FORM 10-QSB

                          OFFICE OF THRIFT SUPERVISION
                             Washington, D. C. 20552

(Mark One)

[X]           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended            December 31, 1997
                               -----------------------------------------------

                                       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)

Ohio                                                          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


                          WAYNE SAVINGS COMMUNITY BANK
                    (Former name, changed since last report)

Check  whether  the issuer:  (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports) and (2) has been subject to such filing  requirements for the past
90 days.

Yes   X                                                    No

As of February 9, 1998, the latest  practicable  date,  2,257,310  shares of the
registrant's common stock, $1.00 par value, were issued and outstanding.




                               Page 1 of 16 pages

<PAGE>


                          Wayne Savings Bancshares Inc.

                                      INDEX

                                                                           Page

PART I   -    FINANCIAL INFORMATION

              Statements of Financial Condition                               3

              Statements of Earnings                                          4

              Statements of Cash Flows                                        5

              Notes to Financial Statements                                   7

              Management's Discussion and Analysis of
              Financial Condition and Results of
              Operations                                                     10


PART II -     OTHER INFORMATION                                              15

SIGNATURES                                                                   16



<PAGE>

<TABLE>

                          Wayne Savings Bancshares Inc.
<CAPTION>

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                        (In thousands, except share data)
                                                                                            December 31,      March 31,
         ASSETS                                                                                     1997           1997
<S>                                                                                                 <C>            <C>
Cash and due from banks                                                                       $    1,453     $    1,302
Federal funds sold                                                                                 3,550          1,125
Interest-bearing deposits in other financial institutions                                          8,519          5,179
                                                                                               ---------      ---------
         Cash and cash equivalents                                                                13,522          7,606

Certificates of deposit in other financial institutions                                            6,500          7,500
Investment securities - at amortized cost, approximate
  market value of $14,237 and $16,904 as of December 31, 1997
  and March 31, 1997                                                                              14,419         16,970
Mortgage-backed securities available for sale - at market                                          2,263            378
Mortgage-backed securities - at cost, approximate
  market value of $297 and $497 as of December 31, 1997
  and March 31, 1997                                                                                 295            495
Loans receivable - net                                                                           205,736        209,404
Loans held for sale - at lower of cost or market                                                     583             -
Real estate acquired through foreclosure                                                             846            809
Office premises and equipment - at depreciated cost                                                5,756          3,991
Federal Home Loan Bank stock - at cost                                                             2,672          2,531
Accrued interest receivable on loans                                                               1,118          1,139
Accrued interest receivable on mortgage-backed securities                                             16              7
Accrued interest receivable on investments and
  interest-bearing deposits                                                                          350            226
Prepaid expenses and other assets                                                                  1,024            790
Prepaid federal income taxes                                                                          24            329
                                                                                             -----------     ----------

         Total assets                                                                           $255,124       $252,175
                                                                                                 =======        =======

         LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                                        $214,605       $211,442
Advances from the Federal Home Loan Bank                                                          14,000         16,000
Loan payable to Employee Stock Ownership Plan                                                         -              35
Advances by borrowers for taxes and insurance                                                      1,356            701
Accrued interest payable                                                                             129            226
Accounts payable on mortgage loans serviced for others                                               260            126
Other liabilities                                                                                    396            382
Accrued federal income taxes                                                                         188            148
                                                                                              ----------     ----------
         Total liabilities                                                                       230,934        229,060

Stockholders' equity
  Common stock (20,000,000  shares of $1.00 par value authorized;  2,257,310 and
    1,498,889 shares issued and outstanding at December 31, 1997
    and March 31, 1997)                                                                            2,258          1,499
  Additional paid-in capital                                                                       5,942          5,844
  Retained earnings - substantially restricted                                                    15,979         15,777
  Less shares acquired by Employee Stock Ownership Plan                                               -             (35)
  Less treasury stock                                                                                (10)            -
  Unrealized gains on securities available for sale, net of related tax effects                       21             30
                                                                                             -----------    -----------
         Total stockholders' equity                                                               24,190         23,115
                                                                                                --------       --------

         Total liabilities and stockholders' equity                                             $255,124       $252,175
                                                                                                 =======        =======
</TABLE>


                                        3


<PAGE>

<TABLE>

                          Wayne Savings Bancshares Inc.
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

                        (In thousands, except share data)

                                                                         Nine months ended            Three months ended
                                                                            December 31,                 December 31,
                                                                         1997         1996            1997         1996
<S>                                                                       <C>         <C>              <C>          <C>
Interest income
  Loans                                                               $12,799      $12,796          $4,240       $4,253
  Mortgage-backed securities                                               57           77              28           19
  Investment securities                                                   741          623             215          187
  Interest-bearing deposits and other                                     781          544             295          190
                                                                     --------     --------          ------       ------
         Total interest income                                         14,378       14,040           4,778        4,649

Interest expense
  Deposits                                                              7,589        7,491           2,545        2,501
  Borrowings                                                              674          421             210          139
                                                                     --------     --------          ------       ------
         Total interest expense                                         8,263        7,912           2,755        2,640
                                                                      -------      -------           -----        -----

         Net interest income                                            6,115        6,128           2,023        2,009

Provision for losses on loans                                              45           15              15            5
                                                                    ---------    ---------         -------     --------

         Net interest income after provision for
           losses on loans                                              6,070        6,113           2,008        2,004

Other income
  Gain on sale of loans                                                   190           39              66           22
  Service fees, charges and other operating                               467          401             154          124
                                                                     --------     --------          ------       ------
         Total other income                                               657          440             220          146

General, administrative and other expense
  Employee compensation and benefits                                    2,394        2,456             813          803
  Occupancy and equipment                                                 729          771             256          227
  Federal deposit insurance premiums                                      152        1,729              48          112
  Franchise taxes                                                         228          215              76           73
  Other operating                                                       1,009          954             334          325
                                                                      -------     --------          ------       ------
         Total general, administrative and other expense                4,512        6,125           1,527        1,540
                                                                      -------      -------           -----        -----

         Earnings before income taxes                                   2,215          428             701          610

Federal income taxes
  Current                                                                 709           98              240         209
  Deferred                                                                 45           49              -            -
                                                                    ---------    ---------           -----        ----
         Total federal income taxes                                       754          147             240          209
                                                                     --------     --------          ------       ------

         NET EARNINGS                                                $  1,461    $     281       $     461    $     401
                                                                      =======     ========        ========     ========

         EARNINGS PER SHARE
           Basic                                                        $0.65        $0.13           $0.20        $0.18
                                                                         ====         ====            ====         ====

           Diluted                                                      $0.65        $0.13           $0.20        $0.18
                                                                         ====         ====            ====         ====
</TABLE>


                                        4


<PAGE>

<TABLE>

                          Wayne Savings Bancshares Inc.
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     For the nine months ended December 31,
                                 (In thousands)

                                                                                                 1997              1996
<S>                                                                                               <C>               <C>
Cash flows from operating activities:
  Net earnings for the period                                                                $  1,461         $     281
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of discounts and premiums on loans,
      investments and mortgage-backed securities - net                                             11                (4)
    Amortization of deferred loan origination fees                                               (274)             (257)
    Amortization expense of stock benefit plans                                                    23                58
    Depreciation and amortization                                                                 318               129
    Loans originated for sale in the secondary market                                          (6,280)           (1,430)
    Proceeds from sale of loans                                                                 5,803             1,050
    Gain on sale of loans                                                                        (106)              (39)
    Provision for losses on loans                                                                  45                15
    Federal Home Loan Bank stock dividends                                                       (141)             (126)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable on loans                                                         21                86
      Accrued interest receivable on mortgage-backed securities                                    (9)                4
      Accrued interest receivable on investments and interest-bearing deposits                   (124)               41
      Prepaid expenses and other assets                                                          (234)              276
      Accrued interest payable                                                                    (97)              (94)
      Accounts payable on mortgage loans serviced for others                                      134                15
      Other liabilities                                                                            14               (10)
      Federal income taxes
        Current                                                                                   305              (318)
        Deferred                                                                                   45                49
                                                                                            ---------         ---------
          Net cash provided by (used in) operating activities                                     915              (274)

Cash flows provided by (used in) investing activities:
  Purchase of investment securities                                                            (2,500)           (1,500)
  Proceeds from maturity of investment securities                                               5,051             5,624
  Purchase of mortgage-backed securities                                                       (1,970)               -
  Principal repayments on mortgage-backed securities                                              280               802
  Loan principal repayments                                                                    45,371            34,671
  Loan disbursements                                                                          (41,703)          (36,879)
  Purchase of office premises and equipment - net                                              (2,083)             (212)
  Proceeds from sale of real estate acquired through foreclosure                                   -                503
  Additions to real estate acquired through foreclosure                                           (37)              (30)
  Decrease in certificates of deposit in other financial institutions                           1,000               500
                                                                                              -------          --------
          Net cash provided by investing activities                                             3,409             3,479
                                                                                              -------           -------

          Net cash provided by operating and investing activities
            (balance carried forward)                                                           4,324             3,205
                                                                                              -------           -------
</TABLE>





                                        5


<PAGE>

<TABLE>

                          Wayne Savings Bancshares Inc.
<CAPTION>

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     For the nine months ended December 31,
                                 (In thousands)

                                                                                                   1997            1996
<S>                                                                                                 <C>             <C>
          Net cash provided by operating and investing activities
            (balance brought forward)                                                          $  4,324        $  3,205

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposit accounts                                                     3,163            (958)
  Proceeds from Federal Home Loan Bank advances                                                   4,000          19,000
  Repayment of Federal Home Loan Bank advances                                                   (6,000)        (17,000)
  Advances by borrowers for taxes and insurance                                                     655             708
  Proceeds from exercise of stock options                                                            42              39
  Dividends paid on common stock                                                                   (268)           (488)
                                                                                                -------        --------
          Net cash provided by financing activities                                               1,592           1,301
                                                                                                -------         -------

Net increase in cash and cash equivalents                                                         5,916           4,506

Cash and cash equivalents at beginning of period                                                  7,606          10,190
                                                                                                -------          ------

Cash and cash equivalents at end of period                                                      $13,522         $14,696
                                                                                                 ======          ======


Supplemental  disclosure of cash flow  information:  Cash paid during the period
  for:
    Federal income taxes                                                                       $    433         $   396
                                                                                                =======          ======

    Interest on deposits and borrowings                                                        $  8,360         $ 8,006
                                                                                                =======          ======


Supplemental disclosure of noncash investing activities:
  Unrealized losses on securities designated as
    available for sale, net                                                                    $     (9)        $    (1)
                                                                                                ========         ======= 

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 125                                                                          $     84         $     -
                                                                                                =======          ======
</TABLE>












                                        6


<PAGE>


                          Wayne Savings Bancshares Inc.

                    NOTES TO CONSOLIDAED FINANCIAL STATEMENTS

              For the three and nine months ended December 31, 1997


1.       Basis of Presentation

         The  accompanying  unaudited  consolidated  financial  statements  were
         prepared  in  accordance  with   instructions   for  Form  10-QSB  and,
         therefore,  do not include  information  or footnotes  necessary  for a
         complete presentation of financial position,  results of operations and
         cash flows in conformity with generally accepted accounting principles.
         Accordingly,  these financial  statements should be read in conjunction
         with the  financial  statements  and notes thereto of The Wayne Savings
         and Loan Company  included in the Annual  Report on Form 10-KSB for the
         year ended March 31, 1997.

         Effective   November  25,  1997,  Wayne  Savings  Community  Bank  (the
         "Company"),   formerly  named  The  Wayne  Savings  and  Loan  Company,
         completed its  reorganization  into a two-tier  mutual holding  company
         structure with the  establishment  of a stock holding company as parent
         of the  Company.  In the  reorganization,  each share of Wayne  Savings
         Community  Bank's  common stock was  automatically  converted  into one
         share of Wayne Savings Bancshares Inc. common stock. The reorganization
         of the  Company was  structured  as a tax-free  reorganization  and was
         accounted  for in the  same  manner  as a  pooling-of-interests.  Wayne
         Savings  Community  Bank is now the  wholly-owned  subsidiary  of Wayne
         Savings Bancshares Inc., the stock holding company ("Wayne").

         In the  opinion of  management,  all  adjustments  (consisting  only of
         normal recurring  accruals) which are necessary for a fair presentation
         of  the  financial  statements  have  been  included.  The  results  of
         operations for the three and nine month periods ended December 31, 1997
         and 1996 are not  necessarily  indicative  of the results  which may be
         expected for an entire fiscal year.

2.       Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
         of Wayne and the Company. All significant  intercompany items have been
         eliminated.

3.       Earnings Per Share

         Basic  earnings per share is computed  based upon the  weighted-average
         shares outstanding during the period,  less shares in the ESOP that are
         unallocated and not committed to be released.  Weighted-average  common
         shares  outstanding,  which  gives  effect  to 4,452  unallocated  ESOP
         shares,  totaled  2,251,587  and 2,255,687 for the nine and three month
         periods ended December 31, 1997, respectively. Weighted-averages common
         shares  outstanding,  which  gives  effect  to 2,546  unallocated  ESOP
         shares,  totaled  2,224,173  and 2,227,710 for the nine and three month
         periods ended December 31, 1996.

         Diluted earnings per share is computed taking into consideration common
         shares  outstanding and dilutive  potential  common shares to be issued
         under the  Corporation's  stock  option plan.  Weighted-average  common
         shares deemed  outstanding for purposes of computing  diluted  earnings
         per share totaled  2,256,039 and 2,260,139 for the nine and three month
         periods  ended  December  31, 1997,  respectively,  and  2,226,719  and
         2,230,256 for the nine and three month periods ended December 31, 1996,
         respectively.


                                        7


<PAGE>


                          Wayne Savings Bancshares Inc.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.       Effects of Recent Accounting Pronouncements

         In June 1996,  the Financial  Accounting  Standards  Board (the "FASB")
         issued Statement of Financial  Accounting  Standards  ("SFAS") No. 125,
         "Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
         Extinguishments of Liabilities",  that provides  accounting guidance on
         transfers of financial  assets,  servicing  of  financial  assets,  and
         extinguishment  of liabilities.  SFAS No. 125 introduces an approach to
         accounting  for transfers of financial  assets that provides a means of
         dealing with more complex  transactions in which the seller disposes of
         only a partial  interest in the assets,  retains rights or obligations,
         makes use of special purpose entities in the transaction,  or otherwise
         has continuing involvement with the transferred assets.

         The new accounting method, the financial components approach,  provides
         that  the  carrying  amount  of the  financial  assets  transferred  be
         allocated to components of the transaction based on their relative fair
         values.  SFAS No. 125 provides criteria for determining whether control
         of assets has been relinquished and whether a sale has occurred. If the
         transfer  does not qualify as a sale,  it is accounted for as a secured
         borrowing.  Transactions  subject  to the  provisions  of SFAS No.  125
         include,  among  others,  transfers  involving  repurchase  agreements,
         securitizations  of financial assets,  loan  participations,  factoring
         arrangements,  and transfers of receivables  with  recourse.  An entity
         that undertakes an obligation to service  financial  assets  recognizes
         either  a  servicing  asset or  liability  for the  servicing  contract
         (unless related to a securitization of assets,  and all the securitized
         assets are retained and  classified as  held-to-maturity).  A servicing
         asset or liability that is purchased or assumed is initially recognized
         at its fair value.  Servicing  assets and  liabilities are amortized in
         proportion to and over the period of estimated net servicing  income or
         net  servicing  loss and are  subject  to  subsequent  assessments  for
         impairment based on fair value.

         SFAS No. 125  provides  that a  liability  is removed  from the balance
         sheet only if the debtor  either pays the  creditor  and is relieved of
         its obligation for the liability or is legally  released from being the
         primary obligor.

         SFAS No. 125 is  effective  for  transfers  and  servicing of financial
         assets and extinguishments of liabilities  occurring after December 31,
         1997,  and  is to be  applied  prospectively.  Earlier  or  retroactive
         application is not permitted. Management adopted SFAS No. 125 effective
         January 1, 1998, as required,  without material effect on the Company's
         financial position or results of operations.











                                        8



<PAGE>


                          Wayne Savings Bancshares Inc.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.       Effects of Recent Accounting Pronouncements (continued)

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
         Income." SFAS No. 130  establishes  standards for reporting and display
         of comprehensive income and its components (revenues,  expenses,  gains
         and losses) in a full set of general-purpose financial statements. SFAS
         No. 130  requires  that all items that are  required  to be  recognized
         under  accounting  standards as components of  comprehensive  income be
         reported  in a  financial  statement  that is  displayed  with the same
         prominence  as  other  financial  statements.  It does  not  require  a
         specific  format for that  financial  statement  but  requires  that an
         enterprise display an amount  representing total  comprehensive  income
         for the period in that financial statement.

         SFAS No. 130 requires  that an enterprise  (a) classify  items of other
         comprehensive  income by their nature in a financial  statement and (b)
         display  the  accumulated   balance  of  other   comprehensive   income
         separately from retained earnings and additional paid-in capital in the
         equity  section of a statement of financial  position.  SFAS No. 130 is
         effective  for  fiscal  years   beginning   after  December  15,  1997.
         Reclassification  of financial  statements for earlier periods provided
         for comparative  purposes is required.  SFAS No. 130 is not expected to
         have a material impact on the Corporation's financial statements.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
         of an Enterprise and Related  Information."  SFAS No. 131 significantly
         changes the way that public  business  enterprises  report  information
         about operating  segments in annual  financial  statements and requires
         that those  enterprises  report selected  information  about reportable
         segments in interim financial  reports issued to shareholders.  It also
         establishes  standards  for  related  disclosures  about  products  and
         services,  geographic  areas and major  customers.  SFAS No. 131 uses a
         "management approach" to disclose financial and descriptive information
         about  the way  that  management  organizes  the  segments  within  the
         enterprise for making  operating  decisions and assessing  performance.
         For many  enterprises,  the  management  approach will likely result in
         more  segments  being  reported.  In  addition,  SFAS No. 131  requires
         significantly  more  information  to be disclosed  for each  reportable
         segment than is presently being reported in annual financial statements
         and also  requires  that  selected  information  be reported in interim
         financial  statements.  SFAS No.  131 is  effective  for  fiscal  years
         beginning after December 15, 1997. SFAS No. 131 is not expected to have
         a material impact on the Corporation's financial statements.













                                        9



<PAGE>


                          Wayne Savings Bancshares Inc.

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Discussion of Financial Condition Changes from March 31, 1997 to December 31,
   1997

At December 31, 1997, Wayne Savings Bancshares Inc. ("Wayne"), the stock holding
company parent of Wayne Savings Community Bank (the "Company"), had total assets
of $255.1 million, an increase of $2.9 million, or 1.2%, from March 31, 1997.

Cash  and  due  from  banks,  federal  funds  sold,  interest-bearing  deposits,
certificates of deposit and investment  securities totaled  approximately  $34.4
million, an increase of approximately $2.4 million,  from March 31, 1997 levels.
Regulatory liquidity  approximated 16.5% at December 31, 1997, compared to 15.3%
at March 31, 1997.

Loans receivable decreased by approximately $3.1 million from the March 31, 1997
total.  This decrease  resulted from  principal  repayments of $45.4 million and
sales of $5.7 million,  which were  partially  offset by loan  disbursements  of
$48.0 million.  The allowance for loan losses  totaled  $962,000 at December 31,
1997,  as compared to $914,000 at March 31, 1997.  Nonperforming  loans  totaled
$616,000 at December 31, 1997 and $962,000 at March 31, 1997.  The allowance for
loan losses totaled 156.2% and 95.0% of nonperforming loans at December 31, 1997
and  March  31,  1997,  respectively.  Although  management  believes  that  its
allowance  for loan  losses at December  31,  1997,  is adequate  based upon the
available facts and  circumstances,  there can be no assurance that additions to
such allowance will not be necessary in future  periods,  which would  adversely
affect the Company's results of operations.

Deposits increased by approximately $3.2 million to a total of $214.6 million at
December  31,  1997.  The  increase  in deposits is  primarily  attributable  to
management's  continuing  efforts to achieve a moderate  rate of growth  through
marketing and pricing strategies.

The  Company is  subject  to  capital  standards  which  generally  require  the
maintenance  of  regulatory  capital  sufficient  to meet  each of three  tests,
hereinafter  described as the  tangible  capital  requirement,  the core capital
requirement and the risk-based  capital  requirement.  At December 31, 1997, the
Company's  tangible and core  capital of $23.2  million,  or 9.1%,  exceeded the
minimum  1.5%  and  3.0%   requirements   of  $3.8  million  and  $7.7  million,
respectively,  by $19.4  million and $15.5  million.  The  Company's  risk-based
capital of $23.9  million,  or 17.5%,  exceeded the 8.0% minimum  requirement by
approximately $13.0 million.

Comparison of Operating Results for the Nine Month Periods Ended December 31, 
  1997 and 1996

Net earnings  totaled $1.5 million for the nine months ended  December 31, 1997,
as compared to net earnings of $281,000 for the same period in 1996, an increase
of $1.2  million.  The  increase  in net  earnings  resulted  primarily  from an
increase  in gain on sale of loans of  $151,000  and a  reduction  in  operating
expenses as described herein,  of $1.6 million.  The same period in 1996 had two
nonrecurring  charges  that  affected  net  earnings  for the  year,  a  special
assessment  charged  to the  Company to  recapitalize  the  Savings  Association
Insurance Fund ("SAIF") and a fixed asset write-off to prepare for  construction
of a new branch.

Before the above prior year one-time charges,  net earnings totaled $1.2 million
for the nine months ended  December  31, 1996.  The net earnings of $1.5 million
for the same nine month  period in the current  year  represents  an increase of
approximately $220,000, or 18%.

                                       10


<PAGE>


                          Wayne Savings Bancshares Inc.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Operating  Results for the Nine Month  Periods Ended  December 31,
  1997 and 1996 (continued)

Net Interest Income

Interest on loans and  mortgage-backed  securities  decreased by $17,000 for the
nine months ended  December 31, 1997,  from same period in 1996.  Average  loans
receivable  decreased to $207.9  million for the nine months ended  December 31,
1997,  compared to $208.7  million for the same period in 1996. The average rate
on the  portfolio  decreased  to 7.98% in the 1997  period  compared to 8.22% in
1996.

Interest on investments and interest-bearing  deposits increased by $355,000, or
30.4%,  during the nine months ended  December 31, 1997, as compared to the same
period in 1996,  which is a result of a $3.3  million  increase  in the  average
portfolio balance year to year.

Interest  expense on deposits and  borrowings  increased  by $351,000,  or 4.4%,
during the nine months ended  December  31, 1997,  over the same period in 1996.
The increase can be primarily  attributed to an increase in the average  balance
of  interest-bearing  liabilities,  which  increased by $3.3 million from $213.0
million, coupled with an increase in the average cost of funds year to year.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest income  decreased by $13,000,  or .2%, during the nine months ended
December 31, 1997, as compared to the same period in 1996.

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance for loan losses to a level considered  appropriate by management based
on  historical  experience,  the  volume and type of  lending  conducted  by the
Company,  the  status  of past due  principal  and  interest  payments,  general
economic  conditions,  particularly as such  conditions  relate to the Company's
market area, and other factors  related to the  collectibility  of the Company's
loan  portfolio.  As a result of such  analysis,  management  recorded a $45,000
provision for losses on loans during the nine months ended December 31, 1997, an
increase of $30,000 over the same period in 1996. There can be no assurance that
the loan loss  allowance  of the Company  will be  adequate  to cover  losses on
nonperforming assets in the future.

Other Income

Other income  totaled  $657,000 for the nine months ended  December 31, 1997, an
increase of $217,000,  or 49.3%, over the comparable 1996 period.  This increase
was due primarily to the $151,000 increase in gain on sale of loans coupled with
a $66,000,  or 16.5%,  increase in service  fees,  charges  and other  operating
income.





                                       11



<PAGE>


                          Wayne Savings Bancshares Inc.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Operating  Results for the Nine Month  Periods Ended  December 31,
  1997 and 1996 (continued)

General, Administrative and Other Expense

General,  administrative and other expense decreased by $1.6 million,  or 26.3%,
during the current nine month period,  due primarily to a $1.6 million  decrease
in federal deposit insurance premiums,  a $62,000, or 2.5%, decrease in employee
compensation  and benefits  and a $42,000,  or 5.4%,  decrease in occupancy  and
equipment.

The one-time  charge in 1996 in federal  deposit  insurance  premiums was due to
legislation to  recapitalize  the SAIF. The one-time charge in 1996 in occupancy
and equipment  was due to the write-off of certain fixed assets  relating to the
construction of the new facility at the existing  Cleveland Road branch. For the
Company,  the one-time assessment amounted to $1.3 million,  and the fixed asset
write-off  to $122,000 for the 1996 period.  Furthermore,  the  recapitalization
assessment  paid last year  resulted in a reduction in premium  insurance  rates
thereby  reducing  the  Company's  insurance  premium for the nine months  ended
December 31, 1997.

The  decrease in employee  compensation  and  benefits  was due  primarily  to a
reduction in  compensation  expense  following the  expiration of the Management
Recognition and Retention Plan.

The decrease in occupancy and  equipment was partially  offset by an increase in
depreciation and other costs relating to the construction of the new facility at
the existing Cleveland Road branch and the main office renovation.

Federal Income Taxes

The provision for federal  income taxes amounted to $754,000 for the nine months
ended  December 31, 1997, an increase of $607,000 as compared to the same period
in 1996. The increase  resulted  primarily  from an increase in pretax  earnings
year to year.  The  effective  tax rates for the nine months ended  December 31,
1997 and 1996 were 34.0% and 34.3%, respectively.


Comparison of Operating Results for the Three Month Periods Ended December 31,
   1997 and 1996

The  Company  recorded  net  earnings  of $461,000  for the three  months  ended
December 31, 1997, an increase of $60,000, or 15.0%, as compared to net earnings
of $401,000  for the same period in 1996.  The increase is a result of a $74,000
increase  in  other   income,   along  with  a  $13,000   decrease  in  general,
administrative  and other  expense,  which  were  partially  offset by a $31,000
increase in the provision for federal income taxes.




                                       12



<PAGE>


                          Wayne Savings Bancshares Inc.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Operating  Results for the Three Month Periods Ended  December 31,
  1997 and 1996 (continued)

Net Interest Income

Interest on loans and mortgage-backed  securities  decreased slightly by $4,000,
or .1%,  for the three  months  ended  December 31, 1997 over the same period in
1996. The decline was due primarily to a $2.6 million  decrease in average loans
receivable year to year.

Interest on investments and interest-bearing  deposits increased by $133,000, or
35.3%,  during the current  three month period as a result of an increase in the
average portfolio balances outstanding year to year.

Interest  expense on deposits and other  borrowings  increased  by $115,000,  or
4.4%,  during the three months  ended  December 31, 1997 as compared to the same
period in 1996.  The increase can be primarily  attributed to an increase in the
average balance of interest-bearing liabilities.

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance  for loan  losses to a level  considered  appropriate  by  management.
Management  recorded a $15,000  provision  for losses on loans  during the three
months ended  December 31, 1997,  an increase of $10,000 over the same period in
1996. There can be no assurance that the loan loss allowance of the Company will
be adequate to cover losses on nonperforming assets in the future.

Other Income

Other  income  increased  by $74,000,  or 50.7%,  during the current  period due
primarily  to an  increase  in gain on sale of loans and an  increase in service
fees, charges and other operating income.

General, Administrative and Other Expense

General,  administrative  and other  expense  decreased  by  $13,000  during the
current  three month  period,  due  primarily  to a decrease of federal  deposit
insurance premiums.

Federal Income Taxes

The Company recorded federal income taxes totaling  $240,000 for the three month
period ended  December 31, 1997,  an increase of $31,000 over the same period in
1996. The increase was a result of an increase in pretax earnings. The effective
tax rates for the three months  ended  December 31, 1997 and 1996 were 34.2% and
34.3%, respectively.





                                       13



<PAGE>


                          Wayne Savings Bancshares Inc.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)


Comparison of Operating  Results for the Three Month Periods Ended  December 31,
  1997 and 1996 (continued)

Other Matters

As with all  providers of  financial  services,  the  Company's  operations  are
heavily dependent on information  technology systems.  The Company is addressing
the potential  problems  associated with the possibility that the computers that
control  or   operate   the   Company's   information   technology   system  and
infrastructure  may not be  programmed to read  four-digit  date codes and, upon
arrival of the year 2000,  may  recognize  the  two-digit  code "00" as the year
1900,  causing  systems to fail to function or to generate  erroneous  data. The
Company is working  with the  companies  that supply or service its  information
technology systems to identify and remedy any year 2000 related problems.

As of the date of this Form 10-QSB,  the Company has not identified any specific
expenses that are reasonably  likely to be incurred by the Company in connection
with this issue and does not expect to incur  significant  expense to  implement
the necessary  corrective  measures.  No assurance can be given,  however,  that
significant  expense will not be incurred in future  periods.  In the event that
the Company is ultimately  required to purchase  replacement  computer  systems,
programs  and  equipment,  or incur  substantial  expense to make the  Company's
current systems,  programs and equipment year 2000 compliant,  the Company's net
earnings and financial condition could be adversely affected.

In addition to possible  expense  related to its own systems,  the Company could
incur losses if loan  payments are delayed due to year 2000  problems  affecting
any major borrowers in the Company's primary market area.  Because the Company's
loan  portfolio is highly  diversified  with regard to individual  borrowers and
types of businesses and the Company's  primary market area is not  significantly
dependent  upon one  employer  or  industry,  the  Company  does not  expect any
significant  or  prolonged  difficulties  that will affect net  earnings or cash
flow.


















                                       14



<PAGE>


                          Wayne Savings Bancshares Inc.

                                     PART II


ITEM 1.  Legal Proceedings

                  Not applicable


ITEM 2.  Changes in Securities and Use of Proceeds

                  Not applicable


ITEM 3.  Defaults Upon Senior Securities

                  Not applicable


ITEM 4.  Submission of Matters to a Vote of Security Holders

                  Not applicable

ITEM 5.  Other Information

                  During  the  last  quarter,   Wayne  Savings  Community  Bank,
                  formerly  named The Wayne Savings and Loan Company,  completed
                  its reorganization  into a two-tier holding company structure.
                  Wayne  Savings   Community   Bank  is  now  the   wholly-owned
                  subsidiary of Wayne Savings Bancshares Inc., the stock holding
                  company.


ITEM 6.  Exhibits and Reports on Form 8-K

                  Reports on Form 8-K:        On November 25, 1997, the Company
                                              filed a current report on Form
                                              8-K in which it reported that it 
                                              had completed the reorganization 
                                              into a two-tier holdingcompany 
                                              structure.

                  Exhibits:                   Financial Data Schedule for the 
                                              nine month period ended
                                              December 31, 1997.












                                       15



<PAGE>


 

                                   SIGNATURES

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





Date:    February 9, 1998                           By: /s/Charles F. Finn
                                                        Charles F. Finn
                                                        Chairman and President




Date:    February 9, 1998                           By: /s/Todd J. Tappel
                                                        Todd J. Tappel
                                                        Senior Vice President
                                                        Chief Financial Officer

































                                       16