Wells Financial Corp. Announces Second Quarter Results

WELLS, Minn., July 17, 2014 /PRNewswire/ --                      


Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)



Quarter Ended June 30,

Six Months Ended


2014

2013

2014

2013






Net Income

$        96

$      386

$       347

$      615

Basic earnings per share

$     0.13

$     0.50

$      0.45

$     0.80

Diluted earnings per share

$     0.13

$     0.50

$      0.45

$     0.80

Return on average equity (1)

1.5%

5.9%

2.6%

4.7%

Return on average assets (1)

0.2%

0.6%

0.3%

0.5%

Net interest rate spread

3.5%

3.2%

3.4%

3.3%

Net interest rate margin

3.5%

3.2%

3.5%

3.3%

Book value per share

$   34.83

$   33.83

$   34.83

$   33.83




(1) Annualized


Three Months Ended June 30, 2014

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 2014 of $96,000, down $290,000 or 75.0% when compared to the second quarter of 2013.  Basic and diluted earnings per share for the second quarter of 2014 were $0.13, down $0.37 or 74.0% when compared to the second quarter of 2013.

When comparing the second quarter of 2014 with the second quarter of 2013, the decrease in net income was due, primarily, to a decrease of $183,000, or 17.2%, in noninterest income and an increase of $301,000, or 13.4%, in noninterest expense.  The decrease in noninterest income was due to a decrease in the gain on sale of loans as fewer residential mortgage loans were originated and sold to the secondary market.  The increase in noninterest expense was due primarily to an increase in carrying costs and write downs on repossessed properties.  Management has accepted offers on approximately $1 million of repossessed property that are scheduled to close in the third quarter of 2014 which resulted in the write downs described above.

Six Months Ended June 30, 2014

When comparing the six months ended June, 30, 2014 to the same period in 2013, net income decreased by $268,000, or 43.6%.  Basic and diluted earnings per share decreased by $0.35, or 43.8%.  The decrease in net income is due, primarily, to a decrease of $491,000, or 21.6%, in noninterest income which resulted, primarily, from fewer residential mortgage loans being originated and sold to the secondary market during 2014.  Net interest income increased by $141,000, or 3.7%, and the provision for loan loss decreased by $55,000, or 14.7%.

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.  As stated above, the provision for loan loss decreased by $50,000 for the first half of 2014 when compared to the same period in 2013.  As of June 30, 2014 and 2013, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,934,000 and $1,801,000 and 1.2% and 1.2%, 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







06/30/14


12/31/13






Cash, including interest-bearing accounts:


$     12,181


$        12,625

    06/30/14 $7,764; 12/31/13 $5,370





Certificates of deposit


7,366


3,695

Fed Funds Sold


3,500


5,000

Securities available for sale


36,187


41,569

Federal Home Loan Stock


2,049


2,021

Loans held for sale


1,955


1,952

Loans receivable, net


166,091


165,401

Accrued interest receivable


855


804

Foreclosed real estate


4,170


4,340

Premises and equipment


2,957


3,040

Mortgage servicing rights, net


1,910


1,952

Other assets


1,120


1,402

              TOTAL ASSETS


$   240,341


$      243,801











LIABILITIES AND EQUITY










LIABILITIES:





    Deposits


$   210,820


$      214,370

    Borrowed funds


-


-

    Advances from borrowers for taxes and insurance


2,598


2,614

    Accrued interest payable


102


6

    Accrued expenses and other liabilities


386


728

          TOTAL LIABILITIES


213,906


217,718






STOCKHOLDER'S EQUITY:





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





        authorized; 2,187,500 shares issued


$          219


$             219

    Additional paid in capital


17,103


17,086

    Retained earnings, substantially restricted


37,468


37,235

    Other comprehensive income


80


(264)

    Treasury stock, at cost, 1,428,488 shares at June 





       30, 2014; 1,418,180 shares at December 31, 2013


(28,435)


(28,193)

          TOTAL EQUITY


26,435


26,083






               TOTAL LIABILITIES AND EQUITY


$   240,341


$      243,801

    

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,



2014


2013



2014


2013

Interest and dividend income










  Loans receivable:










    Residential loans


$      667


$     623



$   1,320


$   1,254

    Commercial Loans


316


310



623


623

    Ag Real Estate Loans


345


314



676


652

    Consumer and other loans


632


659



1,258


1,348

  Investment securities and other interest-










    bearings deposits


177


176



371


344

               Total interest income


2,137


2,082



4,248


4,221

Interest expense










  Deposits


154


207



314


427

  Borrowed funds


-


-



-


1

               Total interest expense


154


207



314


428

               Net interest income


1,983


1,875



3,934


3,793

Provision for loan losses


150


-



320


375

               Net interest income after










                 provision for loan losses


1,833


1,875



3,614


3,418

Noninterest income










  Gain on sale of loans


174


409



350


945

  Gain on sale of securities AFS


3


-



3


-

  Loan servicing fees


207


232



432


466

  Insurance commissions


151


152



292


361

  Fees and service charges


112


109



217


220

  Other


232


160



484


277

               Total noninterest income


879


1,062



1,778


2,269

Noninterest expense










  Compensation and benefits


1,188


1,089



2,367


2,152

  Occupancy and equipment


193


242



401


461

  Federal insurance premiums


53


13



107


62

  Data processing


204


195



419


405

  Advertising


62


57



110


116

  Amortization & Valuation adjustments for MSR's


78


116



149


234

  Other


775


540



1,261


1,190

               Total noninterest expense


2,553


2,252



4,814


4,620

               Income before income taxes


159


685



578


1,067

Income tax expense


63


299



231


452

               Net Income


$       96


$     386



$     347


$     615

Earnings per share










    Basic earnings per share


$     0.13


$    0.50



$    0.45


$    0.80

    Diluted earnings per share


$     0.13


$    0.50



$    0.45


$    0.80

 

SOURCE Wells Financial Corp.



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