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Headline: Blackhawk Bancorp Earns Record $13.64 Million in 2022 and $4.05 Million in Fourth Quarter 2022
Location: US
Post Date: Jan 24, 2023 7:40 PM
TAG ID: awire112835
DocID: 736620
Word Count: approx. 4841 words
 
 
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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 www.blackhawkbank.com .

Blackhawk Bancorp, Inc. Todd J. James, Chairman & CEO tjames@blackhawkbank.com

Matthew McDonnell, SVP & CFO mmcdonnell@blackhawkbank.com 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. View source version on accesswire.com: https://www.accesswire.com/736620/Blackhawk-Bancorp-Earns-Record-1364-Million-in-2022-and-405-Million-in-Fourth-Quarter-2022

 
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