UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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þ
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
June 30, 2008
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number
000-25999
Wake Forest Bancshares, Inc.
(Exact name of small business issuer as specified in its charter)
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United States of America
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56-2131079
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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302 South Brooks Street
Wake Forest, North Carolina 27587
(Address of principal executive offices)
(919)-556-5146
(Issuers telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
o
No
þ
State the number of shares outstanding of each of the issuers classes of common equity, as of the
latest practicable date:
As of August 1, 2008 there were issued and outstanding 1,157,628
shares of the Issuers common stock, $.01 par value
Transitional Small Business Disclosure Format: Yes
o
No
þ
WAKE FOREST BANCSHARES, INC.
CONTENTS
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2008 and September 30, 2007
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June 30,
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September 30,
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2008
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2007
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(Unaudited)
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*
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ASSETS
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|
|
|
|
|
|
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Cash and short-term cash investments
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$
|
11,227,500
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$
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21,670,500
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Bank certificates of deposit
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13,357,000
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4,158,000
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Investment securities:
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|
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Available for sale, at estimated market value
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1,663,750
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1,999,900
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|
FHLB stock
|
|
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195,200
|
|
|
|
191,400
|
|
Loans receivable, net of loan loss allowances of $1,194,750 at
June 30, 2008 and $1,187,550 at September 30, 2007
|
|
|
78,946,450
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|
|
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76,172,100
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|
Accrued interest receivable
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|
|
178,100
|
|
|
|
265,350
|
|
Foreclosed assets, net
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483,250
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|
|
|
1,003,800
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Property and equipment, net
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368,150
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357,350
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Bank owned life insurance
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1,174,600
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|
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|
1,141,350
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Deferred income taxes, net
|
|
|
525,250
|
|
|
|
390,650
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|
Prepaid expenses and other assets
|
|
|
177,200
|
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|
|
47,300
|
|
|
|
|
|
|
|
|
Total Assets
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|
$
|
108,296,450
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|
$
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107,397,700
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LIABILITIES AND STOCKHOLDERS EQUITY
|
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Deposits
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$
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86,389,950
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$
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85,659,150
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Accrued interest on deposits
|
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74,650
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|
64,750
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|
Accrued expenses and other liabilities
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761,500
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924,950
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Dividends payable
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104,550
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|
99,750
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Redeemable common stock held by the ESOP
net of unearned ESOP shares
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390,950
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465,550
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|
|
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Total Liabilities
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87,721,600
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87,214,150
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Stockholders equity:
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Preferred stock, authorized 1,000,000 shares, none issued
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Common stock, par value $ .01, authorized 5,000,000 shares,
issued 1,253,948 shares at June 30, 2008 and
at September 30, 2007
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12,550
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12,550
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Additional paid-in capital
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5,779,500
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|
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5,779,500
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Accumulated other comprehensive income
|
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96,550
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|
|
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305,000
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Retained earnings, substantially restricted
|
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|
16,199,800
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|
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15,555,950
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Less: Common stock in treasury, at cost (93,955 shares at
September 30, 2007 and 96,320 shares at June 30, 2008)
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|
|
(1,513,550
|
)
|
|
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(1,469,450
|
)
|
|
|
|
|
|
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Total stockholders equity
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|
20,574,850
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|
|
|
20,183,550
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|
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|
|
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Total liabilities and stockholders equity
|
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$
|
108,296,450
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|
|
$
|
107,397,700
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|
|
|
|
|
|
|
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*
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Derived from Audited Consolidated Financial Statements.
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See Notes to Consolidated Financial Statements.
1
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30, 2008 and 2007
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2008
|
|
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2007
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,297,850
|
|
|
$
|
1,632,900
|
|
Investment securities
|
|
|
24,250
|
|
|
|
14,200
|
|
Short-term cash investments
|
|
|
192,550
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|
332,050
|
|
|
|
|
|
|
|
|
Total interest income
|
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|
1,514,650
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|
|
|
1,979,150
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Interest expense:
|
|
|
|
|
|
|
|
|
Interest on deposits
|
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|
799,800
|
|
|
|
937,550
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
|
799,800
|
|
|
|
937,550
|
|
|
|
|
|
|
|
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Net interest income before provision for loan losses
|
|
|
714,850
|
|
|
|
1,041,600
|
|
Provision for loan losses
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|
(35,000
|
)
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|
|
(37,500
|
)
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
679,850
|
|
|
|
1,004,100
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Noninterest income:
|
|
|
|
|
|
|
|
|
Service charges and fees
|
|
|
19,500
|
|
|
|
19,000
|
|
Other
|
|
|
14,950
|
|
|
|
9,950
|
|
|
|
|
|
|
|
|
|
|
|
34,450
|
|
|
|
28,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense:
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
201,800
|
|
|
|
224,150
|
|
Occupancy
|
|
|
11,150
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|
|
|
10,800
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|
Federal insurance and operating assessments
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|
12,300
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|
|
|
12,000
|
|
Data processing
|
|
|
33,000
|
|
|
|
27,500
|
|
REO provisions and expense
|
|
|
2,700
|
|
|
|
28,400
|
|
Other operating expense
|
|
|
78,650
|
|
|
|
70,700
|
|
|
|
|
|
|
|
|
|
|
|
339,600
|
|
|
|
373,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income before income taxes
|
|
|
374,700
|
|
|
|
659,500
|
|
Income taxes
|
|
|
139,500
|
|
|
|
234,950
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
235,200
|
|
|
$
|
424,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.20
|
|
|
$
|
0.37
|
|
Diluted earnings per share
|
|
$
|
0.20
|
|
|
$
|
0.37
|
|
Dividends per share
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
See Notes to Consolidated Financial Statements.
2
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
4,205,550
|
|
|
$
|
4,849,300
|
|
Investment securities
|
|
|
73,350
|
|
|
|
28,200
|
|
Short-term cash investments
|
|
|
727,050
|
|
|
|
1,000,550
|
|
|
|
|
|
|
|
|
Total interest income
|
|
|
5,005,950
|
|
|
|
5,878,050
|
|
|
|
|
|
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
Interest on deposits
|
|
|
2,622,800
|
|
|
|
2,739,300
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
|
2,622,800
|
|
|
|
2,739,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before provision for loan losses
|
|
|
2,383,150
|
|
|
|
3,138,750
|
|
Provision for loan losses
|
|
|
(105,000
|
)
|
|
|
(130,000
|
)
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
2,278,150
|
|
|
|
3,008,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income:
|
|
|
|
|
|
|
|
|
Service charges and fees
|
|
|
55,950
|
|
|
|
49,700
|
|
Other
|
|
|
37,900
|
|
|
|
37,450
|
|
|
|
|
|
|
|
|
|
|
|
93,850
|
|
|
|
87,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense:
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
581,300
|
|
|
|
649,200
|
|
Occupancy
|
|
|
37,600
|
|
|
|
35,600
|
|
Federal insurance and operating assessments
|
|
|
36,650
|
|
|
|
35,400
|
|
Data processing
|
|
|
89,100
|
|
|
|
85,350
|
|
REO provisions and expense
|
|
|
11,650
|
|
|
|
68,600
|
|
Other operating expense
|
|
|
233,000
|
|
|
|
262,450
|
|
|
|
|
|
|
|
|
|
|
|
989,300
|
|
|
|
1,136,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,382,700
|
|
|
|
1,959,300
|
|
Income taxes
|
|
|
499,200
|
|
|
|
691,650
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
883,500
|
|
|
$
|
1,267,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.76
|
|
|
$
|
1.09
|
|
Diluted earnings per share
|
|
$
|
0.76
|
|
|
$
|
1.09
|
|
Dividends per share
|
|
$
|
0.60
|
|
|
$
|
0.57
|
|
See Notes to Consolidated Financial Statements.
3
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three and Nine Months Ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
For the Three Months Ended June 30:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
235,200
|
|
|
$
|
424,550
|
|
|
|
|
|
|
|
|
Other comprehensive (loss), net of tax:
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) arising during period
|
|
|
(61,650
|
)
|
|
|
800
|
|
Less: reclassification adjustments for (losses)
included in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(61,650
|
)
|
|
|
800
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
173,550
|
|
|
$
|
425,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
For the Nine Months Ended June 30:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
883,500
|
|
|
$
|
1,267,650
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
Unrealized holding gains (losses) arising during period
|
|
|
(208,450
|
)
|
|
|
(33,800
|
)
|
Less: reclassification adjustments for gains (losses)
included in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(208,450
|
)
|
|
|
(33,800
|
)
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
675,050
|
|
|
$
|
1,233,850
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
4
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Net income
|
|
$
|
883,500
|
|
|
|
1,267,650
|
|
Adjustments to reconcile net income to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
35,850
|
|
|
|
40,200
|
|
Provision for loan losses
|
|
|
105,000
|
|
|
|
130,000
|
|
Deferred income taxes
|
|
|
(6,900
|
)
|
|
|
(60,350
|
)
|
Loss (Gain) on sale of foreclosed assets
|
|
|
(2,900
|
)
|
|
|
3,150
|
|
Increase in cash surrender value of life insurance
|
|
|
(33,250
|
)
|
|
|
(29,750
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
(129,900
|
)
|
|
|
2,500
|
|
Accrued interest receivable
|
|
|
87,250
|
|
|
|
32,100
|
|
Accrued interest on deposits
|
|
|
9,900
|
|
|
|
(22,100
|
)
|
Accrued expenses and other liabilities
|
|
|
(163,450
|
)
|
|
|
112,300
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
785,100
|
|
|
|
1,475,700
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
Net (increase) decrease in loans receivable
|
|
|
(3,682,050
|
)
|
|
|
493,650
|
|
Net increase in bank certificates of deposit
|
|
|
(9,199,000
|
)
|
|
|
(99,000
|
)
|
Purchase of US agency securities
|
|
|
|
|
|
|
(1,500,000
|
)
|
Proceeds from the sale of foreclosed assets
|
|
|
1,354,500
|
|
|
|
262,500
|
|
Redemption of FHLB stock
|
|
|
|
|
|
|
6,200
|
|
Capital addtions to foreclosed assets
|
|
|
(28,350
|
)
|
|
|
(1,650
|
)
|
Purchase of FHLB stock
|
|
|
(3,800
|
)
|
|
|
|
|
Purchase of property and equipment
|
|
|
(46,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(11,605,350
|
)
|
|
|
(838,300
|
)
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Net increase in deposits
|
|
|
730,800
|
|
|
|
2,220,300
|
|
Proceeds from exercise of stock options
|
|
|
|
|
|
|
86,900
|
|
Additions to paid-in-capital from tax effect from exercise of
of stock options
|
|
|
|
|
|
|
27,000
|
|
Repurchase of common stock for the Treasury
|
|
|
(44,100
|
)
|
|
|
(77,550
|
)
|
Dividends paid
|
|
|
(309,450
|
)
|
|
|
(288,250
|
)
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
377,250
|
|
|
|
1,968,400
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
(10,443,000
|
)
|
|
|
2,605,800
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
21,670,500
|
|
|
|
22,828,900
|
|
|
|
|
|
|
|
|
Ending
|
|
$
|
11,227,500
|
|
|
|
25,434,700
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash payments of interest
|
|
$
|
2,612,900
|
|
|
|
2,761,400
|
|
|
|
|
|
|
|
|
Cash payment of income taxes
|
|
$
|
576,000
|
|
|
|
714,000
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Noncash transactions:
|
|
|
|
|
|
|
|
|
Increase (decrease) in ESOP put option charged to
retained earnings
|
|
$
|
(74,600
|
)
|
|
$
|
(73,450
|
)
|
|
|
|
|
|
|
|
Transfer of loans to foreclosed assets
|
|
$
|
802,700
|
|
|
|
295,850
|
|
|
|
|
|
|
|
|
Increase (decrease) in unrealized gain on investment
securities, net of tax
|
|
$
|
(208,450
|
)
|
|
|
(33,800
|
)
|
|
|
|
|
|
|
|
See Notes to Consolidated Finanical Statements.
5
Wake Forest Bancshares, Inc.
Notes to Consolidated Financial Statements
Note 1. Nature of Business
Wake Forest Bancshares, Inc. (the Company) is located in Wake Forest, North Carolina and is the
parent stock holding company of Wake Forest Federal Savings and Loan Association (the Association
or Wake Forest Federal), its only subsidiary. The Company conducts no business other than
holding all of the stock in the Association, investing dividends received from the Association,
repurchasing its common stock from time to time, and distributing dividends on its common stock to
its shareholders. The Associations principal activities consist of obtaining deposits and
providing mortgage credit to customers in its primary market area, the counties of Wake and
Franklin, North Carolina. The Companys and the Associations primary regulator is the Office of
Thrift Supervision (OTS) and its deposits are insured by the Federal Deposit Insurance Corporation
(FDIC).
Note 2. Organizational Structure
The Company is majority owned by the Wake Forest Bancorp, M.H.C., (the MHC) a mutual holding
company. Members of the MHC consist of depositors and certain borrowers of the Association, who
have the sole authority to elect the board of directors of the MHC for as long as it remains in
mutual form. Initially, the MHCs principal assets consisted of 635,000 shares of the
Associations common stock (now converted to the Companys common stock) and $100,000 in cash
received from the Association as initial capital. Prior to 2003 (see Note 4), the MHC received its
proportional share of dividends declared and paid by the Association (now the Company), and such
funds are invested in deposits with the Association. The MHC, which by law must own in excess of
50% of the stock of the Company, currently has an ownership interest of 54.9% of the Company. The
mutual holding company is registered as a savings and loan holding company and is subject to
regulation, examination, and supervision by the OTS.
The Company was formed on May 7, 1999 solely for the purpose of becoming a savings and loan holding
company and had no prior operating history. The formation of the Company had no impact on the
operations of the Association or the MHC. The Association continues to operate at the same
location and is subject to all the rights, obligations and liabilities of the Association which
existed immediately prior to the formation of the Company. The Board of Directors of the
Association capitalized the Company with $100,000. Future capitalization of the Company will
depend upon dividends declared by the Association based on future earnings, or the raising of
additional capital by the Company through a future issuance of securities, debt or by other means.
The Board of Directors of the Company has no present plans or intentions with respect to any future
issuance of securities or debt at this time.
Note 3. Basis of Presentation
The accompanying unaudited consolidated financial statements (except for the consolidated statement
of financial condition at September 30, 2007, which is derived from audited consolidated financial
statements) have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and Regulation S-B. Accordingly, they
do not include all of the information required by accounting principles generally accepted in the
United States of America for complete financial statements. In the opinion of management, all
adjustments (none of which were other than normal recurring accruals) necessary for a fair
presentation of the financial position and results of operations for the periods presented have
been included. The results of operations for the three and nine month periods ended June 30, 2008
are not necessarily indicative of the results of operations that may be expected for the Companys
fiscal year ending September 30, 2008. The accounting policies followed are as set forth in Note 1
of the Notes to Consolidated Financial Statements in the Companys September 30, 2007 Annual Report
to Stockholders.
Note 4. Dividends Declared
On June 16, 2008, the Board of Directors of the Company declared a dividend of $0.20 a share for
stockholders of record as of June 30, 2008 and payable on July 10, 2008. The dividends declared
were accrued and reported as dividends payable in the June 30, 2008 Consolidated Statement of
Financial Condition. Wake Forest Bancorp, Inc., the mutual holding company, waived the receipt of
the dividend declared by the Company this quarter.
6
Wake Forest Bancshares, Inc.
Notes to Consolidated Financial Statements
Note 5. Earnings Per Share
Basic earnings per share amounts are based on the weighted average shares of common stock
outstanding. Diluted earnings per share assumes the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible securities, unless the
effect is to reduce a loss or increase earnings per share. This presentation has been adopted for
all periods presented. There were no adjustments required to net income for any period in the
computation of diluted earnings per share. The reconciliation of weighted average shares
outstanding for the computation of basic and diluted earnings per share for the three and nine
month periods ended June 30, 2008 and 2007 is presented below.
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30:
|
|
2008
|
|
|
2007
|
|
Weighted average shares outstanding for Basic EPS
|
|
|
1,158,024
|
|
|
|
1,161,088
|
|
Plus incremental shares from assumed issuances of shares
pursuant to stock option and stock award plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted EPS
|
|
|
1,158,024
|
|
|
|
1,161,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended June 30:
|
|
|
2008
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for Basic EPS
|
|
|
1,159,133
|
|
|
|
1,160,165
|
|
Plus incremental shares from assumed issuances of shares
pursuant to stock option and stock award plans
|
|
|
|
|
|
|
1,145
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted EPS
|
|
|
1,159,133
|
|
|
|
1,161,310
|
|
|
|
|
|
|
|
|
Note 6. New Accounting Standard
In July 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income
Taxes
(FIN No. 48). FIN No. 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprises financial statements in accordance with SFAS No. 109,
Accounting for
Income Taxes
. FIN No. 48 prescribes a recognition threshold and measurement approach for the
financial statement recognition and measurement of a tax position taken or expected to be taken in
a tax return. FIN No. 48 also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition issues.
FIN No. 48 establishes a two-step process for evaluation of tax positions. The first step is
recognition, under which the enterprise determines whether it is more likely than not that a tax
position will be sustained upon examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the position. The enterprise is required to
presume the position will be examined by the appropriate taxing authority that has full knowledge
of all relevant information. The second step is measurement, under which a tax position that meets
the more-likely-than-not recognition threshold is measured to determine the amount of benefit to
recognize in the financial statements. The tax position is measured at the largest amount of
benefit that is greater than 50% likely of being realized upon ultimate settlement. The
cumulative effect of adopting FIN No. 48 is required to be reported as an adjustment to the opening
balance of retained earnings (or other appropriate components of equity) for that fiscal year. FIN
No. 48 is effective for the Companys current fiscal year and its adoption had no impact on
Companys consolidated financial statements.
7
Wake Forest Bancshares, Inc.
Notes to Consolidated Financial Statements
Note 7. Future Reporting Requirements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 157,
Fair Value Measurements
, which enhances existing guidance
for measuring assets and liabilities using fair value. SFAS No. 157 provides a single definition
of fair value, together with a framework for measuring it, and requires additional disclosures
about the use of fair value to measure assets and liabilities. SFAS No. 157 emphasizes that fair
value is a market-based measurement and establishes a fair value hierarchy with the highest
priority being quoted market prices in active markets. While SFAS No. 157 does not add any new
fair value measurements, it may change certain current practices. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007, and for interim
periods within those fiscal years. The Company does not expect the adoption of SFAS No. 157 will
have a material impact on its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159
The Fair Value Option for Financial Assets and
Financial Liabilities
. SFAS No. 159 provides an option to measure eligible financial instruments at
fair value at specified election dates. Unrealized gains and losses on specific financial assets
and liabilities that are designated to be carried at fair value will be recognized in earnings
thereafter. The fair value option may be applied instrument by instrument, is irrevocable and may
only be applied to entire instruments, not to portions of instruments. The provisions of SFAS No.
159 are effective for fiscal years beginning after November 15, 2007. The Company does not
currently plan to adopt SFAS No. 159.
The Emerging Issues Task Force (EITF) reached a consensus at its September 2006 meeting regarding
EITF 06-4,
Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements
. EITF 06-4 requires the recognition of a liability and
related compensation costs for endorsement split-dollar life insurance policies that provide a
benefit to an employee that extends to postretirement periods. The Company has policies that fall
within the scope of EITF 06-4. EITF 06-4 is effective for fiscal years beginning after
December 15, 2007 and can be applied by either a change in accounting principle through a
cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption or a
change in accounting principle through a retrospective application to all prior periods. The
Company is currently evaluating the impact of EITF 06-4 on its consolidated financial statements.
8
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Forward Looking Statements
Information set forth below contains various forward-looking statements within the meaning of
Section 27A of the Securities and Exchange Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, which statements represent the Companys judgment concerning the future
and are subject to risks and uncertainties that could cause the Companys actual operating
results to differ materially. Such forward-looking statements can be identified by the use of
forward-looking terminology, such as may, will, expect, anticipate, estimate,
believe, or continue, or the negative thereof or other variations thereof or comparable
terminology. The Company cautions that such forward-looking statements are further qualified
by important factors that could cause the Companys actual operating results to differ
materially from those in the forward-looking statements, as well as the factors set forth in
the Companys periodic reports and other filings with the SEC.
Comparison of Financial Condition at September 30, 2007 and June 30, 2008
Total assets increased by $898,750 to $108.3 million at June 30, 2008 from $107.4 million at
September 30, 2007. The increase in total assets during the nine month period ended June 30, 2008
was funded primarily from an increase in deposits of $730,800 and cash generated from internal
operating activities during the same period. Due to adequate levels of current liquidity, deposits
were priced to meet competition and retain certain accounts but not to aggressively attract
additional funds. The Company attempts to maintain a certain level of liquidity to fund loan growth
and to provide a cushion for its construction loan commitments. During the nine months ended June
30, 2008, cash and short term cash investments decreased by approximately $1.2 million.
Net loans receivable increased by approximately $2.7 million to $78.9 million at June 30, 2008 from
$76.2 million at September 30, 2007. The increase during the current nine month period occurred
primarily due to a $2.0 million increase in the Companys commercial real estate portfolio but
substantially all loan categories experienced some level of growth with the exception of the
Companys land loan portfolio which declined by approximately $647,000 during the period. The
increase in the Companys commercial real estate portfolio occurred because of two large loan
originations that closed during March 2008 and which were secured by a couple of industrial
warehouses located in the area. The residential market in the Companys primary lending area
remains sluggish when compared to the same periods a year earlier and both re-sales and newly
constructed homes remain on the market for longer periods of time. New home starts are
considerably less during the current nine month period when compared to the same time period a year
ago. The Companys local real estate market experienced significant growth over the last five
years, primarily due to an influx of newcomers from outside the area. Although the Companys
markets have not experienced a drop in home prices like many areas of the country, local real
estate markets are impacted by newcomers unable to purchase homes here until they are able to sell
residences elsewhere.
In addition, questions about the strength of the economy combined with tighter credit
standards associated with the sub-prime fall-out have slowed the residential real estate markets
significantly both locally and nationwide. Population growth and employment expansion across a wide
spectrum of the local economic base combined with moderate interest rate levels will ultimately
determine whether loan demand can be revived. Assuming local economic conditions improve,
management believes that the long-term fundamentals of its lending markets provide potential for
future loan growth. However, there can be no assurances that such loan demand can or will
materialize in the near future.
Investment securities decreased by $332,350 to $1,858,950 at June 30, 2008 from $2,191,300 at
September 30, 2007. The decrease is attributable to a $347,450 unrealized loss in the Companys
investment in FHLMC stock offset by $11,300 increase in unrealized appreciation in the Companys
bond portfolio during the past nine months and a required $3,800 purchase of FHLB stock during the
same period. The Company has held its FHLMC investment for many years and considers it to be a
long term investment. The Company has very little cost basis in the stock and retains an
approximately $125,750 unrealized gain in the stock at June 30, 2008. The FHLMC stock has
declined during the last nine months due to the issues surrounding sub-prime lending and the market
for mortgage-backed securities. The Company also has an investment of $1.5 million in FHLB bonds.
9
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Comparison of Financial Condition at September 30, 2007 and June 30, 2008 (Continued)
The Company generally maintains higher levels of short term liquidity in order to minimize interest
rate risk, to fund construction loan commitments, and due to the relatively minor differential in
current investment rates available on extended maturities. As a result, the Company has not been
actively involved in the buying and selling securities but has been purchasing FDIC insured bank
certificates of deposit generally with maturities up to one year to protect against downward
interest rate risk. The Companys portfolio of bank certificates of deposit amounted to $13.4
million at June 30, 2008. These bank certificates of deposit investments are typically acquired at
interest rates of 1.00% to 1.50% higher than most debt securities currently available for terms
much longer than a year.
The Company had no borrowings outstanding during the period because its current level of liquidity
was sufficient to fund lending and other cash commitments. The Company has recorded a liability of
$390,950 at June 30, 2008 for the ESOP put option which represents the potential liability owed to
participants based on the current market value of the Companys stock if all participants were to
request the balance of their account from the Company in cash instead of stock.
The Company has an ongoing stock repurchase program authorizing management to repurchase shares of
its outstanding common stock. The repurchases are made through registered broker-dealers from
shareholders in open market purchases at the discretion of management. The Company intends to hold
the shares repurchased as treasury shares, and may utilize such shares to fund stock benefit plans
or for any other general corporate purposes permitted by applicable law. At June 30, 2008 the
Company had repurchased 96,320 shares of its common stock. The program continues until completed
or terminated by the Board of Directors.
Retained earnings increased by $643,850 to $16.2 million at June 30, 2008 from $15.5 million at
September 30, 2007. The increase is primarily attributable to the Companys earnings of $883,500
during the nine month period ended June 30, 2008, reduced by $314,250 in dividends declared during
the period and a $74,600 recovery of prior charges to retained earnings to reflect the change in
the fair value of the ESOP shares subject to the put option. At June 30, 2008 the Companys
capital amounted to $20.6 million, which as a percentage of total assets was 19.00%. The Company
and the Association are both required to meet certain capital requirements as established by the
OTS. At June 30, 2008, all capital requirements were met.
Asset Quality
The Companys level of non-performing loans, consisting of loans past due 90 days or more, amounted
to $616,300 or 0.77% as a percentage of loans outstanding at June 30, 2008. Non-performing loans
amounted to $595,650 or 0.77% as a percentage of loans outstanding at September 30, 2007. At June
30, 2008, non-performing loans consisted of one uncompleted spec residential construction loan
amounting to $294,950, one single family loan totaling $133,600, and one home equity loan amounting
to $187,750. The residential single family loan and the home equity loan are to the same borrower
and secured by the same property. Foreclosure proceedings have commenced on all of the
non-performing loans outstanding at June 30, 2008. Only the residential construction loans cost
basis is considered to be in excess of its fair market value and the Company has allocated
sufficient loss reserves to cover the deficiency at June 30, 2008. All of the loans have been
placed on non-accrual status.
Non-performing assets also includes real estate acquired through foreclosure. At June 30, 2008,
foreclosed real estate included one residential building lot ($26,500) and three former residential
construction loans on partially completed single family properties ($456,750). The three partially
completed single family homes were transferred to foreclosed assets after having incurred a
combined $86,800 in loan charge-offs and the Company believes that no further write downs are
necessarily in order to dispose of the properties. One of the single family properties is
currently under contract and is scheduled to be sold in July 2008. The foreclosed highway 98
commercial tract ($1,003,800) that the Company had held for several years was sold during the
current quarter at approximately its cost basis.
10
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Asset Quality (Continued):
The Company had $97,800 in loan charge-offs during the nine months ended June 30, 2008. The
Companys loan loss allowance amounted to $1,194,750 at June 30, 2008 and management believes that
it has sufficient allowances established to cover losses associated with its loan portfolio. The
allowance for loan losses is established based upon probable losses that are estimated to have
occurred through a provision for loan losses charged to earnings.
During the past five years, the Associations loan portfolio has gradually trended towards a
greater concentration of residential construction and land loans, which generally involve a greater
degree of credit risk and collection issues. As a result, the Company has provided relatively
higher levels of loan loss provisions and resulting allowances during this period than what has
historically been considered necessary. The allowance for loan losses is evaluated on a regular
basis by management.
The Company records provisions for loan losses based upon known problem loans and estimated
deficiencies in the existing loan portfolio. The Companys methodology for assessing the
appropriateness of the allowance for loan losses consists of two key components which are a
specific allowance for identified problem or impaired loans under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 114,
Accounting by Creditors for Impairment of a
Loan"
, and a formula allowance for the remainder of the portfolio under the provisions of SFAS No.
5,
Accounting for Contingencies.
Because the Company only originates loans secured by real
estate, specific problem loans are graded using the standard regulatory classifications and are
evaluated for impairment under SFAS No. 114 based upon the collaterals fair value less estimated
cost of disposal.
All other loans with unidentified impairment issues are pooled and segmented by major loan types
(single-family residential properties, construction loans, commercial real estate, land, etc.).
Loan loss rates for these categories are then generated by capturing historical loan losses net of
recoveries over a five and ten year period, with added weight given to the more recent five year
period. Qualitative factors that may affect loan collectibility such as geographical and lending
concentrations, local economic conditions, and delinquency trends are also considered in
determining the Companys best estimate of the range of credit losses. This evaluation is
inherently subjective as it requires estimates that are susceptible to significant revision as more
information becomes available. Although management believes it has established and maintained the
allowance for loan losses at appropriate levels, future adjustments may be necessary if economic,
real estate values and other conditions differ substantially from the current operating
environment. In addition, regulatory examiners may require the Association to recognize adjustments
to the allowance for loan losses based on their judgments about information available to them at
the time of their examination.
Comparison of Operating Results for the Three and Nine Months Ended June 30, 2008 and 2007
General.
Net income for the three month period ended June 30, 2008 was $235,200, or $189,350 less
than the $424,550 earned during the same quarter in 2007. Net income for the nine month period
ended June 30, 2008 was $883,500, or $384,150 less than the $1,267,650 earned during the same
period in 2007. As discussed below, a reduction in net interest income between the comparable
periods was primarily responsible for the decline in net income during the current quarter and nine
month period end June 30, 2008 when compared to the same periods a year earlier.
Interest income.
Interest income decreased by $464,500 from $1,979,150 for the three months ended
June 30, 2007 to $1,514,650 for the three months ended June 30, 2008. The decrease in interest
income resulted from a 163 basis point decrease in the average yield on interest earning assets
between the quarters. Interest income decreased by $872,100 from $5,878,050 for the nine months
ended June 30, 2007 to $5,005,950 for the nine months ended June 30, 2008. The decrease in
interest income resulted from a 103 basis point decrease in the average yield on interest earning
assets between the nine month periods.
11
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Comparison of Operating Results for the Three and Nine Months Ended June 30, 2008 and 2007
(Continued)
Interest Income (continued)
The Companys yield on interest earning assets was 5.64% and 6.25% for the quarter and nine month
period ended June 30, 2008; respectively, and 7.27% and 7.28% for the quarter and nine month
period ended June 30, 2007; respectively. The changes in yield occurred primarily due to
fluctuations in market rates outstanding during the periods. A significant portion of the
Companys assets have rates that are tied to prime or generally move in tandem with changes to
prime, which in turn is directly influenced by Federal Reserve monetary policies and its interest
rate movements. The Federal Reserve has lowered rates by 3.25% since September 2007 which has had
a material impact on the Companys revenue stream.
Interest Expense.
Interest expense decreased by $137,750 from $937,550 for the three months ended
June 30, 2007 to $799,800 for the three months ended June 30, 2008. Interest expense decreased by
$116,500 from $2,739,300 for the nine months ended June 30, 2007 to $2,622,800 for the nine months
ended June 30, 2008. The decrease in interest expense during the current quarter and nine month
period ended June 30, 2008 as compared to the same periods a year earlier resulted primarily from a
decrease in the Companys cost of funds. The Companys cost of funds was 3.71% and 4.02% for the
three and nine month periods ended June 30, 2008; respectively, as compared to 4.37% and 4.31%,
respectively, for the same periods a year earlier.
Net interest income.
Net interest income decreased by $326,750 from $1,041,600 for the three
months ended June 30, 2007 to $714,850 for the three months ended June 30, 2008. Net interest
income decreased by $755,600 from $3,138,750 for the nine months ended June 30, 2007 to $2,383,150
for the nine months ended June 30, 2008. As explained above, the decrease in net interest income
resulted primarily from declines in the Companys yields on its interest-earning assets during the
three and nine months ended June 30, 2008 as compared with the same periods one year earlier. The
Companys net interest margin was 2.73% and 3.03% for the current quarter and nine months ended
June 30, 2008 versus 4.01% and 4.05% for the same quarter and nine month period a year earlier.
Provision for loan losses.
The Company provided $35,000 and $105,000 in loan loss provisions
during the current quarter and nine month period ended June 30, 2008; respectively, as compared to
$37,500 and $130,000 during the three and nine month periods; respectively, a year earlier.
Provisions, which are charged to operations, and the resulting loan loss allowances are amounts the
Companys management believes will be adequate to absorb losses that are estimated to have occurred
in the portfolio. Loans are charged off against the allowance when management believes that
uncollectibility is confirmed. Subsequent recoveries, if any, are credited to the allowance. The
Associations loan portfolio has gradually trended towards a greater concentration of builder
construction loans, land and land development loans, and commercial real estate loans which
generally involve a greater degree of credit risk and collection issues. Also, many of these types
of loans involve lending relationships which are larger than what the Company has traditionally
maintained. As a result, the Company has provided relatively higher levels of loan loss provisions
and resulting allowances during the last five years than what has historically been considered
necessary.
Non-interest income.
The Companys non-interest income is primarily comprised on various fees and
service charges on customer accounts, income from bank owned life insurance products, as well as
security gains and fees earned from secondary market originations. The Company did not have any
investment sales during any of the periods being reported upon. In addition, the Company has been
originating residential mortgage loans for its own portfolio over the periods being reported upon
and therefore very little secondary marketing income has been generated over those same periods.
12
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Non-interest expense.
Non-interest expense decreased by $33,950 to $339,600 for the three month
period ended June 30, 2008 from $373,550 for the comparable quarter in 2007. Non-interest expense
decreased by $147,300 to $989,300 for the nine month period ended June 30, 2008 from $1,136,600 for
the same period a year earlier.
Compensation and benefits decreased by $22,350 and $67,900 during the quarter and nine months ended
June 30, 2008 as compared to the same periods a year earlier due to the accrual of a lesser amount
of employee bonuses for the current year. REO provisions and expense are primarily associated
with environmental assessment activities for a foreclosed tract on highway 98 outside of Wake
Forest, North Carolina which the Company had held for several years but which was sold during the
current quarter for approximately the Companys recorded cost basis. REO provisions and expense
were approximately $25,700 and $56,950 lower during the current quarter and nine months ended June
30, 2008 versus the same periods a year earlier. The lower REO expense was primarily due to a
lesser amount of assessment activities to the tract during the current year as compared to the same
periods in 2007.
Other operating expense decreased by $29,450 during the nine months ended June 30, 2008 as compared
to the same periods a year ago primarily because the Company has been diligent in trimming various
operating expenses when feasible, including reductions in certain equipment expense, supplies
expense, loan processing expense, shareholder expense, and contribution expense. Other operating
expense increased by $7,950 during the current quarter as compared to the same quarter a year
earlier primarily due to increased shareholder cost associated with the Companys annual meeting of
stockholders. No other category of non-interest expense changed significantly between the periods.
Capital Resources and Liquidity
The term liquidity generally refers to an organizations ability to generate adequate amounts of
funds to meet its needs for cash. More specifically for financial institutions, liquidity ensures
that adequate funds are available to meet deposit withdrawals, fund loan and capital expenditure
commitments, maintain reserve requirements, pay operating expenses, and provide funds for debt
service, dividends to stockholders, and other institutional commitments. Funds are primarily
provided through financial resources from operating activities, expansion of the deposit base,
borrowings, through the sale or maturity of investments, the ability to raise equity capital, or
maintenance of shorter term interest-earning deposits.
During the nine month period ended June 30, 2008, cash and cash equivalents, a significant source
of liquidity, decreased by approximately $1.2 million. A net increase in loans of $3.7 million was
the primary use of funds during the nine month period ended June 30, 2008. Proceeds amounting to
approximately $1.4 million from the sale of foreclosed properties, a net increase in deposits of
$730,800, and cash provided by operating activities of $785,100 were the primary factors which
provided liquidity during the current nine month period. Given its excess liquidity and its
ability to borrow from the Federal Home Loan Bank of Atlanta, the Company believes that it will
have sufficient funds available to meet anticipated future loan commitments, unexpected deposit
withdrawals, and other cash requirements.
Off-Balance Sheet Transactions
In the normal course of business, the Association engages in a variety of financial transactions
that, under generally accepted accounting principles, either are not recorded on the balance sheet
or are recorded on the balance sheet in amounts that differ from the full contract or notional
amounts. Primarily the Association is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
13
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Off-Balance Sheet Transactions (continued)
These financial instruments include commitments to extend credit, revolving lines of credit, and
the undisbursed portion of construction loans. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amounts recognized in the statement of
financial condition. The contract or notional amounts of those instruments reflect the extent of
involvement the Association has in particular classes of financial instruments. The Associations
exposure to credit loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit is represented by the contractual notional amount of
those instruments. The Association uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
At June 30, 2008, the Company had outstanding loan commitments amounting to approximately $848,000.
The undisbursed portion of construction loans amounted to $6.9 million and unused lines of credit
amounted to $3.7 million at June 30, 2008.
Critical Accounting Policies and Estimates
The accounting policies followed are as set forth in Note 1 of the Notes to Financial Statements in
the Companys 2007 Annual Report on Form 10-KSB. The Company has not experienced any material
change in its critical accounting policies since September 30, 2007. The Companys discussion and
analysis of its financial condition and results of operations are based upon its consolidated
financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires the Company
to make estimates and judgments regarding uncertainties that affect the reported amounts of assets,
liabilities, revenues and expenses. On an ongoing basis, the Company evaluates its estimates
which are based upon historical experience and on other assumptions that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The Company considers the following accounting policies to be
most critical in their potential effect on its financial position or results of operations:
Allowance for Loan Losses
The most critical estimate concerns the Companys allowance for loan losses. The Company records
provisions for loan losses based upon known problem loans and estimated deficiencies in the
existing loan portfolio. The Companys methodology for assessing the appropriations of the
allowance for loan losses consists of two key components, which are a specific allowance for
identified problem or impaired loans and a formula allowance for the remainder of the portfolio.
A loan is considered impaired when, based on current information and events, it is probable that
the Association will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length
of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan
basis for commercial and construction loans by either the present value of expected future cash
flows discounted at the loans effective interest rate, the loans obtainable market price, or the
fair value of the collateral if the loan is collateral dependent. This evaluation is inherently
subjective as it requires material estimates that may be susceptible to significant change. Large
groups of smaller balance homogeneous loans are collectively evaluated for impairment.
14
Wake Forest Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition
and Results of Operations
Critical Accounting Policies and Estimates (continued)
The adequacy of the allowance is also reviewed by management based upon its evaluation of
then-existing economic and business conditions affecting the key lending areas of the Company and
other conditions, such as new loan products, collateral values, loan concentrations, changes in the
mix and volume of the loan portfolio; trends in portfolio credit quality, including delinquency and
charge-off rates; and current economic conditions that may affect a borrowers ability to repay.
Although management believes it has established and maintained the allowance for loan losses at
appropriate levels, future adjustments may be necessary if economic, real estate and other
conditions differ substantially from the current operating environment.
Interest Income Recognition:
Interest on loans is included in income as earned based upon interest rates applied to unpaid
principal. Interest is not accrued on loans 90 days or more past due unless the loans are
adequately secured and in the process of collection. Interest is not accrued on other loans when
management believes collection is doubtful. All loans considered impaired are non-accruing.
Interest on non-accruing loans is recognized as payments are received when the ultimate
collectibility of interest is no longer considered doubtful. When a loan is placed on non-accrual
status, all interest previously accrued is reversed against current-period interest income.
15
Wake Forest Bancshares, Inc.
June 30, 2007
Item 3. Controls and Procedures
Management, including the Companys Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(e)) as of the end of the period covered by this report.
Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that
the disclosure controls and procedures were effective, in all material respects, to ensure that
information required to be disclosed in the reports the Company files and submits under the
Exchange Act is recorded, processed, summarized and reported as and when required.
There have been no changes in the Companys internal control over financial reporting identified in
connection with the evaluation that occurred during the Companys last fiscal quarter that has
materially affected, or that is reasonably likely to materially affect, the Companys internal
control over financial reporting.
16
Wake Forest Bancshares, Inc.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any material legal proceedings at the present time.
Occasionally, the Association is a party to legal proceedings within the normal
course of business wherein it enforces its security interest in loans made by it,
and other matters of a similar nature.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits
|
a)
|
|
Exhibit 31 Certification of Pursuant to 18 U.S.C. Section
1350, as adopted Pursuant
to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
b)
|
|
Exhibit 32 Certification of Pursuant to 18 U.S.C. Section
1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
Wake Forest Bancshares, Inc.
|
|
Dated: August 08, 2008
|
By:
|
/s/ Robert C. White
|
|
|
|
Robert C. White
|
|
|
|
Chief Executive Officer and
Chief Financial Officer
|
|
18
EXHIBIT INDEX
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
|
Exhibit 31
|
|
Certification
of Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to
Section 302 of the
Sarbanes-Oxley
Act of 2002.
|
|
|
|
Exhibit 32
|
|
Certification of Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley
Act of 2002.
|
19
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