Wake Forest Bancshares, Inc. Announces Third Quarter Results

WAKE FOREST, N.C., July 20 /PRNewswire-FirstCall/ -- Wake Forest Bancshares, Inc., (OTC Bulletin Board: WAKE.OB) parent company of Wake Forest Federal Savings and Loan Association, announced today that the Company reported earnings of $84,056 or $0.07 per share for the quarter ended June 30, 2010, compared to earnings of $108,712 or $0.09 per share for the same quarter a year earlier.  Earnings for the first nine months of the Company's fiscal year were reported at $222,938 or $0.19 per share versus $308,050 or $0.27 per share for the same nine month period a year earlier.    

In announcing the earnings, Robert C. White, President and Chief Executive Officer, stated that the current quarter's results continue a pattern of compressed interest rate margins, elevated non-performing assets which required higher loss provisions, and increased costs associated with foreclosed properties.  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 has 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 2.42% during the quarter ended June 30, 2010 as compared to a margin of 2.30% for the same quarter a year earlier.  

The listless economic environment and tenuous housing market lingered throughout the past quarter and weighed heavily on the Company's operations.  Home sales and real estate lending, including construction lending, continues at a pace significantly below levels normal for the Company's markets.  The depressed local real estate market has showed few signs of recovery as inventories of new and existing homes remain high, the sluggish economy has created widespread uncertainty, employment gains have been uneven at best, and numerous buyers have had difficulty obtaining financing.  

Earnings for the current quarter were also impacted by elevated loss provisions, charge-offs and expenses associated with foreclosed loans. The Company provided $174,500 and $408,396 during the quarter and nine months ended June 30, 2010, respectively, in additional loss provisions to bolster its loan loss reserves and to reflect for declines in the value of its foreclosed properties. The Company charged off or wrote down loans or foreclosed properties amounting to $155,773 and $324,605 during the quarter and nine month period ended June 30, 2010, respectively.  In comparison, the Company added $115,000 and $235,000 in loss provisions and charged off or wrote down $256,000 and $373,800 against its loan loss and REO allowances during the quarter and nine months ended June 30, 2009, respectively.  In addition, the Company incurred $34,446 and $189,299 in foreclosure related expense during the quarter and nine months ended June 30, 2010.  Such costs totaled $45,675 and $105,776 during the same quarter and nine month period a year earlier.  The Company's loan loss allowances amounted to approximately 1.67% of total loans outstanding at June 30, 2010.  

Total assets of the Company amounted to $110.9 million at June 30, 2010.  Total loans receivable and deposits outstanding at June 30, 2010 amounted to $67.3 million and $89.3 million, respectively.  Wake Forest Bancshares Inc.'s capital to assets ratio was 18.71% at June 30, 2010.    

Wake Forest Bancshares, Inc. has 1,155,410 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.