As announced on April 24, 2025, the Company initiated its seventh stock repurchase program approved by the Board of Directors since the Company completed its second step conversion in 2016. As previously announced, the Company completed the seventh stock repurchase program during the quarter ended September 30, 2025 pursuant to which it repurchased a total of 120,996 shares of its common stock at an average price of $15.01 per share. Through September 30, 2025, the Company repurchased a total of 1,202,370 shares of its common stock under all of its stock repurchase programs at an average price of $13.68 per share.
Craig M. Hepner, President and Chief Executive Officer said, "Economic conditions and employment have remained stable within our local markets throughout 2025, and although loan growth has been flat during the first nine months of the year, we have continued to reduce our reliance on more expensive wholesale funding sources in favor of organic deposit growth. This, combined with the downward trend in short-term interest rates and strong asset quality, has led to significant year-on-year expansion in our net interest margin and improvement in our overall operating results."
Mr. Hepner continued, "We feel the capital management strategies that the Company has employed have produced positive results for our shareholders throughout 2025. Since the beginning of the year, we have returned nearly $2.6 million to our shareholders in the form of dividends and stock repurchases while at the same time increasing our tangible book value by 3.7% or $.61 per share. The Board remains committed to evaluating and executing strategies to maximize shareholder value."
Comparison of Results of Operations for the Three Months Ended September 30, 2025 and September 30, 2024
Net income for the three months ended September 30, 2025 was $0.4 million compared to $0.2 million for the three months ended September 30, 2024. Total interest and dividend income was $4.4 million for the three months ended September 30, 2025 compared to $4.1 million for the three months ended September 30, 2024 due to an increase in the average yield on interest-earning assets. The yield on interest-earning assets increased by 0.28% to 5.21%. Interest expense decreased to $1.8 million for the three months ended September 30, 2025 from $1.9 million during the three months ended September 30, 2024, as our average cost of funds decreased to 2.29% from 2.43%. Net interest income after provision for credit losses increased by $0.5 million to $2.6 million for the three months ended September 30, 2025 as compared to $2.1 million for the three months ended September 30, 2024. Total other income was $0.3 million for the three months ended September 30, 2025 compared to $0.3 million for the three months ended September 30, 2024. Total other expenses were $2.3 million for the three months ended September 30, 2025 compared to $2.1 million for the three months ended September 30, 2024.
The multi-loan commercial relationship that was identified in 2022 as being impaired, meaning that it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreements, was resolved during the quarter as the payment was received for the final loan. The relationship as of December 31, 2024 had balances of approximately $0.7 million with a specific allocation of $0.2 million. As of September 30, 2025, this relationship has no remaining balance, and therefore there is no specific allocation. No additional reserves or charge-offs were required to resolve the last impaired loan, and we do not anticipate any further losses related to this relationship.
The Company recorded a recovery of approximately $29 thousand for the three months ended September 30, 2025 to decrease the Allowance for Credit Losses (ACL) position. During the three months ended September 30, 2024, there was a provision of approximately $9 thousand. The ACL on loans was $4.1 million, or 1.34% of total gross loans, at September 30, 2025 compared to $4.3 million, or 1.39% of gross loans, at September 30, 2024. Net recoveries during the third quarter of 2025 were approximately $6 thousand compared to net recoveries of $6 thousand during the third quarter of 2024. The current period adjustment to the ACL is the result of the quarterly calculation of Current Expected Credit Losses (CECL). The required reserves on non-performing loans as of September 30, 2025 decreased by $198 thousand compared to the required reserves as of September 30, 2024.
The Company recorded income tax expense of $0.2 million for the three-month period ended September 30, 2025 as compared to income tax expense of $0.1 million for the three months ended September 30, 2024 as pre-tax income during the three months ended September 30, 2025 was higher as compared to pre-tax income during the three months ended September 30, 2024.
Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and September 30, 2024
Net income was $1.4 million for the nine months ended September 30, 2025 compared to $0.3 million for the nine months ended September 30, 2024. Total interest and dividend income was $12.8 million for the nine months ended September 30, 2025 compared to $11.9 million for the nine months ended September 30, 2024 as the average yield on interest-earning assets improved to 5.15% from 4.78%. Interest expense for the nine months ended September 30, 2025 was $0.3 million lower as a result of the reduction in short-term interest rates that occurred in late 2024 and a reduction in our higher-cost wholesale funding. This has resulted in a decrease in our average cost of funds from 2.30% to 2.20%. Due to the increase in yield on earning assets and lower interest expense, net interest income for the nine months ended September 30, 2025 increased to $7.6 million as compared to $6.5 million for the nine months ended September 30, 2024. Total other income increased slightly to $0.9 million during the nine months ended September 30, 2025 as compared to $0.8 million for the nine months ended September 30, 2024. Other expense levels were $0.3 million lower, decreasing to $6.7 million for the nine months ended September 30, 2025 as compared to $7.0 million for the nine months ended September 30, 2024. The decrease was primarily related to the net realized loss of $0.6 million on the sale of investment securities in 2024.
The Company recorded a recovery of $164 thousand for the nine-month period ended September 30, 2025 to decrease the ACL position. This compares to a recovery of $85 thousand for the nine-month period ended September 30, 2024. Net charge-offs during the nine months ended September 30, 2025 were approximately $38 thousand compared to net recoveries of approximately $1 thousand during the nine months ended September 30, 2024. The current period adjustment to the ACL is the result of the quarterly calculation of CECL.
We recorded an income tax expense of approximately $0.6 million for the nine months ended September 30, 2025 compared to an income tax expense of $0.1 million for the nine months ended September 30, 2024. This increase is due primarily to higher pre-tax earnings in 2025 as compared to 2024.
Comparison of Financial Condition at September 30, 2025 and December 31, 2024
Total consolidated assets as of September 30, 2025 were $354.2 million, an increase of $0.5 million, or 0.2%, from $353.7 million at December 31, 2024. The increase was due primarily to an increase of $0.3 million in cash and cash equivalents, a $3.5 million increase in federal funds sold, an increase of $0.2 million in accrued interest receivable and a $0.7 million increase in securities available for sale These increases were partially offset by a decrease of $3.0 million in loans, net of allowance, a decrease of $0.2 million in loans held for sale, a $0.1 million decrease in premises and equipment, net, a decrease of $0.5 million in deferred tax assets and a decrease in other assets of $0.3 million
Cash and cash equivalents increased $0.3 million, or 2.4%, to $12.8 million at September 30, 2025 from $12.5 million at December 31, 2024. The increase in cash and cash equivalents was primarily the result of cash provided by operating activities of $1.2 million and cash provided by investing activities of $0.2 million exceeded cash used in financing activities of $1.1 million.
Securities available for sale increased $0.7 million, or 3.8%, to $17.5 million at September 30, 2025 from $16.8 million at December 31, 2024 as purchases and market value fluctuations exceeded payments, calls and maturities during the period.
Net loans decreased $3.0 million, or 1.0%, to $298.7 million at September 30, 2025 compared to $301.7 million at December 31, 2024 primarily due to a decrease of $4.1 million in one-to-four family loans, a decrease of $5.4 million in multi-family loans and a decrease of $1.3 million in consumer loans. These decreases were partially offset by an increase of $5.0 million in non-residential real estate loans and an increase of $2.7 million in commercial loans. The allowance for credit losses on loans decreased by $0.2 million at September 30, 2025.
Total deposits increased $9.0 million, or 3.2%, to $291.8 million at September 30, 2025 from $282.8 million at December 31, 2024. During the nine months ended September 30, 2025 certificate of deposit accounts increased by $6.5 million, interest bearing checking accounts increased by $4.4 million, and money market accounts increased $0.7 million. Partially offsetting these increases were decreases in non-interest bearing checking accounts of $1.5 million and in savings accounts of $1.0 million.
FHLB advances decreased $7.3 million, or 32.6%, to $15.0 million at September 30, 2025 compared to $22.3 million at December 31, 2024.
Stockholders' equity decreased to $39.2 million at September 30, 2025 as compared to $40.2 million at December 31, 2024. The decrease reflects $1.8 million used to repurchase and retire 120,996 outstanding shares of Company common stock and $0.8 million in cash dividends. Net income was $1.4 million for the nine months ended September 30, 2025. In addition, there was a $0.9 million increase in other comprehensive income due to an increase in fair value of securities available for sale during the third quarter.
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, our ability to pay future dividends and if so at what level, our ability to receive any required regulatory approval or non-objection for the payment of dividends from the Bank to the Company or from the Company to stockholders, and our efforts to maximize stockholder value, including our ability to execute any capital management strategies, such as the repurchase of shares of the Company's common stock, and our ability to execute any controlled growth and balance sheet strategies designed to lower the cost of funds and enhance earnings and liquidity. 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
September 30, 2025 and December 31, 2024
(Unaudited)
September 30,
December 31,
2025
2024
Assets
Cash and due from banks
$
11,183,234
$
9,863,824
Interest bearing deposits
1,634,497
2,651,481
Total cash and cash equivalents
12,817,731
12,515,305
Federal funds sold
8,033,000
4,493,000
Securities available for sale, at fair value
17,457,916
16,821,297
Loans, net of allowance for credit losses of $4,069,483 and $4,276,409 at September 30, 2025 and December 31, 2024, respectively
298,738,705
301,741,977
Loans held for sale
-
232,000
Premises and equipment, net
5,894,762
6,005,515
Accrued interest receivable
2,336,322
2,108,565
Deferred tax assets, net
2,045,213
2,553,346
Cash value of life insurance
528,436
528,129
Goodwill
649,869
649,869
Other assets
5,742,161
6,002,358
Total assets
$
354,244,115
$
353,651,361
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest bearing
$
21,119,732
$
22,663,274
Interest bearing
270,666,386
260,276,358
Total deposits
291,786,118
282,939,632
Accrued interest payable
563,447
853,122
FHLB advances
15,000,000
22,250,000
Long term debt
1,274,867
1,380,988
Allowance for credit losses on off-balance sheet credit exposures
83,629
79,199
Other liabilities
4,214,073
4,365,113
Total liabilities
312,922,134
311,868,054
Commitments and contingencies
ESOP Repurchase Obligation
2,101,581
1,583,522
Stockholders' Equity
Common stock, $.01 par value, 12,000,000 shares authorized; 2,289,852 and 2,419,911 shares issued at September 30, 2025 and December 31, 2024, respectively
22,898
24,199
Additional paid-in-capital
20,954,875
22,898,558
Retained earnings
22,101,021
21,503,222
Unallocated ESOP shares
