Marshall M. Williams Chairman of the Board

Paul G. Haggis President and Chief Executive Officer

Protecting the bottom line

ATB conducted a major loan review commencing in November 1996 and set aside $198 million for probable loan losses. Included in this amount is a general provision on current loans, which was taken for the first time. The review was similar to actions taken in the early 1990s by all the major banks. Through this review, ATB has improved the quality of its balance sheet and its loans are now valued appropriately.

A new focus

With the solid building blocks of a new future now in place, ATB is looking ahead with renewed confidence.

The priorities for ATB's Business Plan 1998 -2001 now shifts to three key business goals: focusing on our core target markets, increasing profitability, and getting the best value for every dollar spent. Our success in meeting these goals will ensure that we're here today providing Albertans first class financial services. And we'll be here tomorrow, working with Albertans to fulfill their financial goals.

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Change is a constant in our lives today, and the financial services business is no exception. At ATB, we know there are some important challenges ahead.

Changes in financial services

Across Canada, financial institutions are consolidating into larger, more diverse businesses. They're closing branches in rural communities in favour of automated banking, on-line services, and more centralized lending. Greater foreign entry into the financial services sector is also anticipated.

These challenges provide unique opportunities for ATB. We provide a true alternative - a responsive and local provider of friendly, personalized service meeting Albertans' needs. We're there today with 278 branches and agencies in 109 communities across the province, and we will be there tomorrow. Flexibility, new products, and personalized customer service will help us keep pace with the competition and respond to changing expectations of our customers, especially in a time of dynamic growth in the province's economy.

With a prospering Alberta economy, ATB can also expect increasing competition from other financial institutions entering or expanding operations in the Alberta market. Customers are looking for the best products, the best services and the best price.

Information technology

Technology is changing almost every facet of how business gets done, how organizations operate and how day to day activities are handled. Within the financial services marketplace, there is a move to more convenient access through Call Centres; 24 hour service available seven days per week; Internet banking; and telephone banking. Individual customers have a range of options for their savings including mutual funds and other fixed income instruments such as bonds or mortgage-backed securities. A wide range of financial services can now be delivered through computers, the Internet or at-home visits from financial advisors. Investment advice from prominent experts around the world is available at your fingertips through the Internet.

As with any other business or financial institution, ATB has to use creativity to move quickly with new ideas and new services and to capture and hold a market advantage. During this planning period, we will work more aggressively to develop electronic delivery channels, priced accordingly.

Alberta's dynamic economy

All reports and forecasts for Alberta's economy consistently describe an economy that's "firing on all cylinders" and leading the rest of Canada. Whether it's in the oil sands, transportation, manufacturing, exports or agri-foods, the next few years point to continued strong growth for Alberta, growth that translates into more jobs, higher incomes, and a growing population. For ATB, a growing Alberta economy leads directly into expanding business opportunities.

Like all Albertans, however, we understand the volatility of Alberta's economy. Businesses have learned that decisions on investments made today cannot assume that growth will continue at the same pace.

Our job is to work with our business customers to help them make sound investment decisions, not just for today, but for tomorrow as well. Prudent lending practices based on realistic assumptions about the risks involved are essential.

A key challenge we face at ATB is to increase profitability and achieve sustainable earnings over the planning period. That's one of the goals of this business plan and it's our strong commitment to Albertans.

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A vision for ATB's future

Alberta's first choice for financial services in three target market areas: individual financial services, agricultural operations, and independent business. Albertans investing in Alberta.

ATB's mission

To provide personalized financial services to Albertans while earning a fair return.

ATB's commitment

• To meet customer needs through innovative financial services at a competitive price.
• To demonstrate integrity in all our financial decisions through a secure balance sheet, prudent investment practices, and by reporting our performance against published targets.
• To retain the trust and confidence of our customers, staff, and our owners - the people of Alberta - through open and accountable communications.
• To treat our customers and staff with fairness and respect.
• To have the best people through a competitive compensation program, training and education, and career opportunities to develop staff to their full potential.

Underlying these commitments are the following values:

• Service to customers.
• Support for our staff.
• Integrity.
• Accountability.

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Three clear goals

1. Focus on core target markets

   ATB will maintain our customer focus in three target markets: individual financial services, agricultural operations, and independent business. In each of ATB's target markets, we will expand our business by meeting the needs of our customers today and in the future.

   ATB will also continue its presence in the commercial lending area. New credit policies will ensure that such loans are well secured and closely monitored.

   Our customers deserve highly knowledgeable staff who can solve problems, give sound advice and respond quickly to their needs. They deserve fast, personalized and efficient service, customized products, access to services 24 hours a day, seven days a week, and innovative products at competitive prices.

   ATB expects to achieve its first goal of expanding our business by following through on our commitments to personalized customer service, expanding our distribution base and supporting that with first rate products.

   Selected strategies
   • Meet and exceed customer expectations in our three target markets.
   • Expand our current distribution base through a combination of new branch locations and automated banking machines (ABMs).
   • Implement a world-class Call Centre and develop use of on-line services through Internet banking, Agents and commission sales staff.
   • Establish a proactive sales culture backed up with personalized and competitive products and services, accessibility, and seamless delivery in meeting the lifestyle needs of our customers.
   • Focus marketing initiatives according to customer and market needs.
   • Invest in our staff by introducing incentive compensation plans and pay related to performance, as well as by expanding training opportunities.
   • Re-organize for growth to ensure that we have the right people in the right locations to provide the right services to our customers.
   • Explore strategic alliances as an effective way of delivering a broad range of services to customers at a competitive price.

   Performance measures

   • Loan growth.

2. Increasing profitability

   At ATB, we're committed to serving our customers and to making a fair profit. Albertans count on ATB to provide competitive rates and personalized services. They also want to see a healthy bottom line and a first-rate financial institution making a fair return for Albertans.

   It also means that within ATB, we need information that is timely, accurate, easy to understand and that helps us assess the impact of business decisions and make better decisions in the future.

   Selected strategies
   • Assess the profitability of each branch, region, line of business and product, and use that assessment to guide decisions, strategies and actions.
   • Assess fees and bring them in line with our customer's perception of value.
   • Expand fee for service products and services in areas such as wealth management.
   • Improve accountability for managers and reward success.
   • Continue with prudent lending policies, manage credit risk carefully, and reduce loan losses.
   • Manage interest rate risk through conservative asset liability management.

   Performance measures

   • Eliminate the accumulated deficit by March 31, 2000.
   • Net Income.
   • Loan Loss Provisions.
   • Non-Interest Income / Total Revenue.

3. Getting the best value for every dollar spent

   To improve ATB's bottom line, we have to provide the best customer service and the products our customers need. We also have to balance that service with its cost. The continuing challenge is to improve products and services and keep costs in line.

   As noted earlier, technology is changing both the way financial institutions operate and the way our customers choose to do business. That means using technology to our best advantage and to the advantage of our customers.

   Other challenges we face lie in streamlining and controlling costs, improving the processes we use, and making sure we get the best value for every dollar spent.

   Selected strategies
   • Review current processes and consider which ones can be streamlined, automated or eliminated entirely.
   • Expand the use of electronic transactions within branches.
   • Implement zero-based budgeting controls.
   • Pursue strategic alliances as appropriate.
   • Increase productivity by decreasing costs.

   Performance measures

   • Efficiency ratio (Operating revenues / Operating costs).
   • Percentage of transactions done electronically.

Next Steps

Business Plan 1998 - 2001 continues on ATB's determination to become the best in the class and Albertans' first choice in our chosen target markets. And it sets three simple and clear business goals: focusing on our core target market, increasing profitability, and getting the best value for every dollar spent.

At ATB, we're confident these goals can be met. And we're confident about ATB's future. It's an exciting and challenging future ... a future where we build on our traditional strengths, maintain a strong commitment to our loyal customers, and expand into new markets and new opportunities as part of the fabric of a changing and dynamic Alberta.

ATB is quickly becoming a renewed, efficient organization, committed to friendly customer service with quality products at an affordable price. Over the next year, Albertans can expect to see innovative, new products and services introduced to meet our customers' needs.

While much will change in the coming years, one thing will remain constant ... our commitment to Alberta and putting Albertans first. By following through on that commitment, we can assure Albertans, ATB is here today ... and we'll be here tomorrow.

For more information about ATB's plans for the future, please contact your local Alberta Treasury Branch or

ATB Financial
ATB Place
9888 Jasper Avenue
Edmonton, AB T5J 1P1

Telephone (780) 408-7309
Fax (780) 422-4178

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