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 |
||||||||||||||||||||||||||||||||||||
