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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(mark one)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File Number 000-51367





OTTAWA SAVINGS BANCORP, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|United States                                                  |  | 20-3074627                             
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

925 LaSalle Street

Ottawa, Illinois 61350

(Address of principal executive offices)

(815) 433-2525

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)





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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



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|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈                                                |  | Accelerated Filer         |  |  ̈
|                        |  |                                                  | 
|Non-Accelerated Filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller Reporting Company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date:



|                              |  |                               
|----------------------------- |  | ------------------------------
|Class                         |  | Outstanding as of May 12, 2010
|Common Stock, $0.01 par value |  | 2,121,045                     









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OTTAWA SAVINGS BANCORP, INC.

FORM 10-Q

For the quarterly period ended March 31, 2010

INDEX



|                               |  |                                                                                       |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | --
|                               |  | PageNumber                                                                           
|PART I  FINANCIAL INFORMATION |  |                                                                                      
|                               |  |                                                                                      
|Item 1                         |  | Consolidated Financial Statements (Unaudited)                                         |  | 3 
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15
|Item 3                         |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 21
|Item 4                         |  | Controls and Procedures                                                               |  | 21
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                      
|                               |  |                                                                                      
|Item 1                         |  | Legal Proceedings                                                                     |  | 21
|Item 1A                        |  | Risk Factors                                                                          |  | 21
|Item 2                         |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 22
|Item 3                         |  | Defaults upon Senior Securities                                                       |  | 22
|Item 4                         |  | (Removed and Reserved)                                                                |  | 22
|Item 5                         |  | Other Information                                                                     |  | 22
|Item 6                         |  | Exhibits                                                                              |  | 22
|                               | 
|SIGNATURES                     |  | 23                                                                                   



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OTTAWA SAVINGS BANCORP, INC.

Consolidated Balance Sheets

March 31, 2010 and December 31, 2009

(Unaudited)



|                                                                                                                           |  |               |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                           |  | March 31,2010 |             |   | December 31,2009 |  
|Assets                                                                                                                     |  |               |             |   |                  |   |             |  
|Cash and due from banks                                                                                                    |  | $             | 2,045,712   |   |                  | $ | 1,858,421   |  
|Interest bearing deposits                                                                                                  |  |               | 1,592,980   |   |                  |   | 1,114,371   |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                            |  |               | 3,638,692   |   |                  |   | 2,972,792   |  
|Federal funds sold                                                                                                         |  |               | 8,303,000   |   |                  |   | 3,917,000   |  
|Securities held to maturity (fair value of $73,776 and $723,413 at March 31, 2010 and December 31, 2009, respectively)     |  |               | 73,572      |   |                  |   | 721,101     |  
|Securities available for sale                                                                                              |  |               | 34,907,084  |   |                  |   | 27,118,824  |  
|Non-marketable equity securities                                                                                           |  |               | 2,534,952   |   |                  |   | 2,534,952   |  
|Loans, net of allowance for loan losses of $3,525,859 and $3,514,704 at March 31, 2010 and December 31, 2009,
respectively |  |               | 145,276,824 |   |                  |   | 148,700,290 |  
|Premises and equipment, net                                                                                                |  |               | 7,217,247   |   |                  |   | 7,282,235   |  
|Accrued interest receivable                                                                                                |  |               | 799,432     |   |                  |   | 889,562     |  
|Foreclosed real estate                                                                                                     |  |               | 782,529     |   |                  |   | 832,809     |  
|Deferred tax asset                                                                                                         |  |               | 1,910,781   |   |                  |   | 1,901,837   |  
|Cash value of life insurance                                                                                               |  |               | 1,495,527   |   |                  |   | 1,489,657   |  
|Prepaid FDIC premiums                                                                                                      |  |               | 950,525     |   |                  |   | 1,013,083   |  
|Other assets                                                                                                               |  |               | 1,266,443   |   |                  |   | 1,322,757   |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total assets                                                                                                               |  | $             | 209,156,608 |   |                  | $ | 200,696,899 |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Liabilities and Stockholders Equity                                                                                       |  |               |             |   |                  |   |             |  
|Liabilities                                                                                                                |  |               |             |   |                  |   |             |  
|Deposits:                                                                                                                  |  |               |             |   |                  |   |             |  
|Non-interest bearing                                                                                                       |  | $             | 3,153,321   |   |                  | $ | 3,141,577   |  
|Interest bearing                                                                                                           |  |               | 180,847,089 |   |                  |   | 172,867,675 |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total deposits                                                                                                             |  |               | 184,000,410 |   |                  |   | 176,009,252 |  
|Accrued interest payable                                                                                                   |  |               | 105,190     |   |                  |   | 144,246     |  
|Other liabilities                                                                                                          |  |               | 2,485,275   |   |                  |   | 2,268,085   |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total liabilities                                                                                                          |  |               | 186,590,875 |   |                  |   | 178,421,583 |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Commitments and contingencies                                                                                              |  |               |             |   |                  |   |             |  
|Redeemable common stock held by ESOP plan                                                                                  |  |               | 213,268     |   |                  |   | 227,906     |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Stockholders Equity                                                                                                       |  |               |             |   |                  |   |             |  
|Common stock, $.01 par value, 12,000,000 shares authorized; 2,224,911 shares issued                                        |  |               | 22,249      |   |                  |   | 22,249      |  
|Additional paid-in-capital                                                                                                 |  |               | 8,739,838   |   |                  |   | 8,726,277   |  
|Retained earnings                                                                                                          |  |               | 15,278,822  |   |                  |   | 15,045,706  |  
|Unallocated ESOP shares                                                                                                    |  |               | (496,041    | ) |                  |   | (508,760    | )
|Unearned management recognition plan shares                                                                                |  |               | (241,571    | ) |                  |   | (267,336    | )
|Accumulated other comprehensive income                                                                                     |  |               | 459,423     |   |                  |   | 454,167     |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|                                                                                                                           |  |               | 23,762,720  |   |                  |   | 23,472,303  |  
|                                                                                                                           |  |              
|Less:                                                                                                                      |  |               |             |   |                  |   |             |  
|Treasury shares, at cost, 103,866 shares                                                                                   |  |               | (1,196,987  | ) |                  |   | (1,196,987  | )
|Maximum cash obligation related to ESOP shares                                                                             |  |               | (213,268    | ) |                  |   | (227,906    | )
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total stockholders equity                                                                                                 |  |               | 22,352,465  |   |                  |   | 22,047,410  |  
|                                                                                                                           |  |               |             |   |                  |   |             |  
|Total liabilities and stockholders equity                                                                                 |  | $             | 209,156,608 |   |                  | $ | 200,696,899 |  
|                                                                                                                           |  |               |             |   |                  |   |             |  

See accompanying notes to these unaudited consolidated financial statements.



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OTTAWA SAVINGS BANCORP, INC.

Consolidated Statements of Operations

Three Months Ended March 31, 2010 and 2009

(Unaudited)



|                                                              |  |                             |           |      |   |          
|------------------------------------------------------------- |  | --------------------------- | --------- | ---- | - | ---------
|                                                              |  | Three Months EndedMarch 31,
|                                                              |  | 2010                        |           | 2009
|Interest and dividend income:                                 |  |                             |           |      |   |          
|Interest and fees on loans Securities:                        |  | $                           | 2,185,413 |      | $ | 2,398,294
|Mortgage-backed and related securities                        |  |                             | 249,675   |      |   | 280,493  
|U.S. agency securities                                        |  |                             | 59,807    |      |   | 86,838   
|Interest-bearing deposits                                     |  |                             | 2,515     |      |   | 420      
|                                                              |  |                             |           |      |   |          
|Total interest and dividend income                            |  |                             | 2,497,410 |      |   | 2,766,045
|                                                              |  |                             |           |      |   |          
|Interest expense:                                             |  |                             |           |      |   |          
|Deposits                                                      |  |                             | 940,189   |      |   | 1,305,681
|Other borrowings                                              |  |                             |          |      |   | 5,932    
|                                                              |  |                             |           |      |   |          
|Total interest expense                                        |  |                             | 940,189   |      |   | 1,311,613
|                                                              |  |                             |           |      |   |          
|Net interest income                                           |  |                             | 1,557,221 |      |   | 1,454,432
|Provision for loan losses                                     |  |                             | 247,500   |      |   | 261,993  
|                                                              |  |                             |           |      |   |          
|Net interest income after provision for loan losses           |  |                             | 1,309,721 |      |   | 1,192,439
|                                                              |  |                             |           |      |   |          
|Other income:                                                 |  |                             |           |      |   |          
|Gain on sale of securities                                    |  |                             | 1,562     |      |   |         
|Gain on sale of loans                                         |  |                             | 8,732     |      |   | 56,105   
|Origination of mortgage servicing rights, net of amortization |  |                             | 1,363     |      |   | 18,226   
|Customer service fees                                         |  |                             | 66,663    |      |   | 62,942   
|Income on bank owned life insurance                           |  |                             | 5,869     |      |   | 5,036    
|Other                                                         |  |                             | 12,435    |      |   | 10,949   
|                                                              |  |                             |           |      |   |          
|Total other income                                            |  |                             | 96,624    |      |   | 153,258  
|                                                              |  |                             |           |      |   |          
|Other expenses:                                               |  |                             |           |      |   |          
|Salaries and employee benefits                                |  |                             | 431,721   |      |   | 468,033  
|Directors fees                                                |  |                             | 21,009    |      |   | 21,033   
|Occupancy                                                     |  |                             | 125,618   |      |   | 127,448  
|Deposit insurance premium                                     |  |                             | 72,184    |      |   | 125,702  
|Legal and professional services                               |  |                             | 61,508    |      |   | 47,733   
|Data processing                                               |  |                             | 68,566    |      |   | 68,418   
|Foreclosed real estate                                        |  |                             | 23,522    |      |   | 68,089   
|Loss on sale of foreclosed real estate                        |  |                             | 54,062    |      |   |         
|Loss on sale of repossessed assets                            |  |                             | 193       |      |   | 5,453    
|Other                                                         |  |                             | 114,334   |      |   | 131,154  
|                                                              |  |                             |           |      |   |          
|Total other expenses                                          |  |                             | 972,717   |      |   | 1,063,063
|                                                              |  |                             |           |      |   |          
|Income before income taxes                                    |  |                             | 433,628   |      |   | 282,634  
|Income tax expense                                            |  |                             | 158,190   |      |   | 102,950  
|                                                              |  |                             |           |      |   |          
|Net income                                                    |  | $                           | 275,438   |      | $ | 179,684  
|                                                              |  |                             |           |      |   |          
|Basic earnings per share                                      |  | $                           | 0.13      |      | $ | 0.09     
|                                                              |  |                             |           |      |   |          
|Diluted earnings per share                                    |  | $                           | 0.13      |      | $ | 0.09     
|                                                              |  |                             |           |      |   |          
|Dividends per share                                           |  | $                           | 0.05      |      | $ | 0.05     
|                                                              |  |                             |           |      |   |          

See accompanying notes to these unaudited consolidated
financial statements.



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OTTAWA SAVINGS BANCORP, INC.

Consolidated Statements of Comprehensive Income

Three Months Ended March 31, 2010 and 2009

(Unaudited)



|                                                                                            |  |                             |         |   |      |   |        
|------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | -------
|                                                                                            |  | Three Months EndedMarch 31,
|                                                                                            |  | 2010                        |         |   | 2009
|Comprehensive income:                                                                       |  |                             |         |   |      |   |        
|Net income                                                                                  |  | $                           | 275,438 |   |      | $ | 179,684
|Other comprehensive income, net of tax:                                                     |  |                             |         |   |      |   |        
|Unrealized gain on securities available for sale arising during period, net of income taxes |  |                             | 6,287   |   |      |   | 161,722
|Reclassification adjustment for gains included in net income, net of tax expense            |  |                             | (1,031  | ) |      |   |       
|                                                                                            |  |                             |         |   |      |   |        
|Comprehensive income                                                                        |  | $                           | 280,694 |   |      | $ | 341,406
|                                                                                            |  |                             |         |   |      |   |        

See accompanying notes to these unaudited consolidated
financial statements.



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OTTAWA SAVINGS BANCORP, INC.

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2010 and 2009

(Unaudited)



|                                                                                            |  |      |             |   |      |   |            |  
|------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                                                                            |  | 2010 |             |   | 2009 |  
|Cash Flows from Operating Activities                                                        |  |      |             |   |      |   |            |  
|Net income                                                                                  |  | $    | 275,438     |   |      | $ | 179,684    |  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |      |             |   |      |   |            |  
|Depreciation                                                                                |  |      | 64,988      |   |      |   | 65,255     |  
|Provision for loan losses                                                                   |  |      | 247,500     |   |      |   | 261,993    |  
|Provision for deferred income taxes                                                         |  |      | (11,652     | ) |      |   | 117,456    |  
|Net amortization of premiums and discounts on securities                                    |  |      | 11,512      |   |      |   | 6,963      |  
|Gain on sale of available for sale securities                                               |  |      | (1,562      | ) |      |   |           |  
|Origination of mortgage loans held for sale                                                 |  |      | (724,300    | ) |      |   | (5,098,646 | )
|Proceeds from sale of mortgage loans held for sale                                          |  |      | 733,032     |   |      |   | 4,720,700  |  
|Gain on sale of loans, net                                                                  |  |      | (8,732      | ) |      |   | (56,105    | )
|Origination of mortgage servicing rights, net of amortization                               |  |      | (1,363      | ) |      |   | (18,226    | )
|Loss on sale of foreclosed real estate                                                      |  |      | 54,062      |   |      |   |           |  
|Loss on sale of repossessed assets                                                          |  |      | 193         |   |      |   | 5,453      |  
|ESOP compensation expense                                                                   |  |      | 10,327      |   |      |   | 11,935     |  
|MRP compensation expense                                                                    |  |      | 25,765      |   |      |   | 33,527     |  
|Compensation expense on RRP options granted                                                 |  |      | 15,953      |   |      |   | 8,191      |  
|Increase in cash surrender value of life insurance                                          |  |      | (5,870      | ) |      |   | (5,036     | )
|Change in assets and liabilities:                                                           |  |      |             |   |      |   |            |  
|Decrease in prepaid FDIC insurance premiums                                                 |  |      | 62,558      |   |      |   |           |  
|Decrease in accrued interest receivable                                                     |  |      | 90,130      |   |      |   | 44,953     |  
|Decrease in other assets                                                                    |  |      | 50,177      |   |      |   | 27,756     |  
|Increase in accrued interest payable and other liabilities                                  |  |      | 178,134     |   |      |   | 308,897    |  
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash provided by operating activities                                                   |  |      | 1,066,290   |   |      |   | 614,750    |  
|                                                                                            |  |      |             |   |      |   |            |  
|Cash Flows from Investing Activities                                                        |  |      |             |   |      |   |            |  
|Securities available for sale:                                                              |  |      |             |   |      |   |            |  
|Purchases                                                                                   |  |      | (12,116,677 | ) |      |   |           |  
|Sales, calls, maturities and paydowns                                                       |  |      | 4,348,952   |   |      |   | 2,100,115  |  
|Securities held to maturity:                                                                |  |      |             |   |      |   |            |  
|Sales and paydowns                                                                          |  |      | 625,008     |   |      |   | 25,493     |  
|Net decrease in loans                                                                       |  |      | 3,101,593   |   |      |   | 913,624    |  
|Net increase in federal funds sold                                                          |  |      | (4,386,000  | ) |      |   |           |  
|Proceeds from sale of foreclosed real estate                                                |  |      | 66,163      |   |      |   |           |  
|Proceeds from sale of repossessed assets                                                    |  |      | 11,735      |   |      |   | 20,959     |  
|Purchase of premises and equipment                                                          |  |      |            |   |      |   | (6,742     | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash (used in) provided by investing activities                                         |  |      | (8,349,226  | ) |      |   | 3,053,449  |  
|                                                                                            |  |      |             |   |      |   |            |  
|Cash Flows from Financing Activities                                                        |  |      |             |   |      |   |            |  
|Net increase in deposits                                                                    |  |      | 7,991,158   |   |      |   | 2,300,709  |  
|Principal reduction of Federal Home Loan Bank advances                                      |  |      |            |   |      |   | (6,300,000 | )
|Cash dividends paid                                                                         |  |      | (42,322     | ) |      |   | (41,841    | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net cash provided by (used in) financing activities                                         |  |      | 7,948,836   |   |      |   | (4,041,132 | )
|                                                                                            |  |      |             |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                                        |  |      | 665,900     |   |      |   | (372,933   | )
|Cash and cash equivalents:                                                                  |  |      |             |   |      |   |            |  
|Beginning                                                                                   |  |      | 2,972,792   |   |      |   | 3,096,742  |  
|                                                                                            |  |      |             |   |      |   |            |  
|Ending                                                                                      |  | $    | 3,638,692   |   |      | $ | 2,723,809  |  
|                                                                                            |  |      |             |   |      |   |            |  
|(Continued)                                                                                 |  |      |             |   |      |   |            |  

See accompanying notes to these unaudited consolidated financial statements.



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OTTAWA SAVINGS BANCORP, INC.

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2010 and 2009

(Unaudited)



|                                                                    |  |      |         |   |      |   |          
|------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ---------
|(Continued)                                                         |  |      |         |   |      |   |          
|                                                                    |  | 2010 |         |   | 2009
|Supplemental Disclosures of Cash Flow Information                   |  |      |         |   |      |   |          
|Cash payments for:                                                  |  |      |         |   |      |   |          
|Interest paid to depositors                                         |  | $    | 979,245 |   |      | $ | 1,274,419
|Interest paid on other borrowings                                   |  |      |        |   |      |   | 5,932    
|Income taxes                                                        |  |      | 186,488 |   |      |   | 70,887   
|Supplemental Schedule of Noncash Investing and Financing Activities |  |      |         |   |      |   |          
|Real estate acquired through or in lieu of foreclosure              |  |      | 392,445 |   |      |   | 310,905  
|Other assets acquired in settlement of loans                        |  |      | 4,428   |   |      |   | 21,000   
|Sale of foreclosed real estate through loan origination             |  |      | 322,500 |   |      |   |         
|Liability arising from ESOP put option                              |  |      | (14,638 | ) |      |   | 11,448   

See accompanying
notes to these unaudited consolidated financial statements.



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OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements





NOTE 1  NATURE OF BUSINESS

Ottawa Savings Bancorp, Inc. (the Company) is the federally chartered savings and loan holding company of Ottawa Savings Bank
(the Bank) and was formed upon completion of the Banks reorganization from a mutual to stock form of organization on July 11, 2005.

NOTE 2  BASIS OF PRESENTATION

The consolidated financial statements presented in this quarterly report include the accounts of the Company and the Bank. The
consolidated financial statements of the Company 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 Companys management, all adjustments, consisting of normal recurring adjustments, which the Company considers necessary to fairly state the Companys financial position and the results of
operations and cash flows have been recorded. The interim financial statements should be read in conjunction with the audited financial statements and accompanying notes of the Company for the year ended December 31, 2009. Certain amounts in
the accompanying financial statements and footnotes for 2009 have been reclassified with no effect on net income or stockholders equity to be consistent with the 2010 classifications. The results of the Companys operations for any
interim period are not necessarily indicative of the results of the Companys operations for any other interim period or for a full fiscal year.

NOTE 3  USE OF ESTIMATES

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
amounts reported in the consolidated financial statements. Changes in these estimates and assumptions are considered reasonably possible and may have a material impact on the consolidated financial statements and, thus, actual results could differ
from the amounts reported and disclosed herein.

At March 31, 2010, there were no material changes in the Companys
significant accounting policies or critical accounting estimates from those disclosed in the Form 10-K filed with the Securities and Exchange Commission on March 30, 2010.

NOTE 4  CRITICAL ACCOUNTING POLICIES

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact
on the carrying value of certain assets or on income to be critical accounting policies. We consider the allowance for loan losses to be our critical accounting policy.

Allowance for Loan Losses. The allowance for loan losses is an amount necessary to absorb known or inherent losses that are both
probable and reasonably estimable and is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent
recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience,
the nature and volume of the loan portfolio, adverse situations that may affect each borrowers ability to repay, the estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as
it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is
considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered
by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including
the length of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by either the present value
of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price or the fair value of the collateral if the loan is collateral dependent.



8



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





NOTE 5  EARNINGS PER SHARE

Basic earnings per share is based on net income divided by the weighted average number of shares outstanding during the period, including
allocated and committed-to-be-released Employee Stock Ownership Plan (ESOP) shares and vested Management Recognition Plan (MRP) shares. Diluted earnings per share show the dilutive effect, if any, of additional common shares
issuable under stock options and awards.



|                                                         |  |                             |           |   |      |   |           |  
|-------------------------------------------------------- |  | --------------------------- | --------- | - | ---- | - | --------- | -
|                                                         |  | Three Months endedMarch 31, |          
|                                                         |  | 2010                        |           |   | 2009 |  
|Net income available to common stockholders              |  | $                           | 275,438   |   |      | $ | 179,684   |  
|                                                         |  |                             |           |   |      |   |           |  
|Basic potential common shares:                           |  |                             |           |   |      |   |           |  
|Weighted average shares outstanding                      |  |                             | 2,121,045 |   |      |   | 2,123,017 |  
|Weighted average unallocated ESOP shares                 |  |                             | (50,438   | ) |      |   | (55,526   | )
|Weighted average unvested MRP shares                     |  |                             | (20,939   | ) |      |   | (28,786   | )
|                                                         |  |                             |           |   |      |   |           |  
|Basic weighted average shares outstanding                |  |                             | 2,049,668 |   |      |   | 2,038,705 |  
|Dilutive potential common shares:                        |  |                             |           |   |      |   |           |  
|Weighted average unrecognized compensation on MRP shares |  |                             | 15,457    |   |      |   | 16,955    |  
|Weighted average RRP options outstanding **              |  |                             |          |   |      |   |          |  
|                                                         |  |                             |           |   |      |   |           |  
|Dilutive weighted average shares outstanding             |  |                             | 2,065,125 |   |      |   | 2,055,660 |  
|                                                         |  |                             |           |   |      |   |           |  
|Basic earnings per share                                 |  | $                           | 0.13      |   |      | $ | 0.09      |  
|                                                         |  |                             |           |   |      |   |           |  
|Diluted earnings per share                               |  | $                           | 0.13      |   |      | $ | 0.09      |  
|                                                         |  |                             |           |   |      |   |           |  



|** | The effect of share options was not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------

NOTE 6  EMPLOYEE STOCK OWNERSHIP PLAN

On July 11, 2005, the Company adopted an ESOP for the benefit of substantially all employees. Upon adoption of the ESOP, the ESOP
borrowed $763,140 from the Company and used those funds to acquire 76,314 shares of the Companys stock in the initial public offering at a price of $10.00 per share.

Shares purchased by the ESOP with the loan proceeds are held in a suspense account and are allocated to ESOP participants on a pro rata
basis as principal and interest payments are made by the ESOP to the Company. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Companys discretionary contributions to the ESOP
and earnings on the ESOP assets. Annual principal and interest payments of approximately $77,000 are to be made by the ESOP.

As shares are released from collateral, the Company will report compensation expense equal to the current market price of the shares, and
the shares will become outstanding for earnings-per-share (EPS) computations. Dividends on allocated ESOP shares reduce retained earnings, and dividends on unallocated ESOP shares reduce accrued interest.

A terminated participant or the beneficiary of a deceased participant who received a distribution of employer stock from the ESOP has the
right to require the Company to purchase such shares at their fair market value any time within 60 days of the distribution date. If this right is not exercised, an additional 60 day exercise period is available in the year following the year in
which the distribution is made and begins after a new valuation of the stock has been determined and communicated to the participant or beneficiary. At March 31, 2010, 25,389 shares at a fair value of $8.40 have been classified as mezzanine
capital.



9



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OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





The following table reflects the status of the shares held by the ESOP:



|                                 |  |               |         |   |                  |   |         |  
|-------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                 |  | March 31,2010 |         |   | December 31,2009 |  
|Shares allocated                 |  |               | 26,710  |   |                  |   | 25,438  |  
|Shares withdrawn from the plan   |  |               | (1,321  | ) |                  |   | (1,321  | )
|Unallocated shares               |  |               | 49,604  |   |                  |   | 50,876  |  
|                                 |  |               |         |   |                  |   |         |  
|Total ESOP shares                |  |               | 74,993  |   |                  |   | 74,993  |  
|                                 |  |               |         |   |                  |   |         |  
|Fair value of unallocated shares |  | $             | 416,674 |   |                  | $ | 480,778 |  
|                                 |  |               |         |   |                  |   |         |  

NOTE 7  INVESTMENT SECURITIES

The amortized cost and fair values of securities, with gross unrealized gains and losses, follows:



|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|-------------------------- |  | ------------- | ---------- | -------------------- | - | --------------------- |  | --------- | ------- |  | - | ----------
|                           |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|March 31, 2010:            |  |               |            |                      |   |                       |  |           |         |  |   |           
|Held to Maturity           |  |               |            |                      |   |                       |  |           |         |  |   |           
|Mortgage-backed securities |  | $             | 73,572     |                      | $ | 234                   |  | $         | 30      |  | $ | 73,776    
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|Available for Sale         |  |               |            |                      |   |                       |  |           |         |  |   |           
|U.S. agency securities     |  | $             | 11,200,947 |                      | $ | 42,986                |  | $         | 63,524  |  | $ | 11,180,409
|Mortgage-backed securities |  |               | 23,010,041 |                      |   | 754,817               |  |           | 38,183  |  |   | 23,726,675
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|                           |  | $             | 34,210,988 |                      | $ | 797,803               |  | $         | 101,707 |  | $ | 34,907,084
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|December 31, 2009:         |  |               |            |                      |   |                       |  |           |         |  |   |           
|Held to Maturity           |  |               |            |                      |   |                       |  |           |         |  |   |           
|Mortgage-backed securities |  | $             | 721,101    |                      | $ | 7,132                 |  | $         | 4,820   |  | $ | 723,413   
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|Available for Sale         |  |               |            |                      |   |                       |  |           |         |  |   |           
|U.S. agency securities     |  | $             | 4,506,404  |                      | $ | 65,854                |  | $         |        |  | $ | 4,572,258 
|Mortgage-backed securities |  |               | 21,924,288 |                      |   | 672,800               |  |           | 50,522  |  |   | 22,546,566
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           
|                           |  | $             | 26,430,692 |                      | $ | 738,654               |  | $         | 50,522  |  | $ | 27,118,824
|                           |  |               |            |                      |   |                       |  |           |         |  |   |           

The amortized cost and fair value at March 31,
2010, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalties. Therefore, stated maturities
of mortgage-backed securities are not disclosed.



|                                       |  |                             |        |                               |   |               |  |           |            |  |   |           
|-------------------------------------- |  | --------------------------- | ------ | ----------------------------- | - | ------------- |  | --------- | ---------- |  | - | ----------
|                                       |  | Securities Held to Maturity |        | Securities Available for Sale
|                                       |  | AmortizedCost               |        | FairValue                     |   | AmortizedCost |  | FairValue
|Due within one year                    |  | $                           |       |                               | $ |              |  | $         |           |  | $ |          
|Due after one year through five years  |  |                             |       |                               |   |              |  |           | 7,847,858  |  |   | 7,812,443 
|Due after five years through ten years |  |                             |       |                               |   |              |  |           | 3,353,089  |  |   | 3,367,966 
|Due after ten years                    |  |                             |       |                               |   |              |  |           |           |  |   |          
|Mortgage-backed securities             |  |                             | 73,572 |                               |   | 73,776        |  |           | 23,010,041 |  |   | 23,726,675
|                                       |  |                             |        |                               |   |               |  |           |            |  |   |           
|                                       |  | $                           | 73,572 |                               | $ | 73,776        |  | $         | 34,210,988 |  | $ | 34,907,084
|                                       |  |                             |        |                               |   |               |  |           |            |  |   |           



10



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





The following table reflects securities with gross unrealized losses for less than 12
months and for 12 months or more at March 31, 2010:



|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|----------------------------- |  | ------------------- | ---------- | ----------------- | - | --------- |  | ---------------- | ------- | --------- | - | ---------------- |  | - | ---------- |  | - | -------
|                              |  | Less than 12 Months |            | 12 Months or More |   | Total    
|                              |  | FairValue           |            | UnrealizedLosses  |   | FairValue |  | UnrealizedLosses |         | FairValue |   | UnrealizedLosses
|March 31, 2010:               |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Securities Held to Maturity   |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Mortgage-backed securities    |  | $                   | 48,545     |                   | $ | 30        |  | $                |        |           | $ |                 |  | $ | 48,545     |  | $ | 30     
|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Securities Available for Sale |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|U.S agency securities         |  | $                   | 6,483,976  |                   | $ | 63,524    |  | $                |        |           | $ |                 |  | $ | 6,483,976  |  | $ | 63,524 
|Mortgage-backed securities    |  |                     | 6,429,653  |                   |   | 38,183    |  |                  |        |           |   |                 |  |   | 6,429,653  |  |   | 38,183 
|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|                              |  | $                   | 12,913,629 |                   | $ | 101,707   |  | $                |        |           | $ |                 |  | $ | 12,913,629 |  | $ | 101,707
|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|December 31, 2009:            |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Securities Held to Maturity   |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Mortgage-backed securities    |  | $                   |           |                   | $ |          |  | $                | 359,176 |           | $ | 4,820            |  | $ | 359,176    |  | $ | 4,820  
|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Securities Available for Sale |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        
|Mortgage-backed securities    |  | $                   | 3,554,876  |                   | $ | 50,111    |  | $                | 18,210  |           | $ | 411              |  | $ | 3,573,086  |  | $ | 50,522 
|                              |  |                     |            |                   |   |           |  |                  |         |           |   |                  |  |   |            |  |   |        

Management evaluates securities for
other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less
than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability to retain and whether it is not more likely than not the Company will be required to sell its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuers financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by
bond rating agencies have occurred, and industry analysts reports.

At March 31, 2010, nine securities had
unrealized losses with aggregate depreciation of .78% from the Companys amortized cost basis. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to
sell these securities and it is not more likely than not the Company will be required to sell these securities before recovery of the amortized cost basis, which may be maturity, the Company does not consider these investments to be other than
temporarily impaired at March 31, 2010.

NOTE 8  ASSET QUALITY

The following is a summary of information pertaining to impaired and non-accrual loans:



|                                                                     |  |               |            |                  |   |          
|-------------------------------------------------------------------- |  | ------------- | ---------- | ---------------- | - | ---------
|                                                                     |  | March 31,2010 |            | December 31,2009
|Impaired loans without a valuation allowance                         |  | $             |           |                  | $ | 602,629  
|Impaired loans with a valuation allowance                            |  |               | 10,117,333 |                  |   | 5,540,654
|                                                                     |  |               |            |                  |   |          
|Total impaired loans                                                 |  | $             | 10,117,333 |                  | $ | 6,143,283
|                                                                     |  |               |            |                  |   |          
|Valuation allowance related to impaired loans                        |  | $             | 2,013,275  |                  | $ | 2,005,863
|                                                                     |  |               |            |                  |   |          
|Total non-accrual loans                                              |  | $             | 7,184,125  |                  | $ | 5,901,237
|                                                                     |  |               |            |                  |   |          
|Total loans past due ninety days or more and still accruing interest |  | $             | 341,801    |                  | $ | 248,279  
|                                                                     |  |               |            |                  |   |          



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





Total impaired loans increased approximately $4.0 million due primarily to the addition
to impaired status of 15 loans secured by one-to-four family real estate and 5 loans secured by non-residential real estate. Total non-accrual loans increased approximately $1.3 million due primarily to increased delinquencies of loans secured by
one-to-four family real estate and loans secured by non-residential real estate.

The loan portfolio is reviewed on a regular
basis to determine whether any loans require classification in accordance with applicable regulations. Not all non-performing assets are classified assets.

On the basis of managements review of its assets at March 31, 2010 and December 31, 2009, we classified $5.3 million and
$10.6 million, respectively, of our assets as special mention, $10.7 million and $6.8 million, respectively, of our assets as substandard, and $175,000 and $175,000, respectively, of our assets as doubtful.

Following is a summary of activity in the allowance for loan losses for the three months ended March 31, 2010 and 2009.



|                                           |  |      |           |   |      |   |           |  
|------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                                           |  | 2010 |           |   | 2009 |  
|Balance at beginning of year               |  | $    | 3,514,704 |   |      | $ | 1,604,731 |  
|Provision charged to income                |  |      | 247,500   |   |      |   | 261,993   |  
|Loans charged off                          |  |      | (245,834  | ) |      |   | (794,330  | )
|Recoveries of loans previously charged off |  |      | 9,489     |   |      |   | 302       |  
|                                           |  |      |           |   |      |   |           |  
|Balance at end of period                   |  | $    | 3,525,859 |   |      | $ | 1,072,696 |  
|                                           |  |      |           |   |      |   |           |  

NOTE 9  STOCK COMPENSATION

Total stock-based compensation expense was approximately $42,000 for each of the three months ended March 31, 2010 and 2009. In
accordance with FASB ASC 718, Compensation-Stock Compensation, compensation expense is recognized on a straight-line basis over the grantees vesting period or to the grantees retirement eligibility date, if earlier. For the three
months ended March 31, 2010 and 2009, the Company did not grant additional options or shares under the MRP.

NOTE 10  RECENT
ACCOUNTING DEVELOPMENTS

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic
820); Improving Disclosures about Fair Value Measurements. ASU 2010-06 requires new disclosures on transfers into and out of Level 1 and 2 measurements of the fair value hierarchy and requires separate disclosures about purchases, sales,
issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures relating to the level of disaggregation and inputs and valuation techniques used to measure fair value. It is effective for the first
reporting period (including interim periods) beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchase, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years
beginning after December 15, 2010. The adoption of this accounting guidance did not have a material impact on the Companys consolidated financial statements.

In December 2009, the FASB issued ASU No. 2009-16, Transfers and Servicing (Topic 860)  Accounting for Transfers of
Financial Assets (ASU 2009-16). The amendments in ASU 2009-16 are the result of SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140,originally issued on June 12,
2009.ASU 2009-16 communicates that updates to ASC 860 will require additional information about transfers of financial assets, including securitization transactions, and where entities continue to have exposure to risks relating to
transferred financial assets. The amendments change requirements for derecognizing financial assets, enhance disclosure requirements and eliminate the qualifying special-purpose entity. Furthermore, the term participating
interest is defined to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale. The amendments require transferred assets and liabilities incurred to be recognized and measured at fair
value. The amendments are effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. The adoption of ASU 2009-16 did not have an impact on the Companys consolidated financial position and results of operation.



12



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OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





In August 2009, the FASB issued ASU 2009-05, Fair Value Measurements and Disclosures
(Topic 820)Measuring Liabilities at Fair Value. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure
fair value of such liability using one or more of the techniques prescribed by the update. The Company is currently evaluating the impact that adoption of this accounting guidance will have on the Companys consolidated financial statements.

NOTE 11  FAIR VALUE MEASUREMENT AND DISCLOSURE

The Company has adopted FASB ASC Topic 820, Fair Value Measurements and Disclosures, which clarifies that fair value is an exit
price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and is not adjusted for transaction costs. This guidance also establishes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement inputs) and the
lowest priority to unobservable inputs (Level 3 measurement inputs). The three levels of the fair value hierarchy under FASB ASC Topic 820 are described below:

Basis of Fair Value Measurement:



| |  |  | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar
assets, or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported
by little or no market activity).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Following is a description of valuation methodologies used for assets and
liabilities recorded at fair value:

Securities Available for Sale

Securities classified as available for sale are recorded at fair value on a recurring basis utilizing Level 2 inputs. For these
securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading
levels, trade execution data, market consensus prepayment speeds, credit information and the bonds terms and conditions, among other things.

Foreclosed Assets

Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets. Foreclosed assets are carried at the lower
of cost or fair value. Fair value is based upon independent market prices, appraised values of the collateral or managements estimation of the value of the collateral. When the fair value of the collateral is based on an observable market
price or a current appraised value, the Company records the foreclosed asset as non-recurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value
and there is no observable market price, the Company records the foreclosed asset as non-recurring Level 3.

Impaired Loans

Impaired loans are evaluated and adjusted to fair value at the time the loan is identified as impaired. Impaired loans are carried at the
lower of cost or fair value. Fair value is measured based on the value of the collateral securing these loans. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the
impaired loan as non-recurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the
impaired loan as non-recurring Level 3. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.



13



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





The tables below present the recorded amount of assets measured at fair value on a
recurring basis at March 31, 2010 and December 31, 2009.



|                                              |  |         |   |         |   |            |  |                  |   |  |   |           
|--------------------------------------------- |  | ------- | - | ------- | - | ---------- |  | ---------------- | - |  | - | ----------
|                                              |  | Level 1 |   | Level 2 |   | Level 3    |  | TotalFair 
Value
|March 31, 2010                                |  |         |   |         |   |            |  |                  |   |  |   |           
|U.S. agency securities available for sale     |  | $       |  |         | $ | 11,180,409 |  | $                |  |  | $ | 11,180,409
|Mortgage-backed securities available for sale |  |         |  |         |   | 23,726,675 |  |                  |  |  |   | 23,726,675
|                                              |  |         |   |         |   |            |  |                  |   |  |   |           
|                                              |  | $       |  |         | $ | 34,907,084 |  | $                |  |  | $ | 34,907,084
|                                              |  |         |   |         |   |            |  |                  |   |  |   |           
|                                              |  |         |   |        
|                                              |  | Level 1 |   | Level 2 |   | Level 3    |  | TotalFair 
Value
|December 31, 2009                             |  |         |   |         |   |            |  |                  |   |  |   |           
|U.S. agency securities available for sale     |  | $       |  |         | $ | 4,572,258  |  | $                |  |  | $ | 4,572,258 
|Mortgage-backed securities available for sale |  |         |  |         |   | 22,546,566 |  |                  |  |  |   | 22,546,566
|                                              |  |         |   |         |   |            |  |                  |   |  |   |           
|                                              |  | $       |  |         | $ | 27,118,824 |  | $                |  |  | $ | 27,118,824
|                                              |  |         |   |         |   |            |  |                  |   |  |   |           

The tables below present the recorded amount of assets
measured at fair value on a non-recurring basis at March 31, 2010 and December 31, 2009.



|                    |  |         |   |         |   |           |  |                  |   |  |   |          
|------------------- |  | ------- | - | ------- | - | --------- |  | ---------------- | - |  | - | ---------
|                    |  | Level 1 |   | Level 2 |   | Level 3   |  | TotalFair 
Value
|March 31, 2010      |  |         |   |         |   |           |  |                  |   |  |   |          
|Foreclosed assets   |  | $       |  |         | $ | 796,529   |  | $                |  |  | $ | 796,529  
|Impaired loans, net |  |         |  |         |   | 8,104,058 |  |                  |  |  |   | 8,104,058
|                    |  |         |   |        
|                    |  | Level 1 |   | Level 2 |   | Level 3   |  | TotalFair 
Value
|December 31, 2009   |  |         |   |         |   |           |  |                  |   |  |   |          
|Foreclosed assets   |  | $       |  |         | $ | 854,309   |  | $                |  |  | $ | 854,309  
|Impaired loans, net |  |         |  |         |   | 4,137,420 |  |                  |  |  |   | 4,137,420

The following
information presents estimated fair value of the Companys financial instruments as of March 31, 2010 and December 31, 2009.



|                            |  |                |             |                   |   |                |  |           |             |  |   |            
|--------------------------- |  | -------------- | ----------- | ----------------- | - | -------------- |  | --------- | ----------- |  | - | -----------
|                            |  | March 31, 2010 |             | December 31, 2009
|                            |  | CarryingAmount |             | FairValue         |   | CarryingAmount |  | FairValue
|Financial Assets:           |  |                |             |                   |   |                |  |           |             |  |   |            
|Cash and cash equivalents   |  | $              | 3,638,692   |                   | $ | 3,638,692      |  | $         | 2,972,792   |  | $ | 2,972,792  
|Federal funds sold          |  |                | 8,303,000   |                   |   | 8,303,000      |  |           | 3,917,000   |  |   | 3,917,000  
|Securities                  |  |                | 37,515,608  |                   |   | 37,515,812     |  |           | 30,374,877  |  |   | 30,377,189 
|Accrued interest receivable |  |                | 799,432     |                   |   | 799,432        |  |           | 889,562     |  |   | 889,562    
|Loans                       |  |                | 145,276,824 |                   |   | 151,177,000    |  |           | 148,700,290 |  |   | 154,333,000
|Mortgage servicing rights   |  |                | 166,012     |                   |   | 166,012        |  |           | 164,649     |  |   | 164,649    
|                            |  |                |             |                  
|Financial Liabilities:      |  |                |             |                   |   |                |  |           |             |  |   |            
|Deposits                    |  |                | 184,000,410 |                   |   | 187,233,000    |  |           | 176,009,252 |  |   | 178,964,000
|Accrued interest payable    |  |                | 105,190     |                   |   | 105,190        |  |           | 144,246     |  |   | 144,246    



14



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





The following methods and assumptions were used by the Bank in estimating its fair value
disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amounts reported in the balance sheets
for cash and cash equivalents approximate fair values.

Federal Funds Sold: The carrying amounts reported in the
balance sheets for federal funds sold approximate fair values.

Securities:The Company obtains fair value measurements
of available for sale and held to maturity securities from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading
levels, trade execution data, market consensus prepayment speeds, credit information and the bonds terms and conditions, among other things. The carrying value of non-marketable equity securities approximates fair value.

Loans: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on
carrying amounts. The fair values for other loans (for example, fixed rate commercial real estate and rental property mortgage loans and commercial and industrial loans) are estimated using discounted cash flow analysis, based on market interest
rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. Fair values for impaired loans are
estimated using underlying collateral values, where applicable.

Deposits: The fair values disclosed for demand
deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair
values. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates currently offered on certificates to a schedule of aggregated expected monthly maturities on time
deposits.

Accrued Interest Receivable and Payable: The carrying amounts of accrued interest receivable and payable
approximate fair values.

Mortgage Servicing Rights: The carrying amounts of mortgage servicing rights approximate
their fair values.

Loan Commitments: Commitments to extend credit were evaluated and fair value was estimated using
the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counter-parties. For fixed-rate loan commitments, fair value also considers the difference
between current levels of interest rates and the committed rates. The Bank does not charge fees to enter into these agreements. As of March 31, 2010 and December 31, 2009, the fair value of the commitments is immaterial in nature.

In addition, other assets and liabilities of the Bank that are not defined as financial instruments are not included in the
above disclosures, such as property and equipment. Also, non-financial instruments typically not recognized in financial statements nevertheless may have value but are not included in the above disclosures. These include, among other items, the
estimated earnings power of core deposit accounts, the trained work force, customer goodwill and similar items.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements discussion and analysis of the financial condition and results of operations is intended to assist in understanding the
financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and footnotes appearing in Part I, Item 1 of this
document.



15



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##### Table of Contents

OTTAWA SAVINGS BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

(continued)





FORWARD-LOOKING INFORMATION

Statements contained in this report that are not historical facts may constitute forward-looking statements (within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended), which involve significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable by the use of the words believe, expect, intend, anticipate, estimate, project, plan, or
similar expressions. The Companys ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ from those predicted. The Company undertakes no obligation to update these
forward-looking statements in the future. The Company cautions readers of this report that a number of important factors could cause the Companys actual results subsequent to March 31, 2010, to differ materially from those expressed in
forward-looking statements. Factors that could cause actual results to differ from those predicted and could affect the future prospects of the Company include, but are not limited to, fluctuations in market rates of interest and loan and deposit
pricing, changes in the securities or financial market, a deterioration of general economic conditions either nationally or locally, delays in obtaining the necessary regulatory approvals, our ability to consummate proposed transactions in a timely
manner, legislative or regulatory changes that adversely affect our business, adverse developments or changes in the composition of our loan or investment portfolios, significant increases in competition, changes in real estate values, difficulties
in identifying attractive acquisition opportunities or strategic partners to complement our Companys approach and the products and services the Company offers, the possible dilutive effect of potential acquisitions or expansion, and our
ability to raise new capital as needed and the timing, amount and type of such capital raises. These risks and uncertainties should be considered in evaluating forward-looking statements.

GENERAL

The Bank is a
community and customer oriented savings bank. The Banks business has historically consisted of attracting deposits from the general public and using those funds to originate one-to-four family residential loans, consumer loans and other loans.
The Bank completed its reorganization pursuant to its Plan of Conversion on July 11, 2005, upon which the Bank converted from an Illinois-chartered mutual savings bank to a federally-chartered mutual savings bank, and on that same date,
converted from a federally-chartered mutual savings bank to a federally-chartered stock savings bank, all of the outstanding stock of which was issued to the Company. As part of the reorganization, the Company issued 1,001,210 shares to the public
and 1,223,701 shares to Ottawa Savings Bancorp MHC.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2010 AND DECEMBER 31, 2009

The Companys total assets increased $8.5 million, or 4.22%, to $209.2 million at March 31, 2010, from $200.7
million at December 31, 2009. The increase is the result of an increase in securities available for sale of $7.8 million, an increase in federal funds sold of $4.4 million, an increase in cash and cash equivalents of $666,000, an increase in
deferred tax assets of $9,000, and an increase in the value of bank owned life insurance of $6,000. The increases were offset by a decrease in loans of $3.4 million, a decrease in accrued interest receivable of $90,000, a decrease in premises and
equipment of $65,000 due primarily to depreciation, a decrease in securities held to maturity of $648,000 due primarily to the sale of 28 securities, a decrease in prepaid FDIC insurance premiums of $63,000, a decrease in other assets of $56,000,
and a decrease in foreclosed real estate of $50,000.

Cash and cash equivalents increased $666,000, or 22.40%, to $3.6 million
at March 31, 2010 from $3.0 million at December 31, 2009 primarily as a result of cash provided by investing and operating activities slightly exceeding the cash used in financing activities.

Federal funds sold increased $4.4 million, or 111.97%, to $8.3 million at March 31, 2010 from $3.9 million at December 31, 2009
primarily as a result of funds received from the increase in deposits, decrease in loans and sale of securities, offset by the purchase of securities.



16



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##### Table of Contents

Securities held to maturity decreased $648,000, or 89.80%, to $74,000 at March 31, 2010
from $721,000 at December 31, 2009. The decrease was the result of the sale of 28 securities for $599,000, realized losses on the sales of $22,000 and principal pay-downs of $26,000. Management made the decision to sell 28 of its held to
maturity securities, which in accordance with ASC Topic 320-10-25-14(b), Investments  Debt and Equity Securities, was considered equivalent to holding the securities to maturity as the Company had already collected a substantial portion
(at least 85%) of the principal outstanding at acquisition. The purpose of the sale was to eliminate the safekeeping fees and administrative costs associated with the remnants of the original issues.

Securities available for sale increased $7.8 million, or 28.72%, to $34.9 million at March 31, 2010 from $27.1 million at
December 31, 2009. The increase was primarily the result of $12.1 million in purchases and an $8,000 increase in market values of the available for sale securities, offset by sales, maturities, and principal pay-downs of $4.3 million.

Loans, net of allowances for loan losses, decreased $3.4 million, or 2.30%, to $145.3 million at March 31, 2010, from
$148.7 million at December 31, 2009. The decrease in loans, net of allowances for loan losses, was primarily due to pay-offs and principal reductions of one-to-four family mortgages, construction loans, commercial loans, and personal loans, in
addition to a slight increase in the allowance for loan losses, offset by a slight increase in line of credit advances.

Accrued interest receivable decreased $90,000, or 10.13%, to $799,000 at March 31, 2010, from $890,000 at December 31, 2009.
The decrease was due to an increase in the reserve for uncollected interest on non-accrual loans of $82,000, and a decrease in accrued interest on loans of $18,000, offset by an increase in accrued interest on securities of $10,000.

Other assets comprised primarily of prepaid expenses, deferred director compensation accounts, and auto loan repossessions decreased
$56,000, or 4.26%, to $1.3 million at March 31, 2010, from $1.3 million at December 31, 2009. The decrease is primarily due to a decrease in other charges due on loans of $51,000, a decrease in prepaid dealer reserve on purchased auto
loans of $17,000, a decrease in auto loan repossessions, net of proceeds from sales, totaling $7,000 and a decrease in prepaid expenses of $7,000. The decreases were offset by an increase in the deferred director compensation investment accounts of
$17,000 due to contributions and investment gains, an increase of $5,000 in interest advanced on purchased securities, an increase of $3,000 in funds due from the ESOP trustee, and an increase in mortgage servicing rights of $1,000.

Prepaid FDIC premiums decreased $63,000, or 6.18%, to $950,000 at March 31, 2010, from $1.0 million at December 31, 2009 as a
result of recording the first quarter FDIC premium expense.

Total deposits increased $8.0 million, or 4.54%, to $184.0
million at March 31, 2010, from $176.0 million at December 31, 2009. The increase is due to an increase in certificates of deposit of $6.0 million, primarily in our one year penalty free certificate as a safe haven from continued
volatility in financial markets and historically low interest rates on longer term products. The increase also included increases in interest bearing checking accounts of $501,000, increases in money market accounts of $892,000, increases in
passbook savings accounts of $577,000 and increases in non-interest bearing checking accounts of $12,000.

Accrued interest
payable decreased $39,000, or 27.08%, to $105,000 at March 31, 2010, from $144,000 at December 31, 2009. The decrease is primarily a result of declining interest rates on money market and certificates of deposit accounts.

Other liabilities increased $217,000, or 9.58%, to $2.5 million at March 31, 2010, from $2.3 million at December 31, 2009. The
increase was primarily due to an increase in escrow payable of $160,000, an increase in the accrued SERP payable of $25,000, an increase in exam and accounting fees payable of $22,000, an increase in property taxes payable of $18,000, and an
increase deferred director compensation payable of $7,000. The increases were offset by a decrease in income taxes payable of $17,000.

Equity increased $305,000, or 1.38%, to $22.3 million at March 31, 2010, from $22.0 million at December 31, 2009. The increase
in equity reflects net income for the three months ended March 31, 2010 of approximately $275,000, an increase in other comprehensive income, net of taxes of $5,000, due to increases in the market value of the available for sale securities
portfolio, offset by dividends of $42,000 paid to stockholders. The remaining changes to equity include increases of $52,000 from the allocation and amortization of ESOP shares, MRP shares, and RRP options, and an increase to stockholders
equity of $15,000 to decrease the cash obligation related to redeemable common stock held by the ESOP.

COMPARISON OF RESULTS OF OPERATION
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Net Income. The Company had net income of $275,000 for the three
months ended March 31, 2010, compared to net income of $180,000 for the three months ended March 31, 2009.



17



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##### Table of Contents

Net Interest Income.The following table summarizes interest and dividend income and
interest expense for the three months ended March 31, 2010 and 2009.



|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   
|-------------------------------------- |  | ---------------------------- | ----- | ---- | - | -------- |  | - | -------- | - |  | ------- | --
|                                       |  | Three Months EndedMarch 
31, |      
|                                       |  | 2010                         |       | 2009 |   | $ change |  |   | % change |  
|                                       |  | (Dollars in thousands)       |      
|Interest and dividend income:          |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Interest and fees on loans             |  | $                            | 2,185 |      | $ | 2,398    |  | $ | (213     | ) |  | (8.88   | )%
|Securities:                            |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Mortgage-backed and related securities |  |                              | 250   |      |   | 281      |  |   | (31      | ) |  | (11.03  | ) 
|U.S. agency securities                 |  |                              | 60    |      |   | 87       |  |   | (27      | ) |  | (31.03  | ) 
|Interest-bearing deposits              |  |                              | 2     |      |   |         |  |   | 2        |   |  | 100.00  |   
|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Total interest and dividend income     |  |                              | 2,497 |      |   | 2,766    |  |   | (269     | ) |  | (9.73   | ) 
|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Interest expense:                      |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Deposits                               |  |                              | 940   |      |   | 1,306    |  |   | (366     | ) |  | (28.02  | ) 
|Borrowings                             |  |                              |      |      |   | 6        |  |   | (6       | ) |  | (100.00 | ) 
|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Total interest expense                 |  |                              | 940   |      |   | 1,312    |  |   | (372     | ) |  | (28.35  | ) 
|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   
|Net interest income                    |  | $                            | 1,557 |      | $ | 1,454    |  | $ | 103      |   |  | 7.08    | % 
|                                       |  |                              |       |      |   |          |  |   |          |   |  |         |   

The following table summarizes average balances and average yield or cost of funds for the three
months ended March 31, 2010 and 2009.



|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|------------------------------------------- |  | ---------------------------- | ------- | -------- | ---- | ----------------- |  | ------ | -------------- |  | -------- | ------- | ----------------- | - | ----- |  | ------ | -
|                                            |  | Three Months Ended March 31, |        
|                                            |  | 2010                         |         |          | 2009 |                  
|                                            |  | AVERAGEBALANCE               |         | INTEREST |      | AVERAGEYIELD/COST |  |        | AVERAGEBALANCE |  | INTEREST |         | AVERAGEYIELD/COST |  
|                                            |  | (Dollars in thousands)       |        
|Interest-earning assets                     |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|Securities, net (1)                         |  | $                            | 31,238  |          | $    | 309               |  | 3.96   | %              |  | $        | 29,794  |                   | $ | 367   |  | 4.93   | %
|Loans receivable, net (2)                   |  |                              | 148,430 |          |      | 2,185             |  | 5.89   | %              |  |          | 155,924 |                   |   | 2,398 |  | 6.15   | %
|Non-marketable equity securities            |  |                              | 2,535   |          |      |                  |  | 0.00   | %              |  |          | 2,535   |                   |   |      |  | 0.00   | %
|Other investments                           |  |                              | 9,996   |          |      | 3                 |  | 0.10   | %              |  |          | 2,269   |                   |   | 1     |  | 0.18   | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|Total interest-earning assets               |  |                              | 192,199 |          |      | 2,497             |  | 5.20   | %              |  |          | 190,522 |                   |   | 2,766 |  | 5.81   | %
|Interest-bearing liabilities                |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|Money Market accounts                       |  | $                            | 25,552  |          | $    | 105               |  | 1.64   | %              |  | $        | 11,814  |                   | $ | 62    |  | 2.09   | %
|Passbook accounts                           |  |                              | 11,581  |          |      | 10                |  | 0.34   | %              |  |          | 11,607  |                   |   | 10    |  | 0.34   | %
|Certificates of Deposit accounts            |  |                              | 131,802 |          |      | 816               |  | 2.48   | %              |  |          | 140,796 |                   |   | 1,224 |  | 3.48   | %
|Checking accounts                           |  |                              | 9,815   |          |      | 9                 |  | 0.37   | %              |  |          | 9,564   |                   |   | 10    |  | 0.41   | %
|Advances and borrowed funds                 |  |                              |        |          |      |                  |  | 0.00   | %              |  |          | 3,267   |                   |   | 6     |  | 0.73   | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|Total interest-bearing liabilities          |  |                              | 178,750 |          |      | 940               |  | 2.10   | %              |  |          | 177,048 |                   |   | 1,312 |  | 2.96   | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|NET INTEREST INCOME                         |  |                              |         |          | $    | 1,557             |  |        |                |  |          |         |                   | $ | 1,454 |  |        |  
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|NET INTEREST RATE SPREAD (3)                |  |                              |         |          |      |                   |  | 3.09   | %              |  |          |         |                   |   |       |  | 2.84   | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|NET INTEREST MARGIN (4)                     |  |                              |         |          |      |                   |  | 3.24   | %              |  |          |         |                   |   |       |  | 3.05   | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|RATIO OF AVERAGE INTEREST-EARNING ASSETS TO |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  
|AVERAGE INTEREST-BEARING LIABILITIES        |  |                              |         |          |      |                   |  | 107.52 | %              |  |          |         |                   |   |       |  | 107.61 | %
|                                            |  |                              |         |          |      |                   |  |        |                |  |          |         |                   |   |       |  |        |  



|(1) | Includes unamortized discounts and premiums.
|--- | --------------------------------------------

|(2) | Amount is net of deferred loan origination (costs) fees, undisbursed loan funds, unamortized discounts and allowance for loan losses and includes non-performing loans.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the average cost of interest-bearing liabilities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin represents net interest income divided by average interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------



18



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##### Table of Contents

The following table summarizes the changes in net interest income due to rate and volume for
the three months ended March 31, 2010 and 2009. The column Net is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous
volume and rate changes have been proportionately allocated to rate and volume.



|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|---------------------------------- |  | --------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | --- |  | - | ---- | -
|                                   |  | Three Months Ended March 31,2010 Compared to 2009Increase
(Decrease) Due to |     
|                                   |  | VOLUME                                                                      |      |   | RATE |   |      | NET | 
|                                   |  | (Dollars in Thousands)                                                      |     
|Interest and dividends earned on   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Securities, net                    |  | $                                                                           | 14   |   |      | $ | (72  | )   |  | $ | (58  | )
|Loans receivable, net              |  |                                                                             | (110 | ) |      |   | (103 | )   |  |   | (213 | )
|Non-marketable equity securities   |  |                                                                             |     |   |      |   |     |     |  |   |     |  
|Other investments                  |  |                                                                             | 2    |   |      |   |     |     |  |   | 2    |  
|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Total interest-earning assets      |  | $                                                                           | (94  | ) |      | $ | (175 | )   |  | $ | (269 | )
|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Interest expense on                |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Money Market accounts              |  | $                                                                           | 56   |   |      | $ | (13  | )   |  | $ | 43   |  
|Passbook accounts                  |  |                                                                             |     |   |      |   |     |     |  |   |     |  
|Certificates of Deposit accounts   |  |                                                                             | (56  | ) |      |   | (352 | )   |  |   | (408 | )
|Checking                           |  |                                                                             |     |   |      |   | (1   | )   |  |   | (1   | )
|Advances and borrowed funds        |  |                                                                             |     |   |      |   | (6   | )   |  |   | (6   | )
|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Total interest-bearing liabilities |  |                                                                             |     |   |      |   | (372 | )   |  |   | (372 | )
|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  
|Change in net interest income      |  | $                                                                           | (94  | ) |      | $ | 197  |     |  | $ | 103  |  
|                                   |  |                                                                             |      |   |      |   |      |     |  |   |      |  

Net interest income increased $103,000, or 7.08%, for the three months ended March 31, 2010, compared
to the three months ended March 31, 2009. Interest and dividend income decreased $269,000, or 9.71%, to $2.5 million for the three months ended March 31, 2010, from $2.8 million for the three months ended March 31, 2009 due to a
decrease in the average rate on interest-earning assets to 5.20% from 5.81%, due to a declining interest rate environment, offset by an increase of $1.7 million in average interest-earning assets to $192.1 million from $190.5 million for the three
months ended March 31, 2010 compared to the same period in 2009. Interest expense decreased $372,000, or 28.32%, due to a decrease in the average cost of interest-bearing liabilities to 2.10% from 2.96%, due to a declining interest rate
environment, offset by an increase of $1.7 million in average interest-bearing liabilities for the three months ended March 31, 2010 compared to the same period in 2009.

Provision for Loan Losses.Management recorded a loan loss provision of $248,000 for the three months ended March 31, 2010,
compared to $262,000 for the three months ended March 31, 2009. The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of
historical experience, the nature and volume of the loan portfolio, adverse situations that may affect each borrowers ability to repay, estimated value of any underlying collateral and prevailing economic conditions. Based on its review at
March 31, 2010, management believes that the allowance is maintained at a level that represents its best estimate of inherent losses in the loan portfolio that were both probable and reasonably estimable.

Other Income.The following table summarizes other income for the three months ended March 31, 2010 and 2009.



|                                                              |  |                              |    |      |   |          |  |   |          |   |  |        |   
|------------------------------------------------------------- |  | ---------------------------- | -- | ---- | - | -------- |  | - | -------- | - |  | ------ | --
|                                                              |  | Three months endedMarch 
31, |   
|                                                              |  | 2010                         |    | 2009 |   | $ change |  |   | % change |  
|                                                              |  | (Dollars in thousands)       |   
|Other income:                                                 |  |                              |    |      |   |          |  |   |          |   |  |        |   
|Gain on sale of securities                                    |  | $                            | 2  |      | $ |         |  | $ | 2        |   |  | 100.00 | % 
|Gain on sale of loans                                         |  |                              | 9  |      |   | 56       |  |   | (47      | ) |  | (83.93 | ) 
|Origination of mortgage servicing rights, net of amortization |  |                              | 1  |      |   | 18       |  |   | (17      | ) |  | (94.44 | ) 
|Customer service fees                                         |  |                              | 67 |      |   | 63       |  |   | 4        |   |  | 6.35   |   
|Income on bank owned life insurance                           |  |                              | 6  |      |   | 5        |  |   | 1        |   |  | 20.00  |   
|Other                                                         |  |                              | 12 |      |   | 11       |  |   | 1        |   |  | 9.09   |   
|                                                              |  |                              |    |      |   |          |  |   |          |   |  |        |   
|Total other income                                            |  | $                            | 97 |      | $ | 153      |  | $ | (56      | ) |  | (36.60 | )%
|                                                              |  |                              |    |      |   |          |  |   |          |   |  |        |   



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The decrease in total other income was primarily due to decreased gains on sale of loans and
origination of mortgage servicing rights, net of amortization, due to a decline in the origination of mortgage loans for sale, as a result of a continued decrease in demand for new mortgage loans and a decline in refinancing existing loans to be
sold to Freddie Mac. The decrease was offset by an increase in customer service fees, due to managements decision, effective June 1, 2009, to increase fees the Company charges, and an increase in net gains on sale of securities.

Other Expenses. The following table summarizes other expenses for the three months ended March 31, 2010 and 2009.



|                                       |  |                              |     |      |   |          |  |   |          |   |  |         |   
|-------------------------------------- |  | ---------------------------- | --- | ---- | - | -------- |  | - | -------- | - |  | ------- | --
|                                       |  | Three months endedMarch 
31, |    
|                                       |  | 2010                         |     | 2009 |   | $ change |  |   | % change |  
|                                       |  | (Dollars in thousands)       |    
|Other expenses:                        |  |                              |     |      |   |          |  |   |          |   |  |         |   
|Salaries and employee benefits         |  | $                            | 432 |      | $ | 468      |  | $ | (36      | ) |  | (7.69   | )%
|Directors fees                         |  |                              | 21  |      |   | 21       |  |   |         |   |  |        |   
|Occupancy                              |  |                              | 126 |      |   | 128      |  |   | (2       | ) |  | (1.56   | ) 
|Deposit insurance premium              |  |                              | 72  |      |   | 126      |  |   | (54      | ) |  | (42.86  | ) 
|Legal and professional services        |  |                              | 62  |      |   | 48       |  |   | 14       |   |  | 29.17   |   
|Data processing                        |  |                              | 69  |      |   | 68       |  |   | 1        |   |  | 1.47    |   
|Foreclosed real estate                 |  |                              | 23  |      |   | 68       |  |   | (45      | ) |  | (66.18  | ) 
|Loss on sale of foreclosed real estate |  |                              | 54  |      |   |         |  |   | 54       |   |  | 100.00  |   
|Loss on sale of repossessed assets     |  |                              |    |      |   | 5        |  |   | (5       | ) |  | (100.00 | ) 
|Other                                  |  |                              | 114 |      |   | 131      |  |   | (17      | ) |  | (12.98  | ) 
|                                       |  |                              |     |      |   |          |  |   |          |   |  |         |   
|Total other expenses                   |  | $                            | 973 |      | $ | 1,063    |  | $ | (90      | ) |  | (8.47   | )%
|                                       |  |                              |     |      |   |          |  |   |          |   |  |         |   

The decrease in other expenses was primarily due to a decrease in salaries and employee benefits
of $36,000, as a result of the termination of the defined benefit plan in December 2009, a decrease in expenses on foreclosed real estate of $45,000 due primarily to the absence of a $50,000 property tax payment on one property and a $15,000 repair
expense on another property during the first quarter of 2009, offset by additional property taxes, insurance, and expenses to repair, maintain and sell properties in 2010, and a decrease in deposit insurance premiums of $54,000 due to the absence of
a special assessment accrual, offset by increased assessments imposed by the FDIC. The decreases were offset by an increase in the loss on sale of foreclosed real estate of $54,000 due to a net loss on the sale of seven properties during the first
quarter of 2010 compared to no sales during the same period in 2009.

Income Taxes.The income tax expense was $158,000
for the three months ended March 31, 2010, compared to income tax expense of $103,000 for the same period in 2009. The difference in income taxes for the periods is primarily a result of the differences in pre-tax income for the applicable
periods.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity. Liquidity management for the Bank is measured and monitored on both a short and long-term basis, allowing management to
better understand and react to emerging balance sheet trends. After assessing actual and projected cash flow needs, management seeks to obtain funding at the most economical cost to the Bank. Our primary sources of funds are deposits, amortization,
prepayments and maturities of outstanding loans and mortgage-backed and related securities, and other short term investments, and funds provided from operations. While scheduled payments from amortization of loans and mortgage-backed related
securities and maturing investment securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. We invest
excess funds in short-term interest-earning assets, including federal funds sold, which enable us to meet lending requirements.

At March 31, 2010, the Bank had outstanding commitments to originate $976,000 in loans, unfunded lines of credit of $10.3 million,
unfunded commitments on construction loans of $81,000, and unfunded standby letters of credit of $496,000. In addition, as of March 31, 2010, the total amount of certificates of deposit that were scheduled to mature in the next 12 months was
$76.6 million. The Bank believes that it has adequate resources to fund all of its commitments and that it can adjust the rate on certificates of deposit to retain deposits in changing interest rate environments. If the Bank requires funds beyond
its internal funding capabilities, advances from the Federal Home Loan Bank of Chicago are available as an additional source of funds. As of March 31, 2010, the Bank had $46.9 million of available credit from the Federal Home Loan Bank of
Chicago, based on 20 times the amount of our capital stock in the Federal Home Loan Bank of Chicago. There were no Federal Home Loan Bank advances outstanding at March 31, 2010. In addition, as of March 31, 2010, the Bank had $5.0 million
of available credit from Bankers Bank of Wisconsin to purchase Federal Funds.



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The Company is a separate legal entity from the Bank and must provide for its own liquidity.
In addition to its operating expenses, the Company is responsible for paying any dividends declared to its shareholders and for any repurchased shares of its common stock. The Companys primary source of income is dividends received from the
Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OTS but with prior notice to the OTS, cannot exceed net income for that year to date plus retained
net income (as defined) for the preceding two calendar years. At March 31, 2010, the Company had cash and cash equivalents of $445,000.

Capital. The Bank is required to maintain regulatory capital sufficient to meet Tier 1 leverage, Tier 1 risk-based and total
risk-based capital ratios of at least 4.0%, 4.0% and 8.0%, respectively. The Bank exceeded each of its capital requirements with ratios at March 31, 2010 of 9.46%, 16.16% and 17.46%, respectively, compared to ratios at December 31, 2009 of
9.70%, 15.82% and 17.09%, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted
accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers requests for
funding and take the form of loan commitments and lines of credit.

For the three months ended March 31, 2010, we did not
engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This Item is not applicable as the Company is a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation
of the Companys principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based on this evaluation, the Companys principal
executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information to be included in the Companys periodic SEC reports. It should
be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.

In addition, there have been no changes in the Companys internal control over
financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

Part II  Other Information

ITEM 1 - LEGAL PROCEEDINGS

The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of
business that, in the aggregate, are believed by management to be immaterial to the financial condition and results of operations of the Company.

ITEM 1A - RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part 1, Item
1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2009, which could materially affect our business, financial condition or future results. As of March 31, 2010, the risk factors of the Company have
not changed materially from those reported in the Companys Annual Report on Form 10-K. However, the risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known
to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.



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ITEM 2 - UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 - (REMOVED AND RESERVED)

ITEM 5 - OTHER INFORMATION

Not applicable.

ITEM 6 - EXHIBITS



|            |  |                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                               
|            | 
|3.1         |  | Certificate of Incorporation of Ottawa Savings Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to Companys Registration Statement on Form SB-2, No. 333-123455, filed
on May 3, 2005, as amended)
|            | 
|3.2         |  | Bylaws of Ottawa Savings Bancorp, Inc. (incorporated by reference to Exhibit 3.2 to Companys Registration Statement on Form SB-2, No. 333-123455, filed on May 3, 2005, as
amended)                      
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                        
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                        
|            | 
|32.1        |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                  



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SIGNATURES

Pursuant to the requirements 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 SAVINGS BANCORP, INC.                     
|                   |  | Registrant                                       
|                   |  |                                                  
|                   | 
|Date: May 17, 2010 |  | /s/ Gary L. Ocepek                               
|                   |  | Gary L. Ocepek                                   
|                   |  | President and Chief Executive Officer            
|                   |  | (Principal Executive Officer)                    
|                   | 
|Date: May 17, 2010 |  | /s/ Jon L. Kranov                                
|                   |  | Jon L. Kranov                                    
|                   |  | Senior Vice President and Chief Financial Officer
|                   |  | (Principal Accounting and Financial Officer)     



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