Blackhawk Bancorp Announces Fourth Quarter and Annual 2011 Results

BELOIT, Wis., Feb. 15, 2012 /PRNewswire/ -- Blackhawk Bancorp, Inc.  (OTCBB: BHWB) today reported net income of $731,000 for the quarter ended December 31, 2011, an 18% decrease compared to the $886,000 earned in the fourth quarter of 2010.  Earnings per share for the quarter decreased 21% to $0.26 compared to $0.33 per share for the fourth quarter of 2010.  For the year ended December 31, 2011, Blackhawk reported net income of $2.4 million, a 20% decrease compared to $3.03 million earned in 2010.  Earnings per share for the year decreased 26% to $.81 compared to the $1.10 per share earned in 2010. Total assets increased to $559.3 million as of December 31, 2011, compared with $539.9 million at year end 2010.  "The decrease in earnings for both the quarter and full year reflect the economic realities of our market," said Rick Bastian, president & CEO.  "Weak loan demand and intense competition for qualified borrowers has compressed net interest income.  Earnings continue to be negatively impacted by elevated credit losses from businesses and consumers hurt by the tough economy and depressed real estate values."

(Logo:  http://photos.prnewswire.com/prnh/20110728/CG42912LOGO)

The following table summarizes key performance and asset quality measures for the quarter ended December 31, 2011 compared to the previous four quarters.    



Key Performance and Asset Quality Measures

4th Qtr
2011

3rd Qtr
2011

2nd Qtr
2011

1st Qtr
2011

4th Qtr
2010







Diluted Earnings per share

$0.26

$0.21

$0.13

$0.22

$0.33

Return on average assets

.52%

.45%

.32%

.47%

.63%

Return on common equity

6.74%

5.49%

3.50%

6.29%

9.57%

Net interest margin

3.79%

3.71%

3.83%

3.97%

4.12%

Efficiency ratio

67.19%

70.17%

73.19%

71.86%

67.93%

Nonaccrual loans to total loans

3.67%

2.61%

2.31%

1.99%

1.73%

Nonaccrual loans and OREO to total loans

4.11%

3.38%

3.12%

2.73%

2.61%

Allowance for loan losses to total loans

2.05%

1.78%

1.83%

1.86%

1.82%

Allowance for loan losses to nonaccrual loans

55.9%

68%

79%

94%

105%

Subsidiary bank total risk-based capital

13.90%

13.71%

13.78%

13.57%

13.57%




Net Interest Income

Net interest income for the fourth quarter decreased 7% to $4.85 million compared to $5.23 million in the fourth quarter 2010.  The net interest margin for the quarter decreased to 3.79% compared to 4.12% for the fourth quarter of 2010.   For the full year net interest income was down 3% to $19.1 million, compared to $19.8 million for 2010.  The net interest margin decreased 23 basis points to 3.82% for the year ended December 31, 2011 compared to 4.05% the year before.  Average total loans for 2011 increased by $5.7 million, or 2%, to $334.8 million compared to $329.1 in 2010.  Average total deposits for 2011 grew by $20.2 million, or 4%, to $475.6 million compared to $455.4 in 2010.  The deposit growth in excess of loan growth was used to purchase additional short-term investments and further reduce borrowing.    

Non-Interest Income and Operating Expenses

Noninterest income for the fourth quarter totaled $2.1 million, a 25% decrease compared to the $2.8 million generated in the fourth quarter of 2010.  For the year, non-interest income decreased 7% to $7.9 million compared to $8.4 million in 2010.  The $0.5 million decrease in non-interest income for the year reflects a $1.2 million decrease in mortgage banking revenue, which was partially offset by increases in deposit service fees and debit card interchange income.      

Operating expenses decreased by $0.8 million, or 15%, to $4.8 million in the fourth quarter of 2011 compared to $5.6 million the prior year.  For the year operating expenses were up $0.2 million, less than 1%, to $19.4 million compared to $19.2 million in 2010.  

Provision for Loan Losses and Credit Quality

The provision for loan losses in the fourth quarter increased by 44% to $1.6 million compared to $1.1 million in fourth quarter 2010.  For the year, Blackhawk recorded a provision for loan losses of $4.8 million, a 6% increase over the $4.5 million provision recorded in 2010.  Loans charged off in 2011, net of recoveries, equaled $4.0 million compared to $3.9 million in 2010.  The ratio of allowance for loan losses to total loans was 2.05% at December 31, 2011 compared to 1.82% at December 31, 2010.  

The following table summarizes the activity in the allowance for loan losses for 2011 and 2010.


Activity in Allowance for Loan Losses

2011

2010






Beginning allowance for loan losses

$     6,142,000

$     5,471,000


Provision for loan losses

4,803,000

4,544,000


Charge-offs

(4,407,000)

(4,116,000)


Recoveries

405,000

243,000


Ending allowance for loan losses

$     6,943,000

$     6,142,000



Net charge-offs to average total loans

1.20%

1.18%





Nonperforming assets equaled $13.9 million, or 4.11% of total loans, at December 31, 2011, compared to $11.4 million, or 3.38% of total loans, at September 30, 2011, and $8.8 million, or 2.61% of total loans, at December 31, 2010.  As of December 31, 2011, the ratio of the allowance for loan losses to nonperforming loans equals 56%, compared to 68% as of September 30, 2011 and 105% at December 31, 2010.  

Outlook

Blackhawk has created a strong credit culture and the processes to support it, but the potential for continuing economic weakness presents a heightened level of risk.  For that reason the company expects to continue fortifying its balance sheet by conserving capital, strengthening the allowance for loan losses and maintaining ample liquidity to meet the demands of its customer base.  The company will however continue to seek profitable growth opportunities in its Wisconsin and Illinois markets, without sacrificing profitability or credit quality. Blackhawk emphasizes the value of its personal attention and the service it provides that remain unmatched by larger competitors.  

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, Illinois, to Beloit, Wisconsin.  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 and investment management.

Forward-Looking Statements

When used in this communication, the words "believes," "expects," and similar expressions are intended to identify forward-looking statements. The company's actual results may differ materially from those described in the forward-looking statements. Factors which could cause such a variance to occur include, but are not limited to: heightened competition; adverse state and federal regulation; failure to obtain new or retain existing customers; ability to attract and retain key executives and personnel; changes in interest rates; unanticipated changes in industry trends; unanticipated changes in credit quality and risk factors, including general economic conditions; success in gaining regulatory approvals when required; changes in the Federal Reserve Board monetary policies; unexpected outcomes of new and existing litigation in which Blackhawk or its subsidiaries, officers, directors or employees is named defendants; technological changes; changes in accounting principles generally accepted in the United States; changes in assumptions or conditions affecting the application of "critical accounting policies"; and the inability of third party vendors to perform critical services for the company or its customers.

Further information is available on the Company's website at www.blackhawkbank.com.



BLACKHAWK BANCORP, INC. AND SUBSIDIARY

CONDENSED STATEMENTS OF INCOME

(Unaudited)


Three Months Ended December 31,


Twelve Months Ended December 31,

(Dollars in thousands, except per share data)

2011


2010


2011


2010









Interest and Dividend Income

$      6,137


$      6,824


$           24,822


$            26,847

Interest Expense

1,292


1,596


5,671


7,050

    Net Interest and Dividend Income

4,845


5,228


19,151


19,797

Provision for loan losses

1,600


1,111


4,803


4,544

Non-Interest Income

2,116


2,827


7,866


8,416

Non-Interest Expense

4,754


5,558


19,354


19,196

    Income Before Income Taxes

607


1,386


2,860


4,473

Income Taxes

(124)


500


434


1,448

    Net Income

$         731


$         886


$             2,426


$              3,025









Key Ratios
















Diluted Earnings Per Common Share

$        0.26


$        0.33


$               0.81


$                1.10

Average Outstanding Common Shares

2,195,752


2,172,795


2,192,692


2,171,596

Ending Outstanding Common Shares

2,195,752


2,172,795


2,195,752


2,172,795

Net Interest Margin

3.79%


4.12%


3.82%


4.05%

Efficiency Ratio

67.19%


67.93%


70.56%


66.83%

Return on Assets

0.52%


0.63%


0.44%


0.56%

Return on Common Equity

6.74%


9.57%


5.52%


8.25%









CONDENSED BALANCE SHEETS

(Unaudited)





December 31,


December 31,

(Dollars in thousands)





2011


2010

Assets:








Cash and cash equivalents





$           45,020


$            31,628

Interest-bearing deposits in banks





1,097


639

Trading securities





2,449


3,559

Securities available-for-sale





142,788


132,858

Loans held for sale





4,140


5,301

Federal Home Loan Bank Stock, at cost





4,085


4,085

Loans, net of allowances for loan losses





326,935


326,833

Office buildings and equipment, net





8,772


9,136

Intangible assets, net





8,102


8,172

Cash surrender value of bank-owned life insurance





8,720


8,440

Other assets





7,179


9,266

    Total Assets





$         559,287


$          539,917

Liabilities and Stockholders' Equity:








Deposits





$         475,627


$          473,865

Borrowings





32,326


17,535

Subordinated debentures





4,958


4,958

Other liabilities





2,376


3,091

    Total liabilities





515,287


499,449

Preferred Stock





10,283


10,183

Common Stockholders' equity





33,717


30,285

Total Stockholders' equity





44,000


40,468

    Total liabilities and stockholders' equity





$         559,287


$          539,917



















BLACKHAWK BANCORP, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2011 AND DECEMBER 31, 2010

(UNAUDITED)



December 31,


December 31,

Assets

2011


2010


(Amounts in thousands, except


share and per share data)

Cash and due from banks

$           13,056


$             7,877

Federal funds sold and securities purchased under agreements to resell

31,964


23,751

         Total cash and cash equivalents

45,020


31,628

Interest-bearing deposits in banks

1,097


639

Trading securities

2,449


3,559

Securities available-for-sale

142,788


132,858

Loans held for sale

4,140


5,301

Federal Home Loan Bank (FHLB) Stock, at cost

4,085


4,085

Loans, less allowance for loan losses of $6,943 and $6,142




   at December 31, 2011 and December 31, 2010, respectively

326,935


326,833

Office buildings and equipment, net

8,772


9,136

Intangible assets, net

8,102


8,172

Cash surrender value of bank-owned life insurance

8,720


8,440

Other assets

7,179


9,266

    Total assets

$         559,287


$         539,917





Liabilities and Stockholders' Equity








Liabilities




  Deposits:




    Noninterest-bearing

$           70,578


$           62,282

    Interest-bearing (including $0 and $4,238 at fair value at




      December 31, 2011 and December 31, 2010, respectively)

405,049


411,583

         Total deposits

475,627


473,865

Short-term borrowings

9,000


-

Other borrowings (including $2,255 and $2,172 at fair value at




 December 31, 2011 and December 31, 2010, respectively)

23,326


17,535

Subordinated debentures (including $834 and $834 at fair value at




 December 31, 2011 and December 31, 2010, respectively)

4,958


4,958

Other liabilities

2,376


3,091

         Total liabilities

515,287


499,449





Stockholders’ equity




 Preferred stock, $0.01 par value, 1,000,000 shares authorized;




  10,500 shares issued as of December 31, 2011 and




   December 31, 2010, respectively

10,283


10,183

 Common stock, $0.01 par value, 10,000,000 shares authorized;




  2,279,004 and 2,258,047 shares issued as of December 31, 2011 and




   December 31, 2010, respectively

23


22

 Surplus

9,446


9,359

 Retained earnings

23,629


21,848

 Treasury stock, 83,252 and 85,252 shares at cost as of December 31, 2011 and




   December 31, 2010, respectively

(914)


(931)

 Accumulated other comprehensive income (loss)

1,533


(13)

    Total stockholders' equity

44,000


40,468

    Total liabilities and stockholders' equity

$         559,287


$         539,917



BLACKHAWK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


Three months ended December 31,


2011


2010


(Amounts in thousands, except


share and per share data)

Interest Income:




    Interest and fees on loans

$ 4,958


$ 5,233

    Interest on trading securities

16


33

    Interest and dividends on securities:




         Taxable

822


1,227

         Tax-exempt

249


246

    Interest on federal funds sold and securities purchased under agreements to resell

89


84

    Interest on interest-bearing deposits in banks

3


1

         Total interest and dividend income

6,137


6,824

Interest Expenses:




    Interest on deposits

1,028


1,284

    Interest on short-term borrowings

1


5

    Interest on long-term borrowings

227


273

    Interest on subordinated debentures

36


34

         Total interest expense

1,292


1,596

         Net interest and dividend income

4,845


5,228

Provision for loan losses

1,600


1,111

         Net interest and dividend income after provision for loan losses  

3,245


4,117





Noninterest Income:




    Service charges on deposits accounts

710


680

    Net gain on sale of loans

1,155


1,749

    Net mortgage servicing income

(133)


(144)

    Debit card interchange fees

419


383

    Net gains (losses) on trading activities

(20)


(88)

    Net gains (losses) on available-for-sale securities

9


242

    Net other gains (losses)

(248)


(223)

    Increase in cash value of bank-owned life insurance

71


82

    Other

153


146

         Total noninterest income

2,116


2,827





Noninterest Expenses:




    Salaries and employee benefits

2,421


2,812

    Occupancy and equipment

578


520

    Data processing

526


511

    FDIC assessment

180


330

    Advertising and marketing

102


98

    Amortization of intangibles

35


62

    Professional fees

200


222

    Office Supplies

97


100

    Telephone

77


72

    Other

538


831

         Total noninterest expenses

4,754


5,558

         Income before income taxes

607


1,386

Income Taxes

(124)


500

         Net income

$    731


$    886





Key Ratios








Basic Earnings Per Common Share

$   0.26


$   0.33

Diluted Earnings Per Common Share

0.26


0.33





Net Interest Margin (FTE)

3.79%


4.12%

Efficiency Ratio (FTE)

67.19%


67.93%

Return on Assets

0.52%


0.63%

Return on Common Equity

6.74%


9.57%



BLACKHAWK BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


Twelve months ended December 31,


2011


2010


(Amounts in thousands, except


share and per share data)

Interest Income:




    Interest and fees on loans

$ 19,591


$ 20,173

    Interest on trading securities

86


340

    Interest and dividends on securities:




         Taxable

3,859


5,145

         Tax-exempt

979


900

    Interest on federal funds sold and securities purchased under agreements to resell

300


284

    Interest on interest-bearing deposits in banks

7


5

         Total interest and dividend income

24,822


26,847

Interest Expenses:




    Interest on deposits

4,603


5,240

    Interest on short-term borrowings

8


20

    Interest on long-term borrowings

923


1,615

    Interest on subordinated debentures

137


175

         Total interest expense

5,671


7,050

         Net interest and dividend income

19,151


19,797

Provision for loan losses

4,803


4,544

         Net interest and dividend income after provision for loan losses  

14,348


15,253





Noninterest Income:




    Service charges on deposits accounts

2,811


2,633

    Net gain on sale of loans

2,733


4,073

    Net mortgage servicing income

(135)


(240)

    Debit card interchange fees

1,688


1,428

    Net gains (losses) on trading activities

(251)


(410)

    Net gains (losses) on available-for-sale securities

396


308

    Net other gains (losses)

(518)


(401)

    Increase in cash value of bank-owned life insurance

280


303

    Other

862


722

         Total noninterest income

7,866


8,416





Noninterest Expenses:




    Salaries and employee benefits

9,722


9,649

    Occupancy and equipment

2,296


2,340

    Data processing

2,216


1,953

    FDIC assessment

825


1,030

    Advertising and marketing

445


445

    Amortization of intangibles

167


249

    Professional fees

852


813

    Office Supplies

377


339

    Telephone

286


288

    Other

2,168


2,090

         Total noninterest expenses

19,354


19,196

         Income before income taxes

2,860


4,473

Income Taxes

434


1,448

         Net income

$   2,426


$   3,025





Key Ratios








Basic Earnings Per Common Share

$     0.81


$     1.10

Diluted Earnings Per Common Share

0.81


1.10





Net Interest Margin (FTE)

3.82%


4.05%

Efficiency Ratio (FTE)

70.56%


66.83%

Return on Assets

0.44%


0.56%

Return on Common Equity

5.52%


8.25%



BLACKHAWK BANCORP, INC. AND SUBSIDIARIES

     AVERAGE BALANCE SHEET WITH RESULTANT INTEREST AND RATES









     Average Balance Sheet with Resultant Interest and Rates






(Amounts in thousands)








(yields on a tax-equivalent basis)

Three months ended December 31, 2011


Three months ended December 31, 2010


Average


Average


Average


Average


Balance

Interest

Rate


Balance

Interest

Rate

Interest Earning Assets:








 Interest-bearing deposits in banks

$     6,642

$        3

0.18%


$        942

$        1

0.51%

 Federal funds sold & securities








   purchased under agreements to








   resell

27,499

89

1.28%


18,790

84

1.78%

 Investment securities:








      Taxable investment securities

117,567

838

2.83%


129,875

1,260

3.85%

      Tax-exempt investment securities

28,015

249

5.15%


22,427

246

6.60%

           Total Investment securities

145,582

1,087

3.28%


152,302

1,506

4.25%

 Loans

339,189

4,958

5.80%


343,087

5,233

6.05%









Total Earning Assets

$ 518,912

$ 6,137

4.78%


$ 515,121

$ 6,824

5.35%

 Allowance for loan losses

(6,591)




(6,273)



 Cash and due from banks

10,657




20,433



 Other Assets

34,502




34,921











Total Assets

$ 557,480




$ 564,202











Interest Bearing Liabilities:








 Interest bearing checking accounts

$ 138,972

$    403

1.15%


$ 136,649

$    414

1.20%

 Savings and money market deposits

139,942

125

0.36%


156,232

198

0.50%

 Time deposits

119,223

500

1.66%


132,725

672

2.01%

      Total interest bearing deposits

398,137

1,028

1.02%


425,606

1,284

1.20%

 Short-term borrowings

1,135

1

0.34%


3,595

5

0.56%

 Subordinated debentures

4,958

36

2.90%


4,958

34

2.72%

 Long-term borrowings

30,458

227

2.96%


20,999

273

5.15%









Total Interest-Bearing Liabilities

$ 434,688

$ 1,292

1.18%


$ 455,158

$ 1,596

1.39%









Interest Rate Spread



3.60%




3.96%









Noninterest checking accounts

71,474




64,289



 Other liabilities

6,927




4,694



 Total liabilities

513,089




524,141



 Preferred Stock

10,273




10,172



 Common Stockholders' equity

34,118




29,889



Total Stockholders' equity

44,391




40,061



Total Liabilities and








 Stockholders' Equity

$ 557,480




$ 564,202











Net Interest Income/Margin


$ 4,845

3.79%



$ 5,228

4.12%











BLACKHAWK BANCORP, INC. AND SUBSIDIARIES

     AVERAGE BALANCE SHEET WITH RESULTANT INTEREST AND RATES









     Average Balance Sheet with Resultant Interest and Rates






(Amounts in thousands)








(Yields on a tax-equivalent basis)

Twelve months ended December 31, 2011


Twelve months ended December 31, 2010


Average


Average


Average


Average


Balance

Interest

Rate


Balance

Interest

Rate

Interest Earning Assets:








 Interest-bearing deposits in banks

$     2,771

$          7

0.24%


$        947

$          5

0.55%

 Federal funds sold & securities








   purchased under agreements to








   resell

24,787

300

1.21%


18,551

284

1.44%

 Investment securities:








      Taxable investment securities

124,442

3,945

3.17%


129,149

5,485

4.39%

      Tax-exempt investment securities

24,864

979

5.60%


21,341

900

6.52%

           Total Investment securities

149,306

4,924

3.58%


150,490

6,385

4.68%

 Loans

334,807

19,591

5.85%


329,079

20,173

6.16%









Total Earning Assets

$ 511,671

$ 24,822

4.93%


$ 499,067

$ 26,847

5.52%

 Allowance for loan losses

(6,296)




(6,042)



 Cash and due from banks

10,641




13,930



 Other Assets

35,110




32,169











Total Assets

$ 551,126




$ 539,124











Interest Bearing Liabilities:








 Interest bearing checking accounts

$ 134,354

$   1,671

1.24%


$ 143,133

$   1,947

1.41%

 Savings and money market deposits

144,115

516

0.36%


135,446

784

0.61%

 Time deposits

128,079

2,416

1.89%


115,655

2,509

2.23%

      Total interest bearing deposits

406,548

4,603

1.13%


394,234

5,240

1.38%

 Short-term borrowings

1,912

8

0.44%


2,399

20

0.98%

 Subordinated debentures

4,958

137

2.77%


4,958

175

3.80%

 Long-term borrowings

22,109

923

4.18%


33,825

1,615

4.71%









Total Interest-Bearing Liabilities

$ 435,527

$   5,671

1.30%


$ 435,416

$   7,050

1.70%









Interest Rate Spread



3.63%




3.82%









Noninterest checking accounts

69,100




61,226



 Other liabilities

3,452




3,498



 Total liabilities

508,079




500,140



 Preferred Stock

10,234




10,134



 Common Stockholders' equity

32,813




28,850



Total Stockholders' equity

43,047




38,984



Total Liabilities and








 Stockholders' Equity

$ 551,126




$ 539,124











Net Interest Income/Margin


$ 19,151

3.82%



$ 19,797

4.05%



SOURCE Blackhawk Bancorp, Inc.



RELATED LINKS
http://www.blackhawkbank.com

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