Western Financial Group reports third quarter 2009 results

/THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWS SERVICE OR OTHERWISE IN THE UNITED STATES/

HIGH RIVER, AB, Nov. 12 /CNW/ - (TSX - WES) - Western Financial Group ("the Company") announced today its operating and financial results for the three and nine months ended September 30, 2009.

"Our company continues its progress toward its 2009 objectives," said Scott Tannas, President and CEO. "Our profits for the quarter are a significant improvement over Q3 a year ago. We are encouraged by resiliency demonstrated by so many of our markets across the West. We expect accelerating growth across our businesses in the quarters to come. The Network and Bank West both improved operating results compared to last year. In the Network's case the growth has come from improved margins and organic growth. While Bank West's operating profit is modest for the quarter, it marks a return to profitability that we intend to build upon in current and future quarters. The Bank's key credit quality measure has also shown a modest improvement over the prior quarter. Western Life continues to have a strong year. Given what we have accomplished up to this point, we continue to believe that we can achieve the majority of our original 2009 objectives, including our Net Income target."

    
           -----------------------------------------------------------
           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
           -----------------------------------------------------------
    -------------------------------------------------------------------------
    Financial Highlights
    (unaudited)
    (in $ thousands
     except for per        For the three months       For the nine months
     share amounts)           ended Sept 30              ended Sept 30
    -------------------------------------------------------------------------
                           2009     2008  % Change    2009     2008  % Change
    The Network
    Commissions and
     other customer
     income             $20,425  $19,825     3.0 % $61,055  $58,186     4.9 %
    Operating expenses   14,594   14,243     2.5 %  43,407   40,810     6.4 %
    -------------------------------------------------------------------------

    Operating income     $5,831   $5,582     4.5 % $17,648  $17,376     1.6 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Bank West
    Interest and
     investment income    6,795    4,677    45.3 %  19,017   14,228    33.7 %
    Interest expense -
     customer deposits    3,723    3,185    16.9 %  11,155    9,684    15.2 %
    -------------------------------------------------------------------------
    Net interest and
     investment income    3,072    1,492   105.9 %   7,862    4,544    73.0 %
    Provisions for
     credit losses
      - General             202       38   431.6 %     393      (17) 2411.8 %
      - Specific            720      322   123.6 %   1,335      586   127.8 %
    Operating expenses    1,869    1,164    60.6 %   6,593    2,875   129.3 %
    -------------------------------------------------------------------------

    Operating (loss)
     income             $   281  $   (32) (977.5)% $  (459) $ 1,100  (141.7)%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Western Life
    Premium and
     investment income   12,260    7,092    72.9 %  31,052   22,584    37.5 %
    Policyholder
     benefits             7,224    2,550   183.3 %  16,056    9,037    77.7 %
    Operating expenses    3,997    3,456    15.7 %  11,370   10,025    13.4 %
    -------------------------------------------------------------------------

    Operating income    $ 1,039  $ 1,086    (4.3)% $ 3,626  $ 3,522     3.0 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Corporate and all
     other
    Other revenues          608      418    45.4 %   1,219    1,487   (18.0)%
    Operating expenses    2,505    2,605    (3.9)%   7,257    6,896     5.2 %
    -------------------------------------------------------------------------

    Operating loss      $(1,897) $(2,187)  (13.3)% $(6,038) $(5,409)   11.6 %
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total operating
     income             $ 5,254  $ 4,449    18.1 % $14,777  $16,589   (10.9)%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income            4,147    2,100    97.5 %   9,986   10,325    (3.3)%
    Preferred dividends  (1,202)    (531)  126.3 %  (3,207)  (1,908)   68.1 %
    -------------------------------------------------------------------------
    Earnings available
     to common
     shareholders         2,945    1,569    87.7 %   6,779    8,417   (19.5)%

    Earnings per
     common share
      - basic ($)       $  0.06  $  0.04    49.2 % $  0.14  $  0.17   (19.2)%
    -------------------------------------------------------------------------
      - diluted ($)     $  0.06  $  0.04    48.9 % $  0.13  $  0.17   (21.2)%
    -------------------------------------------------------------------------
    

The Network

Our margins for the nine months are at 30%, same store sales are at 4.2%, and same store customer count growth grew by 2.0% on an annualized basis.

Bank West

The Bank's loan book increased slightly over the quarter, the result of growth of agricultural loan funding in the summer and fall seasons, mitigated by pay downs in the residential mortgage portfolio. Credit quality remained strong, with non performing loans at 1.1% at September 30th.

Western Life

Western Life's industry leading growth continued with premium sales up by 17% in the quarter, the result of substantial cross sales within the Western Financial Group family. Investment income also improved significantly over the second quarter.

Strategic Partnership Portfolio

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

2010 Outlook

Management is in the final stages of preparing its 2010 budgets and strategic plans, and is committed to making significant steps forward in profitability in 2010. The 2010 Key Objectives will be published on the Company's website prior to year end 2009.

Conference Call

Western Financial Group will host a conference call to discuss the Company's third quarter financial results on Monday, November 16, 2009 at 9:00 am Mountain time (11:00 am Eastern time). To participate in the live conference call, please dial either (416) 644-3418 or (800) 589-8577. A replay of the call will be available from November 16th at 12:00 pm MT until November 30th at 11:59 PM MT. To access the replay please dial either (416) 640-1917 or (877) 289-8525 and enter pass code 4181269 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 third quarter of 2009 will be filed on SEDAR on or before November 13, 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
                                                    September 30 December 31
                                                         2009        2008
    -------------------------------------------------------------------------
    ASSETS
    Cash and cash equivalents                          $  73,842   $  28,563
    Interest rate swap (Note 14)                              97           -
    Marketable securities - held-for-trading (Note 14)    61,007      53,091
    Marketable securities - available-for-sale (Note 14)  13,882     103,808
    Mortgages and loans (Note 6 and 14)                  344,854     272,135
    Equity investments                                    50,861      38,040
    Accounts receivable                                   25,527      23,999
    Prepaid expenses                                       7,271       8,039
    Future income taxes                                      548         539
    Capital assets                                        16,982      15,325
    Intangible assets                                     34,235      27,996
    Goodwill                                             118,105     105,285
    -------------------------------------------------------------------------
                                                       $ 747,211   $ 676,820
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Customer deposits                                  $ 330,234   $ 333,130
    Actuarial liabilities                                 40,635      38,256
    Provision for unpaid and unreported claims            10,291       8,510
    Accounts payable and accrued liabilities              53,631      50,378
    Income taxes payable (recoverable)                     1,379        (800)
    Long-term debt (Notes 7 and 17)                       61,774      38,151
    Future income taxes                                    6,270       5,480
    -------------------------------------------------------------------------
    Total liabilities                                    504,214     473,105
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital (Note 8)                               207,136     173,438
    Other paid in capital (Note 7)                           268           -
    Contributed surplus                                    1,971       1,975
    -------------------------------------------------------------------------
                                                         209,375     175,413
    Accumulated other comprehensive income (loss)           (170)       (296)
    Retained earnings                                     33,792      28,598
    -------------------------------------------------------------------------
    Total shareholders' equity                           242,997     203,715
    -------------------------------------------------------------------------
                                                       $ 747,211   $ 676,820
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
    (unaudited)
    (in thousands, except for per share amounts)

                                 Three months ended      Nine months ended
                                      Sept 30                 Sept 30
                                  2009        2008        2009        2008
    -------------------------------------------------------------------------
    REVENUE
    Commission and other
     customer income           $  20,925   $  20,119   $  62,225   $  59,046
    Premium income                 9,522       8,121      27,647      22,999
    Interest income on
     customer loans                6,487       4,677      18,422      14,228
    Investment income
      Change in fair value of
       held-for-trading
       securities                  2,304      (1,458)      2,930      (1,616)
      Realized gain (loss) on
       sales of held-for-trading
       securities                     27           2          57          (2)
      Realized gain (loss) on
       sales of
       available-for-sale assets     396           -        (154)          -
      Other net investment income    427         551       1,216       1,830
    -------------------------------------------------------------------------
                                  40,088      32,012     112,343      96,485

    EXPENSES
      Operating expenses          22,965      21,468      68,627      60,606
      Policyholder benefits        7,224       2,550      16,056       9,037
      Interest expense -
       customer deposits           3,723       3,185      11,155       9,684
      Provision for credit
       losses (Note 14)              922         360       1,728         569
    -------------------------------------------------------------------------
    Income before the following:   5,254       4,449      14,777      16,589
      Income from equity
       investments                 1,783          67       2,618       1,525
      Gain on sale of
       investments and
       capital assets                371         303         374         901
      Interest and financing
       costs on long-term debt      (997)       (540)     (2,600)     (1,676)
      Amortization of
       intangible assets            (449)       (316)     (1,311)       (946)
      Amortization of capital
       assets                       (764)       (731)     (2,191)     (2,087)
    -------------------------------------------------------------------------
    Income before income taxes     5,198       3,232      11,667      14,306
    Income taxes                  (1,051)     (1,132)     (1,681)     (3,981)
    -------------------------------------------------------------------------

    NET INCOME FOR THE PERIOD  $   4,147   $   2,100   $   9,986   $  10,325
    -------------------------------------------------------------------------

    Retained earnings,
     beginning of period       $  31,376      33,361      28,598      28,015
      Preferred share dividends   (1,202)          -      (3,207)     (1,908)
      Common share dividends        (529)       (531)     (1,585)     (1,502)
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                    $  33,792   $  34,930   $  33,792   $  34,930
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share (Note 9)
      Basic                    $    0.06   $    0.04   $    0.14   $    0.17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                  $    0.06   $    0.04   $    0.13   $    0.17
    

SOURCE Western Financial Group

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


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