Markets Wired

WOOSTER, Ohio, Oct. 17, 2019 (GLOBE NEWSWIRE) — Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1,583,000 or $0.60 per common share for the quarter ended September 30, 2019, an increase of $165,000 or 12%, compared to $1,418,000 or $0.53 per common share for the quarter ended September 30, 2018. The increase in net income was due to an increase in net interest income and a decrease in non-interest expense partially offset with an increase in provision for federal income taxes.  The return on average equity and return on average assets for the third quarter of 2019 was 13.14% and 1.29%, respectively, compared to 13.12% and 1.22%, respectively, for the same period in 2018.

President and CEO James R. VanSickle commented, “The Wayne Savings team of experienced bankers continues to focus on the financial needs of our communities with an emphasis on providing excellent customer service.  These efforts have resulted in meaningful growth in loans and deposits as we help make the dreams of our friends and neighbors a reality.  We would like to take this opportunity to thank our customers, shareholders and our communities for their confidence in Wayne Savings.” 

Third Quarter 2019 Business Highlights

• Net interest income was $4.2 million for the quarter ended September 30, 2019, an increase of $224,000, or 5.7%, compared to the quarter ended September 30, 2018.  The net interest margin decreased from 3.59% for the quarter ended September 30, 2018, to 3.58% for the comparable period of 2019.  The net interest margin decrease was the result of an increase of 24 basis points in the average cost of interest-bearing liabilities partially offset with an increase of 23 basis points in the average yield on interest-earning assets.
  
• Provision for loan losses was $181,000 in the third quarter of 2019 compared to $90,000 for the period ending September 30, 2018.  This increase in provision for loan losses expense was mainly due to stronger than anticipated loan growth during the quarter.
• Noninterest expense totaled $2.7 million for the three-month period ended September 30, 2019, a decrease of $71,000, or 2.6%, compared to the three months ended September 30, 2018, primarily due to reduced Federal deposit insurance premiums expense.  The Company’s efficiency ratio improved from 60.0% as of September 30, 2018 to 55.6% as of September 30, 2019.
• On September 27, 2019, the Company announced another dividend increase to $0.20 per share, payable October 30, 2019, to stockholders of record as of October 16, 2019.  This represents a 33% increase over the September 2018 dividend of $0.15 per share.

The Company reported net income (unaudited) of $4.7 million or $1.77 per common share for the nine months ended September 30, 2019, an increase of $1,135,000 or 31.6%, compared to $3.6 million or $1.34 per common share for the same period ended September 30, 2018.  The increase in net income was due to an increase in both net interest income and non-interest income, and a decrease in noninterest expenses, partially offset with an increase in federal income tax expense.  The return on average equity and return on average assets for the nine months ended September 30, 2019, was 13.40% and 1.31%, respectively, compared to 11.27% and 1.05%, respectively, for the same period in 2018.

2019 Year-to-Date Business Highlights

• Net interest income was $12.3 million for the nine-month period ended September 30, 2019, an increase of $682,000, or 5.9%, compared to the same period in 2018, as the nine-month average net loan balances increased $31.3 million from the September 30, 2018 period.  Net interest margin for the nine months ended September 30, 2019 and 2018, declined 1 basis point to 3.56% as the average cost of interest-bearing liabilities increased by 27 basis points and the average yield on interest-earning assets increased by 26 basis points.
• Net loan balances increased from $377.9 million at December 31, 2018, to $401.9 million, an increase of 6.3%.  The increase in loan balances was primarily due to commercial loans secured by real estate.
• Provision for loan losses was $401,000 for the nine-month period ending September 30, 2019, compared to $428,000 for the prior year.
• Noninterest expense totaled $7.9 million for the nine-month period ended September 30, 2019, a decrease of $618,000, or 7.2%, compared to the September 30, 2018 nine-month period.  This decrease was primarily due to reduced stockholder expenses and legal expenses related to the proxy contest which was not repeated in 2019.  Federal deposit insurance premiums expense, net occupancy and equipment expense and advertising and marketing expenses were lower for the nine months ended September 30,2019 compared to the same period in 2018.  The Company’s efficiency ratio improved from 64.2% for the nine-month period ended September 2018 to 56.2% for the same period in 2019.

September 30, 2019 Financial Condition

At September 30, 2019, the Company had total assets of $493.9 million, an increase of $21.0 million, from total assets at December 31, 2018. The growth in total assets includes a $23.9 million increase in net loans compared to December 31, 2018, primarily due to an increase in commercial loans.  The asset growth was primarily funded with an increase in deposits of $16.3 million and a decrease in securities of $5.6 million.

The allowance for loan losses increased from $3.4 million at December 31, 2018, to $3.8 million at September 30, 2019.  The allowance for loan losses and the related provision for loan losses is based on management’s judgment and evaluation of the loan portfolio.  Management believes the current allowance for loan losses is adequate, however, changing economic and other conditions may require future adjustments to the allowance for loan losses.

Total nonperforming loans increased from $1.8 million at December 31, 2018, to $2.6 million for the quarter ended September 30, 2019.  Past due loan balances of 30 days and more increased from $1.6 million at December 31, 2018, to $2.8 million at September 30, 2019.

Established in 1899, Wayne Savings Community Bank, the wholly owned subsidiary of Wayne Savings Bancshares, Inc., has eleven full-service banking locations in the communities of Wooster, Ashland, Millersburg, Rittman, Lodi, North Canton, and Creston, Ohio. The Bank also has a loan production office in Poland Ohio. Additional information about Wayne Savings Community Bank is available at www.waynesavings.com.

Forward-Looking-Statements
This release contains forward-looking statements that are not historical facts and that are intended to be “forward-looking statements” as that term is defined by the Private Securities Litigation Reform Act of 1995.  These forward-looking statements may include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company’s future operating results.  When used in this release, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions are generally intended to identify forward-looking statements.  Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control.  These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company’s loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company’s loan and other products; unforeseen increases in costs and expenses; lower-than-expected revenue or cost savings in connection with acquisitions; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment.  Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information:
Myron Swartzentruber
Senior Vice President Chief Financial Officer
(330) 264-5767

WAYNE SAVINGS BANCSHARES, INC.
Selected Condensed Consolidated Financial Data
(Dollars in thousands, except per share data – unaudited)
		September				June				March				December
		2019				2019				2019				2018
Interest and dividend income		$	5,130			$	4,981			$	4,822			$	4,737
Interest expense			956				899				815				734
Net interest income			4,174				4,082				4,007				4,003
Provision for loan losses			181				136				84				90
Net interest income after
provision for loan losses			3,993				3,946				3,923				3,913
Non-interest income			621				663				567				524
Non-interest expense			2,667				2,692				2,559				2,520
Income before federal income taxes			1,947				1,917				1,931				1,917
Provision for federal income taxes			364				345				364				356
Net income		$	1,583			$	1,572			$	1,567			$	1,561
Earnings per share – basic and diluted		$	0.60			$	0.59			$	0.58			$	0.58
Dividends per share		$	0.20			$	0.19			$	0.17			$	0.16
Return on average assets			1.29	%			1.30	%			1.32	%			1.34	%
Return on average equity			13.14	%			13.31	%			13.76	%			14.23	%
Shares outstanding			2,617,005				2,692,236				2,695,933				2,696,844
Book value per share		$	18.23			$	17.81			$	17.17			$	16.64
		September				June				March				December
		2018				2018				2018				2017
Interest and dividend income		$	4,590			$	4,436			$	4,220			$	4,202
Interest expense			640				541				484				482
Net interest income			3,950				3,895				3,736				3,720
Provision for loan losses			90				218				120				92
Net interest income after
provision for loan losses			3,860				3,677				3,616				3,628
Non-interest income			611				609				493				470
Non-interest expense			2,738				2,846				2,952				2,782
Income before federal income taxes			1,733				1,440				1,157				1,316
Provision for federal income taxes			315				236				192				394
Net income		$	1,418			$	1,204			$	965			$	922
Earnings per share – basic and diluted		$	0.53			$	0.45			$	0.36			$	0.34
Dividends per share		$	0.15			$	0.11			$	0.11			$	0.10
Return on average assets			1.22	%			1.05	%			0.86	%			0.81	%
Return on average equity			13.12	%			11.40	%			9.23	%			8.66	%
Shares outstanding			2,705,844				2,705,844				2,705,844				2,705,844
Book value per share		$	15.98			$	15.70			$	15.39			$	15.37

WAYNE SAVINGS BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data – unaudited)
	Three Months Ended										Nine Months Ended
	September 30,							Percentage			September 30,						Percentage
	2019				2018			change			2019			2018			change
Interest income	$	5,130			$	4,590		11.8	%		$	14,933		$	13,246		12.7	%
Interest expense		956				640		49.4	%			2,670			1,665		60.4	%
Net interest income		4,174				3,950		5.7	%			12,263			11,581		5.9	%
Provision for loan losses		181				90		101.1	%			401			428		(6.3	)%
Net interest income after provision for loan losses		3,993				3,860		3.4	%			11,862			11,153		6.4	%
Non-interest income		621				611		1.6	%			1,851			1,713		8.1	%
Non-interest expense
Salaries and employee benefits		1,554				1,509		3.0	%			4,531			4,578		(1.0	)%
Net occupancy and equipment expense		507				564		(10.1	)%			1,602			1,693		(5.4	)%
Federal deposit insurance premiums		(32	)			33		(197.0	)%			43			127		(66.1	)%
Franchise taxes		102				93		9.7	%			305			285		7.0	%
Advertising and marketing		64				42		52.4	%			158			259		(39.0	)%
Legal		16				50		(68.0	)%			40			139		(71.2	)%
Professional fees		63				49		28.6	%			143			128		11.7	%
ATM Network		77				71		8.5	%			227			201		12.9	%
Auditing and accounting		78				70		11.4	%			187			201		(7.0	)%
Other		238				257		(7.4	)%			682			925		(26.3	)%
Total non-interest expense		2,667				2,738		(2.6	)%			7,918			8,536		(7.2	)%
Income before federal income taxes		1,947				1,733		12.3	%			5,795			4,330		33.8	%
Provision for federal income taxes		364				315		15.6	%			1,073			743		44.4	%
Net income	$	1,583			$	1,418		11.6	%		$	4,722		$	3,587		31.6	%
Earnings per share
Basic and diluted	$	0.60			$	0.53					$	1.77		$	1.34

WAYNE SAVINGS BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data – unaudited)
	September 30, 2019				December 31, 2018
ASSETS
Cash and cash equivalents	$	13,319			$	11,161
Securities, net (1)		53,099				58,705
Loans held for sale		199				213
Loans receivable, net		401,866				377,930
Federal Home Loan Bank stock		4,226				4,226
Premises & equipment, net		5,442				5,406
Bank-owned life insurance		10,569				10,368
Other assets		5,215				4,878
TOTAL ASSETS	$	493,935			$	472,887
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposit accounts	$	403,776			$	387,449
Other short-term borrowings		9,720				7,172
Federal Home Loan Bank advances		28,000				28,500
Accrued interest payable and other liabilities		4,737				4,888
TOTAL LIABILITIES		446,233				428,009
Common stock (3,978,731 shares of $.10 par value issued)		398				398
Additional paid-in capital		36,200				36,152
Retained earnings		31,389				28,290
Shares acquired by ESOP		(97	)			(142	)
Treasury Stock, at cost – 1,361,726 shares and 1,281,887 shares
at September 30, 2019 and December 31, 2018, respectively.		(20,228	)			(18,543	)
Accumulated other comprehensive loss		40				(1,277	)
TOTAL STOCKHOLDERS’ EQUITY		47,702				44,878
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	493,935			$	472,887
(1) Includes available-for-sale and held-to-maturity classifications.
Note: The December 31, 2018 Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date.