BELOIT, Wis., July 26 /PRNewswire-FirstCall/ -- Blackhawk
Bancorp, Inc. (OTC Bulletin Board: BHWB) today reported
earnings of $664,000 for the quarter
ended June 30, 2010, a 28% increase
compared to reported earnings of $519,000 for the second quarter of 2009.
For the six months ended June 30,
2010 the company earned $1,317,000, an 11% increase over the $1,182,000 earned in the first six months of
2009. "In spite of an anemic economy, a strong net interest
margin, a stabilized level of non-performing assets and a focus on
expense control have helped us show improvement over 2009," said
R. Richard Bastian, President &
CEO, in commenting on the results.
Earnings per share for the quarter increased by 35% to
$0.23 compared to $0.17 the second quarter of last year. For the
six month period ended June 30, 2010
earnings per share was $0.46,
unchanged from the same period a year ago. Improvements in the net
interest margin and expense reductions were offset by a decline in
mortgage banking revenue and an increase in the provision for loan
losses for both the second quarter and first six months of
2010.
Net income and earnings per share were essentially unchanged
compared to the first quarter of 2010. Net income in the
second quarter increased by $11,000
compared to $653,000 in the first
quarter of 2010, with earnings per share of $0.23 for both quarters.
Total assets increased during the first six months of 2010 to
$539.3 million from $523.4 million at December
31, 2009. Strong deposit growth lead to an increase in
investment securities and reduction in borrowings from the
wholesale markets, continuing to strengthen the company's liquidity
position. While total loans outstanding had decreased during
the first quarter of the year, growth during the second quarter
more than offset the decline, resulting in year to date loan growth
of 1%.
The following table summarizes key performance and asset quality
measures for the quarter ended June 30,
2010 compared to the previous four quarters.
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Key Performance and Asset
Quality Measures
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2nd Qtr
2010
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1st Qtr
2010
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4th Qtr
2009
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3rd Qtr
2009
|
2nd Qtr
2009
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Diluted Earnings per
share
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$.023
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$0.23
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$0.19
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$0.01
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$0.17
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Return on average
assets
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.50%
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.50%
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.45%
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.14%
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.39%
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Return on common
equity
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7.19%
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7.12%
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6.55%
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.42%
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5.22%
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Net interest margin
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3.92%
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3.96%
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3.86%
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3.62%
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3.61%
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Efficiency ratio
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68.24%
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68.4%
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73.7%
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69.6%
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75.5%
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Nonperforming loans to total
loans
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2.45%
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2.55%
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1.90%
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2.11%
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2.20%
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Nonperforming assets to total
loans
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2.70%
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2.80%
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2.09%
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2.44%
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2.63%
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Allowance for loan losses to
total loans
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1.79%
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1.87%
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1.67%
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1.57%
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1.18%
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Allowance for loan losses to
nonperforming loans
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73%
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74%
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88%
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75%
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54%
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Subsidiary bank total risk based
capital
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13.16%
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13.48%
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12.92%
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12.80%
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12.46%
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Net Interest Income
Net interest income for the second quarter increased 10% to
$4.8 million compared to $4.3 million in the second quarter 2009, and
increased 3% compared to the previous quarter net interest income
of $4.6 million. The average
balance of total earning assets was essentially unchanged compared
to the second quarter of 2009, however, the net interest margin
increased by 31 basis points to 3.92% compared to 3.61% the
previous year. The second quarter net interest margin
decreased by 4 basis points compared to the previous quarter margin
of 3.96%.
Net interest income for the six months ended June 30, 2010 increased 13% to $9.4 million compared to $8.3 million for the first six months of 2009.
Average earning assets for the six months ended June 30, 2010 increased by only 1% compared to
the first six months of 2009; however, the net interest margin
increased by 40 basis points to 3.94% compared to 3.54%.
The improvement in the net interest margin reflects the bank's
success in generating core deposits. Average total deposits
for the second quarter increased $41.4
million, or 10%, compared to the second quarter of 2009, and
by $12.3 million, or 3% compared to
the previous quarter. Total average deposits for the six
months ended June 30, 2010 increased
by $39.0 million, or 11%, compared to
the same six month period in 2009. All of the deposit growth
occurred in non-maturity deposit products such as checking,
interest checking, savings and money market accounts. The
growth in deposits was used to pay down borrowings, decreasing the
average balance of borrowings for the second quarter of 2010 by
$45.0 million, or 54%, compared to
the average balance in the second quarter of 2009.
Non-Interest Income and Operating Expenses
Noninterest income for the second quarter decreased 19% to
$1.8 million compared to $2.2 million the second quarter of the prior
year. For the six month period ended June 30, 2010 non-interest income is down 19% to
$3.5 million compared to $4.3 million the first half of 2009. The
decrease for both the quarter and six month period reflects a lower
volume of origination and sale of residential mortgage loans in the
secondary market. Gain on sale of mortgage loans, net of
amortization of mortgage servicing rights decreased by $1.1 million for the six months ended
June 30, 2010 compared to the first
half of 2009. This decrease was partially offset by increases
in debit card interchange fees, investment management fees and
deposit service charges. While mortgage banking revenues are
down compared to the prior year, activity in the first half of 2010
still exceeded management expectations, as near historic low
interest rates, low home values, and government programs fueled
refinance and purchase activity.
Operating expenses decreased 9% to $4.5
million in the second quarter of 2010 compared to
$5.0 million the same quarter a year
ago. The decrease in total operating expense for the quarter
was due to a decrease in compensation expense, reflecting lower
variable compensation paid to mortgage originators and a decrease
in FDIC insurance, which included a special assessment that was
expensed in the second quarter of 2009. For the six months
ended June 30, 2010 operating
expenses decreased by $0.5 million,
or 5%, to $8.9 compared to
$9.4 million for the same period last
year. This decrease is primarily due to lower variable
compensation for mortgage originators.
Provision for Loan Losses and Credit Quality
Nonperforming assets equaled $8.9
million, or 2.70% of total loans, at June 30, 2010, compared to $6.8 million, or 2.09% of total loans, at
December 31, 2009 and $8.5 million, or 2.63% of total loans, at
June 30, 2009. "Economic
conditions continue to challenge borrowers," said Bastian.
"In addition to the stress the recessionary economy puts on
our business customers, high unemployment and deteriorating real
estate values are increasing default rates and the severity of loss
when a default occurs," he added. Non-performing assets are
expected to remain at elevated levels throughout 2010.
The provision for loan losses in the second quarter increased by
25% to $1.0 million compared to
$0.9 million in second quarter 2009.
For the first six months of 2010 the provision for loan
losses increased by 24% to $2.0
million compared to $1.6
million for first six months of 2009. Net charge-offs
for the six months ended June 30,
2010 increased by $0.9 million to
$1.6 million compared to $0.7
million for the first half of 2009.
The ratio of allowance for loan losses to total loans was 1.79%
at June 30, 2010 compared to 1.67% at
December 31, 2009, and 1.18% at
June 30, 2009. The ratio of the
allowance for loan losses to nonperforming loans was 73% at
June 30, 2010 down from 88% at
December 31, 2009, but up from 54% at
June 30, 2009.
The following table summarizes the activity in the allowance for
loan losses for the six months ended June
30, 2010 and 2009, and the year ended December 31, 2009.
Activity in Allowance for Loan
Losses
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Six Months Ended June
30,
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Year Ended
December 31,
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2010
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2009
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2009
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Beginning allowance for loan
losses
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$
5,471,000
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$ 2,970,000
|
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$
2,970,000
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Provision for loan
losses
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2,022,000
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1,625,000
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4,090,000
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Charge-offs
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(1,692,000)
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(830,000)
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(1,779,000)
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Recoveries
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85,000
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85,000
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190,000
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Ending allowance for loan
losses
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$
5,886,000
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$ 3,850,000
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$
5,471,000
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Net charge-offs to average total
loans (annualized)
|
1.00%
|
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.46%
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.49%
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Outlook
Blackhawk has created a strong credit culture and the processes
to support it, but 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. The bank has received
numerous accolades for its work with the fast-growing Hispanic
population in the markets it serves.
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.
For further
information:
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Blackhawk Bancorp,
Inc.
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R. Richard Bastian, III,
President & CEO
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Todd J. James, EVP &
CFO
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rbastian@blackhawkbank.com
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tjames@blackhawkbank.com
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Phone: (608) 364-8911
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SOURCE Blackhawk Bancorp, Inc.