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Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2022

Note 1 - Basis of Presentation

The consolidated financial statements include the accounts of Finward Bancorp (the “Bancorp” or “FNWD”), its wholly-owned subsidiaries NWIN Risk Management, Inc. (a captive insurance subsidiary) and Peoples Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, Peoples Service Corporation, NWIN, LLC, NWIN Funding, Incorporated, 1683 Real Estate LLC, and Columbia Development Company, LLC. The Bancorp’s business activities include being a holding company for the Bank as well as a holding company for NWIN Risk Management, Inc. The Bancorp’s earnings are primarily dependent upon the earnings of the Bank. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures required by U.S. generally accepted accounting principles for complete presentation of consolidated financial statements. In the opinion of management, the consolidated financial statements contain all adjustments necessary to present fairly the consolidated balance sheets of the Bancorp as of March 31, 2022, and December 31, 2021, and the consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and consolidated statements of cash flows for the three months ended March 31, 2022, and 2021. The income reported for the three month period ended March 31, 2022, is not necessarily indicative of the results to be expected for the full year.

The Notes to the Consolidated Financial Statements appearing in Finward Bancorp’s Annual Report on Form 10-K (2021 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on net income.

Revision of Previously Issued Financial Statements

We have revised amounts reported in previously issued financial statements for the periods presented in this Quarterly Report on Form 10-Q related to immaterial errors discovered during the second quarter of 2021. The errors relate to certain deferred costs booked related to our manufactured home loan product, which resulted in increased assets and understatements of expense in prior periods.

We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021.

The following tables present the revisions to the line items of our previously issued financial statements to reflect the correction of the errors:

Consolidated Statement of Income

For the three months ending March 31, 2021	As Reported		Adjustment			As Revised
Compensation and benefits	$	5,530	$	155		$	5,685
Total noninterest expense		10,338		155			10,493
Income before income tax expense		5,443		(155	)		5,288
Income tax expenses		764		(19	)		745
Net income		4,679		(136	)		4,543
Earnings per common share:
Basic		1.35		(0.04	)		1.31
Diluted		1.35		(0.04	)		1.31

Consolidated Statements of Comprehensive Income (Loss)

For the three months ending March 31, 2021	As Reported			Adjustment			As Revised
Net income	$	4,679		$	(136	)	$	4,543
Comprehensive income, net of tax		(1,782	)		(136	)		(1,918	)

Consolidated Statements of Changes in Stockholders' Equity

Balance at January 1, 2021	As Reported		Adjustment			As Revised
Retained earnings	$	112,494	$	(1,233	)	$	111,261
Total equity		152,922		(1,233	)		151,689

For the three months ending March 31, 2021
Net income		4,679		(136	)		4,543
Retained earnings		116,094		(1,369	)		114,725
Total equity		150,139		(1,369	)		148,770

Consolidated Statements of Cash Flows

For the three months ending March 31, 2021	As Reported			Adjustment			As Revised
Net income	$	4,679		$	(136	)	$	4,543
Net change in other assets		2,662			(19	)		2,643
Net cash - operating activities		16,549			(155	)		16,394
Net change in loan		(4,486	)		155			(4,331	)
Net cash - investing activities		(27,732	)		155			(27,577	)