WELLS FINANCIAL CORP. 
By WELLS, Minn., Jan. 20, 2011 /PRNewswire/ --
Selected Financial Data
(Dollars in Thousands, except per share data)
(unaudited)
Quarter Ended
December 31,
2010 2009
---- ----
Net Income $611 $440
Basic earnings per share $0.78 $0.57
Diluted earnings per share $0.78 $0.57
Return on average equity
(1) 10.5% 8.0%
Return on average assets
(1) 1.0% 0.7%
Net interest rate spread 4.4% 3.3%
Net interest rate margin 4.4% 3.3%
Book value per share $29.79 $28.42
Year Ended December
31,
2010 2009
---- ----
Net Income $2,024 $2,110
Basic earnings per share $2.59 $2.72
Diluted earnings per share $2.58 $2.71
Return on average equity
(1) 8.9% 9.9%
Return on average assets
(1) 0.8% 0.8%
Net interest rate spread 3.8% 3.3%
Net interest rate margin 3.8% 3.4%
Book value per share $29.79 $28.42
(1) Annualized
Lonnie R. Trasamar, President of Wells Financial Corp. (the Company), the holding company of Wells Federal Bank (the Bank), announced earnings for the fourth quarter of 2010 of $611,000, up $171,000 or 38.9%, when compared to the fourth quarter of 2009. Basic and diluted earnings per share for the fourth quarter of 2010 were $0.78, up $0.21 or 36.8%, when compared to the same period in 2009.
Net income for the year ended December 31, 2010 was $2,024,000, down $86,000 or 4.1% when compared to 2009. Basic and diluted earnings per share were $2.59 and $2.58, respectively, down $0.13 or 4.8% when compared to 2009.
When comparing the quarter ended December 31, 2010 with the same period in 2009, net interest income increased by $399,000, or 20.0%, due to decreased costs on deposits and borrowed funds. The provision for loan loss increased by $247,000 during the period. See the discussion below regarding the allowance for loan loss for additional information. Noninterest income increased by $397,000 during the fourth quarter when compared to the same period in 2009 due, primarily, to 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 $218,000 due, primarily, to an increase in other noninterest expense.
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 $257,000 for the fourth quarter of 2010 when compared to the same period in 2009 and decreased by $73,000 for the year ended December 31, 2010 when compared to 2009. As of December 31, 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 $2,136,000 and $1,525,000 and 1.1% and 0.8%, respectively.
When comparing 2010 with 2009 net interest income increased by $723,000 due, primarily, to decreased costs on deposits and borrowed funds. The provision for loan loss decreased by $73,000 during 2010. See the discussion above regarding the allowance for loan loss for additional information. Noninterest income decreased by $458,000 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 and fourth quarters described above. Noninterest expense increased by $418,000 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
12/31/10
--------
Cash, including interest-bearing accounts: $8,244
12/31/10 $2,468; 12/31/09 $5,772
Certificates of deposit -
Fed Funds Sold 12,542
Securities available for sale 14,624
Federal Home Loan Stock 1,859
Loans held for sale 2,217
Loans receivable, net 185,732
Accrued interest receivable 1,366
Premises and equipment 3,439
Mortgage servicing rights, net 1,687
Other assets 7,072
-----
TOTAL ASSETS $238,782
========
LIABILITIES AND EQUITY
LIABILITIES:
Deposits $210,819
Borrowed funds 1,785
Advances from borrowers for taxes and
insurance 2,300
Income taxes:
Deferred (66)
Accrued interest payable 53
Accrued expenses and other liabilities 455
---
TOTAL LIABILITIES 215,346
-------
STOCKHOLDER'S EQUITY:
Common stock, $.10 par value; 7,000.000
shares
authorized; 2,187,500 shares issued $219
Additional paid in capital 17,104
Retained earnings, substantially restricted 33,824
Other comprehensive income 147
Treasury stock, at cost, 1,400,705 shares at
December
31, 2010; 1,411,260 shares at December 31,
2009 (27,858)
-------
TOTAL EQUITY 23,436
------
TOTAL LIABILITIES AND EQUITY $238,782
========
ASSETS
12/31/09
--------
Cash, including interest-bearing accounts: $12,008
12/31/10 $2,468; 12/31/09 $5,772
Certificates of deposit 175
Fed Funds Sold 29,005
Securities available for sale 10,698
Federal Home Loan Stock 2,728
Loans held for sale 1,931
Loans receivable, net 195,423
Accrued interest receivable 1,564
Premises and equipment 3,693
Mortgage servicing rights, net 1,373
Other assets 6,623
-----
TOTAL ASSETS $265,221
========
LIABILITIES AND EQUITY
LIABILITIES:
Deposits $208,871
Borrowed funds 31,435
Advances from borrowers for taxes and
insurance 2,233
Income taxes:
Deferred 53
Accrued interest payable 61
Accrued expenses and other liabilities 505
---
TOTAL LIABILITIES 243,158
-------
STOCKHOLDER'S EQUITY:
Common stock, $.10 par value; 7,000.000
shares
authorized; 2,187,500 shares issued $219
Additional paid in capital 17,166
Retained earnings, substantially restricted 32,615
Other comprehensive income 131
Treasury stock, at cost, 1,400,705 shares at
December
31, 2010; 1,411,260 shares at December 31,
2009 (28,068)
-------
TOTAL EQUITY 22,063
------
TOTAL LIABILITIES AND EQUITY $265,221
========
Wells Financial Corp. and Subsidiary
Consolidated Statement of Income
(Dollars in Thousands, except per share data)
(Unaudited)
Three Months Ended
December 31,
------------
2010 2009
---- ----
Interest and dividend income
Loans receivable:
Residential loans $609 $615
Commercial Loans 579 583
Ag Real Estate Loans 710 783
Consumer and other loans 1,062 1,170
Investment securities and other
interest-
bearings deposits 127 109
--- ---
Total interest income 3,087 3,260
----- -----
Interest expense
Deposits 647 949
Borrowed funds 32 302
--- ---
Total interest expense 679 1,251
--- -----
Net interest income 2,408 2,009
----- -----
Provision for loan losses 402 145
--- ---
Net interest income after
provision for loan losses 2,006 1,864
----- -----
Noninterest income
Gain on sale of loans 783 282
Loan servicing fees 240 240
Insurance commissions 162 154
Fees and service charges 141 158
Other 154 249
--- ---
Total noninterest income 1,480 1,083
----- -----
Noninterest expense
Compensation and benefits 1,147 1,135
Occupancy and equipment 267 246
Federal insurance premiums 116 196
Data processing 187 174
Advertising 68 58
Amortization & Valuation adjustments
for MSR's 71 89
Impairment of Securities Available
for Sale -
Other 647 387
--- ---
Total noninterest expense 2,503 2,285
----- -----
Income before income taxes 983 662
Income tax expense 372 222
Net Income $611 $440
==== ====
Earnings per share
Basic earnings per share $0.78 $0.57
===== =====
Diluted earnings per share $0.78 $0.57
===== =====
Twelve Months Ended
December 31,
------------
2010 2009
---- ----
Interest and dividend income
Loans receivable:
Residential loans $2,407 $2,689
Commercial Loans 2,322 2,478
Ag Real Estate Loans 2,913 3,398
Consumer and other loans 4,394 4,754
Investment securities and other
interest-
bearings deposits 561 437
--- ---
Total interest income 12,597 13,756
------ ------
Interest expense
Deposits 3,030 4,000
Borrowed funds 679 1,591
--- -----
Total interest expense 3,709 5,591
----- -----
Net interest income 8,888 8,165
----- -----
Provision for loan losses 907 980
--- ---
Net interest income after
provision for loan losses 7,981 7,185
----- -----
Noninterest income
Gain on sale of loans 1,849 2,365
Loan servicing fees 954 933
Insurance commissions 679 636
Fees and service charges 550 605
Other 512 463
--- ---
Total noninterest income 4,544 5,002
----- -----
Noninterest expense
Compensation and benefits 4,305 4,269
Occupancy and equipment 1,006 1,010
Federal insurance premiums 457 325
Data processing 738 738
Advertising 245 238
Amortization & Valuation adjustments
for MSR's 309 461
Impairment of Securities Available
for Sale - -
Other 2,190 1,791
----- -----
Total noninterest expense 9,250 8,832
----- -----
Income before income taxes 3,275 3,355
Income tax expense 1,251 1,245
Net Income $2,024 $2,110
====== ======
Earnings per share
Basic earnings per share $2.58 $2.72
===== =====
Diluted earnings per share $2.58 $2.71
===== =====
SOURCE Wells Financial Corp.
