- 2008 Diluted EPS of $1.17 sets record BELOIT, Wis., Feb. 11
/PRNewswire-FirstCall/ -- Blackhawk Bancorp, Inc. (OTC:BHWB)
(BULLETIN BOARD: BHWB) today reported earnings for the year ended
December 31, 2008 of $2.6 million, an 11% increase compared to $2.3
million for 2007. Earnings per share increased 14% to a record
$1.17 per diluted share compared to the $1.03 per diluted share
earned in 2007. The increase includes a $2.1 million, or 17%,
increase in net interest income, reflecting strong loan and deposit
growth for the year. Earnings for the quarter ended December 31,
2008 were $388,000, or $0.18 per diluted share, compared with
$563,000, or $0.26, per diluted share earned for the same period in
2007. The decrease in earnings for the quarter includes the effect
of a $348,000, or 184% increase in the provision for loan losses,
and a $101,000 increase in net losses on financial instruments that
are accounted for at fair value. Total assets increased to $500.4
million as of December 31, 2008 compared with $464.7 million at
year-end 2007. The company announced last week that it has received
preliminary approval to receive $10 million in capital under the
U.S. Treasury's voluntary Capital Purchase Program, a part of the
Emergency Economic Stabilization Act of 2008, designed to provide
capital to healthy financial institutions to promote confidence and
stabilization in the economy. "We are well capitalized and
profitable," said Rick Bastian, president and CEO. "This investment
gives us the resources to continue to meet the borrowing needs of
businesses and individuals in the Stateline area at a time in the
economy when dependable sources of credit are critical," he added.
"We see this as a tremendous vote of confidence in the common sense
approach to banking that Blackhawk has pursued," said Bastian. "By
sticking with our disciplined and focused approach to business we
were able to achieve record earnings per share for 2008," said
Bastian. "However, the current economic crisis threatens to slow
the momentum we've built over the last several years. Participation
in the Capital Purchase Program will allow us to confidently
continue pursuing growth opportunities," he added. Net Interest
Income Rises Net interest income for the fourth quarter increased
12% to $3.8 million as compared with $3.4 million in the fourth
quarter 2007. The net interest margin for the quarter increased 15
basis points to 3.39% compared to 3.24% in the fourth quarter of
2007. For the full year net interest income was up 17% to $15.0
million, compared to $12.9 million for 2007. During 2008 Blackhawk
grew the earning asset base and improved the margin. Average
earning assets for the year ended December 31, 2008 increased $32.3
million, or 8% over the prior year, while the net interest margin
increased 27 basis points to 3.45%. Strong loan and deposit growth
and higher investment portfolio yields accounted for the gains in
net interest income and the improved net interest margin. Average
total loans for the quarter increased $34.3 million, or 12% to
$323.1 million compared with $288.8 million in fourth quarter 2007.
For the year ended December 31, 2008 average total loans increased
$26.5 million, or 9% to $306.4 million compared to the prior year.
The majority of the loan growth was generated through the company's
business banking activities, increasing the average balance of the
commercial and commercial real estate loans for the year by $22.2
million over the average balance for 2007. Average total deposits
for the fourth quarter of 2008 increased 9% to $372.7 million
compared with $341.5 million in the same period a year ago. This
included an additional $24.3 million in interest checking, driven
by the success of Blackhawk's EasyMoney Checking product. For the
twelve months, average total deposits increased 8% to $356.8
million compared with $331.1 million for 2007. NonInterest Income
and Operating Expenses Quarterly noninterest income decreased 14%
to $934,000 compared to $1,089,000 the prior year. Increases in
mortgage banking income, asset management fees and debit card
revenue totaling $118,000 were offset by a $74,000 decline in
deposit service charges and a $101,000 increase in the loss on
financial instruments accounted for at fair value. For the year
noninterest income was up 4% to $5.2 million, compared to $5.0
million in 2007. For the year, mortgage banking revenue, debit card
income, deposit service charges and asset management fees increased
by $570,000, $220,000, $97,000, and $76,000, respectively, compared
to 2007. The increases in noninterest income were partially offset
by a $624,000 increase in net losses from the sale of securities,
and on certain financial instruments accounted for at fair value,
including a $601,000 charge for "Other Than Temporary Impairment"
of mortgage-backed securities. Total operating expenses for the
fourth quarter increased 5% to $3.82 million compared with $3.62
million for the fourth quarter of 2007. For the year, operating
expenses increased 9% to $15.5 million. The increase in the fourth
quarter and annual operating expense is primarily attributable to
increased compensation and data processing expense. The increase in
compensation is partially due to higher mortgage loan production,
which is generated by commission-based employees. It also reflects
the increased cost of and higher participation in the company's
health insurance benefit plans. Higher data processing costs
reflect the increases in the number of accounts and transaction
volume being processed. Credit Quality "Although charge-offs and
non-performing loans have bumped up from the very low levels we
enjoyed earlier in 2008, the current level remains very manageable
in this economic environment where many banking organizations are
struggling with much higher numbers," said Bastian. Credit quality
of the loan portfolio remains strong, however, non-performing loans
at December 31, 2008 increased to $4.9 million compared to $2.4
million at September 30, 2008 and $2.3 million at the end of 2007.
Much of the increase in non-performing loans in the fourth quarter
relates to one lending relationship on which a significant loss is
not expected. However, the number of delinquent borrowers is
increasing and management anticipates an elevated level of
non-performing loans and charge-offs in 2009 as the bank begins to
experience the effects of the economic recession. The provision for
loan losses in the fourth quarter increased by 184% to $537,000,
compared to $189,000 provision recorded in fourth quarter 2007. For
the year Blackhawk recorded a provision for loan losses of
$1,322,000, a 134% increase over the $566,000 provision recorded in
2007. The increase in the provision strengthened the ratio of
allowance for loan losses to total loans to .90% compared to .82%
at December 31, 2007. Net loan charge-offs in the fourth quarter
increased by $238,000 to $419,000 compared to $181,000 for the same
period in 2007. For the year, net charge-offs increased 71% to
$763,000, an amount equal to 0.23% of total loans, compared with
$446,000 for 2007. The ratio of the allowance for loan losses to
non-performing loans has decreased to 60% compared to 119% at
September 30, 2008 and 105% at December 31, 2007. Non-performing
loans plus other real estate owned equaled 1.64% of total assets at
the end of the fourth quarter compared with .78% at December 31,
2007. Outlook "We expect to continue strengthening loan loss
reserves especially if economic conditions continue to
deteriorate," said Bastian. "We believe we've created a strong
credit culture and processes to support it, but the potential for a
prolonged economic downturn has us focused on fortifying our
balance sheet. Applying for capital under the US Treasury's Capital
Purchase Program is just one of the things we're doing to ensure we
have the ability to continue growing and meeting the credit needs
of our customers," he added. Blackhawk continues to seek profitable
growth opportunities in its Wisconsin and Illinois markets, without
sacrificing profitability or credit quality. It emphasizes the
value of its personal attention and the service it provides that
remain unmatched by larger competitors. During the fourth quarter,
Blackhawk completed construction of a new full service facility in
a manufacturing and business section of Rockford, Illinois,
convenient to its niche markets of small to medium sized
manufacturing companies and the area's Hispanic immigrant
population. In spite of the soft economy, the Company believes by
continuing its commitment to service and personalized attention it
can continue to grow and prosper. 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, Ill. to Beloit, Wis.
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, investment management, and estate and succession
planning. The bank has received numerous accolades for its work
with the fast-growing Hispanic population in its served markets.
Further information is available on the Company's website at
http://www.blackhawkbank.com/. BLACKHAWK BANCORP, INC. AND
SUBSIDIARY CONDENSED STATEMENTS OF INCOME (Unaudited) Three Months
Ended Twelve Months Ended December 31, December 31, (Dollars in
thousands, except per share data) 2008 2007 2008 2007 Interest and
Dividend Income $6,957 $7,165 $27,807 $27,664 Interest Expense
3,137 3,754 12,781 14,778 Net Interest and Dividend Income 3,820
3,411 15,026 12,886 Provision for loan losses 537 189 1,322 566
Non-Interest Income 934 1,089 5,196 4,988 Non-Interest Expense
3,819 3,620 15,484 14,195 Income Before Income Taxes 398 691 3,416
3,113 Income Taxes 10 128 864 822 Net Income $388 $563 $2,552
$2,291 Key Ratios Diluted Earnings Per Share $0.18 $0.26 $1.17
$1.03 Dividends Per Share 0.09 0.09 0.36 0.36 Average Outstanding
Shares 2,154,504 2,180,361 2,161,605 2,224,408 Ending Outstanding
Shares 2,154,504 2,174,227 2,154,504 2,174,227 Net Interest Margin
3.39% 3.24% 3.45% 3.18% Efficiency Ratio 78.92% 79.36% 75.45%
78.62% Return on Assets 0.31% 0.48% 0.53% 0.51% Return on Equity
6.32% 8.82% 10.39% 9.35% CONDENSED BALANCE SHEETS (Unaudited)
December 31, December 31, (Dollars in thousands) 2008 2007 Assets:
Cash and cash equivalents $18,558 $22,793 Interest-bearing deposits
in banks 1,080 1,066 Trading securities 19,603 26,520 Securities
available-for sale 103,274 92,266 Federal Home Loan Bank Stock, at
cost 4,085 4,085 Loans, net of allowances for loan losses 326,358
292,529 Office buildings and equipment, net 9,042 7,424 Intangible
assets, net 6,739 6,636 Cash surrender value of bank-owned life
insurance 7,915 7,286 Other assets 3,787 4,068 Total Assets
$500,441 $464,673 Liabilities and Stockholders' Equity: Deposits
$376,995 $331,239 Borrowings 88,370 100,931 Subordinated debentures
5,158 5,158 Other liabilities 3,104 2,852 Total liabilities 473,627
440,180 Stockholders' equity 26,814 24,493 Total liabilities and
stockholders' equity $500,441 $464,673 DATASOURCE: Blackhawk
Bancorp, Inc. CONTACT: R. Richard Bastian, III, President &
CEO, , or Todd J. James, EVP & CFO, +1-608-364-8911, , both of
Blackhawk Bancorp, Inc.
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