Wells Financial Corp. Announces Third Quarter Results

Oct 22, 2010, 11:41 ET from Wells Financial Corp.

WELLS, Minn., Oct. 22 /PRNewswire-FirstCall/ --

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)


Quarter Ended September 30,

Nine Months Ended September 30,


2010

2009

2010

2009






Net Income

$      587

$      428

$1,413

$        1,670

Basic earnings per share

$     0.75

$     0.55

$        1.81

$          2.15

Diluted earnings per share

$     0.75

$     0.55

$        1.80

$          2.15

Return on average equity (1)

10.3%

7.9%

8.4%

10.5%

Return on average assets (1)

1.0%

0.7%

0.7%

0.9%

Net interest rate spread

3.9%

3.4%

3.6%

3.3%

Net interest rate margin

3.9%

3.5%

3.7%

3.4%

Book value per share

$   29.42

$   28.19

$      29.42

$28.19

                (1) Annualized








Lonnie R. Trasamar, President of Wells Financial Corp. (the Company) (OTC Bulletin Board: WEFP), the holding company of Wells Federal Bank (the Bank), announced earnings for the third quarter of 2010 of $587,000, up $159,000 or 37.1%, when compared to the third quarter of 2009.  Basic and diluted earnings per share for the third quarter of 2010 were $0.75, up $0.20 or 36.4%, when compared to the same period in 2009.

Net income for the nine months ended September 30, 2010 was $1,413,000, down $257,000 or 15.4% when compared to the first nine months of 2009.  Basic and diluted earnings per share were $1.81 and $1.80, down $0.34 and $0.35 or 15.8% and 16.3%, respectively, during the first nine months of 2010 when compared to the same period in 2009.

When comparing the quarter ended September 30, 2010 with the same period in 2009, net interest income increased by $157,000, or 7.6%, due to decreased costs on deposits and borrowed funds.  The provision for loan loss increased by $50,000 during the period.  See the discussion below regarding the allowance for loan loss for additional information.  Noninterest income increased by $257,000 which resulted, primarily, from an increase in the gain on sale of loans.  This increase was due to a reduction in the market rates on loans originated for sale to the secondary market resulting in an increase in loan originations.  Noninterest expense increased by $103,000 due, primarily, to increases in other noninterest expense and federal deposit insurance premiums.

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.  The provision for loan losses increased by $50,000 for the quarter ended September 30, 2010 when compared to the same period in 2009 and decreased by $330,000 for the nine months ended September 30, 2010 when compared to the same period in 2009.  As of September 30, 2010 and December 31, 2009, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $1,793,000 and $1,785,000 and 0.93% and 0.85%, respectively.

When comparing the nine months ended September 30, 2010 with the same period in 2009 net interest income increased by $324,000 due, primarily, to decreased costs on deposits and borrowed funds.  The provision for loan loss decreased by $330,000 during the period.  See the discussion above regarding the allowance for loan loss for additional information.  Noninterest income decreased by $855,000 for the first nine months of 2010 when compared to the same period in 2009 due to a decrease in the gain on sale of loans.   During the first two quarters of 2010, the Bank experienced less activity in loan originations for sale to the secondary markets when compared to the first two quarters of 2009 resulting in a decrease in gain on sale of loans during 2010.  This decrease in loan originations for sale to the secondary market during the first two quarters of 2010 was partially offset by the increase in loan origination activity during the third quarter described above.  Noninterest expense increased by $200,000 due, primarily, to increases in other noninterest expense and federal insurance premiums.

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

09/30/10

12/31/09

Cash, including interest-bearing accounts:

$     17,186

$     41,013

   09/30/10 $11,511; 12/31/09 $34,777

Certificates of deposit

498

175

Securities available for sale

13,949

10,698

Federal Home Loan Stock

2,193

2,728

Loans held for sale

3,809

1,931

Loans receivable, net

188,241

195,423

Accrued interest receivable

1,685

1,564

Prepaid Income Taxes

-

-

Premises and equipment

3,510

3,693

Mortgage servicing rights, net

1,468

1,373

Other assets

7,079

6,623

             TOTAL ASSETS

$   239,618

$   265,221

                                 LIABILITIES AND EQUITY

LIABILITIES:

   Deposits

$   206,990

$   208,870

   Borrowed funds

5,035

31,435

   Advances from borrowers for taxes and insurance

3,277

2,233

   Income taxes:

      Deferred

107

157

   Accrued interest payable

345

61

   Accrued expenses and other liabilities

720

402

         TOTAL LIABILITIES

216,474

243,158

STOCKHOLDER'S EQUITY:

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

       authorized; 2,187,500 shares issued

$          219

$          219

   Additional paid in capital

17,096

17,166

   Retained earnings, substantially restricted

33,417

32,615

   Other comprehensive income

270

131

   Treasury stock, at cost, 1,400,705 shares at September  

      30, 2010; 1,411,260 shares at December 31, 2009

(27,858)

(28,068)

         TOTAL EQUITY

23,144

22,063

              TOTAL LIABILITIES AND EQUITY

$   239,618

$   265,221

WELLS FINANCIAL CORP. and SUBSIDIARY

Consolidated Statement of Income

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010

2009

2010

2009

Interest and dividend income

 Loans receivable:

   Residential loans

$    599

$    653

$ 1,798

$ 2,074

   Commercial Loans

569

687

1,743

1,895

   Ag Real Estate Loans

713

835

2,203

2,615

   Consumer and other loans

1,094

1,160

3,332

3,584

 Investment securities and other interest-

   bearings deposits

138

116

434

328

              Total interest income

3,113

3,451

9,510

10,496

Interest expense

 Deposits

725

992

2,383

3,051

 Borrowed funds

159

387

647

1,289

              Total interest expense

884

1,379

3,030

4,340

              Net interest income

2,229

2,072

6,480

6,156

Provision for loan losses

125

75

505

835

              Net interest income after

               provision for loan losses

2,104

1,997

5,975

5,321

Noninterest income

 Gain on sale of loans

600

357

1,066

2,083

 Loan servicing fees

237

237

714

693

 Insurance commissions

160

149

517

482

 Fees and service charges

136

155

409

447

 Other

100

78

358

214

              Total noninterest income

1,233

976

3,064

3,919

Noninterest expense

 Compensation and benefits

1,046

1,032

3,158

3,134

 Occupancy and equipment

233

238

739

764

 Federal insurance premiums

115

73

341

129

 Data processing

174

180

551

564

 Advertising

62

77

177

180

 Amortization & Valuation adjustments for MSR's

72

111

238

372

 Other

688

576

1,543

1,404

              Total noninterest expense

2,390

2,287

6,747

6,547

              Income before income taxes

947

686

2,292

2,693

Income tax expense

360

258

879

1,023

              Net Income

$    587

$    428

$ 1,413

$ 1,670

Earnings per share

   Basic earnings per share

$   0.75

$   0.55

$   1.81

$   2.15

   Diluted earnings per share

$   0.75

$   0.55

$   1.80

$   2.15

SOURCE Wells Financial Corp.