Wayne Savings Bancshares, Inc. Announces Record Earnings for the Quarter ended March 31, 2018

WOOSTER, Ohio, April 06, 2018 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX:WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $965,000 or $0.36 per common share for the quarter ended March 31, 2018, an increase of $394,000 or 69%, compared to $571,000 or $0.21 per common share for the quarter ended March 31, 2017. The increase in net income was due to an increase in net interest income and a decrease in noninterest expenses partially offset by an increase in provision for loan losses.   The return on average equity and return on average assets for the first quarter of 2018 was 9.23% and 0.86%, respectively, compared to 5.53% and 0.51%, respectively, for the same period in 2017.

President and CEO James R. VanSickle commented, “We are pleased to announce another quarter of record earnings for our shareholders.  We have maintained our momentum from 2017 into the current year.  Our excellent performance is the result of the growth in the commercial loan portfolio and continued improvement in operational efficiency.  Excluding items related to the proxy contest, we have reached a key threshold of 10% ROE, a level the bank has never reached before.”

Net income for the three months ended March 31, 2018 was negatively impacted by a proxy contest for the election of directors at the 2018 annual shareholders meeting. The proxy contest expenses, which were included in noninterest expense, totaled $107,000 for the quarter ended March 31, 2018 and $212,000 for the same period in 2017.  The return on average equity and return on assets adjusted for the proxy expenses for the first quarter of 2018 would have been 10.03% and 0.94%, respectively, compared to 6.89% and 0.64%, respectively for the same period. 

First Quarter 2018 Business Highlights

• Net interest income was $3.7 million for the quarter ended March 31, 2018, an increase of $267,000, or 7.7%, compared to the quarter ended March 31, 2017.  The net interest margin increased from 3.28% for the quarter ended March 31, 2017 to 3.52% for the comparable period.   The net interest margin increase was the result of an increase of 22 basis points in the average yield on interest-earning assets and a decline of 2 basis points in the average cost of interest-bearing liabilities.
   
• Provision for loan losses was $120,000 in the first quarter of 2018 as a result of changes in the qualitative factors and growth in the loan portfolio during the first quarter of 2018.
   
• Noninterest expense totaled $3.0 million for the three-month period ended March 31, 2018, a decrease of $207,000, or 6.6%, compared to the three months ended March 31, 2017 primarily due to a decrease in salaries and employee benefits.  The Company’s efficiency ratio improved from March 2017 of 79.9% to 69.8% as of March 31, 2018.  The Company’s efficiency ratios adjusted for the proxy expenses improved from March 2017 of 74.5% to 67.3% as of March 31, 2018.
   
• On December 22, 2017, H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Reform Act”), was enacted into law.  Beginning in 2018, the Tax Reform Act reduces the federal tax rate for corporations from 35% to 21% and changes or limits certain deductions.   The effect of this change lowered the Company’s effective tax rate from 26% in the 2017 quarter to 17% in the 2018 period.
   
• On March 23, 2018 the Company announced another dividend increase to $0.11 per share.  This represents a 22% increase over the March 2017 dividend of $0.09 per share. 

March 31, 2018 Financial Condition:

At March 31, 2018, the Company had total assets of $453.5 million, an increase of $13.7 million, from total assets at December 31, 2017. The increase in total assets includes a $4.6 million increase in net loans compared to December 31, 2017 primarily due to an increase in commercial loans and an increase in both cash and cash equivalents and investment securities of $5.2 million and $3.5 million, respectively.  Federal Home Loan Bank Advances increased by $8.5 million with short-term advances being used to partially fund the above asset growth.  The remaining asset growth was funded with deposits of $6.1 million due mainly to newly offered high interest checking products for both consumers and businesses.

The allowance for loan losses increased from $2.9 million at December 31, 2017 to $3.1 million at March 31, 2018.  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 decreased from $1.9 million at December 31, 2017 to $1.5 million for the quarter ended March 31, 2018 mainly due to reduced nonperforming mortgage loans as the Company had three mortgage loan payoffs, and four mortgage loans removed from nonperforming status due to six consecutive payments and a mortgage transferred to real estate owned properties and sold during the quarter.

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
(330) 264-5767