BMO’s Strategic Expansion Plan in California
BMO Financial Group, one of Canada’s leading financial institutions, plans to open more than 130 branches across California as part of its strategic expansion in the United States. The move, which executives have dubbed “densification,” is aimed at maximizing the bank’s reach in the country’s most populous state. The bank aims to attract a larger customer base, increase deposit volumes, and deliver higher returns for shareholders. You can find more details here.
BMO’s Ambitious Expectations
The U.S. president of BMO, Aron Levine, has outlined ambitious expectations for these new branches. He predicts each new location will garner between $50 and $60 million in retail deposits within three years of opening. Expanding on its current 220 branches, BMO plans to operate over 350 branches in California within the next five years.
This strategic move was announced a week after BMO disclosed its plans to boost its branch count across California. The goal is to increase the bank’s density in higher-growth markets, which, according to Levine, should lead to a higher market share. He drew parallels with BMO’s success in Illinois and Wisconsin, where the bank’s market share is in the double digits, compared to a 2% share in California.
Proven Playbook for Success
Levine, a former Bank of America executive who joined BMO last summer, firmly believes in the effectiveness of this strategy. “Clearly, density matters. It is a proven playbook,” he said. Apart from the planned California expansion, the bank also intends to open approximately 15 new branches in Arizona.
The bank’s expansion in the U.S. is not limited to increasing the number of branches. BMO is also focused on capturing more business from existing clients, a strategy that other banks have also adopted in their quest for higher profits. Commercial banking, wealth and capital markets businesses, and the unified U.S. banking segment are integral to BMO’s growth strategy. In 2025, BMO derived about 40% of its total earnings from its U.S. operations.
BMO’s Journey in the U.S.
The bank’s U.S. business received a significant boost in 2023 with the acquisition of San Francisco-based Bank of the West. This acquisition allowed BMO to expand its reach beyond the Midwest and gain a strong foothold in the California market. However, the bank faced unexpected challenges, especially in commercial lending, and had to reconfigure its U.S. business accordingly.
As part of this restructuring, BMO sold certain nonrelationship loan portfolios and is in the process of selling 138 branches in markets with lower growth prospects. These branches are primarily located in the Midwest and the Great Plains.
Future Outlook
BMO has set an ambitious goal to achieve a 12% return on equity for its U.S. business within three to five years. This target is part of a larger objective to achieve a 15% return on equity across the entire company. As of January 31, the U.S. return on equity stood at 7.9%, while the company-wide return on equity was at 12.1%.
Levine expressed confidence in meeting the 12% target by the fourth quarter of 2027, citing the bank’s progress so far and future plans. When asked about BMO’s past underperformance in the U.S., BMO CEO Darryl White acknowledged the challenges of competing as a regional bank and emphasized the importance of strategic investments and in-country integration for improved performance.
