Finward Bancorp Debt Disclosure
Note 8 – Borrowed Funds
At December 31, 2024 and December 31, 2023, borrowed funds and their outstanding rates are summarized below:
| (Dollars in thousands) | ||||||||
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Federal Reserve Fixed rate advance with outstanding rate of %, matured March 22, 2024 | $ | - | $ | 80,000 | ||||
| FHLB Fixed rate advance with outstanding rate of %, maturing May 16, 2025 | 10,000 | - | ||||||
| FHLB Fixed rate advance with outstanding rate of %, maturing May 19, 2025 | 10,000 | - | ||||||
| FHLB Fixed rate advance with outstanding rate of %, maturing August 7, 2028 (1) | 10,000 | - | ||||||
| FHLB Fixed rate advance with outstanding rate of %, maturing August 7, 2029 (1) | 10,000 | - | ||||||
| FHLB Fixed rate advance with outstanding rate of %, maturing February 28, 2029 (1) | 15,000 | - | ||||||
| FHLB Fixed rate advance with outstanding rate of %, maturing February 28, 2029 (1) | 10,000 | - | ||||||
| Total | $ | 65,000 | $ | 80,000 | ||||
| (1) | FHLB retains puttable option to call these advances after a period of time. |
At December 31, 2024, scheduled maturities of borrowed funds were as follows:
| (Dollars in thousands) | ||||
| 2025 | 20,000 | |||
| 2026 | - | |||
| 2027 | - | |||
| 2028 | 10,000 | |||
| 2029 | 35,000 | |||
| Total | $ | 65,000 | ||
On March 12, 2023, the Federal Reserve Board announced the creation of a new Bank Term Funding Program (the “BTFP”). The BTFP offered loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasury securities, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets were valued at par for purposes of the collateral pledge under the BTFP. During the first quarter of 2023, the Company participated in the BTFP by accessing $80 million of low-cost capital under the program. During the quarter ending September 30, 2024, the Company terminated its involvement in the Bank Term Funding Program (the “BTFP”) and paid off its outstanding balance of $60 million.
Fixed rate advances are payable at maturity, with a prepayment penalty. The advances were collateralized by mortgage loans with a carrying value totaling approximately $460.8 million at December 31, 2024. FHLB retains puttable option to call some of these advances 6 to 12 months after issuance. The Bank had a balance of $65 million at December 31, 2024 compared to balance at December 31, 2023 at FHLB. In addition to the fixed rate advances, the Bank maintains a $25.0 million line of credit with the Federal Home Loan Bank of Indianapolis. The Bank did have a balance on the line of credit at December 31, 2024 or December 31, 2023.
At December 31, 2024, the Bank had available approximately $687.4 million in credit lines with various money center banks, including the FHLB and Federal Reserve.
Repurchase agreements consist of variable rate sweeps which mature daily as well as fixed rate term agreements that generally mature within 12 months. These repurchase agreements are secured by municipal securities and collateralized mortgage obligations and residential mortgage-backed securities, under the Bank’s control. At December 31, information concerning these retail repurchase agreements is summarized below:
| (Dollars in thousands) | ||||||||
| 2024 | 2023 | |||||||
| Ending balance | $ | 40,116 | $ | 38,124 | ||||
| Average balance during the year | 41,506 | 35,543 | ||||||
| Maximum month-end balance during the year | 44,058 | 48,947 | ||||||
| Securities underlying the agreements at year end: | ||||||||
| Carrying value | 57,833 | 54,458 | ||||||
| Fair value | 57,833 | 54,458 | ||||||
| Average interest rate during the year | 3.85 | % | 3.64 | % | ||||
| Average interest rate at year end | 3.51 | % | 3.83 | % | ||||
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About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.