Third Quarter Results
For the period ended December 31, 1997
Financial Highlights
During the third quarter, Alberta Treasury Branches (ATB) earned
$13.8 million. For the nine months ending December 31, 1997,
the corporation earned income of $33.9 million, an increase of
$52.8 million over the same three quarters last year.
Net interest income for the third quarter was $65.1 million.
For the nine months ended December 31, 1997, total net interest income was $186.4 million.
As a result of higher net interest spreads, the year-to-date total was 4.2% higher than at December 31, 1996.
The average interest spread for 1997 is 2.96% compared to 2.83% a year earlier.
An increase in interest earning assets of $198.8 million from December 1996 contributed to higher net interest income.
The charge for provisions for credit impairment was $7.4 million in the
third quarter, and $27.6 million for the nine-month period.
This represents 0.50% of average total loans, compared to 1.55% last year.
This significant improvement is due to recoveries realized by our Asset Management team, as well as a buoyant Alberta economy.
Consistent with other financial institutions, Alberta Treasury Branches has increased its general allowance on current loans.
All current loans in the independent business and commercial categories have recently been risk-rated.
Higher risk-rated loans have been provided for through a general provision.
All other current loans are covered by a general provision based on the average of our specific loan loss
experience in recent years.
Other income for the third quarter is $16.2 million, compared to $17.1 million for the same period in 1996.
The year-to-date results are also slightly down by 0.8% to $48.5 million. ATB continues to strive to provide some
of the most affordable banking services in Alberta and the need to be competitive is being addressed. Adjustments
to product pricing will be made in the upcoming quarter, which will contribute to other income.
Non-interest expenses totalled $60.1 million in the third quarter and $173.4 million year-to-date,
which is $15.0 million (9.5%) higher than last year. Labour costs increased by $7.7 million as ATB is making an
effort to bring staff salaries in line with comparable organizations. Other increases are the result of an intensive
staff training effort now underway as well as ATB's continuous commitment to Branch automation.
Total assets at December 31, 1997 were $8.5 billion, which is
$156.3 million (1.9%) higher than a year ago. Total loans increased
by $137.0 million in the third quarter, with $90.4 million (66%) of
this increase in mortgage and consumer loans.
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Operating Highlights
Dynamic sales campaigns
Marketing initiatives undertaken contributed to improved results during
the third quarter. The launch of a unique Rate-Capped Mortgage offering
a six-month rate with a three-year term brought in over $209 million
in mortgage loans between October and December. This is even more impressive given that $76 million represented new accounts.
Over $447 million of deposits were raised during the Fall promotion
of Guaranteed Income Certificates (GICs).
The Cost Cutter, a loan program designed for agricultural producers, generated a 42% increase in the number of agricultural loans during
the third quarter. This is the first campaign in a rollout of a number
of new agriculture lending programs in the coming year.
Gearing up for Mutual Funds
A top priority for ATB in becoming
a Crown corporation on October 8, 1997, was to exercise its new business powers to establish
the subsidiary company, ATB Investment Services Incorporated (ATB ISI) in order to offer mutual funds starting
in the 1998 RSP season. Negotiations took place with ATLAS Asset Management Inc., managers of 24 funds,
covering a wide range of investments in Canada and the world. With the approval of the Alberta Securities
Commission, sale of mutual funds will be rolled out throughout 1998, starting with an initial offering from
16 licensed Branches. ATB ISI recorded the first mutual fund sale
on January 19, 1998.
New Direction
After successfully achieving the five goals set out in our previous business plan, work continued on finalizing
ATB's new business plan for 1998-2001. The plan, Here Today, Here Tomorrow, was approved by the Board of Directors
during the quarter, and released to the public on January 19, 1998. In the next three years, ATB will focus on its core
target markets, increasing profitability, and getting the best value for every dollar spent.
Marshall M. Williams
Chairman of the Board
Paul G. Haggis
President &
Chief Executive Officer
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