Western Financial Group reports first quarter 2010 results

HIGH RIVER, AB, May 14 /CNW/ - (TSX - WES) - Western Financial Group ("the Company") announced today its operating and financial results for the three months ended March 31, 2010.

    
    Financial Highlights
    Three Months Ended March 31
    (unaudited)
    (in $ thousands except for per
     share amounts)                             2010        2009    % Change
    -------------------------------------------------------------------------
    The Network
    Commissions and other customer revenue $  22,420   $  17,522       28.0%
    Operating expenses                        18,460      13,932       32.5%
    -------------------------------------------------------------------------

    Operating income                           3,960       3,590       10.3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Bank West
    Interest and investment income         $   6,610   $   5,537       19.4%
    Interest expense - customer deposits       2,977       3,654      -18.5%
    -------------------------------------------------------------------------
    Net interest and investment income         3,633       1,883       92.9%
    Provisions for credit losses                 176         289      -39.1%
    Operating expenses                         2,317       2,096       10.6%
    -------------------------------------------------------------------------

    Operating (loss) income                $   1,140   $    (502)     327.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Western Life
    Premium and investment income          $  10,804   $   7,950       35.9%
    Policyholder benefits                      5,727       3,633       57.6%
    Operating expenses                         3,878       3,377       14.8%
    -------------------------------------------------------------------------

    Operating income                       $   1,199   $     940       27.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SecuriCan
    Premium and investment income              9,032           -           -
    Policyholder benefits                      3,943           -           -
    Operating expenses                         3,050           -           -
    -------------------------------------------------------------------------

    Operating income                           2,039   $       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Corporate and all other
    Other revenues                               413   $     372       11.1%
    Operating expenses                         2,474       2,154       14.9%
    -------------------------------------------------------------------------

    Operating loss                         $  (2,061)  $  (1,782)      15.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total operating income                 $   6,277   $   2,246      179.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income                                 2,269   $     914      148.2%
    Preferred dividends                       (1,832)     (1,003)      82.7%
    -------------------------------------------------------------------------

    Earnings (loss) available to common
     shareholders                          $     437   $     (89)     590.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      - basic ($)                               0.01        0.00
      - diluted ($)                             0.01        0.00



    -----------------------------------------------
    2010 KEY OBJECTIVES
    -----------------------------------------------
    Network Same Store Sales          4%-7% growth
    Network Operating Margin                   28%
    Bank West Specific Provisions   75 bps or less
    SecuriCan Loss Ratio               55% or less
    Western Life Loss Ratio            45% or less
    Overall 2010 Net Income   $18.5 to $20 million
    -----------------------------------------------
    

"We are pleased to report early success in achieving our goal for a strong 2010 financial result," said Scott Tannas, President and CEO. "Our net income is ahead of budget for the quarter with a number of bright spots, including our first ever $1 million + quarter of operating income at Bank West. Our Network indicators are in line with expectations, and we noticed an acceleration in same store growth as the quarter progressed. The Network margin is lower than this time last year, as a result of the addition of Group Insurance Solutions (formerly HED), which has magnified the Network's seasonal revenue characteristics. Both Western Life and SecuriCan are ahead of budget after the quarter. As a result, we remain confident that we are on track to achieve our 2010 financial goals."

The Network

The Network combined margin for the quarter was 18%, with Group Insurance Solutions margin at 8% and the retail division at 20%. Retail same store sales are at 4.7%, and same store customer count growth grew by 2.0% on a YTD, annualized basis.

Bank West

The Bank's loan book increased slightly over the quarter, to $360.7 million. Specific and general loan loss reserves were significantly lower compared to the prior quarter, the result of an improved credit environment. Net interest margin stands at a record high of 4%.

Western Life

Western Life's industry leading growth continued with premium sales up by 10% year over year, the result of expanding distribution of creditor life products, and growing cross sales within the Western Financial Group family, including a substantial increase in Term Life sales by the Network.

SecuriCan

SecuriCan's premium revenue is up 15% and we saw improved loss ratios year over year at 44% compared to 50%.

Strategic Partnership Portfolio

The Company's partnerships in investment banking, insurance distribution and manufacturing provided positive income for the quarter, with all units delivering combined results in line with our budget expectations.

Conference Call

Western Financial Group will host a conference call to discuss the Company's first quarter financial results on Thursday, May 20, 2010 at 8:00 am Mountain time (10:00 am Eastern time). To participate in the live conference call, please dial (888) 231-8191 or (647) 427-7450 (Toronto). A replay of the call will be available from May 20th at 11:30 am Mountain time until June 3rd at 11:59 PM MT. To access the replay please dial either (800) 642-1687 or (416) 849-0833 and enter pass code 73235868. The conference will also be broadcast live over the internet and archived through the Company's website at www.westernfinancialgroup.ca.

Western Financial Group is a leader in providing insurance, financial services and banking services in over 90 communities, to more than 500,000 individuals and businesses in Western Canada through its wholly owned network of offices, its affiliated insurance brokers, Western Life Assurance Company, Bank West and SecuriCan General Insurance Company.

The Company's Financial Report for the first quarter of 2010 will be filed on SEDAR on or before May 14, 2010.

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 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       As at
                                                        March 31 December 31
                                                Note        2010        2009
    -------------------------------------------------------------------------
    ASSETS
    Cash and cash equivalents                          $  62,419   $  58,463
    Securities - held-for-trading                         62,742      61,373
    Securities - available-for-sale                3      41,068      30,901
    Mortgages, loans and leases, net of
     allowance for credit losses                   4     356,177     355,621
    Interest rate swaps                                      216          90
    Equity investments                                    11,693      11,591
    Capital assets                                        21,752      21,630
    Goodwill                                             156,205     148,205
    Intangible assets                                     65,940      66,719
    Accounts receivable                                   48,145      51,114
    Prepaid expenses                                       7,405       7,231
    Future income taxes                                    1,325       1,102
    Other assets                                           2,417       2,286
    -------------------------------------------------------------------------
                                                       $ 837,504   $ 816,326
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Customer deposits                                  $ 323,160   $ 317,953
    Actuarial liabilities                                 40,445      40,032
    Provision for unpaid and unreported claims            15,262      13,919
    Debt                                                  78,712      79,771
    Due to policyholders                                  19,632      20,392
    Accounts payable and accrued liabilities             100,140      82,700
    Income taxes payable                                     667       1,809
    Future income taxes                                   12,993      13,199
    -------------------------------------------------------------------------
    Total liabilities                                    591,011     569,775
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                        206,905     206,905
    Other paid in capital                                    268         268
    Contributed surplus                                    2,068       2,041
    -------------------------------------------------------------------------
                                                         209,241     209,214
    Accumulated other comprehensive loss           5        (123)       (129)
    Retained earnings                                     37,375      37,466
    -------------------------------------------------------------------------
    Total shareholders' equity                           246,493     246,551
    -------------------------------------------------------------------------
                                                       $ 837,504   $ 816,326
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME
    FOR THE THREE MONTHS ENDED MARCH 31
    (unaudited)
    (in thousands, except for per share amounts)

                                                            2010        2009
    -------------------------------------------------------------------------
    REVENUE
    Commission and other customer income               $  23,371   $  18,441
    Premium income                                        18,020       8,447
    Interest income on customer loans                      6,174       4,922
    Investment income
      Change in fair value of held-for-trading
       securities                                          1,032        (131)
      Realized gain (loss) on sales of available-
       for-sale assets                                        36        (728)
      Realized gain on sales of held-for-trading
       securities                                             39           6
      Other net investment income                            607         424
    -------------------------------------------------------------------------
                                                          49,279      31,381
    EXPENSES
      Operating expenses                                  30,179      21,559
      Policyholder benefits                                9,670       3,633
      Interest expense - customer deposits                 2,977       3,654
      Provision for credit losses                            176         289
    -------------------------------------------------------------------------
    Income before the following:                           6,277       2,246
      Income (loss) from equity investments                  143        (253)
      Interest and financing costs on debt                (1,410)       (562)
      Amortization of capital assets                        (800)       (412)
      Amortization of intangible assets                     (778)       (691)
    -------------------------------------------------------------------------
    Income before income taxes                             3,432         328
    Income taxes                                          (1,163)        586
    -------------------------------------------------------------------------

    NET INCOME FOR THE PERIOD                          $   2,269   $     914
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Preferred share dividends                          $  (1,832)  $  (1,003)
    -------------------------------------------------------------------------
    Net income (loss) available to common
     shareholders                                      $     437   $     (89)

    Average number of common shares                       49,367      49,333
    Average number of diluted common shares               49,419      49,333
    Earnings per common share
      Basic                                            $    0.01   $    0.00
    -------------------------------------------------------------------------
      Diluted                                          $    0.01   $    0.00
    

SOURCE Western Financial Group

For further information: For further information: Arlene Beggs, Executive Assistant to the CEO, Western Financial Group, (403) 652-2663, info@westernfg.ca


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890