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Finward Bancorp (FNWD)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered improved profitability with net income of $2.15M and diluted EPS of $0.50, driven by continued net interest margin expansion to 2.97% GAAP (3.11% tax-equivalent) and a net benefit from credit losses as recoveries outpaced charge-offs .
  • EPS materially beat Wall Street consensus ($0.50 actual vs $0.26 consensus; 2 estimates), while revenue was roughly in line depending on definition; company “Total revenue” was $16.63M vs S&P consensus revenue estimate $16.95M* (company’s “Total revenue” differs from S&P’s standardized “Revenue”) *.
  • Asset quality remained stable though non-performing loans rose modestly QoQ to $13.5M (0.91% of loans); ACL coverage was robust at 133.0% and the quarter recorded $414K net recoveries, supporting profitability .
  • Capital improved (Tier 1 leverage 8.69%), liquidity remained strong ($728M available), and deposits grew slightly QoQ (+0.3%) with core deposits at 69.1% of total; management highlighted continued opportunity to improve expenses and non-interest income as 2025 progresses .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded for another consecutive quarter (2.97% GAAP; 3.11% tax-equivalent) primarily from higher loan yields and improved funding costs/mix, indicating disciplined pricing and balance sheet management .
  • Credit costs were favorable: the Bank recorded a net benefit from credit loss totaling $274K, including net loan recoveries of $414K, improving earnings and underpinning the ACL coverage ratio of 133.0% .
  • Capital strengthened and tangible book value per share increased (TBVPS $30.16; TBVPS ex-AOCL $43.47), supporting flexibility; CEO: “We have moved Tier 1 capital up above key internal targets, and asset quality has remained relatively stable” .

What Went Wrong

  • Non-performing loans rose QoQ to $13.5M (0.91% of loans) from $12.5M (0.84%), modestly pressuring asset quality ratios even as coverage remained robust .
  • Non-interest expense increased QoQ (2.90% of average assets vs 2.81%) due to higher data processing and marketing costs, raising the efficiency ratio to 88.92% vs 87.20% in Q4 2024, despite improvement vs Q1 2025 .
  • Non-interest income was seasonally/timing impacted, falling from Q4 2024 ($3.73M) to Q1 2025 ($2.23M) and only partly recovering in Q2 2025 ($2.68M), constraining total revenue momentum in the quarter .

Financial Results

Income Statement and EPS vs Prior Periods

Metric ($USD Thousands except per-share)Q4 2024Q1 2025Q2 2025
Total Revenue (company “Total revenue”)16,339 15,542 16,628
Net Interest Income12,607 13,313 13,945
Non-Interest Income3,732 2,229 2,683
Net Income2,102 455 2,151
Diluted EPS ($)0.49 0.11 0.50

Margins and Efficiency

MetricQ4 2024Q1 2025Q2 2025
Net Interest Margin (GAAP)2.65% 2.81% 2.97%
Net Interest Margin (Tax-Equivalent, non-GAAP)2.79% 2.95% 3.11%
Efficiency Ratio (non-GAAP)87.20% 93.11% 88.92%
Return on Assets0.41% 0.09% 0.42%
Return on Equity5.39% 1.17% 5.66%

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Total Deposits ($000)1,760,566 1,750,384 1,754,850
Non-Interest-Bearing Deposits ($000)263,324 281,461 271,172
Certificates of Deposit ($000)560,253 544,847 542,693
Non-Performing Loans / Total Loans0.91% 0.84% 0.91%
ACL / Non-Performing Loans (Coverage)123.10% 143.84% 133.01%
ACL / Loans Receivable1.12% 1.20% 1.22%
Net Charge-offs (Recoveries) / Avg Loans0.59% 0.01% (0.11%)
Tier 1 Leverage Ratio8.48% (Q1) 8.48% (Q1) 8.69% (Q2)
Liquidity Available ($000)—697,000 728,000

Loan Portfolio Composition (Balances)

Category ($000)Q4 2024Q1 2025Q2 2025
Commercial Real Estate (Total)551,674 554,866 551,091
— Owner Occupied (CRE)236,900 (Q1 2025) 236,900 251,000 (stated % context)
— Non-Owner Occupied (CRE)302,800 (Q1 2025) 302,800 299,900
Multifamily212,455 204,964 206,540
Residential Real Estate467,293 458,424 456,256
Construction & Land Development82,874 86,728 74,895
Commercial Business104,246 99,519 105,636
Manufactured Homes26,708 25,762 25,146
Government11,024 9,279 14,628
Consumer551 504 2,347
Loans Receivable (Gross)1,506,583 1,489,798 1,487,651

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/EPSFY/Q3+Not providedNot providedMaintained: no formal guidance issued .
Net Interest MarginFY/Q3+Not quantifiedManagement expects continued opportunity; NIM expanded QoQ (context, not formal guidance) .Directional positive commentary.
Non-Interest IncomeFY/Q3+Not quantified“Seasonal and timing factors impacted… continued opportunity as the year moves forward” .Directional positive commentary.
OpExFY/Q3+Not quantifiedFocus on efficiencies and third-party expense reductions .Maintained operational focus.
Dividend per shareQ2/Q3 2025$0.12 declared (Apr 10) $0.12 declared (Aug 15) Maintained.
Regulatory status2025Consent Order effective Nov 7, 2023 Consent Order terminated Aug 6, 2025 (BSA/AML compliance) Improved regulatory posture.

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available in the document archive. Themes below are based on Q2/Q1 press releases and 8‑K risk statements.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net Interest Margin trajectoryNIM improved to 2.79% tax‑equiv in Q4; to 2.95% in Q1, driven by lower deposit/borrowing costs .NIM further expanded to 3.11% tax‑equiv (loan repricing; improved funding mix) .Improving sequentially.
Credit quality/ACLQ4 had elevated net charge‑offs; Q1 ACL coverage improved to 143.8% with lower NPLs .NPLs up modestly; coverage 133.0%; net recoveries of $414K and net benefit from credit losses .Stable with favorable recoveries.
Non‑interest incomeQ4 strong ($3.73M), Q1 weaker ($2.23M) .Partial recovery to $2.68M; management sees continued opportunity .Gradual normalization.
Operating expenses/efficiencyQ1 OpEx/avg assets 2.81%; efficiency ratio 93.11% .OpEx/avg assets 2.90%; efficiency ratio 88.92% (better vs Q1) .Mixed QoQ; efficiency improved vs Q1.
Regulatory/legalConsent Order in place through Q1 2025; dividend subject to approval .Consent Order terminated Aug 6, 2025 (post‑Q2), improving outlook .Positive regulatory development.
Macro/tariffs/AI risksRisks cited including tariffs and AI .Continued risk disclosure on tariffs, AI, rates, inflation .Ongoing macro vigilance.

Management Commentary

  • “Net interest margin expanded for another consecutive quarter and is above 3% on a tax‑equivalent basis. Importantly, we have moved Tier 1 capital up above key internal targets, and asset quality has remained relatively stable. Net recoveries were a strong point… Seasonal and timing factors impacted operating expense and non‑interest income, and we see continued opportunity in both areas as the year moves forward.” — Benjamin Bochnowski, CEO .
  • “Margin continued to expand in the first quarter as deposits repriced lower… With economic uncertainty potentially increasing, we are maintaining our focus on capital and credit quality.” — Benjamin Bochnowski, CEO .

Q&A Highlights

  • No earnings call transcript for Q2 2025 was available in the filings archive; therefore, Q&A themes and any guidance clarifications are not accessible for this quarter [ListDocuments].

Estimates Context

  • EPS: Q2 2025 actual $0.50 vs consensus $0.26 (2 estimates); Q1 2025 actual $0.11 vs consensus ~$0.095 (2 estimates); Q4 2024 actual $0.49 vs consensus ~$0.195 (2 estimates)* *.
  • Revenue: Company “Total revenue” was $16.63M in Q2 2025 vs S&P consensus ~$16.95M*; Q1 2025 $15.54M vs ~$16.25M*; Q4 2024 $16.34M vs ~$16.00M* (Note: S&P’s “Revenue” may reflect standardized definitions that can differ from the company’s “Total revenue” used in efficiency ratio calculations) .
    Values retrieved from S&P Global.

Actuals vs S&P Consensus

MetricQ4 2024Q1 2025Q2 2025
Diluted EPS – Actual ($)0.49 0.11 0.50
Diluted EPS – Consensus Mean ($)0.195*0.095*0.26*
Revenue – Actual ($000, company “Total revenue”)16,339 15,542 16,628
Revenue – Consensus Mean ($000)16,000*16,250*16,950*

Key Takeaways for Investors

  • Sequential earnings recovery with strong EPS beat vs consensus in Q2 2025; margin expansion and net recoveries were the key drivers *.
  • Balance sheet resilience: deposits ticked up modestly QoQ (+$4.5M), core deposits were ~69% of total, and liquidity stood at ~$728M, supporting funding flexibility .
  • Asset quality stable overall despite a modest uptick in NPLs; ACL coverage remained solid at 133%, and net recoveries underscore constructive credit trends .
  • Operating efficiency improved vs Q1 (efficiency ratio to 88.92%), but OpEx rose QoQ; management is targeting additional efficiencies and third‑party expense reductions, a potential EPS lever .
  • Regulatory risk diminishing: termination of the Consent Order (Aug 6, 2025) post‑Q2 removes a key overhang; continued dividend declarations at $0.12 suggest improved capital/oversight dynamics .
  • Near‑term trading: EPS beats and NIM expansion are positive catalysts; monitor subsequent quarters for sustainability of non‑interest income improvement and OpEx control *.
  • Medium‑term thesis: Loan repricing and funding mix optimization continue to support NIM, while disciplined credit and improved regulatory posture enhance earnings quality; watch CRE exposures (owner/non‑owner occupied) and office collateral (~$42.1M) for macro sensitivity .