Blackhawk Bancorp Earns $3.49 Million in Third Quarter 2022; Highlighted by Net Interest Margin Expansion

Rhea-AI Summary

Blackhawk Bancorp reported a net income of $3.49 million for Q3 2022, a slight increase from $3.48 million in Q2 and an 8% rise from $3.22 million in Q3 2021. Diluted EPS remained at $1.21, with a return on average equity at 16.73%. A 10% increase in net interest income was observed, totaling $11.64 million. However, noninterest income declined, largely due to a $1.17 million drop in mortgage servicing revenue. Total deposits rose to $1.26 billion, while the tangible book value per share decreased to $21.01.

Positive

• Net income increased by 8% year-over-year to $3.49 million.
• Net interest income rose by 19% compared to Q3 2021, totaling $11.64 million.
• Total deposits grew by $94.1 million to $1.26 billion year-over-year.
• Return on average equity (ROAE) improved to 16.73%.

Negative

• Noninterest income decreased by $1.02 million from Q3 2021.
• Mortgage loan revenue decreased by $1.17 million year-over-year.
• Tangible book value per share fell to $21.01, down from $31.17 a year prior.

BELOIT, WI / ACCESSWIRE / October 24, 2022 / Blackhawk Bancorp, Inc. (OTCQX:BHWB), (the "Company") the parent company of Blackhawk Bank (the "Bank"), today reported net income of $3.49 million for the quarter ended September 30, 2022, a modest increase compared to $3.48 million earned in the preceding quarter, and an 8% increase compared to the $3.22 million earned during the third quarter of 2021. Diluted Earnings per Share (EPS) for the current quarter was $1.21, the same as the preceding quarter, and a $0.08, or 7%, increase compared to the quarter ended September 30, 2021. The third quarter of 2022 results yielded a Return on Average Equity (ROAE) of 16.73% and a Return on Average Assets (ROAA) of 1.02%.

Earnings were essentially flat compared to the most recent quarter despite a $1.10 million, or 10% increase in net interest income. The preceding quarter included two non-recurring items, a negative provision of $1.50 million and a $1.27 million charge related to announced branch closures, which contributed a net $230,000 to second quarter pre-tax net income, partially offsetting the third quarter increase in net interest income. In addition, excluding the charge for announced branch closures, operating expenses increased by $707,000 led primarily by increases in salaries and benefits expense and debit card processing expense.

The increase in net income for the third quarter of 2022, compared to the third quarter of the prior year, included a $1.87 million, or 19%, increase in net interest income. This earnings growth was partially offset by a $1.17 million decrease in income from the sale and servicing of mortgage loans and a $373,000, or 4%, increase in operating expenses.

"Our net interest income generation during the third quarter was strong, reflecting the loan growth achieved over the last several quarters. The net interest margin was also boosted by the current rate environment, which has essentially offset the lost revenue from the slowdown in mortgage lending," said Todd James, Chairman and CEO. "Net loan growth during the third quarter slowed compared to the last several quarters reflecting the pay-off of a significant loan relationship upon the sale of our customer's company. Despite the uncertainty in the market, we continue to see opportunities to grow the loan portfolio and have potential for additional margin expansion in the current rate environment."

Third Quarter 2022 Financial Highlights (at or for the three months ended September 30, 2022)

• Net income was $3.49 million, or $1.21 per diluted share, compared to $3.22 million, or $1.13 per diluted share, in the third quarter of 2021.
• Net interest margin was 3.63%, compared to 3.31% in the preceding quarter and 3.11% in the third quarter a year ago.
• Annualized return on average assets was 1.02%, compared to 0.96% in the third quarter of 2021.
• Annualized return on average equity was 16.73%, compared to 12.57% in the third quarter a year ago.
• Excluding Paycheck Protection Program (PPP) loans, average total loans increased $153.5 million, or 25% to $779.7 million for the quarter ended September 30, 2022, compared to $626.2 million for the third quarter of 2021.
• Total deposits grew by $94.1 million to $1.26 billion at September 30, 2022 compared to $1.17 billion a year earlier.
• Allowance for loan losses to total loans was 1.14% at quarter end.
• Nonperforming assets to total assets was 0.36% at September 30, 2022 compared to 0.74% a year ago.
• On September 23, 2022, the Company paid a quarterly cash dividend of $0.12 per share, marking the 33^rd consecutive quarterly cash dividend paid.

Net Interest Income

Net interest income totaled $11.64 million for the quarter ended September 30, 2022, an increase of $1.10 million, or 11%, compared to the second quarter of 2022, and an increase of $1.87 million, or 19%, compared to the third quarter of the prior year. The benefit to net interest income from the recognition of PPP loan fees decreased to $53,000 for the third quarter of 2022 compared to $280,000 the preceding quarter and $850,000 in the third quarter of 2021. As of September 30, 2022, only $33,000 of net deferred PPP fee income remains to be recognized in future periods.

The Company's net interest margin was 3.63% for the third quarter of 2022, compared to 3.31% for the quarter ended June 30, 2022, and 3.11% for the third quarter of 2021. The tax-equivalent yield on earning assets increased by 47 basis points to 3.98% and the cost of deposits increased by 14 basis points to 0.26% for the third quarter of 2022, as compared to 3.51% and 0.12%, respectively, for the most recent quarter ended June 30, 2022. The tax-equivalent yield on earning assets and cost of total deposits increased by 64 basis points and 12 basis points, respectively, compared to the third quarter of 2021.

Average total loans for the quarter ended September 30, 2022 were $780.9 million, a $28.1 million, or 4%, increase over the most recent quarter ended June 30, 2022 and a $105.8 million, or 16%, increase compared to the third quarter of 2021.

Average deposits totaled $1.24 billion for the third quarter of 2022, an increase of $2.1 million, or less than 1%, compared to the quarter ended June 30, 2022, and an increase of $52.8 million, or 4%, compared to the third quarter of 2021.

Net interest income for the nine months ended September 30, 2022 increased $2.19 million, or 7%, to $31.84 million compared to $29.65 million for the first nine months of 2021. For the first nine months of 2022, the company's net interest margin was 3.36%, compared to 3.32% for the same period in the prior year. The tax-equivalent yield on earning assets increased by seven basis points to 3.61% for the first nine months of 2022, compared to 3.54% the first nine months of 2021. The cost of deposits increased by one basis point to 0.12% compared to 0.11% for the first nine months of 2021. The growth in net interest income and net interest margin reflects the $62.8 million increase in average total loans to $749.7 million compared to $686.9 million for the first nine months of 2021.

The benefit to net interest income from recognition of PPP fees was $930,000 for the first nine months of 2022, compared to $3.28 million for the first nine months of 2021. Net interest income for both the quarter and the nine months ended September 30, 2022 benefited from the repricing of variable rate loans and investments due to the increase in short term rates by the Federal Reserve Bank.

Provision for Loan Losses and Asset Quality

The Company recorded a provision for loan losses of $100,000 for the quarter ended September 30, 2022. This compares to a negative provision of $1.5 million the most recent quarter, and no provision for loan losses for the third quarter of 2021. For the nine months ending September 30, 2022 the Company recorded a negative provision of $1.4 million, compared to a $500,000 provision for loan losses for the first nine months of 2021.

Total nonperforming assets, which include troubled debt restructures performing in accordance with their modified terms, equaled $5.0 million as of September 30, 2022, as compared to $6.0 million as of June 30, 2022, and $9.8 million at September 30, 2021. At September 30, 2022, the ratio of nonperforming loans to total loans equaled 0.64%, as compared to 0.78% at June 30, 2022, and 1.46% at September 30, 2021.

The allowance for loan losses to total loans was 1.14% at September 30, 2022, compared to 1.22% at June 30, 2022, and 1.68% at September 30, 2021. The allowance for loan losses to nonperforming loans increased to 179.0% at September 30, 2022, compared to 157.3% at June 30, 2022, and 114.5% at September 30, 2021.

Noninterest Income and Operating Expenses

Noninterest income for the quarter ended September 30, 2022, totaled $3.74 million, a $79,000 decrease compared to $3.82 million the prior quarter and a $1.02 million decrease from the $4.76 million recorded in the third quarter of 2021. The net revenue from the sale and servicing of mortgage loans decreased $200,000 and service charges on deposit accounts increased $55,000 compared to the second quarter of 2022. The decline in noninterest income compared to the third quarter of 2021 was primarily due to a $1.17 million decrease in revenue from the sale and servicing of mortgage loans, which was partially offset by a $236,000 increase in deposit service fees.

Noninterest income for the nine months ended September 30, 2022 totaled $11.48 million, a $3.29 million decrease compared to the $14.76 million for the same period in the prior year. The net revenue from the sale and servicing of mortgages decreased by $3.33 million. This was partially offset by a $764,000 increase in deposit service fees during the same period.

Operating expenses for the quarter ended September 30, 2022, totaled $10.69 million, a decrease of $563,000, or 5%, compared to the second quarter of 2022, and an increase of $373,000, or 4%, compared to the third quarter of 2021. The decrease compared to the most recent quarter was due to the previous quarter including a $1.27 million charge related to announced branch closures. Excluding the branch closure charge recognized in the second quarter, total operating expenses for the third quarter increased by $707,000 compared to the quarter ended June 30, 2022. This increase includes a $356,000 increase in salaries and benefits, which is primarily attributable to increased cost of medical benefits, and a $133,000 increase in debit card processing expenses due to the mass re-issuance of cards to adopt new requirements and touchless functionality.

Operating expenses for the nine months ended September 30, 2022 totaled $32.12 million, a $2.34 million, or 8%, increase compared to the same period in 2021. The increase includes a $1.10 million increase in salaries and employee benefits as well as a $1.27 million one-time charge relating to the announced branch closures. Excluding the one-time charge related to the announced branch closures, total operating expenses for the nine months ended September 30, 2022 increased $1.1 million, or 4%, compared to the first nine months of 2021.

Excluding the one-time charge related to the announced branch closures, the efficiency ratio was 69.04% for the third quarter of 2022. This compared to 68.96% for the preceding quarter and 70.70% for the third quarter a year ago.

Capital

Tangible book value per share was $21.01 at September 30, 2022, compared to $23.91 at June 30, 2022 and $31.17 at September 30, 2021. The decrease in tangible book value per share during the current quarter was primarily due to a $6.23 million decrease in accumulated other comprehensive income ("AOCI") related to an increase in the unrealized loss on available for sale securities reflecting the increase in interest rates during the current quarter. Excluding AOCI, tangible book value per share was $33.62 at September 30, 2022, an increase of $1.20 and $3.98 compared to June 30, 2022 and September 30, 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
Phone: (608) 364-8911

Matthew McDonnell, SVP & CFO
mmcdonnell@blackhawkbank.com

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
(UNAUDITED)

		September 30,				December 31,
Assets		2022				2021
		(Dollars in thousands, except
		share and per share data)
Cash and due from banks		$	18,618			$	10,846
Interest-bearing deposits in banks and other institutions			58,651				55,720
Total cash and cash equivalents			77,269				66,566
Certificates of deposit in banks and other institutions			1,465				2,161
Equity securities at fair value			3,432				2,553
Securities available-for-sale			448,766				504,341
Loans held for sale			2,849				2,585
Federal Home Loan Bank stock, at cost			1,705				2,150
Loans, less allowance for loan losses of $8,902 and $11,125
at September 30, 2022 and December 31, 2021, respectively			767,430				696,292
Premises and equipment, net			19,025				20,778
Goodwill and core deposit intangible			11,369				11,628
Mortgage servicing rights			4,065				3,833
Cash surrender value of bank-owned life insurance			11,682				11,440
Other assets			31,324				16,911
Total assets		$	1,380,381			$	1,341,238
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing		$	377,877			$	380,601
Interest-bearing			885,306				816,440
Total deposits			1,263,183				1,197,041
Subordinated debentures and notes, net of issuance costs (including $1,031
at fair value at September 30, 2022 and December 31, 2021)			19,841				19,775
Senior secured term note			10,111				11,278
Other borrowings			5,000				5,000
Other liabilities			10,568				6,985
Total liabilities			1,308,703				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 September 30, 2022 and
December 31, 2021, respectively			35				35
Additional paid-in capital			36,565				35,890
Retained earnings			90,535				81,987
Treasury stock, 640,216 and 630,991 shares at cost as of September 30, 2022
and December 31, 2021, respectively			(19,265	)			(18,952	)
Accumulated other comprehensive income (loss)			(36,192	)			2,199
Total stockholders' equity			71,678				101,159
Total liabilities and stockholders' equity		$	1,380,381			$	1,341,238

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

		September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
		(Dollars in thousands, except per share data)
Interest Income:
Interest and fees on loans		$	9,306			$	8,366			$	7,808			$	7,876			$	8,180
Interest on available-for-sale securities:
Taxable			2,913				2,364				2,068				1,960				1,830
Tax-exempt			372				369				365				369				419
Interest on deposits in other financial institutions			184				72				24				33				61
Total interest income			12,775				11,171				10,265				10,238				10,490
Interest Expense:
Interest on deposits			815				375				322				319				421
Interest on subordinated debentures			196				186				195				196				195
Interest on senior secured term note			89				45				91				98				103
Interest on other borrowings			32				24				-				-				-
Total interest expense			1,132				630				608				613				719
Net interest income before provision for loan losses			11,643				10,541				9,657				9,625				9,771
Provision for loan losses			100				(1,500	)			-				-				-
Net interest income after provision for loan losses			11,543				12,041				9,657				9,625				9,771
Noninterest Income:
Service charges on deposits accounts			1,023				968				913				901				787
Net gain on sale of loans			868				1,063				1,146				1,865				2,147
Net loan servicing income			203				209				402				186				90
Debit card interchange fees			1,177				1,165				1,079				1,168				1,146
Net gains on sales of securities available-for-sale			-				(20	)			-				-				-
Net other gains (losses)			-				11				(4	)			5				52
Increase in cash surrender value of bank-owned life insurance			78				77				86				77				78
Other			392				347				296				317				457
Total noninterest income			3,741				3,820				3,918				4,519				4,757
Noninterest Expenses:
Salaries and employee benefits			6,422				6,066				6,222				6,403				6,118
Occupancy and equipment			1,176				1,132				1,212				1,109				1,273
Data processing			705				681				708				694				689
Debit card processing and issuance			661				528				513				533				489
Advertising and marketing			138				140				108				115				141
Amortization of intangibles			88				88				96				95				96
Professional fees			417				392				389				436				434
Office Supplies			96				97				86				127				74
Telephone			136				146				140				143				139
Other			852				1,984				697				850				865
Total noninterest expenses			10,691				11,254				10,171				10,505				10,318
Income before income taxes			4,593				4,607				3,404				3,639				4,210
Provision for income taxes			1,107				1,129				785				728				988
Net income		$	3,486			$	3,478			$	2,619			$	2,911			$	3,222
Key Ratios
Basic Earnings Per Common Share		$	1.21			$	1.21			$	0.92			$	1.02			$	1.13
Diluted Earnings Per Common Share			1.21				1.21				0.92				1.02				1.13
Dividends Per Common Share			0.12				0.12				0.12				0.11				0.11
Book Value Per Common Share			24.97				27.89				30.59				35.50				35.29
Tangible Book Value Per Share			21.01				23.91				26.58				31.41				31.17
Tangible Book Value Excluding AOCI Per Share			33.62				32.42				31.27				30.64				29.64
Number of Shares Outstanding			2,870,754				2,875,430				2,873,528				2,848,078				2,848,078
Average Number of Shares Outstanding			2,872,232				2,874,254				2,864,082				2,848,109				2,848,109
Net Interest Margin (1)			3.63	%			3.31	%			3.13	%			3.12	%			3.11	%
Efficiency Ratio (1)(2)(3)			69.04	%			68.96	%			74.35	%			73.75	%			70.70	%
Return on Assets			1.02	%			1.02	%			0.80	%			0.89	%			0.96	%
Return on Common Equity			16.73	%			16.75	%			10.82	%			11.41	%			12.57	%

(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 $1.27 million related to the previously announced branch closures.

(UNAUDITED)		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
						(Amounts in thousands, except per share data)
Cash and due from banks		$	18,618			$	15,682			$	13,413			$	10,846			$	16,536
Interest-bearing deposits in banks and other			60,116				12,990				42,103				57,882				104,722
Securities			452,198				472,977				484,420				506,894				472,472
Net loans/leases			770,279				765,979				716,456				698,877				658,323
Goodwill and core deposit intangible			11,369				11,453				11,536				11,628				11,723
Other assets			67,801				63,109				62,715				55,428				54,218
Total assets		$	1,380,381			$	1,342,190			$	1,330,643			$	1,341,555			$	1,317,994
Deposits		$	1,263,183			$	1,220,667			$	1,199,627			$	1,197,041			$	1,169,085
Subordinated debentures			19,841				19,827				19,812				20,155				20,155
Senior secured term note			10,111				10,500				10,889				11,278				11,667
Borrowings			5,000				5,000				5,000				5,000				5,000
Other liabilities			10,568				5,998				7,414				6,985				11,585
Stockholders' equity			71,678				80,198				87,901				101,096				100,502
Total liabilities and stockholders' equity		$	1,380,381			$	1,342,190			$	1,330,643			$	1,341,555			$	1,317,994
ASSET QUALITY DATA
(Amounts in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,
			2022				2022				2022				2021				2021
Non-accrual loans		$	3,254			$	4,125			$	4,983			$	5,430			$	7,827
Accruing loans past due 90 days or more			-				-				-				-				-
Troubled debt restructures - accruing			1,720				1,910				1,802				1,843				1,975
Total nonperforming loans		$	4,974			$	6,035			$	6,785			$	7,273			$	9,802
Other real estate owned			-				-				75				24				-
Total nonperforming assets		$	4,974			$	6,035			$	6,860			$	7,297			$	9,802
Total loans		$	779,181			$	775,474			$	727,451			$	710,002			$	669,547
Allowance for loan losses			8,902				9,495				10,995				11,125				11,224
Loans, less allowance for loan losses		$	770,279			$	765,979			$	716,456			$	698,877			$	658,323
Nonperforming Assets to total Assets			0.36	%			0.45	%			0.52	%			0.54	%			0.74	%
Nonperforming loans to total loans			0.64	%			0.78	%			0.93	%			1.02	%			1.46	%
Allowance for loan losses to total loans			1.14	%			1.22	%			1.51	%			1.57	%			1.68	%
Allowance for loan losses to nonperforming loans			179.0	%			157.3	%			162.0	%			153.0	%			114.5	%
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
ROLLFORWARD OF ALLOWANCE		2022				2022				2022				2021				2021
Beginning Balance		$	9,495			$	10,995			$	11,125			$	11,224			$	11,229
Provision			100				(1,500	)			-				-				-
Loans charged off			758				95				214				181				103
Loan recoveries			65				95				84				82				98
Net charge-offs			693				-				130				99				5
Ending Balance		$	8,902			$	9,495			$	10,995			$	11,125			$	11,224

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

		Nine months ended September 30,
		2022				2021
		(Amounts in thousands, except per share data)
Interest Income:
Interest and fees on loans		$	25,480			$	24,956
Interest and dividends on available-for-sale securities:
Taxable			7,345				5,309
Tax-exempt			1,105				1,182
Interest on deposits in other financial institutions			281				150
Total interest income			34,211				31,597
Interest Expense:
Interest on deposits			1,513				1,258
Interest on subordinated debentures			577				353
Interest on senior secured term note			224				313
Interest on other borrowings			56				21
Total interest expense			2,370				1,945
Net interest income before provision for loan losses			31,841				29,652
Provision for loan losses			(1,400	)			500
Net interest income after provision for loan losses			33,241				29,152
Noninterest Income:
Service charges on deposits accounts			2,904				2,140
Net gain on sale of loans			3,077				6,726
Net loan servicing income			814				495
Debit card interchange fees			3,421				3,392
Net gains on sales of securities available-for-sale			(20	)			-
Net other gains (losses)			7				101
Increase in cash surrender value of bank-owned life insurance			242				237
Change in value of equity securities			(193	)			(12	)
Other			1,227				1,685
Total noninterest income			11,479				14,764
Noninterest Expenses:
Salaries and employee benefits			18,710				17,605
Occupancy and equipment			3,521				3,547
Data processing			2,094				1,921
Debit card processing and issuance			1,702				1,417
Advertising and marketing			385				310
Amortization of core deposit intangible			273				294
Professional fees			1,198				1,224
Office Supplies			279				244
Telephone			422				425
Other			3,532				2,785
Total noninterest expenses			32,116				29,772
Income before income taxes			12,604				14,144
Provision for income taxes			3,021				3,437
Net income		$	9,583			$	10,707
Key Ratios
Basic Earnings Per Common Share		$	3.34			$	3.45
Diluted Earnings Per Common Share			3.34				3.45
Dividends Per Common Share			0.36				0.33
Net Interest Margin (1)			3.36	%			3.32	%
Efficiency Ratio (1)(2)(3)			70.68	%			67.01	%
Return on Assets			0.95	%			1.13	%
Return on Common Equity			14.55	%			13.49	%

(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 $1.27 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
		September 30, 2022												June 30, 2022												September 30, 2021
		Average								Average				Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate				Balance				Interest				Rate
Interest Earning Assets:
Interest-bearing deposits and other		$	30,655			$	184				2.39	%		$	50,333			$	72				0.58	%		$	119,991			$	61				0.20
																																				%
Investment securities:
Taxable investment securities			417,110				2,913				2.77	%			432,659				2,364				2.19	%			413,853				1,830				1.75
																																				%
Tax-exempt investment securities			54,353				372				3.46	%			54,184				369				3.48	%			52,663				420				4.05
																																				%
Total Investment securities			471,463				3,285				2.85	%			486,843				2,733				2.33	%			466,516				2,250				2.01
																																				%
Loans			780,878				9,306				4.73	%			752,785				8,366				4.46	%			675,070				8,180				4.81	%
Total Earning Assets		$	1,282,996			$	12,775				3.98	%		$	1,289,961			$	11,171				3.51	%		$	1,261,577			$	10,491				3.34
																																				%
Allowance for loan losses			(9,120	)											(10,618	)											(11,229	)
Cash and due from banks			15,331												14,900												16,821
Other assets			71,882												70,202												61,274
Total Assets		$	1,361,089											$	1,364,445											$	1,328,443
Interest Bearing Liabilities:
Interest bearing checking accounts		$	359,146			$	451				0.50	%		$	316,829			$	175				0.22	%		$	300,935			$	180
																																				%
Savings and money market deposits			419,116				177				0.17	%			426,585				75				0.07	%			423,894				109				0.10
																																				%
Time deposits			82,736				187				0.90	%			77,287				125				0.65	%			76,682				133				0.69	%
Total interest bearing deposits			860,998				815				0.38	%			820,701				375				0.18	%			801,511				422				0.21
																																				%
Subordinated debentures and notes			19,834				196				3.93	%			19,820				186				3.77	%			20,155				195				3.83
																																				%
Borrowings			16,492				121				2.90	%			22,143				69				1.25	%			16,670				103				2.45	%
Total Interest-Bearing Liabilities		$	897,324			$	1,132				0.50	%		$	862,664			$	630				0.29	%		$	838,336			$	720				0.34
																																				%
Interest Rate Spread											3.48	%											3.22	%											3.00
																																				%
Noninterest checking accounts			374,336												412,508												381,046
Other liabilities			6,742												5,965												7,381
Total liabilities			1,278,402												1,281,137												1,226,763
Total Stockholders' equity			82,687												83,308												101,680
Total Liabilities and
Stockholders' Equity		$	1,361,089											$	1,364,445											$	1,328,443
Net Interest Income/Margin						$	11,643				3.63	%						$	10,541				3.31	%						$	9,771				3.11
																																				%
(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 Nine Months Ended
		September 30, 2022												September 30, 2021
		Average								Average				Average								Average
		Balance				Interest				Rate				Balance				Interest				Rate
Interest Earning Assets:
Interest-bearing deposits and other		$	43,019			$	281				0.87	%		$	99,997			$	150				0.20	%
Investment securities:
Taxable investment securities			432,689				7,345				2.27	%			366,982				5,309				1.93	%
Tax-exempt investment securities			54,121				1,105				3.48	%			52,329				1,182				3.87	%
Total Investment securities			486,810				8,450				2.40	%			419,311				6,491				2.18	%
Loans			749,685				25,480				4.54	%			686,905				24,956				4.86	%
Total Earning Assets		$	1,279,514			$	34,211				3.61	%		$	1,206,213			$	31,597				3.54	%
Allowance for loan losses			(10,284	)											(11,176	)
Cash and due from banks			15,064												16,668
Other assets			69,447												59,861
Total Assets		$	1,353,741											$	1,271,566
Interest Bearing Liabilities:
Interest bearing checking accounts		$	330,152			$	765				0.31	%		$	296,196			$	521				0.23	%
Savings and money market deposits			423,135				321				0.10	%			392,575				290				0.10	%
Time deposits			79,278				427				0.72	%			78,529				447				0.76	%
Total interest bearing deposits			832,565				1,513				0.24	%			767,300				1,258				0.22	%
Subordinated debentures			19,896				577				3.88	%			12,847				353				3.67	%
Borrowings			18,237				280				2.06	%			19,811				334				2.25	%
Total Interest-Bearing Liabilities		$	870,698			$	2,370				0.36	%		$	799,958			$	1,945				0.32	%
Interest Rate Spread											3.25	%											3.22	%
Noninterest checking accounts			388,404												358,500
Other liabilities			6,591												7,012
Total liabilities			1,265,693												1,165,470
Total Stockholders' equity			88,048												106,096
Total Liabilities and
Stockholders' Equity		$	1,353,741											$	1,271,566
Net Interest Income/Margin						$	31,841				3.36	%						$	29,652				3.32	%

(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/722087/Blackhawk-Bancorp-Earns-349-Million-in-Third-Quarter-2022-Highlighted-by-Net-Interest-Margin-Expansion

FAQ

What were the net income results for BHWB in Q3 2022?

BHWB reported a net income of $3.49 million for Q3 2022.

How did BHWB's diluted EPS perform in Q3 2022?

Diluted EPS remained unchanged at $1.21 for Q3 2022.

What was the net interest income for BHWB in Q3 2022?

Net interest income for BHWB was $11.64 million in Q3 2022.

How much did BHWB's total deposits grow by in Q3 2022?

Total deposits grew by $94.1 million to $1.26 billion year-over-year.

What is BHWB's return on average equity for Q3 2022?

BHWB's return on average equity for Q3 2022 was 16.73%.