What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-03-30 · 138 added, 116 removed, 1118 unchanged (19% of the section changed)

4 unchanged sentences

Richmond, Indiana

Opinion on the Financial Statements

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

(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.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Richmond Mutual Bancorporation (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), stockholders’ equity, and cash flows 1F for each of the years then ended, 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, 2022 and 2021, 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

12 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

/s/ FORVIS, LLP (Formerly BKD, LLP)

We have served as the Company’s auditor since at least 1982;

however, an earlier year cannot be reliably determined.

however, an earlier year cannot be determined.

Indianapolis, Indiana

7 unchanged sentences

Cash and cash equivalents 15,922,093 23,038,145

Interest-bearing time deposits 490,000 —

Investment securities - available for sale 284,899,665 357,537,845

17 unchanged sentences

Interest payable 1,369,351 258,032

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

Other liabilities 8,451,521 6,193,944

9 unchanged sentences

Unearned employee stock ownership plan (ESOP) ( 12,193,043 ) ( 12,928,359 )

Accumulated other comprehensive gain (loss) ( 1,212,011 ) 3,708,605

Accumulated other comprehensive loss ( 49,751,175 ) ( 1,212,011 )

Total stockholders' equity 132,978,303 180,481,335

2 unchanged sentences

Richmond Mutual Bancorporation, Inc.

Consolidated Statements of Income (Loss)

Consolidated Statements of Income

Years Ended December 31, 2022 and 2021

16 unchanged sentences

Net gains on securities (includes $ 0 and $ 55,799 , related to accumulated other comprehensive loss reclassifications)

55,799 196,317

Net gains on loan and lease sales 639,274 2,450,083

23 unchanged sentences

Richmond Mutual Bancorporation, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

Years Ended December 31, 2022 and 2021

Net Income $ 12,965,439 $ 11,144,900

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

Other Comprehensive Loss

Unrealized loss on available-for-sale securities, net of tax benefit of $ 12,902,816 and $ 1,296,294

( 48,539,164 ) ( 4,876,535 )

1 unchanged sentence

( 48,539,164 ) ( 4,920,616 )

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

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

Comprehensive (Loss) Income $ ( 35,573,725 ) $ 6,224,284

See Notes to Consolidated Financial Statements

11 unchanged sentences

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)

5 unchanged sentences

ESOP shares earned — — 63,430 — 735,316 — 798,746

Granting of restricted stock awards 4,000 40 ( 40 ) — — — —

Stock based compensation — — 1,538,737 — — — 1,538,737

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

Common stock dividends ($ 0.40 per share)

16 unchanged sentences

Investment securities gains — ( 55,799 )

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

Net gains on loan and lease sales ( 639,274 ) ( 2,450,083 )

Loss on sale of real estate owned 10,882 1,278

Loss on sale of premises and equipment — 42,968

Accretion of loan origination fees ( 1,578,653 ) ( 3,138,208 )

1 unchanged sentence

ESOP shares expense 798,746 796,449

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

Increase in cash surrender value of life insurance ( 55,359 ) ( 93,404 )

Loans originated for sale ( 28,749,971 ) ( 79,981,656 )

6 unchanged sentences

Interest payable 1,111,319 35,914

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

Net cash provided by (used in) operating activities 18,160,168 ( 9,646,061 )

Investing Activities

Net change in interest-bearing time deposits ( 490,000 ) —

Purchases of securities available for sale ( 22,532,827 ) ( 188,839,863 )

5 unchanged sentences

Purchases of premises and equipment ( 385,099 ) ( 579,452 )

Proceeds from sale of premises and equipment — 31,000

Purchase of FHLB stock ( 942,800 ) ( 1,449,200 )

Change in FHLB stock 45,100 ( 942,800 )

Net cash used in investing activities ( 116,123,966 ) ( 212,189,567 )

17 unchanged sentences

Transfers from loans to other real estate owned 115,965 27,000

Right of use assets obtained in exchange for new operating lease liabilities 504,682 —

See Notes to Consolidated Financial Statements

2 unchanged sentences

December 31, 2022 and 2021

(Table Dollar Amounts in Thousands)

(Table Dollar Amounts in Thousands, Except Per Share Amounts)

Nature of Operations and Summary of Significant Accounting Policies

1 unchanged sentence

RMB-Delaware, which owned 100% of First Bank Richmond (the “Bank” or “First Bank”), was succeeded by Richmond Mutual Bancorporation, Inc., a new Maryland corporation (the "Company”).

As part of the corporate reorganization, First Mutual of Richmond, Inc.’s (“MHC”) ownership interest in RMB-Delaware was sold in a public offering.

As part of the corporate reorganization, First Mutual of Richmond, Inc.’s (the “MHC”) ownership interest in RMB-Delaware was sold in a public offering.

Gross proceeds from the offering were $ 130.3 million.

1 unchanged sentence

Community Foundation (the “Foundation”).

Additionally, a “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to MHC’s ownership interest in the retained earnings of RMB-Delaware as of December 31, 2017 and March 31, 2019.

The costs of the corporate reorganization and the issuance of the common stock have been deducted from the sales proceeds of the offering.

Additionally, a “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to the MHC’s ownership interest in the retained earnings of RMB-Delaware as of December 31, 2017 and March 31, 2019.

First Bank is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana.

12 unchanged sentences

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights, and fair values of financial instruments.

Additionally, the uncertainties related to the Covid-19 pandemic could cause significant changes to these estimates compared to what was known at the time these consolidated financial statements were prepared.

Consolidation - The consolidated financial statements include the accounts of the Company and First Bank after elimination of all material intercompany transactions.

Consolidation - The consolidated financial statements include the accounts of the Company and First Bank and their direct and indirect subsidiaries after elimination of all material intercompany transactions.

Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents.

26 unchanged sentences

For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date.

For all loan classes, loans are

placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral.

13 unchanged sentences

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.

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.

71 unchanged sentences

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 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.

The Interagency Statement was originally issued on March 22, 2020, but the banking agencies revised it to address the relationship between their TDR accounting and disclosure guidance and the TDR guidance in Section 4013 of the CARES Act.

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.

The Company adopted this guidance effective March 27, 2020.

Accounting Pronouncements

6 unchanged sentences

Section 4013 of the CARES Act, as extended, allows a financial institution to elect to suspend generally accepted accounting principles and regulatory determinations with respect to qualifying loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring ("TDR") until January 1, 2022.

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

The Company has taken advantage of this provision to extend

certain payment modifications to loan customers in need.

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

4 unchanged sentences

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.

The PPP expired on May 31, 2021.

As of December 31, 2022, PPP loans outstanding totaled $ 944,000 .

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

Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as and has elected to be an emerging growth company under the JOBS Act.

23 unchanged sentences

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 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.

As of the adoption and day one measurement date of January 1, 2023, the Company expects to record a one-time cumulative-effect adjustment to retained earnings, net of income taxes, on the consolidated balance sheet.

The allowance will increase between $ 2.3 million and $ 3.0 million from December 31, 2022.

CECL also requires the establishment of a reserve for potential losses from unfunded commitments that is recorded in other liabilities, separate from the allowance for credit losses, which will be approximately $ 1.8 million to

$ 2.5 million.

Also, as required by CECL, the Company reviewed the held-to-maturity debt securities portfolio and determined the expected losses were immaterial.

In March 2020, the FASB issued ASU No.

1 unchanged sentence

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU applies to contracts, hedging relationships and other transactions that reference LIBOR or other rate references expected to be discontinued because of reference rate reform.

This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offer Rate ("LIBOR") or other rate references expected to be discontinued because of reference rate reform.

The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination.

36 unchanged sentences

Under the new guidance, lessor accounting is largely unchanged.

For the Company, the amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2021.

Based on leases outstanding as of December 31, 2021, the new standard will not have a material impact on the Company’s balance sheet or income statement.

For the Company, the amendments in this update became effective for annual periods and interim periods within those annual periods beginning after December 15, 2021.

Based on leases outstanding as of December 31, 2021, this standard did not have a material impact on the Company’s balance sheet or income statement.

In July 2018, the FASB issued ASU No.

1 unchanged sentence

Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

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).

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 No.

8 unchanged sentences

Available for sale

treasury securities $ 3,487 $ — $ 27 $ 3,460

SBA Pools 6,768 1 634 6,135

3 unchanged sentences

Corporate obligations 11,500 — 1,867 9,633

Equity securities 13 — — 13

347,876 5 62,981 284,900

8 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

14 unchanged sentences

Mortgage-backed securities –GSE residential 139,626 115,982 — —

Equity securities 13 13 — —

Totals $ 347,876 $ 284,900 $ 6,672 $ 6,577

2 unchanged sentences

Gross gains of $ 0 and $ 56,000 resulting from sales of available-for-sale securities were realized for the years ended December 31, 2022 and 2021, 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.

There were no gross losses realized from sales of available-for-sale securities for the years ended December 31, 2022, and 2021.

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

10 unchanged sentences

Available-for-sale

treasury securities $ 3,460 $ 27 $ — $ — $ 3,460 $ 27

SBA Pools 1,237 145 4,234 489 5,471 634

18 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

2 unchanged sentences

Total temporarily impaired securities $ 206,296 $ 4,005 $ 17,546 $ 535 $ 223,842 $ 4,540

Federal Agency Obligations

Federal Agency Obligations and U.S.

Treasury Securities

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

federal agencies were caused by interest rate changes.

federal agencies and treasury securities 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.

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.

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, 2022.

SBA Pools and Mortgage-Backed Securities - GSE Residential

3 unchanged sentences

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.

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

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

82 unchanged sentences

Grade 8 - Loss

Loans classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets are not warranted.

This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future.

120 unchanged sentences

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

15 unchanged sentences

Net investment in leases $ 133,469 $ 126,762

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 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.

First Bank did not service any leases for the benefit of others totaled at December 31, 2022 and 2021, respectively.

Historically, certain leases have also been sold with partial recourse.

First Bank estimates and

records its obligation based upon historical loss percentages.

At both December 31, 2022 and 2021, First Bank had no recourse obligations recorded or exposure on leases sold.

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

10 unchanged sentences

Net $ 13,668 $ 14,347

The Company enters into leases for certain retail branches, land, and office space.

Operating leases are included in other assets and the lease liability is included in other liabilities in our balance sheets.

The Company does not have any finance leases.

Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments when the rate implicit in a lease is not known.

The Company's incremental borrowing rate is based on the FHLB amortizing advance rate, adjusted for the lease term and other factors.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The Company's leases are generally for periods of five to 15 years with various renewal options.

The exercise of such lease renewal options is not included in the present value of lease obligations unless it is reasonably certain that the option will be exercised.

The Company has lease agreements which contain both lease and non-lease components such as common area maintenance charges, real estate taxes, and insurance.

Non-lease components are not included in the measurement of the lease liability and are recognized in expense when incurred.

The Company has elected not to recognize short-term leases, with original lease terms of twelve months or less, on the Company's balance sheet.

Certain of the Company's lease arrangements include rental payments adjusted periodically for inflation.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information related to leases is presented in the table below as of December 31, 2022:

Operating lease assets $ 505

Total lease assets $ 505

Operating lease liabilities $ 507

Total lease liabilities $ 507

Weighted average remaining lease term (years)

Operating leases 8.2

Weighted average discount rate

Operating leases 3.37 %

The table below presents the components of lease expense for the year ended December 31, 2022:

Operating lease cost $ 83

Total lease cost:

Supplemental cash flow information related to leases is presented in the tables below.

Maturity of lease liabilities

2028 and after 239

Total lease payments $ 585

Present value discount 78

Present value of lease liabilities $ 507

Loan Servicing

2 unchanged sentences

The aggregate fair value of capitalized servicing rights at December 31, 2022 and 2021 totaled approximately $ 2,012,000 and $ 1,647,000 , respectively.

Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value.

Comparable market values and a valuation model that calculates the

present value of future cash flows were used to estimate fair value.

For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage-servicing rights.

22 unchanged sentences

First Bank has Federal Home Loan Bank advances, with interest rates ranging from 0.61 % to 4.74 %.

The maturities of these borrowings at December 31, 2021 are as follows:

The maturities of FHLB advances at December 31, 2022 are as follows:

FHLB Advances

2023 $ 27,000

Thereafter 88,000

2 unchanged sentences

FHLB advances totaling $ 88,000,000 are subject to an option by the FHLB to put the entire advance to a periodic adjustable rate on the lock-out date.

The adjustable rate would be for the remaining term at a predetermined rate based on LIBOR (London Interbank Offer Rate).

The adjustable rate would be for the remaining term at a predetermined rate based on SOFR.

If the FHLB exercises its option to convert the advance to an adjustable rate, the advance will be prepayable at the Company’s option, at par and without a penalty.

7 unchanged sentences

Federal $ 1,987 $ ( 15 )

State ( 51 ) 182

Federal 633 2,330

7 unchanged sentences

Low income housing tax credit ( 12 ) ( 136 )

Small insurance captive premiums ( 131 ) —

Actual tax expense $ 2,783 $ 2,435

5 unchanged sentences

Investment basis 4 4

Defined benefit plan — 4,045

Deferred compensation 488 462

4 unchanged sentences

FHLB stock dividend 164 175

Unrealized gain on securities available for sale — 985

State taxes 152 193

3 unchanged sentences

Net deferred tax asset $ 17,948 $ 5,894

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.

As of December 31, 2022, the Company had approximately $ 3,011,000 of federal charitable contribution carryforwards, which will begin to expire in 2024, and no federal or state net operating loss carryforwards.

At December 31, 2022 and 2021, 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.

3 unchanged sentences

Failure to achieve sufficient projected taxable income might affect the ultimate realization of the net deferred tax assets.

Accumulated Other Comprehensive Income (Loss)

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

Tax effect 322 ( 985 )

Accumulated Other Comprehensive Loss

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

Net unrealized loss on available-for-sale securities $ ( 62,976 ) $ ( 1,534 )

Tax benefit 13,225 322

Net-of-tax amount $ ( 49,751 ) $ ( 1,212 )

17 unchanged sentences

The Company’s expense for the plan was $ 227,000 and $ 226,000 for the years ended December 31, 2022 and 2021, respectively.

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.

The Pentegra Plan operates as a multi-employer plan for accounting purposes and as a multi-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.

There are no collective bargaining agreements in place that require contributions to the Pentegra Plan.

The Pentegra Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities.

The risks of participating in a multi-employer plan are different from a single-employer plan in the following aspects:

• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

• If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Pentegra Plan has not required and does not require a financial improvement plan or a rehabilitation plan.

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 $ 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

28 unchanged sentences

Non-vested, beginning of year 348,395 $ 10.56

Granted 4,000 13.86

Vested ( 87,104 ) 10.56

13 unchanged sentences

Balance at beginning of year 1,050,961 $ 10.56

Granted 8,000 13.86

Exercised — —

12 unchanged sentences

Vested ( 212,617 ) 2.91

Granted 8,000 3.02

Forfeited — —

5 unchanged sentences

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):

25 unchanged sentences

As of December 31, 2022, 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.

First Bank’s actual and required capital amounts and ratios are as follows:

Actual Required for Adequate Capital To Be Well

Actual Minimum for Capital Adequacy Purposes Minimum to be Categorized as "Well-Capitalized" Under Prompt Corrective Action Provisions

Amount Ratio Amount Ratio Amount Ratio

3 unchanged sentences

Common Equity Tier I capital (to risk-weighted assets) 152,391 13.2 51,826 4.5 74,859 6.5

Tier I capital (to average assets) 157,481 12.5 50,284 4.0 62,855 5.0

Tier I leverage capital (to average assets) 152,391 11.2 54,421 4.0 68,026 5.0

As of December 31, 2021

2 unchanged sentences

Common Equity Tier I capital (to risk-weighted assets) 157,481 16.0 44,207 4.5 63,855 6.5

Tier I capital (to average assets) 153,325 14.3 42,939 4.0 53,673 5.0

The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers.

The capital conservation buffer was 2.50 % at both December 31, 2021 and December 31, 2020.

Tier I leverage capital (to average assets) 157,481 12.5 50,284 4.0 62,855 5.0

The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including share repurchases, dividend payments and certain discretionary bonus payments to executive officers.

The capital conservation buffer was 2.50 % of total risk weighted assets at both December 31, 2022 and December 31, 2021.

The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital.

27 unchanged sentences

Available-for-sale securities

Treasury securities $ 3,460 $ 3,460 $ — $ —

SBA Pools 6,135 — 6,135 —

3 unchanged sentences

Corporate obligations 9,633 — 9,633 —

Equity securities 13 13 — —

$ 284,900 $ 3,460 $ 281,440 $ —

5 unchanged sentences

Available-for-sale securities

Treasury securities $ —

SBA Pools $ 8,613 $ — $ 8,613 $ —

2 unchanged sentences

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

Corporate obligations 4,224 — 4,224 —

Equity securities 13 13 — —

57 unchanged sentences

Cash and cash equivalents $ 15,922 $ 15,922 $ — $ —

Interest-earning time deposits 490 — 490 —

Available-for-sale securities 284,900 3,460 281,440 —

39 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 (in thousands):

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

Condensed Balance Sheets

6 unchanged sentences

Total liabilities and stockholders' equity $ 135,374 $ 182,764

Condensed Statements of Income and Comprehensive Income

Condensed Statements of Income and Comprehensive (Loss) Income

Dividends from bank subsidiary $ 20,000 $ 10,000

Other income 439 464

Expenses - other expenses 3,329 2,140

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

Income tax benefit ( 639 ) ( 372 )

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

Total income 20,439 10,464

Other expenses 3,264 3,329

Income before income tax benefit and undistributed subsidiary income (loss) 17,175 7,135

Income tax expense (benefit) ( 632 ) ( 639 )

Equity in undistributed income of subsidiaries (dividends in excess of net income):

Bank subsidiary ( 5,472 ) 3,371

Captive subsidiary 630 —

Net income $ 12,965 $ 11,145

Comprehensive Income $ 6,224 $ 14,387

Comprehensive (loss) income $ ( 35,574 ) $ 6,224

Condensed Statements of Cash Flows

1 unchanged sentence

Net income $ 12,965 $ 11,145

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

Adjustments to reconcile net income to net cash from operating activities:

Dividends in excess of net income (equity in undistributed net income of subsidiaries) 4,842 ( 3,371 )

ESOP expense 799 796

Other changes ( 509 ) ( 538 )

Stock based compensation 1,539 1,811

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

Changes in other assets and other liabilities ( 944 ) ( 509 )

Net cash provided by operating activities 19,201 9,872

Investing Activities

Dividends received from subsidiaries 10,000 —

Net cash provided by investing activities 10,000 —

Capitalization of subsidiary ( 250 ) —

Net cash used in investing activities ( 250 ) —

Financing Activities

6 unchanged sentences

Cash and Cash Equivalents, End of Period $ 26,229 $ 21,545

The prior year income statement and cash flow presented above were revised to conform with the presentation of current year financial statements.

As a result, the following changes were made to the 2021 statements:

• Dividends received from subsidiary are presented in total income.

• Equity in undistributed income of subsidiaries reflects the difference in subsidiary income and dividends received.

• No investing activities are reported in the Condensed Statement of Cash Flows.

The above changes had no effect on 2021 Net Income.

Significant Estimates and Concentrations

9 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