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Highlights for the Fourth Quarter Ended October 31, 2002

• Net income of $398 million, up from $4 million last year. EPS of  $0.75 and cash EPS¹ of $0.79
• Excluding non-recurring items¹, net income of $423 million, up from $109 million last year. EPS of $0.80 and cash EPS of $0.85
• 32 per cent growth in net income of Personal and Commercial Client Group with year-over-year revenue growth of 10 per cent and strong expense control resulting in productivity ratio of 59.7 per cent
• Private Client Group net income, excluding non-recurring items, up strongly from a year ago and up 50 per cent from the third quarter
• Revenues up 17 per cent from a year ago, or 7 per cent excluding non-recurring items
• Expenses up 11 per cent year-over-year.  Expenses flat after adjusting for non-recurring items, acquired businesses and reducing staff levels
• Loan loss provisions at $160 million, unchanged from previous quarter

Highlights for the Fiscal Year Ended October 31, 2002

• Net income of $1,417 million, EPS of $2.68 and cash EPS of $2.83
• Excluding non-recurring items, net income of $1,456 million, EPS of $2.76 and cash EPS of $2.91
• Excluding non-recurring items, cash EPS growth of 8.6 per cent, cash ROE¹ of 14.6 per cent and Tier 1 capital of 8.80 per cent meet annual targets
• Loan loss provisions of $820 million in line with our updated guidance and down $160 million from 2001 ($60 million excluding non-recurring items)
• 22 per cent growth in net income of Personal and Commercial Client Group with strong growth in volumes and an improved productivity ratio of 60.0 per cent
• Private Client Group net income rises 12 per cent, excluding non-recurring items, despite difficult equity markets
• Revenues flat year-over-year but up 2 per cent excluding non-recurring items, driven by acquisitions
• Expenses rise 6 per cent, or 1 per cent excluding non-recurring items and costs of acquired businesses

1. The adjustments that change results under generally accepted accounting principles to results excluding non-recurring items and cash results and comments on the use of these measures are outlined in the "Effects of Non-Recurring Items" table, which precedes the Review of Operating Groups Performance in this release.

All EPS measures in this release refer to diluted EPS unless specified otherwise. 

BMO Financial Group (BMO) reported net income of $1,417 million for its fiscal year ended October 31, 2002, down modestly from a year ago due to the favourable impact of non-recurring items in 2001.  Excluding non-recurring items in both years, net income was $1,456 million, up six per cent from the prior year.  Earnings per share of $2.68 were slightly above year-ago results but excluding non-recurring items, earnings per share were $2.76, an increase of 11 per cent from a year ago.  Return on equity of 13.4 per cent was down from 13.8 per cent in 2001.  Excluding non-recurring items, return on equity was 13.8 per cent, up from 12.9 per cent a year ago.

"In a challenging market environment, this has been a solid year," said Tony Comper, Chairman and Chief Executive Officer, BMO Financial Group.  "We have followed a prudent, disciplined approach in executing our strategy against a backdrop of very soft capital markets and a weak credit environment, and this has helped us meet our performance targets for earnings growth and return on shareholder equity for fiscal 2002.”

Mr. Comper added, “Our personal and business banking operations in Canada and the U.S. continue to perform well, with a strong 22 per cent increase in net income.  At the same time, our market-leading performance in credit risk management means that we have been able to reduce our provision for credit losses from year-ago levels.  Our focus on cost management and our continuing investment in core operations position us to take full advantage of a market turnaround when it occurs.”

The $78 million increase in net income excluding non-recurring items was attributable to a lower provision for credit losses, the discontinuance of goodwill amortization due to changes in generally accepted accounting principles, and more favourable income tax rates and tax initiatives.  Personal and business banking results rose strongly as market share grew in select segments.  Earnings from wealth management operations also rose as expense growth was only modestly above revenue growth in spite of acquisition costs and the weak environment for equity-related businesses.  Revenues fell substantially more than expenses in Investment Banking Group due to net securities losses and weaker trading-related activities.  Their net income improved year-over-year due to a lower provision for credit losses, largely due to changes in loan loss allocations that had the effect of increasing the allocation to Corporate Support in 2002, as explained in subsequent sections of this release.  Earnings sourced in the United States rose to 35 per cent from 17 per cent in 2001.

Bank of Montreal common shares generated a total shareholder return of 16.2 per cent in fiscal 2002, the third best performance of Canada’s six major banks, which averaged a return of 5.8 per cent.  The TSX Composite Total Return for the year was negative 7.7 per cent.

Results for the fourth quarter of 2002 included $39 million ($25 million after-tax) of non-recurring acquisition-related costs.  The fourth quarter of 2001 was affected by a $178 million ($105 million after-tax) write-down of equity investments in BMO’s collateralized bond obligations (CBOs) that was categorized as non-recurring for reporting purposes.

Fourth quarter earnings were $398 million, compared with $4 million a year ago.  Excluding non-recurring items, net income for the quarter was $423 million, up from $109 million a year ago.  The weakening of the economy and the aftermath of September 11^th significantly affected results in the fourth quarter a year ago.  Provisions for credit losses totalled $160 million in the most recent quarter, down from $546 million in the fourth quarter in 2001.  In the fourth quarter a year ago, BMO announced its intention, and subsequently did record a higher provision for credit losses and write-downs totalling $682 million ($414 million after-tax), including the non-recurring item.  Nonetheless, if provisions in the fourth quarter of 2001 had been at the relatively more modest level of this most recent quarter, net income for the fourth quarter of 2002 would still reflect an $82 million or 24 per cent increase from a year ago, excluding non-recurring items.

Personal and Commercial Client Group’s sales momentum continued as net income rose 32 per cent from the fourth quarter of last year on strength in both Canadian and U.S. operations.  Private Client Group net income also rose strongly as the benefits of acquisitions, revenue-generating initiatives and successful cost control efforts more than compensated for weak equity markets and costs of acquired businesses.  Investment Banking Group revenues improved year-over-year but declined excluding non-recurring items, due to lower trading activity and reduced corporate lending volumes.  Net income, however, was up sharply due to the much lower provision for credit losses, partly due to the change in allocation methodology.

“This quarter’s results were easily the best of fiscal 2002 and we anticipate that BMO’s financial performance will have improved relative to its peer group average when all the results are in,” said Comper. “This is, of course, thanks to the on-going efforts of employees across BMO Financial Group.

“Going forward, a recovery in business investment is by no means assured, particularly since capital markets have proven stubbornly sluggish.  We continue to focus on investing in those businesses that contribute most to our current and future strengths and that align with our transnational growth strategy.  We also continue to assess spending to ensure it is reasonably aligned with prospects for revenue growth while investing appropriately for the future.”

Compared with the third quarter, net income in the fourth quarter rose $52 million.  Excluding non-recurring items, net income rose $63 million or 18 per cent.  The increase was driven by improved investment securities performance and income tax initiatives, partially offset by higher non-interest expenses.  Higher revenues in Investment Banking Group accounted for much of the increase in operating performance, while cost reductions in Private Client Group also contributed to improved results.

Non-interest expenses in the fourth quarter rose $100 million or seven per cent from the third quarter, excluding non-recurring items.  The increase was partially attributable to recognition of $50 million ($32 million after-tax) of severance costs related to the elimination of approximately 500 staff positions, of which approximately 55 per cent relate to activities in Corporate Support, including Technology and Solutions.  Growth was also reflective of a $13 million increase in performance-based compensation, costs associated with growth initiatives, our new national advertising campaign and other corporate costs. The effect of fourth quarter severance costs on results was substantially offset by the benefits of income and other tax benefits recognized in the quarter, which are discussed further in the Income Taxes section of this release.

The provision for credit losses was unchanged from the third quarter.  Gross impaired loans increased as new impaired loan classifications totalled $462 million in the quarter, down $60 million from the previous quarter and broadly in line with expectations at this point in the credit cycle.  Of this $462 million, approximately $186 million reflects the decision to classify as impaired a number of loans to U.K. and U.S. entities in the power and power generation sector.  Provisions for the year were consistent with the guidance provided in the second quarter and BMO’s loan loss experience in 2002 remains top-tier.  Exposures to industry groups that are currently more sensitive, such as communications and power and power generation, represent a small part of BMO’s loan portfolio and the allowance for impaired loans in these industries, as in other sectors, is considered to be adequate.

Management’s Responsibility for Financial Information
A rigorous and comprehensive financial governance framework is in place at Bank of Montreal and its subsidiaries at both the management and board levels.  Each year, Bank of Montreal’s Annual Report contains a statement signed by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) outlining management’s responsibility for financial information contained in the report.  BMO’s third quarter press release and quarterly report to shareholders included a statement signed by those same officers affirming management’s responsibility for financial information contained in the documents.  BMO also voluntarily filed a certification, signed by the CEO and CFO, with the Securities and Exchange Commission (SEC) in the United States following the release of third quarter results.  Bank of Montreal’s audited consolidated financial statements for the year ended October 31, 2002 and the annual MD&A for 2002 will be available at www.bmo.com on or after December 19, 2002.  When BMO’s annual report is filed with the SEC in the fourth week of January, 2003, BMO’s CEO and CFO will certify, as required by U.S. law, the appropriateness of BMO’s financial disclosures in the annual report and the effectiveness of controls and procedures over those disclosures.

Financial Targets
BMO achieved three of its annual targets for 2002, as set out below.  The provision for credit losses was within the updated range outlined in April of 2002.

Economic Outlook
Canadian economic growth is expected to remain healthy in the year ahead as a result of continuing low interest rates and a weak currency.  After expanding an estimated 3.4 per cent in 2002, Canadian real GDP is anticipated to grow 3.8 per cent in 2003.  Strong job growth so far in 2002 will support incomes and demand going forward. Spending on interest-sensitive goods, like housing and automobiles, should remain near recent record highs.  The unemployment rate is expected to trend lower in the year ahead.  Canadian interest rates are likely to increase in 2003 as the expansion progresses.  The Canadian dollar should appreciate against the U.S. dollar in response to supportive interest-rate spreads and a positive trade balance.  While growth in the U.S. economy remains uneven, activity should pick up in 2003 in response to past reductions in interest rates and expansionary fiscal measures.  Following estimated growth of 2.4 per cent in 2002, U.S. real GDP is expected to grow 3.2 per cent in 2003.  U.S. interest rates are projected to remain low for some time, before rising in the second half of 2003.  Capital markets activity should improve as the U.S. economy gathers strength.

Harris Bank
Harris Bank’s fourth quarter press release announcing its results for its fiscal year will be its last.  In 2003, BMO plans to expand disclosure of results of its U.S. operations.  This new reporting will reflect how the businesses are managed, and will provide more detail in respect of the client groups’ Canadian and U.S. operations.  This enhancement will align reporting with BMO’s transnational growth strategy and will facilitate the understanding of BMO’s U.S. operations, which extend beyond the Harris Bank legal entity.

Harris Bank, registered as Harris Bankcorp, Inc., will voluntarily forego its status as a registrant of the U.S. Securities and Exchange Commission (SEC).  Harris Bank has no publicly-held securities outstanding that require SEC registration. Harris Bank will continue to operate as a multibank holding company and remain subject to regulation by the U.S. Board of Governors of the Federal Reserve Bank.

Note on Performance Analysis
Management and certain of BMO’s stakeholders believe that performance analysis can be enhanced by focusing on cash results and results excluding non-recurring items.  These adjustments and their effects are outlined in the “Effects of Non-Recurring Items” table, which precedes the review of operating groups’ performance.  Securities regulators require that corporations caution readers that earnings as adjusted for such items do not have standardized meanings under generally accepted accounting principles (GAAP) and are unlikely to be comparable to similar measures used by other companies.

A detailed review of results is outlined in the attached Annual and Fourth Quarter 2002 Review.  A more comprehensive discussion of BMO’s results for the year, its financial position, businesses, strategies, objectives and risk factors is included in Bank of Montreal’s annual MD&A in the Annual Report, which can be accessed on BMO’s web site at www.bmo.com.  The 2002 MD&A and Bank of Montreal’s audited consolidated financial statements for the year ended October 31, 2002 will be available on the web site on or about December 19, 2002.

Bank of Montreal uses a unified branding approach that links all of the organization’s member companies.  Bank of Montreal, together with its subsidiaries, is known as BMO Financial Group.  As such, in this document, the names BMO and BMO Financial Group mean Bank of Montreal.

OTHER INFORMATION FOR INVESTOR AND MEDIA

Online Investor Presentations 
Interested investors, the media and others are invited to visit our web site at www.bmo.com/investorrelations to review this quarterly news release, presentations and supplementary financial information package.

Quarterly Conference Call
Interested parties are also invited to join our quarterly conference call, in listen-only mode, on Tuesday, November 26, 2002 at 2:00p.m. (EST). The call may be accessed by telephone at 1-800-213-1351 (toll free) or 416-641-6678 (from within Toronto).  A replay of the conference call will be available until Friday, December 6, 2002 by calling 1-800-558-5253 and quoting reservation number 19964171.

Webcast
A live webcast of the quarterly conference call can be accessed at www.bmo.com/investorrelations. A replay of the webcast can be accessed on our web site until February 24, 2003.

Document Copies
Copies of the quarterly news release, presentations and supplementary financial information package 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.

Media Relations Contacts
Ralph Marranca, Toronto, 416-867-3996
Ian Blair, Toronto, 416-867-3996
Ronald Monet, Montreal, 514-877-1101

Investor Relations Contacts
Susan Payne, Senior 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
Karen Maidment, Executive Vice President and Chief Financial Officer,
karen.maidment@bmo.com, 416-867-6776

Corporate Secretary 
corp.secretary@bmo.com, 416-867-6785

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 press release, and may be included in 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 the United States Private Securities Litigation Reform Act of 1995.  Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2003 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, 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 and other forward-looking statements will not prove to be accurate.  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: global capital market activities; interest rate and currency value fluctuations; industry and worldwide economic and political conditions; regulatory and statutory developments; the effects of competition in the geographic and business areas in which we operate; management actions; and technological changes.  We caution that the foregoing list of 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 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.

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