Blackhawk Bancorp Announces 2021 Second Quarter Earnings

Accesswire

Published

*BELOIT, WI / ACCESSWIRE / July 21, 2021 /* Blackhawk Bancorp, Inc. *(OTCQX:BHWB)* reported net income of $4.06 million for the quarter ended June 30, 2021, an 18% increase over the $3.43 million earned the previous quarter, and a 58% increase compared to the $2.56 million earned the second quarter of 2020. Fully diluted earnings per share (EPS) for the quarter was $1.30, an increase of $0.28 as compared to $1.02 for the quarter ended March 31, 2021 and an increase of $0.53, or 69%, as compared to $0.77 reported for the quarter ended June 30, 2020. The second quarter 2021 results produced a Return on Average Equity (ROAE) of 15.74% and a Return on Average Assets (ROAA) of 1.26%.

The increase in earnings compared to the most recent quarter included a $0.50 million decrease in the provision for loan losses, a $0.45 million increase in net interest income, and a $0.25 million decrease in operating expenses. These earnings gains were offset by a $0.48 million decrease in revenue from the sale and servicing of mortgage loans.

The increase in net income for the second quarter of 2021 compared to the second quarter of the prior year reflects a $2.51 million decrease in provision for loan losses. This improvement was partially offset by a $0.55 million decrease in revenue from the sale and servicing of mortgage loans and a $0.51 million increase in operating expenses.

The increase in earnings per share for the quarter compared to the most recent quarter and the second quarter of 2020 was boosted by the recently completed tender offer and stock repurchase. On May 18, 2021 the Company repurchased 525,546 shares, or 15.6%, of its outstanding common stock, contributing $0.08 to earnings per share for the quarter.

For the six months ended June 30, 2021, the company reported net income of $7.49 million, a 61% increase over the $4.64 million reported for the first six months of 2020. Diluted earnings per share for the first half of 2021 increased by 65% to $2.31 compared to $1.40 for the first six months of 2020. The Company's results for the first six months of 2021 produced a return on average assets of 1.21% and a return on average equity of 13.93%.

"The strong second quarter results were driven primarily by the recognition of PPP (Paycheck Protection Program) loan fees, an abnormally low provision for loan losses and a continuing high level of mortgage banking activity," said Todd James, the Company's Chairman and CEO. "While we're pleased with the overall performance, we know these earnings tailwinds are unsustainable and future performance will be driven by loan growth and efficiency gains." he added.

Total assets of the company increased by $195.2 million, or 17%, to $1.33 billion as of June 30, 2021 compared to $1.14 billion as of December 31, 2020. Total gross loans decreased by $1.1 million, or less than 1%, and total investment securities increased $96.0 million, or 27%, during the first six months of 2021. Total Deposits increased by $201.7 million, or 20%, to $1.19 billion compared to $987.3 million at the end of 2020.

*Net Interest Income*

Net interest income for the second quarter of 2021 totaled $10.16 million, an increase of $0.45 million, or 5%, compared to the first quarter of 2021, and up $0.29 million, or 3%, compared to the second quarter of last year. The net interest margin was 3.37% for the second quarter of 2021 as compared to 3.52% for the quarter ended March 31, 2021, and 3.99% for the second quarter of the prior year.

The increase in net interest income compared to the second quarter of last year was due to a $216.6 million, or 22%, increase in average total earning assets to $1.22 billion compared to $1.01 billion the second quarter of 2020. The increase included a $129.3 million increase in average investment securities and a $88.3 increase in interest bearing deposits at other financial institutions. Total average loans decreased by $1.0 million. The decrease in average total loans included a decrease of $6.9 million in average Paycheck Protection Program (PPP) loans, which averaged $78.9 million for the quarter. During the second quarter of 2021 $1.10 million of PPP fees were recognized, resulting in a 6.60% annualized yield on average PPP loans for three months ended June, 30 2021. The PPP, pandemic-related stimulus payments and an overall influx of deposits drove a $228.9 million, or 25%, increase in total average deposits for the second quarter of 2021 compared to the second quarter of last year. With the majority of this liquidity being deployed in the investment securities portfolio or held in interest-bearing deposit accounts at other financial institutions, the net interest margin dropped 62 basis points to 3.37% compared to 3.99% for the second quarter of the prior year.

Net interest income for the six months ended June 30, 2021, increased by $1.39 million, or 8%, to $19.88 million as compared to $18.49 million for the first six months of 2020. The net interest margin for the first six months of 2021 decreased by 48 basis points to 3.44% compared to 3.92% for the first six months of 2020. Average total loans for the first six months of 2021 were $692.9 million, an increase of $28.0 million, or 4%, as compared to $664.9 million for the first six months of 2020. Average total deposits for the first six months of 2021 were $1.10 billion, an increase of $216.9 million, or 25%, as compared to $880.1 million for the first six months of 2020.

*Provision for Loan Losses and Asset Quality*

There was no provision for loan losses recorded for the quarter ended June 30, 2021, as compared to $0.50 million for the quarter ended March 31, 2021, and $2.51 million for the second quarter of 2020. The decreased provision reflects an improved credit outlook, especially as it relates to pandemic related losses. Net recoveries for the second quarter equaled $0.11 million.

Total nonperforming assets, which include troubled debt restructures performing in accordance with their modified terms, equaled $10.2 million as of June 30, 2021, as compared to $8.4 million as of March 31, 2021, and $11.6 million at June 30, 2020. At June 30, 2021, the ratio of nonperforming loans to total loans equaled 1.50%, as compared to 1.17% at March 31, 2021, and 1.52% at June 30, 2020. The allowance for loan losses to total loans was 1.66% as of June 30, 2021, as compared to 1.56% at March 31, 2021, and 1.43% as of June 30, 2020. The ratio of the allowance for loan losses to nonperforming loans decreased to 110.2% as of June 30, 2021, as compared to 133.0% at March 31, 2021, and 93.6% at June 30, 2020.

Management continues to work closely with borrowers to ensure credit issues are identified and addressed as early as possible, improving the overall probability of repayment. Blackhawk provided payment relief to borrowers negatively affected by the COVID-19 pandemic. Loans with an aggregate balance in excess of $70 million were modified, and as of June 30, 2021 all of the modified credits have either returned to normal payments or are reflected in the nonperforming loan numbers, except for a small number of credits totaling $2.4 million for which the modified terms have been extended and the borrowers are continuing to perform under the modified terms.

*Non-Interest Income and Operating Expenses*

Non-interest income for the quarter ended June 30, 2021 totaled $4.69 million, a $0.34 million decrease compared to $5.04 million the prior quarter, and a $0.16 million decrease from the $4.85 million recorded in the second quarter of 2020. The decrease compared to the first quarter of 2021 included a decrease of $0.48 million in net revenue from the sale and servicing of mortgage loans. This was partially offset by a $0.19 million increase in debit card interchange fees. The decrease in non-interest income compared to the second quarter of 2020 was primarily due to a $0.55 million decrease in revenue from the sale and servicing of mortgage loans that was partially offset by a $0.29 million increase in debit card interchange fees.

Non-interest income for the first six months of 2021 increased $1.38 million, or 17%, to $9.73 million as compared to $8.35 million for the first six months of 2020, including a $1.17 million increase in the sale and servicing of loans and a $0.49 million increase in debit card interchange fees.

Operating expenses for the quarter ended June 30, 2021 totaled $9.46 million, a decrease of $0.25 million, or 3%, compared to the quarter ended March 31, 2021, and increased by $0.51 million, or 6%, compared to the second quarter of 2020.

Operating expenses for the six-month period ended June 30, 2021, totaled $19.18 million, a $1.44 million, or 8%, increase over the first six month of 2020.

*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 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

Matthew McDonnell, SVP & CFO
mmcdonnell@blackhawkbank.com

Phone: (608) 364-8911

*BLACKHAWK BANCORP, INC. AND SUBSIDIARIES*
*CONSOLIDATED BALANCE SHEETS*
*JUNE 30, 2021 AND DECEMBER 31, 2020*
*(UNAUDITED)*
                       

  *June 30,*     *December 31,*  
*Assets*
  *2021*     *2020*  

  (Dollars in thousands, except  

  share and per share data)  
Cash and due from banks
  $ 16,418     $ 12,012  
Interest-bearing deposits in banks and other institutions
    136,657       42,119  
Total cash and cash equivalents
    153,075       54,131  

               
Certificates of deposit in banks and other institutions
    3,416       4,159  
Equity securities at fair value
    2,521       2,517  
Securities available-for-sale
    445,551       349,565  
Loans held for sale
    6,469       6,096  
Federal Home Loan Bank stock, at cost
    2,150       2,150  
Loans, less allowance for loan losses of $11,229 and $10,764
               
at June 30, 2021 and December 31, 2020, respectively
    660,269       662,225  
Premises and equipment, net
    20,915       20,254  
Goodwill and core deposit intangible
    11,819       12,018  
Mortgage servicing rights
    3,720       3,409  
Cash surrender value of bank-owned life insurance
    11,285       11,126  
Other assets
    15,559       13,949  
Total assets
  $ 1,336,749     $ 1,141,599  

               
*Liabilities and Stockholders' Equity*
               

               
Liabilities
               
Deposits:
               
Noninterest-bearing
  $ 389,940     $ 268,866  
Interest-bearing
    799,057       718,388  
Total deposits
    1,188,997       987,254  
Subordinated debentures and notes (including $1,031 at fair value at
               
June 30, 2021 and December 31, 2020)
    20,155       5,155  
Senior secured term note
    12,056       12,833  
Other borrowings
    5,000       14,000  
Other liabilities
    11,131       10,602  
*Total liabilities*
    1,237,339       1,029,844  

               
*Stockholders' equity*
               
Common stock, $0.01 par value, 10,000,000 shares authorized;
               
3,473,819 and 3,435,348 shares issued as of June 30, 2021 and
               
December 31, 2020, respectively
    35       35  
Additional paid-in capital
    35,455       35,062  
Retained earnings
    76,479       69,676  
Treasury stock, 630,991 and 62,999 shares at cost as of June 30, 2021
               
and December 31, 2020, respectively
    (18,952 )     (941 )
Accumulated other comprehensive income (loss)
    6,393       7,923  
Total stockholders' equity
    99,410       111,755  
*Total liabilities and stockholders' equity*
  $ 1,336,749     $ 1,141,599                                  

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

  *Six months ended June 30,*  

  *2021*     *2020*  

  (Amounts in thousands, except per share data)  

       
Interest Income:
       
Interest and fees on loans
  $  16,776     $  16,691  
Interest and dividends on available-for-sale securities:
               
Taxable
    3,479       3,123  
Tax-exempt
    762       695  
Interest on deposits in other financial institutions
    89       202  
*Total interest income*
    21,106       20,711  
Interest Expense:
               
Interest on deposits
    836       1,816  
Interest on subordinated debentures
    158       98  
Interest on senior secured term note
    210       267  
Interest on other borrowings
    20       41  
*Total interest expense*
    1,224       2,223  
*Net interest income before provision for loan losses*
    19,882       18,488  
Provision for loan losses
    500       3,270  
*Net interest income after provision for loan losses*
    19,382       15,218  

               
Noninterest Income:
               
Service charges on deposits accounts
    1,354       1,507  
Net gain on sale of loans
    4,579       4,097  
Net loan servicing income
    404       (280 )
Debit card interchange fees
    2,245       1,757  
Net gains on sales of securities available-for-sale
    -       107  
Net other gains (losses)
    49       6  
Increase in cash surrender value of bank-owned life insurance
    159       159  
Change in value of equity securities
    (30 )     60  
Other
    967       935  
*Total noninterest income*
    9,727       8,348  

               
Noninterest Expenses:
               
Salaries and employee benefits
    11,487       10,512  
Occupancy and equipment
    2,274       2,156  
Data processing
    1,232       1,071  
Debit card processing and issuance
    928       791  
Advertising and marketing
    169       135  
Amortization of core deposit intangible
    199       223  
Professional fees
    789       772  
Office Supplies
    170       178  
Telephone
    286       299  
Other
    1,641       1,601  
*Total noninterest expenses*
    19,175       17,738  
*Income before income taxes*
    9,934       5,828  
Provision for income taxes
    2,449       1,191  
*Net income*
  $  7,485     $  4,637  

               
*Key Ratios*
               

               
Basic Earnings Per Common Share
  $  2.31     $  1.40  
Diluted Earnings Per Common Share
    2.31       1.40  
Dividends Per Common Share
    0.22       0.22  

               
Net Interest Margin (1)
    3.44 %     3.92 %
Efficiency Ratio (1)(2)
    64.64 %     65.89 %
Return on Assets
    1.21 %     0.90 %
Return on Common Equity
    13.93 %     9.19 %                

(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,*  

  *2021*     *2021*     *2020*     *2020*     *2020*  

  (Dollars in thousands, except per share data)  
Interest Income:
                   
Interest and fees on loans
  $  8,621     $  8,155     $  8,079     $  8,671     $  8,658  
Interest on available-for-sale securities:
                                       
Taxable
    1,759       1,721       1,598       1,607       1,618  
Tax-exempt
    378       384       384       372       371  
Interest on deposits in other financial institutions
    48       41       33       41       40  
*Total interest income*
    10,806       10,301       10,094       10,691       10,687  
Interest Expense:
                                       
Interest on deposits
    421       415       458       565       639  
Interest on subordinated debentures
    117       41       41       42       45  
Interest on senior secured term note
    104       107       113       119       111  
Interest on other borrowings
    -       20       40       47       19  
*Total interest expense*
    642       583       652       773       814  
*Net interest income before provision for loan losses*
    10,164       9,718       9,442       9,918       9,873  
Provision for loan losses
    -       500       1,715       2,615       2,505  
*Net interest income after provision for loan losses*
    10,164       9,218       7,727       7,303       7,368  

                                       
Noninterest Income:
                                       
Service charges on deposits accounts
    663       690       781       747       610  
Net gain on sale of loans
    2,217       2,362       3,572       3,412       3,192  
Net loan servicing income
    36       369       (177 )     26       (389 )
Debit card interchange fees
    1,218       1,027       979       1,002       924  
Net gains on sales of securities available-for-sale
    -       -       428       -       8  
Net other gains (losses)
    7       42       -       58       6  
Increase in cash surrender value of bank-owned life insurance
    72       87       75       76       74  
Other
    479       458       310       344       425  
*Total noninterest income*
    4,692       5,035       5,968       5,665       4,850  

                                       
Noninterest Expenses:
                                       
Salaries and employee benefits
    5,753       5,734       5,851       5,585       5,477  
Occupancy and equipment
    1,092       1,182       986       1,137       1,074  
Data processing
    641       591       683       629       561  
Debit card processing and issuance
    503       425       384       409       394  
Advertising and marketing
    70       99       75       87       38  
Amortization of intangibles
    96       104       107       107       107  
Professional fees
    399       390       373       386       405  
Office Supplies
    93       77       90       94       88  
Telephone
    144       141       140       138       149  
Other
    673       968       637       714       659  
*Total noninterest expenses*
    9,464       9,711       9,326       9,286       8,952  
*Income before income taxes*
    5,392       4,542       4,369       3,682       3,266  
Provision for income taxes
    1,337       1,112       1,021       819       704  
*Net income*
  $  4,055     $  3,430     $  3,348     $  2,863     $  2,562  

                                       
*Key Ratios*
                                       

                                       
Basic Earnings Per Common Share
  $  1.30     $  1.02     $  1.00     $  0.86     $  0.77  
Diluted Earnings Per Common Share
    1.30       1.02       1.00       0.86       0.77  
Dividends Per Common Share
    0.11       0.11       0.11       0.11       0.11  

                                       
Net Interest Margin (1)
    3.37 %     3.52 %     3.63 %     3.83 %     3.99 %
Efficiency Ratio (1)(2)
    63.28 %     65.53 %     61.80 %     59.39 %     60.43 %
Return on Assets
    1.26 %     1.16 %     1.20 %     1.03 %     0.96 %
Return on Common Equity
    15.74 %     12.44 %     12.08 %     10.64 %     10.16 %                                        

(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,*  

  *2021*     *2021*     *2020*     *2020*     *2020*  

  (Amounts in thousands, except per share data)  
Cash and due from banks
  $  16,418     $  15,108     $  12,012     $  17,403     $  14,527  
Interest-bearing deposits in banks and other
    140,073       50,199       46,278       47,848       25,246  
Securities
    448,072       379,187       352,082       317,761       301,726  
Net loans/leases
    666,738       700,399       668,321       681,060       697,881  
Goodwill and core deposit intangible
    11,819       11,914       12,018       12,125       12,232  
Other assets
    53,629       50,826       50,888       50,105       49,485  
*Total assets*
  $  1,336,749     $  1,207,633     $  1,141,599     $  1,126,302     $  1,101,097  

                                       
Deposits
  $  1,188,997     $  1,068,197     $  987,254     $  960,773     $  939,066  
Subordinated debentures
    20,155       5,155       5,155       5,155       5,155  
Senior secured term note
    12,056       12,445       12,833       13,222       13,611  
Borrowings
    5,000       4,000       14,000       29,000       29,000  
Other liabilities
    11,131       7,138       10,602       10,161       9,758  
Stockholders' equity
    99,410       110,698       111,755       107,991       104,507  
*Total liabilities and stockholders' equity*
  $  1,336,749     $  1,207,633     $  1,141,599     $  1,126,302     $  1,101,097  

*ASSET QUALITY DATA*

(Amounts in thousands)
  *June 30,*     *March 31,*     *December 31,*     *September 30,*     *June 30,*  

  *2021*     *2021*     *2020*     *2020*     *2020*  

                   
Non-accrual loans
  $  8,228     $  6,361     $  7,013     $  8,584     $  8,427  
Accruing loans past due 90 days or more
    -       -       -       196       -  
Troubled debt restructures - accruing
    1,958       1,996       2,057       2,176       2,361  
Total nonperforming loans
  $  10,186     $  8,357     $  9,070     $  10,956     $  10,788  
Other real estate owned
    -       -       1       1       762  
Total nonperforming assets
  $  10,186     $  8,357     $  9,071     $  10,957     $  11,550  

                                       
Total loans
  $  677,967     $  711,515     $  679,085     $  691,003     $  707,983  
Allowance for loan losses
  $  11,229     $  11,116     $  10,764     $  9,943     $  10,102  

  $  666,738     $  700,399     $  668,321     $  681,060     $  697,881  
Nonperforming Assets to total Assets
    0.76 %     0.69 %     0.79 %     0.97 %     1.05 %
Nonperforming loans to total loans
    1.50 %     1.17 %     1.34 %     1.59 %     1.52 %
Allowance for loan losses to total loans
    1.66 %     1.56 %     1.59 %     1.44 %     1.43 %
Allowance for loan losses to nonperforming loans
    110.2 %     133.0 %     118.7 %     90.8 %     93.6 %
 
  *For the Quarter Ended*  

  *June 30,*     *March 31,*     *December 31,*     *September 30,*     *June 30,*  
*ROLLFORWARD OF ALLOWANCE*
  *2021*     *2021*     *2020*     *2020*     *2020*  

                   
Beginning Balance
  $  11,116     $  10,764     $  9,943     $  10,102     $  8,160  
Provision
    -       500       1,715       2,615       2,505  
Loans charged off
    61       582       1,334       2,892       639  
Loan recoveries
    174       434       440       118       76  
Net charge-offs
    (113 )     148       894       2,774       563  
Ending Balance
  $  11,229     $  11,116     $  10,764     $  9,943     $  10,102  

*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, 2021     March 31, 2021     June 30, 2020  

  Average         Average     Average         Average     Average         Average  

  Balance     Interest     Rate     Balance     Interest     Rate     Balance     Interest     Rate  
*Interest Earning Assets:*
                                   
Interest-bearing deposits and other
  $  105,385     $  48       0.18 %   $  74,108     $  41       0.22 %   $  17,056     $  40       0.95 %
Investment securities:
                                                                       
Taxable investment securities
    365,329       1,759       1.93 %     320,740       1,721       2.18 %     241,831       1,618       2.69 %
Tax-exempt investment securities
    52,197       378       3.73 %     52,122       384       3.83 %     46,443       371       4.13 %
Total Investment securities
    417,526       2,137       2.16 %     372,862       2,105       2.41 %     288,274       1,989       2.92 %
Loans
    700,109       8,621       4.94 %     685,654       8,155       4.82 %     701,080       8,658       4.97 %

                                                                       
*Total Earning Assets*
* * *$ * *1,223,020* * * * * *$ * *10,806* * * * * * * *3.58* *%* * * *$ * *1,132,624* * * * * *$ * *10,301* * * * * * * *3.73* *%* * * *$ * *1,006,410* * * * * *$ * *10,687* * * * * * * *4.31* *%*
Allowance for loan losses
    (11,221 )                     (11,075 )                     (8,769 )                
Cash and due from banks
    17,124                       16,052                       15,232                  
Other assets
    58,008                       58,706                       58,475                  

                                                                       
*Total Assets*
  $  1,286,931                     $  1,196,307                     $  1,071,348                  

                                                                       
*Interest Bearing Liabilities:*
                                                                       
Interest bearing checking accounts
  $  302,946     $  180       0.24 %   $  284,527     $  161       0.23 %   $  298,831     $  157       0.21 %
Savings and money market deposits
    396,476       96       0.10 %     356,615       84       0.10 %     305,966       105       0.14 %
Time deposits
    77,155       145       0.75 %     81,807       170       0.84 %     101,808       377       1.49 %
Total interest bearing deposits
    776,577       421       0.22 %     722,949       415       0.23 %     706,605       639       0.36 %
Subordinated debentures and notes
    13,067       117       3.59 %     5,155       41       3.23 %     5,155       45       3.53 %
Borrowings
    16,501       104       2.51 %     26,369       127       1.96 %     39,436       130       1.32 %

                                                                       
*Total Interest-Bearing Liabilities*
* * *$ * *806,145* * * * * *$ * *642* * * * * * * *0.32* *%* * * *$ * *754,473* * * * * *$ * *583* * * * * * * *0.31* *%* * * *$ * *751,196* * * * * *$ * *814* * * * * * * *0.44* *%*

                                                                       
*Interest Rate Spread*
                * * * * *3.26* *%*                 * * * * *3.42* *%*                 * * * * *3.87* *%*

                                                                       
Noninterest checking accounts
    371,146                       322,667                       212,196                  
Other liabilities
    6,283                       7,373                       6,570                  
Total liabilities
    1,183,574                       1,084,513                       969,962                  
*Total Stockholders' equity*
    103,357                       111,794                       101,386                  
*Total Liabilities and*
                                                                       
*Stockholders' Equity*
  $  1,286,931                     $  1,196,307                     $  1,071,348                  

                                                                       
*Net Interest Income/Margin*
        * * *$ * *10,164* * * * * * * *3.37* *%*         * * *$ * *9,718* * * * * * * *3.52* *%*         * * *$ * *9,873* * * * * * * *3.99* *%*

                                                                       

(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, 2021     June 30, 2020  

  Average         Average     Average         Average  

  Balance     Interest     Rate     Balance     Interest     Rate  
*Interest Earning Assets:*
                       
Interest-bearing deposits and other
  $  89,833     $  89       0.20 %   $  27,362     $  202       1.48 %
Investment securities:
                                               
Taxable investment securities
    343,158       3,479       2.04 %     223,178       3,123       2.81 %
Tax-exempt investment securities
    52,160       762       3.78 %     43,659       695       4.11 %
Total Investment securities
    395,318       4,241       2.27 %     266,837       3,818       3.03 %
Loans
    692,921       16,776       4.88 %     664,941       16,691       5.05 %

                                               
*Total Earning Assets*
* * *$ * *1,178,072* * * * * *$ * *21,106* * * * * * * *3.65* *%* * * *$ * *959,140* * * * * *$ * *20,711* * * * * * * *4.38* *%*
Allowance for loan losses
    (11,148 )                     (8,392 )                
Cash and due from banks
    16,591                       15,427                  
Other assets
    59,141                       58,696                  

                                               
*Total Assets*
  $  1,242,656                     $  1,024,871                  

                                               
*Interest Bearing Liabilities:*
                                               
Interest bearing checking accounts
  $  293,787     $  341       0.23 %   $  284,840     $  491       0.35 %
Savings and money market deposits
    376,656       180       0.10 %     294,040       467       0.32 %
Time deposits
    79,468       315       0.80 %     107,837       858       1.60 %
Total interest bearing deposits
    749,911       836       0.22 %     686,717       1,816       0.53 %
Subordinated debentures
    9,133       158       3.49 %     5,155       98       3.81 %
Borrowings
    21,408       230       2.17 %     32,018       308       1.93 %

                                               
*Total Interest-Bearing Liabilities*
* * *$ * *780,452* * * * * *$ * *1,224* * * * * * * *0.32* *%* * * *$ * *723,890* * * * * *$ * *2,222* * * * * * * *0.62* *%*

                                               
*Interest Rate Spread*
                * * * * *3.33* *%*                 * * * * *3.76* *%*

                                               
Noninterest checking accounts
    347,041                       193,372                  
Other liabilities
    6,825                       6,715                  
Total liabilities
    1,134,318                       923,977                  
*Total Stockholders' equity*
    108,338                       100,894                  
*Total Liabilities and*
                                               
*Stockholders' Equity*
  $  1,242,656                     $  1,024,871                  

                                               
*Net Interest Income/Margin*
        * * *$ * *19,882* * * * * * * *3.44* *%*         * * *$ * *18,489* * * * * * * *3.92* *%*

                                               

(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.
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