FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             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            June 30, 1998
                               -----------------------------------------

                                       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)

United States                                                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

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 August 5,  1998,  the latest  practicable  date,  2,486,653  shares of the
registrant's common stock, $1.00 par value, were issued and outstanding.









                               Page 1 of 14 pages


<PAGE>


                         Wayne Savings Bancshares, Inc.

                                      INDEX

                                                                    Page

PART I  - FINANCIAL INFORMATION

           Consolidated Statements of Financial Condition              3

           Consolidated Statements of Earnings                         4

           Consolidated Statements of Cash Flows                       5

           Notes to Consolidated Financial Statements                  7

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


PART II -  OTHER INFORMATION                                          13

SIGNATURES                                                            14



<PAGE>

<TABLE>

                         Wayne Savings Bancshares, Inc.
<CAPTION>

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                        (In thousands, except share data)
                               June 30, March 31,
         ASSETS                                                                                     1998           1998
<S>                                                                                                  <C>           <C>
Cash and due from banks                                                                         $  1,437       $  1,422
Federal funds sold                                                                                 3,331          4,100
Interest-bearing deposits in other financial institutions                                         10,578          7,647
                                                                                                 -------        -------
         Cash and cash equivalents                                                                15,346         13,169

Certificates of deposit in other financial institutions                                            1,500          8,500
Investment securities - at amortized cost, approximate
  market value of $15,732 and $13,335 as of June 30, 1998
  and March 31, 1998                                                                              15,938         13,401
Mortgage-backed securities available for sale - at market                                          6,931          4,032
Mortgage-backed securities - at cost, approximate
  market value of $173 and $245 as of June 30, 1998
  and March 31, 1998                                                                                 171            243
Loans receivable - net                                                                           205,745        206,685
Loans held for sale - at lower of cost or market                                                     785          1,194
Real estate acquired through foreclosure                                                             883            946
Office premises and equipment - at depreciated cost                                                6,454          6,461
Federal Home Loan Bank stock - at cost                                                             2,768          2,719
Accrued interest receivable on loans                                                               1,155          1,152
Accrued interest receivable on mortgage-backed securities                                             35             23
Accrued interest receivable on investments and
  interest-bearing deposits                                                                          287            180
Prepaid expenses and other assets                                                                  1,404          1,047
                                                                                                 -------        -------

         Total assets                                                                           $259,402       $259,752
                                                                                                 =======        =======

         LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                                        $217,415       $217,621
Advances from the Federal Home Loan Bank                                                          16,000         16,000
Advances by borrowers for taxes and insurance                                                        162            783
Accrued interest payable                                                                             190            197
Accounts payable on mortgage loans serviced for others                                               151            199
Other liabilities                                                                                    373            291
Accrued federal income taxes                                                                         165              1
Deferred federal income taxes                                                                        231            234
                                                                                                 -------        -------
         Total liabilities                                                                       234,687        235,326

Stockholders' equity
  Common stock (20,000,000  shares of $1.00 par value authorized;  2,486,188 and
    2,258,007 shares issued at June 30, 1998
    and March 31, 1998)                                                                            2,486          2,258
  Additional paid-in capital                                                                      12,399          5,963
  Retained earnings - substantially restricted                                                     9,828         16,198
  Less 357 shares of  treasury stock                                                                 (10)           (10)
  Unrealized gains on securities available for sale, net of related tax effects                       12             17
                                                                                                 -------        -------
         Total stockholders' equity                                                               24,715         24,426
                                                                                                 -------        -------

         Total liabilities and stockholders' equity                                             $259,402       $259,752
                                                                                                 =======        =======

</TABLE>


                                        3


<PAGE>

<TABLE>

                         Wayne Savings Bancshares, Inc.
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

                       For the three months ended June 30,
                        (In thousands, except share data)

                                                                     1998             1997
<S>                                                                  <C>              <C>
Interest income
  Loans                                                            $4,294           $4,280
  Mortgage-backed securities                                           71               15
  Investment securities                                               219              260
  Interest-bearing deposits and other                                 281              237
                                                                    -----            -----
         Total interest income                                      4,865            4,792

Interest expense
  Deposits                                                          2,607            2,518
  Borrowings                                                          194              236
                                                                    -----            -----
         Total interest expense                                     2,801            2,754
                                                                    -----            -----

         Net interest income                                        2,064            2,038

Provision for losses on loans                                          15               15
                                                                    -----            -----

         Net interest income after provision for
           losses on loans                                          2,049            2,023

Other income
  Gain on sale of loans                                                89               57
  Gain on sale of assets                                                1               -
  Service fees, charges and other operating                           170              151
                                                                    -----            -----
         Total other income                                           260              208

General, administrative and other expense
  Employee compensation and benefits                                  837              778
  Occupancy and equipment                                             272              233
  Federal deposit insurance premiums                                   50               51
  Franchise taxes                                                      82               76
  Other operating                                                     345              328
                                                                    -----            -----
         Total general, administrative and other expense            1,586            1,466
                                                                    -----            -----

         Earnings before income taxes                                 723              765

Federal income taxes
  Current                                                             246              216
  Deferred                                                             -                45
                                                                    -----            -----
         Total federal income taxes                                   246              261
                                                                    -----            -----

         NET EARNINGS                                              $  477           $  504
                                                                    =====            =====

         EARNINGS PER SHARE

            Basic                                                   $0.19            $0.20
                                                                     ====             ====

            Diluted                                                 $0.19            $0.20
                                                                     ====             ====

</TABLE>

                                        4


<PAGE>

<TABLE>

                         Wayne Savings Bancshares, Inc.
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       For the three months ended June 30,
                                 (In thousands)

                                                                                                 1998              1997
<S>                                                                                              <C>               <C>
Cash flows from operating activities:
  Net earnings for the period                                                                 $   477           $   504
  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                                              6                18
    Amortization of deferred loan origination fees                                               (159)              (87)
    Amortization expense of stock benefit plans                                                    --                14
    Depreciation and amortization                                                                 116                96
    Loans originated for sale in the secondary market                                          (3,580)           (2,484)
    Proceeds from sale of loans                                                                 3,840             1,829
    Gain on sale of loans                                                                         (51)              (30)
    Provision for losses on loans                                                                  15                15
    Federal Home Loan Bank stock dividends                                                        (49)              (46)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable on loans                                                         (3)              (16)
      Accrued interest receivable on mortgage-backed securities                                   (12)                2
      Accrued interest receivable on investments and interest-bearing deposits                   (107)             (157)
      Prepaid expenses and other assets                                                          (357)             (111)
      Accrued interest payable                                                                     (7)              (54)
      Accounts payable on mortgage loans serviced for others                                      (48)              131
      Other liabilities                                                                            82                18
      Federal income taxes
        Current                                                                                   164               224
        Deferred                                                                                   (3)               45
                                                                                               ------            ------
          Net cash provided by (used in) operating activities                                     324               (89)

Cash flows provided by (used in) investing activities:
  Purchase of investment securities                                                            (4,070)             (500)
  Proceeds from maturity of investment securities                                               1,537                 4
  Purchase of mortgaged-backed securities                                                      (3,331)               -
  Principal repayments on mortgage-backed securities                                              481               131
  Loan principal repayments                                                                    19,109            12,964
  Loan disbursements                                                                          (17,846)          (11,389)
  Purchase of office premises and equipment - net                                                (109)             (682)
  Proceeds from sale of real estate acquired through foreclosure                                   63                -
  Additions to real estate acquired through foreclosure                                            -                (11)
  Decrease in certificates of deposit in other financial institutions                           7,000             2,000
                                                                                               ------            ------
          Net cash provided by investing activities                                             2,834             2,517
                                                                                               ------            ------

          Net cash provided by operating and investing activities
            (balance carried forward)                                                           3,158             2,428
                                                                                               ------            ------
</TABLE>





                                        5


<PAGE>

<TABLE>

                         Wayne Savings Bancshares, Inc.
<CAPTION>

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                       For the three months ended June 30,
                                 (In thousands)

                                                                                                   1998            1997
<S>                                                                                                <C>             <C>
          Net cash provided by operating and investing activities
            (balance brought forward)                                                           $ 3,158         $ 2,428

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposit accounts                                                      (206)          1,366
  Proceeds from Federal Home Loan Bank advances                                                   7,000           1,000
  Repayment of Federal Home Loan Bank advances                                                   (7,000)         (1,000)
  Advances by borrowers for taxes and insurance                                                    (621)            183
  Proceeds from exercise of stock options                                                            15              15
  Dividends paid on common stock                                                                   (169)           (168)
                                                                                                 ------          ------
          Net cash provided by (used in) financing activities                                      (981)          1,396
                                                                                                 ------          ------

Net increase in cash and cash equivalents                                                         2,177           3,824

Cash and cash equivalents at beginning of period                                                 13,169           7,606
                                                                                                 ------          ------

Cash and cash equivalents at end of period                                                      $15,346         $11,430
                                                                                                 ======          ======


Supplemental  disclosure of cash flow  information:
  Cash paid during the period for:
    Federal income taxes                                                                        $    85         $    -
                                                                                                 ======          =====

    Interest on deposits and borrowings                                                         $ 2,808         $ 2,808
                                                                                                 ======          ======


Supplemental disclosure of noncash investing activities:
  Unrealized gains (losses) on securities designated as
    available for sale, net of related tax effects                                             $     (5)        $     1
                                                                                                =======          ======

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 125                                                                          $     38         $    27
                                                                                                =======          ======

</TABLE>











                                        6


<PAGE>


                         Wayne Savings Bancshares, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    For the three months ended June 30, 1998


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 Wayne  Savings
         Bancshares,  Inc.  included in the Annual Report on Form 10-KSB for the
         year ended March 31, 1998.

         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 month periods ended June 30, 1998 and 1997 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.  The  Company  had no
         unallocated  ESOP shares during the three months ended June,  30, 1998.
         Weighted-average  common shares  outstanding  totaled 2,483,571 for the
         three month period ended June 30, 1998.  Weighted average common shares
         outstanding,  which  gives  effect to 5,517  unallocated  ESOP  shares,
         totaled 2,467,824 for the three month period ended June 30, 1997.

         Diluted earnings per share is computed taking into consideration common
         shares  outstanding and dilutive  potential  common shares to be issued
         under Wayne's stock option plan.  Weighted-average common shares deemed
         outstanding  for  purposes  of  computing  diluted  earnings  per share
         totaled  2,520,277 and 2,511,706 for the three month periods ended June
         30, 1998 and 1997, respectively.


                                        7


<PAGE>


                         Wayne Savings Bancshares, Inc.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                    For the three months ended June 30, 1998


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)

                    For the three months ended June 30, 1998


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.  Management adopted SFAS No. 130
         effective  April 1, 1998, as required,  without  material impact on the
         Corporation's   financial  statements.   Comprehensive  income  totaled
         $472,000 and $505,000 for the three month  periods  ended June 30, 1998
         and  1997,   respectively.   The  components  of  comprehensive  income
         consisted   solely  of  unrealized   gains  and  losses  on  securities
         designated as available for sale, net of related tax effects,  totaling
         a loss of $5,000 and a gain of $1,000 for those respective periods.

         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, 1998 to June 30, 1998

At June 30, 1998, Wayne Savings Bancshares,  Inc.  ("Wayne"),  the stock holding
company parent of Wayne Savings Community Bank (the "Company"), had total assets
of $259.4 million, a decrease of $350,000, or 0.1%, from March 31, 1998.

Cash  and  due  from  banks,  federal  funds  sold,  interest-bearing  deposits,
certificates of deposit and investment  securities totaled  approximately  $32.8
million, a decrease of approximately  $2.3 million,  from March 31, 1998 levels.
Regulatory  liquidity  approximated 14.8% at June 30, 1998, compared to 16.0% at
March 31, 1998.

Loans receivable decreased by approximately $1.3 million from the March 31, 1998
total.  This decrease  resulted from  principal  repayments of $19.1 million and
sales of $3.8 million,  which were  partially  offset by loan  disbursements  of
$21.4 million.  The allowance for loan losses totaled $736,000 at June 30, 1998,
as compared to $721,000 at March 31, 1998.  Nonperforming loans totaled $353,000
at June 30, 1998 and $308,000 at March 31, 1998.  The  allowance for loan losses
totaled 208.5% and 234.1% of nonperforming  loans at June 30, 1998 and March 31,
1998,  respectively.  Although  management  believes that its allowance for loan
losses  at June 30,  1998,  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 declined by approximately $206,000 to a total of $217.4 million at June
30, 1998. The decline in deposits  generally  reflects the effect of withdrawals
relating to the lower interest rate environment.

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 June 30,  1998,  the
Company's  tangible and core  capital of $24.1  million,  or 9.3%,  exceeded the
minimum  1.5%  and  3.0%   requirements   of  $3.9  million  and  $7.8  million,
respectively,  by $20.2  million and $16.3  million.  The  Company's  risk-based
capital of $24.9  million,  or 17.5%,  exceeded the 8.0% minimum  requirement by
approximately $13.5 million.

Comparison of Operating Results for the Three Month Periods Ended June 30, 1998
and 1997

Net earnings  totaled  $477,000  for the three  months  ended June 30, 1998,  as
compared to net  earnings of $504,000 for the same period in 1997, a decrease of
$27,000.  The decrease in net earnings  resulted  primarily  from an increase of
$120,000,  or 8.2%,  in general,  administrative  and other  expense,  which was
partially  offset by increases of $26,000,  or 1.3%, in net interest  income and
$52,000, or 25.0% in other income.






                                       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 Three Month Periods Ended June 30, 1998
and 1997 (continued)

Net Interest Income

Interest on loans and mortgage-backed  securities increased by $70,000, or 1.6%,
for the three  months  ended June 30,  1998,  from the same period in 1997.  The
increase in interest income resulted  primarily from a $73,000  increase in loan
fee income.  The increase in loan fee income resulted primarily from accelerated
fee income due to refinances and loan sales.

Interest on investments and  interest-bearing  deposits  decreased by $3,000, or
0.6%,  during the three  months  ended June 30,  1998,  as  compared to the same
period in 1997.

Interest  expense on deposits  and  borrowings  increased  by $47,000,  or 1.7%,
during the three months ended June 30, 1998,  over the same period in 1997.  The
increase can be primarily  attributed  to an increase in the average  balance of
interest-bearing  liabilities,  which  increased  by $5.4  million  from  $212.1
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 increased by $26,000, or 1.3%, during the three months ended
June 30, 1998, as compared to the same period in 1997.

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 $15,000
provision  for losses on loans  during  the three  months  ended June 30,  1998,
unchanged  from the same period in 1997.  The  provision  for losses on loans is
recorded  based upon  management's  assessment  of the risk inherent in the loan
portfolio and management's  assessment of the collateral securing non-performing
loans.  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  $260,000 the three months ended June 30, 1998, an increase
of $52,000,  or 25.0%,  over the comparable  1997 period.  This increase was due
primarily to the $32,000,  or 56.1%,  increase in gain on sale of loans  coupled
with a $19,000, or 12.6%,  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 Three Month Periods Ended June 30, 1998
and 1997 (continued)

General, Administrative and Other Expense

General, administrative and other expense increased by $120,000, or 8.2%, during
the current three month period, due primarily to a $59,000, or 7.6%, increase in
employee  compensation and benefits, a $39,000, or 16.7%,  increase in occupancy
and equipment and a $17,000, or 5.2%, increase in other operating expenses.

Federal Income Taxes

The provision for federal income taxes amounted to $246,000 for the three months
ended June 30,  1998,  a decrease  of $15,000 as  compared to the same period in
1997. The decrease resulted primarily from a decrease in pretax earnings year to
year.  The effective tax rates for the three months ended June 30, 1998 and 1997
were 34.0% and 34.1%, respectively.


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.



                                       12



<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

          The  Board  of  Directors  of  Wayne  Savings  Bancshares,   Inc.  has
          authorized the repurchase of up to 124,322 shares, or approximately 5%
          of Wayne's outstanding stock, over the next 12 months. Any repurchased
          shares,  will be held as  treasury  stock  and will be  available  for
          general corporate purposes.


ITEM 6.  Exhibits and Reports on Form 8-K

         Exhibits:
           27                        Financial Data Schedule for the three month
                                      period ended June 30, 1998.
















                                       13



<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:        August 10, 1998                     By: /s/Charles F. Finn
       ---------------------------------             ------------------
                                                     Charles F. Finn
                                                     Chairman and President





DDate:        August 10, 1998                     By: /s/Anthony Volpe
       ---------------------------------             ------------------
                                                     Anthony Volpe
                                                     Vice President/Controller































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