Bank of Montreal 2000 Annual Report Download - page 64

2000 Accomplishments
■Achieved strong double-digit earnings growth
– and strong revenue
growth – in Harris Bank’s core businesses of community banking,
private client services and mid-market banking, while divesting our
low-return corporate trust business.
■Rapidly grew small business, consumer and mortgage loans. Consumer
loans, in particular, grew 15% over last year. Harris Bank’s retail funding
base now totals more than US$10 billion.
■
Launched Harris Wireless service, making Harris one of the first
banks in the United States to provide banking services via digital
mobile phones.
■Established Harris Nesbitt to serve corporate and investment banking
mid-market clients across the U.S. Midwest and in specialized
markets nationwide.
■Announced two acquisitions
– one in Florida and the other in Arizona –
to augment our growing private banking, personal trust and wealth
management businesses in those regions.
■Introduced BMO Harris Private Banking across North America, which
builds on Harris Bank’s highly successful, integrated approach to
wealth management.
Outlook
The U.S. economy may slow in 2001, which may impact the demand for
financial services in general and result in some decline in asset quality
from the very high level experienced in recent years. Harris Bank is one of
a handful of banks well positioned to take advantage of the opportunity
represented by the large, fragmented and underserved market in the
Chicago area. With this opportunity, and its expanding distribution of wealth
management services in affluent U.S. markets and comprehensive corpo-
rate/investment banking service offerings to mid-market companies in
the Midwest and beyond, Harris is well positioned for profitable growth.
40 ■Bank of Montreal Group of Companies Annual Report 2000
Review of Client Groups Performance
Harris Bank
Harris Bank, with US$29 billion in assets, is one of the largest
community bank networks in Illinois, a nationally-recognized
provider of private client and personal trust services, and a
premier U.S. Midwest mid-market corporate and investment
bank. In 2000, Harris had nearly 130 locations throughout
Financial Results
Harris Bank
Net income of Harris Bank was US$268 million in 2000,
compared with US$220 million in 1999, an increase of 21.8%.
Excluding a non-recurring US$30 million gain on sale of the
Corporate Trust business this year and higher securities gains
last year, earnings increased 13.1%. These increased earnings
were the result of strong business growth, sustained cost
control and continued low credit losses, partially offset by
the impact of the higher interest rate environment.
Year 2000 represented the seventh anniversary of the
launch of the Harris Bank “Vision 2002” strategy in 1993 –
to triple the earnings of the bank to US$300 million by 2002,
and triple distribution and market share in the Chicagoland
marketplace. Excluding non-recurring items, earnings have
grown by an average of 16.0% per annum since 1993, while
annual cash-based return on equity has improved from
10.0%–11.0% to the 18.0% range, and cash-based productivity
from 74.0% to 62.0% during the period.
Chicagoland, with 11 additional branches in Arizona and
Florida. Together with Bank of Montreal, Harris offers its
clients the range of services and depth of expertise of one
of the largest financial institutions in North America.
1999 Compared with 1998
Net income increased 11.7% to US$220 million from 1998 to
1999. Core earnings, excluding securities gains and the 1998
gain from the sale of the credit card business, were up 17.6%.
Harris Bank ($US millions, U.S. GAAP)
As at and for the year ended October 31 2000 1999 * 1998*
Net interest income 694 642 626
Other income 489 485 448
Total Revenue 1,183 1,127 1,074
Provision for credit losses 27 30 36
Non-interest expense 713 738 703
Income before provision
for income taxes and goodwill 443 359 335
Income taxes 159 123 121
Amortization of goodwill,
net of applicable income tax 16 16 17
Net Income 268 220 197
Net Income comprised of: P&C 121 55 67
PCG 19 16 17
IBG 128 149 113
Average assets 27,705 25,260 22,795
*Restated to give effect to the current year’s organization structure and presentation changes as
outlined on page 29.
2001 Objectives
■Sustain double-digit earnings growth.
■
Through The Harris brand, continue to build on Harris Bank’s longstanding
expertise in investment management and personal trust services to
develop our wealth management business throughout North America.
■Ramp up retail and small business lending, targeting to increase retail
and small business loans outstanding by more than US$1 billion per year
for the next several years.
■Continue to develop Harris Nesbitt as the premier mid-market corporate
and investment banking organization in the U.S. Midwest.
2000 Objectives
In 2000, Harris Bank’s goal was to continue to aggressively build value and sustain double-digit growth. In support of these objectives, Harris identified a
number of key performance indicators and seeks to:
■Become the dominant full-service bank in the fragmented and underserved Chicagoland marketplace.
■Become the premier mid-market corporate and investment bank in the U.S. Midwest.
■Expand in the U.S. Sunbelt and other fast-growing markets.