Blackhawk Bancorp : 2022 Second Quarter Financial Statements

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2022 AND DECEMBER 31, 2021
(UNAUDITED)		June 30,		December 31,
Assets		2022			2021
			(Dollars in thousands, except
			share and per share data)
Cash and due from banks	$	15,682	$	10,846
Interest-bearing deposits in banks and other institutions		11,078			55,720
Total cash and cash equivalents			26,760			66,566
Certificates of deposit in banks and other institutions		1,912			2,161
Equity securities at fair value		3,481			2,553
Securities available-for-sale		469,496			504,341
Loans held for sale		3,382			2,585
Federal Home Loan Bank stock, at cost		2,150			2,150
Loans, less allowance for loan losses of $9,495 and $11,125
at June 30, 2022 and December 31, 2021, respectively		762,597			696,292
Premises and equipment, net		19,060			20,778
Goodwill and core deposit intangible		11,453			11,628
Mortgage servicing rights		4,078			3,833
Cash surrender value of bank-owned life insurance		11,604			11,440
Other assets		26,217			16,911
Total assets		$	1,342,190		$	1,341,238
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing	$	393,709	$	380,601
Interest-bearing		826,958			816,440
Total deposits			1,220,667			1,197,041
Subordinated debentures and notes, net of issuance costs (including $1,031
at fair value at March 31, 2022 and December 31, 2021)		19,827			19,775
Senior secured term note		10,500			11,278
Other borrowings		5,000			5,000
Other liabilities		5,998			6,985
Total liabilities			1,261,992			1,240,079
Stockholders' equity
Common stock, $0.01 par value, 10,000,000 shares authorized;
3,510,970 and 3,479,069 shares issued as of June 30, 2022 and
December 31, 2021, respectively		35			35
Additional paid-in capital		36,340			35,890
Retained earnings		87,393			81,987
Treasury stock, 635,540 and 630,991 shares at cost as of June 30, 2022
and December 31, 2021, respectively		(19,108)			(18,952)
Accumulated other comprehensive income (loss)		(24,462)			2,199
Total stockholders' equity			80,198			101,159
Total liabilities and stockholders' equity		$	1,342,190		$	1,341,238

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME		Six months ended June 30,
(UNAUDITED)
		2022		2021
		(Amounts in thousands, except per share data)
Interest Income:
Interest and fees on loans	$	16,174	$	16,776
Interest and dividends on available-for-sale securities:
Taxable		4,433					3,479
Tax-exempt		733					762
Interest on deposits in other financial institutions		96					89
Total interest income		21,436					21,106
Interest Expense:
Interest on deposits		698					836
Interest on subordinated debentures		381					158
Interest on senior secured term note		136					210
Interest on other borrowings		24					20
Total interest expense		1,239					1,224
Net interest income before provision for loan losses		20,197					19,882
Provision for loan losses		(1,500)					500
Net interest income after provision for loan losses		21,697					19,382
Noninterest Income:
Service charges on deposits accounts		1,882					1,354
Net gain on sale of loans		2,209					4,579
Net loan servicing income		612					404
Debit card interchange fees		2,244					2,245
Net gains on sales of securities available-for-sale		(20)					-
Net other gains (losses)		7					49
Increase in cash surrender value of bank-owned life insurance		163					159
Change in value of equity securities		(109)					(30)
Other		751					967
Total noninterest income			7,739					9,727
Noninterest Expenses:
Salaries and employee benefits		12,288					11,487
Occupancy and equipment		2,344					2,274
Data processing		1,389					1,232
Debit card processing and issuance		1,041					928
Advertising and marketing		248					169
Amortization of core deposit intangible		185					199
Professional fees		781					789
Office Supplies		183					170
Telephone		285					286
Other		2,681					1,641
Total noninterest expenses		21,425					19,175
Income before income taxes		8,011					9,934
Provision for income taxes		1,914					2,449
Net income	$	6,097		$	7,485
Key Ratios
Basic Earnings Per Common Share	$	2.13	$	2.31
Diluted Earnings Per Common Share		2.13					2.31
Dividends Per Common Share		0.24					0.22
Net Interest Margin (1)		3.22%					3.44%
Efficiency Ratio (1)(2)		76.11%					64.64%
Return on Assets		0.91%					1.21%
Return on Common Equity		13.54%					13.93%

1. Non-GAAPPresentations: 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.

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Interest Income:

Interest and fees on loans

Interest on available-for-sale securities: Taxable

Tax-exempt

Interest on deposits in other financial institutions

Total interest income

Interest Expense:

Interest on deposits

Interest on subordinated debentures

Interest on senior secured term note

Interest on other borrowings

Total interest expense

Net interest income before provision for loan losses Provision for loan losses

Net interest income after provision for loan losses

Noninterest Income:

Service charges on deposits accounts Net gain on sale of loans

Net loan servicing income Debit card interchange fees

Net gains on sales of securities available-for-sale Net other gains (losses)

Increase in cash surrender value of bank-owned life insurance Other

Total noninterest income

Noninterest Expenses:

Salaries and employee benefits

Occupancy and equipment

Data processing

Debit card processing and issuance

Advertising and marketing

Amortization of intangibles

Professional fees

Office Supplies

Telephone

Other

Total noninterest expenses

Income before income taxes

Provision for income taxes

Net income

Key Ratios

For the Quarter Ended

	June 30,		March 31,	December 31,	September 30,		June 30,
	2022		2022		2021		2021		2021
		(Dollars in thousands, except per share data)
$	8,366	$	7,808	$	7,876	$	8,180	$	8,621
	2,364		2,068		1,960		1,830		1,759
	369		365		369		419		378
	72		24		33		61		48
	11,171		10,265		10,238		10,490		10,806
	375		322		319		421		421
	186		195		196		195		117
	45		91		98		103		104
	24		-		-		-		-
	630		608		613		719		642
	10,541		9,657		9,625		9,771		10,164
	(1,500)		-		-		-		-
	12,041		9,657		9,625		9,771		10,164
	968		913		901		787		663
	1,063		1,146		1,865		2,147		2,217
	209		402		186		90		36
	1,165		1,079		1,168		1,146		1,218
	(20)		-		-		-		-
	11		(4)		5		52		7
	77		86		77		78		72
	347		296		317		457		479
	3,820		3,918		4,519		4,757		4,692
	6,066		6,222		6,403		6,118		5,753
	1,132		1,212		1,109		1,273		1,092
	681		708		694		689		641
	528		513		533		489		503
	140		108		115		141		70
	88		96		95		96		96
	392		389		436		434		399
	97		86		127		74		93
	146		140		143		139		144
	1,984		697		850		865		673
	11,254		10,171		10,505		10,318		9,464
	4,607		3,404		3,639		4,210		5,392
	1,129		785		728		988		1,337
$	3,478	$	2,619	$	2,911	$	3,222	$	4,055

Basic Earnings Per Common Share	$	1.21	$	0.92	$	1.02	$	1.13	$	1.30
Diluted Earnings Per Common Share		1.21		0.92		1.02		1.13		1.30
Dividends Per Common Share		0.12		0.12		0.11		0.11		0.11
Book Value Per Common Share		27.89		30.59		35.50		35.29		34.97
Tangible Book Value Per Share		23.91		26.58		31.41		31.17		30.81
Tangible Book Value Excluding AOCI Per Share		32.42		31.27		30.64		29.64		28.56
Number of Shares Outstanding		2,875,430		2,873,528		2,848,078		2,848,078		2,842,828
Average Number of Shares Outstanding		2,874,254		2,864,082		2,848,109		2,848,109		3,118,265
Net Interest Margin (1)		3.31%		3.13%		3.12%		3.11%		3.37%
Efficiency Ratio (1)(2)		77.77%		74.35%		73.75%		70.70%		63.28%
Return on Assets		1.02%		0.80%		0.89%		0.96%		1.26%
Return on Common Equity		16.75%		10.82%		11.41%		12.57%		15.74%

1. Non-GAAPPresentations: 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.

(UNAUDITED)						As of
		June 30,		March 31,	December 31,	September 30,		June 30,
		2022		2022		2021		2021		2021
				(Amounts in thousands, except per share data)
Cash and due from banks	$	15,682	$	13,413	$	10,846	$	16,536	$	16,418
Interest-bearing deposits in banks and other		12,990		42,103		57,882		104,722		140,073
Securities		472,977		484,420		506,894		472,472		448,072
Net loans/leases		765,979		716,456		698,877		658,323		666,738
Goodwill and core deposit intangible		11,453		11,536		11,628		11,723		11,819
Other assets		63,109		62,715		55,428		54,218		53,629
Total assets	$	1,342,190	$	1,330,643	$	1,341,555	$	1,317,994	$	1,336,749
Deposits	$	1,220,667	$	1,199,627	$	1,197,041	$	1,169,085	$	1,188,997
Subordinated debentures		19,827		19,812		20,155		20,155		20,155
Senior secured term note		10,500		10,889		11,278		11,667		12,056
Borrowings		5,000		5,000		5,000		5,000		5,000
Other liabilities		5,998		7,414		6,985		11,585		11,131
Stockholders' equity		80,198		87,901		101,096		100,502		99,410
Total liabilities and stockholders' equity	$	1,342,190	$	1,330,643	$	1,341,555	$	1,317,994	$	1,336,749
ASSET QUALITY DATA
(Amounts in thousands)		June 30,		March 31,	December 31,	September 30,		June 30,
		2022		2022		2021		2021		2021
Non-accrual loans	$	4,125	$	4,983	$	5,430	$	7,827	$	8,228
Accruing loans past due 90 days or more		-		-		-		-		-
Troubled debt restructures - accruing		1,910		1,802		1,843		1,975		1,958
Total nonperforming loans	$	6,035	$	6,785	$	7,273	$	9,802	$	10,186
Other real estate owned		-		75		24		-		-
Total nonperforming assets	$	6,035	$	6,860	$	7,297	$	9,802	$	10,186
Total loans	$	775,474	$	727,451	$	710,002	$	669,547	$	677,967
Allowance for loan losses		9,495		10,995		11,125		11,224		11,229
Loans, less allowance for loan losses	$	765,979	$	716,456	$	698,877	$	658,323	$	666,738
Nonperforming Assets to total Assets		0.45%		0.52%		0.54%		0.74%		0.76%
Nonperforming loans to total loans		0.78%		0.93%		1.02%		1.46%		1.50%
Allowance for loan losses to total loans		1.22%		1.51%		1.57%		1.68%		1.66%
Allowance for loan losses to nonperforming loans		157.3%		162.0%		153.0%		114.5%		110.2%
				For the Quarter Ended
		June 30,		March 31,	December 31,	September 30,		June 30,
ROLLFORWARD OF ALLOWANCE		2022		2022		2021		2021		2021
Beginning Balance	$	10,995	$	11,125	$	11,224	$	11,229	$	11,116
Provision		(1,500)		-		-		-		-
Loans charged off		95		214		181		103		61
Loan recoveries		95		84		82		98		174
Net charge-offs		-		130		99		5		(113)
Ending Balance	$	9,495	$	10,995	$	11,125	$	11,224	$	11,229

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
		June 30, 2022				March 31, 2022					June 30, 2021
		Average					Average			Average				Average			Average					Average
Interest Earning Assets:		Balance			Interest	Rate			Balance			Interest	Rate			Balance				Interest	Rate
Interest-bearing deposits and other	$	50,333	$	72	0.58%	$	48,261	$	24	0.20%	$	105,385	$	48	0.18%
Investment securities:
Taxable investment securities		432,659				2,364	2.19%			448,643			2,068	1.87%			365,329				1,759	1.93%
Tax-exempt investment securities		54,184				369	3.48%			53,820			365	3.50%			52,197				378	3.73%
Total Investment securities		486,843				2,733	2.33%			502,463			2,433	2.04%			417,526				2,137	2.16%
Loans		752,785				8,366	4.46%			714,666			7,808	4.43%			700,109				8,621	4.94%
Total Earning Assets	$	1,289,961	$	11,171	3.51%	$	1,265,390	$	10,265	3.32%	$	1,223,020	$	10,806	3.58%
Allowance for loan losses		(10,618)								(11,136)							(11,221)
Cash and due from banks		14,900								14,956							17,124
Other assets		70,202								65,912							58,008
Total Assets	$	1,364,445						$	1,335,122					$	1,286,931
Interest Bearing Liabilities:
Interest bearing checking accounts	$	316,829	$	175	0.22%	$	313,986	$	139	0.18%	$	302,946	$	180	0.24%
Savings and money market deposits		426,585				75	0.07%			423,755			68	0.06%			396,476				96	0.10%
Time deposits		77,287				125	0.65%			77,755			115	0.60%			77,155				145	0.75%
Total interest bearing deposits		820,701				375	0.18%			815,496			322	0.16%			776,577				421	0.22%
Subordinated debentures and notes		19,820				186	3.77%			20,037			195	3.94%			13,067				117	3.59%
Borrowings		22,143				69	1.25%			16,071			91	2.29%			16,501				104	2.51%
Total Interest-Bearing Liabilities	$	862,664	$	630	0.29%	$	851,604	$	608	0.29%	$	806,145	$	642	0.32%
Interest Rate Spread							3.22%							3.03%								3.26%
Noninterest checking accounts		412,508								378,414							371,146
Other liabilities		5,965								6,899							6,283
Total liabilities		1,281,137								1,236,917							1,183,574
Total Stockholders' equity		83,308								98,205							103,357
Total Liabilities and
Stockholders' Equity	$	1,364,445							$	1,335,122						$	1,286,931
Net Interest Income/Margin			$	10,541	3.31%				$	9,657	3.13%				$	10,164	3.37%

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.