Western Financial Group announces Q2 results
NET INCOME INCREASED BY 37% AND EARNINGS PER SHARE UP BY 13%
HIGH RIVER, AB, Aug. 12 /CNW/ - (TSX - WES) - Western Financial Group ("the Company") announced today its operating and financial results for the three and six months ended June 30, 2010.
Financial
Highlights
(unaudited)
(in $ thousands Three Months ended Six Months ended
except for per June 30 June 30
share amounts) 2010 2009 % Change 2010 2009 % Change
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The Network
Commissions and
other customer
revenue $ 31,249 $ 23,109 35.2% $ 53,668 $ 40,631 32.1%
Operating
expenses 20,373 14,882 36.9% 38,834 28,813 34.8%
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Operating
income $ 10,876 $ 8,227 32.2% $ 14,834 $ 11,818 25.5%
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Bank West
Interest and
investment
income $ 6,961 $ 6,685 4.1% $ 13,571 $ 12,224 11.0%
Interest
expense -
customer
deposits 3,176 3,778 -15.9% 6,153 7,432 -17.2%
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Net interest and
investment
income 3,785 2,907 30.2% 7,418 4,792 54.8%
Provisions for
credit losses 748 517 44.7% 924 806 14.6%
Operating
expenses 2,447 2,625 -6.8% 4,764 4,724 0.8%
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Operating
income
(loss) $ 590 $ (235) 350.9% $ 1,730 $ (738) 334.5%
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Western Life
Premium and
investment
income $ 13,608 $ 10,841 25.5% $ 24,411 $ 18,791 29.9%
Policyholder
benefits 6,910 5,199 32.9% 12,637 8,832 43.1%
Operating
expenses 4,766 3,995 19.3% 8,643 7,373 17.2%
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Operating
income $ 1,932 $ 1,647 17.3% $ 3,131 $ 2,586 21.1%
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Western Financial
Insurance
Premium and
investment
income $ 9,189 $ - - $ 18,221 $ - -
Policyholder
benefits 4,790 - - 8,732 - -
Operating
expenses 3,278 - - 6,328 - -
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Operating
income $ 1,121 $ - - $ 3,161 $ - -
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Corporate and
all other
Other
revenues $ 295 $ 243 21.3% $ 709 $ 612 15.8%
Operating
expenses 3,173 2,602 21.9% 5,647 4,752 18.8%
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Operating
loss $ (2,878)$ (2,359) 22.0% $ (4,938)$ (4,140) 19.3%
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Total
operating
income $ 11,641 $ 7,280 59.9% $ 17,918 $ 9,526 88.1%
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Net income $ 5,742 $ 4,925 16.6% $ 8,013 $ 5,839 37.2%
Preferred
dividends (1,797) (1,002) 79.3% (3,629) (2,005) 81.0%
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Earnings (loss)
available to
common
shareholders $ 3,945 $ 3,923 0.6% $ 4,384 $ 3,834 14.3%
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Earnings per
share
- basic ($) 0.08 $ 0.08 0.09 $ 0.08
- diluted ($) 0.08 $ 0.07 0.09 $ 0.07
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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
Western Financial Insurance 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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Western Financial Group today announced its second quarter 2010 financial numbers which show net income increased by 37%, with Earnings Per Share up by 13% over the same period in 2009. All Business Units showed positive results year over year, with Bank West reporting its second profitable quarter in a row and record profits for the year to date.
"We are pleased with the Company's performance for all our business units in what appears to be a moderate economy in western Canada," said Scott Tannas, President and CEO. "We are making good progress towards achieving our year-end financial objectives. The Bank is now contributing to our overall profitability, and with our recent financing behind us, we are well positioned with a strong balance sheet to take advantage of opportunities in the second half of this year", he said.
The Network
The Network combined margin for the quarter was 28%, with Group Insurance Solutions' margin at 19% and the retail division at 30%. Retail same store sales are at 4.7%, and same store customer count grew by 2.2% on a YTD, annualized basis.
Bank West
The Bank's loan book increased slightly over the quarter, to $378.9 million. Our specific charges for loan losses stand at 27 basis points at 6 months, which on an annualized basis is tracking toward a significant improvement over 2009. The gross non performing loan ratio also continues to improve over prior quarters, standing now at 1.36%
Western Life
Western Life's growth continued with premium income up by 11% year over year, gaining momentum over Q1. Their loss ratio abated significantly in the quarter bringing their year to date ratio to 45%. Cross sales within the Western Financial Group, continue to increase and are now at record levels.
Western Financial Insurance
Western Financial Insurance's premium revenue is up 15% with improved loss ratios year over year of 46% compared to 51%.
Strategic Partnership Portfolio
The Company's partnerships in investment banking, insurance distribution and manufacturing provided positive income for the quarter, with all units tracking toward our 2010 expectations.
Conference Call
Western Financial Group will host a conference call to discuss the Company's second quarter financial results on Tuesday, August 17, 2010 at 9:15 am Mountain time (11:15 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 August 17th at 12:45 pm Mountain time until August 31st at 21:59 PM MT. To access the replay please dial either (800) 642-1687 or (416) 849-0833 and enter pass code 90465222. 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 Western Financial Insurance Company.
The Company's Financial Report for the second quarter of 2010 will be filed on SEDAR on or before August 13, 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
June 30 December 31
Note 2010 2009
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ASSETS
Cash and cash equivalents $ 82,867 $ 58,463
Securities - held-for-trading 65,514 61,373
Securities - available-for-sale 3 36,357 30,901
Mortgages, loans and leases, net of
allowance for credit losses 4 374,252 355,621
Interest rate swaps - 90
Equity investments 12,152 11,591
Capital assets 22,785 21,630
Goodwill 6 160,825 148,205
Intangible assets 65,162 66,719
Accounts receivable 49,590 51,114
Prepaid expenses 8,394 7,231
Future income taxes 1,283 1,102
Other assets 1,890 2,286
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Total assets $ 881,071 $ 816,326
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LIABILITIES
Customer deposits $ 337,409 $ 317,953
Actuarial liabilities 42,483 40,032
Provision for unpaid and unreported claims 16,289 13,919
Debt 76,318 79,771
Interest rate swaps 169 -
Due to policyholders 19,384 20,392
Accounts payable and accrued liabilities 98,146 82,700
Income taxes payable 1,327 1,809
Future income taxes 13,376 13,199
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Total liabilities 604,901 569,775
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SHAREHOLDERS' EQUITY
Share capital 7 233,356 206,905
Other paid in capital 268 268
Contributed surplus 2,112 2,041
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235,736 209,214
Accumulated other comprehensive loss 8 (248) (129)
Retained earnings 40,682 37,466
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Total shareholders' equity 276,170 246,551
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$ 881,071 $ 816,326
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CONSOLIDATED STATEMENTS
OF INCOME
(unaudited)
(in thousands, except
for per share
amounts)
Three months ended June 30 Six months ended June 30
2010 2009 2010 2009
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REVENUE
Commission and other
customer income $ 32,190 $ 24,540 $ 55,561 $ 42,981
Premium income 19,823 9,678 37,843 18,125
Interest income on
customer loans 6,386 5,451 12,560 10,373
Investment income
Change in fair value
of held-for-trading
securities 2,240 758 3,272 627
Realized gain (loss)
on sales of
available-for-sale
assets 52 (3) 88 (731)
Realized gain (loss)
on sales of
held-for-trading
securities (32) 24 7 30
Other net investment
income 643 430 1,249 853
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61,302 40,878 110,580 72,258
EXPENSES
Operating expenses 34,037 24,104 64,216 45,662
Policyholder benefits 11,700 5,199 21,369 8,832
Interest expense -
customer deposits 3,176 3,778 6,153 7,432
Provision for credit
losses 748 517 924 806
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Income before the
following: 11,641 7,280 17,918 9,526
Income from equity
investments 449 1,088 592 835
Interest and financing
costs on debt (1,595) (1,041) (3,005) (1,603)
Amortization of
capital assets (893) (736) (1,692) (1,427)
Amortization of
intangible
assets (779) (450) (1,557) (862)
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Income before income
taxes 8,823 6,141 12,256 6,469
Income taxes (3,081) (1,216) (4,243) (630)
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NET INCOME FOR THE
PERIOD $ 5,742 $ 4,925 $ 8,013 $ 5,839
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Preferred share
dividends $ (1,797) $ (1,002) $ (3,629) $ (2,005)
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Net income available to
common shareholders $ 3,945 $ 3,923 $ 4,384 $ 3,834
Average number of
common shares 49,507 49,345 49,507 49,345
Average number of
diluted common
shares 49,548 54,915 49,553 54,920
Earnings per common
share
Basic $ 0.08 $ 0.08 $ 0.09 $ 0.08
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Diluted $ 0.08 $ 0.07 $ 0.09 $ 0.07
For further information: Arlene Beggs, Executive Assistant to the CEO, Western Financial Group, 403-652-2663, [email protected]
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