| ý | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

| For                the quarterly period ended | September                30, 2006 |   |
|-----------------------------------------------|-----------------------------------|--------|

| WAYNE                SAVINGS BANCSHARES, INC.                                        |
|--------------------------------------------------------------------------------------|
| (Exact                name of registrant as specified in its                charter) |

|                         Delaware |   | 31-1557791                            |
|--------------------------------------------------------------------------|--------|---------------------------------------|
| (State                or other jurisdiction of                           |   | (I.R.S.                Employer       |
| incorporation                or organization)                            |   | Identification                Number) |
|                                                                     |   |                                  |
| 151                North Market Street                                   |   |                                  |
| Wooster,                Ohio                    |   | 44691                                 |
| (Address                of principal                                     |   | (Zip                Code)             |
| executive                office)                                         |   |                                  |

| Yes                  ý | No                 ̈     |
|----------------------------------|--------------------------------------------------|

| Large                accelerated filer  ̈            | Accelerated                filer  ̈ |                         Non-accelerated filer ý |
|-----------------------------------------------------------------------------------------------------------------|-----------------------------------------|----------------------------------------------------------------------------------------------|

| Yes                 ̈          |                       No ý |
|---------------------------------------------------------------------------------|---------------------------------------------------------------|

----

**Wayne      Savings Bancshares, Inc.**

INDEX

|                     |                                                                                      | Page   |
|--------------------------|-------------------------------------------------------------------------------------------|--------|
|                     |                                                                                      |   |
| PART                I -  | FINANCIAL                INFORMATION                                                      |   |
|                     |                                                                                      |   |
| Item                1    | Consolidated                Statements of Financial                Condition              | 3      |
|                     | Consolidated                Statements of Earnings                                        | 4      |
|                     | Consolidated                Statements of Comprehensive                Income             | 5      |
|                     | Consolidated                Statements of Cash Flows                                      | 6      |
|                     | Notes                to Consolidated Financial Statements                                 | 8      |
|                     |                                                                                      |   |
| Item                2    | Management’s                Discussion and Analysis of                              |   |
|                     | Financial                Condition and Results of                Operations               | 13     |
|                     |                                                                                      |   |
| Item                3    | Quantitative                and Qualitative Disclosures About Market                Risk  | 23     |
|                     |                                                                                      |   |
| Item                4    | Controls                and Procedures                                                    | 23     |
|                     |                                                                                      |   |
|                     |                                                                                      |   |
| PART                II - | OTHER                INFORMATION                                                          |   |
|                     |                                                                                      |   |
| Item                1    | Legal                Proceedings                                                          | 24     |
|                     |                                                                                      |   |
| Item                1A   | Risk                Factors                                                               | 24     |
|                     |                                                                                      |   |
| Item                2    | Unregistered                Sales of Equity Securities and Use of                Proceeds | 24     |
|                     |                                                                                      |   |
| Item                3    | Defaults                Upon Senior Securities                                            | 24     |
|                     |                                                                                      |   |
| Item                4    | Submission                of Matters to a Vote of Security                Holders         | 24     |
|                     |                                                                                      |   |
| Item                5    | Other                Information                                                          | 25     |
|                     |                                                                                      |   |
| Item                6    | Exhibits                                                                                  | 25     |
|                     |                                                                                      |   |
| SIGNATURES               |                                                                                      | 26     |

----

**Wayne      Savings Bancshares, Inc.**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

|                                                                                                               |   | **September                30,** |        | **March                31,** |   |
|--------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-------------|------------------------------|--------|
| **ASSETS** ** **                                                                                         |   | **2006**                         |        | **2006**                     |   |
|                                                                                                               |   | (Unaudited)                      |        |                         |   |
|                                                                                                               |   |                             |        |                         |   |
| Cash                and due from banks                                                                             |   | $                                | 2,539       |                         | $      | 2,952 |   |
| Interest-bearing                deposits in other financial institutions                                      |   |                             | 9,487       |                         |   | 11,171 |   |
| Cash                and cash equivalents                                                                           |   |                             | 12,026      |                         |   | 14,123 |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Investment                securities available for sale - at market                                                |   |                             | 62,610      |                         |   | 67,505 |   |
| Investment                securities held to maturity - at amortized cost, approximate market                value |   |                             |        |                         |   |   |   |
| of                $686 and $5,796 as of September 30, 2006 and March 31, 2006, respectively                        |   |                             | 629         |                         |   | 5,802 |   |
| Mortgage-backed                securities available for sale - at market                                           |   |                             | 67,018      |                         |   | 53,932 |   |
| Mortgage-backed                securities held to maturity - at cost, approximate market value of                  |   |                             |        |                         |   |   |   |
| $1,497                and $1,805 as of September 30, 2006 and March 31, 2006, respectively                         |   |                             | 1,489       |                         |   | 1,799 |   |
| Loans                receivable - net                                                                         |   |                             | 236,299     |                         |   | 235,312 |   |
| Office                premises and equipment - net                                                                 |   |                             | 8,388       |                         |   | 8,557 |   |
| Real                estate acquired through foreclosure                                                            |   |                             | 97          |                         |   | 156 |   |
| Federal                Home Loan Bank stock - at cost                                                              |   |                             | 4,758       |                         |   | 4,623 |   |
| Cash                surrender value of life insurance                                                              |   |                             | 5,922       |                         |   | 5,811 |   |
| Accrued                interest receivable on loans                                                                |   |                             | 1,160       |                         |   | 1,075 |   |
| Accrued                interest receivable on mortgage-backed securities                                           |   |                             | 310         |                         |   | 250 |   |
| Accrued                interest receivable on investments and interest-bearing deposits                            |   |                             | 766         |                         |   | 700 |   |
| Prepaid                expenses and other assets                                                                   |   |                             | 1,594       |                         |   | 1,526 |   |
| Goodwill                and other intangible assets                                                                |   |                             | 2,455       |                         |   | 2,508 |   |
| Prepaid                federal income taxes                                                                        |   |                             | 280         |                         |   | - |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Total                assets                                                                                        |   | **$**                            | **405,801** |                         | **$**  | **403,679** |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
|  **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                |   |                             |        |                         |   |   |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Deposits                                                                                                           |   | $                                | 327,476     |                         | $      | 332,570 |   |
| Advances                from the Federal Home Loan Bank                                                            |   |                             | 38,900      |                         |   | 32,750 |   |
| Advances                by borrowers for taxes and insurance                                                       |   |                             | 530         |                         |   | 521 |   |
| Accrued                interest payable                                                                       |   |                             | 338         |                         |   | 263 |   |
| Accounts                payable on mortgage loans serviced for others                                    |   |                             | 221         |                         |   | 225 |   |
| Other                liabilities                                                                         |   |                             | 1,600       |                         |   | 1,118 |   |
| Accrued                federal income taxes                                                                        |   |                             | -           |                         |   | 51 |   |
| Deferred                federal income taxes                                                                       |   |                             | 1,023       |                         |   | 665 |   |
| Total                liabilities                                                                              |   |                             | 370,088     |                         |   | 368,163 |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Commitments                                                                                                   |   |                             | -           |                         |   | - |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Stockholders’                equity                                                                          |   |                             |        |                         |   |   |   |
| Preferred                stock (500,000 shares of $.10 par value authorized;                                       |   |                             |        |                         |   |   |   |
| no                preferred stock issued)                                                                          |   |                             | -           |                         |   | - |   |
| Common                stock (9,000,000 shares of $.10 par value authorized; 3,954,874 and                3,934,874 |   |                             |        |                         |   |   |   |
| shares                issued at September 30, 2006 and March 31, 2006, respectively)                     |   |                             | 395         |                         |   | 393 |   |
| Additional                paid-in capital                                                                     |   |                             | 35,881      |                         |   | 35,604 |   |
| Retained                earnings - substantially restricted                                                        |   |                             | 11,672      |                         |   | 11,394 |   |
| Less                required contributions for shares acquired by Employee Stock Ownership                Plan     |   |                             | (1,199      | )                            |   | (1,239 | ) |
| Less                650,822 and 595,322 shares of treasury stock at September 30, 2006                and          |   |                             |        |                         |   |   |   |
| March                31, 2006, respectively - at cost                                                              |   |                             | (10,461     | )                            |   | (9,625 | ) |
| Accumulated                other comprehensive loss - unrealized losses on securities                designated    |   |                             |        |                         |   |   |   |
| as                available for sale, net of tax effects                                                           |   |                             | (575        | )                            |   | (1,011 | ) |
| Total                stockholders’ equity                                                                    |   |                             | 35,713      |                         |   | 35,516 |   |
|                                                                                                               |   |                             |        |                         |   |   |   |
| Total                liabilities and stockholders’ equity                                                    |   | **$**                            | **405,801** |                         | **$**  | **403,679** |   |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**CONSOLIDATED      STATEMENTS OF EARNINGS**

|                                                                   |   | **Six                months**    |      | **Three                months**  |   |
|------------------------------------------------------------------------|--------|----------------------------------|-----------|----------------------------------|--------|
|                                                                   |   | **ended**                        |      | **ended**                        |   |
|                                                                   |   | **September                30,** |      | **September                30,** |   |
|                                                                   |   | **2006**                         |      | **2005**                         |   | **2006** |   | **2005** |   |
| Interest                income                                         |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Loans                                                                  |   | $                                | 7,876     |                             | $      | 6,725 |   | $ | 3,985 |   | $ | 3,441 |   |
| Mortgage-backed                securities                              |   |                             | 1,481     |                             |   | 979 |   |   | 782 |   |   | 467 |   |
| Investment                securities                                   |   |                             | 1,455     |                             |   | 1,533 |   |   | 712 |   |   | 774 |   |
| Interest-bearing                deposits and other                     |   |                             | 202       |                             |   | 242 |   |   | 99 |   |   | 116 |   |
| Total                interest income                                   |   |                             | 11,014    |                             |   | 9,479 |   |   | 5,578 |   |   | 4,798 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Interest                expense                                        |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Deposits                                                               |   |                             | 4,649     |                             |   | 3,346 |   |   | 2,417 |   |   | 1,728 |   |
| Borrowings                                                             |   |                             | 628       |                             |   | 502 |   |   | 345 |   |   | 238 |   |
| Total                interest expense                                  |   |                             | 5,277     |                             |   | 3,848 |   |   | 2,762 |   |   | 1,966 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Net                interest income                                     |   |                             | 5,737     |                             |   | 5,631 |   |   | 2,816 |   |   | 2,832 |   |
| Provision                for losses on loans                           |   |                             | 60        |                             |   | - |   |   | 30 |   |   | - |   |
| Net                interest income after provision for losses on loans |   |                             | 5,677     |                             |   | 5,631 |   |   | 2,786 |   |   | 2,832 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Other                income                                            |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Gain                on sale of loans                                   |   |                             | -         |                             |   | 69 |   |   | - |   |   | 44 |   |
| Increase                in cash surrender value of life insurance      |   |                             | 110       |                             |   | 125 |   |   | 55 |   |   | 63 |   |
| Service                fees, charges and other operating               |   |                             | 747       |                             |   | 660 |   |   | 376 |   |   | 339 |   |
| Total                other income                                      |   |                             | 857       |                             |   | 854 |   |   | 431 |   |   | 446 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| General,                administrative and other expense               |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Employee                compensation and benefits                      |   |                             | 2,847     |                             |   | 3,113 |   |   | 1,449 |   |   | 1,544 |   |
| Occupancy                and equipment                                 |   |                             | 935       |                             |   | 901 |   |   | 477 |   |   | 476 |   |
| Federal                deposit insurance premiums                      |   |                             | 20        |                             |   | 22 |   |   | 10 |   |   | 11 |   |
| Franchise                taxes                                         |   |                             | 198       |                             |   | 261 |   |   | 80 |   |   | 132 |   |
| Other                operating                                         |   |                             | 1,025     |                             |   | 974 |   |   | 522 |   |   | 489 |   |
| Total                general, administrative and other expense         |   |                             | 5,025     |                             |   | 5,271 |   |   | 2,538 |   |   | 2,652 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Earnings                before income taxes                            |   |                             | 1,509     |                             |   | 1,214 |   |   | 679 |   |   | 626 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Federal                incomes taxes                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Current                                                                |   |                             | 298       |                             |   | 229 |   |   | 90 |   |   | 81 |   |
| Deferred                                                               |   |                             | 134       |                             |   | 78 |   |   | 105 |   |   | 78 |   |
| Total                federal income taxes                              |   |                             | 432       |                             |   | 307 |   |   | 195 |   |   | 159 |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| NET                EARNINGS                                            |   | **$**                            | **1,077** |                             | **$**  | **907** |   | **$** | **484** |   | **$** | **467** |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| EARNINGS                PER SHARE                                      |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Basic                                                                  |   | **$**                            | **0.33**  |                             | **$**  | **0.27** |   | **$** | **0.15** |   | **$** | **0.14** |   |
| Diluted                                                                |   | **$**                            | **0.33**  |                             | **$**  | **0.27** |   | **$** | **0.15** |   | **$** | **0.14** |   |
|                                                                   |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| DIVIDENDS                PER SHARE                                     |   | **$**                            | **0.24**  |                             | **$**  | **0.24** |   | **$** | **0.12** |   | **$** | **0.12** |   |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**CONSOLIDATED      STATEMENTS OF COMPREHENSIVE      INCOME**

|                                                                           |   | **Six                months**    |      | **Three                months**  |   |
|--------------------------------------------------------------------------------|--------|----------------------------------|-----------|----------------------------------|--------|
|                                                                           |   | **ended**                        |      | **ended**                        |   |
|                                                                           |   | **September                30,** |      | **September                30,** |   |
|                                                                           |   | **2006**                         |      | **2005**                         |   | **2006** |   | **2005** |   |
|                                                                           |   |                             |      |                             |   |   |   |   |   |
| Net                earnings                                                    |   | $                                | 1,077     |                             | $      | 907 |   | $ | 484 |   | $ | 467 |   |
|                                                                           |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Other                comprehensive income:                                     |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gains (losses) on securities, net of related |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| taxes                (benefits) of $225, $211, $485 and $(156) during the      |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| respective                periods                                              |   |                             | 436       |                             |   | 410 |   |   | 941 |   |   | (302 | ) |
|                                                                           |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Comprehensive                income                                            |   | **$**                            | **1,513** |                             | **$**  | **1,317** |   | **$** | **1,425** |   | **$** | **165** |   |
|                                                                           |   |                             |      |                             |   |   |   |   |   |   |   |   |   |
| Accumulated                comprehensive loss                                  |   | **$**                            | **(575**  | **)**                            | **$**  | **(382** | **)** | **$** | **(575** | **)** | **$** | **(382** | **)** |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                                       |   | **2006** |    | **2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|----------|--------|
|                                                                                                                                       |   |     |    |     |   |
| Cash                flows from operating activities:                                                                                       |   |     |    |     |   |   |   |
| Net                earnings for the period                                                                                                 |   | $        | 1,077   |     | $      | 907 |   |
| Adjustments                to reconcile net earnings to net cash                                                                           |   |     |    |     |   |   |   |
| provided                by operating activities:                                                                                           |   |     |    |     |   |   |   |
| Amortization                of discounts and premiums on loans,                                                                            |   |     |    |     |   |   |   |
| investments                and mortgage-backed securities - net                                                                            |   |     | (52     | )        |   | 281 |   |
| Amortization                of deferred loan origination fees                                                                              |   |     | (30     | )        |   | (74 | ) |
| Depreciation                and amortization                                                                                               |   |     | 348     |     |   | 319 |   |
| Amortization                of expense related to ESOP                                                                                     |   |     | 40      |     |   | 24 |   |
| Gain                on sale of loans                                                                                                       |   |     | -       |     |   | (17 | ) |
| Proceeds                from sale of loans in the secondary market                                                                         |   |     | -       |     |   | 5,669 |   |
| Loans                originated for sale in the secondary market                                                                           |   |     | -       |     |   | (5,654 | ) |
| Provision                for losses on loans                                                                                               |   |     | 60      |     |   | - |   |
| Federal                Home Loan Bank stock dividends                                                                                      |   |     | (135    | )        |   | (108 | ) |
| Increase                (decrease) in cash due to changes in:                                                                              |   |     |    |     |   |   |   |
| Accrued                interest receivable on loans                                                                                        |   |     | (85     | )        |   | (216 | ) |
| Accrued                interest receivable on mortgage-backed securities                                                                   |   |     | (60     | )        |   | 229 |   |
| Accrued                interest receivable on investments and interest-bearing                deposits                                     |   |     | (66     | )        |   | (47 | ) |
| Prepaid                expenses and other assets                                                                                           |   |     | (68     | )        |   | (237 | ) |
| Amortization                of expense related to amortization of intangibles                                                              |   |     | 53      |     |   | 53 |   |
| Accrued                interest payable                                                                                                    |   |     | 75      |     |   | 41 |   |
| Accounts                payable on mortgage loans serviced for others                                                                      |   |     | (4      | )        |   | (37 | ) |
| Other                liabilities                                                                                                           |   |     | 482     |     |   | (477 | ) |
| Federal                income taxes                                                                                                        |   |     |    |     |   |   |   |
| Current                                                                                                                                    |   |     | (331    | )        |   | 363 |   |
| Deferred                                                                                                                                   |   |     | 134     |     |   | 78 |   |
| Net                cash provided by operating activities                                                                                   |   |     | 1,438   |     |   | 1,097 |   |
|                                                                                                                                       |   |     |    |     |   |   |   |
| Cash                flows provided by (used in) investing activities:                                                                      |   |     |    |     |   |   |   |
| Purchase                of investment securities designated as available for sale                                                          |   |     | (1,101  | )        |   | (5,344 | ) |
| Proceeds                from maturity of investment securities designated as held to                maturity                               |   |     | 2,681   |     |   | 89 |   |
| Proceeds                from sale of investment securities designated as held to                maturity                                   |   |     | 2,512   |     |   | - |   |
| Proceeds                from maturity of investment securities designated as available for                sale                             |   |     | 6,430   |     |   | 1,051 |   |
| Purchase                of mortgage-backed securities designated as available for                sale                                      |   |     | (15,584 | )        |   | (5,706 | ) |
| Principal                repayments on mortgage-backed securities designated as held to                maturity                            |   |     | 305     |     |   | 530 |   |
| Principal                repayments and sales of mortgage-backed securities designated as                available                for sale |   |     | 2,761   |     |   | 13,309 |   |
| Proceeds                from sale of mortgage-backed securities designated as available for                sale                            |   |     | -       |     |   | 2,860 |   |
| Loan                principal repayments                                                                                                   |   |     | 30,932  |     |   | 18,325 |   |
| Loan                disbursements                                                                                                          |   |     | (31,949 | )        |   | (30,449 | ) |
| Purchase                of office premises and equipment - net                                                                             |   |     | (179    | )        |   | (135 | ) |
| Proceeds                from sale of real estate acquired through foreclosure                                                              |   |     | 59      |     |   | 115 |   |
| Increase                in cash surrender value of life insurance                                                                          |   |     | (111    | )        |   | (125 | ) |
| Net                cash used in investing activities                                                                                       |   |     | (3,244  | )        |   | (5,480 | ) |
|                                                                                                                                       |   |     |    |     |   |   |   |
| Net                cash used in operating and investing activities                                                                         |   |     |    |     |   |   |   |
| (balance                carried forward)                                                                                                   |   |     | (1,806  | )        |   | (4,383 | ) |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS      (CONTINUED)**

|                                                                            |   | **2006** |       | **2005** |   |
|---------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                                            |   |     |       |     |   |
| Net                cash used in operating and investing activities              |   |     |       |     |   |   |   |
| (balance                brought forward)                                        |   | $        | (1,806     | )        | $      | (4,383 | ) |
|                                                                            |   |     |       |     |   |   |   |
| Cash                flows provided by (used in) financing activities:           |   |     |       |     |   |   |   |
| Net                increase (decrease) in deposit accounts                      |   |     | (5,094     | )        |   | 5,232 |   |
| Proceeds                from Federal Home Loan Bank advances                    |   |     | 71,400     |     |   | 17,500 |   |
| Repayments                of Federal Home Loan Bank advances                    |   |     | (65,250    | )        |   | (29,000 | ) |
| Advances                by borrowers for taxes and insurance                    |   |     | 9          |     |   | (20 | ) |
| Dividends                paid on common stock                                   |   |     | (799       | )        |   | (815 | ) |
| Proceeds                from exercise of stock options                          |   |     | 279        |     |   | 367 |   |
| Tax                benefits from exercise of stock options                      |   |     | -          |     |   | 27 |   |
| Purchase                of treasury shares                                      |   |     | (836       | )        |   | (4,656 | ) |
| Net                cash used in financing activities                            |   |     | (291       | )        |   | (11,365 | ) |
|                                                                            |   |     |       |     |   |   |   |
| Net                decrease in cash and cash equivalents                        |   |     | (2,097     | )        |   | (15,748 | ) |
|                                                                            |   |     |       |     |   |   |   |
| Cash                and cash equivalents at beginning of period                 |   |     | 14,123     |     |   | 29,942 |   |
|                                                                            |   |     |       |     |   |   |   |
| Cash                and cash equivalents at end of period                       |   | **$**    | **12,026** |     | **$**  | **14,194** |   |
|                                                                            |   |     |       |     |   |   |   |
|                                                                            |   |     |       |     |   |   |   |
| Supplemental                disclosure of cash flow information:                |   |     |       |     |   |   |   |
| Cash                paid during the period for:                                 |   |     |       |     |   |   |   |
| Federal                income taxes                                             |   | **$**    | **630**    |     | **$**  | **325** |   |
|                                                                            |   |     |       |     |   |   |   |
| Interest                on deposits and borrowings                              |   | **$**    | **5,202**  |     | **$**  | **3,807** |   |
|                                                                            |   |     |       |     |   |   |   |
|                                                                            |   |     |       |     |   |   |   |
| Supplemental                disclosure of noncash investing activities:         |   |     |       |     |   |   |   |
| Transfers                from loans to real estate acquired through foreclosure |   | **$**    | **-**      |     | **$**  | **129** |   |
|                                                                            |   |     |       |     |   |   |   |
| Unrealized                gains on securities designated as available for sale, |   |     |       |     |   |   |   |
| net                of related tax effects                                       |   | **$**    | **436**    |     | **$**  | **410** |   |
|                                                                            |   |     |       |     |   |   |   |
| Recognition                of mortgage servicing rights in accordance           |   |     |       |     |   |   |   |
| with                SFAS No. 140                                                |   | **$**    | **-**      |     | **$**  | **52** |   |
|                                                                            |   |     |       |     |   |   |   |
| Dividends                payable                                                |   | **$**    | **396**    |     | **$**  | **404** |   |
|                                                                            |   |     |       |     |   |   |   |

*Index*

----

**Wayne      Savings Bancshares, Inc. **

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| 1.              | Basis                of Presentation |
|----------------------------------------------------------------------------------|--------------------------------------|

|   | The                accompanying unaudited consolidated financial statements for the                six and                three months ended September 30, 2006 and 2005 were prepared in accordance                with instructions for Form 10-Q and Article 10 of Regulation S-X                and,                therefore, do not include information or footnotes necessary for                a                complete presentation of financial position, results of operations                and                cash flows in conformity with accounting principles generally accepted                in                the United States of America. Accordingly, these financial statements                should be read in conjunction with the consolidated financial statements                and notes thereto of Wayne Savings Bancshares, Inc. (the “Company”)                included in the Annual Report on Form 10-K for the year ended March                31,                2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                the opinion of management, all adjustments (consisting only of normal                recurring accruals) which are necessary for a fair presentation of                the                unaudited financial statements have been included. The results of                operations for the six and three month periods ended September 30,                2006                are not necessarily indicative of the results which may be expected                for                the entire fiscal year. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *Critical                Accounting Policy*-                The Company’s critical accounting policy relates to the allowance for loan                losses. The Company has established a systematic method of periodically                reviewing the credit quality of the loan portfolio in order to establish                a                sufficient allowance for loan losses. The allowance for loan losses                is                based on management’s current judgments about the credit quality of                individual loans and segments of the loan portfolio. The allowance                for                loan losses is established through a provision, and considers all                known                internal and external factors that affect loan collectability as                of the                reporting date. Such evaluation, which included a review of all loans                on                which full collectability may not be reasonably assured, considers                among                other matters, the estimated net realizable value or the fair value                of the                underlying collateral, economic conditions, historical loan loss                experience, management’s knowledge of inherent risks in the portfolio that                are probable and reasonably estimable and other factors that warrant                recognition in providing an appropriate loan loss allowance. Management                has discussed the development and selection of this critical accounting                policy with the audit committee of the Board of                Directors. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *Use                of Estimates*** **-                The preparation of financial statements in conformity with accounting                principles generally accepted in the United States of America requires                management to make estimates and assumptions that affect the reported                amounts of assets and liabilities and disclosure of contingent assets                and                liabilities at the date of the financial statements and the reported                amounts of revenues and expenses during the reporting period. Actual                results could differ from those                estimates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Principles                of Consolidation |
|----|--------------------------------------------|

|   | The                accompanying consolidated financial statements include Wayne Savings                Bancshares, Inc. and the Company’s wholly-owned subsidiary, Wayne Savings                Community Bank (“Wayne Savings” or the “Bank”). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Wayne                Savings has eleven banking locations in Wayne, Holmes, Ashland, Medina                and                Stark counties. All significant intercompany transactions and balances                have been eliminated in the                consolidation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc. **

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| 3. | Earnings                Per Share |
|----|-----------------------------------|

|   | Basic                earnings per common share are computed based upon the weighted-average                number of common shares outstanding during the period, less shares                in the                Company’s Employee Stock Ownership Plan (“ESOP”) that are unallocated and                not committed to be released. Diluted earnings per common share include                the dilutive effect of all additional potential common shares issuable                under the Company’s stock option plan. The computations are as                follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   |                                        |          |                                          |   |
|----------------------------------------------------|--------|---------------------------------------------|---------------|-----------------------------------------------|--------|
|                                               |   | **For                the six months ended** |          | **For                the three months ended** |   |
|                                               |   | **September                30,**            |          | **September                30,**              |   |
|                                               |   | **2006**                                    |          | **2005**                                      |   | **2006** |   | **2005** |   |
|                                               |   |                                        |          |                                          |   |   |   |   |   |
| Weighted-average                common shares      |   |                                        |          |                                          |   |   |   |   |   |   |   |   |   |
| outstanding                (basic)                 |   |                                        | 3,230,084     |                                          |   | 3,365,102 |   |   | 3,225,249 |   |   | 3,273,901 |   |
| Dilutive                effect of assumed exercise |   |                                        |          |                                          |   |   |   |   |   |   |   |   |   |
| of                stock options                    |   |                                        | 12,135        |                                          |   | 18,808 |   |   | 11,333 |   |   | 14,354 |   |
| Weighted-average                common shares      |   |                                        |          |                                          |   |   |   |   |   |   |   |   |   |
| outstanding                (diluted)               |   |                                        | **3,242,219** |                                          |   | **3,383,910** |   |   | **3,236,582** |   |   | **3,288,255** |   |

| 4.              | Stock                Option Plan |
|----------------------------------------------------------------------------------|----------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| 4.              | Stock                Option Plan                (continued) |
|----------------------------------------------------------------------------------|-------------------------------------------------------------|

|                                              |   | **Six                months ended** |        | **Year                ended** |   |
|---------------------------------------------------|--------|-------------------------------------|-------------|-------------------------------|--------|
|                                              |   | **September                30,**    |        | **March                31,**  |   |
|                                              |   | **2006**                            |        | **2006**                      |   |  **2005** |   |
|                                              |   |                                |        | **Weighted-**                 |   |   |   | **Weighted-** |   |   |   | **Weighted-** |   |
|                                              |   |                                |        | **average**                   |   |   |   | **average** |   |   |   | **average** |   |
|                                              |   |                                |        | **exercise**                  |   |   |   | **exercise** |   |   |   | **exercise** |   |
|                                              |   | **Shares**                          |        | **price**                     |   | **Shares** |   | **price** |   | **Shares** |   | **price** |   |
|                                              |   |                                |        |                          |   |   |   |   |   |   |   |   |   |
| Outstanding                at beginning of period |   |                                | 179,148     |                          | $      | 13.92 |   |   | 214,204 |   | $ | 13.84 |   |   | 214,204 |   | $ | 13.84 |   |
| Granted                                           |   |                                | -           |                          |   | - |   |   | - |   |   | - |   |   | 163,265 |   |   | 13.95 |   |
| Exercised                                         |   |                                | (20,000     | )                             |   | 13.95 |   |   | (27,556 | ) |   | 13.32 |   |   | - |   |   | - |   |
| Forfeited                                         |   |                                | -           |                          |   | - |   |   | (7,500 | ) |   | 13.95 |   |   | (163,265 | ) |   | 13.95 |   |
|                                              |   |                                |        |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding                at end of period       |   |                                | **159,148** |                          | **$**  | **13.91** |   |   | **179,148** |   | **$** | **13.92** |   |   | **214,204** |   | **$** | **13.84** |   |
|                                              |   |                                |        |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                exercisable at period-end  |   |                                | **159,148** |                          | **$**  | **13.91** |   |   | **179,148** |   | **$** | **13.92** |   |   | **214,204** |   | **$** | **13.84** |   |
|                                              |   |                                |        |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of options granted      |   |                                |        |                          | **$**  | **-** |   |   |   |   | **$** | **-** |   |   |   |   | **$** | **4.07** |   |
|                                              |   |                                |        |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Number                outstanding                          |   | 159,148                        |
|------------------------------------------------------------|--------|--------------------------------|
| Range                of exercise prices                    |   | $11.67                - $13.95 |
| Weighted-average                exercise price             |   | $13.91                         |
| Weighted-average                remaining contractual life |   | 7.5                years       |

| 5.              | Recent                Accounting Developments |
|----------------------------------------------------------------------------------|-----------------------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| 5.              | Recent                Accounting Developments                (continued) |
|----------------------------------------------------------------------------------|--------------------------------------------------------------------------|

|   | · | Separately                recognize financial assets as servicing assets or servicing liabilities,                each time it undertakes an obligation to service a financial asset                by                entering into certain kinds of servicing contracts; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Initially                measure all separately recognized servicing assets and liabilities                at fair                value, if practicable; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Separately                present servicing assets and liabilities subsequently measured at                fair                value in the statement of financial condition and additional disclosures                for all separately recognized servicing assets and servicing                liabilities. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| 5.              | Recent                Accounting Developments                (continued) |
|----------------------------------------------------------------------------------|--------------------------------------------------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

| **ITEM                2** | **MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL** |   |
|---------------------------|----------------------------------------------------------------------------|--------|
|                      | **CONDITION                AND RESULTS OF OPERATIONS**                     |   |

**Average      Balance Sheet**

|                                             |   | For                the six months ended September 30, |        |
|--------------------------------------------------|--------|-------------------------------------------------------|-------------|
|                                             |   |                                                  |        | 2006 |   |   |   |   |   | 2005 |   |   |   |
|                                             |   | Average                                               |        |   |   | Average                Yield/ |   | Average |   |   |   | Average                Yield/ |   |
|                                             |   | Balance                                               |        | Interest |   | Rate |   | Balance |   | Interest |   | Rate |   |
|                                             |   | (Dollars                in thousands)                 |        |
| **Interest-earning                assets**:      |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable, net1            |   | $                                                     | 236,034     |   | $ | 7,876 |   |   | 6.67 | % | $ | 215,902 |   | $ | 6,725 |   |   | 6.23 | % |
| Mortgage-backed                                  |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities2                                      |   |                                                  | 60,714      |   |   | 1,481 |   |   | 4.88 |   |   | 55,971 |   |   | 979 |   |   | 3.50 |   |
| Investment                securities             |   |                                                  | 69,376      |   |   | 1,455 |   |   | 4.19 |   |   | 77,412 |   |   | 1,533 |   |   | 3.96 |   |
| Interest-bearing                deposits3        |   |                                                  | 10,427      |   |   | 202 |   |   | 3.87 |   |   | 16,335 |   |   | 242 |   |   | 2.96 |   |
| Total                interest-                   |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets                    |   |                                                  | 376,551     |   |   | 11,014 |   |   | 5.85 |   |   | 365,620 |   |   | 9,479 |   |   | 5.19 |   |
| Non-interest-earning                assets       |   |                                                  | 22,782      |   |   |   |   |   |   |   |   | 25,169 |   |   |   |   |   |   |   |
| Total                assets                      |   | **$**                                                 | **399,333** |   |   |   |   |   |   |   | **$** | **390,789** |   |   |   |   |   |   |   |
|                                             |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest-bearing                liabilities:** |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                         |   | $                                                     | 332,611     |   |   | 4,649 |   |   | 2.80 |   | $ | 323,406 |   |   | 3,346 |   |   | 2.07 |   |
| Borrowings                                       |   |                                                  | 28,078      |   |   | 628 |   |   | 4.47 |   |   | 27,234 |   |   | 502 |   |   | 3.69 |   |
| Total                interest-                   |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bearing                liabilities               |   |                                                  | 360,689     |   |   | 5,277 |   |   | 2.93 |   |   | 350,640 |   |   | 3,848 |   |   | 2.19 |   |
| Non-interest                bearing              |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                      |   |                                                  | 2,913       |   |   |   |   |   |   |   |   | 1,692 |   |   |   |   |   |   |   |
| Total                liabilities                 |   |                                                  | 363,602     |   |   |   |   |   |   |   |   | 352,332 |   |   |   |   |   |   |   |
| Stockholders’                equity        |   |                                                  | 35,731      |   |   |   |   |   |   |   |   | 38,457 |   |   |   |   |   |   |   |
| Total                liabilities and             |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders’                equity        |   | **$**                                                 | **399,333** |   |   |   |   |   |   |   | **$** | **390,789** |   |   |   |   |   |   |   |
| Net                interest income               |   |                                                  |        |   | **$** | **5,737** |   |   |   |   |   |   |   | **$** | **5,631** |   |   |   |   |
| Interest                rate spread4             |   |                                                  |        |   |   |   |   |   | **2.92** | **%** |   |   |   |   |   |   |   | **3.00** | **%** |
| Net                yield on interest-            |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets5                   |   |                                                  |        |   |   |   |   |   | **3.05** | **%** |   |   |   |   |   |   |   | **3.08** | **%** |
| Ratio                of average interest-        |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets to average         |   |                                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest-bearing                liabilities      |   |                                                  |        |   |   |   |   |   | **104.40** | **%** |   |   |   |   |   |   |   | **104.27** | **%** |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

**Average      Balance Sheet - (continued)**

|                                             |   | For                the three months ended September 30, |        |
|--------------------------------------------------|--------|---------------------------------------------------------|-------------|
|                                             |   |                                                    |        | 2006 |   |   |   |   |   | 2005 |   |   |   |
|                                             |   | Average                                                 |        |   |   | Average                Yield/ |   | Average |   |   |   | Average                Yield/ |   |
|                                             |   | Balance                                                 |        | Interest |   | Rate |   | Balance |   | Interest |   | Rate |   |
|                                             |   | (Dollars                in thousands)                   |        |
| **Interest-earning                assets**:      |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable, net1            |   | $                                                       | 236,649     |   | $ | 3,985 |   |   | 6.74 | % | $ | 218,695 |   | $ | 3,441 |   |   | 6.29 | % |
| Mortgage-backed                                  |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities2                                      |   |                                                    | 62,906      |   |   | 782 |   |   | 4.97 |   |   | 53,284 |   |   | 467 |   |   | 3.51 |   |
| Investment                securities             |   |                                                    | 67,751      |   |   | 712 |   |   | 4.20 |   |   | 78,075 |   |   | 774 |   |   | 3.97 |   |
| Interest-bearing                deposits3        |   |                                                    | 10,186      |   |   | 99 |   |   | 3.88 |   |   | 15,053 |   |   | 116 |   |   | 3.08 |   |
| Total                interest-                   |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets                    |   |                                                    | 377,492     |   |   | 5,578 |   |   | 5.91 |   |   | 365,107 |   |   | 4,798 |   |   | 5.26 |   |
| Non-interest-earning                assets       |   |                                                    | 22,706      |   |   |   |   |   |   |   |   | 24,609 |   |   |   |   |   |   |   |
| Total                assets                      |   | **$**                                                   | **400,198** |   |   |   |   |   |   |   | **$** | **389,716** |   |   |   |   |   |   |   |
|                                             |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest-bearing                liabilities:** |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                         |   | $                                                       | 331,448     |   |   | 2,417 |   |   | 2.92 |   | $ | 325,465 |   |   | 1,728 |   |   | 2.12 |   |
| Borrowings                                       |   |                                                    | 30,158      |   |   | 345 |   |   | 4.58 |   |   | 25,076 |   |   | 238 |   |   | 3.80 |   |
| Total                interest-                   |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bearing                liabilities               |   |                                                    | 361,606     |   |   | 2,762 |   |   | 3.06 |   |   | 350,541 |   |   | 1,966 |   |   | 2.24 |   |
| Non-interest                bearing              |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                      |   |                                                    | 2,767       |   |   |   |   |   |   |   |   | 2,018 |   |   |   |   |   |   |   |
| Total                liabilities                 |   |                                                    | 364,373     |   |   |   |   |   |   |   |   | 352,559 |   |   |   |   |   |   |   |
| Stockholders’                equity        |   |                                                    | 35,825      |   |   |   |   |   |   |   |   | 37,157 |   |   |   |   |   |   |   |
| Total                liabilities and             |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders’                equity        |   | **$**                                                   | **400,198** |   |   |   |   |   |   |   | **$** | **389,716** |   |   |   |   |   |   |   |
| Net                interest income               |   |                                                    |        |   | **$** | **2,816** |   |   |   |   |   |   |   | **$** | **2,832** |   |   |   |   |
| Interest                rate spread4             |   |                                                    |        |   |   |   |   |   | **2.85** | **%** |   |   |   |   |   |   |   | **3.02** | **%** |
| Net                yield on interest-            |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets5                   |   |                                                    |        |   |   |   |   |   | **2.98** | **%** |   |   |   |   |   |   |   | **3.10** | **%** |
| Ratio                of average interest-        |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earning                assets to average         |   |                                                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest-bearing                liabilities      |   |                                                    |        |   |   |   |   |   | **104.40** | **%** |   |   |   |   |   |   |   | **104.16** | **%** |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

|                                               |   | **September                30, 2006** |        | **March                31, 2006** |   |
|----------------------------------------------------|--------|---------------------------------------|-------------|-----------------------------------|--------|
|                                               |   | (Dollars                in thousands) |        |
| Mortgage                loans:                     |   |                                  |        |                              |   |   |   |   |   |   |   |   |   |
| One-to                four-family residential(1)   |   | $                                     | 146,758     |                              |   | 61.14 | % | $ | 149,134 |   |   | 62.40 | % |
| Residential                construction loans      |   |                                  | 2,844       |                              |   | 1.18 |   |   | 4,675 |   |   | 1.96 |   |
| Multi-family                residential            |   |                                  | 7,729       |                              |   | 3.22 |   |   | 7,930 |   |   | 3.32 |   |
| Non-residential                real estate/land(2) |   |                                  | 54,599      |                              |   | 22.74 |   |   | 50,778 |   |   | 21.25 |   |
| Total                mortgage loans                |   |                                  | 211,930     |                              |   | 88.28 |   |   | 212,517 |   |   | 88.93 |   |
| Other                loans:                        |   |                                  |        |                              |   |   |   |   |   |   |   |   |   |
| Consumer                loans(3)                   |   |                                  | 5,464       |                              |   | 2.28 |   |   | 4,901 |   |   | 2.05 |   |
| Commercial                business loans           |   |                                  | 22,683      |                              |   | 9.44 |   |   | 21,550 |   |   | 9.02 |   |
| Total                other loans                   |   |                                  | 28,147      |                              |   | 11.72 |   |   | 26,451 |   |   | 11.07 |   |
| Total                loans before net items        |   |                                  | 240,077     |                              |   | **100.00** | **%** |   | 238,968 |   |   | **100.00** | **%** |
| Less:                                              |   |                                  |        |                              |   |   |   |   |   |   |   |   |   |
| Loans                in process                    |   |                                  | 1,804       |                              |   |   |   |   | 1,729 |   |   |   |   |
| Deferred                loan origination fees      |   |                                  | 486         |                              |   |   |   |   | 443 |   |   |   |   |
| Allowance                for loan losses           |   |                                  | 1,488       |                              |   |   |   |   | 1,484 |   |   |   |   |
| Total                loans receivable, net         |   | **$**                                 | **236,299** |                              |   |   |   | **$** | **235,312** |   |   |   |   |
| Mortgage-backed                securities, net(4)  |   | **$**                                 | **68,507**  |                              |   |   |   | **$** | **55,731** |   |   |   |   |

| (1) | Includes                equity loans collateralized by second mortgages in the aggregate                amount of                $20.3 million and $20.9 million as of September 30, 2006 and March                31, 2006, respectively. Such loans have been underwritten on substantially                the same basis as the Company’s first mortgage                loans. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                land loans of $258,000 and $674,000 as of September 30, 2006 and                March 31,                2006, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes                second mortgage loans of $550,000 and $783,000 as of September 30,                2006                and March 31, 2006, respectively. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

|                                                          |   | **September                30,**      |     | **March                31,** |   |
|---------------------------------------------------------------|--------|---------------------------------------|----------|------------------------------|--------|
|                                                          |   | **2006**                              |     | **2006**                     |   |
|                                                          |   | (Dollars                in thousands) |     |
| Past                due loans 30-89 days:                     |   |                                  |     |                         |   |   |   |
| Mortgage                loans:                                |   |                                  |     |                         |   |   |   |
| One-                to four-family residential                |   | $                                     | 487      |                         | $      | 553 |   |
| Nonresidential                                                |   |                                  | -        |                         |   | - |   |
| Land                                                          |   |                                  | -        |                         |   | - |   |
| Non-mortgage                loans:                            |   |                                  |     |                         |   |   |   |
| Commercial                business loans                      |   |                                  | 25       |                         |   | 72 |   |
| Consumer                loans                                 |   |                                  | 21       |                         |   | 1 |   |
|                                                          |   |                                  | 533      |                         |   | 626 |   |
|                                                          |   |                                  |     |                         |   |   |   |
| Non-performing                loans:                          |   |                                  |     |                         |   |   |   |
| Mortgage                loans:                                |   |                                  |     |                         |   |   |   |
| One-                to four-family residential                |   |                                  | 860      |                         |   | 725 |   |
| All                other mortgage loans                       |   |                                  | -        |                         |   | - |   |
| Non-mortgage                loans:                            |   |                                  |     |                         |   |   |   |
| Commercial                business loans                      |   |                                  | -        |                         |   | 47 |   |
| Consumer                                                      |   |                                  | 12       |                         |   | - |   |
| Total                non-performing loans                     |   |                                  | 872      |                         |   | 772 |   |
| Total                real estate acquired through foreclosure |   |                                  | 97       |                         |   | 156 |   |
| Total                non-performing assets                    |   | **$**                                 | **969**  |                         | **$**  | **928** |   |
|                                                          |   |                                  |     |                         |   |   |   |
| Total                non-performing loans to net              |   |                                  |     |                         |   |   |   |
| loans                receivable                               |   |                                  | **0.37** | **%**                        |   | **0.33** | **%** |
| Total                non-performing loans to total assets     |   |                                  | **0.21** | **%**                        |   | **0.19** | **%** |
| Total                non-performing assets to total assets    |   |                                  | **0.24** | **%**                        |   | **0.23** | **%** |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

|                                                           |  **For                the six months ended** |  **For                the year ended** |
|----------------------------------------------------------------|---------------------------------------------------|---------------------------------------------|
|                                                           |  **September                30, 2006**       |                                        | **March                31, 2006** |   |
|                                                           |                                              | (Dollars                in thousands)       |   |
|                                                           |                                              |                                        |   |   |   |   |
| Loans                receivable, net                           |                                              | **$**                                       | **236,299** |   |   | **$** | **235,312** |   |
| Average                loans receivable, net                   |                                              | **$**                                       | **236,034** |   |   | **$** | **222,944** |   |
| Allowance                balance (at beginning of period)      |                                              | $                                           | 1,484 |   |   | $ | 1,374 |   |
| Charge-offs:                                                   |                                              |                                        |   |   |   |   |   |   |
| Mortgage                loans:                                 |                                              |                                        |   |   |   |   |   |   |
| One-                to four-family                             |                                              |                                        | (46 | ) |   |   | (73 | ) |
| Residential                construction                        |                                              |                                        | - |   |   |   | - |   |
| Multi-family                residential                        |                                              |                                        | - |   |   |   | - |   |
| Non-residential                real estate and land            |                                              |                                        | (15 | ) |   |   | - |   |
| Other                loans:                                    |                                              |                                        |   |   |   |   |   |   |
| Consumer                                                       |                                              |                                        | (6 | ) |   |   | (75 | ) |
| Commercial                                                     |                                              |                                        | - |   |   |   | (10 | ) |
| Gross                charge-offs                               |                                              |                                        | (67 | ) |   |   | (158 | ) |
| Recoveries:                                                    |                                              |                                        |   |   |   |   |   |   |
| Mortgage                loans:                                 |                                              |                                        |   |   |   |   |   |   |
| One-                to four-family                             |                                              |                                        | - |   |   |   | 14 |   |
| Residential                construction                        |                                              |                                        | - |   |   |   | - |   |
| Multi-family                residential                        |                                              |                                        | - |   |   |   | - |   |
| Non-residential                real estate and land            |                                              |                                        | - |   |   |   | - |   |
| Other                loans:                                    |                                              |                                        |   |   |   |   |   |   |
| Consumer                                                       |                                              |                                        | 11 |   |   |   | 35 |   |
| Commercial                                                     |                                              |                                        | - |   |   |   | 8 |   |
| Gross                recoveries                                |                                              |                                        | 11 |   |   |   | 57 |   |
| Net                charge-offs                                 |                                              |                                        | (56 | ) |   |   | (101 | ) |
| Provision                charged to operations                 |                                              |                                        | 60 |   |   |   | 211 |   |
| Allowance                for loans losses balance (at end      |                                              |                                        |   |   |   |   |   |   |
| of                period)                                      |                                              | **$**                                       | **1,488** |   |   | **$** | **1,484** |   |
| Allowance                for loan losses as a percent of loans |                                              |                                        |   |   |   |   |   |   |
| receivable,                net at end of period                |                                              |                                        | **0.63** | **%** |   |   | **0.63** | **%** |
| Net                loans charged off as a percent of average   |                                              |                                        |   |   |   |   |   |   |
| loans                receivable, net                           |                                              |                                        | **0.02** | **%** |   |   | **0.05** | **%** |
| Ratio                of allowance for loan losses to non-      |                                              |                                        |   |   |   |   |   |   |
| performing                loans at end of period               |                                              |                                        | **170.64** | **%** |   |   | **192.23** | **%** |

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION      AND RESULTS OF OPERATIONS (CONTINUED)**

**ITEM      3**     **QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**ITEM      4           ****CONTROLS      AND PROCEDURES**

*Index*

----

**Wayne      Savings Bancshares, Inc.**

PART      II

ITEM      1

ITEM      1A

ITEM      2

|   | (a) | Not                applicable |
|--------|-----|-------------------------------|

|   | (b) | Not                applicable |
|--------|-----|-------------------------------|

|   | (c) | The                following table sets forth certain information regarding repurchases                by                the Company for the quarter ended September 30,                2006. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                |   |                       |   |                      |   |                            |   | Total                # of            |   | Maximum                # of shares |
|--------|-------------------------------------|--------|----------------------------|--------|---------------------------|--------|---------------------------------|--------|--------------------------------------|--------|------------------------------------|
|   |                                |   | Total                      |   | Average                   |   | shares                purchased |   | which                may still be    |
|   |                                |   | #                of shares |   | price                paid |   | as                part of the   |   | purchased                as part     |
|   | Period                              |   | purchased                  |   | per                share  |   | announced                plan   |   | of                the announced plan |
|   |                                |   |                       |   |                      |   |                            |   |                                 |   |                               |   |   |
|   | July                1-31, 2006      |   |                       | -      |                      |   | $                               | -      |                                 |   |                               | - |   |   |   | 140,105 |   |
|   | August                1-31, 2006    |   |                       | 39,500 |                      |   | $                               | 15.14  |                                 |   |                               | 39,500 |   |   |   | 100,605 |   |
|   | September                1-30, 2006 |   |                       | 16,000 |                      |   | $                               | 14.86  |                                 |   |                               | 16,000 |   |   |   | 84,605 |   |

ITEM      3.

ITEM      4

|                             | **For**   | **Withheld** |
|----------------------------------|-----------|--------------|
|                             |      |         |
| Kenneth                R. Lehman | 2,329,236 | 197,721      |
| James                C. Morgan   | 2,329,440 | 197,516      |

| For:                2,485,350 | Against:                27,593 | Abstain:                14,013 |
|-------------------------------|--------------------------------|--------------------------------|

*Index*

----

**Wayne      Savings Bancshares, Inc.**

ITEM      5

ITEM          6

| EX-31.1 | Certification                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002, 18 U.S.C. Section 1350                                                                         |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                             |
| EX-31.2 | Certification                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002, 18 U.S.C. Section 1350                                                                         |
|    |                                                                                                                                                                                                                             |
| EX-32   | Written                Statement of Chief Executive Officer and Chief Financial Officer                furnished                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                Section 1350 |

*Index*

----

**SIGNATURES**

| Date:                    November                7, 2006 |   | By:  |  /s/                Phillip E. Becker           |
|------------------------------------------------------------------------------|--------|-----------|------------------------------------------------------|
|                                                                         |   |      | Phillip                E. Becker                     |
|                                                                         |   |      | President                and Chief Executive Officer |
|                                                                         |   |      |                                                 |
|                                                                         |   |      |                                                 |
|                                                                         |   |      |                                                 |
| Date:                    November                7, 2006 |   | By:  |  /s/                H. Stewart Fitz Gibbon III  |
|                                                                         |   |      | H.                Stewart Fitz Gibbon III            |
|                                                                         |   |      | Executive                Vice President and          |
|                                                                         |   |      | Chief                Financial Officer               |

*Index*