WELLS FINANCIAL CORP. 
By WELLS, Minn., Oct. 22 /PRNewswire-FirstCall/ --
Selected Financial Data
(Dollars in Thousands, except per share data)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---- ---- ---- ----
Net Income $587 $428 $1,413 $1,670
Basic earnings per share $0.75 $0.55 $1.81 $2.15
Diluted earnings per share $0.75 $0.55 $1.80 $2.15
Return on average equity
(1) 10.3% 7.9% 8.4% 10.5%
Return on average assets
(1) 1.0% 0.7% 0.7% 0.9%
Net interest rate spread 3.9% 3.4% 3.6% 3.3%
Net interest rate margin 3.9% 3.5% 3.7% 3.4%
Book value per share $29.42 $28.19 $29.42 $28.19
(1) Annualized
Lonnie R. Trasamar, President of Wells Financial Corp. (the Company) (OTC Bulletin Board: WEFP), the holding company of Wells Federal Bank (the Bank), announced earnings for the third quarter of 2010 of $587,000, up $159,000 or 37.1%, when compared to the third quarter of 2009. Basic and diluted earnings per share for the third quarter of 2010 were $0.75, up $0.20 or 36.4%, when compared to the same period in 2009.
Net income for the nine months ended September 30, 2010 was $1,413,000, down $257,000 or 15.4% when compared to the first nine months of 2009. Basic and diluted earnings per share were $1.81 and $1.80, down $0.34 and $0.35 or 15.8% and 16.3%, respectively, during the first nine months of 2010 when compared to the same period in 2009.
When comparing the quarter ended September 30, 2010 with the same period in 2009, net interest income increased by $157,000, or 7.6%, due to decreased costs on deposits and borrowed funds. The provision for loan loss increased by $50,000 during the period. See the discussion below regarding the allowance for loan loss for additional information. Noninterest income increased by $257,000 which resulted, primarily, from 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 $103,000 due, primarily, to increases in other noninterest expense and federal deposit insurance premiums.
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 $50,000 for the quarter ended September 30, 2010 when compared to the same period in 2009 and decreased by $330,000 for the nine months ended September 30, 2010 when compared to the same period in 2009. As of September 30, 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 $1,793,000 and $1,785,000 and 0.93% and 0.85%, respectively.
When comparing the nine months ended September 30, 2010 with the same period in 2009 net interest income increased by $324,000 due, primarily, to decreased costs on deposits and borrowed funds. The provision for loan loss decreased by $330,000 during the period. See the discussion above regarding the allowance for loan loss for additional information. Noninterest income decreased by $855,000 for the first nine months of 2010 when compared to the same period in 2009 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 quarter described above. Noninterest expense increased by $200,000 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
09/30/10
--------
Cash, including interest-bearing accounts: $17,186
09/30/10 $11,511; 12/31/09 $34,777
Certificates of deposit 498
Securities available for sale 13,949
Federal Home Loan Stock 2,193
Loans held for sale 3,809
Loans receivable, net 188,241
Accrued interest receivable 1,685
Prepaid Income Taxes -
Premises and equipment 3,510
Mortgage servicing rights, net 1,468
Other assets 7,079
-----
TOTAL ASSETS $239,618
========
LIABILITIES AND EQUITY
LIABILITIES:
Deposits $206,990
Borrowed funds 5,035
Advances from borrowers for taxes and
insurance 3,277
Income taxes:
Deferred 107
Accrued interest payable 345
Accrued expenses and other liabilities 720
---
TOTAL LIABILITIES 216,474
-------
STOCKHOLDER'S EQUITY:
Common stock, $.10 par value; 7,000.000
shares
authorized; 2,187,500 shares issued $219
Additional paid in capital 17,096
Retained earnings, substantially
restricted 33,417
Other comprehensive income 270
Treasury stock, at cost, 1,400,705 shares
at September
30, 2010; 1,411,260 shares at December 31,
2009 (27,858)
-------
TOTAL EQUITY 23,144
------
TOTAL LIABILITIES AND EQUITY $239,618
========
ASSETS
12/31/09
--------
Cash, including interest-bearing accounts: $41,013
09/30/10 $11,511; 12/31/09 $34,777
Certificates of deposit 175
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
Prepaid Income Taxes -
Premises and equipment 3,693
Mortgage servicing rights, net 1,373
Other assets 6,623
TOTAL ASSETS $265,221
========
LIABILITIES AND EQUITY
LIABILITIES:
Deposits $208,870
Borrowed funds 31,435
Advances from borrowers for taxes and
insurance 2,233
Income taxes:
Deferred 157
Accrued interest payable 61
Accrued expenses and other liabilities 402
---
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 September
30, 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
September 30,
-------------
2010 2009
---- ----
Interest and dividend income
Loans receivable:
Residential loans $599 $653
Commercial Loans 569 687
Ag Real Estate Loans 713 835
Consumer and other loans 1,094 1,160
Investment securities and other
interest-
bearings deposits 138 116
--- ---
Total interest income 3,113 3,451
----- -----
Interest expense
Deposits 725 992
Borrowed funds 159 387
--- ---
Total interest expense 884 1,379
--- -----
Net interest income 2,229 2,072
----- -----
Provision for loan losses 125 75
--- ---
Net interest income after
provision for loan losses 2,104 1,997
----- -----
Noninterest income
Gain on sale of loans 600 357
Loan servicing fees 237 237
Insurance commissions 160 149
Fees and service charges 136 155
Other 100 78
--- ---
Total noninterest income 1,233 976
----- ---
Noninterest expense
Compensation and benefits 1,046 1,032
Occupancy and equipment 233 238
Federal insurance premiums 115 73
Data processing 174 180
Advertising 62 77
Amortization & Valuation adjustments
for MSR's 72 111
Other 688 576
--- ---
Total noninterest expense 2,390 2,287
----- -----
Income before income taxes 947 686
Income tax expense 360 258
Net Income $587 $428
==== ====
Earnings per share
Basic earnings per share $0.75 $0.55
===== =====
Diluted earnings per share $0.75 $0.55
===== =====
Nine Months Ended
September 30,
-------------
2010 2009
---- ----
Interest and dividend income
Loans receivable:
Residential loans $1,798 $2,074
Commercial Loans 1,743 1,895
Ag Real Estate Loans 2,203 2,615
Consumer and other loans 3,332 3,584
Investment securities and other
interest-
bearings deposits 434 328
--- ---
Total interest income 9,510 10,496
----- ------
Interest expense
Deposits 2,383 3,051
Borrowed funds 647 1,289
--- -----
Total interest expense 3,030 4,340
----- -----
Net interest income 6,480 6,156
----- -----
Provision for loan losses 505 835
--- ---
Net interest income after
provision for loan losses 5,975 5,321
----- -----
Noninterest income
Gain on sale of loans 1,066 2,083
Loan servicing fees 714 693
Insurance commissions 517 482
Fees and service charges 409 447
Other 358 214
--- ---
Total noninterest income 3,064 3,919
----- -----
Noninterest expense
Compensation and benefits 3,158 3,134
Occupancy and equipment 739 764
Federal insurance premiums 341 129
Data processing 551 564
Advertising 177 180
Amortization & Valuation adjustments
for MSR's 238 372
Other 1,543 1,404
----- -----
Total noninterest expense 6,747 6,547
----- -----
Income before income taxes 2,292 2,693
Income tax expense 879 1,023
Net Income $1,413 $1,670
====== ======
Earnings per share
Basic earnings per share $1.81 $2.15
===== =====
Diluted earnings per share $1.80 $2.15
===== =====
SOURCE Wells Financial Corp.
