Blackhawk Bancorp Redeems TARP Shares

Business Wire

BELOIT, Wis.--(BUSINESS WIRE)--

Blackhawk Bancorp, Inc. (BHWB) announced that it has redeemed all 10,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series B and all 500 shares of its Fixed rate Cumulative Perpetual Preferred Stock, Series C (collectively referred to as “TARP Preferred”). The securities, which were initially issued to the U.S. Treasury under the Troubled Asset Relief Program (“TARP”) Capital Purchase Program, were redeemed at the stated liquidation value of $1,000 per share, or $10.5 million, plus accrued dividends on April 25, 2014.

The shares, which were issued in March, 2009 were redeemed from private investors that had purchased the securities from the U.S. Treasury in a Dutch auction in October of 2012. The funds for the redemption came from existing financial resources and the proceeds of a $9 million senior credit facility. “The TARP Capital Purchase Program, which was designed to provide capital to healthy financial institutions to promote confidence and stabilization in the economy, served its purpose for Blackhawk,” said Rick Bastian, the company’s president & CEO. “The TARP Preferred provided a capital cushion giving us the confidence to continue lending to businesses and individuals in the Stateline area when they and the economy needed it the most. At that time, there were virtually no other capital options available.” he added.

The annualized cost of the TARP Preferred for the first five years was 6.45%, including the cost of warrants that were exercised; however the dividend was scheduled to increase to 9.0% next month. The redemption of these securities will not only avoid the increased cost that the company would have incurred, it will improve earnings available to common shareholders as the after tax cost of the replacement funding is substantially less than the 6.45% annualized cost incurred the last five years.

About Blackhawk Bancorp

Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank, which operates eight banking centers in south central Wisconsin and north central Illinois, along the I-90 corridor from Belvidere, Illinois to Beloit, Wisconsin. Blackhawk’s locations serve individuals and small businesses, primarily with fewer than 200 employees. The company offers a variety of value-added consultative services to small businesses and their employees related to its banking products such as health savings accounts and investment management.

Forward-Looking Statements

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.

Further information is available on the Company’s website at www.blackhawkbank.com.

Contact:
For further information:
Blackhawk Bancorp, Inc.
R. Richard Bastian, III, President & CEO
rbastian@blackhawkbank.com
or
Todd J. James, EVP & CFO
tjames@blackhawkbank.com
Phone: (608) 364-8911

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