Finward Bancorp Announces Earnings for the Quarter and Nine Months Ended September 30, 2021
Finward Bancorp (FNWD) reported a net income of $11.7 million ($3.35 per share) for the nine months ending September 30, 2021, down 7.9% year-over-year. For Q3 2021, net income was $3.5 million ($1.02 per share), decreasing 24.5% from Q3 2020. Total assets increased by $113.6 million (7.6%) with a strong core deposit growth. However, noninterest income dropped 9.7% in nine months and 14.6% in Q3. The efficiency ratio was 75.87% for Q3 compared to 60.66% last year, indicating higher expenses. The Bancorp is well-capitalized, with a tier 1 leverage ratio of 8.4%.
- Net interest income increased by 6.9% to $36.1 million for nine months.
- Core deposits rose by 12.3% to $1.1 billion.
- Successful loan recoveries and reduced non-performing loans, down to 1.42% of total loans.
- Net income for Q3 decreased by 24.5%, attributed to higher noninterest expenses.
- Noninterest income decreased 9.7% for nine months and 14.6% for Q3.
- Efficiency ratio worsened to 75.87% in Q3 from 60.66% in the prior year.
MUNSTER, Ind., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Finward Bancorp (Nasdaq: FNWD) (the “Bancorp”), the holding company for Peoples Bank (the “Bank”), reported net income of
For the quarter ended September 30, 2021, the Bancorp’s net income totaled
During the nine months ended September 30, 2021, total assets increased by
“The third quarter was another strong quarter for Finward Bancorp, with earnings steady from the prior quarter. Commercial loan demand is healthy, and mortgage lending activity was stable from the prior quarter. Nearly
“We are also focusing on the best ways to serve our customers as we work on closing and integrating our pending merger with Royal Financial. We recently announced the consolidation of our three Orland Park branches down to two in response to shifting customer preferences, and executed a pilot project with Purdue University Northwest. In this innovative partnership, we were able to enter into a donation-leaseback arrangement with the University. The University will have space to help build out their economic corridor, and we will maintain a branch presence while reducing operating costs for the branch by over
Net Interest Income
Net interest income was
Noninterest Income
Noninterest income from banking activities totaled
Noninterest Expense
Noninterest expense totaled
The Bancorp’s efficiency ratio was
Lending
The Bancorp’s loan portfolio totaled
Investing
The Bancorp’s securities portfolio totaled
Funding
At September 30, 2021, core deposits totaled
Asset Quality
At September 30, 2021, non-performing loans totaled
For the nine months ended September 30, 2021,
Management also considers reserves on loans from acquisition activity that are not part of the allowance for loan losses. 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. At September 30, 2021, total purchased credit impaired loan reserves totaled
Capital Adequacy
At September 30, 2021, shareholders’ equity stood at
Impacts of COVID-19
The COVID-19 pandemic began to affect the Bancorp’s operations during March 2020, and as of the date of this release, continues to influence operating decisions. In response to the pandemic, the Bancorp’s management implemented the following policy actions:
- Participating in the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”), a program initiated to help small businesses maintain their workforces during the pandemic. As of September 30, 2021, the Bancorp approved 782 applications totaling
$91.5 million for the first round, with an average loan size of approximately$117 thousand . These loans helped local business owners retain 10,758 employees based on the borrowers’ applications. The Bancorp’s SBA lender fee is averaging approximately3.80% for the first round of the program, and fees will be earned over the life of the associated loans. The first round of PPP closed in August of 2020. On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021, which included provisions for a second round of PPP funding in 2021. As of September 30, 2021, the Bancorp approved 420 applications totaling$37.5 million for the second round, with an average loan size of approximately$89 thousand . These loans will help local business owners retain 4,410 employees based on the borrowers’ applications. The Bancorp’s SBA lender fee is averaging approximately5.32% for this program, and fees will be earned over the life of the associated loans. As of September 30, 2021, the Bancorp had remaining loan balances under the Paycheck Protection Program totaling$32.9 million . - Prudently helping borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19. Consistent with regulatory guidance, the Bancorp will consider deferring or modifying a loan customer’s repayment obligation if the customer’s cash flow has been negatively impacted by the pandemic. Outstanding borrower deferrals and modifications continue to decline. Loans modified to interest only payment or full payment deferral as part of the effects of COVID-19 as of September 30, 2021 and June 30, 2021, are as follows:
| (Dollars in thousands) | (Unaudited) | |||||||||||
| As of September 30, 2021 | Mortgage loans | Commercial Loans | ||||||||||
| Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | |||||||||
| Interest only | 11 | $ | 1,485 | - | $ | - | ||||||
| Total $ | 11 | $ | 1,485 | - | $ | - | ||||||
| (Dollars in thousands) | (Unaudited) | |||||||||||
| As of June 30, 2021 | Mortgage loans | Commercial Loans | ||||||||||
| Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | |||||||||
| Interest only | 15 | $ | 1,656 | 1 | $ | 2,973 | ||||||
| Full interest, partial principal | - | - | 2 | 1,021 | ||||||||
| Full payment deferral | 1 | 98 | - | - | ||||||||
| Total $ | 16 | $ | 1,754 | 3 | $ | 3,994 | ||||||
- As the Bancorp continues to monitor the borrowers that are in and outside of deferral status, some loan relationships may be deemed non-performing. As of September 30, 2021, a single large commercial real estate loan relationship, which operates a hotel, with a carrying balance of
$5.0 million , continued to be deemed non-performing after COVID-19 pandemic stresses negatively impacted weak operating performance which occurred prior to the pandemic. Through management’s review of the loan relationship, a specific reserve within the allowance for loan losses was allocated as of September 30, 2021. As of September 30, 2021, the customer is currently in compliance with all modified loan terms. No other material COVID-19 impacted loans that are in deferral status have been deemed non-performing at this time. As of September 30, 2021, a total of 236 loans have come out of COVID-19 related deferral status with carrying balances of$85.9 million . All of these loans continue to be performing, except one commercial real estate loan with a carrying balance of$835 thousand and several residential real estate loans with total carrying balances of$964 thousand .
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 22 locations in Lake and Porter Counties in Northwest Indiana and South 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 significant risks and uncertainties for our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of our remote work arrangements and staffing levels in branches and other operational facilities, and actions taken by governmental authorities and other third parties in response to the 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.
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. Further, statements about the effects of the COVID-19 pandemic on our business, operations, financial performance, and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us.
Important Additional Information for Shareholders and Where to Find It
In connection with the proposed merger between the Bancorp and Royal Financial, Inc. (“RYFL”), the Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes a Joint Proxy Statement of the Bancorp and RYFL and a Prospectus of the Bancorp (the “Joint Proxy Statement/Prospectus”), as well as other relevant documents concerning the proposed transaction. SHAREHOLDERS AND INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
The Joint Proxy Statement/Prospectus and other relevant materials, and any other documents the Bancorp has filed with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain copies of the documents the Bancorp has filed with the SEC, free of charge, from the Bancorp at www.ibankpeoples.com under the tab “Investor Relations – SEC Filings.” Alternatively, these documents can be obtained free of charge from the Bancorp upon written request to Finward Bancorp, Attn: Shareholder Services, 9204 Columbia Avenue, Munster, Indiana 46321, or by calling (219) 836-4400, and from RYFL upon written request to Royal Financial, Inc., Attn: Corporate Secretary, 9226 South Commercial Avenue, Chicago, Illinois 60617, or by calling (773) 768-4800. The information available through the Bancorp’s website is not and shall not be deemed part of this press release or incorporated by reference into other filings the Bancorp makes with the SEC.
The Bancorp and RYFL and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of the Bancorp and RYFL in connection with the proposed merger. Information about the directors and executive officers of the Bancorp is set forth in the Bancorp’s Annual Report on Form 10-K filed with the SEC on March 22, 2021, and in the proxy statement for the Bancorp’s 2021 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 31, 2021. Additional information regarding the interests of these participants and any other persons who may be deemed participants in the transaction may be obtained by reading the Joint Proxy Statement/Prospectus regarding the proposed merger. Free copies of this document may be obtained as described in the preceding paragraph.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
Disclosure Regarding Non-GAAP Measures
This press release includes certain financial measures that are identified as non-GAAP. However, certain non-GAAP performance measures are used by management to evaluate and measure the Bancorp’s performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. See the attached Table 1 at the end of this press release for a reconciliation of the non-GAAP earnings measures identified herein and their most comparable GAAP measures.
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| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
| Return on equity | 8.90 | % | 9.17 | % | 11.94 | % | 8.59 | % | 12.83 | % | 9.96 | % | 11.96 | % | |||||||||||||||||||||
| Return on assets | 0.87 | % | 0.90 | % | 1.18 | % | 0.88 | % | 1.27 | % | 0.98 | % | 1.20 | % | |||||||||||||||||||||
| Basic earnings per share | $ | 1.02 | $ | 1.03 | $ | 1.30 | $ | 1.00 | $ | 1.35 | $ | 3.35 | $ | 3.65 | |||||||||||||||||||||
| Diluted earnings per share | $ | 1.02 | $ | 1.03 | $ | 1.30 | $ | 1.00 | $ | 1.35 | $ | 3.35 | $ | 3.65 | |||||||||||||||||||||
| Yield on loans | 4.28 | % | 4.21 | % | 4.41 | % | 4.61 | % | 4.62 | % | 4.30 | % | 4.69 | % | |||||||||||||||||||||
| Yield on security investments | 1.94 | % | 1.96 | % | 2.02 | % | 1.81 | % | 1.91 | % | 1.97 | % | 2.13 | % | |||||||||||||||||||||
| Total yield on earning assets | 3.36 | % | 3.38 | % | 3.59 | % | 3.77 | % | 3.75 | % | 3.44 | % | 3.96 | % | |||||||||||||||||||||
| Cost of deposits | 0.13 | % | 0.16 | % | 0.19 | % | 0.26 | % | 0.33 | % | 0.16 | % | 0.49 | % | |||||||||||||||||||||
| Cost of repurchase agreements | 0.25 | % | 0.28 | % | 0.28 | % | 0.33 | % | 0.37 | % | 0.27 | % | 0.69 | % | |||||||||||||||||||||
| Cost of borrowed funds | 9.76 | % | 0.47 | % | 2.70 | % | 2.74 | % | 2.77 | % | 3.09 | % | 2.69 | % | |||||||||||||||||||||
| Total cost of funds | 0.13 | % | 0.16 | % | 0.20 | % | 0.27 | % | 0.35 | % | 0.16 | % | 0.52 | % | |||||||||||||||||||||
| Net interest margin - tax equivalent | 3.46 | % | 3.42 | % | 3.58 | % | 3.66 | % | 3.58 | % | 3.49 | % | 3.62 | % | |||||||||||||||||||||
| Noninterest income / average assets | 1.02 | % | 0.92 | % | 1.12 | % | 1.27 | % | 1.32 | % | 1.02 | % | 1.27 | % | |||||||||||||||||||||
| Noninterest expense / average assets | 3.04 | % | 2.76 | % | 2.73 | % | 3.09 | % | 2.72 | % | 2.85 | % | 2.86 | % | |||||||||||||||||||||
| Net noninterest margin / average assets | -2.02 | % | -1.84 | % | -1.61 | % | -1.83 | % | -1.40 | % | -1.83 | % | -1.58 | % | |||||||||||||||||||||
| Efficiency ratio | 75.87 | % | 70.79 | % | 64.14 | % | 68.40 | % | 60.66 | % | 70.26 | % | 63.83 | % | |||||||||||||||||||||
| Effective tax rate | 7.04 | % | 9.96 | % | 14.09 | % | 6.15 | % | 17.18 | % | 10.78 | % | 16.82 | % | |||||||||||||||||||||
| Dividend declared per common share | $ | 0.31 | $ | 0.31 | $ | 0.31 | $ | 0.31 | $ | 0.31 | $ | 0.93 | $ | 0.93 | |||||||||||||||||||||
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| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||||||
| Net worth / total assets | 9.47 | % | 9.70 | % | 9.57 | % | 10.14 | % | 9.99 | % | |||||||||||||||||||||||||
| Book value per share | $ | 43.85 | $ | 44.71 | $ | 42.76 | $ | 43.80 | $ | 42.70 | |||||||||||||||||||||||||
| Non-performing assets to total assets | 0.91 | % | 0.85 | % | 0.92 | % | 1.06 | % | 1.11 | % | |||||||||||||||||||||||||
| Non-performing loans to total loans | 1.42 | % | 1.27 | % | 1.32 | % | 1.49 | % | 1.54 | % | |||||||||||||||||||||||||
| Allowance for loan losses to non-performing loans | 101.71 | % | 111.13 | % | 101.49 | % | 86.72 | % | 71.14 | % | |||||||||||||||||||||||||
| Allowance for loan losses to loans outstanding | 1.44 | % | 1.42 | % | 1.34 | % | 1.29 | % | 1.10 | % | |||||||||||||||||||||||||
| Foreclosed real estate to total assets | 0.01 | % | 0.02 | % | 0.03 | % | 0.04 | % | 0.03 | % | |||||||||||||||||||||||||
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| (Dollars in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||
| Total assets | $ | 1,609,924 | $ | 1,603,513 | $ | 1,555,348 | $ | 1,496,292 | $ | 1,479,954 | |||||||||
| Cash & cash equivalents | 31,765 | 68,625 | 68,009 | 19,922 | 84,447 | ||||||||||||||
| Certificates of deposit in other financial institutions | 977 | 1,471 | 1,474 | 1,897 | 1,901 | ||||||||||||||
| Securities - available for sale | 531,010 | 473,927 | 422,868 | 410,669 | 324,181 | ||||||||||||||
| Loans receivable: | |||||||||||||||||||
| Commercial real estate | $ | 309,905 | $ | 315,087 | $ | 304,851 | $ | 298,257 | $ | 285,701 | |||||||||
| Residential real estate | 268,798 | 268,649 | 276,728 | 286,048 | 284,381 | ||||||||||||||
| Commercial business | 125,922 | 149,414 | 163,896 | 158,140 | 184,406 | ||||||||||||||
| Construction and land development | 110,289 | 104,154 | 97,400 | 93,562 | 89,176 | ||||||||||||||
| Multifamily | 56,869 | 53,639 | 51,933 | 50,571 | 50,701 | ||||||||||||||
| Home equity | 35,652 | 36,684 | 36,222 | 39,233 | 42,127 | ||||||||||||||
| Manufactured Homes | 32,857 | 26,453 | 26,260 | 24,232 | 21,991 | ||||||||||||||
| Government | 9,841 | 8,462 | 9,372 | 10,142 | 13,205 | ||||||||||||||
| Consumer | 650 | 544 | 438 | 1,025 | 467 | ||||||||||||||
| Farmland | 205 | 309 | 315 | 215 | 218 | ||||||||||||||
| Total loans | $ | 950,988 | $ | 963,395 | $ | 967,415 | $ | 961,425 | $ | 972,373 | |||||||||
| Deposits: | |||||||||||||||||||
| Core deposits: | |||||||||||||||||||
| Noninterest bearing checking | $ | 287,376 | $ | 275,819 | $ | 286,969 | $ | 241,620 | $ | 258,170 | |||||||||
| Interest bearing checking | 315,575 | 307,148 | 279,984 | 274,867 | 258,734 | ||||||||||||||
| Savings | 284,681 | 277,944 | 271,910 | 254,108 | 240,215 | ||||||||||||||
| Money market | 254,671 | 253,427 | 245,750 | 246,916 | 238,098 | ||||||||||||||
| Total core deposits | 1,142,303 | 1,114,338 | 1,084,613 | 1,017,511 | 995,217 | ||||||||||||||
| Certificates of deposit | 263,897 | 280,758 | 282,081 | 284,828 | 285,439 | ||||||||||||||
| Total deposits | $ | 1,406,200 | $ | 1,395,096 | $ | 1,366,694 | $ | 1,302,339 | $ | 1,280,656 | |||||||||
| Borrowings and repurchase agreements | $ | 23,844 | $ | 24,399 | $ | 15,917 | $ | 19,860 | $ | 31,145 | |||||||||
| Stockholder's equity | 152,569 | 155,569 | 148,770 | 151,689 | 147,873 | ||||||||||||||
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| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||||
| Loans | $ | 10,270 | $ | 10,275 | $ | 10,746 | $ | 11,278 | $ | 11,263 | $ | 31,291 | $ | 33,589 | ||||||||||||||
| Securities & short-term investments | 2,396 | 2,160 | 1,981 | 1,733 | 1,573 | 6,537 | 5,021 | |||||||||||||||||||||
| Total interest income | 12,666 | 12,435 | 12,727 | 13,011 | 12,836 | 37,828 | 38,610 | |||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||||
| Deposits | 452 | 549 | 651 | 827 | 1,050 | 1,652 | 4,494 | |||||||||||||||||||||
| Borrowings | 14 | 14 | 30 | 77 | 98 | 58 | 342 | |||||||||||||||||||||
| Total interest expense | 466 | 563 | 681 | 904 | 1,148 | 1,710 | 4,836 | |||||||||||||||||||||
| Net interest income | 12,200 | 11,872 | 12,046 | 12,107 | 11,688 | 36,118 | 33,774 | |||||||||||||||||||||
| Provision for loan losses | 139 | 576 | 578 | 1,816 | 849 | 1,293 | 1,871 | |||||||||||||||||||||
| Net interest income after provision for loan losses | 12,061 | 11,296 | 11,468 | 10,291 | 10,839 | 34,825 | 31,903 | |||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||
| Gain on sale of loans held-for-sale, net | 1,229 | 1,116 | 2,049 | 1,551 | 2,420 | 4,394 | 6,037 | |||||||||||||||||||||
| Fees and service charges | 1,473 | 1,471 | 1,066 | 1,488 | 1,473 | 4,010 | 3,673 | |||||||||||||||||||||
| Wealth management operations | 604 | 576 | 607 | 533 | 537 | 1,787 | 1,605 | |||||||||||||||||||||
| Gain on sale of securities, net | 590 | 269 | 417 | 974 | 197 | 1,276 | 1,374 | |||||||||||||||||||||
| Increase in cash value of bank owned life insurance | 180 | 188 | 169 | 174 | 177 | 537 | 534 | |||||||||||||||||||||
| Gain on sale of foreclosed real estate, net | - | 36 | (9 | ) | (49 | ) | 24 | 27 | 127 | |||||||||||||||||||
| Other | 70 | 24 | 14 | 30 | 27 | 108 | 97 | |||||||||||||||||||||
| Total noninterest income | 4,146 | 3,680 | 4,313 | 4,701 | 4,855 | 12,139 | 13,447 | |||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||||
| Compensation and benefits | 6,042 | 5,897 | 5,685 | 6,408 | 5,517 | 17,624 | 16,447 | |||||||||||||||||||||
| Occupancy and equipment | 1,380 | 1,324 | 1,372 | 1,079 | 1,150 | 4,076 | 3,854 | |||||||||||||||||||||
| Data processing | 872 | 597 | 528 | 596 | 583 | 1,997 | 1,671 | |||||||||||||||||||||
| Marketing | 334 | 195 | 199 | 168 | 216 | 728 | 571 | |||||||||||||||||||||
| Federal deposit insurance premiums | 236 | 204 | 180 | 217 | 176 | 620 | 564 | |||||||||||||||||||||
| Other | 3,537 | 2,793 | 2,529 | 3,028 | 2,393 | 8,859 | 7,033 | |||||||||||||||||||||
| Total noninterest expense | 12,401 | 11,010 | 10,493 | 11,496 | 10,035 | 33,904 | 30,140 | |||||||||||||||||||||
| Income before income taxes | 3,806 | 3,966 | 5,288 | 3,496 | 5,659 | 13,060 | 15,210 | |||||||||||||||||||||
| Income tax expenses | 268 | 395 | 745 | 735 | 972 | 1,408 | 2,559 | |||||||||||||||||||||
| Net income | $ | 3,538 | $ | 3,571 | $ | 4,543 | $ | 2,761 | $ | 4,687 | $ | 11,652 | $ | 12,651 | ||||||||||||||
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| Nonaccruing loans | $ | 11,027 | $ | 12,025 | $ | 12,257 | $ | 13,799 | $ | 14,481 | |||||||||||
| Accruing loans delinquent more than 90 days | 2,516 | 248 | 599 | 566 | 579 | ||||||||||||||||
| Securities in non-accrual | 1,011 | 970 | 944 | 929 | 879 | ||||||||||||||||
| Foreclosed real estate | 81 | 368 | 491 | 538 | 501 | ||||||||||||||||
| Total nonperforming assets | $ | 14,635 | $ | 13,611 | $ | 14,291 | $ | 15,832 | $ | 16,440 | |||||||||||
| Allowance for loan losses (ALL): | |||||||||||||||||||||
| ALL specific allowances for impaired loans | $ | 1,904 | $ | 1,770 | $ | 1,884 | $ | 1,775 | $ | 1,330 | |||||||||||
| ALL general allowances for loan portfolio | 11,870 | 11,869 | 11,163 | 10,683 | 9,384 | ||||||||||||||||
| Total ALL | $ | 13,774 | $ | 13,639 | $ | 13,047 | $ | 12,458 | $ | 10,714 | |||||||||||
| Troubled Debt Restructurings: | |||||||||||||||||||||
| Nonaccruing troubled debt restructurings, non-compliant (1) (2) | $ | 1,126 | $ | 1,269 | $ | 407 | $ | 155 | $ | 441 | |||||||||||
| Nonaccruing troubled debt restructurings, compliant (2) | 102 | - | 366 | 383 | 113 | ||||||||||||||||
| Accruing troubled debt restructurings | 1,427 | 1,182 | 1,210 | 1,583 | 1,536 | ||||||||||||||||
| Total troubled debt restructurings | $ | 2,655 | $ | 2,451 | $ | 1,983 | $ | 2,121 | $ | 2,090 | |||||||||||
| (1) "non-compliant" refers to not being within the guidelines of the restructuring agreement | |||||||||||||||||||||
| (2) included in nonaccruing loan balances presented above | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| September 30, | Required | ||||||||||||||||||||
| 2021 | To Be Well | ||||||||||||||||||||
| Actual Ratio | Capitalized | ||||||||||||||||||||
| Capital Adequacy Bancorp | |||||||||||||||||||||
| Common equity tier 1 capital to risk-weighted assets | N/A | ||||||||||||||||||||
| Tier 1 capital to risk-weighted assets | N/A | ||||||||||||||||||||
| Total capital to risk-weighted assets | N/A | ||||||||||||||||||||
| Tier 1 capital to adjusted average assets | N/A | ||||||||||||||||||||
| Capital Adequacy Bank | |||||||||||||||||||||
| Common equity tier 1 capital to risk-weighted assets | |||||||||||||||||||||
| Tier 1 capital to risk-weighted assets | |||||||||||||||||||||
| Total capital to risk-weighted assets | |||||||||||||||||||||
| Tier 1 capital to adjusted average assets | |||||||||||||||||||||
| Quarter-to-Date | ||||||||||||||||||
| (Dollars in thousands) | Average Balances, Interest, and Rates | |||||||||||||||||
| (unaudited) | September 30, 2021 | September 30, 2020 | ||||||||||||||||
| Average Balance | Interest | Rate (%) | Average Balance | Interest | Rate (%) | |||||||||||||
| ASSETS | ||||||||||||||||||
| Interest bearing deposits in other financial institutions | $ | 53,786 | $ | 12 | 0.09 | $ | 72,920 | $ | 22 | 0.12 | ||||||||
| Federal funds sold | 1,112 | - | - | 719 | 7 | 3.89 | ||||||||||||
| Certificates of deposit in other financial institutions | 1,262 | 6 | 1.90 | 1,877 | 10 | 2.13 | ||||||||||||
| Securities available-for-sale | 486,993 | 2,363 | 1.94 | 315,090 | 1,506 | 1.91 | ||||||||||||
| Loans receivable | 960,274 | 10,270 | 4.28 | 975,794 | 11,263 | 4.62 | ||||||||||||
| Federal Home Loan Bank stock | 3,247 | 15 | 1.85 | 3,918 | 28 | 2.86 | ||||||||||||
| Total interest earning assets | 1,506,674 | $ | 12,666 | 3.36 | 1,370,318 | $ | 12,836 | 3.75 | ||||||||||
| Cash and non-interest bearing deposits in other financial institutions | 41,378 | 15,814 | ||||||||||||||||
| Allowance for loan losses | (13,688 | ) | (9,917 | ) | ||||||||||||||
| Other noninterest bearing assets | 97,290 | 98,879 | ||||||||||||||||
| Total assets | $ | 1,631,654 | $ | 1,475,094 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
| Total deposits | $ | 1,436,125 | $ | 452 | 0.13 | $ | 1,282,698 | $ | 1,050 | 0.33 | ||||||||
| Repurchase agreements | 20,970 | 13 | 0.25 | 16,246 | 15 | 0.37 | ||||||||||||
| Borrowed funds | 41 | 1 | 9.76 | 12,000 | 83 | 2.77 | ||||||||||||
| Total interest bearing liabilities | 1,457,136 | $ | 466 | 0.13 | 1,310,944 | $ | 1,148 | 0.35 | ||||||||||
| Other noninterest bearing liabilities | 15,508 | 18,034 | ||||||||||||||||
| Total liabilities | 1,472,644 | 1,328,978 | ||||||||||||||||
| Total stockholders' equity | 159,010 | 146,116 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,631,654 | $ | 1,475,094 | ||||||||||||||
| Return on average assets | 0.87 | % | 1.27 | % | ||||||||||||||
| Return on average equity | 8.90 | % | 12.83 | % | ||||||||||||||
| Net interest margin (average earning assets) | 3.24 | % | 3.41 | % | ||||||||||||||
| Net interest margin (average earning assets) - tax equivalent | 3.46 | % | 3.58 | % | ||||||||||||||
| Year-to-Date | ||||||||||||||||||
| (Dollars in thousands) | Average Balances, Interest, and Rates | |||||||||||||||||
| September 30, 2021 | September 30, 2020 | |||||||||||||||||
| Average Balance | Interest | Rate (%) | Average Balance | Interest | Rate (%) | |||||||||||||
| ASSETS | ||||||||||||||||||
| Interest bearing deposits in other financial institutions | $ | 53,774 | $ | 33 | 0.08 | $ | 42,025 | $ | 91 | 0.29 | ||||||||
| Federal funds sold | 1,064 | - | - | 2,716 | 92 | 4.52 | ||||||||||||
| Certificates of deposit in other financial institutions | 1,443 | 21 | 1.94 | 1,859 | 35 | 2.51 | ||||||||||||
| Securities available-for-sale | 435,119 | 6,428 | 1.97 | 295,073 | 4,708 | 2.13 | ||||||||||||
| Loans receivable | 970,740 | 31,291 | 4.30 | 954,985 | 33,589 | 4.69 | ||||||||||||
| Federal Home Loan Bank stock | 3,535 | 55 | 2.07 | 3,916 | 95 | 3.23 | ||||||||||||
| Total interest earning assets | 1,465,675 | $ | 37,828 | 3.44 | 1,300,574 | $ | 38,610 | 3.96 | ||||||||||
| Cash and non-interest bearing deposits in other financial institutions | 37,186 | 17,530 | ||||||||||||||||
| Allowance for loan losses | (13,205 | ) | (9,508 | ) | ||||||||||||||
| Other noninterest bearing assets | 97,674 | 98,611 | ||||||||||||||||
| Total assets | $ | 1,587,330 | $ | 1,407,207 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
| Total deposits | $ | 1,395,883 | $ | 1,652 | 0.16 | $ | 1,222,497 | $ | 4,494 | 0.49 | ||||||||
| Repurchase agreements | 17,458 | 35 | 0.27 | 13,959 | 72 | 0.69 | ||||||||||||
| Borrowed funds | 992 | 23 | 3.09 | 13,386 | 270 | 2.69 | ||||||||||||
| Total interest bearing liabilities | 1,414,333 | $ | 1,710 | 0.16 | 1,249,842 | $ | 4,836 | 0.52 | ||||||||||
| Other noninterest bearing liabilities | 17,052 | 16,270 | ||||||||||||||||
| Total liabilities | 1,431,385 | 1,266,112 | ||||||||||||||||
| Total stockholders' equity | 155,945 | 141,095 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,587,330 | $ | 1,407,207 | ||||||||||||||
| Return on average assets | 0.98 | % | 1.20 | % | ||||||||||||||
| Return on average equity | 9.96 | % | 11.96 | % | ||||||||||||||
| Net interest margin (average earning assets) | 3.29 | % | 3.46 | % | ||||||||||||||
| Net interest margin (average earning assets) - tax equivalent | 3.49 | % | 3.62 | % | ||||||||||||||
| Table 1 - Reconciliation of the Non-GAAP Performance Ratios | ||||||||||||||||||
| (Dollars in thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||||
| (unaudited) | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||||||||||||
| Calculation of core net income | ||||||||||||||||||
| Net income | $ | 3,538 | $ | 4,687 | $ | 11,652 | $ | 12,651 | ||||||||||
| Realized loss/(gain) on securities | (590 | ) | (197 | ) | (1,276 | ) | (1,374 | ) | ||||||||||
| Core deposit accretion | 249 | 249 | 745 | 745 | ||||||||||||||
| Purchase discount amortization | (271 | ) | (398 | ) | (897 | ) | (1,430 | ) | ||||||||||
| Related tax benefit/(cost) | 129 | 73 | 300 | 432 | ||||||||||||||
| (A) | Core net income | $ | 3,055 | $ | 4,414 | $ | 10,524 | $ | 11,024 | |||||||||
| Calculation of core diluted earnings per share | ||||||||||||||||||
| (A) | Core net income | $ | 3,055 | $ | 4,414 | $ | 10,524 | $ | 11,024 | |||||||||
| Diluted average common shares outstanding | 3,479,139 | 3,463,136 | 3,476,406 | 3,461,598 | ||||||||||||||
| Core diluted earnings per share | $ | 0.88 | $ | 1.27 | $ | 3.03 | $ | 3.18 | ||||||||||
| Calculation of core return on average assets | ||||||||||||||||||
| (A) | Core net income | $ | 3,055 | $ | 4,414 | $ | 10,524 | $ | 11,024 | |||||||||
| Average total assets | 1,631,654 | 1,475,094 | 1,587,330 | 1,407,207 | ||||||||||||||
| Core return on average assets | 0.75 | % | 1.20 | % | 0.88 | % | 1.04 | % | ||||||||||
| Calculation of core pre-provision net revenue | ||||||||||||||||||
| Net interest income | $ | 12,200 | $ | 11,688 | $ | 36,118 | $ | 33,774 | ||||||||||
| Non-interest income | 4,146 | 4,855 | 12,139 | 13,447 | ||||||||||||||
| Non-interest expense | (12,401 | ) | (10,035 | ) | (33,904 | ) | (30,140 | ) | ||||||||||
| Pre-provision net revenue | 3,945 | 6,508 | 14,353 | 17,081 | ||||||||||||||
| Realized loss/(gain) on securities | (590 | ) | (197 | ) | (1,276 | ) | (1,374 | ) | ||||||||||
| Core deposit accretion | 249 | 249 | 745 | 745 | ||||||||||||||
| Purchase discount amortization | (271 | ) | (398 | ) | (897 | ) | (1,430 | ) | ||||||||||
| (B) | Core pre-provision net revenue | $ | 3,333 | $ | 6,162 | $ | 12,925 | $ | 15,022 | |||||||||
| Calculation of core pre-provision net revenue to average assets | ||||||||||||||||||
| (B) | Core pre-provision net revenue | $ | 3,333 | $ | 6,162 | $ | 12,925 | $ | 15,022 | |||||||||
| Average total assets | 1,631,654 | 1,475,094 | 1,587,330 | 1,407,207 | ||||||||||||||
| Core pre-provision net revenue to average assets | 0.82 | % | 1.67 | % | 1.09 | % | 1.42 | % | ||||||||||
| Calculation of tangible assets (excluding PPP) | ||||||||||||||||||
| Total assets | $ | 1,609,924 | $ | 1,474,034 | $ | 1,609,924 | $ | 1,474,034 | ||||||||||
| Goodwill | (11,109 | ) | (11,109 | ) | (11,109 | ) | (11,109 | ) | ||||||||||
| Other Intangibles | (3,374 | ) | (4,368 | ) | (3,374 | ) | (4,368 | ) | ||||||||||
| Paycheck Protection Plan ("PPP") loans | (32,892 | ) | (91,453 | ) | (32,892 | ) | (91,453 | ) | ||||||||||
| (C) | Tangible assets (excluding PPP) | $ | 1,562,549 | $ | 1,367,104 | $ | 1,562,549 | $ | 1,367,104 | |||||||||
| Calculation of tangible common equity | ||||||||||||||||||
| Total stockholder's equity | $ | 152,569 | $ | 147,873 | $ | 152,569 | $ | 147,873 | ||||||||||
| Goodwill | (11,109 | ) | (11,109 | ) | (11,109 | ) | (11,109 | ) | ||||||||||
| Other intangibles | (3,374 | ) | (4,368 | ) | (3,374 | ) | (4,368 | ) | ||||||||||
| (D) | Tangible common equity | $ | 138,086 | $ | 132,396 | $ | 138,086 | $ | 132,396 | |||||||||
| Calculation of tangible common equity to tangible assets (excluding PPP) | ||||||||||||||||||
| (D) | Tangible common equity | $ | 138,086 | $ | 132,396 | $ | 138,086 | $ | 132,396 | |||||||||
| (C) | Tangible assets (excluding PPP) | 1,562,549 | 1,367,104 | 1,562,549 | 1,367,104 | |||||||||||||
| Tangible common equity to tangible assets | 8.84 | % | 9.68 | % | 8.84 | % | 9.68 | % | ||||||||||
| Calculation of average tangible common equity | ||||||||||||||||||
| Average stockholder's common equity | $ | 159,010 | $ | 146,116 | $ | 155,945 | $ | 141,095 | ||||||||||
| Average goodwill | (11,109 | ) | (11,109 | ) | (11,109 | ) | (11,109 | ) | ||||||||||
| Average other intangibles | (3,523 | ) | (4,517 | ) | (3,768 | ) | (4,763 | ) | ||||||||||
| (E) | Average tangible stockholders' common equity | $ | 144,378 | $ | 130,490 | $ | 141,068 | $ | 125,223 | |||||||||
| Calculation of core return on average common equity | ||||||||||||||||||
| (A) | Core net income | $ | 3,055 | $ | 4,414 | $ | 10,524 | $ | 11,024 | |||||||||
| (E) | Average tangible common equity | 144,378 | 130,490 | 141,068 | 125,223 | |||||||||||||
| Core return on average common equity | 8.46 | % | 13.53 | % | 9.95 | % | 11.74 | % | ||||||||||
| Calculation of core yield on loans | ||||||||||||||||||
| Interest income on loans | $ | 10,270 | $ | 11,263 | $ | 31,291 | $ | 33,589 | ||||||||||
| Loan accretion income | (271 | ) | (398 | ) | (897 | ) | (1,430 | ) | ||||||||||
| Adjusted interest income on loans | 9,999 | 10,865 | 30,394 | 32,159 | ||||||||||||||
| Average loan balances | 960,274 | 975,794 | 970,740 | 954,985 | ||||||||||||||
| Core yield on loans | 4.17 | % | 4.45 | % | 4.17 | % | 4.49 | % | ||||||||||
| Calculation of adjusted allowance for loan loss to total loans | ||||||||||||||||||
| Allowance for loan losses | $ | (13,774 | ) | $ | (9,866 | ) | $ | (13,774 | ) | $ | (9,866 | ) | ||||||
| Additional reserves not part of the allowance for loan loss | (2,572 | ) | (4,587 | ) | (2,572 | ) | (4,587 | ) | ||||||||||
| (F) | Adjusted allowance for loan loss | (16,346 | ) | (14,453 | ) | (16,346 | ) | (14,453 | ) | |||||||||
| Total loans | 956,352 | 981,902 | 956,352 | 981,902 | ||||||||||||||
| Adjusted allowance for loan loss to total loans | 1.71 | % | 1.47 | % | 1.71 | % | 1.47 | % | ||||||||||
| Calculation of adjusted allowance for loan loss to nonperforming loans | ||||||||||||||||||
| (F) | Adjusted allowance for loan loss | $ | (16,346 | ) | $ | (14,453 | ) | $ | (16,346 | ) | $ | (14,453 | ) | |||||
| Nonperforming loans | 13,543 | 15,060 | 13,543 | 15,060 | ||||||||||||||
| Adjusted allowance for loan loss to nonperforming loans (coverage ratios) | 120.70 | % | 95.97 | % | 120.70 | % | 95.97 | % | ||||||||||
| Calculation of adjusted allowance for loan loss to total loans excluding PPP | ||||||||||||||||||
| (F) | Adjusted allowance for loan loss | $ | (16,346 | ) | $ | (14,453 | ) | $ | (16,346 | ) | $ | (14,453 | ) | |||||
| Total loans | 956,352 | 975,794 | 956,352 | 954,985 | ||||||||||||||
| PPP loans | (32,892 | ) | (91,453 | ) | (32,892 | ) | (91,453 | ) | ||||||||||
| Total loans excluding PPP | 923,460 | 884,341 | 923,460 | 863,532 | ||||||||||||||
| Adjusted allowance for loan loss to total loans excluding PPP | 1.77 | % | 1.63 | % | 1.77 | % | 1.67 | % | ||||||||||
| Calculation of core revenue | ||||||||||||||||||
| Net interest income | $ | 12,200 | $ | 11,688 | $ | 36,118 | $ | 33,774 | ||||||||||
| Non-interest income | 4,146 | 4,855 | 12,139 | 13,447 | ||||||||||||||
| Realized loss/(gain) on securities | (590 | ) | (197 | ) | (1,276 | ) | (1,374 | ) | ||||||||||
| (G) | Core revenue | $ | 15,756 | $ | 16,346 | $ | 46,981 | $ | 45,847 | |||||||||
| Calculation of core non-interest expense | ||||||||||||||||||
| Non-interest expense | $ | 12,401 | $ | 10,035 | $ | 33,904 | $ | 30,140 | ||||||||||
| Core deposit accretion | 249 | 249 | 745 | 745 | ||||||||||||||
| Purchase discount amortization | (271 | ) | (398 | ) | (897 | ) | (1,430 | ) | ||||||||||
| (H) | Core non-interest expense | $ | 12,379 | $ | 9,886 | $ | 33,752 | $ | 29,455 | |||||||||
| Calculation of core efficiency ratio | ||||||||||||||||||
| (H) | Core non-interest expense | $ | 12,379 | $ | 9,886 | $ | 33,752 | $ | 29,455 | |||||||||
| (G) | Core revenue | 15,756 | 16,346 | 46,981 | 45,847 | |||||||||||||
| Core efficiency ratio | 78.57 | % | 60.48 | % | 71.84 | % | 64.25 | % | ||||||||||
| Calculation of core non-interest expense to total average assets | ||||||||||||||||||
| (H) | Core non-interest expense | $ | 12,379 | $ | 9,886 | $ | 33,752 | $ | 29,455 | |||||||||
| Average total assets | 1,631,654 | 1,475,094 | 1,587,330 | 1,407,207 | ||||||||||||||
| Core non-interest expense to total average assets | 0.76 | % | 0.67 | % | 2.13 | % | 2.09 | % | ||||||||||
| Calculation of tax adjusted net interest margin | ||||||||||||||||||
| Net interest income | $ | 12,200 | $ | 11,688 | $ | 36,118 | $ | 33,774 | ||||||||||
| Tax adjusted interest on securities and loans | 851 | 567 | 2,273 | 1,497 | ||||||||||||||
| Adjusted net interest income | 13,051 | 12,255 | 38,391 | 35,271 | ||||||||||||||
| Total average earning assets | 1,506,674 | 1,370,318 | 1,465,675 | 1,300,574 | ||||||||||||||
| Tax adjusted net interest margin | 3.46 | % | 3.58 | % | 3.49 | % | 3.62 | % | ||||||||||
FOR FURTHER INFORMATION
CONTACT SHAREHOLDER SERVICES
(219) 853-7575
FAQ
What were Finward Bancorp's earnings for the nine months ending September 30, 2021?
How did Finward Bancorp's net income change in Q3 2021 compared to Q3 2020?
What is the current status of Finward Bancorp's core deposits?
What is the efficiency ratio for Finward Bancorp in Q3 2021?
What factors led to the decrease in noninterest income for Finward Bancorp?
