BELOIT, WI / ACCESSWIRE / July 24, 2020 / Blackhawk Bancorp, Inc. (OTCQX:BHWB) reported net income of $2.56 million for the second quarter of 2020, a 24% increase over the $2.07 million earned the previous quarter, and a 7% decrease compared to the $2.75 million earned the second quarter of 2019. Fully diluted earnings per share (EPS) for the quarter ended June 30, 2020, was $0.77, an increase of $0.14 as compared to $0.63 for the quarter ended March 31, 2020 and a decrease of $0.06 as compared to $0.83 earned for the quarter ended June 30, 2019. The second quarter 2020 results produced a Return on Average Equity (ROAE) of 10.16% and a Return on Average Assets (ROAA) of 0.96%.
The earnings increase compared to the most recent quarter reflects record level mortgage banking activity, with gain on sale of loans increasing over 250%, and net interest income increasing by 15%. Net interest income for the quarter was boosted by Paycheck Protection Program (PPP) fees and increased earning assets driven by the funding of PPP loans, deposit of PPP and other stimulus funds, and other deposit growth. The revenue growth realized was substantially offset by an increase in the provision for loan losses and an increase in the valuation allowance against the company's originated mortgage servicing rights asset.
The decrease in earnings compared to the second quarter of last year reflects a $2.3 million increase in the provision for loan losses, and a 13% increase in salaries and benefits. Despite the large provision increase and growth in compensation costs, the decline in earnings was held to just 7%, thanks to a 16% increase in net interest income and a 34% increase in non-interest income. The increase in net interest income compared to the prior year second quarter reflects the overall balance sheet growth and PPP fees mentioned earlier in this release, and the increase in non-interest income reflects the dramatic increase in mortgage banking activity. The provision for loan losses was increased primarily due to uncertainties related to COVID-19 and the effect it may have on future credit losses. The increase in salaries and benefits reflects variable compensation tied to the mortgage banking activity.
For the six months ended June 30, 2020, the company reported net income of $4.64 million, a 21% increase over the $3.83 million reported for the first half of 2019. Diluted earnings per share for the first six months of 2020 increased by 21% to $1.40 compared to $1.16 for the first half of 2019. The results for the first half of the prior year included a $1.34 million after-tax charge for non-recurring acquisition and transition related expenses, reducing EPS by $0.41 for that period. If those charges were excluded, EPS would have decreased by $0.17, or 15%, for the six months ended June 30, 2020 compared to the first half of 2019. The Company's results for the first six-months of 2020 produced a return on average assets of 0.90% and a return on average equity of 9.19%.
Total assets of the company increased by $137.2 million, or 14%, to $1.1 billion at June 30, 2020, compared to $963.9 million as of December 31, 2019. Total gross loans increased by $74.1 million, or 12%, and total investment securities increased $64.2 million, or 27%, during the first six months of 2020. Total Deposits increased by $109.5 million, or 13%, to $939.1 million compared to $829.6 million at the end of 2019.
"In light of the challenges that the COVID-19 pandemic crisis has presented, we're pleased with the financial results for the second quarter of 2020 and we are extremely proud of how our employees have responded to the crisis," said Todd James, the company's Chairman and CEO. "Despite the fear and anxiety this pandemic may be causing in their personal lives, our officers and staff have stepped up to make sure we continued to deliver superior service and products that our customers have come to expect. Our Business Banking team originated about 800 PPP loans totaling $82 million, learning the program themselves and educating and coaching our customers about it at the same time. Our mortgage origination team has been working tirelessly to help our customers take advantage of record low mortgage rates. Our tellers, in-branch staff, customer service team and support staff have been on the front-line of this pandemic from the start, making sure we stayed open and that essential financial services remained available to our customers," he added.
In addition to participating in the PPP, Blackhawk has provided payment relief to borrowers negatively affected by the pandemic. The relief modifications included three month payment deferrals, three or six-month interest-only payments, forbearance agreements and other relief. The first table below summarize Blackhawk's exposure to Industries impacted the most by COVID-19. The second schedule summarizes remaining exposure. Both tables include the company's outstanding balance, balance of loans by modification type, total balance of loans modified and the percent of loans modified within each industry. The balances in these tables exclude loans originated under PPP, which are 100% guaranteed by the SBA:
Balance of Loans by Modification Type
Industry
Portfolio Balance
Payment Deferral
Interest
Only
Other
Total Modified
Percent of Portfolio Modified
High Risk Industries:
(balances in thousands)
Hospitality and Food Service
27,540
8,766
9,578
—
18,344
67
%
Arts Entertainment & Recreation
4,363
219
1,101
—
1,320
30
%
Healthcare and Social Assistance
50,855
3,176
6,342
—
9,518
19
%
Other Services (except public admin)
16,164
7,809
1,702
—
9,511
59
%
Real Estate Rental and Leasing
121,187
5,761
3,687
—
9,448
8
%
Retail Trade
43,896
261
3,444
—
3,705
8
%
Total High Risk
264,005
25,992
25,854
—
51,846
20
%
Balance of Loans by Modification Type
Industry
Portfolio Balance
Payment Deferral
Interest
Only
Other
Total Modified
Percent of Portfolio Modified
Other Industries and Consumer:
(balances in thousands)
Construction
33,956
255
387
—
642
2
%
Manufacturing
109,364
1,744
1,829
—
3,572
3
%
Other Industries
93,981
2,889
5,106
200
8,195
9
%
Consumer, Mortgage and Other
110,230
—
—
4,464
4,464
4
%
Total Other
347,531
4,888
7,322
4,664
16,873
5
%
Total Outstanding (excl. PPP)
611,536
30,880
33,176
4,664
68,719
11
%
Net Interest Income
Net interest income for the second quarter of 2020 totaled $9.87 million, increasing $1.26 million, or 15%, from $8.62 million the previous quarter and up $1.40 million, or 17%, from the second quarter of last year. The net interest margin was 3.99% for the second quarter of 2020 as compared to 3.83% for the quarter ended March 31, 2020, and 3.88% for the second quarter of last year. The increase in net interest income compared to both the previous quarter and second quarter of last year is driven by the overall increase in earning assets, which includes the effect of PPP, and other pandemic stimulus, and the recognition of $522,000 of PPP loan fees. While the increase in overall earning assets, which was driven by the PPP and other pandemic stimulus that has incrementally increased net interest income, the net margin on the assets added is very thin, with PPP loans earning 1% and the remaining liquidity being deployed in the investment portfolio, where yields are historically low. Excluding the PPP fees recognized during the second quarter, the net interest margin would have decreased three basis points to 3.96% compared to 3.83% in the most recent quarter, despite the margin pressure from the drastic rate drops earlier in the year. The company was able to significantly lower funding costs during the second quarter to mitigate the impact of the drop-in rates. The Company has received approximately $3.2 million in net PPP fees and will recognize those fees based on the estimated average life of the PPP loans, which assumes the majority of PPP loans will be repaid through the loan forgiveness process within a year to 18 months from origination.
Average total loans for the quarter ended June 30, 2020, equaled $701.1 million, a $72.3 million, or 12% increase over the previous quarter, and a $99.9 million, or 17%, increase over the same quarter a year ago. The average total loans for the second quarter of 2020 included $63 million average balance of PPP loans. Excluding the PPP loans, average total loans increased by $9.2 million, or less than 2%, over the most recent quarter, and increased by $36.8 million, or 6% over the total average loans for second quarter of 2019.
Average total deposits for the quarter ended June 30, 2020, equaled $918.8 million, a $77.4 million, or 9% increase over the previous quarter, and a $91.0 million, or 11% increase over the same quarter a year ago. The increase in average total deposits included PPP funds deposited by borrowers, other stimulus money received by customers and other deposit growth. Additionally, the cost of interest-bearing deposits decreased by thirty-seven basis points to 0.44%, compared to 0.81% the quarter before, and by fifty-nine basis points compared to 1.03% the second quarter of 2019.
Net interest income for the six months ended June 30, 2020, increased by $2.2 million, or 14%, to $18.5 million as compared to $16.3 million for the first half of 2019. The net interest margin for the first half of 2020 increased by two basis points to 3.92% compared to 3.90% for the first half of 2019. Average total loans for the first half of 2020 were $664.9 million, an increase of $82.2 million, or 12%, as compared to $582.7 million for the first half of 2019. Average total deposits for the first-half of 2020 were $880.1 million, an increase of $84.0 million, or 11%, as compared to $796.1 million for the first half of 2019.
Provision for Loan Losses and Credit Quality
The provision for loan losses for the quarter ended June 30, 2020, totaled $2.51 million, as compared to $765,000 for the quarter ended March 31, 2020, and $180,000 for the second quarter of 2019. The provision for the first-half 2020 increased to $3.3 million compared to $450,000 for the first-half of 2019. The increased provision reflects deterioration in economic conditions and uncertainty related to the impact COVID-19 may have on future loan losses. Net charge-offs during the second quarter equaled $563,000, bringing the total up to $1.1 million for the first six months of 2020.
Total nonperforming assets, which include troubled debt restructures that are performing in accordance with their modified terms, equaled $11.6 million as of June 30, 2020, as compared to $13.4 million as of March 31, 2020, and $7.6 million at June 30, 2019. At June 30, 2020, the ratio of nonperforming assets to total assets equaled 1.05%, as compared to 1.37% at March 31, 2020, and 0.79% at June 30, 2019. The allowance for loan losses to total loans was 1.43% as of June 30, 2020, as compared to 1.29% at March 31, 2020, and 1.24% as of June 30, 2019. The allowance for loan losses to total loans, excluding PPP loans, at June 30, 2020 is just over 1.6%. The ratio of the allowance for loan losses to nonperforming loans increased to 93.6% as of June 30, 2020, as compared to 61.4% at March 31, 2020, and 106.1% at June 30, 2019.
Management expects loan losses to increase in future quarters as the full impact of the COVID-19 crisis works its way through the economy. Overall delinquency rates and non-performing asset levels have not increased; however, many customers have taken advantage of PPP, other stimulus programs, and the loan modifications we provided. Management expects to continue building the allowance for loan losses in the second half of the year and continue being proactive with borrowers to ensure credit issues are identified and addressed as early as possible, improving the overall probability of repayment.
Non-Interest Income and Operating Expenses
Non-interest income for the quarter ended June 30, 2020, totaled $4.85 million, a $1.65 million increase compared to $3.20 million the prior quarter, and a $1.22 million increase over the $3.63 million recorded in the second quarter of 2019. The increase in non-interest income was driven by mortgage banking activity, with gain on sale of loans increasing by $2.3 million and $2.2 million compared to the most recent quarter and the second quarter of 2019, respectively. The large increase in gain on sale of loans for the quarter was offset by a $499,000 and $560,000 decrease in net loan servicing income compared to the most recent quarter and second quarter of 2019, respectively. This decrease in loan servicing income reflects $482,000 increase in the valuation allowance against the company's originated mortgage servicing rights asset. In addition, deposit service charge revenue decreased by $287,000, or 32%, compared to the most recent quarter and by $275,000, or 31%, compared to the second quarter of 2019.
Non-interest income for the first half of 2020 increased $1.74 million, or 26%, to $8.4 million as compared to $6.6 million for the first half of 2019, including a $2.5 million increase in gain on sale of loans. This increase was offset by $186,000, or 11%, decrease in deposit service charges and a $622,000, or 182%, decrease in loan servicing income.
Operating expenses for the quarter ended June 30, 2020, totaled $8.95 million, increasing by $462,000, or 5%, compared to the quarter ended March 31, 2020, and increasing by $577,000, or 7%, compared to the second quarter of 2019. The increases compared to the most recent quarter and to the second quarter of 2019 were due to increased salaries and benefits, reflecting variable compensation related to the high level of mortgage loan originations.
Operating expenses for the six-month period ended June 30, 2020, totaled $17.7 million, a $113,000, or less than 1%, increase over the first half of 2019. The 2019 results included $1.83 million of nonrecurring acquisition related expenses. Excluding these expenses, operating expenses would have increased by $1.94 million, or 12%, over the first half of last year. The increase reflects operating the three acquired locations for the full six months, versus only four months in the first half of 2019, and the increased variable compensation related to the mortgage banking activity.
Outlook
The outlook for Blackhawk as well as the entire banking industry is clouded by uncertainty related to the COVID-19 pandemic crisis. Blackhawk expects to see elevated credit losses in future quarters as the economic impact of the crisis plays out, and will be taking steps to increase revenue, implement government stimulus programs and work with credit customers to offset and mitigate losses to the extent possible. Management believes the Company's financial position is strong and it has ample resources to withstand a potentially severe and protracted recession. In addition to responding to this crisis, Blackhawk will continue to pursue creditworthy and profitable business and consumer relationships in its Wisconsin and Illinois markets, emphasizing the value of its personal attention and service that remains unmatched by larger competitors. In addition to organic growth opportunities, Blackhawk may also pursue growth through selective acquisitions. Ability to grow or maintain profitability may be affected by uncertain economic conditions, competitive pressures, changes in regulatory burden and the interest rate environment.
About Blackhawk Bancorp
Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank. The combined entity operates eleven full-service banking centers and a dedicated commercial office, which are located in Rock County, Wisconsin and the Illinois counties of Winnebago, Boone, McHenry, Lake, and Kane. The Company's footprint stretches along the I-90 corridor from Janesville, Wisconsin to Elgin, Illinois and into the Northwest collar counties of the Chicagoland area. The company offers a variety of value-added consultative services to its business customers and their employees related to the financial products it provides.
Disclosures Regarding non-GAAP Measures
This report refers to financial measures that are identified as non-GAAP that the Company believes help to evaluate and measure the Company's performance, including the presentation of the net interest margin ratio and efficiency ratio calculations on a taxable-equivalent basis. Non-GAAP measures are also used to assist investor comparison by identifying nonrecurring events such as the 2019 acquisition-related expenses, nonrecurring securities gains and the impact such items have on the performance measures of return on average assets, return on average equity, diluted earnings per share, and the efficiency ratio. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.
Forward-Looking Statements
When used in this communication, the words "believes," "expects," "likely", "would", 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 particularly in the Company's markets; potential deterioration in real estate values, 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"; inability to recover previously recorded losses as anticipated, and the inability of third party vendors to perform critical services for the company or its customers. The inclusion of forward-looking information should not be construed as a representation by the Company or any person that future events or plans contemplated by the Company will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information or otherwise.
Further information is available on the company's website at www.blackhawkbank.com.
Blackhawk Bancorp, Inc.
Todd J. James, Chairman & CEO
tjames@blackhawkbank.com
Phone: (608) 364-8911
Matthew McDonnell, SVP & CFO
mmcdonnell@blackhawkbank.com
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 AND DECEMBER 31, 2019
(UNAUDITED)
June 30,
December 31,
Assets
2020
2019
(Dollars in thousands, except
share and per share data)
Cash and due from banks
$
14,527
$
12,320
Interest-bearing deposits in banks and other institutions
20,720
20,761
Total cash and cash equivalents
35,247
33,081
Certificates of deposit in banks and other institutions
4,526
6,325
Equity securities at fair value
2,469
2,365
Securities available-for-sale
299,257
235,083
Loans held for sale
15,234
6,540
Federal Home Loan Bank stock, at cost
2,150
742
Loans, less allowance for loan losses of $10,102 and $7,941
at June 30, 2020 and December 31, 2019, respectively
682,647
619,359
Premises and equipment, net
20,484
21,025
Goodwill and core deposit intangible
12,232
12,455
Mortgage servicing rights
3,088
3,106
Cash surrender value of bank-owned life insurance
10,977
11,118
Other assets
12,786
12,662
Total assets
$
1,101,097
$
963,861
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing
$
209,896
$
155,978
Interest-bearing
729,170
673,631
Total deposits
939,066
829,609
Short-term borrowings
–
–
Subordinated debentures and notes (including $1,031 at fair value at
June 30, 2020 and December 31, 2019)
5,155
5,155
Senior secured term note
13,611
14,000
Other borrowings
29,000
10,000
Other liabilities
9,758
7,773
Total liabilities
996,590
866,537
Stockholders' equity
Common stock, $0.01 par value, 10,000,000 shares authorized;
3,434,848 and 3,399,803 shares issued as of June 30, 2020 and
December 31, 2019, respectively
34
34
Additional paid-in capital
34,313
33,989
Retained earnings
64,203
60,295
Treasury stock, 106,364 and 105,185 shares at cost as of June 30, 2020
and December 31, 2019, respectively
(1,440
)
(1,408
)
Accumulated other comprehensive income (loss)
7,397
4,414
Total stockholders' equity
104,507
97,324
Total liabilities and stockholders' equity
$
1,101,097
$
963,861
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six months ended June 30,
2020
2019
(Amounts in thousands, except per share data)
Interest Income:
Interest and fees on loans
$
16,691
$
15,585
Interest and dividends on available-for-sale securities:
Taxable
3,123
3,003
Tax-exempt
695
900
Interest on other financial institutions
202
288
Total interest income
20,711
19,776
Interest Expense:
Interest on deposits
1,816
2,920
Interest on short-term borrowings
1
–
Interest on subordinated debentures
98
130
Interest on senior secured term note
267
253
Interest on other
41
203
Total interest expense
2,223
3,506
Net interest income before provision for loan losses
18,488
16,270
Provision for loan losses
3,270
450
Net interest income after provision for loan losses
15,218
15,820
Noninterest Income:
Service charges on deposits accounts
1,507
1,693
Net gain on sale of loans
4,097
1,621
Net loan servicing income
(280
)
342
Debit card interchange fees
1,757
1,616
Net gains on sales of securities available-for-sale
107
305
Net other gains (losses)
6
94
Increase in cash surrender value of bank-owned life insurance
159
157
Change in value of equity securities
60
40
Other
935
737
Total noninterest income
8,348
6,605
Noninterest Expenses:
Salaries and employee benefits
10,512
9,426
Occupancy and equipment
2,156
1,992
Data processing
1,071
2,398
Debit card processing and issuance
791
723
Advertising and marketing
135
249
Amortization of core deposit intangible
223
159
Professional fees
772
972
Office Supplies
178
175
Telephone
299
246
Other
1,601
1,285
Total noninterest expenses
17,738
17,625
Income before income taxes
5,828
4,800
Provision for income taxes
1,191
967
Net income
$
4,637
$
3,833
Key Ratios
Basic Earnings Per Common Share
$
1.40
$
1.16
Diluted Earnings Per Common Share
1.40
1.16
Dividends Per Common Share
0.22
0.20
Net Interest Margin (1)
3.92
%
3.90
%
Efficiency Ratio (1)(2)
65.89
%
77.47
%
Return on Assets
0.90
%
0.84
%
Return on Common Equity
9.19
%
8.91
%
(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company's performance, including the presentation of the net interest margin and efficiency ratio calculations on a taxable equivalent basis ("TE"). The net interest margin ratio is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.
(2) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income on a TE basis, noninterest income less any securities gains (losses) or other gains (losses), and also includes a TE adjustment on the increases in cash surrender value of bank-owned life insurance.
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the Quarter Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2020
2020
2019
2019
2019
(Dollars in thousands, except per share data)
Interest Income:
Interest and fees on loans
$
8,658
$
8,033
$
8,284
$
8,580
$
8,043
Interest on available-for-sale securities:
Taxable
1,618
1,505
1,496
1,591
1,659
Tax-exempt
371
323
331
356
451
Interest on other financial institutions
40
162
107
133
130
Total interest income
10,687
10,023
10,218
10,660
10,283
Interest Expense:
Interest on deposits
639
1,177
1,400
1,485
1,458
Interest on subordinated debentures
45
53
58
61
65
Interest on senior secured term note
111
156
165
173
186
Interest on other borrowings
19
22
24
97
98
Total interest expense
814
1,408
1,647
1,816
1,807
Net interest income before provision for loan losses
9,873
8,615
8,571
8,844
8,476
Provision for loan losses
2,505
765
980
580
180
Net interest income after provision for loan losses
7,368
7,850
7,591
8,264
8,296
Noninterest Income:
Service charges on deposits accounts
610
897
1,002
1,019
885
Net gain on sale of loans
3,192
905
1,257
1,333
1,040
Net loan servicing income
(389
)
110
119
(91
)
171
Debit card interchange fees
924
832
876
910
827
Net gains on sales of securities available-for-sale
8
99
–
866
146
Net other gains (losses)
6
–
(87
)
81
94
Increase in cash surrender value of bank-owned life insurance
74
85
75
74
74
Other
425
273
632
455
390
Total noninterest income
4,850
3,201
3,874
4,647
3,627
Noninterest Expenses:
Salaries and employee benefits
5,477
5,035
4,964
4,992
4,841
Occupancy and equipment
1,074
1,083
1,038
1,085
1,000
Data processing
561
510
520
657
571
Debit card processing and issuance
394
397
449
402
389
Advertising and marketing
38
97
101
100
142
Amortization of intangibles
107
115
119
119
119
Professional fees
405
367
300
387
393
Office Supplies
88
90
118
112
89
Telephone
149
150
153
137
130
Other
659
646
730
505
701
Total noninterest expenses
8,952
8,490
8,492
8,496
8,375
Income before income taxes
3,266
2,561
2,973
4,415
3,548
Provision for income taxes
704
487
621
996
794
Net income
$
2,562
$
2,074
$
2,352
$
3,419
$
2,754
Key Ratios
Basic Earnings Per Common Share
$
0.77
$
0.63
$
0.71
$
1.03
$
0.83
Diluted Earnings Per Common Share
0.77
0.63
0.71
1.03
0.83
Dividends Per Common Share
0.11
0.11
0.10
0.10
0.10
Net Interest Margin (1)
3.99
%
3.83
%
3.83
%
3.93
%
3.88
%
Efficiency Ratio (1)(2)
60.43
%
71.89
%
67.25
%
67.19
%
69.77
%
Return on Assets
0.96
%
0.85
%
0.97
%
1.40
%
1.15
%
Return on Common Equity
10.16
%
8.31
%
9.60
%
14.25
%
12.54
%
(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company's performance, including the presentation of net interest income, net interest margin and efficiency ratio calculations on a taxable equivalent basis ("TE"). The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.
(2) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income on an TE basis, noninterest income less any securities gains (losses) or other gains (losses), and also includes a TE adjustment on interest on tax-exempt securities, loans, and the increases in cash surrender value of bank-owned life insurance.
(UNAUDITED)
As of
June 30,
March 31,
December 31,
September 30,
June 30,
2020
2020
2019
2019
2019
(Amounts in thousands, except per share data)
Cash and due from banks
$
14,527
$
15,240
$
12,320
$
18,778
$
17,364
Interest-bearing deposits in banks and other
25,246
6,775
27,086
22,478
16,442
Securities
301,726
265,165
237,448
232,165
256,262
Net loans/leases
697,881
626,797
625,899
640,576
616,925
Goodwill and core deposit intangible
12,232
12,340
12,455
12,575
12,649
Other assets
49,485
50,688
48,653
49,786
49,829
Total assets
$
1,101,097
$
977,005
$
963,861
$
976,358
$
969,471
Deposits
$
939,066
$
843,061
$
829,609
$
843,703
$
837,319
Subordinated debentures
5,155
5,155
5,155
5,155
5,155
Senior secured term note
13,611
14,000
14,000
14,000
14,000
Borrowings
29,000
10,000
10,035
10,042
13,992
Other liabilities
9,758
6,083
7,738
7,516
6,614
Stockholders' equity
104,507
98,706
97,324
95,942
92,391
Total liabilities and stockholders' equity
$
1,101,097
$
977,005
$
963,861
$
976,358
$
969,471
ASSET QUALITY DATA
(Amounts in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2020
2020
2019
2019
2019
Non-accrual loans
$
8,427
$
9,680
$
10,642
$
5,524
$
3,712
Accruing loans past due 90 days or more
–
845
–
104
272
Troubled debt restructures – accruing
2,361
2,770
2,866
3,163
3,321
Total nonperforming loans
$
10,788
$
13,295
$
13,508
$
8,791
$
7,305
Other real estate owned
762
123
54
319
307
Total nonperforming assets
$
11,550
$
13,418
$
13,562
$
9,110
$
7,612
Total loans
$
707,983
$
634,957
$
633,840
$
648,900
$
624,674
Allowance for loan losses
$
10,102
$
8,160
$
7,941
$
8,324
$
7,749
$
697,881
$
626,797
$
625,899
$
640,576
$
616,925
Nonperforming Assets to total Assets
1.05
%
1.37
%
1.41
%
0.93
%
0.79
%
Nonperforming loans to total loans
1.52
%
2.09
%
2.13
%
1.35
%
1.17
%
Allowance for loan losses to total loans
1.43
%
1.29
%
1.25
%
1.28
%
1.24
%
Allowance for loan losses to nonperforming loans
93.6
%
61.4
%
58.8
%
94.7
%
106.1
%
For the Quarter Ended
June 30,
March 31,
December 31,
September 30,
June 30,
ROLLFORWARD OF ALLOWANCE
2020
2020
2019
2019
2019
Beginning Balance
$
8,160
$
7,941
$
8,324
$
7,749
$
7,545
Provision
2,505
765
980
580
180
Loans charged off
639
633
1,463
52
11
Loan recoveries
76
87
100
47
35
Net charge-offs
563
546
1,363
5
(24
)
Ending Balance
$
10,102
$
8,160
$
7,941
$
8,324
$
7,749
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
ANALYSIS of AVERAGE BALANCES & TAX EQUIVALENT INTEREST RATES
Average Balance Sheet with Resultant Interest and Rates
(Dollars in thousands – unaudited)
(Yields on a tax-equivalent basis) (1)
For the Quarter Ended
June 30, 2020
March 31, 2020
June 30, 2019
Average
Average
Average
Average
Average
Average
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Interest Earning Assets:
Interest-bearing deposits and other
$
17,056
$
40
0.95
%
$
37,668
$
162
1.74
%
$
21,250
$
130
2.48
%
Investment securities:
Taxable investment securities
241,831
1,618
2.69
%
204,526
1,505
2.96
%
212,708
1,659
3.13
%
Tax-exempt investment securities
46,443
371
4.13
%
40,876
323
4.09
%
54,193
451
4.33
%
Total Investment securities
288,274
1,989
2.92
%
245,402
1,828
3.15
%
266,901
2,110
3.37
%
Loans
701,080
8,658
4.97
%
628,802
8,033
5.14
%
601,234
8,043
5.37
%
Total Earning Assets
$
1,006,410
$
10,687
4.31
%
$
911,872
$
10,023
4.46
%
$
889,385
$
10,283
4.70
%
Allowance for loan losses
(8,769
)
(8,015
)
(7,645
)
Cash and due from banks
15,232
15,623
15,165
Other assets
58,475
58,984
59,805
Total Assets
$
1,071,348
$
978,464
$
956,710
Interest Bearing Liabilities:
Interest bearing checking accounts
$
298,831
$
157
0.21
%
$
270,849
$
334
0.50
%
$
258,866
$
408
0.63
%
Savings and money market deposits
305,966
105
0.14
%
282,113
362
0.52
%
289,097
535
0.74
%
Time deposits
101,808
377
1.49
%
113,865
481
1.70
%
118,383
515
1.75
%
Total interest bearing deposits
706,605
639
0.36
%
666,827
1,177
0.71
%
666,346
1,458
0.88
%
Subordinated debentures and notes
5,155
45
3.53
%
5,155
53
4.15
%
5,155
65
5.03
%
Borrowings
39,436
130
1.32
%
24,601
178
2.91
%
29,596
284
3.85
%
Total Interest-Bearing Liabilities
$
751,196
$
814
0.44
%
$
696,583
$
1,408
0.81
%
$
701,097
$
1,807
1.03
%
Interest Rate Spread
3.87
%
3.65
%
3.67
%
Noninterest checking accounts
212,196
174,607
161,461
Other liabilities
6,570
6,868
6,055
Total liabilities
969,962
878,058
868,613
Total Stockholders' equity
101,386
100,406
88,097
Total Liabilities and
Stockholders' Equity
$
1,071,348
$
978,464
$
956,710
Net Interest Income/Margin
$
9,873
3.99
%
$
8,615
3.83
%
$
8,476
3.88
%
(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company's performance including a presentation of net interest income with a net interest margin ratio on a tax-equivalent (TE) basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above-stated average balances.
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)(1)
For the Six Months Ended
June 30, 2020
June 30, 2019
Average
Average
Average
Average
Balance
Interest
Rate
Balance
Interest
Rate
Interest Earning Assets:
Interest-bearing deposits and other
$
27,362
$
202
1.48
%
$
24,178
$
288
2.42
%
Investment securities:
Taxable investment securities
223,178
3,123
2.81
%
190,021
3,003
3.19
%
Tax-exempt investment securities
43,659
695
4.11
%
58,095
900
4.03
%
Total Investment securities
266,837
3,818
3.03
%
248,116
3,903
3.38
%
Loans
664,941
16,691
5.05
%
582,684
15,585
5.39
%
Total Earning Assets
$
959,140
$
20,711
4.38
%
$
854,978
$
19,776
4.73
%
Allowance for loan losses
(8,392
)
(7,546
)
Cash and due from banks
15,427
15,862
Other assets
58,696
55,917
Total Assets
$
1,024,871
$
919,211
Interest Bearing Liabilities:
Interest bearing checking accounts
$
284,840
$
491
0.35
%
$
251,246
$
723
0.58
%
Savings and money market deposits
294,040
467
0.32
%
278,135
1,177
0.85
%
Time deposits
107,837
858
1.60
%
114,893
1,021
1.79
%
Total interest bearing deposits
686,717
1,816
0.53
%
644,274
2,921
0.91
%
Subordinated debentures
5,155
98
3.81
%
5,155
130
5.07
%
Borrowings
32,018
308
1.93
%
25,644
456
3.59
%
Total Interest-Bearing Liabilities
$
723,890
$
2,222
0.62
%
$
675,073
$
3,507
1.05
%
Interest Rate Spread
3.76
%
3.68
%
Noninterest checking accounts
193,372
151,833
Other liabilities
6,715
5,534
Total liabilities
923,977
832,440
Total Stockholders' equity
100,894
86,771
Total Liabilities and
Stockholders' Equity
$
1,024,871
$
919,211
Net Interest Income/Margin
$
18,489
3.92
%
$
16,269
3.90
%
(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company's performance including a presentation of net interest income with a net interest margin ratio on a tax equivalent (TE) basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above-stated average balances.
SOURCE: Blackhawk Bancorp, Inc.
ReleaseID: 598901
