For Immediate Release Contact: Lonnie R. Trasamar July 30, 2003 (507) 553-3151 Wells Financial Corp. Announces Results for the Quarter Ended June 30, 2003 Second Quarter Summary: Net income increased by $320,000, or 46.8%, when compared to the second quarter of 2002 Diluted earnings per share increased by $0.31, or 55.4%, when compared to the second quarter of 2002 Net interest income decreased by $229,000, or 11.9%, when compared to the second quarter of 2002 Year to Date Summary: Net income increased by $355,000, or 23.1%, when compared to the first six months of 2002 Diluted earnings per share increased by $0.37, or 29.1%, when compared to the first six months of 2002 Net interest income decreased by $389,000, or 10.3%, when compared to the first six months of 2002 Wells, Minnesota - July 30, 2003 - Lonnie R. Trasamar, President of Wells Financial Corp. (the Company), the holding company of Wells Federal Bank (the Bank), announced earnings of $1,004,000 for the quarter ended June 30, 2003, up $320,000 or 46.8%, when compared to the quarter ended June 30, 2002. Diluted earnings per share for the second quarter of 2003 were $0.87, up $0.31 or 55.4%, when compared to the second quarter of 2002. Net income for the six months ended June 30, 2003 was $1,892,000, up $355,000, or 23.1% when compared to the six months ended June 30, 2002. Diluted earnings per share were $1.64 for the six months ended June 30, 2003, up $0.37, or 29.1%, when compared to the first six months of 2002. Trasamar stated that the increase in net income and earnings per share for the three and six months ended June 30, 2003 when compared to the same periods in 2002 resulted from an increase in the gain on sale of loans originated for sale and in loan origination and commitment fees during 2003. Partially offsetting these increases was a decrease in net interest income that primarily resulted from a decrease in the average balance of interest earning assets and, to a lesser extent, to a decrease in the average yield on interest earning assets. Wells Financial Corp. and Wells Federal Bank are headquartered in Wells, Minnesota. The Bank operates eight full service offices located in Wells, Blue Earth, Mankato, Fairmont, North Mankato, Albert Lea, St. Peter and Owatonna Minnesota and a loan origination office located in Farmington, Minnesota. The Bank is a community oriented, full service savings bank offering traditional mortgage, consumer, commercial and agricultural loan products. The Bank offers insurance, mutual funds and variable rate annuity products through its subsidiary, Wells Insurance Agency. Dividend On July 18, 2003, the Company announced a cash dividend of $0.20 per share payable on August 15, 2003 to shareholders of record on August 1, 2003. Forward-looking Statements 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 after the date of such statements. Selected Financial Information Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2003 2002 2003 2002 --------- ---------- --------- ---------- Return on average assets (1) 1.79% 1.20% 1.69% 1.34% Return on average equity (1) 15.26% 11.02% 14.57% 12.57% Net interest margin 3.13% 3.48% 3.14% 3.48% Book value per share $23.58 $21.05 $23.58 $21.05 (1) annualized (A balance sheet and income statement are included with this release) WELLS FINANCIAL CORP. and SUBSIDIARY Consolidated Statements of Financial Condition June 30, 2003 and December 31, 2002 (Dollars in Thousands) (Unaudited) ASSETS 2003 2002 ------------- -------------- Cash, including interest-bearing accounts June 30, 2003 $38,376; December 31, 2002 $35,178 $ 39,439 $ 36,571 Certificates of deposit 200 200 Securities available for sale, at fair value 23,157 19,856 Federal Home Bank Stock 1,875 1,875 Loans held for sale 13,445 9,695 Loans receivable, net 138,362 145,586 Accrued interest receivable 1,342 1,387 Foreclosed real estate 330 209 Premises and equipment 3,421 2,975 Mortgage servicing rights 2,505 2,179 Other assets 106 83 ------------- -------------- TOTAL ASSETS $ 224,182 $ 220,616 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $ 171,257 $ 169,126 Borrowed funds 23,000 23,000 Advances from borrowers for taxes and insurance 1,434 1,347 Deferred Income taxes 1,384 1,376 Accrued interest payable 198 50 Accrued expenses and other liabilities 232 494 ------------- -------------- TOTAL LIABILITIES 197,505 195,393 ------------- -------------- STOCKHOLDERS' EQUITY: Preferred stock, no par value; 500,000 shares Authorized; none outstanding - - Common stock, $.10 par value; authorized 7,000,000 Shares; issued 2,187,500 shares 219 219 Additional paid-in capital 16,970 16,985 Retained earnings, substantially restricted 25,728 24,287 Accumulated other comprehensive income 602 746 Unearned ESOP shares - (29) Unearned compensation restricted stock awards (96) (138) Treasury stock, at cost, 1,056,064 shares at June 30, 2003, and 1,062,435 shares at December 31, 2002 (16,746) (16,847) ------------- -------------- TOTAL STOCKHOLDERS' EQUITY 26,677 25,223 ------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 224,182 $ 220,616 ============= ============== 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, ------------------------- ------------------------- 2003 2002 2003 2002 ------------- ---------- ----------- ------------ Interest and dividend income Loans receivable: First mortgage loans $ 1,876 $ 2,323 $ 3,815 $ 4,698 Consumer and other loans 709 780 1,419 1,566 Investment securities and other interest bearing deposits 316 420 653 811 ----------- ----------- ----------- ----------- Total interest income 2,901 3,523 5,887 7,075 ----------- ----------- ----------- ----------- Interest Expense Deposits 897 1,290 1,880 2,679 Borrowed funds 310 310 617 617 ----------- ----------- ----------- ----------- Total interest expense 1,207 1,600 2,497 3,296 ----------- ----------- ----------- ----------- Net interest income 1,694 1,923 3,390 3,779 Provision for loan losses - - - 23 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 1,694 1,923 3,390 3,756 ----------- ----------- ----------- ----------- Noninterest income Gain on sale of loans originated for sale 777 268 1,597 755 Loan origination and commitment fees 814 195 1,401 500 Loan servicing fees 231 165 449 319 Insurance commissions 117 100 211 180 Fees and service charges 196 201 416 402 Other 41 26 69 34 ----------- ----------- ----------- ----------- Total noninterest income 2,176 955 4,143 2,190 ----------- ----------- ----------- ----------- Noninterest expense Compensation and benefits 1,054 882 1,966 1,669 Occupancy and equipment 271 215 532 448 Data processing 127 101 252 237 Advertising 74 54 133 100 Amortization & valuation adjustments for mortgage servicing rights 85 130 604 249 Other 593 298 920 596 ----------- ----------- ----------- ----------- Total noninterest expense 2,204 1,680 4,407 3,299 ----------- ----------- ----------- ----------- Income before taxes 1,666 1,198 3,126 2,647 Income tax expense 662 514 1,234 1,110 ----------- ----------- ----------- ----------- Net Income $ 1,004 $ 684 $ 1,892 $ 1,537 =========== =========== =========== =========== Cash dividends declared per share $ 0.20 $ 0.18 $ 0.40 $ 0.36 =========== =========== =========== =========== Earnings per share Basic earnings per share $ 0.89 $ 0.58 $ 1.68 $ 1.31 =========== =========== =========== =========== Diluted earnings per share $ 0.87 $ 0.56 $ 1.64 $ 1.27 =========== =========== =========== =========== Weighted average number of common shares outstanding: Basic 1,131,085 1,179,732 1,128,490 1,172,861 =========== =========== =========== =========== Diluted 1,159,797 1,214,891 1,153,604 1,210,548 =========== =========== =========== ===========