Western Financial Group reports year end 2009 results

HIGH RIVER, Alberta, March 15 /CNW/ - (TSX - WES) - Western Financial Group ("the Company") announced today its operating and financial results for the year ended December 31, 2009.

    
    YEARS ENDED DECEMBER 31
    (in $ thousands except for per share
     amounts)                                     2009       2008   % Change
    -------------------------------------------------------------------------
    The Network

    Commissions and other customer revenue   $  89,144  $  75,424       18.2%
    Operating expenses                          63,261     54,709       15.6%
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    Operating income                            25,883     20,715       24.9%
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    Bank West
    Interest and investment income           $  25,514  $  18,596       37.2%
    Interest expense - customer deposits        15,165     12,555       20.8%
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    Net interest and investment income          10,349      6,041       71.3%
    Provisions for credit losses                 2,645        936      182.5%
    Operating expenses                           8,249      3,867      113.3%
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    Operating (loss) income                  $    (545) $   1,238     -144.0%
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    Western Life
    Premium and investment income            $  40,691  $  32,923       23.6%
    Policyholder benefits                       20,123     14,789       36.1%
    Operating expenses                          15,565     13,907       11.9%
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    Operating income                         $   5,003  $   4,228       18.3%
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    SecuriCan
    Premium and investment income                9,077          -          -
    Policyholder benefits                        3,951          -          -
    Operating expenses                           3,052          -          -
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    Operating income                             2,074
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    Corporate and all other
    Other revenues                           $   1,650  $   1,959      -15.8%
    Operating expenses                           9,692      9,223        5.1%
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    Operating loss                           $  (8,042) $  (7,264)      10.7%
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    Total operating income                   $  24,373  $  18,915       28.9%
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    Total net income                         $  15,961  $   6,548      143.8%
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    Earnings per share
      - basic ($)                            $    0.22  $    0.05      344.0%
      - diluted ($)                          $    0.22  $    0.05      343.9%


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    2009 OBJECTIVES
    ----------------------------------------------------------
    Same Store Revenue                        5% to 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
    ----------------------------------------------------------
    

"We are pleased to report a solid result in a year of challenge," said Scott Tannas, President and CEO. "We achieved the majority of the 2009 objectives we published at the beginning of the year, including Net Income at the high side of the range. Our Network experienced a very strong quarter, with margins in line with target expectations, and contingent profit sharing revenue higher than expected. Western Life finished the year on target for loss ratio and well ahead of budget on net income. SecuriCan and HED contributed significantly to profit in Q4, their first quarter under our ownership. We remain focused on steering Bank West toward sustainable profitability. Their credit portfolio performance in the final quarter robbed them of a modest Q3 year to date profit, however our leading indicators of credit quality show that we have turned the corner. As we begin 2010, we believe we are well positioned to grow revenue and profit across all business units, and our 2010 Objectives reflect this view."

    
    ----------------------------------------------------------
    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
    ----------------------------------------------------------
    

The Network

Our margins for 2009 are at 29%, same store sales are at 4.2%, and same store customer count growth grew by 1.1% on an annualized basis.

Bank West

The Bank's loan book increased slightly over the quarter and ended the year at $360.5 million. Specific loan loss reserves were bolstered significantly in the fourth quarter, bringing the yearly amount to 75 bps.

Western Life

Western Life's industry leading growth continued with premium sales up by 20% year over year, the result of substantial cross sales within the Western Financial Group family.

Strategic Partnership Portfolio

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

Conference Call

Western Financial Group will host a conference call to discuss the Company's year end financial results on Wednesday , March 17, 2010 at 9:00 am Mountain time (11:00 am Eastern time). To participate in the live conference call, please dial either (647) 427-7450 or (888) 231-8191. A replay of the call will be available from March 17th at 12:00 pm MT until March 31st at 11:59 PM MT. To access the replay please dial either dial (800) 642-1687 or (416) 849-0833 (Toronto) and enter pass code 55472511. 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 year end of 2009 will be filed on SEDAR on or before March 16, 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
    AS AT DECEMBER 31, 2009 AND 2008
    (in thousands, except for per share amounts)
                                                             2009       2008
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    ASSETS
    Cash and cash equivalents                           $  58,463  $  28,563
    Securities - held-for-trading                          61,373     53,091
    Securities - available-for-sale                        30,901    103,808
    Mortgages, loans and leases                           355,621    272,135
    Interest rate swap                                         90          -
    Equity investments                                     11,591     36,000
    Capital assets                                         21,630     15,325
    Goodwill                                              148,205    105,285
    Intangible assets                                      66,719     27,996
    Accounts receivable                                    51,114     23,999
    Prepaid expenses                                        7,231      8,039
    Income taxes receivable                                     -        800
    Future income taxes                                     1,102        539
    Other assets                                            2,286      2,040
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                                                        $ 816,326  $ 677,620
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    LIABILITIES
    Customer deposits                                   $ 317,953  $ 333,130
    Actuarial liabilities                                  40,032     38,256
    Provision for unpaid and unreported claims             13,919      8,510
    Debt                                                   79,771     38,151
    Due to policyholders                                   20,392          -
    Accounts payable and accrued liabilities               82,700     50,378
    Income taxes payable                                    1,809          -
    Future income taxes                                    13,199      5,480
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    Total liabilities                                     569,775    473,905
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    SHAREHOLDERS' EQUITY
    Share capital                                         206,905    173,438
    Other paid in capital                                     268          -
    Contributed surplus                                     2,041      1,954
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                                                          209,214    175,392
    Accumulated other comprehensive loss                     (129)      (296)
    Retained earnings                                      37,466     28,619
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    Total shareholders' equity                            246,551    203,715
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                                                        $ 816,326  $ 677,620
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               Approved:          (signed)                   (signed)
                          ---------------------------------------------------
                           Scott Tannas, Director     Gregg Speirs, Director



    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
    FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
    (in thousands, except for per share amounts)
                                                             2009       2008
    -------------------------------------------------------------------------
    REVENUE
    Commission and other customer income                $  91,540  $  76,651
    Premium income                                         45,904     31,240
    Interest income on customer loans                      24,556     18,596
    Investment income
      Change in fair value of held-for-trading securities   1,929        (64)
      Realized gain (loss) on sales
       of available-for-sale assets                           163       (217)
      Realized gain (loss) on sales
       of held-for-trading securities                          37        (30)
      Impairment of available-for-sale securities               -     (3,830)
      Other net investment income                           1,947      2,509
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                                                          166,076    124,855
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    EXPENSES
      Operating expenses                                   99,819     81,707
      Policyholder benefits                                24,074     14,789
      Interest expense - customer deposits                 15,165     12,555
      Provision for credit losses                           2,645        936
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    Income before the following:                           24,373     14,868
      Income from equity investments                        2,859      2,172
      Impairment on equity investments                          -     (2,053)
      Gain on sale of investments and capital assets          298      1,263
      Interest and financing costs on debt                 (4,308)    (2,137)
      Amortization of capital assets                       (3,163)    (2,661)
      Amortization of intangible assets                    (2,088)    (1,262)
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    Income before income taxes                             17,971     10,190
    Income taxes                                           (2,010)    (3,642)
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    NET INCOME FOR THE YEAR                             $  15,961  $   6,548
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    Retained earnings, beginning of year                $  28,619  $  28,015
      Preferred share dividends                            (5,001)    (3,914)
      Common share dividends                               (2,113)    (2,030)
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    Retained earnings, end of year                      $  37,466  $  28,619
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    Earnings per share
      Basic                                             $    0.22  $    0.05
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      Diluted                                           $    0.22  $    0.05
    

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


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