Bank Of Montreal · TSX:BMO
Bank Of Montreal — BMO Financial Group — Investor Day (June 2012)
107 slides from Bank Of Montreal's investor day presentation, Jun 26, 2012
Slide 1: U.S. Investor Day
U.S. Investor Day June 26, 2012
Slide 2: Forward looking statements & non-GAAP measures
Forward looking statements & non-GAAP measures 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 sec
Slide 3: Today's Agenda
Today’s Agenda Introduction - Sharon Haward-Laird, Head, Investor Relations Opening remarks – Bill Downe, President and Chief Executive Officer Business group presentations and Q&A BMO Capital Markets – Tom Milroy, CEO Private Client Group – Gilles Ouellette, President and CEO Personal &
Slide 4: Strategic Overview - Bill Downe
U.S. Investor Day Strategic Overview Bill Downe President & Chief Executive Officer BMO Financial Group
Slide 5: BMO's North American footprint is a competitive advantage
BMO’s North American footprint is a competitive advantage Source: BMO Economics, June 8, 2012 U.S. Investor Day June 2012 4
Slide 6: BMO Capital Markets
BMO Capital Markets U.S. Investor Day U.S. Investor Day June 2012 BMO Capital Markets 5
Slide 7: Today's Agenda: BMO Capital Markets
Today’s Agenda BMO Capital Markets Tom Milroy Strategic Overview CEO, BMO Capital Markets U.S. Investment & Perry Hoffmeister Corporate Banking Head of U.S. I&CB Business & Strategic Overview U.S. Equities Alan Tannenbaum Business & Strategic Overview Head of U.S. Equities U.S. Investor Day Ju
Slide 8: BMO Capital Markets Strategic Overview
BMO Capital Markets Strategic Overview Tom Milroy Chief Executive Officer U.S. Investor Day June 2012 BMO Capital Markets 7
Slide 9: Key BMO Capital Markets U.S. Executives
Key BMO Capital Markets U.S. Executives Tom Milroy Chief Executive Officer Perry Alan Debbie Lyle Luke Hoffmeister Tannenbaum Rechter McCoy Seabrook Managing Head of U.S. Managing Director Head of Debt Investment & Head of U.S. Director Public & Financial Corporate Equities FX Group Finance & Produc
Slide 10: Key Takeaways
Key Takeaways Goal to be the premier U.S. mid-cap investment and corporate bank supported by a full service distribution platform High quality investment in the U.S. U.S. strategy taking hold Target ROE in mid to low teens without outsized volatility in U.S. U.S. Investor Day June 2012 BMO C
Slide 11: BMO Capital Markets is a top ranked investment bank
BMO Capital Markets is a top ranked investment bank Revenue by Operating Group1 (Q2 2012) BMO Capital Markets Best Investment Bank 21% Canada, 2012 59% Best Metals and Mining 20% Personal & Commercial Investment Bank for third Banking year in a row Private Client Group Adjusted2 Net Income by Operat
Slide 12: Proven financial track record
Proven financial track record Revenue by Business (Average Q3 2011 – Q2 2012) BMO Capital Markets Revenue and Adjusted1 Earnings ($CAD millions) I&CB 37.5% 62.5% $3,583 $3,299 Trading Products $3,278 $2,512 $1,561 Revenue by Geography (Average Q3 2011 – Q2 2012) International $815 $1,224 $816 $902 $
Slide 13: BMO CM: U.S. Financial Overview
BMO CM: U.S. Financial Overview US Dollars BMO CM U.S. P&L (last 12 months1) and Assets at Q2’12 Revenue $979 million Net Income $75 million Average Assets $93 billion Average Current Loans & Acceptances $8 billion Average Earning Assets $71 billion Operating segment results reported on an Expected
Slide 14: High Quality Balance Sheet
High Quality Balance Sheet BMO Capital Markets Average Assets ($CAD billions) Q2 2012 Average Assets by Category $249 $248 ($CAD billions) $238 $222 $216 $201 Cash Resources $26 Investment Securities $102 Reverse Repos $44 Net Loans & Acceptances $24 Derivatives1 $50 Other2 Assets $2 Total Assets $2
Slide 15: Enabling our clients to achieve their ambitions
Enabling our clients to achieve their ambitions Issuer Clients Canadian large corporates and governments U.S. mid-cap1 corporates as well as governments International clients that strengthen ISSUERS our North American core INVESTORS Investor Clients Mutual funds Pension funds Asset manag
Slide 16: Unified approach to client coverage
Unified approach to client coverage North American with International Reach 30 locations with over 2,100 professionals UNITED STATES/MEXICO: 972 FTE CANADA: 998 FTE SOUTH AMERICA: 6 FTE EUROPE: 121 FTE ASIA: 80 FTE AUSTRALIA: 7 FTE ATLANTA MEXICO CITY CALGARY RIO DE JANEIRO DUBLIN ABU DHABI MELBOURN
Slide 17: Broad offering supported by deep expertise
Broad offering supported by deep expertise Initial Public Offerings Mergers & Acquisitions Follow-on Offerings Strategic Advisory Convertible Securities Fairness Opinions Mezzanine Lending Takeover Defense Share Buybacks ADVISORY ADVISORY CORPORATE CORPORATE High-Yield Debt Val
Slide 18: Premier U.S. mid-cap investment and corporate bank
Premier U.S. mid-cap investment and corporate bank supported by a full service distribution platform Areas of Differentiation in the U.S. A highly rated, successful and trustworthy North American universal banking model Strong balance sheet Broad, integrated offering and top tier expertise to
Slide 19: Strategically invested in the U.S.
Strategically invested in the U.S. supporting broader North American platform Enhanced Fixed Income Grew U.S. Listed Equity Options Build out Developed Global Securities Lending capabilities distribution Deepened Leveraged Distribution platform platform, primarily in Continue to expand Equ
Slide 20: Strategically positioned for success in the U.S. going forward
Strategically positioned for success in the U.S. going forward Strategic Benefits Looking Ahead Full service North American platform for our Growth: clients Revenue: Above market growth rate Significant operating leverage without Expense: Moderate expense growth introducing outsized volati
Slide 21: U.S. Investment & Corporate Banking
U.S. Investment & Corporate Banking Business & Strategic Overview Perry Hoffmeister Head of U.S, I&CB U.S. Investor Day June 2012 BMO Capital Markets 20
Slide 22: Best of both worlds: boutique focus, bulge bracket expertise
Best of both worlds: boutique focus, bulge bracket expertise Boutiques Bulge Bracket Mid-Cap or Growth Focus Capital Strength Sector Expertise Full Product Capabilities Quality Research Broad Industry Coverage Differentiated Relationships Extensive Resources Senior-Level Attention Global Reach Produ
Slide 23: Mid-cap client coverage space is the most attractive segment
Mid-cap client coverage space is the most attractive segment I&CB U.S. Focus Small Cap Mid Cap Large Cap <$200 MM $200MM - $5B >$5B IB Fee Wallet $2,022 $27,589 $27,221 ‘10-’11 ($MM) % IB Fee Growth 53% 124% (2%) ‘10-’11 vs. 08–09 Mid-Cap Banks Mkt Share* %, ‘10-’11 66% 32% 23% Total # of Deals 2,65
Slide 24: U.S. I&CB strategy
U.S. I&CB strategy Alignment & Focus Objective: • Relationships To be the premier • Focus on key sectors • Become the valued advisor investment & • Lead with ideas/intellectual capital • ‘Surround’ the client with all the firm’s capabilities corporate bank in the • Support prioritized clients with U
Slide 25: U.S. mid-cap investment banking strategy is showing results
U.S. mid-cap investment banking strategy is showing results Highlights1: Monmouth Real Estate 24 M&A transactions completed YTD Investment Corporation Magnum Hunter Resources 12 transactions currently announced and $266 million $50 million $158 million Advisor on the Acquisition of Advisor on sa
Slide 26: Case Study: success in debt capital markets
Case Study: success in debt capital markets Significant Growth in Book-run Transactions YTD1 BMO has book-run $53B of transaction volume for our clients 55% increase over the same period in the prior year U.S. Energy High Yield league table ranking of #6 YTD1 2012 Comprehensive debt financing
Slide 27: Continue to execute focused strategy
Continue to execute focused strategy Focus on mid-cap market, strategic industries and core clients is a competitive advantage Differentiate through universal banking model, experienced bankers and deep, long-term relationships with clients Success measured by taking fee share, growing revenue
Slide 28: U.S. Equities
U.S. Equities Business & Strategic Overview Alan Tannenbaum Head of U.S Equities U.S. Investor Day June 2012 BMO Capital Markets 27
Slide 29: Full-Service Investment Bank
Full-Service Investment Bank CLIENT INVESTMENT FIXED FINANCIAL & EQUITIES FX INCOME PRODUCTS1 CORPORATE BANKING 1 Includes Commodities U.S. Investor Day June 2012 BMO Capital Markets 28
Slide 30: Full-Service Equities Franchise
Full-Service Equities Franchise Sales Top Ranking Trading 20 awards for stock picking and earnings estimates (2011) Research Canadian Research ranked Derivatives #1 or 2 for the past 31 years (2011) Stock Lending Moved from 20th to 16th overall New Issues ranking in U.S. Equity Research Corpor
Slide 31: World-class public equity distribution platform
World-class public equity distribution platform #1 overall Institutional Equity Franchise with the best reputation (Brendan Woods Canada survey) #1 or 2 ranked research for the past 31 years (Brendan Woods Canada survey) Economics team winners of Lawrence R. Klein award for economic forecastin
Slide 32: Progress Report
Progress Report Institutional Client Votes Agency Commission Market Share Average client vote ranking – US Overall agency market share – U.S. +14% +8 15 23 31 Yr End 2010 Yr End 2011 Original Rank Most Recent Objective 2010 Rank 2012 Target accounts agency market share – U.S. Improved client votes
Slide 33: Building on core strengths to capture higher market share
Building on core strengths to capture higher market share Market the full BMO Capital Markets platform Define great customer experience Building on core BMO strengths Leverage strengths in Research, Sales & Trading to capture higher Capture mind-share and market-share gains market share U.S.
Slide 34: Private Client Group
Private Client Group U.S. Investor Day
Slide 35: Today's Agenda: Private Client Group
Today’s Agenda Private Client Group Gilles Ouellette Strategic Overview President & CEO, Private Client Group U.S. Asset Management Barry McInerney Business & Strategic Overview Co-CEO BMO Global Asset Management U.S. Private Bank Terry Jenkins Business & Strategic Overview EVP and Head, BMO P
Slide 36: Private Client Group Strategic Overview
Private Client Group Strategic Overview Gilles Ouellette President and Chief Executive Officer
Slide 37: Key Takeaways
Key Takeaways PCG has a strong history of success in our businesses In the U.S., PCG is focused on leveraging our acquisitions, driving growth from our existing client base and maximizing our wider distribution capabilities Asset Management’s scale and capabilities will drive growth by leverag
Slide 38: Private Client Group Organization and U.S. Management Team
Private Client Group Organization and U.S. Management Team U.S. & International U.S. Private Bank Asset Management Barry McInerney Terry Jenkins U.S. Investor Day June 2012 Private Client Group 37
Slide 39: Private Client Group U.S. Financial Overview
Private Client Group U.S. Financial Overview LTM3 / Assets US Dollars 2011 1 YTD Q2’12 at Q2’12 Revenue $427 million $356 million $634 million Adjusted2 Net $53 million $57 million $96 million Income Adjusted2 80 % 74 % 75 % Productivity AUM $82 billion $85 billion $85 billion AUA $147 bil
Slide 40: M&I acquisition added strength to our U.S. position
M&I acquisition added strength to our U.S. position Immediate + = Impact of Acquisition Number of Private 29 28 57 3 new states Bank locations Personal Wealth 3 X the number 11,000 21,000 32,000 Accounts of accounts U.S. Assets Under 2 X our client $44 Billion $41 Billion $85 Billion Management1 ass
Slide 41: M&I strengthens our platform and prospects on multiple fronts
M&I strengthens our platform and prospects on multiple fronts Complementary Capabilities Harris / BMO US M&I Large wealth concentration in our key markets Private Banking & Financial Planning Focus Institutional trust services Asset Management Global Asset Management (retirement, custody, se
Slide 42: Clear direction for PCG U.S.
Clear direction for PCG U.S. Opportunities Priorities $1.8B GDP of Midwest M&I and CTC Consulting Large market greater than all Leverage market of Canada1 acquisitions Ensure successful platform and structure conversion Drive growth High net worth and mass ~200,000 mass affluent affluent L
Slide 43: U.S. Asset Management
U.S. Asset Management Business & Strategic Overview Barry McInerney Co-CEO, BMO Global Asset Management
Slide 44: Attractive U.S. asset management market
Attractive U.S. asset management market Deep pool of assets in U.S. $25 Trillion Large institutional, retail and high- net worth asset management opportunities in the U.S. Defined benefit plans in the U.S. remain a significant pool of assets and defined contribution plans fast $10 Trillion bec
Slide 45: Strong global asset management capabilities to compete
Strong global asset management capabilities to compete Global investment expertise Local teams across globe Award-winning mutual fund platform Award-winning BMO Retirement Services Institutional trust and custody services Strong internal distribution channels Private Bank Commercial
Slide 46: Global asset management presence with regional expertise
Global asset management presence with regional expertise Dublin London Montreal Milwaukee Toronto Beijing Chicago Boston Los Angeles Shanghai Palm Beach Abu Dhabi Miami Hong Kong Mumbai Singapore U.S. Investor Day June 2012 Private Client Group 45
Slide 47: Manufacturing supported by end-to-end asset management model
Manufacturing supported by end-to-end asset management model and global capabilities 2011 Lipper Asset Class Awards1 Global AUM over $100B, placing us in top 100 asset management firms worldwide World-class international, emerging markets and frontier equity capabilities Award winning and inno
Slide 48: Packaging leverages brand power and presence
Packaging leverages brand power and presence Power of the BMO brand Complete product offering Differentiated client experience Global website U.S. Investor Day June 2012 Private Client Group 47
Slide 49: Distribution channels provide opportunity
Distribution channels provide opportunity Internal and external opportunities Enhanced product focus through solutions-based approach ensuring we deliver the very best to our clients Expanded sales force focused on external channels U.S. Investor Day June 2012 Private Client Group 48
Slide 50: Clear direction for U.S. Asset Management
Clear direction for U.S. Asset Management Breadth of industry-leading products and services Solutions-based client offering supported by increased capabilities and broader array of high-yielding strategies Opportunities from leveraging multiple internal channels and external distribution throu
Slide 51: U.S. Private Bank
U.S. Private Bank Business & Strategic Overview Terry Jenkins EVP and Head, BMO Private Bank, U.S.
Slide 52: Attractive U.S. wealth management market
Attractive U.S. wealth management market $30 Trillion +8% 3.1MM Locations in key wealth markets 2.9MM across the U.S. Significant latent wealth opportunities in our P&C U.S. client base Competitive wealth business 2010 2011 2010 models in each client segment U.S. HNW U.S. Wealth Individuals1 M
Slide 53: Unique and competitive go-to-market model positioned for growth
Unique and competitive go-to-market model positioned for growth Centralized Expertise Advisory / Portfolio Financial Trust Banking Management Planning Illinois Missouri, Regional Team Approach Indiana Local Teams partner to deliver fully integrated client experience and Wisconsin, value proposition
Slide 54: Expanded U.S. Private Bank footprint
Expanded U.S. Private Bank footprint Footprint targets broad client base of ultra high net worth, high net worth and mass 1 affluent segments Core markets in the Midwest with concentration in Chicago, which has the 3rd largest high net worth population in the U.S.1 U.S. Private Bank Locations 57 Loc
Slide 55: Ultra High Net Worth segment - a leading Multi-Family Office provider
Ultra High Net Worth segment – a leading Multi-Family Office provider Top 5 largest multi- Differentiated client experience family offices in U.S.1 offered via multi-family office approach Ranked in top 10 for Quality business with scale quality of offering by Forbes, Leveraging distribution n
Slide 56: High Net Worth segment - strong sales disciplines
High Net Worth segment – strong sales disciplines and a competitive client experience Unique client experience Strong sales management disciplines 12th largest private bank Effective migration of clients across channels in the U.S1 History of strong client retention Attract and retain top
Slide 57: Mass Affluent segment - leveraging Premier Services
Mass Affluent segment – leveraging our retail partnership with Premier Services Enhanced client experience through launch of new go-to-market model Leverage existing P&C U.S. mass affluent client base Jointly-managed sales capabilities Early Results 4.5X 47% 56% Growth in closed Growth of new
Slide 58: Clear direction for U.S. Private Bank
Clear direction for U.S. Private Bank Strong wealth businesses across all client segments Differentiated client experience supported by strong BMO wealth offering Partnerships to leverage opportunities in P&C U.S. for additional growth; executing on high net worth and mass affluent models Co
Slide 59: Personal & Commercial Banking U.S.
Click to edit Personal & Commercial Master titleBanking style U.S. ClickInvestor U.S. to edit Master Day text styles Second level Third level • Fourth level • Fifth level
Slide 60: Today's Agenda: P&C U.S.
Today’s Agenda P&C U.S. Mark Furlong Strategic Overview President & CEO, BMO Harris Bank Personal & Business Banking Chris McComish Business & Strategic Overview EVP Personal & Business Banking Personal Banking Brad Chapin Mass Affluent Strategy EVP Personal & Business Banking Commercial Banki
Slide 61: P&C U.S. Strategic Overview
Click to edit Personal & Commercial Master titleBanking style U.S. Click to edit Strategic Overview Master text styles Second level Mark Furlong Third level • Fourth level President and Chief Executive Officer • Fifth level
Slide 62: Key Takeaways
Key Takeaways Strong, experienced leadership team and platform Leveraging strengths of both legacy franchises and BMO Financial Group Clear growth strategy putting the customer at the center of everything we do Detailed knowledge of our markets and competitors. . . we know how to compete S
Slide 63: Personal & Commercial Banking U.S. Management Team
Personal & Commercial Banking U.S. Management Team Mark Furlong President & Chief Executive Officer Terry Bulger Ann Chris Brad Dave Chief Risk Officer Benschoter McComish Chapin Casper Stephen Taylor Chief Financial Officer Personal & Personal & Commercial Headquarters Business Business Banking Ban
Slide 64: Personal & Commercial Banking U.S. Financial Overview
Personal & Commercial Banking U.S. Financial Overview US Dollars Revenue Last Twelve Months1 P&C U.S. (LTM1) Personal Commercial US$1.6B US$1.2B Revenue $2.8 B Net Income – Adjusted2 $563 MM Productivity – Adjusted2 59.1% Total Loans (as at Q2 2012) Total Loans3 $52.5 B Personal Commercial US$26.6B
Slide 65: Enviable scale and #3 market position in attractive U.S. Midwest
Enviable scale and #3 market position in attractive U.S. Midwest #3 Deposit share across our Midwest markets Illinois • Indiana • Kansas • Minnesota • Missouri • Wisconsin Midwest MSA* deposit market share(1) Branches(2) 1 U.S. Bancorp 11.6% 503 2 JPMorgan Chase 10.8% 607 3 BMO 9.7% 586 (3) 4 Wells
Slide 66: Market Demographics
Competitive position + market demographics = opportunity Milwaukee Other WI FL Chicago Madison MSAs Minneapolis St. Louis Kansas City Indianapolis Phoenix (1) markets Population (MM) 9.5 2.1 2.0 3.3 2.8 2.1 1.8 5.5 6.8 Market Demographics GDP ($B chained 2005 dollars) 476 108 72 181 116 86 93 206 23
Slide 67: M&I strengthens platform and prospects on multiple fronts
M&I strengthens platform and prospects on multiple fronts Complementary Capabilities Harris / BMO US M&I Food & Consumer Equipment Finance Commercial Asset Based Lending / Corporate Finance Agriculture Lending Banking Capital Markets capabilities Healthcare Mortgage servicing capabilit
Slide 68: We are the #1 and #2 bank in Wisconsin and Chicago
We are the #1 and #2 bank in our core markets of Wisconsin and Chicago respectively Chicago (Population 9.46MM, 3rd largest MSA out of 362 US MSAs) Cook County Outer Chicago(2) (Population 5.19MM, larger than the 10th largest MSA) (Population 4.11MM, larger than the 15th largest MSA) Total Total
Slide 69: Our other Midwest markets have good positions
Our other Midwest markets have good positions and provide strong opportunities for growth Indianapolis Minneapolis Population 1.76MM, 35th largest MSA out of 362 US MSAs Population 3.28MM, 16th largest MSA out of 362 US MSAs Total Total Deposit Total Total Deposit Deposit Branch Deposit Branch P
Slide 70: Our footprint strategy is tailored to market opportunity
Our footprint strategy is tailored to market opportunity Branch Share(1) Deposit Share(1) (Rank) (Rank) Strategic Approach Milwaukee/ 14.4% (1) 23.1% Madison Optimize network for Suburban 11.5% (2) profitability Chicago(2) 8.9% (2) Downtown 5.8% (4) 11.8% (2) Add distribution Chicago(3) (organic
Slide 71: Confident in ability to proactively manage headwinds
Confident in ability to proactively manage headwinds Advantaged with business-led recovery Pace of Focus on monitoring and risk management economic Rigorous analysis on new deals recovery Focus on growing share of wallet Strong market position and balance sheet Competitive Compete on val
Slide 72: Delivering on our business strategies
Delivering on our business strategies – delivering growth and strong returns Looking Ahead $1B net income from U.S. retail and wealth businesses in the medium-term P&C U.S. productivity ratio in mid to low 50’s A leading commercial bank in the U.S. Midwest Continued strong customer loyalty s
Slide 73: Focusing on key priorities
Focusing on key priorities Improve Personal & Business banking profitability Establish our position as the leading Commercial bank of the Midwest Achieve strong customer loyalty across all businesses Leverage North American scale Personal & Business Banking Commercial Banking North American
Slide 74: Personal & Business Banking Overview
Click U.S. P&C to edit – Personal Master &title Business style Banking Click to edit Business Master text & Strategic styles Overview Second level Third level Chris McComish • Fourth level EVP,• Personal Fifth level& Business Banking
Slide 75: Personal & Business Banking Overview
Personal & Business Banking Overview Retail Banking Over 2 million customers Revenue1 Branches 663 Branches 663 US$ 1.5B 1,369 ATMs Full multi-channel offering supported by size and strength of BMO Financial Group Call center with over 17MM calls/year 0.8B 280 Small Business/Business Banki
Slide 76: Personal Banking Loan Portfolio
Personal Banking Loan Portfolio Loans* US$26.6B (as at Q2 2012) Opportunities for growth across all personal, small business and business banking products Business Cards & Other Banking/Small 2% Mortgage * Business 28% New production and pipeline growth is 23% strong across most categories despi
Slide 77: In Personal Banking, we compete directly with many of the largest U.S. banks
In Personal Banking, we compete directly with many of the largest U.S. banks Market Branch Count 1 Strategic Approach Footprint 663 Regional – Superior customer experience through (incl. 7 in-store) 8 states relationship-based guidance and advice 1,002 National Convenience and product capability
Slide 78: We have significant competitive advantages
We have significant competitive advantages Our Customers Strong customer loyalty scores and high retention rates relative to largest competitors and comparable with local community banks Attractive customer base: over-indexing to mass affluent/higher net worth with very low customer attrition
Slide 79: Driving growth through customer experience
Driving growth through customer experience Competitive Retail NPS Q2 2012 Loyal customers stay longer 1 52 Community Banks Increasing retention 42 Legacy Harris* Loyal customers buy more 2 Increasing share of wallet 15 Large Banks Loyal customers make referrals 3 Legacy Harris – Retail NPS Inc
Slide 80: BMO Harris Bank market activity is strong
BMO Harris Bank market activity is strong Consumer Lending Mortgage Fundings: Up 20% Q2’12 Y/Y Mortgage Pipeline: Doubled Q2’12 Y/Y Home Equity Applications: Up 18% Q2’12 Q/Q Credit Card Applications: Doubled Q2’12 Y/Y Deposits & Payments Mobile banking Roll out legacy M&I technology to
Slide 81: BMO Harris Bank market activity is strong
BMO Harris Bank market activity is strong Small Business & Business Banking Q2’12 business banking pipeline more than double Q1’12 46 dedicated small business bankers BMO Harris Bank Business Banking was ranked #1 by Greenwich Associates in market penetration within its footprint in 2011 In
Slide 82: Clear direction to drive profitability
Clear direction to drive profitability Focusing on key segments (e.g., Mass Affluent) Driving customer experience focus across entire branch footprint Driving sales productivity and network effectiveness Increasing consumer lending share Leveraging technology across North American footprin
Slide 83: Mass Affluent Strategy
Click U.S. P&C to edit – Personal Master Banking title style Click Mass to edit Master Affluent text styles Strategy Second level Third level Brad Chapin • Fourth level EVP,• Personal Fifth level& Business Banking
Slide 84: Mass Affluent segment offers significant opportunity
Mass Affluent segment offers significant opportunity for BMO Harris Bank 1 Premier Services Client 2 Client Needs 3 Our Delivery Model 4 Measuring Success U.S. Investor Day June 2012 Personal & Commercial Banking U.S. 83
Slide 85: Mass Affluent profile: winning customers' share of wallet
Mass Affluent profile: winning customers’ share of wallet ...approximately 240,000 BMO Harris Bank households 20% fit our Premier Services customer profile … approximately 36,000 BMO 3% Harris Bank households hold over $250K with the Bank today Premier Services Client Profile … approximately 200,000
Slide 86: Premier Services clients told us what they value
Premier Services clients told us what they value1 76% of the mass affluent segment are underserved by current banking/financial Advisor knowledge planning models Have a plan – Have a plan moderately Dedicated point of contact satisfied - very satisfied 24% 37% Confidence about their future 39%
Slide 87: Strategic approach to managing customers' financial services needs
Strategic approach to managing customers’ financial services needs Personal Banking Other Mortgage Banking Banking Needs Premier Premier Banker Banker & Financial Advisor Financial Business Planning Banking Insurance U.S. Investor Day June 2012 Personal & Commercial Banking U.S. 86
Slide 88: Our mass affluent strategy consistently projects the value proposition
Our mass affluent strategy consistently projects the value proposition Value proposition enhanced by customer base that is generally skewed to a higher mass affluent heavy footprint than peers Value Proposition Provision of holistic financial plan Single point of service – based Premier Services
Slide 89: Building on a successful foundation of deepening customer relationships
Building on a successful foundation of deepening customer relationships 5.1X 3.2X 5.2X The average X X X relationship size of customers with assets Accounts per Avg. Retail Avg. Household Household Deposits ($000) Balance ($000) of $250K to $1MM is 1.9X significantly larger 4.1X 2.6X when served by
Slide 90: Pilot results are very encouraging
Pilot results are very encouraging Monthly sales and +46% 4.5X closed investments per Premier Banker have increased substantially in pilot markets Deposit & Loan Sales Closed Premier Investments Pre-pilot Pilot run-rate Performance U.S. Investor Day June 2012 Personal & Commercial Banking U.S. 89
Slide 91: Customers are excited about the Premier Services offering
Customers are excited about the Premier Services offering “It seems like at other institutions, everyone has their own agenda. A stock broker will tell you to leave all your money in the market, and others tell you to keep it all in the bank. I feel very comfortable with what we are doing with [our
Slide 92: Mass Affluent segment offers significant opportunity
Mass Affluent segment offers significant opportunity for BMO Harris Bank Strategic approach to managing customers’ financial services needs Mass Affluent segment provides a significant revenue opportunity to BMO Harris Bank Leverage our advantaged customer segment base Value Proposition: s
Slide 93: Commercial Banking Business & Strategic Overview
Click U.S. P&C to edit – Commercial Master titleBanking style Click to edit Business Master text & Strategic styles Overview Second level Third level Dave Casper • Fourth level EVP,• Commercial Fifth level Banking
Slide 94: Commercial Banking Overview
Commercial Banking Overview Sectors/Coverage Revenue3 Market Share Corporate Finance Dealer Finance Food & Consumer Equipment Finance US$ Financial Institutions Agriculture 1.2B Diversified Industries1 Institutional Commercial Real Businesses1 Wisconsin #1 Estate Treasury Managem
Slide 95: Commercial Banking Loan Portfolio
Commercial Banking Loan Portfolio Loans US$25.9B (as at Q2 2012) C&I book represents $19.6B or ~75% Run-off of commercial loan portfolio 13% Other CRE 1% Go Forward Diversified Go-forward CRE portfolio of $3.1B or 36% 12% ~12% Dealer Run-off portfolio of $3.3B is Finance approximately 80% CRE
Slide 96: Sector expertise expanded by the M&I acquisition
The range of our sector expertise in commercial banking has been expanded by the M&I acquisition Segments Footprint Clients Products Commercial Real Estate WI and IL are historical Businesses with revenue Business loans, including markets >$20MM asset based lending, Diversified Industries(1)
Slide 97: Three paths to growth among our Commercial segments
Three paths to growth among our Commercial segments 1 Continue national growth Corporate Finance Commercial Banking Financial Institutions Revenue Food & Consumer Treasury Management 2 Leverage footprint 45% 55% Diversified Industries National sectors Agriculture Regionally-focused Dea
Slide 98: We compete directly with a broad and varied set of commercial competitors
We compete directly with a broad and varied set of commercial competitors Market Footprint Strategic Approach National (Food & Consumer, RM centric model – typically Corporate Finance, Financial responsible for originating and Institutions, Engineering & maintaining client relationship Construct
Slide 99: We have significant sources of competitive advantage
We have significant sources of competitive advantage Against smaller players Sector Sector expertise delivered locally – “smartest expertise of the local” Balance sheet, financial strength, breadth of BMO Financial Group Against larger players Mid-market Local knowledge / access to senior
Slide 100: Claiming our competitive position and executing on our strategy
Claiming our competitive position and executing on our strategy Joint calls with local bankers, sector experts, and executive management Increased focus on prospecting by legacy M&I bankers New online resource center (with prominent Wall Street Journal partnership) highlighting BMO expertise t
Slide 101: Our Commercial Banking strategy is working
Our Commercial Banking strategy is working . . . Continued strong C&I loan growth with strong pipelines C&I Loan Balances US$B (as at) 19.6 18.8 17.4 17.3 Q3’11 Q4’11 Q1’12 Q2’12 U.S. Investor Day June 2012 Personal & Commercial Banking U.S. 100
Slide 102: Solidifying our position as a leading Midwest commercial bank
Solidifying our position as a leading Midwest commercial bank Deploying a unique operating model to deliver a differentiated value proposition Pursuing three “paths to growth” tailored to the starting positions of our segments Significantly increasing Treasury Management penetration of our cli
Slide 103: Closing Remarks - Tom Flynn
U.S. Investor Day Closing Remarks Tom Flynn Executive Vice President & CFO BMO Financial Group
Slide 104: M&I transforms our U.S. business and is going well
M&I transforms our U.S. business and is going well Complementary Capabilities Harris / BMO US M&I Food & Consumer Equipment Finance Asset Based Lending / Corporate Finance Agriculture Lending Personal & Capital Markets capabilities Healthcare Commercial Mortgage servicing capabilities
Slide 105: Cost synergy realization progressing ahead of schedule
Cost synergy realization progressing ahead of schedule Expect cost synergies of at least $400 million Realization ahead of schedule; expenses down ~$180 million on an annualized basis On track in key areas: Business model alignment Employee savings Systems and back office combination P
Slide 106: Wrap-up comments
Wrap-up comments BMO Capital Markets U.S. mid-cap focused strategy taking hold; target ROE in mid to low teens, within risk appetite Taking share, growing revenues and building profitability Private Client Group Leveraging our acquisitions, driving growth from our existing client base, and max
Slide 107: Investor Relations Contact Information
Investor Relations Contact Information www.bmo.com/investorrelations E-mail: investor.relations@bmo.com Fax: 416.867.3367 SHARON HAWARD-LAIRD Head, Investor Relations 416.867.6656 sharon.hawardlaird@bmo.com MICHAEL CHASE Director 416.867.5452 michael.chase@bmo.com ANDREW CHIN Senior Manager 416.867.