News Releases

P&C Canada Momentum Continues with Net Income Growing 10% to $444 Million

P&C U.S. Continues to Benefit from Improved Margins

PCG Posts Excellent Results, Growing Net Income by 38% to $153 Million

BMO Capital Markets Continues to Deliver Strong Performance

Tier 1 Capital Ratio Remains Strong, at 13.02%

Financial Results Highlights:

• Net income of $776 million, our highest ever, up $119 million or 18% from a year ago
• EPS¹ of $1.30 and cash EPS² of $1.32, up $0.18 or 16% and $0.19 or 17%, respectively, from a year ago
• Return on equity of 15.7%, up from 14.3% a year ago
• Revenue growth of 10.6%, with a productivity ratio of 61.2%
• Provisions for credit losses of $248 million, down $85 million from a year ago and $5 million from the previous quarter
• Pre-Provision, Pre-Tax² (PPPT) contribution of $1,300 million, our highest ever

Toronto, March 1, 2011 – For the first quarter ended January 31, 2011, BMO Financial Group reported net income of $776 million or $1.30 per share. There was strong performance in each of the operating groups.

Today, BMO announced a second quarter 2011 dividend of $0.70 per common share, unchanged from the preceding quarter and equivalent to an annual dividend of $2.80 per common share.

"The investments we have made in the customer experience over the past four years are differentiating BMO in the marketplace and driving strong growth in our personal and commercial banking, wealth management and capital markets businesses," said Bill Downe, President and Chief Executive Officer, BMO Financial Group. "Customers are paying more attention to their finances and this aligns with our core strengths – helping customers maintain balance when it comes to controlling spending, growing savings, borrowing smartly and investing wisely.

"P&C Canada continues to show good momentum, generating strong revenue growth in our personal and commercial businesses, driven by volume growth across most products and improved net interest margin.

"BMO Capital Markets had strong growth in both net income and revenue with good performance in investment banking, where mergers and acquisitions revenue and debt underwriting fees were up appreciably from a year ago.

"Private Client Group produced excellent results with net income up substantially from a year ago. During the quarter, we announced our agreement to acquire Hong Kong-based Lloyd George Management, a boutique asset manager that provides the scale for further expansion of BMO Asset Management and bolsters our portfolio management capabilities in Asian and emerging markets.

"Adjusting for the impact of impaired loans and acquisition costs, results in P&C U.S. were consistent with the same quarter a year ago. Deposits increased 16% year over year due to growth in our commercial segment and the impact of the Rockford, Illinois-based bank transaction, while our personal segment had solid operating leverage, driven by revenue growth, and net interest margins improved in both businesses.

"Our operating businesses are performing well. Their good performance together with our strong balance sheet, liquidity and capital position, give us the flexibility and confidence to react to opportunities to grow our customer base and build the value of the bank for shareholders. During the quarter, we announced signing an agreement to acquire Milwaukee-based Marshall & Ilsley Corporation (M&I), transforming BMO's U.S. businesses by increasing scale and providing an entry point into attractive new markets. M&I has strong customer relationships, and we will build on their well-earned reputation for providing an exemplary customer experience. Since announcing the agreement, we have moved ahead with our plans to ensure a smooth integration for customers and employees. Upon closing, our North American ‘home market' will comprise more than 1,600 branches with new opportunities to grow our businesses," 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 and net income to income before provisions for credit losses, income taxes and non-controlling interest in subsidiaries (PPPT) are outlined in the Non-GAAP Measures section at the end of the attached Management's Discussion and Analysis, where such non-GAAP measures and their closest GAAP counterparts are outlined.

Operating Segment Overview
P&C Canada
Net income was a strong $444 million, up $41 million or 10% from a year ago. Improved profitability was driven by revenue increases in both our personal and commercial businesses from volume growth across most products and improved net interest margin.

There was strong revenue growth, driven in part by the inclusion of a full quarter of the Diners Club North American franchise financial results in the current year compared to a month in the prior year. Expense growth was also high, as expected, due to initiative spending, increased advertising and the Diners Club franchise impact.

We continue to enhance the customer experience and use our brand to help create a differentiated position built around Making Money Make Sense. We leveraged improvements in our performance management system and achieved greater customer loyalty year over year in both our personal and commercial businesses as measured by net promoter score, an objective measure of customer advocacy. This success is reflected in increases in the average number of product categories used by both personal and commercial customers.

In personal banking, including the retail cards business, we continue to improve the productivity of our sales and distribution network. The pace of new branch openings and renovations is accelerating, and we launched an innovative new branch format designed to encourage great conversations with our customers. We also made substantial improvements in our online banking customer experience with the launch of BMO MoneyLogic this quarter. This online personal financial management tool helps customers view, track and manage their money. Along with this tool, we launched BMO SmartSteps for Investing, an initiative designed to encourage more comprehensive investment conversations and promote our differentiated product offers that meet customers' needs.

In commercial banking, including corporate cards and the Diners Club business, our market share for loans to small- and medium-sized businesses has increased for four consecutive quarters and is up 60 basis points over last year. 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 continue to focus on BMO SmartSteps for Business and BMO Business Bundles, which are designed to help our customers choose the banking products that are right for their business. More frequent interactions with our customers have improved the quality of our customer conversations, driving higher commercial banking revenues.

P&C U.S. (all amounts in U.S. $)
Net income of $42 million decreased $6 million or 13% from $48 million a year ago, largely due to a higher provision for credit losses under BMO's expected loss provisioning methodology. The impact of solid revenue growth from increased deposit balances and improved loan spreads, which improved net interest margin, was offset primarily by increases in the impact of impaired loans and deposit insurance premiums.

On a basis that adjusts for the impact of impaired loans and acquisition integration costs, net income was $63 million, consistent with a year ago on a comparably-adjusted basis.

We continue to focus on the customer experience, as reflected in our high loyalty scores. Our retail net promoter score was 41 for the first quarter of 2011 and 40 in the prior quarter, and remains very strong compared to the scores of our major competitors. We launched Bulls and Blackhawks affinity debit cards in the quarter, an attractive option for chequing account customers who wish to demonstrate their team pride when making everyday transactions. New chequing account openings increased 20% year over year and new household account openings were 43% higher than in the prior year. In addition, our retention of existing customers has increased from the comparable quarter a year ago.

Last year's commercial client realignment positioned us for growth, creating a larger business by doubling the number of Harris professionals that service this market. A consistent focus on commercial clients' lending and cash management needs, coupled with a disciplined sales approach, is driving customer acquisition and resulting in deeper relationships through the success of cross-selling efforts. The business has good momentum, which is reflected in strong pipelines for new deposit and loan originations that are expected to lift loan utilization. Deposits have also grown significantly year over year.

Private Client Group (PCG)
Net income was $153 million, up a strong $42 million or 38% from the same quarter a year ago. Private Client Group net income, excluding the insurance business, was $81 million, up $14 million or 20% from a year ago as we continue to see growth across most of our businesses. Insurance net income was $72 million for the quarter, up $28 million or 66% primarily due to higher net premium revenue and the benefit of the effect of favourable market movements on policyholder liabilities.

Revenue was $661 million, reflecting an increase of $111 million or 20% with growth across all of our businesses, as we remain focused on continuing to deliver the high level of service and advice that our clients expect. The productivity ratio of 69.5% improved by 340 basis points from the prior year.

Assets under management and administration improved by $31 billion or 12% after adjusting to exclude the impact of the weaker U.S. dollar.

During the quarter, Private Client Group announced the signing of a definitive agreement to purchase Hong Kong-based Lloyd George Management, an independent investment manager specializing in Asian and global emerging markets. The deal will increase our assets under management by approximately US$6 billion and strengthen our portfolio management capabilities in those markets. The transaction is anticipated to close early in the third quarter of fiscal 2011.

In February 2011, BMO Guardian Funds received Lipper Awards for having delivered stronger and more consistent risk-adjusted performance than our peers in our BMO Guardian Asian Growth and Income Fund (three-year and five-year categories) and our BMO Guardian Global Technology Fund (one-year, five-year and ten-year categories).

For the fifth consecutive year, BMO Mutual Funds was the highest ranked organization for both English and French language services in Dalbar Inc's annual ranking of Canadian mutual fund companies.

BMO Capital Markets
Net income was $257 million, up $45 million or 21% from a year ago, marking a good start to the year. Revenue increased $120 million or 14% to $963 million. Our strong revenue performance was supported by our continued focus on clients, our diversified portfolio of businesses and improving economic conditions. Revenue growth was driven by increases in trading revenue, strong mergers and acquisitions activity and higher underwriting fees across our North American platform. While net income improved from both the previous quarter and the prior year, the improvement was dampened by a provision for prior periods' income taxes in the U.S. segment but results benefited from favourable market conditions.

During the quarter, our Global Securities Lending Business focus on customer service was recognized with a ranking of 17^th in the “Top 100 Institutions Globally”, as assessed by ISF Magazine. For the first quarter of 2011, BMO Capital Markets was ranked 1^st by Bloomberg in announced mergers and acquisitions transactions, and, based on our proprietary new issues database, ranked 3^rd in equity underwriting and 2^nd in debt underwriting. In fiscal 2010, we were ranked 1^st in mergers and acquisitions, 3^rd in equity underwriting and 4^th in debt underwriting.

BMO Capital Markets participated in 158 new issues in the quarter including 63 corporate debt deals, 23 government debt deals, 65 common equity transactions and seven issues of preferred shares, raising $50 billion.

Acquisition of Marshall & Ilsley Corporation
During the quarter, we announced the signing of a definitive agreement to acquire Marshall & Ilsley Corporation (M&I), a Milwaukee, Wisconsin-based bank holding company with consolidated assets of approximately US$51 billion, in a common stock-for-common stock transaction that valued M&I at approximately Cdn$4.1 billion at the time of the announcement. In addition, we have an agreement-in-principle with the U.S. Treasury Department to purchase the Troubled Asset Relief Program (“TARP”) preferred shares and warrants issued by M&I. The transaction provides the increased scale that we have long sought for our U.S. business. We considered the timing of such an acquisition to be right, given our confidence in our ability to generate attractive financial returns in our businesses both organically and through acquisitions, our strong balance sheet and capital position, increased regulatory clarity and an improving economic environment. The transaction is expected to close in the third quarter of fiscal 2011, subject to customary closing conditions including regulatory approvals and the approval of M&I's shareholders.

The combination of M&I with our existing U.S. operations would more than double our U.S. branch count to almost 700 and assets under management and administration to US$309 billion. Our U.S. on-balance sheet assets would increase by approximately 44% (based on average fourth quarter assets) and annual U.S. revenues would be approximately US$5 billion. These pro-forma numbers are based on financial positions and results as at or for the years ended October 31, 2010 for BMO and December 31, 2010 for M&I.

The acquisition provides an excellent strategic, financial, and cultural fit, transforming and strengthening our U.S. retail and commercial banking and wealth management businesses by increasing scale and providing a strong entry point into new and attractive markets. The combined businesses would have top five or better retail deposits market shares in attractive, contiguous Midwest markets. The six Midwest states where we will have a significant footprint together have GDP and a population comparable to Canada's and, as such, our U.S. market will be as large as our Canadian domestic market. Our U.S. customers and communities will benefit from the combination of two organizations with complementary businesses and capabilities, a comparable focus on providing an excellent customer experience and a long history of supporting their shareholders' interests. The combination provides the opportunity to leverage the greater strengths of each organization.

Both organizations have considerable experience with integrating acquired businesses. Preparation for integration is well underway and will be overseen by a dedicated project integration management office. At the time of the announcement, we indicated that we anticipated cost savings of $250 million and we are continuing to pursue additional expense saving opportunities. We also expect there to be opportunities to add to revenues through expanded access to existing and new markets with increased brand awareness.

We currently anticipate that we may complete a common share offering of less than $400 million prior to the closing of the transaction, down from the $800 million announced on December 17.

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 2011 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.

With respect to the M&I transaction, such factors include, but are not limited to: the possibility that the proposed transaction does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions; the anticipated benefits from the proposed transaction such as it being accretive to earnings, expanding our North American presence and synergies are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations (including changes to capital requirements) and their enforcement, and the degree of competition in the geographic and business areas in which M&I operates; the ability to promptly and effectively integrate the businesses of M&I and BMO; reputational risks and the reaction of M&I's customers to the transaction; diversion of management time on merger-related issues; and increased exposure to exchange rate fluctuations. A significant amount of M&I's business involves making loans or otherwise committing resources to specific companies, industries or geographic areas. Unforeseen events affecting such borrowers, industries or geographic areas could have a material adverse effect on the performance of our integrated U.S. operations.

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 29, 30, 61 and 62 of BMO's 2010 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.

In calculating the pro-forma impact of Basel III on our regulatory capital and regulatory capital ratios, we have assumed our interpretation of the proposed rules announced by the Basel Committee on Banking Supervision (BCBS) as of this date and our models used to assess those requirements are consistent with the final requirements that will be promulgated by BCBS and the Office of the Superintendent of Financial Institutions Canada (OSFI). We have also assumed that the proposed changes affecting capital deductions, risk-weighted assets, the regulatory capital treatment for non-common share capital instruments (i.e. grandfathered capital instruments) and the minimum regulatory capital ratios are adopted as proposed by BCBS and OSFI. We also assumed that existing capital instruments that are non-Basel III compliant but are Basel II compliant can be fully included in such estimates. The full impact of the Basel III proposals has been quantified based on our financial and risk positions at January 31 or as close to January 31 as was practical. The impact of IFRS conversion on our capital ratios is based on the analysis completed as of October 31, 2010. In calculating the impact of M&I and LGM on our capital position, our estimates reflect expected RWA and capital deductions at closing based on anticipated balances outstanding and credit quality at closing and our estimate of their fair value. It also reflects our assessment of goodwill, intangibles and deferred tax asset balances that would arise at closing. The Basel rules could be subject to further change, which may impact the results of our analysis. In setting out the expectation that we will be able to refinance certain capital instruments in the future, as and when necessary to meet regulatory capital requirements, we have assumed that factors beyond our control, including the state of the economic and capital markets environment, will not impair our ability to do so.

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 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:

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials
Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2010 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 Tuesday, March 1, 2011, at 2:00 p.m. (EST). At that time, senior BMO executives will comment on results for the quarter and respond to questions from the investor community. The call may be accessed by telephone at 416-695-9753 (from within Toronto) or 1-888-789-0089 (toll-free outside Toronto). A replay of the conference call can be accessed until Tuesday, May 24, 2011, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering passcode 6850310.

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 Tuesday, May 24, 2011.

Media Relations Contacts
Ralph Marranca, Toronto, ralph.marranca@bmo.com, 416-867-3996
Ronald Monet, Montreal, ronald.monet@bmo.com, 514-877-1873

Investor Relations Contacts
Viki Lazaris, Senior Vice-President, viki.lazaris@bmo.com, 416-867-6656
Terry Glofcheskie, Director, terry.glofcheskie@bmo.com, 416-867-5452
Andrew Chin, Senior Manager, andrew.chin@bmo.com, 416-867-7019

Chief Financial Officer
Russel Robertson, Chief Financial Officer
russ.robertson@bmo.com, 416-867-7360

Corporate Secretary
Blair Morrison, Senior Vice-President, Deputy General Counsel,
Corporate Affairs and Corporate Secretary
corp.secretary@bmo.com, 416-867-6785

Annual Meeting 2011
The next Annual Meeting of Shareholders will be held on Tuesday, March 22, 2011, in Vancouver, British Columbia.