Wells Financial Corp. Announces Second Quarter Results of Operations

News provided by

Wells Financial Corp.

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

SOURCE Wells Financial Corp.

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