Market Overview

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

Share:

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    

 

View Comments and Join the Discussion!