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BMO Financial Group Reports Net Income of $1.1 Billion for the Second Quarter of 2014

TORONTO, ONTARIO -- (Marketwired) -- 05/28/14 -- BMO Financial Group (TSX: BMO)(NYSE: BMO) and Bank of Montreal -

Financial Results Highlights:

Second Quarter 2014 Compared with Second Quarter 2013:


--  Net income of $1,076 million, up 12%; adjusted net income(1) of $1,097
    million, up 11%
--  EPS(2) of $1.60, up 14%; adjusted EPS(1, 2) of $1.63, up 13%
--  ROE of 14.3%, compared with 14.2%; adjusted ROE(1) of 14.6%, unchanged
--  Provisions for credit losses of $162 million, compared with $144
    million; adjusted provisions for credit losses(1) of $162 million,
    compared with $109 million
--  Basel III Common Equity Ratio of 9.7%
--  Dividend increased by $0.02 or 3% to $0.78 per common share

Year-to-Date 2014 Compared with Year-to-Date 2013:


--  Net income of $2,137 million, up 7%; adjusted net income(1) of $2,180
    million, up 8%
--  EPS(2) of $3.18, up 9%; adjusted EPS (1,2)  of $3.24, up 10%
--  ROE of 14.3%, compared with 14.6%; adjusted ROE(1) of 14.6%, compared
    with 14.7%
--  Provisions for credit losses of $261 million, compared with $322
    million; adjusted provisions for credit losses(1) of $261 million,
    compared with $205 million

For the second quarter ended April 30, 2014, BMO Financial Group reported net income of $1,076 million or $1.60 per share on a reported basis and net income of $1,097 million or $1.63 per share on an adjusted basis.

"Our customer-focused strategy continued to deliver strong performance and momentum across our operating groups," said Bill Downe, Chief Executive Officer, BMO Financial Group. "Our largest business, Canadian Personal and Commercial banking, had net income growth of 14% year over year and operating leverage above 2% for the third consecutive quarter. Commercial loan growth remained robust in Canada and the United States as we continue to see benefits from our large North American platform.

"Wealth Management and BMO Capital Markets also had strong results in the second quarter, both posting double-digit revenue and earnings growth.

"Shortly after quarter-end, we closed the acquisition of F&C Asset Management. The acquisition advances BMO Global Asset Management's strategy and growth trajectory, effectively doubling client assets. Today, our asset management business has 24 offices that are strategically located across the globe serving an increasingly global client base.

"For the quarter and year to date, continuing business momentum is reflected in positive operating leverage and good balance sheet growth. Adjusted earnings per share in the quarter were up 13% over last year," concluded Mr. Downe.


(1)  Results and measures in this document are presented on a GAAP basis.
     They are also presented on an adjusted basis that excludes the impact
     of certain items. Adjusted results and measures are non-GAAP and are
     detailed in the Adjusted Net Income section, and (for all reported
     periods) in the Non-GAAP Measures section, where such non-GAAP measures
     and their closest GAAP counterparts are disclosed.
(2)  All Earnings per Share (EPS) measures in this document refer to diluted
     EPS unless specified otherwise. EPS is calculated using net income
     after deductions for net income attributable to non-controlling
     interest in subsidiaries and preferred share dividends.

Note: All ratios and percentage changes in this document are based on
unrounded numbers.

Concurrent with the release of results, BMO announced a third quarter 2014 dividend of $0.78 per common share, up $0.02 per share from the preceding quarter and up $0.04 per share from a year ago, equivalent to an annual dividend of $3.12 per common share.

Our complete Second Quarter 2014 Report to Shareholders, including our unaudited interim consolidated financial statements for the period ended April 30, 2014, is available online at www.bmo.com/investorrelations and at www.sedar.com.

Total Bank Overview

Net income was $1,076 million for the second quarter of 2014, up $114 million or 12% from a year ago.

Adjusted net income was $1,097 million, up $113 million or 11% from a year ago. Momentum continued with strong results in Canadian P&C, Wealth Management and BMO Capital Markets, and U.S. P&C results that reflected stable revenue compared to last quarter.

Operating Segment Overview

Canadian P&C

Net income was $480 million, up $59 million or 14% from a year ago. Adjusted net income was $482 million, up $60 million or 14% from the prior year driven by higher revenue and lower credit losses. Revenue was up $87 million or 6% year over year driven by strong balance and fee volumes, partially offset by the impact of lower net interest margin. There was year-over-year loan growth of 9% and deposit growth of 10%. Expenses increased $20 million or 3%.

In personal banking, year-over-year personal loan and deposit growth remains strong at 9% and 10%, respectively. During the quarter we upgraded our BMO mobile banking application, which provides customers with enhanced capabilities including the ability to send Interac® e-Transfers and book branch appointments anywhere, anytime. The updated application has been well received by our customers, and mobile transactions have nearly doubled since its release.

In commercial banking, we continue to streamline our processes, enabling our salesforce to spend more time acquiring new customers and strengthening existing relationships. Volume growth continues to be strong with year-over-year loan and deposit growth of 10% and 9%, respectively. We remain second in Canadian business banking loan market share for small and medium-sized loans.

U.S. P&C (all amounts in US$)

Net income of $140 million and adjusted net income of $151 million both decreased $8 million or 6% from the second quarter a year ago. The benefits from strong commercial loan growth and lower provisions for credit losses were more than offset by the effects of lower net interest margin and reduced gains on sales of newly originated mortgages.

There were year-over-year and quarterly sequential increases in average current loans and acceptances, led by continued strong double-digit growth in the core commercial and industrial (C&I) loan portfolio. The core C&I portfolio increased by $4.2 billion or 19% from a year ago to $26.3 billion.

To demonstrate our commitment to providing financial literacy outreach to the communities in which we serve, we sponsored multiple financial education and homeownership workshops throughout our markets as part of the Federal Reserve Bank's Money Smart Week. In addition, we recently partnered with the Chicago Office of the City Treasurer and the Canadian Foundation for Economic Education to launch Talk With Our Kids About Money Day, which encourages families, students and teachers to have conversations about money and personal finance.

Wealth Management

Net income of $194 million increased $54 million or 38% from a year ago. Adjusted net income of $200 million increased $53 million or 36%. Adjusted net income in traditional wealth was $139 million, up $27 million or 23% resulting from strong growth in client assets. Adjusted net income in insurance was $61 million, up $26 million from a year ago.

Assets under management and administration grew by $91 billion or 17% from a year ago to $612 billion, driven by market appreciation, the stronger U.S. dollar and growth in new client assets.

This past quarter, BMO's wealth businesses received a number of awards from Global Banking and Finance Review, including:

BMO Harris Private Banking was named Best Private Bank in Canada for the fourth consecutive year; BMO Nesbitt Burns was named Best Full Service Investment Advisory in Canada; and BMO Private Bank Asia was named Best New Private Bank in Hong Kong and Best New Private Bank in Singapore.

On May 7, 2014, we announced that we had completed the acquisition of F&C Asset Management plc (F&C). This acquisition strengthens BMO Global Asset Management's position as a globally significant money manager, enhancing its investment platform capabilities and providing attractive opportunities to service wealth markets in the United Kingdom and the rest of Europe.

BMO Capital Markets

Net income of $305 million increased $44 million or 17% from a year ago due to good revenue growth across the businesses and a more favourable tax rate. Revenue increased 14% year over year, driven by good performance in both the Investment and Corporate Banking and the Trading Products businesses and continued good contribution from our U.S. segment. Return on equity of 20.8% was strong, up from 18.3% in the prior year.

Our continued focus on understanding and meeting our core clients' needs was rewarded, having been named World's Best Metals and Mining Investment Bank for the fifth consecutive year by Global Finance magazine this quarter. This focus also contributed to our selection as a 2014 Greenwich Share Leader in Canadian Foreign Exchange Market Share.

BMO Capital Markets participated in 372 new global issues in the quarter, comprised of 172 corporate debt deals, 131 government debt deals and 69 equity transactions, raising $822 billion.

Corporate Services

Corporate Services net loss on a reported and adjusted basis was $58 million for the second quarter of 2014, compared with a net loss of $11 million a year ago. The decline in results was primarily due to lower recoveries on the purchased credit impaired loan portfolio.

Adjusted Net Income

Adjusted net income was $1,097 million for the second quarter of 2014, up $113 million or 11% from a year ago. Adjusted earnings per share were $1.63, up 13% from $1.44 a year ago.

Management has designated certain amounts as adjusting items and has adjusted GAAP results so that we can discuss and present financial results without the effects of adjusting items to facilitate understanding of business performance and related trends. The only item excluded from second quarter 2014 results in the determination of adjusted results was the amortization of acquisition-related intangible assets of $28 million ($21 million after tax; $0.03 per share). Amounts excluded from adjusted results in prior years also included credit-related items in respect of the purchased performing loan portfolio, acquisition integration costs, restructuring costs and run-off structured credit activities. Management assesses performance on a GAAP basis and on an adjusted basis and considers both to be useful in the assessment of underlying business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. Adjusted results and measures are non-GAAP and, together with items excluded in determining adjusted results, are disclosed in more detail in the Non-GAAP Measures section, along with comments on the uses and limitations of such measures. The impact of adjusting items for comparative periods is summarized in the Non-GAAP Measures section.

Caution

The foregoing sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in these Total Bank Overview and Operating Segment Overview sections are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Management's Discussion and Analysis

Management's Discussion and Analysis (MD&A) commentary is as of May 28, 2014. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from financial statements prepared in accordance with International Financial Reporting Standards (IFRS). References to GAAP mean IFRS. The MD&A should be read in conjunction with the unaudited interim consolidated financial statements for the period ended April 30, 2014, as well as the audited consolidated financial statements for the year ended October 31, 2013, and the MD&A for fiscal 2013 in BMO's 2013 Annual Report. The material that precedes this section comprises part of this MD&A.

The annual MD&A includes a comprehensive discussion of our businesses, strategies and objectives, and can be accessed on our website at www.bmo.com/investorrelations. Readers are also encouraged to visit the site to view other quarterly financial information.

Bank of Montreal's management, under the supervision of the CEO and CFO, has evaluated the effectiveness, as at April 30, 2014, of Bank of Montreal's disclosure controls and procedures (as defined in the rules of the Securities and Exchange Commission and the Canadian Securities Administrators) and has concluded that such disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended April 30, 2014, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Because of inherent limitations, disclosure controls and procedures and internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

As in prior quarters, Bank of Montreal's Audit and Conduct Review Committee reviewed this document and Bank of Montreal's Board of Directors approved the document prior to its release.

Regulatory Filings

Our continuous disclosure materials, including our interim filings, annual MD&A and audited consolidated financial statements, Annual Information Form and Notice of Annual Meeting of Shareholders and Proxy Circular are available on our website at www.bmo.com/investorrelations, on the Canadian Securities Administrators' website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov.

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, together with its subsidiaries.


----------------------------------------------------------------------------
Summary Data - Reported                                              Table 1
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
Summary Income Statement
Net interest income             2,063    2,113    2,129     4,176     4,377
Non-interest revenue            1,978    2,009    1,764     3,987     3,548
----------------------------------------------------------------------------
Revenue                         4,041    4,122    3,893     8,163     7,925
----------------------------------------------------------------------------
Specific provision for credit
 losses                           162       99      174       261       352
Collective provision for
 (recovery of) credit losses        -        -      (30)        -       (30)
----------------------------------------------------------------------------
Total provision for credit
 losses                           162       99      144       261       322
Non-interest expense            2,594    2,684    2,550     5,278     5,120
Provision for income taxes        209      278      237       487       485
----------------------------------------------------------------------------
Net income                      1,076    1,061      962     2,137     1,998
----------------------------------------------------------------------------
----------------------------------------------------------------------------
  Attributable to bank
   shareholders                 1,062    1,048      944     2,110     1,962
  Attributable to non-
   controlling interest in
   subsidiaries                    14       13       18        27        36
----------------------------------------------------------------------------
Net income                      1,076    1,061      962     2,137     1,998
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Common Share Data ($ except
 as noted)
Earnings per share               1.60     1.58     1.40      3.18      2.91
Earnings per share growth (%)    14.3      4.6     (6.7)      9.3      (6.7)
Dividends declared per share     0.76     0.76     0.74      1.52      1.46
Book value per share            45.95    45.60    40.87     45.95     40.87
Closing share price             75.55    68.06    63.19     75.55     63.19
Total market value of common
 shares ($ billions)             48.7     43.9     41.0      48.7      41.0
Dividend yield (%)                4.0      4.5      4.7       4.0       4.6
----------------------------------------------------------------------------
Financial Measures and Ratios
 (%)
Return on equity                 14.3     14.2     14.2      14.3      14.6
Net income growth                11.6      2.5     (5.6)      6.9      (5.8)
Revenue growth                    3.7      2.3     (0.4)      3.0      (0.6)
Non-interest expense growth       1.8      4.4      3.1       3.1       2.4
Efficiency ratio                 64.2     65.1     65.5      64.7      64.6
Efficiency ratio, excluding
 PBCAE (1)                       59.4     59.9     60.2      59.7      60.8
Operating leverage                1.9     (2.1)    (3.5)     (0.1)     (3.0)
Net interest margin on
 average earning assets          1.59     1.62     1.82      1.61      1.85
Effective tax rate               16.2     20.8     19.8      18.5      19.5
Return on average assets         0.73     0.72     0.70      0.72      0.71
Provision for credit losses-
 to-average loans and
 acceptances (annualized)        0.22     0.14     0.22      0.18      0.25
----------------------------------------------------------------------------
Value Measures (% except as
 noted)
Average annual five-year
 total shareholder return        19.4     21.4     10.5      19.4      10.5
Average annual three-year
 total shareholder return        11.8     10.6      4.9      11.8       4.9
Twelve month total
 shareholder return              24.8     12.9     13.0      24.8      13.0
Net economic profit ($
 millions) (2)                    297      289      260       586       574
----------------------------------------------------------------------------
Balance Sheet (as at $
 billions, except as noted)
Assets                            582      593      555       582       555
Net loans and acceptances         295      290      264       295       264
Deposits                          394      398      360       394       360
Common shareholders' equity      29.6     29.4     26.5      29.6      26.5
Cash and securities-to-total
 assets ratio (%)                32.1     32.3     30.3      32.1      30.3
----------------------------------------------------------------------------
Capital Ratios (%)
Common Equity Tier 1 Capital
 Ratio                            9.7      9.3      9.7       9.7       9.7
Tier 1 Capital Ratio             11.1     10.6     11.3      11.1      11.3
Total Capital Ratio              13.0     12.4     13.7      13.0      13.7
----------------------------------------------------------------------------
Net Income by Operating Group
  Canadian P&C                    480      484      421       964       868
  U.S. P&C                        155      166      151       321       330
----------------------------------------------------------------------------
Personal and Commercial
 Banking                          635      650      572     1,285     1,198
Wealth Management                 194      175      140       369       302
BMO Capital Markets               305      277      261       582       559
Corporate Services, including
 Technology and Operations
 (T&O)                            (58)     (41)     (11)      (99)      (61)
----------------------------------------------------------------------------
BMO Financial Group net
 income                         1,076    1,061      962     2,137     1,998
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  This ratio is calculated excluding insurance policyholder benefits,
     claims and acquisition expenses (PBCAE).
(2)  Net economic profit is a non-GAAP measure and is discussed in the Non-
     GAAP Measures section.

----------------------------------------------------------------------------
Summary Data - Adjusted (1)                                          Table 2
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
Adjusted Summary Income
 Statement
Net interest income             2,063    2,113    1,954     4,176     3,990
Non-interest revenue            1,978    2,009    1,754     3,987     3,530
----------------------------------------------------------------------------
Revenue                         4,041    4,122    3,708     8,163     7,520
Provision for credit losses       162       99      109       261       205
Non-interest expense            2,566    2,653    2,384     5,219     4,828
Provision for income taxes        216      287      231       503       474
----------------------------------------------------------------------------
Net income                      1,097    1,083      984     2,180     2,013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
  Attributable to bank
   shareholders                 1,083    1,070      966     2,153     1,977
  Attributable to non-
   controlling interest in
   subsidiaries                    14       13       18        27        36
----------------------------------------------------------------------------
Net income                      1,097    1,083      984     2,180     2,013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted Common Share Data
Earnings per share ($)           1.63     1.61     1.44      3.24      2.94
Earnings per share growth (%)    13.2      7.3      0.7      10.2       3.5
----------------------------------------------------------------------------
Adjusted Financial Measures
 and Ratios (%)
Return on equity                 14.6     14.5     14.6      14.6      14.7
Net income growth                11.2      5.4      1.1       8.2       3.9
Revenue growth                    8.9      8.2      0.9       8.5       2.1
Non-interest expense growth       7.7      8.5      2.3       8.1       3.1
Efficiency ratio                 63.5     64.3     64.3      63.9      64.2
Efficiency ratio, excluding
 PBCAE (2)                       58.8     59.2     58.8      59.0      60.2
Operating leverage                1.2     (0.3)    (1.4)      0.4      (1.0)
Net interest margin on
 average earning assets          1.59     1.62     1.67      1.61      1.68
Effective tax rate               16.5     20.9     19.0      18.7      19.0
----------------------------------------------------------------------------
Adjusted Net Income By
 Operating Group
  Canadian P&C                    482      486      422       968       872
  U.S. P&C                        167      178      164       345       356
----------------------------------------------------------------------------
Personal and Commercial
 Banking                          649      664      586     1,313     1,228
Wealth Management                 200      183      147       383       315
BMO Capital Markets               306      277      262       583       560
Corporate Services, including
 T&O                              (58)     (41)     (11)      (99)      (90)
----------------------------------------------------------------------------
BMO Financial Group net
 income                         1,097    1,083      984     2,180     2,013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  The above results and statistics are presented on an adjusted basis.
     These are non-GAAP amounts or non-GAAP measures. Please see the Non-
     GAAP Measures section.
(2)  This ratio is calculated excluding insurance policyholder benefits,
     claims and acquisition expenses (PBCAE).

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 2014 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, U.S. and international 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; weak, volatile or illiquid capital and/or credit markets; interest rate and currency value fluctuations; changes in monetary, fiscal or economic policy; the degree of competition in the geographic and business areas in which we operate; changes in laws or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance; 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, including obtaining regulatory approvals; critical accounting estimates and the effect of changes to accounting standards, rules and interpretations on these estimates; operational and infrastructure risks; changes to our credit ratings; general political conditions; global capital markets activities; the possible effects on our business of war or terrorist activities; disease or illness that affects local, national or international economies; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; technological changes; and our ability to anticipate and effectively manage risks associated with all of the foregoing factors.

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 30 to 31 of BMO's 2013 Annual Report, which outlines in detail certain key factors that may affect Bank of Montreal'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 statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders in understanding our financial position as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the level of default and losses on default were material factors we considered when establishing our expectations regarding the future performance of the transactions into which our credit protection vehicle has entered. Among the key assumptions were that the level of default and losses on default will be consistent with historical experience. Material factors that were taken into account when establishing our expectations regarding the future risk of credit losses in our credit protection vehicle and risk of loss to Bank of Montreal included industry diversification in the portfolio, initial credit quality by portfolio, the first-loss protection incorporated into the structure and the hedges into which Bank of Montreal has entered.

Assumptions about the performance of the Canadian and U.S. economies, as well as overall market conditions and their combined effect on our business, are material factors we consider when determining our strategic priorities, objectives and expectations for our business. 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. See the Economic Review and Outlook section of this interim MD&A.

Economic Review and Outlook

After strengthening moderately in the second half of 2013, the Canadian economy has slowed, largely in response to the inclement weather. However, recent data on manufacturing and exports suggest the economy is benefiting from the weaker Canadian dollar and firmer global demand. The Eurozone economy is growing again, albeit modestly, while China's economic slowdown has stabilized at a still-strong growth rate above 7%. Canadian consumer spending is projected to grow moderately, restrained by elevated household debt, while home sales and construction should continue to slow. Consumer credit and residential mortgage growth will likely moderate further. Business investment is expected to strengthen in response to firmer exports and higher energy prices received by Canadian producers, supporting business loan growth. Economic growth is expected to increase from 2.0% in 2013 to 2.3% in 2014, reducing the unemployment rate to 6.8% by year end. Continued low inflation will likely encourage the Bank of Canada to maintain a steady interest rate policy for a fourth consecutive year. The trade deficit should decline as the Canadian dollar weakens further in response to higher long-term interest rates in the United States than in Canada.

After slowing in response to the severe winter weather, the U.S. economy is returning to the strong growth experienced in the second half of 2013. Improved household finances, replacement demand for motor vehicles and pent-up demand for housing are supporting the economy. At the same time, a smaller federal budget deficit and improved finances at the state and local levels of government imply less restrictive fiscal policies. Diminished political uncertainty will support business investment and the demand for business credit. Residential mortgages and consumer loan growth should improve. Economic growth is projected to increase from 1.9% in 2013 to 2.5% in 2014, reducing the unemployment rate below 6.0% by year end. The Federal Reserve is expected to continue reducing its purchases of fixed-income securities, resulting in moderate upward pressure on long-term interest rates. However, policy rates are not expected to increase until the middle of 2015.

The U.S. Midwest region, which includes the six states in BMO's U.S. footprint, grew approximately 1.6% in 2013, held back by fiscal policy consolidation. However, stronger growth of 2.5% is expected in 2014 in response to strengthening exports and increased automotive production.

This Economic Review and Outlook section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Other Value Measures

BMO's average annual total shareholder returns for the one-year, three-year and five-year periods ending April 30, 2014, were 24.8%, 11.8% and 19.4%, respectively.

Foreign Exchange

The Canadian dollar equivalents of BMO's U.S.-dollar-denominated net income, revenues, expenses, recovery of (provisions for) credit losses and income taxes were increased relative to the first quarter of 2014, the second quarter of 2013 and the prior year to date by the strengthening of the U.S. dollar. The average Canadian/U.S. dollar exchange rate for the quarter, expressed in terms of the Canadian dollar cost of a U.S. dollar, increased by 8% from a year ago and 2% from the first quarter. The average rate for the year to date increased by 8% from a year ago. BMO may execute hedging transactions to mitigate the impact of foreign exchange rate movements on net income. Table 3 indicates the relevant average Canadian/U.S. dollar exchange rates and the impact of changes in the rates.

This Foreign Exchange section contains forward-looking statements. Please see the Caution Regarding Forward Looking Statements.


----------------------------------------------------------------------------
Effects of Changes in Exchange Rates on BMO's Reported and
 Adjusted Results                                                    Table 3
----------------------------------------------------------------------------


                                               Q2-2014             YTD-2014
                                        ----------------------  ------------
(Canadian $ in millions, except as
 noted)                                 vs Q2-2013 vs Q1-2014   vs YTD-2013
--------------------------------------------------------------  ------------
Canadian/U.S. dollar exchange rate
 (average)
  Current period                            1.1029     1.1029        1.0913
  Prior period                              1.0180     1.0800        1.0064

Effects on reported results
Increased net interest income                   54         15           111
Increased non-interest revenue                  45         12            91
----------------------------------------------------------------------------
Increased revenues                              99         27           202
Increased expenses                             (75)       (20)         (150)
Increased recovery of (provision for)
 credit losses                                  (2)        (1)            1
Increased income taxes                          (5)        (1)          (12)
----------------------------------------------------------------------------
Increased reported net income                   17          5            41
----------------------------------------------------------------------------

Effects on adjusted results
Increased net interest income                   49         15           100
Increased non-interest revenue                  45         12            91
----------------------------------------------------------------------------
Increased revenues                              94         27           191
Increased expenses                             (73)       (20)         (146)
Increased recovery of (provision for)
 credit losses                                  (1)        (1)            5
Increased income taxes                          (4)        (1)          (10)
----------------------------------------------------------------------------
Increased adjusted net income                   16          5            40
----------------------------------------------------------------------------
Adjusted results in this section are non-GAAP amounts or non-GAAP Measures.
Please see the non-GAAP Measures section.

Net Income

Q2 2014 vs Q2 2013

Net income was $1,076 million for the second quarter of 2014, up $114 million or 12% from a year ago. EPS was $1.60, up $0.20 or 14% from a year ago.

Adjusted net income was $1,097 million, up $113 million or 11% from a year ago. Adjusted EPS was $1.63, up $0.19 or 13% from a year ago. Adjusted results and items excluded in determining adjusted results are disclosed in detail in the preceding Adjusted Net Income section and in the Non-GAAP Measures section, together with comments on the uses and limitations of such measures.

On an adjusted basis, net income growth was driven by strong results in Canadian P&C, Wealth Management and BMO Capital Markets. Canadian P&C results reflected strong balance and fee volumes, partially offset by lower net interest margin. Wealth Management posted strong results with adjusted net income up 36% due to higher revenue across all businesses driven by strong growth in client assets, and higher insurance revenue, partially offset by higher revenue-based costs. BMO Capital Markets results were up due to good revenue performance in both the Investment and Corporate Banking and the Trading Products businesses and a more favourable tax rate, partially offset by increased employee-related expenses and support costs. U.S. P&C net income declined on a U.S. dollar basis, due to lower revenue as the benefits from strong commercial loan growth and lower provisions for credit losses were more than offset by the effects of lower net interest margin and reduced gains on sales of newly originated mortgages. Corporate Services adjusted results decreased primarily due to lower recoveries on the purchased credit impaired loan portfolio.

Q2 2014 vs Q1 2014

Net income increased $15 million and EPS increased $0.02. Adjusted net income increased $14 million and adjusted EPS increased by $0.02. The impact of the stronger U.S. dollar increased adjusted net income growth by $5 million.

Net income growth in Canadian P&C decreased due to three fewer days in the current quarter, largely offset by lower expenses and lower provisions for credit losses. Net income increased in Wealth Management due to higher revenue, driven by growth in client assets and increased insurance revenue, and lower expenses. BMO Capital Markets results were up as lower revenue was more than offset by lower expenses and a more favourable tax rate. U.S. P&C adjusted net income decreased on a U.S. dollar basis, as the benefits of lower expenses were more than offset by increased provisions for credit losses and fewer days. Corporate Services adjusted results decreased primarily due to lower recoveries on the purchased credit impaired loan portfolio, partly offset by lower expenses.

Q2 YTD 2014 vs Q2 YTD 2013

Net income increased $139 million or 7% to $2,137 million. EPS was $3.18, up $0.27 or 9% from a year ago. Adjusted net income was $2,180 million, up $167 million or 8% from a year ago. The impact of the stronger U.S. dollar increased adjusted net income growth by $40 million or 2%. Adjusted EPS was $3.24, up $0.30 or 10% from a year ago. On an adjusted basis, there was strong growth in Wealth Management and Canadian P&C, good growth in BMO Capital Markets and a decline in U.S. P&C. Adjusted net income in Corporate Services was lower relative to the same period a year ago.

Adjusted results in this Net Income section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Revenue

Q2 2014 vs Q2 2013

Total revenue of $4,041 million increased $148 million or 4% from the second quarter last year. Adjusted revenue increased $333 million or 9% to $4,041 million. Excluding the impact of the stronger U.S. dollar, adjusted revenue increased by $239 million or 6%. Canadian P&C had good results due to strong balance and fee volumes, partially offset by the impact of a lower net interest margin. Wealth Management had strong revenue growth, with traditional wealth up 11%. Insurance revenue increased as the prior year was impacted by unfavourable movements in long-term interest rates. BMO Capital Markets also had good revenue performance in both the Investment and Corporate Banking and Trading Products businesses. U.S. P&C revenue decreased on a U.S. dollar basis, as the benefits of strong commercial loan growth were more than offset by lower net interest margin and reduced gains on sales of newly originated mortgages. Adjusted revenue decreased in Corporate Services due to the impact of a higher group teb adjustment and other smaller items, net of credit-related revenue on the purchased performing loan portfolio.

Net interest income decreased $66 million or 3% from a year ago to $2,063 million. Adjusted net interest income increased $109 million or 5% to $2,063 million, due to volume growth, revenue from the purchased performing loan portfolio and the impact of the stronger U.S. dollar, partially offset by a lower net interest margin. BMO's overall net interest margin decreased on a reported basis by 23 basis points from a year ago to 1.59%. Adjusted net interest margin decreased by 8 basis points to 1.59%. Average earning assets increased $49.5 billion or 10% to $530.6 billion, including a $16.5 billion increase as a result of the stronger U.S. dollar.

Non-interest revenue increased $214 million or 12% from a year ago to $1,978 million. Adjusted non-interest revenue increased $224 million or 13% to $1,978 million, due to increases in all types of non-interest revenue, with the exception of foreign exchange, other than trading, and securities gains.

Q2 2014 vs Q1 2014

Reported and adjusted revenue decreased $81 million or 2% from the first quarter. Excluding the impact of the stronger U.S. dollar, adjusted revenue decreased by $108 million or 3% due to fewer days in the quarter. There was lower revenue in Canadian P&C, primarily due to three fewer days. Revenue in Wealth Management increased, with revenue growth in traditional wealth driven by growth in client assets, and higher insurance revenue. Revenue in BMO Capital Markets was lower, reflecting decreases in investment banking fees and securities gains, partly offset by increased equity and foreign exchange trading. U.S. P&C revenue was stable on a U.S. dollar basis, despite the impact of fewer days. Corporate Services adjusted revenue was lower due to a higher group teb offset.

Reported and adjusted net interest income decreased $50 million or 2%, in large part due to three fewer days in the current quarter. BMO's overall net interest margin decreased by 3 basis points from the first quarter. Average earning assets increased $14.6 billion or 3% from the prior quarter, of which $4.4 billion related to the stronger U.S. dollar.

Reported and adjusted non-interest revenue decreased $31 million or 2%, primarily due to lower underwriting and advisory fees, trading revenues and fewer days.

Q2 YTD 2014 vs Q2 YTD 2013

Year-to-date revenue increased $238 million or 3% and adjusted revenue increased $643 million or 9%. Excluding the impact of the stronger U.S. dollar, adjusted revenue increased $452 million or 6%.

Net interest income decreased $201 million or 5% year to date. Adjusted net interest income increased $186 million or 5%, mainly due to revenue from the purchased performing loan portfolio and volume growth, offset by lower net interest margin. BMO's overall net interest margin declined by 24 basis points to 1.61%. Adjusted net interest margin declined by 7 basis points to 1.61%. Average earning assets increased by $44.6 billion, of which $16.1 billion was due to the stronger U.S. dollar.

Non-interest revenue increased $439 million or 12% year to date. Adjusted non-interest revenue increased $457 million or 13% with increases in all types of non-interest revenue except underwriting and advisory fees and foreign exchange, other than trading.

Net interest income and non-interest revenue are detailed in the unaudited interim consolidated financial statements.

Adjusted results in this Revenue section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.


----------------------------------------------------------------------------
Adjusted Net Interest Margin on Average Earning Assets (teb)(i)      Table 4
----------------------------------------------------------------------------

(In basis points)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
  Canadian P&C                    258      261      264       260       267
  U.S. P&C                        376      383      410       380       411
----------------------------------------------------------------------------
Personal and Commercial
 Banking                          290      293      303       291       304
Wealth Management                 264      273      283       268       285
BMO Capital Markets                59       48       59        53        58
Corporate Services, including
 T&O(ii)                           nm       nm       nm        nm        nm
----------------------------------------------------------------------------
Total BMO adjusted net
 interest margin(iii)             159      162      167       161       168
Total BMO adjusted net
 interest margin (excluding
 trading)(iii)                    196      203      203       199       204
----------------------------------------------------------------------------
Total BMO reported net
 interest margin                  159      162      182       161       185
Total BMO reported net
 interest margin (excluding
 trading)                         196      203      221       199       225
----------------------------------------------------------------------------
Total Canadian Retail
 (reported and adjusted)(iv)      257      260      263       258       266
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i)   Net interest margin is disclosed and computed with reference to
      average earning assets, rather than total assets. This basis provides
      a more relevant measure of margins and changes in margins. Operating
      group margins are stated on a taxable equivalent basis (teb) while
      total BMO margin is stated on a GAAP basis.
(ii)  Corporate Services adjusted net interest income is negative in all
      periods and its variability affects changes in net interest margin.
(iii) These are non-GAAP amounts or non-GAAP measures. Please see the Non-
      GAAP Measures section.
(iv)  Total Canadian retail margin represents the net interest margin of the
      combined Canadian businesses of Canadian P&C and Wealth Management.

nm - not meaningful

Provisions for Credit Losses

Q2 2014 vs Q2 2013

The total provision for credit losses (PCL) was $162 million, an increase of $18 million from the prior year. Adjusted PCL increased by $53 million from the prior year due to lower recoveries. There was no net change to the collective allowance in the quarter.

Canadian P&C provisions decreased by $20 million to $133 million, due to a decrease in provisions in both the commercial and consumer portfolios. Wealth Management provisions were relatively stable year over year. Recoveries of credit losses in BMO Capital Markets were $2 million lower. U.S. P&C provisions of $50 million decreased by $5 million due to lower provisions in the consumer portfolio, partially offset by higher provisions in the commercial portfolio. Corporate Services adjusted recoveries of $19 million declined by $75 million, primarily due to a $62 million decrease in recoveries on the purchased credit impaired loan portfolio.

Q2 2014 vs Q1 2014

The reported and adjusted PCL increased by $63 million from the prior quarter. There was no net change to the collective allowance in the quarter.

Canadian P&C provisions decreased by $8 million, as a decrease in the commercial portfolio was partially offset by an increase in the consumer portfolio. Wealth Management provisions increased by $3 million. Recoveries of credit losses in BMO Capital Markets were $3 million higher in the current quarter. U.S. P&C provisions increased by $31 million due to increases in the commercial portfolio from the low levels in the first quarter. Corporate Services adjusted recoveries decreased by $40 million mainly due to a decrease in recoveries on the purchased credit impaired loan portfolio.

Adjusted results in this Provisions for Credit Losses section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.


----------------------------------------------------------------------------
Provision for Credit Losses by Operating Group                       Table 5
----------------------------------------------------------------------------

(Canadian $ in millions)      Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
  Canadian P&C                    133      141      153       274       281
  U.S. P&C                         50       19       55        69        87
----------------------------------------------------------------------------
Personal and Commercial
 Banking                          183      160      208       343       368
Wealth Management                   2       (1)       1         1         3
BMO Capital Markets                (4)      (1)      (6)       (5)      (21)
Corporate Services, including
 T&O (1)(2)                       (19)     (59)     (94)      (78)     (145)
----------------------------------------------------------------------------
Adjusted provision for credit
 losses                           162       99      109       261       205
Purchased performing loans
 (1)                                -        -       65         -       147
Decrease in collective
 allowance                          -        -      (30)        -       (30)
----------------------------------------------------------------------------
Provision for credit losses       162       99      144       261       322
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Effective Q1-2014, Corporate Services adjusted results include credit-
     related items in respect of the purchased performing loan portfolio,
     including $21 million specific provisions for credit losses in the
     current period ($34 million in Q1-2014).
(2)  Corporate Services results include purchased credit impaired loan
     recoveries of $45 million in Q2-2014 ($28 million after tax); $117
     million in Q1-2014 ($72 million after tax); and $107 million in Q2-2013
     ($66 million after tax).
This table contains adjusted results and measures, which are Non-GAAP.
Please see the Non-GAAP Measures section.

----------------------------------------------------------------------------
Changes to Provision for Credit Losses                               Table 6
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
New specific provisions           348      358      406       706       824
Reversals of previously
 established allowances           (47)     (48)     (49)      (95)     (131)
Recoveries of loans
 previously written-off          (139)    (211)    (183)     (350)     (341)
----------------------------------------------------------------------------
Specific provision for credit
 losses                           162       99      174       261       352
Decrease in collective
 allowance                          -        -      (30)        -       (30)
----------------------------------------------------------------------------
Provision for credit losses       162       99      144       261       322
----------------------------------------------------------------------------
PCL as a % of average net
 loans and acceptances
 (annualized)                    0.22     0.14     0.22      0.18      0.25
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Impaired Loans

Total gross impaired loans (GIL) were $2,325 million at the end of the current quarter, down from $2,482 million in the first quarter of 2014 and down from $2,848 million a year ago.

Factors contributing to the change in GIL are outlined in Table 7 below. Loans classified as impaired during the quarter totalled $509 million in the current quarter, down from $642 million in the first quarter of 2014 and $595 million a year ago.


----------------------------------------------------------------------------
Changes in Gross Impaired Loans (GIL) and Acceptances (1)            Table 7
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
GIL, beginning of period        2,482    2,544    2,912     2,544     2,976
Classified as impaired during
 the period                       509      642      595     1,151     1,225
Transferred to not impaired
 during the period               (244)    (154)    (196)     (398)     (352)
Net repayments                   (185)    (446)    (232)     (631)     (521)
Amounts written-off              (149)    (203)    (216)     (352)     (451)
Recoveries of loans and
 advances previously written-
 off                                -        -        -         -         -
Disposals of loans                (63)      (2)     (56)      (65)      (87)
Foreign exchange and other
 movements                        (25)     101       41        76        58
----------------------------------------------------------------------------
GIL, end of period              2,325    2,482    2,848     2,325     2,848
----------------------------------------------------------------------------
GIL as a % of gross loans and
 acceptances                     0.79     0.85     1.08      0.79      1.08
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  GIL excludes purchased credit impaired loans.

For further discussion of risk management practices and key measures, see the Risk Management section.

Non-Interest Expense

Non-interest expense increased $44 million or 2% from the second quarter a year ago to $2,594 million. Adjusted non-interest expense increased $182 million or 8% to $2,566 million, or 5% excluding the impact of the stronger U.S. dollar, primarily due to higher employee-related expenses, including performance-based compensation, and increased technology and support costs related to a changing business and regulatory environment.

Non-interest expense decreased $90 million or 3% relative to the first quarter. Adjusted non-interest expense decreased $87 million or 3%. Excluding the impact of the stronger U.S. dollar, adjusted non-interest expense decreased by $107 million or 4%, primarily due to $66 million of stock-based compensation for employees eligible to retire that is expensed in the first quarter of each year and lower severance costs.

Year-over-year operating leverage on a reported basis was 1.9% and adjusted operating leverage was 1.2%. The adjusted efficiency ratio of 63.5% for the second quarter of 2014 improved by 80 basis points from a year ago and from the prior quarter.

Non-interest expense for the year to date increased $158 million or 3% to $5,278 million. Adjusted non-interest expense increased $391 million or 8% to $5,219 million, or 5% excluding the impact of the stronger U.S. dollar, primarily due to higher employee-related expenses, including performance-based compensation, and increased technology and support costs related to a changing business and regulatory environment.

Non-interest expense is detailed in the unaudited interim consolidated financial statements.

Adjusted results in this Non-Interest Expense section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Income Taxes

The provision for income taxes of $209 million decreased $28 million from the second quarter of 2013 and decreased $69 million from the first quarter of 2014. The effective tax rate for the quarter was 16.2%, compared with 19.8% a year ago and 20.8% in the first quarter of 2014.

The adjusted provision for income taxes of $216 million decreased $15 million from a year ago and decreased $71 million from the first quarter of 2014. The adjusted effective tax rate was 16.5% in the current quarter, compared with 19.0% a year ago and 20.9% in the first quarter of 2014. The lower adjusted tax rate in the current quarter relative to the second quarter of 2013 was primarily due to higher tax-exempt income. The lower adjusted tax rate in the current quarter relative to the first quarter of 2014 was primarily due to higher tax-exempt income and a lower proportion of income from higher tax-rate jurisdictions.

Adjusted results in this Income Taxes section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Capital Management

Second Quarter 2014 Regulatory Capital Review

BMO's Common Equity Tier 1 (CET1) Ratio was 9.7% at April 30, 2014.

The CET1 Ratio increased by approximately 40 basis points from 9.3% at the end of the first quarter due to a net decrease in risk-weighted assets (RWA) and increased retained earnings. The CET1 Ratio decreased by approximately 20 basis points from 9.9% at October 31, 2013, due to higher RWA, partly offset by a benefit from increased retained earnings.

RWA of $235 billion at April 30, 2014, decreased by $5 billion from the first quarter due to reduced market risk exposures and lower credit risk primarily due to improved risk assessments and the impact of a strengthening Canadian dollar during the second quarter, partially offset by updates to calculation methodologies. RWA increased $20 billion from October 31, 2013, primarily due to increased business-driven source currency RWA, newly-implemented Credit Valuation Adjustment (CVA) rules and IFRS accounting standards, and the impact of a strengthening of the U.S. dollar during the first half of the year, partly offset by a decrease in RWA during the second quarter, as noted above.

The RWA attributable to the CVA for CET1 during fiscal 2014, and for Tier 1 and Total Capital during the first and second quarters of 2014, was 57% of the fully-implemented charge. This will increase each year until it reaches 100% by 2019.

CET1 capital at April 30, 2014, was $22.7 billion, up $0.4 billion from the first quarter and $1.5 billion from October 31, 2013, mainly due to retained earnings growth and the net impact of foreign exchange movements on U.S.-dollar-denominated investments in foreign operations and related hedges.

The bank's Tier 1 and Total Capital Ratios were 11.1% and 13.0%, respectively, at April 30, 2014, compared with 10.6% and 12.4%, respectively, at January 31, 2014, and 11.4% and 13.7%, respectively, at October 31, 2013. These ratios changed from the prior quarter and from October 31, 2013, primarily due to the same factors that caused changes in the CET1 Ratio, described above, and due to the issuance of preferred shares, which was partially offset by preferred share redemptions, as described below.

The Office of the Superintendent of Financial Institutions (OSFI) has announced that the Assets-to-Capital Multiple (ACM), based on Total Capital, will be discontinued in 2015 and will be replaced by the Basel III Leverage Ratio. BMO's ACM was 16.8 at April 30, 2014, improved from 17.4 in the first quarter but up from 15.6 at October 31, 2013, primarily due to increases in Total Capital.

BMO's investments in foreign operations are primarily denominated in U.S. dollars. The foreign exchange impact of U.S.-dollar-denominated RWA on Canadian-dollar equivalent RWA, and the impact of U.S.-dollar-denominated capital deductions on our Canadian dollar capital, also may result in variability in the bank's capital ratios. BMO may enter into hedging arrangements to reduce the impact of foreign exchange movements on its capital ratios.

Pages 61 to 65 and pages 92 to 94 of BMO's 2013 Annual Report provide disclosure on Enterprise-Wide Capital Management and Liquidity and Funding Risk, including regulatory requirements impacting capital and liquidity.

Other Capital Developments

On May 7, 2014, we announced that we had completed the acquisition of F&C. The acquisition is expected to reduce BMO's CET1 Ratio by approximately 75 basis points.

During the quarter, we redeemed all of our Non-cumulative Class B Preferred Share Series 18, at a redemption price of $25.00 per share plus declared and unpaid dividends up to but excluding the date fixed for redemption.

On April 16, 2014, we announced our intention to redeem all of our Non-cumulative Class B Preferred Shares Series 21 on May 25, 2014, at a redemption price of $25.00 per share plus declared and unpaid dividends up to but excluding the date fixed for redemption.

On April 23, 2014, we completed our public offering of Non-cumulative 5-Year Rate Reset Class B Preferred Shares Series 27, our inaugural issuance of non-viability contingent capital securities. We issued 20 million shares for aggregate proceeds of $500 million.

During the quarter, 632,999 common shares were issued through the exercise of stock options.

No shares were repurchased during the quarter under the bank's normal course issuer bid. The timing and amount of purchases under the program are subject to management discretion based on factors such as market conditions and capital levels. Capital expectations for banks have been increasing internationally. In the current environment we expect to maintain capital levels above published minimum CET1 regulatory requirements and do not expect to be active under the normal course issuer bid when BMO's CET1 Ratio is below 9.5%. The bank will periodically consult with OSFI before making purchases under the bid.

On May 28, 2014, BMO announced that the Board of Directors had declared a quarterly dividend payable to common shareholders of $0.78 per common share, up $0.02 per share from the preceding quarter and up $0.04 per share from a year ago. The dividend reflects the success of our business strategies.

The dividend is payable August 26, 2014, to shareholders of record on August 1, 2014. Common shareholders may elect to have their cash dividends reinvested in common shares of the bank in accordance with the shareholder dividend reinvestment and share purchase plan (the Plan). As previously announced, such additional common shares will be issued from treasury until further notice. Commencing with the common share dividend declared on May 28, 2014, common shares issued under the Plan will, until further notice, have a two percent discount from the average market price (as defined in the Plan).


----------------------------------------------------------------------------
Qualifying Regulatory Capital and Risk-Weighted Assets               Table 8
----------------------------------------------------------------------------

                                  Q2-2014                  Q1-2014
                          ------------------------ ------------------------
                             All-in  Transitional     All-in  Transitional
(Canadian $ in millions)        (1)           (2)        (1)           (2)
                          ------------------------ ------------------------

-------------------------------------------------- ------------------------
  Gross Common Equity (3)    29,646        29,646     29,391        29,391
  Regulatory adjustments
   applied to Common
   Equity                    (6,918)       (1,298)    (7,051)       (1,465)
-------------------------------------------------- ------------------------
Common Equity Tier 1
 capital (CET1)              22,728        28,348     22,340        27,926
-------------------------------------------------- ------------------------
  Additional Tier 1
   Eligible Capital (4)       3,835         3,835      3,457         3,457
  Regulatory adjustments
   applied to Tier 1           (413)       (3,203)      (415)       (3,256)
-------------------------------------------------- ------------------------
Additional Tier 1 capital
 (AT1)                        3,422           632      3,042           201
-------------------------------------------------- ------------------------
Tier 1 capital (T1 = CET1
 + AT1)                      26,150        28,980     25,382        28,127
-------------------------------------------------- ------------------------
  Tier 2 Eligible Capital
   (5)                        4,357         4,357      4,321         4,321
  Regulatory adjustments
   applied to Tier 2            (50)          (10)       (50)          (12)
-------------------------------------------------- ------------------------
Tier 2 capital (T2)           4,307         4,347      4,271         4,309
-------------------------------------------------- ------------------------
Total capital (TC = T1 +
 T2)                         30,457        33,327     29,653        32,436
-------------------------------------------------- ------------------------
Total risk-weighted assets  234,774       240,074    240,076       246,232
-------------------------------------------------- ------------------------

Capital Ratios (%)
CET1 Ratio                      9.7          11.8        9.3          11.3
Tier 1 Capital Ratio           11.1          12.1       10.6          11.4
Total Capital Ratio            13.0          13.9       12.4          13.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                  Q4-2013
                          ------------------------
                             All-in  Transitional
(Canadian $ in millions)        (1)           (2)
                          ------------------------

--------------------------------------------------
  Gross Common Equity (3)    28,144        28,144
  Regulatory adjustments
   applied to Common
   Equity                    (6,917)            9
--------------------------------------------------
Common Equity Tier 1
 capital (CET1)              21,227        28,153
--------------------------------------------------
  Additional Tier 1
   Eligible Capital (4)       3,781         3,781
  Regulatory adjustments
   applied to Tier 1           (409)       (3,781)
--------------------------------------------------
Additional Tier 1 capital
 (AT1)                        3,372             -
--------------------------------------------------
Tier 1 capital (T1 = CET1
 + AT1)                      24,599        28,153
--------------------------------------------------
  Tier 2 Eligible Capital
   (5)                        4,951         4,951
  Regulatory adjustments
   applied to Tier 2            (50)          (13)
--------------------------------------------------
Tier 2 capital (T2)           4,901         4,938
--------------------------------------------------
Total capital (TC = T1 +
 T2)                         29,500        33,091
--------------------------------------------------
Total risk-weighted assets  215,094       232,501
--------------------------------------------------

Capital Ratios (%)
CET1 Ratio                      9.9          12.1
Tier 1 Capital Ratio           11.4          12.1
Total Capital Ratio            13.7          14.2
--------------------------------------------------
--------------------------------------------------
(1)  "All-in" regulatory capital assumes that all Basel III regulatory
     adjustments are applied effective January 1, 2013, and that the capital
     value of instruments which no longer qualify as regulatory capital
     under Basel III rules will be phased out at a rate of 10% per year from
     January 1, 2013, and continuing to January 1, 2022.
(2)  Transitional regulatory capital assumes that all Basel III regulatory
     capital adjustments are phased in from January 1, 2014, to January 1,
     2018, and that the capital value of instruments that no longer qualify
     as regulatory capital under Basel III rules will be phased out at a
     rate of 10% per year from January 1, 2013, and continuing to January 1,
     2022.
(3)  Gross Common Equity includes issued qualifying common shares, retained
     earnings, accumulated other comprehensive income and eligible common
     share capital issued by subsidiaries.
(4)  Additional Tier 1 Eligible Capital includes directly and indirectly
     issued qualifying Additional Tier 1 instruments and directly and
     indirectly issued capital instruments, to the extent eligible, which
     are subject to phase-out under Basel III.
(5)  Tier 2 Eligible Capital includes directly and indirectly issued
     qualifying Tier 2 instruments and directly and indirectly issued
     capital instruments, to the extent eligible, that are subject to phase-
     out under Basel III.

----------------------------------------------------------------------------
Outstanding Shares and Securities Convertible into Common Shares     Table 9
----------------------------------------------------------------------------

                                                            Number of shares
                                                            or dollar amount
As at May 21, 2014                                             (in millions)
----------------------------------------------------------------------------

Common shares                                                            645
Class B Preferred Shares
  Series 13                                                       $      350
  Series 14                                                       $      250
  Series 15                                                       $      250
  Series 16                                                       $      157
  Series 17                                                       $      143
  Series 21 (1)                                                   $      275
  Series 23                                                       $      400
  Series 25                                                       $      290
  Series 27 (2)                                                   $      500

Stock options
- vested                                                                 8.0
- non-vested                                                             6.8

----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  The Series 21 Preferred Shares were redeemed on May 25, 2014.
(2)  The Series 27 Preferred Shares were issued on April 23, 2014 and are
     classified as liabilities on our Consolidated Balance Sheet.

Details on share capital are outlined in Note 20 to the audited consolidated
financial statements on page 163 of BMO's 2013 Annual Report.

Caution

The foregoing Capital Management sections contain forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Eligible Dividends Designation

For the purposes of the Income Tax Act (Canada) and any similar provincial and territorial legislation, BMO designates all dividends paid or deemed to be paid on both its common and preferred shares as "eligible dividends", unless indicated otherwise.

Review of Operating Groups' Performance

How BMO Reports Operating Group Results

The following sections review the financial results of each of our operating segments and operating groups for the second quarter of 2014.

Periodically, certain business lines and units within the business lines are transferred between client and corporate support groups to more closely align BMO's organizational structure with its strategic priorities. In addition, revenue and expense allocations are updated to more accurately align with current experience. Results for prior periods are restated to conform to the current presentation.

Corporate Services results reflect certain items in respect of the purchased loan portfolio, including the recognition of a portion of the credit mark that is reflected in net interest income over the term of the purchased loans and provisions and recoveries of credit losses on the purchased portfolio. Amounts excluded from adjusted results in prior years included credit-related items in respect of the purchased performing loan portfolio, acquisition integration costs, restructuring costs and run-off structured credit activities.

Effective November 1, 2013, we adopted several new and amended accounting pronouncements issued by the International Accounting Standards Board (IASB), which are outlined in Note 1 to the unaudited interim consolidated financial statements.

BMO analyzes revenue at the consolidated level based on GAAP revenue reflected in the consolidated financial statements rather than on a taxable equivalent basis (teb). Like many banks, we analyze revenue on a teb basis at the operating group level. This basis includes an adjustment that increases GAAP revenue and the GAAP provision for income taxes by an amount that would raise revenue on certain tax-exempt items to a level equivalent to amounts that would incur tax at the statutory rate. The offset to the group teb adjustments is reflected in Corporate Services revenue and income tax provisions. The teb adjustments for the second quarter of 2014 totalled $138 million, up from $85 million in the first quarter of 2014 and $71 million in the second quarter of 2013.


----------------------------------------------------------------------------
Personal and Commercial Banking (P&C)                               Table 10
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income (teb)       1,764    1,800    1,668     3,564     3,378
Non-interest revenue              559      550      529     1,109     1,065
----------------------------------------------------------------------------
Total revenue (teb)             2,323    2,350    2,197     4,673     4,443
Provision for credit losses       183      160      208       343       368
Non-interest expense            1,282    1,314    1,225     2,596     2,462
----------------------------------------------------------------------------
Income before income taxes        858      876      764     1,734     1,613
Income taxes (teb)                223      226      192       449       415
----------------------------------------------------------------------------
Reported net income               635      650      572     1,285     1,198
----------------------------------------------------------------------------
Adjusted net income               649      664      586     1,313     1,228
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net income growth (%)            11.2      3.8      0.7       7.3       3.2
Revenue growth (%)                5.8      4.6     (0.4)      5.2      (1.1)
Non-interest expense growth
 (%)                              4.7      6.3      1.0       5.5      (0.8)
Return on equity (%)             16.2     16.4     16.7      16.3      17.5
Adjusted return on equity (%)    16.5     16.8     17.1      16.7      17.9
Operating leverage (%)            1.1     (1.7)    (1.4)     (0.3)     (0.3)
Adjusted operating leverage
 (%)                              0.9     (2.0)    (1.9)     (0.5)     (0.7)
Efficiency ratio (%) (teb)       55.2     55.9     55.8      55.6      55.4
Adjusted efficiency ratio (%)
 (teb)                           54.4     55.1     54.8      54.7      54.5
Net interest margin on
 average earning assets (%)
 (teb)                           2.90     2.93     3.03      2.91      3.04
Average earning assets ($
 billions)                      249.8    244.0    225.9     246.8     223.8
Average current loans and
 acceptances ($ billions)       247.4    242.1    223.7     244.7     221.5
Average deposits ($ billions)   187.8    186.0    172.8     186.9     171.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

The Personal and Commercial Banking (P&C) operating group represents the sum of our two retail and business banking operating segments, Canadian Personal and Commercial Banking (Canadian P&C) and U.S. Personal and Commercial Banking (U.S. P&C). These operating segments are reviewed separately in the sections that follow.


----------------------------------------------------------------------------
Canadian Personal and Commercial Banking (Canadian P&C)             Table 11
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income (teb)       1,150    1,194    1,085     2,344     2,208
Non-interest revenue              410      408      388       818       768
----------------------------------------------------------------------------
Total revenue (teb)             1,560    1,602    1,473     3,162     2,976
Provision for credit losses       133      141      153       274       281
Non-interest expense              784      813      764     1,597     1,544
----------------------------------------------------------------------------
Income before income taxes        643      648      556     1,291     1,151
Provision for income taxes
 (teb)                            163      164      135       327       283
----------------------------------------------------------------------------
Reported net income               480      484      421       964       868
----------------------------------------------------------------------------
Adjusted net income               482      486      422       968       872
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Personal revenue                1,029    1,057      977     2,086     1,972
Commercial revenue                531      545      496     1,076     1,004
Net income growth (%)            14.3      8.2     (1.6)     11.1       0.7
Revenue growth (%)                6.0      6.5     (0.1)      6.2      (0.1)
Non-interest expense growth
 (%)                              2.7      4.2      3.2       3.5       2.1
Operating leverage (%)            3.3      2.3     (3.3)      2.7      (2.2)
Efficiency ratio (%) (teb)       50.2     50.8     51.8      50.5      51.9
Net interest margin on
 average earning assets (%)
 (teb)                           2.58     2.61     2.64      2.60      2.67
Average earning assets ($
 billions)                      182.9    181.2    168.2     182.0     166.7
Average current loans and
 acceptances ($ billions)       187.2    185.6    171.8     186.3     170.2
Average deposits ($ billions)   123.0    122.5    112.2     122.7     111.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

Q2 2014 vs Q2 2013

Canadian P&C net income of $480 million increased $59 million or 14% from a year ago. Revenue increased $87 million or 6% from the prior year due to strong balance and fee volumes, partially offset by the impact of lower net interest margin. Net interest margin decreased 6 basis points to 2.58% as a result of changes in mix. Operating leverage at 3.3% was very strong, and was above 2% for the third consecutive quarter.

In the personal banking segment, revenue increased $52 million year over year due to the impact of higher balance and fee volumes, partially offset by lower net interest margin. Total personal lending balances (excluding retail cards) increased 9% year over year. Personal deposit balances increased 10% mainly due to increased term deposits.

In the commercial banking segment, revenue increased $35 million due to the effects of higher balance and fee volumes, partially offset by the impact of lower net interest margin. Commercial loan balances (excluding corporate cards) increased 10% year over year, while commercial deposit balances grew 9%.

Provisions for credit losses fell $20 million or 13% due to a decrease in provisions in both the commercial and consumer portfolios. Non-interest expense increased $20 million or 3% due to continued investment in the business.

Average current loans and acceptances increased $15.4 billion or 9% from a year ago, and deposits increased $10.8 billion or 10%.

Q2 2014 vs Q1 2014

Net income decreased by $4 million from last quarter due to three fewer days in the quarter, largely offset by lower expenses and lower provisions for credit losses. Revenue decreased $42 million or 3% primarily due to fewer days. Net interest margin decreased 3 basis points as a result of changes in mix, including loans growing faster than deposits.

Personal revenue decreased $28 million and commercial revenue decreased $14 million, mainly due to three fewer days in the quarter.

Provisions for credit losses decreased $8 million, as a decrease in the commercial portfolio was partially offset by an increase in the consumer portfolio. Non-interest expense decreased $29 million or 4% mainly due to lower employee-related costs, including fewer days and the cost of stock-based compensation for employees that are eligible to retire that is expensed in the first quarter of each year.

Average current loans and acceptances increased $1.6 billion or 1% from the previous quarter, while deposits were $0.5 billion higher.

Q2 YTD 2014 vs Q2 YTD 2013

Net income increased $96 million or 11% year to date. Revenue increased $186 million or 6% due to higher balance and fee volumes, partially offset by the impact of lower net interest margin. Operating leverage was strong at 2.7%.

Provisions for credit losses decreased $7 million as lower consumer provisions were partially offset by higher provisions in the commercial portfolio. Non-interest expense increased $53 million or 3% due to continued investment in the business.

Average current loans and acceptances increased $16.2 billion or 10%, while deposits increased $11.5 billion or 10%. The rates of year-to-date loan and deposit growth were both higher than last year's levels.


----------------------------------------------------------------------------
U.S. Personal and Commercial Banking (U.S. P&C)                     Table 12
----------------------------------------------------------------------------

(US$ in millions, except as
 noted)                       Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income (teb)         557      561      573     1,118     1,162
Non-interest revenue              134      132      138       266       295
----------------------------------------------------------------------------
Total revenue (teb)               691      693      711     1,384     1,457
Provision for credit losses        45       18       53        63        86
Non-interest expense              451      464      453       915       912
----------------------------------------------------------------------------
Income before income taxes        195      211      205       406       459
Provision for income taxes
 (teb)                             55       58       57       113       131
----------------------------------------------------------------------------
Reported net income               140      153      148       293       328
----------------------------------------------------------------------------
Adjusted net income               151      164      159       315       353
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net income growth (%)            (5.5)   (14.8)     5.1     (10.6)      9.8
Adjusted net income growth
 (%)                             (5.9)   (15.0)     2.2     (10.8)      6.8
Revenue growth (%)               (2.6)    (7.2)    (3.7)     (5.0)     (3.6)
Non-interest expense growth
 (%)                             (0.4)     1.1     (4.8)      0.4      (5.7)
Adjusted non-interest expense
 growth (%)                       0.3      2.0     (4.0)      1.1      (5.0)
Operating leverage (%)           (2.2)    (8.3)     1.1      (5.4)      2.1
Adjusted operating leverage
 (%)                             (2.9)    (9.2)     0.3      (6.1)      1.4
Efficiency ratio (%) (teb)       65.3     67.0     63.8      66.1      62.6
Adjusted efficiency ratio (%)
 (teb)                           63.1     64.6     61.3      63.8      60.0
Net interest margin on
 average earning assets (%)
 (teb)                           3.76     3.83     4.10      3.80      4.11
Average earning assets ($
 billions)                       60.7     58.1     56.7      59.4      56.7
Average current loans and
 acceptances ($ billions)        54.6     52.4     51.0      53.5      51.0
Average deposits ($ billions)    58.8     58.9     59.5      58.8      59.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(Canadian $ equivalent in
 millions, except as noted)
Net interest income (teb)         614      606      583     1,220     1,170
Non-interest revenue              149      142      141       291       297
----------------------------------------------------------------------------
Total revenue (teb)               763      748      724     1,511     1,467
Provision for credit losses        50       19       55        69        87
Non-interest expense              498      501      461       999       918
----------------------------------------------------------------------------
Income before income taxes        215      228      208       443       462
Provision for income taxes
 (teb)                             60       62       57       122       132
----------------------------------------------------------------------------
Reported net Income               155      166      151       321       330
Adjusted net income               167      178      164       345       356
Average earning assets ($
 billions)                       66.9     62.8     57.7      64.8      57.1
Average current loans and
 acceptances ($ billions)        60.2     56.6     51.9      58.4      51.3
Average deposits ($ billions)    64.9     63.6     60.6      64.2      60.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

Q2 2014 vs Q2 2013 (in US$)

Net income of $140 million and adjusted net income of $151 million decreased $8 million or 6% from the second quarter a year ago.

Revenue of $691 million decreased $20 million or 3% from the prior year as the benefits from strong commercial loan growth were more than offset by lower net interest margin and reduced gains on sales of newly originated mortgages. Net interest margin decreased by 34 basis points to 3.76% primarily driven by a decline in loan spreads due to competitive pricing, changes in mix including loans growing faster than deposits, and lower deposit spreads in a low-rate environment.

Provisions for credit losses were $45 million, down $8 million due to lower provisions in the consumer portfolio, partially offset by higher provisions in the commercial portfolio. Non-interest expense of $451 million and adjusted non-interest expense of $436 million were essentially unchanged.

Average current loans and acceptances increased $3.6 billion or 7% year over year to $54.6 billion. There was continued strong double-digit growth in the core commercial and industrial loan portfolio, increasing $4.2 billion from a year ago to $26.3 billion. In addition, there was year-over-year growth in our indirect auto and commercial real estate portfolios. As expected, there were decreases in certain loan portfolios, including our mortgage loan portfolio, due to the effects of our continued practice of selling most mortgage originations. Average deposits of $58.8 billion decreased $0.7 billion year over year, due to growth in our commercial business and personal chequing balances being more than offset by a planned reduction in higher-cost time deposit balances, in addition to a transfer of certain customer balances to Wealth Management at the beginning of the current year.

Q2 2014 vs Q1 2014 (in US$)

Net income and adjusted net income decreased $13 million or 8% from the prior quarter as the benefits of lower expenses were more than offset by increased provisions for credit losses and fewer days.

Revenue was stable, despite the impact of fewer days, due to strong commercial loan growth, net of lower mortgage-related non-interest revenue. Strong commercial loan growth in the quarter was the primary driver of the 7 basis point decline in net interest margin. Loan and deposit spreads remain stable.

Provisions for credit losses increased by $27 million, due to increases in the commercial portfolio from the low levels in the first quarter. Non-interest expense decreased $13 million or 3%. Adjusted non-interest expense decreased $12 million or 2% mainly due to the cost of stock-based compensation for employees that are eligible to retire that is expensed in the first quarter of each year, and other declines reflecting a continued focus on productivity, net of costs associated with regulatory change.

Average current loans and acceptances increased by $2.2 billion or 4% from the prior quarter, our sixth consecutive quarter of positive growth. Average deposits remain relatively unchanged, as growth in chequing balances was offset by planned declines in higher-cost time deposit balances.

Q2 YTD 2014 vs Q2 YTD 2013 (in US$)

Net income of $293 million decreased $35 million or 11%. Adjusted net income of $315 million decreased $38 million or 11% primarily due to lower revenue.

Revenue decreased $73 million or 5% to $1,384 million. The benefits of strong growth in commercial loans were more than offset by the effect of lower net interest margin and reduced gains on sales of newly originated mortgages. Net interest margin decreased by 31 basis points to 3.80%, primarily driven by a decline in loan spreads due to a competitive pricing, changes in mix including loans growing faster than deposits, and lower deposit spreads in a low-rate environment.

Provisions for credit losses of $63 million decreased $23 million year over year. Non-interest expense of $915 million increased $3 million. Adjusted non-interest expense of $884 million increased $10 million or 1%. We continue to focus on productivity while making selective investments in the business and responding to regulatory change.

Average current loans and acceptances of $53.5 billion increased $2.5 billion or 5% from the prior year, while deposits of $58.8 billion decreased $0.8 billion.

Adjusted results in the foregoing U.S. P&C sections are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.



----------------------------------------------------------------------------
Wealth Management                                                   Table 13
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income (teb)         135      140      133       275       269
Non-interest revenue              743      727      630     1,470     1,272
----------------------------------------------------------------------------
Total revenue (teb)               878      867      763     1,745     1,541
Provision for (recovery of)
 credit losses                      2       (1)       1         1         3
Non-interest expense              630      644      587     1,274     1,158
----------------------------------------------------------------------------
Income before income taxes        246      224      175       470       380
Provision for income taxes
 (teb)                             52       49       35       101        78
----------------------------------------------------------------------------
Reported net income               194      175      140       369       302
----------------------------------------------------------------------------
Adjusted net income               200      183      147       383       315
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net income growth (%)            38.4      7.7     (5.2)     21.9      19.3
Adjusted net income growth
 (%)                             36.1      8.3     (3.9)     21.2      19.5
Revenue growth (%)               15.0     11.4      2.7      13.2       7.1
Non-interest expense growth
 (%)                              7.2     12.9      6.2      10.0       4.4
Adjusted non-interest expense
 growth (%)                       7.4     12.7      6.0      10.0       4.1
Return on equity (%)             23.8     20.8     19.7      22.3      21.4
Adjusted return on equity (%)    24.6     21.7     20.7      23.1      22.3
Operating leverage (%)            7.8     (1.5)    (3.5)      3.2       2.7
Adjusted operating leverage
 (%)                              7.6     (1.3)    (3.3)      3.2       3.0
Efficiency ratio (%) (teb)       71.7     74.3     77.0      73.0      75.1
Adjusted efficiency ratio (%)
 (teb)                           70.7     73.1     75.8      71.9      74.0
Net interest margin on
 average earning assets (%)
 (teb)                           2.64     2.73     2.83      2.68      2.85
Average earning assets ($
 billions)                       20.9     20.4     19.4      20.7      19.1
Average current loans and
 acceptances ($ billions)        12.8     12.6     11.8      12.7      11.6
Average deposits ($ billions)    24.8     25.2     23.3      25.0      22.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------

U.S. Select Financial Data
 (US$ in millions, except as
 noted)
Total revenue (teb)               176      178      176       354       349
Non-interest expense              148      157      147       305       292
Reported net income                19       17       20        36        38
Adjusted net income                24       22       26        46        49
Average earning assets ($
 billions)                        3.0      2.9      2.6       3.0       2.6
Average current loans and
 acceptances ($ billions)         2.6      2.5      2.5       2.6       2.5
Average deposits ($ billions)     5.7      5.9      5.1       5.8       5.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

Q2 2014 vs Q2 2013

Wealth Management produced strong results for the quarter. Net income of $194 million increased $54 million or 38% from a year ago. Adjusted net income of $200 million increased $53 million or 36%. Adjusted net income in traditional wealth was $139 million, up $27 million or 23% from strong growth in client assets. Adjusted net income in insurance was $61 million, up $26 million from a year ago, as the prior year was impacted by unfavourable movements in long-term interest rates. The underlying insurance businesses continued to perform well.

Revenue was $878 million, up $115 million or 15% from a year ago. Revenue in traditional wealth was $776 million, up $76 million or 11% due to higher revenue across all businesses driven by strong growth in client assets. Insurance revenue was $102 million, up $39 million or 63% due to the factors mentioned above. The stronger U.S. dollar increased revenue by $15 million or 2%.

Non-interest expense was $630 million, up $43 million or 7% from a year ago. Adjusted non-interest expense was $621 million, up $42 million or 7% primarily due to higher revenue-based costs. The stronger U.S. dollar increased adjusted expense by $12 million or 2%.

Assets under management and administration grew by $91 billion or 17% from a year ago to $612 billion, driven by market appreciation, the stronger U.S. dollar and growth in new client assets.

Q2 2014 vs Q1 2014

Net income was up $19 million or 11% and adjusted net income was up $17 million or 10% from the first quarter. Adjusted net income in traditional wealth was up $16 million or 14%. Adjusted net income in insurance was up $1 million or 2%.

Revenue increased $11 million or 1%. Revenue in traditional wealth increased $8 million or 1%, despite three fewer days in the current quarter, driven by growth in client assets. Insurance revenue increased $3 million or 2%.

Non-interest expense decreased $14 million or 2%. Adjusted non-interest expense decreased $13 million or 2%, as the prior quarter included the impact of stock-based compensation for employees that are eligible to retire, partially offset by higher revenue-based costs in the current quarter.

Assets under management and administration grew by $15 billion or 2% primarily due to market appreciation and growth in new client assets.

Q2 YTD 2014 vs Q2 YTD 2013

Net income was $369 million, up $67 million or 22% from a year ago. Adjusted net income was $383 million, up $68 million or 21%. Adjusted net income in traditional wealth was $262 million, up $46 million or 20%. Adjusted net income in insurance was $121 million, up $22 million or 23% from a year ago as the prior year was impacted by unfavourable movements in long-term interest rates. There was continued growth in both the creditor and life insurance underlying businesses.

Revenue was $1,745 million, up $204 million or 13% from a year ago. Revenue in traditional wealth was $1,544 million, up $166 million or 12% due to higher revenue across all businesses driven by strong growth in client assets and increased transaction volumes. Insurance revenue was $201 million, up $38 million or 23% due to the factors mentioned above. The stronger U.S. dollar increased revenue by $30 million or 2%.

Non-interest expense was $1,274 million, an increase of $116 million or 10%. Adjusted non-interest expense was $1,255 million, an increase of $114 million or 10% due to higher revenue-based costs and higher support costs. The stronger U.S. dollar increased adjusted expenses by $25 million or 2%.

Adjusted results in this Wealth Management section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.


----------------------------------------------------------------------------
BMO Capital Markets                                                 Table 14
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income (teb)         328      261      289       589       578
Non-interest revenue              625      713      551     1,338     1,157
----------------------------------------------------------------------------
Total revenue (teb)               953      974      840     1,927     1,735
Recovery of credit losses          (4)      (1)      (6)       (5)      (21)
Non-interest expense              581      609      511     1,190     1,035
----------------------------------------------------------------------------
Income before income taxes        376      366      335       742       721
Provision for income taxes
 (teb)                             71       89       74       160       162
----------------------------------------------------------------------------
Reported net income               305      277      261       582       559
----------------------------------------------------------------------------
Adjusted net income               306      277      262       583       560
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Trading Products revenue          599      590      544     1,189     1,080
Investment and Corporate
 Banking revenue                  354      384      296       738       655
Net income growth (%)            17.0     (7.2)    17.0       4.1      27.7
Revenue growth (%)               13.6      8.8      7.0      11.1      11.7
Non-interest expense growth
 (%)                             13.6     16.3      7.4      14.9       7.0
Return on equity (%)             20.8     18.8     18.3      19.8      19.4
Operating leverage (%)              -     (7.5)    (0.4)     (3.8)      4.7
Efficiency ratio (%) (teb)       61.0     62.5     61.0      61.8      59.7
Net interest margin on
 average earning assets (%)
 (teb)                           0.59     0.48     0.59      0.53      0.58
Average earning assets ($
 billions)                      227.2    217.0    202.2     222.0     201.6
Average assets ($ billions)     265.2    255.2    251.0     260.1     252.0
Average current loans and
 acceptances ($ billions)        30.4     27.9     25.5      29.1      24.7
Average deposits ($ billions)   137.6    130.9    123.3     134.2     120.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------

U.S. Select Financial Data
 (US$ in millions, except as
 noted)
Total revenue (teb)               295      348      262       643       549
Non-interest expense              224      229      206       453       415
Reported net income                63       88       47       151       131
Average earning assets ($
 billions)                       82.5     75.6     81.4      79.0      77.6
Average assets ($ billions)      92.5     86.3     99.3      89.3      96.7
Average current loans and
 acceptances ($ billions)         9.6      9.0      9.3       9.3       9.0
Average deposits ($ billions)    60.8     55.4     65.0      58.0      62.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

Q2 2014 vs Q2 2013

Net income of $305 million increased $44 million or 17% from a year ago, supported by good revenue growth across the businesses and a more favourable tax rate. Return on equity of 20.8% was strong, up from 18.3% in the prior year.

Revenue increased $113 million or 14% year over year. Investment and Corporate Banking revenue increased, driven by higher securities gains, loan growth in corporate banking and debt and equity underwriting fees. In Trading Products, revenues increased from equity and foreign exchange trading, which benefited from increased client volumes and good market conditions. This more than offset lower client activity levels and a softer market environment in interest rate trading. The stronger U.S. dollar increased revenue by $25 million or 3% relative to the same period a year ago.

Recoveries of credit losses were lower by $2 million compared to the prior year. Non-interest expense increased $70 million or 14% due to higher employee-related expenses and increased support costs, driven by a changing business and regulatory environment. The stronger U.S. dollar increased expense by $19 million or 4% relative to the same period a year ago.

Q2 2014 vs Q1 2014

Net income increased $28 million or 10% from the previous quarter as lower revenue was more than offset by lower expenses and a more favourable tax rate. Revenue decreased $21 million or 2% as Investment and Corporate Banking revenue declined due to lower investment banking fees, as well as lower securities gains. Revenue in Trading Products increased from equity and foreign exchange trading, which benefited from increased client volumes and good market conditions. This was partially offset by lower client activity levels and a softer market environment in interest rate trading.

Recoveries of credit losses were higher by $3 million compared to the prior quarter. Non-interest expense decreased $28 million or 5% from the previous quarter, driven by lower employee-related expenses, including severance and stock-based compensation for employees that are eligible to retire that is expensed in the first quarter of each year.

YTD Q2 2014 vs YTD Q2 2013

Net income of $582 million increased $23 million or 4% from the prior year. Revenue increased $192 million or 11% due to good revenue performance across the businesses, and in particular from our U.S. segment. Investment and Corporate Banking businesses performed well, driven by higher securities gains in both corporate banking and merchant banking activities, higher equity and debt underwriting fees and stronger lending revenues. Trading Products businesses earned higher trading revenues, driven by higher equity and foreign exchange trading, as well as increased securities commissions and fees. The stronger U.S. dollar increased revenue by $55 million or 3% relative to the same period a year ago.

Recoveries of credit losses were lower by $16 million due to a combination of lower recoveries and new provisions. Non-interest expense increased $155 million or 15% due to higher employee-related expenses, including severance, and increased support costs, both driven by a changing business and regulatory environment. The stronger U.S. dollar increased expenses by $38 million or 4% relative to the same period a year ago.


----------------------------------------------------------------------------
Corporate Services, Including Technology and Operations             Table 15
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------

Net interest income before
 group teb offset                 (26)      (3)     110       (29)      287
Group teb offset                 (138)     (85)     (71)     (223)     (135)
----------------------------------------------------------------------------
Net interest income (teb)        (164)     (88)      39      (252)      152
Non-interest revenue               51       19       54        70        54
----------------------------------------------------------------------------
Total revenue (teb)              (113)     (69)      93      (182)      206
Recovery of credit losses         (19)     (59)     (59)      (78)      (28)
Non-interest expense              101      117      227       218       465
----------------------------------------------------------------------------
Loss before income taxes         (195)    (127)     (75)     (322)     (231)
Recovery of income taxes
 (teb)                           (137)     (86)     (64)     (223)     (170)
----------------------------------------------------------------------------
Reported net loss                 (58)     (41)     (11)      (99)      (61)
----------------------------------------------------------------------------

Adjusted Results
Adjusted net interest income
 before group teb offset          (26)      (3)     (65)      (29)     (100)
Group teb offset                 (138)     (85)     (71)     (223)     (135)
----------------------------------------------------------------------------
Adjusted net interest income
 (teb)                           (164)     (88)    (136)     (252)     (235)
Adjusted non-interest revenue      51       19       44        70        36
----------------------------------------------------------------------------
Adjusted total revenue (teb)     (113)     (69)     (92)     (182)     (199)
Adjusted recovery of credit
 losses                           (19)     (59)     (94)      (78)     (145)
Adjusted non-interest expense     101      117       92       218       235
Adjusted net loss                 (58)     (41)     (11)      (99)      (90)
----------------------------------------------------------------------------

Corporate Services Recovery
 of Credit Losses
Impaired real estate loans         (3)      14        2        11        (3)
Interest on impaired loans          8       10       11        18        24
Purchased credit impaired
 loans                            (45)    (117)    (107)     (162)     (166)
Purchased performing loans         21       34        -        55         -
----------------------------------------------------------------------------
Recovery of credit losses,
 adjusted basis                   (19)     (59)     (94)      (78)     (145)
Collective provision                -        -      (30)        -       (30)
Purchased performing loans          -        -       65         -       147
----------------------------------------------------------------------------
Recovery of credit losses,
 reported basis                   (19)     (59)     (59)      (78)      (28)
----------------------------------------------------------------------------
Average loans and acceptances     487      563    1,068       525     1,129
Period-end loans and
 acceptances                      399      559      995       399       995
----------------------------------------------------------------------------
----------------------------------------------------------------------------

U.S. Select Financial Data
 (US$ in millions)
Total revenue (teb)               (18)     (23)      77       (41)      203
Recovery of credit losses         (23)     (48)     (79)      (71)      (55)
Non-interest expense               49       13       89        62       228
Provision for (recovery of)
 income taxes (teb)               (25)      (5)      34       (30)        4
----------------------------------------------------------------------------
Reported net income (loss)        (19)      17       33        (2)       26
Adjusted total revenue (teb)      (18)     (23)     (96)      (41)     (182)
Adjusted recovery of credit
 losses                           (18)     (57)     (93)      (75)     (148)
Adjusted non-interest expense      49       13       30        62        77
Adjusted net income (loss)        (22)      22      (29)        -       (61)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted results in this table are non-GAAP amounts or non-GAAP measures.
Please see the Non-GAAP Measures section.

Corporate Services

Corporate Services consists of Corporate Units and Technology and Operations (T&O). Corporate Units provide enterprise-wide expertise and governance support in a variety of areas, including strategic planning, risk management, finance, legal and compliance, marketing, communications and human resources. T&O manages, maintains and provides governance over information technology, operations services, real estate and sourcing for BMO Financial Group.

The costs of Corporate Units and T&O services are largely transferred to the three client operating groups (P&C, Wealth Management and BMO Capital Markets), and only relatively minor amounts are retained in Corporate Services results. As such, Corporate Services adjusted operating results largely reflect the impact of certain asset-liability management activities, the elimination of taxable equivalent adjustments, the results from certain impaired real estate secured assets and purchased loan accounting impacts. Corporate Services reported results in 2013 and prior reflect a number of items and activities that are excluded from BMO's adjusted results to help assess BMO's performance. These adjusting items are not reflective of core operating results. They are itemized in the Non-GAAP Measures section.

Financial Performance Review

Q2 2014 vs Q2 2013

Corporate Services reported and adjusted net loss for the second quarter of 2014 was $58 million, compared with a reported and adjusted net loss of $11 million a year ago. The decline was primarily due to lower recoveries on the purchased credit impaired loan portfolio.

Q2 2014 vs Q1 2014

Reported and adjusted net loss for the second quarter of 2014 was $58 million, compared with a reported and adjusted net loss of $41 million in the first quarter of 2014. The decline was primarily due to lower recoveries on the purchased credit impaired loan portfolio, partly offset by lower expenses.

YTD Q2 2014 vs YTD Q2 2013

Corporate Services reported and adjusted net loss for the year to date was $99 million, compared with a reported net loss of $61 million and an adjusted net loss of $90 million a year ago. Adjusted results were lower due to a lower net recovery of credit losses, mainly due to specific provisions in respect of the purchased performing loan portfolio, partly offset by better revenues and lower expenses.

Adjusted results in the foregoing Corporate Services section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Non-GAAP Measures

Results and measures in this MD&A are presented on a GAAP basis. They are also presented on an adjusted basis that excludes the impact of certain items as set out in Table 16 below. Management assesses performance on a reported basis and on an adjusted basis and considers both to be useful in assessing underlying ongoing business performance. Presenting results on both bases provides readers with a better understanding of how management assesses results. It also permits readers to assess the impact of certain specified items on results for the periods presented and to better assess results excluding those items if they consider the items to not be reflective of ongoing results. As such, the presentation may facilitate readers' analysis of trends, as well as comparisons with our competitors. Adjusted results and measures are non-GAAP and as such do not have standardized meaning under GAAP. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from or as a substitute for GAAP results.

Net economic profit represents net income available to common shareholders, before deduction for the after-tax impact of the amortization of acquisition-related intangible assets, less a charge for capital, and is considered a reasonable measure of added economic value.


----------------------------------------------------------------------------
Non-GAAP Measures                                                   Table 16
----------------------------------------------------------------------------

(Canadian $ in millions,
 except as noted)             Q2-2014  Q1-2014  Q2-2013  YTD-2014  YTD-2013
----------------------------------------------------------------------------
Reported Results
Revenue                         4,041    4,122    3,893     8,163     7,925
Provision for credit losses      (162)     (99)    (144)     (261)     (322)
Non-interest expense           (2,594)  (2,684)  (2,550)   (5,278)   (5,120)
----------------------------------------------------------------------------
Income before income taxes      1,285    1,339    1,199     2,624     2,483
Provision for income taxes       (209)    (278)    (237)     (487)     (485)
----------------------------------------------------------------------------
Net Income                      1,076    1,061      962     2,137     1,998
EPS ($)                          1.60     1.58     1.40      3.18      2.91
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusting Items (Pre-tax) (1)
Credit-related items on the
 purchased performing loan
 portfolio (see below (i))          -        -      119         -       247
Acquisition integration costs
 (2)                                -        -      (50)        -      (142)
Amortization of acquisition-
 related intangible assets
 (3)                              (28)     (31)     (31)      (59)      (62)
Decrease (increase) in the
 collective allowance for
 credit losses                      -        -       22         -        22
Run-off structured credit
 activities (4)                     -        -        6         -        13
Restructuring costs (5)             -        -      (82)        -       (82)
----------------------------------------------------------------------------
Adjusting items included in
 reported pre-tax income          (28)     (31)     (16)      (59)       (4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusting Items (After tax)
 (1)
Credit-related items on the
 purchased performing loan
 portfolio (see below (i))          -        -       73         -       152
Acquisition integration costs
 (2)                                -        -      (31)        -       (88)
Amortization of acquisition-
 related intangible assets
 (3)                              (21)     (22)     (22)      (43)      (44)
Decrease (increase) in the
 collective allowance for
 credit losses                      -        -       11         -        11
Run-off structured credit
 activities (4)                     -        -        6         -        13
Restructuring costs (5)             -        -      (59)        -       (59)
----------------------------------------------------------------------------
Adjusting items included in
 reported net income after
 tax                              (21)     (22)     (22)      (43)      (15)
Impact on EPS ($)               (0.03)   (0.03)   (0.04)    (0.06)    (0.03)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted Results
Revenue                         4,041    4,122    3,708     8,163     7,520
Provision for credit losses      (162)     (99)    (109)     (261)     (205)
Non-interest expense           (2,566)  (2,653)  (2,384)   (5,219)   (4,828)
----------------------------------------------------------------------------
Income before income taxes      1,313    1,370    1,215     2,683     2,487
Provision for income taxes       (216)    (287)    (231)     (503)     (474)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted net income             1,097    1,083      984     2,180     2,013
EPS ($)                          1.63     1.61     1.44      3.24      2.94
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i)Credit-related items on
 the purchased performing
 loan portfolio are comprised
 of the following amounts:
Revenue                             -        -      176         -       386
Provision for credit losses         -        -      (57)        -      (139)
----------------------------------------------------------------------------
Increase in pre-tax income          -        -      119         -       247
Provision for income taxes          -        -      (46)        -       (95)
----------------------------------------------------------------------------
Increase in reported net
 income after tax                   -        -       73         -       152
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Adjusting items are included in Corporate Services with the exception
     of the amortization of acquisition-related intangible assets, which is
     charged to the operating groups.
(2)  Acquisition integration costs are included in non-interest expense.
(3)  These expenses have been designated as adjusting items because the
     purchase decision may not consider the amortization of acquisition-
     related intangible assets to be a relevant expense. They were charged
     to the non-interest expense of the operating groups as follows:
     -   in the second quarter of 2014: Canadian P&C $2 million before and
         after tax; U.S. P&C $16 million ($12 million after tax); Wealth
         Management $9 million ($6 million after tax); and BMO Capital
         Markets $1 million before and after tax.
     -   in the first quarter of 2014: Canadian P&C $3 million ($2 million
         after tax); U.S. P&C $18 million ($12 million after tax); and
         Wealth Management $10 million ($8 million after tax).
     -   in the second quarter of 2013: Canadian P&C $3 million before tax
         ($1 million after tax); U.S. P&C $19 million ($13 million after
         tax); Wealth Management $8 million ($7 million after tax); and BMO
         Capital Markets $1 million before and after tax.
     -   for year-to-date 2014: Canadian P&C $5 million before tax ($4
         million after tax); U.S. P&C $34 million ($24 million after tax);
         Wealth Management $19 million ($14 million after tax); and BMO
         Capital Markets $1 million before and after tax.
     -   for year-to-date 2013: Canadian P&C $6 million before tax ($4
         million after tax); U.S. P&C $38 million ($26 million after tax);
         Wealth Management $17 million ($13 million after tax); and BMO
         Capital Markets $1 million before and after tax.
(4)  Primarily comprised of valuation changes associated with these
     activities that are mainly included in trading revenue in non-interest
     revenue.
(5)  Restructuring charge to align our cost structure with the current and
     future business environment as part of a broader effort to improve
     productivity.

----------------------------------------------------------------------------
Summary Quarterly Earnings Trends (1)                               Table 17
----------------------------------------------------------------------------

(Canadian $ in
 millions, except as    Q2-    Q1-    Q4-    Q3-    Q2-    Q1-    Q4-    Q3-
 noted)                2014   2014   2013   2013   2013   2013   2012   2012
----------------------------------------------------------------------------
Total revenue         4,041  4,122  4,138  4,000  3,893  4,032  4,129  3,827
Provision for credit
 losses - specific
 (see below)            162     99    189     56    174    178    216    229
Provision for
 (recovery of) credit
 losses - collective      -      -      -     20    (30)     -    (24)     8
Non-interest expense  2,594  2,684  2,580  2,526  2,550  2,570  2,679  2,457
Reported net income
 (see below)          1,076  1,061  1,074  1,123    962  1,036  1,073    962
Adjusted net income
 (see below)          1,097  1,083  1,088  1,122    984  1,029  1,116  1,005
----------------------------------------------------------------------------
Basic earnings per
 share ($)             1.61   1.58   1.60   1.67   1.41   1.51   1.57   1.41
Diluted earnings per
 share ($)             1.60   1.58   1.60   1.66   1.40   1.51   1.57   1.41
Adjusted diluted
 earnings per share
 ($)                   1.63   1.61   1.62   1.66   1.44   1.50   1.64   1.47
Net interest margin
 on average earning
 assets (%)            1.59   1.62   1.69   1.78   1.82   1.87   1.86   1.90
Adjusted net interest
 margin on average
 earning assets (%)    1.59   1.62   1.60   1.65   1.67   1.70   1.70   1.72
Effective income tax
 rate (%)              16.2   20.8   21.6   19.7   19.8   19.3   14.7   15.1
Adjusted effective
 income tax rate (%)   16.5   20.9   21.5   19.2   19.0   19.0   17.1   16.0
Canadian/U.S. dollar
 exchange rate
 (average)             1.10   1.08   1.04   1.04   1.02   1.00   0.99   1.02

Provision for credit
 losses - specific
  Canadian P&C          133    141    166    125    153    128    146    146
  U.S. P&C               50     19     96     40     55     32     75     76
----------------------------------------------------------------------------
Personal and
 Commercial Banking     183    160    262    165    208    160    221    222
Wealth Management         2     (1)     1     (1)     1      2     11      5
BMO Capital Markets      (4)    (1)   (17)     2     (6)   (15)    (4)     -
Corporate Services,
 including T&O          (19)   (59)   (57)  (110)   (29)    31    (12)     2
----------------------------------------------------------------------------
BMO Financial Group
 provision for credit
 losses - specific      162     99    189     56    174    178    216    229
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Reported net income:
  Canadian P&C          480    484    458    486    421    447    436    452
  U.S. P&C              155    166    102    149    151    179    135    136
----------------------------------------------------------------------------
Personal and
 Commercial Banking     635    650    560    635    572    626    571    588
Wealth Management       194    175    311    217    140    162    164    110
BMO Capital Markets     305    277    217    268    261    298    307    240
Corporate Services,
 including T&O          (58)   (41)   (14)     3    (11)   (50)    31     24
----------------------------------------------------------------------------
BMO Financial Group
 net income           1,076  1,061  1,074  1,123    962  1,036  1,073    962
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Adjusted net income:
  Canadian P&C          482    486    461    489    422    450    438    455
  U.S. P&C              167    178    114    161    164    192    151    152
----------------------------------------------------------------------------
Personal and
 Commercial Banking     649    664    575    650    586    642    589    607
Wealth Management       200    183    318    224    147    168    169    116
BMO Capital Markets     306    277    217    269    262    298    308    240
Corporate Services,
 including T&O          (58)   (41)   (22)   (21)   (11)   (79)    50     42
----------------------------------------------------------------------------
BMO Financial Group
 adjusted net income  1,097  1,083  1,088  1,122    984  1,029  1,116  1,005
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Adjusted results in this table are non-GAAP amounts or non-GAAP
     measures. Please see the Non-GAAP Measures section.

Summary Quarterly Earnings Trends

BMO's quarterly earnings trends were reviewed in detail on pages 102 and 103 of BMO's 2013 Annual Report. Readers are encouraged to refer to that review for a more complete discussion of trends and factors affecting past quarterly results including the modest impact of seasonal variations in results. Table 17 outlines summary results for the third quarter of fiscal 2012 through the second quarter of fiscal 2014. The table reflects changes in IFRS that are outlined in Note 1 to the unaudited interim consolidated financial statements.

Periodically, certain business lines and units within the business lines are transferred between client operating groups to more closely align BMO's organizational structure and its strategic priorities. Comparative figures have been restated to conform to the current presentation.

Over the past two years, we have remained focused on executing our strategic priorities. Economic conditions have generally been stable to improving.

Canadian P&C had good results in recent quarters, building on the momentum generated from the latter half of 2013. Improved net income growth in the last four quarters was driven by good revenue, while operating leverage was greater than 2% the last three quarters. Revenue growth was due to continued strong loan and deposit balance growth and moderating margin compression. Expenses have been well managed with moderate growth as a result of continued investment in the business.

Recent quarterly results in traditional wealth have been strong and have grown on a relatively consistent basis, driven by growth in client assets, better markets and a focus on productivity. The fourth quarter of 2013 included a large security gain. Quarterly results in insurance have been subject to variability, resulting primarily from changes in long-term interest rates and investment portfolio changes.

Building on the momentum at the tail-end of 2012 and improving results through 2013, BMO Capital Markets has continued to show strength in the first half of 2014, benefiting from a consistent and diversified strategy and generally favourable market conditions. BMO Capital Markets has continued to build on the success of 2013, delivering good performance with higher revenue contributing to an overall strong net income performance over the last two consecutive quarters across both the Investment and Corporate Banking and Trading Products businesses.

U.S. P&C had strong results in the first quarter of 2013 and results were relatively stable in the second and third quarters due to core commercial and industrial loan growth and lower expenses compared to the prior year, offsetting lower margins and balances in certain portfolios. Results in the fourth quarter of 2013 were negatively impacted by above trend provisions for credit losses. Results improved in the first quarter of 2014, primarily driven by reductions in provisions for credit losses. Results in the second quarter of 2014 were stable. Net interest margin has declined relative to 2012, primarily due to lower loan spreads due to competitive pricing and a decline in deposit spreads given the low-rate environment.

Corporate Services quarterly net income can vary, in large part due to the inclusion of the adjusting items, which are largely recorded in Corporate Services, and recoveries of credit losses on the purchased credit impaired loan portfolio. Reduced recoveries in the first quarter of 2013 together with lower revenue and increased expenses lowered Corporate Services results that quarter. These recoveries increased in the last three quarters of 2013 and first quarter of 2014, increasing net income, and then decreased in the second quarter of 2014.

BMO's PCL measured as a percentage of loans and acceptances has been trending lower in recent quarters relative to 2012, with the exception of an increase in the fourth quarter of 2013 and in the current quarter.

Fluctuations in exchange rates in 2012 and 2013 were subdued. The U.S. dollar strengthened significantly in the first half of 2014. A stronger U.S. dollar increases the translated value of U.S.-dollar-denominated revenue, expenses, provisions for credit losses, income taxes and net income.

The effective income tax rate can vary, as it depends on the timing of resolution of certain tax matters, recoveries of prior periods' income taxes and the relative proportion of earnings attributable to the different jurisdictions in which we operate.

Caution

This Summary Quarterly Earnings Trends section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Adjusted results in this Summary Quarterly Earnings Trends section are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Balance Sheet

Total assets of $582.0 billion at April 30, 2014, increased $45.0 billion from October 31, 2013, including an $11.7 billion increase as a result of the stronger U.S. dollar. The increase primarily reflects growth in net loans and acceptances of $15.4 billion, securities borrowed or purchased under resale agreements of $12.2 billion, cash equivalents and interest bearing deposits with banks of $9.5 billion and securities of $8.8 billion. Other assets increased by a combined $0.5 billion, partly offset by a decrease in derivative financial assets of $1.4 billion.

The $15.4 billion increase in net loans and acceptances, included a $4.4 billion increase as a result of the stronger U.S. dollar. The remaining net loans and acceptances increase was primarily driven by loans to businesses and governments in the P&C businesses and BMO Capital Markets.

The $12.2 billion increase in securities borrowed or purchased under resale agreements is commensurate with the increase in securities lent or sold under repurchase agreements.

The $9.5 billion increase in cash, cash equivalents and interest bearing deposits with banks was primarily due to increased balances held with central banks.

The $8.8 billion increase in securities was primarily due to an increase in trading securities, reflecting higher client-driven activities.

The $1.4 billion decrease in derivative financial assets and the $1.7 billion decrease in derivative financial liabilities were primarily due to the decrease in the fair value of foreign exchange contracts.

Liabilities and equity increased $45.0 billion from October 31, 2013, including an $11.7 billion increase as a result of the stronger U.S. dollar. The change primarily reflects increases in deposits of $25.6 billion, securities lent or sold under repurchase agreements of $17.2 billion, securities sold but not yet purchased of $1.9 billion, shareholders' equity of $1.7 billion, and all remaining liabilities and equity of $0.3 billion, partly offset by decreases in derivative financial liabilities of $1.7 billion.

The $25.6 billion increase in deposits included a $9.6 billion increase due to the stronger U.S. dollar. Business and government deposits increased $16.6 billion, including $6.8 billion driven by the stronger U.S. dollar, with the remainder primarily due to increased wholesale funding issuances. Deposits by banks increased $2.0 billion and deposits by individuals increased $7.0 billion, with $4.9 billion driven by increases in Canadian P&C and Wealth Management and the remainder driven by the impact of the stronger U.S. dollar.

Contractual obligations by year of maturity are outlined in Note 17 to the unaudited interim consolidated financial statements.

Transactions with Related Parties

In the ordinary course of business, we provide banking services to our key management personnel, joint ventures and associates on the same terms that we offer to our customers for those services.

The Bank's policies and procedures for related party transactions did not materially change from October 31, 2013, as described in Note 27 to the audited consolidated financial statements on page 177 of BMO's 2013 Annual Report.

Off-Balance Sheet Arrangements

BMO enters into a number of off-balance sheet arrangements in the normal course of operations. The most significant of these are Credit Instruments, Structured Entities and Guarantees, which are described on pages 65, 66 and 70 of BMO's 2013 Annual Report as well as in Notes 5 and 7 to the unaudited interim consolidated financial statements. We consolidate all of our Structured Entities, except for certain Canadian customer securitization and structured finance vehicles. See the Select Financial Instruments section for comments on any significant changes to these arrangements during the quarter ended April 30, 2014.

Accounting Policies and Critical Accounting Estimates

Significant accounting policies are described in the notes to our audited consolidated financial statements for the year ended October 31, 2013, together with a discussion of certain accounting estimates that are considered particularly important as they require management to make significant judgments, some of which relate to matters that are inherently uncertain. Readers are encouraged to review that discussion.

Effective November 1, 2013, we adopted several new and amended accounting pronouncements issued by the IASB, which are outlined in Note 1 to the unaudited interim consolidated financial statements.

Future Changes in Accounting Policies

BMO monitors the potential changes proposed by IASB, and analyzes the effect that changes in the standards may have on BMO's financial reporting and accounting policies. New standards and amendments to existing standards, which are effective for the Bank in the future, can be found in Note 1 to the unaudited interim consolidated financial statements for the quarter ended April 30, 2014, and in Note 1 to the audited consolidated financial statements on pages 132 and 133 of BMO's 2013 Annual Report.

Regulatory Developments

Regulators in Canada, the United States and elsewhere are very active on a number of fronts, including consumer protection, capital markets activities, anti-money laundering, and the oversight and strengthening of risk management. These regulatory reforms can impact our operations when they pose financial costs, for example from increasing capital and liquidity requirements and cost of compliance in terms of infrastructure, and our failure to comply with laws and regulations could result in sanctions and financial penalties that could adversely affect our strategic flexibility, reputation and earnings.

We continue to monitor and prepare for regulatory developments, including those referenced elsewhere in this MD&A and the recent U.S. regulatory developments set out below. For a more comprehensive discussion of U.S. regulatory developments, see the U.S. Regulatory Developments section on page 69 of BMO's 2013 Annual Report.

As a bank holding company with total consolidated assets of US$50 billion or more, our U.S. subsidiary BMO Financial Corp. (BFC) was subject to the 2014 Comprehensive Capital Analysis and Review (CCAR) rules and processes, under which BFC participated in the annual stress testing and capital planning exercise conducted by the Board of Governors of the Federal Reserve System (FRB). In late March 2014, BFC received FRB's decision to not object, on either a quantitative or a qualitative basis, to the capital plan submitted in January 2014.

The FRB finalized a rule (the FBO Rule) that implements the Dodd-Frank Act's enhanced prudential standards and early remediation requirements for the U.S. operations of non-U.S. banks, such as BMO. The FBO Rule establishes new requirements relating to risk-based capital, leverage limits, liquidity standards, risk-management frameworks, concentration and credit exposure limits, resolution planning and credit exposure reporting.

The Office of the Comptroller of Currency issued for comment proposed guidelines for the design and implementation of a risk governance framework for large national banks, and board of director oversight of the framework's design and implementation. As proposed, the guidelines would apply to our principal U.S. subsidiary bank, BMO Harris Bank N.A. (BHB), and establish specific roles and responsibilities focused on risk management for BHB's front line units, risk management, internal audit, board and CEO.

The Volcker Rule, which prohibits banking entities and their affiliates from certain proprietary trading and specified relationships with hedge funds and private equity funds, was finalized in December 2013. The U.S. federal banking agencies, the Securities and Exchange Commission and the Commodity Futures Trading Commission have confirmed that banking entities, including BMO and certain subsidiaries, have until July 2015 to conform all of their activities and investments, or longer if the period is extended. Banking entities are expected to engage in good-faith planning efforts and work toward compliance during this period.

The Consumer Financial Protection Bureau, which enforces certain U.S. federal consumer finance laws, has stated that it will closely scrutinize indirect auto lenders to focus on compliance, including with fair lending laws.

Caution

This Regulatory Developments section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

Select Financial Instruments

Pages 65 and 66 of BMO's 2013 Annual Report provide enhanced disclosure relating to select financial instruments that, commencing in 2008 and based on subsequent assessments, markets had come to regard as carrying higher risk. Readers are encouraged to review that disclosure to assist in understanding the nature and extent of BMO's exposures.

The Financial Stability Board (FSB) issued a report encouraging enhanced disclosure related to financial instruments that market participants had come to regard as carrying higher risk. An index of where the disclosures recommended by the Enhanced Disclosure Task Force (EDTF) of the FSB are located is provided on our website at www.bmo.com/investorrelations.

We follow a practice of reporting on significant changes in the select financial instruments since year end, if any, in our interim MD&A. There have been no changes of substance from the disclosure in our 2013 Annual Report, other than the expected maturity of the $1.05 billion of Series 2013 Apex Notes that occurred on December 30, 2013.

Risk Management

Our risk management practices and key measures have not changed significantly from those outlined on pages 77 to 99 of BMO's 2013 Annual Report.

Market Risk

Linkages between Balance Sheet Items and Market Risk Disclosures

Below are parts of our consolidated balance sheet that are subject to market risk, showing balances that are mainly subject to traded risk and non-traded risk measurement techniques.


----------------------------------------------------------------------------
Linkages Between Balance Sheet Items and Market Risk Disclosures    Table 18
----------------------------------------------------------------------------
                               As at April 30, 2014
                       -----------------------------------
                                  Subject to Market
                                        Risk
                                 ------------------
                                                       Not
                         Consoli-                  subject  Main risk
                            dated              Non-     to  factors for
(Canadian $ in            Balance   Traded   traded Market  non-traded risk
 millions)                  Sheet risk (1) risk (2)   Risk  balances
----------------------------------------------------------------------------
Assets
Cash and cash
 equivalents               35,082        -   35,082      -  Interest rate
Interest bearing
 deposits with banks        7,069      779    6,290      -  Interest rate
Securities
                                                            Interest rate,
  Trading (3)(4)           82,426   76,482    5,944      -  credit spread
                                                            Interest rate,
  Available-for-sale       51,883   30,788   21,095      -  credit spread
  Held-to-maturity          9,318        -    9,318      -  Interest rate
  Other                       983        -      983      -  Equity
Securities borrowed or
 purchased under resale
 agreements                51,981   51,981        -      -  Interest rate
Loans and acceptances
 (net of allowance for                                      Interest rate,
 credit losses)           294,704        -  294,704      -  foreign exchange
                                                            Interest rate,
Derivative instruments     28,859   27,943      916      -  foreign exchange
Other assets (4)           19,740    1,330    6,364 12,046  Interest rate
----------------------------------------------------------------------------
Total Assets              582,045  189,303  380,696 12,046
----------------------------------------------------------------------------
Liabilities
                                                            Interest rate,
Deposits                  394,007    7,241  386,766      -  foreign exchange
                                                            Interest rate,
Derivative instruments     30,279   29,203    1,076      -  foreign exchange
Acceptances                 9,906        -    9,906      -  Interest rate
Securities sold but not
 yet purchased             24,350   24,350        -      -  Interest rate
Securities lent or sold
 under repurchase
 agreements                46,125   46,125        -      -  Interest rate
Other liabilities (4)      40,088    1,999   37,872    217  Interest rate
Subordinated debt           3,965        -    3,965      -  Interest rate
Preferred share
 liability                    493        -      493      -  Interest rate
----------------------------------------------------------------------------
Total Liabilities         549,213  108,918  440,078    217
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                              As at October 31, 2013
                       -----------------------------------
                                  Subject to Market
                                        Risk
                                 ------------------
                                                       Not
                         Consoli-                  subject  Main risk
                            dated              Non-     to  factors for
(Canadian $ in            Balance   Traded   traded Market  non-traded risk
millions)                   Sheet risk (1) risk (2)   Risk  balances
----------------------------------------------------------------------------
Assets
Cash and cash
 equivalents               26,089        -   26,089      -  Interest rate
Interest bearing
 deposits with banks        6,518    1,511    5,007      -  Interest rate
Securities
                                                            Interest rate,
  Trading (3)(4)           75,159   69,393    5,766      -  credit spread
                                                            Interest rate,
  Available-for-sale       53,710   27,817   25,893      -  credit spread
  Held-to-maturity          6,032        -    6,032      -  Interest rate
  Other                       899        -      899      -  Equity
Securities borrowed or
 purchased under resale
 agreements                39,799   39,799        -      -  Interest rate
Loans and acceptances
 (net of allowance for                                      Interest rate,
 credit losses)           279,294        -  279,294      -  foreign exchange
                                                            Interest rate,
Derivative instruments     30,259   29,484      775      -  foreign exchange
Other assets (4)           19,285      828    6,864 11,593  Interest rate
----------------------------------------------------------------------------
Total Assets              537,044  168,832  356,619 11,593
----------------------------------------------------------------------------
Liabilities
                                                            Interest rate,
Deposits                  368,369    5,928  362,441      -  foreign exchange
                                                            Interest rate,
Derivative instruments     31,974   31,184      790      -  foreign exchange
Acceptances                 8,472        -    8,472      -  Interest rate
Securities sold but not
 yet purchased             22,446   22,446        -      -  Interest rate
Securities lent or sold
 under repurchase
 agreements                28,884   28,884        -      -  Interest rate
Other liabilities (4)      41,724    2,176   39,003    545  Interest rate
Subordinated debt           3,996        -    3,996      -  Interest rate
Preferred share
 liability                      -        -        -      -  Interest rate
----------------------------------------------------------------------------
Total Liabilities         505,865   90,618  414,702    545
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Includes BMO's balance sheet items subject to the trading and
     underwriting risk management framework.
(2)  Includes BMO's balance sheet items subject to the structural balance
     sheet and insurance risk management framework.
(3)  Includes securities designated at fair value through profit or loss.
(4)  Includes balances relating to our insurance business.

Trading, Underwriting and Non-Trading (Structural) Market Risk

Total Trading Value at Risk (VaR) decreased over the quarter due to active portfolio rebalancing within our equity books, along with a reduction in levels of foreign exchange exposure. There was a partially offsetting decline in the overall diversification benefit. The available-for-sale (AFS) VaR remained relatively stable over the period. Total Trading Stressed VaR decreased mainly due to lower equity exposure broadly reflecting the changes in Trading VaR for the quarter.

There were no significant changes in our structural market risk management practices during the quarter. Structural economic value exposure to rising interest rates primarily reflects a lower market value for fixed-rate loans. Structural earnings exposure to falling interest rates primarily reflects the risk of prime-based loans repricing at lower rates. Economic value exposure to rising interest rates increased and earnings exposure to falling interest rates decreased primarily owing to reduced short-term asset sensitivity.

BMO's market risk management practices and key measures are outlined on pages 87 to 91 of BMO's 2013 Annual Report.


----------------------------------------------------------------------------
Total Trading Value at Risk (VaR) Summary ($ in millions)(i) (ii)   Table 19
----------------------------------------------------------------------------
                                                            As at     As at
                        For the quarter ended April 30,   January   October
                                                   2014  31, 2014  31, 2013
-------------------------------------------------------- --------- ---------
(Pre-tax Canadian      Quarter-                          Quarter-  Quarter-
 equivalent)                end Average    High     Low       end       end
-------------------------------------------------------- --------- ---------
Commodity VaR              (0.8)   (0.7)   (0.9)   (0.6)     (0.5)     (0.4)
Equity VaR                 (6.1)   (6.1)  (10.0)   (5.2)     (8.5)     (6.1)
Foreign exchange VaR       (0.9)   (1.7)   (3.5)   (0.6)     (2.1)     (0.5)
Interest rate VaR          (4.3)   (8.6)  (12.6)   (4.3)     (5.7)     (4.6)
Credit VaR                 (5.3)   (5.7)   (6.4)   (5.2)     (5.6)     (5.0)
Diversification             8.6    11.1      nm      nm      10.8       7.5
----------------------------------------                 --------- ---------
Total Trading VaR          (8.8)  (11.7)  (14.4)   (8.6)    (11.6)     (9.1)
----------------------------------------------------------------------------
Total AFS VaR             (12.7)  (12.5)  (14.2)  (11.4)    (12.7)    (10.1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i)   Total Trading VaR and AFS VaR above are subject to BMO Capital Markets
      trading management framework.
(ii)  One-day measure using a 99% confidence interval. Losses are in
      brackets and benefits are presented as positive numbers.
nm - not meaningful

----------------------------------------------------------------------------
Total Trading Stressed Value at Risk (SVaR) Summary
($ in millions)(i) (ii)                                             Table 20
----------------------------------------------------------------------------
                                                            As at     As at
                        For the quarter ended April 30,   January   October
                                                   2014  31, 2014  31, 2013
-------------------------------------------------------- --------- ---------
(Pre-tax Canadian      Quarter-                          Quarter-  Quarter-
 equivalent)                end Average    High     Low       end       end
-------------------------------------------------------- --------- ---------
Commodity SVaR             (7.2)   (5.9)   (7.4)   (3.7)     (4.0)     (4.7)
Equity SVaR               (12.6)  (14.8)  (31.8)   (8.3)    (35.1)     (9.8)
Foreign exchange SVaR      (1.8)   (4.0)   (8.6)   (1.0)    (10.4)     (0.8)
Interest rate SVaR        (23.2)  (24.1)  (30.1)  (15.3)    (12.9)     (9.5)
Credit SVaR               (13.5)  (13.5)  (14.4)  (12.3)    (13.8)    (11.0)
Diversification            31.8    33.8      nm      nm      29.8      19.9
----------------------------------------                 --------- ---------
Total Trading SVaR        (26.5)  (28.5)  (37.2)  (22.3)    (46.4)    (15.9)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i)   Stressed VaR is produced weekly.
(ii)  One-day measure using a 99% confidence interval. Losses are in
      brackets and benefits are presented as positive numbers.
nm - not meaningful

----------------------------------------------------------------------------
Structural Balance Sheet Earnings and Value Sensitivity to Changes
 in Interest Rates ($ in millions)(i) (ii)                          Table 21
----------------------------------------------------------------------------
                                                  Earnings sensitivity over
                     Economic value sensitivity          the next 12 months
                                      (Pre-tax)                 (After tax)
------------------------------------------------ ---------------------------
(Canadian             April   January   October     April  January  October
 equivalent)       30, 2014  31, 2014  31, 2013  30, 2014 31, 2014 31, 2013
------------------------------------------------ ---------------------------
100 basis point
 increase            (649.3)   (500.3)   (503.1)     60.8     95.8     95.4
100 basis point
 decrease             354.1     301.7     340.1     (60.1)   (75.0)   (90.8)

200 basis point
 increase          (1,421.0) (1,090.1) (1,078.8)     85.0    158.8    158.1
200 basis point
 decrease             233.5     350.8     442.7     (71.3)  (102.9)  (113.7)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i)  Losses are in brackets and benefits are presented as positive numbers.
(ii) For BMO's Insurance businesses, a 100 basis point increase in interest
     rates at April 30, 2014, results in an increase in earnings after tax
     of $67 million and an increase in before tax economic value of $384
     million ($72 million and $368 million, respectively, at January 31,
     2014; $81 million and $335 million, respectively, at October 31, 2013).
     A 100 basis point decrease in interest rates at April 30, 2014, results
     in a decrease in earnings after tax of $57 million and a decrease in
     before tax economic value of $454 million ($61 million and $435
     million, respectively, at January 31, 2014; $66 million and $399
     million, respectively, at October 31, 2013). These impacts are not
     reflected in the table above.

Liquidity and Funding Risk

Liquidity and funding risk is managed under a robust risk management framework. There were no material changes in the framework during the quarter.

Liquid and Unencumbered Assets

BMO's liquid assets are primarily held in our trading businesses and in supplemental liquidity pools that are maintained for contingency purposes. Liquid assets include unencumbered, high-quality assets that are marketable, can be pledged as security for borrowings and can be converted to cash in a time frame that meets our liquidity and funding requirements.

BMO's liquid assets are summarized in Table 22 below. In the ordinary course of the bank's day-to-day business activities, BMO may encumber a portion of cash and security holdings as collateral to support its trading activities and participation in clearing and payment systems. In addition, BMO may receive highly liquid assets as collateral and may re-pledge these assets in exchange for cash or as collateral for trading activities. Net unencumbered liquid assets, defined as on-balance sheet assets such as BMO owned cash and securities and securities borrowed or purchased under resale agreements plus other off-balance sheet eligible collateral received less collateral encumbered, totalled $170.5 billion at April 30, 2014, compared with $180.7 billion at January 31, 2014. The decrease in unencumbered liquid assets was primarily due to lower security balances. Net unencumbered liquid assets are primarily held at the parent bank level, in our U.S. legal entity BMO Harris Bank, and in BMO's broker/dealer operations in Canada and internationally. In addition to liquid assets, BMO retains access to the Bank of Canada's emergency lending assistance program, Federal Reserve Bank discount window in the U.S. and European Central Bank standby liquidity facilities. BMO does not consider central bank facilities as a source of available liquidity when assessing its liquidity position.

In addition to cash and securities holdings, BMO may also pledge other assets, including mortgages and loans, to raise long-term secured wholesale funding. Table 23 provides a summary of total encumbered and unencumbered assets.


----------------------------------------------------------------------------
Liquid Assets                                                       Table 22
----------------------------------------------------------------------------
                                                      As at April 30, 2014
                -----------------------------------------------------------
                    Carrying
                    Value/On
                     Balance        Other    Total
                       Sheet       Cash &    Gross                     Net
(Canadian $ in        Assets   Securities   Assets Encumbered Unencumbered
 millions)               (1)     Received      (2)     Assets   Assets (3)
---------------------------------------------------------------------------
Cash and cash
 equivalents          35,082            -   35,082      1,434       33,648
Deposits in
 other banks           7,069            -    7,069          -        7,069
Securities and
 securities
 borrowed or
 purchased under
 resale
 agreements
Sovereigns /
 Central banks /
 Multilateral
 Development
 Banks                97,021       10,763  107,784     70,012       37,772
Mortgage-backed
 securities and
 collateralized
 mortgage
 obligations          15,109          610   15,719        589       15,130
Corporate debt        22,554        6,064   28,618      3,484       25,134
Corporate equity      61,907       16,863   78,770     42,170       36,600
---------------------------------------------------------------------------
Total securities
 and securities
 borrowed or
 purchased under
 resale
 agreements          196,591       34,300  230,891    116,255      114,636
NHA mortgage-
 backed
 securities
 (reported as
 loans at
 amortized cost)
 (4)                  15,565            -   15,565        461       15,104
---------------------------------------------------------------------------
Total liquid
 assets              254,307       34,300  288,607    118,150      170,457
---------------------------------------------------------------------------
Other assets
 eligible at
 central banks
 (not included
 above) (5)          101,959            -  101,959        461      101,498
Undrawn credit
 lines granted
 by central
 banks                     -            -        -          -            -
---------------------------------------------------------------------------
Total liquid
 assets and
 other sources       356,266       34,300  390,566    118,611      271,955
---------------------------------------------------------------------------
---------------------------------------------------------------------------

                       As at
                 January 31,
                        2014
                ------------
                         Net
(Canadian $ in  Unencumbered
 millions)        Assets (3)
----------------------------
Cash and cash
 equivalents          32,731
Deposits in
 other banks           6,586
Securities and
 securities
 borrowed or
 purchased under
 resale
 agreements
Sovereigns /
 Central banks /
 Multilateral
 Development
 Banks                46,376
Mortgage-backed
 securities and
 collateralized
 mortgage
 obligations          13,343
Corporate debt        25,880
Corporate equity      41,463
----------------------------
Total securities
 and securities
 borrowed or
 purchased under
 resale
 agreements          127,062
NHA mortgage-
 backed
 securities
 (reported as
 loans at
 amortized cost)
 (4)                  14,296
----------------------------
Total liquid
 assets              180,675
----------------------------
Other assets
 eligible at
 central banks
 (not included
 above) (5)           99,948
Undrawn credit
 lines granted
 by central
 banks                     -
----------------------------
Total liquid
 assets and
 other sources       280,623
----------------------------
----------------------------
(1)  The carrying values outlined in this table are consistent with the
     carrying values in the Bank's balance sheet as at April 30, 2014.
(2)  Gross assets include on-balance sheet and off-balance sheet assets.
(3)  Net unencumbered liquid assets are defined as on-balance sheet assets,
     such as BMO-owned cash and securities and securities borrowed or
     purchased under resale agreements, plus other off-balance sheet
     eligible collateral received, less encumbered assets.
(4)  Under IFRS, NHA mortgage-backed securities (MBS) that include BMO's
     originated mortgages as the underlying collateral are classified as
     loans. Unencumbered NHA MBS securities have liquidity value and are
     included as liquid assets under BMO's liquidity and funding management
     framework. This amount is shown as a separate line item, NHA mortgage-
     backed securities.
(5)  Represents loans currently lodged at central banks that could
     potentially be used to access central bank funding. Loans available for
     collateral do not include other sources of additional liquidity that
     may be realized from the loan portfolio including incremental
     securitization, covered bond issuances and Federal Home Loan Bank
     (FHLB) advances.

----------------------------------------------------------------------------
Asset Encumbrance (Canadian $ in millions)                          Table 23
----------------------------------------------------------------------------


                        Total
                        Gross
                   Assets (1)        Encumbered (2)         Net Unencumbered
                              --------------------- ------------------------
                                                                   Available
                                                            Other         as
As at April 30,               Pledged as      Other  unencumbered collateral
 2014                         collateral encumbered           (3)        (4)
----------------------------------------------------------------------------
Cash and bank
 deposits              42,151          -      1,434           423     40,294
Securities (5)        246,456     92,488     24,228         7,455    122,285
Loans and
 acceptances          279,139     37,138      1,954       138,549    101,498
Other assets
  Derivative
   Instruments         28,859          -          -        28,859          -
  Premises and
   equipment            2,172          -          -         2,172          -
  Goodwill              3,994          -          -         3,994          -
  Intangible
   assets               1,554          -          -         1,554          -
  Current tax
   assets                 800          -          -           800          -
  Deferred tax
   assets               2,927          -          -         2,927          -
  Other assets          8,293          -          -         8,293          -
----------------------------------------------------------------------------
Total other assets     48,599          -          -        48,599          -
----------------------------------------------------------------------------
Total assets          616,345    129,626     27,616       195,026    264,077
----------------------------------------------------------------------------

                        Total
                        Gross
                   Assets (1)        Encumbered (2)         Net Unencumbered
                              --------------------- ------------------------
                                                                   Available
                                                            Other         as
As at January 31,             Pledged as      Other  unencumbered collateral
2014                          collateral encumbered           (3)        (4)
----------------------------------------------------------------------------
Cash and bank
 deposits              40,698          -      1,381           416     38,901
Securities (5)        255,815     87,047     27,410         7,399    133,959
Loans and
 acceptances          274,121     37,835      1,957       134,381     99,948
Other assets
  Derivative
   Instruments         37,502          -          -        37,502          -
  Premises and
   equipment            2,220          -          -         2,220          -
  Goodwill              4,052          -          -         4,052          -
  Intangible
   assets               1,558          -          -         1,558          -
  Current tax
   assets               1,030          -          -         1,030          -
  Deferred tax
   assets               2,986          -          -         2,986          -
  Other assets          8,346          -          -         8,346          -
----------------------------------------------------------------------------
Total other assets     57,694          -          -        57,694          -
----------------------------------------------------------------------------
Total assets          628,328    124,882     30,748       199,890    272,808
----------------------------------------------------------------------------

(1)  Gross assets include on-balance sheet and off-balance sheet assets.
(2)  Pledged as collateral refers to the portion of on-balance sheet assets
     and other cash and securities received that is pledged through
     repurchase agreements, securities lent, derivative contracts, minimum
     required deposits at central banks and requirements associated with
     participation in clearing houses and payment systems. Other encumbered
     includes assets which are restricted from use for legal or other
     reasons such as restricted cash and short sales.
(3)  Other unencumbered assets include select liquid asset holdings
     management believes are not readily available to support BMO's
     liquidity requirements. These include cash and securities of $7.9
     billion as at April 30, 2014, which include securities held in BMO's
     insurance subsidiary, credit protection vehicle, significant equity
     investments, and certain investments held in our merchant banking
     business. Other unencumbered assets also include mortgages and loans
     that may be securitized to access secured funding.
(4)  Loans included as available as collateral represent loans currently
     lodged at central banks that could potentially be used to access
     central bank funding. Loans available for collateral do not include
     other sources of additional liquidity that may be realized from the
     loan portfolio, including incremental securitization, covered bond
     issuances and FHLB advances.
(5)  Includes securities, securities borrowed or purchased under resale
     agreements and NHA mortgage-backed securities (reported as loans at
     amortized cost).

Funding Strategy

Our funding philosophy requires that secured and unsecured wholesale funding used to support loans and less liquid assets be longer term (typically maturing in two to ten years) to better match the term to maturity for these assets. Wholesale secured and unsecured funding for liquid trading assets is generally shorter term (maturing in one year or less), and is aligned with the liquidity of the assets being funded. Trading assets are subject to haircuts in order to reflect the potential for lower market values and liquidity during times of market stress. Supplemental liquidity pools are funded with a mix of wholesale term funding.

BMO maintains a large and stable base of customer deposits that, along with our strong capital base, is a source of strength. It supports the maintenance of a sound liquidity position and reduces our reliance on wholesale funding. Customer deposits include core deposits and larger retail and commercial fixed-rate customer deposits. Customer deposits totalled $230.4 billion at April 30, 2014, up from $227.9 billion at January 31, 2014. BMO also receives non-marketable deposits from corporate and non-financial institutional customers. These deposits totaled $29.2 billion as at April 30, 2014.

Total wholesale funding outstanding, largely consisting of negotiable marketable securities, was $162.2 billion at April 30, 2014, with $35.7 billion sourced as secured funding and $126.5 billion sourced as unsecured funding. The mix and maturities of BMO's wholesale term funding are outlined in Table 24 below. BMO maintains a sizeable portfolio of unencumbered liquid assets totaling $170.5 billion as of April 30, 2014, that can be monetized to meet potential funding requirements, as described in the Liquid and Unencumbered Assets section above.

Diversification of our wholesale funding sources is an important part of our overall liquidity management strategy. BMO's wholesale funding activities are well diversified by jurisdiction, currency, investor segment, instrument and maturity profile. BMO maintains ready access to long-term wholesale funding through various borrowing programs, including a European Note Issuance Program, Canadian and U.S. Medium Term Note Programs, Canadian and U.S. mortgage securitizations, Canadian credit card securitizations, covered bonds and Canadian and U.S. senior (unsecured) deposits.


----------------------------------------------------------------------------
Wholesale Funding Maturities (Canadian $ in millions) (1)           Table 24
----------------------------------------------------------------------------

                                                                    Subtotal
                                    Less                                less
                                  than 1   1 to 3   3 to 6  6 to 12   than 1
As at April 30, 2014               month   months   months   months     year
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Deposits from banks (2)           11,244    4,718      817       22   16,801
Certificates of deposit and
 commercial paper                 15,202   23,950   13,069    5,299   57,520
Bearer deposit notes               2,146    1,567      241      211    4,165
Asset-backed commercial paper
 (ABCP)                            1,265    1,431      809      110    3,615
Senior unsecured medium-term
 notes                                 -        -      192    4,250    4,442
Senior unsecured structured
 notes                                 2        5       11      416      434
Covered bonds / Securitizations
  Mortgage securitizations             -        -      318    1,844    2,162
  Covered bonds                        -        -        -    2,192    2,192
  Credit card securitizations          -        -        -       42       42
Subordinated debt (3)                  -        -        -        -        -
Other (4)                              -        -        -        -        -
----------------------------------------------------------------------------
Total                             29,859   31,671   15,457   14,386   91,373
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Of which:
  Secured                          1,265    1,431    1,127    4,188    8,011
  Unsecured                       28,594   30,240   14,330   10,198   83,362
----------------------------------------------------------------------------
Total (5)                         29,859   31,671   15,457   14,386   91,373
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                  1 to 2   Over 2
As at April 30, 2014               years    years    Total
----------------------------------------------------------
----------------------------------------------------------
Deposits from banks (2)                -        -   16,801
Certificates of deposit and
 commercial paper                    915        -   58,435
Bearer deposit notes                   -        -    4,165
Asset-backed commercial paper
 (ABCP)                                -        -    3,615
Senior unsecured medium-term
 notes                             8,783   27,177   40,402
Senior unsecured structured
 notes                                44    1,017    1,495
Covered bonds / Securitizations
  Mortgage securitizations         1,391   12,786   16,339
  Covered bonds                    3,836    2,192    8,220
  Credit card securitizations      1,307    3,621    4,970
Subordinated debt (3)                313    4,875    5,188
Other (4)                              -    2,603    2,603
----------------------------------------------------------
Total                             16,589   54,271  162,233
----------------------------------------------------------
----------------------------------------------------------
Of which:
  Secured                          6,534   21,202   35,747
  Unsecured                       10,055   33,069  126,486
----------------------------------------------------------
Total (5)                         16,589   54,271  162,233
----------------------------------------------------------
----------------------------------------------------------
(1)  Wholesale funding excludes repo transactions and bankers acceptances,
     which are disclosed in the contractual maturity table in Note 17 of the
     unaudited interim consolidated financial statements. Wholesale funding
     also excludes ABCP issued by certain ABCP conduits that are not
     consolidated for financial reporting purposes.
(2)  Except for deposits from banks, which primarily consist of bank
     deposits sourced to support trading products activities, unsecured
     funding refers to funding through issuance of marketable, negotiable
     securities.
(3)  Although part of regulatory capital, subordinated debt is reported in
     this table in accordance with EDTF recommended disclosures.
(4)  Refers to Federal Home Loan Banks advances.
(5)  Total wholesale funding consists of Canadian-dollar-denominated funding
     of $54.4 billion and U.S.-dollar and other foreign-denominated funding
     of $107.8 billion as at April 30, 2014.

In November 2013, OSFI released a consultative document, Liquidity Adequacy Requirements (LAR) Guideline. The guideline outlines the approach and methodology for a number of liquidity metrics and tools that OSFI will use to monitor and assess the liquidity adequacy of banks, including the Liquidity Coverage Ratio (LCR), Net Cumulative Cash Flow and others. The guideline is expected to be finalized in the near term. Under the guideline, Canadian banks will be required to maintain a LCR above 100%, effective January 1, 2015.

In January 2014, the Basel Committee on Banking Supervision (BCBS) released a revised consultative document on the Net Stable Funding Ratio (NSFR). The industry provided feedback on the proposal to the BCBS in the second quarter of 2014. The NSFR is expected to be implemented on January 1, 2018.

Credit Rating

The credit ratings assigned to BMO's short-term and senior long-term debt securities by external rating agencies are important in the raising of both capital and funding to support our business operations. Maintaining strong credit ratings allows us to access the capital markets at competitive pricing levels. Should our credit ratings experience a material downgrade, our cost of funds would likely increase significantly and our access to funding and capital through capital markets could be reduced. A material downgrade of our ratings could have other consequences, including those set out in Note 10 to the audited consolidated financial statements on page 150 of BMO's 2013 Annual Report.

The credit ratings assigned to BMO's senior debt by the rating agencies are indicative of high-grade, high-quality issues. The ratings as at April 30, 2014, were as follows: DBRS (AA); Fitch (AA-); Moody's (Aa3); and Standard & Poor's (A+).

We are required to deliver collateral to certain counterparties in the event of a downgrade to our current credit rating. The incremental collateral required is based on mark-to-market exposure, collateral valuations and collateral threshold arrangements, as applicable. As at April 30, 2014, the bank would be required to provide additional collateral to counterparties totalling $91 million, $403 million and $559 million under a one-notch, two-notch and three-notch downgrade, respectively.

Insurance Risk

There were no significant changes in the risk management practices or risk levels of our insurance business during the quarter. BMO's insurance risk management practices are outlined on pages 95 and 96 of BMO's 2013 Annual Report.

Information and Cyber Security Risk

There were no significant changes in our information and cyber security risk management practices during the quarter from those described in the Information and Cyber Security Risk section on page 79 and in the Operational Risk section on page 94 of BMO's 2013 Annual Report.

Select Geographic Exposures

Select geographic exposures were disclosed and discussed on pages 67, 68, 119 and 120 of BMO's 2013 Annual Report. Our exposure to select countries of interest, as at April 30, 2014, is set out in the tables that follow, which summarize our exposure to Greece, Ireland, Italy, Portugal and Spain (GIIPS) along with a broader group of countries of interest in Europe where our gross exposure is greater than $500 million. Our net portfolio exposures are summarized in Table 25 and 26 for funded lending, securities (inclusive of credit default swaps (CDS) activity), repo-style transactions and derivatives. There has been limited change to our exposures compared with January 31, 2014, and October 31, 2013.


----------------------------------------------------------------------------
European Exposure by Country and Counterparty (11)
(Canadian $ in millions)                                            Table 25
----------------------------------------------------------------------------
As at April 30, 2014
                              Funded
                             Lending               Securities
                                 (1)                 (2)(10)
                          --------------------------------------------------
                                                         Sovereign
Country                        Total      Bank Corporate       (9)     Total
----------------------------------------------------------------------------
GIIPS
Greece                             -         -         -         -         -
Ireland (5)                        6         -         1         -         1
Italy                             39         -         -         -         -
Portugal                           -         -         -         -         -
Spain                             79         -         -         -         -
----------------------------------------------------------------------------
Total - GIIPS (6)                124         -         1         -         1
----------------------------------------------------------------------------
Eurozone (excluding GIIPS)
France                            14         -         -       446       446
Germany                           37         4        32     1,316     1,352
Netherlands                      295       707         7       110       824
Other (7)                        212         -         2       382       384
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           558       711        41     2,254     3,006
----------------------------------------------------------------------------
Rest of Europe
Denmark                            7       560         -       163       723
Norway                            14     1,214         2         -     1,216
Russian Federation               579         -         -         -         -
Sweden                            71       270         -         -       270
Switzerland                      140         1         2         -         3
United Kingdom                   248        58        50       187       295
Other (7)                          -         -         -         -         -
----------------------------------------------------------------------------
Total - Rest of Europe (8)     1,059     2,103        54       350     2,507
----------------------------------------------------------------------------
Total - All of Europe          1,741     2,814        96     2,604     5,514
----------------------------------------------------------------------------

As at April 30, 2014
                                         Repo-Style
                                        Transactions
                                   and Derivatives (3)(4)              Total
                          --------------------------------------------------
                                               Sovereign                 Net
Country                         Bank Corporate       (9)     Total  Exposure
----------------------------------------------------------------------------
GIIPS
Greece                             -         -         -         -         -
Ireland (5)                       34         3         -        37        44
Italy                              4         1         -         5        44
Portugal                           -         -         -         -         -
Spain                              9         -         -         9        88
----------------------------------------------------------------------------
Total - GIIPS (6)                 47         4         -        51       176
----------------------------------------------------------------------------
Eurozone (excluding GIIPS)
France                           167         -         4       171       631
Germany                           72         -         -        72     1,461
Netherlands                       54         5         -        59     1,178
Other (7)                         45         6         4        55       651
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           338        11         8       357     3,921
----------------------------------------------------------------------------
Rest of Europe
Denmark                            -         -         -         -       730
Norway                             -         -         -         -     1,230
Russian Federation                 -         -         -         -       579
Sweden                             6         -         -         6       347
Switzerland                        8         -         -         8       151
United Kingdom                   504        15         -       519     1,062
Other (7)                          1         -         -         1         1
----------------------------------------------------------------------------
Total - Rest of Europe (8)       519        15         -       534     4,100
----------------------------------------------------------------------------
Total - All of Europe            904        30         8       942     8,197
----------------------------------------------------------------------------

As at January 31, 2014
                              Funded
                             Lending
                                 (1)                          Securities (2)
                          --------------------------------------------------
                                                         Sovereign
Country                        Total      Bank Corporate       (9)     Total
----------------------------------------------------------------------------
Total - GIIPS (6)                102         -         -         -         -
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           481       687        36     2,402     3,125
----------------------------------------------------------------------------
Total - Rest of Europe (8)     1,149     2,251        49       269     2,569
----------------------------------------------------------------------------
Total - All of Europe          1,732     2,938        85     2,671     5,694
----------------------------------------------------------------------------


As at January 31, 2014
                           Repo-Style Transactions and Derivatives
                                                            (3)(4)     Total
                          --------------------------------------------------
                                               Sovereign                 Net
Country                         Bank Corporate       (9)     Total  Exposure
----------------------------------------------------------------------------
Total - GIIPS (6)                  6        12         -        18       120
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           130        29         7       166     3,772
----------------------------------------------------------------------------
Total - Rest of Europe (8)       119        25         -       144     3,862
----------------------------------------------------------------------------
Total - All of Europe            255        66         7       328     7,754
----------------------------------------------------------------------------

As at October 31, 2013
                              Funded
                             Lending
                                 (1)                          Securities (2)
                          --------------------------------------------------
                                                         Sovereign
Country                        Total      Bank Corporate       (9)     Total
----------------------------------------------------------------------------
Total - GIIPS (6)                 79         -         -         -         -
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           462       626        42     2,111     2,779
----------------------------------------------------------------------------
Total - Rest of Europe (8)       956     2,058        40       674     2,772
----------------------------------------------------------------------------
Total - All of Europe          1,497     2,684        82     2,785     5,551
----------------------------------------------------------------------------


As at October 31, 2013
                           Repo-Style Transactions and Derivatives
                                                            (3)(4)     Total
                          --------------------------------------------------
                                               Sovereign                 Net
Country                         Bank Corporate       (9)     Total  Exposure
----------------------------------------------------------------------------
Total - GIIPS (6)                  5         2         -         7        86
----------------------------------------------------------------------------
Total - Eurozone
 (excluding GIIPS) (8)           113         6         1       120     3,361
----------------------------------------------------------------------------
Total - Rest of Europe (8)       153        19         -       172     3,900
----------------------------------------------------------------------------
Total - All of Europe            271        27         1       299     7,347
----------------------------------------------------------------------------
Refer to footnotes in Table 26.


----------------------------------------------------------------------------
European Lending Exposure by Country and Counterparty (11)
 (Canadian $ in millions)                                           Table 26
----------------------------------------------------------------------------
                                         Lending (1)
                 -----------------------------------------------------------
                   Funded Lending as at April 30, 2014 As at April 30, 2014
                 ------------------------------------- --------------------
                                             Sovereign
Country                  Bank   Corporate          (9)  Commitments  Funded
------------------------------------------------------ --------------------
GIIPS
Greece                      -           -            -            -       -
Ireland (5)                 -           6            -          100       6
Italy                      39           -            -           39      39
Portugal                    -           -            -            -       -
Spain                      79           -            -           89      79
------------------------------------------------------ --------------------
Total - GIIPS             118           6            -          228     124
------------------------------------------------------ --------------------
Eurozone
 (excluding
 GIIPS)
France                     14           -            -           60      14
Germany                    31           6            -           37      37
Netherlands                27         268            -          559     295
Other (7)                 149          63            -          429     212
------------------------------------------------------ --------------------
Total - Eurozone
 (excluding
 GIIPS)                   221         337            -        1,085     558
------------------------------------------------------ --------------------
Rest of Europe
Denmark                     7           -            -            7       7
Norway                     14           -            -           14      14
Russian
 Federation               552          27            -          579     579
Sweden                     23          48            -          176      71
Switzerland                 3         137            -          370     140
United Kingdom            136         112            -          397     248
Other (7)                   -           -            -            -       -
------------------------------------------------------ --------------------
Total - Rest of
 Europe                   735         324            -        1,543   1,059
------------------------------------------------------ --------------------
Total - All of
 Europe                 1,074         667            -        2,856   1,741
------------------------------------------------------ --------------------

                                     Lending (1)
                 --------------------------------------------------
                   As at January 31, 2014    As at October 31, 2013
                 ------------------------ -------------------------
Country           Commitments      Funded  Commitments       Funded
----------------------------------------- -------------------------
GIIPS
Greece                      -           -            -            -
Ireland (5)                32           -            -            -
Italy                      24          24            2            2
Portugal                    -           -            -            -
Spain                      88          78           77           77
----------------------------------------- -------------------------
Total - GIIPS             144         102           79           79
----------------------------------------- -------------------------
Eurozone
 (excluding
 GIIPS)
France                     58          16           22           22
Germany                    34          33           21           21
Netherlands               331         163          338          163
Other (7)                 466         269          421          256
----------------------------------------- -------------------------
Total - Eurozone
 (excluding
 GIIPS)                   889         481          802          462
----------------------------------------- -------------------------
Rest of Europe
Denmark                    15          15           15           15
Norway                     19          19           16           16
Russian
 Federation               639         639          476          476
Sweden                    184          82          121           64
Switzerland               506         163          546          163
United Kingdom            386         231          485          222
Other (7)                   -           -            -            -
----------------------------------------- -------------------------
Total - Rest of
 Europe                 1,749       1,149        1,659          956
----------------------------------------- -------------------------
Total - All of
 Europe                 2,782       1,732        2,540        1,497
----------------------------------------- -------------------------
(1)   Lending includes loans and trade finance. Amounts are net of write-
      offs and gross of specific allowances, both of which are not
      considered material.
(2)   Securities include cash products, insurance investments and traded
      credit.
(3)   Repo-style transactions are primarily with bank counterparties against
      which BMO holds collateral ($137 million for GIIPS, $9.5 billion for
      other Eurozone countries and $5.1 billion for the rest of Europe as at
      April 30, 2014).
(4)   Derivatives amounts are marked-to-market, incorporating transaction
      netting and, for counterparties where a Credit Support Annex is in
      effect, collateral offsets. Derivative replacement risk net of
      collateral for all of Europe is approximately $5.5 billion as at April
      30, 2014.
(5)   Does not include Irish subsidiary reserves we are required to maintain
      with the Irish Central Bank of $86 million as at April 30, 2014.
(6)   BMO's direct exposures to GIIPS are primarily to banks for trade
      finance and trading products. Net exposures remain modest at $176
      million, with $104 million unfunded commitments as at April 30, 2014.
(7)   Includes countries with less than $500 million in gross exposure.
      Other Eurozone includes exposures to Austria, Belgium, Cyprus,
      Finland, Luxembourg, Slovakia and Slovenia. Other Rest of Europe
      includes exposures to Croatia, Czech Republic, Hungary, Iceland and
      Poland.
(8)   BMO's net direct exposure to the other Eurozone countries (the other
      12 countries that share the common euro currency) as at April 30,
      2014, totalled approximately $3.9 billion, of which 51% was to
      counterparties in countries with a rating of Aaa/AAA by both Moody's
      and S&P, with approximately 82% rated Aaa/AAA by one of the two rating
      agencies. Our net direct exposure to the rest of Europe totalled
      approximately $4.1 billion, of which 60% was to counterparties in
      countries with a Moody's/S&P rating of Aaa/AAA. A significant majority
      of our sovereign exposure consists of tradable cash products, while
      exposure related to banks was comprised of trading instruments, short-
      term debt, derivative positions and letters of credit and guarantees.
(9)   Sovereign includes sovereign-backed bank cash products.
(10)  BMO's total net notional CDS exposure (embedded as part of the
      securities exposure table) to Europe is less than $150 million, with
      no net CDS exposure to GIIPS countries as at April 30, 2014.
(11)  Other exposures (including indirect exposures) not included in the
      tables as at April 30, 2014:
   -  BMO also has exposure to entities in a number of European countries
      through our credit protection vehicle and U.S. customer securitization
      vehicle. These exposures are not included in the tables due to the
      credit protection incorporated in their structures.
        -  BMO has direct exposure to those credit structures, which in turn
           have exposures to loans or securities originated by entities in
           Europe. As noted on page 66 in BMO's 2013 Annual Report, in the
           Credit Protection Vehicle section, this structure has first-loss
           protection and hedges are in place.
        -  The notional exposure held in the credit protection vehicle to
           issuers in Greece, Italy and Spain represented 4.2%, of its total
           notional exposure. The credit protection vehicle had notional
           exposure to five of the other 12 countries that share the euro
           currency. This exposure represented 11.8% of total notional
           exposure, of which 79% was rated investment grade by both S&P and
           Moody's. The notional exposure to the rest of Europe was 15.1% of
           total notional exposure, with 89% rated investment grade by S&P
           (83% by Moody's). The vehicle benefits from significant risk loss
           protection and as a result residual credit risk is very low.
        -  BMO has exposure to GIIPS and other European countries through
           our U.S. customer securitization vehicle, which has commitments
           that involve reliance on collateral of which 0.14% represents
           loans or securities originated by entities in Europe. At quarter
           end, exposure to Spain was the largest component at 0.06%.
           Exposure to Luxembourg was approximately 0.04%, and there was no
           exposure to Italy, Ireland, Greece or Portugal.
   -  BMO has exposure to European supranational institutions totalling $0.2
      billion, predominantly in the form of tradable cash products.
   -  BMO's indirect exposure to Europe in the form of euro-denominated
      collateral to support trading activity was EUR1,216 million in
      securities issued by entities in European countries, of which EUR43
      million was held in securities related to GIIPS and EUR648 million was
      in French securities. In addition, EUR1,049 million of cash collateral
      was also held at April 30, 2014.
   -  Indirect exposure by way of guarantees from entities in European
      countries totalled $747.3 million, of which $5.4 million was exposure
      to GIIPS, $426.7 million to the other Eurozone countries and $315.2
      million to the rest of Europe.

Caution

This Risk Management section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

INVESTOR AND MEDIA PRESENTATION

Investor Presentation Materials

Interested parties are invited to visit our website at www.bmo.com/investorrelations to review our 2013 Annual Report, this quarterly news release, presentation materials and supplementary financial information package online.

Quarterly Conference Call and Webcast Presentations

Interested parties are also invited to listen to our quarterly conference call on Wednesday, May 28, 2014, at 2:00 p.m. (EDT). 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 August 25, 2014, by calling 905-694-9451 (from within Toronto) or 1-800-408-3053 (toll-free outside Toronto) and entering passcode 6766952.

A live webcast of the call can be accessed on our website at www.bmo.com/investorrelations. A replay can also be accessed on the site.


----------------------------------------------------------------------------

Shareholder Dividend Reinvestment and  For other shareholder information,
Share Purchase Plan (the Plan)         including the notice for our normal
Average market price as defined under  course issuer bid, please contact
the Plan                               Bank of Montreal
February $72.93                        Shareholder Services
March $74.09                           Corporate Secretary's Department
April $75.75                           One First Canadian Place, 21st Floor
                                       Toronto, Ontario M5X 1A1
For dividend information, change in    Telephone: (416) 867-6785
shareholder address or to advise of    Fax: (416) 867-6793
duplicate mailings, please contact     E-mail: [email protected]
Computershare Trust Company of Canada
100 University Avenue, 9th Floor       For further information on this
Toronto, Ontario M5J 2Y1               report, please contact
Telephone: 1-800-340-5021 (Canada and  Bank of Montreal
the United States)                     Investor Relations Department
Telephone: (514) 982-7800              P.O. Box 1, One First Canadian Place,
(international)                        18th Floor
Fax: 1-888-453-0330 (Canada and the    Toronto, Ontario M5X 1A1
United States)
Fax: (416) 263-9394 (international)    To review financial results online,
E-mail: [email protected]      please visit our website at
                                       www.bmo.com. To review regulatory
                                       filings and disclosures online,
                                       please visit our website at
                                       www.bmo.com/investorrelations.
----------------------------------------------------------------------------

® Registered trademark of Bank of Montreal

Contacts:
Media Relations Contacts
Ralph Marranca, Toronto
[email protected]
416-867-3996

Ronald Monet, Montreal
[email protected]
514-877-1873

Investor Relations Contacts
Sharon Haward-Laird
Head, Investor Relations
[email protected]
416-867-6656

Andrew Chin
Director, Investor Relations
andrew.chin@[email protected]
416-867-7019

Chief Financial Officer
Tom Flynn
[email protected]
416-867-4689

Corporate Secretary
Barbara Muir
[email protected]
416-867-6423

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