Alberta Treasury Branches (ATB) reported improved first quarter earnings with net income of $41.0 million for the period ending June 30, 2001, compared to $38.6 million reported for the same period last year.
This quarter's results increased ATB's equity to $475.1 million, as at June 30, 2001.
"ATB has reached yet another milestone, surpassing $12 billion in assets during its first quarter," said Paul G. Haggis, President and CEO of ATB.
"The success of the organization over the past five years is clearly attributable to our dedicated staff and loyal customers. ATB continues to have a bright future in servicing the financial needs of Albertans."
Financial Highlights
Net interest income of $92.6 million is an increase of 6.18% from $87.2
million for the same quarter last year.
Non-interest expenses of $68.8 million is an increase of 5.88% from $65.0
million for the same quarter last year.
ATB's efficiency ratio, non-interest expenses as a percentage of operating
revenues, is 59.37% compared to 59.26% for the same three-month period last
year.
The allowance for credit losses, including specific and general loan loss
allowance, exceed gross impaired loans by $67.5 million. Net impaired loans
represent a negative 0.69% of total loans at June 30, 2001, compared to a
negative 0.62% at June 30, 2000.
Total assets of $12.1 billion is an increase of 11.04% over last year.
Total loans at $9.7 billion is an increase of 5.60% over last year.
Customer deposits of $11.3 billion is an increase of 9.24% over last year.
Products and Services
An agreement was reached with Bank of America to provide international
banking services to ATB clients who conduct business regularly in the United
States and abroad. These services include: US dollar chequing accounts as well
as US dollar and other currently drafts and wires. In addition, Bank of America
will provide ATB with US dollar, Pound Sterling and Euro corespondent banking
services. By leveraging Bank of America's capabilities and global reach, we are
able to streamline our inter-national banking services through one provider.
Even more important, our customers have access to the breadth of international
banking capabilities they require when dealing south of the border and abroad.
A five-year agreement was entered into with Can-Act Payment Services (a
wholly-owned subsidiary of BCE Emergis Inc.) for on-line tax filing and
remittance services for ATB business customers. This service allows ATB Internet Banking
business banking customers to file federal and provincial taxes around the
clock, seven days a week, with the choice of scheduled remittances for future
processing. ATB customers can now improve their business processes by
electronically filing and paying their federal and provincial corporate income
taxes, employee source deductions and federal GST through this service.
The ATB Alberta Agri-Industry BusinessCard® now provides Alberta farmers with
instant access to as much as $100,000 credit. The previous credit limit on this
popular financial product was $50,000. The AgriBusinessCard is designed
especially for Alberta farm businesses. It can be used to replace an operating
loan, as a low-cost credit card, or to cover purchases of products and services
required for the operation of a farm or agribusiness. The interest rate is based
on the prime rate and is set according to the unique circumstances of each
operation. A low minimum monthly payment can accommodate those customers that
carry a balance, making it the ideal replacement for an operating loan. This
unique product provides the financial flexibility that today's agricultural
operations require.
ATB continues to show solid growth in retail investment products. This has
been achieved through targeted products that meet the specific needs of our
customers while providing quality returns with limited risk at a time when
market volatility is front and center. Through a range of GIC and equity-linked
products, ATB's investment products provide a combination of security, choice,
and value that is second to none.
A 30-month mortgage promotion was introduced, and proved to be a popular
choice among customers. A new product package designed for the first-time
homebuyer was also added. The First Home Package allows customers to begin their
retirement investing as ATB contributes up to $2,500 to their RSPs. These two
great options, along with our regular line-up of mortgage products (Cashback,
Lower than Prime, Best of Both, and Half Your Rate), clearly demonstrate that
ATB has the Best Mortgage Options in Alberta.
Access
ATB's investment in the branch network continues with five new branches under
construction and eight newly constructed branches recently opening in Cold Lake
Tri-City Mall, Calgary Chinook, Calgary Crowfoot, Edmonton Millwoods, Edmonton
Oliver Village, Edmonton Rabbit Hill, Fort Saskatchewan and Red Deer Bower Place
Mall. In addition, renovations were completed at the Banff, Beaverlodge, Calgary
Brentwood, Fort MacLeod, Innisfail and First Red Deer Place branches.
People
In April 2001, changes were made in the organizational structure to ensure a
better allocation of resources and alignment to our business plan objectives.
Larry Kaumeyer moved to Sales as Vice-President Direct Sales. Included in his
responsibilities are the Customer Contact Centre, Card Sales, Conditional Sales,
the Virtual Staff Branch, Mortgage Development and the Investment Specialists.
Sheldon Dyck moved to Sales as Vice-President Business and Retail Sales, Urban.
Sheldon is responsible for business and retail banking in the Calgary and
Edmonton markets. Ken Casey also moved to the Sales group as Vice-President
Branch Operations. He is responsible for branch policy, support and performance,
corporate services, facilities and operational efficiency.
On the Credit side, three new appointments were made: Gord Mooney,
Vice-President Credit; Cathy Lane, Vice-President Credit Policy and Enterprise
Risk Management; and Shelly Miciak, Vice-President Credit Risk and Portfolio
Management. In addition, Erv Krawchuk was appointed Acting Vice-President
Internal Audit.
The 2nd Annual Teddy for a Toonie fundraising campaign took place at all ATB
branches and agencies throughout the province from April 16 to May 12, 2001.
Customers and staff donated $2 to enter a draw for a Gund® teddy bear at each
ATB location. More than $135,000 was raised for the Alberta Children's Hospital
Foundation and the Children's Health Foundation. Both foundations are non-profit
organizations that provide funds for specialized medical services to children
throughout Alberta.
Outlook
In June, the Parliament of Canada passed Bill C-8, an Act establishing the new
Financial Consumers Agency and amending federal financial sector laws, including
the Bank Act. We expect the new law will be proclaimed later this year. While
that Act does not apply to ATB, we believe this new legislation will accelerate
the changes to Canada's financial services sector, as medium-sized banks and
insurers may be takeover candidates. The sector has also witnessed a number of
portfolio transactions where financial institutions sell branches and assets to
competitors. The legislation will enable banks to establish holding companies
that may allow ownership interests to be sold in certain subsidiaries or joint
ventures to be created with foreign players or direct competitors. To the extent
that transactions require divestiture of assets, ATB believes it is positioned
to play a role in obtaining new business or being on the shopping list of
customers affected by branch closure or portfolio sales. Additional changes will
facilitate Canadian financial institutions' entry into the e-commerce arena.
Ron P. Triffo Chairman of the Board
Paul G. Haggis President &
Chief Executive Officer
ATB reported net income of $41.0 million for the first quarter ended June 30,
2001 compared to $38.1 million for the previous quarter and $38.6 million in the
first quarter last year. First quarter net income exceeded last quarter's net
income by 7.41% and last year's first quarter net income by 6.09%.
Net Interest Income
Net interest income is $92.6 million for the first quarter ended June 30, 2001,
up $0.6 million or 0.65% compared to net interest income last quarter and up
$5.4 million or 6.18% compared to the first quarter last year.
The increase in net interest income over the past year is due to growth in
average assets of 12.61%. As expected, the net interest margin decreased to
3.13% from 3.33% one year ago. The lower net interest margin is primarily
attributable to the declining market rate environment.
Other Income
Other income is $23.3 million for the first quarter ended June 30, 2001, an
increase of 3.83% compared to $22.5 million for the first quarter last year.
This is related to an increase in income from fees and other charges. Card fee
revenue also increased due to an increased number of cards in circulation and
related increased transaction volumes compared to the first quarter last year.
Non-interest Expenses
Non-interest expenses are $68.8 million for the first quarter ended June 30,
2001, a decrease of 7.79% compared to non-interest expenses last quarter and a
5.88% increase compared to non-interest expenses for the first quarter last
year.
The increase in non-interest expenses this quarter compared to the same quarter
last year is largely attributable to increased salaries and related payroll
costs. ATB's unionized employees received a four percent salary adjustment and a
one percent performance increase effective April 1, 2001.
The efficiency ratio, expressed as a percentage of non-interest expenses to
operating revenue (net interest income plus other income) remained relatively
unchanged increasing to 59.37% for the three months ended June 30, 2001,
compared to 59.26% for the same period last year. Consistent with ATB's
projection for fiscal year 2002, this change is related to increased
compensation and benefit costs as well as investments in technology and risk
management processes.
Loan Quality
The quality of ATB's loan portfolio continued to improve over the first quarter.
Gross impaired loans (before deducting the allowance for credit losses) at the
end of the quarter are $107.0 million compared to $111.8 million a year ago. The
allowance for credit losses exceeds the gross amount of impaired loans by $67.5
million at June 30, 2001 compared to $58.1 million a year earlier. The ratio of
credit losses to average loans improved to 0.26% at June 30, 2001, compared to
0.27% a year earlier.
Balance Sheet
ATB's total assets are $12.1 billion at June 30, 2001, an increase of 3.85% from
March 31, 2001 and an increase of 11.04% from June 30, 2000. Total loans have
increased by $512.6 million or 5.60% compared to last year. Over the past year,
loans to individuals increased by $392.1 million or 7.56%, agriculture loans
increased by $82.3 million or 7.22%, and independent business and commercial
loans increased by $48.5 million or 1.65% (excluding general allowance for
credit losses). ATB's deposit growth continues to be strong as deposits grew by
$956.7 million or 9.24% over the past twelve months.
