Wells Financial Corp. Announces First Quarter Results and Cash Dividend

WELLS, Minn., April 17 /PRNewswire-FirstCall/ --

Selected Financial Data

Quarter ended 03/31/08 Quarter ended 03/31/07

Net Income $324,000 $467,000
Basic earnings per share $0.41 $0.50
Diluted earnings per share $0.41 $0.49
Return on average equity 6.25% 7.69%
Return on average assets 0.51% 0.70%
Book value per share $26.27 $26.03
Net interest rate spread 2.97% 3.17%
Net interest rate margin 3.09% 3.36%
Allowance for loan loss to total loans 0.48% 0.48%

Lonnie R. Trasamar, President of Wells Financial Corp. (the Company)
(OTC Bulletin Board: WEFP), the holding company of Wells Federal Bank (the
Bank), announced earnings for the first quarter of 2008 of $324,000, down
$143,000 or 30.6%, when compared to the first quarter of 2007. Basic and
diluted earnings per share for the first quarter of 2008 were $0.41. This
compares to basic and diluted earnings per share for the first quarter of 2007
of $0.50 and $0.49, respectively.
The decrease in net income was due to a decrease of $437,000, or 10.2%, in
interest income which resulted, primarily, from an increase in nonperforming
loans on which the accrual of interest was suspended. Partially offsetting
the decrease in interest income was a $156,000, or 7.2%, decrease in interest
expense and a $120,000, or 15.9%, increase in noninterest income. Management
evaluates the adequacy of the allowance for loan losses on a quarterly basis
and adjusts the allowance for loan losses based on this evaluation through the
provision for loan losses. During the first quarter of 2008 the Company
recorded a provision for loan losses of $58,000 as compared to $13,000 for the
first quarter of 2007.
Total assets decreased by $8,909,000, from $258,298,000 at December 31,
2007 to $249,389,000 at March 31, 2008 due primarily to a decrease in the loan
portfolio. The decrease in the loan portfolio resulted primarily from
decreases in loans on agricultural land, loans including home equity loans on
residential properties, and, to a lesser extent, loans on commercial
properties.
Liabilities decreased by $9,045,000 during the first quarter of 2008 due
primarily to a $10,101,000 decrease in borrowed funds.
Cash Dividend
On April 15, 2008, the Company's Board of Directors declared a $0.26 per
share cash dividend, payable on May 19, 2008 to shareholders of record on May
5, 2008.
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.

WELLS FINANCIAL CORP. and SUBSIDIARY
Consolidated Statements of Financial Condition
March 31, 2008 and December 31, 2007
(Dollars in Thousands)
(Unaudited)

ASSETS
2008 2007
Cash, including interest-bearing accounts
March 31, 2008 $6,863; December 31,
2007 $7,138 $ 12,169 $14,182
Certificates of deposit 300 300
Securities available for sale, at fair value 10,466 9,082
Federal Home Loan Bank Stock, at cost 2,234 2,329
Loans held for sale 2,001 1,821
Loans receivable, net 211,679 220,974
Accrued interest receivable 1,738 2,056
Premises and equipment, net 4,105 4,225
Mortgage servicing rights, net 1,485 1,503
Other assets 3,212 1,826
TOTAL ASSETS $249,389 $258,298

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits $189,213 $189,631
Borrowed funds 34,884 44,985
Advances from borrowers for taxes
and insurance 3,376 2,095
Deferred income taxes 547 576
Accrued interest payable 269 128
Accrued expenses and other liabilities 312 231
TOTAL LIABILITIES 228,601 237,646

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 17,109 17,091
Retained earnings, substantially restricted 31,002 30,884
Accumulated other comprehensive income 236 206
Treasury stock, at cost, 1,395,760 shares
at March 31, 2008, and 1,394,885 shares
at December 31, 2007 (27,769) (27,748)
TOTAL STOCKHOLDERS' EQUITY 20,797 20,652

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $249,398 $258,298

WELLS FINANCIAL CORP. and SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)

Three Months Ended
March 31,
2008 2007
Interest and dividend income
Loans receivable:
First mortgage loans $2,338 $2,783
Consumer and other loans 1,283 1,226
Investment securities and other interest
bearing deposits 211 260
Total interest income 3,832 4,269
Interest Expense
Deposits 1,457 1,479
Borrowed funds 540 674
Total interest expense 1,997 2,153
Net interest income 1,835 2,116
Provision for loan losses 58 13
Net interest income after provision for
loan losses 1,777 2,103
Noninterest income
Gain on sale of loans originated for sale 251 150
Loan servicing fees 230 232
Insurance commissions 172 165
Fees and service charges 163 164
Other 59 44
Total noninterest income 875 755
Noninterest expense
Compensation and benefits 1,067 1,059
Occupancy and equipment 328 328
Data processing 198 149
Advertising 53 82
Amortization and valuation adjustments for
mortgage servicing rights 142 134
Other 343 368
Total noninterest expense 2,131 2,120
Income before taxes 521 738
Income tax expense 197 271
Net income $ 324 $467
Cash dividends declared per share $0.26 $0.26
Earnings per share
Basic $0.41 $0.50
Diluted $0.41 $0.49
Weighted average number of common
shares outstanding:
Basic 791,817 937,766
Diluted 796,019 949,108

SOURCE Wells Financial Corp.

Lonnie R. Trasamar of Wells Financial Corp., +1-507-553-3151