For the Period Ended April 30, 2000 Shareholder Dividend Reinvestment and Share Purchase Plan Average market price February 2000 $ 44.44 March 2000 $ 50.35 April 2000 $ 53.76 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 S e c o n d 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 For the six months ended Jan 31, Apr 30, Change from Apr 30, Change from Apr 30, Apr 30, (Canadian $ in millions except as noted) 2000 2000 1999 Apr 30, 1999 2000 1999 Apr 30, 1999 Net Income Statement Net interest income (TEB) (a) $ 1,084 $ 1,081 $ 1,112 (2.5)% $ 2,165 $ 2,201 (1.6)% Other income 1,200 1,042 849 41.4 2,242 1,694 32.4 Total revenue (TEB) (a) 2,284 2,123 1,961 16.5 4,407 3,895 13.2 Provision for credit losses 100 100 80 25.0 200 160 25.0 Non-interest expense 1,348 1,254 1,271 6.2 2,602 2,503 4.0 Provision for income taxes (TEB) (a) 322 279 231 39.2 601 472 27.2 Non-controlling interest in subsidiaries 5 4 5 (9.6) 9 12 (27.2) Net income before goodwill 509 486 374 35.9 995 748 33.1 Amortization of goodwill, net of applicable income tax 12 12 10 12.3 24 22 13.5 Net income 497 474 364 36.6 971 726 33.7 Taxable equivalent adjustment 35 31 35 (0.9) 66 71 (6.8) Per Common Share ($) Net income before goodwill – basic $ 1.81 $ 1.72 $ 1.30 $ 0.51 $ 3.53 $ 2.59 $ 0.94 – fully diluted 1.79 1.71 1.29 0.50 3.50 2.57 0.93 Net income – basic 1.76 1.68 1.26 0.50 3.44 2.51 0.93 – fully diluted 1.75 1.66 1.25 0.50 3.41 2.49 0.92 Dividends declared 0.50 0.50 0.47 0.03 1.00 0.94 0.06 Book value per share 37.45 35.77 33.53 3.92 37.45 33.53 3.92 Market value per share 53.75 48.15 60.80 (7.05) 53.75 60.80 (7.05) Total market value of common shares ($ billions) 14.4 12.9 16.2 (1.8) 14.4 16.2 (1.8) As at Apr 30, Jan 31, Apr 30, Change from 2000 2000 1999 Apr 30, 1999 Balance Sheet Summary Assets $ 238,414 $ 228,525 $ 219,653 8.5% Loans 136,697 133,148 132,984 2.8 Deposits 162,067 154,469 146,965 10.3 Capital funds 16,428 15,920 15,479 6.1 Common equity 10,037 9,571 8,916 12.6 Net impaired loans and acceptances (283) (240) (212) (33.3) Average Balances Loans 136,536 135,659 134,806 1.3 Assets 233,354 230,195 224,762 3.8 For the three months ended For the six months ended Apr 30, 2000 Jan 31, 2000 Apr 30, 1999 Apr 30, 2000 Apr 30, 1999 Primary Financial Measures (%) (b) 5 year total shareholder return 18.2 17.5 23.4 18.2 23.4 Net economic profit ($ millions) 226 201 132 427 262 Earnings per share growth 40.0 33.9 (5.3) 36.9 (3.9) Return on equity 19.8 19.0 15.5 19.4 15.3 Revenue growth 16.5 9.8 2.7 13.2 4.1 Expense-to-revenue ratio 59.1 59.0 64.8 59.1 64.3 Provision for credit losses as a % of average loans and acceptances 0.28 0.28 0.23 0.28 0.22 Gross impaired loans and acceptances as a % of equity and allowance for credit losses 8.71 8.89 8.36 8.71 8.36 Liquidity ratio 30.1 29.9 28.3 30.1 28.3 Tier 1 capital ratio 8.06 7.84 7.73 8.06 7.73 Credit rating AA- AA- AA- AA- AA- Other Financial Ratios (% except as noted) (b) Total shareholder return (1.0) (12.0) (0.8) (1.0) (0.8) Dividend yield 4.2 3.3 2.9 3.4 2.9 Price-to-earnings ratio (times) 9.4 9.3 13.2 9.4 13.2 Market-to-book value (times) 1.44 1.35 1.81 1.44 1.81 Cash earnings per share – basic ($) 1.83 1.74 1.32 3.57 2.64 Cash return on common shareholders’ equity 21.8 21.0 17.4 21.4 17.2 Return on average assets 0.87 0.82 0.66 0.84 0.64 Net interest margin 1.89 1.87 2.03 1.88 1.95 Other income as a % of total revenue 52.5 49.1 43.3 50.9 43.5 Expense growth 6.2 1.8 6.3 4.0 6.2 Tier 1 capital ratio – U.S. basis 7.67 7.63 7.38 7.67 7.38 Total capital ratio 11.13 10.99 10.85 11.13 10.85 Equity-to-assets ratio 5.1 5.1 5.1 5.1 5.1 (a) Reported on a taxable equivalent basis (TEB). (b) For the period ended or as at, as appropriate. (c) All ratios in this report are based on unrounded numbers. 2 Bank of Montreal Second Quarter Report 2000
Overview Bank of Montreal (the Bank) reported record net income of 4. Build on the Bank’s strong leadership position in $497 mil lion for the quarter ended April 30, 2000, an investment banking. On a year-to-date basis, Investment increase of 36.6% from the prior year and 4.9% from the Banking Group ranked #2 in corporate underwriting and first quarter of 2000. Fully diluted earnings per share grew institutional equity, and #1 in research and securitiza- 40.0% versus last year and 5.4% versus the first quarter of tions. The Bank formed a new team to lead the U.S. media 2000. Return on equity was 19.8%, compared with 15.5% for and telecommunications invest ment and merchant the second quarter of 1999 and 19.0% for the first quarter. banking business and US$450 million was committed to The current quarter’s results included $52 million of merchant banking in this area over the next three years. after-tax gains, resulting from the sales of the Bank’s U.S. 5. Drive e-business opportunities. Through a joint venture corporate trust businesses and 17 branches in Western with American Management Systems, Competix.com, Canada. Excluding these gains, net income increased the Bank sold its state-of-the-art loan approval software 22.3% over the prior year and 9.4% over the first quarter. to 41 American banks. The Bank’s joint venture with Revenue growth from the prior year of $235 million CIT Group Inc., FinanciaLinx, became the first financ- excluding gains, was generated by volume growth in ing company to offer all automobile dealers in Canada retail and commercial businesses and by strong equity access to online, real-time, Internet-based car leases market conditions in wealth management and institu- and loans. Private Client Group introduced the BMO tional businesses. Investing portal web-site to assist customers with wealth Expenses, excluding the impact of revenue-driven compen- management product selection. The Bank continued to sation, decreased from the prior year by $32 million, due to build on its leadership position in wireless financial reductions from on-going business operations . services through the introduction of wireless trading Asset quality remained sound throughout the quarter. with BMO InvestorLine and U.S. wireless banking in The Bank’s results this quarter reflect strong business conjunction with Sprint. In addition, Bank of Montreal’s performance across all operating groups and the ability to Veev wireless service offered the first Canadian wire- capitalize on strong capital market activity. less retail application with indigo.ca. The MasterCard wallet was introduced for easy on-line purchasing. Strategic Highlights 6. Intensely focus on cost, capital and risk management. The Bank sold its U.S. corporate trust businesses for an During the quarter, the Bank continued to aggressively focus after-tax gain of $44 million, to re-deploy capital and on its six-point strategy: resources to grow and expand its other businesses. The 1. Continue to aggressively build the value of Harris. Bank announced the sale of 48 branches to a group of credit On a U.S. GAAP basis, Harris Bank earnings were unions in Western Canada, 17 of which were completed for US$87 million, up US$32 million, or 59.9% from the an after-tax gain of $8 million. The Bank plans to complete same quarter a year earlier. Excluding the gains on the remaining 31 branch sales during the rest of the fiscal sales of the corporate trust businesses and securities year. Further progress has been achieved in managing gains, earnings increased 16.0%. market risk, through the capture of commodities expo- 2. Rapidly grow the wealth management business. Private sures on a Value-at-Risk basis. The Bank announced Client Group net income increased by 71.1% and revenues that it may purchase up to 10,000,000 common shares, by 42.4% over the prior year. Assets under management and or approximately 3.7% of the issued and outstanding administration and term deposits increased $28.2 billion, common shares of the Bank, through a normal course or 14.6% from the beginning of the fiscal year. issuer bid, expiring October 31, 2000. 3. Capitalize on the Bank’s strong Canadian position in personal and commercial banking. Residential mortgages increased by $2.7 billion, or 7 .2%; credit cards and other personal loans increased by $1.3 billion, or 7 .8%; and loans to commercial enterprises, including small businesses, increased $1.7 billion, or 8.3% over the prior year. In-Store F. Anthony Comper (signed) branches increased by 12, to a total of 58. Subsequent to Chairman and the end of the quarter, the Bank announced the purchase Chief Executive Officer of 12 branches in the high-growth Kitchener-Waterloo area from TD Financial Group. 3 Bank of Montreal Second Quarter Report 2000
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