Western Financial Group reports record second 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, Aug. 11 /CNW/ - (TSX - WES ) - Western Financial Group
("the Company") announced today its strongest quarterly net income result, as
well as operating and financial results for the six months ended June 30,
2008.

    
                                Three months ended       Six months ended
    FINANCIAL HIGHLIGHTS                   June 30                June 30
    (in $ thousands)         2008    2007  % Change   2008    2007  % Change
    -------------------------------------------------------------------------
    THE NETWORK
    Revenue ($)            21,872  17,739    23.3 %  38,361  32,282   18.8 %
    Operating income ($)    7,943   6,755    17.6 %  11,793  11,136    5.9 %

    BANK WEST
    Interest and investment
     income ($)             4,609   2,760    67.0 %   9,551   5,320   79.5 %
    Net interest income ($) 1,506     934    61.2 %   3,052   1,913   59.5 %
    Operating income (loss)
     ($)                      435     (42) 1135.7 %   1,132     246  360.2 %

    WESTERN LIFE
    Premium and investment
     income ($)             7,488   5,245    42.8 %  15,492  12,135   27.7 %
    Operating income ($)    1,260     948    32.9 %   2,436   1,781   36.8 %

    CORPORATE AND ALL OTHER
    Revenue ($)               402     901  (55.4) %   1,069   1,467 (27.1) %
    Operating income ($)   (1,491) (1,475)    1.1 %  (3,221) (3,089)   4.3 %

    CONSOLIDATED
    Revenue ($)            34,371  26,645    29.0 %  64,473  51,204   25.9 %
    Net income ($)          5,839   4,090    42.8 %   8,225   6,635   24.0 %
    Earnings per share
      - basic ($)          $ 0.08  $ 0.08    (0.0)   $ 0.13  $ 0.14   (7.1)
      - diluted ($)        $ 0.08  $ 0.07    14.3    $ 0.13  $ 0.12    8.3
    -------------------------------------------------------------------------
    

    "After an encouraging start to the year, our second quarter was the
strongest in our history," said Scott Tannas, President and CEO. "Performance
has been driven on a broad base of strong organic revenue growth, low loan
loss provisions, and the widening of our Network's margins. We continue to be
on target for growth in revenue, earnings, and market share for 2008."

    
                   ---------------------------------------
                               2008 OBJECTIVES
                    Same Store Revenue      7%-10% growth
                    Bank Assets             10% growth
                    EPS                     8%-12% growth
                   ---------------------------------------
    

    The Network continued to increase market share, with same store sales up
again from 8.1% to 9.5% year over year. Products per customer held steady at
2.2, and EBITDA margins improved to 36% in the quarter.
    Bank West decreased its loan book slightly from $283.6 million in the
first quarter to $281.2 million in the second quarter. "We continue to
maintain a conservative risk profile," said Bob Marshall, President of Bank
West. "The opportunities for growth are plentiful in the current market,
however we continue to seek customer relationships in areas that fit our
strategic goals rather than transactions that may only provide short term
profitability." The Bank's operating income grew to $1.1 million for the six
months of 2008 compared to $246,000 for the same period in 2007.
    Western Life's income posted a record first 6 months in its history, the
result of stable claims ratios and strong new sales. Policy/certificate count
increased from 23,952 to 26,992, premium and investment income increased 28%
to $15.5 million while operating income increased 37% to $2.4 million for the
period ending June 30, 2008.
    The Company's strategic partnership portfolio, including Jennings
Capital, HED, Falkins Insurance and Harvard Western, all showed expected
returns in the second quarter.

    Conference Call

    Western Financial Group will host a conference call to discuss the
Company's second quarter results on Tuesday, August 12, 2008 at 2:00 pm
Mountain time (4:00 pm Eastern time). To participate in the live conference
call, please dial either (416) 644-3431 or (866) 250-4909. A replay of the
call will be available from August 12th at 4:00 pm MT until August 26th at
11:59 PM MT. To access the replay please dial either (416) 640-1917 or (877)
289-8525 and enter the passcode 21279764 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 second quarter of 2008 will be
filed on SEDAR on or before August 11, 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 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
                                                         June 30 December 31
                                                            2008        2007
    ASSETS
    Cash and cash equivalents                          $  24,612   $  36,033
    Marketable securities - held-for-trading              52,836      46,886
    Marketable securities - available-for-sale            27,495      51,104
    Accounts receivable                                   27,863      26,680
    Prepaid expenses                                       6,070       5,960
    Income taxes receivable                                    -       2,191
    Future income taxes                                      401         584
    Other assets                                           1,262       1,489
    Equity investments                                    38,092      26,100
    Mortgages and loans                                  279,257     288,202
    Capital assets                                        15,065      12,141
    Intangible assets                                     27,200      27,166
    Goodwill                                              99,889      98,165
    -------------------------------------------------------------------------
                                                       $ 600,042   $ 622,701
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Accounts payable and accrued liabilities           $  48,345   $  55,685
    Actuarial liabilities                                 37,254      38,042
    Provision for unpaid and unreported claims             9,077       8,653
    Income taxes payable                                      27           -
    Customer deposits                                    255,638     283,299
    Long term debt                                        36,685      33,389
    Future income taxes                                    5,260       5,274
    -------------------------------------------------------------------------
                                                       $ 392,286   $ 424,342
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital (Note 6)                               173,733     168,693
    Other paid in capital                                      -          51
    Contributed surplus                                    1,896       1,849
    Retained earnings                                     33,361      28,015
    Accumulated other comprehensive loss                  (1,234)       (249)
    -------------------------------------------------------------------------
    Total Shareholders' Equity                           207,756     198,359
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                       $ 600,042   $ 622,701
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (unaudited)
    (in thousands, except for
     per share amounts)
                                  Three months ended        Six months ended
                                             June 30                 June 30
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    REVENUE
    Commission and other
     customer income           $  22,129   $  17,973   $  38,927   $  32,932
    Premium income                 7,717       6,383      14,878      12,631
    Interest income on customer
     loans                         4,610       2,760       9,551       5,320
    Investment income
      Change in fair value of
       held-for-trading assets      (615)     (1,451)       (158)     (1,496)
      Realized gain (loss) on
       sales of held-for-trading
       assets                        (25)       (162)         (4)       (162)
      Other net investment
       income                        555       1,142       1,279       1,979
    -------------------------------------------------------------------------
                                  34,371      26,645      64,473      51,204
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EXPENSES
    Operating expenses            20,210      16,916      39,138      32,540
    Policyholder benefits          2,782       1,447       6,487       4,856
    Interest expense - customer
     deposits                      3,103       1,826       6,499       3,407
    Provision for credit losses      129         270         209         327
    -------------------------------------------------------------------------

    Income before the following    8,147       6,186      12,140      10,074

      Income from long-term
       investments                   845         832       1,458       1,594
      Gain on sale of intangible
       assets                        598           -         598           -
      Interest and financing
       costs on long-term debt      (553)       (901)     (1,136)     (1,427)
      Amortization of
       intangible assets            (278)       (206)       (630)       (410)
      Amortization of capital
       assets                       (841)       (373)     (1,356)       (753)
    -------------------------------------------------------------------------

    Income before income taxes     7,918       5,538      11,074       9,078
    Income taxes                  (2,079)     (1,448)     (2,849)     (2,443)
    -------------------------------------------------------------------------

    NET INCOME FOR THE PERIOD      5,839       4,090       8,225       6,635
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings,
     beginning of period as
     previously reported       $  29,923   $  21,383   $  28,015   $  18,538
    Cumulative effect of
     adopting new accounting
     policies                          -           -           -         300
    -------------------------------------------------------------------------
    Retained earnings,
     beginning of period
     as restated                  29,923      21,383      28,015      18,838
      Preferred share dividends   (1,908)       (501)     (1,908)       (501)
      Common share dividends        (493)       (443)       (971)       (443)
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                       33,361      24,529      33,361      24,529
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share (Note 7)
      Basic                    $    0.08   $    0.08   $    0.13   $    0.14
      Diluted                  $    0.08   $    0.07   $    0.13   $    0.12

    





For further information:

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

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