BMO Financial Group Reports Fourth Quarter Net Income

Results demonstrate the value of BMO’s diversified business mix and continued operating momentum in a difficult capital markets environment.

Performance Highlights:

Fourth Quarter 2007 Compared with Fourth Quarter 2006:

• Net income of $452 million, down $244 million or 35%
• EPS¹ of $0.87 and cash EPS² of $0.89, both down $0.48 or 36% and 35%, respectively
• Results in the quarter were reduced by significant items³ that lowered net income by $275 million or $0.55 per share. Results of a year ago were affected by a reduction in the general allowance which increased net income by $23 million or $0.04 per share
• Excluding these significant items⁴:
  • Net income of $727 million, up $54 million or 8.0%
  • EPS of $1.42 and cash EPS of $1.44, up $0.11 or 8.4% and 8.3%, respectively
• Strong tier 1 capital ratio, at 9.51%

Fiscal 2007 Compared with Fiscal 2006:

• Net income of $2,131 million, down $532 million or 20%
• EPS of $4.11 and cash EPS of $4.18, both down 20% or $1.04 and $1.05, respectively
• Return on equity of 14.4% reflecting core operating strength and diversification of businesses despite significant items in the year
• Results in the year were reduced by significant items⁴ that lowered net income by $787 million or $1.55 per share. Results of a year ago were affected by a reduction in the general allowance which increased net income by $23 million or $0.04 per share.
• Excluding these significant items:
  • Net income of $2,918 million, up $278 million or 10.5%
  • EPS of $5.66, up $0.55 or 10.8% and cash EPS of $5.73, up $0.54 or 10.4%
  • Return on equity of 19.8%

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 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 The significant items are shown in our Net Income Summary table on the following page.

4 Results stated on a basis that excludes commodities losses, charges related to deterioration in the capital markets environment, changes in the general allowance for credit losses and/or restructuring charges are non-GAAP measures. Please see the Non-GAAP Measures section.

Momentum Continues in Most Businesses

Toronto, November 27, 2007 – BMO Financial Group saw most of its businesses achieve strong results in the fourth quarter ended October 31, 2007 in a difficult capital markets environment.

“By focusing on our customers and delivering on our priorities, we were able to build solid momentum in most of our businesses. The quarter’s results led to record net income in fiscal 2007 for Personal & Commercial Banking Canada (P&C Canada) and Private Client Group,” said Bill Downe, President and Chief Executive Officer of BMO Financial Group. “Our businesses performed well in the quarter in the face of a difficult environment, which should pay off when market conditions improve.”

For the fourth quarter ended October 31, 2007, BMO Financial Group reported net income of $452 million or $0.87 per share. Results included losses of $275 million after tax in respect of charges related to deterioration in capital markets, losses in our commodities business, an increase in the general allowance and a restructuring charge. Excluding these significant items, net income was $727 million or $1.42 per share.

Net income for fiscal 2007 was $2,131 million, a decrease of $532 million from a year ago. Full year results were affected by $787 million of after-tax losses in respect of the charges related to deterioration in capital markets, losses in our commodities business, an increase in the general allowance and restructuring charges. Excluding these significant items, net income was $2,918 million, an increase of $278 million or 10.5% after adjusting for the reduction in the general allowance in the prior year.

“We earned $2.1 billion and achieved a return on equity of 14.4% in fiscal 2007. Our return on equity, despite the challenges in the year, reflects the strength of our core businesses and the benefits of our diversified business mix,” added Mr. Downe.

“P&C Canada’s financial results in the quarter rose from a year ago despite market-driven spread compression. For fiscal 2007, P&C Canada earned record net income of $1.25 billion and grew earnings by more than 9%. We are pleased with our progress in 2007 and the Group is more focused on doing the right things, especially in its attention to making it easier for our customers to do business with us. These initiatives are working. We achieved volume growth and increased market share in our priority markets such as personal loans, credit cards and commercial loans and deposits. There is good momentum and we will continue to invest in future growth.

“Personal and Commercial Banking U.S. (P&C U.S.) had a great quarter. On a U.S. dollar basis, earnings increased 51% from a year ago and 31% from the third quarter. It marked the fourth successive quarter of posting better earnings on a basis that excludes acquisition integration costs. On that basis, its cash productivity ratio fell below 70% in the quarter, a tribute to the team who have worked so hard to manage expenses in a tough operating environment.

“Private Client Group also achieved outstanding results. Its net income was up 27% and revenue rose 10% from a year ago in spite of softening market conditions in the quarter. For the year, Private Client Group earned record net income of $408 million, up 15% from 2006, and continues to innovate and invest in growing for the future.

“Losses in our commodities business in the fourth quarter were lower and we continued to implement our strategy to reduce both the size and risk of the portfolio. The write-downs and valuation adjustments in our capital markets business in the fourth quarter were typical of a widespread pattern of losses incurred by many financial institutions. We will continue to take steps to lower the volatility in our trading businesses as the losses in 2007 were outside our risk tolerance, notwithstanding the difficult market environment. Our goal is to earn an annual return on equity in excess of 20% in BMO Capital Markets.”

Results in the fourth quarter included an increase in the general allowance for credit losses of $50 million and a net restructuring charge of $24 million in Corporate Services. The increase in the general allowance was attributable to portfolio growth and risk migration. The net restructuring charge relates to our continued efforts to improve performance, including enhancing customer service by investing in front-line sales and service people and simplifying processes across the organization. As such, we recorded a new charge of $40 million while adding back into earnings $16 million of the original first quarter restructuring charge, mostly due to higher than anticipated staff redeployment within the organization.

Net Income Summary

1 These are non-GAAP amounts. Please see footnote 2 to the preceding Operating Highlights and the Non-GAAP Measures section that follows, which outline the use of non-GAAP measures in this document.

“Looking ahead, our targets for 2008 reflect strong earnings momentum and solid growth across all our businesses, while anticipating a weaker credit environment,” added Mr. Downe. “The targets reflect confidence in our underlying businesses and their teams, the increased focus we are placing on the customer and our commitment to generate strong returns for our shareholders.” The targets are based on our expectations for the economic environment in 2008 as discussed in the Economic Outlook & Market Environment section that follows.

Fourth Quarter Operating Segment Overview

P&C Canada
Net income was $284 million, up $12 million or 4.2% from a year ago. Results included three items that largely offset: a gain on sale of our investment in MasterCard International Inc. common shares, a recovery of prior years’ income taxes and an adjustment to increase the liability for future customer redemptions related to our credit card loyalty rewards program.

There was strong volume growth in all businesses. Revenue in the quarter was affected by lower net interest margins relative to a year ago, driven by higher funding costs and increased competitive pressures on both personal and commercial loan spreads. Over 2007, we have focused on placing the customer at the centre of our activities. We earned record net income of $1.25 billion in fiscal 2007, up 9%. Our businesses have good momentum as personal loans grew and market share increased, and we continued to grow commercial loans and deposits, priority areas for the Group. Growing personal deposits continues to prove challenging.

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. Our AIR MILES debit card initiative is proving popular with new and existing customers, as the number of personal deposit customers increased significantly in the fourth quarter.

In commercial banking, we increased our market share year-over-year and there was continued good growth in deposits and particularly loans, which increased 11% from a year ago with growth in all regions.

In the quarter, we recorded an increase in our liability for future customer redemptions related to our credit card loyalty rewards program. In order to minimize volatility in earnings, we are exploring options to transfer the liability and change the cost structure going forward to eliminate our exposure to changing redemption patterns. We expect no significant change in run-rate costs as a result of the charge or the change in cost structure.

P&C U.S.
Net income was US$32 million, up US$11 million or 51% from a year ago and up US$8 million or 31% from the third quarter. First National Bank & Trust’s operating results, reduced acquisition-integration costs and effective expense management contributed to improved performance.

P&C U.S. has operated in a difficult environment over 2007, with intense competition, soft housing markets and lower economic growth. We have continued to achieve volume growth over the year but net income growth has been hampered by reduced net interest margins, which were down appreciably from a year ago. Margins have stabilized over most of 2007 and consequently the benefits of volume growth are starting to show up in revenue. Management has focused on actively managing expenses in the difficult operating environment and in the fourth quarter, excluding acquisition integration costs, improved the cash productivity ratio to 69.7%. Excluding acquisition integration costs, P&C U.S. net income increased quarter-over-quarter in each period in fiscal 2007.

A number of financial institutions have experienced difficulties with exposure to subprime mortgages. P&C U.S. does not originate subprime mortgage programs and has very little retail exposure with subprime characteristics. Please see the following Economic Outlook & Market Environment section.

We previously announced agreements to acquire Ozaukee Bank and Merchants and Manufacturers Bancorporation, Inc., both located in Wisconsin. We expect to close these transactions in the first quarter of fiscal 2008, subject to receipt of approval from U.S. regulators and Ozaukee Bank shareholders. The shareholders of Manufacturers Bancorporation, Inc. approved the transaction on November 13, 2007. These acquisitions will add 40 full-service branches and 13 limited-service locations to our banking network.

Private Client Group
Net income was $107 million, up $23 million or 27% from a year ago, and reached a record $408 million for the year. This marked another very successful quarter for our wealth management business. Revenues for the quarter were up strongly from a year ago with all lines of business contributing to the growth. The group continues to focus on expanding and improving the productivity of the sales force and improving the solutions and services provided to clients. During the quarter, we launched MyLink, the first online brokerage service in Canada that sends personalized messages to individual investors. Guardian Group of Funds Ltd. completed the launch of the GGOF 2007 Mining Flow-Through Limited Partnership, a fund that offers investors the opportunity to invest in a diversified portfolio of mining industry equities. On November 2, 2007, we announced an agreement to purchase Pyrford International plc, a United Kingdom-based institutional asset manager, adding to the group’s international asset management capabilities and improving our product capabilities for our North American customers. The transaction is expected to close in the first quarter of fiscal 2008, subject to regulatory approval.

BMO Capital Markets
Net income was $48 million, down $140 million or 74% from a year ago, reflecting the after-tax impact of $211 million of charges related to deterioration in capital markets and $16 million of losses in our commodities business. Excluding these significant items, net income was $275 million, up $87 million or 47% from a year ago.

It was a challenging quarter for the group and for many other investment banks as concerns over asset quality affected liquidity, credit spreads and valuations. Activity levels were down from the first three quarters of the year in most product areas.

Commodities losses were down significantly from the prior three quarters. We lowered the size and risk of the portfolio in the quarter in the course of our trading activities.

Net income for the year was $425 million, down $435 million from the prior year. Excluding the fourth quarter charges of $211 million and the $440 million of after-tax losses in the commodities business, net income was $1,076 million, up $216 million or 25%, with very favourable performance in a number of our businesses. Mergers and acquisitions and equity underwriting saw extremely strong performance in fiscal 2007 and there was very strong growth in lending fees and commissions. We maintained our momentum and focus as BMO Capital Markets continued to demonstrate its Canadian leadership in our core high-return fee businesses. Our market share decreased from the previous quarter, however the aggregate amount raised from our deals increased. During the quarter we participated in 100 new issues including 26 corporate debt deals, 3 issues of preferred shares, 48 common equity transactions and 23 government debt issues, raising a total of $39 billion. We also advised on a number of significant M&A transactions in the quarter.

During the quarter, we were recognized, for the 27^th consecutive year, as the top equity research group in Canada in the Brendan Wood International Survey. BMO Capital Markets launched a new suite of global treasury management services, making it easier for companies in Canada and the U.S. to conduct business around the world from their home base. We also established a foreign exchange sales and trading desk in London, England, a move that will further bolster BMO’s strong position in the Canadian-dollar foreign exchange market.

Performance Targets
Given the significance of the losses incurred in our commodities business this year and the fourth quarter charges related to deterioration in capital markets, we were unable to achieve most of our annual financial targets. Our targets for 2008 have been set in the context of our performance in 2007 and our expectations for the economy in the year ahead.

The data in the above table are non-GAAP amounts or non-GAAP measures. Please see footnote 2 to the preceding Operating Highlights and the Non-GAAP Measures section that follows, which outline the use of non-GAAP measures in this document.

The preceding section and above table contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Economic Outlook & Market Environment
The Canadian economy grew at a moderate pace in 2007, with very strong domestic demand partially offset by softening exports. The tightening in credit conditions during the summer has yet to have a major adverse impact on growth. Consumer spending was sustained by solid gains in employment and income, supporting growth in personal loans. Housing market activity continued at high levels, boosting residential mortgages. Companies invested briskly to expand capacity, spurring growth in business credit. The strong Canadian dollar held inflation low despite rising oil prices and the lowest unemployment rate in 33 years.

High commodity prices supported earnings growth in the resource sector, fostering strong underwriting and merger and acquisition activities in the first half of the year. The Bank of Canada raised overnight lending rates 25 basis points in July before moving to the sidelines as credit and liquidity concerns unfolded in the markets in late summer. The U.S. economy grew at a modest rate in 2007, slowing from the previous year as a result of a weakening housing market and rising energy costs. An increase in default rates and a decrease in sales have boosted the supply of unsold homes, causing house prices to decline. While residential mortgage growth continued to slow, growth in personal and business loans remained healthy. In September, the Federal Reserve reduced interest rates for the first time in more than four years to address the risks to the economy arising from tighter credit conditions and weaker housing markets.

In 2008, the Canadian economy is expected to continue growing moderately, restrained by a soft U.S. economy and a strong Canadian dollar. A slowing in housing activity due to a decline in affordability will likely dampen demand for residential mortgages. In contrast, business investment should remain healthy in light of sound corporate balance sheets, promoting growth in business credit. Interest rates are expected to ease modestly in 2008. While the Canadian dollar should remain strong relative to a generally weak U.S. dollar, it is expected to weaken somewhat in 2008 in response to a moderation in commodity prices. The U.S. economy is expected to continue growing modestly in 2008, with weakness in the housing market partly offset by the supportive effects of easier monetary policy and stronger net exports arising from brisk global economic growth and the weaker U.S. dollar. Growth should pick up in the second half of the year as the slump in the housing market recedes. Demand for personal and business credit will likely continue to expand at a moderate pace, although growth in residential mortgages is expected to slow further. The Federal Reserve is expected to reduce rates further in early 2008.

In the fourth quarter, BMO recorded $318 million ($211 million after tax) of charges for certain trading activities and valuation adjustments related to deterioration in capital markets. The charges included $169 million in respect of trading and structured-credit related positions and preferred shares; $134 million related to Canadian asset-backed commercial paper (ABCP); and $15 million related to capital notes in the Links Finance Corporation (Links) and Parkland Finance Corporation (Parkland) structured investment vehicles (SIVs).

The Canadian ABCP charges reflect $80 million for our investment in commercial paper issued by one of our BMO-sponsored conduits, and $54 million for our investment in commercial paper issued by non-bank sponsored conduits. Both write-downs used an estimated mark-to-market adjustment of 15%. BMO has not provided backstop liquidity commitments to any of the preceding conduits.

The above noted BMO-sponsored conduit’s underlying positions are super-senior AAA-rated with exposures to high quality, diversified corporate debt through collateralized debt obligations (CDOs). The conduit has no direct exposure to U.S. subprime-related loans. We are in discussions with a number of counterparties on restructuring alternatives regarding this conduit.

Realization on our investment in the non-bank-sponsored conduits will be affected by the outcome of the agreement reached among certain non-bank-sponsored Canadian ABCP conduits and investors known as the Montreal Accord.

The $15 million charge for our investment in the capital notes in the Links and Parkland SIVs reduced the book value of BMO’s capital notes to $53 million. The conduit has approximately $2.2 billion of capital notes outstanding. During the quarter, BMO agreed to participate in the senior notes issued by these SIVs up to a maximum of approximately $1.3 billion, in addition to our existing commitment for backstop liquidity facilities of $221 million, for a total commitment of approximately $1.6 billion, representing 8% of the SIVs total senior debt outstanding as of October 31, 2007. At October 31, 2007, BMO had purchased approximately $350 million of the SIVs senior notes. Subsequent to year end, BMO purchased another $900 million of senior notes.

The assets of the SIVs consist of investment grade structured finance and financial institution assets. They are high grade assets, as rated by external agencies, with over 60% rated AAA, over 85% rated AA or above, and 99% rated A or above. Less than 0.01% of the assets have direct exposure to U.S. subprime loans.

Given the amount of our investments in ABCP and the SIVs, and given the uncertainty in the capital markets environment, these investments could experience subsequent valuation gains and losses due to changes in market value.

This Economic Outlook & Market Environment section 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 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 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 2008 and how that will affect our businesses are material factors we consider when setting our strategic priorities and objectives, and in determining our financial targets, including provision for credit losses. Key assumptions include that the Canadian economy will expand at a moderate pace in 2008 while the U.S. economy expands modestly, and that inflation will remain low in North America. We also have assumed that interest rates in 2008 will decline slightly in Canada and the United States, and that the Canadian dollar will trade at approximately parity to the U.S. dollar at the end of 2008. 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. Assumptions about the terms of any agreement we enter to transfer our liability for future customer redemptions, or to change the cost structure, relating to our customer credit card loyalty rewards program are material factors we considered in assessing expected changes in the run-rate costs of the program. 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.

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 Tuesday, November 27, 2007 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 Monday, March 3, 2008 by calling 416-641-2196 (from within Toronto) or 1-888-742-2491 (toll-free outside Toronto) and entering passcode 7581.

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, March 3, 2008.

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
Steven Bonin, Director, steven.bonin@bmo.com, 416-867-5452
Krista White, Senior Manager, krista.white@bmo.com, 416-867-7019

Chief Financial Officer
Tom Flynn, Executive Vice-President, Finance & Treasurer and Acting Chief Financial Officer
tom.flynn@bmo.com, 416-867-4649

Corporate Secretary
Blair Morrison, Vice-President & Corporate Secretary,
corp.secretary@bmo.com, 416-867-6785

Annual Meeting 2008

The next Annual Meeting of Shareholders will be held on Tuesday, March 4, 2008 in Quebec City, Quebec.