Western Financial Group reports second quarter 2009 results



    HIGH RIVER, AB, Aug. 13 /CNW/ - (TSX - WES) - Western Financial Group
("the Company") announced today its operating and financial results for the
three and six months ended June 30, 2009.
    "Our company is progressing toward its 2009 objectives," said Scott
Tannas, President and CEO. "Our profits are up substantially over last
quarter, and we see signs of accelerating growth across our businesses. The
Network and Western Life both posted record quarters for revenue and operating
profit. Both operations are growing top and bottom lines at a rate that
exceeds their industry peers. Bank West has managed its business cautiously
through the first half of 2009, and continues to maintain strong credit
quality, with non performing loans at a respectable percentage relative to the
major Canadian Banks. With the summer funding season in swing, and fall
harvest coming, the Bank is now in a position to profitably grow its
operations in the third quarter."

    
    -------------------------------------------------------
    2009 OBJECTIVES

    Same Store Revenue                        5%-8% growth
    Network Operating Margin                           29%
    Bank West Specific Provisions           50 bps or less
    Western Life Loss Ratio                 (less than)45%
    Overall 2009 Net Income         $14.5 to $16.5 million
    -------------------------------------------------------



    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS

    (in $ thousands
     except for per     THREE MONTHS ENDED JUNE 30  SIX MONTHS ENDED JUNE 30
     share amounts)        2009     2008  % Change    2009     2008  % Change

    The Network
    Commissions and
     other customer
     income             $23,109  $21,872     5.7 % $40,631  $38,361     5.9 %
    Operating expenses   14,882   13,929     6.8 %  28,813   26,568     8.5 %
                        -------- --------          -------- --------

    Operating income    $ 8,227  $ 7,943     3.6 % $11,818  $11,793     0.2 %
                        -------- --------          -------- --------
                        -------- --------          -------- --------

    Bank West
    Interest and
     investment income    6,685    4,610    45.0 %  12,224    9,551    28.0 %
    Interest expense -
     customer deposits    3,778    3,103    21.7 %   7,432    6,499    14.3 %
                        -------- --------          -------- --------
    Net interest and
     investment income    2,908    1,507    93.0 %   4,792    3,052    57.0 %
    Provisions for
     credit losses          517      129   300.0 %     806      209   286.3 %
    Operating expenses    2,625      943   178.3 %   4,724    1,711   176.1 %
                        -------- --------          -------- --------

    Operating (loss)
     income             $  (235) $   434  (154.1)% $  (738) $ 1,132  (165.2)%
                        -------- --------          -------- --------
                        -------- --------          -------- --------

    Western Life
    Premium and
     investment income   10,841    7,488    44.8 %  18,791   15,491    21.3 %
    Policyholder benefits 5,199    2,782    86.9 %   8,832    6,487    36.1 %
    Operating expenses    3,995    3,446    15.9 %   7,373    6,568    12.3 %
                        -------- --------          -------- --------

    Operating income    $ 1,647  $ 1,261    30.6 % $ 2,586  $ 2,436     6.2 %
                        -------- --------          -------- --------
                        -------- --------          -------- --------

    Corporate and all
     other
    Other revenues          243      401   (39.4)%     612    1,070   (42.8)%
    Operating expenses    2,602    1,892    37.5 %   4,752    4,291    10.7 %
                        -------- --------          -------- --------

    Operating loss      $(2,360) $(1,491)   58.3 % $(4,140) $(3,221)   28.5 %
                        -------- --------          -------- --------
                        -------- --------          -------- --------

    Total operating
     income             $ 7,280  $ 8,147   (10.6)% $ 9,526  $12,140   (21.5)%
                        -------- --------          -------- --------
                        -------- --------          -------- --------

    Net income            4,925    5,839   (15.7)%   5,839    8,225   (29.0)%
    Preferred dividends  (1,002)  (1,908)  (47.5)%  (2,005)  (1,908)      - %
                        -------- --------          -------- --------
    Earnings available
     to common
     shareholders         3,923    3,931    (0.2)%   3,834    6,317   (39.3)%

    Earnings per common
     share
      - basic ($)       $  0.08  $  0.08     0.0 % $  0.08  $  0.13   (41.1)%
      - diluted ($)     $  0.07  $  0.08   (12.5)% $  0.07  $  0.13   (42.5)%
    -------------------------------------------------------------------------
    

    The Network

    Margins rose significantly in the quarter, bringing the six month margin
to 29%. Same Store Sales are up 4.4%, and same store customer count growth
grew by 1.9% on an annualized basis.

    Bank West

    The Bank's loan book increased slightly over the quarter, in preparation
for expected growth in funding in the summer and fall seasons. Credit quality
remained strong, with non performing loans at 1.3% at June 30th.

    Western Life

    Western Life's industry leading growth continued with premium sales up by
22% in the quarter, the result of substantial cross sales within the Western
Financial Group family. Investment income also improved significantly over the
first quarter.

    Strategic Partnership Portfolio

    The Company's partnerships in investment banking, insurance distribution
and manufacturing provided positive income for the quarter.

    Conference Call

    Western Financial Group will host a conference call to discuss the
Company's second quarter financial results on Tuesday, August 18, 2009 at 8:00
am Mountain time (10:00 am Eastern time). To participate in the live
conference call, please dial either (416) 644-3418 or (800) 732-0232. A replay
of the call will be available from August 18th at 10:00 am MT until September
1st at 11:59 PM MT. To access the replay please dial either (416) 640-1917 or
(877) 289-8525 and enter the passcode 21313011 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.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
and Bank West.
    The Company's Financial Report for the second quarter of 2009 will be
filed on SEDAR on or before August 14, 2009

    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 SHEET
    (unaudited)
    (in thousands, except for per share amounts)
                                                           As at       As at
                                                         June 30 December 31
                                                            2009        2008
    -------------------------------------------------------------------------
    ASSETS
    Cash and cash equivalents                          $  48,627   $  28,563
    Interest rate swap (Note 14)                              67           -
    Marketable securities - held-for-trading (Note 14)    55,350      53,091
    Marketable securities - available-for-sale (Note 14)  16,448     103,808
    Mortgages and loans (Note 6 and 14)                  341,453     272,135
    Equity investments                                    41,305      38,040
    Accounts receivable                                   29,931      23,999
    Prepaid expenses                                       7,955       8,039
    Future income taxes                                      668         539
    Capital assets                                        16,348      15,325
    Intangible assets                                     34,684      27,996
    Goodwill                                             118,089     105,285
    -------------------------------------------------------------------------
                                                       $ 710,925   $ 676,820
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Customer deposits                                  $ 329,570   $ 333,130
    Actuarial liabilities                                 37,732      38,256
    Provision for unpaid and unreported claims             9,860       8,510
    Accounts payable and accrued liabilities              56,263      50,378
    Income taxes payable (recoverable)                     1,077        (800)
    Long-term debt (Note 7)                               63,378      38,151
    Future income taxes                                    5,666       5,480
    -------------------------------------------------------------------------
    Total liabilities                                    503,546     473,105
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital (Note 8)                               173,438     173,438
    Other paid in capital (Note 7)                           268           -
    Contributed surplus                                    1,971       1,975
    -------------------------------------------------------------------------
                                                         175,677     175,413
    Accumulated other comprehensive income (loss)            326        (296)
    Retained earnings                                     31,376      28,598
    -------------------------------------------------------------------------
    Total shareholders' equity                           207,379     203,715
    -------------------------------------------------------------------------
                                                       $ 710,925   $ 676,820
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
                                   2009        2008        2009        2008
    -------------------------------------------------------------------------
    REVENUE
    Commission and other
     customer income           $  24,540   $  22,129   $  42,981   $  38,927
    Premium income                 9,678       7,717      18,125      14,878
    Interest income on
     customer loans                5,451       4,610      10,373       9,551
    Investment income
      Change in fair value of
       held-for-trading
       securities                    758        (615)        627        (158)
      Realized gain (loss) on
       sales of held-for-trading
       securities                     24         (25)         30          (4)
      Realized loss on sales of
       available-for-sale assets      (3)          -        (731)          -
      Other net investment income    430         555         853       1,279
    -------------------------------------------------------------------------
                                  40,878      34,371      72,258      64,473

    EXPENSES
      Operating expenses          24,104      20,210      45,662      39,138
      Policyholder benefits        5,199       2,782       8,832       6,487
      Interest expense -
       customer deposits           3,778       3,103       7,432       6,499
      Provision for credit
       losses (Note 14)              517         129         806         209
    -------------------------------------------------------------------------
    Income before the following:   7,280       8,147       9,526      12,140
      Income from equity
       investments                 1,088         845         835       1,458
      Gain on sale of
       intangible assets               -         598           -         598
      Interest and financing
       costs on long-term debt    (1,041)       (553)     (1,603)     (1,136)
      Amortization of intangible
       assets                       (450)       (278)       (862)       (630)
      Amortization of capital
       assets                       (736)       (841)     (1,427)     (1,356)
    -------------------------------------------------------------------------
    Income before income taxes     6,141       7,918       6,469      11,074
    Income taxes                  (1,216)     (2,079)       (630)     (2,849)
    -------------------------------------------------------------------------

    NET INCOME FOR THE PERIOD  $   4,925   $   5,839   $   5,839   $   8,225
    -------------------------------------------------------------------------

    Retained earnings,
     beginning of period       $  27,981      29,923      28,598      28,015
      Preferred share dividends   (1,002)     (1,908)     (2,005)     (1,908)
      Common share dividends        (528)       (493)     (1,056)       (971)
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                    $  31,376   $  33,361   $  31,376   $  33,361
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share (Note 9)
      Basic                    $    0.08   $    0.08   $    0.08   $    0.13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                  $    0.07   $    0.08   $    0.07   $    0.13
    





For further information:

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


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