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

Quarterly report pursuant to Section 13 or 15(d)

Loans Receivable (Tables)

Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of accounts, notes, loans and financing receivable

Loans receivable are summarized below:


(Dollars in thousands)
	June 30, 2019		December 31, 2018
Loans secured by real estate:
Residential real estate	$	301,770	$	224,082
Home equity		50,093		45,423
Commercial real estate		275,954		253,104
Construction and land development		71,655		64,433
Multifamily		51,149		47,234
Farmland		234		240
Total loans secured by real estate		750,855		634,516
Commercial business		112,238		103,628
Consumer		10,273		5,293
Government		19,284		21,101
Subtotal		892,650		764,538
Less:
Net deferred loan origination fees		1,804		530
Undisbursed loan funds		(180)		(668)
Loans receivable	$	894,274	$	764,400

Schedule of allowance for credit loss for financing activities


(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance

The Bancorp’s activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended June 30, 2019:

Allowance for loan losses:
Residential real estate	$	1,680	$	(18)	$	4	$	(6)	$	1,660
Home equity		194		—		2		6		202
Commercial real estate		3,485		—		—		44		3,529
Construction and land development		777		—		—		29		806
Multifamily		434		—		—		19		453
Farmland		—		—		—		—		—
Commercial business		1,391		—		10		116		1,517
Consumer		254		(7)		6		303		556
Government		21		—		—		—		21
Total	$	8,236	$	(25)	$	22	$	511	$	8,744

The Bancorp’s activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended June 30, 2018:

Allowance for loan losses:
Residential real estate	$	1,493	$	(38)	$	—	$	68	$	1,523
Home equity		159		(5)		—		29		183
Commercial real estate		2,996		—		2		172		3,170
Construction and land development		661		—		—		(50)		611
Multifamily		615		—		—		(8)		607
Farmland		4		—		—		—		4
Commercial business		1,077		(3)		107		83		1,264
Consumer		35		(14)		5		10		36
Government		57		—		—		(7)		50
Total	$	7,097	$	(60)	$	114	$	297	$	7,448

The Bancorp’s activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2019:

Allowance for loan losses:
Residential real estate	$	1,715	$	(66)	$	18	$	(7)	$	1,660
Home equity		202		—		2		(2)		202
Commercial real estate		3,335		—		—		194		3,529
Construction and land development		756		—		—		50		806
Multifamily		472		—		—		(19)		453
Farmland		—		—		—		—		—
Commercial business		1,362		—		16		139		1,517
Consumer		82		(25)		9		490		556
Government		38		—		—		(17)		21
Total	$	7,962	$	(91)	$	45	$	828	$	8,744

The Bancorp’s activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2018:

Allowance for loan losses:
Residential real estate	$	1,568	$	(106)	$	—	$	61	$	1,523
Home equity		166		(24)		—		41		183
Commercial real estate		3,125		(119)		2		162		3,170
Construction and land development		618		—		—		(7)		611
Multifamily		622		—		—		(15)		607
Farmland		—						4		4
Commercial business		1,298		(529)		117		378		1,264
Consumer		31		(22)		9		18		36
Government		54		—		—		(4)		50
Total	$	7,482	$	(800)	$	128	$	638	$	7,448

Schedule of individually impaired loans receivables

The Bancorp’s impairment analysis is summarized below:


	Ending Balances
									Purchased credit
	Individually		Collectively						impaired loans		Loans
(Dollars in thousands)	evaluated for		evaluated for				Loans individually		individually		collectively
	impairment		impairment				evaluated for		evaluated for		evaluated for
	reserves		reserves		Loan receivables		impairment		impairment		impairment

The Bancorp’s allowance for loan losses impairment evaluation and loan receivables are summarized below at June 30, 2019:

Residential real estate	$	22	$	1,638	$	301,488	$	547	$	1,894	$	299,047
Home equity		11		191		50,155		214		225		49,716
Commercial real estate		196		3,333		275,954		1,651		485		273,818
Construction and land development		—		806		71,655		—		—		71,655
Multifamily		—		453		51,149		—		701		50,448
Farmland		—		—		234		—		—		234
Commercial business		334		1,183		112,076		1,753		1,152		109,171
Consumer		—		556		12,279		—		—		12,279
Government		—		21		19,284		—		—		19,284
Total	$	563	$	8,181	$	894,274	$	4,165	$	4,457	$	885,652

The Bancorp’s allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2018:

Residential real estate	$	22		1,693		223,323	$	570	$	980	$	221,773
Home equity		9		193		45,483		141		123		45,219
Commercial real estate		210		3,125		253,104		1,703		402		250,999
Construction and land development		—		756		64,433		—		—		64,433
Multifamily		—		472		47,234		—		—		47,234
Farmland		—		—		240		—		—		240
Commercial business		5		1,357		103,439		423		1,440		101,576
Consumer		—		82		6,043		—		—		6,043
Government		—		38		21,101		—		—		21,101
Total	$	246	$	7,716	$	764,400	$	2,837	$	2,945	$	758,618

Schedule of financing receivable credit quality indicators

The Bancorp’s credit quality indicators are summarized below at June 30, 2019 and December 31, 2018:


	Credit Exposure - Credit Risk Portfolio By Creditworthiness Category
	June 30, 2019
(Dollars in thousands)	2		3		4		5		6		7		8
			Above average				Marginally
Loan Segment	Moderate		acceptable		Acceptable		acceptable		Pass/monitor		Special mention		Substandard		Total
Residential real estate	$	881	$	115,857	$	105,661	$	13,342		55,872		3,900	$	5,975	$	301,488
Home equity		64		7,639		39,725		258		1,161		744		564		50,155
Commercial real estate		—		4,336		85,845		126,413		53,058		4,253		2,049		275,954
Construction and land development		—		310		23,891		32,407		15,047		—		—		71,655
Multifamily		—		934		18,915		27,298		3,161		140		701		51,149
Farmland		—		—		—		—		234		—		—		234
Commercial business		9,634		21,596		20,230		36,348		20,081		2,423		1,764		112,076
Consumer		2,155		2,666		6,371		190		897		—		—		12,279
Government		—		1,889		13,485		3,910		—		—		—		19,284
Total	$	12,734	$	155,227	$	314,123	$	240,166	$	149,511	$	11,460	$	11,053	$	894,274


	December 31, 2018
(Dollars in thousands)	2		3		4		5		6		7		8
			Above average				Marginally
Loan Segment	Moderate		acceptable		Acceptable		acceptable		Pass/monitor		Special mention		Substandard		Total
Residential real estate	$	261	$	58,276	$	100,374	$	10,404	$	44,734	$	3,908	$	5,366	$	223,323
Home equity		192		3,736		40,165		37		323		657		373		45,483
Commercial real estate		—		5,042		78,611		110,984		51,982		4,715		1,770		253,104
Construction and land development		—		322		24,271		29,383		10,457		—		—		64,433
Multifamily		—		569		19,255		23,417		3,844		149		—		47,234
Farmland		—		—		—		—		240		—		—		240
Commercial business		10,655		19,127		20,941		34,996		14,034		2,958		728		103,439
Consumer		925		2,953		1,040		196		909		20		—		6,043
Government		—		2,111		14,795		4,195		—		—		—		21,101
Total	$	12,033	$	92,136	$	299,452	$	213,612	$	126,523	$	12,407	$	8,237	$	764,400

Schedule of impaired financing receivables

The Bancorp’s individually evaluated impaired loans are summarized below:


							For the six months ended
	As of June 30, 2019						June 30, 2019
	Recorded		Unpaid Principal				Average Recorded		Interest Income
(Dollars in thousands)	Investment		Balance		Related Allowance		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	2,284	$	3,762	$	—	$	1,813	$	31
Home equity		375		398		—		344		3
Commercial real estate		1,665		2,264		—		1,655		33
Construction and land development		—		—		—		—		—
Multifamily		701		783		—		472		3
Farmland		—		—		—		—		—
Commercial business		2,565		2,695		—		1,967		43
Consumer		—		—		—		—		—
Government		—		—		—		—		—

With an allowance recorded:
Residential real estate		157		157		22		159		2
Home equity		64		64		11		59		1
Commercial real estate		471		471		196		478		—
Construction and land development		—		—		—		—		—
Multifamily		—		—		—		—		—
Farmland		—		—		—		—		—
Commercial business		340		340		334		145		—
Consumer		—		—		—		—		—
Government		—		—		—		—		—

Total:
Residential real estate	$	2,441	$	3,919	$	22	$	1,972	$	33
Home equity	$	439	$	462	$	11	$	403	$	4
Commercial real estate	$	2,136	$	2,735	$	196	$	2,133	$	33
Construction & land development	$	—	$	—	$	—	$	—	$	—
Multifamily	$	701	$	783	$	—	$	472	$	3
Farmland	$	—	$	—	$	—	$	—	$	—
Commercial business	$	2,905	$	3,035	$	334	$	2,112	$	43
Consumer	$	—	$	—	$	—	$	—	$	—
Government	$	—	$	—	$	—	$	—	$	—


							For the six months ended
	As of December 31, 2018						June 30, 2018
	Recorded		Unpaid Principal				Average Recorded		Interest Income
(Dollars in thousands)	Investment		Balance		Related Allowance		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	1,389	$	3,628	$	—	$	1,108	$	16
Home equity		207		214		—		45		—
Commercial real estate		1,624		2,222		—		561		—
Construction & land development		—		—		—		89		—
Multifamily		—		—		—		—		—
Farmland		—		—		—		—		—
Commercial business		1,799		2,038		—		257		—
Consumer		—		—		—		—		—
Government		—		—		—		—		—

With an allowance recorded:
Residential real estate		161		161		22		114		10
Home equity		57		57		9		20		—
Commercial real estate		481		481		210		160		16
Construction & land development		—		—		—		—		—
Multifamily		—		—		—		—		—
Farmland		—		—		—		—		—
Commercial business		64		64		5		186		8
Consumer		—		—		—		—		—
Government		—		—		—		—		—

Total:
Residential real estate	$	1,550	$	3,789	$	22	$	1,222	$	26
Home equity	$	264	$	271	$	9	$	65	$	—
Commercial real estate	$	2,105	$	2,703	$	210	$	721	$	16
Construction & land development	$	—	$	—	$	—	$	89	$	—
Multifamily	$	—	$	—	$	—	$	—	$	—
Farmland	$	—	$	—	$	—	$	—	$	—
Commercial business	$	1,863	$	2,102	$	5	$	443	$	8
Consumer	$	—	$	—	$	—	$	—	$	—
Government	$	—	$	—	$	—	$	—	$	—

Schedule of past due financing receivables

The Bancorp’s age analysis of past due loans is summarized below:


(Dollars in thousands)													Recorded
													Investments
													Greater than 90
	30‑59 Days Past		60‑89 Days Past		Greater Than 90								Days Past Due
	Due		Due		Days Past Due		Total Past Due		Current		Total Loans		and Accruing
June 30, 2019
Residential real estate	$	4,342	$	1,597	$	4,612	$	10,551	$	290,937	$	301,488	$	294
Home equity		245		6		426		677		49,478		50,155		—
Commercial real estate		753		174		1,146		2,073		273,881		275,954		220
Construction and land development		248		—		—		248		71,407		71,655		—
Multifamily		—		—		438		438		50,711		51,149		173
Farmland		—		—		—		—		234		234		—
Commercial business		372		331		1,320		2,023		110,053		112,076		238
Consumer		181		34		—		215		12,064		12,279		—
Government		—		—		—		—		19,284		19,284		—
Total	$	6,141	$	2,142	$	7,942	$	16,225	$	878,049	$	894,274	$	925

December 31, 2018
Residential real estate	$	3,659	$	909	$	4,362	$	8,930	$	214,393	$	223,323	$	122
Home equity		143		5		304		452		45,031		45,483		50
Commercial real estate		842		18		611		1,471		251,633		253,104		—
Construction and land development		491		533		—		1,024		63,409		64,433		—
Multifamily		—		149		—		149		47,085		47,234		—
Farmland		—		—		—		—		240		240		—
Commercial business		733		260		436		1,429		102,010		103,439		149
Consumer		1		72		—		73		5,970		6,043		—
Government		—		—		—		—		21,101		21,101		—
Total	$	5,869	$	1,946	$	5,713	$	13,528	$	750,872	$	764,400	$	321

Schedule of financing receivables, non accrual status

The Bancorp’s loans on nonaccrual status are summarized below:


(Dollars in thousands)	June 30,		December 31,
	2019		2018
Residential real estate	$	5,720	$	5,135
Home equity		543		270
Commercial real estate		926		695
Construction and land development		—		—
Multifamily		265		—
Farmland		—		—
Commercial business		1,521		495
Consumer		—		—
Government		—		—
Total	$	8,975	$	6,595

Summary of Financing Receivables Acquired [Table Text Block]

For the acquisitions of First Federal Savings & Loan (“First Federal”), Liberty Savings Bank (“Liberty Savings”), First Personal Bank (“First Personal”), and A.J. Smith Federal Savings Bank (“AJ Smith”), as part of the fair value of loans receivable, a net fair value discount was established for loans as summarized below:


	First Federal				Liberty Savings			First Personal			AJ Smith
	Net fair value		Accretable period		Net fair value		Accretable period	Net fair value		Accretable period	Net fair value		Accretable period
(dollars in thousands)	discount		in months		discount		in months	discount		in months	discount		in months
Residential real estate	$	1,062		59	$	1,203	44	$	948	56	$	3,734	52
Home equity		44		29		5	29		51	50		141	32
Commercial real estate		—		0		—	0		208	56		8	9
Construction and land development		—		0		—	0		1	30		—	0
Multifamily		—		0		—	0		11	48		2	48
Consumer		—		0		—	0		146	50		1	5
Commercial business		—		0		—	0		348	24		—	0
Purchased credit impaired loans		—		0		—	0		424	32		—	0
Total	$	1,106			$	1,208		$	2,137		$	3,886

Summary of Accretable Yield from Acquired Financing Receivables [Table Text Block]

Accretable yield, or income recorded for the six months ended June 30, is as follows:


(dollars in thousands)	First Federal		Liberty Savings		First Personal		AJ Smith		Total
2018	$	36	$	68	$	—	$	—	$	104
2019		22		42		357		451	$	872

Summary of Future Accretable Yield from Acquired Financing Receivables [Table Text Block]

Accretable yield, or income expected to be recorded in the future is as follows:


(dollars in thousands)	First Personal		AJ Smith		Total
2019	$	281	$	455	$	736
2020		538		879		1,417
2021		345		871		1,216
2022		334		871		1,205
2023		75		359		434
Total	$	1,573	$	3,435	$	5,008