Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) is a Maryland-based bank holding company that operates through its wholly-owned subsidiary, First Bank Richmond. The company has a rich history dating back to 1887, when it was established as an Indiana state-chartered mutual savings and loan association. Over the years, the bank has undergone several transformations, including a conversion to a federal mutual savings and loan association in 1935, a state-chartered mutual savings bank in 1993, and a national bank charter in 1998. In 2007, the company acquired Mutual Federal Savings Bank, headquartered in Sidney, Ohio, and in 2017, the bank converted to an Indiana state-chartered commercial bank, operating under the name First Bank Richmond.

Business Overview

Today, First Bank Richmond provides a full range of banking services through its 12 full-service and one limited-service offices located in Indiana and Ohio, as well as a loan production office in Columbus, Ohio. The bank's primary market area encompasses Wayne and Shelby Counties in Indiana, and Shelby, Miami, and Franklin Counties in Ohio. First Bank Richmond's loan portfolio is diversified, consisting of commercial and multi-family real estate loans, residential mortgages, consumer loans, direct financing leases, and commercial and industrial loans.

Financials

For the fiscal year ended December 31, 2023, Richmond Mutual Bancorporation reported annual net income of $9.5 million, annual revenue of $72.0 million, annual operating cash flow of $11.8 million, and annual free cash flow of $11.2 million. In the first quarter of 2024, the company generated net income of $2.4 million, with revenue of $20.6 million, operating cash flow of $2.2 million, and free cash flow of $2.0 million.

The company's loan and lease portfolio has experienced steady growth, increasing from $1.1 billion at the end of 2023 to $1.1 billion as of March 31, 2024, a 3.0% increase. This growth was primarily driven by a $15.0 million increase in multi-family loans, an $8.9 million increase in residential mortgage loans, and an $8.2 million increase in commercial and industrial loans. The company's allowance for credit losses on loans and leases stood at $15.8 million as of March 31, 2024, representing 1.39% of total loans and leases, compared to $15.7 million, or 1.42%, at the end of 2023.

Richmond Mutual Bancorporation's investment securities portfolio totaled $281.0 million as of March 31, 2024, a decrease of $6.6 million, or 2.3%, from the end of 2023. The decrease was primarily due to maturities and principal repayments of $4.4 million, as well as a $3.6 million downward mark-to-market adjustment on the investment portfolio.

The company's deposit base grew by $28.5 million, or 2.7%, to $1.1 billion as of March 31, 2024, compared to $1.0 billion at the end of 2023. This increase was driven by a $22.5 million rise in brokered time deposits and an $11.1 million increase in other time deposits, partially offset by a $3.9 million decrease in demand deposit accounts. Brokered deposits represented 27.2% of total deposits as of March 31, 2024, up from 25.8% at the end of 2023.

Stockholders' equity decreased by $2.5 million, or 1.8%, to $132.4 million as of March 31, 2024, from $134.9 million at the end of 2023. This decrease was primarily due to the repurchase of $1.1 million of the company's common stock, a $2.8 million increase in Accumulated Other Comprehensive Loss, and the payment of $1.4 million in dividends, partially offset by $2.4 million in net income.

First Bank Richmond's regulatory capital ratios remained well above the well-capitalized thresholds set by the FDIC. As of March 31, 2024, the bank's total risk-based capital ratio was 14.1%, its tier 1 risk-based capital ratio was 12.9%, and its tier 1 leverage ratio was 10.7%. These ratios provide a solid foundation for the bank's continued growth and operations.

Outlook

Looking ahead, Richmond Mutual Bancorporation is navigating the evolving banking landscape with a focus on prudent growth and risk management. The company's primary growth markets are Columbus, Ohio, Dayton/Springfield, Ohio, and Indianapolis, Indiana, with a particular emphasis on commercial real estate loans. While the economic outlook for these regions remains generally stable, the company is closely monitoring potential risks, such as the impact of higher interest rates, inflation, and a potential recession.

Risks and Challenges

To mitigate these risks, the company is actively managing its loan portfolio, with a focus on maintaining credit quality and diversification. The company's allowance for credit losses on loans and leases is regularly reviewed and adjusted as necessary to reflect changes in the economic environment and the company's risk profile.

Liquidity

In terms of liquidity, Richmond Mutual Bancorporation is well-positioned, with $296.6 million in liquid assets in the form of cash, cash equivalents, and investment securities available for sale as of March 31, 2024. The company also maintains a strong borrowing capacity with the Federal Home Loan Bank, with approximately $91.3 million in remaining borrowing capacity as of the same date.

Conclusion

Overall, Richmond Mutual Bancorporation is a well-capitalized and prudently managed community bank that is navigating the evolving banking landscape with a focus on sustainable growth and risk management. The company's diversified loan portfolio, strong liquidity position, and solid regulatory capital ratios provide a solid foundation for its continued success.