Finward Bancorp 10-Q

fnwd20220331_10q.htm     UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549   FORM 10-Q   (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     For the quarterly period ended March 31, 2022 or   ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     For the transition period from ______ to ______   Commission File Number: 0-26128   Finward Bancorp (Exact name of registrant as specified in its charter)   Indiana 35-1927981 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)     9204 Columbia Avenue , Munster , Indiana 46321 (Address of principal executive offices) (ZIP code)   Registrant's telephone number, including area code: ( 219 ) 836‑4400     N/A     (Former name, former address and former fiscal year, if changed since last report)     Securities registered pursuant to Section 12(b) of the Act: None.   Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, no par value FNWD The NASDAQ Stock Market, LLC   Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes ☒         No ☐   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes ☒         No ☐   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller Reporting Company ☒ Emerging growth company ☐   If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐         No ☒   There were 4,294,709 shares of the registrant’s Common Stock, without par value, outstanding at May 16, 2022.             Finward Bancorp Index       Page   Number PART I. Financial Information       Item 1. Unaudited Financial Statements and Notes 1     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27     Item 3. Quantitative and Qualitative Disclosures about Market Risk 38     Item 4. Controls and Procedures 38     PART II. Other Information 39     SIGNATURES 40     EXHIBITS   31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer   31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer   32.1 Section 1350 Certifications   101 XBRL Interactive Data File             Part I – Financial Information Item 1. Financial Statements       Finward Bancorp Consolidated Balance Sheet       March 31, 2022     December 31,   (Dollars in thousands)   (unaudited)     2021                     ASSETS                                   Cash and non-interest bearing deposits in other financial institutions   $ 21,262     $ 12,725   Interest bearing deposits in other financial institutions     31,420       19,987   Federal funds sold     1,819       464                     Total cash and cash equivalents     54,501       33,176                     Certificates of deposit in other financial institutions     1,731       1,709                     Securities available-for-sale     464,320       526,889   Loans held-for-sale     1,420       4,987   Loans receivable, net of deferred fees and costs     1,439,728       966,720   Less: allowance for loan losses     ( 13,387 )     ( 13,343 ) Net loans receivable     1,426,341       953,377   Federal Home Loan Bank stock     3,038       3,247   Accrued interest receivable     7,427       5,444   Premises and equipment     45,773       31,385   Cash value of bank owned life insurance     31,378       31,440   Goodwill     22,774       11,109   Other intangible assets     5,998       3,126   Other assets     33,144       14,854                     Total assets   $ 2,097,845     $ 1,620,743                     LIABILITIES AND STOCKHOLDERS' EQUITY                                   Deposits:                 Non-interest bearing   $ 380,515     $ 295,294   Interest bearing     1,514,696       1,138,907   Total     1,895,211       1,434,201   Repurchase agreements     23,239       14,581   Borrowed funds     5       -   Accrued expenses and other liabilities     21,753       15,346                     Total liabilities     1,940,208       1,464,128                     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: March 31, 2022 - 4,294,136 December 31, 2021 - 3,480,701     -       -   Additional paid-in capital     68,386       30,430   Accumulated other comprehensive (loss) income     ( 33,462 )     4,276   Retained earnings     122,713       121,909                     Total stockholders' equity     157,637       156,615                     Total liabilities and stockholders' equity   $ 2,097,845     $ 1,620,743     See accompanying notes to consolidated financial statements.   1         Finward Bancorp Consolidated Statements of Income (unaudited)   (Dollars in thousands)   Quarter Ended March 31,       2022     2021   Interest income:                 Loans receivable   $ 13,286     $ 10,746   Securities     2,597       1,961   Other interest earning assets     11       20                     Total interest income     15,894       12,727                     Interest expense:                 Deposits     337       651   Repurchase agreements     16       10   Borrowed funds     6       20                     Total interest expense     359       681                     Net interest income     15,535       12,046   Provision for loan losses     -       578                     Net interest income after provision for loan losses     15,535       11,468                     Noninterest income:                 Fees and service charges     1,304       1,066   Gain on sale of loans held-for-sale, net     607       2,049   Wealth management operations     595       607   Gain on sale of securities, net     381       417   Increase in cash value of bank owned life insurance     252       169   Gain (loss) on sale of foreclosed real estate     -       ( 9 ) Other     5       14                     Total noninterest income     3,144       4,313                     Noninterest expense:                 Compensation and benefits     7,367       5,685   Data processing     3,054       674   Occupancy and equipment     1,500       1,372   Marketing     651       199   Federal deposit insurance premiums     219       180   Other     3,478       2,383                     Total noninterest expense     16,269       10,493                     Income before income tax expenses     2,410       5,288   Income tax expenses     275       745                     Net income   $ 2,135     $ 4,543                     Earnings per common share:                 Basic   $ 0.53     $ 1.31   Diluted   $ 0.53     $ 1.31                     Dividends declared per common share   $ 0.31     $ 0.31     See accompanying notes to consolidated financial statements.   2         Finward Bancorp Consolidated Statements of Comprehensive Income (Loss) (unaudited)   (Dollars in thousands)   Three Months Ended March 31,       2022     2021                     Net income   $ 2,135     $ 4,543                     Net change in net unrealized gains and losses on securities available-for-sale:                 Unrealized loss arising during the period     ( 47,389 )     ( 7,761 ) Less: reclassification adjustment for gains included in net income     ( 381 )     ( 417 ) Net securities loss during the period     ( 47,770 )     ( 8,178 ) Tax effect     10,032       1,717   Other comprehensive loss, net of tax     ( 37,738 )     ( 6,461 )                   Comprehensive loss, net of tax     ( 35,603 )     ( 1,918 )     See accompanying notes to consolidated financial statements.   Finward Bancorp Consolidated Statements of Changes in Stockholder's Equity (unaudited)                       Accumulated                               Additional     Other                       Common     Paid-in     Comprehensive     Retained     Total   (Dollars in thousands, except per share data)   Stock     Capital     (Loss)/Income     Earnings     Equity                                                                                       Balance at January 1, 2021   $ -     $ 29,987     $ 10,441     $ 111,261     $ 151,689                                             Net income     -       -       -       4,543       4,543   Other comprehensive loss, net of tax     -       -       ( 6,461 )     -       ( 6,461 ) Net surrender value of 1,711 restricted stock awards     -       ( 68 )     -       -       ( 68 ) Stock-based compensation expense     -       146       -       -       146   Cash dividends, $0.31 per share     -       -       -       ( 1,079 )     ( 1,079 )                                           Balance at March 31, 2021   $ -     $ 30,065     $ 3,980     $ 114,725     $ 148,770                                             Balance at January 1, 2022   $ -     $ 30,430     $ 4,276     $ 121,909     $ 156,615                                             Net income     -       -       -       2,135       2,135   Other comprehensive loss, net of tax     -       -       ( 37,738 )     -       ( 37,738 ) Net surrender value of 2,336 restricted stock awards     -       ( 115 )     -       -       ( 115 ) Stock-based compensation expense     -       169       -       -       169   Issuance of 795,423 shares at $47.75 per share, for acquisition of Royal Financial, Inc.     -       37,902       -       -       37,902   Cash dividends, $0.31 per share     -       -       -       ( 1,331 )     ( 1,331 )                                           Balance at March 31, 2022   $ -     $ 68,386     $ ( 33,462 )   $ 122,713     $ 157,637     See accompanying notes to consolidated financial statements.   3         Finward Bancorp Consolidated Statements of Cash Flows (unaudited)   (Dollars in thousands)   Three months ended March 31,       2022     2021   CASH FLOWS FROM OPERATING ACTIVITIES:                 Net income   $ 2,135     $ 4,543   Adjustments to reconcile net income to net cash provided by operating activities:                 Origination of loans for sale     ( 15,664 )     ( 49,083 ) Sale of loans originated for sale     19,760       57,876   Depreciation and amortization, net of accretion     1,191       1,043   Stock based compensation expense     169       146   Gain on sale of securities, net     ( 381 )     ( 417 ) Gain on sale of loans held-for-sale, net     ( 582 )     ( 2,026 ) Loss on sale of foreclosed real estate     -       9   Gain on cash value of bank owned life insurance     ( 252 )     ( 169 ) Gain on derivatives     ( 25 )     ( 23 ) Provision for loan losses     -       578   Net change in:                 Interest receivable     ( 1,983 )     ( 284 ) Other assets     1,504       2,643   Accrued expenses and other liabilities     ( 5,150 )     1,558   Net cash provided by operating activities     722       16,394                     CASH FLOWS FROM INVESTING ACTIVITIES:                 Proceeds from maturities of certificates of deposit in other financial institutions     223       423   Proceeds from maturities and pay downs of securities available-for-sale     9,225       27,287   Proceeds from sales of securities available-for-sale     16,236       6,904   Purchase of securities available-for-sale     ( 10,724 )     ( 54,540 ) Proceeds from bank owned life insurance     314       -   Net change in loans receivable     ( 20,094 )     ( 4,331 ) Proceeds of Federal Home Loan Bank Stock     1,512       -   Purchase of loans receivable     ( 2,113 )     ( 2,989 ) Purchase of premises and equipment, net     ( 1,219 )     ( 379 ) Proceeds from sale of foreclosed real estate     -       48   Cash and cash equivalents from acquisition activity, net     33,799       -   Net cash provided by (used in) investing activities     27,159       ( 27,577 )                   CASH FLOWS FROM FINANCING ACTIVITIES:                 Change in deposits     ( 14,025 )     64,355   Repayment of FHLB advances     -       ( 6,000 ) Net surrender value of restricted stock awards     ( 115 )     ( 68 ) Change in repurchase agreements and other borrowed funds     8,663       2,057   Dividends paid     ( 1,079 )     ( 1,074 ) Net cash (used in) provided by financing activities     ( 6,556 )     59,270   Net change in cash and cash equivalents     21,325       48,087   Cash and cash equivalents at beginning of period     33,176       19,922   Cash and cash equivalents at end of period   $ 54,501     $ 68,009                     SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                 Cash paid during the period for:                 Interest   $ 339     $ 690   Acquisition activity:                 Fair value of assets acquired, including cash and cash equivalents   $ 528,083     $ -   Value of goodwill and other intangible assets     14,884       -   Fair value of liabilities assumed     486,340       -   Cash paid for acquisition     18,725       -   Issuance of common stock for acquisition     37,902       -   Noncash activities:                 Dividends declared not paid     1,331       1,079   Securities purchased not settled     -       1,765     See accompanying notes to consolidated financial statements.   4     Finward Bancorp Notes to Consolidated Financial Statements (unaudited)     Note 1 - Basis of Presentation The consolidated financial statements include the accounts of Finward Bancorp (the “Bancorp” or “FNWD”), its wholly-owned subsidiaries NWIN Risk Management, Inc. (a captive insurance subsidiary) and Peoples Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, Peoples Service Corporation, NWIN, LLC, NWIN Funding, Incorporated, 1683 Real Estate LLC, and Columbia Development Company, LLC. The Bancorp’s business activities include being a holding company for the Bank as well as a holding company for NWIN Risk Management, Inc. The Bancorp’s earnings are primarily dependent upon the earnings of the Bank. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10 -Q and, therefore, do not include all disclosures required by U.S. generally accepted accounting principles for complete presentation of consolidated financial statements. In the opinion of management, the consolidated financial statements contain all adjustments necessary to present fairly the consolidated balance sheets of the Bancorp as of March 31, 2022, and December 31, 2021, and the consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and consolidated statements of cash flows for the three months ended March 31, 2022, and 2021. The income reported for the three month period ended March 31, 2022, is not necessarily indicative of the results to be expected for the full year.   The Notes to the Consolidated Financial Statements appearing in Finward Bancorp’s Annual Report on Form 10 -K ( 2021 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on net income.   Revision of Previously Issued Financial Statements   We have revised amounts reported in previously issued financial statements for the periods presented in this Quarterly Report on Form 10 -Q related to immaterial errors discovered during the second quarter of 2021. The errors relate to certain deferred costs booked related to our manufactured home loan product, which resulted in increased assets and understatements of expense in prior periods.   We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Quarterly Report on Form 10 -Q for the quarterly period ended March 31, 2021.   5     The following tables present the revisions to the line items of our previously issued financial statements to reflect the correction of the errors:   Consolidated Statement of Income   For the three months ending March 31, 2021   As Reported     Adjustment     As Revised   Compensation and benefits   $ 5,530     $ 155     $ 5,685   Total noninterest expense     10,338       155       10,493   Income before income tax expense     5,443       ( 155 )     5,288   Income tax expenses     764       ( 19 )     745   Net income     4,679       ( 136 )     4,543   Earnings per common share:                         Basic     1.35       ( 0.04 )     1.31   Diluted     1.35       ( 0.04 )     1.31     Consolidated Statements of Comprehensive Income (Loss)   For the three months ending March 31, 2021   As Reported     Adjustment     As Revised   Net income   $ 4,679     $ ( 136 )   $ 4,543   Comprehensive income, net of tax     ( 1,782 )     ( 136 )     ( 1,918 )   Consolidated Statements of Changes in Stockholders' Equity   Balance at January 1, 2021   As Reported     Adjustment     As Revised   Retained earnings   $ 112,494     $ ( 1,233 )   $ 111,261   Total equity     152,922       ( 1,233 )     151,689                             For the three months ending March 31, 2021                         Net income     4,679       ( 136 )     4,543   Retained earnings     116,094       ( 1,369 )     114,725   Total equity     150,139       ( 1,369 )     148,770     Consolidated Statements of Cash Flows   For the three months ending March 31, 2021   As Reported     Adjustment     As Revised   Net income   $ 4,679     $ ( 136 )   $ 4,543   Net change in other assets     2,662       ( 19 )     2,643   Net cash - operating activities     16,549       ( 155 )     16,394   Net change in loan     ( 4,486 )     155       ( 4,331 ) Net cash - investing activities     ( 27,732 )     155       ( 27,577 )     Note 2 - Use of Estimates Preparing financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan losses, fair values of foreclosed real estate, loan servicing rights, investment securities, deferred tax assets, goodwill, and the status of contingencies are particularly susceptible to material change in the near term.     Note 3 - Acquisition Activity On January 31, 2022, Finward Bancorp (“Finward”) completed its previously announced acquisition of Royal Financial, Inc., a Delaware corporation (“RYFL”), pursuant to an Agreement and Plan of Merger dated July 28, 2021 ( the “Merger Agreement”) between Finward and RYFL. The stockholders of both Finward and RYFL approved the Merger Agreement at the respective stockholder meetings of the companies held on December 13, 2021. Pursuant to the Merger Agreement, RYFL merged with and into Finward, with Finward as the surviving corporation (the “Merger”), and Royal Savings Bank, an Illinois state-chartered savings bank and wholly-owned subsidiary of RYFL, merged with and into Peoples Bank, the wholly-owned Indiana state-chartered commercial bank subsidiary of Finward, with Peoples Bank as the surviving bank.   Under the terms of the merger agreement, RYFL stockholders who owned 101 or more shares of RYFL common stock were permitted to elect to receive either 0.4609 shares of Finward common stock or $ 20.14 in cash, or a combination of both, for each share of RYFL common stock owned, subject to proration and allocation provisions such that 65 % of the shares of RYFL common stock outstanding immediately prior to the closing of the merger were converted into the right to receive shares of Finward common stock and the remaining 35 % of the outstanding RYFL shares were converted into the right to receive cash. Stockholders holding less than 101 shares of RYFL common stock received fixed consideration of $ 20.14 in cash per share and no stock consideration.   6     As a result of RYFL stockholder stock and cash elections and the related allocation and proration provisions of the merger agreement, Finward issued 795,423 shares of its common stock and paid cash consideration of approximately $ 18.7 million in the Merger. Based on the January 28, 2022, closing price of $ 47.75 per share of Finward common stock, the transaction had an implied valuation of approximately $ 56.7 million. In connection with the acquisition, Robert W. Youman, was appointed to the boards of directors of Finward and Peoples Bank effective as of the closing of the Merger. RYFL had a home office and eight branch offices in Cook County and DuPage County, Illinois. The acquisition has further expanded the Bank’s banking center network in Cook County and DuPage County, Illinois.   Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on the valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the final purchase price for the Royal acquisition is allocated as follows:   ASSETS         LIABILITIES         Cash and due from banks   $ 52,524   Deposits         Investment securities, available for sale     -   Non-interest bearing   $ 32,095   Certificate of deposit in other financial institutions     245   NOW accounts     63,639             Savings and money market     184,149   Total Loans     450,757   Certificates of deposits     195,153             Total Deposits     475,036   Premises and equipment, net     13,848             FHLB stock     1,303   Interest payable     75   Goodwill     11,664   Other liabilities     11,228   Core deposit intangible     3,220             Interest receivable     1,836             Other assets     7,569             Total assets purchased   $ 542,966             Common shares issued     37,902             Cash paid     18,725             Total purchase price   $ 56,627   Total liabilities assumed   $ 486,339     Final estimates of fair value on the date of acquisition have not been finalized yet. Prior to the end of the one -year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation prospectively. If any adjustments are made to the preliminary assumptions (provisional amounts), disclosures will be made in the notes to the financial statements of the amounts recorded in the current period earnings by line item that have been recorded in previous reporting periods as if the adjustments to the provisional amounts had been recognized as of the acquisition date.   Goodwill of approximately $ 11.7 million, which is the excess of the acquisition consideration over the fair value of net assets acquired, is expected to be recorded in the RYFL acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes. To the extent that management revises any of the above fair value adjustments as a result of its continuing evaluation, the amount of goodwill recorded in the RYFL acquisition will change.   Gross loans acquired during the RYFL transaction totaled $ 456.7 million. As of the three months ended March 31, 2022, the remaining outstanding principal of loans directly related to the RYFL acquisition total $ 443.8 million, of which $ 6.1 million are expected to be uncollectable.   Revenue, excluding all purchase accounting adjustments, attributed to RYFL totaled $ 3.2  million for the three months ended March 31, 2022.   7     The following pro-forma and earnings (unaudited) of the combined company are presented as if the RYFL merger had occurred on January 1, 2022 and January 1, 2021:       For the three months ended     For the three months ended   (in thousands)   March 31, 2022     March 31, 2021   Selected Financial Data                 Interest income   $ 17,589     $ 17,391   Interest expense     ( 460 )     ( 1,191 ) Recovery of (provision for) loan losses     -       ( 278 ) Non-interest income     3,283       4,516   Non-interest expense (1)     ( 14,397 )     ( 12,945 ) Income before provision for income taxes     6,015       7,493   Income tax expense     ( 1,032 )     ( 1,173 ) Net income   $ 4,983     $ 6,320                     Earnings per common share:                 Basic   $ 1.24     $ 1.82   Diluted   $ 1.24     $ 1.82     ( 1 ) Excludes $ 2.9 million in pre-tax merger expenses for the three months ended March 31, 2022.   As of the three months ended March 31, 2022, the Bancorp has recorded $2.9 million in pretax one -time merger expenses related to the RYFL acquisition, these expenses have been allocated to the following non-interest expense line items within the income statement:       Three months ended   Noninterest expense:   March 31, 2022   Compensation and benefits   $ 132   Data processing     1,929   Marketing     135   Other     656             Period merger expense   $ 2,852     8         Note 4 - Securities The estimated fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:       (Dollars in thousands)               Gross     Gross     Estimated       Cost     Unrealized     Unrealized     Fair       Basis     Gains     Losses     Value   March 31, 2022                                 U.S. government sponsored entities   $ 8,883     $ -     $ ( 681 )   $ 8,202   U.S. treasury securities     199       -       -       199   Collateralized mortgage obligations and residential mortgage-backed securities     178,431       45       ( 14,353 )     164,123   Municipal securities     317,000       1,727       ( 27,903 )     290,824   Collateralized debt obligations     2,173       -       ( 1,201 )     972   Total securities available-for-sale   $ 506,686     $ 1,772     $ ( 44,138 )   $ 464,320         (Dollars in thousands)               Gross     Gross     Estimated       Cost     Unrealized     Unrealized     Fair       Basis     Gains     Losses     Value   December 31, 2021                                 U.S. government sponsored entities   $ 8,883     $ -     $ ( 214 )   $ 8,669   U.S. treasury securities     400       -       -       400   Collateralized mortgage obligations and residential mortgage-backed securities     187,279       961       ( 3,539 )     184,701   Municipal securities     322,750       9,904       ( 527 )     332,127   Collateralized debt obligations     2,173       -       ( 1,181 )     992   Total securities available-for-sale   $ 521,485     $ 10,865     $ ( 5,461 )   $ 526,889     The estimated fair value of available-for-sale debt securities at March 31, 2022, by contractual maturity, were as follows. Securities not due at a single maturity date, primarily collateralized mortgage obligations and residential mortgage-backed securities, are shown separately.       (Dollars in thousands)       Available-for-sale               Estimated       Cost     Fair   March 31, 2022   Basis     Value   Due in one year or less   $ 389     $ 390   Due from one to five years     1,759       1,763   Due from five to ten years     30,204       29,468   Due over ten years     295,903       268,576   Collateralized mortgage obligations and residential mortgage-backed securities     178,431       164,123   Total   $ 506,686     $ 464,320     9     The contractual maturities and weighted average yields for the U.S. government securities, agency securities, municipal securities, and trust preferred securities at March 31, 2022, are summarized in the table below. Securities not due at a single maturity date, such as mortgage-backed securities and collateralized mortgage obligations are not included in the following table. The carrying values are stated in thousands ( 000’s ).   The weighted average yields were calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values. Yields presented are not on a tax-equivalent basis.       Within 1 Year     1 - 5 Years     5 - 10 Years     After 10 Years     Total       Amount     Yield     Amount     Yield     Amount     Yield     Amount     Yield     Amount   U.S. government sponsored entities:   $ -       0.00 %   $ -       0.00 %   $ 8,202       1.00 %   $ -       0.00 %   $ 8,202   AFS                                                                         U.S. treasury securities:                                                                         AFS     199       0.13 %     -       0.00 %     -       0.00 %     -       0.00 %     199   Municipal Securities:                                                                         AFS     191       4.84 %     1,763       4.13 %     21,266       3.56 %     267,604       2.87 %     290,824   Trust Preferred Securities:                                                                         AFS     -       0.00 %     -       0.00 %     -       0.00 %     972       1.57 %     972   Totals   $ 390       2.43 %   $ 1,763       4.13 %   $ 29,468       2.85 %   $ 268,576       2.87 %   $ 300,197     Sales of available-for-sale securities were as follows for the three months ended:       (Dollars in thousands)       March 31,     March 31,       2022     2021                     Proceeds   $ 16,236     $ 6,904   Gross gains     397       417   Gross losses     ( 16 )     -     Accumulated other comprehensive income/(loss) balances, net of tax, related to available-for-sale securities, were as follows:       (Dollars in thousands)       Unrealized gain/(loss)   Ending balance, December 31, 2021   $ 4,276   Current period change     ( 37,738 ) Ending balance, March 31, 2022   $ ( 33,462 )   Securities with market values of approximately $ 34.8 million and $ 39.5 million were pledged as of March 31, 2022, and December 31, 2021, respectively, as collateral for repurchase agreements, public funds, and for other purposes as permitted or required by law.   10     Securities with gross unrealized losses at March 31, 2022, and December 31, 2021, not recognized in income are as follows:       (Dollars in thousands)               Less than 12 months     12 months or longer     Total     Percentage of       Estimated             Estimated             Estimated             Total Portfolio       Fair     Unrealized     Fair     Unrealized     Fair     Unrealized     in Loss       Value     Losses     Value     Losses     Value     Losses     Position   March 31, 2022                                                         U.S. government sponsored entities   $ -     $ -     $ 8,202     $ ( 681 )   $ 8,202     $ ( 681 )     100.0 % Collateralized mortgage obligations and residential mortgage-backed securities     99,994       ( 7,368 )     60,792       ( 6,985 )     160,786       ( 14,353 )     98.0 % Municipal securities     232,220       ( 27,678 )     2,594       ( 225 )     234,814       ( 27,903 )     80.7 % Collateralized debt obligations     -       -       972       ( 1,201 )     972       ( 1,201 )     100.0 % Total temporarily impaired   $ 332,214     $ ( 35,046 )   $ 72,560     $ ( 9,092 )   $ 404,774     $ ( 44,138 )     87.2 % Number of securities             384               33               417                   (Dollars in thousands)               Less than 12 months     12 months or longer     Total     Percentage of       Estimated             Estimated             Estimated             Total Portfolio       Fair     Unrealized     Fair     Unrealized     Fair     Unrealized     in Loss       Value     Losses     Value     Losses     Value     Losses     Position   December 31, 2021                                                         U.S. government sponsored entities   $ 8,669     $ ( 214 )   $ -     $ -     $ 8,669     $ ( 214 )     100.0 % Collateralized mortgage obligations and residential mortgage-backed securities     126,373       ( 3,175 )     8,109       ( 364 )     134,482       ( 3,539 )     72.8 % Municipal securities     70,309       ( 527 )     -       -       70,309       ( 527 )     21.2 % Collateralized debt obligations     -       -       992       ( 1,181 )     992       ( 1,181 )     100.0 % Total temporarily impaired   $ 205,351     $ ( 3,916 )   $ 9,101     $ ( 1,545 )   $ 214,452     $ ( 5,461 )     40.7 % Number of securities             133               5               138             Unrealized losses on securities have not been recognized into income because the securities are of high credit quality or have undisrupted cash flows. Management has the intent and ability to hold those securities for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and volatility in securities markets. The fair values are expected to recover as the securities approach maturity.     Note 5 - Loans Receivable   The Bancorp’s current lending programs are described below:   Residential Real Estate. The primary lending activity of the Bancorp has been the granting of conventional mortgage loans to enable borrowers to purchase existing homes, refinance existing homes, or construct new homes. Conventional loans are made up to a maximum of 97 % of the purchase price or appraised value, whichever is less. For loans made in excess of 80 % of value, private mortgage insurance is generally required in an amount sufficient to reduce the Bancorp’s exposure to 80% or less of the appraised value of the property. Loans insured by private mortgage insurance companies can be made for up to 97% of value. Loans closed with over 20 % of equity do not require private mortgage insurance because of the borrower’s level of equity investment.   Fixed rate loans currently originated generally conform to Freddie Mac guidelines for loans purchased under the one‑to‑four family program. Loan interest rates are determined based on secondary market yield requirements and local market conditions. Fixed rate mortgage loans with contractual maturities generally exceeding fifteen years and greater may be sold and/or classified as held for sale to control exposure to interest rate risk.   The Bancorp’s Adjustable Rate Mortgage Loans (“ARMs”) include offerings that reprice annually or are “Mini-Fixed.” The “Mini‑Fixed” mortgage reprices annually after a one, three, five, seven or ten year period. The ability of the Bancorp to successfully market ARM’s depends upon loan demand, prevailing interest rates, volatility of interest rates, public acceptance of such loans and terms offered by competitors.   Home Equity Line of Credit. The Bancorp offers a fixed and variable rate revolving line of credit secured by the equity in the borrower’s home. Both products offer an interest only option where the borrower pays interest only on the outstanding balance each month. Equity lines will typically require a second mortgage appraisal and a second mortgage lender’s title insurance policy. Loans are generally made up to a maximum of 89 % of the appraised value of the property less any outstanding liens.   Fixed term home improvement and equity loans are made up to a maximum of 85 % of the appraised value of the improved property, less any outstanding liens. These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months. All home equity loans are made on a direct basis to borrowers.   11     Commercial Real Estate and Multifamily Loans. Commercial real estate loans are typically made to a maximum of 80 % of the appraised value. Such loans are generally made on an adjustable rate basis. These loans are typically made for terms of 15 to 20 years. Loans with an amortizing term exceeding 15 years normally have a balloon feature calling for a full repayment within seven to ten years from the date of the loan. The balloon feature affords the Bancorp the opportunity to restructure the loan if economic conditions so warrant. Commercial real estate loans include loans secured by commercial rental units, apartments, condominium developments, small shopping centers, owner occupied commercial/industrial properties, hospitality units and other retail and commercial developments.   In originating commercial real estate loans, the Bancorp considers the feasibility of the project, the financial strength of the borrowers and lessees, the managerial ability of the borrowers, the location of the project and the economic environment. Management evaluates the debt coverage ratio and analyzes the reliability of cash flows, as well as the quality of earnings. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment.   Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records. Projects financed outside of the Bancorp’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Bancorp or projects that are underwritten according to the Bank’s underwriting standards.   Construction and Land Development. Construction loans on residential properties are made primarily to individuals and contractors who are under contract with individual purchasers. These loans are personally guaranteed by the borrower. The maximum loan-to-value ratio is 89 % of either the current appraised value or the cost of construction, whichever is less. Residential construction loans are typically made for periods of six months to one year.   Loans are also made for the construction of commercial properties. All such loans are made in accordance with well-defined underwriting standards. Generally if the loans are not owner occupied, these types of loans require proof of intent to lease and a confirmed end-loan takeout. In general, loans made do not exceed 80 % of the appraised value of the property. Commercial construction loans are typically made for periods not to exceed two years or date of occupancy, whichever is less.   Commercial Business. Although the Bancorp’s priority in extending various types of commercial business loans changes from time to time, the basic considerations in determining the makeup of the commercial business loan portfolio are economic factors, regulatory requirements and money market conditions. The Bancorp seeks commercial loan relationships from the local business community and from its present customers. Conservative lending policies based upon sound credit analysis governs the extension of commercial credit. The following loans, although not inclusive, are considered preferable for the Bancorp’s commercial loan portfolio: loans collateralized by liquid assets; loans secured by general use machinery and equipment; secured short‑term working capital loans to established businesses secured by business assets; short‑term loans with established sources of repayment and secured by sufficient equity and real estate; and unsecured loans to customers whose character and capacity to repay are firmly established.   Consumer Loans. The Bancorp offers consumer loans to individuals for personal, household or family purposes. Consumer loans are either secured by adequate collateral, or unsecured. Unsecured loans are based on the strength of the applicant’s financial condition. All borrowers must meet current underwriting standards. The consumer loan program includes both fixed and variable rate products.   Manufactured Homes. The Bancorp purchases fixed rate closed loans from a third party that are subject to Bancorp’s underwriting requirements and secured by manufactured homes. The maturity date on these loans can range up to 25 years. In addition, these loans have a reserve account held at the Bancorp.   Government Loans. The Bancorp is permitted to purchase non-rated municipal securities, tax anticipation notes and warrants within the local market area.   12     Loans receivable are summarized below:   (Dollars in thousands)                     March 31, 2022     December 31, 2021   Loans secured by real estate:                 Residential real estate   $ 444,753     $ 260,134   Home equity     34,284       34,612   Commercial real estate     408,375       317,145   Construction and land development     150,810       123,822   Multifamily     234,267       61,194   Total loans secured by real estate     1,272,489       796,907   Commercial business     112,396       115,772   Consumer     924       582   Manufactured homes     38,636       37,887   Government     8,176       8,991   Loans receivable     1,432,621       960,139   Add (less):                 Net deferred loan origination costs     6,700       6,810   Undisbursed loan funds     407       ( 229 ) Loans receivable, net of deferred fees and costs   $ 1,439,728     $ 966,720     (Dollars in thousands)   Beginning Balance     Charge-offs     Recoveries     Provisions     Ending Balance                                             The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended March 31, 2022:                                             Allowance for loan losses:                                         Residential real estate   $ 2,480     $ -     $ 21     $ ( 8 )   $ 2,493   Home equity     357       -       -       ( 3 )     354   Commercial real estate     5,515       -       -       15       5,530   Construction and land development     2,119       -       -       16       2,135   Multifamily     848       -       -       41       889   Commercial business     2,009       -       31       ( 99 )     1,941   Consumer     15       ( 10 )     2       38       45   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -   Total   $ 13,343     $ ( 10 )   $ 54     $ -     $ 13,387     The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended March 31, 2021:   Allowance for loan losses:                                         Residential real estate   $ 2,211     $ ( 4 )   $ 10     $ ( 41 )   $ 2,176   Home equity     276       ( 1 )     -       34       309   Commercial real estate     5,406       -       -       320       5,726   Construction and land development     1,405       -       -       182       1,587   Multifamily     626       -       -       54       680   Commercial business     2,508       -       8       36       2,552   Consumer     26       ( 6 )     4       ( 7 )     17   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -   Total   $ 12,458     $ ( 11 )   $ 22     $ 578     $ 13,047     13     A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectation, the deferred cost reserve is paid as an origination cost to the third party originator of the loan. The unamortized balance of the deferred cost reserve totaled $ 5.5 million and $ 5.8 million as of March 31, 2022 and December 31, 2021, respectively, and is included in net deferred loan origination fees and costs.   The Bancorp's impairment analysis is summarized below:       Ending Balances                                                     (Dollars in thousands)   Individually evaluated for impairment reserves     Collectively evaluated for impairment reserves     Loan receivables     Individually evaluated for impairment     Purchased credit impaired individually evaluated for impairment     Collectively evaluated for impairment                                                     The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at March 31, 2022:                                                                     Residential real estate   $ 17     $ 2,476     $ 444,753     $ 753     $ 2,908     $ 441,092   Home equity     4       350       34,284       135       134       34,015   Commercial real estate     440       5,090       408,375       1,496       2,965       403,914   Construction and land development     -       2,135       150,810       -       804       150,006   Multifamily     -       889       234,267       -       3,302       230,965   Commercial business     259       1,682       112,396       501       1,061       110,834   Consumer     -       45       924       -       21       903   Manufactured homes     -       -       38,636       -       -       38,636   Government     -       -       8,176       -       -       8,176   Total   $ 720     $ 12,667     $ 1,432,621     $ 2,885     $ 11,195     $ 1,418,541     The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2021:   Residential real estate   $ 17     $ 2,463     $ 260,134     $ 755     $ 1,016     $ 258,363   Home equity     4       353       34,612       147       137       34,328   Commercial real estate     386       5,129       317,145       1,600       -       315,545   Construction and land development     -       2,119       123,822       -       -       123,822   Multifamily     -       848       61,194       -       556       60,638   Commercial business     277       1,732       115,772       524       1,073       114,175   Consumer     -       15       582       -       -       582   Manufactured homes     -       -       37,887       -       -       37,887   Government     -       -       8,991       -       -       8,991   Total   $ 684     $ 12,659     $ 960,139     $ 3,026     $ 2,782     $ 954,331     14     The Bancorp's credit quality indicators are summarized below at March 31, 2022 and December 31, 2021:       Credit Exposure - Credit Risk Portfolio By Creditworthiness Category       March 31, 2022   (Dollars in thousands)   1 - 6     7     8                                             Loan Segment   Pass     Special mention     Substandard     Total   Residential real estate   $ 435,814     $ 2,308     $ 6,631     $ 444,753   Home equity     33,234       415       635       34,284   Commercial real estate     390,533       11,391       6,451       408,375   Construction and land development     146,407       4,403       -       150,810   Multifamily     229,705       1,532       3,030       234,267   Commercial business     108,605       3,395       396       112,396   Consumer     924       -       -       924   Manufactured homes     38,577       59       -       38,636   Government     8,176       -       -       8,176   Total   $ 1,391,975     $ 23,503     $ 17,143     $ 1,432,621           December 31, 2021   (Dollars in thousands)   1 - 6     7     8                                             Loan Segment   Pass     Special mention     Substandard     Total   Residential real estate   $ 253,472     $ 2,940     $ 3,722     $ 260,134   Home equity     33,565       415       632       34,612   Commercial real estate     301,572       12,011       3,562       317,145   Construction and land development     120,192       3,630       -       123,822   Multifamily     60,657       153       384       61,194   Commercial business     113,470       1,915       387       115,772   Consumer     582       -       -       582   Manufactured homes     37,828       59       -       37,887   Government     8,991       -       -       8,991   Total   $ 930,329     $ 21,123     $ 8,687     $ 960,139     The Bancorp has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of these grades by the Bancorp is uniform and conforms to regulatory definitions. The loan grading system is as follows:   1 – Superior Quality Loans in this category are substantially risk free. Loans fully collateralized by a Bank certificate of deposit or Bank deposits with a hold are substantially risk free.   2 – Excellent Quality The borrower generates excellent and consistent cash flow for debt coverage, excellent average credit scores, excellent liquidity and net worth and are reputable operators with over 15 years experience. Current and debt to tangible net worth ratios are excellent. Loan to value is substantially below policy and collateral condition is excellent.   3 – Great Quality The borrower generates more than sufficient cash flow to fund debt service and cash flow is improving. Average credit scores are very strong. Operators are reputable with significant years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are very strong. Loan to value is significantly below policy and collateral condition is significantly above average.   15     4 – Above Average Quality The borrower generates more than sufficient cash flow to fund debt service but cash flow trends may be stable or slightly declining. Average credit scores are strong. The borrower is a reputable operator with many years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are strong. Loan to value is below policy and collateral condition is above average.   5 – Average Quality Borrowers are considered creditworthy and can repay the debt in the normal course of business, however, cash flow trends may be inconsistent or fluctuating. Average credit scores are satisfactory and years of experience is acceptable. Liquidity and net worth are satisfactory. Current and debt to tangible net worth ratios are average. Loan to value is slightly below policy and the collateral condition is slightly above average.   6 – Pass Borrowers are considered credit worthy but financial condition may show signs of weakness due to internal or external factors. Cash flow trends may be declining annually. Average credit scores may be low but remain acceptable. Borrower has limited years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are below average. Loan to value is nearing policy limits and collateral condition is average.   7 – Special Mention A special mention asset has identified weaknesses that deserve Management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. There is still adequate protection by the current sound worth and paying capacity of the obligor or of the collateral pledged. The Special Mention rating is viewed as transitional and will be monitored closely.   Loans in this category may exhibit some of the following risk factors. Cash flow trends may be consistently declining or may be questionable. Debt coverage ratios may be at or near 1:1. Average credit scores may be very weak or the borrower may have minimal years of experience. Liquidity, net worth, current and debt to tangible net worth ratios may be very weak. Loan to value may be at policy limits or may exceed policy limits. Collateral condition may be below average.   8 – Substandard This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not corrected.   9 – Doubtful Such loans have been placed on nonaccrual status and may be heavily dependent upon collateral possessing a value that is difficult to determine or based upon some near-term event which lacks clear certainty. These loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of the principal balance highly improbable.   10 – Loss Loans that are considered uncollectible and of such little value that continuing to carry them as assets is not warranted.   Performing loans are loans that are paying as agreed and are approximately less than ninety days past due on payments of interest and principal.   During the three months ending March 31, 2022, four residential real estate loans totaling $ 194 thousand and one home equity loan totaling $ 7 thousand, were modified to include deferral of principal resulting troubled debt restructuring classification. During the three months ending March 31, 2021, two residential real estate loans to one customer totaling $ 150 thousand were modified to included deferral of principal resulting troubled debt restructuring classification. One residential real estate trouble debt restructuring loan totaling $ 39 thousand had subsequently defaulted during the three months ending March 31, 2021. All of the loans classified as troubled debt restructurings are also considered impaired. The valuation basis for the Bancorp’s troubled debt restructurings is based on the present value of cash flows, unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.   16     The Bancorp's individually evaluated impaired loans are summarized below:   (Dollars in thousands)                           For the three months ended   (unaudited)   As of March 31, 2022     March 31, 2022       Recorded Investment     Unpaid Principal Balance     Related Allowance     Average Recorded Investment     Interest Income Recognized   With no related allowance recorded:                                         Residential real estate   $ 3,575     $ 5,070     $ -     $ 2,629     $ 30   Home equity     248       263       -       255       7   Commercial real estate     3,610       3,722       -       2,188       10   Construction and land development     804       920       -       460       -   Multifamily     3,302       4,241       -       2,036       -   Commercial business     1,247       1,363       -       1,226       15   Consumer     21       21       -       11       -   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -                                             With an allowance recorded:                                         Residential real estate   $ 86     $ 86     $ 17     $ 87     $ 3   Home equity     21       21       4       22       1   Commercial real estate     851       852       440       843       -   Construction and land development     -       -       -       -       -   Multifamily     -       -       -       -       -   Commercial business     315       377       259       354       16   Consumer     -       -       -       -       -   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -                                             Total:                                         Residential real estate   $ 3,661     $ 5,156     $ 17     $ 2,716     $ 33   Home equity   $ 269     $ 284     $ 4     $ 277     $ 8   Commercial real estate   $ 4,461     $ 4,574     $ 440     $ 3,031     $ 10   Construction & land development   $ 804     $ 920     $ -     $ 460     $ -   Multifamily   $ 3,302     $ 4,241     $ -     $ 2,036     $ -   Commercial business   $ 1,562     $ 1,740     $ 259     $ 1,580     $ 31   Consumer   $ 21     $ 21     $ -     $ 11     $ -   Manufactured homes   $ -     $ -     $ -     $ -     $ -   Government   $ -     $ -     $ -     $ -     $ -     17                                 For the three months ended       As of December 31, 2021     March 31, 2021   (Dollars in thousands)   Recorded Investment     Unpaid Principal Balance     Related Allowance     Average Recorded Investment     Interest Income Recognized   With no related allowance recorded:                                         Residential real estate   $ 1,683     $ 3,017     $ -     $ 1,817     $ 22   Home equity     262       275       -       341       4   Commercial real estate     765       765       -       1,174       12   Construction & land development     -       -       -       -       -   Multifamily     556       647       -       708       5   Commercial business     1,205       1,324       -       1,467       18   Consumer     -       -       -       -       -   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -                                             With an allowance recorded:                                         Residential real estate   $ 88     $ 88     $ 17     $ 217     $ 5   Home equity     22       22       4       12       -   Commercial real estate     835       835       386       5,549       50   Construction & land development     -       -       -       -       -   Multifamily     -       -       -       -       -   Commercial business     392       392       277       737       11   Consumer     -       -       -       -       -   Manufactured homes     -       -       -       -       -   Government     -       -       -       -       -                                             Total:                                         Residential real estate   $ 1,771     $ 3,105     $ 17     $ 2,034     $ 27   Home equity   $ 284     $ 297     $ 4     $ 353     $ 4   Commercial real estate   $ 1,600     $ 1,600     $ 386     $ 6,723     $ 62   Construction & land development   $ -     $ -     $ -     $ -     $ -   Multifamily   $ 556     $ 647     $ -     $ 708     $ 5   Commercial business   $ 1,597     $ 1,716     $ 277     $ 2,204     $ 29   Consumer   $ -     $ -     $ -     $ -     $ -   Manufactured homes   $ -     $ -     $ -     $ -     $ -   Government   $ -     $ -     $ -     $ -     $ -     The Bancorp's age analysis of past due loans is summarized below:   (Dollars in thousands)   30-59 Days Past Due     60-89 Days Past Due     Greater Than 90 Days Past Due     Total Past Due     Current     Total Loans     Recorded Investments Greater than 90 Days Past Due and Accruing   March 31, 2022                                                         Residential real estate   $ 3,056     $ 1,388     $ 3,528     $ 7,972     $ 436,781     $ 444,753     $ 117   Home equity     37       18       534       589       33,695       34,284       -   Commercial real estate     1,665       805       1,015       3,485       404,890       408,375       163   Construction and land development     2,513       -       -       2,513       148,297       150,810       -   Multifamily     55       18       111       184       234,083       234,267       -   Commercial business     970       -       583       1,553       110,843       112,396       214   Consumer     -       -       -       -       924       924       -   Manufactured homes     316       204       -       520       38,116       38,636       -   Government     -       -       -       -       8,176       8,176       -   Total   $ 8,612     $ 2,433     $ 5,771     $ 16,816     $ 1,415,805     $ 1,432,621     $ 494                                                             December 31, 2021                                                         Residential real estate   $ 2,507     $ 824     $ 2,142     $ 5,473     $ 254,661     $ 260,134     $ 31   Home equity     169       67       565       801       33,811       34,612       34   Commercial real estate     231       1,960       944       3,135       314,010       317,145       91   Construction and land development     5,148       283       -       5,431       118,391       123,822       -   Multifamily     -       -       109       109       61,085       61,194       -   Commercial business     573       1,594       242       2,409       113,363       115,772       49   Consumer     -       3       -       3       579       582       -   Manufactured homes     633       171       -       804       37,083       37,887       -   Government     -       -       -       -       8,991       8,991       -   Total   $ 9,261     $ 4,902     $ 4,002     $ 18,165     $ 941,974     $ 960,139     $ 205     18     The Bancorp's loans on nonaccrual status are summarized below:   (Dollars in thousands)                     March 31, 2022     December 31, 2021   Residential real estate   $ 5,710     $ 4,651   Home equity     620       623   Commercial real estate     1,263       940   Construction and land development     -       -   Multifamily     447       455   Commercial business     374       387   Consumer     -       -   Manufactured homes     -       -   Government     -       -   Total   $ 8,414     $ 7,056     As a result of 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. At March 31, 2022, total purchased credit impaired loans with unpaid principal balances totaled $ 13.2 million with a recorded investment of $ 11.2 million. At December 31, 2021, total purchased credit impaired loans with unpaid principal balances totaled $ 4.2 million with a recorded investment of $ 2.8 million   As part of the fair value of loans receivable, there was a net fair value discount for loans acquired of $ 6.4 million at March 31, 2022, compared to $ 1.1 million at December 31, 2021.   Accretable yield, or income recorded for the three months ended March 31, is as follows:   (dollars in thousands)   Total   2021   $ 305   2022     107     Accretable yield, or income expected to be recorded in the future is as follows:   (dollars in thousands)   Total   Remainder 2022   $ 719   2023     804   2024     623   2025     605   2026 and thereafter     3,671   Total   $ 6,422       Note 6 – Intangibles and Acquisition Related Accounting The Bancorp established a goodwill balance totaling $ 11.7 million with the acquisition of Royal, and also maintains goodwill balances totaling $ 11.1 million from prior acquisitions. Goodwill is tested annually for impairment. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. The Bancorp’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of the Bancorp to provide quality, cost effective banking services in a competitive marketplace. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. There has not been any impairment of goodwill identified or recorded. Goodwill totaled $ 22.8 million and $11.1 million as of March 31, 2022 and December 31, 2021, respectively.   19     In addition to goodwill, a core deposit intangible was established with the acquisition of Royal and from previous acquisitons. The Bancorp had core deposit intangible balances of $ 6.0 million and $ 3.1 million as of March 31, 2022, and December 31, 2021, respectively. The table below summarizes the annual amortization:   The amortization recorded for the three months ended March 31, is as follows:   (dollars in thousands)   Total   2021   $ 248   2022   $ 347     Amortization to be recorded in future periods, is as follows:   (dollars in thousands)   Total   Current year     1,205   2023     1,522   2024     1,411   2025     688   5 years and thereafter     1,172   Total   $ 5,998     For the Royal acquisition, as part of the fair value of certificates of deposit, a fair value premium was established of $ 1.0 million. Approximately $ 129 thousand of amortization was taken as income during the three months ended March 31, 2022. It is estimated amortization to be recorded in future periods is as follows, an additional $ 412 thousand in 2022, $ 217 thousand in 2023, $ 124 thousand in 2024, $ 72 thousand in 2025, and $ 55 thousand thereafter.     Note 7 - Concentrations of Credit Risk The primary lending area of the Bancorp encompasses Lake County in northwest Indiana and Cook County in northeast Illinois, where collectively a majority of loan activity is concentrated. The Bancorp is also an active lender in Porter County, and to a lesser extent, LaPorte, Newton and Jasper counties in Indiana; and DuPage, Lake, and Will counties in Illinois. Substantially all loans are secured by specific items of collateral including residences, commercial real estate, land development, business assets and consumer assets.     Note 8 - Earnings per Share Earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations for the three months ended March 31, 2022, and 2021 are as follows:   (dollars in thousands except per share data)   Period ended March 31,       2022     2021   Basic earnings per common share:                 Net income as reported   $ 2,135     $ 4,543   Weighted average common shares outstanding     4,020,815       3,471,604   Basic earnings per common share   $ 0.53     $ 1.31                     Diluted earnings per common share:                 Net income as reported   $ 2,135     $ 4,543   Weighted average common shares outstanding     4,020,815       3,471,604   Weighted average common and dilutive potential common shares outstanding     4,020,815       3,471,604   Diluted earnings per common share   $ 0.53     $ 1.31     20         Note 9 - Stock Based Compensation The Bancorp’s 2015 Stock Option and Incentive Plan (the “Plan”), which was adopted by the Bancorp’s Board of Directors on February 27, 2015, and approved by the Bancorp’s shareholders on April 24, 2015, permits the grant of equity awards for up to 250,000 shares of common stock. Awards granted under the Plan may be in the form of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, performance shares, or performance units.   As required by the Stock Compensation Topic, companies are required to record compensation cost for stock options and awards provided to employees in return for employment service. For the three months ended March 31, 2022, stock based compensation expense of $ 169 thousand was recorded, compared to $ 146 thousand for the three months ended March 31, 2021. It is anticipated that current outstanding unvested awards will result in additional compensation expense of approximately $ 1.6 million through 2025 with an weighted average life of 1.9 years.   There were 18,891 shares of restricted stock granted during the first three months of 2022 compared to 17,716 shares granted during the first three months of 2021. Restricted stock awards are issued with an award price equal to the market price of the Bancorp’s common stock on the award date and vest between three and five years after the grant date. Forfeiture provisions exist for personnel that separate employment before the vesting period expires. A summary of restricted stock activity under the Bancorp’s Plan described above for the three months ended March 31, 2022, follows:   Non-vested Shares   Shares     Weighted Average Grant Date Fair Value   Non-vested at January 1, 2022     44,235     $ 42.33   Granted     18,891       47.96   Vested     ( 10,863 )     41.56   Forfeited     ( 513 )     44.17   Non-vested at March 31, 2022     51,750     $ 44.53       Note 10 – Change in Accounting Principles In December 2019, the FASB issued ASU 2019 - 12 which remove specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences where there are ownership changes in foreign investments; and exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. It also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacts changes in tax laws in interim periods. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Bancorp adopted ASU 2019 - 12 on January 1, 2021 and it did not have a material impact on its accounting and disclosures.     Note 11 - Upcoming Accounting Standards In June 2016, FASB issued ASU No. 2016 - 13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU includes increased disclosures and various changes to the accounting and measurement of financial assets including the Bancorp’s loans and available-for-sale debt securities. Each financial asset presented on the balance sheet would have a unique allowance for credit losses valuation account that is deducted from the amortized cost basis to present the net carrying value at the amount expected to be collected on the financial asset. The amendments in this ASU also eliminate the probable initial recognition threshold in current GAAP and instead, reflect an entity’s current estimate of all expected credit losses using reasonable and supportable forecasts. In October 2019, the FASB voted and approved proposed changes to the effective date of this ASU for smaller reporting companies, such as the Bancorp, and other non-SEC reporting entities. The approval changed the effective date of the ASU to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. The new credit loss guidance will be effective for the Bancorp's as of January 1, 2023. Upon adoption, the ASU will be applied using a modified retrospective transition method to the beginning of the first reporting period in which the guidance is effective. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Early adoption for all institutions is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is in the process of evaluating the impact adoption of this update will have on the Bancorp’s consolidated financial statements. This process of evaluation has engaged multiple areas of the Bancorp’s management in discussing loss estimation methods and the application of these methods to specific segments of the loans receivable portfolio. Management has been actively monitoring developments and evaluating the use of different methods allowed. Due to continuing development of understanding of application, additional time is required to understand how this ASU will affect the Bancorp’s financial statements. Management plans on running parallel calculations and finalizing a method or methods of adoption in time for the effective date.   21     In March 2020, the FASB issued ASU No. 2020 - 04 “Reference Rate Reform (Topic 848 ): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021 - 01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities as of March 12, 2020, through December 31, 2022. The Bancorp is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Bancorp believes the adoption of this guidance on activities after December 31, 2020, through December 31, 2022, will not have a material impact on the consolidated financial statements.   In October 2021, the FASB issued ASU 2021 - 08 related to accounting for acquired revenue contracts with customers in a business combination. The amendments in this update address diversity in practice and inconsistency related to recognition of an acquired contract liability and the effect of payment terms on subsequent revenue recognition for the acquirer. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2023, and we do not expect it to have a material effect on our consolidated financial statements.   In March 2022, the FASB issued ASU  2022 - 01 related to the portfolio layer method of hedge accounting. The amendments in this update clarify the accounting and promote consistency in reporting for hedges where the portfolio layer method is applied. This update is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. As we currently do not have items accounted for under the portfolio layer method of hedge accounting, we do not expect the update to have an effect on our consolidated financial statements.   In March 2022, the FASB issued ASU 2022 - 02, Financial Instruments—Credit Losses (Topic 326 ): Troubled Debt Restructurings and Vintage Disclosures, which addresses and amends areas identified by the FASB as part of its post-implementation review of the accounting standard that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by companies that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross writeoffs for financing receivables and net investment in leases by year of origination in the vintage disclosures. ASU 2022 - 02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities that have adopted the CECL accounting standard. Early adoption, however, is permitted if an entity has adopted the CECL accounting standard. The Bancorp is assessing ASU 2022 - 02 and its impact on its accounting and disclosures.     Note 12 – Derivative Financial Instruments The Bancorp uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Bancorp has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the Consolidated Balance Sheet and do not take into account the effects of master netting agreements. Master netting agreements allow the Bancorp to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Bancorp enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Bancorp agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Bancorp agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Bancorp’s results of operations.   22   The Bancorp enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (i.e., interest rate lock commitment). The interest rate lock commitments are considered derivatives and are recorded on the accompanying consolidated balance sheets at fair value in accordance with FASB ASC 815, Derivatives and Hedging.   The following table shows the amounts of non-hedging derivative financial instruments:   March 31, 2022             Asset derivatives     Liability derivatives   (Dollars in thousands)   Notational or contractual amount   Statement of Financial Condition classification   Fair value     Statement of Financial Condition classification     Fair value   Interest rate swap contracts   $ 93,890   Other assets   $ 4,990     Other liabilties     $ 4,990   Interest rate lock commitments     8,738   Other assets     166       N/A       -   Total   $ 102,628       $ 5,156             $ 4,990     December 31, 2021             Asset derivatives     Liability derivatives   (Dollars in thousands)   Notational or contractual amount   Statement of Financial Condition classification   Fair value     Statement of Financial Condition classification     Fair value   Interest rate swap contracts   $ 94,154   Other assets   $ 2,686     Other liabilties     $ 2,686   Interest rate lock commitments     7,837   Other assets     141       N/A       -   Total   $ 101,991       $ 2,827             $ 2,686     The following table shows the amounts included in the Statements of Income for non-hedging derivative financial instruments:         Three Months Ended         March 31,   (Dollars in thousands) Statement of Income Classification   2022     2021   Interest rate swap contracts Fees and service charges   $ -     $ ( 13 ) Interest rate lock commitments Gain on sale of loans held-for-sale, net     25       23   Total   $ 25     $ 10     The following table shows the offsetting of financial assets and derivative assets:       Gross Amounts of       Gross Amounts Offset in the Statement of     Net Amounts of Assets Presented in the Statement     Gross Amounts not Offset in the Statement of Financial Condition           (Dollars in thousands)   Recognized Assets      Financial Condition     of Financial Condition     Financial Instruments     Cash Collateral Received     Net Amount   March 31, 2022                                                 Interest rate swap contracts   $ 4,990     $ -     $ 4,990     $ -     $ -     $ 4,990   Interest rate lock commitments     166       -       166       -       -       166   Total   $ 5,156     $ -     $ 5,156     $ -     $ -     $ 5,156         Gross Amounts of     Gross Amounts Offset in the Statement of     Net Amounts of Liabilities Presented in the Statement       Gross Amounts not Offset in the Statement of Financial Condition           (Dollars in thousands)   Recognized Liabilities     Financial Condition     of Financial Condition     Financial Instruments     Cash Collateral Received     Net Amount   December 31, 2021                                                 Interest rate swap contracts   $ 2,686     $ -     $ 2,686     $ -     $ -     $ 2,686   Interest rate lock commitments     141       -       141       -       -       141   Total   $ 2,827     $ -     $ 2,827     $ -     $ -     $ 2,827     The following table shows the offsetting of financial liabilities and derivative liabilities:       Gross Amounts of     Gross Amounts Offset in the Statement of     Net Amounts of Liabilities Presented in the Statement of     Gross Amounts not Offset in the Statement of Financial Condition           (Dollars in thousands)   Recognized Liabilities     Financial Condition     Financial Condition     Financial Instruments     Cash Collateral Pledged     Net Amount   March 31, 2022                                                 Interest rate swap contracts   $ 4,990     $ -     $ 4,990     $ -     $ 3,930     $ 1,060   Total   $ 4,990     $ -     $ 4,990     $ -     $ 3,930     $ 1,060         Gross Amounts of     Gross Amounts Offset in the Statement of     Net Amounts of Liabilities Presented in the Statement of     Gross Amounts not Offset in the Statement of Financial Condition           (Dollars in thousands)   Recognized Liabilities     Financial Condition     Financial Condition     Financial Instruments     Cash Collateral Pledged     Net Amount   December 31, 2021                                                 Interest rate swap contracts   $ 2,686     $ -     $ 2,686     $ -     $ 3,930     $ ( 1,244 ) Total   $ 2,686     $ -     $ 2,686     $ -     $ 3,930     $ ( 1,244 )   23         Note 13 - Fair Value The Fair Value Measurements Topic establishes a hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Topic describes three levels of inputs that may be used to measure fair value:   Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.   Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.   Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.   The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges or pricing models utilizing significant observable inputs such as matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Different judgments and assumptions used in pricing could result in different estimates of value. In certain cases where market data is not readily available because of a lack of market activity or little public disclosure, values may be based on unobservable inputs and classified in Level 3 of the fair value hierarchy.   At the end of each reporting period, securities held in the investment portfolio are evaluated on an individual security level for other-than-temporary impairment in accordance with GAAP. Impairment is other-than-temporary if the decline in the fair value is below its amortized cost and it is probable that all amounts due according to the contractual terms of a debt security will not be received. Significant judgments are required in determining impairment, which include making assumptions regarding the estimated prepayments, loss assumptions and the change in interest rates. The Bancorp considers the following factors when determining an other-than-temporary impairment for a security: the length of time and the extent to which the market value has been less than amortized cost; the financial condition and near-term prospects of the issuer; the underlying fundamentals of the relevant market and the outlook for such market for the near future; an assessment of whether the Bancorp ( 1 ) has the intent to sell the debt securities or ( 2 ) more likely than not will be required to sell the debt securities before their anticipated market recovery. If either of these conditions is met, management will recognize other-than-temporary impairment. If, in management’s judgment, an other-than-temporary impairment exists, the cost basis of the security will be written down for the credit loss, and the unrealized loss will be transferred from accumulated other comprehensive loss as an immediate reduction of current earnings.   The Bancorp’s management utilizes a specialist to perform an other-than-temporary impairment analysis for each of its pooled trust preferred securities. The analysis is performed annually during December and utilizes analytical models used to project future cash flows for the pooled trust preferred securities based on current assumptions for prepayments, default and deferral rates, and recoveries. The projected cash flows are then tested for impairment consistent with GAAP. The other-than-temporary impairment testing compares the present value of the cash flows from quarter to quarter to determine if there is a “favorable” or “adverse” change. Other-than-temporary impairment is recorded if the projected present value of cash flows is lower than the book value of the security. To perform the annual other-than-temporary impairment analysis, management utilizes current reports issued by the trustee, which contain principal and interest tests, waterfall distributions, note valuations, collection detail and credit ratings for each pooled trust preferred security. In addition, a detailed review of the performing collateral was performed. Based on current market conditions and a review of the trustee reports, management performed an analysis of the pooled trust preferred securities and no additional impairment was taken at December 31, 2021. A specialist will be used to review all pooled trust preferred securities again at December 31, 2022.   The table below shows the credit loss roll forward on a year-to-date basis for the Bancorp’s pooled trust preferred securities that have been classified with other-than-temporary impairment:       (Dollars in thousands)       Collateralized debt obligations       other-than-temporary impairment   Ending balance, December 31, 2021   $ 173   Additions not previously recognized     -   Ending balance,March 31, 2022   $ 173     24     At March 31, 2022, trust preferred securities with a cost basis of $ 2.2 million continue to be in “payment in kind” status. These trust preferred securities classified as “payment in kind” are a result of not receiving the scheduled quarterly interest payments. For these trust preferred securities in “payment in kind” status, management anticipates to receive the unpaid contractual interest payments from the issuer, because of the self-correcting cash flow waterfall provisions within the structure of the securities. When a tranche senior to the Bancorp’s position fails the coverage test, the Bancorp’s interest cash flows are paid to the senior tranche and recorded as a reduction of principal. The coverage test represents an over collateralization target by stating the balance of the performing collateral as a percentage of the balance of the Bancorp’s tranche, plus the balance of all senior tranches. The principal reduction in the senior tranche continues until the appropriate coverage test is passed. As a result of the principal reduction in the senior tranche, more cash is available for future payments to the Bancorp’s tranche. Consistent with GAAP, management considered the failure of the issuer of the security to make scheduled interest payments in determining whether a credit loss existed. Management will not capitalize the “payment in kind” interest payments to the book value of the securities and will keep these securities in non-accrual status until the quarterly interest payments resume on a consistent basis.   Assets and Liabilities Measured at Fair Value on a Recurring Basis There were no transfers to or from Levels 1 and 2 during the three months ended March 31, 2022. Assets measured at fair value on a recurring basis are summarized below:               (Dollars in thousands)               Fair Value Measurements at March 31, 2022 Using   (Dollars in thousands)   Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Assets:                                 Interest rate swap contracts   $ 4,990     $ -     $ 4,990     $ -   Interest rate lock commitments     166       -       166       -   Available-for-sale debt securities:                                 U.S. government sponsored entities     8,202       -       8,202       -   U.S. treasury securities     199       -       199       -   Collateralized mortgage obligations and residential mortgage-backed securities     164,123       -       164,123       -   Municipal securities     290,824       -       290,824       -   Collateralized debt obligations     972       -       -       972   Total securities available-for-sale   $ 464,320     $ -     $ 463,348     $ 972                                     Liabilities:                                 Interest rate swap contracts   $ 4,990     $ -     $ 4,990     $ -                 (Dollars in thousands)               Fair Value Measurements at December 31, 2021 Using   (Dollars in thousands)   Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Assets:                                 Interest rate swap contracts   $ 2,686     $ -     $ 2,686     $ -   Interest rate lock commitments     141       -       141       -   Available-for-sale debt securities:                                 U.S. government sponsored entities     8,669       -       8,669       -   U.S. treasury securities     400       -       400       -   Collateralized mortgage obligations and residential mortgage-backed securities     184,701       -       184,701       -   Municipal securities     332,127       -       332,127       -   Collateralized debt obligations     992       -       -       992   Total securities available-for-sale   $ 526,889     $ -     $ 525,897     $ 992                                     Liabilities:                                 Interest rate swap contracts   $ 2,686     $ -     $ 2,686     $ -     25     A roll forward of available-for-sale securities, which require significant adjustment based on unobservable data, are presented in the following table:       (Dollars in thousands)       Estimated Fair Value Measurements Using Significant Unobservable Inputs (Level 3)       Available-for- sale securities   Beginning balance, January 1, 2021   $ 929   Principal payments     ( 5 ) Total unrealized losses, included in other comprehensive income     20   Ending balance, March 31, 2021   $ 944             Beginning balance, January 1, 2022   $ 992   Principal payments     -   Total unrealized gains, included in other comprehensive income     ( 20 ) Ending balance, March 31, 2022   $ 972     Assets measured at fair value on a non-recurring basis are summarized below:               (Dollars in thousands)               Fair Value Measurements at March 31, 2022 Using   (Dollars in thousands)   Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Impaired loans   $ 151     $ -     $ -     $ 151                 (Dollars in thousands)               Fair Value Measurements at December 31, 2021 Using   (Dollars in thousands)   Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Impaired loans   $ 896     $ -     $ -     $ 896     Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2 inputs. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore, qualifying the assets as Level 3 in the fair value hierarchy. The fair value of foreclosed real estate is similarly determined by using the results of recent real estate appraisals. The numerical range of unobservable inputs for these valuation assumptions is not meaningful to this presentation.   26     The following table shows carrying values and related estimated fair values of financial instruments as of the dates indicated. Estimated fair values are further categorized by the inputs used to measure fair value. Items that are not financial instruments are not included.       March 31, 2022     Estimated Fair Value Measurements at March 31, 2022 Using   (Dollars in thousands)   Carrying Value     Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Financial assets:                                         Cash and cash equivalents   $ 54,501     $ 54,501     $ 54,501     $ -     $ -   Certificates of deposit in other financial institutions     1,731       1,650       -       1,650       -   Loans held-for-sale     1,420       1,445       -       1,445       -   Loans receivable, net     1,426,341       1,382,030       -       -       1,382,030   Federal Home Loan Bank stock     3,038       3,038       -       3,038       -   Accrued interest receivable     7,427       7,427       -       7,427       -                                             Financial liabilities:                                         Non-interest bearing deposits     380,515       380,515       380,515       -       -   Interest bearing deposits     1,514,696       1,513,699       1,084,309       429,390       -   Repurchase agreements     23,239       23,150       12,939       10,211       -   Borrowed funds     5       5       5       -       -   Accrued interest payable     42       42       -       42       -         December 31, 2021     Estimated Fair Value Measurements at December 31, 2021 Using   (Dollars in thousands)   Carrying Value     Estimated Fair Value     Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)   Financial assets:                                         Cash and cash equivalents   $ 33,176     $ 33,176     $ 33,176     $ -     $ -   Certificates of deposit in other financial institutions     1,709       1,737       -       1,737       -   Loans held-for-sale     4,987       5,065       -       5,065       -   Loans receivable, net     953,377       951,744       -       -       951,744   Federal Home Loan Bank stock     3,247       3,247       -       3,247       -   Accrued interest receivable     5,444       5,444       -       5,444       -                                             Financial liabilities:                                         Non-interest bearing deposits     295,294       295,294       295,294       -       -   Interest bearing deposits     1,138,907       1,139,126       899,690       239,436       -   Repurchase agreements     14,581       14,579       12,842       1,737       -   Borrowed funds     -       -       -       -       -   Accrued interest payable     22       22       -       22       -     The following methods were used to estimate the fair value of financial instruments presented in the preceding table for the periods ended March 31, 2022, and December 31, 2021:   Cash and cash equivalent carrying amounts approximate fair value. Certificates of deposits in other financial institutions carrying amounts approximate fair value (Level 2 ). The fair values of securities available-for-sale are obtained from broker pricing (Level 2 ), with the exception of collateralized debt obligations, which are valued by a third -party specialist (Level 3 ). Loans held-for-sale comprise residential mortgages and are priced based on values established by the secondary mortgage markets (Level 1 ). The estimated fair value for net loans receivable is based on the exit price notion which is the exchange price that would be received to transfer the loans at the most advantageous market price in an orderly transaction between market participants on the measurement date (Level 3 ). Federal Home Loan Bank stock is estimated at book value due to restrictions that limit the sale or transfer of the security. Interest rate swap agreements, both assets and liabilities, are valued by a third -party pricing agent using an income approach (Level 2 ). Fair values of accrued interest receivable and payable approximate book value, as the carrying values are determined using the observable interest rate, balance, and last payment date.   Non-interest and interest bearing deposits, which include checking, savings, and money market deposits, are estimated to have fair values based on the amount payable as of the reporting date (Level 1 ). The fair value of fixed-maturity certificates of deposit (included in interest bearing deposits) are based on estimates of the rate the Bancorp would pay on similar deposits, applied for the time period until maturity (Level 2 ). Estimated fair values for short-term repurchase agreements, which represent sweeps from demand deposits to accounts secured by pledged securities, are estimated based on the amount payable as of the reporting date (Level 1 ). Longer-term repurchase agreements, with contractual maturity dates of three months or more, are based on estimates of the rate the Bancorp would pay on similar deposits, applied for the time period until maturity (Level 2 ). Short-term borrowings are generally only held overnight, therefore, their carrying amount is a reasonable estimate of fair value (Level 1 ). The fair value of FHLB Advances are estimated by discounting the future cash flows using quoted rates from the FHLB for similar advances with similar maturities (Level 2 ). The estimated fair value of other financial instruments, and off-balance sheet loan commitments, approximate cost and are not considered significant to this presentation.   27         Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   Summary Finward Bancorp (the “Bancorp”) is a financial holding company registered with the Board of Governors of the Federal Reserve System. Peoples Bank (the “Bank”), an Indiana commercial bank, and NWIN Risk Management, Inc., a captive insurance company, are wholly-owned subsidiaries of the Bancorp. The Bancorp has no other business activity other than being a holding company for the Bank and NWIN Risk Management, Inc. The following management’s discussion and analysis presents information concerning our financial condition as of March 31, 2022, as compared to December 31, 2021, and the results of operations for the three months ending March 31, 2022, and March 31, 2021. This discussion should be read in conjunction with the consolidated financial statements and other financial data presented elsewhere herein and with the financial statements and other financial data, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.   At March 31, 2022, the Bancorp had total assets of $2.1 billion, total loans receivable, net of deferred fees and costs of $1.4 billion and total deposits of $1.9 billion. Stockholders' equity totaled $157.6 million or 7.51% of total assets, with a book value per share of $36.71. Net income for the three months ended March 31, 2022, was $2.1 million, or $0.53 earnings per common share for both basic and diluted calculations. For the three months ended March 31, 2022, the return on average assets (ROA) was 0.44%, while the return on average stockholders’ equity (ROE) was 5.01%.   Recent Developments   Acquisition of Royal Financial, Inc. On January 31, 2022, the Bancorp completed its acquisition of Royal Financial, Inc. (“RYFL”) pursuant to an Agreement and Plan of Merger dated July 28, 2021 (the “Merger Agreement”) between the Bancorp and RYFL. Pursuant to the terms of the Merger Agreement, RYFL merged with and into the Bancorp, with the Bancorp as the surviving corporation (the “RYFL Merger”). Simultaneous with the RYFL Merger, Royal Savings Bank, an Illinois state-chartered savings bank and wholly-owned subsidiary of RYFL, merged with and into the Bank, with the Bank as the surviving institution.   Under the terms of the Merger Agreement, RYFL stockholders who owned 101 or more shares of RYFL common stock were permitted to elect to receive either 0.4609 shares of Finward common stock or $20.14 in cash, or a combination of both, for each share of RYFL common stock owned, subject to proration and allocation provisions such that 65% of the shares of RYFL common stock outstanding immediately prior to the closing of the merger were converted into the right to receive shares of Finward common stock and the remaining 35% of the outstanding RYFL shares were converted into the right to receive cash. Stockholders holding less than 101 shares of RYFL common stock received fixed consideration of $20.14 in cash and no stock consideration for each share of RYFL common stock.   As a result of RYFL stockholder stock and cash elections and the related allocation and proration provisions of the Merger Agreement, Finward issued 795,423 shares of its common stock and paid cash consideration of approximately $18.7 million in the RYFL Merger. Based on the January 28, 2022 closing price of $47.75 per share of Finward common stock, the transaction had an implied valuation of approximately $56.7 million. The acquisition further expanded the Bank’s banking center network in Cook County and DuPage County, Illinois, expanding the Bank’s full-service retail banking network.   Financial Condition During the three months ended March 31, 2022, total assets increased by $477.1 million (29.4%), with interest-earning assets increasing by $419.5 million (27.5%). Interest-earning assets totaled $1.9 billion at March 31, 2022, and $1.5 billion at December 31, 2021. Earning assets represented 92.6% of total assets at March 31, 2022, and 94.0% of total assets at December 31, 2021. The increase in total assets and interest earning assets for the three months was primarily the result of the acquisition of Royal.   Net loans receivable totaled $1.4 billion at March 31, 2022, compared to $966.7 million at December 31, 2021. The loan portfolio, which is the Bancorp’s largest asset, is the primary source of both interest and fee income. The Bancorp’s lending strategy emphasizes quality loan growth, product diversification, and competitive and profitable pricing.   28     The Bancorp’s end-of-period loan balances were as follows:       (unaudited)                       March 31,     December 31,   (Dollars in thousands)   2022     2021       Balance     % Loans     Balance     % Loans                                     Residential real estate   $ 444,753       31.0 %     260,134       33.0 % Home equity     34,284       2.4 %     34,612       5.4 % Commercial real estate     408,375       28.5 %     317,145       31.2 % Construction and land development     150,810       10.5 %     123,822       9.7 % Multifamily     234,267       16.4 %     61,194       5.7 % Consumer     924       0.1 %     582       0.1 % Manufactured Homes     38,636       2.7 %     37,887       1.8 % Commercial business     112,396       7.8 %     115,772       11.4 % Government     8,176       0.6 %     8,991       1.7 % Loans receivable     1,432,621       100.0 %     960,139       100.0 % Plus                                 Net deferred loans origination costs     6,700               6,810           Undisbursed loan funds     407               (229 )         Loans receivable, net of deferred fees and costs   $ 1,439,728             $ 966,720                                             Adjustable rate loans / loans receivable   $ 654,902       45.7 %   $ 542,975       56.6 %       (unaudited)               March 31,     December 31,       2022     2021                     Loans receivable to total assets     68.6 %     59.6 % Loans receivable to earning assets     74.1 %     63.4 % Loans receivable to total deposits     76.0 %     67.4 %   The following table sets forth certain information at March 31, 2022, regarding the dollar amount of loans in the Bancorp’s portfolio based on their contractual terms to maturity. Demand loans, loans having no schedule of repayment and no stated maturity, and overdrafts are reported as due in one year or less. Contractual principal repayments of loans do not necessarily reflect the actual term of the loan portfolio. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and because of enforcement of due-on-sale clauses, which give the Bancorp the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the property subject to the mortgage. The amounts are stated in thousands (000’s).       Maturing     After one     After five                       within     but within     but within     After               one year     five years     fifteen years     fifteen years     Total   Residential real estate   $ 9,363     $ 34,561     $ 107,164     $ 293,665       444,753   Home equity     3,767       21,328       8,826       363       34,284   Commercial real estate     22,631       111,991       270,678       3,075       408,375   Construction and land development     29,207       41,187       63,310       17,106       150,810   Multifamily     16,915       104,713       110,556       2,083       234,267   Farmland     -       -       -       -       -   Consumer     35       861       28       -       924   Manufactured Homes     -       59       10,760       27,817       38,636   Commercial business     44,914       51,377       15,585       520       112,396   Government     195       3,211       4,770       -       8,176   Total loans receivable   $ 127,027     $ 369,288     $ 591,677     $ 344,629     $ 1,432,621     The Bancorp is primarily a portfolio lender. Mortgage banking activities historically have been limited to the sale of fixed rate mortgage loans with contractual maturities greater than 15 years. These loans are identified as held for sale when originated and sold, on a loan-by-loan basis, in the secondary market. The Bancorp will also retain fixed rate mortgage loans with a contractual maturity greater than 15 years on a limited basis. During the three months ended March 31, 2022, the Bancorp originated $15.7 million in new fixed rate mortgage loans for sale, compared to $49.1 million during the three months ended March 31, 2021. Net gains realized from the mortgage loan sales totaled $607 thousand for the three months ended March 31, 2022, compared to $2.0 million for the three months ended March 31, 2021. At March 31, 2022, the Bancorp had $1.4 million in loans that were classified as held for sale, compared to $5.0 million at December 31, 2021.   Non-performing loans include those loans that are 90 days or more past due and those loans that have been placed on non-accrual status. At March 31, 2022, all non-performing loans are also accounted for on a non-accrual basis, except for two commercial business loans totaling $213 thousand, two commercial real estate loans totaling $163 thousand, and two residential real estate loans totaling $117 thousand that remained accruing and more than 90 days past due. The Bancorp at times will continue to classify loans as accruing, despite being over 90 days past due, for short periods of time when management has reason to believe payments are in process of being collected.   29     The Bancorp's nonperforming loans are summarized below: (Dollars in thousands)   (unaudited)           Loan Segment   March 31, 2022     December 31, 2021   Residential real estate   $ 5,827     $ 4,682   Home equity     620       657   Commercial real estate     1,426       1,031   Construction and land development     -       -   Multifamily     447       455   Commercial business     588       436   Consumer     -       -   Manufactured homes     -       -   Government     -       -   Total   $ 8,908     $ 7,261   Nonperforming loans to total loans     0.62 %     0.75 % Nonperforming loans to total assets     0.42 %     0.45 %   Substandard loans include non-performing loans and potential problem loans, where information about possible credit issues or other conditions causes management to question the ability of such borrowers to comply with loan covenants or repayment terms. No loans were internally classified as doubtful or loss at March 31, 2022 or December 31, 2021.   The Bancorp's substandard loans are summarized below: (Dollars in thousands)   (unaudited)           Loan Segment   March 31, 2022     December 31, 2021   Residential real estate   $ 6,631     $ 3,722   Home equity     635       632   Commercial real estate     6,451       3,562   Construction and land development     -       -   Multifamily     3,030       384   Commercial business     396       387   Consumer     -       -   Manufactured homes     -       -   Government     -       -   Total.   $ 17,143     $ 8,687     The increase in substandard loans is the result of loans acquired pursuant to the RYFL acquisition.   In addition to identifying and monitoring non-performing and other classified loans, management maintains a list of special mention loans. Special mention loans represent loans management is closely monitoring due to one or more factors that may cause the loan to become classified as substandard.   The Bancorp's special mention loans are summarized below: (Dollars in thousands)   (unaudited)           Loan Segment   March 31, 2022     December 31, 2021   Residential real estate   $ 2,308     $ 2,940   Home equity     415       415   Commercial real estate     11,391       12,011   Construction and land development     4,403       3,630   Multifamily     1,532       153   Commercial business     3,395       1,915   Consumer     -       -   Manufactured homes     59       59   Government     -       -   Total   $ 23,503     $ 21,123     30     A loan is considered impaired when, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. Typically, management does not individually classify smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as impaired, unless they are troubled debt restructurings.   Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. Purchased loans with evidence of credit quality deterioration since origination are considered purchased credit impaired loans. Expected future cash flows at the purchase date in excess of the fair value of loans are recorded as interest income over the life of the loans if the timing and amount of the future cash flows is reasonably estimable (“accretable yield”). The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference and represents probable losses in the portfolio. In determining the acquisition date fair value of purchased credit impaired loans, and in subsequent accounting, the Bancorp aggregates these purchased loans into pools of loans by common risk characteristics, such as credit risk rating and loan type. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses.   The Bancorp's impaired loans, including purchased credit impaired loans, are summarized below:   (Dollars in thousands)   (unaudited)           Loan Segment   March 31, 2022     December 31, 2021   Residential real estate   $ 3,661     $ 1,771   Home equity     269       284   Commercial real estate     4,461       1,600   Construction and land development     804       -   Multifamily     3,302       556   Commercial business     1,562       1,597   Consumer     21       -   Manufactured homes     -       -   Government     -       -   Total   $ 14,080     $ 5,808     The increase in impaired loans is the result of purchase credit impaired loans acquired pursuant to the RYFL acquisition.   At times, the Bancorp will modify the terms of a loan to forego a portion of interest or principal or reduce the interest rate on the loan to a rate materially less than market rates, or materially extend the maturity date of a loan as part of a troubled debt restructuring. The valuation basis for the Bancorp’s troubled debt restructurings is based on the present value of expected future cash flows; unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.   The Bancorp's troubled debt restructured loans are summarized below:   (Dollars in thousands)   (unaudited)           Loan Segment   March 31, 2022     December 31, 2021   Residential real estate   $ 532     $ 342   Home equity     88       83   Commercial real estate     645       747   Construction and land development     -       -   Multifamily     -       -   Commercial business     681       694   Consumer     -       -   Manufactured homes     -       -   Government     -       -   Total   $ 1,946     $ 1,866     At March 31, 2022, management is of the opinion that there are no loans, where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which will imminently result in such loans being classified as past due, non-accrual or a troubled debt restructure. Management does not presently anticipate that any of the non-performing loans or classified loans would materially affect future operations, liquidity or capital resources.   31     The allowance for loan losses (ALL) is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses, and decreased by charge-offs net of recoveries. A loan is charged‑off against the allowance by management as a loss when deemed uncollectible, although collection efforts continue and future recoveries may occur. The determination of the amounts of the ALL and provisions for loan losses is based on management’s current judgments about the credit quality of the loan portfolio with consideration given to all known relevant internal and external factors that affect loan collectability as of the reporting date. The appropriateness of the current period provision and the overall adequacy of the ALL are determined through a disciplined and consistently applied quarterly process that reviews the Bancorp’s current credit risk within the loan portfolio and identifies the required allowance for loan losses given the current risk estimates.   The Bancorp's provision for loan losses for the three months ended are   summarized below:                 (Dollars in thousands)                     (unaudited)           Loan Segment   March 31, 2022     March 31, 2021   Residential real estate   $ (8 )   $ (41 ) Home equity     (3 )     34   Commercial real estate     15       320   Construction and land development     16       182   Multifamily     41       54   Commercial business     (99 )     36   Consumer     38       (7 ) Manufactured homes     -       -   Government     -       -   Total   $ -     $ 578     The Bancorp's charge-off and recovery information is summarized below:           (Dollars in thousands)   (unaudited)       As of March 31, 2022   Loan Segment   Charge-off     Recoveries     Net Charge-offs   Residential real estate   $ -     $ 21     $ 21   Home equity     -       -       -   Commercial real estate     -       -       -   Construction and land development     -       -       -   Multifamily     -       -       -   Commercial business     -       31       31   Consumer     (10 )     2       (8 ) Manufactured homes     -       -           Government     -       -       -   Total   $ (10 )   $ 54     $ 44     The Bancorp's charge-off and recovery information is summarized below:           (Dollars in thousands)   (unaudited)       As of March 31, 2021   Loan Segment   Charge-off     Recoveries     Net Charge-offs   Residential real estate   $ (4 )   $ 10     $ 6   Home equity     (1 )     -       (1 ) Commercial real estate     -       -       -   Construction and land development     -       -       -   Multifamily     -       -       -   Farmland     -       -       -   Commercial business     -       8       8   Consumer     (6 )     4       (2 ) Manufactured homes     -       -           Government     -       -       -   Total   $ (11 )   $ 22     $ 11     32     The Bancorp's allowance to total loans and non-performing loans are   summarized below:                 (Dollars in thousands)   (unaudited)               March 31, 2022     December 31, 2021                     Allowance for loan losses   $ 13,387     $ 13,343   Total loans   $ 1,439,728     $ 966,720   Non-performing loans   $ 8,908     $ 7,261   ALL-to-total loans     0.93 %     1.38 % ALL-to-non-performing loans (coverage ratio)     150.3 %     183.8 %   The ALL provisions take into consideration management’s current judgments about the credit quality of the loan portfolio, loan portfolio balances, changes in the portfolio mix and local economic conditions. In determining the provision for loan losses for the current period, management has considered risks associated with the local economy, changes in loan balances and mix, and asset quality.   In addition, management considers additional reserves 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. At March 31, 2022, total purchased credit impaired loan reserves totaled $2.0 million compared to $1.4 million at December 31, 2021. 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. As part of the fair value of loans receivable, a net fair value discount was established for loans acquired and totaled $6.4 million at March 31, 2022, compared to $1.1 million at December 31, 2021. Details on these fair value marks and the additional reserves created can be found in Note 5, Loans Receivable.   The primary objective of the Bancorp’s investment portfolio is to provide for the liquidity needs of the Bancorp and to contribute to profitability by providing a stable flow of dependable earnings. Funds are generally invested in federal funds, interest bearing balances in other financial institutions, U.S. government securities, federal agency obligations, obligations of state and local municipalities and corporate securities. The securities portfolio, all of which is designated as available-for-sale, totaled $464.3 million at March 31, 2022, compared to $526.9 million at December 31, 2021, an increase of $62.6 million (11.9%). The decrease is attributable to increased unrealized losses within the portfolio and a return of liquidity from the securities portfolio. At March 31, 2022, the securities portfolio represented 23.9% of interest-earning assets and 22.1% of total assets compared to 34.6% of interest-earning assets and 32.5% of total assets at December 31, 2021.   The Bancorp’s end-of-period investment portfolio and other short-term investments and stock balances were as follows:       (unaudited)                               March 31,             December 31,           (Dollars in thousands)   2022             2021               Balance     % Securities     Balance     % Securities                                     U.S. government sponsored entities   $ 8,202       1.8 %   $ 8,669       1.6 % U.S. treasury securities     199       0.1 %     400       0.1 % Collateralized mortgage obligations and residential mortgage-backed securities     164,123       35.3 %     184,701       35.1 % Municipal securities     290,824       62.6 %     332,127       63.0 % Collateralized debt obligations     972       0.2 %     992       0.2 % Total securities available-for-sale   $ 464,320       100.0 %   $ 526,889       100.0 %       (unaudited)                               March 31,     December 31,     YTD           (Dollars in thousands)   2022     2021     Change               Balance     Balance     $     %                                     Interest bearing deposits in other financial institutions   $ 31,420     $ 19,987     $ 11,433       57.2 % Fed funds sold     1,819       464       1,355       292.0 % Certificates of deposit in other financial institutions     1,731       1,709       22       1.3 % Federal Home Loan Bank stock     3,038       3,247       (209 )     -6.4 %   The net increase in interest bearing deposits in other financial institutions and fed funds sold is primarily the result of the RYFL acquisition.   33     Deposits are a fundamental and cost-effective source of funds for lending and other investment purposes. The Bancorp offers a variety of products designed to attract and retain customers, with the primary focus on building and expanding relationships.   The Bancorp’s end-of-period deposit portfolio balances were as follows:       (unaudited)                               March 31,     December 31,     YTD   (Dollars in thousands)   2022     2021     Change       Balance     Balance     $     %                                     Checking   $ 731,340     $ 629,038     $ 102,302       16.3 % Savings     425,634       293,976       131,658       44.8 % Money market     307,850       271,970       35,880       13.2 % Certificates of deposit     430,387       239,217       191,170       79.9 % Total deposits   $ 1,895,211     $ 1,434,201     $ 461,010       32.1 %   The following table presents the average daily amount of deposits and average rates paid on such deposits for the periods indicated. The amounts are stated inthousands (000’s).       March 31, 2022                       (unaudited)     December 31, 2021       Amount     Rate %     Amount     Rate %   Noninterest bearing demand deposits   $ 343,176       -     $ 280,900       -   Interest bearing demand deposits     336,441       0.06       297,012       0.08   MMDA accounts     308,377       0.11       253,468       0.13   Savings accounts     388,087       0.05       277,839       0.06   Certificates of deposit     361,539       0.16       271,882       0.46   Total deposits   $ 1,737,620       0.08     $ 1,381,101       0.18     As of March 31, 2022, and December 31, 2021, approximately $549.7 million and $452.0 million, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.   The overall increase in total deposits is a result of the RYFL acquisition, as well as management’s sales efforts along with customer preferences for competitively priced short-term liquid investments.   The Bancorp’s borrowed funds are primarily used to fund asset growth not supported by deposit generation. The Bancorp’s end-of-period borrowing balances were as follows:       (unaudited)                               March 31,     December 31,     YTD   (Dollars in thousands)   2022     2021     Change       Balance     Balance     $     %                                     Repurchase agreements   $ 23,239     $ 14,581     $ 8,658       59.4 % Borrowed funds     5       -       5       100.0 % Total borrowed funds   $ 23,244     $ 14,581     $ 8,663       59.4 %   Repurchase agreements increased as part of normal account fluctuations within that product line.   Liquidity and Capital Resources For the Bancorp, liquidity management refers to the ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, and pay dividends and operating expenses. Because profit and liquidity are often conflicting objectives, management attempts to maximize the Bank’s net interest margin by making adequate, but not excessive, liquidity provisions. Furthermore, funds are managed so that future profits will not be significantly impacted as funding costs increase.   Changes in the liquidity position result from operating, investing and financing activities. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income. The primary investing activities include loan originations, loan repayments, investments in interest bearing balances in other financial institutions, and the purchase, sale, and maturity of investment securities. Financing activities focus almost entirely on the generation of customer deposits. In addition, the Bancorp utilizes borrowings (i.e., repurchase agreements, FHLB advances and federal funds purchased) as a source of funds.   34     During the three months ended March 31, 2022, cash and cash equivalents increased by $21.3 million compared to a $48.1 million increase for the three months ended March 31, 2021. The primary sources of cash and cash equivalents were cash and cash equivalents from acquisition activity, the sale of loans originated for sale, proceeds from the sale of securities, and proceeds from the maturity and paydown of securities. The primary uses of cash and cash equivalents were the purchase of securities, loan originations, and change in deposits. Cash provided by operating activities totaled $722 thousand for the three months ended March 31, 2022, compared to cash provided of $16.4 million for the three months ended March 31, 2021. Cash provided from operating activities was primarily a result of net income and sale of loans originated for sale, offset by loans originated for sale and net change in accrued expenses and other liabilites. Cash inflows from investing activities totaled $27.2 million for the current period, compared to cash outflows of $27.6 million for the three months ended March 31, 2021. Cash inflows from investing activities for the current three months were primarily related to the cash and cash equivalents from acquisition activity, net, and proceeds from the sales and maturities of securities, offset against the net change in loans receivable and purchase of securiites. Net cash outflows from financing activities totaled $6.6 million during the current period compared to net cash provided of $59.3 million for the three months ended March 31, 2021. The net cash outflows from financing activities were primarily a result of net change in deposits, offset against the change in other borrowed funds. On a cash basis, the Bancorp paid dividends on common stock of $1.1 million for the three months ended March 31, 2022 and March 31, 2021.   At March 31, 2022, outstanding commitments to fund loans totaled $241.7 million. Approximately 53.0% of the commitments were at variable rates. Standby letters of credit, which are conditional commitments issued by the Bancorp to guarantee the performance of a customer to a third party, totaled $11.5 million at March 31, 2022. Management believes that the Bancorp has sufficient cash flow and borrowing capacity to fund all outstanding commitments and letters of credit, while maintaining proper levels of liquidity.   Management strongly believes that maintaining a high level of capital enhances safety and soundness. During the three months ended March 31, 2022, stockholders' equity increased by $1.0 million (0.7%). During the three months ended March 31, 2022, stockholders’ equity was primarily increased by additional paid in capital related to the RYFL acquisition, offset against increased unrealized losses on available for sale securities. Increasing stockholders’ equity was net income of $2.1 million. On April 24, 2014 the Bancorp’s Board of Directors authorized a stock repurchase program to repurchase up to 50,000 shares of the Bancorp’s outstanding common stock, from time to time and subject to market conditions, on the open market or in privately negotiated transactions. The stock repurchase program does not expire and is only limited by the number of shares that can be purchased. The stock repurchase program will be reviewed annually by the Board of Directors. No shares were repurchased under the program during the first three months of 2022 or 2021. During 2022, 10,863 restricted stock shares vested under the Bancorp’s 2015 Stock Option and Incentive Plan outlined in Note 9 of the financial statements, of which 2,336 of these shares were withheld in the form of a net surrender to cover the withholding tax obligations of the vesting employees. The repurchase of these surrendered shares is considered outside of the scope of the formal stock repurchase program.   The Bank is subject to risk-based capital guidelines adopted by the FDIC. The regulations divide capital into multiple tiers. The first tier (Common Equity Tier 1 Capital) includes common shareholders’ equity, after deductions for various items including goodwill and certain other intangible assets, and after certain other adjustments. Common Equity Tier 1 Capital also includes accumulated other comprehensive income (for organizations that do not make opt-out elections). The next tier (Tier 1 Capital) is comprised of Common Equity Tier 1 Capital plus other qualifying capital instruments such as perpetual noncumulative preferred stock and junior subordinated debt issued to trusts, and other adjustments. The third tier (Tier 2 Capital) includes instruments such as subordinated debt that have a minimum original maturity of at least five years and are subordinated to the claims of depositors and general creditors, total capital minority interest not included in Tier 1 Capital, and limited amounts of the allowance for loan losses, less applicable regulatory adjustments and deductions. The Bank are required to maintain a Common Equity Tier 1 Capital ratio of 4.5%, a Tier 1 Capital ratio of 6%, and a Total Capital ratio (comprised of Tier 1 Capital plus Tier 2 Capital) of 8%. In addition, the capital regulations provide for a minimum leverage ratio (Tier 1 capital to adjusted average assets) of 4%.   In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions by the institution and certain discretionary bonus payments to management if an institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.   35     The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required the FRB to set minimum capital levels for bank holding companies that are as stringent as those required for insured depository subsidiaries. However, under the FRB’s “Small Bank Holding Company” exemption from consolidated bank holding company capital requirements, bank holding companies and savings and loan holding companies with less than $3 billion in consolidated assets, such as the Bancorp, are exempt from consolidated regulatory capital requirements, unless the FRB determines otherwise in particular cases.   During the three months ended March 31, 2022, the Bancorp’s and Bank’s regulatory capital ratios continued to be negatively impacted by regulatory requirements regarding collateralized debt obligations. The regulatory requirements state that for collateralized debt obligations that have been downgraded below investment grade by the rating agencies, increased risk based asset weightings are required. The Bancorp currently holds pooled trust preferred securities with a cost basis of $2.2 million. These investments currently have ratings that are below investment grade. As a result, approximately $8.6 million of risk-based assets are generated by the trust preferred securities in the Bancorp’s and Bank’s total risk based capital calculation.   In addition, the following table shows that, at March 31, 2022, and December 31, 2021, the Bank’s capital exceeded all applicable regulatory capital requirements. The dollar amounts are in millions.   (Dollars in millions)                                   Minimum Required To Be                       Minimum Required For     Well Capitalized Under Prompt       Actual     Capital Adequacy Purposes     Corrective Action Regulations   At March 31, 2022   Amount     Ratio     Amount     Ratio     Amount     Ratio   Common equity tier 1 capital to risk-weighted assets   $ 156.8       10.9 %   $ 65.0       4.5 %   $ 93.9       6.5 % Tier 1 capital to risk-weighted assets   $ 156.8       10.9 %   $ 86.7       6.0 %   $ 115.6       8.0 % Total capital to risk-weighted assets   $ 170.2       11.8 %   $ 115.6       8.0 %   $ 144.5       10.0 % Tier 1 capital to adjusted average assets   $ 156.8       8.2 %   $ 77.7       4.0 %   $ 97.2       5.0 %   (Dollars in millions)                                   Minimum Required To Be                       Minimum Required For     Well Capitalized Under Prompt       Actual     Capital Adequacy Purposes     Corrective Action Regulations   At December 31, 2021   Amount     Ratio     Amount     Ratio     Amount     Ratio   Common equity tier 1 capital to risk-weighted assets   $ 136.6       13.0 %   $ 47.4       4.5 %     N/A       N/A   Tier 1 capital to risk-weighted assets   $ 136.6       13.0 %   $ 63.3       6.0 %     N/A       N/A   Total capital to risk-weighted assets   $ 149.8       14.2 %   $ 84.3       8.0 %     N/A       N/A   Tier 1 capital to adjusted average assets   $ 136.6       8.6 %   $ 64.2       4.0 %     N/A       N/A     The Bancorp’s ability to pay dividends to its shareholders is entirely dependent upon the Bank’s ability to pay dividends to the Bancorp. Under Indiana law, the Bank may pay dividends from its undivided profits (generally, earnings less losses, bad debts, taxes and other operating expenses) as is considered expedient by the Bank’s Board of Directors. However, the Bank must obtain the approval of the Indiana Department of Financial Institutions (DFI) if the total of all dividends declared by the Bank during the current year, including the proposed dividend, would exceed the sum of retained net income for the year to date plus its retained net income for the previous two years. For this purpose, “retained net income,” means net income as calculated for call report purposes, less all dividends declared for the applicable period. An exemption from DFI approval would require that the Bank have been assigned a composite uniform financial institutions rating of 1 or 2 as a result of the most recent federal or state examination; the proposed dividend would not result in a Tier 1 leverage ratio below 7.5%; and that the Bank not be subject to any corrective action, supervisory order, supervisory agreement, or board approved operating agreement. The aggregate amount of dividends that may be declared by the Bank in 2022, without the need for qualifying for an exemption or prior DFI approval, is its 2022 net profits plus $21.4 million. Moreover, the FDIC and the Federal Reserve Board may prohibit the payment of dividends if it determines that the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of the Bank. On February 25, 2022, the Board of Directors of the Bancorp declared a first quarter dividend of $0.31 per share. The Bancorp’s first quarter dividend was paid to shareholders on April 4, 2022.   Results of Operations - Comparison of the Three Months Ended March 31, 2022, to the Three Months Ended March 31, 2021   For the three months ended March 31, 2022, the Bancorp reported net income of $2.1 million, compared to net income of $4.5 million for the three months ended March 31, 2021, a decrease of $2.4 million (53.0%). For the three months ended March 31, 2022, the ROA was 0.44%, compared to 1.18% for the three months ended March 31, 2021. The ROE was 5.01% for the three months ended March 31, 2022, compared to 11.94% for the three months ended March 31, 2021.   36     Net interest income for the three months ended March 31, 2022, was $15.5 million, an increase of $3.5 million (29.0%), compared to $12.0 million for the three months ended March 31, 2021. The weighted-average yield on interest-earning assets was 3.49% for the three months ended March 31, 2022, compared to 3.59% for the three months ended March 31, 2021. The weighted-average cost of funds for the three months ended March 31, 2022 was 0.08% compared to 0.20% for the three months ended March 31, 2021. The impact of the 3.49% return on interest earning assets and the 0.08% cost of funds resulted in an interest rate spread of 3.41% for the current three months, an increase from the 3.39% spread for the three months ended March 31, 2021. The net interest margin on earning assets was 3.41% for the three months ended March 31, 2022, and 3.40% for the three months ended March 31, 2021. On a tax equivalent basis, the Bancorp’s net interest margin was 3.63% for the three months ended March 31, 2022, compared to 3.59% for the three months ended March 31, 2021. The Bancorp believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully-taxable equivalent basis, as these measures provide useful information to make peer comparisons. Tax adjusted net interest margin represents a non-GAAP financial measure. See the non-GAAP reconciliation table immediately below and the section captioned “Non-GAAP Financial Measures” for further disclosure regarding non-GAAP financial measures.     (Dollars in thousands)   Three Months Ended   (unaudited)   March 31, 2022     March 31, 2021                     Calculation of tax adjusted net interest margin                 Net interest income   $ 15,535     $ 12,046   Tax adjusted interest on securities and loans     966       677   Adjusted net interest income     16,501       12,723   Total average earning assets     1,820,588       1,417,462   Tax adjusted net interest margin     3.63 %     3.59 %     Information relating to the average consolidated balance sheet and the yield on average earning assets and cost of average liabilities for the periods indicated are in the following table. Dividing the related interest, on an annualized basis, by the average balance of assets or liabilities drives the disclosed rates. Average balances are derived from daily balances.   Quarter-to-Date                                                 (Dollars in thousands)   Average Balances, Interest, and Rates   (unaudited)   March 31, 2022     March 31, 2021       Average Balance     Interest     Rate (%)     Average Balance     Interest     Rate (%)   ASSETS           `                                   Interest bearing deposits in other financial institutions   $ 22,295     $ 8       0.14     $ 51,688     $ 12       0.09   Federal funds sold     8,015       -       -       788       -       -   Certificates of deposit in other financial institutions     1,725       3       0.70       1,598       8       2.00   Securities available-for-sale     510,119       2,575       2.02       383,877       1,941       2.02   Loans receivable*     1,274,407       13,286       4.17       975,593       10,746       4.41   Federal Home Loan Bank stock     4,027       22       2.19       3,918       20       2.04   Total interest earning assets     1,820,588     $ 15,894       3.49       1,417,462     $ 12,727       3.59   Cash and non-interest bearing deposits in other financial institutions     20,183                       33,719                   Allowance for loan losses     (13,367 )                     (12,662 )                 Other noninterest bearing assets     127,943                       98,316                   Total assets   $ 1,955,347                     $ 1,536,835                                                                     LIABILITIES AND STOCKHOLDERS' EQUITY                                                 Total deposits   $ 1,737,620     $ 337       0.08     $ 1,348,160     $ 651       0.19   Repurchase agreements     19,390       16       0.33       14,479       10       0.28   Borrowed funds     6,091       6       0.39       2,967       20       2.70   Total interest bearing liabilities     1,763,101     $ 359       0.08       1,365,606     $ 681       0.20   Other noninterest bearing liabilities     21,872                       19,049                   Total liabilities     1,784,973                       1,384,655                   Total stockholders' equity     170,374                       152,180                   Total liabilities and stockholders' equity   $ 1,955,347                     $ 1,536,835                                                                     Net intrest spread     3.41 %                     3.39 %                 Net interest margin**     3.41 %                     3.40 %                 Ratio of interest-earning assets to interest-bearing liabilities   1.03 x                   1.04 x                   * Non-accruing loans have been included in the average balances. ** Net interest income divided by average interest-earning assets.   The increase in interest earning asset income for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is primarily a result of the RYFL acquisition. The decrease in interest bearing liability expense is primarily the result of the Bancorp adjusting deposit pricing to align with the current interest rate cycle.   37     The following table shows the change in noninterest income for the three months ending March 31, 2022, and March 31, 2021.   (Dollars in thousands)   Quarter Ended March 31,     3/31/2022 vs. 3/31/2021       2022     2021     $ Change     % Change   Noninterest income:                                 Fees and service charges     1,304       1,066       238       22.3 % Gain on sale of loans held-for-sale, net     607       2,049       (1,442 )     -70.4 % Wealth management operations     595       607       (12 )     -2.0 % Gain on sale of securities, net     381       417       (36 )     -8.6 % Increase in cash value of bank owned life insurance     252       169       83       49.1 % Gain (loss) on sale of foreclosed real estate     -       (9 )     9       -100.0 % Other     5       14       (9 )     -64.3 %                                   Total noninterest income     3,144       4,313       (1,169 )     -27.1 %   The decrease in gain on sale of loans is the result of significant refinance activity which started in 2020 and continued into the following year due to the economic and low rate environment, which resulted in more loans originated and sold. We anticipate the demand for mortgage loans will continue to revert to normal levels as borrowing rates on loans increase. The increase in fees and service charges for the three-month period ended March 31, 2022 compared to the three-month period ended March 31, 2021 is primarily the result of changes in customer usage of bank services.   The following table shows the change in noninterest expense for the three months ending March 31, 2022, and March 31, 2021.   (Dollars in thousands)   Quarter Ended March 31,     3/31/2022 vs. 3/31/2021       2022     2021     $ Change     % Change   Noninterest expense:                                 Compensation and benefits     7,367       5,685       1,682       29.6 % Data processing     3,054       674       2,380       353.1 % Occupancy and equipment     1,500       1,372       128       9.3 % Marketing     651       199       452       227.1 % Federal deposit insurance premiums     219       180       39       21.7 % Other     3,478       2,383       1,095       46.0 %                                   Total noninterest expense     16,269       10,493       5,776       55.0 %   For the three months ended March 31, 2022, the increase in compensation and benefits is primarily the result of the RYFL acquisition and management’s continued focus on talent management and retention. The increase in data processing expense in primarily the result of data conversion expenses related to the acquisition of RYFL, 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 is primarily related to the RYFL acquisition and related assets acquired in the transaction. The increase in marketing expense is primarily the result of the RYFL acquisition. The increase in other operating expenses is primarily the result of one-time expenses related to the acquisition of RYFL and continued investments in strategic initiatives focusing on growth of the organization.   Income tax expenses for the three months ended March 31, 2022, totaled $275 thousand, compared to income tax expense of $745 thousand for the three months ended March 31, 2021, a decrease of $470 thousand (63.1%). The combined effective federal and state tax rates for the Bancorp was 11.4% for the three months ended March 31, 2022, compared to 14.1% for the three months ended March 31, 2021. The Bancorp’s lower current period effective tax rate is a result of a greater increase to tax preferred income relative to earnings.   Critical Accounting Policies Critical accounting policies are those accounting policies that management believes are most important to the portrayal of the Bancorp’s financial condition and that require management’s most difficult, subjective or complex judgments. The Bancorp’s critical accounting policies from December 31, 2021 remain unchanged.   Forward-Looking Statements Statements contained in this report that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are also intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. The Bancorp cautions readers that forward-looking statements, including without limitation those relating to the Bancorp’s future business prospects, merger and acquisition activities, interest income and expense, net income, liquidity, and capital needs are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to, among other things, factors identified in this report, including those identified in the Bancorp’s 2021 Form 10-K.   38     Non-GAAP Financial Measures This filing includes certain financial measures that are identified as non-GAAP, including adjusted net interest income and tax adjusted net interest margin. The Bancorp provides these non-GAAP performance measures because they are used by management to evaluate and measure the Bancorp’s performance, which the Bancorp believes also is useful to assist investors in assessing the Bancorp’s operating performance. Where non-GAAP financial measures are used in this report, the most comparable GAAP measure, as well as the reconciliation to the most comparable GAAP measure, can be found in the tables referenced herein.   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.   Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution’s business and performance, they have limitations as analytical tools and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business operations and performance.   Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable.   Item 4. Controls and Procedures   (a) Evaluation of Disclosure Controls and Procedures . The Bancorp maintains disclosure controls and procedures (as defined in Sections 13a – 15(e) and 15d – 15(e)) of regulations promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to ensure that information required to be disclosed by the Bancorp in the reports that it files or submits under the "Exchange Act" is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Bancorp in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Bancorp's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. The Bancorp's Chief Executive Officer and Chief Financial Officer evaluate the effectiveness of the Bancorp's disclosure controls and procedures as of the end of each quarter. Based on that evaluation as of March 31, 2022, the Bancorp’s Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective as of that date in ensuring that information required to be disclosed by the Bancorp under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms .   (b)    Changes in Internal Control Over Financial Reporting . There was no change in the Bancorp's internal control over financial reporting identified in connection with the Bancorp’s evaluation of controls that occurred during the three months ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Bancorp's internal control over financial reporting.   39     PART II ‑ Other Information Item 1. Legal Proceedings The Bancorp and its subsidiaries, from time to time, are involved in legal proceedings in the ordinary course of business against its debtors and are defendants in legal actions arising from normal business activities. Management, after consultation with legal counsel believes that the ultimate liabilities, if any, resulting from these actions will not have a material adverse effect on the financial position of the Bank or on the consolidated financial position of the Bancorp.   Item 1A. Risk Factors Not Applicable.   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On April 24, 2014, the Bancorp’s Board of Directors authorized a stock repurchase program to repurchase up to 50,000 shares of the Bancorp’s outstanding common stock, from time to time and subject to market conditions, on the open market or in privately negotiated transactions. The stock repurchase program does not expire and is only limited by the number of shares that can be purchased. The stock repurchase program will be reviewed annually by the Board of Directors. No shares were repurchased during the three months ended March 31, 2022, under the stock repurchase program.   Period   Total Number of Shares Purchased     Average Price Paid per Share     Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs     Maximum Number of Shares That May Yet Be Purchased Under the Program(1)   January 1, 2022 – January 31, 2022     -       N/A       -       48,828   February 1, 2022 – February 28, 2022     -       N/A       -       48,828   March 1, 2022 – March 31, 2022     -       N/A       -       48,828       (1) The stock repurchase program was announced on April 24, 2014, whereby the Bancorp is authorized to repurchase up to 50,000 shares of the Bancorp’s common stock outstanding. There is no express expiration date for this program.   Item 3. Defaults Upon Senior Securities There are no matters reportable under this item.   Item 4. Mine Safety Disclosures Not Applicable   Item 5. Other Information None   Item 6. Exhibits   Exhibit     Number   Description 3.1   Restated Articles of Incorporation of Finward Bancorp (incorporated by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K filed with the SEC on March 2, 2022). 10.1   Amended and Restated Finward Bancorp 2015 Stock Option and Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed with the SEC on March 2, 2022). 31.1   Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. 31.2   Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. 32.1   Section 1350 Certifications. 101   The following materials from the Bancorp’s Form 10-Q for the quarterly period ended March 31, 2022, formatted in an XBRL Interactive Data File: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Changes in Stockholders’ Equity; (iv) Consolidated Statement of Comprehensive Income; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements, with detailed tagging of notes and financial statement schedules. 104   Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)   40     SIGNATURES   Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.         FINWARD BANCORP                   Date: May 16, 2022   /s/ Benjamin J. Bochnowski       Benjamin J. Bochnowski       President and Chief Executive Officer                   Date: May 16, 2022   /s/ Peymon S. Torabi         Peymon S. Torabi       Executive Vice President, Chief Financial       Officer and Treasurer       41