Blackhawk Bancorp Achieves Record Earnings in 2015
Tweet
Share
E-mailBELOIT, WI -- (Marketwired) -- 02/05/16 -- Blackhawk Bancorp, Inc. (OTCQX: BHWB) reported that it achieved record earnings in 2015 with net income of $3,919,000 and fully diluted earnings per share of $1.73, exceeding the previous high watermarks of $3,915,000 and $1.47, respectively, which were attained in 2013. The more dramatic increase in the record earnings per share compared to the increase in net income reflects the 2014 redemption of the Company's preferred securities. Since that redemption, which eliminated the related preferred stock dividends, all earnings are attributable to common shareholders.
The Company earned net income of $985,000 for the fourth quarter of 2015, a $40,000 increase from the $945,000 reported for the fourth quarter of 2014. Earnings per diluted share for the quarter was $0.43, up $0.01 from the $0.42 realized in the fourth quarter of 2014.
The $3,919,000 net income reported for the year was a 74% increase compared to the $2,252,000 earned in 2014. The $1.73 diluted earnings per share for 2015 represents an 88% increase compared to the $0.92 earned the prior year. Excluding the securities related fraud loss that was included in the prior year results, net income and diluted earnings per share for 2015 increased by $74,000 and $0.10, respectively, compared to the prior year results.
"We're pleased to be reporting record performance for 2015 with results that reflect stability and growth in core earnings," said Rick Bastian, the Company's chairman and chief executive officer. "We've made modest but constant progress in growing net interest income and recurring fee income while at the same time controlling operating expenses and credit losses," he added.
"Despite a $1.3 million increase in nonperforming assets during the fourth quarter the overall credit quality of the loan portfolio continues to improve," said Bastian. "The resolution of some of our long term problem credits has contributed to the increase in nonperforming assets, but improved our position overall."
The following table summarizes key performance and asset quality measures for the quarter ended December 31, 2015 compared to the previous four quarters:
4th 3rd 2nd 1st 4th
Key Performance and Asset Quality Qtr Qtr Qtr Qtr Qtr
Measures 2015 2015 2015 2015 2014
----------------------------------------------------------------------------
Diluted EPS $ 0.43 $ 0.51 $ 0.42 $ 0.38 $ 0.42
Return on Average Assets .64% .75% .63% .61% .65%
Return on Average Common Equity 8.59% 10.15% 8.65% 8.16% 8.93%
Efficiency Ratio* 73.65% 71.8% 72.5% 75.9% 74.2%
Net Interest Margin (tax-equivalent
basis) 3.58% 3.68% 3.66% 3.70% 3.73%
Nonaccrual Loans to Total Loans 1.59% 1.31% 1.30% 1.28% 1.43%
Nonaccrual Loans and OREO to Total
Loans 2.00% 1.61% 1.61% 1.53% 1.66%
Allowance for Loan Losses to Total
Loans 1.20% 1.29% 1.17% 1.21% 1.11%
Allowance for Loan Losses to
Nonaccrual Loans 75.5% 97.9% 89.7% 94.3% 77.4%
----------------------------------------------------------------------------
* The efficiency ratio calculation excludes net gains and losses on
securities and net gains and losses on other assets.
Net Interest Income
Net interest income for the fourth quarter increased 3% to $5,015,000 compared to $4,884,000 for the fourth quarter of 2014; however, the net interest margin fell to 3.58% compared to 3.68% the most recent quarter and 3.73% the same quarter last year. The decrease in the net interest margin was partially due to a significant increase in average non-maturity deposits for the quarter. The increase is expected to be short-term in nature; therefore, the proceeds from the increase have been invested short-term producing very little incremental net interest income. The increase in balance sheet leverage with minimal impact on net interest income negatively affected the net interest margin ratio.
For the year, net interest income increased $287,000, or 2%, to $19,633,000 compared to $19,346,000 for 2014. The 2015 net interest margin of 3.65% was down 2 basis points compared to the prior year. The increase in the average balance of non-maturity deposits in the fourth quarter also contributed to the decrease in the net interest margin for the year, but to a much lesser extent.
Average total earning assets for the fourth quarter increased by $35.6 million to $572.5 million compared to $536.9 million in the fourth quarter of 2014. The increase in average total earning assets includes a $16.9 million, or 4%, increase in average total loans and a $17.5 million increase in average short-term investments and investment securities. Average total deposits for the fourth quarter were $37.2 million, or 7%, higher than they were in the fourth quarter of 2014. This includes a $9.3 million increase in average non-interest bearing demand deposits and a $46.1 million increase in average interest-bearing non-maturity deposits, which was offset by an $18.2 million decrease in average time deposits.
Average total earning assets for the twelve months ended December 31, 2015 increased by $9.9 million to $554.7 million compared to $544.8 million for 2014; however, total average loans were up by $22.4 million to $407.0 million compared to $384.6 million the year before. The increase in average total loans for both the quarter and the year was driven by growth in the commercial and commercial real estate portfolios. Average total deposits for 2015 increased by $8.2 million, or 2%, compared to the year before.
Provision for Loan Losses and Credit Quality
The provision for loan losses in the fourth quarter decreased by $166,000, or 32%, to $350,000 compared to $516,000 in fourth quarter of 2014. For the year the provision for loan losses decreased $146,000 to $2,139,000 compared to $2,285,000 for 2014.
Nonaccrual loans and other real estate owned totaled $8.0 million, or 2.0% of total loans, at December 31, 2015 compared to $6.7 million, or 1.61% of total loans, at September 30, 2015 and $6.5 million, or 1.66% of total loans, at December 31, 2014. The increase in nonaccrual loans and OREO includes $786,000 related to a troubled debt restructuring that improved the Company's position on the remaining $3.8 million balance of the relationship.
Net loan charge-offs for 2015 decreased 37% to $1,745,000 compared to $2,783,000 in 2014. The following table summarizes the activity in the allowance for loan losses for the years ended December 31, 2015 and 2014:
Activity in Allowance For Loan Losses:
Year Ended
(in Thousands) December 31,
2015 2014
------- -------
Beginning allowance for loan losses 4,396 4,894
Provision for loan losses 2,139 2,285
Charge-offs (2,506) (3,170)
Recoveries 761 387
------- -------
Ending allowance for loan losses 4,790 4,396
Net charge-offs to average total loans - annualized 0.43% 0.72%
The ratio of the allowance for loan losses to total loans was 1.20% as of December 31, 2015, compared 1.28% at September 30, 2015, and 1.11% at December 31, 2014. The ratio of the allowance for loan losses to nonaccrual loans was 75.5% at December 31, 2015 compared to 97.9% at September 30, 2015 and 77.4% at December 31, 2014.
Non-Interest Income and Operating Expenses
Non-interest income for the fourth quarter of 2015 declined by $133,000, or 6%, to $2,068,000 compared to $2,201,000 for the fourth quarter of 2014. For the full year 2015 non-interest income increased by $3,059,000, or 51%, to $9,015,000 compared to $5,956,000 the year before. Excluding the fraud loss of $2,611,000 that was recorded in 2014, non-interest income increased $448,000, including a $254,000 increase in revenue from the sale and servicing of loans originated for sale into the secondary market.
Operating expenses for the quarter increased by $90,000, or 2%, to $5,450,000 compared to $5,360,000 the fourth quarter of 2014. For the year operating expenses are up $591,000, or 3%, to $21,341,000 compared to $20,750,000 in 2014.
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. This growth combined with ongoing strengthening of the Company's credit quality are expected to lead to continued earnings improvement. Growth and earnings could however be tempered by uncertain economic conditions, which continue to be less than ideal in the markets served by Blackhawk. Competitive pressures, regulation and the on-going low interest rate environment are additional factors that will challenge growth and earnings.
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 Janesville, 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 the financial products its provides.
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"; 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.
Further information is available on the Company's website at www.blackhawkbank.com.
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015 AND DECEMBER 31, 2014
(UNAUDITED)
December 31, December 31,
Assets 2015 2014
---------------------------------------------------------------------------
(Amounts in thousands,
except
share and per share data)
Cash and due from banks $ 11,653 $ 9,847
Securities purchased under agreements to
resell 14,955 -
Interest-bearing deposits in banks and other 1,144 11,744
------------- -------------
Total cash and cash equivalents 27,752 21,591
------------- -------------
Securities available-for-sale 139,533 129,184
Loans held for sale 3,014 1,537
Federal Home Loan Bank stock, at cost 2,266 2,266
Loans, less allowance for loan losses of
$4,790 and $4,396 at December 31, 2015 and
December 31, 2014, respectively 395,187 391,448
Premises and equipment, net 7,715 8,320
Goodwill 5,037 5,037
Mortgage Servicing rights 2,395 2,640
Cash surrender value of bank-owned life
insurance 9,902 9,602
Other assets 9,711 9,848
------------- -------------
Total assets $ 602,512 $ 581,473
============= =============
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing $ 102,943 $ 99,068
Interest-bearing 420,114 416,716
------------- -------------
Total deposits 523,057 515,784
Subordinated debentures and notes (including
$1,031 at fair value at December 31, 2015 and
December 31, 2014) 11,255 11,255
Senior secured term note 8,500 9,000
Other borrowings 11,250 -
Other liabilities 3,302 3,398
------------- -------------
Total liabilities 557,364 539,437
------------- -------------
Stockholders' equity
Common stock, $0.01 par value, 10,000,000
shares authorized; 2,327,197 and 2,318,496
shares issued as of December 31, 2015 and
December 31, 2014, respectively 23 23
Additional paid-in capital 10,362 9,960
Retained earnings 34,376 31,091
Treasury stock, 88,783 and 87,865 shares at
cost as of December 31, 2015 and December
31, 2014, respectively (983) (969)
Accumulated other comprehensive income
(loss) 1,370 1,931
------------- -------------
Total stockholders' equity 45,148 42,036
------------- -------------
Total liabilities and stockholders' equity $ 602,512 $ 581,473
============= =============
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
December 31,
2015 2014
------------- -------------
(Amounts in thousands,
except
share and per share data)
Interest Income:
Interest and fees on loans $ 4,772 $ 4,765
Interest and dividends on available-for-sale
securities:
Taxable 518 530
Tax-exempt 297 321
Interest on securities purchased under
agreements to resell 58 1
Interest on other 5 2
------------- -------------
Total interest and dividend income 5,650 5,619
------------- -------------
Interest Expenses:
Interest on deposits 389 489
Interest on subordinated debentures 154 153
Interest on senior secured term note 89 92
Interest on other borrowings 3 1
------------- -------------
Total interest expense 635 735
------------- -------------
Net interest and dividend income before
provision for loan losses 5,015 4,884
Provision for loan losses 350 516
------------- -------------
Net interest and dividend income after
provision for loan losses 4,665 4,368
------------- -------------
Noninterest Income:
Service charges on deposits accounts 744 731
Net gain on sale of loans 415 533
Net loan servicing income 66 44
Debit card interchange fees 551 543
Net gains on sales of securities available-
for-sale 310 1
Net other gains (losses) (469) 14
Increase in cash value of bank-owned life
insurance 73 71
Other 378 264
------------- -------------
Total noninterest income 2,068 2,201
------------- -------------
Noninterest Expenses:
Salaries and employee benefits 2,830 2,859
Premises and equipment 661 619
Data processing 595 587
Advertising and marketing 91 82
Professional fees 280 187
Office Supplies 93 88
Telephone 111 106
Other 789 832
------------- -------------
Total noninterest expenses 5,450 5,360
------------- -------------
Income before income taxes 1,283 1,209
Provision for income taxes 298 264
------------- -------------
Net income $ 985 $ 945
============= =============
Key Ratios
---------------------------------------------------------------------------
Basic Earnings Per Common Share $ 0.43 $ 0.42
Diluted Earnings Per Common Share 0.43 0.42
Dividends Per Common Share 0.04 0.02
Net Interest Margin (FTE) 3.58% 3.73%
Efficiency Ratio (FTE) 73.65% 74.13%
Return on Assets 0.64% 0.65%
Return on Common Equity 8.59% 8.93%
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
2015 2014
------------- -------------
(Amounts in thousands,
except per share data)
share and per share data)
Interest Income:
Interest and fees on loans $ 18,953 $ 18,711
Interest and dividends on available-for-sale
securities:
Taxable 1,998 2,106
Tax-exempt 1,203 1,314
Interest on securities purchased under
agreements to resell 61 156
Interest on other 19 18
------------- -------------
Total interest and dividend income 22,234 22,305
------------- -------------
Interest Expense:
Interest on deposits 1,616 2,067
Interest on subordinated debentures and notes 612 609
Interest on senior secured term note 361 249
Interest on other borrowings 12 34
------------- -------------
Total interest expense 2,601 2,959
------------- -------------
Net interest and dividend income before
provision for loan losses 19,633 19,346
Provision for loan losses 2,139 2,285
------------- -------------
Net interest and dividend income after
provision for loan losses 17,494 17,061
------------- -------------
Noninterest Income:
Service charges on deposits accounts 2,716 2,832
Net gain on sale of loans 2,021 1,824
Net loan servicing income 293 236
Debit card interchange fees 2,242 2,223
Net gains on sales of securities available-
for-sale 631 470
Net other gains (losses) (450) (2,869)
Increase in cash surrender value of bank-
owned life insurance 299 291
Other 1,263 949
------------- -------------
Total noninterest income 9,015 5,956
------------- -------------
Noninterest Expenses:
Salaries and employee benefits 11,557 11,295
Premises and equipment 2,589 2,522
Data processing 2,381 2,344
Advertising and marketing 276 249
Professional fees 1,024 875
Office Supplies 352 373
Telephone 423 386
Other 2,739 2,706
------------- -------------
Total noninterest expenses 21,341 20,750
------------- -------------
Income before income taxes 5,168 2,267
Provision for income taxes 1,249 15
------------- -------------
Net income $ 3,919 $ 2,252
============= =============
Key Ratios
---------------------------------------------------------------------------
Basic Earnings Per Common Share $ 1.73 $ 0.92
Diluted Earnings Per Common Share 1.73 0.92
Dividends Per Common Share 0.12 0.06
Net Interest Margin (FTE) 3.65% 3.67%
Efficiency Ratio (FTE) 73.33% 73.16%
Return on Assets 0.66% 0.38%
Return on Common Equity 8.90% 5.05%
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- Three months ended Three months ended
equivalent basis) December 31, 2015 December 31, 2014
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Interest Earning
Assets:
Interest-bearing
deposits in banks $ 6,268 $ 5 0.34% $ 4,959 $ 2 0.18%
Federal funds sold
and securities
purchased under
agreements to
resell 15,111 58 1.53% 728 1 0.67%
Investment
securities:
Taxable
investment
securities 100,945 518 2.04% 99,045 530 2.12%
Tax-exempt
investment
securities 39,244 297 4.60% 38,076 321 5.02%
-------------------------- --------------------------
Total
Investment
securities 140,189 815 2.75% 137,121 851 2.92%
Loans 410,964 4,772 4.61% 394,045 4,765 4.80%
-------------------------- --------------------------
Total Earning Assets $572,532 $ 5,650 4.02% $536,853 $ 5,619 4.27%
---------------- ----------------
Allowance for loan
losses (4,821) (4,482)
Cash and due from
banks 13,270 13,128
Other assets 35,472 35,947
-------- --------
Total Assets $616,453 $581,446
======== ========
Interest Bearing
Liabilities:
Interest bearing
checking accounts $157,669 $ 110 0.28% $157,000 $ 111 0.28%
Savings and money
market deposits 200,662 114 0.22% 155,190 64 0.16%
Time deposits 78,691 165 0.84% 96,931 314 1.29%
-------------------------- --------------------------
Total interest
bearing
deposits 437,022 389 0.35% 409,121 489 0.47%
Subordinated
debentures 11,255 154 5.42% 11,255 152 5.38%
Borrowings 14,351 92 2.54% 11,019 93 3.34%
-------------------------- --------------------------
Total Interest-
Bearing Liabilities $462,628 $ 635 0.54% $431,395 $ 734 0.68%
---------------- ----------------
Interest Rate Spread 3.48% 3.59%
======= =======
Noninterest checking
accounts 104,357 94,996
Other liabilities 3,954 13,049
-------- --------
Total liabilities 570,939 539,440
Common
Stockholders'
equity 45,514 42,006
-------- --------
Total Stockholders'
equity 45,514 42,006
Total Liabilities
and Stockholders'
Equity $616,453 $581,446
======== ========
Net Interest
Income/Margin $ 5,015 3.58% $ 4,885 3.73%
================ ================
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- Twelve months ended Twelve months ended
equivalent basis) December 31, 2015 December 31, 2014
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------------------------- --------------------------
Interest Earning
Assets:
Interest-bearing
deposits in banks $ 7,386 $ 19 0.26% $ 3,245 $ 18 0.17%
Federal funds sold
and securities
purchased under
agreements to
resell 4,479 61 1.37% 11,536 156 1.35%
Investment
securities:
Taxable
investment
securities 97,539 1,998 2.05% 106,584 2,106 1.99%
Tax-exempt
investment
securities 38,251 1,203 4.81% 38,853 1,314 5.08%
-------------------------- --------------------------
Total
Investment
securities 135,790 3,201 2.83% 145,437 3,420 2.82%
Loans 407,010 18,953 4.66% 384,583 18,711 4.87%
-------------------------- --------------------------
Total Earning Assets $554,665 $ 22,234 4.12% $544,801 $ 22,305 4.22%
---------------- ----------------
Allowance for loan
losses (4,814) (4,609)
Cash and due from
banks 13,163 12,981
Other assets 35,507 34,103
-------- --------
Total Assets $598,521 $587,276
======== ========
Interest Bearing
Liabilities:
Interest bearing
checking accounts $163,613 $ 452 0.28% $162,483 $ 465 0.29%
Savings and money
market deposits 174,451 311 0.18% 155,447 228 0.15%
Time deposits 82,278 853 1.04% 101,632 1,374 1.35%
-------------------------- --------------------------
Total interest
bearing
deposits 420,342 1,616 0.38% 419,562 2,067 0.49%
Subordinated
debentures and
notes 11,255 612 5.43% 11,199 609 5.44%
Borrowings 17,279 373 2.16% 14,852 283 1.91%
-------------------------- --------------------------
Total Interest-
Bearing Liabilities $448,876 $ 2,601 0.58% $445,613 $ 2,959 0.66%
---------------- ----------------
Interest Rate Spread 3.54% 3.56%
======= =======
Noninterest checking
accounts 101,484 94,015
Other liabilities 4,123 3,504
-------- --------
Total liabilities 554,483 543,132
Common
Stockholders'
equity 44,038 44,144
-------- --------
Total Stockholders'
equity 44,038 44,144
Total Liabilities
and Stockholders'
Equity $598,521 $587,276
======== ========
Net Interest
Income/Margin $ 19,633 3.65% $ 19,346 3.67%
================ ================
For further information:Blackhawk Bancorp, Inc. R. Richard Bastian, IIIChairman & CEO [email protected] J. JamesEVP & [email protected]: (608) 364-8911
Source: Blackhawk Bancorp, Inc.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Midday movers: PepsiCo, JetBlue fall; GM, Danaher and UPS rise
- Dynex Capital (DX) PT Lowered to $12.25 at Keefe, Bruyette & Woods
- Dime Community Bancshares (DCOM) Tops Q1 EPS by 1c
Create E-mail Alert Related Categories
Press ReleasesRelated Entities
Dividend, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
