BELOIT, WI / ACCESSWIRE / January 24, 2023 / Blackhawk Bancorp, Inc. (OTCQX:BHWB), (the "Company") the parent company of Blackhawk Bank (the "Bank"), reported record earnings for the year ended December 31, 2022, with net income of $13.64 million slightly exceeding the previous year's net income of $13.62 million. Diluted Earnings per Share (EPS) for 2022 increased 6.26% to $4.75 compared to the previous record of $4.47 reported for 2021. The Company's results for the year ended 2022 produced a Return on Average Equity (ROAE) of 16.23% and a Return on Average Assets (ROAA) of 1.01%.
The increase in earnings for 2022 as compared to 2021 includes an increase in net interest income of $4.64 million and a decrease in the provision for loan losses of $1.45 million. The growth in net interest income was achieved despite a $2.37 million decrease in Paycheck Protection Program (PPP) fees recognized. These earnings improvements were partially offset by a $4.11 million decrease in noninterest income and a $2.32 million increase in operating expenses, which include a $1.34 one-time charge related to the branch closures.
The Company reported net income of $4.05 million for the fourth quarter of 2022, a 16% increase compared to $3.49 million earned in the preceding quarter, and a 39% increase compared to the $2.91 million earned during the fourth quarter of 2021. Diluted EPS for the current quarter was $1.41, an increase of $0.20, or 17%, over the preceding quarter, and a $0.39, or 38%, increase compared to the fourth quarter a year ago. Fourth quarter 2022 results yielded a ROAE of 22.31% and a ROAA of 1.19%.
The fourth quarter earnings increase over the prior quarter included a $428,000 increase in net interest income and a $487,000 decrease in operating expenses. These earnings improvements were partially offset by an increase of $350,000 in the provision for loan losses and a $327,000 decrease in noninterest income, primarily due to reduced mortgage banking activity.
The increase in net income for the fourth quarter of 2022, compared to the fourth quarter of 2021, included a $2.45 million, or 25%, increase in net interest income. Additionally, operating expenses decreased by $301,000, or 3%. This earnings growth was partially offset by a $1.31 million decrease in income from the sale and servicing of mortgage loans.
"Our continued strong net interest income generation during the fourth quarter reflects rising rates and controlled funding costs, which more than offset the slowdown in mortgage lending," said Todd James, Chairman and CEO. "Our hedge between net interest margin growth and mortgage banking revenue allows us the opportunity to generate revenue growth throughout the economic cycles. During an economic downturn when rates decline our mortgage banking revenue increases helping to offset declining net interest margin and potential credit losses, and when interest rates increase and mortgage lending slows, we benefit from net interest margin expansion."
"Due to the current rate environment and increased deposit competition, we experienced an uptick in in deposit costs during the quarter. With more potential rate sensitivity going forward, we are starting to see some funds move to higher yielding accounts, and we anticipate deposit pricing pressure could be a challenge to future NIM expansion," said James.
Fourth Quarter 2022 Financial Highlights (at or for the three months ended December 31, 2022)
- Net income was $4.05 million, or $1.41 per diluted share, compared to $2.91 million, or $1.02 per diluted share, in the fourth quarter of 2021.
- Net interest margin was 3.82%, compared to 3.63% in the preceding quarter and 3.12% in the fourth quarter a year ago.
- Annualized return on average assets was 1.19%, compared to 0.89% in the fourth quarter of 2021.
- Annualized return on average equity was 22.31%, compared to 11.41% in the fourth quarter a year ago.
- Excluding PPP loans, average total loans increased $139.5 million, or 22% to $785.4 million for the quarter ended December 31, 2022, compared to $645.9 million for the fourth quarter of 2021.
- Total deposits decreased by $5.93 million to $1.19 billion at December 31, 2022 compared to $1.20 billion a year earlier.
- Allowance for loan losses to total loans was 1.11% at quarter end.
- Nonperforming assets to total assets was 0.36% at December 31, 2022 compared to 0.54% a year ago.
- On December 23, 2022, the Company paid a quarterly cash dividend of $0.12 per share, marking the 34th consecutive quarterly cash dividend paid.
Net Interest Income
Net interest income for the year ended December 31, 2022 increased $4.6 million, or 12%, to $43.91 million compared to $39.28 million for 2021. For 2022, the company's net interest margin expanded 20 basis points to 3.47%, compared to 3.27% for the prior year. The tax-equivalent yield on earning assets increased by 33 basis points to 3.81% for 2022, compared to 3.48% for 2021. The cost of deposits increased by 11 basis points to 0.25% compared to 0.14% for 2021. The growth in net interest income and net interest margin reflects the $75.0 million increase in average total loans to $758.9 million compared to $683.9 million for 2021.
The benefit to net interest income from recognition of PPP fees was $904,000 for 2022, compared to $3.28 million for 2021. Net interest income for 2022 benefited from the repricing of variable rate loans and investments due to the increase in short term rates by the Federal Reserve Bank.
Net interest income totaled $12.07 million for the fourth quarter of 2022, an increase of $428,000, or 4%, compared to the third quarter of 2022, and an increase of $2.45 million, or 25%, compared to the fourth quarter of the prior year. The benefit to net interest income from the recognition of PPP loan fees decreased to $33,000 for the fourth quarter of 2022, compared to $53,000 the preceding quarter and $535,000 in the fourth quarter of 2021. As of December 31, 2022, no deferred PPP fee income remains to be recognized in future periods.
The Company's net interest margin was 3.82% for the fourth quarter of 2022, compared to 3.63% for the third quarter of 2022, and 3.12% for the fourth quarter of 2021. The tax-equivalent yield on earning assets increased by 46 basis points to 4.44% and the cost of deposits increased by 24 basis points to 0.50% for the fourth quarter of 2022, as compared to 3.98% and 0.26%, respectively, for the third quarter of 2022. The tax-equivalent yield on earning assets and cost of total deposits increased by 112 basis points and 39 basis points, respectively, compared to the fourth quarter of 2021.
Average total loans for the fourth quarter of 2022 were $786.1 million, a $5.2 million, or 1%, increase over the third quarter of 2022 and a $111.3 million, or 17%, increase compared to the fourth quarter of 2021.
Average deposits totaled $1.23 billion for the fourth quarter of 2022, a decrease of $6.1 million, or less than 1%, compared to the third quarter of 2022, and an increase of $69.7 million, or 6%, compared to the fourth quarter of 2021.
Provision for Loan Losses and Asset Quality
The provision for loan losses decreased by $1.45 million to a negative provision of $950,000 for 2022 compared to a provision of $500,000 for 2021. The decrease in provision reflects a reduction in qualitative factor adjustments in the allowance calculation for potential losses related to the pandemic. The Company recorded a provision for loan losses of $450,000 for the quarter ended December 31, 2022. This compares to a $100,000 provision in the third quarter of 2022, and no provision for loan losses in the fourth quarter of 2021.
Total nonperforming assets, which include troubled debt restructures performing in accordance with their modified terms, improved to $4.7 million as of December 31, 2022, as compared to $5.0 million as of September 30, 2022, and $7.3 million at December 31, 2021. At December 31, 2022, the ratio of nonperforming loans to total loans equaled 0.60%, as compared to 0.64% at September 30, 2022, and 1.02% at December 31, 2021.
The allowance for loan losses to total loans was 1.11% at December 31, 2022, compared to 1.14% at September 30, 2022, and 1.57% at December 31, 2021. The allowance for loan losses to nonperforming loans increased to 185.1% at December 31, 2022, compared to 179.0% at September 30, 2022, and 153.0% at December 31, 2021.
Noninterest Income and Operating Expenses
Noninterest income for the year ended December 31, 2022 totaled $14.89 million, a $4.11 million decrease compared to the $19.00 million for the prior year. The net revenue from the sale and servicing of mortgages decreased by $4.64 million. This was partially offset by a $892,000 increase in deposit service fees during 2022.
Noninterest income totaled $3.41 million for the fourth quarter of 2022, a $327,000 decrease compared to $3.74 million in the third quarter of 2022 and a $1.11 million decrease compared to $4.52 million in the fourth quarter of 2021. The net revenue from the sale and servicing of mortgage loans decreased $325,000 during the fourth quarter of 2022, compared to the preceding quarter and by $1.31 million compared to the fourth quarter of 2021.
Operating expenses for the year ended December 31, 2022 totaled $42.32 million, a $2.32 million, or 6%, increase compared to 2021. The increase includes a $665,000 increase in salaries and employee benefits as well as a $1.34 million non-recurring charge related to the branch closures. Excluding the one-time charge, total operating expenses for the year ended December 31, 2022 increased $984,000, or 2%, compared to 2021.
Operating expenses for the fourth quarter of 2022, totaled $10.20 million, a decrease of $487,000, or 5%, compared to the third quarter of 2022, and a decrease of $301,000, or 3%, compared to the fourth quarter of 2021. The decrease compared to the preceding quarter was primarily due to a $459,000 decrease in salaries and employee benefits.
Excluding the one-time charge related to the branch closures, the efficiency ratio was 65.54% for the fourth quarter of 2022. This compared to 69.04% for the preceding quarter and 73.75% for the fourth quarter a year ago.
Capital
Tangible book value per share was $22.60 at December 31, 2022, compared to $21.01 at September 30, 2022 and $31.41 at December 31, 2021. The increase in tangible book value per share compared to the preceding quarter includes a $557,000 increase in accumulated other comprehensive income ("AOCI") related to a decrease in the unrealized losses on available for sale securities. Excluding AOCI, tangible book value per share was $35.03 at December 31, 2022, an increase of $1.41 and $4.39 compared to September 30, 2022 and December 31, 2021, respectively.
About Blackhawk Bancorp
Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin, and is the parent company of Blackhawk Bank. The combined entity operates ten full-service banking centers located in Rock County, Wisconsin, and the Illinois counties of Winnebago, Boone, McHenry, and Kane. 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, securities gains and losses and other non-recurring gains or losses 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
[email protected]
Matthew McDonnell, SVP & CFO
[email protected]
Phone: (608) 364-8911
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND DECEMBER 31, 2021
(UNAUDITED)
| December 31, | December 31, | |||||||
Assets | 2022 | 2021 | ||||||
| (Dollars in thousands, except | ||||||||
| share and per share data) | ||||||||
Cash and due from banks | $ | 16,686 | $ | 10,846 | ||||
Interest-bearing deposits in banks and other institutions | 6,071 | 55,720 | ||||||
Total cash and cash equivalents | 22,757 | 66,566 | ||||||
Certificates of deposit in banks and other institutions | 1,463 | 2,161 | ||||||
Equity securities at fair value | 3,455 | 2,553 | ||||||
Securities available-for-sale | 443,772 | 504,341 | ||||||
Loans held for sale | 2,190 | 2,585 | ||||||
Federal Home Loan Bank stock, at cost | 1,705 | 2,150 | ||||||
Loans, less allowance for loan losses of $8,714 and $11,125 | ||||||||
at December 31, 2022 and December 31, 2021, respectively | 771,468 | 696,292 | ||||||
Premises and equipment, net | 17,192 | 20,778 | ||||||
Goodwill and core deposit intangible | 11,286 | 11,628 | ||||||
Mortgage servicing rights | 3,985 | 3,833 | ||||||
Cash surrender value of bank-owned life insurance | 11,761 | 11,440 | ||||||
Other assets | 30,764 | 16,911 | ||||||
Total assets | $ | 1,321,798 | $ | 1,341,238 | ||||
Liabilities and Stockholders' Equity | ||||||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 352,647 | $ | 380,601 | ||||
Interest-bearing | 838,469 | 816,440 | ||||||
Total deposits | 1,191,116 | 1,197,041 | ||||||
Subordinated debentures and notes, net of issuance costs (including $1,031 | ||||||||
at fair value at December 31, 2022 and December 31, 2021) | 19,856 | 19,775 | ||||||
Senior secured term note | 9,722 | 11,278 | ||||||
Other borrowings | 18,000 | 5,000 | ||||||
Other liabilities | 7,043 | 6,985 | ||||||
Total liabilities | 1,245,737 | 1,240,079 | ||||||
Stockholders' equity | ||||||||
Common stock, $0.01 par value, 10,000,000 shares authorized; | ||||||||
3,507,220 and 3,479,069 shares issued as of December 31, 2022 and | ||||||||
December 31, 2021, respectively | 35 | 35 | ||||||
Additional paid-in capital | 36,694 | 35,890 | ||||||
Retained earnings | 94,243 | 81,987 | ||||||
Treasury stock, 640,594 and 630,991 shares at cost as of December 31, 2022 | ||||||||
and December 31, 2021, respectively | (19,276 | ) | (18,952 | ) | ||||
Accumulated other comprehensive income (loss) | (35,635 | ) | 2,199 | |||||
Total stockholders' equity | 76,061 | 101,159 | ||||||
Total liabilities and stockholders' equity | $ | 1,321,798 | $ | 1,341,238 | ||||
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) | For the Quarter Ended | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
Interest Income: | ||||||||||||||||||||
Interest and fees on loans | $ | 10,115 | $ | 9,306 | $ | 8,366 | $ | 7,808 | $ | 7,876 | ||||||||||
Interest on available-for-sale securities: | ||||||||||||||||||||
Taxable | 3,284 | 2,913 | 2,364 | 2,068 | 1,960 | |||||||||||||||
Tax-exempt | 379 | 372 | 369 | 365 | 369 | |||||||||||||||
Interest on deposits in other financial institutions | 246 | 184 | 72 | 24 | 33 | |||||||||||||||
Total interest income | 14,024 | 12,775 | 11,171 | 10,265 | 10,238 | |||||||||||||||
Interest Expense: | ||||||||||||||||||||
Interest on deposits | 1,555 | 815 | 375 | 322 | 319 | |||||||||||||||
Interest on subordinated debentures | 219 | 196 | 186 | 195 | 196 | |||||||||||||||
Interest on senior secured term note | 120 | 89 | 45 | 91 | 98 | |||||||||||||||
Interest on other borrowings | 59 | 32 | 24 | - | - | |||||||||||||||
Total interest expense | 1,953 | 1,132 | 630 | 608 | 613 | |||||||||||||||
Net interest income before provision for loan losses | 12,071 | 11,643 | 10,541 | 9,657 | 9,625 | |||||||||||||||
Provision for loan losses | 450 | 100 | (1,500 | ) | - | - | ||||||||||||||
Net interest income after provision for loan losses | 11,621 | 11,543 | 12,041 | 9,657 | 9,625 | |||||||||||||||
Noninterest Income: | ||||||||||||||||||||
Service charges on deposits accounts | 1,029 | 1,023 | 968 | 913 | 901 | |||||||||||||||
Net gain on sale of loans | 551 | 868 | 1,063 | 1,146 | 1,865 | |||||||||||||||
Net loan servicing income | 195 | 203 | 209 | 402 | 186 | |||||||||||||||
Debit card interchange fees | 1,141 | 1,177 | 1,165 | 1,079 | 1,168 | |||||||||||||||
Net gains on sales of securities available-for-sale | 20 | - | (20 | ) | - | - | ||||||||||||||
Net other gains (losses) | - | - | 11 | (4 | ) | 5 | ||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 79 | 78 | 77 | 86 | 77 | |||||||||||||||
Other | 399 | 392 | 347 | 296 | 317 | |||||||||||||||
Total noninterest income | 3,414 | 3,741 | 3,820 | 3,918 | 4,519 | |||||||||||||||
Noninterest Expenses: | ||||||||||||||||||||
Salaries and employee benefits | 5,963 | 6,422 | 6,066 | 6,222 | 6,403 | |||||||||||||||
Occupancy and equipment | 1,083 | 1,176 | 1,132 | 1,212 | 1,109 | |||||||||||||||
Data processing | 724 | 705 | 681 | 708 | 694 | |||||||||||||||
Debit card processing and issuance | 596 | 661 | 528 | 513 | 533 | |||||||||||||||
Advertising and marketing | 81 | 138 | 140 | 108 | 115 | |||||||||||||||
Amortization of intangibles | 84 | 88 | 88 | 96 | 95 | |||||||||||||||
Professional fees | 439 | 417 | 392 | 389 | 436 | |||||||||||||||
Office Supplies | 125 | 96 | 97 | 86 | 127 | |||||||||||||||
Telephone | 133 | 136 | 146 | 140 | 143 | |||||||||||||||
Other | 976 | 852 | 1,984 | 697 | 850 | |||||||||||||||
Total noninterest expenses | 10,204 | 10,691 | 11,254 | 10,171 | 10,505 | |||||||||||||||
Income before income taxes | 4,831 | 4,593 | 4,607 | 3,404 | 3,639 | |||||||||||||||
Provision for income taxes | 779 | 1,107 | 1,129 | 785 | 728 | |||||||||||||||
Net income | $ | 4,052 | $ | 3,486 | $ | 3,478 | $ | 2,619 | $ | 2,911 | ||||||||||
Key Ratios | ||||||||||||||||||||
Basic Earnings Per Common Share | $ | 1.41 | $ | 1.21 | $ | 1.21 | $ | 0.92 | $ | 1.02 | ||||||||||
Diluted Earnings Per Common Share | 1.41 | 1.21 | 1.21 | 0.92 | 1.02 | |||||||||||||||
Dividends Per Common Share | 0.12 | 0.12 | 0.12 | 0.12 | 0.11 | |||||||||||||||
Book Value Per Common Share | 26.53 | 24.97 | 27.89 | 30.59 | 35.50 | |||||||||||||||
Tangible Book Value Per Share | 22.60 | 21.01 | 23.91 | 26.58 | 31.41 | |||||||||||||||
Tangible Book Value Excluding AOCI Per Share | 35.03 | 33.62 | 32.42 | 31.27 | 30.64 | |||||||||||||||
Number of Shares Outstanding | 2,866,626 | 2,870,754 | 2,875,430 | 2,873,528 | 2,848,078 | |||||||||||||||
Average Number of Shares Outstanding | 2,867,915 | 2,872,232 | 2,874,254 | 2,864,082 | 2,848,109 | |||||||||||||||
Net Interest Margin (1) | 3.82 | % | 3.63 | % | 3.31 | % | 3.13 | % | 3.12 | % | ||||||||||
Efficiency Ratio (1)(2)(3) | 65.54 | % | 69.04 | % | 68.96 | % | 74.35 | % | 73.75 | % | ||||||||||
Return on Assets | 1.19 | % | 1.02 | % | 1.02 | % | 0.80 | % | 0.89 | % | ||||||||||
Return on Common Equity | 22.31 | % | 16.73 | % | 16.75 | % | 10.82 | % | 11.41 | % | ||||||||||
| (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. (3)The efficiency ratio excludes the one-time charge totaling $1.34 million related to the previously announced branch closures. | ||||||||||||||||||||
(UNAUDITED) | As of | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||||||
Cash and due from banks | $ | 16,686 | $ | 18,618 | $ | 15,682 | $ | 13,413 | $ | 10,846 | ||||||||||
Interest-bearing deposits in banks and other | 7,534 | 60,116 | 12,990 | 42,103 | 57,882 | |||||||||||||||
Securities | 447,227 | 452,198 | 472,977 | 484,420 | 506,894 | |||||||||||||||
Net loans/leases | 773,658 | 770,279 | 765,979 | 716,456 | 698,877 | |||||||||||||||
Goodwill and core deposit intangible | 11,286 | 11,369 | 11,453 | 11,536 | 11,628 | |||||||||||||||
Other assets | 65,407 | 67,801 | 63,109 | 62,715 | 55,428 | |||||||||||||||
Total assets | $ | 1,321,798 | $ | 1,380,381 | $ | 1,342,190 | $ | 1,330,643 | $ | 1,341,555 | ||||||||||
Deposits | $ | 1,191,116 | $ | 1,263,183 | $ | 1,220,667 | $ | 1,199,627 | $ | 1,197,041 | ||||||||||
Subordinated debentures | 19,856 | 19,841 | 19,827 | 19,812 | 20,155 | |||||||||||||||
Senior secured term note | 9,722 | 10,111 | 10,500 | 10,889 | 11,278 | |||||||||||||||
Borrowings | 18,000 | 5,000 | 5,000 | 5,000 | 5,000 | |||||||||||||||
Other liabilities | 7,043 | 10,568 | 5,998 | 7,414 | 6,985 | |||||||||||||||
Stockholders' equity | 76,061 | 71,678 | 80,198 | 87,901 | 101,096 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 1,321,798 | $ | 1,380,381 | $ | 1,342,190 | $ | 1,330,643 | $ | 1,341,555 | ||||||||||
ASSET QUALITY DATA | ||||||||||||||||||||
(Amounts in thousands) | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||||
Non-accrual loans | $ | 3,036 | $ | 3,254 | $ | 4,125 | $ | 4,983 | $ | 5,430 | ||||||||||
Accruing loans past due 90 days or more | - | - | - | - | - | |||||||||||||||
Troubled debt restructures - accruing | 1,671 | 1,720 | 1,910 | 1,802 | 1,843 | |||||||||||||||
Total nonperforming loans | $ | 4,707 | $ | 4,974 | $ | 6,035 | $ | 6,785 | $ | 7,273 | ||||||||||
Other real estate owned | 17 | - | - | 75 | 24 | |||||||||||||||
Total nonperforming assets | $ | 4,724 | $ | 4,974 | $ | 6,035 | $ | 6,860 | $ | 7,297 | ||||||||||
Total loans | $ | 782,372 | $ | 779,181 | $ | 775,474 | $ | 727,451 | $ | 710,002 | ||||||||||
Allowance for loan losses | 8,714 | 8,902 | 9,495 | 10,995 | 11,125 | |||||||||||||||
Loans, less allowance for loan losses | $ | 773,658 | $ | 770,279 | $ | 765,979 | $ | 716,456 | $ | 698,877 | ||||||||||
Nonperforming Assets to total Assets | 0.36 | % | 0.36 | % | 0.45 | % | 0.52 | % | 0.54 | % | ||||||||||
Nonperforming loans to total loans | 0.60 | % | 0.64 | % | 0.78 | % | 0.93 | % | 1.02 | % | ||||||||||
Allowance for loan losses to total loans | 1.11 | % | 1.14 | % | 1.22 | % | 1.51 | % | 1.57 | % | ||||||||||
Allowance for loan losses to nonperforming loans | 185.1 | % | 179.0 | % | 157.3 | % | 162.0 | % | 153.0 | % | ||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
ROLLFORWARD OF ALLOWANCE | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
Beginning Balance | $ | 8,902 | $ | 9,495 | $ | 10,995 | $ | 11,125 | $ | 11,224 | ||||||||||
Provision | 450 | 100 | (1,500 | ) | - | - | ||||||||||||||
Loans charged off | 679 | 758 | 95 | 214 | 181 | |||||||||||||||
Loan recoveries | 41 | 65 | 95 | 84 | 82 | |||||||||||||||
Net charge-offs | 638 | 693 | - | 130 | 99 | |||||||||||||||
Ending Balance | $ | 8,714 | $ | 8,902 | $ | 9,495 | $ | 10,995 | $ | 11,125 | ||||||||||
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) | Twelve months ended December 31, | |||||||
| 2022 | 2021 | |||||||
| (Amounts in thousands, except per share data) | ||||||||
Interest Income: | ||||||||
Interest and fees on loans | $ | 35,596 | $ | 32,832 | ||||
Interest and dividends on available-for-sale securities: | ||||||||
Taxable | 10,629 | 7,268 | ||||||
Tax-exempt | 1,484 | 1,550 | ||||||
Interest on deposits in other financial institutions | 527 | 184 | ||||||
Total interest income | 48,236 | 41,834 | ||||||
Interest Expense: | ||||||||
Interest on deposits | 3,068 | 1,576 | ||||||
Interest on subordinated debentures | 796 | 549 | ||||||
Interest on senior secured term note | 344 | 412 | ||||||
Interest on other borrowings | 115 | 20 | ||||||
Total interest expense | 4,323 | 2,557 | ||||||
Net interest income before provision for loan losses | 43,913 | 39,277 | ||||||
Provision for loan losses | (950 | ) | 500 | |||||
Net interest income after provision for loan losses | 44,863 | 38,777 | ||||||
Noninterest Income: | ||||||||
Service charges on deposits accounts | 3,933 | 3,041 | ||||||
Net gain on sale of loans | 3,629 | 8,592 | ||||||
Net loan servicing income | 1,009 | 681 | ||||||
Debit card interchange fees | 4,561 | 4,559 | ||||||
Net gains on sales of securities available-for-sale | - | - | ||||||
Net other gains (losses) | 7 | 106 | ||||||
Increase in cash surrender value of bank-owned life insurance | 320 | 314 | ||||||
Change in value of equity securities | (201 | ) | (28 | ) | ||||
Other | 1,635 | 1,739 | ||||||
Total noninterest income | 14,893 | 19,004 | ||||||
Noninterest Expenses: | ||||||||
Salaries and employee benefits | 24,673 | 24,008 | ||||||
Occupancy and equipment | 4,604 | 4,656 | ||||||
Data processing | 2,818 | 2,614 | ||||||
Debit card processing and issuance | 2,297 | 1,950 | ||||||
Advertising and marketing | 467 | 390 | ||||||
Amortization of core deposit intangible | 342 | 425 | ||||||
Professional fees | 1,637 | 1,660 | ||||||
Office Supplies | 404 | 371 | ||||||
Telephone | 555 | 568 | ||||||
Other | 4,524 | 3,355 | ||||||
Total noninterest expenses | 42,321 | 39,997 | ||||||
Income before income taxes | 17,435 | 17,784 | ||||||
Provision for income taxes | 3,800 | 4,165 | ||||||
Net income | $ | 13,635 | $ | 13,619 | ||||
Key Ratios | ||||||||
Basic Earnings Per Common Share | $ | 4.75 | $ | 4.47 | ||||
Diluted Earnings Per Common Share | 4.75 | 4.47 | ||||||
Dividends Per Common Share | 0.48 | 0.44 | ||||||
Net Interest Margin (1) | 3.47 | % | 3.27 | % | ||||
Efficiency Ratio (1)(2)(3) | 69.22 | % | 68.63 | % | ||||
Return on Assets | 1.01 | % | 1.06 | % | ||||
Return on Common Equity | 16.23 | % | 12.99 | % | ||||
| (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. (3)The efficiency ratio excludes the one-time charge totaling $1.34 million related to the previously announced branch closures. | ||||||||
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 | |||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits and other | $ | 29,253 | $ | 246 | 3.34 | % | $ | 30,655 | $ | 184 | 2.39 | % | $ | 61,530 | $ | 33 | 0.21 | % | ||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||||||
Taxable investment securities | 393,291 | 3,284 | 3.31 | % | 417,110 | 2,913 | 2.77 | % | 447,836 | 1,960 | 1.74 | % | ||||||||||||||||||||||||
Tax-exempt investment securities | 54,914 | 379 | 3.49 | % | 54,353 | 372 | 3.46 | % | 52,749 | 369 | 3.57 | % | ||||||||||||||||||||||||
Total Investment securities | 448,205 | 3,663 | 3.33 | % | 471,463 | 3,285 | 2.85 | % | 500,585 | 2,329 | 1.93 | % | ||||||||||||||||||||||||
Loans | 786,108 | 10,115 | 5.11 | % | 780,878 | 9,306 | 4.73 | % | 674,818 | 7,876 | 4.63 | % | ||||||||||||||||||||||||
Total Earning Assets | $ | 1,263,566 | $ | 14,024 | 4.44 | % | $ | 1,282,996 | $ | 12,775 | 3.98 | % | $ | 1,236,933 | $ | 10,238 | 3.32 | % | ||||||||||||||||||
Allowance for loan losses | (8,819 | ) | (9,120 | ) | (11,192 | ) | ||||||||||||||||||||||||||||||
Cash and due from banks | 15,834 | 15,331 | 16,557 | |||||||||||||||||||||||||||||||||
Other assets | 76,693 | 71,882 | 62,310 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 1,347,274 | $ | 1,361,089 | $ | 1,304,608 | ||||||||||||||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||||||||||||||||
Interest bearing checking accounts | $ | 367,443 | $ | 982 | 1.06 | % | $ | 359,146 | $ | 451 | 0.50 | % | $ | 308,166 | $ | 116 | 0.15 | % | ||||||||||||||||||
Savings and money market deposits | 401,432 | 320 | 0.32 | % | 419,116 | 177 | 0.17 | % | 423,311 | 77 | 0.07 | % | ||||||||||||||||||||||||
Time deposits | 84,817 | 253 | 1.18 | % | 82,736 | 187 | 0.90 | % | 78,625 | 126 | 0.64 | % | ||||||||||||||||||||||||
Total interest bearing deposits | 853,692 | 1,555 | 0.72 | % | 860,998 | 815 | 0.38 | % | 810,102 | 319 | 0.16 | % | ||||||||||||||||||||||||
Subordinated debentures and notes | 19,849 | 219 | 4.37 | % | 19,834 | 196 | 3.93 | % | 20,155 | 196 | 3.85 | % | ||||||||||||||||||||||||
Borrowings | 17,962 | 179 | 3.95 | % | 16,492 | 121 | 2.90 | % | 16,306 | 98 | 2.40 | % | ||||||||||||||||||||||||
Total Interest-Bearing Liabilities | $ | 891,503 | $ | 1,953 | 0.87 | % | $ | 897,324 | $ | 1,132 | 0.50 | % | $ | 846,563 | $ | 613 | 0.29 | % | ||||||||||||||||||
Interest Rate Spread | 3.57 | % | 3.48 | % | 3.03 | % | ||||||||||||||||||||||||||||||
Noninterest checking accounts | 375,569 | 374,336 | 349,482 | |||||||||||||||||||||||||||||||||
Other liabilities | 8,151 | 6,742 | 7,342 | |||||||||||||||||||||||||||||||||
Total liabilities | 1,275,223 | 1,278,402 | 1,203,387 | |||||||||||||||||||||||||||||||||
Total Stockholders' equity | 72,051 | 82,687 | 101,221 | |||||||||||||||||||||||||||||||||
Total Liabilities and | ||||||||||||||||||||||||||||||||||||
Stockholders' Equity | $ | 1,347,274 | $ | 1,361,089 | $ | 1,304,608 | ||||||||||||||||||||||||||||||
Net Interest Income/Margin | $ | 12,071 | 3.82 | % | $ | 11,643 | 3.63 | % | $ | 9,625 | 3.12 | % | ||||||||||||||||||||||||
| (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 Twelve Months Ended | |||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||||
Interest-bearing deposits and other | $ | 39,549 | $ | 527 | 1.33 | % | $ | 90,300 | $ | 183 | 0.20 | % | ||||||||||||
Investment securities: | ||||||||||||||||||||||||
Taxable investment securities | 422,758 | 10,629 | 2.51 | % | 387,361 | 7,269 | 1.88 | % | ||||||||||||||||
Tax-exempt investment securities | 54,321 | 1,484 | 3.48 | % | 52,435 | 1,550 | 3.76 | % | ||||||||||||||||
Total Investment securities | 477,079 | 12,113 | 2.62 | % | 439,796 | 8,819 | 2.10 | % | ||||||||||||||||
Loans | 758,866 | 35,596 | 4.69 | % | 683,859 | 32,832 | 4.80 | % | ||||||||||||||||
Total Earning Assets | $ | 1,275,494 | $ | 48,236 | 3.81 | % | $ | 1,213,955 | $ | 41,834 | 3.48 | % | ||||||||||||
Allowance for loan losses | (9,915 | ) | (11,180 | ) | ||||||||||||||||||||
Cash and due from banks | 15,258 | 16,640 | ||||||||||||||||||||||
Other assets | 71,274 | 60,379 | ||||||||||||||||||||||
Total Assets | $ | 1,352,111 | $ | 1,279,794 | ||||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||||
Interest bearing checking accounts | $ | 339,552 | $ | 1,748 | 0.51 | % | $ | 299,213 | $ | 636 | 0.21 | % | ||||||||||||
Savings and money market deposits | 417,665 | 640 | 0.15 | % | 400,323 | 366 | 0.09 | % | ||||||||||||||||
Time deposits | 80,674 | 680 | 0.84 | % | 78,553 | 574 | 0.73 | % | ||||||||||||||||
Total interest bearing deposits | 837,891 | 3,068 | 0.37 | % | 778,089 | 1,576 | 0.20 | % | ||||||||||||||||
Subordinated debentures | 19,884 | 796 | 4.00 | % | 14,689 | 548 | 3.73 | % | ||||||||||||||||
Borrowings | 18,167 | 459 | 2.53 | % | 18,928 | 433 | 2.29 | % | ||||||||||||||||
Total Interest-Bearing Liabilities | $ | 875,942 | $ | 4,323 | 0.49 | % | $ | 811,706 | $ | 2,557 | 0.32 | % | ||||||||||||
Interest Rate Spread | 3.32 | % | 3.16 | % | ||||||||||||||||||||
Noninterest checking accounts | 385,169 | 356,227 | ||||||||||||||||||||||
Other liabilities | 6,984 | 6,995 | ||||||||||||||||||||||
Total liabilities | 1,268,095 | 1,174,928 | ||||||||||||||||||||||
Total Stockholders' equity | 84,016 | 104,866 | ||||||||||||||||||||||
Total Liabilities and | ||||||||||||||||||||||||
Stockholders' Equity | $ | 1,352,111 | $ | 1,279,794 | ||||||||||||||||||||
Net Interest Income/Margin | $ | 43,913 | 3.47 | % | $ | 39,277 | 3.27 | % | ||||||||||||||||
| (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.