Wake Forest Bancshares, Inc. Announces Year End Results

WAKE FOREST, N.C., Dec. 20, 2012

In announcing the earnings, Robert C. White, President and Chief Executive Officer, stated that the Company's earnings continue to be impacted by compressed interest rate margins although the Company has shown improvement in its level of non-performing assets.  In order to protect the Association's portfolios from interest rate risk, a significant portion of the Company's loans and investments have either shorter maturities or variable rates.  The Federal Reserve has kept interest rates at historic lows since December of 2008 and the Company's interest rate sensitive loan and investment portfolios have adjusted downward to those rate movements to a greater extent than has the Company's deposit base.  However, in a rising rate environment, the Company's performance would be enhanced by increased rate spreads because of our ability to react quickly to such movements.

Although lackluster economic conditions persist, real estate lending in our local markets has begun to show some signs of recovery. Improvement in our residential real estate markets has recently occurred primarily because excess inventories of available homes have come down as the market has started to absorb existing product and new starts have been delayed. While sales activity increased during the current quarter, it remains at levels significantly below what is considered normal for the Company's markets.  As a historically high growth area, relocation sales have typically represented a sizable portion of our local real estate market but have suffered during this period because of limited job opportunities.  The broader local real estate markets have under performed largely because the economy has created uncertainty and buyers have either elected to forego home purchases in the interim or have been unable to qualify for financing.  When the area's employment situation improves, our markets and our performance should quickly follow. 

Earnings for the year continue to be impacted by loss provisions, charge-offs and expenses associated with non-performing loans and foreclosed assets. The Company provided $367,500 during the current year in loan loss provisions and write downs to the value of its foreclosed properties.  In addition, the Company charged off loans amounting to $52,500 net of recoveries during the year ended September 30, 2012.  In comparison, the Company incurred $390,650 in loan loss provisions and write downs to foreclosed properties in the year ended September 30, 2011.  However, because the Company's level of non-performing assets continues to fall, foreclosure related expense from holding such assets and net loss from sales of REO properties during the current year amounted to only $9,333. Such costs totaled $22,100 a year earlier.  Non-performing loans and foreclosed assets amounted to $2,113,543 and $4,277,904 at September 30, 2012 and September 30, 2011, respectively.  The Company's loan loss allowances amounted to approximately 2.01% of total loans outstanding at September 30, 2012.

Total assets of the Company amounted to $114,692,250 at September 30, 2012. Total loans receivable and deposits outstanding at September 30, 2012 amounted to $71,748,750 and $92,428,900, respectively.  Wake Forest Bancshares Inc.'s capital to assets ratio was 18.55% at September 30, 2012.   

Wake Forest Bancshares, Inc. has 1,154,535 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.

SOURCE Wake Forest Bancshares, Inc.