−Removed: Finward Bancorp, an Indiana corporation (the “Bancorp” or “Finward”), was incorporated on January 31, 1994, and is the holding company for Peoples Bank, an Indiana-chartered commercial bank (the “Bank”).
−Removed: The Bank is a wholly owned subsidiary of the Bancorp.
−Removed: The Bancorp has no other business activity other than being a holding company for the Bank and the Bancorp’s earnings are primarily dependent upon the earnings of the Bank.
+Added: Business General
+Added: Finward Bancorp, an Indiana corporation (the “Company”), was incorporated on January 31, 1994, and is the holding company for Peoples Bank, an Indiana-chartered commercial bank (the “Bank”).
+Added: The Bank is a wholly owned subsidiary of the Company.
+Added: The Company has no other business activity other than being a holding company for the Bank and the Company’s earnings are primarily dependent upon the earnings of the Bank.
The Bank is primarily engaged in the business of attracting deposits from the general public and the origination of loans, mostly upon the security of single family residences and commercial real estate, as well as, construction loans and various types of consumer loans, commercial business loans and municipal loans, within its primary market areas of Lake and Porter Counties, in Northwest Indiana, and Cook County, Illinois.
−Removed: In addition, the Bancorp's Wealth Management Group currently provides estate and retirement planning, custodial services, guardianships, IRA accounts, investment agency accounts, serves as the personal representative of estates, and acts as corporate trustee for revocable and irrevocable trusts.
−Removed: On January 31, 2022, the Bancorp completed its acquisition of Royal Financial, Inc.
−Removed: (“RYFL”) pursuant to an Agreement and Plan of Merger dated July 28, 2021 (the “Merger Agreement”) between the Bancorp and RYFL.
−Removed: 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”).
−Removed: 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.
−Removed: 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 received fixed consideration of $20.14 in cash and no stock consideration for each share of RYFL common stock.
−Removed: 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 closing price of Finward’s common stock on January 28, 2022, 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 and DuPage County, Illinois, expanding the Bank’s full-service retail banking network.
−Removed: Page 4 of 122
−Removed: NWIN Risk Management, Inc., previously a captive insurance company incorporated in Nevada and a wholly-owned subsidiary of the Bancorp, was dissolved on August 9, 2023.
−Removed: NWIN Risk Management, Inc.
−Removed: was a captive insurance company that insured against certain risks unique to the operations of the Bancorp, the Bank, and their affiliated entities for which insurance may not have been available or economically feasible in the insurance marketplace.
−Removed: The Bancorp decided to dissolve NWIN Risk Management, Inc.
−Removed: In April 2023, the IRS issued proposed regulations which would establish many 831(b) “micro-captives” as listed transactions.
−Removed: Due to the significant complexity and uncertainty created by the organizational structure, the Bancorp decided to move forward and liquidate NWIN Risk Management, Inc., and simplify our organizational structure.
−Removed: The Bancorp has no immediate plans to replace the coverages previously provided by NWIN Risk Management.
−Removed: The captive insurance company structure under which NWIN Risk Management, Inc.
−Removed: operated was not examined by the IRS prior to its dissolution, however the Bancorp’s management believes the captive insurance structure of NWIN Risk Management, Inc.
−Removed: likely would be sustained if examined by the IRS.
−Removed: The Bancorp maintains its corporate office at 9204 Columbia Avenue, Munster, Indiana, from which it oversees the operation of its 26 branch locations.
−Removed: For further information, see “Properties.” The Bancorp’s Internet address is www.ibankpeoples.com.
+Added: In addition, the Company's Wealth Management Group provides estate and retirement planning, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, investment agency accounts, and serves as the personal representative of estates and acts as trustee for revocable and irrevocable trusts.
+Added: The Company monitors and evaluates financial performance on a Company-wide basis and the majority of the Company’s revenue is from the business of banking.
+Added: Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment.
+Added: The Bank’s deposit accounts are insured up to applicable limits by the Deposit Insurance Fund (“DIF”), which is administered by the Federal Deposit Insurance Corporation (“FDIC”), an agency of the federal government.
+Added: As the holding company for the Bank, the Company is subject to comprehensive examination, supervision and regulation by the Board of Governors of the Federal Reserve System (“FRB”), while the Bank is subject to comprehensive examination, supervision and regulation by both the FDIC and the Indiana Department of Financial Institutions (“DFI”).
+Added: The Bank is also subject to regulation by the FRB governing reserves required to be maintained against certain deposits and other matters.
+Added: The Bank is also a member of the Federal Home Loan Bank (“FHLB”) of Indianapolis, which is one of the eleven regional banks comprising the system of Federal Home Loan Banks.
+Added: The Company maintains its corporate office at 9204 Columbia Avenue, Munster, Indiana, from which it oversees the operation of its 26 branch locations.
+Added: For further information, see “Properties.” The Company’s Internet address is www.ibankpeoples.com.
Forward-Looking Statements
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You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target,” and other similar words and expressions relating to the future.
−Removed: Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially, and adversely or positively, from the expectations of the Bancorp that are expressed or implied by any forward-looking statement.
−Removed: Risks, uncertainties, and factors that could cause the Bancorp’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:
+Added: Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially, and adversely or positively, from the expectations of the Company that are expressed or implied by any forward-looking statement.
+Added: Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:
The Bank’s ability to demonstrate compliance with the terms of the previously disclosed consent order and memorandum of understanding entered into between the Bank and the Federal Deposit Insurance Corporation (“FDIC”) and Indiana Department of Financial Institutions (“DFI”), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames;
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changes in interest rates, market liquidity, and capital markets, as well as the magnitude of such changes, which may reduce net interest margins;
−Removed: continuing effects of inflation;
−Removed: current financial conditions within the banking industry, liquidity levels, concentrations in certain loan products or categories, net interest margin compression, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;
+Added: the aggregate effects of inflation experienced in recent years, and the potential for a resurgence in inflation;
+Added: current financial conditions within the banking industry, liquidity levels, concentrations in certain loan products or categories, net interest margin levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;
the use of proceeds of future offerings of securities;
−Removed: capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Bancorp of outstanding debt or equity securities;
−Removed: Page 5 of 122
+Added: capital management activities, including possible future sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities;
changes in asset quality and credit risk;
our ability to sustain revenue and earnings growth;
−Removed: customer acceptance of the Bancorp’s products and services;
+Added: customer acceptance of the Company’s products and services;
customer borrowing, repayment, investment, and deposit practices;
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changes in fiscal, monetary, and tax policies;
−Removed: factors that may cause the Bancorp to incur impairment charges on its investment securities;
+Added: factors that may cause the Company to incur impairment charges on its investment securities;
electronic, cyber, and physical security breaches;
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loss of key personnel;
+Added: continuing risks and uncertainties relating to the COVID-19 pandemic and government responses thereto;
the impact, extent, and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms;
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We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of us.
−Removed: The “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K lists some of the factors that could cause the Bancorp’s actual results to vary materially from those expressed in or implied by any forward-looking statements.
+Added: The “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K lists some of the factors that could cause the Company’s actual results to vary materially from those expressed in or implied by any forward-looking statements.
We direct your attention to this discussion.
−Removed: Other risks and uncertainties that could affect the Bancorp’s future performance are set forth below in Item 1A, “Risk Factors.”
−Removed: Page 6 of 122
+Added: Other risks and uncertainties that could affect the Company’s future performance are set forth below in Item 1A, “Risk Factors.”
Lending Activities
−Removed: The Bancorp’s product offerings include residential mortgage loans, construction loans, commercial real estate loans, consumer loans, commercial business loans, and loans to municipalities.
−Removed: The Bancorp’s lending strategy stresses quality growth, product diversification, and competitive and profitable pricing.
+Added: The Company’s product offerings include residential mortgage loans, construction loans, commercial real estate loans, consumer loans, commercial business loans and loans to municipalities.
+Added: The Company’s lending strategy stresses quality growth, product diversification, and competitive and profitable pricing.
While lending efforts include both fixed and adjustable rate products, the focus has been on products with adjustable rates and/or shorter terms to maturity.
It is management’s goal that all programs are marketed effectively to our primary market area.
−Removed: The Bancorp is primarily a portfolio lender.
−Removed: Mortgage banking activities are limited to the sale of fixed rate mortgage loans with contractual maturities generally exceeding fifteen years and greater.
−Removed: These loans are sold, on a case-by-case basis, in the secondary market as part of the Bancorp’s efforts to manage interest rate risk.
+Added: The Company is primarily a portfolio lender.
+Added: Mortgage banking activities are limited to the sale of fixed rate mortgage loans with contractual maturities generally exceeding fifteen years.
+Added: These loans are sold, on a case-by-case basis, in the secondary market as part of the Company’s efforts to manage interest rate risk.
All loan sales are made to Freddie Mac, US Bank or to the Federal Home Loan Bank of Indianapolis.
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At December 31, 2024, there were no concentrations of loans in any type of industry that exceeded 10% of total loans that were not otherwise disclosed as a loan category.
−Removed: Page 7 of 122
Loan Portfolio.
−Removed: The following table sets forth selected data relating to the composition of the Bancorp’s loan portfolio by type of loan at the end of each of the last two years.
+Added: The following table sets forth selected data relating to the composition of the Company’s loan portfolio by type of loan at the end of each of the last two years.
+Added: The amounts are stated in thousands (000’s).
(Dollars in thousands)
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Net deferred loan origination costs
−Removed: Undisbursed loan funds
+Added: Loan clearing funds
Loans receivable, net of deferred fees and costs
−Removed: Page 8 of 122
Loan Maturity Schedule.
−Removed: The following table sets forth certain information at December 31, 2023, regarding the dollar amount of loans in the Bancorp’s portfolio based on their contractual terms to maturity.
+Added: The following table sets forth certain information at December 31, 2024, regarding the dollar amount of loans in the Company’s portfolio based on their contractual terms to maturity.
Demand loans, loans having no schedule of repayments 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.
−Removed: 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.
+Added: 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 Company 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).
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Construction and land development
−Removed: Manufactured Homes
Commercial business
+Added: Manufactured Homes
Total loans receivable
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Construction and land development
−Removed: Manufactured Homes
Commercial business
+Added: Manufactured Homes
Total loans receivable
Lending Area.
−Removed: 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.
−Removed: The Bancorp is also an active lender in Porter County, and to a lesser extent, LaPorte, Newton, and Jasper counties in Indiana;
+Added: The primary lending area of the Company encompasses Lake County in northwest Indiana and Cook County in northeast Illinois, where collectively a majority of loan activity is concentrated.
+Added: The Company 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.
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Loan Origination Procedure.
−Removed: The primary sources for loan originations are referrals from commercial customers, real estate brokers and builders, solicitations by the Bancorp’s lending and retail staff, and advertising of loan programs and rates.
−Removed: The Bancorp employs no staff appraisers.
+Added: The primary sources for loan originations are referrals from commercial customers, real estate brokers and builders, solicitations by the Company’s lending and retail staff, and advertising of loan programs and rates.
+Added: The Company employs no staff appraisers.
All appraisals are performed by fee appraisers that have been approved by the Board of Directors and who meet all federal guidelines and state licensing and certification requirements.
−Removed: Page 9 of 122
Designated officers have authorities, established by the Board of Directors, to approve loans.
−Removed: Loans up to $4,000,000 are approved by the loan officers’ loan committee.
−Removed: Loans from $4,000,000 to $7,000,000 are approved by the senior officers’ loan committee (SOLC).
−Removed: Loans from $7,000,000 to $15,000,000 are approved the executive officer’s loan committee.
−Removed: All loans in excess of $15,000,000, up to the legal lending limit of the Bank, must be approved by the Bank’s Board of Directors or its Board Risk Management Committee (all members of the Bank’s Board of Directors and Board Risk Management Committee are also members of the Bancorp’s Board of Directors and Board Risk Management Committee, respectively).
−Removed: Certain loan renewals and extensions may not require approval by the Board of Directors or the Board Risk Management Committee as long as there is no material change, credit downgrade, significant change in borrower or guarantor status, material release, or change in collateral value or the eligible loan renewal or extension is not outside the current concentration limits set by the Board of Directors.
−Removed: The maximum in-house legal lending limit as set by the Board of Directors is the lower of 10% of the Bank’s risk-based capital or $15,000,000.
−Removed: Requests that exceed this amount will be considered on a case-by-case basis, after taking into consideration the legal lending limit, by specific Board action.
−Removed: The Bank will not extend credit to any of its executive officers, directors, or principal shareholders or to any related interest of that person, except in compliance with the insider lending restrictions of Regulation O under the Federal Reserve Act and in an amount that, when aggregated with all other extensions of credit to that person, exceeds $1,000,000 unless:
+Added: Loans from $3.0 million to $4.5 million are approved by the loan officers’ loan committee (OLC).
+Added: Loans from $4.5 million to $7.0 million are approved by the senior officers’ loan committee (SOLC).
+Added: Loans from $7.0 million to $15.0 million are approved by the executive officer’s loan committee (EOLC).
+Added: All loans in excess of $15.0 million, up to the legal lending limit of the Bank, must be approved by the Bank’s Board of Directors or its Board Risk Management and Compliance Committee (all members of the Bank’s Board of Directors and Board Risk Management and Compliance Committee are also members of the Company’s Board of Directors and Board Risk Management and Compliance Committee, respectively).
+Added: Certain loan renewals and extensions may not require approval by the Board of Directors or the Credit Committee as long as there is no material change, credit downgrade, significant change in borrower or guarantor status, material release or change in collateral value or the eligible loan renewal or extension is not outside the current concentration limits set by the Board of Directors.
+Added: The maximum in-house legal lending limit as set by the Board of Directors is the lower of 10% of the Bank’s risk-based capital or $15.0 million.
+Added: Requests that exceed this amount will be considered on a case-by-case basis, after taking into consideration the legal lending limit, by specific Board or Board Committee action.
+Added: The Bank will not extend credit to any of its executive officers, directors, or principal shareholders or to any related interest of that person, except in compliance with the insider lending restrictions of Regulation O under the Federal Reserve Act and in an amount that, when aggregated with all other extensions of credit to that person, exceeds $1.0 million unless:
(1) the extension of credit has been approved in advance by a majority of the entire Board of Directors of the Bank, and (2) the interested party has abstained from participating directly or indirectly in the voting.
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Residential Mortgage Loans.
−Removed: 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.
+Added: The primary lending activity of the Company 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.
−Removed: 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.
+Added: For loans made in excess of 80% of value, private mortgage insurance is generally required in an amount sufficient to reduce the Company’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.
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Loan interest rates are determined based on secondary market yield requirements and local market conditions.
−Removed: 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.
−Removed: The 15 year mortgage loan program has gained wide acceptance in the Bancorp’s primary market area.
−Removed: As a result of the shortened maturity of these loans, this product has been priced below the comparable 20 and 30 year loan offerings.
−Removed: Mortgage applicants for 15 year loans tend to have a larger than normal down payment;
−Removed: this, coupled with the larger principal and interest payment amount, has caused the 15 year mortgage loan portfolio to consist, to a significant extent, of second time home buyers whose underwriting qualifications tend to be above average.
−Removed: 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.
+Added: Fixed rate mortgage loans with contractual maturities generally exceeding fifteen years may be sold and/or classified as held for sale to control exposure to interest rate risk.
+Added: The Company’s Adjustable Rate Mortgage Loans (“ARMs”) include offerings that reprice annually or are “Mini-Fixed.” The “Mini-Fixed” mortgage reprices annually after a three, five, seven or ten year period.
ARM originations totaled $7.3 million for 2024 and $17.7 million for 2023.
During 2024, ARMs represented 14.8% of total mortgage loan originations.
−Removed: 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.
−Removed: Page 10 of 122
+Added: The ability of the Company 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.
Construction Loans.
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The maximum loan-to-value ratio is 89% of either the current appraised value or the cost of construction, whichever is less.
−Removed: Residential construction loans are typically made for periods of six months to one year.
+Added: Residential construction loans are typically made for periods of one year.
Loans are also made for the construction of commercial properties.
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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.
−Removed: The balloon feature affords the Bancorp the opportunity to restructure the loan if economic conditions so warrant.
+Added: The balloon feature affords the Company 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.
−Removed: While commercial real estate lending is generally considered to involve a higher degree of risk than single‑family residential lending due to the concentration of principal in a limited number of loans and the effects of general economic conditions on real estate developers and managers, the Bancorp has endeavored to reduce this risk in several ways.
−Removed: 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.
+Added: While commercial real estate lending is generally considered to involve a higher degree of risk than single-family residential lending due to the concentration of principal in a limited number of loans and the effects of general economic conditions on real estate developers and managers, the Company has endeavored to reduce this risk in several ways.
+Added: In originating commercial real estate loans, the Company 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.
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Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records.
−Removed: 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.
+Added: Projects financed outside of the Company’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Company or projects that are underwritten according to the Bank’s underwriting standards.
Consumer Loans.
−Removed: The Bancorp offers consumer loans to individuals for personal, household or family purposes.
+Added: The Company offers consumer loans to individuals for personal, household or family purposes.
Consumer loans are either secured by adequate collateral, or unsecured.
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Home Equity Line of Credit.
−Removed: The Bancorp offers a fixed and variable rate revolving line of credit secured by the equity in the borrower’s home.
+Added: The Company 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.
−Removed: Equity lines will typically require a second mortgage appraisal and a second mortgage lender’s title insurance policy.
+Added: Equity lines will typically require an 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.
3 unchanged sentences
All home equity loans are made on a direct basis to borrowers.
−Removed: Page 11 of 122
Manufactured Homes.
−Removed: The Bancorp purchases fixed rate closed loans from a third party that are subject to Bancorp’s underwriting requirements and secured by manufactured homes.
+Added: The Company purchases fixed rate closed loans from a third party that are subject to Company’s underwriting requirements and secured by manufactured homes.
The maturity date on these loans can range up to 25 years.
−Removed: In addition, these loans have a reserve account held at the Bancorp;
+Added: In addition, these loans have a reserve account held at the Company;
further detail regarding this reserve can be found in Note 3– Loans Receivable.
Commercial Business Loans.
−Removed: 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.
−Removed: The Bancorp seeks commercial loan relationships from the local business community and from its present customers.
+Added: Although the Company’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.
+Added: The Company 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.
−Removed: The following loans, although not inclusive, are considered preferable for the Bancorp’s commercial loan portfolio, loans collateralized by liquid assets;
+Added: The following loans, although not inclusive, are considered preferable for the Company’s commercial loan portfolio, loans collateralized by liquid assets;
loans secured by general use machinery and equipment;
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Government Loans.
−Removed: The Bancorp is permitted to purchase non-rated municipal securities, tax anticipation notes, and warrants within the local market area.
+Added: The Company is permitted to purchase non-rated municipal securities, tax anticipation notes, and warrants within the local market area.
Non-Performing Assets, Asset Classification and Provision for Credit Losses
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Subsequent payments are either applied to the outstanding principal balance, tax and insurance reserve or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.
−Removed: The Bancorp’s mortgage loan collection procedures provide that, when a mortgage loan is 15 days or more delinquent, the borrower will be contacted by mail and payment requested.
+Added: The Company’s mortgage loan collection procedures provide that, when a mortgage loan is 15 days or more delinquent, the borrower will be contacted by mail and payment requested.
If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower.
−Removed: In certain instances, the Bancorp will recast the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his, her, or its financial affairs.
−Removed: If the loan continues in a delinquent status for 120 days, the Bancorp will generally initiate foreclosure proceedings.
+Added: In certain instances, the Company will recast the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his, her, or its financial affairs.
+Added: If the loan continues in a delinquent status for 120 days, the Company will generally initiate foreclosure proceedings.
Collection procedures for consumer loans provide that when a consumer loan becomes ten days delinquent, the borrower will be contacted by mail and payment requested.
If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower.
−Removed: In certain instances, the Bancorp may grant a payment deferral.
−Removed: If a loan continues to be delinquent after 60 days and all collection efforts have been exhausted, the Bancorp will initiate legal proceedings.
+Added: In certain instances, the Company may grant a payment deferral.
+Added: If a loan continues to be delinquent after 60 days and all collection efforts have been exhausted, the Company will initiate legal proceedings.
Collection procedures for commercial business loans provide that when a commercial loan becomes ten days delinquent, the borrower will be contacted by mail and payment requested.
If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower pursuant to the commercial loan collection policy.
−Removed: In certain instances, the Bancorp may grant a payment deferral or restructure the loan.
−Removed: Once it has been determined that collection efforts are unsuccessful, the Bancorp will initiate legal proceedings.
−Removed: Any property acquired as the result of foreclosure or by voluntary transfer of property made to avoid foreclosure is classified as foreclosed real estate until such time as it is sold or otherwise disposed of by the Bancorp.
+Added: In certain instances, the Company may grant a payment deferral or restructure the loan.
+Added: Once it has been determined that collection efforts are unsuccessful, the Company will initiate legal proceedings.
+Added: Any property acquired as the result of foreclosure or by voluntary transfer of property made to avoid foreclosure is classified as foreclosed real estate until such time as it is sold or otherwise disposed of by the Company.
Foreclosed real estate is recorded at fair value at the date of foreclosure.
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Subsequent gains or losses on disposition, including expenses incurred in connection with the disposition, are charged to operations.
−Removed: Page 12 of 122
−Removed: The following table sets forth information regarding the Bancorp’s non-performing assets as of December 31, for each period indicated.
+Added: The following table sets forth information regarding the Company’s non-performing assets as of December 31, for each period indicated.
The amounts are stated in thousands (000’s).
Loans that qualify as troubled loan modifications and accruing:
−Removed: Loans that qualify as troubled debt restructurings and accruing:
−Removed: Commercial business
Loans accounted for on a non-accrual basis:
+Added: Commercial Real Estate
+Added: Construction and land development
Commercial business
Accruing loans which are contractually past due 90 days or more:
−Removed: Manufactured homes
Ratio of non-performing loans to total assets (1)
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(1) Non-performing loans include non-accrual loans and accruing loans which are contractually past due 90 days or more
−Removed: Trust preferred securities
−Removed: Ratio of trust preferred securities to total assets
+Added: Collateralized debt obligations
+Added: Ratio of collateralized debt obligations to total assets
During 2024, gross interest income of $656 thousand would have been recorded on loans accounted for on a non-accrual basis if the loans had been current throughout the period.
Interest on such loans included in income during the period amounted to $313 thousand.
−Removed: Page 13 of 122
Federal regulations require banks to classify their own loans and to establish appropriate general and specific allowances, subject to regulatory review.
2 unchanged sentences
Loans classified as loss must either be written off or reserved for by a specific allowance.
−Removed: Amounts reported in the allowance for credit losses are included in the calculation of the Bancorp’s total risk-based capital requirement (to the extent that the amount does not exceed 1.25% of total risk-based assets), but are not included in Tier 1 leverage ratio calculations and Tier 1 risk-based capital requirements.
+Added: Amounts reported in the allowance for credit losses are included in the calculation of the Company’s total risk-based capital requirement (to the extent that the amount does not exceed 1.25% of total risk-based assets), but are not included in Tier 1 leverage ratio calculations and Tier 1 risk-based capital requirements.
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.
19 unchanged sentences
Commercial business
−Removed: Manufactured homes
−Removed: Page 14 of 122
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date.
9 unchanged sentences
Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.
−Removed: A loan is considered collateral dependent 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.
−Removed: Typically, management does not individually classify smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as collateral dependent, unless the loan terms are modified due to the financial difficulty of the borrower.
+Added: 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.
+Added: Typically, management does not individually classify smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as impaired, unless they are troubled loan modifications.
A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment.
−Removed: In evaluating the overall risk associated with the loan, the Bancorp considers character, overall financial condition and resources, and payment record of the borrower;
+Added: In evaluating the overall risk associated with the loan, the Company considers character, overall financial condition and resources, and payment record of the borrower;
the prospects for support from any financially responsible guarantors;
1 unchanged sentence
However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.
−Removed: The table below presents the amortized cost basis type of loan collateral and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.
+Added: The table below presents the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.
(Dollars in thousands)
5 unchanged sentences
Commercial real estate
+Added: Construction and land development
Commercial business
−Removed: 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 financial difficulty modification.
−Removed: The valuation basis for the Bancorp’s troubled loan modification is based on the present value of expected future cash flows;
−Removed: unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.
−Removed: Page 15 of 122
+Added: At times, the Company 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 loan modification.
Loan Modification Disclosures Pursuant to ASU 2022-02
7 unchanged sentences
Residential Real Estate
+Added: For the year ended December 31, 2023
+Added: (Dollars in thousands)
+Added: Combination Term Extension and
+Added: Interest Rate
+Added: Residential Real Estate
There were no commitments to lend additional amounts to the borrowers included in the previous table.
−Removed: The Bancorp closely monitors the performance of loans and leases that have been modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
−Removed: The following table shows the performance of such loans and leases that have been modified during the year ended December 31, 2023.
+Added: The Company closely monitors the performance of loans and leases that have been modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
+Added: The performance of such modified loans is presented below.
+Added: For the year ended December 31, 2024
(Dollars in thousands)
2 unchanged sentences
Residential Real Estate
+Added: For the year ended December 31, 2023
+Added: (Dollars in thousands)
+Added: Greater Than 90
+Added: Days Past Due
+Added: Residential Real Estate
The borrowers with term extension have had their maturity dates extended and as a result their monthly payments were reduced.
−Removed: Upon the Bancorp’s determination that a modified loan has subsequently been deemed uncollectible, the loan or lease is written off.
+Added: For the year ended December 31, 2024
+Added: (Dollars in thousands)
+Added: Principal forgiveness
+Added: Weighted average interest
+Added: rate reduction
+Added: Weighted average term
+Added: Payment delay
+Added: Residential Real Estate
+Added: For the year ended December 31, 2023
+Added: (Dollars in thousands)
+Added: Principal forgiveness
+Added: Weighted average interest
+Added: rate reduction
+Added: Weighted average term
+Added: Payment delay
+Added: Residential Real Estate
+Added: Upon the Company’s determination that a modified loan has subsequently been deemed uncollectible, the loan or lease is written off.
Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.
−Removed: Troubled Debt Restructuring (TDR) Disclosures Prior to the Adoption of ASU 2022-02
−Removed: During the year ending December 31, 2022, nine residential real estate loans to nine customers totaling $743 thousand were modified to include deferral of principal or interest resulting in troubled debt restructuring classification.
−Removed: Two home equity loans to two customers totaling $189 thousand were modified to include deferral of principal or interest resulting in troubled debt restructuring classification.
−Removed: One commercial real estate loan totaling $1.4 million was provided a short-term renewal resulting in troubled debt restructuring classification.
−Removed: No troubled debt restructuring loans had subsequently defaulted during the year ending December 31, 2022.
−Removed: As of December 31, 2023, the Bancorp had one residential real estate loan in the process of foreclosure totaling $32 thousand.
−Removed: The Bancorp was not in the process of foreclosing on any residential real estate loan as of December 31, 2022.
−Removed: All of the loans classified as troubled debt restructurings are also considered impaired.
−Removed: 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.
−Removed: On January 1, 2023, the Bancorp adopted ASU No.
−Removed: 2016-13 resulting in an implementation entry of $8.3 million, increasing the ACL by $5.2 million and unfunded commitment liability of $3.1 million, retained earnings decreased $6.1 million and a deferred tax asset of $2.2 million was generated.
−Removed: The majority of the implementation entry is related to including acquired loan portfolios in the model and the addition of using economic forecasts in estimating future losses.
−Removed: In addition, $1.0 million of non-acceptable credit loan discounts on purchase credit impaired loans now classified as purchase credit deteriorated were reallocated to the ACL.
−Removed: Page 16 of 122
−Removed: The table that follows sets forth the Allowance for credit losses and related ratios for the years ended December 31, 2023 and 2022.
+Added: The table that follows sets forth the allowance for credit losses and related ratios for the periods indicated.
The amounts are stated in thousands (000’s).
10 unchanged sentences
Net charge-offs
−Removed: Adoption of ASC 326
Provision for credit losses
7 unchanged sentences
The percent columns represent the percentage of loans in each category to total loans.
−Removed: Real estate loans:
−Removed: Commercial and other dwelling
−Removed: Consumer loans
−Removed: Commercial business and other
−Removed: Page 17 of 122
+Added: Residential real estate
+Added: Commercial real estate
+Added: Construction and land development
+Added: Commercial business
+Added: Manufactured homes
Investment Activities
−Removed: The primary objective of the 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.
+Added: The primary objective of the investment portfolio is to provide for the liquidity needs of the Company and to contribute to profitability by providing a stable flow of dependable earnings.
Securities can be classified as trading, held-to-maturity (HTM), or available-for-sale (AFS) at the time of purchase.
−Removed: No securities are classified as trading or as HTM.
−Removed: AFS securities are those the Bancorp may decide to sell if needed for liquidity, asset-liability management or other reasons.
−Removed: It has been the policy of the Bancorp to invest its excess cash in U.S.
+Added: No securities are classified as trading or as held-to-maturity.
+Added: AFS securities are those the Company may decide to sell if needed for liquidity, asset-liability management or other reasons.
+Added: It has been the policy of the Company to invest its excess cash in U.S.
government agency securities, mortgage-backed securities, collateralized mortgage obligations, municipal securities, and treasury securities.
In addition, short-term funds are generally invested as interest bearing balances in financial institutions and federal funds.
−Removed: At December 31, 2023, the Bancorp’s investment portfolio totaled $371.4 million.
−Removed: In addition, the Bancorp had $6.5 million in FHLB stock.
−Removed: The table below shows the carrying values of the available for sale securities portfolio at December 31, 2023 and 2022.
+Added: At December 31, 2024, the Company’s investment portfolio totaled $333.6 million.
+Added: In addition, the Company had $6.5 million in FHLB stock.
+Added: The table below shows the carrying values of the components of available for sale securities portfolio at December 31, on the dates indicated.
The amounts are stated in thousands (000’s).
−Removed: government sponsored agencies
−Removed: treasury securities
−Removed: Collateralized Mortgage Obligations and Mortgage-backed securities
+Added: (Dollars in thousands)
+Added: government sponsored entities
+Added: Collateralized mortgage obligations and residential mortgage-backed securities
Municipal securities
−Removed: Collateralized Debt Securities
−Removed: The contractual maturities and weighted average yields for the U.S.
−Removed: government agency securities, municipal securities, and trust preferred securities at December 31, 2023, are summarized in the table below.
+Added: Collateralized debt obligations
+Added: Total securities available-for-sale
+Added: The contractual maturities and weighted average yields for the U.S government securities, collateralized mortgage obligations, residential mortgage-backed securities, municipal securities, collateralized debit obligations at December 31, 2024, are summarized in the table below.
Securities not due at a single maturity date, such as mortgage-backed securities and collateralized mortgage obligations, are shown separately.
6 unchanged sentences
government sponsored entities:
−Removed: Municipal Securities:
−Removed: Trust Preferred Securities:
Collateralized mortgage obligations and residential mortgage- backed securities:
−Removed: The Bancorp currently holds two trust preferred securities and the securities’ quarterly interest payments have been placed in “payment in kind” status.
+Added: Municipal securities:
+Added: Collateralized debt obligations:
+Added: The Company currently holds two collateralized debt obligations and the securities’ quarterly interest payments have been placed in “payment in kind” status.
Payment in kind status results in a temporary delay in the payment of interest.
As a result of a delay in the collection of the interest payments, management placed these securities in non-accrual status.
−Removed: At December 31, 2023, the cost basis of the two trust preferred securities on non-accrual status totaled $2.2 million.
−Removed: Unrealized losses on securities have not been recognized into income because the securities are of high credit quality, have undisrupted cash flows, or have been independently evaluated.
+Added: At December 31, 2024, the cost basis of the two collateralized debt obligations on non-accrual status totaled $2.2 million.
+Added: Unrealized losses on securities have not been recognized into income because the securities are of high credit quality, have undisrupted cash flows, or have been independently evaluated for credit impairment and appropriate write downs taken.
Management has the intent and ability to hold the securities for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and volatility in the securities markets.
The fair values are expected to recover as the securities approach maturity.
−Removed: Page 18 of 122
Sources of Funds
−Removed: Deposits are the major source of the Bancorp’s funds for lending and other investment purposes.
−Removed: In addition to deposits, the Bancorp derives funds from maturing investment securities and certificates of deposit, dividend receipts from the investment portfolio, loan principal repayments, repurchase agreements, advances from the Federal Home Loan Bank of Indianapolis (FHLB) and other borrowings.
+Added: Deposits are the major source of the Company’s funds for lending and other investment purposes.
+Added: In addition to deposits, the Company derives funds from maturing investment securities and certificates of deposit, dividend receipts from the investment portfolio, loan principal repayments, repurchase agreements, advances from the Federal Home Loan Bank of Indianapolis (FHLB) and other borrowings.
Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions.
1 unchanged sentence
They may also be used on a longer-term basis for general business purposes.
−Removed: The Bancorp uses repurchase agreements, as well as a line-of-credit and advances from the FHLB for borrowings.
−Removed: At December 31, 2023, the Bancorp had $80.0 million from the Bank Term Funding Program (described below) and $38.1 million in repurchase agreements.
−Removed: The Bancorp had no other borrowed funds as of December 31, 2023.
−Removed: Retail and commercial deposits are attracted principally from within the Bancorp’s primary market area.
−Removed: The Bancorp offers a broad selection of deposit instruments including non-interest bearing demand accounts, interest bearing demand accounts, savings accounts, money market deposit accounts, certificate accounts and retirement savings plans.
+Added: The Company uses repurchase agreements, as well as a line-of-credit and advances from the FHLB for borrowings.
+Added: At December 31, 2024, the Company had $65.0 million in FHLB fixed rate advances $40.1 million in repurchase agreements.
+Added: The Company had no other borrowed funds as of December 31, 2024.
+Added: Retail and commercial deposits are attracted principally from within the Company’s primary market area.
+Added: The Company offers a broad selection of deposit instruments including non- interest bearing demand accounts, interest bearing demand accounts, savings accounts, money market deposit accounts, certificate accounts and retirement savings plans.
Deposit accounts vary as to terms, with the principal differences being the minimum balance required, the time period the funds must remain on deposit and the interest rate.
Certificate account offerings typically range in maturity from ten days to 42 months.
−Removed: The deregulation of federal controls on insured deposits has allowed the Bancorp to be more competitive in obtaining funds and to be flexible in meeting the threat of net deposit outflows.
−Removed: The Bancorp does not obtain funds through brokers, however, the Bancorp did acquire brokered deposits through the acquisition of Royal Financial, which it still maintains.
+Added: The deregulation of federal controls on insured deposits has allowed the Company to be more competitive in obtaining funds and to be flexible in meeting the threat of net deposit outflows.
+Added: The Company had $21.7 million in brokered deposit balances at December 31, 2024, which were obtained through prior acquisitions.
+Added: The Company did not obtain any deposit funds through brokers during the year ended 2024.
The following table presents the average daily amount of deposits and average rates paid on such deposits for the years indicated.
10 unchanged sentences
The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.
−Removed: The following table sets forth the portion of the Bank's time deposits, by account, that are in excess of the FDIC insurance limit, by remaining time until maturity, as of December 31, 2023 (dollars in thousands).
+Added: The following table sets forth the portion of the Bank's time deposits, by account, that exceed the FDIC insurance limit, by remaining time until maturity, as of December 31, 2024 (dollars in thousands).
3 months or less
2 unchanged sentences
Over 12 months
−Removed: Page 19 of 122
Borrowed money is used on a short-term basis to compensate for reductions in the availability of other sources of funds and is generally accomplished through repurchase agreements, as well as, through a line of credit and advances from the FHLB.
−Removed: Repurchase agreements generally mature within one year and are generally secured by U.S.
−Removed: government securities or U.S.
−Removed: agency securities, under the Bancorp’s control.
−Removed: FHLB advances with maturities ranging from one year to five years are used to fund securities and loans of comparable duration, as well as to reduce the impact that movements in short-term interest rates have on the Bancorp’s overall cost of funds.
−Removed: Fixed rate advances are payable at maturity, with a prepayment penalty for advances paid prior to maturity.
+Added: Repurchase agreements generally mature within one year and are generally secured by municipal securities, collateralized mortgage obligations and residential mortgage-backed securities, under the Company’s control.
+Added: FHLB advances with maturities ranging from one year to five years are used to fund securities and loans of comparable duration, as well as to reduce the impact that movements in short-term interest rates have on the Company’s overall cost of funds.
+Added: Fixed rate advances are payable at maturity, with a prepayment penalty.
On March 12, 2023, the Federal Reserve Board announced the creation of a new Bank Term Funding Program (the “BTFP”).
−Removed: The BTFP offers loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S.
+Added: The BTFP offered loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S.
Treasury securities, agency debt and mortgage-backed securities, and other qualifying assets as collateral.
−Removed: These assets are valued at par for purposes of the collateral pledge under the BTFP.
−Removed: During the first quarter of 2023, the Bancorp participated in the BTFP by accessing $100 million of low-cost capital under the program and had $80 million outstanding as of December 31, 2023.
−Removed: As of December 31, 2023, the Bancorp had pledged securities as collateral for the program with a par value of $105.3 million.
−Removed: The Bancorp’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources.
−Removed: The Bancorp has available liquidity of $824.0 million including borrowing capacity from the FHLB and Federal Reserve facilities.
−Removed: In addition to the BTFP, the Bancorp maintains a $25.0 million line of credit with the Federal Home Loan Bank of Indianapolis.
−Removed: The Bancorp did not have a balance on the line of credit at December 31, 2023 or 2022.
−Removed: At December 31, 2023, the borrowing from the BTFP was scheduled to mature in March 2024, but the Bank filed an extension per program guidelines, which resulted in the rate increasing from 4.38% to 5.40% at that time.
−Removed: Page 20 of 122
−Removed: The following tables set forth certain information regarding borrowing and repurchase agreements by the Bancorp at the end of and during the periods indicated.
+Added: These assets were valued at par for purposes of the collateral pledge under the BTFP.
+Added: During the first quarter of 2023, the Company participated in the BTFP by accessing $80 million of low-cost capital under the program.
+Added: As of December 31, 2023, the Company had pledged securities as collateral for the program with a par value of $105.3 million.
+Added: During the quarter ending September 30, 2024, the Company terminated its involvement in the Bank Term Funding Program (the “BTFP”) and paid off its outstanding balance of $60 million, in full, through a utilization of excess liquidity and FHLB advances.
+Added: The Company’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources.
+Added: Fixed rate advances are payable at maturity, with a prepayment penalty.
+Added: The advances were collateralized by mortgage loans with a carrying value totaling approximately $460.8 million at December 31, 2024.
+Added: The Bank had no balance at December 31, 2023 and a balance of $65 million at December 31, 2024.
+Added: In addition to the fixed rate advances, the Bank maintains a $25.0 million line of credit with the Federal Home Loan Bank of Indianapolis.
+Added: The Bank did not have a balance on the line of credit at December 31, 2024 or December 31, 2023.
+Added: The Bank did not have other borrowings at December 31, 2024, or December 31, 2023.
+Added: At December 31, 2024, the Bank had approximately $687.4 million available in credit lines with various money center banks, including the FHLB and Federal Reserve.
+Added: The following tables set forth certain information regarding borrowing and repurchase agreements by the Company at the end of and during the periods indicated.
The amounts are stated in thousands (000’s).
9 unchanged sentences
Weighted average rate on securities sold under agreements to repurchase (2)
−Removed: At December 31,
−Removed: Fixed rate short-term advances from the FHLB
−Removed: Fixed rate advances from the Federal Reserve with outstanding rates of 4.38% as of December 31, 2023
−Removed: Total borrowings
−Removed: (1) The weighted average rate for each period is calculated by weighting the principal balances outstanding for the various interest rates.
+Added: The weighted average rate for each period is calculated by weighing the principal balances outstanding for the various interest rates.
The weighted average rate is calculated by dividing the interest expense for the period by the average daily balances of securities sold under agreements to repurchase for the period.
+Added: (Dollars in thousands)
+Added: Federal Reserve Fixed rate advance with outstanding rate of 4.38%, matured March 22, 2024
+Added: FHLB Fixed rate advance with outstanding rate of 4.85%, maturing May 16, 2025
+Added: FHLB Fixed rate advance with outstanding rate of 4.77%, maturing May 19, 2025
+Added: FHLB Fixed rate advance with outstanding rate of 3.38%, maturing August 7, 2028 (1)
+Added: FHLB Fixed rate advance with outstanding rate of 3.22%, maturing August 7, 2029 (1)
+Added: FHLB Fixed rate advance with outstanding rate of 3.84%, maturing February 28, 2029 (1)
+Added: FHLB Fixed rate advance with outstanding rate of 3.74%, maturing February 28, 2029 (1)
+Added: FHLB retains puttable option to call these advances after a period of time.
Wealth Management Group
−Removed: In addition, the Bancorp's Wealth Management Group currently provides estate and retirement planning, custodial services, guardianships, IRA accounts, investment agency accounts, serves as the personal representative of estates, and acts as corporate trustee for revocable and irrevocable trusts.
−Removed: At December 31, 2023, the market value of the Wealth Management Group’s assets under management totaled $387.1 million, an increase of $25.7 million, compared to December 31, 2022.
−Removed: Property, other than cash deposits, held in a fiduciary or agency capacity is not included in the consolidated balance sheets since such property is not owned by the Bancorp.
+Added: The Company's Wealth Management Group provides estate and retirement planning, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, investment agency accounts, and serves as personal representative of estates and acts as trustee for revocable and irrevocable trusts.
+Added: At December 31, 2024, the market value of the Wealth Management Group’s assets under management totaled $392.9 million, a increase of $5.8 million, compared to December 31, 2023.
+Added: Property, other than cash deposits, held in a fiduciary or agency capacity is not included in the consolidated balance sheets since such property is not owned by the Company.
Analysis of Profitability and Key Operating Ratios
Financial Ratios and the Analysis of Changes in Net Interest Income.
−Removed: The tables below set forth certain financial ratios of the Bancorp for the periods indicated:
+Added: The tables below set forth certain financial ratios of the Company for the periods indicated:
Year ended December 31,
5 unchanged sentences
Total stockholders’ equity to total assets
−Removed: Page 21 of 122
The average balance sheet amounts, the related interest income or expense, and average rates earned or paid are presented in the following table.
30 unchanged sentences
** Net interest income divided by average interest-earning assets.
−Removed: Page 22 of 122
−Removed: The table below sets forth certain information regarding changes in interest income and interest expense of the Bancorp for the periods indicated.
+Added: The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated.
For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to:
19 unchanged sentences
Net change in net interest income
−Removed: Page 23 of 122
Subsidiary Activities
8 unchanged sentences
The formation of NWIN Funding, Inc.
−Removed: provides the Bancorp with a vehicle that may be used to raise capital utilizing portfolio mortgages as collateral, without diluting stock ownership.
+Added: provides the Company with a vehicle that may be used to raise capital utilizing portfolio mortgages as collateral, without diluting stock ownership.
Columbia Development Company, LLC is a wholly owned subsidiary of the Bank and was incorporated under the laws of the State of Indiana.
The subsidiary holds real estate properties that the Bank has acquired through the foreclosure process.
−Removed: The consolidated financial statements include the Bancorp, its wholly owned subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, Peoples Service Corporation, NWIN, LLC and Columbia Development Company, LLC.
−Removed: The Bancorp’s business activities include being a holding company for the Bank.
−Removed: The Bancorp’s earnings are dependent upon the earnings of the Bank.
+Added: The consolidated financial statements include the Company, its wholly owned subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, Peoples Service Corporation, NWIN, LLC and Columbia Development Company, LLC.
+Added: The Company’s business activities include being a holding company for the Bank.
+Added: The Company’s earnings are dependent upon the earnings of the Bank.
All significant inter-company accounts and transactions have been eliminated in consolidation.
−Removed: The Bancorp’s primary market area for deposits, loans, and financial services encompasses Lake and Porter Counties, in Northwest Indiana, and Cook County in Northeast Illinois.
−Removed: All of the Bancorp’s banking centers and offices are located in its primary market area.
−Removed: Approximately ninety-four percent of the Bancorp’s business activities are within this area.
−Removed: The Bancorp faces strong competition in its primary market area for the attraction and retention of deposits and in the origination of loans.
−Removed: The Bancorp’s most direct competition for deposits has historically come from commercial banks, savings associations, and credit unions located in its primary market area.
−Removed: Particularly in times of high interest rates, the Bancorp has had significant competition from mutual funds and other firms offering financial services.
−Removed: The Bancorp’s competition for loans comes principally from savings associations, commercial banks, mortgage banking companies, credit unions, insurance companies, and other institutional lenders.
−Removed: The Bancorp competes for loans principally through the interest rates and loan fees it charges and the efficiency and quality of the services it provides borrowers and other third-party sources.
+Added: The Company’s primary market area for deposits, loans and financial services encompasses Lake and Porter Counties in Indiana and Cook and DuPage Counties in Illinois.
+Added: All of the Company’s banking centers and offices are located in its primary market area.
+Added: Approximately ninety-four percent of the Company’s business activities are within this area.
+Added: The Company faces strong competition in its primary market area for the attraction and retention of deposits and in the origination of loans.
+Added: The Company’s most direct competition for deposits has historically come from commercial banks, savings associations, and credit unions located in its primary market area.
+Added: Particularly in times of high interest rates, the Company has had significant competition from mutual funds and other firms offering financial services.
+Added: The Company’s competition for loans comes principally from savings associations, commercial banks, mortgage banking companies, credit unions, insurance companies, and other institutional lenders.
+Added: The Company competes for loans principally through the interest rates and loan fees it charges and the efficiency and quality of the services it provides borrowers and other third-party sources.
It competes for deposits by offering depositors a wide variety of savings accounts, checking accounts, competitive interest rates, convenient banking center locations, drive-up facilities, automatic teller machines, tax deferred retirement programs, digital banking, and other miscellaneous services.
−Removed: The activities of the Bancorp and the Bank in the geographic market served involve competition with other banks as well as with other financial institutions and enterprises, many of which have substantially greater resources than those available to the Bancorp.
−Removed: In addition, non-bank financial services companies with which the Bancorp and Bank compete, while subject to regulation by the CFPB, are generally not subject to the same type of extensive regulation by the federal and state banking agencies applicable to the Bancorp and the Bank.
−Removed: Page 24 of 122
+Added: The activities of the Company and the Bank in the geographic market served involve competition with other banks as well as with other financial institutions and enterprises, many of which have substantially greater resources than those available to the Company.
+Added: In addition, non-bank financial services companies with which the Company and Bank compete, while subject to regulation by the CFPB, are generally not subject to the same type of extensive regulation by the federal and state banking agencies applicable to the Company and the Bank.
Employees and Human Capital Resources
4 unchanged sentences
Management believes its employee relations are good.
−Removed: The Bancorp has four executive officers.
−Removed: The Bancorp’s officers also are full-time employees of the Bank, and are compensated by the Bank.
+Added: The Company has four executive officers and has no other employees.
+Added: The Company’s officers also are full-time employees of the Bank, and are compensated by the Bank.
Regulation and Supervision
Bank Holding Company Regulation.
−Removed: The Bancorp is registered as a bank holding company for the Bank and has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999.
−Removed: As a bank holding company and financial holding company, the Bancorp is subject to the regulation and supervision of the FRB under the Bank Holding Company Act of 1956, as amended (the "BHCA").
+Added: The Company is registered as a bank holding company for the Bank and has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999.
+Added: As a bank holding company and financial holding company, the Company is subject to the regulation and supervision of the FRB under the Bank Holding Company Act of 1956, as amended (the "BHCA").
Bank holding companies are required to file periodic reports with and are subject to periodic examination by the FRB.
−Removed: Under the BHCA, without the prior approval of the FRB, the Bancorp may not acquire direct or indirect control of more than 5% of the voting stock or substantially all of the assets of any company, including a bank, and may not merge or consolidate with another bank holding company.
−Removed: In addition, the Bancorp is generally prohibited by the BHCA from engaging in any nonbanking business unless such business is determined by the FRB to be so closely related to banking as to be a proper incident thereto.
+Added: Under the BHCA, without the prior approval of the FRB, the Company may not acquire direct or indirect control of more than 5% of the voting stock or substantially all of the assets of any company, including a bank, and may not merge or consolidate with another bank holding company.
+Added: In addition, the Company is generally prohibited by the BHCA from engaging in any nonbanking business unless such business is determined by the FRB to be so closely related to banking as to be a proper incident thereto.
Under the BHCA, the FRB has the authority to require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the FRB's determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.
+Added: On September 17, 2024, the FDIC, Office of the Comptroller of the Currency, and the Department of Justice (“DOJ”) announced new rules and policy statements impacting their bank merger review process.
+Added: Among these actions, the FDIC approved a final statement of policy on bank merger transactions.
+Added: The FDIC's statement of policy adopts a principles-based approach and clarifies its policies and expectations in the evaluation of bank merger transactions subject to FDIC approval under the Bank Merger Act.
+Added: However, Acting FDIC Chairman Travis Hill has indicated the possibility of withdrawing the new statement of policy.
+Added: Concurrent with the FDIC announcement, the DOJ withdrew from its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum.
The Change in Bank Control Act (“CBCA”) prohibits a person or group of persons from acquiring “control” of a bank holding company unless the FRB has been notified and has not objected to the transaction.
−Removed: Under a rebuttable presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Bancorp, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Bancorp.
+Added: Under a rebuttable presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Company.
In addition, the CBCA prohibits any entity from acquiring 25% (the BHCA has a lower limit for acquirers that are existing bank holding companies) or more of a bank holding company’s or bank’s voting securities, or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the FRB.
4 unchanged sentences
Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
+Added: In addition, Indiana law requires DFI approval for changes in control of companies controlling Indiana banks, with “control” defined to mean the power to direct the management or policies of the holding company or the power to vote at least 25% of the company’s voting securities.
Under the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), a bank holding company is expected to serve as a source of financial and managerial strength to its subsidiary bank(s).
Pursuant to this requirement, a bank holding company should stand ready to use its resources to provide adequate capital funds to its subsidiary bank(s) during periods of financial stress or adversity.
−Removed: This support may be required by the FRB at times when the Bancorp may not have the resources to provide it or, for other reasons, would not be inclined to provide it.
+Added: This support may be required by the FRB at times when the Company may not have the resources to provide it or, for other reasons, would not be inclined to provide it.
Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a bank holding company is required to provide limited guarantee of the compliance by any insured depository institution subsidiary that may become "undercapitalized" (as defined in the statute) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.
−Removed: Page 25 of 122
State Bank Regulation.
6 unchanged sentences
(i) the FDIC determines that the activity would pose no significant risk to the appropriate deposit insurance fund, and (ii) the bank is, and continues to be, in compliance with all applicable capital standards.
−Removed: Regulatory Actions Affecting the Bank.
−Removed: As previously disclosed, on November 7, 2023, the Bank entered into a Stipulation and Consent to the Issuance of a Consent Order with the FDIC and the Indiana Department of Financial Institutions (“DFI”), consenting to the issuance of a consent order relating to the Bank’s compliance with the Bank Secrecy Act and its implementing regulations.
−Removed: On that same date, the Bank also entered into a memorandum of understanding (“MOU”) with the FDIC and DFI pursuant to which the Bank has agreed to take various actions and comply with certain requirements to enhance certain areas of the Bank’s operations.
−Removed: For a further description of these matters, see “Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments Regarding the Bancorp and the Bank” below.
Branches and Acquisitions.
6 unchanged sentences
Transactions with Affiliates.
−Removed: Under Indiana law, the Bank is subject to Sections 22(h), 23A and 23B of the Federal Reserve Act, which restrict financial transactions between banks and affiliated companies, such as the Bancorp.
+Added: Under Indiana law, the Bank is subject to Sections 22(h), 23A and 23B of the Federal Reserve Act, which restrict financial transactions between banks and affiliated companies, such as the Company.
The statute limits credit transactions between a bank and its executive officers and its affiliates, prescribes terms and conditions for bank affiliate transactions deemed to be consistent with safe and sound banking practices, and restricts the types of collateral security permitted in connection with a bank's extension of credit to an affiliate.
10 unchanged sentences
Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock, and subordinated debt.
−Removed: Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
+Added: Also included in Tier 2 capital is the ACL limited to a maximum of 1.25% of risk- weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Institutions that have not exercised the AOCI opt- out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities).
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
−Removed: Page 26 of 122
In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, and residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset.
4 unchanged sentences
The FRB and FDIC have authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances.
−Removed: As of December 31, 2023, the Bank met all applicable capital adequacy requirements.
+Added: As of December 31, 2024, the Bank met all applicable capital adequacy requirements as set forth in 12 C.F.R.
Bank holding companies are generally subject to consolidated capital requirements established by the FRB.
The Dodd-Frank Act required the FRB to set minimum capital levels for bank holding companies that are as stringent as those required for insured depository subsidiaries.
−Removed: 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.
+Added: 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 Company, are exempt from consolidated regulatory capital requirements, unless the FRB determines otherwise in particular cases.
Federal law establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions.
11 unchanged sentences
Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.
−Removed: Page 27 of 122
Section 201 of the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (the “Economic Growth Act”) directed federal banking agencies to draft regulations establishing a new optional Community Bank Leverage Ratio (“CBLR”).
15 unchanged sentences
The Bank did not elect to opt in to the CBLR framework.
−Removed: The following table shows that, at December 31, 2023, and December 31, 2022, the Bank’s capital exceeded all applicable regulatory capital requirements.
−Removed: The dollar amounts are in millions.
−Removed: (Dollars in millions)
+Added: The following table shows that, at December 31, 2024, and December 31, 2023, the Bank’s capital exceeded all applicable regulatory capital requirements as set forth in 12 C.F.R.
+Added: Bank Level Capital
Minimum Required To Be
+Added: (Dollars in thousands)
Minimum Required For
7 unchanged sentences
Tier 1 capital to adjusted average assets
−Removed: (Dollars in millions)
+Added: Bank Level Capital
Minimum Required To Be
+Added: (Dollars in thousands)
Minimum Required For
7 unchanged sentences
Tier 1 capital to adjusted average assets
−Removed: Page 28 of 122
In December 2017, the Basel Committee on Banking Supervision published the last version of the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets (“RWA”), which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios;
3 unchanged sentences
Under the current U.S.
−Removed: capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Bancorp.
−Removed: The impact of Basel IV on the Bancorp will depend on the manner in which it is implemented by the federal banking regulators.
+Added: capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company.
+Added: In 2023, the federal banking agencies issued a proposed rule to implement the Basel IV standards.
+Added: Among other things, the proposed rule would substantially change the existing calculation of risk-weighted assets and require banking organizations to use revised models for such calculations.
+Added: The proposed rule, if adopted as proposed, would be applicable to banking organizations with $100 billion or more in total consolidated assets, and therefore would not apply to the Bank directly.
+Added: However, many of the principles included in this proposed rulemaking could result in increased supervisory expectations and closer regulatory scrutiny for institutions that experience substantial growth.
+Added: For example, the proposed rulemaking would add back the impact of accumulated other comprehensive income (loss) to the calculation of regulatory capital for institutions above $100 billion in assets.
+Added: The federal banking agencies have discretion during the examination process to require institutions to have higher capital cushions to address a variety of supervisory concerns, which may include a high level of accumulated other comprehensive loss.
+Added: On September 10, 2024, Michael Barr, the Vice Chair for Supervision of the Federal Reserve, stated his intention to recommend to the Federal Reserve Board that the Federal Reserve re-propose a rule to implement the Basel IV standards;
+Added: however, the federal banking agencies to date have not agreed on the issuance of a re-proposal and, in consideration of the new Trump Administration and the expected changes in leadership of the agencies, including a new Vice Chair for Supervision of the Federal Reserve, the prospects and timing for further rulemaking on these matters are uncertain at this time.
+Added: The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal banking regulators.
Banking regulators may change these capital requirements from time to time, depending on the economic outlook generally and the outlook for the banking industry.
−Removed: The Bancorp is unable to predict whether and when any such further capital requirements would be imposed and, if so, to what levels and on what schedule.
−Removed: New Accounting Standards With Regulatory Effect.
−Removed: In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses:
−Removed: Measurement of Credit Losses on Financial Instruments (“CECL”).
−Removed: 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.
−Removed: Each financial asset presented on the balance sheet would have a unique allowance for credit losses (“ACL”) 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.
−Removed: 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.
−Removed: The new credit loss guidance became effective for the Bancorp as of January 1, 2023.
−Removed: On January 1, 2023, the Bancorp adopted ASU No.
−Removed: 2016-13 using a modified retrospective transition method, resulting in an implementation entry of $9.3 million, increasing the ACL by $6.2 million and unfunded commitment liability of $3.1 million, retained earnings decreased $6.1 million and a deferred tax asset of $2.2 million was generated.
−Removed: The majority of the implementation entry is related to including acquired loan portfolios in the model and the addition of using economic forecasts in estimating future losses.
−Removed: In addition, $1.0 million of non-accretable credit loan discounts on purchase credit impaired loans now classified as purchase credit deteriorated were reallocated to the ACL.
+Added: The Company is unable to predict whether and when any such further capital requirements would be imposed and, if so, to what levels and on what schedule.
Dividend Limitations.
−Removed: The Bancorp is a legal entity separate and distinct from the Bank.
−Removed: The primary source of the Bancorp’s cash flow, including cash flow to pay dividends on the Bancorp’s Common Stock, is the payment of dividends to the Bancorp by the Bank.
+Added: The Company is a legal entity separate and distinct from the Bank.
+Added: The primary source of the Company’s cash flow, including cash flow to pay dividends on the Company’s Common Stock, is generally the payment of dividends to the Company by the Bank.
Under Indiana law, the Bank may pay dividends of so much of 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.
7 unchanged sentences
The FRB expects bank holding companies to consult with it in advance of declaring dividends that could raise safety and soundness concerns (i.e., such as when the dividend is not supported by earnings or involves a material increase in the dividend rate) and in advance of repurchasing shares of common or preferred stock.
−Removed: Page 29 of 122
Federal Deposit Insurance.
13 unchanged sentences
The FDIC has set the designated reserve ratio for the deposit insurance fund at 2% of estimated insured deposits, which the FDIC has established as a long-term goal.
−Removed: As of September 30, 2021, the FDIC had announced that the ratio had declined to 1.30% due largely to the effects of the COVID-19 pandemic.
−Removed: The FDIC adopted a plan to restore the fund to the 1.35% ratio within eight years but did not change its assessment schedule.
+Added: The FDIC adopted a plan to restore the fund to the 1.35% ratio by September 30, 2028 but did not change its assessment schedule.
Under the Dodd-Frank Act, the assessment base for deposit insurance premiums is calculated as average consolidated total assets minus average tangible equity.
Tangible equity for this purpose means Tier 1 capital.
−Removed: The rate schedules set forth in the rule governing the assessment base are scaled to the increase in the assessment base, including schedules that go into effect as the reserve ratio reaches 1.15%, 2%, and 2.5%.
−Removed: The schedules reduce the initial base assessment rate in each of the four risk-based pricing categories.
−Removed: For small Risk category I banks, the rates range from 5-9 basis points.
−Removed: The rates for small institutions in Risk Categories II, III and IV are 14, 23 and 35 basis points, respectively.
−Removed: For large institutions and large, highly complex institutions, the rate schedule ranges from 5 to 35 basis points.
−Removed: There are also adjustments made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits.
+Added: Banks with less than $10 billion in assets (such as the Bank) are assigned an individual rate based on a formula using financial data and CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity) ratings.
+Added: Beginning in June 2023, the initial base assessment rates range from 5 to 35 basis points.
+Added: Adjustments are made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits.
+Added: Assessment rates (inclusive of possible adjustments) currently range from 2.5 to 32 basis points of an institution’s average total assets minus average tangible equity.
The FDIC also provides for an assessment system for large depository institutions with over $10 billion in assets.
4 unchanged sentences
The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital.
−Removed: Page 30 of 122
Federal Home Loan Bank System.
5 unchanged sentences
At December 31, 2024, the Bank was in compliance with this requirement.
−Removed: At December 31, 2023, the Bancorp owned $6.5 million of stock of the Federal Home Loan Bank of Indianapolis (“FHLBI”).
−Removed: The FHLBI stock entitles the Bancorp to dividends from the FHLBI.
−Removed: The Bancorp recognized dividend income of approximately $290 thousand in 2023.
−Removed: At December 31, 2023, the Bancorp’s excess borrowing capacity based on collateral from the FHLBI was $592.6 million.
−Removed: Generally, the loan terms from the FHLBI are better than the terms the Bancorp can receive from other sources making it cheaper to borrow money from the FHLBI.
+Added: At December 31, 2024, the Company owned $6.5 million of stock of the Federal Home Loan Bank of Indianapolis (“FHLBI”).
+Added: The FHLBI stock entitles the Company to dividends from the FHLBI.
+Added: The Company recognized dividend income of approximately $408 thousand in 2024.
+Added: At December 31, 2024, the Company’s excess borrowing capacity based on collateral from the FHLBI was $461 million.
+Added: Generally, the loan terms from the FHLBI are better than the terms the Company can receive from other sources making it cheaper to borrow money from the FHLBI.
Federal Reserve System.
6 unchanged sentences
The CRA requires the FDIC in connection with its examination of the Bank, to assess its record of meeting the credit needs of its community and to take that record into account in its evaluation of certain applications by the Bank.
−Removed: For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching) proposals and may be the basis for approving, denying or conditioning the approval of an application.
+Added: For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching) proposals and may be the basis for approving, denying or conditioning the approval of an application for a merger or acquisition.
As of the date of its most recent regulatory examination, the Bank was rated “satisfactory” with respect to its CRA compliance.
+Added: On October 24, 2023, the federal banking agencies jointly issued a final rule to strengthen and modernize the existing CRA regulations.
+Added: Under the final rule, the agencies will evaluate a bank’s CRA performance based upon the varied activities that it conducts and the communities in which it operates.
+Added: CRA evaluations and data collection requirements will be tailored based on bank size and type.
+Added: The final rule significantly expands the assessment area that financial institutions must consider when evaluating their lending practices by including areas associated with mobile and online banking and includes new metrics and benchmarks to assess retail lending performance.
+Added: In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs of low- or moderate-income communities.
+Added: On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule.
+Added: The injunction extends the effective date of April 1, 2024, and all other implementation dates, on a day-for-day basis until the injunction is lifted.
+Added: While the federal banking agencies are appealing the district court’s decision, to date the injunction remains in effect and implementation of the final rule is delayed indefinitely.
+Added: Compliance with the majority of the final rule's provisions otherwise would not have been required until January 1, 2026 and the data reporting requirements of the final rule would not have taken effect until January 1, 2027.
Gramm-Leach-Bliley Act.
1 unchanged sentence
In order to engage in these new financial activities, a bank holding company must qualify and register with the FRB as a "financial holding company" by demonstrating that each of its bank subsidiaries is well capitalized, well managed and has at least a satisfactory rating under the CRA.
−Removed: As previously discussed, the Bancorp has elected to become a financial holding company under Gramm-Leach.
+Added: As previously discussed, the Company has elected to become a financial holding company under Gramm-Leach.
Gramm-Leach established a system of functional regulation, under which the federal banking agencies regulate the banking activities of financial holding companies, the U.S.
3 unchanged sentences
The privacy provisions of Gramm-Leach affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.
−Removed: The Bancorp does not disclose any nonpublic information about any current or former customers to anyone except as permitted by law and subject to contractual confidentiality provisions which restrict the release and use of such information.
−Removed: Page 31 of 122
+Added: The Company does not disclose any nonpublic information about any current or former customers to anyone except as permitted by law and subject to contractual confidentiality provisions which restrict the release and use of such information.
Cybersecurity Guidelines.
1 unchanged sentence
These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.
−Removed: In October 2016, the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cybersecurity risk-management and resilience standards that would apply to large and interconnected banking organizations and to services provided by third parties to these firms.
−Removed: These enhanced standards would apply only to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more, which would not currently include the Bancorp.
−Removed: However, similar standards and/or regulations may be adopted or implemented by federal and state banking agencies in the future which may be applicable to community banking organizations such as the Bancorp.
+Added: The federal banking agencies also have issued a rule imposing cybersecurity notification requirements for banking organizations and their service providers.
+Added: Specifically, the rule requires banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a “computer-security incident” that rises to the level of a “notification incident,” as those terms are defined under the final rules.
+Added: Additional standards and/or regulations may be adopted or implemented by federal and state banking agencies in the future which may be applicable to community banking organizations such as the Company.
Recent cyberattacks against banks and other financial institutions that resulted in unauthorized access to confidential customer information have prompted the federal banking regulators to issue extensive guidance on cybersecurity.
1 unchanged sentence
A financial institution also should have a robust business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution.
−Removed: During 2023, the Bancorp did not discover any material cybersecurity incidents.
+Added: During 2024, the Company did not discover any material cybersecurity incidents.
Consumer Financial Protection Bureau.
12 unchanged sentences
Depending on the implementation of this revised federal preemption standard, the operations of the Bank could become subject to additional compliance burdens in the states in which it operates.
−Removed: Page 32 of 122
Mortgage Reform and Anti-Predatory Lending .
7 unchanged sentences
Although institutions with total assets of less than $10 billion are exempt from this requirement, competitive pressures have required smaller depository institutions to reduce fees with respect to these debit card transactions.
−Removed: Federal Securities Law.
−Removed: The shares of Common Stock of the Bancorp have been registered with the SEC under the Exchange Act.
−Removed: The Bancorp is subject to the periodic reporting, proxy solicitation, insider trading restrictions and other requirements of the Exchange Act and the rules of the SEC promulgated there under.
−Removed: If the Bancorp has fewer than 1,200 record shareholders, it may deregister its shares under the Exchange Act and cease to be subject to the foregoing requirements.
−Removed: Shares of the Bancorp’s Common Stock held by persons who are affiliates of the Bancorp may not be resold without registration unless sold in accordance with the resale restrictions of Rule 144 under the Securities Act of 1933.
−Removed: If the Bancorp meets the current public information requirements under Rule 144, each affiliate of the Bancorp who complies with the other conditions of Rule 144 (including those that require the affiliate’s sale to be aggregated with those of certain other persons) would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of (i) 1% of the outstanding shares of the Bancorp or (ii) the average weekly volume of trading in such shares during the preceding four calendar weeks.
−Removed: Under the Dodd-Frank Act, the Bancorp is required to provide its shareholders an opportunity to vote on the executive compensation payable to its named executive officers and on golden parachute payments in connection with mergers and acquisitions.
+Added: Federal Securities Law and Nasdaq Listing.
+Added: The shares of Common Stock of the Company have been registered with the SEC under the Exchange Act.
+Added: The Company is subject to the periodic reporting, proxy solicitation, insider trading restrictions and other requirements of the Exchange Act and the rules of the SEC promulgated there under.
+Added: If the Company has fewer than 1,200 record shareholders, it may deregister its shares under the Exchange Act and cease to be subject to the foregoing requirements.
+Added: Shares of the Company’s Common Stock held by persons who are affiliates of the Company may not be resold without registration unless sold in accordance with the resale restrictions of Rule 144 under the Securities Act of 1933.
+Added: If the Company meets the current public information requirements under Rule 144, each affiliate of the Company who complies with the other conditions of Rule 144 (including those that require the affiliate’s sale to be aggregated with those of certain other persons) would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of (i) 1% of the outstanding shares of the Company or (ii) the average weekly volume of trading in such shares during the preceding four calendar weeks.
+Added: Under the Dodd-Frank Act, the Company is required to provide its shareholders an opportunity to vote on the executive compensation payable to its named executive officers and on golden parachute payments in connection with mergers and acquisitions.
These votes are non-binding and advisory.
−Removed: At least once every six years, the Bancorp must also permit shareholders to determine on an advisory basis whether such votes should be held every one, two, or three years.
+Added: At least once every six years, the Company must also permit shareholders to determine on an advisory basis whether such votes should be held every one, two, or three years.
+Added: Shares of the Company’s Common Stock are listed on the Nasdaq Capital Market under the trading symbol “FNWD,” and the Company is subject to the rules of the Nasdaq for listed companies.
Federal Reserve Monetary Policies.
−Removed: The Bancorp’s earnings and growth, as well as the earnings and growth of the banking industry in general, are affected by the monetary and credit policies of monetary authorities, including the FRB.
+Added: The Company’s earnings and growth, as well as the earnings and growth of the banking industry in general, are affected by the monetary and credit policies of monetary authorities, including the FRB.
An important function of the FRB is to regulate the national supply of bank credit in order to combat recession and curb inflationary pressures.
3 unchanged sentences
The monetary policies of the FRB have had a significant impact on the operating results of financial institutions in the past and are expected to continue to have effects in the future.
−Removed: In view of continually changing conditions in the national economy and in money markets, as well as the effect of credit policies by monetary and fiscal authorities, including the FRB, it is difficult to predict the impact of possible future changes in interest rates, deposit levels, and loan demand, or their effect on the Bancorp’s business and earnings or on the financial condition of the Bancorp’s various customers.
+Added: In view of continually changing conditions in the national economy and in money markets, as well as the effect of credit policies by monetary and fiscal authorities, including the FRB, it is difficult to predict the impact of possible future changes in interest rates, deposit levels, and loan demand, or their effect on the Company’s business and earnings or on the financial condition of the Company’s various customers.
+Added: Artificial Intelligence.
+Added: State and federal regulatory agencies have begun adopting rules and guidelines regarding the use of artificial intelligence (“AI”) technologies in connection with the provision of financial services.
+Added: For example, the CFPB and other federal bank regulatory agencies have provided guidance that creditors may be subject to adverse action notice requirements under the Equal Credit Opportunity Act even if they rely on algorithmic underwriting models.
+Added: Additionally, the California Privacy Protection Agency is currently in the process of finalizing regulations regarding the use of automated decision making.
+Added: California also enacted new laws that further regulate the use of AI technologies and provide consumers with additional protections around companies’ use of AI technologies, such as requiring companies to disclose certain uses of generative AI, and other states have also passed AI-focused legislation.
+Added: In addition, the New York State Department of Financial Services issued an industry letter on combating cybersecurity risks associated with AI.
+Added: Additionally, on January 23, 2025, President Trump issued an executive order aimed at reducing barriers to AI innovation in the U.S.
+Added: The executive order requires relevant persons and bodies within the federal government to develop an AI action plan to carry out this objective and revokes an AI-related executive order issued in 2023 by President Biden, as well as all corresponding policies, regulations, orders, directives, and other actions taken in response to such order.
Other Future Legislation and Change in Regulations.
Various other legislation, including proposals to expand or contract the powers of banking institutions and bank holding companies, is from time to time introduced.
−Removed: This legislation may change banking statutes and the operating environment of the Bancorp and the Bank in substantial and unpredictable ways.
+Added: This legislation may change banking statutes and the operating environment of the Company and the Bank in substantial and unpredictable ways.
If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions.
−Removed: The Bancorp cannot accurately predict whether any of this potential legislation will ultimately be enacted, and, if enacted, the ultimate effect that it, or implementing regulations, would have upon the financial condition or results of operations of the Bancorp or the Bank.
−Removed: Page 33 of 122
+Added: The Company cannot accurately predict whether any of this potential legislation will ultimately be enacted, and, if enacted, the ultimate effect that it, or implementing regulations, would have upon the financial condition or results of operations of the Company or the Bank.
Federal Taxation
For federal income tax purposes, the Bank reports its income and expenses on the accrual method of accounting.
−Removed: The Bancorp and the Bank file a consolidated federal income tax return for each fiscal year ending December 31.
+Added: The Company and the Bank file a consolidated federal income tax return for each fiscal year ending December 31.
State Taxation
6 unchanged sentences
Accounting for Income Taxes
−Removed: At December 31, 2023, the Bancorp has consolidated total deferred tax assets of $31.4 million and consolidated total deferred tax liabilities of $3.3 million, resulting in a consolidated net deferred tax asset of $28.1 million.
+Added: At December 31, 2024, the Company has consolidated total deferred tax assets of $36.5 million and consolidated total deferred tax liabilities of $6.9 million, resulting in a consolidated net deferred tax asset of $29.5 million.
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.