News Column

BMO Financial Group Reports Net Income of $1.1 Billion for the First Quarter of 2014

February 25, 2014

TORONTO, ONTARIO--(Marketwired - Feb. 25, 2014) - BMO Financial Group (TSX:BMO)(NYSE:BMO) and Bank of Montreal -

For the first quarter ended January 31, 2014, BMO Financial Group reported net income of $1,061 million or $1.58 per share on a reported basis and net income of $1,083 million or $1.61 per share on an adjusted basis.

"BMO's first quarter results reflect continued revenue growth and strong operating group performance, especially in Canadian Personal and Commercial Banking. The bank is showing sustained momentum and a growing balance sheet," said Bill Downe, Chief Executive Officer, BMO Financial Group.

"We gained market share in domestic personal lending complemented by double-digit growth in both commercial loans and deposits. Our U.S. commercial banking team also continued to deliver excellent volume growth with core commercial and industrial loans up 14% from a year ago. Margins were stable on both sides of the border, and Wealth Management and Capital Markets posted robust revenue growth.

"We recently announced an agreement to acquire F&C Asset Management, a diversified, U.K.-based investment manager. The acquisition will expand our BMO Global Asset Management business which had grown to over US$130 billion in assets under management and 175 investment professionals at the end of 2013.

"We're seeing the benefits of our diversified North American presence. We have clear opportunities for growth across our U.S. businesses in an environment of improved household finances and growing consumer confidence. In addition, progress in debt ceiling and budget negotiations in the United States will benefit business investment and our large North American commercial banking platform," concluded Mr. Downe.

Concurrent with the release of results, BMO announced a second quarter 2014 dividend of $0.76 per common share, unchanged from the preceding quarter and up $0.02 per share from a year ago, equivalent to an annual dividend of $3.04 per common share.

Our complete First Quarter 2014 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended January 31, 2014, is available online at www.bmo.com/investorrelations and at www.sedar.com.

(1) Results and measures in this document are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items. Adjusted results and measures are non-GAAP and are detailed in the Adjusted Net Income section, and (for all reported periods) in the Non-GAAP Measures section, where such non-GAAP measures and their closest GAAP counterparts are disclosed. (2) All Earnings per Share (EPS) measures in this document refer to diluted EPS unless specified otherwise. EPS is calculated using net income after deductions for net income attributable to non-controlling interest in subsidiaries and preferred share dividends. Note: All ratios and percentage changes in this document are based on unrounded numbers.



Total Bank Overview

Net income was $1,061 million for the first quarter of 2014, up $25 million or 2% from a year ago.

Adjusted net income was $1,083 million, up $54 million or 5% from a year ago. There was continued momentum in Canadian P&C and Wealth Management, improved results from the prior quarter in U.S. P&C and solid results from BMO Capital Markets.

Operating Segment Overview Canadian P&C



Net income was $484 million, up $37 million or 8% from a year ago. Adjusted net income was $486 million, up $36 million or 8% from the prior year. Results reflect continued momentum from the second half of last year with good revenue growth and a second consecutive quarter with above 2% operating leverage. Revenue was up $99 million or 7% year over year driven by strong volume growth across most products, partially offset by the impact of lower net interest margin. There was year-over-year loan growth of 10% and deposit growth of 11%. Expenses increased $33 million or 4% due to continued investment in the business.

In personal banking, there was strong loan and deposit growth of 10% and 9% respectively. Our recent BMO World Elite MasterCard(R) 'UPGRADE' campaign has been successful in attracting new customers to the Bank. In commercial banking, momentum continued with strong loan and deposit growth of 11% and 14%, respectively. We remain second in Canadian business banking loan market share for small and medium-sized loans. In both personal and commercial banking, we continue to make improvements in our processes, enabling front-line employees to spend more time acquiring more customers and strengthening existing relationships.

U.S. P&C (all amounts in US$)

Net income of $153 million decreased $27 million or 15% from a strong first quarter a year ago. Adjusted net income of $164 million declined $30 million or 15% from a year ago. The prior year included strong revenues on sales of newly originated mortgages, commercial lending fees, due to customers' response to anticipated U.S. tax changes that accelerated commercial lending, and higher net interest margin. Adjusted net income was up $55 million compared to the prior quarter, benefiting from lower provisions for credit losses that were above trend in the fourth quarter.

There were year-over-year and quarterly sequential increases in average current loans and acceptances, led by continued strong growth in the core commercial and industrial loan portfolio. This portfolio increased by $3.0 billion or 14% from a year ago to $24.3 billion.

Growth in our commercial business and personal chequing and savings accounts was more than offset by planned reductions in higher-cost deposit products and a transfer of certain customer balances to Wealth Management at the beginning of the quarter, which resulted in a decline in deposits.

During the quarter, we were awarded 24 competitive Affordable Housing Program projects by the Federal Home Loan Bank of Chicago. These projects allow us to support our communities through the development of affordable housing, and also provide us with opportunities to cross-sell our products and services.

Wealth Management

Wealth Management continued to produce good results. Net income of $175 million increased $13 million or 8% from a year ago. Adjusted net income of $183 million also increased 8%. Adjusted net income in our traditional wealth businesses was $123 million, up $19 million or 17% from strong growth in client assets and increased transaction volumes. Adjusted net income in insurance was $60 million, down $4 million or 7%.

Assets under management and administration grew by $97 billion or 19% from a year ago to $597 billion, driven by market appreciation, the stronger U.S. dollar and growth in new client assets.

BMO InvestorLine was named the top bank-owned online brokerage firm in Canada for the third consecutive year in the 15th annual Globe and Mail ranking of online brokers and was also named Best Online Brokerage 2013 at the 19th annual Morningstar Awards.

In January, BMO announced an agreement on the terms of a cash offer to acquire all of the shares of F&C Asset Management plc (F&C), a diversified U.K.-based investment manager, at an aggregate purchase price of approximately GBP 708 million ($1.3 billion) that would see F&C become part of BMO Financial Group. Subject to F&C shareholder approval and satisfaction of all regulatory and other conditions, the acquisition is expected to close after May 1, 2014.

BMO Capital Markets

Net income for the current quarter was $277 million, down $21 million or 7% from the first quarter a year ago, as good revenue growth primarily from our U.S. businesses was more than offset by higher expenses, lower loan recoveries and a higher effective tax rate. Return on equity of 18.8% was strong, increasing 3.8% from 15.0% in the prior quarter. Revenues increased $79 million or 9% year over year due to good revenue performance in both the Investment and Corporate Banking and the Trading Products businesses, and in particular from our U.S. segment. Expenses increased $85 million or 16% year over year due to higher employee-related expenses, including severance, and increased support costs, both related to a changing business and regulatory environment.

Our continued focus on our core clients was recognized as BMO Capital Markets was selected during the quarter as a 2013 Greenwich Quality Leader in Canadian Mergers and Acquisitions and in Canadian Equity Capital Markets. We were also selected as a 2013 Greenwich Share Leader in Canadian Investment Banking and Canadian Debt Capital Markets for Market Penetration.

BMO Capital Markets participated in 374 new global issues in the quarter, including 192 corporate debt deals, 110 government debt deals and 72 equity transactions, raising $818 billion.

Corporate Services

Corporate Services net loss for the first quarter of 2014 was $41 million, compared with a net loss of $50 million a year ago. The adjusted net loss in the quarter was $41 million, compared with an adjusted net loss of $79 million a year ago. Beginning in the first quarter of 2014, credit-related items in respect of the purchased performing loan portfolio are included in adjusted results. Credit-related items consist of $79 million for the recognition in net interest income of a portion of the credit mark on the portfolio, a $34 million specific provision for credit losses and related income taxes of $17 million. Adjusted revenues were higher mainly due to credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a group taxable equivalent basis (teb) offset that was $21 million higher than the prior year. Adjusted expenses were lower primarily due to lower support costs retained in Corporate and reduced costs associated with the impaired real estate secured asset portfolio. Adjusted recoveries of credit losses of $59 million improved by $8 million primarily due to a $58 million increase in recoveries on the purchased credit impaired loan portfolio from the prior year, partially offset by $34 million of provisions in respect of the purchased performing loan portfolio.

Adjusted Net Income

Adjusted net income was $1,083 million for the first quarter of 2014, up $54 million or 5% from a year ago. Adjusted earnings per share were $1.61, up 7% from $1.50 a year ago.

Management has designated certain amounts as adjusting items and has adjusted GAAP results so that we can discuss and present financial results without the effects of adjusting items to facilitate understanding of business performance and related trends. The only item excluded from first quarter 2014 results in the determination of adjusted results was the amortization of acquisition-related intangible assets of $31 million ($22 million after tax; $0.03 per share), which is charged to the operating groups. There was no net change in the collective allowance for credit losses. Previously, amounts excluded from adjusted results also included credit-related items in respect of the purchased performing loan portfolio, acquisition integration costs and run-off structured credit activities. Management assesses performance on a GAAP basis and on an adjusted basis and considers both to be useful in the assessment of underlying business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. Adjusted results and measures are non-GAAP and, together with items excluded in determining adjusted results, are disclosed in more detail in the Non-GAAP Measures section, along with comments on the uses and limitations of such measures. The impact of adjusting items for comparative periods is summarized in the Non-GAAP Measures section.

Caution

The foregoing sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in these Total Bank Overview and Operating Segment Overview sections are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Management's Discussion and Analysis

Management's Discussion and Analysis (MD&A) commentary is as of February 25, 2014. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from financial statements prepared in accordance with International Financial Reporting Standards (IFRS). References to GAAP mean IFRS. The MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the period ended January 31, 2014, as well as the audited consolidated financial statements for the year ended October 31, 2013, and the MD&A for fiscal 2013 in BMO's 2013 Annual Report. The material that precedes this section comprises part of this MD&A.

The annual MD&A includes a comprehensive discussion of our businesses, strategies and objectives, and can be accessed on our website at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.

Bank of Montreal's management, under the supervision of the CEO and CFO, has evaluated the effectiveness, as at January 31, 2014, of Bank of Montreal's disclosure controls and procedures (as defined in the rules of the Securities and Exchange Commission and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended January 31, 2014, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of inherent limitations, disclosure controls and procedures and internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

As in prior quarters, Bank of Montreal'sAudit and Conduct Review Committee reviewed this document and Bank of Montreal's Board of Directors approved the document prior to its release.

Regulatory Filings

Our continuous disclosure materials, including our interim filings, annual MD&A and audited consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular are available on our website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov.

Bank of Montreal uses a unified branding approach that links all of the organization's member companies. Bank of Montreal, together with its subsidiaries, is known as BMO Financial Group. As such, in this document, the names BMO and BMO Financial Group mean Bank of Montreal, together with its subsidiaries.

---------------------------------------------------------------------------- Summary Data - Reported Table 1 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Summary Income Statement Net interest income 2,113 2,117 2,248 Non-interest revenue 2,009 2,021 1,784 ---------------------------------------------------------------------------- Revenue 4,122 4,138 4,032 ---------------------------------------------------------------------------- Provision for credit losses 99 189 178 Non-interest expense 2,684 2,580 2,570 Provision for income taxes 278 295 248 ---------------------------------------------------------------------------- Net income 1,061 1,074 1,036 ---------------------------------------------------------------------------- Attributable to bank shareholders 1,048 1,061 1,018 Attributable to non- controlling interest in subsidiaries 13 13 18 ---------------------------------------------------------------------------- Net income 1,061 1,074 1,036 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Common Share Data ($ except as noted) Earnings per share 1.58 1.60 1.51 Earnings per share growth (%) 4.6 1.9 (6.8) Dividends declared per share 0.76 0.74 0.72 Book value per share 45.60 43.22 40.13 Closing share price 68.06 72.62 62.99 Total market value of common shares ($ billions) 43.9 46.8 41.1 Dividend yield (%) 4.5 4.1 4.6 ---------------------------------------------------------------------------- Financial Measures and Ratios (%) Return on equity 14.2 14.8 14.9 Net income growth 2.5 0.1 (5.9) Revenue growth 2.3 0.2 (0.8) Non-interest expense growth 4.4 (3.7) 1.7 Efficiency ratio 65.1 62.3 63.8 Operating leverage (2.1) 3.9 (2.5) Net interest margin on average earning assets 1.62 1.69 1.87 Effective tax rate 20.8 21.6 19.3 Return on average assets 0.72 0.76 0.73 Provision for credit losses-to- average loans and acceptances (annualized) 0.14 0.27 0.28 ---------------------------------------------------------------------------- Value Measures (% except as noted) Average annual five-year total shareholder return 21.4 17.0 7.8 Average annual three-year total shareholder return 10.6 11.5 11.8 Twelve month total shareholder return 12.9 28.8 13.5 Net economic profit ($ millions) (1) 289 324 314 ---------------------------------------------------------------------------- Balance Sheet (as at $ billions, except as noted) Assets 593 537 542 Net loans and acceptances 290 279 259 Deposits 398 368 353 Common shareholders' equity 29.4 27.8 26.2 Cash and securities-to-total assets ratio (%) 32.3 31.3 30.8 ---------------------------------------------------------------------------- Capital Ratios (%) Common Equity Tier 1 Capital Ratio 9.3 9.9 9.4 Tier 1 Capital Ratio 10.6 11.4 11.1 Total Capital Ratio 12.4 13.7 13.4 ---------------------------------------------------------------------------- Net Income by Operating Group Canadian P&C 484 458 447 U.S. P&C 166 102 179 ---------------------------------------------------------------------------- Personal and Commercial Banking 650 560 626 Wealth Management 175 311 162 BMO Capital Markets 277 217 298 Corporate Services, including Technology and Operations (T&O) (41) (14) (50) ---------------------------------------------------------------------------- BMO Financial Group net income 1,061 1,074 1,036 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Net economic profit is a non-GAAP measure and is discussed in the Non- GAAP Measures section. ---------------------------------------------------------------------------- Summary Data - Adjusted (1) Table 2 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Adjusted Summary Income Statement Net interest income 2,113 2,000 2,036 Non-interest revenue 2,009 2,010 1,776 ---------------------------------------------------------------------------- Revenue 4,122 4,010 3,812 ---------------------------------------------------------------------------- Provision for credit losses 99 140 96 Non-interest expense 2,653 2,485 2,444 Provision for income taxes 287 297 243 ---------------------------------------------------------------------------- Net income 1,083 1,088 1,029 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Attributable to bank shareholders 1,070 1,075 1,011 Attributable to non- controlling interest in subsidiaries 13 13 18 ---------------------------------------------------------------------------- Net income 1,083 1,088 1,029 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted Common Share Data Earnings per share ($) 1.61 1.62 1.50 Earnings per share growth (%) 7.3 (1.2) 6.4 ---------------------------------------------------------------------------- Adjusted Financial Measures and Ratios (%) Return on equity 14.5 15.0 14.8 Net income growth 5.4 (2.5) 6.8 Revenue growth 8.2 3.5 3.3 Non-interest expense growth 8.5 2.9 4.0 Efficiency ratio 64.3 61.9 64.1 Operating leverage (0.3) 0.6 (0.7) Net interest margin on average earning assets 1.62 1.60 1.70 Effective tax rate 20.9 21.5 19.0 ---------------------------------------------------------------------------- Adjusted Net Income By Operating Group Canadian P&C 486 461 450 U.S. P&C 178 114 192 ---------------------------------------------------------------------------- Personal and Commercial Banking 664 575 642 Wealth Management 183 318 168 BMO Capital Markets 277 217 298 Corporate Services, including T&O (41) (22) (79) ---------------------------------------------------------------------------- BMO Financial Group net income 1,083 1,088 1,029 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) The above results and statistics are presented on an adjusted basis. These are non-GAAP amounts or non-GAAP measures. Please see the Non- GAAP Measures section.



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 other 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 harbor" 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 2014 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, U.S. and international 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; weak, volatile or illiquid capital and/or credit markets; interest rate and currency value fluctuations; changes in monetary, fiscal or economic policy; the degree of competition in the geographic and business areas in which we operate; changes in laws or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance; 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, including obtaining regulatory approvals; critical accounting estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; operational and infrastructure risks; changes to our credit ratings; general political conditions; global capital markets activities; the possible effects on our business of war or terrorist activities; disease or illness that affects local, national or international economies; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; technological changes; and our ability to anticipate and effectively manage risks associated with all of the foregoing factors.

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 to 31 of BMO's 2013 Annual Report, which outlines in detail certain key factors that may affect Bank of Montreal's 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 statements, 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, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the level of default and losses on default were material factors we considered when establishing our expectations regarding the future performance of the transactions into which our credit protection vehicle has entered. Among the key assumptions were that the level of default and losses on default will be consistent with historical experience. Material factors that were taken into account when establishing our expectations regarding the future risk of credit losses in our credit protection vehicle and risk of loss to Bank of Montreal included industry diversification in the portfolio, initial credit quality by portfolio, the first-loss protection incorporated into the structure and the hedges into which Bank of Montreal has entered.

Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material factors we consider when determining our strategic priorities, objectives 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. See the Economic Review and Outlook section of this interim MD&A.

Economic Review and Outlook

The Canadian economy strengthened moderately in the second half of 2013, supported by firm consumer spending, a rebound in housing markets and stronger business investment. However, weaker exports and tighter fiscal policies held back the expansion. In the year ahead, Canadian exports are expected to increase in response to a weaker Canadian dollar and stronger global demand. The U.S. economy is gaining strength, the Eurozone economy is growing again and China's economic slowdown has stabilized. Canadian consumer spending is projected to grow moderately in the face of elevated household debt, while residential construction should slow modestly. Consequently, growth in consumer credit and residential mortgages will likely continue to moderate. However, firmer exports should encourage an improvement in investment and business loan growth. Economic growth is expected to increase from approximately 1.8% in 2013 to 2.3% in 2014, lowering the unemployment rate to 6.8% by year end. Continued low inflation will likely encourage the Bank of Canada to maintain a steady interest rate policy for a fourth consecutive year. The Canadian dollar is projected to further weaken in the near term amid market expectations of a possible Bank of Canada interest rate reduction.

The U.S. economy overcame tighter fiscal policy, renewed political uncertainty and higher mortgage rates to grow strongly in the second half of 2013, as consumer spending and exports rose at the fastest rate in three years in the final quarter. Improved household finances, strong replacement demand for motor vehicles and a declining energy trade deficit should support the economy in 2014. In addition, the federal budget deal implies less fiscal restraint and diminished political uncertainty, which should support business investment. Demand for business credit and residential mortgages will likely strengthen, while demand for consumer loans should remain firm. Economic growth is projected to increase from 1.9% last year to 2.8% in 2014, the fastest growth since 2005, reducing the unemployment rate to 6.1% by year-end. While the Federal Reserve will likely maintain a low interest-rate policy for at least another year, it is expected to continue reducing purchases of fixed-income securities, resulting in moderate upward pressure on longer-term interest rates.

The U.S. Midwest region, that includes the six states in BMO's U.S. footprint, grew approximately 1.6% in 2013, held back by fiscal consolidation. However, we expect stronger growth of 2.5% in 2014 due to strengthening exports and increased automotive production.

This Economic Review and Outlook section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Other Value Measures

BMO's average annual total shareholder returns for the one-year, three-year and five-year periods ending January 31, 2014, were 12.9%, 10.6% and 21.4%, respectively.

Return on equity (ROE) was 14.2% in the first quarter of 2014 and adjusted ROE was 14.5%, compared to 14.9% and 14.8%, respectively, in the first quarter a year ago. ROE was impacted by common shareholders' equity growing at a higher rate than income, in part as a result of foreign exchange gains on our U.S. operations recognized in shareholders' equity as a result of the stronger U.S. dollar.

Foreign Exchange

The Canadian dollar equivalents of BMO's U.S.-dollar-denominated net income, revenues, expenses, recoveries of credit losses and income taxes were increased relative to the fourth quarter of 2013 and the first quarter of 2013 by the strengthening of the U.S. dollar. The average Canadian/U.S. dollar exchange rate for the quarter, expressed in terms of the Canadian dollar cost of a U.S. dollar, increased by 9% from a year ago and 4% from the average of the fourth quarter. BMO may execute hedging transactions to mitigate the impact of foreign exchange rate movements on net income. Table 3 indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in the rates.

This Foreign Exchange section contains forward-looking statements. Pease see the Caution Regarding Forward Looking Statements.

---------------------------------------------------------------------------- Effects of Changes in Exchange Rates on BMO's Reported and Adjusted Results Table 3 ---------------------------------------------------------------------------- Q1-2014 --------------------------- (Canadian $ in millions, except as noted) vs Q1-2013 vs Q4-2013 ---------------------------------------------------------------------------- Canadian/U.S. dollar exchange rate (average) Current period 1.0800 1.0800 Prior period 0.9953 1.0421 Effects on reported results Increased net interest income 57 25 Increased non-interest revenue 46 21 ---------------------------------------------------------------------------- Increased revenues 103 46 Increased expenses (75) (33) Increased recovery of credit losses 3 1 Increased income taxes (8) (4) ---------------------------------------------------------------------------- Increased net income before impact of hedges 23 10 Hedging losses (4) (4) Income taxes thereon 1 1 ---------------------------------------------------------------------------- Increased reported net income 20 7 ---------------------------------------------------------------------------- Effects on adjusted results Increased net interest income 51 22 Increased non-interest revenue 46 21 ---------------------------------------------------------------------------- Increased revenues 97 43 Increased expenses (72) (32) Increased recovery of credit losses 6 3 Increased income taxes (8) (4) ---------------------------------------------------------------------------- Increased adjusted net income before impact of hedges 23 10 Hedging losses (4) (4) Income taxes thereon 1 1 ---------------------------------------------------------------------------- Increased adjusted net income 20 7 ---------------------------------------------------------------------------- Adjusted results in this section are non-GAAP amounts or non-GAAP Measures. Please see the non-GAAP Measures section. Net Income Q1 2014 vs Q1 2013



Net income was $1,061 million for the first quarter of 2014, up $25 million or 2% from a year ago. EPS was $1.58, up $0.07 or 5% from a year ago.

Adjusted net income was $1,083 million, up $54 million or 5% from a year ago. The impact of the stronger U.S. dollar increased adjusted net income growth by $20 million or 2%. Adjusted EPS was $1.61, up $0.11 or 7% from a year ago. Adjusted results and items excluded in determining adjusted results are disclosed in detail in the preceding Adjusted Net Income section and in the Non-GAAP Measures section, together with comments on the uses and limitations of such measures.

On an adjusted basis, net income growth was driven by good growth in Canadian P&C and Wealth Management. Canadian P&C results reflected strong volume growth across most products, partially offset by lower net interest margin. Wealth Management had strong results in traditional wealth businesses with a 17% increase in adjusted net income, partially offset by lower net income in insurance. BMO Capital Markets was down, as good revenue growth primarily from our U.S. businesses was more than offset by higher expenses, lower loan recoveries and a higher effective tax rate. U.S. P&C net income decreased from a strong first quarter a year ago that included strong revenue on sales of newly originated mortgages, commercial lending fees and higher net interest margin. Corporate Services adjusted results improved due to performance in the purchased loan portfolios and lower expenses.

Q1 2014 vs Q4 2013

Net income decreased $13 million and EPS decreased $0.02. Adjusted net income decreased $5 million and adjusted EPS decreased by $0.01. The impact of the stronger U.S. dollar increased adjusted net income growth by $7 million or 1%.

On an adjusted basis, net income decreased relative to the fourth quarter due to higher securities gains in the prior quarter and stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year. Net income growth in Canadian P&C was driven by increased revenues reflecting higher volumes across most products. U.S. P&C adjusted net income increased, primarily driven by reductions in provisions for credit losses, which were above trend in the previous quarter. Net income decreased in Wealth Management primarily due to a $121 million after-tax security gain in the prior quarter and lower net income in insurance, primarily due to lower benefits from changes in our investment portfolio to improve asset-liability management. BMO Capital Markets results were up primarily due to higher revenues across the businesses. Corporate Services adjusted results decreased due to lower recoveries of credit losses.

Adjusted results in this Net Income section are Non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP measures section.

Revenue

Q1 2014 vs Q1 2013

Total revenue of $4,122 million increased $90 million or 2% from the first quarter last year. Adjusted revenue increased $310 million or 8% to $4,122 million. Excluding the impact of the stronger U.S. dollar, adjusted revenue increased by $217 million or 6%. Canadian P&C had good results due to the effect of strong volume growth across most products, partially offset by the impact of lower net interest margin. Wealth Management revenue increased from a year ago due to growth in client assets and increased transaction volumes. BMO Capital Markets had good revenue performance from Investment and Corporate Banking businesses, driven by higher equity underwriting volumes, higher securities gains in corporate banking and merchant banking activities. Trading Products businesses performed well mainly due to higher trading revenues and securities commissions and fees. U.S. P&C revenues decreased on a U.S. dollar basis from a strong first quarter a year ago that included strong revenues on sales of newly originated mortgages, commercial lending fees, due to customers' response to anticipated U.S. tax changes that accelerated commercial lending, and higher net interest margin. Adjusted revenues improved in Corporate Services mainly due to the inclusion, commencing this quarter, of credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a higher group teb offset.

Net interest income decreased $135 million or 6% from a year ago to $2,113 million in the first quarter of 2014. Adjusted net interest income increased $77 million or 4% to $2,113 million, due to revenue from the purchased performing loan portfolio and volume growth in the P&C businesses, partially offset by a lower net interest margin. BMO's overall net interest margin decreased on a reported basis by 25 basis points from a year ago to 1.62%. Adjusted net interest margin decreased by 8 basis points to 1.62%. Average earning assets in the first quarter of 2014 increased $39.8 billion or 8% relative to a year ago, including a $15.7 billion increase as a result of the stronger U.S. dollar.

Non-interest revenue increased $225 million or 13% from the first quarter a year ago to $2,009 million. Adjusted non-interest revenue increased $233 million or 13% to $2,009 million, with the majority of the increase driven by good performance in BMO Capital Markets and Wealth Management. There were significant increases in trading revenues, and most other types of non-interest revenue increased, with the exception of underwriting fees and card fees.

Q1 2014 vs Q4 2013

Revenue decreased $16 million from the fourth quarter. Adjusted revenue increased $112 million or 3%. Excluding the impact of the stronger U.S. dollar, adjusted revenue increased by $73 million or 2%. Canadian P&C revenues increased 2%, reflecting higher volumes across most products. Revenue in Wealth Management decreased as prior quarter results included a $191 million security gain. Revenue in other traditional wealth businesses increased 4%, driven by growth in client assets. Investment and Corporate Banking revenue performance in BMO Capital Markets improved on higher equity underwriting fees and securities gains in corporate banking. Trading Products revenues were significantly stronger on improved market conditions and higher client activity. U.S. P&C revenues increased moderately on a U.S. dollar basis primarily due to loan growth and stable net interest margin. Corporate Services adjusted revenues were higher mainly due to the inclusion, commencing this quarter, of credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a variety of other items, none of which were individually significant.

Net interest income decreased $4 million. Adjusted net interest income increased $113 million or 6%, due to revenue from the purchased performing loan portfolio and volume growth in the P&C businesses. BMO's overall net interest margin decreased by 7 basis points from the fourth quarter, while adjusted net interest margin increased 2 basis points. Average earning assets increased $19.7 billion or 4% from the fourth quarter, of which $7.0 billion related to the stronger U.S. dollar.

Non-interest revenue decreased $12 million and adjusted non-interest revenue was essentially unchanged. Increases in most categories were more than offset by significantly lower securities gains, insurance income and other income.

Net interest income and non-interest revenue are detailed in the unaudited interim consolidated financial statements.

Adjusted results in this Revenue section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

---------------------------------------------------------------------------- Adjusted Net Interest Margin on Average Earning Assets (teb)(i) Table 4 ---------------------------------------------------------------------------- (In basis points) Q1-2014 Q4-2013 Q1-2013 --------------------------------------------------------------------------- Canadian P&C 261 260 270 U.S. P&C 383 382 412 --------------------------------------------------------------------------- Personal and Commercial Banking 293 290 306 Wealth Management 273 289 287 BMO Capital Markets 48 54 57 Corporate Services, including T&O(ii) nm nm nm --------------------------------------------------------------------------- Total BMO adjusted net interest margin (1) 162 160 170 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Total BMO reported net interest margin 162 169 187 --------------------------------------------------------------------------- Total Canadian Retail (reported and adjusted) (iii) 260 260 268 --------------------------------------------------------------------------- (i) Net interest margin is disclosed and computed with reference to average earning assets, rather than total assets. This basis provides a more relevant measure of margins and changes in margins. Operating group margins are stated on a taxable equivalent basis (teb) while total BMO margin is stated on a GAAP basis. (ii) Corporate Services adjusted net interest income is negative in all periods and its variability affects changes in net interest margin. (iii) Total Canadian retail margin represents the net interest margin of the combined Canadian businesses of Canadian P&C and Wealth Management. (1) These are non-GAAP amounts or non-GAAP measures. Please see the Non- GAAP Measures section. nm - not meaningful



Provisions for Credit Losses

Q1 2014 vs Q1 2013

The total provision for credit losses (PCL) was $99 million, a decrease of $79 million from the prior year. Adjusted PCL increased by $3 million from the prior year. There was no net change to the collective allowance year over year.

Canadian P&C provisions increased by $13 million to $141 million, resulting from higher commercial losses partially offset by lower provisions in the consumer portfolio. Wealth Management provisions decreased by $3 million. Recoveries of credit losses in BMO Capital Markets were $14 million lower due to lower recoveries combined with new provisions this quarter. U.S. P&C provisions of $19 million decreased by $13 million due to improvements in the consumer portfolio. Corporate Services adjusted recoveries of $59 million improved by $8 million. Recoveries on the purchased credit impaired loan portfolio increased $58 million from the prior year. Beginning in the first quarter of 2014, Corporate Services adjusted results include credit-related items in respect of the purchased performing loan portfolio and include a $34 million specific provision for credit losses.

Q1 2014 vs Q4 2013

The total PCL decreased by $90 million to $99 million from the prior quarter. Adjusted PCL decreased by $41 million from the prior quarter. There was no net change to the collective allowance from the prior quarter.

Canadian P&C provisions decreased by $25 million due to a combination of lower write-offs and higher recoveries. Wealth Management provisions were relatively stable quarter over quarter. Recoveries of credit losses in BMO Capital Markets were $16 million lower due to lower recoveries combined with new provisions this quarter. U.S. P&C provisions decreased significantly by $77 million from the above trend provisions in the previous quarter, and benefited from higher recoveries in the current quarter. Corporate Services adjusted recoveries decreased by $47 million primarily due to the inclusion of specific provisions in respect of the purchased performing loan portfolio. Recoveries on the purchased credit impaired loan portfolio increased $13 million from the prior quarter.

Adjusted results in this Provisions for Credit Losses section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

---------------------------------------------------------------------------- Provision for Credit Losses by Operating Group Table 5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Canadian P&C 141 166 128 U.S. P&C 19 96 32 ---------------------------------------------------------------------------- Personal and Commercial Banking 160 262 160 Wealth Management (1) 1 2 BMO Capital Markets (1) (17) (15) Corporate Services, including T&O (1) (2) (59) (106) (51) ---------------------------------------------------------------------------- Adjusted provision for credit losses 99 140 96 Purchased performing loans (1) - 49 82 ---------------------------------------------------------------------------- Provision for credit losses 99 189 178 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Effective Q1-2014, Corporate Services adjusted results include credit- related items in respect of the purchased performing loan portfolio, including $34 million specific provisions for credit losses. (2) Corporate Services results include purchased credit impaired loan recoveries of $117 million in Q1-2014 ($72 million after tax); $104 million in Q4-2013 ($64 million after tax); and $59 million in Q1-2013 ($37 million after tax). This table contains adjusted results and measures, which are Non-GAAP. Please see the Non-GAAP Measures section. ---------------------------------------------------------------------------- Changes to Provision for Credit Losses Table 6 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- New specific provisions 358 455 418 Reversals of previously established allowances (48) (64) (82) Recoveries of loans previously written-off (211) (202) (158) ---------------------------------------------------------------------------- Provision for credit losses 99 189 178 ---------------------------------------------------------------------------- PCL as a % of average net loans and acceptances (annualized) 0.14 0.27 0.28 ----------------------------------------------------------------------------



Impaired Loans

Total gross impaired loans (GIL) were $2,482 million at the end of the current quarter, down from $2,544 million in the fourth quarter of 2013 and from $2,912 million a year ago. The stronger U.S. dollar raised GILs by $105 million relative to the fourth quarter of 2013 and $172 million relative to a year ago.

Factors contributing to the change in GIL are outlined in Table 7 below. Loans classified as impaired during the quarter totalled $642 million in the current quarter, up from $614 million in the fourth quarter of 2013 and $630 million a year ago.

---------------------------------------------------------------------------- Changes in Gross Impaired Loans (GIL) and Acceptances (1) Table 7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- GIL, beginning of period 2,544 2,650 2,976 Classified as impaired during the period 642 614 630 Transferred to not impaired during the period (154) (164) (156) Net repayments (446) (247) (289) Amounts written-off (203) (269) (235) Recoveries of loans and advances previously written- off - - - Disposals of loans (2) (110) (31) Foreign exchange and other movements 101 70 17 ---------------------------------------------------------------------------- GIL, end of period 2,482 2,544 2,912 ---------------------------------------------------------------------------- GIL as a % of gross loans and acceptances 0.85 0.91 1.12 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) GIL excludes purchased credit impaired loans.



For further discussion of risk management practices and key measures, see the Risk Management section.

Non-Interest Expense

Non-interest expense increased $114 million or 4% from the first quarter a year ago to $2,684 million. Adjusted non-interest expense increased $209 million or 8% to $2,653 million, primarily due to higher employee-related expenses, including severance, and increased technology and support costs related to a changing business and regulatory environment. Excluding the impact of the stronger U.S. dollar, adjusted non-interest expense increased by $137 million or 6%.

Non-interest expense increased $104 million or 4% relative to the fourth quarter. Adjusted non-interest expense increased $168 million or 7%, primarily due to $66 million of stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year and higher severance costs. Excluding the impact of the stronger U.S. dollar, adjusted non-interest expense increased by $136 million or 5%.

Year-over-year operating leverage on a reported basis was negative 2.1% and adjusted operating leverage was negative 0.3%. On a basis that adjusts for the security gain in the prior quarter and the current quarter stock-based compensation mentioned above, the quarter-over-quarter adjusted operating leverage was positive.

Non-interest expense is detailed in the unaudited interim consolidated financial statements.

Adjusted results in this Non-Interest Expense section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Income Taxes

The provision for income taxes of $278 million increased $30 million from the first quarter of 2013 and decreased $17 million from the fourth quarter of 2013. The effective tax rate for the quarter was 20.8%, compared with 19.3% a year ago and 21.6% in the fourth quarter of 2013.

The adjusted provision for income taxes of $287 million increased $44 million from a year ago and decreased $10 million from the fourth quarter of 2013. The adjusted effective tax rate was 20.9% in the current quarter, compared with 19.0% a year ago and 21.5% in the fourth quarter of 2013. The higher adjusted tax rate in the current quarter relative to the first quarter of 2013 was primarily due to lower recoveries of prior periods' income taxes. The lower adjusted tax rate in the current quarter relative to the fourth quarter of 2013 was primarily due to a lower proportion of income from higher tax-rate jurisdictions. The adjusted tax rate is computed using adjusted net income rather than net income in the determination of income subject to tax.

Adjusted results in this Income Taxes section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Capital Management

First Quarter 2014 Regulatory Capital Review

BMO's capital position remains strong, with a Common Equity Tier 1 (CET1) Ratio of 9.3% at January, 31, 2014.

The CET1 Ratio decreased by 60 basis points from 9.9% at October 31, 2013, due to reductions of approximately: 50 basis points due to higher business driven source currency risk-weighted assets (RWA); 20 basis points due to the newly implemented Credit Valuation Adjustment (CVA) risk capital charge; 10 basis points due to changes in IFRS accounting standards; and 5 basis points due to the net impact of a strengthening U.S. dollar; net of a 25 basis point benefit from increased retained earnings.

The RWA of $240 billion at January 31, 2014, increased by $25 billion from October 31, 2013, primarily resulting from approximately $11 billion due to increased business driven source currency RWA, approximately $6 billion due to the impact of the newly implemented CVA adjustment and IFRS accounting changes, and approximately $6 billion due to the impact of the strengthening U.S. dollar.

Business driven source currency RWA increased due to increased credit risk RWA across all groups and increased market risk RWA in BMO Capital Markets. A portion of these market risk increases are temporary.

The CVA RWA resulted from OSFI's decision to begin phasing in the CVA risk capital charge in the first quarter of 2014. The CET1 CVA risk capital charge applicable to BMO for CET1 during fiscal 2014, and for Tier 1 and Total Capital during the first and second quarter of 2014, will be 57% of the fully-implemented charge. This will increase each year until it reaches 100% by 2019.

CET1 capital at January 31, 2014, was $22.3 billion, up $1.1 billion from October 31, 2013, due mainly to retained earnings growth and the net impact of foreign exchange movements on U.S.-dollar-denominated investments in foreign operations and related hedges.

The bank's Tier 1 and Total Capital Ratios were 10.6% and 12.4%, respectively, at January 31, 2014, compared with 11.4% and 13.7%, respectively, at October 31, 2013. These ratios decreased from last quarter primarily due to the same factors that caused the decrease in the CET1 Ratio, as described above, and due to the additional 10% phase-out of non-qualifying Tier 1 and Tier 2 Capital in January 2014.

OSFI has recently announced the Assets-to-Capital Multiple (ACM), based on Total Capital, will be discontinued in 2015. BMO's ACM was 17.4 at January 31, 2014. BMO's ACM increased from 15.6 at October 31, 2013, primarily due to balance sheet growth.

BMO's investments in foreign operations are primarily denominated in U.S. dollars. Foreign exchange gains or losses on the translation of the investments in foreign operations to Canadian dollars are reported in shareholders' equity. However, when coupled with the foreign exchange impact of U.S.-dollar-denominated RWA on Canadian-dollar equivalent RWA, and with the impact of U.S.-dollar-denominated capital deductions on our Canadian dollar capital, this may result in variability in the bank's capital ratios. BMO may hedge the risk of foreign exchange gains or losses by funding its foreign investments in U.S. dollars or, alternatively, to offset the impact of foreign exchange rate changes on the bank's capital ratios, may enter into derivative contracts, such as forward currency contracts, or elect to fund its investments in Canadian dollars.

Pages 61 to 65 and pages 92 to 94 of BMO's 2013 Annual Report provide disclosure on Enterprise-Wide Capital Management and Liquidity and Funding Risk, including regulatory requirements impacting capital and liquidity.

Other Capital Developments

On January 24, 2014, we announced our intention to redeem all of our Non-cumulative Class B Preferred Shares Series 18 on February 25, 2014, at a redemption price of $25.00 per share plus declared and unpaid dividends up to but excluding the date fixed for redemption.

On January 28, 2014, we announced an agreement to acquire F&C. Assuming a third quarter close, which is subject to F&C shareholder approval and the satisfaction of all regulatory and other conditions, the acquisition is expected to reduce BMO's CET1 Ratio by approximately 75 basis points.

During the quarter, 468,000 common shares were issued through the exercise of stock options.

On January 30, 2014, we announced that we had received approvals from the Toronto Stock Exchange (TSX) and OSFI to proceed with a normal course issuer bid through the facilities of the TSX to purchase, for cancellation, up to 15 million of BMO's common shares commencing February 1, 2014, and ending January 31, 2015. The timing and amount of purchases under the program are subject to management discretion based on factors such as market conditions and capital adequacy. We do not expect to be active under the normal course issuer bid until after closing of the agreement to acquire F&C, described above. The bank will regularly consult with OSFI before making purchases under the bid. Over the term of the previous bid we purchased 10.7 million of common shares at an average price of $62.88 per share.

On February 25, 2014, BMO announced that the Board of Directors had declared a quarterly dividend payable to common shareholders of $0.76 per common share, unchanged from the preceding quarter and up $0.02 per share from a year ago. The dividend reflects our strong capital position and the success of our business strategies.

The dividend is payable May 27, 2014, to shareholders of record on May 1, 2014. Common shareholders may elect to have their cash dividends reinvested in common shares of the bank in accordance with the dividend reinvestment and share purchase plan.

Economic Capital Review

Economic capital is a measure of our internal assessment of the risks underlying BMO's business activities. It represents management's estimation of the likely magnitude of economic losses that could occur should adverse situations arise, and allows returns to be measured on a basis that considers the risks taken. Economic capital is calculated for various types of risk - credit, market (trading and non-trading), operational and business - based on a one-year time horizon. Economic capital is a key element of our risk-based capital management and Internal Capital Adequacy Assessment Process framework.

To view the chart "Economic Capital and RWA by Operating Group and Risk Type", please visit the following link: http://media3.marketwire.com/docs/929120_CHART.pdf.

---------------------------------------------------------------------------- Qualifying Regulatory Capital and Risk-Weighted Assets Table 8 ---------------------------------------------------------------------------- Transitional Transitional All-in (1) (2) All-in (1) (2) -------------------------- -------------------------- (Canadian $ in millions) Q1-2014 Q1-2014 Q4-2013 Q4-2013 ------------------------------------------------- -------------------------- Gross Common Equity (3) 29,391 29,391 28,144 28,144 Regulatory adjustments applied to Common Equity (7,051) (1,465) (6,917) 9 ------------------------------------------------- -------------------------- Common Equity Tier 1 capital (CET1) 22,340 27,926 21,227 28,153 ------------------------------------------------- -------------------------- Additional Tier 1 Eligible Capital (4) 3,457 3,457 3,781 3,781 Regulatory adjustments applied to Tier 1 (415) (3,256) (409) (3,781) ------------------------------------------------- -------------------------- Additional Tier 1 capital (AT1) 3,042 201 3,372 - ------------------------------------------------- -------------------------- Tier 1 capital (T1 = CET1 + AT1) 25,382 28,127 24,599 28,153 ------------------------------------------------- -------------------------- Tier 2 Eligible Capital (5) 4,321 4,321 4,951 4,951 Regulatory adjustments applied to Tier 2 (50) (12) (50) (13) ------------------------------------------------- -------------------------- Tier 2 capital (T2) 4,271 4,309 4,901 4,938 ------------------------------------------------- -------------------------- Total capital (TC = T1 + T2) 29,653 32,436 29,500 33,091 ------------------------------------------------- -------------------------- Total risk-weighted assets 240,076 246,232 215,094 232,501 ------------------------------------------------- -------------------------- Capital Ratios (%) CET1 Ratio 9.3 11.3 9.9 12.1 Tier 1 Capital Ratio 10.6 11.4 11.4 12.1 Total Capital Ratio 12.4 13.2 13.7 14.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) "All-in" regulatory capital assumes that all Basel III regulatory adjustments are applied effective January 1, 2013, and that the capital value of instruments which no longer qualify as regulatory capital under Basel III rules will be phased out at a rate of 10% per year from January 1, 2013, and continuing to January 1, 2022. (2) Transitional regulatory capital assumes that all Basel III regulatory capital adjustments are phased in from January 1, 2014, to January 1, 2018, and that the capital value of instruments that no longer qualify as regulatory capital under Basel III rules will be phased out at a rate of 10% per year from January 1, 2013, and continuing to January 1, 2022. (3) Gross Common Equity includes issued qualifying common shares, retained earnings, accumulated other comprehensive income and eligible common share capital issued by subsidiaries. (4) Additional Tier 1 Eligible Capital includes directly and indirectly issued qualifying Additional Tier 1 instruments and directly and indirectly issued capital instruments, to the extent eligible, which are subject to phase-out under Basel III. (5) Tier 2 Eligible Capital includes directly and indirectly issued qualifying Tier 2 instruments and directly and indirectly issued capital instruments, to the extent eligible, that are subject to phase-out under Basel III. ---------------------------------------------------------------------------- Outstanding Shares and Securities Convertible into Common Shares Table 9 ---------------------------------------------------------------------------- Number of shares or dollar amount As at February 19, 2014 (in millions) ---------------------------------------------------------------------------- Common shares 645 Class B Preferred Shares Series 13 $ 350 Series 14 $ 250 Series 15 $ 250 Series 16 (1) $ 157 Series 17 (1) $ 143 Series 18 (2) $ 150 Series 21 $ 275 Series 23 $ 400 Series 25 $ 290 Stock options - vested 8.7 - non-vested 6.8 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) In August 2013, approximately 5.7 million Series 16 Preferred Shares were converted into Series 17 Preferred Shares on a one-for-one basis. (2) On January 24, 2014, we announced our intention to redeem our Series 18 Preferred Shares on February 25, 2014 Details on share capital are outlined in Note 20 to the audited consolidated financial statements on page 163 of BMO's 2013 Annual Report.



Caution

The foregoing Capital Management sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Eligible Dividends Designation

For the purposes of the Income Tax Act (Canada) and any similar provincial and territorial legislation, BMO designates all dividends paid or deemed to be paid on both its common and preferred shares as "eligible dividends", unless indicated otherwise.

Review of Operating Groups' Performance

How BMO Reports Operating Group Results

The following sections review the financial results of each of our operating segments and operating groups for the first quarter of 2014.

Periodically, certain business lines and units within the business lines are transferred between client and corporate support groups to more closely align BMO's organizational structure with its strategic priorities. In addition, revenue and expense allocations are updated to more accurately align with current experience. Results for prior periods are restated to conform to the current presentation.

Corporate Services results reflect certain items in respect of the acquired loan portfolio, including the recognition of a portion of the credit mark that is reflected in net interest income over the term of the purchased loans and provisions and recoveries of credit losses on the acquired portfolio. Certain integration and restructuring costs, run-off structured credit activities and changes in the collective allowance are also included in Corporate Services.

Effective November 1, 2013, we adopted several new and amended accounting pronouncements issued by the International Accounting Standards Board (IASB), which are outlined in Note 1 to the unaudited interim consolidated financial statements.

BMO analyzes revenue at the consolidated level based on GAAP revenues reflected in the consolidated financial statements rather than on a taxable equivalent basis (teb). Like many banks, we analyze revenue on a teb basis at the operating group level. This basis includes an adjustment that increases GAAP revenues and the GAAP provision for income taxes by an amount that would raise revenues on certain tax-exempt items to a level equivalent to amounts that would incur tax at the statutory rate. The offset to the group teb adjustments is reflected in Corporate Services revenues and income tax provisions. The teb adjustments for the first quarter of 2014 totalled $85 million, down from $89 million in the fourth quarter of 2013 and up from $64 million in the first quarter of 2013.

---------------------------------------------------------------------------- Personal and Commercial Banking (P&C) Table 10 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income (teb) 1,800 1,743 1,710 Non-interest revenue 550 539 536 ---------------------------------------------------------------------------- Total revenue (teb) 2,350 2,282 2,246 Provision for credit losses 160 262 160 Non-interest expense 1,314 1,268 1,237 ---------------------------------------------------------------------------- Income before income taxes 876 752 849 Income taxes (teb) 226 192 223 ---------------------------------------------------------------------------- Reported net income 650 560 626 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income 664 575 642 ---------------------------------------------------------------------------- Net income growth (%) 3.8 (2.0) 5.5 Revenue growth (%) 4.6 2.1 (1.8) Non-interest expense growth (%) 6.3 2.0 (2.5) Return on equity (%) 16.4 15.0 18.2 Adjusted return on equity (%) 16.8 15.4 18.7 Operating leverage (%) (1.7) 0.1 0.7 Adjusted operating leverage (%) (2.0) (0.3) 0.4 Efficiency ratio (%) (teb) 55.9 55.6 55.1 Adjusted efficiency ratio (%) (teb) 55.1 54.6 54.1 Net interest margin on average earning assets (%) (teb) 2.93 2.90 3.06 Average earning assets ($ billions) 244.0 238.2 221.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



The Personal and Commercial Banking (P&C) operating group represents the sum of our two retail and business banking operating segments, Canadian Personal and Commercial Banking (Canadian P&C) and U.S. Personal and Commercial Banking (U.S. P&C). These operating segments are reviewed separately in the sections that follow.

---------------------------------------------------------------------------- Canadian Personal and Commercial Banking (Canadian P&C) Table 11 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income (teb) 1,194 1,166 1,123 Non-interest revenue 408 400 380 ---------------------------------------------------------------------------- Total revenue (teb) 1,602 1,566 1,503 Provision for credit losses 141 166 128 Non-interest expense 813 791 780 ---------------------------------------------------------------------------- Income before income taxes 648 609 595 Provision for income taxes (teb) 164 151 148 ---------------------------------------------------------------------------- Reported net income 484 458 447 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income 486 461 450 ---------------------------------------------------------------------------- Personal revenue 1,057 1,031 995 Commercial revenue 545 535 508 Net income growth (%) 8.2 5.1 3.0 Revenue growth (%) 6.5 4.2 - Non-interest expense growth (%) 4.2 1.7 1.2 Operating leverage (%) 2.3 2.5 (1.2) Efficiency ratio (%) (teb) 50.8 50.5 51.9 Net interest margin on average earning assets (%) (teb) 2.61 2.60 2.70 Average earning assets ($ billions) 181.2 178.2 165.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Q1 2014 vs Q1 2013

Canadian P&C net income of $484 million increased $37 million or 8% from a year ago, continuing the momentum from the second half of 2013. Revenue was up $99 million or 7% from the prior year due to the effects of strong volume growth across most products, partially offset by the impact of lower net interest margin, which was down 9 basis points to 2.61%. Operating leverage was above 2% for a second consecutive quarter.

In the personal banking segment, revenue increased $62 million or 6% year over year reflecting higher volumes across most products, partially offset by the impact of lower net interest margin. Total personal lending balances (excluding credit cards) increased 10%. Personal deposit balances increased 9% year over year mainly due to increased volumes in term deposit products.

In the commercial banking segment, revenue increased $37 million or 7% reflecting higher volumes across most products, partially offset by the impact of lower net interest margin. Balance growth in commercial loans and deposits continued to be strong, increasing 11% and 14% year over year respectively.

Provisions for credit losses increased $13 million or 10% due to higher commercial losses partially offset by lower provisions in the consumer portfolio. Non-interest expense increased $33 million or 4% due to continued investment in the business. We continue to actively manage expenses, including simplifying our core processes.

Average current loans and acceptances increased $17.0 billion or 10% from a year ago, and deposits increased $12.2 billion or 11%.

Q1 2014 vs Q4 2013

Net income increased $26 million or 6% from last quarter due to higher revenues and lower provisions for credit losses, partially offset by higher expenses. Revenues increased $36 million from the prior quarter reflecting higher volumes across most products. Net interest margin increased 1 basis point to 2.61%.

Personal revenue increased $26 million due to higher volumes across most products including higher retail cards revenues.

Commercial revenue increased $10 million from the prior quarter due to higher volumes across most products.

Provisions for credit losses decreased $25 million due to a combination of lower write-offs and higher recoveries. Non-interest expense increased by $22 million due to higher volume-driven costs and stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year.

Average current loans and acceptances increased $3.0 billion or 2% from last quarter, while deposits increased $4.5 billion or 4%.

---------------------------------------------------------------------------- U.S. Personal and Commercial Banking (U.S. P&C) Table 12 ---------------------------------------------------------------------------- (US $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income (teb) 561 554 589 Non-interest revenue 132 134 157 ---------------------------------------------------------------------------- Total revenue (teb) 693 688 746 Provision for credit losses 18 92 33 Non-interest expense 464 458 459 ---------------------------------------------------------------------------- Income before income taxes 211 138 254 Provision for income taxes (teb) 58 40 74 ---------------------------------------------------------------------------- Reported net income 153 98 180 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income 164 109 194 ---------------------------------------------------------------------------- Net income growth (%) (14.8) (28.7) 14.1 Adjusted net income growth (%) (15.0) (28.2) 11.1 Revenue growth (%) (7.2) (7.1) (3.6) Non-interest expense growth (%) 1.1 (2.7) (6.6) Adjusted non-interest expense growth (%) 2.0 (1.7) (6.1) Operating leverage (%) (8.3) (4.4) 3.0 Adjusted operating leverage (%) (9.2) (5.4) 2.5 Efficiency ratio (%) (teb) 67.0 66.7 61.5 Adjusted efficiency ratio (%) (teb) 64.6 64.1 58.8 Net interest margin on average earning assets (%) (teb) 3.83 3.82 4.12 Average earning assets ($ billions) 58.1 57.5 56.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Canadian $ equivalent in millions, except as noted) Net interest income (teb) 606 577 587 Non-interest revenue 142 139 156 ---------------------------------------------------------------------------- Total revenue (teb) 748 716 743 Provision for credit losses 19 96 32 Non-interest expense 501 477 457 ---------------------------------------------------------------------------- Income before income taxes 228 143 254 Provision for income taxes (teb) 62 41 75 ---------------------------------------------------------------------------- Reported net Income 166 102 179 Adjusted net income 178 114 192 Average earning assets (US$ billions) 62.8 59.9 56.5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Q1 2014 vs Q1 2013 (in US$)

Net income of $153 million decreased $27 million or 15% from a strong first quarter a year ago. Adjusted net income of $164 million also declined 15%.

Revenues of $693 million decreased $53 million or 7% from the prior year, which included strong revenues on sales of newly originated mortgages, commercial lending fees, due to customers' response to anticipated U.S. tax changes that accelerated commercial lending, and higher net interest margin. Net interest margin decreased by 29 basis points due to a decline in loan spreads due to competitive pricing and a decline in deposit spreads given the low-rate environment.

Provisions for credit losses were $18 million, down $15 million due to improvements in the consumer portfolio. Non-interest expense of $464 million increased $5 million or 1%. Adjusted non-interest expense of $448 million was $9 million or 2% higher than last year primarily due to a changing regulatory environment.

Average current loans and acceptances increased $1.4 billion year over year to $52.4 billion. The core commercial and industrial loan portfolio continues to grow, increasing $3.0 billion or 14% from a year ago to $24.3 billion. In addition, our indirect auto and commercial real estate portfolios reflected year-over-year growth. As expected, there were decreases in certain loan portfolios, including our mortgage loan portfolio, due to the effects of our continued practice of selling most mortgage originations. Average deposits of $58.9 billion declined $0.9 billion year over year, due to growth in our commercial business and in our personal chequing and savings accounts being more than offset by a planned reduction in higher-cost personal money market and time deposit accounts, in addition to a transfer of certain customer balances to Wealth Management at the beginning of the current period.

Q1 2014 vs. Q4 2013 (in US$)

Net income increased $55 million or 57% and adjusted net income increased $55 million or 50% from the prior quarter, primarily driven by reductions in provisions for credit losses, which were above trend in the previous quarter.

Revenue increased $5 million or 1%, primarily due to loan growth and stable net interest margin.

Provisions for credit losses decreased significantly by $74 million from above trend provisions in the previous quarter, and benefited from higher recoveries in the current quarter. Non-interest expense increased $6 million or 1%. Adjusted non-interest expense increased $8 million or 2% with approximately half due to higher stock-based compensation for employees that are eligible to retire that is recognized in the first quarter of each year.

Average current loans and acceptances increased by $0.4 billion from the prior quarter, our fifth consecutive quarter of positive growth. Average deposits increased by $0.1 billion from the prior quarter.

Adjusted results in this U.S. P&C section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP measures section.

---------------------------------------------------------------------------- Wealth Management Table 13 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income (teb) 140 145 136 Non-interest revenue 727 895 642 ---------------------------------------------------------------------------- Total revenue (teb) 867 1,040 778 Provision for (recovery of) credit losses (1) 1 2 Non-interest expense 644 602 571 ---------------------------------------------------------------------------- Income before income taxes 224 437 205 Provision for income taxes (teb) 49 126 43 ---------------------------------------------------------------------------- Reported net income 175 311 162 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income 183 318 168 ---------------------------------------------------------------------------- Net income growth (%) 7.7 90.0 53.5 Adjusted net income growth (%) 8.3 88.2 51.8 Revenue growth (%) 11.4 32.7 11.9 Non-interest expense growth (%) 12.9 7.4 2.5 Adjusted non-interest expense growth (%) 12.7 7.1 2.3 Return on equity (%) 20.8 41.1 23.0 Adjusted return on equity (%) 21.7 42.0 23.9 Operating leverage (%) (1.5) 25.3 9.4 Adjusted operating leverage (%) (1.3) 25.6 9.6 Efficiency ratio (%) (teb) 74.3 57.9 73.3 Adjusted efficiency ratio (%) (teb) 73.1 57.1 72.3 Net interest margin on average earning assets (%) (teb) 2.73 2.89 2.87 Average earning assets ($ billions) 20.4 19.8 18.8 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- U.S. Select Financial Data (US$ in millions, except as noted) Total revenue (teb) 178 359 173 Non-interest expense 157 147 145 Reported net income 17 136 18 Adjusted net income 22 141 23 Average earning assets (US$ in billions) 2.9 2.8 2.6 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Q1 2014 vs Q1 2013

Wealth Management continued to produce good results. Net income for the quarter of $175 million increased $13 million or 8% from a year ago. Adjusted net income of $183 million increased $15 million or 8% from a year ago. Adjusted net income in our traditional wealth businesses was $123 million, up $19 million or 17% from a year ago. Strong results reflect growth in client assets and increased transaction volumes. Adjusted net income in insurance was $60 million, down $4 million or 7% from a year ago. The decrease was primarily due to lower benefits from changes in our investment portfolio to improve asset-liability management. There was continued growth in both the creditor and life insurance underlying businesses.

Revenue was $867 million, up $89 million or 11% from a year ago. Revenue in our traditional wealth businesses was $768 million, up $90 million or 13% from a year ago due to growth in client assets and increased transaction volumes. Insurance revenue was $99 million, down $1 million or 1% due to the factors mentioned above. The stronger U.S. dollar increased revenue by $15 million or 2%.

Non-interest expense was $644 million, up $73 million or 13% from a year ago. Adjusted non-interest expense was $634 million, up $72 million or 13% due to higher revenue-based costs, higher support costs and timing of initiative spend. The stronger U.S. dollar increased adjusted expense by $13 million or 2%.

Assets under management and administration grew by $97 billion or 19% from a year ago to $597 billion, driven by market appreciation, the stronger U.S. dollar and growth in new client assets.

Q1 2014 vs Q4 2013

Net income was down $136 million or 44% and adjusted net income was down $135 million or 43% from the fourth quarter. Adjusted net income in our traditional wealth businesses was down $126 million or 51%, as prior quarter results included a $121 million after-tax security gain and the current quarter included $15 million after-tax impact of stock-based compensation for employees that are eligible to retire that is expensed in the first quarter of each year. Other traditional wealth businesses continued to perform well. Adjusted net income in insurance was down $9 million or 14%, primarily due to lower benefits from changes in our investment portfolio to improve asset-liability management. The underlying insurance businesses continued to perform well.

Revenue decreased $173 million or 17%. Revenue in our traditional wealth businesses decreased $163 million or 17%, due to a $191 million security gain in the prior quarter. Revenue in other traditional wealth businesses increased $28 million or 4%, driven by growth in client assets. Insurance revenue decreased $10 million or 9% due to the factors mentioned above. The stronger U.S. dollar increased revenue by $7 million or 1%.

Non-interest expense increased $42 million or 7%. Adjusted non-interest expense also increased 7%. Half of the increase was due to stock-based compensation for employees eligible to retire. There were also higher revenue-based costs. The stronger U.S. dollar increased adjusted expense by $6 million or 1%.

Assets under management and administration grew by $45 billion or 8% primarily due to the stronger U.S. dollar and market appreciation.

Adjusted results in this Wealth Management section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP measures section.

---------------------------------------------------------------------------- BMO Capital Markets Table 14 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income (teb) 261 279 289 Non-interest revenue 713 518 606 ---------------------------------------------------------------------------- Total revenue (teb) 974 797 895 Recovery of credit losses (1) (17) (15) Non-interest expense 609 526 524 ---------------------------------------------------------------------------- Income before income taxes 366 288 386 Provision for income taxes (teb) 89 71 88 ---------------------------------------------------------------------------- Reported net income 277 217 298 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income 277 217 298 ---------------------------------------------------------------------------- Trading Products revenue 590 482 536 Investment and Corporate Banking revenue 384 315 359 Net income growth (%) (7.2) (29.3) 38.9 Revenue growth (%) 8.8 (10.9) 16.5 Non-interest expense growth (%) 16.3 (0.4) 6.6 Return on equity (%) 18.8 15.0 20.5 Operating leverage (%) (7.5) (10.5) 9.9 Efficiency ratio (%) (teb) 62.5 66.1 58.5 Net interest margin on average earning assets (%) (teb) 0.48 0.54 0.57 Average earning assets ($ billions) 217.0 204.9 201.1 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- U.S. Select Financial Data (US$ in millions, except as noted) Total revenue (teb) 348 278 287 Non-interest expense 229 210 209 Reported net income 88 60 84 Average earning assets (US$ in billions) 75.6 75.7 74.0 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Q1 2014 vs Q1 2013

Net income of $277 million decreased by $21 million or 7% from the first quarter a year ago, as good revenue growth primarily from our U.S. businesses was more than offset by higher expenses, lower loan recoveries and a higher effective tax rate.

Revenues increased $79 million or 9% year over year due to good revenue performance across the businesses, and in particular from our U.S. segment. Investment and Corporate Banking businesses performed well, driven by higher equity underwriting volumes, higher securities gains in corporate banking and merchant banking activities. Trading Products businesses were supported by higher trading revenue, driven by higher interest rate trading and foreign exchange trading, as well as increased securities commissions and fees. The stronger U.S. dollar increased revenues by $29 million or 3% relative to the same period a year ago.

Recoveries of credit losses were lower by $14 million due to lower recoveries combined with new provisions this quarter. Expenses increased $85 million or 16% due to higher employee-related expenses, including severance, and increased support costs, both driven by a changing business and regulatory environment. The stronger U.S. dollar increased expenses by $19 million or 4% relative to the same period a year ago.

Q1 2014 vs Q4 2013

Net income increased $60 million or 27% from the previous quarter primarily due to higher revenues across the businesses. Revenue increased $177 million or 22%. Higher equity underwriting fees and securities gains in corporate banking drove improved performance in Investment and Corporate Banking. There was stronger Trading Products revenue, particularly in interest rate and equity trading, driven by improved market conditions and stronger client activity. The stronger U.S. dollar increased revenue by $13 million or 2% relative to the previous quarter.

Recoveries of credit losses were lower by $16 million due to a combination of lower recoveries and new provisions this quarter. Non-interest expense increased $83 million or 16% from the previous quarter, primarily due to higher employee-related expenses, including severance and stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year, as well as increased support costs, both driven by a changing business and regulatory environment. The stronger U.S. dollar increased expenses by $9 million or 2% relative to the previous quarter.

---------------------------------------------------------------------------- Corporate Services, Including Technology and Operations Table 15 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Net interest income before group teb offset (3) 39 177 Group teb offset (85) (89) (64) ---------------------------------------------------------------------------- Net interest income (teb) (88) (50) 113 Non-interest revenue 19 69 - ---------------------------------------------------------------------------- Total revenue (teb) (69) 19 113 Provision for (recovery of) credit losses (59) (57) 31 Non-interest expense 117 184 238 ---------------------------------------------------------------------------- Loss before income taxes (127) (108) (156) Recovery of income taxes (teb) (86) (94) (106) ---------------------------------------------------------------------------- Reported net loss (41) (14) (50) ---------------------------------------------------------------------------- Adjusted Results Adjusted total revenue (teb) (69) (109) (107) Adjusted recovery of credit losses (59) (106) (51) Adjusted non-interest expense 117 120 143 Adjusted net loss (41) (22) (79) ---------------------------------------------------------------------------- Corporate Services Provision for (Recovery of) Credit Losses Impaired real estate loans 14 (14) (5) Interest on impaired loans 10 12 13 Purchased credit impaired loans (117) (104) (59) Purchased performing loans 34 - - ---------------------------------------------------------------------------- Recovery of credit losses, adjusted basis (59) (106) (51) Purchased performing loans - 49 82 ---------------------------------------------------------------------------- Provision for (recovery of) credit losses, reported basis (59) (57) 31 ---------------------------------------------------------------------------- Average loans and acceptances 563 669 1,189 Period-end loans and acceptances 559 526 1,054 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- U.S. Select Financial Data (US$ in millions) Total revenue (teb) (23) 28 126 Provision for (recovery of) credit losses (48) (95) 24 Non-interest expense 13 110 139 Recovery of income taxes (teb) (5) (7) (30) ---------------------------------------------------------------------------- Reported net income (loss) 17 20 (7) Adjusted total revenue (teb) (23) (66) (86) Adjusted recovery of credit losses (57) (102) (55) Adjusted non-interest expense 13 52 47 Adjusted net income (loss) 22 2 (32) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Corporate Services

Corporate Services consists of Corporate Units and Technology and Operations (T&O). Corporate Units provide enterprise-wide expertise and governance support in a variety of areas, including strategic planning, risk management, finance, legal and compliance, marketing, communications and human resources. T&O manages, maintains and provides governance over information technology, operations services, real estate and sourcing for BMO Financial Group.

The costs of Corporate Units and T&O services are largely transferred to the three client operating groups (P&C, Wealth Management and BMO Capital Markets), and only relatively minor amounts are retained in Corporate Services results. As such, Corporate Services adjusted operating results largely reflect the impact of certain asset-liability management activities, the elimination of taxable equivalent adjustments, the results from certain impaired real estate secured assets, purchased loan accounting impacts and run-off structured credit activities. Corporate Services reported results in 2013 and prior reflect a number of items and activities that are excluded from BMO's adjusted results to help assess BMO's performance. These adjusting items are not reflective of core operating results. They are itemized in the Non-GAAP Measures section.

Financial Performance Review

Q1 2014 vs Q1 2013

Corporate Services net loss for the first quarter of 2014 was $41 million, compared with a net loss of $50 million a year ago. The adjusted net loss in the quarter was $41 million, compared with an adjusted net loss of $79 million a year ago. Adjusted revenues were higher mainly due to the inclusion, commencing this quarter, of $79 million of credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a group teb offset that was $21 million higher than the prior year. Adjusted expenses were lower primarily due to lower support costs retained in Corporate and reduced costs associated with the impaired real estate secured asset portfolio. Adjusted recoveries of credit losses of $59 million improved by $8 million primarily due to a $58 million increase in recoveries on the purchased credit impaired loan portfolio from the prior year, partially offset by $34 million of specific provision in respect of the purchased performing loan portfolio.

Q1 2014 vs Q4 2013

Corporate Services net loss for the first quarter of 2014 was $41 million, compared with a net loss of $14 million in the fourth quarter of 2013. The adjusted net loss in the quarter was $41 million, compared with a net loss of $22 million in the fourth quarter of 2013. Adjusted revenues were higher mainly due to the inclusion, commencing this quarter, of $79 million of credit-related revenue in respect of the purchased performing loan portfolio, partially offset by a variety of other items, none of which were individually significant. Adjusted expenses were marginally lower. Adjusted recoveries of credit losses decreased mainly due to $34 million of specific provisions in respect of the purchased performing loan portfolio.

Adjusted results in the foregoing Corporate Services section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Non-GAAP Measures

Results and measures in this MD&A are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items as set out in Table 16 below. Management assesses performance on a reported basis and on an adjusted basis and considers both to be useful in assessing underlying ongoing business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. It also permits readers to assess the impact of certain specified items on results for the periods presented and to better assess results excluding those items if they consider the items to not be reflective of ongoing results. As such, the presentation may facilitate readers' analysis of trends, as well as comparisons with our competitors. Adjusted results and measures are non-GAAP and as such do not have standardized meaning under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from or as a substitute for GAAP results.

Net economic profit represents net income available to common shareholders, before deduction for the after-tax impact of the amortization of acquisition-related intangible assets, less a charge for capital, and is considered a reasonable measure of added economic value.

Beginning in the first quarter of 2014, credit-related items on the purchased performing loan portfolio, acquisition integration costs and run-off structured credit activities are no longer adjusting items.

---------------------------------------------------------------------------- Non-GAAP Measures Table 16 ---------------------------------------------------------------------------- (Canadian $ in millions, except as noted) Q1-2014 Q4-2013 Q1-2013 ---------------------------------------------------------------------------- Reported Results Revenue 4,122 4,138 4,032 Provision for credit losses (99) (189) (178) Non-interest expense (2,684) (2,580) (2,570) ---------------------------------------------------------------------------- Income before income taxes 1,339 1,369 1,284 Provision for income taxes (278) (295) (248) ---------------------------------------------------------------------------- Net Income 1,061 1,074 1,036 EPS ($) 1.58 1.60 1.51 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusting Items (Pre-tax) (1) Credit-related items on the purchased performing loan portfolio (see below (i)) - 49 128 Acquisition integration costs (2) - (60) (92) Amortization of acquisition- related intangible assets (3) (31) (31) (31) Decrease (increase) in the collective allowance for credit losses - - - Run-off structured credit activities (4) - 26 7 ---------------------------------------------------------------------------- Adjusting items included in reported pre-tax income (31) (16) 12 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusting Items (After tax) (1) Credit-related items on the purchased performing loan portfolio (see below (i)) - 30 79 Acquisition integration costs (2) - (37) (57) Amortization of acquisition- related intangible assets (3) (22) (22) (22) Decrease (increase) in the collective allowance for credit losses - (5) - Run-off structured credit activities (4) - 20 7 ---------------------------------------------------------------------------- Adjusting items included in reported net income after tax (22) (14) 7 Impact on EPS ($) (0.03) (0.02) 0.01 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted Results Revenue 4,122 4,010 3,812 Provision for credit losses (99) (140) (96) Non-interest expense (2,653) (2,485) (2,444) ---------------------------------------------------------------------------- Income before income taxes 1,370 1,385 1,272 Provision for income taxes (287) (297) (243) ---------------------------------------------------------------------------- Adjusted net income 1,083 1,088 1,029 EPS ($) 1.61 1.62 1.50 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (i)Credit-related items on the purchased performing loan portfolio are comprised of the following amounts: Revenue - 98 210 Provision for credit losses - (49) (82) ---------------------------------------------------------------------------- Increase in pre-tax income - 49 128 Provision for income taxes - (19) (49) ---------------------------------------------------------------------------- Increase in reported net income after tax - 30 79 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Adjusting items are included in Corporate Services with the exception of the amortization of acquisition-related intangible assets, which is charged to the operating groups. (2) Acquisition integration costs are included in non-interest expense. (3) These expenses have been designated as adjusting items because the purchase decision may not consider the amortization of acquisition- related intangible assets to be a relevant expense. They were charged to the non-interest expense of the operating groups as follows: - in the first quarter of 2014: Canadian P&C $3 million ($2 million after tax); U.S. P&C $18 million ($12 million after tax); and Wealth Management $10 million ($8 million after tax). - in the fourth quarter of 2013: Canadian P&C $3 million before and after tax; U.S. P&C $19 million ($12 million after tax); and Wealth Management $9 million ($7 million after tax). - in the first quarter of 2013: Canadian P&C $3 million before and after tax; U.S. P&C $19 million ($13 million after tax); and Wealth Management $9 million ($6 million after tax). (4) Primarily comprised of valuation changes associated with these activities that are mainly included in trading revenue in non-interest revenue. ---------------------------------------------------------------------------- Summary Quarterly Earnings Trends (1) Table 17 ---------------------------------------------------------------------------- (Canadian $ in millions, Q1- Q4- Q3- Q2- Q1- Q4- Q3- Q2- except as noted) 2014 2013 2013 2013 2013 2012 2012 2012 ---------------------------------------------------------------------------- Total revenue 4,122 4,138 4,000 3,893 4,032 4,129 3,827 3,908 Provision for credit losses - specific (see below) 99 189 56 174 178 216 229 195 Provision for (recovery of) credit losses - collective - - 20 (30) - (24) 8 - Non-interest expense 2,684 2,580 2,526 2,550 2,570 2,679 2,457 2,473 Reported net income (see below) 1,061 1,074 1,123 962 1,036 1,073 962 1,020 Adjusted net income (see below) 1,083 1,088 1,122 984 1,029 1,116 1,005 974 ---------------------------------------------------------------------------- Basic earnings per share ($) 1.58 1.60 1.67 1.41 1.51 1.57 1.41 1.51 Diluted earnings per share ($) 1.58 1.60 1.66 1.40 1.51 1.57 1.41 1.50 Adjusted diluted earnings per share ($) 1.61 1.62 1.66 1.44 1.50 1.64 1.47 1.43 Net interest margin on average earning assets (%) 1.62 1.69 1.78 1.82 1.87 1.86 1.90 1.92 Adjusted net interest margin on average earning assets (%) 1.62 1.60 1.65 1.67 1.70 1.70 1.72 1.78 Effective income tax rate (%) 20.8 21.6 19.7 19.8 19.3 14.7 15.1 17.8 Adjusted effective income tax rate (%) 20.9 21.5 19.2 19.0 19.0 17.1 16.0 18.5 Canadian/U.S. dollar exchange rate (average) 1.08 1.04 1.04 1.02 1.00 0.99 1.02 0.99 Provision for credit losses - specific Canadian P&C 141 166 125 153 128 146 146 166 U.S. P&C 19 96 40 55 32 75 76 60 ---------------------------------------------------------------------------- Personal and Commercial Banking 160 262 165 208 160 221 222 226 Wealth Management (1) 1 (1) 1 2 11 5 1 BMO Capital Markets (1) (17) 2 (6) (15) (4) - 19 Corporate Services, including T&O (59) (57) (110) (29) 31 (12) 2 (51) ---------------------------------------------------------------------------- BMO Financial Group provision for credit losses - specific 99 189 56 174 178 216 229 195 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Reported net income: Canadian P&C 484 458 486 421 447 436 452 426 U.S. P&C 166 102 149 151 179 135 136 141 ---------------------------------------------------------------------------- Personal and Commercial Banking 650 560 635 572 626 571 588 567 Wealth Management 175 311 217 140 162 164 110 147 BMO Capital Markets 277 217 268 261 298 307 240 223 Corporate Services, including T&O (41) (14) 3 (11) (50) 31 24 83 ---------------------------------------------------------------------------- BMO Financial Group net income 1,061 1,074 1,123 962 1,036 1,073 962 1,020 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted net income: Canadian P&C 486 461 489 422 450 438 455 429 U.S. P&C 178 114 161 164 192 151 152 156 ---------------------------------------------------------------------------- Personal and Commercial Banking 664 575 650 586 642 589 607 585 Wealth Management 183 318 224 147 168 169 116 152 BMO Capital Markets 277 217 269 262 298 308 240 223 Corporate Services, including T&O (41) (22) (21) (11) (79) 50 42 14 ---------------------------------------------------------------------------- BMO Financial Group adjusted net income 1,083 1,088 1,122 984 1,029 1,116 1,005 974 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



Summary Quarterly Earnings Trends

BMO's quarterly earnings trends were reviewed in detail on pages 102 and 103 of BMO's 2013 Annual Report. Readers are encouraged to refer to that review for a more complete discussion of trends and factors affecting past quarterly results including the modest impact of seasonal variations in results. Table 17 outlines summary results for the second quarter of fiscal 2012 through the first quarter of fiscal 2014. The table reflects changes in IFRS that are outlined in Note 1 to the unaudited interim consolidated financial statements.

Periodically, certain business lines and units within the business lines are transferred between client operating groups to more closely align BMO's organizational structure and its strategic priorities. Comparative figures have been restated to conform to the current presentation.

Over the past two years, we have remained focused on executing our strategic priorities. Economic conditions have generally been stable to improving.

Canadian P&C has had good results in recent quarters with net income growth driven by stronger revenues and our operating leverage has been positive for the last two quarters. The improving revenue growth is due to more stable margins with continued strong balance growth.

Recent quarterly results in traditional wealth businesses have been strong and have grown on a relatively consistent basis, driven by growth in client assets, better markets and a focus on productivity. The fourth quarter of 2013 included a large security gain. Quarterly results in insurance have been subject to variability, resulting primarily from changes in long-term interest rates and investment portfolio changes.

Building on improving operating results from 2012, BMO Capital Markets continued to show strength through 2013, benefiting from an improved market environment which enabled us to deliver three quarters of good performance with higher revenue contributing to an overall strong net income performance. Results in the fourth quarter of 2013 were impacted by market uncertainty in both the United States and Canada, and contributed to both lower revenue and lower net income. Rebounding from the fourth quarter's results, this quarter reflects higher net income, driven by increased client activity and more favourable market conditions across both the Investment and Corporate Banking and Trading Products businesses.

U.S. P&C had strong results in the first quarter of 2013 and results were relatively stable in the second and third quarters due to core commercial and industrial loan growth and lower expenses compared to the prior year, offsetting lower margins and balances in certain portfolios. Results in the fourth quarter of 2013 were negatively impacted by above trend provisions for credit losses. Results improved in the first quarter of 2014, primarily driven by reductions in provisions for credit losses. Net interest margin has declined relative to 2012, primarily due to lower loan spreads due to competitive pricing and a decline in deposit spreads given the low-rate environment.

Corporate Services quarterly net income can vary, in large part due to the inclusion of the adjusting items, which are largely recorded in Corporate Services, and recoveries of credit losses on the purchased credit impaired loan portfolio. Reduced recoveries in the first quarter of 2013 together with lower revenues and increased expenses lowered Corporate Services results that quarter. These recoveries increased in the last three quarters of 2013 and first quarter of 2014, increasing net income.

BMO's PCL measured as a percentage of loans and acceptances has been trending lower in recent quarters relative to 2012, with the exception of an increase in the fourth quarter of 2013.

Fluctuations in exchange rates in 2012 and 2013 have been subdued. The U.S. dollar strengthened significantly in the first quarter of 2014. A stronger U.S. dollar increases the translated value of U.S.-dollar-denominated revenues, expenses, provisions for credit losses, income taxes and net income.

The effective income tax rate can vary, as it depends on the timing of resolution of certain tax matters, recoveries of prior periods' income taxes and the relative proportion of earnings attributable to the different jurisdictions in which we operate.

Caution

This Summary Quarterly Earnings Trends section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in this Summary Quarterly Earnings Trends section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Balance Sheet

Total assets of $592.7 billion at January 31, 2014, increased $55.6 billion from October 31, 2013, including a $15.3 billion increase as a result of the stronger U.S. dollar. The increase primarily reflects growth in securities of $15.1 billion, securities borrowed or purchased under resale agreements of $13.8 billion, net loans and acceptances of $10.5 billion, derivative financial assets of $7.2 billion and cash, cash equivalents and interest bearing deposits with banks of $8.1 billion. All remaining assets increased by a combined $0.9 billion.

The $15.1 billion increase in securities was primarily due to an increase in trading securities, reflecting higher client-driven activities.

The $13.8 billion increase in securities borrowed or purchased under resale agreements was mainly due to increased client activities. This is commensurate with the increase in securities lent or sold under repurchase agreements.

The $10.5 billion increase in net loans and acceptances, included a $5.7 billion increase as a result of the stronger U.S. dollar. The remaining net loans and acceptances increase was primarily driven by loans to businesses and governments in the P&C businesses and BMO Capital Markets.

The $7.2 billion increase in derivative financial assets and the $4.9 billion increase in derivative financial liabilities were primarily due to the increase in the fair value of foreign exchange contracts.

The $8.1 billion increase in cash, cash equivalents and interest bearing deposits with banks was primarily due to increased balances held with central banks.

Liabilities and equity increased $55.6 billion from October 31, 2013, including a $15.3 billion increase as a result of the stronger U.S. dollar. The change primarily reflects increases in deposits of $30.0 billion, securities lent or sold under repurchase agreements of $15.9 billion, increases in derivative financial liabilities of $4.9 billion, securities sold but not yet purchased of $4.2 billion and shareholders' equity of $1.5 billion. All remaining liabilities and equity decreased by a combined $0.9 billion.

The $30.0 billion increase in deposits included a $12.9 billion increase due to the stronger U.S. dollar. Business and government deposits increased $18.0 billion, half due to the stronger U.S. dollar and the remaining half due to increased wholesale funding issuances. Deposits by banks increased $6.3 billion and deposits by individuals increased $5.7 billion, with half driven by increases in Canadian P&C and Wealth Management and the remaining half driven by the impact of the stronger U.S. dollar.

Contractual obligations by year of maturity are outlined in Note 17 to the unaudited interim consolidated financial statements.

Transactions with Related Parties

In the ordinary course of business, we provide banking services to our key management personnel, joint ventures and associates on the same terms that we offer to our customers for those services.

The Bank's policies and procedures for related party transactions did not materially change from October 31, 2013, as described in Note 27 to the audited consolidated financial statements on page 177 of BMO's 2013 Annual Report.

Off-Balance Sheet Arrangements

BMO enters into a number of off-balance sheet arrangements in the normal course of operations. The most significant of these are Credit Instruments, Structured Entities, and Guarantees, which are described on pages 65, 66 and 70 of BMO's 2013 Annual Report as well as in Notes 5 and 7 to the unaudited interim consolidated financial statements. We consolidate all of our Structured Entities, except for certain Canadian customer securitization and structured finance vehicles. See the Select Financial Instruments section for comments on any significant changes to these arrangements during the quarter ended January 31, 2014.

Accounting Policies and Critical Accounting Estimates

Significant accounting policies are described in the notes to our audited consolidated financial statements for the year ended October 31, 2013, together with a discussion of certain accounting estimates that are considered particularly important as they require management to make significant judgments, some of which relate to matters that are inherently uncertain. Readers are encouraged to review that discussion.

Effective November 1, 2013, we adopted several new and amended accounting pronouncements issued by the IASB, which are outlined in Note 1 to the unaudited interim consolidated financial statements.

Future Changes in Accounting Policies

BMO monitors the potential changes proposed by IASB, and analyzes the effect that changes in the standards may have on BMO's financial reporting and accounting policies. New standards and amendments to existing standards, which are effective for the Bank in the future, can be found in Note 1 to the audited consolidated financial statements on pages 132 and 133 of BMO's 2013 Annual Report.

Regulatory Developments

Regulators in Canada, the United States and elsewhere are very active on a number of fronts, including consumer protection, capital markets activities, anti-money laundering, and the oversight and strengthening of risk management. These regulatory reforms can impact our operations when they pose financial costs, for example from increasing capital and liquidity requirements and cost of compliance in terms of infrastructure, and our failure to comply with laws and regulations could result in sanctions and financial penalties that could adversely affect our strategic flexibility, reputation and earnings.

We continue to monitor and prepare for regulatory developments, including those referenced elsewhere in this MD&A and the recent U.S. regulatory developments set out below. For a more comprehensive discussion of U.S. regulatory developments, see the U.S. Regulatory Developments section on page 69 of BMO's 2013 Annual Report.

As a bank holding company with total consolidated assets of US$50 billion or more, our U.S. subsidiary BMO Financial Corp. (BFC) is subject to the 2014 Comprehensive Capital Analysis and Review (CCAR) rules and processes, under which BFC participated in the annual stress testing and capital planning exercise conducted by the Board of Governors of the Federal Reserve System (FRB). BFC is required to demonstrate an ability to maintain a Tier 1 Common Ratio(1) of 5% or more and meet or exceed minimum required capital ratios, after considering its planned capital actions under a company-developed severely adverse scenario and a supervisory-prescribed severely adverse scenario. Pursuant to these requirements, BFC submitted a two-year capital plan to the FRB in January 2014. The FRB is expected to provide its decision on the proposed capital actions contained within BFC's 2014 Capital Plan in March 2014. BMO Harris Bank N.A. (BHB) was subject to similar capital planning requirements by the Office of the Comptroller of Currency (OCC).

The FRB finalized a rule (the FBO Rule) that implements the Dodd-Frank Act's enhanced prudential standards and early remediation requirements for the U.S. operations of non-U.S. banks, such as BMO. The FBO Rule establishes new requirements relating to risk-based capital, leverage limits, liquidity standards, risk-management frameworks, concentration and credit exposure limits, resolution planning and credit exposure reporting.

The OCC issued for comment proposed guidelines for the design and implementation of a risk governance framework for large national banks, and board of director oversight of the risk governance framework's design and implementation. As proposed, the guidelines would apply to our principal U.S. subsidiary bank, BHB, and establish specific roles and responsibilities focused on risk management for front line units, risk management, internal audit, bank boards and CEOs.

The Volcker Rule, which prohibits banking entities and their affiliates from certain proprietary trading and specified relationships with hedge funds and private equity funds, was finalized in December 2013. The U.S. federal banking agencies, the Securities and Exchange Commission and the Commodity Futures Trading Commission have confirmed that banking entities have until July 2015, to conform all of their activities and investments, or longer if the period is extended. Banking entities are expected to engage in good-faith planning efforts and work toward compliance during this period.

The Consumer Financial Protection Bureau, which enforces certain U.S. federal consumer finance laws, has stated that it will closely scrutinize indirect auto lenders to focus on compliance, including with fair lending laws.

(1) Tier 1 Common Ratio is defined as the ratio of Tier 1 Common Capital to total risk-weighted assets under U.S. Basel I rules.



Caution

This Regulatory Developments section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Select Financial Instruments

Pages 65 and 66 of BMO's 2013 Annual Report provide enhanced disclosure relating to select financial instruments that, commencing in 2008 and based on subsequent assessments, markets had come to regard as carrying higher risk. Readers are encouraged to review that disclosure to assist in understanding the nature and extent of BMO's exposures.

The Financial Stability Board (FSB) issued a report encouraging enhanced disclosure related to financial instruments that market participants had come to regard as carrying higher risk. An index of where the disclosures recommended by the Enhanced Disclosure Task Force (EDTF) of the FSB are located is provided on our website at www.bmo.com/investorrelations.

We follow a practice of reporting on significant changes in the select financial instruments since year end, if any, in our interim MD&A. There have been no changes of substance from the disclosure in our 2013 Annual Report, other than the expected maturity of the $1.05 billion of Series 2013 Apex Notes that occurred on December 30, 2013.

Risk Management

Our risk management practices and key measures have not changed significantly from those outlined on pages 77 to 99 of BMO's 2013 Annual Report.

Market Risk

Linkages between Balance Sheet Items and Market Risk Disclosures

Below are parts of our consolidated balance sheet that are subject to market risk, showing balances that are mainly subject to traded risk and non-traded risk measurement techniques.

---------------------------------------------------------------------------- Linkages Between Balance Sheet Items and Market Risk Disclosures Table 18 ---------------------------------------------------------------------------- Market risk measure ----------------------------------------------- As at January 31, 2014 ----------------------------------- Subject to Market Risk ----------------------------------- Not subject Consolidated Non- to (Canadian $ Balance Traded traded Market in millions) Sheet risk (1) risk (2) Risk ----------------------------------------------------------------- Assets Cash and Cash Equivalents 34,112 - - 34,112 Interest bearing deposits with banks 6,586 687 5,899 - Securities Trading (3)(4) 85,957 80,288 5,669 - Available-for- sale 55,736 30,007 25,729 - Held-to-maturity 8,254 - 8,254 - Other 994 - 994 - Securities borrowed or purchased under resale agreements 53,579 53,579 - - Loans and acceptances (net of allowance for credit losses) 289,750 - 289,750 - Derivative instruments 37,502 36,495 1,007 - Other assets (4) 20,192 1,253 7,093 11,846 ----------------------------------------------------------------- Total Assets 592,662 202,309 344,395 45,958 ----------------------------------------------------------------- Liabilities Deposits 398,393 6,780 391,613 - Derivative instruments 36,843 35,617 1,226 - Acceptances 9,207 - 9,207 - Securities sold but not yet purchased 26,646 26,646 - - Securities lent or sold under repurchase agreements 44,789 44,789 - - Other liabilities (4) 40,086 1,635 37,950 501 Subordinated debt 3,983 - 3,983 - ----------------------------------------------------------------- Total Liabilities 559,947 115,467 443,979 501 ----------------------------------------------------------------- ----------------------------------------------------------------- Market risk measure ---------------------------------------------------------- As at October 31, 2013 ----------------------------------------------- Subject to Market Risk ----------------------------------- Main risk Not factors subject for Consolidated Non- to non-traded (Canadian $ Balance Traded traded Market risk in millions) Sheet risk (1) risk (2) Risk balances ---------------------------------------------------------------------------- Assets Cash and Cash Equivalents 26,089 - - 26,089 Interest bearing deposits with Interest banks 6,518 1,511 5,007 - rate Securities Interest Trading (3)(4) 75,159 69,393 5,766 - rate Available-for- Interest sale 53,710 27,817 25,893 - rate Interest Held-to-maturity 6,032 - 6,032 - rate Other 899 - 899 - Equity Securities borrowed or purchased under Interest resale agreements 39,799 39,799 - - rate Loans and Interest acceptances (net rate, of allowance for foreign credit losses) 279,294 - 279,294 - exchange Interest rate, Derivative foreign instruments 30,259 29,484 775 - exchange Interest Other assets (4) 19,285 828 6,864 11,593 rate ---------------------------------------------------------------------------- Total Assets 537,044 168,832 330,530 37,682 ---------------------------------------------------------------------------- Liabilities Interest rate, foreign Deposits 368,369 5,928 362,441 - exchange Interest rate, Derivative foreign instruments 31,974 31,184 790 - exchange Interest Acceptances 8,472 - 8,472 - rate Securities sold but not yet Interest purchased 22,446 22,446 - - rate Securities lent or sold under repurchase Interest agreements 28,884 28,884 - - rate Other liabilities Interest (4) 41,724 2,176 39,003 545 rate Interest Subordinated debt 3,996 - 3,996 - rate ---------------------------------------------------------------------------- Total Liabilities 505,865 90,618 414,702 545 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Includes BMO's balance sheet items subject to the trading and underwriting risk management framework. (2) Includes BMO's balance sheet items subject to the structural balance sheet and insurance risk management framework. (3) Includes securities designated at fair value through profit or loss. (4) Includes balances relating to our insurance business.



Trading, Underwriting and Non-Trading (Structural) Market Risk

Total Trading Value at Risk (VaR) increased over the quarter generally due to client facilitation activity within our equity books along with higher levels of interest rate exposure. There was a partially offsetting improvement in overall diversification benefit. The available-for-sale (AFS) VaR increased mainly as a function of additional securities held in fixed income portfolios. Total Trading Stressed VaR increased mainly due to heightened equity exposures broadly reflecting the changes in Trading VaR for the quarter.

There were no significant changes in our non-trading (structural) market risk management practices during the quarter. Structural economic value exposure to rising interest rates primarily reflects a lower market value for fixed-rate loans. Structural earnings exposure to falling interest rates primarily reflects the risk of prime-based loans repricing at lower rates. Economic value and earnings interest rate sensitivities remained largely unchanged over the quarter.

BMO's market risk management practices and key measures are outlined on pages 87 to 91 of BMO's 2013 Annual Report.

---------------------------------------------------------------------------- Total Trading Value at Risk (VaR) Summary ($ in millions)(i) (ii) Table 19 ---------------------------------------------------------------------------- As at October For the quarter ended January 31, 2014 31, 2013 ---------------------------------------------------------------- ----------- (Pre-tax Canadian Quarter- Quarter- equivalent) end Average High Low end ---------------------------------------------------------------- ----------- Commodity VaR (0.5) (0.5) (0.8) (0.3) (0.4) Equity VaR (8.5) (8.4) (10.6) (5.0) (6.1) Foreign exchange VaR (2.1) (1.9) (3.2) (0.5) (0.5) Interest rate VaR (5.7) (5.9) (8.3) (4.1) (4.6) Credit VaR (5.6) (5.4) (6.2) (4.6) (5.0) Diversification 10.8 10.5 nm nm 7.5 ------------------------------------------ ----------- Total Trading VaR (11.6) (11.6) (13.8) (8.6) (9.1) ---------------------------------------------------------------------------- Total AFS VaR (12.7) (12.9) (14.5) (10.2) (10.1) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (i) Total Trading VaR and AFS VaR above are subject to BMO Capital Markets trading management framework. (ii) One-day measure using a 99% confidence interval. Losses are in brackets and benefits are presented as positive numbers. nm - not meaningful ---------------------------------------------------------------------------- Total Trading Stressed Value at Risk (SVaR) Summary ($ in millions)(i) (ii) Table 20 ---------------------------------------------------------------------------- As at October For the quarter ended January 31, 2014 31, 2013 ---------------------------------------------------------------- ----------- (Pre-tax Canadian Quarter- Quarter- equivalent) end Average High Low end ---------------------------------------------------------------- ----------- Commodity SVaR (4.0) (4.5) (7.7) (1.8) (4.7) Equity SVaR (35.1) (22.9) (38.0) (6.5) (9.8) Foreign exchange SVaR (10.4) (5.7) (10.9) (0.8) (0.8) Interest rate SVaR (12.9) (10.8) (15.2) (8.5) (9.5) Credit SVaR (13.8) (12.4) (13.8) (11.0) (11.0) Diversification 29.8 25.8 nm nm 19.9 ------------------------------------------ ----------- Total Trading SVaR (46.4) (30.5) (46.4) (11.5) (15.9) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (i) Stressed VaR is produced weekly. (ii) One-day measure using a 99% confidence interval. Losses are in brackets and benefits are presented as positive numbers. nm - not meaningful ---------------------------------------------------------------------------- Structural Balance Sheet Earnings and Value Sensitivity to Changes in Interest Rates Table 21 ($ in millions)(i) (ii) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings sensitivity over Economic value the next 12 months (After sensitivity (Pre-tax) tax) ------------------------------------------------- -------------------------- January 31, October 31, January 31, October 31, (Canadian equivalent) 2014 2013 2014 2013 ------------------------------------------------- -------------------------- 100 basis point increase (500.3) (503.1) 95.8 95.4 100 basis point decrease 301.7 340.1 (75.0) (90.8) 200 basis point increase (1,090.1) (1,078.8) 158.8 158.1 200 basis point decrease 350.8 442.7 (102.9) (113.7) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (i) Losses are in brackets and benefits are presented as positive numbers. (ii) For BMO's Insurance businesses, a 100 basis point increase in interest rates at January 31, 2014, results in an increase in earnings after tax of $72 million and an increase in before tax economic value of $368 million ($81 million and $335 million, respectively, at October 31, 2013). A 100 basis point decrease in interest rates at January 31, 2014, results in a decrease in earnings after tax of $61 million and a decrease in before tax economic value of $435 million ($66 million and $399 million, respectively, at October 31, 2013). These impacts are not reflected in the table above.



Liquidity and Funding Risk

Liquidity and funding risk is managed under a robust risk management framework. There were no material changes in the framework during the quarter.

Liquid and Unencumbered Assets

BMO's liquid assets are primarily held in our trading businesses and in supplemental liquidity pools that are maintained for contingency purposes. Liquid assets include unencumbered, high-quality assets that are marketable, can be pledged as security for borrowings and can be converted to cash in a time frame that meets our liquidity and funding requirements.

BMO's liquid assets are summarized in Table 22 below. In the ordinary course of the bank's day-to-day business activities, BMO may encumber a portion of cash and security holdings as collateral to support its trading activities and participation in clearing and payment systems. In addition, BMO may receive highly liquid assets as collateral and may re-pledge these assets in exchange for cash or as collateral for trading activities. Net unencumbered liquid assets, defined as on-balance sheet assets such as BMO owned cash and securities and securities borrowed or purchased under resale agreements plus other off-balance sheet eligible collateral received less collateral encumbered, totalled $180.7 billion at January 31, 2014, compared with $160.6 billion at October 31, 2013. The increase in unencumbered liquid assets was primarily due to higher cash and security balances. Net unencumbered liquid assets are primarily held at the parent bank level, in our U.S. legal entity BMO Harris Bank, and in BMO's broker/dealer operations in Canada and internationally. In addition to liquid assets, BMO retains access to the Bank of Canada's emergency lending assistance program, Federal Reserve Bank discount window in the U.S. and European Central Bank standby liquidity facilities. BMO does not consider central bank facilities as a source of available liquidity when assessing its liquidity position.

In addition to cash and securities holdings, BMO may also pledge other assets, including mortgages and loans, to raise long-term secured wholesale funding. Table 23 provides a summary of total encumbered and unencumbered assets. ---------------------------------------------------------------------------- Liquid Assets As at January 31, 2014 ---------------------------------------------------------------------------- Carrying Value/On- Other Balance Cash & Total Net Sheet Securities Gross Encumbered Unencumbered ($in millions) Assets (1) Received Assets (2) Assets Assets (3) ---------------------------------------------------------------------------- Cash and cash equivalents 34,112 - 34,112 1,381 32,731 Deposits in other banks 6,586 - 6,586 - 6,586 Securities and securities borrowed or purchased under resale agreements Sovereigns / Central banks / Multilateral Development Bank 107,218 11,746 118,964 72,588 46,376 Mortgage-backed securities and collateralized mortgage obligations 13,329 619 13,948 605 13,343 Corporate debt 22,885 6,242 29,127 3,247 25,880 Corporate equity 61,088 17,059 78,147 36,684 41,463 ---------------------------------------------------------------------------- Total securities and securities borrowed or purchased under resale agreements 204,520 35,666 240,186 113,124 127,062 NHA mortgage-backed securities (reported as loans at amortized cost) (4) 15,629 - 15,629 1,333 14,296 ---------------------------------------------------------------------------- Total liquid assets 260,847 35,666 296,513 115,838 180,675 ---------------------------------------------------------------------------- Other assets eligible at central banks (not included above) (5) 100,400 - 100,400 452 99,948 Undrawn credit lines granted by central banks - - - - - ---------------------------------------------------------------------------- Total liquid assets and other sources 361,247 35,666 396,913 116,290 280,623 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Table 22 As at October 31, 2013 ---------------------------------------------------------------------------- Net Unencumbered Assets (3) -------------------- Cash and cash equivalents 24,878 Deposits in other banks 6,518 Securities and securities borrowed or purchased under resale agreements Sovereigns / Central banks / Multilateral Development Bank 51,249 Mortgage-backed securities and collateralized mortgage obligations 10,543 Corporate debt 19,008 Corporate equity 37,020 ---------------------------------------------------------------------------- Total securities and securities borrowed or purchased under resale agreements 117,820 NHA mortgage-backed securities (reported as loans at amortized cost) (4) 11,425 ---------------------------------------------------------------------------- Total liquid assets 160,641 ---------------------------------------------------------------------------- Other assets eligible at central banks (not included above) (5) 101,712 Undrawn credit lines granted by central banks - ---------------------------------------------------------------------------- Total liquid assets and other sources 262,353 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) The carrying values outlined in this table are consistent with the carrying values in the Bank's balance sheet as at January 31, 2014. (2) Gross assets include on-balance sheet and off-balance sheet assets. (3) Net unencumbered liquid assets are defined as on-balance sheet assets, such as BMO-owned cash and securities and securities borrowed or purchased under resale agreements, plus other off-balance sheet eligible collateral received, less encumbered assets. (4) Under IFRS, NHA mortgage-backed securities (MBS) that include BMO's originated mortgages as the underlying collateral are classified as loans. Unencumbered NHA MBS securities have liquidity value and are included as liquid assets under BMO's liquidity and funding management framework. This amount is shown as a separate line item, NHA mortgage- backed securities. (5) Represents loans currently lodged at central banks that could potentially be used to access central bank funding. Loans available for collateral do not include other sources of additional liquidity that may be realized from the loan portfolio including incremental securitization, covered bond issuances and Federal Home Loan Bank (FHLB) advances. ---------------------------------------------------------------------------- Asset Encumbrance ($ in millions) Table 23 ---------------------------------------------------------------------------- Total Gross Assets (1) Encumbered (2) Net Unencumbered -------------------------------- ------------------------- Other Available as As at January Pledged as Other unencumbered collateral 31, 2014 collateral encumbered (3) (4) -------------------------------------------------- ------------------------- Cash and bank deposits 40,698 - 1,381 416 38,901 Securities (5) 255,815 87,047 27,410 7,399 133,959 Loans and acceptances 274,121 37,835 1,957 134,381 99,948 Other assets Derivative Instruments 37,502 - - 37,502 - Premises and equipment 2,220 - - 2,220 - Goodwill 4,052 - - 4,052 - Intangible assets 1,558 - - 1,558 - current tax assets 1,030 - - 1,030 - Deferred tax assets 2,986 - - 2,986 - Other 8,346 - - 8,346 - ---------------------------------------------------------------------------- Total other assets 57,694 - - 57,694 - ---------------------------------------------------------------------------- Total 628,328 124,882 30,748 199,890 272,808 ---------------------------------------------------------------------------- Total Gross Assets (1) Encumbered (2) Net Unencumbered -------------------------------- ------------------------- Other Available as As at October Pledged as Other unencumbered collateral 31, 2013 collateral encumbered (3) (4) -------------------------------------------------- ------------------------- Cash and bank deposits 32,607 - 1,211 1,467 29,929 Securities (5) 217,427 64,168 24,014 6,815 122,430 Loans and acceptances 265,719 38,067 1,956 123,984 101,712 Other assets Derivative Instruments 30,259 - - 30,259 - Premises and equipment 2,168 - - 2,168 - Goodwill 3,819 - - 3,819 - Intangible assets 1,511 - - 1,511 - current tax assets 1,065 - - 1,065 - Deferred tax assets 3,027 - - 3,027 - Other 7,695 - - 7,695 - ---------------------------------------------------------------------------- Total Other assets 49,544 - - 49,544 - ---------------------------------------------------------------------------- Total 565,297 102,235 27,181 181,810 254,071 ---------------------------------------------------------------------------- (1) Gross assets include on-balance sheet and off-balance sheet assets. (2) Pledged as collateral refers to the portion of on-balance sheet assets and other cash and securities received that is pledged through repurchase agreements, securities lent, derivative contracts, minimum required deposits at central banks and requirements associated with participation in clearing houses and payment systems. Other encumbered includes assets that are not available for use for legal or other reasons such as restricted cash and short sales. (3) Other unencumbered assets include select holdings management believes are not readily available to support BMO's liquidity requirements. These include cash and securities of $7.8 billion as at January 31, 2014, which include securities held in BMO's insurance subsidiary, credit protection vehicle, significant equity investments, and certain investments held in our merchant banking business. Other unencumbered assets also include mortgages and loans that may be securitized to access secured funding. (4) Loans included as available as collateral represent loans currently lodged at central banks that could potentially be used to access central bank funding. Loans available for collateral do not include other sources of additional liquidity that may be realized from the loan portfolio, including incremental securitization covered bond issuances and FHLB advances. (5) Includes securities, securities borrowed or purchased under resale agreements and NHA mortgage-backed securities (reported as loans at amortized cost).



Funding Strategy

Our funding philosophy requires that secured and unsecured wholesale funding used to support loans and less liquid assets be longer term (typically maturing in two to ten years) to better match the term to maturity for these assets. Wholesale secured and unsecured funding for liquid trading assets is generally shorter term (maturing in one year or less), and is aligned with the liquidity of the assets being funded. Trading assets are subject to haircuts in order to reflect the potential for lower market values and liquidity during times of market stress. Supplemental liquidity pools are funded with a mix of wholesale term funding.

BMO maintains a large and stable base of customer deposits that, along with our strong capital base, is a source of strength. It supports the maintenance of a sound liquidity position and reduces our reliance on wholesale funding. Customer deposits include core deposits and larger retail and commercial fixed-rate customer deposits. Customer deposits totalled $227.9 billion at January 31, 2014, up from $220.6 billion at October 31, 2013. BMO also receives non-marketable deposits from corporate and non-financial institutional customers. These deposits totalled $27.5 billion as at January 31, 2014.

Total wholesale funding outstanding, largely consisting of negotiable marketable securities, was $171.1 billion at January 31, 2014, with $36.4 billion sourced as secured funding and $134.7 billion sourced as unsecured funding. The mix and maturities of BMO's wholesale term funding are outlined in Table 24 below. BMO maintains a sizeable portfolio of unencumbered liquid assets totalling $180.7 billion as of January 31, 2014, that can be monetized to meet potential funding requirements, as described in the Liquid and Unencumbered Assets section above.

Diversification of our wholesale funding sources is an important part of our overall liquidity management strategy. BMO's wholesale funding activities are well diversified by jurisdiction, currency, investor segment, instrument and maturity profile. BMO maintains ready access to long-term wholesale funding through various borrowing programs, including a European Note Issuance Program, Canadian and U.S. Medium Term Note Programs, Canadian and U.S. mortgage securitizations, Canadian credit card securitizations, covered bonds and Canadian and U.S. senior (unsecured) deposits.

---------------------------------------------------------------------------- Wholesale Funding Maturities ($ in millions) (1) Table 24 ---------------------------------------------------------------------------- Subtotal Less less As at January than 1 1 to 3 3 to 6 6 to 12 than 1 31, 2014 month months months months year ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Deposits from banks (2) 14,787 5,775 135 16 20,713 Certificates of deposit and commercial paper 16,174 22,347 8,334 7,119 53,974 Bearer deposit notes 2,141 3,181 133 250 5,705 Senior unsecured medium-term notes 40 1,862 - 1,420 3,322 Senior unsecured structured notes (3) 20 58 72 467 617 Covered bonds / Asset-backed securities /ABCP(i) ABCP(i) 1,578 1,280 864 84 3,806 Mortgage securitizations 945 - - 652 1,597 Covered bonds - - - 2,228 2,228 Credit card securitizations - - - - - FHLB advances - - - - - Subordinated debt (4) - - - - - ---------------------------------------------------------------------------- Total 35,685 34,503 9,538 12,236 91,962 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Secured 2,523 1,280 864 2,964 7,631 Unsecured 33,162 33,223 8,674 9,272 84,331 ---------------------------------------------------------------------------- Total (5) 35,685 34,503 9,538 12,236 91,962 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- As at January 1 to 2 2 to 5 Over 5 31, 2014 years years years Total ----------------------------------------------------------------- ----------------------------------------------------------------- Deposits from banks (2) - - - 20,713 Certificates of deposit and commercial paper 151 - - 54,125 Bearer deposit notes - - - 5,705 Senior unsecured medium-term notes 11,750 22,700 4,514 42,286 Senior unsecured structured notes (3) 511 2,513 3,019 6,660 Covered bonds / Asset-backed securities /ABCP(i) ABCP(i) - - - 3,806 Mortgage securitizations 2,900 7,744 4,426 16,667 Covered bonds 3,898 2,228 - 8,354 Credit card securitizations 926 3,990 - 4,916 FHLB advances - 2,645 - 2,645 Subordinated debt (4) 318 329 4,549 5,196 ----------------------------------------------------------------- Total 20,454 42,149 16,508 171,073 ----------------------------------------------------------------- ----------------------------------------------------------------- Secured 7,724 16,607 4,426 36,388 Unsecured 12,730 25,542 12,082 134,685 ----------------------------------------------------------------- Total (5) 20,454 42,149 16,508 171,073 ----------------------------------------------------------------- ----------------------------------------------------------------- (i) Asset-backed commercial paper (1) Wholesale funding excludes repo transactions and bankers acceptances, which are disclosed in the contractual maturity table in Note 17 of the financial statements. Wholesale funding also excludes ABCP issued by certain ABCP conduits that are not consolidated for financial reporting purposes. (2) Except for deposits from banks, which primarily consist of bank deposits sourced to support trading products activities, unsecured funding refers to funding through issuance of marketable, negotiable securities. (3) Primarily issued to retail investors. (4) Although part of regulatory capital, subordinated debt is reported in this table in accordance with EDTF recommended disclosures. (5) Total wholesale funding consists of Canadian-dollar-denominated funding of $61 billion and U.S.-dollar and other foreign-denominated funding of $110 billion as at January 31, 2014.



Credit Rating

The credit ratings assigned to BMO's short-term and senior long-term debt securities by external rating agencies are important in the raising of both capital and funding to support our business operations. Maintaining strong credit ratings allows us to access the capital markets at competitive pricing levels. Should our credit ratings experience a material downgrade, our cost of funds would likely increase significantly and our access to funding and capital through capital markets could be reduced. A material downgrade of our ratings could have other consequences, including those set out in Note 10 to the audited consolidated financial statements on page 150 of BMO's 2013 Annual Report.

The credit ratings assigned to BMO's senior debt by the rating agencies are indicative of high-grade, high-quality issues. The ratings as at January 31, 2014, were as follows: DBRS (AA); Fitch (AA-); Moody's (Aa3); and Standard & Poor's (A+).

We are required to deliver collateral to certain counterparties in the event of a downgrade to our current credit rating. The incremental collateral required is based on mark-to-market exposure, collateral valuations and collateral threshold arrangements, as applicable. As at January 31, 2014, the bank would be required to provide additional collateral to counterparties totalling $64 million and $272 million under a one-notch and two-notch downgrade, respectively.

Insurance Risk

There were no significant changes in the risk management practices or risk levels of our insurance business during the quarter. BMO's insurance risk management practices are outlined on pages 95 and 96 of BMO's 2013 Annual Report.

Information and Cyber Security Risk

There were no significant changes in our information and cyber security risk management practices during the quarter from those described in the Information and Cyber Security Risk section on page 79 and in the Operational Risk section on page 94 of BMO's 2013 Annual Report.

Derivative Transactions

With limited exceptions, we utilize the International Swaps and Derivatives Association (ISDA) Master Agreement to document our contractual trading relationships with our counterparties for over-the-counter (OTC) derivatives. ISDA Master Agreements set out the legal framework and standard terms that apply to all derivative transactions entered into bilaterally between the parties. In addition to providing Events of Default and Termination Events which can lead to the early termination of transactions prior to their maturity date, ISDA Master Agreements also contain rules for the calculation and netting of termination values (also known as Close-out Amounts) for transactions between counterparties to identify a single net aggregate amount payable by one party to the other.

Credit Support Annexes (CSAs) are commonly included with ISDA Master Agreements to provide for the exchange of collateral between the parties where one party's OTC derivatives exposure to the other party exceeds an agreed amount (Threshold). The purpose of collateralization is to mitigate counterparty credit risk. Collateral can be exchanged as initial margin and/or variation margin. CSAs outline, among other things, provisions setting out acceptable collateral types (e.g. government treasuries and cash) and how they will be valued (discounts are often applied to the market values), as well as Thresholds, whether or not the collateral can be re-pledged by the recipient and how interest is calculated.

Table 25 represents the notional amounts of our OTC derivative contracts comprised of those which are centrally cleared and settled through a designated clearing house and those which are non-centrally cleared. The notional amounts of our derivatives represent the amount to which a rate or price is applied in order to calculate the payments that must be exchanged under the contract. Notional amounts do not represent assets or liabilities and therefore are not recorded in our Consolidated Balance Sheet. The fair values of OTC derivative contracts are recorded in our Consolidated Balance Sheet.

---------------------------------------------------------------------------- Over-the-Counter Derivatives (Notional Amounts) Table 25 ---------------------------------------------------------------------------- Non-centrally cleared Centrally cleared ---------------------------------------------------- (Canadian $ in millions) Q1-2014 Q4-2013 Q1-2014 Q4-2013 ---------------------------------------------------------------------------- Interest Rate Contracts Swaps 1,076,484 1,084,369 1,419,799 1,140,417 Forward rate agreements 68,307 52,137 398,092 347,614 Purchased options 18,274 18,283 - - Written options 23,355 23,020 - - ---------------------------------------------------------------------------- Total interest rate contracts 1,186,420 1,177,809 1,817,891 1,488,031 ---------------------------------------------------------------------------- Foreign Exchange Contracts Cross-currency swaps 46,850 44,834 - - Cross-currency interest rate swaps 267,286 255,337 - - Forward foreign exchange contracts 259,352 263,607 - - Purchased options 13,060 10,923 - - Written options 18,071 13,530 - - ---------------------------------------------------------------------------- Total foreign exchange contracts 604,619 588,231 - - ---------------------------------------------------------------------------- Commodity Contracts Swaps 16,727 15,122 - - Purchased options 9,000 8,081 - - Written options 4,846 4,285 - - ---------------------------------------------------------------------------- Total commodity contracts 30,573 27,488 - - ---------------------------------------------------------------------------- Equity contracts 39,664 39,360 - - ---------------------------------------------------------------------------- Credit Default Swaps Purchased 7,754 8,541 314 294 Written 11,729 13,072 453 216 ---------------------------------------------------------------------------- Total credit default swaps 19,483 21,613 767 510 ---------------------------------------------------------------------------- Total 1,880,759 1,854,501 1,818,658 1,488,541 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total -------------------------- (Canadian $ in millions) Q1-2014 Q4-2013 -------------------------------------------------- Interest Rate Contracts Swaps 2,496,283 2,224,786 Forward rate agreements 466,399 399,751 Purchased options 18,274 18,283 Written options 23,355 23,020 -------------------------------------------------- Total interest rate contracts 3,004,311 2,665,840 -------------------------------------------------- Foreign Exchange Contracts Cross-currency swaps 46,850 44,834 Cross-currency interest rate swaps 267,286 255,337 Forward foreign exchange contracts 259,352 263,607 Purchased options 13,060 10,923 Written options 18,071 13,530 -------------------------------------------------- Total foreign exchange contracts 604,619 588,231 -------------------------------------------------- Commodity Contracts Swaps 16,727 15,122 Purchased options 9,000 8,081 Written options 4,846 4,285 -------------------------------------------------- Total commodity contracts 30,573 27,488 -------------------------------------------------- Equity contracts 39,664 39,360 -------------------------------------------------- Credit Default Swaps Purchased 8,068 8,835 Written 12,182 13,288 -------------------------------------------------- Total credit default swaps 20,250 22,123 -------------------------------------------------- Total 3,699,417 3,343,042 -------------------------------------------------- --------------------------------------------------



Select Geographic Exposures

Select geographic exposures were disclosed and discussed on pages 67, 68, 119 and 120 of BMO's 2013 Annual Report. Our exposure to select countries of interest, as at January 31, 2014, is set out in the tables that follow, which summarize our exposure to Greece, Ireland, Italy, Portugal and Spain (GIIPS) along with a broader group of countries of interest in Europe where our gross exposure is greater than $500 million. Our gross and net portfolio exposures are summarized in Table 26 for lending, securities (inclusive of credit default swaps (CDS) activity), repo-style transactions and derivatives. These totals are further broken down by counterparty type in Tables 27 to 29. There has been limited change in our exposures.

For greater clarity, BMO's CDS exposures in Europe are outlined separately in Table 30. As part of our credit risk management framework, purchased CDS risk is controlled through a regularly reviewed list of approved counterparties. The majority of CDS exposures are offsetting in nature, typically contain matched contractual terms and are attributable to legacy credit trading strategies that have been in run-off mode since 2008.

---------------------------------------------------------------------------- European Exposure by Country and Counterparty (10) (Canadian $ in millions) Table 26 ---------------------------------------------------------------------------- As at January 31, 2014 Repo-Style Lending (1) Securities (2) Trans. (3) --------------------------------------------------- Country Commitments Funded Gross Net Gross Net ---------------------------------------------------------------------------- GIIPS Greece - - - - - - Ireland (5) 32 - 28 - 89 2 Italy 24 24 182 - 24 - Portugal - - 111 - - - Spain 88 78 134 - - - ---------------------------------------------------------------------------- Total - GIIPS (6) 144 102 455 - 113 2 ---------------------------------------------------------------------------- Eurozone (excluding GIIPS) France 58 16 679 546 2,803 21 Germany 34 33 1,690 1,371 1,413 30 Netherlands 331 163 884 805 1,297 4 Other (7) 466 269 545 403 35 5 ---------------------------------------------------------------------------- Total - Eurozone (excluding GIIPS) (8) 889 481 3,798 3,125 5,548 60 ---------------------------------------------------------------------------- Rest of Europe Denmark 15 15 754 752 247 - Norway 19 19 1,332 1,332 571 - Russian Federation 639 639 - - - - Sweden 184 82 295 295 222 - Switzerland 506 163 51 - 490 5 United Kingdom 386 231 431 190 4,569 35 Other (7) - - 353 - - - ---------------------------------------------------------------------------- Total - Rest of Europe (8) 1,749 1,149 3,216 2,569 6,099 40 ---------------------------------------------------------------------------- Total - All of Europe 2,782 1,732 7,469 5,694 11,760 102 ---------------------------------------------------------------------------- As at January 31, 2014 Derivatives (4) Total ----------------------------------- Country Gross Net Gross Net ------------------------------------------------------------ GIIPS Greece - - - - Ireland (5) 45 7 194 9 Italy 12 7 242 31 Portugal 1 1 112 1 Spain 7 1 229 79 ------------------------------------------------------------ Total - GIIPS (6) 65 16 777 120 ------------------------------------------------------------ Eurozone (excluding GIIPS) France 234 47 3,774 630 Germany 220 10 3,357 1,444 Netherlands 56 12 2,568 984 Other (7) 83 37 1,129 714 ------------------------------------------------------------ Total - Eurozone (excluding GIIPS) (8) 593 106 10,828 3,772 ------------------------------------------------------------ Rest of Europe Denmark 5 5 1,021 772 Norway 42 42 1,964 1,393 Russian Federation - - 639 639 Sweden 3 2 704 379 Switzerland 3 1 1,050 169 United Kingdom 355 53 5,741 509 Other (7) 1 1 354 1 ------------------------------------------------------------ Total - Rest of Europe (8) 409 104 11,473 3,862 ------------------------------------------------------------ Total - All of Europe 1,067 226 23,078 7,754 ------------------------------------------------------------ As at October 31, 2013 Repo-Style Lending (1) Securities (2) Trans. (3) --------------------------------------------------- Country Commitments Funded Gross Net Gross Net ---------------------------------------------------------------------------- Total - GIIPS 79 79 477 - 81 1 ---------------------------------------------------------------------------- Total - Eurozone (excluding GIIPS) 802 462 3,445 2,779 5,199 17 ---------------------------------------------------------------------------- Total - Rest of Europe 1,659 956 3,410 2,772 4,044 57 ---------------------------------------------------------------------------- Total - All of Europe 2,540 1,497 7,332 5,551 9,324 75 ---------------------------------------------------------------------------- As at October 31, 2013 Derivatives (4) Total ----------------------------------- Country Gross Net Gross Net ------------------------------------------------------------ Total - GIIPS 45 6 682 86 ------------------------------------------------------------ Total - Eurozone (excluding GIIPS) 358 103 9,804 3,361 ------------------------------------------------------------ Total - Rest of Europe 262 115 9,375 3,900 ------------------------------------------------------------ Total - All of Europe 665 224 19,861 7,347 ------------------------------------------------------------ (1) Lending includes loans and trade finance. Amounts are net of write- offs and gross of specific allowances, both of which are not considered material. (2) Securities include cash products, insurance investments and traded credit. Gross traded credit includes only the long positions and excludes offsetting short positions. (3) Repo-style transactions are all with bank counterparties. (4) Derivatives amounts are marked-to-market, incorporating transaction netting and, for counterparties where a Credit Support Annex is in effect, collateral offsets. Derivative replacement risk net of collateral for all of Europe is approximately $4.0 billion as at January 31, 2014. (5) Does not include Irish subsidiary reserves we are required to maintain with the Irish Central Bank of $85 million as at January 31, 2014. (6) BMO's direct exposures to GIIPS are primarily to banks for trade finance and trading products. Net exposures remain modest at $120 million, with $42 million unfunded commitments as at January 31, 2014. (7) Includes countries with less than $500 million in gross exposure. Other Eurozone includes exposures to Austria, Belgium, Cyprus, Finland, Luxembourg, Slovakia and Slovenia. Other Rest of Europe includes exposures to Croatia, Czech Republic, Hungary, Iceland and Poland. (8) BMO's net direct exposure to the other Eurozone countries (the other 12 countries that share the common euro currency) as at January 31, 2014, totalled approximately $3.8 billion, of which 53% was to counterparties in countries with a rating of Aaa/AAA by both Moody's and S&P, with approximately 81% rated Aaa/AAA by one of the two rating agencies. Our net direct exposure to the rest of Europe totalled approximately $3.9 billion, of which 70% was to counterparties in countries with a Moody's/S&P rating of Aaa/AAA. A significant majority of our sovereign exposure consists of tradeable cash products, while exposure related to banks was comprised of trading instruments, short- term debt, derivative positions and letters of credit and guarantees. (9) Sovereign includes sovereign-backed bank cash products. (10) Other exposures (including indirect exposures) not included in the tables as at January 31, 2014: - BMO also has exposure to entities in a number of European countries through our credit protection vehicle and U.S customer securitization vehicle. These exposures are not included in the tables due to the credit protection incorporated in their structures. - BMO has direct exposure to those credit structures, which in turn have exposures to loans or securities originated by entities in Europe. As noted on page 66 in BMO's 2013 Annual Report, in the Credit Protection Vehicle section, this structure has first-loss protection and hedges are in place. - The notional exposure held in the credit protection vehicle to issuers in Greece, Italy and Spain represented 4.2%, of its total notional exposure. The credit protection vehicle had notional exposure to five of the other 12 countries that share the euro currency. This exposure represented 11.8% of total notional exposure, of which 71% was rated investment grade by both S&P and Moody's. The notional exposure to the rest of Europe was 15.1% of total notional exposure, with 100% rated investment grade by S&P (94% by Moody's). The vehicle benefits from significant risk loss protection and as a result residual credit risk is very low. - BMO has exposure to GIIPS and other European countries through our U.S. customer securitization vehicle, which has commitments that involve reliance on collateral of which 0.23% represents loans or securities originated by entities in Europe. At year end, exposure to Luxembourg was the largest component at 0.10%. Exposure to Spain was approximately 0.06%, and there was no exposure to Italy, Ireland, Greece or Portugal. - BMO has exposure to European supranational institutions totalling $0.2 billion, predominantly in the form of tradeable cash products. - BMO's indirect exposure to Europe in the form of euro-denominated collateral to support trading activity was EUR516 million in securities issued by entities in European countries, of which EUR8 million was held in securities related to GIIPS and EUR159 million was in French securities. In addition, EUR192 million of cash collateral was also held at January 31, 2014. - Indirect exposure by way of guarantees from entities in European countries totalled $760.3 million, of which $5.7 million was exposure to GIIPS, $445.1 million to the other Eurozone countries and $309.5 million to the rest of Europe. ---------------------------------------------------------------------------- European Lending Exposure by Country and Counterparty (10) (Canadian $ in millions) Table 27 ---------------------------------------------------------------------------- As at January 31, 2014 Lending (1) ----------------------------------------------------------------- Commitments Funded -------------------------------- -------------------------------- Country Bank Corporate Sovereign Total Bank Corporate Sovereign Total ------------------------------------------- -------------------------------- GIIPS Greece - - - - - - - - Ireland (5) - 32 - 32 - - - - Italy 24 - - 24 24 - - 24 Portugal - - - - - - - - Spain 78 10 - 88 78 - - 78 ------------------------------------------- -------------------------------- Total - GIIPS 102 42 - 144 102 - - 102 ------------------------------------------- -------------------------------- Eurozone (excluding GIIPS) France 16 42 - 58 16 - - 16 Germany 24 10 - 34 24 9 - 33 Netherlands 27 304 - 331 27 136 - 163 Other (7) 342 124 - 466 229 40 - 269 ------------------------------------------- -------------------------------- Total - Eurozone (excluding GIIPS) 409 480 - 889 296 185 - 481 ------------------------------------------- -------------------------------- Rest of Europe Denmark 15 - - 15 15 - - 15 Norway 19 - - 19 19 - - 19 Russian Federation 611 28 - 639 611 28 - 639 Sweden 23 161 - 184 23 59 - 82 Switzerland 3 503 - 506 3 160 - 163 United Kingdom 146 240 - 386 146 85 - 231 Other (7) - - - - - - - - ------------------------------------------- -------------------------------- Total - Rest of Europe 817 932 - 1,749 817 332 - 1,149 ------------------------------------------- -------------------------------- Total - All of Europe 1,328 1,454 - 2,782 1,215 517 - 1,732 ------------------------------------------- -------------------------------- Refer to footnotes in Table 26. ---------------------------------------------------------------------------- European Securities Exposure by Country and Counterparty (10) (Canadian $ in millions) Table 28 ---------------------------------------------------------------------------- As at January 31, 2014 Securities (2) ----------------------------------------------------------------- Gross Net -------------------------------- -------------------------------- Sovereign Sovereign Country Bank Corporate (9) Total Bank Corporate (9) Total ------------------------------------------- -------------------------------- GIIPS Greece - - - - - - - - Ireland (5) - - 28 28 - - - - Italy 45 24 113 182 - - - - Portugal - - 111 111 - - - - Spain 45 44 45 134 - - - - ------------------------------------------- -------------------------------- Total - GIIPS 90 68 297 455 - - - - ------------------------------------------- -------------------------------- Eurozone (excluding GIIPS) France 34 99 546 679 - - 546 546 Germany 143 205 1,342 1,690 - 29 1,342 1,371 Netherlands 688 85 111 884 687 7 111 805 Other (7) 36 30 479 545 - - 403 403 ------------------------------------------- -------------------------------- Total - Eurozone (excluding GIIPS) 901 419 2,478 3,798 687 36 2,402 3,125 ------------------------------------------- -------------------------------- Rest of Europe Denmark 569 2 183 754 569 - 183 752 Norway 1,332 - - 1,332 1,332 - - 1,332 Russian Federation - - - - - - - - Sweden 295 - - 295 295 - - 295 Switzerland 12 39 - 51 - - - - United Kingdom 118 227 86 431 55 - 86 190 Other (7) - - 353 353 - - - - ------------------------------------------- -------------------------------- Total - Rest of Europe 2,326 268 622 3,216 2,251 49 269 2,569 ------------------------------------------- -------------------------------- Total - All of Europe 3,317 755 3,397 7,469 2,938 85 2,671 5,694 ------------------------------------------- -------------------------------- Refer to footnotes in Table 26. ---------------------------------------------------------------------------- European Repo and Derivatives Exposure by Country and Counterparty (10) (Canadian $ in millions) Table 29 ---------------------------------------------------------------------------- As at January 31, 2014 Repo-Style Trans. (3) Derivatives (4) ---------------------------------------------------------- Net of Gross Collateral Gross ---------------------------------------------------------- Country Total Total Bank Corporate Sovereign Total ---------------------------------------------------------------------------- GIIPS Greece - - - - - - Ireland (5) 89 2 39 6 - 45 Italy 24 - 8 4 - 12 Portugal - - 1 - - 1 Spain - - 7 - - 7 ---------------------------------------------------------------------------- Total - GIIPS 113 2 55 10 - 65 ---------------------------------------------------------------------------- Eurozone (excluding GIIPS) France 2,803 21 234 - - 234 Germany 1,413 30 220 - - 220 Netherlands 1,297 4 55 1 - 56 Other (7) 35 5 56 20 7 83 ---------------------------------------------------------------------------- Total - Eurozone (excluding GIIPS) 5,548 60 565 21 7 593 ---------------------------------------------------------------------------- Rest of Europe Denmark 247 - 5 - - 5 Norway 571 - 42 - - 42 Russian Federation - - - - - - Sweden 222 - 3 - - 3 Switzerland 490 5 3 - - 3 United Kingdom 4,569 35 347 8 - 355 Other (7) - - 1 - - 1 ---------------------------------------------------------------------------- Total - Rest of Europe 6,099 40 401 8 - 409 ---------------------------------------------------------------------------- Total - All of Europe 11,760 102 1,021 39 7 1,067 ---------------------------------------------------------------------------- As at January 31, 2014 Derivatives (4) ---------------------------------------- Net of Collateral ---------------------------------------- Country Bank Corporate Sovereign Total ---------------------------------------------------------- GIIPS Greece - - - - Ireland (5) 1 6 - 7 Italy 3 4 - 7 Portugal 1 - - 1 Spain 1 - - 1 ---------------------------------------------------------- Total - GIIPS 6 10 - 16 ---------------------------------------------------------- Eurozone (excluding GIIPS) France 47 - - 47 Germany 10 - - 10 Netherlands 11 1 - 12 Other (7) 10 20 7 37 ---------------------------------------------------------- Total - Eurozone (excluding GIIPS) 78 21 7 106 ---------------------------------------------------------- Rest of Europe Denmark 5 - - 5 Norway 42 - - 42 Russian Federation - - - - Sweden 2 - - 2 Switzerland 1 - - 1 United Kingdom 45 8 - 53 Other (7) 1 - - 1 ---------------------------------------------------------- Total - Rest of Europe 96 8 - 104 ---------------------------------------------------------- Total - All of Europe 180 39 7 226 ---------------------------------------------------------- Refer to footnotes in Table 26. ---------------------------------------------------------------------------- Credit Default Swaps (CDS) by Country and Credit Quality (Canadian $ in millions) Table 30 ---------------------------------------------------------------------------- As at January 31, 2014 Fair Value ------------------------------------------- Purchased Written ---------------------------------- Inv. Non-Inv. Inv. Non-Inv. Total Country Grade Grade Grade Grade Exposure ------------------------------------------------------------ GIIPS Greece - - - - - Ireland (5) - - (1) - (1) Italy 1 - (1) - - Portugal 4 - (5) - (1) Spain 1 - (1) - - ------------------------------------------------------------ Total - GIIPS 6 - (8) - (2) ------------------------------------------------------------ Eurozone (excluding GIIPS) France (1) - - - (1) Germany (1) - 1 - - Netherlands - - - - - Other (7) - - - - - ------------------------------------------------------------ Total - Eurozone (excluding GIIPS) (2) - 1 - (1) ------------------------------------------------------------ Rest of Europe Denmark - - - - - Norway - - - - - Russian Federation - - - - - Sweden - - - - - Switzerland (1) - - - (1) United Kingdom (1) - 1 - - Other (7) - - (1) - (1) ------------------------------------------------------------ Total - Rest of Europe (2) - - - (2) ------------------------------------------------------------ Total - All of Europe 2 - (7) - (5) ------------------------------------------------------------ As at January 31, 2014 Notional ----------------------------------------------------------- Purchased Written --------------------------------------------------- Inv. Non-Inv. Inv. Non-Inv. Total Country Grade Grade Total Grade Grade Total Exposure ---------------------------------------------------------------------------- GIIPS Greece - - - - - - - Ireland (5) (22) - (22) 22 - 22 - Italy (120) - (120) 120 - 120 - Portugal (90) - (90) 90 - 90 - Spain (84) - (84) 84 - 84 - ---------------------------------------------------------------------------- Total - GIIPS (316) - (316) 316 - 316 - ---------------------------------------------------------------------------- Eurozone (excluding GIIPS) France (75) - (75) 59 - 59 (16) Germany (159) - (159) 144 - 144 (15) Netherlands (39) - (39) 36 - 36 (3) Other (7) (74) - (74) 74 - 74 - ---------------------------------------------------------------------------- Total - Eurozone (excluding GIIPS) (347) - (347) 313 - 313 (34) ---------------------------------------------------------------------------- Rest of Europe Denmark (1) - (1) 1 - 1 - Norway - - - - - - - Russian Federation (4) - (4) 4 - 4 - Sweden - - - - - - - Switzerland (141) - (141) 34 - 34 (107) United Kingdom (124) - (124) 115 - 115 (9) Other (7) (293) - (293) 293 - 293 - ---------------------------------------------------------------------------- Total - Rest of Europe (563) - (563) 447 - 447 (116) ---------------------------------------------------------------------------- Total - All of Europe (1,226) - (1,226) 1,076 - 1,076 (150) ---------------------------------------------------------------------------- As at October 31, 2013 Fair Value -------------------------------------------- Purchased Written ---------------------------------- Inv. Non-Inv. Inv. Non-Inv. Total Country Grade Grade Grade Grade Exposure ------------------------------------------------------------ Total - GIIPS 12 - (12) - - ------------------------------------------------------------ Total - Eurozone (excluding GIIPS) (6) - 4 - (2) ------------------------------------------------------------ Total - Rest of Europe (3) - 2 - (1) ------------------------------------------------------------ Total - All of Europe 3 - (6) - (3) ------------------------------------------------------------ As at October 31, 2013 Notional ------------------------------------------------------------ Purchased Written --------------------------------------------------- Inv. Non-Inv. Inv. Non-Inv. Total Country Grade Grade Total Grade Grade Total Exposure ---------------------------------------------------------------------------- Total - GIIPS (464) - (464) 464 - 464 - ---------------------------------------------------------------------------- Total - Eurozone (excluding GIIPS) (735) - (735) 661 14 675 (60) ---------------------------------------------------------------------------- Total - Rest of Europe (895) - (895) 634 21 655 (240) ---------------------------------------------------------------------------- Total - All of Europe (2,094) - (2,094) 1,759 35 1,794 (300) ---------------------------------------------------------------------------- Notes: Refer to footnotes in table 26. - All purchased and written exposures are with bank counterparties. - 39% of purchased and 49% of written CDS exposure is subject to complete restructuring trigger events (full restructuring). Under the terms of these contracts, any restructuring event qualifies as a credit event and any bond with a maturity of up to 30 years is deliverable against the contract. - 61% of purchased and 50% of written CDS exposure is subject to modified-modified restructuring trigger events. Under the terms of these contracts, restructuring agreements count as a credit event; however, the deliverable obligation against the contract is limited to maturities of up to 60 months for restructured obligations and 30 months for all other obligations. - This table excludes $13 million of iTraxx CDS Index purchased protection. The index is comprised equally of 25 constituent names in the following regions: GIIPS (16%), Eurozone (excluding GIIPS) (44%) and rest of Europe (40%).



Caution

This Risk Management section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2013 Annual Report, this quarterly news release, presentation materials and supplementary financial information package online.

Quarterly Conference Call and Webcast Presentations

Interested parties are also invited to listen to our quarterly conference call on Tuesday, February 25, 2014, at 2:00 p.m. (EST). At that time, senior BMO executives will comment on results for the quarter and respond to questions from the investor community. The call may be accessed by telephone at 416-695-9753 (from within Toronto) or 1-888-789-0089 (toll-free outside Toronto). A replay of the conference call can be accessed until Tuesday, May 27, 2014, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering passcode 6766952.

A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can also be accessed on the site.

Media Relations Contacts Ralph Marranca, Toronto, ralph.marranca@bmo.com, 416-867-3996 Ronald Monet, Montreal, ronald.monet@bmo.com, 514-877-1873 Investor Relations Contacts Sharon Haward-Laird, Head, Investor Relations, sharon.hawardlaird@bmo.com, 416-867-6656 Andrew Chin, Director, Investor Relations, andrew.chin@bmo.com, 416-867-7019 Chief Financial Officer Tom Flynn, Chief Financial Officer, tom.flynn@bmo.com, 416-867-4689 Corporate Secretary Barbara Muir, Senior Vice-President, Deputy General Counsel, Corporate Affairs and Corporate Secretary, corp.secretary@bmo.com, 416-867-6423 ---------------------------------------------------------------------------- Shareholder Dividend Reinvestment and For other shareholder information, Share Purchase including the notice for our normal Plan (the Plan) course issuer bid, please contact Average market price as defined under Bank of Montreal the Plan Shareholder Services November $74.04 Corporate Secretary's Department December $70.29One First Canadian Place, 21st Floor January$69.91Toronto, Ontario M5X 1A1 Telephone: (416) 867-6785 For dividend information, change in Fax: (416) 867-6793 shareholder address E-mail: corp.secretary@bmo.com or to advise of duplicate mailings, please contact For further information on this Computershare Trust Company of Canada report, please contact 100 University Avenue, 9th Floor Bank of MontrealToronto, Ontario M5J 2Y1 Investor Relations Department Telephone: 1-800-340-5021 (Canada and P.O. Box 1, One First Canadian Place, the United States) 18th Floor Telephone: (514) 982-7800 Toronto, Ontario M5X 1A1 (international) Fax: 1-888-453-0330 (Canada and the To review financial results online, United States) please visit our website at Fax: (416) 263-9394 (international) www.bmo.com. To review regulatory E-mail: service@computershare.com filings and disclosures online, please visit our website at www.bmo.com/investorrelations. ----------------------------------------------------------------------------



(R) Registered trademark of Bank of Montreal

---------------------------------------------------------------------------- Annual Meeting 2014 The next Annual Meeting of Shareholders will be held on Tuesday, April 1, 2014, in Toronto, Ontario. ---------------------------------------------------------------------------- FOR FURTHER INFORMATION PLEASE CONTACT: Media Relations Contacts Ralph Marranca, Torontoralph.marranca@bmo.com 416-867-3996 Ronald Monet, Montrealronald.monet@bmo.com 514-877-1873 Investor Relations Contacts Sharon Haward-Laird Head, Investor Relations sharon.hawardlaird@bmo.com 416-867-6656 Andrew Chin Director, Investor Relations andrew.chin@bmo.com 416-867-7019 Tom Flynn Chief Financial Officer tom.flynn@bmo.com 416-867-4689 Corporate Secretary Barbara Muir Senior Vice-President, Deputy General Counsel, Corporate Affairs and Corporate Secretary, corp.secretary@bmo.com 416-867-6423 Source: BMO Bank of Montreal


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