BMO Financial Group 2013 Corporate Responsibility Report Table of Contents Equal opportunities. Simple explanations. President and Chief Executive Officer’s Message 12 Balanced decisions. Transparent Inspiring Potential 14 Advancing Innovation 26 Sustaining Growth 36 communications. And confidence Our Foundation 48 Highlights IBC built on trust.

This is what we owe. And it’s personal.

Who We Are

Established in 1817, BMO Financial Group serves more than 12 million personal, commercial, corpo- rate and institutional customers in North America and internationally. We provide a broad range of Cover: Commercial account manager Jennifer Enright advising retail banking, wealth management and invest- Bryan Lahartinger, a member of ment banking products through our operating the Communitech community, in Waterloo, Ontario. groups: Personal and Commercial Banking; Private Opposite Page: BMO Harris Bank Client Group; and BMO Capital Markets. branch, Chicago, Illinois.

2013 Corporate Responsibility Report BMO Financial Group / 1 Jason Moore and Matthew Gardner in their Communitech workspace in Waterloo, Ontario.

The perfect house at the right price. A smart idea for growing a business, or for creating a new one from scratch. An investment that leads to a better future. Getting a fair shot at the perfect job – and landing it. With so many doors waiting to be opened by so many different kinds of people, what we owe above all is fairness. It’s about giving everyone an equal chance to fulfill their potential. Charles and Dawn Price with their son Daniel at their new home in Oshkosh, Wisconsin.

Translating complex problems into simple solutions. Explaining clearly why one step follows from another. Reducing the number of layers between a reasonable question and a helpful answer. It isn’t hard to keep things simple. You just need to empower people to focus on what really matters. What remains when you take away all the clutter. What truly adds value. An aerial image of Gatineau, Quebec, taken by Aéro-Photo. Photo credit: Aéro-photo (1961) Inc.

Important challenges are sometimes complicated. How do we balance growing the economy with protecting the environment when both sides make valid points? How much risk is appropriate, and is everyone using the same yardstick? What counts more, good jobs today or solid prospects for the future? It takes time to understand all the dimensions and make a decision that does justice to the bigger picture. Michael Heath, personal banker and Curtis Bradley, retail bank manager at our branch in Schaumburg, Illinois.

There’s one sure way to guarantee that everyone understands what you’re trying to do, and why: tell the truth. Not selectively. Not hidden in the fine print or behind clever spin. People know when a message is clear and forthright, and when someone stands behind it. And while they may not always agree with what you say, they’ll respect the honesty. Because it shows respect for them. Iain Klugman, president and CEO of Communitech, Waterloo, Ontario.

To feel truly confident takes more than a positive outlook. It’s a conviction grounded in trust. The people we guide and encourage know that we keep our promises, are accountable for what we do and have their best interests at heart. When our customers, employees and other stakeholders have confidence in us, they feel empowered to make the right choices – and that gets all of us closer to our goals. President and Chief Executive Officer’s Message

BMO’s understanding of corporate responsibility is grounded in the day-to-day realities of banking. Of course we constantly re-evaluate the impact our actions have on our stakeholders. But our perspective is ultimately shaped by the individual stories of customers who count on us for guidance and support.

Recently, a mortgage specialist at one of our This is just one of countless stories branches in North Milwaukee shared that are unfolding every day across this story: She’d worked with a young BMO’s North American network and in couple to arrange the financing for their our offices around the globe. But it sums first home. It was a modest house, priced up neatly what corporate responsibility lower than many middle-class families means to the bank’s 46,000 employees. might pay for their cars. But for these young people it represented a move to Adding Up What We Owe a nicer neighbourhood and a big step Like all large businesses, banks have a along the path to building a better future. responsibility that extends far beyond On the day the deal was set to the world of profit and loss. Operating close, though, a problem came up. according to the letter of the law, or in As a condition of sale, the owner had narrowly defined compliance with regu- agreed to put down new carpet in the lations, simply isn’t enough. We have to home’s single bedroom. But when the make a positive difference in the lives of young couple made their final inspec- our customers, our employees and the tion, they found the bedroom floor was communities we serve. And we have to Bill Downe at the official opening of The United Way Community Hub — still bare – which put the entire deal lead by example, providing a model and AccessPoint in Toronto’s Danforth neighbourhood. in jeopardy. Desperate, they called the setting a standard for others to follow. mortgage specialist for help. She im- For our bank, business performance conversation – not only within the we back up our convictions. Our actions support us – and we owe it to ourselves mediately jumped in her car and drove is judged in relation to a set of basic organization, but as we contribute to are what matter most. And when we talk – to foster the many individual successes to the house. Taking a photo of the principles that have guided us for the larger public conversation. It’s part to people about BMO – current and pro- that ultimately add up to economic bedroom with her mobile phone, she nearly 200 years. We constantly stop to of our responsibility as a bank to have spective customers, employees, investors prosperity, sustainable growth and a sent it to the seller along with a mes- ask ourselves fundamental questions: a point of view, and to take on tough and other partners – we find that they better quality of life for everyone. sage explaining that he had exactly Is this fair? Is it the right choice? Most questions – about employment, the return to this document frequently to Responsibility isn’t just something one hour to get the bedroom carpeted importantly – and looking far past the economy, the environment – that don’t remind themselves of what we stand for we reflect on once a year in a report. or the sale would not go through. minimum requirements – is it the best resolve themselves into easy distinc- and the commitments we’ve made. It’s something we live every day. And Forty-five minutes later, she was we can do? tions between right and wrong. In the following pages you’ll find it’s personal. waiting at the branch with the anxious Investing in the disciplines neces- This is the context in which we pro- stories drawn from BMO’s diverse buyers when a photo arrived by email sary to deliver against expectations duce BMO’s annual Corporate Respon- customer base and highlighting various showing the new carpet in place. There – both societal and regulatory – is a sibility Report. It’s our opportunity to aspects of our business. The unifying were hugs and high fives all around as source of long-term strength. And we explore the dimensions of responsibility theme is our belief that responsibility the young woman explained through reinforce that strength by having con- as we see them, sharing our experiences begins and ends with an obligation to tears how she never imagined that she’d siderations of corporate responsibility and observations with everyone who has do our job, and do it well. We owe it to Bill Downe one day be able to afford her own home. and good citizenship permeate every an interest in where we stand and how the customers and communities who President and Chief Executive Officer

12 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 13 It could be a start-up just launching or an established business reinventing itself. A conscientious saver on the way to becoming a homeowner or investor. An investment in an after-school program or a scholarship to help even the odds. A financial literacy workshop that empowers people to plan their future with confidence. And, of course, our own efforts to develop the potential of BMO’s talented employees – so they can do the same for our customers and communities.

Pia Schmidt-Hansen and Fun Man Lee, members of the BMO Pride affinity group, at First Canadian Place, Toronto, Ontario.

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For more than a decade, BMO Harris Bank has been a partner in Money Smart Week®, joining hundreds of organizations in promoting financial education across the communities we serve. Spearheaded by the Federal Reserve Bank of Chicago, this national initiative presents a wide range of free events targeting specific audiences. This year we participated in 70 events, including:

Advice for Newlyweds “Worrying about your finances as a single person is hard enough,” says Dean Urbanski, Vice President, National Sales Manager, with BMO Harris Bank. “Adding in another person’s aspirations can make it that much more com- plicated.” BMO’s presentation offered simple advice on combining assets, creating a budget, setting goals, saving for a home, avoiding debt and planning for retirement.

Su Casa First-time Homebuyers BMO experts offered advice on finding an ideal home A fixture of community life in the heart while balancing financial priorities, with tips on determin- of Chicago, Casa Central provides opportunity, ing a budget, saving for a down payment and choosing the encouragement and hope to people trying right mortgage. “The first step is to do an honest assess- ment of the household balance sheet,” explains Kevin to realize their full potential. Christopher, Head of Mortgage Sales. “Then you can make a responsible calculation of what you can afford.”

Essay Contest The Money Smart Kid Essay Contest, coordinated by the Federal Reserve Bank of Chicago and co-sponsored by BMO, helps young people develop and share their financial knowledge. This year’s winner was fifth-grader Dayton Melaniphy of Naperville, Illinois, who was awarded a $5,000 scholarship from BMO for his essay on Ten years ago a homeless single mother Hispanic social service agency in the U.S. Central since 1989. “There are a lot of business, with clear objectives, detailed investments he would make in his community. walked into Casa Central, a social ser- Midwest, with more than 550 employees obstacles in the non-profit world. You work plans and quantifiable outcomes. vice agency primarily serving Chicago’s and an annual budget of $17 million. need to persevere and keep yourself Programs must maintain an 85% Milwaukee Money Conference Hispanic community, looking for help. The agency’s goals are summed up open to learning.” success rate – whether measured by This year BMO once again sponsored the Milwaukee Money Conference, presented by Asset Builders of She needed a job to support her three in its mission: “Casa Central transforms people gaining employment, children America, and a bank team made a presentation on “The children but lacked marketable skills. lives and strengthens communities with Measuring Success advancing in school or other yardsticks ABCs of Homeownership.” Aimed at youth and fami- The staff enrolled her in a course on a special focus on Hispanics. Our net- BMO Harris Bank’s long relationship of progress – reinforcing the belief that lies with low to moderate incomes, the conference has computer basics – beginning with how work of services propels a diverse popu- with Casa Central covers the spectrum each step forward for an individual or helped more than 10,000 people develop budgeting, to find the ‘on’ switch. And when an lation of all ages toward self-sufficiency from banking services to employee vol- family contributes to overall economic savings and investment plans to improve their credit standing, buy homes and launch business ventures. entry-level position opened up in the and a higher quality of life.” Those unteering to corporate giving. Access growth and prosperity. mailroom of a city newspaper, the team services range from childhood and adult to unrestricted dollars – funds not tied “Once you learn how to quantify urged their nervous student to apply. education to seniors’ programs, from to specific programming – enables the what you do,” Ann says, “and you keep Today she manages the department. housing and support for homeless fami- agency to quickly address changing pri- everyone focused on accomplishing This is the kind of success story that lies to domestic violence counseling. orities. “We have strong backing from those goals, you can demonstrate quality has made Casa Central a vital part of life “You really have to be passionate the bank,” Ann says, “and we know and success.” in urban Chicago. Founded by a group of about the mission,” says CEO Ann they’re there if we get into a tight spot.” Programming at Casa Central is focused on families, churches in 1954, the charity started out Alvarez, a social worker who started out What fuels Casa Central’s success and helping every family member reach their highest with a staff of three; today it’s the largest in Chicago’s schools and has led Casa is a commitment to operating like a potential, says CEO Ann Alvarez.

16 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 17 Inspiring Potential Through his work as CEO of Badger Take Me to Meter and co-chair of The Water Council, Rich Meeusen actively Your Leaders supports water conservation in Milwaukee. Our strength is driven by the talent of our employees and their commitment to delivering great customer experiences every day. We are constantly working to create a shared sense of purpose and develop future leaders who can keep Keeping the pace with our customers’ changing needs. In 2012, Bersin by Deloitte, a third-party talent Meter Running research and consulting group, reviewed BMO’s talent and succession practices. They were In the vital Great Lakes economy, a key source of new assessed as exemplary and industry-leading, opportunity is the world’s largest concentration of water technology with well-formulated talent review processes, a companies – including industry leader Badger Meter. high level of assessment and training for executive talent, and a strong commitment to leadership “People who work in computers go to Badger is a market leader known for for the new boom in water technology Badger’s growth reflects increasing and engagement at all levels of the organization, Silicon Valley,” says Rich Meeusen. “My its technologically advanced devices businesses. Among Badger’s neigh- public awareness of the need to conserve right up to the CEO. dream is that if young people want to that measure and control the flow of bours are many of the world’s leading a scarce resource; when people’s water is go into the water technology business, water and other fluids. Founded in 1905, manufacturers of faucets, sinks and metered in the United States, consump- The review also noted our talent-focused they’ll have to come to Milwaukee.” the publicly traded company has seen bathroom fixtures, as well as valves, tion typically goes down by about 25%. culture, which is built around four key priorities. Rich is helping make that dream a strong growth in recent years as more pumps, heaters and filtration systems. “The real story with our business,” Rich Here are some of the ways we put those priorities reality as co-chair of The Water Coun- and more U.S. communities move from As the company has invested in says, “is the greater good we serve.” into action in 2012: cil, the organization he co-founded in flat-rate water fees to a pay-for-use mod- product development and diversified What’s more, that positive impact 2007 with the goal of making his native el. In Chicago, for instance, about a third through acquisition, Rich has relied on extends beyond conservation efforts city a global hub for freshwater-related of homes now have meters installed – the long-standing support of BMO to a general economic revival in a part research, education and development. and most were made by Badger. Harris Bank: “When we have an op- of the country that has seen many of 1. Building a talent mindset: 3. Providing opportunities to The surrounding region boasts at least portunity, we sit down with our bankers its original industries downsize or A network of dedicated talent grow and develop: We encourage 150 water technology businesses, among The Flow of Opportunity and explain our strategy. They always move away. “We can capitalize on advisors provide one-on-one secondments, switching between coaching, 360° feedback sessions line and staff positions, and con- our strength in water technology to them the company Rich has led as CEO With its long history of water-based ask good, probing questions, challeng- and career guidance to help tinuing education programming for the past 11 years: Badger Meter. industries such as brewing, Milwaukee – ing us to make sure we’ve thought things strengthen the whole region,” Rich ex- managers and leaders identify such as our Executive MBA One of only a half-dozen water set on Lake Michigan at the confluence through. And then we’re amazed at how plains. “Given the challenges the world and nurture emerging leaders. and leadership development meter manufacturers in North America, of three rivers – is a natural focal point quickly they come back with an answer.” is facing, water technology is a growth programs, which we provide industry. If we align our businesses with through our Institute for Learning. 2. Engaging our employees: government and academia, we can grow We want people to be passionate something strong here in Milwaukee. about working here. Employee 4. Creating a diverse and inclu- I want to create economic opportunity engagement, customer loyalty and sive work environment: For more for my children, my grandchildren – company profitability are strongly than two decades, BMO has been for everyone in this region.” linked. In 2012, the Employee a leader in promoting diver- Engagement Index score in BMO’s sity in the workplace. In 2012, we annual employee survey was renewed our diversity strategy 75%*, significantly higher than and challenged ourselves to do the industry norm of 67%. even better. Our renewal strategy focuses on integrating leading diversity practices into the bank’s talent management practices, and action plans to build cultural com- petency and accountability. These practices have resulted in, among other things, significant increases in the hiring of Aboriginal people and people with disabilities.

*Data from 2012 Environmental, Social and Governance Report and Public Accountability Statement.

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Inspiring Potential Charles and Dawn Price got more Healthy Returns than a new house with their VA Loan. “We’re part of a great neighbourhood now,” says Dawn.

A Home for a Good Price

A young Wisconsin couple knew that the VA Loan program Across Wisconsin, Ghidorzi Companies for military veterans would give them the opportunity to buy their first home – takes on highly complex development but it took a BMO Harris banker to get them the rest of the way there. projects with one clear goal: to improve the economic, environmental and human health of communities.

reservists and National Guard members Room for Confidence When the public and private sec- Set to open its doors in 2013, the and eligible surviving spouses as part of The Prices contacted Todd Bestor, a tors come together to build a new new clinic expands access to pri- the GI Bill, VA Loans make it possible former Marshall & Ilsley banker who healthcare facility, the design and mary and specialty healthcare for construction challenges can seem the Madison community, including to buy a home with no down payment was pleased to be once again offering less daunting than the financial people facing financial, cultural or monthly private mortgage insur- VA Loans since assuming his new role complexities involved. A case in and language barriers. Built to ance, and are subject to more lenient at BMO. “Working with Todd was like point is the new 1102 S. Park facility, LEED certification standards for underwriting guidelines than mortgages working with a friend,” Dawn says. part of the healthcare network oper- sustainability, the facility enlarges usually require. “People told us that getting a mortgage ated by the University of Wisconsin the patient base of an older clinic – Madison and one of the latest nearby from 20,000 to 30,000 and For the Prices, the opportunity to was going to be a nightmare, but he community-focused projects spear- will create 18 new jobs and add six move ahead on their home ownership made it easy. He explained everything headed by Ghidorzi Companies. residency positions. goals was a welcome acknowledgement to us and laid all the cards on the table “It’s a clinic in a neighbourhood of Charles’s service to his country. A – and then made sure the deal hap- aspiring to revitalization,” explains Committed to Communities combat engineer, he served five years pened. There were no bumps in the Chuck Ghidorzi, co-founder (with “One of the most motivating his wife Mary Ann) of the Wausau- aspects of our business,” Chuck in Germany, including tours in Kosovo road at all. It was awesome!” based development firm. “The na- says, “is seeing the powerful im- and Iraq, followed by three years in the For Dawn, the successful outcome ture of the project – along with its pact that a single building has Wisconsin Army National Guard. Now was about more than the excitement location, demographic impact and on a community’s landscape.” In he has a job with Oshkosh Corporation, a of owning a home: “It’s easy to forget potential job creation – qualified it this case, a former industrial site major manufacturer of military trucks. what our veterans have done, and what for multiple sources of government has been transformed into a funding that were required to make vibrant area that is a catalyst for When their son was born, his crib they’ve lost. Coming back from war, the plan financially feasible.” future development. “The clinic is took up much of the living room in the you have a lot on your shoulders. But To the uninitiated, the array a game-changer for south Madison Prices’ tiny apartment. They began mak- with BMO on our side and Todd willing of financing options can be – and BMO was instrumental in ing more concrete plans to buy a house, to help us out so much – it was a nice overwhelming: New Markets Tax expediting the approval process knowing that VA Loan guarantee financ- reminder that people do remember and Credits, BREWD grants, BEBR and keeping the project moving. grants, TIF, Midwestern Disaster The bank offers the best of both ing could make it happen that much care about you and your service.” Area Bonds…and the list goes on. worlds in terms of having a vast sooner. But when they went looking As the Prices enjoy life in their new “BMO Harris Bank understood the national network while knowing for a bank that was certified to support community, they also have a strong complex structure needed to make the local Madison market inside “Charles and I wanted this for so long,” son never had a yard before; now he the program, they couldn’t find one. “It sense of future promise. “The confi- this project happen,” Chuck says. and out. This was public-private Dawn Price says, looking around the and the dog sit at the door asking to go was disheartening,” Dawn says, “to see dence that comes with being able to buy “They stepped forward with a team sector collaboration at its finest.” of experts who brought exponential house in Oshkosh, Wisconsin that she outside together.” how few people wanted to work with your own home means so much,” Dawn knowledge, value and speed to and her husband recently moved into What made the Prices’ dream pos- the government to do these loans.” After says. “There are so many opportunities help navigate the process.” with their one-year-old son. “When sible was a Veteran Affairs (VA) Loan requesting a list of local bankers who that we have now. We can spend more we met, we weren’t sure where we provided by BMO Harris Bank and handled VA lending, they found there time together as a family. And we can were going to be in five years. Today guaranteed by the U.S. Department of were only two names on it – both at BMO think about baby number two, because we have a home, and we’re settled. My Veterans Affairs. Available to veterans, Harris Bank. we have some extra bedrooms to fill!”

20 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 21 Participants in BMO Volunteer A Giving Culture Day package up school supplies for children in Montreal. Opening the Books BMO Volunteer Day June 7, 2012 In addition to promoting financial literacy, BMO also supports various childhood literacy programs, helping children gain the foundation they need to understand 6,490 the world and share their points of view. wits volunteer opportunities filled schoolchildren, mainly from immigrant Admirable WITS families, with access to reading op- BMO Harris Bank is a long-time supporter of Working in the Schools (WITS), a Chicago initiative that promotes portunities. BMO employee volunteers literacy and the love of reading among young people. In 400 helped distribute more than 60,000 the past year, we donated $50,000 to the program, and new books to over 20,000 children and 60 employee volunteers spent more than 500 hours projects across mentoring students to help expand their learning North America young people in communities across the horizons. At the annual WITS Back to School Luncheon in country. Each young person received October 2012, the BMO team was honoured to receive the three age-appropriate selections to begin annual Wheels on the Bus Award recognizing institutions that encourage academic achievement and foster the + building a personal library. spirit of volunteerism. 16,600 The initiative was an unqualified First Book hours of success. When children receive these 2011 generous support Everyone understands that early exposure books, 99% of participating schools 2012 to books expands children’s minds and and community-based agencies report sparks their imaginations. But child- that the donated books enable them to Academic Goals hood literacy also has a material impact. strengthen their literacy efforts. BMO Harris Bank teamed up with the Rockford (Illinois) Research shows that when lower-income “BMO has helped us in a significant IceHogs of the American Hockey League to families participate in programs to en- way to reach many new groups,” says promote literacy in local schools through a reading mentorship program run by the United Way of Rock How Can We Help? Employee courage reading, their full dependence on Tom Best, Executive Director, First River Valley. In a campaign called Goals for Grades, Giving Campaign Having a positive impact on our communities public assistance drops from 67% to 11%. Book Canada. “We’re also indebted we donated $20 for every goal scored during the For all of these reasons, BMO is a to our publishing partners, and we’re 2011/2012 regular season at the BMO Harris Bank Center is one of BMO’s core values. It says something in Rockford. The total reached $4,140, which BMO then dedicated supporter of childhood overwhelmed by the dedication and increased to $6,000. fundamental about who we are and what matters $ literacy initiatives in the communities enthusiasm of the schoolteachers, to us, individually and collectively. 21.2 we serve. One of the most recent was the librarians and principals, along with March 2013 “Week of Books” campaign community leaders, who are taking in support of First Book Canada, which time to ensure their children get access BMO Volunteer Day Way – through payroll deductions. million partners with publishers to provide to these wonderful books.” Thousands of our employees across Ours is one of the largest employee raised by BMO and its employees for local North America lend a hand at local char- giving programs in North America. United Ways and itable agencies on BMO Volunteer Day. other charities across Diverse Strategies Every year our employees are invited to Corporate Community Initiatives North America “skip work, do good” and take time away Community initiatives that we We’re more focused than ever on the 2.3% in the previous quarter, moving us and we identified more women in our pool from the office – during business hours helped fund in 2012 include: hiring, development and advancement closer to our 2015 goal of 3.8%. of emerging leaders: 38%, up from 34%. – to participate in one of 6,000 volunteer of diverse talent. Our newly established, • In Canada, Aboriginal hiring activity • The bank’s board published its diversity activities arranged by the bank. The • United Way of Metropolitan Chicago: 35,500 executive-led Diversity Renewal Coun- increased 20% to 76 hires in 2012. policy for the first time this year. It states event unites our organization around a This citywide charity provides job employees contributed cil is guiding the direction of that work, that women shall represent no less than special goal: working together to help placements, middle school tutoring, to the cause strengthening our leadership and putting Strength in Numbers one third of BMO’s independent board strategies into action. And we’re seeing re- We’re especially proud of the advances of directors. even the odds and improve the lives of primary care and crisis support for sults already. Here are just three examples we’ve made in female representation across • We set a clear goal to have women repre- people in the communities where we 1 million people. from the year in diversity: BMO in the past year: sent 40% of senior leaders by 2016. work and live. • Danforth Community Hub: This % • Our new “Count me in!” initiative raises • Four women were added to the execu- gathering place in east Toronto, 76 employee awareness of people with tive Management Committee, increasing All of these efforts helped BMO earn the Employee Giving Campaign supported by a $1 million donation participation rate – disabilities and shifts the way we think, female representation to 25%. 2013 Social Responsibility Award at the an all-time high manage teams and view talent to be an • We regained our leadership position Canadian General Counsel Awards. BMO’s community focus is also reflected from BMO, helps more than 13,000 organization that embraces diversity and among Canadian financial institutions in in our Annual Employee Giving Cam- people every year through a range of drives better performance. the representation of female executives – paign, which allows employees to programs, from settlement support • In the final quarter of 2012, the represen- up from #2 last year. financially support organizations they to supplementary healthcare to early tation of persons with disabilities among • Encouraging potential was a focus in our *Data from 2012 Environmental, Social and Governance care about – in particular the United childhood education. our employees increased to 2.5%* from 2012 talent round tables and appointments, Report and Public Accountability Statement.

22 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 23 Inspiring Potential Developing Strength

For The Whitsett Group, the recession was both a testing ground and a source of opportunity as Indiana communities invested in affordable housing and seniors’ developments.

“We have a log cabin on our prop- money from the federal govern- erty that we built years ago,” says ment, much of it earmarked for Joe Whitsett. “That’s where we put affordable housing; and the backing our office when we launched this of a financial institution that took business in 2007. We had no over- the long view on real estate invest- head, no assistants, no salaries. It ments and had the resources to was just me and my son Tony, plus back it up – BMO Harris Bank. a copier and a printer. We stayed Supported by commercial there for two years.” bankers with deep experience in From those modest beginnings, blending public funding with The Whitsett Group has grown into private equity, The Whitsett a 50-person real estate development Group completed its first two company that builds, owns and affordable housing projects and manages affordable housing and began pursuing additional seniors’ communities across Indi- opportunities. Public investment ana. Based in Indianapolis, Joe and sparked its intended effect in the his team oversee every phase of the form of construction-related jobs. development process, from concept And across the state, the company New School through leasing. They also provide helped communities gain new specialized services such as green housing options for people who building design and historic reha- might not otherwise have been of Thought bilitation aimed at drawing people able to afford homes – while creat- back to downtown areas. “I’m a big ing longer-term employment in On the campus of Aurora University believer in strengthening the urban areas such as building maintenance core,” Joe says. “It will always lead and cleaning services. in Illinois, today’s students and tomorrow’s to a stronger city.” The Whitsett Group’s part- teachers share a unique school environment Starting a new business on the nership with BMO continues to where they can learn together. eve of the 2008 recession proved deepen as the company looks to to be a challenge. As the full develop seniors’ housing projects impact of the downturn hit the throughout the Midwest. “The U.S. economy, commercial lending bank has been instrumental in our was severely curtailed. However, growth,” Joe says. “That relation- “We’re all students,” says Dr. Rebecca One area in which AU could imme- BMO Harris Bank, which now handles of its kind in the United States, the pro- working in the fledgling compa- ship, along with our strong ties to Sherrick. “It doesn’t matter how old we diately add value was public education. all of AU’s commercial banking. gram is envisioned as a model for other ny’s favour were two key factors: equity investors, has allowed us to are – we’re all learners. For a university, Partnering with school and community Today the Institute’s eight classrooms schools across the country. a massive injection of stimulus be successful in a difficult market.” it’s about throwing open the front doors leaders, in 2004 the university opened accommodate more than 200 elemen- “This is about bettering our com- and inviting everyone to come in.” This the Institute for Collaboration, where tary students from the Aurora public munity and bettering our nation,” is a philosophy Rebecca puts into prac- student teachers in AU’s education system. And a 500-seat auditorium also Rebecca says of the ambitious initiative. tice every day as president of Aurora program would be able to teach classes promotes arts and culture on campus “A hands-on education in math and sci- University (AU), a private co-ed institu- of elementary students right on campus. and in the community. ence will arm our community’s young tion in the city of Aurora, Illinois, about It’s a program that benefits everyone. The next challenge AU has taken citizens with the tools they need to grow, 64 km west of Chicago. Students enjoy a unique learning envi- on is the well-documented U.S. deficit achieve and succeed in life. The key With just over 4,400 students, AU ronment reflecting the latest approach- in science, technology, engineering to solving many of our society’s com- has deep connections in the commu- es. They also get a taste of the college and mathematics (STEM) educa- plicated social and economic issues is nity dating back to its founding in 1893. experience and see the value of lifelong tion. Backed by research stressing the unlocking this vital resource.” When Rebecca became president in learning. And student teachers, for their importance of teacher preparation, the 2000, she saw an opportunity to make part, get essential first-hand experience Institute is creating a STEM partnership those connections even stronger by in the classroom. school for third- through eighth-grade bringing together students and faculty Once the necessary partnerships students. Instructors will be teach- with local residents, not-for-profits and were in place, the last piece of the puz- ers from area school districts who are Rebecca believes strongly in nurturing motivation: “Imagine an American workforce where each person is YOUnity Village, corporate partners to work on social zle was financing. It came in the form simultaneously pursuing advanced committed to doing a better job on Wednesday than Terre Haute, Indiana and economic challenges. of a successful bond issue arranged by degrees in STEM education. The first he or she did on Tuesday.”

24 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 25 Innovation is the key to sustaining a healthy and productive economy. It’s about creativity. New ways of thinking about competitiveness. Better approaches to emerging issues like online security and climate change. Fresh takes on economic renewal. The critical first step is recognizing the difference between a novel idea and one that has genuine value. Next we gauge the risks of investing beyond the tried and true. And then we get innovative ourselves, making the process easier for today’s visionaries as they imagine where we’ll be tomorrow.

Terepac’s pilot line production machine, Waterloo, Ontario.

2013 Corporate Responsibility Report BMO Financial Group / 27 Advancing Innovation Recognizing Innovation

bmo

Last year BMO was the only Canadian bank to win a prestigious WhatWorks award for excellence in leadership development, in recogni- tion of our innovative approach to learning and talent practices. More than 1,600 employees have participated in the bank’s leadership development program since 2008.

A 2012 Celent Model Bank Impact Award went to BMO Bank by Appointment, a new online tool that allows customers to schedule branch appointments Everything online. In the first months after launching the tool was used to book more Connects than 29,000 appointments.

Technology pioneer Terepac can produce devices BMO InvestorLine with processors, memory and sensors that measure won the Best Use of Technology Award at the less than one millimetre square, are thinner Morningstar Canadian than paper – and hold the key to creating Investment Awards. We the Internet of Things. were recognized for our online investing service, adviceDirect, which was judged easy-to-use, Imagine if your home could speak to you. tion. One of the leaders in meeting that solutions that will make it easier for de- Terepac’s rapid growth also re- people, and he gets the vision. It’s like intuitive and efficient The furnace could confirm that it was challenge is Terepac Corporation of vices of every kind to talk to their users quires a sound financial foundation. old-time banking – it’s personal.” And – enhancing the user experience and improv- heating efficiently. The roof would alert Waterloo, Ontario. and to one another. In the words of the After another bank declined to renew now, with major contracts signed and ing online investing you if it had a leak. The fridge might With Terepac’s breakthrough tech- company’s tagline, Terepac is “giving its initial R&D support due to a policy more in the works, the entrepreneur generally. remind you to buy eggs. Even a milk nologies, chips that are an order of mag- voice to the world.” change, BMO’s commercial banking sees Terepac’s future unfolding within carton could sound the alarm if its con- nitude smaller than current microchips team stepped in to help Terepac at the a larger success story: “The ripple ef- In recognition of our ef- tents had gone sour. can be “printed” onto ultra-thin flexible The Power to Transform crucial stage where major customers fect of any transformational technology forts to reduce emissions, the Carbon Disclosure What once was a sci-fi scenario is substrates – at a fraction of the cost. Since “We’re an innovation engine,” says Ric were interested, but no deal had been is stunning. We’re helping to transform Project included BMO in becoming a technological reality with its founding in 2004, the company has Asselstine, Terepac’s CEO. With co- signed. “We understand that innova- job creation, cultural vibrancy, edu- the Global 500 Climate the emergence of the Internet of Things developed a process to enable increas- founder Jayna Sheats, a Stanford PhD tion is replacing traditional generators cational institutions and more. The Performance Leadership – a network of objects, equipped with ingly larger amounts of computing who serves as chief technology officer, of wealth in our economy,” says BMO’s prospects are very bright.” Index for the third year in sensors and transmitters, that can power in tinier and tinier devices. The Ric has built the company by partnering Alex McIntosh, who works with busi- a row. We were the only Canadian-headquartered react to their environments and com- result will be a new world of transforma- with innovative thinkers across the in- nesses in the high-tech cluster around company named to the municate with us. A major challenge, tive smart products, from sprinklers that dustry – and by attracting bright minds Waterloo. “The market sees that our Index, and one of only 34 though, is miniaturizing complex com- optimize water use to hats that monitor a to its offices in Waterloo, Palo Alto and bank is extremely supportive in this businesses worldwide. ponents so they can be integrated with wearer’s state of health. Dresden, Germany. “We know we’re space, and that drives opportunities.” everything from appliances to cloth- Linking these devices requires mas- onto something, and as people find out Ric stresses the value of that sup- Terepac has the opportunity to transform how customers ing to medical devices – and doing it sive exchanges of data. Terepac is a about us, they want to work with us. port: “Alex took the time to get to know interact with the world around them. “The physical world economically enough for mass produc- leader here, too, developing networking We seem to be a little magnetic.” us, to drill into the technology and the can emote,” says CEO Ric Asselstine.

28 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 29 Advancing Innovation An Overview of Going the Recent Aéro-Photo Distance for Kids Projects

Costa Rica: Comprehen- sive aerial imaging for a remapping of the entire country.

Afghanistan: Acquiring vital data for road and bridge construction in heavily mined areas where ground surveys are too dangerous. A young woman gets her face painted at Walk So Kids Can Talk in Halifax, Nova Scotia.

CIDA: Training local officials to use geospa- tial data for develop- ment planning in Côte $ A Novel Point d’Ivoire, Burkina Faso, 600,000+ Morocco, Senegal and Venezuela. Walk So Kids Can Talk, a nationwide of View event presented by BMO, rallies thou- sands of young people, parents, educa- For Quebec-based aerial mapping company Western Canada: Helping tors, community members and corporate donors to support the 6.5 million children, Aéro-Photo, building a successful business to develop control strate- gies for the largest beetle teens and young adults across Canada starts with having a unique vision of how customers infestation in recent who can benefit from the counseling and want to see the world. North American history, support services of Kids Help Phone. covering 18.1 million BMO was a founding partner of Kids hectares of forest in Help Phone in 1989, and over the past 24 British Columbia alone. years our employees have raised millions of dollars in support of the mental and Aerial photography has been used in public and private sector developers, emotional well-being of children and mapping and surveying since the earli- and organizations ranging from the Quebec: Measuring youth. In 2013, more than 3,000 of our est days of aviation. But with the advent Canadian International Development terrain elevation and the employees registered for the five kilometre of digital imaging technologies, along Agency (CIDA) to The World Bank. In forest canopy to generate charity walk in 30 locations, raising approximately $600,000 so far. Final with sophisticated mapping software, diverse projects extending across better tree inventories. numbers will be available in July. it’s now possible to create remarkably several countries, the common thread “‘Being there’ is an extraordinary detailed and accurate views from is a demand for precise, accessible promise we make to the young people of above that are used in everything information in support of major devel- every community in Canada,” says Sharon from construction and development to opment decisions and policymaking. Wood, the not-for-profit’s president and CEO. “BMO has helped Kids Help Phone assessing mineral deposits to environ- become the leading Canadian – and mental remediation projects. Banking on Innovation world-renowned – professional youth Canada has been a pioneer in the use Known for its innovative digital tech- counseling service that it is today. By of aerial imaging to chart and study the nologies and production facilities, taking this leadership role with Canada’s country’s vast undeveloped expanses. Aéro-Photo has contributed to the de- largest walk to support child and youth mental health, the bank is deepening its And for the past four decades, one of velopment of imaging applications that commitment to the well-being of every kid the recognized Canadian leaders in this deliver more detailed information more from every community, whether urban, highly specialized industry has been efficiently than ever. “Our operations rural or remote.” Aéro-Photo. can seem pretty complex to outsiders,” Based in Quebec City, Aéro-Photo of- says CEO Paul Grenier, a physicist and fers a wide array of services, from aerial surveyor who bought the company imaging and laser-assisted remote sens- from his father Wilfrid in 1974. “BMO BMO also played a role in Aéro- by this new project, the entrepreneur ing, to topographic and thematic map- has taken the time to understand our Photo’s latest business win: a major geo- expects to see revenue grow by at least ping, to the integration of geographic business processes, cycles, challenges graphical survey in Colombia. “The bank 30% in the coming year – and keep on data into sophisticated analytical appli- and opportunities. The bank gives us really helped us in the proposal process,” growing. “With our skilled and experi- cations. The company’s long client list great support, both in our operating Paul says, “suggesting several options enced team, cutting-edge technology includes energy and resource giants, credit facility and our long-term aircraft to support our rapid growth and assist and innovative approach, I foresee engineering and urban planning firms, and equipment financing needs.” with equipment investments.” Buoyed a bright future.”

30 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 31 Advancing Innovation A Smaller Footprint Arens has several development programs underway for hybrid and electric vehicles that will provide new revenue streams and fuel growth and employment.

Driving Innovation * The U.S. automotive sector is Among its innovations was the produc- 115,213 tion of the first hybrid traction inverter reinventing itself through the MWh purchase of for commercial vehicles. “Our hybrid renewable energy efforts of companies like technologies involve some of the most Saving Our Energy Illinois-based Arens, an inno- advanced electronics, software and me- chanical engineering in vehicles today,” Carbon-neutral since 2010, BMO has targeted another vative manufacturer says Ken, who has been CEO since 2002. 10% reduction in emissions – against a 2011 baseline – across all of vehicle control and power “And that’s not the only green contribu- areas of our business by the end of fiscal 2016. 6,497 management systems. tion Arens makes. The transportation tonnes of office paper industry leads the manufacturing world • For new and upgraded locations, shredded/recycled in minimizing pollution and waste. we invest in energy-efficient heating Virtually every material used in manu- and cooling systems and use remote facturing must conform to strict guide- monitoring and controls to ensure they lines about its impact and recyclability. operate efficiently. 96 It’s not just about being environmentally • All major renovations to retail and tonnes of waste friendly – it’s good business.” office space include retrofits of lighting diverted from landfill and mechanical equipment to improve through our technology Meaningful Dialogue disposal program energy efficiency. The economic downturn of 2008 was • We continue to deploy automated especially challenging for the vehicle systems in our branches that disable industry. Arens turned to its bankers for interior lighting after hours (with motion % “When I introduce folks to this company,” help. “BMO Harris was instrumental in sensor overrides for safety and security) 84 says Ken Kunin, CEO of Arens Con- our refinancing during a difficult time and ensure that exterior signage is only energy-efficient service trols, “I explain what would happen for banks to take risk,” Ken says. “They illuminated after dark. fleet (hybrid vehicles) if I snapped my fingers and all the saw that we were a solidly performing products we’ve developed over the company, they understood manage- Reducing Travel last 10 years disappeared. Farm fields ment’s capabilities and they supported and Working Remotely % would not be plowed or harvested us with the funding structure we re- • We continue to replace the bank’s gas- 25 without our throttles and controls. quired. They really came through when powered vehicles with hybrid models. Delivery trucks would stop without we needed them.” At the end of fiscal 2012, hybrids com- target for reduction of our electronic shifters. Mass transit In addition to services such as trea- To achieve our ambitious new carbon • In 2010 we commissioned energy prised approximately 84% of our fleet. paper consumption in cities that use our hybrid systems sury and foreign exchange, the bank (against a 2011 baseline) emissions goal, we will continue a audits for a significant proportion of our • In 2009 we began developing our would shut down. What we do affects supports Arens with capital financing by end of fiscal 2016 wide range of sustainability initiatives branches, assessing factors such BMObility strategy to encourage all these industries. That’s a big impact for product development, as well as over the next few years, including as building envelope, heating, air and support employees working from for a relatively small company from working capital to fund receivables buying carbon offsets, energy retrofits, conditioning, lighting, plumbing, control remote locations. The benefits include: *Data from 2012 Environmental, Social Arlington Heights, Illinois.” and inventory. “The folks at BMO have office consolidation strategies and the systems and signage. We have applied less time spent commuting, which and Governance Report and Public Arens was founded in 1939 by avia- put time into truly understanding our Accountability Statement. replacement of older technologies with specific audit recommendations in reduces employees’ carbon footprint tion pioneer Charles Arens, who wanted business, our customers and what we’re more efficient alternatives. renovating several branches. and enables them to work more to make a better aircraft throttle. Today trying to achieve,” Ken says. “That • A pilot completed in 2011 at a dozen productively (and often interact more the privately held firm is a global leader translates into meaningful dialogue.” Focusing on Buildings branches in Ontario tested a program with customers); a reduction in real in operator interface control systems and As Arens continues to grow its BMO is responsible for more than 20 that allows cooling, heating, lighting, estate needs – approximately power management systems for com- existing customer base while look- million square feet of real estate, most signage and security systems to be 40% in the program pilot – through mercial vehicles, supplying major manu- ing for acquisition opportunities, the of it spread out through cities and towns remotely monitored and controlled the use of shared offices, collaborative facturers such as Volvo and Caterpillar. focus remains on innovative leader- across North America. The geographic from a central point. After one year, spaces and various meeting and data Arens has built a reputation as ship, particularly in the development scale of our operations presents a average electricity use was reduced by handling technologies; and greater an innovator. In the late 1990s, as of more advanced systems for hybrid significant challenge in implementing 20%. In 2012 we extended the program employee satisfaction as they find automotive technology became more and electric vehicles. “Success comes measures to cut emissions. Because to 47 more branches across Canada. better work-life balance while having sophisticated and manufacturers intro- down to innovation and execution,” Ken the bank’s retail branch network • The bank’s Corporate Real Estate a positive environmental impact. duced hybrid alternatives, the company concludes. “It’s about having the right accounts for about half of our total group has adopted sustainable design began developing integrated controls combination of technology, outstanding carbon footprint, we focus much of our and construction methods for all new BMO’s corporate headquarters and power management systems for the people and the best business processes energy-saving effort in this area. buildings, as well as retrofit projects. in Toronto, Ontario. next generation of commercial vehicles. in place to deliver every single day.”

32 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 33 Advancing Innovation Five Years An Innovative at Communitech Thinker

1,070 start-ups

$ Kevin Lynch, Vice-Chair, 185 BMO Financial Group, has helped drive the global con- million versation on innovation and in revenue productivity through his writing, speaking engage- ments and consultations with business, political and $350 academic leaders.

million “Innovation is the ability to create new in total products or services, or to deliver investment existing products or services in new ways. Innovation is related to research, but they’re not the same. Research is a Right from process by which money is transformed into knowledge; innovation is the process that transforms knowledge the Start 5,260 into money. At the heart of one of North America’s new jobs created Today, though, most innovation starts most dynamic technology clusters, not in research labs but with insights from consumers and front-line employ- Communitech helps innovative businesses ees. Transforming those insights into launch, grow and succeed. commercially viable goods or services requires corporate leadership. To suc- ceed at innovation, we need to organize for it, invest in it, manage it and create incentives to sustain it. In the high-tech sector, a typical start-up as OpenText and RIM (now Black- keeping the community active and tionship, last year Communitech chose Through the Canadian Digital Media only has a 45% chance of still being Berry) – Communitech helps sustain relevant, is BMO. BMO to manage its banking needs. Network, Communitech is connected Innovation is crucial to the economy to 21 other technology clusters because it drives productivity – and a in business five years later. But for the region’s technology leadership by “The bank has been with us since across the country. more productive economy grows faster, a growing community of companies connecting new businesses with the A Community of Interests the beginning,” says Lois Norris, the adapts better and supports more jobs, as launched in Waterloo, Ontario, the resources and relationships they need Operating in the Communitech space organization’s CFO. “I’ve dealt with well as higher wages. So increasing pro- average survival rate is 83%. What’s to turn promising ideas into profitable alongside professional firms, universi- the corporate team for years, and they ductivity through innovation is as much made the difference? Much of the outcomes. Through mentorship and ties, government agencies and other provide unparalleled service. BMO a social imperative as an economic one: it raises society’s living standards while credit goes to a not-for-profit organi- peer-to-peer advisory programs – as partners, BMO offers on-site financial has been a strategic partner in many making the economy more competitive.” zation called Communitech, which well as seminars, conferences and advice to both start-ups and established key initiatives.” supports the development and ongoing networking events – the organization companies. In addition to helping fuel It’s this spirit of partnership that en- success of hundreds of entrepreneurial serves as both an information hub and growth in the technology sector and sures the lasting impact of Communitech ventures in a region renowned for new business accelerator, assisting the overall economy, our bankers work on job creation and economic growth. ground breaking innovation. emerging companies with everything directly with entrepreneurs as they “The bottom line,” Lois sums up, “is that Founded in 1997 by a group of from talent recruitment to raising capi- determine their financial strategies and the network enables everyone to contrib- CEOs of local technology compa- tal. And among the strategic partners execute their business plans. ute and everyone to benefit.” nies – including major players such who’ve been there from the beginning, Inspired by this close working rela-

34 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 35 We cannot simply measure growth in terms of sales or market share. For a bank, there is virtue in strong financial performance. But our responsibility goes far beyond dollars and cents. When it comes to helping ideas grow and encouraging self-sufficiency, our leader- ship matters. We nurture growth in knowledge and skills, in innovation, in the well-being of vibrant, inclusive communities – and above all, in confidence, which we work every day to sustain.

A young girl counts her coins at our Queen and Hambly branch in Toronto, Ontario.

2013 Corporate Responsibility Report BMO Financial Group / 37 Sustaining Growth ¡Haz la conexión!

The annual Hispanic Business Expo keeps 45,000 Illinois businesses connected.

Every August, Chicago hosts Make the Connec- tion! Hispanic Business Expo, presented by the Illinois Hispanic Chamber of Commerce (IHCC). BMO Harris Bank is a proud partner in the event, one of the largest in the United States aimed at Hispanic entrepreneurs and professionals, as well as employers focused on enhancing diversity. Featuring high-profile guest speakers and a daylong program of business and career development workshops, the expo strengthens relationships between the state’s more than 45,000 Hispanic-owned businesses and corporate Grizzly and government organizations. It’s the IHCC’s flagship event. Sighting Over the past 20 years, the Chamber has helped In the foothills of the Rockies, a visionary increase revenue among Alberta entrepreneur is turning tourists’ its constituents by an heads and helping boost the local economy at estimated $200 million. The Grizzly Paw Brewing Company. “We’re pleased with the ongoing support of BMO Harris Bank,” says IHCC president Omar Duque, “and with its commitment to helping Hispanic-owned businesses access much-needed capital Each year 12 million people travel the on a trip to Sydney, Australia in the early The company faced a tough decision: Grizzly Paw companies to include ing from and helping to fuel renewed and support to help Trans-Canada Highway between 1990s, Fraser returned to Canada deter- either return to being a brewpub only construction and equipment loans, prosperity: “One of the hardest parts of them grow and create Calgary, Alberta, and the Rocky mined to create something comparable or build a self-sufficient operation in as well as operating lines of credit. operating a ‘micro’ anything in Canada jobs in communities Mountains. Driving in the foothills at back home. He chose Canmore for its Canmore. For Niall there was only one “My business is complicated,” Niall is dealing with economies of scale. across Illinois.” the edge of Banff National Park, you spectacular setting beneath the snow- real choice – invest and grow. says, “so it’s helpful to deal with the When it comes to buying equipment might spot elk, bighorn sheep and even capped peaks and its growing profile as same person over many years – especial- or ingredients, growth really helps. the odd wolf or bear. Sighting a grizzly, a tourist centre. And in 1996, he opened Feeding the Bear ly someone who understands the peaks By increasing production, we’re not though, is extremely unusual – unless the Grizzly Paw pub. While the expansion plan took shape and valleys of a tourist town. Christie only creating jobs and purchasing you’re passing through Canmore, The venue was an immediate hit, and during an economic downturn that was is very proactive. She looks at the big more Alberta-grown agricultural prod- where you can’t miss the impressive sales rose steadily over the next several especially hard on tourism, Niall was picture and shows us how to get there.” ucts, we’re building an Alberta-grown post-and-beam structure that houses years. Then in 2004 Grizzly Paw ex- nevertheless confident of continued When Grizzly Paw’s expanded facil- small business.” The Grizzly Paw Brewing Company. panded to include a microbrewery and a support from the bank that had believed ity opened in early 2013, Alberta was A combination brewpub and micro- line of sodas. This popular addition soon in his vision from the beginning: BMO. again attracting an influx of visitors and brewery, Grizzly Paw is the brainchild of presented a challenge, however, as the His long-time business banker, new residents, including many who Grizzly Paw’s new facility increases its brewing entrepreneur Niall Fraser. Inspired by a Canmore facility was too small to keep Christie Saunders, extended the range welcome the microbrewery concept. capacity by four times and will allow the company pioneering brewpub that he encountered up with growing demand for its product. of services for the two interrelated Niall sees his business as both benefit- to further expand its product line.

38 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 39 Sustaining Growth Helping the Community Grow

$250,000 donation to Laurentian University’s Goodman School of Mines

Just Add Water

For nearly six decades, McKeil Marine has hope offered a reliable, economical and sustainable transportation choice in the vital Great Lakes $250,000 donation to Operation corridor – and business is booming. HOPE in support of financial literacy programs 100% If you need to move a large volume of employees and indirectly creates score on the 2013 Corporate Equality cargo in a single load – using a method hundreds of jobs in related businesses. Index. The Human Rights Campaign that’s energy efficient, highly cost- This impact reflects a steadily increas- Foundation named BMO Harris Bank one of the Best Places to Work for LGBT effective and extremely safe – the short ing demand for services, especially Equality for the fourth year in a row list of options is likely to begin with along the eastern seaboard and in the shipping by water. Since 1956, that’s Arctic. As a result, McKeil has achieved been the secret of success for McKeil remarkable revenue growth – more Marine, a Hamilton, Ontario-based than 100% over the past six years. And company that specializes in customized meeting the company’s diverse finan- lgbt cargo shipping and logistics support. cial needs is a team of business bankers Serving the Great Lakes, the from BMO. $75,000 donation to the LGBT Community Fund of the Chicago St. Lawrence Seaway and Canada’s East “Our partnership with BMO is Community Trust Coast and Arctic, McKeil provides a wide founded on respect and trust,” says range of marine transportation services, Blair. “The bank’s innovative approach including towing, ship docking, ice- is aligned with ours and helps facili- member of Green Marine, which al philanthropy includes a cornerstone breaking, salvage and marine construc- tate growth. Customized financing has promotes sustainability in the industry. donation to the McKeil School of Busi- $ tion. With locations in Hamilton, Port enabled us to expand and upgrade our As an example of those ideals in action, ness at Hamilton’s Mohawk College, 1.25 Dover (on Lake Erie), Montreal and St. fleet, develop the infrastructure to sup- McKeil’s nine-year partnership with which credits its benefactor with John’s, Newfoundland, the family-owned port our evolving needs and invest in Aluminerie Alouette has taken 50,000 “honouring his father’s vision of a com- million our most valuable asset – people.” company operates a fleet of 20 tugboats, truckloads of processed aluminum pany that continuously demonstrates a raised through the 30 barges and various other vessels. off the highways and reduced green- commitment to people, community and Equity Through Education program The Greener Choice house gas emissions by an estimated excellent customer service.” run by BMO Capital Markets An Economic Success Story In what is already regarded as an 200,000 tonnes. “Marine transportation plays a vital role environmentally responsible area of The company’s social responsibil- in the value chain of economic growth,” transportation, McKeil constantly seeks ity is also reflected in McKeil Cares, says chairman and CEO Blair McKeil, new ways to lower fuel consumption a program that supports community In addition to being an economic enabler for several the son of founder Evans McKeil. The and modify vessel design to minimize organizations that are important to its industries, McKeil reduces highway congestion and helps company has more than 200 full-time impact. The company is a founding employees. And Blair McKeil’s person- clients reduce their environmental footprint.

40 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 41 Sustaining Growth

Professional Success Pride Takes a Dive

For members of the BMO Pride employee resource group, In Newfoundland’s booming offshore oil industry, being proud of who you are, what you achieve in Pro-Dive Marine Services is expanding through your career and the organization you work for are all innovation and investing in people – while helping facets of the same story. to drive the local economy.

“When I joined the bank in early 2011,” work,” Pia says. “This makes for hap- June. Other initiatives spearheaded by Every job has its challenges, but maintain- says Pia Schmidt-Hansen, “I was pier and more engaged employees. And the group (which also includes many ing oil rigs in the dark, frigid waters of excited to learn about the BMO Pride it benefits the bank to welcome diverse straight allies) range from organizing the North Atlantic is definitely at the group. From the first meeting, I saw ideas and experiences that contribute awareness seminars and event spon- demanding end of the spectrum. This the passion in other members and was to better service, products and support sorships to ensuring that customer- is the everyday work environment of eager to be a part of it.” for our customers.” oriented programs such as Taking Newfoundland-based Pro-Dive Marine A senior business analyst in the Care of Your Retirement include an Services, which has transformed itself Technology and Operations group, Pia Community Connections LGBTQ perspective. into a key supplier to the rapidly grow- has since been elected to the board BMO Pride and its U.S. counterpart, BMO Pride’s engagement with the ing oil and gas industry off Canada’s of BMO Pride, one of the bank’s most BMO Harris Pride, devote a lot of community can also open doors for East Coast. active and widely supported affinity energy to engaging with the larger LG- new business. For instance, the bank Founded in 1983, Pro-Dive supplies groups. “BMO has created an inclu- BTQ community. For example, mem- has long been the lead sponsor of Bud- the offshore exploration and develop- sive environment where employees bers participate in the annual Pride dies in Bad Times Theatre, a platform ment sector with a range of services, who identify as LGBTQ [Lesbian-Gay- and Remembrance run, a charitable for LGBTQ expression in Toronto and including remotely operated vehicles Bisexual-Transgendered-Queer] feel event associated with Toronto’s high- the hub for several youth programs. (ROVs) for construction and drill sup- they can bring their whole selves to profile Pride Week celebration in late When the theatre found its existing port, saturation diving support for financial institution could no longer deep-water engineering projects, and Pictured from left to right: Anil Narain, Fun Man Lee keep pace with its evolving needs, diving services. and Pia Schmidt-Hansen, members of BMO Pride. management turned to BMO as a bank Having established a solid reputation used for observation only, to larger eco-friendly diving equipment and that had always shown strong support for safety and reliability, the company intervention vehicles with capabilities using electrical propulsion systems on for the entire community. reached a point 10 years ago when it was not previously provided by any undersea vehicles. “As a company that That profile will only grow as BMO time to invest in people and technology. Newfoundland company. Such tech- interacts directly with the marine en- Pride continues its highly visible spon- “Pro-Dive was moving into a significant nology investments have significant, vironment,” David says, “we minimize sorship and fundraising efforts, helped phase of expansion,” explains founder multi-year lead times. The same is true potential impacts.” by a growing number of members who and president David Squires. “We were of Pro-Dive’s investment in people and What’s next? “Pro-Dive is always share Pia’s enthusiasm: “Being a part looking for a bank that would be a training, which has grown to meet the looking to reset industry benchmarks,” of this group has made me proud to partner and understand that our growth complex demands of offshore work. David says, “whether enhancing our come to work every day. It’s given me objectives in this technically specialized As he continues building his busi- service offerings, adopting ISO quality the opportunity to network with em- industry require foresight in financing ness, David remains conscious of standards or acquiring next-generation ployees in other cities and other areas and flexibility in short-term cash flow Pro-Dive’s leadership role in growing equipment. To remain a leader, of the bank that I wouldn’t have met requirements. BMO understood our the regional economy: “We’re helping we’ll continue raising the bar in the otherwise. I now have a better under- non-traditional business model and the our suppliers expand and add to the coming years.” standing of BMO’s business strategy, unique nature of our industry.” skills of the local workforce – goals and of the huge difference that em- that can’t be achieved when goods ployee engagement makes, both in Growing the Local Economy and skills are imported.” At the same BMO provided $2 million in financing for the locally built our own lives and in the communities With the bank’s support, Pro-Dive has time, Pro-Dive has a keen sense of Pro-Dive Attender, one of a handful of such dive support where we operate.” expanded its ROV fleet from robots environmental responsibility, adopting vessels in the world.

42 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 43 Sustaining Growth Success at Kress is achieved through What’s in a Name controlled growth and the ability to adapt to specialized markets and needs worldwide.

BMO Harris Bradley Center, Milwaukee, Wisconsin “The BMO Harris Bradley Center has a net annual economic impact of more than $80 million in metro Milwaukee. It’s a tremendous community asset and job creator. When we issued Heavy Metal a call for Champions of the Community to help As CEO of the company that she built with her late husband, build a bridge from the Center to the future, Rita Kress guides a leading global manufacturer of specialty carriers BMO Harris Bank really stepped up. This spon- for processed metals and other heavy materials. sorship will have a big and important impact.”

Tim Sheehy, President, The Metropolitan Milwaukee Association of Commerce

“I remember back when we had six em- mines and other industries requiring the larger company’s “prime mover” figure out the mechanics of turning her BMO Harris Bank Center, ployees and faced one problem after the transport of heavy materials. From machines. More than 45 years later, that husband’s vision into reality. “We know Rockford, Illinois another,” Rita Kress recalls. “Some- its headquarters in Brimfield, Illinois, solid partnership helps Kress reach an what has made us successful, and we’re “Our partnership with BMO Harris Bank is more times it was touch-and-go for cash flow. the company supplies machines to expanding global network of customers – not going to deviate from that.” than just putting their name on the arena – it was But through constant growth and diver- customers operating in demanding sustaining the vision of constant growth and is an investment in downtown Rockford and a sification of design, we succeeded.” environments on seven continents. championed by company founder Perpetual Motion Founded as a modest family busi- Early on, Kress made the decision to Ted Kress, who died in 2003. A key contributor to the company’s clear signal that BMO Harris Bank is vested in the ness in 1965, Kress Corporation today align with Caterpillar, a world leader in “We’ve attained growth by producing success is a belief in seeking top-notch revitalization of our city. The BMO Harris Bank is a major manufacturer of mobile construction and mining equipment, by the very best product,” says Rita, whose expertise, from legal and accounting Center is a great example of what can be done equipment for steel mills, surface making components that integrated with role from the beginning has been to advice to business banking. “The one when private and public sectors work together thing I’d always heard about BMO for the good of citizens.” Harris Bank,” Rita says, “was that once Mike Dunn, Chairman, Rockford Area Venues you became a customer, you stayed and Entertainment Authority a customer – and I can attest to that. I tightly manage cash flow, and I’ve always tried to limit borrowing. BMO BMO Field, Harris has been instrumental in helping Toronto, Ontario us pay off our debt. Since we switched “BMO Field is a great asset for the community and over, we’ve never lost our momentum. a leading example of a private-public partnership. And when an issue comes up, all I have It not only supports sports and its associated to do is pick up the phone.” The Kress philosophy of mutually benefits, such as health and fitness, but also rewarding partnerships extends as drives economic growth and development in the well to the local community, where city of Toronto for the long term.”

Rita is involved in everything from Tom Anselmi, President & Chief Operating Officer, water conservation to the Boy Scouts Maple Leaf Sports & Entertainment to a group called Forward Focus CI, which promotes economic develop- ment in the region around Peoria. As she sums it up, “It’s only right to help the area your people live in.” As for the company’s future, the CEO has an industry veteran’s per- spective: “In business everything changes – people, needs, entire economies. You have to be ready to BMO Field, constantly adjust while keeping your Toronto, Ontario eyes on the road ahead.”

44 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 45 Sustaining Growth Learning to Balance Financial education comes naturally to a bank that’s in business to simplify complexity, provide helpful guidance and give customers confidence in their own decision-making.

Employees participate in leadership training at the BMO Institute for Learning.

Helping to improve financial literacy is part of BMO’s commitment to Making Money Make Sense. In communities across North One Klick Away America, tens of thousands of bank employ- ees devote their time and energy to enhanc- Employee Financial Financial Literacy Toronto-based digital marketing agency ing people’s understanding of financial Education Resource Center Klick Health has built an international reputation – products, services and concepts – whether As we reinforce BMO’s vision – to be the The BMO Harris Bank intranet is gaining and achieved remarkable growth – we’re guiding first-time homebuyers as bank that defines great customer experience an added educational feature: the Financial through its work for high-profile clients in the they compare mortgage offers or teaching – our employees need to be familiar with Literacy Resource Center, which will offer students how to balance a chequebook. the full range of banking options, supported a series of web-based learning modules healthcare industry. We aim for balance in our own approach by up-to-date financial information. So in designed to support employees as they as well, aligning financial literacy programs 2012 we launched a financial education develop community seminars and other with our broader responsibilities as a well- program aimed at enhancing our own capa- outreach initiatives. The center will also managed business. In strengthening our bilities and confidence. provide webinars on best teaching prac- employees’ ability to inform and advise, Step one was a bank-wide financial tices, information about upcoming events, we have a clear purpose: to build customer literacy survey, which helped identify ar- a directory of employee facilitators, updates If you asked the top 20 global pharmaceu- loyalty and connect more effectively with eas where we could provide employees with on the bank’s various service activities tical and biotech companies what they particular kinds of customers – for instance, additional knowledge and support – both in (including those that fall under the U.S. have in common, 15 could answer with parents who are trying to educate their their financial literacy efforts and in their Community Reinvestment Act) and recogni- a single word: Klick. To get their mes- children about money. At the same time, we everyday conversations with customers. tion of employees who’ve made a sages out to the audiences they want work with governments and community We’re now creating a series of courses difference in advancing financial literacy. agencies to promote greater financial fluency at BMO’s Institute for Learning to to reach online, these industry leaders among all Canadians and Americans. It’s an further develop employees’ expertise and turn to Klick Health, the world’s largest opportunity to provide leadership within our capabilities. This online program, to be independent health-focused digital own industry while acknowledging the trust launched later in 2013, will be available marketing firm. people place in us as a financial institution. to customers as well. Founded in Toronto by a trio of partners in 1997, Klick has grown rapidly to become a standard-bearer for innovative communications in the Klick’s unique workspace, designed by Peter Cordy, includes a LEGO wall, healthcare sector. The agency offers a a gym and an ice cream bar. broad array of digital services, including custom web app development, content $5 million. But what’s equally im- Moreover, Klick is recognized as one of In addition to providing operating and creative development, e-learning portant for the management team is North America’s fastest-growing com- facilities for everyday business needs, course design and management feeling that their work has an impact. panies: last year the workforce grew by BMO also helps finance learning pro- systems, and website design, analytics “It’s humbling,” says founding partner, 50% to nearly 300 employees, including grams and research-based initiatives. and usability consulting. chairman and CEO Peter Cordy, “to a new U.S. sales team. This requires an understanding of the Klick’s clients range from drug and know that some of our programs im- This dramatic growth requires rigor- pharma sector that Peter had found to medical device manufacturers to provid- prove how health issues are managed ous planning and a solid foundation – be rare in banks. He also appreciates ers of diagnostic services and managed and even change lives.” which is where BMO has been able to having banking partners who share care. And while its digital solutions vary help. “Having a strong, reliable financial the basic values that shaped his firm’s with each client’s specific challenges, Success Fuels Success partner has contributed to our success,” success: “Our revenues are approach- the common thread is a need to engage Klick’s founders also take pride in says Peter, who as CFO has dealt almost ing $100 million, but we’re still and inform healthcare providers, who providing a great place to work. Named exclusively with the bank since Klick vigilant about keeping our attitudes and in turn educate patients on vital health among Canada’s Best Managed Compa- opened its doors. “As our needs con- behaviours the same as when we were issues and potential treatments. nies, the agency has won national awards stantly evolve – whether we’re enlarg- a start-up. It may seem simplistic, but Named Agency of the Year by two for being a top employer – turnover is ing our offices, investing in equipment we believe that the secret of our success leading industry publications, Klick less than half the industry average – and upgrades or expanding to the U.S. – is our clients’ success.” exceeded its 2012 earnings forecast by for creating an exemplary workplace. we know we can rely on BMO.”

46 / BMO Financial Group 2013 Corporate Responsibility Report 2013 Corporate Responsibility Report BMO Financial Group / 47 Stakeholder Engagement 2012 Highlights A closer look at our year

Our stakeholders are part of every decision we make.

Maintaining lasting rela- tionships with our stake- holders is essential to the long-term sustainability of our business. We’re committed to working A Foundation of Strong with our shareholders, Corporate Governance our employees, our communities and our customers – understand- BMO is committed to upholding the A culture of trust and good governance ing their expectations highest level of business ethics and begins with our employees. Everyone and interests creates corporate governance. Responsible working at BMO is required to read and opportunities for making conduct is necessary to ensuring the act in accordance with our code of con- our business better, BMO supports soccer, from young players in local communities all the way up to the profes- and helps us achieve our sional level. In 2013 we announced a $20,000 grant to Urban Ventures, a non-profit work- long-term sustainability and viability duct, FirstPrinciples, which provides vision of being the of our organization, and we’re proud a framework for the behaviour and ing to break the cycle of generational poverty in south Minneapolis. The grant will support bank that defines great several initiatives including Urban Stars, a youth soccer program for boys and girls aged 3-19. of the way we do business. ethical decision-making integral to the customer experience. The program gives young people a competitive soccer experience while providing them with We adhere strongly to the tenets of work we do. For a more comprehen- a safe place to play, learn and grow. sound corporate governance – trans- FirstPrinciples guides us to ask: Is it sive look at our corporate Contributions to governance practices, parency, disclosure and honesty. fair? Is it right? Is it legal? Asking these please see our website, the Community These tenets are the foundation of our questions ensures that honesty, integrity proxy circular, environ- corporate responsibility strategy, and and well-defined ethical standards are mental, social and gover- they never change. But governance the foundation for everything we do. nance report and public $ * practices must evolve as the economic accountability statement $ and annual report. environment shifts and our business FirstPrinciples states that all BMO 5, 36 6 55.7 changes. We continuously review, employees must: evaluate and modify our governance million 5.17 million practices so they continue to meet our • Do what is fair, honest and ethical. adjusted total employee compensation training days per employee total community donations high standards – and the standards of • Respect the rights of others. our operating environment. • Work to the letter and spirit of the law. $ * Our corporate governance practices • Protect privacy and confidentiality. 90.6 meet or exceed all applicable rules • Deal with conflicts of interest. 184 adopted by the Canadian Securities • Conduct ourselves appropriately years: the longest-running dividend Administrators and the U.S. Securities at all times. payment record of any company million and Exchange Commission, and the • Be accountable. in Canada total spent on employee training provisions of the U.S. Sarbanes-Oxley Act of 2002. Place d’Armes $ Montreal, Quebec 13.5 24% Hospitals and healthcare 15% Civic and community initiatives k coc 400,000 28% Education million students provided with free 10% Federated appeals 18% Arts and culture bmo in employee donations banking services 5% Other t i o n: Sarah M ay

Compliance ra st , illu Compliance is an essential element of a bank’s social Our compliance policies address security matters, including: %* performance. We have policies and processes in place with • the privacy of personal information 96 respect to legal and regulatory compliance in all jurisdic- • information technology security 83 tonnes of waste diverted from *Data from 2012 Environmental, Social tions where BMO or our subsidiaries or affiliates conduct • whistleblower protection Annual Employee Survey landfill through our technology and Governance Report and Public • anti-money laundering business. Complying with applicable laws, rules and participation rate disposal program Accountability Statement. regulations is a critical part of doing what is right. • corruption. udi o d es ign: und e rlin st

48 / BMO Financial Group 2013 Corporate Responsibility Report Rob Prichard, Chairman, BMO Board of Directors and Deborah Gillis, Chief Operating Officer, Catalyst. In 2012, the Catalyst Accord was launched with the goal of increasing the proportion of FP500 board seats held by women in Canada to 25% by 2017.

Twenty years ago BMO published its landmark report of Contact Us BMO Financial Group’s 2013 our Task Force on the Advancement of Women in the Bank. Corporate Responsibility Report is available for viewing or printing It was groundbreaking work – not just for BMO, but for on our website. If you have any corporate Canada. Tony Comper, then the bank’s President questions regarding our corporate responsibility activities, contact us: and COO, summed up the consensus: “The glass ceiling is [email protected]. now officially smashed.”

Two decades on, while we’re grateful to have been recognized repeatedly for being at the forefront in promoting diversity and inclusion, the work – and it’s work that all of us take on – isn’t close to being done. Promoting diversity, working at it and making sure no one falls behind requires a never-ending commitment. For our bank, there was no more fitting way to mark this 20-year milestone than to renew our commitment to creating an equitable workplace. And we commend our Board for taking another significant step forward: BMO was among the first to sign the Catalyst Accord, an initiative that challenges Canada’s business community to increase the representation of women on corporate boards. In fact, the bank’s Board of Directors, chaired by Rob Prichard, took the Accord further, setting an even higher goal for BMO and then publishing it in the 2013 Proxy Circular. And we’ve met our target: women now comprise one third of the bank’s independent board membership. These efforts add up to far more than promoting equity. They’re about making progress – and it’s time to accelerate the agenda.

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