As previously announced, the Company completed its seventh stock repurchase program, which was approved on April 24, 2025, during the quarter ended September 30, 2025. The Company repurchased a total of 120,996 shares of its common stock under the stock repurchase program at an average price of $15.01 per share. Through December 31, 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, "While fourth-quarter earnings were below the prior year period due to higher operating expenses, higher loan loss provision and lower other income, our core margin components continued to strengthen as our yield on earning-assets increased while our average cost of funds continued to decline during the quarter. We saw our net interest margin increase by 14.5% during the year reflecting our disciplined balance sheet management strategies and a focused effort to reduce our reliance on more costly wholesale funding sources."
Mr. Hepner went on to say, "Although loan origination activity remained muted during the year, especially in the residential lending area as mortgage interest rates remained elevated and housing inventory levels in our primary markets remained relatively low, we did see meaningful increases in higher yielding commercial and commercial real estate loans during the year, and we are optimistic that this trend will continue as we progress through 2026. Our credit quality has remained consistently strong as a result of our sound loan underwriting practices, and it improved further during the fourth quarter as we were able to resolve a significant portion of a substandard commercial credit. In addition, we completed a number of initiatives throughout the year designed to improve operating efficiencies and increase non-interest income going forward."
Mr. Hepner concluded by saying, "As always, our Board remains committed to improving performance and deploying sound capital management strategies designed to enhance shareholder value. We thank our shareholders for their continued investment in and support of the Company, and we look forward to continuing to serve the financial needs of our customers and communities in 2026."
Comparison of Results of Operations for the Three Months Ended December 31, 2025 and December 31, 2024
Net income for the three months ended December 31, 2025 was $0.3 million compared to $0.5 million for the three months ended December 31, 2024. Total interest and dividend income was $4.6 million for the three months ended December 31, 2025 compared to $4.3 million for the three months ended December 31, 2024 due to an increase in the average yield on interest-earning assets. The yield on interest-earning assets increased by 0.10% to 5.25%. Interest expense decreased to $1.8 million for the three months ended December 31, 2025 from $1.9 million for the three months ended December 31, 2024, as our average cost of funds decreased to 2.29% from 2.42%. Net interest income after provision for credit losses increased by $0.1 million to $2.6 million for the three months ended December 31, 2025 as compared to $2.5 million for the three months ended December 31, 2024. Total other income was $0.3 million for the three months ended December 31, 2025 compared to $0.4 million for the three months ended December 31, 2024. Total other expenses were $2.4 million for the three months ended December 31, 2025 compared to $2.2 million for the three months ended December 31, 2024. An increase in salaries and employee benefits expense accounted for most of this increase.
The Company recorded a provision for credit losses of approximately $120 thousand for the three months ended December 31, 2025 compared to a recovery of approximately $64 thousand for the three months ended December 31, 2024. The allowance for credit losses ("ACL") on loans was $4.2 million, or 1.35% of total gross loans, at December 31, 2025 compared to $4.3 million, or 1.41% of gross loans, at December 31, 2024. Net recoveries during the fourth quarter of 2025 were approximately $1 thousand compared to net recoveries of $40 thousand during the fourth 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 December 31, 2025 decreased by approximately $226 thousand compared to the required reserves as of December 31, 2024.
The Company recorded income tax expense of $0.2 million for the three-month period ended December 31, 2025 as compared to income tax expense of $0.2 million for the three months ended December 31, 2024.
Comparison of Results of Operations for the Twelve Months Ended December 31, 2025 and December 31, 2024
Net income was $1.7 million for the twelve months ended December 31, 2025 compared to $0.8 million for the twelve months ended December 31, 2024. Total interest and dividend income was $17.3 million for the twelve months ended December 31, 2025 compared to $16.2 million for the twelve months ended December 31, 2024 as the average yield on interest-earning assets improved to 5.12% from 4.87%. Interest expense for the twelve months ended December 31, 2025 was $0.3 million lower as a result of the reduction in short-term interest rates that began 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 2.36% to 2.22%. Due to the increase in yield on earning assets and lower interest expense, net interest income for the twelve months ended December 31, 2025 increased to $10.3 million as compared to $8.9 million for the twelve months ended December 31, 2024. Total other income was $1.2 million for both the twelve months ended December 31, 2025 and the twelve months ended December 31, 2024. Total other expenses were $0.1 million lower, decreasing to $9.1 million for the twelve months ended December 31, 2025 as compared to $9.2 million for the twelve months ended December 31, 2024.
The Company recorded a recovery of about $44 thousand for the twelve month period ended December 31, 2025 to decrease the ACL position. This compares to a recovery of about $150 thousand for the twelve month period ended December 31, 2024. Net charge-offs during the twelve months ended December 31, 2025 were approximately $38 thousand compared to net recoveries of approximately $40 thousand during the twelve months ended December 31, 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 $0.8 million for the twelve months ended December 31, 2025 compared to an income tax expense of $0.3 million for the twelve months ended December 31, 2024. This increase is due primarily to higher pre-tax earnings in 2025 as compared to 2024.
Comparison of Financial Condition at December 31, 2025 and December 31, 2024
Total consolidated assets as of December 31, 2025 were $362.6 million, an increase of $8.9 million, or 2.5%, from $353.7 million at December 31, 2024. The increase was due primarily to an increase of $7.4 million in cash and cash equivalents, a $4.0 million increase in loans, net of allowance, and an increase of $1.0 million in other assets. These increases were partially offset by a decrease of $1.2 million in federal funds sold, a decrease of $0.2 million in loans held for sale, a $0.8 million decrease in securities available for sale, a $0.1 million decrease in premises and equipment, net, a decrease of $0.4 million in deferred tax assets and a decrease in accrued interest receivable of $0.7 million
Cash and cash equivalents increased $7.4 million, or 59.1%, to $19.9 million at December 31, 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 $2.1 million and cash provided by financing activities of $6.1 million exceeding cash used in investing activities of $0.8 million.
Securities available for sale decreased $0.8 million, or 4.9%, to $16.0 million at December 31, 2025 from $16.8 million at December 31, 2024 as payments, calls and maturities during the period exceeded purchases and market value fluctuations.
Net loans increased $4.0 million, or 1.3%, to $305.8 million at December 31, 2025 compared to $301.7 million at December 31, 2024 primarily due to an increase of $10.2 million in non-residential real estate loans, and an increase of $6.0 million in commercial loans. These increases were partially offset by a decrease of $6.2 million in one-to-four family residential loans, a decrease of $4.5 million in multi-family residential loans and a decrease of $1.6 million in consumer direct loans. The ACL on loans decreased by $0.1 million at December 31, 2025.
Total deposits increased $15.4 million, or 5.4%, to $298.2 million at December 31, 2025 from $282.9 million at December 31, 2024. During the twelve months ended December 31, 2025 certificate of deposit accounts increased by $9.5 million, interest bearing DDA accounts increased by $4.6 million, non-interest bearing DDA accounts increased by $0.5 million and money market accounts increased $1.6 million. Partially offsetting these increases were decreases in savings accounts of $0.8 million.
FHLB advances decreased $6.4 million, or 28.7%, to $15.9 million at December 31, 2025 compared to $22.3 million at December 31, 2024.
Stockholders' equity decreased to $39.6 million at December 31, 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 $1.0 million in cash dividends. Net income was $1.7 million for the twelve months ended December 31, 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 year.
Date of 2026 Annual Meeting of Shareholders
The Company also announced today that the Company's annual meeting of shareholders will be held on Wednesday, May 20, 2026.
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
December 31, 2025 and December 31, 2024
(Unaudited)
December 31,
December 31,
2025
2024
Assets
Cash and due from banks
$
13,198,098
$
9,863,824
Interest bearing deposits
6,719,709
2,651,481
Total cash and cash equivalents
19,917,807
12,515,305
Federal funds sold
3,259,000
4,493,000
Securities available for sale, at fair value
16,002,114
16,821,297
Loans, net of allowance for credit losses of $4,190,141 and $4,276,409 at December 31, 2025 and December 31, 2024, respectively
305,758,205
301,741,977
Loans held for sale
-
232,000
Premises and equipment, net
5,887,527
6,005,515
Accrued interest receivable
1,413,549
2,108,565
Deferred tax assets, net
2,133,620
2,553,346
Cash value of life insurance
528,464
528,129
Goodwill
649,869
649,869
Other assets
7,041,998
6,002,358
Total assets
$
362,592,153
$
353,651,361
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest bearing
$
23,108,846
$
22,663,274
Interest bearing
275,044,752
260,276,358
Total deposits
298,153,598
282,939,632
Accrued interest payable
545,766
853,122
FHLB advances
15,860,000
22,250,000
Long term debt
1,238,661
1,380,988
Allowance for credit losses on off-balance sheet credit exposures
83,629
79,199
Other liabilities
5,007,164
4,365,113
Total liabilities
320,888,818
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; 2,292,784 and 2,419,911 shares issued at December 31, 2025 and December 31, 2024, respectively
22,928
24,199
Additional paid-in-capital
21,060,890
22,898,558
Retained earnings
22,166,578
21,503,222
Unallocated ESOP shares
(162,974
)
(358,737
)
Unallocated management recognition plan shares
(46,375
)
(70,193
)
Accumulated other comprehensive loss
