Wells Financial Corp. Announces Third Quarter Results

Oct 26, 2011, 15:10 ET from Wells Financial Corp.

WELLS, Minn., Oct. 26, 2011 /PRNewswire/ --

Selected Financial Data

(Dollars in Thousands, except per share data)

(unaudited)




Quarter Ended September 30,


Nine Months Ended September 30,


2011

2010

2011

2010






Net Income

$      427

$      587

$      1,099

$        1,413

Basic earnings per share

$     0.54

$     0.75

$        1.40

$          1.81

Diluted earnings per share

$     0.54

$     0.75

$        1.40

$          1.80

Return on average equity (1)

7.0%

10.3%

6.1%

8.4%

Return on average assets (1)

0.7%

1.0%

0.6%

0.7%

Net interest rate spread

3.9%

3.9%

3.9%

3.6%

Net interest rate margin

4.0%

3.9%

4.0%

3.7%

Book value per share

$   31.21

$   29.42

$      31.21

$        29.42

(1) Annualized








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 third quarter of 2011 of $427,000, down $160,000 or 27.3%, when compared to the third quarter of 2010.  Basic and diluted earnings per share for the third quarter of 2011 were $0.54, down $0.21, or 28.0% when compared to the same period in 2010.

Net income for the nine months ended September 30, 2011 was $1,099,000, down $314,000 or 22.2% when compared to the same period in 2010.  Basic and diluted earnings per share were $1.40, down $0.41 and $0.40, or 22.7% and 22.1%, respectively, when compared to the same period in 2010.

When comparing the third quarter of 2011 with the third quarter of 2010, the decrease in net income resulted, primarily, from a $255,000 decrease in gain on sale of loans originated for sale and a $251,000 increase in the provision for loan losses.  During the third quarter of 2011 fewer loans were originated for sale to the secondary market resulting in the decrease in gain on sale of loans.  For more information regarding the increase in the provision for loan losses please see the allowance for loan loss discussion below.

When comparing the nine months ended September 30, 2011 with the same period in 2010 the decrease in net income was due, primarily, to an increase of $377,000 in the provision for loan loss.  Please see the discussion below for information on the allowance and provision for loan loss.

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 $251,000 for the third quarter of 2011 when compared to the same period in 2010 and increased by $377,000 for the nine months ended September 30, 2011 when compared to the same period in 2010.  As of September 30, 2011 and December 31, 2010, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans were $2,405,000 and $2,207,000 and 1.4% 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







09/30/11


12/31/10






Cash, including interest-bearing accounts:


$     14,671


$          8,244

   09/30/11 $9,302; 12/31/10 $2,468





Certificates of deposit


3,735


-

Fed Funds Sold


14,026


12,542

Securities available for sale


19,920


14,624

Securities held to maturity


-


-

Federal Home Loan Stock


2,360


1,859

Loans held for sale


2,928


2,217

Loans receivable, net


170,981


185,418

Accrued interest receivable


1,149


1,366

Prepaid Income Taxes


-


-

Foreclosed real estate


5,091


5,628

Premises and equipment


3,369


3,439

Mortgage servicing rights, net


1,734


1,687

Other assets


1,068


1,383

             TOTAL ASSETS


$   241,032


$      238,407











LIABILITIES AND EQUITY










LIABILITIES:





   Deposits


$   210,914


$      210,819

   Borrowed funds


1,300


1,785

   Advances from borrowers for taxes and insurance


3,358


2,300

   Income taxes:





      Deferred


(43)


-

   Accrued interest payable


208


53

   Accrued expenses and other liabilities


736


223

         TOTAL LIABILITIES


216,473


215,180






STOCKHOLDER'S EQUITY:





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





       authorized; 2,187,500 shares issued


$          219


$             219

   Additional paid in capital


17,117


17,104

   Retained earnings, substantially restricted


34,713


33,615

   Other comprehensive income


368


147

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



      30, 2011; 1,400,705 shares at December 31, 2010


(27,858)


(27,858)

         TOTAL EQUITY


24,559


23,227






              TOTAL LIABILITIES AND EQUITY


$   241,032


$      238,407





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,



2011


2010



2011


2010











Interest and dividend income










 Loans receivable:










   Residential loans


$      590


$     599



$  1,762


$  1,798

   Commercial Loans


512


569



1,571


1,743

   Ag Real Estate Loans


474


713



1,577


2,203

   Consumer and other loans


952


1,094



2,894


3,332

 Investment securities and other interest-










   bearings deposits


149


138



422


434

              Total interest income


2,677


3,113



8,226


9,510

Interest expense










 Deposits


442


725



1,510


2,383

 Borrowed funds


19


159



60


647

              Total interest expense


461


884



1,570


3,030

              Net interest income


2,216


2,229



6,656


6,480

Provision for loan losses


376


125



882


505

              Net interest income after










               provision for loan losses


1,840


2,104



5,774


5,975

Noninterest income










 Gain on sale of loans


345


600



841


1,066

 Loan servicing fees


237


237



706


714

 Insurance commissions


185


160



486


517

 Fees and service charges


132


136



399


409

 Other


139


100



385


358

              Total noninterest income


1,038


1,233



2,817


3,064

Noninterest expense










 Compensation and benefits


1,084


1,046



3,212


3,158

 Occupancy and equipment


195


233



633


739

 Federal insurance premiums


15


115



260


341

 Data processing


170


174



545


551

 Advertising


68


62



185


177

 Amortization & Valuation adjustments for MSR's


80


72



229


238

 Impairment of Securities Available for Sale


-


-



-


-

 Other


582


688



1,733


1,543

              Total noninterest expense


2,194


2,390



6,797


6,747

              Income before income taxes


684


947



1,794


2,292

Income tax expense


257


360



695


879

              Net Income


$      427


$     587



$  1,099


$  1,413











Earnings per share










   Basic earnings per share


$     0.54


$    0.75



$    1.40


$    1.81

   Diluted earnings per share


$     0.54


$    0.75



$    1.40


$    1.80




SOURCE Wells Financial Corp.