BANK OF MONTREAL $54 - Toronto symbol BMO

BANK OF MONTREAL $54 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 550.5 million; Market cap: $29.7 billion; Price-to-sales ratio: 1.9; Dividend yield: 5.2%; SI Rating: Above Average) is the fourth-largest Canadian bank, with total assets of $388.5 billion. The bank earned $1.8 billion in fiscal 2009, down 9.7% from $2.0 billion in the prior year. Earnings per share fell 18.1%, to $3.08 from $3.76, on more shares outstanding. Excluding writedowns and other unusual items, the bank would have earned $4.02 a share in fiscal 2009. Revenue rose 8.4%, to $11.1 billion from $10.2 billion. That’s mainly because low interest rates continue to push up demand for mortgages and other loans. Bank of Montreal’s loan-loss provisions rose at a much slower rate than those of the other big banks in 2009. The bank set aside $1.6 billion to cover bad loans, up 20.5% from $1.3 billion in the prior year. Bad loans account for 0.88% of its total loans, up from 0.76% a year earlier. Most of this increase (particularly loans related to the commercial real-estate and manufacturing industries) came from Harris Bank, its Chicago-based subsidiary. The bank gets 10% of its revenue from the U.S. Bank of Montreal continues to expand its retail banking operations, which now supply half of its earnings. This should push up its 2010 earnings to $4.80 a share. The stock trades at 11.3 times that figure. Bank of Montreal is a buy.