(March 2 – 10:20 ET) – Bank of Montreal’s Harris Bank subsidiary is seeking to expand its influence in the Chicago area with the acquisition of First National Bank of Joliet.

Harris will pay about US$200 million for the firm (C$336 million), which is 19.1 times year 2000 earnings and 2.3 times book value. The transaction, which is subject to regulatory and FNBJ shareholder approvals, is expected to have a minimal effect on BMO’s earnings per share in the first year.

The deal extends Harris’ retail network in Chicago. First National Bank of Joliet was established in 1857, and is a publicly traded, full-service community bank with $1.7 billion in assets and $1.35 billion in deposits. The bank is headquartered in Joliet, Ill., with 18 branches.

FNBJ shareholders will receive $110.75 in BMO stock or cash, or a combination at their option, for each FNBJ common share outstanding with the share exchange ratio determined at closing.

Harris now has more than one million customers in the U.S., and it operates in 22 markets in America, including major urban areas in Illinois, Michigan, Ohio, Wisconsin, Florida, Colorado, Arizona, Utah, Washington State, Oregon, California and Hawaii. As a result of this acquisition, the Harris Bank network in Chicago will expand to 149 locations.

“First National Bank of Joliet is a premier community bank — their people, their network and their customers are a perfect fit for Harris,” said Al McNally, chairman and CEO, Harris Bank.

BMO is confirming its intent to grow its Harris subsidiary. Analysts have assailed the company for not capitalizing on Harris, urging it to either grow it or sell it. “With this acquisition, Harris, a key strategic asset for Bank of Montreal, is closer to its goal of becoming the dominant full-service bank in the Chicago area,” said Tony Comper, chairman and CEO of BMO. “It also confirms our North American strategy of allocating priority resources to leverage our leadership in personal and commercial banking — and invest in higher growth, higher return markets to build shareholder value.”