BELOIT, Wis., Feb. 11 /PRNewswire-FirstCall/ -- Blackhawk Bancorp, Inc.
(OTC Bulletin Board: BHWB) today reported earnings for the year ended December
31, 2008 of $2.6 million, an 11% increase compared to $2.3 million for 2007.
Earnings per share increased 14% to a record $1.17 per diluted share compared
to the $1.03 per diluted share earned in 2007. The increase includes a $2.1
million, or 17%, increase in net interest income, reflecting strong loan and
deposit growth for the year.
Earnings for the quarter ended December 31, 2008 were $388,000, or $0.18
per diluted share, compared with $563,000, or $0.26, per diluted share earned
for the same period in 2007. The decrease in earnings for the quarter
includes the effect of a $348,000, or 184% increase in the provision for loan
losses, and a $101,000 increase in net losses on financial instruments that
are accounted for at fair value. Total assets increased to $500.4 million as
of December 31, 2008 compared with $464.7 million at year-end 2007.
The company announced last week that it has received preliminary approval
to receive $10 million in capital under the U.S. Treasury's voluntary Capital
Purchase Program, a part of the Emergency Economic Stabilization Act of 2008,
designed to provide capital to healthy financial institutions to promote
confidence and stabilization in the economy. "We are well capitalized and
profitable," said Rick Bastian, president and CEO. "This investment gives us
the resources to continue to meet the borrowing needs of businesses and
individuals in the Stateline area at a time in the economy when dependable
sources of credit are critical," he added. "We see this as a tremendous vote
of confidence in the common sense approach to banking that Blackhawk has
pursued," said Bastian.
"By sticking with our disciplined and focused approach to business we were
able to achieve record earnings per share for 2008," said Bastian. "However,
the current economic crisis threatens to slow the momentum we've built over
the last several years. Participation in the Capital Purchase Program will
allow us to confidently continue pursuing growth opportunities," he added.
Net Interest Income Rises
Net interest income for the fourth quarter increased 12% to $3.8 million
as compared with $3.4 million in the fourth quarter 2007. The net interest
margin for the quarter increased 15 basis points to 3.39% compared to 3.24% in
the fourth quarter of 2007. For the full year net interest income was up 17%
to $15.0 million, compared to $12.9 million for 2007. During 2008 Blackhawk
grew the earning asset base and improved the margin. Average earning assets
for the year ended December 31, 2008 increased $32.3 million, or 8% over the
prior year, while the net interest margin increased 27 basis points to 3.45%.
Strong loan and deposit growth and higher investment portfolio yields
accounted for the gains in net interest income and the improved net interest
Average total loans for the quarter increased $34.3 million, or 12% to
$323.1 million compared with $288.8 million in fourth quarter 2007. For the
year ended December 31, 2008 average total loans increased $26.5 million, or
9% to $306.4 million compared to the prior year. The majority of the loan
growth was generated through the company's business banking activities,
increasing the average balance of the commercial and commercial real estate
loans for the year by $22.2 million over the average balance for 2007.
Average total deposits for the fourth quarter of 2008 increased 9% to
$372.7 million compared with $341.5 million in the same period a year ago.
This included an additional $24.3 million in interest checking, driven by the
success of Blackhawk's EasyMoney Checking product. For the twelve months,
average total deposits increased 8% to $356.8 million compared with $331.1
million for 2007.
NonInterest Income and Operating Expenses
Quarterly noninterest income decreased 14% to $934,000 compared to
$1,089,000 the prior year. Increases in mortgage banking income, asset
management fees and debit card revenue totaling $118,000 were offset by a
$74,000 decline in deposit service charges and a $101,000 increase in the loss
on financial instruments accounted for at fair value.
For the year noninterest income was up 4% to $5.2 million, compared to
$5.0 million in 2007. For the year, mortgage banking revenue, debit card
income, deposit service charges and asset management fees increased by
$570,000, $220,000, $97,000, and $76,000, respectively, compared to 2007. The
increases in noninterest income were partially offset by a $624,000 increase
in net losses from the sale of securities, and on certain financial
instruments accounted for at fair value, including a $601,000 charge for
"Other Than Temporary Impairment" of mortgage-backed securities.
Total operating expenses for the fourth quarter increased 5% to $3.82
million compared with $3.62 million for the fourth quarter of 2007. For the
year, operating expenses increased 9% to $15.5 million. The increase in the
fourth quarter and annual operating expense is primarily attributable to
increased compensation and data processing expense. The increase in
compensation is partially due to higher mortgage loan production, which is
generated by commission-based employees. It also reflects the increased cost
of and higher participation in the company's health insurance benefit plans.
Higher data processing costs reflect the increases in the number of accounts
and transaction volume being processed.
"Although charge-offs and non-performing loans have bumped up from the
very low levels we enjoyed earlier in 2008, the current level remains very
manageable in this economic environment where many banking organizations are
struggling with much higher numbers," said Bastian.
Credit quality of the loan portfolio remains strong, however,
non-performing loans at December 31, 2008 increased to $4.9 million compared
to $2.4 million at September 30, 2008 and $2.3 million at the end of 2007.
Much of the increase in non-performing loans in the fourth quarter relates to
one lending relationship on which a significant loss is not expected.
However, the number of delinquent borrowers is increasing and management
anticipates an elevated level of non-performing loans and charge-offs in 2009
as the bank begins to experience the effects of the economic recession.
The provision for loan losses in the fourth quarter increased by 184% to
$537,000, compared to $189,000 provision recorded in fourth quarter 2007. For
the year Blackhawk recorded a provision for loan losses of $1,322,000, a 134%
increase over the $566,000 provision recorded in 2007. The increase in the
provision strengthened the ratio of allowance for loan losses to total loans
to .90% compared to .82% at December 31, 2007. Net loan charge-offs in the
fourth quarter increased by $238,000 to $419,000 compared to $181,000 for the
same period in 2007. For the year, net charge-offs increased 71% to $763,000,
an amount equal to 0.23% of total loans, compared with $446,000 for 2007.
The ratio of the allowance for loan losses to non-performing loans has
decreased to 60% compared to 119% at September 30, 2008 and 105% at December
31, 2007. Non-performing loans plus other real estate owned equaled 1.64% of
total assets at the end of the fourth quarter compared with .78% at December
"We expect to continue strengthening loan loss reserves especially if
economic conditions continue to deteriorate," said Bastian. "We believe we've
created a strong credit culture and processes to support it, but the potential
for a prolonged economic downturn has us focused on fortifying our balance
sheet. Applying for capital under the US Treasury's Capital Purchase Program
is just one of the things we're doing to ensure we have the ability to
continue growing and meeting the credit needs of our customers," he added.
Blackhawk continues to seek profitable growth opportunities in its
Wisconsin and Illinois markets, without sacrificing profitability or credit
quality. It emphasizes the value of its personal attention and the service it
provides that remain unmatched by larger competitors.
During the fourth quarter, Blackhawk completed construction of a new full
service facility in a manufacturing and business section of Rockford,
Illinois, convenient to its niche markets of small to medium sized
manufacturing companies and the area's Hispanic immigrant population. In
spite of the soft economy, the Company believes by continuing its commitment
to service and personalized attention it can continue to grow and prosper.
About Blackhawk Bancorp
Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the
parent company of Blackhawk Bank, which operates eight banking centers in
south central Wisconsin and north Central Illinois, along the I-90 corridor
from Belvidere, Ill. to Beloit, Wis. Blackhawk's locations serve individuals
and small businesses, primarily with fewer than 200 employees. The company
offers a variety of value-added consultative services to small businesses and
their employees related to its banking products such as health savings
accounts, investment management, and estate and succession planning. The bank
has received numerous accolades for its work with the fast-growing Hispanic
population in its served markets.
Further information is available on the Company's website at
BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF INCOME
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands, except
per share data) 2008 2007 2008 2007
Interest and Dividend Income $6,957 $7,165 $27,807 $27,664
Interest Expense 3,137 3,754 12,781 14,778
Net Interest and Dividend
Income 3,820 3,411 15,026 12,886
Provision for loan losses 537 189 1,322 566
Non-Interest Income 934 1,089 5,196 4,988
Non-Interest Expense 3,819 3,620 15,484 14,195
Income Before Income Taxes 398 691 3,416 3,113
Income Taxes 10 128 864 822
Net Income $388 $563 $2,552 $2,291
Diluted Earnings Per Share $0.18 $0.26 $1.17 $1.03
Dividends Per Share 0.09 0.09 0.36 0.36
Average Outstanding Shares 2,154,504 2,180,361 2,161,605 2,224,408
Ending Outstanding Shares 2,154,504 2,174,227 2,154,504 2,174,227
Net Interest Margin 3.39% 3.24% 3.45% 3.18%
Efficiency Ratio 78.92% 79.36% 75.45% 78.62%
Return on Assets 0.31% 0.48% 0.53% 0.51%
Return on Equity 6.32% 8.82% 10.39% 9.35%
CONDENSED BALANCE SHEETS
December 31, December 31,
(Dollars in thousands) 2008 2007
Cash and cash equivalents $18,558 $22,793
Interest-bearing deposits in banks 1,080 1,066
Trading securities 19,603 26,520
Securities available-for sale 103,274 92,266
Federal Home Loan Bank Stock, at
cost 4,085 4,085
Loans, net of allowances for loan
losses 326,358 292,529
Office buildings and equipment, net 9,042 7,424
Intangible assets, net 6,739 6,636
Cash surrender value of bank-owned
life insurance 7,915 7,286
Other assets 3,787 4,068
Total Assets $500,441 $464,673
Liabilities and Stockholders' Equity:
Deposits $376,995 $331,239
Borrowings 88,370 100,931
Subordinated debentures 5,158 5,158
Other liabilities 3,104 2,852
Total liabilities 473,627 440,180
Stockholders' equity 26,814 24,493
Total liabilities and
stockholders' equity $500,441 $464,673
SOURCE Blackhawk Bancorp, Inc.