FORM 10-QSB - QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2001
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 000-25999
WAKE FOREST BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
United States of America 56-2131079
- -----------------------------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
302 South Brooks Street
Wake Forest, North Carolina 27587
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(Address of principal executive offices)
(919)-556-5146
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(Issuer's telephone number)
N/A
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(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 X No
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of February 1, 2002 there were
issued and outstanding 1,155,026 shares of the Issuer's common stock, $.01 par
value
Transitional Small Business Disclosure Format: Yes X No
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WAKE FOREST BANCSHARES, INC.
CONTENTS
PART 1. - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated statements of financial condition at December 31, 2001 (unaudited)
and September 30, 2001 1
Consolidated statements of income for the three months ended December 31, 2001 2
and December 31, 2000 (unaudited)
Consolidated statements of comprehensive income for the three months ended 3
December 31, 2001 and December 31, 2000 (unaudited)
Consolidated statements of cash flows for the three months ended 4
December 31, 2001 and December 31, 2000 (unaudited)
Notes to consolidated financial statements (unaudited) 5 - 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 -10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2001 AND SEPTEMBER 30, 2001
December 31, September 30,
ASSETS 2001 2001
----------------- -----------------
(Unaudited)
Cash and short-term cash investments $ 19,231,450 $ 15,885,100
Investment securities:
Available for sale, at estimated market value 1,013,950 1,510,100
FHLB stock 330,400 330,400
Loans receivable, net 75,054,300 74,632,400
Accrued interest receivable 56,500 86,100
Foreclosed assets, net 742,950 391,250
Property and equipment, net 419,450 423,650
Prepaid expenses and other assets 43,200 77,500
----------------- -----------------
Total Assets $ 96,892,200 $ 93,336,500
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 80,518,200 $ 77,220,600
Accrued expenses and other liabilities 673,450 551,400
Dividends payable 138,600 138,600
Note payable- ESOP 73,550 88,300
Deferred income taxes 168,800 176,550
Redeemable common stock held by the ESOP
net of unearned ESOP shares 668,050 612,100
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Total liabilities 82,240,650 78,787,550
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Stockholders' equity:
Preferred stock, authorized 1,000,000 shares, none issued
Common stock, par value $ .01, authorized 5,000,000 shares,
issued 1,215,862 12,150 12,150
Additional paid-in capital 5,022,100 4,996,900
Accumulated other comprehensive income 619,250 616,850
Retained earnings, substantially restricted 9,808,750 9,733,750
Less: Common stock in treasury, at cost (810,700) (810,700)
----------------- -----------------
Total stockholders' equity 14,651,550 14,548,950
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Total liabilities and stockholders' equity $ 96,892,200 $ 93,336,500
================= =================
See Notes to Consolidated Financial Statements.
1
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
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Interest and dividend income:
Loans $ 1,645,850 $ 1,722,800
Investment securities 12,300 39,200
Short-term cash investments 84,800 167,800
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Total interest income 1,742,950 1,929,800
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Interest expense:
Interest on deposits 1,014,850 1,040,200
Interest on ESOP debt 1,100 3,500
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Total interest expense 1,015,950 1,043,700
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Net interest income before provision for loan losses 727,000 886,100
Provision for loan losses (15,750) (8,000)
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Net interest income after provision for loan losses 711,250 878,100
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Noninterest income:
Service charges and fees 17,000 13,000
Other 4,700 150
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21,700 13,150
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Noninterest expense:
Compensation and benefits 206,250 249,900
Occupancy 10,100 10,250
Federal insurance and operating assessments 10,950 9,550
Data processing and outside service fees 30,650 28,750
Other operating expense 60,900 63,100
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318,850 361,550
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Income before income taxes 414,100 529,700
Income taxes 160,200 196,450
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Net income $ 253,900 $ 333,250
================= =================
Basic earnings per share $ 0.22 $ 0.29
Diluted earnings per share $ 0.22 $ 0.29
Dividends paid per share $ 0.12 $ 0.12
See Notes to Consolidated Financial Statements.
2
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
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Net income $ 253,900 $ 333,250
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Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period 2,400 151,050
Less: reclassification adjustments for gains included
in net income
-- --
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Other comprehensive income 2,400 151,050
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Comprehensive income $ 256,300 $ 484,300
================== ===================
See Notes to Consolidated Finanical Statements.
3
WAKE FOREST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
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Net income $ 253,900 $ 333,250
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 7,950 8,400
ESOP contribution expense charged to paid-in capital 11,050 3,000
Provision for loan losses 15,750 8,000
Gain on sale of foreclosed assets (4,650) --
Amortization of unearned ESOP shares 14,700 14,700
Amortization of unearned RRP shares 14,200 14,200
Changes in assets and liabilities:
Prepaid expenses and other assets 34,300 2,250
Accrued interest receivable 29,600 (19,200)
Accrued expenses and other liabilities 122,050 218,000
Deferred income taxes (9,250) (12,000)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 489,600 570,600
----------------- -----------------
Cash Flows From Investing Activities:
Net (increase) decrease in loans receivable (939,700) 2,171,800
Proceeds from sale of foreclosed assets 155,000 --
Maturity of available for sale investment securities 500,000 --
Purchase of property and equipment (3,750) --
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (288,450) 2,171,800
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Cash Flows From Financing Activities:
Net increase in deposits 3,297,600 5,102,750
Principal payments on ESOP debt (14,750) (14,750)
Repurchase of common stock for the Treasury -- (13,100)
Dividends paid (137,650) (138,950)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 3,145,200 4,935,950
----------------- -----------------
Net increase in cash and cash equivalents 3,346,350 7,678,350
Cash and cash equivalents:
Beginning 15,885,100 6,735,850
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Ending $ 19,231,450 $ 14,414,200
================= =================
Supplemental Disclosure of Cash Flow Information:
Cash payments of interest $ 1,012,750 $ 1,039,050
================= =================
Cash payment of income taxes $ -- $ 7,000
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Supplemental Disclosure of Noncash transactions:
Incr. (decr.) in ESOP put option charged to retained earnings $ 55,950 19,850
================= =================
Transfer of loans to foreclosed assets $ 502,050 $ --
================= =================
Incr. (decr.) in unrealized gain on investment securities $ 2,400 $ 151,050
================= =================
See Notes to Consolidated Finanical Statements.
4
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"), it's 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 Association's principal activities
consist of obtaining savings deposits and providing mortgage credit to customers
in its primary market area, the counties of Wake and Franklin, North Carolina.
The Company's and the Association's primary regulator is the Office of Thrift
Supervision (OTS) and its deposits are insured by the Savings Association
Insurance Fund (SAIF) of 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
MHC's principal assets consisted of 635,000 shares of the Association's common
stock (now converted to the Company's common stock) and $100,000 in cash
received from the Association as initial capital. The MHC has since 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 55.0% 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, with the
same management, and 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.
The establishment of the Company was treated similar to a pooling of interests
for accounting purposes. Therefore, the consolidated capitalization, assets,
liabilities, income and expenses of the Company immediately following its
formation were substantially the same as those of the Association immediately
prior to the formation, all of which are shown on the Company's books at their
historical recorded values.
5
WAKE FOREST BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements (except for the
consolidated statement of financial condition at September 30, 2001, which is
audited) have been prepared in accordance with generally accepted accounting
principles for interim financial information and Regulation S-B. Accordingly,
they do not include all of the information required by generally accepted
accounting principles 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 month period ended December 31, 2001 are not
necessarily indicative of the results of operations that may be expected for the
Company's fiscal year ending September 30, 2002. The accounting policies
followed are as set forth in Note 1 of the Notes to Consolidated Financial
Statements in the Company's September 30, 2001 Annual Report to Stockholders.
NOTE 4. DIVIDENDS DECLARED
On December 17, 2001, the Board of Directors of the Company declared a dividend
of $0.12 a share for stockholders of record as of December 28, 2001 and payable
on January 10, 2002. The dividends declared were accrued and reported as
dividends payable in the December 31, 2001 Consolidated Statement of Financial
Condition. Wake Forest Bancorp, Inc., the mutual holding company, did not waive
the receipt of dividends declared by the Company.
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 month periods ended December 31, 2001 and 2000 is presented
below.
FOR THE THREE MONTHS ENDED DECEMBER 31: 2001 2000
----------------- -----------------
Weighted average shares outstanding for Basic EPS 1,144,744 1,161,005
Plus incremental shares from assumed issuances of shares
pursuant to stock option and stock award plans 9,181 --
----------------- -----------------
Weighted average shares outstanding for diluted EPS 1,153,925 1,161,005
================= =================
6
WAKE FOREST BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2001:
Total assets increased by $3.6 million to $96.9 million at December 31, 2001
from $93.3 million at September 30, 2001. Total assets increased during the
three months ended December 31, 2001 primarily due to an increase in deposits of
approximately $3.3 million during the period. The deposit increase created an
increase in cash and short term cash investments of approximately $3.3 million
for the three month period.
Net loans receivable increased by $421,900 to $75.1 million at December 31, 2001
from $74.6 million at September 30, 2001. The slight increase is a reflection of
a still stagnant economy and a more cautious approach to lending in general.
Assuming interest rates remain fairly stable or decline and economic conditions
improve, management believes that its loan portfolio has potential for future
growth because the Company operates in lending markets that have had sustained
strong loan demand over the past several years. However, there can be no
assurances that such loan demand can or will materialize.
Investment securities decreased by $496,150 to $1.3 million at December 31, 2001
from $1.8 million at September 30, 2001. The decrease is attributable to
maturing investments and management's decision not to invest in a market that is
at historically low interest rates. At December 31, 2001, the Company's
investment portfolio, which consisted primarily of FHLB stock and FHLMC stock,
had approximately $1.0 million in net unrealized gains.
The Company had no borrowings outstanding during the period other than the loan
incurred by the ESOP for purchase of 41,200 shares of the Company's common
stock. The ESOP borrowed $412,000 for its purchase of stock from an outside
financial institution on April 3, 1996. During the current three month period,
the Company made principal payments totaling $14,750 plus interest on the ESOP
note, reducing the outstanding balance of the note to $73,550 at December 31,
2001. The Company is committed to making retirement plan contributions
sufficient to amortize the debt over its seven-year term, and as such, has
reported the debt on its balance sheet. The Company recorded retirement plan
expense of approximately $26,100 during the three month period ended December
31, 2001. The Company also has recorded a liability of 668,050 at December 31,
2001 for the ESOP put option.
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
December 31, 2001 the Company had repurchased 60,836 shares of its common stock.
The program continues until completed or terminated by the Board of Directors.
7
WAKE FOREST BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2001:
Retained earnings increased by $75,000 to $9.8 million at December 31, 2001 from
$9.7 million at September 30, 2001. The increase is attributable to the
Company's earnings during the three month period ended December 31, 2001,
reduced by $137,750 in dividends declared during the period and a $41,200 charge
to retained earnings to reflect the change in the fair value of the ESOP shares
subject to the put option. At December 31, 2001, the Company's capital amounted
to $14.6 million, which as a percentage of total assets was 15.12%, and was
considerably in excess of the regulatory capital requirements at such date.
ASSET QUALITY:
The Company's level of non-performing loans, defined as loans past due 90 days
or more, as a percentage of loans outstanding, was 1.27% at December 31, 2001
and 1.35% at September 30, 2001. The Company's non-performing loans at December
31, 2001 amounted to $949,950 and consisted of five single family residential
loans and one partially completed residential construction loan. Four of the
loans are to the same borrower. The Company believes that it has sufficient
allowances established to cover any loss associated with these loans. There were
no loans charged off during the current quarter. Based on management's analysis
of the adequacy of its allowances, a $15,750 provision for additional loan loss
allowances was made during the three month period ended December 31, 2001. The
Company's loan loss allowance was $334,750 at December 31, 2001.
The Company allowance for loan losses is established as losses are estimated to
have occurred through a provision for loan losses charged to earnings. Such
evaluation includes a review of loans for which collectibility appears doubtful
and other factors, including the nature and volume of the portfolio, historical
experience, estimated value of any underlying collateral, and current economic
conditions. While management uses the best information available to make
evaluations, future adjustments may be necessary, if economic or other
conditions differ substantially from the assumptions used.
The Company also has $742,950 in foreclosed assets consisting of five
residential properties at December 31, 2001. Three of the properties are under
contract to be sold for little aggregate gain or loss. The other two properties,
which includes one tract of nine single family residential lots and another
recently completed residential home, were foreclosed upon in December and are
currently being appraised.
COMPARISON OF OPERATIONS FOR THE QUARTERS ENDED DECEMBER 31, 2001 AND 2000:
GENERAL. Net income for the three month period ended December 31, 2001 was
$253,900, or $79,350 less than the $333,250 earned during the same period in
2000. As discussed below, decreases in net interest income between the
comparable periods was primarily responsible for the change in net income.
8
WAKE FOREST BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF OPERATIONS FOR THE QUARTERS ENDED DECEMBER 31, 2001 AND 2000:
INTEREST INCOME. Interest income decreased by $186,850 from $1,929,800 for the
three months ended December 31, 2000 to $1,742,950 for the three months ended
December 31, 2001. The change in interest income resulted from a 173 basis point
decrease in the overall yield on interest earning assets. The Company's yield on
interest earning assets decreased from 8.77% for the quarter ending December 31,
2000 to 7.04% for the current quarter. The decrease in yield occurred primarily
due to a lower level of market rates outstanding during the current quarter as
compared to the same quarter a year earlier. During calendar year 2001, the
Federal Reserve lowered rates by 4.75% over a series of eleven movements. A
substantial portion of the Association's interest earning assets are directly
affected by such Federal Reserve moves.
INTEREST EXPENSE. Interest expense decreased by $27,750 from $1,043,700 for the
three months ended December 31, 2000 to $1,015,950 for the three months ended
December 31, 2001. The decrease was primarily the result of a decrease in the
Association's cost of funds, which decreased by 98 basis points from 5.95% for
the quarter ended December 31, 2000 to 4.97% for the current quarter. The
decrease in interest expense would have been even larger had it not been for a
$8.3 million increase in the volume of interest bearing deposits outstanding
during the current quarter versus the same period a year earlier. The growth in
the volume of interest bearing deposits occurred due to a marketing campaign to
increase customer deposits.
NET INTEREST INCOME. Net interest income decreased by $159,100 from $886,100 for
the three months ended December 31, 2000 to $727,000 for the three months ended
December 31, 2001. As explained above, the decrease in net interest income
resulted primarily from a more significant decrease in the yield on interest
earning assets versus the decline in the Association's cost of funds. The
Company's interest rate margin was 3.11% for the current quarter as compared to
4.19% for the quarter ended December 31, 2000.
PROVISION FOR LOAN LOSSES. The Company provided $15,750 and $8,000 in loan loss
provisions during the current quarter and the same quarter a year earlier,
respectively. Provisions, which are charged to operations, and the resulting
loan loss allowances are amounts the Company's management believes will be
adequate to absorb losses that are estimated to have occurred. Loans are charged
off against the allowance when management believes that uncollectibility is
confirmed. Subsequent recoveries, if any, are credited to the allowance. This
evaluation is inherently subjective as it requires estimates that are
susceptible to significant revisions as more information becomes available.
NONINTEREST EXPENSE. Noninterest expense decreased by $42,700 to $318,850 for
the three month period ended December 31, 2001 from $361,550 for the comparable
quarter in 2000. The only significant dollar change in any category of
noninterest expense occurred in area of compensation and related benefits, which
decreased from $249,900 during the quarter ended December 31, 2000 to $206,250
during the current quarter. The decrease in compensation and benefits occurred
primarily due to the retirement of a full time senior lending officer in
February 2002. and because of an health insurance coverage adjustment to premium
cost which was assessed during the quarter ended December 31, 2000.
9
WAKE FOREST BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY:
The term "liquidity" generally refers to an organization's 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 three month period ended December 31, 2001, cash and cash
equivalents, a significant source of liquidity, increased by approximately $3.3
million. Proceeds from the Company's operations contributed an $489,600 in cash
during the period. An increase in deposits of approximately $3.3 million, offset
by dividends paid of $137,650 provided the source of approximately $3.1 million
of cash from financing activities. Net loan originations of approximately
$939,700 during the quarter required the use of cash while investment maturities
of $500,000 also provided cash during the current quarter.
Given the Company's 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.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Statements herein regarding estimated future expense levels and other
operational matters may constitute forward-looking statements under the federal
securities laws. Such statements are subject to certain risks and uncertainties.
Undue reliance should not be placed on this information. These estimates are
based on the current expectations of management, which may change in the future
due to a large number of potential events, including unanticipated future
developments.
10
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. From time to time, the Company through
its wholly owned 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. Changes in Securities
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 and Reports on Form 8-K
a) No reports on Form 8-K were filed for the period covered by
this report
11
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 February 11, 2002 By: s/s Anna O. Sumerlin
---------------------- --------------------
Anna O. Sumerlin
President and CEO
Dated February 11, 2002 By: s/s Robert C. White
---------------------- -------------------
Robert C. White
Chief Financial Officer & VP
12