CWBFG Annual Report 2023

23. INTEREST INCOME

The composition of our interest income follows:

2023

2022

Loans measured at amortized cost (1)(2) Securities Debt securities measured at FVOCI (1)

$

2,281,621

$

1,523,026

61,520 11,386 10,945

35,079

Securities purchased under resale agreements measured at amortized cost (1)

1,964 1,836

Deposits with financial institutions measured at FVOCI (1)

Total

$

2,365,472

$

1,561,905

Interest income is calculated using the effective interest method.

(1)

(2) Includes finance income earned, net of related fees, on leases of $200,793 for the year ended October 31, 2023 (2022 – $197,081).

24. FAIR VALUE OF FINANCIAL INSTRUMENTS A) FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT BASIS

The fair value of a financial instrument on initial recognition is normally the transaction price (i.e. the value of the consideration given or received). Subsequent to initial recognition, financial instruments measured at fair value that are quoted in active markets are based on bid prices for financial assets and offer prices for financial liabilities. For certain securities and derivative financial instruments where an active market does not exist, fair values are determined using valuation techniques that refer to observable market data, including discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants, and non- market observable inputs. Several of our significant financial instruments, such as loans and deposits, lack an available trading market as they are not typically exchanged. Therefore, these instruments have been valued assuming they will not be sold, using present value or other suitable techniques and are not necessarily representative of the amounts realizable in an immediate settlement of the instrument. Changes in interest rates are the main cause of changes in the fair value of our financial instruments. The carrying value of loans, deposits, subordinated debentures and debt related to securitization activities are not adjusted to reflect increases or decreases in fair value due to interest rate changes as our intention is to realize their value over time by holding them to maturity.

CWB Financial Group 2023 Annual Report | 101

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