WOOSTER, Ohio, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Wayne Savings Bancshares, Inc. (OTCQX: WAYN), (the "Company"), the holding company parent of Wayne Savings Community Bank, reported net income (unaudited) of $7.8 million, or $3.56 per common share, for the year to date period ended December 31, 2023, a decrease of $1.2 million, or 13.0%, compared to $9.0 million, or $3.98 per common share, for the same period ended December 31, 2022. Net income, excluding the merger-related expenses (non-GAAP) for the twelve months ended December 31, 2023, was $8.8 million, or $3.99 per share. The decrease in net income was due to an increase in non-interest expenses, including the merger-related expenses of $1.0 million. The return on average equity and return on average assets for year ended December 31, 2023, was 16.27% and 1.02%, respectively, compared to 19.37% and 1.34%, respectively, for the same period in 2022. Excluding merger-related expenses, return on average equity and return on average assets for year ended December 31, 2023, was 18.24% and 1.14%, respectively.
The Company reported net income (unaudited) of $2.0 million, or $0.93 per common share, for the quarter ended December 31, 2023, a decrease of $372,000, or 15.4%, compared to $2.4 million, or $1.09 per common share, for the quarter ended December 31, 2022. The decrease in net income was due primarily to an increase in interest expense and non-interest expenses, including merger-related expenses of $413,000. Net income, excluding merger-related expenses (non-GAAP) for the quarter ended December 31, 2023, was $2.4 million, or $1.09 per share. The return on average equity and return on average assets for the fourth quarter of 2023 was 16.90% and 1.02%, respectively, compared to 22.87% and 1.36%, for the same period in 2022. Excluding merger-related expenses, return on average equity and return on average assets for the three months ended December 31, 2023, was 19.83% and 1.20%, respectively.
President and CEO James R. VanSickle commented "It is a pleasure to report another exciting year of progress and achievement for Wayne Savings Bancshares, Inc. We produced a solid year of earnings with net income of $7.8 million for 2023. Wayne Savings was able to grow our loan portfolio by 13% in 2023, despite the economic headwinds caused by inflationary pressures. Our local economy remains resilient and our asset quality continues to be excellent. Our total assets exceeded $800 million for the first time at the end of 2023. I would like to thank our fantastic group of community bankers for their dedication to serving our customers and shareholders for their continued confidence."
2023 Select Business Highlights
- Wayne Savings Bancshares, Inc. and Main Street Financial Services Corp. announced a merger of equals transaction on February 23, 2023. The combined company will have pro-forma assets exceeding $1.3 billion and 19 branches from Wooster, Ohio to Wheeling, West Virginia. The transaction is awaiting the approval of both corporations' shareholders and all customary regulatory approvals. The transaction is expected to close during the second quarter of 2024.
- Wayne Savings Bancshares, Inc., the holding company parent of Wayne Savings Community Bank, announced on January 30, 2023, that it was named to the 2023 OTCQX Best 50. In January 2023, OTCQX ranked Wayne Savings Bancshares, Inc. 28th on its 2023 OTCQX Best 50. Companies in the 2023 OTCQX Best 50 were ranked based on their performance during the 2022 calendar year.
- Net loan balances increased to $669.6 million at December 31, 2023, compared to $594.9 million at December 31, 2022, or 12.6% growth, comprised mainly of $43.4 million of commercial loans secured by real estate and $27.8 million of one-to-four residential mortgage loans.
- Deposit balances increased to $693.1 million at December 31, 2023, compared to $605.8 million at December 31, 2022, or 14.4% growth. This growth was mainly caused by an increase in brokered deposits of $81.7 million, increased certificates of deposit of $44.1 million and $34.3 million in money market accounts. These increases were partially offset with a total decline of $72.8 million of demand and savings accounts balances of which many of these balances stayed within the bank migrating into the higher-yielding products.
- Wayne Savings Bancshares, Inc. declared a cash dividend $0.23 per share for the quarter ending December 31, 2023, on December 21, 2023. The quarterly cash dividend will be paid on January 24, 2024, to the stockholders of record as of January 10, 2024.
- Wayne Savings continues to look for opportunities to create a larger footprint to expand our customer base. Wayne Savings opened a new office in Dalton during the first quarter of 2023 and a new office in Carrollton during the third quarter of 2023.
- Classified loan totals declined to $882,000, or 0.13% of net loans, for the period ending December 31, 2023 compared to $3.4 million for the same period ending in 2022. Total nonperforming loans also declined $399,000 to $406,000, or 0.06% of net loans, at December 31, 2023.
Fourth Quarter 2023 Financial Results
Net interest income was $5.2 million for the quarter ended December 31, 2023, down 16.8% from $6.3 million in the same quarter of 2022. The net interest margin of 2.73% in the fourth quarter of 2023 decreased 97 basis points from 3.70% in the fourth quarter of 2022. These results were impacted by higher loan yields, which were 5.30% for the 2023 quarter compared to 4.80% for the same quarter of 2022. The cost of funds for the quarter ended December 31, 2023, was 2.27%, up 153 basis points from the same 2022 quarter. The cost of funds increase is largely due to utilizing higher-cost wholesale funding, such as FHLB advances and brokered certificates of deposit, to support the Bank's loan growth. We experienced strong deposit growth during the fourth quarter of $24.7 million, excluding brokered deposits.
Provision for credit losses was minimal in the fourth quarter of 2023 under the newly adopted Accounting Standards Update (ASU) 2016-13 Current Expected Credit Losses (CECL) method the Bank adopted on January 1, 2023. The Company benefited from both a reduced annual charge-off rate and a reduced average life of a portfolio segment used in the calculation from the prior quarter. In 2022, the provision for loan losses for the fourth quarter was $381,000 using the incurred loss method.
Other income was $1.0 million for the quarter, an increase of $386,000 from the 2022 fourth quarter of $631,000 mainly due to the sale of the Bank's class B visa stock which generated a gain on sale of $298,000.
Noninterest expense totaled $3.7 million for the three-month period ended December 31, 2023, an increase of $240,000, or 6.8%, compared to the three months ended December 31, 2022, primarily due to merger related expenses of $413,000, partially offset with a reduced salaries and benefits cost as the Company recognized a reduction in the net periodic postretirement benefit cost related to the Split dollar Bank Owned Life Insurance program. The Company's efficiency ratio was 60.1% for the three-month period ended December 31, 2023, compared to 50.8% for the same period in 2022. Excluding merger related expenses for the merger (non-GAAP), noninterest expense decreased $173,000 from the fourth quarter of 2022 to the fourth quarter of 2023 and the Company's efficiency ratio was 54.5%.
2023 Year-to-Date Business Results
Net interest income of $22.2 million for the year ended December 31, 2023, was down 2.6% from $22.8 million in the same period of 2022. These results were mainly due to $120.1 million of loan growth and higher loan yields, which were 5.10% year ended December 31, 2023, compared to 4.55% in the same period ended in 2022. The cost of funds for the year ended December 31, 2023, was 1.75%, up 128 basis points from the previous year due to the increased usage of wholesale funding in a rising interest rate environment used to support the Bank's loan growth. The net interest margin of 3.00% for the year ended December 31, 2023, decreased 55 basis points from 3.55% in the same period of 2022.
Provision for credit losses was $530,000 for the year ending December 31, 2023, under the newly adopted ASU 2016-13 Current Expected Credit Losses (CECL) method the Bank adopted on January 1, 2023. The adoption of CECL required a $113,000 adjustment to equity, net of taxes. In 2022, the Provision for loan losses for the same period was $1.2 million using the incurred loss method.
Noninterest expense totaled $14.8 million for the year-to-date period ended December 31, 2023, an increase of $1.7 million, or 12.7%, compared to the December 31, 2022 twelve month period. The increase was primarily due to the merger expenses, increased net occupancy expenses and increased Federal, Deposit Insurance. The Company's efficiency ratio was 58.8% for the year ended December 31, 2023, compared to 51.6% for the same period in 2022. Excluding the merger expenses (non-GAAP), the Company's noninterest expense increased $637,000 from the 2022 year to the 2023 year and the Company's efficiency ratio was 55.1% for the twelve-month period ended December 31, 2023.
December 31, 2023 Financial Condition
At December 31, 2023, the Company had total assets of $809.9 million, an increase of $80.2 million, from December 31, 2022. The growth in total assets included a $74.7 million increase in net loans as compared to December 31, 2022.
Net loan balances increased from $594.9 million at December 31, 2022, to $669.6 million at December 31, 2023, an increase of $74.7 million, or 12.6% of growth consisting mainly of commercial real estate loans and one-to-four family mortgage loans.
The allowance for credit losses was $7.3 million at December 31, 2023, compared to $6.7 million at December 31, 2022. The allowance for credit losses and the related provision for credit losses is based on management's judgment and evaluation of the loan portfolio. Management believes the current allowance for credit losses is adequate, however, changing economic and other conditions may require future adjustments to the allowance for credit losses.
Total nonperforming loans declined to $406,000 December 31, 2023, from $805,000 at December 31, 2022, as the Company recognized a payoff during the quarter. Past due loan balances of 30 days and more decreased from $4.3 million at December 31, 2022, to $2.7 million at December 31, 2023, mainly due to decreased one-to-four residential real estate loans.
Total liabilities increased $71.9 million due primarily to an increase in deposits accounts of $87.3 million. Deposit accounts increased primarily due to growth in brokered certificates of deposit and growth in the relationship special certificates of deposits.
Total stockholders' equity increased by $8.2 million as the Company earned $7.8 million of net income for the year, down from 2022 by 13.0% mainly due to merger expenses. The Company paid $2.0 million in dividends during the period. Accumulated other comprehensive loss decreased by $2.3 million mainly due to a decrease in gross unrealized losses on securities available for sale as market interest rates declined.
Established in 1899, Wayne Savings Community Bank, the wholly owned subsidiary of Wayne Savings Bancshares, Inc., has fourteen full-service banking locations in the communities of Wooster, Ashland, Millersburg, Rittman, Lodi, North Canton, Creston, Fredericksburg, Washingtonville, Dalton and Carrollton, Ohio. Additional information about Wayne Savings Community Bank is available at www.waynesavings.com.
Non-GAAP Disclosure
This press release includes disclosures of the Company's return on average equity, return on average assets, net income, and efficiency ratios which are excluding costs related to merger activities which are financial measures not prepared in accordance with generally accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flow that excludes or includes amounts that are required to be disclosed by GAAP. The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and the Company's marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP.
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 share data - unaudited) | ||||||||||||||||
| December | September | June | March | |||||||||||||
| 2023 | 2023 | 2023 | 2023 | |||||||||||||
| Interest and dividend income | $ | 9,545 | $ | 9,078 | $ | 8,571 | $ | 7,901 | ||||||||
| Interest expense | 4,330 | 3,673 | 2,867 | 2,050 | ||||||||||||
| Net interest income | 5,215 | 5,405 | 5,704 | 5,851 | ||||||||||||
| Provision for credit losses* | 4 | 138 | 170 | 218 | ||||||||||||
| Net interest income after | ||||||||||||||||
| provision for credit losses* | 5,211 | 5,267 | 5,534 | 5,633 | ||||||||||||
| Non-interest income | 1,017 | 691 | 706 | 603 | ||||||||||||
| Non-interest expense | 3,748 | 3,733 | 3,949 | 3,394 | ||||||||||||
| Income before federal income taxes | 2,480 | 2,225 | 2,291 | 2,842 | ||||||||||||
| Provision for federal income taxes | 443 | 452 | 547 | 563 | ||||||||||||
| Net income | $ | 2,037 | $ | 1,773 | $ | 1,744 | $ | 2,279 | ||||||||
| Earnings per share - basic | $ | 0.93 | $ | 0.81 | $ | 0.79 | $ | 1.04 | ||||||||
| Earnings per share - diluted | $ | 0.93 | $ | 0.80 | $ | 0.79 | $ | 1.03 | ||||||||
| Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | ||||||||
| Return on average assets | 1.02 | % | 0.91 | % | 0.92 | % | 1.23 | % | ||||||||
| Return on average equity | 16.90 | % | 14.41 | % | 14.36 | % | 19.58 | % | ||||||||
| Shares outstanding | 2,200,907 | 2,199,707 | 2,199,407 | 2,196,457 | ||||||||||||
| Book value per share | $ | 24.07 | $ | 21.64 | $ | 22.06 | $ | 21.82 | ||||||||
| December | September | June | March | |||||||||||||
| 2022 | 2022 | 2022 | 2022 | |||||||||||||
| Interest and dividend income | $ | 7,518 | $ | 6,892 | $ | 5,889 | $ | 5,517 | ||||||||
| Interest expense | 1,248 | 670 | 564 | 564 | ||||||||||||
| Net interest income | 6,270 | 6,222 | 5,325 | 4,953 | ||||||||||||
| Provision for loan losses | 381 | 410 | 257 | 174 | ||||||||||||
| Net interest income after | ||||||||||||||||
| provision for loan losses | 5,889 | 5,812 | 5,068 | 4,779 | ||||||||||||
| Non-interest income | 631 | 636 | 599 | 865 | ||||||||||||
| Non-interest expense | 3,508 | 3,350 | 3,191 | 3,101 | ||||||||||||
| Income before federal income taxes | 3,012 | 3,098 | 2,476 | 2,543 | ||||||||||||
| Provision for federal income taxes | 603 | 589 | 457 | 476 | ||||||||||||
| Net income | $ | 2,409 | $ | 2,509 | $ | 2,019 | $ | 2,067 | ||||||||
| Earnings per share - basic | $ | 1.09 | $ | 1.14 | $ | 0.88 | $ | 0.87 | ||||||||
| Earnings per share - diluted | $ | 1.09 | $ | 1.13 | $ | 0.87 | $ | 0.86 | ||||||||
| Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | ||||||||
| Return on average assets | 1.36 | % | 1.48 | % | 1.23 | % | 1.28 | % | ||||||||
| Return on average equity | 22.87 | % | 22.85 | % | 17.37 | % | 15.44 | % | ||||||||
| Shares outstanding | 2,192,738 | 2,191,338 | 2,185,688 | 2,369,886 | ||||||||||||
| Book value per share | $ | 20.40 | $ | 18.94 | $ | 19.33 | $ | 21.12 | ||||||||
| *Adopted ASU 2016-13 during the first quarter 2023: therefore, prior periods provision amount reflects the | ||||||||||||||||
| incurred loss method. | ||||||||||||||||
| WAYNE SAVINGS BANCSHARES, INC. | ||||||||
| Non-GAAP reconciliation | ||||||||
| (Dollars in thousands, except per share data - unaudited) | ||||||||
| For the three months | For the Twelve months | |||||||
| December 31, 2023 | December 31, 2023 | |||||||
| Net Income as reported - GAAP | $ | 2,037 | $ | 7,833 | ||||
| Effect of merger related expenses (net of tax benefit) | 353 | 950 | ||||||
| Net Income non-GAAP | $ | 2,390 | $ | 8,783 | ||||
| Earnings per share - GAAP | $ | 0.93 | $ | 3.56 | ||||
| Effect of merger related expenses | 0.16 | 0.43 | ||||||
| Earnings per share non-GAAP | $ | 1.09 | $ | 3.99 | ||||
| Return on average assets - GAAP | 1.02 | % | 1.02 | % | ||||
| Effect of merger related expenses | 0.18 | % | 0.12 | % | ||||
| Return on average assets non-GAAP | 1.20 | % | 1.14 | % | ||||
| Return on average equity - GAAP | 16.90 | % | 16.27 | % | ||||
| Effect of merger related expenses | 2.93 | % | 1.97 | % | ||||
| Return on average equity non-GAAP | 19.83 | % | 18.24 | % | ||||
| Efficiency Ratio - GAAP | 60.14 | % | 58.84 | % | ||||
| Effect of merger related expenses | -5.66 | % | -3.77 | % | ||||
| Efficiency Ratio non-GAAP | 54.48 | % | 55.07 | % | ||||
| WAYNE SAVINGS BANCSHARES, INC. | |||||||||||
| Condensed Consolidated Statements of Income | |||||||||||
| (Dollars in thousands, except share data - unaudited) | |||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||
| December 31, | December 31, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Interest income | $ | 9,545 | $ | 7,518 | $ | 35,095 | $ | 25,816 | |||
| Interest expense | 4,330 | 1,248 | 12,920 | 3,046 | |||||||
| Net interest income | 5,215 | 6,270 | 22,175 | 22,770 | |||||||
| Provision for credit losses * | 4 | 381 | 530 | 1,222 | |||||||
| Net interest income after provision for credit losses* | 5,211 | 5,889 | 21,645 | 21,548 | |||||||
| Non-interest income | 1,017 | 631 | 3,017 | 2,731 | |||||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 1,782 | 2,133 | 7,731 | 7,758 | |||||||
| Net occupancy and equipment expense | 625 | 562 | 2,431 | 2,051 | |||||||
| Federal deposit insurance premiums | 157 | 70 | 531 | 257 | |||||||
| Franchise taxes | 81 | 112 | 380 | 458 | |||||||
| Advertising and marketing | 44 | 62 | 223 | 258 | |||||||
| Legal | 15 | 7 | 45 | 65 | |||||||
| Professional fees | 74 | 97 | 239 | 347 | |||||||
| ATM network | 123 | 95 | 443 | 386 | |||||||
| Auditing and accounting | 60 | 12 | 240 | 196 | |||||||
| Merger related expenses | 413 | - | 1,037 | - | |||||||
| Other | 374 | 358 | 1,524 | 1,374 | |||||||
| Total non-interest expense | 3,748 | 3,508 | 14,824 | 13,150 | |||||||
| Income before federal income taxes | 2,480 | 3,012 | 9,838 | 11,129 | |||||||
| Provision for federal income taxes | 443 | 603 | 2,005 | 2,125 | |||||||
| Net income | $ | 2,037 | $ | 2,409 | $ | 7,833 | $ | 9,004 | |||
| Earnings per share | |||||||||||
| Basic | $ | 0.93 | $ | 1.09 | $ | 3.56 | $ | 3.98 | |||
| Diluted | $ | 0.93 | $ | 1.09 | $ | 3.54 | $ | 3.93 | |||
| *Adopted ASU 2016-13 during the first quarter 2023: therefore, prior periods provision amount reflects the incurred loss method. | |||||||||||
| WAYNE SAVINGS BANCSHARES, INC. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (Dollars in thousands, except share data - unaudited) | ||||||
| December 31, 2023 | December 31, 2022 | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ 20,884 | $ 13,799 | ||||
| Securities, net (1) | 86,405 | 91,769 | ||||
| Loans receivable, net | 669,603 | 594,931 | ||||
| Federal Home Loan Bank stock | 3,959 | 3,322 | ||||
| Premises & equipment, net | 4,904 | 5,183 | ||||
| Bank-owned life insurance | 11,706 | 11,434 | ||||
| Other assets | 12,486 | 9,335 | ||||
| TOTAL ASSETS | $ 809,947 | $ 729,773 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Deposit accounts | $ 693,126 | $ 605,834 | ||||
| Other short-term borrowings | 8,743 | 14,776 | ||||
| Federal Home Loan Bank advances | 47,000 | 58,500 | ||||
| Accrued interest payable and other liabilities | 8,111 | 5,933 | ||||
| TOTAL LIABILITIES | 756,980 | 685,043 | ||||
| Common stock (3,978,731 shares of $.10 par value issued) | 398 | 398 | ||||
| Additional paid-in capital | 36,715 | 36,584 | ||||
| Retained earnings | 55,342 | 49,645 | ||||
| Treasury Stock, at cost - 1,777,824 shares and 1,785,993 shares | ||||||
| at December 31, 2023 and December 31, 2022, respectively. | (30,330) | (30,459) | ||||
| Accumulated other comprehensive loss | (9,158) | (11,438) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 52,967 | 44,730 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 809,947 | $ 729,773 | ||||
| (1) Includes available-for-sale and held-to-maturity classifications. | ||||||
| Note: The December 31, 2022 Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of that date. | ||||||
