2011 Q1 Investor Presentation v1 6 FINAL v2.ppt [Read-Only] information... · · 2011-03-25Investor Presentation • Q1 2011 1 ... document not to place undue reliance on our forward-looking

Investor Presentation Q1 11

March 14 2011

1Investor Presentation • Q1 2011

Caution Regarding Forward-Looking Statements

Bank of Montreal’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the safe harbour provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for 2011 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, and the results of or outlook for our operations or for the Canadian and U.S. economies.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in the countries in which we operate; interest rate and currency value fluctuations; changes in monetary policy; the degree of competition in the geographic and business areas in which we operate; changes in laws; judicial or regulatory proceedings; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to execute our strategic plans and to complete and integrate acquisitions; critical accounting estimates; operational and infrastructure risks; general political conditions; global capital market activities; the possible effects on our business of war or terrorist activities; disease or illness that impacts on local, national or international economies; disruptions to public infrastructure, such as transportation, communications, power or water supply; and technological changes.

With respect to the M&I transaction, such factors include, but are not limited to: the possibility that the proposed transaction does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions; the anticipated benefits from the proposed transaction such as it being accretive to earnings, expanding our North American presence and synergies are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations (including changes to capital requirements) and their enforcement, and the degree of competition in the geographic and business areas in which M&I operates; the ability to promptly and effectively integrate the businesses of M&I and BMO; reputational risks and the reaction of M&I’s customers to the transaction; diversion of management time on merger-related issues; and increased exposure to exchange rate fluctuations. A significant amount of M&I’s business involves making loans or otherwise committing resources to specific companies, industries or geographic areas. Unforeseen events affecting such borrowers, industries or geographic areas could have a material adverse effect on the performance of our integrated U.S. operations.

We caution that the foregoing list is not exhaustive of all possible factors. Other factors could adversely affect our results. For more information, please see the discussion on pages 29, 30, 61 and 62 of BMO’s 2010 Annual Report, which outlines in detail certain key factors that may affect BMO’s future results. When relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake to update any forward-looking statement, whether written or oral, that may be made, from time to time, by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for the periods ended on the dates presented and our strategic priorities and objectives, and may not be appropriate for other purposes.

In calculating the pro-forma impact of Basel III on our regulatory capital and regulatory capital ratios, we have assumed our interpretation of the proposed rules announced by the Basel Committee on Banking Supervision (BCBS) as of this date and our models used to assess those requirements are consistent with the final requirements that will be promulgated by BCBS and the Office of the Superintendent of Financial Institutions Canada (OSFI). We have also assumed that the proposed changes affecting capital deductions, risk-weighted assets, the regulatory capital treatment for non-common share capital instruments (i.e. grandfathered capital instruments) and the minimum regulatory capital ratios are adopted as proposed by BCBS and OSFI. We also assumed that existing capital instruments that are non-Basel III compliant but are Basel II compliant can be fully included in such estimates. The full impact of the Basel III proposals has been quantified based on our financial and risk positions at January 31 or as close to January 31 as was practical. The impact of IFRS conversion on our capital ratios is based on the analysis completed as of October 31, 2010. In calculating the impact of M&I and LGM on our capital position, our estimates reflect expected RWA and capital deductions at closing based on anticipated balances outstanding and credit quality at closing and our estimate of their fair value. It also reflects our assessment of goodwill, intangibles and deferred tax asset balances that would arise at closing. The Basel rules could be subject to further change, which may impact the results of our analysis. In setting out the expectation that we will be able to refinance certain capital instruments in the future, as and when necessary to meet regulatory capital requirements, we have assumed that factors beyond our control, including the state of the economic and capital markets environment, will not impair our ability to do so.

Assumptions about the performance of the Canadian and U.S. economies as well as overall market conditions and their combined effect on the bank’s business are material factors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, both broadly and in the financial services sector, we primarily consider historical economic data provided by the Canadian and U.S. governments and their agencies.

Non-GAAP Measures

Bank of Montreal uses both GAAP and non-GAAP measures to assess performance. Readers are cautioned that earnings and other measures adjusted to a basis other than GAAP do not have standardized meanings under GAAP and are unlikely to be comparable to similar measures used by other companies. Reconciliations of GAAP to non-GAAP measures as well as the rationale for their use can be found in Bank of Montreal’s First Quarter 2011 Report to Shareholders and 2010 Annual Report, all of which are available on our website at www.bmo.com/investorrelations.

Examples of non-GAAP amounts or measures include: cash earnings per share, cash productivity, cash operating leverage; revenue and other measures presented on a taxable equivalent basis (teb); amounts presented net of applicable taxes and earnings which exclude the impact of provision for credit losses and taxes, and non recurring items such as acquisition integration costs.

Bank of Montreal provides supplemental information on combined business segments to facilitate comparisons to peers.

Forward Looking Statements & Non-GAAP Measures


Additional Information for Stockholders Additional Information for Stockholders

In connection with the proposed merger transaction, BMO has filed with the Securities and Exchange Commission a Registration Statement on Form F-4 that includes a preliminary Proxy Statement of M&I, and a preliminary Prospectus of Bank of Montreal, as well as other relevant documents concerning the proposed transaction. Shareholders are urged to read the Registration Statement and the preliminary Proxy Statement/Prospectus regarding the merger, the definitive Proxy Statement/Prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the preliminary Proxy Statement/Prospectus, as well as other filings containing information about BMO and M&I, may be obtained at the SEC's Internet site (http://www.sec.gov). You can also obtain these documents, free of charge, from BMO at www.BMO.com under the tab "About BMO - Investor Relations" and then under the heading "Frequently Accessed Documents", from BMO Investor Relations at [email protected] or 416-867-6642, from M&I by accessing M&I’s website at www.MICorp.com under the tab "Investor Relations" and then under the heading "SEC Filings", or from M&I at (414) 765-7814.

BMO and M&I and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of M&I in connection with the proposed merger. Information about the directors and executive officers of BMO is set forth in the proxy statement for BMO’s 2011 annual meeting of shareholders, as filed with the SEC on Form 6-K on February 25, 2011. Information about the directors and executive officers of M&I is set forth in the proxy statement for M&I’s 2010 annual meeting of shareholders, as filed with the SEC on aSchedule 14A on March 12, 2010. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the above-referenced preliminary Proxy Statement/Prospectus and the definitive Proxy Statement/Prospectus when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.


Brand Underpins Customer Strategy

Relentless Customer FocusMaximize earnings growth across all North American personal and commercial banking businesses, focusing on industry-leading customer experience and sales force productivity.

BMO – Moving With Our Customers

Accelerate the growth of our wealth management business through client-focused financial planning and by investing for future growth.

Deliver strong, stable returns in our capital markets business by providing highly targeted solutions to our core clients from a single integrated platform.

Develop our business in select global marketsto grow with our clients, expand our capabilities and reach new customers.

Sustain a culture that focuses on customers, high performance and our people.

Maximize the strength of our brand to drive growth

Remain focused on our strategy and our customers

Concentrate on where customers are going and foster progressive innovation

Sustain a culture that supports our strategic agenda and is deeply rooted across the organization

Strategic Priorities

1

2

3

4

5

Sustain a Culture of Excellence


Transforming BMO’s U.S. Platform

On December 17, 2010 BMO announced a definitive agreement to acquire all outstanding shares of common stock of Marshall & Ilsley Corporation (M&I)

Bill Downe, President and CEO of Bank of Montreal said:

The combination of our two organizations crystallizes BMO’s strategy of expanding our North American footprint and positions us for future growth

We are bringing together highly complementary businesses that align well with our US retail, commercial and wealth management focus and we both share a long history of supporting our customers

The transaction is expected to close in Q3 Fiscal 2011

To view the Press Release, Investor Presentation and Additional Information related to this transaction please visit:

http://www2.bmo.com/ir


Transforming BMO’s U.S. Operations

Delivers compelling transaction economics

BMO’s strong capital position will be maintained

Capitalizes on opportune economic, regulatory and market environment

Extensive due diligence on loan portfolio and prudent loan valuation

M&I represents an excellent strategic, financial, and cultural fit with BMO

Strategically Compelling

Financially Attractive

Excellent Cultural Fit

Consistent with BMO’s strategy of expanding our U.S. business

Transforms and strengthens BMO’s U.S. operations by increasing scale and combining the best from both organizations

Positions the business for growth through exposure to M&I’s multiple markets

Combines two organizations with strong customer focus

Consistent values, vision and culture


M&I combined with BMO/Harris will result in a formidable Midwest presence

Source: SNL Financial and Company Disclosure

Harris Private Banking

Harris Bank Branches

BMO Capital Markets

M&I Branches

Today

Harris is a market leading bank in Illinois

Post-Transaction

Strengthens foundation with top 5 or better retail deposit market share in attractive, contiguous Midwest markets – Indiana, Wisconsin, Minnesota and Missouri and added beach-head in Kansas

Enhanced U.S. distribution capability while building critical mass in U.S. wealth management and private client business


Capital OverviewDemonstrated ability to build capital, grow the business and increase dividends when appropriate

10.1510.269.21Common Equity Ratio (%)

Basel II Q1 10 Q4 10 Q1 11

Tier 1 Capital Ratio (%) 12.53 13.45 13.02

Total Capital Ratio (%) 14.82 15.91 15.17

RWA ($B) 165.7 161.2 165.3

Total As At Assets ($B) 398.6 411.6 413.2

Basel II Tier 1 Capital Ratio and Common Equity Ratio on a pro forma basis at January 31, 2011, after including the impact of both the Marshall & Ilsley and Lloyd George Management acquisitions announced in Q1 11, are estimated to be 11.0% and 8.8% respectively

As at January 31, 2011, based on fully implemented Basel III 2019 rules, our Common Equity Ratio and Tier 1 Ratio are estimated to be 8.2%1 and 10.7%1

respectively; and 6.4%1 and 8.4%1 respectively after including the impact of both the M&I and LGM acquisitions announced in Q1 11

2.802.802.802.71

2.26

1.851.59

1.341.20

1.121.000.940.880.820.74

0.960.840.740.710.630.59

1.06 1.15

1.451.72

1.95

2.302.51 2.53 2.53

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Annual Dividends Declared Per Share (C$)

10.1%BMO 15-Year

Compound Annual Growth Rate

8.6%BMO 5-Year

BMOCanadian peer group average

1. BMO’s Basel III Ratios as at January 31, 2011 are estimated based on announced Basel III 2019 rules and the impact of adoption of IFRS. Although BMO has announced it may complete a common share offering of less than $400 million prior to closing of the M&I transaction, ratios assume no additional capital raise. A $400 million capital raise would increase the pro forma ratios by approximately 20 bps. For further details regarding assumptions and factors used in our calculations refer to the Enterprise-Wide Capital Management section on page 59 of Bank of Montreal’s 2010 Annual Report and pages 5, 14 and 15 of Bank of Montreal’s First Quarter 2011 Report to Shareholders.


The remainder of this presentation reflects BMO’s Q1 2011 results as a stand alone enterprise

It does not include or reflect the impact of the pending acquisition of Marshall & Ilsley Corporation

Bank of Montreal (BMO Financial Group)


Bank of Montreal (BMO Financial Group)4th largest bank1 in Canada measured by total assets9th largest bank1 in North America measured by market capitalization100% ownership of Chicago-based Harris Bank

1 Published by Bloomberg; Asset and market capitalization rankings as at February 28, 20112 Balances reported in Canadian dollars. Cdn/U.S. exchange rate: Q1 2011 average $1.0074

RevenueC$3.3 billion (US$3.3 billion)

Net IncomeC$776 million (US$770 million)

Cash EPSC$1.32 (US$1.31)

PCLC$248 million (US$246 million)

Average AssetsC$418 billion (US$415 billion)

Capital Ratios (Basel II)Tier 1 – 13.02%Common Equity Ratio – 10.15%

Listings

NYSE, TSX (Ticker: BMO)

Share Price1

Oct 31/10: NYSE – US$59.25 TSX – C$60.23

Feb 28/11: NYSE – US$63.83TSX – C$61.96

Market Cap1

Oct 31/10: C$34 billion (US$33 billion)Feb 28/11: C$35 billion (US$36 billion)

# of Employees38,100

11 million personal, commercial, corporate and institutional customers

(Fiscal Year-end)

Q1 F2011 Results2


Regions Financial

M&T Bank

National Bank

Fifth Third Bank

Suntrust Banks

BB&T Corporation

CIBC

PNC Financial

BMO Financial Group

US Bancorp

Bank of Nova Scotia

TD Bank Financial Group

Royal Bank of Canada

Bank of America

Citibank

Wells Fargo

JP Morgan Chase

1 As at January 31, 2011 for Canadian Banks, as at December 31, 2010 for US banks as published in quarterly reports and using a consistent methodology. Canadian ratios are based on Basel II data, US ratios are based on Basel I.Common Equity Ratio = Tier 1 net capital less preferred equity less capital trust securities less minority interest

= common shareholders’ equity less goodwill and excess intangibles less other adjustments

BMO’s strong financial position and clear business strategy provide a unique opportunity to grow

Financial and Capital Strength

8.31Scotiabank

8.60Bank of America

8.85TD Bank Financial Group

10.34Wells Fargo

10.36National Bank of Canada

9.89Royal Bank of Canada

10.15BMO Financial Group

10.95Citigroup

11.76Bank of New York Mellon

7.50Fifth Third Bancorp

7.78US Bancorp

7.85Regions Financial

8.08SunTrust Banks

9.34Keycorp

9.70CIBC

9.77JP Morgan Chase

11.81BB&T Corporation

12.06PNC Financial

Common Equity Ratio1 (%)Market Capitalization($US billions)

$32.7 (CDE$32.8)

Largest banks by market capitalization in North America, as at January 31st, 2011 as published by Bloomberg.

BMO Financial Group


Reasons to Invest in BMO

Clear growth strategyConsistent and focused North American growth strategyStrong Canadian and U.S. customer baseGrowing global presence to support our customersCommitment to our medium-term financial objectives

Strong capital positionBasel II Tier 1 Ratio of 13.02% and Common Equity Ratio of 10.15% as at January 31, 2011Basel III Common Equity Ratio and Tier 1 Ratio as at January 31, 2011 are estimated to be 8.2%1 and 10.7%1 respectivelyDisciplined approach to capital management

Proactive risk managementIndependent risk oversight across the enterpriseDisciplined credit risk management capabilities and processesGroup and individual performance assessments that reflect risk-adjusted returns and align with shareholder interests

Commitment to stakeholdersClear brand promise that delivers real benefit for customersEngaged employees committed to exceeding customers’expectationsConsistent dividend payment and longest-running dividend payout record of any company in Canada Sound corporate governance

(5.8)

(27.9)

25.1 26.424.1

2006 2007 2008 2009 2010

Twelve Month Total Shareholder Return (%)

Uniquely clear investor proposition

1. BMO’s Basel III Ratios as at January 31, 2011 are estimated based on announced Basel III 2019 rules and the impact of adoption of IFRS. Although BMO has announced it may complete a common share offering of less than $400 million prior to closing of the M&I transaction, ratios assume no additional capital raise. A $400 million capital raise would increase the pro forma ratios by approximately 20 bps. For further details regarding assumptions and factors used in our calculations refer to the Enterprise-Wide Capital Management section on page 59 of Bank of Montreal’s 2010 Annual Report and pages 5, 14 and 15 of Bank of Montreal’s First Quarter 2011 Report to Shareholders.


BMO Financial Group – Positioned for Strong Growth

Bank of Montreal Branches – 908 locations

Harris Private Banking (Wealth Management)

Harris Bank Branches – 310 locations

BMO Capital Markets

Greater Chicago218*

* Retail locations in major urban centers

Greater Vancouver74*

Greater Toronto202*

Greater Montreal94*

Greater Edmonton37*

Greater Calgary42*

Greater Winnipeg27*

Halifax / Saint John22*


Economic Outlook

Outlook as at March 1, 2011; Source: BMO Economics

Canada

United States

The Canadian economy has strengthened in response to low interest rates, a pickup in U.S. demand and strong global demand for resources

Growth should remain moderately strong this year as a result of healthy business investment and improved U.S. demand

Housing activity has stabilized, and will grow modestly this year

The unemployment rate will decline slowly toward 7¼% by year end

Inflation should remain relatively low despite rising energy and food costs

The Bank of Canada is expected to resume raising interest rates by the summer

The Canadian dollar should remain above parity against the U.S. dollar in 2011, supported by firm commodity prices and higher interest rates

The U.S. economy has improved on the back of firmer consumer spending and robust business investment, and solid growth in exports

Growth should strengthen this year in response to lower taxes and a pickup in consumer spending

However, the housing market remains depressed, and will likely expand modestly

The unemployment rate remains high at near 9%, but should drop to 8½% by year end

Inflation should remain relatively low this year despite higher energy and food costs

The Federal Reserve will likely keep interest rates near zero until next January

The U.S. dollar is expected to weaken moderately further this year


Economic Indicators

Sources: BMO Economics, Haver Analytics1Annual average*Estimates as of March 1, 2011; Eurozone estimates provided by OECD

EurozoneUnited StatesCanada

(3.5)(4.6)(6.3)(7.0)(9.8)(8.9)(1.2)(1.8)(2.8)Budget Surplus / GDP*

0.90.3(0.2)(3.3)(3.4)(3.2)(2.6)(2.8)(3.1)Current Account Balance / GDP*

9.19.810.08.29.09.67.27.58.0Unemployment Rate

2.01.20.71.30.20.12.91.30.6Interest Rate (3mth Tbills)

1.92.11.61.82.31.62.02.71.8Inflation

2.21.71.73.13.22.82.73.03.1GDP Growth

2012E2011E20102012E2011E20102012E2011E2010Economic Indicators (%)1

North American economy growing moderately strong, Europe lagging


U.S.Fragmented marketMultiple regulators Choice of State vs. National Charter allows flexibility in choosing regulatory environment and structuring operationsBank Holding Companies provide flexibility in structuring business activitiesBranch restrictions in U.S. and various limits on interstate expansionHistorically, more likely to securitize residential mortgages as prepayment penalties borne by the bankConsolidation continues

CanadaMature oligopoly: 6 chartered banks with a single regulator (OSFI)Almost no subprime in this marketGoverned by the Bank ActForeign ownership limits in placeIntegrated business model: customers purchase multiple products from one institutionResidential mortgages lower risk due to:

No lending with loan to value above 80% without government backed insuranceShorter terms (i.e.1-10 years)Prepayment charges borne by the borrower No Mortgage interest deductibility for income tax purposes (no incentive to take on higher levels of debt)

New rules for government-backed insured mortgages and secured lines of credit:

All borrowers must meet the standards for five-year fixed rate mortgage, regardless of the mortgage chosenMinimum 20% down payment required for rental propertiesMaximum length amortization on insured mortgages lowered from 35 to 30 years, effective March 18, 2011Maximum amount Canadians can withdraw when refinancing their mortgages lowered to 85 percent of the value of their homes, effective March 18, 2011Withdrawal of government backed insurance for home equity secured lines of credit, effective April 18, 2011

Current government not permitting bank mergers amongst big banks

Systemic Differences Between Canadian & U.S. Banks


12.2

11.110.2

9.3

10.09.89.39.08.6

8.68.4

11.610.610.3

00 01 02 03 04 05 06 07 08 09 10

As reported Items of Note

Long-Term Financial Trends

Revenue ($B) Net Income ($B) & Return on Equity (%)

BMO has delivered positive financial results over the last ten years, with compounded annual Net Income growth of 4.8%

3.8% CAGR

1.81.4 1.4

1.82.3 2.4 2.7

2.1 2.0 1.8

2.82.82.4

2.3

14.9

9.913.014.4

19.218.819.416.413.413.8

18.0

00 01 02 03 04 05 06 07 08 09 10

4.8% CAGR

As reported Items of Note ROE(as reported)


Operating Groups

Personal & Commercial Banking (P&C)Over 8 million customers across Canada & the U.S.

Over 1,200 branches in Canada & the U.S.

Access to almost 3,000 automated banking machines in Canada and the U.S.

Private Client Group (PCG)BMO’s group of wealth management businesses serve a full range of client segments from mainstream to ultra-high net worth, as well as select institutional markets

Offers a broad range of wealth management products and solutions

Operates in Canada and the United States, as well as China and the United Kingdom

BMO Capital Markets (BMO CM)Provides a full range of products and services to help corporate, institutional and government clients achieve their ambitions

26 offices on five continents, including 14 in North America

* BMO employs a methodology for segmented reporting purposes whereby expected credit losses are charged to the operating groups quarterly based on their share of expected credit losses. The difference between quarterly charges based on expected losses and required quarterly provisions based on actual losses, as well as changes in the general allowance are charged (or credited) to Corporate Services. See Note 26 on page 157 of BMO’s 2010 Annual Report

PCG $2,245

17%

P&C$7,25557%

BMO CM $3,27826%

F2010 Revenue by Operating Group (C$MM)

F2010 Net Income by Operating Group (C$MM)

Corporate Services Revenue $(568)

Total$12,778

BMO CM $81626%

P&C $1,817

59%

PCG $460, 15%

Total$3,093

Corporate Services Net Loss $283


Group Performance – AnnualNet IncomeRevenue

2,810(283)

816

460

1,817

176

1,641

F2010F2009

11,064(890)

3,085

2,012

6,857

1,568

5,289

As Reported ($MM)

F2010 F10/F09B/(W)

F2009 F10/F09B/(W)

P&C Canada 5,831 10% 1,429 15%

P&C U.S. 1,424 (9)% 287 (39)%

Total P&C 7,255 6% 1,716 6%

PCG 2,245 12% 361 27%

BMO Capital Markets 3,278 6% 870 (6)%

Corporate Services (568) 36% (1,160) 76%Total Bank 12,210 10% 1,787 57%

Net IncomeRevenue

2,810(283)

816

460

1,817

176

1,641

F2010

11,585(890)

3,606

2,012

6,857

1,568

5,289

F2009Excl. Notable Items ($MM)

F2010 F10/F09B/(W)

F2009 F10/F09B/(W)

P&C Canada 5,831 10% 1,429 15%

P&C U.S. 1,424 (9)% 287 (39)%

Total P&C 7,255 6% 1,716 6%

PCG 2,245 12% 361 27%

BMO Capital Markets 3,278 (9)% 1,225 (33)%

Corporate Services (568) 36% (1,041) 71%Total Bank 12,210 5% 2,261 24%

* Operating segment results reported on an Expected Loss (EL) basis; see Note 26 on page 157 of BMO’s 2010 Annual Report.


Highlights of BMO in Canada Q1 F2011 Non-U.S. Operating

Group Revenue (C$MM)Large, full service universal bank

Personal & Commercial Banking Canada is BMO’s largest business serving more than seven million customers, offering a full range of products and services.

BMO continues to rank 2nd in business banking market share for business loans $5MM and below

In corporate and institutional banking, we maintain a leadership position in Canada in equity research, trading, mergers and acquisitions and have significant market share in debt and equity underwriting activity.

In the individual investing market, we are highly regarded for full service (BMO Nesbitt Burns) and private banking expertise and our Canadian direct investing platform, BMO Investorline.

Q1 F2011 Non-U.S. Operating Group Net Income (C$MM)

PCG $149, 17%

P&C $43751%

BMO CM $27632%

Total$862

PCG $59621% P&C

$1,50354%

BMO CM $69125%

Total$2,790


Corporate Services Net Loss $64



Personal & Commercial (P&C)Established Harris brand and a commitment to service excellenceComprehensive and increasingly integrated distribution network#2 in deposit market share in the Chicago metropolitan market

Private Client Group (PCG)With offices located throughout the United States, Harris Private Bank maintains a strong local presence in the many communities it servesRelationships are managed by a team of experienced wealth specialists, investment professionals, trust and estate specialists, and financial planners with deep roots in the community, as well as intimate knowledge of local markets, trends, laws and issues

BMO Capital Markets (BMO CM)A leading North American full-service investment and corporate bankFocused on mid to large sized companiesExtensive expertise in providing key financial services including Financial Advisory, M&A, Equity Underwriting, Lending, LeveragedFinance and Private Placements

BMO’s Presence in the U.S.

Q1 F2011 U.S. Operating Group Revenue (US$MM)

PCG $64, 9%

P&C $38453%

BMO CM $27138%

Total$719




Financial Highlights

P&C Canada momentum continues, delivering strong revenue growthPCG posts excellent results with net income up substantially from a year agoBMO Capital Markets continues to deliver strong performanceCapital position remains strongPre-provision, pre-tax earnings of $1.3 billionOverall trend of improvement in credit

Strong results and good contribution from all operating groups

$3,346MM

Revenue Net Income EPS Cash

EPS1 ROE Cash Productivity1

Cash Operating Leverage1

Total PCL

Tier 1 Capital Ratio

(Basel II)

Q1 11 $776MM $1.30 $1.32 15.7% 60.9% (0.7)% $248MM 13.02%

1 Non-GAAP measure, see slide 1 of this Investor Presentation and page 25 of the First Quarter 2011 Report to Shareholders; Q1 11 productivity ratio and operating leverage were 61.2% and (0.7)% respectively


P&C (Personal & Commercial)

54%

Operating Group Performance

Q1 11 Revenue by Operating Group (C$MM)

P&C (Personal & Commercial)

54%

Total 3,514MM

Over 70% of revenue and net income from retail businesses in Canada and the US (P&C and PCG)

Q1 11 Net Income by Operating Group (C$MM)

PCG (Wealth

Management) 17%

* Corporate Services net loss $120MM

Total 896MM

* Operating segment results reported on an Expected Loss (EL) basis; see Note 26 on page 157 of BMO’s 2010 audited annual consolidated financial statements

BMO CM (Investment Banking)

29%

PCG (Wealth

Management) 19%

BMO CM (Investment Banking)

27%

* Corporate Services revenue $(168MM)

BMO CM 257

PCG 153

P&C US 42

P&C Canada 444

P&C US, 362

PCG, 661Canada -

Commercial, 573

Trading Products, 595

Inv & Corp Banking & Other, 368

Canada - Personal, 955


Group Revenue & Net Income - Quarter

3,025

(129)

843

550

1,761

349

1,412

Q1 10

3,049

(173)

920

558

1,744

336

1,408

Q2 10Revenue As Reported ($MM) Q3 10 Q4 10 Q1 11 Q/Q

B/(W)Y/Y

B/(W)

P&C Canada 1,490 1,521 1,528 1% 8%

P&C U.S. 361 378 362 (4)% 4%

Total P&C 1,851 1,899 1,890 (1)% 7%

PCG 544 593 661 12% 20%

BMO Capital Markets 679 836 963 15% 14%

Corporate Services (167) (99) (168) (73)% (31)%

Total Bank 2,907 3,229 3,346 4% 11%


657

(120)

212

111

454

51

403

Q1 10

745

(70)

260

115

440

46

394

Q2 10Net Income As Reported ($MM) Q3 10 Q4 10 Q1 11 Q/Q

B/(W)Y/Y

B/(W)

P&C Canada 425 419 444 6% 10%

P&C U.S. 40 39 42 8% (17)%

Total P&C 465 458 486 6% 7%

PCG 105 129 153 19% 38%

BMO Capital Markets 130 214 257 20% 21%

Corporate Services (31) (62) (120) (97)% -

Total Bank 669 739 776 5% 18%


P&C Canada – Market Share & Product BalancesPe

rson

alC

omm

’lPe

rson

alC

omm

erci

al

Sources: Mutual Funds – IFIC, Consumer Loans, Residential Mortgages & Personal Deposits – Bank of Canada, Personal Cards NRS – CBA1Personal Cards NRS are issued on a one fiscal quarter lag basis. (Q1 11: Oct 2010)2Personal share statistics are issued on a one-month lag basis. (Q1 11: Dec 2010)3Business loans (Banks) data is issued by CBA on a one calendar quarter lag basis (Q1 11: Sep 2010)4Q1 10 includes 1 month and from Q2 10 onwards includes 3 months of Diners Club North American franchise acquisition

13.113.013.113.213.2Personal Cards (Net Retail Sales) 1

19.8

13.5

12.2

10.1

Q1 10

19.9

13.5

11.9

10.2

Q2 10

20.2

13.5

11.9

10.2

Q3 10

20.4

13.4

11.7

10.2

Q1 11

10.2Total Personal Lending

Market Share (%) Q4 10

Personal Deposits2 11.8

Mutual Funds2 13.4

Commercial Loans $0 - $5MM3 20.3

36.736.736.235.334.1Commercial Loans & Acceptances

102.6101.399.397.096.3Total Personal Lending

31.5

0.8

66.7

7.4

63.9

32.4

Q1 10

31.6

1.7

65.9

7.2

63.6

33.4

Q2 10

32.5

1.7

66.7

7.3

64.3

35.0

Q3 10

34.7

1.7

66.2

7.5

65.3

37.3

Q1 11

7.4Personal Cards

Balances ($B)(Owned & Managed) Q4 10

Personal Loans 36.4

Residential Mortgages 64.9

Personal Deposits 66.6

Commercial Cards4 1.7

Commercial Deposits 33.1

PersonalTotal Personal lending balances increased Y/Y and Q/Q, driven by growth in branch-originated mortgages and Homeowner ReadiLine products. Market share increased Y/Y and remained flat Q/QPersonal deposit balances decreased Y/Y and Q/Q, driven by a decrease in term deposits. Market share declined Y/Y and Q/Q Personal Cards balances increased Y/Y and Q/Q. Market share decreased Y/Y and increased Q/Q

CommercialWe continue to rank second in Canadian business lending market shareCommercial deposit balances increased Y/Y and Q/Q reflecting the bank’s focus on meeting customer needsCommercial Cards balances increased Y/Y due to the addition of Diners and volume growth


3.63.73.73.63.5Serviced Mortgages

Personal Products –Average Balances (US$B) Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Mortgages 4.7 4.5 4.4 4.2 4.2

Other Personal Loans 5.1 5.0 5.1 5.1 4.9

Indirect Auto 4.2 4.2 4.3 4.3 4.4

Deposits 14.6 14.6 15.9 16.0 15.6

11.710.710.09.78.9Commercial Deposits

Commercial Products –Average Balances (US$B)

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Commercial Loans 12.1 12.0 12.0 12.1 12.1

P&C U.S. – Product Balances

Personal

Mortgage pipeline up $189MM or 55% Y/Y and originations are up $170MM or 60%

Decline in mortgage balances Y/Y are primarily driven by amortization/run off of outstandings and new originations being sold in the secondary market, as reflected in our serviced mortgage portfolio

Indirect Auto balances continue to grow despite increased competition

Core deposits grew $184MM from the start of the fiscal year, with new checking accounts up 20% Y/Y. However, deposit balances are down Q/Q primarily due to maturities on term deposits

Commercial

Excluding the Rockford, Illinois-based bank transaction’s1 $1.0B of average loans and $0.3B of average deposits, commercial loans declined Y/Y, reflecting the impact of lower client loan utilization while deposits grew due to sales efforts

1 On April 23, 2010, acquired certain assets and liabilities of AMCORE Bank N.A. from the Federal Deposit Insurance Corporation (FDIC)


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

BMO Cdn Competitors Weighted AverageHistorical Average (BMO)* Historical Cdn Competitors' Average

0.44%

Credit Performance Measure

Specific PCL as a % of Average Net Loans and Acceptances

(excluding Reverse Repos)

0.56%

Perc

ent

BMO’s Canadian competitors include: BNS, CM, NA, RY, TD Competitor average excludes the impact of TD’s sectoral provisions

* Historical avg.: 1991 to 2010

0.460.56F2011 YTD

0.610.44Historical avg.*

0.580.61F2010

Canadian CompetitorsBMO

High 1.69%Low 1.16%

High 1.24%Low 0.64%

Historical Specific PCL average

0.61%

0.46%

YTD


Loan Portfolio DistributionGross Loans and Acceptances by

Product and Industry ($B)*As at January 31, 2011

100%179934136Total

13%24969Corporate

29%52-1339Commercial

58%103-1588Total Consumer

2%3--3Cards

29%52-1042Consumer Loans

27%48-543Residential Mortgage

Consumer

TotalOtherU.S.*Canada($B)

Total Gross Loans and Acceptances*As at January 31, 2011

Residential M ortgages - 26.9% Cards - 1.8%Personal Loans - 28.9% Commercial M ortgages - 5.6%Commercial Real Estate - 3.6% Construction - 0.9%Retail Trade - 3.3% Wholesale Trade - 1.8%Agriculture - 2.2% Communications - 0.5%M anufacturing - 3.3% M ining - 0.1%Oil & Gas - 1.8% Transportation - 0.7%Utilities - 0.5% Forest Products - 0.2%Service Industries - 5.0% Financial - 9.2%Government - 0.3% Other - 3.2%

*Excluding securities borrowed or purchased under resale agreements


Liquidity and Funding Strategy

Additional Sources:Securitization: Mortgages (Canada Mortgage Bond participation and MBS) and Credit Card ABS ($3bn shelf)Canadian & US Senior (unsecured) deposits

Liquidity Ratio (%) Core Deposits (in billions)

35.635.031.9

29.133.1

27.226.5

2005 2006 2007 2008 2009 2010 Q1 2011

72.3 73.3 75.9 85.8 95.4 98.6 99.4

22.6 22.4 25.1

32.827.7

33.5 36.2

2005 2006 2007 2008 2009 2010 Q1 2011

Canadian $ US$ and other currency in US$

Programs: Current program size:European Note Issuance Program: US$20bnCanadian Base Shelf Program: $8bn Global Covered Bond Program: €7bnUS MTN Program: US$6bn

BMO's has access to diversified funding sources, including:

BMO’s large base of core and customer deposits, along with our strong capital base, reduces reliance on wholesale funding.

Our wholesale funding principles seek to match the term of assets with the term of funding (e.g. to fund loans with longer term funds). In addition, we diversify our sources of funding by market, instrument and term.


Wholesale Capital MarketTerm Funding Composition

(Total $58.2B)

As at Jan 31, 2011

Diversified Wholesale Term Funding Mix

Wholesale Capital Market Term Funding Maturity Profile

(Total $58.2B)

As at Jan 31, 2011

BMO's wholesale funding principles seek to match the term of assets with the term of funding. Loans for example are funded with customer deposits and capital, with any difference provided by longer-term wholesale fundingBMO has a well diversified wholesale funding platform across markets, products, terms, currencies and maturities

0

2

4

6

8

10

12

14

Q2 -Q42011

2012 2013 2014 2015 2016 2017 2018 > 2018

Issu

ance

C

DE

($B

)

Term Debt Tier 1 Capital Tier 2 Capital Securitization

C$ Mortgage & Credit Card

Securitization46%

Tier 1 Capital8%

Covered Bonds8%

Tier 2 Capital7%

C$ Senior Debt18%

US $ Senior Debt (Issued in Euro &

U.S. Markets)13%


Corporate Governance

Comprehensive code of business conduct and ethics provides a framework for directors, officers and employees on the conduct and ethical decision-making integral to their work

Governance practices are consistent with, and in many cases exceed, requirements of the TSX and NYSE. The Bank is also in compliance with applicable rules adopted by the Canadian Securities Administrators (CSA) and the U.S. Securities and Exchange Commission (SEC) to give effect to the provisions of the Sarbanes-Oxley Act.

To ensure non-employee directors’ compensation is aligned with shareholder interests, at least 50% of the annual retainer must be paid in Common Shares of the Bank or Deferred Share Units

The Globe and Mail’s Board Games 2010 annual review of corporate governance practices ranked BMO 4th overall among 187 Canadian reporting issuers


Delivering on our Sustainability Commitments

How we do this?

Deliver Great Customer Experiences:

work with customers on financial decision-making to give them more control over their circumstances

design tools to help customers get a better handle on their current finances and future spending

Develop Employees:

help people expand their horizons and discover exciting career possibilities

open up new avenues in professional and personal development

Improve the Quality of Life in Communities Where We Operate:

support charitable initiatives through donations and sponsorship programs

provide opportunities and support to employees as they devote their time and energy in giving back

Sustaining economic prosperity for our customers, employees and communities


Looking Ahead…

Changes to the economy, regulatory environment and North American banking industry are rapid and ongoing

BMO has emerged as a bank with visible momentum across all of our businesses and a strong capital position

BMO is well positioned for the future:

Brand Promise stands out and gains relevance in the new environment

P&C Canada, PCG and BMO Capital Markets are producing strong financial results and demonstrating good market momentum

P&C U.S. continues to focus on the customer experience and increasing our presence and visibility in the market

Good business opportunities available in the U.S. and each of our businesses is well positioned

We have the business platform, balance sheet and expertise to generate sustainable growth

VIKI LAZARISSenior Vice [email protected]

ANDREW CHINSenior [email protected]

Investor Relations Contact Information

E-mail: [email protected]

www.bmo.com/investorrelations

Fax: 416.867.3367