Finward Bancorp — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income available to common stockholders was $1.4 million ($0.31 diluted EPS) for the quarter ended September 30, 2026, compared to $2.1 million ($0.48 diluted EPS) for the quarter ended June 30, 2026.
• Net interest income was $15.942 million, up from $15.180 million in the prior quarter.
• Net interest margin (non-GAAP, tax-equivalent) was 3.51% for the quarter, compared to 3.37% in the prior quarter.
• Total non-interest expense was $16.983 million, an increase from $14.857 million in the prior quarter, driven by merger-related costs.
• Efficiency ratio (non-GAAP) was 91.32% for the quarter, compared to 84.52% in the prior quarter.
• Return on equity was 3.10% for the quarter, down from 4.74% in the prior quarter.
• Return on assets was 0.27% for the quarter, down from 0.42% in the prior quarter.
• Tangible book value per share (non-GAAP) was $31.07 at September 30, 2026, down from $35.75 at June 30, 2026.
• Tangible common equity to tangible assets (non-GAAP) was 6.76% at September 30, 2026, down from 7.68% at June 30, 2026.
• Total assets were $2.014 billion at September 30, 2026, compared to $2.041 billion at June 30, 2026.
• Stockholders' equity was $157.8 million at September 30, 2026, compared to $178.3 million at June 30, 2026.

Guidance and Future Outlook:

• Management stated the company continues to make progress toward closing its merger with First Financial and believes the combination will benefit shareholders, customers, communities, and employees.
• Management aims to ensure a seamless transition that maximizes the promise of the merger.
• No specific forward-looking financial guidance or quantitative targets for future periods were provided in the release.

Business Segments and Product Lines:

• Aggregate loan portfolio totaled $1.50 billion at September 30, 2026, remaining flat compared to June 30, 2026.
• New commercial loan originations totaled $69.7 million in the quarter, down from $81.3 million in the prior quarter.
• Commercial real estate owner-occupied loans were $263.5 million (17.6% of loans); commercial real estate non-owner occupied loans were $332.4 million (22.2% of loans).
• Loans collateralized by office buildings within the non-owner occupied CRE portfolio totaled $31.5 million (2.1% of total loans).
• Total deposits were $1.76 billion at September 30, 2026, an increase of $25.9 million (1.5%) from June 30, 2026.
• Core deposits totaled $1.3 billion at September 30, 2026, representing 71.9% of total deposits.
• Non-interest-bearing deposits increased by $10.8 million to $281.5 million.
• Certificates of deposit decreased by $4.1 million to $493.3 million.
• Borrowings, federal funds purchased, and repurchase agreements totaled $59.8 million, a decrease of $35.5 million (37.2%) from the prior quarter.
• Securities available-for-sale decreased by $30.3 million to $279.9 million; yield on the portfolio increased to 2.33%.
• Non-interest income increased due to an $182,000 gain on the sale of a branch location.

Market and Competitive Landscape:

• Rapid increases in interest rates contributed positively to loan yields and net interest margin.
• The same rate increases resulted in higher unrealized losses in the bond portfolio.
• The Bancorp operates 24 locations in Lake and Porter Counties in Northwest Indiana and Chicagoland.
• 71.7% of deposits are fully FDIC insured, and an additional 8.3% are backed by the Indiana Public Deposit Insurance Fund.
• Available liquidity totaled $623 million, including borrowing capacity from FHLB and Federal Reserve facilities.

Risks and Challenges:

• Merger-related expenses impacted the quarter, including $1.8 million in one-time compensation and benefits adjustments and $536,000 in professional and outside services expenses.
• Non-performing loans increased to $16.8 million (1.12% of total loans) from $16.5 million (1.10%) in the prior quarter.
• The increase in non-performers included a $1.1 million residential real estate loan and eight smaller loans, offset by the removal of thirteen loans totaling $1.2 million.
• Net loan charge-offs were $240,000 for the quarter, compared to net loan recoveries of $31,000 in the prior quarter.
• Allowance for credit losses (ACL) decreased to $17.5 million (1.17% of loans) from $17.7 million (1.18%) in the prior quarter.
• The coverage ratio (ACL to non-performing loans) was 104.5% at September 30, 2026, down from 106.9% at June 30, 2026.
• Forward-looking statements note risks regarding the ability to complete the merger, effects of the merger pendency, changes in interest rates, asset quality deterioration, and regulatory actions.

Management Commentary and Tone:

• Benjamin Bochnowski, CEO, noted the quarter was impacted by merger-related expenses but stated credit quality remained stable alongside the core banking business and customer base.
• Management expressed confidence that the merger with First Financial will provide benefits and emphasized a commitment to customers and communities during the transition.
• The tone indicated diligence in ensuring a seamless transition while acknowledging the temporary impact of merger costs on efficiency metrics.

Other Key Points:

• The Bancorp is in the process of a pending merger with First Financial, for which a Proxy Statement/Prospectus was mailed to shareholders around September 28, 2026.
• Dividends declared per common share were $0.12 for the quarter.
• The Bank recorded a net provision for credit losses of $124,000 for the quarter ($88,000 for loans and $36,000 for unused commitments).
• The Bank did not sell any securities during the quarter.
• Tier 1 leverage ratio was 9.29% as of September 30, 2026, exceeding regulatory requirements.
• No known credit exposures to non-depository financial institutions exist.