Transcript $25M Subscription Receipt Offering

Western Financial Group
2007 Year End Financial Results
Conference Call
March 28, 2008
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 2007
Top Three Achievements in 2007
2007 Financial Review
Priorities for 2008
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Operational Progress in 2007
WFG Agency Network
•
•
•
•
Same store customer count 4.3%.
Same store sales 7.7%.
Soft pricing market continues.
“Insurance to Value” initiatives helping build
revenue.
• Acquisitions of Oncescu and Early in Q4 – 23
in 2007.
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Western Life Assurance
• Sales and production in Creditor Life.
• Certificate count growth 15% in 2007.
• Bolt-on product for network is at 4,800+
policies. Target was 20,000 by Q2/08, will
need to be extended through 2008 Y/E.
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Bank West
• Loans:
– $149.4 M in 2006
– $286.8 M in 2007 including $90 M Ubiquity
• Decision on new banking platform –
Wealthview.
• Capital capacity for $65 million of growth.
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Top 3 Achievements in 2007
Top 3 Achievements in 2007
• Bank West in black.
• Dividend initiation.
• Network’s internal and external growth.
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2007 Financial Review
Total Revenue
120
114
CAGR 28.2%
($ Millions)
100
83
80
64
60
42
40
20
20
22
28
33
0
2000 2001 2002 2003 2004 2005 2006 2007
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Earnings Per Share
0.3
CAGR 34.6%
0.24
0.25
0.18
0.2
0.17
0.22
0.15
0.08
0.1
0.08
0.11
0.05
0.03
0
0
0
20
1
0
20
2
0
20
3
0
20
4
5
0
0
20
20
12
6
0
20
7
0
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Overall
Revenue ($)
Income from Equity
Investments ($)
Net Income ($)
Earnings per share ($)
Basic
Diluted
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2007
2006
114,126
82,643
2,172
12,213
2,323
7,988
0.24
0.22
0.22
0.20
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The Network
2007
2006
Commission & other
customer revenue ($)
66,408
46,674
Operating expenses ($)
46,613
32,366
Operating income ($)
19,795
14,308
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Bank West
2007
2006
13,803
8,214
Net interest & investment income ($)
4,596
2,991
Operating & provision expenses ($)
3,506
2,773
Operating income/loss ($)
1,090
218
Interest & investment income ($)
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Western Life Assurance
Investment income ($)
2007
27,282
2,814
2006
22,785
2,901
Policyholder benefits ($)
13,934
13,595
Operating expenses ($)
12,102
9,510
4,060
2,581
Premium income ($)
Operating income ($)
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Corporate & All Other
Other revenues ($)
2007
3,817
2006
2,069
Operating expenses ($)
9,130
7,526
(5,313)
(5,457)
Operating loss ($)
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Percent
Western Financial Group
Historical Consolidated ROE
10
9
8
7
6
5
4
3
2
1
0
9.4
7.2
7.5
8.3
8.1
8.4
5.6
1.9
2000 2001 2002 2003 2004 2005 2006 2007
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Percent
Western Financial Group
Debt to Equity Ratio
200
180
160
140
120
100
80
60
40
20
0
173
131
115
81
59
19
17
2001 2002 2003 2004 2005 2006 2007
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Priorities for 2008
2008 Priorities
• Agency acquisitions – pipeline.
• Ubiquity Bank integration/Bank West new
operating system.
• Direct marketing initiative – Network/Life
WFGO “bolt-on” acceleration.
• Increase leverage to 35% debt to equity.
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Questions
…because we live here.