Wayne Savings Bancshares, Inc. Announces Earnings for the second quarter 2020
Wooster, Ohio, July 17, 2020 – Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the “Company”), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $1,651,000 or $0.64 per common share for the quarter ended June 30, 2020, an increase of $79,000 or 5.0%, compared to $1,572,000 or $0.59 per common share for the quarter ended June 30, 2019. The increase in net income was due to an increase in net interest income and an increase in non-interest income, partially offset with an increase in provision for loan losses. The return on average equity and return on average assets for the second quarter of 2020 was 13.27% and 1.25%, respectively, compared to 13.31% and 1.30%, respectively, for the same period in 2019.
President and CEO James R. VanSickle commented, “Our staff continues to respond to the needs of our community during this unfortunate COVID-19 crisis. We have provided over $30 million of Paycheck Protection Program (PPP) loans under the Cares Act through our partnership with the Small Business Administration (SBA) and worked with dozens of customers to provide loan payment relief. Wayne Savings will continue to serve our valued customers, employees and stakeholders in these uncertain times. We can overcome this unprecedented crisis and community banks will be there every step of the way.”
Second Quarter 2020 Business Highlights
- Net interest income was $4.3 million for the quarter ended June 30, 2020, an increase of $173,000, or 4.2%, compared to the quarter ended June 30, 2019. The net interest margin decreased from 3.51% for the quarter ended June 30, 2019, to 3.36% for the comparable period of 2020. The net interest margin decrease was the result of a decrease of 32 basis points in the average yield on interest-earning assets, partially offset with a decrease of 17 basis points in the average cost of interest-bearing liabilities. The 32 basis points decline on the average yield on interest-earning assets was caused by the PPP loan originations at an interest rate of 1% during the quarter. Deposits increased by $27.0 million, mainly due to increased non-interest earning deposits.
- Provision for loan losses was $467,000 in the second quarter of 2020 compared to $136,000 for the period ending June 30, 2019. This increase in provision for loan losses expense was mainly due to the economic impact of the COVID-19 virus on the local economy and additional specific reserves required during the June 30, 2020 quarter on loans evaluated for impairment.
- Noninterest income totaled $846,000, an increase of 27.6%, mainly due to the gain on sale of loans. This is a result of the continued low interest rate environment for single-family mortgage loans, allowing borrowers to refinance their mortgage balances at reduced rates.
- Noninterest expense totaled $2.6 million for the three-month period ended June 30, 2020, a decrease of $56,000, or 2.1%, compared to the three months ended June 30, 2019, primarily due to reduced net occupancy and equipment expense as a result of lower depreciation expense. The Company’s efficiency ratio improved from June 2019 of 56.7% to 51.7% as of June 30, 2020.
The Company reported net income (unaudited) of $3.0 million or $1.15 per common share for the six months ended June 30, 2020, a decrease of $171,000 or 5.4%, compared to $3.1 million or $1.17 per common share for the same period ended June 30, 2019. The decrease in net income was due to an increase in provision for loan losses partially offset by an increase in net interest income, an increase in non-interest income and a decrease in noninterest expenses. The return on average equity and return on average assets for the six months ended June 30, 2020, was 11.97% and 1.17%, respectively, compared to 13.53% and 1.31%, respectively, for the same period in 2019.
2020 Year-to-Date Business Highlights
- Net interest income was $8.4 million for the six-month period ended June 30, 2020, an increase of $333,000, or 4.1%, compared to the same period in 2019 as the six-month average net loan balances increased $5.0 million from the June 30, 2019 period. Net interest margin for the six months ended June 30, 2020 and 2019, declined by 7 basis points to 3.44% as the average yield on interest-earning assets decreased 14 basis points and the average cost of interest-bearing liabilities declined by 7 basis points.
- Net loan balances increased from $376.6 million at December 31, 2019, to $401.8 million, an increase of 6.7%, mainly due to the PPP loans of $30.5 million added during the second quarter of 2020.
- Provision for loan losses was $1.1 million for the six-month period ending June 30, 2020, compared to $220,000 for the prior year. This increase in provision for loan losses expense was mainly due to the economic impact of the COVID-19 virus on the local economy and additional specific reserve required on loans evaluated for impairment as compared to the June 30, 2019 period.
- Noninterest income totaled $1.4 million, an increase of 14.0%, mainly due to the gain on sale of loans. This is a result of the continued low interest rate environment for single-family mortgage loans, allowing borrowers to refinance their mortgage balances at reduced rates.
- Noninterest expense totaled $5.1 million for the six-month period ended June 30, 2020, a decrease of $132,000, or 2.5%, compared to the June 30, 2019 six-month period. This decrease was primarily reduced net occupancy and equipment expense as a result of lower depreciation expense. The Company’s efficiency ratio improved from 56.4% for the six-month period ended June 2019 to 52.1% for the same period in 2020.
June 30, 2020 Financial Condition
At June 30, 2020, the Company had total assets of $534.5 million, an increase of $41.9 million, from total assets at December 31, 2019. The growth in total assets includes a $25.2 million increase in net loans, primarily due to PPP commercial loan additions, and $9.6 million in cash and cash equivalents compared to December 31, 2019.
The allowance for loan losses increased from $3.6 million at December 31, 2019, to $4.6 million at June 30, 2020. 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 have remained at $2.4 million since September 2019. Past due loan balances of 30 days and more increased slightly from $3.5 million at December 31, 2019, to $3.7 million at June 30, 2020.
Total liabilities increased $40.1 million primarily related to an increase in demand deposits of $40.4 million and $7.0 million increased savings and money market balances caused by commercial deposits related to the PPP loans, economic impact payments and pandemic unemployment assistance payments due to the COVID-19 virus stimulus packages. Federal Home Loan Bank advances also increased $6.0 million. These increases were partially offset by a $12.7 million decline in certificates of deposit, mainly due to the maturity of $8.0 million brokered deposits. 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. |
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Condensed Consolidated Statements of Income |
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(Dollars in thousands, except share data - unaudited) |
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Three Months Ended |
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Six Months Ended |
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June 30, |
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Percentage |
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June 30, |
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Percentage |
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2020 |
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2019 |
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change |
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2020 |
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2019 |
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change |
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Interest income |
$ 5,039 |
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$ 4,981 |
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1.2% |
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$ 10,089 |
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$ 9,803 |
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2.9% |
Interest expense |
784 |
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899 |
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(12.8)% |
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1,667 |
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1,714 |
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(2.7)% |
Net interest income |
4,255 |
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4,082 |
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4.2% |
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8,422 |
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8,089 |
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4.1% |
Provision for loan losses |
467 |
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136 |
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243.4% |
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1,087 |
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220 |
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394.1% |
Net interest income after provision for loan losses |
3,788 |
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3,946 |
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(4.0)% |
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7,335 |
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7,869 |
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(6.8)% |
Non-interest income |
846 |
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663 |
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27.6% |
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1,402 |
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1,230 |
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14.0% |
Non-interest expense |
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Salaries and employee benefits |
1,515 |
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1,523 |
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(0.5)% |
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2,932 |
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2,977 |
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(1.5)% |
Net occupancy and equipment expense |
491 |
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535 |
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(8.2)% |
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981 |
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1,095 |
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(10.4)% |
Franchise taxes |
105 |
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99 |
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6.1% |
|
209 |
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203 |
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3.0% |
Advertising and marketing |
37 |
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51 |
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(27.5)% |
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66 |
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94 |
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(29.8)% |
Legal |
23 |
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8 |
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187.5% |
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53 |
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35 |
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51.4% |
Professional fees |
50 |
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56 |
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(10.7)% |
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94 |
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80 |
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17.5% |
Auditing and accounting |
65 |
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68 |
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(4.4)% |
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122 |
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112 |
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8.9% |
Stockholder expense |
37 |
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36 |
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2.8% |
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55 |
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51 |
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7.8% |
Other |
312 |
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316 |
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(1.3)% |
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607 |
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604 |
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0.5% |
Total non-interest expense |
2,635 |
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2,692 |
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(2.1)% |
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5,119 |
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5,251 |
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(2.5)% |
Income before federal income taxes |
1,999 |
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1,917 |
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4.3% |
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3,618 |
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3,848 |
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(6.0)% |
Provision for federal income taxes |
348 |
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345 |
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0.9% |
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650 |
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709 |
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(8.3)% |
Net income |
$ 1,651 |
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$ 1,572 |
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5.0% |
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$ 2,968 |
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$ 3,139 |
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(5.4)% |
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Earnings per share |
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Basic and diluted |
$ 0.64 |
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$ 0.59 |
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$ 1.15 |
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$ 1.17 |
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WAYNE SAVINGS BANCSHARES, INC. |
Condensed Consolidated Balance Sheets |
(Dollars in thousands, except share data - unaudited) |
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June 30, 2020 |
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December 31, 2019 |
ASSETS |
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Cash and cash equivalents |
$ 40,359 |
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$ 30,752 |
Securities, net (1) |
65,589 |
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59,172 |
Loans held for sale |
688 |
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734 |
Loans receivable, net |
401,809 |
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376,581 |
Federal Home Loan Bank stock |
4,226 |
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4,226 |
Premises & equipment, net |
5,425 |
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5,318 |
Bank-owned life insurance |
10,768 |
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10,636 |
Other assets |
5,604 |
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5,167 |
TOTAL ASSETS |
$ 534,468 |
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$ 492,586 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Deposit accounts |
$ 442,317 |
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$ 407,572 |
Other short-term borrowings |
10,869 |
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10,444 |
Federal Home Loan Bank advances |
26,000 |
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20,000 |
Accrued interest payable and other liabilities |
5,070 |
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6,179 |
TOTAL LIABILITIES |
484,256 |
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444,195 |
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Common stock (3,978,731 shares of $.10 par value issued) |
398 |
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398 |
Additional paid-in capital |
36,246 |
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36,219 |
Retained earnings |
34,551 |
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32,600 |
Shares acquired by ESOP |
(53) |
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(82) |
Treasury Stock, at cost - 1,436,100 shares and 1,376,895 shares |
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at June 30, 2020 and December 31, 2019, respectively. |
(21,610) |
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(20,566) |
Accumulated other comprehensive income (loss) |
680 |
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(178) |
TOTAL STOCKHOLDERS' EQUITY |
50,212 |
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48,391 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 534,468 |
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$ 492,586 |
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(1) Includes available-for-sale and held-to-maturity classifications. |
Note: The December 31, 2019 Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date.
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WAYNE SAVINGS BANCSHARES, INC. |
Selected Condensed Consolidated Financial Data |
(Dollars in thousands, except share data - unaudited) |
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June |
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March |
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December |
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September |
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2020 |
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2020 |
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2019 |
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2019 |
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Interest and dividend income |
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$ 5,039 |
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$ 5,050 |
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$ 5,125 |
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$ 5,130 |
Interest expense |
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784 |
|
883 |
|
956 |
|
956 |
Net interest income |
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4,255 |
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4,167 |
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4,169 |
|
4,174 |
Provision for loan losses |
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467 |
|
620 |
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5 |
|
181 |
Net interest income after |
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provision for loan losses |
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3,788 |
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3,547 |
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4,164 |
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3,993 |
Non-interest income |
|
846 |
|
556 |
|
739 |
|
621 |
Non-interest expense |
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2,635 |
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2,484 |
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2,785 |
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2,667 |
Income before federal income taxes |
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1,999 |
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1,619 |
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2,118 |
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1,947 |
Provision for federal income taxes |
|
348 |
|
302 |
|
389 |
|
364 |
Net income |
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$ 1,651 |
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$ 1,317 |
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$ 1,729 |
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$ 1,583 |
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Earnings per share - basic and diluted |
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$ 0.64 |
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$ 0.51 |
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$ 0.66 |
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$ 0.60 |
Dividends per share |
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$ 0.20 |
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$ 0.20 |
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$ 0.20 |
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$ 0.20 |
Return on average assets |
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1.25% |
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1.07% |
|
1.40% |
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1.29% |
Return on average equity |
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13.27% |
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10.65% |
|
14.26% |
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13.14% |
Shares outstanding |
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2,542,631 |
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2,588,945 |
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2,601,836 |
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2,617,005 |
Book value per share |
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$ 19.75 |
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$ 18.77 |
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$ 18.60 |
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$ 18.23 |
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|
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|
|
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|
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June |
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March |
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December |
|
September |
|
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2019 |
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2019 |
|
2018 |
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2018 |
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|
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|
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|
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|
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Interest and dividend income |
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$ 4,981 |
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$ 4,822 |
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$ 4,737 |
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$ 4,590 |
Interest expense |
|
899 |
|
815 |
|
734 |
|
640 |
Net interest income |
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4,082 |
|
4,007 |
|
4,003 |
|
3,950 |
Provision for loan losses |
|
136 |
|
84 |
|
90 |
|
90 |
Net interest income after |
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provision for loan losses |
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3,946 |
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3,923 |
|
3,913 |
|
3,860 |
Non-interest income |
|
663 |
|
567 |
|
524 |
|
611 |
Non-interest expense |
|
2,692 |
|
2,559 |
|
2,520 |
|
2,738 |
Income before federal income taxes |
|
1,917 |
|
1,931 |
|
1,917 |
|
1,733 |
Provision for federal income taxes |
|
345 |
|
364 |
|
356 |
|
315 |
Net income |
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$ 1,572 |
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$ 1,567 |
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$ 1,561 |
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$ 1,418 |
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Earnings per share - basic and diluted |
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$ 0.59 |
|
$ 0.58 |
|
$ 0.58 |
|
$ 0.53 |
Dividends per share |
|
$ 0.19 |
|
$ 0.17 |
|
$ 0.16 |
|
$ 0.15 |
Return on average assets |
|
1.30% |
|
1.32% |
|
1.34% |
|
1.22% |
Return on average equity |
|
13.31% |
|
13.76% |
|
14.23% |
|
13.12% |
Shares outstanding |
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2,692,236 |
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2,695,933 |
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2,696,844 |
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2,705,844 |
Book value per share |
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$ 17.81 |
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$ 17.17 |
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$ 16.64 |
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$ 15.98 |