Richmond Mutual Bancorporation Inc

Previous wording

Management’s discussion and analysis of financial condition of the Richmond Mutual Bancorporation, Inc. (the “Company”) at September 30, 2024, and the consolidated results of operations for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Form 10-Q.

Current wording

Management’s discussion and analysis of financial condition of the Richmond Mutual Bancorporation, Inc. (the “Company”) at March 31, 2025, and the consolidated results of operations for the three month period ended March 31, 2025, compared to the same period in 2024, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Form 10-Q.

Previous wording

First Bank Richmond generates commercial, mortgage and consumer loans and leases and receives deposits from customers located primarily in Wayne and Shelby Counties, in Indiana and Shelby, Miami and Franklin (no deposits) Counties, in Ohio. We sometimes refer to these counties as our primary market area. First Bank Richmond’s loans are generally secured by specific items of collateral including real property, consumer assets and business assets. Our leasing operation consists of direct investments in equipment that we lease (referred to as direct finance leases) to small businesses located throughout the United States. Our lease portfolio consists of various kinds of equipment, generally technology-related, such as computer systems, medical equipment and general manufacturing, industrial, construction and transportation equipment. We seek leasing transactions where we believe the equipment leased is integral to the lessee's business. We also provide trust and wealth management services, including serving as executor and trustee under wills and deeds and as guardian and custodian of employee benefits, and manage private investment accounts for individuals and institutions. Total wealth management assets under management and administration were $189.5 million at September 30, 2024.

Current wording

First Bank Richmond generates commercial, mortgage and consumer loans and leases and receives deposits from customers located primarily in Wayne and Shelby Counties, in Indiana and Shelby, Miami and Franklin (no deposits) Counties, in Ohio. We sometimes refer to these counties as our primary market area. First Bank Richmond’s loans are generally secured by specific items of collateral including real property, consumer assets and business assets. Our leasing operation consists of direct investments in equipment that we lease (referred to as direct finance leases) to small businesses located throughout the United States. Our lease portfolio consists of various kinds of equipment, generally technology-related, such as computer systems, medical equipment and general manufacturing, industrial, construction and transportation equipment. We seek leasing transactions where we believe the equipment leased is integral to the lessee's business. We also provide trust and wealth management services, including serving as executor and trustee under wills and deeds and as guardian and custodian of employee benefits, and manage private investment accounts for individuals and institutions. Total wealth management assets under management and administration were $194.5 million at March 31, 2025.

Previous wording

At September 30, 2024, on a consolidated basis, we had $1.5 billion in assets, $1.1 billion in loans and leases, net of allowance, $1.1 billion in deposits and $140.0 million in stockholders’ equity. At September 30, 2024, First Bank Richmond’s total risk-based capital ratio was 14.35%, exceeding the 10.0% requirement for a well-capitalized institution. For the nine months ended September 30, 2024, net income was $6.9 million, compared with net income of $7.5 million for the nine months ended September 30, 2023.

Current wording

At March 31, 2025, on a consolidated basis, we had $1.5 billion in assets, $1.2 billion in loans and leases, net of allowance, $1.1 billion in deposits, and $130.9 million in stockholders’ equity. At March 31, 2025, First Bank Richmond’s total risk-based capital ratio was 14.04%, exceeding the 10.0% requirement for a well-capitalized institution. For the three months ended March 31, 2025, net income was $2.0 million, compared with net income of $2.4 million for the three months ended March 31, 2024.

Previous wording

There have been no significant changes during the nine months ended September 30, 2024 to the critical accounting estimates reported in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K. See "Critical Accounting Estimates" included in Part II, Item 7 of our 2023 Form 10-K for a further discussion of our Critical Accounting Estimates.

Current wording

There have been no significant changes during the three months ended March 31, 2025 to the critical accounting estimates reported in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K. See "Critical Accounting Estimates" included in Part II, Item 7 of our 2024 Form 10-K for a further discussion of our Critical Accounting Estimates.

Previous wording

General. Total assets increased $31.5 million, or 2.2%, to $1.5 billion at September 30, 2024 from December 31, 2023. The increase was primarily the result of a $50.9 million, or 4.7%, increase in loans and leases, net of allowance for credit losses, to $1.1 billion, partially offset by a $16.3 million, or 5.7%, decrease in investment securities to $271.3 million at September 30, 2024.

Current wording

General. Total assets increased $17.9 million, or 1.2%, to $1.5 billion at March 31, 2025 from December 31, 2024. The increase was primarily the result of a $17.0 million, or 1.5%, increase in loans and leases, net of allowance for credit losses, to $1.2 billion, partially offset by a $2.7 million, or 1.0%, decrease in investment securities to $259.0 million at March 31, 2025.

Previous wording

Investment Securities. Investment securities available for sale totaled $267.3 million and $282.7 million, while investment securities held to maturity totaled $4.1 million and $4.9 million at September 30, 2024 and December 31, 2023, respectively. The $15.4 million, or 5.5%, decrease in investment securities available for sale was primarily due to maturities and principal repayments of $16.4 million and $6.9 million in sales of securities, partially offset by a $5.2 million upward mark-to-market adjustment on the investment portfolio due to the decline in market interest rates at the end of the current quarter. The decrease in investment securities held to maturity was the result of scheduled principal repayments and maturities. The proceeds received from the maturities, repayments, and sales of securities were used to fund loan growth.

Current wording

Investment Securities. Investment securities available for sale totaled $256.1 million and $258.2 million, while investment securities held to maturity totaled $2.9 million and $3.5 million at March 31, 2025 and December 31, 2024, respectively. The $2.1 million, or 0.8%, decrease in investment securities available for sale was primarily due to maturities and principal repayments of $4.5 million, partially offset by a $1.6 million upward mark-to-market adjustment on the investment portfolio and purchases of securities of $1.0 million. The decrease in investment securities held to maturity was the result of scheduled principal repayments and maturities. The proceeds received from the maturities and repayments were primarily used to fund loan growth.

Previous wording

Loans and Leases. Loans and leases, net of allowance for credit losses on loans and leases, increased $50.9 million, or 4.7%, to $1.1 billion at September 30, 2024 from December 31, 2023. The increase in loans and leases was attributable to increases in multi-family loans, commercial and industrial loans, residential mortgage loans, and commercial real estate loans of $45.0 million, $11.2 million, $10.8 million and $6.8 million, respectively. At September 30, 2024, loans held for sale totaled $220,000, compared to $794,000 at December 31, 2023.

Current wording

Loans and Leases. Loans and leases, net of allowance for credit losses on loans and leases, increased $17.0 million, or 1.5%, to $1.2 billion at March 31, 2025 from December 31, 2024. The increase in loans and leases was attributable to increases in multi-family, commercial real estate, and commercial and industrial loans of $25.6 million, $15.8 million, and $10.2 million, respectively. These increases were partially offset by a $32.6 million decrease in construction and development loans. At March 31, 2025, loans held for sale totaled $388,000, compared to $1.1 million at December 31, 2024.

Previous wording

Nonaccrual loans and leases totaled $5.1 million at September 30, 2024, compared to $6.3 million at December 31, 2023. The decrease in nonaccrual loans reflects a $1.2 million decline in nonaccrual commercial and industrial loans which were paid-off during the period. Accruing loans and leases past due 90 days or more totaled $1.6 million at September 30, 2024, compared to $1.7 million at December 31, 2023. Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases 90 days or more past due, totaled $6.7 million, or 0.58% of total loans and leases, at September 30, 2024, compared to $8.0 million, or 0.72% of total loans and leases, at December 31, 2023.

Current wording

Nonaccrual loans and leases totaled $5.3 million at March 31, 2025, compared to $5.1 million at December 31, 2024. The increase in nonaccrual loans and leases reflects a $250,000 increase in nonaccrual direct financing leases. Accruing loans and leases past due 90 days or more totaled $1.7 million at both March 31, 2025 and December 31, 2024. Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases 90 days or more past due, totaled $7.0 million, or 0.59% of total loans and leases, at March 31, 2025, compared to $6.8 million, or 0.58% of total loans and leases, at December 31, 2024.

Previous wording

Allowance for Credit Losses. The allowance for credit losses on loans and leases increased $110,000, or 0.7%, to $15.8 million at September 30, 2024 from December 31, 2023. At September 30, 2024, the allowance for credit losses on loans and leases totaled 1.36% of total loans and leases outstanding. At December 31, 2023, the allowance for credit losses on loans and leases totaled $15.7 million, or 1.42% of total loans and leases outstanding. Net charge-offs during the first nine months of 2024 were $1.2 million, compared to net charge-offs of $436,000 during the first nine months of 2023.

Current wording

Allowance for Credit Losses. The allowance for credit losses on loans and leases increased $287,000, or 1.8%, to $16.1 million at March 31, 2025 from December 31, 2024. At March 31, 2025, the allowance for credit losses on loans and leases totaled 1.35% of total loans and leases outstanding. The increase in the allowance was primarily due to changes in portfolio composition, primarily growth in commercial real estate, multi-family, and commercial and industrial loans, which generally carry higher reserve requirements relative to other segments. In addition, updated economic forecasts, including expectations for slowing GDP growth and rising unemployment, contributed to a more cautious provisioning approach. At December 31, 2024, the allowance for credit losses on loans and leases totaled $15.8 million, or 1.34% of total loans and leases outstanding. Net charge-offs during the first three months of 2025 totaled $395,000, and were primarily attributable to direct financing leases, compared to net charge-offs of $324,000 during the first three months of 2024.

Previous wording

Other Assets. Other assets decreased $3.2 million, or 12.8%, to $21.6 million at September 30, 2024 from $24.8 million at December 31, 2023, primarily caused by a decrease in our deferred tax asset due to the upward mark-to-market adjustment on the investment portfolio.

Current wording

Other Assets. Other assets decreased $843,000, or 3.7%, to $21.6 million at March 31, 2025 from $22.5 million at December 31, 2024. The decrease was primarily caused by a reduction in the Company's deferred tax asset, which resulted from an upward mark-to-market adjustment on the available-for-sale investment portfolio due to a reduction in market rates of interest, thereby reducing unrealized losses previously reflected in accumulated other comprehensive loss ("AOCL").

Previous wording

Deposits. Total deposits increased $48.0 million, or 4.6%, to $1.1 billion at September 30, 2024 from December 31, 2023. The increase in deposits primarily was due to an increase in non-brokered time deposits of $41.6 million, which were used to fund loan demand, and savings and money-market accounts of $27.0 million. These increases were partially offset by a decrease in demand deposit accounts of $31.4 million. Brokered deposits totaled $279.6 million, or 25.7% of total deposits, at September 30, 2024, compared to $268.8 million, or 25.8% of total deposits, at December 31, 2023. At September 30, 2024, noninterest-bearing deposits totaled $98.5 million, or 9.0% of total deposits, compared to $114.4 million, or 11.0% of total deposits, at December 31, 2023. Management attributes the shift in funds from transaction accounts to retail certificates of deposit to customers taking advantage of higher rates being paid on time deposits as a result of interest rate hikes enacted by the Federal Reserve.

Current wording

Deposits. Total deposits increased $11.7 million, or 1.1%, to $1.1 billion at March 31, 2025 from December 31, 2024. The increase in deposits primarily was due to an increase in brokered time deposits of $7.2 million, which were used to fund loan demand, retail (non-brokered) time deposits of $4.2 million, and interest-bearing demand deposits of $6.9 million. These increases were partially offset by a decrease in noninterest-bearing accounts of $6.8 million. Brokered deposits totaled $264.8 million, or 23.9% of total deposits, at March 31, 2025, compared to $257.6 million, or 23.5% of total deposits, at December 31, 2024. At March 31, 2025, noninterest-bearing deposits totaled $103.4 million, or 9.3% of total deposits, compared to $110.1 million, or 10.1% of total deposits, at December 31, 2024. Management attributes the shift in funds from transaction accounts to retail certificates of deposit to customers taking advantage of higher rates being paid on time deposits as a result of interest rate hikes enacted by the Federal Reserve.

Previous wording

As of September 30, 2024, approximately $224.6 million of our deposit portfolio, or 20.6% of total deposits, excluding collateralized public deposits, was uninsured. The uninsured amounts are estimated based on the methodologies and assumptions used for First Bank Richmond's regulatory reporting requirements.

Current wording

As of March 31, 2025, approximately $243.0 million of our deposit portfolio, or 22.0% of total deposits, excluding collateralized public deposits, was uninsured. The uninsured amounts are estimated based on the methodologies and assumptions used for First Bank Richmond's regulatory reporting requirements.

Previous wording

Stockholders’ Equity. Stockholders’ equity totaled $140.0 million at September 30, 2024, an increase of $5.2 million, or 3.8%, from December 31, 2023. The increase in stockholders' equity from year-end 2023 resulted from net income of $6.9 million and a decrease in accumulated other comprehensive loss ("AOCL") of $4.1 million, partially offset by the payment of $4.3 million in dividends to Company stockholders, and the repurchase of $3.1 million of Company common stock. At December 31, 2023, the available for sale portfolio had a net unrealized loss of $54.5 million compared to a net unrealized loss of $49.3 million at September 30, 2024. The AOCL impact to equity, after tax affecting the unrealized loss, was $39.0 million at September 30, 2024 compared to $43.0 million at December 31, 2023. The Company repurchased 261,234 shares of Company common stock at an average price of $11.85 per share for a total of $3.1 million during the first nine months of 2024. The Company's equity to asset ratio was 9.38% at September 30, 2024. At September 30, 2024, the Bank's Tier 1 capital to total assets ratio was 10.73% and the Bank's capital was well in excess of all regulatory requirements.

Current wording

Stockholders’ Equity. Stockholders’ equity totaled $130.9 million at March 31, 2025, a decrease of $1.9 million, or 1.5%, from December 31, 2024. The decrease in stockholders' equity resulted from the payment of $1.5 million in dividends to Company stockholders and the repurchase of $4.2 million of Company common stock, partially offset by net income of $2.0 million and a decrease in AOCL of $1.3 million. The decrease in AOCL was a result of improved fair values in the Company's available for sale investment portfolio, resulting from a reduction in market rates of interest. At December 31, 2024, the available for sale portfolio had a net unrealized loss of $58.0 million compared to a net unrealized loss of $56.4 million at March 31, 2025. The AOCL impact to equity, after tax affecting the unrealized loss, was $44.5 million at March 31, 2025 compared to $45.8 million at December 31, 2024. The Company repurchased 324,696 shares of Company common stock at an average price of $13.04 per share for a total of $4.2 million during the first three months of 2025. The Company's equity to asset ratio was 8.60% at March 31, 2025. At March 31, 2025, the Bank's Tier 1 capital to total assets ratio was 10.68% and the Bank's capital was well in excess of all regulatory requirements.

Previous wording

General. Net income for the nine months ended September 30, 2024 was $6.9 million, a $644,000 or 8.5% decrease from net income of $7.5 million for the nine months ended September 30, 2023. Diluted earnings per share were $0.68 for the first nine months of 2024, compared to $0.72 diluted earnings per share for the first nine months of 2023. The decrease in net income was the result of a $1.4 million increase in noninterest expense and a $127,000 increase in the provision for credit losses, partially offset by a $510,000 increase in net interest income, a $134,000 increase in noninterest income, and a $254,000 decrease in the provision for income taxes.

Current wording

General. Net income for the three months ended March 31, 2025 was $2.0 million, a $401,000 or 16.9% decrease from net income of $2.4 million for the three months ended March 31, 2024. Diluted earnings per share were $0.20 for the first quarter of 2025, compared to $0.23 diluted earnings per share for the first quarter of 2024. The decrease in net income primarily was the result of a $548,000 increase in the provision for credit losses and a $315,000 increase in noninterest expense, partially offset by an increase in net interest income of $425,000 and an increase of $33,000 in noninterest income.

Previous wording

Interest Income. Interest income increased $2.8 million, or 16.4%, to $20.3 million during the quarter ended September 30, 2024, compared to $17.4 million during the quarter ended September 30, 2023. Interest income on loans and leases increased $2.8 million, or 18.3%, to $18.1 million for the quarter ended September 30, 2024, from $15.3 million for the comparable quarter in 2023, due to an increase in the average balance of loans and leases of $84.3 million, and an increase of 56 basis points in the average yield earned on loans and leases. The average outstanding loan and lease balance was $1.2 billion for the quarter ended September 30, 2024, compared to $1.1 billion for the quarter ended September 30, 2023. The average yield on loans and leases was 6.27% for the quarter ended September 30, 2024, compared to 5.71% for the comparable quarter in 2023.

Current wording

Interest Income. Interest income increased $1.4 million, or 7.0%, to $20.9 million during the quarter ended March 31, 2025, compared to $19.5 million during the quarter ended March 31, 2024. Interest income on loans and leases increased $1.5 million, or 8.8%, to $18.8 million for the quarter ended March 31, 2025, from $17.3 million for the comparable quarter in 2024, due to an increase in the average balance of loans and leases of $55.1 million, and an increase of 23 basis points in the average yield earned on loans and leases as new loans and leases were originated at higher rates and existing variable rate loans in the portfolio adjusted upward due to the overall higher interest rate environment. The average outstanding loan and lease balance was $1.2 billion for the quarter ended March 31, 2025, compared to $1.1 billion for the quarter ended March 31, 2024. The average yield on loans and leases was 6.36% for the quarter ended March 31, 2025, compared to 6.13% for the comparable quarter in 2024.

Previous wording

Interest income on investment securities, excluding FHLB stock, decreased $102,000, or 5.7%, for the third quarter of 2024 from the comparable quarter in 2023. The decrease was due to a $12.7 million decrease in the average balance, primarily as a result of proceeds received from sales, maturities and paydowns on securities being used to fund loan growth, and a three basis point decrease in the average yield earned on investment securities. The average yield on investment securities, excluding FHLB stock, decreased to 2.51% for the third quarter of 2024, compared to 2.54% for the third quarter of 2023. The average balance of investment securities, excluding FHLB stock, decreased to $270.9 million for the quarter ended September 30, 2024, compared to $283.6 million for the quarter ended September 30, 2023.

Current wording

Interest income on investment securities, excluding FHLB stock, decreased $144,000, or 8.0%, to $1.7 million for the first quarter of 2025 from the comparable quarter in 2024. The decrease was due to a $21.9 million decrease in the average balance, primarily as a result of maturities and paydowns on securities being used to fund loan growth, and a one basis point decrease in the average yield earned on investment securities. The average yield on investment securities, excluding FHLB stock, decreased to 2.52% for the first quarter of 2025, compared to 2.53% for the first quarter of 2024. The average balance of investment securities, excluding FHLB stock, decreased to $262.1 million for the quarter ended March 31, 2025, compared to $284.0 million for the quarter ended March 31, 2024.

Previous wording

Dividends on FHLB stock increased $63,000, or 26.4%, during the quarter ended September 30, 2024, from the comparable quarter in 2023, resulting in an average yield on FHLB stock of 8.69% for the three months ended September 30, 2024, compared to 8.75% for the three months ended September 30, 2023. Interest income on cash and cash equivalents increased $86,000, or 84.3%, during the quarter ended September 30, 2024, from the comparable quarter in 2023, due to an 81 basis point increase in the average yield and a $5.5 million increase in the average balance of cash and cash equivalents.

Current wording

Dividends on FHLB stock decreased $13,000, or 4.0%, during the quarter ended March 31, 2025, from the comparable quarter in 2024, resulting in an average yield on FHLB stock of 8.95% for the three months ended March 31, 2025, compared to 9.44% for the three months ended March 31, 2024. Interest income on cash and cash equivalents decreased $8,000, or 6.1%, to $131,000 during the quarter ended March 31, 2025, from the comparable quarter in 2024, due to a 31 basis point decrease in the average yield, partially offset by a $273,000 increase in the average balance of cash and cash equivalents.

Previous wording

Interest Expense. Interest expense increased $2.5 million, or 30.7%, to $10.8 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023. Interest expense on deposits increased $2.0 million, or 31.9%, to $8.3 million for the quarter ended September 30, 2024, from the comparable quarter in 2023. The increase in interest expense on deposits primarily was attributable to a $61.8 million increase in the average balance of, and a 64 basis point increase in the average rate paid on, interest-bearing deposits. The average rate paid on interest-bearing deposits was 3.33% for the quarter ended September 30, 2024, compared to 2.69% for the quarter ended September 30, 2023. The average balance of interest-bearing deposits was $1.0 billion for the quarter ended September 30, 2024, compared to $939.2 million in the comparable quarter in 2023. Interest expense on FHLB borrowings increased $529,000, or 26.9%, to $2.5 million in the third quarter of 2024 compared to $2.0 million for the same quarter in 2023, due to increases in the average rate paid on FHLB borrowings of 58 basis points and the average balance of such borrowings of $20.0 million. The average rate paid on FHLB borrowings was 4.08% for the quarter ended September 30, 2024, compared to 3.50% for the third quarter of 2023. The average balance of FHLB borrowings totaled $244.8 million during the quarter ended September 30, 2024, compared to $224.8 million for the quarter ended September 30, 2023.

Current wording

Interest Expense. Interest expense increased $933,000, or 9.6%, to $10.6 million for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024. Interest expense on deposits increased $779,000, or 11.0%, to $7.8 million for the quarter ended March 31, 2025, from the comparable quarter in 2024. The increase in interest expense on deposits primarily was attributable to a $44.2 million increase in the average balance of, and an 18 basis point increase in the average rate paid on, interest-bearing deposits. The average rate paid on interest-bearing deposits was 3.17% for the quarter ended March 31, 2025, compared to 2.99% for the quarter ended March 31, 2024. The average balance of interest-bearing deposits was $989.4 million for the quarter ended March 31, 2025, compared to $945.2 million in the comparable quarter in 2024. The increase in interest-bearing deposit balances and rates reflects ongoing competitive pressures for deposits, as well as a continued shift in customer preferences from non-maturity deposit products into higher-yielding time deposits. Interest expense on FHLB borrowings increased $154,000, or 5.9%, to $2.8 million in the first quarter of 2025 compared to $2.6 million for the same quarter in 2024, due to an increase in the average rate paid on FHLB borrowings of 26 basis points. The average rate paid on FHLB borrowings was 4.03% for the quarter ended March 31, 2025, compared to 3.77% for the first quarter of 2024. The average balance of FHLB borrowings totaled $274.7 million during the quarter ended March 31, 2025, compared to $277.2 million for the quarter ended March 31, 2024.

Previous wording

While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio, uncertainties relating to the level of our allowance for credit losses remain heightened as a result of continued concern about a potential recession due to inflation, stock market volatility, and overall geopolitical tensions.

Current wording

While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio, uncertainties relating to the level of our allowance for credit losses remain heightened as a result of continued concern about a potential recession due to tariffs, inflation, stock market volatility, and overall geopolitical tensions.

Previous wording

Noninterest Income. Noninterest income increased $134,000, or 3.9%, to $3.6 million for the nine months ended September 30, 2024, compared to the same period in 2023. The increase in noninterest income resulted primarily from increases in service charges on deposit accounts and other income and, to a lesser extent, increases in net gains on loan and lease sales and loan and lease servicing fees, partially offset by net losses on sales of securities available for sale. Service fees on deposit accounts increased $77,000, or 9.2%, in the first nine months of 2024 from the comparable period in 2023 due to higher transaction activity and account maintenance fees, coupled with year-over-year deposit growth. Other income increased $58,000, or 6.1%, to $1.0 million for the nine months ended September 30, 2024, compared to $956,000 for the comparable period in 2023 due to increased wealth management income. Net gains on loan and lease sales increased $22,000, or 5.4%, compared to the same period in 2023, due to increased mortgage banking activity. Loan and lease servicing fees increased $40,000, or 11.7%, for the nine months ended September 30, 2024 compared to the comparable period in 2023. Net losses on sales of securities available for sale totaled $51,000 for the first nine months of 2024, while there were no sales of securities in the first nine months of 2023.

Current wording

Noninterest Income. Noninterest income increased $33,000, or 3.0%, to $1.2 million for the quarter ended March 31, 2025, compared to the same quarter in 2024. The increase resulted primarily from increases in other income and service charges on deposit accounts, partially offset by decreases in net gains on loan and lease sales and loan and lease servicing fees. Other income increased $41,000, or 12.9%, to $360,000 for the quarter ended March 31, 2025, compared to $319,000 for the comparable quarter in 2024 due to increased wealth management income. Service fees on deposit accounts increased $23,000, or 8.4%, in the first quarter of 2025 from the comparable quarter in 2024, due to year-over-year deposit growth. Partially offsetting these increases were modest declines in net gains on loan and lease sales and loan and lease servicing fees, reflecting lower mortgage banking activity and a decrease in the servicing portfolio. Card fee income also increased slightly, rising $8,000, or 2.9%, to $298,000.

Previous wording

Income Tax Expense. The provision for income taxes increased $96,000 during the three months ended September 30, 2024, compared to the same period in 2023, due to a higher level of pre-tax income. The effective tax rate for the third quarter of 2024 was 13.0% compared to 12.3% for the same quarter a year ago. The increase in the effective tax rate was a result of a higher level of pre-tax income, reducing the favorable impact of tax-exempt interest and deductions.

Current wording

Income Tax Expense. The provision for income taxes decreased $4,000 during the three months ended March 31, 2025, compared to the same period in 2024. The effective tax rate for the first quarter of 2025 was 15.0% compared to 12.9% for the same quarter a year ago. The increase in the effective tax rate was primarily due to the expiration and write-off of certain charitable contribution carryforwards.

Previous wording

Capital. Shareholders' equity totaled $140.0 million at September 30, 2024 and $134.9 million at December 31, 2023. In addition to net income of $6.9 million, other sources of capital during the first nine months of 2024 included $476,000 related to the allocation of ESOP shares, $1.1 million related to stock-based compensation, and a $4.1 million reduction in AOCL. Uses of capital during the first nine months of 2024 included $4.3 million of dividends paid on common stock and $3.1 million of stock repurchases.

Current wording

Capital. Shareholders' equity totaled $130.9 million at March 31, 2025 and $132.9 million at December 31, 2024. In addition to net income of $2.0 million, other sources of capital during the first three months of 2025 included $178,000 related to the allocation of ESOP shares, $363,000 related to stock-based compensation, and a $1.3 million reduction in AOCL. Uses of capital during the first three months of 2025 included $1.5 million of dividends paid on common stock and $4.2 million of stock repurchases.

Previous wording

We paid a regular quarterly dividend of $0.14 per common share during both the third quarter of 2024 and 2023. We currently expect to continue our practice of paying regular quarterly cash dividends on common stock subject to the Board of Directors' discretion to modify or terminate this practice at any time and for any reason without prior notice. Assuming continued payment during 2024 at the current dividend rate of $0.14 per share, our average total dividend paid each quarter would be approximately $1.5 million based on the number of our currently outstanding shares at September 30, 2024.

Current wording

We paid a regular quarterly dividend of $0.15 per common share during the first quarter of 2025, compared to $0.14 per common share during the first quarter of 2024. We currently expect to continue our practice of paying regular quarterly cash dividends on common stock subject to the Board of Directors' discretion to modify or terminate this practice at any time and for any reason without prior notice. Assuming continued payment during 2025 at the current dividend rate of $0.15 per share, our average total dividend paid each quarter would be approximately $1.6 million based on the number of our currently outstanding shares at March 31, 2025.

Previous wording

Stock Repurchase Plans. From time to time, our Board of Directors has authorized stock repurchase plans. In general, stock-repurchase plans allow us to proactively manage our capital position and return excess capital to shareholders. Repurchased shares also help satisfy obligations related to stock compensation awards. On June 6, 2023, the Company announced that the Board of Directors approved an amendment to the Company's existing stock repurchase program, authorizing the purchase of up to an additional 321,386 shares of the Company's issued and outstanding common stock, in addition to the 827,554 shares remaining available for repurchase at that date, and extending the stock repurchase program's expiration date to June 6, 2024, unless completed sooner. On May 16, 2024, the Company announced that the Board of Directors approved a further extension of the Company's existing stock repurchase program, setting a new expiration date of June 6, 2025. As of September 30, 2024, approximately 606,802 shares remained available for repurchase under its existing stock repurchase program. The repurchase program does not obligate the Company to purchase any particular number of shares. See Part II, Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds."

Current wording

Stock Repurchase Plans. From time to time, our Board of Directors has authorized stock repurchase plans. In general, stock-repurchase plans allow us to proactively manage our capital position and return excess capital to shareholders. Repurchased shares also help satisfy obligations related to stock compensation awards. On June 6, 2023, the Company announced that the Board of Directors approved an amendment to the Company's existing stock repurchase program, authorizing the purchase of up to an additional 321,386 shares of the Company's issued and outstanding common stock, in addition to the 827,554 shares remaining available for repurchase at that date, and extending the stock repurchase program's expiration date to June 6, 2024, unless completed sooner. On May 16, 2024, the Company announced that the Board of Directors approved a further extension of the Company's existing stock repurchase program, setting a new expiration date of June 6, 2025. As of March 31, 2025, approximately 148,248 shares remained available for repurchase under the existing stock repurchase program. The repurchase program does not obligate the Company to purchase any particular number of shares. See Part II, Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds."

Previous wording

Our liquid assets in the form of cash and cash equivalents and investments available for sale totaled $287.1 million at September 30, 2024. Certificates of deposit scheduled to mature in less than one year from September 30, 2024 totaled $349.2 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature.

Current wording

Our liquid assets in the form of cash and cash equivalents and investments available for sale totaled $283.4 million at March 31, 2025. Certificates of deposit scheduled to mature in less than one year from March 31, 2025 totaled $418.6 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature.

Previous wording

As of September 30, 2024, we had approximately $8.1 million held in an interest-bearing account at the Federal Reserve. We also have the ability to borrow funds as a member of the FHLB. As of September 30, 2024, based upon available, pledgeable collateral, our total remaining borrowing capacity with the FHLB was approximately $120.7 million. Furthermore, at September 30, 2024, we had approximately $179.8 million in securities that were unencumbered by a pledge and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed. As of September 30, 2024, management was not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.

Current wording

As of March 31, 2025, we had approximately $13.6 million held in an interest-bearing account at the Federal Reserve. We also have the ability to borrow funds as a member of the FHLB. As of March 31, 2025, based upon available, pledgeable collateral, our total remaining borrowing capacity with the FHLB was approximately $101.1 million. Furthermore, at March 31, 2025, we had approximately $177.7 million in securities that were unencumbered by a pledge and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed. As of March 31, 2025, management was not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.

Previous wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities for the nine months ended September 30, 2024 was $8.0 million, compared to $8.3 million for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, net cash used in investing activities was $30.3 million, which consisted primarily of a $49.3 million increase in loans receivable, compared to $100.6 million of cash used in investing activities for the nine months ended September 30, 2023. Net cash provided by financing activities for the nine months ended September 30, 2024 was $21.7 million, which was comprised primarily of a $48.0 million increase in deposits, compared to $97.0 million provided by financing activities during the nine months ended September 30, 2023. Management believes the capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements and there has not been a material change in our liquidity and capital resources since the information disclosed in our 2023 Form 10-K other than set forth above.

Current wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $2.2 million for both the three months ended March 31, 2025 and March 31, 2024. During the three months ended March 31, 2025, net cash used in investing activities was $12.0 million, which consisted primarily of a $16.0 million increase in loans receivable, compared to $30.2 million of cash used in investing activities for the three months ended March 31, 2024. Net cash provided by financing activities for the three months ended March 31, 2025 was $15.1 million, which was comprised primarily of an $11.7 million increase in deposits, compared to $28.1 million provided by financing activities during the three months ended March 31, 2024. Management believes the capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements and there has not been a material change in our liquidity and capital resources since the information disclosed in our 2024 Form 10-K other than set forth above.

Previous wording

Richmond Mutual Bancorporation is a separate legal entity from First Bank Richmond and must provide for its own liquidity. In addition to its own operating expenses, Richmond Mutual Bancorporation is responsible for paying for any stock repurchases, dividends declared to its stockholders and other general corporate expenses. Since Richmond Mutual Bancorporation is a holding company and does not conduct operations, its primary sources of liquidity are interest on investment securities purchased with proceeds from our initial public offering, dividends up-streamed from First Bank Richmond and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid to us by First Bank Richmond. At September 30, 2024, Richmond Mutual Bancorporation, on an unconsolidated basis, had $6.7 million in cash, noninterest-bearing deposits and liquid investments generally available for its cash needs.

Current wording

Richmond Mutual Bancorporation is a separate legal entity from First Bank Richmond and must provide for its own liquidity. In addition to its own operating expenses, Richmond Mutual Bancorporation is responsible for paying for any stock repurchases, dividends declared to its stockholders and other general corporate expenses. Since Richmond Mutual Bancorporation is a holding company and does not conduct operations, its primary sources of liquidity are interest on investment securities purchased with proceeds from our initial public offering, dividends up-streamed from First Bank Richmond and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid to us by First Bank Richmond. At March 31, 2025, Richmond Mutual Bancorporation, on an unconsolidated basis, had $2.2 million in cash, noninterest-bearing deposits and liquid investments generally available for its cash needs.

Previous wording

Pursuant to the capital regulations of the FDIC and the other federal banking agencies, First Bank Richmond must maintain a capital conservation buffer consisting of additional common equity tier 1 (“CET1”) capital greater than 2.5% of risk-weighted assets above the required minimum levels of risk-based CET1 capital, tier 1 capital and total capital in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. At September 30, 2024, the Bank’s CET1 capital exceeded the required capital conservation buffer.

Current wording

Pursuant to the capital regulations of the FDIC and the other federal banking agencies, First Bank Richmond must maintain a capital conservation buffer consisting of additional common equity tier 1 (“CET1”) capital greater than 2.5% of risk-weighted assets above the required minimum levels of risk-based CET1 capital, tier 1 capital and total capital. Failure to maintain the required buffer could result in limitations on the Bank's ability to pay dividends and discretionary bonuses and the Company's ability to repurchase shares based on specified percentages of eligible retained income. At March 31, 2025, the Bank’s capital exceeded the conservation buffer.