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National Bank to accelerate domestic growth with the acquisition of Canadian Western Bank

Not for distribution to U.S. news wire services or for dissemination in the United States Aligned with National Bank's strategic plan to accelerate growth across all its business lines in Canada Provides customers an expanded product and service offering nationally, extensive banking centre network and common customer experience culture Maintains branch footprint and Edmonton-based executive and operational presence   Combination creates stronger competitor, and provides more choice for Canadians Concurrent subscription receipt offering of $1 billion MONTREAL and EDMONTON, Alberta, June 11, 2024 (GLOBE NEWSWIRE) -- National Bank of Canada ("National Bank") (TSX:NA) and Canadian Western Bank ("CWB") (TSX:CWB) today announced they have entered into a definitive agreement (the "Agreement") for National Bank to acquire CWB, a diversified financial services institution based in Edmonton, Alberta. The transaction brings together two complementary banks with growing businesses, enabling the united bank to enhance services to customers by offering a comprehensive product and service platform at national scale, with a regionally focused service model. National Bank will acquire all of the issued and outstanding common shares of CWB (the "CWB Shares") by way of a share exchange (the "Transaction"), valuing CWB at approximately $5.0 billion (the "CWB Equity Value").  "This transaction is about growth and brings together two great banks with a complementary footprint in personal and commercial banking, and supports our objectives in Western Canada and across the country," said Laurent Ferreira, President and CEO of National Bank. "CWB has developed an attractive banking franchise with a reputation for exceptional service with deep customer relationships across a number of priority industries and service lines. This combination will provide customers with access to a broader range of services, expertise and products, along with the benefits of supporting technological investment and innovation. When we combine these strengths with our commercial and retail banking offering, leading wealth management and capital markets franchises, we will be able to do more for clients, both existing and new, and unlock significant value creation opportunities. I look forward to joining forces with the CWB team so that together, we deliver a stronger banking choice for all Canadians and Canadian businesses." "We are proud to come together with National Bank and are confident that this combination will create incredible value for our clients, teams, communities and our shareholders. Together, we can offer Canadians more choice by combining CWB's four-decade legacy of serving business owners and their families with National Bank's scale, complementary market expertise and the technological capabilities necessary to accelerate our growth," said Chris Fowler, CEO of CWB. "Our two organizations share similar values grounded in an unwavering commitment to our clients, a deep history of entrepreneurship and a commitment to giving back in the communities we serve. We're excited to build on this legacy together."  Transaction Benefits Creating a Canadian banking leader with growth priorities from coast-to-coast – The combination brings together complementary banks with complementary footprints and established positions in Western Canada. The united bank's growth objectives in the region will be supported by executive and operational leaders based out of Edmonton, Alberta. National Bank will increase banking services across CWB's existing network. CWB customers will continue to have access to branches in the communities where they typically bank across Canada, as well as additional locations in National Bank's network. As part of the transaction, National Bank's board of directors will be strengthened by the addition of two CWB nominees. Expanding services for Canadian banking and wealth management customers – With a larger network and the joint resources of both banks, National Bank can increase its banking and wealth management activities, and offer more competitive products and services to provide customers with more options and better value. CWB retail customers will benefit from a larger product offering and digital platform, small business clients can utilize National Bank's cash and risk management solutions, and commercial clients will benefit from access to National Bank's leading capital markets franchise. This combination adds more full-service choice to Canadian businesses and individual customers across Canada. Investing in the future of the Western Canadian economy – National Bank has a strong track record of investing in both the Alberta and Western Canadian economies, with leading franchises in energy, agriculture, and affordable housing lending, as well as a top position in renewables. Today, Alberta and British Columbia represent approximately 24% of National Bank's assets under administration, including managing more than $24 billion in client assets, and more than $25 billion in authorized credit for Western Canadian businesses. Western Canada is already a priority growth market for National Bank and the combination with CWB's small and mid-market business and exposure in growing sectors such as equipment finance will contribute to National Bank becoming an even more valuable partner to Canadian banking and wealth management customers. Deepening commitments to communities – National Bank takes pride in its active participation in the communities where it operates. For example, in 2023 National Bank partnered with local tech accelerators to establish the National Bank Investor Hub to improve connections between investors and Calgary technology startups, and 2024 will mark the fifth year of the National Bank Challenger in Calgary, one of the largest international tennis tournaments in Canada. Through this combination, National Bank will add to its existing national investments and expand its support to western communities by doubling CWB's community investment program to more than $3 million annually. Building on CWB's longstanding relationships, the combined bank will increase its support to Indigenous communities across its banking, wealth management and capital markets franchises. Welcoming new and diverse talent to the National Bank family – National Bank's tools and investments in innovation will provide exciting and rewarding career opportunities for CWB team members as both organizations come together in serving clients coast-to-coast in a unified way. In addition to benefiting from strong regional leadership across corporate and client-facing functions in Alberta, the united bank will grow in areas such as customer experience and services. TRANSACTION DETAILS With $37 billion in loans, CWB is a full-service bank in Canada focused on servicing businesses, their owners and their families, offering services in business and personal banking, equipment financing, trust services and wealth management through its 39 branches located across Western Canada and Ontario. CWB will increase National Bank's commercial banking portfolio by approximately 52%, adding domestic earning power and enhancing loan and revenue diversification. The Transaction is expected to be accretive to adjusted EPS on run-rate cost and funding synergies. National Bank has identified $270 million of pre-tax annual cost and funding synergies, with upside from revenue opportunities. National Bank expects to maintain a CET1 ratio above 12.75% at close. Each CWB Share, other than those held by National Bank, will be exchanged for 0.450 of a common share (the "National Bank Shares") of National Bank (the "Exchange Ratio"). Based on the 20-day volume weighted average trading price of the National Bank Shares on the TSX as of June 11, 2024, the Exchange Ratio values each CWB Share at $52.24, representing a 110% premium to the closing price of the CWB Shares on the TSX of $24.89 as of June 11, 2024, and a 100% premium to the volume weighted average trading price of the CWB Shares over the last 20 days. The National Bank Shares to be issued upon closing of the Transaction will represent a pro forma ownership of approximately 10.5% of National Bank by CWB shareholders, taking into account the Private Placement and the Public Offering (as defined below). The Transaction is subject to approval of 662/3% of the votes cast by CWB shareholders at a special meeting of shareholders (the "Meeting") expected to be held in September 2024 to approve an amendment to CWB's by-laws to provide for the share exchange. The Agreement contains customary non-solicitation covenants on the part of CWB, subject to customary "fiduciary out" provisions, as well as "right to match" provisions in favour of National Bank. A termination fee equivalent to 4% of the CWB Equity Value would be payable by CWB to National Bank in certain circumstances, including in the context of a superior proposal supported by CWB's board of directors. A reverse termination fee ...