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

 Wooster, Ohio, July 17, 2020 – 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 Company’s 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 Company’s 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 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 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 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.    
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 income  $        5,039    $      4,981   1.2%    $     10,089    $       9,803   2.9%
Interest expense               784               899   (12.8)%             1,667             1,714   (2.7)%
     Net interest income            4,255            4,082   4.2%             8,422             8,089   4.1%
          Provision for loan losses               467               136   243.4%             1,087                220   394.1%
     Net interest income after provision for loan losses            3,788            3,946   (4.0)%             7,335             7,869   (6.8)%
Non-interest income               846               663   27.6%             1,402             1,230   14.0%
Non-interest expense                      
     Salaries and employee benefits            1,515            1,523   (0.5)%             2,932             2,977   (1.5)%
     Net occupancy and equipment expense               491               535   (8.2)%                981             1,095   (10.4)%
     Franchise taxes               105                 99   6.1%                209                203   3.0%
     Advertising and marketing                 37                 51   (27.5)%                  66                  94   (29.8)%
     Legal                 23                   8   187.5%                  53                  35   51.4%
     Professional fees                 50                 56   (10.7)%                  94                  80   17.5%
     Auditing and accounting                 65                 68   (4.4)%                122                112   8.9%
     Stockholder expense                 37                 36   2.8%                  55                  51   7.8%
     Other               312               316   (1.3)%                607                604   0.5%
Total non-interest expense            2,635            2,692   (2.1)%             5,119             5,251   (2.5)%
Income before federal income taxes             1,999            1,917   4.3%             3,618             3,848   (6.0)%
Provision for federal income taxes                348               345   0.9%                650                709   (8.3)%
     Net income  $        1,651    $      1,572   5.0%    $       2,968    $       3,139   (5.4)%
                       
Earnings per share                      
     Basic and diluted  $          0.64    $        0.59        $         1.15    $         1.17    
                       

 

WAYNE SAVINGS BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share data - unaudited)
  June 30, 2020   December 31, 2019
ASSETS      
       
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 issued)                               398                                398
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 and 1,376,895 shares      
    at June 30, 2020 and December 31, 2019, respectively.                         (21,610)                         (20,566)
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 been derived from the audited Consolidated Balance Sheet as of that date.

 

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 and dividend income    $       5,039    $        5,050    $        5,125    $        5,130
Interest expense                784                 883                 956                 956
     Net interest income             4,255              4,167              4,169              4,174
          Provision for loan losses                467                 620                     5                 181
     Net interest income after                
     provision for loan losses             3,788              3,547              4,164              3,993
Non-interest income                846                 556                 739                 621
Non-interest expense             2,635              2,484              2,785              2,667
Income before federal income taxes              1,999              1,619              2,118              1,947
Provision for federal income taxes                 348                 302                 389                 364
     Net income    $       1,651    $        1,317    $        1,729    $        1,583
                 
Earnings per share - basic and diluted    $         0.64    $          0.51    $          0.66    $          0.60
Dividends per share    $         0.20    $          0.20    $          0.20    $          0.20
Return on average assets   1.25%   1.07%   1.40%   1.29%
Return on average equity   13.27%   10.65%   14.26%   13.14%
Shares outstanding      2,542,631       2,588,945       2,601,836       2,617,005
Book value per share    $       19.75    $        18.77    $        18.60    $        18.23
                 
                 
    June   March   December   September
    2019   2019   2018   2018
                 
Interest and dividend income    $       4,981    $        4,822    $        4,737    $        4,590
Interest expense                899                 815                 734                 640
     Net interest income             4,082              4,007              4,003              3,950
          Provision for loan losses                136                   84                   90                   90
     Net interest income after                
     provision for loan losses             3,946              3,923              3,913              3,860
Non-interest income                663                 567                 524                 611
Non-interest expense             2,692              2,559              2,520              2,738
Income before federal income taxes              1,917              1,931              1,917              1,733
Provision for federal income taxes                 345                 364                 356                 315
     Net income    $       1,572    $        1,567    $        1,561    $        1,418
                 
Earnings per share - basic and diluted    $         0.59    $          0.58    $          0.58    $          0.53
Dividends per share    $         0.19    $          0.17    $          0.16    $          0.15
Return on average assets   1.30%   1.32%   1.34%   1.22%
Return on average equity   13.31%   13.76%   14.23%   13.12%
Shares outstanding      2,692,236       2,695,933       2,696,844       2,705,844
Book value per share    $       17.81    $        17.17    $        16.64    $        15.98
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