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Western Financial Group Reports Second Quarter Financial Results

High River, Alberta – August 11, 2008 (TSX – WES ) - Western Financial Group (“the Company”) announced today its strongest quarterly net income result, as well as operating and financial results for the six months ended June 30, 2008.

FINANCIAL HIGHLIGHTS

Three months ended June 30

Six months ended June 30

(in $ thousands)

2008

2007

% Change

2008

2007

% Change

THE NETWORK

Revenue ($)

21,872

17,739

23.3

%

38,361

32,282

18.8

%

Operating income ($)

7,943

6,755

17.6

%

11,793

11,136

5.9

%

BANK WEST

Interest and investment income ($)

4,609

2,760

67.0

%

9,551

5,320

79.5

%

Net interest income ($)

1,506

934

61.2

%

3,052

1,913

59.5

%

Operating income (loss) ($)

435

(42)

1135.7

%

1,132

246

360.2

%

WESTERN LIFE

Premium and investment income ($)

7,488

5,245

42.8

%

15,492

12,135

27.7

%

Operating income ($)

1,260

948

32.9

%

2,436

1,781

36.8

%

CORPORATE AND ALL OTHER

Revenue ($)

402

901

(55.4)

%

1,069

1,467

(27.1)

%

Operating income ($)

(1,491)

(1,475)

1.1

%

(3,221)

(3,089)

4.3

%

CONSOLIDATED

Revenue ($)

34,371

26,645

29.0

%

64,473

51,204

25.9

%

Net income ($)

5,839

4,090

42.8

%

8,225

6,635

24.0

%

Earnings per share

- basic ($)

$ 0.08

$ 0.08

(0.0)

$ 0.13

$ 0.14

(7.1)

- diluted ($)

$ 0.08

$ 0.07

14.3

$ 0.13

$ 0.12

8.3

“After an encouraging start to the year, our second quarter was the strongest in our history,” said Scott Tannas, President and CEO. “Performance has been driven on a broad base of strong organic revenue growth, low loan loss provisions, and the widening of our Network’s margins. We continue to be on target for growth in revenue, earnings, and market share for 2008.”

2008 OBJECTIVES

Same Store Revenue 7%-10% growth

Bank Assets 10% growth

EPS 8%-12% growth

The Network continued to increase market share, with same store sales up again from 8.1% to 9.5% year over year. Products per customer held steady at 2.2, and EBITDA margins improved to 36% in the quarter.

Bank West decreased its loan book slightly from $283.6 million in the first quarter to $281.2 million in the second quarter. “We continue to maintain a conservative risk profile,” said Bob Marshall, President of Bank West. “The opportunities for growth are plentiful in the current market, however we continue to seek customer relationships in areas that fit our strategic goals rather than transactions that may only provide short term profitability.” The Bank’s operating income grew to $1.1 million for the six months of 2008 compared to $246,000 for the same period in 2007.

Western Life’s income posted a record first 6 months in its history, the result of stable claims ratios and strong new sales. Policy/certificate count increased from 23,952 to 26,992, premium and investment income increased 28% to $15.5 million while operating income increased 37% to $2.4 million for the period ending June 30, 2008.

The Company’s strategic partnership portfolio, including Jennings Capital, HED, Falkins Insurance and Harvard Western, all showed expected returns in the second quarter.

Conference Call

Western Financial Group will host a conference call to discuss the Company's second quarter results on Tuesday, August 12, 2008 at 2:00 pm Mountain time (4:00 pm Eastern time). To participate in the live conference call, please dial either (416) 644-3431 or (866) 250-4909. A replay of the call will be available from August 12th at 4:00 pm MT until August 26th at 11:59 PM MT. To access the replay please dial either (416) 640-1917 or (877) 289-8525 and enter the passcode 21279764 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 400,000 individuals and businesses in Western Canada through its WFG Agency Network locations, its affiliated insurance brokers, Western Life Assurance Company and Bank West.

The Company’s Financial Report for the second quarter of 2008 will be filed on SEDAR on or before August 11, 2008.

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.

For further information, please contact:

Arlene Beggs, Assistant to the President

Western Financial Group

403-652-2663

WESTERN FINANCIAL GROUP

CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except for per share amounts)

As at June 30

As at December 31

2008

2007

ASSETS

Cash and cash equivalents

$ 24,612

$ 36,033

Marketable securities – held-for-trading

52,836

46,886

Marketable securities – available-for-sale

27,495

51,104

Accounts receivable

27,863

26,680

Prepaid expenses

6,070

5,960

Income taxes receivable

-

2,191

Future income taxes

401

584

Other assets

1,262

1,489

Equity investments

38,092

26,100

Mortgages and loans

279,257

288,202

Capital assets

15,065

12,141

Intangible assets

27,200

27,166

Goodwill

99,889

98,165

$ 600,042

$ 622,701

LIABILITIES

Accounts payable and accrued liabilities

$ 48,345

$ 55,685

Actuarial liabilities

37,254

38,042

Provision for unpaid and unreported claims

9,077

8,653

Income taxes payable

27

-

Customer deposits

255,638

283,299

Long term debt

36,685

33,389

Future income taxes

5,260

5,274

$ 392,286

$ 424,342

SHAREHOLDERS' EQUITY

Share capital (Note 6)

173,733

168,693

Other paid in capital

-

51

Contributed surplus

1,896

1,849

Retained earnings

33,361

28,015

Accumulated other comprehensive loss

(1,234)

(249)

Total Shareholders’ Equity

207,756

198,359

$ 600,042

$ 622,701

WESTERN FINANCIAL GROUP

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (unaudited)

(in thousands, except for per share amounts)

Three months ended June 30

Six months ended June 30

2008

2007

2008

2007

REVENUE

Commission and other customer income

$ 22,129

$ 17,973

$ 38,927

$ 32,932

Premium income

7,717

6,383

14,878

12,631

Interest income on customer loans

4,610

2,760

9,551

5,320

Investment income

Change in fair value of held-for-trading assets

(615)

(1,451)

(158)

(1,496)

Realized gain (loss) on sales of held-for-trading assets

(25)

(162)

(4)

(162)

Other net investment income

555

1,142

1,279

1,979

34,371

26,645

64,473

51,204

EXPENSES

Operating expenses

20,210

16,916

39,138

32,540

Policyholder benefits

2,782

1,447

6,487

4,856

Interest expense – customer deposits

3,103

1,826

6,499

3,407

Provision for credit losses

129

270

209

327

Income before the following

8,147

6,186

12,140

10,074

Income from long-term investments

845

832

1,458

1,594

Gain on sale of intangible assets

598

-

598

-

Interest and financing costs on long-term debt

(553)

(901)

(1,136)

(1,427)

Amortization of intangible assets

(278)

(206)

(630)

(410)

Amortization of capital assets

(841)

(373)

(1,356)

(753)

Income before income taxes

7,918

5,538

11,074

9,078

Income taxes

(2,079)

(1,448)

(2,849)

(2,443)

NET INCOME FOR THE PERIOD

5,839

4,090

8,225

6,635

Retained earnings, beginning of period as previously reported

$ 29,923

$ 21,383

$ 28,015

$ 18,538

Cumulative effect of adopting new accounting policies

-

-

-

300

Retained earnings, beginning of period as restated

29,923

21,383

28,015

18,838

Preferred share dividends

(1,908)

(501)

(1,908)

(501)

Common share dividends

(493)

(443)

(971)

(443)

Retained earnings, end of period

33,361

24,529

33,361

24,529

Earnings per share (Note 7)

Basic

$ 0.08

$ 0.08

$ 0.13

$ 0.14

Diluted

$ 0.08

$ 0.07

$ 0.13

$ 0.12

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