What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-13 compared with 2020-05-15 · 235 added, 107 removed, 245 unchanged (58% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations at March 31, 2020 and for the three months ended March 31, 2020 and 2019 is intended to assist in understanding our financial condition and results of operations of the Company.

The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this Form 10-Q.

Management’s discussion and analysis of financial condition of the Richmond Mutual Bancorporation, Inc.

(the “Company”) at June 30, 2020, and the consolidated results of operations for the three and six month periods ended June 30, 2020, compared to the same periods in 2019 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.

The terms “we,” “our,” “us,” or the “Company” refer to Richmond Mutual Bancorporation, Inc.

and its consolidated subsidiary, First Bank Richmond, which we sometimes refer to as the “Bank,” unless the context otherwise requires.

Cautionary Note Regarding Forward-Looking Statements

42 unchanged sentences

The Plan was approved by the Board of Governors of the Federal Reserve System (the “FRB”) and by the Indiana Department of Financial Institutions (the “IDFI”), as well as the voting members of the MHC at a special meeting of members held on June 19, 2019.

Pursuant to the Plan, upon completion of the transaction, the MHC would convert from a mutual holding company to the stock holding company corporate structure, the MHC and Richmond Mutual Bancorporation-Delaware would cease to exist, and First Bank Richmond would become a wholly owned subsidiary of Richmond Mutual Bancorporation-Maryland, a newly formed Maryland corporation.

The transaction was completed on July 1, 2019.

In connection with the related stock offering, which was also completed on July 1, 2019, Richmond Mutual Bancorporation-Maryland sold 13,026,625 shares of common stock at $10.00 per share, for gross offering proceeds of approximately $130.3 million in its subscription offering and contributed 500,000 shares and $1.25 million to a newly formed charitable foundation, First Bank Richmond, Inc.

In connection with the related stock offering, which was also completed on July 1, 2019, the Company sold 13,026,625 shares of common stock at $10.00 per share, for gross offering proceeds of approximately $130.3 million in its subscription offering and contributed 500,000 shares and $1.25 million to a newly formed charitable foundation, First Bank Richmond, Inc.

Community Foundation (the “Foundation”).

In certain circumstances, where appropriate, the terms “we”, “us”, “our” and the “Company” refer collectively to (i) RMB-Delaware and First Bank Richmond with respect to discussions in this document involving matters occurring prior to completion of the corporate reorganization and (ii) the Company and First Bank Richmond with respect to discussions in this document involving matters occurring post-corporate reorganization, in each case unless the context indicates another meaning.

The Company is regulated by the FRB and the IDFI.

4 unchanged sentences

In 1998, the Bank, in connection with its non-stock mutual holding company reorganization, converted to a national bank charter operating as First Bank Richmond, National Association.

In July 2007, Richmond Mutual Bancorporation-Delaware, the bank’s current holding company, acquired Mutual Federal Savings Bank headquartered in Sidney, Ohio.

In July 2007, Richmond Mutual Bancorporation-Delaware, the Bank’s then current holding company, acquired Mutual Federal Savings Bank headquartered in Sidney, Ohio.

Mutual Federal Savings Bank was operated independently as a separately chartered, wholly owned subsidiary of Richmond Mutual Bancorporation-Delaware until 2016 when it was combined with the bank through an internal merger transaction that consolidated both banks into a single, more efficient commercial bank charter.

14 unchanged sentences

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 $143.5 million at March 31, 2020.

Total wealth management assets under management and administration were $167.0 million at June 30, 2020.

Our results of operations are primarily dependent on net interest income.

Net interest income is the difference between interest income, which is the income that is earned on loans and investments, and interest expense, which is the interest that is paid on deposits and borrowings.

Other significant sources of pre-tax income are service charges (mostly from service charges

on deposit accounts and loan servicing fees), and fees from sale of residential mortgage loans originated for sale in the secondary market.

Other significant sources of pre-tax income are service charges (mostly from service charges on deposit accounts and loan servicing fees), and fees from sale of residential mortgage loans originated for sale in the secondary market.

We also recognize income from the sale of investment securities.

1 unchanged sentence

Because the length of the COVID-19 pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including the recent 150 basis point reduction in the targeted federal funds rate, until the pandemic subsides, the Company expects its net interest income and net interest margin will be adversely affected in 2020 and possibly longer.

At March 31, 2020, on a consolidated basis, we had $1.0 billion in assets, $687.1 million in loans and leases, net of allowance, $605.2 million in deposits and $193.2 million in stockholders’ equity.

At March 31, 2020, First Bank Richmond’s total risk-based capital ratio was 19.1%, exceeding the 10.0% requirement for a well-capitalized institution.

For the three months ended March 31, 2020, net income was $2.5 million, compared with net income of $1.4 million for the three months ended March 31, 2019.

At June 30, 2020, on a consolidated basis, we had $1.1 billion in assets, $752.9 million in loans and leases, net of allowance, $739.1 million in deposits and $196.1 million in stockholders’ equity.

At June 30, 2020, First Bank Richmond’s total risk-based capital ratio was 13.4%, exceeding the 10.0% requirement for a well-capitalized institution.

For the six months ended June 30, 2020, net income was $5.0 million, compared with net income of $1.7 million for the six months ended June 30, 2019.

Critical Accounting Policies

63 unchanged sentences

The SBA guarantees 100% of the PPP loans made to eligible borrowers.

The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven and repaid by the SBA so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses.

We began accepting applications on April 3, 2020, and as of April 30, 2020 have processed 438 PPP loans totaling $63.9 million.

The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven and repaid by the SBA.

The deadline for PPP loan applications to the SBA has been extended to August 8, 2020.

The Bank continued to accept new PPP applications based on this extended

deadline and is assisting small businesses with other borrowing options as they become available, including SBA and other government sponsored lending programs, as appropriate.

As of June 30, 2020, we have processed 465 PPP loans totaling $64.3 million.

There were $72,000 PPP loans approved awaiting funding as of June 30, 2020.

Many of the PPP applications have been from our existing clients but we are also serving those who have not had a banking relationship with us in the past.

6 unchanged sentences

The PPPLF will take the PPP loans as collateral at face value.

As of June 30,2020, we had not utilized the PPPLF.

Loan Modifications.

Beginning in March 2020 we started receiving requests from our borrowers for loan and lease deferrals related to the effects of COVID-19.

As of the quarter ended March 31, 2020, 220 loans aggregating $42.7 million, or 6.1% of total loans and leases were modified.

Beginning in March 2020 we started receiving requests from our borrowers for loan and lease deferrals related to the effects of the COVID-19 pandemic.

At June 30, 2020, 752 loans aggregating $175.1 million, or 22.9% of total loans and leases, were modified.

Modifications include payment deferrals, interest only or principal and interest, of up to primarily 90 days, fee waivers, extensions of repayment terms of up to six months, or other delays in payment that are considered insignificant.

These modifications were not classified as TDRs at March 31, 2020 in accordance with the guidance of the CARES Act.

These modifications were not classified as TDRs at June 30, 2020 in accordance with the guidance of the CARES Act and related regulatory banking guidance.

The CARES Act provides that the short-term modification of loans as a result of the COVID-19 pandemic, made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

1 unchanged sentence

six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

Borrowers are considered current under the CARES Act if they are less than 30 days past due on their contractual payments at the time a modification program is implemented.

Borrowers are considered current under the CARES Act and related regulatory banking guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented.

All loans modified due to COVID-19 will be separately monitored and any request for continuation of relief beyond the initial modification will be reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate.

We believe the steps we are taking are necessary to effectively manage our portfolio and assist our clients through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic.

The following table summarizes information relating to forbearance requests received and granted since January 1, 2020 through April 30, 2020:

The following table summarizes information relating to forbearance requests granted at June 30, 2020 and March 31, 2020:

June 30, 2020

March 31, 2020

($ in thousands)

Number of Loans

Commercial mortgage (excluding hotels)

Commercial mortgage

Commercial and industrial

Construction and development (excluding hotels)

Construction and development

Residential mortgage

1 unchanged sentence

Branch Operations and Additional Client Support

We have taken various steps to ensure the safety of our clients and our personnel by limiting branch activities to appointment only and use of our drive-up facilities.

We also encourage the use of our digital and electronic banking channels while adjusting for evolving State and Federal guidelines.

Many of our employees are working remotely or have flexible work schedules, and we have established protective measures within our offices to help ensure the safety of those employees who must work on-site.

To facilitate this approach, we allocated additional computer equipment to staff and enhanced our network capabilities with several upgrades.

The Family First Coronavirus Response Act also provides additional flexibility to our employees to help navigate their individual challenges.

Comparison of Financial Condition at March 31, 2020 and December 31, 2019

Total assets increased $21.6 million, or 2.2%, to $1.0 billion at March 31, 2020 from $986 million at December 31, 2019.

The increase was primarily a result of a $21.8 million, or 8.4% increase in cash and investments.

The increase in cash and investments was funded by a $28.0 million, or 18.2% increase in FHLB advances and partially offset by a $12.0 million, or 1.9%, decrease in deposits.

Many of our employees continue to work remotely or have flexible work schedules, and we have established protective measures within our offices to help ensure the safety of those employees who must work on-site.

We have also taken steps to resume more normal branch activities with specific guidelines in place to ensure the safety of our clients and our personnel.

This includes the installation of counter shields and hand sanitizing stations, limiting the number of clients in a branch at any one time, requiring social distancing and the wearing of masks within the branch, diligent disinfecting of common area high touchpoints and encouraging the use of our digital and electronic banking channels.

We continuously monitor and conform our practices based on updates from the Center for Disease Control, World Health Organization, Financial Regulatory Agencies, and local and state health departments.

In addition, certain late fees are being waived for those customers experiencing a hardship as a result of the COVID 19 pandemic.

Comparison of Financial Condition at June 30, 2020 and December 31, 2019

Total assets increased $154.2 million, or 15.6%, to $1.1 billion at June 30, 2020 from $986.0 million at December 31, 2019.

The increase was primarily a result of a $65.7 million, or 9.6%, increase in loans and leases, net of allowance, to $752.9 million at June 30, 2020 from $687.3 million at December 31, 2019, and a $70.0 million, or 172.5%, increase in cash and cash equivalents to $110.6 million at June 30, 2020, compared to $40.6 million at December 31, 2019.

The increase in cash and cash equivalents primarily was the result of an increase in brokered deposits and FHLB borrowings as part of the Company’s strategy to increase liquidity.

Loans and Leases.

Our loan and lease portfolio, net of allowance for loan and lease losses, decreased $205,000, to $687.1 million at March 31, 2020 from $687.3 million at December 31, 2019.

While the amount of the total loan portfolio changed very little, there was some movement in the composition of the portfolio.

Commercial mortgage loans increased $9.5 million, or 4.1%, from December 31, 2019 to at March 31, 2020;

while construction and development loans grew $4.6 million, or 8.7% from year-end 2019 to March 31, 2020.

Leases also grew $2.1 million, or 1.9%, from December 31, 2019 to March 31, 2020.

Offsetting that growth, commercial and industrial loans decreased $8.5 million, or 10.1%, from year-end 2019 to March 31, 2020.

Multi-family loans also decreased $7.9 million, or 12.0%, during the first quarter of 2020.

Our loan and lease portfolio, net of allowance for loan and lease losses, increased $65.7 million, to $752.9 million at June 30, 2020 from $687.3 million at December 31, 2019.

The increase in loans and leases was attributable to PPP loans, which accounted for $64.3 million of the $65.7 million increase.

From December 31, 2019 to June 30, 2020, commercial and industrial loans increased $56.6 million or 67.0%, commercial real estate loans increased $12.6 million or 5.5%, and construction and development loans increased $8.9 million or 16.7%.

PPP loans accounted for all of the increases in commercial and industrial loans offsetting a decline of $7.7 million of non-PPP loans.

Partially offsetting these increases were decreases in multi-family real estate loans of $7.3 million or 11.0%, non-PPP commercial and industrial loans of $7.7 million, residential real estate loans, including home equity loans, of $5.6 million or 4.1%, and consumer loans of $984,000 or 7.3%.

Leases grew $4.8 million, or 4.3%, from December 31, 2019 to June 30, 2020.

Nonperforming loans and leases, consisting of nonaccrual loans and leases and accruing loans and leases more than 90 days past due, totaled $4.3 million or 0.57% of total loans and leases at June 30, 2020, compared to $4.3 million or 0.61% of total loans at March 31, 2020, and $3.8 million or 0.55% of total loans and leases at December 31, 2019.

Accruing loans past due more than 90 days at June 30, 2020, totaled $3.3 million, compared to $3.1 million at March 31, 2020, and $2.6 million at December 31, 2019.

At June 30, 2020, TDRs totaled $569,000, compared to $598,000 at December 31, 2019.

At June 30, 2020 and December 31, 2019, the Company had TDRs that were accruing and performing in accordance with their modified terms of $569,000 and $598,000, respectively.

Performing TDRs are not considered nonperforming assets as they continue to accrue interest despite being considered impaired due to the restructured status.

The CARES Act amended generally accepted accounting principles with respect to the modification of loans to borrowers affected by the COVID-19 pandemic.

Among other criteria, this guidance provided that short-term loan modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

As of June 30, 2020, the Company had approved 752 loan modifications qualifying under the CARES Act related to the COVID-19 pandemic with an outstanding loan balance totaling $175.1 million.

Loan modifications in accordance with the CARES Act and related regulatory guidance are still subject to an evaluation in regards to determining whether or not a loan is deemed to be impaired.

Allowance for Loan and Lease Losses.

The allowance for loan and lease losses increased $217,000, or 3.1%, to $7.3 million at March 31, 2020 from $7.1 million at December 31, 2019.

At March 31, 2020, the allowance for loan and lease losses totaled 1.05% of total loans and leases outstanding compared to 1.02% at December 31, 2019.

Net recoveries during the first three months of 2020 were $7,000, compared to net charge-offs of $289,000, or 0.04% of average loans and leases outstanding during the first three months of 2019.

The allowance for loan and lease losses to non-performing loans and leases was 0.61% at March 31, 2020, compared to 0.60% at December 31, 2019.

As of March 31, 2020, the Company had evaluated its exposure to potential loan and lease losses related to the COVID-19 pandemic based on information currently available.

At that time, the Company did not have verifiable documentation as to the full extent of the impact of the pandemic on the Company’s deposit and loan customers.

As more information emerges, the Company will be better able to assess the longer-term impact of COVID-19 on particular loan segments.

Total deposits decreased $12.0 million, or 1.9%, to $605.2 million at March 31, 2020 from $617.2 million at December 31, 2019.

This decrease in deposits primarily was due to a decline in money market account balances and brokered deposits.

Brokered deposits decreased $8.7 million during the first three months of 2020.

At March 31, 2020, brokered deposits totaled $48.0 million, or 7.9% of total deposits, compared to $56.7 million, or 9.2% of total deposits at December 31, 2019.

Total borrowings, consisting solely of FHLB advances, increased $28 million, or 18.2%, to $182 million at March 31, 2020 from $154.0 million at December 31, 2019.

The allowance for loan and lease losses increased $1.4 million, or 20.2%, to $8.5 million at June 30, 2020 from $7.1 million at December 31, 2019.

At June 30, 2020, the allowance for loan and lease losses totaled 1.12% of total loans and leases outstanding compared to 1.02% at December 31, 2019.

Excluding the $64.3 million of PPP loans from the $763.9 million of total loans and leases at June 30, 2020, the allowance for loan and lease losses to total loans and leases was 1.22% at June 30, 2020.

PPP loans are fully guaranteed by the SBA and management expects that the vast majority of PPP borrowers will seek full or partial forgiveness of their loan obligations from the SBA within a short time frame, which in turn will reimburse the Bank for the amount forgiven.

Net charge-offs during the first six months of 2020 were $98,000 or 0.03% of average loans and leases outstanding, compared to net charge-offs of $329,000, or 0.10% of average loans and leases outstanding during the first six months of 2019.

The allowance for loan and lease losses to non-performing loans and leases was 197.5% at June 30, 2020, compared to 186.0% at December 31, 2019.

Management regularly analyzes conditions within its geographic markets and evaluates its loan and lease portfolio.

The Company evaluated its exposure to potential loan and lease losses as of June 30, 2020, which evaluation included consideration of potential credit losses due to the deteriorating economic conditions driven by the impact of the COVID-19 pandemic.

The full impact of the pandemic on the Company’s deposit and loan and lease customers is still unknown.

The Company has increased its qualitative factors when determining the adequacy of its allowance for loan and lease losses.

Credit metrics are being reviewed and stress testing is being performed on the loan portfolio.

Potentially higher risk segments of the portfolio, such as hotels and restaurants, are being closely monitored as are loan payment deferrals.

Total deposits increased $121.9 million, or 19.8%, to $739.1 million at June 30, 2020, from $617.2 million at December 31, 2019.

This increase in deposits was primarily due to an increase in brokered deposits (as the Company sought to increase its liquidity position) and an increase in demand deposit and savings accounts primarily related to disbursements of PPP loan funds to borrowers’ deposit accounts as well as reduced withdrawals reflecting changes in customer spending habits due to the COVID-19 pandemic.

Brokered deposits increased $64.0 million to $120.7 million, or 16.3% of total deposits, at June 30, 2020, compared to $56.7 million, or 9.2% of total deposits, at December 31, 2019.

Demand deposit and savings accounts increased $60.1 million to $395.9 million at June 30, 2020, compared to $335.8 million at December 31, 2019.

At June 30, 2020, noninterest bearing deposits totaled $89.9 million, or 12.2% of total deposits, compared to $60.3 million or 9.8% of total deposits at December 31, 2019.

Total borrowings, consisting solely of FHLB advances, increased $26.0 million, or 16.9%, to $180.0 million at June 30, 2020 from $154.0 million at December 31, 2019 consistent with the Company’s strategy to increase liquidity.

Stockholders’ Equity.

Stockholders’ equity totaled $193.2 million at March 31, 2020, an increase of $5.4 million from December 31, 2019.

The increase in stockholders’ equity primarily was the result of net income of $2.5 million in the first quarter of 2020 and a $2.8 million improvement in accumulated other comprehensive income.

The company’s equity to asset ratio was 19.2% at March 31, 2020.

At March 31, 2020, the Bank’s Tier 1 capital to total assets ratio was 14.3% and the bank’s capital was well in excess of all regulatory requirements.

Stockholders’ equity totaled $196.1 million at June 30, 2020, an increase of $8.3 million, or 4.4%, from December 31, 2019.

The increase in stockholders’ equity primarily was the result of net income of $5.0 million in the first half of 2020 and a $3.7 million improvement in accumulated other comprehensive income, partially offset by $623,000 in dividends paid to shareholders.

The Company’s equity to asset ratio was 17.2% at June 30, 2020.

At June 30, 2020, the Bank’s Tier 1 capital to total assets ratio was 13.4% and the Bank’s capital was well in excess of all regulatory requirements.

Comparison of Results of Operations for the Three Months Ended June 30, 2020 and 2019.

Net income for the three months ended June 30, 2020 was $2.5 million, a $2.2 million, or 647.8% increase from net income of $335,000 for the three months ended June 30, 2019.

The $2.5 million in earnings equaled $0.20 diluted earnings per share for the second quarter of 2020.

There is no comparison of earnings per share to the second quarter of 2019, as the Company’s reorganization from the mutual to stock form of ownership and related stock offering was not completed until July 1, 2019.

Interest Income.

Interest income increased $100,000, or 1.0%, to $10.5 million during the quarter ended June 30, 2020, compared to $10.4 million during the quarter ended June 30, 2019.

Interest income on loans and leases increased $145,000, or 1.6%, to $9.3 million for the quarter ended June 30, 2020, from $9.2 million for the comparable quarter in 2019, due to higher average loan and lease balances.

The average outstanding loan and lease balance was $747.9 million for the quarter ended June 30, 2020, compared to $687.0 million for the quarter ended June 30, 2019.

The average yield on loans and leases was 4.98% for the quarter ended June 30, 2020, compared to 5.33% for the comparable quarter in 2019.

The yield on the loan and lease portfolio was impacted by the PPP loan activity during the second quarter of 2020 as PPP loans are originated at an interest rate of 1%, although the effective yield is slightly higher as a result of the origination fees paid to us by the SBA.

The average yield on PPP loans was 3.22%, including the recognition of the net deferred fees, reducing average yield on loans and leases by 12 basis points for the three months ended June 30, 2020.

Interest income on investment securities, including FHLB stock, increased $222,000, or 23.2%, to $1.2 million during the quarter ended June 30, 2020, from $957,000 during the comparable quarter in 2019.

The increase in interest income on investment securities from the comparable period in 2019 was due to higher average balances, partially offset by a lower weighted average yield.

The average balance of investment securities, including FHLB stock, was $256.6 million for the quarter ended June 30, 2020, compared to $157.8 million for the quarter ended June 30, 2019.

The average yield on investment securities, including FHLB stock, was 1.84% for the second quarter of 2020, compared to 2.45% for the second quarter of 2019.

Interest income earned on cash and cash equivalents decreased to $11,000 in the second quarter of 2020 compared to $278,000 in the comparable quarter of 2019.

This was due to the significantly lower yield earned on funds at the Federal Reserve after the rate reductions experienced in the second half of 2019 and in March 2020.

Interest Expense.

Interest expense decreased $441,000, or 15.1%, to $2.5 million for the quarter ended June 30, 2020, from $2.9 million for the quarter ended June 30, 2019.

Interest expense on deposits decreased $403,000, or 19.1%, to $1.7 million for the quarter ended June 30, 2020, from $2.1 million for the comparable quarter in 2019.

This decrease in interest expense was attributable to the lower weighted average rate paid on interest-bearing deposits, partially offset by higher average deposit balances.

The weighted average rate paid on interest-bearing deposits was 1.13% for the quarter ended June 30, 2020, compared to 1.40% for the quarter ended June 30, 2019.

Average balances of interest-bearing deposits increased slightly to $602.3 million in the quarter ended June 30, 2020, compared to $600.1 million in the comparable quarter in 2019.

Interest expense on FHLB borrowings decreased $38,000, or 4.7%, to $770,000 in the second quarter of 2020 compared to the same quarter in 2019.

The average balance of FHLB borrowings totaled $181.8 million during the quarter ended June 30, 2020, compared to $147.4 million for the quarter ended June 30, 2019.

The weighted average rate paid on FHLB borrowings was 1.69% for the quarter ended June 30, 2020, a 51 basis point decline from 2.20% for the comparable quarter in 2019.

Net Interest Income.

Net interest income before the provision for loan and lease losses increased $541,000, or 7.2%, to $8.0 million in the second quarter of 2020, compared to $7.5 million for the second quarter of 2019.

This increase was primarily due to an increase in average interest-earning assets during the second quarter of 2020 compared to the comparable period in 2019.

Our net interest margin was 3.03% for three months ended June 30, 2020, compared to 3.27% for the three months ended June 30, 2019.

The decrease in net interest margin was primarily due to yields earned on interest-earning assets declining at a faster rate than interest rates paid on interest-bearing liabilities.

The market’s response to lowering deposit pricing to reflect the targeted federal funds rate decrease over the past year typically lags declines in the yield on interest earning assets.

The average yield on PPP loans was 3.22% during the three months ended June 30, 2020, including the recognition of the net deferred fees, resulting in a negative impact on net interest margin of 12 basis points for the three months ended June 30, 2020.

Average Balances, Interest and Average Yields/Cost.

3 unchanged sentences

Loan fees are included in interest income on loans and are not material.

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in thousands)

1 unchanged sentence

Loans and leases receivable

Federal Reserve and Other

Cash and cash equivalents and other

Total interest-earning assets

13 unchanged sentences

(2) Net interest margin represents net interest income divided by average total interest-earning assets.

Comparison of Results of Operations for the Three Months Ended March 31, 2020 and 2019.

Net income for the three months ended March 31, 2020 was $2.5 million, a $1.1 million increase from net income of $1.4 million for the three months ended March 31, 2019.

The $2.5 million in earnings equaled $0.20 diluted earnings per share for the first quarter of 2020.

There is no comparison of earnings per share to the first quarter of 2019, as the Company’s reorganization from the mutual to stock form of ownership and related stock offering was not completed until July 1, 2019.

Provision for Loan and Lease Losses.

The provision for loan and lease losses for the three months ended June 30, 2020 totaled $1.3 million compared to $485,000 for the three months ended June 30, 2019, a $835,000 or 172.2% increase.

The increased provision was primarily due to the continued uncertainty of the economic impact of the COVID-19 pandemic on the Bank’s loan portfolio.

Net charge-offs during the second quarter of 2020 were $106,000, compared to net charge-offs of $40,000 in the second quarter of 2019.

As the COVID-19 pandemic continues, we expect to see continued pressure on asset quality.

As management continues to monitor the loan portfolio, additional provisions may be required.

Non-Interest Income.

Non-interest income increased $1.2 million or 131.4%, to $2.1 million for the quarter ended June 30, 2020, compared to $900,000 for the comparable quarter in 2019 The increase in noninterest income resulted primarily from the increase in the gain on sale of loans and leases, which increased $907,000, or 734.1%, to $1.0 million during the second quarter of 2020, compared to $124,000 during the first quarter of 2020 as a result of increased mortgage banking activity during the current quarter due to lower rates.

Loan and lease servicing income increased $202,000, or 20.5%, to $301,000 for the second quarter of 2020 compared to $99,000 for the comparable quarter in 2019.

In the second quarter of 2020, the Company recorded a recovery to the value of its mortgage servicing rights of $296,000, while no impairment recovery or charge was recorded in the second quarter of 2019.

Other loan fees increased $156,000, or 176.8%, to $245,000 due to increased letter of credit fees of $58,000 and loan interest rate modification fees of $76,000.

Service fees on deposit accounts decreased $146,000, or 58.1%, to $106,000 for the quarter ended June 20, 2020, compared to $252,000 for the quarter ended June 30, 2019 as a result of the waiving of overdraft fees.

Non-Interest Expense.

Non-interest expense decreased $2.0 million, or 25.7%, to $5.6 million for the three months ended June 30, 2020, from $7.6 million for the same period in 2019.

Salaries and employee benefits decreased $2.0 million, or 38.5%, to $3.3 million for the quarter ended June 30, 2020 from $5.3 million for the quarter ended June 30, 2019.

The $2.0 million decrease from the second quarter of 2019 was primarily attributable to the $1.7 million pre-tax expense related to the adoption of a nonqualified deferred compensation plan during the second quarter of 2019.

Excluding this expense, salaries and employee benefits decreased $369,000, or 10.3%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019.

Data processing expenses increased $48,000, or 11.3%, in the second quarter of 2020 compared to the second quarter of 2019, due to normal price increases associated with information technology services and additional digital services and products offered by the Company.

Deposit insurance expense decreased $98,000, or 62.0%, to $60,000, in the second quarter of 2020 compared to the second quarter of 2019.

The decrease from the second quarter of 2019 was due to the Bank’s higher capital ratios resulting from the Company’s injection of capital into the Bank in connection with our reorganization to a stock holding company and related stock offering.

Legal and professional fees increased $118,000, or 56.4%, to $327,000 for the quarter ended June 30, 2020 from $209,000 for the comparable quarter in 2019.

The increase in legal and professional fees was due to the establishment of an out-of-state subsidiary of First Bank for investment management purposes in the second quarter of 2020.

Income Tax Expense.

Income tax expense increased $674,000 during the three months ended June 30, 2020, compared to the same period in 2019, primarily due to a $2.8 million increase in pre-tax income.

The effective tax rate for the second quarter of 2020 was 20.2% compared to a 14.3% benefit for the same quarter a year ago.

Comparison of Results of Operations for the Six Months Ended June 30, 2020 and 2019.

Net income for the six months ended June 30, 2020 totaled $5.0 million, a $3.3 million or 190.4% increase from net income of $1.7 million for the comparable period in 2019.

The $5.0 million in earnings equaled $0.40 diluted earnings per share for the first half of 2020.

There is no comparison of earnings per share to the first half of 2019, as the Company’s reorganization from the mutual to stock form of ownership and related stock offering was not completed until July 1, 2019.

Interest Income.

Interest income increased $695,000, or 7.1%, to $10.5 million for the three months ended March 31, 2020 compared to $9.8 million for the same three month period in 2019.

Interest income on loans increased $297,000, or 3.4%, to $9.1 million for the quarter ended March 31, 2020, compared to $8.8 million for the comparable quarter in 2019, primarily due to a higher average loan balance.

The average outstanding loan balance was $686.2 million for the quarter ended March 31, 2020, compared to $668.2 million for the quarter ended March 31, 2019.

The average yield on loans was 5.28% for the quarter ended March 31, 2020, compared to 5.25% for the quarter ended March 31, 2019.

Interest income on investment securities increased $321,000, or 34.1%, to $1.3 million during the quarter ended March 31, 2020, compared to $942,000 during the comparable quarter in 2019.

Interest income increased $795,000, or 3.9%, to $20.9 million during the six months ended June 30, 2020, compared to $20.2 million for the comparable period in 2019.

Interest income on loans and leases increased $443,000, or 2.5%, to $18.4 million for the first six months of 2020, compared to $17.9 million for the comparable period in 2019, due to higher average loan and lease balances and a slightly higher average yield.

The average outstanding loan and lease balance was $692.1 million for the first half of the year of 2020, compared to $677.7 million for the first half of 2019.

The average yield on loans and leases was 5.31% for the first six months of 2020, compared to 5.29% for the first six months of 2019.

The yield on the loan and lease portfolio was impacted by the PPP loan activity which occurred during the second quarter of 2020 as PPP loans are originated at an interest rate of 1%, although the effective yield is slightly higher as a result of the origination fees paid to us by the SBA.

The average yield on PPP loans was 3.22% in the first half of 2020, including the recognition of the net deferred fees, reducing average yield on loans and leases by eight basis points during the six months ended June 30, 2020.

Interest income on investment securities, including FHLB stock, increased $543,000, or 28.6%, to $2.4 million during the six months ended June 30, 2020, compared to $1.9 million during the comparable period in 2019.

The increase in the interest income on investment securities was due to higher average balances, partially offset by a lower weighted average yield.

The average balance of investment securities was $224.3 million for the quarter ended March 31, 2020, compared to $142.6 million for the quarter ended March 31, 2019.

The average yield on investment securities was 2.11% for the quarter ended March 31, 2020, compared to 2.38% for the quarter ended March 31, 2019.

Interest Expense.

Interest expense decreased $73,000, or 2.8%, to $2.6 million for the three months ended March 31, 2020, compared to the quarter ended March 31, 2019.

Interest expense on deposits decreased $62,000, or 3.3%, to $1.8 million for the quarter ended March 31, 2020, compared to a year ago, primarily as a result of a decrease of $27.0 million, or 4.7%, in the average balance of interest-bearing deposits to $546.5 million.

The weighted average rate paid on interest-bearing deposits was 1.34% for the quarter ended March 31, 2020, compared to 1.49% for the quarter ended March 31, 2019.

The average balance of investment securities, including FHLB stock, was $244.4 million for the first six months of 2020, compared to $153.6 million for the first six months of 2019.

The average yield on investment securities, including FHLB stock, was 2.00% for the first half of 2020, compared to 2.47% for the first half of 2019.

Interest income earned on cash and cash equivalents decreased to $136,000 in the first half of 2020 compared to $328,000 in the first half of 2019.

This was due to the significantly lower yield earned on funds at the Federal Reserve after the rate reductions experienced in the second half of 2019 and in March 2020.

Interest Expense.

on FHLB borrowings decreased $11,000, or 1.5%, to $739,000 for the quarter ended March 31, 2020, compared to the prior year, due to a decrease in the average rate paid on FHLB borrowings.

The weighted rate paid on FHLB borrowings was 1.80% for the quarter ended March 31, 2020, a 41 basis point decline from 2.21% for the comparable quarter in 2019.

Interest expense decreased $514,000, or 9.3%, to $5.0 million for the six months ended June 30, 2020, compared to $5.6 million for the six months ended June 30, 2019.

Interest expense on deposits decreased $465,000, or 11.6%, to $3.5 million for the first half of 2020, compared to $4.0 million in the first half of 2019.

This decrease in interest expense on deposits was primarily attributable to the lower weighted average rate paid on interest-bearing deposits, as well as a decline in average balances of interest-bearing deposits.

The weighted average rate paid on interest-bearing deposits was 1.23% for the six months ended June 30, 2020, compared to 1.37% for the six months ended June 30, 2019.

Average balances of interest-bearing deposits declined $12.5 million, or 2.1%, to $574.4 million in the first six months of 2020 compared to the first six months of 2019.

Interest expense on FHLB borrowings decreased $49,000, or 3.2%, to $1.5 million in the first half of 2020 compared to the first half of 2019.

The average balance of FHLB borrowings totaled $172.9 million during the first six months of 2020, compared to $141.7 million for the first six months of 2019.

The weighted average rate paid on FHLB borrowings was 1.75% for the first half of 2020, a 45 basis point decline from 2.20% for the first half of 2019.

Net Interest Income.

Net interest income before the provision for loan and lease losses increased $768,000, or 10.8%, to $7.9 million during the first quarter of 2020 compared to $7.1 million for the first quarter of 2019.

This increase was due to an increase in average interest-earning assets during the first quarter of 2020 compared to the comparable period in 2019.

The total benefit of this increase in average interest-earning assets was diminished by the significant reduction in the targeted Federal Funds Rate since July 2019, including the 150 basis point decrease in March 2020 in response to the COVID-19 pandemic.

Net interest income before the provision for loan and lease losses increased $1.3 million, or 9.0%, to $15.9 million in the first half of 2020, compared to $14.6 million for the first half of 2019.

This increase was primarily due to an increase in average interest-earning assets during the first half of 2020 compared to the same period in 2019.

Our net interest margin was 3.25% for six months ended June 30, 2020, compared to 3.35% for the six months ended June 30, 2019.

The decrease in net interest margin was primarily due to yields earned on interest-earning assets declining at a faster rate than interest rates paid on interest-bearing liabilities.

The market’s response to lowering deposit pricing to reflect the targeted federal funds rate decrease over the past year typically lags declines in the yield on interest earning assets.

The average yield on PPP loans was 3.22% during the six months ended June 30, 2020, including the recognition of the net deferred fees, resulting in a negative impact on net interest margin of eight basis points for the six months ended June 30, 2020.

Average Balances, Interest and Average Yields/Cost.

The following tables set forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities.

Average balances have been calculated using quarterly balances.

Non-accruing loans have been included in the table as loans carrying a zero yield.

Loan fees are included in interest income on loans and are not material.

Six Months Ended June 30,

(Dollars in thousands)

Interest-earning assets:

Loans and leases receivable

Cash and cash equivalents and other

Total interest-earning assets

Interest-bearing liabilities:

Savings and money market accounts

Interest-bearing checking accounts

Certificate accounts

Total interest-bearing liabilities

Net interest income

Net earning assets

Net interest rate spread (1)

Net interest margin (2)

Average interest-earning assets to

average interest-bearing liabilities

___________________

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest margin represents net interest income divided by average total interest-earning assets.

Provision for Loan and Lease Losses.

The provision for loan and lease losses for the three months ended March 31, 2020 totaled $210,000 compared to $525,000 for the three months ended March 31, 2019, a $315,000 or 60.0% decrease.

The lower provision was due to the lack of growth in the loan portfolio, as well as a reflection of the Company’s asset quality.

Net recoveries during the first three months of 2020 were $7,000, compared to net charge-offs of $289,000 in the first three months of 2019.

As the COVID-19 pandemic continues, it may exert pressure on asset quality as 2020 unfolds.

The provision for loan and lease losses for the six months ended June 30, 2020 totaled $1.5 million compared to $1.0 million for the six months ended June 30, 2019, a $520,000 or 51.5% increase.

The increased provision was primarily due to the continued uncertainty of the economic impact of the COVID-19 pandemic on the Bank’s loan portfolio.

Net charge-offs during the first half of 2020 were $98,000, compared to net charge-offs of $329,000 in the first half of 2019.

As the COVID-19 pandemic continues, we expect to see continued pressure on asset quality.

As management continues to monitor the loan portfolio, additional provisions may be required.

Non-Interest Income.

Non-interest income increased $49,000, or 5.4%, to $953,000 for the three months ended March 31, 2020, compared to $904,000 for the same period in 2019.

Gain on sale of loans and leases increased $141,000, or 161.6%, in the first three months of 2020 to $228,000 compared to $87,000 in the first three months of 2019 as a result of increased mortgage banking activity due to lower rates.

Loan and lease servicing income declined $179,000 in the first quarter as the Company recorded impairment to its mortgage servicing rights of $114,000 compared to no impairment recorded in the first quarter of 2019.

Other loan fees declined $72,000, or 46.4%, in the first quarter of 2020, primarily due to a $47,000 decrease in loan processing fees and a $24,000 decline in miscellaneous loan fees recorded in the first quarter as a result of lower commercial loan originations in the quarters.

Other income increased $78,000, or 61.8% in the first quarter of 2020 compared to 2019, primarily due to a $33,000, or 33.9%, increase in trust fees earned in the first quarter of 2020 compared to the same period in 2019.

Non-interest income increased $1.2 million, or 68.2%, to $3.0 million for the first six months of 2020, compared to $1.8 million for the same period in 2019.

Gain on sale of loans and leases increased $1.0 million in the first half of 2020 to $1.3 million compared to $211,000 in the comparable period of 2019 as a result of increased mortgage banking activity due to lower rates.

Service charges on deposit accounts declined $123,000, or 25.5%, in the first six months of 2020 compared to the first six months of 2019.

This decrease was the result of waiving overdraft charges in the second quarter of 2020.

Other loan fees increased $85,000, or 34.8%, in the first half of 2020, primarily due to a $58,000 increase in letter of credit fees and a $27,000 increase in loan processing fees.

Trust income increased $46,000, or 21.5%, in the first six months of 2020 compared to the first six months of 2019 due to an increase in assets under management.

Non-Interest Expense.

Non-interest expense decreased $281,000 to $5.5 million during the first quarter of 2020 compared to the same period in 2019.

Salaries and employee benefits declined $112,000, or 3.2%, in the first quarter of 2020 compared to the first quarter of 2019.

Salary expenses increased $73,000 while employee benefit expenses decreased $185,000.

The decrease was due to the $19.3 million accrual of estimated expenses in connection with the freezing and proposed termination of our defined benefit plan in December 2019, which resulted in reduced expenses for the first quarter of 2020.

Non-interest expense decreased $2.2 million, or 16.7%, to $11.2 million during the first six months of 2020 compared to $13.4 million during the same period in 2019.

Salaries and employee benefits declined $2.2 million, or 24.5%, in the first half of 2020 compared to the first half of 2019.

This decrease was primarily due to the $1.7 million pre-tax expense related to the adoption of a nonqualified deferred compensation plan during the second quarter of 2019.

Excluding this expense, salaries and employee benefits decreased $456,000, or 6.4%, for the first half of 2020 compared to the first half of 2019.

Salary expense increased $49,000, or 1.1%, in the first half of 2020, while benefit expense declined $505,000 in the first half of 2020 compared to the first half of 2019 primarily due to the lower cost of the ESOP compared to the Company’s defined benefit plan which was frozen with the intent to terminate it in December 2019.

The freezing of the plan is expected to reduce, but not eliminate, the ongoing expenses associated with the defined benefit plan until the plan is terminated.

Data processing expenses increased $63,000, or 15.1%, in the first quarter of 2020 compared to the first quarter of 2019, due to normal price increases associated with information technology services and additional digital services offered by the Company.

Deposit insurance expense decreased $79,000, or 58.5%, in the first quarter of 2020 compared to the first quarter of 2019, due to the Bank’s higher capital ratios resulting from the Company’s injection of capital into the Bank in connection with our reorganization to a stock holding company and related stock offering.

We also experienced decreases of $55,000 in legal and professional fees and $72,000 in other expenses during the first three months of 2020, compared to the first three months of 2019.

The decrease in other expenses was primarily the result of a $44,000 decrease in charitable contributions, which are now being made through the First Bank Richmond, Inc.

Community Foundation formed in connection with our recently completed reorganization and stock offering, and a $20,000 decrease in commissions associated with brokered CDs.

Data processing expenses increased $111,000, or 13.2%, in the first half of 2020 compared to the first half of 2019, due to normal price increases associated with information technology services and additional digital services offered by the Company.

Deposit insurance expense decreased $177,000, or 60.4%, in the first six months of 2020 compared to the first six months of 2019 due to the Bank’s higher capital ratios resulting from the Company’s injection of capital into the Bank in connection with our reorganization to a stock holding company and related stock offering.

We also experienced an increase of $62,000, or 12.3%, in legal and professional fees due to the establishment of an out-of-state subsidiary of First Bank for investment management purposes;

and a $107,000, or 36.0%, decline in advertising expenses.

Income Tax Expense.

Income tax expense increased by $333,000 during the three months ended March 31, 2020, compared to the same period in 2019.

This was due to pre-tax income increasing $1.4 million during the first quarter of 2020 compared to the first quarter of 2019, and the effective tax rate increasing from 19.0% in the first quarter of 2019 to 21.1% in the first quarter of 2020.

The increase in the effective tax rate was due to tax-free income on municipal securities and leases representing a smaller percentage of the Company’s pre-tax income in the first quarter of 2020 versus the first quarter of 2019.

Income tax expense increased $1.0 million during the first half of 2020, compared to the first half of 2019, primarily due to a $4.3 million increase in pre-tax income.

The effective tax rate for the first half of 2020 was 20.6% compared to 14.1% in the first half of 2019.

We are required to have enough cash and investments that qualify as liquid assets in order to maintain sufficient liquidity to ensure safe and sound operations.

9 unchanged sentences

On a long-term basis, we maintain a strategy of investing in various lending products and investment securities, including mortgage-backed and municipal securities.

First Bank Richmond uses its sources of funds primarily to meet its ongoing commitments, pay maturing deposits, fund deposit withdrawals and fund loan commitments.

First Bank Richmond can also generate funds from borrowings, primarily FHLB advances.

In addition, we have historically sold eligible long-term, fixed-rate residential mortgage loans in the secondary market in order to reduce interest rate risk and to create another source of liquidity.

First Bank Richmond’s liquidity may be supplemented in the second quarter of 2020 if it participates in the FRB’s PPPLF pursuant to which First Bank Richmond would pledge PPP loans as collateral to obtain FRB non-recourse loans.

At June 30, 2020, the Bank had $204.1 million in cash and unpledged available-for-sale investment securities for its cash needs.

The Bank had the ability to borrow an additional $41.7 million in FHLB advances based on existing collateral pledged.

First Bank Richmond’s liquidity may be supplemented in the second half of 2020 if it participates in the FRB’s PPPLF pursuant to which First Bank Richmond would pledge PPP loans as collateral to obtain FRB non-recourse loans.

At June 30, 2020, we had no borrowings from the PPPLF, with the ability to borrow up to $64.3 million based on PPP loans unpledged at that date.

First Bank Richmond uses its sources of funds primarily to meet its ongoing commitments, pay maturing deposits, fund deposit withdrawals and fund loan and lease commitments.

At June 30, 2020, outstanding loan and lease commitments, including unused lines and letters of credit, totaled $133.9 million, including $55.6 million of undisbursed construction and land loans.

Certificates of deposit scheduled to mature in one year or less at June 30, 2020, totaled $265.2 million.

It is management’s policy to offer deposit rates that are competitive with other local financial institutions.

Based on this management strategy, we believe that a majority of maturing deposits will remain with the Bank.

Liquidity, represented by cash, cash equivalents, and investment securities, is a product of our operating, investing and financing activities.

4 unchanged sentences

FHLB advances are utilized to leverage our capital base and provide funds for lending and investment activities, as well as to enhance interest rate risk management.

Funds are used primarily to meet ongoing commitments, pay maturing deposits, fund withdrawals, and to fund loan commitments.

It is management’s policy to offer deposit rates that are competitive with other local financial institutions.

Based on this management strategy, we believe that a majority of maturing deposits will remain with us.

Management believes that its primary liquidity sources of loan repayments, maturing investment securities, available FHLB borrowing, possible utilization of the PPPLF facility, and access to the brokered CD market is sufficient in the economic environment created by the COVID-19 pandemic.

Cash and cash equivalents increased $70.0 million to $110.6 million as of June 30, 2020, from $40.6 million as of December 31, 2019.

Net cash provided by operating activities was $7.2 million for the six months ended June 30, 2020.

Net cash used in investing activities totaled $84.5 million during the six months ended June 30, 2020 and consisted primarily of increases in net loans and available-for-sale securities.

The $147.2 million of net cash provided by financing activities during the six months ended June 30, 2020 was primarily the result of a $121.9 million net increase in deposits and $26.0 million net increase in FHLB advances.

As a separate legal entity from the Bank, the Company must provide for its own liquidity.

At June 30, 2020, the Company, on an unconsolidated basis, had $42.5 million in cash, noninterest-bearing deposits and liquid investments generally available for its cash needs.

The Company’s principal source of liquidity is dividends and ESOP loan repayments from the Bank.

Management believes that its primary liquidity sources of loan repayments, maturing investment securities, available FHLB borrowing, possible utilization of the PPPLF facility, and access to the brokered CD market are sufficient in the economic environment created by the COVID-19 pandemic.

Except as set forth above, management is not aware of any trends, events, or uncertainties that will have, or that are reasonably likely to have a material impact on liquidity, capital resources or operations.

5 unchanged sentences

Such commitments are subject to the same credit policies and approval process accorded to loans we make.

At March 31, 2020, we had $136.8 million in loan commitments and unused lines of credit.

At June 30, 2020, we had $133.9 million in loan and lease commitments and unused lines of credit.

Capital Resources

1 unchanged sentence

The FDIC may require us to have additional capital above the specific regulatory levels if it believes we are subject to increased risk due to asset problems, high interest rate risk and other risks.

At March 31, 2020, First Bank Richmond’s regulatory capital exceeded the FDIC regulatory requirements, and First Bank Richmond was well-capitalized under regulatory prompt corrective action standards.

At June 30, 2020 First Bank Richmond’s regulatory capital exceeded the FDIC regulatory requirements, and First Bank Richmond was well-capitalized under regulatory prompt corrective action standards.

Consistent with our goals to operate a sound and profitable organization, our policy is for First Bank Richmond to maintain well-capitalized status.

Adequate Capital

As of March 31, 2020

As of June 30, 2020

(Dollars in thousands)

9 unchanged sentences

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 March 31, 2020, the Bank’s CET1 capital exceeded the required capital conservation buffer.

At June 30, 2020 the Bank’s CET1 capital exceeded the required capital conservation buffer.

For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis and the FRB expects the holding company’s subsidiary banks to be well capitalized under the prompt corrective action regulations.

If Richmond Mutual Bancorporation was subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at March 31, 2020, it would have exceeded all regulatory capital requirements.

If Richmond Mutual Bancorporation was subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at June 30, 2020, it would have exceeded all regulatory capital requirements.

Impact of Inflation

4 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There has not been any material change in the market risk disclosures contained in our Prospectus.

There has not been any material change in the market risk disclosures contained in our 2019 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis