Richmond Mutual Bancorporation, Inc. Annual Report - How They Did This Year

Hey there! Thinking about investing in Richmond Mutual Bancorporation, Inc.? This guide gives you the lowdown on how they've been doing, in plain English. We'll break down the important stuff so you can decide if it's a good fit for your portfolio.

Here's what we'll cover:

1. What does this company do and how did they perform this year?

   • Richmond Mutual Bancorporation, Inc. is a community bank. They attract public deposits. Then they lend that money out and invest it. They also get funds from the Federal Home Loan Bank (FHLB).
   • A little history: They started in 1887 as a mutual savings and loan. Their structure changed several times. In July 2019, they became a stock holding company. This means you can now buy their shares. Before that, they were a mutual holding company. They acquired Mutual Federal Savings Bank in Ohio in 2007. This bank later merged into First Bank Richmond in 2016. Today, they operate as First Bank Richmond in Indiana. They also operate as Mutual Federal in Ohio, a division of First Bank Richmond.
   • What they offer: They provide full banking services. They have 14 offices: 8 in Indiana and 6 in Ohio. Their main business is making loans. These include commercial and multi-family real estate, residential mortgages, consumer loans, and business loans. They also lease equipment directly to small U.S. businesses. Additionally, they offer trust and wealth management services. As of December 31, 2025, they managed about $246.3 million in assets for clients.
   • How they make money: Their main income comes from "net interest income." This is the difference between interest they earn and interest they pay. They earn interest on loans and investments. They pay interest on deposits and borrowings. This is a bank's core income. They also earn money from service charges, like on deposit accounts. Other income comes from selling residential mortgage loans and investment securities.
   • Their lending philosophy: They are careful about lending. They use strict approval standards. The board must approve lending authority. They do not offer riskier loans. These include "interest-only," "negative amortization," "option adjustable rate," or "subprime" loans. (Subprime means a FICO score below 660 at the start). They have no programs for these. This shows they manage credit risk by avoiding high-risk loans.
   • Their loan portfolio at a glance:
     • Commercial and Multi-family Real Estate Loans: This is their largest loan group. It totals $623.2 million, or 52.2% of their total loans. $208.9 million (17.5% of total loans) are multi-family (apartment) loans. About $273.4 million of their business real estate loans back income-producing properties. $207.3 million of these loans are in the Columbus, Ohio market. This concentration means local economic conditions greatly affect these loans. They also buy or participate in these loans from other banks. This totals $74.3 million. $25.9 million of these are outside their main markets. By late 2025, they had $83.4 million in participation loans. All were performing well. Most of these loans (83.1%) have adjustable rates. 16.9% have fixed rates. Adjustable rates help the bank when interest rates rise. But they can also increase borrower payments significantly. The average loan size is $1.3 million. Their largest single loan is $13.6 million for an industrial facility in Columbus, performing well. Their largest lending relationship is $23.5 million. This covers four business real estate loans in Dayton, Ohio, all performing.
     • Business and Industrial Loans: These total $142.5 million. They have a 6.5% average yield. These loans rely mainly on the borrower's cash flow. Collateral, like real estate or equipment, is a secondary factor.
     • Construction and Development Loans: This group totals $71.7 million. It makes up 6.0% of their total loans. It has a 6.9% average yield. This includes $65.2 million in business construction loans. It also includes $6.5 million in home construction loans. They lend to experienced builders for business projects. These include apartments, industrial, office, and retail centers. They check project progress before releasing funds. These loans usually last 1-2 years. They are interest-only during construction. They aim for a loan-to-value (LTV) ratio of 80% or less of the completed value. The average business construction loan is about $1.7 million. $31.1 million (43.4%) of their business construction loans are for speculative projects. This means no buyer is lined up yet. These loans carry higher risk. Repayment depends on future market demand. If unsold within 18 months, they require stricter terms. For home construction, they finance pre-sold homes. These are for builders and homeowners. They often convert to a regular mortgage after construction. This typically takes up to 9 months and is interest-only. These loans have a maximum LTV of 80% of cost or appraised value. They also make smaller land loans for business development. These follow strict approval standards like business construction loans. LTVs are up to 65% for raw land and 75% for developed land. Terms are up to two years. By late 2025, they had $22.5 million in unfunded business construction commitments. They also had $3.8 million in unfunded home construction commitments. These are future funding obligations. Their largest construction loan was $9.3 million for an Indianapolis urban development. It was performing well. They had 6 other construction loans over $3.0 million. All were performing, except one $4.9 million loan now in litigation.
     • Home Mortgages: These total $171.1 million. They have a 5.5% average yield.
     • Home Equity Lines of Credit (HELOCs): These total $20.1 million. They are 1.7% of their total loans. They have a 6.9% average yield. Of these, $14.2 million have adjustable rates. They also have $20.9 million in unfunded HELOC commitments. This means borrowers could draw these funds in the future.
     • Leases: This group totals $145.8 million. It makes up 12.2% of their total loans. It has a 9.7% average yield. They offer direct equipment leases to small U.S. businesses. This includes medical, computer, manufacturing, and construction equipment. They get these deals from brokers and other third parties. A typical lease is $2,500 to $250,000, averaging $51,000. Terms range from 2 to 6 years, averaging 38.8 months. They focus on "A" quality clients. This means borrowers with strong finances.
     • Consumer Loans: These total $19.3 million. They have a 6.9% average yield.
     • About 16.0% of their total loans ($191.2 million) use homes as collateral. This includes $162.5 million in one-to-four family home loans. It also includes $8.6 million in home equity loans. And $20.1 million in home equity lines of credit.
     • Their one-to-four family home loans are a mix. 51.3% are fixed-rate, 48.7% are adjustable-rate. They often sell standard fixed-rate home loans. Buyers include Fannie Mae and the FHLB. This helps them manage interest rate risk. It also boosts their cash on hand. They earn income from sales and by servicing these loans. They sold $17.8 million of these loans in 2025. This is down from $25.2 million in 2024. They keep some "non-conforming" loans. These do not fit Fannie Mae standards. They also keep "jumbo" loans, which are larger. They manage these with specific approval processes.
     • Important note on "subprime" loans: They have no specific program for subprime loans. However, $11.3 million (5.9%) of their home loans went to borrowers with FICO scores under 660. This was at the loan's start. Of these, $2.2 million were late on payments by late 2025.
   • Their structure: They have a few companies they own. First Insurance Management, Inc.: Started in 2022. This company provides extra property and casualty insurance for the bank. It also offers reinsurance for other insurers. FB Richmond Holdings, Inc.: Started in 2020. This company holds most of the bank's investments. These had a market value of $254.7 million by late 2025. FB Richmond Properties, Inc.: Started in 2020. This company holds certain home mortgages and business real estate loans. These totaled about $102.6 million by late 2025.
   • This past year (2025): They had a busy year! Looking at the whole company, by December 31, 2025: They had $1.5 billion in total assets. They had $1.19 billion in loans and leases. They also held $1.1 billion in deposits. Lending activity was strong in 2025. They made $308.1 million in new loans and leases. This was up $71.0 million, or nearly 30%, from $237.1 million in 2024. This growth came mainly from multi-family and business real estate loans. Construction and development loans and lease activity also grew. However, they made fewer home mortgages, HELOCs, and business loans than last year. A big event was agreeing to buy Farmers Bancorp on November 11, 2025. This deal should close in mid-2026. It is a major step to grow their business and market.

2. Financial performance - revenue, profit, growth metrics

   • This year brought clear profit numbers! Richmond Mutual Bancorporation reported a $11.6 million profit for 2025. This is a good jump from their $9.4 million profit in 2024. That's about a 23% profit increase year-over-year. This shows strong profitability.
   • Their "Retained Earnings" grew by $7 million in 2025. This is profit kept in the business, not paid as dividends. It went from $105 million to $112 million. This is better than the $5 million increase in 2024. It also suggests higher profits this year. Their "Additional Paid-In Capital" also grew by $3 million. This shows more money came into the company, likely from selling stock.
   • When they went public in July 2019, they sold about 13 million shares. This brought in roughly $130.3 million. This cash injection built their financial foundation.
   • However, their "Accumulated Other Comprehensive Income" became more negative. This term covers certain gains or losses. These don't directly affect profit, but they do impact total company value. It dropped from -$3 million to -$4 million. This reduces their overall company value, so watch this trend.

3. Major wins and challenges this year

   • Major Win: The biggest news is the agreement to buy Farmers Bancorp. This deal should close in mid-2026. It means Richmond Mutual Bancorporation will grow its reach. They will likely gain more customers and assets. This shows a strategic expansion.
   • They also keep strict loan approval standards. They carefully check if borrowers can repay. A key strategy is not offering riskier loans. These include interest-only or negative amortization loans. This shows they manage credit risk well. It also helps maintain asset quality.
   • Selling standard home mortgages to Fannie Mae and the FHLB is smart. It reduces interest rate risk. They avoid holding long-term fixed-rate assets. It also boosts their cash from sales. They earn income from sales and by servicing these loans.
   • It's good news that their largest business and multi-family real estate loans performed well. This includes their biggest single loan ($13.6 million). Their largest lending relationship ($23.5 million) also performed well. This shows strength in their biggest loan areas.
   • Challenges: On the other hand, more loans are struggling. Their total nonperforming loans and leases more than doubled. These are loans 90+ days late, or where the bank stopped counting interest. They jumped from $6.8 million (0.58% of total loans) in 2024. They reached $17.4 million (1.46% of total loans) in 2025. This big increase is a warning sign for loan quality.
   • Specifically, their nonaccrual loans and leases soared. They rose from $5.1 million in 2024 to $13.2 million in 2025. A big reason was one $6.7 million business real estate loan. It became nonaccrual and entered foreclosure. This shows a major credit problem. Nonaccrual leases also rose sharply. They went from $34,000 in 2024 to $715,000 in 2025. This suggests small business leasing clients face difficulties.
   • Also, loans 90+ days past due but still earning interest increased. This means payments were very late, but the bank hoped to collect. They rose from $1.7 million in 2024 to $4.2 million in 2025. This was mainly due to one $2.4 million multi-family loan. It became seriously late. It was expected to be paid soon. (It later became nonaccrual in early 2026). This shows its status continued to worsen.
   • These increases across loan types are concerning. Especially in business real estate and leases. They suggest some borrowers face difficulties. This worries the bank's loan quality. It could also lead to higher reserves for bad loans.

4. Financial health - cash, debt, liquidity

   • Their total assets are strong and growing. They had $1.5 billion by late 2025. They hold a mix of securities. These include safe US Treasury and government-backed securities. These provide liquidity, meaning they convert to cash easily if needed.
   • A positive sign of their financial strength is their total risk-based capital ratio. It was 14.6% by late 2025. This is well above the 10.0% needed to be "well-capitalized." This means they have a good cushion for losses and stability.
   • However, the big rise in nonperforming loans is a warning. It means more of their lent money isn't performing. This could affect their cash flow. It might require higher reserves for bad loans. This could strain their financial health if it continues.

5. Key risks that could hurt the stock price

   • The data highlights a main risk: loan quality worsened significantly. Nonperforming loans and leases more than doubled. They went from $6.8 million in 2024 to $17.4 million in 2025. Nonaccrual loans also sharply increased, from $5.1 million to $13.2 million. This strongly suggests some borrowers are struggling. This includes a $6.7 million business real estate loan now in foreclosure. It also includes a $2.4 million multi-family loan that became very late. If these trends continue, they could cause higher loan losses. This would impact profits, reduce capital, and potentially hurt the stock price.
   • Business and Multi-family Real Estate (CRE) Loan Risks: This is their largest loan group. It makes up over half their loans. These loans are riskier than typical home loans. They involve larger amounts and fewer borrowers. Repayment heavily depends on the property's success and income. Economic or real estate market changes could impact collateral value. Rising vacancies, falling property values, or higher interest rates are examples. If they must foreclose, selling these properties can be long and costly. This could lead to losses.
     • Most of their CRE loans (83.1%) have adjustable rates. This helps the bank when interest rates rise. But borrower payments can also increase. This might make it harder for some to pay. Especially if property income doesn't match higher debt costs.
     • They have $207.3 million in CRE loans in Columbus, Ohio. A downturn in that market could significantly impact their loan quality.
   • Construction and Development Loan Risks: These loans are generally riskier. They have more credit risk than traditional loans on built properties. This is due to development uncertainties.
     • Project Uncertainty: Zoning approvals, permits, or environmental clearances might be denied. They could also face delays. This could stall a project.
     • Cost & Value Estimates: Initial cost or property value estimates might be wrong. The bank might lend more to protect its investment. Or the property might be worth less than the loan. This increases the bank's risk of loss.
     • Completion Risk: Construction might not finish on time. It might not meet specs or stay within budget. This leads to cost overruns or abandoned projects.
     • Sales/Rental Dependence: Repayment often relies on selling or renting the property. This might not happen quickly or at the expected price. This is especially true in a weaker market.
     • Other Issues: Risks also include fraud by the borrower or contractor. Contractors might file liens for unpaid work. Or the contractor might fail to finish the job.
     • Speculative Construction: A large part ($31.1 million, or 43.4%) of their business construction loans are speculative. This means they build without a buyer or tenant. These loans carry extra risk. Properties might sit unsold or unleased if the market slows.
     • They try to manage these risks. They use diversification, careful borrower checks, appraisals, LTV limits, and monitoring. But these do not guarantee success. One $4.9 million construction loan is in litigation. This highlights these potential problems.
   • "Subprime" Loan Exposure: They have no subprime loan program. But $11.3 million (5.9%) of their home loans went to borrowers with FICO scores under 660. This was at the loan's start. $2.2 million of these were late on payments by late 2025. Of that, $76,000 is now nonaccrual. This shows a higher risk of default. It also means potential losses from this loan group.
   • Lease Portfolio Risk: Nonaccrual leases rose sharply. They went from $34,000 in 2024 to $715,000 in 2025. This points to issues in their equipment leasing for small businesses. This big jump suggests small business clients are struggling. This could be due to economic challenges. It might lead to more uncollectible leases in this area.

This guide gives you a clear picture of Richmond Mutual Bancorporation, Inc.'s year. Weigh these points carefully as you consider if this investment aligns with your financial goals.