CANADIAN AND NORTH AMERIC AN  PEER GROUP COMPARISONS 20 02 2001 Five-Year Average Cdn. N.A. Cdn. N.A. Cdn. N.A. BMO Rank bank bank BMO Rank bank bank BMO Rank bank bank perf. of six avg. QGLYPH<213>tile avg. perf. of six avg. QGLYPH<213>tile avg. perf. of six avg. QGLYPH<213>tile avg. Financial Performance Measures (%)  Five-year total shareholder return (TSR) 7.9 4 8.2 1 3.3 14.3 6 17.7 3 14.7 7.9 4 8.2 1 3.3 Diluted earnings per share (EPS) growth 11.3 3 (16.1) 3 16.4 (14.8) 6 (2.0) 4 (8.4) 3.8 4 1.4 3 6.9 Return on common shareholdersGLYPH<213> equity (ROE) 13.8 4 11.1 3 15.0 12.9 5 14.2 3 14.7 14.6 3 14.5 4 16.9 Net economic profit (NEP) growth (15.2) 2 (97.0) 3 24.5 (43.3) 6 (17.1) 3 (38.0) 2.6 3 (8.2) 3 9.9 Revenue growth 1.7 4 2.5 3 7.6 3.2 5 8.8 3 9.1 4.4 6 9.3 4 10.7 Expense-to-revenue ratio  67.4 4 67.0 4 58.4 65.8 3 67.3 3 62.9 65.7 4 66.5 4 60.9 Provision for credit losses as a % of  average net loans and acceptances 0.56 2 0.89 1 1.41 0.60 3 0.61 2 1.11 0.35 1 0.48 1 0.94 Financial Condition Measures (%)  Gross impaired loans and acceptances as a %  of equity and allowance for credit losses 15.2 4 14.6 4 10.0 14.2 4 14.0 4 8.7 11.0 2 12.8 4 7.7 Cash and securities-to-total assets 24.9 6 28.7 4 38.2 23.1 6 28.7 4 33.5 26.7 4 27.9 2 35.1 Tier 1 Capital Ratio 8.80 4 9.07 2 8.50 8.15 6 8.78 2 7.92 8.15 6 8.39 2 7.96 Credit rating AA— 2 AA— 1 AA— AA— 2 AA— 1 AA— AA— 2 AA— 1 AA— 2002 Performance Canadian Peer Group North American Peer Group Comments on Performance for 2002 Five-Year Average Performance 14 BMO FINANCIAL GROUP ANNUAL REPORT 2002 BMO’s relative performance on the five-year average measures improved from 2001. Our ranking among the six-bank Canadian peer group improved on five of the seven performance measures and was unchanged on the other two measures. In North America, BMO’s quartile ranking improved on two of the performance measures and was unchanged on the other five measures. EPS growth and ROE are also particularly important per- formance measures. EPS growth of 11.3% was the third best of the Canadian banks and considerably stronger than a year ago. ROE of 13.8% also rose strongly from 2001 and both measures were well above the Canadian peer group averages. Our performance on the expense-to-revenue ratio deteriorated relative to the peer groups in 2002 due to the effects of acquired The five-year TSR, the most important of our financial perfor- mance and condition measures, improved as BMO ranked fourth in Canada and is now ranked first quartile in North America. Our one-year TSR was third best in Canada and third best among the 17-bank North American peer group. All of the foregoing comparatives were determined excluding non-recurring items, as appropriate. When comparisons are based on GAAP earnings measures, BMO’s ranking among its Canadian peer group improves on three of the seven performance measures, relative to its ranking excluding non-recurring items, and is unchanged on the other four measures. On a GAAP basis, BMO’s EPS growth and ROE were the second best and revenue growth was the third best of the Canadian peer group.  BMO’s relative performance in 2002 improved from 2001, although the improvement was not as pronounced as in Canada. Our rank - ings by quartile among the North American peer group rose on three of the seven financial performance measures and our per- formance in 2002 was better than the North American peer group average on two of the seven measures. Our performance relative to the peer group average improved on four of the seven measures and was unchanged on another. BMO’s cash and securities-to-total assets ratio was the lowest of the Canadian peer group and ranked fourth quartile among the North American peer group. However, BMO’s liquidity is considered sound. A high ratio of individual deposits-to-total deposits is indicative of lower liquidity risk, and BMO had the highest such ratio of both the Canadian and North American peer groups in 2002. BMO’s ratio of gross impaired loans and acceptances to equity and allowances for credit losses was fourth best of the Canadian peer group and fourth quartile relative to the North American peer group. These rankings were unchanged from 2001. However, BMO’s provision for credit losses as a percent- age of average net loans and acceptances improved in 2002 to second best among the Canadian peer group and first quartile relative to the North American peer group. In addition, BMO’s five-year average was the best of the Canadian peer group and first quartile in North America. businesses. Improving productivity is BMO’s top priority for 20 03. BMO’s relative performance in 2002 was much improved from 2001. Our rankings among the six-bank Canadian peer group rose on six of the seven financial performance measures and were  as good as or better than rankings in 2001 on all four financial condition measures. Results in 2002 exceeded the average of the peer group on four of the seven financial performance measures. Our performance relative to the peer group average improved on six of the seven financial performance measures and on three of the four financial condition measures.  The Canadian bank peer group average is based on the performance of CanadaGLYPH<213>s six largest banks: BMO Financial Group, Canadian Imperial Bank of Commerce, National Bank of Canada, RBC Financial Group, Scotiabank and TD Bank Financial Group. The North American bank peer group average is based on the performance of North AmericaGLYPH<213>s 17 largest banks, consisting of all banks in North America having shareholdersGLYPH<213> equity that is at least 75% as large as BMOGLYPH<213>s. It includes the Canadian peer group, except National Bank of Canada, as well as Bank of America Corporation, Bank One Corporation, Citigroup, FleetBoston Financial Corporation, J.P. Morgan Chase & Co., KeyCorp, National City Corporation, The PNC Financial Services Group Inc., SunTrust Banks Inc., U.S. Bancorp, Wachovia Corporation, and Wells Fargo & Company. Results are as at or for the years ended October 31 for Canadian banks and as at or for the years ended September 30 for U.S. banks, as appropriate.  For consistency with our peer groups, the non-interest expense-to-revenue ratio includes amor- tization of goodwill for all banks for years prior to 2002. Non-recurring items are excluded for all financial performance measures except five-year TSR a nd NEP growth. 