Wells Financial Corp. Announces Third Quarter Results of Operations

Nov 02, 2015, 12:54 ET from Wells Financial Corp.

WELLS, Minn., Nov. 2, 2015 /PRNewswire/ --

Selected Financial Data

(Dollars in thousands, except per share data)

(Unaudited)


Quarter Ended September 30,

Nine Months Ended September 30,


2015

2014

2015

2014






Net Income

$    3,420

$       518

$      4,463

$      865

Basic earnings per share

$      4.63

$      0.68

$        5.88

$     1.14

Diluted earnings per share

$      4.63

$      0.68

$        5.87

$     1.14

Return on average equity (1)(2)

46.42%

7.82%

21.28%

4.37%

Return on average assets(1)

5.11%

0.84%

2.31%

0.47%

Net interest rate spread

3.74%

3.54%

3.67%

3.47%

Net interest rate margin

3.75%

3.56%

3.69%

3.48%

Book value per share (2)

$    38.69

$   35.37

$     38.69

$ 35.37

(1)    Annualized





(2)    Includes stockholders' equity and mezzanine equity



Quarter Ended September 30, 2015

OTCQB-WEFP -- James D. Moll, President of Wells Financial Corp.(the Company), the holding company of Wells Federal Bank (the Bank), announced net income for the third quarter of 2015 of $3,420,000, up $2,902,000 or 560.2%, when compared to the third quarter of 2014.  Basic and diluted earnings per share for the third quarter of 2015 were $4.63, up $3.95 or 581.0%, when compared to the third quarter of 2014.  The improvement in net income for the quarter is due, primarily, to the bargain purchase gain of $2,848,000 that resulted from the merger with St. James Federal Savings and Loan Association consummated on July 16, 2015, discussed below.  Also contributing to the improved earnings were an increase in net interest income of $298,000 and a decrease in the provision for loan losses of $170,000

The increase in net interest income reflects the increase in interest-earning assets resulting from the St. James acquisition and was aided by an increase in the net interest rate spread which improved to 3.74% in the current quarter compared to 3.54% in the prior year.  The yield on interest-bearing assets increased to 3.95% from 3.81% while the average cost of interest-bearing liabilities decreased to 0.21% from 0.27% in the third quarter of 2014.  The average volume of interest-bearing assets increased to $251.3 million from $231.2 million in the prior-year period.  While the average volume of interest-bearing liabilities increased to $233.9 million from $216.0 million between periods, the decrease in average cost resulted in lower interest expense during the current quarter.  The decrease in the provision for loan losses to a net credit of $70,000 resulted from management's analysis of credit quality. 

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 losses through the provision for loan losses.  As of September 30, 2015 and December 31, 2014, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans was $2.1 million and $2.2 million and 1.1% and 1.2%, respectively.

Nine Months Ended September 30, 2015

Net income increased by $3,598,000 or 416.0% for the nine months ended September 30, 2015, when compared to the same period in 2014, primarily due to the bargain purchase gain of $2,848,000 that resulted from the conversion/merger with St. James Federal Savings and Loan Association.  Diluted earnings per share increased by $4.73 for the nine months ended September 30, 2015, when compared to the nine months ended September 30, 2014.  Net interest income increased by $699,000, or 11.7%, in the nine months ended September 30, 2015, when compared to the same period in 2014. When comparing the nine months ended September 30, 2015 to the same period in 2014, the provision for loan loss decreased by $420,000 and noninterest income increased by $3,140,000 which included the aforementioned bargain purchase gain.  Increases in net interest income and noninterest income and the decrease in provision for loan loss were the primary reasons for the increase in earnings.

Acquisition Completed in Third Quarter

On July 16, 2015 the Company announced that it had completed the acquisition of St. James Federal Savings and Loan Association ("St. James") in a conversion merger transaction and the related stock offering of the Company, effective July 16, 2015.  As a result of the conversion merger, St. James converted from a federally-chartered mutual savings association to a federally-chartered stock savings association and immediately merged with and into Wells Federal Bank, the surviving entity in the merger conversion.  The Company sold 78,736 shares of common stock at a price of $27.36 per share to depositor and borrower members of St. James, to the Employee Stock Ownership Plan and stockholders of Wells, and to members of the general public in a concurrent subscription offering and community offering.  Gross offering proceeds totaled approximately $2.15 million.  As a result of the stock offering, the Company had 814,758 shares of common stock issued and outstanding as of the close of business on July 16, 2015.  St. James' sole office, located in St. James, Minnesota, has become a branch office of Wells Federal Bank.

About Wells Financial Corp.

Wells Financial Corp. is the bank holding company for Wells Federal Bank, a Minnesota-chartered, FDIC-insured bank.  Wells Federal Bank, originally chartered in 1934, operates from nine full-service offices in Faribault, Blue Earth, Nicollet, Freeborn, Watonwan and Steele Counties, Minnesota.

Forward-looking Statements

Statements in this press release that are not strictly historical may be "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1996, 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 Balance Sheets

(Dollars in Thousands, except per share data)



Assets

09/30/15

12/31/14


(unaudited)


Cash and cash equivalents, including interest-bearing accounts,



2015, $5,435; 2014, $7,411

$          9,896

$         14,373

Certificates of deposit, at cost

9,521

4,181

Federal funds sold

3,000

2,000

Securities available for sale

35,495

34,177

Federal Home Loan Bank stock, at cost

2,036

2,079

Loans held for sale

1,719

1,707

Loans receivable, net of allowance for loan loss of $2,125 in 2015;  $2,158 in 2014;

197,336

182,050

Accrued interest receivable

1,252

834

Premises and equipment, net

3,417

3,172

Mortgage servicing rights, net

1,862

1,886

Foreclosed real estate

1,975

3,656

Other assets

1,041

1,711

Total assets

$     268,550

$       251,826




Liabilities, Mezzanine Equity and Stockholders' Equity






Liabilities



Deposits

$     232,714

$       221,972

Advances from borrowers for taxes and insurance

3,639

2,630

Accrued interest payable

83

17

Accrued expenses and other liabilities

903

588

Total liabilities

237,339

225,207




Commitments, Contingencies and Credit Risk






Mezzanine Equity

   Redeemable common stock held by ESOP, $0.10 par value, shares issued and outstanding, 85,160 at September 30, 2015;



95,602 at December 31, 2014

2,257

2,533

 

Stockholders' Equity



Preferred stock, no par value; 500,000 shares authorized; none



outstanding

-

-

Common stock, $0.10 par value; 7,000,000 shares authorized;



2,170,634 shares issued

217

209

Additional paid-in capital

18,119

17,110

Retained earnings, substantially restricted

39,879

35,552

Accumulated other comprehensive income

170

93

Unallocated Employee Stock Ownership Plan shares

(172)

-

Treasury stock, 2015, 1,459,526 shares; 2014, 1,445,248 shares

(29,259)

(28,878)

Total stockholders' equity

28,954

24,086

Total liabilities, mezzanine equity and stockholders' equity

$     268,550

$       251,826




 

Wells Financial Corp. and Subsidiary

Consolidated Statements of Income

(Dollars in Thousands, Except Per Share Data)

 


Three Months Ended
September 30,

Nine Months Ended
September 30,


2015

2014

2015

2014


(unaudited)

(unaudited)

Interest income:





Loans receivable

$     2,293

$     2,026

$     6,530

$     5,903

Investment securities and interest-bearing deposits

185

177

508

548

Total interest income

2,478

2,203

7,038

6,451






Interest expense:





Deposits

125

148

350

462

Total interest expense

125

148

350

462






Net interest income

2,353

2,055

6,688

5,989






Provision for loan losses

(70)

100

-

420

Net interest income after provision for 

      loan losses

2,423

 

1,955

6,688

 

5,569






Noninterest income:





Gain on sale of loans held for sale

302

214

826

564

Loan servicing fees

210

168

640

600

Insurance commissions

188

195

529

487

Fees and service charges

113

129

342

346

Bargain purchase gain

2,848

-

2,848

-

Other

204

211

650

698

Total noninterest income

3,865

917

5,835

2,695






Noninterest expenses:





Compensation and benefits

1,168

1,093

3,425

3,460

Occupancy

196

172

553

573

Data processing

268

266

698

685

Advertising

71

71

194

181

Amortization of mortgage servicing rights

98

90

275

239

Other real estate owned

173

-

429

398

Other

546

570

1,491

1,540

Total noninterest expenses

2,520

2,262

7,065

7,076






Income before income taxes

3,768

610

5,458

1,188






Income tax expense

348

92

995

323

Net income

$     3,420

$     518

$     4,463

$       865






Earnings per share:





Basic

$       4.63

$    0.68

$       5.88

$      1.14

Diluted

$       4.63

$    0.68

$       5.87

$      1.14

 

SOURCE Wells Financial Corp.