WEFC Wells Financial (MM)

Wells Financial Corp. Announces Results for Third Quarter 2003 2003 Third Quarter Summary: Quarter ended Quarter ended 09/30/03 09/30/02 % Change Net Income $1,135,000 $846,000 34.2% Basic Earnings per Share $1.00 $0.72 39.0% Diluted Earnings per Share $0.98 $0.70 40.0% Net Interest Income $1,570,000 $1,944,000 -19.2% Noninterest Income $2,491,000 $1,239,000 101.0% Noninterest Expense $2,234,000 $1,760,000 26.9% WELLS, Minn., Nov. 5 /PRNewswire-FirstCall/ -- Lonnie R. Trasamar, President of Wells Financial Corp. (the "Company") , the holding company of Wells Federal Bank (the "Bank"), announced earnings of $1,135,000 for the quarter ended September 30, 2003, up $289,000 or 34.2%, when compared to the same period in 2002. Diluted earnings per share for the quarter were $0.98, up $0.28 or 40.0% when compared to the same quarter in 2002. Net income for the nine months ended September 30, 2003 was $3,027,000, up $644,000 or 27.0%, when compared to the same period in 2002. Diluted earnings per share for the nine- month period ended September 30, 2003 was $2.62, up $0.65 or 33.0%, when compared to the same period in 2002. Trasamar stated that the increase in net income and earnings per share for the three and nine month periods resulted from an increase in the gain on sale of loans originated for sale and in loan origination and commitment fees during 2003 when compared to 2002. These increases resulted from a larger amount of loans being originated and sold to the secondary market during 2003 when compared to 2002. Partially offsetting these increases was a decrease in net interest income and an increase in noninterest expense. The change in net interest income resulted primarily from a decrease in the average balance of interest earning assets during 2003 and, to a lesser extent, from a general decrease in the yield on the Company's loan portfolio. The change in noninterest expense resulted primarily from increases in compensation and benefits and in the amortization and valuation adjustments for mortgage servicing rights. The increase in compensation and benefits resulted primarily from annual compensation adjustments and increases in commissions paid to loan officers for the origination of loans. 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 a loan origination office located in Farmington, Minnesota. During the fourth quarter of 2003 the Bank opened a loan origination office in 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. Dividend On October 21, 2003, the Company announced a cash dividend of $0.20 per share payable on November 17, 2003 to shareholders of record on November 3, 2003. Forward-looking Statements 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 after the date of such statements. WELLS FINANCIAL CORP. and SUBSIDIARY Consolidated Statements of Financial Condition September 30, 2003 and December 31, 2002 (Dollars in Thousands) (Unaudited) ASSETS 2003 2002 Cash, including interest-bearing accounts September 30, 2003 $39,055; December 31, 2002 $35,178 $40,601 $36,571 Certificates of deposit 200 200 Securities available for sale, at fair value 24,576 19,856 Federal Home Loan Bank Stock, at cost 1,300 1,875 Loans held for sale 4,577 9,695 Loans receivable, net 143,335 145,586 Accrued interest receivable 1,161 1,387 Foreclosed real estate 195 209 Premises and equipment 3,536 2,975 Mortgage servicing rights, net 2,747 2,179 Other assets 225 83 TOTAL ASSETS $222,453 $220,616 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $167,622 $169,126 Borrowed funds 23,000 23,000 Advances from borrowers for taxes and insurance 2,251 1,347 Deferred income taxes 1,389 1,376 Accrued interest payable 273 50 Accrued expenses and other liabilities 514 494 TOTAL LIABILITIES 195,049 195,393 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 16,938 16,985 Retained earnings, substantially restricted 26,636 24,287 Accumulated other comprehensive income 405 746 Unearned ESOP shares - (29) Unearned compensation restricted stock awards (80) (138) Treasury stock, at cost, 1,054,060 shares at September 30, 2003, and 1,062,435 shares at December 31, 2002 (16,714) (16,847) TOTAL STOCKHOLDERS' EQUITY 27,404 25,223 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $222,453 $220,616 WELLS FINANCIAL CORP. and SUBSIDIARY Consolidated Statements of Income (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Interest and dividend income Loans receivable: First mortgage loans $1,674 $2,253 $5,489 $6,951 Consumer and other loans 698 829 2,117 2,395 Investment securities and other Interest bearing deposits 275 387 928 1,198 Total interest income 2,647 3,469 8,534 10,544 Interest Expense Deposits 763 1,211 2,643 3,890 Borrowed funds 314 314 931 931 Total interest expense 1,077 1,525 3,574 4,821 Net interest income 1,570 1,944 4,960 5,723 Provision for loan losses - - - 23 Net interest income after provision for loan losses 1,570 1,944 4,960 5,700 Noninterest income Gain on sale of loans originated for sale 974 319 2,571 1,074 Loan origination and commitment fees 670 426 2,071 926 Loan servicing fees 242 171 691 490 Insurance commissions 135 120 346 300 Fees and service charges 404 177 820 579 Other 66 26 135 60 Total noninterest income 2,491 1,239 6,634 3,429 Noninterest expense Compensation and benefits 1,068 848 3,034 2,517 Occupancy and equipment 298 211 830 659 Data processing 106 101 358 338 Advertising 73 62 206 162 Amortization and valuation adjustments for mortgage servicing rights 250 194 854 443 Other 439 344 1,359 940 Total noninterest expense 2,234 1,760 6,641 5,059 Income before taxes 1,827 1,423 4,953 4,070 Income tax expense 692 577 1,926 1,687 Net income $1,135 $846 $3,027 $2,383 Cash dividends declared per share $0.20 $0.18 $0.60 $0.54 Earnings per share Basic earnings per share $1.00 $0.72 $2.68 $2.02 Diluted earnings per share $0.98 $0.70 $2.62 $1.97 Weighted average number of common shares outstanding: Basic 1,132,939 1,182,522 1,129,989 1,178,437 Diluted 1,157,877 1,213,478 1,154,927 1,212,180 DATASOURCE: Wells Financial Corp. CONTACT: Lonnie R. Trasamar of Wells Financial Corp., +1-507-553-3151

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