Ellen Costello - Chief Executive Officer of Harris NA, Chief Executive Officer of Harris Bankcorp, Chief Executive Officer of Harris Financial Corp and President of Harris Financial Corp Frank Techar - Chief Executive Officer of Personal & Commercial Banking for Canada BMO and President of Personal & Commercial Banking for Canada BMO Gilles Ouellette - Chief Executive Officer of Private Client Group and President of Private Client Group Surjit Rajpal - Deputy Head of Enterprise Risk & Portfolio Management Viki Lazaris - Senior Vice President of Investor Relations William Downe - Chief Executive Officer, President, Non-Independent Director, Chief Executive Officer of BMO Financial Group and President of BMO Financial Group Thomas Flynn - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Sumit Malhotra - Macquarie Research Michael Goldberg - Desjardins Securities Inc. Mario Mendonca - Canaccord Genuity Brian Klock - Keefe, Bruyette, & Woods, Inc. Robert Sedran - CIBC World Markets Inc. Gabriel Dechaine - Crédit Suisse AG Steve Theriault - BofA Merrill Lynch John Aiken - Barclays Capital Andre-Philippe Hardy - RBC Capital Markets, LLC

This conference call is being recorded. Good afternoon and welcome to the BMO Financial Group Second Quarter 2011 Conference Call for May 25, 2011. Your host for today is Viki Lazaris, Senior Vice President of Investor Relations. Ms. Lazaris, please go ahead.

Great, thank you, operator. Good afternoon, everyone and thanks for joining us today. Our agenda for today's investor presentation is as follows: We'll begin the call with remarks from Bill Downe, BMO's CEO, followed by presentations from Tom Flynn, the bank's Chief Financial Officer, and Surjit Rajpal, our Chief Risk Officer. After the presentations, we'll have a short question-and-answer period, where we will take questions from prequalified analysts. To give everyone an opportunity to participate, please try and keep it to 1 or 2 questions and then requeue. Also with us this afternoon to take questions are BMO's business unit head, Tom Milroy from BMO Capital Markets; Gilles Ouellette from the Private Client Group; Frank Techar who heads P&C Canada; Ellen Costello from P&C U.S. At this time, I caution our listeners by stating the following on behalf of those speaking today. Forward-looking statements may be made during this call. They are subject to risks and uncertainties. Actual results could differ materially from forecasts, projections or conclusions in the forward-looking statements. Information about material factors that could cause results to differ and the material factors and assumptions underlying these forward-looking statements can be found in our annual MD&A and our second quarter 2011 report to shareholders. With that said, I will hand things over to Bill.

Thank you, Viki, and good afternoon, everyone. As noted, my comments may include forward-looking statements. BMO's second quarter results were very good. We delivered net income of $800 million and earnings per share of $1.34. Somewhat slower revenue growth in some businesses was balanced by strong revenue growth in others, and we generated a solid 5.5% increase in total revenue from a year ago. We continue to demonstrate progress across the bank and we're confident that this good performance will be sustained through the second half of the year. For the year-to-date, net income is ahead 12%, revenue growth is 8.1%, and we're executing well against our strategic priorities supported by the investments we're making in the business. Our plans to integrate Marshall & Ilsley with Harris Bank are on track as we move towards closing. We have a clear view of the opportunities and how to capitalize on them across the breadth of our businesses. We're confident about the results we'll generate with the addition of M&I, and I'll speak more on this topic shortly. ROE continues to improve sequentially and reached 16.7% in the second quarter on a strong capital base. In the quarter, our Basel II common equity ratio strengthened to 10.67%. Provisions for credit losses continued their overall improving trends, down significantly both from last year and from Q1. Specific PCLs were 42 basis points of average net loans and acceptances compared to 59 basis points in the second quarter of 2010. Impaired loan formations were also down significantly both year-over-year and compared to the first quarter. Surjit will provide more color on credit later in the call. As we anticipated this quarter, expenses grew faster than revenues. This short-term negative operating leverage reflects significant investments in people, premises and technology that allows us to deliver our customer experience that's both distinctive and distinctly BMO: in person, online, and on the phone. What we offer is differentiated, an advantage in growing the business. We're adding front-line staff, increasing training, enhancing technology and distribution, and developing educational tools for retail clients. As an example, in the last year, we've added over 700 employees in customer-facing retail areas, including new branches, our client contact center, specialized sales force and other programs to support strategic growth priorities. As a result, total bank expenses in the second quarter on an adjusted basis were 9.2% above the year-ago level and in line with management's expectations for the first half of the year. These expenditures will continue to drive improvement in both top line and customer loyalty scores across our businesses. I should note that we're very closely monitoring movements in the economy and in each of our groups to ensure that our spending level remains in step with our business and economic forecast. We remain committed to achieving medium-term operating leverage of 1.5% on an adjusted basis. I'll now touch briefly on the performance of our business groups, and Tom will provide more details later in the call. P&C Canada's net income was $401 million, with solid revenue growth attributable to volume increases across most products. On an actual credit loss basis, the group's net income was up 16%, with losses improving year-over-year in Consumer and Commercial portfolios. Expenses were elevated in the quarter as expected due to investment in the business, but we expect the rate of expense growth will moderate in the coming quarters. Importantly, we maintain productivity in the low 50s as we advance our strategic agenda. P&C U.S. revenue rose 11% in U.S. dollar terms lifted by last year's acquisition, higher deposit balances and improved spreads. Reported net income was down slightly from last year but up 4.1% from a year ago on a core basis. Private Client Group results were affected by the unusually high claims in the Reinsurance business, masking [ph] excellent operating performance from our other wealth businesses. Net income, excluding insurance, increased 41% compared to last year and 24% from Q1. BMO Capital Markets' net income was a healthy $235 million with an ROE of 21.4%. Q2 results were lower year-over-year, reflecting a decline from a very strong trading environment in 2010 somewhat offset by higher M&A and debt underwriting this year. Since we announced the acquisition of M&I in December, I've been out meeting with M&I employees and customers, and so has the senior management team. These meetings have confirmed our confidence in how good we believe this acquisition will be for our customers and shareholders. We've connected with around 3,000 M&I employees in Indianapolis, Madison, Wausau, Minneapolis-St. Paul, Kansas City, Phoenix, Sarasota and Milwaukee, and with customers from across M&I's businesses. This is a high-quality customer base, and I can tell you that the reaction to BMO has been very positive. This is evident in M&I's customer retention numbers, which have been good. Employee turnover remains low. M&I employees are energized by the potential offered by expanded markets and capabilities, as well as the benefits of being part of a strong organization. They're excited about joining a company that, like M&I, puts a high priority in customer loyalty that can't wait to get started and are thinking ahead already about the opportunities. This week, American Banker and its annual survey of bank reputation ranked Harris number 1 among the largest bank holding companies with material retail presence in the U.S. It's notable that both Harris at number 1 and M&I at number 6 were ranked prominently in this measure of public perception of banking. In 2010, our combined Personal, Commercial and Wealth Management business in the U.S. reported $185 million in earnings on an expected loss basis. For the first full quarter in 2011 after completion of the acquisition, we expect a positive contribution from M&I, excluding integration costs. In the medium term, our aspiration is that these combined businesses will generate $1 billion in earnings annually. We remain on track towards a closing in the third fiscal quarter. An important milestone was achieved last week when M&I shareholders voted overwhelmingly to approve the transaction. We're looking forward to adding these new BMO shareholders. We continue to refine our expectations with respect to capital requirements. Our Basel III estimated pro forma common equity ratio, including M&I, remained strong at 6.9% as of April 30, 2011. We've also been working hard on synergies and now expect to deliver cost synergies in excess of $300 million, an increase of $50 million over our target, and we're continuing to challenge the organization to increase the ultimate realized expense synergy. As you may have seen, we introduced a brand name for our U.S. Retail Business, BMO Harris Bank. We've had a positive response in the market since the introduction. This business is being positioned to mirror our Canadian model and organizational structure. One of the attributes of the Harris Bank has been at similarity to Canada in terms of employee culture and customer orientation. This is also evident across M&I and is contributing to a spirit of collaboration as integration planning teams work together. We look forward to announcing the closing of the transaction before the end of our third quarter. And now, I'll pass it over to Tom to take you through the second quarter financial results in more detail.

Thanks, Bill, and good afternoon. Some of my comments may be forward-looking. Please note the caution regarding forward-looking statements at the beginning of the presentation. I'll start with the financial highlights on Slide 8. Net income was $800 million, up 7.5% from last year. Earnings per share were $1.34, and Return on Equity increased to 16.7%. Pre-provision, pretax earnings were $1.2 billion. This was a good quarter, with earnings at a new high for the bank. We are introducing Adjusted Results this quarter and moving away from cash EPS. Adjustments will include such items as amortization of acquisition-related intangibles, acquisition-related costs, and changes in the general allowance. This positions us to report results clearly in future quarters after the acquisition of M&I. Adjusted net income and EPS were $804 million and $1.35 respectively in the quarter. Net adjustments this quarter were very small at $4 million or $0.01 per share. Adjustments, all on an after-tax basis, include amortization of acquisition-related intangibles of $9 million, M&I integration planning costs of $17 million, a charge to revenue per hedging FX risk on the M&I acquisition of $8 million, and a $30 million release of the general allowance. Except for the amortization of acquisition-related intangibles, all adjustments were booked in corporate. Year-over-year, adjusted revenue was up 5.9% and adjusted expenses grew 9.2%. As Bill noted, credit costs improved meaningfully in the quarter. Results were impacted by unusually high reinsurance claims from the tragic earthquakes in Japan and New Zealand. This reduced earnings by $47 million after-tax or $0.08 a share. BMO's capital position strengthened in the quarter, increasing by 52 basis points for the common equity ratio and 80 basis points for the Tier 1 ratio. Turning to Slide 9, I'll touch briefly on the drivers of revenue growth. Net interest income was $1.6 billion, up $98 million or 6.4% year-over-year. We had solid growth in our retail businesses, driven by higher average earning assets and in Corporate Services. Quarter-over-quarter, net interest income was essentially flat, with decreases in Capital Markets and P&C Canada, partially offset by increases in the Private Client Group and Corporate. Second quarter revenue was reduced by the impact of fewer days relative to Q1. Total bank net interest margin, excluding trading, was up 11 basis points year-over-year. There was a modest increase in P&C Canada, driven by higher spreads in personal lending, consolidating increases in P&C U.S. and PCG from higher spreads and volumes on loans and deposits. Quarter-over-quarter, total bank net interest margin, excluding trading, was up 8 basis point. The increase was driven by higher volumes in PCG, improved deposit spreads and product mix in P&C U.S., and higher net interest income in Corporate, partially offset by lower net interest margin in P&C Canada due to continued low interest rates in a competitive environment and to changing mix. Noninterest revenue was $1.6 billion, up 4.6% from a year ago, largely due to growth in securitization revenues and securities commissions and healthy increases in mutual fund revenues and underwriting and advisory fees. These were partially offset by lower trading revenues, which were strong last year, and the earthquake-related reinsurance claims. Quarter-over-quarter, noninterest revenue was down 7% due to lower trading and insurance revenues. The weaker U.S. dollar reduced revenue by 1% quarter-over-quarter and 1.6% year-over-year. Moving to Slide 10, year-over-year expenses increased $193 million or 10.5%. On an adjusted basis, expenses were up 9.2%. As Bill mentioned, expenses have increased given strategic investments we are making to support our focus on improving the customer experience and to drive top line growth. These investments relate to initiatives largely in our P&C businesses such as increasing frontline sales force, expanding the distribution network and online technology enhancements. In addition, a higher performance-based compensation and the impact of acquisitions, including the Rockford-based bank and M&I integration planning costs, increased expenses year-over-year. Quarter-over-quarter, expenses decreased $23 million or 1.1% and were flat after adjusting for the impact of the weaker U.S. dollar. Increases in some areas, including M&I integration planning cost of $25 million, were offset by lower employee compensation, largely due to the annual cost of stock-based compensation for employees eligible to retire that is expensed in the first quarter. To summarize on the expense side, the bank continues to invest in and deliver on its strategic priorities. At the same time, as we move forward, we are focused on an appropriate relationship between revenue and expense growth. Slide 11 details capital and Risk Weighted Assets. Our common equity ratio increased 52 basis points to a very strong 10.67%. The improvement was driven by growth in shareholders' equity and a 6.6% decrease in RWA. Lower RWA resulted from the impact of the strengthening Canadian dollar and lower non-retail RWA reflecting in part of our continued reduction in non-core activities. Pro-forma Basel III common equity ratio and Tier 1 Capital ratios are very strong at 8.6% and 11.5% respectively. After incorporating the estimated capital consequences of the pending M&I acquisition, capital remains strong. The bank's pro-forma Basel II common equity and Tier 1 Capital ratios would be approximately 9.4% and 11.9% respectively. On a Basel III basis, the pro-forma common equity ratio is estimated to be 6.9% after including M&I. Our pro-forma common equity ratio is well aligned with a Basel III threshold of 7%. Moving now to Slide 14. P&C Canada net income of $401 million increased 1.7% year-over-year. Higher revenue driven by volume growth across most products and an improved net interest margin was partially offset by higher expenses and higher credit losses based on BMO's expected loss methodology. Quarter-over-quarter results were reduced by 3 fewer days in the quarter and lower spreads. Net interest margin decreased 7 basis points due to continued low interest rates and a competitive environment resulting in lower mortgage commercial loan and term deposit spreads. Margin decline was also attributable to the impact of unfavorable product mix. Expenses increased $7 million or 0.7% quarter-over-quarter, primarily due to higher initiative spending and employee costs, partially offset to by the impact of fewer days. Year-to-date, the productivity ratio is 51.7%. Loan growth was solid, with personal loans up 6.6% and commercial loans up 7.1% year-over-year. Moving to Slide 16, P&C US net income of $43 million was down $2 million from a year ago. Organic revenue growth was offset by higher provision for credit losses and an increase in costs associated with impaired loans. Year-over-year, the inclusion of the Rockford acquisition increased revenue by $19 million and expenses by $15 million. Net income increased 4.6% in source currency quarter-over-quarter. Revenue increased 1% driven by increased spreads which offset the impact of lower balances. Turning to Slide 17, the Private Client Group net income was $101 million, down $14 million or 13% from a year ago. As noted earlier, net income was impacted by $47 million after-tax of reinsurance claims from the earthquakes in Japan and New Zealand. Earnings in PCG excluding insurance were up $29 million or 41% as we continue to see growth across our wealth businesses. Revenue increased 15% driven by higher assets under management and administration, up $35 billion or 14% in source currency. This includes $5 billion from the closing of the Lloyd George acquisition in the quarter. Turning to Slide 19. BMO Capital Markets delivered net income of $235 million in the second quarter, down $25 million or 9% as a result of a strong market environment from a year ago. ROE was good at 21%. Revenue declined 9% largely due to lower trading revenues from higher levels last year. This was partially offset by stronger advisory fees and increased Securities Commissions and debt underwriting fees. Quarter-over-quarter net income was down 8% from a strong first quarter. Revenue declined 1% due to lower trading revenues and a more challenging environment. Year-to-date, Capital Markets earnings were $492 million, up 4% and ROE was 21.6%. Lastly, Slide 21 shows Corporate Services. Net income was $21 million, up $91 million year-over-year. Provision for credit losses was better by $86 million, including $42 million reduction in the general allowance. Revenues were $148 million better than a year ago, primarily due to higher interest from the settlement of certain income tax matters. Lower TEB adjustments with the operating groups had a favorable impact of hedging activities in Q2 '10 and higher securitization-related revenues largely related to credit card securitization. Expenses were $88 million higher year-over-year due to higher technology investment spend, M&I integration planning and higher employee expenses. In conclusion, we're pleased with the results. We delivered another good quarter of earnings and ROE of 16.7%, and capital continues to be strong. With that, I'll turn it over Surjit.

Thanks, Tom, and good afternoon. Before I begin I'd draw your attention to the caution regarding forward-looking statements. First, let me say that from this perspective, our performance this quarter was good. We are pleased with the positive trends that are evident both at impaired formations and the provisions in Canada and the U.S. This reflects economic conditions in general, including an easing of problem asset levels. The pace of economic recovery is slow, and therefore we expect there will be some quarterly variability within the overall positive trend. Looking now in more detail, I'll start with Slide 26 to provide a breakdown of our Loan portfolio. The portfolio is diversified both geographically and by portfolio segment. 78% of our loans are in Canada and 17% in the U.S. P&C consumer represents 64% of the Canadian portfolio and these are 87% secured. Our U.S. portfolio mix is 44% Consumer and 56% Commercial and Corporate. The U.S. Consumer portfolios are relatively evenly spread across Res Mortgages, Home Equity and Auto Loan. The U.S. C&I portfolio is very diversified and is performing reasonably. The weakness in the U.S. commercial real estate sector remains a driver on the overall speed of economic recovery, and is we consecutively continue to focus on very closely. While there are signs of improvement, it will clearly take time for the sector to fully recover. This portfolio is approximately USD 2.8 billion. On Slide 27, we provide information on impaired loan formations. Formations were $147 million for the quarter, showing good improvement from $282 million in the first quarter and $366 million in the second quarter of 2010. Canadian formations of $39 million, down $120 million in the first quarter, with the largest decrease experienced in manufacturing and Commercial Real Estate. The U.S. portfolio continues to account for the majority of formations at $108 million, but is down significantly from the $162 million in the first quarter. The Commercial market and Consumer sector account for the largest portion of this decrease. Gross impaired loan balances are down at $2.8 billion compared to $3.1 billion in the first quarter. Slide 28 details the provisions for credit losses in each business. The consolidated specific provision was $187 million, down from $248 million last quarter and $249 million a year ago. Total provisions at $145 million include a $42 million reduction in our General Allowance. Moving now to the business segments detailed that are shown in the table to the right. P&C Canada provisions are moderately lower quarter-over-quarter but down significantly from a year ago. P&C U.S. provisions are also down this quarter, benefiting from lower provisions in Commercial Real Estate, Investor Owned and Residential Mortgages. There were no provisions in the Capital Markets portfolio this quarter. Turning to Slide 29, we provide a segmentation of the specific provision by geography and sector. The Canadian provision was $98 million, down from $116 million last quarter and $139 million a year ago. The Consumer Loan and Credit Card segments continue to be the largest drivers of Canadian provisions at 40% and 35% of the total respectively. The U.S. provision of $90 million, a reduction from $132 million last quarter and $122 million a year ago. The retail sector accounts for just over half of the U.S. specific provisions. To conclude, I know all of you are very interested in the progress we are making in risk, with the M&I integration planning and the opportunities that lie ahead as we move beyond close of the transaction. I expect much more to come on that during our third quarter call in August, and I'm looking forward to updating you then. That concludes my presentation, and we can now move on to the Q&A.

[Operator Instructions] Our first question is from John Aiken from Barclays Capital. John Aiken - Barclays Capital: Quick question on lending volume growth within Canadian P&C. Outside of the $1.3 billion, $1.4 billion and card that is [ph] securitized, we are actually starting to see our lending volumes decline. I was wondering if you could give us a little sense as to what's going on specifically with the Canadian retail in Commercial portfolios, please?

Yes, John, it's Frank. First thing I'd like to say is that in P&C Canada, we had a really solid quarter again this quarter, and as you've noted, that was on the back of just really good, solid balance sheet growth, generally in line with our expectations. To your point, we are seeing a bit of a slowdown in the consumer loan volumes. I don't think this is a surprise to anyone. We've been talking about it for the last couple of quarters. And in particular, we've seen a slowdown in our credit card activity, not only the transaction volumes but also in the balances, the revolving balances that our customers are holding. So there's definitely a change in customer preferences going on on the Consumer side of the business. On the Commercial side, the volume growth for loans has been really strong again this quarter for us in excess of 7%, and we're still really optimistic about our ability to compete and the activity levels in the marketplace seem to be holding up. I think we've talked in previous quarters about this being a bit of a business-led recovery coming out of the recession and we continue to see that playing out in our business. John Aiken - Barclays Capital: Thanks, Frank. And I know there was a lot of commentary in the prepared remarks about expenses and spending on initiatives was in line with plan but we've seen 3 quarters where P&C Canada has actually had negative operating leverage. How much capacity do you have to pull back on expenses if we start to see revenue growth continue to moderate like we have over the last little while?

Yes, I think you're right, John. The elevated expense growth levels that we've seen over the last few quarters have been planned. I think I've been pretty clear about that, that that was the intent. We are investing in our business and we are really confident in our strategy and our ability to execute against that. So our plan for the future is to continue to invest in the business. I think you will have seen over the last couple of quarters that the expense growth has moderated a little bit. I think we were over 12% back in Q3 and in the high 8s last quarter and now we're down to 8. My expectation is we'll see a little bit of moderation in our expense growth as we go through Q3 and Q4 and where I was looking at the top line and trying to keep that relationship in -- on some solid footing. I will just be clear that the expectations for the end -- for this year, for this fiscal year is we're likely to end up in a negative operating leverage position, and the objective for us for this year in P&C Canada was to maintain our productivity ratio in the low 50s. And so far year-to-date, we've been able to do that, and I'd expect we'll end up there at year-end as well.

Our next question is from Andre Hardy from RBC Capital Markets. Andre-Philippe Hardy - RBC Capital Markets, LLC: I have a question probably for Bill Downe. I was surprised that you kept the guidance for the possibility of a share issue of up to $400 million given capital ratios are better than expected, and a pro forma everything ratio that is almost where OSFI wants you to be in almost 2 years. So can you talk about why you kept the language in your press release, please?

Sure, Andre. Thanks for the question. We are encouraged by the capital levels, and as you know, we provided a lot more granular view around capital and Basel III as we've come through the period since the end of the fourth quarter. We're relatively close to confirming when the closing date is, and we prefer to confirm the final conclusion on capital to when we conclude that date. But it's a relatively short period of time now. Andre-Philippe Hardy - RBC Capital Markets, LLC: Are you signaling anything by leaving [indiscernible] there or it's just we don't want to change anything until it's closing?

No, we're not closing on anything. Andre-Philippe Hardy - RBC Capital Markets, LLC: Okay. Quick one for Frank Techar on margins. I understand the reasons you've mentioned why the margins came down sequentially. Do you expect them to stay at these levels or some of these trends to reverse in upcoming quarters?

Yes, thanks, Andre. I think I'd start on the margin question by just saying that in the last couple of quarters, we were really expecting to see some softening in margins, and as you know, we didn't in the P&C business. And this quarter, we did -- I think I talked in previous quarters about the fact that we are going to see some volatility based on a couple of factors. So this quarter, there were a couple of anticipated spread drivers that changed a bit more than we expected. And this really gets to your question. The first one being the competitive pressure is heating up a bit more than we would have expected and we're seeing that probably play out the most on the Commercial business. And my expectation is going forward, we will continue to see that, and from our perspective, we feel good about our ability to compete. We saw good volume growth again this quarter, and as you know, we've been investing in this business, not only adding sales force but in other areas as well. And so we're highly confident that we can compete on the Commercial side. The second thing that happened, and I touched on this briefly already, is we are seeing changing customer preferences, in particular with credit cards, and with that higher spread product, we're just not seeing the volumes as we would have anticipated. So the mix in our balance sheet at least is changing and I wouldn't expect that to change as we go through the next couple of quarters. I don't think my expectations would be that customers are going to change their preferences in the near term. I think they are listening to the conversation that's playing out in the public space about consumer debt levels and they're still feeling conservative at this point in time. And then the last thing on spreads is I think we would've all anticipated a bit of relief from a rate increase perspective, and because interest rates have remained very low, we're still seeing customer preferences focused on lower spread variable rate mortgages, when we would have anticipated this, perhaps would have changed by this point in the year. So there's a number of factors that have just added up in Q2, and we're seeing that volatility for BMO play out in this quarter. Andre-Philippe Hardy - RBC Capital Markets, LLC: It sounds a bit until interest rates rise, you're not expecting a big change in your margins?

Wouldn't anticipate it, Andre. I mean I think I would hold to the comments that I've had in previous quarters. We'll see some volatility moving around sort of the levels that we're at at this point.

Our next question is from Robert Sedran from CIBC. Robert Sedran - CIBC World Markets Inc.: I note the revised synergies from the M&I transaction, but unless I missed it, I didn't notice any difference in the expected accretion or dilution. Can you offer -- I mean, has any of that changed, or are we expecting the pre-synergy view to have come down to offset the greater synergy that you're now expecting?

It's Tom Flynn. Our synergy expectation for the second year would be modestly higher than it was when we announced the transaction and then we talked about roughly 2%, 2.5% accretion and we'd be a little higher than that currently based in part on synergies and in part on a lower equity raise. Robert Sedran - CIBC World Markets Inc.: They're still being dilutive in the first year?

Mildly. Robert Sedran - CIBC World Markets Inc.: Okay. And just a follow-up on the Reinsurance business. Bill, a couple of years ago, you talked about changing the risk profile of the banks so the shareholders were exposed more to risks that involve client phasing and franchise building businesses. When I think about earthquakes on the other side of the world, how does the Reinsurance business stick with that philosophy? And just following up on that, we've had a bit of a bad run in North America with tornadoes and wildfires and various floods. Does BMO have any exposure to any of that?

I'll let Gilles Ouellette respond to the second part of your question, Rob. The first part of it is, it's entirely consistent with the customer phasing in this businesses. It's complementary to the creditor life business, and it's really bounded by a limit to the loss that can occur in any period that is consistent with the size of the business. The incidence of the earthquake, the 2 earthquakes were extraordinary in terms of the historic view, but the loss was within the tolerance we have for the business. And I'll let Gilles speak a little more specifically.

Yes, Rob, I mean this business is for [indiscernible] insure [ph] life and property and casualty, and as Bill mentioned, I mean this is a business that complements our creditor insurance. It's a cyclical business, but over the long cycle, I mean we've got from this business return in excess of the industry, returns of strong growth [ph] of around 14%. And what happened in this tragic event in the last quarter, these 2 events, the one in Japan and one in New Zealand, I mean they represent 2 of the top 9 industry losses, and I mean it's unprecedented. We've never seen anything like that. But as far as the business, obviously we don't like the kind of volatility. We're not used to this kind of volatility, but this is the first time that's happened and we're going to look at the business. But generally speaking, over the length of the cycle, we're comfortable with the business. Robert Sedran - CIBC World Markets Inc.: Gilles, it sounds like the Q3 impact from whatever may have happened in this quarter doesn't sound like it's material?

No, it isn't.

Our next question is from Michael Goldberg from Desjardin Securities. Michael Goldberg - Desjardins Securities Inc.: Question about the operating leverage. Can you give us some examples of how the spending, the investment spending that you're doing, is paying off, or how you expect it to pay off? And also while you indicate that you expect your operating expenses to moderate, you also said a medium-term objective of getting back to a positive operating leverage of about 1.5%. How long is it until the medium term?

I'm going to let Frank, Michael, provide you with a couple of examples. I think you and I have had this -- answered this question before about when the medium term is. I guess it's in the 2- or 3- to 5- year range, but it's not a wait-and-see. We have a view around the pattern of expense going forward and we're quite thoughtful about the rate at which we schedule those expenses. And maybe Frank, you can talk a little bit about a couple of the areas where -- and I think I referred to some of them in my introductory comments where we're seeing some of the benefits.

Yes, thanks, Michael. I mean I'll start by saying, if you ask a question about medium term, I might look back a couple of years as well because for the last 2 years, the P&C Canada business, we've had operating leverage in excess of 5%. So we've talked about a 3% medium-term target for P&C Canada, and we've exceeded that for a couple of years. And I think we've been clear about the fact that this is the year we're going to invest and so that we're going to have a result that's going to be materially different from what we've seen over the last couple. And I think that's consistent with where we are relative to our strategy. So I'd say negative operating leverage is not going to be the norm going forward, but for this year, we are committed to continuing to invest in the business, and we're going to stay the course. Relative to the other part of your question about some examples where we are seeing some benefits, I'll just pause on the FTE side of the business. We have added over the course of the last year over 1,000 people in P&C Canada. The vast majority of those are frontline-facing, frontline-facing resources, so mortgage specialists, financial planners, commercial account managers, contact center people, as Bill mentioned earlier, core bankers in our branches. We do have and continue to have the smallest Distribution Network, and so adding these resources clearly is going to pay off for us in the future as we continue to ramp up. I'll just give you one example that's occurred in the quarter relative to a specific initiative that's been pretty visible in the marketplace, SmartSteps for Parents, which we're pretty proud of. In one month, we had 80,000 unique visits to that site, which, as you know, doesn't have a lot of direct top line growth potential in the offer itself, but it's consistent with our customer promise and we think will help us in the future relative to the growth of the business. This is something that our customers have been asking for for a long time, help with teaching their children about money early on, and we're the first one in the marketplace to provide it. And we think it is going to be a huge success going forward, not only with the parents, but with children as they start their banking business, hopefully, with BMO.

Our next question is from Mario Mendonca from Canaccord Genuity. Mario Mendonca - Canaccord Genuity: First question on capital. This comes from Page 23 of the supplement. Tom, when you were talking about our meeting with Surjit, I mean you talked about the decline in RWA. You referred to currency and to the runoff of that non-core book. I want to understand this 5.5-or-so billion dollar decline in Corporate including specialized lending about halfway down the page. I don't suppose that's service and all currency, and secondarily, how would that tie into any other sort of balance sheet line item that would show a similar sort of decline?

It's Tom, Mario. I'll start. Surjit may want to jump in. The decline really has 2 parts. Currency is a significant part of it, and the other part of it relates to the reduction in a few larger exposures that we had in the portfolio, one of which in particular had a higher risk weighting attached to it, and so I wouldn't say it's reflective of the performance of the overall portfolio for that half of what drove the result. It was more tied to a relatively small number of exposures. Mario Mendonca - Canaccord Genuity: And certain exposures that were particularly...

In [indiscernible] it's a higher risk weighted exposure. Mario Mendonca - Canaccord Genuity: So would you say currency was about half of that, then?

Roughly. Mario Mendonca - Canaccord Genuity: Okay. A different type of question, then, perhaps for Frank. When you were talking about the decline in credit cards, you referred to customer behavior and a few other things, and those were interesting comments. Could you just speak to whether you think this is an industry phenomena or if there's anything in the quarter that might specifically relate to BMO, or do you really feel that this is something we'll see across the industry?

Yes, it's a little bit of one of those trick questions, Mario, but our view is this an industry phenomena. We believe that customers have been paying attention to this debate. We believe that they're feeling that like they're not out of the woods yet relative to their financial situations and the economy -- and the growth of the economy in general. And post-holiday [ph] season, we saw a change in the usage on our credit cards, and we've seen a clear change on the revolving balances, and we don't think it's us. So we'll find that out, I guess, as we go through the next few months.

Your next question is from Steve Theriault from Bank of America Steve Theriault - BofA Merrill Lynch: I'll start with a question for Ellen, if I could. Ellen, last quarter, you said you expected the NIM to be relatively stable due to pricing pressure, I think, less loan repricing, but again the NIM was up quite substantially this quarter. Can you talk to how the NIM has developed versus your expectations and talk to us about your outlook for the remainder of the year?

Thanks for the question, Steve. I do think the longer-term outlook is forward [ph] to be flat and under some pressure for 2 reasons: pricing pressure on the commercial loan market and also on the consumer side, especially in Direct Auto, but also -- and Frank touched on this, low interest rates are a factor. What happened in this quarter is we had a drop in some low-yielding loans that we exited. You might notice, the balance sheet is down to $11.7 billion from $12.1 billion last quarter, and that -- those low-yielding assets and the new originations that we had contributed to that list, mostly on the loan side. The other half of the equation is, our deposit mix changed as we've been pursuing more card deposits, which bring us better spreads into the net interest margin. So those are the 2 big factors. Steve Theriault - BofA Merrill Lynch: Are there any, like is there substantially more lower yielding assets to drop off of that?

I think we're close to done on that, but it's definitely something we've been working on. We shall improve the yield on the overall portfolio through this last cycle. Steve Theriault - BofA Merrill Lynch: Okay. And just something else. I noticed the last 4 quarters, the ATM [indiscernible] in U.S. is down. Is that just rationalizing post-AMCORE or is there something else of interest going on there?

Actually it should be up. There might be a problem with the number. We'll take a look at it and come back to you. Steve Theriault - BofA Merrill Lynch: Okay, I'll circle by. For Tom Flynn, probably. There's obviously a lot of noise in the Corporate Services line this quarter and most quarters. Can you refresh us on what you might consider a reasonable run rate of earnings dragging Corporate Services, maybe excluding the credit loss component?

Sure. I mean Corporate moves around as you've said, partly because of credit and partly just, generally because of what is in there. This was a particularly good quarter for the segment. And I'd look at something like negative 50 to negative 100 million as being a more typical number for what we'd expect.

Our next question is from Ms. (sic) Sumit Malhotra from Macquarie Capital. Sumit Malhotra - Macquarie Research: First one is a numbers question for Tom Flynn as well. A lot of talk obviously on the decline in the Canadian banking net interest margin but top of the house, NIM actually up about 8 basis points quarter-over-quarter, maybe comes back to Corporate Services again. This line has been very volatile and then there's some commentary here about interest on tax refund or something to that extent. How much of the $75 million quarter-over-quarter improvement in NII this quarter related to what seems to be a one-time type item?

Yes, the consolidated bank margin was up quarter-over-quarter and year-over-year as well. The biggest driver of that was from Corporate, as your question sort of went to, and ballpark half of the change quarter-over-quarter, a little less than half of the change quarter-over-quarter would have related to the better performance in Corporate. Sumit Malhotra - Macquarie Research: And is that specifically that one item you flagged in the report to shareholders?

Yes, it is. Sumit Malhotra - Macquarie Research: Okay, thank you for that. And then this one is probably for Bill or Ellen. Looking at the M&I results, if I go back, I guess it's been about 6 months since the acquisition was announced. We've seen the Loan portfolio for M&I decline by about 11%, and I realize there's a couple of things going on. Obviously you've talked about the difficult environment to grow the loan book in the U.S., some repositioning on the part of the company. So I'll offer some of my own caveats but then I'll turn it over to you. When you see a double-digit decline in 6 months or a company that you're on a verge of acquiring, does that concern you and if not, why?

Well, Sumit, thanks for the caveats upfront. The focus around portfolio management at M&I is on the Commercial Real Estate book, and in that regard, I think they've been effective in the management. And the numbers are consistent with what we would have expected. I also think that from a customer attention perspective, they've done well. The customer loyalty there is very, very deep, and the feedback that we've had has been positive. So on the commercial lending side, I think it's more driven by customer need than anything else. But until we close, I think it's hard to open new customer relationships, and we're looking forward to hopefully within the month being a little more proactive in seeking new business. But it is inconsistent with one, the strategy around the management of Commercial Real Estate and our expectations. Sumit Malhotra - Macquarie Research: So to the same extent then, if they're managing their credit side of things, 6 months ago, we talked about a $4.7 billion gross mark on the credit book net of the allowance which has remained relatively the same. Safe to say -- well maybe it's not safe to say, any changes in your thoughts on the credit outlook for the company?

The experience that they've shown quarter-to-quarter again is consistent with our expectations and we haven't seen anything that would cause us to be uncomfortable with the mark that we set on December 17 we thought was appropriate.

Our next question is from Gabriel Dechaine from Credit Suisse. Gabriel Dechaine - Crédit Suisse AG: Just a follow-up on the line of questioning. Maybe the reason you didn't increase your dilution forecast for the deal, is that because the additional synergies that you're expecting from the deal, are you going to pile that back into branding or whatever because of maybe some market share losses in Wisconsin?

Where I thought you were going -- I was going to ask Tom to answer the question around dilution. But no, I think that, as I said to assume that the asset declines are pretty consistent with what we would've expected, in our integration planning is an appropriate level of marketing and promotion that has to go with both the closing to reassure customers that the experience that they've had, the high quality of experience they have will be continued. But also there is a significant amount of built-in expense around the brand name and the attendant signage. And so I think, once again, it's the planning that we're doing is confirming what our initial expectations would be. And I would say the only difference is that I would say we would be less defensive in our feeling about the traction that the combined bank is going to have in the market than we might have been 4 or 5 months ago before we had a chance to be in the market and talking to customers. In my opening remarks, I made a comment that we've had a very positive response. We've had a positive response in the media. In local markets we've had a positive response in town halls with employees. And in our own marketing in those states, by BMO marketing people, has confirmed that the customer response is very strong. So I think it's in line, and we're, as I said, we're comfortable with it. Gabriel Dechaine - Crédit Suisse AG: Okay. Just maybe a bit more. I ask you to look into your crystal ball or whatever. When you look at the business you're acquiring and then I see that 2% sequential decline in loans. Mainly there was a bit of a one-timer there in the U.S. but when would you expect or hope to see on a pro forma basis your loans in the U.S. start to grow mid-2012, late 2012 or sooner?

Well I know that Tom Flynn has answered this question on previous calls about asset levels, and the extent to which we see continued recovery in the U.S., that growth in the core commercial book, both BMO and M&I's customer base, will be positive, and hopefully will essentially offset the intended decline in the Commercial Real Estate book. So I think we'll get 2 benefits. One, I think we'll see better returns from those loans as that older Commercial Real Estate book comes down and new commercial credits come in but the quality of the underlying book with better diversification will be there. So going into 2012, we're very much forward-looking, and I'm expecting that the year will be a good one.

Our next question is from Brian Klock from KBW. Brian Klock - Keefe, Bruyette, & Woods, Inc.: I guess maybe a follow-up. I think you guys have talked about it a little bit. A question for Ellen on the U.S. Loan portfolio, and maybe it's partly for Tom as well. Part of the reduction in the U.S. footprint, there is a $3 billion drop and then [ph] the period balances in the U.S., with half of that coming out of the Capital Markets group and the other half coming out of the Harris, mostly P&C Consumer Loan portfolio. You kind of talked earlier -- I just wanted to make sure, I guess maybe add some more color just to make sure I understand that what drove that large decrease in Capital Markets, and is there anything in the consumer that's related to just how much that's related to the AMCORE runoff versus other just weak demand for consumer loans in the U.S.?

Well, thanks for the question, Brian, and I'll start and then pass over to Tom. On the consumer side, what you're seeing is, and it's probably true of many of our [indiscernible], any new originations that we have coming in on the mortgage side are being unsold, it's staying [ph] on our balance sheet, and so that's less regular amortization that you would expect on those books is bringing the level of outstandings down. We have been consistently originating enough to offset the declines in our indirect auto books, and I expect that that pace will moderate a little bit, but otherwise those are the reasons on the consumer side. On the commercial side, I touched on some of the low-yielding exit clients that we had moved out of the portfolio. We have a very strong pipeline of originations of new customers, customers establishing banking facilities ahead of need, anticipated growth, and so we are confident in the second half that we're going to see some lift and loan outstandings from that activity. Tom? Brian Klock - Keefe, Bruyette, & Woods, Inc.: Great, great, thanks for the color. And maybe just one follow-up question for Surjit. Thinking about the significant improvement in GIL formations in the quarter, there was the negative general provision. I guess x that, the specific provisions are down after being somewhere in the neighborhood of $250 million for the last 3 or 4 quarters. I mean, do you think we can kind of reset that specific provision to a much lower level given where the MPL or the GIL numbers are coming in today?

Yes. Let me tell you, we've said in the past and I think I've said this in my formal remarks as well, that while we see the economic recovery, it's a little slow, and so we will observe some variability quarter-to-quarter. This quarter was really a good quarter, and if you look at, I think if you look at Page 31 on our -- on the supplementary package, that gives you a breakdown of where our PCLs are. And there's an element of variability that gets into deals when you have a Commercial and Corporate business, and I think I mentioned to you in the Capital Markets side, we've had absolutely no PCLs for a long time. In fact, for these 4 quarters in a row, we've had nothing at all from that side. So there will be an element of variability. I would say, yes, we do see it improving in the future, but the caution that there will be variability.

Our last question is from Andre Hardy from RBC Capital Markets. Andre-Philippe Hardy - RBC Capital Markets, LLC: I just wanted to follow up with Gilles Ouellette on Reinsurance. Can you please help us understand what kind of trigger points there might be before you're exposed to catastrophes, or attachment points I guess is a better word for it?

Yes, the -- Andre, the business we're in has relatively low attachment points, and so in the last few years -- every year we have obviously allowance for these. In the last few years, we've been able to absorb the losses and not really feel it through the P&L. It's just that this year, as I have mentioned earlier, I mean these are, like, 2 of the top 9 catastrophes of all time, which is why we've had a kind of major hit. But generally speaking, I mean in past years, we've had -- there's been incidents every quarter, every second quarter, and even though it's gone through our P&L, then we haven't really felt it. Andre-Philippe Hardy - RBC Capital Markets, LLC: But is there something you can give us, maybe if cumulative catastrophes in the year exceed, I don't know, $20 billion, $40 billion, that's when BMO's reserves will prove to be too low?

Well, we have a cap on these. Each one of these treaties has a cap. And for this year, for example, I mean we would, this year, in the worst case, there might be -- and this is not based on the events that happened, but rather on prospective events, there might be another $40 million. But that's the maximum. And that's unlikely that. And that's, I mean provided [ph] unlikely to happen. Does that help you? Andre-Philippe Hardy - RBC Capital Markets, LLC: It helps me understand the tail risk, thank you for that, but I guess I'm trying to understand better when your reserves might not be enough? I can follow up offline if you prefer.

And there are no further questions registered at this time. I would like to turn the meeting back over to Ms. Lazaris.

Thank you. Thanks, everyone, for joining us today, and if you have any further questions, please give us a call in the IR Department. Have a great afternoon.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.