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

Expanding Our U.S. Wealth Management Franchise Bank of Montreal November 28, 2001. I NDEX. The Transaction Transaction Terms Strategic Rationale - Expanding Our U.S. Wealth Management Franchise Combined CSFB direct and InvestorLine Financial Impact Comparable Transactions

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

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

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

  3. THE TRANSACTION • Acquiring CSFBdirect’s direct investing business for US$520 million • Aligned with bank’s strategy to grow selectively and substantially in the U.S. • Cash earnings per share neutral in Year 1, excluding one-time costs, and accretive thereafter • Establishing a national platform to accelerate the expansion of The Harris wealth management franchise in the U.S. • Increasing our U.S. client base

  4. TRANSACTION TERMS

  5. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE • Establishes a national U.S. wealth management business (Private Client Group “PCG”) based around The Harris brand • Harris has been in the wealth management business since 1892 • Builds upon the North American wealth management platform • As at October 31, 2001, our wealth management business consists of: * * ** * Includes Harris AdvantEdge ** Includes $9B of Harris Insight Funds

  6. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Recent Growth Initiatives and Performance • Direct investing • acquisition of BCL for US$45MM (1999) • formation of Harris InvestorLine • acquisition of Freeman Welwood for US$93MM (2000) • expanded to 116,000 active accounts from less than 5,000 in 1999 • Full service investing • launched Harris AdvantEdge (2001) • Mutual funds • 21 funds of which 8 received 4-star Morningstar ratings (Sept 2001) • Private banking • acquisition of Village Banc of Naples for US$13MM (2000) • acquisition of Century Bank in Phoenix for US$16MM (2000) • de novo openings in Phoenix, Minneapolis, Seattle

  7. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Acquisition of CSFBdirect provides: • Attractive business with stand-alone economics • 467,000 active accounts • 1,000,000 total accounts • US$16.3 billion in AUA • 450 employees • Strong client demographics: • Over 85% of clients are college educated • Over 40% of clients have incomes greater than US$75,000 • Significant revenue base:

  8. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Acquisition of CSFBdirect provides: 2.Addition of Key Markets

  9. 1999 Presence Acquisitions since 1999 Future Targets STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Freeman Welwood Burke, Christensen & Lewis Acquisition of CSFBdirect provides: 3.National Foot Print – Pre CSFBdirect and de novo openings ILLINOIS OHIO -Chicago -Cleveland WISCONSIN -Milwaukee MICHIGAN -Detroit WASHINGTON - Seattle - Bellevue - Tacoma - Spokane OREGON - Portland CALIFORNIA - San Francisco COLORADO - Denver UTAH - Salt Lake City ARIZONA - Phoenix HAWAII - Honolulu Harris Private Bank ILLINOIS - Chicago - Hinsdale - Barrington - Lake Forest - Naperville - St. Charles - Palatine - Woodstock - Winnetka - Community Banks ARIZONA - Phoenix - Scottsdale - Tucson - Sun City - Carefree - Pinnacle Peak - Biltmore FLORIDA - Ft. Meyers - Sarasota - Vero Beach - Naples - West Palm Beach

  10. 1999 Presence Acquisitions since 1999 Future Targets STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE CSFBdirect physical locations Freeman Welwood Burke, Christensen & Lewis Acquisition of CSFBdirect provides: 3.National Foot Print – Post CSFBdirect and de novo openings - San Francisco - Boca Raton - New York City - Sandy City - Atlanta - Jersey City - Dallas - Chicago - Philadelphia - Charlotte ILLINOIS OHIO -Chicago -Cleveland WISCONSIN -Milwaukee MICHIGAN -Detroit WASHINGTON - Seattle - Bellevue - Tacoma - Spokane OREGON - Portland CALIFORNIA - San Francisco COLORADO - Denver UTAH - Salt Lake City ARIZONA - Phoenix HAWAII - Honolulu Harris Private Bank ILLINOIS - Chicago - Hinsdale - Barrington - Lake Forest - Naperville - St. Charles - Palatine - Woodstock - Winnetka - Community Banks ARIZONA - Phoenix - Scottsdale - Tucson - Sun City - Carefree - Pinnacle Peak - Biltmore FLORIDA - Ft. Meyers - Sarasota - Vero Beach - Naples - West Palm Beach De novo openings • - Phoenix • - Minneapolis • - Seattle

  11. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Acquisition of CSFBdirect provides: 4.Recognized technology leadership “Best of the Web” – March 2001 Number one “4-Stars” rating – March 2001 “Best Online Brokerage Service” – March 2001 “Top Online Broker” – 2000 Worth MagazineReaders’ Choice Awards

  12. STRATEGIC RATIONALE - EXPANDING OUR U.S. WEALTH MANAGEMENT FRANCHISE Acquisition of CSFBdirect provides: 5.Rapid integration with low risk • CSFBdirect clients experience seamless transition • Successfully integrated operations and converted brands of BCL and Freeman Welwood • Minimal client attrition in previous acquisitions • Depth of experience in direct investing

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

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

  15. FINANCIAL IMPACT CSFBdirect Financial Summary * YTD Q3 annualized ** Excluding one-time costs

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

  17. FINANCIAL IMPACT Sources of Projected Earnings Turnaround in Year 1 • Operating cost improvements included in year 1 total $100MM: Staffing US$26MM Advertising US$18MM Technology US$41MM Professional Fees US$12MM Other US$3MM • Most of the cost improvements have already been achieved or initiated • Assumes current market activity levels • Prudent financial projections – exclude benefit of cross-selling

  18. FINANCIAL IMPACT • Non-common, tier 1 capital will be raised • Tier 1 ratio improves through 2002 as a result of: • earnings retention • managed reduction in risk-weighted assets • One-time pre-tax charge of US$50-55MM plus up to US$10MM of transaction costs which increases goodwill

  19. COMPARABLE TRANSACTIONS • The purchase price multiples are within the bounds of comparable transactions and well below averages of a year ago • The price/active account for this transaction is $931 when the $85MM present value of the tax benefit is deducted from the $520MM purchase price

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

  21. WEALTH MANAGEMENT FRANCHISE

  22. CAUTION REGARDING FORWARD-LOOKING STATEMENTS This financial presentation includes forward-looking statements, which are made pursuant to the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments with respect to our objectives, targets, strategies, financial condition, the results of our operations and our businesses, our outlook for our businesses and for the Canadian and U.S. economies, and risk management. By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this report not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, targets, expectations, estimates and intentions expressed in such forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by the following factors: fluctuations in interest rates and currency values; regulatory developments; statutory changes; the effects of competition in the geographic and business areas in which we operate, including continued pricing pressure on loan and deposit products; and changes in political and economic conditions including, among other things, inflation and technological changes. We caution that the foregoing list of important factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to Bank of Montreal, investors and others should carefully consider the foregoing factors as well as other uncertainties and potential events. The Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank. FORWARDLOOKINGSTATEMENTS

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