Bank of Montreal 2007 Annual Report Download - page 51

Loan growth remains strong
but moderated in a softer real
estate market.
Deposit growth reflects
increases in both personal
and commercial deposits.
Customer loyalty continued
to strengthen.
The acquisition of FNBT added
significantly to our branch network.
2007200620052004
Number of Branches
168
195 202
232
200720062005
Retail Net Promoter Score
34
39 41
Deposits and Deposit Growth
Deposits (US$ billions)
Growth (%)
14.1
5.0
9.3
3.4
8.4
15.4 15.9 17.2
2007200620052004
Loans and Loan Growth
Loans (US$ billions)
Growth (%)
2007200620052004
19 22 15 11
12.2
14.9
17.2 19.1
2007 Group Objectives and Achievements
Improve financial performance by growing revenue
and managing costs.
•We achieved revenue growth of 4.1% in source currency. Expenses
increased 5.9% with a 120 basis point deterioration in our cash
productivity ratio. Excluding acquisition integration costs, quarterly
earnings have increased each quarter since the fourth quarter of
2006. Management focused on controlling expense growth through
reducing personnel by 4% and slowing branch expansion, as well
as through other initiatives.
Continue to build our branch network by opening new
branches in the Chicago area and exploring acquisition
opportunities in the Midwest.
•
Acquired and integrated First National Bank & Trust, adding 32 branches
and 33 ABMs in Indianapolis and surrounding communities.
•Announced definitive agreements to purchase two Wisconsin-based
banks: Ozaukee Bank, a community bank with six full-service and two
limited-service locations in the affluent northern part of the greater
Milwaukee area; and Merchants and Manufacturers Bancorporation,
Inc., a holding company with six bank subsidiaries operating 34 full-
service and 11 limited-service locations concentrated in the Milwaukee
area. These transactions are expected to close in the first quarter
of 2008, subject to approval from U.S. regulators and Ozaukee Bank
shareholders, at which time a third of our branches will be located
in Indiana and Wisconsin.
Challenges
•Chicago area market dynamics remain intensely competitive within
a consolidating U.S. marketplace. In addition, Bank of America’s
recent acquisition of LaSalle Bank will alter the competitive landscape,
presenting both challenges and opportunities.
•Expansion opportunities in the Chicago area are limited by the
rising cost of new branches and the premiums that quality acquisi-
tions command.
•Community banks are aggressively competing on price to achieve
loan and deposit growth.
Key Performance Drivers 2007 2006 2005
Average US$ loan growth (%) 11.4 15.2 22.4
Average US$ deposit growth (%) 8.4 3.4 9.3
Cash productivity ratio (%) 73.2 72.0 70.0
Number of branches 232 202 195
Employee engagement index* 72 69 71
Retail Net Promoter Score** 41 39 34
*Source: BMO’s Annual Employee Survey, conducted by Burke Inc., an independent
research company.
** A measure of the strength of customer loyalty.
•Opened three new branches and closed or consolidated five branches.
We opened fewer branches than our original goal in light of our
cost control initiatives.
Continue to refine our customer experience, providing excellent
service to retain existing customers, expand our relationships and
attract new business.
•Our Retail Net Promoter Score increased to 41 from 39, reflecting
strengthening customer loyalty.
2008 Group Objectives
•
Improve financial performance by growing revenue and
effectively managing costs.
•Continue to refine our customer experience, providing excellent
service to retain existing customers, expand our relationships
and attract new business.
•Improve sales force productivity across all our lines of business.
•Expand our commercial sales force in Chicago and surround-
ing areas.
•Continue our expansion in the U.S. Midwest.
MD&A
BMO Financial Group 190th Annual Report 2007 47