4th Quarter 2000 4th Quarter 2000 November 28, 2000 November 28, - - PowerPoint PPT Presentation

4th Quarter 2000 4th Quarter 2000

November 28, 2000 November 28, 2000

Investor Community Investor Community Conference Call Conference Call

4th Quarter 2000 4th Quarter 2000

Tony Tony Comper Comper Chairman & CEO Chairman & CEO

Strategic Update Strategic Update

2

BMO Performed Well Against BMO Performed Well Against Objectives Objectives

Targets: Grow EPS by at least 10% and ROE by 1.0-1.5 percentage points Targets: Grow EPS by at least 10% and ROE by 1.0-1.5 percentage points

F1999 F2000

5.07 5.88

EPS ($)Excluding Non-recurring Items EPS ($)Excluding Non-recurring Items

16%

F1999 F2000

Reported EPS ($) Reported EPS ($)

39%

6.56 4.72

F1999 F2000

15.1% 16.1%

1.0

ROE (Percentage Points) Excluding Non- ROE (Percentage Points) Excluding Non- recurring Items recurring Items

F1999 F2000

3.9

Reported ROE (Percentage Points) Reported ROE (Percentage Points)

18.0% 14.1%

3

Targeting Top-Quartile Targeting Top-Quartile Shareholder Returns Shareholder Returns

Five-Year Total Shareholder Return (%) Five-Year Total Shareholder Return (%)

22.9 22.0 23.3 26.1 22.2

1 0 1 5 2 0 2 5 3 0 3 5

1996 1997 1998 1999 2000 BMO

• Cdn. Peer Group

N.A. Peer Group

%

4

G

Partners First Partners First (gain of $112 million) (gain of $112 million)

G

Corporate Trust Corporate Trust (gain of $74 million) (gain of $74 million)

G

Branch Sales Branch Sales (gain of $40 million*) (gain of $40 million*)

* Excludes gain on sale of 4 * Excludes gain on sale of 4 branches not yet closed branches not yet closed

Recent Divestitures

($226 million of gains)

Recent Divestitures

($226 million of gains)

Efficient Capital Management Efficient Capital Management

Risk-Weighted Assets Down $2.6 billion Risk-Weighted Assets Down $2.6 billion

5

Personal and Commercial Personal and Commercial

Small business Commercial banking Consumer banking Small business Commercial banking Consumer banking F2000 (as reported) Cash ROE: 25% Capital growth: 17% F2000 (as reported) Cash ROE: 25% Capital growth: 17%

Private Client Private Client

Wealth management Wealth management F2000 (as reported) Cash ROE: 37% Capital growth: 28% F2000 (as reported) Cash ROE: 37% Capital growth: 28%

E-Business E-Business

North America’s First: On-line bank Wireless bank North America’s First: On-line bank Wireless bank

Next Stage - Accelerating Shift Next Stage - Accelerating Shift to Priority Markets to Priority Markets

6

Building our U.S. Wealth Management Franchise Building our U.S. Wealth Management Franchise

Chicagoland (9 offices), Ft. Myers, Phoenix, Sarasota, Tucson, Naples, Scottsdale, Vero Beach, Sun City, West Palm Beach, Carefree

Harris Private Bank

Chicago Milwaukee Cleveland Detroit

BCL Securities

Seattle Bellevue Tacoma Spokane Portland San Francisco Denver Salt Lake City Phoenix Honolulu

Freeman Welwood

7 G North America’s leader in wireless

financial services

G North America’s leader in wireless

North America’s leader in wireless financial services financial services

Exponential Grow th in Exponential Grow th in Wireless Market Wireless Market

www. www.epost epost.com .com www. www.eposte eposte.com .com

G $30 million investment by

Telus for 5% stake implies significant valuation for EPOST

G $30 million investment by

Telus for 5% stake implies significant valuation for EPOST

G Online customers up 129% to 830,000 (adding 20,000/month) G Online customers up 129% to 830,000 (adding 20,000/month)

8

Providing More Detailed Providing More Detailed Financial Targets Financial Targets

G EPS growth (fully diluted) of 10 to 15 per cent G ROE of 17.0 to 17.5 per cent G Revenue growth of 7 to 9 per cent G Expense-to-revenue ratio and provision for credit

losses consistent with 2000 levels

G A tax rate (tax equivalent-basis) averaging

approximately 37 per cent

G Modest growth in risk-weighted assets G Tier 1 capital ratio of at least 8.0 per cent

G An asset and securities to total assets ratio

consistent with the 2000 ratio

G EPS growth (fully diluted) of 10 to 15 per cent G ROE of 17.0 to 17.5 per cent G Revenue growth of 7 to 9 per cent G Expense-to-revenue ratio and provision for credit

losses consistent with 2000 levels

G A tax rate (tax equivalent-basis) averaging

approximately 37 per cent

G Modest growth in risk-weighted assets G Tier 1 capital ratio of at least 8.0 per cent

G An asset and securities to total assets ratio

An asset and securities to total assets ratio consistent with the 2000 ratio consistent with the 2000 ratio Targets for 2001 (excluding non-recurring items): Targets for 2001 (excluding non-recurring items):

9

PCL as % of Average Loans and Acceptances PCL as % of Average PCL as % of Average Loans and Acceptances Loans and Acceptances

0.0 0.4 0.8 1.2 1.6 2.0

90 91 92 93 94 95 96 97 98 99 Q1/00 Q2/00 Q3/00 Q4/00

%

North America* North America* Canada* Canada* BMO BMO

* Peer Group * Peer Group

Top-Quartile Asset Quality Top-Quartile Asset Quality

10

G

Achieved 11 consecutive years of record earnings Achieved 11 consecutive years of record earnings

G

Only major North American bank to deliver return on equity Only major North American bank to deliver return on equity above 14% for 11 straight years above 14% for 11 straight years

EPS EPS

6.56 5.14* 4.66 4.62 4.13 3.38 2.97 2.55 2.36 2.31 2.10

1.8 2.8 3.8 4.8 5.8 6.8 90 91 92 93 94 95 96 97 98 99 OO

$

*Before one-time charge *Before one-time charge

Over a Decade of Strong Over a Decade of Strong Performance Performance

Karen Karen Maidment Maidment EVP & CFO EVP & CFO

Financial Results Financial Results

Fiscal 2000 Fiscal 2000

Karen Karen Maidment Maidment EVP & CFO EVP & CFO

Financial Results Financial Results

Q4 Fiscal 2000 Q4 Fiscal 2000

3

Year: Financial Performance Year: Financial Performance

475 1.84 3.9 1,857 6.56 18.0 34 39 1,672 5.88 16.1 195 0.81 1.0 13 16

Fiscal Growth Yr / Yr Increase % 2000 Reported

Net Income ($MM) Earnings Per Share - FD ($) Return On Equity (%) Net Income ($MM) Earnings Per Share - FD ($) Return On Equity (%)

Excluding Non-recurring Items

4

227 0.89 8.6 485 1.75 18.4 88 103 430 1.54 16.2 59 0.27 1.5 16 21 84 0.35 3.4 40 0.18 1.7 21 25 10 13

Q4 Growth Yr / Yr Increase Increase % % 2000 Reported

Net Income ($MM) Earnings Per Share - FD ($) Return On Equity (%) Net Income ($MM) Earnings Per Share - FD ($) Return On Equity (%)

Excluding Non-recurring Items Growth Q4 / Q3

Quarter: Financial Performance Quarter: Financial Performance

5

Year: Summary of Results Year: Summary of Results

• Progressed towards our objective of top tier

performance by 2002

• Met targets for the year:
• EPS growth of 27.6%
• ROE growth of 2.6 percentage points
• Increased net income in Personal Commercial and

Private Client Group driven by increased volumes

• Low expense growth of 3.0%
• Provision for credit losses at $400MM includes

$110MM increase in general allowance

6

Quarter: Summary of Results Quarter: Summary of Results

• Improvement driven by:
• From Q3 00
• Improved trading in Investment Banking, increasing net income by

$18MM

• Revenue increases in Personal and Commercial and Private Client
• ffset by increased strategic initiative spending in Private Client
• Lower taxes of $20MM in Canadian subsidiaries and U.S.
• perations
• From Q4 99
• Improvement in revenue in Personal and Commercial and Private

Client groups

• Expense growth of 1.0% excluding non-recurring items
• Lower taxes of $20MM in Canadian subsidiaries and U.S.
• perations
• General allowance increased by $110MM

7

Year: Grow th In Earnings Year: Grow th In Earnings Per Share Meets Target Per Share Meets Target

4.72 6.56 4.66 5.07 5.88 4.66

4 5 6 7 1998 1999 2000

EPS FD EPS FD Ex. Non-rec.

1.3 0.9 39.0 2.5 8.8 16.0

Growth Reported (%)

• Vs. Prior Year

Growth Ex. Non-recurring (%)

• Vs. Prior Year

$

( )

EPS growth of 27.6%

• ver 1999 base of

$5.14 meeting 10% target growth

8

Quarter: Improved Quarter: Improved Earnings Per Share Earnings Per Share

1.66 1.42 1.56 1.36 1.54 1.75 1.75 0.86 1.40 1.27

0.75 1.25 1.75 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

EPS FD EPS FD Ex. Non-rec.

33.9 93.0 13.2 37.2 40.0 5.4 67.1 3.1 14.5 11.8 24.8 9.9 2.2 20.0 3.8 12.8 103.5 25.0 21.3 13.2

Growth Reported (%)

Prior Year Linked Quarter

Growth Ex. Non-rec. (%)

Prior Year Linked Quarter ( ) ( ) ( ) ( )

$

EPS reflects improved results in Investment Banking and lower taxes Personal & Commercial results higher Private Client results lower

9

15.2 15.1 16.1

18.0 14.1 15.2 12 15 18 1998 1999 2000

ROE Rptd. Ex. Non-rec. Roe Reported

%

Year: Grow th In Return Year: Grow th In Return On Equity Meets Target On Equity Meets Target

ROE growth of 2.6% from 1999 base of 15.4% meets target

• f 1.0 - 1.5% growth

10

14.7 16.2 14.5 16.2 17.6 15.0 19.8 19.0 9.8 18.4

8 12 16 20 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

ROE Rptd. Ex. Non-rec. Roe Reported

%

Quarter: Improved Quarter: Improved Return On Equity Return On Equity

11

Year: 11th Consecutive Year Year: 11th Consecutive Year

• f Grow th In Net Income
• f Grow th In Net Income

1350 1857 1382 1300 1600 1900 1998 1999 2000

$MM

Net Income

Revenue growth from normal operations in all groups Bancomer lower Expenses decreased Provisions for credit losses increased Non-recurring items of $185MM improve results:

Reversal of restructuring as branches sold, staff attrition / retention LDC loans sold Branch and business sale gains

7,270 4,785 7,928 5,288 8,664 5,258 Revenue Expense

12

Quarter: Improved Net Income In P& C Quarter: Improved Net Income In P& C and IBG Drive Overall Improvement and IBG Drive Overall Improvement

258 474 497 485 401

250 375 500 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

$MM

Net Income

Revenues growth in all groups Initiative spending higher in Private Client Non-recurring items

• f $55MM improve

results:

Reversal of restructuring as branches sold, staff attrition / retention LDC loans sold Branch and business sales

2,123 1,254 2,008 1,501 2,284 1,348 2,095 1,326 2,162 1,330 Revenue Expense

13

Year: Improvement Year: Improvement In Net Income In Net Income

1350 1477 1672

1300 1600 1900 1998 1999 2000

$MM

Revenue growth from normal operations in all groups Bancomer lower Variable compensation driven expense growth Provision for credit losses increased

Net Income

Excluding Non-recurring Items

7,270 4,785 7,956 5,147 8,438 5,301 Revenue Expense

14

Quarter: Improvement In Quarter: Improvement In Net Income Net Income

371 407 445 390 430

250 375 500 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

$MM

All groups contributed to revenue growth Expenses increase from initiatives spending Lower taxes contributed $20MM Net Income

Excluding Non-recurring Items

2,011 1,254 2,063 1,360 2,196 1,348 2,076 1,326 2,155 1,373 Revenue Expense

15

1350 1477 1672 632 666 544 137 130 192 653 831 624

600 1200 1800

1998 1999 2000

Total Bank IBG PCG P&C Ex. Bancomer

$MM

Year: Improved Net Income Year: Improved Net Income In P& C And PCG In P& C And PCG

Personal & Commercial driven by volume growth in Can. / U.S. Private Client driven by volumes primarily in full service and direct investing Investment Banking contribution from normal

• perations improved.

Excluding Non-recurring Items

16

371 407 445 390 430 155 173 143 161 220 190 36 29 45 50 61 169 206 209 196

250 500

Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Total Bank IBG PCG P&C Ex. Bancomer

$MM

Quarter: Improved Net Income Quarter: Improved Net Income In Each Group In Each Group

Personal & Commercial driven by volume increase Private Client driven by volume increase and higher initiative spending Investment Banking driven by improved trading

Excluding Non-recurring Items

17

Year: Volume Drives Year: Volume Drives Revenue Grow th Revenue Grow th

9.0 9.3 1.4 6.1 9.4 1.4

7.0 8.1 2.2

5 10 1998 1999 2000

Reported Vs. Prior Year

• Ex. Non-rec. Vs. Prior Year

Normal Operations

%

Growth reduced by 2.0% from Nesbitt year end change and Bancomer

18

(2.5) (5.4) 9.8 16.5 7.7 3.2 3.8 9.1 3.4 24.2 3.9 12.0 4.0 27.6 4.4

• 10

10 20 30 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

• Ex. Non-rec Vs. Link Qtr.

Reported Vs. Prior Year

• Ex. Non-rec. Vs. Prior Year

%

Quarter: Volume Drives Quarter: Volume Drives Revenue Grow th Revenue Grow th

All groups contribute to growth Q4 / Q4 growth reduced by 5.7% by 1999 Nesbitt year end change and Bancomer

19

$MM

7270 7956 8438 2374 2368 1997 1186 1245 1565 4114 4596 4200

1000 3000 5000 7000 9000 1998 1999 2000

Total Bank IBG PCG P&C Ex. Bancomer

Year: Volumes in P& C Year: Volumes in P& C and PCG Drive Revenue and PCG Drive Revenue

2.1 5.0 18.9 0.1 10.5 6.2 9.4 25.7 0.3 ( ) ( )

Growth Vs. Prior Year

P&C Ex. Bancomer PCG IBG

Total Bank up 6.1% Personal & Commercial up 9.4% driven by volume Private Client up 25.7% driven by volume Investment Banking flat affected by commodities trading in Q3 and Nesbitt year end change

Excluding Non-recurring Items

20

$MM

Quarter: Improved Revenue Quarter: Improved Revenue In Each Group In Each Group

2063 2011 2196 2076 2155 565 651 551 601 1191 602 391 350 379 355 440 1067 1165 1125 1115

300 1300 2300 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Total Bank IBG PCG P&C Ex. Bancomer

5.8 26.9 2.4 2.5 16.1 104.6 10.8 42.9 15.2 9.5 23.1 12.4 11.6 12.1 0.1

Growth Vs. Prior Yr (%)

P&C ex. Bancomer PCG IBG ( ) ( ) ( )

Total Bank up 3.8%

• ver Q3

Personal & Commercial up 1.2% Private Client up 3.4% Investment Banking up 9.3% from trading

Excluding Non-recurring Items

21

%

Year: Non-interest Year: Non-interest Expenses Grow th Expenses Grow th

10.5 3.0 6.5 7.6 4.8 (0.6)

• 5

5 10 15 1998 1999 2000

• Ex. Non-recurring

Total Bank Reported

Expense reduction of $263MM achieved

22

Quarter: Non-interest Quarter: Non-interest Expenses Grow th Expenses Grow th

%

16.5 7.8 16.9 5.9 7.5 7.5 1.7 1.7 0.4 3.7

Growth Vs. Linked Qtr. (%)

Total Bank Reported

• Ex. Non-recurring

( ) ( ) ( ) ( )

23.0 1.8 3.1 11.4 6.2 (11.4) 6.2 1.8 3.1 1.0

• 15
• 10
• 5

5 10 15 20 25 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Total Bank Reported

• Ex. Non-rec.

Expense reductions of $81MM achieved

23

$MM

4785 5147 5301 1149 1169 1056 943 1004 1211 2808 2951 2946

500 1500 2500 3500 4500 5500

1998 1999 2000

Total Bank IBG PCG P&C Ex. Bancomer

Year: Non-interest Year: Non-interest Expense Increased Expense Increased

Total Bank increased by 3.0%

Private Client - revenue driven compensation and initiative spending Investment Banking - revenue driven compensation

Excluding Non-recurring Items

24

$MM

Quarter: Non-interest Quarter: Non-interest Expense Increased Expense Increased

1360 1254 1348 1326 1373 276 757 283 322 288 290 322 294 295 268 326 759 754 710 730

200 800 1400

Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Total Bank IBG PCG P&C Ex. Bancomer

Excluding Non-recurring Items

Initiatives spending drives Private Client increase Revenue driven compensation drives Investment Banking increase

25

65.8 62.8 64.7 66.7 65.8 60.7

60 65 70 1998 1999 2000

Excluding Non- recurring Reported

%

Cost reductions

• f $263MM

partially offset by initiative spending drives decreasing ratio

Year: Expense Reductions Drive Year: Expense Reductions Drive Expense To Revenue Ratio Dow n Expense To Revenue Ratio Dow n

26

65.9 61.4 63.8 63.8 59.0 63.2 61.5 62.3 74.8 59.1

55 65 75 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Excluding Non- recurring Reported

%

Quarter: Strategic Spending Affects Quarter: Strategic Spending Affects Expense To Revenue Ratio Expense To Revenue Ratio

Cost reductions

• f $81MM offset

by initiative spending

27

7.26 7.72 8.83 7 8 9 1998 1999 2000

%

Year: Continued Strong Year: Continued Strong Tier 1 Capital Ratio Tier 1 Capital Ratio

Objective of strong Tier 1 ratio achieved Driven by retained capital and $2.6B reduction in RWA 7.86MM shares repurchased totaling $500MM

28

Quarter: Continued Strong Quarter: Continued Strong Tier 1 Capital Ratio Tier 1 Capital Ratio

7.72 7.84 8.06 8.49 8.83

7 8 9 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

%

Objective of strong Tier 1 ratio achieved Driven by retained capital and $2.6B reduction in RWA 7.86MM shares repurchased totaling $500MM

29

139.8 134.4

83.6 72.4

137.0 56.9 63.6

50 100 150 1998 1999 2000

Total Bank P&C IBG

$B

Shift from low to higher yielding businesses

Year: Risk Weighted Assets Year: Risk Weighted Assets Being Redeployed Being Redeployed

30

%

Quarter: Risk Weighted Assets Quarter: Risk Weighted Assets Being Redeployed Being Redeployed

Shift from low to high yielding businesses

137.0 140.5 132.0 134.4 83.1 74.5 72.4

56.9 57.7 59.8 59.9

138.3 83.6 82.9

63.6

50 100 150 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00

Total Bank IBG P&C

31

Year: Targets Set For 2001 Year: Targets Set For 2001

Objectives

EPS growth of a minimum of 10% ROE growth of 1.0 - 1.5% annually

Targets for fiscal 2001 excluding non-recurring items are:

• EPS Growth (fully diluted)

10 - 15%

• Return On Equity

17.0 - 17.5%

• Revenue Growth

7 - 9%

• Expense To Revenue Ratio

Consistent with fiscal 2000

• Tax Rate (TEB)

Average of approximately 37%

• Risk Weighted Assets

Modest growth in fiscal 2001

• Provisions For Credit Losses Consistent with fiscal 2000
• Tier 1 Capital

Minimum of 8%

• An Asset And Securities To

Consistent with fiscal 2000 ratio

Total Assets Ratio

32

Year: Targets Set For 2001 Year: Targets Set For 2001

Objectives

EPS growth of a minimum of 10% ROE growth of 1.0 - 1.5% annually

Targets for fiscal 2001 excluding non-recurring items are:

• EPS Growth (fully diluted)

10 - 15%

• Return On Equity

17.0 - 17.5%

• Revenue Growth

7 - 9%

• Expense To Revenue Ratio

Consistent with fiscal 2000

• Tax Rate (TEB)

Average of approximately 37%

• Risk Weighted Assets

Modest growth in fiscal 2001

• Provisions For Credit Losses Consistent with fiscal 2000
• Tier 1 Capital

Minimum of 8%

• An Asset And Securities To

Consistent with fiscal 2000 ratio

Total Assets Ratio

Mike Mike Maila Maila EVP Risk Management EVP Risk Management

Risk Review Risk Review

4th Quarter 2000 4th Quarter 2000

2

Highlights Highlights

• Asset quality remains sound:

Asset quality remains sound:

• The loan portfolio remains well-diversified

The loan portfolio remains well-diversified

• The provision for credit losses is $358MM for F2000, including

The provision for credit losses is $358MM for F2000, including $113MM for the consumer portfolio $113MM for the consumer portfolio

• The general allowance has been increased by $110MM to

The general allowance has been increased by $110MM to $1,080MM $1,080MM

• The allowance for credit losses provides 106% coverage of

The allowance for credit losses provides 106% coverage of gross impaired loans gross impaired loans

• Market risk:

Market risk:

• Market value exposure has been reduced

Market value exposure has been reduced

• Trading risk is well within

Trading risk is well within VaR VaR tolerances tolerances

3

Our Loan Portfolio Remains Our Loan Portfolio Remains Largely North American Largely North American

See Page 28 of Supplementary Financial Information for further information

Geographic Distribution of Total Portfolio ($144 BN as at Oct 31, 2000)

Canada 63% Other 3% United States 34%

4

Securities Repos 11% Consumer 39% Commercial & Corporate 50%

Small Consumer Loans Comprise a Small Consumer Loans Comprise a Significant Portion of the Loan Portfolio Significant Portion of the Loan Portfolio

See Page 27 of Supplementary Financial Information for further information

Market Distribution of Total Portfolio ($144 BN as at Oct 31, 2000)

5

Low -risk Mortgages Enhance Quality of Low -risk Mortgages Enhance Quality of Overall Consumer Loan Portfolio Overall Consumer Loan Portfolio

See Page 27 of Supplementary Financial Information for further information

Consumer Portfolio Distribution

Residential Mortgages 65% Cards 3% Personal Loans 32%

6

Business Loans are Well Diversified By Business Loans are Well Diversified By Client Segment in Canada and the U.S. Client Segment in Canada and the U.S.

Commercial & Corporate Portfolio Distribution

Commercial Corporate

Canada US

Corporate Commercial

55% 20% 80%

36% 64%

45%

7 See Page 27 of Supplementary Financial Information for further information

Industry Distribution of Commercial & Corporate Portfolio

Other Service Sectors Mining & Energy Manufacturing Sectors Real Estate Communications Commercial Mortgages Financial Institutions Wholesale Trade Retail Trade Agriculture Construction Transportation / Utilities

There are No Material Industry There are No Material Industry Concentrations in the Business Portfolio Concentrations in the Business Portfolio

8

Media & Communications Loans

(Cdn$MM) 31st October,2000 CABLE OPERATORS 1,334 REGULATED TELECOM 544 2,202 Cable & Telecom OTHER TELECOM 324 OTHER COMMUNICATIONS 905 Communications OTHER SUB-SECTORS (E.G. MEDIA, PUBLISHING) 271 Media 3,378 Total "Non-Inv. Grade" Total "Investment Grade" 1,329 Sub-Total 4,707 Less: Securitized Loans (1,105) Total Media & Communications Loans & B/As

3,602

Media & Communications as % of Total Loans and B/A's 2.5%

The Media & Communications Loan Portfolio The Media & Communications Loan Portfolio is also Well Diversified by Segment is also Well Diversified by Segment

See Page 34 of Supplementary Financial Information for further information The Bank has investment securities to the sector with a book value of $729MM (market value exceeds book value), and mark-to-market trading securities of $245MM. Included in the Trading securities portfolio were high yield bonds of $23MM (total high-yield debt portfolio: $25MM).

9

Media and Communications Asset Media and Communications Asset Quality Remains Sound Quality Remains Sound

We have considerable and satisfactory experience in lending to mid-market and, selectively, to corporate accounts in this sector:

• We have developed specialized industry expertise and

skills over more than a decade of lending to this sector

• Our lending parameters have resulted in a portfolio

characterized mainly by established businesses with good track records and positive cash flows

• We have experienced very low levels of impairment in this

portfolio (currently less than $30MM Gross Impaired)

• Loan losses in this portfolio have been very low (less than

$45MM in aggregate over 10 years; less than $1MM in F2000)

10

0.50 1.00 1.50 2.00 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2

Increased Gross Impaired Loans Increased Gross Impaired Loans Remain Well Within The Historical Range Remain Well Within The Historical Range

Oct 1999 Oct 2000 Individual 189 197 Corporate & Commercial 821 1,246 Commercial Real Estate 82 58 Gross Impaired Loans (GIL) 1,092 1,501 % Of Total Portfolio 0.75% 1.04%

See Pages 31 - 34 of Supplementary Financial Information for further information

Portfolio Segments

($MM)

Peak 1991: 2.15%

* Exc. LDC and Real Estate

Historical Range *

% Of Total Portfolio Low 1997: 0.47%

11

Coverage of Gross Impaired Loans Coverage of Gross Impaired Loans By Allow ance remains Adequate By Allow ance remains Adequate

See Pages 31 - 35 of Supplementary Financial Information for further information

25 50 75 100 125 150 175

1991 1993 1995 1997 1999 Q2 2000 Q4 2000

Allowance for Credit Losses as a percentage of Gross Impaired Loans

Q4 2000 = 106% Q4 2000 = 106% % Peak 1998: 154% Low Point 1993: 47%

12

Gross Impaired Loans by Industry Sector (% of Total as at October 31, 2000)

Other Service Sectors Mining & Energy Manufacturing Sectors Real Estate Communications Commercial Mortgages Financial Institutions Wholesale Trade Retail Trade Agriculture Construction Transportation / Utilities Individuals

No Single Portfolio Segment Presents a No Single Portfolio Segment Presents a Significant Impairment Concentration Significant Impairment Concentration

See Pages 31 -35 of Supplementary Financial Information for further information

13

New Gross Impaired Loans During the Year New Gross Impaired Loans During the Year Are Spread Across Many Sectors Are Spread Across Many Sectors

0.3% 0.3% 1.2% 2.2% 3.3% 3.4% 3.6% 7.9% 8.0% 15.3% 17.2% 17.2% 20.0%

Transportation/Utilities Individuals Manufacturing Financial Retail Service Other Real Estate Agriculture Wholesale Construction Mining/Energy Communications

Sectors Contributing to New Gross Impaired Loan Formations in 2000 (as a % of Total New Formations)

14

Overall Portfolio Performance in 2000 Enabled Overall Portfolio Performance in 2000 Enabled Transfer of $110MM to General Allow ance Transfer of $110MM to General Allow ance

See Page 32 of Supplementary Financial Information for further information

1999 2000 Individual 81 113 Commercial & Corporate 154 177 General Provision 85 110 320 400 Designated Country Reversal

• (42)

PROVISION FOR CREDIT LOSS 320 358 Provision as a % of Average Loans & Acceptances 0.22% 0.25%

15

Market Value Exposure Has Been Reduced, Market Value Exposure Has Been Reduced, While Earnings Exposure Remains Stable While Earnings Exposure Remains Stable

1 MVE = potential pre tax impact on balance sheet values 2 EAR = potential impact on after tax earnings over the next 12 months

100 200 300 400 500 600 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-000

$105MM

• Approx. 6% of

Net Income $282MM

• Approx. 2% of

Total Capital

See Page 13 of Supplementary Financial Information for further information

$MM

Total Market Value Exposure (MVE)1 Total Earnings at Risk (EAR)2

16 (30) (25) (20) (15) (10) (5) 5 10

8/1/00 9/28/00

(CDE$MM)

Q4 Trading Revenue is in Line With Value at Risk Q4 Trading Revenue is in Line With Value at Risk Profile and Well Within Trading Risk Tolerances Profile and Well Within Trading Risk Tolerances

Daily Trading VaR Daily Net Trading Revenue

10/31/00 8/31/00

17

Forw ard-Looking Statements Forw ard-Looking Statements

This presentation includes forward-looking statements. These forward-looking statements include but are not limited to comments with respect to our objectives and strategies, financial condition, the results of our operations and our businesses, our outlook for the Canadian and U.S. economies and our risk and capital management. However, by their nature these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and

• ther forward-looking statements will not be achieved. We caution readers of this presentation

not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. Forward-looking statements may be influenced by the following factors: fluctuations in market prices, interest rates and currency values; regulatory developments; the effects of competition in the geographic and business areas in which we operate, including continued pricing pressure on loan and deposit products; and changes in political and economic conditions including, among other things, inflation and technological changes. We caution that the foregoing list of important factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider the foregoing factors as well as other uncertainties and events.

November 28, 2000 November 28, 2000

Investor Community Investor Community Conference Call Conference Call

4th Quarter 2000 4th Quarter 2000