Transcript $25M Subscription Receipt Offering

Western Financial Group
Q3 2009 Financial Results
Conference Call
November 16, 2009
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
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•
•
•
Operational Progress in Q3
Strategic Events in Q3
Financial Update
Priorities for Q3
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Operational Progress
in Q3 2009
The Network
•
•
•
•
Same store customer count 2.0% YTDA
Same store sales 4.2%
Margins in target range
Regions at different stages of economic
recovery
• Watching Accounts Receivable closely
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Western Life Assurance
• Creditor Life slowing
• Employee benefits growth of $500,000 per
month from HED continues
• Bolt-on product for network still at 6,900+
policies. Target of 7,500 by Y/E 2009
• $100,000 special term life product launched
September 21 – 500+ policies sold so far
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Bank West
• Slight portfolio growth in Q3. Fall funding
season for AgriCard tempered by payouts in
mortgages.
• Agrifinancial spring funding slow start. Did
not meet growth targets – same levels as
2008.
• 21 bps specific provisions in Q3. Credit
quality improving – NPLs at 1.1%.
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Strategic Events in Q3
Q3 Strategic Events
• Agency acquisition not likely until mid 2010.
• Operations focus in 2009.
• Soft market in commercial P & C showing
signs of turning. Expect a final “premium
grab” before firming in 2010.
• Accelerated acquisition to 100% of HED.
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Financial Update
Total Revenue
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Earnings Per Share
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Overall
Revenue ($)
Income from Equity
Investments ($)
Net Income ($)
Earnings per share ($)
Basic
Diluted
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2009
2008
112,343
2,618
96,485
1,525
9,986
10,325
0.14
0.13
0. 17
0. 17
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The Network
2009
2008
Commission & other
customer revenue ($)
61,055
58,186
Operating expenses ($)
43,407
40,810
Operating income ($)
17,648
17,376
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Bank West
2009
2008
19,017
14,228
Net interest & investment income ($)
7,862
4,544
Operating & provision expenses ($)
8,321
3,444
Operating income ($)
(459)
1,100
Interest & investment income ($)
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Western Life Assurance
Investment income ($)
2009
27,716
3,336
2008
23,055
(471)
Policyholder benefits ($)
16,056
9,037
Operating expenses ($)
11,370
10,025
3,626
3,522
Premium income ($)
Operating income ($)
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Corporate & All Other
Other revenues ($)
2009
1,219
2008
1,487
Operating expenses ($)
7,257
6,896
(6,038)
(5,409)
Operating loss ($)
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Western Financial Group
Historical Consolidated ROE
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Western Financial Group
Historical Consolidated ROE
(excluding Bank West)
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Western Financial Group
Debt to Equity Ratio
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Priorities for Q4
Q4 Priorities
• Manage NPLs at Bank West (Winnipeg
Office transition complete)
• Winnipeg “Teamworks” HED/SecuriCan
brings Winnipeg employee compliment 300+
• 2010 budget and plan – next step in
profitability
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Questions
…because we live here.