Expanding Our U'S' Wealth Management Franchise Bank of Montreal November 28, 2001

1
Expanding Our U.S. Wealth Management
FranchiseBank of MontrealNovember 28, 2001
2
INDEX

• The Transaction
• Transaction Terms
• Strategic Rationale - Expanding Our U.S. Wealth
  Management Franchise
• Combined CSFBdirect and InvestorLine
• Financial Impact
• Comparable Transactions
• Conclusion

3
THE TRANSACTION

• Acquiring CSFBdirects direct investing business
  for US520 million
• Aligned with banks strategy to grow selectively
  and substantially in the U.S.
• Cash earnings per share neutral in Year 1,
  excluding one-time costs, and accretive
  thereafter
• Establishing a national platform to accelerate
  the expansion of The Harris? wealth management
  franchise in the U.S.
• Increasing our U.S. client base

4
TRANSACTION TERMS
5
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Establishes a national U.S. wealth management
  business (Private Client Group PCG) based
  around The Harris? brand
• Harris has been in the wealth management business
  since 1892
• Builds upon the North American wealth management
  platform
• As at October 31, 2001, our wealth management
  business consists of

Includes Harris AdvantEdge Includes 9B of
Harris Insight Funds
6
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Recent Growth Initiatives and Performance
• Direct investing
• acquisition of BCL for US45MM (1999)
• formation of Harris InvestorLine
• acquisition of Freeman Welwood for US93MM (2000)
• expanded to 116,000 active accounts from less
  than 5,000 in 1999
• Full service investing
• launched Harris AdvantEdge (2001)
• Mutual funds
• 21 funds of which 8 received 4-star Morningstar
  ratings (Sept 2001)
• Private banking
• acquisition of Village Banc of Naples for US13MM
  (2000)
• acquisition of Century Bank in Phoenix for
  US16MM (2000)
• de novo openings in Phoenix, Minneapolis, Seattle

7
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• Attractive business with stand-alone economics
• 467,000 active accounts
• 1,000,000 total accounts
• US16.3 billion in AUA
• 450 employees
• Strong client demographics
• Over 85 of clients are college educated
• Over 40 of clients have incomes greater than
  US75,000
• Significant revenue base

8
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 2. Addition of Key Markets

9
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 3. National Foot Print Pre CSFBdirect and de
  novo openings

Freeman Welwood
Burke, Christensen Lewis

• ILLINOIS OHIO
• -Chicago -Cleveland
• WISCONSIN
• -Milwaukee
• MICHIGAN
• -Detroit

WASHINGTON - Seattle - Bellevue - Tacoma -
Spokane OREGON - Portland CALIFORNIA -
San Francisco COLORADO - Denver UTAH -
Salt Lake City ARIZONA - Phoenix HAWAII
- Honolulu
Harris Private Bank
ILLINOIS - Chicago - Hinsdale - Barrington -
Lake Forest - Naperville - St. Charles -
Palatine - Woodstock - Winnetka - Community
Banks ARIZONA - Phoenix - Scottsdale - Tucson -
Sun City - Carefree - Pinnacle Peak -
Biltmore FLORIDA - Ft. Meyers - Sarasota - Vero
Beach - Naples - West Palm Beach

10
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 3. National Foot Print Post CSFBdirect and de
  novo openings

CSFBdirect physical locations
Burke, Christensen Lewis
Freeman Welwood

• - San Francisco - Boca Raton - New York City
• - Sandy City - Atlanta - Jersey City
• - Dallas - Chicago - Philadelphia
• - Charlotte

• ILLINOIS OHIO
• -Chicago -Cleveland
• WISCONSIN
• -Milwaukee
• MICHIGAN
• -Detroit

WASHINGTON - Seattle - Bellevue - Tacoma -
Spokane OREGON - Portland CALIFORNIA -
San Francisco COLORADO - Denver UTAH -
Salt Lake City ARIZONA - Phoenix HAWAII
- Honolulu
Harris Private Bank
ILLINOIS - Chicago - Hinsdale - Barrington -
Lake Forest - Naperville - St. Charles -
Palatine - Woodstock - Winnetka - Community
Banks ARIZONA - Phoenix - Scottsdale - Tucson -
Sun City - Carefree - Pinnacle Peak -
Biltmore FLORIDA - Ft. Meyers - Sarasota - Vero
Beach - Naples - West Palm Beach

De novo openings

• - Phoenix
• - Minneapolis
• - Seattle

11
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 4. Recognized technology leadership

Best of the Web March 2001
Number one 4-Stars rating March
2001
Best Online Brokerage Service March
2001
Top Online Broker
2000 Worth Magazine Readers Choice Awards
12
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 5. Rapid integration with low risk
• CSFBdirect clients experience seamless transition
• Successfully integrated operations and converted
  brands of BCL and Freeman Welwood
• Minimal client attrition in previous acquisitions
• Depth of experience in direct investing

13
STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH
MANAGEMENT FRANCHISE

• Acquisition of CSFBdirect provides
• 6. Overall enhanced wealth management franchise
• Opportunity to cross-sell full range of wealth
  management products to CSFBdirect clients
• Enriches our research, product offering, online
  services and tools for existing Harris
  InvestorLine clients
• Expands physical footprint for all wealth
  management businesses
• Import superior technology to Canadian client
  base

14
COMBINED CSFBdirect AND INVESTORLINE

• Combined new entity to be named Harris Direct
  Investing
• Led by Bruce Schwenger, Head of Global Direct
  Investing
• Moves us to 7th largest North American direct
  investing firm in AUA and 7th in active accounts
  ( up from 11th )
• Continuity of CSFBdirect senior executives 4 of
  6 remain
• Headquartered in New Jersey
• 23 combined retail locations in 15 states
• Recognized leading technology platform
• Combined North American active accounts of
  852,000

15
FINANCIAL IMPACT

• CSFBdirect Financial Summary

YTD Q3 annualized Excluding one-time costs
16
FINANCIAL IMPACT

• BMO Financial Impact
• Cash earnings per share neutral in Year 1,
  excluding one-time costs, and accretive
  thereafter
• Purchase price implies a multiple of 18.8 times
  Year 1 cash net income
• IRR of approximately 18

Excluding one-time costs and financing
Excluding one-time costs
17
FINANCIAL IMPACT

• Sources of Projected Earnings Turnaround in Year
  1
• Operating cost improvements included in year 1
  total 100MM
• Staffing US26MM
• Advertising US18MM
• Technology US41MM
• Professional Fees US12MM
• Other US3MM
• Most of the cost improvements have already been
  achieved or initiated
• Assumes current market activity levels
• Prudent financial projections exclude benefit
  of cross-selling

18
FINANCIAL IMPACT

• Non-common, tier 1 capital will be raised
• Tier 1 ratio improves through 2002 as a result
  of
• earnings retention
• managed reduction in risk-weighted assets
• One-time pre-tax charge of US50-55MM plus up to
  US10MM of transaction costs which increases
  goodwill

19
COMPARABLE TRANSACTIONS

• The purchase price multiples are within the
  bounds of comparable transactions and well below
  averages of a year ago

• The price/active account for this transaction is
  931 when the 85MM present value of the tax
  benefit is deducted from the 520MM purchase price

20
CONCLUSION

• Establishing a national platform to accelerate
  the expansion of The Harris? wealth management
  franchise in the U.S.
• Acquisition of a quality business at an
  attractive price
• Acquisition neutral to cash earnings per share in
  Year 1, excluding one-time costs, and accretive
  thereafter
• Consistent with North American wealth management
  strategy to expand distribution network and U.S.
  presence

21
WEALTH MANAGEMENT FRANCHISE
22
FORWARD LOOKING STATEMENTS

• CAUTION REGARDING FORWARD-LOOKING STATEMENTS
• This financial presentation 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 report 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.