Wayne Savings Bancshares, Inc. Announces Earnings for the Quarter and Nine Months Ended September 30, 2016

WOOSTER, Ohio, Oct. 27, 2016 (GLOBE NEWSWIRE) — Wayne Savings Bancshares, Inc. (NASDAQ:WAYN), the holding company parent of Wayne Savings Community Bank, reported net income of $550,000 or $0.20 per diluted share for the quarter ended September 30, 2016, compared to $372,000 or $0.13 per diluted share for the quarter ended September 30, 2015. The increase in net income was primarily due to an increase in net interest income and a decrease in the provision for loan losses, partially offset by a decrease in noninterest income and an increase in both noninterest expense, and the provision for federal income taxes. The return on average equity and return on average assets for the 2016 quarter were 5.31% and 0.49%, respectively, compared to 3.74% and 0.35%, respectively, for the 2015 quarter. 

Net interest income increased $272,000 for the quarter ended September 30, 2016, compared to the quarter ended September 30, 2015. Interest income increased $326,000 during the 2016 quarter primarily due to a $23.5 million increase in average interest-earning assets, and an increase in the rates earned on those assets from 3.63% in the prior year quarter to 3.73% in the current year quarter.  Interest expense increased $54,000 primarily due to a $21.5 million increase in the average balance of interest bearing liabilities, and an increase in the rates paid on those liabilities from 0.50% in the prior year quarter to 0.53% in the current year quarter. The net interest rate spread increased from 3.13% for the quarter ended September 30, 2015 to 3.20% for the quarter ended September 30, 2016. 

Provision for loan losses was $208,000 in the 2016 quarter, a decrease of $149,000 from $357,000 provided during the 2015 quarter.   The decrease is primarily due to a decrease in net charge-offs and impaired loans from the prior year period, as well as improved economic factors, partially offset by higher provision for increased loan balances.

Noninterest income decreased $15,000 for the quarter ended September 30, 2016 compared to the quarter ended September 30, 2015. The decrease was primarily due to a $17,000 decrease in service fees, charges and other operating income. The decrease in service fees, charges and other operating income was primarily due to a decrease in fees from annuity sales compared to the prior year quarter.   

Noninterest expense totaled $3.0 million, and increased $145,000 for the quarter ended September 30, 2016 compared to the quarter ended September 30, 2015.  This increase is primarily due to a $144,000 increase in salaries and employee benefits. The increase in salaries and employee benefits was primarily a result of increased compensation due to merit increases, an increase in healthcare costs due to an increase in premiums, and an increase in pension costs due to current year retirements, partially offset by lower education and training and post-retirement benefit costs compared to the prior year quarter. 

For the nine months ended September 30, 2016, net income totaled $1.9 million, or $0.70 per diluted share, compared to net income of $1.1 million, or $0.38 per diluted share, for the nine months ended September 30, 2015.  The increase in net income was primarily due to an increase in both net interest income and noninterest income and a decrease in the provision for loan losses, partially offset by an increase in both noninterest expense and the provision for federal income taxes.  The return on average equity and return on average assets for the nine months ended September 30, 2016 was 6.29% and 0.58%, respectively, compared to 3.51% and 0.33%, respectively, for the nine months ended September 30, 2015. 

Net interest income increased $771,000 for the nine months ended September 30, 2016, compared to the nine months ended September 30, 2015. Interest income increased $847,000 during the 2016 period mainly due to a $21.4 million increase in average interest-earning assets, and an increase in the rates earned on those assets from 3.62% in the prior year period to 3.70% in the current year period.

Interest expense increased $76,000 primarily due to a $20.7 million increase in the average balance of interest-bearing liabilities, while the average rates paid were 0.52% for both periods. The net interest rate spread increased from 3.10% in the prior year period to 3.18% in the current year period, as a result of interest-earning assets repricing upward, while interest-bearing deposits were unchanged.   

Provision for loan losses decreased $919,000, to $152,000 during the 2016 period compared to $1.1 million during the 2015 period. The decrease is primarily due to a decrease in net charge-offs and impaired loans from the prior year period, as well as improved economic factors, partially offset by higher provision for increased loan balances.

Noninterest income increased $118,000 for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. The increase was primarily due to a $61,000 increase in gain on sale of residential mortgage loans, and a $54,000 increase in service fees, charges and other operating income. The increase in gain on sale of residential mortgage loans was primarily due to an increase in loans sold, from $4.3 million in the 2015 period, to $5.1 million in the 2016 period. The increase in service fees, charges and other operating income was primarily due to a supervisory fee refund.

Noninterest expense increased $518,000 for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015.  This increase includes a $433,000 increase in salaries and employee benefits, a $76,000 increase in occupancy and equipment expense, and a $65,000 increase in franchise taxes, partially offset by a $78,000 decrease in loss on sale of foreclosed assets. The increase in salaries and employee benefits was primarily due to an increase in director and committee fees, employee compensation expense, and the related payroll taxes due to merit increases since the prior year period, increased healthcare costs due to increased premiums, and increased pension costs due to current year retirements. These increases were partially offset by lower costs for education and training and post-retirement benefits. The increase in occupancy and equipment expense was due to increases in depreciation, and data processing, partially offset by decreases in building maintenance and repairs and furniture, fixture and equipment expense. The increase in franchise taxes was due to the exclusion of the tax credit for the state supervisory exam fee that had previously been assessed and in other noninterest expense in the prior year period. The decrease in loss on sale of foreclosed assets was due to the sale of certain properties at higher losses in the prior year period.

At September 30, 2016, the Company had total assets of $445.8 million, an increase of $12.2 million, from total assets at December 31, 2015. The increase in total assets includes a $28.3 million increase in net loan balances, partially offset by a $2.3 million decrease in cash and cash equivalents, and a $14.1 million decrease in securities through the current year period.

Total securities decreased $14.1 million to $89.6 million at September 30, 2016, compared to $103.7 million at December 31, 2015. The decrease in securities was primarily due to investing the principal and interest cash flows from securities into higher yielding loans. Net loans totaled $321.4 million at September 30, 2016, an increase of $28.3 million, compared to $293.1 million at December 31, 2015, primarily due to new originations in excess of principal reductions and scheduled maturities.

The allowance for loan losses totaled $2.9 million, or 0.90% of gross loans, at September 30, 2016, compared to $2.8 million, or 0.96% of gross loans, at December 31, 2015.  Nonperforming assets, which consist of loans on non-accrual status and real estate owned, totaled $1.6 million at September 30, 2016, or 0.48% of total loans, a decrease of $393,000 from the December 31, 2015, balance of $2.0 million, or 0.66% of total loans. 

Deposits totaled $376.5 million at September 30, 2016, an increase of $14.1 million from $362.4 million at December 31, 2015.  This increase includes a $4.6 million increase in demand deposits, a $6.1 million increase in savings and money market balances, and a $3.3 million increase in time deposits. The Company continues to monitor deposit activity closely to respond to changes in customer preference for types of deposits.

Other short-term borrowings, which consist solely of repurchase agreements with commercial customers of the Bank, increased by $417,000 and totaled $6.0 million at September 30, 2016.  These repurchase agreements are offered by the Bank in order to retain commercial customer funds and to provide these commercial customers the opportunity to earn a return on a short-term secured transaction. 

Advances from the Federal Home Loan Bank (FHLB) totaled $18.0 million at September 30, 2016, compared to $21.0 million at December 31, 2015.  This decrease was due to the scheduled maturity of a $3.0 million fixed rate advance that was not replaced.  The Bank uses FHLB advances to extend the duration of its liabilities to manage the interest rate risk associated with the longer duration of loans at a lower cost than other funding alternatives, particularly retail term deposits.

Stockholders’ equity increased by $1.5 million during the period ended September 30, 2016, primarily due to net income of $1.9 million, and a $242,000 increase in unrealized gains on available-for-sale securities. These increases were partially offset by dividends of $742,000 during the current year period.

On September 22, 2016, the Company announced that its Board of Directors adopted a new stock repurchase program. Under the new stock repurchase program, the Company is authorized to repurchase up to 69,546 shares, or 2.5%, of its issued and outstanding shares of common stock.

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

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.

       
WAYNE SAVINGS BANCSHARES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per share data – unaudited) 
         
    For the Three Months
    ended September 30, 
         
      2016       2015  
         
Quarterly Results        
         
Net Interest Income   $   3,419     $   3,147  
Net Income   $   550     $   372  
Earnings Per Share:        
  Basic and diluted   $   0.20     $   0.13  
Return on Average Assets (Annualized)     0.49 %     0.35 %
Return on Average Equity (Annualized)     5.31 %     3.74 %
         
    For the Nine Months
    ended September 30, 
         
      2016       2015  
         
Year to Date Results        
         
Net Interest Income   $ 10,075     $ 9,304  
Net Income   $ 1,931     $ 1,055  
Earnings Per Share:        
  Basic and diluted   $   0.70     $   0.38  
Return on Average Assets (Annualized)     0.58 %     0.33 %
Return on Average Equity (Annualized)     6.29 %     3.51 %
         
         
    September 30,   December 31,
      2016       2015  
         
End of Period Data        
         
Total Assets   $   445,797     $   433,632  
Stockholders’ Equity to Total Assets     9.29 %     9.20 %
Shares Outstanding     2,781,839       2,781,839  
Book Value Per Share   $   14.88     $   14.34  

 

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,   September 30,  
    2016       2015       2016       2015    
                 
Interest income $   3,953     $   3,627     $   11,620     $   10,773    
Interest expense     534         480         1,545         1,469    
  Net interest income     3,419         3,147         10,075         9,304    
Provision for loan losses     208         357         152         1,071    
  Net interest income after provision for loan losses     3,211         2,790         9,923         8,233    
Noninterest income     523         538         1,530         1,412    
Noninterest expense     3,024         2,879         8,882         8,364    
Income before federal income taxes      710         449         2,571         1,281    
Provision for federal income taxes      160         77         640         226    
  Net income $   550     $   372     $   1,931     $   1,055    
                 
Earnings per share                
  Basic and Diluted $   0.20     $   0.13     $   0.70     $   0.38    
                 
Dividends per share $   0.09     $   0.09     $   0.27     $   0.27    

 

WAYNE SAVINGS BANCSHARES, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Dollars in thousands, except share and per share data)  
  September 30, 2016   December 31, 2015  
  (Unaudited)   (Audited)  
ASSETS        
         
Cash and cash equivalents $   8,864     $   11,156    
Investment securities, net (1)     89,550         103,654    
Loans receivable, net     321,390         293,121    
Federal Home Loan Bank stock     4,226         4,226    
Premises & equipment     6,568         6,663    
Foreclosed assets held for sale, net     4         14    
Bank-owned life insurance     9,758         9,554    
Other assets     5,437         5,244    
  TOTAL  ASSETS $   445,797     $   433,632    
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Deposit accounts    376,533       362,427    
Other short-term borrowings   6,023       5,606    
Federal Home Loan Bank Advances   18,000       21,000    
Accrued interest payable and other liabilities   3,837       4,694    
  TOTAL LIABILITIES   404,393       393,727    
         
         
Common stock (3,978,731 shares of $.10 par value issued)   398       398    
Additional paid-in capital   36,032       36,017    
Retained earnings   22,249       21,060    
Shares acquired by ESOP   (290 )     (343 )  
Treasury Stock, at cost – 1,196,892 shares at September 30, 2016 and December 31, 2015.   (16,936 )     (16,936 )  
Accumulated other comprehensive income   (49 )     (291 )  
  TOTAL STOCKHOLDERS’ EQUITY   41,404       39,905    
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $   445,797     $   433,632    
(1)  Includes held-to-maturity classifications.        

CONTACT: Contact Information:
Myron Swartzentruber
Senior Vice President
Chief Financial Officer
(330) 264-5767

Left Menu Icon
Right Menu Icon