Blackhawk Bancorp Announces 2019 Second Quarter Earnings

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

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

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

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

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

Net Interest Income

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

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

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

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

Provision for Loan Losses and Credit Quality

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

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

Non-Interest Income and Operating Expenses

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

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

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

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

Outlook

Blackhawk expects to grow by pursuing creditworthy and profitable business and consumer relationships in its Wisconsin and Illinois markets, emphasizing the value of its personal attention and service that remains unmatched by larger competitors. In addition to such organic growth opportunities, Blackhawk may also pursue growth through selective acquisition opportunities. Growth, combined with the Company’s strong credit quality, is expected to lead to continued earnings improvement. Growth and earnings could, however, be tempered by such occurrences as uncertain economic conditions, competitive pressures, changes in regulatory burden and the interest rate environment.

About Blackhawk Bancorp

Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank. The combined entity operates eleven full-service banking centers and a dedicated commercial office, which are located in Rock County, Wisconsin and the Illinois counties of Winnebago, Boone, McHenry, Lake, and Kane. The Company’s footprint stretches along the I-90 corridor from Janesville, Wisconsin to Elgin, Illinois and into the Northwest collar counties of the Chicagoland area. The company offers a variety of value-added consultative services to its business customers and their employees related to the financial products it provides.

Disclosures Regarding non-GAAP Measures

This report refers to financial measures that are identified as non-GAAP that the Company believes help to evaluate and measure the Company’s performance, including the presentation of net interest income to interest-earning assets, the net interest margin ratio, and efficiency ratio calculations on a taxable-equivalent basis. Non-GAAP measures are also used to assist investor comparison by identifying nonrecurring events such as the 2019 acquisition-related expenses and the impact such net expenses have on the performance measures of return on average assets, return on average equity, diluted earnings per share, and the efficiency ratio. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.

Forward-Looking Statements

When used in this communication, the words “believes,” “expects,” “likely”, “would”, and similar expressions are intended to identify forward-looking statements. The company’s actual results may differ materially from those described in the forward-looking statements. Factors which could cause such a variance to occur include, but are not limited to: heightened competition; adverse state and federal regulation; failure to obtain new or retain existing customers; ability to attract and retain key executives and personnel; changes in interest rates; unanticipated changes in industry trends; unanticipated changes in credit quality and risk factors, including general economic conditions particularly in the Company’s markets; potential deterioration in real estate values, success in gaining regulatory approvals when required; changes in the Federal Reserve Board monetary policies; unexpected outcomes of new and existing litigation in which Blackhawk or its subsidiaries, officers, directors or employees is named defendants; technological changes; changes in accounting principles generally accepted in the United States; changes in assumptions or conditions affecting the application of “critical accounting policies”; inability to recover previously recorded losses as anticipated, and the inability of third party vendors to perform critical services for the company or its customers. The inclusion of forward-looking information should not be construed as a representation by the Company or any person that future events or plans contemplated by the Company will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information or otherwise.

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

CONTACT:

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

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

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

June 30, December 31,
Assets
2019 2018
(Dollars in thousands, except
share and per share data)
Cash and due from banks
$ 17,364 $ 16,677
Interest-bearing deposits in banks and other
16,442 2,760
Total cash and cash equivalents
33,806 19,437
Equity securities at fair value
2,332 2,250
Securities available-for-sale
253,930 198,670
Loans held for sale
5,383 5,164
Federal Home Loan Bank stock, at cost
700 1,643
Loans, less allowance for loan losses of $7,749 and $7,339
at June 30, 2019 and December 31, 2018, respectively
611,542 541,760
Premises and equipment, net
21,066 14,874
Goodwill
10,183 5,037
Core Deposit Intangible
2,466
Mortgage servicing rights
3,153 2,969
Cash surrender value of bank-owned life insurance
10,969 10,812
Other assets
13,941 14,671
Total assets
$ 969,471 $ 817,287
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing
$ 154,813 $ 121,024
Interest-bearing
682,506 564,615
Total deposits
837,319 685,639
Subordinated debentures and notes (including $1,031 at fair value at
June 30, 2019 and December 31, 2018)
5,155 5,155
Senior secured term note
14,000
Other borrowings
13,992 36,500
Other liabilities
6,614 5,701
Total liabilities
877,080 732,995
Stockholders’ equity
Common stock, $0.01 par value, 10,000,000 shares authorized;
3,396,366 and 3,369,192 shares issued as of June 30, 2019 and
December 31, 2018, respectively
34 34
Additional paid-in capital
33,785 33,478
Retained earnings
55,183 52,011
Treasury stock, 104,570 and 97,570 shares at cost as of June 30, 2019
and December 31, 2018, respectively
(1,391 ) (1,204 )
Accumulated other comprehensive income (loss)
4,780 (27 )
Total stockholders’ equity
92,391 84,292
Total liabilities and stockholders’ equity
$ 969,471 $ 817,287

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

Six months ended June 30,
2019 2018
(Amounts in thousands, except per share data)
Interest Income:
Interest and fees on loans
$ 15,585 $ 12,485
Interest on available-for-sale securities:
Taxable
3,003 1,611
Tax-exempt
900 734
Interest on interest-bearing deposits and other
288 132
Total interest income
19,776 14,962
Interest Expense:
Interest on deposits
2,920 1,743
Interest on subordinated debentures and notes
130 112
Interest on senior secured term note
253
Interest on other borrowings
203 46
Total interest expense
3,506 1,901
Net interest income before provision for loan losses
16,270 13,061
Provision for loan losses
450 880
Net interest income after provision for loan losses
15,820 12,181
Noninterest Income:
Service charges on deposits accounts
1,693 1,510
Net gain on sale of loans
1,621 1,430
Net loan servicing income
342 350
Debit card interchange fees
1,616 1,370
Net gains on sales of securities available-for-sale
305 65
Net other gains (losses)
94 (23 )
Increase in cash surrender value of bank-owned life insurance
157 154
Other
777 676
Total noninterest income
6,605 5,532
Noninterest Expenses:
Salaries and employee benefits
9,426 7,917
Occupancy and equipment
1,992 1,723
Data processing
2,398 812
Debit card processing and issuance
723 629
Advertising and marketing
249 296
Amortization of intangibles
159
Professional fees
972 572
Office Supplies
175 189
Telephone
246 250
Other
1,285 1,130
Total noninterest expenses
17,625 13,518
Income before income taxes
4,800 4,195
Provision for income taxes
967 727
Net income
$ 3,833 $ 3,468
Key Ratios
Basic Earnings Per Common Share
$ 1.16 $ 1.05
Diluted Earnings Per Common Share
1.16 1.05
Dividends Per Common Share
0.20 0.18
Net Interest Margin (1)
3.90 % 3.87 %
Efficiency Ratio (1)(2)
77.47 % 72.01 %
Return on Assets
0.84 % 0.94 %
Return on Common Equity
8.91 % 8.92 %

(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance, including the presentation of the net interest margin and efficiency ratio calculations on a taxable equivalent basis (“TE”). The net interest margin ratio is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.

(2) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income on a TE basis, noninterest income less any securities gains (losses) or other gains (losses), and also includes a TE adjustment on the increases in cash surrender value of bank-owned life insurance.

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

For the Quarter Ended
June 30, March 31, December 31, September 30, June 30,
2019 2019 2018 2018 2018
(Dollars in thousands, except per share data)
Interest Income:
Interest and fees on loans
$ 8,043 $ 7,542 $ 7,174 $ 6,884 $ 6,610
Interest on available-for-sale securities:
Taxable
1,659 1,345 1,062 980 839
Tax-exempt
451 448 431 389 359
Interest on interest-bearing deposits and other
130 158 41 208 59
Total interest income
10,283 9,493 8,708 8,461 7,867
Interest Expense:
Interest on deposits
1,458 1,463 1,336 1,213 991
Interest on subordinated debentures and notes
65 65 62 59 59
Interest on senior secured term note
186 67
Interest on other borrowings
98 105 89 34
Total interest expense
1,807 1,700 1,487 1,272 1,084
Net interest income before provision for loan losses
8,476 7,793 7,221 7,189 6,783
Provision for loan losses
180 270 150 150 370
Net interest income after provision for loan losses
8,296 7,523 7,071 7,039 6,413
Noninterest Income:
Service charges on deposits accounts
885 808 849 829 769
Net gain on sale of loans
1,040 581 886 1,070 960
Net loan servicing income
171 172 170 171 173
Debit card interchange fees
827 789 683 663 675
Net gains on sales of securities available-for-sale
146 159 (19 ) 59
Net other gains (losses)
94
Increase in cash surrender value of bank-owned life insurance
74 83 73 72 73
Other
390 388 227 336 329
Total noninterest income
3,627 2,980 2,869 3,141 3,038
Noninterest Expenses:
Salaries and employee benefits
4,841 4,585 4,279 4,081 4,050
Occupancy and equipment
1,000 992 824 826 891
Data processing
571 1,827 425 428 417
Debit card processing and issuance
389 334 334 339 336
Advertising and marketing
142 108 176 126 143
Amortization of intangibles
119 40
Professional fees
393 579 443 350 316
Office Supplies
89 86 91 77 79
Telephone
130 116 129 125 126
Other
701 584 605 555 604
Total noninterest expenses
8,375 9,251 7,306 6,907 6,962
Income before income taxes
3,548 1,252 2,634 3,273 2,489
Provision for income taxes
794 173 538 695 473
Net income
$ 2,754 $ 1,079 $ 2,096 $ 2,578 $ 2,016
Key Ratios
Basic Earnings Per Common Share
$ 0.83 $ 0.33 $ 0.64 $ 0.78 $ 0.61
Diluted Earnings Per Common Share
0.83 0.33 0.64 0.78 0.61
Dividends Per Common Share
0.10 0.10 0.10 0.10 0.10
Net Interest Margin (1)
3.88 % 3.92 % 3.91 % 3.91 % 3.91 %
Efficiency Ratio (1)(2)
69.77 % 86.07 % 71.37 % 66.11 % 70.53 %
Return on Assets
1.15 % 0.50 % 1.05 % 1.29 % 1.06 %
Return on Common Equity
12.54 % 5.12 % 10.13 % 12.67 % 10.25 %

(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance, including the presentation of net interest income, net interest margin and efficiency ratio calculations on a taxable equivalent basis (“TE”). The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.

(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.

(UNAUDITED)
As of
June 30, March 31, December 31, September 30, June 30,
2019 2019 2018 2018 2018
(Amounts in thousands, except per share data)
Cash and due from banks
$ 17,364 $ 14,581 $ 16,677 $ 19,526 $ 16,942
Interest-bearing deposits in banks and other
16,442 35,862 2,760 5,878 43,001
Securities
256,262 270,665 200,920 197,507 181,466
Net loans/leases
616,925 583,350 546,924 502,463 495,005
Goodwill
10,183 10,183 5,037 5,037 5,037
Other assets
52,295 51,795 44,969 41,943 39,978
Total assets
$ 969,471 $ 966,436 $ 817,287 $ 772,354 $ 781,429
Deposits
$ 837,319 $ 854,505 $ 685,639 $ 680,136 $ 692,968
Subordinated debentures
5,155 5,155 5,155 5,155 5,155
Senior secured note
14,000
Other borrowings
13,992 14,000 36,500
Other liabilities
6,614 5,360 5,701 6,241 3,856
Stockholders’ equity
92,391 87,416 84,292 80,822 79,450
Total liabilities and stockholders’ equity
$ 969,471 $ 966,436 $ 817,287 $ 772,354 $ 781,429

ASSET QUALITY DATA
(Amounts in thousands)

June 30, March 31, December 31, September 30, June 30,
2019 2019 2018 2018 2018
Non-accrual loans
$ 3,712 $ 3,815 $ 2,312 $ 3,362 $ 3,539
Accruing loans past due 90 days or more
272 17 388
Troubled debt restructures – accruing
3,321 3,546 3,797 3,873 4,283
Total nonperforming loans
$ 7,305 $ 7,361 $ 6,126 $ 7,235 $ 8,210
Other real estate owned
307 339 104 237 350
Total nonperforming assets
$ 7,802 $ 7,700 $ 6,230 $ 7,472 $ 8,560
Total loans
$ 624,674 $ 590,895 $ 554,263 $ 509,674 $ 501,504
Allowance for loan losses
7,749 $ 7,545 $ 7,339 $ 7,211 $ 6,499
Loans, net of allowance for loan losses
$ 616,925 $ 583,350 $ 546,924 $ 502,463 $ 495,005
Nonperforming Assets to total Assets
0.79 % 0.80 % 0.76 % 0.97 % 1.10 %
Nonperforming loans to total loans
1.17 % 1.25 % 1.11 % 1.42 % 1.64 %
Allowance for loan losses to total loans
1.24 % 1.28 % 1.32 % 1.41 % 1.30 %
Allowance for loan losses to nonperforming loans
106.1 % 102.5 % 119.8 % 99.7 % 79.2 %
For the Quarter Ended
June 30, March 31, December 31, September 30, June 30,
ROLLFORWARD OF ALLOWANCE
2019 2019 2018 2018 2018
Beginning Balance
$ 7,545 $ 7,339 $ 7,211 $ 6,499 $ 6,149
Provision
180 270 150 150 370
Loans charged off
11 102 76 105 178
Loan recoveries
35 38 54 667 158
Net (recoveries) charge-offs
(24 ) 64 22 (562 ) 20
Ending Balance
$ 7,749 $ 7,545 $ 7,339 $ 7,211 $ 6,499

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
ANALYSIS of AVERAGE BALANCES & TAX EQUIVALENT INTEREST RATES

Average Balance Sheet with Resultant Interest and Rates
(Dollars in thousands – unaudited)
(Yields on a tax-equivalent basis) (1)

For the Quarter Ended
June 30, 2019 March 31, 2019 June 30, 2018
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
Interest Earning Assets:
Interest-bearing deposits and other
$ 21,250 $ 130 2.48 % $ 27,139 $ 158 2.37 % $ 14,326 $ 59 1.64 %
Investment securities:
Taxable investment securities
212,708 1,659 3.13 % 170,477 1,345 3.20 % 127,448 839 2.64 %
Tax-exempt investment securities
54,193 451 4.33 % 58,645 448 4.03 % 47,889 359 3.92 %
Total Investment securities
266,901 2,110 3.37 % 229,122 1,793 3.41 % 175,337 1,198 2.99 %
Loans
601,234 8,043 5.37 % 563,927 7,542 5.42 % 517,412 6,610 5.12 %
Total Earning Assets
$ 889,385 $ 10,283 4.70 % $ 820,188 $ 9,493 4.76 % $ 707,075 $ 7,867 4.52 %
Allowance for loan losses
(7,645 ) (7,446 ) (6,403 )
Cash and due from banks
15,165 16,567 17,228
Other assets
59,805 52,023 41,613
Total Assets
$ 956,710 $ 881,332 $ 759,513
Interest Bearing Liabilities:
Interest bearing checking accounts
$ 258,866 $ 408 0.63 % $ 243,543 $ 315 0.52 % $ 225,104 $ 294 0.52 %
Savings and money market deposits
289,097 535 0.74 % 267,052 642 0.97 % 225,411 397 0.71 %
Time deposits
118,383 515 1.75 % 111,365 506 1.84 % 90,779 300 1.33 %
Total interest bearing deposits
666,346 1,458 0.88 % 621,960 1,463 0.95 % 541,294 991 0.73 %
Subordinated debentures and notes
5,155 65 5.03 % 5,155 65 5.11 % 5,155 59 4.59 %
Borrowings
29,596 284 3.85 % 21,616 172 3.23 % 6,999 34 1.95 %
Total Interest-Bearing Liabilities
$ 701,097 $ 1,807 1.03 % $ 648,731 $ 1,700 1.06 % $ 553,448 $ 1,084 0.79 %
Interest Rate Spread
3.67 % 3.70 % 3.73 %
Noninterest checking accounts
161,461 142,178 123,689
Other liabilities
6,055 4,993 3,472
Total liabilities
868,613 795,902 680,609
Total Stockholders’ equity
88,097 85,430 78,904
Total Liabilities and
Stockholders’ Equity
$ 956,710 $ 881,332 $ 759,513
Net Interest Income/Margin
$ 8,476 3.88 % $ 7,793 3.92 % $ 6,783 3.91 %

(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance including a presentation of net interest income with a net interest margin ratio on a tax-equivalent (TE) basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above-stated averages.

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

Average Balance Sheet with Resultant Interest and Rates
(Amounts in thousands)
(yields on a tax-equivalent basis)

For the Six Months Ended
June 30, 2019 June 30, 2018
Average Average Average Average
Balance Interest Rate Balance Interest Rate
Interest Earning Assets:
Interest-bearing deposits and other
$ 24,178 $ 288 2.42 % $ 17,148 $ 132 1.55 %
Investment securities:
%
Taxable investment securities
190,021 3,003 3.19 % 124,005 1,611 2.62 %
Tax-exempt investment securities
58,095 900 4.03 % 49,438 734 3.90 %
Total Investment securities
248,116 3,903 3.38 % 173,443 2,345 2.99 %
Loans
582,684 15,585 5.39 % 501,437 12,485 5.02 %
Total Earning Assets
$ 854,978 $ 19,776 4.73 % $ 692,028 $ 14,962 4.42 %
Allowance for loan losses
(7,546 ) (6,103 )
Cash and due from banks
15,862 17,652
Other assets
55,917 41,676
Total Assets
$ 919,211 $ 745,253
Interest Bearing Liabilities:
Interest bearing checking accounts
$ 251,246 $ 723 0.58 % $ 224,818 $ 535 0.48 %
Savings and money market deposits
278,135 1,177 0.85 % 216,469 647 0.60 %
Time deposits
114,893 1,021 1.79 % 90,521 561 1.25 %
Total interest bearing deposits
644,274 2,921 0.91 % 531,808 1,743 0.66 %
Subordinated debentures
5,155 130 5.07 % 5,155 112 4.38 %
Borrowings
25,644 456 3.59 % 5,131 46 1.82 %
Total Interest-Bearing Liabilities
$ 675,073 $ 3,507 1.05 % $ 542,094 $ 1,901 0.71 %
Interest Rate Spread
3.68 % 3.71 %
Noninterest checking accounts
151,833 121,047
Other liabilities
5,534 3,702
Total liabilities
832,440 666,843
Total Stockholders’ equity
86,771 78,410
Total Liabilities and
Stockholders’ Equity
$ 919,211 $ 745,253
Net Interest Income/Margin
$ 16,269 3.90 % $ 13,061 3.87 %

(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance including a presentation of net interest income with a net interest margin ratio on a tax-equivalent basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above average balances.

SOURCE: Blackhawk Bancorp, Inc.

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https://www.accesswire.com/553631/Blackhawk-Bancorp-Announces-2019-Second-Quarter-Earnings

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