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

Mar 17, 2016, 15:52 ET from Wells Financial Corp.

WELLS, Minn., March 17, 2016 /PRNewswire/ --

Selected Financial Data

(Dollars in thousands, except per share data)

(Unaudited)



Quarter Ended December 31,

Year Ended December 31,


2015

2014

2015

2014






Net Income

$       431

$       438

$      4,894

$    1,303

Basic earnings per share

$      0.54

$      0.59

$        6.35

$      1.72

Diluted earnings per share

$      0.54

$      0.59

$        6.35

$      1.72

Return on average equity (1)(2)

5.5%

6.6%

17.0%

4.9%

Return on average assets(1)

0.6%

0.7%

1.9%

0.5%

Net interest rate spread

3.7%

3.7%

3.7%

3.5%

Net interest rate margin

3.7%

3.7%

3.7%

3.5%

Book value per share (2)

$    38.99

$   35.86

$     38.99

$   35.86

Tangible book value per share(2)

$    38.63

$   35.67

$     38.63

$   35.67

(1)   Annualized




(2)   Includes stockholders' equity and mezzanine equity



Quarter Ended December 31, 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 fourth quarter of 2015 of $431,000, down $7,000 or 1.6%, when compared to the fourth quarter of 2014.  Basic and diluted earnings per share for the fourth quarter of 2015 were $0.54, down $0.05 or 8.5%, when compared to the fourth quarter of 2014.  The decrease in net income resulted from an increase of $353,000 in noninterest expense which more than offset increases of $178,000 and $87,000 in net interest income and noninterest income, respectively. 

The increase in net interest income is primarily attributable to the increase in interest-earning assets acquired in the conversion merger transaction with St. James Federal Savings and Loan Association ("St. James"), discussed below.  The average volume of interest-bearing assets increased to $259.8 million from $238.9 million in the prior-year period.  While the average volume of interest-bearing liabilities increased to $238.9 million from $225.2 million between periods, the decrease in average cost resulted in lower interest expense during the current quarter.  The increase in noninterest expense is related to increases in compensation and benefits and other noninterest expense resulting from the conversion merger with St. James. 

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 December 31, 2015 and 2014, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans was $2.0 million and $2.2 million and 1.0% and 1.2%, respectively.

Year Ended December 31, 2015

Net income increased by $3,591,000 or 275.59% for 2015, when compared to 2014, primarily due to the bargain purchase gain of $2,848,000 that resulted from the conversion merger with St. James.  Diluted earnings per share increased by $4.63 for 2015, when compared to 2014.  Net interest income increased by $877,000, or 10.67%, in 2015, when compared to 2014. When comparing 2015 to 2014, the provision for loan loss decreased by $450,000 and noninterest income increased by $3,227,000 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 net income.

Acquisition Completed in Third Quarter

On July 16, 2015, the Company announced that it had completed the acquisition of St. James in a conversion merger transaction and the related stock offering of the Company.  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, Martin, 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 Sheet

December 31, 2015 and 2014

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

Assets





12/31/15


12/31/14

Cash, including interest-bearing accounts:




    12/31/15 $6,078; 12/31/14 $7,411

$        12,059


$        14,373

Certificates of deposit

9,543


4,181

Fed Funds Sold

9,100


2,000

Securities available for sale

34,450


34,177

Federal Home Loan Stock

1,986


2,079

Loans held for sale

1,337


1,707

Loans receivable, net

197,595


182,050

Accrued interest receivable

1,020


834

Premises and equipment

3,368


3,172

Mortgage servicing rights, net

1,863


1,886

Foreclosed real estate

1,632


3,656

Core deposit intangible

285


145

Other assets

541


1,566

              Total assets

$      274,779


$      251,826





Liabilities, mezzanine equity and stockholders' equity








Liabilities:




    Deposits

$      239,950


$      221,972

    Advances from borrowers for taxes and insurance

2,646


2,630

    Accrued interest payable

12


17

    Accrued expenses and other liabilities

871


588

          Total liabilities

243,479


225,207





Commitments, Contingencies and Credit Risk








Mezzanine Equity




Redeemable common stock held by ESOP, $0.10 par value, shares issued and outstanding, 91,459 at December 31, 2015; 95,602 at December 31, 2014




2,881


2,533





Stockholders' equity:




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




        Outstanding

-


-

    Common stock, $.10 par value; 7,000.000 shares authorized;




        2,174,777 shares issued at December 31, 2015




        2,091,898 shares issued at December 31, 2014

$             217


$             209

    Additional paid in capital

18,123


17,110

    Retained earnings, substantially restricted

39,542


35,552

    Other comprehensive income

66


93

    Unallocated Employee Stock Ownership Plan shares

(146)


-

    Treasury stock, at cost, 1,463,388 shares at December 31,2015; 1,445,248 shares at December 31, 2014

(29,383)


(28,878)

          Total stockholders' equity

28,419


24,086

Total liabilities, mezzanine equity and stockholders' equity

$      274,779


$      251,826

 

Consolidated Statements of Income

Quarters and Years Ended December 31, 2015 and 2014

(Dollars in Thousands, Except Per Share Data)

(Unaudited)







Three Months Ended



Twelve Months Ended


December 31,



December 31,


2015


2014



2015


2014










Interest and dividend income









  Loans receivable

$    2,306


$   2,185



$    8,836


$    8,088

  Investment securities and interest-









    bearings deposits

204


182



712


730

               Total interest income

2,510


2,367



9,548


8,818

Interest expense









  Deposits

100


135



450


597

               Total interest expense

100


135



450


597










               Net interest income

2,410


2,232



9,098


8,221

Provision for loan losses

70


100



70


520

               Net interest income after









                 provision for loan losses

2,340


2,132



9,028


7,701

Noninterest income









  Gain on sale of loans

242


239



1,068


803

  Loan servicing fees

208


168



848


768

  Insurance commissions

156


154



685


641

  Fees and service charges

120


137



462


483

  Bargain Purchase Gain

-


-



2,848


-

  Other

235


176



885


874

               Total noninterest income

961


874



6,796


3,569

Noninterest expense









  Compensation and benefits

1,345


1,189



4,770


4,649

  Occupancy and equipment

204


191



757


764

  Data processing

267


277



965


962

  Advertising

93


68



287


249

  Amortization & Valuation adjustments for MSR's

76


85



351


324

  Other real estate owned

52


101



481


499

  Other

584


357



2,075


1,897

               Total noninterest expense

2,621


2,268



9,686


9,344

               Income before income taxes

680


738



6,138


1,926

Income tax expense

249


300



1,244


623

               Net Income

$      431


$     438



$   4,894


$     1,303










Earnings per share









    Basic earnings per share

$     0.54


$    0.59



$    6.35


$      1.72

    Diluted earnings per share

$     0.54


$    0.59



$    6.35


$      1.72

 

SOURCE Wells Financial Corp.