What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-30 compared with 2021-03-31 · 216 added, 197 removed, 1018 unchanged (29% of the section changed)

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Richmond Mutual Bancorporation, Inc.

(the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income (loss), comprehensive income (loss) stockholders' equity and cash flows for each of the years in the two-year period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements").

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

25 unchanged sentences

Investment securities - held to maturity 9,040,825 12,225,275

Loans held for sale 557,500 1,986,650

Loans and leases, net of allowance for losses of $ 12,107,590 and

48 unchanged sentences

Card fee income 1,086,576 842,902

Loan and lease servicing fees 381,552 144,238

Loan and lease servicing fees, including mortgage servicing right impairment ( 84,333 ) 381,552

Net gains on securities (includes $ 55,799 and $ 196,317 , related to accumulated other comprehensive loss reclassifications)

1 unchanged sentence

Net gains on loan and lease sales 2,450,083 3,632,579

Other loan fees 696,287 545,378

Other income 1,025,889 1,021,556

2 unchanged sentences

Salaries and employee benefits 18,143,286 14,780,970

Multi-employer pension plan expense 386,683 20,492,021

Net occupancy expenses 1,236,549 1,163,910

7 unchanged sentences

Real estate owned expense 25,526 4,753

Loss on sale of real estate owned — 43,871

Donation to establish First Bank Richmond, Inc.

Charitable Foundation — 6,250,000

Other expenses 3,538,538 3,030,484

Total non-interest expenses 28,649,415 24,009,129

Income Before Income Tax Expense (Benefit) 12,495,104 ( 19,376,899 )

Provision (benefit) for income taxes (includes $ 41,227 and $ 25,309 , related to income tax expense from reclassification of items)

Income Before Income Tax Expense 13,580,400 12,495,104

Provision for income taxes (includes $ 11,718 and $ 41,227 , related to income tax expense from reclassification of items)

2,435,500 2,477,453

Net Income (Loss) $ 10,017,651 $ ( 14,084,486 )

Earnings (Loss) Per Share

Basic (for 2019 period:

July 2, 2019 to December 31, 2019) $ 0.82 $ ( 1.27 )

Diluted (for 2019 period:

July 2, 2019 to December 31, 2019) $ 0.82 $ ( 1.27 )

Net Income $ 11,144,900 $ 10,017,651

Earnings Per Share

Basic $ 0.98 $ 0.82

Diluted $ 0.96 $ 0.82

See Notes to Consolidated Financial Statements

2 unchanged sentences

Years Ended December 31, 2021 and 2020

Net Income (Loss) $ 10,017,651 $ ( 14,084,486 )

Other Comprehensive Income

Unrealized gain on available-for-sale securities, net of tax expense of $ 1,202,699 and $ 1,327,234

Net Income $ 11,144,900 $ 10,017,651

Other Comprehensive (Loss) Income

Unrealized (loss) gain on available-for-sale securities, net of tax (benefit) expense of $( 1,296,294 ) and $ 1,202,699

( 4,876,535 ) 4,524,439

2 unchanged sentences

( 4,920,616 ) 4,369,349

Comprehensive Income (Loss) $ 14,387,000 $ ( 10,366,944 )

Comprehensive Income $ 6,224,284 $ 14,387,000

See Notes to Consolidated Financial Statements

10 unchanged sentences

Balances, December 31, 2019 13,526,625 $ 135,266 $ 132,601,876 $ 70,111,434 $ ( 14,400,386 ) $ ( 660,744 ) $ 187,787,446

Net loss — — — ( 14,084,486 ) — — ( 14,084,486 )

Net income — — — 10,017,651 — — 10,017,651

Other comprehensive income — — — — — 4,369,349 4,369,349

ESOP shares earned — — ( 88,506 ) — 736,013 — 647,507

Issuance of common stock, net of offering costs 13,026,625 130,266 127,596,674 — ( 14,706,315 ) — 113,020,625

Stock contributed to charitable foundation 500,000 5,000 4,995,000 — — — 5,000,000

Reorganization of Richmond Mutual Bancorporation ( 100 ) ( 1 ) ( 12,750,999 ) 6,715,602 — — ( 6,035,398 )

Granting of restricted stock awards 449,086 4,491 ( 4,491 ) — — — —

Stock based compensation — — 810,881 — — — 810,881

Common stock dividends ($ 0.15 per share)

— — — ( 1,838,972 ) — — ( 1,838,972 )

Repurchase of common stock ( 781,951 ) $ ( 7,819 ) $ ( 9,073,335 ) $ — $ — $ — $ ( 9,081,154 )

Balances, December 31, 2020 13,193,760 131,938 124,246,425 78,290,113 ( 13,664,373 ) 3,708,605 192,712,708

Net income — — — 11,144,900 — — 11,144,900

Other comprehensive income — — — — — 4,369,349 4,369,349

Other comprehensive loss — — — — — ( 4,920,616 ) ( 4,920,616 )

ESOP shares earned — — 60,435 — 736,014 — 796,449

1 unchanged sentence

Stock based compensation — — 1,811,089 — — — 1,811,089

Exercise of stock options 1 26,072 260 127,313 — — — 127,573

Common stock dividends ($ 0.78 per share)

3 unchanged sentences

See Notes to Consolidated Financial Statements

1 The amount shown represents the number of shares issued in net-settled option transactions where some shares are netted from a portion of the exercises.

Richmond Mutual Bancorporation, Inc.

2 unchanged sentences

Operating Activities

Net income (loss) $ 10,017,651 $ ( 14,084,486 )

Net income $ 11,144,900 $ 10,017,651

Items not requiring (providing) cash

3 unchanged sentences

Stock based compensation 1,811,089 810,881

Investment securities (accretion) amortization, net 2,617,575 1,221,613

Investment securities amortization, net 2,526,033 2,617,575

Investment securities gains ( 55,799 ) ( 196,317 )

Gain on sale of loans and leases held for sale ( 2,450,083 ) ( 3,632,579 )

Loss on sale of real estate owned 1,278 —

Loss on sale of premises and equipment — 42,968

1 unchanged sentence

Amortization of mortgage-servicing rights 412,941 465,079

Multi-employer pension plan expense — 19,298,000

Common stock contributed to Foundation — 5,000,000

ESOP shares expense 796,449 647,507

Decrease (increase) in cash surrender value of life insurance 314,174 ( 121,691 )

Increase (decrease) in cash surrender value of life insurance ( 93,404 ) 314,174

Loans originated for sale ( 79,981,656 ) ( 105,499,317 )

3 unchanged sentences

Other assets ( 3,015,304 ) 1,025,766

Multi-employer pension plan liability ( 17,454,709 ) —

Other liabilities ( 4,071,259 ) 1,526,372

Interest payable 35,914 ( 74,656 )

Net cash provided by operating activities 16,574,558 10,097,020

Net cash (used in) provided by operating activities ( 9,646,061 ) 16,574,558

Investing Activities

16 unchanged sentences

Repayment of FHLB advances ( 199,000,000 ) ( 48,000,000 )

Repayment of other borrowings — ( 5,207,256 )

Proceeds from stock conversion — 113,020,625

Repurchase of common stock ( 11,913,648 ) ( 9,081,154 )

Proceeds from stock option exercises 127,573 —

Dividends paid ( 9,277,120 ) ( 1,838,972 )

30 unchanged sentences

First Bank 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 Counties in Ohio.

First Bank’s loans are generally secured by specific items of collateral including real property, consumer assets and business assets.

First Bank’s loans and leases are generally secured by specific items of collateral including real property, consumer assets and business assets.

When the word "loan" or "loans" is used in these financial statements it includes leases, unless the context indicates otherwise.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

11 unchanged sentences

Gains and losses, both realized and unrealized, are included in other income.

The Company accounts for recognition and presentation of other-than-temporary impairment in accordance with ASC 320-10.

The Company accounts for recognition and presentation of other-than-temporary impairment in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Code ("ASC") 320-10.

When the Company does not intend to sell a debt security, and it is more likely than not, the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss.

7 unchanged sentences

For classification purposes, REMICs are grouped with mortgage-backed securities.

Leases - Lease financing consists of direct financing leases.

Direct financing leases are carried at cost.

23 unchanged sentences

Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months.

Allowance for loan and lease losses is established as losses are estimated to have occurred through a provision for loan losses charged to income.

Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Allowance for Loan and Lease Losses - The allowance for loan and lease losses is established as losses are estimated to have occurred through a provision for loan and lease losses charged to income.

(When the word "loan" or "loans" is used in these financial statements it includes leases unless the context indicates otherwise.) Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Subsequent recoveries, if any, are credited to the allowance.

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As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously.

Premises and equipment are carried at cost, net of accumulated depreciation.

Mortgage Loans Held for Sale – Mortgage loans originated and intended for sale in the secondary market are recorded at the lower of cost or fair value on an individual loan basis.

Premises and Equipment - Premises and equipment are carried at cost, net of accumulated depreciation.

Depreciation is computed using the straight-line method based principally on the estimated useful lives of the assets.

1 unchanged sentence

Gains and losses on dispositions are included in current operations.

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank (FHLB) system.

Federal Home Loan Bank (FHLB) stock - FHLB stock is a required investment for institutions that are members of the FHLB system.

The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for impairment.

2 unchanged sentences

Revenue and expenses from operations and changes in the valuation allowance are included in net income or expense from foreclosed assets.

Mortgage-servicing rights on originated loans that have been sold are initially recorded at fair value.

Capitalized servicing rights, which include purchased servicing rights, are amortized in proportion to and over the period of estimated servicing revenues.

Mortgage Servicing Rights - Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value.

Capitalized mortgage servicing rights, which include purchased servicing rights, are amortized in proportion to and over the period of estimated servicing revenues.

Impairment of mortgage servicing rights is assessed based on the fair value of those rights.

3 unchanged sentences

The amount of impairment recognized is the amount by which the capitalized mortgage servicing rights for a stratum exceed their fair value.

Low Income Housing Tax Credits (LIHTC):

- The Company has invested in low income housing tax credits through funds that assist corporations in investing in limited partnerships and limited liability companies that own, develop and operate low income residential rental properties for purposes of qualifying for the Housing Tax credit.

Low Income Housing Tax Credits (LIHTC) - The Company has invested in LIHTC through funds that assist corporations in investing in limited partnerships and limited liability companies that own, develop and operate low-income residential rental properties for purposes of qualifying for the LIHTC.

These investments are accounted for under the proportional amortization method which recognizes the amortization of the investment in proportion to the tax credit and other tax benefits received.

2 unchanged sentences

No asset impairment was recognized during the years ended December 31, 2021 and 2020.

Revenue Recognition - Accounting Standards Codification 606, “Revenue from Contracts with Customers” (ASC 606) provides that an entity should recognize revenue to depict the transfer of promised

goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue Recognition - ASC 606, “Revenue from Contracts with Customers," provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The guidance enumerates five steps that entities should follow in achieving this core principle.

5 unchanged sentences

Revenue is recognized when the performance obligation is completed, which is generally after a transaction is completed or monthly for account maintenance services.

Income tax in the consolidated statements of operations includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes.

Income Tax - Income tax in the consolidated statements of operations includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes.

The Company files consolidated income tax returns with its parent and subsidiary.

Uncertain Tax Positions - The Company has adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes , concerning the accounting and disclosures for uncertain tax positions, previously deferred by ASC 740-10-65.

Uncertain Tax Positions - The Company has adopted the provisions of ASC 740, Income Taxes , concerning the accounting and disclosures for uncertain tax positions, previously deferred by ASC 740-10-65.

As part of the implementation of this standard, management evaluated its current tax positions and determined the adoption of this standard had no material impact on the consolidated financial statements of the Company.

1 unchanged sentence

All share-based payments are to be recognized as expense, based upon their fair values, in the financial statements over the vesting period of the awards.

The Company has recorded approximately $ 323,000 in compensation expense relating to vesting of stock options, which are recognized as they occur, for the year ended December 31, 2020.

The Company has recorded approximately $ 728,000 and $ 323,000 in compensation expense relating to vesting of stock options, which are recognized as they occur, for the year ended December 31, 2021 and 2020, respectively.

Advertising Expense - The Company's advertising costs are expensed as incurred.

COVID-19 - On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which provides relief from certain accounting and financial reporting requirements under U.S.

Section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for troubled debt restructurings ("TDRs") under ASC 310-40 for loan modifications related to the novel coronavirus disease of 2019 (“COVID-19”) pandemic.

Section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for TDRs under ASC 310-40 for loan modifications related to the novel coronavirus disease of 2019 (“COVID-19”) pandemic.

In addition, on April 7, 2020, a group of banking agencies issued an interagency statement (“Interagency Statement”) for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs.

1 unchanged sentence

Section 4013 of the CARES Act permits the suspension of ASC 310-40 for loan modifications that are made by financial institutions in response to the COVID-19 pandemic if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate on the loan.

The Interagency Statement indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government.

Accordingly, any loan modification made in response to the

COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR.

(2) the modification or deferral program is mandated by the federal government or a state government.

Accordingly, any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR.

The Company adopted this guidance effective March 27, 2020.

8 unchanged sentences

The Company has taken advantage of this provision to extend certain payment modifications to loan customers in need.

As of December 31, 2020, the Company has 48 loans outstanding for $ 54.7 million that were modified during 2020 under the CARES Act guidance.

As of December 31, 2021, the Company had no modified loans outstanding under the CARES Act guidance.

The CARES Act also approved the Paycheck Protection Program ("PPP"), administered by the Small Business Administration ("SBA") with funding provided by financial institutions.

The 2021 Consolidated Appropriations Act approved a new round of PPP loans in 2021.

The PPP provides loans to eligible businesses through financial institutions like the Company, with loans being eligible for forgiveness of some or all of the principal amount by the SBA if the borrower meets certain requirements.

The SBA guarantees repayment of the loans to the Company if the borrower's loan is not forgiven and is then not repaid by the member.

The Company earns a 1% interest rate on PPP loans, plus a processing fee from the SBA for processing and originating a loan.

The company originated approximately $ 64.9 million in PPP loans during 2020, of which approximately $ 43.3 are still outstanding at December 31, 2020.

The PPP provides loans to eligible businesses through financial institutions like First Bank, with loans being eligible for forgiveness of some or all of the principal amount by the SBA if the borrower meets certain requirements.

The SBA guarantees repayment of the loans to First Bank if the borrower's loan is not forgiven and is then not repaid by the member.

The Bank earns a 1% interest rate on PPP loans, plus a processing fee from the SBA for processing and originating a loan.

The Bank originated approximately $ 38.2 million in PPP loans during 2021, of which approximately $ 9.4 million are still outstanding at December 31, 2021.

The JOBS Act, which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets.

3 unchanged sentences

The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

In June 2016, the FASB issued ASU No.

In June 2016, the FASB issued Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments-Credit Losses (Topic 326).

4 unchanged sentences

Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an

organization’s portfolio.

These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

1 unchanged sentence

2019-05, “Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief” (ASU 2019-05).

This ASU provides transition relief for entities adopting the FASB’s credit losses standard, ASU 2016-13 and allows companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for certain financial instruments.

Targeted Transition Relief".

This ASU provides transition relief for entities adopting the FASB’s credit losses standard, ASU No.

2016-13 and allows companies to irrevocably elect, upon adoption of ASU No.

2016-13, the fair value option for certain financial instruments.

In April 2019, the FASB issued ASU No.

2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (ASU 2019-04).

This ASU clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments.

2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments".

2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments.

In October 2019, the FASB voted to extend the implementation of ASU No.

1 unchanged sentence

As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

The Company is evaluating its current expected loss methodology on the loan and investment portfolios to identify the necessary modifications in accordance with this standard.

The Company has not quantified the impact of these ASUs.

The Company is in the early stages of evaluating its historical data available for use in adoption of the new credit loss standards.

Additionally, we are forming an implementation team that will meet on a regular basis to coordinate efforts of our accounting, credit and operations areas.

We will continue to evaluate methodologies available to us under the new standard.

The Company is evaluating its current expected loss methodology on the loan and investment portfolios to identify the necessary modifications in accordance with ASU 2016-13.

A CECL implementation team consisting of management from multiple areas of the Company have been involved in evaluating loss estimation methods and application of these methods to the specific segments and subsegments of the loan portfolio.

Management has been actively monitoring FASB developments and evaluating the use of the different methods allowed.

Due to continuing development of our methodology, additional time is required to quantify the affect on the Company’s Consolidated Financial Statements.

The Company continues to refine its modeling and will finalize a method or methods of adoption in time for the effective date.

In March 2020, the FASB issued ASU No.

4 unchanged sentences

This ASU is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.

In October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-08, “Receivables – Nonrefundable Fees and Other Costs” (“ASU 2020-08”).

ASU 2020-08 clarifies that the Company should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period.

ASU 2020-08 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company does not expect the adoption of ASU 2020-08 to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

The Company does not expect the adoption of ASU No.

2020-04 to have a material impact on its consolidated financial statements.

In October 2020, the FASB issued ASU No.

2020-08, “Receivables – Nonrefundable Fees and Other Costs".

2020-08 clarifies that the Company should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period.

2020-08 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company adopted ASU No.

2020-08 on January 1, 2021.

The adoption of ASU No.

2020-08 did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12 provides that state franchise or similar taxes that are based, at least in part on an entity’s income, be included in an entity’s income tax recognized as income-based taxes.

2019-12 provides that state franchise or similar taxes that are based, at least in part on an entity’s income, be included in an entity’s income tax recognized as income-based taxes.

The ASU further clarifies that the effect of any change in tax laws or rates used in the computation of the annual effective tax rate are required to be reflected in the first interim period that includes the enactment date of the legislation.

Technical changes to eliminate exceptions to Topic 740 related to intra-period tax allocations for entities with losses from continuing operations, deferred tax liabilities related to change in ownership of foreign entities, and interim-period tax allocations for businesses with losses where the losses are expected to be realized.

The amendments in ASU 2019-12 are effective for public business entities with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company does not expect ASU 2019-12 to have a material impact on its consolidated financial statements.

The amendments in ASU No.

2019-12 are effective for public business entities with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company adopted ASU No.

2019-12 on January 1, 2021.

The adoption of ASU No.

2019-12 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No.

2 unchanged sentences

This ASU contains some technical adjustments related to the fair value disclosure requirements of public companies.

Included in this ASU is the additional disclosure requirement of unrealized gains and losses for the period in recurring level 3 fair value disclosures and the range and weighted average of significant unobservable inputs, among other

technical changes.

The Company adopted ASU 2018-13 on January 1, 2020.

The adoption of ASU 2018-13 did not have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU No.

2018-13 on January 1, 2020.

The adoption of ASU No.

2018-13 did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No.

9 unchanged sentences

Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current GAAP (Topic 842, Leases).

The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met.

The amendments in ASU No.

2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met.

Restriction on Cash and Due From Banks

2 unchanged sentences

The Federal Reserve Board announced on March 15, 2020 the reduction of the reserve requirement ratios to zero percent effective March 26, 2020.

This action eliminated the restriction on a portion of the Company's cash and cash equivalents for December 31, 2020.

This action eliminated the restriction on the Company's cash and cash equivalents for December 31, 2021.

Investment Securities

5 unchanged sentences

Mortgage-backed securities - government-sponsored enterprises (GSE) residential 164,629 712 2,831 162,510

Corporate obligations 4,250 2 28 4,224

Equity securities 13 — — 13

5 unchanged sentences

Available for sale

treasury securities $ 2,997 $ — $ 6 $ 2,991

SBA Pools $ 16,283 $ 111 $ 94 $ 16,300

23 unchanged sentences

Gross gains of $ 56,000 and $ 260,000 resulting from sales of available-for-sale securities were realized for the years ended December 31, 2021 and 2020, respectively.

Gross losses of $ 63,000 and $ 86,000 were realized from sales of available-for-sale securities for the years ended December 31, 2020 and 2019, respectively.

There were no gross losses realized from sales of available-for-sale securities for the year ended December 31, 2021, and $ 63,000 of gross losses realized for the year ended December 31, 2020.

Certain investments in debt securities are reported in the consolidated financial statements and notes at an amount less than their historical cost.

14 unchanged sentences

Mortgage-backed securities – GSE residential 111,104 2,576 6,523 255 117,627 2,831

Corporate obligations 2,972 28 — — 2,972 28

Total available-for-sale 205,875 4,003 17,546 535 223,421 4,538

9 unchanged sentences

Available-for-sale

treasury securities $ 2,991 $ 6 $ — $ — $ 2,991 $ 6

SBA Pools $ 5,213 $ 46 $ 5,687 $ 48 $ 10,900 $ 94

6 unchanged sentences

Total temporarily impaired securities $ 38,928 $ 237 $ 6,371 $ 50 $ 45,299 $ 287

Federal Agencies and U.S.

Treasury Securities

Federal Agency Obligations

The unrealized losses on the Company’s investments in direct obligations of U.S.

federal agencies and treasury securities were caused by interest rate changes.

federal agencies were caused by interest rate changes.

The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.

4 unchanged sentences

Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2021.

State and Municipal Obligations

State, Municipal, and Corporate Obligations

The unrealized losses on the Company’s investments in securities of state and municipal obligations were caused by interest rate changes and illiquidity.

2 unchanged sentences

Loans, Leases and Allowance

Categories of loans at December 31, 2020 and 2019 include:

Categories of loans and leases at December 31, 2021 and 2020 include:

Commercial mortgage $ 261,202 $ 247,564

4 unchanged sentences

Home equity lines of credit 7,146 5,982

Direct financing leases 117,171 109,592

Leases 126,762 117,171

Consumer 15,905 13,257

3 unchanged sentences

$ 832,846 $ 734,413

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2020 and 2019:

Mortgage Commercial

Industrial Residential

Mortgage Leases Consumer Total

Allowance for loan losses:

The following tables present the balance in the allowance for loan and lease losses and the recorded investment in loans and leases based on portfolio segment and impairment method as of December 31, 2021 and 2020:

Mortgage Commercial and Industrial Construction and Development Multi-Family Residential Mortgage Home Equity Leases Consumer Total

Allowance for loan and lease losses:

Balance, January 1 $ 4,628 $ 2,271 $ 1,068 $ 1,039 $ 323 $ 18 $ 1,054 $ 185 $ 10,586

4 unchanged sentences

Individually evaluated for impairment $ — $ 299 $ 750 $ — $ — $ — $ — $ — $ 1,049

$ 150 $ 52 $ — $ — $ — $ 202

Collectively evaluated for impairment 4,742 1,340 1,536 1,875 263 29 1,079 195 11,059

Balance, December 31 $ 4,742 $ 1,639 $ 2,286 $ 1,875 $ 263 $ 29 $ 1,079 $ 195 $ 12,108

Loans and Leases:

Individually evaluated for impairment $ 128 $ 995 $ 4,900 $ — $ 119 $ — $ — $ — $ 6,142

$ 701 $ 493 $ 269 $ — $ — $ 1,463

Collectively evaluated for impairment 261,074 98,687 88,778 107,421 134,036 7,146 126,762 15,905 839,809

404,278 106,794 101,380 117,171 17,249 746,872

Ending balance:

December 31 $ 261,202 $ 99,682 $ 93,678 $ 107,421 $ 134,155 $ 7,146 $ 126,762 $ 15,905 $ 845,951

Mortgage Commercial

Industrial Residential

Mortgage Leases Consumer Total

Allowance for loan losses:

Mortgage Commercial and Industrial Construction and Development Multi-Family Residential Mortgage Home Equity Leases Consumer Total

Allowance for loan and lease losses:

Balance, January 1 2,930 1,758 614 779 441 5 426 136 $ 7,089

4 unchanged sentences

Individually evaluated for impairment $ — $ 202 $ — $ — $ — $ — $ — $ — $ 202

$ — $ 202 $ — $ — $ — $ 202

Collectively evaluated for impairment 4,628 2,069 1,068 1,039 323 18 1,054 185 10,384

4,564 1,650 109 426 138 6,887

Balance, December 31 $ 4,628 $ 2,271 $ 1,068 $ 1,039 $ 323 $ 18 $ 1,054 $ 185 $ 10,586

Loans and Leases:

Individually evaluated for impairment $ 76 $ 1,118 $ — $ — $ 269 $ — $ — $ — $ 1,463

48 unchanged sentences

In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial Mortgage including Construction

Commercial Mortgage including Construction and Development

Loans in this segment include commercial loans, commercial construction loans, and multi-family loans.

12 unchanged sentences

Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained.

These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to

interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential, Brokered and Consumer

11 unchanged sentences

The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2021 and 2020:

Mortgage Commercial

Industrial Construction

Development Multi-

Family Residential

Mortgage Home

Equity Leases Consumer Total

1-4 Pass $ 239,055 $ 114,411 $ 53,524 $ 55,998 $ 123,963 $ 5,916 $ 117,136 $ 13,256 $ 723,259

5 Special Mention 6,976 5,542 4,900 — — — — — 17,418

6 Substandard 1,533 2,878 — — 3,145 66 15 1 7,638

7 Doubtful — — — — — — 20 20

8 Loss — — — — — — — — —

$ 247,564 $ 122,831 $ 58,424 $ 55,998 $ 127,108 $ 5,982 $ 117,171 $ 13,257 $ 748,335

Mortgage Commercial

Industrial Construction

Development Multi-

Family Residential

Mortgage Home

Equity Leases Consumer Total

1-4 Pass $ 220,240 $ 75,814 $ 53,426 $ 66,002 $ 127,888 $ 6,871 $ 109,424 $ 13,519 $ 673,184

5 Special Mention 7,489 5,731 — — 189 64 — — 13,473

6 Substandard 1,681 3,004 — — 3,217 61 94 15 8,072

7 Doubtful — — — — — — 74 — 74

8 Loss — — — — — — — — —

$ 229,410 $ 84,549 $ 53,426 $ 66,002 $ 131,294 $ 6,996 $ 109,592 $ 13,534 $ 694,803

Pass Special Mention Substandard Doubtful Loss Total

December 31, 2021

Commercial mortgage $ 256,043 $ 5,031 $ 128 $ — $ — $ 261,202

Commercial and industrial 91,082 7,191 1,409 — — 99,682

Construction and development 88,778 — 4,900 — — 93,678

Multi-family 107,421 — — — — 107,421

Residential mortgage 132,223 — 1,932 — — 134,155

Home equity lines of credit 7,097 — 49 — — 7,146

Leases 126,707 — 13 42 — 126,762

Consumer 15,883 — 22 — — 15,905

Total $ 825,234 $ 12,222 $ 8,453 $ 42 $ — $ 845,951

Pass Special Mention Substandard Doubtful Loss Total

December 31, 2020

Commercial mortgage $ 239,055 $ 6,976 $ 1,533 $ — $ — $ 247,564

Commercial and industrial 114,411 5,542 2,878 — — 122,831

Construction and development 53,524 4,900 — — — 58,424

Multi-family 55,998 — — — — 55,998

Residential mortgage 121,976 — 3,145 — — 125,121

Home equity lines of credit 5,916 — 66 — — 5,982

Leases 117,136 — 15 20 — 117,171

Consumer 13,256 — 1 — — 13,257

Total $ 721,272 $ 17,418 $ 7,638 $ 20 $ — $ 746,348

The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis.

10 unchanged sentences

Residential mortgage 710 174 1,932 2,816 131,339 134,155 1,813

Home equity 138 15 25 178 5,804 5,982 25

Home equity lines of credit 131 — 12 143 7,003 7,146 12

Leases 144 82 — 226 126,536 126,762 —

10 unchanged sentences

Residential mortgage 1,913 243 2,680 4,836 120,285 125,121 2,554

Home equity 189 36 15 240 6,756 6,996 15

Home equity lines of credit 138 15 25 178 5,804 5,982 25

Leases 234 65 — 299 116,872 117,171 —

13 unchanged sentences

Loans with a specific valuation allowance

Commercial mortgage $ 625 $ 625 $ 150 $ 561 $ 28

Commercial and industrial $ 628 $ 658 $ 299 $ 653 $ 31

Construction and development 4,900 4,900 750 3,920 —

$ 5,528 $ 5,558 $ 1,049 $ 4,573 $ 31

2 unchanged sentences

Commercial and industrial 995 1,224 299 1,042 33

Construction and development 4,900 4,900 750 3,920 —

Residential mortgage 119 244 — 172 7

21 unchanged sentences

Commercial and industrial 995 493

Construction and development 4,900 —

Residential mortgage 119 214

$ 6,184 $ 803

During 2020 and 2019, there were no newly classified troubled debt restructured loans.

At December 31, 2020 and 2019, the balance of real estate owned includes $ 32,000 and $ 0 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

During 2021 and 2020, there were no newly classified TDRs.

At December 31, 2021 and 2020, the balance of real estate owned included $ 27,000 and $ 32,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At December 31, 2021 and 2020, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceeds were in process was $ 885,000 and $ 283,000 , respectively.

The following lists the components of the net investment in direct financing leases:

The following lists the components of the net investment in leases:

Total minimum lease payments to be received $ 140,214 $ 129,114

2 unchanged sentences

Unearned income ( 20,487 ) ( 18,296 )

Net investment in direct financing leases $ 117,171 $ 109,592

The amount of leases serviced by First Bank for the benefit of others was approximately $ 86,000 and $ 715,000 at December 31, 2020 and 2019, respectively.

Net investment in leases $ 126,762 $ 117,171

The amount of leases serviced by First Bank for the benefit of others totaled approximately $ 0 and $ 86,000 at December 31, 2021 and 2020, respectively.

Additionally, certain leases have been sold with partial recourse.

First Bank estimates and records its obligation based upon historical loss percentages.

At December 31, 2020 and 2019, First Bank has recorded a recourse obligation on leases sold with recourse of $ 0 , and has a maximum exposure of $ 86,000 and $ 411,000 , respectively, for these leases.

At both December 31, 2021 and 2020, First Bank has recorded a recourse obligation on leases sold with recourse of $ 0 , and has a maximum exposure of $ 0 and $ 86,000 , respectively, for these leases.

The following summarizes the future minimum lease payments receivable in subsequent years:

30 unchanged sentences

Brokered certificates 121,751 23,275

Certificates and other time deposits of $250,000 or more

Certificates and other time deposits greater than $250,000

61,296 48,968

15 unchanged sentences

The Bank has an available line of credit with the FHLB totaling $ 10,000,000 .

The line of credit expires March 2021;

The line of credit expires April 2022;

however, it is renewed annually, and bears interest at a rate equal to the current variable advance rate.

6 unchanged sentences

State ( 62 ) 218

Total income tax expense (benefit) $ 2,477 $ ( 5,292 )

Reconciliation of federal statutory to actual tax expense (benefit)

Total income tax expense $ 2,435 $ 2,477

Reconciliation of federal statutory to actual tax expense

Federal statutory income tax at 21% $ 2,852 $ 2,624

3 unchanged sentences

Low income housing tax credit ( 136 ) ( 111 )

Other 76 ( 65 )

Actual tax expense (benefit) $ 2,477 $ ( 5,292 )

Actual tax expense $ 2,435 $ 2,477

A cumulative deferred tax asset is included in other assets.

14 unchanged sentences

Mortgage-servicing rights 402 405

Other 349 212

Total liabilities 1,119 1,979

Net deferred tax asset $ 5,894 $ 6,855

As of December 31, 2020, the Company had approximately $ 4,400,000 of federal charitable contribution carryforwards, which will begin to expire in 2024.

As of December 31, 2021, the Company had approximately $ 4,444,000 of federal charitable contribution carryforwards, which will begin to expire in 2024, a state net operating loss carryforward of approximately $ 5,699,000 , which will begin to expire in 2036, and a federal net operating loss carryforward of approximately $ 4,289,000 with no expiration.

At December 31, 2021 and 2020, the Company determined that it is more likely than not that the deferred tax assets will be realized, largely based on available tax planning strategies and its projections of future taxable income.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), included in stockholder’s equity, are as follows:

The components of accumulated other comprehensive income (loss), included in stockholders' equity, are as follows:

Net unrealized gain (loss) on available-for-sale securities $ ( 1,534 ) $ 4,694

15 unchanged sentences

Standby letters of credit are conditional commitments issued by the subsidiary to guarantee the performance of the customer to a third party.

The Company is also subject to other claims and lawsuits which arise primarily in the ordinary course of business.

None of these matters are expected to have a material adverse effect on the Company's financial position.

Benefit Plans

2 unchanged sentences

The Company’s expense for the plan was $ 226,000 and $ 204,000 for the years ended December 31, 2021 and 2020, respectively.

The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions ("Pentegra Plan"), an industry-wide, tax-qualified defined-benefit pension plan.

The Company participated in the Pentegra Defined Benefit Plan for Financial Institutions (the "Pentegra Plan"), an industry-wide, tax-qualified defined-benefit pension plan during 2021.

The Pentegra Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333.

8 unchanged sentences

Total contributions by all employer participants in the Pentegra Plan, as reported on Form 5500, totaled $ 213,914,000 and $ 237,376,000 , respectively, for the plan years ended June 30, 2021 and 2020.

The Company’s contributions to the Pentegra Plan totaled $ 722,000 and $ 2,230,000 , respectively, for the years ended December 31, 2020 and 2019 and do not represent more than 5 % of the total contributions made by all employer participants in the Pentegra Plan.

The Company is in process of terminating its participation in the Pentegra Plan and has accrued approximately $ 17,455,000 for this expense.

This accrual is subject to change upon final termination.

The Company’s contributions to the Pentegra Plan totaled $ 0 and $ 722,000 , respectively, for the years ended December 31, 2021 and 2020.

The Company terminated its participation in the Pentegra Plan effective December 23, 2021, and had accrued approximately $ 17,455,000 for this expense as of December 23, 2021.

An additional expense of $ 665,000 was made in December 2021 in connection with the final termination of the DB Plan.

Employee Stock Ownership Plan

5 unchanged sentences

Unearned ESOP shares, which are not vested, are excluded from the computation of average shares outstanding for earnings per share calculation.

Accordingly, $ 14,706,000 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity.

Accordingly, $ 12,928,359 and $ 13,664,373 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at December 31, 2021 and December 31, 2020, respectively.

Shares are released to participants proportionately as the loan is repaid.

1 unchanged sentence

December 31, 2021 December 31, 2020

Allocated ESOP shares 76,669 22,544

Earned ESOP shares 130,775 76,669

Unearned ESOP shares 951,355 1,005,461

1 unchanged sentence

Quoted per share price $ 16.05 $ 13.66

Fair value of allocated shares $ 1,047 $ 360

Fair value of unearned shares $ 13,735 $ 16,911

Fair value of earned shares (in thousands) $ 2,099 $ 1,047

Fair value of unearned shares (in thousands) $ 15,269 $ 13,735

Richmond Mutual Bancorporation, Inc.

2020 Equity Incentive Plan

On September 15, 2020, the Company's stockholders approved the Richmond Mutual Bancorporation, Inc.

2020 Equity Incentive Plan ("2020 EIP") which provides for the grant to eligible participants of up to (i) 1,352,662 shares of Company common stock to be issued upon the exercise of stock options and stock appreciation rights and (ii) 541,065 shares of Company common stock to participants as restricted stock awards (which may be in the form of shares of common stock or share units giving the participant the right to receive shares of common stock at a specified future date).

Restricted Stock Awards.

On September 15, 2020 the Company established the Richmond Mutual Bancorporation, Inc.

2020 Equity Incentive Plan with 541,065 common shares authorized.

From this plan, the Company awarded employees and outside directors 449,086 common shares with a grant date fair value of $ 10.53 per share (total fair value of $ 4.7 million at issuance) on October 1, 2020.

These common shares vest over a five-year period with the first vesting occurring in 2021.

Forfeited shares may be awarded to other eligible recipients in future grants until the plan termination date in 2030.

Total compensation cost recognized in the income statement for restricted stock awards during 2020 was $ 488,000 and the related tax benefit recognized was $ 102,000 .

On October 1, 2020, the Company awarded 449,086 shares of common stock under the 2020 EIP with a grant date fair value of $ 10.53 per share (total fair value of $ 4.7 million at issuance) to eligible participants.

On April 1, 2021, the Company awarded an additional 4,000 shares of common stock under the 2020 EIP with a grant date fair value of $ 13.86 (total fair value of $ 55,000 at issuance) to eligible participants.

These awards vest in five equal annual installments with the first vesting occurring on June 30, 2021.

Forfeited shares may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030.

The following table summarizes the restricted stock awards activity in the 2020 EIP for the year ended December 31, 2021.

Year Ended December 31, 2021

Number of Restricted Shares Weighted Average Grant Date Fair Value

Non-vested, beginning of year 431,501 $ 10.53

Granted 4,000 13.86

Vested ( 87,106 ) 10.56

Forfeited — —

Non-vested, end of year 348,395 10.56

Total compensation cost recognized in the income statement for restricted stock awards during 2021 and 2020 was $ 1,083,000 and $ 488,000 , respectively, and the related tax benefit recognized was $ 227,000 and $ 102,000 , respectively.

As of December 31, 2021, unrecognized compensation expense related to restricted stock awards was $ 3.2 million.

Stock Option Plan.

The Richmond Mutual Bancorporation, Inc.

2020 Equity Incentive Plan also authorized the granting of up to 1,352,662 stock options.

From this plan the Company granted employees and outside directors 1,095,657 stock options with an exercise price of $ 10.53 per share.

These awarded stock options vest over a five-year period with the first vesting occurring in 2021.

Forfeited shares may be awarded to other eligible recipients in future grants until the plan termination date in 2030.

The following table summarizes the stock option activity in the 2020 Equity Incentive Plan during the year ended December 31, 2020.

On October 1, 2020, the Company awarded options to purchase 1,095,657 shares of common stock under the 2020 EIP with an exercise price $ 10.53 per share, the fair value of a share of the Company's common stock on the date of the grant, to eligible participants.

On April 1, 2021, the Company awarded options to purchase 8,000 shares of common stock under the 2020 EIP with an exercise price of $ 13.86 per share, the fair value of the Company's common stock on the date of the grant, to eligible participants.

The options awarded vest in five equal annual installments with the first vesting occurring on June 30, 2021.

Forfeited options may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030.

A net-settle stock option exercise may occur by the option holder by withholding the exercise price from the number of shares that would otherwise be delivered upon a cash exercise of the option.

The withheld shares are canceled and no longer available for future grant.

The following table summarizes the stock option activity in the 2020 EIP during the year ended December 31, 2021.

Number of Shares Weighted-Average Exercise Price

5 unchanged sentences

Exercisable at end of year 200,503 $ 10.56

40,580 $ 10.53

(1) As a result of the acceleration of option vesting upon the death of a recipient.

The fair value of options granted is estimated on the date of grant using a Black Scholes model with the following assumptions:

December 31, 2020

April 1, 2021

Dividend yields 1.90 %

2 unchanged sentences

Expected life of options 6.1 years

A summary of the status of the Company stock option shares as of December 31, 2020 are presented below.

A summary of the status of the Company stock option shares as of December 31, 2021 is presented below.

Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Non-vested, end of year 850,458 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements during 2020 was $ 323,000 and the related tax benefit recognized was $ 48,000 .

Total compensation cost recognized in the income statement for option-based payment arrangements during 2021 and 2020 was $ 728,000 and $ 323,000 , and the related tax benefit recognized was $ 80,000 and $ 48,000 , respectively.

As of December 31, 2021, unrecognized compensation expense related to the stock option awards was $ 2.2 million.

Earnings Per Share

Basic EPS is computed by dividing net income allocated to common stock by the weighted average number of common shares outstanding during the period which excludes the participating securities.

Basic earnings per share ("EPS") is computed by dividing net income allocated to common stock by the weighted average number of common shares outstanding during the period which excludes the participating securities.

Diluted EPS includes the dilutive effect of additional potential common shares from stock compensation awards, but excludes awards considered participating securities.

ESOP shares are not considered outstanding for EPS until they are earned.

ESOP shares are not

considered outstanding for EPS until they are earned.

The following table presents the computation of basic and diluted EPS for the periods indicated (in thousands, except for share and per share data):

For the Period

For the Year Ended July 2, 2019 to

For the Year Ended For the Year Ended

December 31, 2021 December 31, 2020

Net income (loss) $ 10,018 $ ( 15,806 )

Net income $ 11,145 $ 10,018

Shares outstanding for Basic EPS:

Average shares outstanding 12,731,735 13,414,367

average RSA shares not vested 111,107 —

average restricted stock award shares not vested 390,365 111,107

average unearned ESOP Shares 984,893 1,039,056

2 unchanged sentences

Shares outstanding for Diluted EPS 11,632,332 12,286,437

Basic Earnings (Loss) Per Share $ 0.82 $ ( 1.27 )

Diluted Earnings (Loss) Per Share $ 0.82 $ ( 1.27 )

Basic EPS $ 0.98 $ 0.82

Diluted EPS $ 0.96 $ 0.82

Dividend and Capital Restrictions

12 unchanged sentences

As of December 31, 2021, the most recent notification from the regulators categorized First Bank as well-capitalized under the regulatory framework for prompt corrective action.

To be categorized as well-capitalized, First Bank must maintain minimum total risk-based capital, Tier I risk-based capital, common equity Tier I risk-based capital and Tier I leverage ratios as set forth in the table.

To be categorized as well-

capitalized, First Bank must maintain minimum total risk-based capital, Tier I risk-based capital, common equity Tier I risk-based capital and Tier I leverage ratios as set forth in the table.

There are no conditions or events since that notification that management believes have changed First Bank’s category.

47 unchanged sentences

Mortgage-backed securities - GSE residential 162,510 — 162,510 —

Corporate obligations 4,224 — 4,224 —

Equity securities 13 13 — —

35 unchanged sentences

For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Collateral-Dependent Impaired Loans, Net of ALLL

Collateral-Dependent Impaired Loans and Leases, Net of Allowance for Loan and Lease Losses

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell.

34 unchanged sentences

Held-to-maturity securities 9,041 — 9,186 —

Loans held for sale 558 — — 555

Loans and leases receivable, net 832,846 — — 833,975

13 unchanged sentences

Held-to-maturity securities 12,225 — 12,520 —

Loans held for sale 1,987 — — 2,021

Loans and leases receivable, net 734,413 — — 749,130

20 unchanged sentences

Condensed Financial Information (Parent Company Only)

Presented below is condensed financial information as to financial position, results of operations and cash flows of the Company:

Presented below is condensed financial information as to financial position, results of operations and cash flows of the Company (in thousands):

Condensed Balance Sheets

9 unchanged sentences

Expenses - other expenses 3,329 2,140

Income (loss) before income taxes and equity in undistributed net income (loss) of subsidiaries ( 1,472 ) ( 9,080 )

Loss before income taxes and equity in undistributed net income (loss) of subsidiaries ( 2,865 ) ( 1,472 )

Income tax benefit ( 639 ) ( 372 )

Income (loss) before equity in undistributed net income (loss) of subsidiary ( 1,100 ) ( 7,033 )

Loss before equity in undistributed net income (loss) of subsidiary ( 2,226 ) ( 1,100 )

Equity in undistributed net income (loss) of subsidiaries 13,371 11,118

Net Income (Loss) $ 10,018 $ ( 14,084 )

Comprehensive Income (Loss) $ 14,387 $ ( 10,367 )

Net Income $ 11,145 $ 10,018

Comprehensive Income $ 6,224 $ 14,387

Condensed Statements of Cash Flows

Operating Activities

Net income (loss) $ 10,018 $ ( 14,084 )

Net income $ 11,145 $ 10,018

Undistributed equity of subsidiaries ( 13,371 ) ( 11,118 )

Common Stock contributed to Foundation — 5,000

ESOP expense 796 648

2 unchanged sentences

Net cash used in operating activities ( 128 ) ( 179 )

Investing Activities

Dividends received from subsidiaries 10,000 —

Net cash provided by investing activities 10,000 —

Financing Activities

Capital contribution to First Bank Richmond — ( 63,864 )

Proceeds from stock conversion — 113,021

Dividends paid ( 9,277 ) ( 1,839 )

Repurchase of common stock ( 11,914 ) ( 9,081 )

Net cash provided by (used in) financing activities ( 10,920 ) 49,157

Proceeds from stock option exercises 128 —

Net cash used in financing activities ( 21,063 ) ( 10,920 )

Net Change in Cash and Cash Equivalents ( 11,191 ) ( 11,099 )

12 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data