Western Financial Group reports third quarter 2009 results
/THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY
HIGH RIVER, AB,
"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."
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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
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Financial Highlights
(unaudited)
(in $ thousands
except for per For the three months For the nine months
share amounts) ended Sept 30 ended Sept 30
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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 %
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Operating income $5,831 $5,582 4.5 % $17,648 $17,376 1.6 %
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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 %
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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 %
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Operating (loss)
income $ 281 $ (32) (977.5)% $ (459) $ 1,100 (141.7)%
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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 %
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Operating income $ 1,039 $ 1,086 (4.3)% $ 3,626 $ 3,522 3.0 %
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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 %
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Operating loss $(1,897) $(2,187) (13.3)% $(6,038) $(5,409) 11.6 %
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Total operating
income $ 5,254 $ 4,449 18.1 % $14,777 $16,589 (10.9)%
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Net income 4,147 2,100 97.5 % 9,986 10,325 (3.3)%
Preferred dividends (1,202) (531) 126.3 % (3,207) (1,908) 68.1 %
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Earnings available
to common
shareholders 2,945 1,569 87.7 % 6,779 8,417 (19.5)%
Earnings per
common share
- basic ($) $ 0.06 $ 0.04 49.2 % $ 0.14 $ 0.17 (19.2)%
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- diluted ($) $ 0.06 $ 0.04 48.9 % $ 0.13 $ 0.17 (21.2)%
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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
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
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
The Company's Financial Report for the third quarter of 2009 will be filed on SEDAR on or before
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
CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands, except for per share amounts)
As at As at
September 30 December 31
2009 2008
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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
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$ 747,211 $ 676,820
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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
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Total liabilities 504,214 473,105
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SHAREHOLDERS' EQUITY
Share capital (Note 8) 207,136 173,438
Other paid in capital (Note 7) 268 -
Contributed surplus 1,971 1,975
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209,375 175,413
Accumulated other comprehensive income (loss) (170) (296)
Retained earnings 33,792 28,598
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Total shareholders' equity 242,997 203,715
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$ 747,211 $ 676,820
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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
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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
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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
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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)
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Income before income taxes 5,198 3,232 11,667 14,306
Income taxes (1,051) (1,132) (1,681) (3,981)
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NET INCOME FOR THE PERIOD $ 4,147 $ 2,100 $ 9,986 $ 10,325
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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)
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Retained earnings, end of
period $ 33,792 $ 34,930 $ 33,792 $ 34,930
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Earnings per share (Note 9)
Basic $ 0.06 $ 0.04 $ 0.14 $ 0.17
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Diluted $ 0.06 $ 0.04 $ 0.13 $ 0.17
For further information: Arlene Beggs, Executive Assistant to the CEO, Western Financial Group, (403) 652-2663, [email protected]
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