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, 2015

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, 2014	$	271
Additions not previously recognized		-
Ending balance, March 31, 2015	$	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, 2014:

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			Ca
Number of performing banks		52			29			57			47
Number of performing insurance companies		13			7			10			n/a
Number of issuers in default		20			9			1			4
Number of issuers in deferral		8			4			8			5
Defaults & deferrals as a % of performing collateral		47.64	%		31.32	%		11.17	%		20.48	%
Subordination:
As a % of performing collateral		2.10	%		-6.95	%		44.19	%		23.62	%
As a % of performing collateral - adjusted for projected future defaults		-3.49	%		-15.25	%		41.00	%		19.26	%
Other-than-temporary impairment model assumptions:
Defaults:
Year 1 - issuer average		1.80	%		2.40	%		1.80	%		1.80	%
Year 2 - issuer average		1.80	%		2.40	%		1.80	%		1.80	%
Year 3 - issuer average		1.80	%		2.40	%		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]

There were no transfers to or from Levels 1 and 2 during the three months ended March 31, 2015. Assets measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at March 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	$	3,070	$	3,070	$	-	$	-
U.S. government sponsored entities		20,243		-		20,243		-
Collateralized mortgage obligations and residential mortgage-backed securities		113,292		-		113,292		-
Municipal securities		91,597		-		91,597		-
Collateralized debt obligations		2,640		-		-		2,640
Total securities available-for-sale	$	230,842	$	3,070	$	225,132	$	2,640

			Fair Value Measurements at December 31, 2014 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	$	6,453	$	6,453	$	-	$	-
U.S. government sponsored entities		12,869		-		12,869		-
Collateralized mortgage obligations and residential mortgage-backed securities		117,574		-		117,574		-
Municipal securities		80,725		-		80,725		-
Collateralized debt obligations		2,432		-		-		2,432
Total securities available-for-sale	$	220,053	$	6,453	$	211,168	$	2,432

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)	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Available-for- sale securities
Total realized/unrealized (losses)/gains, January 1, 2014	$	1,968
Included in earnings		-
Included in other comprehensive income		464
Transfers in and/or (out) of Level 3		-
Ending balance, December 31, 2014	$	2,432

Total realized/unrealized (losses)/gains, January 1, 2015	$	2,432
Included in earnings		-
Included in other comprehensive income		208
Transfers in and/or (out) of Level 3		-
Ending balance, March 31, 2015	$	2,640

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:

			Fair Value Measurements at March 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	$	6,354	$	-	$	-	$	6,354
Foreclosed real estate		1,821		-		-		1,821

			Fair Value Measurements at December 31, 2014 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	$	6,930	$	-	$	-	$	6,930
Foreclosed real estate		1,745		-		-		1,745

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, 2015				Estimated Fair Value Measurements at March 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	$	26,427	$	26,427	$	26,427	$	-	$	-
Securities available-for-sale		230,842		230,842		3,070		225,132		2,640
Loans held-for-sale		4,290		4,391		4,391		-		-
Loans receivable, net		483,951		482,851		-		-		482,851
Federal Home Loan Bank stock		3,681		3,681		-		3,681		-
Accrued interest receivable		2,629		2,629		-		2,629		-

Financial liabilities:
Non-interest bearing deposits		91,315		91,315		91,315		-		-
Interest bearing deposits		558,055		558,157		374,109		184,048		-
Repurchase agreements		16,836		16,857		11,463		5,394		-
Borrowed funds		32,302		32,505		202		32,303		-
Accrued interest payable		51		51		-		51		-

	December 31, 2014				Estimated Fair Value Measurements at December 31, 2014 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	$	21,963	$	21,963	$	21,963	$	-	$	-
Securities available-for-sale		220,053		220,053		6,453		211,168		2,432
Loans held-for-sale		2,913		2,983		2,983		-		-
Loans receivable, net		481,792		480,736		-		-		480,736
Federal Home Loan Bank stock		3,681		3,681		-		3,681		-
Accrued interest receivable		2,727		2,727		-		2,727		-

Financial liabilities:
Non-interest bearing deposits		80,352		80,352		80,352		-		-
Interest bearing deposits		553,594		552,872		368,501		184,371		-
Repurchase agreements		17,525		17,528		12,010		5,518		-
Borrowed funds		36,381		36,424		281		36,143		-
Accrued interest payable		49		49		-		49		-

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References + Details

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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