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HomePersonal BankingWealth ManagementSmall BusinessCommercialCorporate & InstitutionalAbout BMO
Farewell Address to Shareholders by Tony Comper, President and CEO, BMO Financial Group, at Bank of Montreal Annual Meeting of Shareholders

Toronto, Ontario, March 1, 2007

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Thank you, David. That was very kind. And let me say in return how fortunate our organization has been to have someone of your caliber and stature as the Chairman of the Board.

Good morning, friends, colleagues, and fellow shareholders. I am honoured to present my final report as steward of this enduring enterprise.

When I signed on with Bank of Montreal in that glorious, we-can-do-anything Summer of 1967, it did not remotely occur to me that one day I’d be looking back on a 40-year career – especially one that would wind up in the fabled corner office.

I wasn’t opposed to it, mind you. It may not have seemed a likely spot for a young man with an English degree (and a guitar) in the midst of the establishment-clobbering Sixties, but I had worked summers at a Toronto branch and I was pretty sure I knew what I was getting into.

Above all I knew that BMO was an honourable place; that I would never have to mumble the answer to where I worked, or feel the need to mount a defense of my bank.

I knew it was filled with good, decent, salt-of-the-Earth people who had no stronger motive in working life than the success of their customers – a quality which endures to this day, and which Bill Downe has already announced will be at the heart of his stewardship.

I can think of several reasons why my ‘what-the-heck-I’ll give-it-a-shot’ first job turned into a four-decade gig, aside from feeling at one with the corporate values.

The most obvious reason, I guess, was the succession of really good jobs that kept getting better all the time – up to and including the privilege of leading one of the world’s great institutions. I say this in the clear understanding that heritage and gender have always been on my side.

But the deeper, more abiding reason I’ve hung around so long (and I’m very clear on this) is that I so often was surrounded by just the kind of people I wanted to be surrounded by, from the gentle folks at my local branch back in the mid-Sixties to the management team and board of directors who grace this room today.

Now I won’t say that everyone’s contributions have been as important as everyone else’s, or that I haven’t seen my share of duds along the way, although it has been my impression that most of these duds did not thrive at BMO and soon moved on.

What I will say is this – that BMO Financial Group and its shareholders are blessed with a workforce with a growing sense of ownership (78% of colleagues in Canada own shares) and a conscious stake in the future success of the enterprise. We’ve got tens of thousands of people taking it all very personally.

I am not sure anyone thinks of a big corporation as “family” these days, and I am likely dating myself just by reviving the metaphor. But without waxing sentimental (which I am decidedly not), BMO has been like a family for me.

Not “one big happy family,” of course. But, when you think about all the permutations and combinations of what can go disastrously wrong, in families and in companies, one that we have managed to keep remarkably non-dysfunctional.

And like most good families, we rallied ’round one another and BMO when the proverbial chips were down – as they were in 1999, many directors and colleagues will recollect with a shudder, in the wake of the “merger that never was” with RBC.

Once that preoccupation was ended (forcibly as you may recollect), we were required to face some unpleasant truths about ourselves, including the fact we were under-investing in businesses that were generating most of our economic profit while over-investing in businesses that were eating away our economic profit.

The challenges we faced were numerous and daunting; and if not addressed, potentially quite lethal. They included doubts about whether we could continue to make it on our own in an industry that was now global.

If you want to know what kind of people we are at BMO Financial Group, consider the effort that turned us around; and how collective it was, because it had to be. We converted that moment of truth into one of BMO’s finest hours. And our businesses today are healthy, successful, and poised for further growth.

As the Chairman mentioned, net income more than doubled to $2.66 billion from 1999 to 2006. Last year alone, we grew earnings per share by more than 11%, and the one-year return on your common shares surpassed 24%. It was also a year in which we led the Canadian industry in setting the highest target payout range for dividends.

I will leave the numbers for Karen Maidment’s presentation this morning. The point I want to make is that we have not only survived but thrived since the dark days of 1999.

Our survival effort began with a no-stone-left-unturned analysis of the current and future value-creating capacities of our many businesses. We discovered that we were under-investing in businesses generating most of our economic profit, and over-investing in businesses that were eating it up.

Making some of the toughest decisions that boards and leadership teams ever get called on to make, we undertook the most radical restructuring in BMO’s history.

We became very clear on our purpose in life: the creation of shareholder value. Every decision we’ve taken since has been from that perspective.

The world was not always kind to us as we pushed ahead with our transformation. The businesses we were exiting may have been under-performing, but they had been producing revenues that suddenly weren’t there anymore.

So, on the one hand, we had this downward pressure on earnings. While, on the other hand, it was too early to see any payoff from our strategically redeployed dollars. I would never in my maddest moments want to go through anything like that again, but I’ll always be proud of being the guy at the helm through it all. As BMO responded and turned around, the bruising was more than worth it.

I think of the “post-non-merger crisis” as my finest hour professionally. It allows me to hand over a bank – as I will just minutes from now – that really is ready to take on the world; which I trust that it will, and successfully, in the good hands of this experienced management team.

Before I return to thoughts of succession, however, I have some other blessings that I would like to count.

The first is that when the information technology revolution struck with all its power and glory, I was already a veteran. One of my first big breaks at BMO came in 1971, when I was urged into something called Operations and Systems.

I still shake my head when I say this, but I was one of the people who invented the computer system that allowed us to engage in real-time banking across six time zones. That was not something, to paraphrase Hamlet, “dreamt of in my philosophies.”

I spent just over a decade in Operations, where I earned my first vice-presidency, and where I would do a second stint, this time as the EVP in charge, just prior to being appointed President in 1990.

So when technology arrived in full flight to change the very nature of banking, I was one of the first chief operating officers and later chief executive officers who was comfortable with computers, and who could speak the language well enough to more than get along.

Which, it turned out, was just as well. Because whatever else it may have wrought, the technology revolution would make the customer supreme. As the customer remains today. I would even say “supremer” if such a word existed.

There were other revolutions under way in the Nineties that would also reweave the very fabric of business. Globalization (which in my opinion has been an unqualified success) is probably the first that leaps to mind.

And reasonably so. It has changed the way we do business – and the way we think about business – so profoundly that even the word profoundly only begins to describe it.

The third of the three great turn-of-the-century revolutions has, in the long run, been almost as world-bending as the other two: corporate responsibility has gone from a dubious proposition at best to a core value and operating principle for most of the post-industrial world; and from a traditional cost centre to a bottom-line competitive edge.

In an excruciatingly competitive industry like financial services, all of us are stretching and striving for all the edge we can get. Why should people bank with, or work at, or invest in BMO? What makes BMO so special?

Well, along with everything else that makes us stand out, we can cite the fact that Maclean’s magazine regularly names BMO one of the best 100 places to work in Canada. And the Toronto Star has recently named us one of the 50 best places to work in the Greater Toronto Area.

It is also advantageous that Corporate Knights magazine named BMO Canada’s Best Corporate Citizen in 2005, and has put us near at the top of the list every year the award has existed.

We can, of course, cite BMO’s venerable and respected place in the Canadian corporate pantheon. I have been privileged to contribute to BMO’s longstanding reputation for exceptional commitment to community. In this I have followed the lead of countless colleagues who came before me, worked alongside me, and will carry on after me.

And woe to any organization that has not yet seen the light on environmental sustainability. As highlighted in this year’s Annual Report as well as in our fresh-off-the-presses Public Accountability Statement (which, by the way, is available for you to pick up on your way out of today’s meeting), we have committed ourselves to this cause on several, critical global levels.

Our industry is doing what our industry can do to prevent the environment from being despoiled – and people from being abused – by future generations of global mega-projects: we are making our funding contingent upon environmental sustainability.

I admit to a certain bias, but as the definition of what it has meant to be a good corporate citizen has evolved over the years, BMO people and BMO thinking have always been up on the crest of the wave.

It is no accident, for example, that we won top honours at the inaugural Conference Board of Canada / Spencer Stuart National Awards for Corporate Governance in 2001. It’s something we’ve worked very hard on, and something we want to be known for.

Let me take you back to the early 1990s, when BMO first began to list workplace equity and workforce diversity as business priorities.

I had just been appointed President, and at last I was in a position to find out if there really were legitimate reasons why women were not succeeding at BMO; or just a string of assumptions and unchallenged myths.

I launched an Employee Task Force on the Advancement of Women in the Bank, which went on to make corporate history and change the face of the enterprise.

Women at BMO were as qualified as men in every way that mattered, and what this meant – gross unfairness aside – was that we were underutilizing three quarters of our brainpower.

That was the strong suit I played at first, how taking action to advance women was the smart thing to do, the plain good-business thing to do.

We took the same kind of approach when we promoted the recommendations of three subsequent task forces focused on members of visible minorities, Aboriginal people and people with disabilities. We talked about maximizing our strengths, and seizing the corporate advantage.

What I soon discovered, however, is that I could have come at it the other way and the message would have been just as effective. The “right thing to do” was reason enough, at least for BMO people.

It was also my pleasure to join and strengthen a tradition of placing high value on lifelong education, as symbolized by our one-of-a-kind Institute for Learning. Our commitment to education transcends our own immediate needs to be as capable and competitive as corporately possible. We also invest substantially to support a better educated society, thereby contributing to that “tide that raises all ships” – ships that represent our future customer base.

I’ve enjoyed taking part in the CR (as in corporate responsibility) revolution. Along with all the other rare opportunities that go with the stewardship of BMO Financial Group, I have been privileged to help create a truly exemplary corporate citizen…

… at a time when the quality of corporate citizenship is as indispensable to business success as state-of-the-science technology and world-class savvy and sophistication.

It is also well to keep in mind, as we do, that there is no substitute for good old-fashioned strategy – accompanied, one always hopes, by flawless execution.

As BMO entered the new century, we did so with a clear strategic focus on growing our businesses in Canada and accelerating expansion in the U.S. markets where we have so carefully chosen to compete.

With a sharp eye on increasing shareholder value, we have developed customer-friendly, multi-channel distribution networks throughout Canada and in the American Midwest – following substantial investments in recent years in acquiring branches, developing technology and integrating infrastructure.

Today, we have the most integrated and best positioned U.S expansion platform among the Canadian banks. With the completion in January of the most recent U.S. acquisition of First National Bank & Trust in central Indiana, our Harris community banking stronghold is taking on the competition with 234 branches and close to 600 Harris-branded banking machines. Its mission is to become the leading personal and commercial bank in the U.S. Midwest with a network of 350 to 400 branches.

We are also dealing from other strengths – commercial and wealth management, in particular – where the potential for growth is huge on both sides of the border. We will continue to build on our longtime leadership in credit risk management – and, as I hope has come through today, our remarkable ability to adapt to changing times.

And a changing world. The future has beckoned as well, in the form of the People’s Republic of China, the next great economic superpower, and a market with such potential it almost defies imagination.

As shareholders know, we have been expanding the BMO presence in China over the past decade, marked by our board meeting in Beijing in 1997 on the one end and our meeting this year in Shanghai on the other. While these business-building initiatives have a negligible impact on returns to shareholders today, and our key strategic focus will continue to be on our Canada-U.S. base, we are optimistic about prospects in the Middle Kingdom.

We are developing personal relationships in a culture where such relationships are prized, and one day in the not-too-distant future, shareholders will start to see a financial return on our efforts.

This is an occasion for those who invest in BMO to applaud the choice of my successor. Bill Downe’s excitement about what China could mean to our enterprise in the future equals my own. The same holds true for his passion for BMO. He has a sophisticated grasp of the next steps we must take on our journey toward top performance. And he is very determined.

To be completely honest, part of me isn’t quite prepared to exit smiling – especially since the “interesting times” we’re in the midst of show no signs of ending.

And I’m not even slightly exhausted from steering this enterprise through three overlapping revolutions. In truth it has been nothing but exhilarating.

I would like to be here for the day when BMO becomes – and is recognized as – the top-performing bank on either side of the Canada-U.S. border, in each and every area where we’ve chosen to compete.

I take solace in having set up the mission, however, and I’ll be cheering long and loud when it is accomplished – which, I hope, will be on Bill Downe’s watch, as he leads BMO Financial Group to its next level of performance.

It has been a great privilege to steer BMO into the 21st Century, and a very great pleasure as well. This enterprise has given me the best years of my life.

In closing (a word with new meaning today), I want to thank shareholders for entrusting me with your company. And I want to thank everyone who has had anything to do with my 40-year success and love affair with BMO. From that good-omen Summer of ’67 to this very last moment, I have been blessed with a wonderful life.

Goodbye. I’ll miss you.

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