ATB records solid second-quarter profits as interest income improves
EDMONTON, Nov. 17 /CNW/ - Second-quarter profits at ATB Financial (ATB) dropped $4.8 million, while profits for the first six months of the 2010-11 fiscal year continue to outpace the previous year by 8.1 per cent.
For the second quarter ending Sept. 30, 2010, improving interest rate spreads and a solid loan-loss picture were offset by expenses for staff growth and a reduction in other income.
Adjusted net income, which excludes a recovery on asset-backed commercial paper, was $35.3 million in the second quarter, down 18.0 per cent. For the first six months of 2010-11, adjusted net income is $71.1 million, up $5.7 million from the same period last year.
Second-quarter net income was $38.3 million, down $4.8 million, or 11.1 per cent, from last year.
In the second quarter, net loans (including securitized mortgages) were up 4.9 per cent to $24.9 billion, while retail deposits increased slightly year-over-year to $20.8 billion.
Increased interest-rate spreads boosted net interest income by 5.8 per cent to $182.8 million. The organization's provision for credit losses continued a recent and welcome trend, dropping 31.4 per cent over last year's second quarter to $7.0 million.
"We're still seeing considerable strength in our loan book, which is encouraging given that the recession is not yet that far behind us. It shows that we stuck by Albertans, and did good business at the same time," said Dave Mowat, ATB's President and CEO.
"Our interest income is increasing, and I'm pleased to see good results in our newest line of business, Independent Business and Agriculture, where loan growth has improved quarter over quarter."
Second-quarter profits were impacted negatively mainly by a planned increase in expenses, and a drop in other income, which was prompted mainly by an accounting adjustment that reduced the value of assets relating to ATB's securitization program.
"Like all good and prudent Alberta businesses, we're watching our expenses closely," Mowat said.
"But we expected our expenses to rise on the human resources side. We're reinvesting in staff and expertise, and it's part of our plan to keep growing to meet the needs of more Albertans who are choosing ATB."
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 $15.6 billion at the end of the second quarter. Operating revenue was $107.4 million. (Comparators to last year's second quarter are not available, as 2009-10 results for this line comprised both RFS and a realigned line of business, Independent Business and Agriculture.) To meet growing customer needs in Sylvan Lake, RFS expanded an agency into a new branch that features several environmental innovations, including a green roof.
Independent Business and Agriculture financial services (IB&Ag) - This line of business, newly created last quarter, provides services to Alberta's small businesses, farmers and other agriculture customers. Its assets stood at $3.9 billion at the end of the second quarter. Operating revenue was $65.1 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. CFS's assets grew slightly by $36.1 million over the last year. Operating revenue was $58.8 million, an increase over last year of $6.0 million, or 11.3 per cent.
ATB Investor Services (IS) - This line of business is responsible for growing and protecting wealth for more than 52,000 customers. At the end of the first quarter, client assets under IS's management and administration reached $5.6 billion, up $0.9 billion from last year's second quarter, or 19.9 per cent.
ATB in the Community - In September 2010, ATB launched Untapped Alberta 2010, which saw Alberta music stars play an eight-community concert series throughout the province, including smaller centres such as Beaverlodge, Whitecourt and Camrose. ATB also launched its Youth Education Support bursary, which rewarded six young Alberta post-secondary scholars who were in government care with significant financial support, mentorship, career opportunities and financial literacy courses.
About ATB Financial - ATB Financial is the largest Alberta-based financial institution, with assets of $26.3 billion. It provides Retail Financial Services, Independent Business and Agriculture Financial Services, Investor Services, and Corporate Financial Services to more than 680,000 Albertans in 243 communities. It provides service through 166 branches and 130 agencies, telephone and Internet banking, a Customer Contact Centre, and Automated Banking Machines. ATB Financial was established in 1938 and has been a provincial Crown corporation since 1997. ATB has been named one of Canada's 50 Best Employers by Report on Business Magazine, one of the 75 Best Workplaces in Canada by the Great Place to Work Institute, and one of Canada's Top 100 Employers and Alberta's Top 50 Employers by Mediacorp Canada Inc.
For complete second-quarter financial results, including Management's Discussion and Analysis, please visit www.atb.com
Highlights | ||||||||||
(unaudited) | ||||||||||
ATB FINANCIAL | ||||||||||
FY 2011 Q2 HIGHLIGHTS | ||||||||||
For the three months ended | For the six months ended | |||||||||
September 30 | June 30 | September 30 | September 30 | September 30 | ||||||
($ in thousands) | 2010 | 2010 | 2009 | 2010 | 2009 | |||||
Operating results | ||||||||||
Net interest income | $ 182,833 | $ 171,474 | $ 172,775 | $ 354,307 | $ 333,042 | |||||
Other income | 41,131 | 52,949 | 50,948 | 94,080 | 101,186 | |||||
Total operating revenue | 223,964 | 224,423 | 223,723 | 448,387 | 434,228 | |||||
Provision for credit losses | 7,035 | 3,049 | 10,250 | 10,084 | 29,300 | |||||
Non-interest expenses | 171,024 | 174,903 | 157,515 | 345,927 | 319,924 | |||||
Net income before PILOT and ABCP | 45,905 | 46,471 | 55,958 | 92,376 | 85,004 | |||||
Payment in lieu of tax | 10,559 | 10,688 | 12,870 | 21,247 | 19,551 | |||||
Adjusted net income (1) | 35,346 | 35,783 | 43,088 | 71,129 | 65,453 | |||||
Recovery on asset-backed commercial paper, net of PILOT | 2,971 | - | - | 2,971 | 3,104 | |||||
Net income | $ 38,317 | $ 35,783 | $ 43,088 | $ 74,100 | $ 68,557 | |||||
Financial position | ||||||||||
Net loans | $ 23,124,600 | $ 22,687,215 | $ 22,349,737 | $ 23,124,600 | $ 22,349,737 | |||||
Total assets | $ 26,331,669 | $ 26,185,029 | $ 27,159,920 | $ 26,331,669 | $ 27,159,920 | |||||
Total deposits | $ 23,341,700 | $ 23,425,296 | $ 24,204,494 | $ 23,341,700 | $ 24,204,494 | |||||
Equity | $ 1,864,488 | $ 1,828,713 | $ 1,781,477 | $ 1,864,488 | $ 1,781,477 | |||||
Key performance measures (%) | ||||||||||
Return on average assets | 0.59 | 0.56 | 0.64 | 0.58 | 0.51 | |||||
Return on average assets (2) | 0.54 | 0.56 | 0.64 | 0.55 | 0.49 | |||||
Operating revenue growth (2) | 0.11 | 6.6 | (0.6) | 3.3 | (1.2) | |||||
Other income to operating revenue (2) | 18.4 | 23.6 | 22.8 | 21.0 | 23.3 | |||||
Operating expense growth | 8.6 | 7.7 | 5.0 | 8.1 | 4.9 | |||||
Efficiency ratio (2) | 76.4 | 77.9 | 70.4 | 77.2 | 73.7 | |||||
Net interest spread | 2.95 | 2.84 | 2.71 | 2.88 | 2.66 | |||||
Credit losses to average loans | 0.12 | 0.05 | 0.18 | 0.09 | 0.26 | |||||
Net impaired loans to total gross loans | (0.27) | (0.37) | (0.36) | (0.27) | (0.36) | |||||
Net loan growth | 3.5 | 2.6 | 8.8 | 3.5 | 8.8 | |||||
Net loan growth(3) | 4.9 | 5.6 | 13.1 | 4.9 | 13.1 | |||||
Total asset growth(3) | (1.5) | 1.6 | 11.3 | (1.5) | 11.3 | |||||
Total deposit growth | (3.6) | (1.3) | 5.6 | (3.6) | 5.6 | |||||
(1) Adjusted net income is a non-GAAP measure which excludes the recovery on asset-backed commercial paper (ABCP) | ||||||||||
(2) Excludes the recovery on ABCP. | ||||||||||
(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 November 17, 2010.
For further information: For further information:
Barry Strader
Media Relations
ATB Financial
(780) 886-4398 (cell); (780) 495-1343 (office)
e-mail: bstr[email protected]
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