Wayne Savings Bancshares, Inc. Announces Earnings for the Fourth Quarter and Full year 2020 Earnings

Wooster, Ohio, January 22, 2021 – Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1,773,000 or $0.71 per common share for the quarter ended December 31, 2020, an increase of $44,000 or 2.5%, compared to $1,729,000 or $0.66 per common share for the quarter ended December 31, 2019. The increase in net income was due to an increase in net interest income, partially offset with an increase in provision for loan losses, an increase in total non-interest expense, and increased provision for federal income taxes.  The return on average equity and return on average assets for the fourth quarter of 2020 was 13.69% and 1.25%, respectively, compared to 14.26% and 1.40%, respectively, for the same period in 2019.

President and CEO James R. VanSickle commented, “Wayne Savings was able to post record earnings for 2020 despite one of the worst economic environments in recent memory.  We delivered strong financial results during this period of unprecedented uncertainty by staying focused on the needs of our communities.  We appreciate the confidence our shareholders have shown during this very challenging year.  Our mission for 2021 and beyond is to continue to help our customers successfully capitalize on opportunities and navigate the challenges they face.”

Fourth Quarter 2020 Business Highlights

• Net interest income was $4.5 million for the quarter ended December 31, 2020, an increase of $283,000, or 6.8%, compared to the quarter ended December 31, 2019.  The net interest margin decreased from 3.49% for the quarter ended December 31, 2019, to 3.24% for the comparable period of 2020.   The net interest margin decrease was the result of a decrease of 56 basis points in the average yield on interest-earning assets, partially offset with a decrease of 31 basis points in the average cost of interest-bearing liabilities.  The decrease of 56 basis points of the average yield on interest-earning assets was due to Payroll Protection Program loans originated at an interest rate of 1% and the reduced interest rate environment from 2019.   Also, there was an increase of $57.1 million of deposits at lower interest rates than in the December 2019 quarter.  
• Provision for loan losses was $134,000 in the fourth quarter of 2020 compared to $5,000 for the period ending December 31, 2019.  This increase in provision for loan losses expense was mainly due to continued COVID-19 uncertainty and the increased required reserve as a result of the economic factors used in the allowance for loan losses calculation.

• Noninterest income totaled $742,000, basically unchanged compared to the quarter ended December 31, 2019. 

• Noninterest expense totaled $2.8 million for the three-month period ended December 31, 2020, an increase of $63,000, or 2.3%, compared to the three months ended December 31, 2019, primarily due to increased salaries and employee benefits.  The Company’s efficiency ratio improved from December 2019 of 56.7% to 54.8% as of December 31, 2020. 

The Company reported net income (unaudited) of $6.7 million or $2.63 basic earnings per common share for the year ended December 31, 2020, an increase of $239,000 or 3.7%, compared to $6.5 million or $2.43 per common share for the same period ended December 31, 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 and increased provision for federal income taxes.  The return on average equity and return on average assets for the year-to-date period ended December 31, 2020, was 13.26% and 1.25%, respectively, compared to 13.62% and 1.33%, respectively, for the same period in 2019.

2020 Year-to-Date Business Highlights

• Net interest income was $17.2 million for the year ended December 31, 2020, an increase of $770,000, or 4.7%, compared to the same period in 2019 as the annual average net loan balances increased $6.3 million in 2020, compared to 2019.  Net interest margin declined to 3.34% for the year ended December 31, 2020, compared to 3.51% in 2019.  The net interest margin change was the result of a 35 basis points decrease in the average yield on interest-earning assets partially offset by an 18 basis point decrease in the cost of interest-bearing liabilities.

• Net loan balances increased from $376.6 million at December 31, 2019, to $391.4 million, an increase of 3.9%, mainly due to the Paycheck Protection Program loans added primarily during the second quarter of 2020.

• Provision for loan losses was $1.3 million for the year ending December 31, 2020, compared to $406,000 in 2019.  This increase was mainly due to the COVID-19 uncertainty and the increased required reserve as a result of the economic factors used in the allowance for loan losses calculation. 
• Noninterest income totaled $3.0 million, an increase of 17.1%, mainly due to the gain from the sale of fixed-rate, one-to-four family residential mortgage loans as a result of increased originations.  The gain on loan sales increased $734,000 in 2020, to $1.4 million for the year, from $673,000 for the year ended in 2019.
• Our customers continue to take advantage of the low interest rate environment for single-family mortgage loans.

• Noninterest expense totaled $10.7 million for the year ended December 31, 2020, unchanged compared to the same period in 2019. The Company’s efficiency ratio improved from 56.3% for the year ended December 2019 to 53.0% for the same period in 2020. 

• We continue to enhance shareholder value through earnings improvement and stock repurchase programs.   In 2020, Wayne Savings Bancshares, Inc. completed the December 2019 repurchase plan and adopted a new repurchase plan allowing an additional 124,685 shares of common stock to be repurchased.

Financial Condition as of December 31, 2020

At December 31, 2020, the Company had total assets of $591.6 million, an increase of $99.0 million, from total assets at December 31, 2019. The growth in total assets includes a $14.8 million increase in net loans, primarily due to PPP commercial loan additions, $43.7 million in cash and cash equivalents, and $39.7 million increase in securities as compared to December 31, 2019. 

The allowance for loan losses increased from $3.6 million at December 31, 2019, to $4.7 million at December 31, 2020.  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 have declined to $1.4 million from $2.4 million at December 31, 2019, mainly due to the foreclosure process which transferred these properties into foreclosed assets held for sale and real estate sale proceeds.  Past due loan balances of 30 days and more decreased from $3.5 million at December 31, 2019, to $3.0 million at December 31, 2020, mainly due to decreased commercial loans and a reduction in residential mortgage loans.

Total liabilities increased $95.3 million mainly due to an increase in deposits accounts of $77.0 million caused mainly by Paycheck Protection Program loan originations which also generated increases in business checking accounts.  Other borrowings increased $18.6 million mainly due to new relationships.  Federal Home Loan Bank advances increased $6.0 million as the Company took advantage of the low rates.  The Company is continuing to enhance its deposit products in an effort to serve its customers and increase deposit balances.

Total stockholders’ equity changed mainly due to earnings of $6.7 million and an increase in the market value of available-for-sale securities due to a general market rate decline.  These increases were partially offset with dividends paid of $2.0 million and the increase in treasury shares as a result of the completion of the stock repurchase plan announced in December 2019 and the beginning of the repurchase plan announced in November 2020.

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, Creston, and Fredericksburg, 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