EXHIBIT 99.1
FROM: Blackhawk Bancorp, Inc.
400 Broad Street, Beloit, WI 53511
FOR IMMEDIATE RELEASE
Contact: Todd J. James - Executive Vice President and CFO
Phone: 608-299-3476
Fax: 608-364-1500
BLACKHAWK BANCORP, INC. REPORTS 2003 EARNINGS
Beloit, WI February 10, 2004 - Blackhawk Bancorp, Inc. (OTC: BKHB) reported
diluted earnings per share of $0.10 for the fourth quarter of 2003 compared to
$0.07 per share in the fourth quarter of 2002. For the full year ended December
31, 2003 diluted earnings per share were $0.48, a 4% decrease from $0.50 per
share in 2002. The decrease in earnings per share for the year was due to lower
net interest margin on earning assets and increased expenses to integrate the
acquired operations of DunC Corp. and its subsidiary First Bank, bc. Net income
for the fourth quarter was $246,000 compared to net income of $187,000 in the
fourth quarter of 2002. The 2002 fourth quarter earnings included a $167,000
after-tax charge to write off a receivable related to a breach of contract claim
against a former provider of data processing services. Blackhawk's net income
for the full year was $1,211,000, a 2% decrease from $1,236,000 in 2002.
Commenting on the results, R. Richard Bastian, III, the company's President
and Chief Executive Officer, said "The company dedicated substantial resources
during the second half of the year to successfully integrate the First Bank
acquisition. This produced a significant drag on short term earnings, including
direct expenses incurred and missed opportunities due to the level of management
and line staff time dedicated to the effort. However," he added, "the
integration is substantially complete and has gone extremely well. We expect to
realize benefits from the acquisition as early as the first quarter of 2004."
Net interest income for fourth quarter 2003 of $3,110,000 is up $424,000,
or 16%, from a year ago, primarily due to the earning assets and funding
obtained in the First Bank acquisition. The net interest margin decreased to
3.46% for the fourth quarter of 2003 compared to 3.67% for the same period in
2002. The decrease in margin was primarily due to loan run-off and asset re-
pricing experienced throughout 2003. The reinvestment and re-pricing of these
assets resulted in an 81 basis point decrease in the yield on average earning
assets to 5.46% for the fourth quarter of 2003 compared to 6.27% a year ago. The
average rate paid on interest bearing liabilities, however, decreased only 67
basis points to 2.21% compared to the fourth quarter of last year. The
prolonged, historically low interest rate environment has impacted the company's
ability to continue lowering funding costs.
Total average loans for the fourth quarter of 2003 increased by $43.7
million, or 23% to $237.8 million compared to $194.1 million for the fourth
quarter of 2003. Excluding the $45.9 million of loans obtained in the First
Bank acquisition, average total loans decreased by $2.2 million compared to the
fourth quarter of 2002. Total average loans for the year ended December 31,
2003 increased $2.3 million, or 1% compared to the prior year. Excluding the
annualized impact of the First Bank loans acquired on September 30, 2003, total
average loans decreased $9.2 million or 5%.
Total average deposits increased by $73.6 million, or 30% to $316.9 million
for the fourth quarter of 2003 compared to $243.3 million for the same period in
2002. Excluding the $64.2 million of deposits assumed in the First Bank
acquisition, total average deposits increased $9.4 million, or 4% compared to
the fourth quarter of 2002.
The provision for loan losses of $143,000 for the quarter was $178,000, or
55% lower than the 2002 fourth quarter provision. For the year ended December
31, 2002 the provision for loan losses was $650,000, a $354,000, or 35% decrease
from the 2002 provision of $1,004,000.
"We have devoted substantial time and resources to improved credit
quality," explained Bastian. "Net charge-offs for the year were $316,000
compared to $1,329,000 in 2002. We are pleased with our progress in this area,
especially during this time of economic weakness in our primary markets." At
December 31, 2003, the allowance for loan losses to total loans equaled 1.41%
compared to 1.10% and 1.35% at December 31, 2002 and September 30, 2003,
respectively.
Non-interest income for the fourth quarter of 2003 increased $113,000, or
13% to $981,000 compared to $868,000 for the fourth quarter of 2002. The
increase is primarily due to the First Bank acquisition, and is partially offset
by a $49,000 reduction in gain on sale of loans, due to a slowdown in mortgage
refinance activity.
Total operating expenses for the fourth quarter increased by $631,000, or
20.4% to $3,717,000 compared to $3,086,000 a year ago. The overall increase
reflects the additional operating expenses related the First Bank operations
acquired on September 30, 2003. It also includes approximately $140,000 of
additional integration related expenses.
Blackhawk Bancorp, Inc. is the parent company of Blackhawk State Bank,
which operates eleven office locations in south central Wisconsin and north
central Illinois. The stock of Blackhawk Bancorp, Inc. is publicly traded on
the Over the Counter Market under the symbol BKHB.
When used in this communication, the words "believes," "expects," 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; 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"; and the inability of third
party vendors to perform critical services for the company or its customers.