Wake Forest Bancshares net falls

July 21. Wake Forest Bancshares, parent company of Wake Forest Federal Savings and Loan Association, announced today that the Company reported earnings of $254,566 or $0.23 per share for its quarter ended June 30, 2020. The Company reported earnings of $410,405 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 $902,313 or $0.82 per share versus $1,213,150 or $1.09 per share for the same nine month period a year earlier.

Given the challenging times, the results were in line with expectations and budgetary amounts, said CEO Renee H. Shaw.

Earnings for both the current quarter and the nine months fiscal year to date were adversely impacted by Federal Reserve rate movements over the past nine months and specifically during March.

The Fed decreased rates by a combined 225 basis points beginning in July of 2019, including 150 basis points in March 2020 alone as a result of the economic impact of the COVID 19 pandemic.

The company’s interest rate margins contracted from 3.77% during its June 2019 quarter to 3.00% for its most recent quarter. At June 30, 2020, the net interest rate spread was 2.53%. In addition, the S&L incurred approximately $40,000 in expense associated with a core processing conversion during the current quarter, and close to $120,000 in such expense for the first nine months of its current fiscal year.

Residential market

Economic conditions and home sales continue to be stable in Wake Forest markets which include the Research Triangle area.

“During the current quarter, sales activity has remained resilient primarily because of historically low mortgage rates, but home prices have also stabilized and inventories of available homes have continued to remain tight,” the earnings report stated. Although there has been no significant effect on the local housing market as of yet, the COVID 19 pandemic has created a sizable increase in the local unemployment rate.

However the COVID 19 pandemic has yet to impact the credit quality of our loan portfolio, perhaps because the SBA’s PPP loan program, requested loan modifications, and pandemic financial assistance in the form of stimulus payments and enhanced unemployment insurance payments have masked the potential long term effects of the economic slowdown.

“When such government assistance ends, the S&L will need to evaluate the actual impact of the pandemic on credit quality,” the earnings report said.

The loan portfolio declined slightly from the previous quarter primarily because little additional lending occurred in the current quarter once the social distancing measures of the pandemic were implemented.

However, Wake Forest operations continue to be positively impacted by the absence of nonperforming assets and the lack of need for additional loan loss provisions. There were no problem assets or loan charge-offs during the current quarter. As a result, no additional loan loss provisions were necessary this quarter because of our sufficient level of loan loss allowances. The Company’s loan loss allowance amounted to approximately 2.16% of total loans outstanding at June 30.

Assets top $100 million

Total assets of the Company amounted to $105,992,034 at June 30, 2020. Total loans receivable and deposits outstanding at June 30, 2020 amounted to $66,770,918 and $78,644,194, respectively. Wake Forest Bancshares Inc.’s tier 1 capital leverage ratio was 24.15% at June 30, 2020.

Based in Wake Forest since 1922, the Company conducts business as Wake Forest Federal from its office in Wake Forest, (Wake County), North Carolina.


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