Third Quarter Report 2002 I am pleased to present Bank of Montreals - PDF document

Third Quarter Report 2002 I am pleased to present Bank of Montreal’s Third Quarter 2002 Report to Shareholders. Tony Comper, Chairman and Chief Executive Officer August 27 , 2002 Annual Meeting 2003 The next Annual Meeting of Shareholders will be held on Tuesday, February 25, 2003 in Ottawa, Ontario. During the quarter, Bank of Montreal announced a new unified branding approach that will link all of the organization’s member companies. Bank of Montreal, together with its subsidiaries, will now be known as BMO Financial Group. As such, in this document, the names BMO and BMO Financial Group mean Bank of Montreal. For the period ended July 31, 2002

Financial Highlights For the three months ended For the nine months ended Change from Change from July 31, April 30, January 31, October 31, July 31, July 31, July 31, July 31, July 31, (Canadian $ in millions except as noted) 2002 2002 2002 2001 2001 2001 2002 2001 2001 Income Statement Highlights Total revenue (teb) (a) $ 2,143 $ 2,222 $ 2,205 $ 1,951 $ 2,234 (4.1)% $ 6,570 $ 6,912 (4.9)% Provision for credit losses 160 320 180 546 117 37.3 660 434 52.3 Non-interest expense 1,488 1,476 1,462 1,449 1,421 4.7 4,426 4,222 4.9 Net income 346 301 372 4 444 (22.0) 1,019 1,467 (30.5) Common Share Data ($) (b) Diluted earnings per share $ 0.65 $ 0.57 $ 0.71 $ 0.00 $ 0.83 $ (0.18) $ 1.93 $ 2.66 $ (0.73) – excluding non-recurring items 0.68 0.57 0.71 0.19 0.83 (0.15) 1.96 2.29 (0.33) Diluted cash earnings per share 0.70 0.59 0.75 0.06 0.88 (0.18) 2.04 2.80 (0.76) – excluding non-recurring items 0.72 0.59 0.75 0.25 0.88 (0.16) 2.06 2.43 (0.37) Dividends declared per share 0.30 0.30 0.30 0.28 0.28 0.02 0.90 0.84 0.06 Book value per share 20.74 20.29 20.11 19.69 20.44 0.30 20.74 20.44 0.30 Closing share price 35.26 37.68 36.00 33.86 40.85 (5.59) 35.26 40.85 (5.59) Total market value of common shares ($ billions) 17.3 18.5 17.6 16.6 20.7 (3.4) 17.3 20.7 (3.4) As at Change from July 31, April 30, January 31, October 31, July 31, July 31, 2002 2002 2002 2001 2001 2001 Balance Sheet Highlights Assets $ 250,113 $ 240,008 $ 239,440 $ 239,409 $ 230,203 8.6% Loans 138,643 138,149 136,067 136,829 136,693 1.4 Deposits 159,200 160,359 154,758 154,290 151,003 5.4 Common shareholders’ equity 10,199 9,957 9,851 9,632 10,374 (1.7) For the three months ended For the nine months ended July 31, April 30, January 31, October 31, July 31, July 31, July 31, 2002 2002 2002 2001 2001 2002 2001 Primary Financial Measures (%) (b) (c) Average annual five year total shareholder return 7.4 11.6 12.5 14.3 23.9 7.4 23.9 (21.7) (27.4) Diluted earnings per share growth (48.2) (2.7) (100.0) 20.3 11.3 – excluding non-recurring items (18.1) (25.0) 1.4 (75.0) 23.9 (14.4) 6.5 Diluted cash earnings per share growth (20.5) (48.7) (2.6) (93.3) 20.5 (27.1) 12.4 – excluding non-recurring items (18.2) (26.3) 0.0 (68.8) 23.9 (15.2) 8.0 12.9 13.0 Return on equity 11.6 14.5 (0.4) 16.8 18.6 – excluding non-recurring items 13.5 11.6 14.5 3.8 16.8 13.2 15.9 Cash return on equity 13.8 12.2 15.2 0.7 17.8 13.7 19.5 – excluding non-recurring items 14.4 12.2 15.2 4.8 17.8 13.9 16.9 (54.6) (64.8) Net economic profit (NEP) growth (88.2) (21.4) (+100) 48.9 23.7 Revenue growth (4.1) (10.5) 0.6 (9.7) 6.6 (4.9) 6.3 – excluding non-recurring items (4.1) 1.2 2.6 (1.2) 7.5 (0.1) 4.7 Non-interest expense-to-revenue ratio 69.4 66.4 66.3 74.2 63.6 67.4 61.1 68.4 67.0 – excluding non-recurring items 66.4 66.3 68.1 63.6 64.2 Provision for credit losses as a % of average loans and acceptances 0.44 0.87 0.49 1.49 0.32 0.60 0.39 – excluding non-recurring items 0.44 0.87 0.49 1.49 0.32 0.60 0.30 Gross impaired loans and acceptances as a % of equity and allowance for credit losses 13.55 14.19 14.64 14.17 12.55 13.55 12.55 Cash and securities-to-total assets ratio 24.2 26.0 25.2 23.1 25.6 24.2 25.6 Tier 1 capital ratio 8.72 8.61 8.87 8.15 8.84 8.72 8.84 AA- AA- Credit rating AA- AA- AA- AA- AA- Other Financial Ratios (% except as noted) (b) (c) Total shareholder return – twelve month (11.0) 10.4 (9.3) (1.2) 32.0 (11.0) 32.0 Dividend yield 3.4 3.2 3.3 3.3 2.7 3.4 2.7 18.0 18.0 Price-to-earnings ratio (times) 17.5 13.3 12.4 11.4 11.4 Market-to-book value (times) 1.70 1.86 1.79 1.72 2.00 1.70 2.00 Net economic profit ($ millions) 84 42 115 (249) 184 241 682 Return on average assets 0.55 0.51 0.60 0.01 0.75 0.55 0.81 0.58 0.56 – excluding non-recurring items 0.51 0.60 0.18 0.75 0.70 Net interest margin 1.95 2.02 2.07 1.94 2.09 2.01 1.90 Other income as a % of total revenue 43.2 46.0 41.6 38.4 44.9 43.6 50.2 – excluding non-recurring items 43.2 46.0 41.6 43.5 44.9 43.6 47.7 4.7 4.9 Expense growth 5.2 4.6 8.9 7.2 7.5 – excluding non-recurring items 3.1 5.2 4.6 5.5 7.2 4.3 7.5 Total capital ratio 12.25 12.48 12.93 12.12 12.60 12.25 12.60 Tier 1 capital ratio – U.S. basis 8.30 7.76 8.32 7.87 8.43 8.30 8.43 5.3 5.3 Equity-to-assets ratio 5.4 5.4 5.1 5.6 5.6 All ratios in this report are based on unrounded numbers. corporations caution readers that earnings as adjusted for such items do not have standardized meanings under generally accepted accounting principles and are unlikely to be comparable to (a) Reported on a taxable equivalent basis (teb). similar measures used by other companies. (b) Refer to the “Effects of Non-Recurring Items” section in the Management’s Discussion and Analysis (c) For the period ended, or as at, as appropriate. of Results of Operations for details on non-recurring items. Securities regulators require that