First Quarter Results
Three months ended June 30, 2002
Message
to Stakeholders
Growth is steady at ATB Financial
Edmonton, August 27,2002 - ATB Financial reported first quarter earnings of
$37.2 million for the period ending June 30, 2002, compared to $41.0 million
reported for the same period last year. The decrease is mainly due to the low
interest rate environment, resulting in lower interest income.
This quarter's results increased ATB's equity to $629.2 million, as at June 30,
2002.
"The financial results for this quarter are on target, and our credit
quality is high," said Bob Normand, President and Chief Executive Officer
of ATB Financial. "Overall, ATB Financial continues to show consistent
growth and commitment to meeting the financial needs of its customers."
Financial Highlights
- Total assets of $12.6 billion is an increase of 4.19 per cent over last
year.
- Total loans at $10.6 billion is an increase of 9.30 per cent over last
year.
- Retail deposits of $10.9 billion is an increase of 7.96 per cent over last
year.
- The allowance for credit losses, including specific and general loan loss
allowance, exceed gross impaired loans by $86.4 million. Net impaired loans
represent a negative 0.80 per cent of total loans at June 30, 2002, compared
to a negative 0.60 per cent at June 30, 2001.
- Net interest income of $88.5 million is a decrease of 4.44 per cent from
$92.6 million for the same quarter last year.
- Non-interest expenses of $76.1 million is an increase of 10.52 per cent
from $68.8 million for the same quarter last year.
- ATB's efficiency ratio, non-interest expenses as a percentage of operating
revenues, is 66.40 per cent compared to 59.37 per cent for the same
three-month period last year.
Products and Services
Moneris Solutions was appointed the new service provider for ATB Financial
merchant services. This alliance will improve payment processing for merchant
customers, providing a streamlined, single statement for all types of card
payments, including MasterCard, VISA, and Interac Direct Payment. Moneris will
also provide a broad range of innovative point-of-sale solutions, from
debit/credit terminals, to wireless and e-commerce, online reporting, and gift
card programs.
An enhanced insurance package was added to the ATB Alberta Agri-Industry BusinessCard® and the Alberta Business MasterCard®. The "Life Insurance
Protection" insurance program is more cost effective and provides security
and peace of mind for our customers, by providing extensive insurance coverage
on their ATB Financial MasterCard®.
The Agricultural Equipment Conditional Sales Contract program was expanded to
include farm trucks (1 ton and larger), providing a more comprehensive program
for equipment and automotive dealers throughout the province. The new program
provides for monthly, quarterly, semi-annual or annual payments, compatible with
most farmers' cash flow.
Present drought conditions in parts of Alberta will have a significant impact
on rural Alberta. ATB Financial is committed to proactively work with
agricultural producers, to provide financial solutions that are tailor-made for
each customer.
The Extreme Discount Mortgage product was introduced during the quarter. The
five-year, fixed, closed-term product, with a low interest rate of 5.65 per cent
(subject to change), gives customers an opportunity to lock in their mortgage at
a low rate.
Albertans are looking for quality returns with limited risk in a time when
market volatility is front and centre. Through a range of GIC and equity-linked
products, ATB Financial's investment products provide a combination of security,
choice and value that is second to none. The introduction of an 18-month GIC provides customers a great return on a short-term investment. This
limited-time product was extremely popular with our customers and sales were
extended to mid-August.
New branches open
Two new branches opened during the quarter to better serve customers in two
newly developed areas. The South Edmonton Common branch, located in southeast
Edmonton, and the Douglas Glen branch in the rapidly growing Douglasdale area in
southeast Calgary, opened for business for residents in the area and
neighbouring communities.
Helping Alberta communities
The Third Annual Teddy for a Toonie fundraising campaign took place at all
ATB branches and agencies throughout the province from April 30 to May 31, 2002.
Customers and staff were invited to donate $2 to enter a draw for a teddy bear
at each ATB location and more than $184,000 was raised during the campaign.
In the northern half of the province (Lacombe and north), $114,000 was raised
for the Stollery Children's Hospital Foundation. The money will be used for
specialized equipment for the new pediatric operating suites at the Stollery
Children's Hospital in Edmonton.
The $70,000 raised in southern Alberta (south of Lacombe) was raised for the
Alberta Children's Hospital Foundation. The money will be used to purchase a LKC
Universal Testing and Analysis system. This system will enable the hospital to
diagnose children with visual impairments.
Economic Outlook
Recent turmoil in equity markets has introduced greater uncertainty regarding
the sustainability of global recovery. While erosion of equity values does not
immediately translate into declines in expenditures, continued declines will
begin to adversely affect patterns of personal and business investments and
consumption.
For Alberta, residential housing resale markets and consumption levels are
growing at a healthy rate. Year-to-date housing starts are up by 45.0 per cent.
Retail sales growth in Alberta led the country with a 9.6 per cent rise in the
first quarter. While Alberta's employment continues to grow due to the influx of
workers to the province, the unemployment rate has increased to 5.9 per cent,
compared to 4.5 per cent last year. However, Alberta maintains the second lowest
unemployment rate in Canada. Export receipts have fallen by 23.0 per cent in the
first quarter due in large part to energy prices being lower in the first
quarter compared to 2001. Investment is expected to remain strong in 2002 with
major oil sands, pipelines and utilities projects producing shortages in some
labour markets and longer completion times. The agricultural sector is facing
difficult conditions this summer as low amounts of moisture in many regions of
the province is causing liquidation of livestock herds and the failure of cereal
crops. Despite continued uncertainty, investment and consumption in Alberta are
expected to remain buoyant.
Ron P. Triffo
Chairman of the Board
Bob Normand
President &
Chief Executive Officer
August 2002
top of page...
top of page...
Management's Discussion and Analysis (unaudited)
Net Income
Net income for the first quarter ended June 30, 2002 is $37.2
million compared to $26.2 million for the previous quarter and $41.0
million for the first quarter last year. First quarter net income
exceeded last quarter's net income by 41.68 per cent, and was below
last year's first quarter net income by 9.29 per cent. This decrease
from last year is due to the low interest rate environment, which is
putting downward pressure on interest margins.
Net Interest Income
Net interest income is $88.5 million for the first quarter ended
June 30, 2002, up $3.0 million or 3.52 per cent compared to net
interest income last quarter and down $4.1 million or 4.44 per cent
compared to the first quarter of last year.
The increase in net interest income over the previous quarter is
due to a combination of growth in average assets of 2.10 per cent and
a four basis point increase in the net interest margin. Compared to
the first quarter of last year, the net interest margin decreased to
2.85 per cent from 3.13 per cent. The resulting decrease in net
interest income due to low interest margins was largely offset by a
5.18 per cent growth in average assets.
Other Income
Other income is $26.1 million for the first quarter ended June 30,
2002, a decrease of 3.43 per cent from the previous quarter, and an
increase of 11.70 per cent compared to $23.3 million for the first
quarter last year. A 30.56 per cent increase in credit fees, primarily
due to customers renegotiating their fixed-term loans to lock in the
low interest rates, had the largest impact on the increase of other
income from previous year. 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 $76.1 million for the first quarter ended
June 30, 2002, a decrease of 4.48 per cent compared to non-interest
expenses last quarter and a 10.52 per cent 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 attributable to increased compensation and
employee benefits, higher amortization expense due to new technology
systems, and higher transaction volumes.
The efficiency ratio, expressed as a percentage of non-interest
expenses to operating revenue (net interest income plus other income)
decreased to 66.40 per cent for the three months ended June 30, 2002,
compared to 70.80 per cent for the previous quarter. For the same
period of last year, the efficiency ratio was 59.37 per cent. This
decrease in the efficiency ratio is largely due to a decrease in net
interest income.
Loan Quality
The quality of ATB Financial's loan portfolio continues to be
strong. Gross impaired loans (before deducting the allowance for
credit losses) at the end of the quarter are $87.5 million compared to
$107.0 million a year ago. The allowance for credit losses exceeds the
gross amount of impaired loans by $86.4 million at June 30, 2002
compared to $58.9 million a year earlier. The provision for credit
losses charged to the statement of income for the quarter ended June
30, 2002 was $1.3 million, compared to $6.6 million for the previous
quarter and $6.2 million a year ago. This decrease is due to the
strong quality of ATB Financial's loan portfolio and recoveries of
past provisions.
Balance Sheet
ATB Financial's total assets are $12.6 billion at June 30, 2002, an
increase of 2.11 per cent from March 31, 2002. ATB Financial's loan
growth continues to be strong as total loans grew by $170.2 million or
1.64 per cent during the quarter. Total deposits have increased $233.1
million or 2.04 per cent in the quarter. In comparison, the first
quarter of last year saw total assets increase by 3.85 per cent, total
loans grow by 1.22 per cent and total deposits increase by 3.55 per
cent.
Over the past twelve-month period, the total loans increased by
9.30 per cent compared to a 5.59 per cent increase for the same period
last year. Deposit growth over the past year was 3.11 per cent
compared to 9.24 per cent the year before. Both asset and deposit
growth rates reflect management's decision to retire some
high-interest institutional deposits and reduce short-term
investments.
The total equity as at June 30, 2002 is $629.2 million, up by $37.2
million from March 31, and $154.1 million from a year ago.
Caution Regarding Forward Looking Statements
This report includes forward-looking statements. ATB Financial
from time to time may make forward-looking statements in other written
or verbal communications. These statements include objectives for the
short and medium term and strategies to achieve those objectives. ATB
cautions readers not to place undue reliance on the forward-looking
statements as actual results may differ materially from plans,
objectives and expectations.
By their very nature forward looking statements involve
uncertainties and can change due to a variety of reasons including
legislative or regulatory changes, competition, technological changes,
and changes in interest rates and general economic conditions. The
foregoing list is not exhaustive and when relying on forward looking
statements these factors as well as other factors should be considered.
top of
page...
|
