Blackhawk Bancorp, Inc. (BHWB: OTCQX U.S. Premier) | Blackhawk Bancorp Announces Third Quarter 2015 Results

Blackhawk Bancorp Announces Third Quarter 2015 Results

Oct 23, 2015

OTC Disclosure News Service

– Blackhawk Bancorp Announces Third Quarter 2015 Results

BELOIT, WI–(Marketwired – October 23, 2015) – Blackhawk Bancorp, Inc. (OTCQX: BHWB) reported net income of $1,129,000 for the third quarter of 2015, a $1,504,000 increase from the $375,000 loss reported for the third quarter of 2014. Earnings per diluted share for the quarter was $0.51, up $0.68 from the $0.17 per diluted share loss realized in the third quarter of 2014. The dramatic increase compared to the third quarter of last year reflects the securities fraud loss realized last year, which reduced net income by $1,593,000 in the third quarter of 2014.

Net income for the nine months ended September 2015 increased 124% to $2,933,000 compared to $1,308,000 earned the first three quarters of 2014. Earnings per diluted share for the nine month period was $1.31, a 162% increase compared to the $0.50 earned the first nine months of 2014. Excluding the fraud related loss recognized in the third quarter of 2014, net income for the first nine months of 2015 increased $32,000, or 2%, and diluted earnings per share increased $0.10, or 8%, compared to the first nine months of 2014.

“We’re pleased to be reporting another quarter of solid performance,” said Rick Bastian, the Company’s chief executive officer. “We continue to grow our core business by providing the personal attention and financial solutions business owners and consumers want from their Bank,” he added.

“Our credit quality and the strength of our reserves continue to improve. While the provision for loan losses is about the same as last year, net charge-offs are down by 63%. With the reduction in charge-offs, the allowance for loan losses has increased by 21% since the end of 2014. The added strength of our reserves gives us more flexibility to aggressively resolve remaining nonperforming loans,” said Bastian. “We don’t expect to be releasing any reserves, although the stabilization in credit quality could lead to reduced provision levels in the future,” he added.

The following table summarizes key performance and asset quality measures for the quarter ended September 30, 2015 compared to the previous four quarters:

Net Interest Income

Net interest income for the third quarter increased 2% to $5,019,000 compared to $4,932,000 for the third quarter of 2014, and the net interest margin increased to 3.68% compared to 3.66% the most recent quarter and the third quarter of 2014.

For the first nine months of 2015 net interest income increased $156,000, or 1%, to $14,618,000 compared to $14,462,000 the nine months of 2014. The 2015 year to date net interest margin was 3.68%, up 3 basis points compared to the first three quarters of 2014.

Average total earning assets for the quarter increased by $5.5 million to $558.0 million compared to $552.5 million in the third quarter of 2014. The increase in average total earning assets includes a $26.9 million, or 7%, increase in average total loans that was offset with a $24.6 million decrease in average short-term investments and investment securities. Average total deposits for the third quarter were $7.4 million, or 2%, higher than they were in the third quarter of 2014. This includes a $7.3 million increase in average non-interesting bearing demand deposits.

Average total earning assets for the nine months ended September 30, 2015 increased by $1.2 million to $548.6 million compared to $547.4 million the first nine months of 2014; however, total average loans were up by $24.2 million to $405.7 million compared to $381.3 million the year before. The increase in average total loans for both the quarter and year to date periods was driven by growth in the commercial and commercial real estate portfolios. The shift in earning assets from investments to loans has been helpful in maintaining the net interest margin, despite downward pressure from the prolonged low rate environment and intense competition for quality commercial credits. Average total deposits for the first three quarters of 2015 increased by $1.5 million, or less than 1%, compared to the same period the year before.

Provision for Loan Losses and Credit Quality

The provision for loan losses in the third quarter decreased by $23,000, or 4%, to $555,000 compared to $578,000 in third quarter of 2014. For the first nine months of 2015 the provision for loan losses increased $20,000 to $1,789,000 compared to $1,769,000 for the first three quarters of 2014.

Nonaccrual loans and other real estate owned totaled $6.7 million, or 1.61% of total loans, at September 30, 2015 compared to $6.6 million, or 1.61% of total loans, at June 30, 2015 and $7.0 million, or 1.79% of total loans, at September 30, 2014.

Net loan charge-offs for the first nine months of 2015 decreased 64% to $837,000 compared to $2,276,000 in the first nine months of 2014. The following table summarizes the activity in the allowance for loan losses for the nine months ended September 30, 2015 and 2014 and the year ended December 31, 2014:

The ratio of the allowance for loan losses to total loans was 1.29% as of September 30, 2015, compared 1.17% at June 30, 2015, and 1.12% at September 30, 2014. The ratio of the allowance for loan losses to nonaccrual loans was 97.9% at September 30, 2015 compared to 89.7% at June 30, 2015 and 73.1% at September 30, 2015.

Non-Interest Income and Operating Expenses

Excluding the securities fraud loss from the prior year, non-interest income for the third quarter of 2015 increased $5,000 to $2,452,000 compared to $2,447,000 for the third quarter of 2014. For the first nine months of 2015 it’s up by $581,000, or 9%, compared to $6,366,000 for the first nine months of last year. The year to date improvement in non-interest income includes a $350,000, or 24%, increase in revenue from the sale and servicing of mortgage loans originated for sale into the secondary market.

Operating expenses for the quarter increased by $235,000, or 5%, to $5,381,000 compared to $5,146,000 the third quarter of 2014. For the first nine months of the year operating expenses are up $503,000, or 3%, to $15,892,000 compared to $15,389,000 the first nine months of 2014.

Outlook

Blackhawk has created a strong credit culture and the processes to support it; however, economic uncertainties and depressed real estate values have resulted in an elevated level of losses and nonperforming loans. While the level of nonperforming loans has been decreasing and is expected to result in improved earnings, the potential for continuing economic weakness presents a heightened level of risk. For that reason, the Company expects to continue fortifying its balance sheet by conserving capital, strengthening the allowance for loan losses and maintaining ample liquidity to meet the demands of its customer base. The Company will however, continue to seek profitable growth opportunities in its Wisconsin and Illinois markets, without sacrificing profitability or credit quality. Blackhawk emphasizes the value of its personal attention and the service it provides that remain unmatched by larger competitors.

About Blackhawk Bancorp

Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank, which operates eight banking centers in south central Wisconsin and north central Illinois, along the I-90 corridor from Belvidere, Illinois to Janesville, Wisconsin. Blackhawk’s locations serve individuals and small businesses, primarily with fewer than 200 employees. The Company offers a variety of value-added consultative services to small businesses and their employees related to its banking products such as health savings accounts and investment management.

Forward-Looking Statements

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

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

 
 

   
 BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
 

   
 CONSOLIDATED BALANCE SHEETS
 

   
 SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
 

   
 (UNAUDITED)
 

   
  
September 30,

  December 31,
 Assets
2015

  2014
  
(Amounts in thousands, except
  
share and per share data)
 Cash and due from banks
$10,175

  $9,847
 Interest-bearing deposits in banks and other
 19,819

   11,744
   Total cash and cash equivalents
 29,994

   21,591
 Securities available-for-sale
 134,519

   129,184
 Loans held for sale
 1,300

   1,537
 Federal Home Loan Bank stock, at cost
 2,266

   2,266
 Loans, less allowance for loan losses of $5,348 and $4,396 at September 30, 2015 and December 31, 2014, respectively
 411,321

   391,448
 Premises and equipment, net
 7,919

   8,320
 Goodwill
 5,037

   5,037
 Mortgage Servicing rights
 2,475

   2,640
 Cash surrender value of bank-owned life insurance
 9,828

   9,602
 Other assets
 9,473

   9,848
  Total assets
$614,132

  $581,473
  
  

    
 Liabilities and Stockholders’ Equity
  

    
  
  

    
 Liabilities
  

    
  Deposits:
  

    
   Noninterest-bearing
$101,064

  $99,068
   Interest-bearing
 444,934

   416,716
    Total deposits
 545,998

   515,784
 Subordinated debentures and notes (including $1,031 at fair value at
  

    
 September 30, 2015 and December 31, 2014)
 11,255

   11,255
 Senior secured term note
 8,750

   9,000
 Other borrowings
 –

   –
 Other liabilities
 3,192

   3,398
    Total liabilities
 569,195

   539,437
  
  

    
 Stockholders’ equity
  

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

    
  2,320,454 and 2,318,496 shares issued as of September 30, 2015 and
  

    
  December 31, 2014, respectively
 23

   23
  Additional paid-in capital
 10,280

   9,960
  Retained earnings
 33,480

   31,091
  Treasury stock, 88,783 and 87,865 shares at cost as of September 30, 2015 and December 31, 2014, respectively
 (983

)  (969
) Accumulated other comprehensive income (loss)
 2,137

   1,931
   Total stockholders’ equity
 44,937

   42,036
   Total liabilities and stockholders’ equity
$614,132

  $581,473
           
 

   
 BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
 

   
 CONSOLIDATED STATEMENTS OF INCOME
 

   
 (UNAUDITED)
 

   
  
Three months ended September 30,
  
2015

  2014
  
(Amounts in thousands, except
  
share and per share data)
 Interest Income:
  

    
  Interest and fees on loans
$4,827

  $4,732
  Interest and dividends on available-for-sale securities:
  

    
   Taxable
 504

   595
   Tax-exempt
 296

   325
  Interest on securities purchased under agreements to resell
 3

   45
  Interest on other
 2

   1
   Total interest and dividend income
 5,632

   5,698
 Interest Expenses:
  

    
  Interest on deposits
 364

   518
  Interest on subordinated debentures
 153

   152
  Interest on senior secured term note
 89

   92
  Interest on other borrowings
 7

   4
   Total interest expense
 613

   766
   Net interest and dividend income before provision for loan losses
 5,019

   4,932
 Provision for loan losses
 555

   578
   Net interest and dividend income after provision for loan losses
 4,464

   4,354
  
  

    
 Noninterest Income:
  

    
  Service charges on deposits accounts
 724

   741
  Net gain on sale of loans
 565

   516
  Net loan servicing income
 93

   72
  Debit card interchange fees
 555

   561
  Net gains on sales of securities available-for-sale
 121

   214
  Net other gains (losses)
 14

   (2,515
) Increase in cash value of bank-owned life insurance
 73

   71
  Other
 307

   176
   Total noninterest income
 2,452

   (164

  

    
 Noninterest Expenses:
  

    
  Salaries and employee benefits
 2,878

   2,845
  Premises and equipment
 650

   632
  Data processing
 611

   579
  Advertising and marketing
 69

   55
  Professional fees
 261

   235
  Office Supplies
 85

   108
  Telephone
 105

   98
  Other
 722

   594
   Total noninterest expenses
 5,381

   5,146
   Income before income taxes
 1,535

   (956
)Provision for income taxes
 406

   (581
)  Net income
$1,129

  $(375

  

    
 Key Ratios
  

    
  
  

    
 Basic Earnings Per Common Share
$0.51

  $(0.17
)Diluted Earnings Per Common Share
 0.51

   (0.17
)Dividends Per Common Share
 0.04

   0.02
  
  

    
 Net Interest Margin (FTE)
 3.68

%  3.66
%Efficiency Ratio (FTE)
 71.80

%  71.15
%Return on Assets
 0.75

%  -0.25
%Return on Common Equity
 10.15

%  -3.56
%         
 

   
 BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
 

   
 CONSOLIDATED STATEMENTS OF INCOME
 

   
 (UNAUDITED)
 

   
  
Nine months ended September 30,
  
2015

  2014
  
(Amounts in thousands, except
  
share and per share data)
 Interest Income:
  

    
  Interest and fees on loans
$14,181

  $13,946
  Interest and dividends on available-for-sale securities:
  

    
   Taxable
 1,480

   1,590
   Tax-exempt
 906

   994
  Interest on securities purchased under agreements to resell
 3

   154
  Interest on other
 14

   3
   Total interest and dividend income
 16,584

   16,687
 Interest Expense:
  

    
  Interest on deposits
 1,227

   1,578
  Interest on subordinated debentures and notes
 458

   456
  Interest on senior secured term note
 271

   157
  Interest on other borrowings
 10

   34
   Total interest expense
 1,966

   2,225
   Net interest and dividend income before provision for loan losses
 14,618

   14,462
 Provision for loan losses
 1,789

   1,769
   Net interest and dividend income after provision for loan losses
 12,829

   12,693
  
  

    
 Noninterest Income:
  

    
  Service charges on deposits accounts
 1,972

   2,100
  Net gain on sale of loans
 1,606

   1,291
  Net loan servicing income
 227

   192
  Debit card interchange fees
 1,691

   1,680
  Net gains on sales of securities available-for-sale
 321

   469
  Net other gains (losses)
 19

   (2,879
) Increase in cash surrender value of bank-owned life insurance
 227

   221
  Other
 884

   681
   Total noninterest income
 6,947

   3,755
  
  

    
 Noninterest Expenses:
  

    
  Salaries and employee benefits
 8,727

   8,436
  Premises and equipment
 1,928

   1,903
  Data processing
 1,786

   1,757
  Advertising and marketing
 185

   167
  Professional fees
 743

   688
  Office Supplies
 259

   285
  Telephone
 312

   280
  Other
 1,952

   1,873
   Total noninterest expenses
 15,892

   15,389
   Income before income taxes
 3,884

   1,059
 Provision for income taxes
 951

   (249
)  Net income
$2,933

  $1,308
  
  

    
 Key Ratios
  

    
  
  

    
 Basic Earnings Per Common Share
$1.31

  $0.50
 Diluted Earnings Per Common Share
 1.31

   0.50
 Dividends Per Common Share
 0.08

   0.04
  
  

    
 Net Interest Margin (FTE)
 3.68

%  3.65
%Efficiency Ratio (FTE)
 73.22

%  72.84
%Return on Assets
 0.66

%  0.30
%Return on Common Equity
 9.01

%  3.69
%                     BLACKHAWK BANCORP, INC. AND SUBSIDIARIES            AVERAGE BALANCE SHEET WITH RESULTANT INTEREST AND RATES
 
  
  
  

  
  
  
Average Balance Sheet with Resultant Interest and Rates
  

  
  
  
(Amounts in thousands)
  
  
  

  
  
  
(yields on a tax-equivalent basis)
 Three months ended September 30, 2015

 Three months ended September 30, 2014
 
 Average
  
 Average

 Average
  
 Average
 
 Balance
 Interest
 Rate

 Balance
 Interest
 Rate
Interest Earning Assets:
  
  
  

  
  
  
 Interest-bearing deposits in banks
 $5,322
 $2
 0.17%

 $1,973
 $1
 0.14%
 Federal funds sold securities
  
  
  

  
  
  
 purchased under agreements to
  
  
  

  
  
  
 resell
 2,581
 3
 0.49%

 12,693
 45
 1.39%
 Investment securities:
  
  
  

  
  
  
  Taxable investment securities
 99,801
 504
 2.00%

 113,325
 595
 2.08%
  Tax-exempt investment securities
 37,573
 296
 4.79%

 38,623
 325
 5.02%
   Total Investment securities
 137,374
 800
 2.77%

 151,948
 920
 2.83%
 Loans
 412,801
 4,827
 4.64%

 385,923
 4,732
 4.86%
 
  
  
  

  
  
  
Total Earning Assets
 $558,078
 $5,632
 4.12%

 $552,537
 $5,698
 4.21%
 Allowance for loan losses
 (5,045)
  
  

 (4,310)
  
  
 Cash and due from banks
 13,459
  
  

 13,129
  
  
 Other assets
 35,639
  
  

 32,914
  
  
 
  
  
  

  
  
  
Total Assets
 $602,131
  
  

 $594,270
  
  
 
  
  
  

  
  
  
Interest Bearing Liabilities:
  
  
  

  
  
  
 Interest bearing checking accounts
 $165,566
 $112
 0.27%

 $167,651
 $118
 0.28%
 Savings and money market deposits
 170,955
 75
 0.17%

 143,616
 54
 0.15%
 Time deposits
 77,221
 177
 0.91%

 102,407
 346
 1.34%
  Total interest bearing deposits
 413,742
 364
 0.35%

 413,674
 518
 0.50%
 Subordinated debentures
 11,255
 153
 5.40%

 11,255
 152
 5.37%
 Borrowings
 27,351
 96
 1.39%

 20,084
 96
 1.90%
 
  
  
  

  
  
  
Total Interest-Bearing Liabilities
 $452,348
 $613
 0.54%

 $445,013
 $766
 0.68%
 
  
  
  

  
  
  
Interest Rate Spread
  
  
 3.58%

  
  
 3.53%
 
  
  
  

  
  
  
Noninterest checking accounts
 101,517
  
  

 94,177
  
  
 Other liabilities
 4,149
  
  

 13,180
  
  
 Total liabilities
 558,014
  
  

 552,370
  
  
 Common Stockholders’ equity
 44,117
  
  

 41,900
  
  
Total Stockholders’ equity
 44,117
  
  

 41,900
  
  
Total Liabilities and
  
  
  

  
  
  
 Stockholders’ Equity
 $602,131
  
  

 $594,270
  
  
 
  
  
  

  
  
  
Net Interest Income/Margin
  
 $5,019
 3.68%

  
 $4,932
 3.66%
                                               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)
 Nine months ended September 30, 2015

  Nine months ended September 30, 2014
  
 Average
   
 Average

  Average
   
 Average
  
 Balance
  Interest
 Rate

  Balance
  Interest
 Rate
 Interest Earning Assets:
   
    
  

    
    
  
  Interest-bearing deposits in banks
 $7,763
  $14
 0.24

% $2,667
  $3
 0.16
% Federal funds sold securities
   
    
  

    
    
  
  purchased under agreements to
   
    
  

    
    
  
  resell
  896
   3
 0.48

%  15,179
   154
 1.36
% Investment securities:
   
    
  

    
    
  
   Taxable investment securities
  96,391
   1,480
 2.05

%  109,125
   1,590
 1.95
%  Tax-exempt investment securities
  37,917
   906
 4.88

%  39,116
   994
 5.11
%   Total Investment securities
  134,308
   2,386
 2.85

%  148,241
   2,584
 2.78
% Loans
  405,677
   14,181
 4.67

%  381,395
   13,946
 4.89

   
    
  

    
    
  
 Total Earning Assets
 $548,644
  $16,584
 4.16

% $547,482
  $16,687
 4.20
% Allowance for loan losses
  (4,811
)   
  

   (4,652
)   
  
  Cash and due from banks
  13,127
    
  

   12,932
    
  
  Other assets
  35,518
    
  

   33,531
    
  
  
   
    
  

    
    
  
 Total Assets
 $592,478
    
  

  $589,293
    
  
  
   
    
  

    
    
  
 Interest Bearing Liabilities:
   
    
  

    
    
  
  Interest bearing checking accounts
 $165,617
  $343
 0.28

% $164,331
  $354
 0.29
% Savings and money market deposits
  165,618
   197
 0.16

%  152,495
   164
 0.14
% Time deposits
  83,487
   687
 1.10

%  103,216
   1,060
 1.37
%  Total interest bearing deposits
  414,722
   1,227
 0.40

%  420,042
   1,578
 0.50
% Subordinated debentures and notes
  11,255
   458
 5.44

%  11,180
   456
 5.46
% Borrowings
  18,266
   281
 2.06

%  16,144
   191
 1.58

   
    
  

    
    
  
 Total Interest-Bearing Liabilities
 $444,243
  $1,966
 0.59

% $447,366
  $2,225
 0.66
% 
   
    
  

    
    
  
 Interest Rate Spread
   
    
 3.57

%   
    
 3.54
% 
   
    
  

    
    
  
 Noninterest checking accounts
  100,516
    
  

   93,684
    
  
  Other liabilities
  4,179
    
  

   3,378
    
  
  Total liabilities
  548,938
    
  

   544,428
    
  
  Common Stockholders’ equity
  43,540
    
  

   44,865
    
  
 Total Stockholders’ equity
  43,540
    
  

   44,865
    
  
 Total Liabilities and Stockholders’ Equity
 $
592,478
    
  

  $
589,293
    
  
  
   
    
  

    
    
  
 Net Interest Income/Margin
   
  $14,618
 3.68

%   
  $14,462
 3.65
%                     

For further information:
Blackhawk Bancorp, Inc.

R. Richard Bastian, III
Chairman CEO
rbastian@blackhawkbank.com

Todd J. James
EVP CFO
tjames@blackhawkbank.com

Phone: (608) 364-8911

Copyright © 2015 Marketwired. All Rights Reserved

The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.

Article source: http://www.otcmarkets.com/stock/BHWB/news?id=117342

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