Bank of Montreal today reported lower earnings for the second quarter ended April 30, as provisions for credit losses rose from the low levels of a year ago.

The bank said Q2 net income was $642 million, or $1.25 a share, compared with $671 million, or $1.31 a share, in the year ago period.

The total provision for credit losses jumped to $151 million during the quarter, up from $92 million a year ago.

BMO says its Canadian personal and commercial banking unit, had strong results and one of its best quarters ever, improving significantly from the first quarter and year-over-year after adjusting for insurance and investment gains that increased results in the prior year.

Net income for the group was $331 million, up $4 million or 1.1% from a year ago. Results a year ago included a $26 million insurance gain and a $14 million investment gain that together increased net income by $32 million. Adjusted for these items, net income increased $36 million or 12%.

Revenue rose $11 million and 0.8%, or $51 million and 4.3% adjusted for last year’s insurance and investment gains.

“Private Client Group delivered record net income. Diversified revenues and active, effective cost management have produced another quarter of very impressive results,” says Downe.

Net income for the Private Client Group increased $10 million, or 10% to record levels of $109 million, reflective of diversified revenues and effective management of discretionary expenses. Revenue fell slightly, but increased adjusted for the impact of the
weaker U.S. dollar and a $7 million investment gain in the prior year.

“Results in BMO Capital Markets reflect current market conditions as activity in the investment banking business was slow in the quarter, says Downe. ” In the current quarter, results reflect a net $28 million after-tax recovery related to the capital markets environment, compared with $324 million of after-tax charges in the first quarter.

During the quarter, the bank reversed a portion of the charges recorded on Apex/Sitka Trust in preceding periods in light of the increased likelihood of completing a restructuring. “Subsequent to the quarter end, on May 13, 2008, we completed the restructuring of Apex, preserving asset value and placing it on a solid footing,” says Downe.

“Results in our U.S. personal and commercial banking group were also up from a year ago and the first quarter on a reported basis in a competitive and difficult economic environment. We closed the transactions to acquire the two Wisconsin-based banks during the quarter and we are managing their integration effectively. We’re very pleased with the acquisitions’ contribution to date,” adds Downe.

Net income for the group was US$30 million, up US$5 million or 20% from a year ago on a reported basis. There was volume growth and increased fee income.

The bank left its quarterly dividend unchanged at 70¢ a share.