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
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The Network
Commissions and other customer revenue $ 22,420 $ 17,522 28.0%
Operating expenses 18,460 13,932 32.5%
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Operating income 3,960 3,590 10.3%
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Bank West
Interest and investment income $ 6,610 $ 5,537 19.4%
Interest expense - customer deposits 2,977 3,654 -18.5%
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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%
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Operating (loss) income $ 1,140 $ (502) 327.1%
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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%
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Operating income $ 1,199 $ 940 27.6%
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SecuriCan
Premium and investment income 9,032 - -
Policyholder benefits 3,943 - -
Operating expenses 3,050 - -
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Operating income 2,039 $ -
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Corporate and all other
Other revenues 413 $ 372 11.1%
Operating expenses 2,474 2,154 14.9%
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Operating loss $ (2,061) $ (1,782) 15.7%
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Total operating income $ 6,277 $ 2,246 179.5%
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Net income 2,269 $ 914 148.2%
Preferred dividends (1,832) (1,003) 82.7%
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Earnings (loss) available to common
shareholders $ 437 $ (89) 590.6%
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Earnings per share
- basic ($) 0.01 0.00
- diluted ($) 0.01 0.00
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2010 KEY OBJECTIVES
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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
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"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
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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
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$ 837,504 $ 816,326
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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
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Total liabilities 591,011 569,775
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SHAREHOLDERS' EQUITY
Share capital 206,905 206,905
Other paid in capital 268 268
Contributed surplus 2,068 2,041
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209,241 209,214
Accumulated other comprehensive loss 5 (123) (129)
Retained earnings 37,375 37,466
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Total shareholders' equity 246,493 246,551
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$ 837,504 $ 816,326
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CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(unaudited)
(in thousands, except for per share amounts)
2010 2009
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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
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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
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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)
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Income before income taxes 3,432 328
Income taxes (1,163) 586
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NET INCOME FOR THE PERIOD $ 2,269 $ 914
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Preferred share dividends $ (1,832) $ (1,003)
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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
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Diluted $ 0.01 $ 0.00
For further information: Arlene Beggs, Executive Assistant to the CEO, Western Financial Group, (403) 652-2663, [email protected]
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