2017 Annual Report
NorthWest Indiana Bancorp
Financial Highlights
(Dollars in thousands, except for per share and ratios data)
Earnings:
December 31,
2017
December 31,
2016
Net revenue (a)
Noninterest expense
Pre-provision profit
Provision for loan losses
Net income
Earnings per common share data:
Net income per share:
Basic
Diluted
Cash dividends declared
Book value
Selected balance sheet data (period-end):
Total assets
Loans
Deposits
Total stockholders' equity
Selected ratios:
Return on Equity
Return on Assets
Common equity tier 1 capital to risk-weighted assets
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets
Tier 1 capital to adjusted average assets
38,518
25,488
13,030
1,200
8,961
3.13
3.13
1.15
32.14
927,259
620,211
793,004
92,060
9.90%
0.98%
12.9%
12.9%
14.0%
9.6%
37,667
24,709
12,958
1,268
9,142
3.20
3.20
1.11
29.41
913,626
583,650
779,771
84,108
10.65%
1.03%
13.1%
13.1%
14.3%
9.2%
(a) Net revenue represents the Bancorp's net interest income, plus noninterest income.
2017 Annual Report
Dear Shareholder:
2017 was a significant year in that it marked the end of our
five-year strategic plan that began in 2013. Overall, we
consider the plan to be a resounding success. The main
goal of our plan was to grow and perform in order to drive
continued independence, and the results we have provided
over that time period speak for themselves: earnings were
up 30.8%, assets grew by 34.0%, and the Bank’s
headcount went up by 14.9%. In order to help accomplish
this, the Bank completed two acquisitions, which expanded
both our balance sheet and our footprint.
External validators confirmed that success as well. We are
proud to have been named again in 2017 a Top 200
Community Bank by American Banker Magazine, for the
13th consecutive year. 2017 was also the 6th consecutive
year that Peoples was named a Best Place to Work in Indiana, and the second consecutive
year that we were named a Best Bank to Work For in the entire country by American Banker.
These recognitions show how investments in our employees benefit our shareholders, and the
commitment that we all have to the company’s shareholders.
Despite a year-end write down on the Bank’s Deferred Tax Asset, we had another strong year.
Like many banks across the country, we recognized that decline in value due to the enactment
timing of the Tax Cuts and Jobs Act; without that loss, on a non-GAAP basis, our ROA would
have been 1.04% - the highest it has been over the past 5 years. Going forward, the lower tax
rate should provide ongoing benefits as we continue to meet performance expectations and
invest in the future of our company.
NWIN Stock Performance
2017 was another strong year for NWIN’s stock. For the year 2017, stock price was up 14.5%,
and total return was 17.5%. Dividend yield ended the year strong at 2.6%, price to tangible book
value was at 145%, and the stock’s price-to-earnings ratio was at 14.2.
What is even more impressive are the results that the Bank’s 5-year strategic plan had on the
company’s stock over that time. NWIN’s price was up 133.0%, and total return was 176%. Put
another way, a $100 investment at the beginning of 2013 would have returned $176 in price
appreciation and dividends over that time.
2017 in Review
The Bank continues to strategically build capital in order to fuel organic growth opportunities and
to position the Bank to take advantage of inorganic growth opportunities. Tier one capital grew
from 9.0% to 9.4%, and the dividend policy has purposely been growth-oriented as the Bank
continues to look to the future.
Commercial loan growth remains a primary revenue driver for the Bank, and the overall loan
portfolio ended the year at $620.2 million, with strong growth at the end of the year bringing the
total growth for the year to 6.3%. The Bank’s net interest margin was 3.61%, the result of a
commercial lending team that has expanded from 9 people to 12 people over the past 5 years.
New products, such as interest rate swaps, are allowing the Bank to remain competitive,
respond to customer needs, and grow profitably. At the same time, the Bank originated $42.2
million in mortgages, which generated $1.2 million in gains on sale. The Bank’s mortgage
lending team has similarly grown from 6 people to 11 people over the course of the past 5
years.
Like many banks, Peoples Bank began to feel competitive pressures on deposits. Despite these
pressures, core deposits grew by 2.5%, and the Bank’s core funding ratio remained strong at
78.0%. A new Highland Banking Center was built in early 2017 as well. This investment
represents the ongoing commitment to our retail banking network, and the importance that retail
deposits play in our business. This new office was designed around customer needs; it is
smaller, more efficient to operate, and much more focused on customer engagement than
transactional banking. The new location paid dividends, with deposits growing 11.5%, and total
accounts growing by 33.0%.
Services are also playing a much more important role in the Bank’s overall non-interest income.
As the result of a sustained, multi-year effort, income from banking services increased by $401
thousand, or 13.8%. This result came from a project that was phased in over 5 months in early
2017, providing only 7 months of income benefit during the calendar year. These benefits are
expected to continue, and should improve as new initiatives are fully phased in.
Finally, the Bank continues to invest in its Wealth Management business. Assets under
management ended the year at $306.0 million, and asset yield expanded by 5 basis points over
the course of the year. Internal restructuring resulted in internal efficiencies, which allowed for
further growth in the team. New platform technology investments are planned to be
implemented in early 2018, providing the team with even more tools to serve the Bank’s
customers.
Strategy for the Future
As the Bank pivots to its new strategic plan, we are looking towards a new set of strategic goals
over the next five years. We anticipate additional scale, built on both organic and inorganic
growth. The pieces are in place for further growth, and we have built a foundation for continued
independence over the course of our most recent strategic plan.
Our new strategic direction is built on the mission and values that have sustained us for over
100 years: to help our customers and communities be more successful through stability,
integrity, community, and excellence. Our commitment to shared value creation for all of our
stakeholders – shareholders, customers, employees, and community – will continue to drive us
forward, and keep us focused on the Bank’s performance as we grow into the future.
The company’s strategic framework over the next five years is built on a simple idea: efficiency
and strategic advantage. In other words, we are driven to do better with the resources we have,
while engaging our customers based on a unique value proposition built around our You First
Banking brand. We further intend to deploy that strategy into a growing footprint, and to serve
our customers more completely by providing a consistent customer experience and more
products and services to better serve their financial needs.
Peoples Bank has the management, resources, and experience that has delivered consistent,
strong results. Our past success give us the confidence to execute our future plans, and you
have our commitment to the same principles that have created so much value over the long
history of this company. Thank you for your continued confidence as we continue to grow and
deliver for our stakeholders.
Sincerely,
David A. Bochnowski
Executive Chairman
Benjamin Bochnowski
President & Chief Executive Officer
Market Information
Book Value per Share
The Bancorp’s Common Stock is traded in the
over-the-counter market and quoted on the OTC
Bulletin Board. The Bancorp’s stock is not actively
traded. As of February 16, 2018, the Bancorp had
2,868,940 shares of common stock outstanding and
413 stockholders of record. This does not reflect the
number of persons or entities who may hold their
stock in nominee or “street” name through brokerage
firms. Set forth below are the high and low bid prices
during each quarter for the years ended December
31, 2017 and December 31, 2016. The bid prices
reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily
represent actual transactions. Also set forth is
information concerning the dividends declared by
the Bancorp during the periods reported. Note 11 to
the Financial Statements describes regulatory limits
on the Bancorp’s ability to pay dividends.
Year Ended
December 31, 2017
Year Ended
December 31, 2016
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Per Share Prices
High
Low
Dividends
Declared Per
Common Share
$
40.50
41.00
42.50
44.50
$ 38.40
39.50
40.50
41.50
$
0.28
0.29
0.29
0.29
$
31.05
30.00
32.50
39.87
$
29.30
28.35
29.00
33.00
$
0.27
0.28
0.28
0.28
$28.37
$29.41
$26.78
$32.14
$23.50
2013
2014
2015
2016
2017
Basic Earnings per Share
$3.20
$3.13
$2.50
$2.60
$2.75
2013
2014
2015
2016
2017
Dividends per Share
$1.06
$0.97
$0.85
$1.11
$1.15
2013
2014
2015
2016
2017
2017 Board of Directors
David A. Bochnowski, Director since 1977
Executive Chairman of the Bancorp
James L. Wieser, Director since 1999
Attorney and Senior Partner, Wieser & Wyllie, LLP
Edward J. Furticella, Director since 2000
Former Executive Vice President and CFO of the
Bancorp, Purdue University Northwest
Professor Emeritus of Accounting
Joel Gorelick, Director since 2000
Director/Chairman of Audit Committee, Indiana Economic
Development Corporation; Director/Charter Chairman,
Lake County Economic Alliance; Committee member,
Economic Development Committee – Northwest Indiana
Forum
Kenneth V. Krupinski, Director since 2003
Retired Certified Public Accountant, Swartz Retson &
Co., P.C.
Anthony M. Puntillo, D.D.S., M.S.D., Director since 2004
Orthodontist, CEO of Puntillo and Crane Orthodontics,
P.C.
Donald P. Fesko, Director since 2005
President, Chief Executive Officer, Community
Foundation of Northwest Indiana
Amy W. Han, Ph.D., Director since 2008
Indiana University School of Medicine – Northwest
Danette Garza, Director since 2013
Attorney At Law, Certified Public Accountant,
Owner of Jack Gray Transport, Inc., Owner of Lakes &
Rivers Logistics, Inc.
Benjamin J. Bochnowski, Director since 2014
President, Chief Executive Officer of the Bancorp
Robert E. Johnson III, Director since 2016
President, Chief Executive Officer, Cimcor Inc.
Leroy F. Cataldi, P.D., Director Emeritus
Lourdes M. Dennison, Director Emeritus
Martin A. Dybel, Director Emeritus
John Freyek, Director Emeritus
Stanley E. Mize, Director Emeritus
Gloria C. Gray Weissman, Director Emeritus
Executive Team
David A. Bochnowski
Executive Chairman
Benjamin J. Bochnowski
President, Chief Executive Officer
Robert T. Lowry
Executive Vice President, Chief Financial Officer
and Treasurer
John J. Diederich
Executive Advisor
2017 Board Committees
Compensation and Benefits
Amy W. Han, Chairwoman
Donald P. Fesko
Edward J. Furticella
Anthony M. Puntillo
Executive Committee
David A. Bochnowski, Chairman
Edward J. Furticella
Joel Gorelick
Kenneth V. Krupinski
James L. Wieser
Nominating and Corporate Governance
James L. Wieser, Chairman
Donald P. Fesko
Edward J. Furticella
Danette Garza
Amy W. Han
Robert E. Johnson III
Kenneth V. Krupinski
Anthony M. Puntillo
Risk Management
Anthony M. Puntillo, Chairman
Edward J. Furticella
Danette Garza
Joel Gorelick
Robert E. Johnson III
Kenneth V. Krupinski
Strategic Planning
Edward J. Furticella, Chairman
Danette Garza
Joel Gorelick
Robert E. Johnson III
Kenneth V. Krupinski
Anthony M. Puntillo
James L. Wieser
Wealth Management
Danette Garza, Chairwoman
Donald P. Fesko
Amy W. Han
Kenneth V. Krupinski
Leane E. Cerven
Executive Vice President, General Counsel
and Corporate Secretary
Tanya A. Leetz
Executive Vice President, Chief Information
and Technology Officer
Todd M. Scheub
Executive Vice President, Chief Banking Officer
CORPORATE HEADQUARTERS
9204 Columbia Avenue
Munster, Indiana 46321
(219) 836-4400
(SUBSIDIARY OF NORTHWEST INDIANA BANCORP)
Map represents the Peoples
Banking Center Network.
Stock Transfer Agent
The Bank acts as the transfer agent
for the Bancorp’s common stock.
Independent Auditors
Plante & Moran, PLLC
10 S. Riverside Plaza, 9th Floor
Chicago, Illinois 60606-3564
Special Legal Counsel
Barnes & Thornburg LLP
11 S. Meridian Street
Indianapolis, Indiana 46204
ibankpeoples.com
Annual Stockholders Meeting
The Annual Meeting of Stockholders
of NorthWest Indiana Bancorp will be
held at 8:00 am on April 27, 2018 at:
Peoples Bank Corporate Center
9204 Columbia Avenue,
Munster, Indiana 46321
Annual Report on Form 10-K
A copy of the Annual Report on Form
10-K, for the NorthWest Indiana Bancorp,
as filed with the Securities and Exchange
Commission, will be furnished without
charge to stockholders as of the record
date upon written request to the:
Corporate Secretary
NorthWest Indiana Bancorp
9204 Columbia Avenue
Munster, Indiana 46321
Member FDIC