Richmond Mutual Bancorporation, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Richmond Mutual Bancorporation, Inc. Condensed Consolidated Balance Sheets March 31, 2025 December 31, 2024 (Unaudited) Assets Cash and due from banks $ 10,401,734 $ 8,986,540 Interest-earning demand deposits 16,630,358 12,770,650 Cash and cash equivalents 27,032,092 21,757,190 Interest-earning time deposits 300,000 300,000 Investment securities - available for sale 256,101,105 258,191,630 Investment securities - held to maturity 2,932,158 3,497,913 Loans held for sale 388,325 1,092,920 Loans and leases, net of allowance for credit losses of $ 16,077,931 and $ 15,790,885 , respectively 1,175,833,456 1,158,879,008 Premises and equipment, net 12,778,513 12,922,028 Federal Home Loan Bank stock 13,907,100 13,907,100 Interest receivable 6,059,804 6,030,000 Mortgage-servicing rights 1,932,655 1,950,504 Cash surrender value of life insurance 3,879,550 3,856,494 Other assets 21,647,368 22,490,073 Total assets $ 1,522,792,126 $ 1,504,874,860 Liabilities Noninterest-bearing deposits $ 103,353,499 $ 110,105,973 Interest-bearing deposits 1,002,308,806 983,833,884 Total deposits 1,105,662,305 1,093,939,857 Federal Home Loan Bank advances 274,000,000 265,000,000 Advances by borrowers for taxes and insurance 730,398 590,439 Interest payable 3,702,201 4,831,674 Other liabilities 7,765,365 7,641,130 Total liabilities 1,391,860,269 1,372,003,100 Commitments and Contingent Liabilities — — Stockholders' Equity Common stock, $ 0.01 par value Authorized - 90,000,000 shares Issued and outstanding - 10,490,264 shares and 10,814,960 shares at March 31, 2025 and December 31, 2024, respectively 104,903 108,150 Additional paid-in capital 93,836,968 97,709,231 Retained earnings 92,058,581 91,582,986 Unearned employee stock ownership plan (ESOP) ( 10,538,580 ) ( 10,722,410 ) Accumulated other comprehensive loss ( 44,530,015 ) ( 45,806,197 ) Total stockholders' equity 130,931,857 132,871,760 Total liabilities and stockholders' equity $ 1,522,792,126 $ 1,504,874,860 See Notes to Condensed Consolidated Statements. 1 Richmond Mutual Bancorporation, Inc. Condensed Consolidated Statements of Income (Unaudited) Three Months Ended March 31, 2025 2024 Interest Income Loans and leases $ 18,773,758 $ 17,250,722 Investment securities 1,963,449 2,120,223 Other 130,820 139,248 Total interest income 20,868,027 19,510,193 Interest Expense Deposits 7,844,380 7,065,764 Borrowings 2,765,575 2,611,648 Total interest expense 10,609,955 9,677,412 Net Interest Income 10,258,072 9,832,781 Provision for credit losses 731,095 183,134 Net Interest Income After Provision for Credit Losses 9,526,977 9,649,647 Non-interest Income Service charges on deposit accounts 295,974 272,931 Card fee income 298,480 290,186 Loan and lease servicing fees 112,358 127,242 Net gains on loan and lease sales 95,105 119,317 Other income 360,327 319,259 Total non-interest income 1,162,244 1,128,935 Non-interest Expenses Salaries and employee benefits 4,711,955 4,573,707 Net occupancy expenses 388,300 344,354 Equipment expenses 244,490 236,216 Data processing fees 901,964 906,791 Deposit insurance expense 339,000 403,000 Printing and office supplies 48,473 34,676 Legal and professional fees 530,917 432,553 Advertising expense 65,612 88,723 Bank service charges 46,618 60,706 Real estate owned expense 2,062 1,326 Other expenses 1,093,222 975,454 Total non-interest expenses 8,372,613 8,057,506 Income Before Income Tax Expense 2,316,608 2,721,076 Provision for income taxes 348,298 352,160 Net Income $ 1,968,310 $ 2,368,916 Earnings Per Share Basic $ 0.20 $ 0.23 Diluted $ 0.20 $ 0.23 See Notes to Condensed Consolidated Statements. 2 Richmond Mutual Bancorporation, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended March 31, 2025 2024 Net Income $ 1,968,310 $ 2,368,916 Other Comprehensive Income (Loss) Unrealized gain (loss) on available for sale securities, net of tax (expense) benefit of $( 339,238 ) and $ 757,499 , respectively 1,276,182 ( 2,849,640 ) Comprehensive Income (Loss) $ 3,244,492 $ ( 480,724 ) See Notes to Condensed Consolidated Statements. 3 Richmond Mutual Bancorporation, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Three Months Ended March 31, 2025 Common Stock Additional Paid-in Capital Retained Earnings Unearned ESOP Shares Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balances, December 31, 2024 10,814,960 $ 108,150 $ 97,709,231 $ 91,582,986 $ ( 10,722,410 ) $ ( 45,806,197 ) $ 132,871,760 Net income — — — 1,968,310 — — 1,968,310 Other comprehensive income — — — — — 1,276,182 1,276,182 ESOP shares earned — — ( 5,347 ) — 183,830 — 178,483 Stock based compensation — — 363,459 — — — 363,459 Common stock dividends ($ 0.15 per share) — — — ( 1,492,715 ) — — ( 1,492,715 ) Repurchase of common stock ( 324,696 ) ( 3,247 ) ( 4,230,375 ) — — — ( 4,233,622 ) Balances, March 31, 2025 10,490,264 $ 104,903 $ 93,836,968 $ 92,058,581 $ ( 10,538,580 ) $ ( 44,530,015 ) $ 130,931,857 Three Months Ended March 31, 2024 Common Stock Additional Paid-in Capital Retained Earnings Unearned ESOP Shares Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balances, December 31, 2023 11,208,500 $ 112,085 $ 101,347,566 $ 87,902,747 $ ( 11,457,726 ) $ ( 43,045,096 ) $ 134,859,576 Net income — — — 2,368,916 — — 2,368,916 Other comprehensive loss — — — — — ( 2,849,640 ) ( 2,849,640 ) ESOP shares earned — — ( 29,661 ) — 183,829 — 154,168 Stock based compensation — — 367,484 — — — 367,484 Common stock dividends ($ 0.14 per share) — — — ( 1,437,299 ) — — ( 1,437,299 ) Repurchase of common stock ( 92,613 ) ( 926 ) ( 1,071,562 ) — — — ( 1,072,488 ) Balances, March 31, 2024 11,115,887 $ 111,159 $ 100,613,827 $ 88,834,364 $ ( 11,273,897 ) $ ( 45,894,736 ) $ 132,390,717 See Notes to Condensed Consolidated Statements. 4 Richmond Mutual Bancorporation, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2025 2024 Operating Activities Net income $ 1,968,310 $ 2,368,916 Adjustments to reconcile net income to net cash provided by operating activities Provision for credit losses 731,095 183,134 Depreciation and amortization 219,488 214,846 Deferred income tax ( 117,847 ) 36,457 Stock based compensation 363,459 367,484 Investment securities amortization, net 198,201 265,798 Net gains on loan and lease sales ( 95,105 ) ( 119,317 ) Gain on sale of real estate owned — ( 1,558 ) Accretion of loan origination fees ( 211,416 ) ( 160,947 ) Amortization of mortgage-servicing rights 49,954 43,135 ESOP shares expense 178,483 154,168 Increase in cash surrender value of life insurance ( 23,057 ) ( 22,363 ) Loans originated for sale ( 5,256,050 ) ( 6,697,600 ) Proceeds on loans sold 4,551,455 5,989,100 Net change in Interest receivable ( 29,804 ) ( 144,631 ) Other assets 658,752 1,185,192 Other liabilities 124,235 ( 966,798 ) Interest payable ( 1,129,473 ) ( 532,782 ) Net cash provided by operating activities 2,180,680 2,162,234 Investing Activities Purchases of securities available for sale ( 1,025,982 ) ( 1,935,953 ) Proceeds from maturities and paydowns of securities available for sale 4,534,320 4,404,697 Proceeds from maturities and paydowns of securities held to maturity 565,159 290,306 Net change in loans ( 16,039,372 ) ( 31,650,763 ) Proceeds from sales of real estate owned — 48,821 Purchases of premises and equipment ( 75,973 ) ( 115,447 ) Purchase of FHLB stock — ( 1,260,000 ) Net cash used in investing activities ( 12,041,848 ) ( 30,218,339 ) Financing Activities Net change in Demand and savings deposits 256,508 ( 5,097,505 ) Certificates of deposit 11,465,940 33,600,066 Advances by borrowers for taxes and insurance 139,959 113,420 Proceeds from FHLB advances 112,000,000 58,000,000 Repayment of FHLB advances ( 103,000,000 ) ( 56,000,000 ) Repurchase of common stock ( 4,233,622 ) ( 1,072,488 ) Dividends paid ( 1,492,715 ) ( 1,437,299 ) Net cash provided by financing activities 15,136,070 28,106,194 Net Change in Cash and Cash Equivalents 5,274,902 50,089 Cash and Cash Equivalents, Beginning of Period 21,757,190 20,240,125 Cash and Cash Equivalents, End of Period $ 27,032,092 $ 20,290,214 Additional Cash Flows and Supplementary Information Interest paid $ 11,739,428 $ 10,210,194 Transfers from loans to other real estate owned — — See Notes to Condensed Consolidated Statements. 5 Richmond Mutual Bancorporation, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Amounts) Note 1: Basis of Presentation The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Richmond Mutual Bancorporation, Inc., and its wholly owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., FB Richmond Holdings, Inc. and FB Richmond Properties, Inc. References in this document to Richmond Mutual Bancorporation refer to Richmond Mutual Bancorporation, Inc. References to “we,” “us,” and “our” or the “Company” refers to Richmond Mutual Bancorporation and its wholly-owned direct and indirect subsidiaries, First Bank Richmond, First Insurance Management, Inc., FB Richmond Holdings, Inc., and FB Richmond Properties, Inc. unless the context otherwise requires. First Bank Richmond is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana and the wholly owned banking subsidiary of Richmond Mutual Bancorporation. First Bank Richmond provides full banking services through its seven full- and one limited-service offices located in Cambridge City (1), Centerville (1), Richmond (5) and Shelbyville (1), Indiana, its five full-service offices located in Piqua (2), Sidney (2) and Troy (1), Ohio, and its loan production office in Columbus, Ohio. Administrative, trust and wealth management services are conducted through First Bank Richmond's Corporate Office/Financial Center located in Richmond, Indiana. As an Indiana-chartered commercial bank, First Bank Richmond is subject to regulation by the Indiana Department of Financial Institutions ("IDFI") and the Federal Deposit Insurance Corporation ("FDIC"). First Insurance Management, Inc., a wholly-owned subsidiary of the Company which was formed and began operations in June 2022, is a Nevada-based captive insurance company that insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. First Insurance Management, Inc. is subject to the regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. FB Richmond Holdings, Inc., a wholly-owned subsidiary of First Bank Richmond which was formed and began operations in April 2020, is a Nevada corporation that holds and manages substantially all of First Bank Richmond's investment portfolio. FB Richmond Holdings, Inc. has one active subsidiary, FB Richmond Properties, Inc., a Delaware corporation which holds loans on behalf of the Bank. The accompanying unaudited condensed consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or note disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K") filed with the Securities and Exchange Commission (“SEC”) on March 27, 2025 (SEC File No. 001-38956). However, in the opinion of management, all adjustments which are necessary for a fair presentation of the consolidated financial statements have been included. Those adjustments consist only of normal recurring adjustments. The results of operations for the periods are not necessarily indicative of the results to be expected for the full year. Use of Estimates in Preparation of Financial Statements Financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") require the Company 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 income and expense during the reporting period. Actual results could differ from those estimates. Loans For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. 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 6 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. The Company charges off residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance, which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value, less costs to sell when the loan is 120 days past due, charge-off of unsecured open-end loans when the loan is 90 days past due, and charge down to the net realizable value when other secured loans are 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. On occasion, the Company will provide modifications to loans and leases to borrowers experiencing financial difficulty, by providing payment delays, term extensions, or interest-rate reductions. In some cases, combinations of modifications may be made to the same loan or lease. If determined that the value of the modified loan or lease is less than the recorded investment in the loan, a charge-off is recognized to the allowance for credit losses on loans and leases. Note 2: Accounting Pronouncements The Jumpstart Our Business Startups Act (the "JOBS Act"), enacted in April 2012, introduced various 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” ("EGC"). The Company previously qualified as and elected to be an EGC under the JOBS Act. As an EGC, the Company elected to comply with new or amended accounting pronouncements in the same manner as a private company, an election that had to be made when the Company first filed a registration statement and remained irrevocable while the Company maintained EGC status. However, as of December 31, 2024, the Company no longer qualifies as an EGC and going forward, it will be required to comply with new or amended accounting pronouncements applicable to public companies. In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about significant expenses for their reportable segments on both an interim and annual basis. Public entities must disclose significant expense categories and amounts for each reportable segment, which are derived from expenses regularly reported to the entity’s chief operating decision-maker (CODM) and included in the segment's reported measures of profit or loss. Additionally, public entities must disclose the title and position of the CODM and explain how the CODM uses these measures to assess segment performance. The ASU also mandates certain segment-related interim disclosures that were previously required only on an annual basis. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this ASU on January 1, 2024. Adoption of ASU No. 2023-07 did not have a material impact on the Company's consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. 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. In December of 2022, the FASB issued ASU No. 2022-06 which extended the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The guidance ensures the relief in Topic 848 covers the period of time during which a significant number of modifications may take place and the ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. In March 2023, the FASB issued ASU No. 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method . This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program 7 giving rise to the related income tax credits. ASU No. 2023-02 is effective for all public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted this guidance on January 1, 2024. Adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU established new income tax disclosure requirements and modified existing requirements. The ASU requires additional information be disclosed for specified categories, and reconciling items that meet a certain threshold, within the rate reconciliation on an annual basis. Additionally, this ASU requires information be disclosed on the amount of income taxes paid (net of refunds), disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds) disaggregated by jurisdiction based on a quantitative threshold. ASU No. 2023-09 is effective for all public business entities for annual periods beginning after December 15, 2024. The Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements. Note 3: Investment Securities The amortized cost and approximate fair values, together with gross unrealized gains and losses, of investment securities are as follows: March 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. Treasury securities $ 2,541 $ — $ 8 $ 2,533 SBA Pools 4,011 — 471 3,540 Federal agencies 15,000 — 1,377 13,623 State and municipal obligations 161,383 2 33,171 128,214 Mortgage-backed securities - government-sponsored enterprises (GSE) residential 118,033 26 19,259 98,800 Corporate obligations 11,500 — 2,109 9,391 312,468 28 56,395 256,101 Held to maturity State and municipal obligations 2,932 8 95 2,845 2,932 8 95 2,845 Total investment securities $ 315,400 $ 36 $ 56,490 $ 258,946 8 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. Treasury securities $ 3,159 $ 2 $ — $ 3,161 SBA Pools 4,243 — 543 3,700 Federal agencies 15,000 — 1,666 13,334 State and municipal obligations 162,524 1 32,166 130,359 Mortgage-backed securities - (GSE) residential 119,748 5 21,440 98,313 Corporate obligations 11,500 — 2,175 9,325 316,174 8 57,990 258,192 Held to maturity State and municipal obligations 3,498 8 85 3,421 3,498 8 85 3,421 Total investment securities $ 319,672 $ 16 $ 58,075 $ 261,613 The amortized cost and fair value of investment securities at March 31, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Available for Sale Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value Within one year $ 4,051 $ 4,031 $ 35 $ 35 One to five years 25,492 23,996 1,837 1,828 Five to ten years 42,945 37,668 450 437 After ten years 121,947 91,606 610 545 194,435 157,301 2,932 2,845 Mortgage-backed securities –GSE residential 118,033 98,800 — — Totals $ 312,468 $ 256,101 $ 2,932 $ 2,845 Investment securities with a carrying value of $ 109,295,000 and $ 109,909,000 were pledged at March 31, 2025 and December 31, 2024, respectively, to secure certain deposits and for other purposes as permitted or required by law. There were no sales of securities available for sale for the three months ended March 31, 2025 and March 31, 2024. Certain investments in debt securities, as reflected in the table below, are reported in the condensed consolidated financial statements and notes at an amount less than their historical cost. Total fair value of these investments at March 31, 2025 and December 31, 2024 was $ 253,703,000 and $ 255,749,000 , respectively, which is approximately 98 % and 98 % of the Company’s aggregated available for sale and held to maturity investment portfolio at those dates, respectively. These declines primarily resulted from changes in market interest rates since their purchase. The Company does not consider available for sale securities with unrealized losses to be experiencing credit losses at March 31, 2025. Management considers it more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities. Held to maturity securities are financial assets measured at amortized cost. Held to maturity securities are required to have an established allowance for credit losses that represents the portion of the amortized cost basis of a financial asset that is not expected to be collectable. The Company estimates expected credit losses on a collective basis by security type, with consideration given to historical information, credit ratings, and the statistical probability of future losses. 9 The Company monitors the credit quality of investment securities held to maturity through the use of credit ratings quarterly. As of March 31, 2025, there was no allowance for credit losses recognized on the Company's securities held to maturity portfolio. The following table summarizes the amortized cost of held to maturity securities by credit quality indicator as of March 31, 2025 and December 31, 2024: State and municipal obligations March 31, 2025 December 31, 2024 AA+ $ 416 $ 483 AA- — 295 A+ 435 605 Not rated 2,081 2,115 $ 2,932 $ 3,498 The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses. The following tables show the Company’s investment securities by gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2025 and December 31, 2024: Description of Securities March 31, 2025 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for sale U.S. Treasury Securities $ 2,533 $ 8 $ — $ — $ 2,533 $ 8 SBA Pools — — 3,166 471 3,166 471 Federal agencies — — 13,623 1,377 13,623 1,377 State and municipal obligations 245 — 126,498 33,171 126,743 33,171 Mortgage-backed securities - GSE residential — — 95,801 19,259 95,801 19,259 Corporate obligations — — 9,391 2,109 9,391 2,109 Total available for sale 2,778 8 248,479 56,387 251,257 56,395 Held to maturity State and municipal obligations 1,186 14 1,260 81 2,446 95 Total $ 3,964 $ 22 $ 249,739 $ 56,468 $ 253,703 $ 56,490 10 Description of Securities December 31, 2024 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for sale SBA Pools $ 454 $ 1 $ 2,991 $ 542 $ 3,445 $ 543 Federal agencies — — 13,334 1,666 13,334 1,666 State and municipal obligations 1,578 17 127,705 32,149 129,283 32,166 Mortgage-backed securities - GSE residential 1,045 10 96,296 21,430 97,341 21,440 Corporate obligations — — 9,324 2,175 9,324 2,175 Total available for sale 3,077 28 249,650 57,962 252,727 57,990 Held to maturity State and municipal obligations 1,253 12 1,769 73 3,022 85 Total $ 4,330 $ 40 $ 251,419 $ 58,035 $ 255,749 $ 58,075 Federal Agency Obligations. The unrealized losses on the Company’s investments in direct obligations of U.S. 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. 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. SBA Pools and Mortgage-Backed Securities - GSE Residential. The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes and illiquidity. The Company expects to recover the amortized cost basis over the term of the securities. The decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell the securities and it is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity. State, Municipal, and Corporate Obligations. The unrealized losses on the Company’s investments in securities of state, municipal, and corporate obligations were caused by interest rate changes. The contractual terms of those securities do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company does not intend to sell the securities and it is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity. The Company expects the fair value of the securities described above to recover as the securities approach their maturity or reset date. 11 Note 4: Loans, Leases and Allowance The following table shows the composition of the loan and lease portfolio at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Commercial mortgage $ 387,516 $ 371,705 Commercial and industrial 136,524 126,367 Construction and development 99,953 132,570 Multi-family 211,485 185,864 Residential mortgage 172,614 172,644 Home equity lines of credit 18,115 16,826 Direct financing leases 146,067 148,102 Consumer 20,243 21,218 1,192,517 1,175,296 Less Allowance for credit losses on loans and leases 16,078 15,791 Deferred loan fees 606 626 $ 1,175,833 $ 1,158,879 The Company rates all loans and leases by credit quality using the following designations: Grade 1 – Exceptional Exceptional loans and leases are top-quality loans to individuals whose financial credentials are well known to the Company. These loans and leases have excellent sources of repayment, are well documented and/or virtually free of risk (i.e., CD secured loans). Grade 2 – Quality Loans and Leases These loans and leases have excellent sources of repayment with no identifiable risk of collection, and they conform in all respects to Company policy and IDFI and FDIC regulations. Documentation exceptions are minimal or are in the process of being corrected and not of a type that could subsequently expose the Company to risk of loss. Grade 3 – Acceptable Loans This category is for “average” quality loans and leases. These loans and leases have adequate sources of repayment with little identifiable risk of collection and they conform to Company policy and IDFI/FDIC regulations. Grade 4 – Acceptable but Monitored Loans and leases in this category may have a greater than average risk due to financial weakness or uncertainty but do not appear to require classification as special mention or substandard loans. Loans and leases rated “4” need to be monitored on a regular basis to ascertain that the reasons for placing them in this category do not advance or worsen. Grade 5 – Special Mention Loans and leases in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in the Company’s credit position at some future date. Special Mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This special mention rating is designed to identify a specific level of risk and concern about an asset’s quality. Although a special mention loan or lease has a higher probability of default than a pass rated loan or lease, its default is not imminent. 12 Grade 6 – Substandard Loans and leases in this category are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard loans and leases have a high probability of payment default, or they have other well-defined weaknesses. Such loans and leases have a distinct potential for loss; however, an individual loan’s or lease’s potential for loss does not have to be distinct for the loan or lease to be rated substandard. The following are examples of situations that might cause a loan or lease to be graded a “6”: • Cash flow deficiencies (losses) jeopardize future loan or lease payments. • Sale of non-collateral assets has become a primary source of loan or lease repayment. • The relationship has deteriorated to the point that sale of collateral is now the Company’s primary source of repayment, unless this was the original source of loan or lease repayment. • The borrower is bankrupt or for any other reason future repayment is dependent on court action. Grade 7 – Doubtful A loan or lease classified as doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable. A doubtful loan or lease has a high probability of total or substantial loss. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, nonaccrual accounting treatment will be required for doubtful loans and leases. Grade 8 – Loss Loans and leases classified loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan or lease has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan or lease even though partial recovery may be effected in the future. No material changes have been made to the risk characteristics discussed above contained in the Company's 2024 Form 10-K. 13 The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category, payment activity, and origination year as of March 31, 2025 and rating category as of December 31, 2024: 2025 2024 2023 2022 2021 Prior Revolving loans amortized cost basis Total As of March 31, 2025: Commercial mortgage Pass $ 20,860 $ 24,583 $ 33,013 $ 92,417 $ 55,771 $ 120,294 $ 28,797 $ 375,735 Substandard — — — — 7,089 4,692 — 11,781 Total Commercial mortgage 20,860 24,583 33,013 92,417 62,860 124,986 28,797 387,516 Current period gross charge-offs — — — — — — — — Commercial and industrial Pass 11,031 17,641 27,952 9,134 10,650 11,409 46,221 134,038 Special Mention — — — — — 137 502 639 Substandard — — — 258 — 34 1,555 1,847 Total Commercial and industrial 11,031 17,641 27,952 9,392 10,650 11,580 48,278 136,524 Current period gross charge-offs — — — — — — — — Construction and development Pass 1,167 20,967 35,444 25,386 11,950 139 — 95,053 Substandard — — — — — 4,900 — 4,900 Total Construction and development 1,167 20,967 35,444 25,386 11,950 5,039 — 99,953 Current period gross charge-offs — — — — — — — — Multi-family Pass — 18,652 9,524 58,887 57,076 30,391 32,063 206,593 Special Mention — — — — 1,435 3,457 — 4,892 Total Multi-family — 18,652 9,524 58,887 58,511 33,848 32,063 211,485 Current period gross charge-offs — — — — — — — — Residential mortgage Pass 5,450 21,116 33,657 27,673 27,656 52,971 2,961 171,484 Substandard — — 34 — 345 751 — 1,130 Total Residential mortgage 5,450 21,116 33,691 27,673 28,001 53,722 2,961 172,614 Current period gross charge-offs — — — — — — — — Home equity Pass 154 — 231 — 57 — 17,660 18,102 Substandard — — — — — — 13 13 Total Home equity lines of credit 154 — 231 — 57 — 17,673 18,115 Current period gross charge-offs — — — — — — — — Direct financing leases Pass 14,627 49,380 47,624 22,022 8,925 2,508 — 145,086 Substandard — 108 319 150 111 8 — 696 Doubtful — — 232 — 45 8 — 285 Total Direct financing leases 14,627 49,488 48,175 22,172 9,081 2,524 — 146,067 Current period gross charge-offs — 52 339 103 17 7 — 518 Consumer Pass 1,490 6,134 5,554 4,519 1,829 658 — 20,184 Substandard — 11 2 — 46 — — 59 Total Consumer 1,490 6,145 5,556 4,519 1,875 658 — 20,243 Current period gross charge-offs 28 — — 12 — — — 40 Total Loans and Leases $ 54,779 $ 158,592 $ 193,586 $ 240,446 $ 182,985 $ 232,357 $ 129,772 $ 1,192,517 Total current period gross charge-offs $ 28 $ 52 $ 339 $ 115 $ 17 $ 7 $ — $ 558 14 2024 2023 2022 2021 2020 Prior Revolving loans amortized cost basis Total As of December 31, 2024: Commercial mortgage Pass $ 22,469 $ 40,634 $ 82,254 $ 65,852 $ 31,382 $ 90,763 $ 33,393 $ 366,747 Substandard — — — 234 4,724 — — 4,958 Total Commercial mortgage 22,469 40,634 82,254 66,086 36,106 90,763 33,393 371,705 Current period gross charge-offs — — — — — — — — Commercial and industrial Pass 18,197 28,998 9,866 11,111 2,703 9,648 44,026 124,549 Substandard — — 282 — — 35 1,501 1,818 Total Commercial and industrial 18,197 28,998 10,148 11,111 2,703 9,683 45,527 126,367 Current period gross charge-offs — — — — — 16 — 16 Construction and development Pass 20,811 44,837 43,691 18,185 30 116 — 127,670 Substandard — — — — — 4,900 — 4,900 Total Construction and development 20,811 44,837 43,691 18,185 30 5,016 — 132,570 Current period gross charge-offs — — — — — — — — Multi-family Pass 7,252 3,789 61,936 50,178 6,195 24,845 26,751 180,946 Special Mention — — — 1,461 3,457 — — 4,918 Total Multi-family 7,252 3,789 61,936 51,639 9,652 24,845 26,751 185,864 Current period gross charge-offs — — — — — — — — Residential mortgage Pass 22,614 33,949 28,498 28,302 16,239 39,174 2,513 171,289 Substandard — 35 — 450 — 870 — 1,355 Total Residential mortgage 22,614 33,984 28,498 28,752 16,239 40,044 2,513 172,644 Current period gross charge-offs — — — — — 10 — 10 Home equity Pass 18 198 — 57 — — 16,539 16,812 Substandard — — — — — — 14 14 Total Home equity lines of credit 18 198 — 57 — — 16,553 16,826 Current period gross charge-offs — — — — — — — — Direct financing leases Pass 53,286 53,601 25,447 11,381 3,336 329 — 147,380 Substandard 127 318 175 40 28 — — 688 Doubtful — 9 — 7 18 — — 34 Total Direct financing leases 53,413 53,928 25,622 11,428 3,382 329 — 148,102 Current period gross charge-offs — 741 592 325 72 1 — 1,731 Consumer Pass 6,807 6,272 5,200 2,088 438 314 — 21,119 Substandard — 3 47 49 — — — 99 Total Consumer 6,807 6,275 5,247 2,137 438 314 — 21,218 Current period gross charge-offs 47 89 114 32 — 3 — 285 Total Loans and Leases $ 151,581 $ 212,643 $ 257,396 $ 189,395 $ 68,550 $ 170,994 $ 124,737 $ 1,175,296 Total current period gross charge-offs $ 47 $ 830 $ 706 $ 357 $ 72 $ 30 $ — $ 2,042 For the three months ended March 31, 2025 and December 31, 2024, the Company did not have any revolving loans convert to term loans. 15 The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of March 31, 2025 and December 31, 2024: March 31, 2025 Delinquent Loans and Leases Current Total Portfolio Loans and Leases Total Loans and Leases > 90 Days Accruing 30-59 Days Past Due 60-89 Days Past Due 90 Days and Over Total Past Due Commercial mortgage $ 805 $ — $ 215 $ 1,020 $ 386,496 $ 387,516 $ 215 Commercial and industrial 78 22 111 211 136,313 136,524 111 Construction and development — — 4,900 4,900 95,053 99,953 — Multi-family — — — — 211,485 211,485 — Residential mortgage 607 410 1,129 2,146 170,468 172,614 1,053 Home equity 328 — 13 341 17,774 18,115 13 Direct financing leases 325 317 248 890 145,177 146,067 248 Consumer 192 180 59 431 19,812 20,243 59 Totals $ 2,335 $ 929 $ 6,675 $ 9,939 $ 1,182,578 $ 1,192,517 $ 1,699 December 31, 2024 Delinquent Loans and Leases Current Total Portfolio Loans and Leases Total Loans and Leases > 90 Days Accruing 30-59 Days Past Due 60-89 Days Past Due 90 Days and Over Total Past Due Commercial mortgage $ 101 $ 216 $ — $ 317 $ 371,388 $ 371,705 $ — Commercial and industrial 419 — — 419 125,948 126,367 — Construction and development 429 240 4,900 5,569 127,001 132,570 — Multi-family — — — — 185,864 185,864 — Residential mortgage 781 540 1,356 2,677 169,967 172,644 1,261 Home equity 11 58 14 83 16,743 16,826 14 Direct financing leases 673 362 340 1,375 146,727 148,102 340 Consumer 108 183 99 390 20,828 21,218 99 Totals $ 2,522 $ 1,599 $ 6,709 $ 10,830 $ 1,164,466 $ 1,175,296 $ 1,714 16 The following table presents information on the Company’s nonaccrual loans and leases at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Commercial and industrial $ 34 $ — $ 35 $ — Construction and development 4,900 — 4,900 — Residential mortgage 76 76 94 94 Direct financing leases 285 285 34 34 Total nonaccrual loans and leases $ 5,295 $ 361 $ 5,063 $ 128 During the three months ended March 31, 2025 and December 31, 2024, the Company recognized $ 1,000 and $ 1,000 of interest income on nonaccrual loans and leases, respectively. The following tables present the Company's amortized cost basis of collateral dependent loans, and their respective collateral type, which are individually analyzed to determine expected credit losses as of March 31, 2025 and December 31, 2024: March 31, 2025 Commercial Real Estate Multi-family Housing Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial mortgage $ 11,551 $ — $ — $ — $ 11,551 $ — Commercial and industrial — — — 2,196 2,196 — Construction and development 4,900 — — — 4,900 1,000 Multi-family — 1,435 — — 1,435 — Residential mortgage — — 125 — 125 — Total $ 16,451 $ 1,435 $ 125 $ 2,196 $ 20,207 $ 1,000 December 31, 2024 Commercial Real Estate Multi-family Housing Residential Real Estate Other Total Allowance on Collateral Dependent Loans Commercial mortgage $ 4,724 $ — $ — $ — $ 4,724 $ — Commercial and industrial — — — 1,501 1,501 — Construction and development 4,900 — — — 4,900 1,000 Multi-family — 1,461 — — 1,461 — Residential mortgage — — 143 — 143 — Total $ 9,624 $ 1,461 $ 143 $ 1,501 $ 12,729 $ 1,000 17 Loan/Lease Modification Disclosures under ASU 2022-02 In certain situations, the Company may modify the terms of a loan or lease to a borrower experiencing financial difficulty. These modifications may include payment delays, term extensions, or interest-rate reductions. In some cases, combinations of modifications may be made to the same loan or lease. If a determination is made that a modified loan or lease has been deemed uncollectible, the loan or lease (or portion of the loan or lease) is charged-off, reducing the amortized cost basis of the loan or lease and adjusting the allowance for credit losses. During the three months ended March 31, 2025 and 2024 the Company had no new modifications to borrowers experiencing financial difficulty. There were no modified loans or leases that had a payment default during the three months ended March 31, 2025 or 2024, and that were modified in the twelve months prior to that default by borrowers experiencing financial difficulty. Other Real Estate Owned Other real estate owned is included in other assets on the Condensed Consolidated Balance Sheets. At both March 31, 2025 and December 31, 2024 there was $ 37,000 of other real estate owned, consisting of foreclosed residential real estate properties. At both March 31, 2025 and December 31, 2024, the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $ 275,000 . Direct Financing Leases The following lists the components of the net investment in direct financing leases: March 31, 2025 December 31, 2024 Total minimum lease payments to be received $ 167,027 $ 168,934 Initial direct costs 9,058 9,360 176,085 178,294 Less: Unearned income ( 30,018 ) ( 30,192 ) Net investment in direct finance leases $ 146,067 $ 148,102 The following table summarizes the future minimum lease payments receivable subsequent to March 31, 2025: Remainder of 2025 $ 49,563 2026 53,281 2027 36,235 2028 20,164 2029 7,261 Thereafter 523 $ 167,027 Allowance for Credit Losses on Loans and Leases The allowance for credit losses on loans and leases is established for current expected credit losses on the Company's loan and lease portfolios in accordance with ASC Topic 326. This requires significant judgement to estimate credit losses measured on a collective pool basis when similar risk characteristics exist, and for loans evaluated individually. The Company estimates expected future losses for the loan's entire contractual term, taking into account expected payments when appropriate. The allowance is an estimation based on management's evaluation of expected losses related to the Company's financial assets measured at amortized cost. It considers relevant available information from internal and external sources relating to the 18 historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances. The Company utilizes a cash flow ("CF") analysis method of estimating expected losses, which relies on key inputs and assumptions. Significant factors affecting the calculation are the segmenting of loans and leases based upon similar risk characteristics, applied loss rates based upon reasonable and supportable forecasts, and contractual term adjustments, including prepayment and curtailment adjustments. To ensure the allowance is maintained at an adequate level, a detailed analysis is performed on a quarterly basis, with an appropriate provision made to adjust the allowance. The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses, as it is the Company's policy to write off accrued interest in a timely manner as it is deemed uncollectible by reversing interest income. The Company categorizes its loan portfolios into eight segments, as discussed above, based on similar risk characteristics. Loans within each segment are collectively evaluated using either a CF methodology or remaining life methodology. When estimating for credit loss, the Company forecasts the first four quarters of the credit loss estimate and reverts to a long-run average of each considered factor. The Company developed its reasonable and supportable forecasts using economic data, such as national gross domestic product ("GDP") and unemployment rate. Qualitative adjustments are applied to each collectively segmented pool to appropriately capture differences in current or expected qualitative risk characteristics. When evaluating the estimation for expected credit losses, the Company evaluates these qualitative adjustments for any changes in: • lending policies, procedures, and strategies, • the nature and volume of the loan and lease portfolio, • international, national, regional, and local conditions, • the experience, depth, and ability of lending management, • the volume and severity of past due loans, • the quality of the loan review system, • the underlying collateral, • concentration risk, and • the effect of other external factors. The following tables summarize changes in the allowance for credit losses by segment for the three months ended March 31, 2025 and 2024, respectively: Balances, December 31, 2024 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, March 31, 2025 Commercial mortgage $ 4,486 $ 248 $ — $ — $ 4,734 Commercial and industrial 1,483 138 — 2 1,623 Construction and development 2,243 ( 242 ) — — 2,001 Multi-family 2,660 147 — — 2,807 Residential mortgage 1,910 ( 29 ) — 20 1,901 Home equity 184 12 — — 196 Direct financing leases 2,469 409 ( 518 ) 107 2,467 Consumer 356 — ( 40 ) 33 349 Total $ 15,791 $ 683 $ ( 558 ) $ 162 $ 16,078 19 Balances, December 31, 2023 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, March 31, 2024 Commercial mortgage $ 4,655 $ ( 29 ) $ — $ — $ 4,626 Commercial and industrial 1,281 48 — 61 1,390 Construction and development 3,883 17 — — 3,900 Multi-family 1,789 117 — — 1,906 Residential mortgage 1,681 45 ( 10 ) 4 1,720 Home equity 102 11 — — 113 Direct financing leases 1,955 246 ( 357 ) 24 1,868 Consumer 317 31 ( 72 ) 26 302 Total $ 15,663 $ 486 $ ( 439 ) $ 115 $ 15,825 The allowance for credit losses on loans and leases increased from $ 15.8 million at December 31, 2024, to $ 16.1 million at March 31, 2025. The increase was attributable to provisions for credit losses totaling $ 683,000 during the first quarter of 2025, partially offset by net charge-offs of $ 395,000 . Set forth below is a segment analysis of the loan and lease portfolio reflecting the change in the allowance for each segment, due to the change in the amount of each segment. • Commercial Mortgage – allowance increased due to loan balances increasing $ 15.8 million. • Commercial & Industrial – allowance increased due to loan balances increasing $ 10.2 million. • Construction & Development – allowance decreased due to loan balances decreasing $ 32.6 million. • Multi-Family – allowance increased due to loan balances increasing $ 25.6 million. • Residential Mortgage – allowance decreased due to loan balances decreasing $ 30,000 . • Home Equity – allowance increased due to loan balances increasing $ 1.3 million. • Direct Financing Leases – allowance decreased due to loan balances decreasing $ 2.0 million. • Consumer – allowance decreased due to loan balances decreasing $ 975,000 . Our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represented 70.1 % and 69.5 % of our portfolio as of March 31, 2025 and December 31, 2024, respectively. The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represented 69.4 % and 68.9 % of our total allowance at March 31, 2025 and December 31, 2024, respectively. Economic Outlook Due to the future-focused nature of the calculation for the allowance for credit losses, management must make significant assumptions. Estimating an appropriate allowance requires management to use relevant forward-looking information drawn from reasonable and supportable forecasts. Economic factors are a consequential part of these forecasts, and as such are evaluated periodically for developments that may impact the Company's allowance for credit losses and loan and lease portfolio. As of March 31, 2025 there are several key economic factors affecting the Company's loan and lease portfolio. These economic factors include persistent inflation, weakening economic growth, and unemployment. In addition, geopolitical uncertainty and risks associated with tariffs have significant indirect and direct impacts on supply chains and price increases. These key factors will continue to influence the Company's loan and lease portfolio for the near future. The Company remains committed to three growth market regions: Columbus, Ohio, Cincinnati/Dayton/Springfield, Ohio, and Indianapolis, Indiana. As high-growth areas, these market regions specialize in commercial real estate loans. Their respective forecasts are described below: 20 • Columbus, Ohio – The market region forecasts an overall estimated job growth of 1 % in 2025. This is slightly below national projections. Unemployment rates were slightly above the national unemployment average in the first quarter of 2025. However, city officials have announced multiple large multi-million dollar construction projects for the market region. • Dayton/Springfield, Ohio – The market region forecasts slight estimated job growth in 2025, however the unemployment rate is slightly above the national unemployment average. As of the first quarter of 2025, there were an additional 2.3 million square feet of new construction in process. Additionally, the two new interstate improvement projects of approximately $ 70 million were announced for the market region. • Indianapolis, Indiana – The market region is forecasting positive job growth in 2025. In 2024, the market region experienced continuous and balanced economic growth. Subsequently, based upon similar growth patterns driven primarily by the expanding labor market, retail sales growth, and increasing median household incomes, the outlook for the region is favorable. The unemployment rate was slightly below the national unemployment average in the first quarter of 2025. The economic outlook is significantly more complex and uncertain at best, thus creating a challenging economic environment requiring heightened vigilance and adaptability by the Company. There are a myriad of potential outcomes, and the variances may be significant and unpredictable. Future potential economic volatility may have a significant impact on the Company's loan and lease portfolio, specifically the allowance for credit losses. As a result, the Company's future estimates may fluctuate for the remainder of 2025. Allowance for Credit Losses on Unfunded Commitments The allowance for credit losses on unfunded commitments is included in other liabilities on the Condensed Consolidated Balance Sheets. The estimate of expected losses on unfunded commitments is calculated based on the loss rate for the loan or lease segment in which the loan or lease commitments would be classified if funded, adjusted for the estimate of funding probability. Adjustments to the allowance, either additional provisions or reversals, are recorded in the provision for (reversal of) credit losses in the Condensed Consolidated Statements of Income. The following tables detail activity in the allowance for credit losses on unfunded commitments during the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 Beginning balance $ 558 $ 1,642 Provision for (reversal of) credit losses 48 ( 303 ) Ending balance $ 606 $ 1,339 Note 5: Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities 21 Level 3 Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities Recurring Measurements The following tables present the fair value measurements of assets recognized in the Condensed Consolidated Balance Sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2025 and December 31, 2024: Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2025 Available for sale securities U.S. Treasury securities $ 2,533 $ 2,533 $ — $ — SBA Pools 3,540 — 3,540 — Federal agencies 13,623 — 13,623 — State and municipal obligations 128,214 — 128,214 — Mortgage-backed securities - GSE residential 98,800 — 98,800 — Corporate obligations 9,391 — 9,391 — $ 256,101 $ 2,533 $ 253,568 $ — Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Available for sale securities U.S. Treasury securities $ 3,161 $ 3,161 $ — $ — SBA Pools 3,700 — 3,700 — Federal agencies 13,334 — 13,334 — State and municipal obligations 130,359 — 130,359 — Mortgage-backed securities - GSE residential 98,313 — 98,313 — Corporate obligations 9,325 — 9,325 — $ 258,192 $ 3,161 $ 255,031 $ — Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the three months ended March 31, 2025. Available for Sale Securities Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy, which includes equity securities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include agency securities, obligations of state and political subdivisions, and mortgage-backed securities. Matrix pricing is a mathematical 22 technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Nonrecurring Measurements As of March 31, 2025 and December 31, 2024, there were no assets or liabilities measured at fair value on a nonrecurring basis. Fair Value of Financial Instruments The following tables present estimated fair values of the Company’s financial instruments at March 31, 2025 and December 31, 2024: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2025 Financial assets Cash and cash equivalents $ 27,032 $ 27,032 $ — $ — Interest-earning time deposits 300 — 300 — Available for sale securities 256,101 2,533 253,568 — Held to maturity securities 2,932 — 2,845 — Loans held for sale 388 — — 388 Loans and leases receivable, net 1,175,833 — — 1,125,344 FHLB stock 13,907 — 13,907 — Interest receivable 6,060 — 6,060 — Financial liabilities Deposits 1,105,662 — 1,107,259 — FHLB advances 274,000 — 274,013 — Interest payable 3,702 — 3,702 — 23 Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Financial assets Cash and cash equivalents $ 21,757 $ 21,757 $ — $ — Interest-earning time deposits 300 — 300 — Available for sale securities 258,192 3,161 255,031 — Held to maturity securities 3,498 — 3,421 — Loans held for sale 1,093 — — 1,093 Loans and leases receivable, net 1,158,879 — — 1,099,274 FHLB stock 13,907 — 13,907 — Interest receivable 6,030 — 6,030 — Financial liabilities Deposits 1,093,940 — 1,095,961 — FHLB advances 265,000 — 264,162 — Interest payable 4,832 — 4,832 — Note 6: 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. 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. The following table presents the computation of basic and diluted EPS for the periods indicated: Three Months Ended March 31, 2025 2024 Net income $ 1,968 $ 2,369 Shares outstanding for Basic EPS: Average shares outstanding 10,712,912 11,170,354 Less: average restricted stock award shares not vested 83,379 167,158 Less: average unearned ESOP Shares 788,885 842,993 Shares outstanding for Basic EPS 9,840,648 10,160,203 Additional Dilutive Shares 243,649 69,477 Shares outstanding for Diluted EPS 10,084,297 10,229,680 Basic Earnings Per Share $ 0.20 $ 0.23 Diluted Earnings Per Share $ 0.20 $ 0.23 24 Note 7: Benefit Plans 401(k) The Company has a retirement savings 401(k) plan, in which substantially all employees may participate. The Company matches employees' contributions at the rate of 50 percent for the first six percent of base salary contributed by participants. The Company’s expense for the plan was $ 65,000 and $ 68,000 for the three months ended March 31, 2025 and 2024, respectively. Employee Stock Ownership Plan As part of the reorganization and related stock offering, the Company established an Employee Stock Ownership Plan, or ESOP, covering substantially all employees. The ESOP acquired 1,082,130 shares of Company common stock at an average price of $ 13.59 per share on the open market with funds provided by a loan from the Company. Dividends on unallocated shares used to repay the loan for the Company are recorded as a reduction of the loan or accrued interest, as applicable. Dividends on allocated shares paid to participants are reported as compensation expense. Unearned ESOP shares which have not yet been allocated to ESOP participants are excluded from the computation of average shares outstanding for earnings per share calculation. Accordingly, 775,509 and 789,035 shares of common stock acquired by the ESOP were shown as a reduction of stockholders’ equity at March 31, 2025 and December 31, 2024, respectively. Shares are released to participants proportionately as the loan is repaid. ESOP expense for the three months ended March 31, 2025 and 2024 was $ 178,000 and $ 154,000 , respectively. March 31, 2025 December 31, 2024 Earned ESOP shares 306,621 293,095 Unearned ESOP shares 775,509 789,035 Total ESOP shares 1,082,130 1,082,130 Quoted per share price $ 12.80 $ 14.15 Fair value of earned shares (in thousands) $ 3,925 $ 4,147 Fair value of unearned shares (in thousands) $ 9,927 $ 11,165 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 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. 25 The following table summarizes the restricted stock award activity in the 2020 EIP during the three months ended March 31, 2025. Three Months Ended March 31, 2025 Number of Restricted Shares Weighted Average Grant Date Fair Value Non-vested, beginning of period 83,379 $ 10.55 Granted — — Vested — — Forfeited — — Non-vested, March 31, 2025 83,379 10.55 Total compensation cost recognized in the Condensed Consolidated Statements of Income for restricted stock awards during the three months ended March 31, 2025 and 2024 was $ 217,000 and $ 219,000 , and the related tax benefit recognized was $ 46,000 and $ 46,000 , respectively. As of March 31, 2025, unrecognized compensation expense related to restricted stock awards was $ 217,000 . Stock Option Plan. On October 1, 2020, the Company awarded options to purchase 1,095,657 of common stock under the 2020 EIP with an exercise price of $ 10.53 per share, the fair value of a share of the Company's common stock on the date of 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 a share of the Company's common stock on the date of the grant, to eligible participants. These options awarded vest in five equal annual installments with the first vesting having occurred on June 30, 2021. Forfeited options are available to be awarded in future grants until the 2020 EIP terminates in September 2030. The following table summarizes the stock option activity in the 2020 EIP during the three months ended March 31, 2025. Three Months Ended March 31, 2025 Number of Shares Weighted-Average Exercise Price Balance at beginning of period 1,016,497 $ 10.55 Granted — — Exercised — — Forfeited/expired — — Balance, March 31, 2025 1,016,497 10.55 Exercisable at end of period 812,401 $ 10.55 The fair value of options granted is estimated on the date of the grant using a Black Scholes model with the following assumptions: April 1, 2021 Dividend yields 1.90 % Volatility factors of expected market price of common stock 26.98 % Risk-free interest rates 1.16 % Expected life of options 6.1 years 26 A summary of the status of the Company stock option shares as of March 31, 2025 is presented below. Shares Weighted Average Grant Date Fair Value Non-vested, beginning of year 204,096 $ 2.91 Vested — — Granted — — Forfeited — — Non-vested, March 31, 2025 204,096 $ 2.91 Total compensation cost recognized in the Condensed Consolidated Statements of Income for option-based payment arrangements for the three months ended March 31, 2025 and 2024 was $ 146,000 and $ 148,000 , and the related tax benefit recognized was $ 16,000 and $ 16,000 , respectively. As of March 31, 2025, unrecognized compensation expense related to the stock option awards was $ 146,000 . Note 8: Qualified Affordable Housing Investments The Company has investments in certain limited partnerships that fund affordable housing projects and provide the Company with low income housing tax credits ("LIHTC"). At March 31, 2025 and December 31, 2024, the balance of these investments in LIHTC totaled $ 907,000 and $ 951,000 , respectively. These balances are reflected in the other assets line of the Condensed Consolidated Balance Sheets. The assets are amortized as a component of the provision for income taxes. The following table summarizes the amortization expense and tax credits recognized for the Company's LIHTC investments for the three months ended March 31, 2025 and 2024. Three Months Ended March 31, 2025 2024 Amortization expense $ 44 $ 44 Tax credits recognized 47 47 Note 9: Segment Information The Company has one reportable segment: community banking. The Company's reportable segment is determined by the Chief Executive Officer, who serves as the chief operating decision maker ("CODM"), based on information regarding the Company's products and services. The CODM evaluates the financial performance of the Company's business components by assessing revenue streams, significant expenses, and budget-to-actual results. The Company's primary source of revenue is providing banking services to its customers. Significant expenses associated with banking operations include interest expense, credit loss expense, and salaries and employee benefits. The CODM evaluates performance, directs resource allocation, and makes key operating decisions based on consolidated net income reported in the Condensed Consolidated Statements of Income. Segment assets are measured based on total consolidated assets as reported in the Condensed Consolidated Balance Sheets. Note 10: Subsequent Event Subsequent to March 31, 2025 through May 9, 2025 , the Company purchased 82,776 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 65,472 shares available for future repurchase. 27