Wayne Savings Bancshares, Inc. Announces Ninth Consecutive Quarter of Record Earnings

Published

WOOSTER, Ohio, Oct. 17, 2019 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1,583,000 or $0.60 per common share for the quarter ended September 30, 2019, an increase of $165,000 or 12%, compared to $1,418,000 or $0.53 per common share for the quarter ended September 30, 2018. The increase in net income was due to an increase in net interest income and a decrease in non-interest expense partially offset with an increase in provision for federal income taxes.  The return on average equity and return on average assets for the third quarter of 2019 was 13.14% and 1.29%, respectively, compared to 13.12% and 1.22%, respectively, for the same period in 2018.

President and CEO James R. VanSickle commented, “The Wayne Savings team of experienced bankers continues to focus on the financial needs of our communities with an emphasis on providing excellent customer service.  These efforts have resulted in meaningful growth in loans and deposits as we help make the dreams of our friends and neighbors a reality.  We would like to take this opportunity to thank our customers, shareholders and our communities for their confidence in Wayne Savings.” 

Third Quarter 2019 Business Highlights

  • Net interest income was $4.2 million for the quarter ended September 30, 2019, an increase of $224,000, or 5.7%, compared to the quarter ended September 30, 2018.  The net interest margin decreased from 3.59% for the quarter ended September 30, 2018, to 3.58% for the comparable period of 2019.  The net interest margin decrease was the result of an increase of 24 basis points in the average cost of interest-bearing liabilities partially offset with an increase of 23 basis points in the average yield on interest-earning assets. 
  • Provision for loan losses was $181,000 in the third quarter of 2019 compared to $90,000 for the period ending September 30, 2018.  This increase in provision for loan losses expense was mainly due to stronger than anticipated loan growth during the quarter.
  • Noninterest expense totaled $2.7 million for the three-month period ended September 30, 2019, a decrease of $71,000, or 2.6%, compared to the three months ended September 30, 2018, primarily due to reduced Federal deposit insurance premiums expense.  The Company’s efficiency ratio improved from 60.0% as of September 30, 2018 to 55.6% as of September 30, 2019
  • On September 27, 2019, the Company announced another dividend increase to $0.20 per share, payable October 30, 2019, to stockholders of record as of October 16, 2019.  This represents a 33% increase over the September 2018 dividend of $0.15 per share. 

The Company reported net income (unaudited) of $4.7 million or $1.77 per common share for the nine months ended September 30, 2019, an increase of $1,135,000 or 31.6%, compared to $3.6 million or $1.34 per common share for the same period ended September 30, 2018.  The increase in net income was due to an increase in both net interest income and non-interest income, and a decrease in noninterest expenses, partially offset with an increase in federal income tax expense.  The return on average equity and return on average assets for the nine months ended September 30, 2019, was 13.40% and 1.31%, respectively, compared to 11.27% and 1.05%, respectively, for the same period in 2018.

2019 Year-to-Date Business Highlights

  • Net interest income was $12.3 million for the nine-month period ended September 30, 2019, an increase of $682,000, or 5.9%, compared to the same period in 2018, as the nine-month average net loan balances increased $31.3 million from the September 30, 2018 period.  Net interest margin for the nine months ended September 30, 2019 and 2018, declined 1 basis point to 3.56% as the average cost of interest-bearing liabilities increased by 27 basis points and the average yield on interest-earning assets increased by 26 basis points.
  • Net loan balances increased from $377.9 million at December 31, 2018, to $401.9 million, an increase of 6.3%.  The increase in loan balances was primarily due to commercial loans secured by real estate.
  • Provision for loan losses was $401,000 for the nine-month period ending September 30, 2019, compared to $428,000 for the prior year. 
  • Noninterest expense totaled $7.9 million for the nine-month period ended September 30, 2019, a decrease of $618,000, or 7.2%, compared to the September 30, 2018 nine-month period.  This decrease was primarily due to reduced stockholder expenses and legal expenses related to the proxy contest which was not repeated in 2019.  Federal deposit insurance premiums expense, net occupancy and equipment expense and advertising and marketing expenses were lower for the nine months ended September 30,2019 compared to the same period in 2018.  The Company’s efficiency ratio improved from 64.2% for the nine-month period ended September 2018 to 56.2% for the same period in 2019.

September 30, 2019 Financial Condition

At September 30, 2019, the Company had total assets of $493.9 million, an increase of $21.0 million, from total assets at December 31, 2018. The growth in total assets includes a $23.9 million increase in net loans compared to December 31, 2018, primarily due to an increase in commercial loans.  The asset growth was primarily funded with an increase in deposits of $16.3 million and a decrease in securities of $5.6 million.

The allowance for loan losses increased from $3.4 million at December 31, 2018, to $3.8 million at September 30, 2019.  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 increased from $1.8 million at December 31, 2018, to $2.6 million for the quarter ended September 30, 2019.  Past due loan balances of 30 days and more increased from $1.6 million at December 31, 2018, to $2.8 million at September 30, 2019.

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. The Bank also has a loan production office in Poland 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 Companys plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Companys 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 Companys 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 Companys loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Companys 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.
Selected Condensed Consolidated Financial Data
(Dollars in thousands, except per share data - unaudited)
                 
                 
    September   June   March   December
    2019   2019   2019   2018
                 
Interest and dividend income   $ 5,130     $ 4,981     $ 4,822     $ 4,737  
Interest expense     956       899       815       734  
Net interest income     4,174       4,082       4,007       4,003  
Provision for loan losses     181       136       84       90  
Net interest income after                
provision for loan losses     3,993       3,946       3,923       3,913  
Non-interest income     621       663       567       524  
Non-interest expense     2,667       2,692       2,559       2,520  
Income before federal income taxes   1,947       1,917       1,931       1,917  
Provision for federal income taxes     364       345       364       356  
Net income   $ 1,583     $ 1,572     $ 1,567     $ 1,561  
                 
Earnings per share - basic and diluted $ 0.60     $ 0.59     $ 0.58     $ 0.58  
Dividends per share   $ 0.20     $ 0.19     $ 0.17     $ 0.16  
Return on average assets     1.29 %     1.30 %     1.32 %     1.34 %
Return on average equity     13.14 %     13.31 %     13.76 %     14.23 %
Shares outstanding     2,617,005       2,692,236       2,695,933       2,696,844  
Book value per share   $ 18.23     $ 17.81     $ 17.17     $ 16.64  
                 
                 
    September   June   March   December
    2018   2018   2018   2017
                 
Interest and dividend income   $ 4,590     $ 4,436     $ 4,220     $ 4,202  
Interest expense     640       541       484       482  
Net interest income     3,950       3,895       3,736       3,720  
Provision for loan losses     90       218       120       92  
Net interest income after                
provision for loan losses     3,860       3,677       3,616       3,628  
Non-interest income     611       609       493       470  
Non-interest expense     2,738       2,846       2,952       2,782  
Income before federal income taxes   1,733       1,440       1,157       1,316  
Provision for federal income taxes     315       236       192       394  
Net income   $ 1,418     $ 1,204     $ 965     $ 922  
                 
Earnings per share - basic and diluted $ 0.53     $ 0.45     $ 0.36     $ 0.34  
Dividends per share   $ 0.15     $ 0.11     $ 0.11     $ 0.10  
Return on average assets     1.22 %     1.05 %     0.86 %     0.81 %
Return on average equity     13.12 %     11.40 %     9.23 %     8.66 %
Shares outstanding     2,705,844       2,705,844       2,705,844       2,705,844  
Book value per share   $ 15.98     $ 15.70     $ 15.39     $ 15.37  
                 

WAYNE SAVINGS BANCSHARES, INC.    
Condensed Consolidated Statements of Income    
(Dollars in thousands, except per share data - unaudited)    
                       
       
  Three Months Ended       Nine Months Ended    
  September 30,   Percentage   September 30,   Percentage
   2019     2018   change    2019    2018   change
                       
Interest income $ 5,130     $ 4,590   11.8 %   $ 14,933   $ 13,246   12.7 %
Interest expense   956       640   49.4 %     2,670     1,665   60.4 %
Net interest income   4,174       3,950   5.7 %     12,263     11,581   5.9 %
Provision for loan losses   181       90   101.1 %     401     428   (6.3 )%
Net interest income after provision for loan losses   3,993       3,860   3.4 %     11,862     11,153   6.4 %
Non-interest income   621       611   1.6 %     1,851     1,713   8.1 %
Non-interest expense                      
Salaries and employee benefits   1,554       1,509   3.0 %     4,531     4,578   (1.0 )%
Net occupancy and equipment expense   507       564   (10.1 )%     1,602     1,693   (5.4 )%
Federal deposit insurance premiums   (32 )     33   (197.0 )%     43     127   (66.1 )%
Franchise taxes   102       93   9.7 %     305     285   7.0 %
Advertising and marketing   64       42   52.4 %     158     259   (39.0 )%
Legal   16       50   (68.0 )%     40     139   (71.2 )%
Professional fees   63       49   28.6 %     143     128   11.7 %
ATM Network   77       71   8.5 %     227     201   12.9 %
Auditing and accounting   78       70   11.4 %     187     201   (7.0 )%
Other   238       257   (7.4 )%     682     925   (26.3 )%
Total non-interest expense   2,667       2,738   (2.6 )%     7,918     8,536   (7.2 )%
Income before federal income taxes   1,947       1,733   12.3 %     5,795     4,330   33.8 %
Provision for federal income taxes   364       315   15.6 %     1,073     743   44.4 %
Net income $ 1,583     $ 1,418   11.6 %   $ 4,722   $ 3,587   31.6 %
                       
Earnings per share                      
Basic and diluted $ 0.60     $ 0.53       $ 1.77   $ 1.34    
                       

WAYNE SAVINGS BANCSHARES, INC.  
Condensed Consolidated Balance Sheets  
(Dollars in thousands, except per share data - unaudited)  
  September 30, 2019   December 31, 2018  
ASSETS        
         
Cash and cash equivalents $ 13,319     $ 11,161    
Securities, net (1)   53,099       58,705    
Loans held for sale   199       213    
Loans receivable, net   401,866       377,930    
Federal Home Loan Bank stock   4,226       4,226    
Premises & equipment, net   5,442       5,406    
Bank-owned life insurance   10,569       10,368    
Other assets   5,215       4,878    
  TOTAL ASSETS $ 493,935     $ 472,887    
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Deposit accounts $ 403,776     $ 387,449    
Other short-term borrowings   9,720       7,172    
Federal Home Loan Bank advances   28,000       28,500    
Accrued interest payable and other liabilities   4,737       4,888    
  TOTAL LIABILITIES   446,233       428,009    
         
         
Common stock (3,978,731 shares of $.10 par value issued)   398       398    
Additional paid-in capital   36,200       36,152    
Retained earnings   31,389       28,290    
Shares acquired by ESOP   (97 )     (142 )  
Treasury Stock, at cost - 1,361,726 shares and 1,281,887 shares        
at September 30, 2019 and December 31, 2018, respectively.   (20,228 )     (18,543 )  
Accumulated other comprehensive loss   40       (1,277 )  
  TOTAL STOCKHOLDERS' EQUITY   47,702       44,878    
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 493,935     $ 472,887    
         
(1) Includes available-for-sale and held-to-maturity classifications.  
Note: The December 31, 2018 Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date.  
         

Wayne Savings Bancshares Inc.

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