OTTAWA, Ill., April 30, 2019 (GLOBE NEWSWIRE) -- Ottawa Bancorp, Inc. (the “Company”) (Nasdaq CM: OTTW), the holding company for Ottawa Savings Bank, FSB (the “Bank”), announced net income of $0.4 million, or $0.13 per basic and diluted common share for the three months ended March 31, 2019, compared to net income of $0.5 million, or $0.15 per basic and diluted common share for the three months ended March 31, 2018.  During the first quarter of 2019 the Company continued to experience a decrease in non-performing loans.  Non-performing loans decreased from $1.5 million at December 31, 2018 to $1.1 million at March 31, 2019, which in addition to loan growth, improved the ratio of non-performing loans to gross loans from 0.63% at December 31, 2018 to 0.46% at March 31, 2019.  Additionally, through March 31, 2019, the Company has repurchased a total of 161,774 shares of its common stock at an average price of $13.88 per share as part of the stock repurchase program approved on November 7, 2018 and its previous program which expired in November, 2018. 

Comparison of Results of Operations for the Three Months Ended March 31, 2019 and March 31, 2018

Net income for the three months ended March 31, 2019 was $0.4 million compared to net income of $0.5 million for the three months ended March 31, 2018. The decrease in net income of $0.1 million or 16.1%, was primarily attributed to a decrease in total other income of $0.1 million and an increase in total other expenses of $0.2 million. The decreases were partially offset by an increase in net interest income after provision for loan losses of $0.2 million.   
   
Net interest income increased by $0.2 million, or 9.3%, to $2.4 million for the three months ended March 31, 2019, from $2.2 million for the three months ended March 31, 2018.  Interest and dividend income increased $0.5 million, or 19.6%, primarily due to an increase in the average balances of interest-earning assets of $24.6 million. The increase in net interest income was partially off-set by an increase in interest expense as the average cost of funds increased 47 basis points to 1.25% for the three months ended March 31, 2019. The net interest margin decreased three basis points during the three months ended March 31, 2019 to 3.60% from 3.63%.

We recorded a provision for loan losses of $0.1 million for both of the three-month periods ended March 31, 2019 and 2018. The allowance for loan losses was $2.6 million, or 1.10% of total gross loans at March 31, 2019 compared to $2.6 million, or 1.15% of gross loans at March 31, 2018.  Net charge-offs during the first quarter of 2019 were $129,000 compared to $27,000 during the first quarter of 2018.  General reserves were higher at March 31, 2019, when compared to March 31, 2018, as the balances in most loan categories increased during the twelve months ended March 31, 2019. Additionally, changes in qualitative factors during the twelve months ended March 31, 2019, as compared to the same period ended March 31, 2018, increased the general reserve slightly.  These increases to the allowance were partially off-set by improvements in historical loss levels.  Specific reserves as of March 31, 2019 were lower than they were as of March 31, 2018.

Total other income decreased $0.1 million, to $0.4 million for the three months ended March 31, 2019, as compared to $0.5 million for the three months ended March 31, 2018. The decrease was primarily due to lower revenues related to mortgage banking activity and a decrease in the gain on sale of foreclosed real estate.

Total other expense increased $0.2 million, or 6.3%, to $2.1 million for the three months ended March 31, 2019, as compared to $1.9 million for the three months ended March 31, 2018.  The increase was primarily due to increased salary expense, higher data processing expense, and higher other expenses.

We recorded income tax expense of $0.2 million for both of the three-month periods ended March 31, 2019 and 2018.

Comparison of Financial Condition at March 31, 2019 and December 31, 2018

Total consolidated assets as of March 31, 2019 were $289.5 million, a decrease of $3.33 million, or 1.1%, from $292.8 million at December 31, 2018.  The decrease was primarily due to a decrease of $0.1 million in the net loan portfolio, as well as decreases in securities available for sale of $1.1 million and decreases in cash and cash equivalents of $1.1 million of which $1.5 million was related to paying down FHLB borrowings.

Cash and cash equivalents decreased $1.1 million, or 13.4%, to $7.3 million at March 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 financing activities of $4.2 million exceeding cash provided by investing activities of $2.0 million and cash provided by operating activities of $1.1 million.

Securities available for sale decreased $1.1 million, or 4.2%, to $24.5 million at March 31, 2019 from $25.5 million at December 31, 2018, as paydowns, calls, and maturities exceeded new securities purchases. 

Net loans decreased by $0.1 million, or 0.1% to $235.8 million at March 31, 2019 compared to $235.9 million at December 31, 2018 primarily as a result of a $1.9 million decrease in purchased auto loans and a $4.0 million decrease in non-residential real estate loans.  The decreases were slightly off-set by an increase of $3.7 million in one-to-four family loans, a $1.3 million increase in consumer direct loans and a $0.9 million increase in commercial loans. 

Total deposits decreased $2.2 million, or 1.0%, to $221.2 million at March 31, 2019 from $223.4 million at December 31, 2018.  At March 31, 2019 checking accounts decreased by $6.2 million, money market accounts decreased by $0.7 million and a $0.3 million decrease to non-interest-bearing checking accounts.  The decreases were offset by an increase in savings accounts which increased by $1.1 million and certificates of deposit which increased by $3.9 million as compared to December 31, 2018.

FHLB advances decreased $1.5 million, or 12.4% to $10.6 million at March 31, 2019 compared to $12.1 million at December 31, 2018.

Stockholders’ equity increased $0.1 million, or 0.2% to $52.9 million at March 31, 2019 from $52.8 million at December 31, 2018.  The increase reflects net income of $0.4 million for the three months ended March 31, 2019 and proceeds from stock options exercised $9,000.  Additionally, other comprehensive income increased by $0.2 million related to an increase in the fair value of securities available for sale. The increase was partially offset by $0.3 million used to repurchase and cancel 24,963 outstanding shares of Company common stock and $0.2 million in declared dividends. 

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.

Safe-Harbor

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, 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.