Finward Bancorp

24/07/2024 | Press release | Distributed by Public on 24/07/2024 20:07

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

FINWARD BANCORP

ANNOUNCES EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED

JUNE 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 $9.4 million, or $2.21 per diluted share, for the six months ended June 30, 2024, as compared to $4.7 million, or $1.10 per diluted share, for the corresponding prior year period. For the quarter ended June 30, 2024, the Bancorp's net income totaled $143 thousand, or $0.03 per diluted share, as compared to $2.4 million, or $0.57 per diluted share, for the three months ended June 30, 2023. Selected performance metrics are as follows for the periods presented:

Performance Ratios

Quarter ended,

Six months ended,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2024

2024

2023

2023

2023

2024

2023

Return on equity

0.39 % 24.97 % 4.92 % 6.55 % 7.05 % 12.81 % 6.74 %

Return on assets

0.03 % 1.77 % 0.29 % 0.42 % 0.46 % 0.91 % 0.45 %

Tax adjusted net interest margin

2.67 % 2.57 % 2.80 % 2.87 % 3.03 % 2.62 % 3.13 %

Noninterest income / average assets

0.50 % 2.57 % 0.53 % 0.46 % 0.57 % 1.54 % 0.54 %

Noninterest expense / average assets

2.79 % 2.86 % 2.60 % 2.59 % 2.66 % 2.83 % 2.71 %

Efficiency ratio

98.56 % 59.41 % 87.49 % 86.88 % 82.11 % 73.77 % 82.23 %

"Key operating areas saw benefits in the second quarter from previously announced strategic initiatives. Net interest margin demonstrated signs of continued stabilization during the quarter, and non-interest expense levels decreased as expected, as we believe operational efficiency will continue to improve in the second half of the year. Provision expense increased primarily as the result of new unfunded commitments as we continue to provide capital to our customers," said Benjamin Bochnowski, chief executive officer. "Asset yields have begun to show improvement as we fund new lending opportunities in our core market. While loans balances are down, originations remain on pace with expectations for the year. Credit quality remains strong, and we are well-positioned for potential changes in the interest rate environment"

Highlights of the current period include:

●

Net Interest Margin -The net interest margin for the three months ended June 30, 2024, was 2.54%, compared to 2.42% for the three months ended March 31, 2024. The tax-adjusted net interest margin (a non-GAAP measure) for the three months ended June 30, 2024, was 2.67%, compared to 2.57% for the three months ended March 31, 2024. The increased net interest margin is primarily the result of gradual improvement in earning asset yields as loans are originated or are generally repricing at higher rates, while maintaining relatively stable interest-bearing liability costs in this current interest rate environment. 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 June 30, 2024, deposits totaled $1.8 billion, compared to $1.7 billion on March 31, 2024, an increase of $9.2 million or 0.5%. Core deposits totaled $1.2 billion at both June 30, 2024 and March 31, 2024. Core deposits include checking, savings, and money market accounts and represented 69.2% of the Bancorp's total deposits at June 30, 2024. On June 30, 2024, balances for certificates of deposit totaled $541.2 million, compared to $531.3 million on March 31, 2024, an increase of $9.8 million or 1.7%. The increase in deposits is primarily related to cyclical inflows and outflows related to a number of municipality depositors and planned adjustments to deposit pricing. In addition, on June 30, 2024, borrowings and repurchase agreements totaled $128.0 million, compared to $131.1 million at March 31, 2024, a decrease of $3.2 million or 2.4%. The decrease in short-term borrowings was the result of cyclical inflows and outflows of interest-earning assets and interest-bearing liabilities. Furthermore, during the quarter, the Bancorp repaid an additional $5 million of its outstanding Bank Term Funding Program (the "BTFP") balance, resulting in a $60 million balance as of June 30, 2024. As of June 30, 2024, 71% of our deposits are fully FDIC insured, and another 8% 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 June 30, 2024, the Bancorp had available liquidity of $585 million including borrowing capacity from the FHLB and Federal Reserve facilities.

●

Securities Portfolio - Securities available for sale balances declined by $6.6 million to $339.6 million as of June 30, 2024, compared to $346.2 million as of March 31, 2024. The decrease in securities available for sale was due to a combination of portfolio runoff and an increase of accumulated other comprehensive income ("AOCI") losses. AOCI losses were $58.9 million as of June 30, 2024, compared to $56.3 million on March 31, 2024, an increase of $2.6 million or 4.7%. The yield on the securities portfolio increased to 2.43% for the three months ended June 30, 2024, up from 2.39% for the three months ended March 31, 2024. Management did not execute any securities sale transactions during the quarter but will continue to monitor the securities portfolio for additional restructuring opportunities.

●

Gain on Sale of Loans - Lower levels of mortgage loan origination in our markets continues to drive reduced fixed rate mortgage loan sale activity into the secondary market. As a result, gains from the sale of loans for the six months ended June 30, 2024, totaled $472 thousand, a decrease from $537 thousand for the six months ended June 30, 2023. During the six months ended June 30, 2024, the Bank originated $9.7 million in new fixed rate mortgage loans for sale, compared to $19.3 million during the six months ended June 30, 2023. During the six months ended June 30, 2024, the Bank originated $8.8 million in new 1-4 family loans retained in its portfolio, compared to $17.4 million during the six months ended June 30, 2023. Total 1-4 family originations for the quarter ended June 30, 2024, totaled $18.5 million, a decrease of $4.2 million from the amount for the quarter ended June 30, 2023, totaling $22.7 million. This decrease was driven by increasing market interest rates and continued low levels of housing inventory, which slowed mortgage applications. 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.

●

Commercial Lending - The Bank's aggregate loan portfolio totaled $1.5 billion on both June 30, 2024 and March 31, 2024. During the three months ended June 30, 2024, the Bank originated $48.7 million in new commercial loans, compared to $47.9 million during the three months ended March 31, 2024 and $73.2 million during the three months ended June 30, 2023. The loan portfolio represents 78.5% of earning assets and is comprised of 62.2% commercial-related credits. At June 30, 2024, the Bancorp's portfolio loan balances in commercial real estate owner occupied properties totaled $235.9 million or 15.7% of total loan balances and commercial real estate non-owner occupied properties totaled $293.5 million or 19.5% of total loan balances. Of the $293.5 million in commercial real estate non-owner occupied properties balances, loans collateralized by office buildings represented $42.6 million or 2.8% of total loan balances.

●

Asset Quality - At June 30, 2024, non-performing loans totaled $11.4 million, compared to $11.8 million at March 31, 2024, a decrease of $445 thousand or 3.8%. The Bank's ratio of non-performing loans to total loans was 0.75% at June 30, 2024, compared to 0.78% at March 31, 2024. The Bank's ratio of non-performing assets to total assets declined from 0.64% at March 31, 2024 to 0.61% at June 30, 2024. Management maintains a vigilant oversight of nonperforming loans through proactive relationship management. The allowance for credit losses (ACL) totaled $18.3 million at June 30, 2024, compared to $18.8 million at March 31, 2024, a decrease of $476 thousand or 2.5% and is considered adequate by management. For the quarter ended June 30, 2024, charge-offs, net of recoveries, totaled $37 thousand. The allowance for credit losses as a percentage of total loans was 1.22% at June 30, 2024, and the allowance for credit losses as a percentage of non-performing loans, or coverage ratio, was 161.2% at June 30, 2024.

●

Operating Expenses- Non-interest expense as a percent of average assets was 2.79% for the quarter ended June 30, 2024, as compared to 2.86% for quarter ended March 31, 2024, a decrease of 0.07%. Decreases in non-interest expenses quarter over quarter were primarily attributable to lower accounting and service fees with lower third-party expenses related to operational enhancements. 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 3.3% for the six months ended June 30, 2024, compared to June 30, 2023.

●

Capital Adequacy- As of June 30, 2024, the Bank's tier 1 capital to adjusted average assets ratio was 8.32% which is within all regulatory capital requirements and an improvement of 0.08% compared to 8.24% at March 31, 2024. The Bank continues to be considered well capitalized. The Bancorp's tangible book value per share was $28.67 at June 30, 2024, down from $29.30 as of March 31, 2024 (a non-GAAP measure). Tangible common equity to total assets was 5.95% at June 30, 2024, down from 6.09% as of March 31, 2024 (a non-GAAP measure). Excluding accumulated other comprehensive losses, tangible book value per share decreased to $42.33 as of June 30, 2024, from $42.36 as of March 31, 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 accumulated comprehensive other 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,

Six months ended,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2024

2024

2023

2023

2023

2024

2023

Return on equity

0.39 % 24.97 % 4.92 % 6.55 % 7.05 % 12.81 % 6.74 %

Return on assets

0.03 % 1.77 % 0.29 % 0.42 % 0.46 % 0.91 % 0.45 %

Yield on loans

5.11 % 5.02 % 5.09 % 5.02 % 4.91 % 5.06 % 4.79 %

Yield on security investments

2.43 % 2.37 % 2.57 % 2.41 % 2.36 % 2.40 % 2.38 %

Total yield on earning assets

4.64 % 4.52 % 4.64 % 4.51 % 4.43 % 4.58 % 4.33 %

Cost of deposits

2.37 % 2.36 % 2.22 % 1.95 % 1.65 % 2.37 % 1.40 %

Cost of repurchase agreements

3.86 % 3.88 % 3.78 % 3.83 % 3.78 % 3.87 % 3.39 %

Cost of borrowed funds

4.76 % 4.62 % 4.41 % 4.48 % 4.53 % 4.69 % 4.64 %

Total cost of funds

2.54 % 2.53 % 2.38 % 2.16 % 1.87 % 2.53 % 1.64 %

Tax adjusted net interest margin

2.67 % 2.57 % 2.80 % 2.87 % 3.03 % 2.62 % 3.13 %

Noninterest income / average assets

0.50 % 2.57 % 0.53 % 0.46 % 0.57 % 1.54 % 0.54 %

Noninterest expense / average assets

2.79 % 2.86 % 2.60 % 2.59 % 2.66 % 2.83 % 2.71 %

Net noninterest margin / average assets

-2.29 % -0.29 % -2.08 % -2.13 % -2.09 % -1.29 % -2.17 %

Efficiency ratio

98.56 % 59.41 % 87.49 % 86.88 % 82.11 % 73.77 % 82.23 %

Effective tax rate

-6.72 % 9.48 % -30.85 % -22.20 % 3.86 % 9.27 % 8.22 %

Non-performing assets to total assets

0.61 % 0.64 % 0.61 % 0.54 % 0.62 % 0.61 % 0.62 %

Non-performing loans to total loans

0.75 % 0.78 % 0.76 % 0.66 % 0.80 % 0.75 % 0.80 %

Allowance for credit losses to non-performing loans

161.17 % 159.12 % 163.90 % 192.89 % 158.26 % 161.17 % 158.26 %

Allowance for credit losses to loans outstanding

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

$ 0.03 $ 2.18 $ 0.36 $ 0.52 $ 0.57 $ 2.21 $ 1.10

Diluted earnings per share

$ 0.03 $ 2.17 $ 0.35 $ 0.51 $ 0.57 $ 2.21 $ 1.10

Stockholders' equity / total assets

7.16 % 7.32 % 6.99 % 5.70 % 6.33 % 7.16 % 6.33 %

Book value per share

$ 34.45 $ 35.17 $ 34.28 $ 27.68 $ 31.77 $ 34.45 $ 31.77

Closing stock price

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

Price to earnings per share ratio

182.60 2.82 17.77 10.67 9.59 5.54 9.99

Dividend declared per common share

$ 0.12 $ 0.12 $ 0.12 $ 0.31 $ 0.31 $ 0.24 $ 0.62

Common equity tier 1 capital to risk-weighted assets

11.23 % 10.89 % 10.43 % 10.17 % 10.00 % 11.23 % 10.00 %

Tier 1 capital to risk-weighted assets

11.23 % 10.89 % 10.43 % 10.17 % 10.00 % 11.23 % 10.00 %

Total capital to risk-weighted assets

12.27 % 11.92 % 11.36 % 11.12 % 10.96 % 12.27 % 10.96 %

Tier 1 capital to adjusted average assets

8.32 % 8.24 % 7.78 % 7.81 % 7.58 % 8.32 % 7.58 %

Non-GAAP Performance Ratios

Quarter ended,

Six Months Ended

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2024

2024

2023

2023

2023

2024

2023

Net interest margin - tax equivalent

2.67 % 2.57 % 2.80 % 2.87 % 3.03 % 2.62 % 3.13 %

Tangible book value per diluted share

$ 28.67 $ 29.30 $ 28.31 $ 21.63 $ 25.64 $ 28.67 $ 25.64

Tangible book value per diluted share adjusted for AOCI

$ 42.33 $ 42.36 $ 40.31 $ 39.96 $ 39.62 $ 42.33 $ 39.62

Tangible common equity to total assets

5.95 % 6.09 % 5.77 % 4.46 % 5.11 % 5.95 % 5.11 %

Tangible common equity to total assets adjusted for AOCI

8.79 % 8.81 % 8.22 % 8.23 % 7.89 % 8.79 % 7.89 %

Quarter Ended

(Dollars in thousands)

Average Balances, Interest, and Rates

(unaudited)

June 30, 2024

March 31, 2024

Average
Balance

Interest

Rate (%)

Average
Balance

Interest

Rate (%)

ASSETS

Interest bearing deposits in other financial institutions

$ 60,378 $ 799 5.29 $ 68,935 $ 853 4.95

Federal funds sold

1,263 10 3.17 814 10 4.91

Securities available-for-sale

337,226 2,047 2.43 365,194 2,161 2.37

Loans receivable

1,501,584 19,174 5.11 1,504,011 18,879 5.02

Federal Home Loan Bank stock

6,547 96 5.87 6,547 82 5.01

Total interest earning assets

1,906,998 $ 22,126 4.64 1,945,501 $ 21,985 4.52

Cash and non-interest bearing deposits in other financial institutions

18,054 18,230

Allowance for credit losses

(18,788 ) (18,743 )

Other noninterest bearing assets

158,358 151,945

Total assets

$ 2,064,622 $ 2,096,933

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing deposits

$ 1,455,007 $ 8,610 2.37 $ 1,487,771 $ 8,794 2.36

Repurchase agreements

41,388 399 3.86 38,151 370 3.88

Borrowed funds

85,940 1,022 4.76 90,053 1,040 4.62

Total interest bearing liabilities

1,582,335 $ 10,031 2.54 1,615,975 $ 10,204 2.53

Non-interest bearing deposits

291,618 294,398

Other noninterest bearing liabilities

45,029 37,897

Total liabilities

1,918,982 1,948,270

Total stockholders' equity

145,640 148,663

Total liabilities and stockholders' equity

$ 2,064,622 $ 2,096,933

Return on average assets

0.03 % 1.77 %

Return on average equity

0.39 % 24.97 %

Net interest margin (average earning assets)

2.54 % 2.42 %

Net interest margin (average earning assets) - tax equivalent

2.67 % 2.57 %

Net interest spread

2.11 % 1.99 %

Ratio of interest-earning assets to interest-bearing liabilities

1.21

x

1.20

x

Year-to-Date

(Dollars in thousands)

Average Balances, Interest, and Rates

(unaudited)

June 30, 2024

June 30, 2023

Average
Balance

Interest

Rate (%)

Average
Balance

Interest

Rate (%)

ASSETS

`

Interest bearing deposits in other financial institutions

$ 64,657 $ 1,652 5.11 $ 30,140 $ 765 5.08

Federal funds sold

1,039 20 3.85 1,275 27 4.24

Certificates of deposit in other financial institutions

- - - 1,762 31 3.52

Securities available-for-sale

351,210 4,208 2.40 373,413 4,440 2.38

Loans receivable

1,502,798 38,053 5.06 1,516,689 36,320 4.79

Federal Home Loan Bank stock

6,547 178 5.44 6,547 166 5.07

Total interest earning assets

1,926,251 $ 44,111 4.58 1,929,826 $ 41,749 4.33

Cash and non-interest bearing deposits in other financial institutions

18,142 18,523

Allowance for credit losses

(18,765 ) (16,569 )

Other noninterest bearing assets

155,147 154,227

Total assets

$ 2,080,775 $ 2,086,007

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing deposits

$ 1,471,389 $ 17,404 2.37 $ 1,457,235 $ 10,192 1.40

Repurchase agreements

39,769 769 3.87 26,635 451 3.39

Borrowed funds

87,996 2,062 4.69 103,465 2,399 4.64

Total interest bearing liabilities

1,599,154 $ 20,235 2.53 1,587,335 $ 13,042 1.64

Non-interest bearing deposits

293,008 331,690

Other noninterest bearing liabilities

41,461 28,066

Total liabilities

1,933,623 1,947,091

Total stockholders' equity

147,152 138,916

Total liabilities and stockholders' equity

$ 2,080,775 $ 2,086,007

Return on average assets

0.91 % 0.45 %

Return on average equity

12.81 % 6.74 %

Net interest margin (average earning assets)

2.48 % 2.98 %

Net interest margin (average earning assets) - tax equivalent

2.62 % 3.13 %

Net interest spread

2.05 % 2.69 %

Ratio of interest-earning assets to interest-bearing liabilities

1.20

x

1.01

x

Finward Bancorp

Quarterly Financial Report

Balance Sheet Data

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

2024

2024

2023

2023

2023

ASSETS

Cash and non-interest bearing deposits in other financial institutions

$ 19,061 $ 16,418 $ 17,942 $ 17,922 $ 23,210

Interest bearing deposits in other financial institutions

63,439 54,755 67,647 52,875 89,706

Federal funds sold

851 2,757

Total cash and cash equivalents

83,207 71,780 86,008 71,648 115,673

Certificates of deposit in other financial institutions

- - - - -

Securities available-for-sale

339,585 346,233 371,374 339,280 368,136

Loans held-for-sale

1,185 667 340 2,057 1,832

Loans receivable, net of deferred fees and costs

1,506,398 1,508,251 1,512,595 1,525,660 1,534,161

Less: allowance for credit losses

(18,330 ) (18,805 ) (18,768 ) (19,430 ) (19,507 )

Net loans receivable

1,488,068 1,489,446 1,493,827 1,506,230 1,514,654

Federal Home Loan Bank stock

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

Accrued interest receivable

7,695 7,583 8,045 7,864 7,714

Premises and equipment

48,696 47,795 38,436 38,810 39,204

Foreclosed real estate

- 71 71 71 71

Cash value of bank owned life insurance

33,107 32,895 32,702 32,509 32,316

Goodwill

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

Other intangible assets

2,555 2,911 3,272 3,636 4,015

Other assets

44,027 43,459 45,262 56,423 48,661

Total assets

$ 2,077,067 $ 2,071,782 $ 2,108,279 $ 2,087,470 $ 2,161,218

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Non-interest bearing

$ 286,784 $ 296,959 $ 295,594 $ 312,635 $ 315,671

Interest bearing

1,469,970 1,450,519 1,517,827 1,471,402 1,479,476

Total

1,756,754 1,747,478 1,813,421 1,784,037 1,795,147

Repurchase agreements

42,973 41,137 38,124 48,310 46,402

Borrowed funds

85,000 90,000 80,000 100,000 150,000

Accrued expenses and other liabilities

43,709 41,586 29,389 36,080 32,919

Total liabilities

1,928,436 1,920,201 1,960,934 1,968,427 2,024,468

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: June 30, 2024 - 4,313,940 December 31, 2023 - 4,298,773

- - - - -

Additional paid-in capital

69,778 69,727 69,555 69,482 69,384

Accumulated other comprehensive loss

(58,939 ) (56,313 ) (51,613 ) (78,848 ) (60,185 )

Retained earnings

137,792 138,167 129,403 128,409 127,551

Total stockholders' equity

148,631 151,581 147,345 119,043 136,750

Total liabilities and stockholders' equity

$ 2,077,067 $ 2,071,782 $ 2,108,279 $ 2,087,470 $ 2,161,218

Finward Bancorp

Quarterly Financial Report

Consolidated Statements of Income

Quarter Ended,

Six months ended,

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,

2024

2024

2023

2023

2023

2024

2023

Interest income:

Loans

$ 19,174 $ 18,879 $ 19,281 $ 19,161 $ 18,694 $ 38,053 $ 36,320

Securities & short-term investments

2,953 3,105 2,975 2,617 2,919 6,058 5,429

Total interest income

22,127 21,984 22,256 21,778 21,613 44,111 41,749

Interest expense:

Deposits

8,610 8,794 8,180 7,066 6,105 17,404 10,192

Borrowings

1,463 1,410 1,361 1,579 1,469 2,873 2,850

Total interest expense

10,073 10,204 9,541 8,645 7,574 20,277 13,042

Net interest income

12,054 11,780 12,715 13,133 14,039 23,834 28,707

Provision for credit losses

76 - 779 244 514 76 1,002

Net interest income after provision for credit losses

11,978 11,780 11,936 12,889 13,525 23,758 27,705

Noninterest income:

Fees and service charges

1,257 1,153 1,507 1,374 1,832 2,410 3,143

Wealth management operations

763 633 672 572 626 1,396 1,240

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

320 152 352 192 274 472 537

Increase in cash value of bank owned life insurance

212 193 193 193 201 405 380

Gain (loss) on sale of real estate

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

Loss on sale of securities, net

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

Other

6 17 11 64 136 24 377

Total noninterest income

2,573 13,475 2,735 2,397 3,006 16,049 5,614

Noninterest expense:

Compensation and benefits

7,037 7,109 6,290 6,729 7,098 14,146 14,636

Occupancy and equipment

2,120 1,915 1,520 1,711 1,636 4,035 3,326

Data processing

1,135 1,170 1,269 1,085 1,407 2,305 2,380

Federal deposit insurance premiums

397 501 492 474 572 898 1,037

Marketing

212 158 191 235 159 370 414

Other

3,516 4,151 3,755 3,259 3,123 7,667 6,429

Total noninterest expense

14,417 15,004 13,517 13,493 13,995 29,421 28,222

Income before income taxes

134 10,251 1,154 1,793 2,536 10,386 5,097

Income tax expenses (benefit)

(9 ) 972 (356 ) (398 ) 98 963 419

Net income

$ 143 $ 9,279 $ 1,510 $ 2,191 $ 2,438 $ 9,423 $ 4,678

Earnings per common share:

Basic

$ 0.03 $ 2.18 $ 0.36 $ 0.52 $ 0.57 $ 2.21 $ 1.10

Diluted

$ 0.03 $ 2.17 $ 0.35 $ 0.51 $ 0.57 $ 2.21 $ 1.10

Finward Bancorp

Quarterly Financial Report

Asset Quality

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Dollars in thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2024

2024

2023

2023

2023

Nonaccruing loans

$ 11,079 $ 11,603 $ 9,608 $ 9,840 $ 12,071

Accruing loans delinquent more than 90 days

294 215 1,843 233 255

Securities in non-accrual

1,371 1,442 1,357 1,155 1,075

Foreclosed real estate

- 71 71 71 61

Total nonperforming assets

$ 12,744 $ 13,331 $ 12,879 $ 11,299 $ 13,462

Allowance for credit losses (ACL):

ACL specific allowances for collateral dependent loans

$ 1,327 $ 1,455 $ 906 $ 554 $ 717

ACL general allowances for loan portfolio

17,003 17,351 17,862 18,876 18,790

Total ACL

$ 18,330 $ 18,806 $ 18,768 $ 19,430 $ 19,507

(Unaudited)

June 30,

Required

2024

To Be Well

Actual Ratio

Capitalized

Capital Adequacy Bank

Common equity tier 1 capital to risk-weighted assets

11.23% 4.50%

Tier 1 capital to risk-weighted assets

11.23% 6.00%

Total capital to risk-weighted assets

12.27% 8.00%

Tier 1 capital to adjusted average assets

8.32% 4.00%

Table 1 - Reconciliation of the Non-GAAP Performance Measures

(Dollars in thousands)

Quarter Ended,

Six months ended,

(unaudited)

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

June 30, 2024

June 30, 2023

Calculation of tangible common equity

Total stockholder's equity

$ 148,631 $ 151,581 $ 147,345 $ 119,043 $ 136,750 $ 148,631 $ 136,750

Goodwill

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

Other intangibles

(2,555 ) (2,911 ) (3,272 ) (3,636 ) (4,015 ) (2,555 ) (4,015 )

Tangible common equity

$ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 110,340 $ 123,681 $ 110,340

Calculation of tangible common equity adjusted for accumulated other comprehensive loss

Tangible common equity

$ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 110,340 $ 123,681 $ 110,340

Accumulated other comprehensive loss

58,939 56,313 51,613 78,848 60,185 58,939 60,185

Tangible common equity adjusted for accumulated other comprehensive loss

$ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 170,525 $ 182,620 $ 170,525

Calculation of tangible book value per share

Tangible common equity

$ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 110,340 $ 123,681 $ 110,340

Shares outstanding

4,313,940 4,310,251 4,298,773 4,300,881 4,303,766 4,313,940 4,303,766

Tangible book value per diluted share

$ 28.67 $ 29.30 $ 28.31 $ 21.63 $ 25.64 $ 28.67 $ 25.64

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

Tangible common equity adjusted for accumulated other comprehensive loss

$ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 170,525 $ 182,620 $ 170,525

Diluted average common shares outstanding

4,313,940 4,310,251 4,298,773 4,300,881 4,303,766 4,313,940 4,303,766

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

$ 42.33 $ 42.36 $ 40.31 $ 39.96 $ 39.62 $ 42.33 $ 39.62

Calculation of tangible common equity to total assets

Tangible common equity

$ 123,681 $ 126,275 $ 121,678 $ 93,012 $ 110,340 $ 123,681 $ 110,340

Total assets

2,077,067 2,071,782 2,108,279 2,087,470 2,161,218 2,077,067 2,161,218

Tangible common equity to total assets

5.95 % 6.09 % 5.77 % 4.46 % 5.11 % 5.95 % 5.11 %

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

Tangible common equity adjusted for accumulated other comprehensive loss

$ 182,620 $ 182,588 $ 173,291 $ 171,860 $ 170,525 $ 182,620 $ 170,525

Total assets

2,077,067 2,071,782 2,108,279 2,087,470 2,161,218 2,077,067 2,161,218

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

8.79 % 8.81 % 8.22 % 8.23 % 7.89 % 8.79 % 7.89 %

Calculation of tax adjusted net interest margin

Net interest income

$ 12,054 $ 11,780 $ 12,715 $ 13,133 $ 14,039 $ 23,834 $ 28,707

Tax adjusted interest on securities and loans

677 699 722 730 748 1,376 1,504

Adjusted net interest income

12,731 12,749 13,437 13,863 14,787 25,210 30,211

Total average earning assets

1,906,998 1,945,501 1,920,127 1,930,118 1,950,774 1,926,251 1,929,826

Tax adjusted net interest margin

2.67 % 2.57 % 2.80 % 2.87 % 3.03 % 2.62 % 3.13 %

Efficiency ratio

Total non-interest expense

$ 14,417 $ 15,004 $ 13,517 $ 13,493 $ 13,995 $ 29,421 $ 13,995

Total revenue

14,627 25,255 15,450 15,530 17,045 39,883 17,045

Efficiency ratio

98.56 % 59.41 % 87.49 % 86.88 % 82.11 % 73.77 % 82.11 %