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## REVIEW OF OPERATING GRO UPS  PERFORMANCE 

This section includes an analysis of our operating groups financial results and descriptions of their businesses, and their objectives, accomplishments, challenges and outlooks. A separate analysis of Harris Bank is also provided. Its financial results are incorporated within each of the operating groups. 

## Personal and Commercial Client Group (pages 37 to 40) 

Net income was $968 million in 2002, an increase of $174 million from 2001. Excluding non-recurring items that increased net income $9 million in 2001, net income rose $183 million or 23%. 

## Private Client Group (pages 41 to 43) 

Net income was $96 million in 2002, a decline of $25 million from 2001. Excluding non-recurring expense that reduced net income $39 million in 2002, net income of $135 million rose 12%. 

## Investment Banking Group (pages 44 to 47) 

Net income was $592 million in 2002, an increase of $115 million from 2001. Excluding non-recurring items that reduced net income $105 million in 2001, net income increased $10 million. 

## Corporate Support, including Technology and Solutions 

(pages 47 to 49) 

Net loss was $239 million in 2002, compared with net income of $79 million in 2001. Excluding non-recurring items that increased net income $189 million in 2001, net income declined $129 million. 

## Net Income Business Mix and Average Assets by Operating Group ($ millions, except as noted) 

## Harris Bank (pages 49 to 50) 

On a U.S. dollar/U.S. GAAP basis, Harris Bank net income was $278 million in 2002, an improvement of $77 million from 2001. Excluding gains on the sales of businesses and a fourth quarter increase in the loan loss provision in recognition of a more uncertain economy in 2001, net income increased $33 million. 

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Basis of presentation of operating results — Expenses are matched against the revenues to which they relate. Indirect expenses, such as overhead expenses and any revenue that may be associated thereto, are allocated to the operating groups using appropriate allocation formulas applied on a consistent basis. For each currency, the net income effect of funds transferred from any group with a surplus to any group with a shortfall is at market rates for the currency and appropriate term. Segmentation of assets by geographic region is based upon the geographic location of the unit responsible for managing the related assets, liabilities, revenues and expenses. Provisions for credit 

losses allocated to the operating groups are based on expected losses over an economic cycle. Differences between expected loss provisions and required provisions under GAAP are allocated to the Corporate Support Group. Periodically, certain lines of business and units within them are transferred between operating groups to more closely align BMOGLYPH<213>s organizational structure and its strategic priorities. All comparative figures are restated to give effect to the transfers. During the year, the Cash Management Services business was transferred from Technology and Solutions to Investment B anking Group. 

