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Operating Highlights

• Net Income of $372 Million, Diluted Cash EPS of $0.75 and Diluted EPS of $0.71
• Solid Growth in Retail Revenues in Canada and U.S.
• New Impaired Loan Formations Lowest Since Fiscal 2000, Down 31 Per Cent from Q4 and Provisions for Credit Losses in Line with Guidance
• Investment Banking Group Net Income Holds Up in Difficult Markets
• CSFBdirect Acquisition Closed on February 4^th as Planned, with High Customer Retention
• Expense Growth Declines
• As Previously Announced, Dividends Increase for 10^th Straight Year

Financial Highlights

Bank of Montreal reported net income of $372 million and diluted earnings per share of $0.71 for its first quarter ended January 31, 2002, compared with net income of $416 million and diluted earnings per share of $0.73 in the first quarter of last year. Excluding non-recurring items in the first quarter of last year, net income was down $31 million; however, because of the favourable effect of last year’s share buyback programs, returns to shareholders improved as diluted earnings per share increased by $0.01.

Compared to the fourth quarter of 2001, results of each of the operating groups improved significantly as the Bank’s net income increased $368 million. Net income in the fourth quarter was affected by a sharp deterioration in economic conditions, prompting higher provisions for credit losses and write-downs totalling $682 million. Excluding non-recurring items in the fourth quarter, net income increased $263 million and diluted earnings per share increased $0.52 to $0.71 this quarter.

“Results reflect a solid quarter and a good start to the year,” said Tony Comper, Chairman and Chief Executive Officer, Bank of Montreal. “Loan losses were up compared to the first quarter of 2001, but are expected to decrease for the full year. Taking this into account, financial performance is on the upswing.”

Even though the Bank’s provisions for credit losses in fiscal 2002 are expected to be lower than for fiscal 2001, year-over-year quarterly comparisons are affected because the provision in the first quarter of last year was low relative to later quarters due to the subsequent deterioration in economic conditions.

“While a lot of work lies ahead in continuing to improve performance,” Mr. Comper added, “I am particularly encouraged by the solid growth in personal and commercial banking volumes in both Canada and the U.S.”

· Solid Growth in Retail Revenues in Canada and U.S.

Personal and Commercial Client Group performance improved from the first quarter of last year due to solid volume growth in Canada and continued strong growth in the United States, where volume growth was further enhanced by last year’s acquisition of First National Bank of Joliet (Joliet). In Canada, the premium rate savings product has attracted many new customers and positions the Group for improved profitability when interest rates rise.

· New Impaired Loan Formations Lowest Since Fiscal 2000, Down 31 Per Cent from Q4 and Provisions for Credit Losses in Line with Guidance

New impaired loan formations in the quarter were the lowest since fiscal 2000 and were down 31 per cent from the fourth quarter. The increase in this quarter’s provision for credit losses relative to the first quarter of last year is largely reflective of timing, as required quarterly provisions increased substantially over the course of fiscal 2001 as economic conditions deteriorated. Net income in the first quarter of 2002 would have been higher than in the first quarter of last year were it not for higher provisions for credit losses this quarter. However, provisions for the quarter and anticipated provisions for the year remain in line with the guidance provided at the end of last year.

Provisions for credit losses allocated to the banking groups are based on expected losses over an economic cycle and the timing differences between expected loss provisions and required provisions under Generally Accepted Accounting Principles (GAAP) are allocated to the Corporate Support Group.

· Investment Banking Group Results Hold Up in Difficult Markets

Investment Banking Group net income rose from last year due to reduced expenses and continued momentum in interest rate-sensitive businesses. However, uncertain economic conditions continue to affect the Group’s fee-based businesses.

· CSFBdirect Acquisition Closed on February 4^th as Planned, with High Customer Retention

Private Client Group announced the acquisition of CSFBdirect on November 28, 2001. The transaction, which closed on February 4, 2002, represents another significant step in our selective and substantial expansion into the United States and brings Bank of Montreal closer to becoming a truly transnational bank. We are pleased with the CSFBdirect integration process to date, which leverages the Group’s successful experience with its four previous acquisitions and includes proactive client communications. Client retention has been strong.

· Expense Growth Rate Declines

Expense growth in the first quarter of 2002, while currently greater than revenue growth, was much improved from a year ago. Expense management initiatives continue to be implemented and the full impact of these actions is expected to be even more apparent in the latter half of the year.

· Private Client Group Well Positioned for Return to More Favourable Market Conditions

Private Client Group net income improved year-over-year and rebounded from the fourth quarter, even though challenging market conditions continue to affect trading volumes. The Group remains focused on its long-term growth strategy of expanding its distribution network and is well positioned for a return to more favourable market conditions.

Operating Group Net Income

2002 Outlook Unchanged
The Bank’s outlook for fiscal 2002 continues to anticipate cash earnings per share for the first six months to approximate comparable amounts for the first six months of 2001, excluding non-recurring items. The outlook also continues to anticipate that, excluding non-recurring items, cash earnings per share growth in the second six months will improve from the first half of the year. The outlook for the year now anticipates that the provision for credit losses will remain at the high end of the 40 to 50 basis point target range.

As anticipated at the end of last year, the Canadian and U.S. economies are expected to gradually strengthen over the balance of this year following a short and shallow downturn in 2001. Highly stimulative monetary and fiscal policies are expected to provide ongoing support to consumer spending, while housing activity should remain elevated in the face of low mortgage rates. Inventory rebuilding is anticipated to complement the expansion. The unemployment rate should begin trending down in the spring. Interest rates in Canada and the United States are expected to remain relatively stable in the first half of the calendar year as central banks will likely be reluctant to tighten policy in the face of tame inflation, excess capacity and still emerging economic growth. However, as the recovery gathers momentum and absorbs the slack in the economy, interest rates may increase in the second half of the year. It is likely that capital markets activity will increase with a strengthening economy.

Note on Performance Analysis
Management and certain of the Bank’s stakeholders believe that performance analysis is enhanced by focusing on cash results and results excluding non-recurring items. These adjustments and their effects are outlined in the table on Effects of Non-Recurring Items in the MD&A. Securities regulators require that corporations caution readers that earnings as adjusted for such items do not have standardized meanings under GAAP and are unlikely to be comparable to similar measures used by other companies.

Management’s Discussion and Analysis of Results of Operations (MD&A) for the quarter is below. A more comprehensive discussion of our businesses and strategies and objectives can be found in the MD&A in the Bank’s 2001 Annual Report. Readers are also encouraged to visit the Bank’s web site as indicated below to view other quarterly financial information.

Interested investors are invited to join our conference call to review the first quarter’s results on Tuesday February 26, 2002 at 2:00 p.m. (EST). The conference call can be accessed in listen-only mode as follows:

Via the Internet: www.bmo.com/investorrelations

Via telephone: Toll free 1-800-213-1351 or From within Toronto 416-641-6678

A replay of the conference call will be available until Friday March 8, 2002 by calling 1-800-558-5253 and quoting reservation number 19963938. A replay of the webcast can be accessed on our web site until May 27, 2002.

The news release, quarterly presentations and supplementary financial information package are available on Bank of Montreal’s web site at www.bmo.com/investorrelations and at our offices at 1 First Canadian Place, 18^th Floor, Toronto, Ontario.

Media Relations Contacts

Joe Barbera, Toronto, 416-867-3996

Ronald Monet, Montreal, 514-877-1101

Investor Relations Contacts

Susan Payne, Vice President, Investor Relations, susan.payne@bmo.com, 416-867-6656

Lynn Inglis, Director, Investor Relations, lynn.inglis@bmo.com, 416-867-5452

Chief Financial Officer

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release in respect of earnings for the first quarter of 2002 includes forward-looking statements, which are made pursuant to the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments with respect to our objectives, targets, strategies, financial condition, the results of our operations and our businesses, our outlook for our businesses and for the Canadian and U.S. economies, and risk management.

By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, targets, expectations, estimates and intentions expressed in such forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by the following factors: fluctuations in interest rates and currency values; regulatory developments; statutory changes; the effects of competition in the geographic and business areas in which we operate, including continued pricing pressure on loan and deposit products; and changes in political and economic conditions including, among other things, inflation and technological changes. We caution that the foregoing list of important factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider the foregoing factors as well as other uncertainties and potential events. The Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank.

TO VIEW FIRST QUARTER 2002 MD&A CLICK HERE

TO VIEW FINANCIAL HIGHLIGHTS AND STATEMENTS CLICK HERE