Finward Bancorp

10/29/2024 | Press release | Distributed by Public on 10/29/2024 15:30

FINWARD BANCORP ANNOUNCES EARNINGS FOR THE QUARTER AND NINE MONTHS ENDED Form 8 K

FINWARD BANCORP

ANNOUNCES EARNINGS FOR THE QUARTER AND NINE MONTHS ENDED

SEPTEMBER 30, 2024

Munster, Indiana - Finward Bancorp (Nasdaq: FNWD) (the "Bancorp"), the holding company for Peoples Bank (the "Bank"), today announced that net income available to common stockholders was $10.0 million, or $2.35 per diluted share, for the nine months ended September 30, 2024, as compared to $6.9 million, or $1.60 per diluted share, for the corresponding prior year period. For the quarter ended September 30, 2024, the Bancorp's net income totaled $606 thousand, or $0.14 per diluted share, as compared to $143 thousand, or $0.03 per diluted share, for the three months ended June 30, 2024, and as compared to $2.2 million, or $0.51 per diluted share, for the three months ended September 30, 2023. Selected performance metrics are as follows for the periods presented:

Performance Ratios

Quarter ended,

Nine months ended,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2024

2024

2024

2023

2023

2024

2023

Return on equity

1.60 % 0.39 % 24.97 % 4.92 % 6.55 % 4.50 % 6.68 %

Return on assets

0.12 % 0.03 % 1.77 % 0.29 % 0.42 % 0.64 % 0.44 %

Tax adjusted net interest margin

2.67 % 2.67 % 2.57 % 2.80 % 2.87 % 2.64 % 3.04 %

Noninterest income / average assets

0.55 % 0.50 % 2.57 % 0.53 % 0.46 % 1.21 % 0.51 %

Noninterest expense / average assets

2.80 % 2.79 % 2.86 % 2.60 % 2.59 % 2.82 % 2.67 %

Efficiency ratio

97.32 % 98.56 % 59.41 % 87.49 % 86.88 % 80.16 % 83.68 %

"The Bank's position continued to improve in the third quarter while we prepared for the Fed to begin their easing cycle. Margin and expenses were stable, with minimal benefit from the Fed's late-quarter rate cut. We believe the Bank is poised to see margin expansion as lower rates work their way through the liability side of the balance sheet," said Benjamin Bochnowski, chief executive officer. "We remain vigilant on credit, and we continued to build capital during the quarter. We also fully exited the Bank Term Funding Program well in advance of its March 2025 maturity."

Highlights of the current period include:

●

Net Interest Margin - The net interest margin was 2.53% for both the three months ended September 30, 2024 and the three months ended June 30, 2024. The tax-adjusted net interest margin (a non-GAAP measure) was 2.67% for both the three months ended September 30, 2024 and the three months ended June 30, 2024. The net interest margin for the nine months ended September 30, 2024, was 2.50%, compared to 2.89% for the nine months ended September 30, 2023. The tax-adjusted net interest margin (a non-GAAP measure) for the nine months ended September 30, 2024, was 2.64%, compared to 3.04% for the nine months ended September 30, 2023. See Table 1 at the end of this press release for a reconciliation of the tax-adjusted net interest margin to the GAAP net interest margin.

●

Funding - As of September 30, 2024, deposits totaled $1.7 billion, a decrease of $7.9 million or 0.5%, compared to June 30, 2024. Core deposits totaled $1.2 billion at both September 30, 2024 and June 30, 2024. Core deposits include checking, savings, and money market accounts and represented 67.9% of the Bancorp's total deposits at September 30, 2024. As of September 30, 2024, balances for certificates of deposit totaled $562.2 million, compared to $541.2 million on June 30, 2024, an increase of $21.0 million or 3.9%. The decrease in total portfolio deposits is primarily related to cyclical flows and continued adjustments to deposit pricing. In addition, as of September 30, 2024, borrowings and repurchase agreements totaled $128.0 million, an increase of $65 thousand or 0.2%, compared to June 30, 2024. The increase in short-term borrowings was the result of cyclical inflows and outflows of interest-earning assets and interest-bearing liabilities. During the quarter, the Bancorp terminated its involvement in the Bank Term Funding Program (the "BTFP") and paid off its outstanding balance of $60 million, in full, through a utilization of excess liquidity and FHLB advances. As of September 30, 2024, 72% of our deposits are fully FDIC insured, and another 7% are further backed by the Indiana Public Deposit Insurance Fund. The Bancorp's liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources. As of September 30, 2024, the Bancorp had available liquidity of $686 million including borrowing capacity from the FHLB and Federal Reserve facilities.

●

Securities Portfolio - Securities available for sale balances increased by $10.4 million to $350.0 million as of September 30, 2024, compared to $339.6 million as of June 30, 2024. The increase in securities available for sale was due to a combination of portfolio runoff and a decrease of accumulated other comprehensive loss ("AOCL"). AOCL was $48.2 million as of September 30, 2024, compared to $58.9 million on June 30, 2024, an improvement of $10.7 million, or 18.2%. The yield on the securities portfolio decreased to 2.37% for the three months ended September 30, 2024, down from 2.43% for the three months ended June 30, 2024. Management did not execute any securities sale transactions during the quarter but will continue to monitor the securities portfolio for additional restructuring opportunities.

●

Lending - The Bank's aggregate loan portfolio totaled $1.5 billion on both September 30, 2024 and June 30, 2024. During the three months ended September 30, 2024, the Bank originated $70.4 million in new commercial loans, compared to $48.7 million during the three months ended June 30, 2024 and $73.2 million during the three months ended September 30, 2023. The loan portfolio represents 78.7% of earning assets and is comprised of 62.6% commercial-related credits. At September 30, 2024, the Bancorp's portfolio loan balances in commercial real estate owner occupied properties totaled $236.9 million or 15.7% of total loan balances and commercial real estate non-owner occupied properties totaled $302.8 million or 20.1% of total loan balances. Of the $302.8 million in commercial real estate non-owner occupied properties balances, loans collateralized by office buildings represented $42.4 million or 2.8% of total loan balances.

●

Gain on Sale of Loans - Gains from the sale of loans for the nine months ended September 30, 2024 totaled $810 thousand, an increase from $729 thousand for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Bank originated $22.5 million in new fixed rate mortgage loans for sale, compared to $30.4 million during the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Bank originated $17.6 million in new 1-4 family loans retained in its portfolio, compared to $31.8 million during the nine months ended September 30, 2023. Total 1-4 family originations for the quarter ended September 30, 2024, totaled $20.1 million, an increase of $1.3 million compared to $18.8 million for the quarter ended June 30, 2024. These retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 years or less. The Bank continues to sell longer-duration fixed rate mortgages into the secondary market.

●

Asset Quality - At September 30, 2024, non-performing loans totaled $13.8 million, compared to $11.4 million at June 30, 2024, an increase of $2.4 million or 21.4%. The Bank's ratio of non-performing loans to total loans was 0.92% at September 30, 2024, compared to 0.75% at June 30, 2024. The Bank's ratio of non-performing assets to total assets increased from 0.61% at June 30, 2024 to 0.73% at September 30, 2024. Management maintains a vigilant oversight of nonperforming loans through proactive relationship management. The allowance for credit losses (ACL) totaled $18.5 million at September 30, 2024, compared to $18.3 million at June 30, 2024, an increase of $186 thousand or 1.0% and is considered adequate by management. For the quarter ended September 30, 2024, recoveries, net of charge-offs, totaled $186 thousand. The allowance for credit losses as a percentage of total loans was 1.23% at September 30, 2024, and the allowance for credit losses as a percentage of non-performing loans, or coverage ratio, was 134.1% at September 30, 2024.

●

Operating Expenses- Non-interest expense as a percentage of average assets was 2.80% for the quarter ended September 30, 2024, as compared to 2.79% for the quarter ended June 30, 2024. Increases in non-interest expenses quarter over quarter were primarily attributable to slightly higher federal deposit insurance premium and higher occupancy and equipment expenses. The Bank remains focused on identifying additional operating efficiencies and third-party expense reductions through the remainder of this year and beyond. Compensation and benefits expense is down 1.2% for the nine months ended September 30, 2024, compared to September 30, 2023.

●

Capital Adequacy- As of September 30, 2024, the Bank's tier 1 capital to adjusted average assets ratio was 8.38%, an improvement of 0.06% compared to 8.32% at June 30, 2024. The Bank's capital continues to exceed all applicable regulatory capital requirements as set forth in 12 C.F.R. § 324. The Bancorp's tangible book value per share was $31.28 at September 30, 2024, up from $28.67 as of June 30, 2024 (a non-GAAP measure). Tangible common equity to total assets was 6.51% at September 30, 2024, up from 5.95% as of June 30, 2024 (a non-GAAP measure). Excluding accumulated other comprehensive losses, tangible book value per share increased to $42.47 as of September 30, 2024, from $42.33 as of June 30, 2024 (a non-GAAP measure). See Table 1 at the end of this press release for a reconciliation of the tangible book value per share, tangible book value per share adjusted for other accumulated comprehensive losses, tangible common equity as a percentage of total assets, and tangible common equity as a percentage of total assets adjusted for accumulated other comprehensive losses to the related GAAP ratios.

Disclosures Regarding Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. In this press release, the Bancorp also provides certain financial measures identified as non-GAAP. The Bancorp's management believes that the non-GAAP information, which consists of tangible common equity, tangible common equity adjusted for accumulated other comprehensive losses, tangible book value per share, tangible book value per share adjusted for accumulated other comprehensive losses, tangible common equity/total assets, tax-adjusted net interest margin, and efficiency ratio, which can vary from period to period, provides a better comparison of period to period operating performance. The adjusted net interest income and tax-adjusted net interest margin measures recognize the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. Additionally, the Bancorp believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to Table 1 - Reconciliation of Non-GAAP Financial Measures at the end of this document for a reconciliation of the non-GAAP measures identified herein and their most comparable GAAP measures.

About Finward Bancorp

Finward Bancorp is a locally managed and independent financial holding company headquartered in Munster, Indiana, whose activities are primarily limited to holding the stock of Peoples Bank. Peoples Bank provides a wide range of personal, business, electronic and wealth management financial services from its 26 locations in Lake and Porter Counties in Northwest Indiana and Chicagoland. Finward Bancorp's common stock is quoted on The NASDAQ Stock Market, LLC under the symbol FNWD. The website ibankpeoples.com provides information on Peoples Bank's products and services, and Finward Bancorp's investor relations.

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of the Bancorp. For these statements, the Bancorp claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this communication should be considered in conjunction with the other information available about the Bancorp, including the information in the filings the Bancorp makes with the SEC. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Forward-looking statements are typically identified by using words such as "anticipate," "estimate," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: the Bank's ability to demonstrate compliance with the terms of the previously disclosed consent order and memorandum of understanding entered into between the Bank and the Federal Deposit Insurance Corporation ("FDIC") and Indiana Department of Financial Institutions ("DFI"), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames; the Bank's agreement under the memorandum of understanding to refrain from paying cash dividends without prior regulatory approval; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates, market liquidity, and capital markets, as well as the magnitude of such changes, which may reduce net interest margins; inflation; further deterioration in the market value of securities held in the Bancorp's investment securities portfolio, whether as a result of macroeconomic factors or otherwise; customer acceptance of the Bancorp's products and services; customer borrowing, repayment, investment, and deposit practices; customer disintermediation; the introduction, withdrawal, success, and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; economic conditions; and the impact, extent, and timing of technological changes, capital management activities, regulatory actions by the Federal Deposit Insurance Corporation and Indiana Department of Financial Institutions, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Bancorp's reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC's Internet website (www.sec.gov). All subsequent written and oral forward-looking statements concerning matters attributable to the Bancorp or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Except as required by law, The Bancorp does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.

Finward Bancorp

Quarterly Financial Report

Performance Ratios

Quarter ended,

Nine months ended,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2024

2024

2024

2023

2023

2024

2023

Return on equity

1.60 % 0.39 % 24.97 % 4.92 % 6.55 % 4.50 % 6.68 %

Return on assets

0.12 % 0.03 % 1.77 % 0.29 % 0.42 % 0.64 % 0.44 %

Yield on loans

5.22 % 5.11 % 5.02 % 5.09 % 5.02 % 5.12 % 4.87 %

Yield on security investments

2.37 % 2.43 % 2.37 % 2.57 % 2.41 % 2.39 % 2.39 %

Total yield on earning assets

4.73 % 4.64 % 4.52 % 4.64 % 4.51 % 4.64 % 4.39 %

Cost of interest-bearing deposits

2.47 % 2.37 % 2.36 % 2.22 % 1.95 % 2.40 % 1.58 %

Cost of repurchase agreements

4.04 % 3.86 % 3.88 % 3.78 % 3.83 % 3.93 % 3.59 %

Cost of borrowed funds

4.56 % 4.95 % 4.62 % 4.41 % 4.48 % 4.70 % 4.58 %

Total cost of interest-bearing liabilities

2.63 % 2.55 % 2.53 % 2.38 % 2.16 % 2.57 % 1.82 %

Tax adjusted net interest margin (1)

2.67 % 2.67 % 2.57 % 2.80 % 2.87 % 2.64 % 3.04 %

Noninterest income / average assets

0.55 % 0.50 % 2.57 % 0.53 % 0.46 % 1.21 % 0.51 %

Noninterest expense / average assets

2.80 % 2.79 % 2.86 % 2.60 % 2.59 % 2.82 % 2.67 %

Net noninterest margin / average assets

-2.24 % -2.29 % -0.29 % -2.08 % -2.13 % -1.60 % -2.16 %

Efficiency ratio

97.32 % 98.56 % 59.41 % 87.49 % 86.88 % 80.16 % 83.68 %

Effective tax rate

-51.88 % -6.72 % 9.48 % -30.85 % -22.20 % 7.01 % 0.30 %

Non-performing assets to total assets

0.73 % 0.61 % 0.64 % 0.61 % 0.54 % 0.73 % 0.54 %

Non-performing loans to total loans

0.92 % 0.75 % 0.78 % 0.76 % 0.66 % 0.92 % 0.66 %

Allowance for credit losses to non-performing loans

134.12 % 161.17 % 159.12 % 163.90 % 192.89 % 134.12 % 192.89 %

Allowance for credit losses to loans receivable

1.23 % 1.22 % 1.25 % 1.24 % 1.27 % 1.23 % 1.27 %

Foreclosed real estate to total assets

0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %

Basic earnings per share

$ 0.14 $ 0.03 $ 2.18 $ 0.36 $ 0.52 $ 2.35 $ 1.60

Diluted earnings per share

$ 0.14 $ 0.03 $ 2.17 $ 0.35 $ 0.51 $ 2.35 $ 1.60

Stockholders' equity / total assets

7.69 % 7.16 % 7.32 % 6.99 % 5.70 % 7.69 % 5.70 %

Book value per share

$ 36.99 $ 34.45 $ 35.17 $ 34.28 $ 27.68 $ 36.99 $ 27.68

Closing stock price

$ 31.98 $ 24.52 $ 24.60 $ 25.24 $ 22.00 $ 31.98 $ 22.00

Price to earnings per share ratio

56.21 182.60 2.82 17.77 10.67 10.19 10.28

Dividends declared per common share

$ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.31 $ 0.36 $ 0.93

Common equity tier 1 capital to risk-weighted assets

11.10 % 10.94 % 10.89 % 10.43 % 10.17 % 11.10 % 10.17 %

Tier 1 capital to risk-weighted assets

11.10 % 10.94 % 10.89 % 10.43 % 10.17 % 11.10 % 10.17 %

Total capital to risk-weighted assets

12.14 % 11.95 % 11.92 % 11.36 % 11.12 % 12.14 % 11.12 %

Tier 1 capital to adjusted average assets

8.38 % 8.32 % 8.24 % 7.78 % 7.81 % 8.38 % 7.81 %

Non-GAAP Performance Ratios

Quarter ended,

Nine months ended,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2024

2024

2024

2023

2023

2024

2023

Net interest margin - tax equivalent

2.67 % 2.67 % 2.57 % 2.80 % 2.87 % 2.64 % 3.04 %

Tangible book value per diluted share

$ 31.28 $ 28.67 $ 29.30 $ 28.31 $ 21.63 $ 31.28 $ 21.63

Tangible book value per diluted share adjusted for AOCL

$ 42.47 $ 42.33 $ 42.36 $ 40.31 $ 39.96 $ 42.47 $ 39.96

Tangible common equity to total assets

6.51 % 5.95 % 6.09 % 5.77 % 4.46 % 6.51 % 4.46 %

Tangible common equity to total assets adjusted for AOCL

8.83 % 8.79 % 8.81 % 8.22 % 8.23 % 8.83 % 8.23 %

(1) Tax adjusted net interest margin represents a non-GAAP financial measure. See the non-GAAP reconciliation table section captioned "Non-GAAP Financial Measures" for further disclosure regarding non-GAAP financial measures

Quarter Ended

(Dollars in thousands)

Average Balances, Interest, and Rates

(unaudited)

September 30, 2024

June 30, 2024

Average
Balance

Interest

Rate (%)

Average
Balance

Interest

Rate (%)

ASSETS

Interest bearing deposits in other financial institutions

$ 44,365 $ 665 6.00 $ 60,378 $ 800 5.30

Federal funds sold

682 9 5.28 1,263 10 3.17

Securities available-for-sale

342,451 2,031 2.37 337,226 2,047 2.43

Loans receivable

1,506,967 19,660 5.22 1,501,584 19,174 5.11

Federal Home Loan Bank stock

6,547 107 6.54 6,547 96 5.87

Total interest earning assets

1,901,012 $ 22,472 4.73 1,906,998 $ 22,127 4.64

Cash and non-interest bearing deposits in other financial institutions

32,198 18,054

Allowance for credit losses

(18,482 ) (18,788 )

Other noninterest bearing assets

155,996 158,358

Total assets

$ 2,070,724 $ 2,064,622

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing deposits

$ 1,451,414 $ 8,946 2.47 $ 1,455,007 $ 8,610 2.37

Repurchase agreements

43,074 435 4.04 41,388 399 3.86

Borrowed funds

95,224 1,085 4.56 85,940 1,064 4.95

Total interest bearing liabilities

1,589,712 $ 10,466 2.63 1,582,335 $ 10,073 2.55

Non-interest bearing deposits

287,507 291,618

Other noninterest bearing liabilities

41,696 45,029

Total liabilities

1,918,915 1,918,982

Total stockholders' equity

151,809 145,640

Total liabilities and stockholders' equity

$ 2,070,724 $ 2,064,622

Return on average assets

0.12 % 0.03 %

Return on average equity

1.60 % 0.39 %

Net interest margin (average earning assets)

2.53 % 2.53 %

Net interest margin (average earning assets) - tax equivalent

2.67 % 2.67 %

Net interest spread

2.10 % 2.09 %

Ratio of interest-earning assets to interest-bearing liabilities

1.20x

1.21x

Year-to-Date

(Dollars in thousands)

Average Balances, Interest, and Rates

(unaudited)

September 30, 2024

September 30, 2023

Average
Balance

Interest

Rate (%)

Average
Balance

Interest

Rate (%)

ASSETS

`

Interest bearing deposits in other financial institutions

$ 51,522 $ 2,317 6.00 $ 31,171 $ 1,112 4.76

Federal funds sold

919 29 4.21 1,158 38 4.38

Certificates of deposit in other financial institutions

- - - 1,169 44 5.02

Securities available-for-sale

348,269 6,239 2.39 369,897 6,631 2.39

Loans receivable

1,504,197 57,713 5.12 1,519,981 55,481 4.87

Federal Home Loan Bank stock

6,547 285 5.80 6,547 221 4.50

Total interest earning assets

1,911,454 $ 66,583 4.64 1,929,923 $ 63,527 4.39

Cash and non-interest bearing deposits in other financial institutions

29,183 18,723

Allowance for credit losses

(18,670 ) (17,619 )

Other noninterest bearing assets

155,433 154,227

Total assets

$ 2,077,400 $ 2,085,254

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing deposits

$ 1,464,682 $ 26,350 2.40 $ 1,455,410 $ 17,258 1.58

Repurchase agreements

40,879 1,204 3.93 33,170 892 3.59

Borrowed funds

90,423 3,189 4.70 102,864 3,537 4.58

Total interest bearing liabilities

1,595,984 $ 30,743 2.57 1,591,444 $ 21,687 1.82

Non-interest bearing deposits

291,161 326,431

Other noninterest bearing liabilities

41,540 30,178

Total liabilities

1,928,685 1,948,053

Total stockholders' equity

148,715 137,201

Total liabilities and stockholders' equity

$ 2,077,400 $ 2,085,254

Return on average assets

0.64 % 0.44 %

Return on average equity

4.50 % 6.68 %

Net interest margin (average earning assets)

2.50 % 2.89 %

Net interest margin (average earning assets) - tax equivalent

2.64 % 3.04 %

Net interest spread

2.07 % 2.57 %

Ratio of interest-earning assets to interest-bearing liabilities

1.20x

1.21x

Finward Bancorp

Quarterly Financial Report

Balance Sheet Data

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

2024

2024

2024

2023

2023

ASSETS

Cash and non-interest bearing deposits in other financial institutions

$ 23,071 $ 19,061 $ 16,418 $ 17,942 $ 17,922

Interest bearing deposits in other financial institutions

48,025 63,439 54,755 67,647 52,875

Total cash and cash equivalents

71,649 83,207 71,780 86,008 71,648

Securities available-for-sale

350,027 339,585 346,233 371,374 339,280

Loans held-for-sale

2,567 1,185 667 340 2,057

Loans receivable, net of deferred fees and costs

1,508,242 1,506,398 1,508,251 1,512,595 1,525,660

Less: allowance for credit losses

(18,516 ) (18,330 ) (18,805 ) (18,768 ) (19,430 )

Net loans receivable

1,489,726 1,488,068 1,489,446 1,493,827 1,506,230

Federal Home Loan Bank stock

6,547 6,547 6,547 6,547 6,547

Accrued interest receivable

7,442 7,695 7,583 8,045 7,864

Premises and equipment

47,912 48,696 47,795 38,436 38,810

Foreclosed real estate

- - 71 71 71

Cash value of bank owned life insurance

33,312 33,107 32,895 32,702 32,509

Goodwill

22,395 22,395 22,395 22,395 22,395

Other intangible assets

2,203 2,555 2,911 3,272 3,636

Other assets

40,882 44,027 43,459 45,262 56,423

Total assets

$ 2,074,662 $ 2,077,067 $ 2,071,782 $ 2,108,279 $ 2,087,470

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Non-interest bearing

$ 285,157 $ 286,784 $ 296,959 $ 295,594 $ 312,635

Interest bearing

1,463,653 1,469,970 1,450,519 1,517,827 1,471,402

Total

1,748,810 1,756,754 1,747,478 1,813,421 1,784,037

Repurchase agreements

43,038 42,973 41,137 38,124 48,310

Borrowed funds

85,000 85,000 90,000 80,000 100,000

Accrued expenses and other liabilities

38,259 43,709 41,586 29,389 36,080

Total liabilities

1,915,107 1,928,436 1,920,201 1,960,934 1,968,427

Commitments and contingencies

Stockholders' Equity:

Preferred stock, no par or stated value; 10,000,000 shares authorized, none outstanding

- - - - -

Common stock, no par or stated value; 10,000,000 shares authorized; shares issued and outstanding: September 30, 2024 - 4,313,940 December 31, 2023 - 4,298,773

- - - - -

Additional paid-in capital

69,916 69,778 69,727 69,555 69,482

Accumulated other comprehensive loss

(48,241 ) (58,939 ) (56,313 ) (51,613 ) (78,848 )

Retained earnings

137,880 137,792 138,167 129,403 128,409

Total stockholders' equity

159,555 148,631 151,581 147,345 119,043

Total liabilities and stockholders' equity

$ 2,074,662 $ 2,077,067 $ 2,071,782 $ 2,108,279 $ 2,087,470

Finward Bancorp

Quarterly Financial Report

Consolidated Statements of Income

Quarter Ended,

Nine months ended,

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

2024

2024

2024

2023

2023

2024

2023

Interest income:

Loans

$ 19,660 $ 19,174 $ 18,879 $ 19,281 $ 19,161 $ 57,713 $ 55,481

Securities & short-term investments

2,812 2,953 3,105 2,975 2,617 8,870 8,046

Total interest income

22,472 22,127 21,984 22,256 21,778 66,583 63,527

Interest expense:

Deposits

8,946 8,610 8,794 8,180 7,066 26,350 17,258

Borrowings

1,520 1,463 1,410 1,361 1,579 4,393 4,429

Total interest expense

10,466 10,073 10,204 9,541 8,645 30,743 21,687

Net interest income

12,006 12,054 11,780 12,715 13,133 35,840 41,840

Provision for credit losses

- 76 - 779 244 76 1,246

Net interest income after provision for credit losses

12,006 11,978 11,780 11,936 12,889 35,764 40,594

Noninterest income:

Fees and service charges

1,463 1,257 1,153 1,507 1,374 3,873 4,517

Wealth management operations

731 763 633 672 572 2,127 1,812

Gain on sale of loans held-for-sale, net

338 320 152 352 192 810 729

Increase in cash value of bank owned life insurance

205 212 193 193 193 610 573

Gain (loss) on sale of real estate

- 15 11,858 - 2 11,873 (13 )

Loss on sale of securities, net

- - (531 ) - - (531 ) (48 )

Other

130 6 17 11 64 154 441

Total noninterest income

2,867 2,573 13,475 2,735 2,397 18,916 8,011

Noninterest expense:

Compensation and benefits

6,963 7,037 7,109 6,290 6,729 21,109 21,365

Occupancy and equipment

2,181 2,120 1,915 1,520 1,711 6,205 4,898

Data processing

1,165 1,135 1,170 1,269 1,085 3,470 3,465

Federal deposit insurance premiums

435 397 501 492 474 1,333 1,511

Marketing

209 212 158 191 235 579 649

Other

3,521 3,516 4,151 3,755 3,259 9,465 8,547

Total noninterest expense

14,474 14,417 15,004 13,517 13,493 43,895 41,715

Income before income taxes

399 134 10,251 1,154 1,793 10,785 6,890

Income tax expenses (benefit)

(207 ) (9 ) 972 (356 ) (398 ) 756 21

Net income

$ 606 $ 143 $ 9,279 $ 1,510 $ 2,191 $ 10,029 $ 6,869

Earnings per common share:

Basic

$ 0.14 $ 0.03 $ 2.18 $ 0.36 $ 0.52 $ 2.35 $ 1.60

Diluted

$ 0.14 $ 0.03 $ 2.17 $ 0.35 $ 0.51 $ 2.35 $ 1.60

Finward Bancorp

Quarterly Financial Report

Asset Quality

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Dollars in thousands)

September 30,

June 30,

March 31,

December 31,

September 30,

2024

2024

2024

2023

2023

Nonaccruing loans

$ 13,806 $ 11,079 $ 11,603 $ 9,608 $ 9,840

Accruing loans delinquent more than 90 days

- 294 215 1,843 233

Securities in non-accrual

1,440 1,371 1,442 1,357 1,155

Foreclosed real estate

- - 71 71 71

Total nonperforming assets

$ 15,246 $ 12,744 $ 13,331 $ 12,879 $ 11,299

Allowance for credit losses (ACL):

ACL specific allowances for collateral dependent loans

$ 1,821 $ 1,327 $ 1,455 $ 906 $ 554

ACL general allowances for loan portfolio

16,695 17,003 17,351 17,862 18,876

Total ACL

$ 18,516 $ 18,330 $ 18,806 $ 18,768 $ 19,430

(Dollars in millions)

Minimum Required To Be

Minimum Required For

Well Capitalized Under Prompt

Actual

Capital Adequacy Purposes

Corrective Action Regulations

September 30, 2024

Amount

Ratio

Amount

Ratio

Amount

Ratio

Common equity tier 1 capital to risk-weighted assets

$ 176.3 11.10 % $ 71.9 4.50 % $ 103.9 6.50 %

Tier 1 capital to risk-weighted assets

$ 176.3 11.10 % $ 95.9 6.00 % $ 127.9 8.00 %

Total capital to risk-weighted assets

$ 194.0 12.14 % $ 127.9 8.00 % $ 159.8 10.00 %

Tier 1 capital to adjusted average assets

$ 176.3 8.38 % $ 84.7 4.00 % $ 105.8 5.00 %

Table 1 - Reconciliation of the Non-GAAP Performance Measures

(Dollars in thousands)

Quarter Ended,

Nine months ended,

(unaudited)

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

September 30, 2024

September 30, 2023

Calculation of tangible common equity

Total stockholder's equity

$ 159,555 $ 148,631 $ 151,581 $ 147,345 $ 119,043 $ 159,555 $ 119,043

Goodwill

(22,395 ) (22,395 ) (22,395 ) (22,395 ) (22,395 ) (22,395 ) (22,395 )

Other intangibles

(2,203 ) (2,555 ) (2,911 ) (3,272 ) (3,636 ) (2,203 ) (3,636 )

Tangible common equity

$ 134,957 $ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 134,957 $ 93,012

Calculation of tangible common equity adjusted for accumulated other comprehensive loss

Tangible common equity

$ 134,957 $ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 134,957 $ 93,012

Accumulated other comprehensive loss

48,241 58,939 56,313 51,613 78,848 48,241 78,848

Tangible common equity adjusted for accumulated other comprehensive loss

$ 183,198 $ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 183,198 $ 171,860

Calculation of tangible book value per share

Tangible common equity

$ 134,957 $ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 134,957 $ 93,012

Shares outstanding

4,313,940 4,313,940 4,310,251 4,298,773 4,300,881 4,313,940 4,300,881

Tangible book value per diluted share

$ 31.28 $ 28.67 $ 29.30 $ 28.31 $ 21.63 $ 31.28 $ 21.63

Calculation of tangible book value per diluted share adjusted for accumulated other comprehensive loss

Tangible common equity adjusted for accumulated other comprehensive loss

$ 183,198 $ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 183,198 $ 171,860

Diluted average common shares outstanding

4,313,940 4,313,940 4,310,251 4,298,773 4,300,881 4,313,940 4,300,881

Tangible book value per diluted share adjusted for accumulated other comprehensive loss

$ 42.47 $ 42.33 $ 42.36 $ 40.31 $ 39.96 $ 42.47 $ 39.96

Calculation of tangible common equity to total assets

Tangible common equity

$ 134,957 $ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 134,957 $ 93,012

Total assets

2,074,662 2,077,067 2,071,782 2,108,279 2,087,470 2,074,662 2,087,470

Tangible common equity to total assets

6.51 % 5.95 % 6.09 % 5.77 % 4.46 % 6.51 % 4.46 %

Calculation of tangible common equity to total assets adjusted for accumulated other comprehensive loss

Tangible common equity adjusted for accumulated other comprehensive loss

$ 183,198 $ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 183,198 $ 171,860

Total assets

2,074,662 2,077,067 2,071,782 2,108,279 2,087,470 2,074,662 2,087,470

Tangible common equity to total assets adjusted for accumulated other comprehensive loss

8.83 % 8.79 % 8.81 % 8.22 % 8.23 % 8.83 % 8.23 %

Calculation of tax adjusted net interest margin

Net interest income

$ 12,006 $ 12,054 $ 11,780 $ 12,715 $ 13,133 $ 35,840 $ 41,840

Tax adjusted interest on securities and loans

678 677 699 722 730 2,054 2,234

Adjusted net interest income

12,684 12,731 12,749 13,437 13,863 37,894 44,074

Total average earning assets

1,901,012 1,906,998 1,945,501 1,920,127 1,930,118 1,911,454 1,929,923

Tax adjusted net interest margin

2.67 % 2.67 % 2.57 % 2.80 % 2.87 % 2.64 % 3.04 %

Efficiency ratio

Total non-interest expense

$ 14,474 $ 14,417 $ 15,004 $ 13,517 $ 13,493 $ 43,895 $ 13,493

Total revenue

14,873 14,627 25,255 15,450 15,530 54,756 15,530

Efficiency ratio

97.32 % 98.56 % 59.41 % 87.49 % 86.88 % 80.16 % 86.88 %