Exhibit 99.1

 

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION
April 27, 2022 CONTACT INVESTOR RELATIONS
  (219) 853-7575

  

FINWARD BANCORP

ANNOUNCES EARNINGS FOR THE THREE MONTHS ENDED

MARCH 31, 2022

 

Munster, Indiana - Finward Bancorp (Nasdaq: FNWD) (“Finward” or the “Bancorp”), the holding company for Peoples Bank (the “Bank”), today announced that net income available to common stockholders was $2.1 million, or $0.53 per share, for the quarter ended March 31, 2022, as compared to $4.5 million, or $1.31 per share, for the corresponding prior year period. Selected performance metrics are as follows for the periods presented:

 

Performance Ratios

 

Three months ended,

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Return on equity

    5.01 %     8.56 %     8.90 %     9.17 %     11.94 %

Return on assets

    0.44 %     0.83 %     0.87 %     0.90 %     1.18 %

Net interest margin - tax equivalent

    3.63 %     3.58 %     3.46 %     3.42 %     3.59 %

Noninterest income / average assets

    0.64 %     0.95 %     1.02 %     0.92 %     1.12 %

Noninterest expense / average assets

    3.33 %     3.18 %     3.04 %     2.76 %     2.73 %

Efficiency ratio

    87.10 %     78.28 %     75.87 %     70.79 %     64.14 %

 

The successful closing of the acquisition of Royal Financial, Inc. (“Royal”) in the first quarter of 2022, resulted in one-time expenses of approximately $2.5 million. Core earnings for the quarter ended March 31, 2022, amounted to $4.1 million, or $1.01 per share, compared to $4.1 million, or $1.19 per share for the quarter ended March 31, 2021. Core earnings is a non-GAAP measure. For the periods presented they exclude merger related expenses, net (gain) loss on securities, core deposit accretion, certificate of deposit purchase premium amortization, purchase discount amortization, and related tax benefit/(cost). Selected non-GAAP (“generally accepted accounting principles”) performance metrics are as follows for the periods presented:

 

Non-GAAP Performance Ratios

 

Three months ended,

 
   

(Unaudited)

           

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Core return on equity

    11.32 %     7.83 %     8.46 %     9.42 %     12.04 %

Core return on assets

    0.83 %     0.71 %     0.75 %     0.83 %     1.07 %

Core noninterest expense / average assets

    2.67 %     3.12 %     2.98 %     2.70 %     2.67 %

Core efficiency ratio

    72.87 %     81.01 %     78.48 %     71.82 %     65.74 %

 

Refer to “Disclosure Regarding Non-GAAP Measures” and the “Reconciliation of the Non-GAAP Performance Ratios” table below for additional information regarding our non-GAAP measures and impact per period by operation.

 

Highlights of the recent quarter include:

 

 

Completion of Royal Financial acquisition: As of March 31, 2022, loans on the Finward balance sheet net of associated purchase discount related to the Royal merger totaled $437.3 million. Additionally, deposits on the Finward balance sheet related to the Royal merger totaled $432.8 million. Goodwill associated with the transaction totaled $11.7 million. Initially reported projections related to the Royal acquisition had an aggregate value of $52.9 million based on a closing stock price of $44.00. However, the actual aggregate value of the transaction totaled approximately $56.6 million due to a closing stock price of $47.65.

 

Core earnings stable: Net income for the three months ended March 31, 2022 decreased $2.4 million compared to the three months ended March 31, 2021. However, core earnings for the three months ended March 31, 2022, decreased by $51 thousand, as compared to the three months ended March 31, 2021, primarily relating to the increase in interest-earning assets acquired from the Royal acquisition and organic loan growth and continued ability to price deposit accounts appropriately to manage through the interest rate cycle.

 

 

 

 

Net interest margin steady: The net interest margin for the quarter ended March 31, 2022, was 3.41%, compared to 3.40% for the quarter ended March 31, 2021. The tax-adjusted net interest margin for the quarter ended March 31, 2022, was 3.63%, compared to 3.59% for the quarter ended March 31, 2021. The increased tax-equivalent margin is primarily related to decreased interest expense due to the Bancorp’s ability to manage through the interest rate cycle and tax benefits from the investment in municipal securities.

 

Building a digital-forward foundation: Progress continued to build on the Salesforce platform during the quarter. Our primary focus for this quarter and the next continues to be the deployment of nCino to fully leverage the digital integration between credit and lending while improving the customer experience and overall risk management of the loan portfolios. Expenses related to these initiatives were approximately $259 thousand for the quarter ended March 31, 2022, and approximately $146 thousand for the quarter ended March 31, 2021.

 

Optimizing the banking center footprint: Following the previous year’s successful closure of one banking center and the donation and leaseback of another, progress during the quarter continued towards the closure of two additional banking centers from the 30 current locations. Once those closures are complete, the remaining 28 locations are being analyzed for footprint optimization opportunities, with four additional locations showing the potential for reducing operating overhead. The redeployment of occupancy expenses into building a digital-forward foundation to meet customer expectations will continue Finward’s digital-first future.

 

“With the successful integration of the Royal Financial franchise, we are now delivering a better experience to our new Royal customers with Finward platforms and services. With integration expenses largely behind us, we will continue to tackle big technology investments and expenses to improve our digital user experience and operating environment throughout 2022. Despite the rapidly-changing environment, we continue to deliver financial performance that allows for the ongoing investments in the digital transformation process for Peoples Bank and Finward Bancorp,” said Benjamin Bochnowski, president and chief executive officer. 

 

Net Interest Income

 

Year-to-Date

                                 

(Dollars in thousands)

 

Average Balances, Interest, and Rates

 

(unaudited)

 

March 31, 2022

   

March 31, 2021

 
   

Average
Balance

   

Interest

   

Rate (%)

   

Average
Balance

   

Interest

   

Rate (%)

 

ASSETS

         

`

                                 

Interest bearing deposits in other financial institutions

  $ 22,295     $ 8       0.14     $ 51,688     $ 12       0.09  

Federal funds sold

    8,015       -       -       788       -       -  

Certificates of deposit in other financial institutions

    1,725       3       0.70       1,598       8       2.00  

Securities available-for-sale

    510,119       2,575       2.02       383,877       1,941       2.02  

Loans receivable

    1,274,407       13,286       4.17       975,593       10,746       4.41  

Federal Home Loan Bank stock

    4,027       22       2.19       3,918       20       2.04  

Total interest earning assets

    1,820,588     $ 15,894       3.49       1,417,462     $ 12,727       3.59  

Cash and non-interest bearing deposits in other financial institutions

    20,183                       33,719                  

Allowance for loan losses

    (13,367 )                     (12,662 )                

Other noninterest bearing assets

    127,943                       98,316                  

Total assets

  $ 1,955,347                     $ 1,536,835                  
                                                 

LIABILITIES AND STOCKHOLDERS' EQUITY

                                               

Total deposits

  $ 1,737,620     $ 337       0.08     $ 1,348,160     $ 651       0.19  

Repurchase agreements

    19,390       16       0.33       14,479       10       0.28  

Borrowed funds

    6,091       6       0.39       2,967       20       2.70  

Total interest bearing liabilities

    1,763,101     $ 359       0.08       1,365,606     $ 681       0.20  

Other noninterest bearing liabilities

    21,872                       19,049                  

Total liabilities

    1,784,973                       1,384,655                  

Total stockholders' equity

    170,374                       152,180                  

Total liabilities and stockholders' equity

  $ 1,955,347                     $ 1,536,835                  

 

Net interest income for the quarter ended March 31, 2022, increased to $15.9 million, as compared to $12.7 million for the quarter ended March 31, 2021, reflecting increased interest earning assets primarily as a result of the Royal acquisition and an improvement in net interest margin. Average interest-earning assets increased by $419.1 million for the quarter ended March 31, 2022, as compared to December 31, 2022, primarily concentrated in loans receivable as a result of the Royal acquisition, and organic loan growth. Average loans receivable, net of allowance for loan losses, increased by $298.1 million for the quarter ended March 31, 2022, as compared to the same prior year period. Net interest margin for the quarter ended March 31, 2022 increased to 3.41% from 3.40% for the same prior year period. The net interest margin improvement was primarily due to lower interest expense attributable to the Bancorp’s ability to manage through the interest rate cycle. For the quarter ended March 31, 2022, the cost of average interest-bearing liabilities decreased to 0.08%, from 0.20% for the quarter ended March 31, 2021. The total cost of deposits (including noninterest bearing deposits) was 0.08% for the quarter ended March 31, 2022, compared to 0.19% for the quarter ended March 31, 2021.

 

 

 

Noninterest Income

(Dollars in thousands)

                               

(Unaudited)

 

Quarter Ended March 31,

   

3/31/2022 vs. 3/31/2021

 
   

2022

   

2021

   

$ Change

   

% Change

 

Noninterest income:

                               

Fees and service charges

  $ 1,304     $ 1,066     $ 238       22.3 %

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

    607       2,049       (1,442 )     -70.4 %

Wealth management operations

    595       607       (12 )     -2.0 %

Gain on sale of securities, net

    381       417       (36 )     -8.6 %

Increase in cash value of bank owned life insurance

    252       169       83       49.1 %

Gain (loss) on sale of foreclosed real estate

    -       (9 )     9       -100.0 %

Other

    5       14       (9 )     -64.3 %
                                 

Total noninterest income

  $ 3,144     $ 4,313     $ (1,169 )     -27.1 %

 

The decrease in gain on sale of loans is the result of significant refinance activity which started in 2020 and continued into the prior year due to the economic and low rate environment, which resulted in more loans originated and sold. We anticipate the demand for mortgage loans will continue to revert to normal levels as borrowing rates on loans increase. The increase in fees and service charges for the three-month period is primarily the result of changes in customer usage of bank services.

 

Noninterest Expense

(Dollars in thousands)

                               

(Unaudited)

 

Quarter Ended March 31,

   

3/31/2022 vs. 3/31/2021

 
   

2022

   

2021

   

$ Change

   

% Change

 

Noninterest expense:

                               

Compensation and benefits

  $ 7,367     $ 5,685     $ 1,682       29.6 %

Data processing

    3,054       674       2,380       353.1 %

Occupancy and equipment

    1,500       1,372       128       9.3 %

Marketing

    651       199       452       227.1 %

Federal deposit insurance premiums

    219       180       39       21.7 %

Other

    3,478       2,383       1,095       46.0 %
                                 

Total noninterest expense

  $ 16,269     $ 10,493     $ 5,776       55.0 %

 

For the three months ended March 31, 2022, the increase in compensation and benefits is primarily the result of the Royal acquisition and management’s continued focus on talent management and retention. The increase in data processing expense in primarily the result of data conversion expenses related to the acquisition of Royal, increased system utilization due to growth of the Bank, and continued investment in technological advancements such as Salesforce and nCino. The increase in occupancy and equipment expense is primarily related to the Royal acquisition and related assets brought over. The increase in marketing expense is primarily the result of the Royal acquisition. The increase in other operating expenses is primarily the result of one-time expenses related to the acquisition of Royal and continued investments in strategic initiatives focusing on growth of the organization.

 

Income Tax Expense

The provision for income taxes was $275 thousand for the quarter ended March 31, 2022, as compared to $745 thousand for the quarter ended March 31, 2021. The effective tax rate was 11.4% for the quarter ended March 31, 2022, as compared to 14.1% for the quarter ended March 31, 2021. The Bancorp’s lower current period effective tax rate is a result of a greater increase to tax preferred income relative to earnings.

 

Lending

The Bancorp’s loan portfolio totaled $1.4 billion on March 31, 2022, compared to $966.7 million on December 31, 2021, an increase of $473.0 million or 48.9%. The increase is primarily the result of the Royal acquisition, as well as organic loan portfolio growth. During the first three months of 2022 the Bancorp originated $98.0 million in new commercial loans, compared to $94.9 million during the three months ended March 31, 2021. During the three months ended March 31, 2022, the Bancorp originated $15.7 million in new fixed rate mortgage loans for sale, compared to $49.1 million during the three months ended March 31, 2021. The loan portfolio represents 74.1% of earning assets and is comprised of 63.2% commercial related credits.

 

 

 

Asset Quality

At March 31, 2022, non-performing loans totaled $7.7 million, compared to $7.3 million at December 31, 2021, an increase of $433 thousand or 6.0%. The Bancorp’s ratio of non-performing loans to total loans was 0.54% at March 31, 2022, compared to 0.76% at December 31, 2021. The Bancorp’s ratio of non-performing assets to total assets was 0.41% at March 31, 2022, compared to 0.51% at December 31, 2021.

 

For the three months ended March 31, 2022, no provisions to the ALL were required, compared to $578 thousand for the three months ended March 31, 2021, a decrease of $578 thousand. For the three months ended March 31, 2022, recoveries, net of charge-offs, totaled $44 thousand. At March 31, 2022, the allowance for loan losses totaled $13.4 million and is considered adequate by management. Non-performing loans totaled $7.7 million at March 31, 2022, as compared to $7.3 million at December 31, 2021.The allowance for loan losses as a percentage of total loans was 0.93% at March 31, 2022, compared to 1.38% at December 31, 2021. The allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 174.0% at March 31, 2022, compared to 183.8% at December 31, 2021.

 

Management also considers reserves that are not part of the ALL that have been established from acquisition activity. The Bancorp acquired loans for which there was evidence of credit quality deterioration since origination and it was determined that it was probable that the Bancorp would be unable to collect all contractually required principal and interest payments. Additionally, the Bancorp has acquired loans where there was no evidence of credit quality deterioration since origination and has marked these loans to their fair values. When these additional reserves are included on a non-GAAP basis, the allowance for loan losses as a percentage of total loans was 1.55% at March 31, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 287.7% at March 31, 2022. See Table 1 below for a reconciliation of these non-GAAP figures to the Bancorp’s GAAP figures.

 

Investing

The Bancorp’s securities portfolio totaled $464.3 million at March 31, 2022, compared to $526.9 million at December 31, 2021, a decrease of $62.6 million or 11.9%. The decrease is attributable to increased unrealized losses within the portfolio and a return of liquidity from the securities portfolio. The securities portfolio represents 23.9% of earning assets and provides a consistent source of liquidity and earnings to the Bancorp. Cash and cash equivalents totaled $54.5 million on March 31, 2022, compared to $33.2 million on December 31, 2021, an increase of $21.3 million or 64.3%. The increase in cash and cash equivalents is primarily the result of the timing of investments in interest earnings assets relative to the inflow of deposits and repurchase agreements.

 

Funding

On March 31, 2022, core deposits totaled $1.5 billion, compared to $1.2 billion on December 31, 2021, an increase of $269.8 million or 22.6%. The increase is the result of the Royal acquisition, as well as Bancorp’s efforts to maintain and grow core deposits. Core deposits include checking, savings, and money market accounts and represented 77.3% of the Bancorp’s total deposits at March 31, 2022. During the first three months of 2022, balances for checking, savings, and money market accounts increased. The increase in these core deposits is a result of the Royal acquisition, as well as management’s sales efforts along with customer preferences for competitively priced short-term liquid investments. On March 31, 2022, balances for certificates of deposit totaled $430.4 million, compared to $239.2 million on December 31, 2021, an increase of $191.2 million or 79.9%. The increase related to certificate of deposits is primarily related to the Royal acquisition. In addition, on March 31, 2022, borrowings and repurchase agreements totaled $23.2 million, compared to $14.6 million at December 31, 2021, an increase of $8.7 million or 59.4%. The increase in short-term borrowings was the result of cyclical inflows of repurchase agreement balances.

 

Capital Adequacy

At March 31, 2022, shareholders’ equity stood at $157.6 million, and tangible capital represented 6.3% of tangible assets. The Bank’s regulatory capital ratios at March 31, 2022, were 11.8% for total capital to risk-weighted assets, 10.9% for both common equity tier 1 capital to risk-weighted assets and tier 1 capital to risk-weighted assets, and 8.2% for tier 1 leverage capital to adjusted average assets. Under all regulatory capital requirements, the Bank is considered well capitalized. The tangible book value of the Bancorp’s stock stood at $29.99 per share at March 31, 2022, compared to $40.91 at December 31, 2021, a decrease of $10.91 or 26.7%. Primarily as a result of increased net unrealized loss on securities available-for-sale, net of reclassification and tax effects.

 

 

 

Disclosures Regarding Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. In this press release the Bancorp also is providing certain financial measures that are identified as non-GAAP. The Bancorp’s management believes that the non-GAAP information, which consists of core return on equity, core return on assets, core noninterest expense/average assets, core efficiency ratio, core earnings, adjusted allowance for loan loss to total loans, adjusted allowance for loan loss to nonperforming loans, and reported net income excluding non-core operations, which can vary from period to period, provides a better comparison of period to period operating performance. 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 30 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: difficulties and delays in integrating Finward’s and Royal’s businesses or fully realizing cost savings and other benefits; business disruption following the merger; any continuing risks and uncertainties for our business, results of operations, and financial condition relating to the COVID-19 pandemic; 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; 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, 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 Finward’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 Finward or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Except as required by law, Finward 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

 

Three months ended,

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Return on equity

    5.01 %     8.56 %     8.90 %     9.17 %     11.94 %

Return on assets

    0.44 %     0.83 %     0.87 %     0.90 %     1.18 %

Yield on loans

    4.17 %     4.28 %     4.28 %     4.21 %     4.41 %

Yield on security investments

    2.02 %     1.94 %     1.94 %     1.96 %     2.02 %

Total yield on earning assets

    3.49 %     3.42 %     3.36 %     3.38 %     3.59 %

Cost of deposits

    0.08 %     0.10 %     0.13 %     0.16 %     0.19 %

Cost of repurchase agreements

    0.33 %     0.26 %     0.25 %     0.28 %     0.28 %

Cost of borrowed funds

    0.39 %     0.47 %     9.76 %     0.47 %     2.70 %

Total cost of funds

    0.08 %     0.10 %     0.13 %     0.16 %     0.20 %

Net interest margin - tax equivalent

    3.63 %     3.58 %     3.46 %     3.42 %     3.59 %

Noninterest income / average assets

    0.64 %     0.95 %     1.02 %     0.92 %     1.12 %

Noninterest expense / average assets

    3.33 %     3.18 %     3.04 %     2.76 %     2.73 %

Net noninterest margin / average assets

    -2.68 %     -2.23 %     -2.02 %     -1.84 %     -1.61 %

Efficiency ratio

    87.10 %     78.28 %     75.87 %     70.79 %     64.14 %

Effective tax rate

    11.41 %     0.18 %     7.04 %     9.96 %     14.09 %
                                         

Non-performing assets to total assets

    0.41 %     0.51 %     0.91 %     0.85 %     0.92 %

Non-performing loans to total loans

    0.54 %     0.76 %     1.42 %     1.27 %     1.32 %

Allowance for loan losses to non-performing loans

    173.99 %     183.76 %     101.71 %     111.13 %     101.49 %

Allowance for loan losses to loans outstanding

    0.93 %     1.38 %     1.44 %     1.42 %     1.34 %

Foreclosed real estate to total assets

    0.00 %     0.00 %     0.01 %     0.02 %     0.03 %
                                         

Basic earnings per share

  $ 0.53     $ 0.95     $ 1.02     $ 1.03     $ 1.31  

Diluted earnings per share

  $ 0.53     $ 0.95     $ 1.02     $ 1.03     $ 1.31  

Net worth / total assets

    7.51 %     9.66 %     9.48 %     9.70 %     9.57 %

Book value per share

  $ 36.71     $ 45.00     $ 43.85     $ 44.71     $ 42.76  

Tangible book value per share

  $ 29.99     $ 40.91     $ 39.69     $ 40.48     $ 38.48  

Closing stock price

  $ 46.21     $ 45.88     $ 41.05     $ 44.14     $ 41.82  

Price per earnings per share

  $ 21.76     $ 12.07     $ 10.06     $ 10.71     $ 8.04  

Dividend declared per common share

  $ 0.31     $ 0.31     $ 0.31     $ 0.31     $ 0.31  

 

 

 

Finward Bancorp

Quarterly Financial Report

 

Balance Sheet Data

                                       

(Dollars in thousands)

 

(Unaudited)

           

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Total assets

  $ 2,097,845     $ 1,620,743     $ 1,609,924     $ 1,603,513     $ 1,555,348  

Cash & cash equivalents

    54,501       33,176       31,765       68,625       68,009  

Certificates of deposit in other financial institutions

    1,731       1,709       977       1,471       1,474  

Securities - available for sale

    464,321       526,889       531,010       473,927       422,868  
                                         

Loans receivable:

                                       

Commercial real estate

  $ 408,375     $ 317,145     $ 309,905     $ 315,087     $ 304,851  

Residential real estate

    444,758       260,134       268,798       268,649       276,728  

Commercial business

    112,396       115,772       125,922       149,414       163,896  

Construction and land development

    153,394       123,822       110,289       104,154       97,400  

Multifamily

    231,683       61,194       56,869       53,639       51,933  

Home equity

    34,284       34,612       35,652       36,684       36,222  

Manufactured homes

    38,634       37,887       32,857       26,453       26,260  

Government

    8,176       8,991       9,841       8,462       9,372  

Consumer

    921       582       650       544       438  

Farmland

    -       -       205       309       315  

Total loans

  $ 1,432,621     $ 960,139     $ 950,988     $ 963,395     $ 967,415  
                                         

Deposits:

                                       

Core deposits:

                                       

Noninterest bearing checking

  $ 380,515     $ 295,294     $ 287,376     $ 275,819     $ 286,969  

Interest bearing checking

    350,825       333,744       315,575       307,148       279,984  

Savings

    425,634       293,976       284,681       277,944       271,910  

Money market

    307,850       271,970       254,671       253,427       245,750  

Total core deposits

    1,464,824       1,194,984       1,142,303       1,114,338       1,084,613  

Certificates of deposit

    430,387       239,217       263,897       280,758       282,081  

Total deposits

  $ 1,895,211     $ 1,434,201     $ 1,406,200     $ 1,395,096     $ 1,366,694  
                                         

Borrowings and repurchase agreements

  $ 23,244     $ 14,581     $ 23,844     $ 24,399     $ 15,917  

Stockholder's equity

    157,637       156,615       152,569       155,569       148,770  

 

 

 

Finward Bancorp

Quarterly Financial Report

 

Consolidated Statements of Income

 

Three months ended,

 

(Dollars in thousands)

 

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 
   

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Interest income:

                                       

Loans

  $ 13,286     $ 10,282     $ 10,270     $ 10,275     $ 10,746  

Securities & short-term investments

    2,608       2,545       2,396       2,160       1,981  

Total interest income

    15,894       12,827       12,666       12,435       12,727  

Interest expense:

                                       

Deposits

    337       350       452       549       651  

Borrowings

    22       20       14       14       30  

Total interest expense

    359       370       466       563       681  

Net interest income

    15,535       12,457       12,200       11,872       12,046  

Provision for loan losses

    -       216       139       576       578  

Net interest income after provision for loan losses

    15,535       12,241       12,061       11,296       11,468  

Noninterest income:

                                       

Fees and service charges

    1,304       1,378       1,473       1,471       1,066  

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

    607       902       1,229       1,116       2,049  

Wealth management operations

    595       588       604       576       607  

Gain on sale of securities, net

    381       711       590       269       417  

Increase in cash value of bank owned life insurance

    252       178       180       188       169  

Gain on sale of foreclosed real estate, net

    -       20       -       36       (9 )

Other

    5       31       70       24       14  

Total noninterest income

    3,144       3,808       4,146       3,680       4,313  

Noninterest expense:

                                       

Compensation and benefits

    7,367       6,617       6,042       5,897       5,685  

Occupancy and equipment

    3,054       1,461       1,380       1,324       1,372  

Data processing

    1,500       1,119       1,076       778       674  

Federal deposit insurance premiums

    651       241       236       204       180  

Marketing

    219       357       334       195       199  

Other

    3,478       2,937       3,741       2,612       2,383  

Total noninterest expense

    16,269       12,732       12,401       11,010       10,493  

Income before income taxes

    2,410       3,317       3,806       3,966       5,288  

Income tax expenses

    275       6       268       395       745  

Net income

  $ 2,135     $ 3,311     $ 3,538     $ 3,571     $ 4,543  

 

 

 

Finward Bancorp

Quarterly Financial Report

 

                                         

Asset Quality

 

(Unaudited)

           

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 

(Dollars in thousands)

 

March 31,

   

December 31,

   

September 30,

   

June 30,

   

March 31,

 
   

2022

   

2021

   

2021

   

2021

   

2021

 

Nonaccruing loans

  $ 7,200     $ 7,056     $ 11,027     $ 12,025     $ 12,257  

Accruing loans delinquent more than 90 days

    494       205       2,516       248       599  

Securities in non-accrual

    972       992       1,011       970       944  

Foreclosed real estate

    -       -       81       368       491  

Total nonperforming assets

  $ 8,666     $ 8,253     $ 14,635     $ 13,611     $ 14,291  
                                         

Allowance for loan losses (ALL):

                                       

ALL specific allowances for impaired loans

  $ 716     $ 684     $ 1,904     $ 1,770     $ 1,884  

ALL general allowances for loan portfolio

    12,671       12,659       11,870       11,869       11,163  

Total ALL

  $ 13,387     $ 13,343     $ 13,774     $ 13,639     $ 13,047  
                                         

Troubled Debt Restructurings:

                                       

Nonaccruing troubled debt restructurings, non-compliant (1) (2)

  $ 300     $ 1,122     $ 1,126     $ 1,269     $ 407  

Nonaccruing troubled debt restructurings, compliant (2)

    265       306       102       -       366  

Accruing troubled debt restructurings

    1,379       1,421       1,427       1,182       1,210  

Total troubled debt restructurings

  $ 1,944     $ 2,849     $ 2,655     $ 2,451     $ 1,983  

 

(1) "non-compliant" refers to not being within the guidelines of the restructuring agreement

(2) included in nonaccruing loan balances presented above

 


 

   

(Unaudited)

         
   

March 31,

   

Required

 
   

2022

   

To Be Well

 
   

Actual Ratio

   

Capitalized

 

Capital Adequacy Bank

               

Common equity tier 1 capital to risk-weighted assets

    10.9%       6.5%  

Tier 1 capital to risk-weighted assets

    10.9%       8.0%  

Total capital to risk-weighted assets

    11.8%       10.0%  

Tier 1 capital to adjusted average assets

    8.2%       5.0%  

 

 

 

 

Table 1 - Reconciliation of the Non-GAAP Performance Measures

                                       
                                           
 

(Dollars in thousands)

 

Three Months Ended

 
 

(unaudited)

 

March 31, 2022

   

December 31, 2021

   

September 31, 2021

   

June 30, 2021

   

March 31, 2021

 
 

Calculation of core net income

                                       
 

Net income

  $ 2,135     $ 3,311     $ 3,538     $ 3,571     $ 4,543  
 

Realized loss/(gain) on securities

    (381 )     (771 )     (590 )     (269 )     (417 )
 

Merger related expenses

    2,852       -       -       -       -  
 

CD premium amortization

    (129 )     -       -       -       -  
 

Core deposit amortization

    347       249       249       249       248  
 

Purchase discount amortization

    (234 )     (144 )     (271 )     (300 )     (359 )
 

Related tax benefit/(cost)

    (516 )     127       129       67       111  

(A)

Core net income

  $ 4,074     $ 2,772     $ 3,055     $ 3,318     $ 4,126  
                                           
 

Calculation of core diluted earnings per share

                                       

(A)

Core net income

  $ 4,074     $ 2,832     $ 3,055     $ 3,318     $ 4,126  
 

Diluted average common shares outstanding

    4,020,815       3,479,988       3,479,139       3,478,392       3,471,604  
 

Core diluted earnings per share

  $ 1.01     $ 0.81     $ 0.88     $ 0.95     $ 1.19  
                                           
 

Calculation of core return on average assets

                                       

(A)

Core net income

  $ 4,074     $ 2,832     $ 3,055     $ 3,318     $ 4,126  
 

Average total assets

    1,955,347       1,601,040       1,631,654       1,594,610       1,536,835  
 

Core return on average assets

    0.83 %     0.71 %     0.75 %     0.83 %     1.07 %
                                           
 

Calculation of core pre-provision net revenue

                                       
 

Net interest income

  $ 15,535     $ 12,457     $ 12,200     $ 11,872     $ 12,046  
 

Non-interest income

    3,144       3,808       4,146       3,680       4,313  
 

Non-interest expense

    (16,269 )     (12,732 )     (12,401 )     (11,010 )     (10,493 )
 

Pre-provision net revenue

    2,410       3,533       3,945       4,542       5,866  
 

Realized loss/(gain) on securities

    (381 )     (711 )     (590 )     (269 )     (417 )
 

Core deposit amortization

    347       249       249       249       248  
 

Purchase discount amortization

    (234 )     (144 )     (271 )     (300 )     (359 )

(B)

Core pre-provision net revenue

  $ 2,142     $ 2,927     $ 3,333     $ 4,222     $ 5,338  
                                           
 

Calculation of core pre-provision net revenue to average assets

                                       

(B)

Core pre-provision net revenue

  $ 2,142     $ 2,927     $ 3,333     $ 4,222     $ 5,338  
 

Average total assets

    1,955,347       1,601,040       1,631,654       1,594,610       1,536,835  
 

Core pre-provision net revenue to average assets

    0.44 %     0.73 %     0.82 %     1.06 %     1.39 %
                                           
 

Calculation of tangible assets (excluding PPP)

                                       
 

Total assets

  $ 2,097,845     $ 1,620,743     $ 1,609,924     $ 1,603,513     $ 1,555,348  
 

Goodwill

    (22,851 )     (11,109 )     (11,109 )     (11,109 )     (11,109 )
 

Other Intangibles

    (5,998 )     (3,126 )     (3,374 )     (3,622 )     (3,126 )
 

Paycheck Protection Plan ("PPP") loans

    (9,983 )     (22,072 )     (32,892 )     (50,304 )     (66,295 )

(C)

Tangible assets (excluding PPP)

  $ 2,059,013     $ 1,584,436     $ 1,562,549     $ 1,538,478     $ 1,474,818  
                                           
 

Calculation of tangible common equity

                                       
 

Total stockholder's equity

  $ 157,637     $ 156,615     $ 152,569     $ 155,569     $ 156,615  
 

Goodwill

    (22,851 )     (11,109 )     (11,109 )     (11,109 )     (11,109 )
 

Other intangibles

    (5,998 )     (3,126 )     (3,374 )     (3,622 )     (3,126 )

(D)

Tangible common equity

  $ 128,788     $ 142,380     $ 138,086     $ 140,838     $ 142,380  
                                           
 

Calculation of tangible common equity to tangible assets (excluding PPP)

                                 

(D)

Tangible common equity

  $ 128,788     $ 142,380     $ 138,086     $ 140,838     $ 142,380  

(C)

Tangible assets (excluding PPP)

    2,059,013       1,584,436       1,562,549       1,538,478       1,474,818  
 

Tangible common equity to tangible assets

    6.25 %     8.99 %     8.84 %     9.15 %     9.65 %
                                           
 

Calculation of average tangible common equity

                                       
 

Average stockholder's common equity

  $ 170,374     $ 159,010     $ 159,010     $ 155,850     $ 152,180  
 

Average goodwill

    (21,251 )     (11,109 )     (11,109 )     (11,109 )     (11,109 )
 

Average other intangibles

    (5,174 )     (3,270 )     (3,523 )     (3,770 )     (4,018 )

(E)

Average tangible stockholders' common equity

  $ 143,949     $ 144,631     $ 144,378     $ 140,971     $ 137,053  

 

 

 

 

Calculation of core return on average common equity

                                       

(A)

Core net income

  $ 4,074     $ 2,832     $ 3,055     $ 3,318     $ 4,126  

(E)

Average tangible common equity

    143,949       144,631       144,378       140,971       137,053  
 

Core return on average common equity

    11.32 %     7.83 %     8.46 %     9.42 %     12.04 %
                                           
 

Calculation of core yield on loans

                                       
 

Interest income on loans

  $ 13,286     $ 10,282     $ 10,270     $ 10,275     $ 10,746  
 

Loan accretion income

    (234 )     (144 )     (271 )     (300 )     (359 )
 

Adjusted interest income on loans

    13,052       10,138       9,999       9,975       10,387  
 

Average loan balances

    1,274,407       960,606       960,274       976,520       975,593  
 

Core yield on loans

    4.10 %     4.22 %     4.17 %     4.09 %     4.26 %
                                           
 

Calculation of adjusted allowance for loan loss to total loans

                                       
 

Allowance for loan losses

  $ (13,387 )   $ (13,343 )   $ (13,774 )   $ (13,639 )   $ (13,343 )
 

Additional reserves not part of the allowance for loan loss

    (8,749 )     (2,428 )     (2,572 )     (3,420 )     (3,720 )

(F)

Adjusted allowance for loan loss

    (22,136 )     (15,771 )     (16,346 )     (17,059 )     (17,063 )
 

Total loans

    1,439,728       966,720       956,352       969,491       981,902  
 

Adjusted allowance for loan loss to total loans

    1.54 %     1.63 %     1.71 %     1.76 %     1.74 %
                                           
 

Calculation of adjusted allowance for loan loss to nonperforming loans

                                 

(F)

Adjusted allowance for loan loss

  $ (22,136 )   $ (15,771 )   $ (16,346 )   $ (17,059 )   $ (17,063 )
 

Nonperforming loans

    7,694       7,261       13,543       12,273       12,856  
 

Adjusted allowance for loan loss to nonperforming loans (coverage ratios)

    287.70 %     217.20 %     120.70 %     139.00 %     132.72 %
                                           
 

Calculation of adjusted allowance for loan loss to total loans excluding PPP

                                 

(F)

Adjusted allowance for loan loss

  $ (22,136 )   $ (15,771 )   $ (16,346 )   $ (17,059 )   $ (17,063 )
 

Total loans

    1,439,728       966,720       956,352       969,491       975,593  
 

PPP loans

    (9,983 )     (22,072 )     (32,892 )     (50,304 )     (66,295 )
 

Total loans excluding PPP

    1,429,745       944,648       923,460       919,187       909,298  
 

Adjusted allowance for loan loss to total loans excluding PPP

    1.55 %     1.67 %     1.77 %     1.86 %     1.88 %
                                           
 

Calculation of core revenue

                                       
 

Net interest income

  $ 15,535     $ 12,457     $ 12,200     $ 11,872     $ 12,046  
 

Non-interest income

    3,144       3,808       4,146       3,680       4,313  
 

CD premium amortization

    (129 )     -       -       -       -  
 

Purchase discount amortization

    (234 )     (144 )     (271 )     (300 )     (359 )
 

Realized loss/(gain) on securities

    (381 )     (711 )     (590 )     (269 )     (417 )

(G)

Core revenue

  $ 17,935     $ 15,410     $ 15,485     $ 14,983     $ 15,583  
                                           
 

Calculation of core non-interest expense

                                       
 

Non-interest expense

  $ 16,269     $ 12,732     $ 12,401     $ 11,010     $ 10,493  
 

Merger related expenses

    (2,852 )     -       -       -       -  
 

Core deposit amortization

    (347 )     (249 )     (249 )     (249 )     (248 )

(H)

Core non-interest expense

  $ 13,070     $ 12,483     $ 12,152     $ 10,761     $ 10,245  
                                           
 

Calculation of core efficiency ratio

                                       

(H)

Core non-interest expense

  $ 13,070     $ 12,483     $ 12,152     $ 10,761     $ 10,245  

(G)

Core revenue

    17,935       15,410       15,485       14,983       15,583  
 

Core efficiency ratio

    72.87 %     81.01 %     78.48 %     71.82 %     65.74 %
                                           
 

Calculation of core non-interest expense to total average assets

                                       

(H)

Core non-interest expense

  $ 13,070     $ 12,483     $ 12,152     $ 10,761     $ 10,245  
 

Average total assets

    1,955,347       1,601,040       1,631,654       1,594,610       1,536,835  
 

Core non-interest expense to total average assets

    2.67 %     3.12 %     2.98 %     2.70 %     2.67 %
                                           
 

Calculation of tax adjusted net interest margin

                                       
 

Net interest income

  $ 15,535     $ 12,457     $ 12,200     $ 11,872     $ 12,046  
 

Tax adjusted interest on securities and loans

    966       959       851       745       677  
 

Adjusted net interest income

    16,501       13,416       13,051       12,617       12,723  
 

Total average earning assets

    1,820,588       1,500,183       1,506,674       1,473,625       1,417,462  
 

Tax adjusted net interest margin

    3.63 %     3.58 %     3.46 %     3.42 %     3.59 %
                                           
 

Efficiency Ratio

                                       
 

Total non-interest expense

  $ 16,269     $ 12,732     $ 12,401     $ 11,010     $ 10,493  
 

Total revenue

    18,679       16,265       16,346       15,552       16,359  
 

Efficiency ratio

    87.10 %     78.28 %     75.87 %     70.79 %     64.14 %