Wells Financial Corp. Announces Second Quarter Results

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Jul 17, 2014, 12:37 ET

WELLS, Minn., July 17, 2014 /PRNewswire/ --


Selected Financial Data (Dollars in Thousands, except per share data) (unaudited)

	Quarter Ended June 30,		Six Months Ended
	2014	2013	2014	2013

Net Income	$ 96	$ 386	$ 347	$ 615
Basic earnings per share	$ 0.13	$ 0.50	$ 0.45	$ 0.80
Diluted earnings per share	$ 0.13	$ 0.50	$ 0.45	$ 0.80
Return on average equity (1)	1.5%	5.9%	2.6%	4.7%
Return on average assets (1)	0.2%	0.6%	0.3%	0.5%
Net interest rate spread	3.5%	3.2%	3.4%	3.3%
Net interest rate margin	3.5%	3.2%	3.5%	3.3%
Book value per share	$ 34.83	$ 33.83	$ 34.83	$ 33.83


				(1) Annualized

Three Months Ended June 30, 2014

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 second quarter of 2014 of $96,000, down $290,000 or 75.0% when compared to the second quarter of 2013. Basic and diluted earnings per share for the second quarter of 2014 were $0.13, down $0.37 or 74.0% when compared to the second quarter of 2013.

When comparing the second quarter of 2014 with the second quarter of 2013, the decrease in net income was due, primarily, to a decrease of $183,000, or 17.2%, in noninterest income and an increase of $301,000, or 13.4%, in noninterest expense. The decrease in noninterest income was due to a decrease in the gain on sale of loans as fewer residential mortgage loans were originated and sold to the secondary market. The increase in noninterest expense was due primarily to an increase in carrying costs and write downs on repossessed properties. Management has accepted offers on approximately $1 million of repossessed property that are scheduled to close in the third quarter of 2014 which resulted in the write downs described above.

Six Months Ended June 30, 2014

When comparing the six months ended June, 30, 2014 to the same period in 2013, net income decreased by $268,000, or 43.6%. Basic and diluted earnings per share decreased by $0.35, or 43.8%. The decrease in net income is due, primarily, to a decrease of $491,000, or 21.6%, in noninterest income which resulted, primarily, from fewer residential mortgage loans being originated and sold to the secondary market during 2014. Net interest income increased by $141,000, or 3.7%, and the provision for loan loss decreased by $55,000, or 14.7%.

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. As stated above, the provision for loan loss decreased by $50,000 for the first half of 2014 when compared to the same period in 2013. As of June 30, 2014 and 2013, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,934,000 and $1,801,000 and 1.2% and 1.2%, 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 Statement of Financial Condition
(Dollars in Thousands)
(Unaudited)

ASSETS
	06/30/14	12/31/13

Cash, including interest-bearing accounts:	$ 12,181	$ 12,625
06/30/14 $7,764; 12/31/13 $5,370
Certificates of deposit	7,366	3,695
Fed Funds Sold	3,500	5,000
Securities available for sale	36,187	41,569
Federal Home Loan Stock	2,049	2,021
Loans held for sale	1,955	1,952
Loans receivable, net	166,091	165,401
Accrued interest receivable	855	804
Foreclosed real estate	4,170	4,340
Premises and equipment	2,957	3,040
Mortgage servicing rights, net	1,910	1,952
Other assets	1,120	1,402
TOTAL ASSETS	$ 240,341	$ 243,801


LIABILITIES AND EQUITY

LIABILITIES:
Deposits	$ 210,820	$ 214,370
Borrowed funds	-	-
Advances from borrowers for taxes and insurance	2,598	2,614
Accrued interest payable	102	6
Accrued expenses and other liabilities	386	728
TOTAL LIABILITIES	213,906	217,718

STOCKHOLDER'S EQUITY:
Common stock, $.10 par value; 7,000.000 shares
authorized; 2,187,500 shares issued	$ 219	$ 219
Additional paid in capital	17,103	17,086
Retained earnings, substantially restricted	37,468	37,235
Other comprehensive income	80	(264)
Treasury stock, at cost, 1,428,488 shares at June
30, 2014; 1,418,180 shares at December 31, 2013	(28,435)	(28,193)
TOTAL EQUITY	26,435	26,083

TOTAL LIABILITIES AND EQUITY	$ 240,341	$ 243,801

Wells Financial Corp. and Subsidiary
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)
	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2014	2013	2014	2013
Interest and dividend income
Loans receivable:
Residential loans	$ 667	$ 623	$ 1,320	$ 1,254
Commercial Loans	316	310	623	623
Ag Real Estate Loans	345	314	676	652
Consumer and other loans	632	659	1,258	1,348
Investment securities and other interest-
bearings deposits	177	176	371	344
Total interest income	2,137	2,082	4,248	4,221
Interest expense
Deposits	154	207	314	427
Borrowed funds	-	-	-	1
Total interest expense	154	207	314	428
Net interest income	1,983	1,875	3,934	3,793
Provision for loan losses	150	-	320	375
Net interest income after
provision for loan losses	1,833	1,875	3,614	3,418
Noninterest income
Gain on sale of loans	174	409	350	945
Gain on sale of securities AFS	3	-	3	-
Loan servicing fees	207	232	432	466
Insurance commissions	151	152	292	361
Fees and service charges	112	109	217	220
Other	232	160	484	277
Total noninterest income	879	1,062	1,778	2,269
Noninterest expense
Compensation and benefits	1,188	1,089	2,367	2,152
Occupancy and equipment	193	242	401	461
Federal insurance premiums	53	13	107	62
Data processing	204	195	419	405
Advertising	62	57	110	116
Amortization & Valuation adjustments for MSR's	78	116	149	234
Other	775	540	1,261	1,190
Total noninterest expense	2,553	2,252	4,814	4,620
Income before income taxes	159	685	578	1,067
Income tax expense	63	299	231	452
Net Income	$ 96	$ 386	$ 347	$ 615
Earnings per share
Basic earnings per share	$ 0.13	$ 0.50	$ 0.45	$ 0.80
Diluted earnings per share	$ 0.13	$ 0.50	$ 0.45	$ 0.80