Wake Forest Bancshares, Inc. Announces Third Quarter Results

WAKE FOREST, N.C., July 22 /PRNewswire-FirstCall/ -- Wake Forest
Bancshares, Inc., (OTC Bulletin Board: WAKE.OB) parent company of Wake Forest
Federal Savings and Loan Association, announced today that the Company
reported earnings of $235,200 or $0.20 per share for the quarter ended June
30, 2008, compared to earnings of $424,550 or $0.37 per share for the same
quarter a year earlier. Earnings for the first nine months of the Company's
fiscal year were reported at $883,500 or $0.76 per share versus $1,267,650 or
$1.09 per share for the same nine-month period a year earlier.
In announcing the earnings, Robert C. White, President and Chief Executive
Officer, pointed out that while third quarter earnings were below the
Company's budgetary expectations established at the beginning of the year, the
Company's earnings for the first nine months of the year were only slightly
below the Company's initial outlook. He stated that the primary factor for
the earnings decline when compared to the same periods a year earlier was a
reduction in the Company's net interest income. A significant portion of the
Company's loans and investments have variable rates and therefore the
portfolios react quickly to movements in the prime rate. The Federal Reserve
has lowered interest rates by 325 basis points during the past nine months and
the Company's loan and investment portfolios have adjusted more quickly to
those rate movements than has the Company's deposit base. The Company's net
interest margin was 2.73% and 3.03% during the quarter and nine months ended
June 30, 2008, respectively, as compared to a margin of 4.01% and 4.05% for
the same periods a year earlier.
Real estate lending, including construction lending, in the Company's
markets remained lackluster as both a slowing economy and a nationwide decline
in home sales has affected the Company's primary lending areas. The slow-down
in the Company's local real estate markets has been less severe than that
experienced by many other areas nationwide because local home prices never
escalated to unsustainable levels in recent years. Although the Company does
not make sub-prime loans, the broader local real estate markets have gradually
slowed as inventories of new homes have increased, the uncertainty over the
economy grew, and numerous buyers had difficulty obtaining financing.
The Company's total assets, loans and deposits increased by $899,000, $2.8
million and $731,000, respectively, during the current year. Total assets of
the Company amounted to $108.3 million at June 30, 2008. Total net loans
receivable and deposits outstanding at June 30, 2008 amounted to $78.9 million
and $86.4 million, respectively. Wake Forest Bancshares Inc.'s return on
average assets was .87% for the current quarter as compared to 1.58% for its
quarter ended June 30, 2007.
The Company's ratio of non-performing assets to total assets decreased by
113 basis points during the quarter and amounted to 1.02% at June 30, 2008.
The Company added $35,000 in additional loss provisions to its loan loss
allowances during the current quarter and those allowances amounted to
approximately 1.49% of total loans outstanding at June 30, 2008.
The Company had previously announced that it had declared a quarterly
dividend to $0.20 per share for shareholders of record as of June 30, 2008,
payable on July 10, 2008. The current dividend represents the 49th
consecutive quarterly dividend paid by the Company.
Wake Forest Bancshares, Inc. has 1,157,628 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.

Robert C. White, CEO of Wake Forest Bancshares, Inc., +1-919-556-5146