Western Financial GroupQ2 2008 Financial Results
Conference Call
August 12, 2008
Forward-Looking StatementsThis 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. Forward-looking 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 MeasuresThroughout 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.
TSX: WES3
Today’s Remarks• Operational Progress in Q2
• Strategic Events in Q2
• Financial Update
• Priorities for Q3
Operational Progressin Q2 2008
TSX: WES5
WFG Agency Network
• Same store customer count 4.5% YTDA
• Same store sales 9.5% - Market share gains
• Soft market continues – AB Auto Increase approved
• 5% on mandatory
• Acquisition of Simpson, Trochu, AB and Woodland, Grande Cache, AB
TSX: WES6
Western Life Assurance
• Creditor Life still strong
• Certificate count and growth highest ever - 13% over Q2/07
• Bolt-on product for network is at 5,554 policies. Target of 20,000 by Q2/09
• Westguard employee benefits program underway and gaining traction
TSX: WES7
Bank West
• Negative portfolio growth in Q1, Summer funding season slower than 2007. Opportunity rich environment. Guarding capacity and reviewing opportunities.
• Portfolio target for 2008 - $320 million
• Very low specific provisions in H1, credit quality solid
Strategic Events in Q2
TSX: WES9
Q2 Strategic Events
• Agency acquisition pipeline active – price/value expectations are still high
• Loan portfolio acquisition opportunities
• Business development discussions with Partners continue
• Significant advertising increase in advance of 2009 local name “Sunset” plan
Financial Update
TSX: WES11
Total Revenue
127114
20
64
334228
22
83
020406080
100120140
2000
2001
2002
2003
2004
2005
2006
2007
Q2
2008
LTM
($ M
illi
on
s)
CAGR 28.0%
TSX: WES12
Earnings Per Share
0.00
0.05
0.10
0.15
0.20
0.25
0.30
Basic 0.03 0.09 0.08 0.11 0.18 0.17 0.22 0.24 0.23
Diluted 0.03 0.07 0.08 0.10 0.16 0.15 0.20 0.22 0.23
2000 2001 2002 2003 2004 2005 2006 2007Q2
2008 LTM
CAGR 32%CAGR 31%
TSX: WES13
Overall
2008 2007
Revenue ($000) 64,473 51,204
Income from Equity Investments ($000) 1,458 1,594
Net Income ($000) 8,225 6,635
Earnings per share ($)
Basic
Diluted
0. 13
0. 13
0.14
0.12
TSX: WES14
The Network
2008 2007
Commission & other customer revenue ($000) 38,361 32,282
Operating expenses ($000) 26,568 21,146
Operating income ($000) 11,793 11,136
TSX: WES15
Bank West
2008 2007
Interest & investment income ($000) 9,551 5,320
Net interest & investment income ($000) 3,052 1,913
Operating & provision expenses ($000) 1,920 1,667
Operating income ($000) 1,132 246
TSX: WES16
Western Life Assurance
2008 2007
Premium income ($000) 14,913 12,714
Investment income ($000) 579 (579)
Policyholder benefits ($000) 6,487 4,856
Operating expenses ($000) 6,569 5,498
Operating income ($000) 2,436 1,781
TSX: WES17
Corporate & All Other
2008 2007
Other revenues ($000) 1,069 1,467
Operating expenses ($000) 4,290 4,556
Operating loss ($000) (3,221) (3,089)
TSX: WES18
Western Financial GroupHistorical Consolidated ROE
1.9
9.69.4
5.6
7.28.37.5 8.1
8.4
0
2
4
6
8
10
12
2000
2001
2002
2003
2004
2005
2006
2007
Q2
LTM
Per
cen
t
CAGR 24.1%
TSX: WES19
Western Financial GroupDebt to Equity Ratio
1817
131
19
115
173
81
59
020406080
100120140160180200
2001
2002
2003
2004
2005
2006
2007
Q2
2008
Per
cen
t
Priorities for Q3
TSX: WES21
Q3 Priorities
• Agency acquisitions
• Ubiquity Bank / Wealthview integration
• Network/Life WFGO
• Bank portfolio growth and acquisition and/or new loans
Questions
…because we live here.