EXHIBIT 99.1
FROM: Blackhawk Bancorp, Inc.
400 Broad Street, Beloit, WI 53511
FOR IMMEDIATE RELEASE - APRIL 29, 2004
Contact: Todd J. James - Executive Vice President and CFO
Phone: 608-299-3476
Fax: 608-364-1500
BLACKHAWK BANCORP, INC. ANNOUNCES FIRST QUARTER EARNINGS
--------------------------------------------------------
Beloit, WI April 29, 2004 - Blackhawk Bancorp, Inc. (OTC: BKHB) reported
net income of $406,000 for the first quarter of 2004, a 2% increase compared to
$398,000 for the first quarter of 2003. First quarter diluted earnings per
share were $0.16 for 2004 and 2003. Return on average equity was 6.26 percent
compared to 6.24 percent for the first quarter of 2003.
"With most of the effort and expense to integrate the DunC acquisition into
our operations behind us, we are starting to see improvements in our core
earnings" said R. Richard Bastian, III, President and CEO of Blackhawk. "Most of
last year we were internally focused as we brought the two organizations
together. This year we will spend much more time developing business and
growing the existing branches in our network," he added.
Net interest income for the first quarter of 2004 increased by 21% from a
year ago, or $533,000, primarily due to the assets and liabilities obtained in
the DunC acquisition, offset by the debt incurred to fund the acquisition. The
net interest margin for the quarter was 3.49% compared to 3.62% for the first
quarter of 2003 and 3.45% for the fourth quarter of 2003.
The Corporation's provision for loan and lease losses was $104,000 in the
first quarter of 2004, verses $222,000 in the same period last year. Net
charge-offs for the period were $233,000, or 0.10 % of total average loans
outstanding for the quarter, and $104,000 a year ago or 0.06% of total average
loans. At March 31, 2004, the allowance for loan losses was 1.31% of total
loans, compared to 1.22% a year earlier and 1.41% at December 31, 2003.
Nonperforming loans equaled 2.17% of total loans at March 31, 2004, compared to
1.91% percent at March 31, 2003 and 1.74% at December 31, 2003.
Non-interest income for the first quarter of 2004 decreased by $11,000 to
$1,028,000 compared to $1,039,000 for the same quarter a year ago. This
includes a $249,000, or 76% decrease in net securities gains. The decrease in
securities gains was offset by a $147,000, or 43% increase in service charges on
deposits. This increase was driven by an increase in the number of accounts due
to the DunC acquisition and improved realization of fees on previously existing
accounts.
Non-interest expenses increased by $632,000, or 21% to $3,582,000 for the
quarter compared to $2,950,000 for the first quarter of last year. The
increase, which includes a $360,000, or 25%, increase in salary and benefits,
was largely due to the DunC acquisition. "Even with two branches being closed in
conjunction with the acquisition, we still have excess capacity throughout our
branch network," said Bastian. "Our challenge now is to balance our efforts for
growing into that excess capacity with efforts to reduce overhead costs."
Assets at March 31, 2004 were $419,145,000, compared to $354,761,000 at
March 31, 2003 and included assets acquired in the DunC acquisition which
totaled $77,726,000 at the acquisition date of September 30, 2003. Book value
per share was $10.39 at March 31, 2004 compared to $10.23 for the same date a
year ago. Total loans were $241,543,000, compared to $179,675,000 at March 31,
2003 and included loans acquired in the DunC acquisition which totaled
$46,781,000 at the acquisition date.
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.
BLACKHAWK BANCORP, INC.
FINANCIAL INFORMATION
(UNAUDITED)
Three Months Ended
------------------
March 31, March 31, Percent
2004 2003 Change
---- ---- ------
PER SHARE DATA
Diluted:
Net Income $0.16 $0.16 0.0%
Basic:
Net Income $0.16 $0.16 0.0%
Dividend Declared $0.09 $0.09 0.0%
Book Value $10.39 $10.23 1.6%
Shares Outstanding:
Average-Diluted 2,552,140 2,518,739 1.3%
End of Period 2,526,145 2,517,131 0.4%
INCOME STATEMENT ($THOUSANDS)
Net Interest Income (FTE) $3,286 $2,723 20.7%
Provision for Loan and Lease Losses 104 222 -53.2%
Service Charges on Deposit Accounts 486 339 43.4%
Gain on Sale of Loans 147 158 -7.0%
Securities Gains, Net 80 329 -75.7%
Increase in Cash Value of Bank-Owned
Life Insurance 69 77 -10.4%
Other 246 136 80.9%
--------- --------- ------
Total Noninterest Income 1,028 1,039 -1.1%
Salaries and Employee Benefits 1,818 1,458 24.7%
Occupancy and Equipment 598 419 42.7%
Intangible Amortization 95 77 23.4%
Other 1,071 996 7.5%
--------- --------- ------
Total Noninterest Expenses 3,582 2,950 21.4%
Tax Equivalent Adjustment 162 132 22.7%
--------- --------- ------
Pre-Tax Earnings 466 458 1.7%
Income Taxes 60 60 0.0%
--------- --------- ------
Net Income $406 $398 2.0%
--------- --------- ------
--------- --------- ------
KEY RATIOS
Net Interest Margin (FTE) 3.49% 3.62%
Interest Spread (FTE) 3.28% 3.33%
Efficiency Ratio 86.3% 81.3%
Return on Assets 0.39% 0.48%
Return on Equity 6.26% 6.24%
Equity / Assets (End of Period) 6.26% 6.06%
Three Months Ended
------------------
March 31, March 31, Percent
2004 2003 Change
---- ---- ------
ASSETS ($THOUSANDS)
Cash and Due from Banks $ 13,669 $ 13,134 4.1%
Federal Funds Sold and
Securities Purchased Under
Agreements to Resell 12,254 6,000 104.2%
Interest-Bearing Deposits in Banks 3,224 1,227 162.8%
Available-for-Sale Securities 102,225 108,896 -6.1%
Held to Maturity Securities,
at Amortized Cost 16,531 20,712 -20.2%
Loans 241,543 179,675 34.4%
Allowance for Loan Losses (3,173) (2,197) 44.4%
Office Buildings and Equipment, Net 9,822 6,612 48.5%
Intangible Assets 7,147 4,489 59.2%
Bank-Owned Life Insurance 6,327 5,825 8.6%
Other Assets 9,576 10,605 -9.7%
-------- -------- ------
Total Assets $419,145 $354,978 18.1%
-------- -------- ------
-------- -------- ------
LIABILITIES & STOCKHOLDERS' EQUITY
($ THOUSANDS)
Deposits:
Noninterest-bearing $ 47,615 $ 35,710 33.3%
Interest-bearing 266,501 215,679 23.6%
-------- -------- ------
Total Deposits 314,116 251,389 25.0%
Short-Term Borrowings 9,169 22,997 -60.1%
Subordinated Debentures 7,217 7,217 0.0%
Long-Term Borrowings 57,997 43,900 32.1%
Other Liabilities 4,388 3,729 17.7%
-------- -------- ------
Total Liabilities 392,887 329,232 19.3%
Stockholders' Equity 26,258 25,746 2.0%
-------- -------- ------
Total Liabilities &
Shareholders' Equity $419,145 $354,978 18.1%
-------- -------- ------
-------- -------- ------
Three Months Ended
------------------
March 31, March 31, Percent
2004 2003 Change
---- ---- ------
AVERAGE ASSETS ($THOUSANDS)
Cash and Due from Banks $ 13,450 $ 10,453 28.7%
Federal Funds Sold and Securities
Purchased Under
Agreements to Resell 3,985 8,543 -53.4%
Interest-Bearing Deposits in Banks 2,847 2,144 32.8%
Taxable Investment Securities 102,043 86,439 18.1%
Tax-Exempt Investment Securities 32,303 24,978 29.3%
Loans 237,601 182,957 29.9%
Allowance for Loan Losses (3,251) (2,146) 51.4%
Other Assets 27,721 20,026 38.4%
-------- -------- ------
Total Assets $416,699 $333,394 25.0%
-------- -------- ------
-------- -------- ------
Memo:
Average Earning Assets $378,779 $305,061 24.2%
Average Earning Assets
Excluding Investment Securities
Unrealized Gains/Losses $377,363 $303,293 24.4%
AVERAGE LIABILITIES & STOCKHOLDERS'
EQUITY ($ THOUSANDS)
Deposits:
Noninterest-bearing $46,447 $31,789 46.1%
Interest-bearing 263,297 213,351 23.4%
-------- -------- ------
Total Deposits 309,744 245,140 26.4%
Short-Term Borrowings 14,062 12,448 13.0%
Subordinated Debentures 7,217 7,217 0.0%
Long-Term Borrowings 56,461 40,844 38.2%
Other Liabilities 3,113 1,878 65.8%
-------- -------- ------
Total Liabilities 390,597 307,527 27.0%
Stockholders' Equity 26,102 25,867 0.9%
-------- -------- ------
Total Liabilities &
Shareholders' Equity $416,699 $333,394 25.0%
-------- -------- ------
-------- -------- ------
Memo:
Average Interest Bearing Liabilities $341,037 $273,860 24.5%
Three Months Ended
------------------
March 31, March 31, Percent
2004 2003 Change
---- ---- ------
CREDIT QUALITY
Net-Charge-Offs $233,000 $104,000 124.0%
Net Charge-Offs / Average
Loans & Leases 0.098% 0.057%
Allowance for Loan Losses $3,173,000 $2,197,000 44.4%
Allowance for Loan Losses /
Period-End Loans 1.31% 1.22%
Non-Performing Loans and Leases (NPL) $5,239,000 $3,438,000
NPL / Period End Loans 2.17% 1.91%
Allowance for Loan Losses / NPL 60.56% 63.90%
MARGIN ANALYSIS
Loans 6.00% 7.20%
Investment Securities 4.58% 4.77%
Interest Bearing Deposits in Banks 2.40% 1.89%
Federal Funds Sold & Securities
Purchased Under Agreements
to Resell 1.31% 1.95%
----- -----
Interest Income(FTE) / Average
Interest Earning Assets 5.42% 6.13%
----- -----
----- -----
Interest Bearing Deposits:
Checking Accounts 0.58% 0.93%
Savings and Money Market Deposits 0.79% 0.85%
Time Deposits 2.62% 3.53%
----- -----
Total Interest Bearing Deposits 1.72% 2.41%
Short-Term Borrowings 0.83% 1.11%
Subordinated Debentures 5.74% 4.67%
Long-Term Borrowings 3.99% 5.01%
----- -----
Interest Expense / Average
Interest Bearing Liabilities 2.14% 2.80%
----- -----
----- -----
Interest Rate Spread 3.28% 3.33%
----- -----
----- -----
Net Interest Margin 3.49% 3.62%
----- -----
----- -----