Finward Bancorp Announces Earnings for the Quarter and Nine Months Ended September 30, 2022

Rhea-AI Summary

Finward Bancorp (FNWD) reported a net income of $11.1 million for the nine months ending September 30, 2022, down from $11.7 million in the same period last year. The quarterly net income rose to $4.6 million, up from $3.5 million year-over-year. Core net income increased to $12.7 million, reflecting growth in interest-earning assets from the Royal Financial acquisition and an organic loan growth of 8.4%. The net interest margin improved to 3.56%. However, unrealized losses on securities totaled $79.8 million. The tangible book value per share dropped to $20.99.

Positive

• Core net income for nine months increased by $2.1 million to $12.7 million.
• Organic loan growth achieved 8.4%, with commercial real estate loans growing by $63.6 million.
• Net interest margin improved to 3.56%, up from 3.29% year-over-year.

Negative

• Net income for nine months decreased by $530 thousand compared to last year.
• Unrealized losses on securities portfolio reached $79.8 million.
• Tangible book value per share declined from $25.24 to $20.99.

MUNSTER, Ind., Oct. 25, 2022 (GLOBE NEWSWIRE) -- Finward Bancorp (Nasdaq: FNWD) (the “Bancorp”), the holding company for Peoples Bank (the “Bank”), today announced that net income available to common stockholders was $11.1 million, or $2.67 per diluted share, for the nine months ended September 30, 2022, as compared to $11.7 million, or $3.35 per diluted share, for the corresponding prior year period. For the quarter ended September 30, 2022, the Bancorp’s net income totaled $4.6 million, or $1.07 per diluted share, as compared to $3.5 million, or $1.02 per diluted share, for the quarter ending September 30, 2021. Selected performance metrics are as follows for the periods presented:

Performance Ratios		Quarter ended,											Nine months ended,
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
		September 30,		June 30,		March 31,		December 31,		September 30,			September 30,		September 30,
		2022		2022		2022		2021		2021			2022		2021
Return on equity		13.65%		12.45%		5.01%		8.56%		8.90%			9.98%		9.96%
Return on assets		0.88%		0.85%		0.44%		0.83%		0.87%			0.73%		0.98%
Noninterest income / average assets		0.51%		0.56%		0.64%		0.95%		1.02%			0.57%		1.02%
Noninterest expense / average assets		2.90%		2.91%		3.33%		3.18%		3.04%			3.04%		2.85%
Efficiency ratio		74.54%		75.15%		87.10%		78.28%		75.87%			78.72%		70.26%

Core net income for the nine months ended September 30, 2022, amounted to $12.7 million, or $3.04 per diluted share, compared to $10.5 million, or $3.03 per diluted share for the nine months ended September 30, 2021. Core net income for the quarter ended September 30, 2022, amounted to $4.7 million, or $1.10 per diluted share, compared to $3.1 million, or $0.88 per diluted share for the quarter ended September 30, 2021. Core net income is a non-GAAP measure. For the periods presented, the core net income measure excludes merger related expenses, net (gain) loss on securities, net loss recognized on the sale of premises and equipment, core deposit accretion, certificate of deposit purchase premium amortization, purchase discount amortization, and related tax benefit/(cost). Selected non-GAAP performance metrics are as follows for the periods presented:

Non-GAAP Performance Ratios		Quarter ended,											Nine Months Ended
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
		September 30,		June 30,		March 31,		December 31,		September 30,			September 30,		September 30,
		2022		2022		2022		2021		2021			2022		2021
Core return on equity		17.75%		13.78%		11.32%		7.83%		8.46%			13.96%		9.96%
Core return on assets		0.90%		0.75%		0.83%		0.71%		0.75%			0.83%		0.89%
Core noninterest expense / average assets		2.78%		2.83%		2.67%		3.12%		2.98%			2.76%		2.81%
Core efficiency ratio		73.10%		77.12%		72.87%		81.01%		78.48%			74.39%		72.49%
Net interest margin - tax equivalent		3.84%		3.78%		3.63%		3.58%		3.46%			3.75%		3.49%

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 year-to-date period include:

• Core net income benefiting from acquisition and internal growth: GAAP net income for the nine months ended September 30, 2022, decreased $530 thousand compared to the nine months ended September 30, 2021. However, core net income for the nine months ended September 30, 2022, increased by $2.1 million, as compared to the nine months ended September 30, 2021, primarily relating to the increase in interest-earning assets acquired from the acquisition of Royal Financial, Inc. (“Royal”), organic loan growth, and the continued ability to manage the net interest margin.
• Net interest margin continuing to improve: The net interest margin for the nine months ended September 30, 2022, was 3.56%, compared to 3.29% for the nine months ended September 30, 2021. The tax-adjusted net interest margin (a non-GAAP measure) for the nine months ended September 30, 2022, was 3.75%, compared to 3.49% for the nine months ended September 30, 2021. The increased net interest margin and tax-adjusted margin is primarily related to increased loan balances from acquired and internally generated growth and the ability to manage deposit and borrowing costs to support earning asset growth. Internally generated loan growth (separate from the acquisition) totaled $81.2 million or 8.4%. Leading the internally generated loan growth was commercial real estate loans of $63.6 million or 6.5%. See Table 1 at the end of this press release for a reconciliation of the tax-adjusted net interest margin to the GAAP net interest margin. Despite the continued improvement to the net interest margin, the overall interest rate environment will likely make maintaining and improving this metric more difficult into next year.
• Unrealized losses on the securities portfolio: Accumulated other comprehensive losses were $79.8 million as of September 30, 2022. However, during the quarter, securities portfolio cashflows from sales and regular paydowns of the portfolio of $17 million were used to fund internally generated loan growth. Furthermore, a year-to-date total of $67 million of cashflows have been redirected from the securities portfolio to fund internal loan growth. The yield on the securities portfolio improved on a year-to-date basis to 2.17% at September 30, 2022, up from 1.97% at September 30, 2021. The securities portfolio also generated gains of $662 thousand from the sale of securities for the nine months ended September 30, 2022. The effective duration of the securities portfolio was 6.9 years as of September 30, 2022. Management continues to actively manage the securities portfolio and does not currently anticipate the need to realize losses from the securities portfolio. Further, it remains unlikely the Bancorp will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity.
• Gain on sale of loans: Increases in mortgage rates have dampened demand and slowed the sale of fixed rate mortgage loans into the secondary market. As a result, gains from the sale of loans for the nine-months ended September 30, 2022, totaled $1.2 million, down from $4.4 million for the nine-months ended September 30, 2021. During the nine months ended September 30, 2022, the Bancorp originated $40.8 million in new fixed rate mortgage loans for sale, compared to $120.1 million during the nine months ended September 30, 2021. During the nine months ended September 30, 2022, the Bancorp originated $78.8 million in new mortgage loans retained in its portfolio, compared to $34.7 million during the nine months ended September 30, 2021. These retained loans are primarily construction loans and adjustable-rate loans with duration of 5 years or less, and the Bank continues to sell longer-duration fixed rate mortgages into the secondary market.
• Building a digital-forward foundation: Primary focus remains on enhancing the customer experience and managing risk through our digital platforms. The Bank transitioned to a new tech-enabled customer contact platform during October and is in process of transitioning all customer calls to the platform. The Bank is also planning further enhancements to customer acquisition, onboarding, and servicing platforms to enhance customer experience and drive efficiency in these areas.
• 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 which closed on July 1^st, as well as the announcement of plans to close three additional banking centers by the end of the current year. Each branch closure is expected to result in approximately $250 thousand in operational expense reduction, excluding personnel expenses. The remaining 26 locations are being analyzed for footprint optimization opportunities, with additional locations showing the potential for reducing operating overhead over the next 12 months. These efforts are reducing fixed costs and allowing for redeployment of a portion of occupancy expenses into building a digital-forward foundation to better meet the needs of the communities Finward serves. By the end of 2022, the Bank expects to have reduced its overall branch count by nearly 20% over a 12-month period and management will continue to evaluate branch operations as circumstances permit.
• Asset Quality: At September 30, 2022, the allowance for loan losses totaled $13.4 million and is considered adequate by management. For the nine months ended September 30, 2022, recoveries, net of charge-offs, totaled $56 thousand. The allowance for loan losses as a percentage of total loans was 0.89% at September 30, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 122.6% at September 30, 2022. Management also considers reserves that are not part of the ALL that have been established from acquisition activity. When these additional reserves are included on a non-GAAP basis, the allowance for loan losses as a percentage of total loans was 1.40% at September 30, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 193.2% at September 30, 2022. See Table 1 at the end of this press release for a reconciliation of the adjusted allowance for loan losses to total loans and coverage ratio to the related GAAP ratios.
• Personnel: The Bank has had a headcount freeze in place through the end of the third quarter, with an attrition program further managing headcount going forward. A total 10% reduction in retail staff is also targeted from current levels through the end of 2023.
• Capital Adequacy: As of September 30, 2022, the Bancorp’s tier 1 capital to adjusted average assets ratio totaled 8.1%, and under all regulatory capital requirements, continues to be considered well capitalized. Tangible book value per share was $20.99 at September 30, 2022, down from $25.24 as of June 30, 2022 (a non-GAAP measure). The decrease is due to continued accumulated other comprehensive losses from unrealized losses on the securities portfolio as noted above. Excluding accumulated other comprehensive losses, tangible book value per share increased to $39.57 as of September 30, 2022, from $38.69 as of June 30, 2022 (a non-GAAP measure). Tangible capital represented 4.5% of tangible assets at September 30, 2022 (a non-GAAP measure). Tangible capital, excluding accumulated other comprehensive losses, was 8.4% at September 30, 2022 (a non-GAAP measure). See Table 1 at the end of this press release for a reconciliation of the tangible book value per share, tangible book value per share adjusted for accumulated other losses, tangible capital as a percentage of tangible assets, and tangible capital as a percentage of tangible assets adjusted for accumulated other comprehensive losses to the related GAAP ratios.
  

“During the quarter, we continued to improve our core net income and managed our net interest margin to new highs on the year, while making progress in rebalancing our earning assets. Changes in consumer demand for fixed-rate mortgages has slowed our ability to generate gains from the sales of loans; however, we continue to grow our residential real estate loan portfolio. Cashflows from our securities portfolio, along with securities sales in a volatile market and growth in core deposits, have supported strong commercial loan growth with commercial real estate loans increasing by 8.4% year-to-date. We are actively managing our expense base to achieve greater economies of scale and continue to perform at levels that accrete capital and allow for the ongoing investments in the digital transformation process for Peoples Bank and Finward Bancorp,” said Benjamin Bochnowski, president and chief executive officer. “With economic conditions in mind, we are focused on running the bank efficiently, managing credit and underwriting, and continuing to rebalance our securities portfolio in order to recoup unrealized losses back into tangible book value.”

Net Interest Income

Year-to-Date
(Dollars in thousands)	Average Balances, Interest, and Rates
(unaudited)	September 30, 2022									September 30, 2021
	Average Balance				Interest			Rate (%)		Average Balance				Interest			Rate (%)
ASSETS					`
Interest bearing deposits in other financial institutions	$	24,268			$	163		0.90		$	53,774			$	33		0.08
Federal funds sold		3,561				8		0.30			1,064				-		-
Certificates of deposit in other financial institutions		1,750				15		1.14			1,443				21		1.94
Securities available-for-sale		447,319				7,295		2.17			435,119				6,428		1.97
Loans receivable*		1,406,591				44,629		4.23			970,740				31,291		4.30
Federal Home Loan Bank stock		3,364				63		2.50			3,535				55		2.07
Total interest earning assets		1,886,853			$	52,173		3.69			1,465,675			$	37,828		3.44
Cash and non-interest bearing deposits in other financial institutions		21,279									37,186
Allowance for loan losses		(13,418	)								(13,205	)
Other noninterest bearing assets		142,254									97,674
Total assets	$	2,036,968								$	1,587,330
LIABILITIES AND STOCKHOLDERS' EQUITY
Total deposits	$	1,833,712			$	1,597		0.12		$	1,395,883			$	1,652		0.16
Repurchase agreements		20,935				93		0.59			17,458				35		0.27
Borrowed funds		11,175				143		1.71			992				23		3.09
Total interest bearing liabilities		1,865,822			$	1,833		0.13			1,414,333			$	1,710		0.16
Other noninterest bearing liabilities		22,510									17,052
Total liabilities		1,888,332									1,431,385
Total stockholders' equity		148,636									155,945
Total liabilities and stockholders' equity	$	2,036,968								$	1,587,330

Net interest income was $50.3 million for the nine months ended September 30, 2022, an increase of $14.2 million (39.4%), compared to $36.1 million for the nine months ended September 30, 2021. The Bancorp’s net interest margin on a tax-adjusted basis was 3.75% for the nine months ended September 30, 2022, compared to 3.49% for the nine months ended September 30, 2021.

(Dollars in thousands)	Average Balances, Interest, and Rates
(unaudited)	September 30, 2022									September 30, 2021
	Average Balance				Interest			Rate (%)		Average Balance				Interest			Rate (%)
ASSETS
Interest bearing deposits in other financial institutions	$	24,732			$	110		1.78		$	53,786			$	12		0.09
Federal funds sold		1,579				6		1.52			1,112				-		-
Certificates of deposit in other financial institutions		1,899				9		1.90			1,262				6		1.90
Securities available-for-sale		394,796				2,271		2.30			486,993				2,363		1.94
Loans receivable*		1,484,678				16,122		4.34			960,274				10,270		4.28
Federal Home Loan Bank stock		3,038				21		2.76			3,247				15		1.85
Total interest earning assets		1,910,722			$	18,539		3.88			1,506,674			$	12,666		3.36
Cash and non-interest bearing deposits in other financial institutions		21,954									41,378
Allowance for loan losses		(13,487	)								(13,688	)
Other noninterest bearing assets		149,950									97,290
Total assets	$	2,069,139								$	1,631,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Total deposits	$	1,873,962			$	871		0.19		$	1,436,125			$	452		0.13
Repurchase agreements		20,781				51		0.98			20,970				13		0.25
Borrowed funds		17,456				110		2.52			41				1		9.76
Total interest bearing liabilities		1,912,199			$	1,032		0.22			1,457,136			$	466		0.13
Other noninterest bearing liabilities		23,458									15,508
Total liabilities		1,935,657									1,472,644
Total stockholders' equity		133,482									159,010
Total liabilities and stockholders' equity	$	2,069,139								$	1,631,654

Net interest income was $17.5 million for the quarter ended September 30, 2022, an increase of $5.4 million (43.5%), compared to $12.2 million for the quarter ended September 30, 2021. The Bancorp’s net interest margin was 3.67% for the quarter ended September 30, 2022, compared to 3.24% for the quarter ended September 30, 2021. The Bancorp’s net interest margin on a tax-adjusted basis was 3.84% for the quarter ended September 30, 2022, compared to 3.46% for the quarter ended September 30, 2021. The increased net interest income and net interest margin for the quarter and the nine months was primarily the result of the increased earning assets acquired through the Royal acquisition, the reallocation of securities cashflows into organic loan growth, and managing interest expense.

Noninterest Income

(Dollars in thousands)		Nine Months Ended September 30,									9/30/2022 vs. 9/30/2021
(Unaudited)			2022				2021				$ Change			% Change
Noninterest income:
Fees and service charges			4,434				4,010				424			10.6	%
Wealth management operations			1,590				1,787				(197	)		-11.0	%
Gain on sale of loans held-for-sale, net			1,242				4,394				(3,152	)		-71.7	%
Gain on sale of securities, net			662				1,276				(614	)		-48.1	%
Increase in cash value of bank owned life insurance			628				537				91			16.9	%
Gain on sale of foreclosed real estate			-				27				(27	)		-100.0	%
Other			114				108				6			5.6	%
Total noninterest income			8,670				12,139				(3,469	)		-28.6	%

(Dollars in thousands)		Quarter Ended September 30,								9/30/2022 vs. 9/30/2021
(Unaudited)			2022				2021			$ Change			% Change
Noninterest income:
Fees and service charges			1,570				1,473			97			6.6	%
Wealth management operations			407				604			(197	)		-32.6	%
Gain on sale of loans held-for-sale, net			344				1,229			(885	)		-72.0	%
Gain on sale of securities, net			23				590			(567	)		-96.1	%
Increase in cash value of bank owned life insurance			183				180			3			1.7	%
Gain on sale of foreclosed real estate			-				-			-			0.0	%
Other			103				70			33			47.1	%
Total noninterest income			2,630				4,146			(1,516	)		-36.6	%

The increase in fees and service charges, for the quarter and the year-to-date periods, is primarily the result of the acquisition of Royal and the resultant increase in our customer base. The decrease in wealth management operations, for the quarter and the year-to-date periods, is result of lower fee income year over year due to market conditions. The decrease in gain on sale of loans, for the quarter and the year-to-date periods, is the result of significant refinance activity which started in 2020 and continued into 2021 due to the economic and low-rate environment, which resulted in more loans originated and sold. We expect demand for fixed rate mortgage loans held-for-sale in the secondary market to be lower as borrowing rates on loans increase. The decrease in gains on the sale of securities, for the quarter and the year-to-date periods, is a result of current market conditions and actively repositioning the portfolio.

Noninterest Expense

(Dollars in thousands)		Nine Months Ended September 30,								9/30/2022 vs. 9/30/2021
(Unaudited)			2022				2021			$ Change			% Change
Noninterest expense:
Compensation and benefits			22,403				17,624			4,779			27.1	%
Data processing			5,512				1,997			3,515			176.0	%
Occupancy and equipment			5,033				4,076			957			23.5	%
Marketing			1,623				728			895			122.9	%
Federal deposit insurance premiums			949				620			329			53.1	%
Net loss recognized on sale of premises and equipment			254				-			254			0.0	%
Other			10,681				8,859			1,822			20.6	%
Total noninterest expense			46,455				33,904			12,551			37.0	%

(Dollars in thousands)		Quarter Ended September 30,								9/30/2022 vs. 9/30/2021
(Unaudited)			2022				2021			$ Change			% Change
Noninterest expense:
Compensation and benefits			7,498				6,042			1,456			24.1	%
Data processing			1,212				872			340			39.0	%
Occupancy and equipment			1,804				1,380			424			30.7	%
Marketing			587				334			253			75.7	%
Federal deposit insurance premiums			350				236			114			48.3	%
Net loss recognized on sale of premises and equipment			254				-			254			0.0	%
Other			3,305				3,537			(232	)		-6.6	%
Total noninterest expense			15,010				12,401			2,609			21.0	%

The increase in compensation and benefits, for the quarter and year-to-date periods, is primarily the result of the Royal acquisition, management’s continued focus on talent management, and wage inflation. The increase in occupancy and equipment expense, for the quarter and the year-to-date periods, is primarily related to the Royal acquisition and higher operating costs. Marketing expenses, for the quarter and the year-to-date periods, have increased to enhance brand recognition in new markets and gain more wallet share. The increase in federal deposit insurance premiums, for the quarter and the year-to-date periods, is primarily the result of growth of the bank’s average assets. The increase in data processing expense for the nine-month period ending September 30, 2022, is 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 data processing expense for the quarter ending September 30, 2022, is due to increased system utilization due to growth of the Bank, and continued investment in technological advancements such as Salesforce and nCino. The increase in net loss recognized on sale of premises and equipment, for the quarter and year-to-date periods, is the result of the sale of a branch to reduce future fixed costs, allowing for redeployment of a portion of occupancy expenses into building a digital-forward foundation so that Finward can better serve its customers. The increase in other operating expenses for the nine-month period ending September 30, 2022, is primarily the result of one-time expenses related to the acquisition of Royal, continued investments in strategic initiatives focusing on growth of the organization, and inflationary pressures. The decrease in other operating expenses for the quarter ending September 30, 2022, is primarily due to lower utilization of outside consultants related to bank initiatives during the quarter.

Income Tax Expense
The provision for income taxes was $1.4 million for the nine months ended September 30, 2022, as compared to $1.4 million for the nine months ended September 30, 2021. The effective tax rate was 11.4% for the nine months ended September 30, 2022, as compared to 10.8% for the nine months ended September 30, 2021. The provision for income taxes was $571 thousand for the quarter ended September 30, 2022, as compared to $268 thousand for the quarter ended September 30, 2021. The effective tax rate was 11.1% for the quarter ended September 30, 2022, as compared to 7.0% for the quarter ended September 30, 2021. The Bancorp’s higher current effective tax rate, for the quarter and year-to-date periods, is a result of higher earnings relative to tax preferred income.

Lending
The Bancorp’s loan portfolio totaled $1.5 billion on September 30, 2022, compared to $966.7 million on December 31, 2021, an increase of $536.0 million or 55.4%. The increase is primarily the result of the Royal acquisition, as well as organic loan portfolio growth. During the first nine months of 2022 the Bancorp originated $296.8 million in new commercial loans, compared to $258.1 million during the nine months ended September 30, 2021. During the nine months ended September 30, 2022, the Bancorp originated $40.8 million in new fixed rate mortgage loans for sale, compared to $120.1 million during the nine months ended September 30, 2021. During the nine months ended September 30, 2022, the Bancorp originated $78.8 million in new mortgage loans retained in its portfolio, compared to $34.7 million during the nine months ended September 30, 2021. The loan portfolio represents 79.9% of earning assets and is comprised of 62.6% commercial related credits.

Asset Quality
At September 30, 2022, non-performing loans totaled $10.9 million, compared to $7.3 million at December 31, 2021, an increase of $3.7 million or 50.5%. The Bancorp’s ratio of non-performing loans to total loans was 0.73% at September 30, 2022, compared to 0.76% at December 31, 2021. The Bancorp’s ratio of non-performing assets to total assets was 0.58% at September 30, 2022, compared to 0.51% at December 31, 2021.

For the nine months ended September 30, 2022, no provisions to the ALL were required, compared to $1.2 million for the nine months ended September 30, 2021, a decrease of $1.2 million. For the quarter ended September 30, 2022, no provisions to the ALL were required, compared to $139 thousand for the quarter ended September 30, 2021, a decrease of $139 thousand. For the nine months ended September 30, 2022, recoveries, net of charge-offs, totaled $56 thousand. For the quarter ended September 30, 2022, charge-offs, net of recoveries, totaled $7 thousand. At September 30, 2022, the allowance for loan losses totaled $13.4 million and is considered adequate by management. The allowance for loan losses as a percentage of total loans was 0.89% at September 30, 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 122.6% at September 30, 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 1.40% at September 30, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 193.2% at September 30, 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 $359.0 million at September 30, 2022, compared to $526.9 million at December 31, 2021, a decrease of $167.9 million or 31.9%. The decrease is attributable to increased unrealized losses within the portfolio and the use of cashflows from the securities portfolio to fund loan growth. The securities portfolio represents 19.1% of earning assets and provides a consistent source of liquidity and earnings to the Bancorp. Cash and cash equivalents totaled $38.3 million on September 30, 2022, compared to $33.2 million on December 31, 2021, an increase of $5.1 million or 15.4%. The increase in cash and cash equivalents is primarily the result of the timing of investments in interest earning assets relative to the inflow and outflow of deposits and repurchase agreements.

Funding
On September 30, 2022, core deposits totaled $1.5 billion, compared to $1.2 billion on December 31, 2021, an increase of $310.3 million or 26.0%. The increase is the result of the Royal acquisition, which added $279.9 million of core deposits at the time of acquisition, as well as the Bancorp’s efforts to maintain and grow core deposits. Core deposits include checking, savings, and money market accounts and represented 82.1% of the Bancorp’s total deposits at September 30, 2022. During the first nine 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 September 30, 2022, balances for certificates of deposit totaled $327.7 million, compared to $239.2 million on December 31, 2021, an increase of $88.4 million or 37.0%. The increase related to certificate of deposits is related to the Royal acquisition, which added $195.2 million of certificates at the time of acquisition. In addition, on September 30, 2022, borrowings and repurchase agreements totaled $78.1 million, compared to $14.6 million at December 31, 2021, an increase of $63.6 million or 435.9%. The increase in short-term borrowings was the result of cyclical inflows and outflows of interest-earning assets and interest-bearing liabilities.

Capital Adequacy
At September 30, 2022, shareholders’ equity stood at $118.0 million, a decrease of $38.6 million, or 24.6% from December 31, 2021. This decrease is the result of net unrealized losses in the securities portfolio which resulted in an accumulated comprehensive loss of $79.8 million at September 30, 2022. The Bank’s regulatory capital ratios at September 30, 2022, were 12.8% for total capital to risk-weighted assets, 11.8% for both common equity tier 1 capital to risk-weighted assets and tier 1 capital to risk-weighted assets, and 8.1% for tier 1 capital to adjusted average assets. Under all regulatory capital requirements, the Bank is considered well capitalized. Tangible capital represented 4.5% of tangible assets at September 30, 2022.The tangible book value of the Bancorp’s stock stood at $20.99 per share at September 30, 2022, compared to $40.91 at December 31, 2021. This is primarily the result of increased net unrealized loss on securities available-for-sale, net of reclassification and tax effects. Management continues to actively manage the securities portfolio and does not currently anticipate the need to realize losses from the securities portfolio that would result in reductions to retained earnings.

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 net income, core diluted earnings per share, core return on equity, core return on assets, core pre-provision net revenue, core pre-provision net revenue/average assets, tangible assets (excluding PPP), tangible common equity, tangible common equity/tangible assets (excluding PPP), average tangible common equity, core yield on loans, core noninterest expense, 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, adjusted allowance for loan loss to total loans (excluding PPP), core revenue, adjusted net interest margin, 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 29 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; further deterioration in the market value of securities held in the Bancorp’s investment securities portfolio, whether as a result of macroeconomic factors or otherwise; 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		Quarter ended,																					Nine months ended,
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)					(Unaudited)				(Unaudited)
		September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
		2022				2022				2022				2021				2021					2022				2021
Return on equity			13.65	%			12.45	%			5.01	%			8.56	%			8.90	%				9.98	%			9.96	%
Return on assets			0.88	%			0.85	%			0.44	%			0.83	%			0.87	%				0.73	%			0.98	%
Yield on loans			4.34	%			4.18	%			4.17	%			4.28	%			4.28	%				4.23	%			4.30	%
Yield on security investments			2.30	%			2.23	%			2.02	%			1.94	%			1.94	%				2.17	%			1.97	%
Total yield on earning assets			3.88	%			3.68	%			3.49	%			3.42	%			3.36	%				3.69	%			3.44	%
Cost of deposits			0.19	%			0.08	%			0.08	%			0.10	%			0.13	%				0.12	%			0.16	%
Cost of repurchase agreements			0.98	%			0.46	%			0.33	%			0.26	%			0.25	%				0.59	%			0.27	%
Cost of borrowed funds			2.52	%			1.10	%			0.39	%			0.47	%			9.76	%				1.71	%			3.09	%
Total cost of funds			0.22	%			0.09	%			0.08	%			0.10	%			0.13	%				0.13	%			0.16	%
Noninterest income / average assets			0.51	%			0.56	%			0.64	%			0.95	%			1.02	%				0.57	%			1.02	%
Noninterest expense / average assets			2.90	%			2.91	%			3.33	%			3.18	%			3.04	%				3.04	%			2.85	%
Net noninterest margin / average assets			-2.39	%			-2.36	%			-2.68	%			-2.23	%			-2.02	%				-2.47	%			-1.83	%
Efficiency ratio			74.54	%			75.15	%			87.10	%			78.28	%			75.87	%				78.72	%			70.26	%
Effective tax rate			11.14	%			11.70	%			11.41	%			0.18	%			7.04	%				11.41	%			10.78	%
Non-performing assets to total assets			0.58	%			0.53	%			0.47	%			0.51	%			0.91	%				0.58	%			0.91	%
Non-performing loans to total loans			0.73	%			0.68	%			0.62	%			0.76	%			1.42	%				0.73	%			1.42	%
Allowance for loan losses to non-performing loans			122.64	%			133.78	%			150.28	%			183.76	%			101.71	%				122.64	%			101.71	%
Allowance for loan losses to loans outstanding			0.89	%			0.91	%			0.93	%			1.38	%			1.44	%				0.89	%			1.44	%
Foreclosed real estate to total assets			0.00	%			0.00	%			0.00	%			0.00	%			0.01	%				0.00	%			0.01	%
Basic earnings per share		$	1.07			$	1.04			$	0.53			$	0.95			$	1.02				$	2.68			$	3.35
Diluted earnings per share		$	1.07			$	1.04			$	0.53			$	0.95			$	1.02				$	2.67			$	3.35
Net worth / total assets			5.75	%			6.50	%			7.51	%			9.66	%			9.48	%				5.75	%			9.48	%
Book value per share		$	27.46			$	31.80			$	36.71			$	45.00			$	43.85				$	27.46			$	43.85
Closing stock price		$	34.01			$	37.49			$	46.21			$	45.88			$	41.05				$	34.01			$	41.05
Price per earnings per share		$	7.92			$	8.97			$	21.76			$	12.07			$	10.06				$	4.23			$	4.08
Dividend declared per common share		$	0.31			$	0.31			$	0.31			$	0.31			$	0.31				$	0.93			$	0.93
Non-GAAP Performance Ratios		Quarter ended,																					Nine Months Ended
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)					(Unaudited)				(Unaudited)
		September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
		2022				2022				2022				2021				2021					2022				2021
Core return on equity			17.75	%			13.78	%			11.32	%			7.83	%			8.46	%				13.96	%			9.96	%
Core return on assets			0.90	%			0.75	%			0.83	%			0.71	%			0.75	%				0.83	%			0.89	%
Core noninterest expense / average assets			2.78	%			2.83	%			2.67	%			3.12	%			2.98	%				2.76	%			2.81	%
Core efficiency ratio			73.10	%			77.12	%			72.87	%			81.01	%			78.48	%				74.39	%			72.49	%
Net interest margin - tax equivalent			3.84	%			3.78	%			3.63	%			3.58	%			3.46	%				3.75	%			3.49	%
Tangible book value per diluted share		$	20.99			$	25.24			$	30.01			$	40.91			$	39.69				$	20.99			$	39.69
Tangible book value per diluted share adjusted for AOCI		$	39.57			$	38.69			$	37.80			$	39.68			$	38.94				$	39.57			$	38.94

Finward Bancorp
Quarterly Financial Report
Balance Sheet Data
(Dollars in thousands)					(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
					September 30,				June 30,				March 31,				December 31,				September 30,
						2022				2022				2022				2021				2021
Total assets					$	2,052,986			$	2,101,485			$	2,097,845			$	1,620,743			$	1,609,924
Cash & cash equivalents						38,296				79,302				54,501				33,176				31,765
Certificates of deposit in other financial institutions						2,214				1,482				1,731				1,709				977
Securities - available for sale						359,035				400,466				464,320				526,889				531,010
Loans receivable:
	Commercial real estate				$	452,852			$	420,735			$	408,375			$	317,145			$	309,905
	Residential real estate					471,565				459,151				444,753				260,134				268,798
	Commercial business					95,372				103,649				112,396				115,772				125,922
	Construction and land development					134,301				153,422				150,810				123,822				110,289
	Multifamily					258,377				248,495				234,267				61,194				56,869
	Home equity					37,578				35,672				34,284				34,612				35,652
	Manufactured homes					35,866				37,693				38,636				37,887				32,857
	Government					9,649				8,081				8,176				8,991				9,841
	Consumer					827				1,673				924				582				650
	Farmland					-				-				-				-				205
		Total loans			$	1,496,387			$	1,468,571			$	1,432,621			$	960,139			$	950,988
Deposits:
	Core deposits:
		Noninterest bearing checking			$	386,137			$	370,567			$	380,515			$	295,294			$	287,376
		Interest bearing checking				422,559				384,689				350,825				333,744				315,575
		Savings				427,505				436,203				425,634				293,976				284,681
		Money market				269,110				327,360				307,850				271,970				254,671
			Total core deposits			1,505,311				1,518,819				1,464,824				1,194,984				1,142,303
	Certificates of deposit					327,653				398,396				430,387				239,217				263,897
			Total deposits		$	1,832,964			$	1,917,215			$	1,895,211			$	1,434,201			$	1,406,200
Borrowings and repurchase agreements					$	78,140			$	24,536			$	23,244			$	14,581			$	23,844
Stockholder's equity						118,023				136,654				157,637				156,615				152,569

Finward Bancorp
Quarterly Financial Report
Consolidated Statements of Income		Quarter ended,																Nine months ended,
(Dollars in thousands)		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)				(Unaudited)			(Unaudited)
		September 30,			June 30,			March 31,			December 31,			September 30,				September 30,			September 30,
		2022			2022			2022			2021			2021				2022			2021
Interest income:
Loans		$	16,122		$	15,221		$	13,286		$	10,282		$	10,270			$	44,629		$	31,291
Securities & short-term investments			2,417			2,519			2,608			2,545			2,396				7,544			6,537
Total interest income			18,539			17,740			15,894			12,827			12,666				52,173			37,828
Interest expense:
Deposits			871			389			337			350			452				1,597			1,652
Borrowings			161			53			22			20			14				236			58
Total interest expense			1,032			442			359			370			466				1,833			1,710
Net interest income			17,507			17,298			15,535			12,457			12,200				50,340			36,118
Provision for loan losses			-			-			-			216			139				-			1,293
Net interest income after provision for loan losses			17,507			17,298			15,535			12,241			12,061				50,340			34,825
Noninterest income:
Fees and service charges			1,570			1,560			1,304			1,378			1,473				4,434			4,010
Wealth management operations			407			588			595			588			604				1,590			1,787
Gain on sale of loans held-for-sale, net			344			291			607			902			1,229				1,242			4,394
Gain on sale of securities, net			23			258			381			711			590				662			1,276
Increase in cash value of bank owned life insurance			183			193			252			178			180				628			537
Gain on sale of foreclosed real estate, net			-			-			-			20			-				-			27
Other			103			6			5			31			70				114			108
Total noninterest income			2,630			2,896			3,144			3,808			4,146				8,670			12,139
Noninterest expense:
Compensation and benefits			7,498			7,538			7,367			6,617			6,042				22,403			17,624
Data processing			1,804			1,729			1,500			1,651			872				5,512			1,997
Occupancy and equipment			1,212			1,246			3,054			1,461			1,380				5,033			4,076
Marketing			587			385			651			357			334				1,623			728
Federal deposit insurance premiums			350			380			219			241			236				949			620
Net loss recognized on sale of premises and equipment			254			-			-			-			-				254			-
Other			3,305			3,898			3,478			2,405			3,537				10,681			8,859
Total noninterest expense			15,010			15,176			16,269			12,732			12,401				46,455			33,904
Income before income taxes			5,127			5,018			2,410			3,317			3,806				12,555			13,060
Income tax expenses			571			587			275			6			268				1,433			1,408
Net income		$	4,556		$	4,431		$	2,135		$	3,311		$	3,538			$	11,122		$	11,652

Finward Bancorp
Quarterly Financial Report
Asset Quality					(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
(Dollars in thousands)					September 30,				June 30,				March 31,				December 31,				September 30,
						2022				2022				2022				2021				2021
Nonaccruing loans					$	8,943			$	8,813			$	8,414			$	7,056			$	11,027
Accruing loans delinquent more than 90 days						1,982				1,208				494				205				2,516
Securities in non-accrual						1,027				1,030				972				992				1,011
Foreclosed real estate						-				-				-				-				81
	Total nonperforming assets				$	11,952			$	11,051			$	9,880			$	8,253			$	14,635
Allowance for loan losses (ALL):
	ALL specific allowances for impaired loans				$	749			$	731			$	716			$	684			$	1,904
	ALL general allowances for loan portfolio					12,649				12,675				12,671				12,659				11,870
		Total ALL			$	13,398			$	13,406			$	13,387			$	13,343			$	13,774
Troubled Debt Restructurings:
	Nonaccruing troubled debt restructurings, non-compliant (1) (2)				$	452			$	308			$	300			$	1,122			$	1,126
	Nonaccruing troubled debt restructurings, compliant (2)					542				657				265				306				102
	Accruing troubled debt restructurings					3,480				1,484				1,379				1,421				1,427
		Total troubled debt restructurings			$	4,474			$	2,449			$	1,944			$	2,849			$	2,655
			(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
						2022			To Be Well
					Actual Ratio				Capitalized
Capital Adequacy Bank
Common equity tier 1 capital to risk-weighted assets						11.8%				6.5%
Tier 1 capital to risk-weighted assets						11.8%				8.0%
Total capital to risk-weighted assets						12.8%				10.0%
Tier 1 capital to adjusted average assets						8.1%				5.0%

	Table 1 - Reconciliation of the Non-GAAP Performance Measures
	(Dollars in thousands)	Quarter Ended																				Nine Months Ended
	(unaudited)	September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 31, 2021				September 30, 2022				September 30, 2021
	Calculation of core net income
	Net income	$	4,556			$	4,431			$	2,135			$	3,311			$	3,538			$	11,122			$	11,652
	Realized loss/(gain) on securities		(23	)			(258	)			(381	)			(771	)			(590	)			(662	)			(1,276	)
	Net loss recognized on sale of premises and equipment		254				-				-				-				-				254				-
	Merger related expenses		-				-				2,852				-				-				2,852				-
	CD premium amortization		(134	)			(175	)			(129	)			-				-				(438	)			-
	Core deposit amortization		400				410				347				249				249				1,157				497
	Purchase discount amortization		(342	)			(613	)			(234	)			(144	)			(271	)			(1,189	)			(626	)
	Related tax benefit/(cost)		(33	)			134				(516	)			127				129				(415	)			295
(A)	Core net income	$	4,678			$	3,929			$	4,074			$	2,772			$	3,055			$	12,681			$	10,542
	Calculation of core diluted earnings per share
(A)	Core net income	$	4,678			$	3,929			$	4,074			$	2,832			$	3,055			$	12,681			$	10,542
	Diluted average common shares outstanding		4,260,596				4,258,503				4,020,815				3,479,988				3,479,139				4,170,537				3,476,406
	Core diluted earnings per share	$	1.10			$	0.92			$	1.01			$	0.81			$	0.88			$	3.04			$	3.03
	Calculation of core return on average assets
(A)	Core net income	$	4,678			$	3,929			$	4,074			$	2,832			$	3,055			$	12,681			$	10,542
	Average total assets		2,069,139				2,085,039				1,955,347				1,601,040				1,631,654				2,036,968				1,587,330
	Core return on average assets		0.90%				0.75%				0.83%				0.71%				0.75%				0.83%				0.89%
	Calculation of core pre-provision net revenue
	Net interest income	$	17,507			$	17,298			$	15,535			$	12,457			$	12,200			$	50,340			$	36,118
	Non-interest income		2,630				2,896				3,144				3,808				4,146				8,670				12,139
	Non-interest expense		(15,010	)			(15,176	)			(16,269	)			(12,732	)			(12,401	)			(46,455	)			(33,904	)
	Pre-provision net revenue		5,127				5,018				2,410				3,533				3,945				12,555				14,353
	Realized loss/(gain) on securities		(23	)			(258	)			(381	)			(711	)			(590	)			(662	)			(1,276	)
	Core deposit amortization		400				410				347				249				249				1,157				497
	Purchase discount amortization		(342	)			(613	)			(234	)			(144	)			(271	)			(1,189	)			(626	)
(B)	Core pre-provision net revenue	$	5,162			$	4,557			$	2,142			$	2,927			$	3,333			$	11,861			$	12,948
	Calculation of core pre-provision net revenue to average assets
(B)	Core pre-provision net revenue	$	5,162			$	4,557			$	2,142			$	2,927			$	3,333			$	11,861			$	12,948
	Average total assets		2,069,139				2,085,039				1,955,347				1,601,040				1,631,654				2,036,968				1,587,330
	Core pre-provision net revenue to average assets		1.00%				0.87%				0.44%				0.73%				0.82%				0.78%				1.09%
	Calculation of tangible assets (excluding PPP)
	Total assets	$	2,052,986			$	2,101,485			$	2,097,845			$	1,620,743			$	1,609,924			$	2,052,986			$	1,609,924
	Goodwill		(22,615	)			(22,615	)			(22,774	)			(11,109	)			(11,109	)			(22,615	)			(11,109	)
	Other Intangibles		(5,188	)			(5,588	)			(5,998	)			(3,126	)			(3,374	)			(5,188	)			(3,374	)
	Paycheck Protection Plan ("PPP") loans		(226	)			(570	)			(9,983	)			(22,072	)			(32,892	)			(226	)			(32,892	)
(C)	Tangible assets (excluding PPP)	$	2,024,957			$	2,072,712			$	2,059,090			$	1,584,436			$	1,562,549			$	2,024,957			$	1,562,549
	Calculation of tangible common equity
	Total stockholder's equity	$	118,023			$	136,654			$	157,637			$	156,615			$	152,569			$	118,023			$	152,569
	Goodwill		(22,615	)			(22,615	)			(22,774	)			(11,109	)			(11,109	)			(22,615	)			(11,109	)
	Other intangibles		(5,188	)			(5,588	)			(5,998	)			(3,126	)			(3,374	)			(5,188	)			(3,374	)
(D)	Tangible common equity	$	90,220			$	108,451			$	128,865			$	142,380			$	138,086			$	90,220			$	138,086
	Calculation of tangible common equity adjusted for accumulated other comprehensive loss (income)
(D)	Tangible common equity	$	90,220			$	108,451			$	128,865			$	142,380			$	138,086			$	90,220			$	138,086
	Accumulated other comprehensive loss (income)		79,839				57,781				33,462				(4,276	)			(2,608	)			79,839				(2,608	)
(I)	Tangible common equity adjusted for accumulated other comprehensive loss (income)	$	170,059			$	166,232			$	162,327			$	138,104			$	135,478			$	170,059			$	135,478
	Calculation of tangible book value per diluted share
(D)	Tangible common equity	$	90,220			$	108,451			$	128,865			$	142,380			$	138,086			$	90,220			$	138,086
	Shares outstanding		4,297,900				4,296,949				4,294,136				3,480,701				3,479,139				4,297,900				3,479,139
	Tangible book value per diluted share	$	20.99			$	25.24			$	30.01			$	40.91			$	39.69			$	20.99			$	39.69
	Calculation of tangible book value per diluted share adjusted for accumulated other comprehensive loss (income)
(I)	Tangible common equity adjusted for accumulated other comprehensive loss (income)	$	170,059			$	166,232			$	162,327			$	138,104			$	135,478			$	170,059			$	135,478
	Diluted average common shares outstanding		4,297,900				4,296,949				4,294,136				3,480,701				3,479,139				4,297,900				3,479,139
	Tangible book value per diluted share adjusted for accumulated other comprehensive loss (income)	$	39.57			$	38.69			$	37.80			$	39.68			$	38.94			$	39.57			$	38.94
	Calculation of tangible common equity to tangible assets (excluding PPP)
(D)	Tangible common equity	$	90,220			$	108,451			$	128,865			$	142,380			$	138,086			$	90,220			$	138,086
(C)	Tangible assets (excluding PPP)		2,024,957				2,072,712				2,059,090				1,584,436				1,562,549				2,024,957				1,562,549
	Tangible common equity to tangible assets		4.46%				5.23%				6.26%				8.99%				8.84%				4.46%				8.84%
	Calculation of tangible common equity to tangible assets (excluding PPP and AOCI)
(I)	Tangible common equity adjusted for accumulated other comprehensive losses (income)	$	170,059			$	166,232			$	162,327			$	138,104			$	135,478			$	170,059			$	135,478
(C)	Tangible assets (excluding PPP)		2,024,957				2,072,712				2,059,090				1,584,436				1,562,549				2,024,957				1,562,549
	Tangible common equity adjusted for accumulated other comprehensive loss (income) to tangible assets		8.40%				8.02%				7.88%				8.72%				8.67%				8.40%				8.67%
	Calculation of average tangible common equity
	Average stockholder's common equity	$	133,482			$	142,415			$	170,374			$	159,010			$	159,010			$	148,636			$	155,945
	Average goodwill		(22,615	)			(22,543	)			(21,251	)			(11,109	)			(11,109	)			(22,003	)			(11,109	)
	Average other intangibles		(5,438	)			(5,850	)			(5,174	)			(3,270	)			(3,523	)			(5,488	)			(3,768	)
(E)	Average tangible stockholders' common equity	$	105,429			$	114,022			$	143,949			$	144,631			$	144,378			$	121,145			$	141,068
	Calculation of core return on average common equity
(A)	Core net income	$	4,678			$	3,929			$	4,074			$	2,832			$	3,055			$	12,681			$	10,542
(E)	Average tangible common equity		105,429				114,022				143,949				144,631				144,378				121,145				141,068
	Core return on average common equity		17.75%				13.78%				11.32%				7.83%				8.46%				13.96%				9.96%
	Calculation of core yield on loans
	Interest income on loans	$	16,122			$	15,221			$	13,286			$	10,282			$	10,270			$	44,629			$	31,291
	Loan accretion income		(342	)			(613	)			(234	)			(144	)			(271	)			(1,189	)			(626	)
	Adjusted interest income on loans		15,780				14,608				13,052				10,138				9,999				43,440				30,665
	Average loan balances		1,484,678				1,457,625				1,274,407				960,606				960,274				1,406,591				970,740
	Core yield on loans		4.25%				4.01%				4.10%				4.22%				4.17%				4.12%				4.21%
	Calculation of adjusted allowance for loan loss to total loans
	Allowance for loan losses	$	(13,398	)		$	(13,406	)		$	(13,387	)		$	(13,343	)		$	(13,774	)		$	(13,398	)		$	(13,774	)
	Additional reserves not part of the allowance for loan loss		(7,708	)			(7,908	)			(8,749	)			(2,428	)			(2,572	)			(7,708	)			(2,572	)
(F)	Adjusted allowance for loan loss		(21,106	)			(21,314	)			(22,136	)			(15,771	)			(16,346	)			(21,106	)			(16,346	)
	Total loans		1,502,696				1,474,381				1,439,728				966,720				956,352				1,502,696				956,352
	Adjusted allowance for loan loss to total loans		1.40%				1.45%				1.54%				1.63%				1.71%				1.40%				1.71%
	Calculation of adjusted allowance for loan loss to nonperforming loans
(F)	Adjusted allowance for loan loss	$	(21,106	)		$	(21,314	)		$	(22,136	)		$	(15,771	)		$	(16,346	)		$	(21,106	)		$	(16,346	)
	Nonperforming loans		10,925				10,021				8,908				7,261				13,543				10,925				13,543
	Adjusted allowance for loan loss to nonperforming loans (coverage ratios)		193.19%				212.69%				248.50%				217.20%				120.70%				193.19%				120.70%
	Calculation of adjusted allowance for loan loss to total loans excluding PPP
(F)	Adjusted allowance for loan loss	$	(21,106	)		$	(21,314	)		$	(22,136	)		$	(15,771	)		$	(16,346	)		$	(21,106	)		$	(16,346	)
	Total loans		1,502,696				1,474,381				1,439,728				966,720				956,352				1,502,696				956,352
	PPP loans		(226	)			(570	)			(9,983	)			(22,072	)			(32,892	)			(226	)			(32,892	)
	Total loans excluding PPP		1,502,470				1,473,811				1,429,745				944,648				923,460				1,502,470				923,460
	Adjusted allowance for loan loss to total loans excluding PPP		1.40%				1.45%				1.55%				1.67%				1.77%				1.40%				1.77%
	Calculation of core revenue
	Net interest income	$	17,507			$	17,298			$	15,535			$	12,457			$	12,200			$	50,340			$	36,118
	Non-interest income		2,630				2,896				3,144				3,808				4,146				8,670				12,139
	CD premium amortization		(134	)			(175	)			(129	)			-				-				(438	)			-
	Purchase discount amortization		(342	)			(613	)			(234	)			(144	)			(271	)			(1,189	)			(897	)
	Realized loss/(gain) on securities		(23	)			(258	)			(381	)			(711	)			(590	)			(662	)			(1,276	)
(G)	Core revenue	$	19,638			$	19,148			$	17,935			$	15,410			$	15,485			$	56,721			$	46,084
	Calculation of core non-interest expense
	Non-interest expense	$	15,010			$	15,176			$	16,269			$	12,732			$	12,401			$	46,455			$	33,904
	Net loss recognized on sale of premises and equipment		(254	)			-				-				-				-				(254	)			-
	Merger related expenses		-				-				(2,852	)			-				-				(2,852	)			-
	Core deposit amortization		(400	)			(410	)			(347	)			(249	)			(249	)			(1,157	)			(497	)
(H)	Core non-interest expense	$	14,356			$	14,766			$	13,070			$	12,483			$	12,152			$	42,192			$	33,407
	Calculation of core efficiency ratio
(H)	Core non-interest expense	$	14,356			$	14,766			$	13,070			$	12,483			$	12,152			$	42,192			$	33,407
(G)	Core revenue		19,638				19,148				17,935				15,410				15,485				56,721				46,084
	Core efficiency ratio		73.10%				77.12%				72.87%				81.01%				78.48%				74.39%				72.49%
	Calculation of non-interest expense to total average assets
	Non-interest expense	$	15,010			$	15,176			$	16,269			$	12,732			$	12,401			$	46,455			$	33,904
	Average total assets		2,069,139				2,085,039				1,955,347				1,601,040				1,631,654				2,036,968				1,587,330
	Non-interest expense to total average assets		2.90%				2.91%				3.33%				3.18%				3.04%				3.04%				2.85%
	Calculation of core non-interest expense to total average assets
(H)	Core non-interest expense	$	14,356			$	14,766			$	13,070			$	12,483			$	12,152			$	42,192			$	33,407
	Average total assets		2,069,139				2,085,039				1,955,347				1,601,040				1,631,654				2,036,968				1,587,330
	Core non-interest expense to total average assets		2.78%				2.83%				2.67%				3.12%				2.98%				2.76%				2.81%
	Calculation of tax adjusted net interest margin
	Net interest income	$	17,507			$	17,298			$	15,535			$	12,457			$	12,200			$	50,340			$	36,118
	Tax adjusted interest on securities and loans		817				930				966				959				851				2,713				2,273
	Adjusted net interest income		18,324				18,228				16,501				13,416				13,051				53,053				38,391
	Total average earning assets		1,910,722				1,927,664				1,820,588				1,500,183				1,506,674				1,886,853				1,465,675
	Tax adjusted net interest margin		3.84%				3.78%				3.63%				3.58%				3.46%				3.75%				3.49%
	Efficiency Ratio
	Total non-interest expense	$	15,010			$	15,176			$	16,269			$	12,732			$	12,401			$	46,455			$	33,904
	Total revenue		20,137				20,194				18,679				16,265				16,346				59,010				48,257
	Efficiency ratio		74.54%				75.15%				87.10%				78.28%				75.87%				78.72%				70.26%

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FAQ

What were Finward Bancorp's net income figures for Q3 2022?

Finward Bancorp reported a net income of $4.6 million for the quarter ended September 30, 2022.

How did core net income change for Finward Bancorp in 2022?

Core net income increased to $12.7 million for the nine months ended September 30, 2022, up from $10.5 million in the previous year.

What is the current net interest margin for Finward Bancorp?

The net interest margin for the nine months ended September 30, 2022, was 3.56%.

How has the tangible book value per share changed for FNWD?

Tangible book value per share decreased to $20.99 as of September 30, 2022, down from $25.24 at the end of June 2022.

What factors contributed to the growth in core net income for Finward Bancorp?

Core net income growth was attributed to the acquisition of Royal Financial, organic loan growth, and improved net interest margin.