, 2013. Therefore, the total impact of the
IFRS conversion on the Bank's capital ratios will only be fully
reflected as of January 31, 2013. Excluding this transitional
provision, the Tier 1 capital ratio and total capital ratio would have
been 9.7% and 12.1%, respectively, as at July��31, 2012.



Upon adoption of IFRS, the Bank's assets increased by the amount of
securitized residential mortgage loans and replacements assets. For
purposes of the Asset to Capital Multiple (ACM) calculation,
securitized mortgages sold through the Canada Mortgage Bonds program on
or before March 31, 2010 were excluded as permitted by OSFI. However,
securitized mortgages sold after that date are now included in the ACM
calculation and mainly contributed to the increase in the ACM, which
stood at 18.7 as at July��31,��2012.



Proposal for new capital and liquidity regulatory measures



In August 2012, OSFI issued its draft capital adequacy requirements
guideline drawn on the BCBS new capital guidelines published in
December 2010, commonly referred to as Basel III. In its draft
guideline, OSFI indicated that it expects deposit-taking institutions
to meet the Basel III capital requirements early in the Basel III
transition period beginning January 1, 2013, including a 7% Common
Equity Tier 1 ratio target (4.5% minimum plus 2.5% capital conservation
buffer).



Considering the Bank's capital position, and based on current
understanding of the Basel III rules, management believes that the Bank
is well positioned to meet upcoming capital requirements as of the
initial date of implementation in January 2013. The pro forma Common Equity Tier 1 ratio, as at July��31, 2012, would be approximately
7.0% when applying the full Basel��III rules applicable in 2019 (i.e.,
without transition arrangements). Further details on these capital
measures, as well as the related new global liquidity standards, are
provided in the Capital Management section of the annual MD&A.



Capital implication of the acquisition of AGF Trust



On August 1, 2012, the Bank, through its subsidiary B2B Bank, concluded
its acquisition of 100% of AGF Trust in a share purchase transaction.
After incorporating the estimated capital requirements for AGF Trust at
closing and the proceeds from the simultaneous private placement, the
Bank's Basel II Tier 1 Capital Ratio would be, on a pro forma basis,
approximately 10.1% as at July��31, 2012, still comfortably above
existing regulatory guidelines. Furthermore, the Bank's Basel III
Common Equity Tier 1 ratio based on the full Basel III rules applicable
in 2019 (i.e. without transition arrangements), would be, on a pro
forma basis, approximately 7.3% as at July��31, 2012, in line with
expected regulatory requirements.



Dividends



On August 22, 2012, the Board of Directors declared regular dividends on
the various series of preferred shares to shareholders of record on
September 7, 2012. At its meeting on August 31, 2012, the Board of
Directors declared a dividend of $0.47 per common share, payable on
November 1, 2012, to shareholders of record on October 1, 2012.

































































































































































COMMON SHARE DIVIDENDS AND PAYOUT RATIO

��

��

��

��

��

��

��

��

��

��

��

FOR THE NINE

��

��

��

��

��

��

��

��

��

��

��

��

FOR THE THREE MONTHS ENDED

��

MONTHS ENDED

��

FOR THE YEARS ENDED

��

In Canadian dollars, except payout ratios

��

JULY 31

��

APRIL 30

��

JANUARY 31

����

JULY 31

��

OCTOBER 31

��

OCTOBER 31

��

OCTOBER 31

��

(Unaudited)

��

2012

��

2012

��

2012

��

2012

��

2011

��

2010

��

2009

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Dividends declared per common share

��

$

0.47

��

$

0.45

��

$

0.45

��

$

1.37

��

$

1.62

��

$

1.44

��

$

1.36

��

Dividend payout ratio [1][2]

��

��

44.2

%

��

37.0

%

��

38.7

%

��

39.8

%

��

34.8

%

��

31.1

%

��

32.1

%

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

[2] The ratios for 2010 and 2009 are presented in accordance with
previous Canadian GAAP.







Risk Management



The Bank is exposed to various types of risks owing to the nature of its
activities. These risks are mainly related to the use of financial
instruments. In order to manage these risks, controls such as risk
management policies and various risk limits have been implemented.
These measures aim to optimize the risk/return ratio in all operating
segments. For additional information regarding the Bank's Risk
Management Framework, please refer to the 2011 Annual Report.



Credit risk1



The following sections provide further details on the credit quality of
the Bank's loan portfolios.














________________________________

1

Mortgage loans on residential real estate development properties and
projects, which were previously reported in residential mortgage loans,
were reclassified to commercial mortgage loans to better reflect the
nature and risk of these loans.




















































































































































































































PROVISION FOR LOAN LOSSES

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

In thousands of Canadian dollars, except percentage amounts��

JULY 31

��

APRIL 30

��

JULY 31

��

JULY 31

��

JULY 31

��

(Unaudited)

2012

��

2012

��

2011

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Provision for loan losses

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Personal loans

$

5,715

��

$

5,856

��

$

2,868

��

$

17,760

��

$

15,652

��

��

Residential mortgage loans

��

1,256

��

��

498

��

��

(646)

��

��

2,038

��

��

396

��

��

Commercial mortgage loans

��

13

��

��

2,555

��

��

6,227

��

��

3,456

��

��

13,667

��

��

Commercial and other loans (including acceptances)

��

516

��

��

(1,409)

��

��

6,191

��

��

1,746

��

��

8,366

��

��

$

7,500

��

$

7,500

��

$

14,640

��

$

25,000

��

$

38,081

��

As a % of average loans and acceptances

��

0.13

%

��

0.13

%

��

0.27

%

��

0.15

%

��

0.25

%







The provision for loan losses amounted to $7.5 million in the third
quarter of 2012, unchanged from the second quarter of 2012 but down
$7.1 million or 49% compared to a year ago, reflecting the excellent
credit quality of the Bank's loan portfolios and continued favourable
credit conditions in the Canadian market.



The year-over-year increase in loan losses on personal loans partly
results from increases in credit card receivables, as well as from
higher volumes. The provision on residential mortgage loans was $1.3
million in the third quarter of 2012, up $1.9��million compared to the
third quarter of 2011, which was favourably impacted by net reductions.



Loan losses on commercial mortgages and commercial loans remained at a
low level during the third quarter and further decreased by a combined
$0.6 million sequentially, mainly as a result of improvements in the
credit conditions of certain loans and, to a lesser extent, to
recoveries. The very low level of loan losses continues to reflect the
good credit quality of this portfolio.


























































































































































































































IMPAIRED LOANS

��

��

��

��

��

��

��

��

��

��

��

��

AS AT JULY 31

��

AS AT OCTOBER 31

��

AS AT JULY 31

��

In thousands of Canadian dollars, except percentage amounts (Unaudited)

��

2012

��

2011

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

Gross impaired loans

��

��

��

��

��

��

��

��

��

��

��

Personal

��

$

17,774

��

��$

14,395

��

$

15,369

��

��

Residential mortgages

��

��

18,853

��

��

17,053

��

��

16,517

��

��

Commercial mortgages

��

��

61,418

��

��

62,541

��

��

68,160

��

��

Commercial and other (including acceptances)

��

��

58,348

��

��

69,736

��

��

71,646

��

��

��

��

156,393

��

��

163,725

��

��

171,692

��

Individual allowances

��

��

(62,052)

��

��

(69,450)

��

��

(67,989)

��

Collective allowances

��

��

(70,587)

��

��

(73,700)

��

��

(73,164)

��

Net impaired loans

��

$

23,754

��

��$

20,575

��

$

30,539

��

Impaired loans as a % of loans and acceptances

��

��

��

��

��

��

��

��

��

��

��

Gross

��

��

0.67

%

��

0.74

%

��

0.79

%

��

Net

��

��

0.10

%

��

0.09

%

��

0.14

%







Gross impaired loans amounted to $156.4 million as at July 31, 2012,
compared to $163.7 million as at October 31, 2011 as credit quality
remained strong during the quarter. The decrease since October��31,��2011
essentially resulted from improvements in the commercial loan
portfolios. The increase in gross impaired loans in the residential
mortgage and personal loan portfolios since October��31,��2011 is in line
with the growth in the Bank's various loan portfolios.



Since the beginning of the year, individual allowances decreased by
$7.4��million to $62.1��million. Over the same period, collective
allowances decreased by $3.1��million, including a $3.2 million increase
related to the acquisition of the loan portfolio and allowances of the
MRS��Companies, as improvements in credit quality and market conditions
more than offset the impact of higher loan volumes. Net impaired loans
amounted to $23.8��million as at July 31, 2012, compared to
$20.6��million as at October��31,��2011, a marginal increase to 0.10% of
loans and acceptances from 0.09% as at October��31,��2011.



Market risk



Market risk represents the financial losses that the Bank could incur
following unfavourable fluctuations in the value of financial
instruments subsequent to changes in the underlying factors used to
measure them, such as interest rates, exchange rates or equity prices.
This risk is inherent to the Bank's financing, investment, trading and
asset and liability management (ALM) activities.



The purpose of ALM activities is to control structural interest rate
risk, which corresponds to the potential negative impact of interest
rate movements on the Bank's revenues and economic value. Dynamic
management of structural risk is intended to maximize the Bank's
profitability while preserving the economic value of common
shareholders' equity. As at July 31,��2012, the effect on the economic
value of common shareholders' equity and on net interest income before
taxes of a sudden and sustained 1% increase in interest rates across
the yield curve was as follows.

























































STRUCTURAL INTEREST RATE SENSITIVITY ANALYSIS

��

��

��

��

��

��

��

��

AS AT JULY 31

��

AS AT OCTOBER 31

In thousands of Canadian dollars (Unaudited)

����

2012

��

2011

��

��

��

��

��

��

��

Increase in net interest income before taxes over the next 12 months

��

$

15,923

��

$

22,026

Decrease in the economic value of common shareholders' equity (Net of
income taxes)

��

$

(22,837)

��

$

(15,964)







As shown in the table above, the Bank maintained its short-term ALM
sensitivity compared to October��31,��2011. These results reflect
management's efforts to take advantage in the movement of short-term
and long-term interest rates, all the while maintaining the sensitivity
to these fluctuations within approved limits.



Segmented Information



This section outlines the Bank's operations according to its
organizational structure. Services to individuals, businesses,
financial intermediaries and institutional clients are offered through
the following business segments:










  • Retail & SME-Qu��bec




  • Real Estate & Commercial




  • B2B Bank1






  • Laurentian Bank Securities & Capital Markets




  • Other
















________________________________

1

B2B Trust converted into a Schedule I federally chartered bank under the
name of B2B Bank as of July 7, 2012.







Retail & SME-Qu��bec












































































































































































































































��

��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

��

��

JULY 31

��

APRIL 30

��

JULY 31

��

JULY 31

��

JULY 31

��

In thousands of Canadian dollars, except percentage amounts (Unaudited)

��

2012

��

2012

��

2011

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Net interest income

��

$

80,163

��

$

76,096

��

$

83,137

��

$

234,984

��

$

241,466

��

Other income

��

��

34,662

��

��

33,422

��

��

32,699

��

��

99,887

��

��

99,256

��

Total revenue

��

��

114,825

��

��

109,518

��

��

115,836

��

��

334,871

��

��

340,722

��

Provision for loan losses

��

��

6,474

��

��

4,855

��

��

3,724

��

��

17,545

��

��

17,978

��

Non-interest expenses

��

��

91,107

��

��

91,268

��

��

92,352

��

��

273,635

��

��

272,473

��

Income before income taxes

��

��

17,244

��

��

13,395

��

��

19,760

��

��

43,691

��

��

50,271

��

Income taxes

��

��

3,709

��

��

2,737

��

��

5,015

��

��

9,077

��

��

10,974

��

Net income

��

$

13,535

��

$

10,658

��

$

14,745

��

$

34,614

��

$

39,297

��

Efficiency ratio [1]

��

��

79.3

%

��

83.3

%

��

79.7

%

��

81.7

%

��

80.0

%

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







The Retail & SME-Qu��bec business segment's contribution to net income
was $13.5 million in the third quarter of 2012, compared with $14.7
million in the third quarter of 2011.



Total revenue decreased from $115.8 million in the third quarter of 2011
to $114.8 million in the third quarter of 2012, as higher other income
was more than offset by lower net interest income. Year-over-year, net
interest income decreased by $3.0��million, as significant growth in
loan and deposit volumes, notably in the residential mortgage loan
portfolio and SME portfolio, did not fully compensate for the decline
in net interest margin stemming from the ongoing low interest rate
environment. Other income increased from $32.7��million in the third
quarter of 2011 to $34.7��million for the same period in 2012 as higher
revenues from card services due to increased fees and transactional
volume, and higher fees on deposits was partly offset by lower credit
insurance income.



Loan losses increased by $2.8��million, from $3.7 million in the third
quarter of 2011 to $6.5��million in the third quarter of 2012, as higher
provisions were required for increased volume in the retail portfolio.
This increase was tempered by the continued decrease in the
point-of-sale portfolio stemming from the reduced exposure.
Non-interest expenses were down $1.2 million, from $92.4��million in the
third quarter of 2011 to $91.1��million in the third quarter of 2012,
resulting from cost control initiatives.



For the nine months ended July 31, 2012, net income decreased $4.7
million to $34.6 million, essentially due to lower interest margins,
which more than offset strong loan growth as explained above. Despite
continued investments in SME Qu��bec capabilities and as a result of the
continued focus on controlling costs, non-interest expenses increased
by less than 1% over the same period.



Balance sheet highlights




  • Loans up 7% or $937.8 million over the last 12 months


  • Increase in deposits of 4% or $336.9 million over the last 12 months, to
    $9.7 billion as at July 31, 2012






Real Estate & Commercial



























































































































































































��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

��

JULY 31

APRIL 30

�� JULY 31

��

JULY 31

JULY 31

��

In thousands of Canadian dollars, except percentage amounts (Unaudited)

2012

�� 2012

�� 2011

��

2012

�� 2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Net interest income

$

21,731

$

22,049

$

22,942

��

$

65,992

$

68,551

��

Other income

��

8,327

��

10,451

��

8,837

��

��

26,784

��

24,782

��

Total revenue

��

30,058

��

32,500

��

31,779

��

��

92,776

��

93,333

��

Provision for loan losses

��

436

��

1,755

��

10,458

��

��

5,042

��

18,695

��

Non-interest expenses

��

7,756

��

7,484

��

7,555

��

��

22,996

��

21,918

��

Income before income taxes

��

21,866

��

23,261

��

13,766

��

��

64,738

��

52,720

��

Income taxes

��

5,915

��

6,292

��

3,940

��

��

17,512

��

15,091

��

Net income��

$

15,951

��$

16,969

$

9,826

��

$

47,226

$

37,629

��

Efficiency ratio [1]

��

25.8

%

23.0

%

23.8

%

��

24.8

%

23.5

%

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







The Real Estate & Commercial business segment's contribution to net
income increased by $6.1 million or 62% to $16.0��million in the third
quarter of 2012, compared with $9.8 million in the third quarter of
2011.



Total revenue decreased by $1.7 million, from $31.8 million in the third
quarter of 2011 to $30.1 million in the third quarter of 2012. This
decrease is mainly explained by a reduction in net interest income,
which continued to be impacted by margin compression, and other income
resulting from lower underwriting fees. Loan losses continued to
decline to $0.4��million in the third quarter of 2012, compared with
$10.5��million in the third quarter of 2011. This exceptionally low
level of losses reflects the overall good credit quality of the loan
portfolios, enhanced by the ongoing favourable credit conditions in
Canada. Non-interest expenses increased marginally to $7.8 million in
the third quarter of 2012 compared with $7.6 million in the third
quarter of 2011 essentially due to salary costs related to additional
headcount hired to support increased business activity.



For the nine months ended July 31, 2012, net income increased by 26% to
$47.2 million as a result of improved loan losses and an increase in
other income due to the gain on sale of a commercial mortgage loan
portfolio in the second quarter. Non-interest expenses increased
marginally by $1.1 million compared to the nine months ended July 31,
2011, mainly due to increased salaries and benefits and rental costs as
explained above.



Balance sheet highlights




  • Loans and BAs up 8% or $245.5 million over the last 12 months


  • Increase in deposits of 18% or $87.4 million over the last 12 months






B2B Bank











































































































































































































































��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

��

JULY 31

APRIL 30

�� JULY 31

��

JULY 31

JULY 31

��

In thousands of Canadian dollars, except percentage amounts (Unaudited)

2012

�� 2012

�� 2011

��

2012

�� 2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Net interest income

$

32,119

$

30,689

$

30,072

��

$

93,772

$

87,294

��

Other income

��

8,408

��

9,116

��

2,110

��

��

25,667

��

7,054

��

Total revenue

��

40,527

��

39,805

��

32,182

��

��

119,439

��

94,348

��

Provision for loan losses

��

590

��

890

��

458

��

��

2,413

��

1,408

��

Non-interest expenses

��

22,913

��

24,483

��

16,545

��

��

70,818

��

48,113

��

Costs related to an acquisition and other [1]

��

7,157

��

3,350

��

-

��

��

13,167

��

-

��

Income before income taxes

��

9,867

��

11,082

��

15,179

��

��

33,041

��

44,827

��

Income taxes

��

2,612

��

2,953

��

4,300

��

��

8,786

��

12,703

��

Net income��

$

7,255

$

8,129

$

10,879

��

$

24,255

$

32,124

��

Efficiency ratio [2]

��

74.2

%

69.9

%

51.4

%

��

70.3

%

51.0

%

Adjusted net income�� [2]

$

12,510

$

10,568

$

10,879

��

$

33,906

$

32,124

��

Adjusted efficiency ratio [2]

��

56.5

%

61.5

%

51.4

%

��

59.3

%

51.0

%

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

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







Excluding after-tax T&I Costs related to the acquisition of AGF Trust
and MRS Companies of $5.3 million, the B2B��Bank business segment's
contribution to net income was $12.5 million in the third quarter of
2012, up $1.6 million from the third quarter of 2011. Reported net
income for the third quarter of 2012 was $7.3 million.



Total revenue increased to $40.5 million in the third quarter of 2012
compared with $32.2 million in the third quarter of 2011, mainly as a
result of the increase in other income from registered self-directed
plans related to the acquisition of the MRS Companies. Net interest
income also increased by $2.0 million compared to last year,
essentially as a result of the acquisition of the MRS Companies.



Loan losses increased marginally from $0.5 million in the third quarter
of 2011 to $0.6 million in the third quarter of 2012, as higher
provisions were required on increased volumes of investment loans.
Non-interest expenses increased by $6.4 million to $22.9��million in the
third quarter of 2012, compared with $16.5��million in the third quarter
of 2011. This increase includes current operating costs of $6.6 million
related to the MRS Companies. Otherwise, expenses decreased by $0.3
million or 2% year-over-year, due to lower other expenses which more
than compensated the slight increase in salary expense. T&I Costs
amounted to $7.2 million for the third quarter of 2012, resulting
mainly from IT costs incurred and additional headcount hired to
integrate the MRS Companies, as well as costs of $0.6 million related
to the recently acquired AGF Trust.



The acquisition of the MRS Companies, after eight and a half months, is
yielding excellent results and contributing to improve revenue
diversification as evidenced by the growth in other income and assets
under administration. The integration of the MRS Companies is
progressing according to plan, with the IT integration proceeding
smoothly and some synergies already achieved. Management remains
focused on completing this process in order to ensure anticipated
synergies are achieved within the next three quarters.



For the nine months ended July 31, 2012, net income, excluding after-tax
T&I Costs related to the acquisition of AGF Trust and MRS Companies of
$9.7 million, was $33.9 million, slightly higher than the same period
of 2011 essentially as the contribution of MRS Companies of $6.3
million to net income was partially offset by narrower margins on B2B
Bank's other portfolios. Reported net income for the nine months ended
July 31,��2012 was $24.3��million.



The announced acquisition of AGF Trust by B2B Bank closed on August 1,
2012. This strategic transaction will further contribute to
strengthening B2B Bank's industry-leading position and providing the
Canadian financial advisory and mortgage brokerage communities with
best-in-class products and services to meet their unique needs.



Balance sheet highlights




  • Loans up 9% or $497.5 million over the last 12 months


  • Total deposits up 13% or $1.2 billion over the last 12 months






Laurentian Bank Securities & Capital Markets














































































































































��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

��

JULY 31

APRIL 30

�� JULY 31

��

JULY 31

JULY 31

��

In thousands of Canadian dollars, except percentage amounts (Unaudited)

2012

�� 2012

�� 2011

��

�� 2012

�� 2011

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Total revenue

$

13,256

$

16,265

$

11,851

��

$

44,176

$

45,964

��

Non-interest expenses

��

11,668

��

12,530

��

11,035

��

��

36,358

��

37,656

��

Income before income taxes

��

1,588

��

3,735

��

816

��

��

7,818

��

8,308

��

Income taxes

��

412

��

956

��

130

��

��

1,988

��

2,168

��

Net income

$

1,176

$

2,779

$

686

��

$

5,830

$

6,140

��

Efficiency ratio [1]

��

88.0

%

77.0

%

93.1

%

��

82.3

%

81.9

%

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







The Laurentian Bank Securities and Capital Markets (LBS & CM) business
segment's contribution to net income increased to $1.2��million in the
third quarter of 2012, compared with $0.7��million in the third quarter
of 2011.



Total revenue increased by $1.4 million to $13.3 million in the third
quarter of 2012 compared with $11.9��million for the same quarter of
2011, as underwriting and trading activities benefited from slightly
improved market conditions compared to a year ago, while bond market
uncertainty persists and small-cap equity markets are sidelined. This
increase in underwriting and trading earnings was partly offset by
reduced retail brokerage revenue resulting from a lower level of
activity. Non-interest expenses increased by $0.6 million, largely
related to higher performance-based compensation, in line with higher
market-driven income.



For the nine months ended July 31, 2012, net income decreased by $0.3
million compared to the same period last year, as lower expenses did
not fully compensate for the decrease in revenues, essentially for the
same reasons presented above.



Balance sheet highlight��




  • Assets under management stood at $2.2 billion as at July 31, 2012






Other Sector

































































































































��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

JULY 31

APRIL 30

JULY 31

��

JULY 31

JULY 31

In thousands of Canadian dollars (Unaudited)

2012

2012

2011

��

2012

2011

Net interest income

$

(5,134)

$

(1,206)

$

(7,336)

��

��$

(8,121)

$

(21,270)

Other income

��

301

��

1,788

��

1,521

��

��

3,106

��

2,828

Total revenue

��

(4,833)

��

582

��

(5,815)

��

��

(5,015)

��

(18,442)

Non-interest expenses

��

8,354

��

7,996

��

6,409

��

��

22,112

��

12,799

Loss before income taxes

��

(13,187)

��

(7,414)

��

(12,224)

��

��

(27,127)

��

(31,241)

Income taxes recovery

��

(5,268)

��

(2,742)

��

(5,160)

��

��

(10,025)

��

(13,059)

Net loss

��$

(7,919)

$

(4,672)

$

(7,064)

��

��$

(17,102)

$

(18,182)







The Other sector posted a negative contribution to net income of $7.9
million in the third quarter of 2012 compared with a negative
contribution of $7.1 million in the third quarter of 2011.



Net interest income improved to negative $5.1��million in the third
quarter of 2012, compared to negative $7.4 million in the third quarter
of 2011, reflecting good market positioning as well as some adjustments
to transfer pricing initiated in the first quarter of 2012. Other
income for the third quarter of 2012 was $0.3 million, compared to
$1.5��million for the third quarter of 2011 and essentially relates to
gains on treasury activities.



Non-interest expenses in the third quarter of 2012 amounted to $8.4
million compared to $6.4 million a year ago, a $2.0��million increase.
Higher pension costs, regular salary increases, as well as higher
software and amortization expense related to completed IT development
projects contributed to the increase compared to last year.



For the nine months ended July 31, 2012, the negative contribution stood
at $17.1 million, compared to negative $18.2��million for the nine
months ended July 31, 2011, mainly due to the same reasons as noted
above.



Additional Financial Information - Quarterly Results




























































































































































































































































































































��

IFRS

��

CANADIAN GAAP

��

In thousands of Canadian dollars,

except per share and percentage

amounts (Unaudited)

JULY 31

APRIL 30

JANUARY 31

OCTOBER 31

JULY 31

APRIL 30

JANUARY 31

��

OCTOBER 31

��

��

2012

2012

2012

2011

2011

2011

2011

��

2010

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Total revenue

$

193,833

$

198,670

$

193,744

$

182,422

$

185,833

$

183,237

$

186,855

��

$

190,074

��

Net income

$

29,998

$

33,863

$

30,962

$

26,709

$

29,072

$

31,016

$

36,920

��

$

32,514

��

Earnings per share

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Basic

$

1.06

$

1.22

$

1.16

$

0.99

$

1.09

$

1.17

$

1.41

��

$

1.24

��

��

Diluted

$

1.06

$

1.22

$

1.16

$

0.99

$

1.08

$

1.17

$

1.41

��

$

1.24

��

Return on common shareholders' equity [1]

��

10.2

%

12.1

%

11.6

%

10.0

%

11.2

%

12.7

%

15.2

��

%

11.8

%

Balance sheet assets (in millions of dollars)

$

31,416

$

30,708

$

29,921

$

28,963

$

28,239

$

27,896

$

26,919

��

$

23,772

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Excluding Transaction and Integration Costs [2] ��

�� ��

��

��

��

��

��

��

��

��

��

��

��

��

Adjusted net income [1]

$

35,253

$

36,302

$

32,919

$

33,375

$

29,072

$

31,016

$

36,920

��

$

32,514

��

Adjusted diluted earnings per share [1]

$

1.27

$

1.31

$

1.24

$

1.26

$

1.08

$

1.17

$

1.41

��

$

1.24

��

Adjusted return on common shareholders equity [1]

��

12.2

%

13.0

%

12.4

%

12.8

%

11.2

%

12.7

%

15.2

��

%

11.8

%

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

[2] Costs related to the acquisition of the MRS Companies and AGF Trust.







Accounting Policies



A summary of the Bank's significant accounting policies is presented in
Notes 2 and 3 of the July 31, 2012 unaudited condensed interim
consolidated financial statements. The unaudited condensed interim
consolidated financial statements for the third quarter of 2012 have
been prepared in accordance with these accounting policies.



Future changes in accounting policy



The IASB has issued new standards and amendments to existing standards
on financial instruments, consolidation, fair value measurement,
employee benefits, offsetting and presentation of other comprehensive
income. These future accounting changes will be applicable for the Bank
in various annual periods beginning on November��1,��2012 at the
earliest. The Bank is currently assessing the impact of the adoption of
these standards on its financial statements. Additional information on
the new standards and amendments to existing standards can be found in
Note 4 to the unaudited condensed interim consolidated financial
statements.



Corporate Governance and Changes in Internal Control over Financial
Reporting



On November 16, 2011, the Bank completed the acquisition of the MRS
Companies. In accordance with Canadian securities law, which allows an
issuer to limit its design of the disclosure controls and procedures,
and internal controls over financial reporting to exclude the controls,
policies and procedures of a business acquired not more than 365 days
before the last day of the period covered by the interim filings,
management has excluded the controls, policies and procedures of MRS
Companies, the results of which are included in the unaudited condensed
interim consolidated financial statements of the Bank for the period
ended July 31, 2012. MRS Companies constituted approximately 2% of
total assets, 2% of total liabilities, 5% of total revenue and 7% of
total net income as at and for the nine-month period ended July 31,
2012. For additional information on the assets acquired and liabilities
assumed at the date of acquisition, refer to Note 15 to the unaudited
condensed interim consolidated financial statements.



During the last quarter ended July 31, 2012, there have been no changes
in the Bank's policies or procedures and other processes that comprise
its internal control over financial reporting which have materially
affected, or are reasonably likely to materially affect, the Bank's
internal control over financial reporting.



The Board of Directors and the Audit Committee of Laurentian Bank
reviewed this press release prior to its release today.










Non-GAAP Financial Measures



The Bank 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:



Return on common shareholders' equity



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



Book value per common share



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



Tangible common equity ratio



Tangible common equity is defined as common shareholders' equity,
excluding accumulated other comprehensive income, less goodwill and
contractual and customer relationship intangible assets. The tangible
common equity ratio is defined as the tangible common equity as a
percentage of risk-weighted assets.



Net interest margin



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



Efficiency ratio and operating leverage



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



Dividend payout ratio



The dividend payout ratio is defined as dividends declared on common
shares as a percentage of net income available to common shareholders.



Dividend yield



The dividend yield is defined as dividends declared per common share
divided by the closing common share price.



Adjusted GAAP and non-GAAP measures



Certain analyses presented throughout this document are based on the
Bank's core activities and therefore exclude the effect of the
transaction and integration costs related to the acquisition of the MRS
Companies and AGF Trust.



Operating net income



Operating net income is based on Bank's core activities and is defined
as net income excluding the transaction and integration costs related
to the acquisition of the MRS Companies and AGF Trust, net of income
taxes.







About Laurentian Bank



Laurentian Bank of Canada is a pan-Canadian banking institution that has
more than $35 billion in balance sheet assets and over $32 billion in
assets under administration. Founded in 1846, Laurentian Bank was
selected as the Qu��bec and Atlantic Canada regional winner of the Canada's 10 Most Admired Corporate Cultures program presented by Waterstone Human Capital. The Bank employs more
than 4,000 people.



Recognized for its excellent service, proximity and simplicity,
Laurentian Bank serves more than one million clients in market segments
in which it holds an enviable position. In addition to occupying a
choice position among consumers in Qu��bec, where it operates the third
largest branch network, the Bank has built a solid reputation across
Canada in the area of real estate and commercial financing thanks to
its teams working out of more than 35 offices in Ontario, Qu��bec,
Alberta and British Columbia. Its subsidiary, B2B Bank, is a Canadian
leader in providing banking products to financial advisors and brokers,
while Laurentian Bank Securities is an integrated broker, widely
recognized for its expertise and effectiveness nationwide.



Access to Quarterly Results Materials



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



Conference Call



Laurentian Bank invites media representatives and the public to listen
to the conference call with financial analysts to be held at 2:00��p.m.
Eastern Time on Friday, August 31, 2012. The live, listen-only,
toll-free, call-in number is 514 861-2909 or 1 888 789-9572
Code��3478978#.



You can listen to the call on a delayed basis at any time from 6:00 p.m.
on Friday, August 31, 2012 until 11:59 p.m. on September 30, 2012, by
dialing the following playback number: 514 861-2272 or 1 800 408-3053
Code 4742839#. The conference call can also be heard through the
Investor Relations section of the Bank's Web site at www.laurentianbank.ca. The Bank's Web site also offers additional financial information.



Unaudited Condensed Interim Consolidated Financial Statements



The complete unaudited condensed interim consolidated financial
statements for the quarter ended July 31, 2012, including the notes to
the unaudited condensed interim consolidated financial statements, are
also available on the Bank's Web site at www.laurentianbank.ca.



Consolidated Balance Sheet [1]





























































































































































































































































































































































































































































































































































































































































��

�� AS AT JULY 31

�� AS AT

OCTOBER 31

�� AS AT JULY 31

�� AS AT

NOVEMBER 1

In thousands of Canadian dollars (Unaudited)

��

2012

��

2011

��

2011

��

2010

��

��

��

��

��

��

��

��

��

ASSETS

��

��

��

��

��

��

��

��

Cash and non-interest-bearing deposits with other banks

$

89,287

$

81,600

$

70,013

$

72,444

Interest-bearing deposits with other banks��

��

828,636

��

285,459

��

599,752

��

99,394

Securities

��

��

��

��

��

��

��

��

��

Available-for-sale

��

1,956,279

��

2,108,075

��

2,042,824

��

2,138,861

��

Held-to-maturity

��

979,170

��

885,822

��

830,964

��

559,457

��

Held-for-trading

��

2,243,361

��

2,181,969

��

2,044,465

��

1,496,583

��

Designated as at fair value through profit or loss

��

-

��

-

��

-

��

624,642

��

��

5,178,810

��

5,175,866

��

4,918,253

��

4,819,543

Securities purchased under reverse repurchase agreements

��

1,173,704

��

720,317

��

540,220

��

994,674

Loans

��

��

��

��

��

��

��

��

��

Personal��

��

6,081,592

��

5,774,207

��

5,732,870

��

5,636,203

��

Residential mortgage

��

12,554,098

��

11,869,412

��

11,578,930

��

10,859,647

��

Commercial mortgage

��

2,473,833

��

2,363,808

��

2,302,562

��

2,166,375

��

Commercial and other

��

2,094,100

��

1,900,977

��

1,863,448

��

1,691,190

��

Customers' liabilities under acceptances

��

232,044

��

179,140

��

198,429

��

165,450

��

��

23,435,667

��

22,087,544

��

21,676,239

��

20,518,865

��

Allowances for loan losses

��

(132,639)

��

(143,150)

��

(141,153)

��

(131,567)

��

��

23,303,028

��

21,944,394

��

21,535,086

��

20,387,298

Other

��

��

��

��

��

��

��

��

��

Premises and equipment

��

68,890

��

61,708

��

60,580

��

55,727

��

Derivatives

��

179,275

��

228,261

��

146,143

��

158,066

��

Goodwill

��

64,077

��

29,224

��

29,224

��

29,224

��

Software and other intangible assets

��

147,886

��

113,949

��

105,082

��

101,671

��

Deferred tax assets

��

12,938

��

4,160

��

7,736

��

47,995

��

Other assets

��

368,981

��

318,272

��

226,541

��

289,289

��

��

842,047

��

755,574

��

575,306

��

681,972

��

$

31,415,512

$

28,963,210

$

28,238,630

$

27,055,325

��

��

��

��

��

��

��

��

��

LIABILITIES AND SHAREHOLDERS' EQUITY

��

��

��

��

��

��

��

��

Deposits

��

��

��

��

��

��

��

��

��

Personal

$

16,837,043

$

15,609,853

$

15,534,529

$

15,354,851

��

Business, banks and other

��

4,785,016

��

4,406,428

��

3,891,333

��

4,250,819

��

��

21,622,059

��

20,016,281

��

19,425,862

��

19,605,670

Other

��

��

��

��

��

��

��

��

��

Obligations related to securities sold short

��

1,519,105

��

1,471,254

��

1,436,439

��

1,362,336

��

Obligations related to securities sold under

repurchase agreements

��

417,962

��

36,770

��

367,814

��

60,050

��

Acceptances

��

232,044

��

179,140

��

198,429

��

165,450

��

Derivatives

��

114,924

��

129,969

��

104,027

��

115,235

��

Deferred tax liabilities

��

1,411

��

6,362

��

1,019

��

27,543

��

Other liabilities

��

851,793

��

901,720

��

832,827

��

945,939

��

��

3,137,239

��

2,725,215

��

2,940,555

��

2,676,553

Debt related to securitization activities

��

5,109,015

��

4,760,847

��

4,442,256

��

3,486,634

Subordinated debt

��

243,869

��

242,551

��

242,113

��

150,000

Shareholders' equity

��

��

��

��

��

��

��

��

��

Preferred shares

��

210,000

��

210,000

��

210,000

��

210,000

��

Common shares

��

320,435

��

259,492

��

259,492

��

259,363

��

Share-based payment reserve

��

227

��

227

��

227

��

243

��

Retained earnings

��

734,339

��

683,007

��

669,458

��

610,483

��

Accumulated other comprehensive income

��

38,329

��

65,590

��

48,667

��

56,379

��

��

1,303,330

��

1,218,316

��

1,187,844

��

1,136,468

��

$

31,415,512

$

28,963,210

$

28,238,630

$

27,055,325







[1]

Comparative figures have been prepared in accordance with IFRS. See Note
5 to the unaudited condensed interim consolidated financial statements
as at July 31, 2012 for further details.





Consolidated Statement of Income [1]







































































































































































































































































































































































































































































































































































































































































































































��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED��

��

��

JULY 31

��

APRIL 30

��

JULY 31

��

��

JULY 31

��

JULY 31

In thousands of Canadian dollars, except per share amounts (Unaudited)

��

2012

��

2012

��

2011

��

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

Interest income

��

��

��

��

��

��

��

��

��

��

��

��

Loans

$

248,073

$

240,943

$

244,008

��

$

734,099

$

720,857

��

Securities

��

16,802

��

18,377

��

18,777

��

��

54,070

��

55,262

��

Deposits with other banks

��

2,304

��

1,276

��

1,594

��

��

4,604

��

4,193

��

Other, including derivatives

��

14,457

��

14,557

��

16,289

��

��

44,711

��

45,593

��

��

281,636

��

275,153

��

280,668

��

��

837,484

��

825,905

Interest expense

��

��

��

��

��

��

��

��

��

��

��

��

Deposits

��

108,394

��

104,653

��

112,032

��

��

320,720

��

334,394

��

Debt related to securitization activities

��

40,891

��

39,508

��

36,333

��

��

120,071

��

102,191

��

Subordinated debt

��

2,408

��

2,374

��

2,411

��

��

7,185

��

9,142

��

Other, including derivatives

��

279

��

294

��

466

��

��

891

��

2,084

��

��

151,972

��

146,829

��

151,242

��

��

448,867

��

447,811

Net interest income

��

129,664

��

128,324

��

129,426

��

��

388,617

��

378,094

Other income

��

��

��

��

��

��

��

��

��

��

��

��

Fees and commissions on loans and deposits

��

31,522

��

29,657

��

29,448

��

��

89,690

��

85,673

��

Income from brokerage operations

��

12,517

��

14,354

��

10,221

��

��

40,420

��

40,097

��

Credit insurance income

��

3,682

��

3,662

��

4,104

��

��

11,114

��

13,597

��

Income from treasury and financial market

operations

��

2,398

��

5,856

��

4,919

��

��

12,968

��

15,041

��

Income from sales of mutual funds

��

4,478

��

4,488

��

4,483

��

��

13,295

��

13,050

��

Income from registered self-directed plans

��

7,190

��

7,648

��

1,674

��

��

21,639

��

5,748

��

Other income

��

2,382

��

4,681

��

1,558

��

��

8,504

��

4,625

��

��

64,169

��

70,346

��

56,407

��

��

197,630

��

177,831

Total revenue

��

193,833

��

198,670

��

185,833

��

��

586,247

��

555,925

Provision for loan losses

��

7,500

��

7,500

��

14,640

��

��

25,000

��

38,081

Non-interest expenses

��

��

��

��

��

��

��

��

��

��

��

��

Salaries and employee benefits

��

77,177

��

79,282

��

70,354

��

��

233,491

��

212,199

��

Premises and technology

��

38,644

��

37,998

��

36,282

��

��

113,808

��

105,837

��

Other

��

25,977

��

26,481

��

27,260

��

��

78,620

��

74,923

��

Costs related to an acquisition and other��

��

7,157

��

3,350

��

-

��

��

13,167

��

-

��

��

148,955

��

147,111

��

133,896

��

��

439,086

��

392,959

Income before income taxes

��

37,378

��

44,059

��

37,297

��

��

122,161

��

124,885

Income taxes

��

7,380

��

10,196

��

8,225

��

��

27,338

��

27,877

Net income

$

29,998

$

33,863

$

29,072

��

$

94,823

$

97,008

Preferred share dividends, including applicable taxes

��

3,164

��

3,165

��

3,107

��

��

9,495

��

9,325

Net income available to common shareholders

$

26,834

$

30,698

$

25,965

��

$

85,328

$

87,683

Average number of common shares

outstanding (in thousands)

��

��

��

��

��

��

��

��

��

��

��

��

Basic

��

25,250

��

25,235

��

23,925

��

��

24,800

��

23,923

��

Diluted

��

25,267

��

25,253

��

23,943

��

��

24,818

��

23,944

Earnings per share

��

��

��

��

��

��

��

��

��

��

��

��

Basic

$

1.06

$

1.22

$

1.09

��

$

3.44

$

3.67

��

Diluted

$

1.06

$

1.22

$

1.08

��

$

3.44

$

3.66

Dividends declared per share

��

��

��

��

��

��

��

��

��

��

��

��

Common share

$

0.47

$

0.45

$

0.42

��

$

1.37

$

1.20

��

Preferred share - Series 9

$

0.38

$

0.38

$

0.38

��

$

1.13

$

1.13

��

Preferred share - Series 10

$

0.33

$

0.33

$

0.33

��

$

0.98

$

0.98







[1]

Comparative figures have been prepared in accordance with IFRS. See Note
5 to the unaudited condensed interim consolidated financial statements
as at July 31, 2012 for further details.��







Consolidated Statement of Comprehensive Income [1]

















































































































































































��

��

FOR THE THREE MONTHS ENDED

��

FOR THE NINE MONTHS ENDED

��

��

�� JULY 31

APRIL 30

�� JULY 31

��

�� JULY 31

�� JULY 31

In thousands of Canadian dollars (Unaudited)

��

��

2012

��

2012

��

2011

��

��

2012

��

2011

��

��

��

��

��

��

��

��

��

��

��

��

��

Net income

��

$

29,998

��$

33,863

$

29,072

��

$

94,823

$

97,008

��

��

��

��

��

��

��

��

��

��

��

��

��

Other comprehensive income, net

of income taxes

��

��

��

��

��

��

��

��

��

��

��

��

��

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

��

��

(2,714)

��

(3,751)

��

721

��

��

(7,948)

��

(7,835)

��

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

��

��

(334)

��

(888)

��

(803)

��

��

(1,543)

��

(2,428)

��

Net change in value of derivatives designated as cash flow hedges

��

��

13,774

��

(23,980)

��

19,020

��

��

(17,770)

��

2,551

��

��

��

10,726

��

(28,619)

��

18,938

��

��

(27,261)

��

(7,712)

Comprehensive income

��

$

40,724

$

5,244

$

48,010

��

$

67,562

$

89,296







[1]

Comparative figures have been prepared in accordance with IFRS. See Note
5 to the unaudited condensed interim consolidated financial statements
as at July 31, 2012 for further details.







Consolidated Statement of Changes in Shareholders' Equity [1]






































































































































































































































































































































































































































































































































































































































��

��

��

��

��

��

��

��

��

FOR THE NINE MONTHS ENDED JULY 31, 2012

��

��

��

��

��

��

��

AOCI RESERVES

SHARE-

BASED

PAYMENT

RESERVE

TOTAL

SHARE-

HOLDERS'

EQUITY

In thousands of Canadian dollars (Unaudited)

PREFERRED

SHARES

COMMON

SHARES

RETAINED

EARNINGS

AVAILABLE-

FOR-SALE

SECURITIES

CASH

FLOW

HEDGES

TOTAL

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Balance as at October 31, 2011

$

210,000

$

259,492

$

683,007

$

22,217

$

43,373

$

65,590

$

227

$

1,218,316

Net income

��

��

��

��

��

94,823

��

��

��

��

��

��

��

��

��

94,823

Other comprehensive income (net of income taxes)

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

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

��

��

��

��

��

��

��

(7,948)

��

��

��

(7,948)

��

��

��

(7,948)

��

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

��

��

��

��

��

��

��

(1,543)

��

��

��

(1,543)

��

��

��

(1,543)

��

Net change in value of derivatives designated as cash flow hedges

��

��

��

��

��

��

��

��

��

(17,770)

��

(17,770)

��

��

��

(17,770)

Comprehensive income

��

��

��

��

��

94,823

��

(9,491)

��

(17,770)

��

(27,261)

��

��

��

67,562

Net proceeds from issuance of common shares

��

��

��

60,943

��

��

��

��

��

��

��

��

��

��

��

60,943

Equity dividends

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Preferred shares, including applicable taxes

��

��

��

��

��

(9,495)

��

��

��

��

��

��

��

��

��

(9,495)

��

Common shares

��

��

��

��

��

(33,996)

��

��

��

��

��

��

��

��

��

(33,996)

Balance as at July 31, 2012

$

210,000

$

320,435

$

734,339

$

12,726

$

25,603

$

38,329

$

227

$

1,303,330

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

FOR THE NINE MONTHS ENDED JULY 31, 2011

��

��

�� ��

��

��

��

��

AOCI RESERVES

SHARE-

BASED

PAYMENT

RESERVE

TOTAL

SHARE-

HOLDERS'

EQUITY

In thousands of Canadian dollars (Unaudited)

PREFERRED

SHARES

COMMON

SHARES

RETAINED

EARNINGS

AVAILABLE-

FOR-SALE

SECURITIES

CASH

FLOW

HEDGES

TOTAL

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Balance as at November 1, 2010

$

210,000

$

259,363

$

610,483

$

37,071

$

19,308

$

56,379

$

243

$

1,136,468

Net income

��

��

��

��

��

97,008

��

��

��

��

��

��

��

��

��

97,008

Other comprehensive income (net of income taxes)

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

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

��

��

��

��

��

��

��

(7,835)

��

��

��

(7,835)

��

��

��

(7,835)

��

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

��

��

��

��

��

��

��

(2,428)

��

��

��

(2,428)

��

��

��

(2,428)

��

Net change in value of derivatives designated as cash flow hedges

��

��

��

��

��

��

��

��

��

2,551

��

2,551

��

��

��

2,551

Comprehensive income

��

��

��

��

��

97,008

��

(10,263)

��

2,551

��

(7,712)

��

��

��

89,296

Issuance of common shares under share purchase option plan

��

��

��

129

��

��

��

��

��

��

��

��

��

��

��

129

Share-based payments

��

��

��

��

��

��

��

��

��

��

��

��

��

(16)

��

(16)

Equity dividends

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Preferred shares, including applicable taxes

��

��

��

��

��

(9,325)

��

��

��

��

��

��

��

��

��

(9,325)

��

Common shares

��

��

��

��

��

(28,708)

��

��

��

��

��

��

��

��

��

(28,708)

Balance as at July 31, 2011

$

210,000

$

259,492

$

669,458

$

26,808

$

21,859

$

48,667

$

227

$

1,187,844







[1]

Comparative figures have been prepared in accordance with IFRS. See Note
5 to the unaudited condensed interim consolidated financial statements
as at July 31, 2012 for further details.


��



��



��



��



��



SOURCE: LAURENTIAN BANK OF CANADA







For further information:

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