Remarks by Mr. Thomas E. Flynn, Executive Vice-President, Finance and Treasurer and Acting Chief Financial Officer, BMO Financial Group, at the Annual Meeting of Shareholders

Quebec City, QC, March 4, 2008

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SLIDE # 1 – Title Slide

Merci et bonjour tout le monde.

I am delighted to be here in Quebec today to meet so many shareholders and to report on the financial performance of our company in fiscal 2007 and in the first quarter of fiscal 2008.

SLIDE # 2 – Caution regarding forward-looking statements

Some of my comments will be forward-looking, and so I would like to draw your attention to the caution regarding forward-looking statements.

SLIDE # 3 – Non-GAAP measures

In addition, we use some non-GAAP measures to assess performance. Accordingly, we also have this caution that some measures do not have standardized meanings under GAAP.

SLIDE # 4 – Consistent performance over time

At BMO, our objective is to deliver consistent financial performance over the long term. This has enabled us to provide an average annual total return to shareholders of 14% over the past five years, and over 15% over the last 15 years.

Over the five-year period, we have increased earnings per share at an 8.9% compound annual growth rate.

Dividends are an important component of this focus. BMO’s dividends have increased at a 17.7% compound annual growth rate since fiscal 2002.

And … our financial position remains consistently strong. We ended fiscal 2007 with a Tier 1 capital ratio of 9.51.

SLIDE # 5 – Title Slide - Financial results Fiscal 2007

Now, let’s look at the fiscal 2007 results …

SLIDE # 6 – Fiscal 2007 financial results (Reported)

Despite many challenges in 2007, the bank generated net income of $2.1 billion and a return on equity of 14.4%. This performance demonstrated the strength of the bank’s core businesses and our diversified business mix.

These results included four significant items. These were a combination of internal and external issues, specifically: charges relating to the deterioration in capital markets, commodities losses, changes in the general allowance for credit losses and restructuring charges. In aggregate, these items resulted in $787 million in after-tax charges, which meant we were unable to achieve three of our four financial targets for the year.

Highlighting our long-term consistency, 2007 marked BMO’s 18th consecutive year with a reported ROE above 13%. We are the only bank in our North American peer group to record this achievement. An achievement we are proud of.

SLIDE # 7 – Fiscal 2007 financial results (Ex. Significant items)

This slide adjusts the numbers to exclude the significant items, facilitating a comparison with the previous year.

On this basis, revenue for 2007 reached $10.7 billion compared with $10.1 billion in 2006, growth of 5.8%. With a corresponding increase in expenses of 3.3% -- to $6.6 billion -- we generated a year-over-year improvement in our operating leverage.

After subtracting provisions for credit losses, taxes and minority interest, net income for the year on this basis was $2.9 billion, an increase of 10.5% from 2006, primarily due to improved revenues from business growth.

SLIDE # 8 – Fiscal 2007 net income in operating groups

In fiscal 2007, our core businesses continued to perform well. For the third consecutive year, we generated record earnings in both P&C Canada and the Private Client Group. P&C Canada was up 9.4% to $1.3 billion, while PCG increased 15% to $408 million. These results reflect the impact of the Bank’s renewed focus on our customers.

P&C US was up 3% year-over-year. Both years include significant costs associated with the integration of acquisitions. While we expect to have such costs in future periods, we are good at managing these integrations well, and are building an organization with increased scale that will pay off in higher returns in future years.

On a reported basis, our Capital Markets business experienced an earnings decline to $425 million – the decline was attributable to the significant items referenced earlier. Excluding these items, the group achieved $1.1 billion in net income.

SLIDE # 9 – Credit risk management

As Bill indicated in his remarks, we are working on strengthening areas of our risk management. This is particularly important in the context of the uncertainty about the direction of the North American economy. Credit risk is obviously an important component of risk management, and I’m pleased to say that our company is well-positioned compared with our peer group.

As illustrated on this slide, BMO has an excellent long-term record with respect to credit risk management. Over the past 16 years, our specific provisions for credit losses have averaged 0.33% of net loans and acceptances, significantly lower than those of our competitors.

SLIDE # 10 – Focus on dividends

This strong credit risk management contributes to our objective of delivering consistent performance over time, and to our outstanding long-term dividend record.

In Fiscal 2007 BMO increased its dividends declared to $2.71 per share from $2.26 per share in fiscal 2006, an increase of 20%. We remain dedicated to long-term dividend growth, while maintaining a prudent approach to managing our capital position. Our target payout is 45-55% of our net income, which leads the industry.

SLIDE # 11 – Financial results first quarter 2008

Let me now turn to our results for the first quarter of fiscal 2008, which were announced this morning.

SLIDE # 12 – Q1 2008 financial highlights

Our reported revenue for the quarter was $2.0 billion, down 2% from last year, while expenses were down 3.5%. Net income was $255 million, or $0.47 per share, compared with $348 million, or $0.67 per share, last year. Our return on equity for the quarter was 6.7%.

Both quarters were negatively impacted by significant after-tax charges. If we exclude these items, the bank generated net earnings of $617 million, or $1.19 per share, with a return on equity of 16.8%.

SLIDE # 13 – Q1 2008 net income in operating groups

Looking at the group performance, P&C Canada increased net earnings 1.7% to $302 million. During the quarter we saw improvement in our Net Promoter Score, an important measure of the strength of customer loyalty. In addition, we recorded a market share increase in personal deposits and in both personal and business loans.

These improvements reflect our sharpened focus on the customer, which is evidenced by increased front-line staffing and significant enhancements to our branch network. While income growth in the quarter was impacted by the increase in costs associated with these initiatives, we expect to benefit in future periods.

Net income for P&C US was up 5.2% to $26 million US, primarily due to the successful integration of the First National Bank & Trust acquisition. PCG increased 7.6% to $98 million, primarily due to the successful management of expenses in the softer revenue environment.

While both groups were up compared with last year, they declined from the previous quarter, reflecting weaker markets.

BMO Capital Markets incurred a loss of $34 million on a reported basis, compared with $20 million last year. As Bill previously mentioned, we are committed to producing a high and stable ROE in BMO Capital Markets and we’re taking the steps needed to reduce both the risk and the volatility of our results.

Looking at the operating groups in sum, net income in the quarter was essentially stable on a reported basis, despite the difficult operating conditions. The decline in net income in the quarter reflected weaker results in our corporate areas.

Slide # 14 – Consistent performance over time

Regardless of conditions in the financial markets or the economy, our objective is to deliver consistent long-term financial performance for shareholders. As I highlighted earlier, BMO has a superior credit record and that should support our businesses in a weakening economy.

Today, our company has a strong financial foundation, and our operations are expected to benefit from a number of important initiatives. These include our renewed customer focus and a reduction of volatility in BMO Capital Markets. These will serve us well in building on our established track record of solid long-term returns to shareholders.

Slide # 15 – Annual meeting of shareholders

In closing, and as I pass on the responsibilities of Interim Chief Financial Officer to Russ Robertson, I would like to leave you with some brief thoughts.

First, the BMO Finance teams are strong. Under Karen Maidment’s leadership, we have built excellent teams throughout the bank. Our efforts have been recognized by the Canadian Institute of Chartered Accountants, which awarded BMO its latest Award of Excellence in Financial Reporting.

As Russ takes over the Interim CFO role, his financial background and deep industry perspective will ensure that your interests will continue to be well served.

Thank you for your attention. I’ll now turn the podium over to the Chairman.

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