UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended	December 31, 2007
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _______________

Commission File No. 0-23433

WAYNE SAVINGS BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Delaware	31-1557791
(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)

Registrant’s telephone number, including area code: (330) 264-5767

Indicate by check market whether the Registrant:  (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  ý No o 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).

Yes o          No  ý

As of February 4, 2008, the latest practicable date, 3,125,006 shares of the registrant’s common stock, $.10 par value, were issued and outstanding.

1

Wayne Savings Bancshares, Inc.

Index

		Page
PART I - FINANCIAL INFORMATION
Item 1	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Conditionand Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4	Controls and Procedures	23
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	24
Item 1A	Risk Factors	24
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3	Defaults Upon Senior Securities	24
Item 4	Submission of Matters to a Vote of Security Holders	24
Item 5	Other Information	25
Item 6	Exhibits	25
SIGNATURES		26

2

Wayne Savings Bancshares, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31, 2007			March 31, 2007
	(Unaudited)
ASSETS
Cash and due from banks	$	2,390		$	2,194
Federal funds sold		––			9,000
Interest-earning deposits in other financial institutions		6,015			6,021
Cash and cash equivalents		8,405			17,215
Investment securities available for sale - at fair value		35,787			54,128
Investment securities held to maturity - at amortized cost, approximate fair value of $494 and $573 at December 31, 2007 and March 31, 2007, respectively		489			565
Mortgage-backed securities available for sale - at fair value		82,949			67,856
Mortgage-backed securities held to maturity - at amortized cost, approximate fair value of $916 and $1,219 at December 31, 2007 and March 31, 2007, respectively		912			1,209
Loans receivable - net of allowance for loan losses of $1,735 and $1,523 at December 31, 2007 and March 31, 2007, respectively		248,389			240,049
Office premises and equipment - net		8,025			8,179
Real estate acquired through foreclosure		48			––
Federal Home Loan Bank stock - at cost		4,829			4,829
Cash surrender value of life insurance		6,209			6,034
Accrued interest receivable on loans		1,101			1,100
Accrued interest receivable on mortgage-backed securities		375			314
Accrued interest receivable on investments and interest-bearing deposits		304			667
Prepaid expenses and other assets		794			1,065
Goodwill and other intangible assets		2,322			2,402
Prepaid federal income taxes		22			125
Total assets	$	400,960		$	405,737
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	323,919		$	333,540
Advances from the Federal Home Loan Bank		38,500			34,500
Advances by borrowers for taxes and insurance		1,050			616
Accrued interest payable		348			383
Accounts payable on mortgage loans serviced for others		283			197
Other liabilities		1,115			1,071
Deferred federal income taxes		1,094			997
Total liabilities		366,309			371,304
Commitments		––			––
Stockholders’ equity
Preferred stock (500,000 shares of $.10 par value authorized; no shares issued)		––			––
Common stock (9,000,000 shares of $.10 par value authorized; 3,978,731 shares issued)		398			398
Additional paid-in capital		36,136			36,106
Retained earnings - substantially restricted		12,363			11,982
Less required contributions for shares acquired by Employee Stock Ownership Plan		(1,097	)		(1,158	)
Less 853,725 and 784,622 shares of treasury stock at December 31, 2007 and March 31, 2007, respectively - at cost		(13,273	)		(12,419	)
Accumulated comprehensive income (loss), net of tax effects		124			(476	)
Total stockholders’ equity		34,651			34,433
Total liabilities and stockholders’ equity	$	400,960		$	405,737

See accompanying notes to consolidated financial statements. 

3

Wayne Savings Bancshares, Inc.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share data)

(Unaudited)

	Nine months ended December 31,					Three months ended December 31,
	2007			2006		2007			2006
Interest income
Loans	$	12,518		$	11,924	$	4,204		$	4,048
Mortgage-backed securities		2,969			2,327		1,062			846
Investment securities		1,457			2,082		452			627
Interest-bearing deposits and other		374			360		108			158
Total interest income		17,318			16,693		5,826			5,679
Interest expense
Deposits		7,624			7,194		2,555			2,545
Borrowings		1,298			1,038		475			410
Total interest expense		8,922			8,232		3,030			2,955
Net interest income		8,396			8,461		2,796			2,724
Provision for losses on loans		195			70		140			10
Net interest income after provision for losses on loans		8,201			8,391		2,656			2,714
Other income
Increase in cash surrender value of life insurance		175			167		59			57
Trust income		141			88		45			35
Gain on disposal of real estate acquired through foreclosure		31			–		–			–
Service fees, charges and other operating		1,028			1,035		354			341
Total other income		1,375			1,290		458			433
General, administrative and other expense
Employee compensation and benefits		4,177			4,179		1,394			1,332
Occupancy and equipment		1,483			1,438		500			503
Federal deposit insurance premiums		28			31		9			11
Franchise taxes		291			177		97			(21	)
Amortization of intangible assets		80			80		27			27
Other operating		1,508			1,475		516			503
Total general, administrative and other expense		7,567			7,380		2,543			2,355
Income before income taxes		2,009			2,301		571			792
Federal incomes taxes
Current		706			608		247			310
Deferred		(213	)		53		(122	)		(81	)
Total federal income taxes		493			661		125			229
NET INCOME	$	1,516		$	1,640	$	446		$	563
EARNINGS PER SHARE
Basic	$	0.49		$	0.51	$	0.14		$	0.18
Diluted	$	0.49		$	0.51	$	0.14		$	0.18
DIVIDENDS PER SHARE	$	0.36		$	0.36	$	0.12		$	0.12

See accompanying notes to consolidated financial statements. 

4

WAYNE SAVINGS BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Nine Months Ended December 31,					Three Months Ended December 31,
	2007		2006			2007		2006
Net income	$	1,516	$	1,640		$	446	$	563
Other comprehensive income:
Unrealized holding gains on securities, net of related taxes of $309, $307, $326 and $83 during the respective periods		600		598			632		162
Comprehensive income	$	2,116	$	2,238		$	1,078	$	725
Accumulated comprehensive income (loss)	$	124	$	(413	)	$	124	$	(413	)

See accompanying notes to consolidated financial statements. 

5

Wayne Savings Bancshares, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended December 31,

(In thousands)

(Unaudited)

	2007			2006
Cash flows from operating activities:
Net income for the period	$	1,516		$	1,640
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of discounts and premiums on loans,  investments and mortgage-backed securities – net		(64	)		(66	)
Amortization of deferred loan origination fees		(39	)		(39	)
Depreciation and amortization		488			528
Amortization of expense related to ESOP		91			109
Provision for losses on loans		195			70
Gain on disposal of real estate acquired through foreclosure		(31	)		–
Federal Home Loan Bank stock dividends		–			(206	)
Increase in cash surrender value of life insurance		(175	)		(167	)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans		(1	)		(109	)
Accrued interest receivable on mortgage-backed securities		(61	)		(38	)
Accrued interest receivable on investments and interest-bearing deposits		363			236
Prepaid expenses and other assets		272			374
Amortization of expense related to intangibles		80			80
Accrued interest payable		(35	)		91
Accounts payable on mortgage loans serviced for others		86			66
Other liabilities		44			(36	)
Federal income taxes
Current		103			(279	)
Deferred		(213	)		53
Net cash provided by operating activities		2,619			2,307
Cash flows provided by (used in) investing activities:
Purchase of investment securities designated as available for sale		(6,569	)		(1,101	)
Proceeds from maturity of investment securities designated as held to maturity		76			2,708
Proceeds from sale of investment securities designated as held to maturity		–			2,512
Proceeds from maturity of investment securities designated as available for sale		25,223			11,091
Purchase of mortgage-backed securities designated as available for sale		(29,644	)		(15,584	)
Principal repayments on mortgage-backed securities designated as held to maturity		294			500
Principal repayments and sales of mortgage-backed securities designated as available for sale		15,215			7,380
Loan principal repayments		28,831			38,643
Loan disbursements		(37,453	)		(44,114	)
Purchase of office premises and equipment - net		(334	)		(234	)
Proceeds from sale of real estate acquired through foreclosure		108			156
Net cash provided by (used in) investing activities		(4,253	)		1,957
Net cash provided by (used in) operating and investing activities (balance carried forward)		(1,634	)		4,264

See accompanying notes to consolidated financial statements. 

6

Wayne Savings Bancshares, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the nine months ended December 31,

(In thousands)

(Unaudited)

	2007			2006
Net cash provided by (used in) operating and investing activities
(balance brought forward)	$	(1,634	)	$	4,264
Cash flows provided by (used in) financing activities:
Net increase (decrease)  in deposit accounts		(9,621	)		2,855
Proceeds from Federal Home Loan Bank advances		44,450			78,400
Repayments of Federal Home Loan Bank advances		(40,450	)		(76,650	)
Advances by borrowers for taxes and insurance		434			479
Dividends paid on common stock		(1,135	)		(1,190	)
Proceeds from exercise of stock options		–			602
Purchase of treasury shares		(854	)		(1,993	)
Net cash provided by (used in) financing activities		(7,176	)		2,503
Net increase (decrease) in cash and cash equivalents		(8,810	)		6,767
Cash and cash equivalents at beginning of period		17,215			14,123
Cash and cash equivalents at end of period	$	8,405		$	20,890
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes	$	710		$	830
Interest on deposits and borrowings	$	8,957		$	8,141
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure	$	149		$	–
Unrealized gains on securities designated as available for sale,
net of related tax effects	$	600		$	598
Dividends payable	$	375		$	390

See accompanying notes to consolidated financial statements. 

7

Wayne Savings Bancshares, Inc.

Notes to Consolidated Financial Statements

For the nine and three month periods ended December 31, 2007 and 2006

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements for the nine and three months ended December 31, 2007 and 2006 were prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America.  Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Wayne Savings Bancshares, Inc. (the “Company”) included in the Annual Report on Form 10-K for the year ended March 31, 2007.

In the opinion of management, all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the unaudited financial statements have been included.  The results of operations for the nine and three month periods ended December 31, 2007 are not necessarily indicative of the results which may be expected for the entire fiscal year.

Critical Accounting Policy – The Company’s critical accounting policy relates to the allowance for loan losses.  The Company has established a systematic method of periodically reviewing the credit quality of the loan portfolio in order to establish a sufficient allowance for loan losses.  The allowance for loan losses is based on management’s current judgments about the credit quality of individual loans and segments of the loan portfolio.  The allowance for loan losses is established through a provision, and considers all known internal and external factors that affect loan collectibility as of the reporting date.  Such evaluation, which included a review of all loans on which full collectibility may not be reasonably assured, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s knowledge of inherent risks in the portfolio that are probable and reasonably estimable and other factors that warrant recognition in providing an appropriate loan loss allowance.  Management has discussed the development and selection of this critical accounting policy with the audit committee of the Board of Directors.

Use of Estimates– The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Note 2: Principles of Consolidation

The accompanying consolidated financial statements include Wayne Savings Bancshares, Inc. and the Company’s wholly-owned subsidiary, Wayne Savings Community Bank (“Wayne Savings” or the “Bank”).

Wayne Savings has eleven banking locations in Wayne, Holmes, Ashland, Medina and Stark counties.  All significant intercompany transactions and balances have been eliminated in the consolidation.

8

Wayne Savings Bancshares, Inc.

Notes to Consolidated Financial Statements

For the nine and three month periods ended December 31, 2007 and 2006

Note 3: Earnings Per Share

Basic earnings per common share is computed based upon the weighted-average number of common shares outstanding during the period, less shares in the Company’s Employee Stock Ownership Plan (“ESOP”) that are unallocated and not committed to be released.  Diluted earnings per common share include the dilutive effect of all additional potential common shares issuable under the Company’s stock option plan.  The computations are as follows:

	For the nine months ended				For the three months ended
	December 31,				December 31,
	2007		2006		2007		2006
Weighted-average common shares outstanding (basic)		3,061,671		3,209,885		3,027,848		3,239,078
Dilutive effect of assumed exercise of stock options		–		7,315		–		5,010
Weighted-average common shares outstanding (diluted)		3,061,671		3,217,200		3,027,848		3,244,088

None of the outstanding options were included in the diluted earnings per share calculation for the nine or three month periods ended December 31, 2007 as the average fair value of the shares was less than the option exercise prices.  All of  the outstanding options were included in the diluted earnings per share calculation for the three and nine month periods ended in  December 31, 2006.

Note 4: Stock Option Plan

The Company maintains a 1993 incentive Stock Option Plan that provided for the issuance of 196,390 shares of authorized common stock, as adjusted, with no options outstanding at December 31, 2007.  In fiscal 2004, the Company adopted a new Stock Option Plan that provided for the issuance of 142,857 incentive options and 61,224 non-incentive options with respect to authorized common stock.  As of December 31, 2007, all options under the 2004 Plan have been granted and (excluding forfeited options), are subject to exercise at the discretion of the grantees, and will expire in fiscal 2014 unless otherwise exercised or forfeited.

The Company accounts for the stock plan in accordance with the provisions of SFAS No. 123(R), “Share Based Payment.”  SFAS No. 123(R) requires the recognition of compensation expense related to stock option awards based on the fair value of the option award at the grant date.  Compensation cost is then recognized over the vesting period.  There were no options granted during each of the nine and three months ended December 31, 2007 and 2006.  There was no compensation expense recognized for the stock option plan during the nine month periods ended December 31, 2007 and 2006, as all options were fully vested prior to these periods.

9

Wayne Savings Bancshares, Inc.

Notes to Consolidated Financial Statements

For the nine and three month periods ended December 31, 2007 and 2006

A summary of the status of the Company’s stock option plans as of and for the nine months ended December 31, 2007 and for the years ended March 31, 2007 and 2006, is presented below:

	Nine months ended December 31,				Year ended March 31,
	2007				2007					2006
	Shares		Weighted Average exercise price		Shares			Weighted  Average exercise price		Shares			Weighted Average exercise price
Outstanding at beginning of period		114,224	$	13.95		179,148		$	13.92		214,204		$	13.84
Granted		––		––		––			––		––			––
Exercised		––		––		(60,924	)		13.86		(27,556	)		13.32
Forfeited		––		––		(4,000	)		13.95		(7,500	)		13.95
Outstanding at end of period		114,224	$	13.95		114,224		$	13.95		179,148		$	13.92
Options exercisable at period-end		114,224	$	13.95		114,224		$	13.95		179,148		$	13.92

The following information applies to options outstanding at December 31, 2007:

Number outstanding		114,224
Exercise price on all remaining options outstanding	$	13.95
Weighted-average remaining contractual life	6.25 years

Note 5: Recent Accounting Developments

In March 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 156, “Accounting for Servicing of Financial Assets – an amendment of SFAS No. 140,” to simplify the accounting for separately recognized servicing assets and servicing liabilities. Specifically, SFAS No. 156 amends SFAS No. 140 to require an entity to take the following steps:

● Separately recognize financial assets as servicing assets or servicing liabilities, each time it undertakes an obligation to service a financial asset by entering into certain kinds of servicing contracts;

● Initially measure all separately recognized servicing assets and liabilities at fair value, if practicable; and

● Separately present servicing assets and liabilities subsequently measured at fair value in the statement of financial condition and additional disclosures for all separately recognized servicing assets and servicing liabilities.

10

Wayne Savings Bancshares, Inc.

Notes to Consolidated Financial Statements

For the nine and three month periods ended December 31, 2007 and 2006

Additionally, SFAS No. 156 permits, but does not require, an entity to choose either the amortization method or the fair value measurement method for measuring each class of separately recognized servicing assets and servicing liabilities. SFAS No. 156 also permits a servicer that uses derivative financial instruments to offset risks on servicing to use fair value measurement when reporting both the derivative financial instrument and related servicing asset or liability.

SFAS No. 156 applies to all separately recognized servicing assets and liabilities acquired or issued after the beginning of an entity’s fiscal year that begins after September 15, 2006, or April 1, 2007 as to the Company.  Management adopted SFAS No. 156 effective April 1, 2007, as required, without material effect on the Company’s consolidated statements of financial condition or results of operations.

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.”  The interpretation clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.”  Specifically, FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax provision taken or expected to be taken on a tax return.  FIN 48 also provides guidance on the related derecognition, classification, interest and penalties, accounting for interim periods, disclosure, and transition of uncertain tax positions.  FIN 48 is effective for fiscal years beginning after December 15, 2006, or April 1, 2007 as to the Company.  Management adopted FIN 48 effective April 1, 2007, as required, without material effect on the Company’s consolidated statements of financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”  This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  This Statement emphasizes that fair value is a market-based measurement and should be determined based on assumptions that a market participant would use when pricing an asset or liability.  This Statement clarifies that market participant assumptions should include assumptions about risk as well as the effect of a restriction on the sale or use of an asset.  Additionally, this Statement establishes a fair value hierarchy that provides the highest priority to quoted prices in active markets and the lowest priority to unobservable data.  This Statement is effective for fiscal years beginning after November 15, 2007, or April 1, 2008 as to the Company, and interim periods within that fiscal year.  The adoption of this Statement is not expected to have a material adverse effect on the Company’s financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115.”  This Statement allows companies the choice to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments.  This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007, or April 1, 2008 as to the Company, and interim periods within that fiscal year.  The Company is currently evaluating the impact the adoption of SFAS No. 159 will have on the financial statements.

11

Wayne Savings Bancshares, Inc.

ITEM 2 Management’s Discussion and Analysis of Financial         

Condition and Results of Operations

Average Balance Sheet

The following tables set forth certain information relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated and the average yields earned and rates paid.  Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.

	For the nine months ended December 31,
	2007							2006
	Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net1	$	244,546	$	12,518		6.83	%	$	236,917	$	11,924		6.71	%
Mortgage-backed securities2		74,785		2,969		5.29			62,637		2,327		4.95
Investment securities		45,281		1,457		4.29			66,724		2,082		4.16
Interest-bearing deposits3		11,148		374		4.47			11,705		360		4.10
Total interest-earning assets		375,760		17,318		6.15			377,983		16,693		5.89
Non-interest-earning assets		21,768							22,781
Total assets	$	397,528						$	400,764
Interest-bearing liabilities:
Deposits	$	324,018		7,624		3.14		$	331,637		7,194		2.89
Borrowings		35,530		1,298		4.87			30,247		1,038		4.58
Total interest-bearing liabilities		359,548		8,922		3.31			361,884		8,232		3.03
Non-interest bearing  liabilities		3,651							3,221
Total liabilities		363,199							365,105
Stockholders’ equity		34,329							35,659
Total liabilities and stockholders’ equity	$	397,528						$	400,764
Net interest income			$	8,396						$	8,461
Interest rate spread4						2.84	%						2.86	%
Net yield on interest- earning assets5						2.98	%						2.98	%
Ratio of average interest- earning assets to average  interest-bearing liabilities						104.51	%						104.45	%

________________________________________________

1  Includes non-accrual loan balances.

2  Includes mortgage-backed securities designated as available for sale.

3  Includes federal funds sold and interest-bearing deposits in other financial institutions.

4  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

5  Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.

12

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

	For the three months ended December 31,
	2007							2006
	Average Balance		Interest		Average  Rate			Average Balance		Interest		Average Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net1	$	247,985	$	4,204		6.78	%	$	238,683	$	4,048		6.78	%
Mortgage-backed securities2		79,520		1,062		5.34			66,485		846		5.09
Investment securities		41,846		452		4.32			61,419		627		4.08
Interest-bearing deposits3		9,931		108		4.35			14,261		158		4.43
Total interest-earning assets		379,282		5,826		6.14			380,848		5,679		5.96
Non-interest-earning assets		21,650							22,782
Total assets	$	400,932						$	403,630
Interest-bearing liabilities:
Deposits	$	323,925		2,555		3.16		$	329,691		2,545		3.09
Borrowings		38,426		475		4.94			34,586		410		4.74
Total interest-bearing liabilities		362,351		3,030		3.34			364,277		2,955		3.24
Non-interest bearing liabilities		3,864							3,838
Total liabilities		366,215							368,115
Stockholders’ equity		34,717							35,515
Total liabilities and stockholders’ equity	$	400,932						$	403,630
Net interest income			$	2,796						$	2,724
Interest rate spread4						2.80	%						2.72	%
Net yield on interest-earning assets5						2.95	%						2.86	%
Ratio of average interest-earning assets to average interest-bearing liabilities						104.67	%						104.55	%

__________________________________________

1  Includes non-accrual loan balances.

2  Includes mortgage-backed securities designated as available for sale.

3  Includes federal funds sold and interest-bearing deposits in other financial institutions.

4  Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

5  Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.

13

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Discussion of Financial Condition Changes from March 31, 2007 to December 31, 2007

At December 31, 2007, the Company had total assets of $401.0 million, a decrease  of $4.8 million, or 1.2%, from March 31, 2007 levels.

Liquid assets, consisting of cash, federal funds sold, interest-bearing deposits and investment securities, decreased by $27.2 million, or 37.9%, to $44.7 million at December 31, 2007, due primarily to maturities of investment securities totaling $25.3 million, partially offset by purchases of $6.6 million, and a reduction of federal funds sold by $9.0 million.  The decrease in federal funds sold is directly related to the reduction in deposit balances, as management chose to limit its competition with retail certificate of deposit offerings above alternate cost of funds.

Mortgage-backed securities increased by $14.8 million, or 21.4%, during the nine months ended December 31, 2007.  This increase was primarily due to purchases of $29.6 million and market value increases on available for sale securities of $687,000 during the period, partially offset by $15.5 million in principal repayments.  Purchases were funded by principal repayments on loans and proceeds from maturities of investment securities.

At December 31, 2007, loans receivable increased by $8.3 million, or 3.5%, compared to March 31, 2007, as the Bank originated and retained $37.5 million of loans and received payments of $28.8 million.  The lending division has focused on the origination of shorter-term and adjustable-rate commercial and commercial real estate loans.  The Company believes that investing in shorter-term and adjustable-rate commercial loans positions the Company more favorably from an interest rate risk management perspective, compared to the origination of long term fixed-rate residential mortgages.  The composition of the loan portfolio has changed during the nine months ended December 31, 2007, due to a net increase of $5.2 million in non-residential real estate loans, a decrease in the loans in process of $4.1 million, as the commercial lending department was able to disburse payments to previously committed loans, an increase of $400,000 in commercial loans and an increase of $637,000 in consumer loans.  These increases were offset by a decrease in one- to four-family mortgage loans of $1.8 million as principal repayments exceeded the origination of new loans.

	December 31, 2007				March 31, 2007
	(Dollars in thousands)
Mortgage loans:
One- to four-family residential(1)	$	142,507	56.17	%	$	144,311	57.87	%
Residential construction loans		1,973	.78			2,019	.81
Multi-family residential		8,994	3.54			8,938	3.59
Non-residential real estate/land(2)		67,046	26.42			61,873	24.82
Total mortgage loans		220,520	86.91			217,141	87.09
Other loans:
Consumer loans(3)		6,097	2.40			5,460	2.19
Commercial business loans		27,130	10.69			26,730	10.72
Total other loans		33,227	13.09			32,190	12.91
Total loans before net items		253,747	100.00	%		249,331	100.00	%
Less:
Loans in process		3,214				7,334
Deferred loan origination fees		409				425
Allowance for loan losses		1,735				1,523
Total loans receivable, net	$	248,389			$	240,049
Mortgage-backed securities, net(4)	$	83,438			$	69,065

_________________________________

(1) Includes equity loans collateralized by second mortgages in the aggregate amount of $17.9 million and $19.2 million as of December 31, 2007 and March 31, 2007, respectively. Such loans have been underwritten on substantially the same basis as the Company’s first mortgage loans.

(2) Includes land loans of $196,000 and $204,000 as of December 31, 2007 and March 31, 2007, respectively.

(3) Includes second mortgage loans of $1.3 million and $605,000 as of December 31, 2007 and March 31, 2007, respectively.

(4) Includes mortgage-backed securities designated as available for sale.

14

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Non-performing loans amounted to $2.0 million and $950,000 at December 31, 2007 and March 31, 2007, respectively.  At December 31, 2007 non-performing loans consisted of residential mortgage loans of $882,000, two commercial real estate loans with a combined balance of $1.0 million and a $91,000 commercial loan.  At March 31, 2007, non-performing loans were comprised of $683,000 in residential loans and a $267,000 commercial real estate loan.  During the quarter ended December 31, 2007, the Company evaluated the three commercial loans and elected to record an additional provision for loan losses based on updated appraisals and evaluation of these loans.  Management is actively engaged with the three borrowers to bring the loans current or liquidate the collateral to protect the Bank’s interests.  The Company generally has not realized significant losses on non-performing loans secured by residential mortgages.  The following table sets forth information regarding our past due, nonaccrual and impaired loans and real estate acquired through foreclosure as of December 31, 2007 and March 31, 2007.

	December 3, 2007			March 31, 2007
	(Dollars in thousands)
Past due loans 30-89 days:
Mortgage loans:
One- to four-family residential	$	1,014		$	270
Nonresidential		––			––
Land		––			––
Non-mortgage loans:
Commercial business loans		47			––
Consumer loans		4			11
	$	1,065		$	281
Non-performing loans:
Mortgage loans:
One- to four-family residential	$	743		$	683
All other mortgage loans		139			––
Non-mortgage loans:
Commercial business loans		1,142			267
Consumer		2			––
Total non-performing loans		2,026			950
Total real estate acquired through foreclosure		48			––
Total non-performing assets	$	2,074		$	950
Total non-performing loans to net loans receivable		0.82	%		0.40	%
Total non-performing loans to total assets		0.51	%		0.23	%
Total non-performing assets to total assets		0.52	%		0.23	%

15

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following table sets forth the analysis of the allowance for loan losses for the periods indicated.

	For the nine months ended December 31, 2007			For the year ended March 31, 2007
	(Dollars in thousands)
Loans receivable, net	$	248,389		$	240,049
Average loans receivable, net	$	244,546		$	237,429
Allowance balance (at beginning of period)	$	1,523		$	1,484
Charge-offs:
Mortgage loans:
One- to four-family		(15	)		(31	)
Residential construction		––			––
Multi-family residential		––			––
Non-residential real estate and land		––			(31	)
Other loans:
Consumer		(2	)		(21	)
Commercial		––			––
Gross charge-offs		(17	)		(83	)
Recoveries:
Mortgage loans:
One- to four-family		13			1
Residential construction		––			––
Multi-family residential		––			––
Non-residential real estate and land		––			––
Other loans:
Consumer		21			21
Commercial		––			––
Gross recoveries		34			22
Net (charge-offs) recoveries		17			(61	)
Provision charged to operations		195			100
Allowance for loans losses balance (at end of period)	$	1,735		$	1,523
Allowance for loan losses as a percent of loans receivable, net at end of period		0.70	%		0.63	%
Net loans charged off as a percent of average loans receivable, net		0.00	%		0.03	%
Ratio of allowance for loan losses to non-
performing loans at end of period		85.64	%		160.32	%

16

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Deposits totaled $323.9 million at December 31, 2007, a decrease of $9.6 million, or 2.9%, from $333.5 million at March 31, 2007.  Certificates of deposit decreased by $10.1 million, savings accounts decreased by $7.5 million and NOW accounts decreased by $934,000.  These decreases were partially offset by an increase in money market deposits of $6.7 million and an increase in commercial repurchase agreements of $2.2 million.  The Company continues to experience a shift in depositor preference from low cost liquid deposit accounts to higher cost money market and retail certificate accounts.  Management exercised discipline during the period with regard to the pricing of retail certificates.  In general, management attempts to benchmark retail certificate of deposit pricing to the cost of alternate sources of funds, including Federal Home Loan Bank advances and brokered deposits.  Exceptions are made to defend customer relationships with significant value to the Bank while allowing rate sensitive certificate of deposit shoppers to move to other alternatives.  The local deposit market has been negatively affected by national and online competitors offering higher rates to address liquidity concerns in national markets.

Borrowings totaled $38.5 million at December 31, 2007, an increase of $4.0 million, or 11.6%, as compared with $34.5 million at March 31, 2007.  The Company increased its borrowings to compensate for the loss of  higher cost retail certificates of deposit and low cost passbook savings accounts as discussed above.

Stockholders’ equity increased by $218,000, or 0.6%, during the nine months ended December 31, 2007, due primarily to net income of $1,516,000 and an increase in unrealized gains on available for sale securities of $600,000, which were partially offset by purchases of treasury stock of $854,000 and dividend payments of $1.1 million.

Comparison of Operating Results for the Nine Month Periods Ended December 31, 2007 and 2006

General

Net income totaled $1,516,000 for the nine months ended December 31, 2007, a decrease of $124,000, or 7.6%, compared to net income of $1,640,000 for the nine months ended December 31, 2006.  The decrease in net income was primarily attributable to an increase in the provision for loan losses of $125,000, a decrease in net interest income of $65,000 or 0.8%, and an increase in other operating expenses of $187,000, or 2.5%, partially offset by an increase in other income of $85,000 and a decrease in federal income taxes of $168,000, or 25.4%.

Interest Income

Interest income increased by $625,000, or 3.7%, to $17.3 million for the nine months ended December 31, 2007, compared to the same period in 2006.  This increase was due to an increase in the weighted-average yield on interest-earning assets to 6.15% in the 2007 period from 5.89% for the nine month period ended December 31, 2006.  The average balance of interest-earning assets decreased by $2.2 million to $375.8 million for the nine months ended December 31, 2007, from $378.0 million for the comparable period ended December 31, 2006.The yield increase was primarily due to a change in the composition of loans, mainly due to the increase in higher rate nonresidential real estate, commercial, and land loans.

17

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Interest income on loans increased by $594,000, or 5.0%, for the nine months ended December 31, 2007, compared to the same period in 2006, due primarily an increase in the average balance of loans outstanding period to period of $7.6 million, or 3.2%, to $244.5 million for the 2007 period, coupled with an increase in the weighted-average yield of 12 basis points to 6.83% for the nine months ended December 31, 2007.

Interest income on mortgage-backed securities increased by $642,000, or 27.6%, during the nine months ended December 31, 2007, compared to the same period in 2006.  This was primarily due to an increase of $12.1 million, or 19.4%, in the average balance outstanding and a 34 basis point increase in the weighted-average yield to 5.29%.

Interest income on investment securities decreased by $625,000, or 30.0%, during the nine months ended December 31, 2007, compared to the same period in 2006, reflecting a decrease in the average balance outstanding of $21.4 million, or 32.1%, to $45.3 million for the 2007 period from $66.7 million during the comparable 2006 period, partially offset by an increase in the weighted-average yield to 4.29% from 4.16% for the nine month period in 2006.

Interest income on interest-bearing deposits increased by $14,000, or 3.9%, for the nine months ended December 31, 2007, compared to the same period in 2006, due primarily to an increase in the weighted-average yield of 37 basis points, to 4.47% for the 2007 period from 4.10% for the nine months ended December 31, 2006, offset by a decrease in the average balance outstanding of $557,000,  or 4.8%.

Interest Expense

Interest expense totaled $8.9 million for the nine months ended December 31, 2007, an increase of $690,000, or 8.4%, over the nine months ended December 31, 2006.  The increase resulted from a 28 basis point increase in the weighted-average cost of funds to 3.31% for the 2007 period, partially offset by a decrease in the average balance of deposits and borrowings outstanding of $2.3 million to $359.5 million for the nine month period ended December 31, 2007.

Interest expense on deposits totaled $7.6 million for the nine months ended December 31, 2007, an increase of $430,000, or 6.0%, compared to the nine months ended December 31, 2006, as a result of a 25 basis point increase in the weighted-average cost of deposits to 3.14% for the 2007 period, which was partially offset by a decrease in the average balance outstanding of $7.6 million, or 2.3%, to $324.0 million for the 2007 period.

Interest expense on borrowings totaled $1.3 million for the nine months ended December 31, 2007, an increase of $260,000, or 25.0%, over the 2006 period, primarily due to an increase in the average balance outstanding of $5.3 million, or 17.5%, coupled with an increase in the weighted-average yield of 29 basis points, to 4.87% for the nine months ended December 31, 2007.

Net Interest Income

Net interest income totaled $8.4 million for the nine months ended December 31, 2007, a decrease of $65,000, or 0.8%, compared to the nine month period ended December 31, 2006.  The average interest rate spread decreased to 2.84% for the nine months ended December 31, 2007 from 2.86% for the nine months ended December 31, 2006.  The net interest margin remained at 2.98% for the nine months ended December 31, 2007.  The average interest rate spread decreased mainly due to the cost of deposits increasing at a higher rate than the yield on loans, as maturing certificates of deposit renewed from older, lower rates into higher current rates.  Management has allowed runoff in the retail certificate of deposit portfolio, through a limited response to competitive pricing pressure, to limit the increase in the cost of deposits.

18

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Provision for Losses on Loans

Management recorded a $195,000 provision for losses on loans for the nine month period ended December 31, 2007, an increase of $125,000 over the $70,000 recorded for the nine months ended December 31, 2006, primarily due to the increase in non-performing loans as discussed above in the changes in financial condition.  Management evaluated three non-performing commercial loans and elected to charge an additional $140,000 through the provision for loan losses based on updated appraisals and the evaluations of these loans.  The Company generally has not recognized significant losses on non-performing loans secured by residential mortgages. To the best of management’s knowledge, all known and inherent losses that are probable and which can be reasonably estimated have been recorded as of December 31, 2007.

Other Income

Other income, consisting primarily of the cash surrender value of life insurance, trust income, service fees and charges on deposit accounts, increased by $85,000, or 6.6%, for the nine months ended December 31, 2007,  compared to the nine months ended December 31, 2006.  The increase was primarily due to an increase in trust income of $53,000 and a $31,000 gain on disposal of real estate acquired through foreclosure.  The increase in trust income included a $14,000 one-time estate administration fee for the nine months ended December 31, 2007.

General, Administrative and Other Expense

General, administrative and other expense increased $187,000, or 2.5% for the nine months ended December 31, 2007, compared to the nine months ended December 31, 2006.  The two areas of significant increase were occupancy and equipment expense of $45,000 and franchise tax expense of $114,000.

The increase in occupancy and equipment expense was due primarily to an increase in furniture and equipment expense of $25,000, an increase of $20,000 in branch maintenance costs, an increase of $20,000 in ATM expenses and $13,000 of increased travel expense.  These increases were offset by a $39,000 decrease in depreciation expense.

The increase in franchise tax expense was mainly due to the effects of an amendment filed in December 2006 causing a reduction in expense of $97,000 related to prior year tax returns, offset by a reduction in taxes due to the effects of treasury stock repurchases.

Federal Income Taxes

Federal income tax expense was $493,000 for the nine months ended December 31, 2007, a decrease of $168,000, or 25.4%, compared to the same period in 2006, primarily due to the $292,000, or 12.7%, decrease in pre-tax income.  The difference in the effective tax rate from the 34% statutory rate was mainly due to the  beneficial effects of income from the cash surrender value on life insurance and other tax-exempt obligations.

19

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Comparison of Operating Results for the three Month Periods Ended December 31, 2007 and 2006

General

Net income totaled $446,000 for the three months ended December 31, 2007, a decrease of $117,000, or 20.8%, compared to net income of $563,000 for the three months ended December 31, 2006.  The decrease in net income was primarily attributable to an increase in the provision for losses on loans of $130,000 and an increase in total general, administrative and other expenses of $188,000 or 8.0%, offset by an increase in net interest income of $72,000, or 2.6%, a decrease in tax expense of $104,000 or 45.4%, and an increase in other  income of $25,000, or 5.8%.

Interest Income

Interest income increased by $147,000, or 2.6%, to $5.8 million for the three months ended December 31, 2007, compared to the same period in 2006.  This increase was due to an increase in the weighted-average yield on interest-earning assets to 6.14% in the 2007 period from 5.96% for the three month period ended December 31, 2006.  This increase was offset by a $1.6 million decrease in the average balance of interest-earning assets outstanding to $379.3 million for the three months ended December 31, 2007, from $380.8 million for the comparable period ended December 31, 2006.The yield increase was primarily due to a change in the composition of loans, mainly due to the increase in higher rate nonresidential real estate and land loans.

Interest income on loans increased by $156,000, or 3.9%, for the three months ended December 31, 2007, compared to the same period in 2006, due primarily to an increase in the average balance of loans outstanding period to period of $9.3 million, or 3.9%, to $248.0 million for the 2007 period.  The weighted-average rate on loans remained unchanged from the quarter ending December 31, 2006 to December 31, 2007.

Interest income on mortgage-backed securities increased by $216,000, or 25.5%, during the three months ended December 31, 2007, compared to the same period in 2006.  This increase was primarily due to an increase of $13.0 million, or 19.6%, in the average balance outstanding and a 25 basis point increase in the weighted-average yield to 5.34%.

Interest income on investment securities decreased by $175,000, or 27.9%, during the three-months ended December 31, 2007, compared to the same period in 2006, reflecting a decrease in the average balance outstanding of $19.6 million, or 31.9%, to $41.8 million for the 2007 period from $61.4 million during the comparable 2006 period, partially offset by an increase in the weighted-average yield to 4.32% from 4.08% for the three month period in 2006.

Interest income on interest-bearing deposits decreased by $50,000, or 31.4%, for the three months ended December 31, 2007, compared to the same period in 2006, due primarily to a decrease in the weighted-average balance of $4.3 million, or 30.4%, coupled with a decrease in the weighted-average yield of eight basis points, to 4.35% for the 2007 period from 4.43% for the three months ended December 31, 2006.

20

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Interest Expense

Interest expense totaled $3.0 million for the three months ended December 31, 2007, an increase of $75,000, or 2.5%, over the three months ended December 31, 2006.  The increase resulted from a 10 basis point increase in the weighted-average cost of funds to 3.34% for the 2007 period, partially offset by a decrease in the average balance of deposits and borrowings outstanding of $1.9 million to $362.4 million for the three month period ended December 31, 2007.

Interest expense on deposits totaled $2.6 million for the three months ended December 31, 2007, an increase of $10,000, or 0.4%, compared to the three months ended December 31, 2006, as a result of a seven basis point increase in the weighted-average cost of deposits to 3.16% for the 2007 period, which was partially offset by a decrease in the average balance outstanding of $5.8 million, or 1.7%, to $323.9 million for the 2007 period.

Interest expense on borrowings totaled $475,000 for the three months ended December 31, 2007, an increase of $65,000, or 15.9%, over the 2006 period, primarily due to an increase in the average balance outstanding of $3.8 million, or 11.1%, coupled with an increase in the weighted-average yield of 20 basis points, to 4.94% for the three months ended December 31, 2007.

Net Interest Income

Net interest income totaled $2.8 million for the three months ended December 31, 2007, an increase of $72,000, or 2.6%, compared to the three month period ended December 31, 2006.  The average interest rate spread increased to 2.80% for the three months ended December 31, 2007 from 2.72% for the three months ended December 31, 2006.  The net interest margin increased to 2.95% for the three months ended December 31, 2007 from 2.86% for the three months ended December 31, 2006.  The slight increase in the average interest rate spread was due to a shift in asset composition from lower yielding investment securities and deposits to higher yielding loans and mortgage-backed securities.  This was offset by the increase in the cost of borrowings coupled with the cost of deposits increasing at a higher rate than the yield on loans, as maturing certificates of deposit renewed from older, lower rates into higher current rates.  Management has allowed runoff in the retail certificate of deposit portfolio, through a limited response to competitive pricing pressure, to limit the increase in the cost of deposits.

Provision for Losses on Loans

Management recorded a $140,000 provision for losses on loans for the three month period ended December 31, 2007, an increase of $130,000 compared to the provision for the same period in 2006, primarily due to the increase in non-performing loans as discussed above in the changes in financial condition section.  The Company evaluated three non-performing commercial loans and charged an additional $140,000 through the provision for loan losses based upon updated appraisals and evaluation of these loans.  To the best of management’s knowledge, all known and inherent losses that are probable and which can be reasonably estimated have been recorded as of December 31, 2007.

Other Income

Other income, consisting primarily of the cash surrender value of life insurance, trust income, service fees and charges on deposit accounts, increased by $25,000, or 5.8%, for the three months ended December 31, 2007, compared to the three months ended December 31, 2006.  The increase was primarily due to an increase in trust income of $10,000, or 28.6%, mainly due to the growth in the trust department, and an increase of $13,000, or 3.8%, in service fees and charges on deposit accounts.

21

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

General, Administrative and Other Expense

General, administrative and other expense increased by $188,000, or 8.0%, to $2.5 million for the three months ended December 31, 2007, compared to the three months ended December 31, 2006.  The increase of $62,000, or 4.6%, in employee compensation expense was mainly due to normal merit increases from year to year combined with management's decision to fill certain vacant positions that existed at December 31, 2006 during 2007 to maintain customer service and internal operations.  The franchise tax expense increase of $118,000 was mainly due to the effects of an amendment filed in December 2006 causing a reduction in expense of $97,000 for the quarter ended December 31, 2006.

Federal Income Taxes

Federal income tax expense was $125,000 for the three months ended December 31, 2007, a decrease of $104,000, or 45.4%, compared to the same period in 2006, primarily due to the $221,000, or 27.9%, decrease in pretax income.  The difference in the effective tax rate from the 34% statutory rate was mainly due to the  beneficial effects of income from the cash surrender value on life insurance and other tax-exempt obligations.

Forward-Looking Statements

This document contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and similar expressions.  These forward-looking statements include:  statements of goals, intentions and expectations, statements regarding prospects and business strategy, statements regarding asset quality and market risk, and estimates of future costs, benefits and results.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following:  (1) general economic conditions, (2) competitive pressure among financial services companies, (3) changes in interest rates, (4) deposit flows, (5) loan demand, (6) changes in legislation or regulation, (7) changes in accounting principles, policies and guidelines, (8) litigation liabilities, including costs, expenses, settlements and judgments, and (9) other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.  We have no obligation to update or revise any forward-looking statements to reflect any changed assumptions, any unanticipated events or any changes in the future.

22

Wayne Savings Bancshares, Inc.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

ITEM 3                  Quantitative and Qualitative Disclosures About Market Risk

Management believes there has been no material change in the Company’s market risk since the Company’s Form 10-K filed with the Securities and Exchange Commission for the year ended March 31, 2007.

ITEM 4                  Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company (or our consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

(b) Changes in internal controls.

There has been no change made in the Company’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

23

Wayne Savings Bancshares, Inc.

PART II

ITEM 1.                  Legal Proceedings

Not applicable

ITEM 1A.               Risk Factors

There have been no material changes in the risk factors set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended March 31, 2007.

ITEM 2.                  Unregistered Sales of Equity Securities and Use of Proceeds

(a)           Not applicable

(b)           Not applicable

(c) The following table sets forth certain information regarding repurchases by the Company for the quarter ended December 31, 2007.

	Total		Average		Total # of shares purchased		Maximum # of shares which may still be
	# of shares		price paid		as part of the		purchased as part
Period	purchased		per share		announced plan		of the announced plan
October 1-31, 2007		-	$	-		-		62,180
November  1-30, 2007		-	$	-		-		62,180
December 1-31, 2007		18,316	$	11.55		118,360		120,893

Notes to the Table:

On December 28, 2006, the Company announced the near completion of the repurchase program announced June 6, 2005 and the authorization by the Board of Directors of a new program for the repurchase of 162,165 shares, or 5% of the Company’s outstanding shares.

On December 21, 2007, the Company announced the authorization by the Board of Directors of a new program for the repurchase of 77,029 shares, or 2.5% of the Company’s outstanding shares.

ITEM 3.                   Defaults Upon Senior Securities

 Not applicable

ITEM 4                   Submission of Matters to a Vote of Security Holders

 Not applicable

24

Wayne Savings Bancshares, Inc.

PART II

ITEM 5.                 Other Information

Not applicable

ITEM 6.                 Exhibits

EX-31.1	Certification of Chief Executive Officer pursuant
	to Section 302 of the Sarbanes-Oxley Act of
	2002, 18 U.S.C. Section 1350
EX-31.2	Certification of Chief Financial Officer pursuant
	to Section 302 of the Sarbanes-Oxley Act of
	2002, 18 U.S.C. Section 1350
EX-32	Written Statement of Chief Executive Officer and Chief
	Financial Officer furnished pursuant to Section 906 of the
	Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

25

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:	February 5, 2008	By:	/s/Phillip E. Becker
			Phillip E. Becker
			President and Chief  Executive Officer
Date:	February 5, 2008	By:	/s/H. Stewart Fitz Gibbon III
			H. Stewart Fitz Gibbon III
			Executive Vice President and
			Chief Financial Officer

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