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 September 30, 2013

OR

¨ 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 ¨

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     ¨ 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 ¨     Accelerated filer ¨     Non-accelerated filer  ¨  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 ¨      No ý

As of October 31, 2013, the latest practicable date, 2,885,999 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 (Loss)	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	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4	Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	47
Item 1A	Risk Factors	47
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3	Defaults Upon Senior Securities	47
Item 4	Mine Safety Disclosures	47
Item 5	Other Information	48
Item 6	Exhibits	48
SIGNATURES		49

Wayne Savings Bancshares, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	September 30, 2013			December 31, 2012
Assets		(Unaudited)
Cash and due from banks	$	3,183		$	7,303
Interest-bearing deposits		4,819			4,752
Cash and cash equivalents		8,002			12,055
Available-for-sale securities		100,884			111,518
Held-to-maturity securities		6,646			3,748
Loans, net of allowance for loan losses of $3,042 and $3,328 at         September 30, 2013 and December 31, 2012, respectively		257,979			247,849
Premises and equipment		6,788			7,088
Federal Home Loan Bank stock		5,025			5,025
Foreclosed assets held for sale, net		38			318
Accrued interest receivable		1,371			1,228
Bank-owned life insurance		8,934			8,723
Goodwill		1,719			1,719
Other intangible assets		60			128
Prepaid federal deposit insurance premiums		—			596
Other assets		2,113			1,944
Prepaid federal income taxes		131			178
Total assets	$	399,690		$	402,117
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Demand	$	79,777		$	80,668
Savings and money market		119,424			112,229
Time		127,414			134,840
Total deposits		326,615			327,737
Other short-term borrowings		6,516			7,077
Federal Home Loan Bank advances		22,957			21,217
Interest payable and other liabilities		4,639			5,173
Deferred federal income taxes		496			1,128
Total liabilities		361,223			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		35,976			35,975
Retained earnings		18,488			17,567
Shares acquired by ESOP		(511	)		(572	)
Accumulated other comprehensive income (loss)		(187	)		1,340
Treasury stock, at cost: Common: 1,092,732 and 1,017,385 shares at         September 30, 2013 and December 31, 2012, respectively		(15,697	)		(14,923	)
Total stockholders’ equity		38,467			39,785
Total liabilities and stockholders’ equity	$	399,690		$	402,117

See accompanying notes to condensed consolidated financial statements. 2

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income (Loss)

For the three and nine months ended September 30, 2013 and 2012

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Interest and Dividend Income
Loans	$	2,874		$	2,964		$	8,608		$	8,895
Securities		633			788			1,921			2,592
Dividends on Federal Home Loan Bank stock and           other		54			55			165			171
Total interest and dividend income		3,561			3,807			10,694			11,658
Interest Expense
Deposits		417			500			1,283			1,654
Other short term borrowings		3			3			8			8
Federal Home Loan Bank advances		155			165			460			515
Total interest expense		575			668			1,751			2,177
Net Interest Income		2,986			3,139			8,943			9,481
Provision (Credit) for Loan Losses		76			225			(55	)		618
Net Interest Income After Provision (Credit) for      Loan Losses		2,910			2,914			8,998			8,863
Noninterest Income
Gain on loan sales		7			108			80			203
Gain (Loss) on sale of foreclosed assets held for sale		(11	)		—			6			(13	)
Trust Income		—			62			—			227
Earnings on bank-owned life insurance		74			75			221			223
Service fees, charges and other operating		324			271			872			824
Total noninterest income		394			516			1,179			1,464
Noninterest Expense
Salaries and employee benefits		1,484			1,532			4,516			5,061
Net occupancy and equipment expense		508			468			1,462			1,421
Federal deposit insurance premiums		66			72			206			225
Franchise taxes		100			100			300			301
Provision for impairment on foreclosed assets held           for sale		26			11			26			46
Amortization of intangible assets		23			23			68			68
Other		438			634			1,460			1,705
Total noninterest expense		2,645			2,840			8,038			8,827
Income Before Federal Income Taxes		659			590			2,139			1,500
Provision for Federal Income Taxes		151			125			562			259
Net Income	$	508		$	465		$	1,577		$	1,241
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale      securities		(262	)		170			(2,314	)		166
Tax benefit (expense)		89			(58	)		787			(58	)
Other comprehensive income (loss)		(173	)		112			(1,527	)		108
Total comprehensive income	$	335		$	577		$	50		$	1,349
Basic Earnings Per Share	$	0.18		$	0.16		$	0.55		$	0.42
Diluted Earnings Per Share	$	0.18		$	0.16		$	0.55		$	0.42
Dividends Per Share	$	0.08		$	0.07		$	0.23		$	0.20

See accompanying notes to condensed consolidated financial statements. 3

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2013 and 2012

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2013			2012
Operating Activities
Net income	$	1,577		$	1,241
Items not requiring (providing) cash
Depreciation and amortization		442			411
Provision (credit) for loan losses		(55	)		618
Amortization of premiums and discounts on securities		1,405			1,565
Amortization of mortgage servicing rights		37			38
Amortization of deferred loan origination fees		(77	)		(92	)
Amortization of intangible asset		68			68
Increase in value of bank-owned life insurance		(211	)		(215	)
Amortization expense of stock benefit plan		61			53
Provision for impairment on foreclosed assets held for sale		26			46
Loss (gain) on sale of foreclosed assets held for sale		(6	)		13
Net gains on sale of loans		(80	)		(203	)
Proceeds from sale of loans in the secondary market		6,581			4,530
Origination of loans for sale in the secondary market		(6,501	)		(4,327	)
Deferred income taxes		155			291
Changes in
Accrued interest receivable		(143	)		(223	)
Prepaid federal deposit insurance premiums		529			207
Other assets		(153	)		(466	)
Interest payable and other liabilities		(65	)		125
Net cash provided by operating activities		3,590			3,680
Investing Activities
Purchases of available-for-sale securities		(24,131	)		(32,049	)
Purchase of  held-to-maturity securities		(2,988	)		(867	)
Proceeds from maturities and paydowns of available-for-sale securities		31,058			38,042
Proceeds from maturities and paydowns of held-to-maturity securities		78			58
Net change in loans		(10,048	)		(8,217	)
Purchase of bank-owned life insurance		—			(1,243	)
Purchase of premises and equipment		(142	)		(400	)
Proceeds from the sale of foreclosed assets		311			1,165
Net cash used in investing activities	$	(5,862	)	$	(3,511	)

See accompanying notes to condensed consolidated financial statements. 4

Wayne Savings Bancshares, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

For the nine months ended September 30, 2013 and 2012

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2013			2012
Financing Activities
Net change in deposits	$	(1,122	)	$	(6,475	)
Net change in other short-term borrowings		(561	)		1,942
Proceeds from Federal Home Loan Bank  advances		16,490			14,710
Repayments of Federal Home Loan Bank  advances		(14,750	)		(20,120	)
Advances by borrowers for taxes and insurance		(408	)		(305	)
Dividends on common stock		(656	)		(557	)
Treasury stock purchases		(774	)		(92	)
Net cash used in financing activities		(1,781	)		(10,897	)
Decrease in Cash and Cash Equivalents		(4,053	)		(10,728	)
Cash and Cash equivalents, Beginning of period		12,055			19,816
Cash and Cash equivalents, End of period	$	8,002		$	9,088
Supplemental Cash Flows Information
Interest paid on deposits and borrowings	$	1,749		$	2,189
Federal income taxes paid	$	325		$	—
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Transfers from loans to foreclosed assets held for sale	$	50		$	—
Recognition of mortgage servicing rights	$	65		$	—
Dividends payable	$	231		$	209

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 September 30, 2013 and for the three and nine months ended September 30, 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 and nine months ended September 30, 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.

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
September 30, 2013:
U.S. government agencies	$	139	$	1	$	—	$	140
Mortgage-backed securities of           government sponsored entities		76,693		1,317		573		77,437
Private-label collateralized           mortgage obligations		757		35				792
State and political subdivisions		22,110		587		182		22,515
Totals	$	99,699	$	1,940	$	755	$	100,884

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
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:
September 30, 2013:
U.S. government agencies	$	111	$	—	$	—	$	111
Mortgage-backed securities of         government sponsored entities		1,407		11		2		1,416
State and political subdivisions		5,128		—		441		4,687
Totals	$	6,646	$	11	$	443	$	6,214

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
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 September 30, 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	$	3,183	$	3,346	$	—	$	—
Five to ten years		4,055		4,109		2,637		2,490
After ten years		15,011		15,200		2,602		2,308
		22,249		22,655		5,239		4,798
Mortgage-backed securities of government sponsored entities		76,693		77,437		1,407		1,416
Private-label collateralized mortgage obligations		757		792		—		—
Totals	$	99,699	$	100,884	$	6,646	$	6,214

The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $57.5 million and $60.4 million at September 30, 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 September 30, 2013 and December 31, 2012, was $44.6 million and $19.0 million, which represented approximately 42% and 17%, respectively, of the Company’s total aggregate amortized cost of the available-for-sale and held-to-maturity investment portfolios. These decreases 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 decreases in fair value for these securities are temporary at September 30, 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

	September 30, 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	$	34,283	$	575	$	—	$	—	$	34,283	$	575
State and political subdivisions		9,847		565		424		58		10,271		623
Total temporarily impaired securities	$	44,130	$	1,140	$	424	$	58	$	44,554	$	1,198

	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, chargeoffs, 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 chargeoff 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 and nine months ended September 30, 2013 and 2012:

Three months ended September 30, 2013	One-to-four family residential			All other mortgage loans		Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,239		$	1,557	$	185	$	6		$	2,987
Provision charged to expense		(84	)		150		16		(6	)		76
Losses charged off		(30	)		—		—		—			(30	)
Recoveries		8			—		—		1			9
Ending balance	$	1,133		$	1,707	$	201	$	1		$	3,042

Three months ended September 30, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans		Total
	(In thousands)
Beginning balance	$	1,082		$	2,362		$	143	$	5	$	3,592
Provision charged to expense		92			117			14		2		225
Losses charged off		(21	)		(1	)		—		—		(22	)
Recoveries		2			1			14		—		17
Ending balance	$	1,155		$	2,479		$	171	$	7	$	3,812

13

Index

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

Nine months ended September 30, 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		71			(42	)		(76	)		(8	)		(55	)
Losses charged off		(68	)		(176	)		—			(2	)		(246	)
Recoveries		8			—			2			5			15
Ending balance	$	1,133		$	1,707		$	201		$	1		$	3,042

Nine months ended September 30, 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		95			534			(12	)		1			618
Losses charged off		(109	)		(603	)		—			(4	)		(716	)
Recoveries		41			1			14			—			56
Ending balance	$	1,155		$	2,479		$	171		$	7		$	3,812

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 September 30, 2013 and December 31, 2012:

September 30, 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	$	355	$	869	$	69	$	—	$	1,293
Collectively evaluated for impairment		778		838		132		1		1,749
Total allowance for loan losses	$	1,133	$	1,707	$	201	$	1	$	3,042
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,913	$	4,727	$	149	$	—	$	11,789
Collectively evaluated for impairment		160,359		82,394		10,825		1,221		254,799
Total balance	$	167,272	$	87,121	$	10,974	$	1,221	$	266,588

14

Index

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

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 $687 and $569 or loans in process of $4.9 million and $2.6 million, respectively, for September 30, 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 September 30, 2013 and December 31, 2012:

September 30, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	158,497	$	80,341	$	10,419	$	1,219
Special Mention (Risk 5)		569		2,053		406		—
Substandard (Risk 6)		8,206		4,727		149		2
Total	$	167,272	$	87,121	$	10,974	$	1,221

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

15

Index

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

* 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 nonperforming 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 chargeoff amount can be reasonably determined.

16

Index

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

The following tables present the Bank’s loan portfolio aging analysis for September 30, 2013 and December 31, 2012:

September 30, 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	$	102	$	229	$	869	$	1,200	$	166,072	$	167,272	$	—
All other mortgage loans		—		—		815		815		86,306		87,121		—
Commercial business loans		70		—		—		70		10,904		10,974		—
Consumer loans		—		—		—		—		1,221		1,221		—
Total	$	172	$	229	$	1,684	$	2,085	$	264,503	$	266,588	$	—

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	$	—

17

Index

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

Nonaccrual loans were comprised of the following at:

Nonaccrual loans	September 30, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,238	$	2,097
Nonresidential real estate loans		1,881		3,123
All other mortgage loans		—		—
Commercial business loans		—		32
Consumer loans		2		4
Total	$	4,121	$	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 September 30, 2013 and December 31, 2012 in combination with activity for the three and nine months ended September 30, 2013 and 2012 is presented below:

18

Index

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

	As of September 30, 2013						Three months ended September 30, 2013				Nine months ended September 30, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,602	$	5,602	$	—	$	5,785	$	84	$	5,702	$	222
All other mortgage loans		2,225		2,225		—		2,276		23		2,427		72
Commercial business loans		80		80		—		81		1		83		2
Loans with a specific valuation allowance
One-to-four family residential loans		1,311		1,311		355		1,208		7		1,266		22
All other mortgage loans		2,502		3,097		869		2,504		20		2,730		56
Commercial business loans		69		69		69		73		—		83		2
Total:
One-to-four family residential loans	$	6,913	$	6,913	$	355	$	6,993	$	91	$	6,968	$	244
All other mortgage loans		4,727		5,322		869		4,780		43		5,157		128
Commercial business loans		149		149		69		154		1		166		4
	$	11,789	$	12,384	$	1,293	$	11,927	$	135	$	12,291	$	376

19

Index

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

	As of December 31, 2012						Three months ended September 30, 2012				Nine months ended September 30, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in impaired Loans		Interest Income Recognized		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	$	—	$	3,024	$	21	$	3,144	$	90
All other mortgage loans		2,781		2,781		—		2,324		3		2,179		58
Commercial business loans		85		85		—		—		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		1,210		2		889		35
All other mortgage loans		3,056		3,652		1,074		4,723		25		4,998		64
Commercial business loans		100		100		100		43		1		66		1
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,234	$	23	$	4,033	$	125
All other mortgage loans		5,837		6,433		1,074		7,047		28		7,177		122
Commercial business loans		185		185		100		43		1		66		1
	$	12,900	$	13,496	$	1,422	$	11,324	$	52	$	11,276	$	248

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 the September 30, 2013 quarter, concessions made to borrowers included exceptions to loan policy including high loan to value ratios, no private mortgage insurance (“PMI”) and high debt to income ratios. The TDR classifications that occurred in the 2013 year-to-date period, included those concessions listed above for the current period quarter and an effective interest rate below the market interest rate of similar debt, and an extension of the maturity date. The TDR classifications which occurred in the September 30, 2012 year-to-date 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 or nine month periods ended September 30, 2013 and 2012. The Company considers TDRs that become 90 days or more past due under modified terms as subsequently defaulted.

20

Index

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

	Quarter-to-Date						Year-to-Date
Troubled Debt Restructurings	Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance		Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance
	(dollars in thousands)
September 30, 2013
One-to-four family residential loans		4	$	493	$	517		6	$	909	$	933
All other mortgage loans		—		—		—		1		576		576
September 30, 2012
One-to-four family residential loans		—	$	—	$	—		2	$	538	$	538

Note 5: Goodwill and Intangible Assets

The composition of goodwill and other intangible assets, all of which is core deposit intangible, at September 30, 2013 and December 31, 2012:

	September 30, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(914	)		(846	)
Total	$	1,779		$	1,847

The Company recorded amortization relative to intangible assets totaling $23,000 and $68,000 for both of the three and nine month periods ended September 30, 2013, and 2012 respectively. The Company anticipates $90,000 of amortization for 2013 and $38,000 for 2014. Such amortization is derived using the straight line method for the core deposit asset over ten years. 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:

21

Index

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

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Weighted-average common shares outstanding (basic)		2,841,213		2,935,469		2,871,754		2,937,589
Dilutive effect of assumed exercise of stock options		—		—		—		—
Weighted-average common shares outstanding (diluted)		2,841,213		2,935,469		2,871,754		2,937,589

None of the outstanding options were included in the diluted earnings per share calculation for the three and nine months ended September 30, 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. At September 30, 2013, all options under the 2004 Plan were expired. The Company recognized compensation expense related to stock option awards based on the fair value of the option award at the grant date. Compensation cost was recognized over the vesting period. There were no options granted during the three and nine months ended September 30, 2013 and 2012. There was no compensation expense recognized for the stock option plan during the three and nine months ended September 30, 2013 and 2012, as all options were fully vested prior to these periods.

22

Index

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

A summary of the status of the Company’s stock option plan as of and for the nine months ended September 30, 2013, and for the year ended December 31, 2012 is presented below:

	Nine months ended September 30, 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
Expired		41,204	$	13.95		—		—
Outstanding at end of period		—	$	—		58,908	$	13.95
Options exercisable at period-end		—	$	—		58,908	$	13.95

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 September 30, 2013, that the Bank met all capital adequacy requirements to which it is subject.

23

Index

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

As of September 30, 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 September 30, 2013 that management believes have changed the Bank’s capital classification.

The Bank’s actual capital amounts and ratios as of September 30, 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 September 30, 2013
Tier I Capital to average assets	$	34,768		8.7	%	$	15,970		4.0	%	$	19,962		5.0	%
Tier I Capital to risk- weighted assets		34,768		14.2	%		9,773		4.0	%		14,660		6.0	%
Total Risk-based capital to risk-weighted assets		37,810		15.5	%		19,546		8.0	%		24,433		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	%

24

Index

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

Note 9: Accumulated Other Comprehensive Income (Loss)

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

	Gross Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Gross Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income (Loss)
	(In thousands)
September 30, 2013	$	1,186	$	(246	)	$	(1,096	)	$	(31	)	$	(187	)
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

There were no amounts reclassified out of accumulated other comprehensive (loss) income during the three

and nine months ended September 30, 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.

25

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 September 30, 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)
September 30, 2013
U.S. government agencies	$	140	$	—	$	140	$	—
Mortgage-backed securities of government sponsored entities		77,437		—		77,437		—
Private-label collateralized mortgage obligations		792		—		792		—
State and political subdivisions		22,515		—		22,515		—

			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		—

26

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 September 30, 2013 and December 31, 2012.

27

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)
September 30, 2013
Foreclosed assets	$	38		—		—	$	38
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.

	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
September 30, 2013
Foreclosed assets	$	38	Contract sales price	Selling Costs		10	%
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 September 30, 2013 as compared to December 31, 2012.

28

Index

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

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)
September 30, 2013
Financial assets
Cash and cash equivalents	$	8,002	$	8,002	$	—	$	—
Held-to-maturity securities		6,646		—		6,214		—
Loans, net of allowance for loan losses		257,979		—		—		264,539
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,371		—		1,371		—
Financial liabilities
Deposits		326,615		—		298,337		—
Other short-term borrowings		6,516		—		6,516		—
Federal Home Loan Bank advances		22,957		—		23,513		—
Advances from borrowers for taxes and insurance		662		—		662		—
Interest payable		53		—		53		—

29

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.

30

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 September 30, 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.

31

Index

Wayne Savings Bancshares, Inc.
Notes to Condensed 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 included 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.

32

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, product development, sales training and sales management expenses are likely to increase ahead of revenue.

Another ongoing initiative is the review of branch facilities, branch staff and staffing across the Bank 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 while remaining attentive to the potential effect on short and long-term operating results.

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. During the second quarter of 2013, the Board of Directors formed a Risk Management Committee to oversee management’s ERM program. The committee is meeting on a quarterly basis.

Critical Accounting Policies

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.

33

Index

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

Discussion of Financial Condition Changes from December 31, 2012 to September 30, 2013

At September 30, 2013, the Company had total assets of $399.7 million, a decrease of $2.4 million, or 0.6%, from total assets at December 31, 2012. The decrease in total assets includes a $4.1 million decrease in cash and a $7.7 million decrease in total securities, partially offset by a $10.1 million increase in net loan balances.

Total securities decreased $7.7 million during the nine months ended September 30, 2013. The decrease was primarily principal repayments of $31.1 million, amortization of premiums of $1.4 million, and a $2.3 million decrease in unrealized gains on available-for-sale securities, partially offset by purchases totaling $27.1 million during the nine months ended September 30, 2013.

Net loans receivable increased by $10.1 million at September 30, 2013 compared to December 31, 2012. The Bank originated $50.0 million of loans, received payments of $33.1 million, and originated and sold $6.5 million of 30-year fixed-rate mortgage loans into the secondary market, and recorded a credit for loan losses of $55,000. The increase in net loan balances is mainly due to the increased sales efforts by our team of commercial lenders supported by marketing activities to increase awareness within our market area regarding the Bank’s commercial, mortgage and consumer loan products and services.

Management continues to focus on key areas of risk when reviewing potential loan originations and securities purchases, including interest rate, liquidity and credit risk. Interest rate risk arises mainly from longer term fixed rate loans. Credit risk arises mainly from loan structure and underwriting conditions. The effects of additional loan portfolio risks generated by competitive pressures in the Company’s market area are evaluated relative to the projected returns to ensure acceptable financial performance over a long-term horizon. As part of an overall strategy to manage liquidity and interest rate risk, management continues to execute 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. These strategies have the effect of generating lower loan yields in the short-term due to the loans being priced off the lower yield short end of the yield curve. The principal source of liquidity is the Bank’s investment securities portfolio. To the extent that loan demand is insufficient in any given period, investments in the securities portfolio are made to provide cash flows to fund loan demand in future periods (a source of liquidity), 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.

34

Index

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

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

	September 30, 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)	$	167,272		62.74	%	$	160,910		63.25	%
Residential construction loans		4,259		1.60	%		2,170		0.85	%
Multi-family residential		14,042		5.27	%		9,790		3.85	%
Nonresidential real estate/land(2)		68,820		25.82	%		65,761		25.85	%
Total mortgage loans		254,393		95.43	%		238,631		93.80	%
Other loans:
Consumer loans(3)		1,221		0.46	%		1,517		0.60	%
Commercial business loans		10,974		4.11	%		14,245		5.60	%
Total other loans		12,195		4.57	%		15,762		6.20	%
Total loans before net items		266,588		100.00	%		254,393		100.00	%
Less:
Loans in process		4,880					2,647
Deferred loan origination fees		687					569
Allowance for loan losses		3,042					3,328
Total loans receivable, net	$	257,979				$	247,849

⁽¹⁾ Includes equity loans collateralized by second mortgages in the aggregate amount of $14.2 million at September 30, 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 $2.8 million at September 30, 2013 and $2.3 million for December 31, 2012.

⁽³⁾ Includes second mortgage loans of $603 at September 30, 2013 and $683 at December 31, 2012.

35

Index

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

Foreclosed assets held for sale totaled $38,000 at September 30, 2013 compared to $318,000 at December 31, 2012. Activity during the current year period included the sale of four residential properties totaling $305,000, that were previously held as foreclosed assets, resulting in a gain of $6,000, and one new foreclosed property was added during the current year period, that was subsequently written down by $26,000, based on a current purchase offer as accepted by the Bank. Total nonperforming and impaired assets totaled $13.1 million, or 3.28% of total assets, and $14.8 million, or 3.68% of total assets, at September 30, 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 September 30, 2013.

Prepaid federal deposit insurance premiums (FDIC) decreased $596,000 at September 30, 2013 compared to December 31, 2012. The decrease was substantially related to the refund of the prepaid assessment on deposit with the FDIC that was imposed on all insured institutions in December of 2009.

Deposits totaled $326.6 million at September 30, 2013, a decrease of $1.1 million, compared to $327.7 million at December 31, 2012. Demand deposits decreased $891,000, or 1.1%, and time deposits decreased $7.4 million, or 5.5%, which were partially offset by a $7.2 million, or 6.4% 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.

Included in Time deposits are funds received from the State of Ohio (“State”) as a result of the Company’s participation in the State-sponsored SaveNow program. The SaveNow program allows eligible customers of the Bank to receive up to 3.25% in interest on their deposits, on balances up to $5,000, for a term no longer than two years. The Bank’s rate paid on $2.3 million of consumer deposits was .25%, while the State added an additional 3.0%, which was funded by deposits from the State, that totaled $8.5 million at September 30, 2013. The State suspended the SaveNOW program during the third quarter of 2013, with no new accounts being allowed to open. Existing accounts will mature in accordance with terms of the program. The last accounts opened under the SaveNOW program will mature during the third quarter of 2015. The Bank’s participation in this program will end corresponding to the maturities of both customer SaveNow accounts and State time deposits associated with the program. As these funds are withdrawn the Company will seek to replace these balances with other funds based on the interest rate environment and liquidity position at that time. As the State deposits are required to be collateralized, the securities currently pledged against these deposits will be released and will become available for other types of liquidity management.

Other short-term borrowings, which consist solely of repurchase agreements with commercial customers of the Bank, decreased by $561,000 and totaled $6.5 million at September 30, 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 September 30, 2013 and December 31, 2012.

36

Index

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

Advances from the Federal Home Loan Bank of Cincinnati (“FHLB”) totaled $23.0 million at September 30, 2013, and increased $1.7 million, or 8.2%, compared to $21.2 million at December 31, 2012. This increase includes a $1.0 million increase in fixed rate term advances, a $650,000 increase in short-term overnight borrowings resulting from the timing of loan and deposit cash flows, and $90,000 related to amortized prepayment penalties. The Company uses advances from the FHLB for both short-term cash management purposes and to extend the term to maturity of liabilities for interest rate risk management purposes. The cost of longer term liabilities purchased from the FHLB is generally less expensive than obtaining a similar term to maturity 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 September 30, 2013 compared to 2.69% at December 31, 2012.

Stockholders’ equity decreased by $1.3 million during the nine months ended September 30, 2013, primarily due to dividends declared of $656,000, purchases of treasury stock totaling $774,000 and a $1.5 million decrease in accumulated other comprehensive income related solely to a decline in unrealized gains on available-for-sale securities, partially offset by net income of $1.6 million during the current year period.

The purchase of treasury shares during the current year period were made as part of the Company’s share repurchase program that was initially announced during 2012 whereby the Company was authorized to repurchase up to 5.0%, or 150,206 shares of its common stock outstanding. On September 30, 2013 the Company announced the adoption of a new share repurchase program authorizing the repurchase of an additional 2.5% or 72,150, shares of its common stock outstanding. As a result of these two plans, net of shares previously repurchased, the Company may repurchase up to 104,242 shares of its common stock outstanding.

Comparison of Operating Results for the Three Months Ended September 30, 2013 and 2012

General

Net income for the three months ended September 30, 2013, totaled $508,000, reflecting an increase of $43,000, from $465,000 for the three month period ended September 30, 2012. The increase in net income was primarily due to decreases in both the provision for loan losses and noninterest expense, partially offset by decreases in net interest income, noninterest income and an increase in provision for federal income taxes.

37

Index

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

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 September 30,
	2013							2012
	Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net(1)	$	251,703	$	2,874		4.57	%	$	237,377	$	2,964		4.99	%
Investment securities(2)		112,317		633		2.25	%		130,419		788		2.42	%
Interest-earning deposits(3)		10,714		54		2.02	%		11,534		55		1.91	%
Total interest-earning assets		374,734		3,561		3.80	%		379,330		3,807		4.01	%
Noninterest-earning assets		23,999							23,990
Total assets	$	398,733						$	403,320
Interest-bearing liabilities:
Deposits	$	326,772	$	417		0.51	%	$	326,828	$	500		0.61	%
Other short-term borrowings		6,889		3		0.17	%		7,035		3		0.17	%
Borrowings		21,779		155		2.85	%		24,066		165		2.74	%
Total interest-bearing liabilities		355,440		575		0.65	%		357,929		668		0.75	%
Noninterest-bearing liabilities		4,773							4,531
Total liabilities		360,213							362,460
Stockholders’ equity		38,520							40,860
Total liabilities and stockholders’           equity	$	398,733						$	403,320
Net interest income			$	2,986						$	3,139
Interest rate spread(4)						3.15	%						3.26	%
Net yield on interest-earning assets(5)						3.19	%						3.31	%
Ratio of average interest-earning assets      to average interest-bearing liabilities						105.43	%						105.98	%

⁽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.

38

Index

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

Interest Income

Interest income decreased $246,000 or 6.5%, to $3.6 million for the three months ended September 30, 2013, compared to the same period in 2012. The decrease was due to 21 basis point decrease in the weighted-average yield on interest-earning assets from 4.01% in the 2012 period to 3.80% for the 2013 period, as well as a $4.6 million decrease in the average balance of interest-earning assets from $379.3 million in the 2012 period to $374.7 million for the 2013 period. The yield decrease was primarily due to a continuation of the overall low market interest rate environment, despite an increase in intermediate and long term interest rates in the second quarter of 2013 that persisted into the third quarter of 2013, partially offset by a shift in the Company’s mix of earning assets from lower yielding securities into higher yielding loans. The 2013 increase in interest rates resulted in a significant decrease in the volume of rate driven loan refinancing compared to the prior year period. However, the continued overall level of market interest rates continues to result in existing 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, increased prepayments on loans and securities, amortization of purchase premiums on securities and reinvestment of securities cash flows at lower market yields.

Interest income on loans decreased $90,000, or 3.0%, for the three month period ended September 30, 2013, compared to the same period in 2012. This decrease was primarily due to a 42 basis point decrease in the weighted-average loan portfolio yield from 4.99% for the three months ended September 30, 2012 to 4.57% for the three months ended September 30, 2013, as a result of lower origination yields and the amortization, prepayment and repricing of higher yielding loans due to the low level of market interest rates. The decrease in the weighted-average loan portfolio yield was partially offset by a $14.3 million, or 6.0%, increase in the average balance of loans outstanding from $237.4 million in the 2012 period to $251.7 million for the 2013 period. Interest income on securities decreased $155,000 during the three months ended September 30, 2013, compared to the same period in 2012. This decrease was due to a 17 basis point decrease in the weighted-average rate from 2.42% in the 2012 period to 2.25% for the 2013 period, and an $18.1 million, or 13.9%, decrease in the average balance.

Dividends on Federal Home Loan Bank stock and other income decreased $1,000 for three months ended September 30, 2013 compared to September 30, 2012. The decrease was due to an $820,000 decrease in the average balance, partially offset by an 11 basis point increase in the weighted average rate from 1.91% at September 30, 2012, to 2.02% at September 30, 2013.

Interest Expense

Interest expense totaled $575,000 for the three month period ended September 30, 2013, a decrease of $93,000, or 13.9%, from $668,000 for the three month period ended September 30, 2012. The decrease was due to a 10 basis point decrease in the weighted-average cost of funds from 0.75% in the 2012 period to 0.65% in the current year period as well as a $2.5 million, or .7%, decrease in the average balance of total interest-bearing liabilities from $357.9 million in the 2012 period to $355.4 in the 2013 period.

Interest expense on deposits for the three month period ended September 30, 2013 totaled $417,000, a decrease of $83,000, or 16.6%, from $500,000 for the same period in the previous year. The decrease was substantially due to a 10 basis point decrease in the weighted-average cost of deposits, from 0.61% in the 2012 period to 0.51% for the 2013 period, as the average balance was $326.8 million for both the 2012 and 2013 periods. 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 and as pricing pressure in the local market has begun rising. Interest expense on other short-term borrowings totaled $3,000 for both three month periods ended September 30, 2013, and 2012. The weighted-average cost was unchanged at 0.17%, for both periods, while the average balance decreased by $146,000.

39

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 $155,000 for the three month period ended September 30, 2013, which decreased $10,000 from $165,000 in the 2012 period. The decrease was primarily due to a $2.3 million, or 9.5%, decrease in the average balance outstanding, due to the repayment of maturing advances, partially offset by an 11 basis point increase in the weighted-average cost from 2.74% in the 2012 period to 2.85% in the 2013 period, as the maturing advances were at a lower cost than the remaining portfolio.

Net Interest Income

Net interest income totaled $3.0 million for the three month period ended September 30, 2013, a decrease of $153,000, or 4.9%, from the three month period ended September 30, 2012. The decrease in net interest income was mainly due to a 11 basis point decrease in the net interest rate spread, from 3.26% at September 30, 2012 to 3.15% at September 30, 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 September 30, 2013, the yield on earning assets decreased 21 basis points, while the rate paid on interest-bearing liabilities decreased 10 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, partially offset by a shift in the mix of earning assets from lower yielding securities into higher yielding loans. The decrease in the cost of funds from the prior year period, was mainly due to a continuing preference by customers in the current low interest rate environment for lower cost and more liquid deposit accounts over longer term certificate accounts and management’s continuing strategy of limiting competition for higher cost term deposits by focusing on relationship balances.

Provision for Loan Losses

Management recorded a $76,000 provision for loan losses for the three month period ended September 30, 2013, compared to $225,000 for the three month period ended September 30, 2012. The decrease in the provision for the current year quarter was primarily due to favorable movement in the economic factors considered as part of management’s analysis, partially offset with the effect of growth in the loan portfolio.

Noninterest Income

Noninterest income totaled $394,000, for the three months ended September 30, 2013, a decrease of $122,000, or 23.6%, from $516,000 for the same period in 2012. The decrease was primarily due to a $101,000 decrease in gain on sale of loans, $62,000 decrease in Trust income, and an $11,000 decrease in gain (loss) on sale of foreclosed assets, partially offset by a $53,000 increase in service fees, charges and other operating income. The decrease in gain on sale of loans was due to market price fluctuations which had a negative impact on the premium on loans sold compared to the prior year quarter. The decrease in Trust income was due to the completion of the transfer and assumption agreement between the Bank and Thomasville National Bank (TNB) during November of 2012 that transferred the Bank’s Trust Department assets, and related income, from the Bank to TNB. The decrease in gain (loss) on sale of foreclosed assets was related to a loss on the sale of a residential real estate property previously held in foreclosed assets held for sale. The increase in service fees, charges and other operating income includes a $31,000 increase in fees earned on annuity sales, and $14,000 in facilities and equipment reimbursements from TNB, as a result if the trust transfer and assumption agreement mentioned above, a $5,000 increase in fees related to non-sufficient funds, and a $9,000 increase in visa interchange income.

40

Index

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

Noninterest Expense

Noninterest expense totaled $2.6 million for the three months ended September 30, 2013, a decrease of $195,000, or 6.9%, from $2.8 million for the three months ended September 30, 2012. The decrease was primarily due to a $48,000 decrease in salaries and employee benefits, and a $196,000 decrease in other operating expenses, partially offset by a $40,000 increase in occupancy and equipment expense and a $15,000 increase in provision for impairment on foreclosed assets held for sale. The decrease in salaries and employee benefits was primarily due to reduced compensation cost as a result of staff attrition since the prior year quarter. The decrease in other operating expenses was primarily due a decrease in marketing, special services required to assist the Bank with contract negotiations with vendors, legal services, and trust service charges compared to the prior year quarter. The increase in occupancy and equipment expense is primarily due to an increase in building and equipment repairs and maintenance compared to the prior year quarter. The increase in provision for impairment on foreclosed assets held for sale was due to an increase in write-downs related to foreclosed property held for sale compared to the prior year quarter.

Federal Income Taxes

Federal income tax expense totaled $151,000 for the three month period ended September 30, 2013, an increase of $26,000 compared to $125,000 for three month period ended September 30, 2012. The increase was primarily due to a $69,000 increase in pretax income compared to the prior year period. The effective tax rate for the three month period ended September 30, 2013 was 22.9% compared to 21.2% for the prior year period. The effective rate is below the statutory rate of 34% due to certain income items that are not subject to tax.

Comparison of Operating Results for the Nine Months Ended September 30, 2013 and 2012

General

Net income for the nine months ended September 30, 2013 totaled $1.6 million, an increase of $336,000 from $1.2 million for the nine month period ended September 30, 2012. The increase in net income was primarily due to decreases in both the provision (credit) for loan losses, and noninterest expense, partially offset by decreases in net interest income and noninterest income, and an increase in provision for federal income taxes.

41

Index

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

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 nine months ended September 30,
	2013							2012
	Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net(1)	$	248,134	$	8,608		4.63	%	$	234,195	$	8,895		5.06	%
Investment securities(2)		114,981		1,921		2.23	%		133,246		2,592		2.59	%
Interest-earning deposits(3)		12,582		165		1.75	%		13,804		171		1.65	%
Total interest-earning assets		375,697		10,694		3.80	%		381,245		11,658		4.08	%
Noninterest-earning assets		24,483							23,818
Total assets	$	400,180						$	405,063
Interest-bearing liabilities:
Deposits	$	327,152	$	1,283		0.52	%	$	328,516	$	1,654		0.67	%
Other short-term borrowings		6,620		8		0.16	%		6,738		8		0.16	%
Borrowings		21,448		460		2.86	%		25,194		515		2.73	%
Total interest-bearing liabilities		355,220		1,751		0.66	%		360,448		2,177		0.81	%
Noninterest bearing  liabilities		5,536							4,322
Total liabilities		360,756							364,770
Stockholders’ equity		39,424							40,293
Total liabilities and stockholders’           equity	$	400,180						$	405,063
Net interest income			$	8,943						$	9,481
Interest rate spread(4)						3.14	%						3.27	%
Net yield on interest-earning assets(5)						3.17	%						3.32	%
Ratio of average interest-earning assets      to average interest-bearing liabilities						105.76	%						105.77	%

⁽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.

42

Index

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

Interest Income

Interest income decreased $964,000 or 8.3%, to $10.7 million for the nine months ended September 30, 2013, compared to the same period in 2012. The decrease was due to 28 basis point decrease in the weighted-average yield on interest-earning assets from 4.08% in the 2012 period to 3.80% for the 2013 period, as well as a $5.5 million decrease in the average balance of interest-earning assets from $381.2 million in the 2012 period to $375.7 million for the 2013 period. The yield decrease was primarily due to a continuation of the overall low market interest rate environment, partially offset by a shift in the Company’s mix of earning assets from lower yielding securities into higher yielding loans. The low market rate environment has resulted in existing 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, increased prepayments on loans and securities, amortization of purchase premiums on securities and reinvestment of securities cash flows at lower market yields.

Interest income on loans decreased $287,000, or 3.2%, for the nine month period ended September 30, 2013, compared to the same period in 2012. This decrease was primarily due to a 43 basis point decrease in the weighted-average loan portfolio yield from 5.06% for the nine months ended September 30, 2012 to 4.63% for the nine months ended September 30, 2013, as a result of lower origination yields and the amortization, prepayment and repricing of higher yielding loans due to the low level of market interest rates. The decrease in the weighted-average loan portfolio yield was partially offset by a $13.9 million, or 6.0%, increase in the average balance of loans outstanding from $234.2 million in the 2012 period to $248.1 million for the 2013 period. Interest income on securities decreased $671,000 during the nine months ended September30, 2013, compared to the same period in 2012. This decrease was due to a 36 basis point decrease in the weighted-average rate from 2.59% in the 2012 period to 2.23% for the 2013 period, and an $18.3 million, or 13.7%, decrease in the average balance.

Dividends on Federal Home Loan Bank stock and other income decreased $6,000 for nine months ended September 30, 2013 compared to September 30, 2012. The decrease was due to a $1.2 million decrease in the average balance, partially offset by a 10 basis point increase in the weighted average rate from 1.65% at September 30, 2012, to 1.75% at September 30, 2013.

Interest Expense

Interest expense totaled $1.8 million for the nine month period ended September 30, 2013, a decrease of $426,000, or 19.6%, from $2.2 million for the nine month period ended September 30, 2012. The decrease was due to a 15 basis point decrease in the weighted-average cost of funds from 0.81% in the 2012 period to 0.66% in the current year period as well as a $5.2 million, or 1.5%, decrease in the average balance of total interest-bearing liabilities from $360.4 million in the 2012 period to $355.2 in the 2013 period.

Interest expense on deposits for the nine month period ended September 30, 2013 totaled $1.3 million, a decrease of $371,000, or 22.4%, from $1.7 million for the same period in the previous year. The decrease was due to a 15 basis point decrease in the weighted-average cost of deposits, from 0.67% in the 2012 period to 0.52% for the 2013 period, as well as a $1.3 million decrease in the average balance from $328.5 million in the 2012 period to $327.2 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 and as pricing pressure in the local market has begun rising.

43

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 $460,000 for the nine month period ended September 30, 2013, which decreased $55,000 from $515,000 in the 2012 period. The decrease was primarily due to a $3.7 million, or 14.9%, decrease in the average balance outstanding, partially offset by a 13 basis point increase in the weighted-average cost from 2.73% in the 2012 period to 2.86% in the 2013 period. The increase in the weighted-average cost is primarily due to the repayment of lower cost maturing advances.

Net Interest Income

Net interest income totaled $8.9 million for the nine month period ended September 30, 2013, a decrease of $538,000, or 5.7%, from the nine month period ended September 30, 2012. The decrease in net interest income was mainly due to a 13 basis point decrease in the net interest rate spread, from 3.27% at September 30, 2012 to 3.14% at September 30, 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 nine months ended September 30, 2013, the yield on earning assets decreased 28 basis points, while the rate paid on interest-bearing liabilities decreased 15 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 decreased 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 ($55,000) credit for loan losses for the nine months ended September30, 2013, compared to a provision of $618,000 for the nine months ended September 30, 2012. The decrease was mainly due to the restructuring of commercial real estate loans allowing the release of required reserves as additional collateral was given to the Bank on several classified relationships during the first quarter of 2013 and continued favorable movement in the economic factors considered as part of management’s analysis, partially offset by the effect of growth in the loan portfolio.

Noninterest Income

Noninterest income totaled $1.2 million, for the nine months ended September 30, 2013, a decrease of $285,000, or 19.5%, from $1.5 million for the same period in 2012. The decrease was primarily due to a $227,000 decrease in Trust income, and a $123,000 decrease in gain on sale of loans, partially offset by $48,000 increase in service charges, fees, and other operating income, and a $19,000 increase in gain on sale of foreclosed assets. The decrease in Trust income was due to the completion of the transfer and assumption agreement as previously mentioned. The decrease in gain on sale of loans was due to market price fluctuations which had a negative impact on the premium on loans sold compared to the prior year period. The increase in service charges, fees, and other operating income is primarily due to $47,000 in facilities and equipment reimbursements from TNB. The increase in gain on sale of foreclosed assets was related to a net gain on the sale of four residential properties in the current year period, compared to a loss on the sale of a commercial real estate property in the prior year period.

44

Index

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

Noninterest Expense

Noninterest expense totaled $8.0 million for the nine months ended September 30, 2013, a decrease of $789,000, or 8.9%, from $8.8 million for the nine months ended September 30, 2012. The decrease was primarily due to a $545,000 decrease in salaries and employee benefits, a $19,000 decrease in Federal deposit insurance premiums, a $20,000 decrease in provision for impairment on foreclosed assets held for sale, and a $245,000 decrease in other operating expenses, partially offset by a $41,000 increase in occupancy and equipment expenses. The decrease in salaries and employee benefits was mainly due to lower compensation costs resulting from 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 period, the absence of one-time severance expenses associated with the trust transfer and assumption agreement and staff attrition since the prior year period, and a nonrecurring health savings account contribution made in the prior year period that was not repeated in the current year period. The decrease in Federal deposit insurance premiums was primarily due to a decline in the Bank’s total assets and assessment rate compared to the prior year period. The decrease in provision for impairment on foreclosed assets held for sale was due to decreased write-downs on foreclosed property held for sale compared to the prior year period. The decrease in other operating expenses was primarily due to declines in trust service charges, legal, marketing, and audit accounting-related expenses, partially offset by increases in stationary printing and supplies, postage, and organization dues compared to the prior year period. The increase in occupancy and equipment expenses was primarily due to an increase in depreciation, and furniture and fixture repairs and maintenance compared to the prior year period.

Federal Income Taxes

Federal income tax expense totaled $562,000 for the nine month period ended September 30, 2013, an increase of $303,000 compared to $259,000 for nine month period ended September 30, 2012. The increase was primarily due to a $639,000 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. The effective tax rate for the nine month period ended September 30, 2013 was 26.3% compared to 17.3% for the prior year period. The increase in the effective tax rate for the current year period was primarily due to the tax benefit recorded in the prior year period as mentioned above. The effective rate is below the statutory rate of 34% due to certain income items that are not subject to tax.

45

Index

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

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.

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.

46

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 September 30, 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
July 1 - 31, 2013		—	$	—		98,114		52,092
August 1 - 31, 2013		10,000	$	10.70		108,114		42,092
September 1 - 30, 2013		10,000	$	10.76		118,114		104,242
Total		20,000	$	10.73		118,114		104,242

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 5.0%, of the Company’s outstanding shares of common stock. On September 30, 2013 the Company announced the adoption of a new share buy-back program authorizing the repurchase of an additional 2.5% or 72,150, shares of its common stock outstanding. As a result of these two plans, net of shares previously repurchased, the Company may repurchase up to 104,242 shares of its common stock outstanding.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

47

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits

Exhibit
Number	Description
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)

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  November 8, 2013	By:	/s/Rod C. Steiger
		Rod C. Steiger
		President and Chief Executive Officer
Date:  November 8, 2013	By:	/s/Myron Swartzentruber
		Myron Swartzentruber
		Senior Vice President and
		Chief Financial Officer

49

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.

November 8, 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.

November 8, 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 September 30, 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.

November 8, 2013	/s/Rod C. Steiger
Date	Rod C. Steiger
	President and Chief Executive Officer
November 8, 2013	/s/Myron Swartzentruber
Date	Myron Swartzentruber
	Senior Vice President and
	Chief Financial Officer

XML

Transfer and Assumption Agreement

9 Months Ended

Sep. 30, 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 included 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.

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest and Dividend Income
Loans	$ 2,874	$ 2,964	$ 8,608	$ 8,895
Securities	633	788	1,921	2,592
Dividends on Federal Home Loan Bank stock and other	54	55	165	171
Total interest and dividend income	3,561	3,807	10,694	11,658
Interest Expense
Deposits	417	500	1,283	1,654
Other short term borrowings	3	3	8	8
Federal Home Loan Bank advances	155	165	460	515
Total interest expense	575	668	1,751	2,177
Net Interest Income	2,986	3,139	8,943	9,481
Provision (Credit) for Loan Losses	76	225	(55)	618
Net Interest Income After Provision (Credit) for Loan Losses	2,910	2,914	8,998	8,863
Noninterest Income
Gain on loan sales	7	108	80	203
Gain (Loss) on sale of foreclosed assets held for sale	(11)		6	(13)
Trust income		62		227
Earnings on bank-owned life insurance	74	75	221	223
Service fees, charges and other operating	324	271	872	824
Total noninterest income	394	516	1,179	1,464
Noninterest Expense
Salaries and employee benefits	1,484	1,532	4,516	5,061
Net occupancy and equipment expense	508	468	1,462	1,421
Federal deposit insurance premiums	66	72	206	225
Franchise taxes	100	100	300	301
Provision for impairment on foreclosed assets held for sale	26	11	26	46
Amortization of intangible assets	23	23	68	68
Other	438	634	1,460	1,705
Total noninterest expense	2,645	2,840	8,038	8,827
Income Before Federal Income Taxes	659	590	2,139	1,500
Provision for Federal Income Taxes	151	125	562	259
Net Income	508	465	1,577	1,241
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities	(262)	170	(2,314)	166
Tax benefit (expense)	89	(58)	787	(58)
Other comprehensive income (loss)	(173)	112	(1,527)	108
Total comprehensive income	$ 335	$ 577	$ 50	$ 1,349
Basic Earnings Per Share	$ 0.18	$ 0.16	$ 0.55	$ 0.42
Diluted Earnings Per Share	$ 0.18	$ 0.16	$ 0.55	$ 0.42
Dividends Per Share	$ 0.08	$ 0.07	$ 0.23	$ 0.20

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 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 September 30, 2013 and December 31, 2012:

	September 30, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(914	)		(846	)
Total	$	1,779		$	1,847

The Company recorded amortization relative to intangible assets totaling $23,000 and $68,000 for both of the three and nine month periods ended September 30, 2013, and 2012 respectively. The Company anticipates $90,000 of amortization for 2013 and $38,000 for 2014. Such amortization is derived using the straight line method for the core deposit asset over ten years. 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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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2013

Regulatory Matters Tables

Schedule of Regulatory Capital Requirements

The Bank’s actual capital amounts and ratios as of September 30, 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 September 30, 2013
Tier I Capital to average assets	$	34,768		8.7	%	$	15,970		4.0	%	$	19,962		5.0	%
Tier I Capital to risk- weighted assets		34,768		14.2	%		9,773		4.0	%		14,660		6.0	%
Total Risk-based capital to risk-weighted assets		37,810		15.5	%		19,546		8.0	%		24,433		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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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

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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Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financial assets:
Held-to-maturity securities	$ 6,214	$ 3,740
Carrying Amount
Financial assets:
Cash and cash equivalents	8,002	12,055
Held-to-maturity securities	6,646	3,748
Loans, net of allowance for loan losses	257,979	247,849
Federal Home Loan Bank stock	5,025	5,025
Interest receivable	1,371	1,228
Financial liabilities:
Deposits	326,615	327,737
Other Short Term Borrowings	6,516	7,077
Federal Home Loan Bank Allowances	22,957	21,217
Advance Payments by Borrowers for Taxes and Insurance	662	1,069
Interest Payable	53	51
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	8,002	12,055
Significant Other Observable Inputs (Level 2)
Financial assets:
Held-to-maturity securities	6,214	3,740
Federal Home Loan Bank stock	5,025	5,025
Interest receivable	1,371	1,228
Financial liabilities:
Deposits	298,337	317,312
Other Short Term Borrowings	6,516	7,077
Federal Home Loan Bank Allowances	23,513	22,048
Advance Payments by Borrowers for Taxes and Insurance	662	1,069
Interest Payable	53	51
Significant Unobservable Inputs (Level 3)
Financial assets:
Loans, net of allowance for loan losses	$ 264,539	$ 259,986

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Goodwill and Intangible Assets (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Goodwill And Intangible Assets Details Narrative
Amortization of Intangible Assets	$ 23	$ 23	$ 68	$ 68
Useful life of core deposit asset			10 years
Future amortization expenses of intangible asset
2013	90		90
2014	$ 38		$ 38

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Securities (Details Narrative) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities Details Narrative
Carrying value of securities pledged as collateral to secure public deposits	$ 57,500	$ 60,400
Fair value of investments, carried at less than historical costs	$ 44,600	$ 19,000
Percentage available for sale Securities in unrealized loss positions out of total available for sale securities	42.00%	17.00%

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 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 September 30, 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)
September 30, 2013
U.S. government agencies	$	140	$	—	$	140	$	—
Mortgage-backed securities of government sponsored entities		77,437		—		77,437		—
Private-label collateralized mortgage obligations		792		—		792		—
State and political subdivisions		22,515		—		22,515		—

			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 September 30, 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)
September 30, 2013
Foreclosed assets	$	38		—		—	$	38
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.

	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
September 30, 2013
Foreclosed assets	$	38	Contract sales price	Selling Costs		10	%
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)
September 30, 2013
Financial assets
Cash and cash equivalents	$	8,002	$	8,002	$	—	$	—
Held-to-maturity securities		6,646		—		6,214		—
Loans, net of allowance for loan losses		257,979		—		—		264,539
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,371		—		1,371		—
Financial liabilities
Deposits		326,615		—		298,337		—
Other short-term borrowings		6,516		—		6,516		—
Federal Home Loan Bank advances		22,957		—		23,513		—
Advances from borrowers for taxes and insurance		662		—		662		—
Interest payable		53		—		53		—

			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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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Collateral-dependent impaired loans		$ 2,437
Foreclosed assets	38	16
Fair Value measured on a Non-Recurring Basis | Fair value
Collateral-dependent impaired loans		2,437
Foreclosed assets	38	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		2,437
Foreclosed assets	$ 38	$ 16

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Credit Quality of Loans and Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Aging analysis of past due loans
30-59 Days Past Due	$ 172		$ 2,594
60-89 Days Past Due	229		341
Greater Than 90 Days Past Due	1,684		2,501
Total Past Due	2,085		5,436
Current	264,503		248,957
Total loans receivable	266,588		254,393
Total Loans >90 Days & Accruing
One-to-four family residential
Aging analysis of past due loans
30-59 Days Past Due	102		1,049
60-89 Days Past Due	229		339
Greater Than 90 Days Past Due	869		1,190
Total Past Due	1,200		2,578
Current	166,072		158,332
Total loans receivable	167,272	[1]	160,910	[1]
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	815		1,309
Total Past Due	815		2,853
Current	86,306		74,868
Total loans receivable	87,121	[1]	77,721	[1]
Total Loans >90 Days & Accruing
Commercial business loans
Aging analysis of past due loans
30-59 Days Past Due	70
60-89 Days Past Due
Greater Than 90 Days Past Due
Total Past Due	70
Current	10,904		14,245
Total loans receivable	10,974	[1]	14,245	[1]
Total Loans >90 Days & Accruing
Consumer loans
Aging analysis of past due loans
30-59 Days Past Due			1
60-89 Days Past Due			2
Greater Than 90 Days Past Due			2
Total Past Due			5
Current	1,221		1,512
Total loans receivable	1,221	[1]	1,517	[1]
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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Earnings Per Share (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share Details
Weighted-average common shares outstanding (basic)	2,841,213	2,935,469	2,871,754	2,937,589
Dilutive effect of assumed exercise of stock options
Weighted-average common shares outstanding (diluted)	2,841,213	2,935,469	2,871,754	2,937,589

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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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Credit Quality of Loans and Allowance for Loan Losses (Details Narrative) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Credit Quality Of Loans And Allowance For Loan Losses Details Narrative
Deferred loan origination fees	$ 687	$ 569
Loans in process	$ 4,900	$ 2,600

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Regulatory Matters (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Tier 1 Leverage Capital (to average assets)
Tier 1 Capital	$ 34,768	$ 34,774
Tier 1 Capital (to average assets) ratio	8.70%	8.70%
Minimum amount of Tier 1 Capital for adequacy purposes	15,970	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	19,962	20,086
Minimum Tier 1 Capital required to be well-capitalized, ratio	5.00%	5.00%
Tier 1 Capital (to risk-weighted assets)
Tier 1 Capital	34,768	34,774
Tier 1 Capital (to risk-weighted assets) ratio	14.20%	14.70%
Minimum amount of Tier 1 Capital for adequacy purposes	9,773	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	14,660	14,187
Minimum Tier 1 Capital required to be well-capitalized, ratio	6.00%	6.00%
Total Capital
Total Capital	37,810	37,734
Total Capital (to risk-weighted assets) ratio	15.50%	16.00%
Minimum amount of capital for adequacy purposes	19,546	18,916
Minimum amount of capital for adequacy purposes, ratio	8.00%	8.00%
Minimum Capital required to be well-capitalized	$ 24,433	$ 23,644
Minimum Capital required to be well-capitalized, ratio	10.00%	10.00%

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2013

Accumulated Other Comprehensive Income Tables

Schedule of Accumulated Other Comprehensive Income

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

	Gross Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Gross Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income (Loss)
	(In thousands)
September 30, 2013	$	1,186	$	(246	)	$	(1,096	)	$	(31	)	$	(187	)
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

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Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis Of Presentation

Basis of Presentation

Note 1: Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2013 and for the three and nine months ended September 30, 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 and nine months ended September 30, 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.

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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Securities

9 Months Ended

Sep. 30, 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
September 30, 2013:
U.S. government agencies	$	139	$	1	$	—	$	140
Mortgage-backed securities of           government sponsored entities		76,693		1,317		573		77,437
Private-label collateralized           mortgage obligations		757		35				792
State and political subdivisions		22,110		587		182		22,515
Totals	$	99,699	$	1,940	$	755	$	100,884

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
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:
September 30, 2013:
U.S. government agencies	$	111	$	—	$	—	$	111
Mortgage-backed securities of         government sponsored entities		1,407		11		2		1,416
State and political subdivisions		5,128		—		441		4,687
Totals	$	6,646	$	11	$	443	$	6,214

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
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 September 30, 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	$	3,183	$	3,346	$	—	$	—
Five to ten years		4,055		4,109		2,637		2,490
After ten years		15,011		15,200		2,602		2,308
		22,249		22,655		5,239		4,798
Mortgage-backed securities of government sponsored entities		76,693		77,437		1,407		1,416
Private-label collateralized mortgage obligations		757		792		—		—
Totals	$	99,699	$	100,884	$	6,646	$	6,214

The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $57.5 million and $60.4 million at September 30, 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 September 30, 2013 and December 31, 2012, was $44.6 million and $19.0 million, which represented approximately 42% and 17%, respectively, of the Company’s total aggregate amortized cost of the available-for-sale and held-to-maturity investment portfolios. These decreases 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 decreases in fair value for these securities are temporary at September 30, 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.

	September 30, 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	$	34,283	$	575	$	—	$	—	$	34,283	$	575
State and political subdivisions		9,847		565		424		58		10,271		623
Total temporarily impaired securities	$	44,130	$	1,140	$	424	$	58	$	44,554	$	1,198

	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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Earnings Per Share

9 Months Ended

Sep. 30, 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 September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Weighted-average common shares outstanding (basic)		2,841,213		2,935,469		2,871,754		2,937,589
Dilutive effect of assumed exercise of stock options		—		—		—		—
Weighted-average common shares outstanding (diluted)		2,841,213		2,935,469		2,871,754		2,937,589

None of the outstanding options were included in the diluted earnings per share calculation for the three and nine months ended September 30, 2013 and 2012, as the average fair value of the shares was less than the option exercise prices.

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Credit Quality of Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 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, chargeoffs, 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 chargeoff 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 and nine months ended September 30, 2013 and 2012:

Three months ended September 30, 2013	One-to-four family residential			All other mortgage loans		Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,239		$	1,557	$	185	$	6		$	2,987
Provision charged to expense		(84	)		150		16		(6	)		76
Losses charged off		(30	)		—		—		—			(30	)
Recoveries		8			—		—		1			9
Ending balance	$	1,133		$	1,707	$	201	$	1		$	3,042

Three months ended September 30, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans		Total
	(In thousands)
Beginning balance	$	1,082		$	2,362		$	143	$	5	$	3,592
Provision charged to expense		92			117			14		2		225
Losses charged off		(21	)		(1	)		—		—		(22	)
Recoveries		2			1			14		—		17
Ending balance	$	1,155		$	2,479		$	171	$	7	$	3,812

Nine months ended September 30, 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		71			(42	)		(76	)		(8	)		(55	)
Losses charged off		(68	)		(176	)		—			(2	)		(246	)
Recoveries		8			—			2			5			15
Ending balance	$	1,133		$	1,707		$	201		$	1		$	3,042

Nine months ended September 30, 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		95			534			(12	)		1			618
Losses charged off		(109	)		(603	)		—			(4	)		(716	)
Recoveries		41			1			14			—			56
Ending balance	$	1,155		$	2,479		$	171		$	7		$	3,812

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 September 30, 2013 and December 31, 2012:

September 30, 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	$	355	$	869	$	69	$	—	$	1,293
Collectively evaluated for impairment		778		838		132		1		1,749
Total allowance for loan losses	$	1,133	$	1,707	$	201	$	1	$	3,042
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,913	$	4,727	$	149	$	—	$	11,789
Collectively evaluated for impairment		160,359		82,394		10,825		1,221		254,799
Total balance	$	167,272	$	87,121	$	10,974	$	1,221	$	266,588

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 $687 and $569 or loans in process of $4.9 million and $2.6 million, respectively, for September 30, 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 September 30, 2013 and December 31, 2012:

September 30, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	158,497	$	80,341	$	10,419	$	1,219
Special Mention (Risk 5)		569		2,053		406		—
Substandard (Risk 6)		8,206		4,727		149		2
Total	$	167,272	$	87,121	$	10,974	$	1,221

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 nonperforming 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 chargeoff amount can be reasonably determined.

The following tables present the Bank’s loan portfolio aging analysis for September 30, 2013 and December 31, 2012:

September 30, 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	$	102	$	229	$	869	$	1,200	$	166,072	$	167,272	$	—
All other mortgage loans		—		—		815		815		86,306		87,121		—
Commercial business loans		70		—		—		70		10,904		10,974		—
Consumer loans		—		—		—		—		1,221		1,221		—
Total	$	172	$	229	$	1,684	$	2,085	$	264,503	$	266,588	$	—

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	$	—

Nonaccrual loans were comprised of the following at:

Nonaccrual loans	September 30, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,238	$	2,097
Nonresidential real estate loans		1,881		3,123
All other mortgage loans		—		—
Commercial business loans		—		32
Consumer loans		2		4
Total	$	4,121	$	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 September 30, 2013 and December 31, 2012 in combination with activity for the three and nine months ended September 30, 2013 and 2012 is presented below:

	As of September 30, 2013						Three months ended September 30, 2013				Nine months ended September 30, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,602	$	5,602	$	—	$	5,785	$	84	$	5,702	$	222
All other mortgage loans		2,225		2,225		—		2,276		23		2,427		72
Commercial business loans		80		80		—		81		1		83		2
Loans with a specific valuation allowance
One-to-four family residential loans		1,311		1,311		355		1,208		7		1,266		22
All other mortgage loans		2,502		3,097		869		2,504		20		2,730		56
Commercial business loans		69		69		69		73		—		83		2
Total:
One-to-four family residential loans	$	6,913	$	6,913	$	355	$	6,993	$	91	$	6,968	$	244
All other mortgage loans		4,727		5,322		869		4,780		43		5,157		128
Commercial business loans		149		149		69		154		1		166		4
	$	11,789	$	12,384	$	1,293	$	11,927	$	135	$	12,291	$	376

	As of December 31, 2012						Three months ended September 30, 2012				Nine months ended September 30, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in impaired Loans		Interest Income Recognized		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	$	—	$	3,024	$	21	$	3,144	$	90
All other mortgage loans		2,781		2,781		—		2,324		3		2,179		58
Commercial business loans		85		85		—		—		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		1,210		2		889		35
All other mortgage loans		3,056		3,652		1,074		4,723		25		4,998		64
Commercial business loans		100		100		100		43		1		66		1
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,234	$	23	$	4,033	$	125
All other mortgage loans		5,837		6,433		1,074		7,047		28		7,177		122
Commercial business loans		185		185		100		43		1		66		1
	$	12,900	$	13,496	$	1,422	$	11,324	$	52	$	11,276	$	248

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 the September 30, 2013 quarter, concessions made to borrowers included exceptions to loan policy including high loan to value ratios, no private mortgage insurance (“PMI”) and high debt to income ratios. The TDR classifications that occurred in the 2013 year-to-date period, included those concessions listed above for the current period quarter and an effective interest rate below the market interest rate of similar debt, and an extension of the maturity date. The TDR classifications which occurred in the September 30, 2012 year-to-date 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 or nine month periods ended September 30, 2013 and 2012. The Company considers TDRs that become 90 days or more past due under modified terms as subsequently defaulted.

	Quarter-to-Date						Year-to-Date
Troubled Debt Restructurings	Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance		Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance
	(dollars in thousands)
September 30, 2013
One-to-four family residential loans		4	$	493	$	517		6	$	909	$	933
All other mortgage loans		—		—		—		1		576		576
September 30, 2012
One-to-four family residential loans		—	$	—	$	—		2	$	538	$	538

XML

Stock Option Plan (Details Narrative)	Sep. 30, 2013
Incentive Options
Maximum Options Authorized	142,857
Non-Incentive Options
Maximum Options Authorized	61,224

XML

Securities (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Available for sale
Amortized Cost	$ 99,699	$ 108,020
Gross Unrealized Gains	1,940	3,606
Gross Unrealized Losses	755	108
Approximate Fair Value	100,884	111,518
Held to maturity
Amortized Cost	6,646	3,748
Gross Unrealized Gains	11	46
Gross Unrealized Losses	443	54
Approximate Fair Value	6,214	3,740
U.S. government agencies
Available for sale
Amortized Cost	139	155
Gross Unrealized Gains	1	1
Gross Unrealized Losses		1
Approximate Fair Value	140	155
Held to maturity
Amortized Cost	111	130
Gross Unrealized Gains		1
Gross Unrealized Losses
Approximate Fair Value	111	131
Mortgage-backed securities of government sponsored entities
Available for sale
Amortized Cost	76,693	83,956
Gross Unrealized Gains	1,317	1,979
Gross Unrealized Losses	573	105
Approximate Fair Value	77,437	85,830
Held to maturity
Amortized Cost	1,407	1,469
Gross Unrealized Gains	11	45
Gross Unrealized Losses	2
Approximate Fair Value	1,416	1,514
Private-label collateralized mortgage obligations
Available for sale
Amortized Cost	757	1,067
Gross Unrealized Gains	35	39
Gross Unrealized Losses
Approximate Fair Value	792	1,106
State and political subdivisions
Available for sale
Amortized Cost	22,110	22,842
Gross Unrealized Gains	587	1,587
Gross Unrealized Losses	182	2
Approximate Fair Value	22,515	24,427
Held to maturity
Amortized Cost	5,128	2,149
Gross Unrealized Gains
Gross Unrealized Losses	441	54
Approximate Fair Value	$ 4,687	$ 2,095

XML

Credit Quality of Loans and Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012	Sep. 30, 2013		Sep. 30, 2012	Dec. 31, 2012
Activity in the allowance for loan losses by portfolio segment
Beginning balance	$ 2,987		$ 3,592	$ 3,328		$ 3,854
Provision (credit) charged to expense	76		225	(55)		618
Losses Charged Off	(30)		(22)	(246)		(716)
Recoveries	9		17	15		56
Ending balance	3,042		3,592	3,042		3,592
Ending balances: Allowance for loan losses
Individually evaluated for impairment	1,293			1,293			1,422
Collectively evaluated for impairment	1,749			1,749			1,906
Ending balances: Loans
Individually evaluated for impairment	11,789			11,789			12,900
Collectively evaluated for impairment	254,799			254,799			241,493
Loans Receivable, gross	266,588			266,588			254,393
One-to-four family residential
Activity in the allowance for loan losses by portfolio segment
Beginning balance	1,239		1,082	1,122		1,128
Provision (credit) charged to expense	(84)		92	71		95
Losses Charged Off	(30)		(21)	(68)		(109)
Recoveries	8		2	8		41
Ending balance	1,133		1,155	1,133		1,155
Ending balances: Allowance for loan losses
Individually evaluated for impairment	355			355			248
Collectively evaluated for impairment	778			778			874
Ending balances: Loans
Individually evaluated for impairment	6,913			6,913			6,878
Collectively evaluated for impairment	160,359			160,359			154,032
Loans Receivable, gross	167,272	[1]		167,272	[1]		160,910	[1]
All other mortgage loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	1,557		2,362	1,925		2,547
Provision (credit) charged to expense	150		117	(42)		534
Losses Charged Off			(1)	(176)		(603)
Recoveries			1			1
Ending balance	1,707		2,479	1,707		2,479
Ending balances: Allowance for loan losses
Individually evaluated for impairment	869			869			1,074
Collectively evaluated for impairment	838			838			851
Ending balances: Loans
Individually evaluated for impairment	4,727			4,727			5,837
Collectively evaluated for impairment	82,394			82,394			71,884
Loans Receivable, gross	87,121	[1]		87,121	[1]		77,721	[1]
Commercial business loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	185		143	275		169
Provision (credit) charged to expense	16		14	(76)		(12)
Losses Charged Off
Recoveries			14	2		14
Ending balance	201		171	201		171
Ending balances: Allowance for loan losses
Individually evaluated for impairment	69			69			100
Collectively evaluated for impairment	132			132			175
Ending balances: Loans
Individually evaluated for impairment	149			149			185
Collectively evaluated for impairment	10,825			10,825			14,060
Loans Receivable, gross	10,974	[1]		10,974	[1]		14,245	[1]
Consumer loans
Activity in the allowance for loan losses by portfolio segment
Beginning balance	6		5	6		10
Provision (credit) charged to expense	(6)		2	(8)		1
Losses Charged Off				(2)		(4)
Recoveries	1			5
Ending balance	1		7	1		7
Ending balances: Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	1			1			6
Ending balances: Loans
Individually evaluated for impairment
Collectively evaluated for impairment	1,221			1,221			1,517
Loans Receivable, gross	$ 1,221	[1]		$ 1,221	[1]		$ 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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Credit Quality of Loans and Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 N	Sep. 30, 2012 N	Sep. 30, 2013 N	Sep. 30, 2012 N
One-to-four family residential
Number of Loans	4		6	2
Pre-modification Unpaid Principal Balance	$ 493		$ 909	$ 538
Post- modification Unpaid Principal Balance	517		933	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) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Recurring Fair Value Measurements
Available-for-sale securities	$ 100,884	$ 111,518
U.S. government agencies
Recurring Fair Value Measurements
Available-for-sale securities	140	155
Mortgage-backed securities of government sponsored entities
Recurring Fair Value Measurements
Available-for-sale securities	77,437	85,830
Private-label collateralized mortgage obligations
Recurring Fair Value Measurements
Available-for-sale securities	792	1,106
State and political subdivisions
Recurring Fair Value Measurements
Available-for-sale securities	22,515	24,427
Fair Value measured on a Recurring Basis | Fair value | U.S. government agencies
Recurring Fair Value Measurements
Available-for-sale securities	140	155
Fair Value measured on a Recurring Basis | Fair value | Mortgage-backed securities of government sponsored entities
Recurring Fair Value Measurements
Available-for-sale securities	77,437	85,830
Fair Value measured on a Recurring Basis | Fair value | Private-label collateralized mortgage obligations
Recurring Fair Value Measurements
Available-for-sale securities	792	1,106
Fair Value measured on a Recurring Basis | Fair value | State and political subdivisions
Recurring Fair Value Measurements
Available-for-sale securities	22,515	24,427
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government agencies
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed securities of government sponsored entities
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Private-label collateralized mortgage obligations
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and political subdivisions
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | U.S. government agencies
Recurring Fair Value Measurements
Available-for-sale securities	140	155
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities of government sponsored entities
Recurring Fair Value Measurements
Available-for-sale securities	77,437	85,830
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | Private-label collateralized mortgage obligations
Recurring Fair Value Measurements
Available-for-sale securities	792	1,106
Fair Value measured on a Recurring Basis | Significant Other Observable Inputs (Level 2) | State and political subdivisions
Recurring Fair Value Measurements
Available-for-sale securities	22,515	24,427
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | U.S. government agencies
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | Mortgage-backed securities of government sponsored entities
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | Private-label collateralized mortgage obligations
Recurring Fair Value Measurements
Available-for-sale securities
Fair Value measured on a Recurring Basis | Significant Unobservable Inputs (Level 3) | State and political subdivisions
Recurring Fair Value Measurements
Available-for-sale securities

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Allowance for loan losses	$ 3,042	$ 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	1,092,732	1,017,385

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2013

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Note 9: Accumulated Other Comprehensive Income (Loss)

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

	Gross Unrealized Gains on Available-for-sale Securities		Net Unrealized Loss for Unfunded Status of Split-dollar Life Insurance Plan Liability (tax-free)			Gross Unrealized Loss for Unfunded Status of Defined Benefit Plan			Tax Effect			Total Accumulated Other Comprehensive Income (Loss)
	(In thousands)
September 30, 2013	$	1,186	$	(246	)	$	(1,096	)	$	(31	)	$	(187	)
December 31, 2012	$	3,498	$	(246	)	$	(1,096	)	$	(816	)	$	1,340

There were no amounts reclassified out of accumulated other comprehensive (loss) income during the three

and nine months ended September 30, 2013 or 2012.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating Activities
Net income	$ 1,577	$ 1,241
Items not requiring (providing) cash
Depreciation and amortization	442	411
Provision (credit) for loan losses	(55)	618
Amortization of premiums and discounts on securities	1,405	1,565
Amortization of mortgage servicing rights	37	38
Amortization of deferred loan origination fees	(77)	(92)
Amortization of intangible assets	68	68
Increase in value of bank owned life insurance	(211)	(215)
Amortization expense of stock benefit plan	61	53
Provision for impairment on foreclosed assets held for sale	26	46
Loss (gain) on sale of foreclosed assets held for sale	(6)	13
Net gains on sale of loans	(80)	(203)
Proceeds from sale of loans in secondary market	6,581	4,530
Origination of loans for sale in the secondary market	(6,501)	(4,327)
Deferred income taxes	155	291
Changes in
Accrued interest receivable	(143)	(223)
Prepaid federal deposit insurance premiums	529	207
Other assets	(153)	(466)
Interest payable and other liabilities	(65)	125
Net cash provided by operating activities	3,590	3,680
Investing Activities
Purchase of available-for-sale securities	(24,131)	(32,049)
Purchase of held-to-maturity securities	(2,988)	(867)
Proceeds from maturities and paydowns of available-for-sale securities	31,058	38,042
Proceeds from maturities and paydowns of held-to-maturity securities	78	58
Net change in loans	(10,048)	(8,217)
Purchase of bank-owned life insurance		(1,243)
Purchase of premises and equipment	(142)	(400)
Proceeds from the sale of foreclosed assets	311	1,165
Net cash used in investing activities	(5,862)	(3,511)
Financing Activities
Net change in deposits	(1,122)	(6,475)
Net change in other short-term borrowings	(561)	1,942
Proceeds from Federal Home Loan Bank and Federal Reserve advances	16,490	14,710
Repayments of Federal Home Loan Bank and Federal Reserve advances	(14,750)	(20,120)
Advances by borrowers for taxes and insurance	(408)	(305)
Dividends on common stock	(656)	(557)
Treasury stock purchases	(774)	(92)
Net cash used in financing activities	(1,781)	(10,897)
Decrease in Cash and Cash Equivalents	(4,053)	(10,728)
Cash and Cash Equivalents, Beginning of Period	12,055	19,816
Cash and Cash Equivalents, End of Period	8,002	9,088
Supplemental Cash Flows Information:
Interest paid on deposits and borrowings	1,749	2,189
Federal income taxes paid	325
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Transfers from loans to foreclosed assets held for sale	50
Recognition of mortgage servicing rights	65
Dividends payable	$ 231	$ 209

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 3,183	$ 7,303
Interest-bearing deposits	4,819	4,752
Cash and cash equivalents	8,002	12,055
Available-for-sale securities	100,884	111,518
Held-to-maturity securities	6,646	3,748
Loans, net of allowance for loan losses of $3,042 and $3,328 at September 30, 2013 and December 31, 2012, respectively	257,979	247,849
Premises and equipment	6,788	7,088
Federal Home Loan Bank stock	5,025	5,025
Foreclosed assets held for sale, net	38	318
Accrued interest receivable	1,371	1,228
Bank-owned life insurance	8,934	8,723
Goodwill	1,719	1,719
Other intangible assets	60	128
Prepaid Federal Deposit Insurance Corporation premiums		596
Other assets	2,113	1,944
Prepaid federal income taxes	131	178
Total assets	399,690	402,117
Deposits
Demand	79,777	80,668
Savings and money market	119,424	112,229
Time	127,414	134,840
Total deposits	326,615	327,737
Other short-term borrowings	6,516	7,077
Federal Home Loan Bank advances	22,957	21,217
Interest payable and other liabilities	4,639	5,173
Deferred federal income taxes	496	1,128
Total liabilities	361,223	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	35,976	35,975
Retained earnings	18,488	17,567
Shares acquired by ESOP	(511)	(572)
Accumulated other comprehensive income	(187)	1,340
Treasury stock, at cost - 1,092,732 and 1,017,385 shares at September 30, 2013 and December 31, 2012, respectively	(15,697)	(14,923)
Total stockholders' equity	38,467	39,785
Total liabilities and stockholders' equity	$ 399,690	$ 402,117

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Available-for-sale- Debt maturities, Amortized Cost
One to five years	$ 3,183
Five to ten years	4,055
After ten Years	15,011
Subtotal	22,249
Totals	99,699
Available for Sale Securities, Fair Values
One to five years	3,346
Five to ten years	4,109
After ten Years	15,200
Subtotal	22,655
Totals	100,884
Held to Maturity securities, Amortized Cost
One to five years
Five to ten years	2,637
After ten Years	2,602
Subtotal	5,239
Totals	6,646	3,748
Held to Maturity securities, Fair Values
One to five years
Five to ten years	2,490
After ten Years	2,308
Subtotal	4,798
Total	6,214	3,740
Mortgage-backed securities of government sponsored entities
Available-for-sale- Debt maturities, Amortized Cost
Maturities without single maturity date	76,693
Available for Sale Securities, Fair Values
Maturities without single maturity date	77,437
Held to Maturity securities, Amortized Cost
Maturities without single maturity date	1,407
Totals	1,407	1,469
Held to Maturity securities, Fair Values
Maturities without single maturity date	1,416
Total	1,416	1,514
Private-label collateralized mortgage obligations
Available-for-sale- Debt maturities, Amortized Cost
Maturities without single maturity date	757
Available for Sale Securities, Fair Values
Maturities without single maturity date	792
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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Stock Option Plan (Tables)

9 Months Ended

Sep. 30, 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 nine months ended September 30, 2013, and for the year ended December 31, 2012 is presented below:

	Nine months ended September 30, 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
Expired		41,204	$	13.95		—		—
Outstanding at end of period		—	$	—		58,908	$	13.95
Options exercisable at period-end		—	$	—		58,908	$	13.95

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income Details
Gross unrealized gain on securities available-for-sale	$ 1,186	$ 3,498
Net unrealized loss for unfunded status of split-dollar life insurance plan liability (tax free)	(246)	(246)
Gross unrealized loss for unfunded status of defined benefit plan liability	(1,096)	(1,096)
Tax effect	(31)	(816)
Net-of-tax amount	$ (187)	$ 1,340

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Goodwill And Intangible Assets Details
Goodwill	$ 1,719	$ 1,719
Other intangible assets - gross	974	974
Other intangible assets - amortization	(914)	(846)
Total	$ 1,779	$ 1,847

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Credit Quality of Loans and Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Non-accrual loans	$ 4,121	$ 5,256
One-to-four family residential
Non-accrual loans	2,238	2,097
Nonresidential real estate and land
Non-accrual loans	1,881	3,123
All other mortgage loans
Non-accrual loans
Commercial business loans
Non-accrual loans		32
Consumer loans
Non-accrual loans	$ 2	$ 4

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Credit Quality of Loans and Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Specific Allowance	$ 1,293		$ 1,293		$ 1,422
Recorded Balance	11,789		11,789		12,900
Unpaid Principal Balance	12,384		12,384		13,496
Average Investment in Impaired Loans	11,927	11,324	12,291	11,276
Interest Income Recognized	135	52	376	248
One-to-four family residential
Loans without a specific valuation allowance, Recorded Balance	5,602		5,602		5,587
Loans without a specific valuation allowance, Unpaid Principal Balance	5,602		5,602		5,587
Loans without a specific valuation allowance, Average Investment in Impaired Loans	5,785	3,024	5,702	3,144
Loans without a specific valuation allowance, Interest Income Recognized	84	21	222	90
Loans with a specific valuation allowance, Recorded Balance	1,311		1,311		1,291
Loans with a specific valuation allowance, Unpaid Principal Balance	1,311		1,311		1,291
Specific Allowance	355		355		248
Loans with a specific valuation allowance, Average Investment in Impaired Loans	1,208	1,210	1,266	889
Loans with a specific valuation allowance, Interest Income Recognized	7	2	22	35
Recorded Balance	6,913		6,913		6,878
Unpaid Principal Balance	6,913		6,913		6,878
Average Investment in Impaired Loans	6,993	4,234	6,968	4,033
Interest Income Recognized	91	23	244	125
All other mortgage loans
Loans without a specific valuation allowance, Recorded Balance	2,225		2,225		2,781
Loans without a specific valuation allowance, Unpaid Principal Balance	2,225		2,225		2,781
Loans without a specific valuation allowance, Average Investment in Impaired Loans	2,276	2,324	2,427	2,179
Loans without a specific valuation allowance, Interest Income Recognized	23	3	72	58
Loans with a specific valuation allowance, Recorded Balance	2,502		2,502		3,056
Loans with a specific valuation allowance, Unpaid Principal Balance	3,097		3,097		3,652
Specific Allowance	869		869		1,074
Loans with a specific valuation allowance, Average Investment in Impaired Loans	2,504	4,723	2,730	4,998
Loans with a specific valuation allowance, Interest Income Recognized	20	25	56	64
Recorded Balance	4,727		4,727		5,837
Unpaid Principal Balance	5,322		5,322		6,433
Average Investment in Impaired Loans	4,780	7,047	5,157	7,177
Interest Income Recognized	43	28	128	122
Commercial business loans
Loans without a specific valuation allowance, Recorded Balance	80		80		85
Loans without a specific valuation allowance, Unpaid Principal Balance	80		80		85
Loans without a specific valuation allowance, Average Investment in Impaired Loans	81		83
Loans without a specific valuation allowance, Interest Income Recognized	1		2
Loans with a specific valuation allowance, Recorded Balance	69		69		100
Loans with a specific valuation allowance, Unpaid Principal Balance	69		69		100
Specific Allowance	69		69		100
Loans with a specific valuation allowance, Average Investment in Impaired Loans	73	43	83	66
Loans with a specific valuation allowance, Interest Income Recognized		1	2	1
Recorded Balance	149		149		185
Unpaid Principal Balance	149		149		185
Average Investment in Impaired Loans	154	43	166	66
Interest Income Recognized	$ 1	$ 1	$ 4	$ 1

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Regulatory Matters

9 Months Ended

Sep. 30, 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 September 30, 2013, that the Bank met all capital adequacy requirements to which it is subject.

As of September 30, 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 September 30, 2013 that management believes have changed the Bank’s capital classification.

The Bank’s actual capital amounts and ratios as of September 30, 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 September 30, 2013
Tier I Capital to average assets	$	34,768		8.7	%	$	15,970		4.0	%	$	19,962		5.0	%
Tier I Capital to risk- weighted assets		34,768		14.2	%		9,773		4.0	%		14,660		6.0	%
Total Risk-based capital to risk-weighted assets		37,810		15.5	%		19,546		8.0	%		24,433		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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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Securities with unrealized loss position
Less than 12 Months, Fair Value	$ 44,130	$ 16,798
Less than 12 Months, Unrealized Losses	1,140	139
More than 12 Months, Fair Value	424	2,173
More than 12 Months, Unrealized Losses	58	23
Total, Fair Value	44,554	18,971
Total, Unrealized Losses	1,198	162
Mortgage-backed securities of government sponsored entities
Securities with unrealized loss position
Less than 12 Months, Fair Value	34,283	13,636
Less than 12 Months, Unrealized Losses	575	83
More than 12 Months, Fair Value		2,107
More than 12 Months, Unrealized Losses		22
Total, Fair Value	34,283	15,743
Total, Unrealized Losses	575	105
State and political subdivisions
Securities with unrealized loss position
Less than 12 Months, Fair Value	9,847	3,162
Less than 12 Months, Unrealized Losses	565	56
More than 12 Months, Fair Value	424
More than 12 Months, Unrealized Losses	58
Total, Fair Value	10,271	3,162
Total, Unrealized Losses	623	56
U.S. government agencies
Securities with unrealized loss position
Less than 12 Months, Fair Value
Less than 12 Months, Unrealized Losses
More than 12 Months, Fair Value		66
More than 12 Months, Unrealized Losses		1
Total, Fair Value		66
Total, Unrealized Losses		$ 1

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Stock Option Plan (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 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	17,704	4,500
Number of Options expired	41,204
Number of Options outstanding, ending		58,908
Number of Options exercisable		58,908
Weighted Average Exercise Price:
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	$ 13.95	$ 13.95
Weighted Average Exercise Price of Options expired	$ 13.95
Weighted Average Exercise Price of Options outstanding, ending		$ 13.95
Weighted Average Exercise Price of Options exercisable		$ 13.95

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Recent Accounting Developments

9 Months Ended

Sep. 30, 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.

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Stock Option Plan

9 Months Ended

Sep. 30, 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. At September 30, 2013, all options under the 2004 Plan were expired. The Company recognized compensation expense related to stock option awards based on the fair value of the option award at the grant date. Compensation cost was recognized over the vesting period. There were no options granted during the three and nine months ended September 30, 2013 and 2012. There was no compensation expense recognized for the stock option plan during the three and nine months ended September 30, 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 nine months ended September 30, 2013, and for the year ended December 31, 2012 is presented below:

	Nine months ended September 30, 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
Expired		41,204	$	13.95		—		—
Outstanding at end of period		—	$	—		58,908	$	13.95
Options exercisable at period-end		—	$	—		58,908	$	13.95

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Principles of Consolidation

9 Months Ended

Sep. 30, 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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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Fair Value Measurements Details 2
Collateral-dependent impaired loans		$ 2,437
Foreclosed assets	$ 38	$ 16
Valuation Technique		Market comparable properties
Unobservable Input	Selling Costs	Selling Costs
Range (Weighted Average)	Selling COsts: 10%	Selling Costs: 10%

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Credit Quality of Loans and Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Loans Receivable, gross	$ 266,588		$ 254,393
One-to-four family residential
Loans Receivable, gross	167,272	[1]	160,910	[1]
One-to-four family residential | Pass (Risk 1-4)
Loans Receivable, gross	158,497	[1]	151,749	[1]
One-to-four family residential | Special Mention (Risk 5)
Loans Receivable, gross	569	[1]	708	[1]
One-to-four family residential | Substandard (Risk 6)
Loans Receivable, gross	8,206	[1]	8,453	[1]
All other mortgage loans
Loans Receivable, gross	87,121	[1]	77,721	[1]
All other mortgage loans | Pass (Risk 1-4)
Loans Receivable, gross	80,341	[1]	68,949	[1]
All other mortgage loans | Special Mention (Risk 5)
Loans Receivable, gross	2,053	[1]	2,934	[1]
All other mortgage loans | Substandard (Risk 6)
Loans Receivable, gross	4,727	[1]	5,838	[1]
Commercial business loans
Loans Receivable, gross	10,974	[1]	14,245	[1]
Commercial business loans | Pass (Risk 1-4)
Loans Receivable, gross	10,419	[1]	14,034	[1]
Commercial business loans | Special Mention (Risk 5)
Loans Receivable, gross	406	[1]	26	[1]
Commercial business loans | Substandard (Risk 6)
Loans Receivable, gross	149	[1]	185	[1]
Consumer loans
Loans Receivable, gross	1,221	[1]	1,517	[1]
Consumer loans | Pass (Risk 1-4)
Loans Receivable, gross	1,219	[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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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities Tables

Schedule of Available for Sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
September 30, 2013:
U.S. government agencies	$	139	$	1	$	—	$	140
Mortgage-backed securities of           government sponsored entities		76,693		1,317		573		77,437
Private-label collateralized           mortgage obligations		757		35				792
State and political subdivisions		22,110		587		182		22,515
Totals	$	99,699	$	1,940	$	755	$	100,884

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale securities
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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
September 30, 2013:
U.S. government agencies	$	111	$	—	$	—	$	111
Mortgage-backed securities of         government sponsored entities		1,407		11		2		1,416
State and political subdivisions		5,128		—		441		4,687
Totals	$	6,646	$	11	$	443	$	6,214

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
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

	Available-for-sale				Held-to-maturity
	Amortized cost		Fair Value		Amortized cost		Fair Value
	(In thousands)
One to five years	$	3,183	$	3,346	$	—	$	—
Five to ten years		4,055		4,109		2,637		2,490
After ten years		15,011		15,200		2,602		2,308
		22,249		22,655		5,239		4,798
Mortgage-backed securities of government sponsored entities		76,693		77,437		1,407		1,416
Private-label collateralized mortgage obligations		757		792		—		—
Totals	$	99,699	$	100,884	$	6,646	$	6,214

Schedule of Securities in a Gross Unrealized Loss Position

	September 30, 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	$	34,283	$	575	$	—	$	—	$	34,283	$	575
State and political subdivisions		9,847		565		424		58		10,271		623
Total temporarily impaired securities	$	44,130	$	1,140	$	424	$	58	$	44,554	$	1,198

	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

9 Months Ended

Sep. 30, 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 September 30, 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)
September 30, 2013
U.S. government agencies	$	140	$	—	$	140	$	—
Mortgage-backed securities of government sponsored entities		77,437		—		77,437		—
Private-label collateralized mortgage obligations		792		—		792		—
State and political subdivisions		22,515		—		22,515		—

			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 September 30, 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)
September 30, 2013
Foreclosed assets	$	38		—		—	$	38
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.

	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
September 30, 2013
Foreclosed assets	$	38	Contract sales price	Selling Costs		10	%
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 September 30, 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)
September 30, 2013
Financial assets
Cash and cash equivalents	$	8,002	$	8,002	$	—	$	—
Held-to-maturity securities		6,646		—		6,214		—
Loans, net of allowance for loan losses		257,979		—		—		264,539
Federal Home Loan Bank stock		5,025		—		5,025		—
Interest receivable		1,371		—		1,371		—
Financial liabilities
Deposits		326,615		—		298,337		—
Other short-term borrowings		6,516		—		6,516		—
Federal Home Loan Bank advances		22,957		—		23,513		—
Advances from borrowers for taxes and insurance		662		—		662		—
Interest payable		53		—		53		—

			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 September 30, 2013 and December 31, 2012.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share Tables

Schedule of weighted average number of common shares outstanding reconciliation

The computations are as follows:

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Weighted-average common shares outstanding (basic)		2,841,213		2,935,469		2,871,754		2,937,589
Dilutive effect of assumed exercise of stock options		—		—		—		—
Weighted-average common shares outstanding (diluted)		2,841,213		2,935,469		2,871,754		2,937,589

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

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2013 and 2012:

Three months ended September 30, 2013	One-to-four family residential			All other mortgage loans		Commercial business loans		Consumer loans			Total
	(In thousands)
Beginning balance	$	1,239		$	1,557	$	185	$	6		$	2,987
Provision charged to expense		(84	)		150		16		(6	)		76
Losses charged off		(30	)		—		—		—			(30	)
Recoveries		8			—		—		1			9
Ending balance	$	1,133		$	1,707	$	201	$	1		$	3,042

Three months ended September 30, 2012	One-to-four family residential			All other mortgage loans			Commercial business loans		Consumer loans		Total
	(In thousands)
Beginning balance	$	1,082		$	2,362		$	143	$	5	$	3,592
Provision charged to expense		92			117			14		2		225
Losses charged off		(21	)		(1	)		—		—		(22	)
Recoveries		2			1			14		—		17
Ending balance	$	1,155		$	2,479		$	171	$	7	$	3,812

Nine months ended September 30, 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		71			(42	)		(76	)		(8	)		(55	)
Losses charged off		(68	)		(176	)		—			(2	)		(246	)
Recoveries		8			—			2			5			15
Ending balance	$	1,133		$	1,707		$	201		$	1		$	3,042

Nine months ended September 30, 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		95			534			(12	)		1			618
Losses charged off		(109	)		(603	)		—			(4	)		(716	)
Recoveries		41			1			14			—			56
Ending balance	$	1,155		$	2,479		$	171		$	7		$	3,812

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 September 30, 2013 and December 31, 2012:

September 30, 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	$	355	$	869	$	69	$	—	$	1,293
Collectively evaluated for impairment		778		838		132		1		1,749
Total allowance for loan losses	$	1,133	$	1,707	$	201	$	1	$	3,042
Loan Balances:
Ending balance:
Individually evaluated for impairment	$	6,913	$	4,727	$	149	$	—	$	11,789
Collectively evaluated for impairment		160,359		82,394		10,825		1,221		254,799
Total balance	$	167,272	$	87,121	$	10,974	$	1,221	$	266,588

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 September 30, 2013 and December 31, 2012:

September 30, 2013	One-to-four family residential		All other mortgage loans		Commercial business loans		Consumer loans
	(In thousands)
Rating *
Pass (Risk 1-4)	$	158,497	$	80,341	$	10,419	$	1,219
Special Mention (Risk 5)		569		2,053		406		—
Substandard (Risk 6)		8,206		4,727		149		2
Total	$	167,272	$	87,121	$	10,974	$	1,221

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.

Aging Analysis of Loans Receivable

The following tables present the Bank’s loan portfolio aging analysis for September 30, 2013 and December 31, 2012:

September 30, 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	$	102	$	229	$	869	$	1,200	$	166,072	$	167,272	$	—
All other mortgage loans		—		—		815		815		86,306		87,121		—
Commercial business loans		70		—		—		70		10,904		10,974		—
Consumer loans		—		—		—		—		1,221		1,221		—
Total	$	172	$	229	$	1,684	$	2,085	$	264,503	$	266,588	$	—

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

Nonaccrual loans were comprised of the following at:

Nonaccrual loans	September 30, 2013		December 31, 2012
	(In thousands)
One-to-four family residential loans	$	2,238	$	2,097
Nonresidential real estate loans		1,881		3,123
All other mortgage loans		—		—
Commercial business loans		—		32
Consumer loans		2		4
Total	$	4,121	$	5,256

Schedule of Impaired Loans

Information with respect to the Company’s impaired loans at September 30, 2013 and December 31, 2012 in combination with activity for the three and nine months ended September 30, 2013 and 2012 is presented below:

	As of September 30, 2013						Three months ended September 30, 2013				Nine months ended September 30, 2013
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
	(In thousands)
Loans without a specific valuation allowance
One-to-four family residential loans	$	5,602	$	5,602	$	—	$	5,785	$	84	$	5,702	$	222
All other mortgage loans		2,225		2,225		—		2,276		23		2,427		72
Commercial business loans		80		80		—		81		1		83		2
Loans with a specific valuation allowance
One-to-four family residential loans		1,311		1,311		355		1,208		7		1,266		22
All other mortgage loans		2,502		3,097		869		2,504		20		2,730		56
Commercial business loans		69		69		69		73		—		83		2
Total:
One-to-four family residential loans	$	6,913	$	6,913	$	355	$	6,993	$	91	$	6,968	$	244
All other mortgage loans		4,727		5,322		869		4,780		43		5,157		128
Commercial business loans		149		149		69		154		1		166		4
	$	11,789	$	12,384	$	1,293	$	11,927	$	135	$	12,291	$	376

	As of December 31, 2012						Three months ended September 30, 2012				Nine months ended September 30, 2012
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in impaired Loans		Interest Income Recognized		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	$	—	$	3,024	$	21	$	3,144	$	90
All other mortgage loans		2,781		2,781		—		2,324		3		2,179		58
Commercial business loans		85		85		—		—		—		—		—
Loans with a specific valuation allowance
One-to-four family residential loans		1,291		1,291		248		1,210		2		889		35
All other mortgage loans		3,056		3,652		1,074		4,723		25		4,998		64
Commercial business loans		100		100		100		43		1		66		1
Total:
One-to-four family residential loans	$	6,878	$	6,878	$	248	$	4,234	$	23	$	4,033	$	125
All other mortgage loans		5,837		6,433		1,074		7,047		28		7,177		122
Commercial business loans		185		185		100		43		1		66		1
	$	12,900	$	13,496	$	1,422	$	11,324	$	52	$	11,276	$	248

Schedule of Troubled Debt Restructurings

	Quarter-to-Date						Year-to-Date
Troubled Debt Restructurings	Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance		Number of loans		Pre- modification Unpaid Principal Balance		Post- modification Unpaid Principal Balance
	(dollars in thousands)
September 30, 2013
One-to-four family residential loans		4	$	493	$	517		6	$	909	$	933
All other mortgage loans		—		—		—		1		576		576
September 30, 2012
One-to-four family residential loans		—	$	—	$	—		2	$	538	$	538

XML

Document and Entity Information (USD $)	9 Months Ended
	Sep. 30, 2013	Oct. 31, 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	Sep. 30, 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, Par Value Per Share	$ 0.10
Entity Common Stock, Shares Outstanding		2,885,999
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013

XML

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Tables

Schedule of goodwill and other intangible assets

The composition of goodwill and other intangible assets, all of which is core deposit intangible, at September 30, 2013 and December 31, 2012:

	September 30, 2013			December 31, 2012
	(In thousands)
Goodwill	$	1,719		$	1,719
Other intangible assets – gross		974			974
Other intangible assets – amortization		(914	)		(846	)
Total	$	1,779		$	1,847