BMO Bank of Montreal Posts Strong Earnings. BMO U.S. Banking Operations Contribute to Profit. BMO Dividend is Strong.

BMO Bank of Montreal (TSE: BMO) released very promising results recently. Bloomberg Markets reports that profit at the Canadian bank rose 19 percent on higher investment banking earnings and positive results from its recent U.S. acquisitions.


Income at BMO rose to $793 million, or $1.27 per share for the quarter. BMO has now increased its profit for nine straight quarters and is showing incredible consistency and stability in its operations. It now has the longest streak for increasing profits among the six large Canadian banks. It is clear now that the Canadian banks are in very good shape. BMO is now Canada's 4th largest bank by assets.


In the United States, the BMO completed its $4.1 billion takeover of Marshall & Ilsley on July 5. This doubled its total U.S. branches and deposits in the area. Incredibly the bank now has more branches in Chicago than Toronto. Marchall & IIsley contributed $32 million in profits to the bank this quarter. Much better than previous losses it was experiencing.


Happy Investing : )

BMO's Marshall & Ilsley has 10th Straight Loss... Home Turf is Much Safer.

According to a recent Dow Jones newswire, Marshall & Ilsley Corp., (MI) the American bank that was recently bought by Canada's Bank of Montreal, (BMO, BMO.T) has now had its 10th straight quarterly loss. The bank, however, based in Wisconsin, has been improving in recent months as the amount of money that it must put aside for defaulting loans has been declining. Nonetheless, the bank is struggling desperately to make a profit and it still owes the U.S. government 1.72 trillion dollars in bailout money. BMO has agreed to cover the loan once their deal to buy the troubled bank closes. 


In the last three months, Marshall & Ilsley lost 116.6 million dollars. Which is why the fact that BMO paid 4.1 billion dollars for the bank is so disturbing for many shareholders, like myself. Net charge-offs, loans lenders don't think are collectible, rose to 4.8% of average loans from 3.9% a year earlier, and Non-performing loans, those near default, fell to 4.5% from 4.6%. 


Merging their U.S. Harris banking unit with under performing Marshall & Ilsley may not bode well for investors. But economies of scale are very important in the U.S. banking industry and BMO hopes that more branches and more assets down south will help them finally generate a reasonable return on their American investments... which as of yet, account for less than 10 percent of the bank's income... well behind the Canadian leader in the U.S., TD Bank.