Wake Forest Bancshares, Inc. Announces Second Quarter Results

Rhea-AI Summary

Wake Forest Bancshares, Inc. (OTC: WAKE) reported a net income of $295,562 or $0.28 per share for Q1 2022, up from $282,874 or $0.26 per share in Q1 2021. For the first half of 2022, earnings were $632,626 or $0.59 per share compared to $587,425 or $0.54 per share last year. Despite favorable local economic conditions, the company faces challenges from low Federal Reserve interest rates, impacting its interest margin, which fell to 3.01%. The company declared a special cash dividend of $1.00 per share, commemorating its 100th anniversary.

Positive

• Earnings increased from $282,874 in Q1 2021 to $295,562 in Q1 2022.
• First half earnings rose to $632,626 from $587,425 a year earlier.
• No foreclosures or loan charge-offs occurred, reflecting excellent loan portfolio credit quality.
• Special cash dividend of $1.00 per share announced, celebrating 100 years of operation.

Negative

• Interest rate margin decreased to 3.01% from 3.56% two years prior.
• Federal Reserve's low-interest policies continue to limit potential earnings growth.

WAKE FOREST, N.C., April 19, 2022 (GLOBE NEWSWIRE) -- Wake Forest Bancshares, Inc. (OTC: WAKE), parent company of Wake Forest Federal, announced today that the Company reported earnings of $295,562 or $0.28 per share for its quarter ended March 31, 2022. The Company reported earnings of $282,874 or $0.26 per share for the same quarter a year earlier. Earnings for the first six months of the Company’s fiscal year were reported at $632,626 or $0.59 per share versus $587,425 or $0.54 per share for the same six-month period a year earlier.

In announcing the earnings, Renee H. Shaw, President and Chief Executive Officer, stated that the Company’s earnings were reflective of improving economic conditions associated with the easing of COVID-19 pandemic restrictions but continue to be hampered by static Federal Reserve rate policies. Federal Reserve policy actions have maintained short term interest rates at historically low levels, a decision initiated in March of 2020 at the start of the Pandemic that essentially remained in place for the current quarter. However, the Federal Reserve did increase interest rates by 25 basis points on March 17, 2022 and it now appears that an upward pattern of gradual rate increases is in play. The Company’s balance sheet is intentionally shorter term and rate sensitive in order to avoid prolonged interest rate risk. As a result, the Company’s overall interest rate margin was 3.01% for the current quarter, down from its 3.56% margin for the comparable quarter two years earlier prior to the Pandemic. When market interest rates return to more historical norms, the Company’s interest rate margin should trend upward accordingly.

While our area’s economic conditions continue to improve despite recent inflationary concerns, residential home sales in our local markets remain robust. Our lending environment benefits because we are a part of the desirable Research Triangle area which is generally recognized as one of the top regions in the country for innovation, growth, economic activity and quality of life factors. Our real estate markets have remained exceedingly resilient during the current quarter not only due to relatively low mortgage rates, but also because of strong housing demand coupled with sizable gains in home prices and extremely tight residential inventories. Mortgage rates began to rise during the current quarter from historically low rates in effect for several years but the impact on our residential real estate markets, if any, has yet to be determined.

The Company’s loan portfolio has largely remained unchanged from levels outstanding a year ago. Because the Company holds the mortgage loans it originates, a conscious decision to limit growth in its long term residential loan portfolio and emphasize construction lending was undertaken while market rates remain historically low in order to avoid excessive interest rate risk. In addition, the credit quality of our loan portfolio has continued to be excellent. The Company was delighted that problem assets were essentially non-existent and that 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 healthy level of our existing loss allowances. The Company’s loan loss allowance amounted to approximately 2.16% of total loans outstanding at March 31, 2022.

Wake Forest Bancshares announced on March 22, 2022 the payment of a special cash dividend of $1.00 per share on April 19, 2022 to stockholders of record as of April 05, 2022. Although the Company has paid quarterly cash dividends consecutively to its shareholders for the past twenty five years its Board chose to pay this special dividend in celebration of its 100^th year as an independent community bank.

Total assets of the Company amounted to $112,330,630 at March 31, 2022. Total loans receivable and deposits outstanding at March 31, 2022 amounted to $66,476,976 and $84,299,678, respectively. Wake Forest Bancshares Inc.’s tier 1 capital leverage ratio was 23.08% at March 31, 2022. Wake Forest Bancshares, Inc. has 1,070,046 shares of common stock outstanding. 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 the earnings per share for WAKE for Q1 2022?

WAKE reported earnings of $0.28 per share for Q1 2022.

How did WAKE's earnings for the first half of 2022 compare to 2021?

Earnings for the first six months of 2022 were $0.59 per share, up from $0.54 per share for the same period in 2021.

What is the current interest rate margin for WAKE?

WAKE's interest rate margin is currently 3.01%.

Did WAKE face any loan defaults in Q1 2022?

No, WAKE did not have any foreclosures or loan charge-offs in Q1 2022.

What special dividend did WAKE announce in 2022?

WAKE announced a special cash dividend of $1.00 per share on April 19, 2022.