For Immediate Release Contact: Lonnie R. Trasamar
August 5, 2004 (507) 553-3151
Wells Financial Corp. Announces Second Quarter Earnings
- -------------------------------------------------------
Selected Financial Data
Three months ended Six months ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
Net Income $565,000 $1,004,000 $1,042,000 $1,892,000
Basic earnings per share $0.49 $0.89 $0.90 $1.68
Diluted earnings per share $0.47 $0.87 $0.88 $1.64
Return on average equity (1) 8.0% 15.3% 7.4% 14.6%
Return on average assets (1) 1.0% 1.8% 0.9% 1.7%
Net interest rate spread 3.8% 3.1% 3.7% 2.9%
Net interest rate margin 4.0% 3.2% 3.9% 3.1%
Book value per share at June 30 $24.39 $23.58 $24.39 $23.58
(1) annualized
Wells, Minnesota - August 5, 2004 - Lonnie R. Trasamar, President of
Wells Financial Corp. (the "Company"), the holding company of Wells Federal Bank
(the "Bank"), announced earnings of $565,000 for the quarter ended June 30,
2004, down 43.7% when compared to the same period in 2003. Basic and diluted
earnings per share for the quarter were $0.49 and $0.47, respectively. This
compares to basic and diluted earnings per share of $0.89 and $0.87 for the
quarter ended June 30, 2003.
Net income for the six-months ended June 30, 2004 was $1,042,000, down
44.9% when compared to the same period in 2003. Basic and diluted earnings per
share were $0.90 and $0.88, respectively. Basic and diluted earnings per share
for the six-months ended June 30, 2003 were $1.68 and $1.64, respectively.
The decrease in net income for the three and six months ended June 30,
2004 when compared to the same periods in 2003 was primarily the result of a
decrease in the gain on sale of loans originated for sale. During the first six
months of 2004 fewer mortgage loans were originated for sale when compared to
the first six months of 2003 resulting in a decrease in gain on sale of loans
originated for sale. Partially offsetting the decrease in gain on sale of loans
originated for sale were increases of $393,000 and $658,000 in net interest
income for the three and six months ended June 30, 2004, respectively, when
compared to the same periods in 2003.
Total assets decreased by $452,000 during the first six months of 2004
due primarily from a reduction in customer deposits. Cash and securities
available for sale decreased by $18,588,000 and $5,747,000, respectively, while
loans held for sale and loans receivable increased by $1,525,000 and
1
$21,433,000, respectively. The increase in loans receivable resulted, primarily,
from increases in commercial and agricultural real estate loans.
Liabilities decreased by $912,000 during the first six months of 2004
primarily due to a $4,300,000 decrease in deposits being partially offset by a
$3,140,000 increase in borrowed funds.
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 loan origination offices located in Farmington, Minnesota and
Mason City, Iowa. 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.
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.
2
WELLS FINANCIAL CORP. and SUBSIDIARY
Consolidated Statements of Financial Condition
June 30, 2004 and December 31, 2003
(Dollars in Thousands)
(Unaudited)
ASSETS
2004 2003
--------- ---------
Cash, including interest-bearing accounts
June 30, 2004 $2,397; December 31, 2003 $17,655 $ 6,730 $ 25,318
Certificates of deposit 126 200
Securities available for sale, at fair value 21,663 27,410
Federal Home Loan Bank Stock, at cost 1,444 1,303
Loans held for sale 3,522 1,997
Loans receivable, net 181,482 160,049
Accrued interest receivable 1,502 1,209
Premises and equipment, net 4,016 3,585
Mortgage servicing rights, net 2,680 2,681
Other assets 188 53
--------- ---------
TOTAL ASSETS $ 223,353 $ 223,805
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 165,362 $ 169,662
Borrowed funds 26,140 23,000
Advances from borrowers for taxes and insurance 1,736 1,585
Deferred income taxes 1,327 1,456
Accrued interest payable 208 34
Accrued expenses and other liabilities 252 200
--------- ---------
TOTAL LIABILITIES 195,025 195,937
--------- ---------
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 17,146 17,154
Retained earnings, substantially restricted 27,453 26,922
Accumulated other comprehensive income 287 525
Unearned compensation restricted stock awards (488) (561)
Treasury stock, at cost, 1,026,274 shares at June 30, 2004,
and 1,033,673 shares at December 31, 2003 (16,289) (16,391)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 28,328 27,868
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,353 $ 223,805
========= =========
3
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,
----------------------- -----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Interest and dividend income
Loans receivable:
First mortgage loans $ 1,703 $ 1,876 $ 3,433 $ 3,815
Consumer and other loans 709 2,097 1,419
1,121
Investment securities and other
interest bearing deposits 219 316 445 653
---------- ---------- ---------- ----------
Total interest income 3,043 2,901 5,975 5,887
---------- ---------- ---------- ----------
Interest Expense
Deposits 635 897 1,296 1,880
Borrowed funds 321 310 631 617
---------- ---------- ---------- ----------
Total interest expense 956 1,207 1,927 2,497
---------- ---------- ---------- ----------
Net interest income 2,087 1,694 4,048 3,390
Provision for loan losses - - - -
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 2,087 1,694 4,048 3,390
---------- ---------- ---------- ----------
Noninterest income
Gain on sale of loans originated for sale 550 1,591 829 2,998
Loan servicing fees 240 231 481 449
Insurance commissions 152 117 340 211
Fees and service charges 122 196 303 416
Other 30 41 60 69
---------- ---------- ---------- ----------
Total noninterest income 1,094 2,176 2,013 4,143
---------- ---------- ---------- ----------
Noninterest expense
Compensation and benefits 1,275 1,054 2,297 1,966
Occupancy and equipment 270 271 534 532
Data processing 127 127 267 252
Advertising 71 74 152 133
Amortization and valuation adjustments for
mortgage servicing rights 24 85 264 604
Other 493 593 880 920
---------- ---------- ---------- ----------
Total noninterest expense 2,260 2,204 4,394 4,407
---------- ---------- ---------- ----------
Income before taxes 921 1,666 1,667 3,126
Income tax expense 356 662 625 1,234
---------- ---------- ---------- ----------
Net income $ 565 $ 1,004 $ 1,042 $ 1,892
========== ========== ========== ==========
Cash dividends declared per share $ 0.22 $ 0.20 $ 0.44 $ 0.40
========== ========== ========== ==========
Earnings per share
Basic $ 0.49 $ 0.89 $ 0.90 $ 1.68
========== ========== ========== ==========
Diluted $ 0.47 $ 0.87 $ 0.88 $ 1.64
========== ========== ========== ==========
Weighted average number of common shares
outstanding:
Basic 1,162,283 1,131,085 1,160,414 1,128,490
========== ========== ========== ==========
Diluted 1,190,265 1,159,797 1,188,396 1,153,604
========== ========== ========== ==========
4