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Blackhawk Bancorp, Inc.

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Blackhawk Bancorp Announces 2021 Second Quarter Earnings

BELOIT, WI / ACCESSWIRE / July 21, 2021 / Blackhawk Bancorp, Inc. (OTCQX:BHWB) reported net income of $4.06 million for the quarter ended June 30, 2021, an 18% increase over the $3.43 million earned the previous quarter, and a 58% increase compared to the $2.56 million earned the second quarter of 2020. Fully diluted earnings per share (EPS) for the quarter was $1.30, an increase of $0.28 as compared to $1.02 for the quarter ended March 31, 2021 and an increase of $0.53, or 69%, as compared to $0.77 reported for the quarter ended June 30, 2020. The second quarter 2021 results produced a Return on Average Equity (ROAE) of 15.74% and a Return on Average Assets (ROAA) of 1.26%.

The increase in earnings compared to the most recent quarter included a $0.50 million decrease in the provision for loan losses, a $0.45 million increase in net interest income, and a $0.25 million decrease in operating expenses. These earnings gains were offset by a $0.48 million decrease in revenue from the sale and servicing of mortgage loans.

The increase in net income for the second quarter of 2021 compared to the second quarter of the prior year reflects a $2.51 million decrease in provision for loan losses. This improvement was partially offset by a $0.55 million decrease in revenue from the sale and servicing of mortgage loans and a $0.51 million increase in operating expenses.

The increase in earnings per share for the quarter compared to the most recent quarter and the second quarter of 2020 was boosted by the recently completed tender offer and stock repurchase. On May 18, 2021 the Company repurchased 525,546 shares, or 15.6%, of its outstanding common stock, contributing $0.08 to earnings per share for the quarter.

For the six months ended June 30, 2021, the company reported net income of $7.49 million, a 61% increase over the $4.64 million reported for the first six months of 2020. Diluted earnings per share for the first half of 2021 increased by 65% to $2.31 compared to $1.40 for the first six months of 2020. The Company's results for the first six months of 2021 produced a return on average assets of 1.21% and a return on average equity of 13.93%.

"The strong second quarter results were driven primarily by the recognition of PPP (Paycheck Protection Program) loan fees, an abnormally low provision for loan losses and a continuing high level of mortgage banking activity," said Todd James, the Company's Chairman and CEO. "While we're pleased with the overall performance, we know these earnings tailwinds are unsustainable and future performance will be driven by loan growth and efficiency gains." he added.

Total assets of the company increased by $195.2 million, or 17%, to $1.33 billion as of June 30, 2021 compared to $1.14 billion as of December 31, 2020. Total gross loans decreased by $1.1 million, or less than 1%, and total investment securities increased $96.0 million, or 27%, during the first six months of 2021. Total Deposits increased by $201.7 million, or 20%, to $1.19 billion compared to $987.3 million at the end of 2020.

Net Interest Income

Net interest income for the second quarter of 2021 totaled $10.16 million, an increase of $0.45 million, or 5%, compared to the first quarter of 2021, and up $0.29 million, or 3%, compared to the second quarter of last year. The net interest margin was 3.37% for the second quarter of 2021 as compared to 3.52% for the quarter ended March 31, 2021, and 3.99% for the second quarter of the prior year.

The increase in net interest income compared to the second quarter of last year was due to a $216.6 million, or 22%, increase in average total earning assets to $1.22 billion compared to $1.01 billion the second quarter of 2020. The increase included a $129.3 million increase in average investment securities and a $88.3 increase in interest bearing deposits at other financial institutions. Total average loans decreased by $1.0 million. The decrease in average total loans included a decrease of $6.9 million in average Paycheck Protection Program (PPP) loans, which averaged $78.9 million for the quarter. During the second quarter of 2021 $1.10 million of PPP fees were recognized, resulting in a 6.60% annualized yield on average PPP loans for three months ended June, 30 2021. The PPP, pandemic-related stimulus payments and an overall influx of deposits drove a $228.9 million, or 25%, increase in total average deposits for the second quarter of 2021 compared to the second quarter of last year. With the majority of this liquidity being deployed in the investment securities portfolio or held in interest-bearing deposit accounts at other financial institutions, the net interest margin dropped 62 basis points to 3.37% compared to 3.99% for the second quarter of the prior year.

Net interest income for the six months ended June 30, 2021, increased by $1.39 million, or 8%, to $19.88 million as compared to $18.49 million for the first six months of 2020. The net interest margin for the first six months of 2021 decreased by 48 basis points to 3.44% compared to 3.92% for the first six months of 2020. Average total loans for the first six months of 2021 were $692.9 million, an increase of $28.0 million, or 4%, as compared to $664.9 million for the first six months of 2020. Average total deposits for the first six months of 2021 were $1.10 billion, an increase of $216.9 million, or 25%, as compared to $880.1 million for the first six months of 2020.

Provision for Loan Losses and Asset Quality

There was no provision for loan losses recorded for the quarter ended June 30, 2021, as compared to $0.50 million for the quarter ended March 31, 2021, and $2.51 million for the second quarter of 2020. The decreased provision reflects an improved credit outlook, especially as it relates to pandemic related losses. Net recoveries for the second quarter equaled $0.11 million.

Total nonperforming assets, which include troubled debt restructures performing in accordance with their modified terms, equaled $10.2 million as of June 30, 2021, as compared to $8.4 million as of March 31, 2021, and $11.6 million at June 30, 2020. At June 30, 2021, the ratio of nonperforming loans to total loans equaled 1.50%, as compared to 1.17% at March 31, 2021, and 1.52% at June 30, 2020. The allowance for loan losses to total loans was 1.66% as of June 30, 2021, as compared to 1.56% at March 31, 2021, and 1.43% as of June 30, 2020. The ratio of the allowance for loan losses to nonperforming loans decreased to 110.2% as of June 30, 2021, as compared to 133.0% at March 31, 2021, and 93.6% at June 30, 2020.

Management continues to work closely with borrowers to ensure credit issues are identified and addressed as early as possible, improving the overall probability of repayment. Blackhawk provided payment relief to borrowers negatively affected by the COVID-19 pandemic. Loans with an aggregate balance in excess of $70 million were modified, and as of June 30, 2021 all of the modified credits have either returned to normal payments or are reflected in the nonperforming loan numbers, except for a small number of credits totaling $2.4 million for which the modified terms have been extended and the borrowers are continuing to perform under the modified terms.

Non-Interest Income and Operating Expenses

Non-interest income for the quarter ended June 30, 2021 totaled $4.69 million, a $0.34 million decrease compared to $5.04 million the prior quarter, and a $0.16 million decrease from the $4.85 million recorded in the second quarter of 2020. The decrease compared to the first quarter of 2021 included a decrease of $0.48 million in net revenue from the sale and servicing of mortgage loans. This was partially offset by a $0.19 million increase in debit card interchange fees. The decrease in non-interest income compared to the second quarter of 2020 was primarily due to a $0.55 million decrease in revenue from the sale and servicing of mortgage loans that was partially offset by a $0.29 million increase in debit card interchange fees.

Non-interest income for the first six months of 2021 increased $1.38 million, or 17%, to $9.73 million as compared to $8.35 million for the first six months of 2020, including a $1.17 million increase in the sale and servicing of loans and a $0.49 million increase in debit card interchange fees.

Operating expenses for the quarter ended June 30, 2021 totaled $9.46 million, a decrease of $0.25 million, or 3%, compared to the quarter ended March 31, 2021, and increased by $0.51 million, or 6%, compared to the second quarter of 2020.

Operating expenses for the six-month period ended June 30, 2021, totaled $19.18 million, a $1.44 million, or 8%, increase over the first six month of 2020.

About Blackhawk Bancorp

Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank. The combined entity operates eleven full-service banking centers and a dedicated commercial office, which are located in Rock County, Wisconsin and the Illinois counties of Winnebago, Boone, McHenry, Lake, and Kane. The Company's footprint stretches along the I-90 corridor from Janesville, Wisconsin to Elgin, Illinois and into the Northwest collar counties of the Chicagoland area. 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, nonrecurring securities gains 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
JUNE 30, 2021 AND DECEMBER 31, 2020
(UNAUDITED)


June 30, December 31,
Assets
2021 2020

(Dollars in thousands, except

share and per share data)
Cash and due from banks
$16,418 $12,012
Interest-bearing deposits in banks and other institutions
136,657 42,119
Total cash and cash equivalents
153,075 54,131

Certificates of deposit in banks and other institutions
3,416 4,159
Equity securities at fair value
2,521 2,517
Securities available-for-sale
445,551 349,565
Loans held for sale
6,469 6,096
Federal Home Loan Bank stock, at cost
2,150 2,150
Loans, less allowance for loan losses of $11,229 and $10,764
at June 30, 2021 and December 31, 2020, respectively
660,269 662,225
Premises and equipment, net
20,915 20,254
Goodwill and core deposit intangible
11,819 12,018
Mortgage servicing rights
3,720 3,409
Cash surrender value of bank-owned life insurance
11,285 11,126
Other assets
15,559 13,949
Total assets
$1,336,749 $1,141,599

Liabilities and Stockholders' Equity

Liabilities
Deposits:
Noninterest-bearing
$389,940 $268,866
Interest-bearing
799,057 718,388
Total deposits
1,188,997 987,254
Subordinated debentures and notes (including $1,031 at fair value at
June 30, 2021 and December 31, 2020)
20,155 5,155
Senior secured term note
12,056 12,833
Other borrowings
5,000 14,000
Other liabilities
11,131 10,602
Total liabilities
1,237,339 1,029,844

Stockholders' equity
Common stock, $0.01 par value, 10,000,000 shares authorized;
3,473,819 and 3,435,348 shares issued as of June 30, 2021 and
December 31, 2020, respectively
35 35
Additional paid-in capital
35,455 35,062
Retained earnings
76,479 69,676
Treasury stock, 630,991 and 62,999 shares at cost as of June 30, 2021
and December 31, 2020, respectively
(18,952) (941)
Accumulated other comprehensive income (loss)
6,393 7,923
Total stockholders' equity
99,410 111,755
Total liabilities and stockholders' equity
$1,336,749 $1,141,599

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

Six months ended June 30,

2021 2020

(Amounts in thousands, except per share data)



Interest Income:


Interest and fees on loans
$ 16,776 $ 16,691
Interest and dividends on available-for-sale securities:
Taxable
3,479 3,123
Tax-exempt
762 695
Interest on deposits in other financial institutions
89 202
Total interest income
21,106 20,711
Interest Expense:
Interest on deposits
836 1,816
Interest on subordinated debentures
158 98
Interest on senior secured term note
210 267
Interest on other borrowings
20 41
Total interest expense
1,224 2,223
Net interest income before provision for loan losses
19,882 18,488
Provision for loan losses
500 3,270
Net interest income after provision for loan losses
19,382 15,218

Noninterest Income:
Service charges on deposits accounts
1,354 1,507
Net gain on sale of loans
4,579 4,097
Net loan servicing income
404 (280)
Debit card interchange fees
2,245 1,757
Net gains on sales of securities available-for-sale
- 107
Net other gains (losses)
49 6
Increase in cash surrender value of bank-owned life insurance
159 159
Change in value of equity securities
(30) 60
Other
967 935
Total noninterest income
9,727 8,348

Noninterest Expenses:
Salaries and employee benefits
11,487 10,512
Occupancy and equipment
2,274 2,156
Data processing
1,232 1,071
Debit card processing and issuance
928 791
Advertising and marketing
169 135
Amortization of core deposit intangible
199 223
Professional fees
789 772
Office Supplies
170 178
Telephone
286 299
Other
1,641 1,601
Total noninterest expenses
19,175 17,738
Income before income taxes
9,934 5,828
Provision for income taxes
2,449 1,191
Net income
$ 7,485 $ 4,637

Key Ratios

Basic Earnings Per Common Share
$ 2.31 $ 1.40
Diluted Earnings Per Common Share
2.31 1.40
Dividends Per Common Share
0.22 0.22

Net Interest Margin (1)
3.44% 3.92%
Efficiency Ratio (1)(2)
64.64% 65.89%
Return on Assets
1.21% 0.90%
Return on Common Equity
13.93% 9.19%

(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.

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

For the Quarter Ended

June 30, March 31, December 31, September 30, June 30,

2021 2021 2020 2020 2020

(Dollars in thousands, except per share data)
Interest Income:





Interest and fees on loans
$ 8,621 $ 8,155 $ 8,079 $ 8,671 $ 8,658
Interest on available-for-sale securities:
Taxable
1,759 1,721 1,598 1,607 1,618
Tax-exempt
378 384 384 372 371
Interest on deposits in other financial institutions
48 41 33 41 40
Total interest income
10,806 10,301 10,094 10,691 10,687
Interest Expense:
Interest on deposits
421 415 458 565 639
Interest on subordinated debentures
117 41 41 42 45
Interest on senior secured term note
104 107 113 119 111
Interest on other borrowings
- 20 40 47 19
Total interest expense
642 583 652 773 814
Net interest income before provision for loan losses
10,164 9,718 9,442 9,918 9,873
Provision for loan losses
- 500 1,715 2,615 2,505
Net interest income after provision for loan losses
10,164 9,218 7,727 7,303 7,368

Noninterest Income:
Service charges on deposits accounts
663 690 781 747 610
Net gain on sale of loans
2,217 2,362 3,572 3,412 3,192
Net loan servicing income
36 369 (177) 26 (389)
Debit card interchange fees
1,218 1,027 979 1,002 924
Net gains on sales of securities available-for-sale
- - 428 - 8
Net other gains (losses)
7 42 - 58 6
Increase in cash surrender value of bank-owned life insurance
72 87 75 76 74
Other
479 458 310 344 425
Total noninterest income
4,692 5,035 5,968 5,665 4,850

Noninterest Expenses:
Salaries and employee benefits
5,753 5,734 5,851 5,585 5,477
Occupancy and equipment
1,092 1,182 986 1,137 1,074
Data processing
641 591 683 629 561
Debit card processing and issuance
503 425 384 409 394
Advertising and marketing
70 99 75 87 38
Amortization of intangibles
96 104 107 107 107
Professional fees
399 390 373 386 405
Office Supplies
93 77 90 94 88
Telephone
144 141 140 138 149
Other
673 968 637 714 659
Total noninterest expenses
9,464 9,711 9,326 9,286 8,952
Income before income taxes
5,392 4,542 4,369 3,682 3,266
Provision for income taxes
1,337 1,112 1,021 819 704
Net income
$ 4,055 $ 3,430 $ 3,348 $ 2,863 $ 2,562

Key Ratios

Basic Earnings Per Common Share
$ 1.30 $ 1.02 $ 1.00 $ 0.86 $ 0.77
Diluted Earnings Per Common Share
1.30 1.02 1.00 0.86 0.77
Dividends Per Common Share
0.11 0.11 0.11 0.11 0.11

Net Interest Margin (1)
3.37% 3.52% 3.63% 3.83% 3.99%
Efficiency Ratio (1)(2)
63.28% 65.53% 61.80% 59.39% 60.43%
Return on Assets
1.26% 1.16% 1.20% 1.03% 0.96%
Return on Common Equity
15.74% 12.44% 12.08% 10.64% 10.16%

(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.

(UNAUDITED)


As of

June 30, March 31, December 31, September 30, June 30,

2021 2021 2020 2020 2020

(Amounts in thousands, except per share data)
Cash and due from banks
$ 16,418 $ 15,108 $ 12,012 $ 17,403 $ 14,527
Interest-bearing deposits in banks and other
140,073 50,199 46,278 47,848 25,246
Securities
448,072 379,187 352,082 317,761 301,726
Net loans/leases
666,738 700,399 668,321 681,060 697,881
Goodwill and core deposit intangible
11,819 11,914 12,018 12,125 12,232
Other assets
53,629 50,826 50,888 50,105 49,485
Total assets
$ 1,336,749 $ 1,207,633 $ 1,141,599 $ 1,126,302 $ 1,101,097

Deposits
$ 1,188,997 $ 1,068,197 $ 987,254 $ 960,773 $ 939,066
Subordinated debentures
20,155 5,155 5,155 5,155 5,155
Senior secured term note
12,056 12,445 12,833 13,222 13,611
Borrowings
5,000 4,000 14,000 29,000 29,000
Other liabilities
11,131 7,138 10,602 10,161 9,758
Stockholders' equity
99,410 110,698 111,755 107,991 104,507
Total liabilities and stockholders' equity
$ 1,336,749 $ 1,207,633 $ 1,141,599 $ 1,126,302 $ 1,101,097

ASSET QUALITY DATA

(Amounts in thousands)
June 30, March 31, December 31, September 30, June 30,

2021 2021 2020 2020 2020






Non-accrual loans
$ 8,228 $ 6,361 $ 7,013 $ 8,584 $ 8,427
Accruing loans past due 90 days or more
- - - 196 -
Troubled debt restructures - accruing
1,958 1,996 2,057 2,176 2,361
Total nonperforming loans
$ 10,186 $ 8,357 $ 9,070 $ 10,956 $ 10,788
Other real estate owned
- - 1 1 762
Total nonperforming assets
$ 10,186 $ 8,357 $ 9,071 $ 10,957 $ 11,550

Total loans
$ 677,967 $ 711,515 $ 679,085 $ 691,003 $ 707,983
Allowance for loan losses
$ 11,229 $ 11,116 $ 10,764 $ 9,943 $ 10,102

$ 666,738 $ 700,399 $ 668,321 $ 681,060 $ 697,881
Nonperforming Assets to total Assets
0.76% 0.69% 0.79% 0.97% 1.05%
Nonperforming loans to total loans
1.50% 1.17% 1.34% 1.59% 1.52%
Allowance for loan losses to total loans
1.66% 1.56% 1.59% 1.44% 1.43%
Allowance for loan losses to nonperforming loans
110.2% 133.0% 118.7% 90.8% 93.6%

For the Quarter Ended

June 30, March 31, December 31, September 30, June 30,
ROLLFORWARD OF ALLOWANCE
2021 2021 2020 2020 2020






Beginning Balance
$ 11,116 $ 10,764 $ 9,943 $ 10,102 $ 8,160
Provision
- 500 1,715 2,615 2,505
Loans charged off
61 582 1,334 2,892 639
Loan recoveries
174 434 440 118 76
Net charge-offs
(113) 148 894 2,774 563
Ending Balance
$ 11,229 $ 11,116 $ 10,764 $ 9,943 $ 10,102

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, 2021 March 31, 2021 June 30, 2020

Average
Average Average
Average Average
Average

Balance Interest Rate Balance Interest Rate Balance Interest Rate
Interest Earning Assets:









Interest-bearing deposits and other
$ 105,385 $ 48 0.18% $ 74,108 $ 41 0.22% $ 17,056 $ 40 0.95%
Investment securities:
Taxable investment securities
365,329 1,759 1.93% 320,740 1,721 2.18% 241,831 1,618 2.69%
Tax-exempt investment securities
52,197 378 3.73% 52,122 384 3.83% 46,443 371 4.13%
Total Investment securities
417,526 2,137 2.16% 372,862 2,105 2.41% 288,274 1,989 2.92%
Loans
700,109 8,621 4.94% 685,654 8,155 4.82% 701,080 8,658 4.97%

Total Earning Assets
$ 1,223,020 $ 10,806 3.58% $ 1,132,624 $ 10,301 3.73% $ 1,006,410 $ 10,687 4.31%
Allowance for loan losses
(11,221) (11,075) (8,769)
Cash and due from banks
17,124 16,052 15,232
Other assets
58,008 58,706 58,475

Total Assets
$ 1,286,931 $ 1,196,307 $ 1,071,348

Interest Bearing Liabilities:
Interest bearing checking accounts
$ 302,946 $ 180 0.24% $ 284,527 $ 161 0.23% $ 298,831 $ 157 0.21%
Savings and money market deposits
396,476 96 0.10% 356,615 84 0.10% 305,966 105 0.14%
Time deposits
77,155 145 0.75% 81,807 170 0.84% 101,808 377 1.49%
Total interest bearing deposits
776,577 421 0.22% 722,949 415 0.23% 706,605 639 0.36%
Subordinated debentures and notes
13,067 117 3.59% 5,155 41 3.23% 5,155 45 3.53%
Borrowings
16,501 104 2.51% 26,369 127 1.96% 39,436 130 1.32%

Total Interest-Bearing Liabilities
$ 806,145 $ 642 0.32% $ 754,473 $ 583 0.31% $ 751,196 $ 814 0.44%

Interest Rate Spread
3.26% 3.42% 3.87%

Noninterest checking accounts
371,146 322,667 212,196
Other liabilities
6,283 7,373 6,570
Total liabilities
1,183,574 1,084,513 969,962
Total Stockholders' equity
103,357 111,794 101,386
Total Liabilities and
Stockholders' Equity
$ 1,286,931 $ 1,196,307 $ 1,071,348

Net Interest Income/Margin
$ 10,164 3.37% $ 9,718 3.52% $ 9,873 3.99%

(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 Six Months Ended

June 30, 2021 June 30, 2020

Average
Average Average
Average

Balance Interest Rate Balance Interest Rate
Interest Earning Assets:






Interest-bearing deposits and other
$ 89,833 $ 89 0.20% $ 27,362 $ 202 1.48%
Investment securities:
Taxable investment securities
343,158 3,479 2.04% 223,178 3,123 2.81%
Tax-exempt investment securities
52,160 762 3.78% 43,659 695 4.11%
Total Investment securities
395,318 4,241 2.27% 266,837 3,818 3.03%
Loans
692,921 16,776 4.88% 664,941 16,691 5.05%

Total Earning Assets
$ 1,178,072 $ 21,106 3.65% $ 959,140 $ 20,711 4.38%
Allowance for loan losses
(11,148) (8,392)
Cash and due from banks
16,591 15,427
Other assets
59,141 58,696

Total Assets
$ 1,242,656 $ 1,024,871

Interest Bearing Liabilities:
Interest bearing checking accounts
$ 293,787 $ 341 0.23% $ 284,840 $ 491 0.35%
Savings and money market deposits
376,656 180 0.10% 294,040 467 0.32%
Time deposits
79,468 315 0.80% 107,837 858 1.60%
Total interest bearing deposits
749,911 836 0.22% 686,717 1,816 0.53%
Subordinated debentures
9,133 158 3.49% 5,155 98 3.81%
Borrowings
21,408 230 2.17% 32,018 308 1.93%

Total Interest-Bearing Liabilities
$ 780,452 $ 1,224 0.32% $ 723,890 $ 2,222 0.62%

Interest Rate Spread
3.33% 3.76%

Noninterest checking accounts
347,041 193,372
Other liabilities
6,825 6,715
Total liabilities
1,134,318 923,977
Total Stockholders' equity
108,338 100,894
Total Liabilities and
Stockholders' Equity
$ 1,242,656 $ 1,024,871

Net Interest Income/Margin
$ 19,882 3.44% $ 18,489 3.92%

(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.



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