Wells Financial Corp. Announces Fourth Quarter, Annual Results and Cash Dividend

WELLS, Minn., Feb. 21, 2014 /PRNewswire/ --

Quarter Ended December 31, 2013

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 2013 of $101,000, down $13,000 or 11.4% when compared to the fourth quarter of 2012.  Basic and diluted earnings per share for the fourth quarter of 2013 were $0.13, down $0.02 or 13.3% when compared to the fourth quarter of 2012.

When comparing the fourth quarter of 2013 with the fourth quarter of 2012, the decrease in net income was due, primarily, to a decrease of $470,000 in gain on sale of loans.  The decrease in the gain on sale of loans resulted from a lesser amount of loans being originated for sale to the secondary market.  Beginning late in the second quarter the rates on residential mortgage loans increased resulting in fewer residential loans being refinanced.  Offsetting the decrease in gain on sale of loans was a decrease in noninterest expense.

Year Ended December 31, 2013

Net income decreased by $406,000, or 25.5% for 2013 when compared to 2012.  During 2013 the Company saw decreased activity in the refinancing of residential loans sold to the secondary market due to higher market interest rates.  This resulted in a decrease of $1,081,000 during 2013 in the gain on sale of loans originated for sale when compared to 2012.  Partially offsetting the decrease in the gain on sale of loans originated for sale was a $734,000, or 7.4%, decrease in noninterest expense. 

Net interest income decreased by $475,000, or 5.8% for the year ended December 31, 2013 when compared to the year ended December 31, 2012.  During 2013 the yield on the Company's loan and security portfolios decreased more than the cost of the Company's deposits resulting in a decrease in net interest income.

The provision for loan loss decreased by $200,000, or 23.8%, for 2013 when compared to 2012.  The provision reflects management's monitoring of the allowance for loan losses in relation to the size and quality of the loan portfolio and adjusts the provision for loan losses to adequately provide for loan losses.  Due to changes in economic conditions and changes in the composition of the loan portfolio, it is possible that the provision for loan losses will increase in future periods.

Noninterest income decreased by $1,136,000, or 21.5%, for 2013 when compared to 2012 primarily due to a decrease in the gain on sale of loans originated for sale described above.  During 2013 the Company saw decreased activity in the refinancing of loans sold to the secondary market due to increasing market rate conditions.

Noninterest expense decreased by $734,000, or 7.4%, for 2013 when compared to 2012 due, primarily, to a decrease of $630,000, in other real estate owned expense. The decrease in other real estate owned expense was due, primarily, to decreased write downs of repossessed property.    

Cash Dividend

On February 20, 2014, the Board of Directors declared a quarterly cash dividend of $0.15 per share, payable on March 28, 2014 to shareholders of record on March 14, 2014.

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**

SOURCE Wells Financial Corp.