2014

Wells Financial Corp. Announces Second Quarter Results

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

 

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)



 

Quarter Ended June 30,

 

Six Months Ended


2013

2012

2013

2012






Net Income

$      386

$      450

$       615

$      926

Basic earnings per share

$     0.50

$     0.57

$0.80

$1.18

Diluted earnings per share

$     0.50

$     0.57

$0.80

$1.18

Return on average equity (1)

5.9%

7.0%

4.7%

7.3%

Return on average assets (1)

0.6%

0.7%

0.5%

0.8%

Net interest rate spread

3.2%

3.8%

3.3%

3.8%

Net interest rate margin

3.2%

3.8%

3.3%

3.8%

Book value per share

$   33.83

$   33.04

$   33.83

$   33.04

       (1) Annualized





 

Three Months Ended June 30, 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 second quarter of 2013 of $386,000, down $64,000 or 14.2% when compared to the second quarter of 2012.  Basic and diluted earnings per share for the second quarter of 2013 were $0.50, down $0.07 or 12.3% when compared to the second quarter of 2012.

When comparing the second quarter of 2013 with the second quarter of 2012, the decrease in net income was due, primarily, to decreases of $166,000, or 8.1%, in net interest income and $170,000, or 13.8%, in noninterest income.  Partially offsetting these decreases were decreases of $150,000, or 100%, in the provision for loan losses and $125,000, or 5.3%, in noninterest expense.

Six Months Ended June 30, 2013

When comparing the six months ended June, 30, 2013 to the same period in 2012, net income decreased by $311,000, or 33.6%.  Basic and diluted earnings per share decreased by $0.38, or 32.2%.  Net interest income decreased by $394,000, or 9.4%, and noninterest income decreased by $150,000, or 6.2%. 

Three and Six Months Ended June 30, 2013

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 a 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.  The changes described above resulted in decreased 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 loss decreased by $150,000, or 100% for the second quarter of 2013 when compared to the same period in 2012 and increased by $25,000, or 7.1% during the six month period.  As of June 30, 2013 and 2012, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,801,000 and $3,107,000 and 1.2% and 1.9%, respectively.

The decrease in noninterest income resulted, primarily, from a decrease in the amount of loans originated for sale to the secondary market resulting in a decrease in the gain on sale of loans.

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







06/30/13


12/31/12






Cash, including interest-bearing accounts:


$       6,868


$        13,000

    06/30/13 $1,767; 12/31/12 $4,543





Certificates of deposit


9,382


9,631

Fed Funds Sold


25,000


21,000

Securities available for sale


39,111


23,068

Securities held to maturity


-


-

Federal Home Loan Stock


2,219


2,188

Loans held for sale


4,003


6,911

Loans receivable, net


149,865


157,901

Accrued interest receivable


888


826

Prepaid Income Taxes


-


-

Foreclosed real estate


4,673


3,601

Premises and equipment


3,111


3,192

Mortgage servicing rights, net


1,974


1,940

Other assets


1,031


1,089

              TOTAL ASSETS


$   248,125


$      244,347











LIABILITIES AND EQUITY










LIABILITIES:





    Deposits


$   218,566


$      214,928

    Borrowed funds


-


150

    Advances from borrowers for taxes and insurance


2,546


2,494

    Income taxes:





       Deferred


-


-

    Accrued interest payable


113


8

    Accrued expenses and other liabilities


863


610

          TOTAL LIABILITIES


222,088


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


17,136


17,137

    Retained earnings, substantially restricted


36,894


36,510

    Other comprehensive income


(34)


420

    Treasury stock, at cost, 1,417,845 shares at June 





       30, 2013; 1,415,307 shares at December 31, 2012


(28,178)


(28,129)

          TOTAL EQUITY


26,037


26,157






               TOTAL LIABILITIES AND EQUITY


$   248,125


$      244,347

 


 

Wells Financial Corp. and Subsidiary

Consolidated Statement of Income

(Dollars in thousands, except per share data)

(Unaudited)









Three Months Ended



Six Months Ended



June 30,



June 30,



2013


2012



2013


2012











Interest and dividend income










  Loans receivable:










    Residential loans


$      623


$     731



$   1,254


$   1,407

    Commercial Loans


310


314



623


739

    Ag Real Estate Loans


314


376



652


780

    Consumer and other loans


659


810



1,348


1,674

  Investment securities and other interest-










    bearings deposits


176


149



344


292

               Total interest income


2,082


2,380



4,221


4,892

Interest expense










  Deposits


207


327



427


682

  Borrowed funds


-


12



1


23

               Total interest expense


207


339



428


705

               Net interest income


1,875


2,041



3,793


4,187

Provision for loan losses


-


150



375


350

               Net interest income after










                 provision for loan losses


1,875


1,891



3,418


3,837

Noninterest income










  Gain on sale of loans


409


577



945


1,076

  Loan servicing fees


232


232



466


466

  Insurance commissions


152


169



361


348

  Fees and service charges


109


112



220


249

  Other


160


142



277


280

               Total noninterest income


1,062


1,232



2,269


2,419

Noninterest expense










  Compensation and benefits


1,089


1,089



2,152


2,188

  Occupancy and equipment


242


224



461


426

  Federal insurance premiums


13


48



62


97

  Data processing


195


185



405


385

  Advertising


57


64



116


121

  Amortization & Valuation adjustments for MSRs


116


126



234


258

  Other


540


641



1,190


1,229

               Total noninterest expense


2,252


2,377



4,620


4,704

               Income before income taxes


685


746



1,067


1,552

Income tax expense


299


296



452


626

               Net Income


$      386


$     450



$     615


$     926











Earnings per share










    Basic earnings per share


$     0.50


$    0.57



$    0.80


$    1.18

    Diluted earnings per share


$     0.50


$    0.57



$    0.80


$    1.18

 

 

 

SOURCE Wells Financial Corp.



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