2014

Wells Financial Corp. Announces Third Quarter Results

WELLS, Minn., Oct. 18, 2013 /PRNewswire/ --                

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)



Quarter Ended Sept. 30,

Nine Months Ended


2013

2012

2013

2012






Net Income

$      470

$      552

$       1,085

$      1,478

Basic earnings per share

$     0.61

$     0.71

$         1.41

$        1.88

Diluted earnings per share

$     0.61

$     0.71

$         1.41

$        1.88

Return on average equity (1)

7.2%

8.5%

5.2%

7.7%

Return on average assets (1)

0.8%

0.9%

0.6%

0.8%

Net interest rate spread

3.3%

3.8%

3.3%

3.8%

Net interest rate margin

3.3%

3.8%

3.3%

3.8%

Book value per share

$   34.06

$   33.57

$     34.06

$     33.57

      (1) Annualized





Three Months Ended September 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 third quarter of 2013 of $470,000, down $82,000 or 14.9% when compared to the third quarter of 2012.  Basic and diluted earnings per share for the third quarter of 2013 were $0.61, down $0.10 or 14.1% when compared to the third quarter of 2012.

When comparing the third quarter of 2013 with the third quarter of 2012, the decrease in net income was due, primarily, to a decrease of $480,000, or 58.3%, in gain on sale of loans and a $86,000, or 4.3%, decrease in net interest income.  Partially offsetting these were decreases of $265,000, or 86.9%, in the provision for loan losses and $155,000, or 6.8%, in noninterest expense.

Nine Months Ended September 30, 2013

When comparing the nine months ended September, 30, 2013 to the same period in 2012, net income decreased by $393,000, or 26.6%.  Basic and diluted earnings per share were $1.41 a decrease of $0.47, or 25.0%.  The decrease in net income was due, primarily, to a $611,000, or 32.2%, decrease in the gain on sale of loans and to a decrease of $480,000, or 7.8%, in net interest income.  Partially offsetting these decreases were reductions of $240,000, or 36.6%, in the provision for loan loss and $239,000, or 3.4%, in noninterest expense.    

Three and Nine Months Ended September 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 $265,000, or 86.9% for the third quarter of 2013 when compared to the same period in 2012 and decreased by $240,000, or 36.6% during the nine month period.  As of September 30, 2013 and December 31, 2012, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,634,000 and $1,738,000 and 1.0% and 1.1%, respectively.

The decrease in the gain on sale of loans resulted from a decrease in the amount of loans 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.

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







09/30/13


12/31/12






Cash, including interest-bearing accounts:


$       6,165


$        13,000

    09/30/13 $2,671; 12/31/12 $4,543





Certificates of deposit


7,912


9,631

Fed Funds Sold


14,900


21,000

Securities available for sale


43,329


23,068

Securities held to maturity


-


-

Federal Home Loan Stock


2,016


2,188

Loans held for sale


2,494


6,911

Loans receivable, net


154,796


157,901

Accrued interest receivable


822


826

Prepaid Income Taxes


-


-

Foreclosed real estate


4,886


3,601

Premises and equipment


3,083


3,192

Mortgage servicing rights, net


1,971


1,940

Other assets


1,094


1,089

              TOTAL ASSETS


$   243,468


$      244,347











LIABILITIES AND EQUITY










LIABILITIES:





    Deposits


$   212,861


$      214,928

    Borrowed funds


-


150

    Advances from borrowers for taxes and insurance


3,602


2,494

    Income taxes:





       Deferred


-


-

    Accrued interest payable


158


8

    Accrued expenses and other liabilities


628


610

          TOTAL LIABILITIES


217,249


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


17,126


17,137

    Retained earnings, substantially restricted


37,249


36,510

    Other comprehensive income


(200)


420

    Treasury stock, at cost, 1,417,702 shares at September 



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


(28,175)


(28,129)

          TOTAL EQUITY


26,219


26,157






               TOTAL LIABILITIES AND EQUITY


$   243,468


$      244,347

 

 

Wells Financial Corp. and Subsidiary

Consolidated Statement of Income

(Dollars in thousands, except per share data)

(Unaudited)









Three Months Ended



Nine Months Ended



September 30,



September 30,



2013


2012



2013


2012











Interest and dividend income










  Loans receivable:










    Residential loans


$      654


$     677



$   1,908


$   2,084

    Commercial Loans


297


309



920


1,048

    Ag Real Estate Loans


289


364



941


1,144

    Consumer and other loans


653


774



2,001


2,448

  Investment securities and other interest-










    bearings deposits


212


153



556


445

               Total interest income


2,105


2,277



6,326


7,169

Interest expense










  Deposits


191


275



618


957

  Borrowed funds


-


2



1


25

               Total interest expense


191


277



619


982

               Net interest income


1,914


2,000



5,707


6,187

Provision for loan losses


40


305



415


655

               Net interest income after










                 provision for loan losses


1,874


1,695



5,292


5,532

Noninterest income










  Gain on sale of loans


344


824



1,289


1,900

  Gain on sale of securities AFS


4


-



4


-

  Loan servicing fees


227


234



693


700

  Insurance commissions


181


187



542


535

  Fees and service charges


114


120



334


369

  Other


142


137



419


417

               Total noninterest income


1,012


1,502



3,281


3,921

Noninterest expense










  Compensation and benefits


991


1,032



3,143


3,220

  Occupancy and equipment


204


207



665


633

  Federal insurance premiums


45


49



107


146

  Data processing


197


186



602


571

  Advertising


68


59



184


180

  Amortization & Valuation adjustments for MSR's


110


155



344


413

  Impairment of Securities Available for Sale


-


-



-


-

  Other


504


586



1,694


1,815

               Total noninterest expense


2,119


2,274



6,739


6,978

               Income before income taxes


767


923



1,834


2,475

Income tax expense


297


371



749


997

               Net Income


$      470


$     552



$   1,085


$   1,478











Earnings per share










    Basic earnings per share


$     0.61


$    0.71



$    1.41


$    1.88

    Diluted earnings per share


$     0.61


$    0.71



$    1.41


$    1.88

SOURCE Wells Financial Corp.



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