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

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Feb 07, 2017, 11:00 ET

WELLS, Minn., Feb. 7, 2017 /PRNewswire/ --

Selected Financial Data (Dollars in thousands, except per share data) (Unaudited)

	Quarter Ended December 31,		Year Ended December 31,
	2016	2015	2016	2015

Net Income	$ 523	$ 431	$ 2,387	$ 4,894
Basic earnings per share	$ 0.67	$ 0.54	$ 3.04	$ 6.35
Diluted earnings per share	$ 0.67	$ 0.54	$ 3.04	$ 6.35
Return on average equity (1)	6.5%	5.5%	7.5%	17.0%
Return on average assets (1)	0.8%	0.6%	0.9%	1.9%
Net interest rate spread	3.7%	3.7%	3.7%	3.7%
Net interest rate margin	3.7%	3.7%	3.7%	3.7%
Book value per share	$ 41.19	$ 38.99	$ 41.19	$ 38.99
Tangible book value per share	$ 40.95	$ 38.63	$ 40.95	$ 38.63
(1) Annualized

Quarter Ended December 31, 2016

James D. Moll, 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 2016 of $523,000 and basic and diluted earnings per share of $0.67. This compares to net income of $431,000 and basic and diluted earnings per share of $0.54 for the fourth quarter of 2015. The improvement in net income for the quarter is due, primarily, to decreases in noninterest expense of $117,000 or 4.5%. The decrease in noninterest expense was due, primarily, to decreases in compensation and benefits and occupancy costs.

Net interest income decreased $37,000 or 1.5% and noninterest income decreased $13,000 or 1.4% for the quarter, when compared to the fourth quarter of 2015. Provision for loan losses decreased $70,000 or 100% for the same time period which offset the decreases in net interest income and noninterest income.

Year Ended December 31, 2016

Net income for the year ended December 31, 2016 was $2,387,000. Basic and diluted earnings per share were $3.04. This compares with net income for 2015 of $4,894,000. The decrease in earnings for 2016 was due to the Company realizing a $2,848,000 bargain purchase gain during the third quarter of 2015 which resulted from the acquisition of St. James Federal Savings and Loan Association. When comparing net income on core earnings (excluding the bargain purchase gain realized in 2015), net income for 2016 increased by $341,000 when compared to 2015. Net interest income increased by $426,000, or 4.7%. Noninterest income remained relatively consistent if the bargain purchase gain realized in 2015 is eliminated. Noninterest expense also remained relatively consistent when compared to the same period in 2015. Increased costs caused by the increase in number of branches were offset by reductions in expenses elsewhere in the Company.

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, 2016 and December 31, 2015, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,907,000 and $1,988,000 and 1.0% 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**

Wells Financial Corp. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
Assets
	12/31/16	12/31/15

Cash and cash equivalents, including interest-bearing accounts: 12/31/16 $152; 12/31/15 $6,078	$ 5,777	$ 12,059
Certificates of deposit, at cost	13,582	9,543
Federal funds sold	5,900	9,100
Securities available for sale	33,632	34,450
Federal Home Loan stock, at cost	1,858	1,986
Loans held for sale	1,338	1,337
Loans receivable, net	197,086	197,595
Accrued interest receivable	1,071	1,020
Premises and equipment, net	3,749	3,368
Mortgage servicing rights, net	1,787	1,863
Foreclosed real estate	1,709	1,632
Core deposits intangible	180	285
Other assets	806	541
Total assets	$ 268,475	$ 274,779


Liabilities and Stockholders' Equity


Liabilities:
Deposits	$ 233,010	$ 239,950
Advances from borrowers for taxes and insurance	2,749	2,646
Accrued interest payable	21	12
Accrued expenses and other liabilities	620	871
Total liabilities	236,400	243,479

Stockholders' Equity:
Preferred stock, no par value; 500,000 share authorized; none
outstanding	-	-
Common stock, $.10 par value; 7,000.000 shares
authorized; 2,140,379 shares issued	$ 214	$ 217
Additional paid in capital	18,121	18,123
Retained earnings, substantially restricted	44,024	42,423
Other comprehensive income	(5)	66
Unallocated employee stock ownership plan shares	(82)	(146)
Treasury stock, at cost, 1,361,591 shares at December
31, 2016; 1,337,531 shares at December 31, 2015	(30,197)	(29,383)
Total stockholders' equity	32,075	31,300

Total liabilities and stockholders' equity	$ 268,475	$ 274,779

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

	Three Months Ended		Years Ended
	December 31,		December 31,
	2016	2015	2016	2015

Interest and dividend income:
Loans receivable	$ 2,241	$ 2,306	$ 9,023	$ 8,836
Investment securities and other interest-
bearings deposits	218	204	856	712
Total interest income	2,459	2,510	9,879	9,548
Interest expense:
Deposits	86	100	355	450
Total interest expense	86	100	355	450
Net interest income	2,373	2,410	9,524	9,098
Provision for loan losses	-	70	40	70
Net interest income after
provision for loan losses	2,373	2,340	9,484	9,028
Noninterest income:
Gain on sale of loans	269	242	1,111	1,068
Loan servicing fees	195	208	802	848
Insurance commissions	228	156	1,003	685
Fees and service charges	113	120	451	462
Bargain purchase gain	-	-	-	2,848
Other	143	235	561	885
Total noninterest income	948	961	3,928	6,796
Noninterest expenses:
Compensation and benefits	1,276	1,345	5,104	4,770
Occupancy	169	204	762	757
Data processing	276	267	1,027	965
Advertising	81	93	285	287
Amortization of mortgage servicing rights	91	76	355	351
Amortization of Intangible Assets	21	28	105	92
Other real estate owned	19	52	71	481
Other	571	556	1,995	1,983
Total noninterest expenses	2,504	2,621	9,704	9,686
Income before income taxes	817	680	3,708	6,138
Income tax expense	294	249	1,321	1,244
Net Income	$ 523	$ 431	$ 2,387	$ 4,894

Earnings per share
Basic earnings per share	$ 0.67	$ 0.54	$ 3.04	$ 6.35
Diluted earnings per share	$ 0.67	$ 0.54	$ 3.04	$ 6.35