Bill Downe – President & CEO Russel Robertson - CFO Tom Flynn - Chief Risk Officer Frank Techar - P&C Canada Tom Milroy - BMO Capital Markets Gilles Ouellette - Private Client Group Ellen Costello - P&C US Barry Gilmour - Technology & Operations Viki Lazaris – Sr. VP Investor Relations

Andre Hardy - RBC Capital Markets Darko Mihelic - CIBC World Markets Mario Mendonca - Genuity Capital Markets Robert Sedran - National Bank Financial Steve Theriault - Bank of America / Merrill Lynch John Aiken – Barclays Capital Cheryl Pate – Morgan Stanley John Reucassel - BMO Capital Markets Sumit Malhotra - Macquarie Capital Markets

Good afternoon and welcome to BMO Financial Group’s fourth quarter 2009 conference call for November 24, 2009. Your host today is Viki Lazaris, Senior Vice President of Investor Relations. Ms. Lazaris, please go ahead.

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 Russel Robertson, the bank’s Chief Financial Officer; and Tom Flynn, our Chief Risk Officer. After their presentation we’ll have a short question-and-answer period, where we will take questions from pre-qualified analysts. To give everyone an opportunity to participate, please try to keep it to one or two questions and then re-queue. Also with us this afternoon to take questions are BMO four business unit heads: Tom Milroy from BMO Capital Markets; Gilles Ouellette, from the Private Client Group; Frank Techar, who heads up P&C Canada; and Ellen Costello from P&C US, as well as Barry Gilmour, Head of Technology and Operations. After the Q&A, each of our four business unit heads will make some comments on what they will be concentrating on for 2010. At this time I’d like to caution our listeners by stating the following on behalf of those speaking today. Forward-looking statements maybe made during this call and there are risks that actual results could differ materially from forecasts, projections, or conclusions in the forward-looking statements. Certain material factors and assumptions were applied in drawing the conclusions or making the forecasts or projections in these forward-looking statements. You can find additional information about such material factors and assumptions and the material factors that could cause actual results to so differ in the caution regarding forward-looking statements set forth in our news release or on the Investor Relations website. With that said, I will hand things over to Bill.

Thank you Viki, and good afternoon. As noted my comments may include forward-looking statements. Today BMO reported strong fourth quarter financial results highlighting a year of continued momentum. It’s a reflection of the strength in our core businesses that’s been emerging over a number of quarters and it was achieved while we simultaneously dealt with issues resulting from the economic environment. This performance is attributable to success against the priorities that we established going back to 2007 and our strategy of differentiating BMO by striving for a consistently great customer experience. We’re providing a value proposition that’s clearly higher touch and routed in listening to and guiding customers to make sense of their choices. Internally we continue to focus on strengthening our leadership, renewing talent, and simplifying our organization structure. Going into 2009 we were focused on closely managing our loan portfolio and credit provisions, prudently managing our capital and liquidity position, and continuing to reduce risks both on and off balance sheet. With an eye to future growth we also focused on building out top line and striving to be the market leader in our businesses, aggressively managing expenses while continuing to invest in strategic initiatives that benefit our customers and above all, we set about delivering on a brand promise that has clear benefit for customers. In the process we stood by our customers as the economy and markets faltered and we reinforced our reputation as the consequence and this has moved the company forward. We build a personal and commercial franchise that sets the tone for the entire company, serves as a beacon, and reflects how we intend to compete across all our businesses. In the year we opened 32 new or redeveloped branches and introduced more innovative customer products and we made gains in customer loyalty. We’re well positioned to continue growing and delivering value for shareholders and customers. Russel will review the financial results, but I’d like to highlight some key numbers for you. Net income for the fourth quarter was $647 million with an ROE of 14%. Revenues increased a strong 6.3% from last year while expenses declined 2.2%. Our pre-provision pre-tax earnings were $1.2 billion, up 22% from a year ago. Net income for the year was $1.8 billion or $3.14 per share on a cash basis. On an adjusted basis cash net income was $4.02 a share and revenues increased 8.4% over 2008. Our provision for credit losses in Q4 came in at $386 million in line with our expectations. US gross impaired loans remained high reflecting where we are in the cycle. We’re actively managing our US book and expect that as we go through 2010 and 2011 these levels will decline. Overall we’re confident about our position and expect to earn through our credit losses with significant upside opportunities. We expect to demonstrate once again in this cycle why we have a strong reputation for credit management and we believe this remains a core strength at BMO. Moving to slide five, we continue to maintain a strong balance sheet. Tier 1 capital was 12.2% at year-end and our tangible common equity to risk weighted asset ratio was 9.2%. Until there is regulatory certainty with respect to global capital standards, excess capital will weigh on ROE. That said, we don’t apologize for building levels of capital that we consider prudent given the uncertainties in the market over the past 18 months. The good news ahead is that we have the flexibility around any new regulatory reform that may emerge and equally important, we’re well positioned to deploy capital for growth initiatives and take advantage of opportunities that arise. And we’ve done just that; acquiring businesses, hiring talent and building our presence in the sectors and markets where we see potential. Early last week BMO Capital Markets announced the definitive agreement with Paloma Securities to hire its lending team and acquire assets used in the securities lending business of Paloma Securities. And earlier today, P&C Canada announced a definitive agreement to purchase the Diners Club North American business from Citigroup. A transaction that on completion will more then double BMO’s corporate card revenue. The acquisition will immediately enhance our competitive position by putting us among the top commercial card issuers in North America. Let’s turn now to the results of the operating groups, P&C Canada posted outstanding results in Q4, our fifth quarter in a row of strong performance. The momentum continued across all business segments and the group earned $394 million in the quarter which was 22% of ahead of the prior year and 11% higher then the third quarter. Revenue growth was 8% year over year while expenses were down 1% and our cash productivity ratio was 51.1%. In 2009, it was a year when businesses needed to know their banker would be there for them. We’re sending a very strong signal to Canadian businesses that Canada’s first bank is here for them, and recently we announced that we’re committing a minimum of $1 billion new net dollars to lend to Canada’s small and medium sized businesses which are the backbone of our economy. In sum, P&C Canada had a great year in 2009, revenue for the full year reached $5.3 billion, 8% ahead of 2008. Net income increased 15% to $1.4 billion, cash productivity improved significantly by 220 basis points for the year. P&C in the US earned $29 million on a cash basis in the quarter identical to Q3 and up from $18 million last year. Cash net income adjusted for the impact of credit costs and other items was $39 million consistent with the past five quarters. We benefited from improved loan spreads, deposit volume growth, and gains on the sale of mortgages. Excluding the impact of credit costs, revenue in Q4 increased 5% year over year, cover non-performing loans, and the cost of managing them had increased and will continue to mute reported profitability. Deposits increased 8% and margins improved 26 basis points to 3.26%. We maintained our number two ranking for retail deposit market share in our markets and improved our net promoter scores for both retail and commercial in 2009 and coming out of the recession Harris is capitalizing on the weakened competitive environment and is adding new customers and building revenue. The Private Client Group earned $110 million in Q4, delivering good revenue growth for the second consecutive quarter. On an adjusted basis the group’s net income was up 8% from last year and 15% from Q3. Amid better equity markets and a continued focus on attracting new client assets, PCG generated revenue growth of 5% sequentially. There is clear momentum in our insurance business with BMO life insurance results exceeding our expectations and the Globe & Mail ranked BMO InvestorLine best of the bank owned brokerages in its 2009 online brokerage rankings, a testament to our customer orientation meeting their needs across multiple channels. And finally BMO Capital Markets had a very solid quarter benefiting from its diversified business mix and market opportunity. Earnings were flat compared to last year and down 16% from a very robust Q3 level however net income of $289 million and revenue growth of 24% are very solid results and reflect sound execution and strategy coupled with capitalizing on market opportunity. During the quarter we received the Best FX Bank Canadian Dollar award from FX Week in their annual rankings as well as being named the best foreign exchange bank in Canada by European CEO Magazine and for the 29th consecutive year we were ranked number one for investment research my Brendan Wood. With a strong performance in the last two quarters BMO Capital Markets posted net income of $1.1 billion for the year and while this level of earnings is not necessarily sustainable in the long run, the group is continuing to optimize its business and achieve the right scale and appropriate risk return profile. With a strong commitment to clients, our objective is to generate high quality earnings over the course of the business cycle with an ROE in the high teens. And with that I will turn it over to Russel.

Thanks Bill, and good afternoon. As some of my comments may be forward-looking, please note the caution regarding forward-looking statements on slide one. One slide three you can see the reported fourth quarter earnings were $647 million or $1.11 per share compared to $1.06 last year. On a cash basis, earnings were $1.13 per share and our Tier 1 capital ratio remains strong at 12.24%. Credit costs remain elevated as expected with specific provisions for credit losses of $386 million in the quarter. This was another clean quarter with no notable items and our businesses continued their momentum and delivered strong results. Turning to slide four, revenue of $3 billion was up $11 million from our record third quarter revenue. The increase was largely driven by continued strong performance in P&C Canada and improved revenue in corporate services primarily as a result of mark-to-market gains on hedging activities versus losses in Q3 as well as a lower negative carry on certain asset liability interest rate positions. These increases were partially offset by lower revenue in BMO Capital Markets as trading revenues were down from the extremely favorable conditions in the third quarter. Year over year revenues increased 6% with good growth from all operating groups offset by a reduction in corporate services. The weaker US dollar decreased revenue by $20 million for both comparative quarters. Net interest income was $1.4 billion in the fourth quarter, up $33 million or 2% from a year ago. This increase was driven mainly by favorable prime rates relative to BA rates and actions to mitigate the impact of rising long-term funding costs in P&C Canada. Quarter over quarter net interest income decreased $24 million or 2% mainly due to a reduction in earning assets of $3 billion reflecting the weaker US dollar. Earning assets declined in BMO Capital Markets and P&C US partially offset by growth in P&C Canada and Private Client Group. Looking more specifically at margins, total bank margin was up two basis points year over year driven by P&C Canada and down one basis point quarter over quarter. In P&C Canada net interest margin increased over both comparative quarters. Year over year margins were up 34 basis points largely due to favorable prime rates relative to BA rate. Actions to mitigate the impact of rising long-term funding costs, the effect of deposit growth outpacing loan growth, and the securitization of low margin mortgages. The quarter over quarter increase of five basis points can be attributed to actions to mitigate the impact of rising long-term funding costs and higher volumes in more profitable products, partially offset by lower mortgage refinancing fees. In P&C US margins were up 26 basis points year over year due to strong deposit generation and 13 over the prior quarter due to higher lending spreads. In Capital Markets margins were down two basis points year over year as reductions in interest rate sensitive businesses were partially offset by higher spreads in trading and corporate lending business. Quarter over quarter margins declined by 21 basis points due to lower spreads. Corporate services net interest income improved relative to the third quarter due in part to management actions and a more stable market environment. Turning to slide seven, year over year expenses decreased $39 million or 2% with decreases in each of the operating groups with the exception of PCG. Expenses in PCG were up only $2 million as active expense management helped to offset the $15 million increase from the addition of the BMO Life Assurance acquisition. The weaker US dollar accounted for approximately one third of the year over year decrease with the remainder due to lower salaries, a result of reduced staffing levels, as well as lower computer costs, professional fees, and capital taxes. Expenses decreased $94 million or 5% quarter over quarter. Over half of the decrease was due to lower performance based compensation, with the remainder due to lower computer costs, capital taxes, lower FDIC premiums, and a weaker US dollar. We continue to focus on expense management and improving productivity across the Bank, and we are pleased with the continued progress we have made controlling core expenses. On slide 10 you’ll see that our risk-weighted assets were $167 billion at the end of Q4, down $4 billion over Q3 due to lower corporate and commercial volumes, partially offset by higher risk weighted assets related to securitization. Our Tier 1 capital ratio was strong at 12.24% in the quarter and is expected to remain strong through 2010. The tangible common equity to risk weighted assets ratio also increased to 9.2% which remains top tier. Turning to slide 11 our liquidity position remains sound as reflected by our cash and securities to total assets ratio and level of core deposits. And the Bank’s 2010 term maturities are largely pre funded. In conclusion our results reflect another quarter of high quality earnings delivered by our businesses with strong capital and liquidity levels and good cost management. With that I’ll turn things over to Tom.

Thanks Russel, and good afternoon. Before I begin, I draw your attention to the caution regarding forward-looking statements. I’ll start with slide three where we provide a breakdown of our loan portfolio. The portfolio is well diversified, 71% of loans are in Canada and 23% in the US. Within the Canadian portfolio 62% of assets are consumer loans, over 85% of these are secured. Our US portfolio mix is 43% consumer, with commercial and Capital Market loans making up the larger portion. Slide four shows the details of our US loan portfolio that we have shown in the past few quarters. The US loan book is being effectively managed and the parts of the portfolio most impacted by the downturn are not outsized relative to the overall balance sheet. The US consumer portfolios are relatively evenly spread across first mortgage, home equity, and auto loans. As you would expect the real estate related parts of this portfolio continue to be impacted by the state of the housing and employment markets. Our underwriting in this area was more conservative then the industry overall and as a result our performance is better then peers. The bottom of the page shows details on our commercial real estate and investor owned mortgage portfolio. As you know the US commercial real estate market is experiencing weakness that is expected to continue at least well into 2010. Our exposures here are not outsized, at just 2.5% of total loans and 11% of US loans. The investor owned mortgages are mostly confined to our Midwest footprint, are well diversified by property type, and were underwritten prudently. This portfolio represents approximately 5% of US loans. The developer portfolio represents just 3% of US loans. We have been actively managing our exposure to this sector throughout the year and will continue to do so. Turning to slide five, the charts on the left show a segmentation of impaired loan formations which were $735 million for the quarter. The majority of formations continue to come from the US and these are broken out in the pie chart on the bottom left of the page. These formations were diversified across C&I which was the largest category, real estate related and financial institutions, where one loan accounted for the majority of formations. On the right hand side of the page you see that gross impaired loan balances totaled $3.3 billion. We continue our practice of early recognition and active management of troubled loans. We believe this practice maximizes value for the Bank and works best for our customers. Slide six details our provision for credit loss by business group, the consolidated specific provision was $386 million, slightly higher then Q3 and consistent with our expectations and the quarterly average for the year. The P&C Canada consumer and commercial portfolios continue to perform well considering the environment. Provisions here were in line with last quarter. P&C US provisions were up from last quarter both on the consumer and the commercial sides. This reflects the continued impact of the weak economy and real estate markets. Capital Market provisions continued to be dominated by US exposures and were in line with the quarterly average for the year. Turning to slide seven, you can see a segmentation of the specific provision by geography and portfolio. The Canadian provision was $124 million, consumer and credit card loans continue to be the largest component of Canadian provisions. The US provision was $261 million, up from Q3. C&I subsectors represent the largest portion of this amount with the balance split between consumer and real estate related exposures. To sum things up on the credit side, the Canadian portfolios are performing well given the environment while US provisions are higher given tougher conditions there. Provisions are expected to continue to be elevated into 2010 given the lingering effects of the weak economy, the state of US real estate markets, and high unemployment levels. We hope to see some improvement in the latter part of 2010 provided the economic recovery continues. Slide eight shows information on our consumer credit performance against peers in Canada and the US. In Canada we continue to have leading performance. A high proportion of our consumer portfolio is secured and we have continued to maintain our disciplined approach to lending. On the US side we have performed better then peers in all product categories, although provisions are higher here given the environment. That concludes my presentation, and we can now move to Q&A.

(Operator Instructions) Your first question comes from the line of Andre Hardy - RBC Capital Markets Andre Hardy - RBC Capital Markets: Two questions related to loan growth please, the first for Frank Techar, at what would residential mortgage growth be if it weren’t for the impact of exiting the broker network and then in business lending we’ve had sequential declines all year and balances, and I understand demand is down and that’s an industry trend, but a well capitalized bank like BMO should be picking up market share. Can you give us a feel for what you feel is happening to your market share in business lending in Canada and the US.

Relative to the mortgage business we have seen growth in our core mortgage portfolio derived from our proprietary sales forces. I’d characterize it as being in the low single-digit growth category and as you know that’s one of the things that we’re focused on moving forward with respect to adding to size of our sales force and we’re pretty confident that we can improve on that as we go in to 2010. Relative to our business banking activities in Canada, you’ll note just for our total loan portfolio for P&C Canada after two quarters of declines in loan growth as we started this year we’ve now seen two quarters of increases in our average loans. So not only as a result of some changes to management action that we’ve taken on the consumer side of the business but also on the commercial side of the business. We are getting a bit more aggressive as we become more confident with respect to the economy and our expectation is that we will be able to accelerate both consumer and commercial lending as we go into 2010. From a market share perspective on the commercial side, we’ve seen our numbers be a bit volatile over the course of the year, but on average we’re up year over year from a share perspective and we feel like we’re well positioned for 2010. Andre Hardy - RBC Capital Markets: And presumably Tom Milroy is going to pick up on business lending.

Yes, what I would say was that just to come, our decline is a result of really two things, one is that we mentioned to you before, we’ve taken a number of actions around assets that we thought were non core and that included loans were we didn’t think we were getting an adequate return. So some of the decline in our case is a result of that, probably 40%. Sixty percent of the decline I would say relates to lesser demand and that demand is just down or alternatively some of our customers are accessing the bond market for long-term funding. We really believe that we are not losing any market share, arguably increasing it somewhat but we’re looking towards the latter part of 2010 to see what we believe as the economy recovers, is a better outlook for that loan growth. Andre Hardy - RBC Capital Markets: Okay so the clean up, if you want to call it that, of the book is still not done is what you’re saying.

And the loan, obviously that takes a while to run off and its going to take a couple of years yet before we get that out of the system.

Maybe if we could just take a minute and let Ellen speak to the mid market and commercial portfolio in the US, because I think there’s some insight there as well.

Thank you Bill, we are I think you may know, that we’ve been working actively to grow our C&I portion of our business both in the commercial mid market and small business and at the same we’re de-emphasizing our real estate portfolio and [thus] amortizing. So a lot of those new originations are getting offset by that amortization. Also to continue on with what Tom said, while we are acquiring new borrowing customers and not really utilizing the lines actively, given their confidence in the current environment, but we do expect as things improve that we will see further loan growth in those new acquired customers.

Your next question comes from the line of Darko Mihelic - CIBC World Markets Darko Mihelic - CIBC World Markets: A couple of questions, maybe I’ll start with the confusing one though first, I have a question for Russel, it has to do with your slide deck, page 11 where you talk about diversified wholesale term funding mix. What are you trying to tell me with this slide.

Well one of the main points we’re trying to point out is on the term debt maturities, the size of the maturities going forward but in 2010 in particular, that we have prefunded the majority of those maturities so we’re feeling quite good about the fact that we’re not at risk in terms of how we’re going to deal with those maturities. Darko Mihelic - CIBC World Markets: Can I assume then that if, are you well positioned, I’m trying to figure out if your positioned for a net interest rate increase for wider margins, or if it’s the reverse. Is that how we should read into this line. Should I, because when I look at your supplemental on page 41, an interest rate increase does nothing for you on the earnings side, but it really hurts you on, if it were to decrease. So how, should I read this, should I make an interpretation off of this slide that if rates go up you should be booking higher margins on all new loans coming in.

I think so, yes, that would be my view that in a higher interest rate margin, that we would get higher interest rates environment would get higher margins.

Just to confirm from a P&C perspective, rising interest rates would lead to expanding margins in our business. Darko Mihelic - CIBC World Markets: And presumably there must be some level of growth built into this, maybe I can come back to that. I don’t want to spend too much time on that. Another question I have is with respect to expenses. If I take the total compensation expense this year relative to the average number of employees in the year, I get a number of about $116,000 per employee. That would compare to about $108,000 for last year. So in other words, the actual total comp expense per employee is up about 8%, which would actually mirror revenue growth. Am I thinking about these numbers correctly. How should I think about your expenses, should they mirror revenue growth per employee and should we think about more employee reductions into 2010.

I thought you said your first question was going to be the confusing one, I’ll start on that. First of all in 2009 there is severance in the number and that may account for part of the calculation. I’d have to rerun the calculation myself to tell you if its exact but I think it’s a portion of it. Revenue does have an impact on variable compensation but as you know it depends on the business because there are some businesses that a relatively balance sheet or capital intensive and even with a big move in revenue you don’t tend to get very much in the move in compensation. But I think that in, if you look at the core businesses, where the front line sales forces exist, that’s where we’ve had good progress in the year and it is reflected in the compensation. But I think if you back out the severance number, you’ll probably see there isn’t that big a move in the year. Darko Mihelic - CIBC World Markets: And what about the outlook for number of employees for next year.

We’re keeping a very close eye on employment levels in all of the businesses and I think that’s actually pretty common against all commercial enterprises in North America at this particular time. The increases that we’ve seen because of acquisition have pretty much been offset by streamlining of the back office, of simplifying sales process, so our objective is to growth revenue with the same work force if we can do that. Darko Mihelic - CIBC World Markets: On page 13 of your report to shareholders this year, this quarter you added in a sentence that said, it said that you expect risk weighted assets to increase in future years as a result of pending regulatory changes for 2010 and beyond. I’m just wondering if you have a number, so in other words if I were to look at your Tier 1 capital ratio today, and we were to simply fast track all of those Basel changes, what would the impact be to your Tier 1 ratio. Can you give us a sense of what that impact is.

Its very hard to give a precise sense and I don’t think we can give a precise sense sitting here today because most of the changes won’t kick in until the beginning of 2011 and the impact will be a function of what our book looks like at that time and where the rule changes ultimately settle in at, but from what we’ve seen thus far, most of the impact will be in the area of market risk, risk weighted assets. And our market risk, risk weighted assets aren’t that significant, they’re about $6.5 billion on a base of 167 so they’re under 5% of the total. And they could increase by a factor of two to three and so we’re not expecting an increase in total from what we’ve seen so far that would exceed 10% of risk-weighted assets. But its still really early days on this in terms of fully assessing the impact and the Basel committee is going to be coming out with more guidance and proposals either later this year or early next.

Your next question comes from the line of Mario Mendonca - Genuity Capital Markets Mario Mendonca - Genuity Capital Markets: Sort of along the same lines on capital the credit risk RWA is down about, a little under $21 billion since Q1 2009 and I suspect a portion of this relates to what’s happened to the US dollar, the Canadian dollar and also what’s happened to loan demand. Could you help separate those two, maybe break it out into the currency effect and the declining loan demand, that’s the first part of the question.

I don’t have precise numbers for that period but it would be a combination of currency impact, lower loan balances, particularly in the corporate portfolio which tend to be higher from a risk weighting perspective and with those two things offset with some negative credit migration in the portfolio. Mario Mendonca - Genuity Capital Markets: And at some point it would be helpful to have sense for how much of those, and I understand that you can’t do it now but maybe on a go forward basis. The sort of related question is when you look out, if you just assume for a moment that currency is a non issue or at least stable, do you have a sense for when you expect to see RWA growth resume. Because absent RWA growth, the capital ratios become unusually strong, awfully high if you sort of roll forward the book to the capital ratios of 2011, the numbers become kind of strange. So maybe if you could speak to capital deployment in an environment where the capital ratios look awfully strange. And I even taking into account this two to three times higher RWA related to market risk. Maybe could you speak to capital deployment.

I guess there’s two issues that affect this and neither one of them is determined at the present moment. The first one is and I actually reference this in my opening comments, that I think there’s going to be some clarity around capital standards for banks globally emerge over the, and I’m hoping over the next 30 days. I think in Canada we’ll probably have a much clearer idea perhaps then in some other regulatory regimes because of the fact that we’re essentially starting with very strong capital ratios. But knowing what the longer-term capital targets are going to be is very important. And we need to know also with respect to US banks and I think there there may be a little bit of a delay or there may be some time frame to get to new capital standards which could be as long as a couple of years. So we want to know a little bit more about those with respect to anything but small acquisitions so I think that’s a variable. The second one really relates to the opportunity for organic growth which at this point in the cycle if you believe as we do, that we’re coming out of recession we should be able to grow market share in North America in all of our businesses, in personal and commercial banking in Canada and in personal and commercial banking in the US. And to some extent in capital markets which is really redeploying capital as the non-relationship portfolio that Tom talked about runs off. We ought to be replacing it with assets that relate to new relationships with higher spreads. So I think there is a strong argument to be made that holding surplus capital going into 2010 is prudent and that’s based on a belief that in the mid half of the year its much more likely then not that our commercial clients are going to start to think again about capital investment. Capital investment has been very low for two and a half years, almost three years and as you know inventories are quite low. The pipelines are quite empty so there’s going, inevitably there’s going to be a rebuilding of working capital and then there is going to be capital investment and in particularly in commercial banking, I think we’ll have an opportunity to deploy some of that capital. I think the simple answer is if we move into the middle half of next year and we weren’t seeing any pick up then, and we had clarity around capital then we probably would have too much capital. Mario Mendonca - Genuity Capital Markets: And then maybe if you could clarify, IFRS, there are contemplating having a lot of what are currently off balance sheet vehicles on balance sheet, given the position of strength BMO and the other Canadian banks are in, do you envision that having much of an effect.

Its hard to say because that is a long way out. International accounting standards aren’t going to be adopted until the first quarter of fiscal 2012. So I think my certainly hope and expectation would be that there wouldn’t be a very material impact on us at that time if the off balance sheet items came on balance sheet from a capital perspective.

Your next question comes from the line of Robert Sedran - National Bank Financial Robert Sedran - National Bank Financial: That was some good color on what you’re expecting sort of into 2010, I want to touch on if I can your medium term targets, which call for a targeted EPS growth rate of 10% and an ROE of between 17% and 20%. Now they seem to me pretty ambitious and frankly suggest that as we exit the crisis and exit the recession that really nothing has changed, which I think even an optimist might have a little bit of difficulty arguing. So first can you comment on that and then second can you help us understand how you get to a 10% consolidated EPS growth rate. Are there regular share buybacks assumed, are we assuming accretive capital deployment or is that all just plain old organic growth.

First of all I think if you, you’re right to say is this, are you anticipating a return to the world that perhaps we saw in 2005 and 2006. In fact I think its just the opposite. The returns that we ought to earn on the loan book and on, actually on many of the loan products and operating products that we sell to commercial accounts, ought to reflect a higher fundamental return. And there is a reduction in competition, non-bank competition in the market. The banking system is in essence [reintermediating] more then a trillion dollars of short-term financing so I think that the prospects for good asset growth at better margins over the next couple of years are quite realistic. I do think there is an opportunity for accretive acquisitions over time and the acquisitions that we’ve made in the last 18 months have been reflections of that. Everything from the insurance business to the announcement we made today with respect to the corporate card business. We’ve been able to move into market segments that are highly complementary to our existing base. But at prices that previously were not available and acquisitions like these, whether its AIG or Diners Club, would not have come close to being able to meet our hurdles so I think that’s another very positive impact. When I look at loan losses going forward, we’ve seen loan losses running well above expected loss and just as you could point to the period in 2004, 2005 and say that loan losses in the industry which were running well below expected loss would have ultimately revert to the mean. We know that we’ll see an easing in the impairments, then we will see a reduction in the cost to carry of impaired loans and then we’ll see as provisions come down, I’m confident we’ll see some reversals of provisions already taken. So I think that without gilding the lily too much, I think that the environment for the fundamentals of banking over the next and I would say two to three years, are going to be as good as we’ve seen in a decade. Robert Sedran - National Bank Financial: I guess if I can summarize, is it fair to say that you may be getting similar growth rates but higher quality earnings so in effect the environment is better then it was when it was as good as it gets back in the middle of the decade, really its actually going to be better for the banks going forward because the profitability is of higher quality then it was.

I think it was a stressful environment from our perspective because we were working quite hard trying to stay within what we considered to be prudent standards. I think that’s one of the reasons why we’ve seen our delinquency rates well below market. But its in times like that that if you’re making good quality decisions you lose market share. And I think in the environment that we’re looking at in the intermediate term here, sound-banking practices will be rewarded. I’m not naïve enough to believe that that will last forever. I think the cycle ultimately will turn again but the cost of capital replacement for so many institutions has been extremely high and I think there’s been a generation of bankers who have had an updated education.

Your next question comes from the line of Steve Theriault - Bank of America / Merrill Lynch Steve Theriault - Bank of America / Merrill Lynch: My first question refers to slide eight of Tom’s presentation, I was surprised to see credit card loss rates up what looks like about 30 basis points versus the third quarter. What I would have thought card loss rates would be sort of flat to down. I find it especially surprising given that Canadian consumer credit losses are down a little bit from Q3 when I tend to think of card losses as being more of a leading indicator for consumer losses in general. So can you talk a bit about the trends you’re seeing in the cards business and reconcile increasing card losses declining consumer losses.

The numbers are up as you pointed out, and I think its reflective of continuing to see some migration in the portfolios. Unemployment is still drifting up and retail losses are going to track unemployment. The card loss rate as you know is very materially higher then the loss rate in the rest of the consumer portfolio which is largely secured. So given the higher inherent loss rate in the business, the impact of unemployment and the lack of security, we’re still seeing a bit of upward pressure there. Steve Theriault - Bank of America / Merrill Lynch: Maybe difficult to tell but do you have a sense whether industry card losses would have also been trending up. I know you don’t have the full—

We do though, on page eight if you look at the graph, we show there a comparison of our losses against the industry, and really we’re trying to show a couple of points. The first is that our loss rate is quite significantly below the industry average. This is CBA data so its not just the big banks, its all of the card issuers in the country who report into the CBA. We’re well below the peers. Our trend line I’d say is generally tracking the peers to maybe having a slightly more moderate slope in the last quarter so our performance directionally is very much consistent with what’s going on in the industry. Steve Theriault - Bank of America / Merrill Lynch: That’s to the end of July in that chart.

It is. Steve Theriault - Bank of America / Merrill Lynch: So no reason to think its any different for the quarter ended October.

It would be directionally fairly similar. Steve Theriault - Bank of America / Merrill Lynch: Second question, on market share, we’ve seen some improvement in personal lending and what you’d probably say is a stabilization in deposit market share, do you feel like you’ve turned the corner going into 2010 after a bit of a choppy result in 2009. So what do you expect on the market share front in 2010 in your non-mortgage consumer businesses.

I would expect to see market share increase in our consumer lending business. We’re pretty confident of that given the focus and some of the actions that we’ve reengaged with. And I think I talked about that at Investor Day. There’s no reason why we can’t get back to the growth that we saw a year or so ago. On the deposit side, I think its probably likely to be maybe a little more bumpy from a results perspective. We obviously have an aspiration and a target to grow share and the only tricky part is the high price deposits on the term side of the business and how competitive that market is going forward. We feel really good about the growth that we’re seeing in our retail operating deposits, in our core deposits, our checking and savings accounts, and I’m pretty confident we’re doing more then holding our own there. And we’ve got some good prospects. So the term business is one that we can see some fairly big swings on. So the objective is hold where we are, not deteriorate and as we go through 2010 our objective is to grow that share as well. Steve Theriault - Bank of America / Merrill Lynch: Slightly unrelated note, the efficiency ratio was quite phenomenal in the quarter, could you comment on sustainability, or would you care to hint at a more sustainable level going forward.

We’ve been pretty open about talking about our strategy which is focused on two things, one is customer experience and the other is productivity and I know there have been some questions over the last couple of years about what’s possible from a productivity perspective, so I’m happy that you recognized the number, 53.9 for the full year is the first time we’ve been below 54 for a full year. So we’re really happy and proud about it and we’ve had a number of actions going against that, obviously top line growth helped but we’ve done a great job in managing our core expenses to allow us to continue to invest in our strategic agenda. For instance, we closed our in-store operation this year. We’ve simplified our management structure as Bill indicated and undertaken other initiatives to really manage those core expenses. My expectation is we’ve got some flow through benefit coming in 2010. We will see, its likely that we will see our expense levels increase in 2010 but I would suggest its not going to be material and we are going to be able to invest in our strategic agenda again as we go through the year. So more of the same I guess is what I would say looking forward for the next 12 months.

Your next question comes from the line of John Aiken – Barclays Capital John Aiken – Barclays Capital: Actually for Tom, I just wanted to discuss what was happening on the US commercial mortgage and commercial real estate side, we’ve seen some upticks obviously from the environment that’s going on, and yet provisioning and the allowance for credit losses actually really haven’t kept in stride and we’ve got fairly low coverage ratios. Is this indicative of the fact that you think that pricing is stabilized and there’s very little risk on the secured portion of the loan.

I would say not really. On the commercial side of real estate market in the US conditions are weak, values have been falling, and are expected to continue to fall. When you look at the impact of that on our portfolio, its really had two parts, the first part of that portfolio impacted was the developer portfolio. That’s about $1.2 billion in size and we’ve been taking pretty healthy provisions on that through the year. Starting particularly in Q1 of this year and we think that we’re through most of the challenges that we’ll have in that part of the portfolio. Moving forward with the weakness in commercial real estate we’re likely to have some higher loss level on the investor owned part of the portfolio which to date has held up reasonably well and to a degree within the commercial portfolio in the US, we think that we’ll have lower losses on the developer side and an uptick in investor owned that will, to a reasonable degree, offset each other. So we’ll just have a change in mix. But the general expectation is that that market is going to be weak and losses in that part of our portfolio will continue to be elevated. John Aiken – Barclays Capital: And as I dovetail into your overall thoughts on provisions with if everything goes as well as planned that you will see some easing in the latter part of 2010.

It does, we think that provisions will stay elevated for the first part of the year and in the latter part, assuming that the recovery continues, we think that we’ll get relief in other parts of the portfolio although in the commercial real estate portfolio specifically we’re likely to continue to see some pressure. As I pointed out in my comment, that part of the portfolio is weaker but its only 2.5% of our loan portfolio in total, so its not that large in that context.

Your next question comes from the line of Cheryl Pate – Morgan Stanley Cheryl Pate – Morgan Stanley: I wanted to talk a little bit about the trading number this quarter, I think probably normalized a little bit faster then had been anticipating, if you could talk a little bit about the trajectory we saw over the course of the quarter, was there really a drop off in October or was the lower volume sort of a quarter wide trend.

Clearly we saw through the quarter the market conditions change and our trading revenue start to return to a more normalized level and that really was across a number of the books but obviously we saw in particular vis-a-vie the interest rate sensitive trading book. And I think I would point out that it was down certainly from Q3 but at the level where we were it certainly would be one of the better quarters that we’ve had in the last number of years. So we still thought it was at a pretty good level. Going forward we are pretty confident that while we will be down on an annual basis obviously from this year, we would think that we would be certainly above where we saw ourselves in 2008 and 2006. I’m skipping 2007 only because that was the year that we had the commodities losses which went through the trading revenue line. Cheryl Pate – Morgan Stanley: So fourth quarter, is that a good way to look at a run rate for the next couple of quarters near-term.

And I would range it but yes, that would be, that number would certainly be in the range that I would look at.

Your next question comes from the line of John Reucassel - BMO Capital Markets John Reucassel - BMO Capital Markets: A question for Bill, back to the medium term target ROE of 17% to 20%, is that, be clear what that is, is that something you’d expect to earn on average over the medium term or is that an aspirational target for the group.

I’m not sure about the distinction you’re making, I guess is the question how fast do we aspire to get there. John Reucassel - BMO Capital Markets: I guess the question is if you, if we looked over the medium term, could we expect some years to be 20% and some years to be 15% to average the 17 to 20 or are you really just trying to target the mid to high teens when the world gets to be better.

I think targeting the mid to high teens is the right way to think and in terms of aspiration. Obviously there are some business mix elements to that and that all is also impacted by changes in capital treatment but I think that if you’d ask me eight months ago how optimistic I was about getting to that range, I would have said that I’m quite confident but it could take a considerable period of time just because of the adjustments in the portfolio. I think we made good progress in the adjustments on the portfolio. Obviously Capital Markets from a return on equity point of view had a stronger year this year then we anticipated at the beginning. I think that there are still some reasonable quarters for Capital Markets from a return on equity that will give us the opportunity to continue to adjust the capital deployment. But thinking about a well run bank, that range seems to me like a sensible level to aspire to. John Reucassel - BMO Capital Markets: So with the higher capital requirements and more normalized earnings, it looks like you probably have to get higher ROE out of the US business. If we look forward what would you expect ROE out of the US businesses to be. I guess we’ve seen kind of mid to high single-digits ROE, what should we, when you think of the 17 to 20 how much of that comes out of getting higher returns out of the US.

Well we do have a very specific intent to increase the return on equity of our personal and commercial business in the United States and we’re pretty confident given the changing competitive environment that we’ll be able to move up certainly above the mid teens. With respect to our wholesale business in the United States, we said before that the mix of non-interest revenue to net interest income in the US is much lower because we’re just really building up our debt and equity underwriting in our M&A business in the US and we’ve made great progress in that regard. So I’m expecting stronger returns from the wholesale business in the US as well. So I do think the US is going to be an important contributor to the improvement. The other element is that we’re carrying very, very strong levels of Tier 1 capital right now and while I do think global capital standards will rise, in the normalizing, we’ll be able to grow the revenues and the book of the bank and use this capital. And I think that the, by reducing the excess capital in that way, we’ll also see enhanced return on equity.

Your next question comes from the line of Sumit Malhotra - Macquarie Capital Markets Sumit Malhotra - Macquarie Capital Markets: Quick numbers one to start for Tom Milroy and Russel Robertson, just looking at page 10 of your supplement, BMO Capital Markets, net interest margin on average earning assets, if you’re shedding some of the lower return non-core, non-relationship loan portfolio, and repricing is obviously been a very key word for banks this year, why has the NIM fallen so sharply in this segment. The trading net interest income has been flat, but we’ve seen the NIM come off about 30 basis points in the last two quarters. Anything quickly you can point me to there.

Yes, it really has been in the margins in our trading and accrual books which have come in and you’ll see that and then combined with the lower asset balances in the lending book, the margins in the lending business have actually stood up pretty well. Sumit Malhotra - Macquarie Capital Markets: I thought if we take a look at that [inaudible] of trading NII, I thought that would account for that but is there more to the picture then just the trading NII.

No. Because still when you look at the portfolio in total, as the assets related to the loan shrinks, that’s, which achieve a higher margin, that’s going to have an impact on the overall as well, when you look at the combined pie. Sumit Malhotra - Macquarie Capital Markets: Even after the share issuance impact had normalized in Q2, we’ve seen the share count up about 1% each of the last two quarters, so a bit of creep on the EPS number, your recent press release talked about the fact that the normal course issuer bid had been accepted by OFSI but prior to initiating any purchases you would still consult with the regulator. What exactly has to happen here for you to at least match off this share creep we’ve seen. Is it this new capital rules we’re talking about in the next 30 days hopefully that will give you the go ahead from OFSI to at least match those issuances that we’re seeing under options and [inaudible].

Obviously there’s a process of informing the market that goes on as new standards are set so we’re more driven by our own desire to see what we’re going to be looking for capital [inaudible], not only in Canada but in the United States. And its not even just the visibility around that. I don’t think there are any really fundamental issues around the normal course issuer bid. Its always, we’ve always had one in place. We renewed it. We have OFSI’s approval and as always we’ll consult before we do anything about it. But I think your point is right. Thank you very much for your questions, I did say that we would do a quick turn around the room with some comments on outlook with respect to areas of focus for the businesses in 2010. And maybe I can start with Frank Techar and then we’ll go to Ellen, and Gilles and Tom.

Thanks Bill, I touched on this a little bit in my answer to the last question, I think looking at 2010 I’m expecting more of the same and current trends to continue for the P&C business in Canada. My expectation would be we’d see improving loan growth, consistent with the start that we’ve had over the last couple of quarters. Increasing loan growth on the consumer side, mortgage growth and on the business side as well so I think we can expect to see more growth in all three of those categories into 2010. My expectation is we’ll see strong deposit growth continue as customer preferences remain at or near their current levels. I don’t think that will change until perhaps later in the year. So strong deposit growth continuing as well. And we’re anticipating that margins are going to hold for the first half of the year and if interest rates do rise in the second half of the year, we will see our margins expand in P&C Canada as well. So our balance sheet should grow. We’re pretty confident about our margin position and our ability to manage the mix of the portfolio, continue to price in the marketplace in a healthy way and so pretty optimistic about the revenue side. I touched on expenses, as well already I think we’re going to see some flow through benefits from some of the actions that we’ve taken and we will be able to invest in our strategic agenda again in 2010 to put a little pressure on the competition. And my expectation would be credit losses are going to ease in the second half of the year as the economy continues to improve. So overall I’m optimistic for 2010. Our investment pace is going to continue and my expectation is we will be able to continue to improve on our customer loyalty relative to the competition and our productivity relative to the competition.

A couple for me, we made some strong gains this year and we expect the same to continue next year as we still continue to see great market opportunity with our competitors being a little bit distracted. We will be very focused on acquisition of new clients and households as well as loan growth and deposit growth, particularly in the personal side, we think rates, the low rates, and stabilizing home market prices will help bring new homebuyers in and that will be a big focus for us. As well we expect to see a return of borrowing on the home equity side for the same reason. We’ve been very active in our indirect auto business and expect that to continue as confidence returns with further growth there. I spoke a little bit earlier about business banking, that’s been a big focus of ours for customer acquisition. We’re investing in stage two of our commercial mid market expansion. The results there have just been excellent and to give you an idea of how small business is off to a great start, two thirds of our relationship managers closed new business transactions in the month of October. So we’re making gains and we’re taking advantage of the market opportunities.

Just looking back over the last six months, we’re starting to see some good momentum and not only in financial terms but we’ve had some good results in Q3 revenue was about 12% better then previous quarters, and Q4 was 5% and net income improved at 24% in Q3 and 15% in Q4. But also in all the changes that we’ve made in 2009. I think that put us in a pretty good position for 2010. Some of the changes that we’ve made this year, we’ve seen some pretty aggressive actions to manage our discretionary expenses and our FTDs. We’ve launched a number of new products including ETS and [RDSPs] where we currently have the 70% market share. We realigned the insurance business to PCG, make the acquisition of BMO Assurance and we’re very pleased with the result of the acquisition after the six months. The BMO brand is clearly adding to sales effort. But when you look forward, our revenues are dependant on four main things, they’re dependent on the levels of the equity markets. They’re dependent on the transaction volumes, and the interest rate environment we operate in and now also the sales in our insurance business and looking forward we expect the equity market to continue improving so that should be good for our fee revenues and our transaction volumes. We expect the low interest rate environment to persist for the year so we don’t expect our spread revenue to grow for the course of the year, we haven’t counted on that. But we do expect our insurance business to continue growing. Its now starting to see the benefit of BMO brand. We expect that to continue and we’re going to be continuing focusing on our costs going forward because its still a fairly tentative environment.

Obviously we had a very good year and in addition to we managed to grow our core businesses and at the same time manage down the reduction of both assets and capital and risk in our non-core businesses, looking forward we’re optimistic about the current environment and we believe we can build our strong performance albeit not at the levels of the last couple of quarters. In addition to having revenues increase across some of the businesses that didn’t perform to the peak this year, others will go the other way. We think that the investments that we made this year will clearly pay off during the course of 2010.

Let me reiterate what my colleagues have said, we’re very pleased with the sequential progression of our quarterly earnings in 2009. Going into fiscal 2010 and looking forward to 2011 we’re very confident in the core businesses and the opportunities that lay ahead. We remain cautiously optimistic about the economic environment heading into 2010 but we know that if we continue to execute on our strategy and focus on our customers we’ll be able to make the same kind of progress as we were able to demonstrate this year. I want to thank you again for joining us on the call. I apologize, I think we’ve gone a few minutes over where we intended to, but we look forward to speaking with you again in this forum after Q1.