Wake Forest Bancshares, Inc. Announces First Quarter Results

Rhea-AI Summary

Wake Forest Bancshares, Inc. (OTC: WAKE) reported earnings of $476,321 or $0.45 per share for the quarter ended December 31, 2022, an increase compared to $337,064 or $0.31 per share for the same quarter last year. The company benefitted from a higher interest margin of 4.08%, up from 3.23% a year earlier, driven by rising short-term interest rates due to Federal Reserve policies. Despite healthy economic conditions, rising mortgage rates may impact buyer demand. The loan portfolio remained stable with no reported problem assets, and the company declared a cash dividend of $0.11 per share, continuing a 26-year streak of quarterly dividends.

Positive

• Earnings increased to $476,321 or $0.45 per share for Q4 2022.
• Interest rate margin improved to 4.08% from 3.23% year-over-year.
• No reported problem assets or loan charge-offs in the current quarter.
• Consistent cash dividends declared for the past 26 years.

Negative

• Higher mortgage rates could limit buyer demand, affecting real estate market health.
• Loan portfolio growth was flat for the quarter.

WAKE FOREST, N.C., Jan. 18, 2023 (GLOBE NEWSWIRE) -- Wake Forest Bancshares, Inc., (OTC: WAKE) parent company of Wake Forest Federal Savings and Loan Association, announced today that the Company reported earnings of $476,321 or $0.45 per share for its quarter ended December 31, 2022. The Company reported earnings of $337,064 or $0.31 per share for the same quarter a year earlier.

In announcing the earnings, Renee H. Shaw, President and Chief Executive Officer stated that the Company was very pleased with the reported earnings which were reflective of stable local economic conditions, our resilient real estate markets, and Federal Reserve rate policies that have widened our spreads. Federal Reserve policy actions to combat inflation in the past nine months have increased short term interest rates by 4.25% with projections of further rate increases for the first part of calendar year 2023.  Because the Company’s balance sheet is intentionally shorter term and rate sensitive in order to avoid prolonged interest rate risk, higher rates positively impact our short term results and such rate increases have had a significant effect on our earnings this quarter. For the most recent quarter, the Company’s interest rate margin was 4.08% vs 3.23% for same quarter a year earlier. The Company’s overall interest rate margin was 3.27% for its last fiscal year ended September 30, 2022.

While our area’s economic conditions, unemployment rates, and residential home sales continue to remain healthy despite recent inflationary concerns, higher mortgage rates and home prices have begun to price certain buyers out of the market.   These factors could impact the health of certain segments of our real estate market. However, our lending environment and labor force benefits because we are a part of the desirable Research Triangle area which is recognized as one of the top regions in the country for innovation, growth, business and quality of life factors.

The Company’s loan portfolio exhibited a marginal increase from levels outstanding a year ago but was flat for the quarter. Because we house the mortgage loans we originate, a conscious decision to limit growth in our long term residential loan portfolio and emphasize construction lending was made while market rates were still relatively low in order to avoid excessive interest rate risk. While mortgage rates have now risen to more historically typical levels, demand for longer fixed rate residential financing at these new rates has decreased. An equilibrium between affordability and pricing will ultimately determine demand. In addition, the credit quality of our loan portfolio has continued to be excellent. The Company was delighted that it had no reported problem assets and no foreclosures or loan charge-offs occurred during the current quarter. As a result, no additional loan loss provisions during the current quarter were considered necessary because of the lack of credit concerns and the healthy level of our existing loss allowances. The Company’s loan loss allowance amounted to approximately 2.13% of total loans outstanding at December 31, 2022. However, as the Federal Reserve continues to push short term rates higher, we will closely monitor our loan portfolios that adjust with market rates for any signs of credit concerns.

During the quarter, the Board declared a cash dividend of $0.11 per share to its shareholders. The Company has now paid quarterly cash dividends consecutively to its shareholders for the past twenty six years.

Total assets of the Company amounted to $109,335,096 at December 31, 2022. Total loans receivable and deposits outstanding at December 31, 2022 amounted to $67,525,495 and $81,223,884, respectively. Wake Forest Bancshares Inc.’s tier 1 capital leverage ratio was 24.55% at December 31, 2022. Wake Forest Bancshares, Inc. has 1,070,296 shares of common stock outstanding, including 635,000 shares held by its mutual holding company. Based in Wake Forest, North Carolina since 1922, the Company conducts business as Wake Forest Federal from its office in Wake Forest, (Wake County), North Carolina.

Contact:
Renee H. Shaw, CEO
(919) 556-5146

FAQ

What were Wake Forest Bancshares' earnings for Q4 2022?

Wake Forest Bancshares reported earnings of $476,321 or $0.45 per share for the quarter ended December 31, 2022.

How did the interest rate margin change for Wake Forest Bancshares?

The interest rate margin increased to 4.08% for the quarter ended December 31, 2022, compared to 3.23% for the same quarter a year earlier.

Did Wake Forest Bancshares declare a dividend in 2023?

Yes, the company declared a cash dividend of $0.11 per share for its shareholders.

What is the impact of rising mortgage rates on Wake Forest Bancshares?

Rising mortgage rates could potentially price some buyers out of the market, impacting demand and the health of certain segments of the real estate market.

What is Wake Forest Bancshares' loan loss allowance?

The loan loss allowance was approximately 2.13% of total loans outstanding at December 31, 2022.