Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - Ottawa Savings Bancorp, Inc. | ottw20150319_8ka.htm |
| EX-99.2 - EXHIBIT 99.2 - Ottawa Savings Bancorp, Inc. | ex99-2.htm |
Exhibit 99.1
TWIN OAKS SAVINGS BANK
BALANCE SHEET
September 30, 2014 and 2013
(Unaudited)
|
September 30, 2014 |
September 30, 2013 |
|||||||
|
ASSETS |
||||||||
|
Cash and due from banks |
$ | 597,454 | $ | 885,514 | ||||
|
Interest bearing deposits |
1,146,870 | 1,887,555 | ||||||
|
Total cash and cash equivalents |
1,744,324 | 2,773,069 | ||||||
|
Federal funds sold |
15,000 | 836,000 | ||||||
|
Investment certificates of deposit |
1,304,861 | 2,149,969 | ||||||
|
Securities available for sale |
26,549,917 | 29,252,346 | ||||||
|
Federal Home Loan Bank and Banker's Bank Stock |
547,138 | 547,138 | ||||||
|
Loans, net of allowance for loan losses of $1,594,228 and $977,804 at September 30, 2014 and 2013, respectively |
30,463,576 | 31,112,716 | ||||||
|
Premises and equipment, net |
1,007,476 | 1,073,866 | ||||||
|
Accrued interest receivable |
268,621 | 302,697 | ||||||
|
Other assets |
657,310 | 260,865 | ||||||
|
Total assets |
$ | 62,558,223 | $ | 68,308,666 | ||||
|
LIABILITIES AND MEMBERS' EQUITY |
||||||||
|
Liabilities |
||||||||
|
Deposits |
$ | 51,118,106 | $ | 55,331,580 | ||||
|
Federal Home Loan Bank advances |
4,497,624 | 6,219,288 | ||||||
|
Advances from borrowers for escrow |
44,451 | 69,472 | ||||||
|
Accrued interest payable and other liabilities |
191,201 | 96,544 | ||||||
|
Total liabilities |
55,851,382 | 61,716,884 | ||||||
|
Members' Equity |
||||||||
|
Retained earnings |
6,340,409 | 6,743,756 | ||||||
|
Accumulated other comprehensive income (loss) |
366,432 | (152,274 | ) | |||||
|
Total equity |
6,706,841 | 6,591,482 | ||||||
|
Total liabilities and members' equity |
$ | 62,558,223 | $ | 68,308,366 | ||||
See accompanying notes.
TWIN OAKS SAVINGS BANK
STATEMENT OF OPERATIONS
Six months ended September 30, 2014 and September 30, 2013
(Unaudited)
| September 30, 2014 | September 30, 2013 | |||||||
|
Interest income |
||||||||
|
Loans |
$ | 733,662 | $ | 769,926 | ||||
|
Securities |
206,285 | 187,932 | ||||||
|
Mortgage-backed securities |
190,185 | 125,893 | ||||||
|
Other |
15,743 | 17,514 | ||||||
|
Total interest income |
1,145,875 | 1,101,265 | ||||||
|
Interest expense |
||||||||
|
Deposits |
174,198 | 211,632 | ||||||
|
Federal Home Loan Bank advances |
67,842 | 96,624 | ||||||
|
Total interest expense |
242,040 | 308,256 | ||||||
|
Net interest income |
903,835 | 793,009 | ||||||
|
Provision for loan losses |
363,000 | 355,000 | ||||||
|
Net interest income after provision for loan losses |
540,835 | 438,009 | ||||||
|
Noninterest income |
||||||||
|
Service fees |
50,612 | 51,685 | ||||||
|
Gain on sale of loans |
32,065 | 41,722 | ||||||
|
Gain (loss) on sale of securities |
35,253 | (709 | ) | |||||
|
Other |
18,137 | 5,450 | ||||||
|
Total noninterest income |
136,057 | 98,148 | ||||||
|
Noninterest expense |
||||||||
|
Compensation and benefits |
405,912 | 419,596 | ||||||
|
Occupancy and equipment |
106,078 | 109,452 | ||||||
|
Data processing |
95,391 | 90,123 | ||||||
|
Other |
523,583 | 208,364 | ||||||
|
Total noninterest expense |
1,130,964 | 827,535 | ||||||
|
Loss before income taxes |
(454,072 | ) | (291,378 | ) | ||||
|
Income tax benefit |
237,426 | 173,807 | ||||||
|
Net loss |
$ | (216,646 | ) | $ | (117,571 | ) | ||
See accompanying notes.
TWIN OAKS SAVINGS BANK
STATEMENT OF CASH FLOWS
Six months ended September 30, 2014 and 2013
(Unaudited)
|
September 30, 2014 |
September 30, 2013 |
|||||||
|
Cash Flows from Operating Activities |
||||||||
|
Net loss |
$ | (216,646 | ) | $ | (117,571 | ) | ||
|
Adjustments to reconcile net loss to net cash from operating activities: |
||||||||
|
Depreciation |
45,552 | 49,934 | ||||||
|
Amortization of premiums and discounts |
191,452 | 317,792 | ||||||
|
Provision for loan losses |
363,000 | 355,000 | ||||||
|
(Gain) loss on sale of securities |
(35,253 | ) | 709 | |||||
|
Gain on sale of loans |
(32,065 | ) | (41,722 | ) | ||||
|
Origination of mortgage loans for sale |
(506,600 | ) | (918,155 | ) | ||||
|
Proceeds from sale of mortgage loans |
538,665 | 959,877 | ||||||
|
Origination of Mortgage Servicing Rights, net of amortization |
(3,512 | ) | 7,571 | |||||
|
Loss on sale of OREO |
353 | - | ||||||
|
Change in accrued interest receivable and other assets |
117,555 | 224,502 | ||||||
|
Change in other liabilities |
(227,801 | ) | (491,932 | ) | ||||
|
Net cash provided by operating activities |
234,700 | 346,005 | ||||||
|
Cash Flows from Investing Activities |
||||||||
|
Purchase of investment in certificates of deposit |
(1,892 | ) | (250,000 | ) | ||||
|
Proceeds from maturities of investments in certificates of deposit |
697,000 | 597,000 | ||||||
|
Purchase of securities |
- | (3,702,223 | ) | |||||
|
Proceeds from sales, maturities and paydowns of securities |
4,338,045 | 4,092,509 | ||||||
|
Loan originations, net of principal payments |
(743,583 | ) | 198,887 | |||||
|
Proceeds on sale of OREO |
17,147 | 484,500 | ||||||
|
Net (increase) decrease in federal funds sold |
394,000 | 1,796,000 | ||||||
|
Expenditures for premises and equipment |
(900 | ) | (11,988 | ) | ||||
|
Net cash provided by investing activities |
4,699,817 | 3,204,685 | ||||||
|
Cash Flows from Financing Activities |
||||||||
|
Net change in deposits |
(4,307,633 | ) | (2,873,669 | ) | ||||
|
Proceeds from Federal Home Loan Bank advances |
1,700,000 | - | ||||||
|
Paydowns on Federal Home Loan Bank advances |
(2,410,872 | ) | (1,010,712 | ) | ||||
|
Net change in advances from borrowers for escrow |
(189,067 | ) | (189,765 | ) | ||||
|
Net cash used in financing activities |
(5,207,572 | ) | (4,074,146 | ) | ||||
|
Net decrease in cash and cash equivalents |
(273,055 | ) | (523,456 | ) | ||||
|
Cash and cash equivalents at beginning of period |
2,017,379 | 3,296,525 | ||||||
|
Cash and cash equivalents at end of period |
$ | 1,744,324 | $ | 2,773,069 | ||||
|
Supplemental Disclosures of Cash Flow Information |
||||||||
|
Cash paid during the year for: |
||||||||
|
Interest |
174,259 | 214,447 | ||||||
See accompanying note.
TWIN OAKS SAVINGS BANK
NOTE TO FINANCIAL STATEMENTS
September 30, 2014 and 2013
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
The consolidated financial statements presented in this quarterly report include the accounts of the Twin Oaks Savings Bank (the “Bank”). The consolidated financial statements of the Bank have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and predominant practices followed by the financial services industry, and are unaudited. In the opinion of the Bank’s management, all adjustments, consisting of normal recurring adjustments, which the Bank considers necessary to fairly state the Bank’s financial position and the results of operations and cash flows have been recorded. The interim financial statements at and for the six months ended September 30, 2014 should be read in conjunction with the audited financial statements and accompanying notes of the Bank for the year ended March 31, 2014. Certain amounts in the accompanying financial statements and footnotes for September 30, 2014 have been reclassified with no effect on net income or stockholders’ equity to be consistent with the March 31, 2014 classifications. The results of the Bank’s operations for any interim period are not necessarily indicative of the results of the Bank’s operations for any other interim period or for a full fiscal year.
NOTE 2 - LOANS
A summary of loans by major category was as follows at September 30, 2014 and 2013:
| September 30, 2014 | September 30, 2013 | |||||||
|
Real estate: |
||||||||
|
1-4 family residential |
$ | 26,144,027 | $ | 26,022,059 | ||||
|
Multifamily |
286,700 | 347,944 | ||||||
|
Commercial |
3,022,545 | 3,508,951 | ||||||
|
Land |
713,221 | 942,100 | ||||||
| 30,166,493 | 30,821,054 | |||||||
|
Automobile |
947,076 | 803,582 | ||||||
|
Commercial |
885,897 | 305,832 | ||||||
|
Consumer |
67,913 | 135,827 | ||||||
| 1,900,886 | 1,245,241 | |||||||
|
Gross loans |
$ | 32,067,379 | $ | 32,066,295 | ||||
|
Net deferred loan origination fees |
(9,575 | ) | 24,225 | |||||
|
Allowance for loan losses |
(1,594,228 | ) | (977,804 | ) | ||||
|
Loans, net |
$ | 30,463,576 | $ | 31,112,716 | ||||
(Continued)
TWIN OAKS SAVINGS BANK
NOTE TO FINANCIAL STATEMENTS
September 30, 2014 and 2013
(Unaudited)
NOTE 2 - LOANS (Continued)
Activity in the allowance for loan losses during the quarter ended September 30, 2014 and 2013 was as follows:
September 30, 2014
| Real Estate | ||||||||||||||||||||||||||||||||
|
1-4 Family Residential |
Multifamily | Commercial | Land | Automobile | Commercial | Consumer | Total | |||||||||||||||||||||||||
|
Allowance for loan losses: |
||||||||||||||||||||||||||||||||
|
Beginning balance |
$ | 1,090,779 | $ | 3,154 | $ | 230,704 | $ | 144,105 | $ | 8,399 | $ | 9,121 | $ | 9,673 | $ | 1,495,935 | ||||||||||||||||
|
Provision for loan losses |
149,232 | (287 | ) | 181,089 | 6,260 | 1,072 | 33,076 | (7,441 | ) | 363,001 | ||||||||||||||||||||||
|
Loans charged off |
(38,269 | ) | - | (155,913 | ) | (42,279 | ) | - | (28,847 | ) | - | (265,308 | ) | |||||||||||||||||||
|
Recoveries |
- | - | - | 400 | - | - | 200 | 600 | ||||||||||||||||||||||||
|
Total ending allowance balance |
$ | 1,201,742 | $ | 2,867 | $ | 255,880 | $ | 108,486 | $ | 9,471 | $ | 13,350 | $ | 2,432 | $ | 1,594,228 | ||||||||||||||||
September 30, 2013
| Real Estate | ||||||||||||||||||||||||||||||||
|
1-4 Family Residential |
Multifamily | Commercial | Land | Automobile | Commercial | Consumer | Total | |||||||||||||||||||||||||
|
Allowance for loan losses: |
||||||||||||||||||||||||||||||||
| Beginning balance | $ | 379,809 | $ | 3,809 | $ | 124,233 | $ | 530,475 | $ | 9,345 | $ | 3,864 | $ | 4,051 | $ | 1,055,586 | ||||||||||||||||
| Provision for loan losses | 282,176 | (330 | ) | 1,855 | 51,909 | (1,309 | ) | 11,091 | 9,608 | 355,000 | ||||||||||||||||||||||
| Loans charged off | - | - | - | (459,481 | ) | - | - | - | (459,481 | ) | ||||||||||||||||||||||
| Recoveries | 25,244 | - | - | 1,455 | - | - | - | 26,699 | ||||||||||||||||||||||||
| Total ending allowance balance | $ | 687,229 | $ | 3,479 | $ | 126,088 | $ | 124,359 | $ | 8,036 | $ | 14,955 | $ | 13,659 | $ | 977,80 | ||||||||||||||||
(Continued)
TWIN OAKS SAVINGS BANK
NOTE TO FINANCIAL STATEMENTS
September 30, 2014 and 2013
(Unaudited)
NOTE 2 - LOANS (Continued)
The recorded investment in nonaccrual and loans past due over 90 days still on accrual at September 30, 2014 and 2013 was as follows:
September 30, 2014
| Loans Past | ||||||||
| Due Over | ||||||||
| 90 Days Still | ||||||||
| Nonaccrual | Accruing | |||||||
|
1-4 family residential |
$ | 1,865,992 | $ | - | ||||
|
Commercial real estate |
163,754 | - | ||||||
|
Land |
54,649 | - | ||||||
|
Consumer |
4,491 | - | ||||||
|
Total |
$ | 2.088,886 | $ | - | ||||
September 30, 2013
| Loans Past | ||||||||
| Due Over | ||||||||
| 90 Days Still | ||||||||
|
Nonaccrual |
Accruing |
|||||||
|
1-4 family residential |
$ | 763,091 | $ | - | ||||
|
Commercial real estate |
209,199 | - | ||||||
|
Land |
49,373 | - | ||||||
|
Consumer |
8,479 | - | ||||||
|
Total |
$ | 1,030,142 | $ | - | ||||
The aging of the recorded investment in past due loans at September 30, 2014 and 2013 was as follows:
September 30, 2014
| 30 - 59 | 60 - 89 |
Greater than |
||||||||||||||||||||||
|
Days |
Days |
89 Days |
Total |
Loans Not |
||||||||||||||||||||
|
Past Due |
Past Due |
Past Due |
Past Due |
Past Due |
Total |
|||||||||||||||||||
|
1-4 family residential |
$ | 7,729 | $ | 245,562 | $ | 1,491,718 | $ | 1,745,009 | $ | 24,339,018 | $ | 26,144,027 | ||||||||||||
|
Multifamily |
- | - | - | - | 286,700 | 286,700 | ||||||||||||||||||
|
Commercial real estate |
- | - | 163,754 | 163,754 | 2,858,791 | 3,022,545 | ||||||||||||||||||
|
Land |
- | 54,649 | - | 54,649 | 658,572 | 713,221 | ||||||||||||||||||
|
Automobile |
- | - | - | - | 947,076 | 947,076 | ||||||||||||||||||
|
Commercial |
- | - | - | - | 885,897 | 885,897 | ||||||||||||||||||
|
Consumer |
- | - | 4,491 | 4,491 | 63,422 | 67,913 | ||||||||||||||||||
|
Total |
$ | 7,729 | $ | 300,211 | $ | 1,659,963 | $ | 1,967,903 | $ | 30,099,476 | $ | 32,067,379 | ||||||||||||
TWIN OAKS SAVINGS BANK
NOTE TO FINANCIAL STATEMENTS
September 30, 2014 and 2013
(Unaudited)
September 30, 2013
| 30 - 59 | 60 - 89 |
Greater than |
||||||||||||||||||||||
|
Days |
Days |
89 Days |
Total |
Loans Not |
||||||||||||||||||||
|
Past Due |
Past Due |
Past Due |
Past Due |
Past Due |
Total |
|||||||||||||||||||
|
1-4 family residential |
$ | 364,577 | $ | 471,016 | $ | 392,118 | $ | 1,227,711 | $ | 24,794,348 | $ | 26,022,059 | ||||||||||||
|
Multifamily |
- | - | - | - | 347,944 | 347,944 | ||||||||||||||||||
|
Commercial real estate |
209,199 | - | - | 209,199 | 3,299,752 | 3,508,951 | ||||||||||||||||||
|
Land |
- | 56,221 | - | 56,221 | 885,879 | 942,100 | ||||||||||||||||||
|
Automobile |
- | - | - | - | 803,582 | 803,582 | ||||||||||||||||||
|
Commercial |
- | 12,017 | - | 12,017 | 293,815 | 305,832 | ||||||||||||||||||
|
Consumer |
- | - | 8,499 | 8,499 | 127,328 | 135,827 | ||||||||||||||||||
|
Total |
$ | 573,776 | $ | 539,254 | $ | 400,597 | $ | 1,513,647 | $ | 30,552,648 | $ | 32,066,295 | ||||||||||||
Credit Quality Indicators:
The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a periodic basis. The Bank uses the following definitions for risk ratings:
Watch. Loans classified as watch are those requiring more attention to ensure timely and adequate financial information is received and that the business is being prudently managed, given economic and market conditions.
Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.
TWIN OAKS SAVINGS BANK
NOTE TO FINANCIAL STATEMENTS
September 30, 2014 and 2013
(Unaudited)
Based on the most recent analysis performed, the risk category of loans by class of loans was as follows at September 30, 2014 and 2013:
September 30, 2014
| Special | ||||||||||||||||||||||||
| Pass | Watch | Mention | Substandard | Doubtful | Total | |||||||||||||||||||
|
1-4 family residential |
$ | 22,521,458 | $ | 645,347 | $ | 791,128 | $ | 1,515,647 | $ | 670,447 | $ | 26,144,022 | ||||||||||||
|
Multifamily |
286,700 | - | - | - | - | 286,700 | ||||||||||||||||||
|
Commercial real estate |
2,806,664 | - | 52,127 | - | 163,754 | 3,022,545 | ||||||||||||||||||
|
Land |
619,928 | 38,634 | - | 54,659 | - | 713,221 | ||||||||||||||||||
|
Automobile |
937,663 | 9,413 | - | - | - | 947,076 | ||||||||||||||||||
|
Commercial |
885,897 | - | - | - | - | 885,897 | ||||||||||||||||||
|
Consumer |
63,422 | - | - | 4,491 | - | 67,913 | ||||||||||||||||||
| Total | $ | 28,121,732 | $ | 693,394 | $ | 243,255 | $ | 1,574,797 | $ | 834,201 | $ | 32,067,379 | ||||||||||||
September 30, 2013
| Special | ||||||||||||||||||||||||
| Pass | Watch | Mention | Substandard | Doubtful | Total | |||||||||||||||||||
|
1-4 family residential |
$ | 22,229,992 | $ | 1,631,666 | $ | 1,042,102 | $ | 1,118,299 | $ | - | $ | 26,022,059 | ||||||||||||
|
Multifamily |
347,944 | - | - | - | - | 347,944 | ||||||||||||||||||
|
Commercial real estate |
3,246,284 | 53,468 | - | 209,199 | - | 3,508,951 | ||||||||||||||||||
|
Land |
787,785 | - | 56,221 | 98,094 | - | 942,100 | ||||||||||||||||||
|
Automobile |
798,347 | 13,235 | - | - | - | 803,582 | ||||||||||||||||||
|
Commercial |
293,815 | - | - | 12,017 | - | 305,832 | ||||||||||||||||||
|
Consumer |
127,348 | - | - | 8,479 | - | 135,827 | ||||||||||||||||||
| Total | $ | 27,823,515 | $ | 1,698,369 | $ | 1,098,323 | $ | 1,446,088 | $ | - | $ | 32,066,295 | ||||||||||||