Bank of Montreal 1999 Annual Report Download - page 33

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Bank of Montreal Group of Companies 1999 Annual Report 27
During the year, Nesbitt Burns changed its year end as part of its integration with
the Bank’s institutional businesses. This resulted in the inclusion of an additional
month of revenue ($89 million) and expenses ($72 million) with a positive net income
impact of $8 million.
1998 Compared to 1997
Our fully diluted earnings per share increased 0.9% from $4.62 to $4.66. Net
income
increased 3.5% during the year, and reflected continued business volume
growth and strong asset quality. This was partially offset by the effects of unusual
market conditions in the fourth quarter of 1998, which contributed to lower earnings
from capital market activities including trading losses, as well as a lower contribution
from Bancomer. Expense growth was 4.8%, reflecting strategic development spending,
the foreign exchange rate impact on U.S.-based expenses and business volume growth.
One-Time Charges
During the fourth quarter of 1999 we announced two one-time charges which amounted to
$113 million after tax. The charges consisted of a restructuring charge of $81 million after tax, and
a write-down for distressed investment securities of $32 million after tax.
The restructuring charge was determined as part of a rigorous analysis of the Bank’s 32 lines of
business, and reflects the progress made to date. The charge reflects costs associated with ceasing
activities that were not contributing to the Bank’s shareholder value creation goals, and realigning
business activities to reposition the Bank. The charge has been included in non-interest expenses
and is detailed in note 14 to the consolidated financial statements.
The write-down of the portfolio of distressed investment securities to its net realizable value
results from a deterioration in the overall quality of the portfolio. The overall portfolio at that time,
was valued at $49 million. The charge has been recorded as a loss within Other Income.
These two one-time charges are included within the results of Corporate Support, detailed on page
44.
1,350
1,305
1,168
986
19.5 18.4
1,382
Net Income
and Annual Growth
Net income ($ millions)
Year-over-year growth (%)
9998979695
3.5
11.7
2.4