WEFC Wells Financial (MM)

Wells Financial Corp. Announces Second Quarter Earnings WELLS, Minn., Aug. 5 /PRNewswire-FirstCall/ -- Selected Financial Data Three months ended Six months ended June 30, June 30, June 30, June 30, 2004 2003 2004 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 (A) 8.0% 15.3% 7.4% 14.6% Return on average assets (A) 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 (A) annualized Lonnie R. Trasamar, President of Wells Financial Corp. (NASDAQ:WEFC) (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 $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. 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 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 1,121 709 2,097 1,419 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 DATASOURCE: Wells Financial Corp. CONTACT: Lonnie R. Trasamar of Wells Financial Corp., +1-507-553-3151

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