Finward Bancorp Announces Earnings for the Quarter and Six Months Ended June 30, 2024

Rhea-AI Summary

Finward Bancorp (Nasdaq: FNWD) reported net income of $9.4 million, or $2.21 per diluted share, for the six months ended June 30, 2024, compared to $4.7 million, or $1.10 per diluted share, for the same period in 2023. For Q2 2024, net income was $143,000, or $0.03 per diluted share, down from $2.4 million, or $0.57 per diluted share, in Q2 2023.

Key highlights include:

• Net interest margin improved to 2.54% in Q2 2024 from 2.42% in Q1 2024
• Deposits increased by 0.5% to $1.8 billion
• Loan portfolio remained stable at $1.5 billion
• Non-performing loans decreased by 3.8% to $11.4 million
• Tier 1 capital ratio improved to 8.32%

Positive

• Net income for H1 2024 increased to $9.4 million from $4.7 million in H1 2023
• Net interest margin improved to 2.54% in Q2 2024 from 2.42% in Q1 2024
• Deposits increased by 0.5% to $1.8 billion
• Non-performing loans decreased by 3.8% to $11.4 million
• Tier 1 capital ratio improved to 8.32% from 8.24% in Q1 2024

Negative

• Q2 2024 net income decreased to $143,000 from $2.4 million in Q2 2023
• Earnings per diluted share for Q2 2024 dropped to $0.03 from $0.57 in Q2 2023
• Gains from loan sales decreased to $472,000 in H1 2024 from $537,000 in H1 2023
• New fixed-rate mortgage loan originations decreased to $9.7 million in H1 2024 from $19.3 million in H1 2023
• Tangible book value per share decreased to $28.67 from $29.30 in Q1 2024

Insights

Financial Analyst

Finward Bancorp's Q2 2024 results present a mixed picture. While the six-month net income showed significant improvement, rising to $9.4 million from $4.7 million year-over-year, the quarterly performance was concerning. Q2 net income plummeted to $143,000 from $2.4 million in Q2 2023, a 94% decrease.

The dramatic quarterly decline is reflected in key performance metrics:

• Return on equity fell to 0.39% from 7.05% year-over-year
• Return on assets dropped to 0.03% from 0.46%
• Efficiency ratio deteriorated to 98.56% from 82.11%

However, there are some positive signs. The net interest margin showed slight improvement, increasing to 2.54% from 2.42% in Q1 2024. This suggests the bank is managing to improve its earning asset yields in the current rate environment.

Asset quality remains strong, with non-performing loans decreasing to 0.75% of total loans, down from 0.78% in Q1. The allowance for credit losses covers 161.2% of non-performing loans, indicating a conservative approach to potential credit risks.

The bank's capital position remains adequate, with a Tier 1 capital ratio of 8.32%, slightly improved from Q1. However, tangible book value per share decreased to $28.67 from $29.30 in Q1, potentially concerning for shareholders.

Overall, while Finward shows resilience in some areas, the significant quarterly earnings decline and high efficiency ratio suggest operational challenges that need addressing.

Banking Industry Expert

Finward Bancorp's Q2 2024 results highlight several industry-wide challenges facing regional banks. The sharp decline in quarterly earnings, despite improved six-month results, underscores the volatile operating environment.

The bank's net interest margin (NIM) of 2.54%, while slightly improved from Q1, remains under pressure. This reflects the industry-wide struggle to balance higher funding costs with asset yields in a rising rate environment. Finward's efforts to reprice loans and maintain stable deposit costs are important but may face headwinds as competition for deposits intensifies.

The bank's deposit composition is noteworthy, with 69.2% in core deposits and 71% fully FDIC insured. This stable funding base is a strength, particularly given recent industry turbulence. However, the 1.7% increase in certificates of deposit suggests some customers are seeking higher yields, which could pressure margins further.

Finward's commercial lending focus, with 62.2% of the portfolio in commercial-related credits, aligns with industry trends but exposes the bank to potential economic slowdowns. The 2.8% exposure to office building loans warrants monitoring given current commercial real estate concerns.

The efficiency ratio of 98.56% is alarmingly high, even for a smaller bank. This suggests significant operational inefficiencies that need addressing, especially as technology and regulatory compliance costs continue to rise across the industry.

While asset quality remains strong, the decrease in the allowance for credit losses to 1.22% of total loans bears watching, particularly if economic conditions deteriorate. The bank's capital levels, while adequate, may limit strategic flexibility in a challenging environment.

MUNSTER, Ind., July 24, 2024 (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 $9.4 million, or $2.21 per diluted share, for the six months ended June 30, 2024, as compared to $4.7 million, or $1.10 per diluted share, for the corresponding prior year period. For the quarter ended June 30, 2024, the Bancorp’s net income totaled $143 thousand, or $0.03 per diluted share, as compared to $2.4 million, or $0.57 per diluted share, for the three months ended June 30, 2023. Selected performance metrics are as follows for the periods presented:

Performance Ratios	Quarter ended,															Six months ended,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2024			2024			2023			2023			2023			2024			2023
Return on equity	0.39%			24.97%			4.92%			6.55%			7.05%			12.81%			6.74%
Return on assets	0.03%			1.77%			0.29%			0.42%			0.46%			0.91%			0.45%
Tax adjusted net interest margin	2.67%			2.57%			2.80%			2.87%			3.03%			2.62%			3.13%
Noninterest income / average assets	0.50%			2.57%			0.53%			0.46%			0.57%			1.54%			0.54%
Noninterest expense / average assets	2.79%			2.86%			2.60%			2.59%			2.66%			2.83%			2.71%
Efficiency ratio	98.56%			59.41%			87.49%			86.88%			82.11%			73.77%			82.23%

"Key operating areas saw benefits in the second quarter from previously announced strategic initiatives. Net interest margin demonstrated signs of continued stabilization during the quarter, and non-interest expense levels decreased as expected, as we believe operational efficiency will continue to improve in the second half of the year. Provision expense increased primarily as the result of new unfunded commitments as we continue to provide capital to our customers," said Benjamin Bochnowski, chief executive officer. "Asset yields have begun to show improvement as we fund new lending opportunities in our core market. While loans balances are down, originations remain on pace with expectations for the year. Credit quality remains strong, and we are well-positioned for potential changes in the interest rate environment.”

Highlights of the current period include:

• Net Interest Margin - The net interest margin for the three months ended June 30, 2024, was 2.54%, compared to 2.42% for the three months ended March 31, 2024. The tax-adjusted net interest margin (a non-GAAP measure) for the three months ended June 30, 2024, was 2.67%, compared to 2.57% for the three months ended March 31, 2024. The increased net interest margin is primarily the result of gradual improvement in earning asset yields as loans are originated or are generally repricing at higher rates, while maintaining relatively stable interest-bearing liability costs in this current interest rate environment. 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.
  
  
• Funding - As of June 30, 2024, deposits totaled $1.8 billion, compared to $1.7 billion on March 31, 2024, an increase of $9.2 million or 0.5%. Core deposits totaled $1.2 billion at both June 30, 2024 and March 31, 2024. Core deposits include checking, savings, and money market accounts and represented 69.2% of the Bancorp’s total deposits at June 30, 2024. On June 30, 2024, balances for certificates of deposit totaled $541.2 million, compared to $531.3 million on March 31, 2024, an increase of $9.8 million or 1.7%. The increase in deposits is primarily related to cyclical inflows and outflows related to a number of municipality depositors and planned adjustments to deposit pricing. In addition, on June 30, 2024, borrowings and repurchase agreements totaled $128.0 million, compared to $131.1 million at March 31, 2024, a decrease of $3.2 million or 2.4%. The decrease in short-term borrowings was the result of cyclical inflows and outflows of interest-earning assets and interest-bearing liabilities. Furthermore, during the quarter, the Bancorp repaid an additional $5 million of its outstanding Bank Term Funding Program (the “BTFP”) balance, resulting in a $60 million balance as of June 30, 2024. As of June 30, 2024, 71% of our deposits are fully FDIC insured, and another 8% are further backed by the Indiana Public Deposit Insurance Fund. The Bancorp’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources. As of June 30, 2024, the Bancorp had available liquidity of $585 million including borrowing capacity from the FHLB and Federal Reserve facilities.
  
  
• Securities Portfolio - Securities available for sale balances declined by $6.6 million to $339.6 million as of June 30, 2024, compared to $346.2 million as of March 31, 2024.  The decrease in securities available for sale was due to a combination of portfolio runoff and an increase of accumulated other comprehensive income ("AOCI") losses. AOCI losses were $58.9 million as of June 30, 2024, compared to $56.3 million on March 31, 2024, an increase of $2.6 million or 4.7%. The yield on the securities portfolio increased to 2.43% for the three months ended June 30, 2024, up from 2.39% for the three months ended March 31, 2024. Management did not execute any securities sale transactions during the quarter but will continue to monitor the securities portfolio for additional restructuring opportunities.
  
  
• Gain on Sale of Loans - Lower levels of mortgage loan origination in our markets continues to drive reduced fixed rate mortgage loan sale activity into the secondary market. As a result, gains from the sale of loans for the six months ended June 30, 2024, totaled $472 thousand, a decrease from $537 thousand for the six months ended June 30, 2023. During the six months ended June 30, 2024, the Bank originated $9.7 million in new fixed rate mortgage loans for sale, compared to $19.3 million during the six months ended June 30, 2023. During the six months ended June 30, 2024, the Bank originated $8.8 million in new 1-4 family loans retained in its portfolio, compared to $17.4 million during the six months ended June 30, 2023. Total 1-4 family originations for the quarter ended June 30, 2024, totaled $18.5 million, a decrease of $4.2 million from the amount for the quarter ended June 30, 2023, totaling $22.7 million. This decrease was driven by increasing market interest rates and continued low levels of housing inventory, which slowed mortgage applications. These retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 years or less. The Bank continues to sell longer-duration fixed rate mortgages into the secondary market.
  
  
• Commercial Lending - The Bank’s aggregate loan portfolio totaled $1.5 billion on both June 30, 2024 and March 31, 2024. During the three months ended June 30, 2024, the Bank originated $48.7 million in new commercial loans, compared to $47.9 million during the three months ended March 31, 2024 and $73.2 million during the three months ended June 30, 2023. The loan portfolio represents 78.5% of earning assets and is comprised of 62.2% commercial-related credits. At June 30, 2024, the Bancorp’s portfolio loan balances in commercial real estate owner occupied properties totaled $235.9 million or 15.7% of total loan balances and commercial real estate non-owner occupied properties totaled $293.5 million or 19.5% of total loan balances. Of the $293.5 million in commercial real estate non-owner occupied properties balances, loans collateralized by office buildings represented $42.6 million or 2.8% of total loan balances.
  
  
• Asset Quality - At June 30, 2024, non-performing loans totaled $11.4 million, compared to $11.8 million at March 31, 2024, a decrease of $445 thousand or 3.8%. The Bank’s ratio of non-performing loans to total loans was 0.75% at June 30, 2024, compared to 0.78% at March 31, 2024. The Bank’s ratio of non-performing assets to total assets declined from 0.64% at March 31, 2024 to 0.61% at June 30, 2024. Management maintains a vigilant oversight of nonperforming loans through proactive relationship management. The allowance for credit losses (ACL) totaled $18.3 million at June 30, 2024, compared to $18.8 million at March 31, 2024, a decrease of $476 thousand or 2.5% and is considered adequate by management. For the quarter ended June 30, 2024, charge-offs, net of recoveries, totaled $37 thousand. The allowance for credit losses as a percentage of total loans was 1.22% at June 30, 2024, and the allowance for credit losses as a percentage of non-performing loans, or coverage ratio, was 161.2% at June 30, 2024.
  
  
• Operating Expenses - Non-interest expense as a percent of average assets was 2.79% for the quarter ended June 30, 2024, as compared to 2.86% for quarter ended March 31, 2024, a decrease of 0.07%. Decreases in non-interest expenses quarter over quarter were primarily attributable to lower accounting and service fees with lower third-party expenses related to operational enhancements. The Bank remains focused on identifying additional operating efficiencies and third-party expense reductions through the remainder of this year and beyond. Compensation and benefits expense is down 3.3% for the six months ended June 30, 2024, compared to June 30, 2023.
  
  
• Capital Adequacy - As of June 30, 2024, the Bank’s tier 1 capital to adjusted average assets ratio was 8.32% which is within all regulatory capital requirements and an improvement of 0.08% compared to 8.24% at March 31, 2024. The Bank continues to be considered well capitalized. The Bancorp’s tangible book value per share was $28.67 at June 30, 2024, down from $29.30 as of March 31, 2024 (a non-GAAP measure). Tangible common equity to total assets was 5.95% at June 30, 2024, down from 6.09% as of March 31, 2024 (a non-GAAP measure). Excluding accumulated other comprehensive losses, tangible book value per share decreased to $42.33 as of June 30, 2024, from $42.36 as of March 31, 2024 (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 comprehensive other losses, tangible common equity as a percentage of total assets, and tangible common equity as a percentage of total assets adjusted for accumulated other comprehensive losses to the related GAAP ratios.

Disclosures Regarding Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. In this press release, the Bancorp also provides certain financial measures identified as non-GAAP. The Bancorp’s management believes that the non-GAAP information, which consists of tangible common equity, tangible common equity adjusted for accumulated other comprehensive losses, tangible book value per share, tangible book value per share adjusted for accumulated other comprehensive losses, tangible common equity/total assets, tax-adjusted net interest margin, and efficiency ratio, which can vary from period to period, provides a better comparison of period to period operating performance. The adjusted net interest income and tax-adjusted net interest margin measures recognize the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. 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 26 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: the Bank’s ability to demonstrate compliance with the terms of the previously disclosed consent order and memorandum of understanding entered into between the Bank and the Federal Deposit Insurance Corporation (“FDIC”) and Indiana Department of Financial Institutions (“DFI”), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames; the Bank’s agreement under the memorandum of understanding to refrain from paying cash dividends without prior regulatory approval; 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, regulatory actions by the Federal Deposit Insurance Corporation and Indiana Department of Financial Institutions, 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 the Bancorp’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 the Bancorp or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Except as required by law, The Bancorp 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,																				Six months ended,
	(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2024				2024				2023				2023				2023				2024				2023
Yield on loans		5.11%				5.02%				5.09%				5.02%				4.91%				5.06%				4.79%
Yield on security investments		2.43%				2.37%				2.57%				2.41%				2.36%				2.40%				2.38%
Total yield on earning assets		4.64%				4.52%				4.64%				4.51%				4.43%				4.58%				4.33%
Cost of deposits		2.37%				2.36%				2.22%				1.95%				1.65%				2.37%				1.40%
Cost of repurchase agreements		3.86%				3.88%				3.78%				3.83%				3.78%				3.87%				3.39%
Cost of borrowed funds		4.76%				4.62%				4.41%				4.48%				4.53%				4.69%				4.64%
Total cost of funds		2.54%				2.53%				2.38%				2.16%				1.87%				2.53%				1.64%
Net noninterest margin / average assets		-2.29%				-0.29%				-2.08%				-2.13%				-2.09%				-1.29%				-2.17%
Effective tax rate		-6.72%				9.48%				-30.85%				-22.20%				3.86%				9.27%				8.22%
Non-performing assets to total assets		0.61%				0.64%				0.61%				0.54%				0.62%				0.61%				0.62%
Non-performing loans to total loans		0.75%				0.78%				0.76%				0.66%				0.80%				0.75%				0.80%
Allowance for credit losses to non-performing loans		161.17%				159.12%				163.90%				192.89%				158.26%				161.17%				158.26%
Allowance for credit losses to loans outstanding		1.22%				1.25%				1.24%				1.27%				1.27%				1.22%				1.27%
Foreclosed real estate to total assets		0.00%				0.00%				0.00%				0.00%				0.00%				0.00%				0.00%
Basic earnings per share	$	0.03			$	2.18			$	0.36			$	0.52			$	0.57			$	0.03			$	1.10
Diluted earnings per share	$	0.03			$	2.17			$	0.35			$	0.51			$	0.57			$	0.03			$	1.10
Stockholders' equity / total assets		7.16%				7.32%				6.99%				5.70%				6.33%				7.16%				6.33%
Book value per share	$	34.45			$	35.17			$	34.28			$	27.68			$	31.77			$	34.45			$	31.77
Closing stock price	$	24.52			$	24.60			$	25.24			$	22.00			$	22.00			$	24.52			$	22.00
Price to earnings per share ratio		182.60				2.82				17.77				10.67				9.59			$	730.40			$	9.99
Dividend declared per common share	$	0.12			$	0.12			$	0.12			$	0.31			$	0.31				0.24				0.62
Common equity tier 1 capital to risk-weighted assets		11.23%				10.89%				10.43%				10.17%				10.00%				11.23%				10.00%
Tier 1 capital to risk-weighted assets		11.23%				10.89%				10.43%				10.17%				10.00%				11.23%				10.00%
Total capital to risk-weighted assets		12.27%				11.92%				11.36%				11.12%				10.96%				12.27%				10.96%
Tier 1 capital to adjusted average assets		8.32%				8.24%				7.78%				7.81%				7.58%				8.32%				7.58%
Non-GAAP Performance Ratios	Quarter ended,																				Six Months Ended
	(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
	June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2024				2024				2023				2023				2023				2024				2023
Net interest margin - tax equivalent		2.67%				2.57%				2.80%				2.87%				3.03%				2.62%				3.13%
Tangible book value per diluted share	$	28.67			$	29.30			$	28.31			$	21.63			$	25.64			$	28.67			$	25.64
Tangible book value per diluted share adjusted for AOCI	$	42.33			$	42.36			$	40.31			$	39.96			$	39.62			$	42.33			$	39.62
Tangible common equity to total assets		5.95%				6.09%				5.77%				4.46%				5.11%				5.95%				5.11%
Tangible common equity to total assets adjusted for AOCI		8.79%				8.81%				8.22%				8.23%				7.89%				8.79%				7.89%

Quarter Ended
(Dollars in thousands)		Average Balances, Interest, and Rates
(unaudited)		June 30, 2024												March 31, 2024
		Average Balance				Interest					Rate (%)			Average Balance				Interest				Rate (%)
ASSETS
Interest bearing deposits in other financial institutions		$	60,378			$	799				5.29			$	68,935			$	853				4.95
Federal funds sold			1,263				10				3.17				814				10				4.91
Securities available-for-sale			337,226				2,047				2.43				365,194				2,161				2.37
Loans receivable			1,501,584				19,174				5.11				1,504,011				18,879				5.02
Federal Home Loan Bank stock			6,547				96				5.87				6,547				82				5.01
Total interest earning assets			1,906,998			$	22,126				4.64				1,945,501			$	21,985				4.52
Cash and non-interest bearing deposits in other financial institutions			18,054												18,230
Allowance for credit losses			(18,788	)											(18,743	)
Other noninterest bearing assets			158,358												151,945
Total assets		$	2,064,622											$	2,096,933
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits		$	1,455,007			$	8,610				2.37			$	1,487,771			$	8,794				2.36
Repurchase agreements			41,388				399				3.86				38,151				370				3.88
Borrowed funds			85,940				1,022				4.76				90,053				1,040				4.62
Total interest bearing liabilities			1,582,335			$	10,031				2.54				1,615,975			$	10,204				2.53
Non-interest bearing deposits			291,618												294,398
Other noninterest bearing liabilities			45,029												37,897
Total liabilities			1,918,982												1,948,270
Total stockholders' equity			145,640												148,663
Total liabilities and stockholders' equity		$	2,064,622											$	2,096,933
Return on average assets			0.03	%											1.77	%
Return on average equity			0.39	%											24.97	%
Net interest margin (average earning assets)			2.54	%											2.42	%
Net interest margin (average earning assets) - tax equivalent			2.67	%											2.57	%
Net interest spread			2.11	%											1.99	%
Ratio of interest-earning assets to interest-bearing liabilities		1.21x												1.20x

Year-to-Date
(Dollars in thousands)		Average Balances, Interest, and Rates
(unaudited)		June 30, 2024												June 30, 2023
		Average Balance				Interest					Rate (%)			Average Balance				Interest				Rate (%)
ASSETS						`
Interest bearing deposits in other financial institutions		$	64,657			$	1,652				5.11			$	30,140			$	765				5.08
Federal funds sold			1,039				20				3.85				1,275				27				4.24
Certificates of deposit in other financial institutions			-				-				-				1,762				31				3.52
Securities available-for-sale			351,210				4,208				2.40				373,413				4,440				2.38
Loans receivable			1,502,798				38,053				5.06				1,516,689				36,320				4.79
Federal Home Loan Bank stock			6,547				178				5.44				6,547				166				5.07
Total interest earning assets			1,926,251			$	44,111				4.58				1,929,826			$	41,749				4.33
Cash and non-interest bearing deposits in other financial institutions			18,142												18,523
Allowance for credit losses			(18,765	)											(16,569	)
Other noninterest bearing assets			155,147												154,227
Total assets		$	2,080,775											$	2,086,007
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits		$	1,471,389			$	17,404				2.37			$	1,457,235			$	10,192				1.40
Repurchase agreements			39,769				769				3.87				26,635				451				3.39
Borrowed funds			87,996				2,062				4.69				103,465				2,399				4.64
Total interest bearing liabilities			1,599,154			$	20,235				2.53				1,587,335			$	13,042				1.64
Non-interest bearing deposits.			293,008												331,690
Other noninterest bearing liabilities			41,461												28,066
Total liabilities			1,933,623												1,947,091
Total stockholders' equity			147,152												138,916
Total liabilities and stockholders' equity		$	2,080,775											$	2,086,007
Return on average assets			0.91	%											0.45	%
Return on average equity			12.81	%											6.74	%
Net interest margin (average earning assets)			2.48	%											2.98	%
Net interest margin (average earning assets) - tax equivalent			2.62	%											3.13	%
Net interest spread			2.05	%											2.69	%
Ratio of interest-earning assets to interest-bearing liabilities		1.20x												1.01x

Finward Bancorp
Quarterly Financial Report
Balance Sheet Data
(Dollars in thousands)	(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
	June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
ASSETS
Cash and non-interest bearing deposits in other financial institutions	$	19,061			$	16,418			$	17,942			$	17,922			$	23,210
Interest bearing deposits in other financial institutions		63,439				54,755				67,647				52,875				89,706
Federal funds sold														851				2,757
Total cash and cash equivalents		83,207				71,780				86,008				71,648				115,673
Certificates of deposit in other financial institutions		-				-				-				-				-
Securities available-for-sale		339,585				346,233				371,374				339,280				368,136
Loans held-for-sale		1,185				667				340				2,057				1,832
Loans receivable, net of deferred fees and costs		1,506,398				1,508,251				1,512,595				1,525,660				1,534,161
Less: allowance for credit losses		(18,330	)			(18,805	)			(18,768	)			(19,430	)			(19,507	)
Net loans receivable		1,488,068				1,489,446				1,493,827				1,506,230				1,514,654
Federal Home Loan Bank stock		6,547				6,547				6,547				6,547				6,547
Accrued interest receivable		7,695				7,583				8,045				7,864				7,714
Premises and equipment		48,696				47,795				38,436				38,810				39,204
Foreclosed real estate		-				71				71				71				71
Cash value of bank owned life insurance		33,107				32,895				32,702				32,509				32,316
Goodwill		22,395				22,395				22,395				22,395				22,395
Other intangible assets		2,555				2,911				3,272				3,636				4,015
Other assets		44,027				43,459				45,262				56,423				48,661
Total assets	$	2,077,067			$	2,071,782			$	2,108,279			$	2,087,470			$	2,161,218
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	286,784			$	296,959			$	295,594			$	312,635			$	315,671
Interest bearing		1,469,970				1,450,519				1,517,827				1,471,402				1,479,476
Total		1,756,754				1,747,478				1,813,421				1,784,037				1,795,147
Repurchase agreements		42,973				41,137				38,124				48,310				46,402
Borrowed funds		85,000				90,000				80,000				100,000				150,000
Accrued expenses and other liabilities		43,709				41,586				29,389				36,080				32,919
Total liabilities		1,928,436				1,920,201				1,960,934				1,968,427				2,024,468
Commitments and contingencies
Stockholders' Equity:
Preferred stock, no par or stated value; 10,000,000 shares authorized, none outstanding		-				-				-				-				-
Common stock, no par or stated value; 10,000,000 shares authorized; shares issued and outstanding: June 30, 2024 - 4,313,940  December 31, 2023 - 4,298,773		-				-				-				-				-
Additional paid-in capital		69,778				69,727				69,555				69,482				69,384
Accumulated other comprehensive loss		(58,939	)			(56,313	)			(51,613	)			(78,848	)			(60,185	)
Retained earnings		137,792				138,167				129,403				128,409				127,551
Total stockholders' equity		148,631				151,581				147,345				119,043				136,750
Total liabilities and stockholders' equity	$	2,077,067			$	2,071,782			$	2,108,279			$	2,087,470			$	2,161,218

Finward Bancorp
Quarterly Financial Report
Consolidated Statements of Income	Quarter Ended,																					Six months ended,
(Dollars in thousands)	(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)					(Unaudited)				(Unaudited)
	June 30,				March 31,				December 31,				September 30,				June 30,					June 30,				June 30,
		2024				2024				2023				2023				2023					2024				2023
Interest income:
Loans	$	19,174			$	18,879			$	19,281			$	19,161			$	18,694				$	38,053			$	36,320
Securities & short-term investments		2,953				3,105				2,975				2,617				2,919					6,058				5,429
Total interest income		22,127				21,984				22,256				21,778				21,613					44,111				41,749
Interest expense:
Deposits		8,610				8,794				8,180				7,066				6,105					17,404				10,192
Borrowings		1,463				1,410				1,361				1,579				1,469					2,873				2,850
Total interest expense		10,073				10,204				9,541				8,645				7,574					20,277				13,042
Net interest income		12,054				11,780				12,715				13,133				14,039					23,834				28,707
Provision for credit losses		76				-				779				244				514					76				1,002
Net interest income after provision for credit losses		11,978				11,780				11,936				12,889				13,525					23,758				27,705
Noninterest income:
Fees and service charges		1,257				1,153				1,507				1,374				1,832					2,410				3,143
Wealth management operations		763				633				672				572				626					1,396				1,240
Gain on sale of loans held-for-sale, net		320				152				352				192				274					472				537
Increase in cash value of bank owned life insurance		212				193				193				193				201					405				380
Gain (loss) on sale of real estate		15				11,858				-				2				(15	)				11,873				(15	)
Loss on sale of securities, net		-				(531	)			-				-				(48	)				(531	)			(48	)
Other		6				17				11				64				136					24				377
Total noninterest income		2,573				13,475				2,735				2,397				3,006					16,049				5,614
Noninterest expense:
Compensation and benefits		7,037				7,109				6,290				6,729				7,098					14,146				14,636
Occupancy and equipment		2,120				1,915				1,520				1,711				1,636					4,035				3,326
Data processing		1,135				1,170				1,269				1,085				1,407					2,305				2,380
Federal deposit insurance premiums		397				501				492				474				572					898				1,037
Marketing		212				158				191				235				159					370				414
Other		3,516				4,151				3,755				3,259				3,123					7,667				6,429
Total noninterest expense		14,417				15,004				13,517				13,493				13,995					29,421				28,222
Income before income taxes		134				10,251				1,154				1,793				2,536					10,386				5,097
Income tax expenses (benefit)		(9	)			972				(356	)			(398	)			98					963				419
Net income	$	143			$	9,279			$	1,510			$	2,191			$	2,438				$	9,423			$	4,678
Earnings per common share:
Basic	$	0.03			$	2.18			$	0.36			$	0.52			$	0.57				$	2.21			$	1.10
Diluted	$	0.03			$	2.17			$	0.35			$	0.51			$	0.57				$	2.21			$	1.10

Finward Bancorp
Quarterly Financial Report
Asset Quality	(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
(Dollars in thousands)	June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Nonaccruing loans	$	11,079			$	11,603			$	9,608			$	9,840			$	12,071
Accruing loans delinquent more than 90 days		294				215				1,843				233				255
Securities in non-accrual		1,371				1,442				1,357				1,155				1,075
Foreclosed real estate		-				71				71				71				61
Total nonperforming assets	$	12,744			$	13,331			$	12,879			$	11,299			$	13,462
Allowance for credit losses (ACL):
ACL specific allowances for collateral dependent loans	$	1,327			$	1,455			$	906			$	554			$	717
ACL general allowances for loan portfolio		17,003				17,351				17,862				18,876				18,790
Total ACL	$	18,330			$	18,806			$	18,768			$	19,430			$	19,507
	(Unaudited)
	June 30,				Required
		2024			To Be Well
	Actual Ratio				Capitalized
Capital Adequacy Bank
Common equity tier 1 capital to risk-weighted assets		11.23	%			4.50	%
Tier 1 capital to risk-weighted assets		11.23	%			6.00	%
Total capital to risk-weighted assets		12.27	%			8.00	%
Tier 1 capital to adjusted average assets		8.32	%			4.00	%

Table 1 - Reconciliation of the Non-GAAP Performance Measures
(Dollars in thousands)	Quarter Ended,																				Six months ended,
(unaudited)	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				June 30, 2024				June 30, 2023
Calculation of tangible common equity
Total stockholder's equity	$	148,631			$	151,581			$	147,345			$	119,043			$	136,750			$	148,631			$	136,750
Goodwill		(22,395	)			(22,395	)			(22,395	)			(22,395	)			(22,395	)			(22,395	)			(22,395	)
Other intangibles		(2,555	)			(2,911	)			(3,272	)			(3,636	)			(4,015	)			(2,555	)			(4,015	)
Tangible common equity	$	123,681			$	126,275			$	121,678			$	93,012			$	110,340			$	123,681			$	110,340
Calculation of tangible common equity adjusted for accumulated other comprehensive loss
Tangible common equity	$	123,681			$	126,275			$	121,678			$	93,012			$	110,340			$	123,681			$	110,340
Accumulated other comprehensive loss		58,939				56,313				51,613				78,848				60,185				58,939				60,185
Tangible common equity adjusted for accumulated other comprehensive loss	$	182,620			$	182,588			$	173,291			$	171,860			$	170,525			$	182,620			$	170,525
Calculation of tangible book value per share
Tangible common equity	$	123,681			$	126,275			$	121,678			$	93,012			$	110,340			$	123,681			$	110,340
Shares outstanding		4,313,940				4,310,251				4,298,773				4,300,881				4,303,766				4,313,940				4,303,766
Tangible book value per diluted share	$	28.67			$	29.30			$	28.31			$	21.63			$	25.64			$	28.67			$	25.64
Calculation of tangible book value per diluted share adjusted for accumulated other comprehensive loss
Tangible common equity adjusted for accumulated other comprehensive loss	$	182,620			$	182,588			$	173,291			$	171,860			$	170,525			$	182,620			$	170,525
Diluted average common shares outstanding		4,313,940				4,310,251				4,298,773				4,300,881				4,303,766				4,313,940				4,303,766
Tangible book value per diluted share adjusted for accumulated other comprehensive loss	$	42.33			$	42.36			$	40.31			$	39.96			$	39.62			$	42.33			$	39.62
Calculation of tangible common equity to total assets
Tangible common equity	$	123,681			$	126,275			$	121,678			$	93,012			$	110,340			$	123,681			$	110,340
Total assets		2,077,067				2,071,782				2,108,279				2,087,470				2,161,218				2,077,067				2,161,218
Tangible common equity to total assets		5.95	%			6.09	%			5.77	%			4.46	%			5.11	%			5.95	%			5.11	%
Calculation of tangible common equity to total assets adjusted for accumulated other comprehensive loss
Tangible common equity adjusted for accumulated other comprehensive loss	$	182,620			$	182,588			$	173,291			$	171,860			$	170,525			$	182,620			$	170,525
Total assets		2,077,067				2,071,782				2,108,279				2,087,470				2,161,218				2,077,067				2,161,218
Tangible common equity to total assets adjusted for accumulated other comprehensive loss		8.79	%			8.81	%			8.22	%			8.23	%			7.89	%			8.79	%			7.89	%
Calculation of tax adjusted net interest margin
Net interest income	$	12,054			$	11,780			$	12,715			$	13,133			$	14,039			$	23,834			$	28,707
Tax adjusted interest on securities and loans		677				699				722				730				748				1,376				1,504
Adjusted net interest income		12,731				12,749				13,437				13,863				14,787				25,210				30,211
Total average earning assets		1,906,998				1,945,501				1,920,127				1,930,118				1,950,774				1,926,251				1,929,826
Tax adjusted net interest margin		2.67	%			2.57	%			2.80	%			2.87	%			3.03	%			2.62	%			3.13	%
Efficiency ratio
Total non-interest expense	$	14,417			$	15,004			$	13,517			$	13,493			$	13,995			$	29,421			$	13,995
Total revenue		14,627				25,255				15,450				15,530				17,045				39,883				17,045
Efficiency ratio		98.56	%			59.41	%			87.49	%			86.88	%			82.11	%			73.77	%			82.11	%

FOR FURTHER INFORMATION
CONTACT SHAREHOLDER SERVICES
(219) 853-7575

FAQ

What was Finward Bancorp's (FNWD) net income for Q2 2024?

Finward Bancorp (FNWD) reported a net income of $143,000, or $0.03 per diluted share, for the quarter ended June 30, 2024.

How did Finward Bancorp's (FNWD) net interest margin change in Q2 2024?

Finward Bancorp's (FNWD) net interest margin improved to 2.54% in Q2 2024, up from 2.42% in Q1 2024.

What was the total deposit balance for Finward Bancorp (FNWD) as of June 30, 2024?

As of June 30, 2024, Finward Bancorp's (FNWD) total deposits were $1.8 billion, an increase of 0.5% from the previous quarter.

How did Finward Bancorp's (FNWD) non-performing loans change in Q2 2024?

Finward Bancorp's (FNWD) non-performing loans decreased by 3.8% to $11.4 million in Q2 2024, compared to $11.8 million in Q1 2024.

What was Finward Bancorp's (FNWD) Tier 1 capital ratio as of June 30, 2024?

Finward Bancorp's (FNWD) Tier 1 capital ratio was 8.32% as of June 30, 2024, an improvement from 8.24% in the previous quarter.