illumin Holdings Inc. — Interim / Quarterly Report 2021

Sep 1, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS

AS AT AND FOR THE PERIOD ENDED JULY 31, 2021

This Management's Discussion and Analysis (MD&A) presents management's view of the financial condition of Laurentian Bank of Canada (the “Group” or the “Bank”) as at July 31, 2021 and its operating results for the periods then ended, compared with the corresponding periods shown. This MD&A should be read in conjunction with the Condensed Interim Consolidated Financial Statements. This MD&A is dated August 31, 2021.

Additional information about Laurentian Bank of Canada, including the 2020 Annual Information Form, is available on the Bank's website at www.lbcfg.ca and on the Canadian Securities Administrators’ website at www.sedar.com.

BASIS OF PRESENTATION

The financial information reported herein is based on the Condensed Interim Consolidated Financial Statements for the periods ended July 31, 2021, and, unless otherwise indicated, has been prepared in accordance with International Financial Reporting standards (IFRS), as issued by the International Accounting Standards Board (IASB), as well as in accordance with IAS 34, Interim Financial Reporting. All amounts are presented in Canadian dollars.

ABOUT LAURENTIAN BANK FINANCIAL GROUP

Founded in 1846, Laurentian Bank Financial Group is a diversified financial services provider whose mission is to help its customers improve their financial health. The Laurentian Bank of Canada and its entities are collectively referred to as Laurentian Bank Financial Group (the “Group” or the “Bank”).

With more than 2,900 employees guided by the values of proximity, simplicity and honesty, the Group provides a broad range of advicebased solutions and services to its personal, business and institutional customers. With pan-Canadian activities and a presence in the U.S., the Group is an important player in numerous market segments.

The Group has $44.9 billion in balance sheet assets and $31.2 billion in assets under administration.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 2

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

The Bank may, from time to time, make written or oral forward-looking statements within the meaning of applicable securities legislation, including in this document and the documents incorporated by reference herein, and in other documents filed with Canadian regulatory authorities or in other written or oral communications. Forward-looking statements include, but are not limited to, statements regarding business plans and strategies, priorities and financial objectives, the regulatory environment in which the Bank operates, the anticipated impact of the coronavirus (“COVID-19”) pandemic on the Bank’s operations, earnings results and financial performance and statements under the headings “Outlook”, “COVID-19 Pandemic” and “Risk Appetite and Risk Management Framework” contained in the Bank's 2020 Annual Report, including the Management’s Discussion and Analysis for the fiscal year ended October 31, 2020 and other statements that are not historical facts. Forward-looking statements typically are identified with words or phrases such as “believe”, “assume”, “estimate”, “forecast”, “outlook”, “project”, “vision”, “expect”, “foresee”, “anticipate”, “plan”, “goal”, “aim”, “target”, “may”, “should”, “could”, “would”, “will”, “intend” or the negative of these terms, variations thereof or similar terminology.

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2020 Annual Report under the heading “Outlook”. There is significant risk that the predictions, forecasts, projections or conclusions will prove to be inaccurate, that the Bank's assumptions may not be correct, and that actual results may differ materially from such predictions, forecasts, projections or conclusions.

The Bank cautions readers against placing undue reliance on forward-looking statements, as a number of factors, many of which are beyond its control and the effects of which can be difficult to predict, could influence, individually or collectively, the accuracy of the forward-looking statements and cause actual future results to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include, but are not limited to, risks relating to: the impacts of the COVID-19 pandemic on the Bank, its business, financial condition and prospects (including market, credit, funding and liquidity); technology, information systems and cybersecurity; technological disruption, competition and the Bank’s ability to execute on its strategic objectives; the economic climate in the U.S. and Canada; accounting policies, estimates and developments; legal and regulatory compliance; fraud and criminal activity; human capital; insurance; business continuity; business infrastructure; environmental and social risk and climate change; and its ability to manage operational, regulatory, legal, strategic, reputational and model risks, all of which are described in more detail in the section titled “Risk Appetite and Risk Management Framework” beginning on page 43 of the 2020 Annual Report, including the Management’s Discussion and Analysis for the fiscal year ended October 31, 2020.

The Bank further cautions that the foregoing list of factors is not exhaustive. Additional risks and uncertainties not currently known to us or that the Bank currently deems to be immaterial may also have a material adverse effect on its financial position, financial performance, cash flows, business or reputation. Any forward-looking statements contained in this document represent the views of Management only as at the date hereof, are presented for the purposes of assisting investors and others in understanding certain key elements of the Bank’s current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of the Bank’s business and anticipated operating environment, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether oral or written, made by the Bank or on its behalf whether as a result of new information, future events or otherwise, except to the extent required under applicable securities regulation. Additional information relating to the Bank can be located on the SEDAR website at www.sedar.com.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 3

HIGHLIGHTS

TABLE 1

FINANCIAL HIGHLIGHTS

TABLE 1 FINANCIAL HIGHLIGHTS
In thousands of Canadian dollars, unless otherwise noted, except per share and percentage amounts (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 Variance July 31, 2020 Variance July 31, 2021 July 31, 2020 Variance
Operating results Total revenue Net income Adjusted net income (1)	$ 254,884 $ 249,768 2 % $ 248,609 3 % $ 752,026 $ 727,470 3 % $ 62,064 $ 53,062 17 % $ 36,217 71 % $ 159,945 $ 77,274 107 % $ 59,046 $ 56,704 4 % $ 47,083 25 % $ 163,322 $ 95,895 70 %
Operating performance Diluted earnings per share Adjusted diluted earnings per share (1) Return on common shareholders’ equity Adjusted return on common shareholders’ equity (1) Net interest margin Efficiency ratio Adjusted efficiency ratio (1) Operating leverage Adjusted operatingleverage (1)	$ 1.32 $ 1.15 15 % $ 0.77 71 % $ 3.43 $ 1.58 117 % $ 1.25 $ 1.23 2 % $ 1.02 23 % $ 3.51 $ 2.01 75 % 9.4 % 8.6 % 5.8 % 8.4 % 3.9 % 8.9 % 9.2 % 7.7 % 8.6 % 5.0 % 1.86 % 1.88 % 1.86 % 1.86 % 1.85 % 66.8 % 71.9 % 73.9 % 69.7 % 76.5 % 68.4 % 69.9 % 68.1 % 69.1 % 73.1 % 7.2 % (2.2) % 3.4 % 9.2 % (1.8) % 2.2 % (1.5) % 9.3 % 5.7 % (0.6) %
Financial position ($ millions) Loans and acceptances Total assets Deposits Common shareholders’ equity	$ 32,968 $ 33,004 — % $ 32,807 — % $ 32,968 $ 32,807 — % $ 44,853 $ 44,606 1 % $ 44,295 1 % $ 44,853 $ 44,295 1 % $ 23,162 $ 22,981 1 % $ 24,570 (6) % $ 23,162 $ 24,570 (6) % $ 2,463 $ 2,404 2 % $ 2,292 7 % $ 2,463 $ 2,292 7 %
Basel III regulatory capital ratios Common Equity Tier 1 (CET1) capital ratio (2) CET1 risk-weighted assets ($ millions)	10.3 % 10.1 % 9.4 % 10.3 % 9.4 % $ 19,675 $ 19,698 $ 19,927 $ 19,675 $ 19,927
Credit quality Gross impaired loans as a % of loans and acceptances Net impaired loans as a % of loans and acceptances Provision for credit losses as a % of average loans and acceptances	0.81 % 0.77 % 0.84 % 0.81 % 0.84 % 0.53 % 0.51 % 0.62 % 0.53 % 0.62 % 0.07 % 0.03 % 0.27 % 0.10 % 0.37 %
Common share information Closing share price (3) Price / earnings ratio Book value per share Dividends declared per share Dividend yield Dividend payout ratio Adjusted dividendpayout ratio (1)	$ 42.40 $ 42.54 — % $ 26.55 60 % $ 42.40 $ 26.55 60 % 10.0 x 11.6 x 10.7 x 10.0 x 10.7 x $ 56.61 $ 55.37 2 % $ 53.15 7 % $ 56.61 $ 53.15 7 % $ 0.40 $ 0.40 — % $ 0.40 — % $ 1.20 $ 1.74 (31) % 3.8 % 3.8 % 6.0 % 3.8 % 8.7 % 30.3 % 34.7 % 52.0 % 34.9 % 109.9 % 31.9 % 32.4 % 39.1 % 34.1 % 86.2 %

(1) Refer to the Non-GAAP and Key Performance Measures section.

(2) Using the Standardized Approach in determining credit risk and operational risk.

(3) Toronto Stock Exchange (TSX) closing market price.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 4

NON-GAAP AND KEY PERFORMANCE MEASURES

NON-GAAP MEASURES

Management uses both generally accepted accounting principles (GAAP) and non-GAAP measures to assess the Bank’s performance. Results prepared in accordance with GAAP are referred to as “reported” results. Non-GAAP measures presented throughout this document are referred to as “adjusted” measures and exclude amounts designated as adjusting items. Adjusting items relate to the settlement of pension plans, restructuring charges and business combinations and have been designated as such as management does not believe they are indicative of underlying business performance. Non-GAAP measures are considered useful to readers in obtaining a better understanding of how management analyzes the Bank’s results and in assessing underlying business performance and related trends. 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 issuers. Tables 2 and 3 show adjusting items and their impact on reported results and diluted earnings per share.

TABLE 2

IMPACT OF ADJUSTING ITEMS ON REPORTED RESULTS

In thousands of Canadian dollars, exceptper share amounts (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Impact on income before income taxes Reported income before income taxes	$ 79,226 $ 67,807 $ 42,405 $ 203,544 $ 78,637
Adjusting items, before income taxes Net gain on the settlement of pension plans resulting from annuity purchases (1)	(7,064) — — (7,064) —
Restructuring charges (2) Severance charges (recovery) Other restructuringcharges	(83) (792) 7,047 (613) 10,068 45 2,682 4,020 3,086 4,059
Items related to business combinations Amortization of net premium on purchased financial instruments (3) Amortization of acquisition-related intangible assets (4)	(38) 1,890 11,067 2,473 14,127 — — 127 — 538 2,946 3,014 3,520 9,033 10,461
	2,946 3,014 3,647 9,033 10,999
	(4,156) 4,904 14,714 4,442 25,126
Adjusted income before income taxes	$ 75,070 $ 72,711 $ 57,119 $ 207,986 $ 103,763
Impact on net income Reported net income	$ 62,064 $ 53,062 $ 36,217 $ 159,945 $ 77,274
Adjusting items, net of income taxes Net gain on the settlement of pension plans resulting from annuity purchases (1)	(5,194) — — (5,194) —
Restructuring charges (2) Severance charges (recovery) Other restructuringcharges	(62) (582) 5,178 (451) 7,398 33 1,972 2,955 2,269 2,984
Items related to business combinations Amortization of net premium on purchased financial instruments (3) Amortization of acquisition-related intangible assets (4)	(29) 1,390 8,133 1,818 10,382 — — 93 — 395 2,205 2,252 2,640 6,753 7,844
	2,205 2,252 2,733 6,753 8,239
	(3,018) 3,642 10,866 3,377 18,621
Adjusted net income	$ 59,046 $ 56,704 $ 47,083 $ 163,322 $ 95,895

(1) The net gain on the settlement of pension plans resulting from annuity purchases is related to the purchase of group annuity contracts de-risking the Bank's pension plans (or buy-out) and is included in the Non-interest expenses line item. Refer to the Business Highlights section for further details about this transaction.

(2) In the second quarter of 2021, restructuring charges mainly consisted of charges associated with the resolution of the union grievances and unfair labour practice complaints, including complaints relating to the revocation of the union certification, as well as charges associated with the continued optimization of the Quebec branch network. In the first quarter of 2021, restructuring charges were attributed to the optimization of the Quebec branch network and the related streamlining of certain back-office and corporate functions. In 2020, restructuring charges related mainly to the reorganization of retail brokerage activities and other measures aimed at improving efficiency. Restructuring charges are included in Non-interest expenses and include severance charges, salaries, legal fees, communication expenses, professional fees and charges related to lease contracts.

(3) Amortization of net premium on purchased financial instruments resulted from a one-time gain on a business acquisition in 2012 and is included in the Amortization of net premium on purchased financial instruments line item.

(4) Amortization of acquisition-related intangible assets results from business acquisitions and is included in the Non-interest expenses line item.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 5

TABLE 3

IMPACT OF ADJUSTING ITEMS ON DILUTED EARNINGS PER SHARE

TABLE 3 IMPACT OF ADJUSTING ITEMS ON DILUTED EARNINGS PER	SHARE
In thousands of Canadian dollars, exceptper share amounts (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Impact on diluted earnings per share Reported diluted earningsper share	$ 1.32 $ 1.15 $ 0.77 $ 3.43 $ 1.58
Adjusting items Net gain on the settlement of pension plans resulting from annuity purchases Restructuring charges Items related to business combinations	(0.12) — — (0.12) — — 0.03 0.19 0.04 0.24 0.05 0.05 0.06 0.16 0.19
	(0.07) 0.08 0.25 0.08 0.43
Adjusted diluted earningsper share (1)	$ 1.25 $ 1.23 $ 1.02 $ 3.51 $ 2.01

(1) The impact of adjusting items on a per share basis may not add due to rounding.

KEY PERFORMANCE MEASURES

Management also uses several financial metrics to assess the Bank’s performance.

Detailed information on return on common shareholders' equity is provided below. Other performance measures such as the net interest margin, efficiency ratio, operating leverage and dividend payout ratio are defined in the “Non-GAAP and Key Performance Measures” section on page 21 of the Bank's 2020 Annual Report.

Return on common shareholders’ equity

Return on common shareholders’ equity (ROE) is a profitability measure calculated as the net income available to common shareholders as a percentage of average common shareholders’ equity. The Bank’s common shareholders’ equity is defined as the sum of the value of common shares, retained earnings and accumulated other comprehensive income (AOCI), excluding cash flow hedge reserves.

The following table shows additional information about return on common shareholders’ equity.

TABLE 4

RETURN ON COMMON SHAREHOLDERS’ EQUITY

TABLE 4 RETURN ON COMMON SHAREHOLDERS’ EQUITY
In thousands of Canadian dollars, exceptper share amounts (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Reported net income available to common shareholders Adjustingitems, net of income taxes	$ 57,387 $ 49,946 $ 33,019 $ 149,035 $ 67,682 (3,018) 3,642 10,866 3,377 18,621
Adjusted net income available to common shareholders	$ 54,369 $ 53,588 $ 43,885 $ 152,412 $ 86,303
Average common shareholders’ equity	$ 2,425,424 $ 2,377,617 $ 2,276,124 $ 2,380,043 $ 2,291,451
Return on common shareholders’ equity Adjusted return on common shareholders’ equity	9.4 % 8.6 % 5.8 % 8.4 % 3.9 % 8.9 % 9.2 % 7.7 % 8.6 % 5.0 %

OUTLOOK

ECONOMIC OUTLOOK

Acceleration of the COVID-19 vaccination rollout in developed countries is restoring confidence and solidifying the global economic outlook. Canada’s vaccination rate is among the highest in the world and as such, reduces the probability of broad lockdown measures as concerns about the fourth wave of the pandemic intensify. Over the Summer, provinces have been gradually reopening as public health measures are being lifted. About 98% of Canadian economic activity that was lost during the pandemic has since been recovered, with half of industries operating at or above pre-COVID levels. However, manufacturing and export activities continue to be restrained by global supply bottlenecks and shortages. Higher vaccination rates and reopening of the economy are encouraging consumers to re-direct their spending towards services and businesses to increase their investment in machinery and equipment. The strong corporate earnings outlook and robust demand for Canadian commodities resulted in the S&P/TSX Composite Index reaching an all-time high.

Labour market conditions have been improving over the Summer as lockdown measures implemented last Spring were eased. The level of full-time employment in occupations suitable to a work-from-home environment remains high while the level of part-time workers is low due to on-going health restrictions. Even certain industries that have been thriving during the pandemic are experiencing labour shortages. The unemployment rate stood at 7.5% in July. This compares to 9.4% at the peak of the second COVID-19 wave last Winter, 13.7% at the peak of the first wave in May 2020 and 5.6% pre-pandemic. The federal government has extended financial assistance programs for businesses and individuals until late October.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 6

Households, particularly homeowners, are benefiting from a positive wealth effect from strong housing price appreciation and record high corporate equity values. Conditions in Canadian resale housing markets are tight. Low mortgage rates, as well as a preference for teleworking and safe socialization are maintaining demand at elevated levels and keeping supply low. Housing starts also hit an all-time high during the first six months of 2021, led by an increase in homebuilding activity outside the greater Toronto, Montreal, and Vancouver areas. Household purchases of recreational vehicles and products continued to be strong during the Spring.

In the U.S., real Gross Domestic Product (GDP) was back to a pre-pandemic level during the second quarter of 2021. Fiscal stimulus has been reinforced by the recent $1 trillion bipartisan infrastructure deal. The Federal Reserve indicated to markets that further progress in labour market conditions will be required before it begins easing and tapering the pace of asset purchases.

Global interest rates have been declining in recent months despite the improved economic outlook and uncertainty surrounding the persistence of high Consumer Price Index (CPI) inflation. The Bank of Canada signalled to markets that a constructive economic outlook and fading CPI inflation over time could lead to a first policy rate hike in the second half of 2022.

Finally, volatility of the Canadian dollar has recently increased. The reduced pace of asset purchases by the Bank of Canada relative to other central banks and the pullback in selected non-energy commodities have contributed to the Canadian dollar depreciating to US$0.80.

IMPACT OF COVID-19 PANDEMIC

The highly contagious COVID-19 Delta variant has been spreading around the world, including Canada, creating new health, economic and societal challenges. Governments worldwide have enacted multiple emergency measures to protect their citizens and slow the transmission of the virus. As of August, more than 60% of Canadians have been fully vaccinated. Since the beginning of the outbreak, governments and central banks have implemented relief measures to assist individuals and businesses with some of the negative economic effects. In Canada, households and companies have generally adapted well to the situation, although labour shortages are emerging in Canada while many people remain out of work. As the vaccination program continues to be rolled out and the economy fully reopens, economic activity is expected to continue to improve for the remainder of 2021.

In this context, the Bank's response to the pandemic has focused on ensuring the health and safety of its customers and employees. The measures the Bank has put in place have also provided the foundation to support operations in this period of heightened uncertainty. The Bank continues to work with retail and business customers to manage the impacts of this unprecedented crisis and support them through programs initiated by the federal and provincial governments.

Operating results

The Bank is continuously adapting to this new economic environment. Changes to consumer spending behaviour continues to impact personal loan volumes and retail transaction-driven fees. In addition, targeted loan portfolios were impacted by supply-chain disruption caused by the COVID-19 pandemic. This has weighed on loan volumes and net interest income in the first nine months of 2021, despite a strong contribution from commercial real estate activities. In this quarter, further improvements in forward-looking assumptions resulted in a lower level of provision for credit losses. The continued uncertainty resulting from the ongoing impact of the pandemic may cause future volatility in expected credit losses until we see a more normalized operating environment globally.

While the Bank is taking actions to mitigate the impact of COVID-19 on its daily operations and financial results, the pandemic is expected to continue to impact operating results in the near term. Numerous unpredictable and evolving factors will have to be considered, such as the duration and spread of the pandemic, including the rise of variants; its impact on customers, employees and third-party providers; the response of government authorities to the crisis and global social and economic impacts. As such, it remains challenging to forecast the effects of COVID-19 on the Bank’s future results.

The allowance for credit losses is sensitive to the inputs used in models, including macroeconomic variables used in the forward-looking scenarios and their respective weights. The magnitude of the impact of COVID-19 on the Canadian and U.S. economies remains highly uncertain, including assessments of the impact of government and/or regulatory responses to the pandemic. Therefore, it remains difficult to predict whether the higher level of expected credit losses recorded since April 2020 will result in significant write-offs and if the Bank will be required to recognize additional increases in expected credit losses in subsequent periods.

The COVID-19 pandemic may also increase costs as the Bank prioritizes health and safety measures and complies with applicable requirements, and may cause the Bank to reduce, delay or alter initiatives that may otherwise have increased its long-term value.

The Bank’s risk management framework provides the necessary mechanisms to manage the impact of the crisis on its business and operations. The core risk factors relating to the Bank's operations are described in the “Risk Appetite and Risk Management Framework” section on page 47 of the Bank's 2020 Annual Report. Refer, also, to page 66 of the Bank's 2020 Annual Report under the “Other risks that may affect future results” section for further details relating to impacts of the COVID-19 pandemic.

Capital and liquidity

The Bank is well positioned to manage capital and liquidity risks. The Common Equity Tier 1 ratio stood at 10.3% as at July 31, 2021, in excess of the minimum regulatory requirement. As the Bank continues to support its customers, and in accordance with regulatory developments and policy responses, the Bank expects its regulatory capital ratio to remain above regulatory and target management levels.

The liquidity coverage ratio remains above industry levels. The Bank's liquidity position was healthy at the onset of the pandemic and remains so today. The Bank will continue to prudently monitor capital and liquidity levels.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 7

BUSINESS HIGHLIGHTS

Purchase of group annuity contracts de-risking the Bank's pension plans

On June 10, 2021, in an effort to reduce its defined benefit pension plan obligation and decrease future pension volatility and risks, the Bank purchased $346.2 million of group annuity contracts from a Canadian insurer and transferred $353.4 million in obligations, resulting in a $7.1 million net settlement gain ($5.2 million net of income taxes). Under the agreement, the Canadian insurer will issue annuities covering the responsibility for pension benefits owed to approximately 1,900 Laurentian Bank of Canada pensioners. The insurer will begin administering all benefits for these members in October 2021. Following the transaction, benefits for plan participants are protected under Assuris, the life insurance compensation association designated under the Insurance Companies Act of Canada.

For accounting purposes, this buy-out transaction essentially eliminates further legal or constructive obligation for benefits and a settlement occurred.

Key executive appointment

The Bank appointed Beel Yaqub as Executive Vice President and Chief Information Technology Officer (CITO), effective July 12, 2021. As a member of the executive leadership team, Beel will help support the new strategic direction of the Bank.

As Chief Information Technology Officer, Beel will oversee the modernization of the Bank’s IT systems as well as the Bank's network infrastructure, cyber security, data privacy and management, application engineering, cloud enablement and IT vendor management. He will also directly contribute to the Bank’s ongoing strategic review. He brings more than 20 years of experience and results, leading transformational change and driving performance across multiple technology and business disciplines.

Residential mortgage loans end to end process review

As part of its plan to improve the customer experience and to renew growth in residential mortgage loans, the Bank has initiated an end to end review of its mortgage process. Analysis related to the broker channel origination process initiated in the second quarter is progressing. This led to the launch of a number of pilot projects to improve response times and service levels and eliminate overlapping manual processes. Further phases related to branch mortgage business for both originations and renewals, as well as broker renewals will gradually be rolled out. In the third quarter, to drive greater accountability and cross-functional collaboration, a new Residential Real Estate Secured Lending business unit was created within Personal Banking. New technology tools were also adopted to improve the customer experience, including “DocuSign” for ease, convenience and collection of customer signatures. While improving the performance of the mortgage business is expected to be a multi-year journey, it should gradually yield benefits along the way.

Revocation of union certification

On April 21, 2021, the Bank announced that the Canada Industrial Relations Board (CIRB) had revoked the union certification covering the unionized employees of the Bank, following a vote by the majority of its affected employees in favour of the revocation and withdrawal of the complaints filed by the union. Approximately 20% of the Bank's employees were represented by the union certification prior to its revocation.

UPDATE ON KEY INITIATIVES

Recently, a series of senior executive appointments were announced to help drive a renewed strategic direction for the Bank with a focus on simplifying processes and enhancing digital capabilities, further engaging and empowering the Bank’s team members, and creating a more customer-centric culture. The Bank has committed to outlining the new strategic direction by year-end. Over the past few years, the Bank has launched major initiatives. The following section provides an update on these key projects.

Core-banking system replacement program

In 2019, the Bank migrated all of B2B Bank products and most of its loans to business customers to a new core-banking system. Given the impacts of COVID-19 and the review of the strategic plan, the Bank is evaluating this project and its timeline.

Quebec branch network optimization

In 2020, the Bank completed the conversion of its traditional branch network to a 100% Advice model. In 2021, four more branches were merged, including one in the third quarter. Going forward, the Bank will continuously review its branch network adapting to its customerfirst culture and to the anticipated rollout of its updated digital strategy.

Advanced internal ratings-based approach to credit risk

As part of its plan to improve the Bank’s foundation, the Bank is pursuing the adoption of the AIRB approach to credit risk, subject to regulatory approval. Given the impacts of COVID-19 on its business and the review of the strategic plan, the Bank is evaluating this project and its timeline.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 8

ANALYSIS OF CONSOLIDATED RESULTS

TABLE 5

CONDENSED CONSOLIDATED RESULTS – REPORTED BASIS

In thousands of Canadian dollars (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Net interest income Other income	$ 174,696 $ 171,476 $ 173,546 $ 519,246 $ 513,078 80,188 78,292 75,063 232,780 214,392
Total revenue Amortization of net premium on purchased financial instruments Provision for credit losses Non-interest expenses	254,884 249,768 248,609 752,026 727,470 — — 127 — 538 5,400 2,400 22,300 24,600 92,100 170,258 179,561 183,777 523,882 556,195
Income before income taxes Income taxes	79,226 67,807 42,405 203,544 78,637 17,162 14,745 6,188 43,599 1,363
Net income	62,064 53,062 36,217 159,945 77,274
Preferred share dividends and limited recourse capital note interest	4,677 3,116 3,198 10,910 9,592
Net income available to common shareholders	$ 57,387 49,946 $ 33,019 $ 149,035 $ 67,682

TABLE 6

CONDENSED CONSOLIDATED RESULTS – ADJUSTED BASIS(1)

In thousands of Canadian dollars (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Net interest income Other income	$ 174,696 $ 171,476 $ 173,546 $ 519,246 $ 513,078 80,188 78,292 75,063 232,780 214,392
Total revenue Provision for credit losses Adjusted non-interest expenses (1)	254,884 249,768 248,609 752,026 727,470 5,400 2,400 22,300 24,600 92,100 174,414 174,657 169,190 519,440 531,607
Adjusted income before income taxes (1) Adjusted income taxes (1)	75,070 72,711 57,119 207,986 103,763 16,024 16,007 10,036 44,664 7,868
Adjusted net income (1)	59,046 56,704 47,083 163,322 95,895
Preferred share dividends and limited recourse capital note interest	4,677 3,116 3,198 10,910 9,592
Adjusted net income available to common shareholders (1)	$ 54,369 $ 53,588 $ 43,885 $ 152,412 $ 86,303

(1) Refer to the Non-GAAP and Key Performance Measures section.

THIRD QUARTER OF 2021 COMPARED WITH THIRD QUARTER OF 2020

Net income was $62.1 million and diluted earnings per share were $1.32 for the third quarter of 2021, compared with $36.2 million and $0.77 for the third quarter of 2020. Adjusted net income was $59.0 million for the third quarter of 2021, up from $47.1 million for the third quarter of 2020, and adjusted diluted earnings per share were $1.25, compared with $1.02 for the third quarter of 2020. Net income available to common shareholders in the third quarter of 2021 included a final dividend on the Preferred Shares Series 15 redeemed in June 2021 and a partial initial interest charge on the Limited Recourse Capital Notes issued in May 2021.

Total revenue

Total revenue was $254.9 million for the third quarter of 2021, up 3% compared with $248.6 million for the third quarter of 2020.

Net interest income increased by $1.2 million to $174.7 million for the third quarter of 2021, compared with $173.5 million for the third quarter of 2020, despite lower loan volumes. The increase was mainly due to improved funding costs, mostly as the utilization of secured funding increased year-over-year. Net interest margin was 1.86% for the third quarter of 2021, unchanged compared with the third quarter of 2020 for the same reasons, and despite the overall lower interest rate environment. Over the last few months, the impact of the decrease in inventory financing volumes on net interest margin was mostly offset by improved funding costs. However, lower inventory financing volumes are expected to continue to impact net interest income for the remainder of the year, and until supply-chain disruptions are resolved.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 9

Other income increased by $5.1 million or 7% to $80.2 million for the third quarter of 2021, compared with $75.1 million for the third quarter of 2020. The increase was mainly due to higher lending fees which improved by $3.1 million compared with the third quarter of 2020, stemming from the strong performance in real estate lending. Strong revenues from brokerage activities and higher commissions from sales of mutual funds also contributed to the increase.

Provision for credit losses

The provision for credit losses was $5.4 million for the third quarter of 2021 compared with $22.3 million for the third quarter of 2020, a decrease of $16.9 million as the prior year reflected higher provisions due to the impact of the COVID-19 pandemic. Releases of provisions on performing loans of $3.6 million also contributed to the improvement. While uncertainty over the impact of the COVID-19 pandemic remains, the releases were largely due to an improving economic outlook.

Refer to the “Risk Management” section of the MD&A and to Note 5 to the Condensed Interim Consolidated Financial Statements for more information on provision for credit losses and allowances for credit losses.

Non-interest expenses

Non-interest expenses amounted to $170.3 million for the third quarter of 2021, a decrease of $13.5 million or 7% compared with the third quarter of 2020. Adjusted non-interest expenses amounted to $174.4 million for the third quarter of 2021, an increase of $5.2 million or 3% compared with the third quarter of 2020. Adjusted non-interest expenses exclude adjusting items such as a $7.1 million net gain on the settlement of pension plans resulting from annuity purchases for the third quarter of 2021, as well as the amortization of acquisitionrelated intangible assets and restructuring charges, as described in the Non-GAAP and Key Performance Measures section above.

Salaries and employee benefits amounted to $89.9 million for the third quarter of 2021, a decrease of $2.6 million compared with the third quarter of 2020. Salaries and employee benefits for the third quarter of 2021 included the aforementioned $7.1 million net gain on the settlement of pension plans resulting from annuity purchases. This was partly offset by higher performance-based compensation related to the Bank's improved performance compared with the third quarter of 2020.

Premises and technology costs were $49.2 million for the third quarter of 2021, a decrease of $0.9 million compared with the third quarter of 2020, mainly as a result of cost discipline.

Other non-interest expenses were $31.2 million for the third quarter of 2021, an increase of $1.0 million compared with the third quarter of 2020, mainly resulting from higher professional fees.

Restructuring charges were essentially nil for the third quarter of 2021, a decrease of $11.1 million compared with the third quarter of 2020. Charges in 2020 were mainly related to the streamlining of the branch network, as well as to a reduction in headcount to realign the workforce with operational needs and improve efficiency. Refer to the Non-GAAP and Key Performance Measures section for further details.

Efficiency ratio

The efficiency ratio on a reported basis was 66.8% for the third quarter of 2021, down from 73.9% for the third quarter of 2020. The adjusted efficiency ratio was 68.4% for the third quarter of 2021, slightly higher than 68.1% for the third quarter of 2020, mainly as a result of the increase in salaries and employee benefits.

Income taxes

For the quarter ended July 31, 2021, the income tax expense was $17.2 million, and the effective tax rate was 21.7%. The lower tax rate, compared to the statutory rate, is attributed to a lower taxation level of income from foreign operations, as well as from the favourable effect of holding investments in Canadian securities that generate non-taxable dividend income. For the quarter ended July 31, 2020, the income tax expense was $6.2 million, and the effective tax rate was 14.6%. Year-over-year, the increase in the effective tax rate results from the proportionally higher domestic income.

NINE MONTHS ENDED JULY 31, 2021 COMPARED WITH NINE MONTHS ENDED JULY 31, 2020

Net income was $159.9 million and diluted earnings per share were $3.43 for the nine months ended July 31, 2021, compared with $77.3 million and $1.58 for the nine months ended July 31, 2020. Adjusted net income was $163.3 million for the nine months ended July 31, 2021, up from $95.9 million for the nine months ended July 31, 2020, and adjusted diluted earnings per share were $3.51 for the nine months ended July 31, 2021, up from $2.01 for the nine months ended July 31, 2020.

Total revenue

Total revenue was $752.0 million for the nine months ended July 31, 2021 up 3% compared with $727.5 million for the nine months ended July 31, 2020.

Net interest income increased by $6.2 million to $519.2 million for the nine months ended July 31, 2021, compared with $513.1 million for the nine months ended July 31, 2020. The increase was mainly due to improved funding costs, as the utilization of secured funding increased year-over-year, partly offset by lower loan volumes. Net interest margin increased by 1 bp to 1.86% for the nine months ended July 31, 2021, compared with 1.85% for the nine months ended July 31, 2020, essentially for the same reasons.

Other income increased by $18.4 million or 9% to $232.8 million for the nine months ended July 31, 2021, compared with $214.4 million for the nine months ended July 31, 2020. The increase was mainly due to the contribution from capital markets and treasury operations,

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 10

which increased by $11.3 million compared with the nine months ended July 31, 2020. Higher lending fees and higher commissions from sales of mutual funds further contributed to the increase and also benefited from the economic recovery and strong financial markets. This was partly offset by a decrease in service charges and card service revenues compared with the nine months ended July 31, 2020 due to ongoing changes to the retail banking environment, exacerbated by the COVID-19 pandemic.

Provision for credit losses

The provision for credit losses decreased by $67.5 million to $24.6 million for the nine months ended July 31, 2021 compared with $92.1 million for the nine months ended July 31, 2020, as the prior year reflected higher provisions on performing loans due to the impact of the COVID-19 pandemic. Releases of provisions on performing loans of $14.4 million and lower provisions on impaired loans in the first nine months of 2021 also contributed to the decrease.

Refer to the “Risk Management” section of the MD&A and to Note 5 to the Condensed Interim Consolidated Financial Statements for more information on provision for credit losses and allowances for credit losses.

Non-interest expenses

Non-interest expenses decreased by $32.3 million or 6% to $523.9 million for the nine months ended July 31, 2021, compared with $556.2 million for the nine months ended July 31, 2020. Adjusted non-interest expenses decreased by $12.2 million or 2% to $519.4 million for the nine months ended July 31, 2021, compared with $531.6 million for the nine months ended July 31, 2020. Adjusted non-interest expenses exclude adjusting items such as a $7.1 million net gain on the settlement of pension plans resulting from annuity purchases for the nine months ended July 31, 2021, as well as the amortization of acquisition-related intangible assets and restructuring charges, as described in the Non-GAAP and Key Performance Measures section above.

Salaries and employee benefits were essentially unchanged and amounted to $282.7 million for the nine months ended July 31, 2021, compared with the nine months ended July 31, 2020. Salaries and employee benefits for 2021 include the aforementioned $7.1 million net gain on the settlement of pension plans resulting from annuity purchases. Excluding this special item, the year-over-year increase is mostly due to higher performance-based compensation related to the Bank's improved performance, partly offset by a decrease in salaries reflecting the headcount reduction implemented in 2020.

Premises and technology costs decreased by $3.0 million to $147.6 million for the nine months ended July 31, 2021, compared with the nine months ended July 31, 2020, mainly as a result of cost discipline.

Other non-interest expenses decreased by $18.7 million to $91.1 million for the nine months ended July 31, 2021, compared with the nine months ended July 31, 2020. The improvement mainly resulted from lower regulatory costs, as well as lower advertising, business development and travel expenses, ensuing from efficiency measures and the current economic conditions.

Restructuring charges decreased by $11.7 million to $2.5 million for the nine months ended July 31, 2021, compared with $14.1 million for the nine months ended July 31, 2020, mainly as a result of charges, incurred in 2020, related to the streamlining of the branch network and to a reduction in headcount, as noted above. Refer to the Non-GAAP and Key Performance Measures section for further details.

Efficiency ratio

The efficiency ratio, on a reported basis, was 69.7% for the nine months ended July 31, 2021, down from 76.5% for the nine months ended July 31, 2020. The adjusted efficiency ratio was 69.1% for the nine months ended July 31, 2021, down from 73.1% for the nine months ended July 31, 2020, as a result of lower adjusted non-interest expenses and an increase in total revenue. The adjusted operating leverage was positive year-over-year.

Income taxes

For the nine months ended July 31, 2021, the income tax expense was $43.6 million and the effective tax rate was 21.4%. The lower tax rate, compared to the statutory rate, is attributed to a lower taxation level of income from foreign operations, as well as from the favourable effect of holding investments in Canadian securities that generate non-taxable dividend income. For the nine months ended July 31, 2020, the income tax expense was $1.4 million and the effective tax rate was 1.7%, given the lower level of income from Canadian operations stemming from the COVID-19 pandemic.

THIRD QUARTER OF 2021 COMPARED WITH SECOND QUARTER OF 2021

Net income was $62.1 million and diluted earnings per share were $1.32 for the third quarter of 2021, compared with $53.1 million and $1.15 for the second quarter of 2021. Adjusted net income was $59.0 million and adjusted diluted earnings per share were $1.25 for the third quarter of 2021, compared with $56.7 million and $1.23 for the second quarter of 2021.

Total revenue increased by $5.1 million to $254.9 million for the third quarter of 2021, compared with $249.8 million for the previous quarter.

Net interest income increased by $3.2 million sequentially to $174.7 million. The increase mainly reflects the positive impact of three additional days in the third quarter, partly offset by slightly lower interest margins. Net interest margin was 1.86% for the third quarter of 2021, a decrease of 2 basis points compared with 1.88% for the second quarter of 2021, mainly as a result of a change in the business mix.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 11

Other income amounted to $80.2 million for the third quarter of 2021, an increase of $1.9 million compared with $78.3 million for the previous quarter, mainly as a result of higher lending fees stemming from the strong performance in real estate lending.

Provision for credit losses was $5.4 million for the third quarter of 2021, an increase of $3.0 million compared with $2.4 million for the second quarter of 2021. Lower releases of provisions on performing loans, partly offset by lower provisions on impaired loans in the quarter, contributed to the increase. Refer to the “Risk Management” section for additional information.

Non-interest expenses decreased by $9.3 million to $170.3 million for the third quarter of 2021 from $179.6 million in the second quarter of 2021. Lower salaries and employee benefits, as a result of the aforementioned $7.1 million net gain on the settlement of pension plans and lower performance-based compensation, as well as lower restructuring charges contributed to the decrease sequentially. Adjusted non-interest expenses amounted to $174.4 million in the third quarter of 2021 and were essentially unchanged compared with the second quarter of 2021.

ANALYSIS OF FINANCIAL CONDITION

TABLE 7

CONDENSED BALANCE SHEET

TABLE 7 CONDENSED BALANCE SHEET
		As at July 31,		As at October 31,
In thousands of Canadian dollars (Unaudited)		2021		2020
Assets
Cash and deposits with banks	$	748,400	$	672,842
Securities		6,771,129		5,799,216
Securities purchased under reverse repurchase agreements		2,987,769		3,140,228
Loans and acceptances, net		32,792,084		33,019,603
Other assets		1,553,687		1,535,771
	$	44,853,069	$	44,167,660
Liabilities and Shareholders' Equity
Deposits	$	23,161,529	$	23,920,203
Other liabilities		7,810,303		7,102,277
Debt related to securitization activities		10,784,325		10,184,497
Subordinated debt		349,696		349,442
Shareholders' equity		2,747,216		2,611,241
	$	44,853,069	$	44,167,660

As at July 31, 2021, total assets amounted to $44.9 billion, a 2% increase from $44.2 billion as at October 31, 2020, mostly due to the higher level of liquid assets.

Liquid assets

Liquid assets consist of cash, deposits with banks, securities and securities purchased under reverse repurchase agreements. As at July 31, 2021, these assets amounted to $10.5 billion, an increase of $0.9 billion compared with $9.6 billion as at October 31, 2020.

The Bank continues to prudently manage its level of liquid assets. The Bank's funding sources remain well diversified and sufficient to meet all liquidity requirements. Liquid assets represented 23% of total assets as at July 31, 2021, in line with October 31, 2020.

Loans

Loans and bankers’ acceptances, net of allowances, stood at $32.8 billion as at July 31, 2021, a decrease of $0.2 billion or 1% since October 31, 2020. During the first nine months of 2021, commercial loan growth resumed, while personal loans and residential mortgage loans declined.

Commercial loans and acceptances amounted to $13.5 billion as at July 31, 2021, an increase of 6% since October 31, 2020. Real estate lending accounted for most of the increase and continued to show resilience during the COVID-19 pandemic amidst the lower interest rate environment. This strong performance was partly offset by lower inventory financing volumes since October 31, 2020 due to continued supply chain challenges to sustain the high consumer demand for recreational products.

Personal loans amounted to $3.8 billion as at July 31, 2021, a decrease of $0.3 billion or 8% since October 31, 2020, mainly as a result of the continued decline in the investment loan portfolio.

Residential mortgage loans amounted to $15.7 billion as at July 31, 2021, a decrease of $0.6 billion or 4% since October 31, 2020. The acquisition of mortgage loans from third parties, as part of the Bank's program to optimize the usage of the National Housing Act mortgage-backed securities allocations, has contributed to mitigating the impact of repayments.

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Other assets

Other assets stood at $1.6 billion as at July 31, 2021, unchanged compared with October 31, 2020.

LIABILITIES

Deposits

Deposits decreased by $0.8 billion or 3% to $23.2 billion as at July 31, 2021 compared with $23.9 billion as at October 31, 2020, mainly as the Bank optimized its funding sources to align with its asset levels. Personal deposits stood at $18.2 billion as at July 31, 2021, down $0.6 billion compared with October 31, 2020. The decrease mainly resulted from lower term deposits sourced through intermediaries, managed down as the Bank increased its debt related to securitization activities to optimize funding costs, partly offset by growth in personal notice and demand deposits of $0.8 billion or 15% over the same period.

Personal deposits represented 79% of total deposits as at July 31, 2021, in line with October 31, 2020, and contributed to the Bank's good liquidity position.

Business and other deposits decreased by $0.2 billion over the same period to $5.0 billion, mostly due to a decrease in wholesale funding as the Bank optimized its funding costs as outlined above. Business and other deposits now include the Bank's covered bonds.

Covered bonds

In April 21, 2021, the Bank received approval from Canada Mortgage and Housing Corporation (“CMHC”) to establish a $2.0 billion legislative covered bond programme (“Programme”) pursuant to Canadian Registered Covered Bond Programs Guide. On May 6, 2021, the Bank issued its inaugural $250.0 million covered bonds which bear interest at an annual coupon of 1.603%, payable semi-annually. The Programme further diversifies the Bank's funding sources, reduces the cost of funding and is expected to help the Bank deliver competitively priced products to its customers.

Other liabilities

Other liabilities increased to $7.8 billion as at July 31, 2021 from $7.1 billion as at October 31, 2020. The year-over-year increase resulted mainly from higher obligations related to securities sold under repurchase agreements associated with trading activities.

Debt related to securitization activities

Debt related to securitization activities increased by $0.6 billion or 6% compared with October 31, 2020 and stood at $10.8 billion as at July 31, 2021, contributing to the improvement in funding costs. Since the beginning of the year, mortgage loan securitization through the CMHC programs, supplemented by other secured funding, more than offset maturities of liabilities related to the Canada Mortgage Bond program, as well as normal repayments.

Subordinated debt

Subordinated debt stood at $349.7 million as at July 31, 2021, essentially unchanged compared with October 31, 2020. Subordinated debt is an integral part of the Bank’s regulatory capital and affords its depositors additional protection.

SHAREHOLDERS’ EQUITY

Shareholders’ equity amounted to $2,747.2 million as at July 31, 2021, compared with $2,611.2 million as at October 31, 2020. Compared to October 31, 2020, retained earnings increased by $152.2 million, mainly as a result of the net income contribution of $159.9 million, as well as to other gains related to employee benefit plans and equity securities designated at fair value through other comprehensive income of $58.2 million. These increases were partly offset by dividends amounting to $62.9 million since the beginning of the year. Accumulated other comprehensive income decreased by $28.8 million, mainly as a result of a reduction in the cumulative foreign currency translation amount. During the third quarter, the Bank also redeemed the Non-Cumulative Class A Preferred Shares, Series 15 (Non-Viability Contingent Capital (NVCC)) and issued Limited Recourse Capital Notes, as detailed below. For additional information, please refer to the Consolidated Statement of Changes in Shareholders' Equity in the Condensed Interim Consolidated Financial Statements.

The Bank’s book value per common share was $56.61 as at July 31, 2021 compared to $53.74 as at October 31, 2020.

Limited recourse capital notes

On May 7, 2021, the Bank issued Limited Recourse Capital Notes, Series 1 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (“LRCN”) for an aggregate principal amount of $125 million. LRCN bear interest at a rate of 5.30% annually, payable semiannually, for the initial period from the date of issue to June 15, 2026. LRCN were classified as equity on the balance sheet and fully qualify as Additional Tier 1 capital under the Basel III capital adequacy framework and the CAR Guideline as they include mandatory nonviability contingency capital provisions.

In connection with the issuance of LRCN, the Bank also issued Non-Cumulative 5-Year Fixed Rate Reset Class A Preferred Shares, Series 17 (Non-Viability Contingent Capital (NVCC)) (“Preferred Shares Series 17”) to Computershare Trust Company of Canada as trustee for a newly formed trust (the “Limited Recourse Trust”). In case of non-payment of principal of or interest on LRCN when due, the recourse of each noteholder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets which, except in limited circumstances, will consist of Preferred Shares Series 17. The Preferred Shares Series 17 are treasury shares eliminated on the Bank’s consolidated balance sheet prior to a recourse event. The net proceeds of the issuance were used to redeem the Bank’s

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outstanding 5,000,000 Non-Cumulative Class A Preferred Shares, Series 15 (Non-Viability Contingent Capital (NVCC)) on June 15, 2021, at an aggregate redemption price of $125 million.

CAPITAL MANAGEMENT

REGULATORY CAPITAL

OSFI requires banks to meet minimum risk-based capital ratios drawn on the Basel Committee on Banking Supervision (BCBS) capital framework, commonly referred to as Basel III. Under OSFI’s “Capital Adequacy Requirements” guideline, the Bank must maintain minimum levels of capital depending on various criteria. Tier 1 capital, the most permanent and subordinated forms of capital, consists of two components: Common Equity Tier 1 capital and Additional Tier 1 capital. Tier 1 capital is predominantly composed of common equity to ensure that risk exposures are backed by a high-quality capital base. Tier 2 capital consists of supplementary capital instruments and contributes to the overall strength of a financial institution as a going concern. Institutions are expected to meet minimum risk-based capital requirements for exposure to credit risk, operational risk and market risk. Under OSFI’s guideline, minimum Common Equity Tier 1, Tier 1 and Total capital ratios are set at 7.0%, 8.5% and 10.5% respectively including a 2.5% capital conservation buffer.

Certain banks in Canada have been designated by OSFI as Domestic Systemically Important Banks (D-SIBs). The Bank has not been designated as a D-SIB.

Regulatory capital developments

Changes to Capital, Leverage and Liquidity Requirements and related Disclosures.

On March 11, 2021, OSFI released for public consultation revisions to the Capital Adequacy Requirements (CAR) Guideline, Leverage Requirements (LR) Guideline, and Liquidity Adequacy Requirements (LAR) Guideline (together, “the Guidelines”) applicable as of November 1, 2022. The proposed revisions to the CAR and LR Guidelines reflect OSFI’s domestic implementation of the final Basel III reforms as set out in the consolidated Basel Framework published by the BCBS. In addition, proposed revisions to these guidelines, as well as those proposed to the LAR Guideline, include changes to reflect specific capital and liquidity requirements applicable to small and medium sized deposit-taking institutions (SMSBs). These changes align to the draft new SMSB Capital and Liquidity Requirements Guideline (the SMSB Capital and Liquidity Guideline) that was also released on the same date for public consultation.

Concurrent with the consultation, OSFI is consulting on proposed changes to the Pillar 3 Disclosure Guideline applicable to Domestic Systemically Important Banks (D-SIBs) as of November 1, 2022. These enhanced disclosure requirements incorporate revisions to the Guidelines to support transparency and promote market discipline.

On August, 5, 2021, continuing its initiative to develop tailored requirements for the Canadian Small and Medium-Sized Banks (SMSBs), OSFI issued for Public Consultation the Draft Pillar 3 Disclosure Guideline for SMSBs. The Draft Guideline lists the disclosures required by SMSBs and their respective implementation dates.

The Bank will continue to monitor and prepare for developments impacting regulatory capital requirements.

OSFI consultation on enhanced assurance expectations

On April 13, 2021, OSFI launched a ten-week consultation with the publication of a discussion paper, Assurance on Capital, Leverage and Liquidity Returns for federally regulated insurers (FRIs) and deposit-taking institutions (DTIs). The paper focuses on enhancing and aligning assurance expectations given the increasing complexity arising from the evolving regulatory reporting framework. OSFI proposes to have assurance expectations apply to capital, leverage and liquidity returns of all federally regulated DTIs.

Regulatory capital developments in support of COVID-19 efforts

In the second quarter of 2020, OSFI announced several measures to afford financial institutions further flexibility in addressing current conditions due to COVID-19. These measures are discussed in the section “Regulatory capital developments in support of COVID-19 efforts” of the Bank's Annual Report 2020, on page 40. No other significant regulatory development specific to this topic has occurred during the first nine months of 2021.

Table 8 outlines regulatory capital and regulatory capital ratios. The Bank complied with OSFI’s capital requirements throughout the year.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 14

TABLE 8

REGULATORY CAPITAL

TABLE 8 REGULATORY CAPITAL
				As at October 31,
In thousands of Canadian dollars, exceptpercentage amounts (Unaudited)	As	at July31, 2021		2020
Regulatory capital (1)
Common Equity Tier 1 capital	$	2,033,984	$	1,893,079
Tier 1 capital	$	2,279,704	$	2,137,117
Total capital	$	2,712,304	$	2,571,212
Total risk-weighted assets (2)	$	19,675,022	$	19,669,263
Regulatory capital ratios
Common Equity Tier 1 capital ratio		10.3 %		9.6 %
Tier 1 capital ratio		11.6 %		10.9 %
Total capital ratio		13.8 %		13.1 %

(1) The Common Equity Tier 1, Tier 1 and Total capital ratios excluding the ECL transitional arrangements were 10.3%, 11.5% and 13.8% respectively as at July 31, 2021.

(2) Using the Standardized approach in determining credit risk and operational risk.

The Common Equity Tier 1 capital ratio stood at 10.3% as at July 31, 2021, compared with 9.6% as at October 31, 2020. The increase compared with October 31, 2020 mainly results from internal capital generation and other gains related to employee benefit plans and equity securities designated at fair value through other comprehensive income. This level of capital provides the Bank with the necessary operational flexibility to resume growth and to pursue key initiatives prudently, considering economic conditions.

Outstanding share data

As at August 25, 2021, the number of outstanding common shares was 43,506,218 and the number of stock options was 983,012. NVCC provisions require the conversion of the capital instrument into a variable number of common shares in the event that OSFI deems a bank to be non-viable or a federal or provincial government in Canada publicly announces that a bank has accepted or agreed to accept a capital injection. If a NVCC trigger event were to occur, NVCC capital instruments as at July 31, 2021, which are the Class A Preferred Shares Series 13, the subordinated debentures due on June 22, 2022, as well as the LRCN Series 1 (see above) would be converted into common shares pursuant to an automatic conversion formula with a conversion price based on the greater of: (i) a contractual floor price of $5.00, and (ii) the current market price of the Bank’s common shares at the time of the trigger event (10-day weighted average). Based on a floor price of $5.00 and assuming no accrued interest and no declared and unpaid dividends, these NVCC capital instruments would convert into a maximum of 120,000,000 common shares, in aggregate, which would represent a dilution impact of 73.4% based on the number of common shares outstanding as at July 31, 2021.

BASEL III LEVERAGE RATIO

The Basel III capital reforms introduced a non-risk-based leverage ratio requirement to act as a supplementary measure to the riskbased capital requirements. Under OSFI’s Leverage Requirements Guideline, federally regulated deposit-taking institutions are expected to maintain a Basel III leverage ratio that always meets or exceeds 3%. The leverage ratio is defined as the Tier 1 capital divided by unweighted on-balance sheet assets and off-balance sheet commitments, derivatives and securities financing transactions, as defined within the requirements.

As detailed in the table below, the leverage ratio stood at 5.1% as at July 31, 2021 and exceeded regulatory requirements.

TABLE 9

BASEL III LEVERAGE RATIO

TABLE 9 BASEL III LEVERAGE RATIO
				As at October 31,
In thousands of Canadian dollars, exceptpercentage amounts (Unaudited)	As	at July31, 2021		2020
Tier 1 capital	$	2,279,704	$	2,137,117
Total exposures	$	44,741,677	$	44,452,632
Basel III leverage ratio (1)		5.1 %		4.8 %

(1) The Basel III leverage ratio excluding the ECL transitional arrangements was 5.1% as at July 31, 2021.

DIVIDENDS

On August 31, 2021, the Board of Directors declared a quarterly dividend of $0.40 per common share, payable on November 1, 2021 to shareholders of record on October 1, 2021. Shares attributed under the Bank’s Shareholder Dividend Reinvestment and Share Purchase Plan will continue to be made in common shares issued from Corporate Treasury at a 2% discount.

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RISK MANAGEMENT

The Bank is exposed to various types of risks owing to its activities, mainly as it relates to the use of financial instruments. In order to manage these risks, various risk management policies and risk limits, as well as other controls have been implemented. These measures aim to optimize return considering risk in all operating segments. Refer to the section “Risk Appetite and Risk Management Framework” on page 43 of the Bank's 2020 Annual Report for additional information on the Bank’s risk management framework.

CREDIT RISK

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

COVID-19 impact on credit risk and measurement uncertainty of expected credit loss estimates

To consider the evolving impact of the pandemic, as well as other changes to the Bank's environment, the Bank updated its economic scenarios to assess collective provisions as at July 31, 2021. The three scenarios, “base”, “downside” and “upside”, were probability weighted as part of the Bank's approach to determining the expected credit losses as at July 31, 2021 and are further described in Note 5 to the Condensed Interim Consolidated Financial Statements.

Collective allowances are sensitive to model inputs, including macroeconomic variables in the forward-looking scenarios and their respective probability weighting, among other factors. When possible, the Bank's ECL models were adapted to consider measures introduced by governments, central banks and regulators to promote liquidity and ease financial stress to individuals and businesses. To better assess loan losses, the Bank also applied expert judgment given this unprecedented situation. The COVID-19 pandemic led to significant changes to this forward-looking information in 2020, resulting in an increase in expected credit losses. In this quarter, improvements in forward-looking assumptions resulted in a decrease in expected credit losses. The overall uncertainty with respect to the continuing impact of the pandemic may result in future volatility in expected credit losses until the eventual return to a more normalized worldwide operating environment.

The magnitude of the impact of COVID-19 on the Canadian and U.S. economies remains highly uncertain including assessments of the impact of government and/or regulatory responses to the pandemic. Therefore, it remains difficult to predict whether the increase in expected credit losses will result in significant write-offs or if the Bank will need to recognize additional increases in expected credit losses in subsequent periods.

Provision for credit losses

Third quarter of 2021 compared with third quarter of 2020

Total provision for credit losses of $5.4 million decreased by $16.9 million or 76% compared with the third quarter of 2020, as the prior year reflected higher provisions on impaired loans due to the impact of COVID-19. Releases of provisions on performing loans of $3.6 million also contributed to the improvement. The provision for credit losses as a percentage of average loans and acceptances stood at 7 bps for the quarter, compared to 27 bps for the same quarter a year ago.

The provision for credit losses on performing loans was a recovery of $3.6 million for the third quarter of 2021 compared with a charge of $2.2 million for the third quarter of 2020, primarily reflecting releases of provisions on commercial loans and personal loans. While uncertainty over the impact of the COVID-19 pandemic remains, the releases were largely due an improving economic outlook in the current quarter.

The provision for credit losses on impaired loans of $9.0 million decreased by $11.1 million, due to releases of provisions on residential mortgage loans and lower provisions on personal loans.

Nine months ended July 31, 2021 compared with nine months ended July 31, 2020

Total provision for credit losses of $24.6 million decreased by $67.5 million or 73% compared with the nine months ended July 31, 2020, as the prior year reflected higher provisions on performing loans due to the impact of COVID-19. Releases of provisions on performing loans of $14.4 million and lower provisions on impaired loans in the first nine months of 2021 also contributed to the improvement. The provision for credit losses as a percentage of average loans and acceptances of 10 bps for the nine months ended July 31, 2021 improved by 27 bps.

The provision for credit losses on performing loans was a recovery of $14.4 million for the nine months ended July 31, 2021 compared with a charge of $32.0 million for the nine months ended July 31, 2020, primarily reflecting releases of provisions of commercial loans and personal loans. While uncertainty over the impact of the COVID-19 pandemic remains, the releases were largely due to an improving economic outlook in the second and third quarters of 2021.

The provision for credit losses on impaired loans of $39.0 million decreased by $21.1 million, due to lower provisions on personal and commercial loans.

Third quarter of 2021 compared with second quarter of 2021

Total provision for credit losses of $5.4 million increased by $3.0 million or 125% compared with the second quarter of 2021. Lower releases of provisions on performing loans partly offset by lower provisions on impaired loans in the quarter contributed to the increase. The provision for credit losses as a percentage of average loans and acceptances of 7 bps increased by 4 bps.

The provision for credit losses on performing loans was a recovery of $3.6 million for the third quarter of 2021 compared with a recovery of $9.9 million for the second quarter of 2021, primarily reflecting releases of provisions of commercial loans and personal loans. While

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 16

uncertainty over the impact of the COVID-19 pandemic remains, the releases were largely due an improving economic outlook in the current quarter.

The provision for credit losses on impaired loans of $9.0 million decreased by $3.3 million, due to releases of provisions on residential mortgage loans, partly offset by higher provisions on commercial loans.

TABLE 10

PROVISION FOR CREDIT LOSSES

TABLE 10 PROVISION FOR CREDIT LOSSES
In thousands of Canadian dollars, exceptpercentage amounts (Unaudited)	For the three months ended For the nine months ended July 31, 2021 April 30, 2021 July 31, 2020 July 31, 2021 July 31, 2020
Personal loans Performing (Stage 1 and 2) Impaired (Stage 3)	$ (1,765) $ (1,466) $ (6,095) $ (3,538) $ 537 3,301 2,700 8,207 8,599 22,984
	1,536 1,234 2,112 5,061 23,521
Residential mortgage loans Performing (Stage 1 and 2) Impaired (Stage 3)	866 (2,854) 1,468 (209) 2,654 (4,240) 5,332 1,483 3,390 3,173
	(3,374) 2,478 2,951 3,181 5,827
Commercial loans (1) Performing (Stage 1 and 2) Impaired (Stage 3)	(2,695) (5,595) 6,830 (10,649) 28,786 9,933 4,283 10,407 27,007 33,966
	7,238 (1,312) 17,237 16,358 62,752
Total loans Performing (Stage 1 and 2) Impaired (Stage 3)	(3,594) (9,915) 2,203 (14,396) 31,977 8,994 12,315 20,097 38,996 60,123
Provision for credit losses	$ 5,400 $ 2,400 $ 22,300 $ 24,600 $ 92,100
As a % of average loans and acceptances	0.07 % 0.03 % 0.27 % 0.10 % 0.37 %

(1) Including customers' liabilities under acceptances.

Impaired loans

Gross impaired loans amounted to $265.9 million as at July 31, 2021, down $6.9 million or 3% compared with October 31, 2020, mainly due to decreases in personal impaired loans.

Allowances for loan losses on impaired loans increased by $13.6 million compared with October 31, 2020, mainly with regards to the commercial loan portfolio. Allowances for loan losses on performing loans amounted to $85.8 million as at July 31, 2021, down $11.3 million compared with October 31, 2020, driven by the Bank's most recent assumptions relating to the impact of the COVID-19 pandemic. The Bank remains cautious in the current environment, as government support decreases, and while most payment deferral measures have ended.

See Note 5 to the Condensed Interim Consolidated Financial Statements for additional information.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 17

TABLE 11

IMPAIRED LOANS

TABLE 11 IMPAIRED LOANS
				As at October 31,
In thousands of Canadian dollars, exceptpercentage amounts (Unaudited)	As at July31, 2021			2020
Gross impaired loans
Personal	$	18,111	$	36,105
Residential mortgages		62,616		65,846
Commercial (1)		185,158		170,786
		265,885		272,737
Allowances for loan losses on impaired loans (Stage 3)		(90,043)		(76,435)
Net impaired loans	$	175,842	$	196,302
Impaired loans as a % of loans and acceptances
Gross		0.81 %		0.82 %
Net		0.53 %		0.59 %
Allowances for loan losses against performing loans
Stage 1	$	(51,963)	$	(56,866)
Stage 2		(33,836)		(40,221)
	$	(85,799)	$	(97,087)

(1) Including customers' liabilities under acceptances.

Payment relief programs

Loans subject to payment relief programs still outstanding amounted to $38.1 million or 0.1% of the loan portfolio as at July 31, 2021 and consisted of commercial loans ($219.7 million mainly consisting of residential mortgage loans or 0.7% of the loan portfolio as at October 31, 2020). The Bank is monitoring the accounts which no longer benefit from the programs and its current assessment of the COVID-19 situation is that underlying losses should remain manageable. Refer to the section “Payment relief programs” on page 52 of the Bank's 2020 Annual Report and to Note 5 to the Consolidated Financial Statements for additional information.

MARKET RISK

Market risk is the financial loss that the Bank may incur due to unfavourable fluctuations in the value of financial instruments as a result of changes in the underlying factors used to measure them, such as interest rates, currency 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 net interest income and economic value of its capital. Dynamic management of structural interest rate risk is intended to maximize the Bank’s profitability while preserving the economic value of common shareholders’ equity.

The table below provides a measure of the sensitivity to changes in interest rates of the Bank as at July 31, 2021. As presented, 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 was as follows.

TABLE 12

SENSITIVITY ANALYSIS OF THE STRUCTURAL INTEREST RATE RISK

TABLE 12 SENSITIVITY ANALYSIS OF THE STRUCTURAL INTEREST RATE RISK
		As at July 31,		As at October 31,
In thousands of Canadian dollars (Unaudited)		2021		2020
Effect of a 1% increase in interest rates
Increase in net interest income before taxes over the next 12 months	$	12,231	$	23,476
Decrease in the economic value of common shareholders' equity(net of income taxes)	$	(39,093)	$	(36,690)

LIQUIDITY AND FUNDING RISK

Liquidity and funding risk is the possibility that the Bank may not be able to gather sufficient cash resources when required and on reasonable conditions, to meet its financial obligations. Financial obligations include obligations to depositors and suppliers, as well as lending commitments, investments and posting collateral requirements.

The Bank maintains liquidity and funding that is appropriate for the execution of its strategy, with liquidity and funding risk remaining well

within its approved limits.

The Bank monitors cash resources daily and ensures that liquidity indicators are within established limits, paying particular attention to deposit and loan maturities, as well as to funding availability and demand when planning financing. A reserve of unencumbered liquid assets that are readily available to face contingencies is maintained and constitutes the Bank's liquidity buffer. This reserve does not

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 18

factor in the availability of the central bank's emergency liquidity facilities. Requirements are based on scenarios evaluating required liquid assets necessary to cover predetermined rates of withdrawal of wholesale financing and retail deposits over specified periods.

The Bank originates deposits from Personal, Business and Institutional customers, and has access to wholesale financing from diversified sources. Personal deposits are sourced through multiple channels including the Quebec Retail Network, Advisors and Brokers, as well as the Digital Channel. Wholesale funding options include loan securitization and the issuance of equity or debt instruments through capital markets. Limits on funding sources are monitored by the Asset-Liability Committee, the Executive Committee and the Board of Directors.

The Bank also manages its liquidity to comply with the regulatory liquidity metrics in the OSFI domestic Liquidity Adequacy Requirements (LAR) Guideline. These regulatory metrics include the Liquidity Coverage Ratio (LCR), drawn on the BCBS international Basel III liquidity framework, and the OSFI-designed Net Cumulative Cash Flow (NCCF) supervisory tool. The LCR requires that banks maintain sufficient high-quality liquid assets to meet net short-term financial obligations over a thirty-day period in an acute stress scenario.

The Bank remained compliant with the LAR Guideline throughout the nine months ended July 31, 2021.

Credit ratings

Personal deposits, collected through the Quebec Retail Network as well as the Advisors and Brokers channel, constitute the most important source of financing for the Bank. The Bank also relies on the wholesale markets to obtain financing through securitization and unsecured financing. The Bank’s capacity to obtain such financing, especially wholesale funding, is tied to the credit ratings set by rating agencies such as DBRS Morningstar (DBRS) and Standard & Poor’s Global Ratings (S&P). Revisions of the Bank’s credit ratings may therefore influence financing operations, as well as other collateral obligations.

Changes to credit ratings could also impact the Bank's involvement with other operational banking arrangements. The Bank regularly monitors the impact of a hypothetical downgrade of its credit rating on collateral requirements. As at July 31, 2021, additional collateral that would be required in the event of a one-to-three-notch rating downgrade was not significant.

On April 15, 2021, DBRS revised its long-term rating trends on the Bank to stable from negative and affirmed the Bank’s “A (low)” and “R1 (low)” long and short term issuer credit ratings. On April 16, 2021, S&P revised its long-term rating outlook on the Bank to stable from negative and affirmed the Bank’s “BBB” and “A-2” long and short term issuer credit ratings.

Table 13 presents the Bank’s credit ratings as established by the rating agencies.

TABLE 13 CREDIT RATINGS

TABLE 13 CREDIT RATINGS
As at August 25, 2021
	DBRS	S&P
Long-term deposits and debt	A (low)	BBB
Covered bonds	AAA	n/a
Short-term instruments	R-1 (low)	A-2
NVCC Subordinated debt	BBB (low)	BB+
NVCC Limited recourse capital notes	BB (high)	BB-
NVCC Preferred shares	Pfd-3	BB-
Outlook	Stable (1)	Stable (2)

(1) Rating trends provide guidance in respect of DBRS’s opinion regarding the outlook for the rating in question, with rating trends falling into one of three categories: “Positive”, “Stable”, or “Negative”. The rating trend indicates the direction in which DBRS considers the rating is headed should present tendencies continue, or in some cases, unless challenges are addressed. A positive or negative trend is not an indication that a rating change is imminent. Generally, the conditions that lead to the assignment of a negative or positive trend are resolved within a 12 month period.

(2) An S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). In determining a rating outlook, consideration is given to any changes in the economic and/or fundamental business conditions. An outlook is not necessarily a precursor of a rating change or future action. The S&P rating outlooks have the following meanings: “Positive” means that a rating may be raised; “Negative” means that a rating may be lowered; “Stable” means that a rating is not likely to change; “Developing” means a rating may be raised or lowered.

Contractual maturities of assets and liabilities

The following tables provide remaining contractual maturity profiles of assets and liabilities at their carrying value (e.g., amortized cost or fair value) as at the following balance sheet dates. Details of contractual maturities are a source of information for the management of liquidity risk.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 19

TABLE 14

CONTRACTUAL MATURITIES OF ASSETS AND LIABILITIES

	As at July31, 2021
In thousands of Canadian dollars (Unaudited)	Term 0 to 3 months Over 3 months to 6 months Over 6 months to 9 months Over 9 months to 12 months Over 1 year to 2years Over 2 years to 5years Over 5years No specific maturity Total
Assets Cash and non-interest- bearing deposits with banks Interest-bearing deposits with banks Securities Securities purchased under reverse repurchase agreements Loans (1) Personal loans Residential mortgages Commercial loans Customers' liabilities under acceptances Allowances for loan losses	$ — $ — $ — $ — $ — $ — $ — $ 71,806 $ 71,806 558,983 — — 25,000 — — — 92,611 676,594 534,850 488,549 43,769 445,587 1,108,712 2,012,755 1,788,609 348,298 6,771,129 2,440,226 — 311,441 94,118 141,984 — — — 2,987,769 36,203 38,601 11,864 17,462 95,392 41,761 8,492 3,522,765 3,772,540 785,991 991,811 817,831 1,103,107 2,248,968 9,588,014 68,836 114,878 15,719,436 2,553,428 974,633 974,208 995,759 2,341,496 2,505,770 1,357,495 1,753,161 13,455,950 20,000 — — — — — — — 20,000 — — — — — — — (175,842) (175,842)
	3,395,622 2,005,045 1,803,903 2,116,328 4,685,856 12,135,545 1,434,823 5,214,962 32,792,084
Others	886 2,551 595 1,466 480 450 — 1,547,259 1,553,687
Total assets	$ 6,930,567 $ 2,496,145 $ 2,159,708 $ 2,682,499 $ 5,937,032 $ 14,148,750 $ 3,223,432 $ 7,274,936 $ 44,853,069
Liabilities and equity Deposits Personal deposits (1) Business, Banks and other deposits (1) Wholesale deposits Covered bonds	$ 1,466,759 $ 1,845,992 $ 1,684,945 $ 1,748,052 $ 3,371,195 $ 2,058,667 $ 28,251 $ 6,003,691 $ 18,207,552 144,637 72,812 175,898 232,298 107,169 40,515 1,070 1,728,369 2,502,768 498,168 354,800 — 255,187 748,672 345,845 — — 2,202,672 — — — — — 248,537 — — 248,537
	2,109,564 2,273,604 1,860,843 2,235,537 4,227,036 2,693,564 29,321 7,732,060 23,161,529
Obligations related to securities sold short (2) Obligations related to securities sold under repurchase agreements Other liabilities Debt related to securitization activities (3) Subordinated debt Equity	69,794 20,413 174,914 6,189 393,009 938,041 1,418,466 — 3,020,826 2,177,001 — 627,061 189,494 333,787 — — — 3,327,343 23,654 3,579 3,533 3,472 25,461 23,541 94,544 1,284,350 1,462,134 262,954 578,215 170,772 515,748 1,469,675 6,160,256 1,478,966 147,739 10,784,325 — — — 349,696 — — — — 349,696 — — — — — — — 2,747,216 2,747,216
Total liabilities and equity	$ 4,642,967 $ 2,875,811 $ 2,837,123 $ 3,300,136 $ 6,448,968 $ 9,815,402 $ 3,021,297 $ 11,911,365 $ 44,853,069

(1) Amounts collectible on demand are considered to have no specific maturity.

(2) Amounts are disclosed according to the remaining contractual maturity of the underlying security.

(3) Personal loan securitization cash flows are based on a behavioural prepayment model.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 20

As at October 31, 2020

	As at October 31, 2020
In thousands of Canadian dollars (Unaudited)	Term 0 to 3 months Over 3 months to 6 months Over 6 months to 9 months Over 9 months to 12 months Over 1 year to 2years Over 2 years to 5years Over 5years No specific maturity Total
Assets Cash and non-interest- bearing deposits with banks Interest-bearing deposits with banks Securities Securities purchased under reverse repurchase agreements Loans (1) Personal loans Residential mortgages Commercial loans Customers' liabilities under acceptances Allowances for loan losses	$ — $ — $ — $ — $ — $ — $ — $ 69,661 $ 69,661 482,960 — — 25,000 — — — 95,221 603,181 652,671 268,379 109,515 252,828 751,986 2,074,340 1,352,518 336,979 5,799,216 2,173,297 639,005 — 79,634 248,292 — — — 3,140,228 18,583 17,726 14,713 33,193 91,301 104,487 12,224 3,828,648 4,120,875 1,087,848 1,083,096 1,216,124 968,575 3,871,161 7,948,695 50,837 115,554 16,341,890 2,342,341 919,009 1,172,762 758,031 2,421,636 2,027,004 1,097,008 1,992,569 12,730,360 — — — — — — — — — — — — — — — — (173,522) (173,522)
	3,448,772 2,019,831 2,403,599 1,759,799 6,384,098 10,080,186 1,160,069 5,763,249 33,019,603
Others	2,924 604 615 688 4,041 685 — 1,526,214 1,535,771
Total assets	$ 6,760,624 $ 2,927,819 $ 2,513,729 $ 2,117,949 $ 7,388,417 $ 12,155,211 $ 2,512,587 $ 7,791,324 $ 44,167,660
Liabilities and equity Deposits Personal deposits (1) Business, Banks and other deposits (1) Institutional deposits	$ 2,166,644 $ 2,105,253 $ 1,671,329 $ 1,461,809 $ 3,358,456 $ 2,774,267 $ 28,893 $ 5,229,499 $ 18,796,150 244,701 160,147 206,613 146,803 170,395 46,704 844 1,663,364 2,639,571 416,900 648,000 — 238,450 778,610 402,522 — — 2,484,482
	2,828,245 2,913,400 1,877,942 1,847,062 4,307,461 3,223,493 29,737 6,892,863 23,920,203
Obligations related to securities sold short (2) Obligations related to securities sold under repurchase agreements Other liabilities Debt related to securitization activities (3) Subordinated debt Equity (4)	752,043 66,222 5,873 50,886 162,715 754,313 1,227,405 1,252 3,020,709 343,343 1,404,868 — 159,793 503,645 — — — 2,411,649 3,048 3,610 3,552 3,531 23,208 31,695 92,018 1,509,257 1,669,919 536,301 362,566 708,099 290,437 1,637,102 5,406,786 1,092,918 150,288 10,184,497 — — — — 349,442 — — — 349,442 — — — — — — — 2,611,241 2,611,241
Total liabilities and equity	$ 4,462,980 $ 4,750,666 $ 2,595,466 $ 2,351,709 $ 6,983,573 $ 9,416,287 $ 2,442,078 $ 11,164,901 $ 44,167,660

(1) Amounts collectible on demand are considered to have no specific maturity.

(2) Amounts are disclosed according to the remaining contractual maturity of the underlying security.

(3) Personal loan securitization cash flows are based on a behavioural prepayment model.

(4) Equity amounts have been reclassified in order to conform with the current year presentation.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 21

ADDITIONAL FINANCIAL INFORMATION - QUARTERLY RESULTS

TABLE 15

ADDITIONAL FINANCIAL INFORMATION - QUARTERLY RESULTS

In thousands of Canadian dollars, except per share and percentage amounts (Unaudited)		July 31, 2021		April 30, 2021	January 31, 2021	January 31, 2021	October 31, 2020	October 31, 2020		July 31, 2020		April 30, 2020	January 31, 2020	January 31, 2020	October 31, 2019	October 31, 2019
Net interest income	$	174,696	$	171,476	$	173,074	$	169,346	$	173,546	$	170,747	$	168,785	$	173,205
Other income		80,188		78,292		74,300		74,193		75,063		69,401		69,928		68,433
Total revenue		254,884		249,768		247,374		243,539		248,609		240,148		238,713		241,638
Amortization of net premium on
purchased financial instruments		—		—		—		100		127		179		232		284
Provision for credit losses		5,400		2,400		16,800		24,200		22,300		54,900		14,900		12,600
Non-interest expenses		170,258		179,561		174,063		177,592		183,777		183,516		188,902		180,828
Income before income taxes		79,226		67,807		56,511		41,647		42,405		1,553		34,679		47,926
Income taxes		17,162		14,745		11,692		4,836		6,188		(7,332)		2,507		6,583
Net income	$	62,064	$	53,062	$	44,819	$	36,811	$	36,217	$	8,885	$	32,172	$	41,343
Earnings per share
Basic	$	1.32	$	1.15	$	0.96	$	0.79	$	0.77	$	0.13	$	0.68	$	0.90
Diluted	$	1.32	$	1.15	$	0.96	$	0.79	$	0.77	$	0.13	$	0.68	$	0.90

CORPORATE GOVERNANCE AND CHANGES TO INTERNAL CONTROL OVER FINANCIAL REPORTING

During the third quarter ended July 31, 2021, there have been no changes to internal control over financial reporting that affected materially or are reasonably likely to materially affect ICFR.

The Board of Directors of Laurentian Bank of Canada approved this document prior to its release.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The significant accounting policies followed by the Bank are outlined in Notes 2 and 3 to the 2020 Annual Consolidated Financial Statements. The Condensed Interim Consolidated Financial Statements for the third quarter ended July 31, 2021 have been prepared in accordance with these accounting policies.

Some of these accounting policies are deemed critical as they require management to apply judgment in order to make particularly significant estimates that, by their very nature, involve uncertainties. Changes in these estimates could materially affect the Bank’s Consolidated Financial Statements. Refer to the section “Critical Accounting Policies and Estimates” of the Bank's 2020 Annual Report, as well as to Notes 2 and 3 to the 2020 Annual Consolidated Financial Statements. for additional information.

COVID-19 impact on judgments, estimates and assumptions

The preparation of financial information requires the use of estimates and judgments about future economic conditions. The global pandemic related to an outbreak of COVID-19 has amplified uncertainty on the assumptions used by management in making its judgments and estimates. The full extent of the impact that COVID-19, including government and/or regulatory responses to the pandemic, will have on the Canadian and U.S. economies and the Bank’s business is highly uncertain and difficult to predict at this time. Accordingly, there is a higher level of uncertainty with respect to management’s judgments and estimates. Refer to the section “Critical Accounting Policies and Estimations” of the Bank's 2020 Annual Report, as well as to Notes 2 and 3 to the 2020 Annual Consolidated Financial Statements.

FUTURE CHANGES TO ACCOUNTING POLICIES

The IASB has issued new standards and amendments to existing standards which are applicable for the Bank in various annual periods beginning on November 1, 2021. Except for the adoption of the Conceptual Framework for Financial Reporting as at November 1, 2020, there have been no significant updates to the future accounting changes disclosed in Note 4 of the 2020 Annual Consolidated Financial Statements and in the section “Future Accounting Changes” of the Bank's 2020 Annual Report.

THIRD QUARTER 2021 LAURENTIAN BANK FINANCIAL GROUP 22