Transcript $25M Subscription Receipt Offering

Western Financial Group
Q2 2009 Financial Results
Conference Call
August 18, 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
•
•
•
•
Operational Progress in Q2
Strategic Events in Q2
Financial Update
Priorities for Q3
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Operational Progress
in Q2 2009
The Network
• Same store customer count 1.9% YTDA
• Same store sales 4.4%
• Margins in target range
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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 is at 6,900+
policies. Target of 7,500 by Y/E 2009
• $100,000 special term life product will launch
September 21
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Bank West
• Positive portfolio growth in Q1. Summer
funding season for RVs tempered by payouts
in mortgages
• Agrifinancial Spring funding slow start – now
growing
• 23 bps specific provisions in Q2. Credit
quality solid – NPLs at 1.3%
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Strategic Events in Q2
Q2 Strategic Events
• Agency acquisition not likely until 2010
• Operations focus in 2009
• Alberta auto rate reduction will have minimal
impact
• Soft market in commercial P & C persists
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Financial Update
Total Revenue
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Earnings Per Share
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Overall
Revenue ($)
Income from Equity
Investments ($)
Net Income ($)
Earnings per share ($)
Basic
Diluted
13
2009
2008
72,258
64,473
835
5,839
1,458
8,225
0.08
0.07
0. 13
0. 13
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The Network
2009
2008
Commission & other
customer revenue ($)
40,631
38,361
Operating expenses ($)
28,813
26,568
Operating income ($)
11,818
11,793
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Bank West
2009
2008
12,224
9,551
Net interest & investment income ($)
4,792
3,052
Operating & provision expenses ($)
5,530
1,920
Operating income ($)
(738)
1,132
Interest & investment income ($)
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Western Life Assurance
2009
18,169
622
2008
14,912
579
Policyholder benefits ($)
8,832
6,487
Operating expenses ($)
7,373
6,508
Operating income ($)
2,586
2,436
Premium income ($)
Investment income ($)
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Corporate & All Other
Other revenues ($)
2009
612
2008
1,070
Operating expenses ($)
4,752
4,291
(4,140)
(3,221)
Operating loss ($)
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Western Financial Group
Historical Consolidated ROE
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Western Financial Group
Debt to Equity Ratio
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Priorities for Q3
Q3 Priorities
• Manage NPLs at Bank West (Winnipeg
Office transition)
• Agrifinancial integration
• Grow Bank West loan book
• Increase ownership at HED
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Questions
…because we live here.