Ottawa Bancorp, Inc. Announces First Quarter 2022 Results

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May 05, 2022 17:23 ET | Source: Ottawa Bancorp, Inc.

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.

Ottawa Bancorp, Inc. & Subsidiary
Consolidated Balance Sheets
March 31, 2022 and December 31, 2021
(Unaudited)
 March 31, December 31,
  2022  2021
Assets   
Cash and due from banks$10,397,027 $5,266,361
Interest bearing deposits 2,061,151  1,249,947
Total cash and cash equivalents 12,458,178  6,516,308
Time deposits 250,000  250,000
Federal funds sold 7,031,000  1,716,000
Securities available for sale 29,565,788  32,700,414
Loans, net of allowance for loan losses of $3,579,143 and $3,640,145   
at March 31, 2022 and December 31, 2021, respectively 281,645,400  283,877,203
Loans held for sale 460,600  403,920
Premises and equipment, net 6,278,881  6,331,188
Accrued interest receivable 908,622  1,007,399
Deferred tax assets 2,044,420  1,793,910
Cash value of life insurance 2,660 654  2,649,941
Goodwill 649,869  649,869
Core deposit intangible 91,057  100,326
Other assets 4,750,571  4,528,862
Total assets$348,795,040 $342,525,340


Liabilities and Stockholders’ Equity
   
Liabilities   
Deposits:   
Non-interest bearing$26,640,430 $22,898,814
Interest bearing 254,584,602  250,152,124
Total deposits 281,225,032  273,050,938
Accrued interest payable 49,292  48,825
FHLB advances 15,524,555  16,524,555
Other liabilities 4,916,251  4,860,206
Total liabilities 301,715,130  294,484,524
Commitments and contingencies   
ESOP Repurchase Obligation 2,066,911  2,066,911
Stockholders’ Equity   
Common stock, $.01 par value, 12,000,000 shares authorized; 2,791,543 and 2,818,517   
shares issued at March 31 2022 and December 31, 2021, respectively 27,915  28,185
Additional paid-in-capital 28,075,129  28,473,180
Retained earnings 21,115,139  20,536,121
Unallocated ESOP shares (949,340)  (949,340)
Unallocated management recognition plan shares (178,419)  (99,352)
Accumulated other comprehensive income (1,010,514)  52,022
  47,079,910  48,040,816
Less:   
ESOP Owned Shares (2,066,911)  (2,066,911)
Total stockholders’ equity 45,012,999  45,973,905
Total liabilities and stockholders’ equity$348,795,040 $342,525,340
Ottawa Bancorp, Inc. & Subsidiary
Consolidated Statements of Operations
Three Months Ended March 31, 2022 and 2021
(Unaudited)
 Three Months Ended
 March 31,
  2022  2021
Interest and dividend income:   
Interest and fees on loans$3,021,358 $2,795,387
Securities:   
Residential mortgage-backed and related securities 82,809  41,442
State and municipal securities 52,304  67,924
Dividends on non-marketable equity securities 8,974  8,671
Interest-bearing deposits 3,871  6,172
Total interest and dividend income 3,169,316  2,919,596
Interest expense:   
Deposits 252,407  376,138
Borrowings 59,339  86,522
Total interest expense 311,746  462,660
Net interest income 2,857,570  2,456,936
Provision for loan losses   50,000
Net interest income after provision for loan losses 2,857,570  2,406,936
Other income:   
Gain on sale of loans 90,333  173,812
Loan origination and servicing income 266,783  305,606
Origination of mortgage servicing rights, net of amortization 14,638  9,616
Customer service fees 111,706  90,334
Increase in cash surrender value of life insurance 10,713  12,501
Gain on sale of repossessed assets, net   956
Other 18,088  25,021
Total other income 512,261  617,846
Other expenses:   
Salaries and employee benefits 1,288,366  1,348,392
Directors fees 46,500  40,000
Occupancy 168,344  147,714
Deposit insurance premium 21,048  18,178
Legal and professional services 65,491  79,209
Data processing 281,374  224,296
Loan expense 84,742  187,718
Valuation adjustments and expenses on foreclosed real estate   2,002
Other 198 705  204,013
Total other expenses 2,154 570  2,251,522
Income before income tax expense 1,215,261  773,260
Income tax expense 336,445  205,574
Net income$878,816 $567,686
Basic earnings per share$0.330 $0.200
Diluted earnings per share$0.330 $0.200
Dividends per share$0.118 $0.345
Ottawa Bancorp, Inc. & Subsidiary 
Selected Financial Data and Ratios 
(Unaudited) 
     
   
 At or for the 
 Three Months Ended 
 March 31, 
 2022 2021 
Performance Ratios:    
Return on average assets (5)1.01%0.73%
Return on average stockholders’ equity (5)6.98 4.56 
Average stockholders’ equity to average assets14.52 15.97 
Stockholders’ equity to total assets at end of period12.91 14.72 
Net interest rate spread (1) (5)3.47 3.22 
Net interest margin (2) (5)3.55 3.37 
Other expense to average assets0.62 0.72 
Efficiency ratio (3)63.97 73.20 
Dividend payout ratio35.49 172.50 
 At or for the At or for the 
 Three Months Ended Twelve Months Ended 
 March 31, December 31, 
 2022 2021 
 (unaudited) 
Regulatory Capital Ratios (4):    
Total risk-based capital (to risk-weighted assets)20.57%19.58%
Tier 1 core capital (to risk-weighted assets)19.32 18.32 
Common equity Tier 1 (to risk-weighted assets)19.32 18.32 
Tier 1 leverage (to adjusted total assets)13.15 13.27 
Asset Quality Ratios:    
Net charge-offs to average gross loans outstanding0.09 (0.02) 
Allowance for loan losses to gross loans outstanding1.25 1.27 
Non-performing loans to gross loans (6)0.37 0.57 
Non-performing assets to total assets (6)0.30 0.48 
Other Data:    
Book Value per common share$16.12 $16.53 
Tangible Book Value per common share (7)$15.86 $16.26 
Number of full-service offices3 3 
  
(1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of funds on average interest-bearing liabilities. 
(2) Represents net interest income as a percent of average interest-earning assets. 
(3) Represents total other expenses divided by the sum of net interest income and total other income. 
(4) Ratios are for OSB Community Bank. 
(5) Annualized. 
(6) Non-performing assets consist of non-performing loans, foreclosed real estate, and other foreclosed assets. Non-performing loans consist of all loans 90 days or more past due and all loans no longer accruing interest. 
(7) Non-GAAP measure. Excludes goodwill and core deposit intangible. 

Contact:
Craig Hepner — 815-366-5437

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