WOOSTER, Ohio, Jan. 22 /PRNewswire-FirstCall/ -- Wayne Savings Bancshares, Inc. (Nasdaq: WAYN), the stock holding company parent of Wayne Savings Community Bank, reported net income of $584,000 or $0.20 per diluted share for the third fiscal quarter ended December 31, 2008, compared to $446,000 or $0.14 per diluted share for the third fiscal quarter ended December 31, 2007. The increase in net income 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 $322,000 for the quarter ended December 31, 2008, compared to the quarter ended December 31, 2007. Interest income decreased $418,000 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. However, interest expense decreased $740,000 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 $37,000, due primarily to lower service charges. Noninterest expense increased by $25,000, or 1%, mainly due to increased compensation, deposit insurance and state franchise tax expense, partially offset by lower other operating expense.

A provision for loan losses of $185,000 was made for the 2008 quarter compared to $140,000 provided during the 2007 quarter, based on management's assessment of probable incurred losses in the loan 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 nine month period ended December 31, 2008, net income totaled $1,716,000 or $0.59 per diluted share, compared to net income of $1,516,000 or $0.49 per diluted share for the nine months ended December 31, 2007.

Net interest income increased $617,000 for the nine months ended December 31, 2008 compared to the nine months ended December 31, 2007. Interest income decreased $1,046,000 for the 2008 nine 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. However, interest expense decreased $1,663,000 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 $65,000, due primarily to a $21,000 reduction in gain on sale of real estate acquired through foreclosure and a $32,000 decrease in service charges and other income. Noninterest expense increased by $101,000, or 1%, primarily due to increased compensation, occupancy, deposit insurance and franchise tax expense, partially offset by lower other operating expense.

A provision for loan losses of $346,000 was made during the nine months ended December 31, 2008 compared to $195,000 provided during the 2007 period. The increase was 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, "The economic environment has continued to deteriorate, which presents additional challenges to all institutions. In this environment, selection of credit risks has taken on increased importance, along with the management of delinquent credits to assist borrowers as much as possible while minimizing credit losses. The Company continues to exercise discipline in the management of noninterest expenses and the pricing of deposits in the face of continued strong competition from competitors seeking to meet their liquidity needs though the acquisition of high rate retail deposits. During the past quarter, the Company elected to not participate in the government's Troubled Asset Relief Program (the "TARP") based on our assessment of the Company's capital position and economic conditions in our market area. The Company is participating in the liquidity guarantee programs of the FDIC to provide additional assurances to our depositors regarding the safety of their deposits."

At December 31, 2008, Wayne Savings Bancshares, Inc. reported total assets of $405.4 million, up from total assets of $401.6 million at March 31, 2008. The increase in assets was primarily due to an increase in loans, partially offset by decreases in cash and investment securities. Deposits at December 31, 2008 were $310.8 million, a decrease of $6.9 million, or 2.2% 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 December 31, 2008 amounted to $34.1 million, or 8.41% of total assets, compared to $34.1 million, or 8.49% of total assets, at March 31, 2008. During this period, net income was offset by cash dividends and a decrease in accumulated other comprehensive income.

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.