Cover EngSEDAR 12/13/00 12:52 PM Page 1 bmo.com/annualreview2000 Cover EngSEDAR 12/13/00 1:16 PM Page 1 Bank of Montreal Group of Companies Founded in 1817, Bank of Montreal is Canada’s first bank and one of the largest financial institutions in North America. It offers clients a broad range of financial services across Canada and in the United States, both directly and through Chicago-based subsidiary, Harris Bank. With average assets of $235 billion and more than 33,000 employees, the Bank has diversified activities concentrated in retail banking, wealth management, and corporate and investment banking. Financial Performance: ten consecutive years of… Earnings Growth EPS Growth Net Income Fully Diluted Earnings Per Share ($ millions) ($) 1,857 6.56 1,382 1,305 1,350 4.62 4.66 4.72 1,168 4.13 986 3.38 825 2.97 709 2.55 2.31 2.36 595 640 91 92 93 94 95 96 97 98 99 00 91 92 93 94 95 96 97 98 99 00 ROE Greater than 14% Revenue Growth Return on Common Shareholders’ Equity Revenues (TEB*) (%) ($ millions) 18.0 17.0 17.1 8,664 15.4 7,928 15.0 14.9 15.2 14.1 14.1 14.1 7,167 7, 270 6,227 5,666 5,196 4,861 4,442 3,995 91 92 93 94 95 96 97 98 99 00 91 92 93 94 95 96 97 98 99 00 * Tax equivalent basis Cover EngSEDAR 12/13/00 12:42 PM Page 2 Bank of Montreal Group of Companies at a Glance Volume Growth Initiatives for 200 ■ Personal and Commercial Client Group The Personal and Commercial Client Total Revenue ($ millions) Grew our customer base in Canada by extending Group (P&C) is committed to providing 4,887 the number of skilled frontline personnel and de integrated, seamless, high-quality 4,143 4,346 customer service. service to seven million personal and ■ Introduced a number of product innovations for commercial accounts across Canada including flexible below-prime mortgages, a loya and the United States. P&C offers a full online automotive financing. range of products and services through ■ 16,000 highly skilled financial service Introduced a dedicated direct banking service st providers in more than 1,100 Bank specialists in Canada to meet the loan, cash man of Montreal and Harris Bank®2 branches, of our commercial clients. as well as directly through bmo.com, 98 99 00 ■ Implemented an aggressive sales strategy withi harrisbank.com, BMO mbanx Direct® bank network, which resulted in a 15% increase and a network of 1,987 automated as well as rapid growth in small business and mo banking machines. deposit funding base in Chicagoland now stands ■ Private Client Group The Private Client Group (PCG) has Normal Operating Revenue ($ millions) Brought together all businesses under the BMO b total assets under management and brand in the United States. administration and term investments 1,565 ■ Acquired two U.S. direct investing firms – Chicag of $234 billion and more than 4,700 1,186 1,189 & Lewis Securities and Seattle-based Freeman W employees. It brings together all of accounts in the Bank’s North American direct Bank of Montreal Group of Companies’ ■ wealth management services. Operating Expanded physical distribution network with targ as Private Client Group in Canada and most affluent, fastest-growing urban centres in t TM1 under The Harris in the United States, ■ Launched the first Canadian full-service online p PCG provides North American investors Full-Service OnlineTM5 – offering investors the mo with the tools they need to accumulate, 98 99 00 based research and investing services in the mar protect and grow their financial assets. TM Excludes impact of additional month of ■ Launched BMO Harris Private Banking , providing PCG offers clients a broad array of BMO Nesbitt Burns revenues in 1999. integrated North American private banking enter products and services, including retail investment products, direct and full- ■ Placed 450 new investment professionals in Bank service investing, private banking and provide Bank clients with wealth management ex institutional money management. ■ Offered clients third-party mutual funds through ®3 ■ Investment Banking Group Operating under the BMO Nesbitt Burns Normal Operating Revenue ($ millions) Brought together the corporate lending busines and Harris Nesbitt brands, the Investment Chicago-based investment banking operations of Banking Group (IBG) offers corporate, 2,337 2,368 Nesbitt, resulting in a more comprehensive serv institutional and government clients 1,997 mid-market clients. complete financial services, including ■ Made a major commitment to media and teleco capital-raising, investment and operating addition of a dedicated team of investment and services. Supported by a top-ranked based in New York and created the US$450 mill research department, BMO Nesbitt Burns TM5 Halyard Capital Fund * for investment in the sec is a leader in mergers and acquisitions ■ advisory, debt and equity underwriting, Initiated a strategy to expand our capabilities in institutional equity, securitization and 98 99 00 recruited a new Houston-based head of U.S. Ener ■ export trade finance. Excludes impact of additional month of Reduced risk-weighted assets from $83.6 billion BMO Nesbitt Burns revenues in 1999. ■ Increased credit investment management assets third-party investors by $5.9 billion to $11.4 billio ■ Strategic Initiatives The Bank of Montreal Group of Companies Banking Transactions (millions) Partnered with 724 Solutions Inc. in the Canadia has initiated strategic alliances with America’s first wireless financial, investment and a number of leading-edge technology 250 ■ Allied with 724 Solutions Inc. and Sprint PCS to i partners across North America. The 200 the first wireless banking and investment service goal of these joint ventures is to provide launched in the United States. existing clients with better, faster and 150 ■ Received new equity funding from investors, in cheaper service – and to generate new 100 TM3 sources of revenue by appealing to Competix.com , a joint venture established by B 50 new customers and marketplaces. Management Systems to market our industry-lea system to small and mid-sized U.S. banks. 95 9697 98 99 00 ■ Continued to grow the customer base and broad ABM Telebanking world’s first electronic post office and electronic Branch PC Banking our e-commerce subsidiary, Cebra Inc.®, and Cana ■ Announced a new company in partnership with retail and online business merchants across North transaction processing for credit card, debit card Cover EngSEDAR 12/13/00 12:53 PM Page 2 wth Initiatives for 2000 Focus for 2001 Caution Regarding F This Annual Review inc objectives and strategi ■ ■ s) Grew our customer base in Canada by extending branch hours, increasing Pursue an integrated approach to branch and electronic banking to ensure and capital manageme 4,887 the number of skilled frontline personnel and delivering high-quality that all our employees work in concert to help simplify our customers’ However, by their na customer service. financial lives. and the risk that predic ■ Introduced a number of product innovations for Canadian customers, ■ Pursue an integrated, strategic approach to the development and marketing on these forward-looki including flexible below-prime mortgages, a loyalty reward debit card and of personal banking products. expectations, estimates online automotive financing. Forward-looking stat ■ Provide more customized service and aggressively target the high-growth the effects of competit ■ Introduced a dedicated direct banking service staffed by commercial but underserved small business banking market. specialists in Canada to meet the loan, cash management and service needs and changes in politica ■ Build on our leadership position in the key and relatively underserved of our commercial clients. of important factors is commercial segment of companies with annual revenues of $100 million to and others should care 00 ■ Implemented an aggressive sales strategy within the Chicagoland community $300 million. bank network, which resulted in a 15% increase in Harris consumer loans ■ Achieve asset growth while maintaining existing high asset quality standards as well as rapid growth in small business and mortgage loans. The U.S. retail through continuing investment in technology, along with state-of-the-art risk deposit funding base in Chicagoland now stands at more than US$10 billion. management techniques and strict internal discipline. ■ ■ enue ($ millions) Brought together all businesses under the BMO brand in Canada and The Harris Offer clients wealth management advice, products and services in Bank of brand in the United States. Montreal branches, increasing the number of investment specialists in order 1,565 to expand our Canadian business. ■ Acquired two U.S. direct investing firms – Chicago-based Burke, Christensen & Lewis Securities and Seattle-based Freeman Welwood – bringing the number ■ Provide U.S. investors with a broader range of products and services in of accounts in the Bank’s North American direct investing program to 420,000. order to aggressively expand our U.S. wealth management business. ■ Expanded physical distribution network with targeted acquisitions in the ■ Complete the integration of all our acquired U.S. companies under The most affluent, fastest-growing urban centres in the United States. Harris brand. ■ Launched the first Canadian full-service online program – BMO Nesbitt Burns ■ Continue to build on Harris Bank’s long-standing expertise in investment Full-Service OnlineTM5 – offering investors the most comprehensive Internet- management and trust and estate services through the new brand, The 00 based research and investing services in the market. Harris, in order to develop our wealth management business throughout TM North America. month of ■ Launched BMO Harris Private Banking , providing clients with the first truly 1999. integrated North American private banking enterprise. ■ Placed 450 new investment professionals in Bank of Montreal branches to provide Bank clients with wealth management expertise.