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Corporate Services

Corporate Services consists of Corporate Units and Technology and Operations.

Corporate Units provides 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.

Technology and Operations (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 transferred to the three client operating groups (P&C, PCG and BMO Capital Markets), and only minor amounts are retained in Corporate Services results. As such, Corporate Services adjusted operating results reflect the impact of certain asset-liability management activities, the elimination of taxable equivalent adjustments, the results from certain impaired asset portfolios and the recovery of provisions for credit losses on the M&I purchased credit impaired loan portfolio. Corporate Services reported results also 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. All adjusting items are recorded in Corporate Services except the amortization of acquisition-related intangible assets, which is recorded in the operating groups.

Financial Performance Review

Corporate Services' net loss for the quarter was $65 million, compared with net income of $181 million a year ago. Corporate Services' results reflect a number of items and activities that are excluded from BMO's adjusted results to help assess BMO's performance. As discussed above, these adjusting items are not reflective of core operating results.

The adjusted net loss in the first quarter of 2013 was $94 million, compared with adjusted net income of $20 million a year ago. Adjusted expenses were $80 million higher primarily due to increased benefit costs including pension costs, the timing of technology investment spending and higher severance costs. Adjusted recoveries of credit losses decreased $72 million due to an $83 million reduction in the recoveries on the M&I purchased credit impaired loan portfolio. Adjusted revenues decreased $58 million due to lower securities gains, a higher group teb offset and lower revenue from a variety of items, including treasury-related items, none of which were individually significant.

Corporate Services net loss was $65 million in the current quarter, compared with net income of $22 million in the fourth quarter. The adjusted net loss was $94 million, compared with adjusted net income of $41 million. Adjusted revenues were $71 million lower due to a variety of items, including treasury-related items, none of which were individually significant. Adjusted recoveries of credit losses decreased $64 million, reflecting a $73 million reduction in recoveries of provisions for credit losses on the M&I purchased credit impaired loan portfolio. Adjusted expenses were $34 million higher, mainly due to higher benefit costs and higher performance-based compensation in respect of employees eligible to retire, which are both typically higher in the first quarter of each year.

Loans and acceptances at the end of the current quarter were $1,054 million, down $1,068 million from the prior year and $260 million from the preceding quarter, reflecting run-off in the impaired real-estate-secured loan portfolio.