10-Q

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 March 31, 2013

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 mark 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

ý Yes          o No

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

Large accelerated filer o          Accelerated filer o          Non-accelerated filer o          Smaller reporting company 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 April 30, 2013, the latest practicable date, 2,948,877 shares of the registrant’s common stock, $.10 par value, were issued and outstanding.

Wayne Savings Bancshares, Inc.

Index

		Page
PART I - FINANCIAL INFORMATION
Item 1	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income and Comprehensive Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	37
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	38
Item 1A	Risk Factors	38
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3	Defaults Upon Senior Securities	38
Item 4	Mine Safety Disclosures	38
Item 5	Other Information	38
Item 6	Exhibits	39
SIGNATURES		40

Wayne Savings Bancshares, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	March 31, 2013			December 31, 2012
Assets	(Unaudited)
Cash and due from banks	$	6,095		$	7,303
Interest-bearing deposits		3,867			4,752
Cash and cash equivalents		9,962			12,055
Available-for-sale securities		110,228			111,518
Held-to-maturity securities		5,333			3,748
Loans, net of allowance for loan losses of $2,977 and           $3,328 at March 31, 2013 and December 31, 2012, respectively		246,910			247,849
Premises and equipment		7,014			7,088
Federal Home Loan Bank stock		5,025			5,025
Foreclosed assets held for sale, net		193			318
Accrued interest receivable		1,420			1,228
Bank-owned life insurance		8,793			8,723
Goodwill		1,719			1,719
Other intangible assets		105			128
Prepaid federal deposit insurance premiums		520			596
Other assets		2,270			1,944
Prepaid federal income taxes		143			178
Total assets	$	399,635		$	402,117
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand	$	77,412		$	80,668
Savings and money market		117,457			112,229
Time		131,834			134,840
Total deposits		326,703			327,737
Other short-term borrowings		5,975			7,077
Federal Home Loan Bank advances		21,247			21,217
Interest payable and other liabilities		4,673			5,173
Deferred federal income taxes		1,196			1,128
Total liabilities		359,794			362,332
Commitments and Contingencies		—			—
Stockholders’ Equity
Preferred stock, 500,000 shares of $.10 par value authorized; no           shares issued		—			—
Common stock, $.10 par value; authorized 9,000,000 shares;           3,978,731 shares issued		398			398
Additional paid-in capital		35,975			35,975
Retained earnings		17,942			17,567
Shares acquired by ESOP		(552	)		(572	)
Accumulated other comprehensive income		1,127			1,340
Treasury stock, at cost: Common: 1,029,854 and 1,017,385 shares           at March 31, 2013 and December 31, 2012, respectively		(15,049	)		(14,923	)
Total stockholders’ equity		39,841			39,785
Total liabilities and stockholders’ equity	$	399,635		$	402,117

See accompanying notes to condensed consolidated financial statements. 2

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

For the three months ended March 31, 2013 and 2012

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Interest and Dividend Income
Loans	$	2,888		$	2,986
Securities		656			942
Dividends on Federal Home Loan Bank stock and other		55			59
Total interest and dividend income		3,599			3,987
Interest Expense
Deposits		435			610
Other short term borrowings		2			2
Federal Home Loan Bank advances		152			179
Total interest expense		589			791
Net Interest Income		3,010			3,196
Provision (Credit) for Loan Losses		(141	)		787
Net Interest Income After Provision (Credit) for Loan Losses		3,151			2,409
Noninterest Income
Gain on loan sales		47			46
Trust Income		—			92
Earnings on bank-owned life insurance		73			73
Service fees, charges and other operating		270			257
Total noninterest income		390			468
Noninterest Expense
Salaries and employee benefits		1,504			1,637
Net occupancy and equipment expense		477			476
Federal deposit insurance premiums		75			79
Franchise taxes		100			101
Loss on sale of foreclosed assets held for sale		3			13
Amortization of intangible assets		23			23
Other		551			456
Total noninterest expense		2,733			2,785
Income Before Federal Income Taxes		808			92
Provision (Benefit) for Federal Income Taxes		230			(60	)
Net Income	$	578		$	152
Other comprehensive loss:
Unrealized losses on available-for-sale securities		(322	)		(157	)
Tax benefit		109			53
Other comprehensive loss		(213	)		(104	)
Total comprehensive income	$	365		$	48
Basic Earnings Per Share	$	0.20		$	0.05
Diluted Earnings Per Share	$	0.20		$	0.05
Dividends Per Share	$	0.07		$	0.06

See accompanying notes to condensed consolidated financial statements. 3

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2013 and 2012

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Operating Activities
Net income	$	578		$	152
Items not requiring (providing) cash
Depreciation and amortization		148			134
Provision (Credit) for loan losses		(141	)		787
Amortization of premiums and discounts on securities		472			510
Amortization of mortgage servicing rights		6			17
Amortization of deferred loan origination fees		(25	)		(21	)
Amortization of intangible asset		23			23
Increase in value of bank-owned life insurance		(70	)		(71	)
Amortization expense of stock benefit plan		20			17
Loss on sale of foreclosed assets held for sale		3			13
Net gains on sale of loans		(47	)		(46	)
Proceeds from sale of loans in the secondary market		4,402			1,374
Origination of loans for sale in the secondary market		(4,355	)		(1,328	)
Deferred income taxes		176			104
Changes in
Accrued interest receivable		(192	)		(233	)
Prepaid federal deposit insurance premiums		76			73
Other assets		(297	)		(531	)
Interest payable and other liabilities		(86	)		(502	)
Net cash provided by operating activities		691			472
Investing Activities
Purchases of available-for-sale securities		(10,902	)		(13,885	)
Purchase of  held-to-maturity securities		(1,610	)		—
Proceeds from maturities and paydowns of available-for-sale securities		11,404			11,182
Proceeds from maturities and paydowns of held-to-maturity securities		20			13
Net change in loans		1,105			(125	)
Purchase of bank-owned life insurance		—			(1,243	)
Purchase of premises and equipment		(74	)		(74	)
Proceeds from the sale of foreclosed assets		122			1,165
Net cash provided by (used in) investing activities	$	65		$	(2,967	)

See accompanying notes to condensed consolidated financial statements. 4

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

For the three months ended March 31, 2013 and 2012

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Financing Activities
Net change in deposits	$	(1,034	)	$	(1,964	)
Net change in other short-term borrowings		(1,102	)		1,619
Proceeds from Federal Home Loan Bank and Federal Reserve advances		1,030			10
Repayments of Federal Home Loan Bank and Federal Reserve advances		(1,000	)		20
Advances by borrowers for taxes and insurance		(414	)		(333	)
Dividends on common stock		(203	)		(176	)
Treasury stock purchases		(126	)		—
Net cash used in by financing activities		(2,849	)		(824	)
Decrease in Cash and Cash Equivalents		(2,093	)		(3,319	)
Cash and Cash equivalents, Beginning of period		12,055			19,816
Cash and Cash equivalents, End of period	$	9,962		$	16,497
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$	586		$	788
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Recognition of mortgage servicing rights	$	44		$	13
Dividends payable	$	206		$	180

See accompanying notes to condensed consolidated financial statements. 5

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Note 1:          Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2013 and for the three months ended March 31, 2013 and 2012, 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 condensed 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 December 31, 2012. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included. The results of operations for the three months ended March 31, 2013, are not necessarily indicative of the results which may be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2012, has been derived from the consolidated balance sheet of the Company as of that date.

Critical Accounting Policies – The Company’s critical accounting policies relate to the allowance for loan losses and goodwill. 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 includes 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. The Company recorded all assets and liabilities acquired in prior purchase acquisitions, including goodwill and other intangibles, at fair value as required. Goodwill is subject, at a minimum, to annual tests for impairment. Other intangible assets are amortized over their estimated useful lives using the straight-line method, and are subject to impairment if events or circumstances indicate a possible inability to realize the carrying amount. The initial goodwill and other intangibles recorded and subsequent impairment analysis requires management to make subjective judgments concerning estimates of how the acquired asset will perform in the future. Events and factors that may significantly affect the estimates include, among others, customer attrition, changes in revenue growth trends, specific industry conditions and changes in competition.

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.

6

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Note 2:          Principles of Consolidation

The accompanying condensed 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 full-service offices in Wayne, Holmes, Ashland, Medina and Stark counties. All significant intercompany transactions and balances have been eliminated in the consolidation.

Note 3:          Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
March 31, 2013:
U.S. government agencies	$	149	$	1	$	—	$	150
Mortgage-backed securities of government sponsored entities		83,839		1,873		130		85,582
Private-label collateralized mortgage obligations		968		34				1,002
State and political subdivisions		22,096		1,419		21		23,494
Totals	$	107,052	$	3,327	$	151	$	110,228

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Available-for-sale securities	(In thousands)
December 31, 2012:
U.S. government agencies	$	155	$	1	$	1	$	155
Mortgage-backed securities of government sponsored entities		83,956		1,979		105		85,830
Private-label collateralized mortgage obligations		1,067		39		—		1,106
State and political subdivisions		22,842		1,587		2		24,427
Totals	$	108,020	$	3,606	$	108	$	111,518

7

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
March 31, 2013:
U.S. government agencies	$	123	$	1	$	—	$	124
Mortgage-backed securities of government sponsored entities		1,454		52		—		1,506
State and political subdivisions		3,756		—		75		3,681
Totals	$	5,333	$	53	$	75	$	5,311

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Held-to-maturity Securities:	(In thousands)
December 31, 2012:
U.S. government agencies	$	130	$	1	$	—	$	131
Mortgage-backed securities of government sponsored entities		1,469		45		—		1,514
State and political subdivisions		2,149		—		54		2,095
Totals	$	3,748	$	46	$	54	$	3,740

8

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2013 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized cost		Fair Value		Amortized cost		Fair Value
	(In thousands)
One to five years	$	2,784	$	2,981	$	—	$	—
Five to ten years		4,432		4,675		2,034		2,021
After ten years		15,029		15,988		1,845		1,784
		22,245		23,644		3,879		3,805
Mortgage-backed securities of government sponsored entities		83,839		85,582		1,454		1,506
Private-label collateralized mortgage obligations		968		1,002		—		—
Totals	$	107,052	$	110,228	$	5,333	$	5,311

The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $54.5 million and $60.4 million at March 31, 2013 and December 31, 2012, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at March 31, 2013 and December 31, 2012, was $22.5 million and $19.0 million, which represented approximately 20% and 17%, respectively, of the Company’s aggregate amortized cost of the available-for-sale and held-to-maturity investment portfolios. These declines resulted primarily from changes in market interest rates.

Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary at March 31, 2013.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows the gross unrealized losses and fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

9

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

	March 31, 2013
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Mortgage-backed securities of government sponsored entities	$	18,136	$	130	$	—	$	—	$	18,136	$	130
State and political  subdivisions		4,400		96		—		—		4,400		96
Total temporarily impaired securities	$	22,536	$	226	$	—	$	—	$	22,536	$	226

	December 31, 2012
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government agencies	$	—	$	—	$	66	$	1	$	66	$	1
Mortgage-backed securities of government sponsored entities		13,636		83		2,107		22		15,743		105
State and political subdivisions		3,162		56		—		—		3,162		56
Total temporarily impaired securities	$	16,798	$	139	$	2,173	$	23	$	18,971	$	162

Note 4:          Credit Quality of Loans and the Allowance for Loan Losses

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

10

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in process of collection. Past due status is determined based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current for a period of six months and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

11

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

The risk characteristics of each portfolio segment are as follows:

Residential Real Estate Loans

For residential mortgage loans that are secured by one-to-four family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in one-to-four family residences. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

All Other Mortgage Loans

All other mortgage loans consist of residential construction loans, nonresidential real estate loans, land loans and multi-family real estate loans.

Residential construction loan proceeds are disbursed in increments as construction progresses and as inspections warrant. Construction loans are typically structured as permanent one-to-four family loans originated by the Company with a 12-month construction phase. Accordingly, upon completion of the construction phase, there is no change in interest rate or term to maturity of the original construction loan, nor is a new permanent loan originated. These loans are generally owner occupied and the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.

Nonresidential real estate loans are negotiated on a case by case basis. Loans secured by nonresidential real estate generally involve a greater degree of risk than one-to-four family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by nonresidential real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

The Company also originates a limited number of land loans secured by individual improved and unimproved lots for future residential construction. In addition, the Company originates loans to commercial customers with land held as the collateral.

Multi-family real estate loans generally involve a greater degree of credit risk than one-to-four family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income-producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family real estate is typically dependent upon the successful operation of the related real estate property. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

12

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Commercial Business Loans

Commercial business loans carry a higher degree of risk than one-to-four family residential loans. Such lending typically involves large loan balances concentrated in a single borrower or groups of related borrowers for rental or business properties. In addition, the payment experience on loans secured by income-producing properties is typically dependent on the success of the operation of the related project and thus is typically affected by adverse conditions in the real estate market and in the economy. The Company originates commercial loans generally in the $50,000 to $1,000,000 range with the majority of these loans being under $500,000. Commercial loans are generally underwritten based on the borrower’s ability to pay and assets such as buildings, land and equipment are taken as additional loan collateral. Each loan is evaluated for a level of risk and assigned a rating from “1” (the highest quality rating) to “7” (the lowest quality rating).

Consumer Loans

Consumer loans entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as automobiles, mobile homes, boats, and recreational vehicles. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the lack of demand for used automobiles.

The following presents by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2013 and 2012:

Three months ended March 31, 2013	One-to-four family residential			All other mortgage loans			Commercial business loans			Consumer loans			Total
	(In thousands)
Beginning balance	$	1,122		$	1,925		$	275		$	6		$	3,328
Provision (credit) charged to expense		(61	)		(18	)		(63	)		1			(141	)
Losses charged off		(34	)		(176	)		—			(2	)		(212	)
Recoveries		—			—			1			1			2
Ending balance	$	1,027		$	1,731		$	213		$	6		$	2,977

Three months ended March 31, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,128		$	2,547		$	169	$	10		$	3,854
Provision charged to expense		185			598			5		(1	)		787
Losses charged off		(65	)		(5	)		—		—			(70	)
Recoveries		3			—			—		—			3
Ending balance	$	1,251		$	3,140		$	174	$	9		$	4,574

13

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	232	$	950	$	87	$	—	$	1,269
Collectively evaluated for impairment		795		781		126		6		1,708
Total allowance for loan losses	$	1,027	$	1,731	$	213	$	6	$	2,977
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	7,009	$	5,230	$	171	$	—	$	12,410
Collectively evaluated for impairment		154,697		73,796		10,536		1,409		240,438
Total balance	$	161,706	$	79,026	$	10,707	$	1,409	$	252,848

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	248	$	1,074	$	100	$	—	$	1,422
Collectively evaluated for impairment		874		851		175		6		1,906
Total allowance for loan losses	$	1,122	$	1,925	$	275	$	6	$	3,328
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,878	$	5,837	$	185	$	—	$	12,900
Collectively evaluated for impairment		154,032		71,884		14,060		1,517		241,493
Total balance	$	160,910	$	77,721	$	14,245	$	1,517	$	254,393

Total loans in the above tables do not include deferred loan origination fees of $610,000 and $569,000 or loans in process of $2.4 million and $2.6 million, respectively, for March 31, 2013 and December 31, 2012.

14

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

The following tables present the credit risk profile of the Bank’s loan portfolio based on rating category and payment activity as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	152,244	$	71,363	$	10,512	$	1,407
Special Mention (Risk 5)		700		2,433		24		—
Substandard (Risk 6)		8,762		5,230		171		2
Total	$	161,706	$	79,026	$	10,707	$	1,409

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	151,749	$	68,949	$	14,034	$	1,513
Special Mention (Risk 5)		708		2,934		26		—
Substandard (Risk 6)		8,453		5,838		185		4
Total	$	160,910	$	77,721	$	14,245	$	1,517

* Ratings are generally assigned to consumer and residential mortgage loans on a “pass” or “fail” basis, where “fail” results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank’s loan policy that produces a risk rating as described below.

Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds.

Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive.

Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization.

Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies.

Risk 5 or “Special Mention,” also known as “watch,” has potential weakness that deserves Management’s close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral.

Risk 6 or “Substandard” loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower’s credit strength with limited credit access and all non-performing loans.

Risk 7 or “Doubtful” loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge- off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

15

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

The following tables present the Bank’s loan portfolio aging analysis for March 31, 2013 and December 31, 2012:

March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	207	$	234	$	981	$	1,422	$	160,284	$	161,706	$	—
All other mortgage loans		—		—		1,129		1,129		77,897		79,026		—
Commercial business loans		—		—		—		—		10,707		10,707		—
Consumer loans		2		—		—		2		1,407		1,409		—
Total	$	209	$	234	$	2,110	$	2,553	$	250,295	$	252,848	$	—

December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	1,049	$	339	$	1,190	$	2,578	$	158,332	$	160,910	$	—
All other mortgage loans		1,544		—		1,309		2,853		74,868		77,721		—
Commercial business loans		—		—		—		—		14,245		14,245		—
Consumer loans		1		2		2		5		1,512		1,517		—
Total	$	2,594	$	341	$	2,501	$	5,436	$	248,957	$	254,393	$	—

16

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Non-accrual loans were comprised of the following at:

Non-accrual loans	March 31, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,377	$	2,097
Nonresidential real estate loans		2,903		3,123
All other mortgage loans		—		—
Commercial business loans		30		32
Consumer loans		2		4
Total	$	5,312	$	5,256

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. Information with respect to the Company’s impaired loans at March 31, 2013 and December 31, 2012 in combination with activity for the three months ended March 31, 2013 and 2012 is presented below:

	As of March 31, 2013						Three months ended March 31, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,653	$	5,653	$	—	$	5,620	$	78
All other mortgage loans		2,375		2,375		—		2,578		29
Commercial business loans		84		87		—		85		1
Loans with a specific valuation allowance
One-to-four family residential loans		1,356		1,356		232		1,324		13
All other mortgage loans		2,855		3,627		950		2,956		9
Commercial business loans		87		87		87		94		1
Total:
One-to-four family residential loans	$	7,009	$	7,009	$	232	$	6,944	$	91
All other mortgage loans		5,230		6,002		950		5,534		38
Commercial business loans		171		174		87		178		2
	$	12,410	$	13,185	$	1,269	$	12,655	$	131

17

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

	As of December 31, 2012						Three months ended March 31, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,587	$	5,587	$	—	$	3,232	$	39
All other mortgage loans		2,781		2,781		—		1,923		27
Commercial business loans		85		85		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		821		25
All other mortgage loans		3,056		3,652		1,074		5,248		20
Commercial business loans		100		100		100		71		—
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,053	$	64
All other mortgage loans		5,837		6,433		1,074		7,171		47
Commercial business loans		185		185		100		71		—
	$	12,900	$	13,496	$	1,422	$	11,295	$	111

The interest income recognized in the above tables reflects interest income recognized and is not materially different from the cash basis method.

All the TDR classifications listed below occurred as concessions were granted to borrowers experiencing financial difficulties. In 2013, the concessions made to the borrowers included both a reduction in the stated interest rate below the market rate of similar debt and an extension of the maturity date. The TDR classifications which occurred in the March 31, 2012 period were both due to an effective interest rate below the market interest rate of similar debt. Each TDR has been individually evaluated for impairment with the appropriate specific valuation allowance included in the allowance for loan losses calculation.There were no TDR classifications which defaulted during the three month periods ended March 31, 2013 and 2012. The Company considers TDRs that become 90 days or more past due under modified terms as subsequently defaulted.

	Quarter-to-Date
Troubled Debt Restructurings	Number of loans	Pre-modification Unpaid Principal Balance		Post-modification Unpaid Principal Balance
	(dollars in thousands)
March 31, 2013
One-to-four family residential loans	1	$	113	$	113
All other mortgage loans	1		576		576
March 31, 2012
One-to-four family residential loans	2	$	538	$	538

18

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Note 5:          Goodwill and Intangible Assets

The composition of goodwill and other intangible assets, all of which is core deposit intangible, at March 31, 2013 and December 31, 2012:

	March 31, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(869	)		(846	)
Total	$	1,824		$	1,847

The Company recorded amortization relative to intangible assets totaling $23,000 for both of the three month periods ended March 31, 2013, and 2012 respectively. The Company anticipates $91,000 of amortization for 2013 and $37,000 for 2014. Such amortization is derived using the straight line method for the core deposit asset over ten years. Pursuant to FASB ASC 350, the Company is required to annually test goodwill and other intangible assets for impairment. The Company’s testing of goodwill and other intangible assets at November 30, 2012 indicated there was no impairment in the carrying value of these assets.

Note 6:           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:

	Three months ended March 31,
	2013		2012
Weighted-average common shares outstanding (basic)		2,902,644		2,938,660
Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		2,902,644		2,938,660

19

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

None of the outstanding options were included in the diluted earnings per share calculation for the three months ended March 31, 2013 and 2012, as the average fair value of the shares was less than the option exercise prices.

Note 7:           Stock Option Plan

In fiscal 2004, the Company adopted a 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 March 31, 2013, 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 August of 2013 unless otherwise exercised or forfeited. The Company accounts for the stock option plan in accordance with the provisions of FASB ASC 718-10. FASB ASC 718-10 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 the three months ended March 31, 2013 and 2012. There was no compensation expense recognized for the stock option plan during the three months ended March 31, 2013 and 2012, as all options were fully vested prior to these periods.

A summary of the status of the Company’s stock option plan as of and for the three months ended March 31, 2013, and for the year ended December 31, 2012 is presented below:

	Three months ended March 31, 2013				Year ended December 31, 2012
	Shares		Weighted average exercise price		Shares		Weighted average exercise price
Outstanding at beginning of period		58,908	$	13.95		63,408	$	13.95
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		17,704	$	13.95		4,500	$	13.95
Outstanding at end of period		41,204	$	13.95		58,908	$	13.95
Options exercisable at period-end		41,204	$	13.95		58,908	$	13.95

The following information applies to options outstanding at March 31, 2013:

Number outstanding		41,204
Exercise price on all remaining options outstanding	$	13.95
Weighted-average remaining contractual life		.42 years

20

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Note 8:          Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory–and possibly additional discretionary–actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

The Bank must give notice to the Federal Reserve Bank of Cleveland prior to declaring a dividend to the Company and is subject to existing regulatory guidance where, in general, a dividend is permissible without regulatory approval if the institution is considered to be “well capitalized” and the dividend does not exceed current year to date net income plus the change in retained earnings for the previous two calendar years.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier I capital to average assets, of Tier 1 capital to risk-weighted assets, and of Total Risk-based capital to risk-weighted assets, all as defined in the regulations. Management believes, as of March 31, 2013, that the Bank met all capital adequacy requirements to which it is subject.

As of March 31, 2013, based on the computations for the call report the Bank is classified as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since March 31, 2013 that management believes have changed the Bank’s capital classification.

The Bank’s actual capital amounts and ratios as of March 31, 2013 and December 31, 2012 are presented in the following table.

	Actual					For Capital Adequacy Purposes					To Be well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Tier I Capital to average assets	$	35,223		8.8	%	$	15,969		4.0	%	$	19,961		5.0	%
Tier I Capital to risk weighted assets		35,223		14.9	%		9,473		4.0	%		14,210		6.0	%
Total Risk-based capital to risk-weighted assets		38,184		16.1	%		18,947		8.0	%		23,683		10.0	%
As of December 31, 2012
Tier I Capital to average assets	$	34,774		8.7	%	$	16,069		4.0	%	$	20,086		5.0	%
Tier I Capital to risk weighted assets		34,774		14.7	%		9,458		4.0	%		14,187		6.0	%
Total Risk-based capital to risk-weighted assets		37,734		16.0	%		18,916		8.0	%		23,644		10.0	%

21

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Note 9:          Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	Net Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Net Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income
	(In thousands)
March 31, 2013	$	3,175	$	(246	)	$	(1,096	)	$	(706	)	$	1,127
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

There were no amounts reclassified out of accumulated other comprehensive income during the three months ended March 31, 2013 or 2012.

Note 10:          Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Recurring Measurements

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the Company’s consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

22

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012:

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
U.S. government agencies	$	150	$	—	$	150	$	—
Mortgage-backed securities of government sponsored entities		85,582		—		85,582		—
Private-label collateralized mortgage obligations		1,002		—		1,002		—
State and political subdivisions		23,494		—		23,494		—

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
U.S. government agencies	$	155	$	—	$	155	$	—
Mortgage-backed securities of government sponsored entities		85,830		—		85,830		—
Private-label collateralized mortgage obligations		1,106		—		1,106		—
State and political subdivisions		24,427		—		24,427		—

23

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Nonrecurring Measurements

Certain assets may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

Collateral-dependent Impaired Loans, Net of ALLL

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the office of the Chief Financial Officer. Appraisals are reviewed for accuracy and consistency by the office of the Chief Financial Officer. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the office of the Chief Financial Officer by comparison to historical results.

Foreclosed Assets Held for Sale

Foreclosed assets held for sale are carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the real estate is acquired. Estimated fair value of real estate is based on appraisals or evaluations. Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy.

Appraisals of real estate are obtained when the real estate is acquired and subsequently as deemed necessary by the office of the Chief Financial Officer. Appraisals are reviewed for accuracy and consistency by the office of the Chief Financial Officer. Appraisers are selected from the list of approved appraisers maintained by management.

The following table presents the fair value measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012.

24

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Collateral-dependent impaired loans	$	344	$	—	$	—	$	344
December 31, 2012
Collateral-dependent impaired loans	$	2,437	$	—	$	—	$	2,437
Foreclosed assets		16		—		—		16

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements in thousands.

March 31, 2013	Fair Value		Valuation Technique	Unobservable Inputs	Range
Collateral-dependent   impaired loans	$	344	Market comparable properties	Selling Costs  Sherriff's sale discount		10% 37%
December 31, 2012
Collateral-dependent   impaired loans	$	2,437	Market comparable properties	Selling Costs		10%
Foreclosed assets		16	Market comparable properties	Selling Costs		10%

There were no changes in the inputs or methodologies used to determine fair value at March 31, 2013 as compared to December 31, 2012.

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

25

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Financial assets
Cash and cash equivalents	$	9,962	$	9,962	$	—	$	—
Held-to-maturity securities		5,333		—		5,311		—
Loans, net of allowance for loan losses		246,910		—		—		259,591
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,420		—		1,420		—
Financial liabilities
Deposits		326,703		—		313,654		—
Other short-term borrowings		5,975		—		5,975		—
Federal Home Loan Bank advances		21,247		—		22,023		—
Advances from borrowers for taxes and insurance		655		—		655		—
Interest payable		54		—		54		—

26

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
Financial assets
Cash and cash equivalents	$	12,055	$	12,055	$	—	$	—
Held-to-maturity securities		3,748		—		3,740
Loans, net of allowance for loan losses		247,849		—		—		259,986
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,228		—		1,228		—
Financial liabilities
Deposits		327,737		—		317,312		—
Other short-term borrowings		7,077		—		7,077		—
Federal Home Loan Bank advances		21,217		—		22,048		—
Advances from borrowers for taxes and insurance		1,069		—		1,069		—
Interest payable		51		—		51		—

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Cash and Cash Equivalents, Interest Receivable and Federal Home Loan Bank Stock

The carrying amount approximates fair value.

Held-to-maturity securities

The fair value of held-to-maturity securities was estimated by using pricing models that contain market pricing and information, quoted prices of securities with similar characteristics or discounted cash flows that use credit adjusted discount rates.

27

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include savings accounts, checking accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Interest Payable, Other Short-Term Borrowings and Advances From Borrowers for Taxes and Insurance

The carrying amount approximates fair value.

Federal Home Loan Bank Advances

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of commitments were not material at March 31, 2013 and December 31, 2012.

Note 11:          Recent Accounting Developments

FASB ASU 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2013-02, issued in February 2013 requires the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component. These amendments are effective prospectively for reporting periods beginning after December 15, 2012, and early adoption is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

FASB ASU 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date in Accounting Standards Update No. 2013-04, issued in February 2013 requires the Company to measure and report on obligations resulting from joint and several liability. This includes the amount the Company has agreed to pay on the basis of its arrangement among its co-obligors, and any additional amount the Company expects to pay on behalf of its co-obligors. The amendments in this update, should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated financial statements.

28

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed Consolidated Financial Statements

FASB ASU 2013-07, Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting, in Accounting Standards Update No. 2013-07, issued in April 2013 requires the Company to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. This standard requires the Company to present relevant information about its expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The amendments in this update, are to be applied prospectively, and are effective for annual reporting periods, and interim reporting periods therein, beginning after December 15, 2013 for those entities that determine liquidation is imminent, and early adoption is permitted. This standard is not expected to have any impact on the Company’s consolidated financial statements.

Note 12:          Transfer and Assumption Agreement

On November 15, 2012, the Bank completed a Transfer and Assumption Agreement with Thomasville National Bank (“TNB”), the national bank subsidiary of Thomasville Bancshares, Inc. headquartered in Thomasville, Georgia. The agreement provided for the transfer of the Bank’s trust business to TNB.

Under terms of the agreement, TNB maintains a trust office at a Wayne Savings office in Wooster, Ohio. The Bank and TNB entered into an office support and referral agreement under which the Bank will be compensated for, among other services, the use of facilities and equipment required for the operation of the TNB trust office. The costs of exiting the trust business include a one-time expense of approximately $354,000 that was mainly recognized during the quarter ended June 30, 2012. Closing of the transaction occurred during the fourth quarter of 2012 and the Bank surrendered its trust license to the Ohio Division of Financial Institutions (“ODFI”) in January 2013 after the ODFI confirmed that the Bank had met the conditions for ceasing to conduct trust business. The Bank received no consideration and there was no gain or loss on the transfer other than the one-time expense noted above.

The strategic rationale for this transaction was to partner with a stronger provider of trust services, who will absorb the operating expense overhead and assume the fiduciary risk associated with post-closing management of the trust accounts.

29

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Strategic Initiatives

As part of an ongoing strategic planning process, which includes annual plan updates and regular progress reviews by the Board of Directors, the Company continues to be engaged in several initiatives to improve the returns to shareholders over a foreseeable time horizon.

These continuing initiatives include the execution of a comprehensive marketing and sales program to increase top line revenue of the Company through both loan and fee income generating activities, recognizing that marketing expense is likely to increase ahead of revenue.

Another ongoing initiative is the review of branch facilities and staff to identify opportunities for reductions in staff and facilities costs to improve operational efficiency without impairing revenue generation ability and considering the potential effect on shareholder’ equity.

A further ongoing initiative is the evaluation of information technology solutions to improve internal operating efficiency and customer service.

The final initiative includes the continuing development of a comprehensive Enterprise Risk Management (ERM) program to ensure that the earnings generated through existing and contemplated activities are commensurate with the risks assumed in those activities and consistent with legal requirements, regulatory requirements and general economic conditions.

Discussion of Financial Condition Changes from December 31, 2012 to March 31, 2013

At March 31, 2013, the Company had total assets of $399.6 million, a decrease of $2.5 million, or 0.6%, from total assets at December 31, 2012. Cash and cash equivalents decreased $2.1 million, due to funding a $1.0 million decline in total deposits, mainly in higher cost time deposits, and a $1.1 million decline in other short-term borrowings, while net loans decreased $939,000 which was partially used to fund growth of $295,000 in total securities compared to December 31, 2012.

Total securities increased $295,000 during the three months ended March 31, 2013. The increase was primarily due to purchases totaling $12.5 million, partially offset by principal repayments of $11.4 million, amortization of premiums of $472,000, and a $323,000 decline in unrealized gains on available-for-sale securities during the three months ended March 31, 2013.

Net loans receivable decreased by $939,000, at March 31, 2013 compared to December 31, 2012. The Bank originated $15.8 million of loans, received payments of $11.7 million, and originated and sold $4.4 million of 30-year fixed-rate mortgage loans into the secondary market, and recorded a credit for loan losses of $141,000. The low interest rate environment has induced a number of residential and commercial borrowers to refinance existing loans, which increases loan repayment activity. Although the extensive supply of liquidity provided by the Federal Reserve Board has decreased the cost of borrowing, it has not stimulated a substantial amount of loan growth. Employment, manufacturing, and investment in new plant and consumer spending are not doing as well as the housing sector. According to FDIC call report data based on Call Reports filed for March 31, 2013, loan growth analysis for all bank charters with assets exceeding $300 million (a universe of just over 2,100 banks) shows a general contraction of average loan growth compared to loan balances outstanding at December 31, 2012. Similar to the banking industry, loan growth for the Company remains difficult to achieve because the economic environment continues to limit the demand for new loans by credit worthy borrowers.

30

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

As part of an overall strategy to manage liquidity and interest rate risk, management has executed a strategy of immediately selling certain newly originated 30-year fixed-rate mortgage loans into the secondary market to limit the interest rate risk exposure on the balance sheet and to utilize the secondary market as a backup source of liquidity. Similarly, in order to further limit the overall interest rate risk on the balance sheet, the Company focuses on the origination of shorter-term and adjustable-rate secured commercial loans and limits the retention of long term fixed-rate residential mortgages. To the extent that loan demand is insufficient in the current period, investments in the securities portfolio are made to provide cash flows to fund loan demand in future periods, while also limiting the interest rate risk exposure of the Company. Investments generally contribute to higher risk-based capital ratios, compared to loans, as the investments the Company purchases are risk weighted less than the loan originations. As loan volume increases relative to investment volume, risk-based capital ratios will decline.

The following table sets forth certain information regarding the Company’s loan portfolio for the dates indicated.

	March 31, 2013					December 31, 2012
	Balance		Percent of total loans			Balance		Percent of total loans
	(Dollars in thousands)
Mortgage loans:
One-to-four family residential(1)	$	161,706		63.95	%	$	160,910		63.25	%
Residential construction loans		2,654		1.05	%		2,170		0.85	%
Multi-family residential		9,798		3.88	%		9,790		3.85	%
Nonresidential real estate/land(2)		66,574		26.33	%		65,761		25.85	%
Total mortgage loans		240,732		95.21	%		238,631		93.80	%
Other loans:
Consumer loans(3)		1,409		0.56	%		1,517		0.60	%
Commercial business loans		10,707		4.23	%		14,245		5.60	%
Total other loans		12,116		4.79	%		15,762		6.20	%
Total loans before net items		252,848		100.00	%		254,393		100.00	%
Less:
Loans in process		2,351					2,647
Deferred loan origination fees		610					569
Allowance for loan losses		2,977					3,328
Total loans receivable, net	$	246,910				$	247,849

⁽¹⁾ Includes equity loans collateralized by second mortgages in the aggregate amount of $14.6 million at March 31, 2013 and $14.8 million at December 31, 2012. Such loans have been underwritten on substantially the same basis as the Company’s first mortgage loans.

⁽²⁾ Includes land loans of $2.1 million for March 31, 2013 and $2.3 million for December 31, 2012.

⁽³⁾ Includes second mortgage loans of $667,000 for March 31, 2013 and $683,000 for December 31, 2012.

31

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Foreclosed assets held for sale totaled $193,000 at March 31, 2013 compared to $318,000 at December 31, 2012. Activity during the current year period included the sale of two residential properties totaling $122,000, that were held as foreclosed assets at December 31, 2012, with no new foreclosed assets being added during the current year period. Total nonperforming and impaired assets totaled $14.4 million, or 3.59% of total assets, and $14.8 million, or 3.68% of total assets, at March 31, 2013 and December 31, 2012, respectively.

Goodwill of $1.7 million is carried on the Company’s balance sheet as a result of the acquisition of Stebbins Bancshares in June 2004. In accordance with FASB ASC 350, this goodwill is tested for impairment on at least an annual basis. Management evaluated the goodwill using an analysis of required measures of value, including the current stock price as an indicator of minority interest value, change of control multiples as a measure of controlling interest value and discounted cash flow analysis as a measure of going concern value and applied a weighting based on appraisal standards to arrive at a valuation conclusion that indicated no impairment at November 30, 2012, and there were no interim impairment indicators that would require another evaluation at March 31, 2013.

Deposits totaled $326.7 million at March 31, 2013, a decrease of $1.0 million, compared to $327.7 million at December 31, 2012. Demand deposits decreased $3.3 million, or 4.0%, and time deposits decreased by $3.0 million, or 2.2%, of which declines were partially offset by a $5.2 million, or 4.7% increase in savings and money market accounts. Management continued to exercise discipline during the period with regard to the pricing of retail certificates, keeping rates close to market benchmarks and not competing for certificates where a profitable customer relationship was not involved. Given the uncertain status of the economy in general, customers are choosing to increase their liquidity and keep their funds in insured checking, savings and money market products offered by the Bank.

Other short-term borrowings, which consist solely of repurchase agreements with commercial customers of the Bank, decreased by $1.1 million and totaled $6.0 million at March 31, 2013. These customer repurchase agreements are offered by the Bank in order to retain commercial customer funds and to afford those commercial customers the opportunity to earn a return on a short-term secured transaction. Average balances are shown in the tables below and reflect no significant variation during the periods. The interest rate paid on these borrowings was 0.15% at both March 31, 2013 and December 31, 2012.

Advances from the Federal Home Loan Bank of Cincinnati (“FHLB”) totaled $21.2 million at both March 31, 2013, and at December 31, 2012. The Company uses advances from the FHLB for both short-term cash management purposes and to extend liability duration for interest rate risk management purposes, as the cost of duration purchased from the FHLB is less expensive than obtaining a similar duration through retail certificates of deposit. Repricing risk associated with advances is mitigated through the laddering of advance maturities over time. The weighted average cost of FHLB advances was 2.86% at March 31, 2013 compared to 2.69% at December 31, 2012.

Stockholders’ equity increased by $56,000, during the three months ended March 31, 2013, primarily due to net income of $578,000, partially offset by dividends declared of $206,000, purchases of treasury stock totaling $126,000, and a $213,000 decline in accumulated other comprehensive income related solely to a decline in unrealized gains on available-for-sale securities.

32

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Comparison of Operating Results for the Three Months Ended March 31, 2013 and 2012

General

Net income for the three months ended March 31, 2013 totaled $578,000, reflecting an increase of $426,000, from $152,000 for the three month period ended March 31, 2012. The increase in net income was primarily due to a $928,000 decrease in provision (credit) for loan losses, and a $52,000 decrease in noninterest expense, partially offset by a $186,000 decrease in net interest income, a $78,000 decrease in noninterest income, and a $290,000 increase in provision (benefit) for federal income taxes.

Average Balance Sheet

The following table sets 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. 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 three months ended March 31,
	2013							2012
	Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net(1)	$	247,693	$	2,888		4.66	%	$	231,663	$	2,986		5.16	%
Investment securities(2)		115,023		656		2.28	%		136,932		942		2.75	%
Interest-earning deposits(3)		12,740		55		1.73	%		13,852		59		1.70	%
Total interest-earning assets		375,456		3,599		3.83	%		382,447		3,987		4.17	%
Noninterest-earning assets		24,807							23,837
Total assets	$	400,263						$	406,284
Interest-bearing liabilities:
Deposits	$	326,495	$	435		0.53	%	$	329,567	$	610		0.74	%
Other short-term borrowings		6,615		2		0.12	%		5,947		2		0.13	%
Borrowings		21,239		152		2.86	%		26,608		179		2.69	%
Total interest-bearing liabilities		354,349		589		0.66	%		362,122		791		0.87	%
Noninterest bearing  liabilities		5,942							4,173
Total liabilities		360,291							366,295
Stockholders’ equity		39,972							39,989
Total liabilities and stockholders’ equity	$	400,263						$	406,284
Net interest income			$	3,010						$	3,196
Interest rate spread(4)						3.17	%						3.30	%
Net yield on interest-earning assets(5)						3.21	%						3.34	%
Ratio of average interest- earning assets to           average interest-bearing liabilities						105.96	%						105.61	%

⁽¹⁾ Includes nonaccrual loan balances.

⁽²⁾ Includes mortgage-backed securities both designated as available-for-sale and held-to-maturity.

⁽³ Includes interest-earning 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.

33

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Interest Income

Interest income decreased $388,000 or 9.7%, to $3.6 million for the three months ended March 31, 2013, compared to the same period in 2012. The decrease was due to 34 basis point decline in the weighted-average yield on interest-earning assets from 4.17% in the 2012 period to 3.83% for the 2013 period, as well as a $7.0 million decrease in the average balance of interest-earning assets from $382.4 million in the 2012 period to $375.4 million for the 2013 period. The yield decrease was primarily due to the cumulative effect of interest-earning assets repricing to lower current market rates compared to the 2012 period as a result of lower interest rate resets on adjustable rate loans, lower rates on new loan originations and reinvestment of securities cash flows at lower market yields.

Interest income on loans decreased $98,000, or 3.3%, for the three month period ended March 31, 2013, compared to the same period in 2012. This decrease was primarily due to a 50 basis point decrease in the weighted-average loan portfolio yield from 5.16% for the three months ended March 31, 2012 to 4.66% for the three months ended March 31, 2013, as a result of reduced origination yields and the amortization, prepayment and repricing of higher yielding loans due to the low level of market interest rates. The decline in the weighted-average loan portfolio yield was partially offset by a $16.0 million, or 6.9%, increase in the average balance of loans outstanding from $231.7 million in the 2012 period to $247.7 million for the 2013 period. Interest income on securities decreased $286,000 during the three months ended March 31, 2013, compared to the same period in 2012. This decrease was due to a 47 basis point decrease in the weighted-average rate from 2.75% in the 2012 period to 2.28% for the 2013 period, and a $21.9 million, or 16.0%, decline in the average balance.

Dividends on Federal Home Loan Bank stock and other income decreased $4,000 for three months ended March 31, 2013 compared to March 31, 2012. The decrease was due to a $1.1 million decline in the average balance, partially offset by a 3 basis point increase in the weighted average rate from 1.70% at March 31, 2012, to 1.73% at March 31, 2013.

Interest Expense

Interest expense totaled $589,000 for the three month period ended March 31, 2013, which decreased $202,000, or 25.5%, from $791,000 for the three month period ended March 31, 2012. The decrease was due to a 21 basis point decrease in the weighted-average cost of funds from 0.87% in the 2012 period to 0.66% in the current year period as well as a $7.8 million, or 2.1%, decrease in the average balance of total interest-bearing liabilities from $362.1 million in the 2012 period to $354.3 in the 2013 period.

Interest expense on deposits for the three month period ended March 31, 2013 totaled $435,000, which decreased $175,000, or 28.7%, from $610,000 for the same period in the previous year. The decrease was due to a 21 basis point decrease in the weighted-average cost of deposits, from 0.74% in the 2013 period to 0.53% for the 2013 period, as well as a $3.1 million decrease in the average balance from $329.6 million in the 2012 period to $326.5 million in the 2013 period. The decrease in interest expense continues to slow as rates paid on deposit products reach floors established by local market competitors and overall market conditions.

Interest expense on other short-term borrowings totaled $2,000 for both three month periods ended March 31, 2013, and 2012. The weighted-average cost decreased 1 basis point to 0.12%, which was fully offset by a $668,000 increase in the average balance.

34

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Interest expense on Federal Home Loan Bank advances totaled $152,000 for the three month period ended March 31, 2013, which decreased $27,000 from $179,000 in the 2012 period. The decrease was primarily due to a $5.4 million, or 20.2%, decrease in the average balance outstanding, partially offset by a 17 basis point increase in the weighted-average cost from 2.69% in the 2012 period to 2.86% in the 2013 period. The increase in the weighted-average cost is due to the repayment of lower cost maturing advances without taking out new advances.

Net Interest Income

Net interest income totaled $3.0 million for the three month period ended March 31, 2013, a decrease of $186,000, or 5.8%, from the three month period ended March 31, 2012. The decline in net interest income was mainly due to a 13 basis point decrease in the net interest rate spread, from 3.30% at March 31, 2012 to 3.17% at March 31, 2013. The decrease in the net interest spread is a result of yields on earning-assets declining more than the rate paid on interest-bearing liabilities. During the three months ended March 31, 2013, the yield on earning assets declined 34 basis points, while the rate paid on interest-bearing liabilities declined 21 basis points, compared to the same period last year. The yield on earning assets was negatively impacted as a result of reduced origination yields, amortization, prepayment and repricing of higher yielding adjustable rate loans due to the low level of market interest rates, and security purchases at lower yields than in the prior year period. The cost of funds, which also declined from the prior year period, was managed in a manner that would allow the Bank to maintain its deposit base, and compete with existing market interest rates on interest-earning assets.

Provision (Credit) for Loan Losses

Management recorded a reversal of $141,000 in the provision (credit) for loan losses for the three month period ended March 31, 2013, resulting in a decrease of $928,000 compared to the $787,000 provision for the three month period ended March 31, 2012. The current quarter credit balance provision is based on improved local economic factors including the bank’s delinquency ratios and the number of foreclosures within the bank’s market area which both moved favorably during the current quarter combined with a decline in loan balances, compared to the prior year quarter. The increased provision in the prior year quarter was a result of several relationships requiring additional reserves, which included a loan downgrade, a foreclosure proceeding, and one that was considered doubtful, as well as an increase in classified loan balances.

Noninterest Income

Noninterest income totaled $390,000, for the three months ended March 31, 2013, which decreased $78,000, or 16.7%, from $468,000 for the same period in 2012. The decrease was primarily due to a $92,000 decline in Trust income related to the trust transfer and assumption agreement. This decrease was partially offset by a $13,000 increase in service fees, charges and other operating income which includes $17,000 in facilities and equipment reimbursements from TNB, as a result of the trust transfer and assumption agreement.

35

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Noninterest Expense

Noninterest expense totaled $2.7 million for the three months ended March 31, 2013, which decreased $52,000, or 1.9%, from $2.8 million for the three months ended March 31, 2012. The decrease was primarily due to a $133,000 decrease in salaries and employee benefits and a $10,000 decrease in loss on foreclosed assets held for sale, partially offset by a $95,000 increase in other operating expenses. The decrease in salaries and employee benefits was due to a non-recurring health savings account contribution made in the prior year quarter, lower compensation costs resulting from staff attrition since the prior year quarter and the completion of the trust transfer and assumption agreement which eliminated several positions and the related salary and benefit costs compared to the prior year quarter. The increase in other operating expenses was primarily due to increased marketing expenses incurred as part of the Company’s strategic initiative to increase top line revenues compared to the prior year quarter.

Federal Income Taxes

Federal income tax expense totaled $230,000 for the three month period ended March 31, 2013, an increase of $290,000 compared to a $60,000 benefit for three month period ended March 31, 2012. The increase was primarily due to a $716,000 increase in pretax income compared to the prior year period, as well as the tax benefit recorded in the prior year period which was a result of the composition of non-taxable earnings.

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.

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 was filed with the Securities and Exchange Commission for the year ended December 31, 2012.

36

Index

Wayne Savings Bancshares, Inc.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations

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.

37

Index

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 year ended December 31, 2012.

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 March 31, 2013.

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of the announced plan		Maximum number of shares which may still be purchased as part of the announced plan
January 1 - 31, 2013		—	$	—		42,767		107,439
February 1 - 28, 2013		—	$	—		42,767		107,439
March 1 - 31, 2013		12,469	$	10.12		55,236		94,970
Total		12,469	$	10.12		55,236		94,970

Notes to the Table:

On August 10, 2012, the Company announced the authorization by the Board of Directors of a new program for the repurchase of 150,206 shares, or five percent (5%) of the Company’s outstanding shares of common stock.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

Not applicable.

38

Index

Wayne Savings Bancshares, Inc.
PART II

ITEM 6. Exhibits

Exhibit
Number	Description
10.7*	Group Term Carve-Out Plan entered into by Wayne Savings Community Bank for Senior Vice Presidents and above in November 2002
10.8*	Summary of Cash Incentive Bonus Plan
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
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
101	Interactive financial data (XBRL)

* management contract or compensatory plan or arrangement

39

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:  May 10, 2013	By:	/s/Rod C. Steiger
		Rod C. Steiger
		President and Chief Executive Officer
Date:  May 10, 2013	By:	/s/Myron Swartzentruber
		Myron Swartzentruber
		Senior Vice President and
		Chief Financial Officer

40

EX-10.7

Exhibit 10.7

WAYNE SAVINGS COMMUNITY BANK

GROUP TERM CARVE-OUT PLAN

FOR SENIOR VICE PRESIDENT AND ABOVE

THIS PLAN, hereby made effective this 27^th day of November 2002 (the "Effective Date"), by and between Wayne Savings Community Bank, a state-chartered savings and loan association located in Wooster, Ohio (the "Bank"), and the Participant (the "Participant") selected to participate in this Plan, intending to be legally bound hereby.

INTRODUCTION

The Bank wishes to attract, retain and reward highly qualified executives. To further this objective, the Bank is willing to divide the death proceeds of certain life insurance policies which are owned by the Bank on the lives of the participating executives with the designated beneficiary of each insured participating executive. The Bank will pay the life insurance premiums from its general assets.

Article 1

General Definitions

The following terms shall have the meanings specified:

1.1 "Base Annual Salary" means the Participant's basic annual salary as of each January 1^st, exclusive of special payments such as bonuses or commissions, but including any salary reductions made in accordance with Sections 125 or 401(k) of the Code.

1.2 "Change in Control" means any of the following:

(A) any person (as such term is used in Sections 13d and 14d-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than the Corporation, a subsidiary of the Corporation, an employee benefit plan (or related trust) of the Corporation or a direct or indirect subsidiary of the Corporation, or Affiliates of the Corporation (as defined in Rule 12b-2 under the Exchange Act), becomes the beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 50 % of the combined voting power of the Corporation's then outstanding securities (other than a person owning 10% or more of the voting power of stock on the date hereof); or

(B) the liquidation or dissolution of the Corporation or the occurrence of, or execution of an agreement providing for a sale of all or substantially all of the assets of the Corporation to an entity which is not a direct or indirect subsidiary of the Corporation; or

(C) the occurrence of, or execution of an agreement providing for a reorganization, merger, consolidation or other similar transaction or connected series of transactions of the Corporation as a result of which either (a) the Corporation does not survive or (b) pursuant to which shares of the Corporation common stock ("Common Stock") would be converted into cash, securities or other property, unless, in case of either (a) or (b), the holders of the Corporation Common Stock immediately prior to such transaction will, following the consummation of the transaction, beneficially own, directly or indirectly, more than 50 % of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation surviving, continuing or resulting from such transaction; or

(D) the occurrence of, or execution of an agreement providing for a reorganization, merger, consolidation or similar transaction of the Corporation, or before any connected series of such transactions, if upon consummation of such transaction or transactions, the persons who are members of the Board of Directors of the Corporation immediately before such transaction or transactions cease or, in the case of the execution of an agreement for such transaction or transactions, it is contemplated in such agreement that upon consummation such persons would cease to constitute a majority of the Board of Directors of the Corporation or, in the case where the Corporation does not survive in such transaction, of the corporation surviving, continuing or resulting from such transaction or transactions; or

(E) any other event which is at any time designated as a "Change in Control" for purposes of this Plan by a resolution adopted by the Board of Directors of the Corporation with the affirmative vote of a majority of the non-employee directors in office at the time the resolution is adopted; in the event any such resolution is adopted, the Change in Control event specified thereby shall be deemed incorporated herein by reference and thereafter may not be amended, modified or revoked without the written agreement of the Participant; or

(F) during any period of two consecutive years during the term of this Plan, individuals who at the beginning of such period constitute the Board of Directors of the Bank or Corporation cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period, provided however this provision shall not apply in the event two-thirds of the Board of Directors at the beginning of a period no longer are directors due to death, normal retirement, or other circumstances not related to a Change in Control.

Notwithstanding anything else to the contrary set forth in this Plan, if (i) an agreement is executed by the Corporation providing for any of the transactions or events constituting a Change in Control as defined herein, and the agreement subsequently expires or is terminated without the transaction or event being consummated, and (ii) Participant's employment did not terminate during the period after the agreement and prior to such expiration or termination, for purposes of this Plan it shall be as though such agreement was never executed and no Change in Control event shall be deemed to have occurred as a result of the execution of such agreement.

1.3 "Code" means the Internal Revenue Code of 1986, as amended.

1.4 "Disability" means the Participant's suffering a sickness, accident or injury which has been determined by the carrier of any individual or group disability insurance policy covering the Participant, or by the Social Security Administration, to be a disability rendering the Participant totally and permanently disabled. The Participant must submit proof to the Bank of the carrier's or Social Security Administration's determination upon the request of the Bank.

1.5 "Insured" means the individual whose life is insured.

1.6 "Insurer" means the insurance company issuing the life insurance policy on the life of the insured.

1.7 "Normal Retirement Age" means the Participant's 65^th birthday.

1.8 "Participant" means the employee who is designated by the Board of Directors as eligible to participate in the Plan, elects in writing to participate in the Plan using the form attached hereto as Exhibit A, signs a Split Dollar Endorsement for the Policy in which he or she is the Insured and is provided the death benefit specified in Section 4.2.

1.9 "Policy" or "Policies" means the individual insurance policy (or policies) adopted by the Board of Directors for purposes of insuring a Participant's life under this Plan, including any group term life insurance policy for which the premium is paid by the Bank.

1.10 "Plan" means this instrument, including all amendments thereto.

1.11 "Plan Year" means each consecutive twelve (12) month period commencing with the Effective Date of this Plan.

1.12 "Termination of Employment" means that the Participant ceases to be employed by the Bank for any reason whatsoever other than by reason of a leave of absence, which is approved by the Bank. For purposes of this Plan, if there is a dispute over the employment status of the Participant or the date of the Participant's Termination of Employment, the Bank shall have the sale and absolute right to decide the dispute.

1.13 "Vested Insurance Benefit" means the Bank will provide the Participant with continued insurance coverage from the date of vesting until death, subject to the forfeiture provisions detailed in Section 5.2 and Article 8. Article 5 explains how a Participant achieves vested status.

1.14 “Years of Service” means the number of consecutive twelve (12) month periods of continuous employment with the Bank, including leaves of absences approved by the Bank.

Article 2

Participation

2.1 Eligibility to Participate. The Board of Directors in its sale discretion shall designate from time to time Participants that are eligible to participate in this Plan. The Board may delegate this authority to management.

2.2 Participation. The eligible executive may participate in this Plan by executing an Election to Participate (Exhibit A) and a Split Dollar Endorsement. The Split Dollar Endorsement shall bind the Participant and his or her beneficiaries, assigns and transferees, to the terms and conditions of this Plan. A Participant's participation is limited to only Policies where he or she is the Insured. Exhibit A sets forth the information about the Policy or Policies and maximum Participant benefit under the Plan.

2.3 Termination of Participation. A Participant's rights under this Plan shall cease and his or her participation in this Plan shall terminate if one of the following events occur: (1) the Participant's employment with the Bank is terminated prior the Participant meeting any of the criteria for a Vested Insurance Benefit under Section 5.1 or (2) the Plan or any Participant's rights under the Plan are terminated in accordance with Sections 5.2 or 12.1 of this Plan. In the event that the Bank decides to maintain the Policy after the Participant's termination of participation in the Plan, the Bank shall be the direct beneficiary of the entire death proceeds of the Policy. The Bank may document the Participant's termination from the Plan by indicating the date of termination on Exhibit A. However, the Bank's failure to do so will not be deemed evidence of Participant's continued participation in the Plan.

Article 3

Premium Payments

The Bank shall pay all premiums due on all Policies under this Plan.

Article 4

Policy Ownership/Interests

4.1 Bank Ownership. The Bank shall own the Policies and shall have the right to exercise all incidents of ownership and, subject to Article 7, the Bank may terminate a Policy without the consent of the Insured. With respect to each Policy, the Bank shall be the direct beneficiary of an amount of death proceeds equal to the greatest of: (1) the cash surrender value of the policy; (2) the aggregate premiums paid on the Policy by the Bank less any outstanding indebtedness to the Insurer; or (3) the amount in excess of the Participant's interest specified in Section 4.2. If the Bank owns more than one policy on a Participant, the Policies shall be aggregated with respect to item (3) of this paragraph.

4.2 Participant's Interest. If applicable, the Participant, or the Participant's assignee, shall have the right to designate the beneficiary of the death proceeds of the Policy as specified in Section 4.2.1 or 4.2.2. The Participant shall also have the right to elect and change settlement options by providing written notice to the Bank and the Insurer.

4.2.1 Death Prior to Termination of Employment. If the Participant dies while employed by the Bank, the Participant's beneficiary shall be entitled to a benefit equal to three (3) times the deceased Participant's Base Annual Salary at the date of death; but not in excess of the maximum benefit amount specified in Exhibit A.

4.2.2 Death After Termination of Employment. If, pursuant to Article 5, a terminated Participant has a Vested Insurance Benefit at the date of death, the Participant's beneficiary shall be entitled to a benefit equal to two (2) times the Participant's last Base Annual Salary but not in excess of the maximum benefit amount specified in Exhibit A. If the terminated Participant has not achieved a Vested Insurance Benefit, the Participant's beneficiary will not be entitled to a benefit under this Plan.

Article 5

Vesting

5.1 Vested Insurance Benefit. The Participant shall have a Vested Insurance Benefit equal to the amount specified in Section 4.2 at the earliest of the following events:

5.1.1 Remaining in continuous employment with the Bank until age 65;

5.1.2 Remaining in continuous employment with the Bank until the Participant's age plus Years of Service, when combined, equals or exceeds 70;

5.1.3 Remaining in continuous employment with the Bank for five years from the date of entry into the Plan;

5.1.4 Termination of Employment due to Disability;

5.1.5 Being employed by the Bank at the date a Change in Control occurs; or

5.1.6 At the discretion of the Board of Directors if there are other circumstances not addressed in Sections 5.1.1 through 5.1.5 of this Plan.

5.2 Forfeiture of Benefit. Notwithstanding the provisions of Section 5.1, the Participant will forfeit his or her Vested Insurance Benefit if: (1) the Participant violates any of the provisions detailed in Article 8, (2) in the case of a Disabled Participant who vested pursuant to Section 5.1.3, if such Participant becomes gainfully employed by an entity other than the Bank, or (3) the Participant provides written notice to the Bank declining further participation in the Plan.

Article 6

Imputed Income

The Bank shall impute income to the Participant in an amount equal to the annual cost of current life insurance protection on the life of the Participant measured by the lesser of the Table 2001 rate set forth in Notice 2002-8 (or the corresponding applicable provision of any later Revenue Ruling) or the Insurer's current published premium rate for annually renewable term insurance for standard risks; provided that the Insurer's current published premium rate meets the limitations set forth in Notice 2002-8 (or the corresponding applicable provision of any later Revenue Ruling.) The Bank will provide each Participant with an annual statement of the amount of income reportable by the Participant for federal and state income tax purposes as a result of such imputed income.

Article 7

Comparable Coverage

7.1 Insurance Policies. If a Participant has a Vested Insurance Benefit, the Bank may provide such benefit through the Policies purchased at the commencement of this Plan or may provide comparable insurance coverage to the Participant through whatever means the Bank deems appropriate. If the Participant waives or forfeits his or her right to the Vested Insurance Benefit, the Bank can choose to cancel the Policy or Policies on the Participant, or may continue such coverage and become the direct beneficiary of the entire death proceeds.

7.2 Offer to Purchase. If the Bank discontinues a Policy on a Participant who is employed by the Bank at the date of discontinuance or who has a Vested Insurance Benefit that has not been forfeited, the Bank shall give the Participant at least thirty (30) days to purchase such Policy. The purchase price shall be the cash surrender value of the Policy. Such notification shall be in writing.

Article 8

General Limitations

8.1 Excess Parachute or Golden Parachute Payment. If the payments and benefits pursuant to this Plan, either alone or together with other payments and benefits which the Participant has the right to receive from the Bank, would constitute a "parachute payment" under Section 280G of the Code, the payments and benefits pursuant to this Plan shall be reduced, in the manner determined by the Participant, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under this Plan being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.

8.2 Termination for Cause. Notwithstanding any provision of this Plan to the contrary, the Participant shall forfeit any right to a benefit under this Plan, if the Bank terminate the Participant's employment for cause. Termination of the Participant's employment for "Cause" shall mean termination because of personal dishonesty, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order or material breach of any provision of the Plan. For purposes of this paragraph, no act or failure to act on the Participant's part shall be considered "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the Participant's action or omission was in the best interest of the Bank.

8.3 Removal. Notwithstanding any provision of this Plan to the contrary, the benefit provided under this Plan shall be forfeited if the Participant is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act ("FDIA").

8.4 Competition after Termination of Employment. The Participant shall forfeit his right to any further benefits if the Participant, without the prior written consent of the Bank, violates the following described restrictive covenants.

8.4.1 Non-compete Provision. The Participant shall not, for the term of this Plan and until all benefits have been distributed, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of three percent (3 %) or less in the stock of a publicly traded company):

(i) become employed by, participate in, or be connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the Participant's responsibilities will include providing banking or other financial services within fifty (50) miles of any office maintained by the Bank as of the date of the termination of the Participant's employment;

(ii) participate in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a temporary, part-time or permanent basis, any individual who was employed by the Bank as of the date of termination of the Participant' s employment;

(iii) assist, advise, or serve in any capacity, representative or otherwise, any third party in any action against the Bank or transaction involving the Bank;

(iv) sell, offer to sell, provide banking or other financial services, assist any other person in selling or providing banking or other financial services, or solicit or otherwise compete for, either directly or indirectly, any orders, contract, or accounts for services of a kind or nature like or substantially similar" to the financial services performed or financial products sold by the Bank (the preceding hereinafter referred to as "Services"), to or from any person or entity from whom the Participant or the Bank, to the "knowledge of the Participant provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Participant's employment;

(v) divulge, disclose, or communicate to others in any manner whatsoever, any confidential information of the Bank, to the knowledge of the Participant, including, but not limited to, the names and addresses of customers or prospective customers, of the Bank, as they may have existed from time to time, of work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Bank, earnings or other information concerning the Bank. The restrictions contained in this subparagraph (v) apply to "all information regarding" the Bank, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, all information referred to herein shall not be disclosed unless and until it becomes known to the general public from sources other than the Participant.

8.4.2 Judicial Remedies. In the event of a breach Or threatened breach by the Participant of any provision of these restrictions, the Participant recognizes the substantial and immediate harm that a breach or threatened breach will impose upon the Bank, and further recognizes that in such event monetary damages may be inadequate to fully protect the Bank. Accordingly, in the event of a breach or threatened breach of this Agreement, the Participant consents to the Bank's entitlement to such ex parte, preliminary, interlocutory, temporary or permanent injunctive, or any other equitable relief, protecting and fully enforcing the Bank's rights hereunder and preventing the Participant from further breaching any of his obligations set forth herein. The Participant expressly waives any requirement, based on any statute, rule of procedure, or other source, that the Bank post a bond as a condition of obtaining any of the above-described remedies. Nothing herein shall be construed as prohibiting the Bank from pursuing any other remedies available to the Bank at law or in equity for such breach or threatened breach, including the recovery of damages from the Participant. The Participant expressly acknowledges and agrees that:

(i) the restrictions set forth in Section 8.4.1 hereof are reasonable, in terms of scope, duration, geographic area, and otherwise,

(ii) the protections afforded the Bank in Section 8.4.1 hereof are necessary to protect its legitimate business interest,

(iii) the restrictions set forth in Section 8.4.1 hereof will not be materially adverse to the Participant's employment with the Bank, and (iv) his agreement to observe such restrictions forms a material part of the consideration for this Agreement.

8.4.3 Overbreadth of Restrictive Covenant. It is the intention of the parties that if any restrictive covenant in this Agreement is determined by a court of competent jurisdiction to be overly broad, then the court should enforce such restrictive covenant to the maximum extent permitted under the law as to area, breadth and duration.

8.4.4 Change in Control. The non-compete provision detailed in Section 8.4.1 hereof shall not be enforceable following a Change in Control.

8.5 Suicide or Misstatement. The Participant shall forfeit his benefit under this Plan if the Participant commits suicide within two years after the date of this Plan, or if the insurance company denies coverage for material misstatements of fact made by the Participant on any application for life insurance purchased by the Bank, or any other reason; provided, however that the Bank shall evaluate the reason for the denial, and upon advice of Counsel and in its sole discretion, consider judicially challenging any denial. The Bank shall have no liability to the Participant for any denial of coverage by the insurance company.

Article 9

Assignment

Any Participant may assign without consideration all interests in his or her Policy and in this Plan to any person, entity or trust. In the event a Participant shall transfer all of his/her interest in the Policy, then all of that Participant's interest in his or her Policy and in the Plan shall be vested in his/her transferee, subject to such transferee executing agreements binding them to the provisions of this Plan, who shall be substituted as a party with regard to the benefit hereunder, and that Participant shall have no further interest in his or her benefit under the policy or in this Plan.

Article 10

Insurer

The Insurer shall be bound only by the terms of their corresponding Policy. Any payments the Insurer makes or actions it takes in accordance with a Policy shall fully discharge it from all claims, suits and demands of all persons relating to that Policy. The Insurer shall not be bound by the provisions of this Plan, except to the extent of any endorsement filed with the Insurer. The Insurer shall have the right to rely on the Bank's representations with regard to any definitions, interpretations, or Policy interests as specified under this Plan.

Article 11

Claims Procedure

11.1 Claims Procedure. A Participant or beneficiary (" claimant") who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

11.1.1 Initiation -Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

11.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Bank expect to render their decision.

11.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

11.1.3.1 The specific reasons for the denial

11.1.3.2 A reference to the specific provisions of the Plan on which the denial is based,

11.1.3.3 A description of any additional information or· material necessary for the claimant to perfect the claim and an explanation of why it is needed,

11.1.3.4 An explanation of the Plan's review procedures and the time limits applicable to such procedures, and

11.1.3.5 A statement of the claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

Article 12

Amendment or Termination of Plan

12.1 Non-Vested Insurance Benefit. Unless a Participant has a Vested Insurance Benefit pursuant to Section 5.1, the Bank may amend or terminate the Plan at any time, or may amend or terminate a Participant's rights under the Plan at any time prior to a Participant's death by written notice to the Participant.

12.2 Vested Insurance Benefit. If a Participant has a Vested Insurance Benefit, the Bank may amend or terminate the Plan for that Participant only if: (1) continuation of the Plan would cause significant financial harm to the Bank and (2) the Participant agrees to such action.

Article 13

Miscellaneous

13.1 Administrator. The Bank shall be the administrator of this Plan. The Bank may delegate to others certain aspects of the management and operational responsibilities including the service of advisors and the delegation of ministerial duties to qualified individuals.

13.2 Administration. The Bank shall have powers which are necessary to administer this Plan, including but not limited to:

13.2.1 Interpreting the provisions of the Plan;

13.2.2 Establishing and revising the method of accounting for the Plan;

13.2.3 Maintaining a record of benefit payments; and

13.2.4 Establishing rules and prescribing any forms necessary or desirable to administer the Plan.

13.3 Applicable Law. The Plan and all rights hereunder shall be governed by the laws of the State of Ohio, except to the extent preempted by the laws of the United States of America.

13.4 Binding Effect. This Plan shall bind the Participant and the Bank, and their beneficiaries, survivors, executors, successors, administrators and transferees.

13.5 Entire Agreement. This Plan constitutes the entire agreement between the Bank and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.

13.6 Right of Offset. The Bank shall have the right to offset the benefits against any unpaid obligation the Participant may have with the Bank.

13.7 No Guarantee of Employment. This Plan is not an employment policy or contract. It does not give the Participant the right to remain an employee of the Bank, nor does it interfere with the Bank's right to terminate the Participant's employment. It also does not require the Participant to remain in employment nor interfere with the Participant's right to terminate employment at any time.

13.8 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Group Term Carve-Out Plan by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be. given either by delivering the same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his or her last known address as shown on the records of the Bank. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.

13.9 Reorganization. The Bank shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Bank under this Plan. Upon the occurrence of such event, the term "Bank" as used in this Plan shall be deemed to refer to the successor or survivor company.

13.10 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Plan.

13.11 Unfunded Arrangement. The Participant and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Plan. The benefits represent the mere promise by the Bank to pay such benefits. Any insurance on the Participant's life is a general asset of the Bank to which the Participant and beneficiary have no preferred or secured claim.

IN WITNESS WHEREOF, the Bank executes this Plan as of the date indicated above.

ATTEST:	BANK:
	WAYNE SAVINGS COMMUNITY BANK
/s/Michael C. Anderson	/s/Charles F. Finn
Signature	Signature
Executive Vice President and CFO	Chairman, President and CEO
Title	Title

EX-10.8

Exhibit 10.8

Wayne Savings Bancshares, Inc.

Summary of Cash Incentive Bonus Plan

An informal bonus arrangement that was implemented by the board of directors in 2006, the Cash Incentive Bonus Plan may be terminated or modified by the board at any time. Administered by the board’s compensation committee, the Cash Incentive Bonus Plan provides for an annual cash bonus for executive officers if they achieve annual performance goals established by the committee. The plan does not allow for payment of awards in any form other than cash, nor does it allow for deferral of plan awards. Any officer or employee designated by the compensation committee is eligible to receive a payment under the plan. Cash payments under the plan are made in the first quarter of the year if the established goals for the preceding year are achieved.

An executive’s maximum bonus under the Cash Incentive Bonus Plan is 25% of his or her salary. Although the board of directors may change any and all features of the plan at any time, for the executive officers the performance categories currently consist of a net income goal, a return-on-equity goal, and a discretionary goal having to do with the board’s or the compensation committee’s subjective assessment of an executive’s performance. Currently, the performance categories and potential awards are as follows –

Maximum Cash Incentive Bonus of 10% of Salary: annual net income goal		Maximum Cash Incentive Bonus of 10% of Salary: return on equity of Ohio-based, publicly traded . . .				Maximum Cash Incentive Bonus of 5% of Salary: discretionary factor for individual performance
for achieving budgeted net income goal	for exceeding the budgeted net income goal	savings associations and holding companies		banks and holding companies
		for achieving the median return on equity	for exceeding by 15% or more the median return on equity	for achieving the median return on equity	for exceeding by 15% or more the median return on equity
cash incentive bonus of 5% of salary	cash incentive bonus of an additional 1% of salary for every 5% increment of net income over the goal, up to a maximum of an additional 5% of salary	cash incentive bonus of 2% of salary	cash incentive bonus of 3% of salary	cash incentive bonus of 2% of salary	cash incentive bonus of 3% of salary	cash incentive bonus of up to 5% of salary

At or about the beginning of each year, the board of directors establishes in the budget approval process the net income goal for the President and Chief Executive Officer, the Executive Vice President and Chief Operating Officer, the Senior Vice President and Chief Financial Officer, and other officers selected by the compensation committee. Individual performance goals also may be established at that time for purposes of the compensation committee’s subjective evaluation of an individual executive’s performance, but the committee’s evaluation remains subjective and is not dependent on specific performance goals being established for an executive in advance. Data concerning the median return on equity of Ohio-based banks, savings associations, and financial institution holding companies are readily available to the committee from commercial sources, such as SNL Financial in Charlottesville, Virginia, from industry trade groups, and from other sources.

EX-31.1

Exhibit 31.1

Pursuant to Rule 13a-14(a) and 15d-14(a)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Certification of the Chief Executive Officer

I, Rod C. Steiger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wayne Savings Bancshares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2013	/s/Rod C. Steiger
Date	Rod C. Steiger
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Pursuant to Rule 13a-14(a) and 15d-14(a)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Certification of the Chief financial Officer

I, Myron Swartzentruber, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wayne Savings Bancshares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2013	/s/Myron Swartzentruber
Date	Myron Swartzentruber
	Senior Vice President and
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

I, Rod C. Steiger, President and Chief Executive Officer and Myron Swartzentruber, Senior Vice President and Chief Financial Officer, of Wayne Savings Bancshares, Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2013, (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 10, 2013	/s/Rod C. Steiger
Date	Rod C. Steiger
	President and Chief Executive Officer
May 10, 2013	/s/Myron Swartzentruber
Date	Myron Swartzentruber
	Senior Vice President and
	Chief Financial Officer

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Goodwill And Intangible Assets Details
Goodwill	$ 1,719	$ 1,719
Other intangible assets - gross	974	974
Other intangible assets - amortization	(869)	(846)
Total	$ 1,824	$ 1,847

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Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Carrying Amount
Financial assets:
Cash and cash equivalents	$ 9,962	$ 12,055
Held-to-maturity securities	5,333	3,748
Loans, net of allowance for loan losses	246,910	247,849
Federal Home Loan Bank stock	5,025	5,025
Interest receivable	1,420	1,228
Financial liabilities:
Deposits	326,703	327,737
Other Short Term Borrowings	5,975	7,077
Federal Home Loan Bank Allowances	21,247	21,217
Advance Payments by Borrowers for Taxes and Insurance	655	1,069
Interest Payable	54	51
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	9,962	12,055
Held-to-maturity securities
Loans, net of allowance for loan losses
Federal Home Loan Bank stock
Interest receivable
Financial liabilities:
Deposits
Other Short Term Borrowings
Federal Home Loan Bank Allowances
Advance Payments by Borrowers for Taxes and Insurance
Interest Payable
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and cash equivalents
Held-to-maturity securities	5,311	3,740
Loans, net of allowance for loan losses
Federal Home Loan Bank stock	5,025	5,025
Interest receivable	1,420	1,228
Financial liabilities:
Deposits	313,654	317,312
Other Short Term Borrowings	5,975	7,077
Federal Home Loan Bank Allowances	22,023	22,048
Advance Payments by Borrowers for Taxes and Insurance	655	1,069
Interest Payable	54	51
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents
Held-to-maturity securities
Loans, net of allowance for loan losses	259,591	259,986
Federal Home Loan Bank stock
Interest receivable
Financial liabilities:
Deposits
Other Short Term Borrowings
Federal Home Loan Bank Allowances
Advance Payments by Borrowers for Taxes and Insurance
Interest Payable

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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Collateral-dependent impaired loans		$ 2,437
Foreclosed assets		16
Fair Value measured on a Non-Recurring Basis | Fair value
Collateral-dependent impaired loans	344	2,437
Foreclosed assets		16
Fair Value measured on a Non-Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Collateral-dependent impaired loans
Foreclosed assets
Fair Value measured on a Non-Recurring Basis | Significant Other Observable Inputs (Level 2)
Collateral-dependent impaired loans
Foreclosed assets
Fair Value measured on a Non-Recurring Basis | Significant Unobservable Inputs (Level 3)
Collateral-dependent impaired loans	344	2,437
Foreclosed assets		$ 16

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Credit Quality of Loans and Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012		Mar. 31, 2012
Loans Receivable, gross	$ 252,848		$ 254,393		$ 254,393
One-to-four family residential
Loans Receivable, gross	161,706	[1]	160,910	[1]	160,910
All other mortgage loans
Loans Receivable, gross	79,026	[1]	77,721	[1]	77,721
Commercial business loans
Loans Receivable, gross	10,707	[1]	14,245	[1]	14,245
Consumer loans
Loans Receivable, gross	1,409	[1]	1,517	[1]	1,517
One-to-four family residential | Pass (Risk 1-4)
Loans Receivable, gross	152,244	[1]	151,749	[1]
One-to-four family residential | Special Mention (Risk 5)
Loans Receivable, gross	700	[1]	708	[1]
One-to-four family residential | Substandard (Risk 6)
Loans Receivable, gross	8,762	[1]	8,453	[1]
All other mortgage loans | Pass (Risk 1-4)
Loans Receivable, gross	71,363	[1]	68,949	[1]
All other mortgage loans | Special Mention (Risk 5)
Loans Receivable, gross	2,433	[1]	2,934	[1]
All other mortgage loans | Substandard (Risk 6)
Loans Receivable, gross	5,230	[1]	5,838	[1]
Commercial business loans | Pass (Risk 1-4)
Loans Receivable, gross	10,512	[1]	14,034	[1]
Commercial business loans | Special Mention (Risk 5)
Loans Receivable, gross	24	[1]	26	[1]
Commercial business loans | Substandard (Risk 6)
Loans Receivable, gross	171	[1]	185	[1]
Consumer loans | Pass (Risk 1-4)
Loans Receivable, gross	1,407	[1]	1,513	[1]
Consumer loans | Special Mention (Risk 5)
Loans Receivable, gross		[1]		[1]
Consumer loans | Substandard (Risk 6)
Loans Receivable, gross	$ 2	[1]	$ 4	[1]

[1] * Ratings are generally assigned to consumer and residential mortgage loans on a "pass" or "fail" basis, where "fail" results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank's loan policy that produces a risk rating as described below. Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds. Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive. Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization. Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies. Risk 5 or "Special Mention," also known as "watch," has potential weakness that deserves Management's close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral. Risk 6 or "Substandard" loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower's credit strength with limited credit access and all non-performing loans. Risk 7 or "Doubtful" loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge-off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income Tables

Schedule of Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	Net Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Net Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income
	(In thousands)
March 31, 2013	$	3,175	$	(246	)	$	(1,096	)	$	(706	)	$	1,127
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

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Stock Option Plan (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Number of options:
Number of Options outstanding, beginning	58,908	63,408
Number of Options granted
Number of Options exercised
Number of Options forfeited or expired	17,704	4,500
Number of Options outstanding, ending	41,204	58,908
Number of Options exercisable	41,204	58,908
Weighted Average Exercise Price of Options outstanding, beginning	$ 13.95	$ 13.95
Weighted Average Exercise Price of Options granted
Weighted Average Exercise Price of Options exercised
Weighted Average Exercise Price of Options forfeited or expired	$ 13.95	$ 13.95
Weighted Average Exercise Price of Options outstanding, ending	$ 13.95	$ 13.95
Weighted Average Exercise Price of Options exercisable	$ 13.95	$ 13.95
Weighted Average Remaining Contractual Term of Options outstanding	0 years 5 months 1 day

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Credit Quality of Loans and Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013 N	Dec. 31, 2012 N
One To Four Family Residential
Number of Loans	1	2
Pre-modification Unpaid Principal Balance	$ 113	$ 538
Post- modification Unpaid Principal Balance	113	538
All other mortgage loans
Number of Loans	1
Pre-modification Unpaid Principal Balance	576
Post- modification Unpaid Principal Balance	$ 576

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended			3 Months Ended
	Dec. 31, 2012	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Fair Value measured on a Non-Recurring Basis	Dec. 31, 2012 Significant Unobservable Inputs (Level 3) Fair Value measured on a Non-Recurring Basis	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Fair Value measured on a Non-Recurring Basis Impaired loans
Collateral-dependent impaired loans	$ 2,437	$ 344	$ 2,437	$ 344
Foreclosed assets	$ 16		$ 16
Valuation Technique	Market comparable properties			Market comparable properties
Unobservable Input	Selling Costs			Selling Costs; Sheriff's sale discount
Range (Weighted Average)	Selling Costs: 10%			Selling Costs: 10%; Sheriff's sale discount 37%

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Credit Quality of Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2013

Credit Quality Of Loans And Allowance For Loan Losses

Credit Quality of Loans and Allowance for Loan Losses

Note 4:          Credit Quality of Loans and the Allowance for Loan Losses

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan.

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in process of collection. Past due status is determined based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current for a period of six months and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The risk characteristics of each portfolio segment are as follows:

Residential Real Estate Loans

For residential mortgage loans that are secured by one-to-four family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in one-to-four family residences. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

All Other Mortgage Loans

All other mortgage loans consist of residential construction loans, nonresidential real estate loans, land loans and multi-family real estate loans.

Residential construction loan proceeds are disbursed in increments as construction progresses and as inspections warrant. Construction loans are typically structured as permanent one-to-four family loans originated by the Company with a 12-month construction phase. Accordingly, upon completion of the construction phase, there is no change in interest rate or term to maturity of the original construction loan, nor is a new permanent loan originated. These loans are generally owner occupied and the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.

Nonresidential real estate loans are negotiated on a case by case basis. Loans secured by nonresidential real estate generally involve a greater degree of risk than one-to-four family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by nonresidential real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

The Company also originates a limited number of land loans secured by individual improved and unimproved lots for future residential construction. In addition, the Company originates loans to commercial customers with land held as the collateral.

Multi-family real estate loans generally involve a greater degree of credit risk than one-to-four family residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income-producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family real estate is typically dependent upon the successful operation of the related real estate property. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Commercial Business Loans

Commercial business loans carry a higher degree of risk than one-to-four family residential loans. Such lending typically involves large loan balances concentrated in a single borrower or groups of related borrowers for rental or business properties. In addition, the payment experience on loans secured by income-producing properties is typically dependent on the success of the operation of the related project and thus is typically affected by adverse conditions in the real estate market and in the economy. The Company originates commercial loans generally in the $50,000 to $1,000,000 range with the majority of these loans being under $500,000. Commercial loans are generally underwritten based on the borrower’s ability to pay and assets such as buildings, land and equipment are taken as additional loan collateral. Each loan is evaluated for a level of risk and assigned a rating from “1” (the highest quality rating) to “7” (the lowest quality rating).

Consumer Loans

Consumer loans entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as automobiles, mobile homes, boats, and recreational vehicles. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the lack of demand for used automobiles.

The following presents by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2013 and 2012:

Three months ended March 31, 2013	One-to-four family residential			All other mortgage loans			Commercial business loans			Consumer loans			Total
	(In thousands)
Beginning balance	$	1,122		$	1,925		$	275		$	6		$	3,328
Provision (credit) charged to expense		(61	)		(18	)		(63	)		1			(141	)
Losses charged off		(34	)		(176	)		—			(2	)		(212	)
Recoveries		—			—			1			1			2
Ending balance	$	1,027		$	1,731		$	213		$	6		$	2,977

Three months ended March 31, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,128		$	2,547		$	169	$	10		$	3,854
Provision charged to expense		185			598			5		(1	)		787
Losses charged off		(65	)		(5	)		—		—			(70	)
Recoveries		3			—			—		—			3
Ending balance	$	1,251		$	3,140		$	174	$	9		$	4,574

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	232	$	950	$	87	$	—	$	1,269
Collectively evaluated for impairment		795		781		126		6		1,708
Total allowance for loan losses	$	1,027	$	1,731	$	213	$	6	$	2,977
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	7,009	$	5,230	$	171	$	—	$	12,410
Collectively evaluated for impairment		154,697		73,796		10,536		1,409		240,438
Total balance	$	161,706	$	79,026	$	10,707	$	1,409	$	252,848

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	248	$	1,074	$	100	$	—	$	1,422
Collectively evaluated for impairment		874		851		175		6		1,906
Total allowance for loan losses	$	1,122	$	1,925	$	275	$	6	$	3,328
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,878	$	5,837	$	185	$	—	$	12,900
Collectively evaluated for impairment		154,032		71,884		14,060		1,517		241,493
Total balance	$	160,910	$	77,721	$	14,245	$	1,517	$	254,393

Total loans in the above tables do not include deferred loan origination fees of $610,000 and $569,000 or loans in process of $2.4 million and $2.6 million, respectively, for March 31, 2013 and December 31, 2012.

The following tables present the credit risk profile of the Bank’s loan portfolio based on rating category and payment activity as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	152,244	$	71,363	$	10,512	$	1,407
Special Mention (Risk 5)		700		2,433		24		—
Substandard (Risk 6)		8,762		5,230		171		2
Total	$	161,706	$	79,026	$	10,707	$	1,409

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	151,749	$	68,949	$	14,034	$	1,513
Special Mention (Risk 5)		708		2,934		26		—
Substandard (Risk 6)		8,453		5,838		185		4
Total	$	160,910	$	77,721	$	14,245	$	1,517

* Ratings are generally assigned to consumer and residential mortgage loans on a “pass” or “fail” basis, where “fail” results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank’s loan policy that produces a risk rating as described below.

Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds.

Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive.

Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization.

Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies.

Risk 5 or “Special Mention,” also known as “watch,” has potential weakness that deserves Management’s close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral.

Risk 6 or “Substandard” loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower’s credit strength with limited credit access and all non-performing loans.

Risk 7 or “Doubtful” loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge- off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

The following tables present the Bank’s loan portfolio aging analysis for March 31, 2013 and December 31, 2012:

March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	207	$	234	$	981	$	1,422	$	160,284	$	161,706	$	—
All other mortgage loans		—		—		1,129		1,129		77,897		79,026		—
Commercial business loans		—		—		—		—		10,707		10,707		—
Consumer loans		2		—		—		2		1,407		1,409		—
Total	$	209	$	234	$	2,110	$	2,553	$	250,295	$	252,848	$	—

December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	1,049	$	339	$	1,190	$	2,578	$	158,332	$	160,910	$	—
All other mortgage loans		1,544		—		1,309		2,853		74,868		77,721		—
Commercial business loans		—		—		—		—		14,245		14,245		—
Consumer loans		1		2		2		5		1,512		1,517		—
Total	$	2,594	$	341	$	2,501	$	5,436	$	248,957	$	254,393	$	—

Non-accrual loans were comprised of the following at:

Non-accrual loans	March 31, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,377	$	2,097
Nonresidential real estate loans		2,903		3,123
All other mortgage loans		—		—
Commercial business loans		30		32
Consumer loans		2		4
Total	$	5,312	$	5,256

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. Information with respect to the Company’s impaired loans at March 31, 2013 and December 31, 2012 in combination with activity for the three months ended March 31, 2013 and 2012 is presented below:

	As of March 31, 2013						Three months ended March 31, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,653	$	5,653	$	—	$	5,620	$	78
All other mortgage loans		2,375		2,375		—		2,578		29
Commercial business loans		84		87		—		85		1
Loans with a specific valuation allowance
One-to-four family residential loans		1,356		1,356		232		1,324		13
All other mortgage loans		2,855		3,627		950		2,956		9
Commercial business loans		87		87		87		94		1
Total:
One-to-four family residential loans	$	7,009	$	7,009	$	232	$	6,944	$	91
All other mortgage loans		5,230		6,002		950		5,534		38
Commercial business loans		171		174		87		178		2
	$	12,410	$	13,185	$	1,269	$	12,655	$	131

	As of December 31, 2012						Three months ended March 31, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,587	$	5,587	$	—	$	3,232	$	39
All other mortgage loans		2,781		2,781		—		1,923		27
Commercial business loans		85		85		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		821		25
All other mortgage loans		3,056		3,652		1,074		5,248		20
Commercial business loans		100		100		100		71		—
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,053	$	64
All other mortgage loans		5,837		6,433		1,074		7,171		47
Commercial business loans		185		185		100		71		—
	$	12,900	$	13,496	$	1,422	$	11,295	$	111

The interest income recognized in the above tables reflects interest income recognized and is not materially different from the cash basis method.

All the TDR classifications listed below occurred as concessions were granted to borrowers experiencing financial difficulties. In 2013, the concessions made to the borrowers included both a reduction in the stated interest rate below the market rate of similar debt and an extension of the maturity date. The TDR classifications which occurred in the March 31, 2012 period were both due to an effective interest rate below the market interest rate of similar debt. Each TDR has been individually evaluated for impairment with the appropriate specific valuation allowance included in the allowance for loan losses calculation.There were no TDR classifications which defaulted during the three month periods ended March 31, 2013 and 2012. The Company considers TDRs that become 90 days or more past due under modified terms as subsequently defaulted.

	Quarter-to-Date
Troubled Debt Restructurings	Number of loans	Pre-modification Unpaid Principal Balance		Post-modification Unpaid Principal Balance
	(dollars in thousands)
March 31, 2013
One-to-four family residential loans	1	$	113	$	113
All other mortgage loans	1		576		576
March 31, 2012
One-to-four family residential loans	2	$	538	$	538

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Regulatory Matters (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Regulatory Matters Details
Tier 1 Capital	$ 35,223	$ 34,774
Tier 1 Capital (to average assets) ratio	8.80%	8.70%
Minimum amount of Tier 1 Capital for adequacy purposes	15,969	16,069
Minimum amount of Tier 1 Capital for adequacy purposes, ratio	4.00%	4.00%
Minimum Tier 1 Capital required to be well-capitalized	19,961	20,086
Minimum Tier 1 Capital required to be well-capitalized, ratio	5.00%	5.00%
Tier 1 Capital	35,223	34,774
Tier 1 Capital (to risk-weighted assets) ratio	14.90%	14.70%
Minimum amount of Tier 1 Capital for adequacy purposes	9,473	9,458
Minimum amount of Tier 1 Capital for adequacy purposes, ratio	4.00%	4.00%
Minimum Tier 1 Capital required to be well-capitalized	14,210	14,187
Minimum Tier 1 Capital required to be well-capitalized, ratio	6.00%	6.00%
Total Capital	38,184	37,734
Total Capital (to risk-weighted assets) ratio	16.10%	16.00%
Minimum amount of capital for adequacy purposes	18,947	18,916
Minimum amount of capital for adequacy purposes, ratio	8.00%	8.00%
Minimum Capital required to be well-capitalized	$ 23,683	$ 23,644
Minimum Capital required to be well-capitalized, ratio	10.00%	10.00%

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Available-for-sale- Debt maturities, Amortized Cost
One to five years	$ 2,784
Five to ten years	4,432
After ten Years	15,029
Subtotal	22,245
Totals	107,052
Available for Sale Securities, Fair Values
One to five years	2,981
Five to ten years	4,675
After ten Years	15,988
Subtotal	23,644
Totals	110,228
Held to Maturity securities, Amortized Cost
One to five years
Five to ten years	2,034
After ten Years	1,845
Subtotal	3,879
Totals	5,333
Held to Maturity securities, Fair Values
One to five years
Five to ten years	2,021
After ten Years	1,784
Subtotal	3,805
Total	5,311
Mortgage-backed securities of government sponsored entities
Available-for-sale- Debt maturities, Amortized Cost
Maturities without single maturity date	83,839
Available for Sale Securities, Fair Values
Maturities without single maturity date	85,582
Held to Maturity securities, Amortized Cost
Maturities without single maturity date	1,454
Held to Maturity securities, Fair Values
Maturities without single maturity date	1,506
Private-label collateralized mortgage obligations
Available-for-sale- Debt maturities, Amortized Cost
Maturities without single maturity date	968
Available for Sale Securities, Fair Values
Maturities without single maturity date	1,002
Held to Maturity securities, Amortized Cost
Maturities without single maturity date
Held to Maturity securities, Fair Values
Maturities without single maturity date

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Amortized Cost	$ 107,052	$ 108,020
Gross Unrealized Gains	3,327	3,606
Gross Unrealized Losses	151	108
Approximate Fair Value	110,228	111,518
Amortized Cost	5,333	3,748
Gross Unrealized Gains	53	46
Gross Unrealized Losses	75	54
Approximate Fair Value	5,311	3,740
U.S. government agencies
Amortized Cost	149	155
Gross Unrealized Gains	1	1
Gross Unrealized Losses		1
Approximate Fair Value	150	155
Amortized Cost	123	130
Gross Unrealized Gains	1	1
Gross Unrealized Losses
Approximate Fair Value	124	131
Mortgage-backed securities of government sponsored entities
Amortized Cost	83,839	83,956
Gross Unrealized Gains	1,873	1,979
Gross Unrealized Losses	130	105
Approximate Fair Value	85,582	85,830
Amortized Cost	1,454	1,469
Gross Unrealized Gains	52	45
Gross Unrealized Losses
Approximate Fair Value	1,506	1,514
Private-label collateralized mortgage obligations
Amortized Cost	968	1,067
Gross Unrealized Gains	34	39
Gross Unrealized Losses
Approximate Fair Value	1,002	1,106
State and political subdivisions
Amortized Cost	22,096	22,842
Gross Unrealized Gains	1,419	1,587
Gross Unrealized Losses	21	2
Approximate Fair Value	23,494	24,427
Amortized Cost	3,756	2,149
Gross Unrealized Gains
Gross Unrealized Losses	75	54
Approximate Fair Value	$ 3,681	$ 2,095

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income Details
Net unrealized gain on securities available-for-sale	$ 3,175	$ 3,498
Net unrealized loss for unfunded status of split-dollar life insurance plan liability (tax free)	(246)	(246)
Net unrealized loss for unfunded status of defined benefit plan liability	(1,096)	(1,096)
Tax effect	(706)	(816)
Net-of-tax amount	$ 1,127	$ 1,340

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities with unrealized loss position
Less than 12 Months, Fair Value	$ 22,536	$ 16,798
Less than 12 Months, Unrealized Losses	226	139
12 Months or More, Fair Value		2,173
12 Months or More, Unrealized Losses		23
Total, Fair Value	22,536	18,971
Total, Unrealized Losses	226	162
Mortgage-backed securities of government sponsored entities
Securities with unrealized loss position
Less than 12 Months, Fair Value	18,136	13,636
Less than 12 Months, Unrealized Losses	130	83
12 Months or More, Fair Value		2,107
12 Months or More, Unrealized Losses		22
Total, Fair Value	18,136	15,743
Total, Unrealized Losses	130	105
State and political subdivisions
Securities with unrealized loss position
Less than 12 Months, Fair Value	4,400	3,162
Less than 12 Months, Unrealized Losses	96	56
12 Months or More, Fair Value
12 Months or More, Unrealized Losses
Total, Fair Value	4,400	3,162
Total, Unrealized Losses	96	56
U.S. government agencies
Securities with unrealized loss position
Less than 12 Months, Fair Value
Less than 12 Months, Unrealized Losses
12 Months or More, Fair Value		66
12 Months or More, Unrealized Losses		1
Total, Fair Value		66
Total, Unrealized Losses		$ 1

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Credit Quality of Loans and Allowance for Loan Losses (Details Narrative) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Credit Quality Of Loans And Allowance For Loan Losses Details Narrative
Deferred loan origination fees	$ 610	$ 569
Loans in process	$ 2,400	$ 2,600

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Securities

3 Months Ended

Mar. 31, 2013

SecuritiesAbstract

Securities

Note 3:          Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
March 31, 2013:
U.S. government agencies	$	149	$	1	$	—	$	150
Mortgage-backed securities of government sponsored entities		83,839		1,873		130		85,582
Private-label collateralized mortgage obligations		968		34				1,002
State and political subdivisions		22,096		1,419		21		23,494
Totals	$	107,052	$	3,327	$	151	$	110,228

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Available-for-sale securities	(In thousands)
December 31, 2012:
U.S. government agencies	$	155	$	1	$	1	$	155
Mortgage-backed securities of government sponsored entities		83,956		1,979		105		85,830
Private-label collateralized mortgage obligations		1,067		39		—		1,106
State and political subdivisions		22,842		1,587		2		24,427
Totals	$	108,020	$	3,606	$	108	$	111,518

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
March 31, 2013:
U.S. government agencies	$	123	$	1	$	—	$	124
Mortgage-backed securities of government sponsored entities		1,454		52		—		1,506
State and political subdivisions		3,756		—		75		3,681
Totals	$	5,333	$	53	$	75	$	5,311

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Held-to-maturity Securities:	(In thousands)
December 31, 2012:
U.S. government agencies	$	130	$	1	$	—	$	131
Mortgage-backed securities of government sponsored entities		1,469		45		—		1,514
State and political subdivisions		2,149		—		54		2,095
Totals	$	3,748	$	46	$	54	$	3,740

Amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2013 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized cost		Fair Value		Amortized cost		Fair Value
	(In thousands)
One to five years	$	2,784	$	2,981	$	—	$	—
Five to ten years		4,432		4,675		2,034		2,021
After ten years		15,029		15,988		1,845		1,784
		22,245		23,644		3,879		3,805
Mortgage-backed securities of government sponsored entities		83,839		85,582		1,454		1,506
Private-label collateralized mortgage obligations		968		1,002		—		—
Totals	$	107,052	$	110,228	$	5,333	$	5,311

The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $54.5 million and $60.4 million at March 31, 2013 and December 31, 2012, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at March 31, 2013 and December 31, 2012, was $22.5 million and $19.0 million, which represented approximately 20% and 17%, respectively, of the Company’s aggregate amortized cost of the available-for-sale and held-to-maturity investment portfolios. These declines resulted primarily from changes in market interest rates.

Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary at March 31, 2013.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows the gross unrealized losses and fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	March 31, 2013
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Mortgage-backed securities of government sponsored entities	$	18,136	$	130	$	—	$	—	$	18,136	$	130
State and political  subdivisions		4,400		96		—		—		4,400		96
Total temporarily impaired securities	$	22,536	$	226	$	—	$	—	$	22,536	$	226

	December 31, 2012
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government agencies	$	—	$	—	$	66	$	1	$	66	$	1
Mortgage-backed securities of government sponsored entities		13,636		83		2,107		22		15,743		105
State and political subdivisions		3,162		56		—		—		3,162		56
Total temporarily impaired securities	$	16,798	$	139	$	2,173	$	23	$	18,971	$	162

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Credit Quality of Loans and Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Activity in the allowance for loan losses by portfolio segment
Beginning balance	$ 3,328		$ 3,854
Provision (credit) charged to expense	(141)		787
Losses Charged Off	(212)		(70)
Recoveries	2		3
Total allowance for loan losses	2,977		4,574
Individually evaluated for impairment	1,269		1,422
Collectively evaluated for impairment	1,708		1,906
Individually evaluated for impairment	12,410		12,900
Collectively evaluated for impairment	240,438		241,493
Loans Receivable, gross	252,848		254,393	254,393
One-to-four family residential
Activity in the allowance for loan losses by portfolio segment
Beginning balance	1,122		1,128
Provision (credit) charged to expense	(61)		185
Losses Charged Off	(34)		(65)
Recoveries			3
Total allowance for loan losses	1,027		1,251
Individually evaluated for impairment	232		248
Collectively evaluated for impairment	795		874
Individually evaluated for impairment	7,009		6,878
Collectively evaluated for impairment	154,697		154,032
Loans Receivable, gross	161,706	[1]	160,910	160,910	[1]
All other mortgage loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	1,925		2,547
Provision (credit) charged to expense	(18)		598
Losses Charged Off	(176)		(5)
Recoveries
Total allowance for loan losses	1,731		3,140
Individually evaluated for impairment	950		1,074
Collectively evaluated for impairment	781		851
Individually evaluated for impairment	5,230		5,837
Collectively evaluated for impairment	73,796		71,884
Loans Receivable, gross	79,026	[1]	77,721	77,721	[1]
Commercial business loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	275		169
Provision (credit) charged to expense	(63)		5
Losses Charged Off
Recoveries	1
Total allowance for loan losses	213		174
Individually evaluated for impairment	87		100
Collectively evaluated for impairment	126		175
Individually evaluated for impairment	171		185
Collectively evaluated for impairment	10,536		14,060
Loans Receivable, gross	10,707	[1]	14,245	14,245	[1]
Consumer loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	6		10
Provision (credit) charged to expense	1		(1)
Losses Charged Off	(2)
Recoveries	1
Total allowance for loan losses	6		9
Individually evaluated for impairment
Collectively evaluated for impairment	6		6
Individually evaluated for impairment
Collectively evaluated for impairment	1,409		1,517
Loans Receivable, gross	$ 1,409	[1]	$ 1,517	$ 1,517	[1]

[1] * Ratings are generally assigned to consumer and residential mortgage loans on a "pass" or "fail" basis, where "fail" results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank's loan policy that produces a risk rating as described below. Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds. Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive. Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization. Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies. Risk 5 or "Special Mention," also known as "watch," has potential weakness that deserves Management's close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral. Risk 6 or "Substandard" loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower's credit strength with limited credit access and all non-performing loans. Risk 7 or "Doubtful" loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge-off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

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Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Earnings Per Share Details
Weighted-average common shares outstanding (basic)	2,902,644	2,938,660
Dilutive effect of assumed exercise of stock options
Weighted-average common shares outstanding (diluted)	2,902,644	2,938,660

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 6,095	$ 7,303
Interest-bearing demand deposits	3,867	4,752
Cash and cash equivalents	9,962	12,055
Available-for-sale securities	110,228	111,518
Held-to-maturity securities	5,333	3,748
Loans, net of allowance for loan losses of $2,977 and $3,328 at March 31, 2013 and December 31, 2012, respectively	246,910	247,849
Premises and equipment	7,014	7,088
Federal Home Loan Bank stock	5,025	5,025
Foreclosed assets held for sale - net	193	318
Accrued interest receivable	1,420	1,228
Bank-owned life insurance	8,793	8,723
Goodwill	1,719	1,719
Other intangible assets	105	128
Prepaid Federal Deposit Insurance Corporation premiums	520	596
Other assets	2,270	1,944
Prepaid federal income taxes	143	178
Total assets	399,635	402,117
Liabilities
Demand	77,412	80,668
Savings and money market	117,457	112,229
Time	131,834	134,840
Total deposits	326,703	327,737
Other short-term borrowings	5,975	7,077
Federal Home Loan Bank advances	21,247	21,217
Interest payable and other liabilities	4,673	5,173
Deferred federal income taxes	1,196	1,128
Total liabilities	359,794	362,332
Commitments and Contingencies
Stockholders' Equity
Preferred stock, 500,000 shares of $.10 par value authorized; no shares issued
Common stock, $.10 par value; authorized 9,000,000 shares; 3,978,731 shares issued	398	398
Additional paid-in capital	35,975	35,975
Retained earnings	17,942	17,567
Shares acquired by ESOP	(552)	(572)
Accumulated other comprehensive income	1,127	1,340
Treasury stock, at cost - 1,029,854 and 1,017,385 shares at March 31, 2013 and December 31, 2012, respectively	(15,049)	(14,923)
Total stockholders' equity	39,841	39,785
Total liabilities and stockholders' equity	$ 399,635	$ 402,117

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Investment securities available for sale, at fair value	$ 110,228	$ 111,518
U.S. government agencies
Investment securities available for sale, at fair value	150	155
Mortgage-backed securities of government sponsored entities
Investment securities available for sale, at fair value	85,582	85,830
Private-label collateralized mortgage obligations
Investment securities available for sale, at fair value	1,002	1,106
State and political subdivisions
Investment securities available for sale, at fair value	23,494	24,427
Fair Value measured on a Recurring Basis | Fair value | U.S. government agencies
Investment securities available for sale, at fair value	150	155
Fair Value measured on a Recurring Basis | Fair value | Mortgage-backed securities of government sponsored entities
Investment securities available for sale, at fair value	85,582	85,830
Fair Value measured on a Recurring Basis | Fair value | Private-label collateralized mortgage obligations
Investment securities available for sale, at fair value	1,002	1,106
Fair Value measured on a Recurring Basis | Fair value | State and political subdivisions
Investment securities available for sale, at fair value	23,494	24,427
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government agencies
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed securities of government sponsored entities
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Private-label collateralized mortgage obligations
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and political subdivisions
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | U.S. government agencies
Investment securities available for sale, at fair value	150	155
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities of government sponsored entities
Investment securities available for sale, at fair value	85,582	85,830
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | Private-label collateralized mortgage obligations
Investment securities available for sale, at fair value	1,002	1,106
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | State and political subdivisions
Investment securities available for sale, at fair value	23,494	24,427
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | U.S. government agencies
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | Mortgage-backed securities of government sponsored entities
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | Private-label collateralized mortgage obligations
Investment securities available for sale, at fair value
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | State and political subdivisions
Investment securities available for sale, at fair value

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Basis of Presentation

3 Months Ended

Mar. 31, 2013

Basis Of Presentation

Basis of Presentation

Note 1:          Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2013 and for the three months ended March 31, 2013 and 2012, 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 condensed 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 December 31, 2012. Reference is made to the accounting policies of the Company described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included. The results of operations for the three months ended March 31, 2013, are not necessarily indicative of the results which may be expected for the full year. The condensed consolidated balance sheet of the Company as of December 31, 2012, has been derived from the consolidated balance sheet of the Company as of that date.

Critical Accounting Policies – The Company’s critical accounting policies relate to the allowance for loan losses and goodwill. 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 includes 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. The Company recorded all assets and liabilities acquired in prior purchase acquisitions, including goodwill and other intangibles, at fair value as required. Goodwill is subject, at a minimum, to annual tests for impairment. Other intangible assets are amortized over their estimated useful lives using the straight-line method, and are subject to impairment if events or circumstances indicate a possible inability to realize the carrying amount. The initial goodwill and other intangibles recorded and subsequent impairment analysis requires management to make subjective judgments concerning estimates of how the acquired asset will perform in the future. Events and factors that may significantly affect the estimates include, among others, customer attrition, changes in revenue growth trends, specific industry conditions and changes in competition.

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.

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Credit Quality of Loans and Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Non-accrual loans	$ 5,312	$ 5,256
One-to-four family residential
Non-accrual loans	2,377	2,097
Nonresidential real estate and land
Non-accrual loans	2,903	3,123
All other mortgage loans
Non-accrual loans
Commercial business loans
Non-accrual loans	30	32
Consumer loans
Non-accrual loans	$ 2	$ 4

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share Tables

Schedule of weighted average number of common shares outstanding reconciliation

The computations are as follows:

	Three months ended March 31,
	2013		2012
Weighted-average common shares outstanding (basic)		2,902,644		2,938,660
Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		2,902,644		2,938,660

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Credit Quality of Loans and Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Specific Allowance	$ 1,269	$ 1,422
Recorded Balance	12,410	12,900
Unpaid Principal Balance	13,185	13,496
Average Investment in Impaired Loans	12,655	11,295
Interest Income Recognized	131	111
One To Four Family Residential
Loans without a specific valuation allowance, Recorded Balance	5,653	5,587
Loans without a specific valuation allowance, Unpaid Principal Balance	5,653	5,587
Loans without a specific valuation allowance, Average Investment in Impaired Loans	5,620	3,232
Loans without a specific valuation allowance, Interest Income Recognized	78	39
Loans with a specific valuation allowance, Recorded Balance	1,356	1,291
Loans with a specific valuation allowance, Unpaid Principal Balance	1,356	1,291
Specific Allowance	232	248
Loans with a specific valuation allowance, Average Investment in Impaired Loans	1,324	821
Loans with a specific valuation allowance, Interest Income Recognized	13	25
Recorded Balance	7,009	6,878
Unpaid Principal Balance	7,009	6,878
Average Investment in Impaired Loans	6,944	4,053
Interest Income Recognized	91	64
All other mortgage loans
Loans without a specific valuation allowance, Recorded Balance	2,375	2,781
Loans without a specific valuation allowance, Unpaid Principal Balance	2,375	2,781
Loans without a specific valuation allowance, Average Investment in Impaired Loans	2,578	1,923
Loans without a specific valuation allowance, Interest Income Recognized	29	27
Loans with a specific valuation allowance, Recorded Balance	2,855	3,056
Loans with a specific valuation allowance, Unpaid Principal Balance	3,627	3,652
Specific Allowance	950	1,074
Loans with a specific valuation allowance, Average Investment in Impaired Loans	2,956	5,248
Loans with a specific valuation allowance, Interest Income Recognized	9	20
Recorded Balance	5,230	5,837
Unpaid Principal Balance	6,002	6,433
Average Investment in Impaired Loans	5,534	7,171
Interest Income Recognized	38	47
Commercial business loans
Loans without a specific valuation allowance, Recorded Balance	84	85
Loans without a specific valuation allowance, Unpaid Principal Balance	87	85
Loans without a specific valuation allowance, Average Investment in Impaired Loans	85
Loans without a specific valuation allowance, Interest Income Recognized	1
Loans with a specific valuation allowance, Recorded Balance	87	100
Loans with a specific valuation allowance, Unpaid Principal Balance	87	100
Specific Allowance	87	100
Loans with a specific valuation allowance, Average Investment in Impaired Loans	94	71
Loans with a specific valuation allowance, Interest Income Recognized	1
Recorded Balance	171	185
Unpaid Principal Balance	174	185
Average Investment in Impaired Loans	178	71
Interest Income Recognized	$ 2

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2013

Regulatory Matters Tables

Schedule of Regulatory Capital Requirements

The Bank’s actual capital amounts and ratios as of March 31, 2013 and December 31, 2012 are presented in the following table.

	Actual					For Capital Adequacy Purposes					To Be well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Tier I Capital to average assets	$	35,223		8.8	%	$	15,969		4.0	%	$	19,961		5.0	%
Tier I Capital to risk weighted assets		35,223		14.9	%		9,473		4.0	%		14,210		6.0	%
Total Risk-based capital to risk-weighted assets		38,184		16.1	%		18,947		8.0	%		23,683		10.0	%
As of December 31, 2012
Tier I Capital to average assets	$	34,774		8.7	%	$	16,069		4.0	%	$	20,086		5.0	%
Tier I Capital to risk weighted assets		34,774		14.7	%		9,458		4.0	%		14,187		6.0	%
Total Risk-based capital to risk-weighted assets		37,734		16.0	%		18,916		8.0	%		23,644		10.0	%

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Principles of Consolidation

3 Months Ended

Mar. 31, 2013

Principles Of Consolidation

Principles of Consolidation

Note 2:          Principles of Consolidation

The accompanying condensed 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 full-service offices in Wayne, Holmes, Ashland, Medina and Stark counties. All significant intercompany transactions and balances have been eliminated in the consolidation.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Allowance for loan losses	$ 2,977	$ 3,328
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	9,000,000	9,000,000
Common stock, shares issued	3,978,731	3,978,731
Treasury stock, shares	1,029,854	1,017,385

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Transfer and Assumption Agreement

3 Months Ended

Mar. 31, 2013

Transfer And Assumption Agreement

Transfer and Assumption Agreement

Note 12:          Transfer and Assumption Agreement

On November 15, 2012, the Bank completed a Transfer and Assumption Agreement with Thomasville National Bank (“TNB”), the national bank subsidiary of Thomasville Bancshares, Inc. headquartered in Thomasville, Georgia. The agreement provided for the transfer of the Bank’s trust business to TNB.

Under terms of the agreement, TNB maintains a trust office at a Wayne Savings office in Wooster, Ohio. The Bank and TNB entered into an office support and referral agreement under which the Bank will be compensated for, among other services, the use of facilities and equipment required for the operation of the TNB trust office. The costs of exiting the trust business include a one-time expense of approximately $354,000 that was mainly recognized during the quarter ended June 30, 2012. Closing of the transaction occurred during the fourth quarter of 2012 and the Bank surrendered its trust license to the Ohio Division of Financial Institutions (“ODFI”) in January 2013 after the ODFI confirmed that the Bank had met the conditions for ceasing to conduct trust business. The Bank received no consideration and there was no gain or loss on the transfer other than the one-time expense noted above.

The strategic rationale for this transaction was to partner with a stronger provider of trust services, who will absorb the operating expense overhead and assume the fiduciary risk associated with post-closing management of the trust accounts.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 30, 2013
Document And Entity Information
Entity Registrant Name	WAYNE SAVINGS BANCSHARES INC /DE/
Entity Central Index Key	0001036030
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,948,877
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2013

Basis Of Presentation Policies

Use of Estimates

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.

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Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Interest and Dividend Income
Loans	$ 2,888	$ 2,986
Securities	656	942
Dividends on Federal Home Loan Bank stock and other	55	59
Total interest and dividend income	3,599	3,987
Interest Expense
Deposits	435	610
Other short term borrowings	2	2
Federal Home Loan Bank advances	152	179
Total interest expense	589	791
Net Interest Income	3,010	3,196
Provision (Credit) for Loan Losses	(141)	787
Net Interest Income After Provision (Credit) for Loan Losses	3,151	2,409
Noninterest Income
Gain on loan sales	47	46
Trust income		92
Earnings on bank-owned life insurance	73	73
Service fees, charges and other operating	270	257
Total noninterest income	390	468
Noninterest Expense
Salaries and employee benefits	1,504	1,637
Net occupancy and equipment expense	477	476
Federal deposit insurance premiums	75	79
Franchise taxes	100	101
Loss on sale of foreclosed assets held for sale	3	13
Amortization of intangible assets	23	23
Other	551	456
Total noninterest expense	2,733	2,785
Income Before Federal Income Taxes	808	92
Provision (Benefit) for Federal Income Taxes	230	(60)
Net Income	578	152
Other comprehensive loss:
Unrealized losses on available-for-sale securities	(322)	(157)
Tax benefit	109	53
Other comprehensive loss	(213)	(104)
Total comprehensive income	$ 365	$ 48
Basic Earnings Per Share	$ 0.20	$ 0.05
Diluted Earnings Per Share	$ 0.20	$ 0.05
Dividends Per Share	$ 0.07	$ 0.06

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Stock Option Plan

3 Months Ended

Mar. 31, 2013

Stock Option Plan

Stock Option Plan

Note 7:           Stock Option Plan

In fiscal 2004, the Company adopted a 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 March 31, 2013, 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 August of 2013 unless otherwise exercised or forfeited. The Company accounts for the stock option plan in accordance with the provisions of FASB ASC 718-10. FASB ASC 718-10 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 the three months ended March 31, 2013 and 2012. There was no compensation expense recognized for the stock option plan during the three months ended March 31, 2013 and 2012, as all options were fully vested prior to these periods.

A summary of the status of the Company’s stock option plan as of and for the three months ended March 31, 2013, and for the year ended December 31, 2012 is presented below:

	Three months ended March 31, 2013				Year ended December 31, 2012
	Shares		Weighted average exercise price		Shares		Weighted average exercise price
Outstanding at beginning of period		58,908	$	13.95		63,408	$	13.95
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		17,704	$	13.95		4,500	$	13.95
Outstanding at end of period		41,204	$	13.95		58,908	$	13.95
Options exercisable at period-end		41,204	$	13.95		58,908	$	13.95

The following information applies to options outstanding at March 31, 2013:

Number outstanding		41,204
Exercise price on all remaining options outstanding	$	13.95
Weighted-average remaining contractual life		.42 years

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Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Note 6:           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:

	Three months ended March 31,
	2013		2012
Weighted-average common shares outstanding (basic)		2,902,644		2,938,660
Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		2,902,644		2,938,660

None of the outstanding options were included in the diluted earnings per share calculation for the three months ended March 31, 2013 and 2012, as the average fair value of the shares was less than the option exercise prices.

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Stock Option Plan (Tables)

3 Months Ended

Mar. 31, 2013

Stock Option Plan Tables

Schedule of Stock Option Rollforward

A summary of the status of the Company’s stock option plan as of and for the three months ended March 31, 2013, and for the year ended December 31, 2012 is presented below:

	Three months ended March 31, 2013				Year ended December 31, 2012
	Shares		Weighted average exercise price		Shares		Weighted average exercise price
Outstanding at beginning of period		58,908	$	13.95		63,408	$	13.95
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		17,704	$	13.95		4,500	$	13.95
Outstanding at end of period		41,204	$	13.95		58,908	$	13.95
Options exercisable at period-end		41,204	$	13.95		58,908	$	13.95

The following information applies to options outstanding at March 31, 2013:

Number outstanding		41,204
Exercise price on all remaining options outstanding	$	13.95
Weighted-average remaining contractual life		.42 years

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Securities (Tables)

3 Months Ended

Mar. 31, 2013

Securities Tables

Schedule of Available for Sale Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
March 31, 2013:
U.S. government agencies	$	149	$	1	$	—	$	150
Mortgage-backed securities of government sponsored entities		83,839		1,873		130		85,582
Private-label collateralized mortgage obligations		968		34				1,002
State and political subdivisions		22,096		1,419		21		23,494
Totals	$	107,052	$	3,327	$	151	$	110,228

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Available-for-sale securities	(In thousands)
December 31, 2012:
U.S. government agencies	$	155	$	1	$	1	$	155
Mortgage-backed securities of government sponsored entities		83,956		1,979		105		85,830
Private-label collateralized mortgage obligations		1,067		39		—		1,106
State and political subdivisions		22,842		1,587		2		24,427
Totals	$	108,020	$	3,606	$	108	$	111,518

Schedule of Held To Maturity Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
March 31, 2013:
U.S. government agencies	$	123	$	1	$	—	$	124
Mortgage-backed securities of government sponsored entities		1,454		52		—		1,506
State and political subdivisions		3,756		—		75		3,681
Totals	$	5,333	$	53	$	75	$	5,311

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Held-to-maturity Securities:	(In thousands)
December 31, 2012:
U.S. government agencies	$	130	$	1	$	—	$	131
Mortgage-backed securities of government sponsored entities		1,469		45		—		1,514
State and political subdivisions		2,149		—		54		2,095
Totals	$	3,748	$	46	$	54	$	3,740

Schedule of Expected Maturities of Available for Sale and Held To Maturity Securities

Amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2013 by contractual maturity, are shown below.

	Available-for-sale				Held-to-maturity
	Amortized cost		Fair Value		Amortized cost		Fair Value
	(In thousands)
One to five years	$	2,784	$	2,981	$	—	$	—
Five to ten years		4,432		4,675		2,034		2,021
After ten years		15,029		15,988		1,845		1,784
		22,245		23,644		3,879		3,805
Mortgage-backed securities of government sponsored entities		83,839		85,582		1,454		1,506
Private-label collateralized mortgage obligations		968		1,002		—		—
Totals	$	107,052	$	110,228	$	5,333	$	5,311

Schedule of Securities in a Gross Unrealized Loss Position

The following table shows the gross unrealized losses and fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	March 31, 2013
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Mortgage-backed securities of government sponsored entities	$	18,136	$	130	$	—	$	—	$	18,136	$	130
State and political  subdivisions		4,400		96		—		—		4,400		96
Total temporarily impaired securities	$	22,536	$	226	$	—	$	—	$	22,536	$	226

	December 31, 2012
	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government agencies	$	—	$	—	$	66	$	1	$	66	$	1
Mortgage-backed securities of government sponsored entities		13,636		83		2,107		22		15,743		105
State and political subdivisions		3,162		56		—		—		3,162		56
Total temporarily impaired securities	$	16,798	$	139	$	2,173	$	23	$	18,971	$	162

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Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements

Fair Value Measurements

Note 10:          Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Recurring Measurements

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the Company’s consolidated balance sheets, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy.

The following table presents the fair value measurements of assets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012:

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
U.S. government agencies	$	150	$	—	$	150	$	—
Mortgage-backed securities of government sponsored entities		85,582		—		85,582		—
Private-label collateralized mortgage obligations		1,002		—		1,002		—
State and political subdivisions		23,494		—		23,494		—

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
U.S. government agencies	$	155	$	—	$	155	$	—
Mortgage-backed securities of government sponsored entities		85,830		—		85,830		—
Private-label collateralized mortgage obligations		1,106		—		1,106		—
State and political subdivisions		24,427		—		24,427		—

Nonrecurring Measurements

Certain assets may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

Collateral-dependent Impaired Loans, Net of ALLL

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the office of the Chief Financial Officer. Appraisals are reviewed for accuracy and consistency by the office of the Chief Financial Officer. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the office of the Chief Financial Officer by comparison to historical results.

Foreclosed Assets Held for Sale

Foreclosed assets held for sale are carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the real estate is acquired. Estimated fair value of real estate is based on appraisals or evaluations. Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy.

Appraisals of real estate are obtained when the real estate is acquired and subsequently as deemed necessary by the office of the Chief Financial Officer. Appraisals are reviewed for accuracy and consistency by the office of the Chief Financial Officer. Appraisers are selected from the list of approved appraisers maintained by management.

The following table presents the fair value measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012.

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Collateral-dependent impaired loans	$	344	$	—	$	—	$	344
December 31, 2012
Collateral-dependent impaired loans	$	2,437	$	—	$	—	$	2,437
Foreclosed assets		16		—		—		16

Unobservable (Level 3) Inputs

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements in thousands.

March 31, 2013	Fair Value		Valuation Technique	Unobservable Inputs	Range
Collateral-dependent   impaired loans	$	344	Market comparable properties	Selling Costs  Sherriff's sale discount		10% 37%
December 31, 2012
Collateral-dependent   impaired loans	$	2,437	Market comparable properties	Selling Costs		10%
Foreclosed assets		16	Market comparable properties	Selling Costs		10%

There were no changes in the inputs or methodologies used to determine fair value at March 31, 2013 as compared to December 31, 2012.

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Financial assets
Cash and cash equivalents	$	9,962	$	9,962	$	—	$	—
Held-to-maturity securities		5,333		—		5,311		—
Loans, net of allowance for loan losses		246,910		—		—		259,591
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,420		—		1,420		—
Financial liabilities
Deposits		326,703		—		313,654		—
Other short-term borrowings		5,975		—		5,975		—
Federal Home Loan Bank advances		21,247		—		22,023		—
Advances from borrowers for taxes and insurance		655		—		655		—
Interest payable		54		—		54		—

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
Financial assets
Cash and cash equivalents	$	12,055	$	12,055	$	—	$	—
Held-to-maturity securities		3,748		—		3,740
Loans, net of allowance for loan losses		247,849		—		—		259,986
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,228		—		1,228		—
Financial liabilities
Deposits		327,737		—		317,312		—
Other short-term borrowings		7,077		—		7,077		—
Federal Home Loan Bank advances		21,217		—		22,048		—
Advances from borrowers for taxes and insurance		1,069		—		1,069		—
Interest payable		51		—		51		—

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Cash and Cash Equivalents, Interest Receivable and Federal Home Loan Bank Stock

The carrying amount approximates fair value.

Held-to-maturity securities

The fair value of held-to-maturity securities was estimated by using pricing models that contain market pricing and information, quoted prices of securities with similar characteristics or discounted cash flows that use credit adjusted discount rates.

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include savings accounts, checking accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Interest Payable, Other Short-Term Borrowings and Advances From Borrowers for Taxes and Insurance

The carrying amount approximates fair value.

Federal Home Loan Bank Advances

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. Fair values of commitments were not material at March 31, 2013 and December 31, 2012.

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Regulatory Matters

3 Months Ended

Mar. 31, 2013

Regulatory Matters

Regulatory Matters

Note 8:          Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory–and possibly additional discretionary–actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

The Bank must give notice to the Federal Reserve Bank of Cleveland prior to declaring a dividend to the Company and is subject to existing regulatory guidance where, in general, a dividend is permissible without regulatory approval if the institution is considered to be “well capitalized” and the dividend does not exceed current year to date net income plus the change in retained earnings for the previous two calendar years.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier I capital to average assets, of Tier 1 capital to risk-weighted assets, and of Total Risk-based capital to risk-weighted assets, all as defined in the regulations. Management believes, as of March 31, 2013, that the Bank met all capital adequacy requirements to which it is subject.

As of March 31, 2013, based on the computations for the call report the Bank is classified as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since March 31, 2013 that management believes have changed the Bank’s capital classification.

The Bank’s actual capital amounts and ratios as of March 31, 2013 and December 31, 2012 are presented in the following table.

	Actual					For Capital Adequacy Purposes					To Be well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Tier I Capital to average assets	$	35,223		8.8	%	$	15,969		4.0	%	$	19,961		5.0	%
Tier I Capital to risk weighted assets		35,223		14.9	%		9,473		4.0	%		14,210		6.0	%
Total Risk-based capital to risk-weighted assets		38,184		16.1	%		18,947		8.0	%		23,683		10.0	%
As of December 31, 2012
Tier I Capital to average assets	$	34,774		8.7	%	$	16,069		4.0	%	$	20,086		5.0	%
Tier I Capital to risk weighted assets		34,774		14.7	%		9,458		4.0	%		14,187		6.0	%
Total Risk-based capital to risk-weighted assets		37,734		16.0	%		18,916		8.0	%		23,644		10.0	%

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Note 9:          Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	Net Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Net Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income
	(In thousands)
March 31, 2013	$	3,175	$	(246	)	$	(1,096	)	$	(706	)	$	1,127
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

There were no amounts reclassified out of accumulated other comprehensive income during the three months ended March 31, 2013 or 2012.

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Recent Accounting Developments

3 Months Ended

Mar. 31, 2013

Recent Accounting Developments

Recent Accounting Developments

Note 11:          Recent Accounting Developments

FASB ASU 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2013-02, issued in February 2013 requires the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component. These amendments are effective prospectively for reporting periods beginning after December 15, 2012, and early adoption is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

FASB ASU 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date in Accounting Standards Update No. 2013-04, issued in February 2013 requires the Company to measure and report on obligations resulting from joint and several liability. This includes the amount the Company has agreed to pay on the basis of its arrangement among its co-obligors, and any additional amount the Company expects to pay on behalf of its co-obligors. The amendments in this update, should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated financial statements.

FASB ASU 2013-07, Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting, in Accounting Standards Update No. 2013-07, issued in April 2013 requires the Company to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. This standard requires the Company to present relevant information about its expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The amendments in this update, are to be applied prospectively, and are effective for annual reporting periods, and interim reporting periods therein, beginning after December 15, 2013 for those entities that determine liquidation is imminent, and early adoption is permitted. This standard is not expected to have any impact on the Company’s consolidated financial statements.

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Credit Quality of Loans and Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012		Mar. 31, 2012
Aging analysis of past due loans
30-59 Days Past Due	$ 209		$ 2,594
60-89 Days Past Due	234		341
Greater Than 90 Days Past Due	2,110		2,501
Total Past Due	2,553		5,436
Current	250,295		248,957
Total loans receivable	252,848		254,393		254,393
Total Loans >90 Days & Accruing
One-to-four family residential
Aging analysis of past due loans
30-59 Days Past Due	207		1,049
60-89 Days Past Due	234		339
Greater Than 90 Days Past Due	981		1,190
Total Past Due	1,422		2,578
Current	160,284		158,332
Total loans receivable	161,706	[1]	160,910	[1]	160,910
Total Loans >90 Days & Accruing
All other mortgage loans
Aging analysis of past due loans
30-59 Days Past Due			1,544
60-89 Days Past Due
Greater Than 90 Days Past Due	1,129		1,309
Total Past Due	1,129		2,853
Current	77,897		74,868
Total loans receivable	79,026	[1]	77,721	[1]	77,721
Total Loans >90 Days & Accruing
Commercial business loans
Aging analysis of past due loans
30-59 Days Past Due
60-89 Days Past Due
Greater Than 90 Days Past Due
Total Past Due
Current	10,707		14,245
Total loans receivable	10,707	[1]	14,245	[1]	14,245
Total Loans >90 Days & Accruing
Consumer loans
Aging analysis of past due loans
30-59 Days Past Due	2		1
60-89 Days Past Due			2
Greater Than 90 Days Past Due			2
Total Past Due	2		5
Current	1,407		1,512
Total loans receivable	1,409	[1]	1,517	[1]	1,517
Total Loans >90 Days & Accruing

[1] * Ratings are generally assigned to consumer and residential mortgage loans on a "pass" or "fail" basis, where "fail" results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank's loan policy that produces a risk rating as described below. Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds. Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive. Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization. Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies. Risk 5 or "Special Mention," also known as "watch," has potential weakness that deserves Management's close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral. Risk 6 or "Substandard" loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower's credit strength with limited credit access and all non-performing loans. Risk 7 or "Doubtful" loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge-off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill And Intangible Assets Tables

Schedule of goodwill and other intangible assets

	March 31, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(869	)		(846	)
Total	$	1,824		$	1,847

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements Tables

Schedule of Fair Value Measured on a Recurring Basis

The following table presents the fair value measurements of assets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012:

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
U.S. government agencies	$	150	$	—	$	150	$	—
Mortgage-backed securities of government sponsored entities		85,582		—		85,582		—
Private-label collateralized mortgage obligations		1,002		—		1,002		—
State and political subdivisions		23,494		—		23,494		—

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
U.S. government agencies	$	155	$	—	$	155	$	—
Mortgage-backed securities of government sponsored entities		85,830		—		85,830		—
Private-label collateralized mortgage obligations		1,106		—		1,106		—
State and political subdivisions		24,427		—		24,427		—

Schedule of Fair Value Measured on a Nonrecurring Basis

The following table presents the fair value measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2013 and December 31, 2012.

			Fair Value Measurement Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Collateral-dependent impaired loans	$	344	$	—	$	—	$	344
December 31, 2012
Collateral-dependent impaired loans	$	2,437	$	—	$	—	$	2,437
Foreclosed assets		16		—		—		16

Schedule of Level 3 Fair Value Measurements

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements in thousands.

March 31, 2013	Fair Value		Valuation Technique	Unobservable Inputs	Range
Collateral-dependent   impaired loans	$	344	Market comparable properties	Selling Costs  Sherriff's sale discount		10% 37%
December 31, 2012
Collateral-dependent   impaired loans	$	2,437	Market comparable properties	Selling Costs		10%
Foreclosed assets		16	Market comparable properties	Selling Costs		10%

Schedule of Fair Value of Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments.

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
March 31, 2013
Financial assets
Cash and cash equivalents	$	9,962	$	9,962	$	—	$	—
Held-to-maturity securities		5,333		—		5,311		—
Loans, net of allowance for loan losses		246,910		—		—		259,591
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,420		—		1,420		—
Financial liabilities
Deposits		326,703		—		313,654		—
Other short-term borrowings		5,975		—		5,975		—
Federal Home Loan Bank advances		21,247		—		22,023		—
Advances from borrowers for taxes and insurance		655		—		655		—
Interest payable		54		—		54		—

			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2012
Financial assets
Cash and cash equivalents	$	12,055	$	12,055	$	—	$	—
Held-to-maturity securities		3,748		—		3,740
Loans, net of allowance for loan losses		247,849		—		—		259,986
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,228		—		1,228		—
Financial liabilities
Deposits		327,737		—		317,312		—
Other short-term borrowings		7,077		—		7,077		—
Federal Home Loan Bank advances		21,217		—		22,048		—
Advances from borrowers for taxes and insurance		1,069		—		1,069		—
Interest payable		51		—		51		—

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Transfer and Assumption Agreement (Details Narrative) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Transfer And Assumption Agreement Details Narrative
Expenses incurred in exiting trust business	$ 354

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Stock Option Plan (Details Narrative)	Mar. 31, 2013
Incentive Options
Maximum Options Authorized	142,857
Non-Incentive Options
Maximum Options Authorized	61,224

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating Activities
Net income	$ 578	$ 152
Items not requiring (providing) cash
Depreciation and amortization	148	134
Provision (Credit) for loan losses	(141)	787
Amortization of premiums and discounts on securities	472	510
Amortization of mortgage servicing rights	6	17
Amortization of deferred loan origination fees	(25)	(21)
Amortization of intangible assets	23	23
Increase in value of bank owned life insurance	(70)	(71)
Amortization expense of stock benefit plan	20	17
Loss on sale of foreclosed assets held for sale	3	13
Net gains on sale of loans	(47)	(46)
Proceeds from sale of loans in secondary market	4,402	1,374
Origination of loans for sale in the secondary market	(4,355)	(1,328)
Deferred income taxes	176	104
Accrued interest receivable	(192)	(233)
Prepaid federal deposit insurance premiums	76	73
Other assets	(297)	(531)
Interest payable and other liabilities	(86)	(502)
Net cash provided by operating activities	691	472
Investing Activities
Purchase of available-for-sale securities	(10,902)	(13,885)
Purchase of held-to-maturity securities	(1,610)
Proceeds from maturities and paydowns of available-for-sale securities	11,404	11,182
Proceeds from maturities and paydowns of held-to-maturity securities	20	13
Net change in loans	1,105	(125)
Purchase of bank-owned life insurance		(1,243)
Purchase of premises and equipment	(74)	(74)
Proceeds from the sale of foreclosed assets	122	1,165
Net cash provided by (used in) investing activities	65	(2,967)
Financing Activities
Net change in deposits	(1,034)	(1,964)
Net change in other short-term borrowings	(1,102)	1,619
Proceeds from Federal Home Loan Bank and Federal Reserve advances	1,030	10
Repayments of Federal Home Loan Bank and Federal Reserve advances	(1,000)	20
Advances by borrowers for taxes and insurance	(414)	(333)
Dividends on common stock	(203)	(176)
Treasury stock purchases	(126)
Net cash used in financing activities	(2,849)	(824)
Decrease in Cash and Cash Equivalents	(2,093)	(3,319)
Cash and Cash Equivalents, Beginning of Period	12,055	19,816
Cash and Cash Equivalents, End of Period	9,962	16,497
Supplemental Cash Flows Information:
Interest paid on deposits and borrowings	586	788
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Recognition of mortgage servicing rights	44	13
Dividends payable	$ 206	$ 180

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill And Intangible Assets

Goodwill and Intangible Assets

Note 5:          Goodwill and Intangible Assets

The composition of goodwill and other intangible assets, all of which is core deposit intangible, at March 31, 2013 and December 31, 2012:

	March 31, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(869	)		(846	)
Total	$	1,824		$	1,847

The Company recorded amortization relative to intangible assets totaling $23,000 for both of the three month periods ended March 31, 2013, and 2012 respectively. The Company anticipates $91,000 of amortization for 2013 and $37,000 for 2014. Such amortization is derived using the straight line method for the core deposit asset over ten years. Pursuant to FASB ASC 350, the Company is required to annually test goodwill and other intangible assets for impairment. The Company’s testing of goodwill and other intangible assets at November 30, 2012 indicated there was no impairment in the carrying value of these assets.

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Securities (Details Narrative) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities Details Narrative
Carrying value of securities pledged as collateral to secure public deposits	$ 54,500	$ 60,400
Fair value of investments, carried at less than historical costs	$ 22,500	$ 19,000
Percentage available for sale Securities in unrealized loss positions out of total available for sale securities	20.00%	17.00%

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Goodwill and Intangible Assets (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Goodwill And Intangible Assets Details Narrative
Amortization of Intangible Assets	$ 23	$ 23
Useful life of core deposit asset	10 years
Future amortization expenses of intangible asset
2013	91
2014	$ 37

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Credit Quality of Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2013

Credit Quality Of Loans And Allowance For Loan Losses Tables

Schedule of Allowance for Loan Losses

The following presents by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2013 and 2012:

Three months ended March 31, 2013	One-to-four family residential			All other mortgage loans			Commercial business loans			Consumer loans			Total
	(In thousands)
Beginning balance	$	1,122		$	1,925		$	275		$	6		$	3,328
Provision (credit) charged to expense		(61	)		(18	)		(63	)		1			(141	)
Losses charged off		(34	)		(176	)		—			(2	)		(212	)
Recoveries		—			—			1			1			2
Ending balance	$	1,027		$	1,731		$	213		$	6		$	2,977

Three months ended March 31, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,128		$	2,547		$	169	$	10		$	3,854
Provision charged to expense		185			598			5		(1	)		787
Losses charged off		(65	)		(5	)		—		—			(70	)
Recoveries		3			—			—		—			3
Ending balance	$	1,251		$	3,140		$	174	$	9		$	4,574

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	232	$	950	$	87	$	—	$	1,269
Collectively evaluated for impairment		795		781		126		6		1,708
Total allowance for loan losses	$	1,027	$	1,731	$	213	$	6	$	2,977
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	7,009	$	5,230	$	171	$	—	$	12,410
Collectively evaluated for impairment		154,697		73,796		10,536		1,409		240,438
Total balance	$	161,706	$	79,026	$	10,707	$	1,409	$	252,848

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans		Total
Allowance Balances:	(In thousands)
Ending balance:
Individually evaluated for impairment	$	248	$	1,074	$	100	$	—	$	1,422
Collectively evaluated for impairment		874		851		175		6		1,906
Total allowance for loan losses	$	1,122	$	1,925	$	275	$	6	$	3,328
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,878	$	5,837	$	185	$	—	$	12,900
Collectively evaluated for impairment		154,032		71,884		14,060		1,517		241,493
Total balance	$	160,910	$	77,721	$	14,245	$	1,517	$	254,393

Schedule of Loans Receivable Quality Indicators

The following tables present the credit risk profile of the Bank’s loan portfolio based on rating category and payment activity as of March 31, 2013 and December 31, 2012:

March 31, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	152,244	$	71,363	$	10,512	$	1,407
Special Mention (Risk 5)		700		2,433		24		—
Substandard (Risk 6)		8,762		5,230		171		2
Total	$	161,706	$	79,026	$	10,707	$	1,409

December 31, 2012	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	151,749	$	68,949	$	14,034	$	1,513
Special Mention (Risk 5)		708		2,934		26		—
Substandard (Risk 6)		8,453		5,838		185		4
Total	$	160,910	$	77,721	$	14,245	$	1,517

* Ratings are generally assigned to consumer and residential mortgage loans on a “pass” or “fail” basis, where “fail” results in a substandard classification. Commercial loans, both secured by real estate or other assets or unsecured, are analyzed in accordance with an analytical matrix codified in the Bank’s loan policy that produces a risk rating as described below.

Risk 1 is unquestioned credit quality for any credit product. Loans are secured by cash and near cash collateral with immediate access to proceeds.

Risk 2 is very low risk with strong credit and repayment sources. Borrower is well capitalized in a stable industry, financial ratios exceed peers and financial trends are positive.

Risk 3 is very favorable risk with highly adequate credit strength and repayment sources. Borrower has good overall financial condition and adequate capitalization.

Risk 4 is acceptable, average risk with adequate credit strength and repayment sources. Collateral positions must be within Bank policies.

Risk 5 or “Special Mention,” also known as “watch,” has potential weakness that deserves Management’s close attention. This risk includes loans where the borrower has developed financial uncertainties or the borrower is resolving the financial uncertainties. Bank credits have been secured or negotiations will be ongoing to secure further collateral.

Risk 6 or “Substandard” loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that exhibit a weakening of the borrower’s credit strength with limited credit access and all non-performing loans.

Risk 7 or “Doubtful” loans are significantly under protected by the current net worth and paying capacity of the borrower or of the collateral pledged. This risk category contains loans that are likely to experience a loss of some magnitude, but where the amount of the expected loss is not known with enough certainty to allow for an accurate calculation of a loss amount for charge- off. This category is considered to be temporary until a charge-off amount can be reasonably determined.

Aging Analysis of Loans Receivable

The following tables present the Bank’s loan portfolio aging analysis for March 31, 2013 and December 31, 2012:

March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	207	$	234	$	981	$	1,422	$	160,284	$	161,706	$	—
All other mortgage loans		—		—		1,129		1,129		77,897		79,026		—
Commercial business loans		—		—		—		—		10,707		10,707		—
Consumer loans		2		—		—		2		1,407		1,409		—
Total	$	209	$	234	$	2,110	$	2,553	$	250,295	$	252,848	$	—

December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In thousands)
One-to-four family residential loans	$	1,049	$	339	$	1,190	$	2,578	$	158,332	$	160,910	$	—
All other mortgage loans		1,544		—		1,309		2,853		74,868		77,721		—
Commercial business loans		—		—		—		—		14,245		14,245		—
Consumer loans		1		2		2		5		1,512		1,517		—
Total	$	2,594	$	341	$	2,501	$	5,436	$	248,957	$	254,393	$	—

Schedule of Non-accrual Loans

Non-accrual loans were comprised of the following at:

Non-accrual loans	March 31, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,377	$	2,097
Nonresidential real estate loans		2,903		3,123
All other mortgage loans		—		—
Commercial business loans		30		32
Consumer loans		2		4
Total	$	5,312	$	5,256

Schedule of Impaired Loans

Information with respect to the Company’s impaired loans at March 31, 2013 and December 31, 2012 in combination with activity for the three months ended March 31, 2013 and 2012 is presented below:

	As of March 31, 2013						Three months ended March 31, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,653	$	5,653	$	—	$	5,620	$	78
All other mortgage loans		2,375		2,375		—		2,578		29
Commercial business loans		84		87		—		85		1
Loans with a specific valuation allowance
One-to-four family residential loans		1,356		1,356		232		1,324		13
All other mortgage loans		2,855		3,627		950		2,956		9
Commercial business loans		87		87		87		94		1
Total:
One-to-four family residential loans	$	7,009	$	7,009	$	232	$	6,944	$	91
All other mortgage loans		5,230		6,002		950		5,534		38
Commercial business loans		171		174		87		178		2
	$	12,410	$	13,185	$	1,269	$	12,655	$	131

	As of December 31, 2012						Three months ended March 31, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,587	$	5,587	$	—	$	3,232	$	39
All other mortgage loans		2,781		2,781		—		1,923		27
Commercial business loans		85		85		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		821		25
All other mortgage loans		3,056		3,652		1,074		5,248		20
Commercial business loans		100		100		100		71		—
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,053	$	64
All other mortgage loans		5,837		6,433		1,074		7,171		47
Commercial business loans		185		185		100		71		—
	$	12,900	$	13,496	$	1,422	$	11,295	$	111

Schedule of Troubled Debt Restructurings

Quarter-to-Date
Troubled Debt Restructurings	Number of loans	Pre-modification Unpaid Principal Balance		Post-modification Unpaid Principal Balance
	(dollars in thousands)
March 31, 2013
One-to-four family residential loans	1	$	113	$	113
All other mortgage loans	1		576		576
March 31, 2012
One-to-four family residential loans	2	$	538	$	538