Richmond Mutual Bancorporation, Inc. 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Management’s discussion and analysis of financial condition of the Richmond Mutual Bancorporation, Inc. (the “Company”) at June 30, 2026, and the consolidated results of operations for the three and six month periods ended June 30, 2026, compared to the same periods in 2025, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Form 10-Q. The terms “we,” “our,” “us,” or the “Company” refer to Richmond Mutual Bancorporation, Inc. and its consolidated direct and indirect subsidiaries, including First Bank Richmond, which we sometimes refer to as the “Bank,” unless the context otherwise requires. Cautionary Note Regarding Forward-Looking Statements Certain matters in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook,” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” These forward-looking statements include, but are not limited to: • statements of our goals, intentions and expectations; • statements regarding our business plans, prospects, growth and operating strategies; • statements regarding the quality of our loan and investment portfolios; and • estimates of our risks and future costs and benefits. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These forward-looking statements are based on our current beliefs and expectations and, by their nature, are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Important factors that could cause our actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: • adverse impacts to economic conditions in our local market areas and other markets where we have lending relationships; • effects of employment levels, labor shortages, persistent inflation, recessionary pressures, or slowing economic growth; • changes in interest rate levels and the duration of such changes, including actions by the Board of Governors of the Federal Reserve System (the "Federal Reserve"); • the impact of inflation and monetary and fiscal policy responses thereto, and their impact on consumer behavior; • effects of a federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; • changes in the level and direction of loan or lease delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; • our ability to access cost-effective funding including maintaining the confidence of depositors; 30 • unexpected outflows of uninsured deposits may require us to sell investment securities at a loss; • fluctuations in real estate values, and residential, commercial, and multi-family real estate market conditions; • demand for loans and deposits in our market area; • our ability to implement and change our business strategies; • competition among depository and other financial institutions and equipment financing companies; • bank failures or other adverse developments at banks and related negative press about the banking industry in general on investor and depositor sentiment; • inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on our loans and leases; • adverse changes in the securities or secondary mortgage markets; • changes in the quality or composition of our loan, lease or investment portfolios; • our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, "denial of service" attacks, "hacking" and identity theft, and other attacks on our information technology systems or on our third-party vendors; • results of examinations by regulatory authorities and potential requirements to increase credit loss allowances, write-down assets, reclassify assets, change our regulatory capital position, or affect our liquidity and earnings; • the inability of third-party providers to perform as expected; • our ability to manage market risk, credit risk and operational risk in the current economic environment; • our ability to enter new markets successfully and capitalize on growth opportunities; • our ability to attract and retain key employees; • our compensation expense associated with equity allocated or awarded to our employees; • changes in the financial condition, results of operations or future prospects of issuers of securities that we own; • our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto; • changes in consumer spending, borrowing and savings habits; • changes in accounting policies and practices, as may be adopted by banking regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission ("SEC") or the Public Company Accounting Oversight Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; • legislation or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; • our ability to pay dividends on our common stock; • the ability to adapt to rapid technological changes, including advancements related to artificial intelligence ("AI"), the use of AI models in credit decisioning, customer service, and operations, including risks of model error, bias, 31 regulatory scrutiny under fair lending laws, and third-party AI dependencies, digital banking platforms, and cybersecurity; • risk associated with the evolving regulatory and market environment for digital assets and cryptocurrency, including the potential impact on customer behavior, deposit flows, and our ability to offer or support related products or services; • geopolitical developments and international conflicts, including but not limited to tensions or instability in Eastern Europe, the Middle East, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, energy prices, or economic activity in specific industry sectors; • other economic, competitive, governmental, regulatory, and technical factors affecting our operations, pricing, products and services; • the effects of climate change, severe weather, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest, and other external events; and • the other risks detailed in this report and from time to time in our other filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). In addition, statements about the potential effects of the Company’s completed merger with The Farmers Bancorp, Frankfort, Indiana ("Farmers Bancorp") on the Company’s business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factors and future developments which are uncertain, unpredictable and in many cases beyond the Company’s control, including the following: • the potential that anticipated cost savings, synergies, or revenue enhancements from the merger may not be realized or may take longer to achieve than expected; • the ability to successfully integrate the operations, systems, personnel, and technologies of the combined company; • disruption to customer, employee, or vendor relationships, including key community relationships; • diversion of management’s attention from ongoing operations and strategic initiatives as a result of integration activities; • lower-than-expected revenues or profitability following the merger; • higher-than expected transaction or integration costs; and • other factors detailed in the Company's filings with the SEC. These forward-looking statements are based on information known to us as of the date of this Form 10-Q and speak only as of that date. We undertake no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements. Additional factors that may affect our results are discussed under Part II, Item 1A in this document under the heading "Risk Factors." Overview The Company, a Maryland corporation, is a bank holding company for its wholly owned subsidiary, First Bank Midwest (formerly First Bank Richmond). Substantially all of the Company's business is conducted through First Bank Midwest. The Company is regulated by the Federal Reserve and the Indiana Department of Financial Institutions ("IDFI"). The Company's corporate office is located at 31 North 9th Street, Richmond, Indiana, and its telephone number is (765) 962-2581. 32 First Bank Midwest is an Indiana state-chartered commercial bank headquartered in Richmond, Indiana. The Bank was originally established in 1887 as an Indiana state-chartered mutual savings and loan association and in 1935 converted to a federal mutual savings and loan association, operating under the name First Federal Savings and Loan Association of Richmond. In 1993, the Bank converted to a state-chartered mutual savings bank and changed its name to First Bank Richmond, S.B. In 1998, the Bank, in connection with its non-stock mutual holding company reorganization, converted to a national bank charter operating as First Bank Richmond, National Association. In July 2007, Richmond Mutual Bancorporation-Delaware, the Bank’s then current holding company, acquired Mutual Federal Savings Bank headquartered in Sidney, Ohio. Mutual Federal Savings Bank was operated independently as a separately chartered, wholly owned subsidiary of Richmond Mutual Bancorporation-Delaware until 2016 when it was combined with the bank through an internal merger transaction that consolidated both banks into a single, more efficient commercial bank charter. In 2017, the Bank converted to an Indiana state-chartered commercial bank and changed its name to First Bank Richmond. On July 1, 2026, the Company completed its merger with The Farmers Bancorp, Frankfort, Indiana ("Farmers Bancorp"), and The Farmers Bank merged with and into First Bank Richmond. Following completion of the merger, First Bank Richmond operates under the name First Bank Midwest. First Bank Midwest provides a full range of banking services through its branch locations in Cambridge City, Centerville, Fishers, Frankfort, Kirklin, Lebanon, Michigantown, Mulberry, Noblesville, Richmond, Rossville, Shelbyville, Sheridan, Tipton, and Westfield, Indiana, and its locations in Columbus, Sidney, Piqua, and Troy, Ohio. Additionally, the Bank operates a loan production office in Carmel, Indiana. Administrative, trust, and wealth management services are conducted through the Bank's Financial Center located in Richmond, Indiana, as well as its branch located in Frankfort, Indiana. As an Indiana-chartered commercial bank, the Bank is subject to regulation by the IDFI and the Federal Deposit Insurance Corporation (“FDIC”). Our principal business consists of attracting deposits from the general public, as well as brokered deposits, and investing those funds primarily in loans secured by commercial and multi-family real estate, first mortgages on owner-occupied, one- to four-family residences, a variety of consumer loans, direct financing leases and commercial and industrial loans. We also obtain funds by utilizing Federal Home Loan Bank (“FHLB”) advances. Funds not invested in loans generally are invested in investment securities, including mortgage-backed and mortgage-related securities and government-sponsored agency and municipal bonds. The Bank generates commercial, mortgage and consumer loans and leases and gathers deposits primarily within its market areas in Indiana and Ohio, including the communities served by its branch locations. The Bank also operates a nationwide equipment leasing business, focusing on direct financing leases for equipment integral to small and mid-sized business operations, including technology, medical, manufacturing, industrial, construction, and transportation equipment. The Bank's trust and wealth management division provides fiduciary, investment management, and custodial services. Wealth management assets under management and administration totaled $268.9 million at June 30, 2026. Our results of operations are primarily dependent on net interest income, the difference between interest income earned on loans and investments and interest expense paid on deposits and borrowings. Other significant sources of income include service charges on deposit accounts, loan servicing fees, gains on sales of residential mortgage loans, and securities transactions. Changes in market interest rates, the shape of the yield curve, and the mix and volume of interest-earning assets and interest-bearing liabilities significantly affect the Company's net interest margin and profitability. At June 30, 2026, on a consolidated basis, we had $1.6 billion in assets, $1.2 billion in loans and leases, net of allowance, $1.1 billion in deposits, and $148.3 million in stockholders’ equity. At June 30, 2026, the Bank’s total risk-based capital ratio was 14.24%, exceeding the 10.0% requirement for a well-capitalized institution. For the six months ended June 30, 2026, net income was $5.0 million, compared with net income of $4.6 million for the six months ended June 30, 2025. Completion of Merger with The Farmers Bancorp, Frankfort, Indiana On November 11, 2025, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with Farmers Bancorp, pursuant to which Farmers Bancorp was expected to merge with and into the Company, with the Company as the surviving corporation (the “merger”). On July 1, 2026, the Company completed its merger with Farmers Bancorp. Immediately thereafter, The Farmers Bank merged with and into First Bank Richmond, with First Bank Richmond as the surviving institution. Under the terms of the merger agreement, holders of Farmers Bancorp common stock received 3.40 shares of Company common stock for each share of Farmers Bancorp common stock. Upon completion of the merger, former Farmers 33 Bancorp shareholders own approximately 38% of the Company's outstanding common stock. The merger is being accounted for as a business combination under ASC 805, Business Combinations, with the Company as the accounting acquirer. The combined company continues to trade on the Nasdaq Capital Market under the ticker symbol "RMBI." The holding company continues to operate under the name "Richmond Mutual Bancorporation, Inc.," and the combined bank now operates under the name "First Bank Midwest." The administrative headquarters of the combined company remains in Richmond, Indiana, and the administrative headquarters of the combined bank is located in Frankfort, Indiana. The financial results presented in this Form 10-Q reflect the Company's operations through June 30, 2026, prior to completion of the merger. Accordingly, the assets, liabilities, results of operations, and cash flows of Farmers Bancorp are not included in the Company’s condensed consolidated financial statements for the quarter ended June 30, 2026. The operating results of Farmers Bancorp will first be included in the Company's financial results for the quarter ending September 30, 2026. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). In doing so, we are required to make estimates and assumptions. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We have reviewed our critical accounting estimates with the audit committee of our Board of Directors. There have been no significant changes during the six months ended June 30, 2026 to the critical accounting estimates reported in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Form 10-K. The completion of the merger with Farmers Bancorp on July 1, 2026 did not impact the critical accounting estimates used in the preparation of the Company's condensed consolidated financial statements as of and for the six months ended June 30, 2026. See "Critical Accounting Estimates" included in Part II, Item 7 of our 2025 Form 10-K for a further discussion of our Critical Accounting Estimates. Comparison of Financial Condition at June 30, 2026 and December 31, 2025 General. Total assets increased $26.2 million, or 1.7%, to $1.6 billion at June 30, 2026 from December 31, 2025. The increase was primarily the result of an increase in loans and leases, net of allowance for credit losses, of $31.0 million, or 2.6%, to $1.2 billion, partially offset by a $7.0 million, or 2.8%, decrease in investment securities to $247.6 million. Investment Securities. Investment securities available for sale totaled $245.3 million and $251.9 million, while investment securities held to maturity totaled $2.4 million and $2.7 million at June 30, 2026 and December 31, 2025, respectively. The $6.6 million, or 2.6%, decrease in investment securities available for sale was primarily due to $7.0 million in maturities and principal repayments, partially offset by $955,000 in purchases of securities. The $394,000 decrease in investment securities held to maturity was the result of scheduled principal repayments and maturities. The proceeds received from the maturities and repayments of investment securities were primarily used to fund loan growth consistent with the Company's strategy to prioritize loan growth and deploy liquidity into higher-yielding assets in a moderating interest rate environment. Loans and Leases. Loans and leases, net of allowance for credit losses on loans and leases, increased $31.0 million, or 2.6% from December 31, 2025, to $1.2 billion at June 30, 2026. The increase in loans and leases was attributable to increases in commercial and industrial loans, construction and development loans, commercial mortgage loans, and home equity lines of credit of $15.6 million, $14.5 million, $4.8 million, and $2.3 million, respectively. These increases were partially offset by a $2.2 million decrease in direct financing leases, a $1.3 million decrease in consumer loans, a $1.1 million decrease in multi-family loans, and a $1.0 million decrease in residential mortgage loans. At June 30, 2026, there were no loans held for sale, compared to $828,000 at December 31, 2025. Nonaccrual loans and leases totaled $20.0 million at June 30, 2026, compared to $13.2 million at December 31, 2025. The increase was primarily due to the transfer of a $2.4 million multi-family loan from past due 90 days or more and accruing status as of December 31, 2025 to nonaccrual status, and the addition of a $3.5 million multi-family loan that was placed on 34 nonaccrual status during the second quarter of 2026 due to a troubled loan modification. Accruing loans and leases past due 90 days or more totaled $1.8 million and $4.2 million at June 30, 2026 and December 31, 2025, respectively, with the decrease primarily due to the transfer of the aforementioned multi-family loan to nonaccrual status. Allowance for Credit Losses. The allowance for credit losses on loans and leases increased $508,000, or 3.1%, to $17.0 million at June 30, 2026 from December 31, 2025. At June 30, 2026, the allowance for credit losses on loans and leases totaled 1.39% of total loans and leases outstanding. At December 31, 2025, the allowance for credit losses on loans and leases totaled $16.5 million, or 1.38% of total loans and leases outstanding. Net charge-offs during the first half of 2026 totaled $904,000 and were primarily attributable to direct financing leases, compared to net charge-offs of $1.0 million during the first half of 2025. Management regularly analyzes conditions within its geographic markets and evaluates its loan and lease portfolio. The Company evaluated its exposure to potential loan and lease losses as of June 30, 2026, which evaluation included consideration of a potential recession due to inflation, stock market volatility, and overall geopolitical tensions. Credit metrics are being reviewed and stress testing is being performed on the loan portfolio on an ongoing basis. For additional information on the allowance for credit losses, see "Allowance for Credit Losses on Loans and Leases" and "Economic Outlook" in "Note 5: Loans, Leases and Allowance" of the "Notes to Condensed Consolidated Financial Statements" in this report. Other Assets . Other assets increased $533,000, or 2.8%, to $19.4 million at June 30, 2026 from $18.8 million at December 31, 2025. The increase was primarily caused by an increase in the Company's prepaid assets, resulting from new software and service implementations. Deposits. Total deposits increased $31.8 million, or 2.8%, to $1.1 billion at June 30, 2026 from December 31, 2025. The increase in deposits primarily was due to increases in brokered time deposits of $28.3 million and savings and money market accounts of $11.0 million. These increases were partially offset by a decrease in retail (non-brokered) time deposits of $17.8 million. Brokered deposits totaled $264.3 million, or 23.0% of total deposits, at June 30, 2026, compared to $235.9 million, or 21.2% of total deposits, at December 31, 2025. At June 30, 2026, noninterest-bearing deposits totaled $100.1 million, or 8.7% of total deposits, compared to $100.1 million, or 9.0% of total deposits, at December 31, 2025. As of June 30, 2026, approximately $271.6 million of our deposit portfolio, or 23.7% of total deposits, was uninsured, excluding collateralized public deposits. The uninsured amounts are estimated based on the methodologies and assumptions used for First Bank Richmond's regulatory reporting requirements. Borrowings. Total borrowings decreased $8.0 million, or 3.2%, to $244.0 million at June 30, 2026, compared to $252.0 million at December 31, 2025, reflecting the repayment of other borrowings of $12.0 million, partially offset by a $4.0 million increase in FHLB advances. Management strategically utilizes FHLB advances to supplement deposit funding, support loan growth, and manage interest rate risk. Management will continue to monitor borrowing needs and adjust FHLB advances as necessary to maintain liquidity and support lending activities. Stockholders’ Equity. Stockholders’ equity totaled $148.3 million at June 30, 2026, an increase of $2.5 million, or 1.7%, from December 31, 2025. The increase in stockholders' equity was primarily attributable to net income of $5.0 million, partially offset by $2.9 million in dividends paid to Company stockholders. The available-for-sale portfolio had a net unrealized loss of $44.0 million at June 30, 2026, compared to $43.7 million at December 31, 2025. The after-tax impact of the AOCL on equity was $34.7 million at June 30, 2026, compared to $34.6 million at December 31, 2025. The Company's equity to asset ratio was 9.55% at June 30, 2026. At June 30, 2026, the Bank's Tier 1 capital to total assets ratio was 10.90% and its capital was well in excess of all regulatory requirements. Comparison of Results of Operations for the Three Months Ended June 30, 2026 and 2025. General. Net income for the three months ended June 30, 2026 was $2.2 million, a $375,000 or 14.4% decrease from net income of $2.6 million for the three months ended June 30, 2025. Diluted earnings per share were $0.22 for the second quarter of 2026, compared to $0.26 diluted earnings per share for the second quarter of 2025. The decrease in net income 35 primarily was the result of an increase in noninterest expense of $2.1 million, primarily due to merger-related expenses, partially offset by an increase in net interest income of $1.3 million and an increase in noninterest income of $500,000. Interest Income. Interest income increased $552,000, or 2.6%, to $21.9 million during the quarter ended June 30, 2026, compared to $21.3 million during the quarter ended June 30, 2025. The increase was primarily driven by higher interest income on loans and leases resulting from loan growth and higher yields. Interest income on loans and leases increased $607,000, or 3.2%, to $19.8 million for the quarter ended June 30, 2026, from $19.2 million for the comparable quarter in 2025. The increase was primarily driven by an increase of $29.8 million in the average balance of loans and leases, and a four basis point improvement in the average yield. The average yield on loans and leases rose to 6.55% from 6.51%, as new loans and leases were originated at higher rates than the average yield in the existing loan and lease portfolio and some variable rate loans repriced to higher rates during the period as a result of an increase in market interest rates. Interest income on investment securities, excluding FHLB stock, decreased $31,000, or 1.9%, to $1.6 million for the second quarter of 2026 from the comparable quarter in 2025. The decrease was due to a $1.1 million decrease in the average balance, primarily as a result of maturities and paydowns on securities, and a four basis point decrease in the average yield earned on investment securities. The average yield on investment securities, excluding FHLB stock, decreased to 2.52% for the second quarter of 2026, compared to 2.56% for the second quarter of 2025. The average balance of investment securities, excluding FHLB stock, decreased to $250.6 million for the quarter ended June 30, 2026, compared to $251.7 million for the quarter ended June 30, 2025. Dividends on FHLB stock decreased $8,000, or 2.6%, during the quarter ended June 30, 2026, from the comparable quarter in 2025, resulting in an average yield on FHLB stock of 8.66% for the three months ended June 30, 2026, compared to 8.89% for the three months ended June 30, 2025. Interest income on cash and cash equivalents decreased $15,000, or 6.3%, to $228,000 during the quarter ended June 30, 2026 from the comparable quarter in 2025, due to a 40 basis point decrease in the average yield. Interest Expense. Interest expense decreased $762,000, or 7.2%, to $9.8 million for the quarter ended June 30, 2026, compared to $10.6 million for the quarter ended June 30, 2025. The decrease reflected lower funding costs across both deposit and borrowing categories. Interest expense on deposits decreased $599,000, or 7.7%, to $7.2 million for the quarter ended June 30, 2026, from $7.8 million for the comparable quarter in 2025. The decrease primarily was attributable to a 32 basis point decrease in the average rate paid on interest-bearing deposits, which fell to 2.82% from 3.14%. The average balance of interest-bearing deposits increased to $1.0 billion from $995.4 million, partially offsetting the rate-driven reduction in expense. Interest expense on FHLB borrowings decreased $163,000, or 5.9%, to $2.6 million in the second quarter of 2026 compared to $2.8 million for the same quarter in 2025. The decrease was primarily attributable to an $8.5 million reduction in the average balance of FHLB borrowings, which declined to $253.6 million from $262.1 million, and a decrease in the average rate paid on FHLB borrowings of 12 basis points to 4.12%, compared to 4.24% in the second quarter of 2025. Management continues to actively evaluate funding mix and pricing strategies to balance interest expense with overall liquidity needs. This includes a focus on deepening core deposit relationships, selectively reducing higher-cost deposits, and managing wholesale borrowings to optimize the cost of funds. Net Interest Income. Net interest income before the provision for credit losses increased $1.3 million, or 12.2%, to $12.1 million for the second quarter of 2026, compared to $10.8 million for the second quarter of 2025. This increase was due to a 32 basis point increase in the average interest rate spread and a $9.4 million increase in average net earning assets. The improved spread reflects a favorable shift in asset yields as loans and investment securities repriced to or were originated at higher market rates, paired with a decrease in funding costs. Net interest margin (annualized) was 3.22% for the three months ended June 30, 2026, compared to 2.93% for the three months ended June 30, 2025. The increase in net interest margin was attributable to improved asset yields, particularly on loans and leases, paired with a decrease in funding costs. Average Balances, Interest and Average Yields/Cost. The following table sets forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from 36 average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Average balances have been calculated using daily balances. Non-accruing loans have been included in the table as loans carrying a zero yield. Loan fees are included in interest income on loans and are not material. Three Months Ended June 30, 2026 2025 Average Balance Outstanding Interest Earned/ Paid Yield/ Rate Average Balance Outstanding Interest Earned/ Paid Yield/ Rate (Dollars in thousands) Interest-earning assets: Loans and leases receivable $ 1,207,815 $ 19,790 6.55 % $ 1,178,026 $ 19,183 6.51 % Securities 250,647 1,580 2.52 % 251,717 1,611 2.56 % FHLB stock 13,907 301 8.66 % 13,907 309 8.89 % Cash and cash equivalents and other 25,214 228 3.62 % 24,156 243 4.02 % Total interest-earning assets 1,497,583 21,899 5.85 % 1,467,806 21,346 5.82 % Non-earning assets 40,111 40,536 Total assets 1,537,694 1,508,342 Interest-bearing liabilities: Savings and money market accounts 343,151 1,845 2.15 % 316,419 1,833 2.32 % Interest-bearing checking accounts 147,925 401 1.08 % 140,977 373 1.06 % Certificate accounts 533,159 4,967 3.73 % 538,026 5,605 4.17 % Borrowings 253,637 2,612 4.12 % 262,088 2,775 4.24 % Total interest-bearing liabilities 1,277,872 9,825 3.08 % 1,257,510 10,586 3.37 % Noninterest-bearing demand deposits 100,108 107,351 Other liabilities 13,522 13,222 Stockholders' equity 146,192 130,259 Total liabilities and stockholders' equity 1,537,694 1,508,342 Net interest income $ 12,074 $ 10,760 Net earning assets $ 219,711 $ 210,296 Net interest rate spread (1) 2.77 % 2.45 % Net interest margin (2) 3.22 % 2.93 % Average interest-earning assets to average interest-bearing liabilities 117.19 % 116.72 % _____________ (1) Annualized. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. (2) Annualized. Net interest margin represents net interest income divided by average total interest-earning assets. Provision for Credit Losses. A provision for credit losses of $823,000 was recorded during the three months ended June 30, 2026, compared to $745,000 for the three months ended June 30, 2025. Net charge-offs during the second quarter of 2026 were $557,000 compared to $626,000 in the second quarter of 2025. The increased provision for credit losses during the quarter was primarily due to increases in loan and lease balances and changes in portfolio composition and credit risk factors. While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio, uncertainties relating to the level of our allowance for credit losses remain heightened as a result of continued concern about a potential recession due to tariffs, inflation, stock market volatility, and overall geopolitical tensions. 37 Noninterest Income. Noninterest income increased $500,000, or 46.3%, to $1.6 million for the quarter ended June 30, 2026, compared to the same quarter in 2025. The increase was primarily attributable to the absence of a $157,000 net loss on sales of securities recognized during the second quarter of 2025 and an increase in other income. Other income increased $281,000, or 79.5%, to $635,000 for the quarter ended June 30, 2026, compared to $354,000 for the comparable quarter in 2025, primarily due to increased wealth management income, including higher estate fees. Net gains on loan and lease sales increased $80,000, or 78.9%, to $181,000 during the quarter ended June 30, 2026, compared to $101,000 during the comparable quarter in 2025, primarily due to higher mortgage banking activity. Partially offsetting these increases was a decrease in loan and lease servicing fees of $41,000, or 29.9%, to $95,000 for the quarter ended June 30, 2026, compared to $136,000 for the comparable quarter in 2025. Noninterest Expense. Noninterest expense increased $2.1 million, or 25.4%, to $10.2 million for the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to $1.9 million of nonrecurring merger-related expenses recorded in the second quarter of 2026, consisting primarily of professional fees and other transaction-related costs. Salaries and employee benefits, the largest component of noninterest expense, decreased $41,000, or 0.9%, to $4.7 million, primarily due to reduced equity compensation expenses. Data processing fees increased $175,000, or 18.9%, to $1.1 million, primarily due to increased software implementation expenses. Other expenses increased $179,000, or 20.2%, to $1.1 million, primarily due to real estate tax and force-placed insurance expenses paid on nonaccrual loans. Legal and professional fees decreased $94,000, or 21.0%, to $354,000. Deposit insurance expense decreased $54,000, or 17.8%, to $250,000, primarily due to shifts in First Bank Richmond's asset and deposit mix and related impact on FDIC assessments. Income Tax Expense. The provision for income taxes increased $54,000, or 14.1%, to $436,000 during the three months ended June 30, 2026, compared to $382,000 for the same period in 2025. The effective tax rate was 16.4% for the current quarter, compared to 12.8% for the comparable quarter in 2025. The increase in the effective tax rate was primarily attributable to nondeductible merger-related expense incurred through June 30, 2026, as well as a decrease in tax-exempt interest and an increase in pre-tax income during the first half of 2026. Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025. General. Net income for the six months ended June 30, 2026 was $5.0 million, a $442,000 or 9.7% increase from net income of $4.6 million for the six months ended June 30, 2025. Diluted earnings per share were $0.51 for the first half of 2026, compared to $0.46 diluted earnings per share for the first half of 2025. The increase in net income primarily was the result of increases in net interest income of $2.5 million and in noninterest income of $636,000, partially offset by increases of $2.4 million in noninterest expense and $268,000 in the provision for income taxes. Interest Income. Interest income increased $847,000, or 2.0%, to $43.1 million during the six months ended June 30, 2026, compared to $42.2 million during the six months ended June 30, 2025. Interest income on loans and leases increased $944,000, or 2.5%, to $38.9 million for the six months ended June 30, 2026, from $38.0 million for the comparable period in 2025, due to a $16.2 million increase in the average balance of loans to $1.2 billion for the six months ended June 30, 2026 compared to the same period last year, and a seven basis point increase in the average yield earned on loans and leases. The increase in the average yield was primarily attributable to new loans and leases originated at higher rates and existing variable-rate loans in the portfolio repricing upward. The average yield on loans and leases was 6.51% for the six months ended June 30, 2026, compared to 6.44% for the comparable period in 2025. Interest income on investment securities, excluding FHLB stock, decreased $102,000, or 3.1%, to $3.2 million for the first half of 2026 from the comparable period in 2025. The decrease was due to a $3.2 million decrease in the average balance, which resulted from maturities and principal repayments that were used to fund loan growth. The average yield on investment securities, excluding FHLB stock, was 2.49% for the first half of 2026, compared to 2.54% for the same period in 2025. The average balance of investment securities, excluding FHLB stock, decreased to $253.6 million for the six months ended June 30, 2026, compared to $256.9 million for the six months ended June 30, 2025. Dividends on FHLB stock decreased $28,000, or 4.5%, during the six months ended June 30, 2026 from the comparable period in 2025, resulting in an average yield on FHLB stock of 8.51% for the six months ended June 30, 2026, compared to 8.92% for the six months ended June 30, 2025. Interest income on cash and cash equivalents increased $32,000, or 8.6%, to $406,000 during the six months ended June 30, 2026 from the comparable period in 2025, due to a $3.9 million 38 increase in the average balance of cash and cash equivalents reflecting higher liquidity maintained in advance of the merger, partially offset by a 38 basis point decrease in the average yield. Interest Expense. Interest expense decreased $1.7 million, or 7.8%, to $19.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. Interest expense on deposits decreased $1.1 million, or 7.3%, to $14.5 million for the six months ended June 30, 2026, from the comparable period in 2025. The decrease in interest expense on deposits primarily was attributable to a 30 basis point decrease in the average rate paid, which declined to 2.85% for the six months ended June 30, 2026, compared to 3.16% for the six months ended June 30, 2025, partially offset by a $25.1 million increase in the average balance of interest-bearing deposits. The average balance of interest-bearing deposits was $1.0 billion for the six months ended June 30, 2026, compared to $992.4 million in the comparable period in 2025. Interest expense on FHLB borrowings decreased $511,000, or 9.2%, to $5.0 million in the first half of 2026 compared to $5.5 million for the same period in 2025, primarily due to a $20.9 million decrease in the average balance of FHLB borrowings and a decrease in the average rate paid on FHLB borrowings of six basis points. The average balance of FHLB borrowings totaled $247.4 million during the six months ended June 30, 2026, compared to $268.3 million for the period ended June 30, 2025. The average rate paid on FHLB borrowings was 4.07% for the six months ended June 30, 2026, compared to 4.13% for the first half of 2025. Net Interest Income. Net interest income before the provision for credit losses increased $2.5 million, or 11.9%, to $23.5 million for the first half of 2026, compared to $21.0 million for the first half of 2025. This increase was due to a 31 basis point increase in the average interest rate spread and an increase of $12.7 million in average net earning assets. The improved spread reflects a favorable shift in asset yields outpacing the increase in funding costs, as loans and investment securities repriced or were originated at higher market rates. Net interest margin (annualized) was 3.17% for the six months ended June 30, 2026, compared to 2.86% for the six months ended June 30, 2025. The increase in net interest margin was attributable to improved asset yields, particularly on loans and leases, paired with a decrease in funding costs. Average Balances, Interest and Average Yields/Cost. The following table sets forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Average balances have been calculated using daily balances. Non-accruing loans have been included in the table as loans carrying a zero yield. Loan fees are included in interest income on loans and are not material. 39 Six Months Ended June 30, 2026 2025 Average Balance Outstanding Interest Earned/ Paid Yield/ Rate Average Balance Outstanding Interest Earned/ Paid Yield/ Rate (Dollars in thousands) Interest-earning assets: Loans and leases receivable $ 1,195,543 $ 38,901 6.51 % $ 1,179,329 $ 37,957 6.44 % Securities 253,649 3,162 2.49 % 256,866 3,264 2.54 % FHLB stock 13,907 592 8.51 % 13,907 620 8.92 % Cash and cash equivalents and other 23,064 406 3.52 % 19,177 374 3.90 % Total interest-earning assets 1,486,163 43,061 5.79 % 1,469,279 42,215 5.75 % Non-earning assets 39,243 40,278 Total assets 1,525,406 1,509,557 Interest-bearing liabilities: Savings and money market accounts 331,888 3,505 2.11 % 310,484 3,556 2.29 % Interest-bearing checking accounts 147,308 798 1.08 % 137,737 697 1.01 % Certificate accounts 538,356 10,208 3.79 % 544,192 11,403 4.19 % Borrowings 247,398 5,029 4.07 % 268,343 5,540 4.13 % Total interest-bearing liabilities 1,264,950 19,540 3.09 % 1,260,756 21,196 3.36 % Noninterest-bearing demand deposits 99,240 103,316 Other liabilities 13,916 13,477 Stockholders' equity 147,300 132,008 Total liabilities and stockholders' equity 1,525,406 1,509,557 Net interest income $ 23,521 $ 21,019 Net earning assets $ 221,213 $ 208,523 Net interest rate spread (1) 2.70 % 2.39 % Net interest margin (2) 3.17 % 2.86 % Average interest-earning assets to average interest-bearing liabilities 117.49 % 116.54 % _____________ (1) Annualized. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. (2) Annualized. Net interest margin represents net interest income divided by average total interest-earning assets. Provision for Credit Losses. A provision for credit losses of $1.5 million was recognized during the six months ended June 30, 2026 and the six months ended June 30, 2025. Net charge-offs during the first half of 2026 were $904,000, compared to $1.0 million in the first half of 2025. The provision reflected replenishment of the allowance following charge-offs and was influenced by changes in the macroeconomic forecast, including a modest deterioration in projected economic indicators such as national GDP and unemployment rates. While we believe the steps we have taken and continue to take are necessary to effectively manage our portfolio, uncertainties relating to the level of our allowance for credit losses remain heightened as a result of continued concern about a potential recession due to tariffs, inflation, stock market volatility, and overall geopolitical tensions. Noninterest Income. Noninterest income increased $636,000, or 28.4%, to $2.9 million for the six months ended June 30, 2026, compared to the same period in 2025. During the first half of 2025, net losses on sales of securities totaled $157,000, while no securities were sold in the first half of 2026. Net gains on loan and lease sales increased $158,000, or 80.4%, to $354,000 for the six months ended June 30, 2026, compared to the comparable period in 2025, primarily due to increased mortgage banking activity. Other income increased $313,000, or 43.8%, to $1.1 million for the six months ended June 30, 2026, compared to $714,000 for the comparable period in 2025, primarily due to increased wealth management 40 income. Partially offsetting these increases was a decrease in loan and lease servicing fees of $59,000, or 23.9%, to $189,000 for the first half of 2026 compared to $248,000 for the first half of 2025. Noninterest Expense. Noninterest expense increased $2.4 million, or 14.5%, to $18.9 million for the six months ended June 30, 2026, compared to $16.5 million for the same period in 2025. The increase is primarily attributable to $1.9 million of nonrecurring merger-related expenses recorded in the second quarter of 2026, consisting primarily of professional fees and other transaction-related costs. Salaries and employee benefits, which represent the largest component of noninterest expense, decreased $189,000, or 2.0%, to $9.3 million, reflecting reduced equity compensation expenses. Other expenses increased $393,000, or 19.8%, primarily due to increased tax and insurance expense on nonaccrual loans, as well as $263,000 in check fraud losses related to a single customer, which is nonrecurring in nature. Deposit insurance expense decreased $108,000, or 16.8%, primarily due to changes in the Company's asset and deposit mix and related assessments. Data processing fees increased $465,000, or 25.5%, to $2.3 million, primarily due to increased software implementation and technology upgrade expenses. Income Tax Expense. The provision for income taxes increased $268,000 during the six months ended June 30, 2026, compared to the same period in 2025. The effective tax rate for the first half of 2026 was 16.6% compared to 13.8% for the same period a year ago. The increase in the effective tax rate was primarily attributable to nondeductible merger-related expense incurred through June 30, 2026, as well as a decrease in tax-exempt interest and an increase in pre-tax income during the first half of 2026. Capital and Liquidity Capital. Shareholders' equity totaled $148.3 million at June 30, 2026, compared to $145.8 million at December 31, 2025, an increase of $2.5 million. Equity was positively impacted during the first half of 2026 by net income of $5.0 million, $386,000 related to the allocation of ESOP shares, and $176,000 of stock-based compensation expense. These increases were partially offset by a $189,000 increase in AOCL and $2.9 million in dividends paid to stockholders. We paid a regular quarterly dividend of $0.15 per common share during the second quarter of 2026 and the second quarter of 2025. We currently expect to continue our practice of paying regular quarterly cash dividends on common stock, subject to the Board of Directors' discretion to modify or terminate this practice at any time and for any reason without prior notice. Assuming continued payment during 2026 at the current dividend rate of $0.15 per share, our total dividend payments each quarter would be approximately $1.6 million based on the number of outstanding shares at June 30, 2026. Stock Repurchase Plans. During the six months ended June 30, 2026, the Company did not have an existing stock repurchase program and did not repurchase any shares of its common stock. Stock repurchase programs are utilized from time to time to manage the Company's capital position, enhance shareholder value, and offset dilution from stock-based compensation awards. See Part II, Item 2 - "Unregistered Sales of Equity Securities and Use of Proceeds." Liquidity. Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. The objective of our liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund our operations and to meet obligations and other commitments on a timely basis and at a reasonable cost. We seek to achieve this objective and ensure that funding needs are met by maintaining an appropriate level of liquid funds through asset/liability management, which includes managing the mix and time to maturity of financial assets and financial liabilities on our balance sheet. Our liquidity position is enhanced by our ability to raise additional funds as needed in the wholesale markets. Asset liquidity is provided by liquid assets which are readily marketable or pledgeable or which will mature in the near future. Liquid assets generally include cash, interest-bearing deposits in banks, securities available for sale, maturities and cash flow from securities held to maturity, sales of fixed rate residential mortgage loans in the secondary market, and federal funds sold and resell agreements. Liability liquidity generally is provided by access to funding sources which include core deposits and advances from the FHLB and other borrowing relationships with third party financial institutions. Our liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic 41 disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into our contingency funding plan, which provides the basis for the identification of our liquidity needs. Our liquid assets in the form of cash and cash equivalents and investment securities available for sale totaled $282.8 million at June 30, 2026. Certificates of deposit scheduled to mature in less than one year from June 30, 2026 totaled $409.1 million. Historically, First Bank Richmond has been able to retain a significant amount of its deposits as they mature. As of June 30, 2026, we had approximately $21.4 million held in interest-bearing deposits at the Federal Reserve. We also have the ability to borrow funds as a member of the FHLB. As of June 30, 2026, based upon available, pledgeable collateral, our total remaining borrowing capacity with the FHLB was approximately $115.0 million. Furthermore, at June 30, 2026, we had approximately $135.9 million in securities that were unencumbered and could be used to support additional borrowings through repurchase agreements or the Federal Reserve discount window, as needed. As of June 30, 2026, management was not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us. Our cash flows are comprised of three primary classifications: operating activities, investing activities, and financing activities. Net cash provided by operating activities was $5.8 million for the six months ended June 30, 2026, compared to $7.0 million provided by operating activities for the six months ended June 30, 2025. The decrease in operating cash flows primarily reflected changes in operating assets and liabilities. Net cash used in investing activities totaled $25.1 million for the six months ended June 30, 2026, compared to net cash provided of $2.5 million in the same period of 2025. The significantly higher cash usage in the first half of 2026 was primarily due to increased net loan growth compared to the prior-year period, as net loans increased $30.2 million in the current period compared to growth of $8.7 million in the first half of 2025. Net cash provided by financing activities was $20.9 million for the six months ended June 30, 2026, compared to net cash used of $4.0 million during the same period in 2025. The increase primarily reflected growth in deposits, including a $10.6 million increase in certificates of deposit during the first half of 2026 compared to a $7.6 million decrease in the prior-year period, and a $21.2 million increase in demand and savings deposits compared to a $10.0 million increase in the prior-year period. These increases were partially offset by the repayment of $12.0 million in other borrowings during the first half of 2026, with no comparable activity in the prior-year period. Additionally, demand and savings deposits increased $21.2 million in the first half of 2026 compared to an increase of $10.0 million in the prior-year period. The first half of 2025 also included $5.6 million in common stock repurchases under the Company's repurchase program, with no comparable activity in the current period. Management believes the capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements and there has not been a material change in our liquidity and capital resources since the information disclosed in our 2025 Form 10-K other than set forth above. Richmond Mutual Bancorporation is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its own operating expenses, Richmond Mutual Bancorporation is responsible for paying for any stock repurchases, dividends declared to its stockholders and other general corporate expenses. Since Richmond Mutual Bancorporation is a holding company and does not conduct operations, its primary sources of liquidity are interest on investment securities purchased with proceeds from our initial public offering, dividends up-streamed from the Bank, and borrowings from outside sources. Banking regulations may limit the amount of dividends that may be paid to us by the Bank. At June 30, 2026, Richmond Mutual Bancorporation, on an unconsolidated basis, had $3.6 million in cash, noninterest-bearing deposits, and liquid investments generally available for its cash needs. Regulatory Capital Requirements. First Bank Richmond is subject to minimum capital requirements imposed by the FDIC. The FDIC may require us to have additional capital above the specific regulatory levels if it believes we are subject to increased risk due to asset problems, high interest rate risk and other risks. At June 30, 2026, First Bank Richmond’s regulatory capital exceeded the FDIC regulatory requirements, and First Bank Richmond was well-capitalized under regulatory prompt corrective action standards. Consistent with our goals to operate a sound and profitable organization, our policy is for First Bank Richmond to maintain well-capitalized status. 42 Actual Minimum for Capital Adequacy Purposes Categorized as "Well-Capitalized" Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of June 30, 2026 Total risk-based capital (to risk weighted assets) $ 187,563 14.2 % $ 105,376 8.0 % $ 131,720 10.0 % Tier 1 risk-based capital (to risk weighted assets) 171,087 13.0 79,032 6.0 105,376 8.0 Common equity tier 1 capital (to risk weighted assets) 171,087 13.0 59,274 4.5 85,618 6.5 Tier 1 leverage (core) capital (to adjusted tangible assets) 171,087 10.9 62,786 4.0 78,483 5.0 As of December 31, 2025 Total risk-based capital (to risk weighted assets) $ 186,532 14.6 % $ 101,960 8.0 % $ 127,451 10.0 % Tier 1 risk-based capital (to risk weighted assets) 170,591 13.4 76,470 6.0 101,960 8.0 Common equity tier 1 capital (to risk weighted assets) 170,591 13.4 57,353 4.5 82,843 6.5 Tier 1 leverage (core) capital (to adjusted tangible assets) 170,591 11.0 62,290 4.0 77,862 5.0 Pursuant to the capital regulations of the FDIC and the other federal banking agencies, First Bank Richmond must maintain a capital conservation buffer consisting of additional common equity tier 1 (“CET1”) capital greater than 2.5% of risk-weighted assets above the required minimum levels of risk-based CET1 capital, tier 1 capital and total capital. Failure to maintain the required buffer could result in limitations on First Bank Richmond's ability to pay dividends and discretionary bonuses and the Company's ability to repurchase shares based on specified percentages of eligible retained income. At June 30, 2026, First Bank Richmond’s capital exceeded the conservation buffer. For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve Board expects the holding company’s subsidiary banks to be well capitalized under the prompt corrective action regulations. If Richmond Mutual Bancorporation was subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at June 30, 2026, it would have exceeded all regulatory capital requirements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK There has not been any material change in the market risk disclosures contained in our 2025 Form 10-K.