BELOIT, Wis., April 22 /PRNewswire-FirstCall/ -- Blackhawk
Bancorp, Inc. (OTC Bulletin Board: BHWB) today reported
earnings of $653,000 for the quarter
ended March 31, 2010, a 1% decrease
compared to $662,000 earned in the
first quarter of 2009. Despite continued improvement in net
interest margin, earnings were essentially flat compared to the
first quarter of the prior year due to an increase in the provision
for loan losses and a decrease in mortgage banking activity.
Earnings per share for the quarter decreased to $0.23 compared to $0.29 per diluted share for the first quarter of
2009.
Total assets increased during the quarter to $529.0 million from $523.4
million at December 31, 2009.
Strong deposit growth lead to an increase in investment
securities and reduction in borrowings and other wholesale funding,
substantially strengthening the company's liquidity position.
The following table summarizes key performance and asset quality
measures for the quarter ended March 31,
2010 compared to the previous four quarters.
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Key
Performance and Asset Quality Measures
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1st
Qtr
2010
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4th
Qtr
2009
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3rd
Qtr
2009
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2nd
Qtr
2009
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1st
Qtr
2009
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Diluted
Earnings per share
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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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$0.29
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Return
on average assets
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.51%
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.44%
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.14%
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.39%
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.53%
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Return
on common equity
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7.22%
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4.68%
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.43%
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5.68%
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9.62%
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Net
interest margin
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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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3.46%
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Efficiency
ratio
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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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70.9%
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Nonperforming
loans to total loans
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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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2.24%
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Nonperforming
assets to total loans
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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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2.41%
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Allowance
for loan losses to total loans
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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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1.08%
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Allowance
for loan losses to nonperforming loans
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74%
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88%
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75%
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54%
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48%
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Subsidiary
bank total risk based capital
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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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12.75%
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Net Interest Income
Net interest income for the first quarter increased 17% to
$4.6 million compared to $3.9 million in the first quarter 2009.
Both the average balance of total earning assets and the net
interest margin realized on earning assets increased in the first
quarter of 2010 compared to the same quarter last year. The
average balance of total earning assets for the quarter increased
3.0% compared to the first quarter of 2009. The earning asset
growth included a $22.9 million, or
16% increase in average short-term investments and investment
securities offset by a $10.2 million,
or 3%, decrease in average total loans. The net interest
margin increased 50 basis points to 3.96% compared to 3.46% in the
first quarter of 2009.
The earning asset growth and improvement in the net interest
margin reflect the bank's success in generating core deposits.
Average total deposits for the first quarter increased
$46.1 million, or 12%, compared to
the first quarter of 2009. All of the deposit growth occurred
in non-maturity deposit products such as regular checking, interest
checking and money market. The growth in deposits was used to
pay down borrowings, decreasing the average balance of borrowings
for the first quarter of 2010 by $40.2
million, or 43%, compared to the average balance in the
first quarter of 2009.
Non-Interest Income and Operating Expenses
Noninterest income for the first quarter decreased 20% to
$1.7 million compared to $2.1 million the first quarter of the prior year.
The decrease reflects lower volume of origination and sale of
residential mortgage loans in the secondary market. "Mortgage
banking activity continues to be a primary source of non-interest
income," said Rick Bastian,
president and CEO. "The decrease from the first quarter of last
year reflects the unprecedented volume in the first quarter of
2009. The activity in the first quarter of 2010 still
exceeded our expectations, as near historic low interest rates, low
home values, and government programs have fueled refinance and
purchase activity," he added.
Operating expenses were essentially flat at $4.4 million in the first quarter of 2010
compared to the prior year. Reductions in compensation
expense were offset by increases in FDIC insurance and loan
collection expenses.
Provision for Loan Losses and Credit Quality
Nonperforming assets equaled $8.9
million, or 2.80% of total loans, at March 31, 2010 compared to $6.8 million, or 2.09% of total loans, at
December 31, 2009 and $7.9 million, or 2.41% of total loans, at
March 31, 2009. "We continue to
actively address the Bank's exposure to nonperforming assets,
working closely with customers to mitigate losses to the extent
possible," said Bastian. "This economy continues to challenge
borrowers' ability to meet their obligations. With the
high-level of unemployment in our markets we expect non-performing
assets to remain at elevated levels throughout 2010."
The provision for loan losses in the first quarter increased by
24% to $961,000 compared to
$775,000 in first quarter 2009.
Loan charge-offs also increased in the first quarter of 2010,
but were still less than one half of the provision amount.
This allowed the company to continue increasing the ratio of
allowance for loan losses to total loans, which was 1.87% at
March 31, 2010 compared to 1.67% at
December 31, 2009, and 1.08% at
March 31, 2009. The ratio of
the allowance for loan losses to nonperforming loans was 74% at
March 31, 2010 down from 88% at
December 31, 2009, but up from 48% at
March 31, 2009.
The following table summarizes the activity in the allowance for
loan losses for the quarters ended March 31,
2010 and 2009, and the year ended December 31, 2009.
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Activity
in Allowance for Loan Losses
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Quarter
Ended March 31,
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Year
Ended
December
31,
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2010
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2009
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2009
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Beginning
allowance for loan losses
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$
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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961,000
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775,000
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4,090,000
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Charge-offs
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(475,000)
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(275,000)
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(1,779,000)
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Recoveries
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39,000
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49,000
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190,000
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Ending
allowance for loan losses
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$
5,996,000
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$
3,519,000
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$
5,471,000
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Net
charge-offs to average total loans
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.55%
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.28%
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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.
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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.