Western Financial Group reports third quarter financial results

    /THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWS
    SERVICE OR OTHERWISE IN THE UNITED STATES./

    HIGH RIVER, AB, Nov. 12 /CNW/ - (TSX - WES) - Western Financial Group
("the Company") announced today its operating and financial results for the
three and nine months ended September 30, 2008.

    FINANCIAL            Three months ended             Nine months ended
     HIGHLIGHTS              September 30                  September 30
    (in $
     thousands)       2008      2007  % Change      2008      2007  % Change
    -------------------------------------------------------------------------

    THE NETWORK
    Revenue ($)     19,825    17,007   16.6  %    58,186    49,290   18.0  %
    Operating
     income ($)      5,583     4,944   12.9  %    17,376    16,080    8.1  %

    BANK WEST
    Interest and
     investment
     income    ($)   4,677     3,312   41.2  %    14,228     8,632   64.8  %
    Net interest
     income ($)      1,492       665  124.4  %     4,544     2,953   53.9  %
    Operating
     income
     (loss) ($)        (32)        3 (1166.7) %    1,100       249  341.8  %

    WESTERN LIFE
    Premium and
     investment
     income ($)      7,092     8,306  (14.6) %    22,584    20,440   10.5  %
    Operating
     income ($)      1,086       733   48.1  %     3,522     2,514   40.1  %

    CORPORATE
     AND ALL OTHER
    Revenue ($)        418       929 (55.0)  %     1,487     2,396   (37.9)%
    Operating
     income ($)     (2,187)   (1,343) 62.8  %     (5,408)   (4,432)  22.0  %

    CONSOLIDATED
    Revenue ($)     32,012    29,554    8.3  %    96,485    80,758   19.5  %
    Net income ($)   2,100     2,344  (10.4) %    10,325     8,979   15.0  %
    Earnings
     per share
      - basic ($) $   0.04  $   0.05  (20.0) %  $   0.17  $   0.19  (10.5) %
      - diluted
        ($)       $   0.04  $   0.04    0.0  %  $   0.17  $   0.17    0.0  %
    -------------------------------------------------------------------------

    Scott Tannas, Western Financial Group President & C.E.O. offered the
following comments:

    Continued Strong Operating Earnings

    "Our operating businesses continue to do well, posting increases in
revenue and operating income. By virtually every measure, we are making
progress toward our goal of strong internal growth in revenue, market share
and profitability. The Network's same store sales grew by 9.7% and our same
store customer count is up by 4.3%, both a clear demonstration of our market
share growing. The Network's margin stands at its long term goal of 30%. Bank
West's operating income has shown dramatic improvement and its loan provisions
and delinquency indicators are within expected parameters, in spite of some
"lumpy" expenses in the third quarter. Western Life continues to provide
significant growth in sales and profitability in spite of reduced investment
income. All in all, we are pleased with the performance of the Company's
operations, and believe we are well positioned to grow profitability and
revenue over the coming quarters and years ahead. Western Canada's economy
continues to be strong, and is expected to lead the country in 2009 and
beyond. We are noticing a number of leading indicators of insurance rate
increases. We are beginning to see the effects of integration and synergy
across our operating units, and we expect this to accelerate into 2009."

    Reduction in short term expected returns from Strategic Partners

    "Our strategic partnership portfolio, specifically, our partners at
Jennings Capital are suffering through a difficult period in the investment
industry, and in the third quarter suffered a loss - primarily the result of
mark to market inventory writedowns. We expect that the fourth quarter will
continue to be a challenge, and that Jennings over the next number of quarters
will likely deliver financial results that are significantly reduced compared
to those of the past. That said we firmly believe that Jennings is much better
positioned than many of its competitors to weather the storm and take
advantage of coming opportunities. Jennings' operating platform is efficient
and low cost. It has no debt, and has zero exposure to derivatives or credit
swaps. We remain committed to our partnership with Jennings. Our other
strategic partners - H.E.D., Falkins and Harvard Western all are operating at
or ahead of their budgets."

    Change in 2008 Objectives

    Given the results at nine months, and management's outlook for the final
quarter, the Company is adjusting its 2008 stated goals to reflect a reduction
in expected contributions from its strategic partnership portfolio. The Bank
West portfolio growth goal is also adjusted to reflect the expected closing of
the acquisition of AgriFinancial on or before December 31. The Company's
revenue growth target remains unchanged.

                    ------------------------------------------
                     2008 OBJECTIVES
                     Same Store Revenue     7%-10% growth
                     Bank Assets            25% growth
                     EPS                    0%-10% reduction
                    ------------------------------------------

    Tannas concluded by saying "While we are disappointed to have our overall
bottom line progress hampered in the short term by events in the stock market,
we remain very excited about our ability to grow our business and increase
profitability in the months and years ahead."

    Conference Call

    Western Financial Group will host a conference call to discuss the
Company's third quarter results on Monday, November 17, 2008 at 11:00 am
Mountain time (1:00 pm Eastern time). To participate in the live conference
call, please dial either (416) 644-3429 or (800) 587-1893. A replay of the
call will be available from November 17th at 1:00 pm MT until December 1st at
11:59 PM MT. To access the replay please dial either (416) 640-1917 or (877)
289-8525 and enter the passcode 21289109 followed by the pound sign. The
conference will also be broadcast live over the internet and archived through
the Company's website at www.westernfinancialgroup.net.

    Western Financial Group is a leader in providing insurance, financial
services and banking services in over 90 communities, to more than 400,000
individuals and businesses in Western Canada through its WFG Agency Network
locations, its affiliated insurance brokers, Western Life Assurance Company
and Bank West.
    The Company's Financial Report for the third quarter of 2008 will be
filed on SEDAR on or before November 13, 2008.

    Forward-looking statements involve numerous assumptions, risks and
uncertainties, including the risk that prediction and other forward-looking
statements may not prove to be accurate. We caution the reader not to place
undue reliance on these disclosures, as a number of important factors could
cause actual results to differ materially from the estimates and comments
expressed in them. Such factors may include, but are not limited to: changing
financial and economic conditions in Canada, particularly in Western Canada;
regulatory developments; competition industry trends and availability of
capital resources; and our anticipated success in managing our risks. We
caution readers that the foregoing list is not exhaustive. Except as required
by law, we do not undertake to update any forward-looking statements, written
or oral, that we may make from time to time regarding our operations and
performance.

    CONSOLIDATED BALANCE SHEETS
     (unaudited)
     (in thousands,
     except for per
     share amounts)


                                       As at September 30  As at December 31
                                                     2008               2007
    Cash and cash
     equivalents                                $  10,667          $  36,033
    Marketable securities
     - held-for-trading                            51,018             46,886
    Marketable securities
     - available-for-sale                          33,287             51,104
    Accounts receivable                            29,882             26,680
    Prepaid expenses                                6,328              5,960
    Income taxes
     receivable                                         -              2,191
    Future income taxes                               501                584
    Other assets                                      446              1,489
    Equity investments                             40,607             26,100
    Mortgages and loans                           280,098            288,202
    Capital assets                                 15,545             12,141
    Intangible assets                              28,312             27,166
    Goodwill                                      103,681             98,165
    -------------------------------------------------------------------------
                                                $ 600,372          $ 622,701
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Accounts payable and
     accrued liabilities                        $  46,627         $   55,685
    Actuarial liabilities                          36,017             38,042
    Provision for unpaid
     and unreported claims                          8,427              8,653
    Income taxes payable                              778                  -
    Customer deposits                             259,287            283,299
    Long term debt                                 35,273             33,389
    Future income taxes                             5,358              5,274
    -------------------------------------------------------------------------
                                                $ 391,767          $ 424,342
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital (Note 6)                      $ 173,659          $ 168,693
    Other paid in capital                               -                 51
    Contributed surplus                             1,937              1,849
    Retained earnings                              34,930             28,015
    Accumulated other
     comprehensive loss                            (1,921)              (249)
    -------------------------------------------------------------------------
    Total Shareholders' Equity                  $ 208,605          $ 198,359
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                $ 600,372          $ 622,701
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME
     AND RETAINED EARNINGS
     (unaudited)
     (in thousands,
     except for per share amounts)



                                    Three months ended     Nine months ended
                                               Sept 30               Sept 30
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    REVENUE
    Commission and other
     customer income              $  20,119  $  17,278  $  59,046  $  50,210
    Premium income                    8,121      7,370     22,999     20,001
    Interest income on
     customer loans                   4,677      3,312     14,228      8,632
    Investment income
      Change in fair value of
       held-for-trading assets       (1,458)       362     (1,616)    (1,134)
      Realized gain (loss)
       on sales of
       held-for-trading assets            2        173         (2)        11
      Other net
       investment income                551      1,059      1,830      3,038
    -------------------------------------------------------------------------
                                     32,012     29,554     96,485     80,758
    -------------------------------------------------------------------------

    EXPENSES
    Operating expenses               21,468     18,258     60,606     50,798
    Policyholder benefits             2,550      4,312      9,037      9,168
    Interest expense -
     customer deposits                3,185      2,272      9,684      5,679
    Provision for credit losses         360        375        569        702
    -------------------------------------------------------------------------

    Income before the following       4,449      4,337     16,590     14,411

      Income from long-term
       investments                       67        256      1,525      1,850
      Gain on sale of investments
       and assets                       303          -        901          -
      Interest and financing costs
       on long-term debt               (540)      (532)    (1,676)    (1,959)
      Amortization of
       intangible assets               (316)      (215)      (946)      (625)
      Amortization of capital assets   (731)      (401)    (2,087)    (1,154)
    -------------------------------------------------------------------------

    Income before income taxes        3,232      3,445     14,306     12,523
    Income taxes                     (1,132)    (1,101)    (3,981)    (3,544)
    -------------------------------------------------------------------------

    NET INCOME FOR THE PERIOD      $  2,100   $  2,344  $  10,325   $  8,979
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of period as
     previously stated             $  33,361   $ 24,529  $  28,015   $ 18,538
    Cumulative effect of
     adopting new
     accounting policies                  -          -          -        300
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of period as restated           33,361     24,529     28,015     18,838

      Preferred share dividends           -          -     (1,908)      (501)
      Common share dividends           (531)      (459)    (1,502)      (902)
    -------------------------------------------------------------------------
    Retained earnings,
     end of period                   34,930     26,414     34,930     26,414
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share (Note 7)
      Basic                        $    0.04   $   0.05  $    0.17   $   0.19
      Diluted                      $    0.04   $   0.04  $    0.17   $   0.17

For further information: Arlene Beggs, Assistant to the President,
Western Financial Group, (403) 652-2663, info@westernfinancialgroup.net