Wells Financial Corp. Announces Fourth Quarter and Annual Results
WELLS, Minn., Feb. 4, 2013 /PRNewswire/ --
Selected Financial Data |
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(Dollars in Thousands, except per share data) |
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(unaudited) |
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Quarter Ended December 31, |
Twelve Months Ended December 31, |
|||
2012 |
2011 |
2012 |
2011 |
|
Net Income |
$ 114 |
$ 401 |
$ 1,592 |
$ 1,500 |
Basic earnings per share |
$ 0.15 |
$ 0.51 |
$ 2.03 |
$ 1.91 |
Diluted earnings per share |
$ 0.15 |
$ 0.51 |
$ 2.03 |
$ 1.91 |
Return on average equity (1) |
1.8% |
6.5% |
6.2% |
6.2% |
Return on average assets (1) |
0.2% |
0.7% |
0.7% |
0.6% |
Net interest rate spread |
3.5% |
4.1% |
3.7% |
4.0% |
Net interest rate margin |
3.5% |
4.1% |
3.7% |
4.0% |
Book value per share |
$ 33.87 |
$ 31.74 |
$ 33.87 |
$ 31.74 |
(1) Annualized |
Quarter Ended December 31, 2012
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 fourth quarter of 2012 of $114,000, down $287,000 or 71.6% when compared to the fourth quarter of 2011. Basic and diluted earnings per share for the fourth quarter of 2012 were $0.15, down $0.36 or 70.6% when compared to the fourth quarter of 2011. The decrease in net income for the quarter was the result of impairments and write downs taken on repossessed property.
Net interest income decreased by $341,000, or 14.8%, for the fourth quarter of 2012 when compared to the same period in 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 $343,000, or 65.0%, for the quarter when compared to the same period in 2011. As of December 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 $1,738,000 and $2,800,000 and 1.1% and 1.6%, respectively. During 2012 the Bank converted from a federally chartered savings bank to a state chartered commercial bank. Under the savings bank charter the Bank was allowed to create reserves for impaired loans in the allowance for loan loss. During 2012, these reserves were charged off resulting in the decrease in the allowance.
When comparing the fourth quarter of 2012 with the fourth quarter of 2011 noninterest income increased by $126,000, or 9.9%, due primarily from an increase in the gain on sale of loans. During 2012 the Company saw increased activity in the refinancing of loans sold to the secondary market due to favorable market conditions.
Noninterest expense increased by $485, or 19.2%, due primarily to the increase in impairments and write downs taken on repossessed property discussed above.
Year Ended December 31, 2012
Net income increased by $92,000, or 6.1%, when comparing 2012 with 2011. Basic and diluted earnings per share for 2012 were $2.03, an increase of $0.12 per share, or 6.3%, when compared to 2011.
When comparing 2012 with 2011, interest income decreased by $1,563,000, or 14.3%, due primarily to a decrease in the yields on interest earning assets and, to a lesser extent, to a decrease in the average balances of those assets. Interest expense decreased by $753,000, or 8.4%, due primarily to a decrease in the interest rates paid on interest earning liabilities and, to a lesser extent, on the average balances of those liability accounts. These changes resulted in a decrease of $810,000, or 9.0%, in net interest income.
The provision for loan losses decreased by $570,000 in 2012 when compared to 2011. Please see the discussion above regarding the allowance for loan loss.
Noninterest income increased by $1,230,000, or 30.1%, during 2012 when compared to 2011 due to an increase in the gain on sale of loans to the secondary market. During 2012 the Company saw increased activity in the refinancing of loans sold to the secondary market due to favorable market conditions.
Noninterest expense increased by $666,000, or 7.1%, for 2012 when compared to 2011 due to increases in other real estate owned expense, amortization of mortgage servicing rights and to compensation and benefits. The increase in other real estate owned expense was due primarily to increased write downs on repossessed properties. The increase in amortization of mortgage servicing rights and compensation and benefits was due to the increased activity in the refinancing of loans sold to the secondary market.
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 |
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Consolidated Statements of Financial Condition |
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(Dollars in thousands) |
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(Unaudited) |
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ASSETS |
||||
12/31/12 |
12/31/11 |
|||
Cash, including interest-bearing accounts: 12/31/12 $4,543; 12/31/11 $6,526 |
$ 13,000 |
$ 12,499 |
||
Certificates of deposit |
9,631 |
3,735 |
||
Fed Funds Sold |
21,000 |
12,590 |
||
Securities available for sale |
23,068 |
23,006 |
||
Federal Home Loan Stock |
2,188 |
2,302 |
||
Loans held for sale |
6,911 |
3,253 |
||
Loans receivable, net |
157,901 |
170,016 |
||
Accrued interest receivable |
826 |
1,029 |
||
Foreclosed real estate |
3,601 |
4,501 |
||
Premises and equipment |
3,192 |
3,398 |
||
Mortgage servicing rights, net |
1,940 |
1,776 |
||
Other assets |
937 |
1,370 |
||
TOTAL ASSETS |
$ 244,195 |
$ 239,475 |
||
LIABILITIES AND EQUITY |
||||
LIABILITIES: |
||||
Deposits |
$ 214,928 |
$ 210,555 |
||
Borrowed funds |
150 |
1,000 |
||
Advances from borrowers for taxes and insurance |
2,494 |
2,376 |
||
Accrued interest payable |
8 |
25 |
||
Accrued expenses and other liabilities |
458 |
560 |
||
TOTAL LIABILITIES |
218,038 |
214,516 |
||
STOCKHOLDER'S EQUITY: |
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Common stock, $.10 par value; 7,000.000 shares authorized; 2,187,500 shares issued |
$ 219 |
$ 219 |
||
Additional paid in capital |
17,137 |
17,121 |
||
Retained earnings, substantially restricted |
36,510 |
35,115 |
||
Other comprehensive income |
420 |
367 |
||
Treasury stock, at cost, 1,415,307 shares at December 31, 2012; 1,401,040 shares at December 31, 2011 |
(28,129) |
(27,863) |
||
TOTAL EQUITY |
26,157 |
24,959 |
||
TOTAL LIABILITIES AND EQUITY |
$ 244,195 |
$ 239,475 |
Wells Financial Corp. and Subsidiary |
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Consolidated Statements of Income |
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(Dollars in thousands, except per share data) |
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(Unaudited) |
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Three Months Ended |
Twelve Months Ended |
||||||||
December 31, |
December 31, |
||||||||
2012 |
2011 |
2012 |
2011 |
||||||
Interest and dividend income |
|||||||||
Loans receivable: |
|||||||||
Residential loans |
$ 655 |
$ 724 |
$ 2,739 |
$ 2,486 |
|||||
Commercial Loans |
318 |
456 |
1,366 |
2,027 |
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Ag Real Estate Loans |
347 |
473 |
1,491 |
2,050 |
|||||
Consumer and other loans |
747 |
928 |
3,195 |
3,822 |
|||||
Investment securities and other interest-bearings deposits |
154 |
146 |
599 |
568 |
|||||
Total interest income |
2,221 |
2,727 |
9,390 |
10,953 |
|||||
Interest expense |
|||||||||
Deposits |
255 |
406 |
1,212 |
1,916 |
|||||
Borrowed funds |
1 |
15 |
26 |
75 |
|||||
Total interest expense |
256 |
421 |
1,238 |
1,991 |
|||||
Net interest income |
1,965 |
2,306 |
8,152 |
8,962 |
|||||
Provision for loan losses |
185 |
528 |
840 |
1,410 |
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Net interest income after |
|||||||||
provision for loan losses |
1,780 |
1,778 |
7,312 |
7,552 |
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Noninterest income |
|||||||||
Gain on sale of loans |
723 |
592 |
2,623 |
1,433 |
|||||
Loan servicing fees |
236 |
256 |
936 |
962 |
|||||
Insurance commissions |
173 |
149 |
708 |
635 |
|||||
Fees and service charges |
129 |
131 |
498 |
530 |
|||||
Other |
138 |
145 |
522 |
530 |
|||||
Total noninterest income |
1,399 |
1,273 |
5,287 |
4,090 |
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Noninterest expense |
|||||||||
Compensation and benefits |
1,151 |
1,030 |
4,371 |
4,242 |
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Occupancy and equipment |
224 |
221 |
857 |
854 |
|||||
Federal insurance premiums |
58 |
49 |
204 |
309 |
|||||
Data processing |
190 |
180 |
761 |
725 |
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Advertising |
84 |
69 |
264 |
254 |
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Amortization of Mortgage Servicing Rights |
145 |
145 |
558 |
374 |
|||||
Other real estate owned |
726 |
463 |
1,360 |
1,069 |
|||||
Other |
427 |
363 |
1,575 |
1,490 |
|||||
Total noninterest expense |
3,005 |
2,520 |
9,950 |
9,317 |
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Income before income taxes |
174 |
531 |
2,649 |
2,325 |
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Income tax expense |
60 |
130 |
1,057 |
825 |
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Net Income |
$ 114 |
$ 401 |
$ 1,592 |
$ 1,500 |
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Earnings per share |
|||||||||
Basic earnings per share |
$ 0.15 |
$ 0.51 |
$ 2.03 |
$ 1.91 |
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Diluted earnings per share |
$ 0.15 |
$ 0.51 |
$ 2.03 |
$ 1.91 |
SOURCE Wells Financial Corp.
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