Wayne Savings Bancshares, Inc. Announces Earnings for the Quarter Ended September...

Wayne Savings Bancshares, Inc. Announces Earnings for the Quarter Ended
September 30, 2008

WOOSTER, Ohio, Oct. 23 /PRNewswire-FirstCall/ -- Wayne Savings Bancshares,
Inc. (Nasdaq: WAYN), the stock holding company parent of Wayne Savings
Community Bank, reported net earnings of $601,000 or $0.21 per diluted share
for the second fiscal quarter ended September 30, 2008, compared to $547,000
or $0.18 per diluted share for the second fiscal quarter ended September 30,
2007. The increase in earnings was primarily due to an increase in net
interest income, resulting from decreased interest expense on deposits,
partially offset by decreased interest income on loans and investments.
Net interest income increased $232,000 for the quarter ended September 30,
2008, compared to the quarter ended September 30, 2007. Interest income
decreased $361,000 during the 2008 quarter mainly as a result of lower overall
market interest rates during the 2008 quarter compared to the 2007 quarter and
the corresponding impact on new originations and existing adjustable rate
loans. Interest expense decreased $593,000 during the quarter as a result of
lower deposit balances and lower market interest rates being reflected in
rates paid on certificates of deposit, money market deposit accounts and
advances from the Federal Home Loan Bank of Cincinnati, partially offset by a
higher volume of borrowings used to replace decreased deposit balances.
Noninterest income decreased $9,000, due primarily to a $21,000 reduction in
gain on sale of real estate acquired through foreclosure, partially offset by
a $5,000 increase in trust department income and an $8,000 increase in service
charges. Noninterest expense increased by $55,000, mainly due to increased
occupancy and state franchise tax expense. Compensation expense decreased by
$4,000 during the quarter, as full time equivalent staff decreased from 115 at
September 30, 2007 to 111 at September 30, 2008.
A provision for loan losses of $100,000 was made for the 2008 quarter
compared to $25,000 provided during the 2007 quarter, based on management's
assessment of probable incurred losses in the portfolio. The increase was
mainly due to management's analysis of economic factors in the Company's
market area and the negative change in those factors from the 2007 quarter to
the 2008 quarter.
For the six month period ended September 30, 2008, net earnings totaled
$1,132,000 or $0.39 per diluted share, compared to net earnings of $1,070,000
or $0.35 per diluted share for the six months ended September 30, 2007.
Net interest income increased $295,000 for the six months ended September
30, 2008 compared to the six months ended September 30, 2007. Interest income
decreased $628,000 for the 2008 six month period compared to the same period
in 2007, as a result of lower overall market interest rates during the 2008
period compared to the 2007 period and the corresponding impact on new
originations and existing adjustable rate loans. Interest expense decreased
$923,000 compared to the prior year period as a result of decreased balances
and rates paid on certificates of deposit, money market deposit accounts and
advances from the Federal Home Loan Bank of Cincinnati, partially offset by a
higher volume of borrowings used to replace decreased deposit balances.
Noninterest income decreased $28,000, due primarily to a $21,000 reduction
in gain on sale of real estate acquired through foreclosure, a $5,000 decrease
in trust department income and a $4,000 decrease in income on bank owned life
insurance, partially offset by a $2,000 increase in service charges.
Noninterest expense increased by $76,000, primarily due to increased occupancy
and franchise tax expense. Compensation expense decreased by $5,000 for the
period as increases in salary and benefits expense were offset by reductions
in staff.
A provision for loan losses of $161,000 was made during the six months
ended September 30, 2008 compared to $55,000 provided 2007 period. The
increase was mainly due to management's analysis of economic factors in the
Company's market area and the negative change in those factors from the 2007
period to the 2008 period.
According to Phillip E. Becker, President and Chief Executive Officer,
"During a period in which historic dislocations and interventions have
occurred in financial markets, combined with an increasingly difficult
economic environment, the Company has continued its focus on the management of
credit risk through the disciplined underwriting of credit to maintain strong
credit performance and aggressive work with delinquent borrowers to minimize
credit losses. The Company continues to serve customer needs while carefully
managing noninterest expense. In addition, the Company has continued to
exercise discipline in the pricing of deposits in the face of very strong
competition from national competitors seeking to meet their liquidity needs
though the acquisition of high rate retail deposits."
At September 30, 2008, Wayne Savings Bancshares, Inc. reported total
assets of $396.3 million, down from total assets of $401.6 million at March
31, 2008. The decrease in assets was primarily due to a decrease in cash
balances and investment securities, partially offset by an increase in loans.
Deposits at September 30, 2008 were $309.7 million, a decrease of $8.0
million, or 2.5% from $317.7 million at March 31, 2008. The decrease in
deposits was primarily due to management's decision to not compete
aggressively with high rate retail CDs offered by competitors in the Company's
market area. Borrowed funds at a cost lower than retail deposit rates were
used to partially offset the decrease in deposits.
Stockholders' equity at September 30, 2008 amounted to $32.6 million, or
8.23% of total assets, compared to $34.1 million at March 31, 2008, a decrease
of $1.5 million, primarily due to an increase in accumulated other
comprehensive loss to reflect the decline in the value of available for sale
securities, and, to a lesser extent, the payment of dividends, the completion
of the Company's stock buyback program, and the adoption of the EITF 06-4
accounting standard, requiring a reduction of equity and recognition of a
liability for post-retirement split dollar life insurance benefits, all of
which were partially offset by net earnings.
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.
Statements contained in this news release which are not historical facts
may be forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of factors.
Factors which could result in material variations include, but are not limited
to, changes in interest rates which could affect net interest margins and net
interest income, competitive factors which could affect net interest income
and noninterest income, changes in demand for loans, deposits and other
financial services in the Company's market area; changes in asset quality,
general economic conditions as well as other factors discussed in documents
filed by the Company with the Securities and Exchange Commission from time to
time. The Company undertakes no obligation to update these forward-looking
statements to reflect events or circumstances that occur after the date on
which such statements were made.
SOURCE Wayne Savings Bancshares, Inc.

H. Stewart Fitz Gibbon III, Executive Vice President, Chief Financial Officer
of Wayne Savings Bancshares, Inc., +1-330-264-5767