Finward Bancorp(FNWD) - 2019 Q1 - Quarterly Report

Financial Performance - Net income for the quarter ended March 31, 2019, was $2.2 million, resulting in earnings per common share of $0.66[91] - Net income for the quarter ended March 31, 2019, was $2.2 million, a decrease of $337 thousand (13.2%) from $2.6 million for the same quarter in 2018[137] - Noninterest income rose to $2,570 thousand for the quarter ended March 31, 2019, up 4.9% from $2,449 thousand in the same quarter of 2018, driven by a 30.3% increase in fees and service charges[142] - Total noninterest expense increased significantly to $10,291 thousand, a 47.7% rise from $6,967 thousand in the prior year, primarily due to acquisitions and increased operational costs[144] - The efficiency ratio for the quarter ended March 31, 2019, was 78.1%, compared to 67.8% for the same quarter in 2018, indicating a decline in operational efficiency[144] - Income tax expenses decreased to $340 thousand for the quarter ended March 31, 2019, down 18.1% from $415 thousand in the same quarter of 2018[145] - The combined effective federal and state tax rates decreased to 13.3% for the quarter ended March 31, 2019, compared to 13.9% for the same quarter in 2018[145] Asset and Loan Growth - As of March 31, 2019, total assets were $1.3 billion, total loans receivable were $865.0 million, and total deposits were $1.1 billion[91] - Total assets increased by $172.2 million (15.7%) during the three months ended March 31, 2019[98] - Net loans receivable increased to $856.8 million, up from $756.4 million at December 31, 2018[99] - Total interest earning assets increased to $1,134,840 thousand for the quarter ended March 31, 2019, compared to $875,474 thousand for the same period in 2018, representing a growth of 29.6%[140] - Outstanding commitments to fund loans totaled $191.4 million at March 31, 2019, with approximately 54.1% at variable rates[128] Acquisition Impact - The Bancorp completed the acquisition of AJSB on January 24, 2019, with an implied valuation of approximately $32.9 million[94] - The acquisition of AJSB expanded the Bank's full-service retail banking network to 22 banking centers[94] - The Bancorp issued 416,478 shares of common stock and paid approximately $15.4 million in cash as part of the AJSB acquisition[94] - Nonperforming loans increased by $1.1 million due to the AJSB acquisition, contributing to a total of $8,361 thousand in non-performing loans as of March 31, 2019, compared to $6,916 thousand at December 31, 2018[109] - Total deposits rose to $1,101,653 thousand as of March 31, 2019, marking an increase of $171,867 thousand (18.5%) from $929,786 thousand at December 31, 2018, primarily due to the AJSB acquisition[122] - Interest-bearing deposits in other financial institutions increased by $12,139 thousand (389.6%) to $15,255 thousand as of March 31, 2019, primarily due to the AJSB acquisition[119] Loan Quality and Reserves - Nonperforming loans totaled $8.361 million, representing 0.97% of total loans as of March 31, 2019[101] - The allowance for loan losses (ALL) increased to $8,236 thousand as of March 31, 2019, from $7,962 thousand at December 31, 2018, representing a coverage ratio of 98.5% for non-performing loans[116] - The Bancorp's troubled debt restructured loans decreased from $2,031 thousand on December 31, 2018, to $2,023 thousand on March 31, 2019, reflecting a reduction of $8 thousand[108] - The total purchased credit impaired loans reserves decreased to $3.0 million at March 31, 2019, from $3.1 million at December 31, 2018[115] Capital and Equity - Stockholders' equity increased by $21.8 million (21.5%) during the three months ended March 31, 2019, primarily due to net income and unrealized gains on available securities[129] - The Bancorp's Common Equity Tier 1 Capital ratio was 11.6% at March 31, 2019, exceeding the minimum required ratio of 4.5%[135] - The Bancorp's total capital to risk-weighted assets ratio was 12.6% at March 31, 2019, above the minimum required ratio of 8.0%[135] Interest Income and Expenses - Net interest income increased by $2.8 million (35.3%) to $10.6 million for the quarter ended March 31, 2019, compared to $7.8 million for the same quarter in 2018[138] - The weighted-average yield on interest-earning assets was 4.40% for the quarter ended March 31, 2019, up from 3.99% for the same period in 2018[138] - Total deposits reached $1,038,380 thousand, with an interest expense of $1,672 thousand, compared to $782,382 thousand and $675 thousand in the same quarter of 2018[140] - The increase in compensation and benefits was primarily due to the acquisition of AJSB and First Personal, contributing to a total of $4,676 thousand in expenses, up 21.1% from the previous year[144] Cash Flow and Investments - Cash provided from investing activities totaled $37.4 million for the current period, compared to cash outflows of $6.7 million for the same period in 2018[126] - Cash and cash equivalents increased by $43.7 million for the three months ended March 31, 2019, compared to a $9.4 million increase for the same period in 2018[126] - Foreclosed real estate totaled $1.5 million as of March 31, 2019, slightly down from $1.6 million at December 31, 2018, with net gains from sales amounting to $27 thousand for the quarter[117] - The gain on sale of securities decreased by 53.6% to $352 thousand, reflecting current market conditions[142]