BELOIT, Wis., Oct. 26 /PRNewswire-FirstCall/ -- Blackhawk
Bancorp, Inc. (OTC Bulletin Board: BHWB) today reported earnings of
$822,000 for the quarter ended
September 30, 2010, compared to
reported earnings of $189,000 for the
third quarter of 2009. For the nine months ended September 30, 2010 the company earned
$2,139,000, a 56% increase over the
$1,371,000 earned in the first nine
months of 2009. "A strong net interest margin and a high
level of mortgage banking activity generated enough revenue to
offset elevated loan loss provisions and other credit related
expenses," said R. Richard Bastian,
President & CEO.
Earnings per common share for the quarter increased to
$0.30 compared to $0.01 the third quarter of last year. For
the nine month period ended September 30,
2010 earnings per common share increased by 62% to
$0.76, compared to $0.47 for the same nine month period a year ago.
"With non-performing asset levels stabilizing, we feel like
we've weathered the storm pretty well, but with the combination of
a very slow economic recovery, increasing regulatory burden and
increasing capital requirements, there are still plenty of
challenges ahead," said Bastian. "However, as the whole
industry faces these same issues, we expect to see great
opportunities for banks that are able to meet these challenges head
on," he added.
The following table summarizes key performance and asset quality
measures for the quarter ended September 30,
2010 compared to the previous four quarters.
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|
Key
Performance and Asset Quality Measures
|
3rd
Qtr
2010
|
2nd
Qtr
2010
|
1st
Qtr
2010
|
4th
Qtr
2009
|
3rd
Qtr
2009
|
|
|
|
|
|
|
|
|
Diluted Earnings per
share
|
$0.30
|
$0.23
|
$0.23
|
$0.19
|
$0.01
|
|
Return on average
assets
|
.60%
|
.50%
|
.50%
|
.45%
|
.14%
|
|
Return on common
equity
|
8.91%
|
7.19%
|
7.12%
|
6.55%
|
.42%
|
|
Net interest
margin
|
4.07%
|
3.92%
|
3.96%
|
3.86%
|
3.62%
|
|
Efficiency ratio
|
63.34%
|
68.24%
|
68.4%
|
73.7%
|
69.6%
|
|
Nonperforming loans to
total loans
|
2.30%
|
2.45%
|
2.55%
|
1.90%
|
2.11%
|
|
Nonperforming assets to
total loans
|
2.68%
|
2.70%
|
2.80%
|
2.09%
|
2.44%
|
|
Allowance for loan losses
to total loans
|
1.88%
|
1.79%
|
1.87%
|
1.67%
|
1.57%
|
|
Allowance for loan losses
to nonperforming loans
|
82%
|
73%
|
74%
|
88%
|
75%
|
|
Subsidiary bank total risk
based capital
|
13.05%
|
13.16%
|
13.48%
|
12.92%
|
12.80%
|
|
|
|
|
|
|
|
|
|
Net Interest Income
Net interest income for the third quarter increased 16% to
$5.1 million compared to $4.4 million in the third quarter 2009. The
average balance of total earning assets increased $14.9 million, or 3%, compared to the third
quarter of 2009 while the net interest margin increased by 45 basis
points to 4.07% compared to 3.62% the year before.
Net interest income for the nine months ended September 30, 2010 increased 15% to $14.6 million compared to $12.6 million for the first nine months of 2009.
Average earning assets for the nine months ended September 30, 2010 increased by $8.9 million, or 2%, compared to the first nine
months of 2009, and the net interest margin increased by 46 basis
points to 4.05% compared to 3.59% the year before.
The improvement in the net interest margin reflects the bank's
success in generating core deposits. Average total deposits
for the third quarter increased $56.5
million, or 14%, compared to the third quarter of 2009.
Total average deposits for the nine months ended September 30, 2010 increased by $48.2 million, or 12%, compared to the same nine
month period in 2009. Most of the deposit growth occurred in
non-maturity deposit products such as checking, interest checking,
savings and money market accounts. In addition to funding
earning assets, the deposit growth was used to pay down borrowings,
decreasing the average balance of borrowings for the third quarter
of 2010 by $46.1 million, or 56%,
compared to the average balance in the third quarter of 2009.
Non-Interest Income and Operating Expenses
Noninterest income for the third quarter increased 23% to
$2.3 million compared to $1.9 million the third quarter of the prior year.
For the nine month period ended September 30, 2010 non-interest income is down 9%
to $5.6 million compared to
$6.2 million the first half of 2009.
The change in non-interest income for both the quarter and
the nine month period is due primarily to mortgage banking
activity. Refinance activity was strong during the third
quarter of 2010 increasing net revenues from the sale and servicing
of mortgage loans by $0.3 million to $1.0
million compared to $0.7
million for the third quarter of 2009. For the nine
months ended September 30, 2010 the
net revenue from the sale and servicing of mortgage loans is down
$0.8 million to $2.2 million compared
to $3.0 million realized in the first
nine months of 2009. Loan production was driven by strong
refinance activity during the first half of 2009 and then slowed
for the remainder of 2009 and into the first half of 2010.
However, interest rates have dropped even lower and activity
picked up again in the third quarter of 2010. Strong
refinance activity and related mortgage banking revenue is expected
to continue into the fourth quarter of 2010.
Operating expenses increased 7% to $4.7
million in the third quarter of 2010 compared to
$4.4 million the same quarter a year
ago. The increase for the quarter was primarily due to an
increase in compensation expense, including higher variable
compensation paid for mortgage originations. For the nine
months ended September 30, 2010
operating expenses decreased by $0.1
million, or 1%, to $13.6
compared to $13.7 million for the
same period last year.
Provision for Loan Losses and Credit Quality
Nonperforming assets equaled $9.0
million, or 2.68% of total loans, at September 30, 2010, compared to $6.8 million, or 2.09% of total loans, at
December 31, 2009 and $7.9 million, or 2.44% of total loans, at
September 30, 2009. "While
nonperforming loan levels have stabilized, the weak economy
continues to challenge credit quality," said Bastian. "With
continued high unemployment and depressed real estate values in our
markets we expect the nonperforming loans and charge-offs to remain
at elevated levels through 2011," he added.
The provision for loan losses in the third quarter decreased by
21% to $1.4 million compared to
$1.8 million in third quarter 2009.
For the first nine months of 2010 the provision for loan
losses was $3.4 million, essentially
flat compared to the first nine months of 2009. Net
charge-offs for the nine months ended September 30, 2010 increased by $1.3 million to $2.5 million compared to
$1.2 million for the first nine
months of 2009.
The ratio of allowance for loan losses to total loans was 1.88%
at September 30, 2010 compared to
1.67% at December 31, 2009, and 1.57%
at September 30, 2009. The
ratio of the allowance for loan losses to nonperforming loans was
82% at September 30, 2010 down from
88% at December 31, 2009, but up from
75% at September 30, 2009.
The following table summarizes the activity in the allowance for
loan losses for the nine months ended September 30, 2010 and 2009, and for the year
ended December 31, 2009.
|
|
Activity in Allowance for Loan
Losses
|
Nine Months
Ended September 30,
|
|
Year Ended
December 31,
|
|
|
2010
|
|
2009
|
|
2009
|
|
Beginning allowance for loan
losses
|
$
5,471,000
|
|
$ 2,970,000
|
|
$
2,970,000
|
|
Provision for loan
losses
|
3,433,000
|
|
3,415,000
|
|
4,090,000
|
|
Charge-offs
|
(2,671,000)
|
|
(1,416,000)
|
|
(1,779,000)
|
|
Recoveries
|
135,000
|
|
135,000
|
|
190,000
|
|
Ending allowance for loan
losses
|
$
6,368,000
|
|
$ 5,104,000
|
|
$
5,471,000
|
|
Net charge-offs to average
total loans (annualized)
|
1.05%
|
|
.53%
|
|
.52%
|
|
|
|
|
|
|
|
|
|
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 State 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
|
Todd J. James, EVP &
CFO
|
|
rbastian@blackhawkbank.com
|
tjames@blackhawkbank.com
|
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Phone: (608) 364-8911
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SOURCE Blackhawk Bancorp, Inc.
Copyright . 26 PR Newswire