Ottawa Bancorp, Inc. Announces Fourth Quarter 2019 Results
OTTAWA, Ill., Feb. 10, 2020 (GLOBE NEWSWIRE) — Ottawa Bancorp, Inc. (the “Company”) (Nasdaq CM: OTTW), the holding company for Ottawa Savings Bank, FSB (the “Bank”), announced net income of $0.6 million, or $0.18 per basic and diluted common share for the three months ended December 31, 2019, compared to net income of $0.6 million, or $0.18 per basic diluted common share for the three months ended December 31, 2018. For the year ended December 31, 2019, net income was $1.94 million, or $0.62 per basic and diluted common share, compared to net income of $2.0 million, or $0.62 per basic and per diluted common share for the year ended December 31, 2018. During the fourth quarter of 2019, the Company experienced an increase in loan originations which drove growth in the loan portfolio. The loan portfolio increased to $247.8 million as of December 31, 2019 from $235.9 million as of December 31, 2018. Non-performing loans increased from $1.5 million at December 31, 2018 to $2.3 million at December 31, 2019, which caused the ratio of non-performing loans to gross loans to increase from 0.63% at December 31, 2018 to 0.90% at December 31, 2019. Additionally, through December 31, 2019, the Company has repurchased a total of 340,669 shares of its common stock at an average price of $13.95 per share as part of the stock repurchase program approved on November 20, 2019 and its previous stock repurchase programs that expired in November, 2018 and November, 2019.
Comparison of Results of Operations for the Three Months Ended December 31, 2019 and December 31, 2018Net income for the three months ended December 31, 2019 was $0.6 million compared to net income of $0.6 million for the three months ended December 31, 2018. Total interest and dividend income was $0.2 million higher for the three months ended December 31, 2019 than it was for the three months ended December 31, 2018. This increase was offset by higher interest expense during the 2019 period. Net interest income after provision for loan losses increased slightly but was offset by a corresponding increase in total other expenses leaving net income comparable.
Net interest income increased by $0.1 million, or 2.7%, to $2.4 million for the three months ended December 31, 2019, from $2.3 million for the three months ended December 31, 2018. Interest and dividend income increased $0.2 million, or 8.4%, primarily due to an increase in the average balances of interest-earning assets of $13.1 million. The increase in interest and dividend income was partially offset by an increase in interest expense as the average cost of funds increased 24 basis points to 1.42% for the three months ended December 2019. The net interest margin decreased 7 basis points during the three months ended December 2019 to 3.34% from 3.41% for the three months ended December 31, 2018.The Company recorded a provision for loan losses of $0.2 million for each of the three month periods ended December 2019 and 2018. The allowance for loan losses was $2.9 million, or 1.17% of total gross loans at December 31, 2019 compared to $2.6 million, or 1.10% of gross loans at December 31, 2018. Net charge-offs during the fourth quarter of 2019 were $27 thousand compared to net charge-offs of $0.1 million during the fourth quarter of 2018. General reserves were higher at December 31, 2019, when compared to December 31, 2018, primarily due to the balances in most loan categories increasing during the twelve months ended December 31, 2019. This increase in the allowance due to loan growth was partially offset by improvements in historical loss levels. Although non-performing loans increased, the necessary reserves on non-performing loans as of December 31, 2019 were approximately $17,000 lower than they were as of December, 2018 due to the transfer of one non-performing loan to foreclosed real estate, the charge-off of the specific reserve for a non-performing loan, improvements in the payment status of several other non-performing loans and the new loans added not requiring as large of specific reserves as those removed.Total other income was $0.6 million for both the three months ended December 31, 2019 and December 31, 2018. The increase during the 2019 period was due to an increase in gains on the sale of loans and an increase in loan origination and servicing income. These increases were due to the increase in loan originations during the 2019 period. These increases were mostly offset by a decrease in customer service fees and other income.Total other expense was $2.0 million for both the three months ended December 31, 2019 and December 31, 2018. There was an increase in salaries and employee benefits expense during the 2019 period due to the addition of a commercial lender and a senior credit analyst. Additionally, other expenses increased as well. These increases were offset by decreases in deposit insurance premiums, legal and professional services and data processing fees. The Company recorded income tax expense of $0.2 million for both of the three month periods ended December 31, 2019 and 2018.Comparison of Results of Operations for the Years Ended December 31, 2019 and December 31, 2018Net income was $1.9 million for the year ended December 31, 2019 which is a $0.1 million or 2.9% decrease from $2.0 million for the year ended December 31, 2018. The decrease in net income was primarily the result of total other expense and tax expense increasing more than the increase in total other income and net interest income after provision for loan losses.
Net interest income increased by $0.3 million, or 3.3%, to $9.4 million for the year ended December 31, 2019, from $9.1 million for the year ended December 31, 2018. Interest and dividend income increased $1.4 million, or 12.8%, primarily due to an increase in the average balances of interest-earning assets of $21.0 million. The increase in interest and dividend income was partially offset by an increase in interest expense as the average cost of funds increased 40 basis points to 1.36% for the year ended December 31, 2019. The net interest margin decreased 16 basis points, or 4.67% during the year ended December 31, 2019 to 3.41% from 3.57% for the year ended December 31, 2018.The Company recorded a provision for loan losses of $0.6 million for year ended December 31, 2019 and a provision for loan losses of $0.5 million for the year ended December 31, 2018. The allowance for loan losses was $2.9 million, or 1.17% of total gross loans at December 31, 2019 compared to $2.6 million, or 1.10% of gross loans at December 31, 2018. Net charge-offs were $0.3 million for the year ended December 31, 2019 compared $0.4 million for the year ended December 31, 2018. General reserves were higher at December 31, 2019, when compared to December 31, 2018, primarily due to the balances in all loan categories increasing during the twelve months ended December 31, 2019. This increase in the allowance due to loan growth was partially offset by improvements in historical loss levels. Although non-performing loans increased, the necessary reserves on non-performing loans as of December 31, 2019 were approximately $17,000 lower than they were as of December, 2018 due to the transfer of one non-performing loan to foreclosed real estate, the charge-off of the specific reserve for a non-performing loan, improvements in the payment status of several other non-performing loans and the new loans added not requiring as large of specific reserves as those removed.Total other income increased to $2.5 million for year ended December 31, 2019, as compared to $2.3 million for the year ended December 31, 2018. The increase was primarily due to an increase in gains on sale of loans, an increase in the origination of mortgage servicing rights, and an increase in loan origination and servicing income all of which were primarily the result of increased loan volume in 2019. These increases were partially offset by a decrease in customer service fees and a decrease in gain on sale of foreclosed real estate.Total other expense increased $0.4 million, or 5.2%, to $8.6 million for the year ended December 31, 2019, as compared to $8.2 million for the year ended December 31, 2018. The increase was primarily due to higher salaries and employee benefits, occupancy, data processing and other costs. These increases were offset slightly by reductions in loan expense, deposit insurance premiums, and legal and professional fees. The Company recorded income tax expense of approximately $0.7 million for both of the twelve-month periods ended December 31, 2019 and 2018.Comparison of Financial Condition at December 31, 2019 and December 31, 2018Total consolidated assets as of December 31, 2019 were $300.5 million, an increase of $7.7 million, or 2.63%, from $292.8 million at December 31, 2018. The increase was primarily due to an increase of $11.9 million in the net loan portfolio, an increase in time deposits of $3.0 million and an increase in loans held for sale of $1.2 million. These increases were partially offset by a decrease in cash and cash equivalents of $4.1 million, a decrease in federal funds sold of $1.5 million, a decrease in securities available for sale of $1.0 million and an overall $1.8 million decrease in the remaining other asset categories.Cash and cash equivalents decreased $4.1 million, or 48.8%, to $4.3 million at December 31, 2019 from $8.4 million at December 31, 2018. The decrease in cash and cash equivalents was primarily a result of cash used in investing activities of $12.5 million exceeding cash provided by financing activities of $5.1 million and cash provided by operating activities of $3.3 million.Securities available for sale decreased $1.0 million, or 3.9%, to $24.5 million at December 31, 2019 from $25.5 million at December 31, 2018, as paydowns, calls, and maturities exceeded new securities purchases. Net loans increased $11.9 million, or 5.0%, to $247.8 million at December 31, 2019 compared to $235.9 million at December 31, 2018 primarily as a result of a $13.4 million increase in one-to-four family loans, a $6.6 million increase in commercial loans and a $5.1 million increase in consumer direct loans. The increases were offset by decreases of $1.0 million in multi-family loans, $4.7 million in non-residential real estate loans and $7.5 million in purchased auto loans. Total deposits increased $12.9 million, or 5.8%, to $236.3 million at December 31, 2019 from $223.4 million at December 31, 2018. For the year ended December 31, 2019, interest bearing checking accounts increased by $8.2 million and certificates of deposit increased by $8.4 million as compared to December 31, 2018. The increases were offset by a decrease in non-interest bearing checking accounts of $0.4 million, a decrease in savings accounts of $0.7 million and a decrease in money market accounts of $2.6 million as compared to December 31, 2018.FHLB advances decreased $3.0 million, or 24.9% to $9.1 million at December 31, 2019 compared to $12.1 million at December 31, 2018. The decrease was related to the maturing of several advances that had been used to fund loan growth. Stockholders’ equity decreased $2.1 million, or 4.0% to $50.7 million at December 31, 2019 from $52.8 million at December 31, 2018. The decrease reflects $2.8 million used to repurchase and cancel 204,448 outstanding shares of Company common stock and the payment of $1.9 million in cash dividends. The decreases were partially offset by an increase of $0.4 million in other comprehensive income due to an increase in the fair value of securities available for sale, net income of $1.9 million for the year ended December 31, 2019 and proceeds from stock options exercised, equity incentive plan shares issued and the allocation of ESOP shares totaling $0.3 million. Annual Meeting of StockholdersOn February 10, 2020, the Company also announced that its annual meeting of stockholders will be held on Wednesday, May 20, 2020.About Ottawa Bancorp, Inc.Ottawa Bancorp, Inc. is the holding company for Ottawa Savings Bank, FSB 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. Ottawa Savings Bank, FSB was founded in 1871 and is headquartered in Ottawa, Illinois. For more information about the Company and the Bank, please visit www.ottawasavings.com.Cautionary Statement Regarding Forward-Looking StatementsThis 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, and market disruptions. 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 the rules and regulations of the Securities and Exchange Commission.
Comparison of Results of Operations for the Three Months Ended December 31, 2019 and December 31, 2018Net income for the three months ended December 31, 2019 was $0.6 million compared to net income of $0.6 million for the three months ended December 31, 2018. Total interest and dividend income was $0.2 million higher for the three months ended December 31, 2019 than it was for the three months ended December 31, 2018. This increase was offset by higher interest expense during the 2019 period. Net interest income after provision for loan losses increased slightly but was offset by a corresponding increase in total other expenses leaving net income comparable.
Net interest income increased by $0.1 million, or 2.7%, to $2.4 million for the three months ended December 31, 2019, from $2.3 million for the three months ended December 31, 2018. Interest and dividend income increased $0.2 million, or 8.4%, primarily due to an increase in the average balances of interest-earning assets of $13.1 million. The increase in interest and dividend income was partially offset by an increase in interest expense as the average cost of funds increased 24 basis points to 1.42% for the three months ended December 2019. The net interest margin decreased 7 basis points during the three months ended December 2019 to 3.34% from 3.41% for the three months ended December 31, 2018.The Company recorded a provision for loan losses of $0.2 million for each of the three month periods ended December 2019 and 2018. The allowance for loan losses was $2.9 million, or 1.17% of total gross loans at December 31, 2019 compared to $2.6 million, or 1.10% of gross loans at December 31, 2018. Net charge-offs during the fourth quarter of 2019 were $27 thousand compared to net charge-offs of $0.1 million during the fourth quarter of 2018. General reserves were higher at December 31, 2019, when compared to December 31, 2018, primarily due to the balances in most loan categories increasing during the twelve months ended December 31, 2019. This increase in the allowance due to loan growth was partially offset by improvements in historical loss levels. Although non-performing loans increased, the necessary reserves on non-performing loans as of December 31, 2019 were approximately $17,000 lower than they were as of December, 2018 due to the transfer of one non-performing loan to foreclosed real estate, the charge-off of the specific reserve for a non-performing loan, improvements in the payment status of several other non-performing loans and the new loans added not requiring as large of specific reserves as those removed.Total other income was $0.6 million for both the three months ended December 31, 2019 and December 31, 2018. The increase during the 2019 period was due to an increase in gains on the sale of loans and an increase in loan origination and servicing income. These increases were due to the increase in loan originations during the 2019 period. These increases were mostly offset by a decrease in customer service fees and other income.Total other expense was $2.0 million for both the three months ended December 31, 2019 and December 31, 2018. There was an increase in salaries and employee benefits expense during the 2019 period due to the addition of a commercial lender and a senior credit analyst. Additionally, other expenses increased as well. These increases were offset by decreases in deposit insurance premiums, legal and professional services and data processing fees. The Company recorded income tax expense of $0.2 million for both of the three month periods ended December 31, 2019 and 2018.Comparison of Results of Operations for the Years Ended December 31, 2019 and December 31, 2018Net income was $1.9 million for the year ended December 31, 2019 which is a $0.1 million or 2.9% decrease from $2.0 million for the year ended December 31, 2018. The decrease in net income was primarily the result of total other expense and tax expense increasing more than the increase in total other income and net interest income after provision for loan losses.
Net interest income increased by $0.3 million, or 3.3%, to $9.4 million for the year ended December 31, 2019, from $9.1 million for the year ended December 31, 2018. Interest and dividend income increased $1.4 million, or 12.8%, primarily due to an increase in the average balances of interest-earning assets of $21.0 million. The increase in interest and dividend income was partially offset by an increase in interest expense as the average cost of funds increased 40 basis points to 1.36% for the year ended December 31, 2019. The net interest margin decreased 16 basis points, or 4.67% during the year ended December 31, 2019 to 3.41% from 3.57% for the year ended December 31, 2018.The Company recorded a provision for loan losses of $0.6 million for year ended December 31, 2019 and a provision for loan losses of $0.5 million for the year ended December 31, 2018. The allowance for loan losses was $2.9 million, or 1.17% of total gross loans at December 31, 2019 compared to $2.6 million, or 1.10% of gross loans at December 31, 2018. Net charge-offs were $0.3 million for the year ended December 31, 2019 compared $0.4 million for the year ended December 31, 2018. General reserves were higher at December 31, 2019, when compared to December 31, 2018, primarily due to the balances in all loan categories increasing during the twelve months ended December 31, 2019. This increase in the allowance due to loan growth was partially offset by improvements in historical loss levels. Although non-performing loans increased, the necessary reserves on non-performing loans as of December 31, 2019 were approximately $17,000 lower than they were as of December, 2018 due to the transfer of one non-performing loan to foreclosed real estate, the charge-off of the specific reserve for a non-performing loan, improvements in the payment status of several other non-performing loans and the new loans added not requiring as large of specific reserves as those removed.Total other income increased to $2.5 million for year ended December 31, 2019, as compared to $2.3 million for the year ended December 31, 2018. The increase was primarily due to an increase in gains on sale of loans, an increase in the origination of mortgage servicing rights, and an increase in loan origination and servicing income all of which were primarily the result of increased loan volume in 2019. These increases were partially offset by a decrease in customer service fees and a decrease in gain on sale of foreclosed real estate.Total other expense increased $0.4 million, or 5.2%, to $8.6 million for the year ended December 31, 2019, as compared to $8.2 million for the year ended December 31, 2018. The increase was primarily due to higher salaries and employee benefits, occupancy, data processing and other costs. These increases were offset slightly by reductions in loan expense, deposit insurance premiums, and legal and professional fees. The Company recorded income tax expense of approximately $0.7 million for both of the twelve-month periods ended December 31, 2019 and 2018.Comparison of Financial Condition at December 31, 2019 and December 31, 2018Total consolidated assets as of December 31, 2019 were $300.5 million, an increase of $7.7 million, or 2.63%, from $292.8 million at December 31, 2018. The increase was primarily due to an increase of $11.9 million in the net loan portfolio, an increase in time deposits of $3.0 million and an increase in loans held for sale of $1.2 million. These increases were partially offset by a decrease in cash and cash equivalents of $4.1 million, a decrease in federal funds sold of $1.5 million, a decrease in securities available for sale of $1.0 million and an overall $1.8 million decrease in the remaining other asset categories.Cash and cash equivalents decreased $4.1 million, or 48.8%, to $4.3 million at December 31, 2019 from $8.4 million at December 31, 2018. The decrease in cash and cash equivalents was primarily a result of cash used in investing activities of $12.5 million exceeding cash provided by financing activities of $5.1 million and cash provided by operating activities of $3.3 million.Securities available for sale decreased $1.0 million, or 3.9%, to $24.5 million at December 31, 2019 from $25.5 million at December 31, 2018, as paydowns, calls, and maturities exceeded new securities purchases. Net loans increased $11.9 million, or 5.0%, to $247.8 million at December 31, 2019 compared to $235.9 million at December 31, 2018 primarily as a result of a $13.4 million increase in one-to-four family loans, a $6.6 million increase in commercial loans and a $5.1 million increase in consumer direct loans. The increases were offset by decreases of $1.0 million in multi-family loans, $4.7 million in non-residential real estate loans and $7.5 million in purchased auto loans. Total deposits increased $12.9 million, or 5.8%, to $236.3 million at December 31, 2019 from $223.4 million at December 31, 2018. For the year ended December 31, 2019, interest bearing checking accounts increased by $8.2 million and certificates of deposit increased by $8.4 million as compared to December 31, 2018. The increases were offset by a decrease in non-interest bearing checking accounts of $0.4 million, a decrease in savings accounts of $0.7 million and a decrease in money market accounts of $2.6 million as compared to December 31, 2018.FHLB advances decreased $3.0 million, or 24.9% to $9.1 million at December 31, 2019 compared to $12.1 million at December 31, 2018. The decrease was related to the maturing of several advances that had been used to fund loan growth. Stockholders’ equity decreased $2.1 million, or 4.0% to $50.7 million at December 31, 2019 from $52.8 million at December 31, 2018. The decrease reflects $2.8 million used to repurchase and cancel 204,448 outstanding shares of Company common stock and the payment of $1.9 million in cash dividends. The decreases were partially offset by an increase of $0.4 million in other comprehensive income due to an increase in the fair value of securities available for sale, net income of $1.9 million for the year ended December 31, 2019 and proceeds from stock options exercised, equity incentive plan shares issued and the allocation of ESOP shares totaling $0.3 million. Annual Meeting of StockholdersOn February 10, 2020, the Company also announced that its annual meeting of stockholders will be held on Wednesday, May 20, 2020.About Ottawa Bancorp, Inc.Ottawa Bancorp, Inc. is the holding company for Ottawa Savings Bank, FSB 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. Ottawa Savings Bank, FSB was founded in 1871 and is headquartered in Ottawa, Illinois. For more information about the Company and the Bank, please visit www.ottawasavings.com.Cautionary Statement Regarding Forward-Looking StatementsThis 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, and market disruptions. 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 the rules and regulations of the Securities and Exchange Commission.
