Finward Bancorp Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value (Tables)

Fair Value (Tables)

3 Months Ended

Mar. 31, 2016

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block]

The table below shows the credit loss roll forward on a year-to-date basis for the Bancorp’s pooled trust preferred securities that have been classified with other-than-temporary impairment:

	(Dollars in thousands)
	Collateralized debt obligations
	other-than-temporary impairment
Ending balance, December 31, 2015	$	271
Additions not previously recognized		-
Ending balance, March 31, 2016	$	271

Schedule of Fair Value, Pooled Trust Preferred Securities [Table Text Block]

The following table contains information regarding the Bancorp’s pooled trust preferred securities impairment evaluation as of December 31, 2015:

Cusip		74043CAC1			74042TAJ0			01449TAB9			01450NAC6
Deal name		PreTSL XXIV			PreTSL XXVII			Alesco IX			Alesco XVII
Class		B-1			C-1			A-2A			B
Lowest credit rating assigned		CC			C			BB			CCC
Number of performing banks		57			30			59			48
Number of performing insurance companies		13			7			10			n/a
Number of issuers in default		19			8			2			4
Number of issuers in deferral		4			4			5			4
Defaults & deferrals as a % of performing collateral		36.46	%		27.32	%		7.23	%		16.96	%
Subordination:
As a % of performing collateral		9.51	%		-3.69	%		46.16	%		25.85	%
As a % of performing collateral adjusted for projected future defaults		4.35	%		-11.38	%		43.09	%		21.62	%
Other-than-temporary impairment model assumptions:
Defaults:
Year 1 - issuer average		1.80	%		2.30	%		1.80	%		1.80	%
Year 2 - issuer average		1.80	%		2.30	%		1.80	%		1.80	%
Year 3 - issuer average		1.80	%		2.30	%		1.80	%		1.80	%
> 3 Years - issuer average		(1	)		(1	)		(1	)		(1	)
Discount rate - 3 month Libor, plus implicit yield spread at purchase		1.48	%		1.23	%		1.27	%		1.44	%
Recovery assumptions		(2	)		(2	)		(2	)		(2	)
Prepayments		0.00	%		0.00	%		0.00	%		0.00	%
Other-than-temporary impairment	$	41		$	132		$	36		$	62

(1) - Default rates > 3 years are evaluated on a issuer by issuer basis and range from 0.25% to 5.00%.

(2) - Recovery assumptions are evaluated on a issuer by issuer basis and range from 0% to 15% with a five year lag.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets measured at fair value on a recurring basis are summarized below:

			(Dollars in thousands)
			Fair Value Measurements at March 31, 2016 Using
(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale debt securities:
Money market fund	$	763	$	763	$	-	$	-
U.S. government sponsored entities		22,529		-		22,529		-
Collateralized mortgage obligations and residential mortgage-backed securities		116,290		-		116,290		-
Municipal securities		97,997		-		97,997		-
Collateralized debt obligations		2,316		-		-		2,316
Total securities available-for-sale	$	239,895	$	763	$	236,816	$	2,316

			(Dollars in thousands)
			Fair Value Measurements at December 31, 2015 Using
(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale debt securities:
Money market fund	$	525	$	525	$	-	$	-
U.S. government sponsored entities		17,431		-		17,431		-
Collateralized mortgage obligations and residential mortgage-backed securities		119,173		-		119,173		-
Municipal securities		93,487		-		93,487		-
Collateralized debt obligations		2,734		-		-		2,734
Total securities available-for-sale	$	233,350	$	525	$	230,091	$	2,734

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

A roll forward of available-for-sale securities, which require significant adjustment based on unobservable data, are presented in the following table:

	(Dollars in thousands)
	Estimated Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Available-for- sale securities
Beginning balance, January 1, 2015	$	2,432
Included in earnings		-
Total unrealized gains, included in other comprehensive income		302
Transfers in and/or (out) of Level 3		-
Ending balance, December 31, 2015	$	2,734

Beginning balance, January 1, 2016	$	2,734
Included in earnings		-
Total unrealized losses, included in other comprehensive income		(418)
Transfers in and/or (out) of Level 3		-
Ending balance, March 31, 2016	$	2,316

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block]

Assets measured at fair value on a non-recurring basis are summarized below:

			(Dollars in thousands)
			Fair Value Measurements at March 31, 2016 Using
(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	3,836	$	-	$	-	$	3,836
Foreclosed real estate		1,424		-		-		1,424

			(Dollars in thousands)
			Fair Value Measurements at December 31, 2015 Using
(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	7,048	$	-	$	-	$	7,048
Foreclosed real estate		1,590		-		-		1,590

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following table shows carrying values and related estimated fair values of financial instruments as of the dates indicated. Estimated fair values are further categorized by the inputs used to measure fair value. Items that are not financial instruments are not included.

	March 31, 2016				Estimated Fair Value Measurements at March 31, 2016 Using
(Dollars in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	9,925	$	9,925	$	9,925	$	-	$	-
Securities available-for-sale		239,895		239,895		763		236,816		2,316
Loans held-for-sale		1,505		1,538		1,538		-		-
Loans receivable, net		563,997		559,967		-		-		559,967
Federal Home Loan Bank stock		3,000		3,000		-		3,000		-
Accrued interest receivable		2,853		2,853		-		2,853		-

Financial liabilities:
Non-interest bearing deposits		102,078		102,078		102,078		-		-
Interest bearing deposits		616,618		616,416		420,719		195,697		-
Repurchase agreements		16,825		16,822		12,658		4,164		-
Borrowed funds		33,927		32,660		347		32,313		-
Accrued interest payable		45		45		-		45		-

	December 31, 2015				Estimated Fair Value Measurements at December 31, 2015 Using
(Dollars in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	11,533	$	11,533	$	11,533	$	-	$	-
Securities available-for-sale		233,350		233,350		525		230,091		2,734
Loans held-for-sale		2,435		2,504		2,504		-		-
Loans receivable, net		564,945		561,122		-		-		561,122
Federal Home Loan Bank stock		3,000		3,000		-		3,000		-
Accrued interest receivable		3,000		3,000		-		3,000		-

Financial liabilities:
Non-interest bearing deposits		100,031		100,031		100,031		-		-
Interest bearing deposits		614,844		614,226		420,354		193,872		-
Repurchase agreements		18,508		18,476		13,628		4,848		-
Borrowed funds		39,493		39,504		393		39,111		-
Accrued interest payable		45		45		-		45		-