What changed in this filing

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Item 1. Business

2021-03-31 compared with 2020-03-30 · 297 added, 202 removed, 996 unchanged (33% of the section changed)

8 unchanged sentences

On February 6, 2019, the Board of Directors of the MHC, the parent mutual holding company of Richmond Mutual Bancorporation-Delaware, adopted a Plan of Reorganization and Stock Offering (the “Plan”).

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

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

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

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Community Foundation (the “Foundation”).

Richmond Mutual Bancorporation-Maryland is regulated by the Federal Reserve Board and the Indiana DFI.

Richmond Mutual Bancorporation-Maryland is regulated by the Federal Reserve Board and the IDFI.

Our corporate office is located at 31 North 9th Street, Richmond, Indiana, and our telephone number is (765) 962-2581 .

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We also recognize income from the sale of investment securities.

At December 31, 2019, on a consolidated basis, we had $986.0 million in assets, $687.3 million in loans and leases, net of allowance, $617.2 million in deposits and $187.8 million in stockholders’ equity.

At December 31, 2020, on a consolidated basis, we had $1.1 billion in assets, $736.4 million in loans and leases, net of allowance, $693.0 million in deposits and $192.7 million in stockholders’ equity.

At December 31, 2020, First Bank Richmond’s total risk-based capital ratio was 21.9%, exceeding the 10.0% requirement for a well-capitalized institution.

For the year ended December 31, 2019, we reported a net loss of $14.1 million, compared to net income of $5.7 million for the year ended December 31, 2018.

For the year ended December 31, 2020, we reported net income of $10.0 million, compared to a net loss of $14.1 million for the year ended December 31, 2019.

Our results of operations for the year ended December 31, 2019 were affected by the following non-recurring charges:

(i) a $14.3 million estimated after tax charge associated with the termination of our defined benefit plan;

(i) a $14.3 million estimated after tax charge associated with the freezing and intended termination of our defined benefit plan;

(ii) an after tax charge of $4.9 million associated with our contribution to the Foundation which was formed in connection with our reorganization and stock offering completed on July 1, 2019, and (iii) an after tax charge of $1.3 million related to the adoption of a nonqualified deferred compensation plan in the second quarter of 2019.

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The top employers in Wayne County include Reid Health, Richmond Community Schools, Belden Wire & Cable, Sugar Creek Brandworthy Food Solutions, Richmond State Hospital, and Primex Plastics Corporation.

First Bank Richmond operates seven banking offices in Wayne County including five in Richmond, which is the largest city in Wayne County.

First Bank Richmond operates eight banking offices in Wayne County, including five in Richmond, which is the largest city in Wayne County.

Richmond is a city in east central Indiana and the county seat of Wayne County.

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Manufacturing is the primary source of employment, followed by health care and food service.

The city is home to a regional hospital, Reid Health, as well as four higher educational institutions:

Earlham College, Indiana University East, Purdue Polytechnic University-Richmond, and Ivy Tech Community College.

The city is home to a regional hospital, Reid Health, as well as five higher educational institutions:

Earlham College, Bethany Theological Seminary, Indiana University East, Purdue Polytechnic University-Richmond, and Ivy Tech Community College.

Within Wayne County, we also operate branches in Cambridge City and Centerville, which were initially opened in 1958 and 1959, respectively.

Cambridge City is located in the western part of Wayne County approximately 15 miles west of Richmond, and had an estimated population of 1,760 with a median household income of approximately $43,500.

Cambridge City is located in the western part of Wayne County approximately 15 miles west of Richmond, and had an estimated population of 1,750 with a median household income of approximately $40,200 in 2020.

The workforce in this community is primarily composed of factory workers and employees in the agricultural sector.

Centerville had an estimated population of 2,650 with a median household income of approximately $53,300.

Centerville had an estimated population of 2,650 with a median household income of approximately $51,600 in 2020.

It is a residential suburb to Richmond and home to many antique stores.

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We operate two offices in Sidney (Shelby County), Ohio, and two offices in Piqua and one office in Troy (Miami County), Ohio.

We also operate a loan production office in Columbus, Ohio (Franklin County) that focuses on commercial real estate lending.

Sidney is the largest city and the county seat of Shelby County.

We also operate a loan production office in Columbus, Ohio (Franklin County) that focuses on commercial and multi-family real estate lending.

Sidney is the largest city and the county seat of Shelby County, Ohio.

Sidney is located approximately 35 miles north of Dayton, Ohio and 75 miles west of Columbus, Ohio.

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Manufacturing is the dominant industry among the employee workforce in Shelby County.

Leading manufacturing employers in Shelby County include Honda of America Manufacturing, Emerson Climate Technologies, Airstream, NK Parts, and Plastipak Packaging.

Leading manufacturing employers in Shelby County include Honda of America Manufacturing, Emerson Climate Technologies, Airstream, Plastipak Packaging, and Wilson Health.

The unemployment rate in Shelby County was 4.3% in December 2020 compared to 3.3% in December 2019.

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Columbus is the county seat of Franklin County, which along with nine other counties comprises the Columbus metropolitan area.

The city has a diverse

economy based on education, government, insurance, banking, defense, aviation, food, clothing, logistics, steel, energy, medical research, health care, hospitality, retail, and technology.

The city has a diverse economy based on education, government, insurance, banking, defense, aviation, food, clothing, logistics, steel, energy, medical research, health care, hospitality, retail, and technology.

Columbus is home to The Ohio State University, one of the largest universities in the nation.

The Columbus metropolitan area had an estimated population of 2.1 million and ranked as the 31 st most populous metropolitan area in the United States and the second most populous metropolitan area in Ohio, just behind the Cincinnati metropolitan area and slightly ahead of the Cleveland metropolitan area.

The Columbus metropolitan area had an estimated population of 2.2 million and ranked as the 32nd most populous metropolitan area in the United States and the second most populous metropolitan area in Ohio, just behind the Cincinnati metropolitan area and slightly ahead of the Cleveland metropolitan area.

The unemployment rate in December 2020 was 4.7% for the entire Columbus metropolitan area and 4.9% for Franklin County, compared to 3.2% for the entire Columbus metropolitan area and 3.1% for Franklin County in December 2019.

Lending Activities

We offer a full range of lending products, including multi-family and commercial real estate loans (including owner and non-owner occupied real estate loans), commercial and industrial loans (including equipment loans and working capital lines of credit), construction and development loans, residential real estate loans, including home equity loans and lines of credit, and consumer loans.

We offer a full range of lending products, including multi-family and commercial real estate loans (including owner and nonowner-occupied real estate loans), commercial and industrial loans (including equipment loans and working capital lines of credit), construction and development loans, residential real estate loans, including home equity loans and lines of credit, and consumer loans.

We also engage in lease financing which consists of direct financing leases and is used by our commercial customers to finance purchases of equipment.

We offer consumer loans, predominantly as an accommodation to our customers, secured by personal assets such as automobiles or recreational vehicles.

We offer consumer loans, predominantly as an accommodation to

our customers, secured by personal assets such as automobiles or recreational vehicles.

Some consumer loans are unsecured, such as small installment loans and certain lines of credit.

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The loan information is primarily designed to determine the borrower’s ability to repay the requested loan, and the more significant items are verified through use of credit reports, bank statements and tax returns.

Loans containing a policy exception should have the exception noted in the credit file accompanied by a statement as to the reason for granting the exception.

Loans containing a policy exception have the exception noted in the credit file accompanied by a statement as to the reason for granting the exception.

Exceptions must be approved in accordance with First Bank Richmond’s loan policy.

All loan approval amounts are based on the aggregate debt, including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity.

All loan approval amounts are based on the aggregate debt, including total commitments outstanding and the proposed loan to the individual borrower and any related entity.

In compiling the aggregate debt for determining the adequacy of an officer’s loan authority for commercial lending and leases, the following may be excluded:

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The lending authorities of our other officers range from $50,000 to $1.0 million, and is granted based upon the ability and experience and need of the individual loan officers, relative to the degree of risk and level of expertise required for handling the different types of loans.

Loans that exceed the lending authority of the individual loan officer with exposure up to $1.5 million can be approved by the recommending loan officer and by any one of four designate

senior loan officers.

Loans that exceed the lending authority of the individual loan officer with exposure up to $1.5 million can be approved by the recommending loan officer and by any one of four designated senior loan officers.

Additionally, loans in excess of $1.5 million and up to $2.5 million can be approved by the recommending loan officer and two designated senior loan officers.

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All new loans or renewals to relationships graded “substandard” or below in the amount of (i) $250,000 or less must be approved by one of four designated senior loan officers and (ii) over $250,000 but up to and including $1.0 million must be approved by the Officer Loan Committee.

Loans in excess of $5.0 million up to our legal lending limit must be approved by (i) a majority vote of the members of the Executive Loan Committee present at the meeting (which committee consists of the First Bank Richmond board of directors (excluding Director Jeffery Jackson), Dean Weinert, Paul Witte and two members of the Mutual Federal Advisory Board), or (ii) if occurring outside an Executive Loan Committee meeting, five members of the Executive Loan Committee.

Loans in excess of $5.0 million up to our legal lending limit must be approved by (i) a majority vote of the members of the Executive Loan Committee present at the meeting (which committee consists of the First Bank Richmond board of directors (excluding Director Jeffrey Jackson), Dean Weinert, Paul Witte and two members of the Mutual Federal Advisory Board), or (ii) if occurring outside an Executive Loan Committee meeting, five members of the Executive Loan Committee.

All new loans or renewals to relationships graded “substandard” or below in excess of $1.0 million must be approved by the Executive Loan Committee.

2 unchanged sentences

At December 31,

2020 2019 2018 2017 2016

Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent

(Dollars in thousands)

1 unchanged sentence

Residential (1)

$ 127,108 16.99 % $ 131,294 18.90 % $ 132,492 20.05 % $ 128,773 22.86 % $ 129,336 27.64 %

Home equity lines of credit

5,982 0.80 6,996 1.01 7,214 1.09 7,245 1.29 7,370 1.58

Multi-family 55,998 7.48 66,002 9.50 43,816 6.63 63,701 11.31 32,624 6.97

Commercial 247,564 33.08 229,410 33.01 211,237 31.97 162,218 28.80 120,098 25.67

Construction and development

58,424 7.81 53,426 7.69 72,955 11.04 27,944 4.96 18,788 4.02

Total real estate loans

495,076 66.16 487,128 70.11 467,714 70.78 389,881 69.22 308,216 65.88

Consumer loans 13,257 1.77 13,534 1.95 13,520 2.05 11,628 2.06 10,858 2.32

1 unchanged sentence

Commercial and industrial

122,831 16.41 84,549 12.17 71,854 10.87 61,753 10.97 55,352 11.83

Direct financing leases

117,171 15.66 109,592 15.77 107,735 16.30 99,940 17.75 93,433 19.97

Total commercial business loans and leases

240,002 32.07 194,141 27.94 179,589 27.17 161,693 28.72 148,785 31.80

Total loans and leases 748,335 100.00 % 694,803 100.00 % 660,823 100.00 % 563,202 100.00 % 467,859 100.00 %

Deferred fees and discounts

1,349 456 468 473 436

Allowance for loan and lease losses

10,586 7,089 5,600 4,800 5,246

Total loans and leases receivable, net

$ 736,400 $ 687,258 $ 654,755 $ 557,929 $ 462,177

(1) Includes $3.6 million and $4.5 million of loans secured by second mortgages on residential properties at December 31, 2020 and 2019, respectively.

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Loan balances do not include undisbursed loan proceeds, unearned discounts, unearned income and allowance for loan and lease losses.

Commercial and

Consumer Commercial and

Industrial Construction Total

Due During Years Ending

December 31, Amount Weighted

Rate Amount Weighted

(Dollars in thousands)

$ 1,560 4.09 % $ 25,590 4.26 % $ 17,000 4.46 % $ 44,150 4.34 %

2022 1,205 5.08 4,112 4.44 7,746 4.25 13,063 4.39

2023 1,897 5.25 4,694 4.34 5,916 4.28 12,507 4.45

2024 and 2025 5,607 4.89 59,455 2.02 2,844 3.97 67,906 2.34

2026 to 2030 1,879 4.24 8,702 4.47 17,170 4.53 27,751 4.49

2031 to 2035 1,068 6.01 10,032 5.34 3,862 5.54 14,962 5.44

2036 and following 41 3.75 10,246 4.61 3,886 4.41 14,173 4.55

Total $ 13,257 4.86 % $ 122,831 3.32 % $ 58,424 4.48 % $ 194,512 3.77 %

(1) Includes demand loans, loans having no stated maturity and overdraft loans.

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We make one- to four-family residential real estate loans and home equity loans and lines of credit secured by the borrower’s primary residence.

In addition, we may periodically purchase residential loans, which we refer to as brokered mortgages, primarily during periods of reduced loan demand in our primary market areas and at times to support our Community Reinvestment Act lending activities, although we have not purchased any brokered mortgage loans in the last six years.

Any such purchases are made generally consistent with our underwriting standards for residential mortgage loans.

At December 31, 2019, $138.3 million, or 19.9%, of our total loan and lease portfolio was secured by residential real estate, consisting of $126.8 million of one- to four-family residential real estate loans, including $4.5 million of home equity loans and $7.0 million of home equity lines of credit.

Brokered mortgage loans totaled $819,000 of our total residential mortgage loan portfolio at December 31, 2019.

At December 31, 2020, $133.1 million, or 17.8%, of our total loan and lease portfolio was secured by residential real estate, consisting of $123.5 million of one- to four-family residential real estate loans, $3.6 million of home equity loans, and $6.0 million of home equity lines of credit.

We originate both fixed-rate and adjustable-rate one- to four-family residential real estate loans.

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We may require additional collateral or lower loan-to-value ratios to reduce the risk of these loans.

We believe that these loans satisfy the needs of borrowers in our market area.

We believe that these loans satisfy the needs

of borrowers in our market area.

As a result, subject to market conditions, we intend to continue to originate these types of loans.

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Home equity lines of credit may be either fixed- or adjustable-rate and are typically originated in amounts, together with the amount of the existing first mortgage, of up to 89% of the appraised value of the subject property.

Home equity lines of credit originated with a loan to value ratio in excess of 80% are subject to a higher interest rate

than home equity lines of credit with loan to value ratios of 80% or less.

Home equity lines of credit originated with a loan to value ratio in excess of 80% are subject to a higher interest rate than home equity lines of credit with loan to value ratios of 80% or less.

Home equity lines of credit with an adjustable rate of interest adjust quarterly and are based on the Wall Street Journal Prime rate, plus a margin .

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We do not engage in originating interest only, negative amortization, option adjustable rate or subprime loans and have no established program to originate or purchase these loans.

Subprime loans are defined as loans that at the time of loan origination had a FICO credit score of less than 660.

Subprime loans are defined as loans that at the time of loan

origination had a FICO credit score of less than 660.

Of the $129.8 million in one- to four- family loans, including home equity loans and lines of credit, originated in 2020, only $1.7 million, or 1.3%, were to borrowers with a credit score under 660.

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If the borrower is a corporation, we generally require and obtain personal guarantees from the corporate principals based upon a review of their personal financial statements and individual credit reports.

In addition, the borrower’s and guarantor’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates.

In addition, the borrower’s and guarantor’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statements.

Our commercial and multi-family real estate loans generally have initial terms of 10 to 20 years and amortization terms of up to 25 years, with a balloon payment at the end of the initial term, and may be fixed-rate or adjustable-rate loans.

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When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions.

the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service).

In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service).

We generally require a debt service ratio of at least 1.10x.

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The results and recommendations of the audit must be acceptable to us prior to loan closing.

For loans less than $1.0 million but greater than $150,000, a full Phase I Environmental Audit is not be required, although an environmental investigation is typically performed by qualified bank personnel or a third party to determine if a full Phase I Environmental Audit should be done.

At December 31, 2019, the average loan size of our outstanding multi-family and commercial real estate loans was $790,000, and the largest of such loans was an $8.0 million loan secured by a first mortgage on a multi-family development located in the Columbus, Ohio metropolitan area.

For loans less than $1.0 million but greater than $150,000, a full Phase I Environmental Audit is not required, although an environmental investigation is typically performed by qualified bank personnel or a third party to determine if a full Phase I Environmental Audit should be done.

At December 31, 2020, the average loan size of our outstanding multi-family and commercial real estate loans was $750,000, and the largest of such loans was a $10.4 million loan secured by a first mortgage on an office building located in the Columbus, Ohio metropolitan area.

This loan was performing in accordance with its repayment terms at December 31, 2020.

We had 28 other commercial and multi-family real estate loans with an outstanding balance in excess of $3.0 million at December 31, 2020, all of which were performing in accordance with their repayment terms at December 31, 2020.

Our largest lending relationship at December 31, 2019 with one borrower was for $16.6 million consisting of five commercial real estate loans secured by five separate hotels, three in the Dayton, Ohio area and two in the Cincinnati, Ohio area, all with a common guarantor.

Our largest lending relationship with one borrower at December 31, 2020 was for $16.5 million consisting of five commercial real estate

loans secured by five separate hotels, three in the Dayton, Ohio area and two in the Cincinnati, Ohio area, all with a common guarantor.

All of these loans were performing in accordance with their repayment terms at December 31, 2020.

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The composition of, and location of the underlying collateral securing, our multi-family and commercial real estate loan portfolio at December 31, 2020 was as follows:

Type of Security

Type of Security Indiana Ohio Other Total % of Total

(Dollars in thousands)

1 unchanged sentence

Multi-family/Apartment buildings 28,471 27,180 347 55,998 18.4

Industrial building

Hotels 27,245 27,516 — 54,761 18.0

Industrial buildings 28,446 14,653 — 43,099 14.2

Retail 19,079 15,320 — 34,399 11.3

Medical 14,368 — — 14,368 4.7

Automotive 12,125 443 — 12,568 4.1

Restaurants 5,628 3,451 — 9,079 3.0

Campgrounds/Golf Courses/Leisure Activities 6,511 — — 6,511 2.1

Agricultural 3,691 513 — 4,204 1.4

Other 3,040 4,091 2,488 9,619 3.2

Total $ 172,157 $ 128,570 $ 2,835 $ 303,562 100.0 %

Commercial and Industrial Lending .

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Lines of credit and term loans typically are reviewed annually.

As of December 31, 2019, we had $84.5 million of commercial and industrial loans, representing 12.2% of our total loan and lease portfolio.

The terms of our commercial and industrial loans vary by purpose and by type of underlying collateral.

As of December 31, 2020, we had $122.8 million of commercial and industrial loans, representing 16.4% of our total loan and lease portfolio, including $48.2 million of unsecured commercial and industrial loans (which includes PPP loans discussed below).

Included in the $122.8 million of commercial and industrial loans discuss above are $43.3 million of loans originated under the Paycheck Protection Program (“PPP”), a specialized low-interest loan program funded by the U.S.

Treasury Department and administered by the Small Business Administration (“SBA”).

The Bank, as a qualified SBA lender, was authorized to originate PPP loans.

PPP loans have an interest rate of 1.0%, a two- year or five-year loan term to maturity, and principal and interest payments deferred until the lender receives the applicable forgiven amount or ten months after the end of the borrower’s loan forgiveness covered period.

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

The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and the loan

proceeds are used for other qualifying expenses.

We originated 482 PPP loans totaling $64.9 million during 2020.

At December 31, 2020, we have submitted 263 PPP loans for a total of $40.0 million to the SBA for forgiveness, of which $21.6 million has been forgiven by the SBA as of December 31, 2020.

The terms of our commercial and industrial loans, excluding PPP loans, vary by purpose and by type of underlying collateral.

We typically make equipment loans for a term of five years or less at fixed or adjustable rates, with the loan fully amortized over the term.

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As a result of these additional complexities, variables and risks, commercial and industrial loans require extensive underwriting and servicing.

At December 31, 2019, the average loan size of our outstanding commercial and industrial loans was $214,000, and our largest outstanding commercial and industrial loan was a capital improvement loan totaling $4.3 million to a manufacturing company located in Richmond, Indiana secured by a first lien on all business assets of the borrower.

At December 31, 2020, the average loan size of our outstanding commercial and industrial loans was $181,000, and our largest outstanding commercial and industrial loan was a capital improvement loan totaling $7.9 million to an equipment holding and leasing company located in Bremen, Ohio secured by a first lien on equipment.

This loan was performing in accordance with its repayment terms at December 31, 2020.

We had five other commercial and industrial loans with an outstanding balance in excess of $3.0 million at December 31, 2019, all of which were performing in accordance with their repayment terms at December 31, 2018.

We had seven other commercial and industrial loans with an outstanding balance in excess of $3.0 million at December 31, 2020, all of which were performing in accordance with their repayment terms at that date.

Construction and Development Lending.

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The average outstanding loan size in our commercial construction loan portfolio was approximately $1.0 million at December 31, 2020.

Commercial construction loans on property built for speculative purposes that has not sold in a period of eighteen months after completion will require re-margining at no more than 89% of current appraised value and monthly amortization based on a 25 year payout.

based on a 25-year payout.

At December 31, 2020, $17.6 million, or 31.3%, of our total commercial construction loan portfolio consisted of speculative construction loans.

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At December 31, 2020, this loan was performing according to its repayment terms.

We had four other construction and development loans with an outstanding balance in excess of $3.0 million at December 31, 2019, all of which were performing in accordance with their repayment terms at that date.

We had six other construction and development loans with an outstanding balance in excess of $3.0 million at December 31, 2020, all of which were performing in accordance with their repayment terms at that date.

Lease Financing.

We conduct our leasing operations through First Federal Leasing, a division of First Bank Richmond.

Our lease financing operation consists of direct financing leases which are used by commercial customers to finance purchases such as medical, computer and manufacturing equipment, industrial assets, construction and transportation equipment, and a wide variety of other commercial equipment.

Our lease financing operation consists of direct financing leases which are used by commercial customers to finance purchases such as medical, computer and manufacturing equipment, audio/visual equipment, industrial assets, construction and transportation equipment, and a wide variety of other commercial equipment.

We rely solely on brokers and other third-party originators to generate our lease transactions.

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Our volume of real estate loan originations is influenced significantly by market interest rates, and, accordingly, the volume of our real estate loan originations can vary from period to period.

During the year ended December 31, 2019, we originated $147.0 million of fixed rate loans and $91.9 million of adjustable rate loans, compared to $141.6 million of fixed rate loans and $146.7 million of adjustable rate loans during the year ended December 31, 2018.

During the year ended December 31, 2020, we originated $274.7 million of fixed rate loans and leases and $129.9 million of adjustable-rate loans, compared to $147.0 million of fixed rate loans and leases and $91.9 million of adjustable-rate loans during the year ended December 31, 2019.

The following tables provide information regarding our origination for the dates indicated:

Adjustable Rate

Fixed Rate Floating or

Adjustable Rate Total

(Dollars in thousands)

Residential real estate (1)

$ 113,553 $ 11,200 $ 124,753

Home equity lines of credit 2,377 2,672 5,049

1 unchanged sentence

Construction and development 13,618 52,485 66,103

Consumer 6,498 50 6,548

Commercial and Industrial 71,834 24,588 96,422

Direct finance leasing 61,122 — 61,122

Total $ 274,665 $ 129,894 $ 404,559

(1) Includes $1.0 million of fixed-rate and no adjustable-rate loans secured by second mortgages on residential properties.

Adjustable Rate

Fixed Rate Floating or

Adjustable Rate Total

(Dollars in thousands)

Residential real estate (1)

$ 42,172 $ 4,460 $ 46,632

Home equity lines of credit 2,329 1,264 3,593

1 unchanged sentence

Construction and development 31,656 26,425 58,081

Consumer 6,734 — 6,734

Commercial and Industrial 8,735 21,534 30,269

Direct finance leasing 51,501 — 51,501

Total $ 147,032 $ 91,920 $ 238,952

(1) Includes $4.5 million of fixed-rate and no adjustable-rate loans secured by second mortgages on residential properties.

As reflected in the tables above, loan and lease originations increased $165.6 million or 69.3%, to $404.6 million during 2020 compared to $239.0 million during 2019, primarily due to increases in residential real estate loan and commercial and industrial loan originations.

Demand for one-to-four family loans grew significantly in 2020 as homeowners, taking advantage of historically low interest rates, refinanced their homes.

In addition, the pandemic increased demand for single-family homes and away from large apartment complexes and city living.

The increase in commercial and industrial loan originations was due to PPP loans.

We consider our balance sheet as well as market conditions on an ongoing basis in making decisions as to whether to hold residential loans we originate for investment or to sell these loans to investors, choosing the strategy that is most advantageous to us from a profitability and risk management standpoint.

We sell the majority of the fixed-rate conforming and eligible jumbo one- to four-family residential real estate loans that we originate, generally on a servicing-retained basis, while retaining some non-eligible fixed-rate and adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our loan portfolio.

All FHA, VA and USDA loans we originate are sold on a servicing-released, non-recourse basis in accordance with FHA, VA and

USDA guidelines.

All FHA, VA and USDA loans we originate are sold on a servicing-released, non-recourse basis in accordance with FHA, VA and USDA guidelines.

For the years ended December 31, 2020, 2019 and 2018, we sold $103.9 million, $27.2 million, and $20.7 million of one- to four-family residential real estate loans, respectively.

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In these circumstances, we follow our customary loan underwriting and approval policies.

At December 31, 2019, we had 18 loans totaling $25.7 million in which we were not the lead lender, all of which were performing in accordance with their original repayment terms.

At December 31, 2020, we had 34 loans totaling $29.3 million in which we were not the lead lender.

All of these participation loans were performing in accordance with their original repayment terms at December 31, 2020, except for a $1.1 million commercial real estate participation loan more than 90 days past due and still accruing that is working towards resolution by the lead bank.

We also have sold portions of loans we originate that exceeded our loans-to-one borrower legal lending limit or for risk diversification.

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In some cases, however, it may be in First Bank Richmond’s best interests to delay such action.

The reason for delays are discussed and a trigger date established for final action.

The reason for delays is discussed and a trigger date established for final action.

Loans and Leases Past Due and Nonperforming Assets .

2 unchanged sentences

When a loan or lease is determined to be impaired, the measurement of the loan or lease in the allowance for loan and lease losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.

Non-accrual loans and leases are loans and leases for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis.

accrual loans and leases are loans and leases for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis.

All loans and leases that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection.

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Loans Delinquent For:

90 Days and Over

Total Loans Delinquent

60-89 Days 90 Days and Over Total Loans Delinquent

60 Days or More

Number Amount Percent

Category Number Amount Percent

(Dollars in thousands)

1 unchanged sentence

Residential (1)

7 $ 243 0.2 % 53 $ 2,680 2.1 % 60 $ 2,923 2.3 %

Home equity lines of credit 1 15 0.3 2 25 0.4 3 40 0.7

Multi-family — — — — — — — — —

Commercial — — — 2 1,177 0.5 2 1,177 0.5

Construction or development 1 4,900 8.4 — — — 1 4,900 8.4

Total Real Estate Loans 9 5,158 1.0 57 3,882 0.8 66 9,040 1.8

Consumer 4 129 1.0 6 317 2.4 10 446 3.4

Commercial and industrial 2 203 0.2 4 439 0.4 6 641 0.5

Direct financing leases 2 65 0.1 — — — 2 65 0.1

Total 17 $ 5,555 0.7 % 67 $ 4,638 0.6 % 84 $ 10,193 1.4 %

(1) Includes loans secured by first and second mortgages on residential properties.

5 unchanged sentences

Generally, loans and leases are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Nonperforming loans and leases totaled $3.8 million or 0.55% of total loans and leases at December 31, 2019, $4.6 million or 0.69% of total loans and leases at December 31, 2018 and $4.5 million or 0.80% of total loans and leases at December 31, 2017.

The decrease in nonperforming loans at December 31, 2019, compared to the prior year primarily was the result of the charge-off of three commercial and industrial loans totaling $901,000 during 2019 which were classified as nonaccrual troubled debt restructurings during 2018.

Nonperforming loans and leases totaled $4.8 million or 0.64% of total loans and leases at December 31, 2020 and $3.8 million or 0.55% of total loans and leases at December 31, 2019.

Troubled Debt Restructurings.

18 unchanged sentences

At December 31,

2020 2019 2018 2017 2016

(Dollars in thousands)

1 unchanged sentence

Residential (1)

Home equity lines of credit

$ 214 $ 315 $ 357 $ 320 $ 844

Commercial real estate 76 342 743 181 2,032

Construction and development

Commercial and industrial 493 494 1,177 2,609 2,557

1 unchanged sentence

Total non-accruing loans and leases (2)

803 1,225 2,479 3,135 5,557

Accruing loans and leases delinquent more than 90 days:

Residential (1)

2,554 2,256 1,913 1,310 1,961

Home equity lines of credit 25 15 15 — —

1 unchanged sentence

Construction and development — 249 — — —

Consumer 317 15 38 — 38

Commercial and industrial — 3 130 68 8

4 unchanged sentences

Residential (1)

Home equity lines of credit

32 — 176 34 72

Commercial real estate — — — — 3,672

Construction and development

Commercial and industrial

Direct financing leases

Total foreclosed assets 32 — 176 34 3,744

1 unchanged sentence

Troubled debt restructurings (accruing):

Residential (2)

Home equity lines of credit

Commercial real estate

Construction and development

Commercial and industrial — — — — 152

Direct financing leases

Total trouble debt restructuring (accruing) $ — $ — $ — $ — $ 152

2 unchanged sentences

Total non-performing assets and troubled debt restructurings (accruing) to total assets 0.45 % 0.39 % 0.56 % 0.60 % 1.65 %

Non-accrual loans and leases include $598,000, $1.6 million, $2.7 million, $2.8 million and $6.5 million, of troubled debt restructurings for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

(1) Includes loans secured by first and second mortgages on residential properties.

(2) Non-accrual loans and leases include $541,000, $598,000, $1.6 million, $2.7 million and $2.8 million, of troubled debt restructurings for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

Interest income that would have been recorded for the year ended December 31, 2020 had non-accruing loans been current according to their original terms amounted to $69,000, of which none was recorded.

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Other loans and leases of concern are those loans and leases that are currently accruing interest and are not considered impaired, but which we are monitoring because the financial information of the borrower causes us concerns as to their ability to comply with their loan repayment terms.

Potential problem loans and leases, not included in the non-performing asset table above, totaled $5.4 million at December 31, 2019.

Potential problem loans and leases, not included in the non-performing asset table above, totaled $4.3 million at December 31, 2020, with the largest other loan of concern totaling $1.0 secured by a second mortgage on an office building in Indianapolis, Indiana.

Classified Assets .

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At December 31,

2020 2019 2018

(In thousands)

Watch and special mention $ 17,418 $ 13,473 $ 3,782

Substandard 7,638 8,072 7,695

Doubtful 20 74 202

Total classified assets $ 25,076 $ 21,619 $ 11,679

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Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows.

losses inherent in the loan and lease portfolio and the related allowance may change materially in the near-term.

Because of uncertainties associated with regional economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management’s estimate of probable credit losses inherent in the loan and lease portfolio and the related allowance may change materially in the near-term.

The allowance is increased by a provision for loan and lease losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries.

1 unchanged sentence

Management’s periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management’s ongoing review and grading of loans and leases, facts and issues related to specific loans and leases, historical loan and lease loss and delinquency experience, trends in past due and non-accrual loans and leases, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

As an integral part of their examination process, the Indiana DFI and the FDIC will periodically review our allowance for loan and lease losses, and as a result of such reviews, we may have to adjust our allowance for loan and lease losses.

As an integral part of their examination process, the IDFI and the FDIC will periodically review our allowance for loan and lease losses, and as a result of such reviews, we may have to adjust our allowance for loan and lease losses.

However, regulatory agencies are not directly involved in the process for establishing the allowance for loan and lease losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

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Years Ended December 31,

2020 2019 2018 2017 2016

(Dollars in thousands)

Balance at beginning of period:

$ 7,089 $ 5,600 $ 4,800 $ 5,394 $ 5,246

Real estate loans:

Residential (1)

36 66 121 1,842 772

Home equity — — — — —

Multi-family — — — — —

Commercial — 15 — — 81

Construction and development — — — — 15

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Residential (1)

43 64 137 101 57

Home equity 4 — 2 2 2

Multi-family — — — — —

Commercial 37 19 308 38 141

Construction and development 27 — 17 35 17

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The following table sets forth the allowance for loan and lease losses allocated by category, the total balances by category, and the percent of loans and leases in each category to total loans and leases at the dates indicated.

The allowance for loan and lease losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

The allowance for loan and lease losses allocated to each category is not necessarily indicative

of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

At the dates indicated, we had no unallocated allowance for loan and lease losses.

At December 31,

2020 2019 2018 2017 2016

Amount Percent of

total loans Amount Percent of

(Dollars in thousands)

2 unchanged sentences

Residential (1)

$ 270 18.3 % $ 109 20.0 % $ 139 21.1 % $ 257 24.2 % $ 359 29.2 %

Commercial (2)

7,797 47.8 4,564 50.1 3,147 49.7 2,424 45.0 1,829 36.7

Total real estate loans 8,067 66.1 4,673 70.1 3,286 70.8 2,681 69.2 2,188 65.9

7 unchanged sentences

(2) Includes commercial and multi-family real estate loans and commercial construction loans.

At December 31, 2019, our allowance for loan and lease losses represented 1.0% of total loans and leases and 186.0% of non-performing loans and leases.

There were $1.1 million in net loan and lease charge-offs during the year ended December 31, 2019.

Although we believe that we use the best information available to establish the allowance for loan and lease losses, future adjustments to the allowance may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

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Treasury obligations, securities of various government-sponsored enterprises and municipal governments, deposits at the Federal Home Loan Bank of Indianapolis, certificates of deposit of federally insured institutions, investment grade corporate bonds and investment grade marketable equity securities.

We also are required to maintain an investment in Federal Home Loan Bank of Indianapolis and Federal Home Loan Bank of Cincinnati stock.

We also are required to maintain an investment in Federal Home Loan Bank of Indianapolis stock.

The objectives of our investment policy are to provide and maintain liquidity to meet deposit withdrawal and loan funding needs, to help mitigate interest rate and market risk, to diversify our assets, and to maximize the rate of return on invested funds within the context of our interest rate and credit risk objectives.

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The strategies utilized to meet the objective of our investment policy are established by our Asset/Liability Committee, which consists of at least three board members, the President and Chief Executive Officer, and the Chief Financial Officer of First Bank Richmond.

The Asset/Liability Committee meets quarterly, or more often if necessary, to insure that investment policies and strategies are consistent with both First Bank Richmond’s investment guidelines and market conditions.

The Asset/Liability Committee meets quarterly, or more often if necessary, to ensure that investment policies and strategies are consistent with both First Bank Richmond’s investment guidelines and market conditions.

The Asset/Liability Committee reviews the investment policy at least annually and recommends any revisions, if necessary, to the board of directors of First Bank Richmond.

Our President and Chief Executive Officer and our Chief Financial Officer are responsible for the management of our investment portfolio, subject to the direction and guidance of the Asset/ Liability Committee.

Various factors are considered when making decisions regarding our investment portfolio, including the marketability, maturity and tax consequences of the proposed investment.

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however, the purchasing officer has the option, at the time of purchase, to designate individual securities as held-to-maturity, available-for-sale, or trading.

At December 31, 2019, we had $201.8 million of securities, at fair value, classified as available-for-sale, $15.9 million of securities, at cost, classified as held-to-maturity, and no securities classified as trading.

In April 2020, First Bank Richmond created a wholly-owned subsidiary, FB Richmond Holdings, Inc.

(“FB Richmond Holdings”) to hold a majority of its investment portfolio and take advantage of certain tax benefits.

FB Richmond Holdings, a Nevada corporation, holds, services, manages and invests that portion of First Bank Richmond’s investment portfolio as may be transferred from time to time by First Bank Richmond to FB Richmond Holdings.

FB Richmond Holdings’ investment policy, for the most part, mirrors that of First Bank Richmond’s investment policy.

FB Richmond Holdings has hired a third-party investment advisor to manage its securities portfolio, subject to the oversight of its Board of Directors.

The President and Chief Executive Officer and the Chief Financial Officer of the Company serve on the board of directors of FB Richmond Holdings.

At December 31, 2020, we had, on a consolidated basis, $244.5 million of securities, at fair value, classified as available-for-sale, $12.2 million of securities, at cost, classified as held-to-maturity, and no securities classified as trading.

At that date, FB Richmond Holding managed $256.7 million of our total investment portfolio.

We may from time to time invest in “special situation” investments in order to earn profits or to hedge against interest rate risk.

4 unchanged sentences

While we have the authority under applicable law to invest in derivative securities, we had no investments in derivative securities at December 31, 2020.

In connection with managing our investment securities portfolio, we will solicit and receive advice from approved broker/dealers, recognizing the extensive resources and valuable experience that they can provide.

However, the final decision concerning all investment activities will be the responsibility of our President and the Chief Financial Officer with the approval of the Asset/Liability Committee.

We evaluate each broker/dealer on its financial strength, expertise, and acceptable business practices.

Annually, the Asset/Liability Committee will review and reaffirm the list of approved brokers/dealers.

The Asset/Liability Committee, in addition to its annual review, may choose to make changes to this list throughout the year.

We held common stock of the FHLB of Indianapolis and the FHLB of Cincinnati in connection with our borrowing activities totaling $7.6 million at December 31, 2019.

For the year ended December 31, 2019, First Bank Richmond received a total of $371,000 in dividends from these FHLBs.

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

We held common stock of the FHLB of Indianapolis in connection with our borrowing activities totaling $9.0 million at December 31, 2020.

For the year ended December 31, 2020, First Bank Richmond received a total of $285,000 in dividends from the FHLB.

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

We may be required to purchase additional FHLB stock if we increase borrowings in the future.

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At December 31,

2020 2019 2018

(In thousands)

Securities available for sale:

government and federal agency

SBA pools and federal agencies $ 22,043 $ 22,057 $ 39,259 $ 39,020 $ 40,812 $ 38,010

State and municipal obligations 93,616 96,285 45,635 45,840 30,531 29,789

Government sponsored mortgage-backed securities 124,139 126,150 117,769 116,911 56,945 54,670

Other 13 13 13 13 13 13

Total securities available for sale 239,811 244,505 202,676 201,784 128,301 122,482

1 unchanged sentence

State and municipal obligations 12,225 12,520 15,917 16,156 18,580 18,543

— — — — 2,500 5,110

Total securities held to maturity 12,225 12,520 15,917 16,156 21,080 23,653

FHLB stock 9,050 9,050 7,600 7,600 6,561 6,561

Total investment securities $ 261,086 $ 266,075 $ 226,193 $ 225,540 $ 155,942 $ 152,696

4 unchanged sentences

The following table sets forth the stated maturities and weighted average yields of investment securities, excluding Federal Reserve Bank and FHLB stock, at December 31, 2020.

Weighted average yields on tax-exempt securities are presented on a tax-equivalent basis using a combined federal and state marginal tax rate of approximately 25.9%.

Weighted average yields on tax-exempt securities are presented on a tax-equivalent basis using a federal tax rate of approximately 21.0%.

Certain mortgage-backed securities have adjustable interest rates and will reprice annually within the various maturity ranges.

1 unchanged sentence

Weighted average yield calculations on investment securities available for sale do not give effect to changes in fair value that are reflected as a component of equity.

1 year or less

Over 1 year to 5 years

Over 5 to 10 years

Over 10 years

Total Securities

1 year or less Over 1 year to 5 years Over 5 to 10 years Over 10 years Total Securities

Cost Weighted

Yield Amortized

Cost Weighted

Yield Amortized

Cost Weighted

Yield Amortized

Cost Weighted

Yield Amortized

Cost Weighted

(Dollars in thousands)

3 unchanged sentences

Government sponsored mortgage-backed securities — — — — 6,953 1.37 117,186 1.01 124,139 1.03 126,150

Other — — — — — — 13 — 13 — 13

Total securities available for sale 933 2.36 5,864 2.61 33,268 1.85 199,746 1.42 239,811 1.51 244,505

1 unchanged sentence

State and municipal obligations 2,931 2.49 6,207 2.85 2,027 3.91 1,060 4.96 12,225 3.12 12,520

— — — — — — — — — — —

Total securities held to maturity 2,931 2.49 6,207 2.85 2,027 3.91 1,060 4.96 12,225 3.12 12,520

6 unchanged sentences

We offer deposit accounts to consumers and businesses having a wide range of interest rates and terms.

Our deposits consist of savings deposit accounts, NOW and demand accounts and certificates of deposit.

Our deposits consist of savings deposit accounts, money market accounts, NOW and demand accounts and certificates of deposit.

We solicit deposits in our market areas as well as online through our website.

8 unchanged sentences

The variety of deposit accounts that we offer allows us to be competitive in generating deposits and to respond with flexibility to changes in our customers’ demands.

to gather deposits is impacted by the competitive markets in which we operate, which include numerous financial institutions of varying sizes offering a wide range of products.

Our ability to gather deposits is impacted by the competitive markets in which we operate, which include numerous financial institutions of varying sizes offering a wide range of products.

We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.

Additionally, we concentrate on gathering deposits from both existing commercial loan clients and new commercial prospects which positively impacts our lower cost deposits and assists in retaining full-service clients.

At December 31, 2019, our core deposits, which are deposits other than certificates of deposit in excess of $250,000 and brokered deposits, totaled $516.7 million, representing 84.0% of total deposits.

At December 31, 2020, our core deposits, which are deposits other than certificates of deposit of $250,000 or more and brokered deposits, totaled $620.1 million, representing 89.6% of total deposits.

Our largest banking office based on deposits is our main office in Richmond, Indiana, which had total deposits of $286.4 million or 41.3% of our total deposits at December 31, 2020.

1 unchanged sentence

Overall, $516.8 million or 74.6% of our total deposits were held in Indiana branches and $176.2 million or 25.4% were held in Ohio branches as of December 31, 2020.

The Federal Reserve Board requires all depository institutions to maintain non-interest bearing reserves at specified levels against their transaction accounts, primarily checking, NOW and Super NOW checking accounts.

At December 31, 2019, we were in compliance with these reserve requirements.

The Federal Reserve Board generally requires all depository institutions to maintain noninterest-bearing reserves at specified levels against their transaction accounts, primarily checking, NOW and Super NOW checking accounts.

In response to the COVID-19 pandemic the Federal Reserve reduced the reserve requirement ratio to zero percent effective on March 26, 2020.

The following table sets forth our total deposit activities for the periods indicated.

Years Ended December 31,

2020 2019 2018

(Dollars in thousands)

7 unchanged sentences

At December 31,

2020 2019 2018

Amount Percent

of Total Amount Percent

(Dollars in thousands)

1 unchanged sentence

Demand deposits $ 240,716 34.7 % $ 164,275 26.6 % $ 159,460 25.7 %

Savings 95,033 13.7 73,471 11.9 68,627 11.0

Money market 114,827 16.6 98,058 15.9 84,129 13.6

Total non-certificates 450,576 65.0 335,804 54.4 312,216 50.3

Certificates:

0.00 – 1.00% 98,017 14.1 28,638 4.6 28,266 4.6

1.01 – 2.00% 96,107 13.9 98,382 15.9 135,637 21.9

2.01 – 3.00% 37,847 5.5 143,158 23.2 143,327 23.0

3.01 – 4.00% 10,498 1.5 11,237 1.8 1,191 0.2

Over 4.00% — — — — — —

Total certificates 242,469 35.0 281,415 45.6 308,421 49.7

1 unchanged sentence

The following table indicates the time deposit accounts classified by rate and maturity at December 31, 2020.

3.00% Total Percent

(Dollars in thousands)

12 unchanged sentences

December 31, 2023 292 364 1,197 — 1,853 0.76

Thereafter 8,706 9,328 1,378 8,940 28,352 11.69

Total $ 98,017 $ 96,107 $ 37,847 $ 10,498 $ 242,469 100.00 %

Percent of total 40.42 % 39.64 % 15.61 % 4.33 % 100 %

1 unchanged sentence

Jumbo certificates of deposit require minimum deposits of $100,000.

12 Months Total

(In thousands)

2 unchanged sentences

Public funds (1)

1,352 15,885 602 1,140 18,979

Total certificates of deposit $ 27,111 $ 139,728 $ 24,394 $ 51,236 $ 242,469

5 unchanged sentences

Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.

We use such advances to provide short-term funding as a supplement to our deposits.

To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile.

At December 31, 2020, we had $170.0 million in FHLB advances outstanding.

Based on current collateral levels, at December 31, 2019 we could borrow an additional $78.3 million from the FHLB of Indianapolis and $0 from the FHLB of Cincinnati at prevailing interest rates.

Based on current collateral levels, at December 31, 2020 we could borrow an additional $32.7 million from the FHLB of Indianapolis at prevailing interest rates.

FHLB advances totaling $131.0 million at a weighted, fixed interest rate of 1.38% are subject to an option by the FHLB of Indianapolis to convert, at a specified date in the future, the entire fixed-rate advance to a periodic adjustable rate.

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

The adjustable rate would be for the remaining term of the advance at a predetermined rate based on LIBOR (London Interbank

If the FHLB exercises its option to convert the advance to an adjustable rate, the advance will be pre-payable at our option, at par and without a penalty.

We also have an available line of credit with the FHLB of Indianapolis totaling $10,000,000.

We also have an available line of credit with the FHLB of Indianapolis totaling $10.0 million.

The line of credit expires March 2021;

2 unchanged sentences

There were no amounts outstanding on the line at December 31, 2020 or 2019.

We also are authorized to borrow from the Federal Reserve Bank of Chicago’s “discount window.” We have never borrowed from the Federal Reserve Bank and currently do not have any assets pledged to them for borrowing.

The following tables sets forth information concerning balances and interest rates on our borrowings at and for the periods shown.

1 unchanged sentence

Years Ended December 31,

2020 2019 2018

(Dollars in thousands)

6 unchanged sentences

At December 31,

2020 2019 2018

(Dollars in thousands)

3 unchanged sentences

FHLB advances 1.63 % 1.87 % 2.22 %

In connection with our recently completed reorganization to the stock form of organization and related stock offering, Richmond Mutual Bancorporation-Maryland acquired all of the assets and assumed all of the liabilities of the MHC and Richmond Mutual Bancorporation-Delaware.

Included among the liabilities assumed were $10.0 million of subordinated debentures issued by the MHC in connection with the issuance, through a statutory trust formed by the MHC, of $10.0 million of related trust preferred securities.

Included among the assets acquired by Richmond Mutual Bancorporation, however, were $5.1 million (fair market value) of the trust preferred securities issued by the MHC which were acquired by Richmond Mutual Bancorporation-Delaware in 2010 from a third party at a discount.

The financial statements of the MHC were not consolidated with those of Richmond Mutual Bancorporation-Delaware, therefore the $10.0 million of subordinated debentures issued by the MHC and the related trust preferred securities were not reflected as a liability in the consolidated financial statements prior to the reorganization.

Similarly, the subordinated debentures and related trust preferred securities were redeemed by the Company in 2019, immediately following completion of our reorganization and stock offering, and are not reflected in our current consolidated financial statements.

Trust and Financial Services

2 unchanged sentences

We also manage private investment accounts for individuals and institutions.

management assets under management and administration were $150.0 million at December 31, 2019.

Total wealth management assets under management and administration were $157.3 million at December 31, 2020.

These activities provide an additional source of fee income to First Bank Richmond and in 2020 constituted 6.9 % of our total non-interest income.

Subsidiary and Other Activities

Richmond Mutual Bancorporation has one subsidiary, First Bank Richmond.

First Bank Richmond has no subsidiaries.

At December 31, 2020, Richmond Mutual Bancorporation had one subsidiary, First Bank Richmond.

At December 31, 2020, First Bank Richmond had an active investment subsidiary, FB Richmond Holdings, which is a Nevada corporation that holds and manages a substantially all of First Bank Richmond's investment portfolio.

As of December 31, 2020, the market value of securities managed was $257.0 million.

FB Richmond Holdings has one active subsidiary, FB Richmond Properties, Inc., which is a Delaware corporation holding approximately $86.8 million in loans.

We face significant competition within our market both in making loans and leases and attracting deposits.

Our market area has a high concentration of financial institutions, including large money center and regional banks, community banks and credit unions.

Our market area has a high concentration of financial institutions, including large money center and regional banks, community banks and

credit unions.

Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms, equipment financing companies, consumer finance companies and credit unions.

We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies.

As of June 30, 2019 (the most recent branch deposit data provided by the FDIC), First Bank Richmond’s share of deposits in Wayne and Shelby Counties, in Indiana, was approximately 38.2% and 7.0%, respectively, and in Shelby and Miami Counties, in Ohio, was approximately 8.5% and 3.9%, respectively.

Based on the most recent data provided by the FDIC, there are approximately 14 and 23 other commercial banks and savings banks, and approximately 11 and eight credit unions operating in our Indiana and Ohio market areas, respectively.

As of June 30, 2020 (the most recent branch deposit data provided by the FDIC), First Bank Richmond’s share of bank deposits in Wayne and Shelby Counties, in Indiana, was approximately 13.9% and 5.4%, respectively, and in Shelby and Miami Counties, in Ohio, was approximately 8.3% and 4.2%, respectively.

We do not accept deposits at our loan production office located in Columbus, Ohio.

2 unchanged sentences

Its deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation.

First Bank Richmond is subject to extensive regulation by the Indiana DFI, as its chartering agency, and by the Federal Deposit Insurance Corporation, as its deposit insurer.

First Bank Richmond is required to file reports with, and is periodically examined by, the Federal Deposit Insurance Corporation and the Indiana DIF concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including, but not limited to, mergers with or acquisitions of other financial institutions.

In addition, First Bank Richmond is a member of and owns stock in the FHLB of Indianapolis and the FHLB of Cincinnati, which are two of the 11 regional banks in the Federal Home Loan Bank System.

First Bank Richmond is subject to extensive regulation by the IDFI, as its chartering agency, and by the Federal Deposit Insurance Corporation, as its deposit insurer.

First Bank Richmond is required to file reports with, and is periodically examined by, the Federal Deposit Insurance Corporation and the IDFI concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including, but not limited to, mergers with or acquisitions of other financial institutions.

In addition, First Bank Richmond is a member of and owns stock in the FHLB of Indianapolis, which is one of the 11 regional banks in the Federal Home Loan Bank System.

The regulations and supervision of First Bank Richmond establish a comprehensive framework of activities in which an institution can engage and are intended primarily for the protection of depositors and borrowers and, for purposes of the Federal Deposit Insurance Corporation, the protection of the insurance fund.

17 unchanged sentences

The Dodd-Frank Act has resulted in, and may continue to result in, an increased regulatory burden and increased compliance, operating and interest expense for First Bank Richmond.

Recent Regulatory Reform.

In May 2018 the Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”), was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Act.

While the EGRRCPA maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks with assets of more than $50 billion.

Many of these changes could result in meaningful regulatory changes for community banks such as First Bank Richmond, and their holding companies.

The EGRRCPA, among other matters, expands the definition of qualified mortgages which may be held by a financial institution and simplifies the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10 billion by instructing the federal banking regulators to establish a single “Community Bank Leverage Ratio” of between 8 and 10 percent.

Any qualifying depository institution or its holding company that exceeds the Community Bank Leverage Ratio will be considered to have met generally applicable leverage and risk-based regulatory capital requirements and any qualifying depository institution that exceeds the new ratio will be considered to be “well capitalized” under the prompt corrective action rules.

The EGRRCPA also expands the category of holding companies that may rely on the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement by raising the maximum amount of assets a qualifying bank holding company may have from $1 billion to $3 billion.

A major effect of this change is to exclude such holding companies from the minimum capital requirements of the Dodd-Frank Act.

In addition, the Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule (proprietary trading prohibitions), mortgage disclosures and risk weights for certain high-risk commercial real estate loans.

It is difficult at this time to predict when or how any new standards under the EGRRCPA will ultimately be applied to us or what specific impact the EGRRCPA and the yet-to-be-written implementing rules and regulations will have on community banks.

Indiana Banking Regulation.

First Bank Richmond, as an Indiana commercial bank, is regulated and supervised by the Indiana DFI.

The Indiana DFI is required to regularly examine each state-chartered bank.

The approval of the Indiana DFI is required to establish or close branches, to merge with another bank, to issue stock and to undertake many other activities.

Any Indiana bank that does not operate according to the regulations, policies and directives of the Indiana DFI may be sanctioned.

First Bank Richmond, as an Indiana commercial bank, is regulated and supervised by the Indiana Department of Financial Institutions, or the IDFI.

The IDFI is required to regularly examine each state-chartered bank.

The approval of the IDFI is required to establish or close branches, to merge with another bank, to issue stock and to undertake many other activities.

Any Indiana bank that does not operate according to the regulations, policies and directives of the IDFI may be sanctioned.

The powers that Indiana-chartered banks can exercise under these laws include, but are not limited to, the following:

12 unchanged sentences

At December 31, 2020, First Bank Richmond’s largest aggregate amount of loans to one borrower was $16.5 million.

Under Indiana law, First Bank Richmond, following the completion of the reorganization, will be permitted to declare and pay dividends out of its undivided profits.

The prior approval of the Indiana DFI is required if the total of all dividends declared in a calendar year would exceed the total of its net income for that year combined with its retained net income for the preceding two years.

Under Indiana law, First Bank Richmond is permitted to declare and pay dividends out of its undivided profits.

The prior approval of the IDFI is required if the total of all dividends declared in a calendar year would exceed the total of its net income for that year combined with its retained net income for the preceding two years.

See “- Federal Banking Regulation — Capital Requirements,” “— Prompt Corrective Action” and “- Holding Company Regulation” for restrictions on dividends under federal law.

As an Indiana state-chartered commercial bank, First Bank Richmond is required to pay to the Indiana DFI a general assessment fee in connection with the regulation and supervision of First Bank Richmond.

As an Indiana state-chartered commercial bank, First Bank Richmond is required to pay to the IDFI a general assessment fee in connection with the regulation and supervision of First Bank Richmond.

The Federal Deposit Insurance Corporation, as discussed below, charges all insured depository institutions deposit insurance assessments.

Regulatory Enforcement Authority.

Any Indiana bank that does not operate according to the regulations, policies and directives of the Indiana DFI may be subject to sanctions for non-compliance, including seizure of the property and business of the bank and suspension or revocation of its charter.

The Indiana DFI may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the bank’s business in a manner which is unsafe, unsound or contrary to the depositors interests or been negligent in the performance of their duties.

In addition, upon finding that a bank has engaged in an unfair or deceptive act or practice, the Indiana DFI may issue an order to cease and desist and impose a fine on the bank.

Any Indiana bank that does not operate according to the regulations, policies and directives of the IDFI may be subject to sanctions for non-compliance, including seizure of the property and business of the bank and suspension or revocation of its charter.

The IDFI may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the bank’s business in a manner which is unsafe, unsound or contrary to the depositors' interests or been negligent in the performance of their duties.

In addition, upon finding that a bank has engaged in an unfair or deceptive act or practice, the IDFI may issue an order to cease and desist and impose a fine on the bank.

Indiana consumer protection and civil rights statutes applicable to First Bank Richmond permit private individual and class action lawsuits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damages and attorney’s fees in the case of certain violations of those statutes.

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The regulations also establish a minimum required leverage ratio of at least 4% of Tier 1 capital.

Common equity Tier 1 capital is generally defined

as common stockholders’ equity and retained earnings.

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings.

Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital.

Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries.

Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital.

Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1

capital) and Tier 2 capital.

Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.

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In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of common equity Tier 1 capital to risk-weighted assets more than 2.5% above the amount necessary to meet its minimum risk-based capital requirements.

Legislation enacted in May 2018 requires the federal banking agencies, including the Federal Deposit Insurance Corporation, to establish for institutions with less than $10 billion of assets a “community bank leverage ratio” of between 8 to 10%.

Institutions with capital meeting the specified requirement will be considered in compliance with the applicable regulatory capital requirements, including the risk-based requirements.

The community bank leverage ratio is to be established by notice and comment rulemaking by the federal regulators.

The Economic Growth, Regulatory Relief and Consumer Protection Act ("EGRRCPA"), enacted in May 2018, required the federal banking agencies, including the FDIC, to establish for institutions with assets of less than $10 billion a “community bank leverage ratio” of between 8 to 10%.

Institutions with capital meeting or exceeding the ratio and otherwise complying with the specified requirements (including off-balance sheet exposures of 25% or less of total assets and trading assets and liabilities of 5% or less of total assets) and electing the alternative framework are considered to comply with the applicable regulatory capital requirements, including the risk-based requirements.

The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020.

A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report.

An institution that temporarily ceases to meet any qualifying criteria is provided with a two-quarter grace period to again achieve compliance.

Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of 8% or greater requires the institution to comply with the generally applicable capital requirements.

Section 4012 of the CARES Act required that the community bank leverage ratio be temporarily lowered to 8%.

The federal regulators issued a rule making the reduced ratio effective for the second calendar quarter of 2020.

The rule also established a two-quarter grace period for a qualifying community bank whose leverage ratio falls below the 8% community bank leverage ratio requirement, or fails to meet other qualifying criteria, so long as the bank maintains a leverage ratio of 7% or greater.

Another rule was issued to transition back to the 9% community bank leverage ratio by increasing the ratio to 8.5% for calendar year 2021 and to 9% thereafter.

The Bank did not elect to use the community bank leverage ratio.

At December 31, 2020, First Bank Richmond’s capital exceeded all applicable requirements including the applicable capital conservation buffer.

See “Management’s Discussion and Analysis-Capital Resources” contained in Part II, Item 7 of this Form 10-K.

See “Management’s Discussion and Analysis-Capital Resources” contained in Part II, Item 7 and “Note 16:

Regulatory Capital” in the Notes to Consolidated Financial Statement contained in Part II, Item 8 of this Form 10-K.

The Financial Accounting Standards Board has adopted a new accounting standard for US GAAP that will be effective for us beginning in 2023.

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Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.

These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate.

other operational and managerial standards as the agency deems appropriate.

Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.

If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the

guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

Failure to implement such a plan can result in further enforcement action, including the issuance of a cease-and-desist order or the imposition of civil money penalties.

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It has recently exercised that discretion by establishing a long-range fund ratio of 2%.

On September 30, 2018, the Deposit Insurance Fund reserve ratio reached 1.36 percent, exceeding the statutorily required minimum reserve ratio of 1.35 percent ahead of the September 30, 2020, deadline required under the Dodd-Frank Act.

Federal Deposit Insurance Corporation regulations provide for two changes to deposit insurance assessments upon reaching the minimum:

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Federal Home Loan Bank System.

First Bank Richmond is a member of the FHLB of Indianapolis and the FHLB of Cincinnati, two of the 11 regional FHLBs which provide a central credit facility primarily for member institutions.

First Bank Richmond is a member of the FHLB of Indianapolis, one of the 11 regional FHLBs which provide a central credit facility primarily for member institutions.

Member institutions are required to acquire and hold shares of capital stock in the FHLB.

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At December 31, 2020, no impairment of the value of the stock has been recognized.

As of December 31, 2020, the Bank had $170.0 million of FHLB advances and $10.0 million available on its line of credit with the FHLB.

Federal Reserve System.

The Federal Reserve requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts.

In response to the COVID-19 pandemic, the Federal Reserve reduced the reserve requirement ratio to zero percent effective on March 26, 2020, to support lending to households and businesses.

At December 31, 2020, the Bank was in compliance with the reserve requirements.

The Bank is authorized to borrow from the Federal Reserve Bank "discount window." An eligible institution need not exhaust other sources of funds before going to the discount window, nor are there restrictions on the purposes for which the institution can use primary credit.

At December 31, 2020, the Bank had no outstanding borrowings from the discount window.

Acquisitions.

An acquisition of Richmond Mutual Bancorporation or First Bank Richmond, an acquisition of control of either, or an acquisition by either of another bank holding company or depository institution or control of such a company or institution would generally be subject to prior approval by applicable federal and state banking regulators, as would certain acquisitions by Richmond Mutual Bancorporation or First Bank Richmond of other types of entities.

"Control"

is defined in various ways for this purpose, including but not limited to control of 10% of outstanding voting stock of an entity.

"Control" is defined in various ways for this purpose, including but not limited to control of 10% of outstanding voting stock of an entity.

See “– Holding Company Regulation” below.

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or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

Recent Regulatory Reform

In response to the COVID-19 pandemic, the United States Congress, through the enactment of the CARES Act, and the federal banking agencies, though rulemaking, interpretive guidance and modifications to agency policies and procedures, have taken a series of actions to provide national emergency economic relief measures including, among others, the following:

• The CARES Act allows banks to elect to suspend requirements under GAAP for loan modifications related to the COVID-19 pandemic (for loans that were not more than 30 days past due as of December 31, 2019) that would otherwise be categorized as a TDR, including impairment for accounting purposes, until the earlier of 60 days after the termination date of the national emergency or December 31, 2020.

The suspension of GAAP is applicable for the entire term of the modification.

The federal banking agencies also issued guidance to encourage banks to make loan modifications for borrowers affected by COVID-19 by providing that short-term modifications made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification is implemented is not a TDR.

We are applying this guidance to qualifying COVID-19 modifications.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Response” for further information about the COVID-19 modifications completed by the Bank.

• The CARES Act amended the SBA’s loan program, in which we participate, to create a guaranteed, unsecured loan program, the PPP, to fund payroll and operational costs of eligible businesses, organizations and self-employed persons during COVID-19.

The loans are provided through participating financial institutions, such as the Bank, that process loan applications and service the loans and are eligible for SBA repayment and loan forgiveness if the borrower meets the PPP conditions.

The application period for a SBA PPP loan closed on August 8, 2020.

The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders on October 2, 2020.

The CAA, 2021 which was signed into law on December 27, 2020, renews and extends the PPP until March 31, 2021.

As a result, as a participating lender, the Bank began originating PPP loans again in January 2021 and will continue to monitor legislative, regulatory, and supervisory developments related to the PPP.

As the on-going COVID-19 pandemic evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19.

In addition, it is possible that the United States Congress will enact supplementary COVID-19 response legislation.

We continue to assess the impact of the CARES Act and other statues, regulations and supervisory guidance related to the COVID-19 pandemic.

For additional information regarding actions taken by regulatory agencies to provide relief to consumers who have been adversely impacted by the COVID-19 pandemic, see the discussion below under "Item 1A.

Risk Factors - Risks Related to our Business."

The following discussion of federal and state taxation is intended only to summarize material income tax matters and is not a comprehensive description of the tax rules applicable to Richmond Mutual Bancorporation and First Bank Richmond.

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Richmond Mutual Bancorporation and First Bank Richmond will file a consolidated federal income tax return.

For tax years beginning after December 31, 2017, corporate alternative minimum tax was repealed.

The prior year minimum tax credit is continued to be allowed to offset the taxpayer’s regular tax liability for any tax year.

For tax years beginning after 2017 and before 2022, the prior year minimum tax credit would be refundable in an amount equal to 50% (100% for tax years beginning in 2021) of the excess of the credit for the tax year over the amount of the credit allowable for the year against regular tax liability.

We do not have any minimum tax credits available for carryover as of December 31, 2019.

Capital Loss Carryovers.

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As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains.

Any undeducted loss remaining after the five-year carryover period is not deductible.

Any loss remaining after the five-year carryover period is not deductible.

At December 31, 2020, we had no capital loss carryovers.

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Federal taxable income is then adjusted by several Indiana modifications including only considering members of the combined group which have Indiana nexus.

The Indiana legislature started reducing the financial institutions tax from 8.5% to 6.5% in 0.5% increments over a four year period that commenced in 2014.

The Indiana legislature started reducing the financial institutions tax from 8.5% to 6.0% in 0.5% increments over a seven-year period that commenced in 2014.

The full rate reduction to 4.9% will be phased in fully by 2023.

First Bank Richmond is not currently under audit with respect to its Indiana tax returns.

First Bank Richmond is also subject to Ohio taxation in the same general manner as other corporations.

First Bank Richmond is also subject to Ohio taxation in the same general manner as other financial institutions.

In particular, Richmond Mutual Bancorporation and First Bank Richmond will be subject to the Ohio corporation franchise tax, which is an excise tax imposed on corporations for the privilege of doing business in Ohio, owning capital or property in Ohio, holding a charter or certificate of compliance authorizing the corporation to do business in Ohio, or otherwise having nexus with Ohio during a calendar year.

The franchise tax is imposed on the value of a corporation's issued and outstanding shares of stock.

Financial institutions determine the value of their issued and outstanding shares based upon the net worth of the shares.

For Ohio franchise tax purposes, financial institutions are currently taxed at a rate equal to 0.8% of taxable net worth.

For Ohio franchise tax purposes, financial institutions are currently taxed at a rate equal to 0.8% of apportioned net capital.

Other applicable state taxes include generally applicable sales and use taxes plus real and personal property taxes.

As a Maryland business corporation, Richmond Mutual Bancorporation is required to file an annual report with and pay franchise taxes to the State of Maryland.

Employees and Human Capital

As of December 31, 2020, we had 170 full-time equivalent employees.

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Management believes that we have a good working relationship with our employees.

To facilitate talent attraction and retention, we strive to make First Bank Richmond an inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, health and welfare programs.

As of December 31, 2020, approximately 70% of our workforce was female and 30% male, and our average tenure was 10.5 years, a decrease of 4.5% from an average tenure of 11 years as of December 31, 2019.

As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent.

In addition to healthy base wages, additional programs include annual bonus opportunities, a Company augmented Employee Stock Ownership Plan, Company matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, and employee assistance programs.

The success of our business is fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety and wellness of our employees.

We provide our employees and their families with access to a variety of flexible and convenient health and welfare programs, including benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health status.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes giving some employees the ability to work from home, while implementing additional safety measures for employees continuing critical on-site work.

A core tenet of our talent system is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty and commitment in our employee base which in turn grows our business, our products, and our customers, while adding new employees and external ideas supports a continuous improvement mindset.

We believe that our average tenure — 10.5 years as of the end of the fiscal year 2020 — reflects the engagement of our employees in this core talent system tenet.

Information about our Executive Officers

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He has served as President and Chief Executive Officer of First Bank Richmond since 2001 and was appointed Chairman of the Board in January 2019.

Kleer also serves as a member of the Mutual Federal advisory board of directors.

Kleer also serves as Chairman of the Mutual Federal advisory board of directors.

Kleer began his banking career in 1978 at American Fletcher National Bank in the Career Associates Program and was promoted to Vice President and Branch Manager in 1983.

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He is also a graduate of the Stonier Graduate School of Banking.

Brittenham (age 64).

Brittenham, employed by First Bank Richmond since 1979, currently serves as Senior Vice President-Human Resources.

Brittenham has served in various positions in the human resources department during her 40 year career at First Bank Richmond and as Senior Vice President-Human Resources since 2011.

Her responsibilities include employee relations, payroll, benefits and the administration of all phases of the human resources area.

In addition, Ms.

Brittenham serves as corporate secretary to the First Bank Richmond Entities.

Fullerton , Jr (age 56) .

Fullerton, employed by First Bank Richmond since 2005, currently serves as Senior Vice President-Chief Information Officer/Information Security Officer.

Fullerton has served as Senior Vice President and Chief Information Officer/Information Security Officer since 2013.

His responsibilities include managing the bank’s technology resources and coordinating the evaluation, deployment, and management of IT systems across the organization.

In addition, Mr.

Fullerton is responsible for the development of the cyber security-related policies and processes that reduce the organization’s operational risks.

Fullerton received his graduate degree from the Graduate School of Banking at the University of Wisconsin - Madison.

He earned a Certified Information Security Manager (CISM) designation from ISACA and a Certified Banking Security Manager (CBSM) designation from the SBS Cyber Security Institute.

Hays (age 63).

Hays, employed by First Bank Richmond since 1999, currently serves as Senior Vice President-Chief Audit Examiner and Training Director and has been employed in the financial services industry for 34 years.

Her responsibilities include overseeing the bank’s internal audit program, FDICIA compliance, exam preparation for all regulators and external auditors, and coordinating and overseeing employee training.

Hays received her BA from Indiana University East and, in 2004, received her designation as a BAI Certified Bank Auditor.

Spears (age 62).

Spears, since 2003, has served as Senior Vice President-Senior Trust Officer of First Bank Richmond.

Spears has 29 years of experience in wealth management with a focus on investments and estate planning.

He is responsible for investments, trust and estate administration and new business development.

Spears holds a Bachelor’s Degree in Political Science and a Master’s in Public Administration from Indiana University, and a JD from the Indiana University Robert H.

McKinney School of Law in Indianapolis.

Stoops (age 52).

Stoops, since 2004, has served as Senior Vice President-Retail Lending Manager at First Bank Richmond.

Stoops has more than 33 years of experience in the financial services industry, primarily in residential lending.

Her responsibilities include overseeing all aspects of our retail lending operations, including our secondary market operations.

Stoops received her Associate’s Degree in Business from Indiana Wesleyan University and holds a life, accident and health insurance license.

Weinert (age 68).

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Weinert holds a BA in Economics from Wabash College and an MBA from Butler University.

Weinert (age 56).

Weinert, employed by First Bank Richmond since 2006, currently serves as Senior Vice President-Operations/Retail Banking.

Weinert has served as Senior Vice President-Operations/Retail Banking of First Bank Richmond since 2015.

Her responsibilities include overseeing our retail branches and marketing.

She also is responsible for the overall planning and effectiveness of the retail branch initiatives related to the delivery of exceptional customer service and diversification strategies.

Weinert has over 30 years of experience in the financial services industry with an emphasis on retail, operations and sales.

Weinert is a graduate of the Graduate School of Banking at the University of Wisconsin-Madison.

She has also completed Indiana University East’s Center for Leadership Development program and the Indiana Bankers Association’s Compliance School Operations and Deposit programs.

Witte (age 49).

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Other than an investor’s own internet access charges, we make available free of charge through its website the Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we have electronically filed such material with, or furnished such material to, the SEC.

Information pertaining to us, including SEC filings, can be found by clicking the link on our sites called “About Us,” then scrolling down and clicking on the link called "Investor Relations."

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

What changed 10-K

Item 1. Business