Wells Financial Corp. Announces Fourth Quarter and Annual Results of Operations

WELLS, Minn., March 12, 2015 /PRNewswire/ --                   

Three Months Ended December 31, 2014

James D. Moll, Interim President of Wells Financial Corp. (OTC BB:WEFP)(the Company), the holding company of Wells Federal Bank (the Bank), announced net income for the fourth quarter of 2014 of $438,000, up $337,000 or 334%, when compared to the fourth quarter of 2013.  Basic and diluted earnings per share for the fourth quarter of 2014 were $0.59, up $0.46 or 354% when compared to the fourth quarter of 2013.  The improvement in net income for the quarter is due, primarily, to an increase of $262, or 13.3%, in net interest income and decreases of $125, or 55.6%, in the provision for loan loss and $209, or 8.0%, in noninterest expense.

The increase in net interest income was due to an increase in the net interest rate spread and an increase in the average balance of the loan portfolio.  The decrease in the provision for loan loss resulted from management's analysis of credit quality.  Please see discussion below for additional information on the provision and allowance for loan loss.  During the fourth quarter of 2013 the Bank recorded non-recurring expenses associated with the sale of loans to the secondary market which resulted in higher than normal noninterest expense.  These expenses were not incurred in 2014 which resulted in the decrease in noninterest expense when comparing the periods.

Year Ended December 31, 2014

When comparing the 2014 with 2013 net interest income increased by $544,000, or 7.1%, due to increases in the net interest rate spread and the average balance of the loan portfolio discussed above.  Noninterest income decreased by $582,000, or 14.0%, due, primarily, to a decrease in the gain on sale of loans.  During 2014 changes in market conditions resulted in fewer loans being originated and sold to the secondary market than during 2013.  Noninterest expense increased by $128,000, or 1.4%, due primarily, to increases in compensation and benefits and data processing. 

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.  The provision for loan losses decreased by $120,000, or 18.8%, for 2014 when compared to 2013.  As of December 31, 2014 and 2013, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $2,158,000 and $1,724,000 and 1.2% and 1.0%, respectively.

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**

SOURCE Wells Financial Corp.