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Wayne Savings Bancshares, Inc. Announces Record Earnings for the Quarter ended June 30, 2018

WOOSTER, Ohio, July 19, 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 $1.2 million or $0.45 per common share for the quarter ended June 30, 2018, an increase of $443,000 or 58.4%, compared to $761,000 or $0.27 per common share for the quarter ended June 30, 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 second quarter of 2018 was 11.40% and 1.05%, respectively, compared to 7.26% and 0.68%, respectively, for the same period in 2017.

President and CEO James R. VanSickle commented, “We are pleased to announce a fourth consecutive quarter of record earnings for our shareholders.  2018 is shaping up to be a memorable year for Wayne Savings Bancshares, Inc.  Our outstanding team is committed to building a dynamic and independent financial services organization.  We truly appreciate the support of our customers, staff and shareholders as we execute our plan to become a top-performing community bank.”  

2018 Quarterly Business Highlights

Net interest income was $3.9 million for the quarter ended June 30, 2018, an increase of $299,000, or 8.3%, compared to the quarter ended June 30, 2017.  The quarterly average loan balances increased $21.4 million, or 6.4%, to $357.6 million from the June 30, 2017 period.  The net interest margin increased from 3.38% for the quarter ended June 30, 2017 to 3.57% 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 partially offset with an increase of 3 basis points in the average cost of interest-bearing liabilities to 0.53%.

Provision for loan losses was $218,000 in the second quarter of 2018 as a result of growth in the loan portfolio and related reserve requirement for a classified credit during the second quarter of 2018. 

Noninterest expense totaled $2.8 million for the three-month period ended June 30, 2018, a decrease of $255,000, or 8.2%, compared to the three months ended June 30, 2017 primarily due to reduced stockholder and legal expenses related to the proxy contest as the Company implemented our 2017 experience and internal staff allowing us to reduce professional costs. 

The Company reported net income (unaudited) of $2.2 million or $0.81 per common share for the six months ended June 30, 2018, an increase of $837,000 or 62.8%, compared to $1.3 million or $0.48 per common share for the same period ended June 30, 2017. The increase in net income was due to an increase in net interest income, a decrease in noninterest expenses and a decrease in federal income tax expense partially offset by an increase in provision for loan losses, as both loan balances and specific reserves increased.  The return on average equity and return on average assets for the six months ended June 30, 2018 was 10.32% and 0.96%, respectively, compared to 6.40% and 0.60%, respectively, for the same period in 2017.

Net income for the six months ended June 30, 2018 was also 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 $164,000 for the six months ended June 30, 2018 and $412,000 for the same period in 2017.  The return on average equity and return on assets adjusted for the proxy expenses for the second quarter of 2018 would have been 11.10% and 1.03%, respectively, compared to 7.70% and 0.72%, respectively for the same period in 2017. 

2018 Year-to-Date Business Highlights

Net interest income was $7.6 million for the six-month period ended June 30, 2018, an increase of $566,000, or 8.0%, compared to the same period in 2017 as the six-month average net loan balances increased $18.0 million from the June 30, 2017 period.  Net interest margin increased 21 basis points to 3.53% for the six months ended June 30, 2018.   The net interest margin increase was the result of an increase of 21 basis points in the average yield on interest-earning assets while the average cost of interest-bearing liabilities remained at 0.50%.

Net loan balances increased from $345.9 million at December 31, 2017 to $364.1 million, an increase of 5.3%, despite selling $6.8 million in mortgage loans through June 30, 2018 compared to $5.7 million during the 2017 year to date period.

Provision for loan losses was $338,000 for the six-month period ending June 30, 2018 as a result of growth in the loan portfolio and related specific reserve requirement for a classified credit in 2018. 

Noninterest expense totaled $5.8 million for the six-month period ended June 30, 2018, a decrease of $462,000, or 7.4%, compared to the June 30, 2017 six-month period.  This decrease was primarily due to reduced stockholder and legal expenses related to the proxy contest of $248,000 as the Company utilized our prior experience and internal staff skillsets allowing us to reduce professional costs.  In addition to the reduced proxy costs, the Company reduced accounting and auditing expenses by $85,000 mainly due to deregistration from the Securities and Exchange Commission in October 2017 and reduced professional services of $74,000.  The Company’s efficiency ratio improved from 76.4% for the six-month period ended June 2017 to 66.4% for the same period in 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.  Income before federal income taxes for the six months ended June 30, 2018 increased to $2.6 million from $1.8 million for the same prior year period. Despite the increased income before federal income taxes, the provision for federal income taxes for the six months ended June 2018 declined to $428,000 compared to the prior year period of $490,000 as a result of the federal tax rate reduction.  The effect of this change lowered the Company’s effective tax rate from 27% in the 2017 to 16% in the 2018 period. 

June 30, 2018 Financial Condition:

At June 30, 2018, the Company had total assets of $463.0 million, an increase of $23.2 million, from total assets at December 31, 2017. The increase in total assets was primarily due to an $18.2 million increase in net loans compared to December 31, 2017.  Loan balances generated from commercial relationships increased $17.4 million, or a 9.3% increase over the December 2017 balances, most of which was secured by real estate property. 

The allowance for loan losses increased from $2.9 million at December 31, 2017 to $3.3 million at June 30, 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 $1.4 million for the period ended June 30, 2018 due to reduced nonperforming mortgage loans and Commercial loans paydowns due to real estate sales and loans removed from nonperforming status due to improved payment performance.   

Total liabilities increased from $398.2 at December 31, 2017 to $420.5 million at June 30, 2018.  Federal Home Loan Bank Advances increased by $18.5 million with short-term advances and deposits growth $6.6 million.  The increase in deposits was primarily due to newly offered Platinum checking balances introduced to the market in the fourth quarter of 2017.  These high-interest checking products grew to a combined balance of $28.7 million at June 30, 2018.  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 Balance Sheets

 

(Dollars in thousands, except per share data - unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 2018 

 

 2017 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

  8,543

 

 

$

  6,041

 

 

Securities, net (1)

 

  64,557

 

 

 

  63,011

 

 

Loans held for sale

 

  388

 

 

 

  -

 

 

Loans receivable, net 

 

  364,084

 

 

 

  345,900

 

 

Federal Home Loan Bank stock

 

  4,226

 

 

 

  4,226

 

 

Premises & equipment

 

  5,768

 

 

 

  6,051

 

 

Foreclosed assets held for sale, net

 

  29

 

 

 

  45

 

 

Bank-owned life insurance

 

  10,231

 

 

 

  10,097

 

 

Other assets

 

  5,173

 

 

 

  4,426

 

 

  TOTAL  ASSETS

$

  462,999

 

 

$

  439,797

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Deposit accounts 

 

379,071

 

 

 

372,465

 

 

Other short-term borrowings

 

6,197

 

 

 

7,409

 

 

Federal Home Loan Bank advances

 

32,000

 

 

 

13,500

 

 

Accrued interest payable and other liabilities

 

3,243

 

 

 

4,838

 

 

  TOTAL LIABILITIES

 

420,511

 

 

 

398,212

 

 

 

 

 

 

 

 

 

 

 

 

Common stock (3,978,731 shares of $.10 par value issued)

 

398

 

 

 

398

 

 

Additional paid-in capital

 

36,121

 

 

 

36,093

 

 

Retained earnings

 

25,992

 

 

 

24,414

 

 

Shares acquired by ESOP

 

(174)

 

 

 

(206)

 

 

Accumulated other comprehensive loss

 

(1,488)

 

 

 

(753)

 

 

Treasury Stock at cost - 1,272,887 shares at both June 30, 2018

 

 

 

 

and December 31, 2017

 

(18,361)

 

 

 

(18,361)

 

 

  TOTAL STOCKHOLDERS' EQUITY

 

42,488

 

 

 

41,585

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

  462,999

 

 

$

  439,797

 

 

(1)  Includes held-to-maturity classifications.

 

 

 

 

Note: The December 31, 2017 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

 

 

 

Six Months Ended

 

 

 

 

June 30,

 

Percentage

 

June 30,

 

Percentage

 

 

 2018

 

 2017

 

Change

 

 2018

 

 2017

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

  4,436

 

$

  4,095

 

8.3%

 

 

$

  8,656

 

$

  8,072

 

7.2%

 

Interest expense

 

 

  541

 

 

  499

 

8.3%

 

 

 

  1,025

 

 

  1,007

 

1.8%

 

  Net interest income

 

 

  3,895

 

 

  3,596

 

8.3%

 

 

 

  7,631

 

 

  7,065

 

8.0%

 

  Provision for loan losses

 

 

  218

 

 

  83

 

162.7%

 

 

 

  338

 

 

  110

 

207.3%

 

  Net interest income after provision

 

 

 

 

 

 

 

 

 

 

 

 

  for loan losses

 

 

  3,677

 

 

  3,513

 

4.7%

 

 

 

  7,293

 

 

  6,955

 

4.9%

 

Noninterest income

 

 

  609

 

 

  640

 

(4.8)%

 

 

 

  1,102

 

 

  1,127

 

(2.2)%

 

Non-Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

  Salaries and employee benefits

 

 

  1,523

 

 

  1,526

 

(0.2)%

 

 

 

  3,069

 

 

  3,250

 

(5.6)%

 

  Net occupancy and equipment expense

 

 

  565

 

 

  527

 

7.2%

 

 

 

  1,129

 

 

  1,053

 

7.2%

 

  Franchise taxes

 

 

  96

 

 

  94

 

2.1%

 

 

 

  192

 

 

  185

 

3.8%

 

  Advertising and marketing

 

 

  119

 

 

  62

 

91.9%

 

 

 

  217

 

 

  132

 

64.4%

  Legal

 

 

  16

 

 

  156

 

(89.7)%

 

 

 

  89

 

 

  347

 

(74.4)%

 

  Professional fees

 

 

  40

 

 

  101

 

(60.4)%

 

 

 

  79

 

 

  152

 

(48.0)%

 

  Audit and accounting 

 

 

  68

 

 

  106

 

(35.8)%

 

 

 

  131

 

 

  216

 

(39.4)%

 

  Stockholder expense

 

 

  67

 

 

  186

 

(64.0)%

 

 

 

  193

 

 

  262

 

(26.3)%

 

  Other

 

 

  352

 

 

  343

 

2.6%

 

 

 

  699

 

 

  663

 

5.4%

 

Total noninterest expense

 

 

  2,846

 

 

  3,101

 

(8.2)%

 

 

 

  5,798

 

 

  6,260

 

(7.4)%

 

Income before federal income taxes 

 

 

  1,440

 

 

  1,052

 

37.0%

 

 

 

  2,597

 

 

  1,822

 

42.5%

 

Provision for income taxes 

 

 

  236

 

 

  291

 

(18.9)%

 

 

 

  428

 

 

  490

 

(12.7)%

 

  Net income

 

$

  1,204

 

$

  761

 

58.4%

 

 

$

  2,169

 

$

  1,332

 

62.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - Basic and diluted

 

$

  0.45

 

$

  0.27

 

 

 

$

  0.81

 

$

  0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WAYNE SAVINGS BANCSHARES, INC.

 

 

Selected Condensed Consolidated Financial Data

 

 

(Dollars in Thousands, except per share data - unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June

 

March

 

December

 

September

 

 

 

 

 2018 

 

 2018 

 

 2017 

 

 2017 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

  4,436

 

 

$

  4,220

 

 

$

  4,202

 

 

$

  4,154

 

 

 

Interest expense

 

 

  541

 

 

 

  484

 

 

 

  482

 

 

 

  491

 

 

 

  Net interest income

 

 

  3,895

 

 

 

  3,736

 

 

 

  3,720

 

 

 

  3,663

 

 

 

  Provision for loan losses

 

 

  218

 

 

 

  120

 

 

 

  92

 

 

 

  99

 

 

 

  Net interest income after

 

 

 

 

 

 

 

 

 

 

  provision for loan losses

 

 

  3,677

 

 

 

  3,616

 

 

 

  3,628

 

 

 

  3,564

 

 

 

Noninterest income

 

 

  609

 

 

 

  493

 

 

 

  470

 

 

 

  548

 

 

 

Noninterest expense

 

 

  2,846

 

 

 

  2,952

 

 

 

  2,782

 

 

 

  2,915

 

 

 

Income before income taxes 

 

 

  1,440

 

 

 

  1,157

 

 

 

  1,316

 

 

 

  1,197

 

 

 

Provision for income taxes 

 

 

  236

 

 

 

  192

 

 

 

  394

 

 

 

  342

 

 

 

  Net income

 

$

  1,204

 

 

$

  965

 

 

$

  922

 

 

$

  855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic and diluted

 

$

  0.45

 

 

$

  0.36

 

 

$

  0.34

 

 

$

  0.31

 

 

 

Dividends per share

 

$

  0.11

 

 

$

  0.11

 

 

$

  0.10

 

 

$

  0.09

 

 

 

Return on average assets

 

 

1.05%

 

 

 

0.86%

 

 

 

0.81%

 

 

 

0.77%

 

 

 

Return on average equity

 

 

11.40%

 

 

 

9.23%

 

 

 

8.66%

 

 

 

8.06%

 

 

 

Shares outstanding

 

 

  2,705,844

 

 

 

  2,705,844

 

 

 

  2,705,844

 

 

 

  2,781,839

 

 

 

Book value per share

 

$

  15.70

 

 

$

  15.39

 

 

$

  15.37

 

 

$

  15.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June

 

March

 

December

 

September

 

 

 

 

 2017 

 

 2017 

 

 2016 

 

 2016 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

  4,095

 

 

$

  3,977

 

 

$

  3,931

 

 

$

  3,953

 

 

 

Interest expense

 

 

  499

 

 

 

  508

 

 

 

  525

 

 

 

  534

 

 

 

  Net interest income

 

 

  3,596

 

 

 

  3,469

 

 

 

  3,406

 

 

 

  3,419

 

 

 

  Provision for loan losses

 

 

  83

 

 

 

  27

 

 

 

  213

 

 

 

  208

 

 

 

  Net interest income after

 

 

 

 

 

 

 

 

 

 

  provision for loan losses

 

 

  3,513

 

 

 

  3,442

 

 

 

  3,193

 

 

 

  3,211

 

 

 

Noninterest income

 

 

  640

 

 

 

  487

 

 

 

  466

 

 

 

  523

 

 

 

Noninterest expense

 

 

  3,101

 

 

 

  3,159

 

 

 

  3,276

 

 

 

  3,024

 

 

 

Income before income taxes 

 

 

  1,052

 

 

 

  770

 

 

 

  383

 

 

 

  710

 

 

 

Provision for income taxes 

 

 

  291

 

 

 

  199

 

 

 

  68

 

 

 

  160

 

 

 

  Net income

 

$

  761

 

 

$

  571

 

 

$

  315

 

 

$

  550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic and diluted

 

$

  0.27

 

 

$

  0.21

 

 

$

  0.12

 

 

$

  0.20

 

 

 

Dividends per share

 

$

  0.09

 

 

$

  0.09

 

 

$

  0.09

 

 

$

  0.09

 

 

 

Return on average assets

 

 

0.68%

 

 

 

0.51%

 

 

 

0.28%

 

 

 

0.49%

 

 

 

Return on average equity

 

 

7.26%

 

 

 

5.53%

 

 

 

3.03%

 

 

 

5.31%

 

 

 

Shares outstanding

 

 

  2,781,839

 

 

 

  2,781,839

 

 

 

  2,781,839

 

 

 

  2,781,839

 

 

 

Book value per share

 

$

  15.11

 

 

$

  14.88

 

 

$

  14.75

 

 

$

  14.88

 

 

 

 

 

 

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