Wells Financial Corp. Announces First Quarter Results of Operations

WELLS, Minn., April 24, 2017 /PRNewswire/ --

Quarter Ended March 31, 2017

James D. Moll, President of Wells Financial Corp. (OTC BB:WEFP) (the Company), the holding company of Wells Federal Bank (the Bank), announced the results of operations for the first quarter of 2017.

Net income for the Company for the first quarter of 2017 was $507,000, down $59,000 or 10.4%, when compared to the first quarter of 2016.  Basic and diluted earnings per share for the first quarter 2017 were $0.65, down $0.06 or 8.5%, when compared to the first quarter of 2016.  The decline in net income for the quarter is due, primarily, to an increase of $285,000, or 55.8%, in other noninterest expense.  The increase in noninterest expense is due to the costs associated with the merger noted above. 

Net interest income for the first quarter of 2017 was up $149,000 or 6.4% when compared to the first quarter of 2016 due, primarily, to improved interest income from loans.  Total noninterest income was down $63,000 due to weakness in loans sold to the secondary market and in loan portfolios serviced for the secondary market as well as variances in insurance commissions.  Insurance commissions were down $42,000 or 13.1% in the first quarter of 2017 when compared to the first quarter of 2016.  The Bank's insurance agency subsidiary recorded increased commission income due to favorable insurance loss experience recognized in the first quarter of 2016.  The insurance loss experience in 2017 was consistent with years prior to 2016.  Non-interest expenses increased primarily due to professional fees associated with the announced merger.

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 March 31, 2017 and December 31, 2016, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,999,000 and $2,070,000 and 1.00% and 0.96%, respectively.

On March 17, 2017 the Company announced a merger with Citizens Community Bancorp, Inc.  ("Citizens"), whereby the Company will merge into Citizens Community Bancorp, Inc. (the "Merger") in a transaction valued at approximately $39.8 million.  The board of directors of both companies approved the transaction, which is subject to the approvals of bank regulatory agencies and the shareholders of the Company.  Shareholders of the Company will receive total consideration of $51.00 per share, which will consist of $41.31 in cash or 81% of the total consideration and the balance of the consideration will consist of 0.7636 shares of Citizens Community Bancorp, Inc. for each share of the Company.  The stock consideration is subject to a pricing collar adjustment in certain circumstances based on the price of Citizens Community Bancorp, Inc. common stock at the time of closing.  It is believed that the transaction will close sometime in the third quarter of 2017. 

No Offer or Solicitation

This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Additional Information About The Proposed Transaction and Where To Find It

This press release does not constitute a solicitation of any vote or approval. In connection with the merger, Citizens will be filing with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 and other relevant documents. STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 TO BE FILED BY CITIZENS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY CITIZENS WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The Registration Statement, including the proxy statement/prospectus, and other relevant materials (when they become available), and any other documents filed by Citizens with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. Documents filed by Citizens with the SEC, including the registration statement, may also be obtained free of charge from Citizens' website http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=4091023 by clicking the "SEC Filings" heading, or by directing a request to Citizens' CEO, Stephen Bianchi at [email protected].

The directors, executive officers and certain other members of management and employees of  the Company may be deemed to be "participants" in the solicitation of proxies for stockholder approval. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of stockholder approval will be set forth in the proxy statement/prospectus and the other relevant documents to be filed by Citizens with the SEC.

Cautionary Statement Regarding Forward-looking Statements

Certain statements contained in this release are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "could," "expect," "intend," "may," "planned," "potential," "should," "will," "would" or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the Company's operations and business environment. These uncertainties include the timing to consummate the proposed transaction; the risk that a condition to closing of the proposed transaction may not be satisfied and the transaction may not close; the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained or is obtained subject to conditions that are not anticipated; the combined company's ability to achieve the synergies and value creation contemplated by the proposed transaction; the effects of governmental regulation of the financial services industry; industry consolidation; technological developments and major world news events; and general economic conditions, in particular, relating to consumer demand for the Company's products and services.  Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.

**An unaudited consolidated balance sheet and income statement are part of this press release**

SOURCE Wells Financial Corp.