Finward Bancorp(FNWD) - 2021 Q3 - Quarterly Report

Financial Performance - Net income for the quarter ended September 30, 2021, was $3.5 million, resulting in earnings per common share of $1.02, with a return on average assets (ROA) of 0.87% and return on average stockholders' equity (ROE) of 8.90%[116]. - For the nine months ended September 30, 2021, net income was $11.7 million, with earnings per common share of $3.35, ROA of 0.89%, and ROE of 9.96%[116]. - The Bancorp reported a net income of $3.5 million for the quarter ended September 30, 2021, a decrease of $1.1 million (24.5%) compared to the same quarter in 2020[167]. - For the nine months ended September 30, 2021, the Bancorp reported net income of $11.7 million, a decrease of $999 thousand (7.9%) compared to $12.7 million for the same period in 2020[176]. Asset and Loan Information - As of September 30, 2021, Finward Bancorp had total assets of $1.6 billion, total loans receivable of $956.4 million, and total deposits of $1.4 billion[116]. - Total assets increased by $113.6 million (7.6%) during the nine months ended September 30, 2021, with interest-earning assets increasing by $110.6 million (7.9%) to $1.5 billion[129]. - The loan portfolio totaled $956.4 million as of September 30, 2021, down from $965.1 million at December 31, 2020, reflecting a focus on quality loan growth[130]. - As of September 30, 2021, The Bancorp's total loans receivable amounted to $950.988 million, a slight decrease from $961.425 million on December 31, 2020[132]. - The total loans decreased slightly to $956.352 million as of September 30, 2021, from $961.425 million at December 31, 2020[145]. Loan Performance and Quality - Non-performing loans totaled $13.543 million as of September 30, 2021, representing 1.42% of total loans, a decrease from $14.365 million or 1.49% as of December 31, 2020[134]. - The Bancorp continues to monitor the impact of COVID-19 on its borrowers, with some loans deemed non-performing due to pandemic-related stresses[124]. - Special mention loans increased to $22.876 million as of September 30, 2021, compared to $22.684 million on December 31, 2020, reflecting a slight increase of 0.84%[136]. - Impaired loans totaled $11.429 million as of September 30, 2021, down from $11.821 million on December 31, 2020, indicating a decrease of 3.3%[138]. - The Bancorp's substandard loans decreased to $13.358 million as of September 30, 2021, from $16.627 million on December 31, 2020, a reduction of approximately 19.3%[135]. Capital and Equity - For the nine months ended September 30, 2021, stockholders' equity increased by $880 thousand (0.6%), primarily due to net income of $11.7 million[157]. - The Bancorp's Common Equity Tier 1 Capital ratio was 13.1% as of June 30, 2021, significantly exceeding the minimum requirement of 4.5%[163]. Income and Expenses - Net interest income for the quarter ended September 30, 2021, was $12.2 million, an increase of $512 thousand (4.4%) from $11.7 million in the same quarter of 2020[168]. - Total noninterest income for the quarter ending September 30, 2021, was $4,146 thousand, a decrease of $709 thousand (14.6%) compared to $4,855 thousand for the same quarter in 2020[172]. - Total noninterest expense for the quarter ending September 30, 2021, was $12,401 thousand, an increase of $2,366 thousand (23.6%) compared to $10,035 thousand for the same quarter in 2020[174]. - The Bancorp's efficiency ratio was 75.87% for the quarter ended September 30, 2021, compared to 60.66% for the same quarter in 2020[174]. - Total noninterest expense increased to $33,904,000 for the nine months ended September 30, 2021, up $3,764,000 or 12.5% from $30,140,000 in 2020[185]. Dividends and Shareholder Returns - The Board of Directors declared a third quarter dividend of $0.31 per share, paid on October 4, 2021[165]. Mergers and Acquisitions - A merger agreement with Royal Financial, Inc. was entered into on July 28, 2021, with completion anticipated in the first quarter of 2022, subject to approvals[118][119]. - The merger will allow RYFL stockholders to receive either 0.4609 shares of Finward common stock or $20.14 in cash for each share of RYFL common stock[120]. Market and Economic Conditions - The Bancorp originated $120.1 million in new fixed-rate mortgage loans for sale during the nine months ended September 30, 2021, down from $171.2 million in the same period of 2020, reflecting a decrease of approximately 29.8%[132]. - Net gains from mortgage loan sales for the nine months ended September 30, 2021, were $4.4 million, compared to $6.0 million for the same period in 2020, indicating a decline of 26.7%[132]. - Gain on sale of loans held-for-sale decreased by $1,643,000 or 27.2%, from $6,037,000 in 2020 to $4,394,000 in 2021, attributed to lower refinance activity[183].