[PPT] - Q4 2002 Karen Maidment Executive Vice President and Chief PowerPoint Presentation

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FINANCIAL RESULTS

Karen Maidment

Executive Vice President and Chief Financial Officer

Q4 2002

Quarterly Investor Presentation November 26, 2002

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

0.72 0.25 0.85 Cash EPS – Diluted ($/share) 14.4 4.8 16.4 Cash Return on Equity (%) 8.72 8.15 8.80 Capital: Tier 1 Ratio (%) 0.44 1.49 0.43 PCL/Avg. Loans Accept. (%) 68.4 68.1 68.3 Productivity Ratio (%) (4.1) (1.2) 7.5 Revenue Growth (%) 13.5 3.8 15.5 Return on Equity (%) 0.68 0.19 0.80 EPS – Diluted ($/share) 360 109 423 Net Income ($MM)

Q3 2002 Q4 2001 Q4 2002

Excluding Non-Recurring Items

Q4 Financial Snapshot

* Annualized * * *

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 Financial Highlights – Total Bank

Improved earnings attributable to accounting

changes for goodwill, lower PCL, lower tax rates and improvements in operating group performance

Revenue growth favourably affected by

acquisitions, but continued to be challenging in current economic conditions

Expense growth reflects acquisitions, initiative

spending, performance-based compensation and severance costs

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 Financial Highlights - Groups

Personal & Commercial net income increased by

32% from a year ago and the trend of increasing volumes continued

Private Client net income increased substantially

due to acquisitions, revenue generating initiatives and cost control

Investment Banking net income increased

strongly due to lower provision for credit losses

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4

Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q3 2002 Q4 2001 Q4 2002 Net Income ($MM)

109 7 145 Investment Banking 360 109 423 Total Bank (31) (103) (16) Technology & Solutions and Corporate 26 11 38 Private Client 256 194 256 Personal & Commercial

Q4 Group Performance

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 Revenue Growth

Q4 ’02 vs Q3 ’02 ($MM) … improvements in Investment Banking and continued growth in P&C

$MM

Revenue Growth

Total Growth Acquisitions Business Growth Disposals & Initiatives Investment Securities Losses 146 (6.9%) 22 (1.2%) 3 (0.1%) 160 (7.5%) 39 (1.8%) 65 (3.1%) 55 (2.6%)

Q4 ’02 vs Q4 ’01 ($MM)

126 (5.8%) 1 (0.0%)

5 (-0.2%)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 Expense Growth

Q4 ’02 vs Q3 ’02 ($MM) … is nil over Q4 ’01, excluding acquisitions and severance costs

Total Growth Acquisitions Ongoing Growth Disposals & Initiatives Variable Comp. Severance Costs

$MM

NIX Growth

100 (6.8%) 9 (0.7%) 17 (1.1%) 19 (1.3%) 116 (7.9%)

45 (-3.4%)
9 (-0.5%)

54 (3.7%) 5 (0.3%) 66 (4.6%)

Q4 ’02 vs Q4 ’01 ($MM)

50 (3.4%) 50 (3.5%)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

68.1 66.3 66.4 68.4 66.1 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Q4 Expense-to-Revenue Ratio

(%)

68.3

Excl. Q4

Severances Total Bank

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 P&C Delivers Strong Results Q4 P&C Delivers Strong Results

Volume growth in

Canada and US

US margin stable;

Canada improved slightly

Offset by higher

performance based compensation and spending on key initiatives

Significant

improvement over prior year

Revenue & Net Income ($MM)

194 227 229 256 256 1093 1100 1172 1205 1131 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Net Income Revenue

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

13.10

18.87 18.80 19.04 19.28 19.48 14.67 14.77 14.69 14.59 14.77

13.11 12.89 13.03 13.24 13.26 13.29 13.41 13.48 13.48

Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Q4 P&C Market Share

Personal Loans

(ex. cards)

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 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4’01 affected by

higher PCL and investment write- downs

Improvement over

Q3’02 due to improved M&A activity and lower write-downs

Higher expenses

for revenue driven compensation and severance in Q4’02

Q4 IBG Environment Remains Very Challenging Q4 IBG Environment Remains Very Challenging

7 183 155 109 145 715 642 536 636 720 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Net Income Revenue

Revenue & Net Income ($MM)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 PCG Solid Performance In Challenging Markets Q4 PCG Solid Performance In Challenging Markets

11 39 32 26 38 362 438 440 432 387 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Net Income Revenue

Revenue & Net Income ($MM)

(Excluding Non-Recurring)

Revenue growth driven

by acquisitions; other businesses stable despite market environment

Investment in long-term

growth strategy continues, balanced with strong cost management

CSFBdirect contributed

positive Cash Net Income ($38MM acquisition-related costs classified as non- recurring)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 AUA/AUM Balances Reflect Acquisitions Q4 AUA/AUM Balances Reflect Acquisitions

164 170 199 196 195 73 77 75 77 77

Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

AUA / AUM ($B)*

AUM AUA & Term 237 247 276 273

AUA/AUM & Term year-
ver-year increase due to

acquisitions, strategic initiatives and organic growth

Excluding acquisitions,

AUA/AUM & Term year-

ver-year flat whereas

TSE and S&P were down 9.2% and 16.4% respectively

270 * Certain Assets under Administration and Assets under Management have been reclassified

to confirm with the current period’s presentation.

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 Technology & Solutions and Corporate Q4 Technology & Solutions and Corporate

103
77
115
31
16

Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Net Income ($MM)

Increase from Q4

’01 due to lower PCL and income taxes, partly

ffset by higher

pension and severance costs

Improvement over

Q3’02 primarily due to lower tax rates and tax initiatives

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

F2003 Reporting Changes

Harris Bankcorp, Inc. will deregister from SEC
Harris Bank continues to operate as a multibank holding

company and remains subject to regulation by the US Board of Governors of the Federal Reserve Bank

Harris Bank’s Q4 press release will be the last such

disclosure

BMO will provide expanded disclosure of US results

beginning F2003

Change is consistent with strategy and will promote better

understanding of BMO’s US operations

BMO to begin recognizing compensation expense for new

stock options granted after October 31, 2002

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Q 4 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 4 2 0 0 2 F I N A N C I A L R E S U L T S

Non-Recurring Items

(25)

Tax Asset Adjustment
(178)
CBO Write-down
(178)
62

NIX Acquisition Related Costs 23

39

100

Total Provisions For Credit

Losses

12.9

0.65 346 (14) (23)

Q3 ’02

(0.4)

4

(105) (178) (178)

Q4 ’01

14.6 0.75 398 (25) (39)

Q4 ’02

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

Sale of Bancomer Shares
Sale of Canadian Branches

Non-interest Revenue

($MM)

13.8 13.4 2.66 2.68 1,471 1,417 93 (39) 12

55

(62) 155

321
2001

2002

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Cash

Q4 Earnings Per Share & Return on Equity

0.19 0.71 0.57 0.80 0.68 0.85 0.72 0.59 0.75 0.25 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Earnings Per Share ($)

3.8 14.5 11.6 15.5 13.5 16.4 14.4 12.2 15.2 4.8 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Return on Equity (%)

Accrual

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

110 95 86 312 315 312 308 316 192 195 207 194 202 107 126

Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Q4 Net Interest Margins Decline Slightly

Total Bank IBG P&C

Net Interest Margin (bps)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

8.80 8.72 8.15 8.87 8.61 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Tier 1 (%) Total Capital (%)

Tier 1 ratio improved

due to organic business growth and lower risk-weighted assets

Q4 Capital Remains Above 8% Target

12.12 12.93 12.48 12.25 12.23

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

135.8 132.5 131.3 131.1

5.5 4.8 5.6 7.0 7.9

130.1

60.2 58.5 55.9 68.5 64.7 67.3 63.0 64.3 65.8 61.8

Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Q4 Capital Adequacy

Total Bank IBG P&C PCG & Other

Risk Weighted Assets ($B)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 P&C

3.12 3.15 3.12 3.08 3.16 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 23.5 24.7 26.7 26.6 23.8 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 62.5 61.6 60.0 58.7 59.7 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Net Interest Margin NIX / Revenue Cash ROE

Margin improved in Canada and

stable in US

Performance based compensation

and initiative spending increases the NIX/Revenue ratio

Cost containment and revenue

growth drives NIX/Revenue ratio lower than prior year

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 P&C Volume Growth

4.3 8.0 12.3 14.7 14.4 41.4 42.7 44.4 45.9 47.3

10 20 30 40 50 60

5 10 15 20 25 30

Residential Mortgages Personal Loans

7.0 7.9 9.7 13.7 13.4 18.1 18.4 19.1 19.8 20.5

5 10 15 20 25 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

5 10 15 20 25 30

13.5 20.9 23.2 22.7 15.2 35.0 37.7 38.9 39.5 40.3

5 10 15 20 25 30 35 40 45 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

10 20 30 40

Yr./Yr. Growth (%) Includes securitized balances

Personal Deposits

1 1

Average Balances ($B)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 P&C Net Income

28 38 47 49 52 166 189 182 207 204 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

… Strong contributions from Canadian and US franchises

Chicagoland Banking ($MM) Canada ($MM)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 IBG

1.07 1.26 1.10 0.95 0.86 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 7.3 10.2 11.2

0.6

13.1 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 47.6 51.5 54.8 62.3 57.3 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

Net Interest Margin NIX / Revenue Cash ROE

Margin decreased mainly due to

lower spreads in capital markets businesses and cash management

NIX / Revenue decreased

compared to Q3’02 due to revenue improvements and a disciplined approach to cost management

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Q4 PCG

10.70 10.62 10.02 10.21 10.23 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 8.5 11.8 10.3 13.6 17.2 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 93.0 84.6 87.4 88.6 85.9 Q4 01 Q1 02 Q2 02 Q3 02 Q4 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, balanced with strong cost management

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Direct Investing Continues Growth Through Acquisitions Direct Investing Continues Growth Through Acquisitions

17 6 10 348

Q4 2001

147% 150% 116% 139%

Yr / Yr Change

43 43 Customer Assets ($B Cdn) 17 15 Trades / Day (000) 23 21 New Accounts (000) 709 831 Active Accounts (000)

Q3 2002 Q4 2002

Active accounts restated for systems adjustment required to appropriately apply the definition of active accounts. Active accounts are defined as “accounts with balances or stock positions or trading activity in the last 12 months”. Gross active new accounts estimated

1 2

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Acquisitions Acquisitions

Personal & Commercial Client Group (2) 3 (2) (2) 2 Net Income 26 29 67 88 66 Expense 24 33 66 90 65 Revenue Total Bank (5) 2 (4) (6) 2 Net Income 15 9 55 77 66 Expense 8 12 49 73 65 Revenue 1 20 21 Q1 2002 4 11 17 Q3 2002 3 11 16 Q4 2001 Private Client Group 2 * Net Income 12 * Expense 17 * Revenue Q2 2002 Q4 2002 $MM (Year-over-Year Change)

Acquisition considered core business starting Q4 2002 First National Bank of Joliet CSFBdirect, Morgan Stanley online accounts, Harris Northwestern Trust and Guardian Group of Funds

1 2 1 2 *

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Fiscal Year Financial Snapshot

8.15 8.80 Capital: Tier 1 Ratio (%) 0.60 0.56 PCL/Avg. Loans Accept. (%) 65.1 67.4 Productivity Ratio (%) 3.2 1.7 Revenue Growth (%) 12.9 13.8 Return on Equity (%) 13.9 14.6 Cash Return on Equity (%) 2.48 2.76 EPS – Diluted ($/share) 2.68 2.91 Cash EPS – Diluted ($/share) 1378 1456 Net Income ($MM)

2001 2002

Excluding Non-Recurring Items

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Fiscal Year Group Performance

1378 1456 Total Bank (110) (239) Technology & Solutions and Corporate 121 135 Private Client 582 592 Investment Banking 785 968 Personal & Commercial

2001 2002 Net Income ($MM)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Fiscal Year Improved Group Performance

785 582

110

1378

968 592 135 1456

121

239

P&C IBG PCG

Corp. &

T&S Total Bank

Net Income ($MM)

2001 and 2002

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

EPS ($) Cash EPS ($)

Fiscal Year Earnings Per Share

2.48 2.76 2.91 2.68 2001 2002

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Fiscal Year Revenue Growth

$MM

Total Growth Acquisitions Business Growth Disposals & Initiatives Investment Securities Losses

Revenue Growth 2002 vs 2001

151 (1.7%) 27 (0.2%) 254 (2.9%)

126 (-1.4%)
4 (0.0%)

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Q 4 2 0 0 2 F I N A N C I A L R E S U L T S

Fiscal Year Expense Growth

$MM

Total Growth Acquisitions Ongoing Growth Disposals & Initiatives Variable Comp. Severance Costs

NIX Growth

297 (5.2%) 54 (0.9%)

38 (-0.7%) -19 (-0.3%)

250 (4.4%)

2002 vs 2001

50 (0.9%)

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Q 4 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 Bank of Montreal’s public communications often include written or oral forward-looking statements. Statements of this type are included in this presentation, and may be included in filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, press releases or in other communications. All such statements are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2003 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, 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 and other forward-looking statements will not prove to be
accurate. 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: global capital market activities; interest rate and currency value fluctuations; industry and worldwide economic and political conditions; regulatory and statutory developments; the effects of competition in the geographic and business areas in which we operate; management actions; and technological changes. We caution that the foregoing list of 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 these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank

f 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. Investor Relations Phone: 416-867-6656 Fax: 416-867-3367 Email: investor.relations@bmo.com