Wells Financial Corp. Announces Fourth Quarter and Annual Results

WELLS, Minn., Feb. 4, 2013 /PRNewswire/ --

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)



 

Quarter Ended

December 31,

 

Twelve Months Ended

December 31,


2012

2011

2012

2011






Net Income

$      114

$      401

$  1,592

$  1,500

Basic earnings per share

$     0.15

$     0.51

$    2.03

$    1.91

Diluted earnings per share

$     0.15

$     0.51

$    2.03

$    1.91

Return on average equity (1)

1.8%

6.5%

6.2%

6.2%

Return on average assets (1)

0.2%

0.7%

0.7%

0.6%

Net interest rate spread

3.5%

4.1%

3.7%

4.0%

Net interest rate margin

3.5%

4.1%

3.7%

4.0%

Book value per share

$   33.87

$   31.74

$  33.87

$  31.74

(1) Annualized





Quarter Ended December 31, 2012

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 fourth quarter of 2012 of $114,000, down $287,000 or 71.6% when compared to the fourth quarter of 2011.  Basic and diluted earnings per share for the fourth quarter of 2012 were $0.15, down $0.36 or 70.6% when compared to the fourth quarter of 2011.  The decrease in net income for the quarter was the result of impairments and write downs taken on repossessed property.

Net interest income decreased by $341,000, or 14.8%, for the fourth quarter of 2012 when compared to the same period in 2011.  Current market conditions dictate lower rates on loans that meet the Company's conservative underwriting standards.  This has resulted in interest margin compression which is the primary reason for the decrease in net interest income. 

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 losses decreased by $343,000, or 65.0%, for the quarter when compared to the same period in 2011.  As of December 31, 2012 and 2011, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,738,000 and $2,800,000 and 1.1% and 1.6%, respectively.  During 2012 the Bank converted from a federally chartered savings bank to a state chartered commercial bank.  Under the savings bank charter the Bank was allowed to create reserves for impaired loans in the allowance for loan loss.  During 2012, these reserves were charged off resulting in the decrease in the allowance.

When comparing the fourth quarter of 2012 with the fourth quarter of 2011 noninterest income increased by $126,000, or 9.9%, due primarily from an increase in the gain on sale of loans.  During 2012 the Company saw increased activity in the refinancing of loans sold to the secondary market due to favorable market conditions.

Noninterest expense increased by $485, or 19.2%, due primarily to the increase in impairments and write downs taken on repossessed property discussed above.

Year Ended December 31, 2012

Net income increased by $92,000, or 6.1%, when comparing 2012 with 2011.  Basic and diluted earnings per share for 2012 were $2.03, an increase of $0.12 per share, or 6.3%, when compared to 2011.

When comparing 2012 with 2011,  interest income decreased by $1,563,000, or 14.3%, due primarily to a decrease in the yields on interest earning assets and, to a lesser extent, to a decrease in the average balances of those assets.  Interest expense decreased by $753,000, or 8.4%, due primarily to a decrease in the interest rates paid on interest earning liabilities and, to a lesser extent, on the average balances of those liability accounts.    These changes resulted in a decrease of $810,000, or 9.0%, in net interest income.

The provision for loan losses decreased by $570,000 in 2012 when compared to 2011.   Please see the discussion above regarding the allowance for loan loss.

Noninterest income increased by $1,230,000, or 30.1%, during 2012 when compared to 2011 due to an increase in the gain on sale of loans to the secondary market.  During 2012 the Company saw increased activity in the refinancing of loans sold to the secondary market due to favorable market conditions.

Noninterest expense increased by $666,000, or 7.1%, for 2012 when compared to 2011 due to increases in other real estate owned expense, amortization of mortgage servicing rights and to compensation and benefits.  The increase in other real estate owned expense was due primarily to increased write downs on repossessed properties.   The increase in amortization of mortgage servicing rights and compensation and benefits was due to the increased activity in the refinancing of loans sold to the secondary market.

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 Statements of Financial Condition

(Dollars in thousands)

(Unaudited)

ASSETS







12/31/12


12/31/11






Cash, including interest-bearing accounts: 12/31/12 $4,543; 12/31/11 $6,526


$      13,000


$        12,499

Certificates of deposit


9,631


3,735

Fed Funds Sold


21,000


12,590

Securities available for sale


23,068


23,006

Federal Home Loan Stock


2,188


2,302

Loans held for sale


6,911


3,253

Loans receivable, net


157,901


170,016

Accrued interest receivable


826


1,029

Foreclosed real estate


3,601


4,501

Premises and equipment


3,192


3,398

Mortgage servicing rights, net


1,940


1,776

Other assets


937


1,370

              TOTAL ASSETS


$    244,195


$      239,475











LIABILITIES AND EQUITY










LIABILITIES:





    Deposits


$    214,928


$      210,555

    Borrowed funds


150


1,000

    Advances from borrowers for taxes and insurance


2,494


2,376

    Accrued interest payable


8


25

    Accrued expenses and other liabilities


458


560

          TOTAL LIABILITIES


218,038


214,516






STOCKHOLDER'S EQUITY:





    Common stock, $.10 par value; 7,000.000 shares authorized; 2,187,500 shares issued


$           219


$             219

    Additional paid in capital


17,137


17,121

    Retained earnings, substantially restricted


36,510


35,115

    Other comprehensive income


420


367

    Treasury stock, at cost, 1,415,307 shares at December 31, 2012; 1,401,040 shares at December 31, 2011


(28,129)


(27,863)

          TOTAL EQUITY


26,157


24,959






               TOTAL LIABILITIES AND EQUITY


$    244,195


$      239,475

 

Wells Financial Corp. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share data)

(Unaudited)




Three Months Ended



Twelve Months Ended



December 31,



December 31,



2012


2011



2012


2011











Interest and dividend income










  Loans receivable:










    Residential loans


$    655


$    724



$ 2,739


$ 2,486

    Commercial Loans


318


456



1,366


2,027

    Ag Real Estate Loans


347


473



1,491


2,050

    Consumer and other loans


747


928



3,195


3,822

  Investment securities and other interest-bearings deposits


154


146



599


568

               Total interest income


2,221


2,727



9,390


10,953

Interest expense










  Deposits


255


406



1,212


1,916

  Borrowed funds


1


15



26


75

               Total interest expense


256


421



1,238


1,991

               Net interest income


1,965


2,306



8,152


8,962

Provision for loan losses


185


528



840


1,410

               Net interest income after










                 provision for loan losses


1,780


1,778



7,312


7,552

Noninterest income










  Gain on sale of loans


723


592



2,623


1,433

  Loan servicing fees


236


256



936


962

  Insurance commissions


173


149



708


635

  Fees and service charges


129


131



498


530

  Other


138


145



522


530

               Total noninterest income


1,399


1,273



5,287


4,090

Noninterest expense










  Compensation and benefits


1,151


1,030



4,371


4,242

  Occupancy and equipment


224


221



857


854

  Federal insurance premiums


58


49



204


309

  Data processing


190


180



761


725

  Advertising


84


69



264


254

  Amortization of Mortgage Servicing Rights


145


145



558


374

  Other real estate owned


726


463



1,360


1,069

  Other


427


363



1,575


1,490

               Total noninterest expense


3,005


2,520



9,950


9,317

               Income before income taxes


174


531



2,649


2,325

Income tax expense


60


130



1,057


825

               Net Income


$    114


$    401



$ 1,592


$ 1,500











Earnings per share










    Basic earnings per share


$   0.15


$   0.51



$   2.03


$   1.91

    Diluted earnings per share


$   0.15


$   0.51



$   2.03


$   1.91

SOURCE Wells Financial Corp.



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