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%
-------------------------------------------------------------------------
Operating income 25,883 20,715 24.9%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Bank West
Interest and investment income $ 25,514 $ 18,596 37.2%
Interest expense - customer deposits 15,165 12,555 20.8%
-------------------------------------------------------------------------
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%
-------------------------------------------------------------------------
Operating (loss) income $ (545) $ 1,238 -144.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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%
-------------------------------------------------------------------------
Operating income $ 5,003 $ 4,228 18.3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SecuriCan
Premium and investment income 9,077 - -
Policyholder benefits 3,951 - -
Operating expenses 3,052 - -
-------------------------------------------------------------------------
Operating income 2,074
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Corporate and all other
Other revenues $ 1,650 $ 1,959 -15.8%
Operating expenses 9,692 9,223 5.1%
-------------------------------------------------------------------------
Operating loss $ (8,042) $ (7,264) 10.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total operating income $ 24,373 $ 18,915 28.9%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total net income $ 15,961 $ 6,548 143.8%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
- basic ($) $ 0.22 $ 0.05 344.0%
- diluted ($) $ 0.22 $ 0.05 343.9%
----------------------------------------------------------
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
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
$ 816,326 $ 677,620
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
Total liabilities 569,775 473,905
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 206,905 173,438
Other paid in capital 268 -
Contributed surplus 2,041 1,954
-------------------------------------------------------------------------
209,214 175,392
Accumulated other comprehensive loss (129) (296)
Retained earnings 37,466 28,619
-------------------------------------------------------------------------
Total shareholders' equity 246,551 203,715
-------------------------------------------------------------------------
$ 816,326 $ 677,620
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
166,076 124,855
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
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)
-------------------------------------------------------------------------
Income before income taxes 17,971 10,190
Income taxes (2,010) (3,642)
-------------------------------------------------------------------------
NET INCOME FOR THE YEAR $ 15,961 $ 6,548
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, beginning of year $ 28,619 $ 28,015
Preferred share dividends (5,001) (3,914)
Common share dividends (2,113) (2,030)
-------------------------------------------------------------------------
Retained earnings, end of year $ 37,466 $ 28,619
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
Basic $ 0.22 $ 0.05
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted $ 0.22 $ 0.05
For further information: Arlene Beggs, Executive Assistant to the CEO, Western Financial Group, (403) 652-2663, [email protected]
Share this article