Exhibit 99.1

 

OTTAWA BANCORP, INC.

 

Announces Third Quarter 2018 Results

 

 

 

Ottawa, Illinois – October 25, 2018 - 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 September 30, 2018, compared to net income of $0.5 million, or $0.14 per basic and diluted common share, for the three months ended September 30, 2017. During the third quarter of 2018 the Company continued to grow its loan portfolio as it increased to $226.7 million at September 30, 2018 from $223.0 million at June 30, 2018. Non-performing loans increased slightly from $1.3 million at June 30, 2018 to $1.5 million at September 30, 2018, which increased the ratio of non-performing loans to gross loans from 0.58% at June 30, 2018 to 0.63% at September 30, 2018, but it remains lower than the 0.75% at December 31, 2017. Additionally, through September 30, 2018, the Company has repurchased a total of 100,235 shares of its common stock at an average price of $14.08 per share as part of the stock repurchase program announced on November 15, 2017. During the quarter ended September 30, 2018, the Company has repurchased a total of 17,000 shares of its common stock at an average price of $13.88 per share as part of this program.

 

Comparison of Results of Operations for the Three Months Ended September 30, 2018 and September 30, 2017

 

Net income for the three months ended September 30, 2018 was $0.6 million compared to net income of $0.5 million for the three months ended September 30, 2017. The increase in net income of $0.1 million, or 29.8%, was primarily attributed to an increase in net interest income after provision for loan losses of $0.2 million, partially offset by an increase in total other expenses of $0.1 million.

   

Net interest income increased by $0.1 million, or 6.6%, to $2.3 million for the three months ended September 30, 2018, from $2.2 million for the three months ended September 30, 2017. Interest and dividend income increased $0.4 million, or 15.4%, primarily due to an increase in the average balances of interest-earning assets of $28.9 million. The increase in net interest income was partially off-set by an increase in interest expense as the average cost of funds increased 36 basis points to 0.97% for the three months ended September 30, 2018. The net interest margin decreased 22 basis points, or 5.6% during the three months ended September 30, 2018 to 3.61% from 3.83%.

 

We recorded a provision for loan losses of approximately $0.1 million for the three-month period ended September 30, 2018 compared to $0.2 million for the three-month period ended September 30, 2017. The allowance for loan losses was $2.6 million, or 1.14% of total gross loans at September 30, 2018 compared to $2.4 million, or 1.23% of gross loans at September 30, 2017. Net charge-offs during the third quarter of 2018 were approximately $17 thousand compared to $0.1 million during the third quarter of 2017. General reserves were higher at September 30, 2018, when compared to September 30, 2017, as the balances in most loan categories increased during the twelve months ended September 30, 2018. These increases to the allowance were partially off-set by improvements in historical loss levels and augmented by changes in qualitative factors during the twelve months ended September 30, 2018, as compared to the same period ended September 30, 2017. Additionally, specific reserves as of September 30, 2018 were higher than they were as of September 30, 2017.

 

Total other income remained consistent at $0.6 million for the three months ended September 30, 2018 and September 30, 2017.

 

Total other expense increased $0.1 million, or 6.4%, to $2.1 million for the three months ended September 30, 2018, as compared to $2.0 million for the three months ended September 30, 2017.  The increase was primarily due to higher salaries and employee benefits.

 

We recorded income tax expense of approximately $0.2 million for both the three-month periods ended September 30, 2018 and September 30, 2017.

 

 

 

 

Comparison of Results of Operations for the Nine Months Ended September 30, 2018 and September 30, 2017

 

Net income was $1.4 million for the nine-month period ended September 30, 2018 compared to $1.3 million for the nine-month period ended September 30, 2017.   The increase in net income of $0.1 million or 11.6% was primarily attributed to

an increase in net interest income after provision for loan losses of $0.6 million partially offset by an increase in total other expenses of $0.5 million.

   

Net interest income increased by $0.5 million, or 7.5%, to $6.8 million for the nine months ended September 30, 2018, from $6.3 million for the nine months ended September 30, 2017. Interest and dividend income increased $1.1 million, or 15.5%, primarily due to an increase in the average balances of interest-earning assets of $30.0 million. The increase in net interest income was partially off-set by an increase in interest expense as the average cost of funds increased 32 basis points to 0.88% for the nine months ended September 30, 2018. The net interest margin decreased 21 basis points, or 5.5% during the nine months ended September 30, 2018 to 3.63% from 3.84%.

 

We recorded a provision for loan losses of approximately $0.4 million for the nine-month period ended September 30, 2018 and approximately $0.5 million for the nine months ended September 30, 2017. The allowance for loan losses was $2.6 million, or 1.14% of total gross loans at September 30, 2018 compared to $2.4 million, or 1.23% of gross loans at September 30, 2017. Net charge-offs during the first nine months of 2018 were comparable as they were $0.3 million during the same period for the first nine months of 2017 as well. General reserves were higher at September 30, 2018, when compared to September 30, 2017, as the balances in most loan categories increased during the twelve months ended September 30, 2018. These increases to the allowance were partially off-set by improvements in historical loss levels and augmented by changes in qualitative factors during the twelve months ended September 30, 2018, as compared to the same period ended September 30, 2017. Additionally, specific reserves as of September 30, 2018 were higher than they were as of September 30, 2017.

 

Total other income was comparable for the nine months ended September 30, 2018 and 2017 as it was approximately $1.7 million for both periods.

 

Total other expense increased $0.5 million, or 8.3%, to $6.3 million for the nine months ended September 30, 2018, as compared to $5.8 million for the nine months ended September 30, 2017.  The increase was primarily due to higher other expenses, increased loan expenses, and higher salaries and employee benefits.

 

We recorded income tax expense of approximately $0.5 million for both of the nine-month periods ended September 30, 2018 and 2017.   

 

Comparison of Financial Condition at September 30, 2018 and December 31, 2017

 

Total consolidated assets as of September 30, 2018 were $277.7 million, an increase of $22.3 million, or 8.75%, from $255.4 million at December 31, 2017.  The increase was primarily due to an increase of $17.1 million in the net loan portfolio, an increase in cash and cash equivalents of $7.0 million, an increase in other assets of $0.4 million, and an increase in deferred tax assets of $0.2 million, partially off-set by decreases in securities available for sale of $1.5 million, decreases in non-marketable equity securities of $0.1 million, a decrease in federal funds sold of $0.7 million and a decrease in foreclosed real estate of $0.1 million.

 

Cash and cash equivalents increased $7.0 million, or 186.1%, to $10.7 million at September 30, 2018 from $3.7 million at December 31, 2017. The increase in cash and cash equivalents was primarily a result of cash provided by financing activities of $21.3 million and cash provided by operating activities of $1.4 million exceeding cash used in investing activities of $15.7 million.

 

Securities available for sale decreased $1.5 million, or 5.6%, to $24.6 million at September 30, 2018 from $26.0 million at December 31, 2017, as paydowns, calls, and maturities exceeded new securities purchases.

 

Net loans increased by $17.1 million, or 8.2% to $224.1 million at September 30, 2018 compared to $207.0 million at December 31, 2017 primarily as a result of an $8.9 million increase in one-to-four family loans, a $4.0 million increase in purchased auto loans, a $5.2 million increase in consumer direct loans, a $2.6 million increase in non-residential real estate loans, and a $0.7 million increase in multi-family residential loans, partially off-set by a $4.2 million decrease in commercial loans.

 

 

 

 

Total deposits increased $26.1 million, or 14.3%, to $208.9 million at September 30, 2018 from $182.8 million at December 31, 2017. At September 30, 2018 checking accounts increased by $14.6 million and certificates of deposit increased by $14.3 million as compared to December 31, 2017. Offsetting these increases, money market accounts decreased by $2.2 million, and savings accounts decreased by $0.9 million since December 31, 2017.

 

FHLB advances decreased $3.0 million, or 19.9% to $12.1 million at September 30, 2018 compared to $15.1 million at December 31, 2017.

 

Stockholders’ equity decreased approximately $0.5 million, or 0.9% to $52.6 million at September 30, 2018 from $53.1 million at December 31, 2017. The decrease reflects $1.2 million to repurchase and cancel 82,635 outstanding shares of Company common stock, $0.7 million in dividends and a decrease in other comprehensive income of $0.3 million related to a decrease in the fair value of securities available for sale. These decreases were partially off-set by net income of $1.4 million for the nine months ended September 30, 2018 and proceeds from stock options exercised and the allocation of ESOP shares totaling approximately $0.2 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.

 

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. 

 

 

 

 

Ottawa Bancorp, Inc. & Subsidiary

Consolidated Balance Sheets

September 30, 2018 and December 31, 2017

(Unaudited)

   

September 30,

   

December 31,

 
   

2018

   

2017

 

Assets

               

Cash and due from banks

  $ 3,705,861     $ 2,426,924  

Interest bearing deposits

    7,039,083       1,328,893  

Total cash and cash equivalents

    10,744,944       3,755,817  

Time deposits

    250,000       250,000  

Federal funds sold

    198,000       939,000  

Securities available for sale

    24,591,561       26,045,675  

Non-marketable equity securities

    835,368       918,387  

Loans, net of allowance for loan losses of $2,594,433 and $2,472,446 at September 30, 2018 and December 31, 2017, respectively

    224,089,736       207,035,091  

Loans held for sale

    543,000       499,375  

Premises and equipment, net

    6,632,149       6,670,088  

Accrued interest receivable

    842,124       794,449  

Foreclosed real estate

    -       84,100  

Deferred tax assets

    2,092,546       1,870,490  

Cash surrender value of life insurance

    2,329,421       2,293,800  

Goodwill

    649,869       649,869  

Core deposit intangible

    242,500       286,000  

Other assets

    3,695,089       3,307,734  

Total assets

  $ 277,736,307     $ 255,399,875  

Liabilities and Stockholders' Equity

               

Liabilities

               

Deposits:

               

Non-interest bearing

  $ 11,911,007     $ 11,562,801  

Interest bearing

    196,951,697       171,211,823  

Total deposits

    208,862,704       182,774,624  

Accrued interest payable

    8,693       661  

FHLB advances

    12,097,677       15,105,287  

Other liabilities

    4,120,214       4,416,368  

Total liabilities

    225,089,288       202,296,940  

Stockholders' Equity

               

Common stock, $.01 par value, 12,000,000 shares authorized; 3,383,160 and 3,451,802 shares issued at September 30, 2018 and December 31, 2017, respectively

    33,832       34,518  

Additional paid-in-capital

    35,923,153       36,949,508  

Retained earnings

    18,450,924       17,720,962  

Unallocated ESOP shares

    (1,621,120 )     (1,754,632 )

Accumulated other comprehensive (loss) income

    (139,770 )     152,579  

Total stockholders' equity

    52,647,019       53,102,935  

Total liabilities and stockholders' equity

  $ 277,736,307     $ 255,399,875  

 

 

 

 

 Ottawa Bancorp, Inc. & Subsidiary

Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2018 and 2017

(Unaudited)

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Interest and dividend income:

                               

Interest and fees on loans

  $ 2,596,019     $ 2,204,397     $ 7,541,652     $ 6,291,581  

Securities:

                               

Residential mortgage-backed and related securities

    67,156       98,541       205,975       360,557  

State and municipal securities

    102,269       116,431       305,920       373,999  

Dividends on non-marketable equity securities

    5,079       1,812       14,473       5,154  

Interest-bearing deposits

    30,516       5,357       75,864       21,403  

Total interest and dividend income

    2,801,039       2,426,538       8,143,884       7,052,694  

Interest expense:

                               

Deposits

    454,352       247,897       1,187,481       676,374  

Borrowings

    46,584       20,564       143,129       35,624  

Total interest expense

    500,936       268,461       1,330,610       711,998  

Net interest income

    2,300,103       2,158,077       6,813,274       6,340,696  

Provision for loan losses

    65,000       210,000       377,500       460,000  

Net interest income after provision for loan losses

    2,235,103       1,948,077       6,435,774       5,880,696  

Other income:

                               

Gain on sale of securities

    -       77,028       -       98,230  

Gain on sale of loans

    155,656       205,375       464,527       522,360  

Gain on sale of foreclosed real estate

    59,511       5,182       101,546       29,242  

Gain on sale of repossessed assets

    8,911       1,123       13,094       15,419  

Loan origination and servicing income

    244,351       159,078       615,369       462,787  

Origination of mortgage servicing rights, net of amortization

    4,124       21,293       26,977       55,405  

Customer service fees

    135,710       123,288       384,717       360,359  

Increase in cash surrender value of life insurance

    11,986       11,999       35,621       36,182  

Other

    23,973       28,940       72,607       89,044  

Total other income

    644,222       633,306       1,714,458       1,669,028  

Other expenses:

                               

Salaries and employee benefits

    1,139,592       1,047,416       3,255,532       3,124,939  

Directors fees

    43,000       40,800       137,750       122,400  

Occupancy

    159,892       158,716       494,353       484,496  

Deposit insurance premium

    17,107       15,437       49,933       41,648  

Legal and professional services

    89,623       92,007       279,273       282,129  

Data processing

    169,316       144,137       485,210       435,244  

Loss on sale of securities

    -       47,603       -       55,169  

Loan expense

    189,814       152,645       552,483       403,088  

Valuation adjustments and expenses on foreclosed real estate

    4,465       2,662       25,265       10,184  

Loss on sale of OREO

    -       336       2,438       336  

Loss on sale of repossessed assets

    3,745       -       8,166       274  

Other

    280,830       269,710       957,569       807,889  

Total other expenses

    2,097,384       1,971,469       6,247,972       5,767,796  

Income before income tax expense

    781,941       609,914       1,902,260       1,781,928  

Income tax expense

    191,798       155,163       476,662       504,332  

Net income

  $ 590,143     $ 454,751     $ 1,425,598     $ 1,277,596  

Basic earnings per share

  $ 0.18     $ 0.14     $ 0.44     $ 0.39  

Diluted earnings per share

  $ 0.18     $ 0.14     $ 0.44     $ 0.39  

Dividends per share

  $ 0.05     $ 0.04     $ 0.215     $ 0.12  

 

 

 

 

Ottawa Bancorp, Inc. & Subsidiary

Selected Financial Data and Ratios

(Unaudited)

   

At September 30,

   

At December 31,

 
   

2018

   

2017

 
   

(In thousands, except per share data)

 

Financial Condition Data:

               

Total Assets

  $ 277,736     $ 255,400  

Loans, net (1)

    224,090       207,035  

Securities available for sale

    24,592       26,046  

Deposits

    208,863       182,775  

Stockholders' Equity

    52,647       53,103  

Book Value per common share

  $ 15.56     $ 15.38  

Tangible Book Value per common share (2)

  $ 15.30     $ 15.11  

 

(1) Net of loans in process, deferred loan (cost) fees and allowance for loan losses.

(2) Non-GAAP measure. Excludes goodwill and core deposit intangible.

       

 

 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 
   

(In thousands, except per share data)

 

Operations Data:

                               

Total interest and dividend income

  $ 2,801     $ 2,426     $ 8,144     $ 7,053  

Total interest expense

    501       268       1,331       712  

Net interest income

    2,300       2,158       6,813       6,341  

Provision for loan losses

    65       210       377       460  

Other income

    644       633       1,714       1,669  

Other expense

    2,097       1,971       6,248       5,768  

Income tax expense

    192       155       477       504  

Net income

  $ 590     $ 455     $ 1,425     $ 1.278  

Basic earnings per share

  $ 0.18     $ 0.14     $ 0.44     $ 0.39  

Diluted earnings per share

  $ 0.18     $ 0.14     $ 0.44     $ 0.39  

Dividends per share

  $ 0.05     $ 0.04     $ 0.215     $ 0.12  

 

 

 

 

   

At or for the Three Months Ended

   

At or for the Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Performance Ratios:

                               

Return on average assets

    0.86

%

    0.74

%

    0.71

%

    0.71

%

Return on average stockholders' equity

    4.48       3.44       3.61       3.24  

Average stockholders' equity to average assets

    19.20       21.65       19.55       22.01  

Stockholders' equity to total assets at end of period

    18.96       21.53       18.96       21.53  

Net interest rate spread (1)

    3.43       3.69       3.47       3.72  

Net interest margin (2)

    3.62       3.83       3.63       3.84  
Average interest-earning assets to average interest-bearing liabilities     123.44       128.94       123.66       128.98  

Other expense to average assets

    0.76       0.81       2.32       2.42  

Efficiency ratio (3)

    71.23       70.62       73.27       72.01  

Dividend payout ratio

    27.34       28.57       48.80       30.77  

 

 

 

   

At September 30,

   

At December 31,

 
   

2018

   

2017

 
   

(unaudited)

 

Regulatory Capital Ratios (4):

               

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

    21.05

%

    22.52

%

Tier 1 core capital (to risk-weighted assets)

    19.84       21.27  

Common equity Tier 1 (to risk-weighted assets)

    19.84       21.27  

Tier 1 leverage (to adjusted total assets)

    15.71       16.21  

Asset Quality Ratios:

               

Net charge-offs to average gross loans outstanding

    0.23       0.18  

Allowance for loan losses to gross loans outstanding

    1.14       1.18  

Non-performing loans to gross loans (5)

    0.63       0.75  

Non-performing assets to total assets (5)

    0.52       0.65  

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) Nonperforming loans and assets include accruing loans past due 90 days or more.

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