Transcript Western Financial Group Q1 2009 Financial Results Conference Call May 19, 2009 Forward-Looking Statements This presentation contains certain forward-looking statements.

Western Financial Group
Q1 2009 Financial Results
Conference Call
May 19, 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 Q1
Strategic Events in Q1
Financial Update
Priorities for Q2
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Operational Progress
in Q1 2009
WFG Agency Network
•
•
•
•
Same store customer count 1.2% YTDA
Same store sales 5.2%
Customer inertia continued from Q4 2008
March and April show more normal patterns
and stronger customer count growth
• Acquisition of Bakes Jarvie, Nanaimo, BC
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Western Life Assurance
• Creditor Life still growing
• Employee benefits growth of $500,000 per
month from HED
• Reduced exposure to equities through sales
• Bolt-on product for network is at 6,500+
policies. Target of 7,500 by Y/E 2009
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Bank West
• Negative portfolio growth in Q1. Summer
funding season for RVs surprisingly strong
• Agrifinancial adds additional seasonality to
Bank’s business
• 10 bps specific provisions in Q1. Credit
quality solid – NPLs at 1.01%
• Commercial / farm / consumer pipeline
growing
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Strategic Events in Q1
Q1 Strategic Events
• Agency acquisition not likely until 2010
• Soft market in commercial P & C persists
• Loan portfolio acquisition opportunities
abound. We are staying focused on our
existing business
• Operations focus in 2009
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Financial Update
($ Millions)
Total Revenue
140
120
100
80
60
40
20
0
114
125
126
83
64
28
20
22
33
42
00 001 002 003 004 005 006 007 008 TM
0
L
2
2
2
2
2
2
2
2
2
9
0
0
2
1
Q
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Earnings Per Share
0.3
0.24
0.25
0.18 0.17
0.2
0.22
0.15
0.08 0.08 0.11
0.1
0.05
0
0.03
0.05
0
00 001 002 003 004 005 006 007 008 TM
0
2
2
2
2
2
2
2
2
2 9L
0
20
1
Q
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Overall
Revenue ($)
Income from Equity
Investments ($)
Net Income ($)
Earnings per share ($)
Basic
Diluted
13
2009
2008
31,381
30,102
(253)
914
613
2,386
0.00
0.00
0. 05
0. 04
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The Network
2009
2008
Commission & other
customer revenue ($)
17,522
16,489
Operating expenses ($)
13,932
12,639
3,590
3,850
Operating income ($)
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Bank West
2009
2008
Interest & investment income ($)
5,537
4,942
Net interest & investment income ($)
1,883
1,546
Operating & provision expenses ($)
2,385
849
Operating income ($)
(502)
697
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Western Life Assurance
Investment income ($)
2009
8,469
(519)
2008
7,172
832
Policyholder benefits ($)
3,633
3,705
Operating expenses ($)
3,377
3,123
940
1,176
Premium income ($)
Operating income ($)
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Corporate & All Other
Other revenues ($)
2009
372
2008
667
Operating expenses ($)
2,154
2,397
(1,782)
(1,730)
Operating loss ($)
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10
9
8
7
6
5
4
3
2
1
0
7.2
7.5
8.3
8.1
8.4
9.4
5.6
1.9
1.8
0.1
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Q
1
20 200
09 8
LT
M
Percent
Western Financial Group
Historical Consolidated ROE
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200
180
160
140
120
100
80
60
40
20
0
173
131
115
81
59
19
17
19
25
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Q
20
1
20
08
09
LT
M
Percent
Western Financial Group
Debt to Equity Ratio
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Priorities for Q2
Q2 Priorities
• Manage NPLs at Bank West
• Agrifinancial integration
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Questions
…because we live here.