Bank of Montreal 1998 Annual Report Download - page 44

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BANK OF MONTREAL GROUP OF COMPANIES
HARRIS REGIONAL BANKING
CENTREPIECE OF OUR AMERICAN STRATEGY
Group Description:
Harris Regional Banking (Harris) is composed of three
integrally linked lines of business in which geographic
proximity to the customer, i.e., “location”, matters. The
three lines are Chicagoland (Chicago and its surrounding
communities) Banking, comprising community banking,
private banking and small business/lower middle-market
banking; Corporate Banking, comprised of Harris’ distri-
bution to middle-market companies across the U.S. Midwest
and nationally in selected specialties; and Corporate Trust,
composed of national stock transfer and indenture trust
distribution. Harris possesses the third-largest community
banking network in Chicagoland, is the second-largest
provider of personal trust and banking services in Chicago-
land, the fourth-largest corporate bank in the Midwest, the
fifth-largest stock transfer and ninth-largest bond inden-
ture provider in the United States. Harris is the centrepiece
of our U.S. strategy, providing 17.0% of our total net income
in 1998, and holding 13.7% of our total average assets.
Customer Profile:
Harris serves individuals, small and lower mid-market
businesses, middle-market businesses, specialty industries
and not-for-profit and government entities located in
Chicagoland and throughout the U.S. Midwest. Harris
provides stock transfer and bond indenture services
throughout the United States. Harris also provides wealth
management services nationally, with an emphasis on
Florida, Arizona and the U.S. Midwest.
Environmental Overview:
The U.S. Midwest, and in particular the Chicagoland
market, represents an exceptional market opportunity; a
diversified, high-technology and export-oriented econ-
omy with a gross domestic product twice as large as that
of Canada. This region is inextricably linked with Canada,
with more than a third of trade between Canada and the
United States transacted with enterprises in the Midwest.
Harris is based in Chicagoland, the third-largest metro-
politan market in the United States with a population
of approximately 8 million people. Despite the size and
potential of the market, financial services providers are
highly fragmented and customers are underserved. Cus-
tomers are unaccustomed to receiving the “traditional”
services of a sophisticated retail network, such as convenient
access to a full range of financial services. Chicagoland is
still underdeveloped as a result of historically restrictive
state branching regulations. In order to maximize share-
holder return and customer service quality, from this
unique market opportunity, Harris has identified the key
business strategies mentioned below.
KEY BUSINESS STRATEGIES:
■expand our Midwest middle-market corporate banking franchise;
■build and expand a Chicagoland retail banking franchise and
“win” Chicagoland, while expanding wealth management in
Arizona and Florida; and
ACCOMPLISHMENTS IN 1998:
Expanded our Midwest Middle-Market Corporate
Banking Franchise
■Transformed from “credit bankers” into financial advi-
sors and distributors of all Harris’ services, including
products and services provided by other Harris lines of
business. This resulted in strong loan growth of $1.7 bil-
lion or 23% over last year and related syndication, and
other fee revenues of $41.6 million.
Built and Expanded the Retail Franchise
■
Harris’ retail market share in Chicagoland has increased
from 2.7% in 1994 to a current level of 8.2%. This in-
creased market share is the result of providing a “network
level” of financial services that have produced higher
customer satisfaction scores and sales revenue.
■
Harris expanded operations in Florida by converting
the former Harris Trust Company of Florida, which has
been providing trust and investment services in Florida
for 15 years, into an institution with full banking powers.
This established a strategic base in the U.S. South to
serve the “snowbird” market and increasing numbers of
companies relocating employees southward.
■continue structural cost reductions through North American
integration and standardized processes.
■Loans increased at above market rates, while deposit
volumes grew at double the market rate as Harris remains
on track to meet the goal of 1 million profitable customers
by the year 2002.
■Internet/PC Banking is now available to all community
bank customers, offering greater convenience of access.
Continued Structural Cost Reductions
■
US$60 million reduction in overhead goal has been
achieved. Harris is now focused on the standardization
and integration of support and line functions on a North
American basis. The goal is to continue to reduce fixed
costs by US$20 million per annum.
■Harris established common operating utilities,which
eliminated redundancies and reduced costs. These utili-
ties provide more consistent delivery and access to the
full range of network services from every location, and
include standardized processes for Harris’ business and
consumer lending, call centre, mortgage lending and
servicing, and small business centre.