Wake Forest Bancshares, Inc. Announces Third Quarter Results

Rhea-AI Summary

Wake Forest Bancshares, Inc. (OTC: WAKE) reported earnings of $364,958 or $0.34 per share for Q2 2022, up from $322,721 or $0.29 per share year-over-year. For the first nine months, earnings reached $997,584 or $0.93 per share, compared to $910,146 or $0.83 last year. Despite a stable local economy, rising short-term interest rates by the Federal Reserve are impacting earnings. The company maintained a strong loan portfolio with excellent credit quality and paid a special dividend of $1.00 per share to celebrate its 100th anniversary.

Positive

• Earnings increased from $322,721 to $364,958 YoY.
• EPS rose from $0.29 to $0.34 YoY.
• Loan loss allowance remains healthy at 2.09% of total loans.
• Special cash dividend of $1.00 per share paid to celebrate 100 years.

Negative

• Federal Reserve rate hikes have marginally affected earnings.
• Higher mortgage rates may limit future homebuyer activity.

WAKE FOREST, N.C., July 19, 2022 (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 $364,958 or $0.34 per share for its quarter ended June 30, 2022. The Company reported earnings of $322,721 or $0.29 per share for the same quarter a year earlier. Earnings for the first nine months of the Company’s fiscal year were reported at $997,584 or $0.93 per share versus $910,146 or $0.83 per share for the same nine 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 stable local economic conditions and our resilient real estate markets but continue to be influenced by Federal Reserve rate policies. Federal Reserve policy actions to combat inflation in the past few months have increased short term interest rates by 1.50% with projections of further rate increases for the remainder of calendar year 2022. The Company’s balance sheet is intentionally shorter term and rate sensitive in order to avoid prolonged interest rate risk. While we believe that moderately higher rates will positively impact our short term results, such rate increases have had only a marginal effect on our earnings to date. The Company’s overall interest rate margin was 3.16% for the current quarter, versus 3.01% for its second quarter this year. In addition, included in our results for this quarter are certain employee retention credits (ERC credits) that the bank qualified for based on a pandemic related drop in revenues during two quarters in calendar year 2021.

While our area’s economic conditions and residential home sales continue to remain robust despite recent inflationary concerns, higher mortgage rates and home prices could begin to price certain buyers out of the market. However, our lending environment 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 has remained largely unchanged from levels outstanding a year ago but has grown slightly from levels outstanding during our first two quarters this fiscal year. Because we hold the mortgage loans we originate, a conscious decision to limit growth in our long term residential loan portfolio and emphasize construction lending was undertaken while market rates were historically low in order to avoid excessive interest rate risk. As mortgage rates rise to more typical levels, we intend to become more active in permanent residential financing. 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 2.09% of total loans outstanding at June 30, 2022.

Wake Forest Bancshares paid a special cash dividend of $1.00 per share during the current quarter. 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 $113,623,115 at June 30, 2022. Total loans receivable and deposits outstanding at June 30, 2022 amounted to $68,653,410 and $86,129,490, respectively. Wake Forest Bancshares Inc.’s tier 1 capital leverage ratio was 23.07% at June 30, 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 Q2 2022?

For Q2 2022, Wake Forest Bancshares reported earnings of $364,958 or $0.34 per share.

How did earnings for Wake Forest Bancshares compare year-over-year?

Earnings increased from $322,721 in Q2 2021 to $364,958 in Q2 2022.

What is the current loan loss allowance for Wake Forest Bancshares?

The loan loss allowance is approximately 2.09% of total loans outstanding as of June 30, 2022.

Did Wake Forest Bancshares pay a dividend in 2022?

Yes, the company paid a special cash dividend of $1.00 per share during the current quarter.

How have interest rate policies affected Wake Forest Bancshares' earnings?

Recent Federal Reserve rate increases have had a marginal effect on the company's earnings to date.