EXHIBIT 99.3
OFFICE OF THRIFT SUPERVISION
Washington, D. C. 20552
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Office of Thrift Supervision Docket Number 04195
WAYNE SAVINGS COMMUNITY BANK
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0606020
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
151 North Market Street
Wooster, Ohio 44691
- ----------------------- --------------------
(Address of principal (Zip Code)
executive office)
Issuer's telephone number, including area code: (330) 264-5767
THE WAYNE SAVINGS AND LOAN COMPANY
----------------------------------------
(Former name, changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
------ -----
As of November 4, 1997, the latest practicable date, 2,255,494 shares of the
registrant's common stock, $1.00 par value, were issued and outstanding.
Page 1 of 16 pages
INDEX
Page
PART I - FINANCIAL INFORMATION
Statements of Financial Condition 3
Statements of Operations 5
Statements of Cash Flows 7
Notes to Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II - OTHER INFORMATION 15
SIGNATURES 16
2
WAYNE SAVINGS COMMUNITY BANK
STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
September 30, March 31,
ASSETS 1997 1997
(unaudited)
Cash and due from banks $1,451 $1,302
Federal funds sold 1,800 1,125
Interest-bearing deposits in other financial institutions 5,660 5,179
---------- -----------
Cash and cash equivalents 8,911 7,606
Certificates of deposit in other financial institutions 7,500 7,500
Investment securities - at amortized cost, approximate
market value of $13,483 and $16,904 as of
September 30, 1997 and March 31, 1997 14,428 16,970
Mortgage-backed securities available for sale - at market 340 378
Mortgage-backed securities - at cost, approximate market
value of $334 and $497 as of September 30, 1997
and March 31, 1997 350 495
Loans receivable - net 206,541 209,404
Loans held for sale-at lower of cost or market 1,053 --
Real estate acquired through foreclosure 899 809
Office premises and equipment - at depreciated cost 5,348 3,991
Federal Home Loan Bank stock - at cost 2,624 2,531
Accrued interest receivable on loans 1,197 1,139
Accrued interest receivable on mortgage-backed securities 5 7
Accrued interest receivable on investments and interest -
bearing deposits 252 226
Prepaid expenses and other assets 725 790
Prepaid federal income taxes 68 329
---------- -----------
Total assets $250,241 $252,175
========== ===========
3
WAYNE SAVINGS COMMUNITY BANK
STATEMENTS OF FINANCIAL CONDITION (Continued)
(In thousands, except share data)
September 30, March 31,
1997 1997
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $210,735 $211,442
Advances from Federal Home Loan Bank 14,000 16,000
Loan payable to Employee Stock Ownership Plan - 35
Advances by borrowers for taxes and insurance 769 701
Accrued interest payable 170 226
Accounts payable on mortgage loans serviced for others 188 126
Other liabilities 317 382
---------- -----------
Deferred federal income taxes 193 148
---------- -----------
Total liabilities 226,372 229,060
Stockholder's equity
Common stock (20,000,000 shares of $1.00 par value authorized;
2,255,164 and 1,498,889 issued and outstanding at
September 30, 1997 and March 31, 1997) 2,255 1,499
Additional paid-in capital 5,907 5,844
Retained earnings - substantially restricted 15,687 15,777
Less: shares acquired by Employee Stock Ownership Plan (11) (35)
Unrealized gains on securities available for sale, net 31 30
---------- -----------
Total stockholders' equity 23,869 23,115
---------- -----------
Total liabilities and stockholders' equity $250,241 $252,175
========== ===========
4
WAYNE SAVINGS COMMUNITY BANK
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Six months Three months
ended ended
September 30, September 30,
1997 1996 1997 1996
Interest income
Loans $8,559 $8,543 $4,279 $4,247
Mortgage-backed securities 29 58 14 26
Investment securities 526 436 266 217
Interest-bearing deposits and other 486 354 249 171
-------- -------- -------- --------
Total interest income 9,600 9,391 4,808 4,661
Interest expense
Deposits 5,044 4,990 2,526 2,487
Borrowings 464 282 228 139
-------- -------- -------- --------
Total interest expense 5,508 5,272 2,754 2,626
-------- -------- -------- --------
Net interest income 4,092 4,119 2,054 2,035
Provision for losses on loans 30 10 15 5
-------- -------- -------- --------
Net interest income after provision for losses on loans 4,062 4,109 2,039 2,030
Other income
Gain on sale of loans 124 17 67 17
Service fees, charges and other operating 313 277 162 138
-------- -------- -------- --------
Total other income 437 294 229 155
General, administrative and other expense
Employee compensation and benefits 1,581 1,653 803 824
Occupancy and equipment 473 544 240 336
Federal deposit insurance premiums 104 1,617 53 1,481
Franchise taxes 152 142 76 71
Other operating 675 629 347 306
-------- -------- -------- --------
Total general, administrative and other expense 2,985 4,585 1,519 3,018
-------- -------- -------- --------
Earnings (loss) before income taxes (credits) 1,514 (182) 749 (833)
Federal incomes taxes (credits)
Current 469 (111) 253 (276)
Deferred 45 49 - (7)
-------- -------- -------- --------
Total federal income taxes (credits) 514 (62) 253 (283)
-------- -------- -------- --------
NET EARNINGS (LOSS) $1,000 ($120) $496 ($550)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE $0.44 ($0.05) $0.22 ($0.25)
5
WAYNE SAVINGS COMMUNITY BANK
STATEMENTS OF CASH FLOWS
For the six months ended September 30,
(In thousands)
(unaudited)
1997 1996
Cash flows from operating activities:
Net earnings (loss) for the period $1,000 ($120)
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments and mortgage-backed securities - net 9 (4)
Amortization of deferred loan origination fees (177) (246)
Amortization expense of employee benefit plans 21 48
Depreciation and amortization 207 43
Loans originated for sale in the secondary market (4,880) (506)
Proceeds from sale of loans 3,894 523
Gain on sale of loans (67) (17)
Provision for losses on loans 30 10
Federal Home Loan Bank stock dividends (93) (83)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (58) 53
Accrued interest receivable on mortgage-backed securities 2 3
Accrued interest receivable on investments and interest-bearing deposit (26) (7)
Prepaid expenses and other assets 65 453
Accrued interest payable (56) (30)
Accounts payable on mortgage loans serviced for others 62 (78)
Other liabilities (65) 1,326
Federal income taxes
Current 261 (535)
Deferred 45 49
-------- --------
Net cash provided by operating activities 174 882
Cash flows provided by (used in) investing activities:
Purchase of investment securities -- (1,000)
Proceeds from maturity of investment securities 2,504 2,087
Principal repayments on mortgage-backed securities 183 532
Loan principal repayments 25,997 25,397
Loan disbursements (23,134) (27,579)
Purchase of office premises and equipment-net (1,564) 116
Proceeds from sale of real estate acquired through foreclosure -- 503
Additions to real estate acquired through foreclosure (90) (23)
Decrease in certificates of deposit in other financial institutions -- 2,000
-------- ---------
Net cash provided by investing activities 3,896 2,033
-------- ---------
6
WAYNE SAVINGS COMMUNITY BANK
STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended September 30,
(In thousands)
(unaudited)
1997 1996
Net cash provided by operating and investing activities
(balance brought forward) $4,070 $2,915
Cash flows provided by (used in) financing activities:
Net decrease in deposit accounts (707) (495)
Proceeds from Federal Home Loan Bank advances 3,000 12,000
Repayments on Federal Home Loan Bank advances (5,000) (10,000)
Advances by borrowers for taxes and insurance 68 (3)
Proceeds from exercise of stock options 42 30
Dividends paid on common stock (168) (323)
------- --------
Net cash provided by (used in) financing activities (2,765) 1,209
------- --------
Net increase in cash and cash equivalents 1,305 4,124
Cash and cash equivalents at beginning of period 7,606 10,190
------- --------
Cash and cash equivalents at end of period $8,911 $14,314
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $224 $26
======= ========
Interest on deposits and borrowings $5,564 $5,302
======= ========
Supplemental disclosure of noncash investing activities:
Unrealized gain (loss) on securities designated as available for sale, net $1 ($2)
======= ========
Recognition of mortgage servicing rights in accordance
with SFAS No. 122 $57 $ -
======= ========
7
NOTES TO FINANCIAL STATEMENTS
For the six months ended September 30, 1997
(unaudited)
1. Basis of Presentation
----------------------
The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not
include information or footnotes necessary for a complete presentation
of consolidated financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
Accordingly, these financial statements should be read in conjunction
with the financial statements and notes thereto of the The Wayne
Savings and Loan Company included in the Annual Report on Form 10-KSB
for the year ended March 31, 1997. Effective October 10, 1997, the
Company changed its name to Wayne Savings Community Bank (the
"Company"). In the opinion of management, all adjustments (consisting
only of normal recurring accruals) which are necessary for a fair
presentation of the financial statements have been included. The
results of operations for the three and six month periods ended
September 30, 1997 and 1996 are not necessarily indicative of the
results which may be expected for the entire fiscal year.
2. Earnings Per Share
------------------
Earnings per share for the six months ended September 30, 1997 and 1996
is computed based on 2,249,506 and 2,195,572 weighted-average shares
outstanding, respectively.
Earnings per share for the three months ended September 30, 1997 and
1996 is computed based on 2,247,993 and 2,164,927 weighted-average
shares outstanding, respectively.
3. Effects of Recent Accounting Pronouncements
-------------------------------------------
In June 1996, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") SFAS No.
125, "Accounting for Transfers of Financial Assets, Servicing Rights,
and Extinguishment of Liabilities", that provides accounting guidance
on transfers of financial assets, servicing of financial assets, and
extinguishment of liabilities. SFAS No. 125 introduces an approach to
accounting for transfers of financial assets that provides a means of
dealing with more complex transactions in which the seller disposes of
only a partial interest in the assets, retains rights or obligations,
makes use of special purpose entities in the transaction, or otherwise
has continuing involvement with the transferred assets. The new
accounting method, the financial components approach, provides that the
carrying amount of the financial assets transferred be allocated to
components of the transaction based on their relative fair values. SFAS
No. 125 provides criteria for determining whether control of assets has
been relinquished and whether a sale has occurred. If the transfer does
not qualify as a sale, it is accounted for as a secured borrowing.
Transactions subject to the provisions of SFAS No. 125 include, among
others, transfers involving repurchase agreements, securitizations of
financial assets, loan participations, factoring arrangements, and
transfers of receivables with recourse.
8
NOTES TO FINANCIAL STATEMENTS (continued)
For the six months ended September 30, 1997
3. Effects of Recent Accounting Pronouncements (continued)
-------------------------------------------------------
An entity that undertakes an obligation to service financial assets
recognizes either a servicing asset or liability for the servicing
contract (unless related to a securitization of assets, and all the
securitized assets are retained and classified as held-to-maturity). A
servicing asset or liability that is purchased or assumed is initially
recognized at its fair value. Servicing assets and liabilities are
amortized in proportion to and over the period of estimated net
servicing income or net servicing loss and are subject to subsequent
assessments for impairment based on fair value.
SFAS No. 125 provides that a liability is removed from the balance sheet
only if the debtor either pays the creditor and is relieved of its
obligation for the liability or is legally released from being the
primary obligor.
SFAS No. 125 is effective for transfers and servicing of financial
assets and extinguishment of liabilities occurring after December 31,
1997, and is to be applied prospectively. Earlier or retroactive
application is not permitted. Management does not believe that adoption
of SFAS No. 125 will have a material adverse effect on the Company's
financial position or results of operations.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share",
which is effective for financial statements for periods ending after
December 15, 1997, including interim periods. SFAS No. 128 simplifies
the calculation of earnings per share by replacing primary EPS with
basic EPS. It also requires dual presentation of basic EPS and diluted
EPS for entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common
shareholders by the weighted-average common shares outstanding for the
period. Diluted EPS reflects the potential dilution of securities that
could share in earnings, such as stock options, warrants or other common
stock equivalents. All prior period EPS data will be restated to conform
with the new presentation. This statement will not have a material
impact on the Company's financial statements.
In February 1997, the FASB issued SFAS No. 129, "Disclosures of
Information about Capital Structure." SFAS No. 129 consolidated existing
accounting guidance relating to disclosure about a company's capital
structure. SFAS No. 129 is effective for financial statements for
periods ending after December 15, 1997. SFAS No. 129 is not expected to
have a material impact on the Company's financial statements.
9
NOTES TO FINANCIAL STATEMENTS (continued)
For the six months ended September 30, 1997
3. Effects of Recent Accounting Pronouncements (continued)
------------------------------------------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. SFAS No.
130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements. It does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement.
SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods provided for comparative
purposes is required. SFAS No. 130 is not expected to have a material
impact on the Company's financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 significantly
changes the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about reportable segments in
interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic
areas and major customers. SFAS No. 131 uses a "management approach" to
disclose financial and descriptive information about the way that
management organizes the segments within the enterprise for making
operating decisions and assessing performance. For many enterprises, the
management approach will likely result in more segments being reported.
In addition, SFAS No. 131 requires significantly more information to be
disclosed for each reportable segment than is presently being reported in
annual financial statements and also requires that selected information
be reported in interim financial statements. SFAS No. 131 is effective
for fiscal years beginning after December 15, 1997. SFAS No. 131 is not
expected to have a material impact on the Company's financial statements.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Discussion of Financial Condition Changes from March 31, 1997
- -------------------------------------------------------------
to September 30, 1997
- ---------------------
At September 30, 1997, Wayne Savings Community Bank (the "Company"), formerly
The Wayne Savings and Loan Company, had total assets of $250.2 million, a
decrease of approximately $1.9 million, or .8% from March 31, 1997.
Cash and due from banks, federal funds sold, interest-bearing deposits,
certificates of deposit and investment securities totaled approximately $30.8
million, a decrease of approximately $1.2 million, from March 31, 1997 levels.
This decrease resulted primarily from the use of excess liquidity to repay $2.0
million in FHLB advances. Regulatory liquidity approximated 14.7% at September
30, 1997, compared to 15.3% at March 31, 1997.
Loans receivable decreased by approximately $1.8 million from the March 31, 1997
total. This decrease resulted from principal repayments of $26.0 million and
sales of $3.8 million, which were partially offset by loan disbursements of
$28.0 million. The allowance for loan losses totaled $952,000 at September 30,
1997, as compared to $914,000 at March 31, 1997. Nonperforming loans totaled
$634,000 at September 30, 1997 and $962,000 at March 31, 1997. The allowance for
loan losses totaled 150.2% and 95.0% of nonperforming loans at September 30,
1997 and March 31, 1997, respectively. Although management believes that its
allowance for loan losses at September 30, 1997, is adequate based upon the
available facts and circumstances, there can be no assurance that additions to
such allowance will not be necessary in future periods, which would adversely
affect the Company's results of operations.
Deposits declined by approximately $707,000 to a total of $210.7 million at
September 30, 1997. The decline in deposits generally reflects the effect of
withdrawals relating to the lower interest rate environment.
The Company is subject to capital standards which generally require the
maintenance of regulatory capital sufficient to meet each of three tests,
hereinafter described as the tangible capital requirement, the core capital
requirement and the risk-based capital requirement. At September 30, 1997, the
Company's tangible and core capital of $23.8 million, or 9.5%, exceeded the
minimum 1.5% and 3.0% requirements of $3.8 million and $7.5 million,
respectively, by $20.1 million and $16.3 million. The Company's risk-based
capital of $24.5 million, or 18.2%, exceeded the 8.0% minimum requirement by
approximately $13.7 million.
Comparison of Operating Results for the Six Month Periods Ended
- ---------------------------------------------------------------
September 30, 1997 and 1996
- ---------------------------
Net earnings totaled $1.0 million for the six months ended September 30, 1997,
as compared to net loss of $120,000 for the same period in 1996, an increase of
$1.1 million. The increase in earnings resulted from a decline in general,
administrative and other expense as described herein, of $1.6 million, offset by
a $576,000 increase in the provision for federal income taxes. The same period
in 1996 had two nonrecurring charges that affected net earnings for the year, a
special assessment charged to the Company to recapitalize the Savings
Association Insurance Fund ("SAIF") and a fixed asset write-off to prepare for
construction of a new branch.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Comparison of Operating Results for the Six Month Periods Ended September 30,
- -----------------------------------------------------------------------------
1997 and 1996 (continued)
- -------------
Before the above prior year one-time charges, net earnings totaled $842,000 for
the six months ended September 30, 1996. The net earnings of $1.0 million for
the same six month period in the current year represents an increase of $158,000
or 18.8%. The increase is a result of a decrease in general, administrative and
other expense, and the resulting tax affect.
Net Interest Income
- -------------------
Interest on loans and mortgage-backed securities decreased by $13,000 for the
six months ended September 30, 1997, from the same period in 1996. Average loans
receivable remained stable at $208.5 million for the periods ended September 30,
1997 and 1996.
Interest on investments and interest-bearing deposits increased by $222,000, or
28.1%, during the six months ended September 1997, as compared to the same
period in 1996, which is a result of a $1.0 million increase in the average
portfolio balance year-to-year, coupled with an increase in the average yield.
Interest expense on deposits and borrowings increased by $236,000, or 4.5%,
during the six months ended September 30, 1997 over the same period in 1996. The
increase can be primarily attributed to an increase in the average balance of
interest-bearing liabilities, which increased to $226.1 million from $224.9
million during the same period in 1996, coupled with an increase in the average
cost of funds year-to-year.
As a result of the foregoing changes in interest income and interest expense,
net interest income decreased by $27,000, or .7%, during the six months ended
September 30, 1997, as compared to the same period in 1996.
Provision For Losses on Loans
- -----------------------------
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by the
Company, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the Company's
market area, and other factors related to the collectibility of the Company's
loan portfolio. As a result of such analysis, management recorded a $30,000
provision for losses on loans during the six months ended September 30, 1997, an
increase of $20,000 over the same period in 1996. There can be no assurance that
the loan loss allowance of the Company will be adequate to cover losses on
nonperforming assets in the future.
Other Income
- ------------
Other income totaled $437,000 for the six months ended September 30, 1997, an
increase of $143,000, or 48.6%, over the comparable 1996 period. This increase
was due primarily to the $107,000 increase in gain on sale of loans coupled with
a $36,000, or 13.0%, increase in service fees, charges and other operating
income.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Comparison of Operating Results for the Six Month Periods Ended September 30,
- -----------------------------------------------------------------------------
1997 and 1996 (continued)
- -------------
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense decreased by $1.6 million, or 34.9%,
during the current six month period due primarily to a $1.5 million decrease in
federal deposit insurance premiums, a $72,000, or 4.4%, decrease in employee
compensation and benefits and a $71,000, or 13.1%, decrease in occupancy and
equipment.
The one-time charge in 1996 in federal deposit insurance premiums was due to
legislation to recapitalize the SAIF. The one-time charge in 1996 in occupancy
and equipment was due to the write-off of certain fixed assets relating to the
construction of the new facility at the existing Cleveland Road branch. For the
Company, the one-time assessment amounted to $1.3 million, and the fixed asset
write-off amounted to $122,000 for the 1996 period. Furthermore, the
recapitalization assessment paid last year resulted in a reduction in premium
insurance rates thereby reducing the Company's insurance premium for the six
months ended September 30, 1997.
The decrease in employee compensation and benefits was due primarily to a
reduction in compensation expense following the expiration of the Management
Recognition and Retention Plan.
The decrease in occupancy and equipment was partially offset by an increase in
depreciation and other costs relating to the construction of the new facility at
the existing Cleveland Road branch and the main office renovation.
Federal Income Taxes
- --------------------
The provision for federal income taxes amounted to $514,000 for the six months
ended September 30, 1997, an increase of $576,000, as compared to the same
period in 1996. The increase resulted primarily from an increase in pretax
earnings year-to-year. The effective tax rates for the six months ended
September 30, 1997 and 1996 were 33.9% and 34.1%, respectively.
Comparison of Operating Results for the Three Month Periods Ended
- -----------------------------------------------------------------
September 30, 1997 and 1996
- ---------------------------
The Company recorded net earnings of $496,000 for the three months ended
September 30, 1997, as compared to a net loss of $550,000 for the same period in
1996. The same period in 1996 had two nonrecurring charges that affected net
earnings as discussed above. Before the above prior year one-time charges, net
earnings totaled $412,000 for the three months ended September 30, 1996. The net
earnings of $496,000 for the same three month period in the current year
represents an increase of $84,000, or 20.4%. The increase is a result of an
increase in other income along with a decrease in general, administrative and
other expense, offset by a resulting increase in the provision for federal
income taxes.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended September 30,
- -------------------------------------------------------------------------------
1997 and 1996 (continued)
- -------------
Net Interest Income
- -------------------
Interest on loans and mortgage-backed securities increased by $20,000 for the
three months ended September 30, 1997 over the same period in 1996. Average
loans receivable remained stable at $208.5 million for the comparative periods.
Interest on investments and interest-bearing deposits increased by $127,000
during the current three month period as a result of an increase in the average
portfolio balances outstanding year-to-year.
Interest expense on deposits and other borrowings increased by $128,000 during
the three months ended September 30, 1997 as compared to the same period in
1996. The increase can be primarily attributed to an increase in the average
balance of interest-bearing liabilities.
Provision for Losses on Loans
- -----------------------------
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management.
Management recorded a $15,000 provision for losses on loans during the three
months ended September 30, 1997, an increase of $10,000 over the same period in
1996. There can be no assurance that the loan loss allowance of the Company will
be adequate to cover losses on non performing assets in the future.
Other Income
- ------------
Other income increased by $74,000, or 47.7%, during the current period due
primarily to a gain on sale of loans.
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense decreased by $1.5 million, during the
current three month period, due primarily to a decrease of $1.4 million in
federal deposit insurance premiums coupled with a decrease of $96,000 in
occupancy and equipment expense, for the reasons described above.
Federal Income Taxes
- --------------------
The Company recorded federal income taxes totaling $253,000 for the three month
period ended September 30, 1997, as compared to a tax benefit of $283,000 for
the same period last year. The increase was a result of an increase in pretax
earnings. The effective tax rates for the three months ended September 30, 1997
and 1996 were 33.8% and 34.0%, respectively.
14
PART II
ITEM 1. Legal Proceedings
-----------------
Not applicable
ITEM 2. Changes in Securities
---------------------
Not applicable
ITEM 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
ITEM 5. Other Materially Important Events
---------------------------------
On October 10, 1997, the Company changed its name from "The Wayne
Savings and Loan Company" to Wayne Savings Community Bank."
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
None
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 13, 1997 By: /s/ Charles F. Finn
------------------------------ ----------------------------
Charles F. Finn
President
Date: November 13, 1997 By: /s/ Todd J. Tappel
------------------------------ ----------------------------
Senior Vice-President
Chief Financial Officer
16