Transcript Western Financial Group Q3 2008 Financial Results Conference Call November 17, 2008 Forward-Looking Statements This presentation contains certain forward-looking statements.

Western Financial Group
Q3 2008 Financial Results
Conference Call
November 17, 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 Q3
Strategic Events in Q3
Financial Update
Priorities for Q4
3
TSX: WES
Operational Progress
in Q3 2008
WFG Agency Network
• Same store customer count 4.3% YTDA.
• Same store sales 9.7% - Market share gains.
• Soft market “at bottom” – AB Auto increase
approved; anecdotal increases in personal
and small commercial.
• Acquisition of Vets (Crowsnest Pass, AB),
Dunn (Wolseley, SK) and Boyd (Prince
Albert, SK).
5
TSX: WES
Western Life Assurance
• Creditor Life still strong.
• Certificate count and growth 9.6% over
Q3/07.
• Bolt-on product for network is at 6,159
policies. Target of 20,000 by Q2/09.
• TotalGuard employee benefits program
transfer underway at HED. $5 million +
synergy in 2009.
6
TSX: WES
Bank West
• Negative portfolio growth YTD 2008.
Summer funding season slower than 2007.
• Portfolio target for 2008 - $360 million.
• Very low specific provisions in H1, “lumpy” in
Q3.
• Credit quality solid - > 30 day delinquency
improved slightly in Q3.
7
TSX: WES
AgriFinancial Canada
(Proposed acquisition, subject to OSFI approval)
•
•
•
•
•
Farm credit card – 25,000 farmers.
Equipment loans and leases.
$90 million loan book.
Profitable operation – bolt-on to Bank West.
Geographic and customer synergy.
8
TSX: WES
Strategic Events in Q3
Q3 Strategic Events
• Agency acquisition pipeline active –
price/value expectations are still high.
• Loan portfolio acquisition opportunities =
AgriFinancial.
• Business development discussions with
Partners - TotalGuard transfer.
• Significant advertising increase in advance of
2009 local name “Sunset” plan.
10
TSX: WES
Financial Update
($ Millions)
Total Revenue
140
120
100
80
60
40
20
0
114
130
CAGR 27.0%
83
64
20
22
28
33
42
00 001 002 003 004 005 006 007 TM
0
L
2
2
2
2
2
2
2
2
8
0
0
2
3
Q
12
TSX: WES
Earnings Per Share
0.30
CAGR 32%
CAGR 31%
0.25
0.20
0.15
0.10
0.05
0.00
2000
2001
2002
2003
2004
2005
2006
2007
Q3
2008
LTM
Basic
0.03
0.09
0.08
0.11
0.18
0.17
0.22
0.24
0.22
Diluted
0.03
0.07
0.08
0.10
0.16
0.15
0.20
0.22
0.22
13
TSX: WES
Overall
Revenue ($000)
Income from Equity
Investments ($000)
Net Income ($000)
Earnings per share ($)
Basic
Diluted
14
2008
2007
96,485
80,758
1,525
10,325
1,850
8,979
0. 17
0. 17
0.19
0.17
TSX: WES
The Network
2008
2007
Commission & other
customer revenue ($000)
58,186
49,290
Operating expenses ($000)
40,810
33,210
Operating income ($000)
17,376
16,080
15
TSX: WES
Bank West
2008
2007
14,228
8,632
Net interest & investment income ($000)
4,544
2,953
Operating & provision expenses ($000)
3,444
2,704
Operating income ($000)
1,100
249
Interest & investment income ($000)
16
TSX: WES
Western Life Assurance
2008
23,055
(471)
2007
20,044
396
Policyholder benefits ($000)
9,037
9,168
Operating expenses ($000)
10,025
8,758
3,522
2,514
Premium income ($000)
Investment income ($000)
Operating income ($000)
17
TSX: WES
Corporate & All Other
Other revenues ($000)
2008
1,487
2007
2,396
Operating expenses ($000)
6,895
6,828
(5,408)
(4,432)
Operating loss ($000)
18
TSX: WES
10
9
8
7
6
5
4
3
2
1
0
9.4
7.5
8.3
8.1
8.4
8.5
CAGR 24.1%
7.2
5.6
1.9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
Q 07
3
LT
M
Percent
Western Financial Group
Historical Consolidated ROE
19
TSX: WES
200
180
160
140
120
100
80
60
40
20
0
173
131
115
81
59
19
17
17
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Q
3
20
08
Percent
Western Financial Group
Debt to Equity Ratio
20
TSX: WES
Priorities for Q4
Q4 Priorities
•
•
•
•
Budget and capital planning.
Network/Life WFGO.
AgriFinancial approvals.
Bank West CEO search.
22
TSX: WES
Questions
…because we live here.