Earnings Rise at Harris but Fall at Bank of Montreal

By Dobbs, Kevin | American Banker, August 27, 2008 | Go to article overview

Earnings Rise at Harris but Fall at Bank of Montreal


Dobbs, Kevin, American Banker


Byline: Kevin Dobbs

Bank of Montreal's U.S. banking division, Harris Bankcorp Inc. in Chicago, weathered the credit storm and posted a 12% increase in fiscal third-quarter net income from a year earlier, to $28 million, the Toronto company said Tuesday.

Bank of Montreal said its U.S. personal and commercial banking business benefited from an 18-basis-point rise in its net interest margin during the quarter, to 3.11%, as well as new income from the March acquisitions of Merchants and Manufacturers Bancorp. Inc. and Ozaukee Bank, both in the Milwaukee area. The U.S. unit's revenue rose 16% from a year earlier, to $550 million, in the period, which ended July 31.

In Bank of Montreal's earnings release, William Downe, its president and chief executive, called the U.S. results "good" but said deterioration in the U.S. housing market weighed heavily on his company's overall results and created an uncertain outlook.

Bank of Montreal, the first big Canadian bank to report earnings, said its profit fell 21%, to $494 million, or 95 cents a share, dragged down by higher provisions for credit losses. It was the fifth consecutive quarter of declining earnings for Bank of Montreal, Canada's fourth-largest banking company.

Analysts polled by Thomson Reuters estimated Bank of Montreal would report a profit of $1.15 a share before one-time items.

The $358 billion-asset company, which until late last year had a long history of low credit losses, took a $128 million charge on soured investments tied to bad mortgages, and its provision for credit losses rose fivefold from a year earlier, to $462 million, because of losses on corporate accounts linked to the faltering U.S. housing market.

"Credit woes have befallen" Bank of Montreal for nearly a year, and "we believe it no longer wears the crown of low-provision bank," John Aiken, a Dundee Securities Corp. …

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