Wells Financial Corp. Announces Second Quarter Results of Operations

News provided by

Jul 22, 2016, 12:18 ET

WELLS, Minn., July 22, 2016 /PRNewswire/ --

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

	Quarter Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015

Net Income	$ 523	$ 550	$ 1,089	$ 1,043
Basic earnings per share	$ 0.67	$ 0.75	$ 1.38	$ 1.41
Diluted earnings per share	$ 0.67	$ 0.75	$ 1.38	$ 1.41
Return on average equity (1)	6.9%	8.1%	6.9%	7.7%
Return on average assets (1)	0.8%	0.9%	0.8%	0.8%
Net interest rate spread	3.7%	3.6%	3.7%	3.7%
Net interest rate margin	3.7%	3.6%	3.7%	3.7%
Book value per share	$ 40.36	$ 36.94	$ 40.36	$ 36.94
Tangible book value per share	$ 40.07	$ 36.77	$ 40.07	$ 36.77
(1) Annualized

Quarter Ended June 30, 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 second quarter of 2016 of $523,000, down $27,000 or 4.9%, when compared to the second quarter of 2015. Basic and diluted earnings per share for the second quarter 2016 were $0.67, down $0.08 or 10.7%, when compared to the second quarter of 2015. In addition to decreased earnings, earnings per share were negatively affected by the additional shares that were issued as part of the St. James Federal Savings and Loan acquisition that occurred during the third quarter of 2015 and outstanding during 2016. When comparing the second quarter of 2016 with the same period in 2015, net interest income after provision for loan losses increased by $264,000, or 12.5%. This increase resulted, primarily, from an increase in the average loan balances. Noninterest income decreased by $141,000, or 13.0%, due, primarily to a decrease in the gain on sale of loans. Noninterest expense increased by $184,000, or 7.9%, due, primarily, to an increase in compensation and benefits. During the third quarter of 2015 the Bank acquired St. James Federal Savings and Loan resulting in increased compensation and benefits during 2016.

Six Months Ended June 30, 2016

Net income for the six months ended June 30, 2016 increased by $46,000, or 4.4%, when compared to the first six months of 2015. Basic and diluted earnings per share decreased by $0.03, or 2.1%. Even though net income increased during the first six months of 2016 when compared to the first six months of 2015, earnings per share decreased due to the additional shares that were issued as part of the St. James Federal Savings and Loan acquisition that occurred in the third quarter of 2015 and outstanding in 2016. When comparing the first six months of 2016 with the same period in 2015, net interest income after provision for loan losses increased by $428,000, or 10.0%. This increase resulted, primarily, from an increase in the average loan balances. Noninterest income decreased by $85,000, or 4.3%, due, primarily to a decrease in the gain on sale of loans. Noninterest expense increased by $319,000, or 7.0%, due, primarily, to an increase in compensation and benefits. During the third quarter of 2015 the Bank acquired St. James Federal Savings and Loan resulting in increased compensation and benefits during 2016.

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 June 30, 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 $2,102,000 and $1,988,000 and 1.1% 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
	06/30/16	12/31/15

Cash and cash equivalents, including interest-bearing accounts: 06/30/16 $2,180; 12/31/15 $6,078	$ 6,698	$ 12,059
Certificates of deposit, at cost	14,829	9,543
Fed Funds Sold	12,000	9,100
Securities available for sale	36,054	34,450
Federal Home Loan Stock, at cost	1,922	1,986
Loans held for sale	1,855	1,337
Loans receivable, net	194,870	197,595
Accrued interest receivable	1,168	1,020
Premises and equipment, net	3,820	3,368
Mortgage servicing rights, net	1,815	1,863
Foreclosed real estate	1,602	1,632
Core deposits intangible	230	285
Other assets	588	541
Total assets	$ 277,451	$ 274,779


Liabilities and Stockholders' Equity


Liabilities:
Deposits	$ 241,994	$ 239,950
Advances from borrowers for taxes and insurance	2,670	2,646
Accrued interest payable	57	12
Accrued expenses and other liabilities	1,199	871
Total liabilities	245,920	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	43,112	42,423
Other comprehensive income	299	66
Unallocated employee stock ownership plan shares	(114)	(146)
Treasury stock, at cost, 1,359,167 shares at June
30, 2016; 1,337,531 shares at December 31, 2015	(30,101)	(29,383)
Total stockholders' equity	31,531	31,300

Total liabilities and stockholders' equity	$ 277,451	$ 274,779

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

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2016	2015	2016	2015

Interest and dividend income:
Loans receivable:
Residential loans	$ 647	$ 653	$ 1,300	$ 1,378
Commercial loans	501	364	970	723
Ag real estate loans	435	359	841	743
Consumer and other loans	686	686	1,378	1,393
Investment securities and other interest-
bearings deposits	218	158	424	323
Total interest income	2,487	2,220	4,913	4,560
Interest expense:
Deposits	91	108	180	225
Total interest expense	91	108	180	225
Net interest income	2,396	2,112	4,733	4,335
Provision for loan losses	20	-	40	70
Net interest income after
provision for loan losses	2,376	2,112	4,693	4,265
Noninterest income:
Gain on sale of loans	254	359	420	524
Loan servicing fees	204	215	405	430
Insurance commissions	218	169	539	341
Fees and service charges	110	123	221	229
Other	161	222	300	446
Total noninterest income	947	1,088	1,885	1,970
Noninterest expenses:
Compensation and benefits	1,298	1,145	2,542	2,257
Occupancy	212	173	408	357
Federal insurance premiums	51	51	102	105
Data processing	247	216	481	430
Advertising	74	64	136	123
Amortization & Valuation adjustments for MSR's	89	104	155	177
Amortization of Intangible Assets	28	13	56	51
Other real estate owned	15	142	38	256
Other	486	408	946	789
Total noninterest expenses	2,500	2,316	4,864	4,545
Income before income taxes	823	884	1,714	1,690
Income tax expense	300	334	625	647
Net Income	$ 523	$ 550	$ 1,089	$ 1,043

Earnings per share
Basic earnings per share	$ 0.67	$ 0.75	$ 1.38	$ 1.41
Diluted earnings per share	$ 0.67	$ 0.75	$ 1.38	$ 1.41