BMO Announces Branch Optimization to Accelerate Future Growth

Rhea-AI Summary

BMO (TSX; NYSE: BMO) announced a U.S. branch optimization on Oct 16, 2025: it will sell 138 branches to First Citizens Bank and plans to open 150 new branches over five years, focused on densifying in core U.S. markets, notably California. First Citizens will assume ~$5.7B in deposits and buy ~$1.1B in loans; BMO expects a net deposit premium of ~5%. BMO will record a goodwill charge of ~US$75M and a tax expense of ~US$85M in Q4 2025. Transaction subject to regulatory approvals and expected to close mid-2026.

Positive

• Sale removes 138 lower-density branches
• Planned 150 new branches over five years
• First Citizens assumes approximately $5.7B deposits
• Loan purchase of approximately $1.1B

Negative

• Goodwill charge of approximately US$75M in Q4 2025
• Expected tax expense of approximately US$85M on closing
• Branch disposals concentrated across multiple U.S. states

Insights

U.S. branch strategy analyst

BMO trims peripheral U.S. footprint and plans concentrated reinvestment, targeting scale in higher-opportunity U.S. markets.

BMO will sell 138 branches to First Citizens, transferring approximately $5.7 billion in deposits and purchasing about $1.1 billion of loans, with a reported net deposit premium of approximately 5%.

This frees capital and management bandwidth to open 150 new branches over the next five years, with a California-centric focus, aiming to densify in markets where BMO sees opportunity to build integrated Personal, Business, Commercial and Wealth services.

Watch for regulatory approval timing and the mid-2026 close, plus execution on the new-branch build-out over five years; branch densification outcomes and customer transition metrics will determine whether this reallocation improves returns.

Financial reporting and capital impact expert

Transaction has defined near-term accounting impacts but limited CET1 effect per disclosure.

The bank expects to record a goodwill-related charge of approximately US$75 million (CAD< money>$104 million) in Q4 2025 and a tax expense of approximately US$85 million (CAD< money>$117 million) on closing; amounts are subject to closing adjustments and FX.

The buyer will assume ~$5.7 billion of deposits and purchase ~$1.1 billion of loans; the company states the impact on the CET1 ratio is "not expected to be material," and the items will be reported in Corporate Services as an adjusting item.

Monitor finalized closing adjustments, reported fair values at close, and the disclosed Q4 2025 charge; these will clarify actual P&L and capital effects ahead of the expected mid-2026 closing.

• BMO to sell 138 branches in select markets, supporting redeployment of capital and resources
• Plans to open 150 new branches over next five years in core markets to support long-term client and business growth

TORONTO and CHICAGO, Oct. 16, 2025 /PRNewswire/ - BMO (TSX; NYSE: BMO) today announced a strategic initiative to optimize its U.S. branch network and reinvest in markets with strong client engagement and long-term growth potential.

BMO announced it has entered into a definitive agreement to sell 138 BMO branches to First-Citizens Bank & Trust Company ("First Citizens Bank"). The branches are in North Dakota, South Dakota, Wyoming, Nebraska, Kansas, Missouri, Oklahoma, and Idaho, as well as select branches in western Minnesota, one branch in eastern Oregon, and one branch in southern Illinois.

In parallel, BMO plans to open 150 new branches over the next five years, with a focus on densifying its presence in U.S. markets where it has opportunity to achieve critical mass and build on established offerings across Personal and Business Banking, Commercial Banking, and Wealth Management to deliver integrated and personalized service and advice at scale. Plans for new branches will be California-centric, but not limited to the state.

"We're sharpening our focus on markets with the greatest potential for long-term growth," said Aron Levine, President, BMO U.S. "This reallocation allows us to deepen client relationships and deliver the full power of BMO to our clients. Our branches play a vital role in that journey; they're much more than buildings. They're financial advice centers and community hubs where relationships are built, personalized guidance is given, and clients are supported in achieving their goals, all to help them make real financial progress."

Today's announcement is consistent with BMO's focus on strengthening returns and long-term profitability as a leading North American bank and reflects its commitment to densification and building on established strengths in the U.S. market where BMO is well positioned to deliver growth.

Under the terms of the agreement, First Citizens Bank will assume approximately $5.7 billion in deposits and purchase approximately $1.1 billion in loans for a net deposit premium of approximately 5 percent paid on closing. As a result, the bank will record a charge related to goodwill of approximately US$75 million (CAD$104 million) before and after–tax in Q4 2025. On closing, the bank expects to record a tax expense of approximately US$85 million (CAD$117 million). The impact to the bank's CET1 ratio is not expected to be material. These amounts are subject to closing adjustments, including fair values and prevailing foreign exchange rates, and will be reported in the Corporate Services segment and treated as an adjusting item.

The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in mid-2026.

Until the transaction closes, BMO customers should continue to bank as they normally do, using their existing checks, cards, branches, and online account access. BMO and First Citizens Bank are working together to achieve a smooth transition for impacted customers.

In connection with the transaction, BMO Capital Markets and Piper Sandler & Co. acted as financial advisors and Godfrey & Khan, S.C. acted as legal counsel to BMO. Arnold & Porter Kaye Scholer LLP and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. acted as legal counsel to First Citizens Bank.

Caution Regarding Forward-Looking Statements
Certain statements in this press release are forward-looking statements. All such statements are made pursuant to the "safe harbor" provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements in this press release may include, but are not limited to: statements with respect to the expected closing of the proposed transaction, the opening of new bank branches, the financial impacts of the proposed transaction, our strategies or future actions, the regulatory environment in which we operate, the results of, or outlook for, our operations, and include statements made by our management. Forward-looking statements are typically identified by words such as "will", "expect", "plan", "commit", "optimize" and "may" or negative or grammatical variations thereof.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct, and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this press release not to place undue reliance on our forward-looking statements, as a number of factors – many of which are beyond our control and the effects of which can be difficult to predict – could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: the possibility that the proposed transaction does not close when expected or at all because required regulatory approvals and other conditions to closing are not received or satisfied on a timely basis or at all or are received subject to adverse conditions or requirements; the anticipated benefits from the proposed transaction are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, laws and regulations and their enforcement, and the degree of competition in the business areas in which BMO operates; diversion of management time on transaction-related issues; and those other factors discussed in the Risks That May Affect Future Results section, and the sections related to credit and counterparty, market, insurance, liquidity and funding, operational non-financial, legal and regulatory, strategic, environmental and social, and reputation risk, in the Enterprise-Wide Risk Management section of BMO's 2024 Annual Report, and the Risk Management section in BMO's Third Quarter 2025 Report to Shareholders, all of which outline certain key factors and risks that may affect our future results and our ability to anticipate and effectively manage risks arising from all of the foregoing factors. We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. Investors and others should carefully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements.

We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this press release is presented for the purpose of assisting shareholders and analysts in understanding the proposed transaction and may not be appropriate for other purposes.

About BMO Financial Group
BMO Financial Group is the seventh largest bank in North America by assets, with total assets of $1.4 trillion as of July 31, 2025. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and inclusive society.

View original content:https://www.prnewswire.com/news-releases/bmo-announces-branch-optimization-to-accelerate-future-growth-302585848.html

SOURCE BMO Financial Group

FAQ

What branches is BMO selling in the October 16, 2025 agreement with First Citizens (BMO)?

BMO agreed to sell 138 branches located across North Dakota, South Dakota, Wyoming, Nebraska, Kansas, Missouri, Oklahoma, Idaho, parts of Minnesota, one in Oregon, and one in Illinois.

How much in deposits and loans will First Citizens assume from BMO (BMO)?

First Citizens will assume approximately $5.7B in deposits and purchase about $1.1B in loans.

What are the estimated near-term accounting impacts to BMO from the branch sale (BMO)?

BMO expects a US$75M goodwill charge in Q4 2025 and a closing tax expense of about US$85M.

When is the BMO branch sale to First Citizens expected to close (BMO)?

The transaction is subject to regulatory approvals and is expected to close in mid-2026.

Why is BMO opening 150 new branches over the next five years (BMO)?

BMO plans to densify in core U.S. markets to deepen client relationships and scale integrated personal, commercial, and wealth services.