GlobeNewswire Inc | Jul 17, 2020 06:00AM EDT

July 17, 2020

WOOSTER, Ohio, July 17, 2020 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the Company), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1,651,000 or $0.64 per common share for the quarter ended June 30, 2020, an increase of $79,000 or 5.0%, compared to $1,572,000 or $0.59 per common share for the quarter ended June 30, 2019. The increase in net income was due to an increase in net interest income and an increase in non-interest income, partially offset with an increase in provision for loan losses. The return on average equity and return on average assets for the second quarter of 2020 was 13.27% and 1.25%, respectively, compared to 13.31% and 1.30%, respectively, for the same period in 2019.

President and CEO James R. VanSickle commented, Our staff continues to respond to the needs of our community during this unfortunate COVID-19 crisis. We have provided over $30 million of Paycheck Protection Program (PPP) loans under the Cares Act through our partnership with the Small Business Administration (SBA) and worked with dozens of customers to provide loan payment relief. Wayne Savings will continue to serve our valued customers, employees and stakeholders in these uncertain times. We can overcome this unprecedented crisis and community banks will be there every step of the way.

Second Quarter 2020 Business Highlights

-- Net interest income was $4.3 million for the quarter ended June 30, 2020, an increase of $173,000, or 4.2%, compared to the quarter ended June 30, 2019. The net interest margin decreased from 3.51% for the quarter ended June 30, 2019, to 3.36% for the comparable period of 2020. The net interest margin decrease was the result of a decrease of 32 basis points in the average yield on interest-earning assets, partially offset with a decrease of 17 basis points in the average cost of interest-bearing liabilities. The 32 basis points decline on the average yield on interest-earning assets was caused by the PPP loan originations at an interest rate of 1% during the quarter. Deposits increased by $27.0 million, mainly due to increased non-interest earning deposits.

-- Provision for loan losses was $467,000 in the second quarter of 2020 compared to $136,000 for the period ending June 30, 2019. This increase in provision for loan losses expense was mainly due to the economic impact of the COVID-19 virus on the local economy and additional specific reserves required during the June 30, 2020 quarter on loans evaluated for impairment.

-- Noninterest income totaled $846,000, an increase of 27.6%, mainly due to the gain on sale of loans. This is a result of the continued low interest rate environment for single-family mortgage loans, allowing borrowers to refinance their mortgage balances at reduced rates.

-- Noninterest expense totaled $2.6 million for the three-month period ended June 30, 2020, a decrease of $56,000, or 2.1%, compared to the three months ended June 30, 2019, primarily due to reduced net occupancy and equipment expense as a result of lower depreciation expense. The Companys efficiency ratio improved from June 2019 of 56.7% to 51.7% as of June 30, 2020.

The Company reported net income (unaudited) of $3.0 million or $1.15 per common share for the six months ended June 30, 2020, a decrease of $171,000 or 5.4%, compared to $3.1 million or $1.17 per common share for the same period ended June 30, 2019. The decrease in net income was due to an increase in provision for loan losses partially offset by an increase in net interest income, an increase in non-interest income and a decrease in noninterest expenses. The return on average equity and return on average assets for the six months ended June 30, 2020, was 11.97% and 1.17%, respectively, compared to 13.53% and 1.31%, respectively, for the same period in 2019.

2020 Year-to-Date Business Highlights

-- Net interest income was $8.4 million for the six-month period ended June 30, 2020, an increase of $333,000, or 4.1%, compared to the same period in 2019 as the six-month average net loan balances increased $5.0 million from the June 30, 2019 period. Net interest margin for the six months ended June 30, 2020 and 2019, declined by 7 basis points to 3.44% as the average yield on interest-earning assets decreased 14 basis points and the average cost of interest-bearing liabilities declined by 7 basis points.

-- Net loan balances increased from $376.6 million at December 31, 2019, to $401.8 million, an increase of 6.7%, mainly due to the PPP loans of $30.5 million added during the second quarter of 2020.

-- Provision for loan losses was $1.1 million for the six-month period ending June 30, 2020, compared to $220,000 for the prior year. This increase in provision for loan losses expense was mainly due to the economic impact of the COVID-19 virus on the local economy and additional specific reserve required on loans evaluated for impairment as compared to the June 30, 2019 period.

-- Noninterest income totaled $1.4 million, an increase of 14.0%, mainly due to the gain on sale of loans. This is a result of the continued low interest rate environment for single-family mortgage loans, allowing borrowers to refinance their mortgage balances at reduced rates.

-- Noninterest expense totaled $5.1 million for the six-month period ended June 30, 2020, a decrease of $132,000, or 2.5%, compared to the June 30, 2019 six-month period. This decrease was primarily reduced net occupancy and equipment expense as a result of lower depreciation expense. The Companys efficiency ratio improved from 56.4% for the six-month period ended June 2019 to 52.1% for the same period in 2020.

June 30, 2020 Financial Condition

At June 30, 2020, the Company had total assets of $534.5 million, an increase of $41.9 million, from total assets at December 31, 2019. The growth in total assets includes a $25.2 million increase in net loans, primarily due to PPP commercial loan additions, and $9.6 million in cash and cash equivalents compared to December 31, 2019.

The allowance for loan losses increased from $3.6 million at December 31, 2019, to $4.6 million at June 30, 2020. The allowance for loan losses and the related provision for loan losses is based on managements 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 have remained at $2.4 million since September 2019. Past due loan balances of 30 days and more increased slightly from $3.5 million at December 31, 2019, to $3.7 million at June 30, 2020.

Total liabilities increased $40.1 million primarily related to an increase in demand deposits of $40.4 million and $7.0 million increased savings and money market balances caused by commercial deposits related to the PPP loans, economic impact payments and pandemic unemployment assistance payments due to the COVID-19 virus stimulus packages. Federal Home Loan Bank advances also increased $6.0 million. These increases were partially offset by a $12.7 million decline in certificates of deposit, mainly due to the maturity of $8.0 million brokered deposits. The Company is continuing to enhance its deposit products in an effort to serve its customers and increase deposit balances.

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. 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 Companys plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Companys 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 Companys 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 Companys loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Companys 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.Condensed Consolidated Balance Sheets(Dollars in thousands, except share data - unaudited)

June 30, 2020 December 31, 2019ASSETS Cash and cash equivalents $ 40,359 $ 30,752 Securities, net (1) 65,589 59,172 Loans held for sale 688 734 Loans receivable, net 401,809 376,581 Federal Home Loan Bank stock 4,226 4,226 Premises & equipment, net 5,425 5,318 Bank-owned life insurance 10,768 10,636 Other assets 5,604 5,167 TOTAL ASSETS $ 534,468 $ 492,586 LIABILITIES AND STOCKHOLDERS' EQUITY Deposit accounts $ 442,317 $ 407,572 Other short-term borrowings 10,869 10,444 Federal Home Loan Bank advances 26,000 20,000 Accrued interest payable and other liabilities 5,070 6,179 TOTAL LIABILITIES 484,256 444,195 Common stock (3,978,731 shares of $.10 par value 398 398 issued)Additional paid-in capital 36,246 36,219 Retained earnings 34,551 32,600 Shares acquired by ESOP (53 ) (82 )Treasury Stock, at cost - 1,436,100 shares and1,376,895 shares at June 30, 2020 and December (21,610 ) (20,566 )31, 2019, respectively.Accumulated other comprehensive income (loss) 680 (178 )TOTAL STOCKHOLDERS' EQUITY 50,212 48,391 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 534,468 $ 492,586 (1) Includes available-for-sale and held-to-maturity classifications.Note: The December 31, 2019 Condensed Consolidated Balance Sheet has beenderived from the audited Consolidated Balance Sheet as of that date.

WAYNE SAVINGS BANCSHARES, INC.Condensed Consolidated Statements of Income(Dollars in thousands, except share data - unaudited) Three Months Ended Six Months Ended June 30, Percentage June 30, Percentage 2020 2019 change 2020 2019 change Interest $ 5,039 $ 4,981 1.2 % $ 10,089 $ 9,803 2.9 %incomeInterest 784 899 (12.8 )% 1,667 1,714 (2.7 )%expenseNet interest 4,255 4,082 4.2 % 8,422 8,089 4.1 %incomeProvisionfor loan 467 136 243.4 % 1,087 220 394.1 %lossesNet interestincome afterprovision 3,788 3,946 (4.0 )% 7,335 7,869 (6.8 )%for loanlossesNon-interest 846 663 27.6 % 1,402 1,230 14.0 %incomeNon-interest expenseSalaries andemployee 1,515 1,523 (0.5 )% 2,932 2,977 (1.5 )%benefitsNetoccupancyand 491 535 (8.2 )% 981 1,095 (10.4 )%equipmentexpenseFranchise 105 99 6.1 % 209 203 3.0 %taxesAdvertisingand 37 51 (27.5 )% 66 94 (29.8 )%marketingLegal 23 8 187.5 % 53 35 51.4 %Professional 50 56 (10.7 )% 94 80 17.5 %feesAuditing and 65 68 (4.4 )% 122 112 8.9 %accountingStockholder 37 36 2.8 % 55 51 7.8 %expenseOther 312 316 (1.3 )% 607 604 0.5 %Totalnon-interest 2,635 2,692 (2.1 )% 5,119 5,251 (2.5 )%expenseIncomebefore 1,999 1,917 4.3 % 3,618 3,848 (6.0 )%federalincome taxesProvisionfor federal 348 345 0.9 % 650 709 (8.3 )%income taxesNet income $ 1,651 $ 1,572 5.0 % $ 2,968 $ 3,139 (5.4 )% Earnings per shareBasic and $ 0.64 $ 0.59 $ 1.15 $ 1.17 diluted

WAYNE SAVINGS BANCSHARES, INC.Selected Condensed Consolidated Financial Data(Dollars in thousands, except share data - unaudited) June March December September 2020 2020 2019 2019 Interest anddividend $ 5,039 $ 5,050 $ 5,125 $ 5,130 incomeInterest 784 883 956 956 expenseNet interest 4,255 4,167 4,169 4,174 incomeProvisionfor loan 467 620 5 181 lossesNet interestincome afterprovision 3,788 3,547 4,164 3,993 for loanlossesNon-interest 846 556 739 621 incomeNon-interest 2,635 2,484 2,785 2,667 expenseIncomebefore 1,999 1,619 2,118 1,947 federalincome taxesProvisionfor federal 348 302 389 364 income taxesNet income $ 1,651 $ 1,317 $ 1,729 $ 1,583 Earnings pershare - $ 0.64 $ 0.51 $ 0.66 $ 0.60 basic anddilutedDividends $ 0.20 $ 0.20 $ 0.20 $ 0.20 per shareReturn onaverage 1.25 % 1.07 % 1.40 % 1.29 %assetsReturn onaverage 13.27 % 10.65 % 14.26 % 13.14 %equityShares 2,542,631 2,588,945 2,601,836 2,617,005 outstandingBook value $ 19.75 $ 18.77 $ 18.60 $ 18.23 per share June March December September 2019 2019 2018 2018 Interest anddividend $ 4,981 $ 4,822 $ 4,737 $ 4,590 incomeInterest 899 815 734 640 expenseNet interest 4,082 4,007 4,003 3,950 incomeProvisionfor loan 136 84 90 90 lossesNet interestincome afterprovision 3,946 3,923 3,913 3,860 for loanlossesNon-interest 663 567 524 611 incomeNon-interest 2,692 2,559 2,520 2,738 expenseIncomebefore 1,917 1,931 1,917 1,733 federalincome taxesProvisionfor federal 345 364 356 315 income taxesNet income $ 1,572 $ 1,567 $ 1,561 $ 1,418 Earnings pershare - $ 0.59 $ 0.58 $ 0.58 $ 0.53 basic anddilutedDividends $ 0.19 $ 0.17 $ 0.16 $ 0.15 per shareReturn onaverage 1.30 % 1.32 % 1.34 % 1.22 %assetsReturn onaverage 13.31 % 13.76 % 14.23 % 13.12 %equityShares 2,692,236 2,695,933 2,696,844 2,705,844 outstandingBook value $ 17.81 $ 17.17 $ 16.64 $ 15.98 per share