Bank of Montreal (TSE:BMO) plans first-of-its-kind mortgage-backed bond

Bank of Montreal (TSE:BMO, Mkt cap 63.98B, P/E 13.05, Div/yield 0.88/3.57, EPS 7.56, Shares 651.65M), one of the "Big Five" banks in Canada, is to bundle nearly C$2 billion of prime Canadian mortgages into securities, Moody's said in a pre-sale report on Monday.

The bond is backed by C$1.96 billion of prime residential mortgages that are not insured by the government. More than half of the mortgages are in Ontario and Quebec.

Bank of Montrea mortgage back bond

Bank of Montreal (TSE:BMO) plans first-of-its-kind mortgage-backed bond

According to Bloomberg News, the mortgage-backed securities offering is the first from a major Canadian bank to bundle uninsured prime mortgages.

Canadian banks have historically packaged federally guaranteed loans into bonds, but the government is looking to reduce support for the fast-growing housing sector.

"This is a really unique deal in the Canadian market," Richard Hunt, an analyst at Moody's who rated the deal, said in an interview with Bloomberg News. "Given the pent-up demand that we think is out there on the part of banks and non-banks to have a vehicle to fund their residential mortgages, to have an RMBS (residential mortgage-backed securities) market, we think this could be a significant transaction."

About 95% of the securities will be rated 'Aaaa', Reuters reported.

Canadian mortgage loans generally have a five-year term, which means that borrowers usually have to refinance a significant portion of their loan every five years.

BMO will offer to renew or refinance the mortgage loans at the end of their term if the borrower is in compliance with the bank's underwriting criteria at that time.

"Canada's one of the few jurisdictions that doesn't have a developed RMBS market; this could be the first step to getting that going on," Hunt told Reuters.

Bank of Montreal (TSE:BMO) is a Toronto based financial services company. The Bank provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the United Kingdom, Europe, the Caribbean and Asia. It also serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides a suite of financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank, based in the United States Midwest with more than two million retail, small business and commercial  customers. More from Reuters »

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Bank of Montreal announces 2,000 job cuts

Bank of Montreal (TSE:BMO, Mkt cap 53.47B, P/E 12.53, Div/yield 0.86/4.12, EPS 6.66, Shares 643.56M) said it is “to position the bank for what lies ahead” by cutting 4% of its 46,000 workforce, with more and more customers choosing to bank online over visiting a branch, Reuters reports.

Bank of Montreal profit dividend

Bank of Montreal announces 2,000 job cuts

The moves follows a decline in quarterly profit, with net income for the second quarter down 3% to $973 million, or $1.45 per share.

The bank’s balance sheet was impacted by a $132 million restructuring charge. Excluding that charge, its earnings were $1.73 a share. Analysts on average had expected $1.75 a share, according to Thomson Reuters I/B/E/S.

At the same time as announcing itssecond-quarter results, staff were told in a memo that around 1,850 jobs will go – a result of changing customer behaviour and the advent of new digital technologies, according to the bank’s Chief Executive Bill Downe.

“We have taken this step to position the bank for what lies ahead – and to account for the structural changes underway in the financial services industry,” Downe said in the memo seen by Reuters.

Canada’s fourth biggest bank highlighted how the number of transactions done by customers online and via mobile banking apps had risen by five million in the past two years while branch transactions declined.

As well as having to adjust to changing customer behaviour, BMO is having to set aside more funds to cover bad loans to the energy second.

The bank said gross impaired loans to the oil and gas sector rose to $410 million from $162 million during the second quarter ended on April 30.

Provisions for credit losses increased to $201 million from $161 million, with loan loss provisions expected to rise further over the course of the year.

Bank of Montreal is a Toronto based financial services company. The Bank provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the United Kingdom, Europe, the Caribbean and Asia. It also serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides a suite of financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank, based in the United States Midwest with more than two million retail, small business and commercial  customers. More from Reuters »

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Bank of Montreal hikes dividend on back of profit climb

Bank of Montreal (TSE:BMO, Mkt cap 50.26B, P/E 12.37, Div/yield 0.84/4.30, EPS 6.32, Shares 642.58M) has posted better-than-expected fourth-quarter profit, prompting the lender to raise its dividend 2.4% to 84 cents a share, reports the Wall Street Journal.

Bank of Montreal profit dividend

Bank of Montreal posted better-than-expected fourth-quarter profit, prompting the lender to raise its dividend 2.4% to 84 cents a share,

Canada’s fourth-largest lender by assets becomes the second of Canada’s five biggest banks to exceed expectations for the August-to-October quarter, suggesting that lenders are successfully managing to offset lower oil prices and a sluggish economy.

Toronto-based BMO saw profit rise to C$1.21 billion ($906 million), or C$1.83 a share, in the three-month period, up from C$1.07 billion, or C$1.56 a share, a year earlier.

Adjusted to exclude extraordinary items, BMO said fourth-quarter earnings totaled C$1.90 a share, surpassing the Thomson Reuters mean estimate of C$1.74 a share.

“BMO posted a strong finish to the year, delivering record results,” said chief executive Bill Downe in a release, who highlighted how the bank’s personal and commercial banking and wealth management businesses in the U.S. generated adjusted earnings in excess of C$1 billion for the first time.

“With the acquisition of GE Capital Transportation Finance which closed today, we continue to strengthen our large, well-established North American commercial banking customer base,” he added.

As well as hiking up its quarterly dividend, the bank announced a share buyback program of up to 15 million of its common shares, subject to regulatory approval.

The WSJ notes that share buybacks typically raise a company’s stock prices because they reduce the number of outstanding shares on the market.

In addition to the profit rise, BMO’s provisions for credit losses – a reserve the bank uses to non-accrual loans – declined by C$42 million on a year-over-year basis to C$128 million.

Bank of Montreal is a Toronto based financial services company. The Bank provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the United Kingdom, Europe, the Caribbean and Asia. It also serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides a suite of financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank, based in the United States Midwest with more than two million retail, small business and commercial  customers. More from Reuters »

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Bank of Montreal to acquire General Electric Co’s transportation finance business

Bank of Montreal (TSE:BMO, Mkt cap 45.85B, P/E 11.29, Div/yield 0.82/4.60, EPS 6.32, Shares 642.32M) says its acquisition of GE Capital‘s transportation finance business in the United States represents a “unique opportunity” to increase its commercial customer base.

The purchase price of the largest financier to the commercial truck and trailer segment in North America is expected to total around $13 billion, analysts were informed on a conference call last week, the Financial Post reports.

Bank of Montrea General Electric Co's transportation finance business

Bank of Montreal to acquire General Electric Co’s transportation finance business

Bill Downe, chief executive of the bank said the assets it will be welcoming into the firm are well aligned with other business segments “in which BMO has proven capability”.

The deal should be wrapped up in the first quarter, bolstering BMO’s earnings and boosting the return on equity of Canada’s fourth-largest bank, Downe told analysts.

The transportation finance business in question is based in Irving, Texas, and operates out of 11 locations in the United States and four in Canada, boasting around 600 employees.

BMO executives anticipate that GE Capital’s management team will stay intact, but refused to discuss retention terms.

“We’re acquiring an excellent organization, one that is operated by the premier management team in the transportation finance industry,” said David Casper, chief executive of BMO Harris Bank.

Dan Clark, the transportation finance unit’s president and general manager, said his team welcomed the prospect of joining BMO.

In terms of the breakdown of the deal, the anticipated asset value on closing would be about $12.55 billion, with about $450 million in goodwill, according to an unnamed Toronto-based analyst. “They are buying hard assets,” he said.

BMO said the purchase price will be funded “primarily through existing balance sheet liquidity, additional deposits and wholesale funding.” No common equity will be issued.

Downe suggested there could be a “pause” in share buybacks as BMO digests the acquisition.

The Bank of Montreal or Banque de Montréal in French is commonly called BMO in either of Canada’s official languages. It is also known as BMO Financial Group. BMO is one of the Big Five banks in Canada. It is the fourth-largest bank in Canada by market capitalization and based on assets, and among the ten largest banks in North America.

Bank of Montreal provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the UK, Europe, the Caribbean and Asia. BMO serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Bank of Montreal profits at odds with turbulent Canadian economy

The slowing Canadian economy, coinciding with tumbling oil prices, appears to have done little to damage Bank of Montreal’s (TSE:BMO, Mkt cap 45.65B, P/E 11.24, Div/yield 0.82/4.62, EPS 6.32, Shares 642.32M) bottom line – which reported a third-quarter profit which exceeded analysts’ expectations, writes the Wall Street Journal.

Bank of Montreal profits turbulent Canadian economy

Bank of Montreal profits at odds with turbulent Canadian economy

The Toronto-based bank’s results show how its net earnings for the three-month period were driven up by higher contributions from personal and commercial banking along with wealth management.

It was largely believed that Canadian banks would bear the effects of five consecutive months of economic contraction due to the collapse in oil prices, but BMO’s net profit of 1.19 billion Canadian dollars ($897 million), or C$1.80 a share, for the three months ended July 31, 2015, suggests otherwise.

Thomson Reuters’ mean estimate was expecting earnings – excluding items – of C$1.73 a share, but BMO posted a significantly higher C$1.86 a share

BMO’s chief executive Bill Downe said Canada’s fourth-largest bank by assets was anticipating an upturn in performance in the second half of the year and the Q3 results are evidence that the optimism is well-founded.

However, analysts have detected a potential weakness in the bank’s US Oil & Gas portfolio, highlighting how BMO’s provision for credit losses –the money the set aside to cover bad loans – grew to C$160 million in the third quarter versus C$130 million a year earlier.

But Downe spoke of the positives instead: “These results were driven by good operating group performance, particularly in our combined Personal and Commercial Banking business which posted adjusted earnings of $792 million, up 13% from last year, and in Wealth Management where adjusted net income was up 10%. Credit provisions continued to be stable.”
The Bank of Montreal or Banque de Montréal in French is commonly called BMO in either of Canada’s official languages. It is also known as BMO Financial Group. BMO is one of the Big Five banks in Canada. It is the fourth-largest bank in Canada by market capitalization and based on assets, and among the ten largest banks in North America.

Bank of Montreal provides a range of retail banking, wealth management, and investment banking products and services. It conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the UK, Europe, the Caribbean and Asia. BMO serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance. BMO Capital Markets, its investment and corporate banking and trading products division, provides financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Bank of Montreal cuts prime lending rate, must also pay US$16 million in lawsuit

The Bank of Montreal (TSE:BMO, Mkt cap 48.00B, P/E 12.04, Div/yield 0.82/4.40, EPS 6.19, Shares 644.27M) has recently cut its Canadian dollar prime lending rate from 2.85% to 2.7%, following in the footsteps of the Toronto-Dominion Bank and the Royal Bank of Canada. In the wake of the move from these three banks, the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce also followed suit.

Bank of Montreal cuts prime lending rate pay US$16 million lawsuit

Bank of Montreal cuts prime lending rate, must also pay US$16 million in lawsuit

As the Financial Post reports, this decrease in prime lending rates from the Bank of Montreal and others means that consumers with variable rate mortgages will benefit. After these discounts, consumers with a floating-rate debt with the aforementioned banks will now be able to borrow at less than 2%, and five-year fixed-rate loans will also benefit from a rate of below 2.5%.

However, the Bank of Montreal has also made the headlines for another reason, as it was announced that the financial institution must pay US$16 million to bring a US lawsuit against it to a close. The lawsuit revolves around the claim that a lender bought by the bank caused two bankrupt Florida funds to lose money in the Thomas Petters Ponzi scheme.

Thomas Petters is facing a 50-year prison sentence for the US$3.65 billion Ponzi scheme, having been convicted for his part in 2009. He was found guilty of 20 charges including fraud and money laundering.

The bank issued a statement claiming that by agreeing to settle it did not accept liability. The original lawsuit was for US$23.6 billion. The two Florida funds that filed for bankruptcy are Marshall & Ilsley and Palm Beach Finance.

Bank of Montreal is a Canadian financial services company. It provides a range of retail banking, wealth management, and investment banking products and services. BMO conducts its business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets. The Bank operates primarily in Canada and the United States. It also has operations in the United Kingdom, Europe, the Caribbean and Asia. It also serves customers through its wealth management businesses: BMO Nesbitt Burns, BMO InvestorLine, BMO Private Banking, BMO Global Asset Management and BMO Insurance.

BMO Capital Markets, its investment and corporate banking and trading products division, provides financial products and services to North American and international clients. In the United States, BMO serves customers through BMO Harris Bank, based in the United States Midwest with more than two million retail, small business and commercial customers.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that the success of a particular investment is always relative to the price you paid. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.