2014

Blackhawk Bancorp Announces Fourth Quarter and Annual 2012 Results

BELOIT, Wis., Feb. 8, 2013 /PRNewswire/ -- Blackhawk Bancorp, Inc.  (OTCBB: BHWB) today reported net income of $781,000 for the quarter ended December 31, 2012, a 7% increase compared to the $731,000 earned in the fourth quarter of 2011.  For the year ended December 31, 2012 Blackhawk reported net income of $2,912,000, a 20% increase compared to $2,426,000 earned in 2011.  Strong growth in noninterest income, led by mortgage banking revenue, more than offset an increase in the provision for loan losses for the year. 

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Earnings per share for the quarter increased 8% to $0.28 compared to $0.26 per share for the fourth quarter of 2011.  Diluted earnings per share for the year increased 27% to $1.03 compared to the $.81 per share earned in 2011. Total assets increased slightly to $559.8 million as of December 31, 2012 compared with $559.0 million at year end 2011.         

The following table summarizes key performance and asset quality measures for the quarter ended December 31, 2012 compared to the previous four quarters.    

 

Key Performance and Asset Quality Measures

4th Qtr

2012

3rd Qtr

2012

2nd Qtr

2012

1st Qtr

2012

4th Qtr

2011







Diluted Earnings per share

$0.28

$0.25

$0.27

$0.24

$0.26

Return on average assets

.55%

.50%

.53%

.49%

.52%

Return on common equity

6.69%

6.00%

6.82%

6.03%

6.74%

Net interest margin

3.75%

3.72%

3.80%

3.75%

3.79%

Efficiency ratio

72.92%

68.16%

67.37%

69.94%

67.19%

Nonaccrual loans to total loans

3.09%

3.77%

3.01%

4.19%

3.67%

Nonaccrual loans and OREO to total loans

3.57%

4.38%

3.76%

4.41%

4.11%

Allowance for loan losses to total loans

1.77%

1.74%

1.98%

2.13%

2.05%

Allowance for loan losses to nonaccrual loans

57.11%

46.1%

65.8%

50.8%

55.9%

Subsidiary bank total risk-based capital

13.51%

13.62%

13.58%

13.83%

13.90%

 

Net Interest Income

Net interest income for the fourth quarter decreased 1% to $4.76 million compared to $4.84 million in the fourth quarter 2011.  For the full year net interest income was down 1% to $19.0 million, compared to $19.2 million for 2011.  The net interest margin for the quarter decreased to 3.75% compared to 3.79% for the fourth quarter of 2011.   For the year ended December 31, 2012 the net interest margin decreased 6 basis points to 3.76% compared to 3.82% the year before.  Growth in the commercial loan portfolio has helped to mitigate downward pressure on the net interest margin from the prolonged low rate environment.  

Average earning assets for 2012 increased by $9.7 million compared to the year before.  The earning asset growth includes an $18.6 million, or 6%, increase in average loans, which was offset by a reduction of $11.0 million in investment securities and short-term investments.  Average total deposits for 2012 grew by $12.2 million, or 3%, to $487.9 million compared to $475.6 in 2011. 

Non-Interest Income and Operating Expenses

Noninterest income for the fourth quarter totaled $2.7 million, a 25% increase compared to the $2.2 million generated in the fourth quarter of 2011.  For the year, non-interest income increased 38% to $11.1 million compared to $8.1 million in 2011.  The $3.0 million increase in non-interest income for the year reflects a $2.0 million increase in mortgage banking revenue and increases in substantially all other categories of non-interest income.       

Operating expenses increased by $0.8 million, or 16%, to $5.6 million in the fourth quarter of 2012 compared to $4.8 million the prior year.  For the year, operating expenses were up $1.8 million, or 9%, to $21.4 million compared to $19.5 million in 2011.  The increase in expenses was primarily in salary and benefits and other variable expenses tied to increased mortgage banking and other fee generating activities. 

Provision for Loan Losses and Credit Quality

The provision for loan losses in the fourth quarter decreased by 21% to $1.3 million compared to $1.6 million in fourth quarter 2011.  For the year, Blackhawk recorded a provision for loan losses of $5.6 million, a 17% increase over the $4.8 million provision recorded in 2011.  Loans charged off in 2012, net of recoveries, equaled $6.0 million compared to $4.0 million in 2011.   The ratio of allowance for loan losses to total loans was 1.77% at December 31, 2012 compared to 2.05% at December 31, 2011.   

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

Activity in Allowance for Loan Losses

2012

2011




Beginning allowance for loan losses

$     6,943,000

$     6,142,000

Provision for loan losses

5,620,000

4,803,000

Charge-offs

(6,391,000)

(4,407,000)

Recoveries

348,000

405,000

Ending allowance for loan losses

$     6,520,000

$     6,943,000

 

Net charge-offs to average total loans

 

1.71%

 

1.20%

Nonperforming assets equaled $13.2 million, or 3.57% of total loans, at December 31, 2012 compared to $14.1 million, or 4.11% of total loans December 31, 2011.  As of December 31, 2012 the ratio of the allowance for loan losses to nonperforming loans equals 57%, compared to 56% at December 31, 2011.  

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 SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS




DECEMBER 31, 2012 AND DECEMBER 31, 2011




(UNAUDITED)





December 31,


December 31,

Assets

2012


2011


(Amounts in thousands, except


share and per share data)

Cash and due from banks

$            11,579


$            13,056

Federal funds sold and securities purchased under agreements to resell

25,442


31,964

          Total cash and cash equivalents

37,021


45,020

Interest-bearing deposits in banks

1,539


1,097

Trading securities

1,614


2,449

Securities available-for-sale

121,096


142,788

Loans held for sale

2,558


4,140

Federal Home Loan Bank (FHLB) Stock, at cost

2,266


4,085

Loans, less allowance for loan losses of $6,520 and $6,943




    at December 31, 2012 and December 31, 2011, respectively

359,928


326,935

Office buildings and equipment, net 

8,406


8,772

Intangible assets, net

8,274


8,102

Cash surrender value of bank-owned life insurance

9,017


8,720

Other assets 

8,062


6,879

     Total assets

$         559,781


$         558,987





Liabilities and Stockholders' Equity








Liabilities




   Deposits:




     Noninterest-bearing

$            84,311


$            70,578

     Interest-bearing 

409,510


405,049

          Total deposits

493,821


475,627

Short-term borrowings

-


16,000

Other borrowings (including $2,231 and $2,255 at fair value at




  December 31, 2012 and December 31, 2011, respectively)

10,010


16,326

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




  December 31, 2012 and December 31, 2011, respectively)

4,958


4,958

Other liabilities

3,156


2,040

          Total liabilities

511,945


514,951





Stockholders' equity




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




   10,500 shares issued as of December 31, 2012 and 




    December 31, 2011, respectively

10,383


10,283

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




   2,279,004 and 2,279,004 shares issued as of December 31, 2012 and




    December 31, 2011, respectively

23


23

  Surplus

9,619


9,477

  Retained earnings 

25,897


23,629

  Treasury stock, 83,252 and 85,252 shares at cost as of December 31, 2012 and



    December 31, 2011, respectively

(909)


(909)

  Accumulated other comprehensive income (loss)

2,823


1,533

     Total stockholders' equity

47,836


44,036

     Total liabilities and stockholders' equity

$         559,781


$         558,987





 

 

 

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF INCOME





(UNAUDITED)





Three months ended December 31,


2012


2011



(Amounts in thousands, except



share and per share data)


Interest Income:





     Interest and fees on loans

$  4,964


$  4,958


     Interest on trading securities

15


16


     Interest and dividends on securities:





          Taxable

424


822


          Tax-exempt

291


249


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

52


89


     Interest on interest-bearing deposits in banks

2


3


          Total interest and dividend income

5,748


6,137


Interest Expenses:





     Interest on deposits

760


1,029


     Interest on short-term borrowings

1


1


     Interest on long-term borrowings

177


227


     Interest on subordinated debentures

35


36


          Total interest expense

973


1,293


          Net interest and dividend income

4,775


4,844


 Provision for loan losses

1,260


1,599


          Net interest and dividend income after provision for loan losses  

3,515


3,245







Noninterest Income:





     Service charges on deposits accounts

753


661


     Net gain on sale of loans

1,436


1,155


     Net mortgage servicing income

(126)


(133)


     Debit card interchange fees

552


546


     Net gains (losses) on trading activities

-


(19)


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

144


9


     Net other gains (losses) 

(163)


(248)


     Increase in cash value of bank-owned life insurance

72


71


     Other

80


152


          Total noninterest income

2,748


2,194







Noninterest Expenses:





     Salaries and employee benefits

2,905


2,420


     Occupancy and equipment

607


578


     Data processing 

630


618


     FDIC assessment

185


180


     Advertising and marketing

59


102


     Amortization of intangibles

35


35


     Professional fees

255


200


     Office Supplies

97


96


     Telephone

95


76


     Other

725


527


          Total noninterest expenses

5,593


4,832


          Income before income taxes

670


607


Income Taxes

(111)


(124)


          Net income 

$     781


$     731







Key Ratios










Basic Earnings Per Common Share

$    0.28


$    0.26


Diluted Earnings Per Common Share

0.28


0.26







Net Interest Margin (FTE)

3.75%


3.79%


Efficiency Ratio (FTE)

72.92%


67.56%


Return on Assets

0.55%


0.52%


Return on Common Equity

6.69%


6.72%


 

 

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF INCOME




(UNAUDITED)





Twelve months ended December 31,


2012


2011


(Amounts in thousands, except


share and per share data)

Interest Income:




     Interest and fees on loans

$  19,464


$  19,591

     Interest on trading securities

66


86

     Interest and dividends on securities:




          Taxable

2,533


3,859

          Tax-exempt

1,159


979

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

259


300

     Interest on interest-bearing deposits in banks

13


7

          Total interest and dividend income

23,494


24,822

Interest Expenses:




     Interest on deposits

3,518


4,603

     Interest on short-term borrowings

5


8

     Interest on long-term borrowings

811


923

     Interest on subordinated debentures

144


137

          Total interest expense

4,478


5,671

          Net interest and dividend income

19,016


19,151

 Provision for loan losses

5,620


4,803

          Net interest and dividend income after provision for loan losses  

13,396


14,348





Noninterest Income:




     Service charges on deposits accounts

2,792


2,556

     Net gain on sale of loans

5,009


2,733

     Net mortgage servicing income

(369)


(135)

     Debit card interchange fees

2,259


2,140

     Net gains (losses) on trading activities

(49)


(251)

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

666


396

     Net other gains (losses) 

(279)


(518)

     Increase in cash value of bank-owned life insurance

297


280

     Other

790


862

          Total noninterest income

11,116


8,063





Noninterest Expenses:




     Salaries and employee benefits

11,092


9,722

     Occupancy and equipment

2,399


2,296

     Data processing 

2,536


2,413

     FDIC assessment

740


825

     Advertising and marketing

313


445

     Amortization of intangibles

139


167

     Professional fees

1,053


852

     Office Supplies

382


377

     Telephone

342


286

     Other

2,357


2,168

          Total noninterest expenses

21,353


19,551

          Income before income taxes

3,159


2,860

Income Taxes

247


434

          Net income 

$    2,912


$    2,426





Key Ratios








Basic Earnings Per Common Share

$      1.03


$      0.81

Diluted Earnings Per Common Share

1.03


0.81





Net Interest Margin (FTE)

3.76%


3.82%

Efficiency Ratio (FTE)

69.54%


71.06%

Return on Assets

0.52%


0.44%

Return on Common Equity

6.37%


5.51%





 

 

                                     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,

 2012


Three months ended December 31, 2011


Average


Average


Average


Average


Balance

Interest

Rate


Balance

Interest

Rate

Interest Earning Assets:








  Interest-bearing deposits in banks

$               4,844

$                  2

0.20%


$      6,642

$          3

0.18%

  Federal funds sold & securities








    purchased under agreements to 








    resell

17,777

52

1.17%


27,499

89

1.28%

  Investment securities:








       Taxable investment securities

102,173

439

1.71%


117,567

838

2.83%

       Tax-exempt investment securities

33,519

291

5.20%


28,015

249

5.15%

            Total Investment securities

135,692

730

2.57%


145,582

1,087

3.28%

  Loans

363,234

4,964

5.44%


339,189

4,958

5.80%









Total Earning Assets

$           521,547

$          5,748

4.50%


$  518,912

$  6,137

4.78%

  Allowance for loan losses

(6,312)




(6,591)



  Cash and due from banks

12,687




10,657



  Other assets

34,681




34,503











Total Assets

$           562,603




$  557,481











Interest Bearing Liabilities:








  Interest bearing checking accounts

$           152,076

$             236

0.62%


$  138,972

$     403

1.15%

  Savings and money market deposits

143,406

69

0.19%


139,942

125

0.36%

  Time deposits

107,092

455

1.69%


119,223

501

1.66%

       Total interest bearing deposits

402,574

760

0.75%


398,137

1,029

1.02%

  Short-term borrowings

326

1

0.82%


1,135

1

0.34%

  Subordinated debentures

4,958

35

2.80%


4,958

36

2.90%

  Long-term borrowings

15,360

177

4.60%


30,458

227

2.96%









Total Interest-Bearing Liabilities

$           423,218

$             973

0.91%


$  434,688

$  1,293

1.18%









Interest Rate Spread



3.59%




3.60%









Noninterest checking accounts

84,862




71,474



  Other liabilities

6,175




6,927



  Total liabilities

514,255




513,089



  Preferred Stock

10,367




10,273



  Common Stockholders' equity

37,981




34,118



Total Stockholders' equity

48,348




44,391



Total Liabilities and








  Stockholders' Equity

$           562,603




$  557,480











Net Interest Income/Margin


$          4,775

3.75%



$  4,844

3.79%









 

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, 2012


Twelve months ended December 31, 2011


Average


Average


Average


Average


Balance

Interest

Rate


Balance

Interest

Rate

Interest Earning Assets:








  Interest-bearing deposits in banks

$      4,910

$          13

0.27%


$      2,771

$            7

0.33%

  Federal funds sold & securities








    purchased under agreements to 








    resell

21,834

259

1.19%


24,787

300

1.18%

  Investment securities:








       Taxable investment securities

108,138

2,599

2.40%


124,442

3,945

3.28%

       Tax-exempt investment securities

33,154

1,159

5.22%


24,864

979

5.78%

            Total Investment securities

141,292

3,758

3.06%


149,306

4,924

3.67%

  Loans

353,372

19,464

5.51%


334,807

19,591

5.87%









Total Earning Assets

$  521,408

$  23,494

4.62%


$  511,671

$  24,822

4.98%

  Allowance for loan losses

(6,783)




(6,296)



  Cash and due from banks

12,419




10,641



  Other assets

34,079




35,110











Total Assets

$  561,123




$  551,126











Interest Bearing Liabilities:








  Interest bearing checking accounts

$  153,891

$    1,285

0.83%


$  134,354

$    1,671

1.28%

  Savings and money market deposits

144,699

372

0.26%


144,115

516

0.36%

  Time deposits

109,401

1,861

1.70%


128,079

2,416

1.95%

       Total interest bearing deposits

407,991

3,518

0.86%


406,548

4,603

1.17%

  Short-term borrowings

872

5

0.56%


1,912

8

0.45%

  Subordinated debentures

4,958

144

2.90%


4,958

137

2.72%

  Long-term borrowings

17,414

811

4.66%


22,109

923

4.82%









Total Interest-Bearing Liabilities

$  431,235

$    4,478

1.04%


$  435,527

$    5,671

1.35%









Interest Rate Spread



3.58%




3.63%









Noninterest checking accounts

79,886




69,100



  Other liabilities

3,496




3,452



  Total liabilities

514,617




508,079



  Preferred Stock

10,234




10,234



  Common Stockholders' equity

36,272




32,813



Total Stockholders' equity

46,506




43,047



Total Liabilities and








  Stockholders' Equity

$  561,123




$  551,126











Net Interest Income/Margin


$  19,016

3.76%



$  19,151

3.82%









 

SOURCE Blackhawk Bancorp, Inc.



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