Wells Financial Corp. Announces Annual Results WELLS, Minn., March 10 /PRNewswire-FirstCall/ -- Selected Financial Data Year ended Year ended 12/31/04 12/31/03 Net Income $2,164,000 $3,540,000 Basic earnings per share $1.87 $3.12 Diluted earnings per share $1.83 $3.05 Return on average equity 7.64% 13.30% Return on average assets 0.95% 1.58% Book value per share $24.58 $24.15 Net interest rate spread 3.75% 3.16% Net interest rate margin 3.92% 3.33% Allowance for loan loss to total loans 0.44% 0.56% Lonnie R. Trasamar, President of Wells Financial Corp. (the Company), the holding company of Wells Federal Bank (the Bank), announced earnings for 2004 of $2,164,000, down $1,376,000 or 38.9% when compared to 2003. Basic and diluted earnings per share for 2004 were $1.87 and $1.83, respectively. This compares to basic and diluted earnings per share of $3.12 and $3.05, respectively, for 2003. The decrease in net income for 2004 when compared to 2003 was primarily the result of a decrease of $4,192,000 in the gain on sale of loans originated for sale. During 2004 fewer mortgage loans were originated for sale when compared to 2003 resulting in a decrease in the gain on sale of loans originated for sale. Partially offsetting the decrease in gain on sale of loans originated for sale was an increase of $1,468,000 in net interest income. Total assets increased by $15,590,000 during 2004 due primarily to an increase of $45,613,000 in loans receivable. The increase in loans receivable resulted primarily from increases in commercial and agricultural real estate loans. Cash and securities available for sale decreased by $19,713,000 and $13,465,000, respectively. Liabilities increased by $16,868,000 during 2004 due to a $18,640,000 increase in borrowed funds being partially offset by a $2,167,000 decrease in deposits. Wells Financial Corp. and Wells Federal Bank are headquartered in Wells, Minnesota. The Bank operates nine full service offices located in Wells, Blue Earth, Mankato, Fairmont, North Mankato, Albert Lea, St. Peter and Owatonna Minnesota and Mason City, Iowa 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. 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. Consolidated Statements of Financial Condition December 31, 2004 and 2003 (dollars in thousands) Assets 2004 2003 Cash, including interest-bearing accounts 2004 $1,383; 2003 $17,655 $5,605 $25,318 Certificates of deposit 100 200 Securities available for sale 13,945 27,410 Federal Home Loan Bank Stock, at cost 2,133 1,303 Loans held for sale 3,454 1,997 Loans receivable, net of allowance for loan losses of $924 in 2004 and $904 in 2003 205,662 160,049 Accrued interest receivable 1,533 1,209 Premises and equipment 4,212 3,585 Mortgage servicing rights, net 2,515 2,681 Other assets 236 53 Total assets $239,395 $223,805 Liabilities and Stockholders' Equity Liabilities Deposits $167,495 $169,662 Borrowed funds 41,640 23,000 Advances from borrowers for taxes and insurance 1,877 1,585 Deferred income taxes 1,494 1,456 Accrued interest payable 38 34 Accrued expenses and other liabilities 261 200 Total liabilities 212,805 195,937 Stockholders' Equity Preferred stock, no par value; 500,000 shares authorized; none outstanding - - Common stock, $.10 par value; 7,000,000 shares authorized; 2,187,500 shares issued 219 219 Additional paid-in capital 17,177 17,154 Retained earnings, substantially restricted 28,063 26,922 Accumulated other comprehensive income 600 525 Unearned Employee Stock Ownership Plan shares - - Unearned compensation-restricted stock awards (329) (561) Less cost of treasury stock, 2004 1,105,852 shares; 2003 1,033,673 shares (19,140) (16,391) Total stockholders' equity 26,590 27,868 Total liabilities and stockholders' equity $239,395 $223,805 Consolidated Statements of Income Years Ended December 31, 2004 and 2003 (dollars in thousands, except per share data) 2004 2003 Interest and Dividend Income Loans receivable: First mortgage loans $7,036 $7,447 Consumer and other loans 4,569 2,848 Investment securities and interest-bearing deposits 797 1,219 Total interest income 12,402 11,514 Interest Expense Deposits 2,609 3,350 Borrowed funds 1,406 1,245 Total interest expense 4,015 4,595 Net interest income 8,387 6,919 Provision for loan losses 120 - Net interest income after provision for loan losses 8,267 6,919 Noninterest Income Gain on sale of loans originated for sale 1,421 5,090 Loan servicing fees 962 947 Insurance commissions 643 459 Fees and service charges 621 1,058 Other 98 196 Total noninterest income 3,745 7,750 Noninterest Expenses Compensation and benefits 4,393 4,159 Occupancy 1,070 1,153 Data processing 652 471 Advertising 331 293 Amortization and valuation adjustments for mortgage servicing rights 656 1,071 Other 1,525 1,752 Total noninterest expenses 8,627 8,899 Income before income taxes 3,385 5,770 Income tax expense 1,221 2,230 Net income $2,164 $3,540 Cash dividends declared per share $0.88 $0.80 Earnings per share Basic $1.87 $3.12 Diluted $1.83 $3.05 DATASOURCE: Wells Financial Corp. CONTACT: Lonnie R. Trasamar of Wells Financial Corp., +1-507-553-3151

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