[PDF] - Q409 Defining great customer experience. Institutional Investor PDF Document

SLIDE 1

Defining great customer experience.

Q409

Institutional Investor Presentation

1

Institutional Investor Presentation • Q4 2009

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 document, and may be included in

ther 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 2009 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. 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 30 and 31 of the BMO 2008 Annual Report, which outlines in detail certain key factors that may affect our 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. Assumptions about the level of asset sales, expected asset sale prices, net funding cost, credit quality and risk of default and losses on default of the underlying assets of the structured investment vehicles were material factors we considered when establishing our expectations regarding the structured investment vehicles discussed in this document, including the amount to be drawn under the BMO liquidity facilities and the expectation that the first-loss protection provided by the subordinate capital notes will exceed future

losses. Key assumptions included that assets would continue to be sold with a view to reducing the size of the structured investment vehicles, under various asset price scenarios,

and that the level of defaults and losses will be consistent with the credit quality of the underlying assets and our current expectations regarding challenging market conditions continuing. Assumptions about the level of defaults and losses on defaults were material factors we considered when establishing our expectation of the future performance of the transactions that Apex Trust has entered into. Key assumptions included that the level of defaults and losses on defaults would be consistent with historical experience. Material factors that were taken into account when establishing our expectations of the future risk of credit losses in Apex Trust and risk of loss to BMO included industry diversification in the portfolio, initial credit quality by portfolio, the first-loss protection incorporated into the structure and the hedges that BMO has entered into. 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, including those described under the heading Economic Outlook in our Fourth Quarter 2009 Report to Shareholders, are material factors we consider when determining our strategic priorities,

bjectives 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.

SLIDE 2

2

Institutional Investor Presentation • Q4 2009

Other Reporting Matters

Caution Regarding 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 Fourth Quarter 2009 Report to Shareholders and 2008 Annual Report to Shareholders all

f which are available on our website at www.bmo.com/investorrelations.

Non-GAAP results or measures include: revenue presented on a taxable equivalent basis; amounts presented net of applicable taxes; cash earnings per share; cash operating leverage results; measures that use taxable equivalent basis (teb) amounts; cash-based profitability and operating ratios; net economic profit and results and measures that exclude items that are not considered reflective of ongoing operations. For example, core measures and results which exclude the impact of Visa litigation accruals, impaired loans and acquisition integration costs as well as results and measures presented on a basis that exclude the impact of capital market environment charges. Bank of Montreal provides supplemental information on combined business segments to facilitate comparisons to peers.

3

Institutional Investor Presentation • Q4 2009

F2009 Average Assets C$439 billion (US$3771 billion) F2009 Net Income C$1.8 billion (US$1.51 billion) F2009 Tier 1 Capital Ratio 12.24% # of Employees 36,000

Bank of Montreal (BMO Financial Group)

4th largest bank in Canada measured by total assets as at October 31, 2009 100% ownership of Chicago-based Harris Bank

1 Balances reported in Canadian dollars. F2009 average exchange rate: Cdn/U.S. $1.1648 As at October 31, 2009 the exchange rate: Cdn/U.S. $1.0819

Listings NYSE, TSX (Ticker: BMO) Share Price Oct 31/09: NYSE – US$46.37 TSX – C$50.06 Market Cap Oct 31/09: C$28 billion (US$26 billion)

(Fiscal Year-end)

SLIDE 3

4

Institutional Investor Presentation • Q4 2009

Reasons to Invest in BMO

Clear growth strategy

Consistent and focused North American growth strategy
Strong Canadian and U.S. customer base
Growing global presence to support our customers
Commitment to our medium-term financial objectives

Strong financial position

Balanced approach to capital management
Tier 1 Capital Ratio of 12.24% at October 31, 2009
Tangible common equity to risk-weighted assets ratio of 9.21% at

October 31, 2009

Strong senior debt ratings

Proactive risk management

Independent risk oversight across the enterprise
Disciplined credit risk management capabilities and processes
Group and individual performance assessments that reflect risk-

adjusted returns and align with shareholder interests

Commitment to stakeholders

Clear brand promise that delivers real benefit for customers
Engaged employees committed to exceeding customers’ expectations
Financial performance and consistent dividend payment track record
Strategic approach to corporate responsibility and sustainability

1.85 2.26 2.71 2.80 2.80 2005 2006 2007 2008 2009

Annual Dividend Declared (C$/share)

24.1 (5.8) (27.9) 25.1 3.7 2005 2006 2007 2008 2009

Twelve Month Average Total Shareholder Return (%)

CAGR = 12.0%

5

Institutional Investor Presentation • Q4 2009

2. 2.80 0.66 0.74 0.82 0.88 0.94 1.00 1.12 1.20 1.34 1.59 1.85 2.26 2.71 2.80 2.80 2. 2.51 2.51 2.51 2.30 1.95 1.72 1.45 1.15 1.06 0.96 0.53 0.59 0.63 0.71 0.74 0.84 95 95 96 96 97 97 98 99 99 00 00 01 01 02 02 03 04 04 05 05 06 06 07 07 08 09 09 10 10

Annual Dividends Declared Per Share (C$)

Annual Dividend

CA CAGR = = 1 10.1% BM BMO 15-Yea O 15-Year2

Target Payout Ratio 45% - 55%

BMO Canadian peer group average 1 1 1Estimate based on the assumption that current dividend level continues for the rest of the year 2CAGR based on dividends declared 1995 - 2010

SLIDE 4

6

Institutional Investor Presentation • Q4 2009

U. U.S. S.

Fragmented market
Multiple regulators
Choice of State vs. National Charter

allows flexibility in choosing regulatory environment and structuring operations

Bank Holding Companies provide flexibility

in structuring business activities

Branch restrictions in U.S. and various

limits on interstate expansion

More likely to securitize residential

mortgages as prepayment penalties borne by the bank

Consolidation continues

Canada Canada

Mature oligopoly: 6 chartered banks Single regulator – OSFI Almost no subprime in this market Governed by the Bank Act Foreign ownership limits in place Integrated business model: customers purchase multiple products from one institution Residential mortgages are lower risk due to:

No lending with loan to value above 80%

without government backed insurance

Shorter terms
Prepayment penalties borne by the individual
Lack of interest deductibility from income taxes
Significant portion of mortgages generally

retained on balance sheet

Current government not permitting bank mergers amongst big banks

Systemic Differences Between Canadian & U.S. Banks

7

Institutional Investor Presentation • Q4 2009

Canada has the “soundest and healthiest” banking system in the world based on a recent survey by the World Economic Forum No bailouts by the Canadian government have been needed in the downturn Canadian banks remain among the best capitalized banks in the world BMO Tier 1 Capital Ratio is 12.24% vs. CAD peer average of 11.6% BMO TCE / RWA1 Ratio is 9.21% vs. CAD peer average of 8.52% The market for residential secured borrowing in Canada is typically of high

quality. Approximately 5% of mortgage borrowers are considered to be

non-prime and the large banks are generally not significant players in this space BMO ‘s exposure to U.S. subprime lending is not material More diversified by product and client type, business line and geography BMO was ranked in the top 10 for market cap in North America as of December 2nd, 2009

Performance ... Canadian versus U.S. Banks

1 Tangible Common Equity to Risk Weighted Assets Ratio

SLIDE 5

8

Institutional Investor Presentation • Q4 2009

Canadians in Better Financial Shape

0.6 0.7 0.8 0.9 1.0 1.1 1.2 1995 1996 1998 2000 2002 2003 2005 2007 2009 3.6 4.0 4.4 4.8 5.2 5.6 6.0 1995 1996 1998 2000 2002 2003 2005 2007 2009 38 45 52 59 66 73 80 1995 1996 1998 2000 2002 2003 2005 2007 2009

Hou Househol ehold Debt d Debt1

(ratio to personal income) Can Canada da US US US US Can Canada da

Tech. Stock

Bubble Housing Bubble

Net Net Worth Worth

(ratio to personal income) Can Canada da US US

Homeowner Equ Homeowner Equity ity

(% of real estate values)

1Household Debt = Mortgage and Consumer Credit Only Source: Statistics Canada, US Federal Reserve, US Bureau of Economic Analysis *As of December 4, 2009

9

Institutional Investor Presentation • Q4 2009

40
20

20 40 60 2000 2001 2002 2004 2005 2006 2008 2009

20
10

10 20 2000 2001 2002 2004 2005 2006 2008 2009

Sales Sales Prices Prices

Housing Market Stabilizing … Turning Up

Existing isting Hom Homes (Y/ s (Y/Y % % change; 3 month mov change; 3 month moving av ng averag erage) e)

The housing market seems to have

found a floor in North America

The market in Canada has

demonstrated resilience through the downturn

Month-over-month housing prices

increasing in U.S. with Chicago growing faster than national average1

Can Canada da US US Can Canada da US US

1Case-Shiller: September 2009 Source: Canadian Real Estate Association, National Association of Realtors *As of December 4, 2009

SLIDE 6

10

Institutional Investor Presentation • Q4 2009

Soft Recovery in a Low Interest Rate Environment

8
6
4
2

2 4 6 2005 2006 2007 2008 2009 2010 2011 1 2 3 4 5 6 2004 2005 2006 2007 2008 2009 2011 2.5 2.6 10 3.2

2.5

0.4 US 3.6

2.5

0.4 Canada 11 09 08 Forecast

Can Canada da US US

Rea Real GP l GPD

(Q/Q % change: annualized rate)

Canad Canadian an Intere Interest Rates st Rates

(%: as of December 4, 2009)

Forecast

10-ye 10-year Bond

nd

Ov Over ernig night Ra Rate te 3.26% 0.25%

A soft recovery and subdued

inflation will support a low interest rate environment for an extended period

Recession Ending, Moderate

Recovery Beginning

Source: Statistics Canada, US Bureau of Economic Analysis, Bank of Canada, US Federal Reserve *As of December 4, 2009

11

Institutional Investor Presentation • Q4 2009

Economic Outlook

* Outlook as at December 4, 2009

Canada Canada

The economy is turning up after a three-quarter recession, with modest growth in Q3 and an

expected stronger performance in Q4. Record-low interest rates and unprecedented fiscal stimulus are fostering the recovery. We expect the expansion to gain traction in the year ahead.

The housing market continues to strengthen due to record-low mortgage rates and improving

consumer confidence, and should remain healthy well into next year amid low interest rates.

Consumer spending is strengthening, and business investment has turned higher.
The Bank of Canada is expected to keep interest rates near zero until the middle of 2010 because
f low inflation and relatively high unemployment.
The Canadian dollar is expected to strengthen towards parity with the U.S. dollar in 2010 as a

result of firmer commodity prices and general weakness in the greenback.

U. U.S. S.

The economy is growing moderately after the worst recession in seven decades, supported by

aggressive monetary policy and fiscal stimulus programs. The recovery is expected to continue in 2010, albeit at a subdued rate as consumers rebuild savings.

The housing market is recovering and prices are stabilizing after a three-year slump.
The Fed is expected to keep rates near zero until next fall to encourage a durable recovery.

SLIDE 7

12

Institutional Investor Presentation • Q4 2009

Economy … Recession Over

Sources: BMO Economics, Haver Analytics 1Annual average *Forecasts as of December 4, 2009

Eurozone United States Canada (10.4) (11.2) (3.2) (2.8) (3.7) (0.4) Budget Surplus / GDP (3.0) (3.1) (4.9) (3.2) (2.9) 0.5 Current Account Balance / GDP 10.6 9.4 7.6 10.0 9.3 5.8 8.5 8.3 6.1 Unemployment Rate 1.2 1.2 4.6 0.3 0.2 1.4 0.6 0.3 2.3 Interest Rate (3mth Tbills)1 0.3 1.7 (0.6) (0.2) 2.7 0.1 3.0 Private Consumption Growth 1.6 0.3 3.3 2.1 (0.4) 3.8 1.5 0.3 2.4 Inflation 1.6 (3.9) 0.5 2.5 (2.5) 0.4 2.6 (2.5) 0.4 GDP Growth 2010E 2009E 2008 2010E 2009E 2008 2010E 2009E 2008 Economic Indicators (%)

13

Institutional Investor Presentation • Q4 2009

How BMO is Differentiating to Drive Performance & Growth

Our Customer Culture

Streamlining processes to ensure we deliver extraordinary value to
ur customers and take away complexity
Brand is compelling because it promises a differentiated experience

Excellence in Performance

Managing our people, processes and assets across the enterprise for

productivity

Our culture emphasizes results, customer focus, accountability and

leadership development

Building Leadership in Risk Management

Making investments in our risk management capabilities, assessing

performance based on risk-adjusted returns to ensure that the risks we assume are being appropriately rewarded and are generating shareholder returns

Customer Pace Growth

SLIDE 8

14

Institutional Investor Presentation • Q4 2009

1

BMO’s Strategic Priorities

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

2

Accelerate the growth in our wealth management business by providing our clients with exceptional advice, emphasizing retirement and financial planning.

3

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

4

Grow our business in select global markets to meet our customers’ expanding needs.

5

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

15

Institutional Investor Presentation • Q4 2009

U.S. Growth Potential

Chicago is the hub of Midwest region

Population base of 60 million people, almost

double that of Canada’s population

GDP of $2.6 trillion U.S.

Harris is a well known brand in the attractive U.S. Midwest market Uniquely positioned between smaller community banks and larger network banks New opportunities for organic growth due to the erosion of big network banks in the Midwest Current market conditions may provide

pportunities

Minnesota Wisconsin Michigan Ohio Indiana Illinois Missouri Iowa

SLIDE 9

16

Institutional Investor Presentation • Q4 2009

Acquisition History

U.S. Retail Acquisitions Year Amount (US $MM) Harris Bank 1984 547 Barrington 1985 32

St. Charles & Batavia

1988 26 Libertyville 1990 6 Frankfort 1990 17 Suburban Bancorp 1994 222 Household Int’l 1996 277 Joliet 2001 221 Lakeland 2004 37 New Lenox State Bank (NLSB) 2004 235 Mercantile 2004 161 Edville (Villa Park) 2005 66 First National Bank and Trust 2006 290 Merchants & Manufacturers 2008 135 Ozaukee 2008 180 Total 2,452

Harris Bank

Recognized and respected bank, in

business for 125 years

Established strengths in both personal

and commercial businesses, serving

ver 1 million customers

Distribution network

280 branches

188 in Illinois 40 in Wisconsin 52 in Indiana

636 ATM’s
Internet & telephone banking

Chicago

Solid growth in population and median

household incomes

Highly diversified economy
Banking industry still fragmented

17

Institutional Investor Presentation • Q4 2009 As reported Items of Note

Long-Term Financial Trends

11.1 10.2 9.3 10.0 9.8 9.3 9.0 8.6 8.6 8.4 7.7 11.6 10.6 10.3 99 00 01 02 03 04 05 06 07 08 09

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 5.8%1

4.2% CAGR1 1.8 2.0 2.1 2.7 2.4 2.3 1.8 1.4 1.4 1.8 1.3 2.3 2.4 2.8

14.1 18.0 13.8 13.4 16.4 19.4 18.8 19.2 14.4 13.0 9.9 99 00 01 02 03 04 05 06 07 08 09

5.8% CAGR1 As reported Items of Note ROE

(as reported) 1 Excluding items of note As reported results: Revenue CAGR of 3.7% Net Income CAGR of 3.3%

SLIDE 10

18

Institutional Investor Presentation • Q4 2009

2.40 2.66 2.13 1.98 1.79 2.77 2.40 2.26 2005 2006 2007 2008 2009 9.9 13.0 14.4 19.2 18.8 18.8 16.0 12.7 2005 2006 2007 2008 2009

Fiscal 2009 Financial Highlights

Net Income $1.8 billion, ROE 9.9% (as reported) Excluding items of note1

Net Income $2.3 billion
ROE 12.7%

Results reflect strength and diversity of core business in challenging market

ROE (%) Net Income ($B)

1 Items of note include: F2007: Commodities losses, capital markets environment charges, increase to the general allowance, and restructuring charges F2008: Capital markets environment charges and increase to the general allowance F2009: Capital markets environment charges, severance costs and increase to the general allowance

As reported Items of Note

19

Institutional Investor Presentation • Q4 2009 PC PCG $2,012 17% P& P&C $6,396 54% BM BMO C CM $3,466 29%

Operating Groups

Personal & Commercial Banking (P&C)

Over 8 million customers across Canada & the U.S.
Almost 1,200 branches in Canada & the U.S.
Access to over 2,600 automated banking machines

in Canada and the U.S.

Private Client Group (PCG)

Full-service and direct investing, private banking,

investment products

BMO Life Insurance

BMO Capital Markets (BMO CM)

Bulge bracket firm in Canada, mid-market niche

player in the U.S.

Capital raising, M&A and restructuring advisory

services

Industry leading research, sales and trading

capability F2009 Revenue by Operating Group (C$MM) F2009 Net Income by Operating Group (C$MM)

P&C : $ 6,396 PCG : $ 2,012 CM : $ 3,987 Corp : $ (810)

Total Total $11, $11,874 874

BM BMO C CM $1,060 36% P&C P&C $1,501 51% PCG PCG $381, 13%

Total Total $2,9 $2,942

Re Reve venu nues Exclud luding Items of ing Items of Note ($

te ($MM)1

P&C : $1,501 PCG : $ 381 CM : $ 1,415 Corp : $ (1,036) Net Income t Income Exclud luding Items of ing Items of Note ($

te ($MM)1

1 Items of note include capital markets environment charges in BMO CM, as well as a severance costs and increase to the general allowance in the corporate segment * 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.

SLIDE 11

20

Institutional Investor Presentation • Q4 2009

Highlights of BMO in Canada

F2009 Non-U.S. Operating Group Revenue (C$MM)

Large, full service universal bank
BMO continues to rank 2nd in business banking

market share for business loans $5MM and below

Strong performance in combined Personal &

Commercial (P&C) / Private Client Group (PCG) businesses

BMO Capital Markets (BMO CM) Ranked Top

Overall Equity Research Team in Canada for the 29th consecutive year

BMO InvestorLine was recognized as Canada’s

best of the bank-owned brokerages by The Globe and Mail in 2009 F2009 Non-U.S. Operating Group Net Income (C$MM)

PC PCG $390, 17% P&C P&C $1,392 61% BM BMO C CM $508 22%

Total Total $2,2 $2,290

PCG PCG $1,771 20% P&C P&C $5,263 60% BM BMO C O CM $1,700 20%

Total Total $8,7 $8,734

P&C : $ 5,263 PCG : $ 1,771 CM : $ 2,221 Corp : $ (490) P&C : $ 1,392 PCG : $ 390 CM : $ 863 Corp : $ (318) Re Reve venu nues Exclud luding Items of ing Items of Note ($

te ($MM)1

Net Income t Income Exclud luding Items of ing Items of Note ($

te ($MM)1

1 Items of note include capital markets environment charges in BMO CM, as well as a severance costs and increase to the general allowance in the corporate segment * 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.

21

Institutional Investor Presentation • Q4 2009

Our Presence in the U.S.

F2009 U.S. Operating Group Revenue (US$MM) F2009 U.S. Operating Group Net Income2 (US$MM) Pe Personal al & Comm & Commer ercial ( al (P&C &C)

Brand image and reputation Well-positioned branch distribution

and access

Strong sales management &

marketing capabilities

Superior risk management capabilities Strong customer orientation and

culture

PCG PCG $208, 8% P&C P&C $973 36% BM BMO C CM $1,505 56%

Total Total $2,6 $2,686

P&C P&C $94 17% BM BMO CM CM $464 83%

Total Total $558 $558

P&C : $ 973 PCG : $ 208 CM : $ 1,505 Corp : $ (265) P&C : $ 94 PCG : $ (7) CM : $ 464 Corp : $ (611) Net Income t Income Exclud luding Items of ing Items of Note ($

te ($US M

US MM)1 Re Reve venu nues Exclud luding Items of ing Items of Note ($

te ($US M

US MM)1

1 Items of note includes severance costs and increase to the general allowance in the corporate segment 2 PCG had a net loss of US$7MM as reported for F2009 * 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.

Priv Private Cli ate Client Group nt Group (PCG (PCG)

Industry-recognized leadership in

client service

High retention, strong product

ffering

Strategic presence in select high-

growth wealth management markets

Harris distribution and brand

BMO Capital BMO Capital Marke Markets (B (BMO CM) MO CM)

Attractive client base, strong long-term relationships Primary focus on mid-market Full service, integrated investment & corporate bank Cross-border capabilities Sector specialties Top-tier equity research capabilities Strong position in the municipal bond market

SLIDE 12

22

Institutional Investor Presentation • Q4 2009

Strong fourth quarter results with 6% revenue growth and effective expense management P&C Canada continues to deliver strong revenue growth of 8%, net income growth of 22% and

improvement in competitive position

Tier 1 capital ratio remains strong

F2009 Q4 09

12.24% $1,603MM 1.3% 9.9% $3.14 $3.08 1,787MM 8.3% Cash Operating Leverage 12.24% Tier 1 Capital Ratio (Basel II) Net Income EPS Cash EPS ROE Total PCL1 $647MM $1.11 $1.13 14.0% $386MM

Financial Highlights

Strengths Challenges

Continued market environment pressures

1 F2009 includes a charge to the general allowance of $60MM in Q3 09

23

Institutional Investor Presentation • Q4 2009

Well-Diversified Business

F2009 Revenue by Operating Group (C$MM) Over 70% of revenues from retail businesses in Canada and the US (P&C and PCG)

Total Total 11,874 874MM

P&C (Personal & Commercial) 54% BMO CM (Investment Banking) 29% PCG (Wealth Management) 17% Ca Cana nada -

Ca

Cards, 1, 1,25 254 P&C US P&C US, 1, 1,13 133 Ca Canada -

Pe

Pers rsona

nal &

& Ot Other, 2, 2,47 478 Ca Cana nada -

Com

Commer ercial, 1, 1,53 531 PC PCG, 2, 2,01 012 Tr Trading ing Pr Products, 1, 1,98 983 Inv & Inv & C Corp Ba Banking a and Oth Other, r, 1, 1,48 483

SLIDE 13

24

Institutional Investor Presentation • Q4 2009

Group Performance

Net Income Revenue 1,787 (1,155) 1,060 381 1,501 109 1,392 F2009 9,349 (323) 1,969 2,162 5,541 908 4,633 F2007 10,205 (249) 2,440 2,146 5,868 990 4,878 F2008 As Reported

($MM)

F2009 F09/F08

B/(W)

F2007 F2008 F09/F08

B/(W)

P&C Canada 5,263 8% 1,148 1,209 15% P&C U.S. 1,133 14% 116 96 14% Total P&C 6,396 9% 1,264 1,305 15% PCG 2,012 (6)% 528 452 (16)% BMO Capital Markets 3,466 42% 417 711 49% Corporate Services (810) (+100)% (78) (490) (+100)% Total Bank 11,064 8% 2,131 1,978 (10)% Net Income Revenue 2,261 (1,036) 1,415 381 1,501 109 1,392 F2009 10,296 (323) 2,916 2,162 5,541 908 4,633 F2007 10,593 (249) 2,828 2,146 5,868 990 4,878 F2008

Excl. Notable Items

($MM)

F2009 F09/F08

B/(W)

F2007 F2008 F09/F08

B/(W)

P&C Canada 5,263 8% 1,148 1,209 15% P&C U.S. 1,133 14% 116 96 14% Total P&C 6,396 9% 1,264 1,305 15% PCG 2,012 (6)% 528 452 (16)% BMO Capital Markets 3,987 41% 918 971 46% Corporate Services (810) (+100)% 58 (324) (+100)% Total Bank 11,585 9% 2,768 2,404 (6)%

* 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.

25

Institutional Investor Presentation • Q4 2009

Group Net Income

560 (150) 290 84 336 12 324 Q4 08 225 (369) 179 73 342 34 308 Q1 09 As Reported

($MM)

Q2 09 Q3 09 Q4 09 Q/Q

B/(W)

Y/Y

B/(W)

P&C Canada 334 356 394 11% 22% P&C U.S. 25 25 25

+100%

Total P&C 359 381 419 10% 25% PCG 78 120 110 (7)% 32% BMO Capital Markets 249 343 289 (16)% (1)% Corporate Services (328) (287) (171) 41% (14)% Total Bank 358 557 647 16% 16%

nm – not meaningful

685 (52) 298 103 336 12 324 Q4 08 584 (369) 527 84 342 34 308 Q1 09 Excluding Items of Note

($MM)

Q2 09 Q3 09 Q4 09 Q/Q

B/(W)

Y/Y

B/(W)

P&C Canada 334 356 394 11% 22% P&C U.S. 25 25 25

+100%

Total P&C 359 381 419 10% 25% PCG 78 120 110 (7)% 7% BMO Capital Markets 329 343 289 (16)% (3)% Corporate Services (248) (248) (171) 31% nm Total Bank 518 596 647 9% (6)%

* 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.

SLIDE 14

26

Institutional Investor Presentation • Q4 2009 0.43% 0.43% 0. 0.0 0. 0.2 0. 0.4 0. 0.6 0. 0.8 1. 1.0 1. 1.2 1. 1.4 1. 1.6 1. 1.8 91 91 92 93 93 94 94 95 96 96 97 98 98 99 00 01 01 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 BM BMO Cd Cdn C Competit itors W Weig ighted A Average Historic ical al A Averag age (B (BMO)* Hist storical C Cdn Compe mpetitor

rs'

s' A Average

Credit Performance Measure

Sp Specific PCL ecific PCL as a % as a % of

f Av

Aver erage Ne age Net Loan t Loans an and d Acce cept ptance ces

(excluding excluding Rever Reverse Repo se Repos)

0.85% 0.85% 0.61% 0.61% Perc Percent BMO’s Canadian competitors include: BNS, CM, NA, RY, TD Competitor average excludes the impact of TD’s sectoral provisions * Historical avg.: 1991 to 2009

0.72 0.85 F2009 0.61 0.43 Historical avg.* 0.40 0.61 F2008 Canadian Competitors BMO

High 1.69% High 1.69% Low 1.16% w 1.16% High 1.24% High 1.24% Low 0.64% w 0.64% 0.72% 0.72%

Historical Specific PCL average

27

Institutional Investor Presentation • Q4 2009

Loan Portfolio Distribution

Commercial Mort gages Commercial Real Est at e Const ruct ion Ret ail Trade Wholesale Trade Agricult ure Communicat ions Manufact uring Mining Oil & Gas Transport at ion Ut ilit ies Forest Product s Service Indust ries Financial Services Government Ot her

Commercial and Corporate

Gross Loans and Acceptances by Industry ($B)

As at October 31, 2009 100% 170 10 39 121 Total 20% 34 10 13 11 Corporate 26% 44

9

35 Commercial 54% 92

17

75 Total Consumer 2% 3

3

Cards 27% 46

11

35 Consumer Loans 25% 43

6

37 Residential Mortgage Consumer Total Other U.S. Canada ($B)

To Total G Gross Lo Loans a and A Acce ceptance ces

As at October 31, 2009

SLIDE 15

28

Institutional Investor Presentation • Q4 2009

1 Based on the riskiest 87 credits defaulting out of a total portfolio of 442 and using conservative recovery rates * As at October 31, 2009 unless noted otherwise

Senior ranked BMO liquidity facility provided to facilitate an orderly

windup of each vehicle. It is well protected – has benefit of asset quality and significant subordinated capital beneath it. Links has $866MM (12% of asset B/V) subordinated capital (B/V); this percentage is higher for Parkland.

Strategy to sell assets in an “orderly” manner unchanged – actual

sales slowed since last year given illiquid market conditions.

Asset quality remains strong – 91%/92% of Links assets (by market

value) are investment grade by Moody’s/S&P; 51% rated Aa3 or better by Moody’s, 47% rated AA- or better by S&P. Parkland has a greater percentage of highly rated assets. Portfolio mix largely unchanged.

Senior Ranked Liquidity Facility stands at US$6.0BN (US$5.8BN

funded), and €627MM (€597MM funded) for Links and Parkland

respectively. Fair value of assets is US$5.5BN for Links and €631MM

for Parkland.

Assuming no asset sales and that assets are repaid as anticipated

the Liquidity Facility drawn amount is forecast to be US$5.2BN and €542MM as at 31/10/10 and US$1.3BN and €68MM by 31/10/13.

Fair value of assets impacted by market illiquidity; has exhibited

some recovery over the quarter.

Sales and asset maturities generated B/V reductions of:

Links – US$442MM sales, US$277MM maturities Parkland - €10MM sales, €11MM maturities

Credit Protection Vehicle & Structured Investment Vehicle Update

The vehicle has 12 tranches of diversified credit pools, each with first

loss protection in place.

In Q3 and Q4 we put in place hedges that result in BMO’s residual risk
f loss being modest:
During the third quarter we entered into a transaction that

hedges the first $515MM of losses on our committed exposure under the senior funding facility.

During the fourth quarter we entered into a transaction that

hedges our $815MM of exposure to the Notes.

Cumulative default rate would need to exceed ~18% for BMO to have

realized loss given hedges.1

The likelihood of losses exceeding the level of protection provided by

the hedges is considered remote given the level of first-loss protection

n the tranches and the strength of the underlying credits with over

70% rated investment grade.

Significant first loss protection on all but two tranches (with hedges

BMO has essentially no exposure to credit losses in these tranches).

The attachment point on the weakest tranche of $875MM is 3.2%; the

second weakest tranche of $342MM has an attachment point of 10.4%. BMO’s effective ~$450MM exposure to these tranches is fully

hedged. Approximately $8B in 7 tranches have attachment points

between 13% and 15%; the remaining $12B in 3 tranches have attachment points greater than 23%.

Credit Protection Vehicle

Risk of realized loss is considered remote.

Structured Investment Vehicles

Book Value of Subordinated Capital Notes exceeds future expected losses.

29

Institutional Investor Presentation • Q4 2009

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)

31.9 29.1 33.1 27.2 26.5 26.0 2004 2005 2006 2007 2008 2009 73.4 72.3 73.3 75.9 85.8 95.4 23.4 22.6 22.4 25.1 32.8 27.7 2004 2005 2006 2007 2008 2009 Canadian $ US$ and other currency in US$

Programs: Current program size: EMTN Program: US$20bn Canadian MTN Program: $6bn Covered Bond Program: €7bn US 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.

SLIDE 16

30

Institutional Investor Presentation • Q4 2009

Wholesale Capital Market Term Funding Composition (Total $64.3B) As at Oct 31, 2009

Tier 1 Capital 8% US $ Senior Debt (Issued in Euro & U.S. Markets) 17% Euro Covered Bond 2% C$ Senior Debt 16%

Diversified Wholesale Term Funding Mix

Tier 2 Capital 8% Euro Senior Debt 5%

Wholesale Capital Market Term Funding Maturity Profile (Total $64.3B) As at Oct 31, 2009 2 4 6 8 10 12 14 16

2010 2011 2012 2013 2014 2015 2016 2017 2018 >2018 Term Debt Tier 1 Capital Tier 2 Capital Securitization Issuance CDE ($B) C$ Mortgage & Credit Card Securitization 44%

Our wholesale funding principles seek to match the term of assets with the term of funding. Loans for example are largely funded with customer deposits and capital, with the difference provided by longer-term wholesale funding. BMO has a well diversified wholesale funding platform across markets, products, terms, currencies and maturities. BMO has largely prefunded its fiscal 2010 wholesale term-funding requirements. Our liquidity position remains sound as reflected by our cash and securities to total asset ratio and level of core deposits.

31

Institutional Investor Presentation • Q4 2009

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

f 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 2009 annual review of corporate governance practices ranked BMO 3rd overall among 180 Canadian reporting issuers

SLIDE 17

32

Institutional Investor Presentation • Q4 2009

Recent Sustainability Initiatives

What is BMO doing? Integrating respect for the environment into our business growth strategies and practices by:

Implementing our Clear Blue Skies™ Initiative, which includes our BMO ECO5 Strategy, designed to

manage the environmental impact of our operations.

Committing to achieve carbon neutrality for energy consumption and transportation emissions across
ur enterprise in 2010. By making operational improvements, retrofitting buildings, using technology

to reduce travel and raising employee awareness we are working towards this goal.

Being a leader in reducing our non-renewable energy consumption.

BMO purchases over 23,800 megawatt hours of emission-free electricity annually from Bullfrog Power, a green electricity retailer that markets energy from clean, renewable sources like wind power and low-impact water power.

Investing $10 million in the new Greening Canada Fund, which provides direct access to credits that
ffset greenhouse gas emissions.
Introducing two environmentally responsible investment funds; BMO Sustainable Climate Class and

BMO Sustainable Opportunities Class. 33

Institutional Investor Presentation • Q4 2009

Ongoing Stakeholder Engagement

BMO supports various international environmental initiatives: Signatory to the United Nations’ UNEP Statement by Financial Institutions on the Environment & Sustainable Development, the Carbon Disclosure Project and The Equator Principles External recognition for our sustainability efforts: Included in indices that recognize the sustainability performance of companies across economic, social and environmental dimensions (e.g. FTSE4Good Index, Dow Jones Sustainability North America Index and Jantzi Social Index) Named as one of the highest scoring companies in the world and the only Canadian bank in the Global 500 Carbon Disclosure Leadership Index for 2009.

SLIDE 18

Defining great customer experience.

Investor Relations Contact Information

E-mail: investor.relations@bmo.com www.bmo.com/investorrelations Fax: 416.867.3367

VIKI LAZARIS

Senior Vice President 416.867.6656 viki.lazaris@bmo.com

STEVEN BONIN

Director 416.867.5452 steven.bonin@bmo.com

ANDREW CHIN

Senior Manager 416.867.7019 andrew.chin@bmo.com