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F INANCIAL R ESULTS Q3 2002 Karen Maidment Executive Vice President and Chief Financial Officer Quarterly Investor Presentation August 27, 2002 Q3 Financial Snapshot Q3 2002 Q3 2001 Q2 2002 Excluding Non-recurring Items Net Income ($MM)

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SLIDE 1

FINANCIAL RESULTS

Karen Maidment

Executive Vice President and Chief Financial Officer

Q3 2002

Quarterly Investor Presentation August 27, 2002

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SLIDE 2

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

0.59 0.88 0.72 Cash EPS – Diluted ($/share) 12.2 17.8 14.4 Cash Return on Equity (%) 8.61 8.84 8.72 Capital: Tier 1 Ratio (%) 0.87 0.32 0.44 PCL/Avg. Loans Accept. (%) 66.4 63.6 68.4 Productivity Ratio (%) 1.2 7.5 (4.1) Revenue Growth (%) 11.6 16.8 13.5 Return on Equity (%) 0.57 0.83 0.68 EPS – Diluted ($/share) 301 444 360 Net Income ($MM)

Q2 2002 Q3 2001 Q3 2002

Excluding Non-recurring Items

Q3 Financial Snapshot

* Annualized * * *

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SLIDE 3

2

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Financial Highlights

  • Personal & Commercial net income increased by

22% from a year ago and the trend of increasing volumes continued

  • Private Client net income was unchanged from a year

ago despite a weak operating environment

  • Investment Banking net income decreased reflecting

investment write-downs and weaker capital markets

  • Excluding acquisitions, expenses were reduced by 3%

from a year ago, reflecting focus on cost management

  • Provision for credit losses in the quarter returned to

more typical levels and expected losses for the year are unchanged

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3

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q2 2002 Q3 2001 Q3 2002 Net Income ($MM)

154 187 108 Investment Banking 301 444 360 Total Bank (114) 22 (28) Corporate & Emfisys 32 25 25 Private Client 229 210 255 Personal & Commercial

Q3 Group Performance

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4

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Group Performance

  • 28

360 108 25 255

P&C IBG PCG

  • Corp. &

Emfisys Total Bank

Net Income ($MM)

Q3 ’01 thru Q3 ’02

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5

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

EPS ($) Cash EPS ($)

Q3 Earnings Per Share

0.83 0.19 0.71 0.68 0.57 0.72 0.59 0.75 0.25 0.88 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

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6

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

0.72 0.01 0.06 0.01 0.21 0.59

Q2 02 PCL CBO Other Net Inv. Losses Other Q3 02

Q3 ’02 vs Q2 ’02 ($/share) Q3 ’02 vs Q3 ’01 ($/share)

↑ ↑ ↑ ↑ 22.3%

Q3 Diluted Cash EPS

0.72 0.04 0.07 0.07 0.06 0.88

Q3 01 PCL CBO Other Net Inv. Losses Other Q3 02

↓ ↓ ↓ ↓ 18.2% ↑ ↑ ↑ ↑ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↑ ↑ ↑ ↑

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Return On Equity

Cash ROE (%) ROE (%)

16.8 3.8 14.5 11.6 13.5 17.8 4.8 15.2 14.4 12.2 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Revenue Growth

1231 1200 1217 1003 1022 926 Q3 01 Q2 02 Q3 02

($MM)

↓ ↓ ↓ ↓79 (↓

↓ ↓ ↓3.6%) Other Income Net Interest Income

2234 2222 2143

Q3 ’02 vs Q2 ’02

  • Other Income down

$96MM or 9.4%

  • NII up $17MM or 1.4%
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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Revenue Growth

Q3 ’02 vs Q2 ’02 ($MM)

… investment write-downs more than offset favourable impact of acquisitions $MM

Total Growth Business Growth Investment Securities Losses Acquisitions / Disposals & Initiatives

  • 79 (-3.6%)
  • 40 (-1.9%)

27 (1.2%)

  • 91 (-4.1%)
  • 68 (-3.0%)

95 (4.2%)

  • 118 (-5.3%)

Q3 ’02 vs Q3 ’01 ($MM)

  • 66 (-2.9%)
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10

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

126 110 95 320 312 315 312 308 195 202 194 209 207 122 107

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Q3 Net Interest Margins Decline

Total Bank IBG P&C

Net Interest Margin (bps)

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11

Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

EPS

($/share)

$MM

pre-tax

116 (42) 158 75 27 56 0.03 WorldCom 0.20 Total Write-downs 0.14 Net Investment Securities Losses (0.06) Net Realized Gains 0.10 Other 0.07 CBO Equity

Q3 2002

Q3 Investment Write-downs

* *

Total write-downs are $158MM pre-tax ($98MM after-tax) and Net Investment Securities Losses are $116MM pre-tax ($72MM after-tax)

*

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Expense Growth

Q3 ’02 vs Q2 ’02 ($MM) Q3 ’02 vs Q3 ’01 ($MM)

… reflects management of core expenses and lower variable compensation

Total Growth Acquisitions Ongoing Growth Disposals & Initiatives Variable Comp.

$MM

  • 11 (-0.8%)
  • 9 (-0.6%)

0 (0.0%)

  • 24 (-1.7%)

44 (3.1%)

  • 5 (-0.4%)

0 (0.0%)

  • 38 (-2.7%)

22 (1.5%) 87 (6.2%)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

63.6 68.1 66.3 66.4 68.4 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Q3 Expense-to-Revenue Ratio

(%)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C Delivers Strong Results Q3 P&C Delivers Strong Results

  • Volume growth in

Canada

  • U.S. margin down,

Canada flat vs. Q2

  • Continued cost

containment in Canada

  • Significant

improvement over prior year

Revenue & Net Income ($MM)

210 195 227 229 255 1108 1131 1099 1171 1094 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Net Income Revenue

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C Net Income

25 28 38 47 49 185 167 189 182 206 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

… Improved contributions from Canadian and US franchises

Chicagoland Banking ($MM) Canada ($MM)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C

3.20 3.12 3.15 3.12 3.08 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 27.7 23.8 24.6 26.6 23.6 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 62.2 62.4 61.6 60.0 58.7 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Net Interest Margin NIX / Revenue Cash ROE

  • Margin flat in Canada, down in

US.

  • Cost containment and revenue

growth drives NIX / Revenue ratio lower

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C Delivers Volume Growth Q3 P&C Delivers Volume Growth

Residential Mortgages

9.0 12.4 13.5 7.1 6.1 42.6 44.3 45.6 47.1 48.4

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Yr./Yr. Growth (%) Average Balances ($B)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C Delivers Volume Growth Q3 P&C Delivers Volume Growth

Personal Loans

10.9 12.3 14.7 6.6 9.5 17.7 18.5 19.0 19.7 20.4

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Yr./Yr. Growth (%) Average Balances ($B)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 P&C Delivers Volume Growth Q3 P&C Delivers Volume Growth

Personal Deposits

20.9 23.2 22.7 5.1 13.5 32.2 35.0 37.7 38.9 39.5

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Yr./Yr. Growth (%) Average Balances ($B)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

13.26 13.05 12.55 12.71 12.81 12.89 12.90

18.82 18.87 18.80 19.04 19.28 14.80 14.77 14.59 14.55 14.69

13.11 13.33 13.24

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Q3 P&C Market Share

Personal Loans Residential Mortgages

(Incl.3rd Party)

(%)

Personal Deposits

Small Business Loans are on a calendar quarter and 3 month lag basis.

Small Business Loans

($ 0-5MM) 1 1

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

  • Investment

security losses, narrower margins and reduced merger and acquisition activity

  • Continued focus
  • n cost reduction

Q3 IBG Environment Remains Very Challenging Q3 IBG Environment Remains Very Challenging

187 7 183 154 108 749 721 642 537 716 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Net Income Revenue

Revenue & Net Income ($MM)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 IBG

1.22 1.07 1.26 1.10 0.95 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 11.2 7.3 13.0 15.3

  • 0.6

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 52.6 47.8 51.7 54.9 62.5 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Net Interest Margin NIX / Revenue Cash ROE

  • Margin decreased due mainly to

the effect of a flatter yield curve

  • n capital markets businesses
  • NIX / Revenue increased as

revenue declined.

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 PCG Solid Performance In Difficult Markets Q3 PCG Solid Performance In Difficult Markets

25 11 39 32 25 366 387 439 438 363 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Net Income Revenue

Revenue & Net Income ($MM)

(Excluding Non-recurring)

  • Revenue growth

driven by acquisitions; other businesses stable despite market environment

  • CSFBdirect

contributed positive Cash Net Income ($23MM acquisition related costs classified as non- recurring)

  • Investment in long-

term growth strategy continues

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 PCG

9.69 10.70 10.61 9.97 10.09 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 15.1 17.2 11.8 10.2 8.5 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 84.4 93.0 84.7 87.4 88.7 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Net Interest Margin NIX / Revenue Cash ROE

  • Wider spreads on retail

investment products

  • NIX / Revenue ratio driven by

acquired businesses and continued investment in strategic initiatives

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 PCG Solid Performance In Difficult Markets Q3 PCG Solid Performance In Difficult Markets

159 158 163 193 190 80 84 83 83 79

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

AUA / AUM ($B)

AUM AUA & Term 239 237 247 276 273

  • AUA/AUM & Term

year over year increase primarily attributable to acquisitions & strategic initiatives

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Direct Investing Q3 Direct Investing

19.3 7 11 325

Q3 2001

122% 129% 106% 129%

Yr / Yr Change

48.5 42.8 Customer Assets ($B Cdn) 20 17 Trades / Day (000) 20 23 New Accounts (000) 758 743 Active Accounts (000)

Q2 2002 Q3 2002

Active accounts are defined as “accounts with balances or stock positions or trading activity in the last 12 months”. Q2 ’02 is restated to be consistent with this definition Gross active new accounts estimated CSFBdirect Q2 based on 39 days representing 2 months of trading activity

1 2 3

1 2 3

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

CSFBdirect Performance Review

  • Contributed positive Q3 Cash Net Income (excluding non-

recurring)

  • Revenue per account remains impacted by challenging market

environment.

  • US Client base represents over 50% of Direct Investing active

accounts; aligns with US Expansion Strategy

  • Trading activity declined in line with our peer group
  • Successfully re-branded to Harrisdirect, establishing differentiated

positioning of “guided investing” consistent with the needs of our target market

  • Client retention in line with peer group after successful integration
  • f operations, including significant step of converting accounts
  • Completed Morgan Stanley online account acquisition - expands

Harrisdirect’s client base and provides opportunity to leverage CSFBdirect scale and technology

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 Corporate & Emfisys Q3 Corporate & Emfisys

22

  • 104
  • 77
  • 114
  • 28

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Net Income ($MM)

  • Decline over Q3

’01 due to higher PCL and increased pension and other costs, offset by favourable income tax initiatives

  • Improvement over

Q2’02 primarily due to lower PCL

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

8.72 8.61 8.84 8.15 8.87 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Tier 1 (%) Total Capital (%)

  • Driven by disciplined

balance sheet management, including capital

12.60

Q3 Capital Remains Above 8% Target

12.12 12.93 12.48 12.25

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

133.1 135.8 130.1 131.3

64.7 5.4 5.5 4.8 5.6 7.0

132.5

60.2 58.5 68.3 68.5 65.8 61.8 63.0 64.3 59.4

Q3 01 Q4 01 Q1 02 Q2 02 Q3 02

Q3 Capital Adequacy

Total Bank IBG P&C PCG & Other

Risk Weighted Assets ($B)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

8.72% Minimum 8.0% Tier 1 Capital 60 bps

Annualized

40 - 50 bps Provision For Credit Losses 13.9%

Annualized

14 – 15% Cash Return On Equity (15.2%) 8 – 12% EPS same as last year Cash EPS Growth

  • Total Year
  • First Half

2002 YTD Actual 2002 Target

Excluding Non- recurring Items

Annual Targets

2

On April 25/02, PCL target for fiscal 2002 was revised to $775 - $825 MM, or in a range about 55 bps Growth based on fiscal 2001 cash EPS of $2.68 per share

2 1 1

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Appendix

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Non-recurring Items

  • 23

NIX Acquisition Related Costs

  • 23

100

  • Total Provisions For Credit

Losses

  • 11.6

0.57 301

  • Q2 ’02

16.8 0.83 444

  • Q3 ’01

12.9 0.65 346 14 23

  • Q3 ’02

Return on Equity (%) Earnings per Share – D ($) Net Income as Reported Total After-tax Impact Total Pre-tax Impact Total Non-interest Revenue

  • Sale of Bancomer Shares
  • Sale of Cdn. Branches

Non-interest Revenue

($MM)

18.6 13.0 2.66 1.93 1467 1019 198 14 12

  • 433

23 333

  • 321
  • YTD ’01

YTD ’02

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Financial Snapshot

8.84 8.72 Capital: Tier 1 Ratio (%) 0.30 0.60 PCL/Avg. Loans Accept. (%) 64.2 67.0 Productivity Ratio (%) 4.7 (0.1) Revenue Growth (%) 15.9 13.2 Return on Equity (%) 16.9 13.9 Cash Return on Equity (%) 2.29 1.96 EPS – Diluted ($/share) 2.43 2.06 Cash EPS – Diluted ($/share) 1269 1033 Net Income ($MM)

2001 2002

Excluding Non-recurring Items

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Group Performance

1269 1033 Total Bank (6) (219) Corporate & Emfisys 110 96 Private Client 573 445 Investment Banking 592 711 Personal & Commercial

2001 2002 Net Income ($MM)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Improved Group Performance

592 573

  • 6

1269

711 445 96 1033

110

  • 219

P&C IBG PCG

  • Corp. &

Emfisys Total Bank

Net Income ($MM)

YTD 2001 and YTD 2002

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

EPS ($) Cash EPS ($)

YTD Earnings Per Share

2.29 1.96 2.06 2.43 2001 2002

Q2 EPS reflects:

  • Lower net income
  • Significantly higher

PCL in first half of 2002 versus 2001

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Revenue and Expense Growth

6579 6570 2001 2002

Total Revenue ($MM)

4222 4403 2001 2002

Non-Interest Expense ($MM) ↓ ↓ ↓ ↓ 9 (↓

↓ ↓ ↓0.1%)

↑ ↑ ↑ ↑ 181 (↑

↑ ↑ ↑4.3%)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Revenue Growth

3440 3705 3139 2865 YTD 01 YTD 02

($MM)

↓ ↓ ↓ ↓ 9 (↓

↓ ↓ ↓0.1%) Other Income Net Interest Income

6579 6570

YTD ’02 vs YTD ’01

  • Other Income down

$274MM

  • NII up $265MM
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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Revenue Growth

$MM … investment write-downs more than offset favourable impact of acquisitions

Total Growth Business Growth Investment Securities Losses Acquisitions / Disposals & Initiatives

YTD ’02 vs YTD ’01

  • 9 (-0.1%)

82 (1.3%) 90 (1.4%)

  • 181 (-2.8%)
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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

YTD Expense Growth

YTD 02 vs YTD 01

… reflects management of core expenses and lower variable compensation $MM

Total Growth Acquisitions Ongoing Growth Disposals & Initiatives Variable Comp. 181 (4.3%) 101 (2.5%)

  • 30 (-0.7%)
  • 73 (-1.8%)

183 (4.3%)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

64.2 67.0 2001 2002

YTD Expense-to-Revenue Ratio

(%)

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Q 3 2 0 0 2 F I N A N C I A L R E S U L T S

Forward-looking Statements

Caution Regarding Forward-looking Statements This financial presentation includes forward-looking statements, which are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments with respect to our objectives, targets, strategies, financial condition, the results of our operations and our businesses, our outlook for our businesses and for the Canadian and U.S. economies, and risk management. By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be

  • accurate. We caution readers of this report 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, targets, expectations, estimates and intentions expressed in such forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by the following factors: fluctuations in interest rates and currency values; regulatory developments; statutory changes; 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

  • thers should carefully consider the foregoing factors as well as other uncertainties and potential events. The

Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank. Investor Relations Phone: 416-867-6656 Fax: 416-867-3367 Email: investor.relations@bmo.com