Blackhawk Bancorp : Interim Financial Report - Blackhawk Bancorp 2020 Fourth Quarter Financial Statements

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND DECEMBER 31, 2019
(UNAUDITED)		December 31,			December 31,
Assets		2020			2019
		(Dollars in thousands, except
		share and per share data)
Cash and due from banks	$	12,012	$	12,320
Interest‐bearing deposits in banks and other institutions		42,119			20,761
Total cash and cash equivalents		54,131			33,081
Certificates of deposit in banks and other institutions		4,159			6,325
Equity securities at fair value		2,517			2,365
Securities available‐for‐sale		349,565			235,083
Loans held for sale		6,096			6,540
Federal Home Loan Bank stock, at cost		2,150			742
Loans, less allowance for loan losses of $10,764 and $7,941
at December 31, 2020 and December 31, 2019, respectively		662,225			619,359
Premises and equipment, net		20,254			21,025
Goodwill and core deposit intangible		12,018			12,455
Mortgage servicing rights		3,409			3,106
Cash surrender value of bank‐owned life insurance		11,126			11,118
Other assets		13,949			12,662
Total assets	$	1,141,599		$	963,861
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest‐bearing	$	268,866	$	155,978
Interest‐bearing		718,388			673,631
Total deposits		987,254			829,609
Short‐term borrowings		‐			‐
Subordinated debentures and notes (including $1,031 at fair value at
December 31, 2020 and December 31, 2019)		5,155			5,155
Senior secured term note		12,833			14,000
Other borrowings		14,000			10,000
Other liabilities		10,602			7,773
Total liabilities		1,029,844			866,537
Stockholders' equity
Common stock, $0.01 par value, 10,000,000 shares authorized;
3,435,348 and 3,399,803 shares issued as of December 31, 2020 and
December 31, 2019, respectively		35			34
Additional paid‐in capital		35,062			33,989
Retained earnings		69,676			60,295
Treasury stock, 62,999 and 105,185 shares at cost as of December 31, 2020
and December 31, 2019, respectively		(941)			(1,408)
Accumulated other comprehensive income (loss)		7,923			4,414
Total stockholders' equity		111,755			97,324
Total liabilities and stockholders' equity	$	1,141,599		$	963,861

BLACKHAWK BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME		Twelve months ended December 31,
(UNAUDITED)
		2020			2019
	(Amounts in thousands, except per share data)
Interest Income:
Interest and fees on loans	$	33,441	$	32,449
Interest and dividends on available‐for‐sale securities:
Taxable		6,328			6,089
Tax‐exempt		1,451			1,587
Interest on other financial institutions		276			528
Total interest income		41,496			40,653
Interest Expense:
Interest on deposits		2,840			5,806
Interest on short‐term borrowings		44			313
Interest on subordinated debentures		182			248
Interest on senior secured term note		498			591
Interest on other		83			11
Total interest expense		3,647			6,969
Net interest income before provision for loan losses		37,849			33,684
Provision for loan losses		7,600			2,010
Net interest income after provision for loan losses		30,249			31,674
Noninterest Income:
Service charges on deposits accounts		3,035			3,715
Net gain on sale of loans		11,080			4,211
Net loan servicing income		(431)			369
Debit card interchange fees		3,738			3,402
Net gains on sales of securities available‐for‐sale		535			1,171
Net other gains (losses)		64			89
Increase in cash surrender value of bank‐owned life insura		310			306
Change in value of equity securities		70			33
Other		1,380			1,832
Total noninterest income		19,781			15,128
Noninterest Expenses:
Salaries and employee benefits		21,948			19,382
Occupancy and equipment		4,278			4,115
Data processing		2,383			3,574
Debit card processing and issuance		1,584			1,574
Advertising and marketing		297			450
Amortization of core deposit intangible		437			398
Professional fees		1,531			1,659
Office Supplies		363			405
Telephone		577			536
Other		2,752			2,520
Total noninterest expenses		36,150			34,613
Income before income taxes		13,880			12,189
Provision for income taxes		3,033			2,585
Net income	$	10,847		$	9,604
Key Ratios
Basic Earnings Per Common Share	$	3.25	$	2.90
Diluted Earnings Per Common Share		3.25			2.90
Dividends Per Common Share		0.44			0.40
Net Interest Margin (1)		3.82%			3.88%
Efficiency Ratio (1)(2)		63.14%			72.10%
Return on Assets		1.02%			1.02%
Return on Common Equity		10.35%			10.49%

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.

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 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

December 31,	September 30,		June 30,		March 31,	December 31,
	2020		2020		2020		2020		2019
		(Dollars in thousands, except per share data)
$	8,079	$	8,671	$	8,658	$	8,033	$	8,284
	1,598		1,607		1,618		1,505		1,496
	384		372		371		323		331
	33		41		40		162		107
	10,094		10,691		10,687		10,023		10,218
	458		565		639		1,177		1,400
	41		42		45		53		58
	113		119		111		156		165
	40		47		19		22		24
	652		773		814		1,408		1,647
	9,442		9,918		9,873		8,615		8,571
	1,715		2,615		2,505		765		980
	7,727		7,303		7,368		7,850		7,591
	781		747		610		897		1,002
	3,572		3,412		3,192		905		1,257
	(177)		26		(389)		110		119
	979		1,002		924		832		876
	428		‐		8		99		‐
	‐		58		6		‐		(87)
	75		76		74		85		75
	310		344		425		273		632
	5,968		5,665		4,850		3,201		3,874
	5,851		5,585		5,477		5,035		4,964
	986		1,137		1,074		1,083		1,038
	683		629		561		510		520
	384		409		394		397		449
	75		87		38		97		101
	107		107		107		115		119
	373		386		405		367		300
	90		94		88		90		118
	140		138		149		150		153
	637		714		659		646		730
	9,326		9,286		8,952		8,490		8,492
	4,369		3,682		3,266		2,561		2,973
	1,022		819		704		487		621
$	3,347	$	2,863	$	2,562	$	2,074	$	2,352

Basic Earnings Per Common Share	$	1.00	$	0.86	$	0.77	$	0.63	$	0.71
Diluted Earnings Per Common Share		1.00		0.86		0.77		0.63		0.71
Dividends Per Common Share		0.11		0.11		0.11		0.11		0.10
Net Interest Margin (1)		3.63%		3.83%		3.99%		3.83%		3.83%
Efficiency Ratio (1)(2)		61.80%		59.39%		60.43%		71.89%		67.25%
Return on Assets		1.20%		1.03%		0.96%		0.85%		0.97%
Return on Common Equity		12.08%		10.64%		10.16%		8.31%		9.60%

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)

Cash and due from banks

Interest‐bearing deposits in banks and other Securities

Net loans/leases

Goodwill and core deposit intangible Other assets

Total assets

Deposits

Subordinated debentures

Senior secured term note

Borrowings

Other liabilities

Stockholders' equity

Total liabilities and stockholders' equity

ASSET QUALITY DATA (Amounts in thousands)

Non‐accrual loans

Accruing loans past due 90 days or more Troubled debt restructures ‐ accruing Total nonperforming loans

Other real estate owned Total nonperforming assets

Total loans

Allowance for loan losses

Nonperforming Assets to total Assets Nonperforming loans to total loans Allowance for loan losses to total loans Allowance for loan losses to nonperforming loans

ROLLFORWARD OF ALLOWANCE

Beginning Balance

Provision

Loans charged off

Loan recoveries

Net charge‐offs

Ending Balance

As of

December 31,	September 30,		June 30,		March 31,	December 31,
	2020		2020		2020		2020		2019
		(Amounts in thousands, except per share data)
$	12,012	$	17,403	$	14,527	$	15,240	$	12,320
	46,278		47,848		25,246		6,775		27,086
	352,082		317,761		301,726		265,165		237,448
	668,321		681,060		697,881		626,797		625,899
	12,018		12,125		12,232		12,340		12,455
	50,888		50,105		49,485		50,688		48,653
$	1,141,599	$	1,126,302	$	1,101,097	$	977,005	$	963,861
$	987,254	$	960,773	$	939,066	$	843,061	$	829,609
	5,155		5,155		5,155		5,155		5,155
	12,833		13,222		13,611		14,000		14,000
	14,000		29,000		29,000		10,000		10,035
	10,602		10,161		9,758		6,083		7,738
	111,755		107,991		104,507		98,706		97,324
$	1,141,599	$	1,126,302	$	1,101,097	$	977,005	$	963,861

December 31,	September 30,		June 30,		March 31,	December 31,
	2020		2020		2020		2020		2019
$	7,013	$	8,584	$	8,427	$	9,680	$	10,642
	‐		196		‐		845		‐
	2,057		2,176		2,361		2,770		2,866
$	9,070	$	10,956	$	10,788	$	13,295	$	13,508
	1		1		762		123		54
$	9,071	$	10,957	$	11,550	$	13,418	$	13,562
$	679,085	$	691,003	$	707,983	$	634,957	$	633,840
$	10,764	$	9,943	$	10,102	$	8,160	$	7,941
$	668,321	$	681,060	$	697,881	$	626,797	$	625,899
	0.79%		0.97%		1.05%		1.37%		1.41%
	1.34%		1.59%		1.52%		2.09%		2.13%
	1.59%		1.44%		1.43%		1.29%		1.25%
	118.7%		90.8%		93.6%		61.4%		58.8%

For the Quarter Ended

December 31,	September 30,		June 30,		March 31,	December 31,
	2020		2020		2020		2020		2019
$	9,943	$	10,102	$	8,160	$	7,941	$	8,324
	1,715		2,615		2,505		765		980
	1,334		2,892		639		633		1,463
	440		118		76		87		100
	894		2,774		563		546		1,363
$	10,764	$	9,943	$	10,102	$	8,160	$	7,941