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Finward Bancorp Announces Earnings for the Quarter and Twelve Months Ended December 31, 2022

Globe Newswire 25-Jan-2023 9:00 AM

MUNSTER, Ind., Jan. 25, 2023 (GLOBE NEWSWIRE) -- Finward Bancorp (NASDAQ:FNWD) (the "Bancorp"), the holding company for Peoples Bank (the "Bank"), today announced that net income available to common shareholders was $15.1 million, or $3.60 per diluted share, for the twelve months ended December 31, 2022, as compared to $15.0 million, or $4.30 per diluted share, for the corresponding prior year period. For the quarter ended December 31, 2022, the Bancorp's net income totaled $4.0 million, or $0.93 per diluted share, as compared to $3.3 million, or $0.95 per diluted share, for the quarter ending December 31, 2021. Selected performance metrics are as follows for the periods presented:

Finward Bancorp 
Quarterly Financial Report 
                    
Performance Ratios Quarter ended,  Twelve months ended, 
     (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
     December 31,September 30,June 30, March 31, December 31, December 31, December 31, 
     2022  2022  2022  2022  2021   2022  2021  
Return on equity 12.96% 13.65% 12.45% 5.01% 8.56%  10.47% 9.61% 
Return on assets 0.78% 0.88% 0.85% 0.44% 0.83%  0.74% 0.95% 
Noninterest income / average assets 0.56% 0.51% 0.56% 0.64% 0.95%  0.56% 1.01% 
Noninterest expense / average assets 3.07% 2.90% 2.91% 3.33% 3.18%  3.05% 2.96% 
Efficiency ratio  79.63% 74.54% 75.15% 87.10% 78.28%  78.95% 72.28% 
                    

Core net income for the twelve months ended December 31, 2022, amounted to $17.3 million, or $4.12 per diluted share, compared to $13.4 million, or $3.84 per diluted share for the twelve months ended December 31, 2021. Core net income for the quarter ended December 31, 2022, amounted to $4.6 million, or $1.08 per diluted share, compared to $2.8 million, or $0.81 per diluted share for the quarter ended December 31, 2021. Core net income is a non-GAAP measure. For the periods presented, the core net income measure excludes merger related expenses, net gain on securities, net loss recognized on the sale of premises and equipment, impairment charges on assets held for sale, 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:

Finward Bancorp 
Quarterly Financial Report 
                    
                    
Non-GAAP Performance Ratios Quarter ended,  Twelve Months Ended 
     (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
     December 31,September 30,June 30, March 31, December 31, December 31, December 31, 
     2022  2022  2022  2022  2021   2022  2021  
Core return on equity 19.47% 17.75% 13.78% 11.32% 7.83%  14.83% 9.44% 
Core return on assets 0.90% 0.90% 0.75% 0.83% 0.71%  0.85% 0.85% 
Core noninterest expense / average assets 2.75% 2.78% 2.83% 2.67% 3.12%  2.76% 2.90% 
Core efficiency ratio 74.36% 73.10% 77.12% 72.87% 81.01%  74.38% 74.22% 
Net interest margin - tax equivalent 3.73% 3.84% 3.78% 3.63% 3.58%  3.74% 3.51% 

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 twelve-month period include:

  • Core net income benefiting from acquisition and internal growth: Net income for the twelve months ended December 31, 2022, increased $117 thousand compared to the twelve months ended December 31, 2021. Additionally, core net income for the twelve months ended December 31, 2022, increased by $3.9 million, as compared to the twelve months ended December 31, 2021, primarily relating to the increase in interest-earning assets acquired from the acquisition of Royal Financial, Inc. ("Royal"), organic loan growth, and the overall improvement to the net interest margin during the year.
  • Net interest margin: The net interest margin for the twelve months ended December 31, 2022, was 3.56%, compared to 3.29% for the twelve months ended December 31, 2021. The tax-adjusted net interest margin (a non-GAAP measure) for the twelve months ended December 31, 2022, was 3.74%, compared to 3.51% for the twelve months ended December 31, 2021. The increased net interest margin and tax-adjusted margin is primarily related to increased loan balances from the acquisition of Royal, organic loan growth, and the ability to manage deposit and borrowing costs to support earning asset growth. Organic loan growth (separate from the Royal acquisition) totaled $96.5 million or 10.0%. 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 improvement to the net interest margin during the year, the overall increasing interest rate environment caused a contraction in the margin during the fourth quarter that will likely continue into 2023.
  • Unrealized losses on the securities portfolio: Accumulated other comprehensive losses were $64.3 million as of December 31, 2022. However, during the fourth quarter, securities portfolio cashflows from sales and regular paydowns of the portfolio of $8.5 million were used to fund internally generated loan originations. Furthermore, during full-year 2022, a total of $74.6 million of cashflows were redirected from the securities portfolio to fund internal loan growth. The yield on the securities portfolio improved to 2.22% for the twelve months ended December 31, 2022, up from 1.96% for the twelve months ended December 31, 2021. The securities portfolio also generated gains of $662 thousand from the sale of securities for the twelve months ended December 31, 2022. The effective duration of the securities portfolio was 6.6 years as of December 31, 2022. Management continues to actively manage the securities portfolio and does not currently anticipate the need to realize losses from the securities portfolio, as losses are currently driven by the interest rate environment and management feels are fully recoverable. 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 twelve months ended December 31, 2022, totaled $1.4 million, down from $5.3 million for the twelve months ended December 31, 2021. During the twelve months ended December 31, 2022, the Bancorp originated $44.9 million in new fixed rate mortgage loans for sale, compared to $153.1 million during the twelve months ended December 31, 2021. During the twelve months ended December 31, 2022, the Bancorp originated $105.4 million in new mortgage loans retained in its portfolio, compared to $45.1 million during the twelve months ended December 31, 2021. These retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 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. In the first quarter, management is prioritizing the digitization and automation of back-office tasks to drive efficiency and improve the foundation for a digital-first banking experience. 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 successful closure of one banking center and the donation and leaseback of another during 2021, we have successfully closed five branches during 2022, a reduction of 16%. Each branch closure and sale is expected to result in approximately $250 thousand in operational expense reduction, excluding personnel expenses. Impairment charges recorded on closed branches during the twelve-months ended 2022, totaled $1.2 million. The Bank's 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 customers and communities the Bancorp serves.
  • Asset quality: At December 31, 2022, the allowance for loan losses totaled $12.9 million and is considered adequate by management. For the twelve months ended December 31, 2022, charge-offs, net of recoveries, totaled $446 thousand. The allowance for loan losses as a percentage of total loans was 0.85% at December 31, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 127.3% at December 31, 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 1.31% at December 31, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 195.9% at December 31, 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: A headcount freeze, and attrition plan remains in place, and has netted a reduction of 12 full time equivalents, or 4%, during the three months ended December 31, 2022.
  • Capital Adequacy: As of December 31, 2022, the Bancorp's tier 1 capital to adjusted average assets ratio totaled 7.7%, and under all regulatory capital requirements, continues to be considered well capitalized. Tangible book value per share was $25.40 at December 31, 2022, up from $20.99 as of September 30, 2022 (a non-GAAP measure). The increase is due to recoveries of accumulated other comprehensive losses from the unrealized loss position on the securities portfolio as noted above. Excluding accumulated other comprehensive losses, tangible book value per share increased to $40.36 as of December 31, 2022, from $39.57 as of September 30, 2022 (a non-GAAP measure). Tangible capital represented 5.3% of tangible assets at December 31, 2022 (a non-GAAP measure). Tangible capital, excluding accumulated other comprehensive losses, was 8.5% at December 31, 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.

"Expense management has been a focus for 2022, and we took steps to further reduce fixed costs in the fourth quarter in anticipation of changing economic conditions in 2023. The Bank is healthy from a credit standpoint, which reflects our ability to originate high-quality, relationship-based assets in our footprint. We did see some contraction in our net interest margin in the 4th quarter, primarily due to increasing funding costs as we saw seasonal outflows of core funds in the month of December. Loan demand continues to be strong on the commercial side, supporting higher yields. Funding is a key lever to support the margin in 2023, and we are working to maintain core relationships and using on-balance sheet liquidity to reduce wholesale funding whenever possible," said Benjamin Bochnowski, chief executive officer. "As yields have moved in, our unrealized losses have abated. As opportunities arise to reposition our securities portfolio to provide liquidity to fund loan growth, we will continue to do so throughout the year to maximize our margin and profitability during the year."

Net Interest Income

 

 Year-to-Date           
 (Dollars in thousands)Average Balances, Interest, and Rates
 (unaudited)December 31, 2022 December 31, 2021
  Average Balance Interest Rate (%) Average Balance Interest Rate (%)
 ASSETS           
 Interest bearing deposits in other financial institutions$21,685  $287 1.32 $43,375  $36 0.08
 Federal funds sold 3,025   11 0.36  1,058   - -
 Certificates of deposit in other financial institutions 1,868   28 1.50  1,509   25 1.66
 Securities available-for-sale 427,291   9,492 2.22  456,783   8,951 1.96
 Loans receivable 1,431,017   62,133 4.34  968,185   41,573 4.29
 Federal Home Loan Bank stock 3,675   84 2.29  3,462   70 2.02
 Total interest earning assets 1,888,561  $72,035 3.81  1,474,372  $50,655 3.44
 Cash and non-interest bearing deposits in other financial institutions 16,820       14,829     
 Allowance for loan losses (13,385)      (13,353)    
 Other noninterest bearing assets 146,259       98,133     
     Total assets$2,038,255      $1,573,981     
             
 LIABILITIES AND STOCKHOLDERS' EQUITY           
 Total deposits$1,823,598  $3,604 0.20 $1,381,101  $2,002 0.14
 Repurchase agreements 20,649   195 0.94  17,789   47 0.26
 Borrowed funds 26,806   1,087 4.06  2,448   31 1.27
 Total interest bearing liabilities 1,871,053  $4,886 0.26  1,401,338  $2,080 0.15
 Other noninterest bearing liabilities 23,132       16,996     
     Total liabilities 1,894,185       1,418,334     
     Total stockholders' equity 144,070       155,647     
     Total liabilities and stockholders' equity$2,038,255      $1,573,981     
             

Net interest income was $67.1 million for the twelve months ended December 31, 2022, an increase of $18.6 million (38.2%), compared to $48.6 million for the twelve months ended December 31, 2021. The Bancorp's net interest margin on a tax-adjusted basis (non-GAAP) was 3.74% for the twelve months ended December 31, 2022, compared to 3.51% for the twelve months ended December 31, 2021.

 Quarter Ended           
 (Dollars in thousands)Average Balances, Interest, and Rates
 (unaudited)December 31, 2022 December 31, 2021
  Average Balance Interest Rate (%) Average Balance Interest Rate (%)
 ASSETS           
 Interest bearing deposits in other financial institutions$13,914  $124 3.56 $12,516  $3 0.10
 Federal funds sold 1,460   3 0.82  1,039   - -
 Certificates of deposit in other financial institutions 2,218   13 2.34  1,706   4 0.94
 Securities available-for-sale 360,865   2,197 2.44  521,069   2,523 1.94
 Loans receivable 1,503,543   17,504 4.66  960,606   10,282 4.28
 Federal Home Loan Bank stock 4,596   21 1.83  3,247   15 1.85
 Total interest earning assets 1,886,596  $19,862 4.21  1,500,183  $12,827 3.42
 Cash and non-interest bearing deposits in other financial institutions 3,240       14,810     
 Allowance for loan losses (13,289)      (13,790)    
 Other noninterest bearing assets 158,812       99,837     
     Total assets$2,035,359      $1,601,040     
             
 LIABILITIES AND STOCKHOLDERS' EQUITY           
 Total deposits$1,793,583  $2,007 0.45 $1,403,559  $350 0.10
 Repurchase agreements 19,799   102 2.06  18,771   12 0.26
 Borrowed funds 72,772   944 5.19  6,769   8 0.47
 Total interest bearing liabilities 1,886,154  $3,053 0.65  1,429,099  $370 0.10
 Other noninterest bearing liabilities 27,055       17,177     
     Total liabilities 1,913,209       1,446,276     
     Total stockholders' equity 122,150       154,764     
     Total liabilities and stockholders' equity$2,035,359      $1,601,040     
             

Net interest income was $16.8 million for the quarter ended December 31, 2022, an increase of $4.4 million (34.9%), compared to $12.5 million for the quarter ended December 31, 2021. The Bancorp's net interest margin was 3.56% for the quarter ended December 31, 2022, compared to 3.32% for the quarter ended December 31, 2021. The Bancorp's net interest margin on a tax-adjusted basis (non-GAAP) was 3.73% for the quarter ended December 31, 2022, compared to 3.58% for the quarter ended December 31, 2021. The increased net interest income and net interest margin for the quarter and the twelve 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, except per share data)  Twelve Months Ended December 31,  12/31/2022 vs. 12/31/2021
    2022  2021  $ Change % Change
Noninterest income:            
  Fees and service charges   6,257  5,388  869  16.1%
  Wealth management operations   2,113  2,375  (262) -11.0%
  Gain on sale of loans held-for-sale, net   1,368  5,296  (3,928) -74.2%
  Gain on sale of securities, net   662  1,987  (1,325) -66.7%
  Increase in cash value of bank owned life insurance   810  715  95  13.3%
  Gain on sale of foreclosed real estate   16  47  (31) -66.0%
  Other   283  139  144  103.6%
             
      Total noninterest income   11,509  15,947  (4,438) -27.8%
             


(Dollars in thousands, except per share data) Quarter Ended December 31,  12/31/2022 vs. 12/31/2021
   2022  2021  $ Change % Change
Noninterest income:           
  Fees and service charges  1,823  1,378  445  32.3%
  Wealth management operations  523  588  (65) -11.1%
  Gain on sale of loans held-for-sale, net  126  902  (776) -86.0%
  Gain on sale of securities, net  -  711  (711) -100.0%
  Increase in cash value of bank owned life insurance  182  178  4  2.2%
  Gain on sale of foreclosed real estate  16  20  (4) -20.0%
  Other  169  31  138  445.2%
            
      Total noninterest income  2,839  3,808  (969) -25.4%
            

The increase in fees and service charges, for the quarter and the twelve months ended December 31, 2022, is primarily the result of the acquisition of Royal and the resulting increase in our customer base. The decrease in wealth management operations, for the quarter and the twelve-month periods, is the 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 twelve-month periods, is the result of significant refinance activity in 2021 due to the economic and low-rate environment, which resulted in more loans originated and sold in 2021 compared to 2022. 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, except per share data)  Twelve Months Ended December 31,  12/31/2022 vs. 12/31/2021
    2022  2021  $ Change % Change
Noninterest expense:            
  Compensation and benefits   28,990  24,241  4,749 19.6%
  Occupancy and equipment   6,785  5,537  1,248 22.5%
  Data processing   6,750  3,648  3,102 85.0%
  Marketing   1,907  1,085  822 75.8%
  Impairment charge on assets held for sale   1,232  -  1,232 0.0%
  Federal deposit insurance premiums   1,228  861  367 42.6%
  Professional services   1,211  1,205  6 0.5%
  Net loss recognized on sale of premises and equipment   303  -  303 0.0%
  Other   13,694  10,059  3,635 36.1%
             
      Total noninterest expense   62,100  46,636  15,464 33.2%
             


(Dollars in thousands, except per share data) Quarter Ended December 31,  12/31/2022 vs. 12/31/2021
   2022  2021  $ Change % Change
Noninterest expense:           
  Compensation and benefits  6,587  6,617  (30) -0.5%
  Occupancy and equipment  1,752  1,461  291  19.9%
  Data processing  1,238  1,651  (413) -25.0%
  Marketing  284  357  (73) -20.4%
  Impairment charge on assets held for sale  1,232  -  1,232  0.0%
  Federal deposit insurance premiums  279  241  38  15.8%
  Professional services  393  250  143  57.2%
  Net loss recognized on sale of premises and equipment  49  -  49  0.0%
  Other  3,831  2,155  1,676  77.8%
            
      Total noninterest expense  15,645  12,732  2,913  22.9%
            

The increase in compensation and benefits, for the twelve months ended December 31, 2022, is primarily the result of the Royal acquisition, management's continued focus on talent management, and wage inflation. The increase in data processing expense for the twelve-month period ending December 31, 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 December 31, 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 occupancy and equipment expense, for the quarter and the twelve-month periods, is primarily related to the Royal acquisition and higher operating costs. Marketing expenses, for the twelve-month period ended December 31, 2022, have increased to enhance brand recognition in new markets and gain more wallet share. The increase in impairment charge on assets held for sale, for the quarter and twelve-month periods, is the result of impairment on the carrying value of branches held for sale. The increase in federal deposit insurance premiums, for the quarter and the twelve-month periods, is primarily the result of growth of the bank's average assets. The increase in net loss recognized on sale of premises and equipment, for the quarter and twelve-month 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 twelve-month period ending December 31, 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 increase in other operating expenses for the quarter ending December 31, 2022, is primarily due to higher utilization of outside consultants related to bank initiatives during the quarter.

Income Tax Expense
The provision for income taxes was $1.5 million for the twelve months ended December 31, 2022, as compared to $1.4 million for the twelve months ended December 31, 2021. The effective tax rate was 8.9% for the twelve months ended December 31, 2022, as compared to 8.6% for the twelve months ended December 31, 2021. The provision for income taxes was $45 thousand for the quarter ended December 31, 2022, as compared to $6 thousand for the quarter ended December 31, 2021. The effective tax rate was 1.1% for the quarter ended December 31, 2022, as compared to 0.2% for the quarter ended December 31, 2021. The Bancorp's higher current effective tax rate for the twelve months ended 31, 2022, is a result of higher earnings relative to tax preferred income. The decrease in effective tax rate quarter-over-quarter is due to tax benefits resulting from the recognition of impairment on assets held for sale.

Lending
The Bancorp's loan portfolio totaled $1.5 billion on December 31, 2022, compared to $966.7 million on December 31, 2021, an increase of $546.9 million or 56.6%. The increase is primarily the result of the Royal acquisition, as well as organic loan portfolio growth. During the first twelve months of 2022 the Bancorp originated $376.0 million in new commercial loans, compared to $339.9 million during the twelve months ended December 31, 2021. During the twelve months ended December 31, 2022, the Bancorp originated $44.9 million in new fixed rate mortgage loans for sale, compared to $153.1 million during the twelve months ended December 31, 2021. During the twelve months ended December 31, 2022, the Bancorp originated $105.4 million in new mortgage loans retained in its portfolio, compared to $45.1 million during the twelve months ended December 31, 2021. The loan portfolio represents 73.1% of earning assets and is comprised of 62.1% commercial related credits.

Asset Quality
At December 31, 2022, non-performing loans totaled $10.1 million, compared to $7.3 million at December 31, 2021, an increase of $2.9 million or 39.6%. The Bancorp's ratio of non-performing loans to total loans was 0.67% at December 31, 2022, compared to 0.76% at December 31, 2021. The Bancorp's ratio of non-performing assets to total assets was 0.54% at December 31, 2022, compared to 0.51% at December 31, 2021.

For the twelve months ended December 31, 2022, no provisions to the ALL were required, compared to $1.5 million for the twelve months ended December 31, 2021, a decrease of $1.5 million. For the quarter ended December 31, 2022, no provisions to the ALL were required, compared to $216 thousand for the quarter ended December 31, 2021, a decrease of $216 thousand. For the twelve months ended December 31, 2022, charge-offs, net of recoveries, totaled $446 thousand. For the quarter ended December 31, 2022, charge-offs, net of recoveries, totaled $483 thousand. At December 31, 2022, the allowance for loan losses totaled $12.9 million and is considered adequate by management. The allowance for loan losses as a percentage of total loans was 0.85% at December 31, 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 127.3% at December 31, 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 1.31% at December 31, 2022, and the allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 195.9% at December 31, 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 $370.9 million at December 31, 2022, compared to $526.9 million at December 31, 2021, a decrease of $156.0 million or 29.6%. 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 19.5% of earning assets and provides a consistent source of liquidity and earnings to the Bancorp. Cash and cash equivalents totaled $31.3 million on December 31, 2022, compared to $33.2 million on December 31, 2021, a decrease of $1.9 million or 5.7%. The decrease 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 December 31, 2022, core deposits totaled $1.4 billion, compared to $1.2 billion on December 31, 2021, an increase of $216.9 million or 18.2%. 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 79.5% of the Bancorp's total deposits at December 31, 2022. During the twelve months of 2022, balances for checking, and savings 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 December 31, 2022, balances for certificates of deposit totaled $363.1 million, compared to $239.2 million on December 31, 2021, an increase of $123.9 million or 51.8%. The increase in certificate of deposit balances is related to the Royal acquisition, which added $195.2 million of certificates at the time of acquisition, along with efforts by the bank to maintain lower cost of deposits in the future. In addition, on December 31, 2022, borrowings and repurchase agreements totaled $135.5 million, compared to $14.6 million at December 31, 2021, an increase of $120.9 million or 829.3%. 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 December 31, 2022, shareholders' equity stood at $136.4 million, a decrease of $20.2 million, or 12.9% 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 $64.3 million at December 31, 2022. The Bank's regulatory capital ratios at December 31, 2022, were 12.1% for total capital to risk-weighted assets, 11.2% for both common equity tier 1 capital to risk-weighted assets and tier 1 capital to risk-weighted assets, and 7.7% for tier 1 capital to adjusted average assets. Under all regulatory capital requirements, the Bank is considered well capitalized. Tangible capital represented 5.3% of tangible assets at December 31, 2022. The tangible book value of the Bancorp's stock stood at $25.40 per share at December 31, 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 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: 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.

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



Finward Bancorp 
Quarterly Financial Report 
                    
Performance Ratios Quarter ended,  Twelve months ended, 
     (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
     December 31,September 30,June 30, March 31, December 31, December 31, December 31, 
      2022   2022   2022   2022   2021    2022   2021  
Return on equity  12.96%  13.65%  12.45%  5.01%  8.56%   10.47%  9.61% 
Return on assets  0.78%  0.88%  0.85%  0.44%  0.83%   0.74%  0.95% 
Yield on loans   4.66%  4.34%  4.18%  4.17%  4.28%   4.34%  4.29% 
Yield on security investments  2.44%  2.30%  2.23%  2.02%  1.94%   2.22%  1.96% 
Total yield on earning assets  4.21%  3.88%  3.68%  3.49%  3.42%   3.81%  3.44% 
Cost of deposits  0.45%  0.19%  0.08%  0.08%  0.10%   0.20%  0.14% 
Cost of repurchase agreements  2.06%  0.98%  0.46%  0.33%  0.26%   0.94%  0.26% 
Cost of borrowed funds  5.19%  2.52%  1.10%  0.39%  0.47%   4.06%  1.27% 
Total cost of funds  0.65%  0.22%  0.09%  0.08%  0.10%   0.26%  0.15% 
Noninterest income / average assets  0.56%  0.51%  0.56%  0.64%  0.95%   0.56%  1.01% 
Noninterest expense / average assets  3.07%  2.90%  2.91%  3.33%  3.18%   3.05%  2.96% 
Net noninterest margin / average assets  -2.52%  -2.39%  -2.36%  -2.68%  -2.23%   -2.48%  -1.95% 
Efficiency ratio   79.63%  74.54%  75.15%  87.10%  78.28%   78.95%  72.28% 
Effective tax rate  1.12%  11.14%  11.70%  11.41%  0.18%   8.93%  8.63% 
                    
Non-performing assets to total assets  0.54%  0.58%  0.53%  0.47%  0.51%   0.54%  0.51% 
Non-performing loans to total loans  0.67%  0.73%  0.68%  0.62%  0.76%   0.67%  0.76% 
Allowance for loan losses to non-performing loans  127.26%  122.64%  133.78%  150.28%  183.76%   127.26%  183.76% 
Allowance for loan losses to loans outstanding  0.85%  0.89%  0.91%  0.93%  1.38%   0.85%  1.38% 
Foreclosed real estate to total assets  0.00%  0.00%  0.00%  0.00%  0.00%   0.00%  0.00% 
                    
Basic earnings per share $0.93  $1.07  $1.04  $0.53  $0.95   $3.61  $4.30  
Diluted earnings per share $0.93  $1.07  $1.04  $0.53  $0.95   $3.60  $4.30  
Net worth / total assets  6.59%  5.75%  6.50%  7.51%  9.66%   6.59%  9.66% 
Book value per share $31.73  $27.46  $31.80  $36.71  $45.00   $31.73  $45.00  
Closing stock price $36.20  $34.01  $37.49  $46.21  $45.88   $36.20  $45.88  
Price per earnings per share $9.70  $7.92  $8.97  $21.76  $12.07   $10.02  $10.66  
Dividend declared per common share $0.31  $0.31  $0.31  $0.31  $0.31   $1.24  $1.24  
                    
                    
Non-GAAP Performance Ratios Quarter ended,  Twelve Months Ended 
     (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
     December 31,September 30,June 30, March 31, December 31, December 31, December 31, 
      2022   2022   2022   2022   2021    2022   2021  
Core return on equity  19.47%  17.75%  13.78%  11.32%  7.83%   14.83%  9.44% 
Core return on assets  0.90%  0.90%  0.75%  0.83%  0.71%   0.85%  0.85% 
Core noninterest expense / average assets  2.75%  2.78%  2.83%  2.67%  3.12%   2.76%  2.90% 
Core efficiency ratio  74.36%  73.10%  77.12%  72.87%  81.01%   74.38%  74.22% 
Net interest margin - tax equivalent  3.73%  3.84%  3.78%  3.63%  3.58%   3.74%  3.51% 
Tangible book value per diluted share $25.41  $20.99  $25.24  $30.01  $40.91   $25.41  $40.91  
Tangible book value per diluted share adjusted for AOCI$40.36  $39.57  $38.69  $37.80  $39.68   $40.36  $39.68  



Finward Bancorp 
Quarterly Financial Report 
               
Balance Sheet Data           
(Dollars in thousands) (Unaudited) (Unaudited) (Unaudited) (Unaudited)   
     December 31,September 30,June 30, March 31, December 31,
      2022  2022  2022  2022  2021 
Total assets $2,070,339 $2,052,986 $2,101,485 $2,097,845 $1,620,743 
Cash & cash equivalents  31,282  38,296  79,302  54,501  33,176 
Certificates of deposit in other financial institutions 2,456  2,214  1,482  1,731  1,709 
Securities - available for sale  370,896  359,035  400,466  464,320  526,889 
               
Loans receivable:           
 Commercial real estate $486,431 $452,852 $420,735 $408,375 $317,145 
 Residential real estate  484,595  471,565  459,151  444,753  260,134 
 Commercial business  93,278  95,372  103,649  112,396  115,772 
 Construction and land development  108,926  134,301  153,422  150,810  123,822 
 Multifamily  251,014  258,377  248,495  234,267  61,194 
 Home equity  38,978  37,578  35,672  34,284  34,612 
 Manufactured homes  34,882  35,866  37,693  38,636  37,887 
 Government  9,549  9,649  8,081  8,176  8,991 
 Consumer  918  827  1,673  924  582 
 Farmland  -  -  -  -  - 
  Total loans $1,508,571 $1,496,387 $1,468,571 $1,432,621 $960,139 
               
Deposits:            
 Core deposits:           
  Noninterest bearing checking $359,092 $386,137 $370,567 $380,515 $295,294 
  Interest bearing checking  396,285  422,559  384,689  350,825  333,744 
  Savings  402,365  427,505  436,203  425,634  293,976 
  Money market  254,157  269,110  327,360  307,850  271,970 
   Total core deposits  1,411,899  1,505,311  1,518,819  1,464,824  1,194,984 
 Certificates of deposit  363,118  327,653  398,396  430,387  239,217 
   Total deposits $1,775,017 $1,832,964 $1,917,215 $1,895,211 $1,434,201 
               
Borrowings and repurchase agreements $135,503 $78,140 $24,536 $23,244 $14,581 
Stockholder's equity  136,393  118,023  136,654  157,637  156,615 



Finward Bancorp 
Quarterly Financial Report 
                    
Consolidated Statements of Income Quarter ended,  Twelve months ended, 
(Dollars in thousands) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)  (Unaudited) (Unaudited) 
     December 31,September 30,June 30, March 31, December 31, December 31, December 31, 
      2022  2022  2022  2022  2021   2022  2021 
Interest income:                
Loans   $17,504 $16,122 $15,221 $13,286 $10,282  $62,133 $41,573 
Securities & short-term investments  2,358  2,417  2,519  2,608  2,545   9,902  9,082 
Total interest income  19,862  18,539  17,740  15,894  12,827   72,035  50,655 
Interest expense:                
Deposits   2,007  871  389  337  350   3,604  2,002 
Borrowings   1,046  161  53  22  20   1,282  78 
Total interest expense  3,053  1,032  442  359  370   4,886  2,080 
Net interest income  16,809  17,507  17,298  15,535  12,457   67,149  48,575 
Provision for loan losses  -  -  -  -  216   -  1,509 
Net interest income after provision for loan losses  16,809  17,507  17,298  15,535  12,241   67,149  47,066 
Noninterest income:                
  Fees and service charges  1,823  1,570  1,560  1,304  1,378   6,257  5,388 
  Wealth management operations  523  407  588  595  588   2,113  2,375 
  Gain on sale of loans held-for-sale, net  126  344  291  607  902   1,368  5,296 
  Gain on sale of securities, net  -  23  258  381  711   662  1,987 
  Increase in cash value of bank owned life insurance 182  183  193  252  178   810  715 
  Gain on sale of foreclosed real estate, net  16  -  -  -  20   16  47 
  Other    169  103  6  5  31   283  139 
Total noninterest income  2,839  2,630  2,896  3,144  3,808   11,509  15,947 
Noninterest expense:                
  Compensation and benefits  6,587  7,498  7,538  7,367  6,617   28,990  24,241 
  Occupancy and equipment  1,752  1,804  1,729  1,500  1,461   6,785  5,537 
  Data processing  1,238  1,212  1,246  3,054  1,651   6,750  3,648 
  Marketing   284  587  385  651  357   1,907  1,085 
  Impairment charge on assets held for sale  1,232  -  -  -  -   1,232  - 
  Federal deposit insurance premiums  279  350  380  219  241   1,228  861 
Net loss recognized on sale of premises and equipment     49  254  -  -  -   303  - 
  Other    4,224  3,305  3,898  3,478  2,405   14,905  11,264 
Total noninterest expense  15,645  15,010  15,176  16,269  12,732   62,100  46,636 
Income before income taxes  4,003  5,127  5,018  2,410  3,317   16,558  16,377 
Income tax expenses  45  571  587  275  6   1,478  1,414 
Net income  $3,958 $4,556 $4,431 $2,135 $3,311  $15,080 $14,963 
                    



 Finward Bancorp 
 Quarterly Financial Report 
                
 Asset Quality (Unaudited) (Unaudited) (Unaudited) (Unaudited)   
 (Dollars in thousands) December 31,September 30,June 30, March 31, December 31,
       2022   2022   2022  2022  2021 
 Nonaccruing loans $9,886  $8,943  $8,813 $8,414 $7,056 
 Accruing loans delinquent more than 90 days  248   1,982   1,208  494  205 
 Securities in non-accrual  1,048   1,027   1,030  972  992 
 Foreclosed real estate  -   -   -  -  - 
  Total nonperforming assets $11,182  $11,952  $11,051 $9,880 $8,253 
                
 Allowance for loan losses (ALL):           
  ALL specific allowances for impaired loans $338  $749  $731 $716 $684 
  ALL general allowances for loan portfolio  12,559   12,649   12,675  12,671  12,659 
   Total ALL $12,897  $13,398  $13,406 $13,387 $13,343 
                
 Troubled Debt Restructurings:           
  Nonaccruing troubled debt restructurings, non-compliant (1) (2)$343  $452  $308 $300 $1,122 
  Nonaccruing troubled debt restructurings, compliant (2)  815   542   657  265  306 
  Accruing troubled debt restructurings  2,753   3,480   1,484  1,379  1,421 
   Total troubled debt restructurings $3,911  $4,474  $2,449 $1,944 $2,849 
    (1) "non-compliant" refers to not being within the guidelines of the restructuring agreement         
    (2) included in nonaccruing loan balances presented above           
                
                
      (Unaudited)        
      December 31, Required       
       2022  To Be Well       
      Actual Ratio Capitalized       
 Capital Adequacy Bank           
 Common equity tier 1 capital to risk-weighted assets  11.2%  6.5%       
 Tier 1 capital to risk-weighted assets  11.2%  8.0%       
 Total capital to risk-weighted assets  12.1%  10.0%       
 Tier 1 capital to adjusted average assets  7.7%  5.0%       
                



 Table 1 - Reconciliation of the Non-GAAP Performance Measures             
               
 (Dollars in thousands)Quarter Ended Twelve Months Ended
 (unaudited)December 31, 2022 September 30, 2022June 30, 2022 March 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
 Calculation of core net income             
 Net income$3,958  $4,556  $4,431  $2,135  $3,311  $15,080  $14,963 
 Realized loss/(gain) on securities -   (23)  (258)  (381)  (771)  (662)  (1,987)
 Net loss recognized on sale of premises and equipment 49   254   -   -   -   303   - 
 Impairment charge on assets held for sale 1,232   -   -   -   -   1,232   - 
 Merger related expenses -   -   -   2,852   -   2,852   - 
 CD premium amortization (103)  (134)  (175)  (129)  -   (541)  - 
 Core deposit amortization 395   400   410   347   249   1,552   994 
 Purchase discount amortization (760)  (342)  (613)  (234)  (144)  (1,949)  (1,041)
 Related tax benefit/(cost) (171)  (33)  134   (516)  127   (585)  427 
(A)Core net income$4,600  $4,678  $3,929  $4,074  $2,772  $17,282  $13,356 
               
 Calculation of core diluted earnings per share             
(A)Core net income$4,600  $4,678  $3,929  $4,074  $2,832  $17,282  $13,356 
 Diluted average common shares outstanding 4,261,506   4,260,596   4,258,503   4,020,815   3,479,988   4,193,340   3,477,309 
 Core diluted earnings per share$1.08  $1.10  $0.92  $1.01  $0.81  $4.12  $3.84 
               
 Calculation of core return on average assets             
(A)Core net income$4,600  $4,678  $3,929  $4,074  $2,832  $17,282  $13,356 
 Average total assets 2,035,359   2,069,139   2,085,039   1,955,347   1,601,040   2,038,255   1,573,981 
 Core return on average assets 0.90%  0.90%  0.75%  0.83%  0.71%  0.85%  0.85%
               
 Calculation of core pre-provision net revenue             
 Net interest income$16,809  $17,507  $17,298  $15,535  $12,457  $67,149  $48,575 
 Non-interest income 2,839   2,630   2,896   3,144   3,808   11,509   15,947 
 Non-interest expense (15,645)  (15,010)  (15,176)  (16,269)  (12,732)  (62,100)  (46,636)
 Pre-provision net revenue 4,003   5,127   5,018   2,410   3,533   16,558   17,886 
 Realized loss/(gain) on securities -   (23)  (258)  (381)  (711)  (662.00)  (1,987)
 Core deposit amortization 395   400   410   347   249   1,552   994 
 Purchase discount amortization (760)  (342)  (613)  (234)  (144)  (1,949)  (1,041)
(B)Core pre-provision net revenue$3,638  $5,162  $4,557  $2,142  $2,927  $15,499  $15,852 
               
 Calculation of core pre-provision net revenue to average assets             
(B)Core pre-provision net revenue$3,638  $5,162  $4,557  $2,142  $2,927  $15,499  $15,852 
 Average total assets 2,035,359   2,069,139   2,085,039   1,955,347   1,601,040   2,038,255   1,573,981 
 Core pre-provision net revenue to average assets 0.71%  1.00%  0.87%  0.44%  0.73%  0.76%  1.01%
               
 Calculation of tangible assets (excluding PPP)             
 Total assets$2,070,339  $2,052,986  $2,101,485  $2,097,845  $1,620,743  $2,070,339  $1,620,743 
 Goodwill (22,395)  (22,615)  (22,615)  (22,774)  (11,109)  (22,395)  (11,109)
 Other Intangibles (4,794)  (5,188)  (5,588)  (5,998)  (3,126)  (4,794)  (3,126)
 Paycheck Protection Plan ("PPP") loans -   (226)  (570)  (9,983)  (22,072)  -   (22,072)
(C)Tangible assets (excluding PPP)$2,043,150  $2,024,957  $2,072,712  $2,059,090  $1,584,436  $2,043,150  $1,584,436 
               
 Calculation of tangible common equity             
 Total stockholder's equity$136,393  $118,023  $136,654  $157,637  $156,615  $136,393  $156,615 
 Goodwill (22,395)  (22,615)  (22,615)  (22,774)  (11,109)  (22,395)  (11,109)
 Other intangibles (4,794)  (5,188)  (5,588)  (5,998)  (3,126)  (4,794)  (3,126)
(D)Tangible common equity$109,204  $90,220  $108,451  $128,865  $142,380  $109,204  $142,380 
               
 Calculation of tangible common equity adjusted for accumulated other comprehensive loss (income)            
(D)Tangible common equity$109,204  $90,220  $108,451  $128,865  $142,380  $109,204  $142,380 
 Accumulated other comprehensive loss (income) 64,300   79,839   57,781   33,462   (4,276)  64,300   (4,276)
(I)Tangible common equity adjusted for accumulated other comprehensive loss (income)$173,504 $-$170,059 $-$166,232 $-$162,327 $-$138,104  $173,504 $-$138,104 
               
 Calculation of tangible book value per diluted share             
(D)Tangible common equity$109,204  $90,220  $108,451  $128,865  $142,380  $109,204  $142,380 
 Shares outstanding 4,298,401   4,297,900   4,296,949   4,294,136   3,480,701   4,298,401   3,480,701 
 Tangible book value per diluted share$25.41  $20.99  $25.24  $30.01  $40.91  $25.41  $40.91 
               
 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)$173,504  $170,059  $166,232  $162,327  $138,104  $173,504  $138,104 
 Diluted average common shares outstanding 4,298,401   4,297,900   4,296,949   4,294,136   3,480,701   4,298,401   3,480,701 
 Tangible book value per diluted share adjusted for accumulated other comprehensive loss (income)$40.36  $39.57  $38.69  $37.80  $39.68  $40.36  $39.68 
               
 Calculation of tangible common equity to tangible assets (excluding PPP)             
(D)Tangible common equity$109,204  $90,220  $108,451  $128,865  $142,380  $109,204  $142,380 
(C)Tangible assets (excluding PPP) 2,043,150   2,024,957   2,072,712   2,059,090   1,584,436   2,043,150   1,584,436 
 Tangible common equity to tangible assets 5.34%  4.46%  5.23%  6.26%  8.99%  5.34%  8.99%
 Calculation of tangible common equity to tangible assets (excluding PPP and AOCI)             
(I)Tangible common equity adjusted for accumulated other comprehensive losses (income)$173,504  $170,059  $166,232  $162,327  $138,104  $173,504  $138,104 
(C)Tangible assets (excluding PPP) 2,043,150   2,024,957   2,072,712   2,059,090   1,584,436   2,043,150   1,584,436 
 Tangible common equity adjusted for accumulated other comprehensive loss (income) to tangible assets 8.49%  8.40%  8.02%  7.88%  8.72%  8.49%  8.72%
               
 Calculation of average tangible common equity             
 Average stockholder's common equity$122,150  $133,482  $142,415  $170,374  $159,010  $144,070  $155,647 
 Average goodwill (22,615)  (22,615)  (22,543)  (21,251)  (11,109)  (22,157)  (11,109)
 Average other intangibles (5,038)  (5,438)  (5,850)  (5,174)  (3,270)  (5,375)  (3,126)
(E)Average tangible stockholders' common equity$94,497  $105,429  $114,022  $143,949  $144,631  $116,538  $141,412 
               
 Calculation of core return on average common equity             
(A)Core net income$4,600  $4,678  $3,929  $4,074  $2,832  $17,282  $13,356 
(E)Average tangible common equity 94,497   105,429   114,022   143,949   144,631   116,538   141,412 
 Core return on average common equity 19.47%  17.75%  13.78%  11.32%  7.83%  14.83%  9.44%
               
 Calculation of core yield on loans             
 Interest income on loans$17,504  $16,122  $15,221  $13,286  $10,282  $62,133  $41,573 
 Loan accretion income (760)  (342)  (613)  (234)  (144)  (1,949)  (1,041)
 Adjusted interest income on loans 16,744   15,780   14,608   13,052   10,138   60,184   40,532 
 Average loan balances 1,503,543   1,484,678   1,457,625   1,274,407   960,606   1,431,017   968,185 
 Core yield on loans 4.45%  4.25%  4.01%  4.10%  4.22%  4.21%  4.19%
               
 Calculation of adjusted allowance for loan loss to total loans             
 Allowance for loan losses$(12,897) $(13,398) $(13,406) $(13,387) $(13,343) $(12,897) $(13,343)
 Additional reserves not part of the allowance for loan loss (6,960)  (7,708)  (7,908)  (8,749)  (2,428)  (6,960)  (2,428)
(F)Adjusted allowance for loan loss (19,857)  (21,106)  (21,314)  (22,136)  (15,771)  (19,857)  (15,771)
 Total loans 1,513,631   1,502,696   1,474,381   1,439,728   966,720   1,513,631   966,720 
 Adjusted allowance for loan loss to total loans 1.31%  1.40%  1.45%  1.54%  1.63%  1.31%  1.63%
               
 Calculation of adjusted allowance for loan loss to nonperforming loans             
(F)Adjusted allowance for loan loss$(19,857) $(21,106) $(21,314) $(22,136) $(15,771) $(19,857) $(15,771)
 Nonperforming loans 10,134   10,925   10,021   8,908   7,261   10,134   7,261 
 Adjusted allowance for loan loss to nonperforming loans (coverage ratios) 195.94%  193.19%  212.69%  248.50%  217.20%  195.94%  217.20%
               
 Calculation of adjusted allowance for loan loss to total loans excluding PPP             
(F)Adjusted allowance for loan loss$(19,857) $(21,106) $(21,314) $(22,136) $(15,771) $(19,857) $(15,771)
 Total loans 1,513,631   1,502,696   1,474,381   1,439,728   966,720   1,513,631   966,720 
 PPP loans -   (226)  (570)  (9,983)  (22,072)  -   (22,072)
 Total loans excluding PPP 1,513,631   1,502,470   1,473,811   1,429,745   944,648   1,513,631   944,648 
 Adjusted allowance for loan loss to total loans excluding PPP 1.31%  1.40%  1.45%  1.55%  1.67%  1.31%  1.67%
               
 Calculation of core revenue              
 Net interest income$16,809  $17,507  $17,298  $15,535  $12,457  $67,149  $48,575 
 Non-interest income 2,839   2,630   2,896   3,144   3,808   11,509   15,947 
 CD premium amortization (103)  (134)  (175)  (129)  -   (541)  - 
 Purchase discount amortization (760)  (342)  (613)  (234)  (144)  (1,949)  (1,041)
 Realized loss/(gain) on securities -   (23)  (258)  (381)  (711)  (662)  (1,987)
(G)Core revenue$18,785  $19,638  $19,148  $17,935  $15,410  $75,506  $61,494 
               
 Calculation of core non-interest expense             
 Non-interest expense$15,645  $15,010  $15,176  $16,269  $12,732  $62,100  $46,636 
 Impairment charge on assets held for sale (1,232)  -   -   -   -   (1,232)  - 
 Net loss recognized on sale of premises and equipment (49)  (254)  -   -   -   (303)  - 
 Merger related expenses -   -   -   (2,852)  -   (2,852)  - 
 Core deposit amortization (395)  (400)  (410)  (347)  (249)  (1,552)  (994)
(H)Core non-interest expense$13,969  $14,356  $14,766  $13,070  $12,483  $56,161  $45,642 
               
 Calculation of core efficiency ratio             
(H)Core non-interest expense$13,969  $14,356  $14,766  $13,070  $12,483  $56,161  $45,642 
(G)Core revenue 18,785   19,638   19,148   17,935   15,410   75,506   61,494 
 Core efficiency ratio 74.36%  73.10%  77.12%  72.87%  81.01%  74.38%  74.22%
               
 Calculation of non-interest expense to total average assets             
 Non-interest expense$15,645  $15,010  $15,176  $16,269  $12,732  $62,100  $46,636 
 Average total assets 2,035,359   2,069,139   2,085,039   1,955,347   1,601,040   2,038,255   1,573,981 
 Non-interest expense to total average assets 3.07%  2.90%  2.91%  3.33%  3.18%  3.05%  2.96%
               
 Calculation of core non-interest expense to total average assets             
(H)Core non-interest expense$13,969  $14,356  $14,766  $13,070  $12,483  $56,161  $45,642 
 Average total assets 2,035,359   2,069,139   2,085,039   1,955,347   1,601,040   2,038,255   1,573,981 
 Core non-interest expense to total average assets 2.75%  2.78%  2.83%  2.67%  3.12%  2.76%  2.90%
               
 Calculation of tax adjusted net interest margin             
 Net interest income$16,809  $17,507  $17,298  $15,535  $12,457  $67,149  $48,575 
 Tax adjusted interest on securities and loans 791   817   930   966   959   3,504   3,232 
 Adjusted net interest income 17,600   18,324   18,228   16,501   13,416   70,653   51,807 
 Total average earning assets 1,886,596   1,910,722   1,927,664   1,820,588   1,500,183   1,888,561   1,474,372 
 Tax adjusted net interest margin 3.73%  3.84%  3.78%  3.63%  3.58%  3.74%  3.51%
               
 Efficiency Ratio             
 Total non-interest expense$15,645  $15,010  $15,176  $16,269  $12,732  $62,100  $46,636 
 Total revenue 19,648   20,137   20,194   18,679   16,265   78,658   64,522 
 Efficiency ratio 79.63%  74.54%  75.15%  87.10%  78.28%  78.95%  72.28%
               

 



 

Image for Press Release 1626931
Image for Press Release 1626931