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

WELLS, Minn., March 17, 2016 /PRNewswire/ --

Quarter Ended December 31, 2015

OTCQB-WEFP -- James D. Moll, President of Wells Financial Corp. (the Company), the holding company of Wells Federal Bank (the Bank), announced net income for the fourth quarter of 2015 of $431,000, down $7,000 or 1.6%, when compared to the fourth quarter of 2014.  Basic and diluted earnings per share for the fourth quarter of 2015 were $0.54, down $0.05 or 8.5%, when compared to the fourth quarter of 2014.  The decrease in net income resulted from an increase of $353,000 in noninterest expense which more than offset increases of $178,000 and $87,000 in net interest income and noninterest income, respectively. 

The increase in net interest income is primarily attributable to the increase in interest-earning assets acquired in the conversion merger transaction with St. James Federal Savings and Loan Association ("St. James"), discussed below.  The average volume of interest-bearing assets increased to $259.8 million from $238.9 million in the prior-year period.  While the average volume of interest-bearing liabilities increased to $238.9 million from $225.2 million between periods, the decrease in average cost resulted in lower interest expense during the current quarter.  The increase in noninterest expense is related to increases in compensation and benefits and other noninterest expense resulting from the conversion merger with St. James. 

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, 2015 and 2014, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans was $2.0 million and $2.2 million and 1.0% and 1.2%, respectively.

Year Ended December 31, 2015

Net income increased by $3,591,000 or 275.59% for 2015, when compared to 2014, primarily due to the bargain purchase gain of $2,848,000 that resulted from the conversion merger with St. James.  Diluted earnings per share increased by $4.63 for 2015, when compared to 2014.  Net interest income increased by $877,000, or 10.67%, in 2015, when compared to 2014. When comparing 2015 to 2014, the provision for loan loss decreased by $450,000 and noninterest income increased by $3,227,000 which included the aforementioned bargain purchase gain.   Increases in net interest income and noninterest income and the decrease in provision for loan loss were the primary reasons for the increase in net income.

Acquisition Completed in Third Quarter

On July 16, 2015, the Company announced that it had completed the acquisition of St. James in a conversion merger transaction and the related stock offering of the Company.  As a result of the conversion merger, St. James converted from a federally-chartered mutual savings association to a federally-chartered stock savings association and immediately merged with and into Wells Federal Bank, the surviving entity in the merger conversion.  The Company sold 78,736 shares of common stock at a price of $27.36 per share to depositor and borrower members of St. James, to the Employee Stock Ownership Plan and stockholders of Wells, and to members of the general public in a concurrent subscription offering and community offering.  Gross offering proceeds totaled approximately $2.15 million.  As a result of the stock offering, the Company had 814,758 shares of common stock issued and outstanding as of the close of business on July 16, 2015.     St. James' sole office, located in St. James, Minnesota, has become a branch office of Wells Federal Bank.

About Wells Financial Corp.

Wells Financial Corp. is the bank holding company for Wells Federal Bank, a Minnesota-chartered, FDIC-insured bank.  Wells Federal Bank, originally chartered in 1934, operates from nine full-service offices in Faribault, Blue Earth, Martin, Nicollet, Freeborn, Watonwan and Steele Counties, Minnesota.

Forward-looking Statements

Statements in this press release that are not strictly historical may be "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1996, 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**

SOURCE Wells Financial Corp.