BMO Bank of Montreal

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BMO Bank of Montreal
BMO Financial Group



BMO Financial Group

July 07, 2010 06:00 ET

BMO Branches Now Offer AgriInvest Accounts-BMO Urges Farm Business Owners to Take Advantage of Government's Matching Deposits Program

Expected interest rate increases over the next three years provide another good reason to build a reserve fund now to help withstand consequent pressures on income.

- Farmers can double their savings by generating matching government funds.

- AgriInvest accounts at BMO branches give farmers more convenient and immediate access to their funds.

- "Rainy day" AgriInvest account can help farmers mitigate risk and manage cash flow.

- Savings rate on BMO AgriInvest account balances is 1 per cent, as much as double what farmers are currently earning and what other financial institutions are paying.

TORONTO, ONTARIO--(Marketwire - July 7, 2010) - BMO Bank of Montreal (TSX:BMO)(NYSE:BMO) today launched the BMO AgriInvest Savings Account, allowing agricultural customers to double their savings by generating matching government funds for every allowable contribution they make to the account.

Until now, farmers accessed AgriInvest accounts through the Department of Agriculture & Agri-Food Canada (AAFC). BMO expects that, with an AgriInvest account now as close and convenient as the nearest BMO branch, farmers will be better able and more inclined to take advantage of the accelerated savings that an AgriInvest account can generate from matching government funds.

AAFC developed the AgriInvest account to help agricultural producers improve productivity or business investment and protect their margin from small income declines. AAFC administered the accounts for the 2007 and 2008 tax years, but transferred administration to the banks in all provinces and territories, except Quebec, for the 2009 tax year to help make it easier for farmers to make deposits and to access their funds more immediately when they need them. 

BMO is urging farmers to start building their savings now so that they are in a better position to withstand cyclical pressures on margins and cash flows as well as any impact that steady but gradual increases in lending rates are expected to have on farm incomes over the next three to five years.

BMO economists are anticipating interest rates to rise by as much as 3-5 percentage points by 2015.

"An AgriInvest account with BMO is, hands down, one of the simplest tools Canadian farmers can employ to prepare for the ups and downs that this industry experiences," said David Rinneard, National Manager, Agriculture, BMO Bank of Montreal. "In light of the pressures that interest rate increases will have on farm margins and that likely fluctuations in exchange rates and commodity prices can have on cash flow over the next few years, putting away any extra income that you can afford today for a rainy day down the road is probably one of the best things you can do to help weather volatility in cash flow and interest rate costs.

"A BMO AgriInvest account maximizes your savings by generating matching government funds and ensures your savings are available to you when you need them because you can now access your AgriInvest account conveniently through our online banking, ABMs, telephone banking and in-branch services," said Mr. Rinneard. "That level of convenience and return wasn't available to farmers before, so we do anticipate that more farmers will now take advantage of what continues to be a very good government program." 

BMO AgriInvest customers also benefit from:

  • Premium interest rate savings account - premium rates on the entire balance
  • Expert financial advice and support
  • No monthly plan fee
  • Five free transactions a month
  • Unlimited free transfers to and from any existing business accounts

Each year, farmers who file a tax return can make a deposit into their AgriInvest account based on their allowable net sales (ANS). The federal, provincial and territorial governments make a matching contribution. The cap for matching contributions is $22,500.

Allowable net sales are equal to total sales of eligible commodities minus total purchases of eligible commodities. For example, sales of canola minus purchases of canola seed.

Sample calculation

2010 Sales of Allowable Commodities: $1,800,000
2010 Purchases of Allowable Commodities: $1,000,000
2010 Allowable Net Sales = $800,000 X 1.5%
2010 Maximum Matchable Deposit = $12,000

AgriInvest helps protect against rising interest rates

"We anticipate interest rates will begin to rise by the middle of next year, with the 10-year Government of Canada yield climbing from 3 per cent, currently, to 3.5 per cent by July 2011, to 3.85 per cent by the end of 2011 and to 4.6 per cent by the end of 2012," said Sal Guatieri, Senior Economist, BMO Capital Markets. 

"In this rising interest rate environment, BMO is encouraging farmers to review their longer-term interest rate strategies to avoid risks," said Mr. Rinneard. "Taking advantage of the AgriInvest account should figure into every producer's strategy, because it can help build a nest egg when they are generating revenue so they have a reserve to weather cash flow volatility."

BMO has an extensive team of commercial agri-industry experts who understand their customers' local business and business environment, and who apply a consistent approach through all business cycles, in good times and in challenging times.

Mr. Rinneard suggests Canadian producers take the time to sit down with a trusted BMO advisor to ensure their financial structure is optimal for their farm business.

About BMO Bank of Montreal

BMO's roots in the Canadian agricultural sector date back almost 200 years, to 1817, when it first began working with farmers. Today, BMO enjoys a well-founded reputation for providing customized loan and deposit solutions to Canada's agri-business owners, the single largest core commercial sector that the bank serves. 

In addition to AgriInvest, BMO Bank of Montreal offers programs and products including a specialized farm-equipment line of credit, flexible farm mortgages, BMO's Agri ReadiLine and loans under the Canadian Agricultural Loans Act. 

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