12 unchanged sentences
At December 31, 2022, stockholders' equity totaled $136.4 million, with book value per share at $31.73.
−Removed: Net income for 2021 was $15.0 million, or $4.30 basic and diluted earnings per common share.
+Added: Net income for 2022 was $15.1 million, or $3.60 diluted earnings per common share.
The return on average assets was 0.74%, while the return on average stockholders’
equity was 10.47%.
−Removed: Recent Developments
−Removed: Acquisition of Royal Financial, Inc.
On January 31, 2022, the Bancorp completed its acquisition of Royal Financial, Inc.
3 unchanged sentences
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.
−Removed: Stockholders holding less than 101 shares of RYFL common stock will have the right to receive fixed consideration of $20.14 in cash and no stock consideration for each share of RYFL common stock.
+Added: 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.
−Removed: 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.
−Removed: The acquisition further expanded the Bank’s banking center network in Cook County, Illinois, expanding the Bank’s full-service retail banking network to 30 banking centers.
−Removed: Page 46 of 108
+Added: Based on the closing price of Finward’s common stock on January 28, 2022, the transaction had an implied valuation of approximately $56.7 million.
+Added: 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
1 unchanged sentence
At December 31, 2022, interest‑earning assets totaled $1.9 billion and represented 92.1% of total assets.
−Removed: Loans totaled $966.7 million and represented 63.4% of interest-earning assets, 59.6% of total assets and 67.4% of total deposits.
+Added: Loans totaled $1.5 billion and represented 79.4% of interest-earning assets, 73.1% of total assets and 85.3% of total deposits.
The loan portfolio, which is the Bancorp’s largest asset, is a significant source of both interest and fee income.
9 unchanged sentences
Loans receivable, net of deferred fees and costs
+Added: Adjustable rate loans / loans receivable
Loans receivable to total assets
6 unchanged sentences
During the twelve months ended December 31, 2022, the Bancorp originated $44.9 million in new fixed rate mortgage loans for sale, compared to $153.1 million during the twelve months ended December 31, 2021.
+Added: During the twelve months ended December 31, 2022, the Bancorp originated $105.4 million in new mortgage loans retained in its portfolio, compared to $45.1 million during the twelve months ended December 31, 2021.
+Added: These retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 years or less, and the Bank continues to sell longer-duration fixed rate mortgages into the secondary market.
Net gains realized from the mortgage loan sales totaled $1.4 million for the twelve months ended December 31, 2022, compared to $5.3 million for the twelve months ended December 31, 2021.
At December 31, 2022, the Bancorp had $1.5 million in loans that were classified as held for sale, compared to $5.0 million at December 31, 2021.
−Removed: In addition, the Bancorp participates in the U.S.
−Removed: Small Business Administration’s Paycheck Protection Program (“PPP”), a program initiated to help small businesses maintain their workforces during the pandemic.
−Removed: As of December 31, 2021, the Bancorp approved 782 applications totaling $91.5 million for the first round, with an average loan size of approximately $117 thousand.
−Removed: These loans helped local business owners retain 10,758 employees based on the borrowers’
−Removed: applications.
−Removed: The Bancorp’s SBA lender fee is averaging approximately 3.80% for the first round of the program, and fees will be earned over the life of the associated loans.
−Removed: The first round of PPP closed in August of 2020.
−Removed: On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021, which included provisions for a second round of PPP funding in 2021.
−Removed: As of December 31, 2021, the Bancorp approved 420 applications totaling $37.5 million for the second round, with an average loan size of approximately $89 thousand.
−Removed: These loans will help local business owners retain 4,410 employees based on the borrowers’
−Removed: applications.
−Removed: The Bancorp’s SBA lender fee is averaging approximately 5.32% for this program, and fees will be earned over the life of the associated loans.
−Removed: As of December 31, 2021, the Bancorp had remaining loan balances under the Paycheck Protection Program totaling $22.1 million.
−Removed: Page 47 of 108
Non-performing loans include those loans that are 90 days or more past due and accruing and those loans that have been placed on non-accrual status.
−Removed: At December 31, 2021, all non-performing loans are also accounted for on a non-accrual basis, except for one commercial real estate loan totaling $91 thousand, two commercial business loans totaling $49 thousand, one home equity loan totaling $34 thousand, and one residential real estate loan totaling $31 thousand that remained accruing and more than 90 days past due.
+Added: At December 31, 2022, all non-performing loans are also accounted for on a non-accrual basis, except for two residential real estate loans totaling $166 thousand, and one consumer manufactured loan totaling $82 thousand that remained accruing and more than 90 days past due.
The Bancorp's nonperforming loans are summarized below:
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Residential real estate
9 unchanged sentences
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Residential real estate
5 unchanged sentences
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.
−Removed: Page 48 of 108
The Bancorp's special mention loans are summarized below:
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Residential real estate
14 unchanged sentences
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Residential real estate
6 unchanged sentences
unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.
−Removed: Page 49 of 108
The Bancorp's troubled debt restructured loans are summarized below:
2 unchanged sentences
December 31, 2021
−Removed: Number of Loans
−Removed: Recorded Investment
−Removed: Number of Loans
−Removed: Recorded Investment
Residential real estate
3 unchanged sentences
Manufactured homes
−Removed: The decrease in nonperforming, impaired, and substandard loans as of December 31, 2021, is due to the loan sale with charge off for a single large commercial real estate loan relationship, which operates a hotel, totaling $5,080 thousand.
−Removed: Nonperforming loans at December 31, 2021, also decreased due to the removal of various residential real estate loans from nonaccrual totaling $2,856 thousand.
−Removed: Substandard loans at December 31, 2021, also decreased due to the removal of various residential real estate loans totaling $2,665 thousand.
−Removed: Impaired loans at December 31, 2021, also decreased due to the removal of eight commercial business or commercial real estate customers with loans totaling $623 thousand due to loan pay off or refinance.
−Removed: The decrease in special mention loans as of December 31, 2021, is due to the removal of six commercial business, multifamily or commercial real estate customers with loans totaling $2,513 thousand because of loan risk rating change or loan pay off and the removal of various residential real estate and home equity loans totaling $945 thousand which was offset by the addition of seven commercial real estate or commercial business customers with loans totaling $2,854 thousand.
At December 31, 2022, management is of the opinion that there are no loans, except certain of those discussed above, 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.
4 unchanged sentences
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.
−Removed: Page 50 of 108
The Bancorp's provision for loan losses for the twelve months ended are summarized below:
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Residential real estate
5 unchanged sentences
(Dollars in thousands)
−Removed: As of December 31, 2021
+Added: As of the twelve months ended December 31, 2022
Net Charge-offs
15 unchanged sentences
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.
−Removed: Page 51 of 108
−Removed: The Bancorp's allowance to total loans and non-performing loans are summarized below:
+Added: The Bancorp's allowance to total loans and non-performing loans are
+Added: summarized below:
(Dollars in thousands)
+Added: December 31, 2022
+Added: December 31, 2021
Allowance for loan losses
6 unchanged sentences
Management has allocated reserves to both performing and non-performing loans based on current information available.
−Removed: At December 31, 2021, the Bank held no balances in foreclosed real estate, compared to $538 thousand and ten properties at December 31, 2020.
During 2022, net sales of foreclosed real estate totaled $93 thousand and net gains from the 2022 sales totaled $16 thousand.
1 unchanged sentence
Funds are generally invested in federal funds, interest bearing balances in other financial institutions, U.S.
−Removed: government securities, federal agency obligations, obligations of state and local municipalities and corporate securities.
−Removed: The securities portfolio, all of which is designated as available-for-sale, totaled $526.9 million at December 31, 2021, compared to $410.7 million at December 31, 2020, an increase of $116.2 million (28.3%).
−Removed: The increase in the securities portfolio during the year is a result of market value adjustments and investment of excess liquidity.
+Added: government securities, U.S.
+Added: treasury securities, federal agency obligations, obligations of state and local municipalities and corporate securities.
+Added: The securities portfolio totaled $370.9 million at December 31, 2022, compared to $526.9 million at December 31, 2021, a decrease of $156.0 million or 29.6%.
+Added: The decrease is attributable to increased unrealized losses within the portfolio and the use of cashflows from the securities portfolio to fund loan growth.
At December 31, 2022, the securities portfolio represented 19.5% of interest-earning assets and 17.9% of total assets compared to 34.6% of interest-earning assets and 32.5% of total assets at December 31, 2021.
−Removed: As of December 31, 2021, the Bancorp’s two investments in trust preferred securities are in “payment in kind”
+Added: As of December 31, 2022, the Bancorp’s two investments in trust preferred securities were in “payment in kind”
Payment in kind status results in a temporary delay in the payment of interest.
1 unchanged sentence
At December 31, 2022, the cost basis of the two trust preferred securities on non-accrual status totaled $2.2 million.
−Removed: Page 52 of 108
The Bancorp’s end-of-period investment portfolio and other short-term investments and stock balances were as follows:
(Dollars in thousands)
−Removed: Money market fund
government sponsored entities
9 unchanged sentences
Federal Home Loan Bank stock
−Removed: The net increase in interest bearing deposits in other financial institutions is primarily the result of the increase in customer deposits.
+Added: The net decrease in interest bearing deposits in other financial institutions is primarily the result of the timing of investments in interest earning assets relative to the inflow and outflow of deposits and repurchase agreements.
Deposits are a fundamental and cost-effective source of funds for lending and other investment purposes.
4 unchanged sentences
Total deposits
−Removed: The overall increase in total deposits is primarily a result of the Bancorp’s efforts to maintain and grow core deposits and customer preferences for the security and liquidity of the Bancorp’s deposit product offerings
+Added: The overall increase in total deposits was primarily a result of the Royal acquisition, the Bancorp’s efforts to maintain and grow core deposits, and customer preferences for the security and liquidity of the Bancorp’s deposit product offerings.
The Bancorp’s borrowed funds are primarily used to fund asset growth not supported by deposit generation.
5 unchanged sentences
Repurchase agreements increased as part of normal account fluctuations within that product line.
−Removed: Borrowed funds decreased as FHLB advances were paid down and matured during the year.
−Removed: Page 53 of 108
+Added: Borrowed funds increased as short-term FHLB advances were taken during the year, due to cyclical inflows and outflows of interest-earnings assets and interest-bearing liabilities.
Liquidity and Capital Resources
7 unchanged sentences
In addition, the Bancorp utilizes borrowings (i.e., repurchase agreements, FHLB advances and federal funds purchased) as a source of funds.
−Removed: During 2021, cash and cash equivalents increased $13.3 million compared to a decrease of $27.3 million for 2020.
−Removed: During 2021, he primary sources of cash and cash equivalents were the sale loans originated for sale, proceeds from the maturity and paydown of securities, proceeds from the sale of securities, growth of deposits, and proceeds from the maturity and paydown of loans receivable.
−Removed: The primary uses of cash and cash equivalents were origination of loans for sale and purchase of securities.
+Added: During 2022, cash and cash equivalents decreased $1.9 million compared to an increase of $13.3 million for 2021.
+Added: 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, proceeds from the maturity and paydown of securities, and proceeds from FHLB advances.
+Added: The primary uses of cash and cash equivalents were the purchase of securities, change in deposits, and loan originations.
During 2022, net cash from operating activities totaled $17.8 million, compared to $18.8 million for 2021.
−Removed: The decrease in cash in-flow from operating activities was primarily due to lower net income year over year, lower sale of loans originated for sale, and net change in accrued expenses and other liabilities.
+Added: 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 other assets, accrued expenses, and other liabilities.
Net cash outflows from investing activities totaled $1.1 million during 2022, compared to outflows of $127.7 million during 2021.
−Removed: The changes for the current year were primarily related to the decreased purchases of securities and net change in loans receivable.
−Removed: Net cash inflows from financing activities totaled $122.1 million in 2021, compared to net cash inflows of $138.0 million in 2020.
−Removed: The increase during 2021 was primarily due to the change in deposits.
−Removed: On a cash basis, the Bancorp paid dividends on common stock of $4.3 million during 2021 and 2020.
+Added: Cash outflows from investing activities were primarily related to the net change in loans receivable and purchase of securities, offset against the cash and cash equivalents from acquisition activity, net, and proceeds from the sales and maturities of securities.
+Added: Net cash outflows from financing activities totaled $18.5 million in 2022, compared to net cash inflows of $122.1 million in 2021.
+Added: The net cash outflows from financing activities were primarily a result of net change in deposits and repayment of FHLB advances, offset against the change in proceeds from FHLB advances.
During 2022, the Bancorp’s Board of Directors maintained dividends as earnings and capital continued to be sufficient to warrant the current dividend.
Management strongly believes that safety and soundness is enhanced by maintaining a high level of capital.
−Removed: Stockholders' equity totaled $156.6 million at December 31, 2021, compared to $151.7 million at December 31, 2020, an increase of $4.9 million (3.2%).
−Removed: The increase was primarily the result of net income of $15.0 million, offset against change in net unrealized gains of available for sale securities of $6.2 million and dividends of $4.3 million.
+Added: Stockholders' equity totaled $136.4 million at December 31, 2022, compared to $156.6 million at December 31, 2021, a decrease of $20.2 million (3.2%).
+Added: The decrease was primarily the result of an increase in net unrealized losses of available for sale securities of $68.6 million and dividends of $5.3 million, offset against issuance of shares for the acquisition of Royal of $38.0 million and net income of $15.1 million.
At December 31, 2022, book value per share was $31.73 compared to $45.00 for 2021.
7 unchanged sentences
Corrective Action Regulations
−Removed: At December 31, 2021
+Added: December 31, 2022
Common equity tier 1 capital to risk-weighted assets
10 unchanged sentences
and that the Bank not be subject to any corrective action, supervisory order, supervisory agreement, or board approved operating agreement.
−Removed: The aggregate amount of dividends that may be declared by the Bank in 2021, without the need for qualifying for an exemption or prior DFI approval, is its 2021 net profits plus $21.4 million.
+Added: 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 2023 net profits.
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.
1 unchanged sentence
The Bancorp’s fourth quarter dividend was paid to shareholders on January 6, 2023.
−Removed: Page 54 of 108
Results of Operations –
Comparison of 2022 to 2021
−Removed: Net income for 2021 was $15.0 million, compared to $15.9 million for 2020, a decrease of $969 thousand (6.1%).
−Removed: The twelve-month earnings decrease is primarily related to higher noninterest expense and lower noninterest income.
+Added: Net income for 2022 was $15.1 million, compared to $15.0 million for 2021, an increase of $117 thousand (0.8%).
+Added: The twelve-month earnings increase is primarily related to higher net interest income, offset again higher noninterest expense and lower noninterest income.
The earnings represent a return on average assets of 0.74% for 2022, compared to 0.95% for 2021.
1 unchanged sentence
Net interest income for 2022, was $67.1 million, an increase of $18.6 million (38.2%) from $48.6 million for 2021.
−Removed: During the year, the Bancorp’s interest earning assets were negatively impacted by lower yields, while interest expense was driven lower primarily by decreased cost of funds.
+Added: The increased net interest margin is primarily related to increased loan balances from the acquisition of Royal, organic loan growth, and the ability to manage deposit and borrowing costs to support earning asset growth.
The weighted-average yield on interest-earning assets was 3.81% for 2022, compared to 3.44% for 2021.
1 unchanged sentence
The impact of the 3.81% return on interest earning assets and the 0.26% cost of funds resulted in a net interest spread of 3.55% for 2022, compared to a net interest spread of 3.29% for 2021.
−Removed: During 2021, total interest income decreased by $966 thousand (1.9%) while total interest expense decreased by $3.7 million (63.8%).
+Added: During 2022, total interest income increased by $21.4 million (42.2%) while total interest expense increased by $2.8 million (134.9%).
The net interest margin was 3.56% for 2022, compared to 3.29% for 2021.
1 unchanged sentence
Comparing the net interest margin on a tax equivalent basis more accurately compares the returns on tax-exempt loans and securities to those on taxable interest-earning assets.
−Removed: The decrease in interest earning asset income for the year ended December 31, 2021, compared to the year ended December 31, 2020, is primarily related to continued decreased reinvestment rates in 2021 for loans, securities, and excess cash balances, as a result of the Federal Reserve cuts occurring in March 2020.
−Removed: The decrease in interest bearing liability expense is primarily the result of the Bancorp adjusting deposit and repurchase agreement pricing to align with the current interest rate cycle.
+Added: The increase in interest earning asset income for the year ended December 31, 2022, compared to the year ended December 31, 2021, is primarily related to increased reinvestment rates in 2022 for loans, securities, and excess cash balances, as a result of the Federal Reserve rate increases occurring though out 2022.
+Added: The increase in interest bearing liability expense is primarily the result of the Bancorp adjusting deposit and repurchase agreement pricing to align with the current interest rate cycle, along with increased borrowing costs as a result of the Federal Reserve rate increases.
The following table shows the change in noninterest income for the year ending December 31, 2022, and December 31, 2021.
(Dollars in thousands, except per share data)
−Removed: Year Ended December 31,
+Added: Twelve Months Ended December 31,
12/31/2022 vs.
−Removed: 12/31/2020   
Noninterest income:
Fees and service charges
−Removed: Gain on sale of loans held-for-sale, net
Wealth management operations
+Added: Gain on sale of loans held-for-sale, net
Gain on sale of securities, net
2 unchanged sentences
Total noninterest income
−Removed: The increase in fees and service charges is primarily the result of the Bancorp’s efforts to provide products and services to help customers be more successful, including debit card and ATM services.
−Removed: The decrease in gain on sale of loans is the result of significant refinance activity in the prior year due to the economic and rate environment, which resulted in more loans originated and sold.
−Removed: The increase in wealth management income is the result of the Bancorp’s continued focus on expanding its wealth management line of business.
−Removed: The decrease in gains on the sale of securities is a result of current market conditions and actively managing the portfolio.
−Removed: Page 55 of 108
+Added: The increase in fees and service charges is primarily the result of the acquisition of Royal and the resulting increase in our customer base.
+Added: The decrease in wealth management operations is the result of lower fee income year over year due to market conditions.
+Added: The decrease in gain on sale of loans is the result of significant refinance activity in 2021 due to the economic and low-rate environment, which resulted in more loans originated and sold in 2021 compared to 2022.
+Added: We expect demand for fixed rate mortgage loans held-for-sale in the secondary market to be lower as borrowing rates on loans increase.
+Added: The decrease in gains on the sale of securities is a result of current market conditions and actively repositioning the portfolio.
The following table shows the change in noninterest expense for the year ending December 31, 2022, and December 31, 2021.
(Dollars in thousands, except per share data)
−Removed: Year Ended December 31,
+Added: Twelve Months Ended December 31,
12/31/2022 vs.
−Removed: 12/31/2020   
Noninterest expense:
2 unchanged sentences
Data processing
+Added: Impairment charge on assets held for sale
Federal deposit insurance premiums
Professional services
+Added: Net loss recognized on sale of premises and equipment
Total noninterest expense
−Removed: The increase in compensation and benefits is primarily the result of management’s continued focus on talent management and retention.
−Removed: The increase in occupancy and equipment is primarily related to facilities improvement efforts aimed at enhancing technology and efficiency.
−Removed: The increase in data processing expense is primarily the result of increased system utilization and investment in technological advancements such as Salesforce and nCino.
−Removed: The increase in marketing expense is the result of increased marketing and rebranding initiatives.
−Removed: The increase in professional services is primarily the result of the Royal Financial acquisition.
−Removed: The increase in other operating expenses is primarily the result of investments in strategic initiatives focusing on growth of the organization, such as the acquisition of Royal Financial.
−Removed: The acquisition of RYFL is discussed in Note 2 of the financial statements.
−Removed: Income tax expenses for the year ended December 31, 2021, totaled $1.4 million, compared to income tax expense of $2.8 for the year ended December 31, 2020, a decrease of $1.4 million (49.0%).
+Added: The increase in compensation and benefits is primarily the result of the Royal acquisition, management’s continued focus on talent management, and wage inflation.
+Added: The increase in data processing expense is primarily the result of data conversion expenses related to the acquisition of Royal, increased system utilization due to growth of the Bank, and continued investment in technological advancements such as Salesforce and nCino.
+Added: The increase in occupancy and equipment expense is primarily related to the Royal acquisition and higher operating costs.
+Added: Marketing expenses have increased to enhance brand recognition in new markets and gain more wallet share.
+Added: The increase in impairment charge on assets held for sale is the result of impairment on the carrying value of branches held for sale.
+Added: The increase in federal deposit insurance premiums is primarily the result of growth of the bank’s average assets.
+Added: The increase in net loss recognized on sale of premises and equipment is the result of the sale of a branch to reduce future fixed costs, allowing for redeployment of a portion of occupancy expenses into building a digital-forward foundation so that Finward can better serve its customers.
+Added: The increase in other operating expenses is primarily the result of one-time expenses related to the acquisition of Royal, continued investments in strategic initiatives focusing on growth of the organization, and inflationary pressures.
+Added: Income tax expenses for the year ended December 31, 2022, totaled $1.5 million, compared to income tax expense of $1.4 for the year ended December 31, 2021, an increase of $64 thousand (4.5%).
The combined effective federal and state tax rates for the Bancorp was 8.9% for the year ended December 31, 2022, compared to 8.6% for the year ended December 31, 2021.
−Removed: The Bancorp’s lower current period effective tax rate is a result of a greater increase to tax preferred income relative to earnings.
+Added: The Bancorp’s higher current effective tax rate is a result of higher earnings relative to tax preferred income.
Critical Accounting Policies
10 unchanged sentences
Significant judgments are required in determining impairment, which include making assumptions regarding the estimated prepayments, loss assumptions and the change in interest rates.
−Removed: Page 56 of 108
We consider the following factors when determining an other-than-temporary impairment for a security:
41 unchanged sentences
Not applicable.
−Removed: Page 57 of 108
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.