Transcript $25M Subscription Receipt Offering

Western Financial Group
2009 Year End Financial Results
Conference Call
March 17, 2010
Forward-Looking Statements
This presentation contains certain forward-looking statements. Forward-looking statements include, without
limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected
costs, capital expenditures, financial results, taxes and plans and objectives of or involving Western
Financial Group Inc. (the “Company”) or its subsidiaries. Many of these statements can be identified by
looking for words such as ‘‘believe’’, ‘‘expects’’, ‘‘expected’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’,
‘‘estimates’’, ‘‘continues’’ or similar words. The Company believes the expectations reflected in such
forward-looking statements are reasonable but no assurance can be given that these expectations will
prove to be correct and such forward-looking statements should not be unduly relied upon. Forwardlooking statements are not guarantees of future performance and involve a number of risks and
uncertainties only some of which are described herein. Many factors could cause the Company’s actual
results, performance or achievements to, or future events or developments to, differ materially from those
expressed or implied by the forward-looking statements, including, without limitation, the risk factors, which
are discussed in greater detail in the ‘‘Risk Factors’’ section of the prospectus. Any forward-looking
statements are made as of the date hereof and the Company does not assume any obligation to publicly
update or revise such statements to reflect new information, subsequent events or otherwise.
Non-GAAP Measures
Throughout this presentation, the Company may use the term ‘‘operating income’’ to refer to earnings,
including investment income, before interest expense, taxes, depreciation and amortization of intangible
and capital assets, excluding gain (loss) from the sale of assets and income (loss) from equity investments.
The Company uses ‘‘operating income’’ to assist it in measuring corporate performance before the costs of
capital and amortization of capital and intangible assets. Operating income is not a measure recognized by
GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not
be comparable to similar measures presented by other issuers and investors are cautioned that it should
not be used as an alternative to ‘‘net income’’ or other measures of financial performance
calculated in accordance with GAAP.
Today’s Remarks
• Operational progress in 2009
• Top achievements and disappointments in
2009
• 2009 financial review
• Priorities for 2010
Operational Progress in 2009
The Network
• Same store customer count +1.1%
• Same store sales +4.2%
• Improving loss ratios at insurance companies
in 2nd half cause positive adjustment of $1.0
million to 2009 profit share commission
estimates
• Financial Services – Life sales up 20% and
accelerating
The Network
Acquisitions:
• Bakes-Jarvie
• H.E.D. – Association/Group Insurance Solutions
Western Life Assurance
• Sales and production increases – all lines except
Creditor
• Certificate count growth 6.0% in 2009
• Bolt-on product for network is at 6,900+ policies.
Target of 7,500 for Y/E 2009
• Western & Affiliates account for $10.6 million
(20%+) of 2009 premium revenue
• Signed significant creditor life program – effective
2010
Bank West
•
•
•
•
•
Loan book at $360.5 MM
AgriFinancial added in 2009
Non-performing loans – 2.0% at year end
Specific provisions at 75 bps
Four core areas emerging
Business Lines @ Dec. 31/09
Point of Sale/Finance
-RV Loans
-Boat Loans
-Power Sport Loans
$105 MM
Syndication/Securitizations
-Prospera Pools/Syndications
-Travellers Acceptance
-RIFCO
-Waterpoint/SNAP
$45 MM
Specialty Agricultural
-Agrifinance
-AgriCard
$85 MM
Relationship/Community Lending
-Network Premium Finance
-Commercial Loans/Leases
-Residential/Commercial/Farm Mortgages
-Personal Loans
$125 MM
Top Achievements in 2009
•
•
•
•
•
Network margin
HED/SecuriCan acquisition
Western Life growth/profit
Sunset brand project
Consumer credit quality
Top Disappointments in 2009
•
•
•
•
Bank West loss
Equity sale – Western Life January 2009
Agrifinancial flat sales
Saskatchewan growth
2009 Financial Review
Total Revenue
Overall
Revenue ($)
Income from Equity Investments ($)
Net Income ($)
Earnings per share ($) – Basic
– Diluted
2009
2008
166,076
2,859
15,961
0.22
0.22
124,855
2,172
6,548
0.05
0.05
The Network
2009
2008
Commission & other customer
revenue ($)
89,144
75,424
Operating expenses ($)
63,261
54,710
Operating income ($)
25,883
20,714
Bank West
2009
2008
Interest & investment income ($)
25,514
18,596
Net interest & investment income ($)
10,349
6,041
Operating & provision expenses ($)
10,894
4,804
(545)
1,237
Operating income/loss ($)
Western Life Assurance
2009
2008
37,491
31,309
3,200
1,614
Policyholder benefits ($)
20,123
14,789
Operating expenses ($)
15,565
13,907
5,003
4,227
Premium income ($)
Investment income ($)
Operating income ($)
SecuriCan
2009
2008
8,975
-
102
-
Policyholder benefits ($)
3,951
-
Operating expenses ($)
3,052
-
Operating income ($)
2,074
-
0
-
Premium income ($)
Investment income ($)
Impairment on AFS Investments
Corporate & All Other
2009
2008
Other revenues ($)
1,650
1,959
Operating expenses ($)
9,692
9,223
(8,042)
(7,264)
0
(1,542)
Operating loss ($)
Impairment on AFS Investments
Western Financial Group
Historical Consolidated ROE
Earnings Per Share
Priorities for 2010
2010 Priorities
• Winnipeg Teamworks
• Sustainable profit / market niche Bank
West
• Metro market strategy – P & C insurance
• Network / Partnership expansion
• “Next Step” on EPS growth ladder
Questions