Higher interest rates, solid loan portfolio boost ATB's first-quarter profits
by 40.5 per cent

EDMONTON, Aug. 18 /CNW/ - First-quarter profits at ATB Financial (ATB) grew 40.5 per cent, as the organization saw improvements to both net interest income and provisions for credit losses.

Net income for the quarter ending June 30, 2010 was $35.8 million, up $10.3 million from last year's first quarter.

Adjusted net income, which excludes payment in lieu of tax and last year's first-quarter recovery on asset-backed commercial paper, was up 60 per cent to $46.5 million.

Net loans, including securitized mortgages, were up 5.6 per cent over June 30, 2009 to $24.5 billion, while an increasingly competitive deposit market led to a slight increase in retail deposits, to $20.8 billion.

Operating revenue increased 6.6 per cent to $224.4 million which was driven largely by a 7.0 per cent increase in net interest income.

ATB's increase in net income was prompted mainly by better margins due to higher interest rates, and a sharp decrease in its provision for credit losses, down $16.0 million to $3.0 million.

Dave Mowat, ATB Financial's President and CEO, said the results were solid and encouraging as Alberta's economy continues to improve.

"The good news is that ATB is not seeing the kind of credit losses we might have reasonably expected given the recent volatility in Alberta's economy," Mowat said.

"We stood by Albertans throughout the recent economic cycle, we did more business, and it was good business. That mix of prudent lending and support for Alberta businesses and individuals is paying off in improved results for our organization."

Operational Highlights

Retail Financial Services (RFS) - ATB's largest line of business includes branches and agencies throughout Alberta. Assets, primarily consisting of loans, stood at $15.3 billion at the end of the first quarter. Operating revenue was $105.4 million. Comparables to last year's first quarter are not available, as 2009-10 results for this line comprised both RFS and a new line of business, Independent Business and Agriculture. ATB opened its largest branch in the province in Red Deer, and a new branch in downtown Lethbridge, located in the renovated Paramount theatre building.

Independent Business and Agriculture financial services (IB&Ag) - This line of business, newly created this quarter, provides services to Alberta's small businesses, farmers and other agriculture customers. Its assets stood at $3.8 billion at the end of the first quarter. Operating revenue was $63.1 million.

Corporate Financial Services (CFS) - This line of business provides services to Alberta's mid- and senior-market companies in three sub-lines - Energy, Commercial, and Food & Forestry. Due to the challenges of the economy, CFS's assets declined by $354.5 million, or 6.3 per cent, over the last year. However, operating revenue increased over last year by $7.4 million, or 14.2 per cent.

ATB Investor Services (IS) - This line of business is responsible for growing and protecting wealth for more than 51,100 customers. At the end of the first quarter, client assets under IS's management and administration reached $5.1 billion, up $0.9 billion from last year's first quarter, or 22.3 per cent.

ATB in the Community - In May 2010, ATB received wide notice for its new Junior ATB program, which sees students learn financial literacy, leadership skills and the power of saving money in real working bank "branches" in two Edmonton elementary schools. ATB hopes to expand the program throughout Alberta. To launch its five-year partnership with the Art Gallery of Alberta, ATB sponsored the 7th Alberta Biennial of Contemporary Art at the gallery.

About ATB Financial - ATB Financial is the largest Alberta-based financial institution, with assets of $26.2 billion. It provides Retail Financial Services, Independent Business and Agriculture Financial Services, Investor Services, and Corporate Financial Services to more than 680,000 Albertans in 242 communities. It provides service through 166 branches and 131 agencies, telephone and Internet banking, a Customer Contact Centre, and Automated Banking Machines. ATB Financial was established in 1938 and has been a provincial Crown corporation since 1997. ATB has been named one of Canada's 50 Best Employers by Report on Business Magazine, one of the 75 Best Workplaces in Canada by the Great Place to Work Institute, and one of Canada's Top 100 Employers and Alberta's Top 50 Employers by Mediacorp Canada Inc.

For complete first-quarter financial results, including Management's Discussion and Analysis, please visit cr="true" href="http://www.atb.com/Dev/home/index.asp">www.atb.com

Highlights
(unaudited)


                 
For the three months ended   June 30     March 31     June 30  
($ in thousands)   2010     2010     2009
Operating results  
Net interest income $ 171,474   $ 163,871   $ 160,267
Other income   52,949     53,362     50,238
Total operating revenue   224,423     217,233     210,505
Provision for (recovery of) credit losses   3,049     9,405     19,050
Non-interest expenses   174,903     177,746     162,409
Adjusted net income(1)   46,471     30,082     29,046
Recovery (provision for loss) on asset-backed commercial paper   -     -       4,031
Payment in lieu of tax        10,688              6,919          7,608
Net income $ 35,783   $ 23,163   $ 25,469
Financial position
Net loans $ 22,687,215   $ 22,534,603   $ 22,119,959
Total assets $ 26,185,029   $ 25,429,018   $ 26,461,696
Total deposits $ 23,425,296   $ 22,579,167   $ 23,742,333
Equity $ 1,828,713   $ 1,809,357   $ 1,753,979
Key performance measures (%)(2)
Return on average assets   0.73     0.48     0.44
Operating revenue growth   6.6     (8.2)     (3.9)
Other income to operating revenue   23.6     24.6     23.9
Operating expense growth   7.7     4.6     4.8
Efficiency ratio   77.9     81.8     77.2
Net interest spread   2.84     2.69     2.54
Credit losses to average loans   0.05     0.17     0.35
Net impaired loans to total gross loans   (0.37)     (0.40)     (0.41)
Net loan growth   2.6     4.3     11.7
Net loan growth(3)   5.6     6.2     15.7
Total asset growth(3)   (1.0)     (4.0)     8.5
Total deposit growth   (1.3)     (5.5)     6.7

(1) Adjusted net income is a non-GAAP measure which excludes recovery (provision for loss) on asset-backed commercial paper (ABCP) and payment in lieu of tax (PILOT).
   
(2) Excludes the recovery (provision for loss) on ABCP and PILOT.
   
(3) Excludes the impact of securitization.

This financial highlights table and this media release were approved by the Audit Committee of ATB Financial's Board of Directors on August 18, 2010.

SOURCE ATB Financial

For further information: For further information:

Barry Strader
Media Relations
ATB Financial
(780) 886-4398 (cell)
(780) 495-1343 (office)
e-mail: bstrader@atb.com


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