Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
			For the quarterly period ended June 30, 2025 or
			For the quarterly period ended September 30, 2025 or
o			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
			For the transition period from ______ to ______
			Commission File Number: 001-40999

Finward Bancorp

(Exact name of registrant as specified in its charter)


Indiana			35-1927981
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

9204 Columbia Avenue Munster, Indiana			46321
(Address of principal executive offices)			(ZIP code)

Registrant's telephone number, including area code: (219) 836‑4400


			N/A
			(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	FNWD	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer o Non-accelerated filer x

Smaller Reporting Company x Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 4,~~324~~327,~~889~~000 shares of the registrant’s Common Stock, without par value, outstanding at ~~August~~November 117, 2025.

Table of Contents

Finward Bancorp

Index

			PageNumber
PART I. Financial Information
Item 1. Unaudited Financial Statements and Notes			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3839
Item 3. Quantitative and Qualitative Disclosures about Market Risk			5759
Item 4. Controls and Procedures			5759
PART II. Other Information			57
SIGNATURES			60
Item 6. Exhibits			61
EXHIBITS
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1 Section 1350 Certifications
101 XBRL Interactive Data File
SIGNATURES			62

Table of Contents

PART I. Financial Information

Item 1. Financial Statements and Notes (unaudited)

Finward Bancorp

Condensed Consolidated Balance Sheets

	(unaudited)
(Dollars in thousands)	~~June~~September 30,2025		December 31,2024
ASSETS
Cash and non-interest bearing deposits in other financial institutions	$	2319,~~027~~458	$	17,883
Interest bearing deposits in other financial institutions	7984,~~976~~157		52,047
Federal funds sold	~~411~~563		654
Total cash and cash equivalents	~~103~~104,~~414~~178		70,584
Securities available-for-sale	~~327~~335,~~845~~150		333,554
Loans held-for-sale	~~834~~2,641		1,253
Loans receivable, net of deferred fees and costs	1,~~484~~473,~~278~~774		1,508,976
Less: Allowance for credit losses	(1817,~~184~~977)		(16,911)
Net loans receivable	1,~~466~~455,~~094~~797		1,492,065
Federal Home Loan Bank stock	6,547		6,547
Accrued interest receivable	7,~~651~~585		7,721
Premises and equipment	4645,~~179~~544		47,259
Cash value of bank owned life insurance	33,~~932~~843		33,514
Goodwill	22,395		22,395
Other intangible assets	1,~~414~~273		1,860
Other assets	4137,~~606~~771		43,947
Total assets	$	2,~~057~~052,~~911~~724	$	2,060,699
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	~~271~~280,~~172~~296	$	263,324
Interest bearing	1,~~483~~470,~~678~~350		1,497,242
Total	1,~~754~~750,~~850~~646		1,760,566
Repurchase agreements	48,~~331~~426		40,116
Borrowed funds	6555,000		65,000
Accrued expenses and other liabilities	3533,~~477~~157		43,603
Total liabilities	1,~~903~~887,~~658~~229		1,909,285
Commitments and contingencies
Stockholders' Equity:
Preferred stock, no par or stated value; 10,000,000 shares authorized, none outstanding	-		-
Common stock, no par or stated value; 10,000,000 shares authorized; shares issued and outstanding: June 30, 2025 - 4,324,889 December 31, 2024 - 4,313,698	-		-
Common stock, no par or stated value; 10,000,000 shares authorized; shares issued and outstanding: September 30, 2025 - 4,327,511 December 31, 2024 - 4,313,698	-		-
Additional paid-in capital	70,~~263~~233		70,034
Accumulated other comprehensive loss	(5749,~~560~~266)		(58,084)
Retained earnings	~~141~~144,~~550~~528		139,464
Total stockholders' equity	~~154~~165,~~253~~495		151,414
Total liabilities and stockholders' equity	$	2,~~057~~052,~~911~~724	$	2,060,699

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Finward Bancorp

Condensed Consolidated Statements of Income

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(Dollars in thousands, except per share data)

2025

2024

2025

2024

Interest income:

Loans receivable

1920,~~940~~246

19,~~174~~660

3959,~~595~~841

3857,~~053~~713

Securities

2,~~108~~091

2,~~143~~138

46,~~241~~332

46,~~386~~524

Other interest earning assets

~~622~~1,003

~~810~~674

12,~~175~~178

12,~~672~~346

Total interest income

2223,~~670~~340

22,~~127~~472

4568,~~011~~351

4466,~~111~~583

Interest expense:

Deposits

7,~~780~~996

8,~~610~~946

1523,~~825~~821

1726,~~404~~350

Repurchase agreements

~~370~~392

~~399~~435

~~718~~1,110

~~769~~1,204

Borrowed funds

~~575~~509

1,~~064~~085

1,~~210~~719

23,~~104~~189

Total interest expense

8,~~725~~897

10,~~073~~466

1726,~~753~~650

2030,~~277~~743

Net interest income

1314,~~945~~443

12,~~054~~006

2741,~~258~~701

2335,~~834~~840

Provision for (benefit from) credit losses

(~~274~~301)

76-

~~180~~(121)

Net interest income after provision for credit losses

14,~~219~~744

1112,~~978~~006

2741,~~078~~822

2335,~~758~~764

Non-interest income:

Fees and service charges

1,~~330~~463

1,~~257~~463

23,~~439~~902

23,~~410~~873

Wealth management operations

~~696~~759

~~763~~731

12,~~315~~074

12,~~396~~127

Gain on tax credit investment

Gain (loss) on tax credit investment

Gain on sale of loans held-for-sale, net

378

320

608

472

Gain (loss) on sale of loans held-for-sale, net

265

338

873

810

Loss on sale of securities, net

(531)

Gain (loss) on sale of securities, net

(531)

Increase in cash value of bank owned life insurance

220

212

418

405

Increase (decrease) in cash value of bank owned life insurance

210

205

628

610

Gain on sale of real estate

11,873

Gain (loss) on sale of real estate

(56)

11,873

Other

59249

6130

65314

24154

Total non-interest income

2,~~683~~913

2,~~573~~867

47,~~912~~825

1618,~~049~~916

Non-interest expense:

Compensation and benefits

7,~~313~~330

76,~~037~~963

1422,~~685~~015

1421,~~146~~109

Occupancy and equipment

12,~~935~~004

2,~~116~~181

46,~~046~~050

46,~~024~~205

Data processing

1,~~341~~116

1,~~135~~165

23,~~380~~496

23,~~305~~470

Marketing

~~214~~257

~~212~~209

~~300~~557

~~370~~579

Federal deposit insurance premiums

~~471~~399

~~397~~435

~~904~~1,303

~~898~~1,333

Professional and outside services

~~1,115~~945

1,~~257~~251

23,~~375~~320

24,~~814~~064

Technology

~~545~~549

~~507~~602

~~999~~1,548

1,~~132~~734

Other

1,~~852~~497

1,~~756~~668

35,~~569~~066

35,~~732~~401

Total non-interest expense

14,~~786~~097

14,~~417~~474

2943,~~258~~355

2943,~~421~~895

Income before income tax expense

23,~~116~~560

~~134~~399

26,~~732~~292

10,~~386~~785

Income tax expense (benefit)

~~(35)~~63

(9207)

~~126~~189

~~963~~756

Net income

23,~~151~~497

~~143~~606

26,~~606~~103

910,~~423~~029

Earnings per common share:

Basic

0.5082

0.0314

01.6143

2.2135

Diluted

0.5081

0.0314

01.6142

2.2135

Dividends declared per common share

0.12

0.1224

0.2436

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Finward Bancorp

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

Three Months Ended June 30

Six Months Ended June 30

Three Months Ended September 30

Nine Months Ended September 30

(Dollars in thousands)

2025

2024

2025

2024

Net income

23,~~151~~497

~~143~~606

26,~~606~~103

910,~~423~~029

Net change in net unrealized gains and losses on securities available-for-sale:

Unrealized gain (loss) arising during the period

~~899~~10,912

(313,~~338)~~957

~~689~~11,601

~~(10~~3,~~050)~~907

Less: reclassification adjustment for losses included in net income

531

Net securities gain (loss) during the period

~~899~~10,912

(313,~~338)~~957

~~689~~11,601

(94,~~519)~~438

Tax effect

(~~215~~2,618)

~~712~~(3,259)

(~~165~~2,783)

2(1,~~193~~066)

Other comprehensive income (loss), net of tax

~~684~~8,294

(210,~~626)~~698

~~524~~8,818

(73,~~326)~~372

Comprehensive income (loss) net of tax

211,~~835~~791

(211,~~483)~~304

314,~~130~~921

213,~~097~~401

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Finward Bancorp

Condensed Consolidated Statements of Changes in Stockholder's Equity

(unaudited)

(Dollars in thousands, except per share data)	CommonStock		AdditionalPaid-inCapital		AccumulatedOtherComprehensive(Loss)/Income		RetainedEarnings		TotalStockholders'Equity
Balance at March 31, 2024	$	-	$	69,727	$	(56,313)	$	138,167	$	151,581
Net income	-		-		-		143		143
Other comprehensive loss, net of tax	-		-		(2,626)		-		(2,626)
Net surrender value of 3,364 restricted stock awards	-		(82)		-		-		(82)
Stock-based compensation expense	-		133		-		-		133
Cash dividends, $0.12 per share	-		-		-		(518)		(518)
Balance at June 30, 2024	$	-	$	69,778	$	(58,939)	$	137,792	$	148,631
Net income	-		-		-		606		606
Other comprehensive income (loss), net of tax	-		-		10,698		-		10,698
Stock-based compensation expense	-		138		-		-		138
Cash dividends, $0.12 per share	-		-		-		(518)		(518)
Balance at September 30, 2024	$	-	$	69,916	$	(48,241)	$	137,880	$	159,555
Balance at January 1, 2024	$	-	$	69,555	$	(51,613)	$	129,403	$	147,345
Net income	-		-		-		910,~~423~~029		910,~~423~~029
Other comprehensive loss, net of tax	-		-		(7,326)		-		(7,326)
Other comprehensive income (loss), net of tax	-		-		3,372		-		3,372
Net surrender value of 3,364 restricted stock awards	-		(82)		-		-		(82)
Stock-based compensation expense	-		~~305~~443		-		-		~~305~~443
Cash dividends, $0.24 per share	-		-		-		(1,034)		(1,034)
Cash dividends, $0.36 per share	-		-		-		(1,552)		(1,552)
Balance at June 30, 2024	$	-	$	69,778	$	(58,939)	$	137,792	$	148,631
Balance at September 30, 2024	$	-	$	69,916	$	(48,241)	$	137,880	$	159,555
Balance at March 31, 2025	$	-	$	70,132	$	(58,244)	$	139,919	$	151,807
Net income	-		-		-		2,151		2,151
Other comprehensive income, net of tax	-		-		684		-		684
Stock-based compensation expense	-		131		-		-		131
Cash dividend, $0.12 per share	-		-		-		(520)		(520)
Balance at June 30, 2025	$	-	$	70,263	$	(57,560)	$	141,550	$	154,253
Net income	-		-		-		3,497		3,497
Other comprehensive income (loss), net of tax	-		-		8,294		-		8,294
Net surrender value of 5,328 restricted stock awards	-		(146)		-		-		(146)
Stock-based compensation expense	-		116		-		-		116
Cash dividend, $0.12 per share	-		-		-		(519)		(519)
Balance at September 30, 2025	$	-	$	70,233	$	(49,266)	$	144,528	$	165,495
Balance at January 1, 2025	$	-	$	70,034	$	(58,084)	$	139,464	$	151,414
Net income	-		-		-		26,~~606~~103		26,~~606~~103
Other comprehensive income, net of tax	-		-		524		-		524
Other comprehensive income (loss), net of tax	-		-		8,818		-		8,818
Stock-based compensation expense	-		229		-		-		229
Net surrender value of 5,328 restricted stock awards	-		(146)		-		-		(146)
Cash dividends, $0.12 per share	-		-		-		(520)		(520)
Stock-based compensation expense	-		345		-		-		345
Balance at June 30, 2025	$	-	$	70,263	$	(57,560)	$	141,550	$	154,253
Cash dividends, $0.24 per share	-		-		-		(1,039)		(1,039)
Balance at September 30, 2025	$	-	$	70,233	$	(49,266)	$	144,528	$	165,495

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Finward Bancorp

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine months ended September 30,
(Dollars in thousands)	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,103	$	10,029
Adjustments to reconcile net income to net cash provided by operating activities:
Origination of loans for sale	(29,276)		(22,536)
Sale of loans originated for sale	28,788		21,051
Depreciation and amortization, net of accretion	4,684		5,532
Stock based compensation expense	345		443
Cash payments for lease liabilities	(1,201)		(965)
(Gain) loss on sale of securities, net	-		531
(Gain) loss on sale of loans held-for-sale, net	(906)		(744)
(Gain) loss on sale of real estate	56		(11,873)
(Gain) loss on sale of foreclosed real estate	-		(1)
(Increase) decrease of cash value of bank owned life insurance	(628)		(610)
(Gain) loss on death benefits of bank-owned life insurance	(236)		-
(Gain) loss on derivatives	33		(66)
Provision for (benefit from) credit losses	(121)		76
Change in:
Interest receivable	136		603
Interest payable	(542)		(2,294)
Other assets	2,555		3,134
Accrued expenses and other liabilities	(7,630)		(3,310)
Total adjustments	(3,943)		(11,029)
Net cash provided by (used in) operating activities	2,160		(1,000)
CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities and pay downs of securities available-for-sale	8,934		9,486
Proceeds from sales of securities available-for-sale	-		14,698

Net change in loans receivable	34,706		3,891
Purchase of premises and equipment	(613)		(2,852)
Proceeds from sale of premises and equipment	667		17,677
Proceeds from sale of foreclosed real estate	-		72
Proceeds from death benefits of bank owned life insurance	535		-
Net cash provided by (used in) investing activities	44,229		42,972
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in deposits	(9,920)		(64,611)
Proceeds from borrowed funds	30,000		150,000
Repayment of borrowed funds	(40,000)		(145,000)
Net surrender value of restricted stock awards	(146)		(82)
Change in repurchase agreements	8,310		4,914
Dividends paid	(1,039)		(1,552)
Net cash provided by (used in) financing activities	(12,795)		(56,331)
Net change in cash and cash equivalents	33,594		(14,359)
Cash and cash equivalents at beginning of period	70,584		86,008
Cash and cash equivalents at end of period	$	104,178	$	71,649
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	26,728	$	33,038
Income taxes	-		385
Noncash activities:

Dividends declared not paid	-		518


Right-of-use asset obtained in exchange for lease liability	-		16,140

See accompanying notes to condensed consolidated financial statements.

	Six months ended June 30,
(Dollars in thousands)	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,606	$	9,423
Adjustments to reconcile net income to net cash provided by operating activities:
Origination of loans for sale	(18,141)		(10,594)
Sale of loans originated for sale	19,178		10,217
Depreciation and amortization, net of accretion	3,231		3,436
Stock based compensation expense	229		305
Cash payments for lease liabilities	(800)		(570)
Loss on sale of securities, net	-		531
Gain on sale of loans held-for-sale, net	(624)		(470)
Gain on sale of real estate	-		(11,873)
Gain on sale of foreclosed real estate	-		(1)
Increase of cash value of bank owned life insurance	(418)		(405)
Gain on derivatives	16		(2)
Provision for credit losses	180		76
Change in:
Interest receivable	70		350
Interest payable	(34)		(1,543)
Other assets	2,136		2,855
Accrued expenses and other liabilities	(6,669)		990
Total adjustments	(1,646)		(6,698)
Net cash provided by operating activities	960		2,725
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and pay downs of securities available-for-sale	5,687		6,326
Proceeds from sales of securities available-for-sale	-		14,697
Net change in loans receivable	24,593		5,976
Purchase of premises and equipment	(461)		(2,344)
Proceeds from sale of premises and equipment	-		17,677
Proceeds from sale of foreclosed real estate	72		72
Net cash provided by investing activities	29,891		42,404
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in deposits	(5,716)		(56,667)
Proceeds from borrowed funds	40,000		90,000
Repayment of borrowed funds	(40,000)		(85,000)
Net surrender value of restricted stock awards	-		(82)
Change in repurchase agreements	8,215		4,849
Dividends paid	(520)		(1,030)
Net cash provided by (used in) financing activities	1,979		(47,930)
Net change in cash and cash equivalents	32,830		(2,801)
Cash and cash equivalents at beginning of period	70,584		86,008
Cash and cash equivalents at end of period	$	103,414	$	83,207
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	17,718	$	21,779
Income taxes	-		160
Noncash activities:
Dividends declared not paid	-		515
Right-of-use asset obtained in exchange for lease liability	-		16,140

Table of Contents

Finward Bancorp

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 - Basis of Presentation

Organization and Description of Business

The condensed consolidated financial statements include the accounts of Finward Bancorp (the “Company” or “FNWD”) and Peoples Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, Peoples Service Corporation, NWIN, LLC, NWIN Funding, Incorporated, and Columbia Development Company, LLC. 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 accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures required by U.S. generally accepted accounting principles ("GAAP") for complete presentation of condensed consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments necessary to present fairly the condensed consolidated balance sheets of the Company as of ~~June~~September 30, 2025, and December 31, 2024, and the condensed consolidated statements of income, comprehensive income (loss), and changes in stockholders’ equity for the three and ~~six~~nine months ended ~~June~~September 30, 2025, and 2024, and condensed consolidated statements of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2025, and 2024. The income reported for the ~~six~~nine months ended ~~June~~September 30, 2025, is not necessarily indicative of the results to be expected for the full year.

The Company's revenue is primarily derived from the business of banking. The Company's financial performance is monitored on a consolidated basis by the CEO, who is considered to be the Company's Chief Operating Decision Maker ("CODM"). This review is supported by the Chief Financial Officer, Chief Revenue Officer, and Chief Operating Officer. Financial performance is reported to the CODM monthly. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Company's consolidated balance sheets and consolidated statements of income. Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include compensation and benefits, net occupancy expense, equipment costs, data processing fees, and professional fees.

All of the Company’s financial results are similar and considered by management to be aggregated into one reportable operating segment. The Company's revenue is primarily derived from the business of banking and the Company’s CODM evaluates financial performance on a company-wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment.

The Notes to the Condensed Consolidated Financial Statements appearing in Finward Bancorp’s Annual Report on Form 10-K (2024 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Condensed Consolidated Balance Sheet at December 31, 2024, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for condensed financial statements.

Note 2 - Use of Estimates

Preparing condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for credit losses are particularly susceptible to material change in the near term.

Note 3 – Accounting Pronouncements Recently Adopted or Issued

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU incorporates several disclosure and presentation requirements currently residing in the SEC Regulations S-X and S-K. The amendments will be applied prospectively and are effective when the SEC removes the related requirements from Regulations S-X or S-K. Any amendments the SEC

Table of Contents

does not remove by June 30, 2027 will not be effective. As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our condensed consolidated financial statements or related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. This accounting standards update will be effective for us for fiscal year 2025, with early adoption permitted. We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this accounting standard, but we do not expect it to have a material impact on our condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-04, Debt-Debt With Conversion and Other Options, which clarifies the requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods beginning after December 15, 2025. Early adoption is permitted. We are currently evaluating the impact of this accounting standard, but we do not expect it to have a material impact on our condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for all entities and an accounting policy election that is available to all entities other than public business entities related to applying ASC-320 to simplify the measurement of credit losses on current accounts receivable and current contract assets that occur from transactions accounted for under ASC 606. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods beginning after December 15, 2025. Early adoption is permitted. We are currently evaluating the impact of this accounting standard, but we do not expect it to have a material impact on our condensed consolidated financial statements.

Note 4 - Securities

The estimated fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

(Dollars in thousands)

CostBasis

GrossUnrealizedGains

GrossUnrealizedLosses

EstimatedFairValue

June 30, 2025

September 30, 2025

U.S. government sponsored entities

8,884

(~~577~~498)

8,~~307~~386

Collateralized mortgage obligations and residential mortgage-backed securities

~~130~~126,~~260~~998

(2220,~~288~~705)

~~107~~106,~~972~~293

Municipal securities

~~262~~261,~~277~~936

(5243,~~327~~081)

~~209~~218,~~950~~855

Collateralized debt obligations

2,~~149~~145

(~~533~~529)

1,616

Total securities available-for-sale

~~403~~399,~~570~~963

(7564,~~725~~813)

~~327~~335,~~845~~150

	(Dollars in thousands)
	CostBasis		GrossUnrealizedGains		GrossUnrealizedLosses		EstimatedFairValue
December 31, 2024
U.S. government sponsored entities	$	8,884	$	-	$	(823)	$	8,061
Collateralized mortgage obligations and residential mortgage-backed securities	135,974		-		(26,649)		109,325
Municipal securities	262,954		-		(48,205)		214,749
Collateralized debt obligations	2,156		-		(737)		1,419
Total securities available-for-sale	$	409,968	$	-	$	(76,414)	$	333,554

Table of Contents


	(Dollars in thousands)
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2024
U.S. government sponsored entities	$	8,884	$	-	$	(823)	$	8,061
Collateralized mortgage obligations and residential mortgage-backed securities	135,974		-		(26,649)		109,325
Municipal securities	262,954		-		(48,205)		214,749
Collateralized debt obligations	2,156		-		(737)		1,419
Total securities available-for-sale	$	409,968	$	-	$	(76,414)	$	333,554

The cost basis and estimated fair value of available-for-sale debt securities at ~~June~~ September 30, 2025, by contractual maturity, were as follows. Securities not due at a single maturity date, primarily collateralized mortgage obligations and residential mortgage-backed securities, are shown separately.

(Dollars in thousands)

Available-for-sale

June 30, 2025

CostBasis

EstimatedFairValue

September 30, 2025

CostBasis

EstimatedFairValue

Due in one year or less

Due from one to five years

12,~~438~~686

11,~~590~~927

Due from five to ten years

4151,~~642~~314

3646,~~578~~151

Due over ten years

~~219~~208,~~230~~965

~~171~~170,~~705~~779

Collateralized mortgage obligations and residential mortgage-backed securities

~~130~~126,~~260~~998

~~107~~106,~~972~~293

Total

~~403~~399,~~570~~963

~~327~~335,~~845~~150

Sales of available-for-sale securities were as follows for the quarter ended:

	Three Months Ended June 30				Six Months Ended June 30
	Three Months Ended September 30				Nine Months Ended September 30
	2025		2024		2025		2024
Proceeds	$	-	$	-	$	-	$	14,~~697~~698
Gross gains	-		-		-		-
Gross losses	-		-		-		(531)

Accumulated other comprehensive income/(loss) balances, net of tax, related to available-for-sale securities, were as follows:

	(Dollars in thousands)
	Unrealized loss
Beginning balance, April 1, 2025	$	(58,244)
Beginning balance, June 30, 2025	$	(57,560)
Period change	~~684~~8,294
Ending balance, June 30, 2025	$	(57,560)
Ending balance, September 30, 2025	$	(49,266)

	(Dollars in thousands)
	Unrealized loss
Beginning balance, April 1, 2024	$	(56,313)
Current period change	(2,626)
Ending balance, June 30, 2024	$	(58,939)

	(Dollars in thousands)
	Unrealized loss
Beginning Balance, January 1, 2025	$	(58,084)
Period change	524
Ending Balance, June 30, 2025	$	(57,560)

Table of Contents


	(Dollars in thousands)
	Unrealized loss
Beginning balance, June 30, 2024	$	(58,939)
Current period change	10,698
Ending balance, September 30, 2024	$	(48,241)

	(Dollars in thousands)
	Unrealized loss
Beginning balance, January 1, 2024	$	(51,613)
Beginning Balance, January 1, 2025	$	(58,084)
Current period change	(7,326)
Period change	8,818
Ending balance, June 30, 2024	$	(58,939)
Ending Balance, September 30, 2025	$	(49,266)

Securities with market values of approximately $327.1 million and $326.5 million were pledged as of June 30, 2025 and December 31, 2024, respectively, as collateral for repurchase agreements, public funds, and for other purposes as permitted or required by law.


	(Dollars in thousands)
	Unrealized loss
Beginning balance, January 1, 2024	$	(51,613)
Current period change	3,372
Ending balance, September 30, 2024	$	(48,241)

Securities with ~~unrealized~~market ~~losses~~values atof ~~June~~approximately $334.4 million and $326.5 million were pledged as of September 30, 2025, and December 31, 2024, ~~not~~respectively, ~~recognized~~as incollateral ~~income~~for ~~are~~repurchase agreements, public funds, and for other purposes as ~~follows:~~permitted or required by law.

					(Dollars in thousands)
	Less than 12 months				12 months or longer				Total
	EstimatedFairValue		UnrealizedLosses		EstimatedFairValue		UnrealizedLosses		EstimatedFairValue		UnrealizedLosses		Percentage ofTotal Portfolioin Loss Position
June 30, 2025
U.S. government sponsored entities	$	-	$	-	$	8,307	$	(577)	$	8,307	$	(577)	100.0	%
Collateralized mortgage obligations and residential mortgage-backed securities	-		-		107,972		(22,288)		107,972		(22,288)		100.0	%
Municipal securities	-		-		209,950		(52,327)		209,950		(52,327)		100.0	%
Collateralized debt obligations	-		-		1,616		(533)		1,616		(533)		100.0	%
Total temporarily impaired	$	-	$	-	$	327,845	$	(75,725)	$	327,845	$	(75,725)	100.0	%
Number of securities			-				411				411

Securities with unrealized losses at September 30, 2025, and December 31, 2024 not recognized in income are as follows:


					(Dollars in thousands)
	Less than 12 months				12 months or longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Percentage of Total Portfolio in Loss Position
September 30, 2025
U.S. government sponsored entities	$	-	$	-	$	8,386	$	(498)	$	8,386	$	(498)	100.0	%
Collateralized mortgage obligations and residential mortgage-backed securities	-		-		106,293		(20,705)		106,293		(20,705)		100.0	%
Municipal securities	-		-		218,855		(43,081)		218,855		(43,081)		100.0	%
Collateralized debt obligations	-		-		1,616		(529)		1,616		(529)		100.0	%
Total temporarily impaired	$	-	$	-	$	335,150	$	(64,813)	$	335,150	$	(64,813)	100.0	%
Number of securities			-				411				411


					(Dollars in thousands)
	Less than 12 months				12 months or longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Percentage of Total Portfolio in Loss Position
December 31, 2024
U.S. government sponsored entities	$	-	$	-	$	8,061	$	(823)	$	8,061	$	(823)	100.0	%
Collateralized mortgage obligations and residential mortgage-backed securities	-		-		109,325		(26,649)		109,325		(26,649)		100.0	%
Municipal securities	3,310		(156)		211,439		(48,049)		214,749		(48,205)		100.0	%
Collateralized debt obligations	-		-		1,419		(737)		1,419		(737)		100.0	%
Total temporarily impaired	$	3,310	$	(156)	$	330,244	$	(76,258)	$	333,554	$	(76,414)	100.0	%
Number of securities			4				409				413

Unrealized losses on securities have not been recognized into income because the securities are of high credit quality or have undisrupted cash flows. Management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and volatility in securities markets. The fair values are expected to recover as the securities approach maturity.

9Collateralized debt obligations with a cost basis of $2.1 million and fair value of $1.6 million at September 30, 2025 and $1.4 million at December 31, 2024, had previously recorded impairment of $173 thousand, which will not be recoverable until maturity of the security.

~~Table~~Accrued interest receivable on AFS debt securities totaled $2.2 million at September 30, 2025, and $2.3 million at December 31, 2024. These amounts are excluded from the estimate of ~~Contents~~credit losses. The Company made the policy election to exclude accrued interest from the amortized cost basis of AFS debt securities and report accrued interest separately on the condensed consolidated balance sheet.

Collateralized debt obligations with a cost basis of $2.1 million and fair value of $1.6 million at June 30, 2025 and $1.4 million million at December 31, 2024, had previously recorded impairment of $173 thousand, which will not be recoverable until maturity of the security.

Accrued interest receivable on AFS debt securities totaled $2.1 million at June 30, 2025, and $2.3 million at December 31, 2024. These amounts are excluded from the estimate of credit losses. The Company made the policy election to exclude accrued interest from the amortized cost basis of AFS debt securities and report accrued interest separately on the condensed consolidated balance sheet.

Note 5 - Loans Receivable

The Company’s current lending programs are described below:

Residential Real Estate. A 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. 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.

Fixed rate loans generally conform to Freddie Mac guidelines for loans purchased under the 1-4 family program. Loan interest rates are determined based on secondary market yield requirements and local market conditions. Fixed rate mortgage loans may be sold and/or classified as held for sale to control exposure to interest rate risk.

The Company’s Adjustable-Rate Mortgage Loans (“ARMs”) include offerings that have a three, five, seven or ten year fixed period. The ability of the Company to successfully market ARM’s depends upon loan demand, prevailing interest rates, volatility of interest rates, and terms offered by competitors.

Home Equity Line of Credit. 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. Equity lines will typically require a second mortgage appraisal and a second mortgage lender’s title insurance policy. Loans are generally made up to a maximum of 89% of the appraised value of the property less any outstanding liens.

Fixed-term home improvement and equity loans are made up to a maximum of 85% of the appraised value of the improved property, less any outstanding liens. These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months. All home equity loans are made on a direct basis to borrowers.

Commercial Real Estate and Multifamily Loans. Commercial real estate loans are typically made to a maximum of 80% of the appraised value. Such loans are generally made on an adjustable-rate basis. These loans are typically made for terms of 15 to 25 years. Loans with an amortizing term exceeding 15 years normally have a balloon feature calling for a full repayment within seven to ten years from the date of the loan. The balloon feature affords the Company the opportunity to restructure the loan if economic conditions 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.

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. 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. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment.

Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records. Projects financed outside of the 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.

Table of Contents

Construction and Land Development. Construction loans on residential properties are made primarily to individuals who are under contract with a general contractor. The maximum loan-to-value ratio is 89% of either the current appraised value or the cost of construction, whichever is less. Residential construction loans are typically made for a period of one year.

Loans are also made for the construction of commercial properties. All such loans are made in accordance with well-defined underwriting standards. Generally if the loans are not owner occupied, these types of loans require proof of intent to lease and a confirmed end-loan takeout. In general, loans made do not exceed 80% of the appraised value of the property. Commercial construction loans are typically made for periods not to exceed two years or date of occupancy, whichever is less.

Commercial Business ~~and Farmland Loans~~. 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. The Company seeks commercial loan relationships from the local business community and from its present customers. Prudent lending policies based upon sound credit analysis governs the extension of commercial credit. The following loans, although not inclusive, are considered preferable for the Company’s commercial loan portfolio: agriculture loans, loans collateralized by liquid assets; loans secured by general use machinery and equipment; secured short-term working capital loans to established businesses secured by business assets; short-term loans with established sources of repayment and secured by sufficient equity and real estate; and unsecured loans to customers whose character and capacity to repay are firmly established.

Consumer Loans. The Company offers consumer loans to individuals for personal, household or family purposes. Consumer loans are either secured by adequate collateral, or unsecured. Unsecured loans are based on the strength of the applicant’s financial condition. All borrowers must meet current underwriting standards. The consumer loan program includes both fixed and variable rate products.

Manufactured Homes. The Company has purchased fixed rate closed loans from a third-party that are subject to the Company’s underwriting requirements and secured by manufactured homes. The maturity date on these loans can range up to 25 years. In addition, these loans are partially secured by a reserve account held at the Company.

Government Loans. The Company is permitted to purchase non-rated municipal securities, tax anticipation notes and warrants within the local market area.

Loans consist of the following as of June 30, 2025, and December 31, 2024:

(Dollars in thousands)	June 30, 2025		December 31, 2024
Loans secured by real estate:
Residential real estate	$	457,248	$	467,293
Home equity	51,112		49,758
Commercial real estate	551,091		551,674
Construction and land development	74,795		82,874
Multifamily	200,440		212,455
Total loans secured by real estate	1,334,686		1,364,054
Commercial business	105,636		104,246
Consumer	2,347		551
Manufactured homes	25,146		26,708
Government	14,628		11,024
Loans receivable	1,482,443		1,506,583
Add:
Net deferred loan origination costs	2,012		2,439
Loan clearing funds	(177)		(46)
Loans receivable, net of deferred fees and costs	$	1,484,278	$	1,508,976

~~Table~~Loans consist of ~~Contents~~the following as of September 30, 2025, and December 31, 2024:

The Company's age analysis of past due loans is summarized below:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Loans secured by real estate:
Residential real estate	$	450,007	$	467,293
Home equity	51,813		49,758
Commercial real estate	564,558		551,674
Construction and land development	79,678		82,874
Multifamily	192,698		212,455
Total loans secured by real estate	1,338,754		1,364,054
Commercial business	96,192		104,246
Consumer	348		551
Manufactured homes	24,372		26,708
Government	12,298		11,024
Loans receivable	1,471,964		1,506,583
Add:
Net deferred loan origination costs	1,719		2,439
Loan clearing funds	91		(46)
Loans receivable, net of deferred fees and costs	$	1,473,774	$	1,508,976

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90Days Past Due		Total Past Due andAccruing		Current		Accruing Loans		Non-accrualLoans		Total LoansReceivable
June 30, 2025
Residential real estate	$	5,841	$	499	$	-	$	6,340	$	445,275	$	451,615	$	5,633	$	457,248
Home equity	536		78		145		759		49,370		50,129		983		51,112
Commercial real estate	6,473		2,328		-		8,801		541,111		549,912		1,179		551,091
Construction and land development	471		458		-		929		73,140		74,069		726		74,795
Multifamily	178		753		-		931		197,348		198,279		2,161		200,440
Commercial business	991		118		-		1,109		101,683		102,792		2,844		105,636
Consumer	-		2		-		2		2,345		2,347		-		2,347
Manufactured homes	234		95		-		329		24,817		25,146		-		25,146
Government	-		-		-		-		14,628		14,628		-		14,628
Total	$	14,724	$	4,331	$	145	$	19,200	$	1,449,717	$	1,468,917	$	13,526	$	1,482,443
December 31, 2024
Residential real estate	$	4,423	$	1,184	$	-	$	5,607	$	457,021	$	462,628	$	4,665	$	467,293
Home equity	1,002		123		-		1,125		48,150		49,275		483		49,758
Commercial real estate	4,556		571		-		5,127		545,267		550,394		1,280		551,674
Construction and land development	2,039		-		-		2,039		80,177		82,216		658		82,874
Multifamily	1,961		359		-		2,320		206,773		209,093		3,362		212,455
Commercial business	493		508		-		1,001		99,955		100,956		3,290		104,246
Consumer	5		-		-		5		546		551		-		551
Manufactured homes	428		54		-		482		26,226		26,708		-		26,708
Government	-		-		-		-		11,024		11,024		-		11,024
Total	$	14,907	$	2,799	$	-	$	17,706	$	1,475,139	$	1,492,845	$	13,738	$	1,506,583

The following table shows the amortized cost of loans, segregated by portfolio segment, credit quality rating and year of origination as of June 30, 2025, and December 31, 2024, and gross charge-offs for the six months ended June 30, 2025, and for the year ended December 31, 2024.

June 30, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Revolving Converted to Term		Total
Total Loans Receivable	$	64,475	$	124,957	$	132,229	$	278,903	$	278,031	$	493,164	$	109,206	$	1,478	$	1,482,443
Total current period gross charge-off	$	(21)	$	-	$	-	$	-	$	-	$	(107)	$	-	$	-	$	(128)
Residential real estate
Pass (1-6)	$	6,569	$	15,780	$	29,417	$	85,492	$	96,842	$	208,120	$	4,020	$	-	$	446,240

~~Table~~The Company's age analysis of ~~Contents~~past due loans is summarized below:

Special Mention (7)	-		-		200		1,173		1,195		2,721		-		-		5,289
(Dollars in thousands)	30-59 Days Past Due				60-89 Days Past Due				Greater Than 90Days Past Due				Total Past Due andAccruing				Current		Accruing Loans		NonaccrualLoans		Total LoansReceivable
Substandard (8)	-		-		875		1,498		586		2,760		-		-		5,719
September 30, 2025
Total	$	6,569	$	15,780	$	30,492	$	88,163	$	98,623	$	213,601	$	4,020	$	-	$	457,248
Residential real estate	$	4,848			$	615			$	-			$	5,463			$	438,730	$	444,193	$	5,814	$	450,007
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Home equity	375				263				-				638				50,294		50,932		881		51,813
Home equity
Commercial real estate	2,714				6,349				-				9,063				553,431		562,494		2,064		564,558
Pass (1-6)	$	455	$	125	$	45	$	98	$	52	$	2,680	$	45,199	$	891	$	49,545
Construction and land development	811				-				-				811				78,150		78,961		717		79,678
Special Mention (7)	-		-		8		-		20		76		275		199		578
Multifamily	174				491				-				665				190,301		190,966		1,732		192,698
Substandard (8)	-		26		-		124		-		228		223		388		989
Commercial business	2,041				47				-				2,088				91,420		93,508		2,684		96,192
Total	$	455	$	151	$	53	$	222	$	72	$	2,984	$	45,697	$	1,478	$	51,112
Consumer	-				-				-				-				348		348		-		348
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Manufactured homes	81				90				-				171				24,201		24,372		-		24,372
Commercial real estate
Government	-				-				-				-				12,298		12,298		-		12,298
Pass (1-6)	$	31,473	$	53,648	$	62,290	$	115,973	$	87,245	$	184,384	$	3,444	$	-	$	538,457
Total	$	11,044			$	7,855			$	-			$	18,899			$	1,439,173	$	1,458,072	$	13,892	$	1,471,964
Special Mention (7)	-		923		827		1,958		2,345		5,375		25		-		11,453
December 31, 2024
Substandard (8)	-		-		-		830		-		351		-		-		1,181
Residential real estate	$	4,423			$	1,184			$	-			$	5,607			$	457,021	$	462,628	$	4,665	$	467,293
Total	$	31,473	$	54,571	$	63,117	$	118,761	$	89,590	$	190,110	$	3,469	$	-	$	551,091
Home equity	1,002				123				-				1,125				48,150		49,275		483		49,758
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Commercial real estate	4,556				571				-				5,127				545,267		550,394		1,280		551,674
Construction and land development	2,039				-				-				2,039				80,177		82,216		658		82,874
Pass (1-6)	$	9,721	$	31,082	$	20,411	$	3,218	$	1,444	$	1,021	$	4,989	$	-	$	71,886
Multifamily	1,961				359				-				2,320				206,773		209,093		3,362		212,455
Special Mention (7)	-		-		458		-		122		-		-		-		580
Commercial business	493				508				-				1,001				99,955		100,956		3,290		104,246
Substandard (8)	-		-		1,011		67		1,251		-		-		-		2,329
Consumer	5				-				-				5				546		551		-		551
Total	$	9,721	$	31,082	$	21,880	$	3,285	$	2,817	$	1,021	$	4,989	$	-	$	74,795
Manufactured homes	428				54				-				482				26,226		26,708		-		26,708
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Government	-				-				-				-				11,024		11,024		-		11,024
Multifamily
Total	$	14,907			$	2,799			$	-			$	17,706			$	1,475,139	$	1,492,845	$	13,738	$	1,506,583
Pass (1-6)	$	4,191	$	6,343	$	8,332	$	55,381	$	68,889	$	52,332	$	466	$	-	$	195,934
Special Mention (7)	-		-		-		763		378		1,204		-		-		2,345
Substandard (8)	-		-		214		430		-		1,517		-		-		2,161
Total	$	4,191	$	6,343	$	8,546	$	56,574	$	69,267	$	55,053	$	466	$	-	$	200,440
Current period gross charge-off	-		-		-		-		-		(46)		-		-		(46)
Commercial business
Pass (1-6)	$	4,606	$	13,421	$	6,953	$	8,655	$	5,346	$	13,145	$	49,545	$	-	$	101,671
Special Mention (7)	-		87		75		-		31		-		928		-		1,121
Substandard (8)	-		-		1,004		191		147		1,410		92		-		2,844
Total	$	4,606	$	13,508	$	8,032	$	8,846	$	5,524	$	14,555	$	50,565	$	-	$	105,636
Current period gross charge-off	-		-		-		-		-		(61)		-		-		(61)
Consumer
Pass (1-6)	$	2,110	$	72	$	109	$	25	$	29	$	-	$	-	$	-	$	2,345

The following table shows the amortized cost of loans, segregated by portfolio segment, credit quality rating and year of origination as of September 30, 2025, and December 31, 2024, and gross charge-offs for the nine months ended September 30, 2025, and for the year ended December 31, 2024.


September 30, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Revolving Converted to Term		Total
Total Loans Receivable	$	96,295	$	125,770	$	128,741	$	272,358	$	271,138	$	474,161	$	102,022	$	1,479	$	1,471,964
Total current period gross charge-off	$	(33)	$	-	$	(44)	$	-	$	(2)	$	(339)	$	-	$	-	$	(418)

Residential real estate
Pass (1-6)	$	8,909	$	17,218	$	28,272	$	82,991	$	95,407	$	202,715	$	3,465	$	-	$	438,977

Table of Contents


Special Mention (7)	-		-		459		1,324		739		2,610		-		-		5,132
Substandard (8)	127		-		869		1,484		528		2,890		-		-		5,898
Total	$	9,036	$	17,218	$	29,600	$	85,799	$	96,674	$	208,215	$	3,465	$	-	$	450,007
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Home equity
Pass (1-6)	$	626	$	94	$	43	$	239	$	51	$	2,338	$	46,043	$	1,032	$	50,466
Special Mention (7)	-		28		7		-		20		74		145		186		460
Substandard (8)	-		-		-		-		-		217		409		261		887
Total	$	626	$	122	$	50	$	239	$	71	$	2,629	$	46,597	$	1,479	$	51,813
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Commercial real estate
Pass (1-6)	$	46,040	$	60,004	$	63,815	$	110,836	$	84,291	$	176,061	$	3,367	$	-	$	544,414
Special Mention (7)	25		873		2,221		4,853		3,423		6,685		-		-		18,080
Substandard (8)	-		-		-		826		-		1,238		-		-		2,064
Total	$	46,065	$	60,877	$	66,036	$	116,515	$	87,714	$	183,984	$	3,367	$	-	$	564,558
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Construction and land development
Pass (1-6)	$	26,125	$	26,218	$	16,188	$	3,165	$	1,562	$	1,010	$	3,103	$	-	$	77,371

Substandard (8)	-		-		1,002		64		1,241		-		-		-		2,307
Total	$	26,125	$	26,218	$	17,190	$	3,229	$	2,803	$	1,010	$	3,103	$	-	$	79,678
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Multifamily
Pass (1-6)	$	4,040	$	6,317	$	8,059	$	54,547	$	66,642	$	48,206	$	346	$	-	$	188,157
Special Mention (7)	262		-		-		758		375		1,414		-		-		2,809
Substandard (8)	-		-		208		417		-		1,107		-		-		1,732
Total	$	4,302	$	6,317	$	8,267	$	55,722	$	67,017	$	50,727	$	346	$	-	$	192,698
Current period gross charge-off	-		-		-		-		-		(46)		-		-		(46)

Commercial business
Pass (1-6)	$	4,972	$	12,472	$	6,226	$	7,795	$	4,902	$	11,562	$	43,819	$	-	$	91,748
Special Mention (7)	47		64		326		65		24		-		1,234		-		1,760
Substandard (8)	158		87		960		179		128		1,081		91		-		2,684
Total	$	5,177	$	12,623	$	7,512	$	8,039	$	5,054	$	12,643	$	45,144	$	-	$	96,192
Current period gross charge-off	-		-		(44)		-		-		(293)		-		-		(337)

Consumer
Pass (1-6)	$	154	$	65	$	86	$	22	$	21	$	-	$	-	$	-	$	348

Total	$	154	$	65	$	86	$	22	$	21	$	-	$	-	$	-	$	348

Substandard (8)	-		-		-		-		2		-		-		-		2
Total	$	2,110	$	72	$	109	$	25	$	31	$	-	$	-	$	-	$	2,347
Current period gross charge-off	(21)		-		-		-		-		-		-		-		(21)
Manufactured homes
Pass (1-6)	$	-	$	-	$	-	$	1,782	$	10,879	$	12,390	$	-	$	-	$	25,051
Substandard (8)	-		-		-		-		61		34		-		-		95
Total	$	-	$	-	$	-	$	1,782	$	10,940	$	12,424	$	-	$	-	$	25,146
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Government
Pass (1-6)	$	5,350	$	3,450	$	-	$	1,245	$	1,166	$	3,417	$	-	$	-	$	14,628
Total	$	5,350	$	3,450	$	-	$	1,245	$	1,166	$	3,417	$	-	$	-	$	14,628
Current period gross charge-off	-		-		-		-		-		-		-		-		-

December 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving		RevolvingConverted to Term		Total
Total Loans Receivable	$	124,670	$	143,098	$	291,855	$	308,352	$	211,268	$	324,738	$	102,602	$	-	$	1,506,583
Total current period gross charge-off	$	(64)	$	-	$	(1,010)	$	(125)	$	(2)	$	(1,267)	$	-	$	-	(2,468)
Residential real estate
Pass (1-6)	$	13,118	$	30,947	$	90,324	$	99,390	$	102,552	$	119,449	$	2,468	$	-	$	458,248
Special Mention (7)	-		371		365		1,064		554		1,937		-		-		4,291
Substandard (8)	-		539		1,161		601		510		1,943		-		-		4,754
Total	$	13,118	$	31,857	$	91,850	$	101,055	$	103,616	$	123,329	$	2,468	$	-	$	467,293
Current period gross charge-off	-		-		-		-		-		(28)		-		-		(28)
Home equity
Pass (1-6)	$	193	$	68	$	153	$	110	$	-	$	3,342	$	44,943	$	-	$	48,809
Special Mention (7)	-		132		-		-		3		15		309		-		459
Substandard (8)	26		-		138		-		-		218		108		-		490
Total	$	219	$	200	$	291	$	110	$	3	$	3,575	$	45,360	$	-	$	49,758
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Commercial real estate
Pass (1-6)	$	49,861	$	67,290	$	123,342	$	96,206	$	53,864	$	148,529	$	2,976	$	-	$	542,068
Special Mention (7)	974		-		1,036		2,375		668		2,930		25		-		8,008
Substandard (8)	-		-		-		-		202		1,396		-		-		1,598
Total	$	50,835	$	67,290	$	124,378	$	98,581	$	54,734	$	152,855	$	3,001	$	-	$	551,674
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Table of Contents


Current period gross charge-off	(33)		-		-		-		(2)		-		-		-		(35)

Manufactured homes
Pass (1-6)	$	-	$	-	$	-	$	1,749	$	10,707	$	11,826	$	-	$	-	$	24,282
Special Mention (7)	-		-		-		-		-		90		-		-		$	90
Substandard (8)	-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	1,749	$	10,707	$	11,916	$	-	$	-	$	24,372
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Government
Pass (1-6)	$	4,810	$	2,330	$	-	$	1,044	$	1,077	$	3,037	$	-	$	-	$	12,298
Total	$	4,810	$	2,330	$	-	$	1,044	$	1,077	$	3,037	$	-	$	-	$	12,298
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Construction and land development
December 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving		RevolvingConverted to Term		Total
Pass (1-6)	$	34,599	$	24,360	$	3,732	$	7,867	$	224	$	820	$	5,312			$	76,914
Total Loans Receivable	$	124,670	$	143,098	$	291,855	$	308,352	$	211,268	$	324,738	$	102,602	$	-	$	1,506,583
Special Mention (7)	-		-		-		1,207		2,468		-		-		-		3,675
Total current period gross charge-off	$	(64)	$	-	$	(1,010)	$	(125)	$	(2)	$	(1,267)	$	-	$	-	(2,468)
Substandard (8)	-		1,018		-		1,267		-		-		-		-		2,285
Residential real estate
Total	$	34,599	$	25,378	$	3,732	$	10,341	$	2,692	$	820	$	5,312			$	82,874
Pass (1-6)	$	13,118	$	30,947	$	90,324	$	99,390	$	102,552	$	119,449	$	2,468	$	-	$	458,248
Special Mention (7)	-		371		365		1,064		554		1,937		-		-		4,291
Substandard (8)	-		539		1,161		601		510		1,943		-		-		4,754
Total	$	13,118	$	31,857	$	91,850	$	101,055	$	103,616	$	123,329	$	2,468	$	-	$	467,293
Current period gross charge-off	-		-		-		-		-		(28)		-		-		(28)
Home equity
Pass (1-6)	$	193	$	68	$	153	$	110	$	-	$	3,342	$	44,943	$	-	$	48,809
Special Mention (7)	-		132		-		-		3		15		309		-		459
Substandard (8)	26		-		138		-		-		218		108		-		490
Total	$	219	$	200	$	291	$	110	$	3	$	3,575	$	45,360	$	-	$	49,758
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Multifamily
Commercial real estate
Pass (1-6)	$	649,~~398~~861	$	867,~~923~~290	$	56123,~~771~~342	$	7496,~~716~~206	$	3653,~~075~~864	$	20148,~~066~~529	$	~~627~~2,976	$	-	$	~~203~~542,~~576~~068
Special Mention (7)	-974		-		~~780~~1,036		32,~~332~~375		~~1,217~~668		-2,930		-25		-		58,~~329~~008
Substandard (8)	-		-		~~446~~-		~~1,219~~-		~~1,516~~202		~~369~~1,396		-		-		31,~~550~~598
Total	$	650,~~398~~835	$	867,~~923~~290	$	57124,~~997~~378	$	7998,~~267~~581	$	3854,~~808~~734	$	20152,~~435~~855	$	~~627~~3,001	$	-	$	~~212~~551,~~455~~674
Current period gross charge-off	-		-		-		(125)		-		-		-		-		(125)
Commercial business
Pass (1-6)	$	14,655	$	8,123	$	9,441	$	6,094	$	3,653	$	11,416	$	44,046	$	-	$	97,428
Special Mention (7)	-		25		978		39		-		800		1,686		-		3,528
Substandard (8)	-		1,139		80		171		177		1,621		102		-		3,290
Total	$	14,655	$	9,287	$	10,499	$	6,304	$	3,830	$	13,837	$	45,834	$	-	$	104,246
Current period gross charge-off	-		-		(1,010)		-		-		(1,239)		-		-		(2,249)
Consumer
Pass (1-6)	$	301	$	163	$	34	$	51	$	-	$	2	$	-	$	-	$	551
Substandard (8)	-		-		-		-		-		-		-		-		-
Total	$	301	$	163	$	34	$	51	$	-	$	2	$	-	$	-	$	551
Current period gross charge-off	(64)		-		-		-		(2)		-		-		-		(66)
Manufactured homes
Pass (1-6)	$	-	$	-	$	1,634	$	11,360	$	7,559	$	6,101	$	-	$	-	$	26,654
Substandard (8)	-		-		-		28		26		-		-		-		54
Total	$	-	$	-	$	1,634	$	11,388	$	7,585	$	6,101	$	-	$	-	$	26,708
Current period gross charge-off	-		-		-		-		-		-		-		-		-
Government
Pass (1-6)	$	4,545	$	-	$	1,440	$	1,255	$	-	$	3,784	$	-	$	-	$	11,024
Total	$	4,545	$	-	$	1,440	$	1,255	$	-	$	3,784	$	-	$	-	$	11,024
Current period gross charge-off	-		-		-		-		-		-		-		-		-

The Company has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of these grades by the Company is uniform and conforms to regulatory definitions. The loan grading system is as follows:

Table of Contents


Construction and land development
Pass (1-6)	$	34,599	$	24,360	$	3,732	$	7,867	$	224	$	820	$	5,312	$	-	$	76,914
Special Mention (7)	-		-		-		1,207		2,468		-		-		-		3,675
Substandard (8)	-		1,018		-		1,267		-		-		-		-		2,285
Total	$	34,599	$	25,378	$	3,732	$	10,341	$	2,692	$	820	$	5,312	$	-	$	82,874
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Multifamily
Pass (1-6)	$	6,398	$	8,923	$	56,771	$	74,716	$	36,075	$	20,066	$	627	$	-	$	203,576
Special Mention (7)	-		-		780		3,332		1,217		-		-		-		5,329
Substandard (8)	-		-		446		1,219		1,516		369		-		-		3,550
Total	$	6,398	$	8,923	$	57,997	$	79,267	$	38,808	$	20,435	$	627	$	-	$	212,455
Current period gross charge-off	-		-		-		(125)		-		-		-		-		(125)

Commercial business
Pass (1-6)	$	14,655	$	8,123	$	9,441	$	6,094	$	3,653	$	11,416	$	44,046	$	-	$	97,428
Special Mention (7)	-		25		978		39		-		800		1,686		-		3,528
Substandard (8)	-		1,139		80		171		177		1,621		102		-		3,290
Total	$	14,655	$	9,287	$	10,499	$	6,304	$	3,830	$	13,837	$	45,834	$	-	$	104,246
Current period gross charge-off	-		-		(1,010)		-		-		(1,239)		-		-		(2,249)

Consumer
Pass (1-6)	$	301	$	163	$	34	$	51	$	-	$	2	$	-	$	-	$	551
Substandard (8)	-		-		-		-		-		-		-		-		-
Total	$	301	$	163	$	34	$	51	$	-	$	2	$	-	$	-	$	551
Current period gross charge-off	(64)		-		-		-		(2)		-		-		-		(66)

Manufactured homes
Pass (1-6)	$	-	$	-	$	1,634	$	11,360	$	7,559	$	6,101	$	-	$	-	$	26,654
Substandard (8)	-		-		-		28		26		-		-		-		54
Total	$	-	$	-	$	1,634	$	11,388	$	7,585	$	6,101	$	-	$	-	$	26,708
Current period gross charge-off	-		-		-		-		-		-		-		-		-

Government
Pass (1-6)	$	4,545	$	-	$	1,440	$	1,255	$	-	$	3,784	$	-	$	-	$	11,024
Total	$	4,545	$	-	$	1,440	$	1,255	$	-	$	3,784	$	-	$	-	$	11,024
Current period gross charge-off	-		-		-		-		-		-		-		-		-

1 – Superior Quality

Loans in this category are substantially risk free. Loans fully collateralized by a Bank certificate of deposit or Bank deposits with a hold are substantially risk free.

2 – Excellent Quality

The borrower generates excellent and consistent cash flow for debt coverage, excellent average credit scores, excellent liquidity and net worth and are reputable operators with over 15 years' experience. Current and debt to tangible net worth ratios are excellent. Loan to value is substantially below policy and collateral condition is excellent.

3 – Great Quality

The borrower generates more than sufficient cash flow to fund debt service and cash flow is improving. Average credit scores are very strong. Operators are reputable with significant years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are very strong. Loan to value is significantly below policy and collateral condition is significantly above average.

4 – Above Average Quality

The borrower generates more than sufficient cash flow to fund debt service, but cash flow trends may be stable or slightly declining. Average credit scores are strong. The borrower is a reputable operator with many years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are strong. Loan to value is below policy and collateral condition is above average.

5 – Average Quality

Borrowers are considered creditworthy and can repay the debt in the normal course of business, however, cash flow trends may be inconsistent or fluctuating. Average credit scores are satisfactory, and years of experience is acceptable. Liquidity and net worth are satisfactory. Current and debt to tangible net worth ratios are average. Loan to value is slightly below policy and the collateral condition is slightly above average.

6 – Pass

Borrowers are considered creditworthy, but financial condition may show signs of weakness due to internal or external factors. Cash flow trends may be declining annually. Average credit scores may be low but remain acceptable. The borrower has limited years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are below average. Loan to value is nearing policy limits and collateral condition is average.

7 – Special Mention

A special mention asset has identified weaknesses that deserve Management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. There is still adequate protection by the current sound worth and paying capacity of the obligor or of the collateral pledged. The Special Mention rating is viewed as transitional and will be monitored closely.

Loans in this category may exhibit some of the following risk factors. Cash flow trends may be consistently declining or may be questionable. Debt coverage ratios may be at or near 1:1. Average credit scores may be very weak, or the borrower may have minimal years of experience. Liquidity, net worth, current and debt to tangible net worth ratios may be very weak. Loan to value may be at policy limits or may exceed policy limits. Collateral condition may be below average.

8 – Substandard

This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not corrected.

9 – Doubtful

Such loans have been placed on ~~non-accrual~~nonaccrual status and may be heavily dependent upon collateral possessing a value that is difficult to determine or based upon some near-term event which lacks clear certainty. These loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of the principal balance highly improbable.

Table of Contents

10 – Loss

Loans that are considered uncollectible and of such little value that continuing to carry them as assets is not warranted.

Loans with risk classifications of pass and special mention were part of the pooled loan ACL analysis. Loans classified as substandard or worse were individually evaluated for impairment and specific reserves were established, if applicable. Risk gradings for loans with balances greater than $1 million are updated every 12 months through analysis during origination, renewals, modifications, or regular annual review. Risk gradings for loans with balances less than $1 million are updated primarily through analysis during origination, renewals, modifications, or periodic review. Risk gradings are also downgraded due to delinquency at month end. In particular, 60 days past due are downgraded to Special Mention, while 90 days past due are further downgraded to Substandard.

gradings for loans with balances greater than $1 million are updated every 12 months through analysis during origination, renewals, modifications, or regular annual review. Risk gradings for loans with balances less than $1 million are updated primarily through analysis during origination, renewals, modifications, or periodic review. Risk gradings are also downgraded due to delinquency at month end. In particular, 60 days past due are downgraded to Special Mention, while 90 days past due are further downgraded to Substandard.

Modifications to Borrowers Experiencing Financial Difficulty

The allowance of credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. The starting point to estimate such credit losses is historical loss information. The Company uses a probability of default/loss given default model to determine the allowance for credit losses recorded at origination. Occasionally, the Company subsequently modifies loans to borrowers experiencing financial difficulty by providing the following terms of relief: principal forgiveness, term extension, payment delay, or interest rate reduction. In some cases, the Bank provides multiple types of modifications on one loan. Because the effect of most modifications to borrowers experiencing financial difficulty is already included in the allowance for credit losses, no change to the allowance for credit losses is generally recorded for these modifications.

The following table shows the amortized cost basis of loans at ~~June~~September 30, 2025, that were both experiencing financial difficulty and modified during the three and ~~six~~nine months ended ~~June~~September 30, 2025, segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financing receivable is also presented below.

	For the three months ended June 30, 2025
	For the three months ended September 30, 2025
(Dollars in thousands)	PaymentDelay		TermExtension		InterestRateReduction		CombinationTerm Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Commercial business	$	1,851	$	-	$	-	$	-	1.75	%
Residential real estate	$	-	$	307	$	-	$	-	0.07	%
Total	$	1,851	$	-	$	-	$	-	0.12	%
Commercial real estate	-		390		-		-		0.07	%
Total	$	-	$	697	$	-	$	-	0.05	%

	For the three months ended June 30, 2024
	For the three months ended September 30, 2024
(Dollars in thousands)	PaymentDelay		TermExtension		InterestRateReduction		CombinationTerm Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Residential real estate	$	~~132~~121	$	~~241~~332	$	-	$	-	0.0810	%
Total	$	~~132~~121	$	~~241~~332	$	-	$	-	0.0203	%

Table of Contents

	For the six months ended June 30, 2025
(Dollars in thousands)	PaymentDelay		TermExtension		InterestRateReduction		CombinationTerm Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Residential real estate	$	-	$	168	$	-	$	-	0.04	%
Commercial business	$	1,851	$	-	$	-	$	-	1.75	%
Total	$	1,851	$	168	$	-	$	-	0.14	%

	For the six months ended June 30, 2024
(Dollars in thousands)	PaymentDelay		TermExtension		InterestRateReduction		CombinationTerm Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Residential real estate	$	132	$	1,491	$	-	$	-	0.34	%
Total	$	132	$	1,491	$	-	$	-	0.11	%

The financial effects of payment delay modifications and term extension modifications had a forbearance average of five months and six months weighted average extension to life of loan, respectively. There were no commitments to lend additional amounts to the borrowers included in the previous tables.

The borrowers with term extension have had their maturity dates extended and as a result their monthly payments were reduced or had payments added to the end of the loan which resulted in payment relief.

	For the three months ended June 30, 2025
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay(months)
Commercial business	$	-	—	%	-	5

	For the three months ended June 30, 2024
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay(months)
Residential real estate	$	-	—	%	4	3

	For the six months ended June 30, 2025
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay(months)
Residential real estate	$	-	—	%	6	-
Commercial business	$	-	—	%	-	5

Table of Contents


	For the nine months ended September 30, 2025
(Dollars in thousands)	Payment Delay		Term Extension		Interest Rate Reduction		Combination Term Extension and Interest Rate Reduction		% of Total Segment Financing Receivables
Residential real estate	$	-	$	472	$	-	$	-	0.10	%
Commercial real estate	135		390		-		-		0.09	%
Construction and land development	654		-		-		-		0.82	%
Commercial business	1,053		-		-		-		1.09	%
Total	$	1,842	$	862	$	-	$	-	0.18	%

	For the six months ended June 30, 2024
	For the nine months ended September 30, 2024
(Dollars in thousands)	~~Principal Forgiveness~~PaymentDelay		~~Weighted average interest rate reduction~~TermExtension			~~Weighted average term extension (months)~~InterestRateReduction		~~Payment~~CombinationTerm ~~delay(months)~~Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Residential real estate	$	-253	—$	1,807	%	4$	-	3$	-	0.44	%
Total	$	253	$	1,807		$	-	$	-	0.14	%

The financial effects of payment delay modifications and term extension modifications had a forbearance average of five months and one hundred eighty-seven months weighted average extension to life of loan, respectively. There were no commitments to lend additional amounts to the borrowers included in the previous tables.


	For the three months ended September 30, 2025
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)

Residential real estate	$	-	—	%	7	-
Commercial real estate	$	-	—	%	180	-


	For the three months ended September 30, 2024
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)
Residential real estate	$	-	—	%	4	7


	For the nine months ended September 30, 2025
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)
Residential real estate	$	-	—	%	7	-
Commercial real estate	$	-	—	%	180	5


	For the nine months ended September 30, 2024
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)
Residential real estate	$	-	—	%	4	5

The Company closely monitors the performance of loans that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables present the performance of such loans in the twelve months following modification.

	June 30, 2025
	September 30, 2025
(Dollars in thousands)	Current		30-59 DaysPast Due		60-89Days PastDue		Greater Than 90Days Past Due
Residential real estate	$	~~197~~500	$	53-	$	~~461~~378	$	~~316~~315
Home equity	3330		-		-		-
Commercial business	4		-		-		1,847
Commercial real estate	390		-		-		135
Total	$	234	$	53	$	461	$	2,163
Construction and land development	-		-		-		654
Commercial business	2		-		-		1,051
Total	$	922	$	-	$	378	$	2,155

	June 30, 2024
	September 30, 2024
(Dollars in thousands)	Current		30-59 DaysPast Due		60-89Days PastDue		Greater Than 90Days Past Due
Residential real estate	$	774	$	194	$	121	$	132
Total	$	774	$	194	$	121	$	132

Upon the Company’s determination that a modified loan has subsequently been deemed uncollectible, the loan 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. All modified loans are deemed collectible.

Foreclosures

As part of the normal course of business, the Company had $~~181~~2.1 ~~thousand~~million in loans involved in the foreclosure process at ~~June~~September 30, 2025 compared to $700 thousand at December 31, 2024. The Company had no other real estate owned as of ~~June~~ September 30, 2025 and December 31, 2024.

Acquired Loan Purchase Discounts

As part of the fair value of loans receivable, there was a net fair value discount for loans acquired of $3.9 million at ~~June~~September 30, 2025, compared to $4.4 million at December 31, 2024.

Accretable yield, or income recorded for the ~~six~~nine months ended ~~June~~September 30, is as follows:

(Dollars in thousands)	Total
2024	$	~~431~~649
2025	~~439~~610

1920

Table of Contents

Accretable yield, or income expected to be recorded in the future is as follows:

(Dollars in thousands)	Total
Remainder of 2025	$	~~296~~142
2026	~~451~~440
2027	~~300~~296
2028	~~281~~280
2029	~~247~~246
2030 and thereafter	2,~~315~~302
Total	$	3,~~890~~706

Allowance for Credit Losses

The allowance for credit losses is established for current expected credit losses on the Company’s loan portfolio utilizing guidance in Accounting Standards Codification (ASC) Topic 326.

The determination of the allowance requires significant judgment to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. In determining the allowance, the Company estimates expected future losses for the loan’s entire contractual term adjusted for expected payments when appropriate. The allowance estimate considers relevant available information, from internal and external sources relating to the historical loss experience, current conditions, and reasonable and supportable forecasts for the Company’s outstanding loan balances. The allowance is an estimation that reflects management’s evaluation of expected losses related to the Company’s financial assets measured at amortized cost. To ensure that the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

The Company categorizes the loan portfolio into nine segments based on similar risk characteristics. Loans within each segment are collectively evaluated using the probability of default (“PD”)/loss given default (“LGD”) methodology (PD/LGD). In creating the “current expected credit loss (CECL)” model as required under ASC 326, the Company has established a two-year reasonable and supportable forecast period with a two-year straight line reversion to the long-term historical average. Due to its minimal loss history, the Company elected to use peer data for a more reasonable calculation. The following tables show the changes in the allowance for credit losses, segregated by portfolio segment, for the three and ~~six~~nine months ended ~~June~~September 30, 2025, and 2024.

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the three months ended ~~June~~September 30, 2025:

(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Allowance for credit losses:
Residential real estate	$	2,~~442~~755	$	-	$	1915	$	~~294~~(22)	$	2,~~755~~748
Home equity	~~622~~738		-		-		~~116~~(56)		~~738~~682
Commercial real estate	9,~~657~~150		-		-		~~(507)~~86		9,~~150~~236
Construction and land development	1,~~644~~495		-		-		(~~149~~345)		1,~~495~~150
Multifamily	2,~~192~~301		-		-1		~~109~~226		2,~~301~~528
Commercial business	1,~~234~~603		-(276)		~~404~~-		~~(35)~~141		1,~~603~~468
Consumer	32		(1014)		16		89		23
Manufactured homes	~~129~~125		-		-		(49)		~~125~~116
Government	3215		-		-		~~(17)~~31		1546
Total	$	1718,~~955~~184	$	(10290)	$	~~424~~22	$	~~(185)~~61	$	1817,~~184~~977

Table of Contents

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the three months ended June 30, 2024:

(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Allowance for credit losses:
Residential real estate	$	4,017	$	-	$	10	$	270	$	4,297
Home equity	737		-		-		(10)		727
Commercial real estate	7,256		-		2		(355)		6,903
Construction and land development	3,456		-		-		(389)		3,067
Multifamily	957		(65)		31		(44)		879
Commercial business	2,135		-		7		63		2,205
Consumer	6		(26)		5		20		5
Manufactured homes	173		-		-		(16)		157
Government	68		-		-		22		90
Total	$	18,805	$	(91)	$	55	$	(439)	$	18,330

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the six months ended June 30, 2025:

(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Allowance for credit losses:
Residential real estate	$	4,481	$	-	$	35	$	(1,761)	$	2,755
Home equity	835		-		-		(97)		738
Commercial real estate	6,444		-		4		2,702		9,150
Construction and land development	2,651		-		-		(1,156)		1,495
Multifamily	1,003		(46)		10		1,334		2,301
Commercial business	1,185		(61)		460		19		1,603
Consumer	5		(21)		1		17		2
Manufactured homes	252		-		-		(127)		125
Government	55		-		-		(40)		15
Total	$	16,911	$	(128)	$	510	$	891	$	18,184

~~Table~~The ofCompany's ~~Contents~~activity in the allowance for credit losses, by loan segment, is summarized below for the three months ended September 30, 2024:

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the six months ended June 30, 2024:


(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Allowance for credit losses:
Residential real estate	$	4,297	$	(28)	$	9	$	170	$	4,448
Home equity	727		-		-		107		834
Commercial real estate	6,903		-		1		(622)		6,282
Construction and land development	3,067		-		-		(261)		2,806
Multifamily	879		-		-		650		1,529
Commercial business	2,205		(2)		222		(179)		2,246
Consumer	5		(17)		1		16		5
Manufactured homes	157		-		-		90		247
Government	90		-		-		28		118
Total	$	18,330	$	(47)	$	233	$	-	$	18,516

(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Allowance for credit losses:
Residential real estate	$	3,984	$	-	$	20	$	293	$	4,297
Home equity	698		-		-		29		727
Commercial real estate	7,045		-		2		(144)		6,903
Construction and land development	4,206		-		-		(1,139)		3,067
Multifamily	933		(65)		31		(20)		879
Commercial business	1,649		-		9		548		2,206
Consumer	7		(44)		6		36		5
Manufactured homes	181		-		-		(24)		157
Government	65		-		-		25		90
Total	$	18,768	$	(109)	$	68	$	(396)	$	18,331

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the nine months ended September 30, 2025:


(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance

Allowance for credit losses:
Residential real estate	$	4,481	$	-	$	50	$	(1,783)	$	2,748
Home equity	835		-		-		(153)		682
Commercial real estate	6,444		-		4		2,788		9,236
Construction and land development	2,651		-		-		(1,501)		1,150
Multifamily	1,003		(46)		11		1,560		2,528
Commercial business	1,185		(337)		460		160		1,468
Consumer	5		(35)		7		26		3
Manufactured homes	252		-		-		(136)		116
Government	55		-		-		(9)		46
Total	$	16,911	$	(418)	$	532	$	952	$	17,977

The Company's activity in the allowance for credit losses, by loan segment, is summarized below for the nine months ended September 30, 2024:


(Dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance

Allowance for credit losses:
Residential real estate	$	3,984	$	(28)	$	30	$	462	$	4,448
Home equity	698		-		-		136		834
Commercial real estate	7,045		-		3		(766)		6,282
Construction and land development	4,206		-		-		(1,400)		2,806
Multifamily	933		(66)		31		631		1,529
Commercial business	1,649		(2)		230		369		2,246
Consumer	7		(60)		7		51		5
Manufactured homes	181		-		-		66		247
Government	65		-		-		53		118
Total	$	18,768	$	(156)	$	301	$	(397)	$	18,516

A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. 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; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. 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.

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)	~~June~~September 30, 2025
	Real Estate		Equipment/Inventory		Accounts Receivable		Vehicles		Total		ACL Allocation
Residential real estate	$	2,~~709~~970	$	-	$	-	$	-	$	2,~~709~~970	$	2840
Home equity	~~192~~206		-		-		-		~~192~~206		-
Commercial real estate	12,~~181~~455		-		-		-		12,~~181~~455		6298
Construction and land development	2,~~329~~306		-		-		-		2,~~329~~306		-
Multifamily	21,~~161~~732		-		-		-		21,~~161~~732		-407
Commercial business	-		1,~~489~~520		~~1,238~~942		~~117~~222		2,~~844~~684		~~480~~367
Total	$	89,~~572~~669	$	1,~~489~~520	$	~~1,238~~942	$	~~117~~222	$	1112,~~416~~353	$	~~570~~912

2223

Table of Contents


(Dollars in thousands)	December 31, 2024

	Real Estate		Equipment/Inventory		Accounts Receivable		Vehicles		Total		ACL Allocation
Residential real estate	$	3,012	$	-	$	-	$	-	$	3,012	$	50

Home equity	219		-		-		-		219		-
Commercial real estate	1,598		-		-		-		1,598		43
Construction and land development	2,285		-		-		-		2,285		-
Multifamily	3,550		-		-		-		3,550		-
Commercial business	712		1,399		1,428		144		3,683		191
Total	$	11,376	$	1,399	$	1,428	$	144	$	14,347	$	284

(Dollars in thousands)	December 31, 2024
	Real Estate		Equipment/Inventory		Accounts Receivable		Vehicles		Total		ACL Allocation
Residential real estate	$	3,012	$	-	$	-	$	-	$	3,012	$	50
Home equity	-
Commercial real estate	1,598		-		-		-		1,598		43
Construction and land development	2,285		-		-		-		2,285		-
Multifamily	3,550		-		-		-		3,550		-
Commercial business	1		1		1		-		4		-
Total	$	11,376	$	1,399	$	1,428	$	144	$	14,347	$	284

A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectations, the deferred cost reserve is paid as a premium to the third-party originator of the loan. The unamortized balance of the deferred cost reserve totaled $2.5 million and $2.9 million as of September 30, 2025, and December 31, 2024, respectively, and is included in net deferred loan origination cost.

A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectations, the deferred cost reserve is paid as a premium to the third-party originator of the loan. The unamortized balance of the deferred cost reserve totaled $3.0 million and $2.9 million as of June 30, 2025, and December 31, 2024, respectively, and is included in net deferred loan origination cost.

The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loans:

As of June 30, 2025

Nonaccrual withNo Allowance forCredit Loss

Nonaccrual withAllowance forCredit Loss

Nonaccrual Loansin Total

Loans Past Dueover 90 Days StillAccruing

As of September 30, 2025

Nonaccrual withNo Allowance forCredit Loss

Nonaccrual withAllowance forCredit Loss

Nonaccrual Loansin Total

Loans Past Dueover 90 Days StillAccruing

Residential real estate

1,~~431~~705

4,~~202~~109

5,~~633~~814

Home equity

~~157~~30

~~826~~851

~~983~~881

~~145~~-

Commercial real estate

~~987~~1,505

~~192~~559

12,~~179~~064

Construction and land development

~~726~~717

Multifamily

~~2,161~~625

-1,107

21,~~161~~732

Commercial business

2,~~125~~193

~~719~~491

2,~~844~~684

Total

76,~~587~~775

57,~~939~~117

13,~~526~~892

~~145~~-


As of December 31, 2024	Nonaccrual with No Allowance for Credit Loss		Nonaccrual with Allowance for Credit Loss		Nonaccrual Loans in Total		Loans Past Due over 90 Days Still Accruing
Residential real estate	$	1,514	$	3,150	$	4,664	$	-
Home equity	179		304		483		-
Commercial real estate	1,078		202		1,280		-
Construction and land development	659		-		659		-
Multifamily	3,362		-		3,362		-
Commercial business	3,099		191		3,290		-



Total	$	9,891	$	3,847	$	13,738	$	-

Accrued interest receivable on loans totaled $5.43 million on ~~June~~September 30, 2025, ~~and~~as well as $5.3 million on December 31, 2024, and is excluded from the estimate of credit losses. The Company made the accounting policy election to not measure an ACL for accrued interest receivable. Accrued interest deemed uncollectible will be written off through interest income.

2324

Table of Contents

Liability for Credit Losses on Unfunded Loan Commitments

The liability for credit losses inherent in unfunded loan commitments is included in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the ACL. The following table shows the changes in the liability for credit losses on unfunded loan commitments.

(Dollars in thousands)	Three months ended,~~June~~September 30, 2025		Three months ended,~~June~~September 30, 2024
Balance, beginning of period	$	2,~~116~~027	$	3,~~399~~914
Provision for (benefit from) unfunded loan commitments	(89361)		~~515~~-
Balance, end of period	$	21,~~027~~666	$	3,914

(Dollars in thousands)	~~Six~~Nine months ended,~~June~~September 30, 2025		~~Six~~Nine months ended,~~June~~September 30, 2024
Balance, beginning of period	$	2,739	$	3,441
Provision for (benefit from) unfunded loan commitments	(~~712~~1,073)		473
Balance, end of period	$	21,~~027~~666	$	3,914

Note 6 – Intangibles and Acquisition-Related Accounting

(Dollars in thousands)	2025		2024
Goodwill balance January 1,	$	22,395	$	22,395
Goodwill balance June 30,	$	22,395	$	22,395
Goodwill balance September 30,	$	22,395	$	22,395

Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. The Company’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of the Company to provide quality, cost effective banking services in a competitive marketplace. Goodwill is tested periodically for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated, and goodwill is written down to its implied fair value. There has not been any impairment of goodwill identified or recorded.

In addition to goodwill, a core deposit intangible was established from previous acquisitions. The Company had core deposit intangible balances of $1.43 million and $1.9 million as of ~~June~~September 30, 2025, and December 31, 2024, respectively. The table below summarizes the intangibles amortization:

The amortization recorded for the quarter ended ~~June~~ September 30, is as follows:

(Dollars in thousands)	Total
2024	$	~~356~~352
2025	$	~~221~~141

The amortization recorded for the ~~six~~nine months ended ~~June~~September 30, is as follows:

(Dollars in thousands)	Total
2024	$	~~717~~1,069
2025	$	~~446~~587

2425

Table of Contents

Amortization to be recorded in future periods, is as follows:

(Dollars in thousands)	Total
Remainder of 2025	$	~~242~~101
2026	~~360~~361
2027	294
2028	228
2029	162
Thereafter	~~128~~127
Total	$	1,~~414~~273

Note 7 – Deposits

The Company’s end-of-period deposit portfolio balances were as follows:

(Dollars in thousands)	~~June~~September 30, 2025		December 31, 2024
Checking	$	~~593~~579,~~471~~760	$	591,487
Savings	~~266~~257,~~070~~058		275,121
Money market	~~352~~377,~~616~~155		333,705
Certificates of deposit	~~542~~536,~~693~~673		560,253
Total deposits	$	1,~~754~~750,~~850~~646	$	1,760,566

The aggregate amount of retail and brokered certificates of deposit with a balance of $250 thousand or more was approximately $~~134~~120.37 million at ~~June~~September 30, 2025 and $141.4 million at December 31, 2024.

At ~~June~~September 30, 2025, selected maturities of retail and brokered certificate of deposits were as follows:

	(Dollars in thousands)
2025	$	~~418~~242,~~263~~577
2026	~~118~~285,~~422~~430
2027	47,~~931~~334
2028	~~875~~1,002
2029 and thereafter	202
2029	211
Total	$	542,693
Thereafter	119
Total	$	536,673

Note 8 - Concentrations of Credit Risk

The Company grants residential, commercial real estate, commercial business, and installment loans to customers primarily in Lake County in northwest Indiana and Cook County in northeast Illinois. 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. Substantially all loans are secured by specific items of collateral including residences, commercial real estate, land development, business assets and consumer assets.

2526

Table of Contents

Note 9 - Earnings per Share

Earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding. A reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, are as follows:

	Three months endedJune 30,				Six months endedJune 30,
	Three months endedSeptember 30,				Nine months endedSeptember 30,
(dollars in thousands except per share data)	2025		2024		2025		2024
Basic earnings per common share:
Net income as reported	$	23,~~151~~497	$	~~143~~606	$	26,~~606~~103	$	910,~~423~~029
Weighted average common shares outstanding—basic	4,~~271~~273,~~952~~022		4,~~259~~260,~~695~~809		4,~~269~~270,~~478~~652		4,~~258~~259,~~181~~063
Basic earnings per common share	$	0.5082	$	0.0314	$	01.6143	$	2.2135
Diluted earnings per common share:
Net income as reported	$	23,~~151~~497	$	~~143~~606	$	26,~~606~~103	$	910,~~423~~029
Weighted average common shares outstanding	4,~~271~~273,~~952~~022		4,~~259~~260,~~695~~809		4,~~269~~270,~~478~~652		4,~~258~~259,~~181~~063
Add: Dilutive effect of unvested restricted stock awards	2425,~~466~~985		1120,~~357~~339		1920,~~238~~519		812,~~234~~601
Weighted average common shares outstanding—diluted	4,~~296~~299,~~418~~007		4,~~271~~281,~~052~~148		4,~~288~~291,~~716~~171		4,~~266~~271,~~415~~664
Diluted earnings per common share	$	0.5081	$	0.0314	$	01.6142	$	2.2135

Note 10 - Stock Based Compensation

The Company replaced its expired 2015 Stock Option and Incentive Plan with a new equity incentive plan named the Finward Bancorp 2025 Omnibus Equity Incentive Plan (the “Plan”), which was adopted by the Company’s Board of Directors on March 21, 2025, and approved by the Company’s shareholders on May 22, 2025. The maximum number of shares of common stock cumulatively available for issuance under the 2025 Omnibus Plan is 265,174 shares. Awards granted under the Plan may be in the form of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, restricted stock units, performance shares, stock appreciation rights, or any combination thereof, as provided in the Plan. Unvested awards granted under the prior plan will continue to be governed by the terms of the award agreements entered into with the participants under the prior plan. Shares of common stock underlying awards granted under the prior plan that expire, terminate, or are canceled or forfeited under the terms of the prior plan will be available for issuance under the new plan.

As required by the Stock Compensation Topic, companies are required to record compensation cost for stock options and awards provided to employees in return for employment service. For the three months ended ~~June~~September 30, 2025, stock based compensation expense of $~~131~~116 thousand was recorded, compared to $~~133~~138 thousand for the three months ended ~~June~~September 30, 2024. For the ~~six~~nine months ended ~~June~~September 30, 2025, stock based compensation expense of $~~229~~345 thousand was recorded, compared to $~~306~~443 thousand for the ~~six~~nine months ended ~~June~~September 30, 2024. It is anticipated that current outstanding unvested awards will result in additional compensation expense of approximately $~~0.7~~700 ~~million~~thousand with a weighted average life of 2.01 years.

Restricted stock awards are issued with an award price equal to the market price of the Company’s common stock on the award date and vest one year after the grant date for independent directors and three years after the grant date for employees. Forfeiture provisions exist for personnel that separate employment before the vesting period expires. A summary of restricted stock activity under the Company’s Plan described above for the ~~six~~nine months ended ~~June~~September 30, 2025, follows:

2627

Table of Contents


Non-vested Shares	Shares	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2025	44,570	$	36.74
Granted	20,321	27.08
Vested	(17,253)	27.34
Forfeited	(1,180)	27.76
Non-vested at September 30, 2025	46,458	$	36.24

Non-vested Shares	Shares	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2025	44,570	$	36.74
Granted	16,415	26.95
Vested	(16,469)	27.33
Forfeited	(611)	25.92
Non-vested at June 30, 2025	43,905	$	36.76

Note 11 – Derivative Financial Instruments

The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Company has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the Condensed Consolidated Balance Sheet and do not take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Company agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations.

The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (i.e., interest rate lock commitment). The interest rate lock commitments are considered derivatives and are recorded on the accompanying condensed consolidated balance sheets at fair value in accordance with FASB ASC 815, Derivatives and Hedging.

The following table shows the amounts of non-hedging derivative financial instruments:

June 30, 2025

September 30, 2025

Asset derivatives

Liability derivatives

(Dollars in thousands)

Statement of Financial Condition classification

Fair value

Statement of Financial Condition classification

Fair value

Interest rate swap contracts

Other assets

4,~~074~~086

Other liabilities

4,~~074~~086

Interest rate lock commitments

Other assets

6649

N/A

Total

4,~~140~~135

4,~~074~~086

2728

Table of Contents


December 31, 2024
	Asset derivatives			Liability derivatives
(Dollars in thousands)	Statement of Financial Condition classification	Fair value		Statement of Financial Condition classification	Fair value
Interest rate swap contracts	Other assets	$	5,486	Other liabilities	$	5,486
Interest rate lock commitments	Other assets	24		N/A	-
Total		$	5,510		$	5,486

The following table shows the amounts included in the Statements of Income for non-hedging derivative financial instruments:

		Three Months Ended June 30,
		Three Months Ended September 30,
(Dollars in thousands)	Statement of Income Classification	2025		2024
Interest rate swap contracts	Fees and service charges	$	-170	$	-179
Interest rate lock commitments	Gain on sale of loans held-for-sale, net	19(17)		~~(6)~~65
Total		$	19153	$	~~(6)~~244

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in thousands)

Statement of Income Classification

2025

2024

Interest rate swap contracts

Fees and service charges

~~(30)~~140

~~(30)~~149

Interest rate lock commitments

Gain on sale of loans held-for-sale, net

(1633)

266

Total

~~(46)~~107

~~(28)~~215

The following table shows the offsetting of financial assets and derivative assets:

							Gross Amounts not Offset in theStatement of Financial Condition
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of FinancialCondition		Net Amounts of Assets Presented in the Statement of FinancialCondition		Financial Instruments		Cash Collateral Received		Net Amount
June 30, 2025
September 30, 2025
Interest rate swap contracts	$	4,~~074~~086	$	-	$	4,~~074~~086	$	-	$	2,~~620~~180	$	1,~~454~~906
Interest rate lock commitments	6649		-		6649		-		-		6649
Total	$	4,~~140~~135	$	-	$	4,~~140~~135	$	-	$	2,~~620~~180	$	1,~~520~~955

2829

Table of Contents


							Gross Amounts not Offset in the Statement of Financial Condition
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount
December 31, 2024
Interest rate swap contracts	$	5,486	$	-	$	5,486	$	-	$	5,120	$	366
Interest rate lock commitments	82		-		82		-		-		82
Total	$	5,568	$	-	$	5,568	$	-	$	5,120	$	448

The following table shows the offsetting of financial liabilities and derivative liabilities:

Gross Amounts not Offset in theStatement of Financial Condition

(Dollars in thousands)

Gross Amounts of Recognized Liabilities

Gross Amounts Offset in the Statement of FinancialCondition

Net Amounts of Assets Presented in the Statement of FinancialCondition

Financial Instruments

Cash Collateral Pledged

Net Amount

June 30, 2025

September 30, 2025

Interest rate swap contracts

4,~~074~~086


							Gross Amounts not Offset in the Statement of Financial Condition
(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Pledged		Net Amount
December 31, 2024
Interest rate swap contracts	$	5,486	$	-	$	5,486	$	-	$	-	$	5,486

Note 12 - Fair Value

The Fair Value Measurements Topic establishes a hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Topic describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

2930

Table of Contents

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges or pricing models utilizing significant observable inputs such as matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. Different judgments and assumptions used in pricing could result in different estimates of value. In certain cases where market data is not readily available because of a lack of market activity or little public disclosure, values may be based on unobservable inputs and classified in Level 3 of the fair value hierarchy.

The Company evaluates AFS security impairment on a quarterly basis. This allows the Company to maintain the same amortized cost basis of the securities before and after adoption date. The Company has $173 thousand of previously recorded credit impairment on collateralized debt obligations. The Company believes this continues to represent the expected credit losses of the amortized cost basis, therefore, has established an ACL for AFS debt securities. The ACL is monitored quarterly and is measured by evaluating the present value of cash flows as compared to the amortized cost basis of the security. To the extent that there are improvements in credit related to these securities, the ACL will be reduced to account for the improvements. If any improvements in credit exceed the amount of previously reduced amortized cost bases, recoveries will be recorded through the income statement in the period received. The allowance for collateralized debt credit losses was at $173 thousand at ~~June~~ September 30, 2025 and December 31, 2024.

The Company’s subordination for each collateralized debt obligation is calculated by taking the total performing collateral and subtracting the sum of the total collateral within the Company’s class and the total collateral within all senior classes, and then stating this result as a percentage of the total performing collateral. This measure is an indicator of the level of collateral that can default before potential cash flow disruptions may occur. In addition, management calculates subordination assuming future collateral defaults by utilizing the default/deferral assumptions in the Company’s impairment analysis. Subordination assuming future default/deferral assumptions is calculated by deducting future defaults from the current performing collateral. At ~~June~~ September 30, 2025 and December 31, 2024, management reviewed the subordination levels for each security in context of the level of current collateral defaults and deferrals within each security; the potential for additional defaults and deferrals within each security; the length of time that the security has been in “payment in kind” status; and the Company’s class position within each security.

At ~~June~~ September 30, 2025 and December 31, 2024, the collateralized debt obligations with a cost basis of $2.1 million and $2.2 million have been placed in “payment in kind” status. The Company’s securities that are classified as “payment in kind” are a result of not receiving the scheduled quarterly interest payments. For the securities in “payment in kind” status, management anticipates to receive the unpaid contractual interest payments from the issuer, because of the self- correcting cash flow waterfall provisions within the structure of the securities. When a tranche senior to the Company’s position fails the coverage test, the Company’s interest cash flows are paid to the senior tranche and recorded as a reduction of principal. The coverage test represents an over collateralization target by stating the balance of the performing collateral as a percentage of the balance of the Company’s tranche, plus the balance of all senior tranches. The principal reduction in the senior tranche continues until the appropriate coverage test is passed. As a result of the principal reduction in the senior tranche, more cash is available for future payments to the Company’s tranche. Management will not capitalize the “payment in kind” interest payments to the book value of the securities and will keep these securities in ~~non-accrual~~nonaccrual status until the quarterly interest payments resume.

The fair value of the Company’s interest rate swap contracts, both assets and liabilities, are valued by a third- party pricing agent using an income approach and are classified within Level 2 of the valuation hierarchy.

The fair value of the Company’s interest rate lock commitments is based on the price of the underlying loans expected to be sold to an investor while taking into consideration the probability the rate lock commitments will close and are classified within Level 2 of the valuation hierarchy. The Company utilized a third-party pricing service for classifying and valuing the fair value of collateralized debt obligations held. These securities were categorized as unobservable Level 3 and priced using an Option-Adjusted Discounted Cash flow model to value these securities. The significant inputs to this model include yield, prepayment speed, default rate, and loss severity.

3031

Table of Contents

Assets and Liabilities Measured at Fair Value on a Recurring Basis

There were no transfers to or from Levels 1 and 2 during the ~~six~~nine months ended ~~June~~September 30, 2025 and the year ended December 31, 2024. Changes in Level 3 assets relate to the result of change in estimated fair values, payments received, and sales of securities that have been classified as Level 3 during the ~~six~~nine months ended ~~June~~September 30, 2025 and all of 2024. Assets measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at June 30, 2025 Using
			Fair Value Measurements at September 30, 2025 Using
(Dollars in thousands)	EstimatedFairValue		Quoted Prices inActive Markets forIdentical Assets(Level 1)		Significant OtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Assets:
Interest rate swap contracts	$	4,~~074~~086	$	-	$	4,~~074~~086	$	-
Interest rate lock commitments	6649		-		6649		-
Available-for-sale debt securities:
U.S. government sponsored entities	8,~~307~~386		-		8,~~307~~386		-
Collateralized mortgage obligations and residential mortgage-backed securities	~~107~~106,~~972~~293		-		~~107~~106,~~972~~293		-
Municipal securities	~~209~~218,~~950~~855		-		~~209~~218,~~950~~855		-
Collateralized debt obligations	1,616		-		-		1,616
Total securities available-for-sale	$	~~327~~335,~~845~~150	$	-	$	~~326~~333,~~229~~534	$	1,616
Liabilities:
Interest rate swap contracts	$	4,~~074~~086	$	-	$	4,~~074~~086	$	-


			Fair Value Measurements at December 31, 2024 Using

(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Interest rate swap contracts	$	5,486	$	-	$	5,486	$	-
Interest rate lock commitments	82		-		82		-
Available-for-sale debt securities:
U.S. government sponsored entities	8,061		-		8,061		-
Collateralized mortgage obligations and residential mortgage-backed securities	109,325		-		109,325		-
Municipal securities	214,749		-		214,749		-
Collateralized debt obligations	1,419		-		-		1,419
Total securities available-for-sale	$	333,554	$	-	$	332,135	$	1,419

Liabilities:
Interest rate swap contracts	$	5,486	$	-	$	5,486	$	-

3132

Table of Contents

A reconciliation of available-for-sale securities, which require significant adjustment based on unobservable data, are presented in the following table:

	(Dollars in thousands)
	Estimated Fair ValueMeasurements UsingSignificant UnobservableInputs(Level 3)
	Available-for-sale securities
Beginning balance, January 1, 2025	$	1,419
Principal payments	(711)
Total unrealized gains, included in other comprehensive loss	204
Total unrealized gains, included in other comprehensive income (loss)	208
Ending balance, June 30, 2025	$	1,616
Ending balance, September 30, 2025	$	1,616
Beginning balance, January 1, 2024	$	1,357
Principal payments	(711)
Total unrealized gains, included in other comprehensive income	21
Total unrealized gains, included in other comprehensive income (loss)	94
Ending balance, June 30, 2024	$	1,371
Ending balance, September 30, 2024	$	1,440

Assets measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at June 30, 2025 Using

Fair Value Measurements at September 30, 2025 Using

(Dollars in thousands)

EstimatedFairValue

Quoted Prices inActive Markets forIdentical Assets(Level 1)

Significant OtherObservableInputs(Level 2)

SignificantUnobservableInputs(Level 3)

Collateral dependent loans


			Fair Value Measurements at December 31, 2024 Using

(Dollars in thousands)	Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	1,496	$	-	$	-	$	1,496

Significant (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

(Dollars in thousands)

Fair Value ~~atJune~~atSeptember 30, 2025

Valuation Technique

Significant Unobservable Inputs

Range

Weighted-AverageRange

Collateral dependent loans

Fair Value of Collateral

Discount for type of property and current market conditions

0—% - 0—%

—

3233

Table of Contents

(Dollars in thousands)

Fair Value at
December 31, 2024

Valuation
Technique

Significant Unobservable Inputs

Range

Weighted-Average
Range

Collateral dependent loans

1,496

Fair Value of Collateral

Discount for type of property and current market conditions

0% - 80%

The following table shows carrying values and related estimated fair values of financial instruments not carried at fair value in the condensed consolidated balance sheets as of the dates indicated. Estimated fair values are further categorized by the inputs used to measure fair value. Items that are not financial instruments are not included.

June 30, 2025

Estimated Fair Value Measurements at June 30, 2025 Using

September 30, 2025

Estimated Fair Value Measurements at September 30, 2025 Using

(Dollars in thousands)

CarryingValue

EstimatedFair Value

Quoted Prices inActive Markets for Identical Assets(Level 1)

SignificantOther ObservableInputs(Level 2)

SignificantUnobservableInputs(Level 3)

Financial assets:

Cash and cash equivalents

~~103~~104,~~414~~178

Loans held-for-sale

~~834~~2,641

~~869~~2,781

Loans receivable, net

1,~~466~~455,~~094~~797

1,~~422~~416,~~648~~903

Federal Home Loan Bank stock

6,547

Accrued interest receivable

7,~~651~~585

Financial liabilities:

Non-interest bearing deposits

~~271~~280,~~172~~296

Interest bearing deposits

1,~~483~~470,~~678~~350

1,~~483~~468,~~674~~712

~~940~~933,~~985~~677

~~542~~535,~~689~~035

Repurchase agreements

48,~~331~~426

48,~~230~~415

40,~~495~~680

7,735

Borrowed funds

6555,000

6454,~~105~~347

Accrued interest payable

~~711~~1,162

3334

Table of Contents


	December 31, 2024				Estimated Fair Value Measurements at December 31, 2024 Using
(Dollars in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	70,584	$	70,584	$	70,584	$	-	$	-
Loans held-for-sale	1,253		1,277		-		1,277		-
Loans receivable, net	1,492,065		1,435,148		-		-		1,435,148
Federal Home Loan Bank stock	6,547		6,547		-		6,547		-
Accrued interest receivable	7,721		7,721		-		7,721		-

Financial liabilities:
Non-interest bearing deposits	263,324		263,324		263,324		-		-
Interest bearing deposits	1,497,242		1,496,638		936,989		559,649		-
Repurchase agreements	40,116		39,960		32,364		7,596		-
Borrowed funds	65,000		63,432		-		63,432		-
Accrued interest payable	620		620		-		620		-

The following methods were used to estimate the fair value of financial instruments presented in the preceding table at ~~June~~September 30, 2025 and December 31, 2024:

Cash and cash equivalent carrying amounts approximate fair value. The fair values of securities available-for-sale are obtained from broker pricing (Level 2), with the exception of collateralized debt obligations, which are valued by a third-party specialist (Level 3). Loans held-for-sale comprise residential mortgages and are priced based on values established by the secondary mortgage markets (Level 2). The estimated fair value for net loans receivable is based on the exit price notion which is the exchange price that would be received to transfer the loans at the most advantageous market price in an orderly transaction between market participants on the measurement date (Level 3). Federal Home Loan Bank stock is estimated at book value due to restrictions that limit the sale or transfer of the security. Interest rate swap agreements, both assets and liabilities, are valued by a third-party pricing agent using an income approach (Level 2). Fair values of accrued interest receivable and payable approximate book value, as the carrying values are determined using the observable interest rate, balance, and last payment date.

Non-interest and interest bearing deposits, which include checking, savings, and money market deposits, are estimated to have fair values based on the amount payable as of the reporting date (Level 1). The fair value of fixed-maturity certificates of deposit (included in interest bearing deposits) are based on estimates of the rate the Company would pay on similar deposits, applied for the time period until maturity (Level 2). Estimated fair values for short-term repurchase agreements, which represent sweeps from demand deposits to accounts secured by pledged securities, are estimated based on the amount payable as of the reporting date (Level 1). Longer-term repurchase agreements, with contractual maturity dates of quarter or more, are based on estimates of the rate the Company would pay on similar deposits, applied for the time period until maturity (Level 2). Short-term borrowings are generally only held overnight, therefore, their carrying amount is a reasonable estimate of fair value (Level 1). The fair value of FHLB Advances are estimated by discounting the future cash flows using quoted rates from the FHLB for similar advances with similar maturities (Level 2). The estimated fair value of other financial instruments, and off-balance sheet loan commitments, approximate cost and are not considered significant to this presentation.

Note 13 - Borrowings

At ~~June~~September 30, 2025, and December 31, 2024, borrowed funds are summarized below:

3435

Table of Contents


	(Dollars in thousands)
	September 30, 2025		December 31, 2024

FHLB Fixed rate advance with outstanding rate of 4.85%, maturing May 16, 2025	$	-	$	10,000
FHLB Fixed rate advance with outstanding rate of 4.77%, maturing May 19, 2025	-		10,000

FHLB Fixed rate advance with outstanding rate of 3.63%, maturing March 7, 2028 (1)	10,000		-
FHLB Fixed rate advance with outstanding rate of 3.46%, maturing June 26, 2028 (1)	10,000		-
FHLB Fixed rate advance with outstanding rate of 3.38%, maturing August 7, 2028 (1)	-		10,000
FHLB Fixed rate advance with outstanding rate of 3.84%, maturing February 28, 2029 (1)	15,000		15,000
FHLB Fixed rate advance with outstanding rate of 3.74%, maturing February 28, 2029 (1)	10,000		10,000
FHLB Fixed rate advance with outstanding rate of 3.22%, maturing August 7, 2029 (1)	-		10,000
FHLB Fixed rate advance with outstanding rate of 2.95%, maturing April 29, 2030 (1)	10,000		-
Total	$	55,000	$	65,000

	(Dollars in thousands)
	June 30,2025		December 31,2024
FHLB Fixed rate advance with outstanding rate of 4.85%, maturing May 16, 2025	$	-	$	10,000
FHLB Fixed rate advance with outstanding rate of 4.77%, maturing May 19, 2025	-		10,000
FHLB Fixed rate advance with outstanding rate of 4.49%,maturing July 3, 2025	10,000		-
FHLB Fixed rate advance with outstanding rate of 3.63%, maturing March 7, 2028 (1)	10,000		-
FHLB Fixed rate advance with outstanding rate of 3.46%, maturing June 26, 2028 (1)	10,000		-
FHLB Fixed rate advance with outstanding rate of 3.38%, maturing August 7, 2028 (1)	-		10,000
FHLB Fixed rate advance with outstanding rate of 3.84%, maturing February 28, 2029 (1)	15,000		15,000
FHLB Fixed rate advance with outstanding rate of 3.74%, maturing February 28, 2029 (1)	10,000		10,000
FHLB Fixed rate advance with outstanding rate of 3.22%, maturing August 7, 2029 (1)	-		10,000
FHLB Fixed rate advance with outstanding rate of 2.95%, maturing April 29, 2030 (1)	10,000		-
Total	$	65,000	$	65,000

(1) FHLB retains putable option to call these advances after a period of time.

At ~~June~~September 30, 2025, scheduled maturities of borrowed funds were as follows:

	(Dollars in thousands)
2025	$	~~10,000~~-
2026	-
2027	-
2028	20,000
2029	25,000
2030	10,000
Total	$	6555,000

The Company has available liquidity of $~~932~~942.0 million including borrowing capacity from the FHLB and Federal Reserve facilities and other sources. The Company also maintains a $25.0 million line of credit with the Federal Home Loan Bank of Indianapolis. The Company did not have a balance at ~~June~~September 30, 2025, or as of December 31, 2024. The Company did not have other borrowings at ~~June~~September 30, 2025, or as of December 31, 2024.

Note 14 - Leases

Under ASC 842, operating lease expense is generally recognized on a straight-line basis over the term of the lease. On February 22, 2024, the Bank closed its previously announced sale-leaseback transaction with MountainSeed Real Estate Services, LLC (the “Buyer”), pursuant to which the Bank sold to the Buyer five properties owned and operated as branch locations (the “Properties”) for an aggregate purchase price of $17.2 million, including customary closing adjustments. Under the Sale Agreement, the Bank also entered into triple net lease agreements (the “Lease Agreements”) with the Buyer under which the Bank leases each of the Properties, and pursuant to which the Bank is responsible for the insurance, real estate taxes, and maintenance and repairs for each of the properties. Each of the Lease Agreements became effective upon

3536

~~Table~~the closing of ~~Contents~~the sale-leaseback transaction and have an initial term of 15 years. The Bank’s obligations under the Lease Agreements are guaranteed by the Company.

estate taxes, and maintenance and repairs for each of the properties. Each of the Lease Agreements became effective upon the closing of the sale-leaseback transaction and have an initial term of 15 years. The Bank’s obligations under the Lease Agreements are guaranteed by the Company.

As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are excluded from our weighted-average remaining lease term.

The following table summarizes supplemental cash flow and other information related to our operating leases:

(Dollars in thousands)	~~Six~~Nine Months Ended ~~June~~September 30,
	2025			2024
Gain on sale-leaseback transaction, net	$	-		$	(11,772)
Operating cash flows
Cash paid for amounts included in the measurement of lease liabilities for leases	~~800~~1,201			~~570~~965
ROU assets obtained in the exchange for lease liabilities - operating leases (1)	-			16,140
ROU assets obtained in exchange for lease liabilities - operating leases (1)	-			16,140
Weighted-average remaining lease terms (in years) - operating leases	13			1514
Weighted-average discount rate - operating leases	7.67		%	7.6867		%
Variable lease payments	$	~~140~~209		$	~~140~~209
Operating lease costs	~~962~~1,442			~~667~~1,078
Total lease costs (2)	$	1,~~102~~651		$	~~807~~1,287

(1) Right of Use Asset included in Premises and equipment on the consolidated balance sheet

(2) Included in occupancy and equipment costs on the condensed consolidated statements of income

Table of Contents

The following table represents the maturity of the Company's operating lease liabilities as of June 30, 2025:

(Dollars in thousands)
Maturity Analysis
Remainder 2025	$	797
2026	1,622
2027	1,657
2028	1,692
2029	1,679
2030	1,688
Thereafter	15,110
Total	24,245
Less: Present value discount	(9,471)
Lease liability	$	14,774

~~Table~~The following table represents the maturity of ~~Contents~~the Company's operating lease liabilities as of September 30, 2025:


(Dollars in thousands)

Maturity Analysis
Remainder 2025	$	399
2026	1,622
2027	1,657
2028	1,692
2029	1,679
2030	1,688
Thereafter	15,110
Total	23,847
Less: Present value discount	(9,193)
Lease liability	$	14,654

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Summary

Finward Bancorp (the “Company”) is a financial holding company registered with the Board of Governors of the Federal Reserve System. Peoples Bank (“the Bank”), an Indiana commercial bank, is a wholly-owned subsidiary of the Company. The Company has no other business activity other than being a holding company for the Bank. The following management’s discussion and analysis presents information concerning our financial condition as of ~~June~~September 30, 2025 and December 31, 2024, and the results of operations for the three and ~~six~~nine months ending ~~June~~September 30, 2025 and ~~June~~September 30, 2024. This discussion should be read in conjunction with the condensed consolidated financial statements and other financial data presented elsewhere herein and with the condensed consolidated financial statements and other financial data, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

At ~~June~~September 30, 2025, the Company had total assets of $2.1 billion, loans receivable, net of deferred fees and costs, of $1.5 billion and total deposits of $1.8 billion. Stockholders' equity totaled $~~154~~165.35 million or 78.51% of total assets, with a book value per share of $3538.6724. Net income for the three months ended ~~June~~September 30, 2025, was $23.25 million, or $0.5081 earnings per diluted common share. For the three months ended ~~June~~September 30, 2025, the return on average assets (ROA) was 0.4268%, while the return on average stockholders’ equity (ROE) was 58.6696%. Net income for the ~~six~~nine months ended ~~June~~September 30, 2025, was $2.6.1 million, or $01.6142 earnings per diluted common share. For the ~~six~~nine months ended ~~June~~September 30, 2025, the ROA was 0.2540%, while the ROE was 35.3927%.

Recent Developments Regarding the Company and the Bank

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which is a sweeping federal reconciliation package that permanently extends and expands key provisions of the 2017 Tax Cuts and Jobs Act, introduces new tax benefits (including elevated standard deductions, higher state-and-local tax (SALT) caps, and no taxation on tips and overtime income for certain workers), and enacts broad reductions in government spending. The OBBBA is a complex revision to the U.S. federal income tax laws with potentially far-reaching consequences. The OBBBA will require subsequent rulemaking in a number of areas. The long-term impact of the OBBBA on the Company, the Bank, our shareholders, and the banking industry in general cannot be reliably predicted at this early stage of the new law’s implementation. Shareholders are urged to consult with their own tax advisors regarding the impact of the OBBBA to them and their acquisition, ownership, and disposition of the Company's common stock. The Company's management continues to evaluate the impact of the OBBBA on the Company, the Bank, and its business, financial condition, and results of operations.

Termination of Consent Order

On August 6, 2025, the FDIC and the Indiana Department of Financial Institutions ("DFI") terminated the Consent Order issued to the Bank that was effective on November 7, 2023 relating to the Bank's compliance with the Bank Secrecy Act and its implementing regulations (collectively, the "BSA"). The termination of the Consent Order follows the Bank's successful resolution of the deficiencies in the Bank's BSA compliance and anti-money laundering compliance program which was the subject of the Consent Order.

Memorandum of Understanding

On August 9, 2024, the Bank entered into a memorandum of understanding (“MOU”) with the FDIC and DFI. The MOU is an informal administrative agreement 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. The MOU documents an understanding among the Bank, the FDIC, and DFI that, among other things, the Bank will: refrain from paying cash dividends without prior regulatory approval and develop and implement certain plans regarding the Bank’s operations, capital, and strategy. The Bank will submit written quarterly progress reports to the FDIC and DFI detailing compliance with the MOU. The MOU will remain in effect until modified or terminated by the FDIC and DFI.

Management does not expect the actions called for by these regulatory actions to have a substantial impact on the Company’s or the Bank’s ongoing day-to-day operations, although they may have the effect of limiting or delaying the Bancorp’s or the Bank’s ability or plans to expand and engage in business acquisitions.

3839

Table of Contents

Financial Condition

General

During the ~~six~~nine months ended ~~June~~September 30, 2025, total assets decreased by $2.8.0 million (0.1439%), with interest-earning assets decreasing by $21.76 million (0.1408%). At both ~~June~~September 30, 2025 and December 31, 2024, interest-earning assets totaled $1.9 billion. Earning assets represented 92.36% of total assets at ~~both June~~September 30, 2025 and 92.3% December 31, 2024.

Loan Portfolio

Loans receivable, net of deferred fees and costs totaled $1.5 billion at both ~~June~~September 30, 2025 and December 31, 2024. The loan portfolio, which is the Company’s largest asset, is the primary source of both interest and fee income. The Company’s lending strategy emphasizes quality loan growth, product diversification, and competitive and profitable pricing.

The Company’s end-of-period loan balances were as follows:

	June 30, 2025				December 31, 2024
	September 30, 2025				December 31, 2024
(Dollars in thousands)	Balance		% Loans		Balance		% Loans
Residential real estate	$	~~457~~450,~~248~~007	30.86	%	$	467,293	31.0	%
Home equity	51,~~112~~813		3.45	%	49,758		3.3	%
Commercial real estate	~~551~~564,~~091~~558		3738.24	%	551,674		36.6	%
Construction and land development	7479,~~795~~678		5.14	%	82,874		5.5	%
Multifamily	~~200~~192,~~440~~698		13.51	%	212,455		14.1	%
Commercial business	~~105~~96,~~636~~192		76.15	%	104,246		6.9	%
Consumer	~~2,347~~348		~~0.2~~—	%	551		—	%
Manufactured homes	2524,~~146~~372		1.7	%	26,708		1.8	%
Government	1412,~~628~~298		1.0.8	%	11,024		0.7	%
Loans receivable	1,~~482~~471,~~443~~964		100.0	%	1,506,583		100.0	%
Plus:
Net deferred loans origination costs	21,~~012~~719				2,439
Loan clearing funds	~~(177)~~91				(46)
Loans receivable, net of deferred fees and costs	$	1,~~484~~473,~~278~~774			$	1,508,976
Adjustable rate loans / loans receivable	$	~~721~~728,~~921~~185	4849.75	%	$	793,920	52.7	%

Our total commercial real estate portfolio (which includes but is not limited to loans secured by office space, medical office space, and mixed-use retail/office space) totaled $~~551~~564.16 million as of ~~June~~September 30, 2025, compared to $551.7 million as of December 31, 2024. Given prevailing market conditions such as continued elevated interest rate levels, reduced occupancy as a result of the increase in hybrid work arrangements, we are carefully monitoring these loans for signs of deterioration in credit quality.

3940

~~Table~~Commercial real estate loans remained our largest loan segment and accounted for 38.4% of ~~Contents~~the total loan portfolio at September 30, 2025 and 36.6% at December 31, 2024. A further breakdown of the composition of the commercial real estate loan portfolio as of September 30, 2025 and December 31, 2024 is shown in the table below:

Commercial real estate loans remained our largest loan segment and accounted for 37.2% of the total loan portfolio at June 30, 2025 and 36.6% at December 31, 2024. A further breakdown of the composition of the commercial real estate loan portfolio as of June 30, 2025 and December 31, 2024 is shown in the table below:

Commercial Real Estate (CRE)

September 30, 2025

December 31, 2024

(Dollars in thousands)

# Loans

$ Amount

% of Total Gross Loans

# Loans

$ Amount

% of Total Gross Loans

CRE Owner Occupied (CRE OO)

Food

Filing Compare · Finward Bancorp