BMO Financial Group Reports Second Quarter Earnings

BMO Financial Group Reports Second Quarter Net Income of $671 million, Up 3.1% ($20 million) from a year ago. Results Include $90 million in After-Tax Losses Related to Commodities Trading

P&C Canada Reports Strong Quarterly Net Income Growth of 24% from a year ago

After a Restatement of the First Quarter’s Results, BMO’s Year-to-Date Net Income was $1,019 million, Down 19% ($238 million) from a year ago. Year-to-Date Results Include $327 million in After-Tax Losses Related to Commodities Trading and an $88 Million After-Tax Restructuring Charge

Performance Highlights:

Second Quarter 2007 Compared with Second Quarter 2006:

• Net income of $671 million, up $20 million or 3.1%
• EPS¹ of $1.29 and cash EPS² of $1.31, both up $0.04 or 3.2%
• ROE of 18.3%, compared with 19.3% last year
• Results in the second quarter were affected by previously-announced commodities trading losses of $171 million, which, net of reduced performance-based compensation and income taxes, lowered net income by $90 million ($0.18 per common share³)
• Excluding the above items, net income was $761 million, up $110 million or 17%, and EPS was $1.47, up $0.22 or 18%, with revenue growth of 9.6% and expense growth of 5.6%

Operating Group Net Income:

• P&C Canada up $63 million or 24% to $324 million, due to strong performance in core businesses, a $26 million ($23MM after-tax) insurance gain and an investment security gain
• P&C U.S. down $1 million or 4% to $27 million in a difficult economic and competitive environment, benefiting from active cost management
• Private Client Group up $4 million or 5% to $101 million, the second-highest quarterly earnings ever
• BMO Capital Markets down $48 million or 19% to $199 million. Excluding the net impact of commodities losses, net income rose $42 million or 17% to $289 million, with broad-based growth across other businesses

Year-to-Date 2007 Compared with a Year Ago:

• Net income of $1,019 million, down $238 million or 19%
• EPS of $1.96 and cash EPS of $1.99, down $0.46 or 19%, and $0.47 or 19% respectively
• ROE of 13.7%, compared with 18.6% last year
• Net income and EPS were reduced by the year-to-date net impact of $327 million ($0.64 per share) of commodities trading losses and a $135 million restructuring charge ($88 million after tax and $0.17 per share) recorded in the first quarter
• Tier 1 Capital Ratio remains strong at 9.67%

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

2 The adjustments that change results under generally accepted accounting principles (GAAP) to cash results and GAAP revenue and income taxes to a taxable equivalent basis (teb) are outlined in the Non-GAAP Measures section in the Financial Performance Review, where all non-GAAP measures and their closest GAAP counterparts are outlined. Revenues and income taxes in the financial statements are stated in accordance with GAAP. Otherwise, all revenues and income taxes and measures that include revenues or income taxes in this document are stated on a taxable equivalent basis.

3 Results stated on a basis that excludes commodities trading losses and/or the first quarter restructuring charge are non-GAAP measures. Please see the non-GAAP Measures section.

Please note that all financial data for the first quarter of 2007 in this document has been restated to include the effects of commodities trading losses that relate to that quarter, unless otherwise noted.

Good Underlying Performance in the Second Quarter

Toronto, May 23, 2007 – BMO Financial Group reported net income of $671 million for the second quarter ended April 30, 2007, or $1.29 per share. Results included an after-tax charge of $90 million, or $0.18 a share, for previously-announced commodities trading losses.

Excluding the net impact of the commodities trading losses, net income was $761 million or $1.47 per share. On this basis, revenue grew 9.6% from a year ago, net income improved by $110 million, or 17%, and operating leverage improved 400 basis points.

Earnings increased 24% in P&C Canada as strong revenue growth significantly outpaced expense growth. Broad-based revenue growth in BMO Capital Markets also outpaced expense growth by a wide margin as earnings grew 17% excluding the impact of the commodities losses. Net income increased 5.2% in Private Client Group as it earned its second-highest earnings ever. P&C U.S. earnings were relatively stable in a challenging economic and competitive environment.

Net Income Summary

“The commodities trading losses lowered what would otherwise have been good second quarter results for BMO, as P&C Canada delivered strong performance,” said Bill Downe, President and Chief Executive Officer of BMO Financial Group.

On May 17, 2007, we announced that BMO would be recording $680 million of commodities trading losses which, net of a $120 million reduction in performance-based compensation and reduced income taxes, lowered net income by $327 million ($0.64 per share). The loss relates to the use of a more appropriate market-based methodology in the valuation of the commodities portfolio and, for our positions, the market becoming increasingly illiquid with volatility dropping to historically low levels. Previously, the portfolio had been marked to market each day by traders and the valuations confirmed independently, primarily by our principal external broker on a monthly basis. As our natural gas portfolio grew in the first few months of fiscal 2007, we sought additional verification of the valuations from other independent sources. Management subsequently initiated an external investigation of the trading activity which resulted in concerns with the reliability of quotes received from the principal external broker. At that time, we suspended our business relationship with the broker, pending the results of the external review.

The investigation determined that the losses relate to both the first and second quarters of 2007. As a consequence, for the first quarter of 2007, we have restated our results to record commodities trading losses of $509 million which, net of an $87 million reduction in performance-based compensation and reduced income taxes, lowered net income in the first quarter by $237 million ($0.46 per share). In the second quarter, we have recorded commodities trading losses of $171 million which, net of a $33 million reduction in performance-based compensation and reduced income taxes, lowered net income in the current quarter by $90 million ($0.18 per share). Please refer to Note 2 to the attached unaudited consolidated financial statements.

BMO’s commodities portfolio is now more appropriately marked-to-market as of April 30, 2007, based on a completed valuation review. We are continuing our investigation of the facts and circumstances surrounding these mark-to-market commodities trading losses including a review to determine whether any potential irregularities in trading and valuation took place. Given the size and complexity of the portfolio, it could experience subsequent significant mark-to-market gains and losses due to repositioning of the portfolio and market volatility. However, the ultimate orderly realization over time is not expected to generate any further large economic gain or loss on the portfolio. Please see the Caution Regarding Forward-Looking Statements.

“We have reduced the risk in this portfolio by approximately a third from its peak,” added Mr. Downe. “We have a new management team in place and risk limits have been reduced. Our capital remains very strong, with a Tier 1 Capital Ratio of 9.67%, the impact of the trading losses having lowered the ratio by 19 basis points.”

The foregoing adjustments were recorded in BMO Capital Markets (formerly referred to as Investment Banking Group), primarily in its U.S. operations. As a result, BMO Capital Markets net income for the second quarter was $199 million compared with $247 million a year ago and a net loss of $18 million on a restated basis in the first quarter. Its net income for the year to date was $181 million, compared with $469 million a year ago.

We recorded a restructuring charge of $135 million in the first quarter and are proceeding with implementing the associated changes. We have approximately 50 initiatives targeted at improving the efficiency and effectiveness of the organization. When fully implemented, we anticipate approximately 1,000 fewer full-time positions, primarily in non-customer-facing areas. The initiatives are targeted to reduce our run-rate expense by $300 million, half of which is expected to be achieved by the end of fiscal 2007.

“While the commodities losses were a major disappointment, we saw increasing operating momentum across most of our businesses and we’re making good progress on our priorities,” concluded Downe. “We remain focused on our strategies, including our goal of Harris becoming the leading personal and commercial bank in the U.S. Midwest.”

Operating Segment Overview

P&C Canada
Net income increased $63 million or 24% from a year ago to $324 million. There was solid top-line growth in each of the personal, commercial and cards businesses, while expenses reflected the addition of front-line sales and service staff in the latter half of 2006 and higher depreciation associated with last year’s initiatives. Results included an insurance gain and an investment security gain.

Relative to the first quarter, net income increased $32 million or 11%. There was good revenue growth, particularly in the personal business, despite having three fewer days in the current quarter and a modest decline in net interest margin, while expenses were slightly higher. The insurance and investment security gain contributed to improved revenues.

In personal banking, there was growth in most products, particularly higher-spread loans and cards as we continue to focus on improving the customer experience and strengthening relationships. Personal loans grew a strong 9.5% from a year ago and market share improved year-over-year and relative to the first quarter. Mortgage growth slowed with third party mortgages and broker balances declining from the first quarter as anticipated, as we re-focus our efforts on proprietary channels and building relationships with customers. We are aggressively targeting growth in personal deposits through simplified products, streamlined account opening and an improved customer experience.

In commercial banking, there was continued good growth in loans and deposits. Loans grew 6.7% from a year ago with growth in all divisions. We continue to view this as an area of strength as we rank second in Canadian business banking market share and, with our integrated approach to client service and broad spectrum of products, we are building on our competitive strength to be a market leader in commercial lending.

P&C U.S.
Net income decreased $1 million from a year ago to $27 million, while absorbing $5 million of First National Bank & Trust (FNBT) integration costs. Revenue and expense growth were attributable to the acquisition.

Relative to the first quarter, net income fell by $2 million or 3.9%. Revenue increased due to the acquisition of FNBT. Excluding the impact of FNBT, non-interest expenses were down slightly. Net interest margin was slightly lower but appears to be stabilizing.

We continue to operate under somewhat difficult economic and market conditions. In this environment, we have chosen to manage costs by actions such as reducing personnel costs and slowing down new branch openings.

There have been significant ongoing developments surrounding a potential change in the ownership of one of our major competitors in the Chicago area. Different ownership may present challenges, but may also present opportunities. We are monitoring developments closely.

Private Client Group
Net income increased $4 million or 5.2% from a year ago to $101 million. Revenue increased $31 million or 6.5% on broad-based growth. Expenses increased, primarily due to higher revenue-based costs and continued investment in our sales force, new products, technology and infrastructure to deepen client relationships and drive future revenue growth.

Relative to the first quarter, net income increased $6 million or 7.9%. There was moderate revenue growth and expenses were relatively unchanged. Expenses in the first quarter were elevated by stock-based compensation costs for employees eligible to retire.

During the 2007 RSP season, BMO Mutual Funds generated record net sales, up 22% over the prior year.

We introduced enCircle^®EXEC, an all-in-one service to manage the financial affairs of busy professionals by providing access to professional assistance through concierge and lifestyle services.

The group continues to be recognized for its products and services. Guardian Group of Funds Asian Growth and Income Fund earned a Lipper Award for excellence in delivering consistently strong risk-adjusted performance relative to its peers.

BMO Capital Markets
As explained, results were affected by commodities trading losses. Excluding the impact of those losses, net income increased $42 million or 17% from a year ago. On a similarly-adjusted basis, revenue increased $94 million or 13%. There was favourable performance in many product areas. There were strong increases in equity underwriting activity and merger and acquisition fees. There were higher revenues from increased corporate banking assets, consistent with the group’s strategy, as well as increases in commissions, loan fees, securities gains and collections on previously-impaired loans. Equity trading revenues also increased.

Excluding the impact of the commodities trading losses in both periods, net income rose $70 million or 32% from the first quarter on good revenue growth in other product areas, including equity underwriting, mergers and acquisitions and securities commissions.

During the quarter, BMO Capital Markets continued to demonstrate its Canadian leadership in high-return fee businesses. Although volumes were down slightly from comparative quarters, our investment banking revenues were much stronger. We participated in 120 new issues including 31 corporate debt deals, 7 issues of preferred shares, 66 common equity transactions and 16 government debt issues, raising a total of $35.4 billion. We also acted as financial advisor on several significant M&A transactions.

Performance Targets
Given the significance of the commodities trading losses incurred this year, it will be extremely challenging to achieve most of our annual financial targets. We will continue to monitor our performance relative to our annual targets, but will also monitor performance on a basis that excludes the impact of the announced commodities trading losses, to provide a checkpoint on the success of growing our businesses and meeting our strategic objectives.

The above table contains 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 harbor’ 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 2007 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 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 28 and 29 of BMO’s 2006 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.

Assumptions about the performance of the Canadian and U.S. economies in 2007 and how that will affect our businesses were material factors we considered when setting our strategic priorities and objectives and in determining our financial targets, including provisions for credit losses. Key assumptions included that the Canadian and U.S. economies would expand at a moderate pace in 2007 and that inflation would remain low. We also assumed that interest rates in 2007 would remain little changed in Canada but decline in the United States and that the Canadian dollar would hold onto its value relative to the U.S. dollar. The Canadian dollar has strengthened relative to the U.S. dollar, particularly late in the second quarter, but we continue to believe that our other assumptions remain valid. We have continued to rely upon those assumptions and the views outlined in the following Economic Outlook in considering our ability to achieve our 2007 targets. 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. Tax laws in the countries in which we operate, primarily Canada and the United States, are material factors we consider when determining our sustainable effective tax rate.

Assumptions about the performance of the natural gas and crude oil commodities markets and how that will affect the performance of our commodities business were material factors we considered when establishing our estimates of the future performance of the commodities trading portfolio set out in this document. Key assumptions included that commodities prices and implied volatility would be stable and our positions would continue to be managed with a view to lowering the size and risk level of the portfolio.

To view the rest of this news release consisting of:

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials
Interested parties are invited to visit our web site at www.bmo.com/investorrelations to review this quarterly news release, presentation materials and a supplementary financial information package online. Copies of these documents are also available at BMO Financial Group’s offices at 100 King Street West, 18^th Floor, 1 First Canadian Place, Toronto, Ontario, M5X 1A1.

Quarterly Conference Call and Webcast Presentations
Interested parties are also invited to listen to our quarterly conference call on Wednesday, May 23, 2007 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 (from within Toronto) or 1-888-789-0089 (toll-free outside Toronto). A replay of the conference call can be accessed until Wednesday, June 6, 2007 by calling 416-641-2196 (from within Toronto) or 1-888-742-2491 (toll-free outside Toronto) and entering passcode 7573.

A live webcast of the call can be accessed on our web site at www.bmo.com/investorrelations. A replay can be accessed on the site until Monday, August 27, 2007.

Media Relations Contacts
Ralph Marranca, Toronto, ralph.marranca@bmo.com, 416-867-3996
Ronald Monet, Montreal, ronald.monet@bmo.com, 514-877-1101

Investor Relations Contacts
Viki Lazaris, Senior Vice-President, viki.lazaris@bmo.com, 416-867-6656
Steven Bonin, Director, steven.bonin@bmo.com, 416-867-5452
Krista White, Senior Manager, krista.white@bmo.com, 416-867-7019

Chief Financial Officer
Karen Maidment, Chief Financial and Administrative Officer, karen.maidment@bmo.com, 416-867-6776

Corporate Secretary
Sharon Sandall, Acting Secretary, Corporate and Legal Affairs, corp.secretary@bmo.com, 416-867-6785