##### 



Wake Forest Bancshares, Inc.




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##### 



CONTENTS
 SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    1REPORT TO STOCKHOLDERS
    
    
    2MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    3 - 15REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    16CONSOLIDATED FINANCIAL STATEMENTS:Consolidated statements of financial condition at September 30, 2007 and 2006
    
    
    17Consolidated statements of income for years ended September 30, 2007 and 2006
    
    
    18Consolidated statements of stockholders equity for the years ended
September 30, 2007 and 2006
    
    
    19 -20Consolidated statements of cash flows for the years ended
September 30, 2007 and 2006
    
    
    21 - 22NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    23 - 35COMMON STOCK INFORMATION
    
    
    36CORPORATE INFORMATION
    
    
    37




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##### 



WAKE FOREST BANCSHARES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
 September 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Financial Condition Data:Total assets
    
    $
    107,398
    
    
    $
    104,279
    
    
    $
    99,731
    
    
    $
    87,650
    
    
    $
    85,674Investments (1)
    
    
    27,272
    
    
    
    23,806
    
    
    
    22,273
    
    
    
    5,467
    
    
    
    16,381Loans receivable, net
    
    
    76,172
    
    
    
    76,635
    
    
    
    73,894
    
    
    
    79,241
    
    
    
    67,016Deposits
    
    
    85,659
    
    
    
    83,978
    
    
    
    80,905
    
    
    
    69,891
    
    
    
    68,840Stockholders equity
    
    
    20,184
    
    
    
    18,806
    
    
    
    17,406
    
    
    
    16,407
    
    
    
    15,542
 Years Ended September 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands, Except Per Share Data)Operating Data:Interest and dividend income
    
    $
    7,811
    
    
    $
    7,173
    
    
    $
    5,752
    
    
    $
    4,818
    
    
    $
    5,325Interest expense
    
    
    3,684
    
    
    
    2,979
    
    
    
    2,315
    
    
    
    1,942
    
    
    
    2,325Net interest income
    
    
    4,127
    
    
    
    4,194
    
    
    
    3,437
    
    
    
    2,876
    
    
    
    3,000Provision for loan losses
    
    
    165
    
    
    
    193
    
    
    
    120
    
    
    
    90
    
    
    
    215Noninterest income
    
    
    123
    
    
    
    109
    
    
    
    95
    
    
    
    129
    
    
    
    315Noninterest expense
    
    
    1,490
    
    
    
    1,519
    
    
    
    1,350
    
    
    
    1,153
    
    
    
    1,234Income before income taxes
    
    
    2,595
    
    
    
    2,591
    
    
    
    2,062
    
    
    
    1,762
    
    
    
    1,866Income tax expense
    
    
    915
    
    
    
    935
    
    
    
    741
    
    
    
    673
    
    
    
    715Net income
    
    $
    1,680
    
    
    $
    1,656
    
    
    $
    1,321
    
    
    $
    1,089
    
    
    $
    1,151Basic earnings per share
    
    $
    1.45
    
    
    $
    1.44
    
    
    $
    1.14
    
    
    $
    0.95
    
    
    $
    1.01Diluted earnings per share
    
    
    1.45
    
    
    
    1.43
    
    
    
    1.13
    
    
    
    0.94
    
    
    
    1.00Dividends per share
    
    
    0.76
    
    
    
    0.68
    
    
    
    0.60
    
    
    
    0.56
    
    
    
    0.52Dividend payout ratio
    
    
    23.76
    %
    
    
    21.31
    %
    
    
    23.67
    %
    
    
    26.36
    %
    
    
    29.68
    %Selected Other Data:Return on average assets (3)
    
    
    1.57
    %
    
    
    1.63
    %
    
    
    1.38
    %
    
    
    1.26
    %
    
    
    1.30
    %Return on average equity (3)
    
    
    8.64
    %
    
    
    9.19
    %
    
    
    7.86
    %
    
    
    6.89
    %
    
    
    7.57
    %Interest rate spread (3)
    
    
    3.25
    %
    
    
    3.66
    %
    
    
    3.24
    %
    
    
    2.91
    %
    
    
    2.94
    %Average equity to average assets (3)
    
    
    18.15
    %
    
    
    17.75
    %
    
    
    17.60
    %
    
    
    18.29
    %
    
    
    17.15
    %Net interest margin (3)
    
    
    3.98
    %
    
    
    4.27
    %
    
    
    3.73
    %
    
    
    3.41
    %
    
    
    3.48
    %Allowance for loan losses to
nonperforming loans (2)
    
    
    199.37
    %
    
    
    156.44
    %
    
    
    110.27
    %
    
    
    48.99
    %
    
    
    259.11
    %Nonperforming loans to total loans (2)
    
    
    0.77
    %
    
    
    0.86
    %
    
    
    1.03
    %
    
    
    1.86
    %
    
    
    0.37
    %
 (1)
    
    Includes interest earning deposits and investment securities(2)
    
    Nonperforming loans include mortgage loans delinquent more than 90 days(3)
    
    Average balances are derived from month-end balances
  1




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##### 



Report to Stockholders
       
 
  2




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 General
        3




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Financial Condition
        4




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Results of Operations
 Returns.
 Net Income
 Net Interest Income
 Interest Income
 Interest Expense
 Provision for Loan Losses
   5




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Results of Operations (continued)
 Non-interest Income
 Non-interest Expense
     Income Taxes
  6




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##### 



Average Balances, Interest, Yields and Costs
  Year Ended September 30,2007
    
    
    2006At September 30, 2007
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageActual
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    CostAssets:Interest-earning assets:Interest-earning deposits
    
    $
    25,081
    
    
    
    5.10
    %
    
    $
    25,667
    
    
    $
    1,344
    
    
    
    5.24
    %
    
    $
    23,454
    
    
    $
    1,100
    
    
    
    4.69
    %Investment securities
    
    
    2,191
    
    
    
    4.88
    %
    
    
    1,333
    
    
    
    55
    
    
    
    4.13
    %
    
    
    685
    
    
    
    25
    
    
    
    3.65
    %Loans receivable (1)
    
    
    76,172
    
    
    
    7.92
    %
    
    
    76,651
    
    
    
    6,412
    
    
    
    8.37
    %
    
    
    74,145
    
    
    
    6,048
    
    
    
    8.16
    %Total interest-earning assets
    
    
    103,444
    
    
    
    7.20
    %
    
    
    103,651
    
    
    $
    7,811
    
    
    
    7.54
    %
    
    
    98,284
    
    
    $
    7,173
    
    
    
    7.30
    %Non-interest-earning assets
    
    
    3,954
    
    
    
    
    
    
    
    3,432
    
    
    
    
    
    
    
    
    
    
    
    3,252Total
    
    $
    107,398
    
    
    
    
    
    
    $
    107,083
    
    
    
    
    
    
    
    
    
    
    $
    101,536Liabilities and stockholders equity:Interest-bearing liabilities:Passbook accounts
    
    
    2,512
    
    
    
    1.75
    %
    
    
    2,818
    
    
    
    56
    
    
    
    1.99
    %
    
    
    2,859
    
    
    
    48
    
    
    
    1.68
    %NOW & MMDA accounts
    
    
    24,830
    
    
    
    3.91
    %
    
    
    26,495
    
    
    
    1,021
    
    
    
    3.85
    %
    
    
    25,213
    
    
    
    809
    
    
    
    3.21
    %Certificates of deposit
    
    
    58,317
    
    
    
    4.79
    %
    
    
    56,565
    
    
    
    2,607
    
    
    
    4.61
    %
    
    
    53,784
    
    
    
    2,122
    
    
    
    3.95
    %Total interest-bearing liabilities
    
    
    85,659
    
    
    
    4.45
    %
    
    
    85,878
    
    
    $
    3,684
    
    
    
    4.29
    %
    
    
    81,856
    
    
    $
    2,979
    
    
    
    3.64
    %Non-interest-bearing liabilities
    
    
    1,555
    
    
    
    
    
    
    
    1,768
    
    
    
    
    
    
    
    
    
    
    
    1,655Stockholders equity
    
    
    20,184
    
    
    
    
    
    
    
    19,437
    
    
    
    
    
    
    
    
    
    
    
    18,025Total
    
    $
    107,398
    
    
    
    
    
    
    $
    107,083
    
    
    
    
    
    
    
    
    
    
    $
    101,536Net interest income and
interest rate spread (2)
    
    
    
    
    
    
    2.75
    %
    
    
    
    
    
    $
    4,127
    
    
    
    3.25
    %
    
    
    
    
    
    $
    4,194
    
    
    
    3.66
    %Net yield on interest-earning assets (3)
    
    
    
    
    
    
    3.51
    %
    
    
    
    
    
    
    
    
    
    
    3.98
    %
    
    
    
    
    
    
    
    
    
    
    4.27
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    120.76
    %
    
    
    
    
    
    
    
    
    
    
    120.70
    %
    
    
    
    
    
    
    
    
    
    
    120.07
    %
 (1)
    
    Balance is net of deferred loan fees and loans in process. Non-accrual loans are included in the balances.(2)
    
    Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.(3)
    
    Net yield on interest-earning assets represents net interest income divided by average interest-earning assets.
  7




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##### 



Rate/Volume Analysis of Net Interest Income
  Year Ended September 30,
    
    
    Year Ended September 30,2007 vs. 2006
    
    
    2006 vs. 2005Increase (Decrease) Attributable to
    
    
    Increase (Decrease) Attributable toRate/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rate/Volume
    
    
    Rate
    
    
    Volume
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    NetAssets:Interest-earning assets:Interest-earning deposits
    
    $
    104
    
    
    $
    129
    
    
    $
    11
    
    
    $
    244
    
    
    $
    179
    
    
    $
    326
    
    
    $
    124
    
    
    $
    629Investment securities
    
    
    24
    
    
    
    3
    
    
    
    3
    
    
    
    30
    
    
    
    (1
    )
    
    
    7
    
    
    
    
    
    
    
    6Loans receivable
    
    
    204
    
    
    
    156
    
    
    
    4
    
    
    
    364
    
    
    
    (20
    )
    
    
    811
    
    
    
    (5
    )
    
    
    786Total
    
    
    332
    
    
    
    288
    
    
    
    18
    
    
    
    638
    
    
    
    158
    
    
    
    1,144
    
    
    
    119
    
    
    
    1,421Liabilities:Interest-bearing liabilities:Passbook savings
    
    
    (1
    )
    
    
    9
    
    
    
    
    
    
    
    8
    
    
    
    (2
    )
    
    
    21
    
    
    
    (1
    )
    
    
    18NOW & MMDA accounts
    
    
    41
    
    
    
    161
    
    
    
    10
    
    
    
    212
    
    
    
    75
    
    
    
    262
    
    
    
    44
    
    
    
    381Certificate of deposit
    
    
    110
    
    
    
    355
    
    
    
    20
    
    
    
    485
    
    
    
    45
    
    
    
    215
    
    
    
    5
    
    
    
    265Total
    
    
    150
    
    
    
    525
    
    
    
    30
    
    
    
    705
    
    
    
    118
    
    
    
    498
    
    
    
    48
    
    
    
    664Net interest income
    
    $
    182
    
    
    $
    (237
    )
    
    $
    (12
    )
    
    $
    (67
    )
    
    $
    40
    
    
    $
    646
    
    
    $
    71
    
    
    $
    757
  8




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Asset Quality
    Accounting by Creditors for Impairment of a
Loan Accounting for Contingencies.
   9




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Asset Quality (Continued)
  Capital Resources and Liquidity
      Off-Balance Sheet Transactions
   10




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Off-Balance Sheet Transactions (Continued)
   Asset/Liability Management and Market Risk
     11




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Market Risk Analysis
 Year Ended September 30,(Dollars in Thousands)2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueAssets:Loans-fixed:Balance
    
    $
    167
    
    
    $
    20
    
    
    $
    
    
    
    $
    31
    
    
    $
    21
    
    
    $
    9,460
    
    
    $
    9,699
    
    
    $
    9,542Interest rate
    
    
    6.71
    %
    
    
    8.84
    %
    
    
    0.00
    %
    
    
    8.82
    %
    
    
    9.75
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    Loans-variable (1):Balance
    
    
    44,127
    
    
    
    4,684
    
    
    
    11,013
    
    
    
    4,534
    
    
    
    2,525
    
    
    
    883
    
    
    
    67,766
    
    
    
    67,527Interest rate
    
    
    8.87
    %
    
    
    7.07
    %
    
    
    6.88
    %
    
    
    5.97
    %
    
    
    7.48
    %
    
    
    6.54
    %
    
    
    8.15
    %
    
    
    Investments (2):Balance
    
    
    27,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,272
    
    
    
    27,272Interest rate
    
    
    5.12
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.12
    %
    
    
    Liabilities:Deposits (3):Balance
    
    
    27,342
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,342
    
    
    
    27,342Interest rate
    
    
    3.45
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.45
    %
    
    
    Deposits-certificates:Balance
    
    
    35,318
    
    
    
    13,783
    
    
    
    7,407
    
    
    
    841
    
    
    
    968
    
    
    
    
    
    
    
    58,317
    
    
    
    59,041Interest rate
    
    
    4.81
    %
    
    
    4.80
    %
    
    
    4.60
    %
    
    
    4.85
    %
    
    
    5.01
    %
    
    
    
    
    
    
    4.79
    %
    
    
    
 (1)
    
    Maturities of variable rate loans are based on contractual maturity except
home equity loans and commercial lines of credit which are based on the next repricing date(2)
    
    Includes interest bearing deposits and investment securities(3)
    
    Includes passbook accounts, NOW accounts and money market accounts
  12




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Future Reporting Requirements
 Fair Value Measurements
 Accounting for Uncertainty in Income
Taxes Accounting for
Income Taxes
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements
  13




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Critical Accounting Policies and Estimates
          14




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##### 



WAKE FOREST BANCSHARES, INC.  MANAGEMENTS DISCUSSION AND ANALYSIS
 Impact of Inflation and Changing Prices
  Special Note Regarding Forward-Looking Statements
   15




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##### 



16




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##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  September 30, 2007 and 2006
 2007
    
    
    2006ASSETSCash:Interest-earning deposits
    
    $
    25,080,600
    
    
    $
    23,067,150Noninterest-earning deposits
    
    
    747,900
    
    
    
    751,75025,828,500
    
    
    
    23,818,900Investment securities (Note 2):Available for sale, at market value
    
    
    1,999,900
    
    
    
    540,850FHLB stock, at cost
    
    
    191,400
    
    
    
    197,600Loans receivable, net of allowance for loan losses
of $1,187,550 in 2007 and $1,042,500 in 2006 (Note 3)
    
    
    76,172,100
    
    
    
    76,635,300Accrued interest receivable
    
    
    265,350
    
    
    
    230,050Property and equipment, net (Note 4)
    
    
    357,350
    
    
    
    401,800Foreclosed assets, net (Note 5)
    
    
    1,003,800
    
    
    
    1,003,800Bank owned life insurance (Note 6)
    
    
    1,141,350
    
    
    
    1,100,050Deferred income taxes (Note 11)
    
    
    390,650
    
    
    
    295,100Prepaid expenses and other assets
    
    
    47,300
    
    
    
    55,050Total assets
    
    $
    107,397,700
    
    
    $
    104,278,500LIABILITIES AND EQUITYLiabilities:Deposits (Note 7)
    
    $
    85,659,150
    
    
    $
    83,977,850Accrued interest on deposits
    
    
    64,750
    
    
    
    67,950Accounts payable and accrued expenses
    
    
    924,950
    
    
    
    784,200Dividends payable
    
    
    99,750
    
    
    
    88,700Redeemable common stock held by the ESOP, net of
unearned ESOP shares (Note 10)
    
    
    465,550
    
    
    
    553,650Total liabilities
    
    
    87,214,150
    
    
    
    85,472,350Commitments and contingencies (Note 13)Stockholders Equity (Note 12):Preferred stock, authorized 1,000,000 shares, none issued
    
    
    
    
    
    
    Common stock, $.01 par value, authorized 5,000,000 shares;
issued 1,253,948 shares in 2007 and 1,247,134 in 2006
    
    
    12,550
    
    
    
    12,450Additional paid-in-capital
    
    
    5,779,500
    
    
    
    5,665,700Accumulated other comprehensive income
    
    
    305,000
    
    
    
    330,400Retained earnings, substantially restricted (Note 12)
    
    
    15,555,950
    
    
    
    14,187,400Common stock in treasury, at cost (93,955 shares in 2007
and 90,445 shares in 2006)
    
    
    (1,469,450
    )
    
    
    (1,389,800
    )Total stockholders equity
    
    
    20,183,550
    
    
    
    18,806,150$
    107,397,700
    
    
    $
    104,278,500
   17




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##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF INCOME  Years Ended September 30, 2007 and 2006
 2007
    
    
    2006Interest and dividend income:Loans
    
    $
    6,411,200
    
    
    $
    6,047,800Investment securities
    
    
    55,300
    
    
    
    25,600Interest-earning deposits
    
    
    1,344,000
    
    
    
    1,099,7507,810,500
    
    
    
    7,173,150Interest expense:Deposits
    
    
    3,684,050
    
    
    
    2,978,9503,684,050
    
    
    
    2,978,950Net interest income before provision for loan losses
    
    
    4,126,450
    
    
    
    4,194,200Provision for loan losses (Note 3)
    
    
    (165,000
    )
    
    
    (192,500
    )Net interest income after provision for loan losses
    
    
    3,961,450
    
    
    
    4,001,700Noninterest income:Service fees and other income
    
    
    75,900
    
    
    
    59,100Gain on sale of mortgage loans
    
    
    6,150
    
    
    
    8,000Income from bank owned life insurance
    
    
    41,300
    
    
    
    41,550123,350
    
    
    
    108,650Noninterest expense:Compensation and benefits (Notes 8, 9, and 10)
    
    
    810,150
    
    
    
    820,500Occupancy
    
    
    47,600
    
    
    
    46,950Federal insurance premiums and operating assessments
    
    
    47,050
    
    
    
    45,350Data processing and outside service fees
    
    
    106,800
    
    
    
    154,750Foreclosed assets
    
    
    107,750
    
    
    
    170,500Other operating expense
    
    
    370,650
    
    
    
    280,9501,490,000
    
    
    
    1,519,000Income before income taxes
    
    
    2,594,800
    
    
    
    2,591,350Income taxes (Note 11):Current
    
    
    995,300
    
    
    
    964,000Deferred
    
    
    (80,000
    )
    
    
    (28,600
    )915,300
    
    
    
    935,400Net income
    
    $
    1,679,500
    
    
    $
    1,655,950Basic earnings per share
    
    $
    1.45
    
    
    $
    1.44Diluted earnings per share
    
    $
    1.45
    
    
    $
    1.43Dividends paid per share
    
    $
    0.76
    
    
    $
    0.68
   18




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  Years Ended September 30, 2007 and 2006
 OutstandingShares of
    
    
    
    
    
    
    AdditionalCommon
    
    
    Common
    
    
    Paid inStock
    
    
    Stock
    
    
    CapitalBalance at September 30, 2005
    
    
    1,152,761
    
    
    $
    12,350
    
    
    $
    5,502,050Comprehensive income:Net income for 2006
    
    
    
    
    
    
    
    
    
    
    Net change in unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    Total comprehensive incomeMarket value adjustment for redeemable
common stock held by ESOP
    
    
    
    
    
    
    
    
    
    
    Cash dividends ($0.68 per share)
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    9,988
    
    
    
    100
    
    
    
    127,250Acquisition of 6,060 shares of common
stock for the treasury
    
    
    (6,060
    )
    
    
    
    
    
    
    Tax effect of exercise of nonqualifying stock options
    
    
    
    
    
    
    
    
    
    
    36,400Balance at September 30, 2006
    
    
    1,156,689
    
    
    
    12,450
    
    
    
    5,665,700Comprehensive income:Net income for 2007
    
    
    
    
    
    
    
    
    
    
    Net change in unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    Total comprehensive incomeMarket value adjustment for redeemable
common stock held by ESOP
    
    
    
    
    
    
    Cash dividends ($0.76 per share)
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    6,814
    
    
    
    100
    
    
    
    86,800Acquisition of 3,510 shares of common
stock for the treasury
    
    
    (3,510
    )
    
    
    
    
    
    
    Tax effect of exercise of nonqualifying stock options
    
    
    
    
    
    
    
    
    
    
    27,000Balance at September 30, 2007
    
    
    1,159,993
    
    
    $
    12,550
    
    
    $
    5,779,500
   19




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  Years Ended September 30, 2007 and 2006
 AccumulatedOther
    
    
    
    
    
    
    TreasuryComprehensive
    
    
    Retained
    
    
    StockIncome
    
    
    Earnings
    
    
    Acquired
    
    
    Total$
    280,500
    
    
    $
    12,868,900
    
    
    $
    (1,257,600
    )
    
    $
    17,406,200
    
    
    
    1,655,950
    
    
    
    
    
    
    
    1,655,95049,900
    
    
    
    
    
    
    
    
    
    
    
    49,9001,705,850
    
    
    
    15,400
    
    
    
    
    
    
    
    15,400
    
    
    
    (352,850
    )
    
    
    
    
    
    
    (352,850
    )127,350
    
    
    
    
    
    
    
    (132,200
    )
    
    
    (132,200
    )
    
    
    
    
    
    
    
    
    
    
    
    36,400330,400
    
    
    
    14,187,400
    
    
    
    (1,389,800
    )
    
    
    18,806,150
    
    
    
    1,679,500
    
    
    
    
    
    
    
    1,679,500(25,400
    )
    
    
    
    
    
    
    
    
    
    
    (25,400
    )1,654,100
    
    
    
    88,100
    
    
    
    
    
    
    
    88,100
    
    
    
    (399,050
    )
    
    
    
    
    
    
    (399,050
    )86,900
    
    
    
    
    
    
    
    (79,650
    )
    
    
    (79,650
    )
    
    
    
    
    
    
    
    
    
    
    
    27,000$
    305,000
    
    
    $
    15,555,950
    
    
    $
    (1,469,450
    )
    
    $
    20,183,550
  20




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF CASH FLOWS  Years Ended September 30, 2007 and 2006
 2007
    
    
    2006Cash Flows From Operating ActivitiesNet income
    
    $
    1,679,500
    
    
    $
    1,655,950Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    44,450
    
    
    
    33,500Provision for loan losses
    
    
    165,000
    
    
    
    192,500Deferred income taxes
    
    
    (80,000
    )
    
    
    (28,600
    )Increase in bank owned life insurance contracts
    
    
    (41,300
    )
    
    
    (41,550
    )Loss on sale of foreclosed assets
    
    
    3,600
    
    
    
    Gain on sale of loans
    
    
    (6,150
    )
    
    
    (8,000
    )Loans orignated for sale
    
    
    (211,200
    )
    
    
    Proceeds from loans sold
    
    
    217,350
    
    
    
    Changes in assets and liabilities:(Increase) decrease in:Accrued interest receivable
    
    
    (35,300
    )
    
    
    (93,850
    )Prepaid expenses and other assets
    
    
    7,750
    
    
    
    (21,350
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    137,550
    
    
    
    78,900Net cash provided by operating activities
    
    
    1,881,250
    
    
    
    1,767,500Cash Flows From Investing ActivitiesPrincipal collected on loans
    
    
    36,745,850
    
    
    
    42,629,550Redemption of participation loans
    
    
    67,500
    
    
    
    273,750Loans originated
    
    
    (36,811,000
    )
    
    
    (45,829,000
    )Proceeds from sale of foreclosed assets
    
    
    293,900
    
    
    
    Capital additions to foreclosed assets
    
    
    (1,650
    )
    
    
    Purchase of US Government agency securities
    
    
    (1,500,000
    )
    
    
    Purchase of FHLB of Atlanta Stock
    
    
    
    
    
    
    (15,300
    )Redemption of FHLB of Atlanta stock
    
    
    6,200
    
    
    
    Purchases of property and equipment
    
    
    
    
    
    
    (97,450
    )Net cash used in investing activities
    
    
    (1,199,200
    )
    
    
    (3,038,450
    )
   21




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF CASH FLOWS  Years Ended September 30, 2007 and 2006
 2007
    
    
    2006Cash Flows From Financing ActivitiesCash dividends paid
    
    $
    (388,000
    )
    
    $
    (341,800
    )Proceeds from stock options exercised
    
    
    86,900
    
    
    
    127,350Additions to paid in capital from tax effect of exercise of
nonqualifying stock options
    
    
    27,000
    
    
    
    36,400Purchase of treasury stock
    
    
    (79,650
    )
    
    
    (132,200
    )Net increase in deposits
    
    
    1,681,300
    
    
    
    3,072,700Net cash provided by financing activities
    
    
    1,327,550
    
    
    
    2,762,450Net increase in cash
    
    
    2,009,600
    
    
    
    1,491,500Cash:Beginning
    
    
    23,818,900
    
    
    
    22,327,400Ending
    
    $
    25,828,500
    
    
    $
    23,818,900Supplemental Disclosures of Cash Flow InformationCash payments for:Interest
    
    $
    3,687,250
    
    
    $
    2,937,950Income taxes
    
    $
    955,000
    
    
    $
    965,000Supplemental Schedule of Noncash Investing
and Financing Activities:Fair value of ESOP shares in excess of unearned ESOP shares credited to retained earnings
    
    $
    88,100
    
    
    $
    15,400Change in unrealized gain (loss) on available for sale
securities, net of tax effect
    
    $
    (25,400
    )
    
    $
    49,900Loans receivable transferred to foreclosed assets
    
    $
    295,850
    
    
    $
    
  22




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies
    Basis of financial statement presentation
 Consolidation
 Cash and cash equivalents
 Investment securities
 Securities held to maturity
 Securities available for sale
 Securities held for trading
  23




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies (continued)
 Loans receivable and Fees
 Allowance for loan losses
 Deposits
 Interest income
 Property, equipment and depreciation
 Presold mortgages in process of settlement:
 Foreclosed assets
 Income taxes
  24




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies (continued)
 Earnings per share
 2007
    
    
    2006Weighted average outstanding shares used for basic EPS
    
    
    1,160,134
    
    
    
    1,152,765Plus incremental shares from assumed issuances
pursuant to stock options
    
    
    828
    
    
    
    5,380Weighted average outstanding shares used for diluted EPS
    
    
    1,160,962
    
    
    
    1,158,145
 Off-balance-sheet risk and credit risk
 Stock compensation plans: Accounting for
Stock-Based Compensation.
  Fair value of financial instruments
 Cash and accrued interest receivable
 Investment securities
  25




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies (continued)
 Loans receivable
 Bank owned life insurance
 Deposits
 Off-balance-sheet commitments
 Accrued Interest Payable and Dividends Payable:
 Note 2. Investment Securities
  2007Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable for sale securities:FHLMC stock
    
    $
    8,000
    
    
    $
    473,150
    
    
    $
    
    
    
    $
    481,150US Government agency securities
    
    
    1,500,000
    
    
    
    18,750
    
    
    
    
    
    
    
    1,518,7501,508,000
    
    
    
    491,900
    
    
    
    
    
    
    
    1,999,900Nonmarketable equity securities:Federal Home Loan Bank stock
    
    
    191,400
    
    
    
    
    
    
    
    
    
    
    
    191,400$
    1,699,400
    
    
    $
    491,900
    
    
    $
    
    
    
    $
    2,191,300
 2006Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable for sale securities:FHLMC stock
    
    $
    8,000
    
    
    $
    532,850
    
    
    $
    
    
    
    $
    540,850Nonmarketable equity securities:Federal Home Loan Bank stock
    
    
    197,600
    
    
    
    
    
    
    
    
    
    
    
    197,600$
    205,600
    
    
    $
    532,850
    
    
    $
    
    
    
    $
    738,450
  26




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2. Investment Securities (continued)
  2007
    
    
    2006Accumulated other comprehensive income, beginning of year
    
    $
    330,400
    
    
    $
    280,500Change in unrealized gains, net of tax effect of $15,550 in 2007
and $30,600 in 2006
    
    
    (25,400
    )
    
    
    49,900Accumulated other comprehensive income, end of year
    
    $
    305,000
    
    
    $
    330,400
  Note 3. Loans Receivable
  2007
    
    
    2006First mortgage loans:Single family, one-to-four units
    
    $
    25,466,600
    
    
    $
    24,256,050Multifamily, residential
    
    
    354,100
    
    
    
    427,000Commercial real estate
    
    
    11,532,150
    
    
    
    12,426,350Land
    
    
    14,243,900
    
    
    
    14,604,950Residential construction
    
    
    33,387,950
    
    
    
    36,900,25084,984,700
    
    
    
    88,614,600Equity line mortgages
    
    
    1,886,500
    
    
    
    2,328,150Loans on savings accounts
    
    
    143,200
    
    
    
    179,50087,014,400
    
    
    
    91,122,250Undisbursed portion of loans in process
    
    
    (9,549,100
    )
    
    
    (13,340,900
    )Allowance for loan losses
    
    
    (1,187,550
    )
    
    
    (1,042,500
    )Deferred loan fees
    
    
    (105,650
    )
    
    
    (103,550
    )(10,842,300
    )
    
    
    (14,486,950
    )$
    76,172,100
    
    
    $
    76,635,300
  2007
    
    
    2006Balance, beginning of year
    
    $
    1,042,500
    
    
    $
    850,000Provision for loan losses
    
    
    165,000
    
    
    
    192,500Charge-offs
    
    
    (19,950
    )
    
    
    Balance, end of year
    
    $
    1,187,550
    
    
    $
    1,042,500
  27




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Loans Receivable (continued)
    2007
    
    
    2006Beginning balance
    
    $
    
    
    
    $
    16,000New loans
    
    
    256,650
    
    
    
    Reductions
    
    
    (46,450
    )
    
    
    (16,000
    )Ending balance
    
    $
    210,200
    
    
    $
    Maximum balance during the year
    
    $
    210,200
    
    
    $
    16,000
 Note 4. Property and Equipment
  2007
    
    
    2006Land
    
    $
    20,950
    
    
    $
    20,950Office buildings and improvements
    
    
    608,800
    
    
    
    608,800Furniture and fixtures
    
    
    303,550
    
    
    
    303,550933,300
    
    
    
    933,300Less accumulated depreciation
    
    
    (575,950
    )
    
    
    (531,500
    )$
    357,350
    
    
    $
    401,800
 Note 5. Foreclosed Assets
   28




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Bank Owned Life Insurance
  Note 7. Deposits
  2007
    
    
    2006Passbook accounts
    
    $
    2,512,350
    
    
    $
    2,702,750MMDA accounts
    
    
    21,223,550
    
    
    
    22,290,450NOW accounts
    
    
    2,523,650
    
    
    
    2,228,550Certificate of deposit accounts
    
    
    58,317,100
    
    
    
    55,003,350Noninterest-bearing accounts
    
    
    1,082,500
    
    
    
    1,752,750$
    85,659,150
    
    
    $
    83,977,850
  Maturity Period:2008
    
    $
    35,317,7502009
    
    
    13,782,9502010
    
    
    7,406,9502011
    
    
    841,7002012
    
    
    967,750$
    58,317,100
  Maturity Period:Within three months
    
    $
    2,789,900After three months but within six months
    
    
    5,212,300After six months but within twelve months
    
    
    7,521,900After twelve months
    
    
    11,022,050$
    26,546,150
  29




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Employees and Directors Benefit Plans
    Note 9. Stock Option Plan
  2007
    
    
    2006Stock options outstanding at beginning of the year
    
    
    6,814
    
    
    
    16,802Granted
    
    
    
    
    
    
    Exercised
    
    
    (6,814
    )
    
    
    (9,988
    )Terminated
    
    
    
    
    
    
    Stock options outstanding at end of the year
    
    
    
    
    
    
    6,814Stock options exercisable at end of the year
    
    
    
    
    
    
    6,814
 Note 10. Employee Stock Ownership Plan
    30




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10. Employee Stock Ownership Plan (continued)
   2007
    
    
    2006Shares originally held by the ESOP
    
    
    41,200
    
    
    
    41,200Shares released to retired participants
    
    
    (18,602
    )
    
    
    (18,602
    )Shares outstanding at year end
    
    
    22,598
    
    
    
    22,598Shares released for allocation
    
    
    22,598
    
    
    
    22,598Fair value of outstanding ESOP shares
    
    $
    465,550
    
    
    $
    553,650
 Note 11. Income Taxes
   2007
    
    
    2006Statutory federal income tax rate
    
    
    34.00
    %
    
    
    34.00
    %Increase (decrease) in income taxes resulting from:State income taxes, net of federal benefit
    
    
    2.36
    
    
    
    2.63Other
    
    
    (1.09
    )
    
    
    (0.53
    )Effective tax rate
    
    
    35.27
    %
    
    
    36.10
    %
  2007
    
    
    2006Deferred tax assets:Loan loss allowances
    
    $
    451,250
    
    
    $
    393,300Health insurance accrual
    
    
    82,550
    
    
    
    95,000Retirement plan accrual
    
    
    70,450
    
    
    
    54,700Other
    
    
    9,750
    
    
    
    4,000614,000
    
    
    
    547,000Deferred tax liabilities:Excess accumulated tax depreciation
    
    
    36,400
    
    
    
    49,400Unrealized net appreciation, investments
    
    
    186,950
    
    
    
    202,500223,350
    
    
    
    251,900$
    390,650
    
    
    $
    295,100
  31




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 12. Capital
      Minimum Requirements to Be:Actual
    
    
    Adequately Capitalized
    
    
    Well CapitalizedIn Thousands
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio2007Total Capital to Risk Weighted Assets
    
    $
    20,975
    
    
    
    30.03
    %
    
    $
    5,587
    
    
    
    8.00
    %
    
    $
    6,984
    
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets
    
    $
    19,877
    
    
    
    28.46
    %
    
    $
    2,794
    
    
    
    4.00
    %
    
    $
    4,190
    
    
    
    6.00
    %Tier 1 Capital to Average Assets
    
    $
    19,877
    
    
    
    18.59
    %
    
    $
    4,276
    
    
    
    4.00
    %
    
    $
    5,345
    
    
    
    5.00
    %2006Total Capital to Risk Weighted Assets
    
    $
    19,622
    
    
    
    28.00
    %
    
    $
    5,606
    
    
    
    8.00
    %
    
    $
    7,007
    
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets
    
    $
    18,507
    
    
    
    26.41
    %
    
    $
    2,803
    
    
    
    4.00
    %
    
    $
    4,204
    
    
    
    6.00
    %Tier 1 Capital to Average Assets
    
    $
    18,507
    
    
    
    17.84
    %
    
    $
    4,150
    
    
    
    4.00
    %
    
    $
    5,187
    
    
    
    5.00
    %
   32




---



##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13. Concentration of Credit Risk and Off-Balance-Sheet Risk
    Note 14. Fair Value of Financial Instruments
  September 30,2007
    
    
    2006Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    25,828,500
    
    
    $
    25,828,500
    
    
    $
    23,818,900
    
    
    $
    23,818,900Investment securities
    
    
    1,999,900
    
    
    
    1,999,900
    
    
    
    540,850
    
    
    
    540,850FHLB stock
    
    
    191,400
    
    
    
    191,400
    
    
    
    197,600
    
    
    
    197,600Loans receivable
    
    
    76,172,100
    
    
    
    75,776,250
    
    
    
    76,635,300
    
    
    
    76,455,750Bank owned life insurance
    
    
    1,141,350
    
    
    
    1,141,350
    
    
    
    1,100,050
    
    
    
    1,100,050Accrued interest receivable
    
    
    265,350
    
    
    
    265,350
    
    
    
    230,050
    
    
    
    230,050Financial liabilities:Deposits
    
    
    85,659,150
    
    
    
    86,383,200
    
    
    
    83,977,850
    
    
    
    83,630,200Accrued interest payable
    
    
    64,750
    
    
    
    64,750
    
    
    
    67,950
    
    
    
    67,950Dividends payable
    
    
    99,750
    
    
    
    99,750
    
    
    
    88,700
    
    
    
    88,700
  33




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##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 15. Mutual Holding Company Financial Data
  
 2007
    
    
    2006Assets:Cash and cash equivalents
    
    $
    836,300
    
    
    $
    1,028,600Investment in Wake Forest Bancshares, Inc.
    
    
    9,450,950
    
    
    
    8,531,850Total assets
    
    $
    10,287,250
    
    
    $
    9,560,450Liabilities:Accounts payable and accrued expenses
    
    $
    12,950
    
    
    $
    29,250Equity:Capitalization by Wake Forest Federal
    
    
    106,350
    
    
    
    106,350Equity in Wake Forest Bancshares, Inc.
    
    
    3,854,700
    
    
    
    3,854,700Retained earnings
    
    
    6,313,250
    
    
    
    5,570,150Total equity
    
    
    10,274,300
    
    
    
    9,531,200Total liabilities and equity
    
    $
    10,287,250
    
    
    $
    9,560,450
 
 2007
    
    
    2006Revenues:Interest income
    
    $
    38,450
    
    
    $
    38,300Equity in earnings of subsidiary
    
    
    919,100
    
    
    
    910,800Total income
    
    
    957,550
    
    
    
    949,100Expenses:Accounting and tax expense
    
    
    28,750
    
    
    
    29,450Attorney Fees
    
    
    12,400
    
    
    
    19,900Directors fees
    
    
    145,450
    
    
    
    84,750Other
    
    
    27,850
    
    
    
    25,900Total expense
    
    
    214,450
    
    
    
    160,000Net income
    
    $
    743,100
    
    
    $
    789,100
 
 2007
    
    
    2006Cash Flows from Operating Activities:Net income
    
    $
    743,100
    
    
    $
    789,100Equity in earnings of Wake Forest Bancshares, Inc.
    
    
    (919,100
    )
    
    
    (910,800
    )Increase (decrease) in accounts payable
    
    
    (16,300
    )
    
    
    22,550Net cash provided by operating activities
    
    
    (192,300
    )
    
    
    (99,150
    )Cash and cash equivalents- beginning
    
    
    1,028,600
    
    
    
    1,127,750Cash and cash equivalents- ending
    
    $
    836,300
    
    
    $
    1,028,600
  34




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##### 



WAKE FOREST BANCSHARES, INC. AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 16. Parent Company Only Financial Data
  
 2007
    
    
    2006Assets:Cash and cash equivalents
    
    $
    163,550
    
    
    $
    151,750Accrued dividends receivable, Wake Forest Federal
    
    
    99,750
    
    
    
    88,700Investment in Wake Forest Federal
    
    
    20,020,100
    
    
    
    18,653,800Other assets
    
    
    
    
    
    
    600Total assets:
    
    $
    20,283,400
    
    
    $
    18,894,850Liabilities and Equity:Accrued income taxes
    
    $
    100
    
    
    $
    Accrued dividends payable
    
    
    99,750
    
    
    
    88,700Total liabilities
    
    
    99,850
    
    
    
    88,700Common stock
    
    
    12,550
    
    
    
    12,450Additional paid-in capital
    
    
    14,460,850
    
    
    
    14,268,850Retained earnings
    
    
    7,179,600
    
    
    
    5,914,650Treasury stock acquired
    
    
    (1,469,450
    )
    
    
    (1,389,800
    )Total equity
    
    
    20,183,550
    
    
    
    18,806,150Total liabilities and equity
    
    $
    20,283,400
    
    
    $
    18,894,850
 
 2007
    
    
    2006Interest income
    
    $
    8,100
    
    
    $
    4,450Equity in earnings of Wake Forest Federal
    
    
    1,675,650
    
    
    
    1,654,400Other expense
    
    
    (4,250
    )
    
    
    (2,900
    )Net income
    
    $
    1,679,500
    
    
    $
    1,655,950
 
 2007
    
    
    2006Cash Flows from Operating Activities:Net income
    
    $
    1,679,500
    
    
    $
    1,655,950Equity in earnings of Wake Forest Federal
    
    
    (1,675,650
    )
    
    
    (1,654,400
    )Dividends received from Wake Forest Federal
    
    
    388,000
    
    
    
    341,800(Increase) decrease in accrued dividends receivable
    
    
    (11,050
    )
    
    
    (11,050
    )(Increase) decrease in other assets
    
    
    600
    
    
    
    450Increase (decrease) in accrued income taxes
    
    
    100
    
    
    
    Net cash provided by operating activities
    
    
    381,500
    
    
    
    332,750Cash Flows from Financing Activities:Treasury stock acquired
    
    
    (79,650
    )
    
    
    (132,200
    )Proceeds from exercise of stock options
    
    
    86,900
    
    
    
    127,350Increase (decrease) in accrued dividends payable
    
    
    11,050
    
    
    
    11,050Dividends paid
    
    
    (388,000
    )
    
    
    (341,800
    )Net cash provided from financing activities
    
    
    (369,700
    )
    
    
    (335,600
    )Decrease in cash
    
    
    11,800
    
    
    
    (2,850
    )Cash and cash equivalents- beginning
    
    
    151,750
    
    
    
    154,600Cash and cash equivalents- ending
    
    $
    163,550
    
    
    $
    151,750
  35




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##### 



WAKE FOREST BANCSHARES, INC.
COMMON STOCK INFORMATION
  Stock PriceDividends
    
    
    High
    
    
    Low2007First Quarter
    
    $
    0.19
    
    
    $
    27.000
    
    
    $
    24.000Second Quarter
    
    
    0.19
    
    
    
    24.010
    
    
    
    22.750Third Quarter
    
    
    0.19
    
    
    
    23.500
    
    
    
    21.250Fourth Quarter
    
    
    0.19
    
    
    
    22.400
    
    
    
    19.0002006First Quarter
    
    $
    0.17
    
    
    $
    24.000
    
    
    $
    20.400Second Quarter
    
    
    0.17
    
    
    
    22.750
    
    
    
    20.700Third Quarter
    
    
    0.17
    
    
    
    22.500
    
    
    
    20.550Fourth Quarter
    
    
    0.17
    
    
    
    24.500
    
    
    
    21.300
  36




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##### 



OFFICERS
 Robert C. White
    
    Susan S. Carter
    
    Billy B. FaulknerPresident, Chief Executive Officer
    
    Vice President and
    
    Vice President, Secretary& Chief Financial Officer
    
    Assistant Treasurer
    
    & Treasurer
 DIRECTORS
 Howard Brown
    
    John D. Lyon
    
    Rodney M. PrivetteChairman of the Board
    
    Real Estate Management
    
    Owner of Insurance AgencyFormer Owner ofOil Distribution Company
    
    Harold R. Washington
    
    R. W. Wilkinson IIIFormer Owner of
    
    Vice Chairman of the BoardAnna O. Sumerlin
    
    Automobile Distributorship
    
    Former Managing OfficerFormer CEO of the Company
    
    
    
    of Wake Forest FederalWilliam S. WootenRobert C. White
    
    Dentist
    
    Leelan A. WoodliefCEO of the Company
    
    
    
    Retired Owner of Farm SupplyCompany
 STOCK TRANSFER AGENT
    
    SPECIAL LEGAL COUNSEL
    
    INDEPENDENT AUDITORSMellon Investor Services LLC
    
    Thacher Proffitt & Wood LLP
    
    Dixon Hughes PLLCNewport Office Center VII
    
    Suite 800
    
    Suite 200480 Washington Blvd.
    
    1700 Pennsylvania Ave., N.W.
    
    2501 Blue Ridge RoadJersey City, NJ 07310
    
    Washington, DC 20006
    
    Raleigh, NC 276071-800-756-3353CORPORATE OFFICE302 S. Brooks St.Wake Forest, NC 27587
 ANNUAL MEETING
  FORM 10-KSB
 A copy of the Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission
will be furnished without charge to stockholders upon written request to Wake Forest Bancshares,
Inc., PO Box 1167, Wake Forest, N.C. 27588.
  37