Blackhawk Bancorp Announces First Quarter 2012 Results
BELOIT, Wis., April 27, 2012 /PRNewswire/ -- Blackhawk Bancorp, Inc. (OTCBB: BHWB) today reported earnings of $678,000 for the quarter ended March 31, 2012, a 6% increase compared to $639,000 earned in the first quarter of 2011. Earnings per diluted share for the quarter increased $0.02 to $0.24 compared to $0.22 the first quarter of 2011. Growth in non-interest income in the first quarter of 2012 more than offset a decrease in net interest income and increase in the provision for loan losses compared to the first quarter of last year. Total assets of the company increased $6.0 million during the quarter to $565.0 million at March 31, 2012 from $559.0 million at December 31, 2011.
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The following table summarizes key performance and asset quality measures for the quarter ended March 31, 2012 compared to the previous four quarters.
|
Key Performance and Asset Quality Measures |
1st Qtr 2012 |
4th Qtr 2011 |
3rd Qtr 2011 |
2nd Qtr 2011 |
1st Qtr 2011 |
| Diluted Earnings per share |
$0.24 |
$0.26 |
$0.21 |
$0.13 |
$0.22 |
| Return on average assets |
.49% |
.52% |
.45% |
.32% |
.47% |
| Return on common equity |
6.03% |
6.74% |
5.49% |
3.50% |
6.29% |
| Net interest margin |
3.75% |
3.79% |
3.71% |
3.83% |
3.97% |
| Efficiency ratio |
69.94% |
67.19% |
70.17% |
73.19% |
72.03% |
| Nonaccrual loans to total loans |
4.19% |
3.67% |
2.61% |
2.31% |
1.99% |
| Nonaccrual loans and OREO to total loans |
4.41% |
4.11% |
3.38% |
3.12% |
2.73% |
| Allowance for loan losses to total loans |
2.13% |
2.05% |
1.78% |
1.83% |
1.86% |
| Allowance for loan losses to nonaccrual loans |
50.8% |
55.9% |
68% |
79% |
94% |
| Subsidiary bank total risk-based capital |
13.83% |
13.90% |
13.71% |
13.78% |
13.57% |
"The on-going low interest rate environment, soft loan demand and intense competition for qualified borrowers are all factors that continued to compress net interest income in the first quarter," said Rick Bastian, president & CEO. "However, we are starting to see an increase in lending opportunities, especially in the manufacturing sector, and expect loan growth to pick up the remainder of the year," he added.
Net Interest Income
Net interest income for the first quarter decreased 4% to $4.7 million compared to $4.9 million in the first quarter 2011. The average balance of total earning assets for the first quarter increased by $11.2 million to $517.4 million while the net interest margin realized on earning assets decreased 22 basis points to 3.75% compared to 3.97% for the first quarter of 2011. The growth in earning assets included a $6.9 million, or 2%, increase in average total loans.
Average total deposits for the first quarter were essentially flat at $477.3 million compared to $478.1 million the first quarter of 2011. While total average deposits were little changed, a $20.3 million increase in average non-maturity deposits such as checking, money market and savings accounts was offset by a $21.2 million decrease in average time deposits. The strong growth in non-maturity deposits has dramatically reduced the company's need for brokered deposits or other sources of wholesale funding.
Non-Interest Income and Operating Expenses
Noninterest income for the first quarter of 2012 increased by $768,000, or 43%, to $2.6 million compared to $1.8 million the first quarter of the prior year. The increase was primarily attributable to a $406,000 increase in mortgage banking revenues, which consists of gain on sale of mortgage loans and net loan servicing income. Other increases in non-interest income included a $145,000 increase in net securities gains, a $148,000 improvement in net gain (loss) on sale of other real estate and other assets, and an increase of $110,000 in deposit service fees and debit card revenue.
Operating expenses for the first quarter increased $305,000, or 6%, to $5.2 million compared to $4.9 million in the first quarter of 2011. This includes an increase of $276,000, or 11%, in compensation and benefit costs, which was driven primarily by variable compensation related to mortgage production and an increase in the cost of employee health benefits.
Provision for Loan Losses and Credit Quality
The provision for loan losses in the first quarter increased by $360,000, or 40%, to $1.3 million compared to $0.9 million in first quarter 2011. During the first quarter the company had net loan charge-offs of $901,000 compared to $819,000 for the first quarter of the previous year. Nonaccrual loans and other real estate owned totaled $15.1 million, or 4.41% of total loans, at March 31, 2012 compared to $13.9 million, or 4.11% of total loans, at December 31, 2011 and $9.1 million, or 2.73% of total loans, at March 31, 2011. "While we are beginning to see bright spots in the local economy, our market still suffers from high unemployment and depressed real estate values," said Bastian. "Although we expect non-performing assets to remain at elevated levels throughout 2012, we anticipate improvement throughout the year as we reach final resolution on certain credits."
The ratio of allowance for loan losses to total loans was 2.13% at March 31, 2012 compared to 2.05% at December 31, 2011, and 1.86% at March 31, 2011. The ratio of the allowance for loan losses to nonaccrual loans was 51% at March 31, 2012 down from 56% at December 31, 2011, and 94% at March 31, 2011.
The following table summarizes the activity in the allowance for loan losses for the quarters ended March 31, 2012 and 2011, and the year ended December 31, 2011.
| Activity in Allowance for Loan Losses |
Quarter Ended March 31, |
Year Ended December 31, |
|||
| 2012 |
2011 |
2011 |
|||
| Beginning allowance for loan losses |
$ 6,943,000 |
$ 6,142,000 |
$ 6,142,000 |
||
| Provision for loan losses |
1,260,000 |
900,000 |
4,803,000 |
||
| Charge-offs |
(987,000) |
(858,000) |
(4,407,000) |
||
| Recoveries |
86,000 |
39,000 |
405,000 |
||
| Ending allowance for loan losses |
$ 7,302,000 |
$ 6,223,000 |
$ 6,943,000 |
||
|
Net charge-offs to average total loans, annualized |
1.06% |
1.00% |
1.20% |
||
Outlook
Blackhawk has created a strong credit culture and the processes to support it; however, the economic recession and depressed real estate values have resulted in an elevated level of nonperforming loans. The level of nonperforming loans and 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 Beloit, 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"; 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 |
|||
| MARCH 31, 2012 AND DECEMBER 31, 2011 |
|||
| (UNAUDITED) |
|||
| March 31, |
December 31, |
||
| Assets |
2012 |
2011 |
|
| (Amounts in thousands, except |
|||
| share and per share data) |
|||
| Cash and due from banks |
$ 12,653 |
$ 13,056 |
|
| Federal funds sold and securities purchased under agreements to resell |
29,512 |
31,964 |
|
| Total cash and cash equivalents |
42,165 |
45,020 |
|
| Interest-bearing deposits in banks |
10,128 |
1,097 |
|
| Trading securities |
2,187 |
2,449 |
|
| Securities available-for-sale |
135,374 |
142,788 |
|
| Loans held for sale |
4,328 |
4,140 |
|
| Federal Home Loan Bank (FHLB) Stock, at cost |
3,055 |
4,085 |
|
| Loans, less allowance for loan losses of $7,302 and $6,943 |
|||
| at March 31, 2012 and December 31, 2011, respectively |
335,400 |
326,935 |
|
| Office buildings and equipment, net |
8,525 |
8,772 |
|
| Intangible assets, net |
8,053 |
8,102 |
|
| Cash surrender value of bank-owned life insurance |
8,801 |
8,720 |
|
| Other assets |
7,011 |
6,879 |
|
| Total assets |
$ 565,027 |
$ 558,987 |
|
| Liabilities and Stockholders' Equity |
|||
| Liabilities |
|||
| Deposits: |
|||
| Noninterest-bearing |
$ 79,034 |
$ 70,578 |
|
| Interest-bearing |
418,091 |
405,049 |
|
| Total deposits |
497,125 |
475,627 |
|
| Short-term borrowings |
- |
16,000 |
|
| Other borrowings (including $2,246 and $2,255 at fair value at |
|||
| March 31, 2012 and December 31, 2011, respectively) |
15,994 |
16,326 |
|
| Subordinated debentures (including $834 and $834 at fair value at |
|||
| March 31, 2012 and December 31, 2011, respectively) |
4,958 |
4,958 |
|
| Other liabilities |
2,660 |
2,040 |
|
| Total liabilities |
520,737 |
514,951 |
|
| Stockholders' equity |
|||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized; |
|||
| 10,500 shares issued as of March 31, 2012 and |
|||
| December 31, 2011, respectively |
10,308 |
10,283 |
|
| Common stock, $0.01 par value, 10,000,000 shares authorized; |
|||
| 2,279,004 and 2,279,004 shares issued as of March 31, 2012 and |
|||
| December 31, 2011, respectively |
23 |
23 |
|
| Surplus |
9,516 |
9,477 |
|
| Retained earnings |
24,146 |
23,629 |
|
| Treasury stock, 83,252 and 83,252 shares at cost as of March 31, 2012 and |
|||
| December 31, 2011, respectively |
(909) |
(909) |
|
| Accumulated other comprehensive income (loss) |
1,206 |
1,533 |
|
| Total stockholders' equity |
44,290 |
44,036 |
|
| Total liabilities and stockholders' equity |
$ 565,027 |
$ 558,987 |
|
| BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
|||
| CONSOLIDATED STATEMENTS OF INCOME |
|||
| (UNAUDITED) |
|||
| Three months ended March 31, |
|||
| 2012 |
2011 |
||
| (Amounts in thousands, except |
|||
| share and per share data) |
|||
| Interest Income: |
|||
| Interest and fees on loans |
$ 4,730 |
$ 4,854 |
|
| Interest on trading securities |
12 |
33 |
|
| Interest and dividends on securities: |
|||
| Taxable |
789 |
1,103 |
|
| Tax-exempt |
287 |
250 |
|
| Interest on federal funds sold and securities purchased under agreements to resell |
80 |
78 |
|
| Interest on interest-bearing deposits in banks |
2 |
1 |
|
| Total interest and dividend income |
5,900 |
6,319 |
|
| Interest Expenses: |
|||
| Interest on deposits |
952 |
1,188 |
|
| Interest on short-term borrowings |
2 |
2 |
|
| Interest on long-term borrowings |
217 |
234 |
|
| Interest on subordinated debentures |
37 |
33 |
|
| Total interest expense |
1,208 |
1,457 |
|
| Net interest and dividend income |
4,692 |
4,862 |
|
| Provision for loan losses |
1,260 |
900 |
|
| Net interest and dividend income after provision for loan losses |
3,432 |
3,962 |
|
| Noninterest Income: |
|||
| Service charges on deposits accounts |
615 |
570 |
|
| Net gain on sale of loans |
899 |
383 |
|
| Net mortgage servicing income |
(79) |
31 |
|
| Debit card interchange fees |
561 |
496 |
|
| Net gains (losses) on trading activities |
(16) |
19 |
|
| Net gains (losses) on available-for-sale securities |
226 |
81 |
|
| Net other gains (losses) |
26 |
(122) |
|
| Increase in cash value of bank-owned life insurance |
82 |
69 |
|
| Other |
243 |
262 |
|
| Total noninterest income |
2,557 |
1,789 |
|
| Noninterest Expenses: |
|||
| Salaries and employee benefits |
2,715 |
2,439 |
|
| Occupancy and equipment |
606 |
594 |
|
| Data processing |
620 |
573 |
|
| FDIC assessment |
185 |
240 |
|
| Advertising and marketing |
91 |
104 |
|
| Amortization of intangibles |
35 |
62 |
|
| Professional fees |
255 |
207 |
|
| Office Supplies |
96 |
94 |
|
| Telephone |
76 |
69 |
|
| Other |
485 |
477 |
|
| Total noninterest expenses |
5,164 |
4,859 |
|
| Income before income taxes |
825 |
892 |
|
| Income Taxes |
147 |
253 |
|
| Net income |
$ 678 |
$ 639 |
|
| Key Ratios |
|||
| Basic Earnings Per Common Share |
$ 0.24 |
$ 0.22 |
|
| Diluted Earnings Per Common Share |
0.24 |
0.22 |
|
| Net Interest Margin (FTE) |
3.75% |
3.97% |
|
| Efficiency Ratio (FTE) |
69.94% |
72.03% |
|
| Return on Assets |
0.49% |
0.47% |
|
| Return on Common Equity |
6.03% |
6.29% |
|
| 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 March 31, 2012 |
Three months ended March 31, 2011 |
|||||
| Average |
Average |
Average |
Average |
||||
| Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
||
| Interest Earning Assets: |
|||||||
| Interest-bearing deposits in banks |
$ 3,789 |
$ 2 |
0.24% |
$ 735 |
$ 1 |
0.65% |
|
| Federal funds sold & securities |
|||||||
| purchased under agreements to |
|||||||
| resell |
27,248 |
80 |
1.17% |
27,426 |
78 |
1.15% |
|
| Investment securities: |
|||||||
| Taxable investment securities |
114,062 |
801 |
2.82% |
122,278 |
1,136 |
3.81% |
|
| Tax-exempt investment securities |
32,593 |
287 |
5.20% |
23,035 |
250 |
6.11% |
|
| Total Investment securities |
146,655 |
1,088 |
3.35% |
145,313 |
1,386 |
4.27% |
|
| Loans |
339,772 |
4,730 |
5.60% |
332,837 |
4,854 |
5.91% |
|
| Total Earning Assets |
$ 517,464 |
$ 5,900 |
4.69% |
$ 506,311 |
$ 6,319 |
5.15% |
|
| Allowance for loan losses |
(7,088) |
(6,385) |
|||||
| Cash and due from banks |
12,760 |
11,705 |
|||||
| Other Assets |
33,547 |
35,660 |
|||||
| Total Assets |
$ 556,683 |
$ 547,291 |
|||||
| Interest Bearing Liabilities: |
|||||||
| Interest bearing checking accounts |
$ 150,314 |
$ 355 |
0.95% |
$ 129,525 |
$ 412 |
1.29% |
|
| Savings and money market deposits |
138,384 |
120 |
0.35% |
147,110 |
139 |
0.38% |
|
| Time deposits |
114,152 |
477 |
1.68% |
135,319 |
637 |
1.91% |
|
| Total interest bearing deposits |
402,850 |
952 |
0.95% |
411,954 |
1,188 |
1.17% |
|
| Short-term borrowings |
1,504 |
2 |
0.40% |
1,018 |
2 |
0.56% |
|
| Subordinated debentures |
4,958 |
37 |
2.99% |
4,958 |
33 |
2.73% |
|
| Long-term borrowings |
21,566 |
217 |
4.05% |
17,526 |
234 |
5.42% |
|
| Total Interest-Bearing Liabilities |
$ 430,878 |
$ 1,208 |
1.13% |
$ 435,456 |
$ 1,457 |
1.36% |
|
| Interest Rate Spread |
3.56% |
3.79% |
|||||
| Noninterest checking accounts |
74,471 |
66,212 |
|||||
| Other liabilities |
6,289 |
4,069 |
|||||
| Total liabilities |
511,638 |
505,737 |
|||||
| Preferred Stock |
10,296 |
10,196 |
|||||
| Common Stockholders' equity |
34,749 |
31,358 |
|||||
| Total Stockholders' equity |
45,045 |
41,554 |
|||||
| Total Liabilities and |
|||||||
| Stockholders' Equity |
$ 556,683 |
$ 547,291 |
|||||
| Net Interest Income/Margin |
$ 4,692 |
3.75% |
$ 4,862 |
3.97% |
|||
SOURCE Blackhawk Bancorp, Inc.
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