# BMO Bank of Montreal



## KaeJS (Sep 28, 2010)

BMO Bank of Montreal to be the first of the Big Six Canadian Banks to release Third Quarter earnings, August 23, 2011!

Let's all hope for a good report!

BMO and CIBC are the only banks that have not raised their dividends since the financial crisis. A surprise dividend increase would be amazing, although, I don't think it will happen till 2012.

Still trying to soak up as many shares as I can.


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## Cal (Jun 17, 2009)

A dividend increase would be a nice surprise, but not sure if that is in the making, after their US purchase the other day.


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## KaeJS (Sep 28, 2010)

BMO posts greater than expected earnings for Q3.

Q2 was $804M Net Income
Q3 was $843M Net Income

a 4.85% increase in Net Income from Q2 of $39,000,000.


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## Dmoney (Apr 28, 2011)

KaeJS said:


> BMO posts greater than expected earnings for Q3.
> 
> Q2 was $804M Net Income
> Q3 was $843M Net Income
> ...


I'd chalk it up to the hard work you've been putting in there .

Now if the rest of the banks follow suit we'll have a nice little rebound in the next two weeks.


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## KaeJS (Sep 28, 2010)

Dmoney said:


> I'd chalk it up to the hard work you've been putting in there .


If that were the case, I would think I deserve a raise.


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## gibor365 (Apr 1, 2011)

KaeJS said:


> If that were the case, I would think I deserve a raise.


Considering how much time you spend following stocks, you don't deserve it


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## KaeJS (Sep 28, 2010)

gibor said:


> Considering how much time you spend following stocks, you don't deserve it


Are you kidding?

I'm a future Nesbitt Burns employee.


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## Financial Cents (Jul 22, 2010)

KaeJS said:


> BMO Bank of Montreal to be the first of the Big Six Canadian Banks to release Third Quarter earnings, August 23, 2011!
> 
> Let's all hope for a good report!
> 
> ...



Payout ratios are still a tad high for any dividend increases. Need another year or so of solid earnings. Then again, I've been wrong before.


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## Abha (Jun 26, 2011)

Financial Cents said:


> Payout ratios are still a tad high for any dividend increases. Need another year or so of solid earnings. Then again, I've been wrong before.


I don't think any banks are going to raise dividends in the next 2 - 3 quarters unless we see a significant turnaround in the economy.


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## dogleg (Feb 5, 2010)

Kaejs: How about coming to my CIBC branch. There is a "investment advisor" here who always speaks about Chinese Walls within the corporation that supposedly protect her from becoming too familiar with her clients investment details thus allowing her to see the "big" picture. All very foolish and shady in my opinion.


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## ddkay (Nov 20, 2010)

BMO just launched their mobile transaction service with MC PayPass, any phone can have an NFC tag (sticker) attached to it and be swiped on PayPass readers to complete a transaction. It's free to use and the same PayPass rules apply, any purchase under $50 requires no swipe, PIN, or signature.


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## Argonaut (Dec 7, 2010)

I like some of the things BMO has been doing lately. Notably their aggressive foray into the ETF market. And their hiring of KaeJS of course. However, they haven't raised the dividend in four years. Of the banks, I would rank them #4. But that is not a slight in any way, the top four are all fairly close. CIBC is the obvious dog.


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## Eder (Feb 16, 2011)

BMO is only bank up year to date nic div's


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## KaeJS (Sep 28, 2010)

Argonaut said:


> And their hiring of KaeJS of course. However, they haven't raised the dividend in four years.




I think they will raise the dividend for Q1 of 2012. Only reason being they didn't raise it was because they acquired M&I bank, which cost them $4.1B, I think.

But it appears that M&I is turning over more than $1M in profit per day already since acquisition, and BMO hasnt even done anything with it yet.

Keep in mind, that before CIBC's share price fell to the floor, BMO had the highest yield. In fact, CIBC and BMO are tied. As of writing, BMO has a yield of 4.83%, CIBC has a yield of 4.82%

I know I work for BMO so I don't want to seem too biased, but I'm bullish on BMO for the future. It definitely still has that "backburner" view from a retail consumer's standpoint, but I think it will change over time and the company is growing quite nicely. Profit in Q2 was $804M, Profit in Q3 was $843M, Hopefully profit in Q4 is $888M.

With BMO, you have to be Bullish in a Conservative sense, though, because BMO is the most conservative bank out of the BIG 5. And that may very well be the reason it has been in business for almost 200 years. And that's something I have no problem with.


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## KaeJS (Sep 28, 2010)

And in regards to PayPass, it is a very, very neat feature.

I think Google and VISA are working together to create something called PayWave, which will be the VISA equivalent.


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## Dmoney (Apr 28, 2011)

Like you said BMO is likely the most stable of the Canadian banks, but don't expect a huge amount of price appreciation. I would definitely say the safest bet and the dividend is very nice, but I don't see any catalyst for solid growth. 

Might be the best to have right now though with the world falling apart.


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## KaeJS (Sep 28, 2010)

Yep. As long as the stock price is not depreciating over time, everything is good. I'm hoping to get some BMO stock cheap since the world is collapsing. 

$56 share price is a 5% yield and thats less than $2 away.


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## Eder (Feb 16, 2011)

The world is falling apart again? wtf!


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## KaeJS (Sep 28, 2010)

_"(Reuters) - The hunt for the missing $600 million in customer money at MF Global Holdings Ltd (MFGLQ.PK) may begin with Harris Bank, a Chicago-based lender that often holds client money for many large futures brokerage firms."_

Fudge.

Nothing like getting your hands a little dirty!


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## londoncalling (Sep 17, 2011)

KaeJS said:


> _"(Reuters) - The hunt for the missing $600 million in customer money at MF Global Holdings Ltd (MFGLQ.PK) may begin with Harris Bank, a Chicago-based lender that often holds client money for many large futures brokerage firms."_
> 
> Fudge.
> 
> Nothing like getting your hands a little dirty!


This news didn`t seem to affect the stock price. I checked with the other banks stocks over the last 5 day period and they seem pretty much the same. 

http://www.google.ca/finance?q=TSE:BMO


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## Jungle (Feb 17, 2010)

They better increase that dividend tomorrow.


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## doctrine (Sep 30, 2011)

I own a nice chunk of BMO. Only CIBC is giving me a higher yield, so the inevitable dividend increase will be fantastic, whether it is this quarter or next year, but in the meantime, enjoying the payments. I'm sure I get more in dividends than many people pay in bank fees to them


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## KaeJS (Sep 28, 2010)

I don't think they will increase the dividend next quarter.

But I say they pull an earnings of $900M. (hopefully)


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## Jungle (Feb 17, 2010)

Insider's report.


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## Square Root (Jan 30, 2010)

Pretty easy to forecast when dividends are set to rise. BMO has a policy of paying 40-50% of cash earnings as dividends. Earnings have to go up for dividends to go up. Think their payout ratio is still pretty close to 50%. 
Edit: Actually it's still over 50%: $.70/$1.27


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## KaeJS (Sep 28, 2010)

KaeJS said:


> I don't think they will increase the dividend next quarter.
> 
> But I say they pull an earnings of $900M. (hopefully)


*
"BMO profit climbs 21 per cent

Fourth-quarter earnings hit $897-million on higher revenue"*



I win. 

http://www.theglobeandmail.com/globe-investor/bmo-profit-climbs-21-per-cent/article2261466/


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## Square Root (Jan 30, 2010)

KaeJS said:


> *
> "BMO profit climbs 21 per cent
> 
> Fourth-quarter earnings hit $897-million on higher revenue"*
> ...


A little less than analysts expected though.


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## KaeJS (Sep 28, 2010)

Yeah. Figures.


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## Jungle (Feb 17, 2010)

They are now doing a 2% on dividend reinvestment. Not bad, I may add when then stock dies over the next couple days.


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## doctrine (Sep 30, 2011)

Yeah, that's a nice pullback. I added to BNS today, but I figure this news may last a few more weeks so I'll let the dust settle.


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## KaeJS (Sep 28, 2010)

Square Root said:


> Pretty easy to forecast when dividends are set to rise. BMO has a policy of paying 40-50% of cash earnings as dividends. Earnings have to go up for dividends to go up. Think their payout ratio is still pretty close to 50%.
> Edit: Actually it's still over 50%: $.70/$1.27


Dividend Payout Ratio was 53%.

"BMO Financial Group is the longest-running dividend-paying company in Canada. BMO’s policy is to pay out 45% to 55% of its earnings in dividends to shareholders over time."

At 53%, it may actually be a little while before the dividend is increased, unless BMO can pull off some serious earnings in 2012 (which is probably unlikely, unless US expansion continues to do increasingly well).


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## Square Root (Jan 30, 2010)

Yes you are correct. The payout ratio is 45-55% I think this is one of the highest in the industry and inconsistent with a 2% DRIP discount. TD is 35-45%.


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## Financial Cents (Jul 22, 2010)

I think a dividend increase will come in 2012. Stay positive!


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## scomac (Aug 22, 2009)

Square Root said:


> Yes you are correct. The payout ratio is 45-55% I think this is one of the highest in the industry and inconsistent with a 2% DRIP discount. TD is 35-45%.


Why does a DRiP discount have anything to do with the payout ratio?


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## KaeJS (Sep 28, 2010)

Financial Cents said:


> I think a dividend increase will come in 2012. Stay positive!


I think so, too. 

As their profit rises along with their new US acquisitions, the payout ratio percentage will decrease and the dividend will increase.


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## Square Root (Jan 30, 2010)

scomac said:


> Why does a DRiP discount have anything to do with the payout ratio?


When a company has a big discount on it's DRIP it is because they want you to take shares. This suggests they need or want more capital. If they need more capital they generally wouldn't have a high dividend payout ratio. So the two actions displayed by BMO are inconsistent.
TD's payout is between 35% and 45% with a 1% DRIP discount. This seems more consistent.


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## Square Root (Jan 30, 2010)

KaeJS said:


> I think so, too.
> 
> As their profit rises along with their new US acquisitions, the payout ratio percentage will decrease and the dividend will increase.


Let's hope so. Earnings per share need to go up by at least 10% for a dividend increase I think. .....Maybe?


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## doctrine (Sep 30, 2011)

And 10% is entirely possible within a year for a Cdn bank. So, they are within the window as long as earnings meet expectations.


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## scomac (Aug 22, 2009)

Square Root said:


> When a company has a big discount on it's DRIP it is because they want you to take shares. This suggests they need or want more capital. If they need more capital they generally wouldn't have a high dividend payout ratio. So the two actions displayed by BMO are inconsistent.
> TD's payout is between 35% and 45% with a 1% DRIP discount. This seems more consistent.


While I don't disagree with your reasoning, I still don't necessarily think that a DRiP discount and a high payout ratio are at odds with one another. It's pretty clear that BMO would like investors to take shares rather than cash. It doesn't "cost" them anything as the shares can be issued out of treasury. What's your other alternative? Cut the dividend?!


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## doctrine (Sep 30, 2011)

BNS, CIBC and now BMO have 2% DRIP discounts. TD has 1% and RY and NA has none. I don't think you can really draw any conclusions here, you're talking 2% of a distribution that is already only 3-5% of the share price.


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## Square Root (Jan 30, 2010)

The alternative of a DRIP discount is to raise equity and pay the 3-4% sales commission that goes with it. Just read a report this AM that highlighted the capital needs of most of the banks in order to meet the new Basle iii rules that come into force for Q1 2013. So if you need capital (and most of the banks do) DRIP discounts are the cheapest way to go. if you need capital you generally don't want to have a high dividend payout ratio. The issue is you also don't want to play around with the payout ratio too often as that confuses and irritates investors. BMO has always had a high payout ratio as they were historically a low growth bank. This may have changed with their US purchase stategy. In my view their payout ratio may be too high but they probably don't want to adjust down at this time. Issuing shares does cost shareholders if the capital isn't needed, even if they are issued from treasury. A 2% discount may not seem like much but it would add up to around $40million a year for the 3 largest banks.
In my working career I dealt with these issues at the board level every quarter so I have a pretty good understanding of the issues that come into play. Every quarter I had to justify our DRIP stategy to the board given our capital plan.


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## scomac (Aug 22, 2009)

So what your really saying is that BMO is a victim of a dividend policy that was conceived prior to the credit crisis and the advent of new regulatory capital requirements. if they had a do over, it's likely that they would have chosen to keep the target payout ratio lower inlight of the new rules. Cutting the dividend is suicide especially if the intention is to raise capital going forward. Just look at the premium that Manulife is forced to pay.

The best that they could hope for is that earnings growth will redress the payout ratio issue and institute a DRiP discount to encourage shareholders to take shares instead of cash. While this maybe dilutive to shareholders, it doesn't cost the business operations and allows them to gradually add to capital via retained earnings.


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## Cal (Jun 17, 2009)

Thx for the input SR.


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## Square Root (Jan 30, 2010)

scomac said:


> So what your really saying is that BMO is a victim of a dividend policy that was conceived prior to the credit crisis and the advent of new regulatory capital requirements. if they had a do over, it's likely that they would have chosen to keep the target payout ratio lower inlight of the new rules. Cutting the dividend is suicide especially if the intention is to raise capital going forward. Just look at the premium that Manulife is forced to pay.
> 
> The best that they could hope for is that earnings growth will redress the payout ratio issue and institute a DRiP discount to encourage shareholders to take shares instead of cash. While this maybe dilutive to shareholders, it doesn't cost the business operations and allows them to gradually add to capital via retained earnings.


Yes. I think you have described it well. As it turns put BMO isn't in the most need of capital(BNS is) and RY and CM are in very good shape. BMO would not be the obvious choice if an investor was looking for dividend increase. This would probably be TD. Keep in mind that dividends are paid out of earnings so ultimately it's earnings growth that drives dividend growth. Capital requirements are important but the banks have generally tried to keep dividends growing as long as earnings do as well.


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## londoncalling (Sep 17, 2011)

*time to add?*

I currently only own one of the big 5. (RY) I know the banks(as well as most sectors) have had a nice run. I would like to add BMO to my dividend portfolio. Does anybody here see a reason not to buy this stock before the next dividend? It is giving a decent yield in the 4.8% range. Any thoughts of a pullback in the coming weeks. As mentioned in other parts of the forum it is getting harder to find places to deploy money. I have my RRSP money for this year ready to deploy but am short on choices. I have 3 options (BMO,BCE and ECA) and am concerned that I may be a little late on 2 of the 3. I feel that I most likely have till fall to get into ECA. If one was to use yield alone BCE would be my first choice. However, BCE has recently raised its dividend and I don't think BMO will be raising theirs until at least the end of this year. ECA offers the lowest yield and will more than likely be in the dog house for some time. Had I had the money available to deploy when ECA was at 19 or BCE was at 39 I would have jumped on both. Thoughts?


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## KaeJS (Sep 28, 2010)

I own all 3. 

Why not buy all of them?


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## doctrine (Sep 30, 2011)

Like BMO and BCE, not so much ECA because of nat gas price.


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## gibor365 (Apr 1, 2011)

I own all 5 (one of them CM via ESP). Every bank has its pros and cons.

I was even thinking to initiate position in NA, they are the most agressive lately in rising dividends and their payout just 43%


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## londoncalling (Sep 17, 2011)

KaeJS said:


> I own all 3.
> 
> Why not buy all of them?


I plan to at some point in time. This is more of an issue of which to add when. Since these purchases will be funded with new money coming in over the next 6 months I cannot buy them all at once. Instead I can buy part positions with each contribution. I guess I could hedge and try to grab both BCE and BMO right away and maybe pick up ECA later. I always like to buy on dips but I am not too sure we'll get a pullback in the short term. I guess worse case scenario the market takes off and I am left with a pile of cash and have to restart my analysis.

doctrine: "Like BMO and BCE, not so much ECA because of nat gas price."

I like BMO and BCE as well. The reason I am interested in ECA is because of nat gas price. This one would be more of a value play for the long term. Which is why I think I have some time on this one.

gibor: "I own all 5 (one of them CM via ESP). Every bank has its pros and cons.

I was even thinking to initiate position in NA, they are the most agressive lately in rising dividends and their payout just 43%"

I hope to own all 5 eventually as the money comes available to me. I would be open to NA or CWB. I read a report some time back that showed a correlation of long term performance of bank stocks with yield and p/e. In the longer term the higher yielders tended to have a better price appreciation. Most of this is probably attributed to the cyclicality of the big 5. It seems that over time they each get a turn in the spotlight which raises price and lowers yield. 

What I meant with my initial question was not so much about what to add but if it was the time to add to these. Probably with such a long horizon it may not much matter as long as the prices and yield are better than or are at historic averages. However, I like to play this game to see if I can spot price trends. 

Ever since the CMF market sentiment thread started I just followed what it said. I seem to be lost since the March one hasn't been posted yet. 

Thanks for your responses guys.

Cheers.


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## gibor365 (Apr 1, 2011)

londoncalling, I also noticed that if 1 or 2 from big 5 lagging in specific Q/year, it will catch up in another Q/Year.
So you just can check which bank underperformed last 3 or 6 months and invest there.
Also you can check which bank is yielding currently more than on average.

I like BCE , but not less I like RCI, I have about equal allocation for both. BCE has a better current yield, RCI has much higher div growth every year (always in double digits) and better payout ratio.


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## londoncalling (Sep 17, 2011)

Earnings report tomorrow. If they fail to meet expectations I will definitely be adding. Who thinks tomorrow's news will be positive, negative, or neutral?


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## KaeJS (Sep 28, 2010)

Neutral is my guess.


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## gibor365 (Apr 1, 2011)

londoncalling said:


> Earnings report tomorrow. If they fail to meet expectations I will definitely be adding. Who thinks tomorrow's news will be positive, negative, or neutral?


Mixed


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## Jungle (Feb 17, 2010)

HSBC was good so far. Maybe the trend will follow.


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## gibor365 (Apr 1, 2011)

Last 3 months and last 6 months BMO really was underperforming other "big 5"... so it should catch up for next Q or two ....just MHO


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## londoncalling (Sep 17, 2011)

that's what I'm afraid of. I am hoping one more quarter poor enough to allow me an entry. If the news is good tomorrow. I'lll have to let this one slip away for a bit. If the news is ok or not so good I'll be pulling the trigger on a long term hold. Guess I'll know soon enough.


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## gibor365 (Apr 1, 2011)

londoncalling said:


> that's what I'm afraid of. I am hoping one more quarter poor enough to allow me an entry. If the news is good tomorrow. I'lll have to let this one slip away for a bit. If the news is ok or not so good I'll be pulling the trigger on a long term hold. Guess I'll know soon enough.


With this approach you should've buy 50% today at close and maybe 50% tomorrow if it drops...


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## Oldroe (Sep 18, 2009)

Oh London timing the market


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## Uranium101 (Nov 18, 2011)

BMO result out, beating expectation?


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## humble_pie (Jun 7, 2009)

globe & mail reports bmo profit hits 1.1 billion.

but look. Falling profits at its canadian retail banking & capital markets operations.


Grant Robertson - The Globe and Mail

_Profit at Bank of Montreal rose 34 per cent in the first quarter, as lower credit losses and the addition of Midwestern U.S. bank Marshall & Ilsley Corp. made up for falling profits at its Canadian retail banking and capital markets operations. 

BMO, Canada’s fourth-largest bank by assets made $1.11-billion, or $1.63 a share in the quarter. That compared to profit of $825-million, or $1.34 a share, during the same period last year.

Revenue rose 18.7 per cent to $4.12-billion.

The results beat the expectations of analysts, who were predicting profit of $1.36 a share on average. Adjusted for one-time items, BMO made $1.42 a share. _


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## londoncalling (Sep 17, 2011)

Oldroe said:


> Oh London timing the market


 Yes I have heard that it is impossible to time the market. However, you can choose your entry points if you don't mind having a few get away on you from time to time. The irony is that I am a long term dividend investor so I probably shouldn't quibble over an entry point. However, for me part of this is also trying to better understand the market how it ebbs and flows. Besides, I am not particularily anxious to get into the market as their seems to be a lot of money on the sidelines this RRSP season. On a side note anybody find it interesting that the dow can't break 13?

Analysts are so far providing mixed reviews. Regardless, I have till May to get in on this one if I want to get the dividend.


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## Jungle (Feb 17, 2010)

I knew I should have added when it was $54. I just need a few more shares to drip.

And for gosh sakes I owned this at $30 in 08 but sold it... ugh the joys of learning young.


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## Toronto.gal (Jan 8, 2010)

Jungle said:


> And for gosh sakes I owned this at $30 in 08 but sold it... ugh the joys of learning young.


That is hard to believe, that you sold that is, and youth is no excuse [unless you're KaeJS's age]. 

I first bought in Nov.09 for $50.01 & sent my shares to Computershare, so out of sight, out of mind.

I was going to predict 'positive' yesterday just to come in between the neutrals and mixes here.


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## doctrine (Sep 30, 2011)

Have to look closer at the numbers but hopefully BMO is reaffirming/closing in on a structural < 50% payout.. that would imply a dividend increase will be coming, but at least you know their nice 4.7-4.8% will be sustained.


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## Oldroe (Sep 18, 2009)

Ah London I just think it's funny everything we look at is market is timing. PE to high/low, 200 day moving avg. 50 day, beta, eps everything is market timing. 

I disagree we can time the market just not perfect.


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## KaeJS (Sep 28, 2010)

doctrine said:


> Have to look closer at the numbers but hopefully BMO is reaffirming/closing in on a structural < 50% payout.. that would imply a dividend increase will be coming, but at least you know their nice 4.7-4.8% will be sustained.


Not gonna happen for another 9 months.

Bill Downe even said (in more or less words) in a recent interview with BNN that there probably won't be a dividend increase until 2013.


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## gibor365 (Apr 1, 2011)

I'm just wondering which one from 5 big will first increase dividends in 2012?


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## Argonaut (Dec 7, 2010)

TD has already increased to 72 cents/share. On a twice per year increase schedule like another quality "T" Canadian stock.. Telus.


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## Square Root (Jan 30, 2010)

Argonaut said:


> TD has already increased to 72 cents/share. On a twice per year increase schedule like another quality "T" Canadian stock.. Telus.


Td is at .68 and I would hope they raise by at least .02 tomorrow.


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## Argonaut (Dec 7, 2010)

Google Finance says 72 cents but the official website says declaration tomorrow, so you're right. But it will be raised I assume.


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## Square Root (Jan 30, 2010)

Argonaut said:


> Google Finance says 72 cents but the official website says declaration tomorrow, so you're right. But it will be raised I assume.


Yes. They raised to .72 this AM.


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## Argonaut (Dec 7, 2010)

Google finance had insider info.. I work for the company and they knew before me, haha.


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## humble_pie (Jun 7, 2009)

argo i've always thought you were too good to be true.

but please don't out yourself. Your posts here as argo are much too valuable.


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## Mall Guy (Sep 14, 2011)

Would you buy BMO at these levels ? I have a good size position in BNS and RY, and a very small toehold in BMO. Recently paid down the max I could on my mortgage with this year's bonus, but still have $$$ to invest . . . long term outlook in an non-registered account. . . nice dividend


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## londoncalling (Sep 17, 2011)

I did this week. I needed more exposure to financials. I am holding this long so the price wasn't as critical for me. I have held RY since Nov as well. I can wait for a dividend increase on this one as I am getting a decent yield as you mentioned. I also can afford to average down if need be as I have some money reserved for financials on the next downswing. I guess it comes down to a few things for you though. Mortgage rate vs. yield rate, asset allocation, risk tolerance, penalty for mortgage payment and desire to payoff debt. Paying down the mortgage will give you a guaranteed rate of return. with BMO it is less certain.

Edit: Sorry I misread the part about the mortgage payment maxed. Disregard that information. I assume you have maxed your tfsa for this year if you are going non reg

Cheers


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## Mall Guy (Sep 14, 2011)

londoncalling said:


> Edit: Sorry I misread the part about the mortgage payment maxed. Disregard that information. I assume you have maxed your tfsa for this year if you are going non reg
> 
> Cheers


Thanks, yes, have maxed all registered accounts (RRSP, RESP, and TFSA)


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## gibor365 (Apr 1, 2011)

As per seasonality theory:


> the best return over the maximum number of positive periods reveals a buy date of March 12 and a sell date of April 2, producing a total return over the same 10-year range of 75.63% with positive results in 10 of those periods.


So, we'll how it does this year


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## OptsyEagle (Nov 29, 2009)

gibor said:


> the best return over the maximum number of positive periods reveals a buy date of March 12 and a sell date of April 2, producing a total return over the same 10-year range of 75.63% with positive results in 10 of those periods.


I would love to see the results if you took out 2003 and 2009. March of those years was the co-incidental end to the last two huge bear markets that we had.


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## KaeJS (Sep 28, 2010)

How can you NOT buy this?










P/E of 9.
Increasing Revenues
$540B in Assets
5.2% Yield
Dividend Increase within the near future
Conservative Company

People are buying RIMM and ZYNGA... but not BMO?


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## Financial Cents (Jul 22, 2010)

Smart man. I've got BMO DRIPping. More stock, cheaper stock now, on autopilot. I have no idea why people are buying RIM and not BMO or other companies. Check out POW. P/E = 9.60. Buying more this month. Payout ratio under 50%. 'Nuff said.


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## Jungle (Feb 17, 2010)

I doubled our postion of BMO last week, I can now drip. I was not happy about no dividend increase in 5 years, but P/E is great, I want DRIP and high dividend. I will just have to wait for dividend increase. It many only be 2-3% anyway, so long as there is something to keep with inflation.


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## Spudd (Oct 11, 2011)

LOL, Jungle, that's exactly my plan for today. Right now I have only half a share's worth every time they pay dividends, so I'm going to double up today.


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## humble_pie (Jun 7, 2009)

add sales of jan 58 calls plus jan 52 puts in bmo & right there is a current yield of $6 over just 7 months, or north of 11% over 7 months. Including 2 dividends + option proceeds but not including any possible capital gain in the stock itself.

bonus: everything is favourably taxed.

there are 2 principal ways to beat an index imho. One is to trade options around good stocks. The other is to successfully time the market. The former is much easier, imho.


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## Sampson (Apr 3, 2009)

Options trading is very tempting. Pie, do you always watch the same stocks, or will you scan/sort through based only on the options pricing?
I would expect that there is as much efficiency surrounding options as their is with plain stock pricing.

Are your collars naked or covered?


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## HaroldCrump (Jun 10, 2009)

Sampson said:


> Are your collars naked or covered?


This is a respectable financial forum, please ;o)


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## humble_pie (Jun 7, 2009)

skinny dipping is fun


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## humble_pie (Jun 7, 2009)

sampson i myself don't do collars. The bmo strategy i was describing is a strangle. In a collar, the direction of the put is reversed, ie it gets bought instead of sold. Collar risk is far less than strangle risk. In fact it's non-existent.

i always watch the same stocks. Elsewhere people are talking about the time spent on investment decisions. I economize on time by owning the same stocks & relentlessly selling their option strategies year in, year out.

i myself would never approach from the options first, although others do. First i want to know about a company, do i like the company, its longterm. Next, it has to have good liquidity for both stock & options. It's always a plus for a canadian stock when its more liquid option market turns out to be US markets, because these are easier to trade.

i do sell & maintain naked short option positions to a limited extent.

in this forum, the alltime expert on collars is lephturn. Pension & retirement funds are big on em, too, because collars provide risk-free income that's considerably above T-bill returns.


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## praire_guy (Sep 8, 2011)

Humble, where do you suggest I start for,learning about options. 

I am intrigued and would like to read up on them.


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## Lephturn (Aug 31, 2009)

Don't believe humble_pie - I like collars and use them, but he's the expert.

I have been learning about options for the last few years.

My starting point was the OIC's great free education site. That's the Options Industry Council - run by the exchanges.
http://www.optionseducation.org/en.html Lots of great basic education there and they have a simulator you can practice on.

I would also suggest you do some reading - I would start with Options as a Strategic Investment by Lawrence G. McMillan 

Then move on to Option Volatility & Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg

humble_pie will let me know if I'm missing something key or leading you astray.

There is also a ton of great information and education available free from one of the brokers I use - OptionsXpress. https://online.optionsxpress.ca There are tons of free education resources there you can use for free - they also have a virtual trading platform you can practice with.


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## humble_pie (Jun 7, 2009)

morning guys & so sorry praire that i didn't see your message.

could i add that the montreal exchange has a 50-page pdf covering everything from what-is-a-call to black scholes & beyond, available for free on its website. I usually refer to this gem as The Best Little Short Book on Options. Here is a link:

http://m-x.ca/educ_guides_strat_en.php

scroll down the wide left column to equity derivatives, click equity options reference manual.

but a caution, if i may. Brief though the book is, it does contain advanced theory. Recently one option newcomer from cmf forum pmm'd me to say he was in despair. He'd printed & studied the entire 50 pages & he was overwhelmed.

i realized the problem, because there are parts of this document i don't understand myself.

only the first 13 pages are necessary for an option newcomer. Up to "Advanced Concepts." These will be enuf to actually start trading, if you wish.

while you are on the montreal exchange website, won't you please take a moment to navigate around & see all the resources for option traders. There are first-rate webinars, for example, including some for beginners. There's also an option blog with guru richard croft.

as lephturn says, there are incredibly many free option teaching websites. I also like Tradeking, the US option broker, for its education section with some famous teachers ...

and the best teacher of all is experience.


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## Dopplegangerr (Sep 3, 2011)

humble_pie said:


> but a caution, if i may. Brief though the book is, it does contain advanced theory. Recently one option newcomer from cmf forum pmm'd me to say he was in despair. He'd printed & studied the entire 50 pages & he was overwhelmed.


That would be me 

It is a great book though, heaps to be learnt from it. I have read it cover to cover twice (before getting the warning from Humble) and then the first dozen pages an additional 4 or 5 times. I also made little q-cards to help me remember some of the terms and test my self on them, I know, kinda dorky, but it helped me remember. 
I also started doing some of the online courses at http://www.optionseducation.org and have found them very beneficial.
I think you will find options fascinating (as I do) 
I will slowly begin option trading after my wedding in two weeks (never been so excited in my life for anything) when things have calmed down a little.

Best of luck


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## humble_pie (Jun 7, 2009)

Dopplegangerr said:


> ... after my wedding in two weeks (never been so excited in my life for anything) when things have calmed down a little


DG i too am getting excited for your wedding !

may the day dawn sunny & bright
but not too warm
may every happy thing befall you both


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## Dopplegangerr (Sep 3, 2011)

Thank you very much Humble. Maybe I will post a photo of us together from our wedding, or is that not appropriate on a forum?


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## HaroldCrump (Jun 10, 2009)

Dopplegangerr said:


> Thank you very much Humble. Maybe I will post a photo of us together from our wedding, or is that not appropriate on a forum?


You should most certainly post the pictures.
There are a couple of threads under the General section that are appropriate for that, such as the _Introduce Yourself_ thread or the coffee lounge thread.

My picture is already next to my posts ;o)


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## Toronto.gal (Jan 8, 2010)

HaroldCrump said:


> My picture is already next to my posts ;o)


Mine as well. :biggrin:

*"This is a respectable financial forum, please ;o)"* - oh HC, you have such a dirty little mind. :highly_amused:

Sure, would love to see the wedding pics.!


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## Dopplegangerr (Sep 3, 2011)

HaroldCrump said:


> My picture is already next to my posts ;o)


Yea I like your picture. Its taken out side the financial center in Frankfurt if I am not mistaken. I love Frankfurt such a beautiful city

I will put up a nice picture of us. There should be many good ones with the amount I am spending on the photographer 
Anyways back to BMO, I dont need to high jack this thread


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## ddkay (Nov 20, 2010)

Frankfurt may have something similar but I'm pretty confident Harold's photo is Wall Street lol


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## Dopplegangerr (Sep 3, 2011)

Your right, the Bull's head in Frankfurt is higher up.


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## humble_pie (Jun 7, 2009)

high jack ? in terms of interest, boring old bmo compared to a starry-eyed june wedding is a molehill beside mount everest ... 

re photos, i find myself thinking maybe not full frontals.

if i were whimsy editor at a fashmag, i might ask a friend of the couple to take a couple extra non-professional pix that don't actually show the bride or groom's face. A thin sliver - an ear plus a millimetre of brow & cheek taken from a 3/4 or 7/8 rear angle - would be fine. An arrangement that would be easy to capture when the couple are standing up, say, chatting with guests at the reception (friend should remember to clear people standing between himself & the bridal couple, so that photo can show off the bride's dress) ...

or perhaps the bridal couple alone, holding hands, backs to camera, standing in front of the reception table. Flowers massed with them. 

later, this one might even become DG's avatar ...


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## Dopplegangerr (Sep 3, 2011)

Haha thats a lot to remember there Humble. I might just pick one that I think is nice. I dont care if people see my face. The pictures are going to be all over facebook within hours of the wedding anyways


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## praire_guy (Sep 8, 2011)

Thanks humble. Looks like I've got lots of reading to do.


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## Toronto.gal (Jan 8, 2010)

Dopplegangerr said:


> 1. I also made little q-cards to help me remember some of the terms and test my self on them, I know, kinda dorky, but it helped me remember.
> 2. I think you will find options fascinating (as I do).


1. I always do that & IMO, nothing dorky about it.
2. Definitely.

I was pretty overwhelmed at first and still am, but don't let the sexy strategies that Sampson/hp were talking about excite you too much [as they did Harold]. :biggrin: 

Let me recommend other good/simple books for a newbie, 

*- Understanding Options* by: Michael Sincere [221 pages], and:

*- Uncommon Stock Market Strategies* by: David G. Funk [148 pages]....after the wedding and honeymoon ofc.

Back on topic: BMO is down.


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## al42 (Mar 5, 2011)

*Bmo*

Wow...Blow out qtr. and Dividend Increase.

http://finance.yahoo.com/news/bmo-financial-group-reports-strong-104517844.html


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## Dopplegangerr (Sep 3, 2011)

Here is the thread thats been going for BMO.


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## Jungle (Feb 17, 2010)

Jungle said:


> I doubled our postion of BMO last week, I can now drip. I was not happy about no dividend increase in 5 years, but P/E is great, I want DRIP and high dividend. I will just have to wait for dividend increase. It many only be 2-3% anyway, so long as there is something to keep with inflation.


Well at least we got something to make up for 5 years of no increase.


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## asdes (Oct 25, 2012)

Hi guys, 
I had 2 questions concerning BMO. 
1) Is the majority of the increase in number of outstanding shares due to their DRIP policy?
2) Do you think that this dilution will have an important consequence on the stock price and dividend yield in the future (eg. few years)?
Thanks for your input.


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## newfoundlander61 (Feb 6, 2011)

"BMO among Select U.S. Banks to Offer Digital Accounts Managed Via Google Pay"

BMO among Select U.S. Banks to Offer Digital Accounts Managed Via Google Pay


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## jacko72 (Aug 4, 2020)

It is within a nice trend so sure looks good.









BMO.TO Stock Price Forecast. Should You Buy BMO.TO?


Check if BMO.TO Stock has a Buy or Sell Evaluation. BMO.TO Stock Price (TSX), Forecast, Predictions, Stock Analysis and Bank of Montreal News.




stockinvest.us


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## gardner (Feb 13, 2014)

I'm curious what folks think about the Bank of the West deal and the share offering. I confess to not realising this was in the works, despite being a BMO shareholder. I guess they've bought Bank of the West directly off BNP Paribas. Any thoughts on whether the $16b price tag is reasonable?


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## KaeJS (Sep 28, 2010)

I like the deal.
I think it will pay off.
I'm actually annoyed the share price didn't sell off a little, though. I wanted to maybe pick up some more.


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## doctrine (Sep 30, 2011)

I like the deal. RBC and CIBC have both done well expanding in US recently. Those banks also paid a lot for their acquisitions (not as much as BMO), but they grew those businesses enough that it is paying off. But it's definitely more risky. They will be chewing on it for a few years.


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## KaeJS (Sep 28, 2010)

I worked for BMO when they took over Chicago Harris and it is now BMO Harris.

BMO tends to move slow, but they do know how to make acquisitions and turn them into profitable ventures. I think doctrine is right, it will take a little time, but it will work in their favour.

I also think it costs a premium right now to acquire due to rising rates. Who would want to sell on the low when good times are coming for financials?


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## Gumball (Dec 22, 2011)

anyone else not too happy about this rather large share dilution? 









Bank of Montreal to raise $3.15 billion in offering of shares - BNN Bloomberg


Bank of Montreal says it will raise about $3.15 billion in a public offering and a concurrent private placement of shares after the federal banking regulator announced plans to increase the amount of capital major banks need to have on hand.




www.bnnbloomberg.ca


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## AlwaysMissingTheBoat (8 mo ago)

Gumball said:


> anyone else not too happy about this rather large share dilution?
> 
> 
> 
> ...


I don't hold any BMO, but I was taken aback by such a drastic move. It's having a knock-on effect on the other banks, including TD, which I do own and it has outperformed, but it cannot escape the jitters that the BMO share offering is causing.


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## AltaRed (Jun 8, 2009)

BMO made it clear when they made the US bank acquisition offer that they would be going to the equity market for some of the funds. None of that is news. Half of that $3.15B is private placement so it is only the rest of it that is underwriter 'bought' deal. I doubt whether this dilutive in nature with: 1) $83B in market cap and 678M shares outstanding, and 2) some of this capital being Tier 1 capital on the books to meet OSFI requirements.

The price of $118.60 may reflect the fact that BMO shares dipped to about $115 in Oct 2022 for a very brief day or two. Bought deals do NOT like prices above any recent lows. Timing of this equity issue may not have been ideal for BMO but the increased capital requirements may have triggered timing OR with risk of recession, bank share prices could continue to slide. IOW, good reasons for why now, and why the price. The price is merely a blip that will be quickly forgotten about.


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## doctrine (Sep 30, 2011)

AltaRed said:


> BMO made it clear when they made the US bank acquisition offer that they would be going to the equity market for some of the funds. None of that is news. Half of that $3.15B is private placement so it is only the rest of it that is underwriter 'bought' deal. I doubt whether this dilutive in nature with: 1) $83B in market cap and 678M shares outstanding, and 2) some of this capital being Tier 1 capital on the books to meet OSFI requirements.


While that is true, they already issued $3.1B is shares earlier this year for the acquisition, and this new issue is in addition to that. At least they issued ewer shares as it was for $149 each in March, as opposed to $118.60 now. So they have gone to the market for about 8% of their current market cap. They had no choice but no doubt it is going to weigh on their per share metrics for the next several years. Those shares are pretty much solely to sit as Tier 1 capital and will not be invested anywhere.


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## AlwaysMissingTheBoat (8 mo ago)

From the Canadian Press:

TORONTO -- Bank of Montreal says it will raise about $3.15 billion in a public offering and a concurrent private placement of shares after the federal banking regulator announced plans to increase the amount of capital major banks need to have on hand.

The Office of the Superintendent for Financial Institutions said last week that the domestic stability buffer will go up by half a percentage point to three per cent as of Feb. 1, 2023. It also increased the possible range of future adjustments to between zero and four per cent, rather than the previous top end of 2.5 per cent.


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## AltaRed (Jun 8, 2009)

Which is what the prior posts are talking about.....


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## AltaRed (Jun 8, 2009)

doctrine said:


> While that is true, they already issued $3.1B is shares earlier this year for the acquisition, and this new issue is in addition to that. At least they issued ewer shares as it was for $149 each in March, as opposed to $118.60 now. So they have gone to the market for about 8% of their current market cap. They had no choice but no doubt it is going to weigh on their per share metrics for the next several years. Those shares are pretty much solely to sit as Tier 1 capital and will not be invested anywhere.


Ah yes, I missed that March offering which will be supported by acquisition cash flow/earnings, etc. They clearly did not have enough excess capital on the books to meet the new OFSI requirement. I think RBC was going to fund the HSBC acquisition with excess capital but they too may have to go to the markets this summer? fall? with OSFI throwing this curve ball at the banks.


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## OptsyEagle (Nov 29, 2009)

It's not like the OFSI announcement was pre-announced. It was a surprise and hence why most of the banks went down today. They are all regulated under the same capital requirements.

When BMO made the last acquisition and then issued equity last March, at a great price by the way, they had no idea that in Feb of 2023 they would need more capital. So I imagine when they were planning their funding for the acquisition, instead of issuing more equity in March then they did, causing pricing problems with that larger amount, they probably figured they would deal with the acquisition with a combination of equity issuance AND a small reduction in their capital ratio. They probably figured that the reduction in their capital ratio would be shored back up by the next few profitable quarters or years, but Whammo, the OFSI regulation gets imposed and they probably found themselves a little on the low side now and presto, $3.15bill later and now they are not.

Nothing wrong with this business plan and the point above about this capital sitting in the bank is important in that the bank still has it. It's not like it gets spent like equity issues in other industries. It does cause some short term dilution but that does not look overly material to me, and all banks will have this capital issue. They will probably just raise their fees and get us to pay for it, like they usually do. Someone has to pay for it and it will unlikely be the banks.


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## Covariance (Oct 20, 2020)

Equity = Assets - Liabilities

Selling shares increases assets (cash) which correspondingly increases equity value, less for issuance cost. All else being equal.

Dividends are a reduction in cash (assets), retained earnings and reduce equity.

Food for thought.


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## londoncalling (Sep 17, 2011)

I have no concern with the increase in capital but when shares are issued at a large discount there is an opportunity for downward pressure to take place. I am not concerned with the current issue as I think the price drop will be temporary. If cash is being set aside for PCL purposes and not needed it will eventually be used to increase share holder value/return. However, investors should to pay attention to dilution. More attention needs to be given to share issues and buybacks such as when and how they occur. Total earnings are not important. Real EPS matters.


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