Wells Financial Corp. Announces First Quarter Results

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Apr 17, 2012, 05:08 ET

WELLS, Minn., April 17, 2012 /PRNewswire/ --

Selected Financial Data
(Dollars in Thousands, except per share data)
(unaudited)

	Quarter Ended March 31,
	2012	2011

Net Income	$ 476	$ 370
Basic earnings per share	$ 0.60	$ 0.47
Diluted earnings per share	$ 0.60	$ 0.47
Return on average equity (1)	7.6%	6.3%
Return on average assets (1)	0.8%	0.6%
Net interest rate spread	3.8%	4.0%
Net interest rate margin	3.9%	4.1%
Book value per share	$ 32.30	$ 30.00
(1) Annualized

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 first quarter of 2012 of $476,000, up $106,000 or 28.6% when compared to the first quarter of 2011. Basic and diluted earnings per share for the first quarter of 2012 were $0.60, up $0.13 or 27.7% when compared to the first quarter of 2011.

When comparing the first quarter of 2012 with the first quarter of 2011, the increase in net income was due, primarily, from an increase in the origination and sale to the secondary market of loans on residential properties.

Net interest income decreased by $98,000, or 4.4%, for the first quarter of 2012 when compared to the first quarter of 2011. Current market conditions dictate lower rates on loans that meet the Company's conservative underwriting standards. This has resulted in interest margin compression which is the primary reason for the decrease in 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 losses decreased by $16,000 for the first quarter of 2012 when compared to the same period in 2011. As of March 31, 2012 and 2011, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $3,007,000 and $2,265,000 and 1.8% and 1.3%, respectively.

When comparing the first quarter of 2012 with the first quarter of 2011 noninterest income increased by $282,000, or 31.2%, and noninterest expense increased by $8,000, or 0.4%. The increase in noninterest income was due, primarily, from an increase in the origination and sale to the secondary market of loans on residential properties.

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
	03/31/12	12/31/11

Cash, including interest-bearing accounts:	$ 20,405	$ 12,499
03/31/12 $7,804; 12/31/11 $6,526
Certificates of deposit	3,735	3,735
Fed Funds Sold	15,000	12,590
Securities available for sale	22,453	23,006
Securities held to maturity	-	-
Federal Home Loan Bank Stock, at cost	2,249	2,302
Loans held for sale	6,207	3,253
Loans receivable, net	164,896	170,016
Accrued interest receivable	930	1,029
Foreclosed real estate	4,070	4,501
Premises and equipment	3,343	3,398
Mortgage servicing rights, net	1,783	1,776
Other assets	972	1,370
TOTAL ASSETS	$ 246,043	$ 239,475


LIABILITIES AND EQUITY

LIABILITIES:
Deposits	$ 215,649	$ 210,555
Borrowed funds	1,030	1,000
Advances from borrowers for taxes and insurance	3,633	2,376
Accrued interest payable	82	25
Accrued expenses and other liabilities	256	560
TOTAL LIABILITIES	220,650	214,516

STOCKHOLDER'S EQUITY:
Common stock, $.10 par value; 7,000.000 shares
authorized; 2,187,500 shares issued	$ 219	$ 219
Additional paid in capital	17,125	17,121
Retained earnings, substantially restricted	35,590	35,115
Other comprehensive income	327	367
Treasury stock, at cost, 1,401,340 shares at March
31, 2012; 1,401,040 shares at December 31, 2011	(27,868)	(27,863)
TOTAL EQUITY	25,393	24,959

TOTAL LIABILITIES AND EQUITY	$ 246,043	$ 239,475

Wells Financial Corp. and Subsidiary
Consolidated Statement of Income
(Dollars in Thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2012	2011

Interest and dividend income:
Loans Receivable	$ 2,369	$ 2,704
Investment securities and other interest-
bearings deposits	143	127
Total interest income	2,512	2,831
Interest expense
Deposits	355	567
Borrowed funds	11	20
Total interest expense	366	587
Net interest income	2,146	2,244
Provision for loan losses	200	216
Net interest income after
provision for loan losses	1,946	2,028
Noninterest income
Gain on sale of loans	499	280
Loan servicing fees	234	236
Insurance commissions	179	144
Fees and service charges	137	128
Other	138	117
Total noninterest income	1,187	905
Noninterest expense
Compensation and benefits	1,099	1,085
Occupancy and equipment	202	222
Federal insurance premiums	49	119
Data processing	200	195
Advertising	57	66
Amortization & Valuation adjustments for MSR's	132	69
Other	588	563
Total noninterest expense	2,327	2,319
Income before income taxes	806	614
Income tax expense	330	244
Net Income	$ 476	$ 370

Earnings per share
Basic earnings per share	$ 0.60	$ 0.47
Diluted earnings per share	$ 0.60	$ 0.47