DBRS Comments on Canadian Western Bank Warrant Redemption

DBRS has reviewed Canadian Western Bank’s (the Bank) announcement of the redemption of the outstanding common share purchase warrants and concluded there are no rating implications at this time, despite the expectation that no common shares will be issued under the related common share subscription agreement.

Using publicly available data as at the Bank’s Q2 April 30,.2011 quarter end, DBRS estimates the worst-case scenario on the tangible common equity (TCE) ratio and the Tier 1 ratio to be about 84 basis points, reducing the TCE ratio to 7.8% from 8.6% and the Tier 1 ratio to 10.7% from 11.6%. Since it appears some warrants have been exercised since April 30, 2011, the actual reduction in capital ratios will likely be more moderate.

Note:
The applicable methodologies are the Global Methodology for Rating Banks and Banking Organizations (January 14, 2010), Rating Bank Preferred Shares and Equivalent Hybrids (June 29, 2009), and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments (February 11, 2009), which can be found on our website under Methodologies.