WAKE FOREST, N.C., Nov. 20 /PRNewswire-FirstCall/ -- Wake Forest Bancshares, Inc., (OTC Bulletin Board: WAKE) parent company of Wake Forest Federal Savings and Loan Association, announced today that the Company reported earnings of $179,516 or $0.16 per share for the year ended September 30, 2009, compared to earnings of $1 million or $0.87 per share for the year ended September 30, 2008. The Company reported a loss of $128,534 or $0.11 a share for the quarter ended September 30, 2009 versus earnings of $120,850 or $0.10 a share for the same quarter a year earlier.

In announcing the earnings, Robert C. White, President and Chief Executive Officer, stated that this past year has been challenging for the entire financial services industry and that the Company's results were significantly impacted by decreased interest rate margins, a rise in non-performing assets which required higher loan loss provisions, charge-offs, and costs associated with foreclosed properties, and assessments levied by the FDIC. A significant portion of the Company's loans and investments have either shorter maturities or variable rates and therefore the portfolio reacts fairly quickly to movements in the prime rate. The Federal Reserve lowered interest rates by 400 basis points since January of 2008 and the Company's interest rate sensitive loan and investment portfolios have adjusted more quickly to those rate movements than has the Company's deposit base. The Company's net interest margin was 2.06% during the year ended September 30, 2009 as compared to a margin of 2.95% a year earlier. Because of depletions to the FDIC insurance fund caused by a number of bank failures across the country, FDIC insurance premiums and special assessments totaled $176,242 during the current year as compared to $10,991 during 2008.

The weakened economic environment and tenuous housing market lingered throughout the past year and weighed heavily on the Company's operations. Real estate lending, including construction lending, slowed significantly in the Company's markets during 2009. As a high growth area, the relocation market represents a sizable portion of local real estate sales but has suffered recently because of higher than normal unemployment rates as well as newcomers being unable to sell their homes from other areas. The broader local real estate market has declined as inventories of new homes have climbed, the sluggish economy has created uncertainty, and numerous buyers have had difficulty obtaining financing.

Earnings for 2009 were also impacted by elevated loss provisions, charge-offs and expenses associated with foreclosed loans. The Company provided $480,000 in additional loan loss provisions to bolster its loan loss reserves because the Company believes continued weakness in our local housing market has heightened risk to the Company's construction and land loan portfolios. The Company charged off $612,800 in loans during 2009, primarily associated with its construction loan portfolio. In addition, the Company incurred $216,289 in foreclosure related expense and holding costs during the current year. However, the Company has never originated sub-prime loans or invested in the types of questionable mortgage-backed securities that have precipitated massive write-downs throughout the financial services industries. The Company's loan loss allowances amounted to approximately 1.62% of total loans outstanding at September 30, 2009.

Total assets of the Company amounted to $112.2 million at September 30, 2009. Total loans receivable and deposits outstanding at September 30, 2009 amounted to $71.2 million and $90.5 million, respectively. Wake Forest Bancshares Inc.'s capital to assets ratio was 18.31% at September 30, 2009.

Wake Forest Bancshares, Inc. has 1,156,410 shares of common stock outstanding. Based in Wake Forest, North Carolina since 1922, the Company conducts business as Wake Forest Federal Savings & Loan Association from its office in Wake Forest, (Wake County), North Carolina.

SOURCE Wake Forest Bancshares, Inc.

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