<PAGE>   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, 1999

                                       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, 1999
                  -----------------------              ------------------

                      $.01 par value                     2,315,373 shares










<PAGE>   2



                                      INDEX

                         PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>


                                                                      Page
                                                                      ----

ITEM 1.  FINANCIAL STATEMENTS
<S>                                                                 <C>
         Consolidated Condensed Balance Sheets as of
           March 31, 1999 and December 31, 1998                         3

         Consolidated Condensed Statements of Income for the
           three months ended March 31, 1999 and 1998                   4

         Consolidated Condensed Statements of Shareholders'
           Equity as of March 31, 1999 and December 31, 1998            5

         Consolidated Condensed Statements of Cash Flows for the
           three months ended March 31, 1999 and 1998                 6-7

         Notes to Consolidated Condensed Financial Statements         8-9


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS                    10-14


                             PART II - OTHER INFORMATION


ITEM 6.  A) EXHIBITS                                                   15

         B) REPORTS ON FORM 8-K                                        15

SIGNATURES                                                             16
</TABLE>












<PAGE>   3





                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

          ASSETS                                          MARCH 31,             DECEMBER 31,
                                                            1999                   1998
                                                        ------------           -----------
<S>                                                    <C>                    <C>          
Cash and cash equivalents                              $  20,483,000          $  15,973,000
Federal funds sold and other short-term
  investments                                              8,325,000             15,335,000
Securities available for sale                             45,601,000             38,475,000
Securities held to maturity                               17,927,000             21,896,000
Loans, net of allowance for loan losses of
  $1,952,000 and $1,915,000                              169,680,000            176,027,000
Bank premises and equipment, net                           7,411,000              7,483,000
Accrued interest receivable                                1,747,000              1,908,000
Other intangible assets                                    8,069,000              8,152,000
Other assets                                               1,692,000              1,857,000
                                                       -------------          -------------
    Total Assets                                       $ 282,826,000            291,468,000
                                                       =============          =============

          LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
  Deposits:
    Non-interest bearing                               $  23,975,000          $  33,110,000
    Interest bearing                                     205,438,000            208,285,000
                                                       -------------          -------------
          Total deposits                                 229,413,000            241,395,000
                                                       -------------          -------------
  Borrowed Funds:
    Short-term borrowings                                  9,306,000              4,576,000
    Other borrowings                                      16,199,000             17,123,000
Accrued interest payable                                     749,000              1,046,000
Other liabilities                                          2,920,000              2,928,000
                                                       -------------          -------------
      Total Liabilities                                  258,587,000            267,068,000
                                                       -------------          -------------

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, 2,291,264 and
    2,285,864 shares issued and outstanding                   23,000                 23,000
  Additional paid-in capital                               7,122,000              7,099,000
  Employee stock options earned                              130,000                130,000
  Retained Earnings                                       17,009,000             16,975,000
  Treasury Stock                                            (120,000)              (120,000)
  FASB 115 Adjustment                                         75,000                293,000
                                                       -------------          -------------

    Total Shareholders' Equity                            24,239,000             24,400,000
                                                       -------------          -------------
    Total Liabilities and
Shareholders' Equity                                   $ 282,826,000          $ 291,468,000
                                                       =============          =============
</TABLE>




       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       3





<PAGE>   4




                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED
                                                              MARCH 31
                                                    1999                1998
                                                 ------------         --------
INTEREST INCOME:
<S>                                               <C>                <C>       
  Interest and fees on loans                      $3,848,000         $3,179,000
  Interest on deposits with other banks              110,000             18,000
  Interest on investment securities:
    Taxable                                          684,000            550,000
    Exempt from federal income taxes                 101,000             47,000
  Interest on federal funds sold
    and other short-term investments                 164,000             72,000
                                                  ----------         ----------
          Total Interest Income                    4,907,000          3,866,000
                                                  ----------         ----------

INTEREST EXPENSE:
  Interest on deposits                             2,282,000          1,606,000

  Interest on short-term borrowings                   90,000            120,000
  Interest on other borrowings                       244,000            104,000
                                                  ----------         ----------
          Total Interest Expense                   2,626,000          1,830,000
                                                  ----------         ----------

  Net Interest Income                              2,291,000          2,036,000
  Provision for loan losses (Note 3)                 108,000             56,000

  Net Interest Income After
          Provision For Loan Losses                2,183,000          1,980,000
                                                  ----------         ----------

OTHER OPERATING INCOME:
  Gain on sale of loans                              184,000             83,000
  Trust department income                             60,000             62,000
  Service fees                                       459,000            232,000
  Other income                                        53,000            134,000
                                                  ----------         ----------
          Total Other Operating Income               756,000            511,000
                                                  ----------         ----------

OTHER OPERATING EXPENSES:
  Salaries and employee benefits                   1,241,000            919,000
  Occupancy expense of bank premises, net            175,000            146,000
  Furniture and equipment                            189,000            101,000
  Data processing                                    167,000            141,000
  Intangible amortization                            145,000             47,000
  Other operating expenses                           518,000            396,000
                                                  ----------         ----------
          Total Other Operating Expenses           2,435,000          1,750,000
                                                  ----------         ----------

  Income Before Income Taxes                         504,000            741,000

  Provision for income taxes                         193,000            252,000
                                                  ----------         ----------

  Net Income                                      $  311,000         $  489,000
                                                  ==========         ==========

  Earnings Per Share                              $      .14         $      .21
                                                  ==========         ==========

  Fully diluted earnings per share                $      .13         $      .20
                                                  ==========         ==========

  Dividends Per Share                             $      .12         $      .10
                                                  ==========         ==========
</TABLE>



       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       4





<PAGE>   5


                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
            CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                     THREE MONTHS        TWELVE MONTHS
                                                       ENDED                  ENDED
                                                      MARCH 31,           DECEMBER 31,
                                                        1999                  1998
                                                     ----------            ---------
<S>                                                <C>                   <C>         
Common Stock:
  Balance at beginning of period                   $     23,000          $     23,000
  Stock options exercised                                    --                    --
                                                   ------------          ------------
  Balance at end of period                               23,000                23,000

Additional Paid-in Capital:
  Balance at beginning of period                      7,099,000             7,002,000
  Stock options exercised                                23,000                97,000
  Balance at end of period                            7,122,000             7,099,000
                                                   ------------          ------------

Employee Stock Options Earned:
  Balance at beginning of period                        130,000               131,000
  Unearned employee compensation                             --                (1,000)
                                                   ------------          ------------
  Balance at end of period                              130,000               130,000
                                                   ------------          ------------

Retained Earnings:
  Balance at beginning of period                     16,975,000            16,045,000
  Net income                                            311,000             2,010,000
  Dividends declared on common stock                   (277,000)           (1,080,000)
                                                   ------------          ------------
  Balance at end of period                           17,009,000            16,975,000
                                                   ------------          ------------

Treasury Stock, at cost:
  Balance at beginning of period                       (120,000)             (104,000)
  Purchase                                                   --               (16,000)
                                                   ------------          ------------
  Balance at end of period                             (120,000)             (120,000)
                                                   ------------          ------------

Accumulated other comprehensive income:
  Balance at beginning of period                        293,000                38,000
  Other comprehensive income, net of taxes             (218,000)              255,000
                                                   ------------          ------------
  Balance at end of period                               75,000               293,000
                                                   ------------          ------------



Total Shareholders' Equity                         $ 24,239,000          $ 24,400,000
                                                   ============          ============
</TABLE>




       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       5


<PAGE>   6



                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                           1999                  1998
                                                        -----------          ------------
<S>                                                   <C>                   <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                          $    311,000          $    489,000

  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
    Compensatory options recognized                             --                 9,000
    Provision for loan losses                              108,000                56,000
    Provision for depreciation and
      Amortization                                         307,000               161,000
    Amortization of premiums (accretion
     Discounts) on investment securities, net               38,000               (33,000)
   (Gain) on sale of loans                                (184,000)              (83,000)
    Loans originated for sale                          (20,077,000)           (4,633,000)
    Proceeds from sale of loans                         22,732,000             4,128,000
    Change in assets and liabilities:
      (Increase) decrease in other assets                  165,000            (1,143,000)
    (Increase) decrease in accrued
        interest receivable                                161,000               730,000
      Increase (decrease) in accrued
        interest payable                                  (297,000)             (138,000)
      Increase (decrease) in other
        Liabilities                                         (8,000)              593,000
                                                      ------------          ------------
           Net cash provided by operating
             Activities                                  3,256,000               136,000

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturity of available-
    for-sale securities                                  4,643,000               547,000
  Purchase of available-for-sale securities            (12,022,000)           (7,087,000)
  Proceeds from maturity of investment
    Securities                                           6,270,000             3,210,000
  Purchase of investment securities                     (2,304,000)             (530,000)
  Decrease in federal funds sold and
    other short-term investments, net                    7,010,000             5,061,000
  Loans originated, net of
    principal collected                                  6,239,000               860,000
  Purchase of bank premises and equipment                 (152,000)              (97,000)
                                                      ------------          ------------
    Net cash provided by (used in)
      investing activities                               9,684,000             1,964,000
                                                      ------------          ------------
</TABLE>



       See Notes to Unaudited Consolidated Condensed Financial Statements.


                                       6





<PAGE>   7


                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                    THREE MONTHS ENDED
                                                                       MARCH  31
                                                                1999                  1998
                                                             -----------           -----------
<S>                                                        <C>                   <C>         
CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised                                  $     23,000          $     28,000
  Net (decrease) in deposits                                (11,982,000)             (433,000)
  Net increase (decrease) in borrowed
    Funds                                                     3,806,000            (1,121,000)
  Cash dividends paid                                          (277,000)             (252,000)
  Purchase of common stock for Treasury                              --               (16,000)
        Net cash (used in)
          financing activities                               (8,430,000)           (1,794,000)
                                                           ------------          ------------
  Net increase (decrease) in cash and
    cash equivalents                                          4,510,000               306,000


CASH AND CASH EQUIVALENTS:
  Beginning                                                  15,973,000             8,680,000
                                                           ------------          ------------

  Ending                                                   $ 20,483,000          $  8,986,000
                                                           ============          ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash payments for:
    Interest                                               $  2,913,000          $  1,968,000
    Income taxes                                           $    274,000          $    228,000

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING
  ACTIVITIES:
  Other assets acquired in settlement of
    loans                                                  $    185,000          $     74,000
</TABLE>








      See Notes to Unaudited Consolidated Condensed Financial Statements.


                                       7


<PAGE>   8


                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 March 31, 1999
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, 1999 and December 31,
          1998, the results of operations for the three months ended March 31,
          1999 and 1998, and cash flows for the three months ended March 31,
          1999 and 1998.

          The results of operations for the three months ended March 31, 1999
          and 1998 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:

<TABLE>
<CAPTION>


                                             MARCH 31                   DECEMBER 31
                                   ----------------------------         -----------

                                     1999                1998                1998
                                   ---------           --------            -------

<S>                               <C>                <C>                <C>       
Impaired loans                    $  957,000         $  526,000         $1,479,000
Non-accruing loans                 1,014,000            772,000            857,000
Past due 90 days or more
   and still accruing                598,000            402,000            240,000
                                  ----------         ----------         ----------

Total non-performing loan         $2,569,000         $1,700,000         $2,576,000
                                  ==========         ==========         ==========
</TABLE>




                                       8

<PAGE>   9


                     BLACKHAWK BANCORP, INC. AND SUBSIDIARY
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (CONTINUED)
Note 3:  Allowance For Loan Losses

         A summary of transactions in the allowance for loan losses is as
         follows:
<TABLE>
<CAPTION>

                                               THREE MONTHS ENDED
                                                  MARCH 31
                                                  --------

                                               1998         1998
                                               ----         ----
<S>                                        <C>           <C>       
         Balance at beginning of
           period                          $1,915,000    $1,523,000
         Provision charged to expense         108,000        47,000
         Loans charged off                     86,000       106,000
         Recoveries                            15,000         5,000
                                            ---------     ---------
         Balance at end of period          $1,952,000    $1,469.000
                                           ==========    ==========
</TABLE>


Note 4.   Future Accounting Change

          In June 1998, the Financial Accounting Standards Board (FASB) issued
          Statement of Financial Accounting Standards (SFAS) No. 133,
          "Accounting for Derivative Instruments and Hedging Activities." This
          statement establishes accounting and reporting standards for
          derivative instruments and for hedging activities. This statement
          requires an entity to recognize all derivatives as either assets or
          liabilities in the balance sheet and measure those instruments at fair
          value. The accounting for changes in the fair value of a derivative
          depends on the intended use of the derivative and the resulting
          designation. This statement is effective for fiscal years beginning
          after June 15, 1999. Management, at this time, cannot determine the
          effect adoption of this statement may have on the consolidated
          financial statements of the Company as the accounting for derivatives
          is dependent on the amount and nature of derivatives in place at the
          time of adoption.


                                       9




<PAGE>   10





      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, 1999 and December 31,
1998 and the consolidated condensed statements of income for the three months
ended March 31, 1999 and 1998. 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, 1999 was approximately $311,000
compared to $489,000 for the similar period in 1998. 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, 1999, interest income was $4,907,000
compared to $3,866,000 for the same period in 1998. This increase of
approximately 26.9%, $1,041,000, was primarily the result of increased volume
attributable to the acquisition of First Financial Bancorp in September, 1998.

Interest and fees on loans increased to $3,848,000 in the three months ended
March 31, 1999 compared to $3,179,000 in same period of 1998. Interest from real
estate loans, the largest part of loan interest, also contributed the most the
increase. This was the result of increased volumes, being partially offset by
lower yields. A substantial portion of the real estate portfolio earns interest
at a variable rate, therefore has been affected by the lower overall rate
environment. Commercial loan interest income increased almost entirely to
additional volume. Income from consumer loans, including home equity, credit
cards, and installment loans, increased due to higher volumes.


Investment income on taxable securities increased nearly $134,000 in the first
three months of 1999 compared to 1998, $684,000 and $550,000 respectively. This
increase was the result of increased volumes partially offset by lower yields.
The volume increase was again the result of the First Financial transaction.
Income from tax exempt securities increased by 114.9%, $101,000 in 1999 compared
to $47,000 in the same period in 1998. This was the result of a shift from U.S.
Treasury and Agency securities to municipal securities. This shift was to take
advantage of relatively good spreads on municipal securities compared to
treasury and agency bonds.

Interest from fed funds sold and other short-term investments increased
substantially to $164,000 in 1999 from $72,000 in 1998. The increased volume in
fed funds sold, an average balance of $15.8 million in 1999 compared to $7.1
million in 1998, was the primary reason for the increased income in this
category. This excess liquidity was the result of real estate loan payoffs and
security maturities. Late in the first quarter and early second quarter of 1999,
this excess liquidity has been invested in either longer-term securities or the
loan portfolio.

Interest paid on deposits increased to $2,282,000 in the three months ended
March 31, 1999. This was an increase of 42.1%, or $676,000 when compared to the
same period in 1998. Average deposits increased due to the First Financial
acquisition and growth in non-interest bearing demand accounts. The average rate
paid on deposits decreased when comparing 1999 to 1998, but not in the same




                                       10
<PAGE>   11


magnitude as earning assets. The actions of the Federal Reserve will continue to
affect the level and direction of interest rates in the future.

Interest on short-term borrowings decreased to $90,000 from $120,000 in 1999, or
a decrease of $30,000 or 25.0%. Both repurchase agreements and fed funds
purchased had a lower average balance in 1999 compared to 1998. The interest
rates paid also decreased in 1999 compared to 1998.

Other borrowings are represented by Federal Home Loan Bank ("FHLB") advances and
borrowings with a third-party bank in part to finance the First Financial
acquisition. Average borrowings from the FHLB increased to $8.7 million from
$6.7 million in 1998. The average rate on the borrowings decreased because of
favorable advance rates taken in 1998 and the addition of First Financial
advances, which had a lower relative rate. As a result of these items the
interest cost of the other borrowings category was approximately $140,000 more
in 1999 than in 1998.

The provision for loan loss was $108,000 for the three months in 1999 compared
to $56,000 in 1998. It is management's opinion that this amount is an adequate
provision.

Total other operating income increased to $756,000 from $511,000 for the three
months ended March 31, 1999 and 1998 respectively. Gain on sale of loans in the
first quarter of 1999 was $184,000 compared to $83,000 in 1998. As fixed
mortgage rates remain relatively low, the activity in this area continues to be
robust. All fixed rate loans originated are sold. Service fees increased to
nearly $459,000 in 1999 from $232,000 in 1998. 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,
1997 was $53,000 compared to $134,000 in the comparable period of 1996.

Total other operating expenses increased approximately $685,000 to $2,435,000
from $1,750,000. The increases in other operating expense are mostly
attributable to the First Financial acquisition. The Bank also opened a new
branch in the Roscoe, Illinois market, late in the first quarter of 1998, which
will affect other operating expenses, until the branch reaches the break-even
point. Currently, this location is closer to the break-even point, then
originally planned.

Income taxes decreased to $193,000 from $252,000. This decrease was due to a
lower amount of income before taxes and a higher effective tax rate, 38.3% and
34.0%, 1999 and 1998 respectively. This higher effective rate is primarily the
result of higher non-deductible amortization expenses, attributable to the
purchase method of accounting the Company has used for its acquisitions.


                             BALANCE SHEET ANALYSIS

This analysis of the Company's financial position is comparing March 31, 1999 to
December 31, 1998. Total assets were $282.8 million compared to $291.5 million,
March 31, 1999 and December 31, 1998, respectively. This represents an decrease
of approximately 3.0%.

Net loans were $169.7 million on March 31, 1999 and $176.0 million on December
31, 1998, an decrease of $6.3 million or 3.6%. Real estate loans experienced the
largest decline as the consumer continues to take advantage of low fixed
mortgage rates. These fixed rate mortgages generally have a longer maturity
date, therefore the Company sells these mortgages into the secondary loan
market. Commercial and consumer loans have increased since December 31, 1998.
During the second quarter of 1999, loan demand, especially for commercial
mortgages, has increased. Loan demand will be greatly affected by future changes
in overall interest rates, as customers have become more price sensitive.

Allowance for loan losses was $1.95 million at March 31, 1999 compared to $1.92
million at December 31, 1998. As of March 31, 1999, non-performing loans totaled
$2.6 million compared to $2.6 million 




                                       11

<PAGE>   12

at December 31, 1998. Management believes that the allowance is adequate at this
time.

Bank premises and equipment was $7.4 million at March 31, 1999 compared to $7.5
million at December 31, 1998. 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, 1999 fed funds
sold and other short-term investments were $8.3 million compared to $15.3
million at December 31, 1998. Securities available for sale were $45.6 million
at March 31, 1999 compared to $38.5 million at December 31, 1998. Securities
held to maturity were $17.9 million compared to $21.9 million, March 31, 1999
and December 31, 1998, respectively.

Total deposits were $229.4 million at March 31, 1999 compared to $241.4 million
at December 31, 1998. Non-interest bearing deposits were approximately $9.1
million lower on March 31, 1999 than December 31, 1998, $24.0 million and $33.1
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 down slightly, $205.4 million at March 31, 1999 and $208.3 million at
December 31, 1998. Competition for deposit dollars continues to be intense. As a
result, dramatic growth of interest-bearing deposits is not anticipated during
the balance of 1999.

Other borrowings, the main component of which is long-term borrowings incurred
in part to complete the First Financial acquisition, was $16.2 million at March
31, 1999 compared to $17.1 million at December 31, 1998. Also part of other
borrowings are advances from the FHLB. The advances were used to fund some loans
in the past and to also provide liquidity. The use of FHLB advances in the
future will depend on the Bank's need for funds and the rates at which they may
be obtained.

The company continues to maintain an excellent capital position regardless of
the measurement used. The following table shows three different measurements as
of March 31, 1999 and December 31, 1998, and the regulatory requirement, if any.
Management does not anticipate the need for additional capital resources in the
near future.
<TABLE>
<CAPTION>


                                              MARCH 31,              DECEMBER 31,            REGULATORY
                                               1999                    1998
                                               ----                    ----
     REQUIREMENTS
     ------------
<S>                                            <C>                     <C>                       <C>  
Leverage capital ratio                         6.24%                   6.00%                     3.00%

Tier I capital as a percent
  of risk-based assets                         6.23%                   8.36%                     4.00%

Total capital as a percent
  of risk-based assets                         9.46%                   9.31%                     8.00%
</TABLE>


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, 


                                       12
<PAGE>   13

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 primarily consist of payment of dividends to
its shareholders and a limited amount of expenses. The sources of funds to
provide this liquidity are cash balances, dividends from the Bank, and a line of
credit with a third-party 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
$21.6 million as of March 31, 1999. This compares to $33.7 million at December
31, 1998. The bank historically funds off-balance sheet commitments with its
primary sources of funds, and management anticipates that this will continue.

Year 2000 Issues

Year 2000 ("Y2K") issues affect the Company to the extent that it operates in an
industry which heavily relies upon information technology systems and has
material relationships with third parties, both vendors and customers.
Therefore, the Company has undertaken a four-phase process to determine to what
extent the Company is vulnerable to Y2K issues. The four phases set-forth by the
Company are awareness by major area, assessment of Y2K compliance, system
renovation (if necessary) and validation of Y2K preparedness. The Company's Y2K
progress, by major area, is set-forth in the table that follows.



    System            Awareness   Assessment   Renovation    Validation
    General
    Ledger            Complete    Complete     Complete     Complete
    Loan
    System            Complete    Complete     Complete     Complete
    Deposit
    System            Complete    Complete     Complete     Complete
    Item
    Capture           Complete    Complete     Complete     Complete
    Hardware          Complete    Complete     In Process   June '99
    Individual
    Loan
    Customers         Complete    Complete     Basis        Ongoing

The Company has approved a budget for $600,000 for the cost of hardware and
software remediation. A majority of these costs were planned expenditures to
upgrade existing hardware and software regardless of Y2K. Most of these funds
have been expended and will be amortized over the useful life of the asset.

As is shown in the table, the Company has completed a majority of the validation
phase of several critical areas. A Y2K contingency plan has been formulated. The
validation processes completed indicate that mission critical systems are Y2K
compliant. If the results of the validation processes not yet completed lead
management to believe otherwise, then a contingency plan, with a timetable will
be implemented for those additional areas.




                                       13

<PAGE>   14

Because of the potential negative effect of Y2K non-compliance by some of the
Bank customers, the Bank has implemented an external Y2K awareness campaign that
provides them with information that will assist them in becoming compliant.
Requests have been sent to larger commercial customers to provide the bank with
information as to their status of compliance.

Private Securities Litigation Reform Act of 1995

When used in this report, 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, changes in interest rates, levels of consumer bankruptcies,
customer loan and deposit preferences, and other general economic conditions


                                       14

<PAGE>   15


                               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 1999.


                                       15

<PAGE>   16


                                   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 14, 1999                            /s/Dennis M. Conerton
                                               ---------------------
                                               Dennis M. Conerton
                                               President and
                                               Chief Executive Officer



Date:  May 14, 1999                            /s/ Jesse L. Calkins
                                               --------------------
                                               Jesse L. Calkins
                                               Senior Vice President
                                               (Chief Financial and
                                                Accounting Officer)




                                       16
<PAGE>   17


                             BLACKHAWK BANCORP, INC.

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>


                                   Incorporated             Filed
Exhibit                            Herein By                Here-     Page
Number    Description              Reference To:            with      No.
-------------------------------------------------------------------------

<S>       <C>                       <C>   
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)
</TABLE>





                                       17