laurentian bank english annual report_1

8/3/2019 Laurentian Bank English Annual Report_1

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HAVE YOU

AT US LATELY?L OKED


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Agenda

Opening Remarks Gladys Caron

Introduction Rjean Robitaille

Financial Highlightspresentation and Q & A

Michel C. Lauzon

Real Estate & Commercialpresentation and Q & A

Paul Hurtubise

BreakRetail & SME Quebecpresentation and Q & A

Luc Bernard

B2B Trust

presentation and Q & A

Franois Desjardins

Laurentian Bank Securities & Capital Marketspresentation and Q & A

Michel C. Trudeau

Closing Remarks Rjean Robitaille

Questions and Answers

Symbol:LB,TSX 2


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ITS NOT THESAME BANK ANYMORE

Rjean RobitaillePresident

andChief

Executive

Officer


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Established

Track

Record

A solid track record of:

Improving profitability: EPS up 87% over the past 4 years

Growing balance sheet: Loans and BAs and deposits up 43%and 50% respectively over the past 4 years

Being more efficient: Efficiency ratio improved by 770 basis pointsover the past 4 years

Our strong performance has resulted in:

DBRS upgrading our credit rating in 2008

Standard & Poor's raising our credit rating in 2010, being the firstbank in North America to be upgraded since the financial crisis

Symbol:LB,TSX 5


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Milestones

inour

development

1846: Founded as Montreal City and District Savings Bank

1965: Allowed to offer services outside the city of Montreal

1981: Allowed to offer services outside of Quebec

1987: Became a chartered Bank and renamed Laurentian Bank of Canada

1993: Laurentian Bank Securities created

2000: Creation of B2B Trust

Symbol:LB,TSX 6


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Milestones

inour

development

1990s: An acquisition phase

Expanded the Quebec operation

Added several branches in Ontario and western Canada

Laid the foundation for B2B Trust

2000s: A repositioning and consolidation phase

Refocused our operations

Reduced our credit risk

Restructured the Bank

Symbol:LB,TSX 7


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Repositioning enhanced our focus

Focus on Geography

Quebec focus for Retail Financial Services, SME and Retail brokerage

National focus for Real Estate, B2B Trust and LBS

Focus on Clients

Young families

Small and mid-size businesses

Real estate developers

Independent financial advisors

Government & municipal entities, small cap companies

Symbol:LB,TSX 8


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Impactofrepositioning

&growth

Symbol:LB,TSX 9

Loan growth($ millions)


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Sustained loan &deposit

growth

Symbol:LB,TSX 10


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Improving

profitability

&efficiency

Symbol:LB,TSX 11


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RETAIL AND SME-QUEBEC

Branch networkAutomated Teller Machines

Internet and Telebanking Centre

Mortgage brokers

SME-Quebec

Point-of-saleloans

Diversified

activities

across

Canada

Over 1 million banking relationships

B2B TRUST

Securities brokers

Life insurance brokers

Mutualfundrepresentatives

Deposit brokers

Mortgage brokers

REAL ESTATE & COMMERCIAL

Real-estatefinancing

Commercial financing

LAURENTIAN BANK SECURITIESAND CAPITAL MARKETS

Institutional brokerageRetail brokerage

Symbol:LB,TSX 12


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Consequently

we

haveachieved

Record profitability in 2010

Six consecutive years of increasing EPS only Canadian bank to have accomplished this

Six consecutive years of growing loans and BAs

Five consecutive years of increasing deposits

A track record firmly established

Symbol:LB,TSX 13


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Our three pillarsSupporting organic and sustainable growth

Symbol:LB,TSX 14

FOCUS

Focus exclusively on profitable markets in Quebec and in largerCanadian cities, where we hold comparative and distinctive advantagesand can allocate the required investment to generate growth

AGILE GROWTH

Agile growth promoted through our culture of proximity and service and madepossible by our light organizational structure, enabling us to be opportunistic

EXECUTION

Strictly adhere to excellence in execution, owing to our commitment todeliver strong results and facilitated by our proactive approach to ourbusiness plan and to risk management


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NUMBERS

SAY IT ALL

Michel C. LauzonChief Financial Officer


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Revenuegrowth

Symbol:LB,TSX 16

$ Millions


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$ millions 2006 2007 2008 2009 2010

Averageannual

growth2006-2010

Retail & SMEQuebec

259* 284 299 306 324 6%

Real Estate &Commercial

59* 46* 57 68 85 11%

B2B Trust 74 81 87 91 114 14%

Total netinterestincome

357 390 405 424 496 10%

Netinterest

income

growth

Increasing contribution from our 3 main growth engines

*Figures not restated to conform to current reporting

Symbol:LB,TSX 17


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Other

income

growth

Growth in core & recurring revenues

*Credit insurance income, income from sales of mutual funds and card service revenues

Symbol:LB,TSX 18

$ millions

2006-2010Other Income: + 32%


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$ millions 2006 2007 2008 2009 2010

Averageannual

growth2006-2010

Salariesand

employee

benefits

214 229 236 250 276 7%

Premises

and

technology108 112 119 120 133 6%

Other

expenses 89 87 91 102 96 2%Total

noninterest

expense

411 427 446 472 504 6%

Noninterest

expenses

Supporting growth and development

Symbol:LB,TSX 19


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Efficiency

ratio

Symbol:LB,TSX 20


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Credit

quality

Evolution of gross and net impaired loans

Symbol:LB,TSX 21

$ Millions


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% 2006 2007 2008 2009 2010

Residential

mortgages 0.01 0.02 0.01 0.02 0.04

Personal

loans

(excluding

POS&investment

loans)1.17 1.01 0.84 0.97 1.08

Pointof

sale

(POS)

financing

loans

0.72 0.87 1.19 1.92 2.14

Investment

loans 0.00 0.00 0.03 0.08 0.08

Commercial mortgages,loans & BAs0.58 0.53 0.42 0.57 0.95

Total LaurentianBank

0.32 0.30 0.34 0.35 0.38

Industry 0.20 0.29 0.50 0.92 0.58

Loan

losses

byportfolio

Loan loss provision as a % of loans and BAs

Symbol:LB,TSX 22


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CapitalratiosOctober 31, 2010

Symbol:LB,TSX 23


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ImpactofIFRS

Impact at transition Impact going forward

Securitization Gross-up of the balance sheetof approximately $2.7BSlight negative impact onretained earnings

Higher assets on balance sheetHigher net interest incomeLower net interest margins andother income

Employee benefits Potential reduction of retainedearnings of $92.7M

Decrease in pension costs

Loan provisioningand Businesscombinations

Potential impact should belimited

N/A

ROE N/A Higher

EPS N/A Neutral to slightly higher

Symbol:LB,TSX 24


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Revenue growthfueled by continued healthy organic growth

and diversification of activities

Expensescontinued investments to support growth

Credit qualityprogressively improving

Capital

strong foundation to support organic growth

KeyTakeawaysOur foundation is strong and our operating model is simple

Symbol:LB,TSX 25


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A NICHE APPROACH

FOR A HIGH POTENTIALMARKET

Paul HurtubiseSenior Vice-PresidentReal Estate and Commercial


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Delivered record new business activity and another

year of record profitability in 2010

Increased net income by 43% to $49 million

Expanded real estate financing by 14% to $2.2B

Grew commercial loans and deposits in selected marketsegments

RealEstate

andCommercial

Introduction

Symbol:LB,TSX 27

T di ti t k t


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Two distinct marketsBut one distinct goal profitable growth

Real estate financing Commercial financing

Construction loans and fixed termloans for various real estateprojects:Office and commercial buildings,condominiums, residentialcomplexes

Operating credit facilities, depositsand transactional products for theoperational needs of companiesin sectors targeted by the Bank

Activities across CanadaActivities concentrated in Quebecand Ontario

8 offices:

Toronto, Thornhill, Kitchener,Ottawa, Calgary, Vancouver,Montreal, Quebec City

6 offices:

Toronto, Thornhill, Kitchener,Mississauga, Montreal andQuebec City

$1M to $30M loan per project(maximum exposure per group: $75M)

$1M to $25M loan maximum(maximum exposure per group: $75M)

Symbol:LB,TSX 28

R l E t t d C i l


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RealEstate

andCommercial

Our focus is on performance

Symbol:LB,TSX 29

R l E t t fi i P fil


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Target market

Real estate developers and investors requiring variable and fixed-term

financing of $1M to $30M

Solid and experienced clients with a low risk profile

Larger real estate loans through syndication

Positioning

Widely recognized leadership and expertise in real estate financing

across Canada

Competitive advantage and distinctive promise

Long standing credibility

Timely execution of loan offerings

Limited number of relationships per account manager

RealEstate

financing

Profile

Our credibility and our timely execution make the difference

Symbol:LB,TSX 30

Real Estate financing profile


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RealEstate

financing

profile

Growth with disciplined and rigorous underwriting

Symbol:LB,TSX 31

Real estate financing($ millions, as at October 31)

Commercial financing Profile


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Target market

Geographic focus on Quebec, the GTA and south-western Ontario

Companies with financing needs of up to $25 million

Syndication market for diversification

Positioning

Recognized as a leading mid-market financial service provider with the

highest level of customer service

Competitive advantage and distinctive promiseProactive, creative and flexible to meet our clients evolving needs

Limited number of accounts per account manager

Flat organizational structure

Rapid turn-around time

Commercialfinancing

Profile

Symbol:LB,TSX 32

Commercial financing Loan growth


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Commercialfinancing

Loan

growth

Building relationships builds business

Symbol:LB,TSX 33

Commercial loans and BAs($ millions, as at October 31)


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RealEstate

andCommercialstrategies

Increase market penetration with emphasis on real estatefinancing and Quebec and Ontario mid-market loans

Expand our banking role by increasing our deposit portfolio andforeign exchange activities

Increase syndication activities

Improve efficiency through investments in information

technology

Symbol:LB,TSX 34

RealEstate andCommercial


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FOCUS

Focus concentrated in segments we understand very well

AGILE GROWTH

Growing and increasingly profitable business segment

EXECUTION

Solid team in knowledge and experience, leading to excellent execution

KeyTakeaways

Symbol:LB,TSX 35


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A STRONG FRANCHISE

WITH ROOM TO GROW

Luc BernardExecutive Vice-PresidentRetail and SME - Quebec

R il d SME Q b I d i


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Symbol:LB,TSX 37

19% increase in net income in 2010, compared to 2009, on the basis of

continuing operations

14% growth in residential mortgages in 2010

10% growth in SME lending in 2010, 45% over the last three years

48% of the Banks deposits

76% of the residential mortgages of the Bank

31% of the Banks profits

Retail

andSMEQuebec

Introduction

Retail and SME Profile


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Retail

andSME Profile

A strong franchise

Firmly rooted in Quebec

3rd largest network

Most admired bank brand in Quebec

A unique DNA

- Focus: Not being everything to

everyone- Discipline: Underwriting- Agility: Turnaround time- Proximity: To our clients

- Execution: Customer oriented

2,600 Team members

Symbol:LB,TSX 38

Q b


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Quebec

economy

A robust market, with strong economic fundamentals

Stronger job recovery than in Canada

Lower unemployment rate than in Ontario

Less chronic unemployment

More pent-up demand in housing

Symbol:LB,TSX 39

Retail and SME Progress


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Retail

andSME Progress

Achievements of the last 5 years

Strong

organic

growth

capacity

Inbranch

advisors

(+15%)

SME

account

managers

(+75%)

Newmobilebankers

(+100)

45%ofmortgage

origination

Newvirtual

advisors

(+55)

Modernized

branchesandinfrastructure

NewandDistinctiveBoutiqueconcept

Openings

/relocationsinhigh

potential

suburban sectors

Improved

inbranch

experience

Expanded

ATMnetwork(+30%)

ExclusiveATMs

intheMontreal

subway

and

transit

system

Symbol:LB,TSX 40

Retail and SME Progress


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Retail

andSME Progress

Improved sales culture

- Streamlined processes: divert 30% of time on administrative

tasks to sales and customer care initiatives

Increased penetration rate of credit insurance, Visaand mutual funds by +25%

Number of customers holding 5 products ormore increased by +15%

Symbol:LB,TSX 41

Retail Mutual funds growth


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Retail

Mutual

funds

growth

Ourfocusondistributionis

paying

off

Symbol:LB,TSX 42

Mutual Funds Net Sales

Retail Spending growth on cards


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Retail

Spending

growth

oncards

Symbol:LB,TSX 43

Spending Growth Premium Cards

Retail Mortgage loan growth


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Retail

Mortgage

loan

growth

Double-digit growth

Symbol:LB,TSX 44

Mortgage Loans Annual Growth


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Retail and SME Strategies


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Mid-term Strategy

Maximize share of wallet and customer profitability

Target market

Retail: Young families and emphasis on 3 urban markets

(Montreal, Quebec and Gatineau)

SME: selective niche approach

Retail

andSME Strategies

Symbol:LB,TSX 46

Retail and SME Strategies


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Increase our organic growth capacity:

Capitalize on the competitive edge that constitutes our fully

deployed integrated knowledge base infrastructure

Technology critical for:

Cross-selling

Targeted marketing campain

Pricing based on profitability,credit risk and loyalty

Providing unique customerexperience across the board

Anticipating customer needsand behaviours

Retail

andSME Strategies

Symbol:LB,TSX 47

CustomerRelationship

Manager

MarketingCampaignManager

Analyticaltools

Datawarehouse

Retail andSME Strategies


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Increase our organic growth capacity:

Continue to increase our mobile sales force and

SME account managers

Acceleration of the niche strategy in the SME market

Expansion of Insurance operation and product line

Improve our operational efficiency:

Operational excellence and streamlining of end-to-end processes

Simplification and bundling of products

Convert administrative tasks into sales and customer care initiatives

g

Symbol:LB,TSX 48

Retail andSME KeyTakeaways


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FOCUS

Well

positioned

toleverage

transformed

operational

model

AGILEGROWTH

Renewed

and

strong

franchise

with

room

to

grow

EXECUTION

Simplestrategy

Time

tested

lending

discipline

y y

Symbol:LB,TSX 49


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BANKING THAT WORKS

FOR THE BANK

Franois DesjardinsPresident & Chief Executive OfficerB2B Trust

B2BTrust Introduction


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51% of the Banks deposits

67% in GICs, 33% in high interest accounts

26% of the Banks loans

99% secured with either residential real estate,

mutual or segregated funds

11% of the Banks non-interest expenses

30% of the Banks net income

Symbol:LB,TSX 51

B2BTrust Progress


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Doubled the loan book($2.8B to $5.2B)

Almost doubled the depositbook ($5.1B to $9.2B)

Signed over 40 distributionagreements, now having 65

Increased to 16 salesterritories to cover 100%of the Canadian landscape

Doubled the number ofemployees to 400

Deliberate and steady

Symbol:LB,TSX 52

B2BTrust Mission


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B2B Trust is a traditional banking product manufacturer

Specializing exclusively in distribution through independently-minded financial advisors either:

- to complement core products they offer to their clients, or

- as a stand-alone offer to their clients

Products tailored to the specific needs and sales cycle offinancial advisors and brokers

Symbol:LB,TSX 53

B2BTrust Brand


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Banking thatworks foradvisors

[REALLY]

[INDEPENDENTLYMINDED]

Symbol:LB,TSX 54

B2BTrust Distributionnetwork


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A recognized market leader solely dedicated to the financialcommunity across Canada in 5 segments

- Investment Advisors- Insurance Agents

- Mutual Fund Advisors

- Mortgage Brokers

- Deposit Brokers

Offering a wide range of products in 5 categories

- Investment and RSP loans- Mortgage loans

- Banking accounts HIIA and HISA

- GIC deposits

- Self-directed accounts

Symbol:LB,TSX 55

B2BTrust ProfileA distinctive positioning


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Profile

Premier third party supplier of investment and RSP lending products

in CanadaLeading supplier of wholesale deposit/GIC products, as well as high

interest accounts

A growing player in the broker residential mortgage market


The only financial institution exclusively dedicated to independentfinancial advisors

The only one to provide products under a generic non-competingbrand name

Respectful of the relationship between a financial professional andtheir end-clients, with the promise of never interfering in that

relationship

A distinctive positioning

Symbol:LB,TSX 56

B2BTrustloan portfoliosRebuilding products one at a time


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Symbol:LB,TSX 57

Total Loans($ millions, as at October 31)

Rebuilding products one at a time

B2BTrustinvestment loans


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Secured personal loans

Granted to individuals in good financial standing

Lending decisions based on specific criteria confirmingthe borrowers capacity to pay

Selected mutual funds and segregated funds compriseB2B Trusts eligible list

Collateral registered in trust, as a supplementaryguarantee

Regular monitoring through credit scoring of each client

Symbol:LB,TSX 58

B2BTrust Investment loan credit qualityA healthy portfolio


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A healthy portfolio

Symbol:LB,TSX 59

B2BTrustdeposit portfolios


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Symbol:LB,TSX 60

Deposits($ millions, as at October 31)

B2BTrust Performance91% growth in net income


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g

Symbol:LB,TSX 61

B2BTrust Strategies


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Operational ExcellenceDistribution Maximization

Revenue Maximization

Business Foundations

Symbol:LB,TSX 62

B2BTrust KeyTakeaways


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FOCUS

Focused and brand-consistent business strategies

AGILE GROWTH

Profitable business with a significant growth potential

Well diversified with low credit-risk activities

EXECUTION

Disciplined executive team with proven track record

Symbol:LB,TSX 63


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THE BEST OF

BOTH WORLDS

Michel C. TrudeauPresident and CEOLaurentian Bank Securities and Capital Markets

Laurentian BankSecurities&CapitalMarkets Introduction


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Solid platform in each business line

Selectively target our niches

Significant growth potential

Differentiate ourselves as a Bank-owned small capinvestment dealer

Symbol:LB,TSX 65

Laurentian BankSecurities&CapitalMarkets Profile


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Target market

Institutional Fixed Income:

- Pan-Canadian coverage of government and corporate issuers

Institutional Equities:- Research, sales, trading and corporate finance for small

capitalization companies

Retail Brokerage:

- Regional in Quebec through 14 offices

Positioning

Dominant brokerage firm amongst the mid-size tier across Canada

Largest research firm in QuebecMajor distributor of Agency products in the money market segment


The only Bank-owned dealer with a boutique mentality

Symbol:LB,TSX 66

Institutional

Fixed

income

Adding value to investors and issuers


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Mature operation, in business since 1996

Team of about 40 people operating in Montreal andToronto

8th largest fixed income dealer in Canada in provincials

Dominant player in several productsUnderwrite fixed income securities for provincial,municipal and corporate entities

Competitive market making and account coverage inCanadian fixed income securities

Symbol:LB,TSX 67

Institutional

Equity

Only bank-owned dealer focusing exclusively on small cap niche


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Youngest division of the group, in operation since 2006

Team of about 20 professionals, located in Montreal and Toronto

Analysts covering more than 50 companies in the following sectors:

Mining Technology Transportation Infrastructure Healthcare Consumer products Special situations

Offers:

- Equity capital markets and advisory services to small cap issuers- Research-driven approach to growth sectors

- Dedicated sales and trading coverage of small cap market participants

Symbol:LB,TSX 68

Retail

brokerage

Advisors more than doubled in 5 years


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Began operations in 1998

85 retail advisors in 14 offices across Quebec,focusing in Montreal and Quebec City

Complete range of financial products and services

$2.3 billion of assets under administration

Symbol:LB,TSX 69

Laurentian

BankSecurities&

CapitalMarkets


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Symbol:LB,TSX 70

*2006 and 2007 results exclude the Banks Capital Markets Operations

Laurentian

BankSecurities&

CapitalMarkets StrategiesBuilding for the future


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Expand and increase our footprint in Fixed Income

Further develop our Institutional Equities presence

Continue to develop the retail sector

Symbol:LB,TSX 71

Laurentian

BankSecurities&

CapitalMarkets KeyTakeaways


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FOCUS

Focus facilitating continuous reinvestment in both young and more

mature businesses

AGILE GROWTH

Agility to seize opportunities across all divisions

EXECUTION

Rigorous execution to achieve gradual and measured growth

Symbol:LB,TSX 72


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Rjean RobitaillePresident

andChief

Executive

Officer

Conclusion


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Symbol:LB,TSX 74

Declared dividend history($ per share)


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For questions on this presentation, please contact:

Gladys Caron, Vice-President, Public Affairs,Communications and Investor Relations

Tel: 514 284-4500, extension 7511 - Cell: 514 893-3963

[email protected]


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laurentian bank english annual report_1

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