Ottawa Bancorp, Inc. Announces First Quarter 2022 Results

OTTAWA, Ill., May 05, 2022 (GLOBE NEWSWIRE) — Ottawa Bancorp, Inc. (the “Company”) (OTCQX: OTTW), the holding company for OSB Community Bank (the “Bank”), announced net income of $0.9 million, or $0.33 per basic and diluted common share for the three months ended March 31, 2022, compared to net income of $0.6 million, or $0.20 per basic and diluted common share for the three months ended March 31, 2021. The loan portfolio, net of allowance, decreased to $281.6 million as of March 31, 2022 from $283.9 million as of December 31, 2021 as payoffs and payments exceeded originations. Non-performing loans decreased from $1.8 million at December 31, 2021 to $1.1 million at March 31, 2022, which caused the ratio of non-performing loans to gross loans to decrease from 0.57% at December 31, 2021 to 0.37% at March 31, 2022. Additionally, through March 31, 2022, the Company has repurchased a total of 737,585 shares of its common stock at an average price of $13.35 per share as part of the five stock repurchase programs approved by the Board of Directors since the Company’s second step conversion was completed in 2016.   

“I am very pleased with the results of operations for the first quarter and the solid start to 2022,” said Craig Hepner, President and Chief Executive Officer of the Company. “Net earnings came in significantly above prior periods as our net interest margin continued to expand, and we realized a significant reduction in compensation and related expenses during the three months ended March 31, 2022. We experienced minimal asset growth during the quarter as our loan growth decreased slightly in response to higher market interest rates. Our asset quality remained extremely strong as our customers continued to benefit from our robust local labor markets.”

Mr. Hepner went on to say further, “We continue to closely monitor economic conditions as we prepare for the expected rise in short-term interest rates throughout the remainder of 2022. We believe that we are well-positioned for the rising rate environment given our strong interest rate risk and liquidity positions. Our strategy continues to focus on the deployment of our strong capital position primarily through high quality loan growth in an effort to increase the value of the Company for the benefit of our shareholders.”

Comparison of Results of Operations for the Three Months Ended March 31, 2022 and March 31, 2021

Net income for the three months ended March 31, 2022 was $0.9 million compared to net income of $0.6 million for the three months ended March 31, 2021. Total interest and dividend income increased to $3.2 million for the three months ended March 31, 2022 from $2.9 million for the three months ended March 31, 2021 due to an increase in the average balances of interest-earning assets of $30.8 million. Interest expense was $0.2 million lower during the three months ended March 31, 2022 due to average cost of funds declining to 0.46%. Additionally, there was no provision for loan losses taken during the three months ended March 31, 2022 as compared to $50,000 for the three months ended March 31, 2021. Thus, net interest income after provision for loan losses increased by $0.5 million to $2.9 million for the three months ended March 31, 2022 from $2.4 million for the three months ended March 31, 2021. Total other income decreased by $0.1 million to $0.5 million for the three months ended March 31,2022. Total other expenses decreased by $0.1 million this quarter to $2.2 million as compared to $2.3 million in the first quarter of 2021. Therefore, net income was $0.3 million higher for the three months ended March 31, 2022 increasing to $0.9 million as compared to $0.6 during the three months ended March 31, 2021.

The Company recorded a provision for loan losses of $0 for the three months ended March 31, 2022 as compared to $50 thousand for the three months ended March 31, 2021. The allowance for loan losses was $3.6 million, or 1.25% of total gross loans at March 31, 2022 compared to $3.5 million, or 1.31% of gross loans at March 31, 2021. Net charge-offs during the first quarter of 2022 were $61 thousand compared to $0 during the first quarter of 2021. General reserves were higher at March 31, 2022, when compared to March 31, 2021, primarily due to the balances in most loan categories increasing during the twelve months ended March 31, 2022. Non-performing loans decreased and the necessary reserves on non-performing loans as of March 31, 2022 were lower than the reserves as of December 31, 2021.

The Company recorded income tax expense of $336 thousand for the three months ended March 31, 2022 as compared to $206 thousand for the three months ended March 31, 2021 due to higher pretax earnings for the first quarter of 2022.

Comparison of Financial Condition at March 31, 2022 and December 31, 2021

Total consolidated assets as of March 31, 2022 were $348.8 million, an increase of $6.3 million, or 1.8%, from $342.5 million at December 31, 2021. The increase was primarily due to an increase of $5.3 million in federal funds sold, a $6.0 million increase in cash and cash equivalents, and a $0.2 million increase in other assets. These increases were partially offset by a decrease in the loan portfolio of $2.2 million, a decrease in securities available for sale of $3.1 million and a decrease in accrued interest receivable of $0.1 million.

Cash and cash equivalents increased $6.0 million, or 91.2%, to $12.5 million at March 31, 2022 from $6.5 million at December 31, 2021. The increase in cash and cash equivalents was primarily the result of cash provided by operating activities of $1.0 million and cash provided by financing activities of $6.4 million exceeding cash used in investing activities of $1.4 million

Securities available for sale decreased $3.1 million, or 9.6%, to $29.6 million at March 31, 2022 from $32.7 million at December 31, 2021, as paydowns, calls, and maturities exceeded new securities purchases.  

Net loans decreased $2.3 million, or 0.8%, to $281.6 million at March 31, 2022 compared to $283.9 million at December 31, 2021 primarily as a result of decreases of $1.4 million in one-to-four residential loans, $0.8 million in commercial loans, $0.5 million in consumer direct loans and $0.8 million in purchased auto loans. These decreases were partially offset by a $0.3 million increase in multi-family loans and a $0.9 million increase in non-residential real estate loans.

Total deposits increased $8.1 million, or 3.0%, to $281.2 million at March 31, 2022 from $273.1 million at December 31, 2021. For the three months ended March 31, 2022, savings accounts increased by $1.9 million, non-interest bearing checking accounts increased by $3.7 million and certificates of deposit increased by $6.1 million. Offsetting these increases slightly were decreases in interest bearing checking accounts of $2.8 million and in money market accounts of $0.8 million as compared to December 31, 2021.

FHLB advances decreased $1.0 million to $15.5 million at March 31, 2022 as compared to $16.5 million at December 31, 2021.         

Stockholders’ equity decreased $1.0 million, or 2.1% to $45.0 million at March 31, 2022 from $46.0 million at December 31, 2021. The decrease reflects $0.5 million used to repurchase and cancel 33,000 outstanding shares of Company common stock, a decrease of $1.1 million in other comprehensive income due to a decrease in fair value of securities available for sale and $0.3 million in cash dividends. The decreases were partially offset by net income of $0.9 million for the three months ended March 31, 2022.

About Ottawa Bancorp, Inc.

Ottawa Bancorp, Inc. is the holding company for OSB Community Bank which provides various financial services to individual and corporate customers in the United States. The Bank offers various deposit accounts, including checking, money market, regular savings, club savings, certificates of deposit, and various retirement accounts. Its loan portfolio includes one-to-four family residential mortgage, multi-family and non-residential real estate, commercial, and construction loans as well as auto loans and home equity lines of credit. OSB Community Bank was founded in 1871 and is headquartered in Ottawa, Illinois. For more information about the Company and the Bank, please visit www.myosb.bank.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the federal securities laws. Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results. These forward-looking statements, identified by words such as “will,” “expected,” “believe,” and “prospects,” involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. These risks and uncertainties involve general economic trends and changes in interest rates, increased competition, changes in consumer demand for financial services, the possibility of unforeseen events affecting the industry generally, the uncertainties associated with newly developed or acquired operations, market disruptions and the potential effects of the COVID-19 pandemic on the local and national economic environment, on our customers and on our operations as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic. Ottawa Bancorp, Inc. undertakes no obligation to release revisions to these forward-looking statements publicly to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under applicable law.

Contact:
Craig Hepner — 815-366-5437