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

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 MeasuresReported 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 BancorpFinward 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 StatementsThis 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
	AverageBalance			Interest		Rate (%)	AverageBalance			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
	AverageBalance			Interest		Rate (%)	AverageBalance			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	%