News Releases

Fifth Consecutive Quarter of Higher Revenues and Net Income

P&C Canada Continues to Perform Well

Provisions for Credit Losses Continue Improving Trend

Tier 1 Capital Ratio Remains Strong, at 13.27%

Financial Results Highlights:

Second Quarter 2010 Compared with Second Quarter 2009:

• Net income of $745 million, up $387 million from a year ago
• EPS¹ of $1.26 and cash EPS² of $1.28, both up $0.65 from a year ago
• Return on Equity of 16.4 %, compared with 8.1% a year ago
• Provisions for credit losses of $249 million, down $123 million from a year ago

Year-to-Date 2010 Compared with a Year Ago:

• Net income of $1,402 million, compared with $583 million in 2009
• EPS of $2.38 compared with $1.00 and cash EPS of $2.41 compared with $1.03

Toronto, May 26, 2010 - For the second quarter ended April 30, 2010, BMO Financial Group reported net income of $745 million or $1.26 per share. Strong results were broadly based. Canadian personal and commercial banking had a good quarter, with net income of $396 million, up $56 million or 16% from a year ago. Private Client Group net income increased 64% to $118 million and BMO Capital Markets net income rose 38% to $259 million.Today, BMO announced a third quarter dividend of $0.70 per common share, unchanged from the preceding quarter and equivalent to an annual dividend of $2.80 per common share."With a clear strategy and a focus on helping our customers succeed, BMO has achieved its fifth consecutive quarter of higher revenue and net income," said Bill Downe, President and Chief Executive Officer, BMO Financial Group. "Strong earnings, a continuation of the favourable trend in our revenue growth, and lower credit provisions, as credit conditions continue to improve, are reflected in these results.

"Late in the quarter, we acquired certain of the assets and liabilities of a Rockford, Illinois-based bank, adding its 52 branches in Illinois and Wisconsin to our network. The acquisition provides an excellent fit with our strategy of growing P&C U.S. in the Midwest. We are pleased to welcome our new customers and employees, strengthening our presence in a marketplace we know well and in which we have a strong brand.

"P&C Canada continued to perform very well, with $396 million in net income, up 16% from a year ago. We achieved good revenue growth across each of our personal, commercial and cards businesses, driven by volume growth across most products, improved net interest margin and our continued focus on market share.

"BMO Capital Markets results were also good, with $259 million in net income, up 38% from the same quarter last year. During the quarter, BMO Capital Markets continued to take advantage of market opportunities to hire industry-leading talent that will position our businesses well for future growth across key sectors.

"Private Client Group results were strong at $118 million, up 64% from the same period a year ago as improved equity markets and the accumulation of net new client assets resulted in higher fee-based income.

"Net income for our P&C U.S. business was US$45 million, reflecting our strategic focus on our commercial banking model as we integrate all of our U.S. commercial customers into our P&C business. We have the right structure in place, under a strong leadership team, to grow this business.

"Our results confirm that we are successfully executing the customer-focused strategy we laid out three years ago. Our financial strength is giving us the flexibility to attract top talent and customers and expand our North American presence, while delivering strong results," concluded Mr. Downe.

1 All Earnings per Share (EPS) measures in this document refer to diluted EPS unless specified otherwise.

2 The adjustments that change results under generally accepted accounting principles (GAAP) to cash results are outlined in the Non-GAAP Measures section at the end of Management's Discussion and Analysis (MD&A), where such non-GAAP measures and their closest GAAP counterparts are outlined.

Operating Segment Overview
In the current quarter we identified U.S. mid-market clients that would be better served by a commercial banking model and transferred the accounts to P&C U.S. from BMO Capital Markets. Comparative figures have been restated to reflect the effects of the transfer and conform to the current presentation.

P&C Canada
Net income was a strong $396 million, up $56 million or 16% from a year ago. We had good revenue increases across each of our personal, commercial and cards businesses, driven by volume growth across most products, the inclusion of Diners Club in our financial results and an improved net interest margin. Good revenue growth together with effective management of operating expenses resulted in strong cash operating leverage of 6.1%.

Our goal is to be the bank that defines great customer experience. We have narrowed the gap to the industry leader on both personal and commercial loyalty scores relative to a year ago and we have seen year-over-year increases in the average number of product categories used by both personal and commercial customers. This is the result of our commitment to listen, understand and provide guidance to our customers.

In personal banking, our Spring Home Financing Campaign is designed to help customers make the right home financing decisions by giving the right advice. We introduced a new straightforward low-fixed-rate closed mortgage product and made it easier for customers to contact a mortgage specialist or apply for a new mortgage online. We are also promoting our popular Homeowner ReadiLine product, which lets customers use the equity in their home to finance renovations or any other expenses.

In commercial banking, we launched BMO SmartSteps for Business to provide small business owners convenient access to advice on how to manage their business better. We continue to rank second in Canadian business lending market share and our goal is to become the bank of choice for businesses across Canada.

We are one of the largest MasterCard issuers in Canada. We are growing our cards business, while maintaining prudent credit management and have had significantly better credit loss rates than our peers. During the quarter, BMO became the first Canadian bank to introduce the World Elite MasterCard - a premium credit card that offers a superior level of service, world-class travel benefits and first-class travel insurance.

P&C U.S. (all amounts in U.S. $)
Net income was $45 million, down $20 million or 31% from a year ago. Revenues from improved loan spreads were more than offset by a decline in commercial loan balances due to lower client loan utilization, deposit spread compression and the impact of impaired loans.

Net income for the quarter adjusted for the impact of impaired loans was $61 million. The cash productivity ratio for the quarter adjusted on the same basis was 62.3%.

To position our commercial business to be aligned for growth coming out of the U.S. recession, we identified U.S. mid-market clients that would be better served by a commercial banking model and transferred these accounts to P&C U.S. from BMO Capital Markets in the quarter. As a result, P&C U.S. assumed $5.4 billion in loans and $3.2 billion in deposits with results for prior periods restated to reflect the transfer. We plan to intensify coverage of this expanded universe of accounts to create an opportunity to deepen existing client relationships and win new business. We expect to realize economic benefits by reducing the cost to serve each account and by leveraging our strong reputation as a commercial lender with the Harris brand. Migrating accounts that are primarily lending-based into P&C U.S. allows BMO Capital Markets to direct its attention to sectors and clients where it has a differentiated competitive advantage and to maintain a clear focus on winning investment banking mandates.

In personal banking, we continue to focus on helping make money make sense for our customers. Leveraging the success of the BMO SmartSteps program, we have developed Harris Helpful Steps. Launching in June via an aggressive multichannel integrated marketing and sales campaign, the program delivers five simple steps to help consumers save more, spend smarter and take control of their finances.

On April 23, 2010, we announced the acquisition of certain assets and liabilities of a Rockford, Illinois-based bank from the Federal Deposit Insurance Corporation (FDIC). The acquisition was effective immediately. The 52 branches of the bank reopened as Harris branches the following day. The acquisition adds approximately US$2.2 billion in deposits and US$2.5 billion in assets. It provides an excellent strategic fit that accelerates our growth strategy, adding quality locations and a valued customer base that expands our branch network into communities in northern Illinois and southern Wisconsin where we already have a strong and growing commercial banking presence. As is normal with acquisitions, we are addressing overlap in operations and locations to achieve synergies.

Private Client Group (PCG)
Net income was $118 million, an increase of $46 million or 64% from the same quarter a year ago.

PCG net income, excluding the insurance business, was $73 million, up $31 million or 79% from a year ago. Insurance net income was $45 million for the quarter, up $15 million or 43% from a year ago, due to organic growth and the $8 million incremental benefit from the BMO Life Assurance acquisition. PCG revenue grew by $91 million or 19% primarily as a result of improved equity markets and the success of our focus on attracting new client assets, which has resulted in revenue growth across all our businesses. The BMO Life Assurance acquisition also contributed to revenue growth. The cash productivity ratio of 71.2% improved 800 basis points from the prior year.

Assets under management and administration improved by $45 billion or 20% year over year, after adjusting to exclude the impact of the weaker U.S. dollar.

PCG launched six new mutual fund portfolios of Exchange Traded Funds (ETFs) in the quarter, giving investors broader choice and greater access to the growing ETF market. The new offerings include two tactically managed funds and four strategically managed risk-differentiated portfolios, providing access to a portfolio of ETFs in one simple investment solution, in a mutual fund structure with which many investors are familiar.

BMO Capital Markets
BMO Capital Markets has built on its good first quarter performance with a strong second quarter, earning net income of $259 million, up $71 million or 38% from a year ago. Our return on equity was 24.8%, compared to 12.8% a year ago. Revenue increased $186 million or 27% to $864 million. Our revenue generation continued to benefit from our client focus and our diversified portfolio of businesses. Trading revenues were significantly higher than in the prior year as revenues a year ago were lowered by losses related to our Canadian credit protection vehicle. Investment securities gains were positive this year whereas the prior year included charges related to the weaker capital markets environment. Corporate lending revenue fell due to significantly reduced asset levels and lower fees. Investment banking performance was also softer than a year ago, although activity is expected to increase due to our strong pipeline.

During the quarter, BMO Capital Markets was recognized for its focus on client service by being named the world's Best Metals & Mining Investment Bank by Global Finance magazine, an acknowledgement of our experience and deep sector knowledge. Our Foreign Exchange group also won the Most Improved Overall Market Share award in the Euromoney FX survey, the benchmark poll for the foreign exchange industry. BMO Capital Markets continued to upgrade talent across various product areas, including securities lending, leveraged finance, mergers and acquisitions, sales and trading, research and equity and debt capital markets to position our businesses for future growth.

BMO Capital Markets was involved in 119 new issues in the quarter including 25 corporate debt deals, 36 government deals, 53 common equity transactions and five issues of preferred shares, raising $39 billion.

Corporate Services
Corporate Services incurred a net loss in the quarter of $74 million. Results were $249 million better than in the prior year due to improved revenues, reduced expenses and lower provisions for credit losses. Expenses decreased as the prior year included $118 million of severance costs. Provisions for credit losses charged to Corporate Services were reduced by $187 million. BMO employs a methodology for segmented reporting purposes whereby expected credit losses are charged to the client operating groups, and the difference between expected losses and actual losses is charged (or credited) to Corporate Services.

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

Caution Regarding Forward-Looking Statements
Bank of Montreal's public communications often include written or oral forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the safe harbour provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for 2010 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, and the results of or outlook for our operations or for the Canadian and U.S. economies.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in the countries in which we operate; interest rate and currency value fluctuations; changes in monetary policy; the degree of competition in the geographic and business areas in which we operate; changes in laws; judicial or regulatory proceedings; the accuracy and completeness of the information we obtain with respect to our customers and counterparties; our ability to execute our strategic plans and to complete and integrate acquisitions; critical accounting estimates; operational and infrastructure risks; general political conditions; global capital market activities; the possible effects on our business of war or terrorist activities; disease or illness that impacts on local, national or international economies; disruptions to public infrastructure, such as transportation, communications, power or water supply; and technological changes.

We caution that the foregoing list is not exhaustive of all possible factors. Other factors could adversely affect our results. For more information, please see the discussion on pages 32 and 33 of BMO's 2009 Annual Report, which outlines in detail certain key factors that may affect BMO's future results. When relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake to update any forward-looking statement, whether written or oral, that may be made, from time to time, by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for the periods ended on the dates presented and our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the performance of the Canadian and U.S. economies as well as overall market conditions and their combined effect on the bank's business, including those described under the heading Economic Outlook and Review, are material factors we consider when determining our strategic priorities, objectives and expectations for our business. In determining our expectations for economic growth, both broadly and in the financial services sector, we primarily consider historical economic data provided by the Canadian and U.S. governments and their agencies.

To view the rest of this news release consisting of:

Financial Highlights	click here
Management's Discussion and Analysis	click here
Unaudited Financial Statements	click here

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials
Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2009 Annual Report, this quarterly news release, presentation materials and a supplementary financial information package online.

Quarterly Conference Call and Webcast Presentations
Interested parties are also invited to listen to our quarterly conference call on Wednesday, May 26, 2010, at 2:00 p.m. (EDT). At that time, senior BMO executives will comment on results for the quarter and respond to questions from the investor community. The call may be accessed by telephone at 416-695-9753 begin_of_the_skype_highlighting            416-695-9753      end_of_the_skype_highlighting (from within Toronto) or 1-888-789-0089 begin_of_the_skype_highlighting            1-888-789-0089      end_of_the_skype_highlighting (toll-free outside Toronto). A replay of the conference call can be accessed until Monday, August 23, 2010, by calling 416-695-5800 begin_of_the_skype_highlighting            416-695-5800      end_of_the_skype_highlighting (from within Toronto) or 1-800-408-3053 begin_of_the_skype_highlighting            1-800-408-3053      end_of_the_skype_highlighting (toll-free outside Toronto) and entering passcode 4451142.

A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can be accessed on the site until Monday, August 23, 2010.