WOOSTER, Ohio, Jan. 23, 2020 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1.7 million, or $0.66 per common share, for the quarter ended December 31, 2019. This represents an increase of $168,000, or 10.8%, compared to $1.6 million, or $0.58 per common share, for the quarter ended December 31, 2018. The increase in net income was due to an increase in net interest income and non-interest income and a decrease in provision for loan losses, offset with an increase in noninterest expenses. The return on average equity and return on average assets for the fourth quarter of 2019 were 14.26% and 1.40%, respectively, compared to 14.23% and 1.34%, respectively, for the same period in 2018.
President and CEO James R. VanSickle commented, “We are very pleased to have achieved record net income of $6.5 million in 2019 and a return on average equity of 13.62%. Wayne Savings produced excellent results in the fourth quarter of 2019 and earned our tenth consecutive quarter of record earnings for our shareholders. We have been blessed with a robust local economy and remain focused on providing a first-rate community banking experience for our customers, communities, employees and shareholders.”
“Our 2019 performance was driven by strong commercial loan growth, excellent asset quality, core deposit growth and our ability to leverage operational efficiencies. We believe our competitive advantages will allow us to develop trusted relationships and capitalize on opportunities throughout 2020 and beyond.”
“Wayne Savings is committed to achieving our results through our five core values as we interact with our friends and neighbors. Those core values are: being dependable and trustworthy, respecting one another, excellence in everything, being adaptable to change and maintaining meaningful relationships.”
2019 Quarterly Business Highlights
- Net interest income was $4.2 million for the quarter ended December 31, 2019, an increase of $166,000, or 4.1%, compared to the quarter ended December 31, 2018. The quarterly average loan balances increased $16.6 million, or 4.5%, to $389.1 million from the December 31, 2018 period. Our net interest margin decreased from 3.57% for the quarter ended December 31, 2018, to 3.49% at December 31, 2019. The yield on average interest-earning assets went from 4.27% at December 31, 2018, to 4.36% at December 31, 2019. The average cost of interest-bearing liabilities increased from 0.70% at December 31, 2018, to 0.87% at December 31, 2019. The cost of our interest-bearing liabilities increased as the Bank’s deposit composition shifted to higher interest checking products, resulting in the growth of core deposits.
- Provision for loan losses was $5,000 in the fourth quarter of 2019, mainly due to a bulk sale of seasoned one-to-four family residential mortgage loans totaling $30.4 million “portfolio mortgage loan sale” from the loan portfolio during the quarter. This sale of fixed-rate one-to-four family residential mortgage loans hastens the transition of our loan portfolio composition to one more typical of a commercial bank.
- Noninterest expense totaled $2.8 million for the three-month period ended December 31, 2019, an increase of $265,000, or 10.5%, compared to the three months ended December 31, 2018, primarily due to increased pension benefit expenses. The Company’s efficiency ratio was 56.7% for the three-month period ended December 31, 2019, compared to 55.7% for the same period in 2018.
The Company reported net income (unaudited) of $6.5 million, or $2.43 per common share, for the year ended December 31, 2019, an increase of $1.4 million or 25.3%, compared to $5.1 million, or $1.92 per common share, for the same period ended December 31, 2018. The increase in net income was due to an increase in net interest income, a decrease in provision for loan losses, an increase other income, and a decrease in noninterest expenses, partially offset with an increase in federal income tax expense due to an increase in the Bank’s pre-tax income. The return on average equity and return on average assets for the year-to-date period ended December 31, 2019, was 13.62% and 1.33%, respectively, compared to 12.03% and 1.12%, respectively, for the same period in 2018.
Net income for the year ended December 31, 2018, was negatively impacted by a proxy contest for the election of directors during the year. The proxy contest expenses, which were included in noninterest expense, totaled $164,000 for year ended December 31, 2018. The return on average equity and return on assets adjusted for the proxy expenses for 2018 would have been 12.33% and 1.15%, respectively.
2019 Year-to-Date Business Highlights
- Net interest income was $16.4 million for the year ended December 31, 2019, an increase of $848,000, or 5.4%, compared to the same period in 2018 as the annual average net loan balances increased $27.6 million in 2019, compared to 2018. Net interest margin declined to 3.51% for the year ended December 31, 2019, compared to 3.55% in 2018. The net interest margin change was the result of a 26 basis points increase in the average cost of interest-bearing liabilities partially offset by growth in the yield on interest-earning assets of 22 basis points. The cost of our interest-bearing liabilities increased as the Bank’s deposit composition shifted to higher interest checking products, resulting in the growth of core deposits.
- Net loan balances decreased $1.3 million, or .4%, from $377.9 million at December 31, 2018, to $376.6 million a result of selling $48.5 million in One-to-four family residential mortgage loans through December 31, 2019, compared to $14.1 million during the 2018 year-to-date period. Commercial loans secured by real estate increased $22.5 million and commercial non-real estate loans increased by $3.0 million. One-to-four family residential mortgage loans decreased $27.2 million primarily related to the aforementioned portfolio mortgage loan sale in the fourth quarter of 2019.
- Provision for loan losses was $406,000 for the year ending December 31, 2019, compared to $518,000 in 2018, mainly due to decreased specific reserves for classified credits and the reduction of required reserves related to portfolio mortgage loan sale, partially offset with the higher required reserves of the commercial loan growth in 2019.
- Noninterest expense totaled $10.7 million for the year ended December 31, 2019, a decrease of $353,000, or 3.2%, compared to the same period in 2018. This decrease was primarily due to reduced legal and stockholder expenses, as there was no proxy contest, and reduced federal deposit insurance expense as the Federal Deposit Insurance Fund awarded assessment credits for institutions under $10 billion. The Company’s efficiency ratio improved from 62.04% for the year ended December 2018, to 56.27% for the same period in 2019.
- Income before federal income taxes for the twelve months ended December 31, 2019, increased to $7.9 million from $6.2 million for the same prior year period. The provision for federal income taxes for the year ended December 31, 2019, increased to $1.5 million, compared to the prior year period of $1.1 million, due to the increase in pre-tax income. The Company’s effective tax rate changed from 17.6% for the year ended December 31, 2018, to 18.5% for the same period in 2019.
- We continue to enhance shareholder value through earnings improvement, increased cash dividends and stock repurchase programs. On December 20, 2019, the Company declared a quarterly dividend of $0.20 per share of the Company’s common stock which was a 25% increase from December 2018. In 2019, Wayne Savings Bancshares, Inc. repurchased 95,008 shares of common stock.
Financial Condition as of December 31, 2019
At December 31, 2019, the Company had total assets of $492.6 million, an increase of $19.7 million, from December 31, 2018. Commercial loans increased $25.5 million and cash and cash equivalents increased $19.6 million during 2019. These gains were partially offset by the $27.2 million decrease in one-to-four family residential loans. The increase in cash and cash equivalents was primarily due to portfolio mortgage loan sale during the fourth quarter. The Company plans to redeploy these funds into the commercial loan portfolio in 2020.
The allowance for loan losses was $3.4 million at December 31, 2018, increasing to $3.6 million at December 31, 2019. This increase was due to growth in commercial loans. 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 to $2.4 million at December 31, 2019, from $1.8 million at December 31, 2018, the result of a single commercial loan relationship which is well secured.
Total liabilities increased from $428.0 at December 31, 2018, to $444.2 million at December 31, 2019, mainly due to deposit growth of $20.1 million. The deposit growth was primarily due to the Platinum checking account introduced to the market in the fourth quarter of 2017 which totaled $72.0 million at December 31, 2019. The high-interest checking accounts were partially offset with declines in savings accounts and money market balances. 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. | ||||||||||||||||
| Selected Condensed Consolidated Financial Data | ||||||||||||||||
| (Dollars in thousands, except per share data - unaudited) | ||||||||||||||||
| December | September | June | March | |||||||||||||
| 2019 | 2019 | 2019 | 2019 | |||||||||||||
| Interest and dividend income | $ | 5,125 | $ | 5,130 | $ | 4,981 | $ | 4,822 | ||||||||
| Interest expense | 956 | 956 | 899 | 815 | ||||||||||||
| Net interest income | 4,169 | 4,174 | 4,082 | 4,007 | ||||||||||||
| Provision for loan losses | 5 | 181 | 136 | 84 | ||||||||||||
| Net interest income after | ||||||||||||||||
| provision for loan losses | 4,164 | 3,993 | 3,946 | 3,923 | ||||||||||||
| Non-interest income | 739 | 621 | 663 | 567 | ||||||||||||
| Non-interest expense | 2,785 | 2,667 | 2,692 | 2,559 | ||||||||||||
| Income before federal income taxes | 2,118 | 1,947 | 1,917 | 1,931 | ||||||||||||
| Provision for federal income taxes | 389 | 364 | 345 | 364 | ||||||||||||
| Net income | $ | 1,729 | $ | 1,583 | $ | 1,572 | $ | 1,567 | ||||||||
| Earnings per share - basic and diluted | $ | 0.66 | $ | 0.60 | $ | 0.59 | $ | 0.58 | ||||||||
| Dividends per share | $ | 0.20 | $ | 0.20 | $ | 0.19 | $ | 0.17 | ||||||||
| Return on average assets | 1.40 | % | 1.29 | % | 1.30 | % | 1.32 | % | ||||||||
| Return on average equity | 14.26 | % | 13.14 | % | 13.31 | % | 13.76 | % | ||||||||
| Shares outstanding | 2,601,836 | 2,617,005 | 2,692,236 | 2,695,933 | ||||||||||||
| Book value per share | $ | 18.60 | $ | 18.23 | $ | 17.81 | $ | 17.17 | ||||||||
| December | September | June | March | |||||||||||||
| 2018 | 2018 | 2018 | 2018 | |||||||||||||
| Interest and dividend income | $ | 4,737 | $ | 4,590 | $ | 4,436 | $ | 4,220 | ||||||||
| Interest expense | 734 | 640 | 541 | 484 | ||||||||||||
| Net interest income | 4,003 | 3,950 | 3,895 | 3,736 | ||||||||||||
| Provision for loan losses | 90 | 90 | 218 | 120 | ||||||||||||
| Net interest income after | ||||||||||||||||
| provision for loan losses | 3,913 | 3,860 | 3,677 | 3,616 | ||||||||||||
| Non-interest income | 524 | 611 | 609 | 493 | ||||||||||||
| Non-interest expense | 2,520 | 2,738 | 2,846 | 2,952 | ||||||||||||
| Income before federal income taxes | 1,917 | 1,733 | 1,440 | 1,157 | ||||||||||||
| Provision for federal income taxes | 356 | 315 | 236 | 192 | ||||||||||||
| Net income | $ | 1,561 | $ | 1,418 | $ | 1,204 | $ | 965 | ||||||||
| Earnings per share - basic and diluted | $ | 0.58 | $ | 0.53 | $ | 0.45 | $ | 0.36 | ||||||||
| Dividends per share | $ | 0.16 | $ | 0.15 | $ | 0.11 | $ | 0.11 | ||||||||
| Return on average assets | 1.34 | % | 1.22 | % | 1.05 | % | 0.86 | % | ||||||||
| Return on average equity | 14.23 | % | 13.12 | % | 11.40 | % | 9.23 | % | ||||||||
| Shares outstanding | 2,696,844 | 2,705,844 | 2,705,844 | 2,705,844 | ||||||||||||
| Book value per share | $ | 16.64 | $ | 15.98 | $ | 15.70 | $ | 15.39 | ||||||||
| WAYNE SAVINGS BANCSHARES, INC. | |||||||||||||||||
| Condensed Consolidated Statements of Income | |||||||||||||||||
| (Dollars in thousands, except per share data - unaudited) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, | Percentage | December 31, | Percentage | ||||||||||||||
| 2019 | 2018 | change | 2019 | 2018 | change | ||||||||||||
| Interest income | $ | 5,125 | $ | 4,737 | 8.2 | % | $ | 20,058 | $ | 17,983 | 11.5 | % | |||||
| Interest expense | 956 | 734 | 30.2 | % | 3,626 | 2,399 | 51.1 | % | |||||||||
| Net interest income | 4,169 | 4,003 | 4.1 | % | 16,432 | 15,584 | 5.4 | % | |||||||||
| Provision for loan losses | 5 | 90 | (94.4 | )% | 406 | 518 | (21.6 | )% | |||||||||
| Net interest income after provision for loan losses | 4,164 | 3,913 | 6.4 | % | 16,026 | 15,066 | 6.4 | % | |||||||||
| Non-interest income | 739 | 524 | 41.0 | % | 2,590 | 2,237 | 15.8 | % | |||||||||
| Non-interest expense | |||||||||||||||||
| Salaries and employee benefits | 1,587 | 1,434 | 10.7 | % | 6,128 | 6,012 | 1.9 | % | |||||||||
| Net occupancy and equipment expense | 474 | 454 | 4.4 | % | 1,849 | 1,946 | (5.0 | )% | |||||||||
| Federal deposit insurance premiums | - | 33 | (100.0 | )% | 43 | 166 | (74.1 | )% | |||||||||
| Franchise taxes | 102 | 82 | 24.4 | % | 407 | 367 | 10.9 | % | |||||||||
| Advertising and marketing | 92 | 40 | 130.0 | % | 250 | 299 | (16.4 | )% | |||||||||
| Legal | 19 | 16 | 18.8 | % | 59 | 155 | (61.9 | )% | |||||||||
| Professional fees | 43 | 26 | 65.4 | % | 186 | 154 | 20.8 | % | |||||||||
| ATM Network | 70 | 76 | (7.9 | )% | 297 | 277 | 7.2 | % | |||||||||
| Auditing and accounting | 81 | 21 | 285.7 | % | 268 | 222 | 20.7 | % | |||||||||
| Other | 317 | 338 | (6.2 | )% | 1,216 | 1,458 | (16.6 | )% | |||||||||
| Total non-interest expense | 2,785 | 2,520 | 10.5 | % | 10,703 | 11,056 | (3.2 | )% | |||||||||
| Income before federal income taxes | 2,118 | 1,917 | 10.5 | % | 7,913 | 6,247 | 26.7 | % | |||||||||
| Provision for federal income taxes | 389 | 356 | 9.3 | % | 1,462 | 1,099 | 33.0 | % | |||||||||
| Net income | $ | 1,729 | $ | 1,561 | 10.8 | % | $ | 6,451 | $ | 5,148 | 25.3 | % | |||||
| Earnings per share | |||||||||||||||||
| Basic and diluted | $ | 0.66 | $ | 0.58 | $ | 2.43 | $ | 1.92 | |||||||||
| WAYNE SAVINGS BANCSHARES, INC. | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Dollars in thousands, except per share data - unaudited) | |||||||
| December 31, 2019 | December 31, 2018 | ||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 30,752 | $ | 11,161 | |||
| Securities, net (1) | 59,172 | 58,705 | |||||
| Loans held for sale | 734 | 213 | |||||
| Loans receivable, net | 376,581 | 377,930 | |||||
| Federal Home Loan Bank stock | 4,226 | 4,226 | |||||
| Premises & equipment, net | 5,318 | 5,406 | |||||
| Bank-owned life insurance | 10,636 | 10,368 | |||||
| Other assets | 5,167 | 4,878 | |||||
| TOTAL ASSETS | $ | 492,586 | $ | 472,887 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Deposit accounts | $ | 407,572 | $ | 387,449 | |||
| Other short-term borrowings | 10,444 | 7,172 | |||||
| Federal Home Loan Bank advances | 20,000 | 28,500 | |||||
| Accrued interest payable and other liabilities | 6,179 | 4,888 | |||||
| TOTAL LIABILITIES | 444,195 | 428,009 | |||||
| Common stock (3,978,731 shares of $.10 par value issued) | 398 | 398 | |||||
| Additional paid-in capital | 36,219 | 36,152 | |||||
| Retained earnings | 32,600 | 28,290 | |||||
| Shares acquired by ESOP | (82 | ) | (142 | ) | |||
| Treasury Stock, at cost - 1,376,895 shares and 1,281,887 shares | |||||||
| at December 31, 2019 and December 31, 2018, respectively. | (20,566 | ) | (18,543 | ) | |||
| Accumulated other comprehensive loss | (178 | ) | (1,277 | ) | |||
| TOTAL STOCKHOLDERS' EQUITY | 48,391 | 44,878 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 492,586 | $ | 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. | |||||||