FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20552

(Mark One)

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

For the quarterly period ended December 31, 2003

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from ____________ to _______________

Commission File No. 0-23433

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

               Delaware                                     31-1557791
  (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                     Identification Number)

      151 North Market Street
            Wooster, Ohio                                      44691
        (Address of principal                                (Zip Code)
          executive office)

Registrant's telephone number, including area code: (330) 264-5767

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

Yes |X|                         No |_|

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12 B-2 of the Exchange Act)

Yes |_|                         No |X|

As of February 6, 2004, the latest practicable date, 3,907,318 shares of the
registrant's common stock, $.10 par value, were issued and outstanding.

                                       1
<PAGE>

                         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        20

  Item 4   Controls and Procedures                                           20

PART II -  OTHER INFORMATION

  Item 1   Legal Proceedings                                                 21

  Item 2   Changes in Securities and Use of Proceeds                         21

  Item 3   Defaults Upon Senior Securities                                   21

  Item 4   Submission of Matters to a Vote of Security Holders               21

  Item 5   Other Information                                                 21

  Item 6   Exhibits and Reports on Form 8-K                                  21

 SIGNATURES                                                                  22

                                       2
<PAGE>

                         Wayne Savings Bancshares, Inc.

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                           December 31,       March 31,
         ASSETS                                                                                    2003            2003
<S>                                                                                           <C>             <C>
Cash and due from banks                                                                       $   3,328       $   2,967
Federal funds sold                                                                                2,850           8,000
Interest-bearing deposits in other financial institutions                                         7,064           6,529
                                                                                              ---------       ---------
         Cash and cash equivalents                                                               13,242          17,496

Investment securities available for sale - at market                                             24,777          17,036
Investment securities - at amortized cost, approximate  market value of $14,875
  and $19,211 as of December 31, 2003 and March 31, 2003, respectively                           14,089          18,805
Mortgage-backed securities available for sale - at market                                        84,072          66,151
Mortgage-backed securities - at cost, approximate market value of $5,008 and
  $9,927 as of December 31, 2003 and March 31, 2003, respectively                                 4,927           9,851
Loans receivable - net                                                                          208,745         228,373
Office premises and equipment - net                                                               8,748           8,818
Real estate acquired through foreclosure                                                            167              --
Federal Home Loan Bank stock - at cost                                                            4,164           4,041
Cash surrender value of life insurance                                                            6,252           5,121
Accrued interest receivable on loans                                                                831             948
Accrued interest receivable on mortgage-backed securities                                           405             380
Accrued interest receivable on investments and interest-bearing deposits                            409             313
Prepaid expenses and other assets                                                                 1,136           1,532
Prepaid federal income taxes                                                                         --             126
                                                                                              ---------       ---------

         Total assets                                                                         $ 371,964       $ 378,991
                                                                                              =========       =========

         LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                                      $ 294,363       $ 300,931
Advances from the Federal Home Loan Bank                                                         30,000          30,000
Advances by borrowers for taxes and insurance                                                     1,151             712
Accrued interest payable                                                                            102             235
Accounts payable on mortgage loans serviced for others                                               68             130
Other liabilities                                                                                 1,145           1,638
Accrued federal income taxes                                                                         42              --
Deferred federal income taxes                                                                       741             682
                                                                                              ---------       ---------
         Total liabilities                                                                      327,612         334,328

Commitments                                                                                          --              --

Stockholders' equity
  Common stock (8,000,000 shares of $ .10 par value authorized; 3,907,318 and 3,888,795
    shares issued and outstanding at December 31, 2003 and March 31, 2003, respectively)            391             389
  Additional paid-in capital                                                                     34,365          34,208
  Retained earnings - substantially restricted                                                   12,373          11,830
  Less required contributions for shares acquired by Employee Stock Ownership Plan               (1,495)         (1,612)
  Shares acquired by Management Recognition Plan                                                 (1,142)             --
  Accumulated other comprehensive loss                                                             (140)           (152)
                                                                                              ---------       ---------
         Total stockholders' equity                                                              44,352          44,663
                                                                                              ---------       ---------

         Total liabilities and stockholders' equity                                           $ 371,964       $ 378,991
                                                                                              =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                         Wayne Savings Bancshares, Inc.

                       CONSOLIDATED STATEMENTS OF EARNINGS

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                             Nine months                Three months
                                                                                ended                      ended
                                                                            December 31,                December 31,
                                                                        2003          2002           2003            2002
<S>                                                                   <C>           <C>            <C>            <C>
Interest income
  Loans                                                               $ 10,515      $ 12,866       $  3,277       $  4,117
  Mortgage-backed securities                                             1,767           875            648            470
  Investment securities                                                  1,113           835            376            346
  Interest-bearing deposits and other                                      191           406             61            123
                                                                      --------      --------       --------       --------
         Total interest income                                          13,586        14,982          4,362          5,056

Interest expense
  Deposits                                                               4,526         6,673          1,423          2,006
  Borrowings                                                               938           430            313            299
                                                                      --------      --------       --------       --------
         Total interest expense                                          5,464         7,103          1,736          2,305
                                                                      --------      --------       --------       --------

         Net interest income                                             8,122         7,879          2,626          2,751
Provision for losses on loans                                               63            75             --             37
                                                                      --------      --------       --------       --------
         Net interest income after provision for losses on loans         8,059         7,804          2,626          2,714

Other income
  Gain on sale of loans                                                     91            42             30             26
  Increase in cash surrender value of life insurance                       211            54             77             54
  Loss on disposal of real estate acquired through foreclosure              --           (11)            --             --
  Service fees, charges and other operating                              1,177         1,077            383            388
                                                                      --------      --------       --------       --------
         Total other income                                              1,479         1,162            490            468

General, administrative and other expense
  Employee compensation and benefits                                     3,972         3,475          1,372          1,189
  Occupancy and equipment                                                1,098         1,116            357            371
  Federal deposit insurance premiums                                        36            41             12             14
  Franchise taxes                                                          230           231             76             77
  Other operating                                                        1,462         1,281            498            456
                                                                      --------      --------       --------       --------
         Total general, administrative and other expense                 6,798         6,144          2,315          2,107
                                                                      --------      --------       --------       --------

         Earnings before income taxes                                    2,740         2,822            801          1,075

Federal incomes taxes
  Current                                                                  783           969            350            481
  Deferred                                                                  53           (47)          (109)          (145)
                                                                      --------      --------       --------       --------
         Total federal income taxes                                        836           922            241            336
                                                                      --------      --------       --------       --------

         NET EARNINGS                                                 $  1,904      $  1,900       $    560       $    739
                                                                      ========      ========       ========       ========

         EARNINGS PER SHARE
           Basic                                                      $   0.51      $   0.50       $   0.15       $   0.19
                                                                      ========      ========       ========       ========
           Diluted                                                    $   0.51      $   0.50       $   0.15       $   0.19
                                                                      ========      ========       ========       ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -4-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                Nine months          Three months
                                                                   ended                 ended
                                                               December 31,           December 31,
                                                              2003        2002      2003       2002
<S>                                                         <C>          <C>        <C>        <C>
Net earnings                                                $ 1,904      $1,900     $ 560      $739

Other comprehensive income, net of tax:
  Unrealized holding gains on securities,  net of taxes
    of $6, $133, $134 and $100, during the
    respective periods                                           12         259       260       194
                                                            -------      ------     -----      ----

Comprehensive income                                        $ 1,916      $2,159     $ 820      $933
                                                            =======      ======     =====      ====

Accumulated comprehensive income (loss)                     $  (140)     $  281     $(140)     $281
                                                            =======      ======     =====      ====
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -5-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
                                                                                            2003          2002
<S>                                                                                       <C>           <C>
Cash flows from operating activities:
  Net earnings for the period                                                             $  1,904      $  1,900
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of discounts and premiums on loans,
      investments and mortgage-backed securities - net                                       1,359           253
    Amortization of deferred loan origination fees                                            (441)         (318)
    Depreciation and amortization                                                              392           422
    Gain on sale of loans                                                                      (49)          (27)
    Proceeds from sale of loans in the secondary market                                      4,665         3,169
    Loans originated for sale in the secondary market                                       (4,627)       (1,715)
    Provision for losses on loans                                                               63            75
    Loss on disposal of real estate acquired through foreclosure                                --            11
    Federal Home Loan Bank stock dividends                                                    (123)         (137)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable on loans                                                     117           173
      Accrued interest receivable on mortgage-backed securities                                (25)         (165)
      Accrued interest receivable on investments and interest-bearing deposits                 (96)         (198)
      Prepaid expenses and other assets                                                        396          (674)
      Accrued interest payable                                                                (133)         (120)
      Accounts payable on mortgage loans serviced for others                                   (62)           46
      Other liabilities                                                                       (493)           83
      Federal income taxes
        Current                                                                                 42           122
        Deferred                                                                                53           (47)
                                                                                          --------      --------
          Net cash provided by operating activities                                          2,942         2,853

Cash flows provided by (used in) investing activities:
  Purchase of investment securities designated as held to maturity                              --       (14,049)
  Purchase of investment securities designated as available for sale                       (21,129)       (5,086)
  Proceeds from maturity of investment securities designated as held to maturity             4,690        12,927
  Proceeds from maturity of investment securities designated as available for sale          13,523         1,673
  Purchase of mortgage-backed securities designated as held to maturity                         --        (3,557)
  Purchase of mortgage-backed securities designated as available for sale                  (44,446)      (47,108)
  Principal repayments on mortgage-backed securities designated as held to maturity          4,756         5,691
  Principal repayments on mortgage-backed securities designated as available for sale       25,360         2,774
  Loan principal repayments                                                                 73,680        57,709
  Loan disbursements                                                                       (53,646)      (45,213)
  Purchase of office premises and equipment - net                                             (322)         (156)
  Purchase of bank-owned life insurance                                                       (920)       (5,000)
  Increase in cash surrender value of life insurance                                          (211)          (54)
  Proceeds from sale of real estate acquired through foreclosure                                --             8
  Purchase of Federal Home Loan Bank stock                                                      --           (97)
                                                                                          --------      --------
          Net cash provided by (used in) investing activities                                1,335       (39,538)
                                                                                          --------      --------

          Net cash provided by (used in) operating and investing activities
            (balance carried forward)                                                        4,277       (36,685)
                                                                                          --------      --------
</TABLE>


                                      -6-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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

<TABLE>
<CAPTION>
                                                                                     2003          2002
<S>                                                                               <C>           <C>
          Net cash provided by (used in) operating and investing activities
            (balance brought forward)                                             $  4,277      $(36,685)

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposit accounts                                       (6,568)       19,299
  Proceeds from Federal Home Loan Bank advances                                         --        25,000
  Advances by borrowers for taxes and insurance                                        439           544
  Dividends paid on common stock                                                    (1,341)         (623)
  Proceeds from exercise of stock options                                               61            16
  Prepaid tax benefits related to employee stock plans                                  20            --
  Shares acquired by Management Recognition Plan                                    (1,142)           --
                                                                                  --------      --------
          Net cash provided by (used in) financing activities                       (8,531)       44,236
                                                                                  --------      --------

Net increase (decrease) in cash and cash equivalents                                (4,254)        7,551

Cash and cash equivalents at beginning of period                                    17,496        27,883
                                                                                  --------      --------

Cash and cash equivalents at end of period                                        $ 13,242      $ 35,434
                                                                                  ========      ========

Supplemental disclosure of cash flow information:
  Cash paid during the period for:
    Federal income taxes                                                          $    635      $    713
                                                                                  ========      ========

    Interest on deposits and borrowings                                           $  5,597      $  7,223
                                                                                  ========      ========

Supplemental disclosure of noncash investing activities:

  Issuance of mortgage loan upon sale of impaired loan                            $     --      $    450
                                                                                  ========      ========

  Unrealized gains on securities designated as available for
    sale, net of related tax effects                                              $     12      $    259
                                                                                  ========      ========

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 140                                                             $     42      $     15
                                                                                  ========      ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -7-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      For the nine and three month periods ended December 31, 2003 and 2002

1.    Basis of Presentation

      The accompanying unaudited consolidated financial statements for the nine
      and three months ended December 31, 2003 and 2002 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,
      2003.

      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 three- and nine-month periods ended December 31, 2003
      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 losses on loans. 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 losses on
      loans. The allowance for losses on loans is based on management's current
      judgments about the credit quality of individual loans and segments of the
      loan portfolio. The allowance for losses on loans 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"). On September 30, 2003,
      Village Savings Bank, F.S.B. ("Village Bank") was merged with and into
      Wayne Savings Community Bank to be operated as a branch. Prior to this
      date, Village Bank was a wholly-owned subsidiary of Wayne Savings
      Community Bank. Wayne Savings has ten banking locations in Wayne, Holmes,
      Ashland, Medina and Stark counties. All significant intercompany
      transactions and balances have been eliminated in the consolidation.


                                      -8-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      For the nine and three month periods ended December 31, 2003 and 2002

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. Basic and
      diluted earnings per share for the three and nine months ended December
      31, 2002 has been restated to give effect to 1.5109 share exchange ratio
      in the Company's January 2003 secondary stock offering. The computations
      are as follows:

<TABLE>
<CAPTION>
                                                For the nine months ended    For the three months ended
                                                       December 31,                 December 31,
                                                    2003          2002           2003          2002
<S>                                              <C>           <C>            <C>           <C>
      Weighted-average common shares
        outstanding (basic)                      3,747,681     3,887,582      3,757,170     3,889,087
      Dilutive effect of assumed exercise
        of stock options                             3,916         6,033         20,154         5,912
                                                 ---------     ---------      ---------     ---------
      Weighted-average common shares
        outstanding (diluted)                    3,751,597     3,893,615      3,777,324     3,894,999
                                                 =========     =========      =========     =========
</TABLE>

      At December 31, 2003 and 2002 all outstanding options were included in the
      diluted earnings per share calculation.

4.    Stock Option Plan

      The Company has a 1993 incentive Stock Option Plan that provided for the
      issuance of 196,390 adjusted shares of authorized shares of common stock
      with 10,123 options outstanding at December 31, 2003. In fiscal 2004, the
      Company adopted a new Stock Option Plan that provided for the issuance of
      142,857 incentive options and 61,224 non-incentive options of authorized
      common stock. As of December 31, 2003, all options under the 2004 Plan
      have been granted and expire in fiscal 2014.

      The Company accounts for its stock option plans in accordance with SFAS
      No. 123, "Accounting for Stock-Based Compensation," which provides a fair
      value-based method for valuing stock-based compensation that entities may
      use, which measures compensation cost at the grant date based on the fair
      value of the award. Compensation is then recognized over the service
      period, which is usually the vesting period. Alternatively, SFAS No. 123
      permits entities to continue to account for stock options and similar
      equity instruments under Accounting Principles Board ("APB") Opinion No.
      25, "Accounting for Stock Issued to Employees." Entities that continue to
      account for stock options using APB Opinion No. 25 are required to make
      pro forma disclosures of net earnings and earnings per share, as if the
      fair value-based method of accounting defined in SFAS No. 123 had been
      applied. Management has determined that the Company will continue to
      account for stock based compensation in accordance with APB Opinion No.
      25.

      There were 204,081 options granted during the nine months ended December
      31, 2003 and 10,123 options granted for the nine month period ended
      December 31, 2002.


                                      -9-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      For the nine and three month periods ended December 31, 2003 and 2002

4.    Stock Option Plan (continued)

      At December 31, 2003, 10,123 of the stock options granted were subject to
      exercise at the discretion of the grantees and expire in fiscal 2013 while
      the remaining 204,081 options vest at a rate of 20% annually and will
      expire in fiscal 2014.

      A summary of the status of the Company's stock option plans as of and for
      the years ended March 31, 2003 and 2002, and the nine months ended
      December 31, 2003 is presented below:

<TABLE>
<CAPTION>
                                               Nine months ended                         Year ended
                                                  December 31,                            March 31,
                                                      2003                     2003                   2002
                                                          Weighted-                 Weighted-               Weighted-
                                                           average                   average                 average
                                                          exercise                  exercise                exercise
                                                Shares      price       Shares        price      Shares       price
<S>                                          <C>            <C>          <C>         <C>         <C>         <C>
      Outstanding at beginning of period        28,666      $ 6.26       23,378      $ 3.31      26,400      $ 3.31
      Granted                                  204,081       13.95       10,123       11.67          --          --
      Exercised                                (18,543)       3.31       (4,835)       3.31      (3,022)       3.31
      Forfeited                                     --          --           --          --          --          --
                                             ---------      ------     --------      ------     -------      ------

      Outstanding at end of period             214,204      $13.84       28,666      $ 6.26      23,378      $ 3.31
                                             =========      ======     ========      ======     =======      ======

      Options exercisable at period-end      $  10,123      $11.67       28,666      $ 6.26      23,378      $ 3.31
                                             =========      ======     ========      ======     =======      ======

      Fair value of options granted                         $ 3.93                   $ 3.17                  $   --
                                                            ======                   ======                  ======
</TABLE>

      The following information applies to options outstanding at December 31,
      2003:

<TABLE>
<S>                                                                                               <C>
      Number outstanding......................................................................            214,204
      Range of exercise prices................................................................    $11.67 - $13.95
      Weighted-average exercise price.........................................................             $13.84
      Weighted-average remaining contractual life.............................................          9.5 years
</TABLE>

      The fair value of options granted has been based on the Black Scholes
      pricing model using a dividend yield of 3.3%, expected volatility of
      28.8%, a risk-free interest rate of 4.38% and an expected life of ten
      years.

5.    Effects of Recent Accounting Pronouncements

      In October 2002, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 147, "Accounting
      for Certain Financial Institutions: An Amendment of FASB Statement No. 72
      and 144 and FASB Interpretation No. 9," which removes acquisitions of
      financial institutions from the scope of SFAS No. 72, "Accounting for
      Certain Acquisitions of Banking and Thrift Institutions," except for
      transactions between mutual enterprises. Accordingly, the excess of the
      fair value of liabilities assumed over the fair value of tangible and
      intangible assets acquired in a business combination should be recognized
      and accounted for as goodwill in accordance with SFAS No. 141, "Business
      Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."

      SFAS No. 147 also requires that the acquisition of a less-than-whole
      financial institution, such as a branch, be accounted for as a business
      combination if the transferred assets and activities constitute a
      business. Otherwise, the acquisition should be accounted for as the
      acquisition of net assets.


                                      -10-
<PAGE>

                         Wayne Savings Bancshares, Inc.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      For the nine and three month periods ended December 31, 2003 and 2002

5.    Effects of Recent Accounting Pronouncements (continued)

      SFAS No. 147 also amends the scope of SFAS No. 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets," to include long-term
      customer relationship assets of financial institutions (including mutual
      enterprises) such as depositor and borrower-relationship intangible assets
      and credit cardholder intangible assets.

      The provisions of SFAS No. 147 related to unidentifiable intangible assets
      and the acquisition of a less-than-whole financial institution are
      effective for acquisitions for which the date of acquisition is on or
      after October 1, 2002. The provisions related to impairment of long-term
      customer relationship assets are effective October 1, 2002. Transition
      provisions for previously recognized unidentifiable intangible assets are
      effective on October 1, 2002, with earlier application permitted.

      SFAS No. 147 was adopted on April 1, 2003, without material effect on the
      Company's financial condition or results of operations.

      In December 2002, the FASB issued SFAS No. 148, "Accounting for
      Stock-Based Compensation - Transition and Disclosure." SFAS No. 148 amends
      SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
      alternative methods of transition for a voluntary change to the fair value
      based method of accounting for stock-based employee compensation. In
      addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123
      to require prominent disclosures in both annual and interim financial
      statements about the method of accounting for stock-based employee
      compensation and the effect of the method used on reported results. SFAS
      No. 148 is effective for fiscal years beginning after December 15, 2002.
      The interim disclosure provisions are effective for financial reports
      containing financial statements for interim periods beginning after
      December 15, 2002. SFAS No. 148 was adopted on April 1, 2003, without
      material effects on the Company's financial position or results of
      operation.

      In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
      "Guarantor's Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
      a guarantor entity, at the inception of a guarantee covered by the
      measurement provisions of the interpretation, to record a liability for
      the fair value of the obligation undertaken in issuing the guarantee. The
      Company has financial letters of credit which require the Company to make
      payment if the customer's financial condition deteriorates, as defined in
      the agreements. FIN 45 requires Wayne to record a liability generally
      equal to fees received for these letters of credit when guaranteeing
      obligations. FIN 45 applies prospectively to guarantees Wayne issues or
      modifies subsequent to December 31, 2002. Wayne had $97,000 in letters of
      credit outstanding at December 31, 2003.

      In January 2003, the FASB issued FIN 46, "Consolidation of Variable
      Interest Entities." FIN 46 requires a variable interest entity to be
      consolidated by a company if that company is subject to a majority of the
      risk of loss from the variable interest entity's activities or entitled to
      receive a majority of the entity's residual returns, or both. FIN 46 also
      requires disclosures about variable interest entities that a company is
      not required to consolidate, but in which it has a significant variable
      interest. The consolidation requirements of FIN 46 apply immediately to
      variable interest entities created after January 31, 2003. The
      consolidation requirements apply to existing entities in the first fiscal
      year or interim period beginning after September 15, 2003. Certain of the
      disclosure requirements apply in all financial statements issued after
      January 31, 2003, regardless of when the variable interest entity was
      established. The Company adopted the disclosure requirements of FIN 46
      effective January 31, 2003, without material effect on its financial
      statements.


                                      -11-
<PAGE>

                         Wayne Savings Bancshares, Inc.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      For the nine and three month periods ended December 31, 2003 and 2002

6.    Forward-looking Statements

      This quarterly report on Form 10-Q contains forward-looking statements.
      For this purpose, any statements contained herein that are not statements
      of historical fact may be deemed to be forward-looking statements. Without
      limiting the foregoing, the words "believes," "anticipates," "plans",
      "expects" and similar expressions are intended to identify forward-looking
      statements. There are a number of important factors that could cause the
      Company's actual results to differ materially from those contemplated by
      such forward-looking statements. These important factors include, without
      limitation, the Bank's continued ability to originate quality loans,
      fluctuation of interest rates, real estate market conditions in the Bank's
      lending areas, general and local economic conditions, the continued
      ability of the Bank to attract and retain deposits, new accounting
      pronouncements and changing regulatory requirements.


                                      -12-
<PAGE>

ITEM 2         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

Average Balance Sheet

The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid. Such yields and costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the periods
presented.

<TABLE>
<CAPTION>
                                                    For the nine months ended December 31,
                                    -----------------------------------------------------------------------
                                                   2003                                  2002
                                    ---------------------------------      --------------------------------
                                    Average                   Average      Average                  Average
                                    Balance      Interest      Rate        Balance     Interest      Rate
                                    -------      --------     -------      -------     --------     -------
                                                             (Dollars in thousands)
<S>                                 <C>          <C>          <C>         <C>          <C>          <C>
Interest-earning assets:
  Loans receivable, net(1)          $216,611     $ 10,515       6.47%     $244,848     $ 12,866       7.01%
  Mortgage-backed
    securities(2)                     85,686        1,767       2.75        29,978          875       3.89
  Investment securities               31,311        1,113       4.74        22,274          835       5.00
  Interest-bearing deposits(3)        16,727          191       1.52        28,700          406       1.89
                                    --------     --------                 --------     --------
     Total interest-
       earning assets                350,335       13,586       5.17       325,800       14,982       6.13
Non-interest-earning assets           22,115                                20,504
                                    --------                              --------
     Total assets                   $372,450                              $346,304
                                    ========                              ========

Interest-bearing liabilities:
  Deposits                          $297,531        4,526       2.03      $300,517        6,673       2.96
  Borrowings                          30,000          938       4.17        12,939          430       4.43
                                    --------     --------                 --------     --------
     Total interest-
       bearing liabilities           327,531        5,464       2.22       313,456        7,103       3.02
                                                 --------     ------                   --------     ------
Non-interest bearing
  liabilities                            372                                 6,020
                                    --------                              --------
     Total liabilities               327,903                               319,476
Stockholders' equity                  44,547                                26,828
                                    --------                              --------
     Total liabilities and
       stockholders' equity         $372,450                              $346,304
                                    ========                              ========
Net interest income                              $  8,122                              $  7,879
                                                 ========                              ========
Interest rate spread(4)                                         2.95%                                 3.11%
                                                              ======                                ======
Net yield on interest-
  earning assets(5)                                             3.09%                                 3.22%
                                                              ======                                ======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                                106.96%                               103.94%
                                                              ======                                ======
</TABLE>

----------

(1)   Includes non-accrual loan balances.

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

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

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

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


                                      -13-
<PAGE>

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

Average Balance Sheet (continued)

<TABLE>
<CAPTION>
                                                 For the three months ended December 31,
                                   -----------------------------------------------------------------------
                                                  2003                                 2002
                                   ---------------------------------     ---------------------------------
                                   Average                   Average     Average                   Average
                                   Balance      Interest       Rate      Balance      Interest      Rate
                                   -------      --------     -------     -------      --------     -------
                                                           (Dollars in thousands)
<S>                                <C>          <C>          <C>         <C>          <C>          <C>
Interest-earning assets:
  Loans receivable, net(1)         $210,174     $  3,277       6.24%     $239,545     $  4,117       6.87%
  Mortgage-backed
    securities(2)                    88,758          648       2.92        48,810          470       3.85
  Investment securities              33,966          376       4.43        24,765          346       5.59
  Interest-bearing deposits(3)       16,695           61       1.46        30,054          123       1.64
                                   --------     --------                 --------     --------
     Total interest-
       earning assets               349,593        4,362       4.99       343,174        5,056       5.89
Non-interest-earning assets          22,234                                24,283
                                   --------                              --------
     Total assets                  $371,827                              $367,457
                                   ========                              ========
Interest-bearing liabilities:
  Deposits                         $295,793        1,423       1.92      $303,700        2,006       2.64
  Borrowings                         30,000          313       4.17        28,817          299       4.15
                                   --------     --------                 --------     --------
     Total interest-
       bearing liabilities          325,793        1,736       2.13       332,517        2,305       2.77
                                                --------       ----                   --------       ----
Non-interest bearing
  liabilities                         1,768                                 7,662
                                   --------                              --------
     Total liabilities              327,561                               340,179
Stockholders' equity                 44,266                                27,278
                                   --------                              --------
     Total liabilities and
       stockholders' equity        $371,827                              $367,457
                                   ========                              ========
Net interest income                             $  2,626                              $  2,751
                                                ========                              ========
Interest rate spread(4)                                        2.86%                                 3.12%
                                                             ======                                ======
Net yield on interest-
  earning assets(5)                                            3.00%                                 3.21%
                                                             ======                                ======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                               107.30%                               103.20%
                                                             ======                                ======
</TABLE>

----------

(1)   Includes non-accrual loan balances.

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

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

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

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


                                      -14-
<PAGE>

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

Discussion of Financial Condition Changes from March 31, 2003 to December 31,
2003

At December 31, 2003, we had total assets of $372.0 million, a decrease of $7.0
million, or 1.9%, from March 31, 2003 levels.

Liquid assets consisting of cash, interest-bearing deposits and investment
securities decreased by $1.2 million, or 2.3%, to $52.1 million at December 31,
2003. Mortgage-backed securities increased by $13.0 million, or 17.1%, to $89.0
million as management redeployed excess liquid assets into higher-yielding
assets consisting of short term adjustable-rate mortgage-backed securities and
collateralized mortgage obligations with low extension risks. Management's
intention is to maintain a short term investment duration until rates rise from
near historic low levels. The increase in mortgage-backed securities was funded
by loan repayments and sales exceeding loan originations which contributed to
the reduction of loan portfolio by $19.6 million, or 8.6%, to $208.7 million.
During the nine month period ended December 31, 2003, loan prepayments exceeded
those from the same period in 2002 as customers sought to refinance their loans
in the declining interest rate environment.

Nonperforming and impaired loans of $1.8 million consisted of $1.2 million of
residential mortgage loans, coupled with a $548,000 commercial business and real
estate loan relationship which became delinquent and was designated as impaired
during fiscal year 2002. The Company entered into a workout agreement in July
2003 with the borrower which called for the sale and disposal of the underlying
collateral. The first sale under the workout agreement closed in August and
Wayne Savings received payment of $1.1 million. The second sale occurred in
October and Wayne Savings received net proceeds of $157,000. The final sale
occurred during December 2003 in which Wayne Savings, upon finalization will
receive $866,000 representing the recovery of all the principal and interest to
which we are entitled.

Deposits at December 31, 2003, totaled $294.4 million, a decrease of $6.6
million from $300.9 million at March 31, 2003. Management attributes the decline
in deposits mainly to customers seeking to find alternative investment
opportunities due to the low rate environment. The Bank's deposit pricing is
very competitive in all market areas.

Stockholders' equity decreased by $311,000 during the nine months ended December
31, 2003, due to dividends paid totaling $1.3 million and the purchase of common
stock of $1.1 million for the management recognition plan offset by a $1.9
million in net earnings for the nine months ended December 31, 2003, an increase
of $117,000 due to amortization of the ESOP loan and an after-tax increase of
$12,000 in other comprehensive gain.

Comparison of Operating Results for the Nine Month Periods Ended December 31,
2003 and 2002

General

Net earnings totaled $1.9 million for the nine months ended December 31, 2003,
an increase of $4,000 or .2%, over the nine months ended December 31, 2002. The
growth in net earnings was primarily attributable to an increase in net interest
income of $243,000, or 3.1%, an increase in other income of $317,000, or 27.3%,
and an $86,000, or 9.3%, decrease in federal income tax expense, which were
partially offset by a $654,000, or 10.6%, increase in general, administrative
and other expense.

Interest Income

Interest income for the nine months ended December 31, 2003, decreased $1.4
million, or 9.3%, to $13.6 million. This decrease was a result of a 96 basis
point reduction in the yield on interest earning assets to 5.17%, partially
offset by an increase in the weighted average balance of interest-earning assets
totaling $24.5 million, or 7.5%, to $350.3 million for the period ended December
31, 2003.


                                      -15-
<PAGE>

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

Comparison of Operating Results for the Nine Month Periods Ended December 31,
2003 and 2002 (continued)

Interest Income (continued)

Interest income on loans declined $2.4 million, or 18.3%, for the nine months
ended December 31, 2003, due primarily to a decrease in the weighted average
balance of loans outstanding of $28.2 million, or 11.5%, compared to the 2002
period, coupled with a 54 basis-point decrease in the weighted average yield on
loans to 6.47% for the 2003 period.

Interest income on mortgage-backed securities increased $892,000 during the nine
months ended December 31, 2003, due primarily to a $55.7 million, or 185.8%,
increase in the weighted average balance outstanding from the comparable 2002
period, which was partially offset by a decrease in the average yield of 114
basis points to 2.75%.

Interest income on investments increased by $278,000, or 33.3%, reflecting an
increase in the weighted average balance of $9.0 million, or 40.6%, partially
offset by a decrease in the weighted average rate of 26 basis-points to 4.74%
from 5.00% during the comparable 2002 period.

Interest income on interest-bearing deposits and other decreased by $215,000, or
53.0%, reflecting a decrease in the weighted average balance of $12.0 million,
or 41.7%, coupled with a decrease in the weighted average rate of 37 basis
points to 1.52% from 1.89% during the comparable 2002 period.

Interest Expense

Interest expense for the nine months ended December 31, 2003 totaled $5.5
million, a decrease of $1.6 million, or 23.1%, from interest expense of $7.1
million for the nine months ended December 31, 2002. The decrease resulted from
a 80 basis point decrease in the average cost of funds to 2.22% for the 2003
period, offset by an increase in the average balance of deposits and borrowings
outstanding of $14.1 million, or 4.5%, to $327.5 million for the period ended
December 31, 2003.

Interest expense on deposits totaled $4.5 million for the nine months ended
December 31, 2003, a decrease of $2.1 million, or 32.2%, from the nine months
ended December 31, 2002, as a result of a 93 basis point decrease in the average
cost of deposits to 2.03% for the 2003 period coupled with a decrease in the
average balance outstanding of $3.0 million, or 1.0%, to $297.5 million for the
2003 period.

Interest expense on borrowings totaled $938,000 for the nine months ended
December 31, 2003, an increase of $508,000 from the 2002 period, primarily due
to an increase in the average balance of borrowings of $17.1 million to an
average balance of $30.0 million for the nine months ended December 31, 2003
from $12.9 million for the nine months ended December 31, 2002, offset by a
decrease in the average cost of borrowings to 4.17% from an average cost of
4.43% for the 2002 period. The Company borrowed the additional funds in the nine
month period ended December 31, 2002, to purchase corporate and mortgage-backed
securities which should enhance future earnings and cash flows.

Net Interest Income

Net interest income totaled $8.1 million for the nine months ended December 31,
2003, an increase of $243,000, or 3.1%, from the nine month period ended
December 31, 2002. The average interest rate spread decreased to 2.95% for the
nine months ended December 31, 2003 from 3.11% for the nine months ended
December 31, 2002. The net interest margin decreased to 3.09% for the nine
months ended December 31, 2003 from 3.22% for the nine months ended December 31,
2002.


                                      -16-
<PAGE>

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

Comparison of Operating Results for the Nine Month Periods Ended December 31,
2003 and 2002 (continued)

Provision for Losses on Loans

The Company recorded provisions for losses on loans totaling $63,000 and $75,000
for the nine month periods ended December 31, 2003 and 2002, respectively. To
the best of management's knowledge, all known and inherent losses that are
probable and which can be reasonably estimated have been recorded as of December
31, 2003 and 2002.

Other Income

Other income, consisting primarily of an increase in cash surrender value of
life insurance, gains on sale of loans, service fees, and charges on deposit
accounts, increased by $317,000 or 27.3%, to $1.5 million for the nine months
ended December 31, 2003, from $1.2 million for the nine months ended December
31, 2002. The increase resulted primarily from an increase of $157,000 in cash
surrender value of life insurance which was purchased in October 2002.
Additionally, service fees, charges and other operating income increased by
$100,000, or 9.3%, to $1.2 million for the nine months ended December 31, 2003,
was due primarily to increased income related to credit card merchants. Gain on
sale of loans increased $49,000, or 116.7%, in 2003 as compared to the nine
months ended December 31, 2002, mainly due to management's decision to sell the
majority of the lower rate thirty year residential mortgage loans to the
secondary market.

General, Administrative, and Other Expense

General, administrative and other expense increased by $654,000, or 10.6%, to
$6.8 million for the nine months ended December 31, 2003 compared to the nine
months ended December 31, 2002. The increase resulted primarily from a $497,000,
or 14.3%, increase in employee compensation and benefits and a $181,000, or
14.1%, increase in other operating expense. The increase in employee
compensation and benefits was primarily attributable to normal merit increases,
an increase in employee benefit plan costs and additional staff needed for
operating a fully converted, publicly traded stock company. Similarly, the
increase in other operating expense was primarily attributable to increased
costs related to routine and ongoing compliance matters required of a public
company as well as higher merchant expenses related to credit card activity.

Federal Income Taxes

The provision for federal income taxes was $836,000 for the nine months ended
December 31, 2003, a decrease of $86,000, or 9.3%, compared to the same period
in 2002. The decrease resulted primarily from a $82,000, or 2.9%, decrease in
pretax earnings, coupled with $211,000 of tax-exempt income related to the cash
surrender value of life insurance, as compared to $54,000 of tax-exempt income
from the cash surrender value of life insurance in the 2002 period. The
effective tax rate for the nine months ended December 31, 2003, was 30.5% as
compared to 32.7% for the same period in 2002. The decrease in the effective tax
rate period to period is mainly due to the beneficial effects of the
aforementioned tax-exempt income.


                                      -17-
<PAGE>

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

Comparison of Operating Results for the Three Month Periods Ended December 31,
2003 and 2002

General

Net earnings totaled $560,000 for the three months ended December 31, 2003, a
decrease of $179,000, or 24.2%, from the $739,000 of net earnings for the three
months ended December 31, 2002. The reduction in net earnings was primarily
attributable to an decrease in net interest income of $125,000, or 4.5%, and an
increase in general, administrative and other expense of $208,000, or 9.9%,
which were partially offset by a $95,000, or 28.3%, decrease in federal income
tax expense, coupled with a decrease of $37,000 in provision for loan losses and
an increase of $22,000, or 4.7%, in other income.

Interest Income

Interest income decreased $694,000, or 13.7%, for the three months ended
December 31, 2003, to $4.4 million. This decline was mainly due to a 90 basis
point reduction in the average yield on interest earning assets to 4.99% from
5.89% for the period ended December 31, 2002. The yield reduction was partially
offset with an increase in the weighted-average balance of interest-earning
assets totaling $6.4 million, or 1.9%, to a balance of $349.6 million for the
three months ended December 31, 2003.

Interest income on loans declined $840,000, or 20.4%, for the three months ended
December 31, 2003, due primarily to a decrease in the weighted average
outstanding balance of loans period to period of $29.4 million, or 12.3%,
coupled with a 63 basis-point decrease in the weighted average yield on loans to
6.24% for the 2003 period.

Interest income on mortgage-backed securities increased $178,000 during the
three months ended December 31, 2003, due primarily to a $40.0 million increase
in the weighted average balance outstanding from the comparable 2002 period.
This significant increase in the average outstanding balance was the result of
management's strategy to invest in higher yielding short term mortgage-backed
securities as a defensive measure during the current historic low interest rate
environment. The increase in the weighted-average balance was partially offset
by a decrease in the average yield of 93 basis points to 2.92% for the three
months ended December 31, 2003. The yield on mortgage-backed securities was
adversely affected by the record levels of repayments during the period.

Interest income on investments increased by $30,000, or 8.7%, reflecting an
increase in the weighted average balance of $9.2 million, or 37.2%, to $34.0
million from $24.8 million during the comparable 2002 period, partially offset
with a decrease in the average yield of 116 basis points to 4.43%.

Interest income on interest-bearing deposits declined $62,000, or 50.4%, for the
three months ended December 31, 2003, due primarily to a decrease in the
weighted average balance of $13.4 million, or 44.4%, compared to the 2002 period
of $30.1 million, coupled with a decrease in the average yield of 18 basis
points to an average yield of 1.46% from an average yield of 1.64% for the
quarter ended December 31, 2002.

Interest Expense

Interest expense for the three months ended December 31, 2003 totaled $1.7
million, a decrease of $569,000, or 24.7%, from interest expense of $2.3 million
for the three months ended December 31, 2002. The decrease resulted from a 64
basis point decrease in the average cost of funds to 2.13% for the 2003 period,
coupled with a decrease in the average balance of deposits and borrowings
outstanding of $6.7 million, or 2.0%, to $325.8 million for the period ended
December 31, 2003.

Interest expense on deposits totaled $1.4 million for the three months ended
December 31, 2003, a decrease of $583,000, or 29.1%, from the three months ended
December 31, 2002, as a result of a 72 basis point decrease in the average cost
of deposits to 1.92% for the 2003 period coupled with a decrease in the average
balance outstanding of $7.9 million, or 2.6%, to $295.8 million for the 2003
period.


                                      -18-
<PAGE>

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

Comparison of Operating Results for the Three Month Periods Ended December 31,
2003 and 2002 (continued)

Interest Expense (continued)

Interest expense on borrowings totaled $313,000 for the three months ended
December 31, 2003, an increase of $14,000 from the 2002 period, primarily due to
an increase in the average balance of borrowings of $1.2 million to an average
outstanding balance of $30.0 million for the three months ended December 31,
2003, coupled with an increase in the average cost of borrowings to 4.17% from
the average cost of 4.15% for the 2002 period.

Net Interest Income

Net interest income totaled $2.6 million for the three months ended December 31,
2003, a decrease of $125,000, or 4.5%, from the three month period ended
December 31, 2002. The average interest rate spread decreased to 2.86% for the
three months ended December 31, 2003 from 3.12% for the three months ended
December 31, 2002. The net interest margin decreased to 3.00% for the three
months ended December 31, 2003 from 3.21% for the three months ended December
31, 2002.

Provision for Losses on Loans

The Company recorded no provision for losses on loans for the three month period
ended December 31, 2003 as compared to $37,000 in 2002. To the best of
management's knowledge, all known and inherent losses that are probable and
which can be reasonably estimated have been recorded as of December 31, 2003 and
2002.

Other Income

Other income, consisting primarily of an increase in cash surrender value of
life insurance, gains on sale of loans, service fees, and charges on deposit
accounts, increased by $22,000, or 4.7%, to $490,000 for the three months ended
December 31, 2003, from $468,000 for the three months ended December 31, 2002.
The increase resulted primarily from $23,000 in the increase in cash surrender
value of life insurance due to the purchase of life insurance in October 2002.

General, Administrative, and Other Expense

General, administrative and other expense increased by $208,000, or 9.9%, to
$2.3 million for the three months ended December 31, 2003 compared to the three
months ended December 31, 2002. The increase resulted primarily from a $183,000,
or 15.4%, increase in employee compensation and benefits and a $42,000, or 9.2%,
increase in other operating expense. The increase in employee compensation and
benefits was primarily attributable to normal merit increases, an increase in
employee benefit plan costs and additional staff needed for operating a fully
converted, publicly traded stock company. Similarly, the increase in other
operating expense was primarily attributable to increased merchant expenses
related to credit card activity, coupled with increased costs related to routine
compliance matters required of a public company.

Federal Income Taxes

The provision for federal income taxes was $241,000 for the three months ended
December 31, 2003, a decrease of $95,000, or 28.3%, compared to the same period
in 2002, primarily due to the $274,000 decrease in earnings before federal
income taxes and the aforementioned increase of the cash surrender value of life
insurance. The effective tax rate for the three months ended December 31, 2003,
was 30.1% as compared to 31.3% for the same period in 2002.


                                      -19-
<PAGE>

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      There has been no material change in the Company's market risk since the
Company's Form 10-K filed with the Securities and Exchange Commission for the
year ended March 31, 2003.

ITEM 4 CONTROLS AND PROCEDURES

      (a) Evaluation of disclosure controls and procedures.

      Under the supervision and with the participation of the Company's
management, including our Chief Executive Officer and Chief Financial Officer,
the Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) as of the end of the period covered by this report.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the
Company's disclosure controls and procedures were effective in timely alerting
them to the material information relating to the Company (or our consolidated
subsidiaries) required to be included in the Company's periodic SEC filings.

      (b) Changes in internal controls.

      There has been no change made in the Company's internal control over
financial reporting during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                      -20-
<PAGE>

                         Wayne Savings Bancshares, Inc.

                                     PART II

ITEM 1.     Legal Proceedings

            Not applicable

ITEM 2.     Changes in Securities and Use of Proceeds

            Not applicable

ITEM 3.     Defaults Upon Senior Securities

            Not applicable

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

            None.

ITEM 5.     Other Information

            Not applicable

ITEM 6.     Exhibits and Reports on Form 8-K

            (a)   Exhibits:

                    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-32.1       Written Statement of Chief Executive Officer
                                  furnished pursuant to Section 906 of the
                                  Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                                  1350

                    EX-32.2       Written Statement of Chief Financial Officer
                                  furnished pursuant to Section 906 of the
                                  Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                                  1350

            (b)   Reports on Form 8-K:

            The Company filed a Form 8-K on October 1, 2003, disclosing the
            merger of Wayne Savings Community Bank and Village Savings Bank,
            F.S.B.

            The Company filed a Form 8-K on October 29, 2003, disclosing its
            earnings release for the six months and three months ended September
            30, 2003.

            The Company filed a Form 8-K on November 5, 2003, disclosing the
            signing of the merger agreement to acquire Stebbins Bancshares, Inc.
            and its national bank subsidiary, Stebbins National Bank of Creston,
            Ohio.


                                      -21-
<PAGE>

                                   SIGNATURES

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


Date: February 12, 2004                    By:
      ----------------------------              --------------------------------
                                                Charles F. Finn
                                                Chairman and President


Date: February 12, 2004                    By:
      ----------------------------              --------------------------------
                                                Michael C. Anderson
                                                Chief Financial Officer


                                 -22-
<PAGE>

                                   SIGNATURES

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


Date: February 12, 2004                      By: /s/ Charles C. Finn
      -----------------------                    -------------------------------
                                                   Charles C. Finn
                                                   Chairman and President


Date: February 12, 2004                      By: /s/ Michael C. Anderson
      -----------------------                    -------------------------------
                                                   Michael C. Anderson
                                                   Chief Financial Officer


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