Wells Financial Corp. Announces Third Quarter Results of Operations

WELLS, Minn., Oct. 24, 2016 /PRNewswire/ --

Quarter Ended September 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 third quarter of 2016 of $775,000 and basic and diluted earnings per share of $0.99.  This compares to net income of $3,420,000 and basic and diluted earnings per share of $4.63 for the third quarter of 2015.  The decrease in earnings was due to the Company realizing a $2,848,000 bargain purchase gain during the third quarter of 2015 which resulted from the acquisition of St. James Federal Savings and Loan Association.  When comparing net income on core earnings (excluding the bargain purchase gain realized in 2015), net income for the third quarter of 2016 increased by $203,000 when compared to the third quarter of 2015 due, primarily, to improvement in net interest income and gain on sale of loans.

Nine Months Ended September 30, 2016

Net income for the nine months ended September 30, 2016 was $1,864,000.  Basic and diluted earnings per share were $2.37.  This compares with net income for the same period in 2015 of $4,463,000.  The decrease in earnings for 2016 was due to the bargain purchase gain described above. When comparing net income on core earnings (excluding the bargain purchase gain realized in 2015), net income for the first nine months of 2016 increased by $249,000 when compared to the same period in 2015.  Net interest income increased by $463,000, or 6.9%. Noninterest income remained relatively constant if the bargain purchase gain realized in 2015 is eliminated.  Noninterest expense increased by $135,000, or 1.9%, 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.    

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 September 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 $1,919,000 and $1,988,000 and 1.0% 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**

SOURCE Wells Financial Corp.