First Quarter Results for period ended June 30, 1997
Alberta Treasury Branches' (ATB) net income for the quarter ended June 30, 1997 was $8,174,000, an increase of 42% over last year's first quarter earnings of $5,728,000.
Net interest income was up 2.4% to $60,225,000 from the same period last year, as a result of higher net interest spreads achieved through improved asset-liability management. The first quarter interest spread was 2.91% compared to 2.76% last year.
The quarterly provision for credit losses charged to the income statement is down $2,725,000, to $12,750,000, from the 1996/97 first quarter. The annualized ratio of provision charges to average total loans is 0.70% as compared to 0.81% last year. The credit quality of our portfolio continues to improve. As a result, we may achieve a lower ratio of provision charges to average loans in future quarters.
Primarily due to increased revenues from transaction volumes, other income increased by $456,000, to $16,262,000, compared to the first quarter last year. The level of service fees charged to our customers remains unchanged.
Information technology initiatives and the cost of implementing ATB's business plan, A Plan for the Future, contributed to the 4% increase in non-interest expenditures, which were $55,563,000 compared to $53,405,000 for the same period last year. Non-interest expenses are expected to increase in future quarters due to comprehensive training programs, marketing initiatives, and program costs to ensure that ATB processes and systems are year 2000 compliant.
Total assets recorded on our balance sheet were $8.57 billion at June 30, 1997, up 1.3% from March 31, 1997. The increase is mainly due to increased securities and cash resources, which are funds available for operations and future lending activities. The overall loan portfolio decreased by $14,602,000, or 0.20% during the quarter.
We are encouraged by the first quarter financial results. As we continue to ensure the integrity of our balance sheet, we will position ATB as the provider of choice for independent business, agri-food businesses (primary production to value-added), and individual financial services.
Two sales campaigns were initiated during the first quarter. The federal/provincial Net Income Stabilization Account (NISA) program, which allows farmers to stabilize their income during years when incomes are lower than average, ran from March 15 to May 31, 1997. During this period, some 2,179 new accounts were opened. A Summer/Fall Mortgage Campaign was launched in June and will run until the end of October. During June, mortgages increased by $18 million (0.7%). To date, 257 new mortgages have been approved through this program, with a total value of $25 million.
Legislation
The Alberta Government has confirmed its commitment to ATB by passing Bill 33, the Alberta Treasury Branches Act. The Bill was debated in the Legislature during the Spring Session and received Royal Assent on June 18, 1997. Regulations are now being developed to prepare for transition to a Crown Corporation. Proclamation of the legislation is expected in the early Fall. Once the legislation is in effect, ATB's business powers will be broadened to allow ATB to provide financial services such as wealth management products.
The 100% guarantee of deposits and interest held with ATB remains unchanged. ATB customers can remain confident that their deposits are secure and 100% guaranteed by the Alberta Government.
Staff development
A key component of our current business plan is training. We are committed to develop the best people with the best skills and a strong focus on customer service. Sandra Chipchar joined ATB on April 21, 1997 as the Dean of the ATB Corporate Learning Centre to create and implement a professional development centre. Ms. Chipchar has over 15 years diverse experience as a human resources professional with specific experience in establishing and managing a successful learning centre. A broad range of personnel will undergo intensive training in the new ATB, leadership, sales, product, and credit training over the remainder of the year. We have also established partnerships with a few highly successful training organizations that are focused on meeting our unique needs.
New personnel
Robert J. Normand joined ATB on June 16, 1997, as the Senior Vice-President of Branch Sales and Services. Mr. Normand has significant senior management experience in the banking industry. His priority will be to build on our customer services and loan origination capabilities to significantly grow our share of the Alberta retail, agri-food and commercial sectors.
Alberta Treasury Branches has a solid foundation and a strong history in providing financial services to Albertans. We will continue to meet our customers' needs and be the provider of choice in products, services and locations.
Marshall M. Williams Chairman of the Board
Paul G. Haggis President &
Chief Executive Officer
