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Ottawa Bancorp, Inc. Announces First Quarter 2021 Results

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OTTAWA, Ill., May 05, 2021 (GLOBE NEWSWIRE) -- Ottawa Bancorp, Inc. (the “Company”) (OTCQX: OTTW), the holding company for Ottawa Savings Bank, FSB (the “Bank”), announced net income of $0.6 million, or $0.20 per basic and diluted common share for the three months ended March 31, 2021, compared to net income of $0.1 million, or $0.029 per basic and diluted common share for the three months ended March 31, 2020. During the first quarter of 2021, the Company experienced an increase in loan originations which drove growth in the loan portfolio. The loan portfolio, net of allowance, increased to $270.8 million as of March 31, 2021 from $255.1 million as of December 31, 2020. Non-performing loans decreased slightly from $1.9 million at December 31, 2020 to $1.8 million at March 31, 2021, which caused the ratio of non-performing loans to gross loans to decrease from 0.62% at December 31, 2020 to 0.57% at March 31, 2021. Additionally, through March 31, 2021, the Company has repurchased a total of 576,585 shares of its common stock at an average price of $12.99 per share as part of the four stock repurchase programs approved by the Board since the Company’s second step conversion closed in 2016.

“2021 marks the 150th year of operation for Ottawa Savings Bank, and the year is off to a very solid start,” said Craig Hepner, President and Chief Executive Officer of the Company. “We continued to experience extremely solid mortgage loan origination volume during the first quarter as interest rates remained at very favorable levels. This resulted in strong demand for refinance and purchase money mortgage loans during the quarter. As economic activity within our primary markets continued to rebound, overall loan volume was strong, resulting in a 6.2% increase in net loans and a 5.1% increase in total assets from the December 31, 2020 levels. Net earnings for the first quarter were solid, having benefitted from the strong loan origination volume and a continued pull-back in our cost of funds.”

Mr. Hepner went on to say further, “The support of our customers and the communities in which we operate continues to be a top priority for the Company as we all work together to navigate through the challenges brought about by the COVID-19 pandemic. We are pleased to continue to serve as a strong source of liquidity for our shareholders having returned $1 million in the form of dividends during the first quarter along with continuing our stock buyback program. We are encouraged by the economic recovery which has started to gain traction, and we are cautiously optimistic that conditions will continue to rebound in the coming months.”

Comparison of Results of Operations for the Three Months Ended March 31, 2021 and March 31, 2020

Net income for the three months ended March 31, 2021 was $0.6 million compared to net income of $0.1 million for the three months ended March 31, 2020. Total interest and dividend income decreased slightly to $2.9 million for the three months ended March 31, 2021 from $3.1 million for the three months ended March 31, 2020. Interest expense was $0.3 million lower during the three months ended March 31, 2021. In addition. a provision of $50 thousand was taken during the three months ended March 31, 2021 as compared to $450,000 for the three months ended March 31, 2020. During 2020, with the anticipated impact of the COVID-19 pandemic on the local and national economies, qualitative factors were adjusted negatively which led to an increase in the provision level. In 2021, with the economy improving, the qualitative factors were adjusted slightly more favorably which led to a more normalized level of provision for the period. Thus, net interest income after provision for loan losses increased by $0.5 million to $2.4 million for the three months ended March 31, 2021 from $1.9 million for the three months ended March 31, 2020. Total other income increased by $0.2 million to $0.6 million due to the strong loan origination levels which continued from 2020. Total other expenses rose slightly by $0.1 million this quarter as compared to the first quarter of 2020. Net income was $0.5 million higher for the three months ended March 31, 2021 as it rose to $0.6 million as compared to the three months ended March 31, 2020 when it was $0.1 million.

Net interest income increased by $0.2 million, or 5.6%, to $2.5 million for the three months ended March 31, 2021, from $2.3 million for the three months ended March 31, 2020. Interest and dividend income was $3.0 million which was lower by $0.1 million for the three months ended March 31, 2021 as compared to $3.1 million for the three months ended March 31, 2020. Although there was an increase in the average balances of interest-earning assets of $6.1 million, interest and dividend income decreased by $0.2 million as the yield on earning assets decreased from 4.37% for the three months ended March 31, 2020 to 4.01% for the three months ended March 31, 2021. Interest expense decreased $0.3 million as the average cost of funds decreased 56 basis points to 0.78% which led to interest expense declining from $0.8 million for the three months ended March 31, 2020 to $0.5 million for the three months ended March 31, 2021. Thus, net interest income increased to $2.5 million for the three months ended March 31, 2021 from $2.3 million for the three months ended March 31, 2020. Overall, the net interest margin increased 11 basis points during the three months ended March 31, 2021 to 3.37% from 3.26% for the three months ended March 31, 2020.

The Company recorded a provision for loan losses of $50 thousand for the three months ended March 31, 2021 as compared to $0.4 million for the three months ended March 31, 2020. The allowance for loan losses was $3.5 million, or 1.31% of total gross loans at March 31, 2021 compared to $3.4 million, or 1.35% of gross loans at March 31, 2020. Net charge-offs during the first quarter of 2021 were $0 compared to $30 thousand during the first quarter of 2020. General reserves were higher at March 31, 2021, when compared to March 31, 2020, primarily due to the balances in most loan categories increasing during the twelve months ended March 31, 2021. Non-performing loans decreased and the necessary reserves on non-performing loans as of March 31, 2021 were comparable to the reserves as of December 31, 2020.

Total other expense was $2.3 million for the three months ended March 31, 2021 as compared to $2.2 million for the three months ended March 31, 2020. There was an increase in the salaries and employee benefits category, an increase in deposit insurance premium, and an increase in loan expense. These increases were offset by decreases in legal and professional services, occupancy, and other expenses.

The Company recorded income tax expense of approximately $206 thousand for the three month periods ended March 31, 2021 as compared to $15 thousand for the three months ended March 31, 2020 due to lower pre-tax earnings in 2020.

Comparison of Financial Condition at March 31, 2021 and December 31, 2020

Total consolidated assets as of March 31, 2021 were $323.4 million, an increase of $15.8 million, or 5.1%, from $307.6 million at December 31, 2020. The increase was primarily due to an increase of $9.7 million in federal funds sold, a $15.7 million increase in the net loan portfolio and a $0.2 million increase in other assets. These increases were partially offset by a decrease in cash and cash equivalents of $6.5 million, a decrease in securities available for sale of $1.4 million, a decrease of $1.7 million in time deposits and a decrease of almost $0.2 million in accrued interest receivable.

Cash and cash equivalents decreased $6.5 million, or 61.9%, to $3.9 million at March 31, 2021 from $10.4 million at December 31, 2020. The decrease in cash and cash equivalents was primarily the result of cash used in investing activities of $22.6 million exceeding cash provided by operating activities of $1.4 million and cash provided by financing activities of $14.7 million.

Securities available for sale decreased $1.4 million, or 7.5%, to $17.3 million at March 31, 2021 from $18.7 million at December 31, 2020, as paydowns, calls, and maturities exceeded new securities purchases.

Net loans increased $15.7 million, or 6.2%, to $270.8 million at March 31, 2021 compared to $255.1 million at December 31, 2020 primarily as a result of a $10.4 million increase in one-to-four family loans, an increase of $1.1 million in multi-family loans, a $4.3 million increase in non-residential real estate loans and a $1.9 million increase in commercial loans. These increases were offset by decreases of $0.8 million in consumer direct loans and $1.2 million in purchased auto loans.

Total deposits increased $16.8 million, or 7.1%, to $252.9 million at March 31, 2021 from $236.1 million at December 31, 2020. For the three months ended March 31, 2021, savings accounts increased by $2.5 million, non-interest bearing checking accounts increased $3.3 million, interest bearing checking accounts increased $2.5 million, money market accounts increased $0.8 million and certificates of deposit increased by $7.7 million as compared to December 31, 2020.

FHLB advances decreased $1.0 million, or 5.7% to $16.5 million at March 31, 2021 compared to $17.5 million at December 31, 2020. The decrease was related to the maturity and repayment of a borrowing during the quarter.

Stockholders’ equity decreased $1.0 million, or 2.2% to $47.2 million at March 31, 2021 from $48.2 million at December 31, 2020. The decrease reflects $0.2 million used to repurchase and cancel 13,100 outstanding shares of Company common stock, a decrease of $0.1 million in other comprehensive income due to a decrease in fair value of securities available for sale and $1.0 million in cash dividends. Additionally, the ESOP owned shares increased by $0.4 million causing a decrease to equity. The decreases were partially offset by net income of $0.6 million for the three months ended March 31, 2021 and proceeds from stock options exercised, equity incentive plan shares issued and the allocation of ESOP shares totaling $0.1 million.

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 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 the rules and regulations of the Securities and Exchange Commission.

Contact:
Craig Hepner
President and Chief Executive Officer
(815) 366-5437


Ottawa Bancorp, Inc. & Subsidiary

Consolidated Balance Sheets

March 31, 2021 and December 31, 2020

(Unaudited)

March 31,

December 31,

2021

2020

Assets

Cash and due from banks

$

3,383,329

$

4,793,872

Interest bearing deposits

564,450

5,581,139

Total cash and cash equivalents

3,947,779

10,375,011

Time deposits

1,494,000

3,232,500

Federal funds sold

13,174,000

3,486,000

Securities available for sale

17,307,343

18,711,631

Loans, net of allowance for loan losses of $3,529,012 and $3,497,150

at March 31, 2021 and December 31, 2020, respectively

270,803,316

255,103,054

Premises and equipment, net

6,294,191

6,312,256

Accrued interest receivable

827,220

972,602

Foreclosed Real Estate

77,265

107,100

Deferred tax assets

1,677,413

1,666,339

Cash value of life insurance

2,615,547

2,603,046

Goodwill

649,869

649,869

Core deposit intangible

122,495

131,996

Other assets

4,428,675

4,234,003

Total assets

$

323,419,113

$

307,585,407



Liabilities and Stockholders' Equity

Liabilities

Deposits:

Non-interest bearing

$

21,588,484

$

18,285,211

Interest bearing

231,345,946

217,774,806

Total deposits

252,934,430

236,060,017

Accrued interest payable

71,532

54,851

FHLB advances

16,548,752

17,548,560

Other liabilities

5,278,003

4,731,352

Total liabilities

274,832,717

258,394,780

Commitments and contingencies

ESOP Repurchase Obligation

1,415,674

957,167

Stockholders' Equity

Common stock, $.01 par value, 12,000,000 shares authorized; 2,944,465 and 2,949,324

shares issued at March 31 2021 and December 31, 2020, respectively

29,445

29,491

Additional paid-in-capital

30,320,124

30,415,091

Retained earnings

19,043,944

19,457,092

Unallocated ESOP shares

(1,101,057

)

(1,132,842

)

Unallocated management recognition plan shares

(122,107

)

(62,070

)

Accumulated other comprehensive income

416,047

483,865

48,586,396

49,190,627

Less:

ESOP Owned Shares

(1,415,674

)

(957,167

)

Total stockholders' equity

47,170,722

48,233,460

Total liabilities and stockholders' equity

$

323,419,113

$

307,585,407


Ottawa Bancorp, Inc. & Subsidiary

Consolidated Statements of Operations

Three Months Ended March 31, 2021 and 2020

(Unaudited)

Three Months Ended

March 31,

2021

2020

Interest and dividend income:

Interest and fees on loans

$

2,795,387

$

2,909,081

Securities:

Residential mortgage-backed and related securities

41,442

67,230

State and municipal securities

67,924

95,944

Dividends on non-marketable equity securities

8,671

6,590

Interest-bearing deposits

6,172

40,148

Total interest and dividend income

2,919,596

3,118,993

Interest expense:

Deposits

376,138

730,819

Borrowings

86,522

61,896

Total interest expense

462,660

792,715

Net interest income

2,456,936

2,326,278

Provision for loan losses

50,000

450,000

Net interest income after provision for loan losses

2,406,936

1,876,278

Other income:

Gain on sale of loans

173,812

107,067

Gain on sale of securities, net

-

857

Loan origination and servicing income

305,606

114,958

Origination of mortgage servicing rights, net of amortization

9,616

(10,443

)

Customer service fees

90,334

106,840

Increase in cash surrender value of life insurance

12,501

12,699

Gain on sale of repossessed assets, net

956

16,031

Other

25,021

37,673

Total other income

617,846

385,682

Other expenses:

Salaries and employee benefits

1,348,392

1,264,646

Directors fees

40,000

43,000

Occupancy

147,714

178,525

Deposit insurance premium

18,178

-

Legal and professional services

79,209

104,622

Data processing

224,296

223,273

Loan expense

187,718

134,350

Valuation adjustments and expenses on foreclosed real estate

2,002

559

Other

204,013

211,665

Total other expenses

2,251,522

2,160,640

Income before income tax expense

773,260

101,320

Income tax expense

205,574

15,364

Net income

$

567,686

$

85,956

Basic earnings per share

$

0.200

$

0.029

Diluted earnings per share

$

0.200

$

0.029

Dividends per share

$

0.345

$

0.418


Ottawa Bancorp, Inc. & Subsidiary

Selected Financial Data and Ratios

(Unaudited)

At or for the

Three Months Ended

March 31,

2021

2020

Performance Ratios:

Return on average assets (5)

0.73

%

0.11

%

Return on average stockholders' equity (5)

4.56

0.61

Average stockholders' equity to average assets

15.97

18.67

Stockholders' equity to total assets at end of period

14.72

15.87

Book Value per common share

$

16.02

$

16.33

Tangible Book Value per common share (7)

$

15.76

$

16.07

Net interest rate spread (1) (5)

3.22

3.03

Other expense to average assets

0.72

0.71

Efficiency ratio (3)

73.20

79.68

Dividend payout ratio

172.50

1,461.54


At or for the

At or for the

Three Months Ended

Twelve Months Ended

March 31,

December 31,

2021

2020

(unaudited)

Regulatory Capital Ratios (4):

Total risk-based capital (to risk-weighted assets)

20.98

%

20.39

%

Tier 1 core capital (to risk-weighted assets)

19.73

19.14

Common equity Tier 1 (to risk-weighted assets)

19.73

19.14

Tier 1 leverage (to adjusted total assets)

14.38

14.26

Asset Quality Ratios:

Net charge-offs to average gross loans outstanding

0.00

0.18

Allowance for loan losses to gross loans outstanding

1.31

1.35

Non-performing loans to gross loans (6)

0.57

0.62

Non-performing assets to total assets (6)

0.58

0.67

Other Data:

Number of full-service offices

3

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 Ottawa Savings 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.