Wells Financial Corp. Announces Second Quarter Results of Operations

WELLS, Minn., July 22, 2016 /PRNewswire/ --

Quarter Ended June 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 second quarter of 2016 of $523,000, down $27,000 or 4.9%, when compared to the second quarter of 2015.  Basic and diluted earnings per share for the second quarter 2016 were $0.67, down $0.08 or 10.7%, when compared to the second quarter of 2015.  In addition to decreased earnings, earnings per share were negatively affected by the additional shares that were issued as part of the St. James Federal Savings and Loan acquisition that occurred during the third quarter of 2015 and outstanding during 2016.  When comparing the second quarter of 2016 with the same period in 2015, net interest income after provision for loan losses increased by $264,000, or 12.5%.  This increase resulted, primarily, from an increase in the average loan balances.  Noninterest income decreased by $141,000, or 13.0%, due, primarily to a decrease in the gain on sale of loans.  Noninterest expense increased by $184,000, or 7.9%, 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.      

Six Months Ended June 30, 2016

Net income for the six months ended June 30, 2016 increased by $46,000, or 4.4%, when compared to the first six months of 2015.  Basic and diluted earnings per share decreased by $0.03, or 2.1%.  Even though net income increased during the first six months of 2016 when compared to the first six months of 2015, earnings per share decreased due to the additional shares that were issued as part of the St. James Federal Savings and Loan acquisition that occurred in the third quarter of 2015 and outstanding in 2016.  When comparing the first six months of 2016 with the same period in 2015, net interest income after provision for loan losses increased by $428,000, or 10.0%.  This increase resulted, primarily, from an increase in the average loan balances.  Noninterest income decreased by $85,000, or 4.3%, due, primarily to a decrease in the gain on sale of loans.  Noninterest expense increased by $319,000, or 7.0%, 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 June 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 $2,102,000 and $1,988,000 and 1.1% 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**

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SOURCE Wells Financial Corp.