10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 333-202694

WELLS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Minnesota	41-1799504
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
53 First Street, S.W., Wells, Minnesota	56097
(Address of principal executive offices)	(Zip Code)

(507) 553-3151

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x          No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x            No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer,” “accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨   Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨           No x

As of November 13, 2015 there were issued and outstanding 805,710 shares of the registrant's common stock.

WELLS FINANCIAL CORP.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2015

INDEX

		Page
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1-31
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32-39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	42
Item 6.	Exhibits	42
SIGNATURES		43

EXHIBITS and CERTIFICATIONS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Wells Financial Corp. and Subsidiary

Consolidated Balance Sheets

(Dollars in Thousands, Except Per Share Data)

	September 30,			December 31,
	2015			2014
	(unaudited)
Assets
Cash and cash equivalents, including interest-bearing accounts, 2015, $5,435; 2014, $7,411	$	9,896		$	14,373
Certificates of deposit, at cost		9,521			4,181
Federal funds sold		3,000			2,000
Securities available for sale		35,495			34,177
Federal Home Loan Bank stock, at cost		2,036			2,079
Loans held for sale		1,719			1,707
Loans receivable, net of allowance for loan loss of $2,125 in 2015;  $2,158 in 2014;		197,336			182,050
Accrued interest receivable		1,252			834
Premises and equipment, net		3,417			3,172
Mortgage servicing rights, net		1,862			1,886
Foreclosed real estate		1,975			3,656
Other assets		1,041			1,711
Total assets	$	268,550		$	251,826
Liabilities, Mezzanine Equity and Stockholders’ Equity
Liabilities
Deposits	$	232,714		$	221,972
Advances from borrowers for taxes and insurance		3,639			2,630
Accrued interest payable		83			17
Accrued expenses and other liabilities		903			588
Total liabilities		237,339			225,207
Commitments, Contingencies and Credit Risk
Mezzanine Equity
Redeemable common stock held by ESOP, $0.10 par value, shares issued and outstanding, 85,160  at September 30, 2015; 95,602  at December 31, 2014		2,257			2,533
Stockholders’ Equity
Preferred stock, no par value; 500,000 shares authorized; none outstanding		-			-
Common stock, $0.10 par value; 7,000,000 shares authorized;
2,181,076 shares issued at September 30, 2015; 2,091,898 shares issued at December 31, 2014		217			209
Additional paid-in capital		18,119			17,110
Retained earnings, substantially restricted		39,879			35,552
Accumulated other comprehensive income		170			93
Unallocated Employee Stock Ownership Plan shares		(172	)		-
Treasury stock, 2015, 1,459,526 shares; 2014, 1,445,248 shares		(29,259	)		(28,878	)
Total stockholders’ equity		28,954			24,086
Total liabilities, mezzanine equity and stockholders’ equity	$	268,550		$	251,826

See Notes to Consolidated Financial Statements.

1

Wells Financial Corp. and Subsidiary

Consolidated Statements of Income

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(unaudited)					(unaudited)
Interest income:
Loans receivable	$	2,293		$	2,026	$	6,530	$	5,903
Investment securities and interest-bearing deposits		185			177		508		548
Total interest income		2,478			2,203		7,038		6,451
Interest expense:
Deposits		125			148		350		462
Total interest expense		125			148		350		462
Net interest income		2,353			2,055		6,688		5,989
Provision for loan losses		(70	)		100		-		420
Net interest income after provision for loan losses		2,423			1,955		6,688		5,569
Noninterest income:
Gain on sale of loans held for sale		302			214		826		564
Loan servicing fees		210			168		640		600
Insurance commissions		188			195		529		487
Fees and service charges		113			129		342		346
Bargain purchase gain		2,848			-		2,848		-
Other		204			211		650		698
Total noninterest income		3,865			917		5,835		2,695
Noninterest expenses:
Compensation and benefits		1,168			1,093		3,425		3,460
Occupancy		196			172		553		573
Data processing		268			266		698		685
Advertising		71			71		194		181
Amortization of mortgage servicing rights		98			90		275		239
Other real estate owned		173			-		429		398
Other		546			570		1,491		1,540
Total noninterest expenses		2,520			2,262		7,065		7,076
Income before income taxes		3,768			610		5,458		1,188
Income tax expense		348			92		995		323
Net income	$	3,420		$	518	$	4,463	$	865
Earnings per share:
Basic	$	4.63		$	0.68	$	5.88	$	1.14
Diluted	$	4.63		$	0.68	$	5.88	$	1.14

See Notes to Consolidated Financial Statements.

2

Wells Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
	(unaudited)					(unaudited)
Net income	$	3,420	$	518		$	4,463	$	865
Other comprehensive income (loss):
Unrealized gain (loss)  on securities, net of related taxes		129		(1	)		77		343
Comprehensive income	$	3,549	$	517		$	4,540	$	1,208

See Notes to Consolidated Financial Statements.

3

Wells Financial Corp. and Subsidiary

Consolidated Statements of Stockholders’ Equity and Mezzanine Equity

(Dollars in thousands, Except Per Share Data)

(Unaudited)

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Unallocated ESOP Plan Shares			Treasury Stock			Total Stockholders’ Equity			Mezzanine Equity Redeemable Common Stock
Nine Months Ended September 30, 2015
Balance, December 31, 2014	$	209	$	17,110	$	35,552		$	93	$	-		$	(28,878	)	$	24,086		$	2,533
Net income		-		-		4,463			-		-			-			4,463			-
Issuance of 78,736 shares of common stock including 6,299 shares acquired by the ESOP, net of issuance costs		8		999		-			-		(172	)		-			835			-
Other comprehensive income, net of related taxes		-		-		-			77		-			-			77			-
Cash dividends declared ($0.54 per share)		-		-		(412	)		-		-			-			(412	)		-
Stock-based compensation		-		10		-			-		-			-			10			-
Treasury stock purchases, 14,278 shares, including 10,442 of redeemable common shares		-		-		276			-		-			(381	)		(105	)		(276	)
Change in fair value related to redeemable common stock		-		-		-			-		-			-			-			-
Balance, September 30, 2015	$	217	$	18,119	$	39,879		$	170	$	(172	)	$	(29,259	)	$	28,954		$	2,257

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity			Mezzanine Equity Redeemable Common Stock
Nine Months Ended September 30, 2014
Balance, December 31, 2013	$	209	$	17,096	$	34,893		$	(264	)	$	(28,193	)	$	23,741		$	2,342
Net income		-		-		865			-			-			865			-
Other comprehensive income, net of related taxes		-		-		-			343			-			343			-
Cash dividends declared ($0.45 per share)		-		-		(342	)		-			-			(342	)		-
Stock-based compensation		-		25		-			-			-			25			-
Treasury stock purchases, 22,633 shares		-		-		-			-			(563	)		(563	)		-
Change in fair value related to redeemable common stock		-		-		-			-			-			-			-
Balance, September 30, 2014	$	209	$	17,121	$	35,416		$	79		$	(28,756	)	$	24,069		$	2,342

See Notes to Consolidated Financial Statements

4

Wells Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows

(Dollars in Thousands, Except Per Share Data)

	Nine Months Ended September 30,
	2015			2014
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	4,463		$	865
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses		-			420
Gain on sale of loans		(826	)		(564	)
Originations of loans held for sale		(15,597	)		(18,307	)
Proceeds from the sale of loans held for sale		16,411			18,969
Net change in mortgage servicing rights		24			324
Loss (gain) on sales of foreclosed real estate, net		4			(27	)
Depreciation expense		146			134
Amortization of net deferred loan origination fees		(43	)		(61	)
Amortization of securities premiums		165			160
Impairment of foreclosed real estate		232			252
Stock-based compensation expense		10			25
Bargain purchase gain		(2,848	)		-
Changes in assets and liabilities, net of effects of business combination:
Accrued interest receivable		(309	)		(252	)
Other assets		703			(216	)
Accrued expenses and other liabilities		76			173
Net cash provided by operating activities		2,611			1,895
Cash Flows From Investing Activities
Net decrease (increase) in loans		2,154			(12,983	)
Net decrease (increase) in certificates of deposit		274			(1,221	)
Net (increase) decrease in federal funds sold		(1,000	)		3,500
Purchase of Federal Home Loan Bank stock		(114	)		(181	)
Proceeds from sale of Federal Home Loan Bank stock		190			116
Purchase of securities available-for-sale		(5,815	)		(7,803	)
Maturities of available-for-sale securities		5,400			11,537
Net cash received in conversion/merger		1,337			-
Purchase of premises and equipment		(25	)		(203	)
Investment in foreclosed real estate		-			(109	)
Proceeds from sales of foreclosed real estate		1,589			360
Net cash provided by (used in) investing activities		3,990			(6,987	)
Cash Flows From Financing Activities
Net  (decrease) increase in deposits		(12,301	)		5,914
Net increase in advances from borrowers for taxes and insurance		1,009			961
Issuance of 78,736 shares of common stock, net of issuance costs and ESOP shares		1,007			-
Dividends paid		(412	)		(342	)
Purchase of treasury stock		(381	)		(563	)
Net cash (used in) provided by financing activities		(11,078	)		5,970
Net  (decrease) increase in cash and cash equivalents		(4,477	)		878
Cash and Cash Equivalents
Beginning		14,373			12,625
Ending	$	9,896		$	13,503

Significant noncash financing and investing activities for the nine months ended September 30, 2015, which include the recognition of assets acquired and liabilities assumed, are disclosed in Note 11.

See Notes to Consolidated Financial Statements

5

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 1. Nature of Operations

Operations of Wells Financial Corp. (the “Company”) primarily consist of banking services through Wells Federal Bank (the “Bank”), and Wells Insurance Agency, Inc., a property and casualty insurance agency. The Company serves its customers through the Bank’s nine locations in south central Minnesota.

Note 2. Summary of Significant Accounting Policies

Basis of Financial Statement Presentation: The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. The accompanying consolidated balance sheet and related notes as of December 31, 2014 are derived from the audited consolidated financial statements as of that date. These condensed financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2014 contained in the Company’s Form S-1. In the opinion of management, all adjustments (which consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial statements have been included. Results for any interim period are not necessarily indicative of results to be expected for the year or any other interim period.

Segment reporting: The Company’s activities are considered to be a single industry segment for financial reporting purposes. The Company is engaged in commercial and retail banking, investment and insurance services with operations in southern Minnesota. Substantially all income is derived from a diverse base of commercial and retail lending activities.

Note 3. Certificates of Deposit

Certificates of deposit with a carrying value of $9,521 and $4,181 at September 30, 2015 and December 31, 2014, respectively, had weighted-average yields of 1.28% and 0.41%, respectively, and weighted average contractual maturities of 1.7 and 0.5 years, respectively.

6

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 4. Securities Available for Sale

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,356	$	96	$	(71	)	$	22,381
SBA pools		2,645		4		(3	)		2,646
Obligations of states and political subdivisions		10,201		162		(20	)		10,343
Government-sponsored enterprise equity		40		85		-			125
	$	35,242	$	347	$	(94	)	$	35,495

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,677	$	60	$	(192	)	$	22,545
SBA pools		1,835		6		(9	)		1,832
Obligations of states and political subdivisions		9,474		250		(26	)		9,698
Government-sponsored enterprise equity		40		62		-			102
	$	34,026	$	378	$	(227	)	$	34,177

7

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Contractual maturities: The amortized cost and fair value of securities available for sale as of September 30, 2015, by contractual maturity are shown below. Maturities may differ from contractual maturities in residential mortgage-backed securities and Small Business Administration (SBA) pools because the mortgages underlying the securities may be called or repaid without any penalties. In addition, government-sponsored enterprise equity securities have no maturity. Therefore, these securities are not included in the maturity categories in the following maturity summary.

	September 30, 2015
	Amortized Cost		Fair Value
Due in one year or less	$	872	$	873
Due in one to five years		3,695		3,739
Due after five through 10 years		3,890		3,951
Due after 10 years		1,744		1,780
		10,201		10,343
Residential mortgage-backed agencies		22,356		22,381
SBA pools		2,645		2,646
Government-sponsored enterprise equity		40		125
	$	35,242	$	35,495

Pledged securities: Securities with a carrying value of $30,556 and $20,961 at September 30, 2015 and December 31, 2014, respectively, were pledged to secure borrowed funds and for other purposes as required or permitted by law.

Changes in other comprehensive income—unrealized gains on securities available for sale:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance, beginning	$	41		$	80		$	93		$	(264	)
Unrealized gains  during the year		208			-			119			417
Deferred tax effect relating to unrealized gain		(79	)		(1	)		(42	)		(74	)
Balance, ending	$	170		$	79		$	170		$	79

8

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Temporarily impaired securities:

	September 30, 2015
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage-backed agencies	$	4,197	$	9	$	8,575	$	62	$	12,772	$	71
SBA Pools		1,049		3		-		-		1,049		3
Obligations of states and political subdivisions		490		4		920		16		1,410		20
	$	5,737	$	16	$	9,495	$	78	$	15,232	$	94

	December 31, 2014
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage-backed agencies	$	5,679	$	20	$	10,566	$	172	$	16,245	$	192
SBA pools		-		-		1,250		9		1,250		9
Obligations of states and political subdivisions		1,495		6		1,180		20		2,675		26
	$	7,174	$	26	$	12,996	$	201	$	20,170	$	227

There were 25 and 37 securities in unrealized loss positions as of September 30, 2015 and December 31, 2014, respectively.

Unrealized losses are deemed to be temporary. Most of these underlying securities consist of mortgage-backed securities. Market fluctuations are caused primarily by changes in interest rates and prepayments of underlying mortgages. Volatility in economic conditions influences the prices of these securities. There were no sales of available-for-sale securities during the nine months ended September 30, 2015 and 2014.

9

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 5. Loans Receivable and Loans Held for Sale

Composition of loans receivable:

	September 30,			December 31,
	2015			2014
Residential real estate	$	61,091		$	56,674
Commercial real estate		32,255			30,653
Agricultural real estate		40,469			38,128
Commercial construction real estate		2,827			4,035
Residential construction real estate		1,319			940
Home equity, home improvement and second mortgages		33,031			32,741
Commercial operating and term		9,551			5,718
Agricultural operating and term		9,839			7,714
Vehicle		2,720			1,671
Consumer		6,573			6,279
Total loans		199,675			184,553
Net deferred loan origination fees		(214	)		(345	)
Allowance for loan loss		(2,125	)		(2,158	)
Loans receivable, net	$	197,336		$	182,050

Loans are made to individuals as well as to commercial and tax-exempt entities. Specific loan terms vary as to interest rate, repayment and collateral requirements based on the type of loan requested and the creditworthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by the Company.

The Company’s extension of credit is governed by the individual loan policies that were established to control the quality of the Company’s loans. These policies and procedures are reviewed and approved by the Board of Directors on a regular basis.

Residential real estate loans: The Company originates residential real estate loans in its service area and also originates loans throughout Minnesota through its correspondent bank relationships. Currently, the majority of these loan originations are sold in the secondary market.

Commercial real estate loans: The Company’s goal is to create and maintain a high-quality portfolio of commercial real estate loans with customers who meet the credit quality and relationship profitability objectives of the Company. Commercial real estate loans are subject to underwriting standards and processes similar to commercial operating and term loans. These loans are analyzed using projected cash flows, and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market, such as geographic location and property type.

Agricultural real estate loans: The Company originates loans secured by agricultural real estate in its service area. Agricultural land in the Company’s service area is considered to be prime agricultural land. These loans are underwritten using both a cash flow analysis and appraised values. These are amortizing loans, and loan-to-value ratios generally do not exceed 60 percent at loan inception.

10

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Commercial construction real estate loans: The Company defines construction loans as loans where the loan proceeds are controlled by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, they are subject to other industry-specific policy guidelines outlined in the Company’s credit risk policy and are monitored closely.

Residential construction real estate loans: Residential construction loans originated by the Company generally are limited to six-month terms. When construction is completed, these loans are converted to permanent financing or sold to the secondary market.

Commercial operating and term loans: Commercial operating and term loans are originated in the Company’s primary service area. These loans are made to individuals, partnerships, corporations, limited liability partnerships and limited liability companies for the purpose of assisting in the development of a business enterprise. Loans to closely held businesses will generally be guaranteed in full or for a meaningful amount by the businesses’ major owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not perform as forecasted, and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types.

Agricultural operating and term loans: Agricultural operating and term loans are originated in the Company’s primary service area and are generally used to purchase agricultural equipment or crop inputs. These loans are primarily secured by agricultural real estate and agricultural equipment or crops. Agricultural term and operating loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted, and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all agricultural loan types.

Consumer loans, including home equity, home improvement and second mortgages, and vehicle loans: The Company originates direct consumer loans, including home equity lines and loans, credit cards, and vehicle loans, using a scoring-based credit analysis as part of the underwriting process. Each loan type has a separate specified scoring that consists of several factors, including debt to income, type of collateral and loan-to-collateral value, credit history, and Company relationship with the borrower.

11

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Loans receivable:

	September 30, 2015
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	58,636	$	964	$	99	$	1,392	$	2,455	$	61,091
Commercial real estate		32,173		-		82		-		82		32,255
Agricultural real estate		39,914		-		-		555		555		40,469
Commercial construction real estate		2,827		-		-		-		-		2,827
Residential construction real estate		1,319		-		-		-		-		1,319
Home equity, home improvement and second mortgages		32,793		131		59		48		238		33,031
Commercial operating and term		9,248		-		-		303		303		9,551
Agricultural operating and term		9,839		-		-		-		-		9,839
Vehicle		2,659		22		3		36		61		2,720
Consumer		6,505		46		-		22		68		6,573
Total loans	$	195,913	$	1,163	$	243	$	2,356	$	3,762	$	199,675
Nonperforming loans	$	-	$	-	$	-	$	2,356	$	2,356	$	2,356

	December 31, 2014
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	54,698	$	782	$	507	$	687	$	1,976	$	56,674
Commercial real estate		30,653		-		-		-		-		30,653
Agricultural real estate		37,843		285		-		-		285		38,128
Commercial construction real estate		4,035		-		-		-		-		4,035
Residential construction real estate		940		-		-		-		-		940
Home equity, home improvement and second mortgages		32,291		193		2		255		450		32,741
Commercial operating and term		5,569		82		-		67		149		5,718
Agricultural operating and term		7,674		40		-		-		40		7,714
Vehicle		1,661		8		1		1		10		1,671
Consumer		6,243		26		10		-		36		6,279
Total loans	$	181,607	$	1,416	$	520	$	1,010	$	2,946	$	184,553
Nonperforming loans	$	-	$	-	$	-	$	1,010	$	1,010	$	1,010

12

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Recorded investment in nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of September 30, 2015 and December 31, 2014, were as follows:

	September 30, 2015
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	1,392	$	-
Commercial real estate		-		-
Agricultural real estate		555		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		48		-
Commercial operating and term		303		-
Agricultural operating and term		-		-
Vehicle		36		-
Consumer		22		-
Total	$	2,356	$	-

	December 31, 2014
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	687	$	-
Commercial real estate		-		-
Agricultural real estate		-		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		255		-
Commercial operating and term		67		-
Agricultural operating and term		-		-
Vehicle		1		-
Consumer		-		-
Total	$	1,010	$	-

No interest income was recognized on nonaccrual loans for the nine months ended September 30, 2015 and 2014. There are no additional funds to be advanced on these loans.

13

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk-rating system, the Company classifies problem and potential problem loans as “Special Mention,” “Substandard” and “Doubtful,” which correspond to risk ratings five, six and seven, respectively. Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk-rated seven, have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention, or risk-rated five. Risk ratings are updated any time the situation warrants.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass-rated loans. Loans listed as not rated are included in groups of homogeneous loans with similar risk and loss characteristics. The following tables present the risk category of loans by class of loans based on the most recent analyses performed and the contractual aging as of September 30, 2015 and December 31, 2014:

	September 30, 2015
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate	$	29,012	$	1,980	$	1,263	$	-	$	32,255
Agricultural real estate		39,914		165		390		-		40,469
Commercial construction real estate		2,827		-		-		-		2,827
Commercial operating and term		9,523		58		258		-		9,551
Agricultural operating and term		9,806		33		-		-		9,839
Total	$	91,082	$	2,236	$	1,911	$	-	$	94,941

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate	$	26,449	$	3,556	$	648	$	-	$	30,653
Agricultural real estate		38,128		-		-		-		38,128
Commercial construction real estate		4,035		-		-		-		4,035
Commercial operating and term		5,426		-		292		-		5,718
Agricultural operating and term		7,714		-		-		-		7,714
Total	$	43,624	$	3,556	$	940	$	-	$	48,120

14

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

For consumer, residential real estate, agricultural real estate, home equity, vehicle and residential construction loan classes, the Company collectively evaluates loans for impairment. The Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. Loans where credit quality and aging indicate potential weakness are placed on nonaccrual and are deemed to be nonperforming.

Impaired loans also include loans modified in a troubled debt restructuring where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collections. There was one troubled debt restructuring of loans during the three and nine months ended September 30, 2015. There were no troubled debt restructuring of loans during the three and nine months ended September 30, 2014.

Payments received on nonaccrual loans are applied as a direct reduction of principal. Nonaccrual loans that are brought current, and do not have additional credit risk factors noted, are returned to accrual status.

There were no loans modified in a troubled debt restructuring during the previous twelve month period that subsequently defaulted during the three and nine months ended September 30, 2015 and 2014.

Loans individually evaluated for impairment by class of loans as of September 30, 2015 and December 31, 2014 are as follows:

	September 30. 2015
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	473	$	473	$	-	$	493	$	18
Commercial real estate		575		575		-		666		18
With an allowance recorded:
Residential real estate		414		414		79		440		27
Commercial real estate		1,884		1,884		329		1,910		58
Home equity, home improvement and second mortgages		-		-		-		-		-
Commercial operating and term		209		209		181		221		6
Consumer		7		7		5		3		1
Vehicle		2		2		2		8		-
Total	$	3,564	$	3,564	$	596	$	3,741	$	128

	December 31, 2014
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	461	$	461	$	-	$	505	$	27
With an allowance recorded:
Residential real estate		822		822		115		830		34
Commercial real estate		2,637		2,637		341		2,690		99
Home equity, home improvement and  second mortgages		73		73		73		74		2
Commercial operating and term		63		63		32		-		2
Consumer		16		16		12		16		2
Total	$	4,072	$	4,072	$	573	$	4,115	$	166

15

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Allowance for loan losses:

	Three Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	528	$	-		$	-	$	(49	)	$	479
Commercial real estate		786		-			-		(83	)		703
Agricultural real estate		159		-			-		(14	)		145
Commercial construction real estate		6		-			-		8			14
Residential construction real estate		6		-			-		1			7
Home equity, home improvement and second mortgages		447		(26	)		4		(25	)		400
Commercial operating and term		117		-			-		144			261
Agricultural operating and term		30		-			-		(1	)		29
Vehicle		27		-			-		-			27
Consumer		78		(17	)		50		(51	)		60
Total	$	2,184	$	(43	)	$	54	$	(70	)	$	2,125

	Nine Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	545	$	(9	)	$	9	$	(66	)	$	479
Commercial real estate		722		-			-		(19	)		703
Agricultural real estate		155		-			-		(10	)		145
Commercial construction real estate		12		-			-		2			14
Residential construction real estate		13		-			-		(6	)		7
Home equity, home improvement and second mortgages		431		(115	)		18		66			400
Commercial operating and term		109		-			-		152			261
Agricultural operating and term		31		-			-		(2	)		29
Vehicle		28		-			4		(5	)		27
Consumer		112		(26	)		86		(112	)		60
Total	$	2,158	$	(150	)	$	117	$	-		$	2,125

16

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

	Three Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	484	$	(3	)	$	11	$	9		$	501
Commercial real estate		712		-			-		(16	)		696
Agricultural real estate		142		-			-		9			151
Commercial construction real estate		8		-					14			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		314		(4	)		2		80			392
Commercial operating and term		93		-			-		21			114
Agricultural operating and term		14		-			-		7			21
Vehicle		30		-			1		(4	)		27
Consumer		126		(14	)		13		(15	)		110
Total	$	1,934	$	(21	)	$	27	$	100		$	2,040

	Nine Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	433	$	(6	)	$	11	$	63		$	501
Commercial real estate		624		-			7		65			696
Agricultural real estate		130		-			-		21			151
Commercial construction real estate		2		-			-		20			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		254		(181	)		39		280			392
Commercial operating and term		87		(1	)		-		28			114
Agricultural operating and term		18		-			-		3			21
Vehicle		30		-			3		(6	)		27
Consumer		135		(24	)		48		(49	)		110
Total	$	1,724	$	(212	)	$	108	$	420		$	2,040

17

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The recorded investment in loans and the allowance for loan losses by portfolio segment and based on impairment method as of September 30, 2015 and December 31, 2014, are as follows:

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	887	$	60,204	$	61,091
Commercial real estate		2,459		29,796		32,255
Agricultural real estate		-		40,469		40,469
Commercial construction real estate		-		2,827		2,827
Residential construction real estate		-		1,319		1,319
Home equity, home improvement and second mortgages		-		33,031		33,031
Commercial operating and term		209		9,342		9,551
Agricultural operating and term		-		9,839		9,839
Vehicle		2		2,718		2,720
Consumer		7		6,566		6,573
Total	$	3,564	$	196,111	$	199,675

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	79	$	400	$	479
Commercial real estate		329		374		703
Agricultural real estate		-		145		145
Commercial construction real estate		-		14		14
Residential construction real estate		-		7		7
Home equity, home improvement and second mortgages		-		400		400
Commercial operating and term		181		80		261
Agricultural operating and term		-		29		29
Vehicle		2		25		27
Consumer		5		55		60
Total	$	596	$	1,529	$	2,125

18

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	1,283	$	55,390	$	56,674
Commercial real estate		2,637		28,016		30,653
Agricultural real estate		-		38,128		38,128
Commercial construction real estate		-		4,035		4,035
Residential construction real estate		-		940		940
Home equity, home improvement and second mortgages		73		32,668		32,741
Commercial operating and term		63		5,655		5,718
Agricultural operating and term		-		7,714		7,714
Vehicle		-		1,671		1,671
Consumer		16		6,263		6,279
Total	$	4,072	$	180,481	$	184,553

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	115	$	430	$	545
Commercial real estate		341		381		722
Agricultural real estate		-		155		155
Commercial construction real estate		-		12		12
Residential construction real estate		-		13		13
Home equity, home improvement and second mortgages		73		358		431
Commercial operating and term		32		77		109
Agricultural operating and term		-		31		31
Vehicle		-		28		28
Consumer		12		100		112
Total	$	573	$	1,585	$	2,158

Loans with a carrying value of $92,639 and $96,740 at September 30, 2015 and December 31, 2014, respectively, were pledged to secure borrowed funds.

19

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Related-party loans: The Company has entered into transactions with its executive officers, directors, significant shareholders, and their affiliates (related parties). The aggregate amounts of loans to such related parties at September 30, 2015 and December 31, 2014, were $190 and $342, respectively. During 2015 and 2014, new loans to such related parties were $97 and $185, respectively, and repayments were $152 and $67, respectively. In the opinion of management, these loans have terms similar to other customer loans and do not present more than normal risk of collection.

Loans held for sale: As of September 30, 2015 and December 31, 2014, the Company’s loans held for sale were $1,719 and $1,707, respectively, and consisted of one- to four-family residential real estate loans.

Interest rate lock commitments related to the origination of mortgage loans that will be sold are considered derivative instruments. The Company estimates the fair value of these derivatives using the difference between the guaranteed interest rate in the commitments and the current market interest rate. To reduce the net interest rate exposure arising from its loan sale activity, the Company enters into a commitment to sell these loans at the same time that the interest rate lock commitment is quoted. The commitments to sell loans are also considered derivative instruments, with offsetting estimated fair values based on changes in current market rates. These commitments are not designated as hedging instruments and, therefore, changes in fair value are recognized immediately into income. The fair values of the Company’s derivative instruments are offsetting and deemed to be immaterial.

Note 6. Loan Servicing

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans as of September 30, 2015 and December 31, 2014, were $320,669 and $332,075, respectively, and consist of one- to four-family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in advances from borrowers for taxes and insurance, were $3,176 and $2,347 at September 30, 2015 and December 31, 2014, respectively.

Mortgage servicing rights are summarized as follows for the nine months ended September 30, 2015 and 2014:

	September 30,			September 30,
	2015			2014
Balance at beginning of year, net	$	1,886		$	1,952
Mortgage servicing rights capitalized		251			181
Amortization expense		(275	)		(239	)
Valuation provision change		-			-
Balance at end of period, net	$	1,862		$	1,894

The estimated fair value of mortgage servicing rights was $2,143 and $2,578 at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the valuation allowance was $15 and $15, respectively.

20

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 7. Stockholders’ Equity, Regulatory Capital and Dividend Restrictions

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier I, Tier I capital and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of September 30, 2015, that the Bank meets all capital adequacy requirements to which they are subject.

As of September 30, 2015, the most recent notification of the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for Prompt Corrective Action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, common equity Tier I, Tier I risk-based, and Tier I leverage ratios. There are no conditions or events since that notification that management believes have changed the Bank’s category.

21

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The following table summarizes the Bank’s compliance with its regulatory capital requirements:

											Minimum to Be Well
						Minimum					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Percent			Amount		Percent			Amount		Percent
Bank as of September 30, 2015:
Tier I capital (to average assets)	$	28,221		10.37	%	$	10,884		4.00	%	$	13,605		5.00	%
Tier I capital common equity (to risk weighted assets)		28,221		11.37	%		11,166		4.50	%		16,129		6.50	%
Tier I capital (to risk weighted assets)		28,221		11.37	%		14,889		6.00	%		19,851		8.00	%
Total risk based capital (to risk weighted assets)		30,384		12.24	%		19,851		8.00	%		24,814		10.00	%
Bank as of December 31, 2014:
Tier I capital (to average assets)		25,380		9.90	%		10,255		4.00	%		12,819		5.00	%
Tier I capital (to risk weighted assets)		25,380		13.58	%		7,478		4.00	%		11,217		6.00	%
Total capital (to risk weighted assets)		27,566		14.74	%		14,956		8.00	%		18,695		10.00	%

22

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 8. Earnings Per Share

A reconciliation of the income and common stock share amounts used in the calculation of basic and diluted earnings per share follows:

	Three Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	3,420		738,439	$	4.63
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	3,420		738,871	$	4.63

	Nine Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	4,463		759,012	$	5.88
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	4,463		759,444	$	5.88

	Three Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	518		757,323	$	0.68
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	518		758,541	$	0.68

	Nine Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	865		760,297	$	1.14
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	865		761,515	$	1.14

23

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

At September 30, 2015, all options were included in the dilutive earnings per share computation. At September 30, 2014, 15,850 options are not included in the dilutive earnings per share computation because their inclusion would be antidilutive.

Note 9. Financial Instruments With Off-Balance-Sheet Risk

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include primarily commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit on loans totaled approximately $44,312 and $38,110 at September 30, 2015 and December 31, 2014, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but normally includes real estate and personal property.

Note 10. Fair Value Measurements

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

24

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Investment securities available for sale: The fair values of exchange-listed equity securities are based on quoted market prices and are categorized as Level 1 of the fair value hierarchy. The fair values of debt securities were generally determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings and prepayment speeds. Fair values determined using matrix pricing are categorized as Level 2 in the fair value hierarchy.

25

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Redeemable common stock: The Company has certain shares of common stock outstanding whereby the holder may put its shares to the Company for cash. This redeemable common stock is recorded at its fair value in the mezzanine equity section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. The fair value of a share of common stock was determined by applying a market valuation approach based upon comparative financial and pricing analysis of the Company with a peer group of publicly traded financial institutions. The comparative financial analysis is based on three types of market pricing ratios: price to earnings, price to book (or price to tangible book) and price to assets, with a greater emphasis given to price to earnings and price to book value. Valuations include assumptions not observable in the marketplace, and the related fair value measurements have been categorized as Level 3 measurements.

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets, using fair value measurements in accordance with generally accepted accounting principles.

Impaired loans: The specific reserves for collateral-dependent impaired loans are based on the fair value of the collateral less estimated costs to sell. The fair value of collateral was determined based on appraisals, with further adjustments made to the appraised values due to various factors, including the age of the appraisal, age of comparables included in the appraisal, and changes in the market and in the collateral. As these significant adjustments are based on unobservable inputs, the resulting fair value measurements have been categorized as Level 3 measurements.

Foreclosed real estate: Foreclosed real estate is recorded at fair value based on property appraisals, less estimated selling costs, at the date of transfer. The carrying value of foreclosed real estate is not remeasured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Property appraisals are based on assumptions generally not observable in the marketplace, and the related nonrecurring fair value measurement adjustments have generally been classified as Level 3.

Mortgage servicing rights: Mortgage servicing rights are initially measured at fair value in the Company’s consolidated balance sheet. The Company utilizes the amortization method to subsequently measure its capitalized servicing assets. In accordance with ASC Topic 860, the Company must record impairment charges when the carrying value of certain strata exceeds their estimated fair value. To estimate the fair value of servicing rights, the Company considers market prices for similar assets and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing, and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceeds estimated fair value. Impairment is recognized through a valuation allowance. The determination of fair value of capitalized servicing rights is considered a Level 3 valuation.

26

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The following tables summarize assets and liabilities measured at fair value as of September 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2015
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,381	$	-		$	22,381
SBA pools		-		2,646		-			2,646
Obligations of states and political subdivisions		-		10,343		-			10,343
Government-sponsored enterprise equity securities		-		125		-			125
Redeemable common stock		-		-		(2,257	)		(2,257	)
Nonrecurring:
Foreclosed real estate		-		-		1,975			1,975
Collateral-dependent impaired loans		-		-		1,914			1,914
Mortgage servicing rights		-		-		315			315

	December 31, 2014
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,545	$	-		$	22,545
SBA pools		-		1,832		-			1,832
Obligations of states and political subdivisions		-		9,698		-			9,698
Government-sponsored enterprise equity securities		-		102		-			102
Redeemable common stock		-		-		(2,533	)		(2,533	)
Nonrecurring:
Foreclosed real estate		-		-		3,656			3,656
Collateral-dependent impaired loans		-		-		3,002			3,002
Mortgage servicing rights		-		-		646			646

27

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The following tables present additional quantitative information about the unobservable inputs used in the fair value measurement of mortgage servicing rights measured on a non-recurring basis that were categorized within Level 3 of the fair value hierarchy:

	Fair Value at September 30, 2015		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	315	Discounted cash flows(1)	Prepayment PSA		157 – 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37 – 325
				Costs to service		$65 - $750

	Fair Value at December 31, 2014		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	646	Discounted cash flows(1)	Prepayment PSA		157- 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37- 325
				Costs to service		$65 - $750

(1) The estimated fair value on mortgage servicing rights is determined through a cash flow analysis performed at the loan level and is based on the objective attributes of the portfolio (i.e., note rate, loan amount, etc.) and industry assumptions used in the marketplace.

There was no change in the per share fair value of redeemable common stock, which is a recurring fair value measurements using significant unobservable inputs (Level 3), between December 31, 2014 and September 30, 2015.

For the three and nine months ended September 30, 2015 and 2014 there were no transfers in or out of Levels 1, 2, and 3.

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not recognized at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are recognized at fair value on a recurring or nonrecurring basis are discussed above.

28

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

The estimated fair values of the Company’s financial instruments are as follows:

		September 30,				December 31,
		2015				2014
	Level in Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	9,896	$	9,896	$	14,373	$	14,373
Certificates of deposit	Level 2		9,521		9,521		4,181		4,181
Federal funds sold	Level 2		3,000		3,000		2,000		2,000
Securities available for sale	Level 2		35,495		35,495		34,177		34,177
Federal Home Loan Bank stock	Level 2		2,036		2,036		2,079		2,079
Loans held for sale	Level 2		1,719		1,719		1,707		1,707
Loans receivable, net	Level 2		197,336		201,241		182,050		183,219
Accrued interest receivable	Level 2		1,252		1,252		834		834
Mortgage servicing rights	Level 3		1,862		2,143		1,886		2,578
Financial liabilities:
Deposits	Level 2		232,714		232,131		221,972		215,199
Advances from borrowers for taxes and insurance	Level 2		3,639		3,639		2,630		2,630
Accrued interest payable	Level 2		83		83		17		17
Redeemable common stock	Level 3		2,257		2,257		2,533		2,533

Note 11. Business Combination

Effective July 16, 2015, the Company completed its previously reported acquisition of St. James Federal Savings and Loan Association, St. James, Minnesota (St. James), in a conversion merger transaction. As a result of the conversion merger transaction, St. James converted from a mutual to stock institution and merged with and into the Bank, with the Bank as the surviving institution. The Company acquired 100% of the voting shares of St. James. The Company issued and sold 78,736 shares of common stock at a price of $27.36 per share, which reflected a 5% discount on the 30 day average price as prescribed in the merger agreement. The shares were offered to depositor and borrower members of St. James in a subscription offering and to stockholders of the Company and members of the general public in a community offering. The Company’s ESOP acquired 8%, or 6,299 shares, of the newly issued shares using funds borrowed from the Company. The fair value of consideration paid to the prior depositors and borrowers of St. James was determined to approximate zero. Gross offering proceeds totaled approximately $2,154, including $172 purchased by the Company’s ESOP. As a result of the stock offering, the Company had 814,758 shares of common stock outstanding as of the close of business on July 16, 2015. St. James’ sole office, located in St. James, Minnesota, has become a branch office of the Bank. The Company’s primary reasons for the acquisition are to provide for asset growth, improve capital and competitive positions, and increase the limit on loans to one borrower.

29

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 11. Business Combination (continued)

The Company has determined that the acquisition constitutes a business combination as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their estimated fair values as required by the guidance. Fair values were determined based on the requirements of ASC Topic 820, Fair Value Measurements.

The determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events which are highly subjective in nature. The assets acquired and liabilities assumed in the transaction are presented at estimated fair value on the acquisition date.

The Company recorded the following assets and liabilities as of July 16, 2015. The discounts and premiums resulting from the fair value adjustments will be accreted or amortized over the anticipated lives of the underlying assets and liabilities. The excess fair value of assets acquired over liabilities assumed, resulted in a $2,848 bargain purchase gain. The merger resulted in a gain because of the legal and financial barriers that St. James would have incurred to convert to a stock form of ownership in a stand-alone transaction, including the related transaction costs associated with a conversion and stock issuance. The bargain purchase gain was recorded in non-interest income in the Company’s consolidated statements of income for the three and nine months ended September 30, 2015.

	July 16, 2015
Recognized amounts of identifiable assets acquired and liabilities assumed
Fair value of assets acquired
Cash	$	1,337
Certificates of deposit		5,616
Securities – available for sale		995
Loans		17,506
Premises and equipment		366
Real estate owned		35
Accrued interest and other assets		131
Core deposit intangible		208
Total assets acquired	$	26,194
Fair value of liabilities assumed
Deposits	$	23,043
Deferred tax liability		238
Accrued interest and other liabilities		65
Total liabilities assumed	$	23,346
Net assets acquired	$	2,848

The fair value of the loan portfolio was estimated by performing a discounted cash flow analysis. The valuation was performed at the loan level on real estate loans and at the cohort level for all other loan types, and is based on the objective attributes of the loans in the portfolio (e.g., the rate of interest on the loan, the original term of the loan, the current term of the loan, etc.) and current statistical performance variables used in the market place.

30

Wells Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in Thousands, Except Per Share Data)

Note 11. Business Combination (continued)

The analysis was based on the contractually specified amounts of principal and interest to be received modified by our estimates of prepayment, default and loss severity to be experienced prospectively. The prepayment, default and loss severity assumptions were applied at the loan level based on the characteristics of the loan.

The composition of the acquired loans at July 16, 2015 was as follows:

	Contractual Amount		Fair Value Adjustments			Fair Value
Residential real estate	$	6,480	$	74		$	6,554
Revolving, open end residential real estate		336		(1	)		335
Agricultural real estate		5,437		57			5,494
Agricultural operating and term		2,588		2			2,590
Commercial real estate		1,262		2			1,264
Automobile loans		721		(8	)		713
Other consumer		602		(46	)		556
Total	$	17,426	$	80		$	17,506

The Company estimates that $79 of the contractual amounts receivable for loans acquired will not be collected.

The following table presents pro forma financial information assuming the acquisition occurred on January 1, 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues (interest and noninterest income)	$	3,614	$	3,403	$	10,419	$	9,547
Net income	$	542	$	507	$	1,641	$	888
Diluted net income per share	$	0.66	$	0.61	$	1.96	$	1.06
Diluted weighted-average shares	$	0.66	$	0.61	$	1.96	$	1.06

The bargain purchase gain is excluded from the pro forma table above.

To determine pro forma information, the Company adjusted its three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014 historical results to include the historical results of St. James.

Stock issuance costs incurred totaled $1,147. The stock issuance costs were offset against the proceeds of the offering, which was recognized as paid-in capital.

Merger costs of $332 and $334 were expensed during the three and nine months ended September 30, 2015, respectively. Merger costs of $9 and $27 were expensed during the three and nine months ended September 30, 2014.

31

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The Company may from time to time make written or oral “forward-looking statements” including statements contained in this report and in other communications by the Company which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, such as statements of the Company’s plans, objectives, estimates and intentions, involve risks and uncertainties and are subject to change based on various important factors (some of which are beyond the Company’s control). The following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of the products and services by users, including the features, pricing and quality compared to competitor’s products and services; the willingness of users to substitute competitors’ products and services for the Company’s products and services; the success of the Company in gaining regulatory approval of its products and services, when required; the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; acquisitions; changes in consumer spending and savings habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

General

The Company’s primary source of income is the Bank’s net income. The Bank’s primary source of net income is its net interest income, which is determined by (i) the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (interest rate spread) and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities. The Bank’s interest rate spread is affected by regulatory, economic, and competitive factors that influence interest rates, loan demand, and deposit flows. In order to maintain interest rate spread and reduce interest rate risk, management has elected to diversify the Bank’s loan portfolio by emphasizing its investment in agriculture and commercial mortgages, agricultural and commercial operating and term loans and consumer loans.

The Bank’s secondary sources of income are, primarily, the gain on sale of loans originated for sale and loan servicing fees. When comparing the first nine months of 2015 with the first nine months of 2014, a greater volume of loans were originated and sold to the secondary market.

The operations of the Bank and the entire banking industry are significantly affected by prevailing economic conditions, competition, and the monetary and fiscal policies of the federal government and governmental agencies. The demand for and supply of housing, competition among lenders, the level of interest rates, and the availability of funds influence lending activities. Deposit flows and costs of funds are influenced by prevailing market rates of interest, primarily on competing investments, account maturities, and the levels of personal income and savings in the Bank's market area.

32

Comparison of Financial Condition at September 30, 2015 and December 31, 2014

At September 30, 2015, total assets were $268.6 million, an increase of $16.8 million from $251.8 million at December 31, 2014. Increases in loans receivable and securities available for sale that were recorded in the acquisition of St. James Federal Savings and Loan Association (St. James) were the primary reasons for the increase in assets.

Securities available for sale increased from $34.2 million at December 31, 2014 to $35.5 million at September 30, 2015. Purchases of mortgage backed-securities and obligations of state and political subdivisions totaling $5,055,000 and $1,707,000, respectively, were only partially offset by the maturities and principal repayments totaling $5,380,000.

Loans held for sale stayed relatively constant at $1.7 million at December 31, 2014 and September 30, 2015. On December 31, 2014 and September 30, 2015, the Company had firm commitments to sell the loans that were classified as held for sale. Loans receivable increased by $15.3 million, or 8.4%, from $182.1 million at December 31, 2014 to $197.3 million at September 30, 2015. The increase in loans receivable resulted primarily from the $17.5 million in loans acquired in the conversion/merger with St. James.

In accordance with the Bank’s internal classification of assets policy, management evaluates the loan portfolio on a quarterly basis to identify and determine the adequacy of the allowance for loan losses. As of September 30, 2015 and December 31, 2014, the balance in the allowance for loan losses and the allowance for loan losses as a percentage of total loans was $2.1 million and $2.2 million and 1.1% and 1.2%, respectively.

Loans on which the accrual of interest had been discontinued amounted to $2.4 million and $1.0 million at September 30, 2015 and December 31, 2014, respectively. The Company considers all nonaccrual loans impaired. The amount of impaired loans at September 30, 2015 and December 31, 2014 was $3.6 million and $4.1 million, respectively and the related allowance for loan loss for these loans was $596,000 and $573,000, respectively.

Foreclosed real estate decreased to $2.0 million at September 30, 2015 from $3.7 million at December 31, 2014, as the Company disposed of eight properties during the nine months ended September 30, 2015. At September 30, 2015, foreclosed real estate consisted of two residential and six commercial properties.

Liabilities increased by $12.1 million, from $225.2 million at December 31, 2014 to $237.3 million at September 30, 2015 due, primarily, to the deposits that were assumed in the St. James conversion/merger.

Stockholders’ equity increased by $4.9 million from $24.1 million at December 31, 2014 to $29.0 million at September 30, 2015. The increase in stockholders’ equity resulted, primarily, from the retention of net income of $4,463,000, partially offset by payments of $412,000 in cash dividends and the purchase of $381,000 in treasury stock.

33

Comparison of Operating Results for the Three and Nine Months Ended September 30, 2015 and 2014

General. Net income increased by $2,902,000 and $3,598,000, or 560.2% and 416.0% for the three and nine months ended September 30, 2015, respectively, when compared to the same periods in 2014 due, primarily, to the bargain purchase gain of $2,848,000 that resulted from the conversion/merger with St. James. See Note 11 in the accompanying financial statements for additional information. Diluted earnings per share increased by $3.99 and $4.92 for the three and nine months ended September 30, 2015, respectively, when compared to the three and nine months ended September 30, 2014. Net interest income increased by $398,000 and $699,000, or 20.4% and 11.7%, in the three and nine months ended September 30, 2015, respectively, when compared to the same periods in 2014. When comparing the three and nine months ended September 30, 2015 to the same periods in 2014, the provision for loan loss decreased by $170,000 and $420,000, respectively, and noninterest income increased by $2,918,000 and $3,201,000, respectively. Increases in net interest income and noninterest income and the decrease in provision for loan loss were the primary reasons for the increase in earnings.

Interest Income. Interest income increased by $275,000 and $587,000, or 12.5% and 9.1%, for the three and nine months ended September 30, 2015 when compared to the three and nine months ended September 30, 2014. For the quarter ended September 30, 2015, interest income from both the loan and securities portfolios exceeded interest income from those portfolios for the same quarter in 2014. For the first nine months of 2015 an increase in interest income from loans receivable more than offset a decrease in interest income from investments. The changes in interest income from the loan portfolio and investment securities and other interest bearing deposits resulted, primarily, from changes in the average balances and yields on those interest earning assets. For the three months ended September 30, 2015, the average balance of loans receivable increased $19.6 million, or 11.3%, and the yield increased by eight basis points when compared to the same period in 2014. For the same period, average investments increased by $485,000, or 0.1%, and the yield increased by four basis points. For the nine months ended September 30, 2015 the average balance of loans receivable decreased $2.4 million, or 1.4%, and the yield increased by one basis point. Average investments decreased $5.2 million, or 8.5%, and the yield on investments increased by one basis point. As a result of the increase in loans as a percentage of earning assets, however, the yield on interest-earning assets increased by 13 basis points between the nine-month periods.

Interest Expense. Interest expense on deposits decreased by $23,000 and $212,000, or 15.5% and 37.7%, for the three and nine months, respectively ended September 30, 2015 when compared to the three and nine months ended September 30, 2014. These changes resulted from changes in the average balances and interest rates. Although average interest-bearing liabilities increased $17.9 million, or 8.3%, to $233.9 million for the three months ended September 30, 2015 compared to $216.0 million for the three months ended September 30, 2014, the average cost of interest-bearing liabilities decreased 6 basis points to 0.21% for the three months ended September 30, 2015 compared to 0.27% for the three months ended September 30, 2014. Although average interest-bearing liabilities increased $9.8 million to $225.5 million for the nine months ended September 30, 2015, compared to $215.7 million for the nine months ended September 30, 2014, the average cost of interest-bearing liabilities decreased 7 basis points to 0.21% for the nine months ended September 30, 2015 from 0.28% for the nine months ended September 30, 2014, reflecting the continued low interest rate environment.

Net Interest Income. Net interest income increased by $398,000 and $699,000, or 20.4% and 11.7%, for the three and nine months ended September 30, 2015, respectively, when compared to the same periods in 2014, due to the changes in interest income and interest expense described above. For the three months ended September 30, 2015, the interest rate spread increased by 20 basis points to 3.74% compared to 3.54% for the three months ended September 30, 2014 as a result of a 14 basis point increase in the average yield of interest-bearing assets to 3.95% for the three months ended September 30, 2015 from 3.81% for the three months ended September 30, 2014 and a six basis point decrease in the average cost on interest-bearing liabilities to 0.21% for the three months ended September 30, 2015 from 0.27% for the three months ended September 30, 2014. The Company’s net interest margin improved 19 basis points to 3.75% for the three months ended September 30, 2015 compared to 3.56% for the three months ended September 30, 2014. The Company’s interest rate spread increased by 20 basis points to 3.67% for the nine months ended September 30, 2015, compared to 3.47% for the nine months ended September 30, 2014 as the result of a 13 basis point increase in the average yield on interest-earning assets to 3.88% in the nine months ended September 30, 2015 from 3.75% in the nine months ended September 30, 2014 and a 7 basis point decrease in the average cost of interest-bearing liabilities to 0.21% in the nine months ended September 30, 2015

34

from 0.28% in the nine months ended September 30, 2014. The Company’s net interest margin improved 21 basis points to 3.69% for the nine months ended September 30, 2015 compared to 3.48% for the nine months ended September 30, 2014.

Provision for Loan Losses. The provision for loan loss decreased by $170,000 and $420,000 for the three and nine months ended September 30, 2015 when compared to the same periods in 2014. The provision reflects management’s monitoring of the allowance for loan losses in relation to the size and quality of the loan portfolio and adjusts the provision for loan losses to adequately provide for loan losses. Due to changes in economic conditions and changes in the composition of the loan portfolio, it is possible that the provision for loan losses may increase in future periods.

Noninterest Income. Noninterest income increased by $2,948,000 and $3,140,000 for the three and nine months ended September 30, 2015 when compared to the same periods in 2014 due, primarily, to the bargain purchase gain of $2,848,000 that resulted from the conversion/merger with St. James. See Note 11 in the accompanying financial statements for additional information. Increases in the gain on sale of loans held for sale also contributed to the increase in noninterest income. During the first nine months of 2015, a higher volume of loans were originated and sold to the secondary market than during the first nine months of 2014.

Noninterest Expense. Noninterest expense increased by $258,000 and decreased by $11,000, or 11.4% and 0.2%, for the three and nine months ended September 30, 2015 when compared to the three and nine months ended September 30, 2014 due, primarily, to increases in expenses related to other real estate owned during the three-month period and decreases in compensation and benefits and other expenses during the nine month period.

Income Tax Expense. Income tax expense increased by $256,000 and $672,000, or 278.3% and 208.0%, for the three months and nine months ended September 30, 2015 when compared to the same periods in 2014 due to the increase in income before income taxes. Income tax expense as a percent of income before taxes was 9.2% and 15.1% for the three months ended September 30, 2015 and 2014, respectively, and 18.2% and 27.2% for the nine months ended September 30, 2015 and 2014, respectively. The difference in income tax as percentage of income before taxes is due, primarily, to the non-taxable nature of the bargain purchase gain that was realized in the third quarter of 2015.

35

Average Balances and Yields

The following table sets forth average balance sheets, average yields and costs, and certain other information at the date and for the periods indicated. All average balances are based on daily averages, unless otherwise noted. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

	Nine Months Ended September 30,
	2015								2014
	Average Balance			Interest		Average Yield/Cost			Average Balance			Interest		Average Yield/Cost
	(Dollars in thousands)
Interest earning assets:
Loans receivable (1)	$	186,436		$	6,530		4.67	%	$	168,853		$	5,903		4.66	%
Investments (2)		55,467			508		1.22	%		60,652			548		1.21	%
Total interest-earning assets		241,903			7,038		3.88	%		229,505			6,451		3.75	%
Non interest-earning assets		15,869								16,519
Total assets	$	257,772							$	246,024
Interest-bearing liabilities:
Savings, NOW and money market accounts (3)	$	159,846		$	54		0.05	%	$	141,616		$	48		0.04	%
Certificates of deposit		65,638			296		0.60	%		74,056			414		0.75	%
Total interest-bearing liabilities		225,484			350		0.21	%		215,672			462		0.28	%
Non interest-bearing liabilities		4,321								3,965
Total liabilities		206,071								219,637
Equity (4)		27,967								26,387
Total liabilities and equity	$	230,917							$	246,024
Net interest income				$	6,688							$	5,989
Interest rate spread (5)							3.67	%							3.47	%
Net interest margin (6)							3.69	%							3.48	%
Ratio of average interest earning assets to average interest bearing liabilities		1.07	X							1.06	X

(1) Average balances include non-accrual loans and loans held for sale.

(2) Includes interest-bearing deposits in other financial institutions.

(3) Includes $4,957,000 and $5,288,000 in non-interest-bearing deposits for the nine months ended September 30, 2015 and 2014, respectively.

(4) Consists of stockholders’ equity and mezzanine equity.

(5) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.

36

	Three Months Ended September 30,
	2015								2014
	Average Balance			Interest		Average Yield/Cost			Average Balance			Interest		Average Yield/Cost
	(Dollars in thousands)
Interest earning assets:
Loans receivable (1)	$	193,189		$	2,293		4.75	%	$	173,575		$	2,026		4.67	%
Investments (2)		58,076			185		1.27	%		57,591			177		1.23	%
Total interest-earning assets		251,265			2,478		3.95	%		231,166			2,203		3.81	%
Non interest-earning assets		16,702								15,225
Total assets	$	267,967							$	246,391
Interest-bearing liabilities:
Savings, NOW and money market accounts (3)	$	167,012		$	20		0.05	%	$	143,539		$	16		0.05	%
Certificates of deposit		66,926			105		0.63	%		72,499			132		0.73	%
Total interest-bearing liabilities		233,938			125		0.21	%		216,038			148		0.27	%
Non interest-bearing liabilities		4,557								3,850
Total liabilities		238,495								219,888
Equity (4)		29,472								26,503
Total liabilities and equity	$	264,912							$	246,391
Net interest income				$	2,353							$	2,055
Interest rate spread (5)							3.74	%							3.54	%
Net interest margin (6)							3.75	%							3.56	%
Ratio of average interest earning assets to average interest bearing liabilities		1.07	X							1.07	X

(1) Average balances include non-accrual loans and loans held for sale.

(2) Includes interest-bearing deposits in other financial institutions.

(3) Includes $5,880,000 and $4,091,000 in non-interest-bearing deposits for the three months ended September 30, 2015 and 2014, respectively.

(4) Consists of stockholders’ equity and mezzanine equity.

(5) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.

37

Liquidity and Capital Resources

The Bank’s primary sources of funds are deposits, amortization and prepayment of loans, maturities of investment securities and funds provided from operations. While scheduled loan repayments are a relatively predictable source of funds, deposit flows and loan prepayments are significantly influenced by general interest rates, economic conditions and competition. If needed, the Bank’s primary source of funds can be supplemented by wholesale funds obtained through additional advances from the Federal Home Loan Bank system. The Bank invests excess funds in overnight deposits, which not only serve as liquidity, but also earn interest income until funds are needed to meet required loan funding.

The Bank’s most liquid asset is cash, including investments in interest bearing accounts at the United Bankers Bank and the FHLB of Des Moines that have no withdrawal restrictions. The levels of these assets are dependent on the Bank’s operating, financing and investing activities during any given period. At September 30, 2015, the Bank’s noninterest bearing cash was $4.5 million. In addition, at September 30, 2015, the Bank had $10.3 million and $10.6 million invested in interest bearing accounts at the United Bankers Bank and the FHLB of Des Moines, respectively.

At September 30, 2015, the Bank had no outstanding advances from the FHLB of Des Moines. At September 30, 2015, the Bank had the ability to borrow up to $67.8 million based upon the pledged collateral. The Bank has the option of pledging additional collateral which will increase the amount available to borrow.

The Bank is required to maintain specified amounts of capital. The capital standards generally require the maintenance of regulatory capital sufficient to meet a common equity Tier 1 requirement, a leverage capital requirement and a risk-based capital requirement. At September 30, 2015, the Bank’s Tier 1 leverage capital totaled $28.2 million, or 10.37% of adjusted total assets, which substantially exceeded the 4.0% Tier 1 leverage capital requirement at that date by $17.3 million, or 6.87% of adjusted total assets. The Bank’s common equity Tier 1 and total risk-based capital totaled $28.2 million, and $30.4 million at September 30, 2015 or 11.37%, and 12.24% of risk-weighted assets, respectively, which exceeded the current requirements of 4.5% and 8.0% of risk-weighted assets by $17.0 million and $10.5 million or 6.37% and 4.24% of risk-weighted assets, respectively. The Bank will be subject to higher capital requirements in the future as capital conservation buffer rules become fully effective from 2016 through 2019.

The reconciliation of the equity of Wells Federal Bank to each major category of regulatory capital is as follows:

	At September 30,			At December 31,
	2015			2014
	(In thousands)
Equity under generally accepted accounting principles	$	28,516		$	25,662
Unrealized (gains) losses on available for sale securities		(170	)		(93	)
Disallowed intangible assets		(125	)		-
Disallowed servicing assets		-			(189	)
Tier 1 capital		28,221			25,380
Allowance for loan losses included in Tier 2 capital		2,125			2,158
Unrealized gains on available for sale equity securities		38			28
Total risk-based capital	$	30,384		$	27,566

38

Off-Balance Sheet Arrangements

As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks in the normal course of business to meet the financing needs of our customers. These financial instruments include primarily commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. For additional information, see Note 9 of the Notes to the Consolidated Financial Statements

Critical Accounting Policies

The consolidated financial statements include amounts that are based on informed judgments of management. These estimates and judgments are the result of management’s need to estimate the effect of matters that are inherently uncertain. Therefore, actual results could vary significantly from the estimates used. Management considers the following items to be the critical accounting estimates contained in the consolidated financial statements.

Allowance for Loan Loss. The allowance for loan loss is based on management’s periodic review of the loan portfolio. In evaluating the adequacy of the allowance for loan loss, management considers factors including, but not limited to, specific loan impairment, historical loss experience, the size and composition of the loan portfolio and current economic conditions. Although management believes that the allowance for loan loss is maintained at an adequate level, there can be no assurance that further additions will not be made to the allowance and that losses will not exceed the estimated amounts.

Available for Sale Securities. The fair value of equity securities is based on quoted market prices and the fair value of debt securities is generally determined based on matrix pricing utilizing yield curves, credit ratings and prepayment speeds. The Company believes the unrealized losses are temporary because the primary reason for the unrealized losses is changes in market interest rates from the date of purchase to the reporting date.

Mortgage Servicing Rights. Mortgage servicing rights are capitalized and then amortized over the period of estimated servicing income. Management periodically evaluates its capitalized mortgage servicing rights for impairment. The valuation of mortgage servicing rights is based on estimated prepayment speeds, ancillary income received from servicing the loans and current interest rates. Changes in these estimates may have a material effect on the valuation of the mortgage servicing rights. Although management believes that the estimates used to determine the value of the mortgage servicing rights are reasonable, future material adjustments may be necessary if economic conditions vary from those used to estimate the value of the mortgage servicing rights.

Foreclosed Real Estate. Foreclosed real estate is reported at the lower of cost or fair value, less estimated costs to sell. The Company monitors the net fair value of the property on a monthly basis, taking into consideration market and economic factors, including comparison to sales of like properties.

Loans acquired in business combination. Loans acquired as part of the conversion/merger with St. James were recognized at fair value as of the acquisition date. The fair value was estimated by performing a discounted cash flow analysis. The valuation was performed at the loan level on real estate loans and at the cohort level for all other loan types, and is based on the objective attributes of the loans in the portfolio and current statistical performance variables used in the market place. The analysis was based on the contractually specified amounts of principal and interest to be received modified by our estimates of prepayment, default and loss severity to be experienced prospectively.

39

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as the Company is a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures. Based on their evaluation of the Company's disclosure controls and procedures (as defined in Rule 15a-15(e) under the Securities Exchange Act of 1934, (the "Exchange Act")), the Company's principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms.

Internal Controls

Changes in internal control over financial reporting. During the last quarter, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company was not a party to any material legal proceedings other than routine matters in the ordinary course of business.

ITEM 1A. RISK FACTORS

Not applicable as the Company is a smaller reporting company.

40

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Unregistered Sales of Equity Securities. Not applicable.

(b) Use of Proceeds. Not applicable.

(c) Issuer Purchases of Equity Securities.

Period	(a) Total Number Of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or  Programs
July 1 through 31, 2015		3,280	$	30.25		-		-
August 1 through 31, 2015		4,768	$	24.50		-		-
September 1 through 30, 2015		-		-		-		-
Total		8,048	$	26.84		-		-

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

41

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

3.1	Articles of Incorporation of Wells Financial Corp. *
3.2	Bylaws of Wells Financial Corp. *
4	Form of Common Stock Certificate of Wells Financial Corp. *
31	Certification of CEO and CFO as required by Rule 15d-14(a).
32	Certification required by 18 U.S.C. §1350.
101.INS	XBRL Instance Document **
101.SCH	XBRL Schema Document **
101.CAL	XBRL Calculation Linkbase Document **
101.LAB	XBRL Labels Linkbase Document **
101.PRE	XBRL Presentation Linkbase Document **
101.DEF	XBRL Definition Linkbase Document **

*	Incorporated by reference from identically numbered exhibit to Registration Statement on Form S-1 (File No. 333-202694).
**	Submitted as Exhibits 101 to this Form 10-Q are documents formatted in XBRL (Extensible Business Reporting Language).

42

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WELLS FINANCIAL CORP.
Date: November 16, 2015	/s/ James D. Moll
	James D. Moll
	President and Chief Executive Officer
	Treasurer and Chief Financial Officer
	(Duly Authorized Officer and Principal Executive and Financial Officer)

43

EX-31

Exhibit 31

CERTIFICATION

I, James D. Moll, President and Chief Executive Officer, Treasurer and Chief Financial Officer, certify that:

1. I have reviewed this Form 10-Q of Wells Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 16, 2015	/s/ James D. Moll
	James D. Moll
	President and Chief Executive Officer
	Treasurer and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (the "Report") of Wells Financial Corp. (the "Company") as filed with the Securities and Exchange Commission, I, James D. Moll, President and Chief Executive Officer, and Treasurer and Chief Financial Officer, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)         The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and

(2)         The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James D. Moll

James D. Moll

President and Chief Executive Officer

Treasurer and Chief Financial Officer

(Principal Executive and Financial Officer)

November 16, 2015

XML

Loans Receivable and Loans Held for Sale (Details 4) - Loans receivable - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
With an allowance recorded:
Allowance for Loan Losses Allocated	$ 596	$ 573
Total
Unpaid Principal Balance	3,564	4,072
Recorded Investment	3,564	4,072
Allowance for Loan Losses Allocated	596	573
Average Recorded Investment	3,741	4,115
Interest Income Recognized	128	166
Real estate | Residential
With no related allowance recorded:
Unpaid Principal Balance	473	461
Recorded Investment	473	461
Average Recorded Investment	493	505
Interest Income Recognized	18	27
With an allowance recorded:
Unpaid Principal Balance	414	822
Recorded Investment	414	822
Allowance for Loan Losses Allocated	79	115
Average Recorded Investment	440	830
Interest Income Recognized	27	34
Total
Allowance for Loan Losses Allocated	79	115
Real estate | Commercial
With no related allowance recorded:
Unpaid Principal Balance	575
Recorded Investment	575
Average Recorded Investment	666
Interest Income Recognized	18
With an allowance recorded:
Unpaid Principal Balance	1,884	2,637
Recorded Investment	1,884	2,637
Allowance for Loan Losses Allocated	329	341
Average Recorded Investment	1,910	2,690
Interest Income Recognized	58	99
Total
Allowance for Loan Losses Allocated	$ 329	341
Home equity, home improvement and second mortgages
With an allowance recorded:
Unpaid Principal Balance		73
Recorded Investment		73
Allowance for Loan Losses Allocated		73
Average Recorded Investment		74
Interest Income Recognized		2
Total
Allowance for Loan Losses Allocated		73
Operating and term | Commercial
With an allowance recorded:
Unpaid Principal Balance	$ 209	63
Recorded Investment	209	63
Allowance for Loan Losses Allocated	181	$ 32
Average Recorded Investment	221
Interest Income Recognized	6	$ 2
Total
Allowance for Loan Losses Allocated	181	32
Consumer
With an allowance recorded:
Unpaid Principal Balance	7	16
Recorded Investment	7	16
Allowance for Loan Losses Allocated	5	12
Average Recorded Investment	3	16
Interest Income Recognized	1	2
Total
Allowance for Loan Losses Allocated	5	$ 12
Vehicle
With an allowance recorded:
Unpaid Principal Balance	2
Recorded Investment	2
Allowance for Loan Losses Allocated	2
Average Recorded Investment	$ 8
Interest Income Recognized
Total
Allowance for Loan Losses Allocated	$ 2

XML

Business Combination (Details 2) - St. James - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Business Combination, Separately Recognized Transactions [Line Items]
Revenues (interest and noninterest income)	$ 3,614	$ 3,403	$ 10,419	$ 9,547
Net income	$ 542	$ 507	$ 1,641	$ 888
Diluted net income per share (in dollars per share)	$ 0.66	$ 0.61	$ 1.96	$ 1.06
Diluted weighted-average shares (in dollars per share)	$ 0.66	$ 0.61	$ 1.96	$ 1.06

XML

Financial Instruments With Off-Balance-Sheet Risk (Detail Textuals) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments to extend credit on loans total	$ 44,312	$ 38,110

XML

Business Combination (Detail Textuals) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 16, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Business Acquisition [Line Items]
Bargain purchase gain		$ 2,848		$ 2,848
Stock issuance costs				1,147
Merger costs		$ 332	$ 9	$ 334	$ 27
St. James
Business Acquisition [Line Items]
Percentage of voting shares acquired	100.00%
Number of common stock sold and issued (in shares)	78,736
Share price (in dollars per share)	$ 27.36
Percentage of discount on average bid	5.00%
Threshold Trading Days	30 days
Percentage acquired by ESOP	8.00%
Shares issued under Employee Stock Ownership Plan (in shares)	6,299
Gross offering proceeds	$ 2,154
Purchased by employee stock ownership plan	$ 172
Common Stock, Shares, Outstanding	814,758
Bargain purchase gain	$ 2,848
Estimated contractual amounts receivable for loans acquired will not be collected	$ 79

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic earnings per share:
Net income	$ 3,420	$ 518	$ 4,463	$ 865
Weighted average number of shares outstanding, basic (in shares)	738,439	757,323	759,012	760,297
Per share amount, basic (in dollars per share)	$ 4.63	$ 0.68	$ 5.88	$ 1.14
Effect of dilutive securities:
Stock options (in shares)	432	1,218	432	1,218
Diluted earnings per share:
Net income plus assumed conversions	$ 3,420	$ 518	$ 4,463	$ 865
Weighted average number of shares outstanding, diluted (in shares)	738,871	758,541	759,444	761,515
Per share amount, diluted (in dollars per share)	$ 4.63	$ 0.68	$ 5.88	$ 1.14

XML

Securities Available for Sale (Details 3) - Temporarily impaired securities - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Continuous Unrealized Losses Existing 12 Months or Less, Fair Value	$ 5,737	$ 7,174
Continuous Unrealized Losses Existing 12 Months or Less, Unrealized Loss	16	26
Continuous Unrealized Losses Existing Greater Than 12 Months, Fair Value	9,495	12,996
Continuous Unrealized Losses Existing Greater Than 12 Months, Unrealized Loss	78	201
Total Fair Value	15,232	20,170
Total Unrealized Loss	94	227
Residential mortgage-backed agencies
Schedule of Available-for-sale Securities [Line Items]
Continuous Unrealized Losses Existing 12 Months or Less, Fair Value	4,197	5,679
Continuous Unrealized Losses Existing 12 Months or Less, Unrealized Loss	9	20
Continuous Unrealized Losses Existing Greater Than 12 Months, Fair Value	8,575	10,566
Continuous Unrealized Losses Existing Greater Than 12 Months, Unrealized Loss	62	172
Total Fair Value	12,772	16,245
Total Unrealized Loss	71	$ 192
SBA pools
Schedule of Available-for-sale Securities [Line Items]
Continuous Unrealized Losses Existing 12 Months or Less, Fair Value	1,049
Continuous Unrealized Losses Existing 12 Months or Less, Unrealized Loss	$ 3
Continuous Unrealized Losses Existing Greater Than 12 Months, Fair Value		$ 1,250
Continuous Unrealized Losses Existing Greater Than 12 Months, Unrealized Loss		9
Total Fair Value	$ 1,049	1,250
Total Unrealized Loss	3	9
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Continuous Unrealized Losses Existing 12 Months or Less, Fair Value	490	1,495
Continuous Unrealized Losses Existing 12 Months or Less, Unrealized Loss	4	6
Continuous Unrealized Losses Existing Greater Than 12 Months, Fair Value	920	1,180
Continuous Unrealized Losses Existing Greater Than 12 Months, Unrealized Loss	16	20
Total Fair Value	1,410	2,675
Total Unrealized Loss	$ 20	$ 26

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

	Three Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	3,420		738,439	$	4.63
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	3,420		738,871	$	4.63

	Nine Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	4,463		759,012	$	5.88
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	4,463		759,444	$	5.88

	Three Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	518		757,323	$	0.68
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	518		758,541	$	0.68

	Nine Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	865		760,297	$	1.14
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	865		761,515	$	1.14

XML

Fair Value Measurements (Details 1) - Nonrecurring - Level 3 Inputs - Mortgage servicing rights - Discounted cash flows - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		$ 315	$ 646
Valuation Technique	[1]	Discounted cash flows	Discounted cash flows
Unobservable Input		Prepayment PSA, Discount rate, Maturity (months) WAM, Costs to service	Prepayment PSA, Discount rate, Maturity (months) WAM, Costs to service
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Prepayment PSA		157.00%	157.00%
Discount rate		8.50%	8.50%
Maturity (months) WAM		37 months	37 months
Costs to service		$ 65	$ 65
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Prepayment PSA		335.00%	335.00%
Discount rate		9.25%	9.25%
Maturity (months) WAM		325 months	325 months
Costs to service		$ 750	$ 750

[1] The estimated fair value on mortgage servicing rights is determined through a cash flow analysis performed at the loan level and is based on the objective attributes of the portfolio (i.e., note rate, loan amount, etc.) and industry assumptions used in the marketplace.

XML

Loans Receivable and Loans Held for Sale (Detail Textuals) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying value of loans pledged to secure borrowed funds	$ 92,639	$ 96,740
Aggregate amounts of loans to related parties	190	342
Addition to aggregate amounts of loans to related parties	97	185
Repayments of loans receivable from related parties	152	67
Loans held for sale	$ 1,719	$ 1,707
Real estate | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Maximum loan to value ratios	60.00%

XML

Loans Receivable and Loans Held for Sale (Details 2) - Loans receivable - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 2,356	$ 1,010
Loans Past Due 90 Days or More and Still Accruing
Real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 1,392	$ 687
Loans Past Due 90 Days or More and Still Accruing
Real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual
Loans Past Due 90 Days or More and Still Accruing
Real estate | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 555
Loans Past Due 90 Days or More and Still Accruing
Construction real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual
Loans Past Due 90 Days or More and Still Accruing
Construction real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual
Loans Past Due 90 Days or More and Still Accruing
Home equity, home improvement and second mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 48	$ 255
Loans Past Due 90 Days or More and Still Accruing
Operating and term | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 303	$ 67
Loans Past Due 90 Days or More and Still Accruing
Operating and term | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual
Loans Past Due 90 Days or More and Still Accruing
Vehicle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 36	$ 1
Loans Past Due 90 Days or More and Still Accruing
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual	$ 22
Loans Past Due 90 Days or More and Still Accruing

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Business Combination (Details) - St. James $ in Thousands	Jul. 16, 2015 USD ($)
Fair value of assets acquired
Cash	$ 1,337
Certificates of deposit	5,616
Securities - available for sale	995
Loans	17,506
Premises and equipment	366
Real estate owned	35
Accrued interest and other assets	131
Core deposit intangible	208
Total assets acquired	26,194
Fair value of liabilities assumed
Deposits	23,043
Deferred tax liability	238
Accrued interest and other liabilities	65
Total liabilities	23,346
Net assets acquired	$ 2,848

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Earnings Per Share (Detail Textuals)	9 Months Ended
	Sep. 30, 2014 shares
Earnings Per Share [Abstract]
Antidilutive options excluded from computation of earnings per share	15,850

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Nature of Operations

9 Months Ended

Sep. 30, 2015

Nature Of Operations [Abstract]

Nature of Operations

Note 1. Nature of Operations

Operations of Wells Financial Corp. (the “Company”) primarily consist of banking services through Wells Federal Bank (the “Bank”), and Wells Insurance Agency, Inc., a property and casualty insurance agency. The Company serves its customers through the Bank’s nine locations in south central Minnesota.

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Loan Servicing (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of year, net	$ 1,886	$ 1,952
Mortgage servicing rights capitalized	251	181
Amortization expense	$ (275)	$ (239)
Valuation provision change
Balance at end of period, net	$ 1,862	$ 1,894

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Certificates of Deposit (Detail Textuals) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Certificates Of Deposit [Abstract]
Certificates of deposit with carrying value	$ 9,521	$ 4,181
Certificates of deposit, weighted average yield percent	1.28%	0.41%
Certificates of deposit, contractual maturities	1 year 8 months 12 days	6 months

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Summary of Significant Accounting Policies (Detail Textuals)	9 Months Ended
	Sep. 30, 2015 Segment
Accounting Policies [Abstract]
Number of reportable segments	1

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Loan Servicing (Detail Textuals) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Loan Servicing [Abstract]
Unpaid principal balance of one to four family residential real estate loans	$ 320,669	$ 332,075
Custodial escrow balance	3,176	2,347
Fair value of mortgage servicing rights	2,143	2,578
Mortgage servicing rights valuation allowance	$ 15	$ 15

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Securities Available for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 35,242	$ 34,026
Gross Unrealized Gains	347	378
Gross Unrealized Losses	(94)	(227)
Fair Value	35,495	34,177
Residential mortgage-backed agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	22,356	22,677
Gross Unrealized Gains	96	60
Gross Unrealized Losses	(71)	(192)
Fair Value	22,381	22,545
SBA pools
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,645	1,835
Gross Unrealized Gains	4	6
Gross Unrealized Losses	(3)	(9)
Fair Value	2,646	1,832
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,201	9,474
Gross Unrealized Gains	162	250
Gross Unrealized Losses	(20)	(26)
Fair Value	10,343	9,698
Government-sponsored enterprise equity
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	40	40
Gross Unrealized Gains	$ 85	$ 62
Gross Unrealized Losses
Fair Value	$ 125	$ 102

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Securities Available for Sale (Details 1) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized Cost
Amortized Cost	$ 35,242
Fair Value
Fair Value	35,495	$ 34,177
Obligations of states and political subdivisions
Amortized Cost
Due in one year or less	872
Due in one to five years	3,695
Due after five through 10 years	3,890
Due after 10 years	1,744
Amortized Cost	10,201
Fair Value
Due in one year or less	873
Due in one to five years	3,739
Due after five through 10 years	3,951
Due after 10 years	1,780
Fair Value	10,343	9,698
Residential mortgage-backed agencies
Amortized Cost
Amortized Cost	22,356
Fair Value
Fair Value	22,381	22,545
SBA pools
Amortized Cost
Amortized Cost	2,645
Fair Value
Fair Value	2,646	1,832
Government-sponsored enterprise equity
Amortized Cost
Amortized Cost	40
Fair Value
Fair Value	$ 125	$ 102

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities
Net income	$ 4,463	$ 865
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses		420
Gain on sale of loans	(826)	(564)
Originations of loans held for sale	(15,597)	(18,307)
Proceeds from the sale of loans held for sale	16,411	18,969
Net change in mortgage servicing rights	24	324
Loss (gain) on sales of foreclosed real estate, net	4	(27)
Depreciation expense	146	134
Amortization of net deferred loan origination fees	(43)	(61)
Amortization of securities premiums	165	160
Impairment of foreclosed real estate	232	252
Stock-based compensation expense	10	25
Bargain purchase gain	(2,848)
Changes in assets and liabilities, net of effects of business combination:
Accrued interest receivable	(309)	(252)
Other assets	703	(216)
Accrued expenses and other liabilities	76	173
Net cash provided by operating activities	2,611	1,895
Cash Flows From Investing Activities
Net decrease (increase) in loans	2,154	(12,983)
Net decrease (increase) in certificates of deposit	274	(1,221)
Net (increase) decrease in federal funds sold	(1,000)	3,500
Purchase of Federal Home Loan Bank stock	(114)	(181)
Proceeds from sale of Federal Home Loan Bank stock	190	116
Purchase of securities available-for-sale	(5,815)	(7,803)
Maturities of available-for-sale securities	5,400	11,537
Net cash received in conversion/merger	1,337
Purchase of premises and equipment	(25)	(203)
Investment in foreclosed real estate		(109)
Proceeds from sales of foreclosed real estate	1,589	360
Net cash provided by (used in) investing activities	3,990	(6,987)
Cash Flows From Financing Activities
Net (decrease) increase in deposits	(12,301)	5,914
Net increase in advances from borrowers for taxes and insurance	1,009	961
Issuance of 78,736 shares of common stock, net of issuance costs and ESOP shares	1,007
Dividends paid	(412)	(342)
Purchase of treasury stock	(381)	(563)
Net cash (used in) provided by financing activities	(11,078)	5,970
Net (decrease) increase in cash and cash equivalents	(4,477)	878
Cash and Cash Equivalents
Beginning	14,373	12,625
Ending	$ 9,896	$ 13,503

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Securities Available for Sale (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Balance, beginning	$ 41	$ 80	$ 93	$ (264)
Unrealized gains during the year	208		119	417
Deferred tax effect relating to unrealized gain	(79)	$ (1)	(42)	(74)
Balance, ending	$ 170	$ 79	$ 170	$ 79

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Loans Receivable and Loans Held for Sale (Details 5) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning			$ 2,158
Provision				$ 420
Balance, Ending	$ 2,125		2,125
Loans receivable
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	2,184	$ 1,934	2,158	1,724
Charge-offs	(43)	(21)	(150)	(212)
Recoveries	54	27	$ 117	108
Provision	(70)	100		420
Balance, Ending	2,125	2,040	$ 2,125	2,040
Loans receivable | Real estate | Residential
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 528	484	545	433
Charge-offs		(3)	(9)	(6)
Recoveries		11	9	11
Provision	$ (49)	9	(66)	63
Balance, Ending	479	501	479	501
Loans receivable | Real estate | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 786	$ 712	$ 722	$ 624
Charge-offs
Recoveries				$ 7
Provision	$ (83)	$ (16)	$ (19)	65
Balance, Ending	703	696	703	696
Loans receivable | Real estate | Agricultural
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 159	$ 142	$ 155	$ 130
Charge-offs
Recoveries
Provision	$ (14)	$ 9	$ (10)	$ 21
Balance, Ending	145	151	145	151
Loans receivable | Construction real estate | Residential
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 6	$ 11	$ 13	$ 11
Charge-offs
Recoveries
Provision	$ 1	$ (5)	$ (6)	$ (5)
Balance, Ending	7	6	7	6
Loans receivable | Construction real estate | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 6	$ 8	$ 12	$ 2
Charge-offs
Recoveries
Provision	$ 8	$ 14	$ 2	$ 20
Balance, Ending	14	22	14	22
Loans receivable | Home equity, home improvement and second mortgages
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	447	314	431	254
Charge-offs	(26)	(4)	(115)	(181)
Recoveries	4	2	18	39
Provision	(25)	80	66	280
Balance, Ending	400	392	400	392
Loans receivable | Operating and term | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 117	$ 93	$ 109	87
Charge-offs				$ (1)
Recoveries
Provision	$ 144	$ 21	$ 152	$ 28
Balance, Ending	261	114	261	114
Loans receivable | Operating and term | Agricultural
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 30	$ 14	$ 31	$ 18
Charge-offs
Recoveries
Provision	$ (1)	$ 7	$ (2)	$ 3
Balance, Ending	29	21	29	21
Loans receivable | Vehicle
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	$ 27	$ 30	$ 28	$ 30
Charge-offs
Recoveries		$ 1	$ 4	$ 3
Provision		(4)	(5)	(6)
Balance, Ending	$ 27	27	27	27
Loans receivable | Consumer
Allowance for Loan and Lease Losses [Roll Forward]
Balance, Beginning	78	126	112	135
Charge-offs	(17)	(14)	(26)	(24)
Recoveries	50	13	86	48
Provision	(51)	(15)	(112)	(49)
Balance, Ending	$ 60	$ 110	$ 60	$ 110

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Business Combination (Details 1) - St. James - Loans receivable $ in Thousands	Jul. 16, 2015 USD ($)
Business Acquisition [Line Items]
Contractual Amount	$ 17,426
Fair Value Adjustments	80
Fair Value	17,506
Real estate | Residential
Business Acquisition [Line Items]
Contractual Amount	6,480
Fair Value Adjustments	74
Fair Value	6,554
Real estate | Revolving, open end residential
Business Acquisition [Line Items]
Contractual Amount	336
Fair Value Adjustments	(1)
Fair Value	335
Real estate | Agricultural
Business Acquisition [Line Items]
Contractual Amount	5,437
Fair Value Adjustments	57
Fair Value	5,494
Real estate | Commercial
Business Acquisition [Line Items]
Contractual Amount	1,262
Fair Value Adjustments	2
Fair Value	1,264
Operating and term | Agricultural
Business Acquisition [Line Items]
Contractual Amount	2,588
Fair Value Adjustments	2
Fair Value	2,590
Automobile Loan
Business Acquisition [Line Items]
Contractual Amount	721
Fair Value Adjustments	(8)
Fair Value	713
Other Consumer
Business Acquisition [Line Items]
Contractual Amount	602
Fair Value Adjustments	(46)
Fair Value	$ 556

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and cash equivalents, including interest-bearing accounts, 2015, $5,435; 2014, $7,411	$ 9,896	$ 14,373
Certificates of deposit, at cost	9,521	4,181
Federal funds sold	3,000	2,000
Securities available for sale	35,495	34,177
Federal Home Loan Bank stock, at cost	2,036	2,079
Loans held for sale	1,719	1,707
Loans receivable, net of allowance for loan loss of $2,125 in 2015; $2,158 in 2014;	197,336	182,050
Accrued interest receivable	1,252	834
Premises and equipment, net	3,417	3,172
Mortgage servicing rights, net	1,862	1,886
Foreclosed real estate	1,975	3,656
Other assets	1,041	1,711
Total assets	268,550	251,826
Liabilities
Deposits	232,714	221,972
Advances from borrowers for taxes and insurance	3,639	2,630
Accrued interest payable	83	17
Accrued expenses and other liabilities	903	588
Total liabilities	$ 237,339	$ 225,207
Commitments, Contingencies and Credit Risk
Mezzanine Equity
Redeemable common stock held by ESOP, $0.10 par value, shares issued and outstanding, 85,160 at September 30, 2015; 95,602 at December 31, 2014	$ 2,257	$ 2,533
Stockholders' Equity
Preferred stock, no par value; 500,000 shares authorized; none outstanding
Common stock, $0.10 par value; 7,000,000 shares authorized; 2,181,076 shares issued at September 30, 2015;2,091,898 shares issued at December 31, 2014	$ 217	$ 209
Additional paid-in capital	18,119	17,110
Retained earnings, substantially restricted	39,879	35,552
Accumulated other comprehensive income	170	93
Unallocated Employee Stock Ownership Plan shares	(172)
Treasury stock, 2015, 1,459,526 shares; 2014, 1,445,248 shares	(29,259)	(28,878)
Total stockholders' equity	28,954	24,086
Total liabilities, mezzanine equity and stockholders' equity	$ 268,550	$ 251,826

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Stockholders' Equity, Regulatory Capital and Dividend Restrictions (Details) - Wells Federal Bank - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier I capital (to average assets), Actual Amount	$ 28,221	$ 25,380
Tier I capital (to average assets), Minimum for Capital Adequacy Purposes, Amount	10,884	10,255
Tier I capital (to average assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 13,605	$ 12,819
Tier I capital (to average assets), Actual Percent	10.37%	9.90%
Tier I capital (to average assets), Minimum for Capital Adequacy Purposes, Percent	4.00%	4.00%
Tier I capital (to average assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Percent	5.00%	5.00%
Tier I capital common equity (to risk weighted assets), Actual Amount	$ 28,221
Tier I capital common equity (to risk weighted assets), Minimum for Capital Adequacy Purposes, Amount	11,166
Tier I capital common equity (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 16,129
Tier I capital common equity (to risk weighted assets), Actual Percent	11.37%
Tier I capital common equity (to risk weighted assets), Minimum for Capital Adequacy Purposes, Percent	4.50%
Tier I capital common equity (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Percent	6.50%
Tier I capital (to risk weighted assets), Actual Amount	$ 28,221	$ 25,380
Tier I capital (to risk weighted assets), Minimum for Capital Adequacy Purposes, Amount	14,889	7,478
Tier I capital (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 19,851	$ 11,217
Tier I capital (to risk weighted assets), Actual Percent	11.37%	13.58%
Tier I capital (to risk weighted assets), Minimum for Capital Adequacy Purposes, Percent	6.00%	4.00%
Tier I capital (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Percent	8.00%	6.00%
Total risk based capital (to risk weighted assets), Actual Amount	$ 30,384	$ 27,566
Total risk based capital (to risk weighted assets), Minimum for Capital Adequacy Purposes, Amount	19,851	14,956
Total risk based capital (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 24,814	$ 18,695
Total risk based capital (to risk weighted assets), Actual Percent	12.24%	14.74%
Total risk based capital (to risk weighted assets), Minimum for Capital Adequacy Purposes, Percent	8.00%	8.00%
Total risk based capital (to risk weighted assets), Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions, Percent	10.00%	10.00%

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Consolidated Statements of Stockholders' Equity and Mezzanine Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Unallocated ESOP Plan Shares Stock Ownership Shares	Treasury Stock	Total	Mezzanine equity Redeemable Common Stock
Balance at Dec. 31, 2013	$ 209	$ 17,096	$ 34,893	$ (264)		$ (28,193)	$ 23,741	$ 2,342
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			865				865
Other comprehensive income, net of related taxes				343			343
Cash dividends declared ($0.54 and $0.45 per share for September 30, 2015 and 2014 respectively)			(342)				(342)
Stock-based compensation		$ 25					25
Treasury stock purchases						(563)	$ (563)
Change in fair value related to redeemable common stock
Balance at Sep. 30, 2014	209	$ 17,121	35,416	79		(28,756)	$ 24,069	2,342
Balance at Dec. 31, 2014	209	17,110	35,552	93		(28,878)	24,086	2,533
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			4,463				4,463
Issuance of 78,736 shares of common stock including 6,299 shares acquired by the ESOP, net of issuance costs	$ 8	999			$ (172)		835
Other comprehensive income, net of related taxes				77			77
Cash dividends declared ($0.54 and $0.45 per share for September 30, 2015 and 2014 respectively)			(412)				(412)
Stock-based compensation		10					10
Treasury stock purchases			276			(381)	$ (105)	(276)
Change in fair value related to redeemable common stock
Balance at Sep. 30, 2015	$ 217	$ 18,119	$ 39,879	$ 170	$ (172)	$ (29,259)	$ 28,954	$ 2,257

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Loans Receivable and Loans Held for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan loss	$ (2,125)		$ (2,158)
Loans receivable, net	197,336		182,050
Loans receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	199,675		184,553
Net deferred loan origination fees	(214)		(345)
Allowance for loan loss	(2,125)	$ (2,184)	(2,158)	$ (2,040)	$ (1,934)	$ (1,724)
Loans receivable, net	197,336		182,050
Loans receivable | Real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	61,091		56,674
Allowance for loan loss	(479)	(528)	(545)	(501)	(484)	(433)
Loans receivable | Real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	32,255		30,653
Allowance for loan loss	(703)	(786)	(722)	(696)	(712)	(624)
Loans receivable | Real estate | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	40,469		38,128
Allowance for loan loss	(145)	(159)	(155)	(151)	(142)	(130)
Loans receivable | Construction real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,319		940
Allowance for loan loss	(7)	(6)	(13)	(6)	(11)	(11)
Loans receivable | Construction real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,827		4,035
Allowance for loan loss	(14)	(6)	(12)	(22)	(8)	(2)
Loans receivable | Home equity, home improvement and second mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	33,031		32,741
Allowance for loan loss	(400)	(447)	(431)	(392)	(314)	(254)
Loans receivable | Operating and term | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	9,551		5,718
Allowance for loan loss	(261)	(117)	(109)	(114)	(93)	(87)
Loans receivable | Operating and term | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	9,839		7,714
Allowance for loan loss	(29)	(30)	(31)	(21)	(14)	(18)
Loans receivable | Vehicle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,720		1,671
Allowance for loan loss	(27)	(27)	(28)	(27)	(30)	(30)
Loans receivable | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	6,573		6,279
Allowance for loan loss	$ (60)	$ (78)	$ (112)	$ (110)	$ (126)	$ (135)

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Loans Receivable and Loans Held for Sale (Tables)

9 Months Ended

Sep. 30, 2015

Loans and Leases Receivable Disclosure [Abstract]

Schedule of composition of loans receivable

	September 30,			December 31,
	2015			2014
Residential real estate	$	61,091		$	56,674
Commercial real estate		32,255			30,653
Agricultural real estate		40,469			38,128
Commercial construction real estate		2,827			4,035
Residential construction real estate		1,319			940
Home equity, home improvement and second mortgages		33,031			32,741
Commercial operating and term		9,551			5,718
Agricultural operating and term		9,839			7,714
Vehicle		2,720			1,671
Consumer		6,573			6,279
Total loans		199,675			184,553
Net deferred loan origination fees		(214	)		(345	)
Allowance for loan loss		(2,125	)		(2,158	)
Loans receivable, net	$	197,336		$	182,050

Schedule of loans receivable

	September 30, 2015
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	58,636	$	964	$	99	$	1,392	$	2,455	$	61,091
Commercial real estate		32,173		-		82		-		82		32,255
Agricultural real estate		39,914		-		-		555		555		40,469
Commercial construction real estate		2,827		-		-		-		-		2,827
Residential construction real estate		1,319		-		-		-		-		1,319
Home equity, home improvement and second mortgages		32,793		131		59		48		238		33,031
Commercial operating and term		9,248		-		-		303		303		9,551
Agricultural operating and term		9,839		-		-		-		-		9,839
Vehicle		2,659		22		3		36		61		2,720
Consumer		6,505		46		-		22		68		6,573
Total loans	$	195,913	$	1,163	$	243	$	2,356	$	3,762	$	199,675
Nonperforming loans	$	-	$	-	$	-	$	2,356	$	2,356	$	2,356

	December 31, 2014
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	54,698	$	782	$	507	$	687	$	1,976	$	56,674
Commercial real estate		30,653		-		-		-		-		30,653
Agricultural real estate		37,843		285		-		-		285		38,128
Commercial construction real estate		4,035		-		-		-		-		4,035
Residential construction real estate		940		-		-		-		-		940
Home equity, home improvement and second mortgages		32,291		193		2		255		450		32,741
Commercial operating and term		5,569		82		-		67		149		5,718
Agricultural operating and term		7,674		40		-		-		40		7,714
Vehicle		1,661		8		1		1		10		1,671
Consumer		6,243		26		10		-		36		6,279
Total loans	$	181,607	$	1,416	$	520	$	1,010	$	2,946	$	184,553
Nonperforming loans	$	-	$	-	$	-	$	1,010	$	1,010	$	1,010

Schedule of non-accrual loans

	September 30, 2015
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	1,392	$	-
Commercial real estate		-		-
Agricultural real estate		555		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		48		-
Commercial operating and term		303		-
Agricultural operating and term		-		-
Vehicle		36		-
Consumer		22		-
Total	$	2,356	$	-

	December 31, 2014
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	687	$	-
Commercial real estate		-		-
Agricultural real estate		-		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		255		-
Commercial operating and term		67		-
Agricultural operating and term		-		-
Vehicle		1		-
Consumer		-		-
Total	$	1,010	$	-

Schedule of credit quality indicators

	September 30, 2015
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate	$	29,012	$	1,980	$	1,263	$	-	$	32,255
Agricultural real estate		39,914		165		390		-		40,469
Commercial construction real estate		2,827		-		-		-		2,827
Commercial operating and term		9,523		58		258		-		9,551
Agricultural operating and term		9,806		33		-		-		9,839
Total	$	91,082	$	2,236	$	1,911	$	-	$	94,941

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate	$	26,449	$	3,556	$	648	$	-	$	30,653
Agricultural real estate		38,128		-		-		-		38,128
Commercial construction real estate		4,035		-		-		-		4,035
Commercial operating and term		5,426		-		292		-		5,718
Agricultural operating and term		7,714		-		-		-		7,714
Total	$	43,624	$	3,556	$	940	$	-	$	48,120

Schedule of impaired loans

	September 30. 2015
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	473	$	473	$	-	$	493	$	18
Commercial real estate		575		575		-		666		18
With an allowance recorded:
Residential real estate		414		414		79		440		27
Commercial real estate		1,884		1,884		329		1,910		58
Home equity, home improvement and second mortgages		-		-		-		-		-
Commercial operating and term		209		209		181		221		6
Consumer		7		7		5		3		1
Vehicle		2		2		2		8		-
Total	$	3,564	$	3,564	$	596	$	3,741	$	128

	December 31, 2014
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	461	$	461	$	-	$	505	$	27
With an allowance recorded:
Residential real estate		822		822		115		830		34
Commercial real estate		2,637		2,637		341		2,690		99
Home equity, home improvement and  second mortgages		73		73		73		74		2
Commercial operating and term		63		63		32		-		2
Consumer		16		16		12		16		2
Total	$	4,072	$	4,072	$	573	$	4,115	$	166

Schedule of allowance for loan losses

	Three Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	528	$	-		$	-	$	(49	)	$	479
Commercial real estate		786		-			-		(83	)		703
Agricultural real estate		159		-			-		(14	)		145
Commercial construction real estate		6		-			-		8			14
Residential construction real estate		6		-			-		1			7
Home equity, home improvement and second mortgages		447		(26	)		4		(25	)		400
Commercial operating and term		117		-			-		144			261
Agricultural operating and term		30		-			-		(1	)		29
Vehicle		27		-			-		-			27
Consumer		78		(17	)		50		(51	)		60
Total	$	2,184	$	(43	)	$	54	$	(70	)	$	2,125

	Nine Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	545	$	(9	)	$	9	$	(66	)	$	479
Commercial real estate		722		-			-		(19	)		703
Agricultural real estate		155		-			-		(10	)		145
Commercial construction real estate		12		-			-		2			14
Residential construction real estate		13		-			-		(6	)		7
Home equity, home improvement and second mortgages		431		(115	)		18		66			400
Commercial operating and term		109		-			-		152			261
Agricultural operating and term		31		-			-		(2	)		29
Vehicle		28		-			4		(5	)		27
Consumer		112		(26	)		86		(112	)		60
Total	$	2,158	$	(150	)	$	117	$	-		$	2,125

	Three Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	484	$	(3	)	$	11	$	9		$	501
Commercial real estate		712		-			-		(16	)		696
Agricultural real estate		142		-			-		9			151
Commercial construction real estate		8		-					14			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		314		(4	)		2		80			392
Commercial operating and term		93		-			-		21			114
Agricultural operating and term		14		-			-		7			21
Vehicle		30		-			1		(4	)		27
Consumer		126		(14	)		13		(15	)		110
Total	$	1,934	$	(21	)	$	27	$	100		$	2,040

	Nine Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	433	$	(6	)	$	11	$	63		$	501
Commercial real estate		624		-			7		65			696
Agricultural real estate		130		-			-		21			151
Commercial construction real estate		2		-			-		20			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		254		(181	)		39		280			392
Commercial operating and term		87		(1	)		-		28			114
Agricultural operating and term		18		-			-		3			21
Vehicle		30		-			3		(6	)		27
Consumer		135		(24	)		48		(49	)		110
Total	$	1,724	$	(212	)	$	108	$	420		$	2,040

Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	887	$	60,204	$	61,091
Commercial real estate		2,459		29,796		32,255
Agricultural real estate		-		40,469		40,469
Commercial construction real estate		-		2,827		2,827
Residential construction real estate		-		1,319		1,319
Home equity, home improvement and second mortgages		-		33,031		33,031
Commercial operating and term		209		9,342		9,551
Agricultural operating and term		-		9,839		9,839
Vehicle		2		2,718		2,720
Consumer		7		6,566		6,573
Total	$	3,564	$	196,111	$	199,675

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	79	$	400	$	479
Commercial real estate		329		374		703
Agricultural real estate		-		145		145
Commercial construction real estate		-		14		14
Residential construction real estate		-		7		7
Home equity, home improvement and second mortgages		-		400		400
Commercial operating and term		181		80		261
Agricultural operating and term		-		29		29
Vehicle		2		25		27
Consumer		5		55		60
Total	$	596	$	1,529	$	2,125

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	1,283	$	55,390	$	56,674
Commercial real estate		2,637		28,016		30,653
Agricultural real estate		-		38,128		38,128
Commercial construction real estate		-		4,035		4,035
Residential construction real estate		-		940		940
Home equity, home improvement and second mortgages		73		32,668		32,741
Commercial operating and term		63		5,655		5,718
Agricultural operating and term		-		7,714		7,714
Vehicle		-		1,671		1,671
Consumer		16		6,263		6,279
Total	$	4,072	$	180,481	$	184,553

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	115	$	430	$	545
Commercial real estate		341		381		722
Agricultural real estate		-		155		155
Commercial construction real estate		-		12		12
Residential construction real estate		-		13		13
Home equity, home improvement and second mortgages		73		358		431
Commercial operating and term		32		77		109
Agricultural operating and term		-		31		31
Vehicle		-		28		28
Consumer		12		100		112
Total	$	573	$	1,585	$	2,158

XML

Loans Receivable and Loans Held for Sale (Details 1) - Loans receivable - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 195,913	$ 181,607
Total past due	3,762	2,946
Total	199,675	184,553
30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	1,163	1,416
60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	243	520
Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 2,356	$ 1,010
Nonperforming loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current
Total past due	$ 2,356	$ 1,010
Total	$ 2,356	$ 1,010
Nonperforming loans | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Nonperforming loans | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Nonperforming loans | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 2,356	$ 1,010
Real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	58,636	54,698
Total past due	2,455	1,976
Total	61,091	56,674
Real estate | Residential | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	964	782
Real estate | Residential | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	99	507
Real estate | Residential | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	1,392	687
Real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	32,173	$ 30,653
Total past due	82
Total	$ 32,255	$ 30,653
Real estate | Commercial | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Real estate | Commercial | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 82
Real estate | Commercial | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Real estate | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 39,914	$ 37,843
Total past due	555	285
Total	$ 40,469	38,128
Real estate | Agricultural | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due		$ 285
Real estate | Agricultural | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Real estate | Agricultural | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 555
Construction real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 1,319	$ 940
Total past due
Total	$ 1,319	$ 940
Construction real estate | Residential | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Construction real estate | Residential | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Construction real estate | Residential | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Construction real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 2,827	$ 4,035
Total past due
Total	$ 2,827	$ 4,035
Construction real estate | Commercial | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Construction real estate | Commercial | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Construction real estate | Commercial | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Home equity, home improvement and second mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 32,793	$ 32,291
Total past due	238	450
Total	33,031	32,741
Home equity, home improvement and second mortgages | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	131	193
Home equity, home improvement and second mortgages | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	59	2
Home equity, home improvement and second mortgages | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	48	255
Operating and term | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	9,248	5,569
Total past due	303	149
Total	$ 9,551	5,718
Operating and term | Commercial | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due		$ 82
Operating and term | Commercial | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Operating and term | Commercial | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 303	$ 67
Operating and term | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 9,839	7,674
Total past due		40
Total	$ 9,839	7,714
Operating and term | Agricultural | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due		$ 40
Operating and term | Agricultural | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Operating and term | Agricultural | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due
Vehicle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 2,659	$ 1,661
Total past due	61	10
Total	2,720	1,671
Vehicle | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	22	8
Vehicle | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	3	1
Vehicle | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	36	1
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	6,505	6,243
Total past due	68	36
Total	6,573	6,279
Consumer | 30-59 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 46	26
Consumer | 60-89 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due		$ 10
Consumer | Loans Past Due 90 Days or More
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total past due	$ 22

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Stockholders' Equity, Regulatory Capital and Dividend Restrictions (Tables)

9 Months Ended

Sep. 30, 2015

Banking and Thrift [Abstract]

Schedule of Bank's compliance with its regulatory capital requirements

											Minimum to Be Well
						Minimum					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Percent			Amount		Percent			Amount		Percent
Bank as of September 30, 2015:
Tier I capital (to average assets)	$	28,221		10.37	%	$	10,884		4.00	%	$	13,605		5.00	%
Tier I capital common equity (to risk weighted assets)		28,221		11.37	%		11,166		4.50	%		16,129		6.50	%
Tier I capital (to risk weighted assets)		28,221		11.37	%		14,889		6.00	%		19,851		8.00	%
Total risk based capital (to risk weighted assets)		30,384		12.24	%		19,851		8.00	%		24,814		10.00	%
Bank as of December 31, 2014:
Tier I capital (to average assets)		25,380		9.90	%		10,255		4.00	%		12,819		5.00	%
Tier I capital (to risk weighted assets)		25,380		13.58	%		7,478		4.00	%		11,217		6.00	%
Total capital (to risk weighted assets)		27,566		14.74	%		14,956		8.00	%		18,695		10.00	%

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Consolidated Statements of Stockholders' Equity and Mezzanine Equity (Unaudited) (Parentheticals) - $ / shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
Cash dividends (in dollars per share)	$ 0.54	$ 0.45
Treasury stock purchases (in shares)	14,278	22,633
Redeemable common shares acquired included in treasury stock (in shares)	10,442
Issuance of common stock (in shares)	78,736
Number of shares acquired by ESOP (in shares)	6,299

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Interest-bearing accounts (in dollars)	$ 5,435	$ 7,411
Allowance for loan loss (in dollars)	$ 2,125	$ 2,158
Redeemable common stock held by ESOP (in dollar per share)	$ 0.10	$ 0.10
Redeemable common stock held by ESOP, shares issued	85,160	95,602
Redeemable common stock held by ESOP, shares outstanding	85,160	95,602
Preferred stock, par value (in dollars per share)
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares outstanding	0	0
Common stock, per value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized	7,000,000	7,000,000
Common stock, shares issued	2,181,076	2,091,898
Treasury stock, shares	1,459,526	1,445,248

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Financial Instruments With Off-Balance-Sheet Risk

9 Months Ended

Sep. 30, 2015

Financial Instruments With Off Balance Sheet Risk [Abstract]

Financial Instruments With Off-Balance-Sheet Risk

Note 9. Financial Instruments With Off-Balance-Sheet Risk

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include primarily commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheet.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit on loans totaled approximately $44,312 and $38,110 at September 30, 2015 and December 31, 2014, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but normally includes real estate and personal property.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 13, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	WELLS FINANCIAL CORP
Entity Central Index Key	0000934739
Trading Symbol	wefp
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		805,710
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10. Fair Value Measurements

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Investment securities available for sale: The fair values of exchange-listed equity securities are based on quoted market prices and are categorized as Level 1 of the fair value hierarchy. The fair values of debt securities were generally determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings and prepayment speeds. Fair values determined using matrix pricing are categorized as Level 2 in the fair value hierarchy.

Redeemable common stock: The Company has certain shares of common stock outstanding whereby the holder may put its shares to the Company for cash. This redeemable common stock is recorded at its fair value in the mezzanine equity section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. The fair value of a share of common stock was determined by applying a market valuation approach based upon comparative financial and pricing analysis of the Company with a peer group of publicly traded financial institutions. The comparative financial analysis is based on three types of market pricing ratios: price to earnings, price to book (or price to tangible book) and price to assets, with a greater emphasis given to price to earnings and price to book value. Valuations include assumptions not observable in the marketplace, and the related fair value measurements have been categorized as Level 3 measurements.

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets, using fair value measurements in accordance with generally accepted accounting principles.

Impaired loans: The specific reserves for collateral-dependent impaired loans are based on the fair value of the collateral less estimated costs to sell. The fair value of collateral was determined based on appraisals, with further adjustments made to the appraised values due to various factors, including the age of the appraisal, age of comparables included in the appraisal, and changes in the market and in the collateral. As these significant adjustments are based on unobservable inputs, the resulting fair value measurements have been categorized as Level 3 measurements.

Foreclosed real estate: Foreclosed real estate is recorded at fair value based on property appraisals, less estimated selling costs, at the date of transfer. The carrying value of foreclosed real estate is not remeasured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Property appraisals are based on assumptions generally not observable in the marketplace, and the related nonrecurring fair value measurement adjustments have generally been classified as Level 3.

Mortgage servicing rights: Mortgage servicing rights are initially measured at fair value in the Company’s consolidated balance sheet. The Company utilizes the amortization method to subsequently measure its capitalized servicing assets. In accordance with ASC Topic 860, the Company must record impairment charges when the carrying value of certain strata exceeds their estimated fair value. To estimate the fair value of servicing rights, the Company considers market prices for similar assets and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing, and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceeds estimated fair value. Impairment is recognized through a valuation allowance. The determination of fair value of capitalized servicing rights is considered a Level 3 valuation.

The following tables summarize assets and liabilities measured at fair value as of September 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2015
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,381	$	-		$	22,381
SBA pools		-		2,646		-			2,646
Obligations of states and political subdivisions		-		10,343		-			10,343
Government-sponsored enterprise equity securities		-		125		-			125
Redeemable common stock		-		-		(2,257	)		(2,257	)
Nonrecurring:
Foreclosed real estate		-		-		1,975			1,975
Collateral-dependent impaired loans		-		-		1,914			1,914
Mortgage servicing rights		-		-		315			315

	December 31, 2014
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,545	$	-		$	22,545
SBA pools		-		1,832		-			1,832
Obligations of states and political subdivisions		-		9,698		-			9,698
Government-sponsored enterprise equity securities		-		102		-			102
Redeemable common stock		-		-		(2,533	)		(2,533	)
Nonrecurring:
Foreclosed real estate		-		-		3,656			3,656
Collateral-dependent impaired loans		-		-		3,002			3,002
Mortgage servicing rights		-		-		646			646

The following tables present additional quantitative information about the unobservable inputs used in the fair value measurement of mortgage servicing rights measured on a non-recurring basis that were categorized within Level 3 of the fair value hierarchy:

	Fair Value at September 30, 2015		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	315	Discounted cash flows(1)	Prepayment PSA		157 – 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37 – 325
				Costs to service		$65 - $750

	Fair Value at December 31, 2014		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	646	Discounted cash flows(1)	Prepayment PSA		157- 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37- 325
				Costs to service		$65 - $750

(1) The estimated fair value on mortgage servicing rights is determined through a cash flow analysis performed at the loan level and is based on the objective attributes of the portfolio (i.e., note rate, loan amount, etc.) and industry assumptions used in the marketplace.

There was no change in the per share fair value of redeemable common stock, which is a recurring fair value measurements using significant unobservable inputs (Level 3), between December 31, 2014 and September 30, 2015.

For the three and nine months ended September 30, 2015 and 2014 there were no transfers in or out of Levels 1, 2, and 3.

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not recognized at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are recognized at fair value on a recurring or nonrecurring basis are discussed above.

The estimated fair values of the Company’s financial instruments are as follows:

		September 30,				December 31,
		2015				2014
	Level in Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	9,896	$	9,896	$	14,373	$	14,373
Certificates of deposit	Level 2		9,521		9,521		4,181		4,181
Federal funds sold	Level 2		3,000		3,000		2,000		2,000
Securities available for sale	Level 2		35,495		35,495		34,177		34,177
Federal Home Loan Bank stock	Level 2		2,036		2,036		2,079		2,079
Loans held for sale	Level 2		1,719		1,719		1,707		1,707
Loans receivable, net	Level 2		197,336		201,241		182,050		183,219
Accrued interest receivable	Level 2		1,252		1,252		834		834
Mortgage servicing rights	Level 3		1,862		2,143		1,886		2,578
Financial liabilities:
Deposits	Level 2		232,714		232,131		221,972		215,199
Advances from borrowers for taxes and insurance	Level 2		3,639		3,639		2,630		2,630
Accrued interest payable	Level 2		83		83		17		17
Redeemable common stock	Level 3		2,257		2,257		2,533		2,533

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Consolidated Statements of Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest income:
Loans receivable	$ 2,293	$ 2,026	$ 6,530	$ 5,903
Investment securities and interest-bearing deposits	185	177	508	548
Total interest income	2,478	2,203	7,038	6,451
Interest expense:
Deposits	125	148	350	462
Total interest expense	125	148	350	462
Net interest income	2,353	2,055	6,688	5,989
Provision for loan losses	(70)	100		420
Net interest income after provision for loan losses	2,423	1,955	6,688	5,569
Noninterest income:
Gain on sale of loans held for sale	302	214	826	564
Loan servicing fees	210	168	640	600
Insurance commissions	188	195	529	487
Fees and service charges	113	129	342	346
Bargain purchase gain	2,848		2,848
Other	204	211	650	698
Total noninterest income	3,865	917	5,835	2,695
Noninterest expenses:
Compensation and benefits	1,168	1,093	3,425	3,460
Occupancy	196	172	553	573
Data processing	268	266	698	685
Advertising	71	71	194	181
Amortization of mortgage servicing rights	98	90	275	239
Other real estate owned	173		429	398
Other	546	570	1,491	1,540
Total noninterest expenses	2,520	2,262	7,065	7,076
Income before income taxes	3,768	610	5,458	1,188
Income tax expense	348	92	995	323
Net income	$ 3,420	$ 518	$ 4,463	$ 865
Earnings per share:
Basic	$ 4.63	$ 0.68	$ 5.88	$ 1.14
Diluted	$ 4.63	$ 0.68	$ 5.88	$ 1.14

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Securities Available for Sale

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Securities Available for Sale

Note 4. Securities Available for Sale

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,356	$	96	$	(71	)	$	22,381
SBA pools		2,645		4		(3	)		2,646
Obligations of states and political subdivisions		10,201		162		(20	)		10,343
Government-sponsored enterprise equity		40		85		-			125
	$	35,242	$	347	$	(94	)	$	35,495

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,677	$	60	$	(192	)	$	22,545
SBA pools		1,835		6		(9	)		1,832
Obligations of states and political subdivisions		9,474		250		(26	)		9,698
Government-sponsored enterprise equity		40		62		-			102
	$	34,026	$	378	$	(227	)	$	34,177

Contractual maturities: The amortized cost and fair value of securities available for sale as of September 30, 2015, by contractual maturity are shown below. Maturities may differ from contractual maturities in residential mortgage-backed securities and Small Business Administration (SBA) pools because the mortgages underlying the securities may be called or repaid without any penalties. In addition, government-sponsored enterprise equity securities have no maturity. Therefore, these securities are not included in the maturity categories in the following maturity summary.

	September 30, 2015
	Amortized Cost		Fair Value
Due in one year or less	$	872	$	873
Due in one to five years		3,695		3,739
Due after five through 10 years		3,890		3,951
Due after 10 years		1,744		1,780
		10,201		10,343
Residential mortgage-backed agencies		22,356		22,381
SBA pools		2,645		2,646
Government-sponsored enterprise equity		40		125
	$	35,242	$	35,495

Pledged securities: Securities with a carrying value of $30,556 and $20,961 at September 30, 2015 and December 31, 2014, respectively, were pledged to secure borrowed funds and for other purposes as required or permitted by law.

Changes in other comprehensive income—unrealized gains on securities available for sale:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance, beginning	$	41		$	80		$	93		$	(264	)
Unrealized gains  during the year		208			-			119			417
Deferred tax effect relating to unrealized gain		(79	)		(1	)		(42	)		(74	)
Balance, ending	$	170		$	79		$	170		$	79

Temporarily impaired securities:

	September 30, 2015
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage- backed agencies	$	4,197	$	9	$	8,575	$	62	$	12,772	$	71
SBA Pools		1,049		3		-		-		1,049		3
Obligations of states and political subdivisions		490		4		920		16		1,410		20
	$	5,737	$	16	$	9,495	$	78	$	15,232	$	94

	December 31, 2014
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage-backed agencies	$	5,679	$	20	$	10,566	$	172	$	16,245	$	192
SBA pools		-		-		1,250		9		1,250		9
Obligations of states and political subdivisions		1,495		6		1,180		20		2,675		26
	$	7,174	$	26	$	12,996	$	201	$	20,170	$	227

There were 25 and 37 securities in unrealized loss positions as of September 30, 2015 and December 31, 2014, respectively.

Unrealized losses are deemed to be temporary. Most of these underlying securities consist of mortgage-backed securities. Market fluctuations are caused primarily by changes in interest rates and prepayments of underlying mortgages. Volatility in economic conditions influences the prices of these securities. There were no sales of available-for-sale securities during the nine months ended September 30, 2015 and 2014.

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Certificates of Deposit

9 Months Ended

Sep. 30, 2015

Certificates Of Deposit [Abstract]

Certificates of Deposit

Note 3. Certificates of Deposit

Certificates of deposit with a carrying value of $9,521 and $4,181 at September 30, 2015 and December 31, 2014, respectively, had weighted-average yields of 1.28% and 0.41%, respectively, and weighted average contractual maturities of 1.7 and 0.5 years, respectively.

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Loan Servicing (Tables)

9 Months Ended

Sep. 30, 2015

Loan Servicing [Abstract]

Schedule of mortgage servicing rights

	September 30,			September 30,
	2015			2014
Balance at beginning of year, net	$	1,886		$	1,952
Mortgage servicing rights capitalized		251			181
Amortization expense		(275	)		(239	)
Valuation provision change		-			-
Balance at end of period, net	$	1,862		$	1,894

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Business Combination

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Business Combination

Note 11. Business Combination

Effective July 16, 2015, the Company completed its previously reported acquisition of St. James Federal Savings and Loan Association, St. James, Minnesota (St. James), in a conversion merger transaction. As a result of the conversion merger transaction, St. James converted from a mutual to stock institution and merged with and into the Bank, with the Bank as the surviving institution. The Company acquired 100% of the voting shares of St. James. The Company issued and sold 78,736 shares of common stock at a price of $27.36 per share, which reflected a 5% discount on the 30 day average price as prescribed in the merger agreement. The shares were offered to depositor and borrower members of St. James in a subscription offering and to stockholders of the Company and members of the general public in a community offering. The Company’s ESOP acquired 8%, or 6,299 shares, of the newly issued shares using funds borrowed from the Company. The fair value of consideration paid to the prior depositors and borrowers of St. James was determined to approximate zero. Gross offering proceeds totaled approximately $2,154, including $172 purchased by the Company’s ESOP. As a result of the stock offering, the Company had 814,758 shares of common stock outstanding as of the close of business on July 16, 2015. St. James’ sole office, located in St. James, Minnesota, has become a branch office of the Bank. The Company’s primary reasons for the acquisition are to provide for asset growth, improve capital and competitive positions, and increase the limit on loans to one borrower.

The Company has determined that the acquisition constitutes a business combination as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their estimated fair values as required by the guidance. Fair values were determined based on the requirements of ASC Topic 820, Fair Value Measurements.

The determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events which are highly subjective in nature. The assets acquired and liabilities assumed in the transaction are presented at estimated fair value on the acquisition date.

The Company recorded the following assets and liabilities as of July 16, 2015. The discounts and premiums resulting from the fair value adjustments will be accreted or amortized over the anticipated lives of the underlying assets and liabilities. The excess fair value of assets acquired over liabilities assumed, resulted in a $2,848 bargain purchase gain. The merger resulted in a gain because of the legal and financial barriers that St. James would have incurred to convert to a stock form of ownership in a stand-alone transaction, including the related transaction costs associated with a conversion and stock issuance. The bargain purchase gain was recorded in non-interest income in the Company’s consolidated statements of income for the three and nine months ended September 30, 2015.

	July 16, 2015
Recognized amounts of identifiable assets acquired and liabilities assumed
Fair value of assets acquired
Cash	$	1,337
Certificates of deposit		5,616
Securities – available for sale		995
Loans		17,506
Premises and equipment		366
Real estate owned		35
Accrued interest and other assets		131
Core deposit intangible		208
Total assets acquired	$	26,194
Fair value of liabilities assumed
Deposits	$	23,043
Deferred tax liability		238
Accrued interest and other liabilities		65
Total liabilities assumed	$	23,346
Net assets acquired	$	2,848

The fair value of the loan portfolio was estimated by performing a discounted cash flow analysis. The valuation was performed at the loan level on real estate loans and at the cohort level for all other loan types, and is based on the objective attributes of the loans in the portfolio (e.g., the rate of interest on the loan, the original term of the loan, the current term of the loan, etc.) and current statistical performance variables used in the market place.

The analysis was based on the contractually specified amounts of principal and interest to be received modified by our estimates of prepayment, default and loss severity to be experienced prospectively. The prepayment, default and loss severity assumptions were applied at the loan level based on the characteristics of the loan.

The composition of the acquired loans at July 16, 2015 was as follows:

	Contractual Amount		Fair Value Adjustments			Fair Value
Residential real estate	$	6,480	$	74		$	6,554
Revolving, open end residential real estate		336		(1	)		335
Agricultural real estate		5,437		57			5,494
Agricultural operating and term		2,588		2			2,590
Commercial real estate		1,262		2			1,264
Automobile loans		721		(8	)		713
Other consumer		602		(46	)		556
Total	$	17,426	$	80		$	17,506

The Company estimates that $79 of the contractual amounts receivable for loans acquired will not be collected.

The following table presents pro forma financial information assuming the acquisition occurred on January 1, 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues (interest and noninterest income)	$	3,614	$	3,403	$	10,419	$	9,547
Net income	$	542	$	507	$	1,641	$	888
Diluted net income per share	$	0.66	$	0.61	$	1.96	$	1.06
Diluted weighted-average shares	$	0.66	$	0.61	$	1.96	$	1.06

The bargain purchase gain is excluded from the pro forma table above.

To determine pro forma information, the Company adjusted its three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014 historical results to include the historical results of St. James.

Stock issuance costs incurred totaled $1,147. The stock issuance costs were offset against the proceeds of the offering, which was recognized as paid-in capital.

Merger costs of $332 and $334 were expensed during the three and nine months ended September 30, 2015, respectively. Merger costs of $9 and $27 were expensed during the three and nine months ended September 30, 2014.

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Stockholders' Equity, Regulatory Capital and Dividend Restrictions

9 Months Ended

Sep. 30, 2015

Banking and Thrift [Abstract]

Stockholders' Equity, Regulatory Capital and Dividend Restrictions

Note 7. Stockholders’ Equity, Regulatory Capital and Dividend Restrictions

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier I, Tier I capital and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of September 30, 2015, that the Bank meets all capital adequacy requirements to which they are subject.

As of September 30, 2015, the most recent notification of the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for Prompt Corrective Action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, common equity Tier I, Tier I risk-based, and Tier I leverage ratios. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The following table summarizes the Bank’s compliance with its regulatory capital requirements:

											Minimum to Be Well
						Minimum					Capitalized Under
						for Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Percent			Amount		Percent			Amount		Percent
Bank as of September 30, 2015:
Tier I capital (to average assets)	$	28,221		10.37	%	$	10,884		4.00	%	$	13,605		5.00	%
Tier I capital common equity (to risk weighted assets)		28,221		11.37	%		11,166		4.50	%		16,129		6.50	%
Tier I capital (to risk weighted assets)		28,221		11.37	%		14,889		6.00	%		19,851		8.00	%
Total risk based capital (to risk weighted assets)		30,384		12.24	%		19,851		8.00	%		24,814		10.00	%
Bank as of December 31, 2014:
Tier I capital (to average assets)		25,380		9.90	%		10,255		4.00	%		12,819		5.00	%
Tier I capital (to risk weighted assets)		25,380		13.58	%		7,478		4.00	%		11,217		6.00	%
Total capital (to risk weighted assets)		27,566		14.74	%		14,956		8.00	%		18,695		10.00	%

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Loans Receivable and Loans Held for Sale

9 Months Ended

Sep. 30, 2015

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable and Loans Held for Sale

Note 5. Loans Receivable and Loans Held for Sale

Composition of loans receivable:

	September 30,			December 31,
	2015			2014
Residential real estate	$	61,091		$	56,674
Commercial real estate		32,255			30,653
Agricultural real estate		40,469			38,128
Commercial construction real estate		2,827			4,035
Residential construction real estate		1,319			940
Home equity, home improvement and second mortgages		33,031			32,741
Commercial operating and term		9,551			5,718
Agricultural operating and term		9,839			7,714
Vehicle		2,720			1,671
Consumer		6,573			6,279
Total loans		199,675			184,553
Net deferred loan origination fees		(214	)		(345	)
Allowance for loan loss		(2,125	)		(2,158	)
Loans receivable, net	$	197,336		$	182,050

Loans are made to individuals as well as to commercial and tax-exempt entities. Specific loan terms vary as to interest rate, repayment and collateral requirements based on the type of loan requested and the creditworthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by the Company.

The Company’s extension of credit is governed by the individual loan policies that were established to control the quality of the Company’s loans. These policies and procedures are reviewed and approved by the Board of Directors on a regular basis.

Residential real estate loans: The Company originates residential real estate loans in its service area and also originates loans throughout Minnesota through its correspondent bank relationships. Currently, the majority of these loan originations are sold in the secondary market.

Commercial real estate loans: The Company’s goal is to create and maintain a high-quality portfolio of commercial real estate loans with customers who meet the credit quality and relationship profitability objectives of the Company. Commercial real estate loans are subject to underwriting standards and processes similar to commercial operating and term loans. These loans are analyzed using projected cash flows, and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market, such as geographic location and property type.

Agricultural real estate loans: The Company originates loans secured by agricultural real estate in its service area. Agricultural land in the Company’s service area is considered to be prime agricultural land. These loans are underwritten using both a cash flow analysis and appraised values. These are amortizing loans, and loan-to-value ratios generally do not exceed 60 percent at loan inception.

Commercial construction real estate loans: The Company defines construction loans as loans where the loan proceeds are controlled by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, they are subject to other industry-specific policy guidelines outlined in the Company’s credit risk policy and are monitored closely.

Residential construction real estate loans: Residential construction loans originated by the Company generally are limited to six-month terms. When construction is completed, these loans are converted to permanent financing or sold to the secondary market.

Commercial operating and term loans: Commercial operating and term loans are originated in the Company’s primary service area. These loans are made to individuals, partnerships, corporations, limited liability partnerships and limited liability companies for the purpose of assisting in the development of a business enterprise. Loans to closely held businesses will generally be guaranteed in full or for a meaningful amount by the businesses’ major owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not perform as forecasted, and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types.

Agricultural operating and term loans: Agricultural operating and term loans are originated in the Company’s primary service area and are generally used to purchase agricultural equipment or crop inputs. These loans are primarily secured by agricultural real estate and agricultural equipment or crops. Agricultural term and operating loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted, and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all agricultural loan types.

Consumer loans, including home equity, home improvement and second mortgages, and vehicle loans: The Company originates direct consumer loans, including home equity lines and loans, credit cards, and vehicle loans, using a scoring-based credit analysis as part of the underwriting process. Each loan type has a separate specified scoring that consists of several factors, including debt to income, type of collateral and loan-to-collateral value, credit history, and Company relationship with the borrower.

Loans receivable:

	September 30, 2015
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	58,636	$	964	$	99	$	1,392	$	2,455	$	61,091
Commercial real estate		32,173		-		82		-		82		32,255
Agricultural real estate		39,914		-		-		555		555		40,469
Commercial construction real estate		2,827		-		-		-		-		2,827
Residential construction real estate		1,319		-		-		-		-		1,319
Home equity, home improvement and second mortgages		32,793		131		59		48		238		33,031
Commercial operating and term		9,248		-		-		303		303		9,551
Agricultural operating and term		9,839		-		-		-		-		9,839
Vehicle		2,659		22		3		36		61		2,720
Consumer		6,505		46		-		22		68		6,573
Total loans	$	195,913	$	1,163	$	243	$	2,356	$	3,762	$	199,675
Nonperforming loans	$	-	$	-	$	-	$	2,356	$	2,356	$	2,356

	December 31, 2014
							Loans Past
			30–59 Days		60–89 Days		Due 90 Days		Total
	Current		Past Due		Past Due		or More		Past Due		Total
Residential real estate	$	54,698	$	782	$	507	$	687	$	1,976	$	56,674
Commercial real estate		30,653		-		-		-		-		30,653
Agricultural real estate		37,843		285		-		-		285		38,128
Commercial construction real estate		4,035		-		-		-		-		4,035
Residential construction real estate		940		-		-		-		-		940
Home equity, home improvement and second mortgages		32,291		193		2		255		450		32,741
Commercial operating and term		5,569		82		-		67		149		5,718
Agricultural operating and term		7,674		40		-		-		40		7,714
Vehicle		1,661		8		1		1		10		1,671
Consumer		6,243		26		10		-		36		6,279
Total loans	$	181,607	$	1,416	$	520	$	1,010	$	2,946	$	184,553
Nonperforming loans	$	-	$	-	$	-	$	1,010	$	1,010	$	1,010

Recorded investment in nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of September 30, 2015 and December 31, 2014, were as follows:

	September 30, 2015
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	1,392	$	-
Commercial real estate		-		-
Agricultural real estate		555		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		48		-
Commercial operating and term		303		-
Agricultural operating and term		-		-
Vehicle		36		-
Consumer		22		-
Total	$	2,356	$	-

	December 31, 2014
			Loans Past Due
			90 Days or More
	Nonaccrual		and Still Accruing
Residential real estate	$	687	$	-
Commercial real estate		-		-
Agricultural real estate		-		-
Commercial construction real estate		-		-
Residential construction real estate		-		-
Home equity, home improvement and second mortgages		255		-
Commercial operating and term		67		-
Agricultural operating and term		-		-
Vehicle		1		-
Consumer		-		-
Total	$	1,010	$	-

No interest income was recognized on nonaccrual loans for the nine months ended September 30, 2015 and 2014. There are no additional funds to be advanced on these loans.

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk-rating system, the Company classifies problem and potential problem loans as “Special Mention,” “Substandard” and “Doubtful,” which correspond to risk ratings five, six and seven, respectively. Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk-rated seven, have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention, or risk-rated five. Risk ratings are updated any time the situation warrants.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass-rated loans. Loans listed as not rated are included in groups of homogeneous loans with similar risk and loss characteristics. The following tables present the risk category of loans by class of loans based on the most recent analyses performed and the contractual aging as of September 30, 2015 and December 31, 2014:

	September 30, 2015
				Special
		Pass		Mention		Substandard		Doubtful		Total
Commercial real estate		$	29,012	$	1,980	$	1,263	$	-	$	32,255
Agricultural real estate			39,914		165		390		-		40,469
Commercial construction real estate			2,827		-		-		-		2,827
Commercial operating and term			9,523		58		258		-		9,551
Agricultural operating and term			9,806		33		-		-		9,839
Total		$	91,082	$	2,236	$	1,911	$	-	$	94,941

	December 31, 2014
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate	$	26,449	$	3,556	$	648	$	-	$	30,653
Agricultural real estate		38,128		-		-		-		38,128
Commercial construction real estate		4,035		-		-		-		4,035
Commercial operating and term		5,426		-		292		-		5,718
Agricultural operating and term		7,714		-		-		-		7,714
Total	$	43,624	$	3,556	$	940	$	-	$	48,120

For consumer, residential real estate, agricultural real estate, home equity, vehicle and residential construction loan classes, the Company collectively evaluates loans for impairment. The Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. Loans where credit quality and aging indicate potential weakness are placed on nonaccrual and are deemed to be nonperforming.

Impaired loans also include loans modified in a troubled debt restructuring where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collections. There was one troubled debt restructuring of loans during the three and nine months ended September 30, 2015. There were no troubled debt restructuring of loans during the three and nine months ended September 30, 2014.

Payments received on nonaccrual loans are applied as a direct reduction of principal. Nonaccrual loans that are brought current, and do not have additional credit risk factors noted, are returned to accrual status.

There were no loans modified in a troubled debt restructuring during the previous twelve month period that subsequently defaulted during the three and nine months ended September 30, 2015 and 2014.

Loans individually evaluated for impairment by class of loans as of September 30, 2015 and December 31, 2014 are as follows:

	September 30. 2015
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	473	$	473	$	-	$	493	$	18
Commercial real estate		575		575		-		666		18
With an allowance recorded:
Residential real estate		414		414		79		440		27
Commercial real estate		1,884		1,884		329		1,910		58
Home equity, home improvement and second mortgages		-		-		-		-		-
Commercial operating and term		209		209		181		221		6
Consumer		7		7		5		3		1
Vehicle		2		2		2		8		-
Total	$	3,564	$	3,564	$	596	$	3,741	$	128

	December 31, 2014
	Unpaid				Allowance for		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income
	Balance		Investment		Allocated		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	461	$	461	$	-	$	505	$	27
With an allowance recorded:
Residential real estate		822		822		115		830		34
Commercial real estate		2,637		2,637		341		2,690		99
Home equity, home improvement and  second mortgages		73		73		73		74		2
Commercial operating and term		63		63		32		-		2
Consumer		16		16		12		16		2
Total	$	4,072	$	4,072	$	573	$	4,115	$	166

Allowance for loan losses:

	Three Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	528	$	-		$	-	$	(49	)	$	479
Commercial real estate		786		-			-		(83	)		703
Agricultural real estate		159		-			-		(14	)		145
Commercial construction real estate		6		-			-		8			14
Residential construction real estate		6		-			-		1			7
Home equity, home improvement and second mortgages		447		(26	)		4		(25	)		400
Commercial operating and term		117		-			-		144			261
Agricultural operating and term		30		-			-		(1	)		29
Vehicle		27		-			-		-			27
Consumer		78		(17	)		50		(51	)		60
Total	$	2,184	$	(43	)	$	54	$	(70	)	$	2,125

	Nine Months Ended September 30, 2015
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	545	$	(9	)	$	9	$	(66	)	$	479
Commercial real estate		722		-			-		(19	)		703
Agricultural real estate		155		-			-		(10	)		145
Commercial construction real estate		12		-			-		2			14
Residential construction real estate		13		-			-		(6	)		7
Home equity, home improvement and second mortgages		431		(115	)		18		66			400
Commercial operating and term		109		-			-		152			261
Agricultural operating and term		31		-			-		(2	)		29
Vehicle		28		-			4		(5	)		27
Consumer		112		(26	)		86		(112	)		60
Total	$	2,158	$	(150	)	$	117	$	-		$	2,125

	Three Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	484	$	(3	)	$	11	$	9		$	501
Commercial real estate		712		-			-		(16	)		696
Agricultural real estate		142		-			-		9			151
Commercial construction real estate		8		-					14			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		314		(4	)		2		80			392
Commercial operating and term		93		-			-		21			114
Agricultural operating and term		14		-			-		7			21
Vehicle		30		-			1		(4	)		27
Consumer		126		(14	)		13		(15	)		110
Total	$	1,934	$	(21	)	$	27	$	100		$	2,040

	Nine Months Ended September 30, 2014
	Balance,										Balance,
	Beginning		Charge-offs			Recoveries		Provision			Ending
Residential real estate	$	433	$	(6	)	$	11	$	63		$	501
Commercial real estate		624		-			7		65			696
Agricultural real estate		130		-			-		21			151
Commercial construction real estate		2		-			-		20			22
Residential construction real estate		11		-			-		(5	)		6
Home equity, home improvement and second mortgages		254		(181	)		39		280			392
Commercial operating and term		87		(1	)		-		28			114
Agricultural operating and term		18		-			-		3			21
Vehicle		30		-			3		(6	)		27
Consumer		135		(24	)		48		(49	)		110
Total	$	1,724	$	(212	)	$	108	$	420		$	2,040

The recorded investment in loans and the allowance for loan losses by portfolio segment and based on impairment method as of September 30, 2015 and December 31, 2014, are as follows:

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	887	$	60,204	$	61,091
Commercial real estate		2,459		29,796		32,255
Agricultural real estate		-		40,469		40,469
Commercial construction real estate		-		2,827		2,827
Residential construction real estate		-		1,319		1,319
Home equity, home improvement and second mortgages		-		33,031		33,031
Commercial operating and term		209		9,342		9,551
Agricultural operating and term		-		9,839		9,839
Vehicle		2		2,718		2,720
Consumer		7		6,566		6,573
Total	$	3,564	$	196,111	$	199,675

	September 30, 2015
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	79	$	400	$	479
Commercial real estate		329		374		703
Agricultural real estate		-		145		145
Commercial construction real estate		-		14		14
Residential construction real estate		-		7		7
Home equity, home improvement and second mortgages		-		400		400
Commercial operating and term		181		80		261
Agricultural operating and term		-		29		29
Vehicle		2		25		27
Consumer		5		55		60
Total	$	596	$	1,529	$	2,125

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Loans:
Residential real estate	$	1,283	$	55,390	$	56,674
Commercial real estate		2,637		28,016		30,653
Agricultural real estate		-		38,128		38,128
Commercial construction real estate		-		4,035		4,035
Residential construction real estate		-		940		940
Home equity, home improvement and second mortgages		73		32,668		32,741
Commercial operating and term		63		5,655		5,718
Agricultural operating and term		-		7,714		7,714
Vehicle		-		1,671		1,671
Consumer		16		6,263		6,279
Total	$	4,072	$	180,481	$	184,553

	December 31, 2014
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Allowance for loan losses:
Residential real estate	$	115	$	430	$	545
Commercial real estate		341		381		722
Agricultural real estate		-		155		155
Commercial construction real estate		-		12		12
Residential construction real estate		-		13		13
Home equity, home improvement and second mortgages		73		358		431
Commercial operating and term		32		77		109
Agricultural operating and term		-		31		31
Vehicle		-		28		28
Consumer		12		100		112
Total	$	573	$	1,585	$	2,158

Loans with a carrying value of $92,639 and $96,740 at September 30, 2015 and December 31, 2014, respectively, were pledged to secure borrowed funds.

Related-party loans: The Company has entered into transactions with its executive officers, directors, significant shareholders, and their affiliates (related parties). The aggregate amounts of loans to such related parties at September 30, 2015 and December 31, 2014, were $190 and $342, respectively. During 2015 and 2014, new loans to such related parties were $97 and $185, respectively, and repayments were $152 and $67, respectively. In the opinion of management, these loans have terms similar to other customer loans and do not present more than normal risk of collection.

Loans held for sale: As of September 30, 2015 and December 31, 2014, the Company’s loans held for sale were $1,719 and $1,707, respectively, and consisted of one- to four-family residential real estate loans.

Interest rate lock commitments related to the origination of mortgage loans that will be sold are considered derivative instruments. The Company estimates the fair value of these derivatives using the difference between the guaranteed interest rate in the commitments and the current market interest rate. To reduce the net interest rate exposure arising from its loan sale activity, the Company enters into a commitment to sell these loans at the same time that the interest rate lock commitment is quoted. The commitments to sell loans are also considered derivative instruments, with offsetting estimated fair values based on changes in current market rates. These commitments are not designated as hedging instruments and, therefore, changes in fair value are recognized immediately into income. The fair values of the Company’s derivative instruments are offsetting and deemed to be immaterial.

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Loan Servicing

9 Months Ended

Sep. 30, 2015

Loan Servicing [Abstract]

Loan Servicing

Note 6. Loan Servicing

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans as of September 30, 2015 and December 31, 2014, were $320,669 and $332,075, respectively, and consist of one- to four-family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in advances from borrowers for taxes and insurance, were $3,176 and $2,347 at September 30, 2015 and December 31, 2014, respectively.

Mortgage servicing rights are summarized as follows for the nine months ended September 30, 2015 and 2014:

	September 30,			September 30,
	2015			2014
Balance at beginning of year, net	$	1,886		$	1,952
Mortgage servicing rights capitalized		251			181
Amortization expense		(275	)		(239	)
Valuation provision change		-			-
Balance at end of period, net	$	1,862		$	1,894

The estimated fair value of mortgage servicing rights was $2,143 and $2,578 at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the valuation allowance was $15 and $15, respectively.

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Earnings Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Note 8. Earnings Per Share

A reconciliation of the income and common stock share amounts used in the calculation of basic and diluted earnings per share follows:

	Three Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	3,420		738,439	$	4.63
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	3,420		738,871	$	4.63

	Nine Months Ended September 30, 2015
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	4,463		759,012	$	5.88
Effect of dilutive securities:
Stock options				432
Diluted earnings per share:
Net income plus assumed conversions	$	4,463		759,444	$	5.88

	Three Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	518		757,323	$	0.68
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	518		758,541	$	0.68

	Nine Months Ended September 30, 2014
					Per Share
	Income		Shares		Amount
Basic earnings per share:
Net income	$	865		760,297	$	1.14
Effect of dilutive securities:
Stock options				1,218
Diluted earnings per share:
Net income plus assumed conversions	$	865		761,515	$	1.14

At September 30, 2015, all options were included in the dilutive earnings per share computation. At September 30, 2014, 15,850 options are not included in the dilutive earnings per share computation because their inclusion would be antidilutive.

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Securities Available for Sale (Detail Textuals)	9 Months Ended
	Sep. 30, 2015 USD ($) Security	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) Security
Investments, Debt and Equity Securities [Abstract]
Pledged securities carrying value	$ 30,556,000		$ 20,961,000
Number of securities in unrealized loss positions | Security	25		37
Proceeds from sales of available-for-sale securities	$ 0	$ 0

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Fair Value Measurements (Details 2) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Financial assets:
Cash and cash equivalents		$ 9,896	$ 14,373	$ 13,503	$ 12,625
Certificates of deposit		9,521	4,181
Federal funds sold		3,000	2,000
Securities available for sale		35,495	34,177
Federal Home Loan Bank stock		2,036	2,079
Loans held for sale		1,719	1,707
Loans receivable, net		197,336	182,050
Accrued interest receivable		1,252	834
Mortgage servicing rights		1,862	1,886
Financial liabilities:
Deposits		232,714	221,972
Advances from borrowers for taxes and insurance		3,639	2,630
Accrued interest payable		83	17
Redeemable common stock		2,257	2,533
Fair Value
Financial assets:
Cash and cash equivalents	[1]	9,896	14,373
Certificates of deposit	[2]	9,521	4,181
Federal funds sold	[2]	3,000	2,000
Securities available for sale	[2]	35,495	34,177
Federal Home Loan Bank stock	[2]	2,036	2,079
Loans held for sale	[2]	1,719	1,707
Loans receivable, net	[2]	201,241	183,219
Accrued interest receivable	[2]	1,252	834
Mortgage servicing rights	[3]	2,143	2,578
Financial liabilities:
Deposits	[2]	232,131	215,199
Advances from borrowers for taxes and insurance	[2]	3,639	2,630
Accrued interest payable	[2]	83	17
Redeemable common stock	[3]	$ 2,257	$ 2,533

[1] Level 1

[2] Level 2

[3] Level 3

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Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Summary of amortized cost and fair values of securities with gross unrealized gains and losses

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,356	$	96	$	(71	)	$	22,381
SBA pools		2,645		4		(3	)		2,646
Obligations of states and political subdivisions		10,201		162		(20	)		10,343
Government-sponsored enterprise equity		40		85		-			125
	$	35,242	$	347	$	(94	)	$	35,495

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Residential mortgage-backed agencies	$	22,677	$	60	$	(192	)	$	22,545
SBA pools		1,835		6		(9	)		1,832
Obligations of states and political subdivisions		9,474		250		(26	)		9,698
Government-sponsored enterprise equity		40		62		-			102
	$	34,026	$	378	$	(227	)	$	34,177

Schedule of amortized cost and fair value by contractual maturity

	September 30, 2015
	Amortized Cost		Fair Value
Due in one year or less	$	872	$	873
Due in one to five years		3,695		3,739
Due after five through 10 years		3,890		3,951
Due after 10 years		1,744		1,780
		10,201		10,343
Residential mortgage-backed agencies		22,356		22,381
SBA pools		2,645		2,646
Government-sponsored enterprise equity		40		125
	$	35,242	$	35,495

Schedule of changes in other comprehensive income-unrealized gains on securities available for sale

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Balance, beginning	$	41		$	80		$	93		$	(264	)
Unrealized gains  during the year		208			-			119			417
Deferred tax effect relating to unrealized gain		(79	)		(1	)		(42	)		(74	)
Balance, ending	$	170		$	79		$	170		$	79

Schedule of unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position

	September 30, 2015
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage- backed agencies	$	4,197	$	9	$	8,575	$	62	$	12,772	$	71
SBA Pools		1,049		3		-		-		1,049		3
Obligations of states and political subdivisions		490		4		920		16		1,410		20
	$	5,737	$	16	$	9,495	$	78	$	15,232	$	94

	December 31, 2014
	Continuous Unrealized				Continuous Unrealized
	Losses Existing				Losses Existing
	12 Months or Less				Greater Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Residential mortgage-backed agencies	$	5,679	$	20	$	10,566	$	172	$	16,245	$	192
SBA pools		-		-		1,250		9		1,250		9
Obligations of states and political subdivisions		1,495		6		1,180		20		2,675		26
	$	7,174	$	26	$	12,996	$	201	$	20,170	$	227

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on a recurring basis segregated by fair value hierarchy level

	September 30, 2015
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,381	$	-		$	22,381
SBA pools		-		2,646		-			2,646
Obligations of states and political subdivisions		-		10,343		-			10,343
Government-sponsored enterprise equity securities		-		125		-			125
Redeemable common stock		-		-		(2,257	)		(2,257	)
Nonrecurring:
Foreclosed real estate		-		-		1,975			1,975
Collateral-dependent impaired loans		-		-		1,914			1,914
Mortgage servicing rights		-		-		315			315

	December 31, 2014
	Level 1		Level 2		Level 3			Total
	Inputs		Inputs		Inputs			Fair Value
Recurring:
Investment securities available for sale:
Residential mortgage-backed securities	$	-	$	22,545	$	-		$	22,545
SBA pools		-		1,832		-			1,832
Obligations of states and political subdivisions		-		9,698		-			9,698
Government-sponsored enterprise equity securities		-		102		-			102
Redeemable common stock		-		-		(2,533	)		(2,533	)
Nonrecurring:
Foreclosed real estate		-		-		3,656			3,656
Collateral-dependent impaired loans		-		-		3,002			3,002
Mortgage servicing rights		-		-		646			646

Schedule of quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis

	Fair Value at September 30, 2015		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	315	Discounted cash flows(1)	Prepayment PSA		157 – 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37 – 325
				Costs to service		$65 - $750

	Fair Value at December 31, 2014		Valuation Technique	Unobservable Input	Range
	(in thousands)
Mortgage servicing rights	$	646	Discounted cash flows(1)	Prepayment PSA		157- 335
				Discount rate		8.50% – 9.25%
				Maturity (months) WAM		37- 325
				Costs to service		$65 - $750

(1) The estimated fair value on mortgage servicing rights is determined through a cash flow analysis performed at the loan level and is based on the objective attributes of the portfolio (i.e., note rate, loan amount, etc.) and industry assumptions used in the marketplace.

Schedule of estimated fair values of the company's financial instruments

		September 30,				December 31,
		2015				2014
	Level in Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	9,896	$	9,896	$	14,373	$	14,373
Certificates of deposit	Level 2		9,521		9,521		4,181		4,181
Federal funds sold	Level 2		3,000		3,000		2,000		2,000
Securities available for sale	Level 2		35,495		35,495		34,177		34,177
Federal Home Loan Bank stock	Level 2		2,036		2,036		2,079		2,079
Loans held for sale	Level 2		1,719		1,719		1,707		1,707
Loans receivable, net	Level 2		197,336		201,241		182,050		183,219
Accrued interest receivable	Level 2		1,252		1,252		834		834
Mortgage servicing rights	Level 3		1,862		2,143		1,886		2,578
Financial liabilities:
Deposits	Level 2		232,714		232,131		221,972		215,199
Advances from borrowers for taxes and insurance	Level 2		3,639		3,639		2,630		2,630
Accrued interest payable	Level 2		83		83		17		17
Redeemable common stock	Level 3		2,257		2,257		2,533		2,533

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Recurring | Residential mortgage-backed agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 22,381	$ 22,545
Recurring | Residential mortgage-backed agencies | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Residential mortgage-backed agencies | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 22,381	$ 22,545
Recurring | Residential mortgage-backed agencies | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | SBA pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 2,646	$ 1,832
Recurring | SBA pools | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | SBA pools | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 2,646	$ 1,832
Recurring | SBA pools | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 10,343	$ 9,698
Recurring | Obligations of states and political subdivisions | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Obligations of states and political subdivisions | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 10,343	$ 9,698
Recurring | Obligations of states and political subdivisions | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Government-sponsored enterprise equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 125	$ 102
Recurring | Government-sponsored enterprise equity securities | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Government-sponsored enterprise equity securities | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 125	$ 102
Recurring | Government-sponsored enterprise equity securities | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Redeemable common stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ (2,257)	$ (2,533)
Recurring | Redeemable common stock | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Redeemable common stock | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Recurring | Redeemable common stock | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ (2,257)	$ (2,533)
Nonrecurring | Foreclosed real estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 1,975	$ 3,656
Nonrecurring | Foreclosed real estate | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Foreclosed real estate | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Foreclosed real estate | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 1,975	$ 3,656
Nonrecurring | Collateral-dependent impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 1,914	$ 3,002
Nonrecurring | Collateral-dependent impaired loans | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Collateral-dependent impaired loans | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Collateral-dependent impaired loans | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 1,914	$ 3,002
Nonrecurring | Mortgage servicing rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 315	$ 646
Nonrecurring | Mortgage servicing rights | Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Mortgage servicing rights | Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)
Nonrecurring | Mortgage servicing rights | Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Asset (Liability)	$ 315	$ 646

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Loans Receivable and Loans Held for Sale (Details 6) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Allowance for loan losses:
Total	$ 2,125		$ 2,158
Loans receivable
Loans:
Individually Evaluated for Impairment	3,564		4,072
Collectively Evaluated for Impairment	196,111		180,481
Total	199,675		184,553
Allowance for loan losses:
Individually Evaluated for Impairment	596		573
Collectively Evaluated for Impairment	1,529		1,585
Total	2,125	$ 2,184	2,158	$ 2,040	$ 1,934	$ 1,724
Loans receivable | Real estate | Residential
Loans:
Individually Evaluated for Impairment	887		1,283
Collectively Evaluated for Impairment	60,204		55,390
Total	61,091		56,674
Allowance for loan losses:
Individually Evaluated for Impairment	79		115
Collectively Evaluated for Impairment	400		430
Total	479	528	545	501	484	433
Loans receivable | Real estate | Commercial
Loans:
Individually Evaluated for Impairment	2,459		2,637
Collectively Evaluated for Impairment	29,796		28,016
Total	32,255		30,653
Allowance for loan losses:
Individually Evaluated for Impairment	329		341
Collectively Evaluated for Impairment	374		381
Total	$ 703	786	$ 722	696	712	624
Loans receivable | Real estate | Agricultural
Loans:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 40,469		$ 38,128
Total	$ 40,469		$ 38,128
Allowance for loan losses:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 145		$ 155
Total	$ 145	159	$ 155	151	142	130
Loans receivable | Construction real estate | Residential
Loans:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 1,319		$ 940
Total	$ 1,319		$ 940
Allowance for loan losses:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 7		$ 13
Total	$ 7	6	$ 13	6	11	11
Loans receivable | Construction real estate | Commercial
Loans:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 2,827		$ 4,035
Total	$ 2,827		$ 4,035
Allowance for loan losses:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 14		$ 12
Total	$ 14	6	12	22	8	2
Loans receivable | Home equity, home improvement and second mortgages
Loans:
Individually Evaluated for Impairment			73
Collectively Evaluated for Impairment	$ 33,031		32,668
Total	$ 33,031		32,741
Allowance for loan losses:
Individually Evaluated for Impairment			73
Collectively Evaluated for Impairment	$ 400		358
Total	400	447	431	392	314	254
Loans receivable | Operating and term | Commercial
Loans:
Individually Evaluated for Impairment	209		63
Collectively Evaluated for Impairment	9,342		5,655
Total	9,551		5,718
Allowance for loan losses:
Individually Evaluated for Impairment	181		32
Collectively Evaluated for Impairment	80		77
Total	$ 261	117	$ 109	114	93	87
Loans receivable | Operating and term | Agricultural
Loans:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 9,839		$ 7,714
Total	$ 9,839		$ 7,714
Allowance for loan losses:
Individually Evaluated for Impairment
Collectively Evaluated for Impairment	$ 29		$ 31
Total	29	30	$ 31	21	14	18
Loans receivable | Vehicle
Loans:
Individually Evaluated for Impairment	2
Collectively Evaluated for Impairment	2,718		$ 1,671
Total	2,720		$ 1,671
Allowance for loan losses:
Individually Evaluated for Impairment	2
Collectively Evaluated for Impairment	25		$ 28
Total	27	27	28	27	30	30
Loans receivable | Consumer
Loans:
Individually Evaluated for Impairment	7		16
Collectively Evaluated for Impairment	6,566		6,263
Total	6,573		6,279
Allowance for loan losses:
Individually Evaluated for Impairment	5		12
Collectively Evaluated for Impairment	55		100
Total	$ 60	$ 78	$ 112	$ 110	$ 126	$ 135

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Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 3,420	$ 518	$ 4,463	$ 865
Other comprehensive income (loss) :
Unrealized gain (loss) on securities, net of related taxes	129	(1)	77	343
Comprehensive income	$ 3,549	$ 517	$ 4,540	$ 1,208

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Financial Statement Presentation: The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. The accompanying consolidated balance sheet and related notes as of December 31, 2014 are derived from the audited consolidated financial statements as of that date. These condensed financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2014 contained in the Company’s Form S-1. In the opinion of management, all adjustments (which consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial statements have been included. Results for any interim period are not necessarily indicative of results to be expected for the year or any other interim period.

Segment reporting: The Company’s activities are considered to be a single industry segment for financial reporting purposes. The Company is engaged in commercial and retail banking, investment and insurance services with operations in southern Minnesota. Substantially all income is derived from a diverse base of commercial and retail lending activities.

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

	July 16, 2015
Recognized amounts of identifiable assets acquired and liabilities assumed
Fair value of assets acquired
Cash	$	1,337
Certificates of deposit		5,616
Securities – available for sale		995
Loans		17,506
Premises and equipment		366
Real estate owned		35
Accrued interest and other assets		131
Core deposit intangible		208
Total assets acquired	$	26,194
Fair value of liabilities assumed
Deposits	$	23,043
Deferred tax liability		238
Accrued interest and other liabilities		65
Total liabilities assumed	$	23,346
Net assets acquired	$	2,848

Schedule of composition of the acquired loans

The composition of the acquired loans at July 16, 2015 was as follows:

	Contractual Amount		Fair Value Adjustments			Fair Value
Residential real estate	$	6,480	$	74		$	6,554
Revolving, open end residential real estate		336		(1	)		335
Agricultural real estate		5,437		57			5,494
Agricultural operating and term		2,588		2			2,590
Commercial real estate		1,262		2			1,264
Automobile loans		721		(8	)		713
Other consumer		602		(46	)		556
Total	$	17,426	$	80		$	17,506

Schedule of pro forma financial information assuming acquisition

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues (interest and noninterest income)	$	3,614	$	3,403	$	10,419	$	9,547
Net income	$	542	$	507	$	1,641	$	888
Diluted net income per share	$	0.66	$	0.61	$	1.96	$	1.06
Diluted weighted-average shares	$	0.66	$	0.61	$	1.96	$	1.06

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Loans Receivable and Loans Held for Sale (Details 3) - Loans receivable - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 94,941	$ 48,120
Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	91,082	43,624
Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	2,236	3,556
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 1,911	$ 940
Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 32,255	$ 30,653
Real estate | Commercial | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	29,012	26,449
Real estate | Commercial | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	1,980	3,556
Real estate | Commercial | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 1,263	$ 648
Real estate | Commercial | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Real estate | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 40,469	$ 38,128
Real estate | Agricultural | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	39,914	$ 38,128
Real estate | Agricultural | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	165
Real estate | Agricultural | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 390
Real estate | Agricultural | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Construction real estate | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 2,827	$ 4,035
Construction real estate | Commercial | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 2,827	$ 4,035
Construction real estate | Commercial | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Construction real estate | Commercial | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Construction real estate | Commercial | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Operating and term | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 9,551	$ 5,718
Operating and term | Commercial | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	9,523	$ 5,426
Operating and term | Commercial | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	58
Operating and term | Commercial | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 258	$ 292
Operating and term | Commercial | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Operating and term | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 9,839	$ 7,714
Operating and term | Agricultural | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	9,806	$ 7,714
Operating and term | Agricultural | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 33
Operating and term | Agricultural | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total
Operating and term | Agricultural | Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation: The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. The accompanying consolidated balance sheet and related notes as of December 31, 2014 are derived from the audited consolidated financial statements as of that date. These condensed financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2014 contained in the Company’s Form S-1. In the opinion of management, all adjustments (which consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial statements have been included. Results for any interim period are not necessarily indicative of results to be expected for the year or any other interim period.

Segment reporting

Segment reporting: The Company’s activities are considered to be a single industry segment for financial reporting purposes. The Company is engaged in commercial and retail banking, investment and insurance services with operations in southern Minnesota. Substantially all income is derived from a diverse base of commercial and retail lending activities.