BMO misses expectations on costs tied to Bank of the West

financialpost.com:

Bank of Montreal missed analysts’ earnings estimates as the company reported higher expenses related to the integration of Bank of the West and a drop in wealth-management income.

The Toronto-based lender earned $2.81 per share on an adjusted basis in the fiscal fourth quarter, it said in a statement Dec. 1, falling short of the $2.85 average estimate of analysts in a Bloomberg survey. Non-interest expenses totalled $5.7 billion, up from $4.78 billion a year earlier and missing analysts’ forecasts of $4.95 billion.

The Canadian bank acquired regional United States lender Bank of the West in February and converted its branches to the Bank of Montreal brand over Labour Day weekend. For the fourth quarter, Bank of Montreal had after-tax acquisition and integration costs of $433 million, up from $145 million a year earlier.

Bank of Montreal also said Friday it expects pretax cost savings of US$800 million annually from the acquisition, up from a previous estimate of US$670 million.

The lender’s corporate-services division reported a net loss of $757 million, compared with $2.25 billion of net income a year earlier. It said the loss was driven by higher expenses from the impact of Bank of the West and a $51-million charge related to the consolidation of Bank of Montreal real estate.

The company said adjusted net income from its wealth-management unit slumped 12 per cent to $263 million as the inclusion of Bank of the West and an increase in revenue from client-asset growth was more than offset by higher expenses.

Provisions for credit losses in the three months through October totalled $446 million, less than the $457.7 million analysts had forecast.

It was a “mixed quarter” for Bank of Montreal, Keefe, Bruyette & Woods