The viability of franchised branches, or "community banks", of Bendigo and Adelaide Bank featured in
The Age once again at the weekend, with a partial analysis by one researcher reaching different conclusions to those recently publicised by the bank.
The newspaper cited research by John Williams, a former mayor of Essendon, and a former shoe retailer, the same source used for an article in July 2010 that reached equally adverse conclusions.
In the 2010 article, the newspaper cited analysis by Williams of the accounts of 77 community bank branches. In the latest article, The Age cites analysis by Williams of the accounts of 193 community bank branches.
The bank says the number of community bank branches is around 260 (though recent prospectuses for new branches put the number at 270).
According to Williams, 66 community franchises reported a loss in 2010. Twenty had lost all their capital and another eight have less than $100,000 of their capital remaining.
The bank's chief financial officer, Richard Fennell, told a Macquarie Equities' conference two Fridays ago that 10 per cent of community bank branches were in negative equity, a number consistent with Williams' research.
Two-thirds of community banks posted profits in 2010, Fennell said. Nine per cent incurred losses.
Of the remaining 25 per cent of community branches that reported losses, three-quarters were in their first three years of trading and their returns were in line with budget. Most of the remainder were in drought-affected areas.
Fennell said that 48 per cent paid dividends to shareholders, and that 58 per cent of those with a trading history of three years or more paid dividends.
The average shareholder yield was 8.4 per cent on the original investment, Fennell said.
Dividends paid since the inception of the scheme, in the late 1990s, amount to $17million, the bank's managing director, Mike Hirst, told The Age. Working capital losses to date are $27 million.