Wake Forest Bancshares, Inc. Announces Second Quarter Results

Rhea-AI Summary

Wake Forest Bancshares, Inc. (OTC: WAKE) announced a net income of $486,910 or $0.45 per share for the quarter ending March 31, 2023, a significant increase from $295,562 or $0.28 per share in Q1 2022. For the first half of the fiscal year, earnings reached $963,231 or $0.90 per share, compared to $632,626 or $0.59 per share year-over-year. The company's interest rate margin increased to 4.07%, benefiting from rising short-term interest rates due to Federal Reserve policies. Despite healthy local economic conditions, the impact of higher mortgage rates is pricing some buyers out of the market. The loan portfolio has grown with no reported problem assets or foreclosures. A cash dividend of $0.11 per share was declared, maintaining a 26-year streak of quarterly dividends.

Positive

• Earnings increased to $486,910 or $0.45 per share, up from $295,562 or $0.28 per share year-over-year.
• First half earnings of $963,231 or $0.90 per share, compared to $632,626 or $0.59 per share in the previous year.
• Interest rate margin improved to 4.07% from 3.01% year-over-year.
• Loan portfolio increased with no reported problem assets, foreclosures, or loan charge-offs.
• Declared a cash dividend of $0.11 per share, marking 26 consecutive years of dividends.

Negative

• Higher mortgage rates have priced some buyers out of the market, potentially affecting real estate market health.
• There is a risk of credit concerns as interest rates rise, particularly for adjustable-rate loans.

WAKE FOREST, N.C., April 18, 2023 (GLOBE NEWSWIRE) -- Wake Forest Bancshares, Inc., (OTC: WAKE) parent company of Wake Forest Federal, announced today that the Company reported earnings of $486,910 or $0.45 per share for its quarter ended March 31, 2023. The Company reported earnings of $295,562 or $0.28 per share for the same quarter a year earlier. Earnings for the first six months of the Company’s fiscal year were reported at $963,231 or $0.90 per share versus $632,626 or $0.59 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 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 over the past year have increased short term interest rates by 4.75% with the potential for further rate increases in the future.   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 for the past two quarters. For the most recent quarter, the Company’s interest rate margin was 4.07% vs 3.01% for the same quarter a year earlier.

While our area’s economic conditions, unemployment rates, and residential home sales continue to remain healthy despite current inflationary concerns, higher mortgage rates and home prices have priced 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 increased from levels outstanding both in the first quarter and from a year ago. 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 when 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, driven somewhat by a lack of new refinancings. As always, 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 2.05% of total loans outstanding at March 31, 2023. 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 $117,856,929 at March 31, 2023. Total loans receivable and deposits outstanding at March 31, 2023 amounted to $69,954,293 and $89,359,248, respectively. Wake Forest Bancshares Inc.’s tier 1 capital leverage ratio was 23.10% at March 31, 2023. 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 the quarter ending March 31, 2023?

The company reported earnings of $486,910 or $0.45 per share for the quarter.

How does Wake Forest Bancshares' interest rate margin compare year-over-year?

The interest rate margin increased to 4.07% from 3.01% for the same quarter last year.

What is the cash dividend declared by Wake Forest Bancshares?

The company declared a cash dividend of $0.11 per share.

How many years has Wake Forest Bancshares been paying dividends?

The company has paid quarterly cash dividends for 26 consecutive years.

What are the earnings for the first half of the fiscal year for Wake Forest Bancshares?

Earnings for the first half were reported at $963,231 or $0.90 per share, up from $632,626 or $0.59 per share the previous year.