1
Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---- ----
Commission file number 0-18599
BLACKHAWK BANCORP, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1659424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Broad Street 53511
Beloit, Wisconsin (Zip Code)
(Address of principal executive offices)
(608) 364-8911
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock March 31, 1996
--------------------- ----------------
$.01 par value 2,284,364 shares
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INDEX
PART I - FINANCIAL INFORMATION
Page
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ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets as of
March 31, 1996 and December 31, 1995 3
Consolidated Condensed Statements of Income for the
three months ended March 31, 1995 and 1995 4
Consolidated Condensed Statements of Shareholders'
Equity as of March 31, 1996 and December 31, 1995 5
Consolidated Condensed Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 6-7
Notes to Consolidated Condensed Financial Statements 8-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11-14
PART II - OTHER INFORMATION
ITEM 6. A) EXHIBITS 15
B) REPORTS ON FORM 8-K 15
SIGNATURES 16
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3
BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS MARCH 31, DECEMBER 31,
------ 1996 1995
------------ ------------
Cash and cash equivalents $ 5,707,450 $ 7,589,600
Federal funds sold and other short-term
investments 3,806,174 11,734,905
Securities available for sale 14,681,781 11,571,581
Securities held to maturity 26,062,528 25,794,108
Total loans 94,195,593 94,476,844
Allowance for loan losses (Note 3) 938,961 928,817
------------ ------------
Net loans 93,256,632 93,548,027
Bank premises and equipment, net 3,677,937 3,732,418
Accrued interest receivable 1,284,059 1,217,561
Other assets 324,656 343,248
------------ ------------
Total Assets $148,801,217 $155,531,448
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits:
Non-interest bearing $ 12,691,143 $ 22,513,544
Interest bearing 97,267,251 97,203,385
------------ ------------
Total deposits 109,958,394 119,716,929
Borrowed Funds:
Short-term borrowings (Note 4) 12,930,278 9,679,833
Other borrowings (Note 5) 3,615,634 3,629,027
Accrued interest payable 578,626 693,364
Other liabilities 354,694 622,811
------------ ------------
Total Liabilities 127,437,626 134,341,964
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock
1,000,000 shares, $.01 par value per
share authorized, none issued or
outstanding -- --
Common stock
10,000,000 shares, $.01 par value
per share authorized, 2,284,364 and
2,286,615 shares issued and outstanding 22,844 22,826
Additional paid-in capital 6,954,806 6,946,370
Employee stock options earned 75,802 52,165
Retained Earnings 14,398,934 14,210,036
FASB 115 Adjustment (23,161) 37,114
------------ ------------
21,429,225 21,268,511
Less: Deferred compensation related
to employee stock ownership
plan debt guarantee 65,634 79,027
------------ ------------
Total Shareholders' Equity 21,363,591 21,189,484
------------ ------------
Total Liabilities and
Shareholders' Equity $148,801,217 $155,531,448
============ ============
See Notes to Unaudited Consolidated Condensed Financial Statements
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4
BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31
1996 1995
------------ ------------
INTEREST INCOME:
Interest and fees on loans $ 2,124,459 $ 1,989,879
Interest on deposits with other banks 417 159
Interest on investment securities:
Taxable 494,283 459,518
Exempt from federal income taxes 51,051 50,123
Dividends 8,600 8,190
Interest on federal funds sold
and other short-term investments 88,958 12,118
------------ ------------
Total Interest Income 2,767,768 2,519,987
------------ ------------
INTEREST EXPENSE:
Interest on deposits 1,138,966 1,033,797
Interest on short-term borrowings 168,001 91,678
Interest on other borrowings 55,983 17,301
------------ ------------
Total Interest Expense 1,362,950 1,142,776
------------ ------------
Net Interest Income 1,404,818 1,377,211
Provision for loan losses (Note 3) 45,000 45,000
------------ ------------
Net Interest Income After
Provision For Loan Losses 1,359,818 1,332,211
------------ ------------
OTHER OPERATING INCOME:
Investment securities gains (losses) 99 --
Gain on sale of loans 17,611 1,459
Trust department income 23,779 14,490
Service fees 123,715 87,285
Other income 69,356 32,626
------------ ------------
Total Other Operating Income 234,560 135,860
------------ ------------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 526,617 494,309
Occupancy expense of bank premises, net 80,116 70,722
Furniture and equipment 90,016 82,661
Data processing 80,730 74,317
Other operating expenses 265,998 257,484
------------ ------------
Total Other Operating Expenses 1,043,477 979,493
------------ ------------
Income Before Income Taxes 550,901 488,578
Provision for income taxes 179,254 153,738
------------ ------------
Net Income $ 371,647 $ 334,840
============ ============
Earnings Per Share $ .16 $ .15(1)
============ ============
Dividends Per Share $ .08 $ .07(1)
============ ============
(1) Adjusted for 3 for 2 stock split paid as a 50% stock dividend on
June 15, 1995
See Notes to Unaudited Consolidated Condensed Financial Statements
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
Three Months Twelve Months
Ended Ended
March 31, DECEMBER 31,
1996 1995
------------ ------------
Common Stock:
Balance at beginning of period $ 22,826 $ 15,006
Stock split -- 7,593
Stock options exercised 18 227
------------ ------------
Balance at end of period 22,844 22,826
------------ ------------
Additional Paid-in Capital:
Balance at beginning of period 6,946,370 6,791,012
Stock options exercised 8,436 155,358
------------ ------------
Balance at end of period 6,954,806 6,946,370
------------ ------------
Employee Stock Options Earned:
Balance at beginning of period 52,165 26,642
Stock options exercised (8,436) (8,174)
Unearned employee compensation 32,091 33,697
------------ ------------
Balance at end of period 75,802 52,165
------------ ------------
Retained Earnings:
Balance at beginning of period 14,210,036 13,421,900
Net income 371,647 1,471,887
Dividends declared on common stock (182,749) (676,140)
Stock Split -- (7,611)
------------ ------------
Balance at end of period 14,398,934 14,210,036
------------ ------------
FASB 115 Adjustment:
Balance at beginning of period 37,114 (159,701)
Net adjustment during period (60,275) 196,815
------------ ------------
Balance at end of period (23,161) 37,114
------------ ------------
Other:
Balance at beginning of period (79,027) (132,599)
Principal payments on ESOP loan 13,393 53,572
------------ ------------
Balance at end of period (65,634) (79,027)
------------ ------------
Total Shareholders' Equity $ 21,363,591 $ 21,189,484
============ ============
See Notes to Unaudited Consolidated Condensed Financial Statements
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 371,647 $ 334,840
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses 45,000 45,000
Provision for depreciation and
amortization 84,480 73,105
Amortization of premiums
on investment securities, net 1,814 20,718
(Gains) losses on investment securities 99 --
(Gain) on sale of loans (17,611) (1,459)
Proceeds from sale of loans (1,323,508) (264,458)
Loans originated for sale 1,424,319 265,917
Change in assets and liabilities:
(Increase) decrease in accrued
interest receivable (66,498) (11,172)
(Increase) decrease in other assets 18,592 109,521
Increase (decrease) in accrued
interest payable (114,738) (469,794)
Increase (decrease) in other
liabilities (211,248) (20,597)
------------ ------------
Net cash provided by operating
activities 205,952 81,421
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of available-
for-sale securities 3,218,902 350,447
Purchase of available-for-sale securities (6,329,991) (251,094)
Proceeds from maturity of investment
securities 1,294,166 1,877,560
Purchase of investment securities (1,660,000) (1,973,750)
Decrease in federal funds sold and
other short-term investments, net 7,928,73 6,392,345
Loans originated, net of
principal collected 163,195 (1,318,860)
Purchase of bank premises and equipment (7,327) (799,254)
------------ ------------
Net cash provided by (used in)
investing activities 4,607,676 4,277,394
============ ============
See Notes to Unaudited Consolidated Condensed Financial Statements.
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
Three Months Ended
March 31
1996 1995
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock options exercised 8,454 116,595
Net (decrease) in deposits (9,758,535) (7,943,856)
Net increase (decrease) in other
borrowings 3,237,052 3,289,590
Cash dividends paid (182,749) (151,677)
----------- ------------
Net cash (used in)
financing activities (6,695,778) (4,689,348)
----------- ------------
Net increase (decrease) in cash and
cash equivalents (1,882,150) (330,533)
CASH AND CASH EQUIVALENTS:
Beginning 7,589,600 5,155,930
----------- ------------
Ending $ 5,707,450 $ 4,825,397
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash payments for:
Interest $ 1,477,688 $ 1,194,394
Income taxes $ 32,129 $ 221,229
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Other assets acquired in settlement of
loans $ 103,845 $ 35,093
Principal payments on ESOP loan (Note 5) $ 13,394 $ 13,394
See Notes to Unaudited Consolidated Condensed Financial Statements.
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
Note 1. General:
The accompanying consolidated condensed financial statements
conform to generally accepted accounting principles and to
general practices within the banking industry. The more
significant policies used by the Company in preparing and
presenting its financial statements are stated in the
Corporation's Form 10-KSB.
The effect of timing differences in the recognition of revenue
and expense for tax liability is not determined until the end of
each fiscal year.
In the opinion of Management, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of normal recurring accruals) necessary
to present fairly the financial position of the Corporation as of
March 31, 1996 and December 31, 1995, the results of operations
for the three months ended March 31, 1996 and 1995, and cash
flows for the three months ended March 31, 1996 and 1995.
The results of operations for the three months ended March 31,
1996 and 1995 are not necessarily indicative of the results to be
expected for the full year.
Note 2. Non-Performing Loans
Non-performing loans includes loans which have been categorized
by management as non-accruing because collection of interest is
not assured, and loans which are past-due ninety days or more as
to interest and/or principal payments. The following summarizes
information concerning non-performing loans:
March 31 December 31
-------------------- -----------
1996 1995 1995
---- ---- ----
Impaired loans $ -- $ -- $134,000
Non-accruing loans 308,000 188,000 206,000
Past due 90 days or more
and still accruing 142,000 281,000 238,000
-------- -------- --------
Total non-performing loan $450,000 $469,000 $578,000
======== ======== ========
Note 3: Allowance For Loan Losses
A summary of transactions in the allowance for loan losses is as
follows:
Three Months Ended
March 31
--------
1996 1995
---- ----
Balance at beginning of
period $ 928,817 $ 814,115
Provision charged to expense 45,000 45,000
Loans charged off (38,861) (10,541)
Recoveries 4,005 2,570
--------- ---------
Balance at end of period $ 938,961 $ 851,144
========= =========
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
(CONTINUED)
Note 4. Short-Term Borrowings:
A summary of short-term borrowings is as follows:
March 31, December 31,
1996 1995
-------- -----------
Securities sold under agreement to
repurchase $12,930,278 $9,679,833
=========== ==========
Note 5. Other Borrowings:
March 31, December 31,
1996 1995
-------- -----------
ESOP Debt Guarantee $ 65,634 $ 79,027
FHLB Borrowings 3,550,000 3,550,000
---------- ----------
$3,615,634 $3,629,027
========== ==========
The Company has an Employee Stock Ownership Plan for the benefit of
the employees of the Company and its subsidiary. The ESOP borrowed
funds from a third party lender and purchased 37,367 shares of the
Company's stock. Accordingly, the debt has been recorded in the
accompanying consolidated condensed balance sheets together with the
related deferred compensation. The debt and related deferred
compensation are reduced as the ESOP makes principal payments.
The bank has established a line of credit with the Federal Home Loan
Bank ("FHLB"). Periodic draws are taken against this line to fund
specific loans. The total line of credit is $5,834,000, with an
available balance of $2,284,000.
Note 6. Stock Option Plan:
The Company's 1990 Directors' Stock Option Plan and the 1990
Executive Stock Option Plan expired on January 24, 1995. At the
time of expiration, options outstanding under the 1990 Plans were
125,134 plus another 240,000 options under the 1994 Directors' and
Executives Stock Option Plans. Options are granted at prices equal
to the fair market value for directors and at prices from 90% to
100% of fair market value for key employees. The options vest over
three years and are exercisable to 10 years from the date of grant.
Other pertinent information related to the plans is as follows:
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BLACKHAWK BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
(CONTINUED)
Note 6. Stock Option Plan (continued)
March 31, December 31,
1996 1995 (1)
-------- -----------
Shares under option, beginning of year 262,235 196,701
Granted during the year 6,300 108,350
Terminated and canceled during the year -- (11,100)
Exercised during the year (1,749) (31,716)
-------- --------
Shares under option, end of period 266,786 262,235
======== ========
Options exercisable, end of period 168,496 113,543
======== ========
Available to grant, end of period 125,350 131,650
======== ========
Average prices: Granted during the period $ 11.13 $ 9.40
Exercised during the period $ 4.83 $ 4.65
Under option $ 6.84 $ 9.79
======== ========
(1) Adjusted for 3-for-2 stock split payable June 15, 1995.
Note 7. Commitments and Contingent Liabilities:
Following are commitments and contingent liabilities with changes
since December 31, 1995.
Financial instruments with off-balance-sheet risk:
A summary of the amount of exposure to credit loss for loan
commitments (unfunded loans and unused lines of credit) and standby
letters of credit outstanding is as follows:
March 31, December 31,
1996 1995
-------- -----------
Loan commitments $7,556,039 $7,733,617
Standby letters of credit 254,165 201,793
---------- ----------
$7,810,204 $7,935,410
========== ==========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The purpose of Management's discussion and analysis is to provide relevant
information regarding the Registrant's financial condition and its results
of operations. The information included herein should be read in conjunction
with the consolidated condensed balance sheets as of March 31, 1996 and
December 31, 1995 and the consolidated condensed statements of income for
the three months ended March 31, 1996 and 1995. This information is not meant
to be a substitute for the balance sheets and income statements.
RESULTS OF OPERATIONS
Net income for the three months ended March 31, 1996 was approximately $372,000
compared to $335,000 for the similar period in 1995. The discussion that
follows will provide information about the various areas of income and expense
that resulted in the aforementioned results.
THREE MONTHS ENDED MARCH 31
For the three months ended March 31, 1996, interest income was $2,768,000
compared to $2,520,000 for the same period in 1995. This increase of
approximately 9.8%, $248,000, was primarily the result of increased volume in
commercial loans and fed funds sold, as discussed below.
Interest and fees on loans increased to $2,124,000 in the three months ended
March 31, 1996 compared to $1,990,000 in same period of 1995. Interest from
real estate loans was approximately $15,000 higher in 1996 but fees were
approximately $15,000 lower, thus resulting in total real estate loan interest
and fees being almost identical for the first three months of 1996 and 1995.
Commercial loan interest income increased approximately $93,000 in 1996
compared to 1995. The increase due to additional volume was decreased by
yields being .38% lower. Income from consumer loans, including home equity,
credit cards, and installment loans, increased due to increased yields.
Investment income on taxable securities increased nearly $35,000 in the first
three months of 1996 compared to 1995, $494,000 and $459,000 respectively.
Most of this increase, approximately 66% was from U.S. agency securities as a
result of increased volume and increased yields. The balance of the increase
was from U.S. treasury securities as a result of increased volume.
Interest from fed funds sold and other short-term investments increased
substantially to $89,000 in 1996 from $12,000 in 1995. The increased volume
in fed funds sold, an average balance of $6.7 million in 1996 compared to
$.3 million in 1995, was the primary reason for the increased income in this
category. The increased income due to increased volume was offset to some
extent by lower yields.
Interest paid on deposits increased to $1,139,000 in the three months ended
March 31, 1996 compared to $1,034,000 for the same period in 1995. Although
average deposits increased slightly in 1996, the major reason for the increase
was increased interest rates. Interest rates in general declined during the
first quarter, but the average rate on deposits continued to increase. This
is because the average rate on maturing deposits was lower than the rate on
new and renewed deposits. This is expected to change in the second quarter of
1996 based on
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current rates being offered and the rates on maturing deposits. The actions of
the Federal Reserve will continue to affect the level and direction of interest
rates in the future. Management, at this time, is not able to predict their
actions.
Interest on short-term borrowings increased to $168,000 from $92,000 in 1995,
or an increase of $76,000. Repurchase agreements, the major item in this
category, had a higher average balance in 1996 compared to 1995, $13.5 million
and $4.8 million respectively. The interest rates paid decreased in 1996
compared to 1995. Fed funds purchased were not used in the first quarter of
1996 compared to an average balance of $1.9 million in 1995.
Other borrowings are represented by Federal Home Loan Bank ("FHLB") advances.
In an effort to economically fund loans, average borrowings from the FHLB
increased to $3.6 million from $1.4 million in 1995. The average rate on the
borrowings increased because the maturing borrowings were at rates lower than
those remaining.
The provision for loan loss was $45,000 for the three months in 1996 which was
the same as in 1995. It is management's opinion that this amount is an
adequate provision.
Total other operating income increased to $235,000 from $136,000 for the three
months ended March 31, 1996 and 1995 respectively. Gain on sale of loans in
the first quarter of 1996 was $17,000 compared to $1,000 in 1995. As fixed
mortgage rates declined, the activity in this area increased. All fixed rate
loans originated are sold. Service fees increased to nearly $124,000 in 1996
from $87,000 in 1995. Most of this amount results from checking account fees.
The increase was due to an increased number of accounts and an increased fee
schedule. Other income in the three months ended March 31, 1996 was $69,000
compared to $33,000 in the comparable period of 1995. Of this $36,000
increase, $26,000 is from investment center income. The investment center
began operation in the second quarter of 1995. The remaining variance is from
increases in safe deposit box rentals, credit card fees, and commissions on
loan insurance.
Total other operating expenses increased approximately $64,000 to $1,043,000
from $979,000. The increased personnel costs were primarily the result of
normal annual increases. The increase in occupancy expenses are due to
increased depreciation and increased real estate taxes as a consequence of the
building addition completed in the second quarter of 1995. The increase in
equipment expenses was depreciation and taxes on the equipment in the building
addition. Increases in other operating costs were sufficient to offset the
savings from the reduced FDIC insurance premium thus resulting in an $8,500
increase for the period.
Income taxes increased to $179,000 from $154,000. This increase was due to a
larger amount of income before taxes and a higher effective tax rate, 32.5%
and 31.5%, 1996 and 1995 respectively.
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BALANCE SHEET ANALYSIS
This analysis of the Company's financial position is comparing March 31, 1996
to December 31, 1995. Total assets were $148.8 million compared to $155.5
million, March 31, 1996 and December 31, 1995, respectively. This represents
a decrease of approximately 4.3%.
Total loans were $93.3 million on March 31, 1996 and $93.6 million on December
31, 1995, a decrease of $.3 million. Of the three major categories of loans,
only commercial loans increased during this period of time. Real estate loans
were $54.1 million compared to $56.5 million, March 31, 1996 and December 31,
1995 respectively. Consumer loans decreased to $17.4 million at March 31,
1996 compared to $17.6 million at December 31, 1995. Commercial loans
increased to $21.2 million at March 31, 1996 compared to $20.3 million at
December 31, 1995. Commercial paper was $1.5 million at March 31, 1996
compared to $0 at the year end. There has been some indication that loan demand
slowed during the first quarter. If the predictions of slower economic
growth during the rest of 1996 are correct, growth of the loan portfolio
should also be slower.
Allowance for loan losses was $939,000 at March 31, 1996 compared to $929,000
at December 31, 1995. As of March 31, 1996 non-performing loans totaled
$450,000 compared to $578,000 at December 31, 1995. Management believes that
the allowance is adequate at this time.
Bank premises and equipment was $3.6 million at March 31, 1996 compared to
$3.7 million at December 31, 1995. This decrease was primarily the
depreciation of buildings and equipment with no major purchases.
The reduction of deposits discussed below were funded in part by a reduction
in fed funds sold and other short term investments. As of March 31, 1996
fed funds sold and other short-term investments were $3.8 million compared to
$11.7 million at December 31, 1995. Securities available for sale were $14.7
million at March 31, 1996 compared to $11.6 million at December 31, 1995.
Securities held to maturity were $26.1 million compared to $25.8 million,
March 31, 1996 and December 31, 1995, respectively.
Total deposits were $110.0 million at March 31, 1996 compared to $119.7
million at December 31, 1995. Non-interest bearing deposits were approximately
$9.8 million lower on March 31, 1996 than December 31, 1995, $12.7 million and
$22.5 million, respectively. Several commercial customers have historically
increased their demand deposit balances at year end. As a result, subsequent
reporting dates typically have balances lower than year-end. Interest bearing
deposits were up slightly, $97.3 million at March 31, 1996 and $97.2 million at
December 31, 1995. Competition for deposit dollars continues to be intense.
As a result, dramatic growth of deposits is not anticipated during the balance
of 1996.
Other borrowings, the main component of which are advances from the FHLB, was
$3.6 million at March 31, 1996 compared to $3.6 million at December 31, 1995.
Approximately $1 million of FHLB advances will be repaid during the second
quarter of 1996. The advances were used to fund some of the increase in loans
and to also provide liquidity.
The company continues to maintain an excellent capital position regardless of
the measurement used. The following table shows four different measurements
as of March 31, 1996 and December 31, 1995, and the regulatory requirement, if
any. Management does not anticipate the need for additional capital resources
in the near future.
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March 31, December 31, Regulatory
1996 1995 Requirements
---- ---- ------------
Leverage capital ratio 14.76% 14.10% N/A
Core capital as a percent
of assets 14.27% 13.51% 5.50%
Core capital as a percent
of risk-based assets 24.34% 22.88% N/A
Total capital as a percent
of risk-based assets 25.40% 23.89% 8.00%
Liquidity as it relates to the subsidiary bank is a measure of its ability to
fund loans and withdrawals of deposits in a cost-effective manner. The Bank's
principal sources of funds are deposits, scheduled amortization and prepayment
of loan principal, maturities of investment securities, income from operations,
and short term borrowings. Additional sources include purchasing fed
funds, sale of loans, borrowing from both the Federal Reserve Bank and Federal
Home Loan Bank capital loans, and dividends paid by Nevahawk to the Bank.
Under present law, accumulated earnings could be paid as dividends without
incurring a tax liability.
The liquidity needs of the Company consist of payment of dividends to its
shareholders and a limited amount of expenses. The sources of funds to provide
this liquidity are income from investments, maturities of investments, cash
balances and dividends from the Bank. Certain restrictions are imposed upon
the Bank which could limit its ability to pay dividends if it did not have net
earnings in the future. The Company maintains adequate liquidity to pay its
expenses.
Off-Balance sheet items consist of credit card lines of credit, mortgage
commitments, letters of credit and other commitments totaling approximately
$7,810,000 as of March 31, 1996. This compares to $7,935,000 at December 31,
1995. The bank has historically funded the off-balance sheet commitments with
its primary sources of funds, and management anticipates that this will
continue.
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PART II
OTHER INFORMATION
ITEM 6. A) EXHIBITS
See Exhibit Index following the signature page in this
report, which is incorporated herein by this reference.
ITEM 6. B) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the first
quarter of 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Blackhawk Bancorp, Inc.
-----------------------------
(Registrant)
Date: May 3, 1996 /s/ Dennis M. Conerton
-----------------------------
Dennis M. Conerton
President and
Chief Executive Officer
Date: May 3, 1996 /s/ Jesse L. Calkins
-----------------------------
Jesse L. Calkins
Senior Vice President
(Chief Financial and
Accounting Officer)
16
17
BLACKHAWK BANCORP, INC.
INDEX TO EXHIBITS
Incorporated Filed
Exhibit Herein By Here- Page
Number Description Reference To: with No.
- - ----------------------------------------------------------------------
4.1 Amended and Exhibit 3.1 to
restated Articles Amendment No. 1 to
of Incorporation Registrant's
of the Registrant Registration
Statement on Form
S-1 (Reg. No.
33-32351)
4.2 By-laws of Regis- Exhibit 3.2 to
trant as amended Amendment No. 1 to
Registrant's
Registration
Statement on Form
S-1 (Reg. No.
33-32351)
4.3 Plan of Conversion Exhibit 1.2 to
Beloit Savings Amendment No. 1 to
Bank as amended Registrant's
Registration
Statement on Form
S-1 (Reg. No.
33-32351)
11.0 Statement re
computation
of per share
earnings X 18
27.0 Financial Data Schedule X
17