Second Quarter Results
As at September 30, 1997
Alberta Treasury Branches (ATB) achieved record earnings during the 2nd quarter ending September 30, 1997. Net income for the quarter was $11,918,000, for a year-to-date total
of $20,092,000. This represents an increase of $16,658,000 over
the same period last year.
Net interest income is up 2.77% for a total increase of $3,273,000
from the same period last year, as a result of higher net interest spreads. The net interest spread was 2.90%, compared to 2.77% last year.
As reported in our first quarter financial results, the credit quality of
our portfolio continues to improve. The charge for provisions for credit impairment was $7,400,000 for the second quarter, as compared
to $12,750,000 for the first quarter. The annualized ratio of provision charges to average loans was 0.55% for the six months ending
September 30, 1997, compared to 1.05% for the same period last year. We expect that the provision charge will continue to improve through the remainder of the fiscal year.
Other income for this quarter was $16,044,000 compared to $16,262,000 for the first quarter. Year-to-date other income of $32,306,000 is 1.69% higher than the same period last year.
We continue to provide value to our customers, through competitively priced, quality products, personalized service, and some of the most affordable banking packages in the financial industry.
Non-interest expenses have increased by 6.59% over last year. The increase in non-interest expenses is largely due to an investment in training programs, marketing initiatives and in information technology. We anticipate these expenses will continue to increase throughout the year, as we continue to implement the strategies identified in our three-year business plan, "A Plan for the Future".
Total assets have increased by almost 2.00% from March 31, 1997 to
$8.6 billion. Specifically, during the period, the loan portfolio for personal and agricultural loans grew by 4.94%, and independent business and commercial loans decreased by 4.46%. While the overall change in loan assets is positive, independent business and commercial loans are an area we are focused on. We believe new loan programs now being introduced will improve our position in this important market segment.
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Operating Highlights
Sales campaigns
Alberta Treasury Branches continues to provide some of the most competitively priced retail products available in Alberta today.
The Summer/Fall Mortgage campaign, which ran from June until the end of October, continues to show strong results.
By September 30, mortgages increased by over $89 million, an increase of 39% over the same period last year.
A new flexible Retirement Income Fund (RIF) was introduced mid-September.
The RIF is a flexible investment plan that provides a retirement income while maintaining investments in a tax sheltered plan.
Similar to a flexible retired savings plan, the flexible RIF is non-redeemable and has a term of two years with a minimum investment of $500.
Overall, ATB expects to grow its RIF portfolio by $92 million by the end of the fiscal year.
Training initiatives
In order to improve customer service, a focus on training is paramount
in our business strategy. Some 4,000 person days of inhouse training
have been completed during this fiscal year. In addition, we have launched sales and product training programs, as well as
a specialized training program
for selling Mutual Funds.
These initiatives are consistent with our business plan objectives to grow our Balance Sheet
and instill renewed confidence
in Alberta Treasury Branches.
A proud history
The government of Premier
Bill Aberhart made a bold
and unique move amidst the recession in 1938, to stimulate the local economy by providing accessible financial services to Albertans through its Treasury Department "branches".
ATB has evolved over the years and on October 8th, 1997,
the financial institution became
a provincial Crown Corporation. ATB will continue to operate under the direction of its Board of Directors and with this new status, ATB will be in a position to compete more effectively.
In closing
The results for this second quarter reflect ATB's commitment to achieve
its business plan objectives. With new products and programs continually being developed and implemented, ATB is well positioned to achieve its
best financial results ever!
Marshall M. Williams
Chairman of the Board
Paul G. Haggis
President &
Chief Executive Officer
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