Blackhawk Bancorp Announces 2019 Second Quarter Earnings

BELOIT, WI / ACCESSWIRE / July 26, 2019 / Blackhawk Bancorp, Inc. (OTCQX: BHWB) reported net income of $2.75 million for the second quarter of 2019, a 155% increase over the $1.08 million earned for the previous quarter, and a 37% increase over the $2.02 million earned the second quarter of 2018. The increase compared to the most recent quarter is largely due to $1.34 million (after-tax) of acquisition, transition, and integration expenses related to the First National Bank of McHenry (FNB) acquisition being recorded in the first quarter. Excluding these expenses, net income for the second quarter of 2019 increased by $334,000, or 14%, as compared to the linked quarter ending March 31, 2019.

Fully diluted earnings per share (EPS) for the quarter ended June 30, 2019, was $0.83, an increase of $0.50 as compared to $0.33 for the quarter ended March 31, 2019 and an increase of $0.22 as compared to $0.61 for the quarter ended June 30, 2018. The increase compared to the most recent quarter is largely due to the above-mentioned acquisition, transition, and integration expenses. Excluding the acquisition related expenses, the 2019 second-quarter EPS increased by $0.10, or 14%, over the quarter ended March 31, 2019. The second quarter 2019 results produced a Return on Average Equity (ROAE) of 12.54% and a Return on Average Assets (ROAA) of 1.15%.

For the six months ended June 30, 2019, the company reported net income of $3.83 million, a 10% increase over the $3.47 million reported for the first half of 2018. Diluted earnings per share for the first six months of 2019 increased by 10% to $1.16 compared to $1.05 for the first half of 2018. The six-month results produced a return on average assets of 0.84% and a return on average equity of 8.91%. Excluding the acquisition-related expenses mentioned above, earnings for the first half of 2019 would have been $5.17 million, a $1.71 million, or 49.2% increase over the first half of 2018 and would have equated to $1.57 EPS, a $0.52 per share, or 49.5% increase over the first half of the prior year.

“We are very pleased with the earnings momentum reflected in our first-half results and our prospects for continued growth,” said Todd James, Chairman and Chief Executive Officer. “During the second quarter, we generated over $30 million of loan growth, converted the FNB accounts to our operating systems and merged FNB with and into the Company’s wholly-owned subsidiary Blackhawk Bank. These accomplishments combined with our passion and ability to provide personalized and responsive services to our customers should keep the momentum going,” he added.

Total assets increased by $152.2 million, or 18.6%, to $969.5 million at June 30, 2019, compared to $817.3 million as of December 31, 2018. Total gross loans increased by $70.4 million, or 12.7%, during the first six months of 2019 to $624.7 million compared to $554.3 million at December 31, 2018. This included $30.0 million in net organic growth as First National Bank of McHenry provided $39.8 million of the first half increase in loans. Total deposits increased by $151.7 million, or 22.1%, to $837.3 million as compared to $685.6 million at the end of 2018 and included $151.3 million in McHenry deposits.

Net Interest Income

Net interest income for the second quarter of 2019 totaled $8.48 million, increasing $683,000, or 8.8%,

compared to $7.79 million for the previous quarter and up $1.69 million, or 25.0%, from the second quarter of last year. The net interest margin was 3.88% for the second quarter of 2019 as compared to 3.92% for the quarter ended March 31, 2019, and 3.91% for the second quarter of last year.

The increases in net interest income for each comparative period was driven by strong organic and acquisitive growth in average earning assets and deposits. Average total loans for the quarter ended June 30, 2019, equaled $601.2 million, a $37.3 million, or 6.6% increase over the previous quarter, and an $83.8 million, or 16.2% increase over the same quarter a year ago. The $83.8 million increase in second-quarter 2019 average loans over the second quarter of 2018 includes the effect of acquiring $41.5 million in net loans from FNB. Average total deposits for the quarter ended June 30, 2019, equaled $862.6 million, a $63.7 million, or 8.3% increase over the previous quarter, and a $162.8 million, or 24.5% increase over the same quarter a year ago. The growth in average total deposits reflects the impact of the $150.1 million in total deposits added with the FNB acquisition.

Net interest income for the six months ended June 30, 2019, increased by $3.2 million, or 24.6%, to $16.3 million as compared to $13.1 million for the first half of 2018. The net interest margin for the first half of 2019 increased by three basis points to 3.90% compared to 3.87% for the first half of 2018. Average total loans for the first half of 2019 were $582.7 million, an increase of $81.2 million, or 16.2%, as compared to $501.4 million for the first half of 2018 with the FNB acquisition contributing $27.5 million of the 2019 increase. Average total deposits for the first-half of 2019 were $796.1 million, an increase of $143.2 million, or 21.9%, as compared to $652.9 for the first half of 2018 with FNB contributing $101.4 million in average deposits.

Provision for Loan Losses and Credit Quality

The provision for loan losses for the quarter ended June 30, 2019, totaled $180,000, as compared to $270,000 for the quarter ended March 31, 2019, and $370,000 for the second quarter of 2018. The provision for the first-half 2019 decreased to $450,000 compared to $880,000 for the first-half of 2018. Net charge-offs for the six months ended June 30, 2019, equaled $40,000.

Total nonperforming assets, which include troubled debt restructures that are performing in accordance with their modified terms, equaled $7.80 million as of June 30, 2019, as compared to $7.70 million as of March 31, 2019, and $8.56 million at June 30, 2018. The FNB acquisition added $597,000 to nonperforming loans. At June 30, 2019, the ratio of nonperforming assets to total assets equaled 0.79%, as compared to 0.80% at March 31, 2019, and 1.10% at June 30, 2018. The allowance for loan losses to total loans was 1.24% as of June 30, 2019, as compared to 1.28% at March 31, 2019, and 1.30% as of June 30, 2018. The ratio of the allowance for loan losses to nonperforming loans increased to 106.1% as of June 30, 2019, as compared to 102.5% at March 31, 2019, and 79.2% at June 30, 2018. In addition to the balance of the allowance for loan losses, the balance sheet includes an additional $595,000 credit-related valuation discount attributable to the non-credit impaired loans acquired in the FNB transaction.

Non-Interest Income and Operating Expenses

Non-interest income for the quarter ended June 30, 2019, totaled $3.63 million, a $647,000 increase compared to $2.98 million the prior quarter, and a $589,000 increase over the $3.04 million recorded in the second quarter of 2018. The increase compared to the most recent quarter was primarily due to a $458,000 increase in revenue from the sale and servicing of mortgage loans, and also included increases in deposit service charges, debit interchange and net gains on the sale of other real estate. The increase compared to the second quarter of 2018 reflects growth in substantially all recurring fee income categories, but also includes a $181,000 increase in combined net gains from the sale of securities and other real estate.

Non-interest income for the first half of 2019 increased $1.07 million to $6.6 million as compared to $5.5 million for the first half of 2018 reflecting increases across all categories, including $183,000 in deposit service fees, $183,000 in net revenue from the sale and servicing of mortgage loans, $246,000 in interchange income, and a combined $240,000 in net gains on sale of securities.

Operating expenses for the quarter ended June 30, 2019, totaled $8.38 million, decreasing by $876,000 compared to the quarter ended March 31, 2019, and increasing by $1.4 million, or 20.3%, compared to the second quarter of 2018. The decrease compared to the most recent quarter was the result of $1.83 million of merger-related expenses being recorded in the first quarter of 2019. Excluding those acquisition-related expenses, total operating expenses for the second quarter increased by $951,000 compared to the first quarter of 2019, reflecting the first full quarter of operations of the FNB locations.

Operating expenses for the six-month period ended June 30, 2019, totaled $17.6 million, a $4.1 million, or 30.4% increase over the first half of 2018. That increase includes the $1.83 million in acquisition-related expenses mentioned above. Excluding those expenses, operating expenses increased $2.3 million, or 16.8%. The increase is partially driven by four months of operations of the First McHenry locations being included in the first half of 2019.

Outlook

Blackhawk expects to grow by pursuing 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 such organic growth opportunities, Blackhawk may also pursue growth through selective acquisition opportunities. Growth, combined with the Company’s strong credit quality, is expected to lead to continued earnings improvement. Growth and earnings could, however, be tempered by such occurrences as 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 net interest income to interest-earning assets, 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 and the impact such net expenses 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.

CONTACT:

Todd J. James, Chairman & CEO
tjames@blackhawkbank.com
Phone: (608) 364-8911

Mary King McGovern, SVP & CFO
mmcgovern@blackhawkbank.com

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 AND DECEMBER 31, 2018
(UNAUDITED)

June 30,

December 31,

Assets

2019

2018

(Dollars in thousands, except

share and per share data)

Cash and due from banks

$
17,364

$
16,677

Interest-bearing deposits in banks and other

16,442

2,760

Total cash and cash equivalents

33,806

19,437

Equity securities at fair value

2,332

2,250

Securities available-for-sale

253,930

198,670

Loans held for sale

5,383

5,164

Federal Home Loan Bank stock, at cost

700

1,643

Loans, less allowance for loan losses of $7,749 and $7,339

at June 30, 2019 and December 31, 2018, respectively

611,542

541,760

Premises and equipment, net

21,066

14,874

Goodwill

10,183

5,037

Core Deposit Intangible

2,466

–

Mortgage servicing rights

3,153

2,969

Cash surrender value of bank-owned life insurance

10,969

10,812

Other assets

13,941

14,671

Total assets

$
969,471

$
817,287

Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Noninterest-bearing

$
154,813

$
121,024

Interest-bearing

682,506

564,615

Total deposits

837,319

685,639

Subordinated debentures and notes (including $1,031 at fair value at

June 30, 2019 and December 31, 2018)

5,155

Senior secured term note

14,000

–

Other borrowings

13,992

36,500

Other liabilities

6,614

5,701

Total liabilities

877,080

732,995

Stockholders’ equity

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

3,396,366 and 3,369,192 shares issued as of June 30, 2019 and

December 31, 2018, respectively

Additional paid-in capital

33,785

33,478

Retained earnings

55,183

52,011

Treasury stock, 104,570 and 97,570 shares at cost as of June 30, 2019

and December 31, 2018, respectively

(1,391
)

(1,204
)

Accumulated other comprehensive income (loss)

4,780

(27
)

Total stockholders’ equity

92,391

84,292

Total liabilities and stockholders’ equity

$
969,471

$
817,287

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

Six months ended June 30,

2019

2018

(Amounts in thousands, except per share data)

Interest Income:

Interest and fees on loans

$
15,585

$
12,485

Interest on available-for-sale securities:

Taxable

3,003

1,611

Tax-exempt

900

734

Interest on interest-bearing deposits and other

288

132

Total interest income

19,776

14,962

Interest Expense:

Interest on deposits

2,920

1,743

Interest on subordinated debentures and notes

130

112

Interest on senior secured term note

253

–

Interest on other borrowings

203

Total interest expense

3,506

1,901

Net interest income before provision for loan losses

16,270

13,061

Provision for loan losses

450

880

Net interest income after provision for loan losses

15,820

12,181

Noninterest Income:

Service charges on deposits accounts

1,693

1,510

Net gain on sale of loans

1,621

1,430

Net loan servicing income

342

350

Debit card interchange fees

1,616

1,370

Net gains on sales of securities available-for-sale

305

Net other gains (losses)

(23
)

Increase in cash surrender value of bank-owned life insurance

157

154

Other

777

676

Total noninterest income

6,605

5,532

Noninterest Expenses:

Salaries and employee benefits

9,426

7,917

Occupancy and equipment

1,992

1,723

Data processing

2,398

812

Debit card processing and issuance

723

629

Advertising and marketing

249

296

Amortization of intangibles

159

–

Professional fees

972

572

Office Supplies

175

189

Telephone

246

250

Other

1,285

1,130

Total noninterest expenses

17,625

13,518

Income before income taxes

4,800

4,195

Provision for income taxes

967

727

Net income

$
3,833

$
3,468

Key Ratios

Basic Earnings Per Common Share

$
1.16

$
1.05

Diluted Earnings Per Common Share

1.16

1.05

Dividends Per Common Share

0.20

0.18

Net Interest Margin (1)

3.90
%

3.87
%

Efficiency Ratio (1)(2)

77.47
%

72.01
%

Return on Assets

0.84
%

0.94
%

Return on Common Equity

8.91
%

8.92
%

(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,

2019

2018

(Dollars in thousands, except per share data)

Interest Income:

Interest and fees on loans

$
8,043

$
7,542

$
7,174

$
6,884

$
6,610

Interest on available-for-sale securities:

Taxable

1,659

1,345

1,062

980

839

Tax-exempt

451

448

431

389

359

Interest on interest-bearing deposits and other

130

158

208

Total interest income

10,283

9,493

8,708

8,461

7,867

Interest Expense:

Interest on deposits

1,458

1,463

1,336

1,213

991

Interest on subordinated debentures and notes

Interest on senior secured term note

186

–

Interest on other borrowings

105

–

Total interest expense

1,807

1,700

1,487

1,272

1,084

Net interest income before provision for loan losses

8,476

7,793

7,221

7,189

6,783

Provision for loan losses

180

270

150

370

Net interest income after provision for loan losses

8,296

7,523

7,071

7,039

6,413

Noninterest Income:

Service charges on deposits accounts

885

808

849

829

769

Net gain on sale of loans

1,040

581

886

1,070

960

Net loan servicing income

171

172

170

171

173

Debit card interchange fees

827

789

683

663

675

Net gains on sales of securities available-for-sale

146

159

(19
)

–

Net other gains (losses)

–

Increase in cash surrender value of bank-owned life insurance

Other

390

388

227

336

329

Total noninterest income

3,627

2,980

2,869

3,141

3,038

Noninterest Expenses:

Salaries and employee benefits

4,841

4,585

4,279

4,081

4,050

Occupancy and equipment

1,000

992

824

826

891

Data processing

571

1,827

425

428

417

Debit card processing and issuance

389

334

339

336

Advertising and marketing

142

108

176

126

143

Amortization of intangibles

119

–

Professional fees

393

579

443

350

316

Office Supplies

Telephone

130

116

129

125

126

Other

701

584

605

555

604

Total noninterest expenses

8,375

9,251

7,306

6,907

6,962

Income before income taxes

3,548

1,252

2,634

3,273

2,489

Provision for income taxes

794

173

538

695

473

Net income

$
2,754

$
1,079

$
2,096

$
2,578

$
2,016

Key Ratios

Basic Earnings Per Common Share

$
0.83

$
0.33

$
0.64

$
0.78

$
0.61

Diluted Earnings Per Common Share

0.83

0.33

0.64

0.78

0.61

Dividends Per Common Share

0.10

Net Interest Margin (1)

3.88
%

3.92
%

3.91
%

Efficiency Ratio (1)(2)

69.77
%

86.07
%

71.37
%

66.11
%

70.53
%

Return on Assets

1.15
%

0.50
%

1.05
%

1.29
%

1.06
%

Return on Common Equity

12.54
%

5.12
%

10.13
%

12.67
%

10.25
%

(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.

(UNAUDITED)

As of

June 30,

March 31,

December 31,

September 30,

June 30,

2019

2018

(Amounts in thousands, except per share data)

Cash and due from banks

$
17,364

$
14,581

$
16,677

$
19,526

$
16,942

Interest-bearing deposits in banks and other

16,442

35,862

2,760

5,878

43,001

Securities

256,262

270,665

200,920

197,507

181,466

Net loans/leases

616,925

583,350

546,924

502,463

495,005

Goodwill

10,183

5,037

Other assets

52,295

51,795

44,969

41,943

39,978

Total assets

$
969,471

$
966,436

$
817,287

$
772,354

$
781,429

Deposits

$
837,319

$
854,505

$
685,639

$
680,136

$
692,968

Subordinated debentures

5,155

Senior secured note

14,000

–

Other borrowings

13,992

14,000

36,500

–

Other liabilities

6,614

5,360

5,701

6,241

3,856

Stockholders’ equity

92,391

87,416

84,292

80,822

79,450

Total liabilities and stockholders’ equity

$
969,471

$
966,436

$
817,287

$
772,354

$
781,429

ASSET QUALITY DATA
(Amounts in thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2019

2018

Non-accrual loans

$
3,712

$
3,815

$
2,312

$
3,362

$
3,539

Accruing loans past due 90 days or more

272

–

388

Troubled debt restructures – accruing

3,321

3,546

3,797

3,873

4,283

Total nonperforming loans

$
7,305

$
7,361

$
6,126

$
7,235

$
8,210

Other real estate owned

307

339

104

237

350

Total nonperforming assets

$
7,802

$
7,700

$
6,230

$
7,472

$
8,560

Total loans

$
624,674

$
590,895

$
554,263

$
509,674

$
501,504

Allowance for loan losses

7,749

$
7,545

$
7,339

$
7,211

$
6,499

Loans, net of allowance for loan losses

$
616,925

$
583,350

$
546,924

$
502,463

$
495,005

Nonperforming Assets to total Assets

0.79
%

0.80
%

0.76
%

0.97
%

1.10
%

Nonperforming loans to total loans

1.17
%

1.25
%

1.11
%

1.42
%

1.64
%

Allowance for loan losses to total loans

1.24
%

1.28
%

1.32
%

1.41
%

1.30
%

Allowance for loan losses to nonperforming loans

106.1
%

102.5
%

119.8
%

99.7
%

79.2
%

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

ROLLFORWARD OF ALLOWANCE

2019

2018

Beginning Balance

$
7,545

$
7,339

$
7,211

$
6,499

$
6,149

Provision

180

270

150

370

Loans charged off

102

105

178

Loan recoveries

667

158

Net (recoveries) charge-offs

(24
)

(562
)

Ending Balance

$
7,749

$
7,545

$
7,339

$
7,211

$
6,499

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, 2019

March 31, 2019

June 30, 2018

Average

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Interest Earning Assets:

Interest-bearing deposits and other

$
21,250

$
130

2.48
%

$
27,139

$
158

2.37
%

$
14,326

$
59

1.64
%

Investment securities:

Taxable investment securities

212,708

1,659

3.13
%

170,477

1,345

3.20
%

127,448

839

2.64
%

Tax-exempt investment securities

54,193

451

4.33
%

58,645

448

4.03
%

47,889

359

3.92
%

Total Investment securities

266,901

2,110

3.37
%

229,122

1,793

3.41
%

175,337

1,198

2.99
%

Loans

601,234

8,043

5.37
%

563,927

7,542

5.42
%

517,412

6,610

5.12
%

Total Earning Assets

$
889,385

$
10,283

4.70
%

$
820,188

$
9,493

4.76
%

$
707,075

$
7,867

4.52
%

Allowance for loan losses

(7,645
)

(7,446
)

(6,403
)

Cash and due from banks

15,165

16,567

17,228

Other assets

59,805

52,023

41,613

Total Assets

$
956,710

$
881,332

$
759,513

Interest Bearing Liabilities:

Interest bearing checking accounts

$
258,866

$
408

0.63
%

$
243,543

$
315

0.52
%

$
225,104

$
294

0.52
%

Savings and money market deposits

289,097

535

0.74
%

267,052

642

0.97
%

225,411

397

0.71
%

Time deposits

118,383

515

1.75
%

111,365

506

1.84
%

90,779

300

1.33
%

Total interest bearing deposits

666,346

1,458

0.88
%

621,960

1,463

0.95
%

541,294

991

0.73
%

Subordinated debentures and notes

5,155

5.03
%

5,155

5.11
%

5,155

4.59
%

Borrowings

29,596

284

3.85
%

21,616

172

3.23
%

6,999

1.95
%

Total Interest-Bearing Liabilities

$
701,097

$
1,807

1.03
%

$
648,731

$
1,700

1.06
%

$
553,448

$
1,084

0.79
%

Interest Rate Spread

3.67
%

3.70
%

3.73
%

Noninterest checking accounts

161,461

142,178

123,689

Other liabilities

6,055

4,993

3,472

Total liabilities

868,613

795,902

680,609

Total Stockholders’ equity

88,097

85,430

78,904

Total Liabilities and

Stockholders’ Equity

$
956,710

$
881,332

$
759,513

Net Interest Income/Margin

$
8,476

3.88
%

$
7,793

3.92
%

$
6,783

3.91
%

(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 averages.

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)

For the Six Months Ended

June 30, 2019

June 30, 2018

Average

Balance

Interest

Rate

Balance

Interest

Rate

Interest Earning Assets:

Interest-bearing deposits and other

$
24,178

$
288

2.42
%

$
17,148

$
132

1.55
%

Investment securities:

Taxable investment securities

190,021

3,003

3.19
%

124,005

1,611

2.62
%

Tax-exempt investment securities

58,095

900

4.03
%

49,438

734

3.90
%

Total Investment securities

248,116

3,903

3.38
%

173,443

2,345

2.99
%

Loans

582,684

15,585

5.39
%

501,437

12,485

5.02
%

Total Earning Assets

$
854,978

$
19,776

4.73
%

$
692,028

$
14,962

4.42
%

Allowance for loan losses

(7,546
)

(6,103
)

Cash and due from banks

15,862

17,652

Other assets

55,917

41,676

Total Assets

$
919,211

$
745,253

Interest Bearing Liabilities:

Interest bearing checking accounts

$
251,246

$
723

0.58
%

$
224,818

$
535

0.48
%

Savings and money market deposits

278,135

1,177

0.85
%

216,469

647

0.60
%

Time deposits

114,893

1,021

1.79
%

90,521

561

1.25
%

Total interest bearing deposits

644,274

2,921

0.91
%

531,808

1,743

0.66
%

Subordinated debentures

5,155

130

5.07
%

5,155

112

4.38
%

Borrowings

25,644

456

3.59
%

5,131

1.82
%

Total Interest-Bearing Liabilities

$
675,073

$
3,507

1.05
%

$
542,094

$
1,901

0.71
%

Interest Rate Spread

3.68
%

3.71
%

Noninterest checking accounts

151,833

121,047

Other liabilities

5,534

3,702

Total liabilities

832,440

666,843

Total Stockholders’ equity

86,771

78,410

Total Liabilities and

Stockholders’ Equity

$
919,211

$
745,253

Net Interest Income/Margin

$
16,269

3.90
%

$
13,061

3.87
%

(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 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 average balances.

SOURCE: Blackhawk Bancorp, Inc.

ReleaseID: 553631

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