Blackhawk Bancorp Earns Record $13.64 Million in 2022 and $4.05 Million in Fourth Quarter 2022

BELOIT, WI / ACCESSWIRE / January 24, 2023 / Blackhawk Bancorp, Inc. (OTCQX:BHWB), (the “Company”) the parent company of Blackhawk Bank (the “Bank”), reported record earnings for the year ended December 31, 2022, with net income of $13.64 million slightly exceeding the previous year’s net income of $13.62 million. Diluted Earnings per Share (EPS) for 2022 increased 6.26% to $4.75 compared to the previous record of $4.47 reported for 2021. The Company’s results for the year ended 2022 produced a Return on Average Equity (ROAE) of 16.23% and a Return on Average Assets (ROAA) of 1.01%.

The increase in earnings for 2022 as compared to 2021 includes an increase in net interest income of $4.64 million and a decrease in the provision for loan losses of $1.45 million. The growth in net interest income was achieved despite a $2.37 million decrease in Paycheck Protection Program (PPP) fees recognized. These earnings improvements were partially offset by a $4.11 million decrease in noninterest income and a $2.32 million increase in operating expenses, which include a $1.34 one-time charge related to the branch closures.

The Company reported net income of $4.05 million for the fourth quarter of 2022, a 16% increase compared to $3.49 million earned in the preceding quarter, and a 39% increase compared to the $2.91 million earned during the fourth quarter of 2021. Diluted EPS for the current quarter was $1.41, an increase of $0.20, or 17%, over the preceding quarter, and a $0.39, or 38%, increase compared to the fourth quarter a year ago. Fourth quarter 2022 results yielded a ROAE of 22.31% and a ROAA of 1.19%.

The fourth quarter earnings increase over the prior quarter included a $428,000 increase in net interest income and a $487,000 decrease in operating expenses. These earnings improvements were partially offset by an increase of $350,000 in the provision for loan losses and a $327,000 decrease in noninterest income, primarily due to reduced mortgage banking activity.

The increase in net income for the fourth quarter of 2022, compared to the fourth quarter of 2021, included a $2.45 million, or 25%, increase in net interest income. Additionally, operating expenses decreased by $301,000, or 3%. This earnings growth was partially offset by a $1.31 million decrease in income from the sale and servicing of mortgage loans.

“Our continued strong net interest income generation during the fourth quarter reflects rising rates and controlled funding costs, which more than offset the slowdown in mortgage lending,” said Todd James, Chairman and CEO. “Our hedge between net interest margin growth and mortgage banking revenue allows us the opportunity to generate revenue growth throughout the economic cycles. During an economic downturn when rates decline our mortgage banking revenue increases helping to offset declining net interest margin and potential credit losses, and when interest rates increase and mortgage lending slows, we benefit from net interest margin expansion.”

“Due to the current rate environment and increased deposit competition, we experienced an uptick in in deposit costs during the quarter. With more potential rate sensitivity going forward, we are starting to see some funds move to higher yielding accounts, and we anticipate deposit pricing pressure could be a challenge to future NIM expansion,” said James.

Fourth Quarter 2022 Financial Highlights (at or for the three months ended December 31, 2022)

  • Net income was $4.05 million, or $1.41 per diluted share, compared to $2.91 million, or $1.02 per diluted share, in the fourth quarter of 2021.

  • Net interest margin was 3.82%, compared to 3.63% in the preceding quarter and 3.12% in the fourth quarter a year ago.

  • Annualized return on average assets was 1.19%, compared to 0.89% in the fourth quarter of 2021.

  • Annualized return on average equity was 22.31%, compared to 11.41% in the fourth quarter a year ago.

  • Excluding PPP loans, average total loans increased $139.5 million, or 22% to $785.4 million for the quarter ended December 31, 2022, compared to $645.9 million for the fourth quarter of 2021.

  • Total deposits decreased by $5.93 million to $1.19 billion at December 31, 2022 compared to $1.20 billion a year earlier.

  • Allowance for loan losses to total loans was 1.11% at quarter end.

  • Nonperforming assets to total assets was 0.36% at December 31, 2022 compared to 0.54% a year ago.

  • On December 23, 2022, the Company paid a quarterly cash dividend of $0.12 per share, marking the 34th consecutive quarterly cash dividend paid.

Net Interest Income

Net interest income for the year ended December 31, 2022 increased $4.6 million, or 12%, to $43.91 million compared to $39.28 million for 2021. For 2022, the company’s net interest margin expanded 20 basis points to 3.47%, compared to 3.27% for the prior year. The tax-equivalent yield on earning assets increased by 33 basis points to 3.81% for 2022, compared to 3.48% for 2021. The cost of deposits increased by 11 basis points to 0.25% compared to 0.14% for 2021. The growth in net interest income and net interest margin reflects the $75.0 million increase in average total loans to $758.9 million compared to $683.9 million for 2021.

The benefit to net interest income from recognition of PPP fees was $904,000 for 2022, compared to $3.28 million for 2021. Net interest income for 2022 benefited from the repricing of variable rate loans and investments due to the increase in short term rates by the Federal Reserve Bank.

Net interest income totaled $12.07 million for the fourth quarter of 2022, an increase of $428,000, or 4%, compared to the third quarter of 2022, and an increase of $2.45 million, or 25%, compared to the fourth quarter of the prior year. The benefit to net interest income from the recognition of PPP loan fees decreased to $33,000 for the fourth quarter of 2022, compared to $53,000 the preceding quarter and $535,000 in the fourth quarter of 2021. As of December 31, 2022, no deferred PPP fee income remains to be recognized in future periods.

The Company’s net interest margin was 3.82% for the fourth quarter of 2022, compared to 3.63% for the third quarter of 2022, and 3.12% for the fourth quarter of 2021. The tax-equivalent yield on earning assets increased by 46 basis points to 4.44% and the cost of deposits increased by 24 basis points to 0.50% for the fourth quarter of 2022, as compared to 3.98% and 0.26%, respectively, for the third quarter of 2022. The tax-equivalent yield on earning assets and cost of total deposits increased by 112 basis points and 39 basis points, respectively, compared to the fourth quarter of 2021.

Average total loans for the fourth quarter of 2022 were $786.1 million, a $5.2 million, or 1%, increase over the third quarter of 2022 and a $111.3 million, or 17%, increase compared to the fourth quarter of 2021.

Average deposits totaled $1.23 billion for the fourth quarter of 2022, a decrease of $6.1 million, or less than 1%, compared to the third quarter of 2022, and an increase of $69.7 million, or 6%, compared to the fourth quarter of 2021.

Provision for Loan Losses and Asset Quality

The provision for loan losses decreased by $1.45 million to a negative provision of $950,000 for 2022 compared to a provision of $500,000 for 2021. The decrease in provision reflects a reduction in qualitative factor adjustments in the allowance calculation for potential losses related to the pandemic. The Company recorded a provision for loan losses of $450,000 for the quarter ended December 31, 2022. This compares to a $100,000 provision in the third quarter of 2022, and no provision for loan losses in the fourth quarter of 2021.

Total nonperforming assets, which include troubled debt restructures performing in accordance with their modified terms, improved to $4.7 million as of December 31, 2022, as compared to $5.0 million as of September 30, 2022, and $7.3 million at December 31, 2021. At December 31, 2022, the ratio of nonperforming loans to total loans equaled 0.60%, as compared to 0.64% at September 30, 2022, and 1.02% at December 31, 2021.

The allowance for loan losses to total loans was 1.11% at December 31, 2022, compared to 1.14% at September 30, 2022, and 1.57% at December 31, 2021. The allowance for loan losses to nonperforming loans increased to 185.1% at December 31, 2022, compared to 179.0% at September 30, 2022, and 153.0% at December 31, 2021.

Noninterest Income and Operating Expenses

Noninterest income for the year ended December 31, 2022 totaled $14.89 million, a $4.11 million decrease compared to the $19.00 million for the prior year. The net revenue from the sale and servicing of mortgages decreased by $4.64 million. This was partially offset by a $892,000 increase in deposit service fees during 2022.

Noninterest income totaled $3.41 million for the fourth quarter of 2022, a $327,000 decrease compared to $3.74 million in the third quarter of 2022 and a $1.11 million decrease compared to $4.52 million in the fourth quarter of 2021. The net revenue from the sale and servicing of mortgage loans decreased $325,000 during the fourth quarter of 2022, compared to the preceding quarter and by $1.31 million compared to the fourth quarter of 2021.

Operating expenses for the year ended December 31, 2022 totaled $42.32 million, a $2.32 million, or 6%, increase compared to 2021. The increase includes a $665,000 increase in salaries and employee benefits as well as a $1.34 million non-recurring charge related to the branch closures. Excluding the one-time charge, total operating expenses for the year ended December 31, 2022 increased $984,000, or 2%, compared to 2021.

Operating expenses for the fourth quarter of 2022, totaled $10.20 million, a decrease of $487,000, or 5%, compared to the third quarter of 2022, and a decrease of $301,000, or 3%, compared to the fourth quarter of 2021. The decrease compared to the preceding quarter was primarily due to a $459,000 decrease in salaries and employee benefits.

Excluding the one-time charge related to the branch closures, the efficiency ratio was 65.54% for the fourth quarter of 2022. This compared to 69.04% for the preceding quarter and 73.75% for the fourth quarter a year ago.

Capital

Tangible book value per share was $22.60 at December 31, 2022, compared to $21.01 at September 30, 2022 and $31.41 at December 31, 2021. The increase in tangible book value per share compared to the preceding quarter includes a $557,000 increase in accumulated other comprehensive income (“AOCI”) related to a decrease in the unrealized losses on available for sale securities. Excluding AOCI, tangible book value per share was $35.03 at December 31, 2022, an increase of $1.41 and $4.39 compared to September 30, 2022 and December 31, 2021, respectively.

About Blackhawk Bancorp

Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin, and is the parent company of Blackhawk Bank. The combined entity operates ten full-service banking centers located in Rock County, Wisconsin, and the Illinois counties of Winnebago, Boone, McHenry, and Kane. The Company offers a variety of value-added consultative services to its business customers and their employees related to the financial products it provides.

Disclosures Regarding non-GAAP Measures

This report refers to financial measures that are identified as non-GAAP that the Company believes help to evaluate and measure the Company’s performance, including the presentation of the net interest margin ratio and efficiency ratio calculations on a taxable-equivalent basis. Non-GAAP measures are also used to assist investor comparison by identifying nonrecurring events such as acquisition-related expenses, securities gains and losses and other non-recurring gains or losses and the impact such items have on the performance measures of return on average assets, return on average equity, diluted earnings per share, and the efficiency ratio. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures.

Forward-Looking Statements

When used in this communication, the words “believes,” “expects,” “likely”, “would”, 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 particularly in the Company’s markets; potential deterioration in real estate values, 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. The inclusion of forward-looking information should not be construed as a representation by the Company or any person that future events or plans contemplated by the Company will be achieved. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information or otherwise.

Further information is available on the Company’s website at .

Blackhawk Bancorp, Inc.
Todd J. James, Chairman & CEO

Matthew McDonnell, SVP & CFO

Phone: (608) 364-8911

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND DECEMBER 31, 2021
(UNAUDITED)

December 31,

December 31,

Assets

2022

2021

(Dollars in thousands, except

share and per share data)

Cash and due from banks

$

16,686

$

10,846

Interest-bearing deposits in banks and other institutions

6,071

55,720

Total cash and cash equivalents

22,757

66,566

Certificates of deposit in banks and other institutions

1,463

2,161

Equity securities at fair value

3,455

2,553

Securities available-for-sale

443,772

504,341

Loans held for sale

2,190

2,585

Federal Home Loan Bank stock, at cost

1,705

2,150

Loans, less allowance for loan losses of $8,714 and $11,125

at December 31, 2022 and December 31, 2021, respectively

771,468

696,292

Premises and equipment, net

17,192

20,778

Goodwill and core deposit intangible

11,286

11,628

Mortgage servicing rights

3,985

3,833

Cash surrender value of bank-owned life insurance

11,761

11,440

Other assets

30,764

16,911

Total assets

$

1,321,798

$

1,341,238

Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Noninterest-bearing

$

352,647

$

380,601

Interest-bearing

838,469

816,440

Total deposits

1,191,116

1,197,041

Subordinated debentures and notes, net of issuance costs (including $1,031

at fair value at December 31, 2022 and December 31, 2021)

19,856

19,775

Senior secured term note

9,722

11,278

Other borrowings

18,000

5,000

Other liabilities

7,043

6,985

Total liabilities

1,245,737

1,240,079

Stockholders’ equity

Common stock, $0.01 par value, 10,000,000 shares authorized;

3,507,220 and 3,479,069 shares issued as of December 31, 2022 and

December 31, 2021, respectively

35

35

Additional paid-in capital

36,694

35,890

Retained earnings

94,243

81,987

Treasury stock, 640,594 and 630,991 shares at cost as of December 31, 2022

and December 31, 2021, respectively

(19,276

)

(18,952

)

Accumulated other comprehensive income (loss)

(35,635

)

2,199

Total stockholders’ equity

76,061

101,159

Total liabilities and stockholders’ equity

$

1,321,798

$

1,341,238

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2022

2022

2022

2022

2021

(Dollars in thousands, except per share data)

Interest Income:

Interest and fees on loans

$

10,115

$

9,306

$

8,366

$

7,808

$

7,876

Interest on available-for-sale securities:

Taxable

3,284

2,913

2,364

2,068

1,960

Tax-exempt

379

372

369

365

369

Interest on deposits in other financial institutions

246

184

72

24

33

Total interest income

14,024

12,775

11,171

10,265

10,238

Interest Expense:

Interest on deposits

1,555

815

375

322

319

Interest on subordinated debentures

219

196

186

195

196

Interest on senior secured term note

120

89

45

91

98

Interest on other borrowings

59

32

24

Total interest expense

1,953

1,132

630

608

613

Net interest income before provision for loan losses

12,071

11,643

10,541

9,657

9,625

Provision for loan losses

450

100

(1,500

)

Net interest income after provision for loan losses

11,621

11,543

12,041

9,657

9,625

Noninterest Income:

Service charges on deposits accounts

1,029

1,023

968

913

901

Net gain on sale of loans

551

868

1,063

1,146

1,865

Net loan servicing income

195

203

209

402

186

Debit card interchange fees

1,141

1,177

1,165

1,079

1,168

Net gains on sales of securities available-for-sale

20

(20

)

Net other gains (losses)

11

(4

)

5

Increase in cash surrender value of bank-owned life insurance

79

78

77

86

77

Other

399

392

347

296

317

Total noninterest income

3,414

3,741

3,820

3,918

4,519

Noninterest Expenses:

Salaries and employee benefits

5,963

6,422

6,066

6,222

6,403

Occupancy and equipment

1,083

1,176

1,132

1,212

1,109

Data processing

724

705

681

708

694

Debit card processing and issuance

596

661

528

513

533

Advertising and marketing

81

138

140

108

115

Amortization of intangibles

84

88

88

96

95

Professional fees

439

417

392

389

436

Office Supplies

125

96

97

86

127

Telephone

133

136

146

140

143

Other

976

852

1,984

697

850

Total noninterest expenses

10,204

10,691

11,254

10,171

10,505

Income before income taxes

4,831

4,593

4,607

3,404

3,639

Provision for income taxes

779

1,107

1,129

785

728

Net income

$

4,052

$

3,486

$

3,478

$

2,619

$

2,911

Key Ratios

Basic Earnings Per Common Share

$

1.41

$

1.21

$

1.21

$

0.92

$

1.02

Diluted Earnings Per Common Share

1.41

1.21

1.21

0.92

1.02

Dividends Per Common Share

0.12

0.12

0.12

0.12

0.11

Book Value Per Common Share

26.53

24.97

27.89

30.59

35.50

Tangible Book Value Per Share

22.60

21.01

23.91

26.58

31.41

Tangible Book Value Excluding AOCI Per Share

35.03

33.62

32.42

31.27

30.64

Number of Shares Outstanding

2,866,626

2,870,754

2,875,430

2,873,528

2,848,078

Average Number of Shares Outstanding

2,867,915

2,872,232

2,874,254

2,864,082

2,848,109

Net Interest Margin (1)

3.82

%

3.63

%

3.31

%

3.13

%

3.12

%

Efficiency Ratio (1)(2)(3)

65.54

%

69.04

%

68.96

%

74.35

%

73.75

%

Return on Assets

1.19

%

1.02

%

1.02

%

0.80

%

0.89

%

Return on Common Equity

22.31

%

16.73

%

16.75

%

10.82

%

11.41

%

(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance, including the presentation of net interest income, net interest margin and efficiency ratio calculations on a taxable equivalent basis (“TE”). The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.

(2) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income on an TE basis, noninterest income less any securities gains (losses) or other gains (losses), and also includes a TE adjustment on interest on tax-exempt securities, loans, and the increases in cash surrender value of bank-owned life insurance.

(3)The efficiency ratio excludes the one-time charge totaling $1.34 million related to the previously announced branch closures.

(UNAUDITED)

As of

December 31,

September 30,

June 30,

March 31,

December 31,

2022

2022

2022

2022

2021

(Amounts in thousands, except per share data)

Cash and due from banks

$

16,686

$

18,618

$

15,682

$

13,413

$

10,846

Interest-bearing deposits in banks and other

7,534

60,116

12,990

42,103

57,882

Securities

447,227

452,198

472,977

484,420

506,894

Net loans/leases

773,658

770,279

765,979

716,456

698,877

Goodwill and core deposit intangible

11,286

11,369

11,453

11,536

11,628

Other assets

65,407

67,801

63,109

62,715

55,428

Total assets

$

1,321,798

$

1,380,381

$

1,342,190

$

1,330,643

$

1,341,555

Deposits

$

1,191,116

$

1,263,183

$

1,220,667

$

1,199,627

$

1,197,041

Subordinated debentures

19,856

19,841

19,827

19,812

20,155

Senior secured term note

9,722

10,111

10,500

10,889

11,278

Borrowings

18,000

5,000

5,000

5,000

5,000

Other liabilities

7,043

10,568

5,998

7,414

6,985

Stockholders’ equity

76,061

71,678

80,198

87,901

101,096

Total liabilities and stockholders’ equity

$

1,321,798

$

1,380,381

$

1,342,190

$

1,330,643

$

1,341,555

ASSET QUALITY DATA

(Amounts in thousands)

December 31,

September 30,

June 30,

March 31,

December 31,

2022

2022

2022

2022

2021

Non-accrual loans

$

3,036

$

3,254

$

4,125

$

4,983

$

5,430

Accruing loans past due 90 days or more

Troubled debt restructures – accruing

1,671

1,720

1,910

1,802

1,843

Total nonperforming loans

$

4,707

$

4,974

$

6,035

$

6,785

$

7,273

Other real estate owned

17

75

24

Total nonperforming assets

$

4,724

$

4,974

$

6,035

$

6,860

$

7,297

Total loans

$

782,372

$

779,181

$

775,474

$

727,451

$

710,002

Allowance for loan losses

8,714

8,902

9,495

10,995

11,125

Loans, less allowance for loan losses

$

773,658

$

770,279

$

765,979

$

716,456

$

698,877

Nonperforming Assets to total Assets

0.36

%

0.36

%

0.45

%

0.52

%

0.54

%

Nonperforming loans to total loans

0.60

%

0.64

%

0.78

%

0.93

%

1.02

%

Allowance for loan losses to total loans

1.11

%

1.14

%

1.22

%

1.51

%

1.57

%

Allowance for loan losses to nonperforming loans

185.1

%

179.0

%

157.3

%

162.0

%

153.0

%

For the Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

ROLLFORWARD OF ALLOWANCE

2022

2022

2022

2022

2021

Beginning Balance

$

8,902

$

9,495

$

10,995

$

11,125

$

11,224

Provision

450

100

(1,500

)

Loans charged off

679

758

95

214

181

Loan recoveries

41

65

95

84

82

Net charge-offs

638

693

130

99

Ending Balance

$

8,714

$

8,902

$

9,495

$

10,995

$

11,125

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

Twelve months ended December 31,

2022

2021

(Amounts in thousands, except per share data)

Interest Income:

Interest and fees on loans

$

35,596

$

32,832

Interest and dividends on available-for-sale securities:

Taxable

10,629

7,268

Tax-exempt

1,484

1,550

Interest on deposits in other financial institutions

527

184

Total interest income

48,236

41,834

Interest Expense:

Interest on deposits

3,068

1,576

Interest on subordinated debentures

796

549

Interest on senior secured term note

344

412

Interest on other borrowings

115

20

Total interest expense

4,323

2,557

Net interest income before provision for loan losses

43,913

39,277

Provision for loan losses

(950

)

500

Net interest income after provision for loan losses

44,863

38,777

Noninterest Income:

Service charges on deposits accounts

3,933

3,041

Net gain on sale of loans

3,629

8,592

Net loan servicing income

1,009

681

Debit card interchange fees

4,561

4,559

Net gains on sales of securities available-for-sale

Net other gains (losses)

7

106

Increase in cash surrender value of bank-owned life insurance

320

314

Change in value of equity securities

(201

)

(28

)

Other

1,635

1,739

Total noninterest income

14,893

19,004

Noninterest Expenses:

Salaries and employee benefits

24,673

24,008

Occupancy and equipment

4,604

4,656

Data processing

2,818

2,614

Debit card processing and issuance

2,297

1,950

Advertising and marketing

467

390

Amortization of core deposit intangible

342

425

Professional fees

1,637

1,660

Office Supplies

404

371

Telephone

555

568

Other

4,524

3,355

Total noninterest expenses

42,321

39,997

Income before income taxes

17,435

17,784

Provision for income taxes

3,800

4,165

Net income

$

13,635

$

13,619

Key Ratios

Basic Earnings Per Common Share

$

4.75

$

4.47

Diluted Earnings Per Common Share

4.75

4.47

Dividends Per Common Share

0.48

0.44

Net Interest Margin (1)

3.47

%

3.27

%

Efficiency Ratio (1)(2)(3)

69.22

%

68.63

%

Return on Assets

1.01

%

1.06

%

Return on Common Equity

16.23

%

12.99

%

(1) Non-GAAP Presentations: Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance, including the presentation of the net interest margin and efficiency ratio calculations on a taxable equivalent basis (“TE”). The net interest margin ratio is calculated by dividing net interest income on a tax equivalent basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability.

(2) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income on a TE basis, noninterest income less any securities gains (losses) or other gains (losses), and also includes a TE adjustment on the increases in cash surrender value of bank-owned life insurance.

(3)The efficiency ratio excludes the one-time charge totaling $1.34 million related to the previously announced branch closures.

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
ANALYSIS of AVERAGE BALANCES & TAX EQUIVALENT INTEREST RATES

Average Balance Sheet with Resultant Interest and Rates

(Dollars in thousands – unaudited)

(Yields on a tax-equivalent basis) (1)

For the Quarter Ended

December 31, 2022

September 30, 2022

December 31, 2021

Average

Average

Average

Average

Average

Average

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Interest Earning Assets:

Interest-bearing deposits and other

$

29,253

$

246

3.34

%

$

30,655

$

184

2.39

%

$

61,530

$

33

0.21

%

Investment securities:

Taxable investment securities

393,291

3,284

3.31

%

417,110

2,913

2.77

%

447,836

1,960

1.74

%

Tax-exempt investment securities

54,914

379

3.49

%

54,353

372

3.46

%

52,749

369

3.57

%

Total Investment securities

448,205

3,663

3.33

%

471,463

3,285

2.85

%

500,585

2,329

1.93

%

Loans

786,108

10,115

5.11

%

780,878

9,306

4.73

%

674,818

7,876

4.63

%

Total Earning Assets

$

1,263,566

$

14,024

4.44

%

$

1,282,996

$

12,775

3.98

%

$

1,236,933

$

10,238

3.32

%

Allowance for loan losses

(8,819

)

(9,120

)

(11,192

)

Cash and due from banks

15,834

15,331

16,557

Other assets

76,693

71,882

62,310

Total Assets

$

1,347,274

$

1,361,089

$

1,304,608

Interest Bearing Liabilities:

Interest bearing checking accounts

$

367,443

$

982

1.06

%

$

359,146

$

451

0.50

%

$

308,166

$

116

0.15

%

Savings and money market deposits

401,432

320

0.32

%

419,116

177

0.17

%

423,311

77

0.07

%

Time deposits

84,817

253

1.18

%

82,736

187

0.90

%

78,625

126

0.64

%

Total interest bearing deposits

853,692

1,555

0.72

%

860,998

815

0.38

%

810,102

319

0.16

%

Subordinated debentures and notes

19,849

219

4.37

%

19,834

196

3.93

%

20,155

196

3.85

%

Borrowings

17,962

179

3.95

%

16,492

121

2.90

%

16,306

98

2.40

%

Total Interest-Bearing Liabilities

$

891,503

$

1,953

0.87

%

$

897,324

$

1,132

0.50

%

$

846,563

$

613

0.29

%

Interest Rate Spread

3.57

%

3.48

%

3.03

%

Noninterest checking accounts

375,569

374,336

349,482

Other liabilities

8,151

6,742

7,342

Total liabilities

1,275,223

1,278,402

1,203,387

Total Stockholders’ equity

72,051

82,687

101,221

Total Liabilities and

Stockholders’ Equity

$

1,347,274

$

1,361,089

$

1,304,608

Net Interest Income/Margin

$

12,071

3.82

%

$

11,643

3.63

%

$

9,625

3.12

%

(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance including a presentation of net interest income with a net interest margin ratio on a tax-equivalent (TE) basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above-stated average balances.

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-equivalent basis)(1)

For the Twelve Months Ended

December 31, 2022

December 31, 2021

Average

Average

Average

Average

Balance

Interest

Rate

Balance

Interest

Rate

Interest Earning Assets:

Interest-bearing deposits and other

$

39,549

$

527

1.33

%

$

90,300

$

183

0.20

%

Investment securities:

Taxable investment securities

422,758

10,629

2.51

%

387,361

7,269

1.88

%

Tax-exempt investment securities

54,321

1,484

3.48

%

52,435

1,550

3.76

%

Total Investment securities

477,079

12,113

2.62

%

439,796

8,819

2.10

%

Loans

758,866

35,596

4.69

%

683,859

32,832

4.80

%

Total Earning Assets

$

1,275,494

$

48,236

3.81

%

$

1,213,955

$

41,834

3.48

%

Allowance for loan losses

(9,915

)

(11,180

)

Cash and due from banks

15,258

16,640

Other assets

71,274

60,379

Total Assets

$

1,352,111

$

1,279,794

Interest Bearing Liabilities:

Interest bearing checking accounts

$

339,552

$

1,748

0.51

%

$

299,213

$

636

0.21

%

Savings and money market deposits

417,665

640

0.15

%

400,323

366

0.09

%

Time deposits

80,674

680

0.84

%

78,553

574

0.73

%

Total interest bearing deposits

837,891

3,068

0.37

%

778,089

1,576

0.20

%

Subordinated debentures

19,884

796

4.00

%

14,689

548

3.73

%

Borrowings

18,167

459

2.53

%

18,928

433

2.29

%

Total Interest-Bearing Liabilities

$

875,942

$

4,323

0.49

%

$

811,706

$

2,557

0.32

%

Interest Rate Spread

3.32

%

3.16

%

Noninterest checking accounts

385,169

356,227

Other liabilities

6,984

6,995

Total liabilities

1,268,095

1,174,928

Total Stockholders’ equity

84,016

104,866

Total Liabilities and

Stockholders’ Equity

$

1,352,111

$

1,279,794

Net Interest Income/Margin

$

43,913

3.47

%

$

39,277

3.27

%

(1) Management discloses certain non-GAAP financial measures to evaluate and measure the Company’s performance including a presentation of net interest income with a net interest margin ratio on a tax-equivalent (TE) basis. The net interest margin is calculated by dividing net interest income on a TE basis by average earning assets for the period. Management believes this measure provides investors with information regarding comparative balance sheet profitability. Nonaccrual loans are included in the above-stated average balances.

SOURCE: Blackhawk Bancorp, Inc.

Leave a Comment