WEFC..$27.50,, 3'rd Qtr 2008 Results..
Wells Financial Corp. Announces Third Quarter Results and Cash Dividend
WELLS, Minn., Oct. 22 /PRNewswire-FirstCall/ --
Selected Financial Data
Quarter ended Nine months ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2008 2007 2008 2007
Net Income $8,000 $436,000 $965,000 $1,322,000 Basic earnings per share $0.01 $0.49 $1.00 $1.44 Diluted earnings per share $0.01 $0.48 $1.00 $1.42 Return on average equity (1) - 7.5% 5.1% 7.4% Return on average assets (1) - 0.7% 0.4% 0.7% Net interest rate spread 3.4% 3.1% 3.2% 3.1% Net interest rate margin 3.4% 3.3% 3.3% 3.3% Book value per share $26.18 $26.01 $26.18 $26.01
(1) annualized
Lonnie R. Trasamar, President of Wells Financial Corp. (the Company) (OTC:WEFP) (BULLETIN BOARD: WEFP) , the holding company of Wells Federal Bank (the Bank), announced earnings for the third quarter of 2008 of $8,000, down $428,000 or 98.2%, when compared to the third quarter of 2007. Basic and diluted earnings per share for the third quarter of 2008 were $0.01, down $0.48 and $0.47, respectively, when compared to the third quarter of 2007. During September of 2008 the federal government placed the Federal Home Loan Mortgage Corp. (Freddie Mac) into conservatorship which resulted in the Company realizing a $485,000 other-than-temporary impairment on the Freddie Mac preferred stock in its security portfolio. The Company has no other preferred stock in its investment portfolio. "The impairment of the Freddie Mac preferred stock due to government action was an unexpected development that offset most of the Company's income during the third quarter", said Trasamar. "Absent this impairment, the Company would have reported net income of approximately $316,000 for the quarter," he added. Also contributing to the reduction in net income for the quarter was a $192,000 increase in the provision for loan loss when compared to the third quarter of 2007.
"The liquidity position of Wells Financial Corp. remains strong and it continues to have capital levels that exceed regulatory standards to be classified as a well capitalized institution," said Trasamar.
Net income for the nine months ended September 30, 2008 was $965,000, down $357,000 or 27.0% when compared to the same period in 2007. Basic and diluted earnings per share were $1.00 for the first nine months of 2008, down 30.0% and 31.0%, respectively, when compared to basic and diluted earnings per share for the first nine months of 2007 of $1.44 and $1.42, respectively. The decrease in net income and earnings per share for the nine months ended September 30, 2008 when compared to the same period in 2007 resulted from the other-than-temporary impairment and increase in the provision for loan loss described above.
When comparing September 30, 2008 to December 31, 2007, total assets decreased by $13,046,000 due primarily to decreases in loans receivable and cash. The decrease in loans receivable resulted primarily from decreases in residential mortgages, agricultural real estate and construction loans.
Liabilities decreased by $12,697,000 during the first nine months of 2008 due to a decrease in deposits of $10,670,000 and a decrease of $3,379,000 in borrowed funds.
Cash Dividend Announcement
On October 21, 2008, the Company's Board of Directors declared a $0.26 per share cash dividend, payable on November 24, 2008 to shareholders of record on November 10, 2008.
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