2014

Wells Financial Corp. Announces First Quarter Results

WELLS, Minn., April 17, 2013 /PRNewswire/ --

 

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)



Quarter Ended March 31,


2013

2012




Net Income

$      229

$      476

Basic earnings per share

$     0.30

$     0.60

Diluted earnings per share

$     0.30

$     0.60

Return on average equity (1)

3.5%

7.6%

Return on average assets (1)

0.4%

0.8%

Net interest rate spread

3.3%

3.8%

Net interest rate margin

3.4%

3.9%

Book value per share

$   34.09

$32.30

         (1) Annualized



Lonnie R. Trasamar, President of Wells Financial Corp. (OTC BB: WEFP) (the Company), the holding company of Wells Federal Bank (the Bank), announced earnings for the first quarter of 2013 of $229,000, down $247,000 or 52.0% when compared to the first quarter of 2012.  Basic and diluted earnings per share for the first quarter of 2013 were $0.30, down $0.30 or 50.0% when compared to the first quarter of 2012.

When comparing the first quarter of 2013 with the first quarter of 2012, the decrease in net income was due to a decrease in net interest income of $228,000, or 10.6%, and an increase in the provision for loan loss of $175,000, or 87.5%.  Total interest income decreased by $373,000, or 14.8%, and total interest expense decreased by $145,000, or 39.6%, during the first quarter of 2013 when compared to the same period in 2012

During 2012 and continuing into 2013 the Bank experienced a decrease in the volume of its loan portfolio, primarily in residential loans, commercial real estate loans and loans for agricultural inputs and agricultural real estate.  The decrease in residential loans resulted from loans being refinanced and sold to the secondary market.  Commercial real estate loans decreased due to the stricter underwriting standards the Bank implemented regarding this type of loan.  The robust agricultural economy has resulted in a decrease in the amounts borrowed for crop inputs and increased prepayments on agricultural real estate loans.  These changes, along with an overall decrease in market interest rates being charged on loans, are the reason for the decrease in interest income.  The Bank was able to partially offset the decrease in interest income by decreasing the rates paid on deposit accounts and by paying off all borrowed funds.

In accordance with the Bank's internal classification of assets policy, management evaluates the loan portfolio on a quarterly basis to identify and determine the adequacy of the allowance for loan loss and adjusts the level of the allowance for loan loss through the provision for loan loss.  The provision for loan loss increased by $175,000 for the first quarter of 2013 when compared to the same period in 2012.  As of March 31, 2013 and 2012, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,878,000 and $3,007,000 and 1.2% and 1.8%, respectively.

Forward-looking Statements

Statements in this press release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties.  The foregoing material may contain forward-looking statements concerning the financial condition, results of operations and business of the Company.  We caution that such statements are subject to a number of uncertainties and actual results could differ materially and, therefore, readers should not place undue reliance on any forward-looking statements.  The Company does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances arising after the date hereof.

**An unaudited consolidated balance sheet and income statement are part of this press release**

Wells Financial Corp. and Subsidiary

Consolidated Statement of Financial Condition

(Dollars in thousands)

(Unaudited)






ASSETS







03/31/13


12/31/12






Cash, including interest-bearing accounts:


$       7,887


$     13,000

    03/31/13 $2,648; 12/31/12  $4,543





Certificates of deposit


9,631


9,631

Fed Funds Sold


34,000


21,000

Securities available for sale


31,174


23,068

Federal Home Loan Bank Stock, at cost


2,196


2,188

Loans held for sale


2,584


6,911

Loans receivable, net


151,353


157,901

Accrued interest receivable


763


826

Foreclosed real estate


5,355


3,601

Premises and equipment


3,158


3,192

Mortgage servicing rights, net


1,981


1,940

Other assets


1,056


1,089

              TOTAL ASSETS


$   251,138


$   244,347











LIABILITIES AND EQUITY










LIABILITIES:





    Deposits


$   220,304


$   214,928

    Borrowed funds


-


150

    Advances from borrowers for taxes and insurance


3,868


2,494

    Accrued interest payable


61


8

    Accrued expenses and other liabilities


588


610

          TOTAL LIABILITIES


224,821


218,190






STOCKHOLDER'S EQUITY:





    Common stock, $.10 par value; 7,000.000 shares





        authorized; 2,187,500 shares issued


$          219


$          219

    Additional paid in capital


17,135


17,137

    Retained earnings, substantially restricted


36,740


36,510

    Other comprehensive income


357


420

    Treasury stock, at cost, 1,415,595 shares at March





     31, 2013; 1,415,307 shares at December 31, 2012


(28,134)


(28,129)

          TOTAL EQUITY


26,317


26,157






 TOTAL LIABILITIES AND EQUITY


$   251,138


$   244,347





 

Wells Financial Corp. and Subsidiary

Consolidated Statement of Income

(Dollars in thousands, except per share data)

(Unaudited)



Three Months Ended



March 31,



2013


2012






Interest and dividend income





  Loans receivable:





    Residential loans


$                631


$                676

    Commercial Loans


313


425

    Ag Real Estate Loans


338


404

    Consumer and other loans


689


864

  Investment securities and other interest-





    bearings deposits


168


143

               Total interest income


2,139


2,512

Interest expense





  Deposits


220


355

  Borrowed funds


1


11

               Total interest expense


221


366

               Net interest income


1,918


2,146

Provision for loan losses


375


200

               Net interest income after





                 provision for loan losses


1,543


1,946

Noninterest income





  Gain on sale of loans


536


499

  Loan servicing fees


234


234

  Insurance commissions


209


179

  Fees and service charges


111


137

  Other


117


138

               Total noninterest income


1,207


1,187

Noninterest expense





  Compensation and benefits


1,063


1,099

  Occupancy and equipment


219


202

  Federal insurance premiums


49


49

  Data processing


210


200

  Advertising


59


57

  Amortization & Valuation adjustments for MSR's

118


132

  Other


650


588

               Total noninterest expense


2,368


2,327

               Income before income taxes


382


806

Income tax expense


153


330

               Net Income


$                229


$                 476






Earnings per share





    Basic earnings per share


$               0.30


$                0.60

    Diluted earnings per share


$               0.30


$                0.60

SOURCE Wells Financial Corp.



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