Western Financial Group announces Q3 results
Western Financial Group announced today its operating and financial results for the three and nine months ended September 30, 2010.
Its third quarter 2010 financial numbers show net income increased by 37%, with Earnings Per Share up by 7% and fully diluted Earnings Per Share up 15% over the same period in 2009. All Business Units showed positive results year over year, with Bank West reporting its second profitable quarter in a row and record profits for the year to date.
“Our results for the 9 months reflect the continued progress toward our stated objectives for 2010,” said Scott Tannas, President and CEO.
“At this moment, with our traditionally strongest quarter ahead of us, we remain confident we are on track for all our key measurements above. Our optimism is tempered by continued modest growth in the economy in the West. We continue to be cautious with cash management, expense control, and capital allocation,” he said.
The Network
The Network combined margin for the nine months was 28%, with Group Insurance Solutions’ margin at 22% and the retail division at 30%. Retail same store sales are at 4.3%, and same store customer count grew by 1.92% on a YTD, annualized basis.
Bank West
The Bank’s loan book decreased slightly over the quarter, to $378.2 million. Our specific charges for loan losses stand at 48 basis points at 9 months, which on an annualized basis is tracking toward a significant improvement over 2009. The gross non performing loan ratio also continues to improve over prior quarters, standing now at 1.65%. While there is much to be done to improve profitability at Bank West, we are pleased to have a $2.6 million positive swing in operating income over this time last year.
Western Life
Western Life’s growth continued with premium income up by 17% year over year, gaining momentum over Q2. Their loss ratio abated significantly in the quarter bringing their year to date ratio to 48%. Cross sales within the Western Financial Group continue to set new highs each quarter.
Western Financial Insurance
Western Financial Insurance’s premium revenue is up 13% with improved loss ratios year over year of 43% compared to 48% in 2009. Net new policy count is 3,812 for the year, bringing the total in-force policies to 68,864.
Strategic Partnership Portfolio
The Company’s partnerships in investment banking, insurance distribution and manufacturing provided combined positive income for the quarter, with all units tracking at or near our 2010 expectations.
| Financial Highlights | |||||||
| (unaudited) | Three Months ended September 30 | Nine Months ended September 30 | |||||
| (in $ thousands except for per share amounts) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | |
| The Network | |||||||
| Commissions and other customer revenue | $ 27,446 | $ 20,425 | 34.4% | $ 81,115 | $ 61,055 | 32.9% | |
| Operating expenses | 19,662 | 14,594 | 34.7% | 58,496 | 43,407 | 34.8% | |
| Operating income | $ 7,783 | $ 5,831 | 33.5% | $ 22,619 | $ 17,648 | 28.2% | |
| Bank West | |||||||
| Interest and investment income | $ 6,880 | $ 6,795 | 1.2% | $ 20,450 | $ 19,017 | 7.5% | |
| Interest expense – customer deposits | 3,314 | 3,723 | -11.0% | 9,467 | 11,155 | -15.1% | |
| Net interest and investment income | 3,566 | 3,072 | 16.1% | 10,983 | 7,862 | 39.7% | |
| Provisions for credit losses | 857 | 922 | -7.0% | 1,781 | 1,728 | 3.1% | |
| Operating expenses | 2,272 | 1,869 | 21.6% | 7,038 | 6,593 | 6.8% | |
| Operating income (loss) | $ 437 | $ 281 | 55.5% | $ 2,164 | $ (459) | 571.5% | |
| Western Life | |||||||
| Premium and investment income | $ 16,067 | $ 12,260 | 31.1% | $ 40,479 | $ 31,052 | 30.4% | |
| Policyholder benefits | 8,616 | 7,224 | 19.3% | 21,253 | 16,056 | 32.4% | |
| Operating expenses | 5,660 | 3,997 | 41.6% | 14,303 | 11,370 | 25.8% | |
| Operating income | $ 1,791 | $ 1,039 | 72.3% | $ 4,923 | $ 3,626 | 35.8% | |
| Western Financial Insurance | |||||||
| Premium and investment income | $ 9,558 | $ - | - | $ 27,779 | $ - | - | |
| Policyholder benefits | 3,623 | - | - | 12,355 | - | - | |
| Operating expenses | 3,045 | - | - | 9,374 | - | - | |
| Operating income | $ 2,890 | $ - | - | $ 6,050 | $ - | - | |
| Corporate and all other | |||||||
| Other revenues | $ 312 | $ 608 | -48.7% | $ 1,020 | $ 1,219 | -16.3% | |
| Operating expenses | 2,992 | 2,505 | 19.4% | 8,637 | 7,257 | 19.0% | |
| Operating loss | $ (2,680) | $ (1,897) | -41.3% | $ (7,617) | $ (6,038) | -26.2% | |
| Total operating income | $ 10,221 | $ 5,254 | 94.5% | $ 28,139 | $ 14,777 | 90.4% | |
| Net income | $ 5,101 | $ 4,147 | 23.0% | $ 13,114 | $ 9,986 | 31.3% | |
| Preferred dividends | (1,796) | (1,202) | 49.4% | (5,425) | (3,207) | 69.2% | |
| Earnings available to common shareholders | $ 3,305 | $ 2,945 | 12.2% | $ 7,689 | $ 6,779 | 13.4% | |
| Earnings per share | |||||||
| - basic ($) | $ 0.06 | $ 0.06 | $ 0.15 | $ 0.14 | |||
| - diluted ($) | $ 0.06 | $ 0.06 | $ 0.15 | $ 0.13 |
| 2010 KEY OBJECTIVES | |
| Network Same Store Sales Network Operating Margin Bank West Specific Provisions Western Financial Insurance Loss Ratio Western Life Loss Ratio Overall 2010 Net Income |
4%-7% growth 28% 75 bps or less 55% or less 45% or less $18.5 to $20 million |
