Discussion of Financial Condition Changes from March 31, 2009 to June 30, 2009

At June 30, 2009, the Company had total assets of $404.1 million, a decrease of $342,000, or 0.1%, from total assets at March 31, 2009.

Liquid assets, consisting of cash, interest-bearing demand deposits and available-for-sale securities, increased by $1.2 million, or 1.0%, to $125.7 million at June 30, 2009. This was primarily due to an increase of $4.8 million in cash and cash equivalents, partially offset by a decrease in available-for-sale securities of $3.5 million, or 3.0%.

Total securities decreased by $3.6 million, or 3.1%, during the three months ended June 30, 2009. This decrease was primarily due to principal repayments of $13.0 million, partially offset by purchases of $9.1 million and an increase in the market value of available for sale investment securities of $228,000. Purchases were mainly funded by proceeds from principal payments received from the securities portfolio.

Net loans receivable decreased by $2.8 million, or 1.1% at June 30, 2009 compared to March 31, 2009. The Bank originated $21.1 million of loans and received payments of $23.9 million. Included in this loan activity are originations and sales into the secondary market of $2.5 million of 30-year fixed-rate mortgage loans. The low interest rate environment has induced a number of residential and commercial borrowers to refinance existing loans, which increases loan repayment activity. Due to the interest rate risk associated with 30-year fixed-rate mortgage loans, management has adopted a strategy of immediately selling certain newly originated loans of this type into the secondary market to limit the accumulation of interest rate risk on the balance sheet. In addition, management believes it appropriate to keep the secondary market channel open as a backup source of liquidity. As part of an overall interest rate risk management strategy, based on the Company's belief that investing in shorter-term and adjustable-rate commercial loans positions the Company more favorably from an interest rate risk management perspective, compared to the origination and retention of long term fixed-rate residential mortgages, the lending division continues to focus on the origination of shorter-term and adjustable-rate commercial and commercial real estate loans. Consistent with this strategy, the composition of the loan portfolio has changed during the three months ended June 30, 2009, mainly due to a decrease of $1.8 million in one- to four-family loans and decrease in non-residential real estate loans of $3.4 million, offset by an increase of $3.8 million in commercial business loans.

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



                                             June 30, 2009              March 31, 2009
                                                      (Dollars in thousands)
   Mortgage loans:
   One- to four-family residential(1)    $ 138,980        53.94 %   $ 141,285        54.40 %
   Residential construction loans            2,082         0.81         1,587         0.61
   Multi-family residential                  8,541         3.31         8,604         3.31
   Non-residential real estate/land(2)      67,296        26.12        70,725        27.23
   Total mortgage loans                    216,899        84.18       222,201        85.55
   Other loans:
   Consumer loans(3)                         4,366         1.69         4,923         1.90
   Commercial business loans                36,386        14.13        32,592        12.55
   Total other loans                        40,752        15.82        37,515        14.45
   Total loans before net items            257,651       100.00 %     259,716       100.00 %
   Less:
   Loans in process                          3,266                      2,506
   Deferred loan origination fees              386                        400
   Allowance for loan losses                 2,437                      2,484
   Total loans receivable, net           $ 251,562                  $ 254,326
   Mortgage-backed securities, net(4)    $  89,129                  $  88,788

(1) Includes equity loans collateralized by second mortgages in the aggregate amount of $16.5 million and $16.9 million as of June 30, 2009 and March 31, 2009, respectively. Such loans have been underwritten on substantially the same basis as the Company's first mortgage loans.

(2) Includes land loans of $215,000 for both June 30, 2009 and March 31, 2009.

(3) Includes second mortgage loans of $1.2 million and $1.3 million as of June 30, 2009 and March 31, 2009, respectively.

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

Non-performing loans amounted to $4.4 million and $5.0 million at June 30, 2009 and March 31, 2009, respectively. At June 30, 2009, non-performing loans consisted primarily of residential mortgage loans of approximately $1.0 million, commercial real estate loans with a combined balance of $2.8 million, $577,000 in commercial business loans and consumer loans totaling $12,000. At March 31, 2009, non-performing loans were comprised of $1.4 million in residential loans, $3.0 million in commercial real estate loans, commercial loans totaling $558,000 and $4,000 in consumer loans. Foreclosed assets held for sale amounted to $926,000 at June 30, 2009 compared to $594,000 at March 31, 2009, an increase of 55.9%. Total non-performing assets amounted to $5.3 million at June 30, 2009 compared to $5.6 million at March 31, 2009. The decrease was mainly due to a decrease in non-performing residential mortgage loans of $392,000 and a decrease in non-performing commercial real estate loans of $268,000. The following table sets forth information regarding our past due, nonaccrual and impaired loans and foreclosed assets held for sale as of June 30, 2009 and March 31, 2009.

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



                                                      June 30,        March 31,
                                                        2009            2009
                                                       (Dollars in thousands)
Past due loans 30-89 days:
Mortgage loans:
One- to four-family residential                      $       609     $       491
Nonresidential                                               510              77
Non-mortgage loans:
Commercial business loans                                     90               -
Consumer loans                                                12              18
                                                     $     1,221     $       586

Non-performing loans:
Mortgage loans:
One- to four-family residential                      $     1,017     $     1,409
All other mortgage loans                                   2,759           3,027
Non-mortgage loans:
Commercial business loans                                    577             558
Consumer                                                      12               4
Total non-performing loans                                 4,365           4,998
Total foreclosed assets held for sale                        926             594
Total non-performing assets                          $     5,291     $     5,592


Total non-performing loans to net loans receivable          1.74 %          1.97 %
Total non-performing loans to total assets                  1.08 %          1.24 %
Total non-performing assets to total assets                 1.31 %          1.38 %

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

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

                                                 For the three          For the
                                                 months ended          year ended
                                                 June 30, 2009       March 31, 2009
                                                       (Dollars in thousands)

 Loans receivable, net                          $       251,562     $        254,326
 Average loans receivable, net                  $       252,138     $        250,220
 Allowance balance (at beginning of period)     $         2,484     $          1,777
 Provision for losses                                       165                1,068
 Charge-offs:
 Mortgage loans:
 One- to four-family                                        (63 )                (49 )
 Non-residential real estate and land                      (104 )               (245 )
 Other loans:
 Consumer                                                     -                   (3 )
 Commercial                                                 (46 )                (74 )
 Gross charge-offs                                         (213 )               (371 )
 Recoveries:
 Other loans:
 Consumer                                                     1                   10
 Gross recoveries                                             1                   10
 Net charge-offs                                           (212 )               (361 )

 Allowance for loan losses balance (at end of
 period)                                        $         2,437     $          2,484
 Allowance for loan losses as a percent of
 loans receivable, net at end of period                    0.97 %               0.97 %
 Net loans charged off as a percent of
 average loans receivable, net                             0.08 %               0.14 %
 Ratio of allowance for loan losses to non-
  performing loans at end of period                       55.83 %              49.70 %

Deposits totaled $308.0 million at June 30, 2009, a decrease of $1.5 million, or 0.5%, from $309.5 million at March 31, 2009. Certificates of deposit decreased by $6.9 million, partially offset by an increase in savings and money market accounts of $1.5 million and NOW accounts of $3.9 million. Management continued to exercise discipline during the period with regard to the pricing of retail certificates. In general, management attempts to benchmark retail certificate of deposit pricing to the cost of alternate sources of funds, including Federal Home Loan Bank advances and brokered deposits. Exceptions are made to defend customer relationships with significant value to the Bank while allowing rate sensitive certificate of deposit accounts to move to other alternatives. The local deposit market continues to be negatively affected by national and online competitors offering higher rates to address liquidity concerns in national markets.

Other short-term borrowings, in the form of repurchase agreements with customers, totaled $10.2 million at June 30, 2009 and March 31, 2009. The interest rate paid on these borrowings is .40%, which over the past year has declined significantly as the Federal Reserve lowered rates.

Advances from the Federal Home Loan Bank of Cincinnati totaled $47.0 million at June 30, 2009, an increase of $1.0 million, compared with $46.0 million at March 31, 2009. As discussed above, the Company continues to use borrowed funds to compensate for the loss of higher cost retail certificates of deposit and to extend liability duration for interest rate risk management purposes.

Stockholders' equity increased by $550,000, or 1.6%, during the three months ended June 30, 2009, due primarily to net income of $532,000 and an increase in accumulated other comprehensive income of $150,000, partially offset by dividends payable of $150,000.

Comparison of Operating Results for the Three Month Periods Ended June 30, 2009 and 2008

General

Net income totaled $532,000 for the three months ended March 31, 2009 compared to $531,000 for the three months ended June 30, 2008. While net income was essentially unchanged, there were significant changes in the composition of net income between the current period and the year ago period, reflecting a much lower interest rate environment and a more difficult economic environment.

                         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 and the average yields earned and rates
paid. Such yields and costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the periods
presented.

                                                     For the three months ended June 30,
                                               2009                                      2008
                                Average                     Average       Average                     Average
                                Balance       Interest        Rate        Balance       Interest        Rate
                                                           (Dollars in thousands)
Interest-earning assets:
Loans receivable, net(1)       $ 252,138     $    3,682         5.84 %   $ 242,870     $    3,814         6.28 %
Investment securities(2)         115,692          1,403         4.85       123,869          1,519         4.91
Interest-earning deposits(3)       8,608             57         2.65        11,851             99         3.34
Total interest-earning
assets                           376,438          5,142         5.46       378,590          5,432         5.74
Non-interest-earning assets       29,711                                    24,524

Total assets                   $ 406,149                                 $ 403,114

Interest-bearing
liabilities:
Deposits                       $ 309,036          1,382         1.79     $ 316,777          2,096         2.65
Other short-term borrowings        9,843             10         0.41         8,049             21         1.04
Borrowings                        48,421            502         4.15        40,002            470         4.70
Total interest-bearing
liabilities                      367,300          1,894         2.06       364,828          2,587         2.84

Non-interest
bearing liabilities                3,531                                     4,845
Total liabilities                370,831                                   369,673
Stockholders' equity              35,318                                    33,441
Total liabilities and
stockholders' equity           $ 406,149                                 $ 403,114
Net interest income                          $    3,248                                $    2,845
Interest rate spread(4)                                         3.40 %                                    2.90 %
Net yield on interest-
earning assets(5)                                               3.45 %                                    3.01 %
Ratio of average interest-
earning assets to
average interest-bearing
liabilities                                                   102.49 %                                  103.77 %


________________________________

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

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

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

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

Interest Income

Interest income decreased by $290,000 or 5.3%, to $5.1 million for the three months ended June 30, 2009, compared to the same period in 2008. This decrease was due to a decrease in the weighted-average yield on interest-earning assets to 5.46% in the 2009 period from 5.74% for the three month period ended June 30, 2008 and a decrease of $2.2 million in the average balance of interest-earning assets outstanding to $376.4 million for the three months ended June 30, 2009, from $378.6 million for the comparable period ended June 30, 2008. The yield decrease was primarily due to lower market rates in the 2009 period compared to the 2008 period that resulted from the Federal Reserve's interest rate reductions during the year. The decrease in the average balance of earning assets was due to repayments on both loans and securities exceeding loan origination and securities purchase volumes, as the low levels of interest rates prompted borrowers to refinance loans held directly in portfolio and loans underlying mortgage-backed securities.

Interest income on loans decreased by $132,000, or 3.5%, for the three months ended June 30, 2009, compared to the same period in 2008, due primarily to a reduction in the weighted-average rate on loans from 6.28% for the quarter ending June 30, 2008 to 5.84% for the June 30, 2009 quarter. As discussed earlier, this was mainly due to a decrease in rates of 200 basis points implemented by the Federal Reserve over the past year and the corresponding impact on adjustable rate loans and new originations. This decrease was partially offset by an increase in the average balance of loans outstanding period to period of $9.3 million, or 3.8%, to $252.1 million for the 2009 period.

Interest income on securities decreased by $116,000, or 7.6%, during the three months ended June 30, 2009, compared to the same period in 2008. This decrease was primarily due to an $8.2 million, or 6.6%, reduction in the average balance of securities along with a decrease in the weighted-average rate to 4.85% for the three months ended June 30, 2009 compared to 4.91% for the same period ended June 30, 2008.

Dividends on Federal Home Loan Bank stock and other income decreased by $42,000, or 42.4%, for the three months ended June 30, 2009, compared to the same period in 2008, due primarily to a decrease in the weighted-average yield of 69 basis points resulting from reductions in short term market interest rates, to 2.65% for the 2009 quarter from 3.34% for the period ended June 30, 2008.

Interest Expense

Interest expense totaled $1.9 million for the three months ended June 30, 2009, a decrease of $693,000, or 26.8%, compared to the three months ended June 30, 2008. The decrease resulted from a 78 basis point decrease in the weighted-average cost of funds to 2.06% for the 2009 period, partially offset by an increase of $2.5 million in the average balance of deposits and borrowings outstanding from $364.8 million in the 2008 period to $367.3 million for the three month period ended June 30, 2009.

Interest expense on deposits totaled $1.4 million for the three months ended June 30, 2009, a decrease of $714,000, or 34.1%, compared to the three months ended June 30, 2008, as a result of an 86 basis point decrease in the weighted-average cost of deposits, to 1.79% for the 2009 period, combined with a decrease in the average balance outstanding of $7.7 million, or 2.4%, to $309.0 million for the 2009 period. The decrease in the rate was due to market interest rate decreases as discussed above.

Interest expense on other short-term borrowings totaled $10,000 for the three months ended June 30, 2009, a decrease of $11,000, from the 2008 period, primarily due to a decrease in the weighted-average cost of 63 basis points, to .41% for the three months ended June 30, 2009, due to the Federal Reserve rate decreases. This was partially offset by an increase in the average balance of short-term borrowings of $1.8 million. Interest expense on Federal Home Loan Bank advances totaled $502,000 for the three months ended June 30, 2009, an increase of $32,000, over the 2008 period, primarily due to an increase in the average balance of $8.4 million, or 21.0%, as the Company replaced the loss of higher cost retail certificates of deposit with lower cost Federal Home Loan Bank advances. This was offset by a decrease of 55 basis points in the weighted-average cost of Federal Home Loan Bank advances to 4.15% for the 2009 period.

Net Interest Income

Net interest income totaled $3.2 million for the three months ended June 30, 2009, an increase of $403,000, or 14.2%, compared to the three month period ended June 30, 2008. The interest rate spread increased to 3.40% for the three months ended June 30, 2009, from 2.90% for the three months ended June 30, 2008. The net interest margin increased to 3.45% for the three months ended June 30, 2009 from 3.01% for the three months ended June 30, 2008. The increase in the interest rate spread was due to a shift in asset composition from lower yielding investment securities and deposits to higher yielding loans and mortgage-backed securities and a shift in composition of liabilities from higher cost retail certificates of deposit to lower cost Federal Home Loan Bank advances.

Provision for Loan Losses

Management recorded a $165,000 provision for loan losses for the three month period ended June 30, 2009, an increase of $104,000 compared to the provision for the same period in 2008, primarily due to the increase in non-performing loans and charge-offs during the period. To the best of management's knowledge, all known and inherent losses that are probable and which can be reasonably estimated have been recorded as of June 30, 2009.

Noninterest Income

Non-interest income, consisting primarily of the earnings on bank-owned life insurance, trust income, service fees and charges on deposit accounts and gain on the sale of loans increased by $72,000, or 16.8%, for the three months ended June 30, 2009, compared to the three months ended June 30, 2008. The increase was primarily due to net gains on loan sales of $63,000 during the 2009 period, compared to no gains in the 2008 period. As discussed above, management is executing a strategy of selective sale of newly originated 30 year fixed rate mortgage loans to limit the accumulation of interest rate risk on the balance sheet and to maintain the secondary market as a backup source of liquidity. Service fees, charges and other operating income increased $16,000, or 4.9%, as management implemented a new fee schedule. These increases were partially offset by a decrease in trust income of $9,000, or 19.6%, in the three months ended June 30, 2009 compared to the same period ended June 30, 2008, mainly due to a decrease in the market value of assets held in trust accounts.

Non-interest Expense

Non-interest expense increased by $390,000, or 15.5%, to $2.9 million for the three months ended June 30, 2009, compared to the three months ended June 30, 2008. The increase was mainly due to a $330,000 increase in federal deposit insurance expense that includes an increase in the deposit insurance premium rate schedule, the 5 basis point special assessment, which was assessed on all FDIC insured institutions, and will be collected on September 30, 2009, and the absence of deposit insurance credits in the 2009 quarter that reduced costs for the 2008 quarter. Other noninterest expenses, excluding deposit insurance expense, increased $60,000 or 2.3% for the 2009 quarter compared to the 2008 quarter.

Federal Income Taxes

Federal income tax expense was $147,000 for the three months ended June 30, 2009, a decrease of $20,000, or 12.0%, compared to the same period in 2008. The decrease was primarily due to a decrease in income before taxes of $19,000, or 2.7%, and an increase in non-taxable interest income compared to the same period in 2008. The effective tax rates were 21.6% and 23.9% for the three month periods ended June 30, 2009 and 2008, respectively.

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.