Finward Bancorp (FNWD) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01As a financial institution, the Company is subject to a number of risks relating to its daily business
2. 02Compliance Risk – the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably
3. 03The Company is subject to liquidity risk in its operations, which could adversely affect the ability to fund various obligations
4. 04Unrealized losses in the Company’s investment portfolio could affect liquidity
5. 05Above average interest rate risk associated with fixed-rate loans may have an adverse effect on our financial position or results of operations
6. 06Higher loan losses could require the Company to increase its allowance for credit losses through a charge to earnings
7. 07Commercial business lending may expose the Company to increased lending risks
8. 08Commercial real estate lending may expose the Company to increased lending risks
9. 09Our mortgage lending profitability could be significantly reduced if we are not able to resell mortgages at a reasonable gain on sale or experience other problems with the secondary market process or we are unable to retain our mortgage loan sales force due to regulatory changes
10. 10Our mortgage lending profitability could be significantly reduced as changes in interest rates could affect mortgage origination volume and pricing for selling mortgages on the secondary market
11. 11Our information systems may experience an interruption or breach in security
12. 12We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors
13. 13We depend on outside third parties for processing and handling of our records and data
14. 14We continually encounter technological change
15. 15We may not be able to attract and retain skilled people
16. 16Loss of key employees may disrupt relationships with certain customers
17. 17We may need to raise additional capital in the future, and such capital may not be available when needed or at all
18. 18We may be exposed to risk of environmental liabilities with respect to real property to which we take title
19. 19We are exposed to intangible asset risk in that our goodwill may become impaired
20. 20Damage to our reputation could damage our business
21. 21Potential acquisitions may disrupt our business and dilute stockholder value
22. 22potential problems in integrating the target company’s data processing and ancillary systems, customers, and employees with ours
23. 23The Company and Bank are subject to extensive regulation and oversight, including with respect to the Order and MOU
24. 24Regulatory changes to diversity, equity, and inclusion (“DEI”) and environmental, social, and governance (“ESG”) practices may adversely impact our reputation, compliance costs, and business operations

Risks Related to the Banking Industry

1. 25Our business may be adversely affected by conditions in the financial markets and economic conditions generally
2. 26There could be an increase in write-downs of asset values by financial institutions, such as the Bank
3. 27Our ability to assess the creditworthiness of customers could be impaired if the models and approaches they use to select, manage, and underwrite credits become less predictive of future performance
4. 28The Bank could be required to pay significantly higher FDIC premiums in the future if losses further deplete the Deposit Insurance Fund
5. 29We face strong competition in all phases of our business from other banks, financial institutions, and non-banks
6. 30We are subject to federal regulations that seek to protect the Deposit Insurance Fund and the depositors and borrowers of the Bank, and our federal regulators may impose restrictions on our operations that are detrimental to holders of the Company’s common stock
7. 31Acquisitions and the addition of branch facilities may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties and dilution to existing shareholder value
8. 32The soundness of other financial institutions could adversely affect us

Risks Related to the Company’s Common Stock

1. 33An investment in the Company’s common stock is not an insured deposit
2. 34The price of our common stock may fluctuate, sometimes significantly, and this may make it difficult for you to resell our common stock at times or at prices you find attractive
3. 35economic, financial, geopolitical, regulatory, congressional, or judicial events that affect us or the financial markets
4. 36The trading volume in the Company’s common stock is less than that of other larger financial institutions
5. 37The Company’s Articles of Incorporation, Indiana law, and certain banking laws may have an anti-takeover effect
6. 38The Company may issue additional securities, which could dilute the ownership percentage of holders of the Company’s common stock
7. 39We may not be able to pay dividends in the future in accordance with past practice