Bank of Montreal 1998 Annual Report Download - page 87

Demand deposits are comprised primarily of our customers’
chequing accounts, some of which we pay interest on. Our cus-
tomers need not notify us prior to withdrawing money from their
chequing accounts.
Deposits payable after notice are comprised primarily of our cus-
tomers’ savings accounts, on which we pay interest. Our customers
are required to give us notice prior to withdrawing money from
these accounts.
Deposits payable on a fixed date are comprised primarily of
various investment instruments purchased by our customers, such
as term deposits and guaranteed investment certificates, to earn
interest over a fixed period. The term of these deposits can vary
from one day to seven years.
Deposits include federal funds purchased, which are overnight
borrowings of other banks’ excess reserve funds at a United States
Federal Reserve Bank. As at October 31, 1998 we had purchased
$3,461 and $2,501 as at October 31, 1997.
Deposits include commercial paper totalling $615 as at Octo-
ber 31, 1998 and $1,476 as at October 31, 1997.
Included in our deposits are $26,025 of individual deposits
greater than $100,000.00 in Canada and $44,686 outside Canada as
at October 31, 1998 and $27,795 in Canada and $45,407 outside
Canada as at October 31, 1997. Of the total deposits booked in
Canada $19,856 related to deposits maturing within six months
or less as at October 31, 1998 and $21,594 as at October 31, 1997.
Individual deposits greater than $100,000.00 outstanding at year end
that are payable on a fixed date totalled $70,711 as at October 31,
1998 and $73,202 as at October 31, 1997.
1998 19 97
Acceptances $ 6,944 $ 5,594
Securities sold but not yet purchased 7,843 10,304
Securities sold under repurchase agreements 29,758 21,389
$ 44,545 $ 37,287
Accounts payable, accrued expenses
and other items $ 3,150 $ 3,166
Liabilities of subsidiaries, other than deposits 1,433 2,599
Accrued interest payable 1,298 1,161
Unrealized losses and amounts payable
on derivative contracts 12,133 6,446
Deferred loan fees 132 82
Non-controlling interest in subsidiaries 517 151
Other $ 18,663 $ 13,605
To t a l $ 63,208 $ 50,892
Included in liabilities of subsidiaries, other than deposits are other
short-term borrowings totalling $1,279 as at October 31, 1998 and
$2,458 as at October 31, 1997.
Subordinated debt represents our direct unsecured obligations to
our debt holders and forms part of our regulatory capital. The rights
of the holders of our notes and debentures are subordinate to the
claims of depositors and certain other creditors. We require prior
approval from the Superintendent of Financial Institutions Canada
before we can redeem any part of the subordinated debt.
Our subordinated debt consists of notes and debentures with
interest rates ranging from 5.52% to 10.85%. The maturity dates
extend from December 1998 to August 2089.
Theinterestratesoncertaindebentureseriesarevariablebasedon
various indices. In addition, certain series of subordinated debt are
redeemable at our option on various dates prior to February 2012.
Included in subordinated debt are debentures and subordinated
notes denominated in U.S. dollars totalling US$950 as at October 31,
1998 and US$750 as at October 31, 1997. The Canadian dollar
equivalent of these is $1,466 as at October 31, 1998 and $1,056 as at
October 31, 1997.
We have issued $1.0 billion medium-term notes under a $5.0 billion
North American shelf offering program as at October 31, 1998 and
$450 as at October 31, 1997.
We have also issued US$350 of subordinated debt under our
$3.0 billion Euro Medium-Term Note Program. No notes were
issued under this program in 1997.
Repayments of our subordinated debt required over the next five
years and thereafter are:
1999 $ 10
2000 –
2001 –
2002 150
2003 250
Thereafter 4,381
To t a l $ 4,791
79
BANK OF MONTREAL GROUP OF COMPANIES
NOTE 13 SUBORDINATED DEBT
Acceptances
Acceptances represent a form of negotiable short-term debt that is
issued by our customers and which we guarantee for a fee. We have
an offsetting claim, equal to the amount of the acceptances, against
our customers when the instrument matures. The amount due
under acceptances is recorded as a liability and our corresponding
claim is recorded as an asset in our Consolidated Balance Sheet.
Securities Sold but not yet Purchased
Securities which we have sold but not yet purchased represent our
obligation to deliver securities which we did not own at the time of
sale. These obligations are recorded at their market value. Adjust-
ments to the market value as at the balance sheet date and gains and
losses on the settlement of these obligations are recorded as interest,
dividend and fee income from securities in our Consolidated State-
ment of Income.
Securities Sold under Repurchase Agreements
Securities which we have sold under repurchase agreements repre-
sent short-term funding transactions where we sell securities that
we already own and simultaneously commit to repurchase the same
securities at a specified price on a specified date in the future. These
securities are recorded at their original cost. The interest expense
related to these liabilities is recorded on an accrual basis.
NOTE 12 OTHER LIABILITIES