PWC Capital Inc.

  • Date: 2016-01-29

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ANNUAL INFORMATION FORM For the year ended October 31, 2015

JANUARY 27, 2016

-2PWC CAPITAL INC. ANNUAL INFORMATION FORM Table of Contents Page CORPORATE STRUCTURE ...................................................................................................................... 3 Incorporation Inter-corporate Relationships GENERAL DEVELOPMENT OF THE BUSINESS ................................................................................... 4 PWC Capital Inc. Pacific & Western Bank of Canada DESCRIPTION OF THE BUSINESS .......................................................................................................... 4 (1) Deposit Services (2) Lending Services (a) Government Financings (b) Residential Multi-Family Mortgages (c) Commercial and Consumer Loans and Leases (d) Commercial Mortgages (e) Consumer Finance Treasury Assets Specialized Skills and Knowledge/Competitive Conditions Supervision and Regulation Employees and Principal Properties Risk Factors DIVIDENDS AND DISTRIBUTIONS ........................................................................................................ 8 PWC Capital Inc. Pacific & Western Bank of Canada DESCRIPTION OF CAPITAL STRUCTURE .......................................................................................... 10 Common Shares Class “A” Preferred Shares Class “B” Preferred Shares MARKET FOR SECURITIES ................................................................................................................... 13 DIRECTORS .............................................................................................................................................. 13 OFFICERS .................................................................................................................................................. 14 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS.......................... 15 MATERIAL CONTRACTS ....................................................................................................................... 16 TRANSFER AGENT.................................................................................................................................. 16 TRUSTEE ................................................................................................................................................... 16 EXPERTS ................................................................................................................................................... 17 AUDIT COMMITTEE INFORMATION .................................................................................................. 17 Audit Fees Audit-Related Fees Tax Fees ADDITIONAL INFORMATION ............................................................................................................... 18 EXHIBIT A –Audit Committee Mandate ................................................................................................... 19 Caution Regarding Forward-Looking Statements The Corporation occasionally makes forward-looking statements about its objectives, operations and targeted financial results. These statements may be written or verbal and may be included in such things as press releases, corporate presentations, Annual Reports and other disclosure documents and communications. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. A number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian economy in general and the strength of local economies within Canada in which the

-3Corporation conducts operations; the effect of changes in interest rates; the effects of competition in the markets in which the Corporation operates; capital market fluctuations; and, the impact of changes in laws and regulations. When relying on forward-looking statements to make decisions, investors and others should carefully consider these factors and other uncertainties or potential events. Except as required by securities law, the Corporation makes no undertaking to update any forward-looking statement that is made from time to time by the Corporation. Information Unless otherwise noted, all information is given as at October 31, 2015. Financial information is based on the audited consolidated financial statements of PWC Capital Inc., for the year ended October 31, 2015, and all monetary amounts are expressed in Canadian Dollars.

CORPORATE STRUCTURE Incorporation PWC Capital Inc. (the “Corporation”), was originally incorporated on November 17, 1970 under the Companies Act (Alberta). The Corporation was continued under the Canada Business Corporations Act on March 16, 1987. The Corporation amalgamated with PacWest Ventures Ltd. on January 1, 2002 and retained the name Pacific & Western Credit Corp. The Corporation’s shares began trading on the Toronto Stock Exchange on January 1, 2002. On April 2, 2014 the Corporation changed its name to PWC Capital Inc. On August 1, 2002, the Corporation’s principal subsidiary was continued as Pacific & Western Bank of Canada (the “Bank”), under the Bank Act (Canada). The Bank Act (Canada) is the governing legislation of the Bank. The Bank’s common shares began trading on the Toronto Stock Exchange on August 27, 2013. The head and registered office of the Corporation is Suite 2002–140 Fullarton Street, London, Ontario N6A 5P2. The fiscal year end of the Corporation is October 31. Inter-corporate Relationships The following chart summarizes the primary corporate structure of the Corporation, the jurisdiction of incorporation of each corporate entity and percentage of votes attached to all securities beneficially owned or over which control is exercised by the Corporation.

PWC Capital Inc. (Canada Business Corporations Act)

~65%

Pacific & Western Bank of Canada (Bank Act (Canada))

-4GENERAL DEVELOPMENT OF THE BUSINESS PWC Capital Inc. The Corporation is a holding company with its securities listed on the Toronto Stock Exchange (“TSX”). Its principal operating subsidiary is the Bank, which provides lending services to selected niche markets and receives deposits through a diversified deposit broker network. At January 27, 2016, the Corporation owns approximately 65% of the securities of the Bank. Prior to March 7, 2013, the Corporation held $30.0 million of subordinated notes issued by the Bank. On March 7, 2013, the Bank repaid the entire $30.0 million of subordinated debt it owed to the Corporation. In turn, the Corporation used the proceeds to subscribe for additional common shares of the Bank. During 2016, the Corporation expects that its ownership interest in the Bank will continue to reduce. Pacific & Western Bank of Canada During 2013 the Bank completed an initial public offering of its common shares and on August 27, 2013 the Bank’s common shares began trading on the Toronto Stock Exchange. During 2014, the Bank completed an offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 1 (“Series 1 Preferred Shares”), which qualify as Tier 1 capital of the Bank. The Bank’s Series 1 Preferred Shares began trading on the Toronto Stock Exchange on October 30, 2014. During 2015, the Bank completed an offering of Non-Cumulative 6-Year Rate Reset Preferred Shares, Series 3 (Non-Viability Contingent Capital (NVCC)) (“Series 3 Preferred Shares”), which qualify as Tier 1 capital of the Bank. The Bank’s Series 3 Preferred Shares began trading on the Toronto Stock Exchange on February 19, 2015. The Bank, a technologically proficient Schedule I chartered bank, operates under the Bank Act and is a member institution of the Canada Deposit Insurance Corporation (“CDIC”). The Bank operates using an “electronic branchless model” and sources deposits, consumer loans, commercial loans and leases electronically. The Bank also makes residential development and commercial mortgages it sources through a well-established network of brokers and direct contact with its lending staff. The Bank plans to increase profitability over the course of 2016 primarily through the growth of its lending programs, specifically its bulk receivable purchase program, and to continue the diversification and expansion of the Bank’s deposit gathering system. DESCRIPTION OF THE BUSINESS The Bank has two primary business activities, (1) deposit services and (2) lending services. (1)

Deposit Services

Deposit services are located in Saskatoon, Saskatchewan. Deposits, consisting of guaranteed investment certificates, tax free savings accounts, registered retirement saving plan accounts, and daily interest savings accounts, eligible for CDIC insurance, are raised through a diversified network of financial advisors and deposit brokers across Canada. The Bank also raises deposits through its trustee in bankruptcy deposit program. The Bank’s branchless model and innovative in-house developed software enable it to efficiently process deposit transactions without a substantial investment in fixed assets or employees. At October 31, 2015, deposits totalled approximately $1.3 billion, including $111 million from its trustee integrated banking program. At October 31, 2014, deposits totalled approximately $1.2 billion, including $84 million from its trustee integrated banking program. In fiscal 2016, the Bank plans to continue to grow its trustee integrated banking program, while also leveraging the infrastructure and experience

-5gained via the development of the trustee integrated banking program to access additional, niche, low cost deposit markets. (2) Lending Services The Bank’s lending portfolio is categorized into: (a) government financings, (b) residential multi-family mortgages, (c) bulk purchases of loan and lease contract receivables that are derived from commercial and consumer loans and leases, (d) commercial mortgages, and (e) consumer finance. These lending segments are supported by the Bank’s lending team on a regional basis, through representatives in the Vancouver and Toronto regions, and out of offices in London, Ontario; Waterloo, Ontario; and Saskatoon, Saskatchewan. This allows the lending team to leverage local and regional business knowledge and established lending relationships when sourcing and structuring lending transactions. The Bank places an emphasis on lending in niche markets that have lower than average administrative requirements. This includes bulk purchases of loan and lease contract receivables that are derived from commercial and consumer loans and leases sourced primarily through the Bank’s bulk receivable purchase program. In addition, the Bank finances a select number of real estate developers, primarily in Southwestern Ontario. The Bank also provides consumer financing through its private label credit card program. In 2016, the Bank expects that lending assets will increase, with the primary area of growth expected to come from commercial mortgages and contract receivables derived from commercial and consumer loans and leases sourced through the bulk receivable purchase program. (a) Government Financings Government financings consist of loans and leases to hospitals and school boards and federal, provincial, territorial and municipal governments. At October 31, 2015, assets in this portfolio totalled $72.2 million or 4% of total assets and gross revenue was $2.2 million or 3% of total gross revenue. At October 31, 2014, assets in this portfolio totalled $87.3 million or 6% of total assets and gross revenue was $3.6 million or 6% of total gross revenue. Total gross revenue is a combination of interest income and fee income. The decrease in government financings from fiscal 2014 to fiscal 2015 is a result of a reduced focus on government financing due to market conditions. The Bank does not expect this portfolio to increase in the coming year due to the emphasis on commercial and consumer financing opportunities, particularly the bulk receivable purchase program. (b) Residential Multi-Family Mortgages The Bank has insured and uninsured residential mortgages outstanding which are comprised primarily of multi-family residential units. At October 31, 2015, assets in this portfolio were $112.8 million or 7% of total assets, and gross revenue was $5.4 million or 8% of total gross revenue. At October 31, 2014, assets in this portfolio were $122.7 million or 8% of total assets and gross revenue was $5.8 million or 10% of total gross revenue.

-6(c) Commercial and Consumer Loans and Leases Commercial and consumer loans and leases consist primarily of commercial loans to corporations and commercial and consumer loans and lease receivables sourced through the bulk receivable purchase program. As at October 31, 2015, assets in this portfolio totalled $783.8 million or 48% of total assets and gross revenue contributed was $30.4 million or 46% of total gross revenue. At October 31, 2014, assets in this portfolio totalled $548.2 million or 38% of total assets and gross revenue was $19.2 million or 32% of total gross revenue. The Bank expects this portfolio to be a key growth driver for lending in the coming year. (d) Commercial Mortgages Commercial mortgages consist primarily of residential and commercial construction and term mortgages primarily in Southwestern Ontario. As at October 31, 2015, assets in this portfolio totalled $445.9 million or 27% of total assets and gross revenue contributed was $21.3 million or 32% of total gross revenue. At October 31, 2014, assets in this portfolio totalled $432.6 million or 30% of total assets and gross revenue was $23.7 million or 40% of total gross revenue. The increase in commercial mortgages was primarily due to the timing of transactions. (e) Consumer Finance Currently, the Bank’s consumer finance business is comprised of the issuance of a private-label credit card called the Home Credit Card, in cooperation with the Bank’s retail business partner Home Hardware Stores Limited (“Home Hardware”). The Home Credit Card offers financing terms exclusively to Home Hardware’s consumers for the purpose of financing a broad spectrum of home improvement related purchases. The Bank continues to review and assess opportunities in the consumer finance space. At October 31, 2015, assets in this portfolio totalled $27.4 million or 2% of total assets, and gross revenue, in the form of interest income and fees, was $4.9 million or 7% of total gross revenue. At October 31, 2014, assets in this portfolio totalled $28.0 million or 2% of total assets, and gross revenue, in the form of interest income and fees, was $4.2 million or 7% of total gross revenue. Treasury Assets Treasury assets are in the form of cash, government securities, term deposits and debt of other financial institutions, and are held primarily for liquidity management purposes. At October 31, 2015, assets in the treasury portfolio totalled $153.0 million or 9% of total assets and gross revenue was $1.5 million or 2% of total gross revenue. At October 31, 2014, assets in this portfolio were $196.1 million or 14% of total assets and gross revenue was $2.9 million or 5% of total gross revenue.

-7Specialized Skills and Knowledge / Competitive Conditions The Canadian financial services industry is highly developed and competitive. While many of Canada’s financial institutions carry on full service businesses, the Bank operates according to a different business model, as it focuses on raising deposits without branches and it reinvests these funds in loans and leases in the Bank’s target markets. The Bank faces competition in attracting deposits from virtually all other large and small Canadian institutions that raise deposits. The Bank has strong long term relationships with its national network of deposit brokers, and has developed its own software and systems to enable it to efficiently process deposit instruments through this network. As a result, the Bank is in a strong competitive position by being able to handle a large volume of deposits with a minimal number of employees. With its lending programs, the Bank competes with other Canadian financial institutions, both large and small. The Bank differentiates itself and reduces the prospect of direct competition by focusing on lending within markets that contain fewer administration requirements, are under-serviced, and in which the Bank’s employees have particular skills and experience. The Bank has a comprehensive set of investment and lending policies and procedures that govern this aspect of the Bank’s business. Another advantage that the Bank has over its competitors is that it does not have a significant investment in fixed assets. By raising deposits through a deposit broker network across Canada, the Bank does not have the physical locations and branches it would otherwise need. Supervision and Regulation The Bank’s activities are governed by the Bank Act (Canada). In accordance with the Bank Act, banks may engage in and carry on the business of banking and such business generally as pertains to the business of banking. The Ministry of Finance or the Superintendent of Financial Institutions (Canada) (the “Superintendent”) is responsible to the Minister of Finance (Canada) for the administration of the Bank Act. The Superintendent provides guidelines regarding disclosure of a bank's financial information and is also required to make an annual examination of each bank to ensure compliance with the Bank Act and to monitor each bank’s financial condition and intervene, when necessary, when a bank fails. Banks have broad powers to invest in the securities of other corporations and entities, but the Bank Act imposes limits upon substantial investments. Under the Bank Act, generally a bank has a substantial investment in a body corporate when (i) the voting shares beneficially owned by the bank and by entities controlled by the bank exceed 10% of the outstanding voting shares of the body corporate or (ii) the total of the shares of the body corporate that are beneficially owned by the bank and entities controlled by the bank represent more than 25% of the total shareholders’ equity of the body corporate. A Canadian chartered bank is permitted to have a substantial investment in entities whose activities are consistent with those of certain prescribed permitted substantial investments. In general, a bank will be permitted to invest in an entity that carries on any financial service activity whether that entity is regulated or not. Further, a bank may invest in entities that carry on commercial activities that are related to the promotion, sale, delivery or distribution of a financial product or service, or that relate to certain information services. A bank may also invest in entities that invest in real property, act as mutual funds or mutual fund distributors or that service financial institutions, and a bank may have downstream holding companies to hold these investments. In certain cases, the approval of the Superintendent is required prior to making the investment and/or the bank is required to control the entity. Banks may, by way of temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity for a two year period. This time period may be extended upon application to the Superintendent. Other than for authorized types of insurance, chartered banks may offer insurance products only through their subsidiaries and not through their branch systems. Banks are prohibited from engaging in automobile leasing.

-8Employees and Principal Properties The Corporation operates out of a leased office located in London, Ontario. David Taylor is the President and Chief Executive Officer of the Corporation, Barry Walter is the Senior Vice President & Chief Financial Officer and Cameron Mitchell is the Vice President, General Counsel & Corporate Secretary of the Corporation. The Bank operates out of leased offices located in London, Ontario; Waterloo, Ontario; and, Saskatoon, Saskatchewan. As at October 31, 2015, the Bank had 79 full time employees operating out of those offices. Risk Factors The risks faced by the Corporation are described on pages 35 to 44 of the Management’s Discussion and Analysis for the year ended October 31, 2015, which pages are incorporated herein by reference. DIVIDENDS AND DISTRIBUTIONS PWC Capital Inc. Common Shares While there are no restrictions in the Corporation’s Articles prohibiting the declaration of dividends on common shares, the Corporation does not currently pay such dividends. Preferred Shares The holders of the Class “A” Preferred Shares (“Pref A Shares”) of the Corporation are entitled to receive, as and when declared by the Board of Directors of the Corporation (the “Board”), fixed preferential cumulative cash dividends at the rate of 7% of the issue price per share. At December 31, 2015, the Corporation paid dividends to the holders of its Pref A Shares at the rate of $0.21 per share. It has paid such dividends since December 31, 2002. It is anticipated that dividends will also be paid in 2016. At the Annual and Special Meeting of Shareholders held on April 9, 2015, holders of common shares and holders of Class “B” Preferred Shares (“Pref B Shares”) approved amendments to the terms of the dividend provisions of the Pref B Shares. As of June 30, 2015, holders of Pref B Shares are entitled to receive, as and when declared by the Board, fixed subordinated cumulative dividends at the rate of $1.68 per share per annum, payable in cash. Such dividends are paid quarterly on the last day of March, June, September and December in each year. Prior to June 30, 2015, holders of Pref B Shares were entitled to receive, as and when declared by the Board, fixed subordinated cumulative dividends at the rate of $2.25 per share per annum,$0.84 of which was paid by the Corporation in cash and the remaining d$1.41 was paid by the Corporation in cash or common shares of the Corporation, at the Corporation’s sole discretion. Such dividends were paid quarterly on the last day of March, June, September and December in each year. On June 30, 2015, September 30, 2015 and December 31, 2015, the Corporation paid cash dividends to the holders of Pref B Shares at the rate of $1.68 per Pref B Share per annum. On March 31, 2015, as well as in 2014, 2013, and all prior periods since their issuance, the Corporation paid dividends to the holders of its Pref B Shares at the rate of $2.25 per Pref B Share per annum, wherein $0.84 per Pref B Share per annum was paid in cash and the remainder was paid in common shares of the Corporation. It is anticipated that dividends will continue to be paid in 2016.

-9Series C Notes At a special meeting of the holders of Series C Notes, held on March 7, 2013, the holders of Series C Notes approved amendments to the Series C Note indenture. Specifically, the Series C Note indenture was modified so that, as at June 30, 2014, and provided that the Corporation’s subsidiary, the Bank, had completed its initial public offering (“IPO”) and the Bank's common shares had been listed on the TSX, the Corporation had the option to satisfy all future interest obligations of its issued and outstanding Series C Notes either in cash or in-kind in the form of common shares of the Bank held by the Corporation. The number of common shares of the Bank to be transferred to satisfy any in-kind payments on the Series C Notes is based on a five day volume weighted average trading price of the Bank’s common shares on the TSX as of the payment date. The Series C Note indenture was also modified to make, at the option of the holder, the Series C Notes convertible into common shares of the Bank held by the Corporation. The conversion price was fixed at the greater of $10.00 per common share or the IPO price of the Bank’s common shares until October 16, 2016, and thereafter at the greater of $12.00 per common share or the IPO price of the Bank’s common shares until maturity of the Series C Notes on October 16, 2018. Further information regarding these matters can be found under the Corporation’s profile on SEDAR (www.sedar.com). Upon request, the Corporation will promptly provide a copy of this material free of charge to a shareholder. To request a copy of material, contact the Corporate Secretary of the Corporation at Suite 2002-140 Fullarton Street, London, Ontario N6A 5P2, telephone (519) 675-4201. The effectiveness of the proposed amendments were conditional upon the Bank completing its IPO and its common shares being listed on the TSX, both of which were completed on August 27, 2013. In accordance with the modifications made to the Series C Note indenture, the Corporation elected to make the interest payments on its Series C Notes by way of a transfer of common shares of the Bank held by the Corporation, as follows: Interest Payment Date

December 31, 2015 June 30, 2015 December 31, 2014 June 30, 2014

Number of Bank common shares held by the Corporation transferred to Series C Noteholders 493,725 509,579 471,266 458,000

Price per Bank common share

$5.624 $5.449 $5.892 $6.063

Other Distributions On June 30, 2014 and on September 4, 2014, the Corporation transferred a total of 51,222 common shares of the Bank held by the Corporation to settle amounts owing to former directors resulting from deferred share units of the Corporation held by those directors. On May 11, 2015, the Corporation also transferred a total of 335,900 common shares of the Bank held by the Corporation to repay notes payable totaling $2,420,000. Pacific & Western Bank of Canada Common Shares While there are no restrictions in the Bank’s By-Laws prohibiting the declaration of dividends on Common Shares, the Bank does not currently pay such dividends.

- 10 Preferred Shares Holders of Series 1 Preferred Shares of the Bank are entitled to receive, as and when declared by the Board of Directors (“Board”), fixed non-cumulative preferential cash dividends at the rate of $0.70 per share per annum, or $0.175 per share per quarter. Such dividends are paid quarterly on the last day of January, April, July and October in each year. The Series 1 Preferred Shares were listed and posted for trading on the Toronto Stock Exchange on October 30, 2014 and, accordingly, no dividends were payable in fiscal 2014. On January 8, 2015, the Board declared an initial quarterly cash dividend on the Series 1 Preferred Shares, payable on January 31, 2015, in the amount of $0.176 per Series 1 Preferred Share. Thereafter, on April 30, 2015, July 31, 2015 and October 31, 2015 the Bank paid quarterly cash dividends to holders of Series 1 Preferred Shares at the rate of $0.175 per Series 1 Preferred Share. In addition, the Board has declared a quarterly cash dividend on the Series 1 Preferred Shares, payable on January 31, 2016, at the rate of $0.175 per Series 1 Preferred Share. The Bank anticipates that dividends at the rate of $0.175 per Series 1 Preferred Share will continue to be paid quarterly in 2016. Holders of Series 3 Preferred Shares of the Bank are entitled to receive, as and when declared by the Board, fixed non-cumulative preferential cash dividends at the rate of $0.70 per share per annum, or $0.175 per share per quarter. Such dividends are paid quarterly on the last day of January, April, July and October in each year. The Series 3 Preferred Shares were listed and posted for trading on the Toronto Stock Exchange on February 19, 2015. On June 25, 2015, an initial quarterly cash dividend was declared on the Series 3 Preferred Shares, payable on July 31, 2015, in the amount of $0.2992 per Series 3 Preferred Share. On October 31, 2015, the Bank paid a quarterly cash dividend to holders of Series 3 Preferred Shares at the rate of $0.175 per Series 1 Preferred Share. In addition, the Board has declared a quarterly cash dividend on the Series 3 Preferred Shares, payable on January 31, 2016, at the rate of $0.175 per Series 3 Preferred Share. The Bank anticipates that dividends at the rate of $0.175 per Series 3 Preferred Share will continue to be paid quarterly in 2016. DESCRIPTION OF CAPITAL STRUCTURE The Corporation is authorized to issue an unlimited number of common shares and an unlimited number of Pref A Shares and Pref B Shares of the Corporation (collectively, the "Preferred Shares"). Below is a summary of the Corporation’s share capital. This is qualified in its entirety by the Corporation’s Articles of Incorporation and the actual terms and conditions of such shares. The Corporation currently has Normal Course Issuers Bids (“NCIB”) outstanding for its common shares, Pref B Shares and Series C Notes. The NCIBs commenced on March 16, 2015 and will terminate on March 15, 2016, or such earlier date as the Corporation may complete its purchases pursuant to the NCIBs. The Corporation has repurchased and cancelled $19,000 Series C Notes pursuant to the Series C Note NCIB. No repurchases have occurred under the Corporation’s common shares NCIB or its Pref B Shares NCIB. Common Shares The Corporation is authorized to issue an unlimited number of common shares. There were 44,592,260 common shares outstanding at October 31, 2015. Holders of the Corporation’s common shares are entitled to vote at all meetings of the shareholders, except for meetings at which only holders of another specified class or series of shares of the Corporation are entitled to vote separately as a class or series.

- 11 Holders of the Corporation’s common shares are entitled to receive dividends as and when declared by the Board, subject to the preference of the Preferred Shares. In the event of the dissolution, liquidation or winding-up of the Corporation, subject to the prior rights of the holders of Pref A Shares, and the holders of Pref B Shares, the holders of common shares shall be entitled to receive the remaining property and assets of the Corporation. Class “A” Preferred Shares The Corporation is authorized to issue an unlimited number of Pref A Shares. These shares are nonvoting, non-participating and redeemable in certain circumstances at the option of the Corporation at the issue price, and are convertible by the holder into common shares on the basis of 4.608 Pref A Shares converting to 1 common share. There were 314,572 Pref A Shares outstanding at October 31, 2015. The Pref A Shares are entitled to preference over the common shares, and are entitled to preference over the Pref B shares, with respect to the payment of dividends and upon any distribution of assets in the event of liquidation, dissolution or winding-up of the Corporation. The holders of Pref A Shares are entitled to receive, as and when declared by the Board of Directors, fixed preferential cumulative cash dividends at an annual rate of $0.21 per share. Any approval to be given by the holders of Pref A Shares may be given by a resolution carried by the affirmative vote of not less than two-thirds of the votes cast at a meeting of holders of Pref A Shares at which a majority of the outstanding Pref A Shares is represented or, if no quorum is present, by twothirds of votes cast at any adjourned meeting. The Corporation may redeem all, at any time, and part, from time to time, of the then outstanding Pref A Shares on payment for each share to be redeemed of $3.00, together with accrued and unpaid cumulative preferential dividends. While any Pref A Shares are outstanding, the Corporation will not, without the approval of the holders of Pref A Shares: (i) declare, set aside for payment or pay any dividends on or make distributions on or in respect of the common shares; or (ii) call for redemption, redeem, purchase, retire or acquire for value or distribute in respect of any common shares, or (iii) reserve, set aside, allot or issue any shares ranking as to capital or dividends prior to or on parity with the Pref A Shares or any securities convertible into or exchangeable for such shares, unless, in each such case, all dividends then payable on the Pref A Shares then outstanding or accrued up to and including the dividends payable on the immediately preceding respective date for the payment of dividends thereon shall have been declared and paid or set apart for payment. Subject to the above and on certain conditions, the Corporation may at any time and from time to time purchase for cancellation all or any part of the then outstanding Pref A Shares in the open market or by invitation for tenders addressed to all holders of Pref A Shares then outstanding. Class “B” Preferred Shares The Corporation is authorized to issue an unlimited number of Pref B Shares. The Pref B Shares are nonvoting, non-participating and redeemable by the Corporation, at its discretion, on or after June 30, 2014,

- 12 but must be redeemed by the Corporation by no later than June 30, 2019, in each case for $25.00 in cash per Pref B Share. There were 1,909,458 Pref B Shares outstanding at October 31, 2015. At the Annual and Special Meeting of Shareholders held on April 9, 2015, holders of common shares and holders of Pref B Shares approved amendments to the terms of the of the Pref B Shares, including: 1. The dividend provisions were amended such that holders of Pref B Shares of the Corporation are entitled to receive, as and when declared by the Board of Directors, fixed subordinated cumulative dividends at the rate of $1.68 per share per annum, payable in cash. See the “Dividends and Distributions” section above for additional details regarding this amendment. 2. The conversion provisions were amended such that each holder of Pref B Shares has the right, at its option, at any time to convert into common shares of the Corporation on the basis of 12.5 common shares of the Corporation for each Pref B Share. Prior to the amendment, holders of Pref B shares had the right to convert into common shares of the Corporation on the basis of 5 common shares of the Corporation for each Pref B Share. The Pref B Share terms were also amended to add the right for the Corporation, within 30 days of the approval of the articles of amendment, to offer to redeem up to 800,000 Pref B Shares for 3.425 common shares of the Bank held by the Corporation for each Pref B Share redeemed. The Corporation announced its intention to exercise this redemption right on April 20, 2015. Holders of Pref B Shares had until May 22, 2015 to surrender their Pref B Shares to the Corporation for redemption. The Corporation’s redemption offer resulted in 800,000 Pref B shares being redeemed and the transfer of an aggregate of 2,740,000 common shares of the Bank held by the Corporation to holders of Pref B Shares. The Pref B Shares are subordinate to the Pref A Shares with respect to the payment of dividends and the distribution of assets on dissolution, liquidation or winding-up of the Corporation, but are entitled to preference over the common shares with respect to the payment of dividends and upon any distribution of assets in the event of liquidation, dissolution or winding-up of the Corporation. Any approval to be given by the holders of Pref B Shares may be given by a resolution carried by the affirmative vote of not less than two-thirds of the votes cast at a meeting of the holders of Pref B Shares, at which the holders of at least 1% of the outstanding Pref B Shares are represented or, if no quorum is present, by two-thirds of votes cast at any adjourned meeting. While any Pref B Shares are outstanding, the Corporation will not, without the approval of the holders of Pref B Shares: (iv) declare, set aside for payment or pay any dividends on or make distributions on or in respect of the common shares; or (v) call for redemption, redeem, purchase, retire or acquire for value or distribute in respect of any common shares, or (vi) reserve, set aside, allot or issue any shares ranking as to capital or dividends prior to or on parity with the Pref B Shares or any securities convertible into or exchangeable for such shares, unless, in each such case, all dividends then payable on the Pref B Shares then outstanding or accrued up to and including the dividends payable on the immediately preceding respective date for the payment of dividends thereon shall have been declared and paid or set apart for payment. Subject to the above and on certain conditions, the Corporation may at any time and from time to time purchase for cancellation all or any part of the then outstanding Pref B Shares in the open market or by invitation for tenders addressed to all holders of Pref B Shares then outstanding.

- 13 MARKET FOR SECURITIES The Corporation’s securities are listed and posted for trading on the Toronto Stock Exchange. The trading symbols are as follows: Common Shares Class “A” Preferred Shares Class “B” Preferred Shares Series C Promissory Notes

Month

COMMON SHARES High Low

Oct 2015 Sep 2015 Aug 2015 Jul 2015 Jun 2015 May 2015 Apr 2015 Mar 2015 Feb 2015 Jan 2015 Dec 2014 Nov 2014

0.200 0.200 0.235 0.270 0.285 0.270 0.260 0.275 0.290 0.385 0.430 0.450

0.125 0.130 0.150 0.185 0.210 0.190 0.205 0.230 0.225 0.250 0.205 0.355

-

PWC PWC.PR.A PWC.PR.B PWC.NT.C

Trading Volume 561,708 389,173 215,126 343,003 1,433,060 718,247 530,852 383,959 662,234 295,492 1,232,639 511,992

CLASS “A” PREFERREDS High Low Trading Volume 2.500 2.500 6,500 2.700 2.500 3,000 2.440 2.220 2,000 2.900 2.550 3,000 2.550 1.500 61,300 2.000 1.500 3,100 1.500 1.250 44,700 1.750 1.000 6,100 -

CLASS “B” PREFERREDS High Low Trading Volume 18.000 16.000 5,897 17.500 14.480 4,650 16.000 15.000 5,549 18.500 15.500 4,387 18.250 15.300 13,063 19.000 17.250 17,687 18.750 15.260 34,567 16.000 13.220 44,165 15.240 12.060 48,278 16.610 14.050 10,935 18.000 11.560 32,978 12.720 11.530 58,052

SERIES C PROMISSORY NOTES Month High Low Trading Volume Oct 2015 72.000 68.500 640 Sep 2015 74.000 68.000 910 Aug 2015 75.030 72.000 380 Jul 2015 77.000 75.000 480 Jun 2015 80.000 72.500 2,190 May 2015 81.000 76.020 1,830 Apr 2015 79.160 72.000 1,436 Mar 2015 75.000 68.550 2,260 Feb 2015 75.000 71.000 4,280 Jan 2015 77.000 72.000 49,780 Dec 2014 73.000 71.370 3,580 Nov 2014 74.000 72.000 4,590

DIRECTORS The names, municipalities of residence, positions held with the Corporation, and principal occupations of its directors, as at January 27, 2016, are as follows:

- 14 -

Name William T. Mitchell Etobicoke, Ontario

Office Held and Time as Director Chairman

Principal Occupation Retired, former senior partner of PricewaterhouseCoopers LLP

Director since April 2, 2004 Director of the Bank from August 1, 2002 to March 28, 2013

David R. Taylor(3) Ilderton, Ontario

President and Chief Executive Officer

President and Chief Executive Officer of the Corporation and the Bank

Director since January 18, 1993 Patrick M. George Breslau, Ontario

(1)(2)

Director since March 28, 2013

President, GA Masonry

Paul G. Oliver (1)(2)(3) Markham, Ontario

Director since June 2, 2005

Retired, former senior partner of PricewaterhouseCoopers LLP

J. S. (Steve) Wilson(1)(2) London, Ontario

Director since December 2, 2015

Retired, former senior partner of PricewaterhouseCoopers LLP

(1) (2) (3)

Member of the Audit Committee. Member of the HR, Nominating & Governance Committee. Also a Director of the Bank.

OFFICERS The names, municipalities of residence, positions held with the Corporation, and principal occupations of its officers, as at January 27, 2016, are as follows:

Name

Office Held

Principal Occupation

David R. Taylor Ilderton, Ontario

President and Chief Executive Officer

President and Chief Executive Officer of the Corporation and the Bank

Barry D. Walter Saskatoon, Saskatchewan

Senior Vice President and Chief Financial Officer

Senior Vice President and Chief Financial Officer of the Bank

Cameron Mitchell Kitchener, Ontario

Vice President, General Counsel and Corporate Secretary

Corporate Secretary of the Bank

At January 27, 2016, there were 44,592,260 issued and outstanding common shares of the Corporation. The directors and senior officers of the Corporation as a group beneficially own, directly or indirectly, or have control or direction over 3,171,540 common shares of the Corporation, representing approximately 7.11% of the total number of common shares outstanding. At January 27, 2016, there were 19,437,171 issued and outstanding common shares of the Bank, the Corporation’s subsidiary. The directors and senior officers of the Corporation as a group beneficially own, directly or indirectly, or have control or direction over 720,305common shares of the Bank, representing approximately 3.71% of the total number of common shares outstanding.

- 15 At January 27, 2016, Patrick George, a director of the Corporation, owns 835,082 common shares of the Corporation, which are included in the directors and senior officers’ aggregate number noted above. In addition, Mr. George owns 5,000 Class A Preferred Shares, 682 Class B Preferred Shares, and $5,368,000 Series C Notes of the Corporation. Patrick George’s spouse also owns securities of the Corporation. Mr. George does not beneficially own, nor does he have control or direction over, those holdings. To the knowledge of the Corporation, Mr. George’s spouse owns approximately 2,435,000 common shares of the Corporation, as well as approximately 400 Class B Preferred Shares and $505,000 Series C Notes of the Corporation. Certain of the Corporation’s directors and officers serve as directors and officers of other companies and, therefore, it is possible that a conflict may arise between their duties to the Corporation and their duties as a director or officer of such other companies. Patrick George is a shareholder, director and the President of 340268 Ontario Limited (“340268”), which is itself an insider of the Corporation. 340268 owns 7,055,624 common shares of the Corporation, and $22,499,000 Series C Notes of the Corporation. 340268 also owns $6 million of short-term notes of the Corporation, with an interest rate of 7.5% per annum and maturing on January 1, 2017. The terms of the $6 million subordinated notes were comparable to what the Corporation would have obtained from an arm’s-length party and they were approved by the Board with Mr. George recusing himself from discussions and voting. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than as disclosed below, (a) no director or executive officer of the Corporation; (b) no person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10 percent of any class or series of outstanding voting securities of the Corporation; and, (c) no associate or affiliate of any of the persons or companies referred to in (a) or (b) has any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected the Corporation or any of its subsidiaries, or is reasonably expected to materially affect the Corporation or any of its subsidiaries. At the Annual and Special Meeting of the Corporation held on March 22, 2012, further information in respect of which is contained in the management proxy circular of the Corporation in respect of such meeting dated January 25, 2012 (the “2012 Circular”), which is available under the Corporation's profile on SEDAR (www.sedar.com), the shareholders of the Corporation approved a Share Subscription Transaction (as defined in the 2012 Circular) between the Corporation and 340268. Pursuant to the Share Subscription Transaction, 340268 agreed to apply all future semi-annual interest payments payable by the Corporation to 340268 in respect of $18,722,000 principal amount of Series C Notes held by 340268, each such interest payment being $842,490, towards the semi-annual subscription of common shares of the Corporation by 340268 on each interest payment date, being June 30 and December 31 each year during which the Series C Notes are outstanding. Subsequently, the Corporation advised 340268 of its intention to deliver to 340268 the cash interest on the applicable Series C Notes on and after June 30, 2015. The Corporation also indicated that it may elect to deliver the cash interest on the applicable Series C Notes prior to June 30, 2015 and 340268 may advise the Corporation that it wishes to continue to apply the interest payments towards the subscription for common shares of the Corporation via private placement in respect of and after June 30, 2015. As set out within the 2012 Circular, shareholder approval was sought as the Corporation believed that the issuance of common shares to 340268 pursuant to the Share Subscription Transaction could eventually result in 340268 holding more than 20% of the voting securities of the Corporation, and thus could eventually “materially affect control” of the Corporation. Due to that potential eventuality, the rules and

- 16 policies of the TSX required the Corporation to obtain security holder approval in respect of the transaction. Shareholder approval for the Share Subscription Transaction was obtained on March 22, 2012 at a meeting of the Corporation’s holders of common shares. Pursuant to the Share Subscription Transaction, both in 2012 and in 2013, 340268 applied each of the $842,490 semi-annual interest payments towards the subscription for common shares of the Corporation. For the interest payments of June 30, 2012 and December 31, 2012, this resulted in the purchase of 521,020 and 652,587 common shares of the Corporation, respectively, at a subscription price of $1.617 and $1.291 per common share, respectively. For the interest payments of June 30, 2013 and December 31, 2013, this resulted in the purchase of 649,067 and 705,013 common shares of the Corporation, respectively, at a subscription price of $1.298 and $1.195 per common share, respectively. Following the amendments to the Series C Note Indenture approved on March 7, 2013 by holders of Series C Notes (as more fully described above in “Dividends and Distributions”), 340268 received payment in the form of a transfer of common shares of the Bank held by the Corporation for the interest payments of June 30, 2014, December 31, 2014, June 30, 2015 and December 31, 2015, like the other Series C Noteholders. On August 28, 2014 the Corporation entered into a Subscription Agreement with Eugene George for the private placement of 4,700,000 common shares of the Corporation, at a subscription price of $0.60 per common share. The private placement was completed via 2 closings. The first closing occurred on August 28, 2014 for 850,000 common shares. The second closing occurred on September 16, 2014 for 3,850,000 common shares. As a result of this transaction, Mr. Eugene George acquired more than 10% of issued and outstanding common shares of the Corporation. MATERIAL CONTRACTS The Corporation and the Bank were parties to a management agreement dated November 1, 2003. Pursuant to this agreement, the Corporation agreed to act as an interface to the public financing markets for the benefit of the Bank and the Bank agreed to pay the Corporation an annual fee. This management agreement was amended on August 16, 2013 to become the Management Services Agreement. The terms of the Management Services Agreement were substantially similar to the management agreement, except that the Management Services Agreement also included the provision of management services by the Bank to the Corporation for a fee. In fiscal 2013 and fiscal 2014 approximately $561,000 and $380,000, respectively, was paid by the Bank to PWC pursuant to the Management Services Agreement. The Management Services Agreement was terminated effective November 1, 2014. The Bank and Versabanq Innovations Inc. (“Versabanq”), a wholly-owned subsidiary of the Corporation, are parties to a Software Licence Agreement, pursuant to which the Bank has been granted a nonexclusive, worldwide, perpetual, fully paid-up, royalty-free, and irrevocable licence in respect of asset and deposit management software used by the Bank. The one-time licence fee of $3 million was paid by the Bank on May 31, 2013. TRANSFER AGENT The Corporation’s registrar and transfer agent is Computershare Investor Services Inc., 100 University Avenue, Toronto, Ontario M5J 2Y1. TRUSTEE The Corporation’s Trustee is Computershare Trust Company of Canada, 100 University Avenue, Toronto, Ontario M5J 2Y1.

- 17 EXPERTS The Corporation’s auditors are KPMG LLP Suite 500, 475 Second Avenue South, Saskatoon, Saskatchewan S7K 1P4. KPMG LLP are also the auditors of the Bank. AUDIT COMMITTEE INFORMATION The Mandate of the Audit Committee of the Corporation is attached to this AIF as Exhibit A. The members of the Audit Committee are: Paul G. Oliver (Chair), Patrick M. George and Steve Wilson. Each member of the Audit Committee is both independent and financially literate, as such terms are defined in Canadian securities legislation. Mr. Oliver is a retired senior partner of PricewaterhouseCoopers LLP in the Financial Services Industry Practice. His practice focused on Assurance, Financial Reporting and Business Advisory services, covering a broad range of organizations, with a focus in the regulated financial services industry. Mr. Oliver was admitted to the Institute of Chartered Accountants in England and Wales in 1968. He became a Fellow of the Institute of Chartered Accountants of Ontario in 2003, after having been admitted to membership in 1971. Mr. Oliver is a Certified Director of the Institute of Corporate Directors. Mr. George has been the President of 340268 Ontario Limited, an industrial real estate development company, for 30 years. Mr. George is also the President of GA Masonry, a masonry contractor company with offices in Canada and the United States. Mr. George has a Bachelor’s Degree in Business Administration from Wilfrid Laurier University. Mr. Wilson is a retired senior partner of PricewaterhouseCoopers LLP in the Financial Advisory Services Practice. His practice focused on providing financial advisory, business financial improvement and business recovery services to a broad range of clients across numerous industries. Mr. Wilson became a Chartered Accountant in 1973. He is a member of the Chartered Professional Accountants of Ontario, and numerous other associations related to the accounting profession. Mr. Wilson also serves as a Trustee on the Audit Committee of Huron University College and has served the roles of President, Director, and Treasurer on various not-for-profit educational and health care Boards. The Corporation’s Board of Directors has approved an Audit Services Policy which provides that the Audit Committee shall pre-approve non-audit services and audit and non-audit related fees to be provided by the external auditor on a case-by-case basis. Audit Fees Audit fees paid to KPMG LLP during the year ended October 31, 2015 for both the Corporation and the Bank were $382,000 and during the year ended October 31, 2014 were $408,000. Audit-Related Fees Audit-related fees paid to KPMG LLP during the year ended October 31, 2015 for both the Corporation and the Bank were $189,500 and during the year ended October 31, 2014 were $215,000. Tax Fees Fees paid to KPMG LLP for tax related services during the year ended October 31, 2015 for both the Corporation and the Bank were $35,000 and during the year ended October 31, 2014 were $43,000. No other fees were paid to KPMG LLP during the years ended October 31, 2015 or October 31, 2014.

- 18 ADDITIONAL INFORMATION Additional information regarding the Corporation may be found on SEDAR at http://www.sedar.com or at http://www.pwccapital.com. Information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities, and securities authorized for issuance under equity compensation plans will be contained in the Management Proxy Circular for the Annual and Special Meeting anticipated to be held on or about April 27, 2016. Additional financial information is provided in the Corporation’s comparative financial statements and MD&A for the year ended October 31, 2015.

- 19 EXHIBIT A MANDATE OF THE AUDIT COMMITTEE

1.

The Audit Committee shall each consist of not less than three directors, each of whom must be independent.1 3

2.

Each member of the Audit Committee must be financially literate.2 3

3.

The Audit Committee shall meet at least once a quarter, and otherwise as required, and, at the next following meeting of the Board of Directors, provide the Board with a summary of the matters discussed.

4.

The members of the Audit Committee are charged with the following duties: General Duties a)

review such documents as needed to comply with regulatory requirements, and report to the Board of Directors where approval of the documents by the Board is required;

b)

require management to implement and maintain appropriate internal control procedures;

1

Independence means having no direct or indirect material relationship with the Corporation. A material relationship means a relationship which could, in the view of the Board of Directors, be reasonably expected to interfere with the exercise of the member’s independent judgment. Notwithstanding the above, an individual is considered to have a material relationship with the Corporation in a number of situations enumerated in N1 52-110, including if the individual accepts directly or indirectly any consulting, advisory or other compensatory fee from the Corporation or any subsidiary entity of the Corporation other than as remuneration for acting in his or her capacity as a member of the Board or any Committee or as a part-time Chair or Vice-Chair of the Board or any Committee. 2

Financially literate means the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of accounting issues that can reasonably be expected to be raised by the financial statements. 3

If the death, disability or resignation of a member has resulted in a vacancy on the Committee that the Board is required to fill, a Committee member appointed to fill such vacancy is exempt from the requirement for a period ending on the later of the next annual meeting and the date that is six months from the day the vacancy was created, so long as the Board has determined that a reliance on this exemption will not materially adversely affect the ability of the Committee to act independently and to satisfy its other requirements.

- 20 c)

review new accounting policies and amendments to existing accounting policies before recommending them to the Board of Directors for approval;

d)

review, evaluate and approve the internal control procedures;

e)

approve the interim quarterly financial statements and MD&A of PWC;

f)

concur with the annual financial statements and the annual MD&A of PWC before recommending them to the Board of Directors for approval;

g)

review the interim and annual earnings press releases before public disclosure;

h)

review the Annual Information Form before recommending it to the Board of Directors for approval;

i)

review the Monthly Reporting Package for the most recent quarter for which interim quarterly financial statements for PWC are being issued;

j)

review such investments and transactions that could adversely affect the wellbeing of the Corporation as the auditor or auditors or any officer may bring to the attention of the Committee;

k)

on an annual basis review the policies and procedures relating to matters falling under the Mandate of the Audit Committee and report to the Board of Directors;

Disclosure l)

concur with the Mandate of the Disclosure Committee before recommending it to the Board of Directors for approval;

m)

review the Corporate Disclosure Policy and all amendments thereto before recommending it to the Board of Directors for approval;

n)

review the Disclosure Controls and Procedures;

Complaints and Confidential Reporting o)

establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters;

p)

establish procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

- 21 -

External Audit q)

concur with the external auditors to be nominated for the purpose of preparing or issuing an audit report or performing other audit, review or attest services before recommending them to the Board of Directors;

r)

meet with the external auditor to review the Audit Planning Memorandum and annually approve the Audit Planning Memorandum;

s)

concur with the compensation of the external auditor before recommending it to the Board of Directors for approval;

t)

pre-approve services and expenditures to the external auditor, in accordance with the Audit Services Policy;

u)

oversee the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services, including the resolution of disagreements between management and the external auditor regarding financial reporting;

v)

meet with the external auditor or auditors to discuss the annual financial statements and the returns and transactions referred to in this Mandate;

w)

annually review all amounts paid to the external auditor and other accounting firms in the previous year;

x)

identify, evaluate by performing annual assessments and periodic comprehensive assessments and, where appropriate, recommend to the shareholder(s), replacement of the external auditor;

y)

annually report to the Board on the effectiveness of the external auditor;

z)

concur with hiring policies regarding partners, employees and former partners and employees of the present and former external auditor before recommending them to the Board of Directors for approval;

aa)

concur with the hiring of a partner, employee or former partner or employee of the present or former external auditor before recommending it to the Board of Directors for approval;

- 22 bb)

meet with the external auditor in camera at the conclusion of each regularly scheduled meeting of the committee;

Other Duties

5.

cc)

institute and oversee special investigations, as needed;

dd)

perform other activities related to the Mandate as requested by the Board of Directors; and

ee)

confirm annually that all responsibilities outlined in the Mandate have been carried out.

The Audit Committee has the authority to: a)

communicate directly with the external auditors;

b)

engage independent counsel and other advisors as determined necessary; and

c)

set and pay the compensation for any advisors employed by the Audit Committee, provided such compensation does not exceed $10,000 in any fiscal year. Should the compensation of outside counsel or other advisor exceed $10,000 in any fiscal year, the prior approval of the full Board of Directors will be required.