For the Period Ended Januar y 31, 2000 Shareholder Dividend Reinvestment and Share Purchase Plan Average market price November 1999 $ 53.79 December 1999 $ 49.41 January 2000 $ 45.95 For dividend information, change in shareholder address or to advise of duplicate mailings, please contact The Trust Company of Bank of Montreal 129 Saint-Jacques Street B Level North Montreal, Quebec H2Y 1L6 Telephone: (514) 877-2500 Fax: (514) 877-9676 For other shareholder information, please contact Shareholder Services Corporate Secretary’s Department 21st Floor 1 First Canadian Place Toronto, Ontario M5X 1A1 Telephone: (416) 867-6785 Fax: (416) 867-6793 F i r s t Q u a r t e r Re p o r t E-mail: corp.secretary@bmo.com For further information on this report, please contact Investor Relations Department 18th Floor P .O. Box 1 1 First Canadian Place Toronto, Ontario M5X 1A1
Financial Highlights For the three months ended Jan 31, Oct 31, Jan 31, Change from (Canadian $ in millions except as noted) 2000 1999 1999 Jan 31, 1999 Net Income Statement Net interest income (TEB) (a) $ 1,081 $ 1,124 $ 1,089 (0.7)% Other income 1,042 884 845 23.3 Total revenue (TEB) (a) 2,123 2,008 1,934 9.8 Provision for credit losses 100 80 80 25.0 Non-interest expense 1,254 1,501 1,232 1.8 Provision for income taxes (TEB) (a) 279 153 243 15.6 Non-controlling interest in subsidiaries 4 4 7 (39.3) Net income before goodwill 486 270 372 30.2 Amortization of goodwill, net of applicable income tax 12 12 10 11.2 Net income 474 258 362 30.8 Taxable equivalent adjustment 31 33 36 (12.6) Per Common Share ($) Net income before goodwill • basic $ 1.72 $ 0.91 $ 1.29 $ 0.43 • fully diluted 1.71 0.90 1.28 0.43 Net income • basic 1.68 0.87 1.25 0.43 • fully diluted 1.66 0.86 1.24 0.42 Dividends declared 0.50 0.47 0.47 0.03 Book value per share 35.77 34.87 33.09 2.68 Market value per share 48.15 56.65 66.75 (18.60) Total market value of common shares ($ billions) 12.9 15.1 17.7 (4.8) As at Jan 31, Oct 31, Jan 31, Change from 2000 1999 1999 Jan 31, 1999 Balance Sheet Summary Assets $ 228,525 $ 230,615 $ 224,919 1.6% Loans 133,148 138,001 134,481 (1.0) Deposits 154,469 156,874 146,577 5.4 Capital funds 15,920 15,693 15,413 3.3 Common equity 9,571 9,313 8,785 8.9 Net impaired loans and acceptances (240) (256) (319) 24.8 Average Balances Loans 135,659 134,362 136,226 (0.4) Assets 230,195 225,321 230,169 0.0 Jan 31, 2000 Oct 31, 1999 Jan 31, 1999 Three Months Twelve Months Three Months Primary Financial Measures (%) (b) Five-year total shareholder return 17.5 22.0 21.6 Net economic profit ($ millions) 201 401 130 Earnings per share growth 33.9 1.3 (2.4) Return on equity 19.0 14.1 15.1 Revenue growth 9.8 9.0 5.6 Expense-to-revenue ratio 59.0 66.7 63.7 Provision for credit losses as a % of average loans and acceptances 0.28 0.22 0.22 Gross impaired loans and acceptances as a % of equity and allowance for credit losses 8.89 8.53 7.28 Liquidity ratio 29.9 29.2 28.6 Tier 1 capital ratio 7.84 7.72 7.41 Credit rating AA- AA- AA- Other Financial Ratios (% except as noted) (b) Total shareholder return (12.0) (7.4) 8.7 Dividend yield 3.3 2.9 2.8 Price-to-earnings ratio (times) 9.3 11.9 14.3 Market-to-book value (times) 1.35 1.62 2.02 Cash earnings per share – basic ($) 1.74 5.01 1.32 Cash return on common shareholders’ equity 21.0 15.9 17.1 Return on average assets 0.82 0.61 0.62 Net interest margin 1.87 1.95 1.88 Other income as a % of total revenue 49.1 44.3 43.7 Expense growth 1.8 10.5 6.0 Tier 1 capital ratio – U.S. basis 7.63 7.42 7.15 Total capital ratio 10.99 10.77 10.53 Equity-to-assets ratio 5.1 4.9 4.9 (a) Reported on a taxable equivalent basis (TEB). (c) All ratios in this report are based on unrounded numbers. (b) For the period ended or as at, as appropriate. 2 Bank of Montreal First Quarter Report 2000
Overview Bank of Montreal (the Bank) reported net income of $474 5. Drive e-business opportunities. During the quarter the million for the quarter ended January 31, 2000, compared Bank became the first bank in North America to deliver with $362 million a year ago, and $258 million in the integrated wireless banking and trading services, in fourth quarter of 1999. partnership with the Toronto-based software company Fully diluted earnings per share were $1.66 ($1.68 724 Solutions, which went public in January. The Bank basic), versus $1.24 ($1.25 basic) last year and $0.86 ($0.87 holds 3.4 million shares of common stock, a 9.4% interest basic) in the fourth quarter of 1999. Return on equity was in 724 Solutions, after an initial investment of $2 million. 19.0%, compared with 15.1% for the first quarter of 1999, 6. Intensely focus on cost, capital and risk management. and 9.8% for the fourth quarter of 1999. Return on equity The Bank sold its investment in Partners First, a U.S. on a cash basis was 21.0% up from 17 .1% a year ago, and credit card issuing business, to Wachovia Bank Card 11.2% in the fourth quarter of 1999. Services for an after-tax gain of $67 million. Excluding the gain on the sale of Partners First, net Financial Highlights income was $407 million, fully diluted earnings per share were $1.42 ($1.43 basic), and return on equity was 16.2%. Revenue The net income increase of $45 million, excluding the gain Total revenues for the first quarter increased $189 million, on sale, was driven by higher revenues and a higher pro- or 9.8%, relative to a year ago. Excluding the gain on sale, portion of foreign income which resulted in lower taxes. revenues increased $77 million or 4.0%. The 4.0% rise in This was partly offset by expense growth and an increase revenue reflects a decrease of $8 million in net interest in the provision for credit losses. income or 0.7%, and an increase of $85 million or 10.1% in The rise in net income, excluding the gain on sale, was other income. the result of strong business volume growth in the Bank’s Expenses retail and commercial businesses, and in the wealth man- Expense growth relative to last year was $22 million, or agement businesses, particularly full-service and direct 1.8%, and was driven by higher revenue-driven compensa- investing. Net income from institutional businesses was rel- tion, spending on new strategic initiatives, offset by a atively unchanged as lower volumes and narrower spreads favourable foreign-exchange impact on U.S.-based on fixed income and money market securities, and lower expenses, and a reduction in on-going business expenses cash collections on impaired loans, were offset by revenue including cost reductions. growth from investment and corporate banking activities. Asset Quality The provision for credit losses for the quarter was Strategic Highlights $100 million versus $80 million in 1999. The Bank The Bank’s record performance in the first quarter currently forecasts an annual provision for credit losses reflected the aggressive pursuit and execution of our six of $400 million, compared with $320 million in 1999. point strategy. Key features of the strategy, developed in Gross impaired loans at the end of the quarter grew January, include: $72 million over the last quarter. The allowance for credit 1. Continue to aggressively build the value of Harris losses exceeded gross impaired loans by $240 million at Bank. On a U.S. GAAP basis, Harris Bank earnings were the end of the quarter. US$58 million, up US$7 million or 12.7% from the first Capital Adequacy quarter of 1999. 2. Rapidly grow the wealth management business. The Bank’s Tier 1 Capital Ratio was 7 .84% and the Total Capital Ratio was 10.99% at January 31, 2000 compared with During the first quarter Nesbitt Burns full-service online was introduced as Canada’s first full-service 7 .41% and 10.53% at January 31, 1999. This compares with 7 .72% and 10.77% at October 31, 1999. Risk-weighted assets at online investment program. In addition, the acquisition of the Chicago-based discount brokerage Burke, January 31, 2000 of $138 billion, were relatively unchanged from last year, and up 1.0% from October 31, 1999. Christensen & Lewis was completed. 3. Capitalize on the Bank’s strong Canadian position in personal and commercial banking. Year over year resi- dential mortgages rose 6.3%, credit cards and other per- sonal loans 7 .4% and loans to commercial enterprises 6.9%. In addition, three new In-Store branches were F. Anthony Comper (signed) opened and two branches consolidated during the quarter. Chairman and 4. Build on the Bank’s strong leadership position in Chief Executive Officer investment banking. The Bank was ranked either first or second in corporate underwriting and institutional equity, and first in mergers and acquisitions, research and securitizations. 3 Bank of Montreal First Quarter Report 2000
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