Wayne Savings Bancshares, Inc. Announces Earnings for the first quarter 2020

WOOSTER, Ohio, April 27, 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 $1.3 million, or $0.51 per common share, for the quarter ended March 31, 2020.  This represents a decrease of $250,000, or (16.0%), compared to $1.6 million, or $0.58 per common share, for the quarter ended March 31, 2019. The decrease in net income was mainly due to an increase in provision for loan losses associated with increased factor adjustments as a result of the effects of the Coronavirus pandemic (COVID-19), offset with an increase in net interest income and a decrease in non-interest expenses.   The return on average equity and return on average assets for the first quarter of 2020 was 10.65% and 1.07%, respectively, compared to 13.76% and 1.32%, respectively, for the same period in 2019.

President and CEO James R. VanSickle commented, “I am extremely proud of the efforts of our staff responding to the COVID-19 crisis.  Under the CARES Act, we were able to partner with the Small Business Administration (SBA) to offer ongoing assistance to our customers experiencing hardships using the Paycheck Protection Program.  We also are currently offering customer payment deferral options to those impacted by the COVID-19 pandemic.   We consider it a privilege to continue supporting the economy by providing the essential service of community banking.”

First Quarter 2020 Business Highlights

• Net interest income was $4.2 million for the quarter ended March 31, 2020, an increase of $160,000, or 4.0%, compared to the quarter ended March 31, 2019.  The quarterly average loan balances decreased $1.1 million, to $379.2 million from the March 31, 2019 period, as we sold $30.4 million of lower rate, seasoned, one-to-four family residential mortgage loans during the fourth quarter of 2019.  Our net interest margin was 3.51% for the quarters ended March 31, 2020, and March 31, 2019.   The yield on average interest-earning assets increased 4 basis points to 4.32% for the March 31, 2020 period.  The average cost of interest-bearing liabilities also increased 4 basis points to 0.81% for the period ended March 31, 2020.  The cost of our interest-bearing liabilities increased as the Bank’s deposit composition shifted to higher interest checking products, resulting in the growth of core deposits. 
   
• Due to the uncertainty of the incurred but unrealized COVID-19 related credit losses, and as a result of the mandate by the State of Ohio Governor Mike Dewine to close non-essential businesses, the provision for loan losses was $620,000 for the first quarter of 2020 compared to $84,000 during this same period in 2019.  The Company anticipates an elevated provision for loan losses until the non-essential businesses have re-opened, allowing the associated impact on the local economy and the unemployment rate to improve and our loan deferral plans have expired.     
   
• Noninterest expense totaled $2.5 million for the three-month period ended March 31, 2020, a decrease of $75,000, or 2.9%, compared to the three months ended March 31, 2019.  This decrease was primarily due to decreased net occupancy and equipment expenses as a result of reduced depreciation expense.  The Company’s efficiency ratio was 52.6% for the three-month period ended March 31, 2020, compared to 56.0% for the same period in 2019.   

Financial Condition as of March 31, 2020

At March 31, 2020, the Company had total assets of $494.1 million, an increase of $1.5 million, from December 31, 2019, mainly due to an increase in cash and cash equivalents of $2.1 million during 2020.  The Company plans to redeploy the excess cash and cash equivalent funds into the commercial loan portfolio in 2020. 

The allowance for loan losses was $4.2 million at March 31, 2020, compared to $3.6 million at December 31, 2019.  This increase was due to a provision for loan losses of $620,000 due mainly to increased factors as a result of the COVID-19 pandemic.  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 remained at $2.4 million at both March 31, 2020, and December 31, 2019, an increase from $1.8 million at December 31, 2018, the result of a single commercial loan relationship which is well secured.  

Total liabilities increased $1.3 million mainly due to borrowings growth of $6.0 million, and deposits declined $2.8 million, mainly due to declined certificate of deposit balances of $7.0 million offset with growth in demand deposit accounts of $3.4 million.  The demand deposit growth was primarily due to the Platinum checking account introduced to the market in the fourth quarter of 2017 which totaled $79.3 million at March 31, 2020.  The high-interest checking accounts were partially offset with declines in savings accounts and money market balances. The Company is continuing to enhance its deposit products in an effort to serve its customers and increase core 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 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
[phone]

WAYNE SAVINGS BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data - unaudited)
	March 31, 2020				December 31, 2019
ASSETS
Cash and cash equivalents	$	32,842			$	30,752
Securities, net (1)		59,363				59,172
Loans held for sale		881				734
Loans receivable, net		375,139				376,581
Federal Home Loan Bank stock		4,226				4,226
Premises & equipment, net		5,325				5,318
Bank-owned life insurance		10,702				10,636
Other assets		5,599				5,167
TOTAL ASSETS	$	494,077			$	492,586
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts	$	404,779			$	407,572
Other short-term borrowings		10,020				10,444
Federal Home Loan Bank advances		26,000				20,000
Accrued interest payable and other liabilities		4,690				6,179
TOTAL LIABILITIES		445,489				444,195
Common stock (3,978,731 shares of $.10 par value issued)		398				398
Additional paid-in capital		36,235				36,219
Retained earnings		33,401				32,600
Shares acquired by ESOP		(67	)			(82	)
Treasury Stock, at cost - 1,389,786 shares and 1,376,895 shares
at March 31, 2020 and December 31, 2019, respectively.		(20,817	)			(20,566	)
Accumulated other comprehensive loss		(562	)			(178	)
TOTAL STOCKHOLDERS' EQUITY		48,588				48,391
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	494,077			$	492,586
(1) Includes available-for-sale and held-to-maturity classifications.
Note: The December 31, 2019 Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date.

WAYNE SAVINGS BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data - unaudited)
		Three Months Ended
		March 31,						Percentage
		2020			2019			change
Interest income		$	5,050		$	4,822		4.7	%
Interest expense			883			815		8.3	%
Net interest income			4,167			4,007		4.0	%
Provision for loan losses			620			84		638.1	%
Net interest income after provision for loan losses			3,547			3,923		(9.6	)%
Non-interest income			556			567		(1.9	)%
Non-interest expense
Salaries and employee benefits			1,417			1,454		(2.5	)%
Net occupancy and equipment expense			490			560		(12.5	)%
Franchise taxes			104			104		0.0	%
Advertising and marketing			29			43		(32.6	)%
Legal			30			16		87.5	%
Professional fees			44			24		83.3	%
Auditing and accounting			58			44		31.8	%
Stockholder expense			18			15		20.0	%
Other			294			299		(1.7	)%
Total non-interest expense			2,484			2,559		(2.9	)%
Income before federal income taxes			1,619			1,931		(16.2	)%
Provision for federal income taxes			302			364		(17.0	)%
Net income		$	1,317		$	1,567		(16.0	)%
Earnings per share
Basic and diluted		$	0.51		$	0.58

WAYNE SAVINGS BANCSHARES, INC.
Selected Condensed Consolidated Financial Data
(Dollars in thousands, except per share data - unaudited)
		March				December				September				June
		2020				2019				2019				2019
Interest and dividend income		$	5,050			$	5,125			$	5,130			$	4,981
Interest expense			883				956				956				899
Net interest income			4,167				4,169				4,174				4,082
Provision for loan losses			620				5				181				136
Net interest income after
provision for loan losses			3,547				4,164				3,993				3,946
Non-interest income			556				739				621				663
Non-interest expense			2,484				2,785				2,667				2,692
Income before federal income taxes			1,619				2,118				1,947				1,917
Provision for federal income taxes			302				389				364				345
Net income		$	1,317			$	1,729			$	1,583			$	1,572
Earnings per share - basic and diluted		$	0.51			$	0.66			$	0.60			$	0.59
Dividends per share		$	0.20			$	0.20			$	0.20			$	0.19
Return on average assets			1.07	%			1.40	%			1.29	%			1.30	%
Return on average equity			10.65	%			14.26	%			13.14	%			13.31	%
Shares outstanding			2,588,945				2,601,836				2,617,005				2,692,236
Book value per share		$	18.77			$	18.60			$	18.23			$	17.81
		March				December				September				June
			2019				2018				2018				2018
Interest and dividend income		$	4,822			$	4,737			$	4,590			$	4,436
Interest expense			815				734				640				541
Net interest income			4,007				4,003				3,950				3,895
Provision for loan losses			84				90				90				218
Net interest income after
provision for loan losses			3,923				3,913				3,860				3,677
Non-interest income			567				524				611				609
Non-interest expense			2,559				2,520				2,738				2,846
Income before federal income taxes			1,931				1,917				1,733				1,440
Provision for federal income taxes			364				356				315				236
Net income		$	1,567			$	1,561			$	1,418			$	1,204
Earnings per share - basic and diluted		$	0.58			$	0.58			$	0.53			$	0.45
Dividends per share		$	0.17			$	0.16			$	0.15			$	0.11
Return on average assets			1.32	%			1.34	%			1.22	%			1.05	%
Return on average equity			13.76	%			14.23	%			13.12	%			11.40	%
Shares outstanding			2,695,933				2,696,844				2,705,844				2,705,844
Book value per share		$	17.17			$	16.64			$	15.98			$	15.70