10-Q 3 o-63010q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 Commission File Number 0-24118 OTTAWA FINANCIAL CORPORATION ---------------------------- (Exact name of registrant as specified in its charter) Delaware 38-3172166 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 245 Central Avenue, Holland, Michigan 49423 ------------------------------------------- (Address of principal executive offices) 616-393-7000 ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Class: Common stock, $.01 par value As of August 4, 2000, there were 6,603,687 shares outstanding. OTTAWA FINANCIAL CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 2000 PART I - FINANCIAL INFORMATION Interim Financial Information required by Rule 10-01 of Regulation S-X and Item 303 of Regulation S-K is included in this Form 10-Q as referenced below: Page ITEM 1 - FINANCIAL STATEMENTS Consolidated Statements of Financial Condition.........................3 Consolidated Statements of Operations..................................4 Consolidated Statements of Comprehensive Income........................5 Consolidated Statements of Cash Flows..............................6 - 7 Notes to the Consolidated Financial Statements.........................8 Report of Independent Accountants......................................9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................10 - 16 ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............................................................17 - 18 Part II - Other Information OTHER INFORMATION...........................................................19 SIGNATURES..................................................................20 EXHIBIT INDEX...............................................................21 2

See accompanying notes to consolidated financial statements. 3

See accompanying notes to consolidated financial statements. 4

See accompanying notes to consolidated financial statements. 5

See accompanying notes to consolidated financial statements. 7 OTTAWA FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTER ENDED JUNE 30, 2000 (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements reflect the consolidated financial condition and results of operations of Ottawa Financial Corporation, AmeriBank and AmeriBank's wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. As of January 1, 2000, AmeriBank's residential mortgage lending operations were segregated and transferred into AmeriBank Mortgage Company, a wholly-owned subsidiary of AmeriBank. The operations of AmeriBank Mortgage Company include originating and selling residential mortgage loans. These interim financial statements are not audited and reflect all adjustments which, in management's opinion, are necessary to present fairly the consolidated financial position of Ottawa at June 30, 2000, and its results of operations, cash flows, and comprehensive income for the periods presented. All adjustments are normal and recurring in nature. The accompanying consolidated financial statements do not contain all the necessary financial disclosures required by generally accepted accounting principles and should be read with the consolidated financial statements and notes of Ottawa Financial Corporation for the year ended December 31, 1999. The provision for income taxes is based upon the effective tax rate expected to be applicable for the entire year. Amounts reported as basic earnings per common share reflect the earnings available to common shareholders for the period divided by the weighted average number of common shares outstanding during the period. Common shares outstanding includes issued shares less shares held in the treasury and unallocated shares held by the employee stock ownership plan. Diluted earnings per common share include the shares that would be outstanding assuming exercise of dilutive stock options and warrants. All share and per share information has been retroactively adjusted to reflect the 10% stock dividend paid on June 30, 2000. 8 REPORT OF INDEPENDENT ACCOUNTANTS Board of Directors and Shareholders Ottawa Financial Corporation Holland, Michigan We have reviewed the consolidated statement of financial condition of Ottawa Financial Corporation as of June 30, 2000, and the related consolidated statements of operations and comprehensive income for the quarter and year-to-date periods ended June 30, 2000 and 1999, and the related consolidated statements of cash flows for the year-to-date periods ended June 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Crowe, Chizek and Company LLP Grand Rapids, Michigan July 14, 2000 9 Item 2 OTTAWA FINANCIAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following discussion compares the financial condition of Ottawa Financial Corporation and its wholly owned subsidiary, AmeriBank at June 30, 2000 to December 31, 1999 and the results of operations for the three and six months ended June 30, 2000, compared to the same period in 1999. This discussion should be read with the interim consolidated condensed financial statements and footnotes attached. This document, including information included or incorporated by reference, contains, and future filing by the Company on Form 10-K, Form 10-Q and Form 8-K and future oral and written statements by the Company and its management may contain, forward-looking statements about Ottawa Financial and its subsidiaries which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by management. Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. The important factors we discuss below and elsewhere in this document, as well as other factors discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this document and identified in our filings with the SEC and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document. The following factors, many of which are subject to change based on various other factors beyond our control, could cause our financial performance to differ materially from plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: o the strength of the United States economy in general and the strength of the local economies in which we conduct operations; o the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; o inflation, interest rate, market and monetary fluctuations; o the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; o the willingness of users to substitute competitors' products and services for our products and services; o our success in gaining regulatory approval of our products and services, when required; o the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); o the impact of technological changes; o acquisitions; o changes in consumer spending and saving habits; and o our success at managing the risks involved in the foregoing. 10 FINANCIAL CONDITION Total assets increased to $1.08 billion at June 30, 2000 from $1.02 billion at December 31, 1999. This growth was in the loan portfolio and was funded primarily from the growth in deposits, additional borrowings from the Federal Home Loan Bank and the reduction in low-yielding investable funds. Net loans receivable increased to $941.94 million at June 30, 2000 from $856.76 million at December 31, 1999. Through our focus on the development of our commercial and business banking services, as well as healthy loan demand in our market area, we were able to grow our commercial business and commercial real estate portfolio by $41.69 million during the first six months of 2000. This growth was accompanied by the increase in the residential mortgage portfolio of $39.45 million during the same period. The combination of rising interest rates and loan demand in our market area caused a shift in our residential mortgage portfolio from fixed-rate loans to adjustable-rate loans. Since we sell almost all of our 15 and 30 year term fixed rate mortgage loan production and retain for our portfolio adjustable rate mortgage loan production, we saw an increase in our overall mortgage loan portfolio. Deposits increased to $738.09 million at June 30, 2000 from $711.95 million at December 31, 1999. The growth was primarily in certificates of deposit, and to a lesser extent in commercial checking and money market savings accounts. Commercial checking accounts grew by $4.22 million during the first half of this year. This represents a 19% growth rate and is due to our increased emphasis on growing commercial deposit relationships and partly as a by-product of our growth in commercial lending. The deposit growth was supplemented by the use of Federal Home Loan Bank advances and the reduction in low-yielding investable funds to fund the loan growth discussed above. The primary component of growth in shareholders' equity for the six months ended June 30, 2000 was net income. The increase was partially offset by cash dividends declared and additional repurchases of common stock. 11 AVERAGE BALANCES, INTEREST RATES AND YIELDS This table presents the amount of interest income from average interest-earning assets and the yields earned on those assets, as well as the interest expense on average interest-bearing liabilities and the rates paid on those liabilities. All average balances are daily average balances.

(1) Calculated net of deferred loan fees, loan discounts, loans in process, and loan reserves. (2) Tax exempt interest on loans and securities has been converted to a fully - taxable equivalent basis. 12 RATE/VOLUME ANALYSIS This table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). Changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. Six Months Ended June 30 2000 vs. 1999 ------------------------------- Increase (Decrease) Due to ------------------ Total Volume Rate Increase (Decrease) ------------------------------- (Dollars in Thousands) Interest-earning assets: Loans receivable $ 4,929 $ 116 $ 5,045 Securities - Taxable 98 116 214 Other interest-earning assets (675) 373 (302) ------- ------- ------- Total interest-earning assets $ 4,352 $ 605 $ 4,957 ======= ======= ======= Interest-bearing liabilities: Demand and NOW deposits $ 196 $ 592 $ 788 Savings deposits (58) 8 (50) Certificate accounts 848 657 1,505 Borrowings 1,969 240 2,209 Other interest-bearing liabilities 257 -- 257 ------- ------- ------- Total interest-bearing liabilities $ 3,212 $ 1,497 $ 4,709 ======= ======= ======= Net interest income $ 1,140 $ (892) $ 248 ======= ======= ======= RESULTS OF OPERATIONS Net income for the quarter ended June 30, 2000 was $2.33 million or $.35 per diluted common share compared to net income of $2.26 million or $.32 per diluted common share for the same period in 1999. Net income for the six months ended June 30, 2000 was $4.50 million or $.67 per diluted common share compared to net income of $4.38 million or $.63 per diluted common share for the same period in 1999. The improvement in earnings over the same periods in the prior year was due to a combination of growth in net interest income in the first quarter and noninterrest expense reductions during both the first and second quarters. In addition to the increase in net income, earnings per share was enhanced through our continued stock repurchase activity. All per share information has been retroactively adjusted to reflect the 10% stock dividend paid on June 30, 2000. To supplement the earnings per share information typically disclosed, we are providing "cash" or "tangible" earnings per share as an alternative measure for evaluating our ability to grow tangible capital. The calculations of cash earnings per share were specifically formulated by us and may not be comparable 13 to similarly titled measures reported by other companies. This measure is not intended to reflect cash flow per share. The cash or tangible EPS for the second quarter and first six months of 2000 were $.42 and $.81 compared to a cash EPS of $.40 and $.79 for the same periods in the prior year. This measure and the factors influencing its calculation are described more fully in our 1999 Annual Report to Shareholders. Net interest income increased $248,000 on a tax equivalent basis for the six months ended June 30, 2000 compared to the same period in 1999. The increase in net interest income was attributable to the positive impact of interest-earning asset volume increases caused by internal growth experienced during the first six months of 2000. The improvement in interest income resulting from the increase in the volume of interest-earning assets was partially offset by the increase in both the volume and cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities resulted from the rise in general market interest rates, as well as an increase in FHLB advances as a percent of total interest-bearing liabilities during the first six months of 2000 compared to the same period in the prior year. While there was a 46 basis point rise in the cost of interest-bearing liabilities, there was only a 8 basis point rise in the yield on interest-earning assets. The limited improvement in yield on interest-earning assets was due to the increased demand for adjustable-rate mortgage loans during the first six months of 2000. This lower-yielding portfolio offset the improvement in yield that resulted from the growth in the commercial loan portfolio. Due to the increase in the cost of interest-bearing liabilities and the limited increase in yield on interest-earning assets, we saw a reduction in our net interest rate spread and net interest margin during the first six months of 2000 compared to the same period in the prior year. The provision for loan losses is a result of management's periodic analysis of the adequacy of the allowance for loan losses. Although actual losses on loans have not increased compared to the first six months of the prior year, the provision of $675,000 for the six months ended June 30, 2000 compared to $555,000 for the same period in the prior year was in response to the growth achieved in the commercial loan portfolio, which generally involves a greater degree of credit risk than one-to-four family mortgage lending. The allowance is maintained by management at a level considered adequate to cover possible loan losses that are currently anticipated based on past loss experience, information about specific borrower situations, including their financial position and collateral values, and other factors and estimates, which are subject to change over time. Although the level of non-performing assets is considered in establishing the allowance for loan losses balance, variations in non-performing loans have not been meaningful based upon our past loss experience and, as such, have not had a significant impact on the overall level of the allowance for loan losses. Delinquent loans more than 90 days are put on non-accrual status unless they are adequately collateralized and in the process of collection (see discussion on Non-Performing Assets and Allowance for Loan Losses below). Noninterest income decreased to $3.22 million for the six months ended June 30, 2000 from $3.47 million for the same period in 1999. The decrease related primarily to lower gains on sales of mortgage loans which fell by $546,000 compared to the first six months of 1999. The rising interest rate environment caused a shift in the mix of our mortgage loan originations from fixed-rate to adjustable-rate loans. Since we retain adjustable-rate mortgage loans for our portfolio, our loan sale volume decreased. Noninterest income, other than income from mortgage loan sales, grew during the second quarter and the first six months of 2000 compared to the same periods of the prior year. This growth was due primarily to the increase in fees on sales of mutual funds and annuities. Noninterest expense decreased for the quarter and the six months ended June 30, 2000 compared to the same periods in the prior year. Compensation and benefits expense was relatively stable for the periods presented. Improvements in ESOP expense and pension income were offset by increases in salary expense. Due to favorable market conditions, the performance of the pension assets was strong and exceeded the expenses associated with the plan thereby resulting in net pension income. Due to a reduction in premiums within the industry, our FDIC deposit insurance expense decreased during the second quarter and the first six months of 2000 compared to the same periods in the prior year. In addition, tax savings strategies implemented in the first quarter of the year resulted in a decrease in our state single business tax expense. Our efficiency ratio, defined generally as noninterest expense divided by the sum of net interest income and noninterest income, decreased from 59.08% for the six months ended June 30, 1999 to 57.75% for the same period in 2000. This improvement in our efficiency ratio is a result of these favorable reductions in noninterest expenses. 14 NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES Non-performing assets increased to $3.59 million at June 30, 2000 from $2.10 million at December 31, 1999. The percentage of non-performing assets to total assets was .33% at June 30, 2000 compared to .21% at December 31, 1999. The Corporation's allowance for loan losses as a percentage of non-performing loans at June 30, 2000 was 168.08% compared to 359.21% at December 31, 1999. The increase in non-performing assets was due primarily to the addition of one loan to non-accruing commercial business loans. Management anticipates based on collateral value that all principal and interest due on this loan will be collected in full. The table below sets forth the amounts and categories of non-performing assets at June 30, 2000 and December 31, 1999. June 30 December 31 2000 1999 ---- ---- (Dollars in Thousands) Non-accruing loans: One to four family $547 $175 Multi-family and commercial real estate - - Construction or development - - Commercial business 2,333 389 Consumer 131 323 --- --- Total 3,011 887 Accruing loans delinquent more than 90 days: One- to four-family - 5 Multi-family and commercial real estate 78 - Construction or development - - Commercial business - 322 Consumer - 98 ---- --- Total 78 425 -- --- Foreclosed assets: One- to four-family 274 536 Consumer 229 250 --- --- Total 503 786 --- --- Total non-performing assets $3,592 $2,098 ===== ===== Total as a percentage of total assets .33 % .21% ==== === LIQUIDITY We anticipate we will have sufficient funds available to meet current loan commitments through sales, calls and maturities of securities, loan payments and payoffs, and the growth of deposits. If necessary, significant sources of liquidity are available from Federal Home Loan Bank advances and unused lines of credit with correspondent banks. At June 30, 2000, we had commitments to make loans of $12.43 million, unused lines of credit of $79.29 million, and construction loans in process of $54.40 million. 15 CAPITAL RESOURCES AmeriBank is subject to capital requirements in accordance with Bank regulations. There has been no significant change in the level of the Bank's regulatory capital relative to the requirements since December 31, 1999. The Bank remains "well capitalized" under the prompt corrective action regulations. YEAR 2000 ISSUE We successfully completed our Y2K readiness plan and experienced no material issues. All systems and functions have been processing well since January 1, 2000. We will continue to monitor all systems throughout the year. 16 Item 3 OTTAWA FINANCIAL CORPORATION QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The balance sheet consists of investments in interest-earning assets, primarily loans and investment securities, which are primarily funded by interest-bearing liabilities, deposits and borrowings. These financial instruments have varying levels of sensitivity to changes in market interest rates, resulting in market risk. Other than loans that are originated and held for sale, all of our financial instruments are for other than trading purposes. We are subject to interest rate risk to the extent that our interest-bearing liabilities with short and intermediate-term maturities reprice more rapidly, or on a different basis, than our interest-earning assets. Senior management and the Board of Directors review AmeriBank's (the Company's operating subsidiary) exposure to interest rate risk on a quarterly basis. We measure interest rate risk by computing estimated changes in net interest income and the net portfolio value of cash flows from assets, liabilities and off-balance sheet items within a range of assumed changes in market interest rates. If estimated changes to net portfolio value and net interest income are not within the limits established by the Board, the Board may direct management to adjust AmeriBank's asset and liability mix to bring interest rate risk within Board approved limits. Net portfolio value represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market risk sensitive instruments in the event of sudden and sustained 1% to 3% increases and decreases in market interest rates. The tables below present the change in AmeriBank's net portfolio value and net interest income at June 30, 2000 and December 31, 1999, based on internal assumptions, that would occur upon an immediate change in interest rates, with no effect given to any steps that management might take to counteract that change. JUNE 30, 2000: Net Portfolio Value Net Interest Income ------------------- ------------------- Change in Interest Rate $ Amount % Change $ Amount % Change (Basis Points) in NPV in NPV in NII in NII --------------------------------------------------------------------------- +300 $31,404 -55 % $20,601 -32 % +200 47,946 -32 24,035 -21 +100 61,265 -13 27,313 -10 0 70,402 --- 30,390 --- -100 78,611 12 33,155 9 -200 83,112 18 35,122 16 -300 89,564 27 36,942 22 DECEMBER 31, 1999: Net Portfolio Value Net Interest Income ------------------- ------------------- Change in Interest Rate $ Amount % Change $ Amount % Change (Basis Points) in NPV in NPV in NII in NII --------------------------------------------------------------------------- +300 $ 50,356 -39 % $ 20,235 -31 % +200 60,890 -27 23,412 -20 +100 73,191 -12 26,468 -10 0 83,204 --- 29,299 --- -100 84,197 1 31,910 9 -200 90,050 8 33,703 15 -300 97,142 17 35,349 21 17 As illustrated in the table, net portfolio value is more sensitive to rising rates than declining rates. This occurs principally because, as rates rise, the market value of fixed-rate loans declines due to both the rate increase and slowing prepayments. When rates decline, we do not experience a significant rise in market value for these loans because borrowers prepay at relatively high rates. The value of our deposits and borrowings changes in approximately the same proportion in rising or falling rate scenarios. The results for the 300 basis point interest rate shocks are monitored primarily to assist in identifying trends in our interest rate risk profile. We feel that a sudden and sustained change in interest rates of 300 basis points is not a realistic event. Therefore we focus on managing, to acceptable levels, the change in net portfolio value for the 100 and 200 basis point interest rate shocks both up and down. The table identifies slight increases in our interest rate risk for the first six months of 2000 for rate shocks up to 200 basis points either up or down. The table, however, displays a larger increase in risk for the 300 basis point interest rate shock upward. This increase in risk relates partially to the decrease in the value of our equity at a 0 basis point shock from December 31, 1999 to June 30, 2000. As equity decreases, the percent change in net portfolio value increases for the same dollar amount change in net portfolio value. This dynamic is emphasized at the higher basis point shock levels. Further, the rapid rise in market interest rates during the first six months of 2000 has resulted in larger declines than in the past in the value of our adjustable rate residential mortgage loan portfolio for upward interest rate shocks of over 200 basis points. Most of our adjustable rate mortgage loans contain interest rate adjustment caps of 200 basis points per year. The rapid rise in rates has caused more of these loans to hit their adjustment caps in the computations of their value for the upward interest rate shock of 300 basis points. Finally, the significant growth in our adjustable rate residential mortgage portfolio, given the rate adjustment caps and the rising interest rate environment, has caused an increase in our interest rate risk. To decrease our exposure to interest rate risk, we are trying to reduce the duration and average life of our interest-earning assets. To achieve this goal, we are emphasizing growth in our installment and commercial business loan portfolios. In addition, we are underwriting all long-term, fixed rate and adjustable rate residential mortgages in accordance with Federal Home Loan Mortgage Corporation guidelines which allows us the flexibility of selling these assets into the secondary market. We have been and will continue to sell 30- and 15-year fixed-rate residential mortgage loans as they are originated. In addition, beginning June 1, 2000 we have been selling our adjustable rate residential mortgage loans as they are originated. With our funding sources, we are attempting to reduce the impact of interest rate changes by emphasizing non-interest bearing products and using longer-term fixed-rate certificates of deposit. As with any method of measuring interest rate risk, the above table inherently has shortcomings. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. When there is a change in interest rates, expected rates of prepayments on loans, decay rates of deposits and early withdrawals from certificates could likely differ from those assumed in the table. Finally, the ability of many borrowers to service their debt may decrease in the event of a significant interest rate increase. In addition, the above table may not properly reflect the impact of general interest rate movements on our net interest income because the repricing of certain categories of assets and liabilities are influenced by competitive and other pressures beyond our control. 18 OTTAWA FINANCIAL CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 2000 PART II - OTHER INFORMATION Item 1. Legal Proceedings: See Note 10 of the 1999 Annual Report to Shareholders. Item 2. Changes in Securities: There are no matters required to be reported under this item. Item 3. Defaults Upon Senior Securities: There are no matters required to be reported under this item. Item 4. Submission of Matters to a Vote of Security Holders: On April 25, 2000, Ottawa Financial Corporation held its Annual Meeting of Shareholders ("Meeting"). Shareholders of the Corporation voted on the following matters at the Meeting: Election of Directors Votes For Votes Withheld --------------------- --------- -------------- Gordon H. Cunningham 5,137,646 44,858 B. Patrick Donnelly, III 5,138,918 43,586 Robert D. Kolk 5,159,294 23,210 Ratification of the appointment Votes For Votes Against Abstain of Crowe, Chizek and Company LLP as --------- ------------- ------- independent auditors of the Corporation 5,156,593 11,556 14,355 Item 5. Other Information: There are no matters required to be reported under this item. Item 6. Exhibits and Reports on Form 8-K: (a) The following exhibits are filed herewith: Exhibit 11- Statement - Re: Computation of Per Share Earnings Exhibit 15 - Letter re unaudited interim financial statements Exhibit 27 - Financial Data Schedule (electronic filing only) (b) Reports on Form 8-K. Ottawa filed a Form 8-K dated May 24, 2000 containing a press release announcing a 10% stock dividend and a cash dividend of $0.12 per share payable on June 30, 2000 to shareholders of record on June 14, 2000. 19 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OTTAWA FINANCIAL CORPORATION Date: August 11, 2000 Douglas J. Iverson ---------------- ----------------------------------- Douglas J. Iverson Vice Chairman and Chief Executive Officer (Duly Authorized Officer) Date: August 11, 2000 Jon W. Swets ---------------- ----------------------------------- Jon W. Swets Chief Financial Officer (Principal Financial Officer) 20 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION ------ ----------- 11 Statement - Re: Computation of per share earnings 15 Awareness Letter from Crowe, Chizek & Company LLP 27 Financial Data Schedule (electronic filing only)

OTTAWA FINANCIAL CORP 10-Q