Ottawa Financial (OFCP) 10-Q 2000 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 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 incorporation or organization	(I.R.S. Employer Identification Number)

245 Central Avenue, Holland, Michigan 49423(Address of principal executive offices)
(ZIP Code)

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       

Indiate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class:
Common stock, $.01 par value Outstanding at October 31, 2000 6,724,559 shares outstanding.

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OTTAWA FINANCIAL CORPORATION

FORM 10-Q
Quarter Ended September 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	19
EXHIBIT INDEX	20

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PART 1
Item 1.

OTTAWA FINANCIAL CORPORATION
Consolidated Statements of Financial Condition
(Unaudited)

	September 30, 2000	December 31, 1999
	(Dollars in Thousands)
ASSETS
Cash and due from financial institutions	$16,681	$24,420
Interest-bearing demand deposits in other financial institutions	1,002	2,069
Total cash and cash equivalents	17,683	26,489
Securities available for sale	66,270	81,056
Federal Home Loan Bank stock	12,206	11,782
Loans held for sale	1,186
Loans receivable, net	964,570	856,759
Premises and equipment, net	17,737	16,348
Acquisition intangibles	10,933	11,828
Other assets	12,957	12,906
Total Assets	$1,103,542	$1,017,168
LIABILITIES
Deposits	$732,759	$711,954
Federal Home Loan Bank advances	181,125	216,353
Federal funds purchased	92,825	1,600
Accrued expenses and other liabilities	13,637	9,429
Total Liabilities	1,020,346	939,336
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value;   8,000,000 shares authorized; issued   6,724,105 shares at September 30, 2000,  6,471,617 shares at December 31, 1999	67	65
Additional Paid-in Capital	81,366	77,562
Retained earnings, substantially restricted	3,454	10,454
Accumulated other comprehensive income	(507)	(855)
Employee Stock Ownership Plan (Unallocated Shares)	(1,158)	(1,462)
Management Recognition and Retention Plan (Unearned Shares)	(26)	(215)
Less Cost of Common Stock in   Treasury - 0 shares at   September 30, 2000, 376,828 shares at   December 31, 1999		(7,717)
Total Shareholders' Equity	83,196	77,832
Total Liabilities and Shareholders' Equity	$1,103,542	$1,017,168

See accompanying notes to consolidated financial statements.
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OTTAWA FINANCIAL CORPORATION
Consolidated Statements of Operations
(Unaudited)

	Three Months Ended September 30		Nine Months Ended September 30
	2000	1999	2000	1999
	(Dollars in Thousands, except per share data)
Interest Income
Loans	$19,271	$15,865	$54,856	$46,405
Investment securities and     equity investments	1,074	1,204	3,413	3,325
Other interest and dividend income	276	274	796	1,094
	20,621	17,343	59,065	50,824
Interest Expense
Deposits	8,896	6,920	25,430	21,211
Federal Home Loan Bank advances	3,750	2,518	10,507	7,066
Other	419	74	688	86
	13,065	9,512	36,625	28,363
Net interest income	7,556	7,831	22,440	22,461
Provision for loan losses	360	300	1,035	855
Net interest income after provision   for loan losses	7,196	7,531	21,405	21,606
Noninterest income
Service charges and other fees	1,185	1,183	3,504	3,362
Mortgage servicing fees	57	98	178	302
Gain (loss) on sale of loans	78	(3)	127	592
Gain (loss) on sale of securities				(9)
Fees from sales of mutual funds and annuities	208	270	846	704
Other	57	11	150	78
	1,585	1,559	4,805	5,029
Noninterest expense
Compensation and benefits	2,752	2,742	8,593	8,510
Occupancy	438	426	1,283	1,279
Furniture, fixtures and equipment	255	329	744	985
Advertising	109	75	317	225
FDIC deposit insurance	38	99	110	302
State single business tax	17	143	52	428
Data processing	322	332	961	946
Professional services	257	96	514	323
Acquisition intangibles amortization	298	301	895	903
Other	780	690	2,243	2,006
	5,266	5,233	15,712	15,907
Income before federal   income tax expense	3,515	3,857	10,498	10,728
Federal income tax expense	1,280	1,372	3,765	3,868
Net income	$2,235	$2,485	$6,733	$6,860
Earnings per common share
Basic	$.34	$.38	$1.04	$1.04
Diluted	.33	.36	1.00	.98
Dividends per common share	.12	.11	.35	.3 0

See accompanying notes to consolidated financial statements.4NEXT PAGE





OTTAWA FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
(Unaudited)

	Three Months Ended September 30		Nine Months Ended September 30
	2000	1999	2000	1999
	(Dollars in Thousands)
Net Income	$2,235	$2,485	$6,733	$6,860
Other comprehensive income, net of tax:
Unrealized gains (losses) arising during the     period on securities available for sale	360	(126)	348	(587)
Less: reclassification adjustment for accumulated     (gains) losses included in net income				6
Unrealized gains (losses) on securities     available for sale	360	(126)	348	(581)
Comprehensive income	$2,595	$2,359	$7,081	$6,279

See accompanying notes to consolidated financial statements.

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OTTAWA FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)

	Nine Months Ended September 30
	2000	1999
	(Dollars in Thousands)
Cash flows from operating activities
Net income	$6,733	$6,860
Adjustments to reconcile net income to net cash     from operating activities
Depreciation	946	990
Net amortization of security premiums and discounts	32	281
Amortization of acquisition intangibles	895	903
Provision for loan losses	1,035	855
Loss on limited partnership investments	170	212
ESOP expense	776	887
MRP expense	189	373
Origination of loans for sale	(15,362)	(60,409)
Proceeds from sale of loans originated for sale	14,181	61,629
Gain on sale of loans	(127)	(592)
Loss on sale of securities		9
Changes in:
Other assets	(388)	(1,217)
Other liabilities	4,208	1,154
Net cash from operating activities	13,288	11,935
Cash flows from investing activities
Activity in available-for-sale securities:
Purchases		(36,993)
Maturities, prepayments and calls	15,269	18,429
Sales		1,005
Purchases of FHLB stock	(424)
Purchases of loans	(17,985)	(9,910)
Loan originations net of principal payments on loans	(90,739)	(30,052)
Premises and equipment expenditures, net	(2,335)	(1,505)
Net cash from investing activities	(96,214)	(59,026)

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OTTAWA FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Continued

	Nine Months Ended September 30
	2000	1999
	(Dollars in Thousands)
Cash flows from financing activities
Net increase(decrease) in deposits	20,805	(19,845)
Net increase in Federal funds purchased	91,225	14,000
Proceeds from FHLB advances	149,000	62,000
Repayment of FHLB advances	(184,228)	(30,915)
Proceeds from exercise of stock options	1,200	445
Proceeds from exercise of stock warrants		1,078
Cash paid for exchange of warrants		(92)
Cash dividends paid	(2,267)	(1,988)
Purchase of treasury shares	(1,615)	(3,329)
Net cash from financing activities	74,120	21,354
Net change in cash and cash equivalents	(8,806)	(25,737)
Cash and cash equivalents at beginning of period	26,489	42,225
Cash and cash equivalents at end of period	$17,683	$16,488
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest	$34,629	$28,710
Income taxes	4,000	3,700

See accompanying notes to consolidated financial statements.




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OTTAWA FINANCIAL CORPORATION

Notes to the Consolidated Financial Statements

Quarter Ended September 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 to 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 September 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. The computation of diluted earnings per common share includes 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.

NOTE 2 - PENDING MERGER WITH FIFTH THIRD BANK

       On August 31, 2000, Ottawa Financial Corporation and Fifth Third Bank signed an agreement whereby Fifth Third would acquire Ottawa. The transaction will be accounted for as a purchase. The agreement calls for Ottawa shareholders to receive .54 of a share of Fifth Third common stock for each share of Ottawa common stock, with a minimum value of $22.01 per share. The boards of directors of both companies have approved the agreement, however, the acquisition is contingent upon the adoption of the agreement by Ottawa shareholders and the approval of the transaction by regulatory authorities.

       Fifth Third is a diversified financial services company headquartered in Cincinnati, Ohio. Fifth Third has $44 billion in assets, operates 14 affiliate banks with 639 full-service Banking Centers and 1,400 ATMs in the Midwest, Florida and Arizona. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Midwest Payment Systems, the Bank's data processing subsidiary.

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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 September 30, 2000, and the related consolidated statements of operations and comprehensive income for the quarter and year-to-date periods ended September 30, 2000 and 1999, and the related consolidated statements of cash flows for the year-to-date periods ended September 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
October 16, 2000

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Item 2

OTTAWA FINANCIAL CORPORATION
Management's Discussion and Analysis
of Financial Condition and Results of Operations

Pending Merger

       On August 31, 2000, Ottawa Financial Corporation and Fifth Third Bank signed an agreement whereby Fifth Third would acquire Ottawa. The transaction will be accounted for as a purchase. The agreement calls for Ottawa shareholders to receive .54 of a share of Fifth Third common stock for each share of Ottawa common stock, with a minimum value of $22.01 per share. The boards of directors of both companies have approved the agreement, however, the acquisition is contingent upon the adoption of the agreement by Ottawa shareholders and the approval of the transaction by regulatory authorities.

       Fifth Third is a diversified financial services company headquartered in Cincinnati, Ohio. Fifth Third has $44 billion in assets, operates 14 affiliate banks with 640 full-service Banking Centers and 1,400 ATMs in the Midwest, Florida and Arizona. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors and Midwest Payment Systems, the Bank's data processing subsidiary.

General

       The following discussion compares the financial condition of Ottawa Financial Corporation and its wholly owned subsidiary, AmeriBank at September 30, 2000 and December 31, 1999, and the results of operations for the three and nine months ended September 30, 2000, compared to the same periods 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:

• the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
• the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;

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• inflation, interest rate, market and monetary fluctuations;
• 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;
• the willingness of users to substitute competitors' products and services for our products and services;
• our success in gaining regulatory approval of our products and services, when required;
• the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance);
• the impact of technological changes;
• acquisitions;
• changes in consumer spending and saving habits; and
• our success at managing the risks involved in the foregoing.

Financial Condition

       Total assets increased to $1.10 billion at September 30, 2000 from $1.02 billion at December 31, 1999. This growth was in the loan portfolio and was funded primarily with federal funds purchased, and to a lesser extent through the growth in deposits and the use of low-yielding investable funds.

       Net loans receivable increased to $964.57 million at September 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 $64.18 million during the first nine months of 2000. This growth was accompanied by an increase in our residential mortgage loan portfolio of $35.36 million during the same period. While the fixed-rate portion of the residential mortgage loan portfolio declined, the adjustable-rate portion grew as a result of rising interest rates earlier in the year and loan demand in our market area.

       Deposits increased to $732.76 million at September 30, 2000 from $711.95 million at December 31, 1999. The growth was in certificates of deposit, commercial checking and money market savings accounts. Commercial checking accounts grew by $5.61 million during the first nine months of this year due to our increased emphasis on growing commercial deposit relationships and partly as a by-product of our growth in commercial lending.

       The decrease of $35.23 million in Federal Home Loan Bank advances was due to refinancing the daily adjustable rate portion of such advances into Federal funds purchased upon substantially the same terms but at a slightly reduced interest rate. Additional federal funds of $56.00 million were purchased to supplement the growth in deposits used to fund the loan growth discussed above.

       The primary components of growth in shareholders' equity for the nine months ended September 30, 2000 related to net income, as well as proceeds received from the exercise of stock options. The increases were partially offset by cash dividends declared and additional repurchases of common stock.

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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. Loans receivable are calculated net of deferred loan fees, loan discounts, loans in process, and loan reserves. Tax exempt interest on loans and securities has been converted to a fully - taxable equivalent basis. All average balances are daily average balances.

	Nine Months Ended September 30, 2000			Nine Months Ended September 30, 1999
	Average Outstanding Balance	Interest Earned/ Paid	Yield/ Rate	Average Outstanding Balance	Interest Earned/ Paid	Yield/ Rate
	(Dollars in Thousands)
Interest-Earning Assets:
Loans receivable	$917,346	$54,880	7.98%	$782,177	$46,432	7.92%
Securities	73,580	3,415	6.19	76,531	3,332	5.81
Other interest-earning assets	12,850	796	8.26	21,121	1,094	6.93
Total interest-earning assets	$1,003,776	$59,091	7.84%	$879,829	$50,858	7.71%
Interest-Bearing Liabilities:
Demand and NOW deposits	$215,525	$6,518	4.03%	$204,980	$5,226	3.41%
Savings deposits	47,261	619	1.75	53,731	692	1.72
Certificate accounts	418,338	18,293	5.83	380,45 0	15,293	5.37
FHLB advances	224,564	10,507	6.24	161,810	7,066	5.84
Other interest-bearing liabilities	13,735	688	6.68	2,197	86	5.22
Total interest-bearing liabilities	$919,423	$36,625	5.31%	$803,168	$28,363	4.72%
Net interest income		$22,466			$22,495
Net interest rate spread			2.53%			2.99%
Net earning assets	$84,353			$76,661
Net yield on average     interest-earning assets			2.98%			3.41%
Average interest-earning assets     to average interest-bearing     liabilities	1.09x			1.10x

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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.

	Nine Months Ended September 30 2000 vs. 1999
	Increase (Decrease) Due to
	Volume	Rate	Total Increase (Decrease)
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable	$8,084	$364	$8,448
Securities - Taxable	(117)	200	83
Other interest-earning assets	(596)	298	(298)
Total interest-earning assets	$7,371	$862	$8,233
Interest-bearing liabilities:
Demand and NOW deposits	280	1,012	1,292
Savings deposits	(85)	12	(73)
Certificate accounts	1,594	1,406	3,000
Borrowings	2,906	535	3,441
Other interest-bearing liabilities	572	30	602
Total interest-bearing liabilities	$5,267	$2,995	$8,262
Net interest income	$2,104	$(2,133)	$(29)

Results of Operations

       Net income for the quarter ended September 30, 2000 was $2.24 million or $.33 per diluted common share compared to net income of $2.49 million or $.36 per diluted common share for the same period in 1999. Net income for the nine months ended September 30, 2000 was $6.73 million or $1.00 per diluted common share compared to net income of $6.86 million or $.98 per diluted common share for the same period in 1999. The decrease in the Corporation's net income for the quarter ended September 30, 2000 compared to the same period of the prior year was largely due to the decline in net interest income, expenses relating to the pending merger with Fifth Third Bank as well as the effect of Management's priorities and focus on the proceedings associated with the merger. For the nine months ended September 30, 2000, the decline in net interest income was accompanied by a decrease in gains on sales of loans and offset by a reduction in noninterest expenses compared to the same period of the prior year. All per share information has been retroactively adjusted to reflect the 10% stock dividend paid on June 30, 2000.

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       To supplement the earnings per share information typically disclosed, we provide "cash" or "tangible" earnings per share as an alternative measure for evaluating the Corporation's ability to grow tangible capital. The calculations of cash earnings per share are specifically formulated by us and may not be comparable to similarly titled measures reported by other companies. This measure is not intended to reflect cash flow per share. The "cash" or "tangible" earnings per share for the third quarter of 2000 was $.40, which was $.07 per share higher than the diluted earnings per share, compared to a cash earnings per share of $.44 for the third quarter of 1999. The cash or tangible earnings per share for the nine months ended September 30, 2000 was $1.22, which was $.22 per share higher than the diluted earnings per share, compared to a cash earnings per share of $1.22 for the same period in 1999. This measure and the factors influencing its calculation are described more fully in the 1999 Annual Report to Shareholders.

       Net interest income decreased $29,000 on a tax equivalent basis for the nine months ended September 30, 2000 compared to the same period in 1999. The healthy growth in earning assets, especially in the commercial lending portfolio, was overcome by the effect of the sharp increases in short-term interest rates by the Federal Reserve earlier in the year causing an overall reduction in net interest income compared to the same period in the prior year. 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 and federal funds purchased as a percent of total interest-bearing liabilities during the first nine months of 2000 compared to the same period in the prior year. While there was a 59 basis point rise in the cost of interest-bearing liabilities, there was only a 13 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, and our resulting growth in, adjustable-rate mortgage loans during the first nine months of 2000. Competitive initial rates on adjustable-rate mortgages were low relative to other loan products and the overall yield of our total loan portfolio, and as a result, these lower-yielding originations offset the improvement in yield that resulted from the growth in the commercial loan portfolio. Due 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 nine months of 2000 compared to the same period of 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 for the nine months ended September 30, 2000 are comparable to actual losses for the same period of the prior year, the provision of $1.04 million for the nine months ended September 30, 2000 compared to $855,000 for the same period of 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, general economic conditions, 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 $4.81 million for the nine months ended September 30, 2000 from $5.03 million for the same period in 1999. The decrease related primarily to lower gains on sales of mortgage loans which fell by $465,000 compared to the first nine 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 did not begin selling our adjustable-rate mortgage production until late in the second quarter of 2000, our overall loan sale volume for the nine month period decreased compared to the prior year. Noninterest income, excluding gains on sales of mortgage loans, grew $237,000 during the nine months ended September 30, 2000 compared to the same period of the prior year. This growth was due primarily to increases in fees on sales of mutual funds and annuities, as well as deposit account service fees.

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       Noninterest expense increased to $5.27 million for the quarter ended September 30, 2000 from $5.23 million for the same period of the prior year, while it decreased to $15.71 million for the nine months ended September 30, 2000 from $15.91 million for the same period of the prior year. The increase in noninterest expense for the quarter ended September 30, 2000 compared to the same period of the prior year was largely due to the impact of the $150,000 in legal expenses relating to the pending merger with Fifth Third Bank. The decrease in noninterest expense for the nine months ended September 30, 2000 compared to the same period of the prior year was achieved through the management of furniture, fixtures and equipment expense, state single business tax strategies implemented in the first quarter of the year and a decrease in the FDIC deposit insurance premiums.

Non-Performing Assets and Allowance for Loan Losses

       Non-performing assets increased to $4.03 million at September 30, 2000 from $2.10 million at December 31, 1999 primarily due to an increase in commercial business non-accruing loans. The percentage of non-performing assets to total assets was .37% at September 30, 2000 compared to .21% at December 31, 1999. Our allowance for loan losses as a percentage of non-performing loans at September 30, 2000 was 162.14% compared to 359.21% at December 31, 1999. The increase in commercial business non-accruing loans was primarily due to the addition of one loan to this category. Management anticipates based on collateral value that the principal due on this loan will be collected in full.

       The table below sets forth the amounts and categories of non-performing assets at September 30, 2000 and December 31, 1999.

	September 30 2000	December 31 1999
	(Dollars in Thousands)
Non-accruing loans
One to four family	$445	$175
Multi-family and commercial real estate	78	-
Construction or development	-	-
Commercial business	2,576	389
Consumer	187	323
Total	3,286	887
Accruing loans delinquent more than 90 days:
One- to four-family	121	5
Multi-family and commercial real estate	-	-
Construction or development	-	-
Commercial business	-	322
Consumer	-	98
Total	121	425
Foreclosed assets:
One- to four-family	345	536
Consumer	279	250
Total	624	786
Total non-performing assets	$4,031	$2,098
Total as a percentage of total assets	.37%	.21%

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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 September 30, 2000, we had commitments to make loans of $21.44 million, unused lines of credit of $107.13 million, and construction loans in process of $43.29 million.

Capital Resources

       AmeriBank is subject to capital requirements in accordance with state banking regulations. There has been no significant change in the level of AmeriBank's regulatory capital relative to the requirements since December 31, 1999. AmeriBank 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.

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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.

       Our senior management and 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 September 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.

September 30, 2000:	Net Portfolio Value		Net Interest Income
Change in Interest Rate (Basis Points)	$ Amount in NPV	% Change in NPV	$ Amount in NII	% Change in NII
+300	$ 35,945	-50%	$ 21,874	-28%
+200	48,984	-32	24,888	-18
+100	60,968	-15	27,718	-9
0	71,764	---	30,440	---
-100	81,207	13	32,809	8
-200	87,519	22	34,447	13
-300	95,414	33	35,968	18

December 31, 1999:	Net Portfolio Value		Net Interest Income
Change in Interest Rate (Basis Points)	$ Amount in NPV	% Change in NPV	$ Amount in NII	% Change 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

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       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 nine 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 when comparing December 31, 1999 to September 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 early 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 mortgage loans 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.

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OTTAWA FINANCIAL CORPORATION
FORM 10-Q
Quarter Ended September 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:

              There are no matters required to be reported under this item.

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 - Awareness Letter from Crowe, Chizek & Company LLP

              Exhibit 27 - Financial Data Schedule (electronic filing only)

       (b) Reports on Form 8-K:

       Ottawa filed a Form 8-K dated August 31, 2000 containing an Affiliation Agreement whereby Fifth Third will acquire Ottawa and its subsidiary AmeriBank in a transaction to be accounted for as a purchase.

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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:  November 9, 2000	/s/  Douglas J. Iverson Douglas J. Iverson Vice Chairman and Chief Executive Officer (Duly Authorized Officer)
Date:  November 9, 2000	/s/  Jon W. Swets Jon W. Swets Chief Financial Officer (Principal Financial Officer)

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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)